EXHIBIT 99.1 ASSET PURCHASE AGREEMENT

 

 

                                                                    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.

<PAGE>

 

            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   securities   laws.   If   Vivid so   requires,   no

assignment shall be effective unless TrueActive and/o