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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of Earliest Event Reported) April 5, 1996
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(March 27, 1996)
Teltronics, Inc.
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(Exact Name of Registrant as specified in its charter)
Delaware 0-17893 59-2937938
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(State or other jurisdiction (Commission File Number) (IRS Employer
of Incorporation) Identification
Number)
2150 Whitfield Industrial Way Sarasota, Florida 34243-9706
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(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code (941) 753-5000
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This document consists of 36 pages.
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The Exhibit Index appears on page 3 .
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Item 5. OTHER EVENTS.
On March 27, 1996, ISL, Inc. ("ISL"), a Delaware corporation and a
wholly owned subsidiary of the Registrant, entered into an Agreement of Sale
("Agreement") with Interactive Solutions, LLC, a Kentucky limited liability
company ("Interactive") and its three Members under which ISL agreed to acquire
all of the assets and technology owned by, or licensed to, the Members and/or
Interactive used in connection with Interactive's business. Interactive is
developing certain technology for a small, self-contained, voice-activated,
portable pentium(R) processor driven, multi-media computer ("Technology"). The
Agreement superseded a Memorandum of Agreement dated March 11, 1996 filed as an
Exhibit to Registrant's Form 10-KSB for the year ended December 31, 1995.
Under the Agreement, ISL would acquire all of the rights of each of
Interactive and the Members in and to the Technology in exchange for the
issuance of up to 1,000,000 shares of the Registrant's Common Stock which, if
issued, would be subject to several conditions, including an escrow of the
shares to secure indemnification obligations of Interactive and its Members and
restrictions on the right to vote the shares until satisfaction of certain
conditions, including the award of a significant contract utilizing the
Technology. There can be no assurance that the numerous conditions necessary
to consummate the transfer of the Technology will be satisfied or that the
transaction will close upon the terms and conditions described in the
Agreement.
There are numerous other provisions in the Agreement filed as an
Exhibit to this Report on Form 8-K which are important in order to derive a
full understanding of the proposed transaction. The above summary is qualified
in its entirety by reference to the text and the terms and conditions of the
Agreement.
Item 7. FINANCIAL STATEMENTS AND EXHIBITS.
(a) Not Applicable.
(b) Not Applicable.
(c) Exhibits.
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(1) Agreement of Sale dated as of the 27th day of March,
1996 by and among Interactive, its Members and ISL.
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of
1934, the Registrant has duly caused this Report to be signed on its behalf by
the undersigned hereunto duly authorized.
Teltronics, Inc.
(Registrant)
Dated: April 5, 1996 By: /s/ Paul D. Shrader
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Paul D. Shrader, Vice President
Finance, Secretary & Treasurer
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AGREEMENT OF SALE
THIS AGREEMENT ("Agreement") dated as of this 27th day of March, 1996 by
and among Interactive Solutions, LLC, a Kentucky limited liability company
("Interactive") with principal offices located at 191 West Lowry Lane, Suite A,
Lexington, Kentucky 40503, and its members Bruce W. Hanks residing at 3500
Beaver Place Road #167, Lexington, Kentucky 40503, Kevin Rogers residing at
2120 Harbourside Drive, Longboat Key, Florida 34228, Michael Jonas residing at
4142 Waikiki Drive, Sarasota, Florida 34241, (the three members are hereinafter
referred to as "Members") (the Members and Interactive are sometimes
hereinafter referred to collectively as "Sellers") and ISL, Inc., a Delaware
corporation (the "Buyer") with principal offices located at 2150 Whitfield
Industrial Way, Sarasota, Florida 34243.
W I T N E S S E T H
WHEREAS, the Sellers desire to sell to the Buyer and the Buyer desires to
purchase from the Sellers substantially all of the properties and assets,
subject to certain liabilities, of the Sellers;
NOW, THEREFORE, in consideration of the mutual promises herein set forth
and subject to the terms and conditions hereof, the parties agree as follows:
1. Definitions. As used in this Agreement, terms defined in the preamble
and recitals of this Agreement shall have the meanings set forth therein and
the following terms shall have the meanings set forth below:
"Affiliate" shall mean, with respect to any person or entity, the
shareholders, subsidiaries, officers, directors and/or partners of such person
or entity and any other person which directly or indirectly controls, is
controlled by or is under common control with such person or entity.
"Agreement" shall mean this Agreement of Sale and all Schedules and
Exhibits hereto, as the same may from time to time be amended.
"Assumed Liabilities" shall mean all Liabilities of the Sellers which are
listed on Exhibit A attached to this Agreement.
"Closing" shall mean the closing of the transactions contemplated by this
Agreement.
"Closing Date" shall mean a date on or after all of the conditions
specified in paragraphs
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8 and 8A hereof have been satisfied or waived.
"Code" shall mean the Internal Revenue Code of 1986 and all regulations
promulgated thereunder, as the same have from time to time been amended.
"Convertible Common Consideration" shall mean 1,000,000 Non-Voting
Convertible Common shares of Teltronics, Inc. ("Teltronics") a Delaware
corporation, as set forth in Section 3(a) hereof.
"Employment Agreements" shall mean the employment agreements between the
Buyer and each of Kevin Rogers and Bruce W. Hanks, containing the terms
summarized in Exhibit A-1 attached to this Agreement.
"Escrow/Indemnity Agreement" shall mean the Escrow/Indemnity Agreement to
be executed and delivered by the Buyer and Sellers at the Closing.
"Liabilities" shall mean all debts, liabilities, taxes (including any
sales or transfer taxes on the sale of the Purchased Assets), obligations under
contracts, leases, agreements and commitments, and other obligations of every
kind and character of the Sellers as the same may exist at the Closing (whether
accrued, absolute, contingent or otherwise, and whether due or to become due)
or which may arise in the future based upon events or a state of facts existing
at the Closing.
"Members" shall mean all of the Members of Interactive as of the Closing
Date.
"Phoenix License" shall mean the Computer Technology License Agreement
entered into and made effective as of the 15th day of December, 1995, by and
between Phoenix Technologies Ltd., a Delaware corporation having its principal
place of business at 2770 De La Cruz Boulevard, Santa Clara, California 95050
and Interactive, a true and correct copy of which has been delivered to Buyer
on or before the date hereof.
"Purchased Assets" shall mean all of the Interactive's properties and
assets, real and personal, tangible and intangible, or every kind and wherever
situated, which are owned by the Interactive or in which the Interactive has
any right, title or interest (including, without limiting the generality of the
foregoing, its business as a going concern, its goodwill, franchises and all
right, title and interest in and to the use of its corporate or other names and
in its business names and any derivatives or combinations thereof; its
trademarks, trademark registrations, trademark applications, trade names,
copyrights, copyright applications, copyright registrations, patents, patent
applications, patent registrations, permits, licenses, processes, formulae,
trade
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secrets, inventions and royalties (including all rights to sue for past
infringement); its leaseholds; its inventory, equipment and supplies; its cash,
money on deposit with banks, factors and others, certificates of deposit,
commercial paper, stocks, bonds and other investments including but not limited
to all of its right, title and interest in and to the capital stock of Wesco
Capital Holdings, Inc. ("Wesco") a Delaware corporation, its accounts
receivable; its insurance policies; its causes of action, judgments, claims and
demands of whatever nature; its tangible and intangible personal property of
all kinds; its deferred charges, advance payments, pre-paid items, claims for
refunds, rights of offset and credits of all kinds; all credit balances of or
inuring to it under any state unemployment compensation plan or fund; its
employment contracts, restrictive covenants and obligations of present and
former officers and employees and of individuals and corporations; its
accounts, contract rights, general intangibles, returned and repossessed goods,
and rights as an unpaid vendor, secured party or lienor; its credit balances,
documents, instruments and other chooses in action; its contracts, purchase
orders, leases, right under joint venture agreements or arrangements and other
agreements; its files, papers and records relating to the aforesaid business,
properties and assets; all assets reflected on the Financial Statements or
acquired by the Sellers since the date of such Financial Statements, except for
those assets which have been transferred or disposed of in the ordinary course
of business and consistent with past practice after the date of such Financial
Statements or as otherwise permitted by this Agreement); provided, however,
that the purchased Assets shall not include the Retained Assets. Purchased
Assets shall also include without limiting the generality of the foregoing all
of the Members' properties and assets, real and personal, tangible and
intangible, or every kind and wherever situated which are owned by the Members
(jointly and/or severally) or which the Members have any right, title or
interest in or to, which are, or have been used in connection with the business
of Interactive including without limitation, any trademarks, trademark
registrations, trademark applications, trade names, copyrights, copyright
applications, copyright registrations, patents, patent applications, patent
trade secrets, inventions and royalties (including all rights to sue for past
infringement) and all of the Members rights, title and interest in and to
Wesco, including but not limited to, any and all shares of capital stock of
Wesco owned by the Members.
"Retained Assets" shall mean the Members personal assets, including their
Membership Interest in Interactive, not utilized in connection with or useful
to the business of Interactive as
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described on Exhibit B attached to this Agreement.
"Retained Liabilities" shall mean all of the Liabilities except the
Assumed Liabilities.
"Taxes" shall mean all Federal, state, local and foreign taxes, including,
without limitation, income taxes, excise taxes, sales taxes, use taxes, gross
receipts taxes, franchise taxes, employment and payroll taxes, property taxes,
import duties and interest and penalties in connection with any of the
foregoing.
"Uniform Commercial Code" shall mean the Florida Uniform Commercial Code.
"Worlds Agreement" shall mean the Development & Software License Agreement
entered into as of October 17, 1995, by and between Worlds, Inc. a Delaware
corporation, with an address of 510 Third Street, San Francisco, California
94107 and Interactive, a true and correct copy of which has been delivered to
Buyer on or before the date hereof.
2. Sale of Properties and Assets.
(a) At the Closing, the Sellers will sell, transfer, assign, convey and
deliver to the Buyer, and the Buyer will purchase, accept and acquire form the
Sellers all of the Purchased Assets.
(b) The Closing shall occur as soon as possible after the satisfaction
of the conditions of Closing set forth in Sections 8 and 8A of this Agreement.
3. Purchase Price. The aggregate purchase price to be paid by the Buyer
for the Purchased Assets shall consist of (i) Convertible Common Consideration
described in Section 3(a) and (ii) the assumption by the Buyer of the Assumed
Liabilities as set forth in Section 3(b) hereof. The Sellers and the Buyer
agree that the aggregate purchase price of the Purchased Assets shall be
allocated based upon the book value of the Purchased Assets as reflected in a
balance sheet to be prepared by Sellers as of the Closing Date ("Allocation").
Buyer and Sellers agree to utilize the Allocation for all purposes, including
without limitations, financial reporting and federal income tax purposes and
execute IRS Form 8594 with respect thereto.
(a) Convertible Common Consideration. Purchaser shall at Closing,
deliver 1,000,000 Non-Voting Convertible Common shares of Teltronics, par value
$.001/share which shall contain the Terms described in Exhibit C to this
Agreement and be issued subject to the Escrow/Indemnity Agreement.
(b) Assumed Liabilities. At the Closing, the Buyer will assume the
Assumed Liabilities. Except for the Assumed Liabilities, Buyer shall not
assume and shall not be
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responsible for any other obligation or Liability of Sellers, direct or
indirect, known or unknown, absolute or contingent.
4. Instruments of Transfer; Payment of Purchase Price and Assumption of
Liabilities; Further Assurances.
(a) Sellers' Deliveries. At the Closing, the Sellers shall deliver to
the Buyer:
(i) Bills of sale for the Purchased Assets owned by the Sellers,
in form reasonably satisfactory to the Buyer;
(ii) An assignment of each patent, trademark, copyright, and all
other tangible and intangible contract rights under which the Sellers have any
rights, title and/or interest, in form reasonably satisfactory to the Buyer;
(iii) Assignments for all funds on deposit with banks or other
persons which are Purchased Assets owned by the Sellers;
(iv) Stock certificates for all of the shares of capital stock of
Wesco owned by Sellers free and clear of all liens, claims, charges,
restrictions, equities or encumbrances of any kind, which certificates shall be
duly endorsed to Buyer or accompanied by duly executed stock powers in form
satisfactory to the Buyer;
(v) Such other instrument or instruments of transfer, in such
form, as shall be reasonably necessary or appropriate to vest in the Buyer good
and valid title to the Purchased Assets;
(vi) The Employment Agreements, duly executed and delivered by the
parties thereto;
(vii) Evidence, satisfactory to the Buyer and its counsel, that
certificates for all real property leases, and that all permits, consents,
licenses, franchises and other authorizations listed in the Schedules have been
transferred to or issued to the Buyer;
(viii) Evidence of the authorization of the transactions contem-
plated hereby by the Sellers together with certificates of incumbency, certi-
fied copy of Interactive's Operating Agreement and other corporate or partner-
ship documents, as the Buyer shall reasonably request;
(ix) The Escrow/Indemnity Agreement duly executed and delivered by
the parties thereto; and
(x) Such other instrument or instruments of transfer, in such
form, as
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shall be reasonably necessary or appropriate to vest in Buyer good and valid
title to the Purchased Assets.
(b) Buyer's Deliveries. At the Closing, the Buyer shall deliver to the
Sellers:
(i) The Convertible Common;
(ii) Escrow Indemnity Agreement;
(iii) Assumption instruments in form reasonably satisfactory to the
Seller whereby the Buyer agrees to assume the Assumed Liabilities;
(iv) The Employment Agreements duly executed and delivered by the
Buyer; and
(v) Evidence of the authorization of the transactions contemplated
hereby by the Buyer and the Buyer's shareholders, together with certificates of
incumbency and other corporate documents, as the Sellers shall reasonably
request.
(c) Documentation. All matters and proceedings taken in connection with
the sale of the Purchased Assets by the Sellers to the Buyer and the assumption
of the Assumed Liabilities by the Buyer as herein contemplated, including forms
of instruments and matters of title, shall be satisfactory to the Sellers, the
Buyer, the Members, and each of their respective counsel.
(d) Other Transfer Instruments; Inspection Rights. Following the
Closing, at the request of the Buyer, the Sellers shall (at the Sellers'
expense) deliver any further instruments of transfer and take all reasonable
action as may be necessary or appropriate (A) to vest in the Buyer all of the
Sellers' title to the Purchased Assets, and (B) to transfer to the Buyer all of
the Sellers' rights to licenses and permits necessary for the operation of the
Purchased Assets.
5. Representations and Warranties of the Sellers. The Sellers represent
and warrant to the Buyer as follows:
(a) Organization; Good Standing. Interactive is a limited liability
company duly organized, validly existing and in good standing under the laws of
state of Kentucky. Sellers have all requisite power and authority and legal
right to own, operate and lease their properties, to carry on their business as
now being conducted, and to enter into this Agreement and perform their
obligations hereunder. Interactive is qualified to do business in each
jurisdiction where the conduct of its business or the ownership of its property
requires such
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qualification and where the failure to so qualify would have a material adverse
effect on the business of Sellers. The chief executive office and principal
place of business and the places where Interactive maintains all records
relating to its business is 191 West Lowry Lane, Suite A, Lexington, Kentucky
40503. All of the Membership Interests and equity securities of the
Interactive are owned beneficially and of record by the Members as shown on
Exhibit D hereto. There are no other persons or entities having an interest
in such Membership Interests, as Member pledgee, assignee, option holder or
otherwise.
(b) Capitalization of Wesco. Set forth on Exhibit E hereto is a
description of the authorized, issued and outstanding capital stock of Wesco
and the names of persons to whom it is issued. There are no other classes or
series of capital stock of Wesco authorized, issued or outstanding. All of the
shares of Wesco owned by Sellers are validly issued, fully paid and
non-assessable with no liability attaching to the ownership thereof. There are
no outstanding rights of subscription, warrants, call options, contracts or
other agreements of any kind, issued or granted by any of the Sellers or Wesco
to purchase or otherwise acquire securities of Wesco. Sellers are the sole
record and beneficial owners of at least 68.91% of the outstanding shares of
Capital Stock of Wesco, free and clear of all liens, claims, restrictions,
equities and encumbrances of any kind.
(c) Absence of Undisclosed Liabilities. With respect to Interactive,
there are material liabilities or obligations of any nature, whether accrued,
absolute, contingent or otherwise, and whether due or to become due, in an
aggregate amount in excess of $10,00. The Sellers do not know of any material
claim against the Sellers or liability of any nature, whether due or to become
due, in any amount in the aggregate in excess of $10,000, or know of any other
material claim or liability of any nature arising since October 1, 1995 in an
aggregate amount in excess of $10,000, other than claims or liabilities
incurred in the ordinary course of business.
(d) No Material Adverse Change.
(i) To the best of the Sellers' knowledge, except as set forth in
Schedule 5(d) hereto or except as permitted by this Agreement, since October 1,
1995, there has not been:
(A) any material adverse change in the financial condition of
Interactive, or
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(B) any material damage, destruction or loss to any of the Purchased
Assets, whether or not covered by insurance, which materially adversely affects
the ability of the Interactive or Sellers, taken as a whole, to conduct its
business or so far as the Sellers can reasonably now foresee is likely in the
future to affect or impair the ability of Interactive or Sellers, taken as a
whole, to conduct its business.
(ii) Since October 1, 1995, Interactive has not:
(A) entered into any contract to merge or consolidate with any other
corporation; or
(B) sold, transferred or otherwise disposed of or encumbered all or
any substantial part of its assets; or
(C) declared or paid any dividend or other distribution in respect
of Membership Interests; or
(D) made any purchase, redemption or other acquisition, directly or
indirectly, of any Membership Interest.
(iii) Sellers have not sold, transferred or otherwise disposed of all or
any part of the Purchased Assets.
(e) Tax Returns and Payments. Sellers have duly filed all state, federal,
local and foreign tax returns and reports required to be filed and have paid
the amounts shown as owing thereon and any assessments received in connection
therewith. All monies required to be withheld by the Sellers from employees
for income taxes, Social Security and unemployment insurance taxes have been
collected or withheld, and either paid to the respective governmental agencies
or set aside in accounts for such purpose, or accrued, reserved against, and
entered upon the books of the Sellers.
(f) Real Property Leased. A list and description of all real property
(together with any improvements) leased, in connection with the Business, by
the Sellers or in which either the Sellers have any interest, are set forth in
Schedule 5(f) hereto. Except as set forth in Schedule 5(f) hereto, all such
real property leases or other agreements are valid and effective in accordance
with their respective terms, and, to the best knowledge of the Sellers, there
are no existing defaults or events of default or events which with notice or
lapse of time or both would constitute defaults, the consequences of which,
severally or in the aggregate, would have a material adverse effect on the
business and operations of the Sellers. Sellers have not received
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or given notice of any claimed default with respect to any such lease. Except
as set forth n Schedule 5(f) hereto, all such leases or other agreements are
fully assignable without the consent of any third party and the continuation,
validity and effectiveness of all such leases or other agreements under the
current rental and other material terms will in no way be affected by the
transactions contemplated by this Agreement.
(g) Title to Purchased Assets. Sellers have good and valid title to all
of the Purchased Assets, subject to no mortgage, pledge, option, assignment,
escrow, hypothecation, lien, security interest, financing statement, lease,
charge, encumbrance, easement or conditional sale or other title retention
agreement.
(h) Condition of Property. Except as set forth in Schedule 5(h), the
condition of the Purchased Assets owned or leased by the Sellers is currently
adequate for the conduct of the business of the Sellers.
(i) Shareholder Agreement. On the Closing Date, there will be no
agreements, written or oral between Wesco and any Seller (or any affiliate of
such Seller) or any other person, or between or among any of the Sellers,
relating to the acquisition, disposition or voting of the capital stock of
Wesco.
(j) Membership Agreements. On the Closing Date, there will be no
agreements, written or oral, between Interactive and any Member or any other
person, or between or among any of the Sellers, relating to the acquisition,
disposition or voting of any Membership Interest in Interactive.
(k) Financial Condition. The aggregate amounts for work: (i) performed,
invoiced and paid; (ii) performed, invoiced and not paid; (iii) performed but
not yet invoiced; and (iv) to be performed under the Worlds Agreement are
described in Schedule 5(k) attached to this Agreement. The aggregate amounts
paid, billed but not paid and to be billed under the Phoenix License are
further described in Schedule 5(k) to this Agreement.
(l) Trademarks, Licenses, etc. A list and brief description of all of the
Sellers' trademarks, service marks, trade names, brands, patents, all
applications for registration and registrations for trademarks, copyrights and
patents, and all franchises, permits and licenses and rights with respect to
the foregoing, are set forth in Schedule 5(l) hereto, Sellers own or possesses
the right to use all the material trademarks, service marks, trade names,
brands, copyrights, patents, franchises, permits and licenses, and rights with
respect to the foregoing,
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necessary for the conduct of its business as now conducted. The Sellers have
not received notice of any conflict with the rights of others, or any use by
others which conflicts in any material respect with the rights of the Sellers.
All such marks, franchises, permits andlicenses and rights with respect to the
foregoing and all contracts, and arrangements referred to in Schedule 5(l) here
to are fully assignable without the consent of any third party. The Sellers
have not received or given notice of any default or claimed or purported or
alleged default on the part of any party in the performance or payment of any
material obligation to be performed or paid by any party under any franchises,
permits, licenses, contracts, agreements or arrangements referred to in or
submitted as a part of Schedule 5(l) hereto. During the past five years the
only names by which Sellers have been known or which the Sellers have used are
Interactive Solutions, LLC, Bruce W. Hanks, Kevin Rogers and Michael Jonas.
(m) Litigation; Compliance with Laws; etc. Except as set forth in
Schedule 5(m) hereto there is (i) no suit, action pending or to the best of
Sellers' knowledge, threatened, against either the Sellers or the property of
the Sellers, (ii) no governmental investigation or inquiry pending or to the
best of Sellers' knowledge, threatened against the Sellers, or (iii) no change
in the environment, zoning or building laws, regulations or ordinances
affecting the leasehold property of the Sellers or its business operations,
pending of which Sellers have received notice, which matter referred to in
clauses (i), (ii) and (iii) above would, severally or in the aggregate,
materially and adversely affect the condition (financial or otherwise)
business, property, assets or prospects of the Sellers. Sellers have complied
with and are not in default in any respect under any laws, ordinances or
governmental requirements, regulations or orders applicable to its business and
properties (other than with respect to environmental matters) where such
failure or default would materially and adversely affect the condition
(financial or otherwise), business or assets of the Sellers. Sellers have not
received any notice of any claimed violation or threatened proceeding or
investigation with respect to any matter referred to in the foregoing
sentences. To the best of Sellers' knowledge, no investigation is pending by
any federal, state or local government, or by any agency or instrumentality
thereof, the effect of which could materially affect the business in which the
Sellers are engaged.
(n) Authority. All necessary proceedings of the Sellers and the Members
have been duly taken to authorize the execution, delivery and performance of
this Agreement. This Agreement has been duly authorized, executed and
delivered by the Sellers and is the
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legal, valid and binding obligation of the Sellers enforceable against the
Sellers in accordance with its terms.
(o) Compliance with Other Instruments, etc. Subject to the obtaining of
the consents listed in Schedules 5(f), 5(l) and 5(q) hereto, neither the
execution and delivery of the Agreement nor the consummation of the transaction
contemplated hereby will conflict with or result in any violation of or
constitute a default under any term of the Articles of Organization or
Operating Agreement of Interactive or any material agreement, mortgage,
indenture, franchise, license, permit, authorization, lease or other
instrument, judgment, decree, order, law or regulation by which the Sellers or
any of its properties or assets are bound.
(p) Governmental and Other Consents, etc. To the best of Sellers'
knowledge, no consent, approval or authorization of or designation, declaration
or filing with, any governmental authority, bureau or agency or other persons
or entities on the part of either the Sellers is required in connection with
the execution or delivery of this Agreement or the consummation of the
transactions contemplated hereby other than notifications to and consents from
the persons specified in Schedules 5(f), 5(l) and 5(q).
(q) Agreements, etc. Set forth in Schedule 5(q) are complete and accurate
lists of the following agreements and documents:
(i) all leases, licensing agreements and franchise agreements to which
any of the Sellers is a party or in which any of the Sellers has an interest
(other than the leases, licensing agreements and franchise agreements set forth
in Schedules 5(f) or 5(l) hereof);
(ii) all bonus, incentive, compensation, profit-sharing, retirement,
pension, group insurance, death benefit or other fringe benefit plans, deferred
compensation and post-termination obligations, trust agreements of the Sellers
in effect or under which any amounts remain unpaid on the date hereof or are to
become effective after the date hereof;
(iii) all collective bargaining and other agreements and contracts of the
Sellers with any labor union or other representative of employees, including
local agreements, amendments, supplements, letters and memoranda of
understanding of all kinds and all employment and consulting contracts
(including all retirement benefit agreements) not terminable by the Sellers or
at will or on not more than 30 days notice without penalty to which the Sellers
are a party;
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(iv) each instrument defining the terms on which indebtedness of the
Sellers for borrowed money or guarantees thereof by the Sellers, in each case
aggregating more than $10,000, are outstanding or may be issued;
(v) any agreement limiting the Sellers' freedom to compete in any
material respect in any line of business or with any person;
(vi) all written agreements, contracts, arrangements, commitments,
understandings, or obligations of the Sellers in which any officer, director or
Member of the Sellers or any member of the family of any of the foregoing, has
any interest, direct or indirect, in the Sellers; and
(vii) all other agreements, licenses, contracts, arrangements,
commitments, understandings or obligations, known to the Sellers, oral or
written, of the Sellers which involve the payment by or to the Sellers of more
than $5,000.
Except as set forth in Schedule 5(q) hereto, all instruments set forth in
Schedule 5(q) hereto are fully assignable without the consent of any third
party, and the continuation, validity and effectiveness of all such instruments
will in no way be affected materially and adversely by the transactions
contemplated by this Agreement. To the best of Sellers' knowledge, there
exists no default or claimed or purported or alleged default on the part of any
party in the performance of any material obligation to be performed or paid by
any party under any contracts, plans or other instruments or arrangements
referred to in or submitted as a part of Schedule 5(q) hereto. The Sellers has
not received or given notice of any default or claimed or purported or alleged
default on the part of any party in the performance or payment of any material
obligation to be performed or paid by any party under any contracts, plans or
other instruments or arrangements referred to in or submitted as a part of
Schedule 5(q) hereto.
(r) Customers and Suppliers. Set forth in Schedule 5(r) hereto is a list
of names and addresses of the entities that account for 5% or more of the sales
or 10% or more of the purchases, respectively, made by the Sellers during the
calendar year 1995 showing with respect to each, the nature of the relationship
(including the principal categories of products bought or sold). Except as set
forth in Schedule 5(r) hereto, the Sellers has no knowledge of any intention of
any customer or supplier to terminate, cancel, modify, or change its business
relationship with the Sellers which individually or in the aggregate would be
materially adverse to the business of the Sellers. The Sellers have no
knowledge of any existing events or
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conditions or state of facts or circumstances relating to the Sellers'
relationships with customers and suppliers that will prevent the Buyer from
conducting the business of the Sellers after the consummation of the
transactions contemplated by this Agreement in essentially the same manner in
which it has heretofore been conducted by the Sellers.
(s) Permits and Licenses. Set forth in Schedule 5(s) hereto is a list and
brief description of all permits, licenses, notices and similar filings that
are required in the Sellers' operation of its respective business in each
jurisdiction in which it conducts business, the failure of which to possesses
would have a material adverse effect on the business, properties or condition
(financial or otherwise) of the Sellers. Except as set forth in Schedule 5(s)
hereto, all such permits, licenses, notices and similar filings may be freely
transferred to the Buyer. Except as set forth in Schedule 5(s) hereto, to the
best of Sellers' knowledge, the Sellers are not required to be licensed or
regulated by any governmental or regulatory body by reason of the particular
business conducted by it.
(t) Schedules and Other Information. Neither this Agreement, nor the
Schedules or Exhibits hereto, taken as a whole, contain any untrue statement of
a material fact or omit state a material fact necessary in order to make the
statements contained therein not misleading.
(u) Accuracy of Documents. All agreements, contracts, leases, titles and
other documents delivered by the Sellers to the Buyer for the Buyer's review in
connection with this Agreement and the transactions contemplated hereby,
including without limitation, all Articles of Organization, Operating
Agreements, Worlds Agreement, Phoenix License, minutes, membership record books
and tax returns are true, correct and complete copies of all such agreements,
contracts, leases, titles and other documents.
(v) [Intentionally omitted]
(w) Conduct of Business.
Except as set forth in Schedule 5(w):
(i) Since October 1, 1995, the Sellers have:
(A) used their best efforts to preserve its business organization
intact, to keep available the services of its employees and representatives and
to preserve the goodwill of its employees, customers, suppliers and others
having business relations with the Sellers; and
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<PAGE> 14
(B) maintained its books, accounts and records in the usual manner
on a basis consistent with prior years.
(ii) Since October 1, 1995, the Sellers have not:
(A) modified their practices with respect to employee compensation or
benefits, entered into any new oral or written compensation agreements with
employees or amended any existing oral or written compensation agreements
(except for annual increases in compensation of employees in the ordinary
course of business and consistent with past practice);
(B) issued or contracted to issue any debt or guarantees of debt;
(C) entered into any joint venture, partnership or other similar
arrangement for the conduct of its business;
(D) made any loans or advances to any employee, Member, officer,
director or Affiliate of the Sellers;
(E) directly or indirectly disposed or accelerated realization of any
of its assets, including inventory and receivables, except in the ordinary
course of business and consistent with past practice;
(F) changed the character of their business; or
(G) entered into any other transaction not in the ordinary course of
business.
(x) Accounts Receivable. All of the accounts receivable reflected in the
books and records of the Sellers represent bona fide sales of goods or
provision of services and arose in the ordinary course of business. Except as
set forth in Schedule 5(x), the Sellers has no knowledge of any accounts
receivable with a value in excess of $10,000 in the aggregate that are being
contested or disputed by the obligor thereon, or which the Sellers has reason
to believe will be contested or disputed.
(y) Transactions with Affiliates. Except as set forth on Schedule 5(y),
all transactions in excess of $5,000 between the Sellers and any Affiliate,
relating to Purchased Assets or Assumed Liabilities, (i) were conducted on
terms not materially less favorable than with unrelated third parties and (ii)
have not been fraudulent with respect to any creditor of the Sellers or any of
its Affiliates.
14
<PAGE> 15
(z) Product Warranties. Except as set forth in Schedule 5(z) hereto,
neither the Sellers does not have (i) any unexpired, express product warranty
with respect to any product that it manufactures or sells or that it has
heretofore manufactured or sold; (ii) received written notice of any claim
based on any product warranty or (iii) knowledge or any reasonable ground to
know of any claim (actual or threatened) based on any product warranty of which
it has received no written notice. No new (unused) products sold by the
Sellers failed to meet any specification relating thereto or were otherwise
defective, which failure individually or in the aggregate would have a material
adverse effect on the financial condition of the Sellers.
(aa) Representations and Warranties. All of the representations and
warranties of the Sellers contained in this Section 5 are true and correct on
and as of the date hereof.
6. Representations and Warrants of the Buyer. The Buyer represents and
warrants to the Sellers as follows:
(a) Organization, etc. The Buyer is a validly existing corporation,
duly organized under the laws of the State of Delaware, and has all requisite
power and authority to own, operate and lease its properties and assets and to
enter into and perform its obligations under this Agreement.
(b) Authority. All necessary proceedings of the Buyer and its
shareholders have been duly taken to authorize the execution, delivery and
performance of this Agreement. This Agreement, has been duly authorized,
executed and delivered by the Buyer and is the legal, valid and binding
obligation of the Buyer, enforceable against the Buyer in accordance with its
terms.
(c) Compliance with Instruments, Consents, Adverse Agreements. Neither
the execution and the delivery of this Agreement, nor the consummation of the
transaction contemplated hereby will conflict with or result in any violation
of or constitute a default under the Buyer's certificate of incorporation and
by-laws or any mortgage, indenture, license, permit, lease or other instrument,
judgment, decree, order, law or regulation by which the Buyer is bound. To the
Buyer's knowledge, no consent, approval or authorization of or designation,
declaration or filing with any governmental authority or other persons or
entities on the part of the Buyer is required in connection with the execution
or delivery of this Agreement or the consummation of the transaction
contemplated hereby. The Buyer is not a party to or subject to any agreement
or instrument, or subject to any charter or other restriction or any judgment,
15
<PAGE> 16
order, writ, injunction, decree, law, rule or regulation which materially and
adversely affects or, so far as the Buyer can now foresee, may in the future
materially and adversely affect the business operations, prospects, properties,
assets or condition, financial or otherwise, of the Buyer.
(d) Accuracy of Documents. All agreements, contracts, leases, titles and
other documents delivered by the Buyer to the Sellers for the Sellers' review
in connection with this Agreement and the transactions contemplated hereby are
true, correct and complete copies of all such agreements, contracts, leases,
titles and other documents.
(e) Representations and Warranties. All of the representations and
warranties of Buyer contained in this Section 6 are true and correct on and as
of the date hereof.
7. Covenants of Sellers. Sellers agree that prior to the Closing:
(a) Cooperation. Sellers shall use their best efforts to cause the
transactions contemplated by this Agreement to be consummated, and, without
limiting the generality of the foregoing, to obtain all consents and
authorizations of third parties and to make all filings with and give all
notices to third parties which may be necessary or reasonably required in order
to effect the transactions contemplated hereby. Sellers will use its best
efforts to preserve the business of the Sellers intact, to keep available the
services of its employees and representatives and to preserve the goodwill of
its employees, customers, suppliers and others having business relations with
the Sellers.
(b) Maintenance of Properties, etc. Sellers shall maintain the Purchased
Assets in customary repair, order and condition, reasonable wear and tear
excepted, and maintain insurance coverage currently in effect with respect to
the Purchased Assets and the conduct of the Business, or shall replace such
insurance coverage with insurance in such amounts and of such kinds comparable
to that in effect on the date of this Agreement.
(c) Maintenance of Books, etc. Sellers shall maintain its books, accounts
and records relative to the business in the usual manner on a basis consistent
with prior years. Sellers will duly comply in all respects with all laws,
regulations and decrees applicable to them in the conduct of its business.
(d) Access to Properties, etc. Sellers shall give to Buyer and to its
counsel, accountants, investment advisors and other representatives full
access, during normal business hours to all of the properties, books, tax
returns, contracts, commitments and records of the
16
<PAGE> 17
Sellers relative to the business, and will furnish to Buyer all such
documents and information with respect to the Business operations of the
Sellers as Buyer may from time to time reasonably request.
(e) Certain Prohibited Transactions. Except with the prior written
consent of the Buyer, the Sellers will not (i) enter into any contract to merge
or consolidate with any other corporation, (ii) change the character of the
Business, or sell, transfer or otherwise dispose of or encumber any part of the
Purchased Assets, (iii) enter into any other transaction involving the Business
not in the ordinary course of business.
(f) Amending Schedules and Exhibits. From time to time prior to the
Closing Date, Sellers shall promptly supplement or amend the Schedules and
Exhibits (i) with respect to any matter hereafter arising which, if existing or
occurring at the date of this Agreement, would have been required to be set
forth or described in the Schedules and Exhibits and (ii) to correct any
untruth or inaccuracy contained in any representation or warranty in this
Agreement or any Schedule hereto, immediately upon Sellers becoming aware of
such untruth or inaccuracy. No such supplement or amendment shall have the
effect of curing any misrepresentation or breach of warranty for the
transactions contemplated by this Agreement unless Buyer elects to waive such
breach and consummate the transactions contemplated by this Agreement
8. Conditions Precedent to the Obligations of Buyer. All obligations of
Buyer under this Agreement are subject to the fulfillment, at or prior to the
Closing Date, of each of the following conditions, any or all of which may be
waived in whole or in part at or prior to the Closing by Buyer:
(a) Sellers' Representations and Warranties. The representations and
warranties of Sellers herein contained shall be true on and as of the Closing
Date with the same force and effect as though made on and as of said date,
except as affected by transactions contemplated or permitted by this Agreement.
(b) Sellers' Covenants. Sellers shall have performed all of its
obligations and agreements and complied with all of its covenants contained in
this Agreement to be performed and complied with by Sellers on or prior to the
Closing Date.
(c) Sellers' Closing Certificate. Buyer shall have received a
certificate of Sellers, executed by an authorized representative of Sellers,
dated the Closing Date, certifying
17
<PAGE> 18
as to the fulfillment of the matters mentioned in paragraphs (a) and (b) of
this Section 8.
(d) Consents. Buyer shall have received evidence, satisfactory to Buyer
and its counsel, that all of the consents disclosed in any Schedule hereto have
been duly obtained and that all permits, licenses, franchises and other
authorizations necessary to the operation of the Sellers has been transferred
to or issued to Buyer.
(e) No Litigation. No action, suit or proceeding before any court or
any governmental or regulatory authority shall have been commenced and still be
pending and no action, suit or proceeding, by any governmental or regulatory
authority shall have been commenced against Sellers or against Buyer, seeking
to restrain, prevent or change the transactions contemplated hereby or
questioning the validity or legality of any of such transactions.
(f) Documentation. All matters and proceedings taken in connection with
the sale of the Purchased Assets by Sellers to Buyer as herein contemplated,
including forms of instruments and matters of title, shall be reasonably
satisfactory to Sellers and Buyer and to their counsel.
(g) Evidence of Authorization. Buyer shall have received such evidence of
the authorization of the transactions contemplated hereby by Sellers together
with certificates of incumbency, written consent and other appropriate
documents, as Buyer shall reasonably request.
(h) Sellers Deliveries. All deliveries, as described in Section 4(a) and
elsewhere herein, required to be made under this Agreement to Buyer on or
before the Closing Date shall have been received by the Buyer.
(i) Wesco Amendment. Sellers shall have caused Wesco to amend its
Certificate of Incorporation to elect out of the Delaware close corporation
laws.
8.A. Conditions Precident to the Obligations of Sellers. All obligations
of Sellers under this Agreement are subject to fulfillment, at or prior to the
Closing Date, of each of the following conditions, any or all of which may be
waived in whole or in part at or prior to Closing by Sellers.
(a) Buyer's Representations and Warranties. The representations and
warranties of Buyer herein contained shall be true on and as of the Closing
Date with the same force and effect as though made on and as of said date,
except as affected by transactions
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<PAGE> 19
contemplated or permitted by this Agreement.
(b) Buyer's Deliveries. All deliveries, as described in Section 4(b)
herein, required to be made under this Agreement to Sellers on or before the
Closing Date shall have been received by Sellers.
9. Survival of Representations and Warranties. The parties hereto
agree that, notwithstanding any right of Buyer fully to investigate the affairs
of Sellers and notwithstanding any knowledge of facts determined or
determinable by Buyer pursuant to such investigation or right of investigation,
Buyer has the right to rely fully upon the representations and warranties of
Sellers contained in this Agreement and on the accuracy of the documents,
certificates, Exhibits, and Schedules given or delivered by Sellers to Buyer
herewith or at the Closing or delivered to Buyer to review for purposes of due
diligence. All representations and warranties made in this Agreement or in any
Exhibit, Schedule, certificate or document delivered herewith or at the Closing
or delivered to Buyer to review for purposes of due diligence shall survive the
execution and delivery thereof and the Closing hereunder for a period of two
(2) years provided that the representations and warranties contained in Section
5(e) hereof with respect to tax returns and payments shall survive until the
expiration of the respective statutes of limitation applicable thereto.
10. Bulk Sales Compliance. Buyer and Sellers each waives compliance with
the provisions of the applicable statutes relating to bulk transfers or bulk
sales. In accordance with the provisions of the Indemnification Agreement
described in Section 14 below, Sellers shall indemnify and hold Buyer harmless
from and against any and all losses, costs, damages, claims or expenses
(including attorneys' fees) which Buyer may sustain by reason of Sellers'
failure to comply with such bulk transfer or bulk sales provisions, except with
respect to the obligations and liabilities being assumed by Buyer under this
Agreement.
11. Severability. If any provision of this Agreement or the application
of any such provision to any party or circumstances shall be determined by any
court of competent jurisdiction to be invalid and unenforceable to any extend,
the remainder of this Agreement or the application of such provision to such
person or circumstances other than those to which it is so determined to be
invalid and unenforceable, shall not be affected thereby, and each provision
hereof shall be validated and shall be enforced to the fullest extent permitted
by law.
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<PAGE> 20
12. Applicable Law. This Agreement shall be governed and construed and
interpreted in accordance with the internal laws of the State of Florida
without regard to principles of conflicts of laws.
13. Waivers and Notices. Any failure by any party to this Agreement to
comply with any of its obligations, agreement or covenants hereunder may be
waived by the Sellers in the case of a default by the Buyer and by the Buyer in
the case of a default by the Sellers. All waivers under this Agreement and all
notices, consents, demands, requests, approvals and other communications which
are required or may be given hereunder shall be in writing and shall be deemed
to have been duly given if delivered or mailed certified first class mail,
postage prepaid, return receipt requested:
(a) If to the Sellers to each of:
Interactive Solutions, LLC
191 West Lowry Lane
Suite A
Lexington, Kentucky 40503
Bruce W. Hanks
3500 Beaver Place Road
#167
Lexington, Kentucky 40503
Michael Jonas
4142 Waikiki Drive
Sarasota, Florida 34241
Kevin Rogers
2120 Harbourside Drive
#617
Longboat Key, Florida 34228
(b) If to the Buyer:
ISL, Inc.
2150 Whitfield Industrial Way
Sarasota, Florida 34243
or to such other person or persons at such address or addresses as may be
designated by written notice to the other parties hereunder.
20
<PAGE> 21
14. Obligation of the Sellers to Indemnify. The Sellers hereby agree to
indemnify and hold harmless the Buyer and its Affiliates in accordance with the
Escrow/Indemnity Agreement.
15. Access to Books and Records Post-Closing. After the Closing, (i) the
Sellers shall provide the Buyer full access during normal business hours (upon
reasonable prior notice) to all books and records which are part of the
Retained Assets insofar as they relate to any Purchased Assets or Assumed
Liabilities or the conduct of the business after the Closing and (ii) the Buyer
shall provide the Sellers full access during normal business hours (upon
reasonable prior notice) to all books and records which are part of the
Purchased Assets which relate to the Purchased Assets or Assumed Liabilities or
the conduct of the business prior to the Closing.
16. Entire Agreement. This Agreement, together with the other writings
delivered in connection herewith, embodies the entire Agreement and
understanding of the parties hereto and supersedes all prior agreements
including but not limited to, a certain Memorandum of Agreement by and among
Buyer and Sellers dated March 11, 1996, or understandings between the parties,
oral or written, express or implied. This Agreement cannot be amended orally,
but only by a writing duly executed by the parties.
17. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same document.
18. Headings. Headings of the Sections in this Agreement are for
reference purposes only and shall not be deemed to have any substantive effect.
19. Binding Effect, Benefits. This Agreement shall inure to the benefit
of and binding upon the parties hereto and their respective successors and
assigns; provided, however, that nothing in this Agreement shall be construed
to confer any rights, remedies, obligations or liabilities on any person other
than the parties hereto or their respective successors and assigns.
20. Expenses. All costs and expenses, including any sales taxes payable
on the transfer of the Purchased (excluding attorneys and accountant's fees)
incurred by the parties hereto in connection with this Agreement and the
transactions contemplated hereby, shall be paid by the Buyer at Closing. Each
party shall pay its own attorneys and accountant's fees in connection with this
Agreement.
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<PAGE> 22
21. Brokers. The Sellers agrees to indemnify and hold harmless the Buyer
and its Affiliates from and against any and all claims for any other broker's
or finder's fee or commission in connection with the transactions contemplated
hereby arising out of or based upon any act of the Sellers or its Affiliates.
The Buyer agrees to indemnify and hold harmless the Sellers and its Affiliates
from and against any and all claims for any broker's or finder's fee or
commission in connection with the transactions contemplated hereby arising out
of or based upon any act of the Buyer or its Affiliates.
IN WITNESS WHEREOF, the parties heave executed this Agreement as of the
date first written above.
SELLER:
INTERACTIVE SOLUTIONS, LLC
a Kentucky Limited Liability Company
By: /s/ Bruce W. Hanks
----------------------------------
Bruce W. Hanks, President
/s/ Bruce W. Hanks /s/ Bruce W. Hanks
- -------------------------------- ---------------------------------
Bruce W. Hanks, Individually Bruce W. Hanks, Member
/s/ Kevin Rogers /s/ Kevin Rogers
- -------------------------------- ---------------------------------
Kevin Rogers, Individually Kevin Rogers, Member
/s/ Michael Jonas /s/ Michael Jonas
- -------------------------------- --------------------------------
Michael Jonas, Individually Michael Jonas, Member
BUYER:
ISL, INC.
By: /s/ Ewen R. Cameron
---------------------------------
Ewen R. Cameron, President
22
<PAGE> 23
EXHIBIT A
ASSUMED LIABILITIES
Aggregate amount of $50,000
23
<PAGE> 24
EXHIBIT A-1
SUMMARY OF TERMS OF
EMPLOYMENT AGREEMENTS
1. Term - five years
2. Compensation
a. Kevin B. Rogers - $175,000/year
b. Bruce Hanks - $100,000/year
3. Benefits - Right to participate in any benefit plans offered to
salaried employees of Buyer and its parent.
4. Termination - (i) for cause and (ii) without cause provided ninety (90)
days severance paid.
5. Inventions/Confidentiality - All inventions, patents, copyrights and
other proprietary rights shall be transferred to and/or owned by Buyer.
6. Non-Compete - Non-competition with business of Buyer and its affiliates
during term and for a period to be agreed upon thereafter which shall not be
less than 6 months and no more than 18 months.
24
<PAGE> 25
EXHIBIT B
RETAINED ASSETS
None
25
<PAGE> 26
EXHIBIT C
TELTRONICS, INC.
SUMMARY OF PROPOSED TERMS
ISSUER: Teltronics, Inc. ("Issuer")
SECURITIES: 1,000,000 shares of non-voting common stock, $.001 par value
("Convertible Common").
DIVIDENDS: Shares will have dividends only if, when and as declared by the
Board of Directors.
VOTING: Will have no voting rights except with respect to any attempted
amendment, repeal or modification of the Certificate of Incorpo-
ration or Designations by Issuer changing the rights of the
Convertible Common.
CONVERSION: Provided the Sellers are not in default of their obligations under
this Agreement, the Sellers will have the option to convert the
Convertible Common to Common stock of the Issuer on a one share
for one share basis thirty days after demonstration of each of the
following to the satisfaction of the Issuer ("Conversion Date"):
(i) Buyer enters into and receives a fully executed contract
from the U.S. Department of Defense, Department of the Army,
utilizing the Technology, with contract revenues of no less than
$50,000,000 or Buyer enters into and receives fully executed major
contracts utilizing the Technology, with contract revenues of
$50,000,000 within any 12 month period on terms and conditions
acceptable to the Board of Directors; and
(ii) Issuer completes due diligence and investigation of the
Group, Wesco and the Partnership with respect to ownership of the
Technology and authorization of its transfer.
REDEMPTION: Issuer will have the right to redeem, in whole or in part,
the Convertible Common not previously converted at any
time commencing six months subsequent to the Conversion Date by
payment of a redemption price equal to $500,000 ("Conversion
Price") plus 15% of the Conversion Price for each year the
Convertible Common are outstanding prior to conversion.
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<PAGE> 27
RESTRICTED SECURITIES: The Shares will be restricted securities within the
meaning of Rule 144 promulgated under the Securities
Act of 1933, as amended.
SHAREHOLDER
AGREEMENT: The Group and Issuer will enter into a Shareholder
Agreement which will provide that:
(i) The holder of the Convertible Common will
not acquire any additional Common Shares of Issuer from
any party nor grant to or receive from any other party
any voting rights with respect to the Common Shares for
a period of five years without the approval of two
thirds of the members of the Board of Directors of the
Issuer.
(ii) The holder will not sell, transfer or dispose any
of the Convertible Common and/or the Common
without offering Issuer a right of first refusal to
acquire such Convertible Common and/or Common on the
same terms and conditions proposed by any third party.
CERTIFICATE OF
INCORPORATION: Issuance of the Convertible Common requires amendments
to the Issuer's Certificate of Incorporation to be
approved at the next meeting by the stockholders of the
Issuer.
27
<PAGE> 28
EXHIBIT D
MEMBERS
<TABLE>
<CAPTION>
Membership Name Percentage Ownership
--------------- --------------------
<S> <C>
Kevin Rogers 33 1/3%
Bruce W. Hanks 33 1/3%
Michael Jonas 33 1/3%
</TABLE>
28
<PAGE> 29
EXHIBIT E
MEMBERS
Wesco Capital Holdings, Inc. a Delaware corporation
Authorized Shares: 1,500 shares with no par value
Issued and outstanding shares: 740 shares
Outstanding Shares owned of Record as follows:
<TABLE>
<S> <C>
Bruce W. Hanks 170 shares
Kevin Rogers 170 shares
Michael Jonas 170 shares
*Brett Pafford *115 shares
*Wayne Seufert Trust *115 shares
</TABLE>
Sellers own beneficially and of record at least 68.91% of the outstanding
shares.
*Disputed
29
<PAGE> 30
Schedules 5(f), 5(m), 5(r), 5(s), 5(w), 5(x), 5(y) and 5(z)
Buyer and Sellers agree to complete these Schedules before Closing but no
later than April 8, 1996. Any and all information submitted by Sellers to
Buyer in connection with these Schedules, after the execution of this
Agreement, is subject to review and approval by Buyer. Buyer may, for any
reason, refuse to approve all or part of any proposed additions by Sellers to
these Schedules.
<PAGE> 31
Schedule 5(k)
Financial Condition
A. Worlds Agreement
Under the Worlds Agreement the aggregate amounts for Sellers' work:
1. Performed, invoiced and paid is $_________.
2. Performed, invoiced and not paid (outstanding) is $________.
3. Performed, but not yet invoiced is $_________.
4. To be performed is $_________.
B. Phoenix License
Under the Phoenix License amounts:
1. Already paid by Sellers is $________.
2. Billed to Sellers, but not yet paid is $________.
3. To be billed to Sellers is $________.
<PAGE> 32
Schedule 5(l)
Trademarks, Licenses, Patents, etc.
A. All of Sellers' trademarks, service marks, trade names, drawings,
concepts, inventions, brands, patents, all applications for registration
and registrations for trademarks, copyrights and patents, all franchises,
permits, licenses and any and all rights of Sellers with respect to the
above including but not limited to: (i) The patent, patent application
and/or assignment of invention entitled "Multi Pro Systems Board", Kevin
B. Rogers, Inventor dated 10/17/95; (ii) "Multi Pro Systems Card"; (iii)
"ISL Multimedia Processing Unit or ISL MPU"; (iv) "ISL Processing Unit";
(v) "Multi Pro System Board"; (vi) Full MPEG decoder subsystem; (vii)
Modular Design with Selective Placement; (viii) Supreme Connector
Management.
Together with all of the inventions, trade secrets, shop rights, know-how,
business plans and strategies, proprietary processes and formulas, data
bases, and all other proprietary technical information, whether patentable
or unpatentable related to, derived from or utilized in any of the above.
Additionally, all of Sellers' computer programs and a copy of the source
code and object code of all computer programs used by Sellers, together
with all additions, modifications, updates and enhancements thereto; all
design specifications including, but not limited to, program descriptions,
system flow charts, file layouts, report layouts, screen layouts, and all
other computer program documentation.
<PAGE> 33
Schedule 5(q)
Agreements, Licenses, etc.
1. Development & Software License Agreement entered into as of October 17,
1995, by and between Worlds, Inc., a Delaware corporation and Interactive
Solutions, Limited, a Kentucky Corporation with principal offices located
at 191 West Lowry Lane, Suite A, Lexington, Kentucky, together with any
and all amendments, assignments and/or modifications thereof.
2. Computer Technology License Agreement effective as of December 15, 1995
by and between Phoenix Technologies Ltd., a Delaware corporation and
Interactive Solutions, Ltd. a Kentucky corporation, together with any and
all amendments, assignments and/or modifications thereof.
