ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT (the "Agreement") is made and entered
into this 24th day of June, 1998, by and between EDUCATIONAL SYSTEMS, INC., a
Utah corporation whose address for purposes of this Agreement is 0000 Xxxxx
Xxxxxxxxxx Xxx, #000, Xxxxx, Xxxx 00000 (the "Seller"), SENTO TRAINING
CORPORATION, a Utah corporation whose address for purposes of this Agreement
is 000 Xxxxx Xxxxx Xxxxxx Xxxx, Xxxx 00000 (the "Buyer"), XXXXXXX X. XXXXX,
an individual, and XXXXX 0. XXXXXX, an individual, (collectively, the
"Principals"), whose common address for purposes of this Agreement is 0000
Xxxxx Xxxxxxxxxx Xxx, #000, Xxxxx, Xxxx 00000.
RECITALS
WHEREAS, Seller is engaged in the business of marketing, selling and
promoting training courses for users, designers and engineers of computer
networks (the "Courses"), including, without limitation, Courses designed to
assist students to pass any core or elective tests necessary to receive the
Microsoft Certified Systems Engineer ("MCSE") or Certified Novell Engineer
("CNE") designations (the "Business").
WHEREAS, Buyer desires to purchase, and Seller desires to soil,
substantially all of the assets used in conducting the Business, upon the
terms and conditions set forth in this Agreement.
AGREEMENT
NOW THEREFORE, in consideration of the covenants, conditions and
agreements set forth herein, and for other good and valuable consideration,
the receipt, adequacy and legal sufficiency of which are hereby acknowledged,
Buyer, Seller and the Principals hereby agree as follows:
I. PURCHASE AND SALE OF ASSETS
1.1 PURCHASE AND SALE. Except as set forth in Section 12 below, at
the Closing (as defined below) Seller shall sell, assign, transfer, convey
and deliver to Buyer, free and clear of all claims, encumbrances and
liabilities, all of the assets, tangible and intangible, real and personal,
used by Seller in connection with the operation of the Business (all of which
are referred to collectively herein as the "Assets") including, but not by
way of limitation:
(a) all rights to market, sell or promote the MCSE and CNE Courses
on behalf of Astron, Inc. as provided for in that certain
agreement dated June 4, 1997 between Seller and Astron, Inc.
(b) all intellectual property used in connection with the
operation of the Business;
(c) all supplier lists, promotional materials, literature, books
and records related to the Business; and
(d) all other intangible rights associated with the Business,
including, without limitation, all goodwill, approvals,
authorizations, contract rights, escrow accounts, agreements,
1
instruments, documents of title, general intangibles, options
and all other permits, approvals and certificates used,
obtained or held in connection with the Business.
1.2 EXCLUDED ASSETS. Notwithstanding the sale, transfer and
conveyance described in Section 1.1 above, the parties agree that Assets
shall not include and Buyer shall not, pursuant to this Agreement, acquire
any interest in (a) the name "Educational Systems, Inc." or any rights to use
such name or (b) any of the assets included in paragraphs 5.2 and 5.3 herein,
including the physical assets identified on EXHIBIT A attached hereto and
incorporated herein by this reference (the "EXCLUDED ASSETS").
1.3 NO ASSUMPTION OF LIABILITIES. Buyer shall not assume any of
the liabilities, obligations, duties or encumbrances of Seller generally or
in connection with Seller's operation of the Business; in particular, but
without limitation, Buyer shall not assume any liabilities, obligations,
duties or encumbrances under the Jamestown Lease. Seller agrees and covenants
that it shall remain liable for and shall satisfy in a timely manner all
liabilities, obligations, duties and agreements of Seller relating to or
arising in connection with the Business or the Assets based on events that
occur on or prior to the Closing Date.
II. PURCHASE PRICE: MANNER OF PAYMENT
2.1 PAYMENT OF PURCHASE PRICE. Subject to the terms and
conditions set forth in This Agreement, as consideration for Seller's
execution of this Agreement and performance of its obligations hereunder,
including, without [imitations, the sale of the Assets, Buyer agrees to pay
to Seller, in cash and shares of the Common Stock (the "Sento Common Stock")
of Sento Technical Innovations Corporation ("Sento") the purchase price
determined in accordance with the provisions of this Article II (the
"Purchase Price"). The actual amount of the Purchase Price shall be equal to
the greater of (a) Six Hundred Thousand Dollars ($600,000) or (b) an amount
equal to Ten Percent (10%) of the gross sales price actually received by
Buyer from the sale and delivery of live, in-person, instructor-led MCSE and
CNE Courses conducted in the United States (including all replacement or
successor Courses thereto), resulting from Buyer financed marketing efforts
and delivered after August 1, 1998 and continuing with respect to all Courses
for which Buyer initiates marketing activities on or prior to March 31, 2001,
and pursuant to which Courses are scheduled on or prior to June 30, 2001,
regardless of the timing of payment for such Courses (such period to be
referred hereinafter as the "PAYMENT PERIOD" net of any refunds, rebates,
discounts, axes and costs of collection (including attorneys' fees), up to a
maximum of One Million Five Hundred Thousand Dollars ($1,500,000).
2.2 INITIAL INSTALLMENT. Subsequent to Closing, Buyer shall pay
to Seller an initial installment of the Purchase Price in the amount of One
Hundred Thousand Dollars ($100,000). To facilitate Buyer's payment of such
initial installment, (a) at the Closing, Seller shall deliver to Buyer a
schedule of creditors, to be attached to this Agreement as Exhibit "C",
identifying each creditor and setting forth the amount of and basis for each
payment to be made by Seller and (b) subsequent to the Closing, Seller shall,
in good faith, proceed to pay such creditors. Seller agrees that for the
first 60 days after Closing, the funds provided in this section shall be used
solely for the purpose of payment to Seller's creditors. Any balance
remaining thereafter may be disbursed at the discretion of Seller.
2
2.3 INSTALLMENT PAYMENTS. In addition to Buyer's payment of
amounts required by Section 2.2 above, Buyer shall pay to Seller the
remainder of the Purchase Price in monthly and quarterly installments, the
timing and amounts of which shall be determined as follows.
(a) Buyer shall pay to Seller 33 equal cash payments in the amount
of $7,576 on the first day of each month, beginning August 1,
1998 (the Monthly Payment) and continuing to and including
April 1, 2001.
(b) Within thirty (30) days of the conclusion of each calendar
quarter during the Payment Period, Buyer shall deliver to
Seller, in cash and shares of Sento Common Stock a
reconciliation payment (the "Quarterly Payment") in an amount
equal to the difference between (i) the actual Purchase Price
payable by Buyer pursuant to Section 2.1 above with respect to
MCSE and CNE Course sales during the applicable quarter and
(ii) the aggregate amount of all Monthly Payments paid by
Buyer to Seller with respect to the applicable quarter. The
Quarterly Payment shall be paid in cash and shares of Sento
Common Stock in accordance with the following procedure:
First, Buyer shall cause Sento Technical Innovations
Corporation ("Sento") to issue to Seller shares of Sento
Common Stock having a value (determined pursuant to Section
2.4 below) equal to the amount of the Quarterly Payment, but
not in excess of the aggregate amount of all Monthly Payments
paid by Buyer with respect to the applicable quarter; Second,
if the amount of the Quarterly Payment exceeds the aggregate
amount of all Monthly Payments wfth respect to the applicable
quarter, the balance of the Quarterly Payment will be paid In
two equal portions, one portion of which will be paid in cash
and the other portion of which will be paid in shares of Sento
Common Stock having a value (determined pursuant t~ Section
2.4 below) equal to the cash portion.
(c) Buyer's obligation to deliver any shares of Sento Common Stock
pursuant to this Agreement shall be contingent upon Seller's
delivery at the Closing of the subscription agreement
described in Section 4.2(d) below, together with all other
certificates, documents and agreements required to conform
such issuance to the requirements of all applicable state and
federal securities laws, as determined by Sento. If, in
Sento's discretion, such documentation does not warrant the
issuance of stock, then such payments will be made in cash.
2.4 VALUE OF COMMON STOCK. For purposes of determining the
value of the shares of Sento Common Stock to be delivered to Seller pursuant
to Section 2.3 above, the value of each share of Sento Common Stock shall be
equal to the lesser of (a) the closing sale price for a share of Sento Common
Stock, as reported by the Nasdaq Stock Market, on the last trading day of the
applicable calendar quarter and (b) the following amounts, as applicable,
during the Payment Period (i) for quarterly periods occurring between the
Closing Date and March 31, 1999, Five Dollars ($5.00) per share; (ii) for
quarterly periods occurring between April I, 1999 and March 31, 2000, Seven
and 50/100 Dollars ($7.50) per share; and (iii) and for quarterly periods
occurring between April 1, 2000 and March 31, 2001, Ten Dollars ($10.00) per
share.
2.5 PRORATIONS. Subject to the other provisions of this
Agreement, including, without limitation, Section 1.3 above, the parties
agree to prorate as of the Closing Date any taxes, utilities, insurance
premiums and other charges relating to the Assets.
3
III. PRE-CLOSING RIGHTS AND OBLIGATIONS
3.1 OPPORTUNITY TO INVESTIGATE. Prior to the Closing Date,
Seller shall afford Buyer and its accountants, attorneys and other authorized
representatives free and full access during regular business hours to the
books, records, personnel and properties of Seller and the Business in order
that Buyer may have a full opportunity to make such investigation as it may
desire of the Business and all properties and affairs of Seller as they
relate to the Business.
3.2 CONDUCT OF BUSINESS. Prior to the Closing Date, Seller
shall conduct the Business only in the ordinary and usual course of business
consistent with past practices. No change shall be made in the policies and
practices of the Business without the prior written consent of Buyer in each
instance. Seller shall pay when due all amounts and obligations relating to
or arising in connection with the Business including, without limitation, all
lease payments, insurance premiums, taxes and accounts payable.
3.3 PROTECTION OF ASSETS. Prior to the Closing Date, Seller
shall take all actions reasonably necessary to protect its title to, and the
condition of, the Assets. Seller shall maintain in full force and effect all
existing insurance policies with respect to the Business and the Assets,
except to the extent that such insurance policies may be replaced with
policies providing equivalent or superior coverage and protection at the same
or lower rates with Buyer's prior written consent
3.4 CONFIDENTIALITY. Buyer and Seller shall maintain the
confidentiality of any non-public information of the other party exchanged
during the pendency of this Agreement. Neither party will make public
disclosure of the proposed transaction without the prior consent of the other
party, except as necessary for Sento to comply with its reporting obligations
as a public company.
IV. CLOSING
4.1 DATE AND PLACE OF CLOSING. The closing of the sale of the
Assets (the "Closing") shall be held at such time and location as Buyer and
Seller shall mutually agree on June 24, 1998, with effect on July 1, 1998 (the
"Closing Date"). At the Closing, title to all of the Assets, as outlined in
section one above, shall pass to Buyer.
4.2 SELLER'S CLOSING DELIVERIES. At the Closing, Seller shall:
(a) deliver to Buyer possession of the Assets, such that Buyer
shall be entitled to til enjoyment of the Assets;
(b) deliver to Buyer a schedule of creditors of the Business as
contemplated by Section 2.2 above;
(c) execute and deliver to Sento a subscription agreement relating
to the shares of Sento Common Stock to be transferred pursuant
to Section 2.3(b) above, in form and substance acceptable to
Sento in its discretion; and
4
(d) deliver to Buyer all other documents, agreements,
certificates, books and records relating to the Assets as
Buyer shall reasonably request.
4.3 BUYER'S CLOSING DELIVERIES. Subject to the terms,
conditions and provisions hereof, including, without limitation, Seller's
performance of each of its obligations set forth in Section 4.2 above, upon
the completion of the Closing. Buyer shall, at the times and in the amounts
set forth in Article U above, pay the Purchase Price, less any offset for
claims arising pursuant to Section 7.4 below.
V. POST-CLOSING RIGHTS AND OBLIGATIONS
5.1 TRANSITION PERIOD. During the period between the Closing
Date and August 1, 1998 (the "Transition Period"), Seller will continue
marketing Courses to be held prior to August 1, 1998, and will provide Buyer
oversight of marketing activities to verify that marketing of the Courses
continues at levels acceptable to Buyer. MCSE and CNE Course revenues (net of
any refunds, rebates, discounts, taxes and costs of collection) actually
received by Buyer or Seller as a result of Seller's marketing efforts
initiated prior to August 1, 1998 will be divided equally between Buyer and
Seller. Buyer will pay to Seller Ten Percent (10%) of all MCSE and CNB Course
revenues (net of any refunds, rebates, discounts, taxes and costs of
collection) actually received by Buyer as a result of Buyer's marketing
efforts initiated during the Transition Period for courses held after August
1, 1998, as defined in section 2.1 above. The parties shall apportion
expenses such as "cold calls," telephones, reception. etc., during, or prior
to, the Transition Period based on which party is responsible for initiating
the particular marketing efforts; i.e., costs expended by Seller to aid Buyer
in the marketing efforts for which it is responsible shall be refunded to
Seller. Further, during the Transition Period, the panics shall work together
to settle any outstanding accounts or other issues relative to Courses held
prior to August 1, 1998.
5.2 PHYSICAL ASSETS. Seller will retain ownership of Seller's
tangible assets located at the Jamestown Property, including Seller's
furniture, office equipment, telephone system and computer network.
Subsequent to the Closing, Seller shall permit Buyer to occupy the Jamestown
Property and use all such related assets during the remaining term of the
Jamestown Lease, after which Buyer shall vacate possession of the Jamestown
Property and return to Seller all assets of Seller located thereat. From
Closing through December 31, 1998, Buyer shall reimburse Seller, on a monthly
basis, an amount equal to the actual lease payment and utility expenses
incurred by Seller with respect to the Jamestown Property. Seller shall
maintain adequate insurance coverage of the Jamestown Property and shall
cause all insurance policies relating to the Jamestown Property to name Buyer
as an additional insured party.
5.3 CONTACT DATABASE. Seller shall retain ownership and use of
Seller's "Contact Database" but Seller shall allow Buyer the use of the
Contact Database to further its marketing efforts for the Courses during the
term of this Agreement and beyond. Seller will not use or allow the Contact
Database to be used for Competitive Business Purposes as described in 5.4(b)
below.
5.4 SELLER'S BUSINESS ACTIVITIES.
(a) Seller and each of the Principals acknowledges that (i) they
constitute a limited number of persons who have performed a
significant role in developing the Business: (ii) the Business
is conducted throughout the United States; (iii) their work in
connection with the development of the Business has given
them, and will continue to give them, trade secrets of and
confidential information concerning the Assets, the Business,
the Courses
5
and Buyer, (iv) the agreements and covenants contained in this
Section 5.4 are essential to protect the Assets and the
Business and the goodwill associated therewith; and (v) they
possess the means to support themselves and their dependents
other than by engaging in any Competitive Business (as defined
below) and the provisions of this Section 5.4 will not impair
such ability.
(b) Seller and each of the Principals covenants and agrees that
during the Payment Period he or it will not to engage in any
Competitive Business (as defined below) anywhere in the United
States. As used herein, the term "Competitive Business" means
the business of marketing, promoting, soiling, offering,
teaching and developing live, instructor-led Courses related
in any manner to MCSE or CNE training or certification.
(c) Seller and each of the Principals acknowledge and agree that
the covenants in this Section 5.4 are reasonable and valid in
geographical and temporal scope and in all other respects. If
any court determines that any of the covenants in this Section
5.4, or any part thereof, is invalid or unenforceable, the
remainder of such covenants shall not thereby be affected and
shall be given full effect, without regard to the invalid
portions. Without limiting the generality of the foregoing,
if, court determines that the geographic scope of the
covenants in this Section 5.4 is unreasonable, then such scope
shall be reduced to the geographic area where Buyer (including
its affiliates) are engaged in the Business or such other
geographic area as the court shall determine to be reasonable
in light of the factors acknowledged by Seller and the
Principals in Section 5.4(a) above.
(d) Buyer and Seller agree that during the Payment Period Seller
may continue to market and promote training courses that do
not constitute a "Competitive Business" and may continue to
use the name "Educational Systems, Inc."
5.5 ASTRON AGREEMENT. The parties agree that, upon the
execution of this Agreement, that the certain Agreement, dared as of June 4,
1997, by and between Astron Incorporated and Seller (the "Astron Agreement"),
together with any subsequent agreements or addenda related in any manner
thereto, shall be terminated with effect from August 1, 1998, but its
previsions shall apply to courses marketed by Seller prior to August 1, 1998.
VI. REPRESENTATIONS AND WARRANTIES
6.1 REPRESENTATIONS AND WARRANTIES OF SELLER AND THE
PRINCIPALS. For the purpose of inducing Buyer to enter into this Agreement
and with the knowledge that Buyer will rely upon the following
representations and warranties. Seller and each of the Principals represents
and warrants to Buyer as follows:
(a) AUTHORITY. Seller and the Principals possess all requisite
power and authority to enter into this Agreement and to
perform all of their respective obligations under this
Agreement. Seller is not a party to, subject to, or bound
by, and no part of the Assets are subject to any mortgage,
deed of trust, loan agreement security agreement, lien, or
other agreement or instrument of any kind, or any judgment,
order, writ, injunction or decree of any court or
governmental body, that will prohibit, prevent, or affect
(i) the carrying
6
out of the transactions contemplated by this Agreement, or
the performance by Seller of any of its obligations
hereunder; or (ii) the use by Buyer of any part of the
Assets.
(b) COMPLIANCE WITH LAW. The operations of Seller with respect
to the Business and the Assets have not violated, do not
currently violate, and will not, as of the Closing Date,
violate any federal, state, or local laws. Seller possesses
all licenses, permits, certificates, orders, approvals and
authority from federal, state or local governmental
agencies which are necessary to conduct and continue to
conduct the Business as presently constituted; and no
suspension or cancellation of any such licenses, permits,
certificates, orders, approvals or authority is threatened.
(c) LITIGATION. There is no litigation. action, proceeding or
investigation pending or threatened before any court,
administrative agency or other governmental body or arbiter
by, against, affecting or involving Seller which involves
or affects the Business or any part of the Assets which
would (i) affect in any way the ability of Seller to catty
out the transactions contemplated by this Agreement or (ii)
affect or threaten in any manner whatsoever Buyers
ownership, use or possession of the Assets after the
Closing Date.
(d) ASSETS AND TITLE. Seller holds good and marketable title to
all of the Assets. Neither Seller nor any Principal or any
other person has sold, assigned, granted or transferred to
any person, firm or entity any interest in the Assets, the
Business, or any part thereof. Seller is authorized and
possesses the right to sell, assign, transfer and convey
the Assets to Buyer and to permit Buyer to occupy the
Jamestown Property during the remaining term of the
Jamestown Lease; and Seller's sole and undivided interest
in and to the Assets is assignable and transferable. Upon
the consummation of the transactions described in this
Agreement, Buyer will acquire good and marketable title to
all of the Assets, free and clear of any lien, claim,
encumbrance, pledge or security interest of any nature
whatsoever.
6.2 REPRESENTATIONS AND WARRANTIES OF BUYER. For the purpose of
inducing Seller to enter into this Agreement and with the knowledge that Seller
and the Principals will rely upon the following representations and warranties,
Buyer represents and warrants to Seller and each of the Principals as follows:
(a) AUTHORITY. Buyer possess all requisite power and authority to
enter into this Agreement and to perform all of its respective
obligations under this Agreement and Buyer and Sento warrants
that Buyer is authorized to enter into this Agreement and that
payments in cash and stock will be paid as provided for
herein. Sento further warrants that its wholly-owned
subsidiary, Astron, Inc., consents to the transfer of Seller's
rights to Buyer hereunder.
(b) COMPLIANCE WITH LAW. The operations of Buyer with respect to
the purchase of the Business and the Assets will not violate,
as of the Closing Date, any federal, state, or local laws.
(c) LITIGATION. There is no litigation, action, proceeding or
investigation pending Or threatened before any court,
administrative agency or other governmental body or arbiter
7
by. against affecting or involving Buyer which would in any
way impair its ability to complete all terms and conditions of
this Agreement.
6.3 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. Notwithstanding
any investigation made at any time by or on behalf of any of the parties, all
of the covenants, representations, warranties, indemnifications, agreements
and undertakings set forth in this Agreement, and in the separate instruments
delivered hereunder, shall survive the Closing.
VII. ADDITIONAL OBLIGATIONS
7.1 FURTHER ASSURANCES. From time to time after the Closing,
each party to this Agreement at the request of the other party and without
further consideration, shall execute and deliver or use its best efforts to
cause to be executed and delivered such other consents, releases, assumptions
and other instruments as the requesting party may reasonably deem necessary
or desirable (a) to vest, perfect, or confirm, on record or otherwise, in the
requesting party the title to any assets, properties, or rights acquired or
to be acquired by the requesting party by reason of, or as a result of, the
transactions provided for in this Agreement or (b) to put the requesting
party in possession of any of such assets, property, or rights. In the case
of any assets, properties, or rights, if any, which cannot be transferred
effectively without the consent of a third party or governmental agency,
Seller and the Principals shall, in good FAITH, cooperate in obtaining such
consent promptly; and if any such consent shall not be obtainable, Seller and
the Principals shall use best efforts to provide Buyer with the benefits
thereof in some other manner.
7.2 TAXES ARID EXPENSES. All sales, use and transfer taxes
payable with respect to the sate and transfer of the Assets shall be paid by
Seller. Buyer, Seller and the Principals shall pay their own fees and
expenses incurred in the preparation and execution OF, and performance
pursuant to, this Agreement.
7.3 EMPLOYEES. Seller, Buyer and the Principals acknowledge and
agree that Buyer shall have no obligation to employ after the Closing Date
any current employee of the Business, and that Buyer shall retain all
discretion with respect to its employment of any current employee of the
Business who are principally employed or involved in the marketing of MCSE or
CNE Courses in connection wit the purchase of the Assets and the operation of
the Business after the Closing Date. In connection therewith:
(a) Seller shall pay all obligations and retain all liability for
amounts owing to employees of the Business which are incurred
during any period prior to the Closing Date or attributable
thereto, except as provided for in section 5.1 above.
(b) Seller shall provide promptly to all employees employed in the
Business all tax and employment forms and information required
to be provided to such employees by Seller under applicable
law. To the extent Buyer has control of any of this
information, either due to its use of Seller's computers and
equipment or due to Buyer employing the employees of the
Business with accounting or tax knowledge. Buyer agrees to
cooperate in providing the necessary information to Seller.
Buyer also agrees to cooperate in
8
providing any other information Seller may need for its own
accounting or tax purposes where the information or knowledge
is held by the computers, equipment or employees Buyer has
hired from the Business.
(c) Seller represents that as of the date of this Agreement all
employees of the Business are, and covenants that as of the
Closing Date all employees of the Business shall be, employees
at will.
7.4 INDEMNIFICATION. Seller shall indemnify and hold harmless
Buyer from and against any and all liabilities, claims, obligations, demands,
damages, costs, fees and expenses incurred by Buyer as a result of, arising
out of, or otherwise in respect of (i) the ownership of the Assets or the
operation of the Business on or prior to the Closing Date; (ii) any
inaccuracy in, or breach of, any representation. warranty, covenant or
agreement of Seller set forth in this Agreement; (iii) the application or any
violation of, or failure to comply with, any bulk sales statute; and (iv) any
and all actions, suits, proceedings, claims, liabilities, demands,
assessments and judgments incident to any of the foregoing or such
indemnification. It is the intention of the panics that this indemnity does
not require payment as a condition precedent to recovery by Buyer against
Seller under this indemnity and that, in the event a valid claim against
Seller may be legally asserted against Buyer, then, pursuant to this Section
7.4, Buyer may withhold and offset the reasonable amount of any such claim
against amounts otherwise payable by Buyer to Seller pursuant to this
Agreement. The provisions of this Section 7.4 shall not limit or preclude in
any manner the right of Buyer to seek and obtain indemnification from Seller
pursuant to any other agreement or applicable law.
7.5 ASSIGNABILITY. Buyer agrees to promptly notify Seller of
any assignment of this Agreement or any of its rights hereunder. Buyer
acknowledges that no assignment will have any adverse impact on Seller or the
contractual rights and obligations entered into in this Agreement.
7.6 ACCOUNTING AND RECORDS. Buyer agrees, in accordance with
the payment of Purchase Price described in paragraph 2.1 above, that Seller
shall, upon reasonable notice, be allowed access to Buyer's or its assignees
accounting and records in order to verify the calculations used to determine
the Purchase Price payment.
VIII. GENERAL PROVISIONS
8.1 GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of Utah, without reference
to choice of law rules.
8.2 WAIVER AND MODIFICATION. This Agreement may not be amended,
superseded or canceled, and none of the terms and conditions hereof may be
waived except by a written instrument executed by each party hereto: or, in
the case of a waiver, by the party waiving compliance.
8.3 ENTIRE AGREEMENT. This Agreement, together with the
exhibits attached hereto, contains the entire agreement between the parties
(including any affiliates of the parties) with respect to the subject matter
hereof and supersedes all prior understandings and agreements between Buyer,
Seller and the Principals, including, without limitation, the Astron
Agreement., as delineated in paragraph 5.5 above.
9
8.4 CAPTIONS. The respective captions of the sections and
paragraphs of this Agreement are inserted for convenience only and shall not
be deemed to modify or otherwise affect this Agreement
8.5 ATTORNEYS FEES. If any legal action or other proceeding is
brought for enforcement of this Agreement because of an alleged dispute,
breach, default or misrepresentation in connection with any of the provisions
of this Agreement, the successful or prevailing party shall be entitled to
recover reasonable attorneys fees and costs incurred, in addition to any
other relief to which it may be entitled.
8.6 NOTICES. All notices and other communications required
hereunder shall be in writing and shall be deemed given and effective when
delivered personally or by overnight courier or deposited in the United
States Mail, registered or certified mail (return receipt requested), postage
prepaid, to the parties at the addresses set forth in the introductory
paragraph above (or at such other address as shall be specified by like
notice, provided that notices of a change of address shall be effective only
upon receipt thereof).
IN WITNESS WHEREOF, this Agreement was executed by the parties as of
the day and year first written above.
"SELLER"
EDUCATIONAL SYSTEMS, INC.,
a Utah corporation
By: /s/ Xxxxx X. Xxxxxx
--------------------------------
Its: President
"PRINCIPALS"
/s/ Xxxxxxx X Xxxxx
-----------------------------------
Xxxxxxx X. Xxxxx
/s/ Xxxxx X Xxxxxx
-----------------------------------
Xxxxx X. Xxxxxx
10
"BUYER"
SENTO TRAINING CORPORATION,
a Utah corporation
By: /s/ Xxxx Xxxxxx
--------------------------------
Its: EVP
SENTO TECHNICAL INNOVATIONS
CORPORATION, a Utah Corporation
By:
Its:
11
Exhibit A
EXCLUDED ASSETS
Desks 7
Credenza 1
File Cabinets 4
Conference Chairs 10
Desk Chairs 15
Cubicles 10
Tables 4
Computers 13
Printers 3
Fax Machines 2
Copy Machine 1
Win Telephone System 1
Telephones 14
White Boards 5
Storage Cabinet-S 1
Shelving Units 3
Refrigerator 1
Microwave 1
Toaster 1
Clocks 2
Pictures 5
Other Miscellaneous Office Equipment
EXHIBIT "B"
TO
ASSET PURCHASE AGREEMENT DATED JUNE 24, 1998
PAYMENT SCHEDULE
Section 1:
MCSE and CNE Course revenues resulting from Seller's marketing
efforts initiated prior to August 1, 1998 Period will be divided as follows:
A. 50% to Buyer.
B. 50% to Seller.
Section 2:
MCSE and CNE Course revenues resulting from Buyer's marketing efforts
initiated during the Transition Period, with respect to courses held after
August 1, 1998, will be divided as follows:
A. 90% to Buyer.
B. 10% to Seller.
13
Exhibit C
ESI Accounts Payable
Maasai, Inc $ 26,926.63
Xxxxx Response 21,343.59
Accumail Services, Inc 15,841.42
American Name Services 15,546.61 (18,119.21)*
American Mail Well 9,050.41
TelAmerica 6,313.85
Sylvan Prornetric 4,950.00
SOS Staffing Services 2,612.95
Xxxxxx Xxxxxx 1,135.00
Xxx Xxxxxxxx 900.96
Federal Express 767.95
System Technology, Inc 478.19
Multi Media Marketing 399.00
Viking 349.52
Jamestown Square 198.20
Lock Box 156.80
Pitney Xxxxx 145.11
Mount Olympus Water 138.86
Laser Supply of Utah, Inc 104.13
Access Computer Products 52.06
Bidnet 27.12
Personnel Concepts Limited 9.95
-----------
Total $107,498.37
The above represents amounts owing to third party vendors for which services
have been received. The amounts and total will vary as payments are made and
new services received in the day-to-day course of business. The above does
not include Sento/ESI reconciliations and accounts which are still open.
* The difference represents an item for which we are not responsible.
STOCK ISSUANCE AGREEMENT
THIS STOCK ISSUANCE AGREEMENT (the "Agreement") is made and entered
into this 24th day of June, 1998 by and among EDUCATIONAL SYSTEMS, INC., a
Utah corporation (ES!), SENTO TECHNICAL INNOVATIONS CORPORATION, a Utah
corporation ("Sento"), and XXXXXXXX. XXXXX, an individual, and XXXXX (3. XXXXXX,
an individual (collectively, the "Principals").
RECITALS:
WHEREAS, pursuant to the terms of an Asset Purchase Agreement,
dated June __, 1998, by and between ES!, Sento Training Corporation, a Utah
corporation which is a wholly-owned subsidiary of Sento ("Sento Training"),
and the Principals (the "Purchase Agreement"), Sento Training has agreed to
purchase from ES!, and ES! has agreed to sell to Sento Training,
substantially all of the assets of ES!; and
WHEREAS, in partial consideration for ESI's performance of its
obligations under the Purchase Agreement, Sento has agreed to issue and
deliver to EM certain shares (the "Shares") of the Sento Common Stock, $25
par value (the "Common Stock"), at the times and in the manner set forth in
the Purchase Agreement, including, without limitation, the provisions of
Section 2.3 (b) of the Purchase Agreement; and
WHEREAS, the obligation of Sento to issue and deliver the Shares to
ESI is expressly contingent upon ESI's delivery of all representations,
warranties and documents requested by Sento in order to accomplish such
issuance and delivery; and
WHEREAS, subject to the terms and conditions of the Purchase
Agreement, this Agreement sets forth certain terms and conditions upon which
Sento is willing to issue and deliver the Shares to ESI.
AGREEMENT:
NOW, THEREFORE, upon these premises and in consideration of the
mutual obligations set forth herein and in the Purchase Agreement and for
other good and valuable consideration, the receipt and adequacy of which are
hereby acknowledged, the parties hereto agree as follows:
1. ISSUANCE OF SHARES. Upon the terms and subject to the conditions
set forth in the Purchase Agreement, Sento shall, at the times and in the
manner set forth in the Purchase Agreement, issue and deliver to ES! a
presently indeterminate number of newly issued shares of Common Stock, the
number of which shall be calculated in the manner set forth in the Purchase
Agreement.
2. ACKNOWLEDGEMENTS. As an inducement to Sento to enter into this
Agreement and to issue and deliver the Shares acid with the knowledge that
Sento and Sento Training will rely upon each of the following acknowledgments
and agreements, ESI and each of the Principals hereby acknowledges and agrees
that:
2.1 Sento has previously made available for inspection by ESI and
the Principals financial statements and other financial,
corporate and business information and records with respect
to Sento.
2.2 The Shares have not been registered under the Securities Act
of 1933, as amended (the "Securities Act"), or any state
securities or 'blue sky' laws, and al-c being issued to ES!
pursuant to
1
exemptions from the registration requirements of the
Securities Act and applicable state securities and blue sky
laws, and:
(i) the Shares may not be resold, pledged,
transferred. hypothecated or otherwise disposed of unless the
Shares are subsequently registered under the Securities Act and
relevant state securities and blue sky laws or unless Sento
receives an opinion of ESI's counsel In a form acceptable to Sento
and its legal counsel that with respect to the Shares registration
is not required under the Securities Actor under the securities or
blue sky laws of any state;
(ii) a notation will be made upon the appropriate
records of Sento andante certificate or certificates representing
the Shares so that transfers of the Shares will not be effected
without compliance with such restrictions on transferability and
resale and reflecting the terms and conditions of this Agreement
and the Purchase Agreement;
(iii) the Securities and Exchange Commission (the
"Commission") has taken the position that persons who offer or
sell restricted securities such as the Shares are on notice that,
in view of the broad remedial purposes of the Securities Act and
of public policy which supports registration, they will have a
substantial burden of proof in establishing that an exemption from
registration is available for such offers or sales and, in
connection with resales, the Commission has stated that the
"change in circumstances" concept which previously applied in
determining whether such resales were exempt from registration,
will no longer be considered on that issue;
(iv) ESI may have to bear the economic risk of any
investment related to the Shares for an indefinite period of time;
and
(v) no representation, promise or agreement has
been made concerning the marketability or value of the Shares or
that any of the Shares will be registered under the Securities
Actor any state securities or blue sky laws at any time in the
future or will otherwise be qualified for sale under applicable
securities laws.
2.3 Any investment in the Common Stock is highly speculative
and subject to substantial risks, including, without limitation, the risks
identified in Sento's filings with the Commission, which filings Sento has
encouraged ESI and the Principals to review in detail and ESI and the
Principals have had a reasonable opportunity to review.
2.4 No representation, warranty, promise or agreement has been
made to ESI with respect to any of the following:
(i) the approximate or exact length of time ESI will be
required to remain as owner of the Shares;
(ii) the percentage of profit and/or the amount or type of
consideration (including dividends), profit or loss (including tax
benefits) to be realized, if any, as a result of ESI's ownership of the
Shares; and/or
(iii) that the past performance or experience of Sento will
in anyway indicate the results of fixture operations of Sento, the
results of the ownership of the Shares, or the likelihood of
achievement of the overall objectives of Sento.
2
3. REPRESENTATIONS AND WARRANTIES. To induce Sento to enter
into this Agreement, to induce Sento Training to enter into the Purchase
Agreement, and with the knowledge that each of Sento and Sento Training will
relay upon each of the following representations and warranties, ES! and each
of the Principals hereby represents and warrants that:
3.1 ESI is able to bear the substantial economic risks of an
investment in the Common Stock, including, but not limited to, the
possibility of the complete loss of the ESI's investment in the Shares, the
lack of a public market, and the limited transferability of the Shares which
may make the liquidation of this investment impossible for the indefinite
ffiture. ES! has no need for liquidity in such investment, and could afford a
complete loss of such investment.
3.2 ESI and the Principals have such knowledge and experience
in financial and business matters that ESI and the Principals are capable of
evaluating the merits and risks of the investment in the Common Stock and of
protecting their own interests.
3.3 The Shares will be acquired for ESI's own account for
investment and not wit a view toward resale or distribution thereof, and ESI
does not now have any reason to anticipate any change in ESI's circumstances
or other particular occasion or event which would cause ESI to sell any of
the Shares or any interest therein.
3.4 ESI and the Principals have received and reviewed all
business, corporate and financial documents and records concerning Sento that
ESI and the Principals desire to receive and review.
3.5 ESI and the Principals have been given an opportunity to
discuss the history, business, corporate matters and prospects of Sento and
the management thereof with the officers and directors of Sento. ESI and the
Principals are fully informed with respect to the merits and risks associated
with the Shares and with the history, management business, prospects and
corporate matters of Sento.
3.6 All representations and warranties set forth above or in
any other written statement or document delivered by ESI or the Principals in
connection with the transactions contemplated hereby are true and correct in
all respects as of the date hereof and will be true and correct in all
respects on and as of the date of each issuance and delivery of the Shares as
contemplated by the Purchase Agreement as if made on and as of such date and
will survive each issuance and delivery of the Shares.
3.7 ESI and the Principals understand the meaning and legal
consequences of the representations and warranties contained in this
Agreement and agree, jointly and severally, to indemnify and hold harmless
Sento and Sento Training and their respective directors, officers and agents
from and against any and all losses, damages and liabilities due to or
arising out of a breach of or the inaccuracy of any representation or
warranty of ES! of the Principals in this Agreement. Notwithstanding any of
the representations, warranties, acknowledgments or agreements made herein by
ES! or the Principals, ES! and the Principals do not hereby or in any other
manner waive any right granted to ES! or the Principals under federal or
state securities laws.
4. CAPTIONS. The captions used herein are for convenience
only and shall not be deemed a part of this Agreement and in no way define,
limit, augment, extend or describe the scope, content or intent of any part
or parts of this Agreement.
3
5. GOVERNING LAW. This Agreement shall be construed in
accordance with, and governed by the substantive laws of, the State of Utah,
without reference to principles governing choice or conflicts of laws.
6. ASSIGNMENTS. This Agreement shall be binding upon and
shall inure to the benefit of the parties hereto and their respective legal
representatives, successors, agents, heirs and assigns. Neither this
Agreement nor any obligations hereunder shall be assigned by ESI.
7. ENTIRE AGREEMENT. This Agreement, together with the
Purchase Agreement and any exhibits and schedules attached hereto or thereto,
constitute the entire agreement between the parties hereto with respect to
the subject matter contained herein, and there are no covenants, terms or
conditions, express or implied, other than as set forth or referred to
herein. This Agreement and the Purchase Agreement supersede all prior
agreements between the parties hereto relating to all or part of the subject
matter herein. No representations, oral or written, modifying or
contradicting the terms of this Agreement have been made by any party except
as contained herein. This Agreement may not be amended, modified or canceled
except by written agreement of the parties signed by the party against whom
enforcement is sought.
4
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the
date first set forth above.
"ESI"
EDUCATIONAL SYSTEMS, INC.
a Utah corporation
By: /s/ Xxxxx X. Xxxxxx
--------------------------------
Its: President
"SENTO"
SENTO TECHNICAL INNOVATIONS CORPORATION,
a Utah corporation
By: /s/ Xxxxxx K Bench
--------------------------------
Its: Vice President/CFO
"PRINCIPLES"
/s/ Xxxxxxx X. Xxxxx
-----------------------------------
Xxxxxxx X. Xxxxx, an individual
/s/ Xxxxx X. Xxxxxx
-----------------------------------
Xxxxx X. Xxxxxx, an individual
5
Execution Copy
RESTRICTED STOCK TRANSFER AGREEMENT
THIS RESTRICTED STOCK TRANSFER AGREEMENT (the "Agreement") is made
and entered into this 18th day of November, 1998 by and among SENTO
CORPORATION, a Utah corporation ("Sento"), and XXXXX XXXXXX, an individual,
and XXXXX X. XXXXX, an individual (collectively, the "Principals").
RECITALS:
WHEREAS, pursuant to the terms of an Asset Purchase Agreement, dated
June 24, 1998, by and between Educational Systems. Inc., a Utah corporation
("ESI"), Sento Training Corporation, a Utah corporation which is a
wholly-owned subsidiary of Sento ("Sento Training"), among other parties (the
"Purchase Agreement"), Sento Training purchased from ESI, and ESI sold to
Sento Training, substantially all of the assets of ESI; and
WHEREAS, in partial consideration for ESI's performance of its
obligations under the Purchase Agreement, Sento issued and delivered to ESI
certain shares of Sento Common Stock, $.25 par value (the "Common Stock"),
and agreed to issue to ESI certain additional shares of Common Stock at the
times and in the manner set forth in the Purchase Agreement, including,
without limitation, the provisions of Section 2.3(b) of the Purchase
Agreement; and
WHEREAS, ESI and the Principals have requested that Sento give its
consent to a proposed transfer by EM to the Principals of all of the shares
of Common Stock acquired or proposed to be acquired by ESI pursuant to the
terms of the Purchase Agreement (collectively, the "Shares"); and
WHEREAS, subject to the terms and conditions of the Purchase
Agreement, this Agreement sets forth certain terms and conditions upon which
Sento is willing to consent to the proposed transfer of the Shares from ESI
to the Principals.
AGREEMENT:
NOW, THEREFORE, upon these premises and in consideration of the
mutual obligations set forth herein and in the Purchase Agreement and for
other good and valuable consideration, the receipt and adequacy of which are
hereby acknowledged, the parties hereto agree as follows:
1. CONSENT TO TRANSFER OF SHARES. Upon the terms and subject
to the conditions set forth in the Purchase Agreement and this Agreement,
Sento hereby consents to the proposed transfer of the Shares from ESI to the
Principals.
1
Execution Copy
2. ACKNOWLEDGMENTS. As an inducement to Sento to enter into
this Agreement and to consent to the transfer of the Shares from ESI to the
Principals and, with the knowledge that Sento will rely upon each of the
following acknowledgments and agreements, each of the Principals hereby
acknowledges and agrees that:
2.1 Sento has previously made available for inspection by the
Principals financial statements and other financial, corporate and business
information and records with respect to Sento.
2.2 The Shares have not been registered under the Securities
Act of 1933, as amended (the "Securities Act"), or any state securities or
"blue sky" laws, and have been and will be issued to ESI pursuant to
exemptions from the registration requirements of the Securities Act and
applicable state securities and blue sky laws, and:
(i) the Shares may not be resold, pledged, transferred,
hypothecated or otherwise disposed of unless the Shares are
subsequently registered under the Securities Act and relevant state
securities and blue sky laws or unless Sento receives an opinion of
counsel to the Principals in a form acceptable to Sento and its legal
counsel that with respect to the Shares registration is not required
under the Securities Act or under the securities or blue sky laws of
any state;
(ii) a notation will be made upon the appropriate records
of Sento and on the certificate or certificates representing the Shares
so that transfers of the Shares will not be effected without compliance
with such restrictions on transferability and resale and reflecting the
terms and conditions of this Agreement and the Purchase Agreement;
(iii) the Securities and Exchange Commission (the
"Commission") has taken the position that persons who offer or sell
restricted securities such as the Shares are on notice that, in view of
the broad remedial purposes of the Securities Act and of public policy
which supports registration, they will have a substantial burden of
proof in establishing that an exemption from registration is available
for such offers or sales and, in connection with resales, the
Commission has stated that the "change in circumstances" concept, which
previously applied in determining whether such resales were exempt from
registration, will no longer be considered on that issue;
(iv) the Principals may have to bear the economic risk of
any investment related to the Shares for an indefinite period of time;
and
(v) no representation, promise or agreement has been made
concerning the marketability or value of the Shares or that any of the
Shares will be registered under the Securities Act or any state
securities or blue sky laws at any time in the future or will otherwise
be qualified for sale under applicable securities laws.
2.3 Any investment in the Common Stock is highly speculative
and subject to substantial risks, including, without limitation, the risks
identified in Sento's filings with the Commission, which filings Sento has
encouraged the Principals to review in detail and the Principals have had a
reasonable opportunity to review.
2
Execution Copy
2.4 No representation, warranty, promise or agreement has been
made to the Principals with respect to any of the following:
(i) the approximate or exact length of time the
Principals will be required to remain as owners of the Shares;
(ii) the percentage of profit and/or the amount or type of
consideration (including dividends), profit or loss (including tax
benefits) to be realized, if any, as a result of the ownership of the
Shares by the Principals; and/or
(iii) that the past performance or experience of Sento will
in any way indicate the results of future operations of Sento, the
results of the ownership of the Shares, or the likelihood of
achievement of the overall objectives of Sento.
3. REPRESENTATIONS AND WARRANTIES. To induce Sento to enter
into this Agreement and with the knowledge that Sento will relay upon each of
the following representations and warranties, each of the Principals hereby
represents and warrants that:
3.1 each of the Principals is able to bear the substantial
economic risks of an investment in the Shares, including, but not limited to,
the possibility of the complete loss of the investment of the Principals in
the Shares, the lack of a public market, and the limited transferability of
the Shares which may make the liquidation of this investment impossible for
the indefinite future. The Principals have no need for liquidity in such
investment, and could afford a complete loss of such investment.
3.2 The Principals have such knowledge and experience in
financial and business matters that the Principals are capable of evaluating
the merits and risks of the investment in the Common Stock and of protecting
their own interests.
3.3 The Shares will be acquired for the Principals' own account
for investment and not with a view toward resale or distribution thereof, and
the Principals do not now have any reason to anticipate any change in their
circumstances or other particular occasion or event which would cause the
Principals to sell any of the Shares or any interest therein.
3.4 The Principals have received and reviewed all business,
corporate and financial documents and records concerning Sento that the
Principals desire to receive and review.
3.5 The Principals have been given an opportunity to discuss
the history, business, corporate matters and prospects of Sento and the
management thereof with the officers and directors of Sento. The Principals
are fully informed with respect to the merits and risks associated with the
Shares and with the history, management, business, prospects and corporate
matters of Sento.
3.6 All representations and warranties set forth above or in
any other written statement or document delivered by ESI or the Principals in
connection with the transactions contemplated hereby or by the Purchase
Agreement are true and correct in all respects as of the date hereof and will
be true and correct in all respects on and as of the date of each issuance
and delivery of the Shares as contemplated by
3
Execution Copy
the Purchase Agreement as if made on and as of such date and will survive
each issuance and delivery of the Shares.
3.7 The Principals understand the meaning and legal
consequences of the representations and warranties contained in this
Agreement and agree, jointly and severally, to indemnify and hold harmless
Sento and Sento Training and their respective directors, officers and agents
from and against any and all losses, damages and liabilities due to or
arising out of a breach of or the inaccuracy of any representation or
warranty of the Principals in this Agreement. Notwithstanding any of the
representations, warranties, acknowledgments or agreements made herein by the
Principals, the Principals do not hereby or in any other manner waive any
right granted to the Principals under federal or state securities laws.
4. CAPTIONS. The captions used herein are for convenience only
and shall not be deemed a part of this Agreement and in no way define, limit,
augment, extend or describe the scope, content or intent of any pan or parts
of this Agreement.
5. GOVERNING LAW. This Agreement shall be construed in
accordance with, and governed by the substantive laws of, the State of Utah,
without reference to principles governing choice or conflicts of laws.
6. ASSIGNMENTS. This Agreement shall be binding upon and shall
inure to the benefit of the parties hereto and their respective legal
representatives, successors, agents, heirs and assigns. Neither this
Agreement nor any obligations hereunder shall be assigned by the Principals.
7. ENTIRE AGREEMENT. This Agreement, together with the
Purchase Agreement (including any exhibits and schedules attached thereto)
and any other documents or instrument executed in connection therewith
including, without limitation, a Stock Issuance Agreement dated June 24,
1998, constitute the entire agreement between the parties hereto with respect
to the subject matter contained herein, and there are no covenants, terms or
conditions, express or implied, other than as set forth or referred to
herein. This Agreement, the Purchase Agreement and the Stock Issuance
Agreement described above supersede all prior agreements between the parties
hereto relating to all or part of the subject mailer herein. No
representations, oral or written, modifying or contradicting the tem~s of
this Agreement have been made by any party except as contained herein. This
Agreement may not be amended, modified or canceled except by written
agreement of the parties signed by the party against whom enforcement is
sought.
4
Execution Copy
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
on the date first set forth above.
"SENTO"
SENTO TECHNICAL INNOVATIONS CORPORATION,
a Utah corporation
By: /s/ Xxxxxx X. Bench
--------------------------------
Its: Vice President/CFO
"PRINCIPALS"
/s/ Xxxxx X. Xxxxx
-----------------------------------
Xxxxx X. Xxxxx, an individual
/s/ Xxxxx Xxxxxx
-----------------------------------
Xxxx Xxxxxx, an individual
