Document:

exv10w4

 

Exhibit 10.4

SHAREHOLDERS’ AGREEMENT

     THIS SHAREHOLDERS’ AGREEMENT (this “Agreement”) is made and entered into as of September 21,
2005 by and among Valley Forge Scientific Corp., a Pennsylvania corporation (the “Company”), and
the shareholders identified on Schedule I attached hereto (each, a “Shareholder” and collectively,
the “Shareholders”) of the Company.

RECITALS

     A. Concurrently with the execution of this Agreement, the Company, Synergetics Acquisition
Corporation, a Delaware corporation and a wholly-owned subsidiary of the Company (“MergerSub”), and
Synergetics, Inc. a Missouri corporation (“Synergetics”), have consummated the Merger of the
MergerSub with and into Synergetics (the “Merger”) pursuant to that certain Agreement and Plan of
Merger (the “Merger Agreement”), dated as of May 2, 2005, as amended by Amendment No. 1 to
Agreement and Plan of Merger, dated as of June 2, 2005, and as further amended by Amendment No. 2
to Agreement and Plan of Merger, dated as of July 15, 2005, among Valley Forge, MergerSub and
Synergetics (the “Merger Agreement”);

     B. All capitalized terms not otherwise defined herein shall have the meaning ascribed to them
in the Merger Agreement;

     C. The Shareholders are the beneficial holders of record of the number of shares of
outstanding shares of the Common Stock, no par value per share, of the Company (collectively, the
“Shares”), as is indicated on Schedule I attached hereto; and

     D. In consideration of and to induce the consummation of the Merger by the Company, each of
the Shareholders agrees not to sell or otherwise dispose of any of the Shares held by the
Shareholder, except in accordance with the terms hereof, and to vote their Shares as provided
herein.

     NOW, THEREFORE, in consideration of the mutual promises and the mutual covenants contained
herein, the parties agree as follows:

     1. Prohibited Transfers. For a period of twelve (12) months following the date
hereof, the Shareholders shall not sell, assign, transfer, pledge, hypothecate, mortgage or dispose
of, by gift or otherwise, or in any way encumber (each, a “Transfer”), all or any part of the
Shares beneficially owned by them, without the prior written approval of the holders of at least
80% of the Shares then held by the non-selling Shareholders. For purposes of this Agreement, the
term “Shares” shall include all Shares presently held or hereafter acquired by the Shareholders.
The Company shall not transfer on its books any Shares which are subject to this Agreement unless
the provisions hereof have been complied with in full. Any purported Transfer without full
compliance with the provisions of this Agreement shall be null and void.

     2. Exempt Transfers. Notwithstanding anything contained herein to the contrary, the
restrictions on Transfers set forth in Section 1 hereof shall not apply to any Transfer or
Transfers by a Shareholder made to a Permitted Transferee (as defined below) of such Shareholder,
provided such Permitted Transferee agrees in writing to be bound by, and to comply with, all
provisions of this Agreement. For purposes of this Agreement, “Permitted Transferee” shall

 

 

mean with respect to any Shareholder, (i) the spouse or lineal descendants (but not minor
children) of such Shareholder, (ii) any trust created solely for the benefit of such Shareholder,
the spouse or lineal descendants of such Shareholder, or such Shareholder’s estate, (iii) any
corporation, limited liability company or partnership in which such Shareholder, or the spouse or
lineal descendants of such Shareholder, are the direct and beneficial owners of all of the equity
interests (provided such Shareholder, spouse and lineal descendants agree in writing to remain the
direct and beneficial owners of all such equity interests), or (iv) the personal representatives of
such Shareholder upon such Shareholder’s death for purposes of administration of such Shareholder’s
estate or upon such Shareholder’s adjudicated incapacity for purposes of the protection and
management of the assets of such Shareholder.

     3. Representations, Warranties and Covenants of the Shareholders. Each Shareholder,
severally and not jointly, hereby represents, warrants and covenants to the Company and the other
Shareholders the following:

          3.1 Ownership of Shares. The Shareholder (i) is the holder and beneficial owner of
the Shares set forth opposite such Shareholder’s name on Schedule I attached hereto, which at the
date hereof and at all times until the termination of this Agreement will be free and clear of any
liens, claims, options, charges or other encumbrances, (ii) does not beneficially own any shares of
stock of the Company other than the Shares and (iii) has full power and authority to make, enter
into, deliver and carry out the terms of this Agreement.

          3.2 Validity; No Conflict. This Agreement constitutes the legal, valid and binding
obligation of the Shareholder, enforceable against the Shareholder in accordance with its terms,
except as such enforceability may be limited by bankruptcy, insolvency, moratorium or other similar
laws affecting or relating to creditors’ rights generally and by general principles of equity.
Neither the execution of this Agreement by the Shareholder nor the consummation of the transactions
contemplated hereby will result in a breach or violation of the terms of any agreement by which
the Shareholder is bound or of any decree, judgment, order, law or regulation now in effect of any
court or other governmental body applicable to the Shareholder.

          3.3 No Voting Trusts and Agreements. Between the date of this Agreement and the
termination hereof, the Shareholder will not, and will not permit any entity under the
Shareholder’s control to, deposit any shares of the Company’s capital stock held by the Shareholder
or such entity in a voting trust or subject any shares of the Company’s capital stock held by the
Shareholder or such entity to any arrangement or agreement with respect to the voting of such
shares of capital stock, other than agreements entered into with the Company and the other
Shareholders, unless the trustee of such trust agrees in writing to be bound by the terms of this
Agreement.

     4. Representations, Warranties and Covenants of the Company.

          4.1 Due Authorization. This Agreement has been authorized by all necessary corporate
action on the part of the Company and has been duly executed by a duly authorized officer of the
Company.

          4.2 Validity; No Conflict. This Agreement constitutes the legal, valid and binding
obligation of the Company, enforceable against the Company in accordance with its

 

 

terms, except as such enforceability may be limited by bankruptcy, insolvency, moratorium or
other similar laws affecting or relating to creditors’ rights generally and by general principles
of equity. Neither the execution of this Agreement by the Company nor the consummation of the
transactions contemplated hereby will result in a breach or violation of the terms of any agreement
by which the Company is bound or of any decree, judgment, order, law or regulation now in effect of
any court or other governmental body applicable to the Company.

     5. Additional Documents. Each of the Shareholders and the Company hereby covenant and
agree to execute and deliver any additional documents necessary or desirable, in the reasonable
opinion of the Company’s legal counsel or the Shareholders, as the case may be, to carry out the
intent of this Agreement.

     6. Termination. This Agreement and the respective rights and obligations of the
parties hereto shall terminate upon on the first anniversary of the date hereof.

     7. Miscellaneous.

          7.1 Severability. If any term, provision, covenant or restriction of this Agreement
is held by a court of competent jurisdiction to be invalid, void or unenforceable, the remainder of
the terms, provisions, covenants and restrictions of this Agreement shall remain in full force and
effect and shall in no way be affected, impaired or invalidated.

          7.2 Binding Effect and Assignment. This Agreement and all of the provisions hereof
shall be binding upon and inure to the benefit of the parties hereto and their respective
successors, heirs and permitted assigns, but, except as otherwise specifically provided herein,
neither this Agreement nor any of the rights, interests or obligations of the parties hereto may be
assigned by any of the parties without the prior written consent of the other.

          7.3 Amendments and Modifications. This Agreement may not be modified, amended,
altered or supplemented except upon the execution and delivery of a written agreement executed by
the parties hereto.

          7.4 Specific Performance; Injunctive Relief. The parties hereto acknowledge that the
Company and the non-breaching Shareholders will be irreparably harmed and that there will be no
adequate remedy at law for a violation of any of the covenants or agreements of any Shareholder set
forth herein. Therefore, it is agreed that, in addition to any other remedies which may be
available to the Company and non-breaching Shareholders upon such violation, the Company and such
non-breaching Shareholders shall have the right to enforce such covenants and agreements by
specific performance, injunctive relief or by any other means available to it at law or in equity.

          7.5 Notices. All notices and other communications hereunder shall be in writing and
shall be deemed duly given (a) on the date of delivery if delivered personally, or by telecopy or
telefacsimile, upon confirmation of receipt, (b) on the first business day following the date of
dispatch if delivered by a recognized next-day courier service, or (c) on the tenth business day
following the date of mailing if delivered by registered or certified mail, return receipt
requested, postage prepaid. All notices hereunder shall be delivered as set forth below, or

 

 

pursuant to such other instructions as may be designated in writing by the party to receive
such notice:

	 	 	 
	If to the Company:

	 	With a copy to:
	 
	 	 
	Gregg D. Scheller, CEO

	 	Robert Guest, Esquire
	3845 Corporate Center Drive

	 	Doster Mickes James Ullom Benson & Guest LLC
	O’Fallon, Missouri 63368

	 	17107 Chesterfield Road, Suite 300
	636.939.5100 (p)

	 	Chesterfield, Missouri 63005
	636.939.6885 (f)

	 	(636) 532-0042 (p)
	 

	 	(636) 532-1082 (f)

If to any Shareholder: To the address set forth on Schedule I attached hereto.

          7.6 Governing Law. This Agreement shall be governed by, construed and enforced in
accordance with the laws of the State of Delaware without giving effect to principles of conflicts
of law.

          7.7 Entire Agreement. This Agreement contains the entire understanding of the parties
in respect of the subject matter hereof, and supersedes all prior negotiations and understandings
between the parties with respect to such subject matter.

          7.8 Counterparts. This Agreement may be executed in counterparts, each of which shall
be an original, but all of which together shall constitute one and the same agreement.

          7.9 Effect of Headings. The section headings herein are for convenience only and
shall not affect the construction or interpretation of this Agreement.

[Signature pages follow]

 

 

          IN WITNESS WHEREOF, the parties have caused this Agreement to be duly executed on the day and
year first above written.

	 	 	 	 	 
	 	 	VALLEY FORGE SCIENTIFIC CORP.
	 
	 	 	 	 
	 

	 	By:
	 	/s/ Jerry L. Malis
	 

	 	 	 	 
	 

	 	 	 	     Name: Jerry L. Malis
	 

	 	 	 	     Title: President
	 
	 	 	 	 
	 	 	SHAREHOLDERS:
	 
	 	 	 	 
	 	 	/s/ Jerry L. Malis
	 	 	 
	 	 	Jerry L. Malis
	 
	 	 	 	 
	 	 	MALIS FAMILY, L.P.
	 
	 	 	 	 
	 

	 	By:
	 	/s/ Jerry L. Malis
	 

	 	 	 	 
	 

	 	 	 	     Name: Jerry L. Malis
	 

	 	 	 	     Title: General Partner

[Signature Page to Shareholders’ Agreement]

 

 

	 	 	 	 	 
	 	 	GREGG D. SCHELLER REVOCABLE

LIVING TRUST DATED 3/5/02
	 
	 	 	 	 
	 

	 	By:
	 	/s/ Gregg D. Scheller
	 

	 	 	 	 
	 

	 	 	 	     Name: Gregg D. Scheller
	 

	 	 	 	     Title: Trustee
	 
	 	 	 	 
	 	 	DONNA M. SCHELLER REVOCABLE

LIVING TRUST DATED 3/5/02.
	 
	 	 	 	 
	 

	 	By:
	 	/s/ Donna M. Scheller
	 

	 	 	 	 
	 

	 	 	 	     Name: Donna M. Scheller
	 

	 	 	 	     Title: Trustee
	 
	 	 	 	 
	 	 	KURT W. GAMPP, JR., REVOCABLE

LIVING TRUST DATED 10/1/02
	 
	 	 	 	 
	 

	 	By:
	 	/s/ Kurt W. Gampp, Jr.
	 

	 	 	 	 
	 

	 	 	 	     Name: Kurt W. Gampp, Jr.
	 

	 	 	 	     Title: Trustee

[Signature Page to Shareholders’ Agreement]

 

 

	 	 	 	 	 
	 	 	ESTATE OF LEONARD I. MALIS
	 
	 	 	 	 
	 

	 	By:	 	 
	 

	 	 	 	 
	 

	 	 	 	     Name:
	 

	 	 	 	     Title:

[Signature Page to Shareholders’ Agreement]

 

 

	 	 	 	 	 
	 	 	LEONARD MALIS AND RUTH MALIS FAMILY L.P.
	 
	 	 	 	 
	 

	 	By:	 	 
	 

	 	 	 	 
	 

	 	 	 	     Name: Ruth Malis
	 

	 	 	 	     Title: General Partner

 

 

[Signature Page to Shareholders’ Agreement]

 

 

Schedule I

SHAREHOLDERS

	 	 	 	 	 
	Name and Address	 	Number of Shares
	Gregg D. Scheller Revocable Living Trust
	 	 	807,840	 
	Dated 3/5/02
	 	 	 	 
	17820 Suzanne Ridge Road
	 	 	 	 
	Wildwood, MO 63038

	 	 		 
	 
	 	 	 	 
	Donna M. Scheller Revocable Living Trust
	 	 	817,020	 
	Dated 3/5/02
	 	 	 	 
	17820 Suzanne Ridge Road
	 	 	 	 
	Wildwood, MO 63038

	 	 		 
	 
	 	 	 	 
	Kurt W. Gampp, Jr., Revocable Living Trust
	 	 	958,392	 
	Dated 10/1/02
	 	 	 	 
	2029 Sundowner Ridge
	 	 	 	 
	Wildwood, MO 63011

	 	 	 	 
	 
	Jerry L. Malis
	 	 	932,276	 
	3000 Valley Forge Circle PH 43
	 	 	 	 
	King of Prussia, PA 19406-1110

	 	 		 
	 
	 	 	 	 
	Malis Family L.P.
	 	 	200,000	 
	c/o Jerry L. Malis
	 	 	 	 
	Valley Forge Scientific Corp.
	 	 	 	 
	3600 Horizon Drive
	 	 	 	 
	King of Prussia, PA 19406

	 	 		 
	 
	 	 	 	 
	Estate of Leonard I. Malis
	 	 	482,242	 
	219-44 Peck Avenue
	 	 	 	 
	Hollis Hills, NY 11427

	 	 		 
	 
	 	 	 	 
	Leonard Malis and Ruth Malis Family L.P.
	 	 	400,000	 
	c/o Ruth Malis
	 	 	 	 
	219-44 Peck Avenue
	 	 	 	 
	Hollis Hills, NY 11427Exhibit 10.1

 

Exhibit
10.1

EXECUTION VERSION

CDI CAREER DEVELOPMENT INSTITUTES LTD.

- and –

CDI CORPORATE EDUCATION SERVICES INC.

- and –

CROSSOFF INCORPORATED

 

ASSET SALE AGREEMENT

September 21, 2005

 

Osler, Hoskin & Harcourt LLP

 

 

TABLE OF CONTENTS

	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Page
	ARTICLE 1	 	 	 	 	 	 
	 	 	DEFINITIONS AND PRINCIPLES OF INTERPRETATION	 	 	1	 
	 

	 	1.1
	 	Definitions
	 	 	1	 
	 

	 	1.2
	 	Certain Rules of Interpretation
	 	 	15	 
	 

	 	1.3
	 	Knowledge
	 	 	16	 
	 

	 	1.4
	 	Entire Agreement
	 	 	17	 
	 

	 	1.5
	 	Schedules
	 	 	17	 
	 
	 	 	 	 	 	 	 	 
	ARTICLE 2	 	 	 	 	 	 
	 	 	PURCHASE AND SALE	 	 	18	 
	 

	 	2.1
	 	Action by Vendor and Purchaser
	 	 	18	 
	 

	 	2.2
	 	Closing
	 	 	19	 
	 

	 	2.3
	 	Tender
	 	 	19	 
	 

	 	2.4
	 	Non-Assignable Rights
	 	 	20	 
	 
	 	 	 	 	 	 	 	 
	ARTICLE 3	 	 	 	 	 	 
	 	 	PURCHASE PRICE	 	 	20	 
	 

	 	3.1
	 	Purchase Price
	 	 	20	 
	 

	 	3.2
	 	Satisfaction of Purchase Price
	 	 	21	 
	 

	 	3.3
	 	Delivery of Closing Date Financial Statement
	 	 	21	 
	 

	 	3.4
	 	Net Working Capital Adjustment
	 	 	21	 
	 

	 	3.5
	 	Objection to Draft Closing Date Financial Statement
	 	 	22	 
	 

	 	3.6
	 	Interest
	 	 	23	 
	 

	 	3.7
	 	Adjustment to and Allocation of Purchase Price
	 	 	23	 
	 
	 	 	 	 	 	 	 	 
	ARTICLE 4	 	 	 	 	 	 
	 	 	REPRESENTATIONS AND WARRANTIES OF THE VENDOR	 	 	24	 
	 

	 	4.1
	 	Incorporation and Corporate Power
	 	 	24	 
	 

	 	4.2
	 	Residence of the Vendor
	 	 	24	 
	 

	 	4.3
	 	No Subsidiaries
	 	 	24	 
	 

	 	4.4
	 	Due Authorization and Enforceability of Obligations
	 	 	24	 
	 

	 	4.5
	 	Absence of Conflicts
	 	 	25	 
	 

	 	4.6
	 	Regulatory Approvals
	 	 	25	 
	 

	 	4.7
	 	Financial Statements
	 	 	26	 
	 

	 	4.8
	 	Absence of Changes and Unusual Transactions
	 	 	26	 
	 

	 	4.9
	 	Title to Certain Assets
	 	 	26	 
	 

	 	4.10
	 	Business in Compliance with Law
	 	 	27	 
	 

	 	4.11
	 	Assigned Intellectual Property and Assigned Technology
	 	 	27	 
	 

	 	4.12
	 	Leased Real Property
	 	 	27	 
	 

	 	4.13
	 	Environmental Matters
	 	 	28	 
	 

	 	4.14
	 	Employment Matters
	 	 	28	 
	 

	 	4.15
	 	Collective Agreements
	 	 	28	 
	 

	 	4.16
	 	Consultants
	 	 	28	 
	 

	 	4.17
	 	Benefits Plans
	 	 	29	 
	 

	 	4.18
	 	Material Contracts
	 	 	29	 

-i-

 

TABLE OF CONTENTS
(continued)

	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Page
	 

	 	4.19
	 	Litigation
	 	 	29	 
	 

	 	4.20
	 	Tax Matters
	 	 	29	 
	 

	 	4.21
	 	No Broker
	 	 	30	 
	 

	 	4.22
	 	Disclaimer of Other Representations and Warranties
	 	 	30	 
	 
	 	 	 	 	 	 	 	 
	ARTICLE 5	 	 	 	 	 	 
	 	 	REPRESENTATIONS AND WARRANTIES OF THE PURCHASER	 	 	30	 
	 

	 	5.1
	 	Incorporation
	 	 	31	 
	 

	 	5.2
	 	Due Authorization and Enforceability of Obligations
	 	 	31	 
	 

	 	5.3
	 	Absence of Conflicts
	 	 	31	 
	 

	 	5.4
	 	Financial Ability
	 	 	31	 
	 

	 	5.5
	 	Conditional Listing Approval
	 	 	32	 
	 

	 	5.6
	 	Litigation
	 	 	32	 
	 

	 	5.7
	 	No Breach
	 	 	32	 
	 

	 	5.8
	 	Goods and Services Tax and Harmonized Sales Tax Registration
	 	 	32	 
	 

	 	5.9
	 	No Broker
	 	 	33	 
	 

	 	5.10
	 	Due Diligence by Purchaser
	 	 	33	 
	 
	 	 	 	 	 	 	 	 
	ARTICLE 6	 	 	 	 	 	 
	 	 	SURVIVAL	 	 	33	 
	 

	 	6.1
	 	Nature and Survival
	 	 	33	 
	 
	 	 	 	 	 	 	 	 
	ARTICLE 7	 	 	 	 	 	 
	 	 	PURCHASER’S CONDITIONS PRECEDENT	 	 	34	 
	 

	 	7.1
	 	Truth and Accuracy of Representations of Vendor
	 	 	34	 
	 

	 	7.2
	 	Compliance with Vendor Covenants
	 	 	34	 
	 

	 	7.3
	 	Receipt of Closing Documentation
	 	 	34	 
	 

	 	7.4
	 	No Orders
	 	 	34	 
	 

	 	7.5
	 	Approvals
	 	 	35	 
	 

	 	7.6
	 	Non-competition Agreement
	 	 	35	 
	 
	 	 	 	 	 	 	 	 
	ARTICLE 8	 	 	 	 	 	 
	 	 	VENDOR’S CONDITIONS PRECEDENT	 	 	36	 
	 

	 	8.1
	 	Truth and Accuracy of Representations of the Purchaser
	 	 	37	 
	 

	 	8.2
	 	Performance of Obligations
	 	 	37	 
	 

	 	8.3
	 	Financial Commitment
	 	 	37	 
	 

	 	8.4
	 	Irrevocable Direction
	 	 	37	 
	 
	 	 	 	 	 	 	 	 
	ARTICLE 9	 	 	 	 	 	 
	 	 	OTHER COVENANTS OF THE PARTIES	 	 	38	 
	 

	 	9.1
	 	Conduct of Business Prior to Closing
	 	 	38	 
	 

	 	9.2
	 	Access for Investigation
	 	 	38	 
	 

	 	9.3
	 	Notice by Vendor of Certain Matters
	 	 	39	 
	 

	 	9.4
	 	Notice by Purchaser of Certain Matters
	 	 	39	 
	 

	 	9.5
	 	Confidentiality
	 	 	40	 

-ii-

 

TABLE OF CONTENTS
(continued)

	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Page
	 

	 	9.6
	 	Actions to Satisfy Closing Conditions
	 	 	42	 
	 

	 	9.7
	 	CDI Transitional Licence Agreement
	 	 	42	 
	 

	 	9.8
	 	Employees
	 	 	43	 
	 

	 	9.9
	 	Benefit Plan Arrangements
	 	 	43	 
	 

	 	9.10
	 	Sales and Transfer Taxes
	 	 	45	 
	 

	 	9.11
	 	Goods and Services Tax and Harmonized Sales Tax
	 	 	46	 
	 

	 	9.12
	 	Tax Election
	 	 	46	 
	 

	 	9.13
	 	Preservation of Records
	 	 	47	 
	 

	 	9.14
	 	Risk of Loss
	 	 	47	 
	 

	 	9.15
	 	Consent to Jurisdiction
	 	 	48	 
	 

	 	9.16
	 	Waiver of Trial by Jury
	 	 	48	 
	 

	 	9.17
	 	Shareholder Approval
	 	 	49	 
	 

	 	9.18
	 	Executive Agreement
	 	 	49	 
	 

	 	9.19
	 	Consultants
	 	 	49	 
	 
	 	 	 	 	 	 	 	 
	ARTICLE 10	 	 	 	 	 	 
	 	 	INDEMNIFICATION	 	 	49	 
	 

	 	10.1
	 	Indemnification by the Vendor
	 	 	49	 
	 

	 	10.2
	 	Indemnification by the Purchaser
	 	 	51	 
	 

	 	10.3
	 	Bulk Sales and Retail Sales Tax Waiver
	 	 	52	 
	 

	 	10.4
	 	Indemnification Procedures for Third Party Claims
	 	 	52	 
	 

	 	10.5
	 	Reductions and Subrogation
	 	 	53	 
	 

	 	10.6
	 	Exclusive Remedy
	 	 	54	 
	 

	 	10.7
	 	One Recovery
	 	 	54	 
	 

	 	10.8
	 	Duty to Mitigate
	 	 	55	 
	 

	 	10.9
	 	Adjustment to Purchase Price
	 	 	55	 
	 
	 	 	 	 	 	 	 	 
	ARTICLE 11	 	 	 	 	 	 
	 	 	GENERAL	 	 	55	 
	 

	 	11.1
	 	Termination
	 	 	55	 
	 

	 	11.2
	 	Public Notices
	 	 	57	 
	 

	 	11.3
	 	Expenses
	 	 	58	 
	 

	 	11.4
	 	Notices
	 	 	58	 
	 

	 	11.5
	 	Assignment
	 	 	60	 
	 

	 	11.6
	 	Enurement
	 	 	60	 
	 

	 	11.7
	 	Amendment
	 	 	60	 
	 

	 	11.8
	 	Further Assurances
	 	 	60	 
	 

	 	11.9
	 	Joint and Several
	 	 	61	 
	 

	 	11.10
	 	Execution and Delivery
	 	 	61	 

-iii-

 

THIS ASSET SALE AGREEMENT is made September 21, 2005

BETWEEN:

CDI CAREER DEVELOPMENT INSTITUTES LTD, a corporation governed by the laws of Canada,

- and –

CDI CORPORATE EDUCATION SERVICES INC., a corporation governed by the laws of the
Province of Ontario,

(collectively, the “Vendor”)

- and -

CROSSOFF INCORPORATED, a corporation governed by the laws of Nova Scotia,

(the “Purchaser”).

RECITALS:

	A.	 	The Vendor carries on the Business.
	 
	B.	 	The Vendor has agreed to sell to the Purchaser and the Purchaser has agreed to purchase from
the Vendor substantially all of the assets, property and undertaking of and relating to the
Business, on the terms and conditions of this Agreement.

THEREFORE the parties agree as follows:

ARTICLE 1

DEFINITIONS AND PRINCIPLES OF INTERPRETATION

	1.1	 	Definitions

Whenever used in this Agreement the following words and terms shall have the meanings set out
below:

 

 

- 2 -

“Accounts Payable” means amounts relating exclusively to the Business owing to any Person as
of the Effective Time, which are incurred in connection with the purchase of goods or
services in the ordinary course of business and in accordance with the terms of this
Agreement;

“Accounts Receivable” means accounts receivable, bills receivable, trade accounts, book
debts and insurance claims relating exclusively to the Business, recorded as receivable in
the Books and Records and other amounts due or deemed to be due to the Vendor relating
exclusively to the Business including refunds and rebates receivable relating to the
Business or the Purchased Assets;

“Accrued Liabilities” means liabilities relating exclusively to the Business incurred as of
the Effective Time but which are not yet due and payable as of the Effective Time, including
accruals for vacation pay and customer rebates;

“Affiliate” has the meaning given in the Business Corporations Act (Canada);

“Agreement” means this Asset Sale Agreement, including all schedules, and all amendments or
restatements, as permitted, and references to “Article” or “Section” mean the specified
Article or Section of this Agreement;

“Assigned Intellectual Property” means the intellectual property rights, including learning
content, curriculum, copyrights, industrial designs, trade-marks, trade-secrets, business
names, domain names and similar rights which are owned, used or held by the Vendor
exclusively for use in the Business, including the intellectual property listed in Schedule
1(a) and Schedule 4.11, including the Vendor’s rights, if any, relating to the trade name
“Gilmore”;

“Assigned Technology” means the computer hardware, software in source code and object code
form (including documentation, interfaces and development tools), websites, data base and
other information technology systems, know-how and related technical knowledge which are
owned, used or held by the Vendor exclusively for use in the Business, including the
software owned by the Vendor which is listed in Schedule 1(b);

 

- 3 -

“Assumed Liabilities” means Accounts Payable and Accrued Liabilities, plus the liabilities
and obligations of the Vendor, relating exclusively to the Business accruing and due
subsequent to the Closing Date under or in respect of the Contracts (including, for greater
certainty, the Real Property Leases, the Equipment Contracts and the Contractor Contracts),
the Governmental Authorizations, the Permitted Encumbrances, the Termination and Severance
Costs, the liabilities and obligations relating to the Transferred Employees employed by the
Purchaser as contemplated by Section 9.8, and the other obligations or liabilities to be
assumed by the Purchaser as specifically provided for under this Agreement, but shall not
include the CDSI Liabilities;

“Balance Sheet” means the balance sheet of the Business as at June 30, 2005, forming part of
the Financial Statements;

“Benefit Plans” means material plans, arrangements, agreements, programs, policies,
practices or undertakings, whether oral or written, formal or informal, funded or unfunded,
insured or uninsured, registered or unregistered to which the Vendor is a party or bound or
in which the Employees participate or under which the Vendor has, or will have, any material
liability or contingent liability, or pursuant to which material payments are made, or
material benefits are provided to, or an entitlement to payments or benefits may arise with
respect to any of the Employees or former Employees or directors or officers of the Business
(or any spouses, dependants, survivors or beneficiaries of any such persons), excluding
Statutory Plans and any equity compensation plans and “Benefit Plan” means any one of such
plans;

Books and Records” means books and records of the Vendor relating exclusively to the
Business or the Purchased Assets, including financial, operations and sales books, records,
books of account, sales and purchase records, lists of suppliers and customers, business
reports, and all other documents, plans, files, records, assessments, correspondence, and
other data and information, financial or otherwise including all data and information stored
on computer-related or other electronic media;

“Business” means the corporate training division of the Vendor that operates under the brand
name “CDI Education”;

 

- 4 -

“Business Day” means any day, other than a Saturday or Sunday, on which Bank of America in
Toronto, Ontario is open for commercial banking business during normal banking hours;

“Cash Consideration” has the meaning set forth in Section 3.1(a);

“CDI Brands” means any trademark, service mark, trade name, business name, domain name,
e-mail address, uniform resource locator or any other mark, designation or logo that (i)
incorporates the term “CDI”, (ii) belongs to the Vendor or its Affiliates, or (iii)
otherwise indicates that the Vendor or its Affiliates are the originator, source or sponsor
of a given product or service;

“CDIL” means the CDI Career Development Institutes Ltd., a corporation amalgamated under
the laws of Canada;

“CDI Licensed Trademarks” means the CDI Brands listed in Schedule 9.7(a) and licensed to
the Purchaser on Closing.

“CDI Transitional Licence Agreement” means the transitional licence agreement between the
Vendor and the Purchaser, which agreement shall be executed at Closing.

“CDSI” means CDI Corporate Education Services Inc. a corporation incorporated under the laws
of the Province of Ontario;

“CDSI Contract” means the agreement described in Schedule 1 (c);

“CDSI Liabilities” means all of the liabilities and obligations of CDSI other than CDSI’s
obligations under the CDSI Contract;

“Claims” means claims, demands, complaints, grievances, actions, suits, causes of action,
Orders, charges, indictments, prosecutions, informations or other similar process,
judgments, debts, liabilities, expenses, costs, damages or losses, contingent or otherwise,
including reasonable professional fees, including fees of legal counsel on a partial
indemnity basis, and all costs incurred in any proceeding relating to any of the foregoing;

 

- 5 -

“Closing” means the completion of the sale to, and purchase by, the Purchaser of the
Purchased Assets under this Agreement;

“Closing Date” means such date as the Parties may agree in writing as the date upon which
the Closing shall take place, which shall not be later than the second Business Day after
satisfaction or waiver of the conditions set forth in ARTICLE 7 and ARTICLE 8 (excluding
conditions that, by their terms, cannot be satisfied until the Closing Date, but subject to
the satisfaction or waiver of such conditions);

“Closing Date Financial Statement” means the statement of assets and liabilities of the
Business as at the Closing Date, prepared by the Vendor, showing all of the Purchased Assets
and the Current Liabilities, prepared on a basis consistent with that used in the Financial
Statements, and shall also include a statement of the Net Working Capital;

“Confidentiality Agreement” means the confidentiality agreement entered into between
Corinthian Colleges, Inc. and the Purchaser dated May 25, 2005 and accepted and agreed to on
May 25, 2005;

“Consultants” means any individual or corporate entity who is providing consulting or
independent contractor services to the Business;

“Consulting Contracts” means a Contract, for greater certainty, other than a Benefit Plan,
between the Vendor and a Consultant pursuant to which the Vendor is required to pay
aggregate amounts in any fiscal year in excess of $20,000;

“Contracts” means contracts, licences, leases, agreements, obligations, promises,
undertakings, understandings, arrangements, documents, commitments, entitlements or
engagements to which the Vendor is a party or by which the Vendor is bound or under which
the Vendor has, or will have, any liability or contingent liability relating exclusively to
the Business or the Purchased Assets (in each case, whether written or oral, express or
implied), and includes quotations or orders which remain open for acceptance and warranties
and guarantees;

“Current Assets” means, as of the applicable date, without duplication, the sum of the
following items, each as set forth on the relevant balance sheet for the Business

 

- 6 -

	 	(a)	 	Accounts Receivable, less an allowance for doubtful accounts,
	 
	 	(b)	 	Prepaid Expenses and Deposits,

in each case, based on the value of such items on the Books and Records of the Vendor;

“Current Liabilities” means, as of the applicable date, without duplication, the sum of the
following items, each as set forth on the relevant balance sheet for the Business

	 	(a)	 	Accounts Payable,
	 
	 	(b)	 	accrued compensation,
	 
	 	(c)	 	other accrued expenses,
	 
	 	(d)	 	unearned revenue,

in each case, based on the value of such items on the Books and Records of the Vendor;

“Data Room Material” means documents provided in writing in the due diligence data room and
listed in Schedule 1(d);

“Effective Time” means 12:01 a.m. Toronto time on the Closing Date;

“Employees” means individuals employed or retained for employment by the Vendor, on a
full-time, part-time or temporary basis, relating exclusively to the Business, including
those employees of the Business on disability leave, parental leave or other absence and,
for greater certainty, shall not include the Consultants;

“Employment Contracts” means Contracts, other than Benefit Plans, in writing between an
Employee and the Vendor;

“Encumbrances” means pledges, liens, charges, security interests, leases, title retention
agreements, mortgages, options, adverse claims or encumbrances of any kind or character
whatsoever;

 

- 7 -

“Environment” means the environment or natural environment as defined in any Environmental
Laws and includes air, surface water, ground water, land surface, soil, subsurface strata;

“Environmental Laws” means Laws relating to the protection of the Environment, and includes
Laws relating to the storage, generation, use, handling, manufacture, processing,
transportation, treatment, Release and disposal of Hazardous Substances;

“Equipment Contracts” means motor vehicle leases, equipment leases, conditional sales
contracts, title retention agreements and other similar agreements binding upon the Vendor
relating to equipment and vehicles used by the Vendor relating exclusively to the Business;

“Excluded Assets” means:

	 	(a)	 	all of the property, assets and rights of the Vendor that relate to the
operation of the Vendor of any business other than the Business, including for
greater certainty, the Vendor’s human resources and financial reporting corporate
support services departments and the Vendor’s post-secondary education business;
	 
	 	(b)	 	the CDI Brands;
	 
	 	(c)	 	the Vendor’s leasehold interest in respect of the premises located (i) on
the 6th floor at 2 Bloor Street West, Toronto, Ontario, and (ii) at 5657
Spring Garden Road, Park Lane Mall, Box 11, Halifax, Nova Scotia;
	 
	 	(d)	 	all intellectual property or intellectual property interests owned by the
Vendor other than the Assigned Intellectual Property;
	 
	 	(e)	 	all technology or technical information owned by the Vendor other than the
Assigned Technology;
	 
	 	(f)	 	cash, bank balances, moneys in possession of banks and other depositories,
term or time deposits and similar cash items of, owned or held by or for the account

 

- 8 -

	 	 	 	of the Vendor, except for such items which are part of Prepaid Expenses and
Deposits;
	 
	 	(g)	 	marketable shares, notes, bonds, debentures or other securities of or
issued by corporations or other Persons and certificates or other evidences of
ownership thereof owned or held by or for the account of the Vendor;
	 
	 	(h)	 	corporate, financial and taxation records of the Vendor and records of the
Vendor that do not relate exclusively or primarily to the Business;
	 
	 	(i)	 	extra-provincial, sales, excise or other licences or registrations issued
to or held by the Vendor, whether in respect of the Business or otherwise;
	 
	 	(j)	 	refunds in respect of reassessments for Taxes relating to the Business or
Purchased Assets paid prior to the Closing;
	 
	 	(k)	 	refundable Taxes including any Taxes paid under the GST Legislation;
	 
	 	(l)	 	insurance policies and the right to receive insurance recoveries under such
policies;
	 
	 	(m)	 	assets held in relation to the Benefit Plans;
	 
	 	(n)	 	amounts owing from any Affiliate of the Vendor or any director, officer,
former director or officer, shareholder or employee of the Vendor or its Affiliates;
	 
	 	(o)	 	Contracts relating to the foregoing;

“Excluded Expenses” means the costs or expenses incurred by the Vendor or its Affiliates
associated with or relating to:

	 	(a)	 	certain corporate support services that are shared with the Vendor’s
post-secondary education business, including human resources, payroll, customer

 

- 9 -

	 	 	 	collections for the Greater Toronto Area, credit management, treasury, accounts
payable, audit and financial reporting services; and
	 
	 	(b)	 	the litigation proceedings commenced by or against the Vendor that are
described on Schedule 1(d);

“Executive Agreement” has the meaning given in Section 4.14(c);

“Financial Statements” means the unaudited financial statements of the Business for the
fiscal year ended June 30, 2005, consisting of the adjusted income statement for such period
and the Balance Sheet, copies of which are attached as Schedule 4.7;

“Goodwill” means the goodwill of the Business and relating to the Purchased Assets, and
information and documents relevant thereto including lists of customer and suppliers, credit
information, telephone and facsimile numbers, research materials, research and development
files and the exclusive right of the Purchaser to represent itself as carrying on the
Business in succession to the Vendor;

“Governmental Authorities” means governments, regulatory authorities, governmental
departments, agencies, agents, commissions, bureaus, officials, ministers, Crown
corporations, courts, bodies, boards, tribunals or dispute settlement panels or other law or
regulation-making organizations or entities:

	 	(a)	 	having or purporting to have jurisdiction on behalf of any nation,
province, territory, state or other geographic or political subdivision thereof; or
	 
	 	(b)	 	exercising, or entitled or purporting to exercise any administrative,
executive, judicial, legislative, policy, regulatory or taxing authority or power;

“Governmental Authorizations” means authorizations, approvals, licences or permits issued to
the Vendor relating to the Business or any of the Purchased Assets by or from any
Governmental Authority;

 

- 10 -

“GST Legislation” means Part IX of the Excise Tax Act (Canada) and any similar value-added
or multi-staged tax imposed under any applicable provincial or territorial legislation;

“Hazardous Substances” means pollutants, contaminants, wastes of any nature, hazardous
substances, hazardous materials, toxic substances, prohibited substances, dangerous
substances or dangerous goods in excess of that permitted by Environmental Laws;

“Included Expenses” means the costs and expenses associated with (a) certain information
technology licences and services of the Vendor or its Affiliates that are used exclusively
in the Business, (b) certain network services of the Vendor or its Affiliates that are used
exclusively in the Business, and (c) the amortization and depreciation of certain curriculum
and information technology equipment used exclusively in the Business;

“Incurred” means, in relation to Claims under Vendor Benefit Plans or Purchaser Benefit
Plans, the date on which the event giving rise to such claim occurred and, in particular:
(i) with respect to a death or dismemberment claim, shall be the date of the death or
dismemberment; (ii) with respect to a short-term or long-term disability claim, shall be the
date that the period of short-term or long-term disability commenced; (iii) with respect to
an extended health care claim, including, without limitation, dental and medical treatments,
shall be the date of the treatment; and (iv) with respect to a prescription drug or vision
care claim, the date that the prescription was filled;

“Indemnified Party” has the meaning given in Section 10.3;

“Indemnifying Party” has the meaning given in Section 10.3;

“Independent Auditor” means such independent auditing firm as the parties may agree;

“Laws” means currently existing applicable statutes, by-laws, rules, regulations, Orders,
ordinances or judgments, in each case of any Governmental Authority having the force of law;

 

- 11 -

“Leased Real Property” means lands and/or premises which are used by the Vendor relating
exclusively to the Business which are leased, subleased, licensed or otherwise occupied by
the Vendor and the interest of the Vendor in plants, buildings, structures, fixtures,
erections, improvements, easements, rights of way, spur tracks and other appurtenances
situate on or forming part of such premises;

“Material Adverse Effect” means any change, effect or circumstance that is materially
adverse to the financial condition or results of operations of the Business taken as a
whole; but shall exclude any Material Adverse Effect arising out of: (i) any adverse change,
effect or circumstance relating generally to financial markets or general economic
conditions; (ii) any adverse change, effect or circumstance relating to conditions generally
affecting the industry in which the Business operates, and not affecting the Business in a
disproportionate manner; (iii) war, act of terrorism, civil unrest or similar event; (iv)
any generally applicable change in Laws or interpretation thereof; (v) any adverse change,
effect or circumstance resulting from an action required by this Agreement; or (vi) any
adverse change, effect or circumstance caused by the announcement or pendency of this
Agreement or the transactions contemplated by this Agreement;

“Material Contracts” means Contracts (i) involving aggregate payments to or by the Vendor in
the past fiscal year in excess of $250,000.00, or (ii) which by their terms require services
or payments to or by the Vendor in any fiscal year in excess of $250,000.00;

“Net Working Capital” means

	 	(a)	 	Current Assets, less
	 
	 	(b)	 	Current Liabilities;

“Net Working Capital Payment” has the meaning given in Section 8.3;

“Non-Assignable Rights” has the meaning given in Section 2.4;

“Non-Compete Covenant” has the meaning given in Section 7.6;

 

- 12 -

“Non-Competition Agreement” has the meaning given in Section 7.6;

“Notice” has the meaning given in Section 11.3;

“Objection Notice” has the meaning given in Section 3.5;

“Orders” means orders, injunctions, judgments, administrative complaints, decrees, rulings,
awards, assessments, directions, instructions, penalties or sanctions issued, filed or
imposed by any Governmental Authority or arbitrator;

“Parties” means the Vendor and the Purchaser collectively, and “Party” means any one of
them;

“Permitted Encumbrances” means the Encumbrances listed in Schedule 4.9 and Encumbrances
which do not, in the aggregate, have a Material Adverse Effect;

“Person” means any individual, sole proprietorship, partnership, firm, entity,
unincorporated association, unincorporated syndicate, unincorporated organization, trust,
body corporate, Governmental Authority, and where the context requires any of the foregoing
when they are acting as trustee, executor, administrator or other legal representative;

“Personal Information” means information in the possession of the Vendor about an
identifiable individual, but does not include the name, title or business address or
telephone number of an Employee;

“Prepaid Expenses and Deposits” means the unused portion of amounts prepaid relating
exclusively to the Business or the Purchased Assets including assessments, rates and
charges, utilities, rents, tenant allowances, and deposits with any public utility or any
Governmental Authority and other prepaid assets, but excluding income or other Taxes which
are personal to the Vendor and amounts paid in respect the Benefit Plans;

“Purchase Price” has the meaning given in Section 3.1;

 

- 13 -

“Purchased Assets” means all of the Vendor’s right, title and interest in, to and under, or
relating to, the following properties, assets and rights owned or used by the Vendor
exclusively in, or solely in respect of, the Business:

	 	(a)	 	the Accounts Receivable;
	 
	 	(b)	 	the Books and Records;
	 
	 	(c)	 	the Contracts including:

	 	(i)	 	the Equipment Contracts;
	 
	 	(ii)	 	the Consulting Contracts; and
	 
	 	(iii)	 	the Real Property Leases;

	 	(d)	 	the Goodwill;
	 
	 	(e)	 	the Governmental Authorizations;
	 
	 	(f)	 	the Prepaid Expenses and Deposits;
	 
	 	(g)	 	the Tangible Personal Property;
	 
	 	(h)	 	the Assigned Technology;
	 
	 	(i)	 	the Assigned Intellectual Property, including for greater certainty, all of
the Vendor’s rights in the trademark “Virtual Learning Portal”;

other than the Excluded Assets;

“Purchaser Benefit Plans” has the meaning set forth in Section 9.9(a) and “Purchaser Benefit
Plan” means any one of such plans;

“Purchaser Group RRSP” has the meaning set forth in Section 9.9(a);

 

- 14 -

“Real Property Leases” means those leases and subleases pursuant to which the Vendor uses or
occupies the Leased Real Property;

“Reference Net Working Capital” means $0.00;

“Statutory Plans” means statutory benefit plans which the Vendor is required to participate
in or comply with, including the Canada and Quebec Pension Plans and plans administered
pursuant to applicable health tax, workplace safety insurance and employment insurance
legislation;

“Tangible Personal Property” means equipment, furniture, furnishings, office equipment,
computer hardware, supplies, materials, vehicles and tangible assets (other than Leased Real
Property) owned or used or held by the Vendor exclusively for use in or relating solely to
the Business, including the property listed in Schedule 1(f);

“Tax Returns” means returns, reports, declarations, elections, notices, filings, forms,
statements and other documents (whether in tangible, electronic or other form) and including
any amendments, schedules, attachments, supplements, appendices and exhibits thereto, made,
prepared, filed or required to be made, prepared or filed by Law in respect of Taxes;

“Taxes” means taxes, duties, fees, premiums, assessments, imposts, levies and other similar
charges imposed by any Governmental Authority under applicable Law, including all interest,
penalties, fines, additions to tax or other additional amounts imposed by any Governmental
Authority in respect thereof, and including those levied on, or measured by, or referred to
as, income, gross receipts, profits, capital, transfer, land transfer, sales, goods and
services, harmonized sales, use, value-added, excise, stamp, withholding, business,
franchising, property, development, occupancy, employer health, payroll, employment, health,
social services, education and social security taxes, all surtaxes, all customs duties and
import and export taxes, countervail and anti-dumping, all licence, franchise and
registration fees and all employment insurance, health insurance and Canada, Québec and
other government pension plan premiums or contributions;

“Termination and Severance Costs” means all liabilities, costs and obligations in respect of
notice of termination, termination pay and severance pay, including vacation

 

- 15 -

pay accrued through to the Closing Date, whether under statute, common law, contract, or
otherwise, relating to any Transferred Employees who are not offered employment by the
Purchaser or who reject such offer of employment.

“Transferred Employees” has the meaning given in Section 9.8;

“Vendor Benefit Plans” means the Benefit Plans listed or described in Schedule 4.16 to this
Agreement and “Vendor Benefit Plan” means any one of such plans;

“Vendor Group RRSP” means the CDI Education Corporation Group Registered Retirement Savings
Program;

	1.2	 	Certain Rules of Interpretation

In this Agreement:

	 	(a)	 	Currency — Unless otherwise specified, all references to money amounts are
to lawful currency of Canada.
	 
	 	(b)	 	Governing Law — This Agreement is a contract made under and shall be
governed by and construed in accordance with the laws of the Province of Ontario and
the federal laws of Canada applicable in the Province of Ontario.
	 
	 	(c)	 	Headings — Headings of Articles and Sections are inserted for convenience
of reference only and shall not affect the construction or interpretation of this
Agreement.
	 
	 	(d)	 	Including — Where the word “including” or “includes” is used in this
Agreement, it means “including (or includes) without limitation”.
	 
	 	(e)	 	No Strict Construction — The language used in this Agreement is the
language chosen by the Parties to express their mutual intent, and no rule of strict
construction shall be applied against any Party.

 

- 16 -

	 	(f)	 	Number and Gender — Unless the context otherwise requires, words importing
the singular include the plural and vice versa and words importing gender include all
genders.
	 
	 	(g)	 	Severability — If, in any jurisdiction, any provision of this Agreement or
its application to any Party or circumstance is restricted, prohibited or
unenforceable, such provision shall, as to such jurisdiction, be ineffective only to
the extent of such restriction, prohibition or unenforceability without invalidating
the remaining provisions of this Agreement and without affecting the validity or
enforceability of such provision in any other jurisdiction or without affecting its
application to other Parties or circumstances.
	 
	 	(h)	 	Statutory references — A reference to a statute includes all regulations
made pursuant to such statute and, unless otherwise specified, the provisions of any
statute or regulation which amends, supplements or supersedes any such statute or any
such regulation.
	 
	 	(i)	 	Time — Time is of the essence in the performance of the Parties’ respective
obligations.
	 
	 	(j)	 	Time Periods — Unless otherwise specified, time periods within or following
which any payment is to be made or act is to be done shall be calculated by excluding
the day on which the period commences and including the day on which the period ends
and by extending the period to the next Business Day following if the last day of the
period is not a Business Day.

	1.3	 	Knowledge

Any reference to the knowledge of any Party means to the actual knowledge of such Party, in the
case of the knowledge of the Vendor, William Rasberry, in his capacity as President and Chief
Operating Officer of the CDI Corporate Education Division of the Vendor and, in the case of the
knowledge of the Purchaser, Donnie Snow, in his capacity as President and Chief Executive Officer
of the Purchaser.

 

- 17 -

1.4 Entire Agreement

This Agreement, together with the agreements and other documents required to be delivered pursuant
to this Agreement, and the Confidentiality Agreement constitute the entire agreement between the
Parties and set out all the covenants, promises, warranties, representations, conditions,
understandings and agreements between the Parties relating to the subject matter of this Agreement
and supersede all prior agreements, understandings, negotiations and discussions, whether oral or
written. There are no covenants, promises, warranties, representations, conditions, understandings
or other agreements, oral or written, express, implied or collateral between the Parties in
connection with the subject matter of this Agreement except as specifically set forth in this
Agreement, together with any document required to be delivered pursuant to this Agreement, and the
Confidentiality Agreement, and the Purchaser shall acquire the Business and the Purchased Assets as
is and where is subject to the benefit of the representations and warranties in this Agreement.
Any cost estimates, projections or other predictions contained or referred to in any other material
that has been provided to the Purchaser or any of its Affiliates, agents or representatives
(including any due diligence presentations or documents, and in particular any descriptive
memorandum transmitted to the Purchaser relating to the sale of the Purchased Assets, and any
supplements or addenda thereto) are not and shall not be deemed to be representations or warranties
of the Vendor or any of its Affiliates, agents, employees or representatives.

1.5 Schedules

The schedules to this Agreement, listed below, are an integral part of this Agreement:

	 	 	 
	Schedule	 	 Description
	Schedule 1(a)

	 	Assigned Intellectual Property
	Schedule 1(b)

	 	Software Owned by the Vendor
	Schedule 1(c)

	 	CDSI Contract
	Schedule 1(d)

	 	Data Room Material
	Schedule 1(e)

	 	Excluded Litigation
	Schedule 1(f)

	 	Tangible Personal Property
	Schedule 2.4(a)

	 	Required Approvals or Consents

 

 - 18 -

	 	 	 
	Schedule	 	 Description
	Schedule 3.7

	 	Allocation of Purchase Price
	Schedule 4.7

	 	Financial Statements
	Schedule 4.9

	 	Permitted Encumbrances
	Schedule 4.11

	 	Registered Assigned Intellectual Property
	Schedule 4.12

	 	Leased Real Property
	Schedule 4.14(a)

	 	Employment Matters
	Schedule 4.16

	 	Consultants
	Schedule 4.17

	 	Benefit Plans
	Schedule 4.18

	 	Material Contracts
	Schedule 4.19

	 	Litigation
	Schedule 7.6

	 	Non-Competition Agreement
	Schedule 8.3

	 	Net Working Capital Financial Commitment
	Schedule 9.7(a)

	 	CDI Licensed Trademarks
	Schedule 9.7(b)

	 	CDI Transitional Licence Agreement

Personal Information that has been removed from any schedule in accordance with applicable privacy
Laws will, to the extent permitted by applicable Law, be provided to the Purchaser within seven
days of the execution of this Agreement, except to the extent that such information relates to an
individual who indicates, or who has indicated, to the Vendor that he or she does not consent to
the disclosure of Personal Information to the Purchaser. For the purposes of the schedules in
respect of which Personal Information applies, such Personal Information provided to the Purchaser
in accordance with this Section 1.5 shall be deemed to be included in such schedules.

ARTICLE 2

PURCHASE AND SALE

2.1 Action by Vendor and Purchaser

Subject to the provisions of this Agreement, effective as of the Effective Time:

	 	(a)	 	Purchase and Sale of Purchased Assets — the Vendor shall sell and the
Purchaser shall purchase the Purchased Assets;

 

 - 19 -

	 	(b)	 	Assumption of Assumed Liabilities — the Purchaser shall assume the Assumed
Liabilities;
	 
	 	(c)	 	Payment of Purchase Price — the Purchaser shall pay the Purchase Price as
provided in Sections 3.2, 3.4 and 3.5;
	 
	 	(d)	 	Transfer and Delivery of Purchased Assets — the Vendor shall execute and
deliver to the Purchaser all such bills of sale, assignments, instruments of
transfer, deeds, assurances, consents and other documents as shall be necessary to
effectively transfer to the Purchaser the Purchased Assets; the Vendor shall deliver
up to the Purchaser possession of the Purchased Assets, free and clear of all
Encumbrances (other than Permitted Encumbrances); and
	 
	 	(e)	 	Other Documents — the Vendor and Purchaser shall deliver such other
documents as may be necessary to complete the transactions provided for in this
Agreement.

2.2 Closing

The Closing shall take place on the Closing Date at the offices of Osler, Hoskin & Harcourt LLP
located at 1 First Canadian Place, 100 King Street West, 66th Floor, Toronto, Ontario,
M5X 1B8, or at such other place as may be agreed upon by the Vendor and the Purchaser, or by
facsimile (to be followed by delivery of originals by overnight courier of national reputation on
the Business Day following the Closing Date). The Closing shall be effective as of the Effective
Time.

2.3 Tender

Any tender of documents under this Agreement shall be made upon the Parties or their respective
counsel. Any tender of money under this Agreement shall be made by delivery upon the Parties of
their respective counsel of (a) a negotiable cheque payable in Canadian funds and certified by a
chartered bank or trust company, or (b) a letter from the tendering Party’s counsel addressed to
the other Party confirming that the funds in question are in such counsel’s trust account and that

 

 - 20 -

such counsel has irrevocable instructions to wire transfer such funds in immediately available
funds to the Party entitled to payment immediately upon Closing.

2.4 Non-Assignable Rights

Nothing in this Agreement shall be construed as an assignment of, or an attempt to assign to the
Purchaser, any Contract or Governmental Authorization which, as a matter of law or by its terms, is
(i) not assignable, or (ii) not assignable without the approval or consent of the issuer thereof or
the other party or parties thereto, without first obtaining such approval or consent (collectively
“Non-Assignable Rights”). In connection with such Non-Assignable Rights, the Vendor shall, at the
request of the Purchaser:

	 	(a)	 	apply for and use reasonable efforts to obtain all consents or approvals
contemplated by those Contracts and Governmental Authorizations listed in Schedule
2.4(a), provided that nothing shall require the Vendor to make any payment to any
other party in order to obtain such consent or approval; and
	 
	 	(b)	 	co-operate with the Purchaser in any reasonable and lawful arrangements
designed to provide the benefits of such Non-Assignable Rights to the Purchaser,
including holding any such Non-Assignable Rights in trust for the Purchaser or acting
as agent for the Purchaser.

ARTICLE 3

PURCHASE PRICE

3.1 Purchase Price

The amount payable by the Purchaser for the Purchased Assets (the “Purchase Price”), exclusive of
all applicable sales and transfer taxes, shall be:

	 	(a)	 	the amount of $19,000,000.00 (the “Cash Consideration”), subject to
adjustment in accordance with Section 3.4; plus
	 
	 	(b)	 	the amount of the Accounts Payable and the Accrued Liabilities.

 

 - 21 -

3.2 Satisfaction of Purchase Price

The Purchaser shall satisfy the Purchase Price as follows:

	 	(a)	 	on the Closing Date:

	 	(i)	 	as to the amount which is the book value at the Closing Date of
the Accounts Payable and the Accrued Liabilities by the assumption by the
Purchaser of the Accounts Payable and Accrued Liabilities; and
	 
	 	(ii)	 	by payment to the Vendor, in immediately available funds by
wire transfer to an account designated by the Vendor prior to Closing, of the
Cash Consideration.

	 	(b)	 	the balance, if any, in accordance with Section 3.4.

3.3 Delivery of Closing Date Financial Statement

As soon as reasonably practicable after the Closing Date and in any event not later than 45 days
thereafter, the Vendor shall cause to be prepared and delivered to the Purchaser the Closing Date
Financial Statement. The Parties shall co-operate fully in the preparation of the Closing Date
Financial Statement.

3.4 Net Working Capital Adjustment

Subject to Section 3.5, within 90 days after the Closing Date, the Cash Consideration shall be

	 	(a)	 	increased, if the Net Working Capital at the Closing Date is positive, by
an amount equal to the amount of such Net Working Capital and the Purchaser shall pay
such amount to the Vendor in immediately available funds by wire transfer to an
account designated by the Vendor, or

	 	(b)	 	decreased, if the Net Working Capital at the Closing Date is negative, by
an amount equal to the amount by which such Net Working Capital is negative and

 

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	 	 	 	the Vendor shall pay such amount to the Purchaser in immediately available funds
by wire transfer to an account designated by the Purchaser.

3.5 Objection to Draft Closing Date Financial Statement

	 	(a)	 	Delivery of Objection Notice — In the event that the Purchaser objects in
good faith to any item of the Closing Date Financial Statement, the Purchaser shall
so advise the Vendor by delivery to the Vendor of a notice (the “Objection Notice”)
within 10 days after the delivery to the Purchaser of the Closing Date Financial
Statement. The Objection Notice shall set out the reasons for each of the
Purchaser’s objections as well as each amount in dispute and reasonable details of
the calculation of each such amount in dispute. If the Closing Date Financial
Statement requires that the Purchaser make a payment to the Vendor as contemplated by
Section 3.4, the Purchaser, at the same time any Objection Notice is given to the
Vendor, will pay to the Vendor the amount to be paid to the Vendor except for the
specific amount in dispute as reflected in the Objection Notice.
	 
	 	(b)	 	Resolution of Disputes — The Purchaser shall give the Vendor and its
accountants full access to the Books and Records and working papers of the Business
and its auditor to permit the preparation of the Closing Date Financial Statement and
the Vendor shall give the Purchaser and its accountants access to its working papers
relating to the preparation of the Closing Date Financial Statement to enable the
Purchaser to exercise its rights under this Section. The Vendor and the Purchaser
shall attempt to resolve all of the items in dispute set out in any Objection Notice
within 30 days of any Objection Notice. Any items in dispute not resolved within
such 30 day period shall be referred as soon as possible thereafter by the Vendor and
the Purchaser to the Independent Auditor. The Independent Auditor shall act as an
expert and not as an arbitrator and shall be required to determine the items in
dispute that have been referred to it as soon as reasonably practicable but in any
event not later than 30 days after the date of referral of the dispute to it. In
making its determination, the Independent Auditor will only consider the issues in
dispute placed before it and will not

 

 - 23 -

	 	 	 	consider any issues which are not set out in the Objection Notice. The Vendor and
the Purchaser shall provide or make available all documents and information as are
reasonably required by the Independent Auditor to make its determination. The
determination of the Independent Auditor shall be final and binding on the Parties
and the Closing Date Financial Statement shall be finalized in accordance with
such determination.
	 
	 	(c)	 	Audit Expenses — The fees and expenses of the Independent Auditor in acting
in accordance with this ARTICLE 3 shall be shared equally by the Purchaser and the
Vendor, unless the Independent Auditor determines otherwise.
	 
	 	(d)	 	Payment in Accordance with Determination — Unless a later time is permitted
by Section 3.4, within 5 days after resolution, by agreement of the Parties, of the
dispute which was the subject of the Objection Notice or, failing such resolution,
within 5 days after the final determination of the Independent Auditor, the Vendor or
the Purchaser, as the case may be, shall pay to the other the amount owing as a
result of such resolution or final determination.

3.6 Interest

The amounts paid as adjustments under Sections 3.4 and 3.5 shall be paid together with simple
interest thereon calculated from the Closing Date to the date of payment, at the rate per annum
equal to the rate quoted by the Bank of America on the Closing Date as the reference rate of
interest it uses for determining interest rates on Canadian dollar commercial loans in Canada and
designated as such Bank of America’s prime rate.

3.7 Adjustment to and Allocation of Purchase Price

Any payment made by the Purchaser pursuant to Section 3.4 shall constitute an increase in the
Purchase Price and any payment made by the Vendor pursuant to Section 3.4 shall constitute a
reduction of the Purchase Price. The Purchase Price shall be allocated in accordance with the
provisions of Schedule 3.7 provided that if the Purchase Price shall be adjusted pursuant to
Section 3.4, the amount of adjustment required shall, if such amount cannot be reasonably

 

 - 24 -

allocated to a particular asset, be allocated on a pro rata basis among the various categories of
assets listed in Schedule 3.7. Each of the Vendor and the Purchaser shall report the purchase and
sale of the Purchased Assets in any Tax Return in accordance with the provisions of Schedule 3.7.

ARTICLE 4

REPRESENTATIONS AND WARRANTIES OF THE VENDOR

The Vendor hereby represents and warrants to the Purchaser, the matters set out below as at the
date of this Agreement. Disclosure of a fact or matter to the Purchaser in any Schedule, or Data
Room Material, shall be sufficient disclosure for all purposes under this Agreement. Any fact or
matter referenced in a Schedule shall be deemed to be included in all Schedules, whether or not
explicitly cross-referenced. The inclusion of any information in any Schedule (or any update or
supplement thereto) shall not be deemed to be an acknowledgement, in and of itself, that such
information is required to be disclosed, is material to the Business, has resulted in or would
result in a Material Adverse Effect or is outside the ordinary course of business.

4.1 Incorporation and Corporate Power

CDIL is a corporation existing under the laws of Canada. CDSI is a corporation existing under the
laws of the Province of Ontario.

4.2 Residence of the Vendor

The Vendor is not a non-resident of Canada for the purposes of the Income Tax Act (Canada).

4.3 No Subsidiaries

The Vendor does not own, or have any interest in, any shares of any corporation which carries on
the Business other than CDSI, which is a wholly-owned subsidiary of CDIL.

4.4 Due Authorization and Enforceability of Obligations

The Vendor has all necessary corporate power, authority and capacity to enter into this Agreement
and to carry out its obligations under this Agreement. The execution and delivery of

 

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this Agreement and the consummation of the transactions contemplated by this Agreement have been
duly authorized by all necessary corporate action on the part of the Vendor. This Agreement
constitutes a valid and binding obligation of the Vendor enforceable against it in accordance with
its terms subject to any limitations imposed by Law.

4.5 Absence of Conflicts

Except for the Non-Assignable Rights, the Vendor is not a party to or bound by any:

	 	(a)	 	Contract;
	 
	 	(b)	 	charter or by-law; or
	 
	 	(c)	 	Laws or Governmental Authorizations;

material to the operation of the Business, which would be violated, breached by, or under which
default would occur or an Encumbrance would be created as a result of the execution and delivery
of, or the performance of obligations under, this Agreement or any other agreement to be entered
into under the terms of this Agreement except for such violations, breaches, defaults or
Encumbrances which do not have a Material Adverse Effect. There has been no assignment of any of
the material Purchased Assets or any granting of any agreement or right capable of becoming an
agreement or option for the purchase of any of the material Purchased Assets other than pursuant to
the provisions of, or as disclosed in, this Agreement or pursuant to purchase orders for inventory
or other assets accepted by the Vendor in the ordinary course of business.

4.6 Regulatory Approvals

No approval, Order, consent of or filing with any Governmental Authority is required on the part of
the Vendor, in connection with the execution, delivery and performance of this Agreement or any
other documents and agreements to be delivered under this Agreement or the performance of the
Vendor’s obligations under this Agreement or any other documents and agreements to be delivered
under this Agreement other than those approvals, Orders, consents or filings that will have been
obtained prior to Closing or where any failure to obtain or perform would not have a Material
Adverse Effect.

 

 - 26 -

4.7 Financial Statements

The Financial Statements present fairly in all material respects

	 	(a)	 	the financial position of the Vendor as at June 30, 2005 with respect to
the Business, and

	 	(b)	 	the results of the operations of the Vendor with respect to the Business
for the twelve month period ended June 30, 2005.

except, however, that: (i) the Financial Statements are presented in a form which facilitates
internal reporting, (ii) the Financial Statements have been calculated on a divisional rather than
a legal entity basis, (iii) the Financial Statements have been adjusted to exclude the Excluded
Expenses and the revenues and expenses associated with the expansion of the Business into the
United States, and (iv) the Financial Statements have been adjusted to include the Included
Expenses.

4.8 Absence of Changes and Unusual Transactions

Since the date of the Balance Sheet, to the knowledge of the Vendor, there has not been any action,
event, occurrence or development that has had a Material Adverse Effect.

4.9 Title to Certain Assets

Except as identified elsewhere in this Agreement, the Vendor is the sole legal and beneficial owner
of the Purchased Assets with good and valid title, free and clear of all Encumbrances other than
Permitted Encumbrances and other than Encumbrances that in the aggregate do not have a Material
Adverse Effect and is entitled to possess and dispose of same (subject only, in the case of
Contracts or Governmental Authorizations, to any necessity of obtaining consents to their
assignment). For greater certainty, the Vendor is not the owner of (i) the Leased Real Property
which is leased to the Vendor pursuant to the Real Property Leases, and (ii) any intellectual
property that is licenced to the Vendor by third parties.

 

 - 27 -

4.10 Business in Compliance with Law

To the knowledge of the Vendor, the operations of the Business are conducted in compliance in all
material respects with all Laws of each jurisdiction in which the Business is carried on except for
non-compliance which does not have a Material Adverse Effect.

4.11 Assigned Intellectual Property and Assigned Technology

	 	(a)	 	Schedule 4.11 sets forth a complete list and a brief description of all
material Assigned Intellectual Property which has been registered, or for which
applications for registration have been filed, by or on behalf of the Vendor and
which are used in the Business.
	 
	 	(b)	 	To the knowledge of the Vendor, the Vendor is using or holding any of the
Assigned Technology of which it is not the sole beneficial and registered owner with
the consent of or a licence from the owner of such Assigned Technology.
	 
	 	(c)	 	There are no Claims by the Vendor relating to breaches, violations,
infringements or interferences with any of the Assigned Technology by any other
Person.
	 
	 	(d)	 	To the knowledge of the Vendor there are no Claims in progress or pending
or threatened against the Vendor relating to the Assigned Technology.

4.12 Leased Real Property

	 	(a)	 	Schedule 4.12 sets forth a complete list of the material Leased Real
Property by reference to municipal address and description of corresponding Real
Property Leases.
	 
	 	(b)	 	To the best of the Vendor’s knowledge, the Vendor is not in default in
meeting any of its obligations under any of the Real Property Leases, other than a
default which does not have a Material Adverse Effect.

 

 - 28 -

4.13 Environmental Matters

To the knowledge of the Vendor, all operations of the Vendor relating to the Business or the
Purchased Assets or conducted on the Leased Real Property are in compliance in all material
respects with all Environmental Laws, other than non-compliance which does not have a Material
Adverse Effect.

4.14 Employment Matters

	 	(a)	 	To the extent permitted by applicable privacy Laws, Schedule 4.14(a) sets
forth a complete list of Employees, together with their titles, salaries or hourly
rate of pay, benefits, vacation entitlement and commissions and bonus.
	 
	 	(b)	 	Except for those Employment Contracts listed in Schedule 4.14(a), there are
no written Employment Contracts with any Employees which are not terminable on the
giving of reasonable notice in accordance with applicable Law.
	 
	 	(c)	 	The Vendor has entered into an agreement dated as of September 16, 2005
with William Rasberry (the “Executive Agreement”), a redacted copy of which has been
provided to the Purchaser.

4.15 Collective Agreements

The Vendor is not a party to any collective agreement with any bargaining agent or union which
applies to any Employee. No trade union, council of trade unions, employee bargaining agency or
affiliated bargaining agent holds bargaining rights with respect to any of the Employees or has
applied or, to the knowledge of the Vendor, threatened to apply to be certified as the bargaining
agent of the Employees. To the knowledge of the Vendor, there are no threatened or pending union
organizing activities involving the Employees.

4.16 Consultants

To the extent permitted by applicable privacy Laws, Schedule 4.16 sets forth a complete list of
Consultants who have entered into Consulting Contracts, together with their titles and fees.

 

 - 29 -

4.17 Benefits Plans

Schedule 4.17 sets for a complete list of the material Benefit Plans. Current copies or
descriptions of the Benefit Plans listed in Schedule 4.17 have been made available to the
Purchaser.

4.18 Material Contracts

Schedule 4.18 sets forth a complete list of the written Material Contracts that have not been
listed on any other Schedule. The Material Contracts listed in Schedule 4.18 (including any
amendments thereto) are all in full force and effect unamended (except for the amendments described
in Schedule 4.18) and there are no outstanding material defaults or violations under such Material
Contracts on the part of the Vendor which have a Material Adverse Effect.

4.19 Litigation

To the knowledge of the Vendor, except as disclosed in Schedule 4.19, there are no Claims,
investigations or other proceedings, including appeals and applications for review, in progress or
pending against the Vendor before any Governmental Authority relating to the Business or the
Purchased Assets which, if determined adversely to the Vendor, would have a Material Adverse
Effect.

4.20 Tax Matters

	 	(a)	 	No failure, in any material respect, of the Vendor to duly and timely pay
all Taxes, including all instalments on account of Taxes for the current year, that
are due and payable by it, which will result in an Encumbrance on the Purchased
Assets.
	 
	 	(b)	 	To the knowledge of the Vendor, there are no material proceedings,
investigations, audits or Claims now pending or threatened against the Vendor in
respect of any Taxes and there are no material matters under discussion, audit or
appeal with any Governmental Authority relating to Taxes, which will result in an
Encumbrance on the Purchased Assets.

 

 - 30 -

	 	(c)	 	The Vendor, in all material respects, has duly and timely withheld all
Taxes and other amounts required by Law to be withheld by it in respect of the
Business (including Taxes and other amounts required to be withheld by it in respect
of any amount paid or credited or deemed to be paid or credited by it to or for the
account or benefit of any Person, including any Employees, officers or directors and
any non-resident Person, which will result in an Encumbrance on the Purchased
Assets), and has duly and timely remitted to the appropriate Governmental Authority
such Taxes and other amounts required by Law to be remitted by it in respect of the
Business, which will result in an Encumbrance on the Purchased Assets.

4.21 No Broker

The Vendor has carried on all negotiations relating to this Agreement and the transactions
contemplated in this Agreement directly and without intervention on its behalf of any other party
in such manner as to give rise to any valid claim for a brokerage commission, finder’s fee or other
like payment.

4.22 Disclaimer of Other Representations and Warranties

Except as expressly set forth in this ARTICLE 4, the Vendor makes no representation or warranty,
express or implied, at law or in equity, in respect of the Business or the Purchased Assets,
including with respect to merchantability or fitness for any particular purpose, and any such other
representations, warranties or conditions are expressly disclaimed. The Purchaser acknowledges and
agrees that, except to the extent specifically set forth in this ARTICLE 4, the Purchaser is
purchasing the Purchased Assets on an “as-is, where-is” basis.

ARTICLE 5

REPRESENTATIONS AND WARRANTIES OF THE PURCHASER

The Purchaser hereby represents and warrants to the Vendor the matters set out below as of the date
of this Agreement.

 

 - 31 -

5.1 Incorporation

The Purchaser is a corporation existing under the laws of Nova Scotia.

5.2 Due Authorization and Enforceability of Obligations

The Purchaser has all necessary corporate power, authority and capacity to enter into this
Agreement and to carry out its obligations under this Agreement. The execution and delivery of this
Agreement and the consummation of the transactions contemplated by this Agreement have been duly
authorized by all necessary corporate action of the Purchaser. This Agreement constitutes a valid
and binding obligation of the Purchaser enforceable against it in accordance with its terms subject
to any limitations imposed by Law.

5.3 Absence of Conflicts

The Purchaser is not a party to, bound or affected by or subject to any material:

	 	(a)	 	indenture, mortgage, lease, agreement, obligation or instrument;
	 
	 	(b)	 	charter or by-law provision; or
	 
	 	(c)	 	Laws or Governmental Authorizations;

which would be violated, breached by, or under which default would occur or an Encumbrance would be
created as a result of the execution and delivery of, or the performance of obligations under, this
Agreement or any other agreement to be entered into under the terms of this Agreement.

5.4 Financial Ability

The Purchaser has cash on hand or firm and binding commitments from lenders, copies of which have
been provided to the Vendor, in amounts sufficient to allow it to pay the Purchase Price including
any adjustments, and all other costs and expenses in connection with the consummation of the
transactions contemplated by this Agreement.

 

 - 32 -

5.5 Conditional Listing Approval

The Purchaser has received conditional approval from the Toronto Stock Exchange for the listing of
its common shares to be issued in connection with a private placement financing to be completed
prior to the Closing Date. A copy of such conditional approval has been provided to the Vendor.

5.6 Litigation

There are no Claims, investigations or other proceedings, including appeals and applications for
review, in progress or, to the knowledge of the Purchaser, pending or threatened against or
relating to the Purchaser which, if determined adversely to the Purchaser, would,

	 	(a)	 	prevent the Purchaser from paying the Purchase Price to the Vendor;
	 
	 	(b)	 	enjoin, restrict or prohibit the transfer of all or any part of the
Purchased Assets as contemplated by this Agreement; or
	 
	 	(c)	 	prevent the Purchaser from fulfilling any of its obligations set out in
this Agreement or arising from this Agreement.

5.7 No Breach

The Purchaser has no knowledge of any fact or circumstance which would constitute a breach by the
Vendor of the Vendor’s representations and warranties. Any breach by the Purchaser of the
representation and warranty contained in this Section 5.7 shall constitute a waiver in full by the
Purchaser of any of its rights against the Vendor pursuant to ARTICLE 10 for such breach by the
Vendor of the Vendor’s representations and warranties.

5.8 Goods and Services Tax and Harmonized Sales Tax Registration

The Purchaser is duly registered under Subdivision (d) of Division V of Part IX of the Excise Tax
Act (Canada) with respect to the goods and services tax and harmonized sales tax and under

 

 - 33 -

Division I of Chapter VIII of Title I of the Quebec Sales Tax Act with respect to the Quebec sales
tax, and its registration numbers are: 102797552 and 1021591943, respectively.

5.9 No Broker

Other than with respect to TD Securities Inc., whose fees and expenses shall be entirely for the
account of the Purchaser, the Purchaser has carried on all negotiations relating to this Agreement
and the transactions contemplated in this Agreement directly and without the intervention on its
behalf of any other party in such manner as to give rise to any valid claim for a brokerage
commission, finder’s fee or other like payment.

5.10 Due Diligence by Purchaser

The Purchaser acknowledges that it has conducted to its satisfaction an independent investigation
of the financial condition, liabilities, results of operations and projected operations of the
Business and the nature and condition of its properties and assets and, in making the determination
to proceed with the transactions contemplated by this Agreement, has relied solely on the results
of its own independent investigation and the representations and warranties in ARTICLE 4.

ARTICLE 6

SURVIVAL

6.1 Nature and Survival

All representations, warranties and post-Closing covenants contained in this Agreement on the part
of each of the Parties shall survive the Closing, the execution and delivery under this Agreement
of any bills of sale, instruments of conveyance, assignments or other instruments of transfer of
title to any of the Purchased Assets and the payment of the consideration for the Purchased Assets.

 

 - 34 -

ARTICLE 7

PURCHASER’S CONDITIONS PRECEDENT

The obligation of the Purchaser to complete the purchase of the Purchased Assets under this
Agreement is subject to the satisfaction of, or compliance with, at or before the Closing, each of
the following conditions precedent (each of which is acknowledged to be inserted for the exclusive
benefit of the Purchaser and may be waived in writing by it in whole or in part):

7.1 Truth and Accuracy of Representations of Vendor

There shall be no inaccuracies or breaches of the representations and warranties of the Vendor
contained in this Agreement which constitute a Material Adverse Effect and the Vendor shall deliver
to the Purchaser at the Closing a certificate confirming compliance with this Section.

7.2 Compliance with Vendor Covenants

There shall have been no breach of or non-compliance with any of the covenants, agreements and
conditions under this Agreement by the Vendor if such breach or non-compliance has resulted in a
Material Adverse Effect.

7.3 Receipt of Closing Documentation

The Purchaser shall have received copies of all such documentation or other evidence as it may
reasonably request in order to establish the consummation of the transactions contemplated by this
Agreement and the taking of all corporate proceedings in connection with such transactions in
compliance with these conditions.

7.4 No Orders

There shall be no Order issued preventing, or judicial proceeding against any Party by any
Governmental Authority for the purpose of enjoining or preventing, the consummation of the
transactions contemplated in this Agreement.

 

 - 35 -

7.5 Approvals

The Purchaser shall have received the approval of its shareholders for the performance of the
Purchaser’s obligations under this Agreement, and the approval of the Toronto Stock Exchange
(subject to the filing of required documentation, notice of issuance and/or other usual
requirements) for the listing of the Purchaser’s common shares to be issued in connection with a
private placement financing to be completed on the Closing Date.

7.6 Non-competition Agreement

The Vendor shall have executed a non-competition agreement substantially in the form attached as
Schedule 7.6 (the “Non-Competition Agreement”), pursuant to which the Vendor will agree not to
compete with the Purchaser in Canada in relation to the Business for a period of one year from the
Closing Date.

The Vendor and the Purchaser agree that the consideration for the agreement by the Vendor not to
compete in accordance with the terms of the Non-Competition Agreement (the “Non-Compete Covenant”)
is included in the amount that has been allocated to the goodwill of the Business in Schedule 3.7.
The Vendor and the Purchaser further agree that the Non-Compete Covenant has been granted by the
Vendor to the Purchaser in order to maintain or preserve the value of the goodwill of the Business
acquired by the Purchaser in accordance with the terms of this Agreement.

In accordance with the requirements of the Income Tax Act (Canada), the regulations thereunder, the
administrative practice and policy of the Canada Revenue Agency and any applicable equivalent or
corresponding provincial or territorial legislative, regulatory and administrative requirements,
the Vendor and the Purchaser shall make and file, in a timely manner, a joint election(s) (a
“56.4(7) Election”) under subsection 56.4(7) of the Income Tax Act (Canada), as set out in Clause
70(1) of the draft legislative proposals to amend the Income Tax Act (Canada) released by the
Department of Finance on July 18, 2005 (the “Legislative Proposals”) and any equivalent or
corresponding provision under applicable provincial or territorial tax legislation to have the
rules in subsection 56.4(5) and any equivalent or corresponding provision under applicable
provincial or territorial tax legislation, apply in respect of the Non-Compete Covenant. The
Purchaser and the Vendor shall prepare and file their respective Tax Returns in a

 

 - 36 -

manner consistent with such election. If a Party fails to file its Tax Returns in such manner, it
shall indemnify and save harmless the other Party in respect of any resulting Taxes and legal and
accounting expenses paid or incurred by the other Party.

If Clause 70(1) of the Legislative Proposals is:

	 	(a)	 	withdrawn in its entirety,
	 
	 	(b)	 	amended such that a 56.4(7) Election cannot be made by the Vendor and the
Purchaser in respect of the Non-Compete Covenant or,
	 
	 	(c)	 	amended such that if the Vendor and the Purchaser were to make an election
in respect of the Non-Compete Covenant under subsection 56.4(7) or any other
applicable provision of the amended Legislative Proposals, the tax consequences to
the Vendor of granting the Non-Compete Covenant would be different than the tax
consequences that would have applied to the Vendor if the Vendor and the Purchaser
had made a 56.4(7) Election under the Legislative Proposals in the form in which they
were released on July 18, 2005,

the Vendor and the Purchaser agree to co-operate in taking such steps, including the making of any
additional or different election or elections, as are necessary and available to ensure to the
extent possible that the tax consequences to the Vendor of granting the Non-Compete Covenant are
the same as the tax consequences that would have applied to the Vendor if the Vendor and the
Purchaser had made a 56.4(7) Election under the Legislative Proposals in the form in which they
were released on July 18, 2005, provided that the tax consequences are no less favourable to the
Purchaser.

ARTICLE 8

VENDOR’S CONDITIONS PRECEDENT

The obligation of the Vendor to complete the sale of the Purchased Assets under this Agreement
shall be subject to the satisfaction of or compliance with, at or before the Closing, each of the
following conditions precedent (each of which is acknowledged to be inserted for the exclusive
benefit of the Vendor and may be waived in writing by it in whole or in part):

 

 - 37 -

8.1 Truth and Accuracy of Representations of the Purchaser

All of the representations and warranties of the Purchaser made in or pursuant to this Agreement
shall be true and correct in all material respects and the Vendor shall have received a certificate
of the Purchaser confirming the truth and correctness of such representations and warranties.

8.2 Performance of Obligations

The Purchaser shall have performed or complied with, in all material respects, all its obligations
and covenants under this Agreement.

8.3 Financial Commitment

The Purchaser shall have received a financing commitment from Wellington Financial LP in the form
of Schedule 8.3 to fund the payment of the Net Working Capital that may become due to the Vendor
pursuant to Section 3.4(a) (the “Net Working Capital Payment”), up to a maximum amount of
$3,000,000.00, and the Vendor shall have received written confirmation of same from Wellington
Financial LP; provided for greater certainty however, that nothing in this Section 8.3 shall in any
way be construed as limiting the Purchaser’s obligation to pay the full amount that may become
payable by the Purchaser to the Vendor pursuant to Section 3.4(a).

8.4 Irrevocable Direction

The Vendor shall have received in escrow from the Purchaser an irrevocable direction from the
Purchaser to Wellington Financial LLP, in a form satisfactory to the Vendor, pursuant to which the
Purchaser irrevocably authorizes and directs Wellington Financial LLP to pay the Net Working
Capital Payment (up to a maximum amount of $3,000,000) to the Vendor within five (5) Business Days
following the failure by the Purchaser to pay such amount within the time periods set out in
Section 3.4 and/or Section 3.5, as applicable.

 

- 38 -

ARTICLE 9

OTHER COVENANTS OF THE PARTIES

9.1 Conduct of Business Prior to Closing

During the period from the date of this Agreement to the Closing Date, the Vendor shall:

	 	(a)	 	Conduct Business in the Ordinary Course — except as otherwise contemplated
or permitted by this Agreement, conduct the Business in all material respects in the
ordinary course, consistent with past practice; and
	 
	 	(b)	 	Continue Insurance — use commercially reasonable efforts to continue in
force all policies of insurance maintained by or for the benefit of the Vendor
relating to the Business.

9.2 Access for Investigation

	 	(a)	 	The Vendor shall permit the Purchaser and its representatives, between the
date of this Agreement and the Closing Date, without interference to the ordinary
conduct of the Business, to have reasonable access during normal business hours to
(i) the Purchased Assets, (ii) the Leased Real Property and (iii) the Books and
Records, provided that the Purchaser may not conduct any environmental investigation
in, on, under or near any Leased Real Property including any sampling, or interview
any Employees, without, in either case, the Vendor’s prior consent. The Vendor shall
furnish to the Purchaser copies of Books and Records (subject to any confidentiality
agreements or covenants relating to any such Books and Records) as the Purchaser
shall from time to time reasonably request to enable confirmation of the matters
warranted in ARTICLE 4. Notwithstanding the foregoing, without the prior written
consent of the Vendor, the Purchaser shall not contact, and shall instruct its
counsel, financial advisors, auditors and other authorized representatives not to
contact, any of the suppliers, customers, clients or financing sources of the Vendor
with respect to the Business or the transactions contemplated by this Agreement.

 

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	 	(b)	 	Notwithstanding Section 9.2(a), the Vendor shall not be required to
disclose any information, records, files or other data to the Purchaser which, in the
sole opinion of the Vendor, is considered to be competitively sensitive or where the
disclosure of such information, records, files or other data is prohibited by any
Laws.
	 
	 	(c)	 	The Purchaser acknowledges that information provided to it under Section
9.2(a) above will be non-public and/or proprietary in nature and will be subject to
the terms of the Confidentiality Agreement and Section 9.5. For greater certainty,
the provisions of the Confidentiality Agreement shall survive the termination of this
Agreement.

9.3 Notice by Vendor of Certain Matters

Prior to the Closing, the Vendor shall have the obligation to give notice to the Purchaser of (a)
any failure of any representation or warranty contained in this Agreement or in any Schedule to be
true or accurate in any material respect, and (b) any failure of the Vendor to comply with or
satisfy in any material respect any covenant, condition or agreement to be complied with or
satisfied by it under this Agreement or any Schedule. Such notification may take the form of a
supplement to the Schedules which are being delivered to the Purchaser as of this date of this
Agreement. In such event, unless the Purchaser has the right to terminate this Agreement pursuant
to Section 11.1 by reason of such development and exercises such right prior to the Closing, the
notice provided by the Vendor to the Purchaser pursuant to this Section 9.3 shall be deemed (i) to
have amended the applicable Schedule, (ii) to have qualified the representations and warranties
contained in ARTICLE 4, and (iii) to have cured any misrepresentation or breach of warranty that
otherwise might have existed by reason of such development. To the knowledge of the Vendor at the
date of this Agreement, there is no existing fact or state of events that would be reasonably
likely to cause it to give such notice.

9.4 Notice by Purchaser of Certain Matters

The Purchaser shall give the Vendor written notice, prior to the Closing, of any facts or
circumstances of which the Purchaser becomes aware that would serve as a basis for a claim by

 

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the Purchaser against the Vendor based upon a breach of any representations and warranties of the
Vendor contained in this Agreement or breach of any of the Vendor’s covenants or agreements to be
performed by the Vendor at or prior to the Closing. In such event, the Vendor shall have the
option to (a) terminate this Agreement or (b) complete the transactions contemplated by this
Agreement. Unless such notice is delivered, the Purchaser shall be deemed to have waived in full
any breach of any of the Vendor’s representations and warranties and any such covenants and
agreements of which the Purchaser has knowledge at the Closing.

9.5 Confidentiality

	 	(a)	 	Prior to the Closing, the Purchaser shall keep confidential all information
disclosed to it by the Vendor or its agents relating to the Vendor or the Business,
except information which:

	 	(i)	 	is part of the public domain;
	 
	 	(ii)	 	can be demonstrated to have been in the possession of the
Purchaser before disclosure by the Vendor; or
	 
	 	(iii)	 	was received in good faith from an independent Person who was
lawfully in possession of such information free of any obligation of
confidence.

Such information is confidential and proprietary to the Vendor and the Purchaser shall only
disclose such information to those of its employees and representatives of its advisors who
need to know such information for the purposes of evaluating and implementing the
transaction contemplated in this Agreement. Notwithstanding the foregoing, the Purchaser
shall keep confidential all Personal Information disclosed to it by the Vendor or its agents
and will not disclose the Personal Information except in accordance with applicable Law. If
this Agreement is terminated without completion of the transactions contemplated by this
Agreement, the Purchaser shall promptly return all documents, work papers and other written
material (including all copies) obtained from the Vendor in connection with this Agreement,
and not previously made public and shall continue to maintain the confidence of all such
information.

 

- 41 -

	 	(b)	 	After the Closing, the Vendor shall keep confidential all Personal
Information it disclosed to the Purchaser and all information relating to the
Business, except information which:

	 	(i)	 	is part of the public domain;
	 
	 	(ii)	 	becomes part of the public domain other than as a result of a
breach of these provisions by the Vendor; or
	 
	 	(iii)	 	was received in good faith after Closing from an independent
Person who was lawfully in possession of such information free of any
obligation of confidence.

	 	(c)	 	At all times, each of the Vendor and the Purchaser shall keep confidential
all information disclosed to it, or to a third party in connection with this
transaction, by or on behalf of the other Party relating to the other Party, except
information which:

	 	(i)	 	is part of the public domain;
	 
	 	(ii)	 	becomes part of the public domain other than as a result of
breach of these provisions;
	 
	 	(iii)	 	can be demonstrated to have been known or available to them
before receipt of such information from the other Party or independently
developed by them; or
	 
	 	(iv)	 	was received in good faith from an independent Person, who was
lawfully in possession of such information free of any obligation of
confidence.

 

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9.6 Actions to Satisfy Closing Conditions

	 	(a)	 	Each of the Parties shall use commercially reasonable efforts to take all
such actions as are within its power to control, and to cause other actions to be
taken which are not within its power to control, so as to ensure compliance with each
of the conditions and covenants set forth in ARTICLE 7, ARTICLE 8 or ARTICLE 9 which
are for the benefit of any other Party.
	 
	 	(b)	 	The Purchaser shall take any and all steps in order to avoid the entry of
any injunction, interim Order or other Order which would otherwise have the effect of
preventing the Closing, and if any such injunction, interim Order or other Order is
entered, the Purchaser shall take any and all steps to have it vacated, rescinded or
lifted. For greater certainty, “any and all steps” shall include without limitation
committing to or effecting undertakings, a consent agreement, a hold separate
arrangement, a consent Order, a hold separate Order, a sale, a divestiture, a
disposition or other action, in any such case without any reduction of the Purchase
Price.

9.7 CDI Transitional Licence Agreement

	 	(a)	 	At the Closing Date, the Vendor shall enter into the CDI Transitional
Licence Agreement in the form of Schedule 9.7(b) pursuant to which the Vendor shall
grant to the Purchaser a non-exclusive, non-transferable licence in the CDI Licensed
Trade-marks for a period of 90 days following the Closing Date.
	 
	 	(b)	 	From and after the Closing, the Purchaser shall use reasonable efforts to
cover over any materials forming part of the Purchased Assets that contain CDI
Brands, including marketing materials, course and instructing materials and
stationary or business cards, with another brand or to add explanatory materials
indicating that another party, not the Vendor, is the source of the product or
service referenced in such materials. The Purchaser shall discontinue use of the CDI
Brands within 90 days following the Closing Date.

 

- 43 -

	 	(c)	 	Notwithstanding the foregoing, the Vendor shall forward to the Purchaser
e-mails relating exclusively to the Business and shall redirect all hits on the
“CDILearn.com” website and, to the extent that hits on the “CDIEDUCATION.com” website
are not automatically redirected to the “CDILearn.com” website, hits on the
“CDIEDUCATION.com” website to the Purchaser’s website, in each case for one (1) year
after the Closing Date and at the Purchaser’s cost and expense, such expense to
include only out of pocket expenses of the Vendor and not any administrative or other
internal fee.

9.8 Employees

	 	(a)	 	The Purchaser shall offer employment, effective from the Closing Date, to
all Employees on the Closing Date other than William Rasberry and Mona Mitchell (the
“Transferred Employees”), on terms and conditions of employment including salary,
incentive compensation and benefits which are substantially similar in the aggregate
to those currently available to the Transferred Employees. The Vendor and the
Purchaser shall exercise reasonable efforts to persuade the Transferred Employees to
accept such offers of employment. For greater certainty, nothing in this Agreement
obligates the Purchaser to offer share purchase options to any Transferred Employee.
	 
	 	(b)	 	The Purchaser shall be responsible for any and all Termination and
Severance Costs. Amounts due or accrued to the Closing Date for all salary, wages,
bonuses, commissions, vacation pay, termination or severance pay (other than
Termination and Severance Costs) or benefits shall be for the account of the Vendor.
For greater certainty, all salary, wages, bonuses, commissions, vacation pay,
termination or severance pay or benefits for William Rasberry and Mona Mitchell shall
also be for the account of the Vendor.

9.9 Benefit Plan Arrangements

	 	(a)	 	Effective as of the Closing Date, the Purchaser shall establish or
otherwise provide Benefit Plans (the “Purchaser Benefit Plans”) including, for
greater

 

- 44 -

	 	 	 	certainty, a group registered retirement savings plan (the “Purchaser Group
RRSP”), to provide on and after the Closing Date benefits to the Transferred
Employees (and their eligible spouses, beneficiaries and dependants). The
Purchaser Benefit Plans shall provide benefits which are substantially similar to
those provided to the Transferred Employees (and their eligible spouses,
beneficiaries and dependants) under the terms of the Vendor Benefit Plans in
effect as of the Closing Date.
	 
	 	(b)	 	Effective as of the Closing Date, each Transferred Employee shall cease to
be eligible to participate in and cease to participate in and accrue benefits under
the Vendor Benefit Plans, and each Transferred Employee shall commence participation
in the Purchaser Benefit Plans effective from the Closing Date. Where service with
the Purchaser is a relevant criterion, for each Transferred Employee for purposes of
eligibility for membership in and entitlement to benefits under the Purchaser Benefit
Plans, the Purchaser Benefit Plans shall recognize each Transferred Employee’s period
of service with the Vendor.
	 
	 	(c)	 	The Vendor shall provide such assistance to the Purchaser as is reasonably
required to transfer the account balance, if any, in each Transferred Employees’
account under the Vendor Group RRSP to a corresponding account established under the
Purchaser Group RRSP. Once the Transferred Employees’ account balances have been
transferred to the Purchaser Group RRSP from the Vendor Group RRSP, Transferred
Employees will have no benefit entitlement under the terms of the Vendor Group RRSP
and the Vendor and the Vendor Group RRSP shall not have any further obligation or
liability with respect to the accrued benefits of Transferred Employees under the
Vendor Group RRSP prior to the Closing Date.
	 
	 	(d)	 	The Purchaser will waive, or cause to be waived, any pre-existing medical
condition or other restriction that would prevent immediate and full participation of
any Transferred Employee in the Purchaser Benefit Plans. In addition, where the
benefits provided under a Purchaser Benefit Plan are subject to a deductible in
respect of the benefits provided to an individual during a

 

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	 	 	 	certain period of time, the Purchaser shall take into account the amount of any
corresponding deductible which has already been paid by the applicable Transferred
Employee during such period and prior to the Closing Date under the corresponding
Vendor Benefit Plan, for the purpose of determining the amount of the deductible
to be paid by the Transferred Employee under the Purchaser Benefit Plan after the
Closing Date.
	 
	 	(e)	 	The Vendor shall be responsible, in accordance with the terms of the
applicable Vendor Benefit Plan, for any and all Claims Incurred by the Transferred
Employees (and their eligible spouses, beneficiaries and dependants) prior to the
Closing Date, and the Purchaser shall be responsible, in accordance with the terms of
the applicable Purchaser Benefit Plan, for any and all Claims Incurred by the
Transferred Employees (and their eligible spouses, beneficiaries and dependants) on
and after the Closing Date.
	 
	 	(f)	 	Notwithstanding anything to the contrary in this Agreement, on and after
the Closing Date, the Vendor shall have no liabilities or obligations in respect of
post-employment and post-retirement benefits for Transferred Employees (and their
eligible spouses, beneficiaries and dependants), whether under the Vendor Benefit
Plans or otherwise, and to the extent that any such liabilities and obligations
exist, such liabilities and obligations shall be the sole responsibility of the
Purchaser.

9.10 Sales and Transfer Taxes

The Purchaser shall pay direct to the appropriate Governmental Authority all sales and transfer
taxes, registration charges and transfer fees, other than the goods and services tax and harmonized
sales tax imposed under the GST Legislation, payable by it in respect of the purchase and sale of
the Purchased Assets and, upon the reasonable request of the Vendor, the Purchaser shall furnish
proof of such payment.

 

- 46 -

9.11 Goods and Services Tax and Harmonized Sales Tax

	 	(a)	 	Subject to Section 9.11(b), the Purchaser shall be liable for and shall pay
to the Vendor an amount equal to any goods and services tax and harmonized sales tax
payable by the Purchaser and collectible by the Vendor under the GST Legislation,
plus an amount equal to any similar value added or multi-staged tax imposed by any
applicable provincial or territorial legislation, in connection with the purchase and
sale of the Purchased Assets under this Agreement.
	 
	 	(b)	 	The Vendor and the Purchaser agree to elect pursuant to subsection 167(1)
of the GST Legislation (and any equivalent provision under applicable provincial
legislation) in respect of the purchase and sale of the Purchased Assets. The
Purchaser agrees and undertakes to file the election described herein in accordance
with the requirements of the GST Legislation and to provide the Vendor with evidence
of filing as soon as practicable thereafter. The Purchaser acknowledges that the
election described herein is made for its exclusive benefit and accordingly, agrees
to indemnify, protect and forever save harmless the Vendor, its successors, assigns,
directors and officers, from and against all claims, assessments or other demands
made by the Canada Revenue Agency or any other government department, federal or
provincial, responsible for the administration and enforcement of GST Legislation
resulting from the rejection of the election by such officials or from the failure of
the Purchaser to file the election in accordance with the requirements of the GST
Legislation. This indemnity shall extend to the amount of any taxes assessed against
the Vendor together with any interest, penalties or costs of the Vendor associated
with such claim, assessment or demand.

9.12 Tax Election

In accordance with the requirements of the Income Tax Act (Canada), the regulations thereunder, the
administrative practice and policy of the Canada Revenue Agency and any applicable equivalent or
corresponding provincial or territorial legislative, regulatory and administrative requirements,
the Vendor and the Purchaser shall make and file, in a timely manner, a joint

 

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election(s) to have the rules in subsection 20(24) of the Income Tax Act (Canada), and any
equivalent or corresponding provision under applicable provincial or territorial tax legislation,
apply to the obligations of the Vendor in respect of undertakings which arise from the operation of
the Business and to which paragraph 12(1)(a) of the Income Tax Act (Canada) applies. The Purchaser
and the Vendor acknowledge that the Vendor is transferring assets to the Purchaser which have a
value equal to the elected amount as consideration for the assumption by the Purchaser of such
obligations of the Vendor.

The Purchaser and the Vendor shall prepare and file their respective Tax Returns in a manner
consistent with such election. If a Party fails to file its Tax Returns in such manner, it shall
indemnify and save harmless the other Party in respect of any resulting Taxes and legal and
accounting expenses paid or incurred by the other Party.

9.13 Preservation of Records

The Purchaser shall take all reasonable steps to preserve and keep the records of the Vendor and
the Business delivered to it in connection with the completion of the transactions contemplated by
this Agreement for a period of six (6) years from the Closing Date, or for any longer period as may
be required by any Law or Governmental Authority, and shall make such records available to the
Vendor on a timely basis, as may be required by it.

9.14 Risk of Loss

If the Purchased Assets are damaged or destroyed or appropriated, expropriated or seized by any
Person, on or prior to the Closing Date, and if such acts or events:

	 	(a)	 	in the aggregate have a Material Adverse Effect, then the Purchaser may,
within 5 days of becoming aware of such acts or events, terminate this Agreement; or
	 
	 	(b)	 	in the aggregate do not have a Material Adverse Effect or, in the aggregate
have a Material Adverse Effect but the Purchaser fails to give notice within the
applicable time period, the Purchaser will complete the transactions contemplated by
this Agreement without reduction of the Purchase Price. In such event all proceeds
of insurance or compensation for expropriation or

 

 

- 48 -

	 	 	 	seizure in respect thereof will be payable to the Purchaser and all right and
claim of the Vendor to any such amounts not paid by the Closing Date will be
assigned to the Purchaser.

	9.15	 	Consent to Jurisdiction

Each of the Parties irrevocably attorns and submits to the exclusive jurisdiction of any Ontario
court sitting in Toronto in any action or proceeding arising out of or related to this Agreement
and irrevocably agrees that all claims in respect of any such action or proceeding shall be heard
and determined in such Ontario court. Each of the Parties irrevocably waives, to the fullest
extent it may effectively do so, the defence of an inconvenient forum to the maintenance of such
action or proceeding. The Purchaser irrevocably appoints Polar Bear Corporate Education Services
(the “Process Agent”), with an office as of the date of this Agreement at 2660-130 King Street
West, Toronto, Ontario, M5X 1C7, for the attention of Brian Pennington, Executive Vice President of
Sales, as its agent to receive on behalf of it and its property service of copies of the statement
of claim and any other process which may be served in any such action or proceeding. Such service
may be made by delivering a copy of such process to the Purchaser in care of the Process Agent at
the Process Agent’s above address, and the Purchaser irrevocably authorizes and directs the Process
Agent to accept such service on its behalf. A final judgment in any such action or proceeding
shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any
other manner provided by law.

	9.16	 	Waiver of Trial by Jury

EACH OF THE PARTIES KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVES ANY RIGHT IT MAY HAVE TO A
TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED HEREON OR ARISING OUT OF, UNDER OR IN CONNECTION
WITH THIS AGREEMENT, OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER ORAL OR
WRITTEN), OR ACTIONS OF THE OTHER PARTIES IN CONNECTION HEREWITH.

 

- 49 -

	9.17	 	Shareholder Approval

The Purchaser covenants to use its best efforts to obtain the shareholder approval described in
Section 7.5 as expeditiously as is practicable, and in any event on or before November 15, 2005.

	9.18	 	Executive Agreement

The Vendor shall fulfill its obligations under the Executive Agreement in accordance with the terms
thereof. At the Closing, the Vendor shall, to the extent permitted by applicable Law, assign to
the Purchaser all of its rights under Sections 1(i), (ii), (iii) and (iv) and Section 6 of the
Executive Agreement to the extent such rights relate to the Business.

	9.19	 	Consultants

Immediately following the signing of this Agreement, the Vendor shall provide the Purchaser with a
list of the names and fees of the Consultants to whom the Vendor paid in excess of $50,000 during
the Vendor’s 2005 fiscal year.

ARTICLE 10

INDEMNIFICATION

	10.1	 	Indemnification by the Vendor

	 	(a)	 	The Vendor shall indemnify and save harmless the Purchaser, on an after-Tax
basis, from and against all valid Claims which may be made or brought against the
Purchaser, or which it may suffer or incur, as a result of or in connection with:

	 	(i)	 	any non-fulfilment or breach of any covenant or agreement on
the part of the Vendor contained in this Agreement;
	 
	 	(ii)	 	any misrepresentation or any incorrectness in or breach of any
representation or warranty of the Vendor contained in this Agreement or

 

- 50 -

	 	 	 	in any certificate or other document furnished by the Vendor pursuant to
this Agreement.

	 	(b)	 	The Vendor’s obligations under Section 10.1(a) shall be subject to the
following limitations:

	 	(i)	 	subject to Section 10.1(b)(ii), the obligations of the Vendor
under Section 10.1(a)(ii) shall terminate 18 months after the Closing Date
except with respect to bona fide Claims by the Purchaser set forth in written
notices given by the Purchaser to the Vendor prior to such date and in any
event, within 45 days of its determination that it has a bona fide Claim;
	 
	 	(ii)	 	the obligations of the Vendor under Section 10.1(a)(ii) in
respect of any Claim relating to or impacted by Tax matters set out in Section
4.20 arising in or in respect of a particular period ending on, before or
including the Closing Date shall terminate on the date which is 30 days after
the relevant Governmental Authorities shall no longer be entitled to assess or
reassess liability for Taxes against the Vendor or the Purchaser for that
particular period (which date shall not be extended by any waiver given by the
Purchaser after the Closing Date without the consent of the Vendor), except
with respect to bona fide Claims by the Purchaser set forth in written notices
given by the Purchaser to the Vendor prior to such date and in any event,
within 45 days of its determination that it has a bona fide Claim;
	 
	 	(iii)	 	the Vendor shall not be required to pay any amount with
respect to any individual Claim of less than $25,000.00;
	 
	 	(iv)	 	the Vendor shall not be required to pay any amounts until the
aggregate of such Claims exceeds $500,000.00 and then only the excess over such
amount;
	 
	 	(v)	 	the Vendor’s total liability shall not exceed $5,000,000.00;

 

- 51 -

	 	(vi)	 	the Vendor shall not be liable for any indirect, consequential,
punitive or aggravated damages, including damages for loss of profit; and
	 
	 	(vii)	 	the Vendor shall have no obligation to indemnify with respect
to matters of which the Purchaser was aware at the time of Closing or the
entering into of this Agreement.

	10.2	 	Indemnification by the Purchaser

	 	(a)	 	The Purchaser shall indemnify and save harmless the Vendor, on an after-Tax
basis, from and against all valid Claims which may be made or brought against the
Vendor, or which it may suffer or incur, as a result of or in connection with:

	 	(i)	 	any non-fulfilment or breach of any covenant or agreement on
the part of the Purchaser contained in this Agreement;
	 
	 	(ii)	 	any misrepresentation or any incorrectness in or breach of any
representation or warranty of the Purchaser contained in this Agreement or in
any certificate or other document furnished by the Purchaser pursuant to this
Agreement; and
	 
	 	(iii)	 	any Termination and Severance Cost, together with any other
liabilities, costs and obligations suffered by the Vendor as a result of any
Claim brought by a Transferred Employee after the Closing Date.

	 	(b)	 	The Purchaser’s obligations under Section 10.2(a) shall be subject to the
following limitations:

	 	(i)	 	the obligations of the Purchaser under Section 10.2(a)(ii)
shall terminate 18 months after the Closing Date except with respect to bona
fide Claims by the Vendor set forth in written notices given by the Vendor to
the Purchaser prior to such date and in any event, within 45 days of its
determination that it has a bona fide Claim;

 

- 52 -

	 	(ii)	 	the Purchaser shall have no obligation to indemnify with
respect to matters of which the Vendor was aware at the time of Closing; and
	 
	 	(iii)	 	the Purchaser’s total liability shall not exceed
$5,000,000.00.

	10.3	 	Bulk Sales and Retail Sales Tax Waiver

In respect of the purchase and sale of the Purchased Assets under this Agreement, the Purchaser
shall not require the Vendor to comply, or to assist the Purchaser to comply, with the requirements
of (a) the Bulk Sales Act (Ontario) or (b) section 6 of the Retail Sales Tax Act (Ontario) and any
equivalent or corresponding provisions under any other applicable legislation.

	10.4	 	Indemnification Procedures for Third Party Claims

	 	(a)	 	In the case of Claims made by a third party with respect to which
indemnification is sought, the Party seeking indemnification (the “Indemnified
Party”) shall give prompt notice, and in any event within 20 days, to the other Party
(the “Indemnifying Party”) of any such Claims made upon it.

	 	(b)	 	The Indemnifying Party shall have the right, by notice to the Indemnified
Party given not later than 30 days after receipt of the notice described in Section
10.3(b), to assume the control of the defence, compromise or settlement of the Claim,
provided that such assumption shall, by its terms, be without cost to the Indemnified
Party and provided the Indemnifying Party acknowledges in writing its obligation to
indemnify the Indemnified Party in accordance with the terms contained in this
Section in respect of that Claim.

	 	(c)	 	Upon the assumption of control of any Claim by the Indemnifying Party as
set out in Section 10.3(b), the Indemnifying Party shall diligently proceed with the
defence, compromise or settlement of the Claim at its sole expense, including, if
necessary, employment of counsel reasonably satisfactory to the Indemnified Party
and, in connection therewith, the Indemnified Party shall co-operate fully, but at
the expense of the Indemnifying Party with respect to any out-of-pocket

 

- 53 -

	 	 	 	expenses incurred, to make available to the Indemnifying Party all pertinent
information and witnesses under the Indemnified Party’s control, make such
assignments and take such other steps as in the opinion of counsel for the
Indemnifying Party are reasonably necessary to enable the Indemnifying Party to
conduct such defence. The Indemnified Party shall also have the right to
participate in the negotiation, settlement or defence of any Claim at its own
expense.

	 	(d)	 	The final determination of any Claim pursuant to this Section, including
all related costs and expenses, shall be binding and conclusive upon the Parties as
to the validity or invalidity, as the case may be of such Claim against the
Indemnifying Party.

	 	(e)	 	If the Indemnifying Party does not assume control of a Claim as permitted
in Section 10.3(b), the obligation of the Indemnifying Party to indemnify the
Indemnified Party in respect of such Claim shall terminate if the Indemnified Party
settles such Claim without the consent of the Indemnifying Party.

	10.5	 	Reductions and Subrogation

If the amount of any Claim incurred by a Party at any time subsequent to the making of an indemnity
payment is reduced by:

	 	(a)	 	any net Tax benefit to that Party; or

	 	(b)	 	any recovery, settlement or otherwise under or pursuant to any insurance
coverage, or pursuant to any claim, recovery, settlement or payment by or against any
other Person,

the amount of such reduction (less any costs, expenses (including taxes) or premiums incurred in
connection therewith), together with interest thereon from the date of payment thereof at a rate of
4 percent, shall promptly be repaid by that Party to the other Party. Upon making a full indemnity
payment, a Party shall, to the extent of such indemnity payment, be subrogated to all

 

- 54 -

rights of the other Party against any third party in respect of the Claim to which the indemnity
payment relates.

	10.6	 	Exclusive Remedy

Except as provided in Section 11.1, and notwithstanding any other provisions of this Agreement, the
rights of indemnity set forth in this ARTICLE 10 are the sole and exclusive remedy of each Party in
respect of any misrepresentation, incorrectness in or breach of representation or warranty or
breach of covenant, by the other Party under this Agreement. Accordingly, the Parties waive, from
and after the Closing, any and all rights, remedies and claims that one Party may have against the
other, whether at law, under any statute or in equity (including but not limited to claims for
contribution or other rights of recovery arising under any Environmental Laws, claims for breach of
contract, breach of representation and warranty, negligent misrepresentation and all claims for
breach of duty), or otherwise, directly or indirectly, relating to the provisions of this Agreement
or the transactions contemplated by this Agreement other than as expressly provided for in this
ARTICLE 10 and other than those arising with respect to any fraud or wilful misconduct. The
Parties agree that if a Claim for indemnification is made by one Party in accordance with Section
10.1(b) or Section 10.2(b), as the case may be, and there has been a refusal by the other Party to
make payment or otherwise provide satisfaction in respect of such Claim, then a legal proceeding is
the appropriate means to seek a remedy for such refusal. This ARTICLE 10 shall remain in full
force and effect in all circumstances and shall not be terminated by any breach (fundamental,
negligent or otherwise) by any Party of its representations, warranties or covenants under this
Agreement or under any Closing document or by any termination or rescission of this Agreement by
any Party.

	10.7	 	One Recovery

A Party shall not be entitled to double recovery for any Claims even though they may have resulted
from the breach of more than one of the representations, warranties, agreements and covenants made
by the other Party in this Agreement.

 

- 55 -

	10.8	 	Duty to Mitigate

Nothing in this Agreement shall in any way restrict or limit the general obligation at law of a
Party to mitigate any loss which it may suffer or incur by reason of the breach by the other Party
of any representation, warranty or covenant of that other Party under this Agreement. If any Claim
can be reduced by any recovery, settlement or otherwise under or pursuant to any insurance
coverage, or pursuant to any claim, recovery, settlement or payment by or against any other Person,
a Party shall take all appropriate steps to enforce such recovery, settlement or payment.

	10.9	 	Adjustment to Purchase Price

Any payment made by the Vendor to the Purchaser under this ARTICLE 10 shall constitute a downward
adjustment to the Purchase Price.

ARTICLE 11

GENERAL

	11.1	 	Termination

	 	(a)	 	Prior to Closing, this Agreement may only be terminated as follows:

	 	(i)	 	by mutual consent of the Vendor and the Purchaser,
	 
	 	(ii)	 	by the Vendor, with notice to the Purchaser, pursuant to
Section 9.4,
	 
	 	(iii)	 	by either the Vendor or the Purchaser, with notice to the
other Party, if the Closing has not occurred on or before November 30, 2005,
provided that no Party shall be entitled to terminate this Agreement if such
Party’s breach of this Agreement prevented the consummation of the transactions
contemplated hereunder;
	 
	 	(iv)	 	by Purchaser, with notice to the Vendor, if:

 

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	 	A.	 	any of the representations or warranties of the
Vendor contained in this Agreement were untrue or inaccurate when made
and such untruth or inaccuracy has resulted in a Material Adverse
Effect, or
	 
	 	B.	 	the Vendor breaches or fails to comply with any
of its covenants or agreements under this Agreement and such breach or
non-compliance has resulted in a Material Adverse Effect,

	 	 	 	provided that, in each case, such untruth, inaccuracy, breach or
non-compliance continues for a period of fifteen (15) Business Days after
written notice of the same by the Purchaser to the Vendor;
	 
	 	(v)	 	by the Vendor, with notice to the Purchaser, if the Purchaser
breaches any of the covenants, undertakings, representations or warranties of
the Purchaser contained in this Agreement, and such breach either

	 	A.	 	materially misrepresents the financial
condition of the Purchaser, or
	 
	 	B.	 	prohibits the satisfaction of a condition to
Closing,

	 	 	 	provided that, in each case, such breach continues for fifteen (15) Business
days after written notice of the same by the Vendor to the Purchaser;
	 
	 	(vi)	 	by the Vendor, with notice to the Purchaser, if the approvals
described in Section 7.5 have not been obtained by the Purchaser on or before
November 15, 2005; and
	 
	 	(vii)	 	by the Vendor, with notice to the Purchaser, if the Purchaser
fails to have cash on hand or firm and binding commitments from lenders in
amounts sufficient to allow it to pay the Purchase Price including any
adjustments, and all other costs and expenses in connection with the
consummation of the transactions contemplated by this Agreement, provided that
such event

 

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	 	 	 	continues for fifteen (15) Business days after written notice of the same by
the Vendor to the Purchaser.

	 	(b)	 	Effect of Termination

	 	 	In the event of termination of this Agreement by the Vendor or the Purchaser in accordance
with the provisions of Section 11.1(a), this Agreement shall forthwith terminate upon notice
thereof duly given in accordance with the provisions hereof, and there shall be no liability
of any nature on the part of either the Vendor or the Purchaser to the other, except for
liabilities arising in respect of any breach of this Agreement prior to such termination;
provided, however, that the maximum amount of damages for which the Vendor, on the one hand,
or Purchaser, on the other hand, shall be liable for a breach of this Agreement prior to
Closing, shall not exceed $3,000,000.00 and provided further that if this Agreement is
terminated by the Vendor pursuant to Section 11.1(a)(vi), the Purchaser shall pay a break
fee to the Vendor in the amount of $500,000.00 (which amount the Parties agree is a genuine
pre-estimate of damages resulting from any such breach) within three Business Days, and
shall not be liable for any other damages under this section. Notwithstanding the
foregoing, in the event of a termination of this Agreement, no Party shall be liable to any
other party for any indirect, consequential, punitive, or exemplary damages. The rights set
forth in this Section 11.1 are the sole and exclusive remedy of each Party in respect of any
breach of this Agreement occurring prior to Closing.

	11.2	 	Public Notices

The Parties shall jointly plan and co-ordinate any public notices, press releases, and any other
publicity concerning the transactions contemplated by this Agreement and no Party shall act in this
regard without the prior approval of the other, such approval not to be unreasonably withheld,
except:

	 	(a)	 	where required to meet timely disclosure obligations of any Party under
applicable Laws or stock exchange rules in circumstances where prior

 

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	 	 	 	consultation with the other Party is not practicable and a copy of such disclosure
is provided to the other Party; and

	 	(b)	 	in the case of the Vendor’s communication made to the Vendor’s employees
affected by such transaction.

	11.3	 	Expenses

Except as otherwise provided in this Agreement, each of the Parties shall pay their respective
legal, accounting, and other professional advisory fees, costs and expenses incurred in connection
with the purchase and sale of the Business and the Purchased Assets and the preparation, execution
and delivery of this Agreement and all documents and instruments executed pursuant to this
Agreement and any other costs and expenses incurred. For greater certainty, the Parties agree that
the Purchaser shall be responsible for all costs relating to obtaining the shareholder approval
referred to in Section 7.5.

	11.4	 	Notices

Any notice, consent or approval required or permitted to be given in connection with this Agreement
(in this Section referred to as a “Notice”) shall be in writing and shall be sufficiently given if
delivered (whether in person, by courier service or other personal method of delivery), or if
transmitted by facsimile or e-mail:

	 	(a)	 	in the case of a Notice to the Vendor at:

CDI Career Development Institutes Ltd.

2 Bloor Street West

Suite 1700

Toronto, ON M4W 3E2

Attention:     Jack Massimino, Chief Executive Officer

Fax:              (714) 427-3013

E-mail:          jmassimino@cci.edu

with a copy to:

 

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Corinthian Colleges, Inc.

6 Hutton Centre Drive

Suite 400

Santa Ana, CA 92707-5764

Attention:     Stan Mortensen, Senior Vice President & General Counsel

Fax:              (714) 751-3605

E-mail:          smortens@cci.edu

	 	(b)	 	in the case of a Notice to the Purchaser at:

CrossOff Incorporated

70 Crescent Road

Suite 207

Sydney, NS B1S 2Z7

Attention:     President

Fax:              (902) 564-2089

E-mail:          dsnow@crossoff.com

with a copy to:

Stewart McKelvey Stirling Scales

Suite 900

1959 Upper Water Street

Halifax, NS B3J 2X2

Attention:     Andrew V. Burke

Fax:              (902) 420-1417

E-mail:          aburke@smss.com

Any Notice delivered or transmitted to a Party as provided above shall be deemed to have been given
and received on the day it is delivered or transmitted, provided that it is delivered or
transmitted on a Business Day prior to 5:00 p.m. local time in the place of delivery or receipt.
However, if the Notice is delivered or transmitted after 5:00 p.m. local time or if such day is not

 

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a Business Day then the Notice shall be deemed to have been given and received on the next Business
Day.

Any Party may, from time to time, change its address by giving Notice to the other Parties in
accordance with the provisions of this Section.

	11.5	 	Assignment

No party may assign this Agreement or any rights or obligations under this Agreement without the
prior written consent of the other Party.

	11.6	 	Enurement

This Agreement shall enure to the benefit of and be binding upon the Parties and their respective
successors (including any successor by reason of amalgamation of any Party) and permitted assigns.

	11.7	 	Amendment

No amendment, supplement, modification or waiver or termination of this Agreement and, unless
otherwise specified, no consent or approval by any Party, shall be binding unless executed in
writing by the Party to be bound thereby.

	11.8	 	Further Assurances

The Parties shall, with reasonable diligence, do all such things and provide all such reasonable
assurances as may be required to consummate the transactions contemplated by this Agreement, and
each Party shall provide such further documents or instruments required by any other Party as may
be reasonably necessary or desirable to effect the purpose of this Agreement and carry out its
provisions, whether before or after the Closing provided that the costs and expenses of any actions
taken after Closing at the request of a Party shall be the responsibility of the requesting Party.

 

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	11.9	 	Joint and Several

The representations, warranties, covenants and other duties and obligations of CDIL and CDSI
hereunder are joint and several.

	11.10	 	Execution and Delivery

This Agreement may be executed by the Parties in counterparts and may be executed and delivered by
facsimile and all such counterparts and facsimiles shall together constitute one and the same
agreement.

[Signature page to follow]

 

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IN WITNESS OF WHICH the Parties have executed this Agreement.

	 	 	 	 	 
	 	 	CDI CAREER DEVELOPMENT INSTITUTES LTD.
	 
	 	 	 	 
	 

	 	By:
	 	/s/ Jack Massimino
	 

	 	 	 	 
	 

	 	 	 	Name: Jack Massimino
	 

	 	 	 	Title: Chief Executive
Officer
	 
	 	 	 	 
	 	 	CDI CORPORATE EDUCATION SERVICES INC.
	 
	 	 	 	 
	 

	 	By:
	 	/s/ Jack Massimino
	 

	 	 	 	 
	 

	 	 	 	Name: Jack Massimino
	 

	 	 	 	Title: Chief Executive
Officer
	 
	 	 	 	 
	 	 	CROSSOFF INCORPORATED
	 
	 	 	 	 
	 

	 	By:
	 	/s/ Donnie Snow
	 

	 	 	 	 
	 

	 	 	 	Name: Donnie Snow
	 

	 	 	 	Title: President and Chief Executive Officer

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