UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[ X ] Quarterly report pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the period ended March 31, 1995
or
[ ] Transition report pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the transition period from ______________ to __________________
Commission file number 0-18194
WESTCOTT COMMUNICATIONS, INC.
(Exact name of Registrant as specified in its charter)
Texas 75-2110878
(State of Incorporation) (I.R.S. Employer Identification No.)
1303 Marsh Lane
Carrollton, Texas 75006
(Address of principal executive offices)
(214) 417-4100
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months (or
for such shorter period that the registrant was required to file
such reports), and (2) has been subject to such filing requirements
for the past 90 days.
Yes X No
As of May 5, 1995 there were 19,657,375 shares of common stock
outstanding.
<PAGE>
WESTCOTT COMMUNICATIONS, INC.
INDEX
PART I: FINANCIAL INFORMATION
Page No.
Item 1. Financial Statements
Condensed Consolidated Balance Sheets -
December 31, 1994 and March 31, 1995 . . . . . . . . 3
Condensed Consolidated Statements of Income -
Three Months Ended March 31, 1994 and 1995 . . . . . 5
Condensed Consolidated Statement of Shareholders'
Equity - Three Months Ended March 31, 1995 . . . . . 6
Condensed Consolidated Statements of Cash Flows -
Three Months Ended March 31, 1994 and 1995 . . . . . 7
Notes to Condensed Consolidated Financial Statements 9
Item 2. Management's Discussion and Analysis of Results of
Operations and Financial Condition . . . . . . . . .12
PART II: OTHER INFORMATION. . . . . . . . . . . . . . . . .15
Signatures . . . . . . . . . . . . . . . . . . . . . . . . .16
<PAGE>
Part I - Financial Information
Item 1 - Financial Statements
WESTCOTT COMMUNICATIONS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
ASSETS
<TABLE>
<CAPTION>
December 31, March 31,
1994 1995
(Unaudited)
____________ ____________
<S> <C> <C>
Current assets:
Cash and cash equivalents. . . . . . . . $ 5,815,118 $ 8,340,426
Accounts receivable (net of allowance for
doubtful accounts of $776,000 and $668,000
at December 31, 1994 and March 31, 1995,
respectively) . . . . . . . . . . . . 20,939,216 18,981,513
Program inventory . . . . . . . . . . . 5,843,078 5,966,242
Prepaid commissions. . . . . . . . . . . 2,038,547 1,877,767
Short-term investment. . . . . . . . . . 718,437 92,659
Other current assets . . . . . . . . . . 3,834,796 3,857,924
__________ __________
Total current assets . . . . . . . . . 39,189,192 39,116,531
Property and equipment, at cost:
Downlink equipment . . . . . . . . . . . 32,267,208 32,178,416
Studio equipment . . . . . . . . . . . . 10,990,730 11,147,152
Office furniture and equipment . . . . . 12,096,651 12,644,431
Leasehold improvements . . . . . . . . . 2,499,308 2,513,841
__________ __________
57,853,897 58,483,840
Accumulated depreciation and amortization. .(22,298,155) (24,146,708)
__________ __________
35,555,742 34,337,132
Other assets:
Equipment inventory. . . . . . . . . . . 2,648,086 2,589,147
Program inventory. . . . . . . . . . . . 9,802,493 10,770,204
Goodwill (net of accumulated amortization of
$3,197,000 and $3,542,000 at December 31,
1994 and March 31, 1995, respectively). . 16,491,866 19,396,079
Other intangibles (net of accumulated
amortization of $3,144,000 and $3,430,000
at December 31, 1994 and March 31, 1995,
respectively) . . . . . . . . . . . . 2,997,859 3,584,118
Other assets . . . . . . . . . . . . . . 2,302,066 2,253,730
__________ __________
$108,987,304 $112,046,941
___________ ___________
___________ ___________
</TABLE>
<PAGE>
WESTCOTT COMMUNICATIONS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS - (Continued)
LIABILITIES AND SHAREHOLDERS' EQUITY
<TABLE>
<CAPTION>
December 31, March 31,
1994 1995
____________ ____________
(Unaudited)
<S> <C> <C>
Current liabilities:
Accounts payable. . . . . . . . . . . . $ 2,430,582 $ 2,317,709
Income taxes payable. . . . . . . . . . 213,436 1,747,858
Accrued liabilities . . . . . . . . . . 4,557,849 5,661,435
Deferred income taxes . . . . . . . . . 1,154,962 132,876
Unearned revenue. . . . . . . . . . . . 14,994,796 12,405,472
Current portion of long-term obligations . . 10,000 10,000
__________ ____________
Total current liabilities . . . . . 23,361,625 22,275,350
Long-term obligations . . . . . . . . . . 32,254 25,935
Deferred income taxes . . . . . . . . . . 1,162,672 1,162,672
Minority interest liability . . . . . . . 132,940 148,406
Shareholders' equity:
Common stock, $.01 par value; 29,000,000
shares authorized; 19,561,123 and 19,599,292
shares outstanding at December 31, 1994 and
March 31, 1995, respectively. . . . . 195,611 195,993
Additional paid-in capital. . . . . . . 71,398,368 71,725,508
Retained earnings . . . . . . . . . . . 12,859,978 16,669,221
Less treasury shares at cost; 45,920 shares . (156,144) (156,144)
__________ __________
Total shareholders' equity. . . . . 84,297,813 88,434,578
$108,987,304 $112,046,941
___________ ___________
___________ ___________
</TABLE>
See accompanying notes.
<PAGE>
WESTCOTT COMMUNICATIONS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
_____________________________
1994 1995
_____________________________
<S> <C> <C>
Revenues. . . . . . . . . . . . . . . $ 20,637,184 $ 24,634,153
Cost of revenues:
Programming and production. . . . . 3,902,763 4,914,875
Delivery and transmission . . . . . 2,287,004 3,334,017
Sales and marketing . . . . . . . . 4,970,071 4,845,399
General and administrative. . . . . 2,323,585 2,442,380
Depreciation and amortization . . . 2,505,136 2,904,453
__________ __________
Total . . . . . . . . . . . . . . 15,988,559 18,441,124
Income from operations. . . . . . . . 4,648,625 6,193,029
Interest expense. . . . . . . . . . . (49,581) (31,409)
Interest income . . . . . . . . . . . 34,260 102,346
Other income (expense) . . . . . . . (18,354) (19,305)
__________ __________
Income before income taxes. . . . . . 4,614,950 6,244,661
Provision for income taxes . . . . . 1,726,016 2,435,418
__________ __________
Net income available to common
shareholders . . . . . . . . . $ 2,888,934 $ 3,809,243
____________ ____________
____________ ____________
Earnings per common share
(Note 2). . . . . . . . . . . . $ .15 $ .20
____________ ____________
____________ ____________
Weighted average common
and common equivalent
shares outstanding. . . . . . . 19,854,910 19,530,490
____________ ____________
____________ ____________
</TABLE>
See accompanying notes.
<PAGE>
WESTCOTT COMMUNICATIONS, INC.
CONDENSED CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
For the three months ended March 31, 1995
(Unaudited)
<TABLE>
<CAPTION>
Common Stock Additional
______________________ pain-in
Shares Amount capital
__________ ________ ___________
<S> <C> <C> <C>
Balance at December 31, 1994. . . . 19,561,123 $195,611 $71,398,368
Issuance of Common Stock under
Employee Stock Purchase Plan. . . 7,169 72 86,763
Issuance of Common Stock under
Employee Stock Option Plan and
Non-Employee Stock Option Plan,
including federal income tax
benefit (Note 1). . . . . . . . . 31,000 310 240,377
Net Income . . . .. . . . . . . . . - - -
__________ ________ ___________
Balance at March 31, 1995 . . . . . 19,599,292 $195,993 $71,725,508
__________ ________ ___________
__________ ________ ___________
</TABLE>
<TABLE>
<CAPTION>
Retained Treasury
earnings shares
___________ _________
<S> <C> <C>
Balance at December 31, 1994. . . . $12,859,978 $(156,144)
Issuance of Common Stock under
Employee Stock Purchase Plan. . . - -
Issuance of Common Stock under
Employee Stock Option Plan and
Non-Employee Stock Option Plan,
including federal income tax
benefit (Note 1). . . . . . . . . - -
Net Income. . . . . . . . . . . . . 3,809,243 -
___________ _________
Balance at March 31, 1995 . . . . . $16,669,221 $(156,144)
</TABLE>
See accompanying notes.
<PAGE>
WESTCOTT COMMUNICATIONS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Three Months ended March 31,
____________________________
1994 1995
___________ ___________
<S> <C> <C>
Operating activities:
Net income . . . . . . . . . . . $ 2,888,934 $ 3,809,243
Adjustments to reconcile net
income to net cash provided
by operating activities:
Depreciation and amortization 2,505,136 2,904,453
Deferred income taxes . . . . (1,353,400) -
(Gain) Loss on sale of property
and equipment . . . . . . . (203) 26,294
Changes in operating assets
and liabilities:
Accounts receivable. . . 1,973,146 2,092,973
Other current assets
and prepaid commissions (1,260,199) 207,760
Accounts payable and accrued
liabilities . . . . . (1,169,239) (1,251,030)
Income taxes payable . . 1,635,732 1,534,422
Unearned revenue . . . . (2,615,601) (3,549,719)
__________ __________
Net cash provided by
operating activities 2,604,306 5,774,396
Investing activities:
Net decrease in investments. . . 30,022 625,778
Additions to property and equipment (1,853,664) (773,656)
Net increase in other assets . . (1,921,775) (589,267)
Net additions to program inventory (1,659,182) (946,969)
Net additions to interest in
partnership. . . . . . . . . . 18,558 15,466
Proceeds from sale of assets . . - 17,412
Purchase business combinations,
net of cash acquired (Note 3). 10,662 (1,478,548)
__________ ___________
Net cash used in investing
activities. . . . . . . . (5,375,379) (3,129,784)
Financing activities:
Payments on short-term debt
and capital leases . . . . . . (809) (255,024)
Payments on long-term debt . . . (3,062) (191,802)
Proceeds from short-term and
long-term debt . . . . . . . . 1,406,361 -
Proceeds from issuance of stock, net 1,505,110 327,522
__________ ___________
Net cash provided by (used in)
financing activities . . 2,907,600 (119,304)
Net increase (decrease) in cash
and cash equivalents . . . . . . 136,527 2,525,308
Cash and cash equivalents
at beginning of period . . . . . 5,545,539 5,815,118
__________ __________
Cash and cash equivalents at
end of period . . . . . . . . . $ 5,682,066 $ 8,340,426
___________ ___________
___________ ___________
Supplemental disclosures of cash
flow information
Cash paid during the period:
Interest . . . . . . . . . $ 10,726 $ 31,409
Income taxes . . . . . . . $ 116,925 $ 797,723
</TABLE>
See accompanying notes.
<PAGE>
WESTCOTT COMMUNICATIONS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - (Continued)
(Unaudited)
Noncash investing activity:
In March 1994, the Company issued 100,000 shares of its Common Stock
valued at approximately $2,100,000 and assumed liabilities of approximately
$979,000 in connection with the acquisition of Excellence in Training
Corporation.
<PAGE>
WESTCOTT COMMUNICATIONS, INC.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
1. Basis of Presentation. The accompanying unaudited condensed consolidated
financial statements have been prepared in accordance with the instructions to
Form 10-Q and therefore do not include all information and footnotes necessary
for fair presentation of financial position, results of operations, and cash
flows in conformity with generally accepted accounting principles. Management
believes all adjustments necessary for a fair presentation of the results of
the interim period have been made and are of a normal recurring nature.
In presenting the accompanying unaudited condensed consolidated
financial statements, certain amounts have been reclassified. These
individual reclassifications have not been disclosed as the impact on the
Company's financial statements is not material.
During the first three months of 1995, the Company recognized a
federal income tax benefit of approximately $103,000 resulting from the
exercise of employee stock options. Under generally accepted accounting
principles, this federal income tax benefit is recognized as a deferred tax
asset and added to additional paid-in-capital in the period of the tax
deduction.
These unaudited condensed consolidated financial statements and the
notes thereto should be read in conjunction with the Company's most recent
audited financial statements included in its Annual Report on Form 10-K.
2. Earnings per share. Earnings per share are computed based on the weighted
average number of common and common equivalent shares outstanding.
3. Acquisitions. Effective March 1, 1995, the Company acquired all of the
outstanding stock of Lockert Jackson & Associates, Inc. ("Lockert") in
exchange for $1,500,000 and the assumption of approximately $2,075,000 of
liabilities. In addition, the Company made a one-time payment of $500,000 in
return for five-year non-competition agreements, and will pay approximately
$318,000 over the next three years for consulting services to be provided by
Lockert's former principals. Lockert is nationally recognized as a producer
and distributor of "Emergency Medical Update" and "Safety Watch,"
subscription based emergency medical and safety video training products.
This acquisition was accounted for as a purchase, and accordingly, the net
assets and results of operations of Lockert are included in the Company's
consolidated financial statements commencing March 1, 1995.
Pro forma income statement data for the Lockert acquisition is not
presented as the pro forma impact on the Company's financial statements is
not material.
4. Long-term Obligations. Effective June 28, 1993, the Company entered into a
two-year revolving credit facility with its bank pursuant to which it may
borrow up to $18,000,000. After the revolver term expires, outstanding
amounts under this facility would be convertible into a four-year term loan.
The bank has indicated its willingness to extend this credit facility beyond
June 28, 1995. The Company intends to finalize this transaction in the near
future. The facility provides a sublimit of $1,000,000 for standby letters
of credit. A commitment fee of one-half of 1% of the unused credit line and
an interest rate of prime, or if lower, an alternate CD rate plus 1 1/2% will
be charged.
The credit facility contains various restrictive covenants which,
among other things, limit the payment of dividends and require the Company to
maintain certain financial and tangible net worth ratios. The
<PAGE>
WESTCOTT COMMUNICATIONS, INC.
Notes to Condensed Consolidated Financial Statements - (Continued)
(Unaudited)
facility is secured by studio equipment, downlink equipment, other equipment
and fixtures, subsidiary stock and accounts receivable. At March 31, 1995,
there were no amounts borrowed under this facility.
5. Subsequent Events. On April 7, 1995, the Company confirmed that it was
engaged in preliminary negotiations regarding the possible acquisition of
Sandy Corporation (AMEX: SDY), a consulting company, for approximately $24
million in cash or $10 for each outstanding share. As of May 8, 1995 no
agreement had been reached. (See Liquidity and Capital Resources Section).
<PAGE>
The following table contains information about products and services offered
by the Company.
<TABLE>
<CAPTION>
Current
Markets Offerings Description Medium
_______ _________ ___________ ______
<S> <C> <C> <C>
Government & LETN Law Enforcement Television Network S/V/W
Public Services FETN Fire & Emergency Television Network S/V
American
Heat American Heat V
Pulse Pulse V
GSTN Government Services Television Network V
Automotive ASTN Automotive Satellite Television Network S
Detroit
(WCMI) Custom Programming N/A
Health Care HSTN Health & Sciences Television Network S
AHA American Hospital Association T
WHTG Executive Communications T
PSYCHNET Sponsored Programming S
LTCN Long Term Care Network S
IMN Custom Programming N/A
FMTN Family Medical Television Network S
Corporate & CPA
Professional Report The CPA Report V
PSTN Professional Security Television Network V
AFTN Accounting & Financial Television Network V
ITS Industrial Training Systems V/C
Tel-A-
Train Tel-A-Train V/C
ETC Excellence in Training V
EMU Emergency Medical Update V
Safety
Watch Safety Watch V
IDTN Electronic Classroom I
Financial
Services BTCC Bankers Training & Consulting Company V/C
Educational TI-IN K-12 Education S
</TABLE>
Legend: S = Private Satellite
V = Videotape
T = Teleconferencing
C = Computer-Based Training
W = Workstation
I = Interactive Multi-Media
N/A = Not Applicable
<PAGE>
Item 2 - Management's Discussion and Analysis of Results of Operations and
Financial Condition
Results of Operations:
Comparison of Three Months Ended March 31, 1995 to the Three Months Ended
March 31, 1994:
Revenues. The increase in revenues of $3,996,969 or 19% over the
corresponding period last year is primarily attributable to revenue growth in
networks internally-developed or acquired during the first quarter of 1994,
such as IDTN and ETC. Because the Company now offers more diversified
products and services than in past periods, including teleconferences,
Training on Demand and other customer services, management believes that
reporting revenue by markets served is indicative of the Company's
performance. Revenues from the Company's six principal markets for the
periods indicated were as follows:
<TABLE>
<CAPTION>
Markets Revenues
___________________________________ _______________________________
Three Months Ended
March 31, March 31,
1994 1995
____________ ___________
<S> <C> <C>
Government and Public Services . . . $ 4,482,018 $ 4,918,050
Automotive . . . . . . . . . . . . . 2,592,291 2,773,086
Health Care. . . . . . . . . . . . . 4,439,144 5,618,022
Corporate and Professional . . . . . 4,826,666 6,568,321
Financial Services . . . . . . . . . 1,487,955 1,424,705
Education. . . . . . . . . . . . . . 2,493,196 3,018,327
Other. . . . . . . . . . . . . . . . 315,914 313,642
____________ ____________
Total. . . . . . . . . . . . . . . . $ 20,637,184 $ 24,634,153
____________ ____________
____________ ____________
</TABLE>
Revenues in the Government and Public Services market increased $436,032
or 10% primarily as a result of an increase in revenues from EMU, products
acquired in the acquisition of Lockert Jackson in the first quarter of 1995;
and GSTN, which experienced a growth in revenues as a result of an increase
in subscribers over the same period last year.
Revenues in the Automotive market increased $180,795 or 7% due primarily
to subscriber increases for ASTN.
Revenues in the Healthcare market increased $1,178,878 or 27% primarily as
a result of an increase in teleconference revenues for WHTG in connection
with its alliance with the Joint Commission on Accreditation of Healthcare
Organizations. In addition, LTCN also experienced increased revenues as a
result of an increase in subscribers over the same period last year.
Revenues in the Corporate and Professional market increased $1,741,655 or
36% primarily as a result of IDTN's electronic classroom which began
operations in the first quarter of 1994; and ETC, which was acquired in the
first quarter of 1994. Partially offsetting these increases were decreases
in one-time sales revenues for ITS and Tel-A-Train resulting from an industry-
wide decline in safety training sales, and a decline in international sales
as a result of the decline in value of the Mexican peso.
Revenues in the Financial Services market decreased $63,250 or 4% as a
direct result of a decrease in fee revenue and one-time sales of videotape
products. This decrease was partially offset by an increase in subscription-
Based revenue as a result of an increase in subscribers over the same period
last year.
<PAGE>
Revenues in the Education market increased $525,131 or 21% due to the
introduction of elementary and middle school products and services, as well as
the addition of new high school subscribers.
Programming and Production. Programming and production costs increased
$1,012,112 or 26% primarily as a result of production costs associated with
IDTN which began operations in early 1994, and royalties paid for ETC which
was acquired in the first quarter of 1994. In addition, programming and
production expenses for WCMI increased in response to the increase in revenues
over the same period last year, as many large custom programming projects were
completed during the first quarter of 1995. Offsetting these increases were
decreases in programming and production costs for many of the more mature
satellite networks such as ASTN, LETN, TI-IN, FETN and HSTN.
Delivery and Transmission. An increase of $1,047,013 or 46% over the
corresponding period last year is primarily due to an increase in transponder
expense, resulting from an amendment in 1994 to the Company's long-term
transponder lease which increased its satellite transponder capacity.
Delivery and transmission costs also increased over the same period last year
for IDTN, which began operations in early 1994. In addition, Tel-A-Train
experienced a small increase in the cost of hardware sales from the first
quarter of 1994 to the first quarter of 1995.
Sales and Marketing. A decrease of $124,672 or 3% over the corresponding
period last year is due primarily to a reduction in commission expense for ITS
resulting from the decrease in revenues for the same period, and as a result
of the implementation of a new sales commission plan in late 1994. Partially
offsetting this decrease was an increase in sales and marketing expense for
ETC, which was acquired in the first quarter of 1994.
Sales personnel are compensated through commissions on new sales and
renewals, supplemented by a small base salary. Therefore, commission expense
for the satellite networks in any reporting period will vary with the number
of subscriptions and renewals sold during such reporting period. Commissions
relating to videotape and teleconference networks, however, are deferred and
amortized over the life of the respective contract, which is generally a
period of one to three years.
General and Administrative. General and administrative expenses increased
$118,795 or 5%. This category includes operating costs for the Company's
travel agency, bad debt expense, executive compensation, facilities and other
expenses not directly attributed to the operation of the programming,
production and sales and marketing departments. The increase in general and
administrative expense over the same period last year is primarily attributable
to ETC, which was acquired during the first quarter of 1994.
Depreciation and Amortization. The $399,317 or 16% increase in
depreciation and amortization expense over the same period last year is
primarily attributable to depreciation increases for the installation of
downlink and CDV equipment at LETN, FETN, HSTN, LTCN and TI-IN sites, as well as
One-Touch equipment installed at TI-IN sites during 1994. Equipment installed
for IDTN electronic classrooms, computer equipment and software, leasehold
improvements and production equipment purchases necessary to accommodate the
Company's overall growth also contributed to this increase in depreciation
expense. Amortization also increased from the same period last year as a
result of goodwill and other intangible assets added in connection with
acquisitions made during 1994 and the first three months of 1995.
Interest. Interest expense decreased by $18,172 or 37% primarily as a
result of the payment of $1,100,000 of long-term debt in December, 1994.
Interest income increased $68,086 or 199% over the same period last year
primarily as a result of the increase in temporary interest-bearing investments.
<PAGE>
Income Taxes. The provision for income taxes as a percentage of income
before income taxes increased from 37% for the three month period ended
March 31, 1994 to 39% for the three month period ended March 31, 1995 primarily
as a result of an increase in non-deductible goodwill amortization, an increase
in state income taxes and the application of graduated tax rates.
Liquidity and Capital Resources. During the quarter ended March 31,
1995, the Company satisfied its liquidity needs principally from cash flow
from operations. In addition, the Company has a credit facility under which
the Company may borrow up to $18,000,000. No amounts have been drawn against
this facility as of March 31, 1995. The facility, which the bank has
indicated can be extended through June 28, 1996, provides a sublimit of
$1,000,000 for standby letters of credit. A commitment fee of one half of 1%
of the unused credit line and an interest rate of prime, or if lower, an
alternate CD rate plus 1 1/2% will be charged. As of March 31, 1995, the
Company had $8,340,426 in cash, cash equivalents and temporary investments.
During the three months ended March 31, 1995, the Company generated
approximately $6 million in cash from operations. Approximately $3 million in
cash was used in investment activities, primarily in connection with the
purchase of equipment and investment in program inventory. The Company's
financing activities during this period used approximately $119,000 in cash,
primarily resulting from the payment of short-term and long-term debt assumed
in the acquisition of Lockert in March, 1995.
The Company has identified capital needs of approximately $7 million
through early 1996 primarily to fund investments in program inventory,
additional purchases and installations of CDV equipment, installation of
interactive computer equipment to be utilized by TI-IN subscribers, leased
equipment and uplink expenses for IDTN, and computer hardware and software
for the A/S 400. The acquisition of Sandy Corporation would require use of
the revolving line of credit and cash on hand. The Company believes that
cash generated from operations, cash on hand, and funds available under the
revolving line of credit will be sufficient to meet its budgeted capital and
liquidity requirements through the foreseeable future.
<PAGE>
Part II - Other Information
Item 1 - Legal Proceedings
None
Item 2 - Changes in Securities
None
Item 3 - Defaults
None
Item 4 - Submission of Matters to a Vote
None
Item 5 - Other Information
None
Item 6 - Exhibits and Reports on Form 8-K
2. Stock Purchase Agreement between the Stockholders of Lockert
Jackson and Associates, Inc. and the Company dated March 1, 1995.
11. Computation of Earnings Per Share
<PAGE>
SIGNATURES
Pursuant to the requirements of Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
WESTCOTT COMMUNICATIONS, INC.
Date: May 10, 1995 By: /s/ JACK T. SMITH
(Jack T. Smith)
President and
Chief Operating Officer
Date: May 10, 1995 By: /s/ PHYLLIS FARRAGUT
(Phyllis Farragut)
Executive Vice President and
Chief Financial Officer
(Chief Accounting Officer)
<PAGE> INDEX TO EXHIBITS
Sequentially
Numbered
Exhibit Page
_____________________________________________ ____________
2 Stock Purchase Agreement between the Stockholders
of Lockert Jackson & Associates, Inc. and the Company
dated March 1, 1995.
11 Computation of Earnings Per Share
STOCK PURCHASE AGREEMENT
BETWEEN
THE STOCKHOLDERS OF
LOCKERT JACKSON AND ASSOCIATES, INC.
AND
WESTCOTT COMMUNICATIONS, INC.
March 1, 1995
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE 1
PURCHASE AND SALE OF STOCK
1.1 Sale of Stock. . . . . . . . . . . . . . . . . . . . . . . . .1
1.2 Purchase Price . . . . . . . . . . . . . . . . . . . . . . . .1
ARTICLE 2
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
2.1 Due Organization . . . . . . . . . . . . . . . . . . . . . . .2
2.2 Due Authorization. . . . . . . . . . . . . . . . . . . . . . .2
2.3 Investment Purposes. . . . . . . . . . . . . . . . . . . . . .2
2.4 Information Furnished to Purchaser . . . . . . . . . . . . . .3
2.5 Brokers and Finders. . . . . . . . . . . . . . . . . . . . . .3
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF LOCKERT JACKSON
AND THE STOCKHOLDERS
3.1 Due Organization . . . . . . . . . . . . . . . . . . . . . . .3
3.2 Capitalization; Ownership of Shares. . . . . . . . . . . . . .3
3.3 No Liens on Shares . . . . . . . . . . . . . . . . . . . . . .3
3.4 Other Rights to Acquire Capital Stock; Dividends . . . . . . .4
3.5 Due Authorization. . . . . . . . . . . . . . . . . . . . . . .4
3.6 No Consents. . . . . . . . . . . . . . . . . . . . . . . . . .4
3.7 Tax or Informational Returns . . . . . . . . . . . . . . . . .5
3.8 Assets and Liabilities . . . . . . . . . . . . . . . . . . . .5
3.9 Properties . . . . . . . . . . . . . . . . . . . . . . . . . .5
3.10 Licenses and Permits . . . . . . . . . . . . . . . . . . . . .5
3.11 Intellectual Rights. . . . . . . . . . . . . . . . . . . . . .5
3.12 Compliance with Laws . . . . . . . . . . . . . . . . . . . . .6
3.13 Employee Plans . . . . . . . . . . . . . . . . . . . . . . . .6
3.14 Contracts and Agreements . . . . . . . . . . . . . . . . . . .6
3.15 Claims and Proceedings . . . . . . . . . . . . . . . . . . . .7
3.16 Financial Statements . . . . . . . . . . . . . . . . . . . . .7
3.17 Taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . . .7
3.18 Business Relations . . . . . . . . . . . . . . . . . . . . . .8
3.19 Brokers and Finders. . . . . . . . . . . . . . . . . . . . . .8
<PAGE>
3.20 Inventory. . . . . . . . . . . . . . . . . . . . . . . . . . .8
3.21 Accounts Receivable. . . . . . . . . . . . . . . . . . . . . .8
3.22 Information Furnished to Purchaser . . . . . . . . . . . . . .9
3.23 Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . .9
3.24 Customers. . . . . . . . . . . . . . . . . . . . . . . . . . .9
3.25 Ordinary Course. . . . . . . . . . . . . . . . . . . . . . . .9
ARTICLE 4
CONCURRENT DELIVERIES
4.1 Deliveries to the Purchaser. . . . . . . . . . . . . . . . . .9
4.2 Deliveries to the Stockholders . . . . . . . . . . . . . . . 10
ARTICLE 5
INDEMNIFICATION
5.1 Indemnification of the Purchaser . . . . . . . . . . . . . . 11
5.2 Indemnification of the Stockholders. . . . . . . . . . . . . 11
5.3 Defense of Third-Party Claims. . . . . . . . . . . . . . . . 12
5.4 Direct Claims. . . . . . . . . . . . . . . . . . . . . . . . 13
5.5 Limitations on Liability . . . . . . . . . . . . . . . . . . 13
ARTICLE 6
MISCELLANEOUS
6.1 Collateral Agreements, Amendments, and Waivers . . . . . . . 16
6.2 Successors and Assigns . . . . . . . . . . . . . . . . . . . 16
6.3 Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . 16
6.4 Sales Taxes. . . . . . . . . . . . . . . . . . . . . . . . . 16
6.5 Invalid Provisions . . . . . . . . . . . . . . . . . . . . . 16
6.6 Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
6.7 Notices. . . . . . . . . . . . . . . . . . . . . . . . . . . 17
6.8 Survival of Representations, Warranties, and
Covenants. . . . . . . . . . . . . . . . . . . . . . . . . . 17
6.9 Further Assurances . . . . . . . . . . . . . . . . . . . . . 17
6.10 No Third-Party Beneficiaries . . . . . . . . . . . . . . . . 18
6.11 Best Knowledge . . . . . . . . . . . . . . . . . . . . . . . 18
6.12 Dispute Resolution . . . . . . . . . . . . . . . . . . . . . 18
6.13 Interpretation . . . . . . . . . . . . . . . . . . . . . . . 18
6.14 Governing Law. . . . . . . . . . . . . . . . . . . . . . . . 18
6.15 Headings . . . . . . . . . . . . . . . . . . . . . . . . . . 19
<PAGE>
6.16 Sections; Exhibits . . . . . . . . . . . . . . . . . . . . . 19
6.17 Disclosure Schedule. . . . . . . . . . . . . . . . . . . . . 19
6.18 Number and Gender of Words . . . . . . . . . . . . . . . . . 19
6.19 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . 19
EXHIBITS
A - Stockholders
B - Form of Noncompetition Agreement
C - Form of Agreement
<PAGE>
STOCK PURCHASE AGREEMENT
This Stock Purchase Agreement (this "Agreement") is made
effective as of March 1, 1995, among Westcott Communications, Inc.,
a Texas corporation (the "Purchaser"), and Ms. Ellen Lockert, Ms.
Nina Jackson, and Ms. Christine Marit Saltrones (each a
"Stockholder" and collectively, the "Stockholders").
BACKGROUND:
The Stockholders own an aggregate of 1000 shares of the common
stock of Lockert Jackson and Associates, Inc. ("Lockert Jackson"),
which represent all of the issued and outstanding shares of capital
stock of Lockert Jackson (the "Shares").
Purchaser desires to purchase from the Stockholders and each
of the Stockholders desires to sell to Purchaser all of the Shares
owned by her, upon the terms and subject to the conditions set
forth in this Agreement.
AGREEMENTS:
In consideration of the respective representations,
warranties, covenants, and conditions set forth in this Agreement,
the parties agree as follows:
ARTICLE
PURCHASE AND SALE OF STOCK
1.1 Sale of Stock. On the basis of the representations and
warranties and for the consideration set forth in this Agreement,
concurrently with the execution of this Agreement, each of the
Stockholders sells, transfers and conveys to the Purchaser all of
the Shares owned by her on the terms and conditions set forth in
this Agreement.
1.2 Purchase Price. The Purchase Price payable by the
Purchaser in consideration for the sale of the Shares is $1,500,000
(the "Purchase Price"), which is being paid by the Purchaser
concurrently with the execution of this Agreement through a wire
transfer to the Stockholders as follows:
Shareholder Purchase Price Allocation
Ellen Lockert $675,000
Nina Jackson $675,000
Christine Marit Saltrones $150,000
<PAGE>
ARTICLE 2
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
The Purchaser represents and warrants to the Stockholders as
follows (with the understanding that the Stockholders are relying
materially on each such representation and warranty in entering
into and performing this Agreement):
2.1 Due Organization. The Purchaser is a corporation,
validly existing, and in good standing under the laws of the State
of Texas and has full power and authority and is entitled to own or
lease its properties and to carry on its business as, and in the
places where, such properties are owned or leased and such business
is conducted.
2.2 Due Authorization. The Purchaser has full power and
authority to enter into and perform its obligations under this
Agreement and each agreement, instrument, and document required to
be executed by the Purchaser in accordance with this Agreement.
The execution, delivery, and performance by the Purchaser of this
Agreement and the agreements, documents, and instruments required
to be executed and delivered by the Purchaser in accordance with
this Agreement have been duly authorized by the Board of Directors
of the Purchaser. This Agreement and the agreements, documents,
and instruments required to be executed and delivered by the
Purchaser in accordance with this Agreement have been duly and
validly executed and delivered by the Purchaser and constitute
valid and binding obligations of the Purchaser, enforceable in
accordance with their respective terms, except that (i) such
enforcement may be subject to applicable bankruptcy, insolvency,
fraudulent transfer, or other laws, now or hereafter in effect,
affecting creditors' rights generally, and (ii) the remedy of
specific performance and injunctive and other forms of equitable
relief may be subject to equitable defenses (including commercial
reasonableness, good faith, and fair dealing) and to the discretion
of the court before which any proceeding therefor may be brought.
Neither the execution, delivery, nor performance of this Agreement
or any other agreement, instrument, or document to be executed by
the Purchaser in connection with this Agreement shall (a) violate
or conflict with, or permit the cancellation of, any agreement to
which the Purchaser is a party, or by which it or any of its
properties are bound, or result in the creation of any lien,
security interest, charge, or encumbrance upon any of such
properties, or (b) violate or conflict with any provision of the
Articles of Incorporation or the Bylaws of the Purchaser. To the
best of the Purchaser's knowledge, the execution, delivery, or
performance of this Agreement or any other agreement, instrument,
or document to be executed by the Purchaser in connection with this
Agreement shall not violate any federal, state, county, or local
law, rule, or regulation applicable to the Purchaser or its
properties.
2.3 Investment Purposes. Purchaser is acquiring the Shares
for investment purposes and not with a view toward resale or
distribution thereof, and has no present intention of selling,
<PAGE>
granting any participation in, or otherwise distributing the
Shares.
2.4 Information Furnished to Purchaser. Purchaser has been
provided with, and are familiar with, the financial and other
information regarding the business and operations of Lockert
Jackson, that Purchaser deems necessary for evaluating the merits
and risks of the transactions contemplated by this Agreement.
Purchaser is knowledgeable and experienced in financial and
business matters and is capable of evaluating the merits and risks
of the transactions contemplated by this Agreement.
Notwithstanding the foregoing, nothing in this Section 2.4 shall
constitute a representation or warranty by Purchaser that
disclosure schedules delivered by the Stockholders in accordance
with Section 6.16 are complete and/or accurate, nor shall this
Section 2.4 reduce any liability of the Stockholders to indemnify
Purchaser for or in connection with a breach or default of the
representations and warranties set forth in Article 3.
2.5 Brokers and Finders. The Purchaser has not incurred any
liability to any finder, broker, or sales agent in connection with
the execution, delivery, or performance of this Agreement or the
transactions contemplated by this Agreement.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF LOCKERT JACKSON
AND THE STOCKHOLDERS
Each of the Stockholders jointly and severally represent and
warrant to the Purchaser as follows (with the understanding that
the Purchaser is relying materially on each such representation and
warranty in entering into and performing this Agreement):
3.1 Due Organization. Lockert Jackson is a corporation
validly existing and in good standing under the laws of the State
of Washington and has full power and authority and is qualified to
own or lease its properties and to carry on its businesses in the
U.S. and in the places where such properties are owned or leased
and such business is conducted. Lockert Jackson does not maintain
any offices or own any property outside of the State of Washington.
3.2 Capitalization; Ownership of Shares. The authorized
capital stock of Lockert Jackson consists of 1000 shares of Common
Stock, no par value per share, all of which, being the Shares, are
issued, and outstanding and none of which are held as treasury
shares. All of the Shares are duly authorized validly issued,
fully paid and nonassessable. All of the Shares are owned of
record and beneficially by the Stockholders as set forth on Exhibit
A. None of the Shares was issued or will be transferred under this
Agreement in violation of any preemptive or preferential rights of
any person.
3.3 No Liens on Shares. Each Stockholder is the true and
lawful owner, of record and beneficially, of her Shares, free and
clear of any liens, restrictions, security interests, claims,
rights of another, or encumbrances other than the rights and
obligations arising under this Agreement, and none of the Shares is
subject to any outstanding option, warrant, call, or similar right
<PAGE>
of any other person to acquire same, and none of the Shares is
subject to any restriction on the transfer thereof except for such
restrictions imposed by applicable federal and state securities
laws. Each Stockholder has full power and authority to convey good
title to her Shares, free and clear of any mortgages, liens,
restrictions, security interests, claims, rights of another, or
encumbrances.
3.4 Other Rights to Acquire Capital Stock; Dividends. Except
as set forth in this Agreement, there are no authorized or
outstanding warrants, options, or rights of any kind to acquire
from Lockert Jackson any equity or debt securities of Lockert
Jackson, or securities convertible into or exchangeable for equity
or debt securities of Lockert Jackson, and there are no shares of
capital stock of Lockert Jackson reserved for issuance for any
purpose nor any contracts, commitments, understandings, or
arrangements which require Lockert Jackson to issue, sell or
deliver any additional shares of its capital stock. There are no
declared but unpaid dividends or distributions owing by Lockert
Jackson in respect of its capital stock, and Lockert Jackson has
not paid any dividends or distributions in respect of its capital
stock, nor has it entered into any agreement, commitment, or
understanding to declare or pay any such dividend or distribution.
3.5 Due Authorization. The Stockholders have full power and
authority to enter into and perform their respective obligations
under this Agreement and each agreement, instrument, and document
required to be executed by the Stockholders in accordance with this
Agreement. This Agreement, and the agreements, documents, and
instruments required to be executed and delivered by the
Stockholders in accordance with this Agreement have been duly and
validly executed and delivered by the Stockholders and constitute
valid and binding obligations of the Stockholders enforceable in
accordance with their respective terms, except that (i) such
enforcement may be subject to applicable bankruptcy, insolvency,
fraudulent transfer, or other laws, now or hereafter in effect,
affecting creditors' rights generally, and (ii) the remedy of
specific performance and injunctive and other forms of equitable
relief may be subject to equitable defenses (including commercial
reasonableness, good faith, and fair dealing) and to the discretion
of the court before which any proceeding therefor may be brought.
Neither the execution, delivery, nor performance of this Agreement
or any other agreement, instrument, or document to be executed by
the Stockholders in connection with this Agreement shall
(a) violate or conflict with, or permit the cancellation of, any
agreement to which Lockert Jackson is a party, or by which it or
any of its properties are bound, or result in the creation of any
lien, security interest, charge, or encumbrance upon any of such
properties, or (b) result in the acceleration of the maturity of
any indebtedness of, or indebtedness secured by any property or
other assets of, Lockert Jackson.
3.6 No Consents. Except as set forth on Schedule 3.6, no
consent or approval of any governmental agency or third party is
required in order for any of the Stockholders to enter into and
perform this Agreement or any agreement, instrument, or document
<PAGE>
executed by the Stockholders in accordance with this Agreement, or
for Purchaser to acquire the Shares.
3.7 Tax or Informational Returns. Schedule 3.7 is a true and
correct copy of all federal and state income and sales tax or
informational returns of Lockert Jackson for its 1993 and 1994
fiscal years.
3.8 Assets and Liabilities. Schedule 3.8A sets forth all of
the material assets of Lockert Jackson that would customarily be
reflected on financial statements (which, together with all other
tangible and intangible assets, constitute the "Transferred
Assets"). Notwithstanding anything to the contrary contained in
this Agreement, there shall be excluded from the sale, transfer,
conveyance and assignment hereunder, and the Transferred Assets
shall not include, any debt, liability or obligation of, or claim
against, any past or present shareholder, director or officer of
Lockert Jackson, except to the extent that the same is reflected as
an asset of Lockert Jackson on the Financial Statements. Schedule
3.8B sets forth all obligations and liabilities, absolute or
contingent, including, but not limited to, all liens, security
interests, claims, charges or other encumbrances against Lockert
Jackson or any of the Transferred Assets that would customarily be
reflected on financial statements, except for liabilities incurred
in the ordinary course of business between February 28, 1995 and
the date of the disclosure schedules attached to this Agreement,
which are disclosed in Schedule 3.8C.
3.9 Properties. Other than liens for taxes not yet due, upon
the consummation of the transactions contemplated hereby, Purchaser
will acquire good and marketable title to the Transferred Assets,
free and clear of all liens, security interests, claims, and
encumbrances, except as set forth on Schedule 3.9. There are no
pending or, to the best of each of the Stockholders' knowledge,
threatened condemnation or similar proceedings or assessments
affecting the Transferred Assets.
3.10 Licenses and Permits. Set forth on Schedule 3.10 is a
list of all federal, state, county, and local governmental
licenses, authorizations, certificates, and permits held or applied
for by Lockert Jackson. Lockert Jackson has complied in all
material respects, and is in compliance in all material respects,
with the terms and conditions of all such licenses, authorizations,
certificates, and permits and no material violation of any such
licenses, authorizations, certificates, or permits, or the laws or
rules governing the issuance or continued validity thereof, has
occurred. To the best knowledge of the Stockholders, no additional
license, authorization, certificate, permit, or order is required
from any federal, state, county, or local governmental agency or
body thereof in connection with the conduct of the business of
Lockert Jackson as presently conducted, except as may be required
by authorities listed on Schedule 3.17A. No claim has been made by
any governmental authority (and, to the actual knowledge of and
each of the Stockholders, no such claim is anticipated) to the
effect that any license, authorization, certificate, permit, or
order in addition to those listed on Schedule 3.10 is necessary in
respect of the business as presently conducted by Lockert Jackson.
3.11 Intellectual Rights. Schedule 3.11 is a list and
description of all patents, trademarks, service marks, trade names,
and copyrights and applications therefor owned by or registered in
the name of Lockert Jackson or in which Lockert Jackson has any
<PAGE>
right, license, or interest. Except for the agreements listed on
Schedule 3.14, Lockert Jackson is not a party to any license
agreements, either as licensor or licensee, with respect to any
patents, trademarks, service marks, trade names, or copyrights or
applications therefor. Lockert Jackson has good and marketable
title to or the right to use such assets and all inventions,
processes, designs, formulae, trade secrets, and know-how used in
the conduct of its business as presently conducted, without the
payment of any royalty or similar payment, except as set forth in
Schedule 3.14. To the best knowledge of the Stockholders, (a)
Lockert Jackson is not infringing any patent, trademark, service
mark, trade name, or copyright of others, and (b) no third party is
infringing any such rights owned by Lockert Jackson.
3.12 Compliance with Laws. To the best knowledge of the
Stockholders, Lockert Jackson has complied in all material
respects, and is in compliance in all material respects, with all
federal, state, county, and local laws, regulations, and orders
that are applicable to Lockert Jackson's business as presently
conducted and has filed with the proper authorities all statements
and reports required by the laws, regulations, and orders to which
Lockert Jackson or its properties or operations are subject.
Lockert Jackson has not received any claim of or from any
governmental authority (and, to the best knowledge of each of the
Stockholders, no such claim is anticipated) to the effect that the
business as presently conducted by Lockert Jackson fails to comply,
in any material respect, with any law, rule, regulation, or
ordinance, other than those set forth on Schedule 3.17A. Without
limiting the foregoing, Lockert Jackson has complied with all
judicial and governmental requirements relating to pollution and
environmental control and regulation and employee health and safety
including, but not limited to, laws, rules, regulations,
ordinances, and orders related to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport,
handling, presence, emission, discharge, release, or threatened
release into or on the air, land, surface, water, groundwater,
personal property, or structures, wherever located, of any
contaminants, hazardous materials, hazardous or toxic substances,
or wastes as defined under any federal, state, or local laws,
regulations, or ordinances.
3.13 Employee Plans. Except as set forth in Schedule 3.14A,
Lockert Jackson does not have any employee benefit, savings, or
retirement plans or agreements or employment or consulting
contracts or agreements, whether or not subject to ERISA ("Employee
Plans").
3.14 Contracts and Agreements. The agreements listed on
Schedule 3.14A constitute all of the material written or oral
contracts, commitments, leases, and other agreements currently in
force or enforceable by or against Lockert Jackson. Lockert
Jackson has afforded, to the Purchaser and its officers, attorneys,
and other representatives the opportunity to review complete and
correct copies of all such contracts, commitments, leases, and
other agreements to which Lockert Jackson is a party or by which
Lockert Jackson or its properties are bound. Except as identified
as aging accounts receivable in Schedule 3.21 or as otherwise set
forth in Schedule 3.14B, Lockert Jackson is not and, to the best
knowledge of each of the Stockholders, no other party thereto is in
default (and, to the best knowledge of the Stockholders, no event
has occurred which, with the passage of time or the giving of
notice, or both, would constitute a default) under any such
contract, commitment, lease, or other agreement. Lockert Jackson
has not waived any right under any such contract, commitment,
<PAGE>
lease, or other agreement, which waivers, individually or in the
aggregate would have a material adverse affect on the business or
operations of Lockert Jackson. The Stockholders have not received
any notice of default or termination under any such contract,
commitment, lease, or other agreement and, except as contemplated
by this Agreement, Lockert Jackson has not assigned or otherwise
transferred any rights under any such contract, commitment, lease,
or other agreement, except as set forth in Schedule 3.14B. There
are no written or oral contracts, commitments, or other agreements
pursuant to which or in connection with which Lockert Jackson has
accepted payment for services or goods yet to be performed or
provided by Lockert Jackson to a third party other than those set
forth in Schedule 3.14C (including a description of such services
or goods to be performed or delivered and the amounts received by
Lockert Jackson).
3.15 Claims and Proceedings. Except as set forth in Schedule
3.15, the Stockholders have not received notice of any claims,
actions, suits, proceedings, or investigations pending and, to the
best knowledge of each of the Stockholders, or threatened against
or affecting Lockert Jackson or any of its properties or assets, at
law or in equity, or before or by any court, municipal or other
governmental department, commission, board, agency, or
instrumentality. No inquiry, action, or proceeding has been
asserted, instituted, or, to the best knowledge of each of the
Stockholders, threatened to restrain or prohibit the carrying out
of the transactions contemplated by this Agreement or to challenge
the validity of such transactions or any part thereof or seeking
damages on account thereof. To the best knowledge of each of the
Stockholders, there is no basis for any such claim or action.
3.16 Financial Statements. Lockert Jackson has delivered to
Purchaser a complete and correct copy of Lockert Jackson's
unaudited balance sheet and income statement at and for the twelve
month period ended December 31, 1994 and for the two month period
ended February 28, 1995 (the "Financial Statements"). The
Financial Statements have been prepared in accordance with
generally accepted accounting principles applied on a basis
consistent with periods subsequent to 1992 and each of the
Financial Statements fairly present the financial position, results
of operations, and changes in financial position of Lockert Jackson
as of the indicated date and for the indicated period. Purchaser
has reviewed the accounting methods used to determine Lockert
Jackson's deferred revenue, prepaid production expense, start-up
costs, and deferred marketing expense and has found such methods to
be reasonable. Since February 28, 1995, there has been no material
adverse change in the financial position, assets, results of
operations, or business of Lockert Jackson, other than those
normally encountered in the market place. To the best knowledge of
each of the Stockholders there are no current or pending
developments or circumstances, which would have a material adverse
effect on the business, properties, or assets of Lockert Jackson.
3.17 Taxes. Except as set forth on Schedule 3.17A, all
federal, foreign, state, county, and local income, gross receipts,
excise, property, franchise, license, sales, use, withholding, and
other tax (collectively, "Taxes") returns, reports, and
declarations of estimated tax (collectively, "Returns") which were
required to be filed by Lockert Jackson on or before the date
hereof have been filed within the time and in the manner provided
by law, and all such Returns are true and correct and accurately
reflect the Tax liabilities of Lockert Jackson. All Taxes,
<PAGE>
assessments, penalties, and interest which have become due pursuant
to such Returns have been paid or adequately accrued in the
Financial Statements. Schedule 3.17B lists all of the states in
which Lockert Jackson has filed Returns during the 1993 and 1994
calendar years and sets forth the amount and type of Taxes paid to
such states. Lockert Jackson has not executed any presently
effective waiver or extension of any statute of limitations against
assessments and collections of Taxes. There are no pending or, to
the best of each of the Stockholders' knowledge, threatened,
claims, assessments, notices, proposals to assess, deficiencies, or
audits (collectively, "Lockert Jackson Tax Actions") with respect
to any Taxes owed or allegedly owed by Lockert Jackson. To the
best knowledge of each of the Stockholders, there is no basis for
any Lockert Jackson Tax Actions. There are no tax liens on any of
the assets of Lockert Jackson. Except as set forth in Schedule
3.17C, proper and accurate amounts have been withheld and remitted
by Lockert Jackson from and in respect of its employees for all
periods in full and complete compliance with the tax withholding
provisions of all applicable laws and regulations. Lockert Jackson
is, and for all of its existence has been, a C corporation as
defined in Section 1361 of the Internal Revenue Code of 1986, as
amended.
3.18 Business Relations. None of the Stockholder knows or has
any reason to believe that any customer, client, or supplier of
Lockert Jackson will cease or otherwise refuse to do business with
the Purchaser after the consummation of the transactions
contemplated hereby in the same manner as such business was
previously conducted with Lockert Jackson; provided that Purchaser
operates Lockert Jackson in a manner similar to Lockert Jackson's
past practice. This Section 3.18 does not constitute a warranty by
the Stockholders of the size of the subscription base that will be
maintained by the Purchaser following the consummation of the
transactions contemplated hereby or of subscribers' satisfaction
with video tapes, programs or services provided by the Purchaser.
3.19 Brokers and Finders. Neither Lockert Jackson nor any of
the Stockholders has caused any liability to be incurred to any
finder, broker, or sales agent in connection with the execution,
delivery, or performance of this Agreement or the transactions
contemplated hereby, other than to William Golding of Business
Consultants, Inc. in an amount not exceeding $40,000.
3.20 Inventory. Schedule 3.20 is a true, complete and
accurate list of each video tape catalogue, instructor's guide, and
item of the tape inventory of Lockert Jackson's videotapes for
subscription sales. Lockert Jackson owns such inventory free and
clear of all liens, security interests and third party claims which
would interfere with the use of such inventory, subject to the
agreements listed on Schedule 3.14.
3.21 Accounts Receivable. Schedule 3.21 is a list (including
a description) of all of the Accounts Receivable of Lockert Jackson
at March 27, 1995. Except as listed on Schedule 3.8B, all of such
Accounts Receivable are free and clear of any security interests,
liens, encumbrances, or other charges; to the best of the
Stockholder's knowledge, none of such Accounts Receivable are
subject to any offset or claims of offset, and none of the obligors
of such Accounts Receivable have given written or oral notice that
they will or may refuse to pay the full amount thereof or any
portion thereof, except as identified on Schedule 3.21.
<PAGE>
3.22 Information Furnished to Purchaser. Lockert Jackson has
made available to the Purchaser and its officers, attorneys,
accountants, and representatives true and correct copies of all
agreements, documents, and other items listed on the schedules to
this Agreement and all books and records of Lockert Jackson, and,
to the best knowledge of each of the Stockholders, neither this
Agreement, the attached schedules, nor any information, agreements,
or documents delivered to or made available to the Purchaser or its
officers, attorneys, accountants, or representatives pursuant to
this Agreement contain any untrue statement of a material fact or
omit any material fact necessary to make the statements herein or
therein, as the case may be, not misleading. This Section 3.22
shall be interpreted consistent with Rule 10b-5 promulgated under
the Securities and Exchange Act of 1934, as amended.
3.23 Subsidiaries. Lockert Jackson has no direct or indirect
subsidiaries and no stock or other equity or ownership interests
(whether controlling or not) in any corporation, association,
partnership, joint venture.
3.24 Customers. Schedule 3.24 accurately sets forth as of
March 27, 1995 the name of each existing customer and subscriber of
Lockert Jackson and a description of the date and term of the
agreement, if the agreement is effective or obligates Lockert
Jackson to future performance, relating to the customer or
subscriber.
3.25 Ordinary Course. Since February 28, 1995, Lockert
Jackson has conducted its business only in the ordinary course
consistent with its past practices.
ARTICLE 4
CONCURRENT DELIVERIES
4.1 Deliveries to the Purchaser. Concurrently with, and as
a condition to, its delivery and execution of this Agreement, the
Stockholders are delivering to the Purchaser the following:
(a) A certificate executed by the President of Lockert
Jackson accurately setting forth the number of customers and
subscribers as of the date hereof as customarily counted by
Lockert Jackson.
(b) The Noncompetition Agreements in the form attached
as Exhibit B (the "Noncompetition Agreement"), duly executed
by each of the Stockholders.
(c) At least one master copy of each item of tape
inventory included in the Transferred Assets.
<PAGE>
(d) Physical possession of all items of tangible
property included in the Transferred Assets, including,
without limitation, all subscription documents and records,
any and all operating manuals, third party warranties, and
like materials and data in Lockert Jackson's and the
Stockholders' possession relating to the operation of
business, facilities, improvements, and equipment of Lockert
Jackson, and all books and records, accounting information,
and operating information and data, whether current or
historical.
(e) The Agreements in the form attached as Exhibit C
duly executed by each of the Stockholders ("Stockholder
Agreements").
(f) The Disclosure Schedule as described in Section 6.16
hereof.
(g) Possession and control, together with proper
signature authority, of the bank accounts and other deposits
of Lockert Jackson.
(h) All stock certificates representing the Shares,
together with stock powers executed in blank.
4.2 Deliveries to the Stockholders. Concurrently with its
execution and delivery of this Agreement, the Purchaser is
delivering to the Stockholders the following:
(a) A wire transfer of funds representing the Purchase
Price and the amounts payable by Purchaser under Section 5 of
the Noncompetition Agreements to the Stockholders as follows:
Name Amount Payable
Ellen Lockert $900,000
Nina Jackson $900,000
Christine Marit Saltrones $200,000
(b) The Noncompetition Agreements, duly executed by the
Purchaser.
(c) The Stockholder Agreements, duly executed by Lockert
Jackson and the Purchaser as guarantor.
(d) A wire transfer of $96,562.97 to Ms. Nina Jackson in
full satisfaction of the note payable by Lockert Jackson.
(e) A wire transfer of $15,014.37 to Mr. Larry Jackson
in full satisfaction of the note payable by Lockert Jackson.
<PAGE>
(f) A wire transfer of $316,400.31 to American Marine
Bank in full satisfaction of the notes payable by Lockert
Jackson and satisfactory evidence of the release of the
personal guarantees of Ms. Ellen Lockert and Ms. Nina Jackson,
the and the Deeds of Trust and security agreements with
respect to such note.
(g) Payment of up to $100,000 of the brokerage,
accounting and legal expenses incurred by Lockert Jackson and
the Stockholders in connection with the transactions
contemplated in this Agreement, which expenses are set forth
as Liabilities in Schedule 3.8B.
(h) A certificate of an authorized officer of Purchaser
to the effect that based upon Purchaser's review of the
agreements, contracts, instruments and other documents
delivered by Stockholders to, and reviewed by Purchaser, in
connection with this Agreement, Purchaser has no reason to
believe that at the time of the closing of the transactions
contemplated herein the Stockholders were in breach of any of
the representations and warranties contained in Article 3
above.
(i) An undertaking to abide by any severance plan
reviewed by Purchaser regarding Lockert Jackson employees put
into place prior to the closing of the transactions
contemplated herein.
(j) Promptly after the closing of the transactions
contemplated herein, the Purchaser will cause Lockert Jackson
to change its name to one not utilizing the words "Lockert" or
"Jackson."
ARTICLE 5
INDEMNIFICATION
5.1 Indemnification of the Purchaser. The Stockholders,
jointly and severally agree to indemnify and hold harmless the
Purchaser, each affiliate of the Purchaser, and each officer,
director, stockholder and employee of the Purchaser (collectively,
the "Purchaser Indemnified Parties") from and against any and all
damages, losses, claims, liabilities, demands, charges, suits,
penalties, costs, and expenses (including court costs and
attorneys' fees and expenses incurred in investigating and
preparing for any litigation or proceeding) (collectively,
"Purchaser Indemnified Costs") which any of the Purchaser
Indemnified Parties may sustain, or to which any of the Purchaser
Indemnified Parties may be subjected, arising out of any breach or
default by any of the Stockholders of or under any of their
respective representations, warranties, covenants, agreements, or
contained in this Agreement or any agreement or document executed
in connection herewith.
5.2 Indemnification of the Stockholders. The Purchaser
agrees to indemnify and hold harmless the Stockholders
(collectively, the "Lockert Jackson Indemnified Parties" and,
<PAGE>
collectively with the Purchaser Indemnified Parties, the
"Indemnified Parties") from and against any and all damages,
losses, claims, liabilities, demands, charges, suits, penalties,
costs, and expenses (including court costs and attorneys' fees
incurred in investigating and preparing for any litigation or
proceeding) (collectively, the "Lockert Jackson Indemnified Costs"
and, collectively with the Purchaser Indemnified Costs, the
"Indemnified Costs") which any of the Lockert Jackson Indemnified
Parties may sustain, or to which any of the Lockert Jackson
Indemnified Parties may be subjected, arising out of any breach or
default by the Purchaser under any of the representations,
warranties, covenants, agreements, or contained in this Agreement
or any agreement or document executed in connection herewith, or
arising from the operations of Lockert Jackson as conducted by
Purchaser after the effective date of this Agreement.
5.3 Defense of Third-Party Claims. An Indemnified Party
shall give prompt written notice to the party who is obligated to
provide indemnification hereunder (the "Indemnifying Party") of the
commencement or assertion of any action, proceeding, demand, or
claim by a third party (collectively, a "third-party action") in
respect of which such Indemnified Party shall seek indemnification
hereunder. The Indemnifying Party shall have the right to assume
control of the defense of, settle, or otherwise dispose of such
third-party action on such terms as it deems appropriate; provided,
however, that:
(a) If an Indemnifying Party, elects to contest or
defend any such action, proceeding, demand or claim, neither
the Indemnified Party nor its successors or assigns shall
admit any liability with respect thereto or settle,
compromise, pay or discharge the same without the prior
written consent of the Indemnifying Party so long as any
Indemnifying Party is contesting or defending the same in good
faith, and the Indemnified Party (and its successors and
assigns) shall cooperate with the Indemnifying Party in the
contest or defense thereof and, subject to the following
subsections, shall accept any settlement thereof recommended
by a majority in interest of the Indemnifying Parties so long
as the amount such settlement is paid by the Indemnifying
Parties;
(b) The Indemnified Party shall be entitled, at his,
her, or its own expense, to participate in the defense of such
third-party action (provided, however, that the Indemnifying
Party shall pay the attorneys' fees of the Indemnified Party
if (i) the employment of separate counsel shall have been
authorized in writing by the Indemnifying Party in connection
with the defense of such third-party action, or (ii) the
Indemnifying Party shall not have employed counsel reasonably
satisfactory to the Indemnified Party to have charge of such
third-party action;
(c) The Indemnifying Party shall obtain the prior
written approval of the Indemnified Party before entering into
or making any settlement, compromise, admission, or
acknowledgement of the validity of such third-party action or
any liability in respect thereof if, pursuant to or as a
result of such settlement, compromise, admission, or
acknowledgement, injunctive or other equitable relief would be
<PAGE>
imposed against the Indemnified Party or if, in the reasonable
opinion of the Indemnified Party, such settlement, compromise,
admission, or acknowledgement could have a material adverse
effect on its business or, in the case of an Indemnified Party
who is a natural person, on her or her assets or interests;
(d) The Indemnifying Party shall not consent to the
entry of any judgment or enter into any settlement that does
not include as an unconditional term thereof the giving by
each claimant or plaintiff to each Indemnified Party of a
release from all liability in respect of such third-party
action; and
(e) The Indemnifying Party shall not be entitled to
control (but shall be entitled to participate at its own
expense in the defense of), and the Indemnified Party shall be
entitled to have sole control over, the defense or settlement,
compromise, admission, or acknowledgement of any third-party
action (i) as to which the Indemnifying Party fails to assume
the defense within a reasonable length of time or (ii) to the
extent the third-party action seeks an order, injunction, or
other equitable relief against the Indemnified Party which, if
successful, would materially adversely affect the business,
operations, assets, or financial condition of the Indemnified
Party; provided, however, that the Indemnified Party shall
make no settlement, compromise, admission, or acknowledgement
which would give rise to liability on the part of the
Indemnifying Party without the prior written consent of the
Indemnifying Party.
The parties shall extend reasonable cooperation in connection with
the defense of any third-party action pursuant to this Article 5
and, in connection therewith, shall furnish such records,
information, and testimony and attend such conferences, discovery
proceedings, hearings, trials, and appeals as may be reasonably
requested.
5.4 Direct Claims. In any case in which an Indemnified Party
seeks indemnification hereunder which is not subject to Section 5.3
hereof because no third-party action is involved, the Indemnified
Party shall notify the Indemnifying Party in writing of any
Indemnified Costs which he, she, or it claims are subject to
indemnification under the terms hereof.
5.5 Limitations on Liability.
(a) Notwithstanding anything to the contrary contained
in this Agreement, the Stockholder shall be liable under the
indemnification provisions of Article 5 hereof or otherwise
have any liability for any misrepresentation or breach of
warranty under this Agreement or otherwise have any liability
in connection with the transactions contemplated by this
Agreement to the extent that:
(i) the existence of such liability, the breach of
warranty or the falsity of the representation upon which
such liability would be based is specifically disclosed
in this Agreement or any of the Schedules attached
hereto, or any document specifically disclosed herein or
therein; or
<PAGE>
(ii) such liability is based upon a claim,
assessment or deficiency for federal, state and/or local
income or franchise taxes which arise from adjustments
which have the effect only of shifting income, credits
and/or deductions from one fiscal period to another; or
(iii) such liability results from returns or
allowances in the ordinary course of business; or
(iv) such liability is covered by one or more
policies of insurance maintained by Lockert Jackson (or
would have been covered by such insurance, had Purchaser
continued the policies which Lockert Jackson had in
effect as of the date prior to this Agreement).
(b) The indemnities set forth in Article 5 hereof and
all representations, warranties contained in this Agreement
shall expire one (1) year after the closing of the
transactions contemplated in this Agreement, and neither
Purchaser nor the Stockholders shall have any liability under
the indemnification provisions of Article 5 hereof or
otherwise have any liability under this Agreement or otherwise
in connection with the transactions contemplated by this
Agreement (other than for obligations that expressly extend
beyond such one (1) year period, specifically including, but
not limited to, the payments due under the Noncompetition
Agreements and Stockholder Agreements), unless:
(i) the party seeking indemnification gives written
notice to the other parties of a claim for any such
liability, setting forth in reasonable detail the
specific facts and circumstances pertaining thereto,
before the expiration of such one (1) year period, and
(ii) if such claim is not satisfied by the party
from which indemnification is sought within thirty (30)
days after the giving of such notice, the party seeking
indemnification commences a legal action or proceeding
against the other party with respect to such claim within
forty five (45) days after such thirty (30) day period.
(c) If any action or proceeding be commenced, or if any
claim, demand or assessment be asserted, in respect of which
any party proposes to hold one or more of the other parties
(collectively the "Indemnitors") liable under the provisions
of this Agreement or otherwise in connection with the
transactions contemplated by this Agreement, the Indemnitors
shall have no liability therefor unless:
(i) the Indemnitors shall have received written
notice of such action, proceeding, claim, demand or
assessment within thirty (30) days after Purchaser
acquires knowledge thereof; and
<PAGE>
(ii) the Indemnitors shall have received copies of
all information and documents relating thereto within
thirty (30) days after Purchaser's receipt thereof.
(d) It is specifically understood and agreed that:
(i) in the event a misrepresentation or breach of
warranty or covenant is discovered by any party and
asserted by it after the date hereof, the remedy of that
party shall be limited to indemnification as set forth in
Article 5 hereof (as limited by the provisions set forth
in this Section 5.5 or elsewhere in this Agreement), and
no party shall be entitled to a rescission of this
Agreement; and
(ii) in the event the effect of any
misrepresentation or breach of warranty or other
provision contained in this Agreement or in any document
referred to herein is that the dollar amount of Lockert
Jackson's assets has been overstated on the Financial
Statements or the dollar amount of Lockert Jackson's
liabilities has been understated on the Financial
Statements, the Purchaser's damages caused by such
overstatement or understatement shall in no event exceed
the net amount by which such overstated assets and/or
understated liabilities reduces the tangible net worth of
the business being acquired by Purchaser hereunder as
reflected on the Financial Statements.
(e) An Indemnified Party shall not be entitled to assert
any claim for indemnification under this Article 5 unless and
until such time as all claims for Indemnified Costs of the
Indemnified Party exceed $20,000 in the aggregate (the
"Basket"). Once all Indemnified Costs of an Indemnified Party
exceed the Basket, the Indemnified Party shall, subject to the
terms of this Article 5, be entitled to full indemnification
for all Indemnified Costs, including those comprising the
Basket.
(f) Notwithstanding anything to the contrary contained
in this Agreement or otherwise, in the event that,
notwithstanding the limitations contained in this Section 5.5
or elsewhere in this Agreement, the Stockholders nevertheless
becomes liable to Purchaser, in no event shall the aggregate
amount of the Stockholders' liability (including but not
limited to any and all liabilities for costs, expenses and
attorneys' fees paid or incurred in connection therewith or in
connection with the curing of any and all misrepresentations
or breaches of warranties or covenants under this Agreement)
exceed the sum of $2,500,000 (the "Liability Limit"); provided
that the obligations of each of the Stockholders to indemnify
the Purchaser Indemnified Parties shall be limited to that
Stockholders proportionate share of the Liability Limit based
upon their respective ownership percentage of the Shares
immediately prior the closing of the transactions contemplated
herein.
<PAGE>
ARTICLE 6
MISCELLANEOUS
6.1 Collateral Agreements, Amendments, and Waivers. This
Agreement (together with the documents delivered in connection
herewith) supersedes all prior documents, understandings, and
agreements, oral or written, relating to this transaction and
constitutes the entire understanding among the parties with respect
to the subject matter hereof. Any modification or amendment to, or
waiver of, any provision of this Agreement (or any document
delivered in connection herewith unless otherwise expressly
provided therein) may be made only by an instrument in writing
executed by the party against whom enforcement thereof is sought.
6.2 Successors and Assigns. No rights or obligations of any
party under this Agreement may be assigned (except that the
Purchaser may assign its rights and obligations to any affiliate
thereof). Any assignment in violation of the foregoing shall be
null and void. Subject to the preceding sentences of this Section
6.2, the provisions of this Agreement shall be binding upon and
inure to the benefit of the parties and their respective heirs,
legal representatives, and successors.
6.3 Expenses. Except as contemplated in Section 4.2(h), each
of the parties shall pay its own respective costs and expenses,
including but not limited to attorneys' fees, incurred in
connection with this Agreement.
6.4 Sales Taxes. The parties expressly agree that the
Stockholders shall be responsible for and shall pay all federal,
Washington State, or local Washington taxes arising by reason of or
resulting from the sale of the Shares as contemplated hereby.
6.5 Invalid Provisions. If any provision of this Agreement
is held to be illegal, invalid, or unenforceable under present or
future laws effective during the term hereof, such provision shall
be fully severable; this Agreement shall be construed and enforced
as if such illegal, invalid, or unenforceable provision had never
comprised a part hereof; and the remaining provisions shall remain
in full force and effect and shall not be affected by the illegal,
invalid, or unenforceable provision or by its severance therefrom.
Furthermore, the parties expressly agree that the court or other
judicial or administrative tribunal holding such provision illegal,
invalid or unenforceable shall reform such provision, but only to
the extent necessary to render such provision legal, valid and
enforceable, and such reformed provision shall be added
automatically as a part of this Agreement.
6.6 Waiver. No failure or delay on the part of any party in
exercising any right, power, or privilege hereunder or under any of
the documents delivered in connection with this Agreement shall
operate as a waiver of such right, power, or privilege; nor shall
any single or partial exercise of any such right, power, or
privilege preclude any other or future exercise thereof or the
exercise of any other right, power, or privilege.
<PAGE>
6.7 Notices. Any notices required or permitted to be given
under this Agreement (and, unless otherwise expressly provided
therein, under any document delivered in connection with this
Agreement) shall be given in writing and shall be deemed received
(a) when personally delivered to the relevant party at such party's
address as set forth below, (b) when confirmed if delivered by
facsimile or similar device, or (c) if sent by mail, on the third
day following the date when deposited in the United States mail,
certified or registered mail, postage prepaid, to the relevant
party at its or her address indicated below:
If to the Purchaser: Westcott Communications, Inc.
1303 Marsh Lane
Carrollton, Texas 75006
Attn: Mr. Jack T. Smith
Fax No: (214) 716-5105
If to the Stockholders: Ms. Ellen Lockert
10191 NE South Beach Drive
Bainbridge Island, WA 98110
Ms. Nina Jackson
10191 NE South Beach Drive
Bainbridge Island, WA 98110
Ms. Marit Saltrones
P.O. Box 10508
Bainbridge Island, WA 98110
With a copy to: Riddell, Williams, Bullitt &
Walkinshaw
1001 Fourth Avenue Plaza, Suite 4400
Seattle, Washington 98154
Attn: Mr. Mark Maghie
Fax No.: (206) 389-1708
Each party may change its address for purposes of this Section 6.7
by proper notice to the other parties.
6.8 Survival of Representations, Warranties, and Covenants.
Regardless of any investigation at any time made by or on behalf of
any party or of any information any party may have in respect
thereof, all covenants, representations, and warranties made under
this Agreement or in connection with the transactions contemplated
hereby shall survive the closing of the transactions contemplated
hereby for a period of one (1) year.
6.9 Further Assurances. From time to time hereafter, at the
request of the Purchaser, but without further consideration, each
of the Stockholders shall execute and deliver such other
instruments of conveyance, assignment, transfer, and delivery and
<PAGE>
take such other action as the Purchaser may reasonably request in
order more effectively to consummate the transactions contemplated
hereby.
6.10 No Third-Party Beneficiaries. No person or entity not a
party to this Agreement shall be deemed to be a third-party
beneficiary hereunder or entitled to any rights hereunder.
6.11 Best Knowledge. When used in this Agreement, the term
"best knowledge" (or any variation thereof) refers to knowledge
obtained after reasonable inquiry of appropriate records,
agreements, instruments and other documents maintained in the
ordinary course at the offices of Lockert Jackson.
6.12 Dispute Resolution. In the event of a dispute involving
the covenants, representations or warranties set forth in this
Agreement, then upon the written request of any party, each party
will designate an officer (the "Negotiator") who will meet for the
purpose of endeavoring to resolve the dispute. If the party is not
a natural person, the Negotiators must be of a rank of Vice
President or comparable status within their respective
organizations, and shall have the authority to resolve the dispute
in accordance with this section. If the party is a natural person,
that person (or her counsel provided that such counsel has full
power and authority to bind the person) shall be the Negotiator.
The Negotiators shall meet as often as the parties reasonably deem
necessary in order to discuss the problem and/or negotiate in good
faith in an effort to resolve the dispute without the necessity of
any formal proceeding. During the course of such negotiation, all
reasonable requests for information made by one party to the other
will be honored. The specific format for the discussions will be
left to the discretion of the Negotiators. No formal proceedings
for the resolution of such dispute may be commenced until the first
to occur of: (a) the Negotiators conclude in good faith that
amicable resolution through continued negotiation of the matter in
issue does not appear likely; (b) sixty (60) days from the date the
Negotiators first meet; or (c) thirty (30) days from the first
written request under this paragraph for resolution of the matter
in issue, if the Negotiators have failed to meet within such thirty
(30) day period.
6.13 Interpretation. The parties hereto acknowledge and agree
that (a) each party and its counsel has reviewed and negotiated the
terms and provisions of this Agreement and have contributed to its
revision, (b) the rule of construction to the effect that any
ambiguities are resolved against the drafting party shall not be
employed in the interpretation of this Agreement, and (c) the terms
and provisions of this Agreement shall be construed fairly as to
all parties hereto and not in favor of or against any party
regardless of which party was generally responsible for the
preparation of this Agreement.
6.14 Governing Law. THE LAW OF THE STATE OF TEXAS WILL GOVERN
THE INTERPRETATION, VALIDITY AND EFFECT OF THIS AGREEMENT WITHOUT
REGARD TO THE PLACE OF EXECUTION OR THE PLACE OF PERFORMANCE
THEREOF. NOTWITHSTANDING THE PARTIES' SELECTION OF THE LAWS OF THE
STATE OF TEXAS TO GOVERN THIS AGREEMENT, THE PARTIES HEREBY AGREE
THAT EXCLUSIVE JURISDICTION FOR ANY CLAIM ARISING UNDER THIS
<PAGE>
AGREEMENT WILL LIE IN KING COUNTY, WASHINGTON, AND EACH OF THE
PARTIES HEREBY CONSENTS TO SUCH JURISDICTION.
6.15 Headings. The headings, captions, and arrangements used
in this Agreement are, unless specified otherwise, for convenience
only and shall not be deemed to limit, amplify, or modify the terms
of this Agreement or affect the meaning hereof.
6.16 Sections; Exhibits. All references to "Sections",
"Subsections", "Schedules", and "Exhibits" herein are, unless
specifically indicated otherwise, references to sections,
subsections, schedules, annexes, and exhibits of and to this
Agreement.
6.17 Disclosure Schedule. All references to Schedules are,
unless specifically indicated otherwise, references to individual
schedules contained in the Disclosure Schedule to this Agreement of
even date herewith which is made a part hereof for all intents and
purposes.
6.18 Number and Gender of Words. Whenever herein the singular
number is used, the same shall include the plural where
appropriate, and words of any gender shall include each other
gender where appropriate.
6.19 Counterparts. This Agreement may be executed in multiple
counterparts; provided that all such counterparts together shall be
deemed to constitute one agreement. This Agreement may be executed
by facsimile signatures.
The parties have duly executed this Agreement in one or more
counterparts (all of which shall constitute one and the same
agreement) as of the day and year first above written.
WESTCOTT COMMUNICATIONS, INC. /S/ ELLEN LOCKERT
Ellen Lockert
By:/S/ JACK T. SMITH /S/ NINA JACKSON
Jack T. Smith, President Nina Jackson
/S/ MARIT SALTRONES
Christine Marit Saltrones
<PAGE>
EXHIBIT A
STOCKHOLDERS
Name Shares Held
Ms. Ellen Lockert 450
Ms. Nina Jackson 450
Ms. Marit Saltrones 100
<PAGE>
EXHIBIT B
NONCOMPETITION AGREEMENT
This Noncompetition Agreement (the "Agreement") is entered into as
of March 29, 1995, by _______________ ("______"), a resident of
Washington and a stockholder of Lockert Jackson and Associates, Inc.
(the "Company"), and Westcott Communications, Inc., a Texas corporation
("Westcott").
BACKGROUND:
Concurrently with the execution of this Agreement, the
stockholders of the Company are entering into that certain Stock
Purchase Agreement with Westcott (the "Purchase Agreement"), pursuant
to which the Company will become a wholly-owned subsidiary of Westcott
for the consideration and upon the terms and conditions set forth in
the Purchase Agreement.
______ has extensive knowledge of the business, operations, and
affairs of the Company and is able to irreparably harm Westcott and
substantially impair the value of the Company to Westcott if ______ or
any business owned in whole or in part by ______ directly or indirectly
competes with the businesses engaged in by the Company.
The execution by ______ of this Agreement constitutes a material
inducement for Westcott to acquire the Company.
AGREEMENTS:
In consideration of the respective representations, warranties,
covenants, and conditions set forth in this Agreement, the parties
agree as follows:
1. Term. The "Term of Noncompetition" means the period
beginning the date hereof and continuing until the date that is five
(5) years from the date hereof.
2. Competing Business. During the Term of Noncompetition,
______ will not engage, directly or indirectly, individually or as a
principal, shareholder (other than a holder of fewer than 5% of the
outstanding shares of a publicly-traded company), consultant, partner,
joint venturer, agent, equity owner or in any other capacity whatsoever
in any business enterprise (regardless of whether it is a corporation,
partnership, business association, or other entity) that constitutes a
Competing Business. The term "Competing Business" means any enterprise
that produces, markets, distributes, sells or otherwise provides any
educational training or informational services to the following: (a)
emergency medical industry, or (b) regarding workplace safety, whether
through the use of any method of video distribution to persons within
the territory of the United States or Canada. Notwithstanding the
foregoing, Westcott acknowledges and agrees that ______'s activities in
writing fictional plays, novels, short stories, screenplays and the
like, regardless of whether the same may be produced for video or
television broadcast, shall not be deemed to constitute a violation of
this Agreement. [In addition, ______ may develop and produce video
<PAGE>
products, (x) in the nature of a video user's manual, solely for use
and distribution in connection with a specific product, and (b) other
custom video products, so long as such custom video products are to be
used solely for "in-house" purposes and not for distribution. ]
In addition, during the Term of Noncompetition, ______ will not
intentionally, directly or indirectly, individually or as a principal,
shareholder (other than a holder of fewer than 5% of the outstanding
shares of a publicly-traded company), consultant, partner, joint
venturer, agent, equity owner or in any other capacity whatsoever
attempt to persuade, entice, induce or influence the relationship
between the Company and any party listed by Company as a customer or
subscriber on the certificate delivered to Westcott pursuant to Section
4.1(a) of the Purchase Agreement in a manner which is injurious to such
relationship.
3. Confidential Information. ______ acknowledges that she has
heretofore had access to Confidential Information (as hereinafter
defined) of the Company related to the Company ("Company Information")
and may hereafter have access to Confidential Information of Westcott
and its affiliates. Accordingly, ______ agrees that she will not at
any time during the term of this Agreement, directly or indirectly, use
for her own account, disclose to any person or reveal, divulge,
disclose or communicate to any person, firm or corporation, other than
officers, directors and employees of Westcott, in any manner
whatsoever, Confidential Information about Westcott or its affiliates
or Company Information. ______ agrees to deliver to Westcott, at any
time Westcott may request, all memoranda, notes, plans, records,
reports and other documents (and copies thereof) embodying Confidential
Information of Westcott or its affiliates and Company Information which
she may then possess or have under her control. As used herein,
"Confidential Information" of an entity or person, including without
limitation any predecessors of such entity or person, means information
of any kind, nature or description which is disclosed to or otherwise
known to ______ as a direct or indirect consequence of her ownership of
the capital stock, employment and/or other association (whether past or
future) with such entity or person, which information is not published
or generally known in the businesses in which such entity or person is
engaged, including, without limitation, information concerning
products, production and distribution methods or procedures, goods,
services, business methods or procedures, financial affairs, business
plans, vendors, vendor requirements, customers, customer requirements
and production or marketing methods or plans.
4. Equitable and Other Relief. In the event of a breach or
threatened breach by ______ of the provisions of Section 2 or Section 3
of this Agreement, ______ acknowledges and agrees that such a breach or
threatened breach will cause irreparable injury to Westcott for which
an adequate remedy is not available at law. Therefore, the parties
agree that Westcott shall be entitled, without the posting of any bond,
to an injunction restraining ______, in whole or in part, from such
breach or threatened breach. Nothing herein shall be construed as
prohibiting Westcott from pursuing any other remedies available to
Westcott for such breach or threatened breach at law or in equity,
including the recovery of damages from ______. ______ acknowledges
that the possible restrictions on her activities which may occur as a
result of the performance of her obligations under Sections 2 and 3 of
this Agreement are reasonably required for the protection of Westcott
and its investments. ______ agrees that in the event of any violation
<PAGE>
of any of the provisions of this Agreement by her, Westcott, in
addition to such other rights and remedies as it may have at law or in
equity, shall be entitled to an injunction to be issued by a court of
competent jurisdiction restraining and prohibiting her from committing
or continuing any violation of such provisions.
Notwithstanding any other provision to the contrary contained in
this Agreement, in no event shall the aggregate amount of damages
awarded against ______ (including but not limited to any and all
liabilities for costs, expenses and attorneys' fees paid or incurred in
connection therewith or in connection with the curing of any and all
misrepresentations or breaches of warranties or covenants under this
Agreement) exceed the amount ______ has received from Westcott under
this Agreement.
5. Consideration. As consideration for entering into this
Agreement, Westcott shall pay to ______ the sum of _________________
payable by wire transfer upon the execution of this Agreement.
6. Assignability. ______ may not, without the prior written
consent of Westcott, assign, transfer, or convey this Agreement or any
interest herein. This Agreement and all rights and obligations of
Westcott shall be binding upon and inure to the benefit of its
successors and assigns. The term "successor" shall mean any person,
corporation, or other entity that, by merger, consolidation, purchase
of assets, liquidation, voluntary or involuntary assignment, or
otherwise, acquires all or a substantial part of the assets of Westcott
or succeeds to one or more lines or business of Westcott.
7. Waiver. No failure or delay on the part of any party in
exercising any right, power, or privilege hereunder or under any of the
documents delivered in connection with this Agreement shall operate as
a waiver of such right, power, or privilege; nor shall any single or
partial exercise of any such right, power, or privilege preclude any
other or future exercise thereof or the exercise of any other right,
power, or privilege.
8. Separate Agreement. This Agreement is separate and distinct
from the Purchase Agreement, and breach or termination of the Purchase
Agreement shall not be deemed a breach or termination of this
Agreement. This Agreement supersedes all prior documents,
understandings, and agreements, oral or written, relating to this
transaction and constitutes the entire understanding among the parties
with respect to the subject matter hereof. Any modification or
amendment to, or waiver of, any provision of this Agreement may be made
only by an instrument in writing executed by the party against whom
enforcement thereof is sought.
9. Interpretation. The parties hereto acknowledge and agree
that (i) each party and its counsel has reviewed and negotiated the
terms and provisions of this Agreement and have contributed to its
revision, (ii) the rule of construction to the effect that any
ambiguities are resolved against the drafting party shall not be
employed in the interpretation of this Agreement, and (iii) the terms
and provisions of this Agreement shall be construed fairly as to all
parties hereto and not in favor of or against any party regardless of
which party was generally responsible for the preparation of this
Agreement.
<PAGE>
10. Attorney's Fees. In the event that one of the parties hereto
brings suit against the other party hereto based upon or arising out of
a breach of this Agreement, the parties hereto agree that the party who
is successful on the merits, upon final adjudication from which no
further appeal can be taken, shall be entitled to recover her or its
reasonable attorney's fees and expenses from the party which is not
successful.
11. Governing Law. THE LAW OF THE STATE OF TEXAS WILL GOVERN THE
INTERPRETATION, VALIDITY AND EFFECT OF THIS AGREEMENT WITHOUT REGARD TO
THE PLACE OF EXECUTION OR THE PLACE OF PERFORMANCE THEREOF.
NOTWITHSTANDING THE PARTIES' SELECTION OF THE LAWS OF THE STATE OF
TEXAS TO GOVERN THIS AGREEMENT, THE PARTIES HEREBY AGREE THAT EXCLUSIVE
JURISDICTION FOR ANY CLAIM ARISING UNDER THIS AGREEMENT WILL LIE IN
KING COUNTY, WASHINGTON, AND EACH OF THE PARTIES HEREBY CONSENTS TO
SUCH JURISDICTION.
12. Invalid Provisions. If any provision of this Agreement is
held to be illegal, invalid, or unenforceable under present or future
laws effective during the term hereof, such provision shall be fully
severable; this Agreement shall be construed and enforced as if such
illegal, invalid, or unenforceable provision had never comprised a part
hereof; and the remaining provisions shall remain in full force and
effect and shall not be affected by the illegal, invalid, or
unenforceable provision or by its severance therefrom. Furthermore,
the parties expressly agree that the court or other judicial or
administrative tribunal holding such provision illegal, invalid or
unenforceable shall reform such provision, but only to the extent
necessary to render such provision legal, valid and enforceable, and
such reformed provision shall be added automatically as a part of this
Agreement.
13. Counterparts. This Agreement may be executed in multiple
counterparts; provided that all such counterparts together shall be
deemed to constitute one agreement. This Agreement may be executed by
facsimile signatures.
The parties have duly executed this Agreement in one or more
counterparts (all of which shall constitute one and the same agreement)
as of the day and year first above written.
______________________________
_____________
WESTCOTT COMMUNICATIONS, INC.
By:___________________________
Jack T. Smith, President
<PAGE>
EXHIBIT C
AGREEMENT
This Agreement (this "Agreement") is made and entered into as
of March 29, 1995 (the "Effective Date") by and between Lockert
Jackson and Associates, Inc., a ______ corporation (the "Company"),
and __________ an individual residing in the state of Washington
("______"), and for the limited purpose of guarantying the
obligations of the Company in accordance with Section 8 hereunder,
Westcott Communications, Inc., a Texas corporation and the parent
company of the Company ("Westcott").
BACKGROUND:
In accordance with Stock Purchase Agreement (the "Purchase
Agreement") effective as of March 1, 1995, between the Company and
stockholders of Lockert Jackson and Associates, Inc., a Washington
corporation ("Lockert Jackson"), Lockert Jackson will become a
wholly-owned subsidiary of the Company.
______ has extensive knowledge of the business, operations and
affairs of Lockert Jackson.
The Company desires to obtain the services of ______ and the
agreements of ______ as hereinafter set forth, and ______ is
willing to furnish her personal services and furnish such
agreements, all on the terms and conditions set forth in this
Agreement.
Prior to the date of this Agreement, ______ has deferred
receiving certain amounts of compensation due her from the Company
(the "Deferred Compensation") for services previously rendered to
the Company.
After the date of this Agreement, the Company desires to pay
to ______ the Deferred Compensation on the terms and conditions set
forth in this Agreement, and ______ has accepted such terms and
conditions.
As an inducement for ______ entering into this Agreement,
Westcott has agreed to guaranty the payment obligations of the
Company to ______ under this Agreement.
AGREEMENTS:
In consideration of the mutual covenants set forth in this
Agreement,, the parties agree as follows:
<PAGE>
1. Consulting Services. The Company hereby retains ______
as an independent contractor and not as an employee of the Company
in an advisory and consultative capacity during the term of this
Agreement (the "Term"). During the Term, ______ agrees to make
available to the Company her knowledge, expertise and advise
regarding Lockert Jackson and matters relating to the business of
Lockert Jackson at reasonable and mutually agreeable times.
______ agrees not to enter into contracts on behalf of the
Company, or bind the Company to future commitments without the
prior written approval of such contract or commitment from the
Chief Executive Officer or the President of the Company.
2. Nonexclusive Agreement. The Company acknowledges that
______ is or may be involved in other businesses, and that,
subject to the provisions of Section 9 hereof regarding the use or
disclosure of Confidential Information (defined below), this
Agreement shall not limit ______ from engaging in any business or
other activity which is consistent with the provisions of that
certain Noncompetition Agreement between the Company and ______ of
even date herewith.
3. Term. The Term shall commence on the Effective Date of
this Agreement and shall expire on March 28, 1998 (the "Expiration
Date"), unless the Term is otherwise extended or earlier terminated
pursuant to the terms of this Agreement.
4. Compensation. As compensation for services rendered to
the Company pursuant to this Agreement, and in full satisfaction of
any and all Deferred Compensation, the Company shall pay to ______
the sum of _______________ per year payable in equal monthly
installments during the Term (the "Consideration"). ______ shall
be responsible for any and all state and federal income tax
withholding, and any applicable FICA and FUTA.
5. Primary Location of Consultant's Performance; Office.
Unless otherwise agreed between ______ and the Company, ______
shall not be required to travel outside the Puget Sound region in
order to provide any services under this Agreement.
6. Early Termination of Term of Agreement; Effect of
Termination. The Term and the retention of ______ hereunder may be
terminated (a "Termination") prior to the Expiration Date by ______
if the Company materially breaches its obligations under this
Agreement, if ______ gives written notice of Termination to the
Company specifying such breach, and if such breach continues for
thirty (30) days after the receipt of such written notice from
______; except, that if the breach is a breach of an obligation to
make a Consideration, then the period referred to in the preceding
clause will be ten (10) business days. In the event of a
Termination pursuant to this Section 6, ______ shall be entitled to
accelerate all Consideration due under this Agreement for the
remainder of the Term as if this Agreement had not been terminated,
which payments shall become immediately due and payable by the
Company. Notwithstanding the foregoing, the provisions of
Sections 9 through 12 of this Agreement shall survive any
Termination.
<PAGE>
7. Expenses. The Company shall pay or reimburse ______ for
reasonable business expenses incurred or paid by ______, upon
presentation of expense statements or vouchers in accordance with
the Company's regular reimbursement policies; provided that such
expenses have been approved, in writing and in advance, by the
Company.
8. Westcott Guaranty. Westcott hereby unconditionally and
irrevocably guarantees the prompt payment of all amounts due from
the Company to ______ or to the proper taxing authorities as
required under this Agreement. This guaranty is for the benefit of
______ and her successors and permitted assigns and is binding not
only on Westcott, but on Westcott's successors and permitted
assigns. Westcott acknowledges that upon default of this Agreement
by the Company, ______ may proceed directly against Westcott
without first or contemporaneously seeking to institute suit or
exhaust remedies against the Company. Westcott hereby waives any
and all defenses to the enforcement of the Company's obligations
hereunder, except for payment in full.
9. Confidential Information. ______ acknowledges that she
has heretofore had access to Confidential Information (as
hereinafter defined) of the Company and may hereafter have access
to Confidential Information of the Company and its affiliates.
Accordingly, ______ agrees that she will not at any time during the
term of this Agreement and for a period of two years thereafter
directly or indirectly, use for her own account, disclose to any
person or reveal, divulge, disclose or communicate to any person,
firm or corporation, other than officers, directors and employees
of the Company, in any manner whatsoever, Confidential Information
about the Company or its affiliates. ______ agrees to deliver to
the Company, at any time the Company may request, all memoranda,
notes, plans, records, reports and other documents (and copies
thereof) embodying Confidential Information of the Company or its
affiliates which she may then possess or have under her control.
As used herein, "Confidential Information" of an entity or person,
including without limitation any predecessors of such entity or
person, means information of any kind, nature or description which
is disclosed to or otherwise known to ______ as a direct or
indirect consequence of her ownership of the capital stock,
employment and/or other association (whether past or future) with
such entity or person, which information is not published or
generally known in the businesses in which such entity or person is
engaged, including, without limitation, information concerning
products, production and distribution methods or procedures, goods,
services, business methods or procedures, financial affairs,
business plans, vendors, vendor requirements, customers, customer
requirements and production or marketing methods or plans. The
Company shall use reasonable efforts to give written notice to
______ with respect to information which the Company deems
confidential; however, it is the intent of the parties that
all information which is not generally public or generated from
public information be deemed confidential consistent with the
proprietary nature of such information. The obligation of ______
pursuant to this Section 9 shall be in effect during the Term and
shall survive and continue after the end of the Term.
10. Equitable and Other Relief. In the event of a breach or
threatened breach by ______ of the provisions of Section 9 of this
Agreement, ______ acknowledges and agrees that such a breach or
<PAGE>
threatened breach will cause irreparable injury to the Company for
which an adequate remedy is not available at law. Therefore, the
parties hereto agree that the Company shall be entitled, without
the posting of any bond, to an injunction restraining ______, in
whole or in part, from such breach or threatened breach. Nothing
herein shall be construed as prohibiting the Company from pursuing
any other remedies available to the Company for such breach or
threatened breach at law or in equity, including the recovery of
damages from ______. ______ acknowledges that the possible
restrictions on her activities which may occur as a result of the
performance of her obligations under Section 9 of this Agreement
are reasonably required for the protection of the Company and its
investments.
Notwithstanding any other provision to the contrary contained
in this Agreement, in no event shall the aggregate amount of
______'s liability (including but not limited to any and all
liabilities for costs, expenses and attorneys' fees paid or
incurred in connection therewith or in connection with the curing
of any and all misrepresentations or breaches of warranties or
covenants under this Agreement) exceed the amount ______ has or is
to receive from the Company under this Agreement.
11. Payment Default; Interest. Any past due consulting
compensation shall accrue interest beginning on the day after such
payment becomes past due at a rate equal to one and one-half
percent of such past due amount per month. Interest shall be
calculated on the basis of 30-day months and a 360-day year. In
the event the Company fails to pay the consulting fee within 30
days after such fee is due, Consultant may declare to be due all
consulting fees payable during the remainder of the Term. Nothing
herein shall be construed as prohibiting ______ from pursuing
any other remedies available to Consultant for any failure by the
Company to pay any sums when due under this Agreement.
12. Miscellaneous.
a. Notices. Any notices required or permitted to be
given under this Agreement shall be given in writing and shall
be deemed received (a) when personally delivered to the
relevant party at such party's address as set forth below, (b)
when confirmed if delivered by facsimile or similar device, or
(c) if sent by mail, on the third day following the date when
deposited in the United States mail, certified or registered
mail, postage prepaid, to the relevant party at its or her
address indicated below:
Company: Westcott Communications, Inc.
1303 Marsh Lane
Carrollton, Texas 75006
Attention: Jack T. Smith
Fax No: (214) 716-5105
<PAGE>
Consultant:
with a copy to: Riddell, Williams, Bullitt & Walkinshaw
1001 Fourth Avenue Plaza, Suite 4400
Seattle, Washington 98154
Attn: Mr. Mark Maghie
Fax No.: (206) 389-1708
Each party may change its address for purposes of this
Section 11(a) by proper notice to the other parties.
b. Offset. Neither the Company nor ______ may claim
any offset against any of their respective obligations arising
under this Agreement that they may now or hereafter have with
respect to any obligation, covenant or agreement arising under
or in connection with any other transaction or relationship
between the parties (each individual claim being an "Other
Obligation"), until such time as such Other Obligation has
been finally determined whether by court of law or other
judicial or administrative tribunal or upon agreement of the
parties.
c. Entire Agreement. This Agreement supersedes all
prior documents, understandings, and agreements, oral or
written, relating to this transaction and constitutes the
entire understanding among the parties with respect to the
subject matter hereof. Any modification or amendment to, or
waiver of, any provision of this Agreement (or any document
delivered in connection herewith unless otherwise expressly
provided therein) may be made only by an instrument in writing
executed by the party against whom enforcement thereof is
sought.
d. Waiver. No failure or delay on the part of any
party in exercising any right, power, or privilege hereunder
or under any of the documents delivered in connection with
this Agreement shall operate as a waiver of such right, power,
or privilege; nor shall any single or partial exercise of any
such right, power, or privilege preclude any other or future
exercise thereof or the exercise of any other right, power, or
privilege.
e. Governing Law. THE LAW OF THE STATE OF TEXAS WILL
GOVERN THE INTERPRETATION, VALIDITY AND EFFECT OF THIS
AGREEMENT WITHOUT REGARD TO THE PLACE OF EXECUTION OR THE
PLACE OF PERFORMANCE THEREOF. NOTWITHSTANDING THE PARTIES'
SELECTION OF THE LAWS OF THE STATE OF TEXAS TO GOVERN THIS
AGREEMENT, THE PARTIES HEREBY AGREE THAT EXCLUSIVE
JURISDICTION FOR ANY CLAIM ARISING UNDER THIS AGREEMENT WILL
<PAGE>
LIE IN KING COUNTY, WASHINGTON, AND EACH OF THE PARTIES HEREBY
CONSENTS TO SUCH JURISDICTION.
f. Invalid Provisions. If any provision of this
Agreement is held to be illegal, invalid, or unenforceable
under present or future laws effective during the term hereof,
such provision shall be fully severable; this Agreement shall
be construed and enforced as if such illegal, invalid, or
unenforceable provision had never comprised a part hereof; and
the remaining provisions shall remain in full force and effect
and shall not be affected by the illegal, invalid, or
unenforceable provision or by its severance therefrom.
Furthermore, the parties expressly agree that the court or
other judicial or administrative tribunal holding such
provision illegal, invalid or unenforceable shall reform such
provision, but only to the extent necessary to render such
provision legal, valid and enforceable, and such reformed
provision shall be added automatically as a part of this
Agreement.
g. Assignability. ______ may not, without the prior
written consent of the Company, assign, transfer, or convey
this Agreement or any interest herein. This Agreement and all
rights and obligations of the Company shall be binding upon
and inure to the benefit of its successors and assigns. The
term "successor" shall mean any person, corporation, or other
entity that, by merger, consolidation, purchase of assets,
liquidation, voluntary or involuntary assignment, or
otherwise, acquires all or a substantial part of the assets of
the Company or succeeds to one or more lines or business of
the Company.
h. Interpretation. The parties hereto acknowledge and
agree that (i) each party and its counsel has reviewed and
negotiated the terms and provisions of this Agreement and have
contributed to its revision, (ii) the rule of construction to
the effect that any ambiguities are resolved against the
drafting party shall not be employed in the interpretation of
this Agreement, and (iii) the terms and provisions of this
Agreement shall be construed fairly as to all parties hereto
and not in favor of or against any party regardless of which
party was generally responsible for the preparation of this
Agreement.
i. Attorney's Fees. In the event that one of the
parties hereto brings suit against the other party hereto
based upon or arising out of a breach of this Agreement, the
parties hereto agree that the party who is successful on the
merits, upon final adjudication from which no further appeal
can be taken shall be entitled to recover her or its
reasonable attorney's fees and expenses from the party which
is not successful.
j. Counterparts. This Agreement may be executed in
multiple counterparts; provided that all such counterparts
together shall be deemed to constitute one agreement. This
Agreement may be executed by facsimile signatures.
<PAGE>
The parties have duly executed this Agreement in one or
more counterparts (all of which shall constitute one and the same
agreement) as of the day and year first above written.
______________________________
_____________
WESTCOTT COMMUNICATIONS, INC.
By:___________________________
Jack T. Smith, President
<TABLE>
WESTCOTT COMMUNICATIONS, INC.
COMPUTATION OF EARNINGS PER SHARE
<CAPTION>
Three Months ended
March 31,
1994 1995
___________ ___________
<S> <C> <C>
Earnings per share:
Net income available to common
shareholders. . . . . . . . . . . . . . . . $ 2,888,934 $ 3,809,243
___________ ___________
___________ ___________
Weighted average Common and
Common equivalent shares(1) . . . . . . . . 19,854,910 19,530,490
___________ ___________
___________ ___________
Earnings per share. . . . . . . . . . . . . . . $ .15 $ .20
___________ ___________
___________ ___________
Earnings per Common and
Common Equivalent Share:
Weighted average shares
outstanding . . . . . . . . . . . . . . . . . 19,196,517 19,530,490
Net shares to be issued upon exercise
of dilutive stock options after applying
treasury stock method . . . . . . . . . . . . 658,393 250,774
___________ __________
Weighted average Common and
Common equivalent shares . . . . . . . . . . 19,854,910 19,781,264
___________ ___________
___________ ___________
Earnings per Common and
Common equivalent shares. . . . . . . . . . . $ .15 $ .19
___________ ___________
___________ ___________
Earnings per Common Share
Assuming Full Dilution:
Weighted average shares
outstanding . . . . . . . . . . . . . . . . . 19,196,517 19,530,490
Net shares to be issued upon exercise
of dilutive stock options after applying
treasury stock method . . . . . . . . . . . . 659,507 250,833
___________ ___________
Weighted average Common and
Common equivalent shares. . . . . . . . . . . 19,856,024 19,781,323
___________ ___________
___________ ___________
Earnings per Common Share assuming
assuming full dilution. . . . . . . . . . . . $ .15 $ .19
___________ ___________
</TABLE>
(1) For the three month period ended March 31, 1995, the calculation of
earnings per share was based upon weighted average common shares
outstanding, due to the fact that both primary and fully-diluted
earnings per share were more than 97% of earnings per common share
outstanding. For the three month period ended March 31, 1994, the
calculation of earnings per share was based upon weighted average
common and common equivalent shares outstanding.
