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SHARE PURCHASE AGREEMENT
THIS AGREEMENT (the "Agreement") is entered into as of June 25, 1999 (the
"Agreement Date"), by and among Asymetrix Learning Systems, Inc., a Delaware
corporation ("Asymetrix") and Xxxx Kit Ming Xxx, Xxxx Kit Xxxxx Xxx and
Xxxxxxxxx Xxxx Xxxx Xxxxx (collectively referred to herein as the "Shareholders"
and each individual referred to as a "Shareholder"). In consideration of the
mutual promises and undertakings herein, the parties agree as follows:
1. CERTAIN DEFINITIONS
As used in this agreement, the following terms have the meanings set
forth below:
1.1 "Asymetrix Common Stock" means the Common Stock of Asymetrix,
$0.01 par value per share.
1.2 "Asymetrix Shares" means 100,000 shares of Asymetrix Common
Stock to be issued pursuant to this Agreement.
1.3 "Closing" means the completion of the sale to and purchase by
Asymetrix of the Purchased Shares under this Agreement.
1.4 "Dollars" or "$" means Canadian dollars.
1.5 "Encumbrance" means any pledge, lien, charge, security
agreement, lease, title retention agreement, mortgage,
encumbrance, option or adverse claim, of any kind or character
whatsoever.
1.6 "Purchased Shares" means all of the issued and outstanding
Class "A" Voting Common Shares, the Class "B" Voting Common
Shares and the Class "C" Voting Common Shares of Pixelmedia.
1.7 "Purchase Price" shall have the meaning given in Section 2.1.
1.8 "Pixelmedia" means Pixelmedia Visual Communications, Inc. a
British Columbia corporation.
Other capitalized terms defined elsewhere in this Agreement and not
defined in this Section 1 have the meanings assigned to such terms in
this Agreement.
2. PURCHASE AND SALE
2.1 PURCHASE AND SALE OF PURCHASED SHARES. The Shareholders are
the registered holders and beneficially own and control all of
the issued and outstanding Purchased Shares. At the Closing
and subject to the terms and conditions of this Agreement, the
Shareholders shall sell and Asymetrix shall purchase the
Purchased Shares for the Purchase Price payable as provided in
this Agreement.
2.2 PURCHASE PRICE. Subject to adjustment as provided in Section
2.3, the amount payable by Asymetrix for the Purchased Shares
(the "Purchase Price") shall, exclusive of all applicable
sales and transfer taxes, consist of the following:
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(a) 100,000 shares of Asymetrix Common Stock; and
(b) cash in an amount equal to $700,000 less (i) the
amount required for Pixelmedia to repay in full all
loans from Xxxx Xxx and Xxxx Xxxxx (not including any
amounts owed for deferred compensation); plus (ii) an
amount equal to the lesser of the actual attorneys'
and accountants' fees incurred by the Shareholders in
connection with the sale of the Purchased Shares and
other transactions contemplated by this Agreement or
$10,000.
The Purchase Price shall be allocated among the Class "A"
Voting Common Shares, the Class "B" Voting Common Shares and
the Class "C" Voting Common Shares as set forth in Exhibit
2.2.
2.3 REDUCTION OF THE PURCHASE PRICE IN CERTAIN CIRCUMSTANCES. The
Shareholders acknowledge that the Purchase Price is based in
part on the expectation that the Shareholders will continue to
remain employed by Pixelmedia and that the value of the
Purchased Shares will decrease substantially if the
shareholders do not remain employed by Pixelmedia for a period
of at least 18 months following the Closing (as defined
herein). Accordingly, the Shareholders agree that for each
Shareholder whose employment is terminated voluntarily or for
cause during the 18 months following the Closing, the
Shareholders shall repay to Asymetrix a portion of the cash
element of the Purchase Price determined as follows: (a) if
such termination occurs during the first six months following
the closing, 1/3 of the cash portion of the Purchase Price;
(b) if such termination occurs between six and 12 months
following the closing, 1/4 of the cash portion of the Purchase
Price; and (c) if such termination occurs between 12 and 18
months following the closing, 1/6 of the cash portion of the
Purchase Price. The obligation to repay such amount will be
evidenced by a Promissory Note and secured by a Stock Pledge
and Option Right Assignment Agreement in a form acceptable to
Asymetrix and the Shareholders. All such payments shall reduce
the Purchase Price on a dollar for dollar basis. The foregoing
shall not apply to any termination resulting from a
Shareholder's death or disability which renders him or her
incapable of carrying out his or her duties. If a
Shareholder's termination for cause is disputed by such
Shareholder, this obligation shall not apply until a final
ruling of an arbitrator is issued upholding the termination
for cause, in accordance with the arbitration procedures set
forth in such Shareholder's Employment Agreement.
2.4 U.S. SECURITIES LAW COMPLIANCE. Asymetrix will issue the
Asymetrix Shares pursuant to the exemption from registration
under Regulation S ("Regulation S") promulgated under, the
SECURITIES ACT OF 1933, as amended (the "Securities Act"), and
the Asymetrix Shares received by the Shareholders will
therefore be restricted securities within the meaning of Rule
144 under the Securities Act and will not be eligible for
resale into the United States for a period of one year
following the issuance to the Shareholders, and certificates
evidencing such shares will bear a restrictive legend
evidencing that fact. Asymetrix shall also take any reasonable
action that is required to be taken under any applicable state
securities or Blue Sky laws in connection with the issuance of
Asymetrix Shares. The Shareholders shall furnish to Asymetrix
all information known to the Shareholders (or reasonably
ascertainable by the Shareholders) concerning Pixelmedia and
the Shareholders, as may be reasonably requested in connection
with any action contemplated by this Section.
2.5 PURCHASE MAY BE MADE BY CANADIAN SUBSIDIARY. Provided that
there is no adverse effect on the Purchase Price or on the
rights of the Shareholders hereunder, the purchase of the
Purchased Shares may be made by a Canadian subsidiary of
Asymetrix.
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3. REPRESENTATIONS AND WARRANTIES OF SHAREHOLDERS
Each of the Shareholders, jointly and severally, hereby represents and
warrants as follows, except as set forth in the Shareholder Schedule of
Exceptions (in numbered paragraphs that correspond to the Section
numbers below) simultaneously delivered to Asymetrix with the execution
of this Agreement and attached hereto as Exhibit 3.0:
3.1 INCORPORATION AND REGISTRATION. Pixelmedia is a corporation
duly incorporated and validly existing under the laws of the
Province of British Columbia and has all necessary corporate
power, authority and capacity to own its property and assets
and to carry on its business as presently conducted. Neither
the nature of its business nor the location or character of
the property owned or leased by Pixelmedia requires it to be
registered, licensed or otherwise qualified as an
extra-provincial or foreign corporation in any jurisdiction
other than British Columbia (where it is duly registered,
licensed or otherwise qualified for such purpose) and other
than jurisdictions where failure to be so registered, licensed
or otherwise qualified would not have a material adverse
effect on Pixelmedia's business, operations, financial
condition or prospects (for purposes of this Section 3 a
"Material Adverse Effect") .
3.2 DUE AUTHORIZATION. Each Shareholder has all necessary power,
authority and capacity to enter into this Agreement and all
other agreements to which such Shareholder is or will be a
party that are required to be executed at the Closing pursuant
to this Agreement (the "Shareholder Ancillary Agreements").
3.3 REGULATORY APPROVALS. No consent, approval, order or filing
with, any government, regulatory authority, court,
governmental department, agency, commission, board, tribunal,
crown corporation or other governmental authority or
instrumentality or other law, rule or regulation authority
having or purporting to have jurisdiction on behalf of any
nation, or province or state or other subdivision thereof or
any municipality, district or other subdivision thereof (each
a "Governmental Entity"), is required to be obtained by the
Shareholders in connection with the execution and delivery of
this Agreement, the Shareholder Ancillary Agreements or the
consummation of the transactions contemplated hereby or
thereby, except that the Shareholders make no representations
or warranties regarding the application of any securities laws
or regulations to the issuance and delivery of the Asymetrix
Shares as provided herein.
3.4 ENFORCEABILITY OF OBLIGATIONS. This Agreement and the
Shareholder Ancillary Agreements are, or when executed by the
Shareholders will be, valid and binding obligations of the
Shareholders, enforceable in accordance with their respective
terms.
3.5 CAPITALIZATION. The issued and outstanding share capital of
Pixelmedia is as set forth in Schedule 3.5. All of the
Purchased Shares have been duly and validly issued and are
outstanding as fully paid and nonassessable shares of
Pixelmedia. No options, warrants or other rights to purchase
shares or other securities of Pixelmedia and no securities or
obligations convertible into or exchangeable for shares or
other securities of Pixelmedia have been authorized or agreed
to be issued or outstanding. Schedule 3.5 sets forth a true,
correct and complete list of all holders of the Purchased
Shares and the Purchased Shares held by each such shareholder.
3.6 ABSENCE OF CONFLICTING AGREEMENTS. The Shareholders are not a
party to, bound or affected by or subject to any indenture,
mortgage, lease, agreement, obligation, instrument, charter or
by-law provision, statute, regulation, order, judgment,
decree, licence, permit or law which would be violated,
contravened, breached by, or under which default would occur
or an Encumbrance
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would be created as a result of the execution and delivery of
this Agreement or any Shareholder Ancillary Agreement, or the
performance by the Shareholders of any of their obligations
provided for under this Agreement or any Shareholder Ancillary
Agreement.
3.7 LITIGATION. There is no suit, action, litigation, proceeding,
claim, complaint, grievance or investigation, including
appeals and applications for review, in progress, pending
against Pixelmedia or any Shareholder before any federal,
state, provincial, municipal, foreign or other court or
administrative agency, department, board, bureau, commission
or arbitration panel or instrumentality and Pixelmedia and the
Shareholders have no knowledge of any existing ground on which
any suit, action, litigation, proceeding, claim, complaint,
grievance or investigation might be commenced with any
reasonable likelihood of success.
3.8 TAXES.
(a) Pixelmedia has duly and timely filed its Tax Returns (as
defined below) with the appropriate Governmental Entity and
has duly, completely and correctly reported all income and all
other amounts and information required to be reported thereon
and has duly and timely withheld and paid all Taxes (as
defined below), including all installments on account of Taxes
for the current year that are due and payable by it whether or
not assessed by the appropriate Governmental Entity, and has
otherwise complied with all registration requirements, rules,
regulations or statutes imposed or adopted by any Governmental
Agency and relating to any Taxes.
(b) Pixelmedia has established reserves that are reflected
on the Balance Sheet that are adequate for the payment
by Pixelmedia of all Taxes that are not yet due and
payable (and that will not be due and payable by the
Closing) and that relate to periods ending on or prior
to the Closing.
(c) As used in this Agreement, "Tax" and "Taxes" includes,
all taxes, duties, fees, premiums, assessments,
imposts, levies and other charges of any kind
whatsoever imposed by any Governmental Entity, together
with all interest, penalties, fines, additions to tax
or other additional amounts imposed in respect thereof,
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, employer
health, payroll, employment, health, social services,
education and social security taxes, all surtaxes, all
customs duties and import and export taxes, all
license, franchise and registration fees and all
employment insurance, health insurance and government
pension plan premiums or contributions of any
Governmental Entity. As used in this Agreement,
"Tax Returns" includes all returns, reports,
declarations, elections, notices, filings, information
returns and statements filed or required to be filed
in respect of Taxes.
3.9 FINANCIAL STATEMENTS. Pixelmedia has delivered to Asymetrix
as Schedule 4.10 of the Pixelmedia Schedule of Exceptions,
Pixelmedia's balance sheet as of April 30, 1999, (the
"Balance Sheet") and income statement and statement of cash
flows for the 12 month period then ended (collectively, the
"Pixelmedia Financial Statements"). The Pixelmedia Financial
Statements fairly present all of the assets, liabilities and
financial position of Pixelmedia and the sales, earnings,
results of operations and changes in financial position of
Pixelmedia and have been prepared on a "review engagement"
basis. Since April 30, 1999, Pixelmedia has not incurred any
liabilities or obligations (whether accrued, absolute,
contingent or otherwise) which continue to be outstanding or
incurred in the ordinary course of business.
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3.10 TITLE TO THE ASSETS. Pixelmedia is the sole beneficial and
(where its interests are registrable) the sole registered
owner of all of its assets and interests in assets, real and
personal, with good and valid title, free and clear of all
Encumbrances. In particular, without limiting the generality
of the foregoing, there has been no assignment, subletting or
granting of any licence (of occupation, use or otherwise) of
or in respect of any of Pixelmedia's assets or any granting of
any agreement or right capable of becoming an agreement or
option for the purchase of any of the assets other than
licenses to use Pixelmedia products granted in the ordinary
course of business.
3.11 ABSENCE OF CERTAIN CHANGES. Except as set forth on Schedule
3.11, since April 30, 1999, there has not been with respect to
Pixelmedia:
(a) any change in the financial condition, operations or
prospects of Pixelmedia which change by itself or in
conjunction with all other such changes, whether or
not arising in the ordinary course of business, has
had or, to the knowledge of Pixelmedia and the
Shareholders, will have a Material Adverse Effect;
(b) any contingent liability incurred by Pixelmedia as
guarantor, surety or otherwise with respect to the
obligations of others;
(c) any Encumbrance placed on any of the assets of
Pixelmedia;
(d) any obligation or liability incurred thereby other
than obligations and liabilities incurred in the
ordinary course of business;
(e) any damage, destruction or loss, whether or not
covered by insurance, which has a Material Adverse
Effect;
(f) any payment or discharge of any Encumbrance or
liability thereof which lien was not either shown on
the Balance Sheet or incurred in the ordinary course
of business thereafter; or
(g) any material transaction with any of its officers,
directors, employees or shareholders or any entity
controlled by any of such individuals.
3.12 MATERIAL AGREEMENTS. Except as set forth on Schedule 3.12 of
the Pixelmedia Schedule of Exceptions Pixelmedia is not on the
date hereof a party or subject to any oral or written
contracts, obligations, commitments, plans, leases,
instruments, arrangements or licenses which are material to
the business of Pixelmedia (each a "Material Agreement")
including, but not limited to any:
(a) contract, commitment, letter contract or purchase
order providing for payments by or to Pixelmedia in
an aggregate amount of (1) $25,000 or more in the
ordinary course of business to any one vendor or
customer; or (2) $10,000 or more not in the ordinary
course of business to any one vendor or customer;
(b) license agreement as licensor or licensee, including
site licenses for products with initial year fees in
excess of $25,000 and each agreement that provides
for either the delivery of source code to the
licensee or escrow of such source code for the
benefit of such licensee and including any Pixelmedia
Intellectual Property;
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(c) consulting, development or similar agreement under
which Pixelmedia currently provides or will provide
any custom software development, training,
documentation, personnel placements, advice,
consulting services or other products or services to
a customer of Pixelmedia;
(d) contract for the current or future sale, provision or
manufacture of products (including computer
software), material or supplies from Pixelmedia or in
which Pixelmedia has granted or received distribution
rights, most favored customer pricing provisions or
exclusive marketing rights relating to any product or
services, group of products or services or territory;
(e) contract providing for the development of software by
or for Pixelmedia, or license of software to
Pixelmedia, which software is used or incorporated in
any products distributed or services provided by
Pixelmedia or is contemplated to be used or
incorporated in any products to be distributed or
services to be provided by Pixelmedia (other than
software generally available to the public at a per
copy license fee of less than $2,000 per copy);
(f) contract or commitment for the employment of any
officer, employee or consultant of Pixelmedia or any
other type of contract or understanding with any
officer, employee or consultant of Pixelmedia which
is not immediately terminable by Pixelmedia without
cost or other liability;
(g) agreement for the lease of real or personal property
involving payments by or to Pixelmedia in an
aggregate amount of $10,000 or more;
(h) joint venture contract or arrangement or any other
agreement that involves a sharing of profits with
other persons;
(i) written dealer, distributor, sales representative,
original equipment manufacturer, value added
remarketer or other agreement for the ongoing
distribution of any products or services of
Pixelmedia;
(j) instrument evidencing or related in any way to
indebtedness for borrowed money by way of direct
loan, sale of debt securities, purchase money
obligation, conditional sale, guarantee, or
otherwise, except for trade indebtedness incurred in
the ordinary course of business, and except as
disclosed in the Pixelmedia Financial Statements;
(k) contract containing covenants purporting to limit
Pixelmedia's freedom to compete in any line of
business in any geographic area; or
(l) stock redemption or purchase agreement yet to be
performed.
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All Material Agreements listed in Schedule 3.12 are in full
force and effect unamended and no default exists under such
Material Agreements on the part of Pixelmedia. Pixelmedia has
the capacity to perform all its obligations under the Material
Agreements.
3.13 INTELLECTUAL PROPERTY.
(a) There are no patents, trade-marks, copyright,
industrial designs which have been registered by or
on behalf of Pixelmedia or for which applications for
registration have been filed.
(b) Except as set forth in Material Agreements provided
to Asymetrix, Pixelmedia has the sole and exclusive
right to use and is the sole and exclusive owner of
all right, title and interest in and to the
Intellectual Property (as defined below) (with no
breaks in the chain of title). The Intellectual
Property which is not owned by Pixelmedia is being
used by Pixelmedia only with the consent of or
license from the rightful owner thereof and all such
licenses are in full force and effect. The
Intellectual Property owned by Pixelmedia is in full
force and effect and has not been used or enforced or
failed to be used or enforced in a manner that would
result in the abandonment, cancellation or
unenforceability of any of the Intellectual Property.
(c) The Shareholders have no knowledge of any claim of
adverse ownership, invalidity or other opposition to
or conflict with any Intellectual Property nor of any
pending or threatened suit, proceeding, claim,
demand, action or investigation of any nature or kind
against Pixelmedia relating to the Intellectual
Property, either within or outside of Canada.
(d) The Shareholders have no knowledge that Pixelmedia,
any activity in which Pixelmedia is engaged or any
product which Pixelmedia manufactures, uses or sells
or any process, method, packaging, advertising, or
material that Pixelmedia employs in the manufacture,
marketing or sale of any such product, or the use of
any of the Intellectual Property breaches, violates,
infringes or interferes with any intellectual
property rights of any third party or requires
payment for the use of any patent, trade-name, trade
secret, trade-xxxx, copyright or other intellectual
property right or technology of another, either
within or outside of Canada.
(e) As used herein, the term "Intellectual Property"
shall mean all intellectual property rights in any
jurisdiction in Canada, including, without
limitation, patents, patent applications, patent
rights, trademarks, trademark applications, trade
names, service marks, service xxxx applications,
copyright, copyright registrations, licenses,
know-how, trade secrets, customer lists, proprietary
processes, formulae and other rights to Software. The
term "Software" shall mean all source and object
code, user interface design, learning content,
algorithms, architecture, structure, display screens,
layouts, inventions, development tools and all
documentation and media constituting, describing or
relating to the above, including, without limitation,
manuals, memoranda and records.
3.14 COMPLIANCE WITH LAWS. In all material respects, the operations
of Pixelmedia have been and are now conducted in compliance
with all laws of each jurisdiction in which Pixelmedia carries
on or has carried on business and Pixelmedia has not received
any notice of any alleged violation of any such laws.
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3.15 CERTAIN TRANSACTIONS AND AGREEMENTS. None of the Shareholders
nor any member of their immediate families is or has been
directly or indirectly interested in any contract or informal
arrangement with Pixelmedia within the last three years,
except for compensation as an officer, director or employee of
Pixelmedia. None of the Shareholders nor any member of their
immediate families has any interest in any property, real or
personal, tangible or intangible, including inventions,
patents, copyrights, trademarks or trade names or trade
secrets, used in or pertaining to the business of Pixelmedia,
except for the normal rights of a shareholder.
3.16 PENSION AND OTHER BENEFIT PLANS. Pixelmedia has no Benefit
Plans and no Pension Plans. For the purposes of this section,
"Benefit Plans" means all plans, arrangements, agreements,
programs, policies, practices or undertakings, whether oral or
written, formal or informal, funded or unfunded, registered or
unregistered to which Pixelmedia is a party to or bound by or
under which Pixelmedia has, or will have, any liability or
contingent liability, with respect to any of its employees or
former employees (or any dependents or beneficiaries of any
such employees or former employees), individuals working on
contract with Pixelmedia or other individuals providing
services to it of a kind normally provided by employees or
eligible dependents of such person and "Pension Plans" means
any and all benefits relating to retirement or retirement
savings including, without limitation, pension plans, pensions
or supplemental pensions, registered retirement savings plans,
"registered pension plans" (as defined in the INCOME TAX ACT
(Canada)) and "retirement compensation arrangements" (as
defined in the INCOME TAX ACT (Canada)).
3.17 EMPLOYMENT MATTERS
(a) Schedule 3.17 contains a complete list of all
employees of Pixelmedia with the titles and current
salaries or and/or commissions payable to each such
employee as of the Closing Date.
(b) There are no employment policies or plans, including
policies or plans regarding incentive compensation,
stock options, severance pay or other terms or
conditions of employment or terms or conditions upon
which employees may be terminated, which are binding
upon Pixelmedia.
3.18 COPIES OF CORPORATE DOCUMENTS AND AGREEMENTS. Pixelmedia has
made available to Asymetrix for examination all documents and
information listed in the Pixelmedia Schedule of Exceptions or
other exhibits called for by this Agreement or which have been
requested by Asymetrix's counsel, including, without
limitation, all Articles and by-laws of Pixelmedia and its
minute books and amendments thereto and all Material
Agreements.
3.19 FULL DISCLOSURE. Pixelmedia has made available to Asymetrix,
all information, including the financial, marketing, sales,
operational and corporate information on an historical basis
relating to Pixelmedia which is material to Asymetrix. All
information, which has been provided to Asymetrix by
Pixelmedia and the Shareholders is true and correct in all
material respects and no material fact or facts have been
omitted therefrom which would make such information
misleading.
3.20 INSURANCE. Pixelmedia maintains and at all times during the
prior three years has maintained fire and casualty, general
liability, business interruption and product liability
insurance, as are appropriate for its operations, property and
assets, in such amounts and against such risks as are
customarily carried and insured against by owners of
comparable business, properties and
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assets. All such policies of insurance are in full force and
effect and Pixelmedia is not in default, as to the payment of
premium or otherwise, under the terms of any such policy.
3.21 RESIDENCE OF THE SHAREHOLDERS. The Shareholders are not
non-residents of Canada for the purposes of the INCOME TAX ACT
(Canada), and are residents of the Province of British
Columbia.
3.22 RIGHT TO SELL. The Shareholders are the registered and
beneficial owners of the Purchased Shares free and clear of
all Encumbrances. The Shareholders have the exclusive right to
dispose of the Purchased Shares as provided in this Agreement
and such disposition will not violate, contravene, breach or
offend against or result in any default under any indenture,
mortgage, lease agreement, obligation, instrument, stature,
regulation, order, judgment, decree, licence, permit or law to
which the Shareholders are a party or subject or by which the
Shareholders are bound or affected. The Purchased Shares are
not subject to the terms of any shareholders agreement.
3.23 REAL PROPERTY.
(a) Pixelmedia owns no real property and Pixelmedia's
real property leases have not been altered or amended
and are in full force and effect.
(b) All interests held by Pixelmedia as lessee or
occupant under the real property leases are free and
clear of all Encumbrances.
(c) All payments required to be made by Pixelmedia
pursuant to the real property leases have been duly
paid and Pixelmedia is not otherwise in default in
meeting any of its obligations under any of the real
property leases.
(d) None of the landlords, sublandlords, tenants or
subtenants under any of the real property leases is
in default in meeting any of its obligations under
real property leases to which it is a party.
3.24 SECURITIES LAW COMPLIANCE.
(a) None of the Shareholders is:
(1) a natural person resident in the United
States;
(2) a partnership or corporation organized or
incorporated under the laws of the United
States;
(3) an estate of which any executor or
administrator is resident in the United
States or incorporated under the laws of the
United States;
(4) a trust of which any trustee is resident in
the United States or incorporated under the
laws of the United States;
(5) an agency or branch of a foreign entity
located in the United States;
(6) a discretionary account or similar account
held by a dealer or other fiduciary
organized, incorporated or resident in the
United States;
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(7) a non-discretionary account or similar
account held by a dealer or other fiduciary
for the benefit or account of a beneficiary
resident in the United States or
incorporated in the United States; or
(8) a non-U.S. partnership or corporation formed
by a U.S. person or entity principally for
the purpose of investing in securities not
registered under the Securities Act.
(b) No Shareholder will resell his or her Asymetrix
Shares other than in compliance with Regulation S or pursuant
to registration under the Securities Act or as available
exemption from registration.
4. REPRESENTATIONS AND WARRANTIES OF ASYMETRIX
Asymetrix hereby represents and warrants as follows, except as set
forth in the Asymetrix SEC Documents or in the Asymetrix Schedule of
Exceptions (in numbered paragraphs that correspond to the Section
numbers below) simultaneously delivered to the Shareholders with the
execution of this Agreement and attached hereto as Exhibit 4.0:
4.1 INCORPORATION AND REGISTRATION. Asymetrix is a corporation
duly organized, validly existing and in good standing under
the laws of the State of Delaware and has all necessary
corporate power, authority and capacity to own, operate and
lease its properties and to carry on its business as presently
conducted. Asymetrix is qualified to do business as a foreign
corporation in each jurisdiction where failure to be so
qualified could reasonably be expected to have a material
adverse effect on the business, operations, financial
condition or prospects of Asymetrix and its subsidiaries taken
as a whole (for purposes of this Section 4, a "Material
Adverse Effect").
4.2 DUE AUTHORIZATION. Asymetrix has all necessary corporate
power, capacity and authority to enter into this Agreement,
and all agreements to which Asymetrix is or will be a party
that are required to be executed pursuant to this Agreement
(the "Asymetrix Ancillary Agreements"). The execution and
delivery of this Agreement and the Asymetrix Ancillary
Agreements and the consummation of the transactions
contemplated thereby have been duly authorized by all
necessary corporate action on the part of Asymetrix.
4.3 REGULATORY APPROVALS. No filing, authorization or approval,
governmental or otherwise, is necessary to enable Asymetrix to
enter into, and to perform its respective obligations under,
this Agreement and the Asymetrix Ancillary Agreements, except
for such filings as may be required to comply with federal,
provincial and state corporate and securities laws.
4.4 ENFORCEABILITY OF OBLIGATIONS. This Agreement and the
Asymetrix Ancillary Agreements are, or when executed by
Asymetrix will be, valid and binding obligations of Asymetrix
enforceable in accordance with their respective terms.
4.5 CAPITALIZATION. The capitalization of Asymetrix consists of
the following:
(a) ASYMETRIX CAPITAL STOCK. As of the date hereof,
Asymetrix is authorized to issue 40,000,000 shares of
Asymetrix Common Stock, of which 14,104,247 shares
are outstanding, and 2,000,000 shares of Preferred
Stock, of which none are outstanding. All of the
issued and outstanding shares of Asymetrix Common
Stock have been duly authorized and validly issued,
and are outstanding as fully paid and nonassessable
shares of Asymetrix, and have been offered, issued,
sold and delivered by Asymetrix
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in compliance with all registration or
qualification requirements (or applicable
exemptions therefrom) of applicable federal and
state securities laws.
(b) ASYMETRIX OPTIONS, WARRANTS, RESERVED SHARES. As of
the date hereof, options to purchase an aggregate of
4,238,337 shares of Asymetrix Common Stock are
outstanding under all stock option and equity
incentive plans of Asymetrix and an additional
1,489,029 shares are reserved for future awards under
such plans. Except for the options and reserved
shares described above, an additional option to
purchase 14,573 shares of Asymetrix Common Stock and
400,000 shares of Asymetrix Common Stock eligible for
purchase under Asymetrix`s 1999 Employee Stock
Purchase Plan, as of the date hereof there are not
outstanding any options, warrants, calls,
commitments, rights (including conversion or
preemptive rights) or agreements for the purchase or
acquisition from Asymetrix of any shares of its
capital stock or any securities convertible into or
ultimately exchangeable or exercisable for any shares
of Asymetrix's capital stock or obligating Asymetrix
to grant, extend, or enter into any such option,
warrant, call, commitment, conversion privilege or
other right or agreement, and there is no liability
for dividends accrued but unpaid.
4.6 ABSENCE OF CONFLICTING AGREEMENTS. Asymetrix is not a party
to, bound or affected by or subject to any indenture,
mortgage, lease, agreement, obligation, instrument, charter
or by-law provision, statute, regulation, order, judgement,
decree, license, permit or law which would be violated,
contravened or breached by, or under which any default would
occur or a lien, claim, restriction or encumbrance would be
created as a result of the execution and delivery by it of
this Agreement or any of the Asymetrix Ancillary Agreements or
the performance by it of any of the terms of this Agreement.
4.7 LITIGATION. There is no suit, action, litigation, proceeding,
claim, complaint, grievance or investigation, including
appeals and applications for review, in progress, pending
against Asymetrix before any federal, state, provincial,
municipal, foreign or other court or administrative agency,
department, board, bureau, commission or arbitration panel or
instrumentality and Asymetrix has no knowledge of any existing
ground on which any suit, action, litigation, proceeding,
claim, complaint, grievance or investigation might be
commenced with any reasonable likelihood of success.
4.8 SEC FILINGS
(a) Asymetrix has made available to Pixelmedia true and
complete copies of each report, registration
statement (on a form other than Form S-8) and
definitive proxy statement (in each case excluding
copies of exhibits) filed by Asymetrix with the SEC
between December 31, 1998 and the Agreement Date
pursuant to the Securities Act or the SECURITIES
EXCHANGE ACT OF 1934, as amended (the "1934 Act"),
including without limitation the Asymetrix 1998
Annual Report on Form 10-K (collectively, the
"Asymetrix SEC Documents"). As of the time it was
filed with the Securities and Exchange Commission
(the "SEC") (or, if amended or superseded by a
subsequent filing prior to the Agreement Date, then
on the date of such subsequent filing): (i) each of
the Asymetrix SEC Documents complied in all material
respects with the applicable requirements of the
Securities Act or the 1934 Act (as the case may be);
and (ii) none of the Asymetrix SEC Documents
contained any untrue statement of a material fact or
omitted to state a material fact required to be
stated therein or necessary in order to make the
statements therein, in the light of the circumstances
under which they were made, not misleading.
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(b) The consolidated financial statements (including any
related notes) contained in the Asymetrix SEC
Documents: (i) complied as to form in all material
respects with the published rules and regulations of
the SEC applicable thereto; (ii) were prepared in
conformity with U.S. generally accepted accounting
principals applied on a consistent basis throughout
the periods covered (except as may be indicated in
the notes to such financial statements and, in the
case of unaudited statements, as permitted by Form
10-Q of the SEC, and except that unaudited financial
statements may not contain footnotes and are subject
to normal and recurring year-end audit adjustments);
and (iii) fairly present the consolidated financial
position of Asymetrix and its subsidiaries as of the
respective dates thereof and the consolidated results
of operations and cash flows of Asymetrix and its
subsidiaries for the periods covered thereby.
4.9 ABSENCE OF CERTAIN CHANGES. Since the date of Asymetrix's
Report on Form 10-Q for its fiscal quarter ended March 31,
1999 (the "March 31 10-Q") there has been no change in its
financial condition, properties, assets, liabilities, business
or operations from that reflected in the March 31 10-Q, other
than those that do not have a Material Adverse Effect.
4.10 FULL DISCLOSURE. Asymetrix has made available to the
Shareholders all information requested by the Shareholders.
All information, which has been provided by Asymetrix to the
Shareholders is true and correct in all material respects and
no material fact or facts have been omitted therefrom which
would make such information misleading.
4.11 SHARES ISSUED. The Asymetrix Shares to be issued to the
Shareholders pursuant to this Agreement, when issued by
Asymetrix pursuant to the terms of this Agreement, will be
duly authorized and validly issued and outstanding as fully
paid and nonassessable shares of Asymetrix Common Stock, free
and clear of all liens, claims, pledges, options, adverse
claims, assessments or charges of any nature whatsoever, and
will have been issued materially in compliance with all
registration or qualification requirements (or applicable
exemptions therefrom) of applicable federal and state
securities laws.
5. CLOSING MATTERS
5.1 THE CLOSING. The Closing will take place at the offices of
Asymetrix in Bellevue, Washington on or before July 1, 1999,
or, if all conditions to closing have not been satisfied or
waived by such date, such other place, time and date as the
Shareholders and Asymetrix may mutually select (the
"Closing").
5.2 DELIVERIES BY PIXELMEDIA. At the Closing the Shareholders will
deliver to Asymetrix the following:
(a) share certificates representing the Purchased
Shares accompanied by irrevocable security
transfer powers of attorney duly executed in blank
by the Shareholders; and
(b) all documents, agreements and things required to
be delivered to Asymetrix to satisfy the
conditions precedent to Asymetrix's obligations
under this Agreement as described in Sections 7.5,
7.6, 7.7 and 7.8.
6.3 DELIVERIES AND PAYMENTS BY ASYMETRIX. At the Closing
Asymetrix will deliver to the Shareholders the following:
(a) the Purchase Price, pro rata in accordance with each
Shareholder's holdings as set
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forth on Schedule 4.5;
(b) the amounts necessary to repay the
Shareholder Loans (as defined in Section 9.1); and
(c) all documents, agreements and things
required to be delivered to the Shareholders to
satisfy the conditions precedent to the Shareholders'
obligations under this Agreement as described in
Sections 6.5 and 6.6.
6. THE SHAREHOLDERS' CONDITIONS PRECEDENT
The Shareholders' obligations hereunder are subject to the fulfillment
or satisfaction, on and as of the Closing, of each of the following
conditions (any one or more of which may be waived by the Shareholders,
but only in writing signed by the Shareholders):
6.1 ACCURACY OF REPRESENTATIONS AND WARRANTIES. The
representations and warranties of Asymetrix set forth in
Section 4 that are not made as of a specific date shall
be true and accurate in all material respects on and as of
the Closing.
6.2 PERFORMANCE OF OBLIGATIONS. Asymetrix shall have performed or
complied with, in all respects, all its obligations, covenants
and agreements under this Agreement.
6.3 COMPLIANCE WITH LAW. There shall be no order, decree, or
ruling by any court or governmental agency or threat thereof,
or any other fact or circumstance, which would prohibit or
render illegal the transactions contemplated by this
Agreement.
6.4 GOVERNMENT CONSENTS. There shall have been obtained at or
prior to the Closing such consents, approvals, orders or
authorizations, and there shall have been taken such other
action, as may be required to consummate the transactions
contemplated by this Agreement by any regulatory authority
having jurisdiction over the parties and the actions herein
proposed to be taken.
6.5 OPINION OF ASYMETRIX'S COUNSEL. The Shareholders shall have
received an opinion, in form and substance satisfactory to the
Shareholders, from Fenwick & West, counsel to Asymetrix.
6.6 EMPLOYMENT AGREEMENTS. Asymetrix shall have executed and
delivered (i) an employment agreement with Xxxx Xxx (the "Xxxx
Xxx Employment Agreement"), (ii) an employment agreement with
Xxxx Xxx (the "Xxxx Xxx Employment Agreement"), (iii) an
employment agreement with Xxxx Xxxxx (the "Xxxx Xxxxx
Employment Agreement), and an employment agreement with Daniel
Ah-Fat (the "Daniel Ah-Fat Employment Agreement").
7. ASYMETRIX'S CONDITIONS PRECEDENT
The obligations of Asymetrix hereunder are subject to the fulfillment
or satisfaction on, and as of the Closing, of each of the following
conditions (any one or more of which may be waived by Asymetrix, but
only in a writing signed by Asymetrix):
7.1 ACCURACY OF REPRESENTATIONS AND WARRANTIES. The
representations and warranties of the Shareholders set forth
in Section 4 that are not made as of a specific date shall be
true and accurate in all material respects on and as of the
Closing.
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7.2 PERFORMANCE OF OBLIGATIONS. Each Shareholder shall have
performed or complied with, in all respects, all its
obligations, covenants and agreements under this Agreement.
7.3 COMPLIANCE WITH LAW. There shall be no order, decree, or
ruling by any court or governmental agency or threat thereof,
or any other fact or circumstance, which would prohibit or
render illegal the transactions contemplated by this
Agreement.
7.4 GOVERNMENT CONSENTS. There shall have been obtained at or
prior to the Closing such consents, approvals, orders or
authorizations, and there shall have been taken such other
action, as may be required to consummate the transactions
contemplated by this Agreement by any regulatory authority
having jurisdiction over the parties and the actions herein
proposed to be taken.
7.5 OPINION OF COUNSEL. Asymetrix shall have received an opinion,
in form and substance satisfactory to Asymetrix, from Xxxxx
Xxxxxx Xxxxxxx, counsel to the Shareholders.
7.6 EMPLOYMENT AGREEMENTS. Asymetrix shall have received the Xxxx
Xxx Employment Agreement executed by Xxxx Xxx, the Xxxx Xxx
Employment Agreement executed by Xxxx Xxx, the Xxxx Xxxxx
Employment Agreement executed by Xxxx Xxxxx, and the Daniel
Ah-Fat Employment Agreement executed by Daniel Ah-Fat.
7.7 PROMISSORY NOTES AND SECURITY DOCUMENTS. Asymetrix shall have
received each of the following executed by the persons named
therein:
(a) the Promissory Note securing repayment of amounts
paid to Xxxx Xxx in connection with the Shareholder
Loans pursuant to Section 9.1, the Promissory Note
securing repayment of the cash portion of the
Purchase Price paid to Xxxx Xxx pursuant to Section
2.3, and the Stock Pledge and Option Right Assignment
Agreement securing each of the foregoing Promissory
Notes;
(b) the Promissory Note securing repayment of the cash
portion of the Purchase Price paid to Xxxx Xxx
pursuant to Section 2.3, and the Stock Pledge and
Option Right Assignment Agreement securing the
foregoing Promissory Note;
(c) the Promissory Note securing repayment of amounts
paid to Xxxx Xxxxx in connection with the Shareholder
Loans pursuant to Section 9.1, the Promissory Note
securing repayment of the cash portion of the
Purchase Price paid to Xxxx Xxxxx pursuant to Section
2.3, and the Stock Pledge and Option Right Assignment
Agreement securing each of the foregoing Promissory
Notes; and
(d) the Promissory Note securing repayment of the $25,000
signing bonus paid to Daniel Ah-Fat pursuant to the
Daniel Ah-Fat Employment Agreement, and the Stock
Pledge and Option Right Assignment Agreement securing
the foregoing Promissory Note.
7.8 RELEASES IN CONNECTION WITH SHAREHOLDER LOANS. Asymetrix shall
have received an acknowledgement of repayment of the
Shareholder Loans and a release of any claims against
Pixelmedia, in form and substance satisfactory to Asymetrix,
for any amounts loaned to Pixelmedia, contributed to the
capital of Pixelmedia or otherwise used to fund the operations
of Pixelmedia.
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7.9 FACTUAL REPRESENTATIONS FOR LEGAL COMPLIANCE. Each of the
Shareholders shall have executed and delivered to Asymetrix
documents containing such representations as Asymetrix shall
reasonably deem necessary in order to make a determination
that the transactions contemplated hereby comply with all
applicable laws and regulations, including without limitation
securities laws and regulations.
8. SURVIVAL OF REPRESENTATIONS, INDEMNIFICATION AND REMEDIES
8.1 SURVIVAL OF REPRESENTATIONS. All representations, warranties
and covenants of Pixelmedia, the Shareholders and Asymetrix
contained in this Agreement will survive the Effective Time
and remain operative and in full force and effect, regardless
of any investigation made by or on behalf of the parties to
this Agreement, until three (3) years after the Closing,
whereupon such representations, warranties and covenants will
expire (except for covenants that by their terms survive for a
longer period); provided, however, that representations,
warranties and covenants breached through intentional fraud or
willful misconduct shall survive the Closing indefinitely.
Representations and warranties concerning tax matters set out
in Section 3.8 shall survive until 90 days after the date the
relevant authorities shall no longer be entitled to assess
liability for any tax against Pixelmedia for any particular
tax year ended on or prior to the Closing, having regard
without limitation to any waivers given by Pixelmedia in
respect of any tax year. The period of such survival shall be
referred to herein as the "Survival Period."
8.2 AGREEMENT TO INDEMNIFY
(a) Subject to the limitations set forth in this Section
8, the Shareholders (during the time period specified
below) shall indemnify Asymetrix and their officers,
directors, and employees (the "Asymetrix Indemnified
Persons") in respect of, and hold the Asymetrix
Indemnified Persons harmless against, any and all
claims, demands, actions, causes of actions, losses,
costs, damages, liabilities and expenses including,
without limitation, reasonable legal fees
(hereinafter referred to as "Damages"):
(1) arising out of any misrepresentation or
breach of or default in connection with any
of the representations, warranties and
covenants given or made by Pixelmedia or the
Shareholders in this Agreement (including
any Schedule or Exhibit hereto), which
indemnity shall survive for the time period
specified in Section 8.1;
(2) resulting from any failure of any of the
Shareholders to have good, valid and
marketable title to the issued and
outstanding Pixelmedia Common Shares held by
such shareholders, free and clear of all
liens, claims, pledges, options, adverse
claims, assessments or charges of any nature
whatsoever, which indemnity shall survive
for a three year period
The Shareholders' maximum aggregate liability under
this subsection 8.2(a) shall be $1,000,000 (the
"Shareholder Cap"), provided, however, that any
indemnification obligations arising under this
subsection 8.2(a) which result from intentional fraud
or willful misconduct shall be excluded from the
calculation of the Shareholder Cap and the
Shareholder Cap shall not otherwise apply to any
indemnification obligations arising under this
subsection 8.2(a) which result from intentional fraud
or willful misconduct. At the option of the
Shareholders, Asymetrix shall first resort to the
property secured by the Stock Pledge and Option
Rights Assignment Agreements executed by the
Shareholders in satisfaction of any claim for
indemnity hereunder (applying such property in the
manner described therein), but such option shall
apply
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only to the extent that the value of such
property exceeds the aggregate then-current principal
balances of the Promissory Notes referred to in
Sections 2.3 and 9.1.
(b) The indemnification provided for in paragraphs of
subsection 8.2(a) shall not apply unless and until
the aggregate Damages for which one or more Asymetrix
Indemnified Persons seeks indemnification, exclusive
of legal fees, exceeds $50,000 (the "Basket") and
then only to the extent that aggregate Damages exceed
the Basket. The Basket shall not apply to any Damages
arising from the breach of the representations and
warranties set forth in Section 3.8 [Taxes].
Asymetrix will use commercially reasonable efforts to
obtain recoveries under all applicable insurance
policies for all Damages. Except for intentional
fraud or willful misconduct, the remedies set forth
in this Section shall be the exclusive remedies of
the Asymetrix Indemnified Persons against any of the
Shareholders.
(c) Subject to the limitations set forth in this Section
8, Asymetrix will indemnify and hold harmless the
Shareholders (collectively, the "Pixelmedia
Indemnified Persons") from and against any and all
Damages:
(1) arising out of any misrepresentation or
breach of or default in connection with
any of the representations, warranties
and covenants given or made by Asymetrix
in this Agreement or in any certificate,
document or instrument delivered by or on
behalf of Asymetrix pursuant hereto; or
(b) from any failure on the part of Asymetrix
to issue to the Shareholders good, valid
and marketable title to the Asymetrix
Common Stock as provided in this
Agreement, free and clear of all liens,
claims, pledges, options, adverse claims,
assessments or charges of any nature
whatsoever.
Asymetrix's maximum aggregate liability under
paragraphs (a) and (b) of this subsection 8.2(c)
shall be $1,000,000 (the "Asymetrix Cap"), provided,
however, that any indemnification obligations arising
under this subsection 8.2(c) which result from
intentional fraud or willful miscount shall be
excluded from the calculation of the Asymetrix Cap
and the Asymetrix Cap shall not otherwise apply to
any indemnification obligations arising under this
subsection 8.2(c) which result from intentional fraud
or willful misconduct.
(d) Any Asymetrix Indemnified Person or any Pixelmedia
Indemnified Person seeking indemnification hereunder
shall give prompt written notification to the
Shareholders (in the case of indemnification sought
by the Asymetrix Indemnified Person) or to Asymetrix
(in the case of indemnification sought by a
Pixelmedia Indemnified Person) (as applicable, the
"Indemnification Representative") of the commencement
of any action, suit or proceeding relating to a third
party claim for which indemnification pursuant to
this Section 8 may be sought; provided, however, that
no delay on the part of the Indemnified Person in
providing such notice shall relieve the Shareholders
or Asymetrix, as the case may be, of any liability or
obligation hereunder except to the extent of any
damage or liability caused by or arising out of such
failure. Any claim by an Asymetrix Indemnified Person
shall be made against all of the Shareholders,
jointly and severally. Within 20 days after delivery
of such notification, the Indemnification
Representative may, upon written notice thereof to
the Indemnified Person, assume control of the defense
of such action, suit or proceeding with counsel
reasonably satisfactory to the Indemnified Person,
provided that the Indemnification Representative
acknowledges in writing to the Indemnified Person
that any damages,
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fines, costs or other liabilities
that may be assessed against the Indemnified Person
in connection with such action, suit or proceeding
constitute Damages for which the Indemnified Person
shall be entitled to indemnification pursuant to this
Section 8. If the Indemnification Representative does
not so assume control of such defense, the
Indemnified Person shall control such defense. The
party not controlling such defense may participate
therein at its own expense; provided that if the
Indemnification Representative assumes control of
such defense and the Indemnified Person reasonably
concludes that the indemnifying parties and the
Indemnified Person have conflicting interests or
different defenses available with respect to such
action, suit or proceeding, the reasonable fees and
expenses of counsel to the Indemnified Person shall
be considered "Damage" for purposes of this
Agreement. The party controlling such defense shall
keep the other party advised of the status of such
action, suit or proceeding and the defense thereof
and shall consider in good faith recommendations made
by the other party with respect thereto. The
Indemnified Person shall not agree to any settlement
of such action, suit or proceeding without the prior
written consent of the Indemnification
Representative.
9. CONTINUING COVENANTS
9.1 REPAYMENT OF SHAREHOLDER LOANS. At the Closing, Asymetrix
shall cause Pixelmedia to repay to each of Xxxx Xxx and Xxxx
Xxxxx amounts of the loans set forth in Exhibit 9.1 (the
"Shareholder Loans"). Asymetrix will provide the funding
required to repay the Shareholder Loans, or may repay the
Shareholder Loans directly for the account of Pixelmedia. Xxxx
Xxx and Xxxx Xxxxx agree that if they terminate their
employment with Pixelmedia at any time prior to 12 months
following the Closing, they will be required to repay to
Asymetrix a portion of the Shareholder Loan amounts set forth
in Exhibit 9.1 determined by reducing such amount by 1/12 of
the total for each whole month that has elapsed since the
Closing. The obligation to repay such amount will be evidenced
by a Promissory Note and secured by a Stock Pledge and Option
Right Assignment Agreement in a form acceptable to Asymetrix.
9.2 REDEMPTION OF PREFERENCE SHARES. As soon as reasonably
practicable following the Closing, Asymetrix shall cause
Pixelmedia to redeem the 99,999 shares of Class "G" Non-Voting
Cumulative Preference Shares held by Xxx Xxxx and Tuen Xxxx
Xxxx (the "Preference Shares"). Asymetrix will provide the
funding required to redeem the Preference Shares.
9.3 ADDITIONAL FUNDING
(a) Between the Closing and December 31, 1999, Asymetrix
shall provide at least $750,000 of additional funding
to Pixelmedia to be used for completion of existing
title development. Such funds shall be provided to
Pixelmedia in accordance with budgets and development
plans prepared by Pixelmedia and approved by
Asymetrix, such approval not to be unreasonably
withheld.
(b) Following the Closing, Asymetrix shall
Asymetrix shall provide at least $375,000 of
additional funding to Pixelmedia to be used for
development of content for the Xxxxx0Xxxxx.xxx
learning portal. Such funds shall be provided to
Pixelmedia in accordance with budgets and development
plans prepared by Pixelmedia and approved by
Asymetrix, such approval not to be unreasonably
withheld.
9.4 EMPLOYEE STOCK OPTIONS. Asymetrix shall grant options to
purchase the number of shares of Asymetrix Common Stock as set
forth on Exhibit 9.4 to employees of Pixelmedia. The grant of
such options to any particular employee shall be contingent
upon such employee
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executing Asymetrix's standard form of Employee Invention,
Confidentiality, Nonraiding and Noncompetition Agreement.
9.5 WAIVER AND RELEASE OF PAST COMPENSATION. In consideration of
the acquisition of the Purchased Shares and the Payment of the
Purchase Price, and the increases in the Shareholders'
salaries and the grant of stock options pursuant to this
Agreement and their respective Employment Agreements, each
Shareholder hereby waives and releases, and agrees to hold
Pixelmedia and Asymetrix harmless from and against, any claims
related to compensation owed to such Shareholder for services
provided to Pixelmedia prior to the Closing of any nature
whatsoever, including without limitation salary, bonuses,
commissions, deferred compensation, incentive compensation,
stock, stock options or any other form of compensation (other
than salary for the portion of the current pay period
occurring prior to the Closing).
10. MISCELLANEOUS
10.1 GOVERNING LAW. The internal laws of the State of Washington
(irrespective of its conflict of law principles) will govern
the validity of this Agreement, the construction of its terms,
and the interpretation and enforcement of the rights and
duties of the parties hereto. The exclusive venue of an action
to enforce or interpret this Agreement shall be in the courts
of King County, Washington, and the parties hereby attorn to
the jurisdiction of such courts.
10.2 ASSIGNMENT; BINDING UPON SUCCESSORS AND ASSIGNS. None of the
parties hereto may assign any of its rights or obligations
hereunder without the prior written consent of the other
hereto parties and any attempt to do so will be void.
Notwithstanding the foregoing, Asymetrix may assign this
Agreement to a Canadian subsidiary for the purposes of Section
2.5. This Agreement will be binding upon and inure to the
benefit of the parties hereto and their respective successors
and permitted assigns.
10.3 SEVERABILITY. If any provision of this Agreement, or the
application thereof, will for any reason and to any extent be
invalid or unenforceable, the remainder of this Agreement and
application of such provision to other persons or
circumstances will be interpreted so as reasonably to effect
the intent of the parties hereto. The parties further agree to
replace such void or unenforceable provision of this Agreement
with a valid and enforceable provision that will achieve, to
the extent possible, the economic, business and other purposes
of the void or unenforceable provision.
10.4 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which will be an original as regards any
party whose signature appears thereon and all of which
together will constitute one and the same instrument. This
Agreement will become binding when one or more counterparts
hereof, individually or taken together, will bear the
signatures of all parties reflected hereon as signatories.
Facsimile copies of such counterparts are acceptable.
10.5 OTHER REMEDIES. Except as otherwise provided herein, any and
all remedies herein expressly conferred upon a party will be
deemed cumulative with and not exclusive of any other remedy
conferred hereby or by law on such party, and the exercise of
any one remedy will not preclude the exercise of any other.
10.6 AMENDMENT AND WAIVERS. Any term or provision of this Agreement
may be amended, and the observance of any term of this
Agreement may be waived (either generally or in a particular
instance and either retroactively or prospectively) only by a
writing signed by the party to be
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bound thereby. The waiver by a party of any breach hereof or
default in the performance hereof will not be deemed to
constitute a waiver of any other default or any succeeding
breach or default.
10.7 NO WAIVER. The failure of any party to enforce any of the
provisions hereof will not be construed to be a waiver of the
right of such party thereafter to enforce such provisions.
10.8 EXPENSES. Each party will bear its respective expenses and
fees of its own accountants, attorneys and other professionals
incurred with respect to this Agreement and the transactions
contemplated hereby.
10.9 ATTORNEYS' FEES. Should suit be brought to enforce or
interpret any part of this Agreement, the prevailing party
will be entitled to recover, as an element of the costs of
suit, reasonable attorneys' fees to be fixed by the court
(including without limitation, costs, expenses and fees on any
appeal). The prevailing party will be entitled to recover its
costs of suit, regardless of whether such suit proceeds to
final judgment.
10.10 NOTICES. Any notice or other communication required or
permitted to be given under this Agreement will be in writing,
will be delivered personally, by registered or certified mail,
postage prepaid, by confirmed facsimile or by nationally
recognized courier service, and will be deemed given upon
delivery, if delivered personally, or five days after deposit
in the mails, if mailed, or upon receipt if delivered by
confirmed facsimile or by nationally recognized courier
service, to the following addresses:
If to Asymetrix:
Asymetrix Learning Systems, Inc.
000 000xx Xxxxxx XX, Xxxxx 000
Xxxxxxxx, XX 00000
Facsimile: (000) 000-0000
Attention: General Counsel
With a copy to:
Fenwick & West LLP
Xxx Xxxx Xxxx Xxxxxx
Xxxx Xxxx, XX 00000
Facsimile: (000) 000-0000
Attention: Xxxxxxx X. Xxxxxx, Esq.
If to the Shareholders:
c/o Pixelmedia Visual Communications, Inc.
Xxxx 000
Xxxxxxx Xxxxxxxx Xxxxxx
Xxxxxxxx, XX
X0X0X0
Facsimile: (000) 000-0000
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With a copy to:
Xxxxx Xxxxxx Xxxxxxx
Xxxxx 000
0000 Xx. 0 Xxxx
Xxxxxxxx, XX
X0X 0X0
Facsimile: (000) 000-0000
Attention: M. Xxxxxx Xxxxxxx, Esq.
or to such other address as a party may have furnished to the
other parties in writing pursuant to this Section 10.10.
10.11 CONSTRUCTION OF AGREEMENT. This Agreement has been negotiated
by the respective parties hereto and their attorneys and the
language hereof will not be construed for or against either
party. A reference to a Section or an Exhibit will mean a
Section in, or exhibit to, this Agreement unless otherwise
explicitly set forth. The titles and headings herein are for
reference purposes only and will not in any manner limit the
construction of this Agreement which will be considered as a
whole.
10.12 FURTHER ASSURANCES. Each party agrees to cooperate fully with
the other parties and to execute such further instruments,
documents and agreements and to give such further written
assurances as may be reasonably requested by any other party
to evidence and reflect the transactions described herein and
contemplated hereby and to carry into effect the intents and
purposes of this Agreement.
10.13 ABSENCE OF THIRD PARTY BENEFICIARY RIGHTS. No provisions of
this Agreement are intended, nor will be interpreted, to
provide or create any third party beneficiary rights or any
other rights of any kind in any client, customer, affiliate,
stockholder, partner or any party hereto or any other person
or entity unless specifically provided otherwise herein, and,
except as so provided, all provisions hereof will be personal
solely between the parties to this Agreement.
10.14 PUBLIC ANNOUNCEMENT. Upon execution of the Agreement by all
parties, and until the consummation of the Amalgamation, all
press releases and other public communications shall be made
by the parties only with the mutual consent of the
Shareholders, Pixelmedia and Asymetrix.
10.15 ENTIRE AGREEMENT. This Agreement together with the agreements
to be delivered pursuant to this Agreement and the exhibits
hereto constitute the entire understanding and agreement of
the parties hereto with respect to the subject matter hereof
and supersede all prior and contemporaneous agreements or
understandings, inducements or conditions, express or implied,
written or oral, between the parties. The express terms hereof
control and supersede any course of performance or usage of
the trade inconsistent with any of the terms hereof.
-21-
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
date first above written.
"ASYMETRIX"
Asymetrix Learning Systems, Inc.
By:
---------------------------------
Name: Xxxxx X. Xxxxxxxxx
Its: Chief Executive Officer
"SHAREHOLDERS"
----------------------------------
Xxxx Kit Xxxx Xxx
----------------------------------
Xxxx Kit Xxxxx Xxx
----------------------------------
Xxxx Xxxx Xxxx Xxxxx
-22-
LIST OF EXHIBITS AND SCHEDULES
Exhibit 2.2 Allocation of Purchase Price
Exhibit 3.0 Shareholders' Schedule of Exceptions
Schedule 3.5 Pixelmedia Capitalization
Schedule 3.9 Pixelmedia Financial Statements
Schedule 3.11 Changes Since April 30, 1999
Schedule 3.12 Material Agreements
Schedule 3.17 Pixelmedia Employees
Exhibit 4.0 Asymetrix Schedule of Exceptions
Exhibit 9.1 Shareholder Loans
Exhibit 9.4 Option grants to Pixelmedia Employees
-23-
EXHIBIT 2.2
ALLOCATION OF PURCHASE PRICE
ALLOCATION OF ASYMETRIX SHARES:
NUMBER OF NUMBER OF
PURCHASED ASYMETRIX
CLASS OF PURCHASED SHARES SHAREHOLDER NAME SHARES SHARES
------------------------------------------------------------------------------------------------
Class "A" Voting Common Xxxx Xxx 58 61,053
Class "B" Voting Common Xxxx Xxx 37 38,947
Class "C" Voting Common Xxxxxxxxx Xxxxx 5 0
------------------------------------------------------------------------------------------------
TOTALS 100 100,000
ALLOCATION OF CASH:
The cash portion of the Purchase Price (calculated in accordance with Section
2.2(b) and referred to herein as the "Cash Portion") shall be allocated among
the Purchased Shares as follows:
(1) the Class "A" Voting Common shall receive an amount equal to 58% of the
Cash Portion less an amount equal to the Market Value of 3,053
Asymetrix Shares;
(2) the Class "B" Voting Common shall receive an amount equal to 37% of the
Cash Portion less an amount equal to the Market Value of 1,947
Asymetrix Shares; and
(3) the Class "C" Voting Common shall receive an amount equal to 5% of the
Cash Portion plus an amount equal to the Market Value of 5,000
Asymetrix Shares.
The "Market Value" of an Asymetrix Share shall be equal to the closing price of
an Asymetrix Share on the Nasdaq National Market on the Closing date, converted
into Canadian dollars using the exchange rate published in the WALL STREET
JOURNAL on the Closing Date.
-24-
EXHIBIT 3.0
SHAREHOLDERS' SCHEDULE OF EXCEPTIONS
Any disclosures made under the heading of one section of this Schedule of
Exceptions shall apply to and/or qualify disclosures made under one or more
other sections to the extent that such disclosure contains sufficient
information to clearly indicate that it applies to such other sections. Section
headings are provided for convenience only. Unless otherwise defined, any
capitalized terms in this Schedule of Exceptions shall have the same meanings
assigned to such terms in the Agreement. Nothing in this Schedule of Exceptions
constitutes an admission of any liability or obligation of any Shareholder to
any third party, nor an admission against any Shareholder's interests.
None, except as otherwise set forth in Schedules 3.5, 3.9, 3.11, 3.12 and 3.17
-25-
SCHEDULE 3.5
CAPITALIZATION
SHAREHOLDER NAME CLASS OF SHARES NO. SHARES
--------------------------------------------------------------------------------------------------------
Xxxx Xxx Class "A" Voting Common 58
Xxxx Xxx Class "B" Voting Common 37
Xxxxxxxxx Xxxxx Class "C" Voting Common 5
--------------------------------------------------------------------------------------------------------
Total Common 100
Tuen Xxxx Xxxx Class "G" Non-voting Cumulative Preference 66,666
Xxx Xxxx Class "G" Non-voting Cumulative Preference 33,333
--------------------------------------------------------------------------------------------------------
Total Preference 99,999
-26-
SCHEDULE 3.9
PIXELMEDIA FINANCIAL STATEMENTS
The Pixelmedia Financial statements are attached following this page.
-27-
SCHEDULE 3.11
CHANGES SINCE APRIL 30, 1999
None, except as set forth in the June 24 Pixelmedia interim financial
statements attached behind this page.
-28-
SCHEDULE 3.12
MATERIAL AGREEMENTS
TEACHER AND OTHER CONTENT WRITER CONTRACTS:
DATE OF
CONTRACT
Xxx-Xxxxx (Xxxxx) Xxxx 4-Nov-98
Xxxxxx Guackenbush 30-Oct-98
Xxxxx Xxxxxxxx 30-Oct-98
Xxx Xxxxxxx 00-Xxx-00
Xxxxxxx Xxxx 14-Sep-98
Xxxxxxx X. Xxxxx 14-Sep-98
Xxxxxxx Xxxxxx 8-Feb-98
Cam Xxxxxxx 1-Sep-98
Cam Xxxxxxx 14-Dec-98
Sooke School District 17-Aug-98
LIST OF OPEN SALES CONTRACTS:
South Island Distance Education (SIDE) 4-Mar-99
Kumsheeen Secondary School 10-Jun-99
Abbotsford School District 26-Apr-99
Sation Stretch 5-Oct-98
Okanagan (Osoyoos) Learning Centre 5-Sep-98
LIST OF EQUIPMENT LEASE AGREEMENTS:
MONTHLY START FINISH
LEASING COMPANY LEASE # ITEMS PAYMENT DATE DATE
------------------------------------------------------------------------------------------------------------------
National Leasing Group 171111 1 computer $ 79.04 5/26/97 5/26/00
------------------------------------------------------------------------------------------------------------------
National Leasing Group 171808 2 computers, $ 156.26 9/12/97 9/12/01
2 monitors
------------------------------------------------------------------------------------------------------------------
National Leasing Group 2002940 8 computers, $ 552.84 12/15/97 12/15/01
monitors,
and 1 LCD
projector
------------------------------------------------------------------------------------------------------------------
National Leasing Group 2016563 1 server $ 76.77 7/3/98 7/3/01
------------------------------------------------------------------------------------------------------------------
National Leasing Group 536176 phone $ 75.20 10/28/98 10/28/02
system and 7
phones
------------------------------------------------------------------------------------------------------------------
Xxxx Commercial 533335 6 computers, $ 452.12 11/30/98 11/30/00
1 notebook
------------------------------------------------------------------------------------------------------------------
National Leasing Group 2028778 1 computer, $ 222.68 12/31/98 12/31/02
1 printer, 1
server
------------------------------------------------------------------------------------------------------------------
National Leasing Group 2039100 CD copier $ 144.81 4/23/99 4/23/03
------------------------------------------------------------------------------------------------------------------
National Leasing Group 2041395 1 Sony $ 91.07 5/13/99 5/13/03
laptop
------------------------------------------------------------------------------------------------------------------
REAL ESTATE LEASE:
1999
DATE DATE MONTHLY
LANDLORD START FINISH PAYMENT
----------------------------------------------------------------------------------------
Jacombs 3000 Investments Ltd. 12/1/97 11/30/02 $ 2,351.38
property address:
000-0000 Xxxxxxx Xxxx
Xxxxxxxx, XX X0X 0X0
-29
SCHEDULE 3.17
PIXELMEDIA EMPLOYEES
CURRENT OTHER
NAME TITLE SALARY COMPENSATION
------------------------------------------------------------------------------------------------------------
Xxxx Xxxxxx VP, Sales and Marketing $ 24,000 3% commission until Aug. 1999
Xxxxx Xxxxxxx Graphic Artist $ 22,200
Leaf Xxxxxxxxx Graphic Director $ 34,800
Xxxx Xxxxx CFO $ 72,000
Xxxx Xxx President $ 85,000
Xxxx Xxx VP, Technical $ 80,000
Xxxx Xxxxxxx Graphic Artist $ 22,200
Xxxxx Xxx Programmer $ 22,400
Xxxx Xxxx Graphic Artist $ 20,400
Xxxx Xxxxxxx Dir. Of Education $ 36,000 $100 monthly travel allowance
Xxxxxx Xxxx Ah-Fat VP, Production $ 45,000
Xxxxxxx Xxxxxxx Scripter $ 34,200
------------------------------------------------------------------------------------------------------------
-30-
EXHIBIT 4.0
ASYMETRIX SCHEDULE OF EXCEPTIONS
Any disclosures made under the heading of one section of this Schedule of
Exceptions shall apply to and/or qualify disclosures made under one or more
other sections to the extent that such disclosure contains sufficient
information to clearly indicate that it applies to such other sections. Section
headings are provided for convenience only. Unless otherwise defined, any
capitalized terms in this Schedule of Exceptions shall have the same meanings
assigned to such terms in the Agreement. Nothing in this Schedule of Exceptions
constitutes an admission of any liability or obligation of Asymetrix to any
third party, nor an admission against Asymetrix's interests. All disclosures
made herein are supplemented by any additional disclosure made in the Asymetrix
SEC Documents, and any disclosure made in the Asymetrix SEC Documents shall be
incorporated herein by this reference.
4.2 The Agreement, Ancillary Agreements and consummation of these
transactions have not yet been authorized by Asymetrix's Board of Directors.
Such authorization must be obtained prior to the Closing.
4.4 The obligation to proceed with the Closing is subject to authorization of
the Agreement, Ancillary Agreements and consummation of these transactions by
Asymetrix's Board of Directors.
4.7 GRANT V. ASYMETRIX CORPORATION. For more information see Part I Item 3 of
Asymetrix's 1998 Annual Report on Form 10-K included with the Asymetrix SEC
Documents.
4.9 Asymetrix has operated at a loss since March 31, 1999, which has
reduced its available cash.
-31-
EXHIBIT 9.1
SHAREHOLDER LOANS
SHAREHOLDER NAME TOTAL LOAN AMOUNT
----------------------------------------------------------
Xxxx Xxx 290,907.54
Xxxx Xxxxx 227,208.15
----------------------------------------------------------
Total Shareholder Loans 518,115.69
-32-
EXHIBIT 9.4
OPTION GRANTS TO PIXELMEDIA EMPLOYEES
NAME TITLE OPTIONS
------------------------------------------------------------------------------
Xxxx Xxxxxx VP, Sales and Marketing 5,000
Xxxxx Xxxxxxx Graphic Artist 2,220
Leaf Xxxxxxxxx Graphic Director 5,000
Xxxx Xxxxx CFO 32,000
Xxxx Xxx President 32,000
Xxxx Xxx VP, Technical 32,000
Xxxx Xxxxxxx Graphic Artist 2,220
Xxxxx Xxx Programmer 2,240
Xxxx Xxxx Graphic Artist 2,040
Xxxx Xxxxxxx Dir. Of Education 5,000
Xxxxxx Xxxx Ah-Fat VP, Production 10,000
Xxxxxxx Xxxxxxx Scripter 3,420
------------------------------------------------------------------------------
133,140
