Asset Purchase Agreement - Pearson Education Inc. and adam.com Inc.
[EXECUTION COPY]
ASSET PURCHASE AGREEMENT
DATED AS OF JUNE 22, 2001
BETWEEN
PEARSON EDUCATION, INC.
AND
ADAM.COM, INC.
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Exhibit A - Form of Bill of Sale and General Assignment
Exhibit B - Form of Copyright Assignment
Exhibit C - Form of Amended and Restated Development Agreement
ANNEX
Annex I - Permitted Products
Annex II - Co-Developed Products
Annex III - Terms and Conditions of Distribution of Inventory
Annex IV - Additional Terms and Conditions of Content License
Annex V - Images Products
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ASSET PURCHASE AGREEMENT
ASSET PURCHASE AGREEMENT dated as of June 22, 2001 (this "AGREEMENT")
between Pearson Education, Inc., a Delaware corporation (the "PURCHASER"), and
adam.com, Inc., a Georgia corporation (f/k/a A.D.A.M. Software, Inc.) (the
"SELLER").
RECITALS
WHEREAS, the Seller and Benjamin/Cummings, Purchaser's
predecessor-in-interest, entered into the Development Agreement, which provided
for, among other things, the joint development by Purchaser and Seller of
certain "Co-Developed Products" (as that term is defined in the Development
Agreement).
WHEREAS, the Purchaser desires to purchase from the Seller and the
Seller desires to sell to the Purchaser all of Seller's rights, title and
interest in and to the Co-Developed Products and certain related assets, all
upon the terms and conditions set forth in this Agreement.
NOW, THEREFORE, in consideration of the representations, warranties and
covenants herein contained and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
hereby agree as follows:
ARTICLE I
CERTAIN DEFINITIONS
1.1 CERTAIN DEFINITIONS.
(a) The following terms, when used in this Agreement, shall have the
respective meanings ascribed to them below:
"ACTION" means any claim, action, suit, inquiry, hearing, investigation
or other proceeding.
"AFFILIATE" means, with respect to a Person, any other Person that,
directly or indirectly, through one or more intermediaries, Controls, is
controlled by or is under common Control with, such Person. For purposes of this
definition, "CONTROL" (including, with correlative meanings, the terms
"Controlled by" and "under common Control with") means the possession, directly
or indirectly, of the power to direct or cause the direction of the management
or policies of a Person, whether through the ownership of stock, as trustee or
executor, by Contract or credit arrangement or otherwise.
"AGREEMENT" has the meaning set forth in the preamble hereto.
"AMENDED AND RESTATED DEVELOPMENT AGREEMENT" has the meaning set forth
in Section 3.2(d).
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"ANCILLARY AGREEMENTS" means the Bill of Sale, the Amended and Restated
Development Agreement and the Copyright Assignment.
"ASSETS" has the meaning set forth in Section 2.1.
"BENJAMIN/CUMMINGS" means Benjamin/Cummings, an imprint of Addison
Wesley Longman, Inc.
"BILL OF SALE" has the meaning set forth in Section 3.2(b).
"BUSINESS DAY" means any day other than Saturday, Sunday or any day on
which banks in San Francisco, California are required or authorized to be
closed.
"CLAIM NOTICE" means written notification pursuant to Section 7.2(a) of
a Third-Party Claim as to which indemnity under Section 7.1 is sought by an
Indemnified Party, enclosing a copy of all papers served, if any, and specifying
the nature of and basis for such Third-Party Claim and for the Indemnified
Party's claim against the Indemnifying Party under Section 7.1, together with
the amount or, if not then reasonably ascertainable, the estimated amount,
determined in good faith, of the Indemnified Party's Losses in respect of such
Third-Party Claim.
"CLOSING" has the meaning set forth in Section 3.1.
"CLOSING DATE" has the meaning set forth in Section 3.1.
"CO-DEVELOPED PRODUCTS" has the meaning set forth in the recitals
hereto.
"COMPETITIVE PRODUCT" means any product that is entirely or
predominantly physiology-based and that competes directly with the Co-Developed
Products for sales or licenses in the Restricted Market.
"CONTRACT" means any agreement, lease, debenture, note, bond, evidence
of Indebtedness, mortgage, indenture, security agreement, option or other
contract or commitment (whether written or oral).
"COPYRIGHT ASSIGNMENT" has the meaning set forth in Section 3.2(c).
"DEVELOPMENT AGREEMENT" means the Umbrella Product Development and
Distribution Agreement, effective as of March 25, 1998, between
Benjamin/Cummings and the Seller, including any addenda thereto.
"DISPUTE NOTICE" means a written notice provided by any party against
which indemnification is sought under this Agreement to the effect that such
party disputes its indemnification obligation under this Agreement.
"DISPUTE PERIOD" means the period ending thirty calendar days following
receipt by an Indemnifying Party of either a Claim Notice or an Indemnity
Notice.
"DISTRIBUTION AGREEMENT" has the meaning set forth in Section 8.3(b).
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"EXCLUDED SOFTWARE" means Seller's Director-based animation viewer,
HotWord tool and DLL's software.
"GAAP" means United States generally accepted accounting principles as
in effect from time to time, consistently applied throughout the specified
period and all prior comparable periods.
"GOVERNMENTAL ENTITY" means any government or political subdivision
thereof, whether foreign or domestic, federal, state, provincial, county, local,
municipal or regional, or any other governmental entity, any agency, authority,
department, division or instrumentality of any such government, political
subdivision or other governmental entity, any court, arbitral tribunal or
arbitrator, and any nongovernmental regulating body, to the extent that the
rules, regulations or orders of such body have the force of Law.
"IMAGES PRODUCTS" means those products set forth on ANNEX V attached
hereto.
"INDEBTEDNESS" means, as to any Person: (i) all obligations, whether or
not contingent, of such Person for borrowed money (including, without
limitation, reimbursement and all other obligations with respect to surety
bonds, letters of credit and bankers' acceptances, whether or not matured), (ii)
all obligations of such Person evidenced by notes, bonds, debentures,
capitalized leases or similar instruments, (iii) all obligations of such Person
representing the balance of deferred purchase price of property or services (iv)
all interest rate and currency swaps, caps, collars and similar agreements or
hedging devices under which payments are obligated to be made by such Person,
whether periodically or upon the happening of a contingency, (v) all
indebtedness created or arising under any conditional sale or other title
retention Contract with respect to property acquired by such Person (even though
the rights and remedies of the seller or lender under such Contract in the event
of default are limited to repossession or sale of such property), (vi) all
indebtedness secured by any Lien on any property or asset owned or held by such
Person regardless of whether the indebtedness secured thereby shall have been
assumed by such Person or is non-recourse to the credit of such Person, and
(vii) all indebtedness referred to in clauses (i) through (vi) above of any
other Person that is guaranteed, directly or indirectly, by such Person.
"INDEMNIFIED PARTY" means any Person claiming indemnification under any
provision of Article VII.
"INDEMNIFYING PARTY" means any Person against whom a claim for
indemnification is being asserted under any provision of Article VII.
"INDEMNITY NOTICE" means written notification pursuant to Section
7.2(b) of a claim for indemnification under Article VII by an Indemnified Party,
specifying the nature of and basis for such claim, together with the amount or,
if not then reasonably ascertainable, the estimated amount, determined in good
faith, of the Indemnified Party's Losses in respect of such claim.
"INTELLECTUAL PROPERTY" means: all (i) discoveries and inventions
(whether patentable or unpatentable and whether or not reduced to practice), all
improvements thereto, and all United States, international, and foreign patents,
patent applications (either filed or in preparation for filing), patent
disclosures and statutory invention registrations, including all reissuances,
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divisions, continuations, continuations in part, extensions and reexaminations
thereof, all rights therein provided by international treaties or conventions,
(ii) trademarks, service marks, trade dress, logos, trade names, corporate
names, and other source identifiers (whether or not registered) including all
common law rights, all registrations and applications for registration (either
filed or in preparation for filing) thereof, all rights therein provided by
international treaties or conventions, and all renewals of any of the foregoing,
(iii) all copyrightable works and copyrights (whether or not registered), all
registrations and applications for registration thereof, all rights therein
provided by international treaties or conventions, and all data and
documentation relating thereto, (iv) confidential and proprietary information,
trade secrets, know-how (whether patentable or nonpatentable and whether or not
reduced to practice), processes and techniques, research and development
information, ideas, technical data, designs, drawings and specifications, (v)
Software, (vi) coded values, formats, data and historical or current databases,
whether or not copyrightable, (vii) domain names, Internet websites or
identities used or held for use by the Seller, (viii) other proprietary rights
relating to any of the foregoing (including without limitation any and all
associated goodwill and remedies against infringements thereof and rights of
protection of an interest therein under the laws of all jurisdictions), and (ix)
copies and tangible embodiments of any of the foregoing.
"KNOWLEDGE" means the actual or constructive knowledge after due
inquiry of any current officer of the Seller.
"LAWS" means all laws, statutes, rules, regulations, ordinances and
other pronouncements having the effect of law of the United States, any foreign
country or any domestic or foreign state, county, city or other political
subdivision or of any Governmental Entity.
"LIABILITY" means all Indebtedness, obligations and other Liabilities
of a Person, whether absolute, accrued, contingent, fixed or otherwise, and
whether due or to become due (including for Taxes).
"LIEN" means any mortgage, pledge, assessment, security interest,
lease, lien, adverse claim, levy, charge or other encumbrance of any kind,
whether voluntary or involuntary (including any conditional sale Contract, title
retention Contract or Contract committing to grant any of the foregoing).
"LOSS" means any and all damages, fines, fees, penalties, deficiencies,
losses and expenses (including, without limitation, all interest, court costs,
fees and expenses of attorneys, accountants and other experts or other expenses
of litigation or other proceedings or of any claim, default or assessment).
"MARKS" has the meaning set forth in Section 8.1(a).
"MATERIAL ADVERSE EFFECT" means any material adverse effect on the
condition, operations, business, prospects or results of sales of the Seller;
PROVIDED, HOWEVER, that any adverse effect arising out of or resulting from the
entering into of this Agreement or the consummation of the transactions
contemplated hereby, shall be excluded in determining whether a Material Adverse
Effect has occurred.
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"ORDER" means any writ, judgment, decree, injunction or similar order
of any Governmental Entity (in each case whether preliminary or final).
"PAYNE" has the meaning set forth in Section 7.1(a).
"PAYNE CONTRACT" means that certain Product Release, dated September 8,
1994, between Kathy Payne and the Seller.
"PERMITTED PRODUCTS" means the existing products of the Seller set
forth on ANNEX I attached hereto.
"PERSON" means any individual, partnership, limited liability company,
corporation, association, joint stock company, trust, estate, joint venture,
unincorporated organization, Governmental Entity or any other entity of any
kind.
"PHYSIOLOGY CONTENT" means all art and animations included in the
Co-Developed Products.
"PURCHASE PRICE" has the meaning set forth in Section 2.1.
"PURCHASER" has the meaning set forth in the preamble hereto.
"PURCHASER INDEMNIFIED PARTIES" has the meaning set forth in Section
7.1(a).
"REPRESENTATIVES" means, with respect to any Person, the directors,
officers, employees, counsel, accountants and other authorized representatives
of such Person.
"RESOLUTION PERIOD" means the period ending thirty days following
receipt by an Indemnified Party of a Dispute Notice.
"RESTRICTED MARKET" means institutions, as well as students and
faculty, in the following education markets: grades 9 through 12, two and four
year undergraduate schools and graduate schools of nursing.
"SELLER" has the meaning set forth in the preamble hereto.
"SELLER INDEMNIFIED PARTIES" has the meaning set forth in Section
7.1(b).
"SOFTWARE" means all computer software, including source code, object
code, machine-readable code, HTML or other markup language, program listings,
comments, user interfaces, menus, buttons and icons, and all files, data,
manuals, design notes and other items and documentation related thereto or
associated therewith.
"SOLVENT" means, with respect to the Seller, that (a) the Seller is
able to pay its Liabilities, as they mature in the normal course of business,
and (b) the fair value of the assets of the Seller is greater than the total
amount of Liabilities of the Seller.
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"TAX RETURNS" means all returns and reports (including elections,
claims, declarations, disclosures, schedules, estimates, computations and
information returns) required to be supplied to a Tax Authority in any
jurisdiction relating to Taxes.
"TAXES" means all federal, state, local and foreign income, profits,
franchise, license, social security, transfer, registration, estimated, gross
receipts, environmental, customs duty, capital stock, severance, stamp, payroll,
sales, employment, unemployment, disability, use, property, withholding, excise,
production, value added, occupancy and other taxes, duties or assessments of any
nature whatsoever together with all interest, penalties, fines and additions to
tax imposed with respect to such amounts and any interest in respect of such
penalties and additions to tax.
"THIRD-PARTY CLAIM" has the meaning set forth in Section 7.2(a).
"TRANSFER TAXES" means all sales, use, value added, excise,
registration, documentary, stamps, transfer, real property transfer, recording,
gains, stock transfer and other similar Taxes and fees.
(b) For purposes of this Agreement, except as otherwise expressly
provided herein or unless the context otherwise requires: (i) words using the
singular or plural number also include the plural or singular number,
respectively, and the use of any gender herein shall be deemed to include the
other genders; (ii) references herein to "Articles," "Sections," "subsections"
and other subdivisions without reference to a document are to the specified
Articles, Sections, subsections and other subdivisions of this Agreement; (iii)
a reference to a subsection without further reference to a Section is a
reference to such subsection as contained in the same Section in which the
reference appears, and this rule shall also apply to other subdivisions within a
Section or subsection; (iv) the words "herein," "hereof," "hereunder," "hereby"
and other words of similar import refer to this Agreement as a whole and not to
any particular provision; and (v) the words "include," "includes" and
"including" are deemed to be followed by the phrase "without limitation". All
accounting terms used herein and not expressly defined herein shall have the
meanings given to them under GAAP.
ARTICLE II
PURCHASE AND SALE OF ASSETS
2.1 PURCHASE AND SALE OF ASSETS. Upon the terms and conditions set
forth in this Agreement, and in consideration of the payment by the Purchaser of
$1,950,000.00 (the "PURCHASE PRICE"), the Seller hereby agrees to sell, convey,
transfer, assign, grant and deliver to the Purchaser, and the Purchaser hereby
agrees to purchase, acquire and accept from the Seller, at the Closing, all of
the Seller's right, title and interest in and to all of the Assets, free and
clear of all Liens. The term "ASSETS" means: (a) all Intellectual Property in
and to the Co-Developed Products, which include those products set forth on
ANNEX II attached hereto; (b) all rights to causes of action, lawsuits,
judgments, claims and demands of any nature available to or being pursued by the
Seller with respect to (a) above, whether arising by way of counterclaim or
otherwise; (c) a list of end-users of the Co-Developed Products that have
licensed such products during the past two years who received such products from
Seller or Seller's resellers/
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distributors, which list shall include the product received, the platform on
which it is used and the term of the license, it being understood that the
Seller shall not be required to list end-users from its resellers/distributors
of which it is not aware after using its reasonable best efforts to ascertain
such information; (d) the rights under the Payne Contract; and (e) records
relating to the Co-Developed Products, but specifically excluding the Excluded
Software.
2.2 ASSUMPTION OF LIABILITIES. For greater certainty, the Purchaser
assumes no Liabilities relating to the Assets or the Seller or the Seller's
business (including Tax Liabilities), except for Liabilities under the Payne
Contract.
2.3 ALLOCATION. The sum of the Purchase Price shall be allocated as
soon as possible after the Closing but in no event later than ninety days
following the Closing among the Assets pursuant to the joint agreement of the
Seller and the Purchaser. The parties hereto shall each report federal, state,
local and other Tax consequences of the purchase and sale contemplated hereby in
a manner consistent with such allocation, and neither party hereto shall take
any position in any Tax Return, or other filing, proceeding or audit or
otherwise inconsistent with such allocation.
ARTICLE III
THE CLOSING
3.1 CLOSING. The closing of the transactions contemplated hereby (the
"CLOSING") shall take place at the offices of Morgan, Lewis & Bockius LLP, 101
Park Avenue, New York, New York commencing at 10:00 a.m. E.S.T., on the first
Business Day immediately following the satisfaction or waiver of all conditions
to the obligations of the parties hereto set forth in Article VI, or such other
date as the parties hereto may mutually determine in writing (the "CLOSING
DATE").
3.2 DELIVERY OF ITEMS BY THE SELLER. The Seller shall deliver to the
Purchaser at the Closing (or, in the case of subsection (e) below, on or before
June 27, 2001) the items listed below:
(a) a certificate, duly executed by an authorized officer of the
Seller, certifying the satisfaction of the conditions set forth in Sections
6.1(a) and (b);
(b) a Bill of Sale and General Assignment for the Assets, duly executed
by the Seller, in the form attached hereto as EXHIBIT A (the "BILL OF SALE");
(c) a Copyright Assignment, duly executed by the Seller, in the form
attached hereto as EXHIBIT B (the "COPYRIGHT ASSIGNMENT"); and
(d) the Amended and Restated Umbrella Product Development Agreement,
duly executed by the Seller in the form attached hereto as Exhibit D (the
"AMENDED AND RESTATED DEVELOPMENT AGREEMENT");
(e) physical possession of the Assets to the Purchaser at 1301 Sansome
Street, San Francisco, California; and
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(f) such other documents and instruments as the Purchaser may
reasonably request.
3.3 DELIVERY OF ITEMS BY THE PURCHASER. The Purchaser shall deliver to
the Seller at the Closing the items listed below:
(a) a certificate duly executed by an authorized officer of the
Purchaser, certifying the satisfaction of the conditions set forth in Sections
6.2(a) and (b);
(b) the Amended and Restated Development Agreement, executed by the
Purchaser;
(c) a wire transfer of immediately available funds to the Seller
constituting the payment of the Purchase Price; and
(d) such other documents and instruments as the Seller may reasonably
request.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE seller
As an inducement to the Purchaser to enter into this Agreement, the
Seller represents and warrants to the Purchaser as follows:
4.1 ORGANIZATION, QUALIFICATION AND CORPORATE POWER. The Seller is a
corporation duly organized, validly existing and in good standing under the Laws
of the State of Georgia, and has full corporate power and authority to own its
properties and assets and to carry on its business as it is now being conducted.
The Seller is duly qualified or licensed as a foreign corporation to do
business, and is in good standing, in each jurisdiction where the character of
the properties or assets owned, leased or operated by it or the nature of its
activities makes such qualification or licensing necessary, except where the
failure to be so qualified or licensed would not have a Material Adverse Effect.
The Seller has heretofore furnished to the Purchaser complete and correct copies
of its certificate of incorporation and bylaws, including all amendments
thereto. Such certificate of incorporation and bylaws are in full force and
effect and no other organizational documents are applicable to or binding on the
Seller.
4.2 AUTHORIZATION. The Seller has full power and authority to execute
and deliver this Agreement and the Ancillary Agreements and to perform its
obligations hereunder and thereunder. The execution, delivery and performance by
the Seller of this Agreement and the Ancillary Agreements and the consummation
of the transactions contemplated hereby and thereby have been duly authorized by
the Seller's board of directors and no other corporate action is required on the
part of the Seller in connection with the execution, delivery or performance of
this Agreement and the Ancillary Agreements or the consummation of the
transactions contemplated hereby and thereby. This Agreement and the Ancillary
Agreements have been duly executed and delivered by the Seller and, assuming the
due authorization, execution and delivery hereof and thereof by the Purchaser,
constitute the valid and legally binding obligations of the Seller enforceable
in accordance with their respective terms.
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4.3 NONCONTRAVENTION.
(a) Neither the execution, delivery or performance of this Agreement or
the Ancillary Agreements nor the consummation of the transactions contemplated
hereby or thereby will, with or without the giving of notice or the lapse of
time or both, (i) violate any provision of the certificate of incorporation or
bylaws of the Seller, (ii) violate any Law or Order or other restriction of any
Governmental Entity to which the Seller may be subject or (iii) conflict with,
result in a breach of, constitute a default under, result in the acceleration of
any right or obligation under, create in any party the right to accelerate,
terminate, modify, cancel, require any notice under or result in the creation of
a Lien on any of the Assets under, any Contract to which the Seller is a party
or by which it is bound and to which any of its Assets is subject.
(b) The execution and delivery of this Agreement and the Ancillary
Agreements by the Seller do not, and the performance of this Agreement and the
Ancillary Agreements by the Seller and the consummation of the transactions
contemplated hereby and thereby will not, require any consent, approval,
authorization or permit of, or filing with or notification to, any Governmental
Entity.
4.4 LITIGATION. There is no pending or, to the Knowledge of the Seller,
threatened Action against or affecting the Assets. Neither the Seller nor the
Assets are subject to any Order restraining, enjoining or otherwise prohibiting
or making illegal any action by the Seller, this Agreement or any of the
transactions contemplated hereby.
4.5 CONTRACTS. Except as disclosed on SCHEDULE 4.5, there are no
executory Contracts (whether license agreements, development agreements or
otherwise), to which any of the Assets are bound or subject (other than this
Agreement and the Development Agreement).
4.6 INTELLECTUAL PROPERTY.
(a) SCHEDULE 4.6 contains a list of all registered copyrights and
applications therefor filed by Seller with respect to the Co-Developed Products
and all licenses relating to the foregoing copyrights and applications therefor,
and SCHEDULE 4.6 contains a list of all Software that is included in the
Co-Developed Products, which Software is the only Software included in the
Co-Developed Products. SCHEDULE 4.6 identifies the owner of each item listed
thereon and, in the case of registrations and applications, the application or
registration number and date. The Seller has not taken any action that could
result in any of the registrations and applications for registration for the
Co-Developed Products not being valid and in full force and effect. The Seller
owns no patents or patent applications with respect to the Co-Developed Products
or any trademarks, trade names or service marks or registrations therefor or
applications therefor with respect to the Co-Developed Products, other than the
marks "A.D.A.M." and the "Walking Man" design and logo and the jointly owned
logo depicted on Exhibit A of the Development Agreement.
(b) Except as disclosed on SCHEDULE 4.6, and except for any existing
right of the Purchaser therein, the Seller is the sole and exclusive owner of,
and has good and marketable title to, all of the Intellectual Property in and to
the Co-Developed Products, including the Intellectual Property set forth on
SCHEDULE 4.6, free and clear of all Liens (subject to any rights in
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favor of third parties granted or created by the Purchaser). Except as disclosed
on SCHEDULE 4.6, and except for any existing right of the Purchaser therein, the
Seller has sole and exclusive right to develop, perform, use, create derivative
works of, operate, reproduce, market, sell, license, display, distribute,
publish and transmit the Co-Developed Products (subject to any rights in favor
of third parties granted or created by the Purchaser). Upon the Closing, except
as disclosed on SCHEDULE 4.6, the Purchaser will have sole and exclusive right,
title and interest in and to the Intellectual Property in and to the
Co-Developed Products, such that the Purchaser shall thereafter have sole and
exclusive rights to perform, reproduce, create derivative works of, develop,
use, operate, market, sell, license, display, publish, transmit and distribute
the Co-Developed Products, free of all encumbrances (subject to any rights or
encumbrances in favor of third parties granted or created by Purchaser). For
greater certainty there are no licenses of discrete images extracted from the
Co-Developed Products other than under the Guidant License referred to on
SCHEDULE 4.6. The Seller has taken reasonable measures to protect the
proprietary nature of the Intellectual Property in and to the Co-Developed
Products and to maintain in confidence the trade secrets and confidential
information that it owns or uses. Except as disclosed on SCHEDULE 4.6, and
except for any existing right of the Purchaser therein, no other Person has any
rights to any of Intellectual Property in and to the Co-Developed Products and,
to the knowledge of the Seller, no other Person is infringing, violating or
misappropriating any of the Intellectual Property in and to the Co-Developed
Products.
(c) With respect to the Seller's Intellectual Property contributed to
the Co-Developed Products, such Intellectual Property does not infringe upon,
violate or constitute a misappropriation of any Intellectual Property or other
right of any other Person . In addition, to Seller's Knowledge, none of the
activities or business presently conducted by the Seller with respect to the
Assets infringes or violates, or constitutes a misappropriation of, any
Intellectual Property or other right of any other Person. Neither the Seller nor
any Affiliate of the Seller has received any written complaint, claim or notice
alleging any such infringement, violation or misappropriation.
4.7 PROPRIETARY INFORMATION AND INVENTIONS AGREEMENTS. Each employee,
officer and consultant of the Seller that has had any involvement or
participation in the creation of any of the Assets has executed a proprietary
nondisclosure, nonsolicitation and assignment of intellectual property agreement
or similar agreement. The Seller is not aware that any of the Seller's
employees, officers or consultants are in violation of the terms thereof.
4.8 BROKERS' FEES. No agent, broker, finder, investment banker,
financial advisor or other similar Person will be entitled to any fee,
commission or other compensation in connection with any of the transactions
contemplated by this Agreement on the basis of any act or statement made or
alleged to have been made by the Seller, any of its Affiliates, or any
investment banker, financial advisor, attorney, accountant or other Person
retained by or acting for or on behalf of the Seller or any such Affiliate.
4.9 COMPLIANCE WITH LAWS. The Seller is not in violation of, has not
violated and, to the Knowledge of the Seller, is not under investigation with
respect to any possible violation of, and has not been threatened to be charged
with any violation of, any Order or Law applicable to the Assets.
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4.10 TITLE TO ASSETS. Except as to Intellectual Property (which
warranty is contained in Section 4.6): (i) the Seller has good and marketable
title to all of the Assets free and clear of all Liens; (ii) this Agreement and
the instruments of transfer to be executed and delivered pursuant hereto will
effectively vest in the Purchaser good and marketable title to all of the Assets
free and clear of all Liens; (iii) and no Person other than the Seller has any
ownership interest in any of the Assets.
4.11 SOLVENCY. The Seller is and, after consummation of the
transactions contemplated by this Agreement, will be Solvent.
4.12 DISCLOSURE. The representations and warranties on the part of the
Seller contained in this Agreement, and the statements contained in any of the
Schedules or in any certificates furnished to the Purchaser pursuant to any
provisions of this Agreement, including pursuant to Article VI hereof, do not
contain any untrue statement of a material fact or omits to state a material
fact necessary in order to make the statements herein or therein, in light of
the circumstances under which they were made, not misleading.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
As an inducement to the Seller to enter into this Agreement, the
Purchaser represents and warrants to the Seller as follows:
5.1 ORGANIZATION. The Purchaser is a corporation duly organized,
validly existing and in good standing under the Laws of the State of Delaware,
and has full corporate power and authority to own its properties and assets and
to carry on its business as it is now being conducted. The Purchaser is duly
qualified or licensed as a foreign corporation to do business, and is in good
standing, in each jurisdiction where the character of the properties or assets
owned, leased or operated by it or the nature of its activities makes such
qualification or licensing necessary, except where the failure to be so
qualified or licensed would not have a material adverse effect on the Purchaser.
5.2 AUTHORIZATION. The Purchaser has full power and authority to
execute and deliver this Agreement and the Ancillary Agreements and to perform
its obligations hereunder and thereunder. The execution, delivery and
performance by the Purchaser of this Agreement and the Ancillary Agreements and
the consummation of the transactions contemplated hereby and thereby have been
duly authorized by the Purchaser's board of directors and no other corporate
action is required on the part of the Purchaser in connection with the
execution, delivery or performance of this Agreement and the Ancillary
Agreements or the consummation of the transactions contemplated hereby and
thereby. This Agreement and the Ancillary Agreements have been duly executed and
delivered by the Purchaser and, assuming the due authorization, execution and
delivery hereof and thereof by the Seller, constitute the valid and legally
binding obligations of the Purchaser enforceable in accordance with their
respective terms.
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5.3 NONCONTRAVENTION.
(a) Neither the execution, delivery or performance of this Agreement or
the Ancillary Agreements, nor the consummation of the transactions contemplated
hereby or thereby will, with or without the giving of notice or the lapse of
time or both, (i) violate any provision of the certificate of incorporation or
bylaws of the Purchaser or (ii) violate any Law or Order or other restriction of
any Governmental Entity to which the Purchaser may be subject.
(b) The execution and delivery of this Agreement and the Ancillary
Agreements by the Purchaser do not, and the performance of this Agreement and
the Ancillary Agreements by the Purchaser and the consummation of the
transactions contemplated hereby and thereby will not, require any consent,
approval, authorization or permit of, or filing with or notification to, any
Governmental Entity.
5.4 BROKERS' FEES. No agent, broker, finder, investment banker,
financial advisor or other similar Person will be entitled to any fee,
commission or other compensation in connection with any of the transactions
contemplated by this Agreement on the basis of any act or statement made or
alleged to have been made by the Purchaser, any of its Affiliates, or any
investment banker, financial advisor, attorney, accountant or other Person
retained by or acting for or on behalf of the Purchaser or any such Affiliate.
ARTICLE VI
CONDITIONS TO OBLIGATION TO CLOSE
6.1 CONDITIONS TO CLOSING BY THE PURCHASER. The obligation of the
Purchaser to effect the transactions contemplated hereby is subject to the
satisfaction or waiver by the Purchaser of the following conditions:
(a) The representations and warranties of the Seller set forth in this
Agreement shall be true and correct in all material respects, with respect to
representations and warranties not qualified by materiality, or in all respects,
with respect to representations and warranties qualified by materiality, as of
the date of this Agreement and as of the Closing Date as though made on and as
of the Closing Date.
(b) The Seller shall have performed in all material respects the
covenants required to be performed by it under this Agreement at or prior to the
Closing Date.
(c) The board of directors of the Seller shall have approved this
Agreement and the Ancillary Agreements and the transactions contemplated hereby
and thereby.
(d) The Seller shall have executed and delivered each of the Ancillary
Agreements.
(e) There shall be no effective or pending Law or Order that would
prohibit the Closing, and the Seller shall have obtained all necessary approvals
of any Governmental Entities in connection with the transactions contemplated
hereby and by the Ancillary Agreements.
(f) The Seller shall have delivered each of the items described in
Section 3.2.
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(g) The Seller shall have delivered to the Purchaser a duly completed
and executed certification pursuant to Section 1.445-2(b)(2) of the Treasury
regulations certifying that the Seller is not a foreign person.
6.2 CONDITIONS TO CLOSING BY THE SELLER. The obligation of the Seller
to effect the Transactions is subject to the satisfaction or waiver by the
Seller of the following conditions:
(a) The representations and warranties of the Purchaser set forth in
this Agreement shall be true and correct in all material respects, with respect
to representations and warranties not qualified by materiality, and in all
respects, with respect to representations and warranties qualified by
materiality, in each case as of the date of this Agreement and as of the Closing
Date as though made on and as of the Closing Date.
(b) The Purchaser shall have performed in all material respects the
covenants required to be performed by it under this Agreement at or prior to the
Closing Date.
(c) The Purchaser shall have executed and delivered each of the
Ancillary Agreements.
(d) There shall be no effective or pending Law or Order that would
prohibit the Closing, and the Purchaser shall have obtained all necessary
approvals of any Governmental Entities in connection with the transactions
contemplated hereby and by the Ancillary Agreements.
(e) The Purchaser shall have delivered each of the items described in
Section 3.3.
ARTICLE VII
INDEMNIFICATION
7.1 INDEMNIFICATION OBLIGATIONS.
(a) Seller shall indemnify (subject to the limitations set forth in
Section 7.3) the Purchaser and its officers, directors, employees, agents and
Affiliates (collectively, the "PURCHASER INDEMNIFIED PARTIES") in respect of,
and hold each harmless from and against, any and all Losses suffered, incurred
or sustained by any of them or to which any of them becomes subject, resulting
from, arising out of or relating to (i) any misrepresentation or breach of
representation or warranty on the part of the Seller contained in this
Agreement, (ii) any nonfulfillment of or failure to perform any covenant or
agreement on the part of the Seller contained in this Agreement, (iii) any
Liabilities of the Seller and (iv) any claim by Kathy Payne (an individual
residing at 3177 Peachtree Road, Ste. 212, Atlanta, GA 30305, (hereinafter
"PAYNE")) that Purchaser's on-line distribution of the Performance (as such term
is defined in the Payne Contract) violates any of the terms of the Payne
Contract or otherwise violates any right of Payne.
(b) Purchaser shall indemnify (subject to the limitations set forth in
Section 7.3) the Seller and its officers, directors, employees, agents and
Affiliates (collectively, the "SELLER INDEMNIFIED PARTIES") in respect of, and
hold each harmless from and against, any and all Losses
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suffered, incurred or sustained by it or to which it becomes subject, resulting
from, arising out of or relating to (i) any misrepresentation or breach of
representation or warranty on the part of the Purchaser contained in this
Agreement and (ii) any nonfulfillment of or failure to perform any covenant or
agreement on the part of the Purchaser contained in this Agreement.
(c) For purposes of indemnification under this Article VII only, all
qualifications as to materiality and/or Material Adverse Effect contained in any
representation or warranty shall be disregarded.
7.2 METHOD OF ASSERTING CLAIMS. Claims for indemnification by an
Indemnified Party under Section 7.1 will be asserted and resolved as follows:
(a) THIRD-PARTY CLAIMS. In the event that any claim or demand in
respect of which an Indemnified Party might seek indemnification under Section
7.1 in respect of, arising out of or involving a claim or demand made by any
Person not a party to this Agreement against an Indemnified Party (a
"THIRD-PARTY CLAIM"), the Indemnified Party shall deliver a Claim Notice to the
Indemnifying Party within thirty (30) days after receipt by such Indemnified
Party of written notice of the Third Party Claim. If the Indemnified Party fails
to provide the Claim Notice within such time period, the Indemnifying Party will
not be obligated to indemnify the Indemnified Party with respect to such
Third-Party Claim to the extent that the Indemnifying Party's ability to defend
is actually prejudiced by such failure of the Indemnified Party. The
Indemnifying Party will notify the Indemnified Party as soon as practicable
within the Dispute Period whether the Indemnifying Party accepts or disputes its
liability to the Indemnified Party under Section 7.1 and whether the
Indemnifying Party desires, at its sole cost and expense, to defend the
Indemnified Party against such Third-Party Claim.
(i) DEFENSE BY INDEMNIFYING PARTY. If the Indemnifying Party notifies
the Indemnified Party within the Dispute Period that the Indemnifying Party
desires to defend the Indemnified Party with respect to the Third-Party Claim
pursuant to this Section 7.2, then the Indemnifying Party will have the right to
defend, with counsel reasonably satisfactory to the Indemnified Party, at the
sole cost and expense of the Indemnifying Party, such Third-Party Claim by all
appropriate proceedings, which proceedings will be vigorously and diligently
prosecuted or defended by the Indemnifying Party to a final conclusion or will
be settled at the discretion of the Indemnifying Party (but only with the
consent of the Indemnified Party in its sole discretion in the case of any
settlement that provides for any relief other than the payment of monetary
damages or that provides for the payment of monetary damages as to which the
Indemnified Party will not be indemnified in full pursuant to Section 7.1).
Subject to the immediately preceding sentence, the Indemnifying Party will have
full control of such defense and proceedings, including any compromise or
settlement thereof; PROVIDED, HOWEVER, that the Indemnified Party may, at the
cost and expense of the Indemnifying Party, at any time prior to the
Indemnifying Party's delivery of notice to assume the defense of such Third
Party Claim, file any motion, answer or other pleadings or take any other action
that the Indemnified Party reasonably believes to be necessary or appropriate to
protect its interests. The Indemnifying Party shall not be liable to the
Indemnified Party for legal expenses incurred by the Indemnified Party in
connection with the defense of such Third Party Claim after the Indemnifying
Party's delivery of notice to assume the defense. In addition, if requested by
the Indemnifying Party, the Indemnified Party will, at the sole cost and expense
of the Indemnifying Party, provide
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reasonable cooperation to the Indemnifying Party in contesting any Third-Party
Claim that the Indemnifying Party elects to contest.
(ii) DEFENSE BY INDEMNIFIED PARTY. If the Indemnifying Party fails to
notify the Indemnified Party within the Dispute Period that the Indemnifying
Party desires to assume the defense of the Third-Party Claim, or if the
Indemnifying Party gives such notice but any time thereafter fails to prosecute
or defend vigorously and diligently or settle the Third-Party Claim, or if the
Indemnifying Party fails to give any notice whatsoever within the Dispute
Period, then the Indemnified Party will have the right to defend, at the sole
cost and expense of the Indemnifying Party, the Third-Party Claim by all
appropriate proceedings, which proceedings will be prosecuted by the Indemnified
Party in good faith or will be settled at the discretion of the Indemnified
Party. The Indemnified Party will have full control of such defense and
proceedings, including any compromise or settlement thereof; PROVIDED, HOWEVER,
that if requested by the Indemnified Party, the Indemnifying Party will, at the
sole cost and expense of the Indemnifying Party, provide reasonable cooperation
to the Indemnified Party and its counsel in contesting any Third-Party Claim
which the Indemnified Party is contesting. Notwithstanding the foregoing
provisions of this Section 7.2, if the Indemnifying Party has notified the
Indemnified Party within the Dispute Period that the Indemnifying Party disputes
its liability hereunder to the Indemnified Party with respect to such
Third-Party Claim and if such dispute is resolved in all respects in favor of
the Indemnifying Party in the manner provided in clause (iii) below, the
Indemnifying Party will not be required to bear the costs and expenses of the
Indemnified Party's defense pursuant to this Section 7.2 or of the Indemnifying
Party's participation therein at the Indemnified Party's request. The
Indemnifying Party may participate in, but not control, any defense or
settlement controlled by the Indemnified Party pursuant to this Section 7.2, and
the Indemnifying Party will bear its own costs and expenses with respect to such
participation.
(iii) ACCEPTANCE BY INDEMNIFYING PARTY. If the Indemnifying Party
notifies the Indemnified Party that it accepts its indemnification liability to
the Indemnified Party with respect to the Third-Party Claim under Section 7.1,
the Loss identified in the Claim Notice, as finally determined, will be
conclusively deemed a liability of the Indemnifying Party under Section 7.1 and
the Indemnifying Party shall pay the amount of such Loss to the Indemnified
Party on demand. If the Indemnifying Party timely disputes its liability with
respect to such Third-Party Claim or fails to notify the Indemnified Party
within the Dispute Period whether the Indemnifying Party disputes its liability
to the Indemnified Party with respect to such Third-Party Claim, the
Indemnifying Party and the Indemnified Party will proceed in good faith to
negotiate a resolution of such dispute, and if not resolved through negotiations
with the Resolution Period, such dispute shall be resolved by litigation in a
court of competent jurisdiction.
(b) NON-THIRD PARTY CLAIMS. In the event any Indemnified Party should
have a claim under Section 7.1 against any Indemnifying Party that does not
involve a Third-Party Claim, the Indemnified Party shall deliver an Indemnity
Notice with reasonable promptness to the Indemnifying Party. The failure or
delay by any Indemnified Party to give the Indemnity Notice shall not impair
such party's rights hereunder except to the extent that the Indemnifying Party
is actually prejudiced by such failure or delay. If the Indemnifying Party
notifies the Indemnified Party that it does not dispute the claim described in
such Indemnity Notice within the Dispute
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Period, the Loss indemnified in the Indemnity Notice will be conclusively deemed
a Liability of the Indemnified Party under Section 7.1 and the Indemnifying
Party shall pay the amount of such Loss to the Indemnified Party on demand. If
the Indemnifying Party has timely disputed its liability with respect to such
claim or fails to notify the Indemnified Party within the Dispute Period whether
the Indemnifying Party disputes the claim described in such Indemnity Notice,
the Indemnifying Party and the Indemnified Party will proceed in good faith to
negotiate a resolution of such dispute and, if not resolved through negotiations
within the Resolution Period, such dispute shall be resolved by litigation in a
court of competent jurisdiction.
7.3 FURTHER ITEMS RELATING TO INDEMNIFICATION. Notwithstanding any
other provision of this Article VII to the contrary, the right of any
Indemnified Party to indemnification under this Article VII shall be subject to
the following terms:
(a) No party hereto shall be required to indemnify or hold harmless any
Person with respect to (i) any claim for indemnification pursuant to clauses (i)
or (ii) of Section 7.1(a), unless and until the Purchaser Indemnified Parties'
aggregate Losses in respect of all such claims exceed $150,000, or (ii) any
claim for indemnification pursuant to Section 7.1(b), unless and until the
Seller Indemnified Parties' aggregate Losses in respect of all such claims
exceed $150,000.
(b) The aggregate liability of the Seller pursuant to clauses (i) and
(ii) of Section 7.1(a) on the one hand, and the aggregate liability of the
Purchaser pursuant to Section 7.1(b) on the other hand, for claims for
indemnification under this Article VII shall not exceed $1,950,000; PROVIDED,
HOWEVER, that the limitation set forth in this Section 7.3(b) shall not apply to
any claim alleging fraud or willful breach.
(c) Any indemnity payment made under this Agreement following the
Closing shall be treated by the parties hereto as a purchase price adjustment,
and the parties agree to report such payments consistent therewith.
(d) Except for claims for indemnification based on fraud or willful
breach and claims arising under Sections 8.1 through 8.5 or 8.8 hereof, the
indemnification provisions of this Article VII are the sole and exclusive remedy
of any Purchaser Indemnified Party or Seller Indemnified Party related to the
matters covered by Section 7.1(a) or Section 7.1(b) above.
(e) The amount of any Losses payable under Section 7.1(a) or Section
7.1(b) above shall be net of any amounts recovered by the indemnified party
under applicable insurance policies.
ARTICLE VIII
POST-CLOSING COVENANTS
8.1 TRADEMARK LICENSE.
(a) The Seller hereby grants to the Purchaser, effective as of the
Closing, the worldwide, royalty-free, non-exclusive, nonassignable,
non-transferable (except as permitted in
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Section 9.5) and limited license to use the trademarks "A.D.A.M.," "adam.com"
and "a.d.a.m." (the "MARKS") on the Co-Developed Products and in connection with
the advertising, marketing, promotion and distribution and sale of the
Co-Developed Products (but specifically excluding any materially modified
versions or derivatives thereof). The initial term of the foregoing license
shall be thirty (30) years. Thereafter, the license will be automatically
renewed for additional twenty (20) year terms.
(b) The Purchaser shall have the right to request from Seller a license
to use the Marks on all derivatives and materially modified versions of the
Co-Developed Products developed after the Closing Date, which request Seller
shall not unreasonably deny (it being understood that it shall not be
unreasonable for Seller to deny such request if the parties cannot agree on a
reasonable royalty). Notwithstanding the foregoing, in the event that Seller
reasonably denies Purchaser's request to license the Marks on any individual
derivative or materially modified version of a Co-Developed Product developed
after the Closing Date, the Seller hereby acknowledges that the Purchaser shall
not be limited or restricted in any manner with respect to the sale or
distribution of any such derivative or materially modified version of a
Co-Developed Product and any materials used in connection with such derivative
or materially modified version of a Co-Developed Product, provided that the
Marks are not used in any manner in connection with such derivative or
materially modified version of a Co-Developed Product and such materials.
(c) The Purchaser's use of the Marks shall at all times be in
accordance with guidelines the Seller may reasonably establish and which have
been provided to the Purchaser. The Purchaser acknowledges and agrees that this
Agreement does not constitute any conveyance of any right, title and interest in
or to the Marks, except for the limited right of use described herein. Purchaser
shall submit to Seller for Seller's approval (which approval shall not be
unreasonably withheld and shall be given or denied within five (5) days after
such submission), any and all materials bearing the Marks, but only to the
extent that the manner of usage thereon is different from Purchaser's historical
usage prior to the Closing Date, at least fifteen (15) days prior to Purchaser's
use of such materials. The Purchaser agrees not to knowingly commit any acts,
directly or indirectly, which may contest, dispute, or otherwise impair the
rights, title or interest of the Seller in and to the Marks. The parties agree
that all uses of the Marks by the Purchaser shall inure to the benefit of the
Seller. The Purchaser shall not knowingly use any language or display the Marks
in such a manner as to create the impression that the Marks belong to or are
owned by the Purchaser. Upon one hundred twenty (120) days written notice by the
Seller, the Purchaser agrees to discontinue the use of the Marks to the extent
that they are being used by the Purchaser in a manner that is inconsistent with
the guidelines set forth above; PROVIDED, HOWEVER, that the Purchaser shall not
be required to alter any stocks of products or materials bearing the Marks which
exist at the time of a change in such guidelines in order to be consistent with
that change, and the Purchaser may deplete such stocks of products and materials
and such depletion shall not be deemed a violation of this Section 8.1.
8.2 NON-COMPETE.
(a) The Seller acknowledges that reasonable limits on its ability to
engage in activities competitive with the Purchaser are warranted to protect the
Purchaser's substantial investment in the Assets. Accordingly, the Seller shall
not, and shall cause its Affiliates not to,
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directly or indirectly, develop, co-develop, publish, co-publish, sell, license
or distribute any Competitive Product of the Co-Developed Products during the
period commencing on the Closing Date and ending five (5) years thereafter.
Seller's ownership of stock of any corporation listed on a national securities
exchange shall not be deemed a violation of this Section 8.2, provided that
Seller and its Affiliates collectively do not own more than five (5%) of the
voting stock of such corporation.
(b) Should any portion of Section 8.2(a) be declared by a court of
competent jurisdiction to be unreasonable, unenforceable or void for any reason
or reasons, the involved court shall modify Section 8.2(a) so as to be
reasonable or as is otherwise necessary to make that Section enforceable and
valid.
(c) Notwithstanding anything contained in Section 8.2 to the contrary,
Seller's (and its Affiliates') development, distribution, publication, sale
and/or license of Permitted Products shall not be deemed a violation of this
Section 8.2.
8.3 DISTRIBUTION OF INVENTORY; DISTRIBUTION AGREEMENT.
(a) From and after the Closing Date, the Seller will cease all
distribution, whether directly or indirectly, of the Co-Developed Products;
PROVIDED, that, for three (3) months after the Closing Date, the Seller shall
have the right to sell its inventory of Co-Developed Products remaining on the
Closing Date in the ordinary course of business consistent with past practice
and in accordance with the terms and conditions set forth on ANNEX III.
(b) After the Closing, the Purchaser (or one of its Affiliates) and the
Seller will enter into good faith negotiations to reach an agreement (the
"Distribution Agreement") for: (a) the Seller to act as the Purchaser's
non-exclusive distributor of the Co-Developed Products for a term of one (1)
year after the Closing Date, and (b) the Purchaser to act as the Seller's
non-exclusive distributor of certain of the Seller's products for a term after
the Closing Date to be mutually agreed upon. In the event that the parties are
unable to reach agreement within three (3) months after the Closing Date,
notwithstanding their exercise of good faith, the Purchaser and the Seller shall
have no further obligation to negotiate with respect to the Distribution
Agreement and, promptly thereafter, the Purchaser shall repurchase the Seller's
inventory then remaining of the Co-Developed Products at the price paid by the
Seller for those products. At the Closing, the Seller shall certify to the
Purchaser the number of Co-Developed Products in its inventory and the
Purchaser's repurchase obligation shall not extend to more than that number of
products. The Purchaser may audit such inventory upon request to the Seller.
8.4 CONTENT LICENSE AGREEMENT.
(a) For a period of three years from and after the Closing Date,
Purchaser hereby grants Seller a non-exclusive, worldwide, non-assignable,
non-transferable license to use, reproduce, distribute, transmit, sublicense
(but only to resellers and end users pursuant to agreements reasonably
satisfactory to the Purchaser), market and publicly display the Physiology
Content as currently used in Seller's A+ Bundle and Essential High School Suite
products (the "LICENSED PRODUCTS") only in those Licensed Products and only in
the manner currently used and in the current format (but specifically excluding
any derivatives or materially modified versions
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thereof). The Seller shall mark each copy of the Licensed Products with a
copyright notice evidencing the Purchaser's ownership of the copyright in the
Physiology Content, such notice to be in form and substance satisfactory to the
Purchaser. The Purchaser may terminate this license by written notice to the
Seller, without prejudice to any other right the Purchaser may have against the
Seller, if the Seller (i) fails to pay the royalties when due; (ii) fails to
protect the Purchaser's copyright in the Physiology Content; or (iii) breaches
any of the other terms of this Section 8.4 (including Annex IV), but, in the
case of subsections (ii) and (iii) above, only if Seller has failed to cure such
breach within thirty (30) days after receipt of written notice thereof. The
foregoing license also is subject to the additional terms and conditions set
forth on ANNEX IV.
(b) Purchaser hereby grants Seller a perpetual, royalty-free,
irrevocable, non-exclusive, worldwide (except as to subsection (i), not in the
Target Market as defined in ANNEX III), non-assignable, non-transferable license
to use, reproduce, distribute, transmit, sublicense (but only to resellers and
end users pursuant to agreements reasonably satisfactory to the Purchaser),
market and publicly display the Physiology Content (i) as currently used in the
Images Products only in the Images Products (and with respect to Images Products
listed on ANNEX V as on-line, modifications thereto, provided that the
percentage of Physiology Content in such modifications does not exceed the
percentage set forth on Annex V) and only in the manner currently used and in
the current format; and (ii) to fulfill the Seller's obligations under that
certain License Agreement dated March 30, 2001 by and between Seller and Guidant
Corporation, but no renewal or amendment thereof. The Seller shall mark each
copy of the Images Products containing any Physiology Content with a copyright
notice evidencing the Purchaser's ownership of the copyright in the Physiology
Content, such notice to be in form and substance satisfactory to the Purchaser.
The Purchaser may terminate this license by written notice to the Seller, if the
Seller (i) fails to protect the Purchaser's copyright in the Physiology Content;
or (ii) breaches any of the terms of this Section 8.4(b), but, in each such
case, only if the Seller has failed to cure such breach within thirty (30) days
after receipt of written notice thereof.
8.5 LICENSE OF EXCLUDED SOFTWARE. The Seller hereby grants to the
Purchaser a non-exclusive, worldwide, perpetual, irrevocable, royalty-free
license to use, reproduce, distribute, transmit, sublicense, market, publicly
display, modify and create derivative works of the Excluded Software in
connection with the Purchaser's products (including the Co-Developed Products
and modifications and derivatives thereof). Such license shall be transferable
and assignable by the Purchaser. Within three (3) Business Days after the
Closing Date, the Seller shall deliver to the Purchaser the Excluded Software in
both source and object code with all related documentation and programmer notes.
8.6 TRANSFER TAXES. Notwithstanding anything herein to the contrary,
Seller shall be liable for and shall pay any Transfer Taxes or other similar tax
imposed in connection with the transfer of the Assets pursuant to this
Agreement. The party responsible under applicable Law for remitting any such tax
shall pay and remit such tax on a timely basis and, if such party is the
Purchaser, the Purchaser shall notify the Seller of the amount of such tax, and
the Seller promptly pay to the Purchaser the amount of such tax.
8.7 FURTHER ACTION. From and after the Closing each of the parties
hereto shall execute and deliver such documents and take such further actions as
may reasonably be required to carry
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out the provisions of this Agreement and the Ancillary Agreements and to give
effect to the transactions contemplated hereby and thereby, including to give
the Purchaser effective ownership and control of the Assets.
8.8 CONFIDENTIALITY. From and after the Closing Date, the Seller shall
keep confidential, and shall inform its Affiliates and their respective
Representatives of the confidential nature of, any information relating to the
Assets, except for any such information that (a) is available to the public on
the Closing Date, (b) thereafter becomes available to the public other than as a
result of a disclosure by the Seller or any of its Representatives, or (c) is or
becomes available to the Seller or any of its Representatives on a
non-confidential basis from a source that to the Seller's or such
Representative's knowledge is not prohibited from disclosing such information to
the Seller or such Representative by a legal, contractual or fiduciary
obligation to any other Person. Should the Seller or any such Representative be
required to disclose any such information in response to an Order or as
otherwise required by Law or administrative process, it shall inform the
Purchaser in writing of such request or obligation as soon as possible after the
Seller is informed of it and, if possible, before any information is disclosed,
so that a protective order or other appropriate remedy may be obtained by the
Purchaser. If the Seller or such Representative is obligated to make such
disclosure, it shall only make such disclosure to the extent to which it is so
obligated, but not further or otherwise.
8.9 RETURNS. Each party shall be responsible for taking and handling
returns of the Co-Developed Products sold or licensed by it prior to the date of
this Agreement.
ARTICLE IX
MISCELLANEOUS
9.1 SURVIVAL. Notwithstanding any right of the Purchaser (whether or
not exercised) to investigate the affairs of the Seller or any right of any
party (whether or not exercised) to investigate the accuracy of the
representations and warranties of the other party contained in this Agreement or
the waiver of any condition to Closing, each of the parties hereto has the right
to rely fully upon the representations, warranties, covenants and agreements of
the other contained in this Agreement. The representations, warranties,
covenants and agreements of the parties hereto contained in this Agreement and
any certificate or other document provided hereunder or thereunder will survive
the Closing until the date that is twelve (12) months following the Closing
Date, except that any representation, warranty, covenant or agreement that would
otherwise terminate in accordance with this sentence will continue to survive if
a Claim Notice or Indemnity Notice (as applicable) shall have been timely given
under Article VII on or prior to such termination date, until the related claim
for indemnification has been satisfied or otherwise resolved as provided in
Article VII, but only with respect to matters described in such Claim Notice or
Indemnity Notice.
9.2 PRESS RELEASES AND PUBLIC ANNOUNCEMENT. No party hereto shall issue
any press release or make any public announcement relating to this Agreement or
the Ancillary Agreements or the transactions contemplated hereby or thereby
without the prior written approval of the other party hereto; PROVIDED, HOWEVER,
that this Section 9.2 shall not apply to any disclosure required by any
applicable Law or stock exchange regulation or rule.
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9.3 NO THIRD-PARTY BENEFICIARIES. The terms and provisions of this
Agreement are intended solely for the benefit of the parties hereto and their
respective successors and permitted assigns, and it is not the intention of the
parties to confer third-party beneficiary rights, and this Agreement does not
confer any such rights, upon any other Person, except for any Person entitled to
indemnity under Article VII.
9.4 ENTIRE AGREEMENT. This Agreement (including the Exhibits and the
Schedules hereto) constitute the entire agreement between the parties hereto
with respect to the subject matter hereof and thereof and supersede any prior
understandings, agreements or representations by or between the parties hereto,
written or oral, with respect to such subject matter.
9.5 SUCCESSION AND ASSIGNMENT. This Agreement shall be binding upon and
inure to the benefit of the parties named herein and their respective successors
and permitted assigns. No party hereto may assign either this Agreement or any
of its rights, interests or obligations hereunder without the prior written
approval of the other parties hereto, except that the Purchaser may assign this
Agreement or any of its rights, interests or obligations hereunder to any
Affiliate of the Purchaser.
9.6 DRAFTING. The parties have participated jointly in the negotiation
and drafting of this Agreement and, in the event an ambiguity or question of
intent or interpretation arises, this Agreement shall be construed as if drafted
jointly by the parties and no presumption or burden of proof shall arise
favoring or disfavoring any party by virtue of the authorship of any of the
provisions of this Agreement.
9.7 NOTICES. All notices, requests and other communications hereunder
must be in writing and will be deemed to have been duly given only if delivered
personally against written receipt or by facsimile transmission or mailed (by
registered or certified mail, postage prepaid, return receipt requested) or
delivered by reputable overnight courier, fee prepaid, to the parties hereto at
the following addresses or facsimile numbers:
If to the Seller, to:
adam.com, Inc.
1600 River Edge Parkway, Suite 800
Atlanta, Georgia 30328
Telephone No. (770) 541-5070
Facsimile No.: (770) 989-4970
Attention: Robert Cramer
with a copy to:
Smith, Gambrell & Russell LLP
1230 Peachtree Street, N.E.
Suite 3100, Promenade II
Atlanta, George 30305
Facsimile: (404) 815-3509
Attention: Michael E. Rubinger
21
<PAGE>
If to the Purchaser, to:
Pearson Education, Inc.
One Lake Street
Upper Saddle River, NJ 07458
Facsimile:
Attention: John Isley and Robert Dancy
with a copy to:
Morgan, Lewis & Bockius LLP
101 Park Avenue
New York, New York 10178-0060
Facsimile: 212-309-6273
Attention: Anne E. Gold
Any party hereto may change the address to which notices, requests, demands,
claims and other communications hereunder are to be delivered by giving the
other parties hereto notice in the manner set forth herein.
9.8 GOVERNING LAW. This Agreement shall be governed by, and construed
in accordance with, the laws of the State of New York, without giving effect to
any choice of law or conflict of law provision or rule that would cause the
application of the Laws of any jurisdiction other than the State of New York.
9.9 CONSENT TO JURISDICTION AND SERVICE OF PROCESS. EACH OF THE PARTIES
HERETO CONSENTS TO THE JURISDICTION OF ANY STATE OR FEDERAL COURT LOCATED WITHIN
THE COUNTY OF NEW YORK IN THE STATE OF NEW YORK AND IRREVOCABLY AGREES THAT ALL
ACTIONS OR PROCEEDINGS RELATING TO THIS AGREEMENT, THE ANCILLARY AGREEMENTS OR
THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY MAY BE LITIGATED IN SUCH COURTS.
EACH OF THE PARTIES HERETO ACCEPTS FOR ITSELF AND IN CONNECTION WITH ITS
RESPECTIVE PROPERTIES, GENERALLY AND UNCONDITIONALLY, THE JURISDICTION OF THE
AFORESAID COURTS AND WAIVES ANY DEFENSE OF FORUM NON CONVENIENS, AND IRREVOCABLY
AGREES TO BE BOUND BY ANY JUDGMENT RENDERED THEREBY IN CONNECTION WITH THIS
AGREEMENT, THE ANCILLARY AGREEMENTS OR THE TRANSACTIONS CONTEMPLATED HEREBY OR
THEREBY. EACH OF THE PARTIES HERETO FURTHER IRREVOCABLY CONSENTS TO THE SERVICE
OF PROCESS OUT OF ANY OF THE AFOREMENTIONED COURTS IN ANY SUCH ACTION OR
PROCEEDING BY THE MAILING OF COPIES THEREOF BY REGISTERED OR CERTIFIED MAIL,
POSTAGE PREPAID, TO SUCH PARTY AT THE ADDRESS SPECIFIED IN THIS AGREEMENT, SUCH
SERVICE TO BECOME EFFECTIVE 15 CALENDAR DAYS AFTER SUCH MAILING. NOTHING HEREIN
SHALL IN ANY WAY BE DEEMED TO LIMIT THE ABILITY OF EITHER PARTY HERETO TO SERVE
ANY SUCH LEGAL PROCESS, SUMMONS, NOTICES AND DOCUMENTS IN ANY OTHER MANNER
PERMITTED BY APPLICABLE LAW OR TO OBTAIN JURISDICTION OVER OR TO BRING ACTIONS,
22
<PAGE>
SUITS OR PROCEEDINGS AGAINST THE OTHER PARTY HERETO IN SUCH OTHER JURISDICTIONS,
AND IN SUCH MANNER, AS MAY BE PERMITTED BY ANY APPLICABLE LAW.
9.10 WAIVER OF JURY TRIAL. EACH OF THE PARTIES HERETO IRREVOCABLY AND
UNCONDITIONALLY WAIVES TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING RELATING
TO THIS AGREEMENT, THE ANCILLARY AGREEMENTS OR THE TRANSACTIONS CONTEMPLATED
HEREBY OR THEREBY AND FOR ANY COUNTERCLAIM RELATING THERETO.
9.11 AMENDMENTS AND WAIVERS. No amendment of any provision of this
Agreement shall be valid unless such amendment is in writing and signed by each
of the parties hereto. No waiver by any party hereto of any default,
misrepresentation or breach of warranty or covenant hereunder, whether
intentional or not, shall be deemed to extend to any prior or subsequent
default, misrepresentation or breach of warranty or covenant hereunder or affect
in any way any rights arising by virtue of any prior or subsequent such
occurrence. No waiver shall be valid unless such waiver is in writing and signed
by the party against whom such waiver is sought to be enforced.
9.12 SEVERABILITY. Except as set forth in Section 8.2(b), if any
provision of this Agreement is held to be illegal, invalid or unenforceable
under any present or future Law, and if the rights or obligations of any party
hereto under this Agreement will not be materially and adversely affected
thereby, (a) such provision will be fully severable, (b) this Agreement will be
construed and enforced as if such illegal, invalid or unenforceable provision
had never comprised a part hereof, (c) the remaining provisions of this
Agreement will remain in full force and effect and will not be affected by the
illegal, invalid or unenforceable provision or by its severance herefrom and (d)
in lieu of such illegal, invalid or unenforceable provision, there will be added
automatically as a part of this Agreement a legal, valid and enforceable
provision as similar in terms of such illegal, invalid or unenforceable
provision as may be possible.
9.13 EXPENSES. Except as otherwise expressly set forth herein or
therein, each of the parties hereto will bear its own costs and expenses
(including legal fees and expenses) incurred in connection with this Agreement,
the Ancillary Agreements and the transactions contemplated hereby or thereby,
whether or not the transactions contemplated hereby or thereby are consummated.
9.14 INCORPORATION OF EXHIBITS AND SCHEDULES. The Exhibits, Annexes and
Schedules identified in this Agreement are incorporated herein by reference and
made a part hereof. Unless otherwise specified, no information contained in any
particular numbered Schedule shall be deemed to be contained in any other
numbered Schedule unless explicitly included therein (by cross reference or
otherwise).
9.15 SPECIFIC PERFORMANCE. The parties hereto agree that irreparable
damage would occur in the event that any provision of this Agreement was not
performed in accordance with the terms hereof and that the parties shall be
entitled to specific performance of the terms hereof in addition to any other
remedy available to them at law or equity.
23
<PAGE>
9.16 HEADINGS. The descriptive headings contained in this Agreement are
included for convenience of reference only and shall not affect in any way the
meaning or interpretation of this Agreement.
9.17 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, and by the different parties hereto in separate counterparts, each
of which when executed shall be deemed to be an original but all of which taken
together shall constitute one and the same agreement.
9.18 BULK SALES LAWS. The parties hereto hereby waive compliance with
the bulk sales Laws of any jurisdiction in which any of the Assets are located
or in which any operations relating to the Seller's business are conducted.
[Signature page follows.]
24
<PAGE>
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as of
the date first written above.
PEARSON EDUCATION, INC.
By:______________________________________
Name:
Title:
adam.com, Inc.
By:______________________________________
Name:
Title:
<PAGE>
Annex I
Permitted Products
3D Library Volume 2(1)
ADAM Media(1)
Anatomy Practice Institutional Version(1)
Anatomy Practice Student Version(1)
A.D.A.M. Interactive Anatomy(1)
Iliad(1)
Media Pro(1)
Practice Practical(1)
ATIS Complete(1)
Nine Month Miracle(1)
A.D.A.M. The Inside Story(1)
ATIS Online(2)
Life's Greatest Mysteries(1)
A.D.A.M. Online Anatomy(2)
Physician's Home Assistant(1)
Pediatrician's Home Assistant(1)
The Spine(1)
Genetics(1)
Health Encylopedia (Illustrated and Non-Illustrated)(2)
Text-Only Encyclopedia(2)
Pregnancy Health Center(2)
Child Safety Health Center(2)
Surgeries and Procedures(2)
Outdoor Health Center(2)
Body Atlas(2)
LIDO collection of images(2)
A.D.A.M. Body System Navigator(2)
-----------
(1) CD ROM
(2) On-line
<PAGE>
Annex II
Co-Developed Products
ISBN TITLE AUTHOR
--------------------------------------------------------------------------------------
0805390863 Interactive Phys Cardio Module Marieb
0805391096 Interactive Phys Muscular Module Branstrom
0805347992 Interactive Phys Respir Module Salmi
0805391592 Interactive Phys Nervous Sys Mitchell
0805360743 I/A Physio Nerv Sys 2 CD ADAM
0805321411 Interactive Phys Urinary Sys Branstrom
0201951495 Cardiovascular CD ROM Marieb
0805398961 Interactv Physio Fluids& Adam
0805309993 Fluids & Electrolytes I/A Adam
0805396918 I/A Phys Fluid Electrolyte Adam
0805360727 IP Nervous Sys 2 I/A Phy Adam
080539690X I/A Phsio Nervous 2 Inst Adam
0805349839 IP Web Version 1.0 Adam
0805361065 I/P V2.0 7-System Suite CD Adam
0805359753 I/PWeb Single 6-month Subscription with HAP 5e Adam
0805359710 I/PWeb Single 12-month Subscription with HAP 5e Adam
0805359729 I/PWeb Single 18-month Subscription with HAP 5e Adam
0805359761 I/PWeb Single 6-month Subscription Adam
0805359737 I/PWeb Single 12-month Subscription Adam
0805359745 I/PWeb Single 18-month Subscription Adam
0805360808 I/P V2.0 Cardiovascular System CD Student Version Adam
0805360842 I/P V2.0 Muscular System CD Student Version Adam
0805360840 I/P V2.0 Respiratory System CD Student Version Adam
<PAGE>
0805360867 I/P V2.0 Urinary System CD Student Version Adam
0805360883 I/P V2.0 Nervous System I CD Student Version Adam
0805360905 I/P V2.0 Nervous System II CD Student Version Adam
0805360921 I/P V2.0 Fluids &Electrolytes System CD Stu Adam
0805321071 Interactv Phy Respiratry Salmi
0805391339 Interactive Phy Muscular CD Branstrom
0805391460 CD Adam I/A CDROM Physio Salmi
0805391592 Nervous System CD I/A Phy Mitchell
0805396365 Interactive Phy Respirat Salmi
0805396373 Interactv Phy Nerv 1Stud Mitchell
0805396381 Interactive Phy Urin Sys Branstrom
080539639X Interactive Phy Muscular Branstrom
0805396454 Interactive Phy Cardiovas Marieb
0805396632 I/A Phys Cardiovasclr Sys Marieb
0805396640 I/A Phys Respiratory Syst Mitchell
0805396659 I/A Phys Nervous System 1 Mitchell
0805396667 I/A Phys Muscle Instr Branstrom
0805396675 I/A Phy Urin Inst Mod Branstrom
For greater certainty, the Co-Developed Products include the Software (excluding
the Excluded Software) and all other works included in the Co-Developed
Products.
<PAGE>
Annex III
Terms and Conditions of Distribution of Inventory
DEFINITIONS:
"TARGET MARKET" means that portion of the worldwide market consisting of higher
education markets, including two and four year undergraduate schools, and
graduate schools of nursing. The Target Market includes institutions in that
market, together with students and faculty in those institutions. The Target
Market does not include: (i) secondary schools (grades 7-12), (ii) graduate
schools other than nursing schools, or (iii) schools within the Allied Health
Market.
"ALLIED HEALTH MARKET" means those academic disciplines encompassed by and
associated with, but not limited to, medical and/or dental technology careers
and therapeutic careers; examples would include medical records technology,
dental hygiene, dental assistants, occupational therapy and radiology
technology.
"ADOPTION CHANNELS" refers to sales, in class or course size quantities to
college book stores or college/school districts, into the education class or
education course market, including in particular sales through college or school
professors, instructors or other school/college decision makers.
"NET RECEIPTS" means gross receipts from the distribution, licensing and/or sale
of the inventory of Co-Developed Products (exclusive of any applicable discounts
and allowances and returns, and prepaid transportation, insurance and taxes
charged to and reimbursed by customers).
"BUNDLED PRODUCTS" means inventory of Co-Developed Products that are bundled or
sold in a package with or otherwise in combination with student textbooks or
other student-oriented publications. The term Bundled Products includes "Bundled
Co-Developed Products"
LIMITATION ON DISTRIBUTION RIGHTS:
Seller may not distribute its inventory of Co-Developed Products, directly or
through a third party, within Adoption Channels in the Target Market, and it may
not bundle, directly or through a third party, any of its inventory of
Co-Developed Products with any other product for distribution within the Target
Market.
Subject to the limitation on the use of Designated Companies described below,
where the Seller is permitted to distribute in the Target Market, that
distribution may be done directly by the Seller or through the use of third
party distributors. Further, the Seller may use third party distributors to
exercise its distribution rights to distribute its inventory of the Co-Developed
Products to the secondary school science market (grades 7-12) or to any graduate
or professional schools other than nursing schools. The Seller shall not use any
of the following "Designated Companies" to distribute in the Allied Health
Market, its inventory of the Co-Developed Products: McGraw Hill; Mosby; Prentice
Hall; Harcourt-Brace/Saunders; Jones and Bartlett;
<PAGE>
WH Freeman; ITP/Delmar; John Wiley & Sons; or any subsidiaries of any of these
Designated Companies.
ROYALTIES:
With respect to each sale, license or other distribution of any Co-Developed
Products from such inventory, the Seller will pay the Purchaser a royalty equal
to fifty percent (50%) of the Seller's Net Receipts from said sales, licensing
and/or other distribution.
PAYMENT OF ROYALTIES:
Within twenty-five (25) days after the end of each calendar quarter, the Seller
will pay to the Purchaser any royalty due above on the Seller's Net Receipts for
the preceding quarter. Each royalty payment will be accompanied by a written
report showing the calculation of the payment and the sales or other receipts on
which that calculation is based.
END-USER LICENSES:
All end-user license agreements used in connection with the sale, license or
distribution of such inventory shall be in the form of an end-user license
agreement to be mutually agreed upon by Seller and Purchaser.
AUDIT:
Upon the Purchaser's written request, but not more than once, the Purchaser may,
at its own cost and expense, during regular business hours, examine or cause to
be examined through certified public accountant's the books of account of the
Seller insofar as they relate to the sale, license or distribution of such
inventory. If, as a result of such an audit, it is determined that there has
been an underpayment of amounts due to the Purchaser hereunder, the Seller shall
pay to the Purchaser an amount equal to the resulting underpayment, plus
interest thereon at the prime interest rate as published by THE WALL STREET
JOURNAL, from the date the payment was required to be made.
<PAGE>
Annex IV
Additional Terms and Conditions of Content License
DEFINITIONS:
"NET RECEIPTS" means gross receipts from the distribution, licensing and/or sale
of the Licensed Products (exclusive of any applicable discounts and allowances
and returns, and prepaid transportation, insurance and taxes charged to and
reimbursed by customers).
ROYALTIES:
The Seller shall pay a royalty with respect to the sale, license or distribution
of each Licensed Product, in an amount determined as follows:
The royalty to be paid shall be thirty percent (30%) of that portion of the Net
Receipts from the sale, license or distribution of such Licensed Product as is
proportionate to the amount of Physiology Content used in the Licensed Product
as compared to the total amount of all content in the Licensed Product.
ROYALTY PAYMENTS:
Within twenty-five (25) days after the end of each calendar quarter, the Seller
will pay to the Purchaser any royalty due above on Seller's Net Receipts for the
preceding quarter. Each royalty payment will be accompanied by a written report
showing the calculation of the payment and the sales or other receipts on which
that calculation is based.
AUDIT:
Upon the Purchaser's written request, but not more than once each calendar year,
the Purchaser may, at its own cost and expense, during regular business hours,
examine or cause to be examined through certified public accountant's the books
of account of the Seller insofar as they relate to the sale, licensing or
distribution of the Licensed Products, for the two years immediately preceding
the year in which the audit is conducted. If, as a result of such an audit, it
is determined that there has been an underpayment of amounts due to the
Purchaser hereunder, the Seller shall pay to the Purchaser an amount equal to
the resulting underpayment, plus interest thereon at the prime interest rate as
published by THE WALL STREET JOURNAL, from the date the payment was required to
be made.
<PAGE>
Annex V
Images Products
-------------------------------- ------------------ ------------------------ ------------------- ------------
PHYSIOLOGY CONTENT
PRODUCT TOTAL IMAGES DERIVED IMAGES PERCENTAGE FORMAT
-------------------------------- ------------------ ------------------------ ------------------- ------------
Health Illustrated Encyclopedia 4068 25 0.006145526 Online
-------------------------------- ------------------ ------------------------ ------------------- ------------
Surgeries and Procedures 691 5 0.00723589 Online
-------------------------------- ------------------ ------------------------ ------------------- ------------
-------------------------------- ------------------ ------------------------ ------------------- ------------
PRODUCT TOTAL MEGABYTES ESTIMATED MEGABYTES OF PERCENTAGE FORMAT
PHYSIOLOGY CONTENT
-------------------------------- ------------------ ------------------------ ------------------- ------------
ADAM The Inside Story Online 36 1.2 0.033333333 Online
-------------------------------- ------------------ ------------------------ ------------------- ------------
-------------------------------- ------------------ ------------------------ ------------------- ------------
PRODUCT TOTAL MEGABYTES ESTIMATED MEGABYTES OF PERCENTAGE FORMAT
PHYSIOLOGY CONTENT
-------------------------------- ------------------ ------------------------ ------------------- ------------
A.D.A.M. The Insides Story 578 8 0.01384083 cd-ROM
CD-ROM
-------------------------------- ------------------ ------------------------ ------------------- ------------
Nine Month Miracle CD-ROM 642 1 0.000778816 cd-ROM
-------------------------------- ------------------ ------------------------ ------------------- ------------
Life's Greatest Mysteries 644 5 0.007763975 cd-ROM
CD-ROM
-------------------------------- ------------------ ------------------------ ------------------- ------------
A.D.A.M. Media 217 1 0.004608295 cd-ROM
-------------------------------- ------------------ ------------------------ ------------------- ------------
<PAGE>
SCHEDULE 4.5
CONTRACTS
1. Seller has ongoing customer licenses related to various Seller products of
which the Physiology Content represents less than 25% of the content of
such Seller products, measured in data storage bytes. These customer
licenses include a Content License Agreement dated March 30, 2001 between
Seller and Guidant Corporation. All of such customer licenses are in the
forms attached hereto, except for the Guidant license.
2. See the disclosure on Schedule 4.6 related to the software license with
Altura.
3. The Payne Contract.
<PAGE>
SCHEDULE 4.6
COPYRIGHT REGISTRATIONS AND APPLICATIONS; SOFTWARE
1. Seller has not registered any copyrights or filed any applications for
copyright registration related to the Co-Developed Products.
2. The Excluded Software and Included Software are the only Software
included in the Co-Developed Assets. The term "Included Software" means
Adam's Animation Page Interactivity, Hotdata, Help-Macintosh,
Installer-Macintosh and Installer-Windows.
3. Seller is not the owner of the Intellectual Property in any of the software
development applications underlying the Included Software and Excluded
Software. A license of Altura Quickview is required to use Help-Macintosh.
No licenses are required to use the other Included Software.
4. See SCHEDULE 4.5(1) regarding Guidant Corporation.