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EXHIBIT 99.1
ASSET PURCHASE AGREEMENT
This asset purchase agreement (this "Agreement") is dated March
14, 2005
and is between VIVID LEARNING SYSTEMS, Inc., a Delaware
corporation ("Vivid"),
and TRUEACTIVE SOFTWARE, Inc., a Washington corporation
("TrueActive").
WHEREAS, the respective Boards of Directors and/or Executive
Management
Committees of Vivid and TrueActive have determined that the
purchase of the
assets of TrueActive by Vivid pursuant to the terms and
conditions of this
Agreement is advisable, fair, and in the best interests of both
Vivid and
TrueActive and their respective shareholders;
NOW, THEREFORE, in consideration of the representations,
warranties,
covenants, and agreements contained herein and other valuable
consideration, the
receipt and sufficiency of which are hereby acknowledged, the
parties, intending
to be legally bound, agree as follows:
ARTICLE I
THE PURCHASE
Section 1.1 The Purchase. This Agreement pertains to the
purchase of
specific assets of TrueActive; it does not constitute a purchase
of the
TrueActive corporate entity nor of the shares of TrueActive.
Upon the terms and
subject to the conditions of this Agreement, at the "Effective
Time" as defined
in Section 1.2, Vivid shall have lawful, valid, and indefeasible
title to all of
the assets of TrueActive delineated in Exhibit A, as well as
full rights to the
names "WinWhatWhere", "TrueActive", and all derivatives
thereof.
Within forty-five (45) days from the date of Closing, the
original
owner/shareholders of TrueActive shall provide evidence to
Vivid's General
Counsel that they are conducting business under a new name. The
purpose of the
new entity will be to receive any amortized purchase payments,
such as royalty
and note payments, owed by Vivid to TrueActive. In recognition
of this, the
parties agree that payables and receivables shall be posted
through the closing
date. Vivid shall be responsible for collecting the Interactive,
Inc.
receivable. All other receivables shall remain payable to
TrueActive. Vivid
shall not be responsible for satisfying any payables, except
Vivid shall assume
responsibility for future Internet services (hosting and access)
required to
support the sales of TrueActive/Vivid products.
Section 1.2 Effective Time of the Purchase. The Purchase shall
become
effective upon the time of closing.
Section 1.3 Closing. The closing of the transactions
contemplated by this
Agreement shall take place March 14, 2005 at 1:30 p.m. local
time, at the
corporate offices of Vivid located at 723 The Parkway, Richland,
Washington. At
that time, Vivid shall deliver all funds and documents required
by this
Agreement and TrueActive shall deliver a bill of sale for the
assets.
ARTICLE II
CONSIDERATION
Section 2.1 Consideration. In exchange for the assets sold by
True Active
to Vivid and for certain promises as noted in Section 2.2, Vivid
shall issue to
TrueActive:
a) A check in the amount of One Hundred Twenty Thousand
Dollars
($120,000.00).
b) A one (1) year promissory note with principal due and owing
of One
Hundred Twenty Thousand Dollars ($120,000.00), payable in
monthly
installments on the first day of each month, beginning May
1st,
2005.
c) Vivid warrants, carrying a four (4) year expiration date from
date
of issue, representing a total of Eighty Thousand (80,000)
shares of
Vivid Common Stock with an exercise price of One Dollar ($1.00)
per
share and a two (2) year vesting schedule, wherein one-eighth
(1/8)
shall vest at the end of each quarter. Said warrants shall
be
distributed as follows: Thirty-nine Thousand One Hundred
Eleven
(39,111) to Richard E. Eaton; Forty Thousand Seven Hundred
Eight
(40,708) to M. Susan Mikels; and One Hundred Eighty-one (181)
to
Theresa Sullivan-Seidl. Such shares as may be issued pursuant
to
such exercise will, upon issuance, be duly and validly issued,
fully
paid and nonassessable and free from all taxes, liens and
charges
with respect to the issuance thereof.
d) An employment agreement with Richard E. Eaton to include
terms as
delineated in the form of Exhibit B.
e) A royalty of eight percent (8%) - based on "net sale
amount,"
defined as gross sale amount less credit card fees, shipping
and
handling, applicable taxes, returns, reseller commissions,
and
discounts - will be paid by Vivid to the corporate entity that
is
the successor to TrueActive for all sales of: i) the
existing
TrueActive Monitor product, as well as any developments thereto
not
yet released; ii) products (un-enhanced) sold as "computer
monitoring" programs under the name "WinWhatWhere"; and,
iii)
products under the name "TrueActive" for a period of three (3)
years
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from Closing. Royalties will be calculated according to
calendar
quarters ending in March, June, September and December and,
where
applicable, royalty checks will be mailed within the first
ten
working days of the end of each quarter.
f) A royalty of four percent (4%) - based on "net sale amount,"
defined
as gross sale amount less credit card fees, shipping and
handling,
applicable taxes, returns, reseller commissions and discounts -
will
be paid by Vivid to the corporate entity that is the successor
to
TrueActive for all sales of the Vivid branded or
"sub-branded"
product(s) based on the existing TrueActive products that
include a
refined dashboard and additional Vivid-funded enhancements to
the
program for three (3) years after the official launch of the
program. Royalties will be managed as noted in Section
2.1(e).
g) Royalties will not be due to TrueActive for sales of products
other
than those delineated above. It is acknowledged by the parties
that
a portion of the afore-noted consideration is designated
specifically as the consideration in exchange for the covenant
not
to compete and client lists.
h) Any and all taxes incurred as a result of this Agreement
shall be
the responsibility of the party incurring said taxes.
Section 2.2 Covenant Not To Compete. TrueActive agrees that from
and after
closing, a) the corporate officers of TrueActive will be
reasonably available to
assist with the transition; and, b) will not, without Vivid's
prior written
consent, directly or indirectly invest or engage in any business
that is
competitive with the Vivid business lines, nor accept employment
or render
services to a competitor as a director, officer, agent,
employee, or consultant
for a period of two (2) years. This non-compete covenant shall
be binding on the
officers, directors, and shareholders of TrueActive.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
Section 3.1 Representations and Warranties of Vivid. Vivid
hereby
represents and warrants to TrueActive that:
3.1.1 Organization; Corporate Power and Authority. Vivid is
a
corporation duly and validly organized and existing under the
laws
of the State of Delaware. Vivid has full power, legal capacity,
and
authority to carry on its business as it is now conducted, to
own,
lease, and operate its assets and properties, and to enter
into,
perform, and comply with this Agreement.
3.1.2 Authorization; Enforceability; No Conflict. The
execution,
delivery, and performance of this Agreement by Vivid have been
duly
authorized by all necessary corporate action. This Agreement
constitutes the valid and binding obligation of Vivid,
enforceable
in accordance with its terms except as limited by
bankruptcy,
insolvency, reorganization, fraudulent transfer, moratorium,
and
similar laws affecting creditors generally and by the
availability
of equitable remedies. The execution, delivery, and performance
of
this Agreement will not, or at Closing shall not, conflict with,
or
result in the breach or termination of, or constitute a
default
under, the articles of incorporation or bylaws of Vivid or
any
agreement, commitment, or instrument, judgment, or decree to
which
Vivid is a party or by which Vivid or its properties are
bound.
3.1.3 Disclosure. To the best knowledge of Vivid, neither
this
Agreement nor any other instrument/document delivered to
TrueActive
pursuant to this Agreement contains any untrue statement of
any
material fact or omits to state any material fact required to
be
stated or necessary in order to make the statements contained
herein
or therein not misleading.
3.1.4 Finances. Vivid represents that it is financially capable
of
completing the purchase of TrueActive's business assets and
fully
understands its financial obligations under this Agreement.
Section 3.2 Representations and Warranties of TrueActive.
TrueActive
hereby represents and warrants to Vivid that:
3.2.1 Organization; Corporate Power and Authority. TrueActive is
a
corporation duly and validly organized and existing under the
laws
of the State of Washington. TrueActive has full power, legal
capacity, and authority to carry on its business as it is
now
conducted, to own, lease, and operate its assets and properties,
and
to enter into, perform, and comply with this Agreement.
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3.2.2 Authorization; Enforceability; No Conflict. The
execution,
delivery, and performance of this Agreement by TrueActive has
been
duly authorized by all necessary corporate action. This
Agreement
constitutes the valid and binding obligation of TrueActive,
enforceable in accordance with its terms except as limited
by
bankruptcy, insolvency, reorganization, fraudulent transfer,
moratorium, and similar laws affecting creditors generally and
by
the availability of equitable remedies. The execution, delivery,
and
performance of this Agreement will not, or at Closing shall
not,
conflict with, or result in the breach or termination of, or
constitute a default under, the articles of incorporation or
bylaws
of TrueActive or any agreement, commitment, or instrument,
judgment
or decree to which TrueActive is a party or by which TrueActive
or
the properties of TrueActive are bound.
3.2.3 Liabilities. TrueActive has no liabilities or obligations
of
any nature or kind, whether absolute or contingent, known or
unknown, accrued or unaccrued, due or to become due related to
the
assets being purchased by Vivid.
3.2.4 Disclosure. To the best knowledge of TrueActive, neither
this
Agreement nor any other instrument/document delivered to
Vivid
pursuant to this Agreement contains any untrue statement of
any
material fact or omits to state any material fact required to
be
stated or necessary in order to make the statements contained
herein
or therein not misleading.
3.2.5 Title to Assets. TrueActive is the record and beneficial
owner
of the assets to be purchased by Vivid from TrueActive, free
and
clear of any security interest, claim, lien, pledge,
encumbrance, or
restriction whatsoever in law or in equity, and TrueActive's
delivery and/or granting of access to Vivid on closing of
this
Agreement will convey to Vivid lawful, valid, and indefeasible
title
thereto, free and clear of any security interest, claim,
lien,
pledge, encumbrance, or restriction unless listed on Exhibit
A.
Section 3.3 No Further Representations or Warranties. The
parties hereto
acknowledge that due diligence has occurred. As a result, each
party is
adequately informed about the other's past, current, and planned
business
activities and strategies. Accordingly, the representations and
warranties
contained in Sections 3.1 and 3.2 of this Agreement are
exclusive, and no
further representations or warranties shall be deemed to have
been made by
either party pursuant to this Agreement.
ARTICLE IV
SECURITIES LAW MATTERS AND REGISTRATION RIGHTS
Section 4.1 Shares for Investment. TrueActive covenants and
agrees that
the Vivid warrants to be issued under this Agreement will be
held for investment
and not with a view to distribute all or any part thereof in any
transaction
which would constitute a "distribution" within the meaning of
the Securities Act
of 1933 (hereinafter "Securities Act"). TrueActive and/or its
shareholders will
not, directly or indirectly, offer, transfer, sell, assign,
pledge, hypothecate,
or otherwise dispose of any of the Vivid warrants except in
compliance with the
Securities Act. TrueActive and its shareholders agree that no
transfer or
assignment of any Vivid warrants shall be effective if the
assignment would
violate the provisions of the sec
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