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EXHIBIT 10.45
ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT (the "Agreement"), is dated as of the 16th
day of April 1999, by and among HTR, Inc. a Delaware corporation ("HTR"), UOL
Publishing, Inc., a Delaware corporation ("UOL" and, together with HTR, jointly
and severally hereinafter collectively referred to as "Sellers") and
XxxxxxXxxxxxx.xxx, LLC, a Maryland limited liability company ("Buyer").
W I T N E S S E T H:
WHEREAS, Sellers own, among other assets, the KnowledgeWorks Division
of Sellers (the "Business"); and
WHEREAS, HTR is the wholly-owned subsidiary of UOL;
WHEREAS, Sellers desire to sell all the assets used in the Business and
Buyer desires to purchase such assets.
NOW, THEREFORE, for and in consideration of the premises, the mutual
covenants and agreements set forth below, and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto agree as follows:
SECTION 1
TRANSFER OF ASSETS AND PURCHASE PRICE
1.1 ASSETS.
(a) Subject to the terms and conditions of this Agreement and in
consideration of the obligations of Buyer herein, Sellers agree to sell, convey,
transfer and deliver to Buyer at the Closing (as defined in Section 2), free and
clear of any claims, liens or encumbrances, all rights title and interest of
Sellers in and to all assets of Sellers used in connection with the Business,
including but not limited to those described on Schedule 1.1(a) (collectively,
the "Assets").
(b) In addition to the Assets to be transferred, and in consideration of
the obligations of Buyer herein, Buyer shall be granted an option exercisable
for a period of eighteen (18) months subsequent to the execution of this
Agreement to be assigned any or all of four Virtual Campus licenses on terms
substantially the same as the form license attached hereto as Exhibit 1.1(b)
with an exercise price of $100 per license (the "Option Licenses"). Such option
may be exercised by Buyer by giving 30 days prior written notice to Sellers.
Upon receipt of such notice, Sellers shall take all necessary actions to assign
all rights to Buyer to the Option Licenses. Each license shall have a term of
one year beginning on the date that Buyer is assigned the rights to such
license. At the end of such one year term Buyer shall have the right to extend
the term of the license for successive one-year terms on terms consistent with
terms offered to other customers of UOL or HTR, as the case may be. Sellers will
waive the $15,000 license maintenance fee for the first year for all licenses
assigned to Buyer pursuant to this Agreement.
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(c) Sellers will retain and not transfer and the Buyer will
not purchase or acquire, the assets listed on Schedule 1.1(c) (collectively, the
"Excluded Assets"). Buyer hereby agrees to use reasonable efforts to cooperate
with Sellers in the collection of any of the accounts receivable listed on
Schedule 1.1(c).
(d) With the exception of the ordinary course liabilities and
obligations specifically identified on Schedule 1.1(a), all of which Buyer
agrees to assume and become responsible from and after the Closing Date (as
defined in Section 2) (the "Assumed Liabilities"), Buyer shall not, by the
execution, delivery and performance of this Agreement, or otherwise, assume or
otherwise be responsible for any liability or obligation of any nature, or
claims of such liability or obligation, matured or unmatured, liquidated or
unliquidated, fixed or contingent, or known or unknown, whether arising out of
acts or occurrences prior to, at or after the date hereof. Without limiting the
generality of the foregoing, Sellers shall remain liable for (i) all liabilities
and obligations to Sellers' personnel with respect to payroll, overtime, accrued
vacation time, holiday time, severance arrangements or workers' compensation of
any nature which are accrued but unpaid as of the Closing Date, (ii) any
liability or obligation of Sellers for federal, state, or local income,
franchise, property, sales, or use, or recapture taxes, assessments and
penalties, whether arising out of the transactions contemplated by this
Agreement or otherwise, (iii) any liability or obligation resulting from
violations of any applicable laws or regulations by Sellers prior to the Closing
Date or infringement of third-party rights or interests or (iv) any trade
payables incurred prior to the Closing Date (the "Retained Liabilities").
1.2 WARRANTS. In addition to the Assets and the Option Licenses, in
exchange for the non-competition covenant set forth in Section 5.2 hereof,
Sellers shall issue to each of Xxxxx Xxxxx and Xxxx XxXxxxx at the Closing (as
defined below), warrants or options to purchase an aggregate of 5,000 shares of
Common Stock of UOL Publishing, Inc. ("UOL"). Such warrants or options shall (i)
be exercisable for a period of two years, (ii) have an exercise price equal to
the closing price of UOL's Common Stock as reported by The Nasdaq Stock Market
on the Closing Date (as defined below) of this Agreement and (iii) be
substantially in the form of Exhibit A attached hereto and made a part hereof
(the "Warrants").
1.3 PURCHASE PRICE. In consideration of the sale and transfer of the
Assets and the Option Licenses, Buyer will pay the following purchase price (the
"Purchase Price"):
(a) One Hundred Thousand Dollars ($100,000) by wire transfer
to UOL's account at the execution of this Agreement in the form of a deposit
(the "Deposit") to be refunded in accordance with Section 1.7 of this Agreement
upon termination of this Agreement pursuant to Section 8 of this Agreement.
UOL's account information for purposes of the wire transfer is as follows:
Account Number: UOL Publishing, Inc.
Bank Name: First Union National Bank of Virginia
ABA #: 0541400549
Account #: 2050000112713
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(b) One Million Four Hundred Thousand Dollars ($1,400,000)
pursuant to a subordinated promissory note to be executed at Closing bearing
simple interest at the rate of seven percent (7%) per annum, with such note to
be in the form of Exhibit B attached hereto and made a part hereof (the "Note").
The term of the Note shall be no longer than 18 months and will be payable in
quarterly installments of interest and amounts of principal as agreed to by
Buyer and Sellers at or prior to the Closing Date.
1.4 SECURITY. The amounts due under the Note including principal,
interest, penalties and expenses if any and all renewals, modifications and
extensions thereof (collectively, the "Obligations"), are and shall continue to
be secured as follows: Buyer hereby grants, assigns and pledges to Sellers a
purchase money security interest in all Assets, together with proceeds thereof
(the "Collateral"). As of the Closing Date, Buyer will have all necessary right,
power and authority to grant to Sellers a valid and enforceable purchase money
security interest in the Collateral. Except as provided in the penultimate
sentence of this Section 1.4, without the prior written consent of Sellers,
which consent shall not unreasonably be withheld, Buyer will not, and will not
permit any subsidiary to, create or incur, or suffer to be incurred or to exist
any mortgage, pledge, security interest, encumbrance, lien or charge of any kind
("Lien") on the Collateral. Until the Note is paid in full, (i) upon 10 days
prior written notice, Buyer shall grant to the Sellers access to all pertinent
and relevant corporate records, financial statements, agreements and contracts
and any additional information as Sellers may reasonably request concerning the
Buyer in order to enable Sellers to determine the Buyers financial capacity to
repay the Note and (ii) without the prior written consent of Sellers, which
consent shall not unreasonably be withheld, Buyer will not merge or consolidate
with any other person or sell, exchange, lease, negotiate, pledge, assign or
otherwise dispose of the Collateral outside of the ordinary course of business.
In the event that Buyer fails to meet a payment on the Note, Sellers shall have
all the rights and remedies of a secured party under the Uniform Commercial Code
and shall be entitled to immediately exercise all remedies possessed by Sellers
hereunder. Notwithstanding any other provision of this Section 1.4, the security
interest in the Collateral granted by Buyer to Sellers shall be subordinate to
any Lien on the Collateral granted by Buyer to a commercial or institutional
lender in connection with loans made by any such lender to Buyer. Upon the
request of Buyer, Sellers shall take such action as may be required to confirm
its subordinate Lien as to the Collateral, including the filing of releases,
amended financing statements or any other documents reasonably required in
connection with any such commercial subordination.
1.5 FURTHER COOPERATION. From time to time after the Closing Date, without
further consideration, the parties will execute and deliver such other
instruments of conveyance and transfer and take such other action as the other
reasonably may request to give effect to the acquisition contemplated by this
Agreement. Each of the parties will furnish the other with such information and
documents in its possession or under its control or which it can execute or
cause to be executed as will enable the other to prosecute any and all pending
claims, applications and the like hereunder.
1.6 ALLOCATION OF CONSIDERATION. Buyer and Sellers hereby agree to
allocate the Purchase Price in accordance with an allocation schedule to be
mutually agreed to by Buyer and Sellers as of the Closing Date. Such allocation
schedule shall be prepared in accordance with section 1060 of the Internal
Revenue Code of 1986, as amended (the "Code"). The parties will each
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report the federal, state and local and other tax consequences of the purchase
and sale contemplated hereby in a manner consistent with the allocation
schedule.
1.7 REFUND OF DEPOSIT. In the event of termination pursuant to Section
8(a),(b) or (c) hereof, Sellers shall refund the Deposit within 10 calendar days
after termination by issuing to Xxxxx Xxxxx, or his designees, in the sole
discretion of Buyer, (i) an aggregate of $100,000 of the Common Stock of
Guarantor based upon the closing price of the Common Stock as reported by The
Nasdaq Stock Market on the date of termination or (ii) if Buyer introduces
Sellers to a purchaser willing to purchase the Business at a purchase price
equal to or more than the Purchase Price hereunder, the right to receive an
aggregate of 6.7% of the proceeds of any subsequent sale of the Business to such
purchaser. If Buyer elects to receive the Common Stock, such Common Stock will
have full piggyback registration rights on commercially reasonable terms. In the
event of termination pursuant to Section 8.1(d) hereof, Sellers shall refund the
Deposit within 10 calendar days after termination by wire transfer of
immediately available funds to an account designated by Buyer.
SECTION 2
CLOSING
The transfer of Assets and payment of the Purchase Price referred to in
Section 1 hereof (the "Closing") will take place at 10:00 a.m. at the offices of
Buyer's counsel at 0000 Xxx Xxxx Xxxxxx, Xxxxx 0000, Xxxxxxxxxx, XX, on June 30,
1999 or at such other time and date as Sellers and Buyer may in writing
designate or such exchange actually occurs (the "Closing Date"). Buyer shall
deliver to Sellers on or prior to June 15, 1999 a notice indicating that Buyer
has received commitments for sufficient financing in order to proceed with the
Closing of this Agreement. If Buyer does not deliver such notice, Seller shall
have the right to terminate this Agreement in accordance with Section 8 hereof.
SECTION 3
SELLERS'S REPRESENTATIONS AND WARRANTIES
Sellers, jointly and severally, represent and warrant to Buyer that the
statements contained in this Section 3 are correct as of the date of this
Agreement, except as otherwise set forth in the schedules attached hereto, each
of which shall survive closing for a period of two (2) years and may be relied
upon by prospective investors and lenders of Buyer.
3.1 AUTHORIZATION, ETC. Each of the Sellers has the corporate power and
authority to execute and deliver this Agreement, to perform fully its
obligations hereunder and to consummate the transactions contemplated hereby.
The execution and delivery by Sellers of this Agreement, and the consummation of
the transactions contemplated hereby, have been, duly authorized by all
requisite corporate action of Sellers. Each of the Sellers has duly executed and
delivered this Agreement. This Agreement is the legal, valid and binding
obligation of Sellers, enforceable against them in accordance with its terms.
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3.2 CORPORATE STATUS.
(a) Each of the Sellers is a corporation duly organized,
validly existing and in good standing under the laws of Delaware with full
corporate power and authority to carry on its business (including the Business)
and to own or lease and to operate its properties as and in the places where
such business is conducted and such properties are owned, leased or operated.
(b) Each of the Sellers is duly qualified or licensed to do
business and is in good standing in each of the jurisdictions specified in
Schedule 3.2(b), which are the only jurisdictions in which the operation of the
Business or the character of the properties owned, leased or operated by it in
connection with the Business makes such qualification or licensing necessary.
(c) Each of the Sellers has delivered to the Buyer complete
and correct copies of its certificate of incorporation and bylaws or other
organizational documents, in each case, as amended and in effect on the date
hereof. Each of the Sellers is not in violation of any of the provisions of its
certificate of incorporation or bylaws or other organizational documents.
3.3 NO CONFLICTS, ETC. The execution, delivery and performance by Sellers
of this Agreement, and the consummation of the transactions contemplated hereby,
do not and will not conflict with or result in a violation of or a default under
(with or without the giving of notice or the lapse of time or both) (i) any
applicable provisions of all constitutions, treaties, statutes, laws (including
the common law), rules, regulations, ordinances, codes or orders of any
governmental authority ("Applicable Law") applicable to Sellers or any affiliate
of Sellers hereof or any of the properties or assets of Sellers (including but
not limited to the Assets), (ii) the certificate of incorporation or bylaws or
other organizational documents of Sellers or (iii) any Contract (as defined in
Section 3.10) or other contract, agreement or other instrument to which Sellers
or any affiliate thereof is a party or by which Sellers or any of their
properties or assets, including but not limited to the Assets, may be bound or
affected. No consent, approval, authorization, waiver, permit, grant, franchise,
concession, agreement, license, exemption or order of, registration,
certificate, declaration or filing with, or report or notice to, any natural
person, firm, partnership, association, corporation, company, trust, business
trust, governmental authority or other entity ("Consent") is required to be
obtained or made by Sellers in connection with the execution and delivery of the
Agreement or the consummation of the transactions contemplated hereby.
3.4 STATEMENT OF ASSETS AND LIABILITIES. Schedule 3.4 sets forth Sellers'
statement of assets and liabilities with respect to the Business and the Assets.
3.5 ABSENCE OF UNDISCLOSED LIABILITIES. To the Sellers' knowledge, Sellers
do not have any liabilities or obligations of any nature, whether known or
unknown, absolute, accrued, contingent or otherwise and whether due or to become
due, arising out of or relating to the Business, except as set forth in Schedule
3.4.
3.6 TAXES. All taxes, including without limitation, income, property,
sales, use, franchise, added value, withholding, and social security taxes,
imposed by the United States, any state, municipality, other local government or
other subdivision or instrumentality of the United
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States, or any foreign country or any state or other government thereof, or any
other taxing authority, that are due or payable by Sellers with respect to the
Business, and all interest and penalties thereon, whether disputed or not, and
which would result in the imposition of a lien, claim or encumbrance on the
Assets or against Buyer, other than taxes which are not yet due and payable,
have been paid in full, or are being contested in good faith, and all tax
returns required to be filed in connection therewith have been accurately
prepared and duly and timely filed and all deposits required by law to be made
by Sellers with respect to employees' withholding taxes have been duly made.
None of the Sellers is delinquent in the payment of any foreign or domestic tax,
assessment or governmental charge or deposits which would result in the
imposition of a lien, claim or encumbrance on the Assets or against Buyer, and
none of the Sellers have a tax deficiency or claim outstanding or assessed or,
to Seller's knowledge proposed against them, and there is no basis for any such
deficiency or claim, which would result in the imposition of any lien, claim or
encumbrances on the Assets or against Buyer.
3.7 ABSENCE OF CHANGES. Except as set forth in Schedule 3.7, since
________, 1999, each of the Sellers have conducted the Business only in the
ordinary course consistent with prior practice and has not, on behalf of, in
connection with or relating to the Business or the Assets:
(a) incurred any obligation or liability, except current
liabilities for trade or business obligations incurred in the ordinary course
of business consistent with prior practice, none of which liabilities, in any
case or in the aggregate, could have a material adverse effect on the
operations or liabilities of the Business;
(b) pledged or subjected to pledge, security interest,
encumbrance, lease, license, or other restrictions or limitations of any nature
whatsoever ("Liens"), any property, business or assets, tangible or intangible,
held in connection with the Business;
(c) sold, transferred, leased to others or otherwise disposed
of any of the Assets, except for inventory sold in the ordinary course of
business, or cancelled or compromised any debt or claim, or waived or released
any right of substantial value;
(d) received any notice of termination of any contract, or
other agreement which, in any case or in the aggregate, would have a material
adverse effect on the Business; or
(e) transferred or granted any rights under, or entered into
any settlement regarding the breach or infringement of, any Owned Intellectual
Property (as defined in Section 3.15), or modified any existing rights with
respect thereto.
3.8 LITIGATION. There is no action, claim, demand, suit, proceeding,
arbitration, grievance, citation, summons, subpoena, inquiry or investigation of
any nature, civil, criminal, regulatory or otherwise, in law or in equity,
pending or, to the knowledge of Sellers, threatened against or relating to
Sellers in connection with the Assets or the Business or against or relating to
the transactions contemplated by this Agreement, and Sellers do not know or have
reason to be aware of any basis for the same.
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3.9 COMPLIANCE WITH LAWS. Each of the Sellers has complied in all material
respects with all applicable provisions of all constitutions, treaties,
statutes, laws (including the common law), rules, regulations, ordinances, codes
or orders of any governmental authority ("Applicable Laws") applicable to the
Business or the Assets, and none of the Sellers has received any notice alleging
any such conflict, violation, breach or default. To the knowledge of Sellers,
there are no proposed laws, rules, regulations, ordinances, orders, judgments,
decrees, governmental takings, condemnations or other proceedings which would be
applicable to the business, operations or properties of the Business and which
might adversely affect the properties, assets, liabilities, operations or
prospects of the Business, either before or after the Closing Date.
3.10 ASSETS. Sellers have good title to all the Assets free and clear of
any Lien. To the Sellers' knowledge, The Assets comprise all assets and services
required for the continued conduct of the Business by the Buyer as now being
conducted. The Assets, taken as a whole, constitute all the properties and
assets relating to or used or held for use in connection with the Business
during the past twelve months. Except for the Excluded Assets, there are no
assets or properties used in the operation of the Business and owned by any
natural person, firm, partnership, association, corporation, company, trust,
business trust, government authority or other entity ("Person") other than
Sellers that will not be leased or licensed to Buyer under valid, current leases
or license arrangements. The Assets are in all material respects adequate for
the purposes for which the Assets are currently used or are held for use, and
are in reasonably good operating condition and, to the knowledge of Sellers,
there are no facts or conditions affecting the Assets which could, individually
or in the aggregate, interfere in any material respect with the use, occupancy
or operation thereof as currently used, occupied or operated, or their adequacy
for such use.
3.11 CONTRACTS. Schedule 3.11. contains a complete and correct list of all
material agreements, contracts, commitments and other instruments and
arrangements (whether written or oral) (x) by which any of the Assets are bound
or affected or (y) to which Sellers are a party or by which they are bound in
connection with the Business or the Assets (the "Contracts"). Sellers have
delivered to the Buyer complete and correct copies of all written Contracts,
together with all amendments thereto, and accurate descriptions of all material
terms of all oral Contracts, set forth or required to be set forth in Schedule
3.11. All Contracts are in full force and effect and enforceable against each
party thereto. There does not exist under any Contract any event of default or
event or condition that, after notice or lapse of time or both, would constitute
a violation, breach or event of default hereunder on the part of Sellers or, to
the best knowledge of Sellers, any other party thereto. Except as set forth in
Schedule 3.11, no consent of any third party is required under any Contract as a
result of or in connection with, and the enforceability of any Contract will not
be affected in any manner by, the execution, delivery and performance of this
Agreement.
3.12 INVENTORIES. All inventories are of good, usable and merchantable
quality in all material respects.
3.13 CUSTOMERS. To Sellers' best knowledge, Sellers have not received any
notice that any significant customer of Sellers (i) has ceased, or will cease,
to use the products, goods or services of the Business, (ii) has substantially
reduced or will substantially reduce, the use of
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products, goods or services of the Business or (iii) has sought, or is seeking,
to reduce the price it will pay for products, goods or services of the Business,
including in each case after the consummation of the transactions contemplated
hereby. To the best knowledge of Sellers, no customer of the Business has
otherwise threatened to take any action described in the preceding sentence as a
result of the consummation of the transactions contemplated by the Agreement.
3.14 INTELLECTUAL PROPERTY.
(a) Title. Schedule 3.14(a) contains a complete and correct
list of all Intellectual Property (as defined below) that is owned by Sellers
and primarily related to, used in, held for use in connection with, or
necessary for the conduct of, or otherwise material to the Business (the "Owned
Intellectual Property"). Sellers own or have the exclusive right to use
pursuant to license, sublicense, agreement or permission all Owned Intellectual
Property, free from any Liens and free from any requirement of any past,
present or future royalty payments, license fees, charges or other payments, or
conditions or restrictions whatsoever. To the Sellers' knowledge, the Owned
Intellectual Property comprise all of the Intellectual Property necessary for
the Buyer to conduct and operate the Business as now being conducted by
Sellers.
(b) Transfer. Immediately after the Closing, Buyer will own
all of the Owned Intellectual Property and, except with respect to the Note,
will have a right to use the Owned Intellectual Property, free from any Liens
and on the same terms and conditions as in effect prior to the Closing.
(c) No Infringement. The conduct of the Business does not
infringe or otherwise conflict with any rights of any Person in respect of any
Owned Intellectual Property. To the knowledge of Sellers after due inquiry, none
of the Owned Intellectual Property is being infringed or otherwise used or
available for use, by any other Person.
(d) Licensing Arrangements. Schedule 3.14(d) sets forth all
material agreements, arrangements or laws (i) pursuant to which Sellers have
licensed Owned Intellectual Property to, or the use of Owned Intellectual
Property is otherwise permitted (through non-assertion, settlement or similar
agreements or otherwise) by, any other Person and (ii) pursuant to which Sellers
have had Intellectual Property licensed to it, or has otherwise been permitted
to use Intellectual Property (through non-assertion, settlement or similar
agreements or otherwise). All of the agreements or arrangements set forth on
Schedule 3.14(d) (x) are in full force and effect in accordance with their terms
and no default exists thereunder by Sellers, or to the knowledge of Sellers
after due inquiry, by any other party thereto, (y) are free and clear of all
Liens, and (z) do not contain any change in control or other terms or conditions
that will become applicable or inapplicable as a result of the consummation of
the transactions contemplated by this Agreement. Each of the Sellers has
delivered to Buyer true and complete copies of all licenses and arrangements
(including amendments) set forth on Schedule 3.14(d).
(e) No Intellectual Property Litigation. No claim or demand of
any Person has been made nor is there any proceeding that is pending, or to the
knowledge of Sellers after due inquiry, threatened, nor is there a reasonable
basis therefor, which (i) challenges the rights of Sellers in respect of any
Owned Intellectual Property, (ii) asserts that any of the Sellers
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is infringing or otherwise in conflict with, or is, except as set forth in
Schedule 3.14(d), required to pay any royalty, license fee, charge or other
amount with regard to, any Owned Intellectual Property, or (iii) claims that any
default exists under any agreement or arrangement listed on Schedule 3.14(d).
None of the Owned Intellectual Property is subject to any outstanding order,
ruling, decree, judgment or stipulation by or with any court, arbitrator, or
administrative agency, or has been the subject of any litigation within the last
five years, whether or not resolved in favor of Sellers.
(f) Due Registration, Etc. The Owned Intellectual Property has
been duly registered with, filed in or issued by, as the case may be, the
United States Patent and Trademark Office, United States Copyright Office or
such other filing offices, domestic or foreign, and Sellers have taken such
other actions, to ensure full protection under any applicable laws or
regulations, and such registrations, filings, issuances and other actions
remain in full force and effect, in each case to the extent material to the
Business.
(g) Use of Name and Xxxx. To the Sellers' knowledge, there
are, and immediately after the Closing will be, no contractual restriction or
limitations pursuant to any orders, decisions, injunctions, judgments, awards
or decrees of any governmental authority on the Buyer's right to use the name
and xxxx "KnowledgeWorks" and "CourseFactory" in the conduct of the Business as
presently carried on by Sellers.
For purposes of this Agreement "Intellectual Property" shall
mean any and all United States and foreign: (a) patents (including design
patents, industrial designs and utility models) and patent applications
(including docketed patent disclosures awaiting filing, reissues, divisions,
continuations-in-part and extensions), patent disclosures awaiting filing a
determination, inventions and improvements thereto; (b) trademarks, service
marks, trade names, trade dress, logos, business and product names, slogans, and
registrations and applications for registration there-of; (c) copyrights
(including software) and registrations thereof; (d) inventions, processes,
designs, formulae, trade secrets, know-how, industrial models, confidential and
technical information, manufacturing, engineering and technical drawings,
product specifications and confidential business information; (e) mask work and
other semiconductor chip rights and registrations thereof; (f) intellectual
property rights similar to any of the foregoing; and (g) copies and tangible
embodiments thereof (in whatever form or medium, including electronic media).
3.15 INSURANCE. Schedule 3.15 contains a complete and correct list and
summary description of all insurance policies maintained by Sellers for the
benefit of or in connection with the Assets or the Business. Sellers have
delivered to the Buyer complete and correct copies of all such policies together
with all riders and amendments thereto. Such policies are in full force and
effect, and all premiums due hereon have been paid. Sellers have complied in all
material respects with the terms and provisions of such policies. The insurance
coverage provided by such policies is adequate and customary for the Business.
Schedule 3.15 sets out all claims made by Sellers under any policy of insurance
during the past two years with respect to the Business and in the opinion of
Sellers reasonably formed and held, there is no basis on which a claim should or
could be made under any such policy with respect to it.
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3.16 ENVIRONMENTAL MATTERS. Sellers and their respective affiliates have
complied and are in compliance in all material respects with all Applicable Laws
relating to the protection of the environment, to human health and safety, or to
any emission, discharge, generation, processing, storage, holding, abatement,
existence, release, threatened release or transportation of any hazardous
substances pertaining to the Business. None of the Sellers nor any of their
affiliates has caused or taken any action that has resulted or may result in, or
has been or is subject to, any liability or obligation relating to (i) the
environmental conditions on, under, or about any real property, the Assets or
other properties or assets owned, leased or used by Sellers held for use in
connection with, necessary for the conduct of, or otherwise material to, the
Business, or (ii) the past or present use, management, handling, transport,
treatment, generation, storage or release of any hazardous substances, except
for any such liabilities and obligations that, individually and in the
aggregate, are not material to the Business and have not had or resulted in, and
will not have or result in, a Material Adverse Effect.
3.17 EMPLOYEES, LABOR MATTERS, ETC. None of the Sellers is a party to or
bound by any collective bargaining agreement and there are no labor unions or
other organizations representing, purporting to represent or attempting to
represent any employees employed in the operation of the Business. There has not
occurred or, to the best knowledge of Sellers after due inquiry, been threatened
any material strike, slowdown, picketing, work stoppage, concerted refusal to
work overtime or other similar labor activity with respect to any employees
employed in the operation of the Business. There are no labor disputes currently
subject to any grievance procedure, arbitration or litigation and there is no
representation petition pending or, to the best knowledge of Sellers after due
inquiry, threatened with respect to any employee employed in the operation of
the Business. Sellers have complied with all provisions of Applicable Law
pertaining to the employment of employees, including, without limitation, all
Applicable Laws relating to labor relations, equal employment, fair employment
practices, entitlements, prohibited discrimination or other similar employment
practices or acts, except for any failure so to comply that, individually or
together with all such other failures, has not and will not result in a material
liability or obligation on the part of Buyer or the Business, and has not had or
resulted in, and will not have or result in, a Material Adverse Effect.
3.18 EMPLOYEE BENEFIT PLANS AND RELATED MATTERS. The Sellers do not have
any employee benefit plan, as such term is defined in section 3(3) of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA"), whether
or not subject to ERISA, and each bonus, incentive or deferred compensation,
severance, termination, retention, change of control, stock option, stock
appreciation, stock purchase, phantom stock or other equity-based, performance
or other employee or retiree benefit or compensation plan, program, arrangement,
agreement, policy or understanding, whether written or unwritten, that provides
or may provide benefits or compensation in respect of any employee or former
employee employed or formerly employed in the operation of the Business or the
beneficiaries or dependents of any such employee or former employee (such
employees, former employees, beneficiaries and dependents collectively, the
"Employees") or under which any Employee is or may become eligible to
participate or derive a benefit and that is or has been maintained or
established by Sellers or any other trade or business, whether or not
incorporated, which, together with Sellers is or would have been at any date of
determination occurring within the preceding six years treated as a single
employer under section 414 of the Code (such other trades and businesses
collectively, the
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"Related Persons"), or to which Sellers or any Related Person contributes or is
or has been obligated or required to contribute or with respect to which Sellers
or the Business may have any liability or obligation.
3.19 BROKERS, FINDERS, ETC. All negotiations relating to this
Agreement, and the transactions contemplated hereby, have been carried on
without the participation of any Person acting on behalf of Sellers or their
respective Affiliates in such manner as to give rise to any valid claim against
Buyer or any of its subsidiaries for any brokerage or finder's commission, fee
or similar compensation, or for any bonus payable to any officer, director,
employee, agent or sales representative of or consultant to Sellers or their
respective affiliates upon consummation of the transactions contemplated hereby
or thereby.
3.20 YEAR 2000.
(a) Sellers hereby represent and warrant to Buyer that no
action by the Sellers have caused the hardware, software, and embedded
microcontrollers in non-computer equipment (the "Computer Systems") used by
Sellers in the Business not to be Year 2000 compliant. Sellers further
represents and warrants that it has received absolute certification from the
critical service providers it relies upon that their delivery of services and
products to Sellers with respect to the Business will not be disrupted by Year
2000 issues.
(b) For purposes of this provision, Year 2000 compliant shall
mean that the Computer Systems meet each of the following criteria:
(1) the functions, calculations, and other computing processes
of the Computer Systems (collectively, "Processes") perform in a consistent
manner regardless of the date in time on which the Processes are actually
performed and regardless of the date data input to the Computer Systems, whether
before, on, during or after January 1, 2000 and whether or not the date data is
affected by leap years;
(2) the Computer Systems accept, calculate, compare, sort,
extract, sequence, and otherwise process date data, and return and display date
data, in a consistent manner regardless of the dates used in such date data,
whether before, on, during or after January 1, 2000;
(3) the Computer Systems will function without interruptions
caused by the date in time on which the Processes are actually performed or by
the date data input to the Computer Systems, whether before, on, during or after
January 1, 2000;
(4) the Computer Systems accept and respond to two-digit
year-date input in a manner that resolves any ambiguities as to the century in a
defined, predetermined, and appropriate manner;
(5) the Computer Systems store and display date data in ways
that are unambiguous as to the determination of the century, and
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(6) no date data will cause the Computer Systems to perform an
abnormally ending routine or function within the Processes or generate incorrect
values or invalid results.
3.21 DISCLOSURE. No representation or warranty by Sellers contained in
this Agreement nor any statement or certificate furnished or to be furnished by
or on behalf of Sellers to Buyer or its representatives in connection herewith
or pursuant hereto contains or will contain any untrue statement of a material
fact, or omits or will omit to state any material fact required to make the
statements contained herein or therein not misleading.
SECTION 4
BUYER'S REPRESENTATIONS AND WARRANTIES
Buyer represents and warrants to Sellers that the statements
contained in this Section 4 are correct as of the date of this Agreement, except
as otherwise set forth in the schedules attached hereto.
4.1 CORPORATE STATUS; AUTHORIZATION, ETC. Buyer is a limited liability
company duly organized, validly existing and in good standing, under the laws of
the jurisdiction of its incorporation with full corporate power and authority to
execute and deliver this Agreement, to perform its obligations hereunder and to
consummate the transactions contemplated hereby. The execution and delivery by
Buyer of this Agreement, and the consummation of the transactions contemplated
hereby, have been, duly authorized by all requisite corporate action of Buyer.
Buyer has duly executed and delivered this Agreement. This Agreement is a valid
and legally binding obligation of Buyer, enforceable against Buyer in accordance
with its respective terms.
4.2 NO CONFLICTS, ETC. The execution, delivery and performance by Buyer of
this Agreement, and the consummation of the transactions contemplated hereby, do
not and will not conflict with or result in a violation of or under (with or
without the giving of notice or the lapse of time, or both) (i) the Articles of
Organization or Operating Agreement or other organizational documents of Buyer,
(ii) any Applicable Law applicable to Buyer or any of its properties or assets
or (iii) any contract, agreement or other instrument applicable to Buyer or any
of its properties or assets, except, in the case of clause (iii), for violations
and defaults that, individually and in the aggregate, have not and will not
materially impair the ability of Buyer to perform its obligations under this
Agreement. No Consent is required to be obtained or made by Buyer in connection
with the execution and delivery of this Agreement or the consummation of the
transactions contemplated hereby.
4.3 LITIGATION. There is no action, claim, suit or proceeding pending, or
to Buyer's knowledge threatened, by or against or affecting Buyer in connection
with or relating to the transactions contemplated by this Agreement or of any
action taken or to be taken in connection herewith or the consummation of the
transactions contemplated hereby.
4.4 BROKERS, FINDERS, ETC. All negotiations relating to this Agreement and
the transactions contemplated hereby have been carried on without the
participation of any Person
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acting on behalf of Buyer in such manner as to give rise to any valid claim
against Sellers for any brokerage or finder's commission, fee or similar
compensation.
SECTION 5
ADDITIONAL AGREEMENTS
5.1 SELLERS NON-COMPETITION.
(a) Until the end of the four (4) year period following the
Closing Date, Sellers shall not, and to the extent it is within Sellers' control
shall cause their affiliates not to, for any reason whatsoever, directly or
indirectly, for itself or on behalf of or in conjunction with any other person,
persons, company, partnership, corporation, business or other entity of whatever
nature:
(i) engage, as a shareholder, owner, partner, joint
venturer, or in a managerial capacity, whether as an independent contractor,
consultant or advisor, or as a sales representative, in any business selling any
products or services in competition with the selling of downloadable, print
based course and related print-based training materials for use by individuals
or entities as either self-paced or instructor led course or related print-based
training material (the "Sellers Restricted Business");
(ii) call upon any person who is, at that time, an
employee of Buyer for the purpose or with the intent of enticing such
employee away from or out of the employ of Buyer or the Company; or
(iii) market, promote or sell to any of the Sellers'
past, current or potential customers any of the business services described in
or which are consistent with Sellers Restricted Business.
(b) Damages. Because of the difficulty of measuring economic
losses to Buyer as a result of a breach of the foregoing covenant, and because
of the immediate and irreparable damage that could be caused to Buyer for which
it would have no other adequate remedy, Sellers agrees that the foregoing
covenant may be enforced by Buyer in the event of breach by Sellers, by
injunctions and restraining orders.
(c) Reasonable Restraint. Buyer and Sellers agree that the
foregoing covenants in this Section 5.1 impose a reasonable restraint on Sellers
in light of the activities and business of Buyer on the date of the execution of
this Agreement and the current plans of Buyer; but it is also the intent of
Buyer and Sellers that such covenants be construed and enforced in accordance
with the changing activities and business of Buyer throughout the term of this
covenant.
(d) Severability; Reformation. The covenants in this Section
5.1 are severable and separate, and the unenforceability of any specific
covenant shall not affect the provisions of any other covenant. Moreover, in the
event any court of competent jurisdiction
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shall determine that the scope, time or territorial restrictions set forth are
unreasonable, then it is the intention of the Buyer and Sellers that such
restrictions be enforced to the fullest extent which the court deems reasonable,
and the Agreement shall thereby be reformed.
(e) Independent Covenant. All of the covenants in this Section
5.1 shall be construed as an agreement independent of any other provision in
this Agreement, and the existence of any claim or cause of action of Sellers
against Buyer, whether predicated on this Agreement or otherwise, shall not
constitute a defense to the enforcement by Buyer of such covenants. It is
specifically agreed that the period of noncompetition stated at Section 5.1(a),
during which the agreements and covenants of Sellers made in this Section 5.1
shall be effective, shall be computed by excluding from such computation any
time during which any Seller is found by a court of competent jurisdiction to
have been in violation of any provision of this Section 5.1. The covenants
contained in Section 5.1 shall not be affected by any breach of any other
provision hereof by either party hereto and shall have no effect if the
transactions contemplated by this Agreement are not consummated.
(f) Materiality. Sellers hereby agree that the covenants set
forth in this Section 5.1 are a material and substantial part of the
transactions contemplated by this Agreement.
5.2 BUYERS NON-COMPETITION.
(a) Provided that Seller shall be actively involved in selling
online training and education, until the end of the two (2) year period
following the Closing Date, without the prior written consent of the Sellers,
Buyer shall not, and shall cause its affiliates not to, for any reason
whatsoever, directly or indirectly, for itself or on behalf of or in conjunction
with any other person, persons, company, partnership, corporation, business or
other entity of whatever nature engage, as a shareholder, owner, partner, joint
venturer, or in a managerial capacity, whether as an independent contractor,
consultant or advisor, or as a sales representative, in any business selling
online training and education in competition with Sellers' business as currently
marketed and conducted as of the date of this agreement, other than the Sellers
Restricted Business;
(b) Damages. Because of the difficulty of measuring economic
losses to Sellers as a result of a breach of the foregoing covenant, and because
of the immediate and irreparable damage that could be caused to Sellers for
which it would have no other adequate remedy, Buyer agrees that the foregoing
covenant may be enforced by Sellers in the event of breach by Buyer , by
injunctions and restraining orders.
(c) Reasonable Restraint. Buyer and Sellers agree that the
foregoing covenants in this Section 5.2 impose a reasonable restraint on Buyer
in light of the activities and business of Sellers on the date of the execution
of this Agreement and the current plans of Sellers; but it is also the intent of
Buyer and Sellers that such covenants be construed and enforced in accordance
with the changing activities and business of Sellers throughout the term of this
covenant.
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(d) Severability; Reformation. The covenants in this Section
5.2 are severable and separate, and the unenforceability of any specific
covenant shall not affect the provisions of any other covenant. Moreover, in the
event any court of competent jurisdiction shall determine that the scope, time
or territorial restrictions set forth are unreasonable, then it is the intention
of the Buyer and Sellers that such restrictions be enforced to the fullest
extent which the court deems reasonable, and the Agreement shall thereby be
reformed.
(e) Independent Covenant. All of the covenants in this Section
5.2 shall be construed as an agreement independent of any other provision in
this Agreement, and the existence of any claim or cause of action of Sellers
against Buyer, whether predicated on this Agreement or otherwise, shall not
constitute a defense to the enforcement by Sellers of such covenants. It is
specifically agreed that the period of noncompetition stated at Section 5.2(a),
during which the agreements and covenants of Sellers made in this Section 5.2
shall be effective, shall be computed by excluding from such computation any
time during which such Sellers is found by a court of competent jurisdiction to
have been in violation of any provision of this Section 5.2. The covenants
contained in Section 5.2 shall not be affected by any breach of any other
provision hereof by either party hereto and shall have no effect if the
transactions contemplated by this Agreement are not consummated.
(f) Materiality. Buyer hereby agrees that the covenants set
forth in this Section 5.2 are a material and substantial part of the
transactions contemplated by this Agreement.
5.3 NONDISCLOSURE OF CONFIDENTIAL INFORMATION. Sellers will not disclose
the customer names, addresses and/or any other confidential information relating
to the Business to any person, firm, corporation, association or other entity
for any purpose or reason whatsoever for five years after the Closing Date,
except to authorized representatives of Buyer; provided, however, that Sellers
may disclose the information in response to any legally enforceable summons or
subpoena or in order to comply with any order, law, ruling or regulation
applicable to Sellers. If Sellers become legally compelled to disclose such
confidential information, Sellers will provide Buyer with prompt notice of such
requirement so that Buyer may seek a protective order or other appropriate
remedy.
5.4 NO SOLICITATION. In consideration of the substantial expenses which
Buyer will incur in pursuing the due diligence process, provided that this
Agreement has not been terminated pursuant to Section 7, until closing, Sellers,
their officers, directors, employees, agents and representatives shall not sell,
offer or agree to sell or conduct any negotiation to sell any or all of the
Assets to any other person or entity other than Buyer, other than sales in the
normal course of the Business, or provide any information to any other person or
entity for any purpose inconsistent with this Agreement, or fail to negotiate in
good faith.
5.5 FEES AND EXPENSES. Whether or not the transactions herein contemplated
are consummated, (i) Sellers will pay the fees, expenses and disbursements of
Sellers and their agents, representatives, accountants and counsel incurred in
connection with the subject matter of this Agreement and any amendments hereto,
and (ii) Buyer will pay the fees, expenses and
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disbursements of Buyer and its agents, representatives, accountants and counsel
incurred in connection with the subject matter of this Agreement and any
amendments hereto.
5.6 PRESS RELEASES. Neither party will disclose to any third party or
issue any press release or otherwise publicize the terms of the Agreement
without the consent or approval of the other party; however, each party may make
such public disclosure that it believes in good faith to be required by any law.
5.7 CUSTOMER LETTERS. Immediately after the Closing, Buyer and Sellers
will jointly prepare a letter to be sent by Buyer, at Buyer's expense, informing
the customers whose contracts have been sold and transferred pursuant to this
Agreement, of such sale under this Agreement. Buyer agrees not to disclose the
transactions contemplated by this Agreement to any customers without the consent
of the Sellers.
5.8 SALES, TRANSFER AND DOCUMENTARY TAXES, ETC. All federal, state and
local sales, documentary and other transfer taxes, if any, due as a result of
the purchase, sale or transfer of the Assets in accordance herewith will be paid
by the party against whom they are imposed by law. All real and personal
property taxes shall be prorated through the Closing Date, with Sellers
responsible for the portion of such taxes through Closing Date and Buyer
responsible for the share of such taxes for the period after the Closing Date.
5.9 ACCOUNTS RECEIVABLE. Sellers shall be responsible for all trade
payables related to the Contracts including those related to the Business for
periods prior to Closing. Sellers shall be entitled to all accounts receivable
for all work or work in progress performed prior to Closing and the parties
shall cooperate to report to each other relating to any such payments or
obligations. Following the Closing Date, Buyer shall forward to Sellers any
payments received by Buyer that Sellers are entitled to pursuant to the terms of
this Agreement (including in respect of accounts receivable existing as of the
Closing) and Sellers shall forward to Buyer any payments received by Sellers
that Buyer is entitled to pursuant to the terms of this Agreement, in each case
within one week of receipt of any such payment by Buyer or Sellers, as the case
may be. Buyer shall promptly deliver to Sellers any mail or other communications
received by Buyer relating to assets not sold to Buyer and to retained
liabilities and Sellers shall promptly deliver to Buyer any mail or other
communications received by Sellers relating to the Assets or the Assumed
Liabilities.
5.10 CORPORATE NAME. At Closing, Sellers shall assign to Buyer all of its
right, title and interest to the corporate and trade names associated with
"KnowledgeWorks" and any variations thereof and trade or service marks relating
thereto and will promptly discontinue use of such names and marks after the
Closing Date and cause all public records to be amended to reflect the proper
ownership of such names and marks. In addition, Sellers hereby agree to forego
any rights, title and interest to the corporate and trade names associated with
"CourseFactory" and any variations thereof and trade or service marks relating
thereto.
5.11 ACCESS AND INFORMATION. So long as this Agreement remains in effect,
Sellers will give Buyer, the Buyer's prospective lenders and investors, and
their respective accountants, counsel, consultants, employees and agents, full
access during normal business hours to, and furnish them with all documents,
records, work papers and information with respect to, all of
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such person's properties, assets, books, contracts, commitments, reports and
records relating to the Business, as Buyer shall from time to time reasonably
request. In addition, Sellers will permit Buyer, Buyer's prospective lenders and
investors, and their respective accountants, counsel, consultants, employees and
agents, reasonable access to such personnel of Sellers during normal business
hours as may be necessary or useful to Buyer in its review of the properties,
assets and business affairs of the Business and the above-mentioned documents,
records and information.
5.12 TRANSFERRED EMPLOYEES. Effective as of the Closing Date, Buyer shall
offer employment to certain employees of Sellers to be named prior to the
Closing Date on terms acceptable to Buyer. Those employees who accept such
offers of employment effective as of the Closing Date shall be referred to
herein as the "Transferred Employees." The Sellers shall remain liable in
respect of the Transferred Employees for any liabilities, accrued but unpaid
salaries, wages, vacation and sick pay and incentive compensation accruing
prior to the Closing Date. Sellers shall also remain responsible for payment of
any and all retention, change in control or other similar compensation or
benefits which are or may become payable in connection with the consummation of
the transactions contemplated by this Agreement.
5.13 ACCESS TO E-COMMERCE APPLICATION. Buyer shall have the right, at
Buyer's expense, prior to the Closing Date, to access the e-commerce application
purchased pursuant to this Agreement.
SECTION 6
TRANSITION PERIOD
For a period beginning on the Closing Date of this Agreement and ending no
more than ninety (90) days subsequent to the Closing Date (the "Transition
Period"), Sellers shall assist Buyer in the transition of the Business,
including accounting and administrative and other support of a nature as
previously rendered by Sellers to the Business as reasonably requested by Buyer
and at Seller's sole expense. Sellers shall also provide a reasonable amount of
technical support services during the Transition Period to ensure that the
Netscape Merchant System operates in a manner consistent with its operation
prior to the Closing Date. During the Transition Period, Sellers will also
provide all necessary equipment to Buyer at no cost to operate the Business
consistent with past practice. Subsequent to the Transition Period, Sellers will
make such equipment available upon mutually acceptable terms.
SECTION 7
CONDITIONS PRECEDENT TO OBLIGATIONS
7.1 CONDITIONS TO OBLIGATIONS OF BUYER. Each and every obligation of Buyer
to be performed at or after the Closing shall be subject to the satisfaction as
of or before the Closing Date of the following conditions (unless waived in
writing by Buyer):
(a) Representations and Warranties. Seller's representations
and warranties set forth in Section 3.1 of this Agreement shall have been true
and correct in all material respects as of the date hereof and shall be true and
correct in all material respects at and
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as of the Closing Date as if such representations and warranties were made as of
such date and time.
(b) Performance of Agreement. All covenants, conditions and
other obligations under this Agreement which are to be performed or complied
with by Sellers at or prior to the Closing Date shall have been performed and
complied with in all material respects at or prior to the Closing Date.
(c) No Material Adverse Change. There shall have been no
material adverse change in the financial condition, business or properties of
Sellers which materially adversely affects the conduct of the Business as
presently being conducted or the condition or business prospects, financial or
otherwise, of the Business.
(d) Absence of Governmental or Other Objection. There shall be
no pending or overtly threatened lawsuit challenging the transaction by any body
or agency of the federal, state or local government or by any third party, and
the consummation of the transaction shall not have been enjoined by a court of
competent jurisdiction as of the Closing Date.
(e) Due Diligence Review. Buyer shall be fully satisfied in
its sole and absolute discretion with the results of its final due diligence
review of the Business.
(f) Employment Agreements. The Transferred Employees shall
have executed and delivered employment agreements in the form acceptable to the
Buyer and such employees.
(g) Certificate of President. Sellers shall have delivered to
Buyer at the Closing a certificate executed by its President, dated the date of
the Closing, to the effect that the conditions set forth in subsections (a)-(c)
of this Section 7.1, have been satisfied.
(h) Approval of Documentation. The form and substance of all
certificates, instruments and other documents delivered or to be delivered to
Buyer under this Agreement shall be reasonably satisfactory to Buyer and its
counsel in all reasonable respects.
(i) Financing. Buyer shall have received adequate financing on
terms satisfactory to Buyer in its sole discretion.
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7.2 CONDITIONS TO OBLIGATIONS OF SELLERS. Each and every obligation of
Sellers to be performed at or after the Closing Date shall be subject to the
satisfaction as of or before such time of the following conditions (unless
waived in writing by Sellers):
(a) Representations and Warranties. Buyer's representations
and warranties set forth in Section 4 of this Agreement shall have been true and
correct in all material respects as of the date hereof and shall be true and
correct in all material respects at and as of the Closing Date as if such
representations and warranties were made as of such time and date.
(b) Performance of Agreement. All covenants, conditions and
other obligations under this Agreement which are to be performed or complied
with by Buyer at or prior to the Closing Date shall have been performed and
complied with in all material respects at or prior to the Closing Date.
(c) Absence of Governmental or Other Objection. There shall be
no pending or overtly threatened lawsuit challenging the transaction by any body
or agency of the federal, state or local government or by any third party, and
the consummation of the transaction shall not have been enjoined by a court of
competent jurisdiction as of the Closing Date.
(d) Certificates. Buyer shall have delivered to Sellers at the
Closing a certificate, dated the date of the Closing, executed by its President,
to the effect that the conditions set forth in subsections (a) and (b) of this
Section 7.2 have been satisfied.
(e) Approval of Documentation. The form and substance of all
certificates, instruments and other documents delivered or to be delivered to
Sellers under this Agreement shall be reasonably satisfactory to Sellers and
Seller's general counsel in all reasonable respects.
(f) Absence of Governmental or Other Objection. There shall be
no pending or overtly threatened lawsuit challenging the transaction by any body
or agency of the federal, state or local government or by any third party, and
the consummation of the transaction shall not have been enjoined by a court of
competent jurisdiction as of the Closing Date.
SECTION 8
TERMINATION
8.1. TERMINATION. This Agreement may be terminated at any time prior
to the Closing Date:
(a) by the written agreement of the Buyer and Sellers;
(b) by Seller in accordance with Section 2 hereof;
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(c) by either Sellers or the Buyer by written notice to the
other party if the transactions contemplated hereby shall not have been
consummated pursuant hereto by 5:00 p.m. on June 30, 1999, unless such date
shall be extended by the mutual written consent of Sellers and Buyer;
(d) by Buyer by written notice to Sellers if (i) the
representations and warranties of Sellers shall not have been true and correct
in all respects (in the case of any representation or warranty containing any
materiality qualification) or in all material respects (in the case of any
representation or warranty without any materiality qualification) as of the date
when made or (ii) if any of the conditions set forth in Section 7.1 shall not
have been, or if it becomes apparent that any of such conditions will not be,
fulfilled by 5:00 p.m. on June 30, 1999, unless such failure shall be due to the
failure of the Buyer to perform or comply with any of the covenants, agreements
or conditions hereof to be performed or complied with by it prior to the
Closing; or
(e) by Sellers by written notice to the Buyer if (i) the
representations and warranties of the Buyer shall not have been true and correct
in all respects (in the case of any representation or warranty containing any
materiality qualification) or in all material respects (in the case of any
representation or warranty without any materiality qualification) as of the date
when made or (ii) if any of the conditions set forth in Section 7.2 shall not
have been, or if becomes apparent that any of such conditions will not be,
fulfilled by 5:00 p.m. on June 30, 1999, unless such failure shall be due to the
failure of Sellers to perform or comply with any of the covenants, agreements or
conditions hereof to be performed or complied with by it prior to the Closing.
8.2. EFFECT OF TERMINATION. In the event of the termination of this
Agreement pursuant to the provisions of Section 8.1, this Agreement shall become
void and have no effect, without any liability to Buyer and Sellers in respect
hereof or of the transactions contemplated hereby on the part of any party
hereto, or any of its directors, officers, employees, agents, consultants,
representatives, advisers, stockholders or affiliates, except (i) with respect
to the refund of the deposit set forth in Section 1.7, (ii) as specified in
Section 5.2, Section 5.3 and Section 5.4 and (iii) for any liability resulting
from such party's breach of this Agreement.
SECTION 9
INDEMNIFICATION;DEFAULT
9.1 INDEMNITY BY SELLERS. Sellers will indemnify, defend and hold harmless
Buyer, its successors and assigns and their respective officers, directors,
employees, stockholders and agents (collectively, the "Buyer Indemnified
Persons") against all material claims, losses, liabilities, damages,
deficiencies, costs and expenses, including without limitation, reasonable
attorneys', accountants' and expert witness' fees, costs and expenses of
investigation, and the costs and expenses of enforcing this indemnification
(hereinafter individually a "Loss" and collectively "Losses") incurred by any
such Buyer Indemnified Person arising out of or related to (i) any Retained
Liability, (ii) any and all taxes of Sellers and affiliates of Sellers not
relating to the Business or (iii) any breach by Sellers of a representation or
warranty set forth in Section 3, or nonfulfillment of any agreement or covenant
to be performed by Sellers under this Agreement or in
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any writing delivered pursuant to the provisions of this Agreement or out of or
relating to the obligations of Sellers, arising prior to the Closing Date. The
obligations of indemnity of Sellers under this Section 9.1 will not exceed the
amount of the Purchase Price, excluding interest thereon, actually received by
Sellers.
9.2 INDEMNITY BY BUYER. Buyer covenants and agrees that it will indemnify
and hold harmless Sellers, its successors and assigns and their respective
officers, directors, employees, stockholders and agents (collectively the
"Sellers Indemnified Persons"), after the Closing, against any and all Losses
arising out of or related to any breach by Buyer of a representation or warranty
set forth in Section 4, or nonfulfillment of any agreement or covenant to be
performed by Buyer under this Agreement or in any writing delivered pursuant to
the provisions of this Agreement and out of or relating to the obligations and
Contracts assumed hereunder.
9.3 DEFAULT. In the event that any party (the "Defaulting Party") defaults
in his or its obligations under this Agreement and, as a result thereof, the
other party (the "Non-Defaulting Party") is successful in legally enforcing its
rights hereunder against the Defaulting Party, then, in addition to all damages
and other remedies to which the Non-Defaulting Party is entitled by reason of
such default, including specific performance, the Defaulting Party shall
promptly pay to the Non-Defaulting Party an amount equal to all costs and
expenses (including reasonable attorneys' fees) paid or incurred by the
Non-Defaulting Party in connection with such enforcement.
SECTION 10
GENERAL
10.1 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The representations and
warranties of the parties contained in this Agreement or other attachments
hereto delivered pursuant to the provisions of this Agreement will survive the
consummation of the transactions contemplated hereby and any examination on
behalf of the parties in accordance with the terms of this Agreement and shall
continue in full force and effect thereafter for a period of two (2) years
following the Closing Date.
10.2 ASSIGNMENT. This Agreement may not be assigned (including by
operation of law) without the prior written consent of the other parties, which
consent will not be unreasonably withheld; provided, however, any party may
assign its rights, but may not delegate its duties or obligations hereunder, to
its affiliates or a purchaser by merger or otherwise of all of substantially all
of its business.
10.3 ARBITRATION. Any controversy or claim arising out of or related to
this Agreement, or any transactions contemplated herein, that cannot be amicably
resolved, including, without limitation, whether such controversy or claim is
subject to arbitration, will be resolved by binding arbitration held in McLean,
Virginia, in accordance with the commercial arbitration rules of the American
Arbitration Association, subject to this Section. Arbitration proceedings will
be conducted by a panel of three persons selected as follows. The party
initiating arbitration will select one arbitrator listed and qualified with the
American Arbitration Association ("Qualified
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Arbitrator") and the other party will select a second Qualified Arbitrator, both
within 10 days of any written notice to arbitrate. The two arbitrators will
select a third Qualified Arbitrator within 20 days of the appointment of the
first two arbitrators. No arbitrator will have or previously have had any
significant relationship with any of the parties. The decision of any two of the
arbitrators on any submitted matter will be final and nonappealable.
Notwithstanding the foregoing, if the controversy or claim in question is not
resolved by the arbitrators as provided herein within 150 days after selection
of the first arbitrator, either party may pursue any remedy with respect hereto
provided by law.
10.4 NOTICES. Any notice or communication required or permitted hereunder
will be sufficiently given if sent by first class mail, postage prepaid:
(a) If to Sellers, addressed to:
UOL Publishing, Inc.
0000 Xxxxxxxxxx Xxxxx, Xxxxx 000
XxXxxx, Xxxxxxxx 00000
With a copy to its counsel, addressed to:
Xxxxxx Xxxxxxx Xxxxx & Xxxxxx LLP
0000 Xxxx Xxxxx Xxxxx, Xxxxx 000
Xxxxxxx, Xxxxx Xxxxxxxx 00000
Attention: Xxxxx X. Xxxxxxx, Esq.
(b) If to Buyer, addressed to:
0000 Xxxxxxxxx Xxxxxx, X.X.
Xxxxxxxxx 000
Xxxxxxxxxx X.X. 00000
Attention: Xxxxx Xxxxx
With a copy to its counsel, addressed to:
Xxxxxxx, Xxxxxxx & Xxxxxx
1800 Mercantile Bank & Trust Xxxx.
0 Xxxxxxx Xxxxx
Xxxxxxxxx, XX 00000
Attention: Xxx X. Xxxxx, Esq.
10.5 APPLICABLE LAW. This Agreement will be construed in accordance with
the laws of the Commonwealth of Virginia, regardless of conflict of law
principles.
10.6 HEADINGS. The section and article headings in this Agreement are for
convenience only and will not be considered a part hereof or affect the
construction or interpretation of any provisions of this Agreement.
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10.7 THIRD PARTY CONSENTS. To the extent that the rights of Sellers under
any Asset to be assigned to Buyer hereunder may not be assigned without the
consent of another person which has not been obtained, this Agreement will not
constitute an agreement to assign the same if an attempted assignment would
constitute a breach thereof or be unlawful, and Sellers will use their
reasonable efforts to obtain any such required consent(s) as promptly as
possible. If any such consent is not obtained or if any attempted assignment
would be ineffective or would impair Buyer's rights under the Asset in question
so that Buyer would not in effect acquire the benefit of all such rights,
Sellers, to the maximum extent permitted by law and the Asset, will act after
the Closing as Buyer's agent in order to obtain for it the benefits thereunder
and will cooperate, to the maximum extent permitted by law and the Asset, with
Buyer in any other reasonable arrangement satisfactory to all parties designed
to provide such benefits to Buyer, and Buyer will be responsible for the
reasonable costs and expenses of obtaining such benefits.
10.8 NO BENEFIT TO OTHERS. The representations, warranties, covenants and
agreements contained in this Agreement are for the sole benefit of the parties
hereto and, in the case of Section 8 hereof, the Indemnified Buyer Parties and
the Indemnified Sellers Parties, and their successors and assigns, and they will
not be construed as conferring any rights on any other persons.
10.9 ENTIRE AGREEMENT. This Agreement (including the exhibits and
schedules hereto) and the documents delivered pursuant hereto constitute the
entire agreement and understanding among Sellers and Buyer and supersede any
prior agreement and understanding relating to the subject matter of this
Agreement. This Agreement may be modified or amended only by a written
instrument executed by Sellers and Buyer acting through their duly elected
officers.
10.10 COUNTERPARTS. This Agreement may be executed simultaneously in two
or more counterparts, each of which will be deemed an original and all of which
together will constitute but one and the same instrument.
10.11 SEVERABILITY. The provisions of this Agreement are severable, so
that the invalidity or unenforceability of any provision of this Agreement shall
not affect the validity or enforceability of any other term or provision of this
Agreement, which shall remain in full force and effect.
10.12 SPECIFIC PERFORMANCE. In addition to any and all other remedies that
may be available at law in the event of any breach of this Agreement, Sellers
shall be entitled to specific performance of the agreements and obligations of
Buyer hereunder and to such other injunctive or other equitable relief as may be
granted by a court of competent jurisdiction.
[THE NEXT PAGE IS THE SIGNATURE PAGE.]
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IN WITNESS WHEREOF, the parties have executed this Asset
Purchase Agreement as of the day and year first above written.
SELLERS:
HTR, INC.
ATTEST:
By: By:
-------------------------- --------------------------
Name: Name:
------------------------ --------------------------
Title: Title:
----------------------- --------------------------
UOL PUBLISHING, INC.
ATTEST:
By: By:
-------------------------- --------------------------
Name: Name:
------------------------ --------------------------
Title: Title:
----------------------- --------------------------
BUYER:
XxxxxxXxxxxxx.xxx, LLC
ATTEST:
By: By:
-------------------------- --------------------------
Name: Name:
------------------------ --------------------------
Title: Title:
----------------------- --------------------------
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