EXHIBIT 2.6
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SETTLEMENT AND ASSET PURCHASE AGREEMENT
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This SETTLEMENT AND ASSET PURCHASE AGREEMENT is made effective as of July 1,
2001 (the "Effective Date") by and among Compass Knowledge Holdings, Inc.
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("Compass"), Educators' Learning Network, Inc. f/k/a Xxxxxx, Inc. ("ELNet"),
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Xxxxxxxxxx Learning Group, Inc. ("RLG") (Compass, ELNet, and RLG are
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hereinafter sometimes collectively referred to as the "Companies") and Xxxxxxx
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Xxxxxxxxxx ("Xxxxxxxxxx")
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Recitals:
A. WHEREAS, pursuant to that certain Agreement and Plan of Stock Purchase
dated August 15, 2000 by and among ELNet, the ELNet shareholders
(including Xxxxxxxxxx), Compass and Compass Acquisition Corp. ("CAC")
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(hereinafter the "ELNet Purchase Agreement"), Compass and CAC acquired
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from Xxxxxxxxxx all of the stock he owned in ELNet;
B. WHEREAS, pursuant to that certain Agreement and Plan of Stock Exchange
dated July 28, 2000 by and among RLG, Xxxxxxxxxx, Compass and CAC
(hereinafter the "RLG Purchase Agreement"), Compass and CAC acquired
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from Xxxxxxxxxx all of the issued and outstanding shares of capital
stock in RLG and certain assets;
C. WHEREAS, in connection with such Purchase Agreements, ELNet and
RLG entered into separate Employment Agreements with Xxxxxxxxxx
each effective as of August 1, 2000 (the "Employment
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Agreements");
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D. WHEREAS, the consideration required to be paid under the ELNet Purchase
Agreement and the RLG Purchase Agreement (collectively, hereinafter the
"Purchase Agreements") has been paid to Xxxxxxxxxx in accordance with
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the terms of same and compensation required to be paid under the
Employment Agreements has not been paid to Xxxxxxxxxx in accordance
with the terms of same;
E. WHEREAS, certain disputes have arisen by and among the Companies and
Xxxxxxxxxx, and the Companies have asserted various rights, claims
and damages against Xxxxxxxxxx with respect thereto; and
F. WHEREAS, the Companies and Xxxxxxxxxx are desirous of settling such
disputes and claims as provided herein.
NOW, THEREFORE, in consideration of the foregoing recitals, as well as the
mutual covenants hereinafter set forth, the parties hereto, intending to be
legally bound, hereby agree as follows:
ARTICLE I
PURCHASE AND SALE OF ASSETS
1.1 Recitals. The above recitals are true and correct in all
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material respects and by this reference incorporated herein.
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1.2 Purchase And Sale Of Assets. Subject to the terms and conditions
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of this Agreement, on the Closing Date (as hereinafter defined), and except as
otherwise stated, the Companies shall sell, transfer, convey, assign, and
deliver to Xxxxxxxxxx [or upon Xxxxxxxxxx'x request, to one or more
corporations or entities owned by Xxxxxxxxxx as designated by Xxxxxxxxxx], and
Xxxxxxxxxx shall purchase and accept the assets described below (hereinafter
the "Purchased Assets"). The Purchased Assets are:
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1.2.(a) Personal Property. All rights, title and ownership to
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certain office equipment and supplies (the "Personal Property") described
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in Schedule 1.2.(a).
1.2.(b) Learning Centered School. All intellectual property
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rights and ownership to that certain educational program known as the
"Learning Centered School" and all related content, curriculum, computer
programs, software, documentation, reference materials, sales literature,
promotional literature, catalogs and similar materials and related property
and information with respect to same inclusive of the content underlying two
Requisites of A Leader episodes (i.e., "Learning...Three Levels of Quality" and
"Standards of Teaching") which is content also used in the Learning Centered
School program (hereinafter the "LCS Program").
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1.2.(c) RLG Name and Marks. The Xxxxxxxxxx Learning Group name
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and its trademarks, service marks and logos, if any, inclusive of all
reference materials, sales literature, promotional literature, catalogs and
similar materials which bear such name and marks.
1.2.(d) Limited Release of Covenant Not-to-Compete. The limited
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release of Xxxxxxxxxx'x covenants not-to-compete as set forth in the Employment
Agreements as more fully described in Section 4.8(c) below
1.2.(e) Consulting Agreements. The transferable consulting
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contracts identified in Schedule 1.2.(e).
1.2.(f) General Intangibles. Certain other intangible rights
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and assets related to the foregoing such as the telephone number(s), directory
listings, and prepaid advertisements identified in Schedule 1.2.(f).
1.3. Excluded Assets. Section 1.2 notwithstanding, the Companies are
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not selling, transferring, assigning, conveying or delivering to Xxxxxxxxxx,
and Xxxxxxxxxx is not purchasing the following assets: (a) the right to any
income associated with the consulting engagements of Xxxxxxxxxx and/or RLG or
ROL which has accrued to the benefit of any of the Companies prior to the
Effective Date, and (c) cash, deposits and accounts receivable related to the
foregoing Purchased Assets existing on the Effective Date.
ARTICLE II
ASSUMPTION OF LIABILITIES
2. Assumption of Liabilities
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2.1. Liabilities to be Assumed. As used in this Agreement, the term
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"Liability" shall mean and include any direct or indirect indebtedness,
guaranty, endorsement, claim, loss, damage, deficiency, cost, expense,
obligation or responsibility, fixed or unfixed, known or unknown, asserted or
unasserted, liquidated or unliquidated, secured or unsecured. Subject to the
terms and conditions of this Agreement, on the Effective Date, Xxxxxxxxxx shall
assume and agree to perform and discharge the following (hereinafter the
"Assumed Liabilities"):
2.1.(a) Taxes Arising from Transaction. Xxxxxxxxxx shall
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assume, be responsible for and pay all taxes applicable to, imposed upon or
arising out of the sale or transfer of the Purchased Assets to Xxxxxxxxxx and
the other transactions contemplated by this Agreement, including but not
limited to any
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transfer, sales, use, gross receipts or documentary stamp taxes but excluding
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any income taxes which would otherwise be imposed upon the Companies.
2.1.(b) Product and Service Liability. Xxxxxxxxxx shall assume,
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be responsible for and pay all product and/or service Liability of the
Companies arising out of or in any way relating to or resulting from all and/or
any one or more of the Purchased Assets (including any Liability of the
Companies for claims made for injury to person, damage to property or other
damage, whether made in product liability, tort, breach of contract, warranty
or otherwise).
2.1.(c) Transaction Expenses. Xxxxxxxxxx shall assume, be
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responsible for and pay all transaction expenses including, without limitation,
legal bills he incurs in connection with the drafting and negotiation of this
Agreement and the consummation of the transactions contemplated herein.
2.1.(d) LCS Program Development. Xxxxxxxxxx shall assume, be
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responsible for and pay all expenses associated with the creation, development,
production, preparation, writing, and hosting of the ten (10) additional
one-hour episodes of the LCS Program as more fully described in Section 4.3
below.
2.1.(e) ROL Program Development. Xxxxxxxxxx shall assume, be
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responsible for and pay all expenses associated with the creation, development,
preparation, writing, and hosting the ten (10) core one-hour episodes of the
Requisites of A Leader Program (the "ROL Program") as more fully described in
Section 4.4 below. The Companies will be responsible for paying for all costs
and expenses associated with the actual telecast production of said Program.
ARTICLE III
PURCHASE PRICE - PAYMENT
3. Purchase Price - Payment
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3.1. Purchase Price. The purchase price (the "Purchase Price") for
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the Purchased Assets as agreed to by and between the parties shall be One
Million Six Thousand Two Hundred Fifty Dollars ($1,006,250) which will consist
of the following consideration:
(i) One Hundred Twenty-five Thousand (125,000) shares of
Compass common stock, $.001 par value, evidenced by stock certificate #2367,
which is valued for these purposes at $1.00 per share or One Hundred
Twenty-five Thousand Dollars ($125,000.00) in the aggregate;
(ii) Fifty-six Thousand Two Hundred and Fifty (56,250) shares
of Compass common stock, $.001 par value, evidenced by stock certificate #2359
[which is presently sitting in Escrow and held by Firstar Bank, Cincinnati,
Ohio (the "Escrow Agent") for the benefit of Xxxxxxxxxx] (the "Escrow Shares")
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and which is valued for these purposes at $1.00 per share or Fifty-six Thousand
Two Hundred and Fifty Dollars ($56,250.00) in the aggregate;
(iii) Xxxxxxxxxx'x ten percent (10%) ownership interest in
ELNet evidenced by stock certificate #15 representing twenty-two (22) shares
of no par value common stock of ELNet, which is valued for these purposes at
Two Hundred Thousand Dollars ($200,000.00);
(iv) Xxxxxxxxxx'x ten percent (10%) interest in those certain
"Incentive Payments" described in Section 2.2.2 of the ELNet Purchase Agreement
which is valued for these purposes at Twenty-Five Thousand Dollars
($25,000.00);
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(v) The rights in and to that certain License Agreement of
even date herewith for the sale and distribution of the LCS Program as more
fully described in Section 4.3(b) below and which is valued for these purposes
at Three Hundred Thousand Dollars ($300,000.00); and
(vi) The assumption of the Assumed Liabilities which is valued
for these purposes at Three Hundred Thousand Dollars ($300,000.00).
3.2. Payment of Purchase Price. The Purchase Price shall be paid by
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Xxxxxxxxxx at the Closing as follows:
3.2.(a) Delivery of Certificates. Xxxxxxxxxx shall, on
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the Closing Date, deliver to Compass, and with respect to the Escrow Shares
instruct the Escrow Agent to deliver to Compass, the certificates nos. 2367
and 2359, respectively, evidencing the transfer of the Compass shares described
in Sections 3.1(i) and (ii) and certificate number 15 evidencing the ELNet
shares as described in 3.1(iii) above (collectively, the certificates shall
hereinafter be known as the "Certificates"), free of all liens and encumbrances
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and duly endorsed in blank for transfer or accompanied by stock powers duly
executed in blank.
3.2(b) Delivery of Interest in Incentive Payments. The
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execution and delivery of such documents and instruments as are reasonably
required to evidence Xxxxxxxxxx'x sale and transfer of his interest in those
certain "Incentive Payments" described in Section 3.1(iv) above.
3.2(c) License. The execution and delivery of that
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certain License Agreement described in Section 3.1(v) above.
3.2(d) Assumption of Liabilities. The execution and
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delivery of such documents and instruments as are reasonably required to
evidence the assumption of the Assumed Liabilities described in Section 3.1(vi)
above.
3.3. Allocation of Purchase Price. The aggregate Purchase Price shall
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be allocated among the Purchased Assets for tax purposes as set forth above and
the Companies and Xxxxxxxxxx will follow and use such allocation in all tax
returns, filings or other related reports made by them to any governmental
agencies. To the extent that disclosures of this allocation are required to be
made by the parties to the Internal Revenue Service ("IRS") under the
provisions of Section 1060 of the Internal Revenue Code of 1986, as amended
(the "Code") or any regulations thereunder, Xxxxxxxxxx and the Companies will
disclose such reports to the other prior to filing with the IRS.
ARTICLE IV
OTHER COVENANTS
4.1 Cooperation. The parties hereby agree to cooperate with each
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other and use their reasonable best efforts to cause the fulfillment at the
earliest practicable date of all of the conditions to the parties' obligations
to consummate the transactions contemplated in this Agreement. Each party
further agrees that it/he will not make any slanderous statements, disseminate
any libelous materials or otherwise engage in or take any defamatory actions or
fail to take any actions that would have a potentially material adverse effect
on the other party or its/his products, programs and business.
4.2 Consents. The parties will use their best efforts prior to Closing
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to obtain all consents necessary for the consummation of the transactions
contemplated hereby.
4.3 Learning Centered Schools ("LCS").
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4.3(a) Xxxxxxxxxx agrees that he will create, write, develop,
produce, prepare downloads and serve as the host, instructor and keynote
speaker with respect to a minimum of ten (10) additional one-hour episodes of
the LCS Program which as of yet have not been developed (the "Undeveloped LCS
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Episodes"). In connection therewith, Xxxxxxxxxx will bear all costs and
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expenses associated with the creation, development, and production of such
Undeveloped LCS Episodes and will produce and deliver to Compass such
Undeveloped LCS Episodes as well as the six (6) developed episodes (the "LCS
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Developed Episodes") within the time parameters and subject to the terms and
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conditions set forth in the License Agreement described in 4.3(b) below and the
Production Plan and Schedule attached hereto as Schedule 4.3(a). It is
understood and agreed between the parties that the quality, features and
attributes of the Undeveloped LCS Episodes will be at least equal to or better
than the LCS Developed Episodes.
4.3(b) The parties hereby agree to into a Content Development
and License Agreement in the form attached hereto as Exhibit "A" whereby the
Companies shall have the exclusive right to market, sell and deliver the LCS
Program (inclusive of all LCS Episodes) and its content in all distance
learning models for a period of at least ten (10) years subject to earlier
termination as provided in the License Agreement.
4.4 Requisites of a Leader ("ROL").
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4.4(a) Xxxxxxxxxx agrees that he will create, develop, write,
rewrite, refresh, prepare downloads and serve as the host, primary instructor
and keynote speaker, under the direction of the Companies and its designated
producer, with respect to ten (10) core programs of ROL which are required for
the 2001-2002 school year all in accordance with the time parameters (which is
presently contemplated no later than September 30, 2001) and subject to the
terms and conditions set forth in the Production Plan and Schedule attached
hereto as Schedule 4.4(a).
4.4(b) The parties hereby agree to into a Content Development
and License Agreement in the form attached hereto as Exhibit "B" whereby for a
period of five (5) years commencing with the Effective Date, Compass will grant
to Xxxxxxxxxx a limited, non-transferable and non-exclusive license to present
and deliver, the ROL Programs and its content via live (in-person) consulting
engagements. Compass shall have no economic interest or rights to any of the
revenue, compensation or other remuneration received by Xxxxxxxxxx with respect
to such performances. At the end of the five (5) year period (unless sooner
terminated), the License Agreement shall terminate and Xxxxxxxxxx will have no
further rights in or to or for the use of the ROL Programs and/or the content.
4.5 Consulting Services. In addition to the foregoing services,
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Xxxxxxxxxx agrees to (i) make himself available to the Companies, as requested,
for consultation and creative input with respect to the ten (10) elective ROL
programs required for the 2001-2002 school year, and (ii) to be present, as
requested, at all conferences, seminars and onsite client and customer
visitations required of the Companies from July 1, 2001 until October 1, 2002
not to exceed 10 days in the aggregate. Set forth in Schedule 4.5 is a listing
of the locations and the scheduled times and dates for the presently known
conferences, seminars and onsite visitations for which Xxxxxxxxxx'x presence
and participation is anticipated.
4.6 Compensation.
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(a) For the services provided in Sections 4.3, and 4.4 above,
the Companies agree to pay to Xxxxxxxxxx $12,500 per month payable in three (3)
consecutive monthly payments beginning July 31, 2001 and ending September 30,
2001; For the services provided in Section 4.5, the Companies agree to pay to
Xxxxxxxxxx $1,000 per day for onsite presentations and conferences not to
exceed 10 days in the aggregate.
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(b) ELNet also agrees to pay Xxxxxxxxxx an amount equal to 5%
of all "Net Receipts" received by ELNet within one (1) year with regard to
sales of the ROL Program for which Xxxxxxxxxx is directly responsible for and
plays an integral and continuing role in consummating. For purposes of this
provision, the term "Net Receipts" shall be defined as total student, client
and customer fees, referral fees, or any other fees actually collected by ELNet
with respect to the ROL Program less commissions paid to third parties and
charges associated with collection, sales tax incurred on such sales and
refunds, rebates, credits and returns given or provided.
(c) In addition to the foregoing, the Companies will pay
Xxxxxxxxxx reasonable and pre-approved travel, meals and lodging expense
reimbursements incurred with respect to the services identified in Sections
4.4 and 4.5 above.
4.7 Termination of Rights in Purchase Agreements and Employment
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Agreements. Contemporaneous with the Closing of this Agreement and the
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transactions provided herein, Xxxxxxxxxx forfeits and foregoes all rights and
interest in and to any consideration, payments, reimbursements, damages,
claims, costs and/or expenses he may now have or hereafter acquire in
connection with or arising out the Purchase Agreements and the Employment
Agreements.
4.8 Confidentiality, Competition and Solicitation.
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4.8(a) Confidentiality. Xxxxxxxxxx shall not divulge,
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communicate, use to the detriment of the Companies, or for the benefit of any
other business, firm, person, partnership or corporation, or otherwise misuse,
any "Confidential Information", pertaining to the Companies including (except
as may be required under legal process by subpoena or other court order;
provided that Xxxxxxxxxx will take reasonable steps to give the Companies
sufficient prior written notice in order to contest such requirement or order),
without limitation, all (i) data or trade secrets, including secret processes,
formulas or other technical data; (ii) production methods; (iii) customer
lists; (iv) personnel lists; (v) proprietary information; (vi) financial or
corporate records; (vii) operational, sales, promotional and marketing methods
and techniques; (viii) development ideas, acquisition strategies and plans;
(ix) financial information and records; (x) "know-how" and methods of doing
business; and (xi) computer programs, including source codes and/or object
codes and other proprietary, competition-sensitive or technical information or
secrets developed with or without the help of Xxxxxxxxxx. Xxxxxxxxxx
acknowledges that any such information or data he may have acquired was
received in confidence and by reason of his relationship to the Companies.
Confidential Information, data or trade secrets shall not include any
information which as determined by a court of competent jurisdiction: (a) at
the time of disclosure is within the public domain or is generally known within
the industry; (b) after disclosure becomes a part of the public domain or
generally known within the industry through no fault, act or failure to act,
error, effort or breach of this Agreement by Xxxxxxxxxx; (c) is known to the
recipient at the time of disclosure; (d) is subsequently discovered by
Xxxxxxxxxx independently of any disclosure by the Companies; (e) is required by
order, statute or regulation, of any governmental authority to be disclosed to
any federal or state agency, court or other body; or (f) is obtained from a
third party who has acquired a legal right to possess and disclose such
information.
4.8(b) Records. All documents, papers, materials, notes,
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books, correspondence, drawings and other written and graphic records relating
to the Companies and/or the Business of the Companies which Xxxxxxxxxx shall
prepare or use, or come into contact with, shall be and remain the sole
property of the Companies and, effective immediately upon request by the
Companies for any reason shall be immediately returned to the Companies.
4.8(c) Nonsolicitation. As an inducement to the Companies to
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execute this Agreement and in order to preserve the goodwill associated with
the business of the Companies and in addition to and not in limitation of any
covenants contained in any agreements executed and delivered herewith,
Xxxxxxxxxx hereby covenants and agrees as follows:
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(i) Covenant Not to Compete. During the term of the
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Content Development and License Agreement for the use of the ROL Content
(Exhibit "A") and for a period of two (2) years after its expiration or
termination, Xxxxxxxxxx will not directly or indirectly, within the continental
United States, act as an officer, manager, executive, consultant, advisor or
agent or controlling shareholder, partner or member to any business or
otherwise engage in any business which is, competitive, either directly or
indirectly, with the Business, as defined herein, nor shall Xxxxxxxxxx become
employed by such a business in a capacity which would require Xxxxxxxxxx to
carry out, in whole or in part, either directly or indirectly, the duties
Xxxxxxxxxx has performed or is expected to perform for the Companies or which
are competitive with the Business or otherwise engage in any practice the
purpose of which is to evade the provisions of this covenant not to compete or
to commit any act which adversely affects the Companies. For purposes of
Section, the "Business" shall be defined as creating, designing, developing,
owning, leasing and/or operating distributed learning and education programs,
courses and/or its business and other related businesses as are presently being
conducted by the Companies (or such business as is presently under
development).
(ii) Nonsolicitation; Employees. During the term of
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the Content Development and License Agreement for the use of the ROL Content
(Exhibit A) and for a period of two (2) years after its expiration or
termination, Xxxxxxxxxx will not offer employment to any person who was
employed by the Companies or its subsidiaries as of the Effective Date without
the prior written consent of the Compass.
(iii) Nonsolicitation; Customers. Xxxxxxxxxx agrees
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that, during term of the Content Development and License Agreement for the use
of the ROL Content (Exhibit A) and for a period of two (2) years after its
expiration or termination, Xxxxxxxxxx will not solicit customers or clients of
the Companies, its parent company or their subsidiaries, with a view to
interfering or competing with the Business of the Companies or their
subsidiaries.
4.8(d) Equitable Modification. In the event a court of
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competent jurisdiction determines that the provisions of the restrictive
covenants are excessively broad as to duration, geographical scope or activity,
it is expressly agreed that the restrictive covenants shall be construed so
that the remaining provisions shall not be affected, but shall remain in full
force and effect, and any such over broad provisions shall be deemed, without
further action on the part of any person, to be modified, amended and/or
limited, but only to the extent necessary to render the same valid and
enforceable in such jurisdiction.
4.8(e) Equitable Relief for Violations. Xxxxxxxxxx agrees that
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the provisions and restrictions contained in this Section are necessary to
protect the legitimate continuing interests of the Companies, and that any
violation or breach of these provisions will result in irreparable injury to
the Companies for which a remedy at law would be inadequate and that, in
addition to any relief at law which may be available to the Companies for such
violation or breach and regardless of any other provision contained in this
Agreement, the Companies shall be entitled to injunctive and other equitable
relief as a court may grant after considering the intent of this Section.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF XXXXXXXXXX
Xxxxxxxxxx hereby makes the following representations and warranties to the
Companies, each of which is true and correct on the date hereof, shall remain
true and correct to and including the Closing Date, shall be unaffected by any
investigation heretofore or hereafter made by the Companies, or any knowledge
of the Companies other than as specifically disclosed in the disclosure
schedules delivered to the Companies, and shall survive the Closing of the
transactions provided for herein.
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5.1 Authority and Approval of Agreement.
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(a) The execution and delivery of this Agreement by Xxxxxxxxxx and the
performance of his obligations hereunder have been duly authorized and
approved by all requisite action on his and any other persons part
pursuant to applicable law. Xxxxxxxxxx has the power and authority to
execute and deliver this Agreement and to perform all his obligations
hereunder.
(b) This Agreement and any other documents, instruments and agreements
executed by Xxxxxxxxxx in connection herewith constitute the valid and
legally binding agreements of Xxxxxxxxxx, enforceable against Xxxxxxxxxx
in accordance with their terms, except that (i) enforceability may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium
or similar laws of general application affecting the enforcement of the
rights and remedies of creditors; and (ii) the availability of equitable
remedies may be limited by equitable principles.
5.2 No Violations. Neither the execution, delivery nor performance
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of this Agreement or any other documents, instruments or agreements executed by
a Xxxxxxxxxx in connection herewith, nor the consummation of the transactions
contemplated hereby: (a) will violate any statute, law, ordinance, rule or
regulation (collectively, "Laws") or any order, writ, injunction, judgment,
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plan or decree (collectively, "Orders") of any court, arbitrator, department,
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commission, board, bureau, agency, authority, instrumentality or other body,
whether federal, state, municipal, foreign or other (collectively, "Government
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Entities") or (b) will, except as provided herein, require any authorization,
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consent, approval, exemption or other action by or notice to any Government
Entity.
5.3 Consents. The execution, delivery and performance by Xxxxxxxxxx
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of this Agreement and the consummation by a Xxxxxxxxxx of the transactions
contemplated hereby do not require any consent that has not been received prior
to the date hereof.
5.4 Brokers. Xxxxxxxxxx has no liability or obligation to pay any
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fees or commissions to any broker, finder, or agent with respect to the
transactions contemplated by this Agreement for which the Companies could
become liable or obligated.
5.5 Title to Shares and Incentive Payments. Xxxxxxxxxx has good and
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marketable title to his 10% interest in the Incentive Payments and to the
shares of common stock in Compass and ELNet represented by the Certificates,
free and clear of all mortgages, liens, security interests, claims, pledges,
or encumbrances of any nature whatsoever (collectively, "Liens"). Xxxxxxxxxx
has complete and unrestricted power and right to sell, assign, convey and
deliver his 10% interest in the Incentive Payments and the shares of common
stock in Compass and ELNet represented by the Certificates as contemplated
hereby. At Closing, the Companies will receive good title to his 10% interest
in the Incentive Payments and to the shares of common stock in Compass and
ELNet represented by the Certificates.
ARTICLE VI
THE COMPANIES' REPRESENTATIONS AND WARRANTIES
The Companies hereby make the following representations and warranties to
Xxxxxxxxxx, each of which the Companies represent to be true and correct on the
date hereof, shall remain true and correct to and including the Closing Date,
shall be uneffected by any investigation heretofore or hereafter made by
Xxxxxxxxxx, or any knowledge of Xxxxxxxxxx other than as specifically disclosed
in the disclosure schedules delivered to Xxxxxxxxxx, and shall survive the
closing of the transactions provided for herein.
6.1 Organization. the Companies are corporations duly organized,
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validly existing and in good standing under the laws of the state of their
organization.
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6.2 Authority and Approval of Agreement.
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(a) The execution and delivery of this Agreement by the
Companies and the performance of their obligations hereunder have been duly
authorized and approved by all requisite corporate action on the part of the
Companies pursuant to applicable law., the Companies have the power and
authority to execute and deliver this Agreement and to perform all their
obligations hereunder.
(b) This Agreement and each of the other documents, instruments and
agreements executed by the Companies in connection herewith constitute
the valid and legally binding agreements of the Companies, enforceable
against the Companies in accordance with their terms, except that: (i)
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws of general application
affecting the enforcement of the rights and remedies of creditors; and
(ii) the availability of equitable remedies as may be limited by
equitable principles.
6.3 No Violations. Neither the execution, delivery nor performance
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of this Agreement or any other documents, instruments or agreements executed by
the Companies in connection herewith, nor the consummation of the transactions
contemplated hereby: (a) will violate any Laws or Orders; (b) will, except as
provided herein, require any authorization, consent, approval, exemption or
other action by or notice to any Government Entity; (c) constitutes a violation
of or default under (either immediately, upon notice or upon lapse of time) the
Articles of Incorporation or Bylaws of the Companies, any provision of any
contract to which the Companies or its assets may be bound, any judgment to
which the Companies is bound or any law applicable to the Companies; or (d)
result in the creation or imposition of any encumbrance upon, or give any third
person any interest in or right to, any or all of the Property.
6.4 Consents. The execution, delivery and performance by the
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Companies of this Agreement and the consummation by the Companies of the
transactions contemplated hereby do not require any consent that has not been
received prior to the date hereof.
6.5 Brokers. The Companies have no liability or obligation to
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pay any fees or commissions to any broker, finder, or agent with respect to the
transactions contemplated by this Agreement for which Xxxxxxxxxx could become
liable or obligated.
6.6 Title to Purchased Assets. The Companies have good and
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marketable title to all the Purchased Assets, free and clear of all mortgages,
liens, security interests, claims, pledges, or encumbrances of any nature
whatsoever (collectively, "Liens"). None of the Purchased Assets are subject to
any restrictions with respect to the transferability thereof. The Companies
have complete and unrestricted power and right to sell, assign, convey and
deliver the Purchased Assets to Xxxxxxxxxx as contemplated hereby. At Closing,
Xxxxxxxxxx will receive good title to all the Purchased Assets, free and clear
of all Liens.
ARTICLE VII
INTERPRETATION; SURVIVAL OF
REPRESENTATIONS AND WARRANTIES; AND INDEMNIFICATION
7.1 Interpretation. Each warranty and representation made by a party
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in this Agreement or pursuant hereto is independent of all other warranties and
representations made by the same party in this Agreement or pursuant hereto
(whether or not covering identical, related or similar matters) and must be
independently and separately satisfied. Exceptions or qualifications to any
such warranty or representation shall not be construed as exceptions or
qualification to any other warranty or representation.
7.2 Indemnification.
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7.2(a) By Xxxxxxxxxx. Xxxxxxxxxx hereby agrees to indemnify, defend
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and hold harmless the Companies and their directors, officers, employees and
controlled and controlling persons (hereinafter the "Companies' Affiliates"),
---------------------
from and against all Claims asserted against, resulting to, imposed upon, or
incurred by the Companies and/or the Companies' Affiliates, directly or
indirectly, by reason of, arising out of or resulting from (i) the inaccuracy
or breach of any representation or warranty of Xxxxxxxxxx contained in or made
pursuant to this Agreement; (ii) the breach of any covenant contained in this
Agreement; and/or (iii) any Claim relating to or arising from matters arising
from the operation of Xxxxxxxxxx'x business, affairs or consulting engagements.
7.2(b) By the Companies. The Companies hereby agree to indemnify,
----------------
defend and hold harmless Xxxxxxxxxx from and against all Claims asserted
against, resulting to, imposed upon or incurred by any such person, directly
or indirectly, by reason of or resulting from (i) the inaccuracy or
breach of any representation or warranty of the Companies contained in or made
pursuant to this Agreement; (ii) the breach of any covenant of the Companies
contained in this Agreement; and/or (iii) any Claim relating to or arising from
matters arising from the operation of the Companies' business and affairs
except for those Claims which arise from or out of the negligent or intentional
wrongful acts of Xxxxxxxxxx or arise from or out a breach of this Agreement by
Xxxxxxxxxx.
7.2(c) Claims. As used in this Section, the term "Claim" shall
------ -----
include (i all liabilities; (ii) all losses, damages, judgments, awards,
settleme ts, costs and expenses (including, without limitation, interest
includin prejudgment interest in any litigated matter), penalties, court costs
and attorneys fees and expenses); and (iii) all demands, claims, actions, costs
of investigation, causes of action, proceedings and assessments, whether or not
ultimately determined to be valid.
7.2(d) Limits. Notwithstanding anything herein to the contrary, in
------
no event shall a party be liable for Claims unless such Claim(s) individully
or in the aggregate is more than Ten Thousand Dollars ($10,000.00) nor shall
a party be liable for Claims of more than One Million Dollars ($1,000,000.00)
in the aggregate.
7.3 Survival. All covenants, representations, warranties and
--------
indemnifications made in this Agreement or pursuant hereto shall survive the
Closing hereof, the consummation of the transactions contemplated hereby and
any investigation by a party hereto for a period of two (2) years from the
Effective Date.
ARTICLE VIII
CONDITIONS PRECEDENT TO XXXXXXXXXX'X OBLIGATIONS
Notwithstanding the execution and delivery of this Agreement or the performance
of any part hereof, Xxxxxxxxxx'x obligations to consummate the transaction
contemplated by this Agreement shall be subject to the satisfaction of each of
the conditions set forth in this Article VIII, except to the extent that such
satisfaction is waived in writing by Xxxxxxxxxx.
8.1 Representations and Warranties of the Companies. All
-----------------------------------------------
representations and warranties made by the Companies in this Agreement shall be
true and correct in all material respects on the date hereof, and shall be true
and correct in all material respects on the Closing Date as though such
representations were again made, without exception or deviation, at the Closing
Date.
8.2 Performance of this Agreement. The Companies shall have duly
-----------------------------
performed or complied with all the obligations under this Agreement which are
required to be performed or complied with by the Companies on or prior to the
Closing Date.
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8.3 Absence of Litigation. No litigation shall have been instituted on
---------------------
or before the Closing Date by any person, the result of which did or could
prevent or make illegal the consummation of the transaction contemplated by
this Agreement, or which had or could have a material adverse effect on a
Xxxxxxxxxx.
ARTICLE IX
CONDITIONS PRECEDENT TO THE COMPANIES' OBLIGATIONS
Notwithstanding the execution and delivery of this Agreement or the performance
of any part hereof, the Companies' obligations to consummate the transaction
contemplated by this Agreement shall be subject to the satisfaction of each of
the conditions set forth in this Article IX, except to the extent that such
satisfaction is waived by the Companies in writing.
9.1 Representations and Warranties of Xxxxxxxxxx. All representations
--------------------------------------------
and warranties made by a Xxxxxxxxxx contained in this Agreement shall be true
and correct in all material respects on the date hereof, and shall be true and
correct in all material respects at the Closing Date as though such
representations were again made, without exception or deviation, at the Closing
Date.
9.2 Performance of this Agreement. Xxxxxxxxxx shall have duly performed
-----------------------------
or complied with all of the covenants and obligations under this Agreement to be
performed or complied with by them or it, as the case may be, on or prior to the
Closing Date.
9.3 Absence of Litigation. No litigation shall have been instituted on
---------------------
or before the time of the Closing Date by any person, the result of which did or
could prevent or make illegal the consummation of the transaction contemplated
by the Agreement, or which has or could have a material adverse effect on the
Companies.
ARTICLE X
OBLIGATIONS AT CLOSING
10.1 Obligations of the Companies to Xxxxxxxxxx. The Companies hereby
------------------------------------------
covenant and agree to deliver or cause to be delivered to Xxxxxxxxxx on or
before the Closing Date or as otherwise set forth herein the following:
10.1(a) A certification by an officer of the Companies that the Companies
are authorized to execute, deliver and perform this Agreement and
consummate the transactions contemplated hereby;
10.1(b) Such corporate resolutions and other documents as shall be
reasonably requested by Xxxxxxxxxx;
10.1(c) A General Release in the form attached hereto as Exhibit
"C";
10.1(d) The License Agreement in the form attached hereto as
Exhibit B;
10.1(e) Bills of sale and such other instruments of assignment,
transfer, conveyance and endorsement as will be sufficient in the opinion of
Xxxxxxxxxx and his counsel to transfer, assign, convey and deliver to Xxxxxxxxxx
the Purchased Assets as contemplated hereby;
10.1(f) Such other documents and instruments as Xxxxxxxxxx and
his counsel may reasonably request in order to effectuate the terms of this
Agreement duly executed by the appropriate persons.
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10.2 Obligations of Xxxxxxxxxx to the Companies. Xxxxxxxxxx hereby
------------------------------------------
covenants and agrees to deliver or cause to be delivered to the Companies on or
before the Closing Date the following:
10.2(a) The Certificates duly endorsed in blank for transfer or
accompanied by stock powers duly executed in blank;
10.2(b). Bills of sale and such other instruments of
assignment, transfer, conveyance and endorsement as will be sufficient in the
opinion of the Companies and its counsel to transfer, assign, convey and deliver
to the Companies the Incentive Payments described in Section 3.1(iv);
10.2(c) The License Agreement in the form attached hereto as
Exhibit A;
10.2(d) A General Release in the form attached hereto as
Exhibit "D";
10.2(e) The Resignation in the form attached hereto as Exhibit
"E"
10.2(f) Such other documents and instruments as the
Companies and their counsel may reasonably request in order to effectuate
the terms of this Agreement.
ARTICLE XI
CLOSING
11.1 Consummation of the transactions CONTEMPLATED by the Agreement
(the "Closing") shall take place no later than July 3, 2001 or on such other
-------
date or at such other time or place as may be mutually agreed upon in writing by
the parties hereto (the "Closing Date"). The Closing shall take place at the
------------
offices of the Companies located in Ocoee, Florida, or at such other place as
the parties hereto shall agree upon. Such date is referred to in this Agreement
as the "Closing Date".
ARTICLE XII
MISCELLANEOUS
12.1 Notices. All notices, requests, demands and other communications
-------
hereunder shall be deemed to have been duly given if the same shall be in
writing and shall be delivered personally or sent by registered or certified
mail, postage prepaid, and addressed as set forth below:
If to Xxxxxxxxxx: Xxxxxxx Xxxxxxxxxx
0000 Xxxxxxxxxxx Xxxxx
Xxxxxxxx, XX 00000
If to the Companies: Compass Knowledge Holdings, Inc.
0000 Xxx Xxxxxx, Xxxxx 000
Xxxxx, XX 00000
Attention: Xxxxxx X. Xxxxxx
Fax No. (000) 000-0000
12.2 Entire Agreement. This Agreement, including the disclosure
----------------
schedules attached hereto and the documents delivered pursuant hereto, sets
forth all the promises, covenants, agreements, conditions and understandings
among the parties hereto with respect to the subject matter hereof, and, upon
Closing of the transactions contemplated hereby, novates and supersedes all
prior and
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contemporaneous agreements, understandings, inducements or conditions,
expressed or implied, oral or written, except as herein contained. No changes of
or modifications or additions to this Agreement shall be valid unless same shall
be in writing and signed by the parties hereto.
12.3 Binding Effect; Assignment. This Agreement shall be binding upon
--------------------------
the parties hereto, their successors and assigns, and beneficiaries, heirs and
administrators. No party may assign or transfer its interests herein, or
delegate its duties hereunder, without the written consent of the other parties.
12.4 Amendment. The parties hereby irrevocably agree that no attempted
---------
amendment, modification or change (collectively, "Amendment") of this Agreement
shall be valid and effective, unless the parties shall unanimously agree in
writing to such Amendment.
12.5 No Waiver. No waiver of any provision of this Agreement shall be
---------
effective unless it is in writing and signed by the party against whom it is
asserted, and any such written waiver shall only be applicable to the specific
instance to which it relates and shall not be deemed to be a continuing or
future waiver.
12.6 Gender and Use of Singular and Plural. All pronouns shall be
-------------------------------------
deemed to refer to the masculine, feminine, neuter, singular or plural, as the
identity of the party or parties or their personal representatives, successors
and assigns may require.
12.7 Counterparts. This Agreement and any amendments may be executed in
------------
one or more counterparts, each of which shall be deemed an original and all of
which together shall constitute one and the same instrument.
12.8 Name Abbreviations and Headings The name abbreviations article and
-------------------------------
section headings contained in this Agreement are inserted for convenience only
and shall not affect in any way the meaning or interpretation of the Agreement.
12.9 Governing Law This Agreement shall be construed in accordance
-------------
with the laws of the State of Florida.
12.10 Further Assurances. The parties hereto shall execute and deliver
------------------
such further instruments and do such further acts and things as may be
reasonably required to carry out the intent and purposes of this Agreement.
12.11 Arbitration. If a dispute or matter in controversy arises between
-----------
the parties with respect to any matter arising out of or in connection with this
Agreement which they are unable to resolve to their mutual satisfaction within
ten (10) days of written notice from one to the other of the existence of such
dispute, then either party may notify the other party in writing (the "Notice")
that the dispute be submitted to binding arbitration as provided in the Rules of
Arbitration of the Orange County (FL) Bar Arbitration Service, and as
hereinafter provided. The arbitration panel shall consist of three (3) members,
one of whom shall be selected by the Companies one of which shall be selected by
Xxxxxxxxxx, each within 10 days of the Notice, and the third shall be selected
by the first two within ten (10) days of their selection. If either party shall
fail to make a selection within ten (10) days, the first arbitrator shall select
the remaining two (2). In the event that any arbitrator shall resign or
otherwise fail to perform his duties, his successor shall immediately be
selected by the party who selected such arbitrator in the first instance. The
arbitration panel shall have the authority to assess costs and shall award
attorneys' fees. Either party may have recourse to the courts for enforcement of
the award of the arbitration panel.
Notwithstanding the foregoing, because time is of the essence of this
Agreement, the parties specifically reserve the right to seek a judicial
temporary restraining order, preliminary injunction, or other similar short-term
equitable relief, and grant the arbitrators the right to make a final
determination
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of the parties' rights, including whether to make permanent or dissolve such
court order.
The venue for all such proceedings in arbitration and for the enforcing
of any awards shall be in the court having subject matter jurisdiction, in
Orlando, Florida, in and for Orange County, Florida.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the date and year set forth above.
WITNESSES: Compass Knowledge Group, Inc.
_______________________ By: /s/ Xxxxxx X. Xxxxxx, Xx.
-------------------------
Xxxxxxxxxx Learning Group, Inc.
_______________________ By: /s/ Xxxxxx X. Xxxxxx, Xx.
-------------------------
Educators' Learning Network, Inc.
_______________________ By: /s/ Xxxxxx X. Xxxxxx, Xx.
-------------------------
_______________________ /s/ Xxxxxxx Xxxxxxxxxx
----------------------
Xxxxxxx Xxxxxxxxxx
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