Fill and Sign the Partnership Interest Form

C PARTNERSHIP INTEREST PURCHASE AGREEMENT by and between FRANKLIN COVEY CO., a Utah corporation, and DAYTRACKER.COM, a general partnership, and SCOT ROBINSON, an individual, and MICHAEL BARLOW, an individual, Effective December 8, 1999 PARTNERSHIP INTEREST PURCHASE AGREEMENT --------------------------------------- THIS PARTNERSHIP INTEREST PURCHASE AGREEMENT (the "Agreement") is entered into this 8th day of December, 1999, by and among FRANKLIN COVEY CO., a Utah corporation ("Franklin Covey"), and DAYTRACKER.COM, a California general partnership ("DayTracker"), SCOT ROBINSON, an individual ("Robinson"), and MICHAEL BARLOW, an individual ("Barlow"). Robinson and Barlow are sometimes individually and collectively referred to herein as "Seller." The capitalized terms used in this Agreement, which are not defined in context, have the meanings specified in Article 9 below. RECITALS: WHEREAS, DayTracker is in the business of providing, among other things, WEB-based personal and group information management and calendaring software applications and solutions; and WHEREAS, Robinson owns a fifty percent (50%) partnership interest in DayTracker (the "Robinson Partnership Interest") and Barlow owns a fifty percent (50%) partnership interest in DayTracker (the "Barlow Partnership Interest"); and WHEREAS, DayTracker is the owner of certain intangible personal property, including intellectual property used in the conduct of DayTracker's business, the name "DayTracker.com," all other trade names under which DayTracker has conducted its business and operations, and certain other assets, as described on Schedule A attached hereto and by this reference incorporated herein (the "Assets"); and WHEREAS, Franklin Covey desires to purchase 88.05% of the Robinson Partnership Interest and 88.05% of the Barlow Partnership Interest, resulting in Franklin Covey owning an 88.05% partnership interest, Robinson owning a 5.975% partnership interest and Barlow owning a 5.975% partnership interest, respectively, in DayTracker, all upon the terms and conditions set forth in this Agreement, and WHEREAS, Franklin Covey, Robinson and Barlow each desires to then contribute its or his respective partnership interest in DayTracker to a new corporation incorporated in the State of Utah, as Franklin Covey eSolutions, Inc., a Utah Corporation(hereinafter, "eSolutions, Inc.) in exchange for the number of shares of eSolutions, Inc. common stock that will represent a percentage equity interest in eSolutions, Inc. equal to its or his percentage partnership interest in DayTracker immediately prior to said exchange, and to take such other actions and execute such other agreements as are necessary and appropriate to enable eSolutions, Inc. to own, manage, operate and exploit the Assets and to otherwise carry out and conduct the same business as was previously conducted by DayTracker (the "Business") prior to the date of the Closing; and WHEREAS, the parties then desire that Franklin Covey will, immediately following the foregoing transactions, purchase additional shares of stock in eSolutions, Inc. for a total purchase price of Two Million Dollars ($2,000,000), 20 resulting in Franklin Covey owning 90% of the issued and outstanding stock of eSolutions, Inc. and Robinson and Barlow each owing 5% of the issued and outstanding stock of eSolutions, Inc. as of the Closing Date; and WHEREAS, Seller is making certain representations, warranties, covenants and indemnities herein as an inducement to Franklin Covey to enter into this Agreement; NOW THEREFORE, in consideration of the respective representations, warranties and covenants contained herein and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows: ARTICLE 1 SALE OF PARTNERSHIP INTERESTS; EXCHANGE TRANSACTION; TRANSACTION AGREEMENTS; CLOSING 1.1 SALE OF PARTNERSHIP INTERESTS. Subject to the terms and conditions of this Agreement, at the Closing, (i) Robinson shall sell, transfer and deliver to Franklin Covey, and Franklin Covey shall purchase from Robinson for the Robinson Purchase Price set forth in Section 1.8(a), below, all right, title and interest in and to 88.05% of the Robinson Partnership Interest; and (ii) Barlow shall sell, transfer and deliver to Franklin Covey, and Franklin Covey shall purchase from Barlow for the Barlow Purchase Price set forth in Section 1.8(b), below, all right, title and interest in and to 88.05% of the Barlow Partnership Interest. As the result of the foregoing transactions, Franklin Covey shall own an 88.05% partnership interest in DayTracker, Barlow shall own a 5.975% partnership interest in DayTracker, and Robinson shall own a 5.975% partnership interest in DayTracker immediately following the Closing. 1.2 TAX ELECTIONS. The parties acknowledge that pursuant to Section 708(b)(1)(B) of the Internal Revenue Code of 1986, as amended, (the "Code"), the consummation of the transactions described in Section 1.1 above will cause the technical termination of the DayTracker partnership originally formed by Robinson and Barlow ("Original DayTracker"), will create the existence of a new partnership ("New DayTracker"), and will require the filing by Original DayTracker of a final partnership tax return. Robinson and Barlow agree to prepare said final tax return and to submit it to Franklin Covey for Franklin Covey's approval, which approval shall not be unreasonably withheld or delayed. Upon Franklin Covey's approval of the final tax return, Robinson and Barlow shall execute and file said final tax return. Robinson and Barlow shall cause Original DayTracker to file as part of said final tax return an election pursuant to Section 754 of the Code to adjust the basis of the Original DayTracker partnership assets to reflect the difference between Franklin Covey's basis for the partnership interest it acquired pursuant to Section 1.1 above and its proportionate share of the adjusted basis of all partnership property. In accordance with Section 1060 of the Code, the parties shall allocate the increase in basis of FC' share of the assets of DayTracker pursuant to the values set forth in Schedule B hereto. 21 1.3 INCORPORATION OF ESOLUTIONS, INC. Franklin Covey has heretofore executed and filed with the State of Utah Articles of Incorporation forming eSolutions, Inc. A copy of said Articles is attached hereto as Exhibit 1.3. 1.4 Exchange Transaction. Subject to the terms and conditions of this Agreement, Franklin Covey, Robinson and Barlow shall be parties to and each agrees to execute an Exchange Agreement, in the form attached hereto as Exhibit 1.4, whereby each shall contribute to eSolutions, Inc. its or his entire respective partnership interest in New DayTracker solely in exchange for the number of shares of common stock of eSolutions, set forth below in a transaction intended to qualify under Section 351 (a) of the Code (the "Exchange"). As the result of the Exchange, each party shall own the percentage of eSolutions, Inc. stock (the "Common Stock") set forth opposite his or its name as follows: Shareholder eSolutions, Inc. Shares Acquired Percent of eSolutions, Inc. Stock Held - --------------------- --------------------------------- -------------------------------------- Robinson 5,000 5.975% Barlow 5,000 5.975% Franklin Covey 73,637 88.05% The parties acknowledge that pursuant to Section 708(b)(1)(B) of the Code, the consummation of the transactions described in this Section 1.4 will cause the technical termination of the New DayTracker partnership and will require the filing by New DayTracker of a final partnership tax return. Franklin Covey shall prepare said tax return and submit it to Robinson and Barlow for their approval. Upon said approval, which shall not be unreasonably withheld or delayed, Franklin Covey shall file said tax return. 1.5 FRANKLIN COVEY STOCK PURCHASE. Concurrently with the Exchange, Franklin Covey shall, at the Closing, purchase an additional 16,363 shares of eSolutions, Inc. common stock for a total purchase price of Two Million Dollars ($2,000,000). Following said purchase, the parties shall own the number of shares of eSolutions, Inc. common stock, representing the percentage ownership interests in eSolutions, Inc. set forth below: Shareholder eSolutions, Inc. Shares Owned Percent of eSolutions, Inc. Stock Held - --------------------- --------------------------------- -------------------------------------- Robinson 5,000 5% Barlow 5,000 5% Franklin Covey 90,000 90% 1.6 SHAREHOLDER AGREEMENT. Upon the completion of the Exchange, Franklin Covey, Robinson and Barlow shall execute a Shareholder Agreement in the form attached hereto as Exhibit 1.6, which shall provide, among other things, the following: (a) Franklin Covey shall, (i) provided Robinson owns at least a two percent (2%) equity interest in eSolutions, Inc. vote its shares of eSolutions, Inc. stock to elect Robinson as a director of eSolutions, Inc., 22 and (ii) provided Barlow owns at least a two percent (2%) equity interest in eSolutions, Inc., vote its shares of eSolutions, Inc. stock to elect Barlow as a director of eSolutions, Inc. Robinson and Barlow shall be provided reasonable errors and omissions insurance and such other benefits as are afforded other directors of eSolutions, Inc.; and (b) Neither Barlow nor Robinson, nor their designees, heirs or assigns, shall offer to sell or sell any stock of eSolutions, Inc to any third party without first offering to sell said stock to Franklin Covey at the same price and on the same terms and conditions offered to or by said third party; and (c) eSolutions, Inc. shall not raise capital or enter into any transaction that would dilute either Robinson's or Barlow's equity interest in eSolutions, Inc. unless the Board of Directors of eSolutions, Inc. unanimously votes in favor of such transaction; in this connection, Franklin Covey and Seller agree that, if feasible and prudent, additional capital shall be raised by borrowing, rather than through capital contribution(s); and (d) Subject to the provisions of Section 1.6(c), any capital contributions made by the shareholders of eSolutions, Inc. if any, subsequent to Franklin Covey's stock purchase described in Section 1.5, shall be pro rata with respect to all shareholders, each shareholder contributing a percentage of the aggregate dollar capital contribution of all shareholders that corresponds to its or his percentage stock ownership in eSolutions, Inc. and (e) In the event any shareholder fails to make its or his pro rata contribution to working capital ("Omitted Contribution") as determined by the Board of Directors of eSolutions, Inc. the other shareholders may make said capital contribution, and will be issued sufficient additional Common Stock so that the percentage ownership interest of the non-contributing shareholder shall be diluted by the quotient derived by dividing a numerator consisting of the Omitted Contribution, by a denominator consisting of the then fair market value of the total outstanding eSolutions, Inc. stock; and (f) Subject to the provisions of Section 1.6(c), Robinson, Barlow and Franklin Covey shall, in the event a third party purchases eSolutions, Inc. stock, be diluted on a pari passu basis; provided, however, that Robinson, Barlow shall have the right to purchase shares of eSolutions, Inc. stock at the same price paid by the third party purchaser the number of additional shares of eSolutions, Inc. stock necessary to maintain the same percentage equity position in eSolutions, Inc. which each of them held prior to said third party share purchase; and (g) In the event options are granted to third parties to purchase eSolutions, Inc. stock, Robinson, Barlow and Franklin Covey shall be diluted on a pari passu basis; provided, however, that any shareholder may avoid dilution as the result of any such stock option grants by purchasing at a price equal to the then fair market value of a share of eSolutions, Inc. stock the number of additional shares of eSolutions, Inc. stock 23 necessary to maintain the same percentage equity position in eSolutions, Inc. the shareholder held prior to said option grant eSolutions, Inc.; and (h) In the event Robinson and Barlow have not been afforded the opportunity within two years following the Closing Date, to liquidate their stock in eSolutions, Inc. through an initial public offering of eSolutions, Inc. stock, a merger, acquisition, consolidation or other similar transaction (a "Liquidation Transaction"), Franklin Covey shall have the option, exercisable during the time period commencing on the second anniversary date of the Closing Date (the "Call Option Trigger Date") and ending on the date ninety (90) days after the Call Option Trigger Date (the "Call Option Period"), to purchase not less than 100% of said shares (the "Optioned Shares") at an option exercise price calculated in accordance with Schedule 1.6(h) attached hereto as of the Call Option Trigger Date (the "Option Exercise Price"). In the event Franklin Covey fails to exercise the foregoing option to purchase the Optioned Shares during the Call Option Period, Robinson and Barlow shall have the right and option, exercisable during the time period commencing on the next business day following the Call Option Period (the "Put Option Trigger Date") and ending on the date ninety (90) days after the Put Option Trigger Date to put the Optioned Shares to Franklin Covey for purchase at the Option Exercise Price. The foregoing notwithstanding, should Robinson and Barlow be required to make a contribution to capital of eSolutions, Inc. or should a contribution to capital be made on their behalf, the Call Option Trigger Date applicable to Franklin Covey, including the date as of which the option exercise price shall be calculated, shall not occur until the second anniversary date of the Closing date or one year following the date of the last such capital contribution, whichever shall last occur. In the event of such capital contribution, the Put Option Trigger Date shall not be extended, and shall be advanced to the day immediately following the second anniversary date of the Closing Date; and (i) If Franklin Covey purchases the Optioned Shares pursuant to the provisions of paragraph 1.6(h), above, and within two (2) years thereafter the Board of Directors of Franklin Covey or the Board of Directors of eSolutions, Inc. whichever shall last occur (the "Resolution Date"), adopts a resolution to cause eSolutions, Inc. to engage in a Liquidation Transaction, said Optioned Shares shall be valued based on the value established for eSolutions, Inc. stock in the Liquidation Transaction (the "Liquidation Share Value") and Franklin Covey shall transfer and convey to Robinson and Barlow the number of shares of eSolutions, Inc. stock having a value equal to the percent of the Liquidation Share Value determined by the following table, but reduced by the price paid by Franklin Covey to Robinson and Barlow for the Optioned Shares pursuant to Section 1.6(h) above. Time Lapse Between Put or Call Percent of Liquidation Share Percent of Liquidation Share Option Exercise and Resolution Value if Franklin Covey Call Value if Robinson/Barlow Put Date Option Exercised Option Exercised - ------------------------------ ----------------------------- ------------------------------- 1 to 3 months 100% 100% 4 to 6 months 100% 80% 7 to 9 months 80% 60% 10 to 12 months 60% 40% 13 to 24 months 40% 20% 24 The Shareholder Agreement shall further provide that (i) Franklin Covey shall not exercise a call option, without the consent of Robinson and Barlow, during such time as the Board of Directors of Franklin Covey has under consideration or has passed a resolution to cause eSolutions, Inc. to pursue a Liquidation Transaction, and (ii) should Robinson and Barlow exercise a put right during such time, Franklin Covey shall, if it has not already done so, advise Robinson and Barlow that such resolution is under consideration, or has been adopted, and Robinson and Barlow shall have ten business days thereafter within which to withdraw the tender of such put. Without limitation of the foregoing, should the Board of Directors of Franklin Covey, or any committee or officer of Franklin Covey retain consultants, investment advisors or counsel to explore the possibility of a Liquidation Transaction, said Board shall be deemed to have a Liquidation Transaction under consideration. The Shareholder Agreement shall further provide that, in the event eSolutions, Inc. has issued shares or options to a third party, or has reached any agreement to issue shares to a third party, prior to the exercise of a put by Robinson or Barlow, or call by Franklin Covey, and has established a valuation for the Common Shares for purposes of said issuance ("Third Party Value") the Optioned Shares shall be valued for purposes of said put or call at the Option Exercise Price, or at the Third Party Value price, whichever is greater. (j) Any additional contribution to capital by Robinson or Barlow within 12 months prior to exercise of a put or call option pursuant to Section 1.6(h) shall be added to the Option Exercise Price (or Third Party Value price as the case may be), as more specifically set forth at Schedule 1.6(h), attached; and (k) Franklin Covey and its Affiliates may, from time to time, render services, material, or other support to or for the benefit of eSolutions, Inc. Franklin Covey and its Affiliates may charge eSolutions, Inc. for such matters; provided, however, that (a) Franklin Covey shall not charge eSolutions, Inc. more than the then prevailing fair market price of any services rendered by Franklin Covey to eSolutions, Inc. (b) transfer prices charged by Franklin Covey to eSolutions, Inc. for Franklin Covey products supplied to eSolutions, Inc. shall not exceed the lowest price charged by Franklin Covey to Franklin Covey Affiliates or third party customers; (c) Franklin Covey shall not charge eSolutions, Inc. any license fees or royalties in connection with eSolutions, Inc.'s use of Franklin Covey brands or trademarks in advertising, labeling or marketing materials and media; and (d) if Franklin Covey or eSolutions, Inc. advertises, promotes, endorses or markets the products or services of the other, any charges for such services shall not exceed the actual cost of producing the promotional or marketing materials used in connection with said services. The charge for such matters shall be accrued by Franklin Covey, and shall be payable by eSolutions, Inc., to the extent of proceeds available from the first to 25 occur of (i) positive cash flow, or (ii) a liquidation event, or (iii) equity contribution by Persons other than the parties or their Affiliates, or (iv) money loaned to eSolutions, Inc. by Persons other than the parties or their Affiliates. (l) In the event any capital contribution by Robinson or Barlow is required or permitted at a time when any portion of the principal balance of the Robinson Note or the Barlow Note remains unpaid ("Unpaid Balance"), Franklin Covey shall at Robinson's and/or Barlow's request. loan said sum to Robinson or Barlow as the case may be (the "Loan"), in an amount up to, but not exceeding the Unpaid Balance at the same rate of interest born by, and to be repaid at the time of payment of, the last remaining installment of the Unpaid Balance which would reduce the Unpaid Balance to an amount below the Loan amount outstanding. At the time of said repayment, Franklin Covey may offset any remaining obligation under a Loan against the Unpaid Balance. 1.7 Additional Understandings. In connection with Franklin Covey's purchase of the Robinson Partnership Interest and the Barlow Partnership Interest and each other transaction contemplated by this Agreement, and pursuant to Franklin Covey's investigation of the Business as provided in this Agreement, Franklin Covey has reviewed and examined all business records, service agreements, supply agreements, marketing agreements, customer contracts, employment agreements, and related agreements and all other contracts and relationships which Seller or DayTracker has with any suppliers, vendors, customers or any third parties providing services, supplies or equipment to DayTracker or with whom DayTracker does business and has met with all employees, officers and directors of DayTracker, if any, other than Seller, and others necessary for Franklin Covey to fully evaluate the Business and Assets and the transactions contemplated hereby. Franklin Covey has made reasonable physical inspections of the Assets and reasonable legal or factual inquiry of any matter relating to the subject matter of this Agreement as Franklin Covey, in its sole discretion, deemed necessary or appropriate, including reviewof the books, records, expenses, and other financial data relating to the Business and the Assets. 1.8 Purchase Price. (a) Subject to the terms and conditions of this Agreement, the purchase price to be paid by Franklin Covey for the Robinson Partnership Interest (the "Robinson Purchase Price") shall be Four Million Five Hundred Thousand Dollars ($4,500,000.00), payable as follows: One Million Five Hundred Thousand Dollars ($1,500,000.00) shall be payable in cash at the Closing, and the sum of Three Million Dollars ($3,000,000.00) shall be represented by a promissory note, a copy of which is attached hereto as Exhibit 1.8(a) (the "Robinson Note") payable in two (2) equal installments of One Million Five Hundred Thousand Dollars ($1,500,000.00), the first installment to be paid on the 1st anniversary of the Closing Date, and the second installment to be paid on the 2nd anniversary of the Closing Date, with interest accruing at the rate of eight percent (8%) per annum on the unpaid principal balance from and after the Closing Date until the Robinson Note is paid in full. (b) Subject to the terms and conditions of this Agreement, the purchase price to be paid by Franklin Covey for the Barlow Partnership Interest (the "Barlow Purchase Price") shall be Four Million Five Hundred Thousand Dollars ($4,500,000.00), payable as follows: One Million Five Hundred Thousand Dollars ($1,500,000.00) shall be payable in cash at the Closing, and the sum of Three Million Dollars ($3,000,000.00) shall be represented by a promissory note, a copy of which is attached hereto as Exhibit 1.8(b) (the "Barlow Note") payable in two (2) equal installments of One Million Five Hundred Thousand Dollars ($1,500,000.00), the first installment to be paid on the 1st anniversary of the Closing Date, and the second installment to be paid on the 2nd anniversary of the Closing Date, with interest accruing at the rate of eight percent (8%) per annum on the unpaid principal balance from and after the Closing Date until the Barlow Note is paid in full. 26 (c) The remaining installment payments due and owing to Robinson and Barlow shall be secured, each, by a pledge of 24,544 shares of eSolutions, Inc. Stock owned by Franklin Covey, having a value on the Closing Date equivalent to the remaining installments of the Barlow Note and Robinson Note, in the form attached hereto as Exhibit 1.8(c). 1.9 Closing Deliveries. (a) At the Closing, Seller shall deliver to Franklin Covey the following (the form, content and substance of which shall be satisfactory to Franklin Covey and Seller in all respects): (1) The Partnership Interest Purchase Agreement executed by Robinson and Barlow; and (2) The Shareholder Agreement executed by Robinson and Barlow; and (3) Copies of each of the Transaction Agreements executed by all parties except Franklin Covey; and (4) Such other documents as may be required by this Agreement, including all of the Transaction Agreements, or as reasonably requested by Franklin Covey. (5) An opinion with respect to the matters set forth in Exhibit 1.9(a)(5), attached hereto, from counsel to the Seller, addressed to Franklin Covey and dated as of the Closing Date; and (b) At the Closing, Franklin Covey shall deliver or cause to be delivered to Seller the following (the form, content and substance of which shall be satisfactory to Seller and Franklin Covey in all respects): 27 (6) A bank cashier's check or confirmed wire transfer of funds to Robinson's designated bank account in the amount of One Million Five Hundred Thousand Dollars ($1,500,000.00) pursuant to paragraph 1.8(a) payable to the order of Robinson; and (7) The Robinson Note; and (8) A bank cashier's check or confirmed wire transfer of funds to Barlow's designated bank account in the amount of One Million Five Hundred Thousand Dollars ($1,5000,000.00) pursuant to paragraph 1.8(b) payable to the order of Barlow; and (9) The Barlow Note; and (10) A certificate in the name of Robinson evidencing his ownership of 5,000 Common Shares; and (11) A certificate in the name of Barlow evidencing his ownership of 5,000 Common Shares; and (12) Copies of the Transaction Agreements, including the Shareholder Agreement, executed by Franklin Covey; and (13) An opinion with respect to the matters set forth in Exhibit 1.9(b)(8), attached hereto, from counsel to Franklin Covey, addressed to Seller, and dated as of the Closing Date; and (14) An assignment and pledge of Common Shares to Robinson, as security for payment of the Robinson Note, in the form attached hereto as Exhibit 1.9(b)(9); and (15) An assignment and pledge of Common Shares to Barlow, as security for payment of the Barlow Note, in the form attached hereto as Exhibit 1.9(b)(10); and (16) A copy of the director resolutions by which all corporate actions on the part of Franklin Covey necessary to approve this Agreement were taken, certified by the Secretary of Franklin Covey; and (17) Such other documents as may be required by this Agreement, the Transaction Agreements or as reasonably requested by Seller. 28 ARTICLE 2 REPRESENTATIONS AND WARRANTIES OF SELLER Seller jointly and severally represents and warrants to Franklin Covey that, except as set forth in the Disclosure Schedule to be delivered to Franklin Covey pursuant to the terms of this Agreement, the following are correct and complete in all material respects as of the date of this Agreement and will be materially correct and complete as of the Closing Date (as though made then and as though the Closing Date were substituted for the date of this Agreement throughout this Article 2), except as expressly contemplated by this Agreement. 2.1 CONSENTS AND APPROVALS; NO VIOLATION. Neither the execution and delivery of this Agreement or the Transaction Agreements by Seller, the consummation of the transactions contemplated hereby and thereby, nor the compliance by Seller with any of the provisions hereof and thereof will, as of the Closing Date, (i) result in a violation or breach of, or constitute (with or without due notice or lapse of time or both) a default (or give rise to any right of termination, cancellation or acceleration) under, any of the terms, conditions or provisions of any note, contract, agreement, commitment, bond, mortgage, indenture, license, lease, pledge agreement or other instrument or obligation to which DayTracker or Seller is a party or by which DayTracker or Seller or any of DayTracker's or Seller's properties or assets may be bound, including, without limitation, any agreement with respect to the sale by DayTracker or Seller of any of DayTracker's or Seller's properties or assets, (ii) violate or conflict with any provision of any Legal Requirement binding upon DayTracker or Seller, or (iii) result in, or require, the creation or imposition of, any Encumbrance upon or with respect to any of the Assets, or impair the ability of Seller to carry out Seller's obligations under this Agreement or the Transaction Agreements. 2.2 BOOKS AND RECORDS. The books of account and other business records of DayTracker regarding the Assets, the Business and the results of operations of DayTracker have all been made available to Franklin Covey and such books and records are, to the best of Seller's knowledge, true and correct. 2.3 ABSENCE OF UNDISCLOSED LIABILITIES. Except as and to the extent fully reflected or reserved against on DayTracker's Financial Statements or as fully disclosed in writing to Franklin Covey on the Disclosure Schedule or except for liabilities incurred in the Ordinary Course of Business since the date of the Financial Statements: (a) DayTracker does not have any Liabilities, including, without limitation, any Liabilities resulting from failure to comply with any Legal Requirement applicable to DayTracker due or to become due and whether incurred in respect of or measured by the income or sales of DayTracker for any period, or arising out of any transaction entered into or any state of facts existing, on or before the Closing Date, which could materially adversely affect 29 the Assets, give rise to an Encumbrance against the Assets or materially adversely affect DayTracker's ability to carry out the transactions contemplated by this Agreement and the Transaction Agreements; (b) as of the Closing Date there was no transaction previously entered into or any state of facts or circumstances existing which could give rise to, cause or result in any Liability of DayTracker which could materially adversely affect the Assets, give rise to an Encumbrance against the Assets or materially adversely affect DayTracker's ability to carry out the transactions contemplated by this Agreement and the Transaction Agreements; and (c) there is no basis for any assertion against the Assets as of the Closing Date, of any Liabilities of any nature. 2.4 FINANCIAL STATEMENTS. Seller has delivered or will deliver to Franklin Covey the unaudited balance sheet of DayTracker as of December 31, 1998, and the related unaudited statement of income for the twelve (12) months then ended. Franklin Covey has been advised, as set forth in the Disclosure Statements, that Seller has not maintained its financial records according to generally accepted accounting principles ("GAAP"), nor has it maintained formal journals. Subject to such reservations and limitations, all such Financial Statements delivered pursuant to this Section 2.4 (the "Financial Statements") fairly present the financial condition and results of operations of DayTracker as of the respective dates thereof and for the period referred to therein. 2.5 ABSENCE OF CHANGES. Since December 31, 1998, there has not been (i) any Material Adverse Change, or any event, condition or contingency that is likely to result in a Material Adverse Change; (ii) except as reflected in the Disclosure Statements, to prepare more formal compilations, any change in the accounting methods followed by DayTracker; (iii) any entry into, termination or receipt of notice of termination of any material agreement or commitment except in the Ordinary Course of Business; (v) any dispute or any other occurrence, event or condition of any character, which reasonably could be anticipated to give rise to a legal or administrative action or to a Material Adverse Change; or (vi) any agreement to do any of the foregoing. 2.6 CONTRACTS. (a) Copies of all written Contracts have been delivered to Franklin Covey. (b) Other than oral agreements which Seller has no reason to believe will not be fully performed by both parties thereto, all of the Contracts are in full force and effect and are valid and enforceable in accordance with their terms, there are no defaults thereunder or breaches thereof, and no condition exists or event has occurred which, with notice or lapse of time or both, would constitute a default or a basis for force majeure or other claim of excusable delay or non-performance thereunder and are fully assignable to eSolutions, Inc. and enforceable by eSolutions, Inc. in accordance with their terms without the consent of the other party thereto except in those instances where consent is required, in which event Seller will use their best reasonable efforts to obtain such consents. Without limiting the generality of the foregoing, Seller specifically represents and warrants that DayTracker is in full compliance with any and all software license agreements relating to software programs utilized at any time by DayTracker which are assigned and transferred to eSolutions, Inc. pursuant to this Agreement. (c) There are no renegotiations of, or attempts to renegotiate, or outstanding rights to renegotiate, any material amounts paid or payable to 30 DayTracker under the Contracts to which DayTracker is a party with any person or entity having the contractual or statutory right to demand or require such re-negotiation. No such person or entity has made verbal or written demand for such renegotiations. 2.7 TITLE TO ASSETS AND RELATED MATTERS. DayTracker owns all of its Assets free and clear of all Encumbrances and the claims or rights of any other party, except for Encumbrances represented by liabilities of DayTracker incurred in the ordinary course of business and disclosed in the Financial Statement or Disclosure Schedule, and the restrictions, conditions, obligations in the Contracts, and other matters disclosed on the Disclosure Schedule. 2.8 COMPLIANCE WITH LAWS. DayTracker is in compliance with all Legal Requirements applicable to its ownership of the Assets and the operation of its business where the failure so to comply would have a material adverse effect on DayTracker's ability to carry out its obligations under this Agreement or the Transaction Agreements, and DayTracker has no basis to expect, nor has it received, any Order, notice, or other communication from any Governmental Authority of any alleged, actual, or potential violation and/or failure to comply with any such Legal Requirement. 2.9 LITIGATION. DayTracker is not subject to any Order in which relief is sought involving, affecting, or relating to the ownership, operation, or use of the Assets or the business of DayTracker or the matters covered by the Transaction Agreements which would prevent, delay, or make illegal the transactions contemplated by this Agreement or the Transaction Agreements. There are no Proceedings pending, or to the best of Seller's knowledge, threatened against, involving, affecting, or relating to DayTracker or to its ownership, operation, or use of the Assets or to the conduct of its business or before any arbitrator or Governmental Authority. There exist no facts known to Seller that would serve as a basis for the institution of any Proceeding against DayTracker or any of the Assets or the conduct of the business of DayTracker or which would prohibit or materially adversely affect the ability of DayTracker to carry out its obligations under this Agreement or the Transaction Agreements. 2.10 NO BROKER'S OR FINDER'S FEES. No agent, broker, investment banker or similar Person has acted directly or indirectly on behalf of Seller or DayTracker in connection with this Agreement or the transactions contemplated hereby, and no Person, including Seller or DayTracker, is or will be entitled to any broker's or finder's fee or any other commission or similar fee or expense, directly or indirectly, in connection with this Agreement, the Transaction Agreements or the transactions contemplated hereby or thereby. 2.11 BANKRUPTCY. DayTracker has not made any assignment for the benefit of creditors, filed any petition in bankruptcy, been adjudicated insolvent or bankrupt, petitioned or applied to any tribunal for any receiver, conservator or trustee of it or any of its property or assets, or commenced any Proceeding under any reorganization arrangement, readjustment of debt, conservation, dissolution or liquidation law or statute of any jurisdiction; and no such action or Proceeding has been commenced or threatened against DayTracker by any creditor, claimant, governmental authority or any other Person. 31 2.12 PERSONAL PROPERTY. Seller has disclosed to Franklin Covey all the Intangible Personal Property owned by DayTracker and/or Seller or used or useful in connection with the Business or the matters covered by this Agreement and the Transaction Agreements. Seller has made available to Franklin Covey true, correct and complete copies of all material contracts, agreements, leases and commitments relating to or affecting any interest in the Intangible Personal Property of DayTracker or related to the Business. There is no other personal property necessary to the operation of the Business that has not been disclosed to Franklin Covey. eSolutions, Inc. will be acquiring all of the Intangible Personal property owned by DayTracker. 2.13 DISCLOSURE. No representation or warranty of Seller contained in this Agreement (as qualified by the Disclosure Schedule), the Schedules and Exhibits hereto, or the Transaction Agreements to which Seller is a party contains 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. There is no fact known to Seller which has specific application to DayTracker or the Assets (other than general economic or industry conditions) and which materially adversely affect or materially threatens, the Assets, the Business, the ability of eSolutions, Inc. to carry on the Business after the Closing, or the ability of Seller to carry out its obligations under this Agreement or the Transaction Agreements, which has not been set forth in this Agreement or otherwise disclosed in writing to Franklin Covey. 2.14 TAX MATTERS. Seller and DayTracker will file or cause to be filed on a timely basis all Tax Returns that are or were required to be filed by or with respect to DayTracker pursuant to the Legal Requirements of each Governmental Authority with taxing power over it or the Assets. DayTracker shall pay, or make provision for the payment of, all Taxes of DayTracker that may become due pursuant to those Tax Returns, or otherwise, or pursuant to any assessment received by DayTracker. There have been no audits by the Internal Revenue Service or relevant state tax authorities of the United States federal or state income, or state franchise or sales, Tax Returns of DayTracker. 2.15 INTELLECTUAL PROPERTY. The term "Intellectual Property Assets" shall include the Name, all other fictitious business names and trade names under which DayTracker has conducted the Business, registered and unregistered trademarks, service marks, domain name registrations, and applications therefor (collectively, "Marks") used in connection with the Business, all copyrights in both published works and unpublished works (collectively, "Copyrights") owned, or used by DayTracker in connection with the operation of the Business, and all designs, inventions, know-how, trade secrets, confidential information, software, technical information, (collectively, "Trade Secrets") owned, developed or used by Seller or DayTracker in connection with the operation of the Business. The term "Intellectual Property Assets" shall not include any "off-the-shelf" software that Seller or DayTracker is using and assigning to eSolutions, Inc. pursuant to the terms of this Agreement. The Intellectual Property Assets are all those owned and used by or capable of being used by DayTracker in the operation of the Business, and consist of intellectual property that is either (i) owned by or held by or on behalf of DayTracker, (ii) in the public domain, or (iii) rightfully used by DayTracker and authorized for use by DayTracker pursuant to license or agreement. There are no pending Proceedings or to the best of Seller's knowledge threatened 32 disputes or disagreements with respect to the Intellectual Property Assets. Seller and/or DayTracker owns all right, title and interest in and to each of its Intellectual Property Assets free and clear of all Encumbrances, and Seller and DayTracker have the right to transfer without payment to a third party, all the Intellectual Property Assets being transferred pursuant to the terms of this Agreement. To Seller's knowledge, no such Intellectual Property Asset infringes upon or has been alleged to infringe upon the intellectual property rights of any other Person. Except as disclosed on the Disclosure Schedule, DayTracker has not granted rights or licenses to any third parties with respect to any Intellectual Property Assets. 2.16 PARTNERSHIP STATUS. DayTracker is, and upon the Closing Date will be, a California General Partnership, whose partners are, and at all times have been, Barlow and Robinson. ARTICLE 3 REPRESENTATIONS AND WARRANTIES OF FRANKLIN COVEY Franklin Covey represents and warrants to Seller as follows: 3.1 ORGANIZATION, EXISTENCE AND GOOD STANDING. Franklin Covey is a corporation duly organized, validly existing and in good standing under the laws of the State of Utah and has full corporate power and authority to carry on its business as now being conducted, to own and operate its properties and assets, and to perform all its obligations under the Contracts and the Transaction Agreements. Franklin Covey is duly qualified to do business as a foreign corporation and is in good standing under the laws of each state or other jurisdiction in which the properties and assets owned or leased and operated by it or the nature of the business conducted by it make such qualification necessary and where the failure so to qualify would have a material adverse effect on Franklin Covey's business or operations. 3.2 AUTHORITY. Franklin Covey has full power and authority to execute and deliver this Agreement and the Transaction Agreements, to perform its obligations hereunder and thereunder, and to consummate the transactions contemplated hereby and thereby. This Agreement has been duly and validly executed and delivered by Franklin Covey and constitutes the legal, valid and binding agreement of Franklin Covey enforceable against Franklin Covey in accordance with its terms. The Transaction Agreements to which Franklin Covey is a party, when executed by Franklin Covey, will have been duly and validly executed and delivered by Franklin Covey and will constitute the legal, valid, and binding agreement of Franklin Covey, enforceable against Franklin Covey in accordance with their terms. All corporate, shareholder and other action necessary to authorize the execution, delivery and performance of this Agreement and the Transaction Agreements by Franklin Covey and the consummation by Franklin Covey of the transactions contemplated by this Agreement and the Transaction Agreements shall have been duly and validly taken and Franklin Covey has full right and power to perform its obligations upon the terms provided in this Agreement and the Transaction Agreements. 33 3.3 CONSENTS AND APPROVALS; NO VIOLATION. No filing or registration with, no notice to and no Governmental Authorization, consent or approval of any Governmental Authority, creditor or other person in a contractual relationship with Franklin Covey is necessary in connection with Franklin Covey's execution and delivery of this Agreement or the Transaction Agreements, the performance of its obligations hereunder or thereunder or the consummation of the transactions contemplated hereby or thereby. Neither the execution and delivery of this Agreement or the Transaction Agreements, the consummation of the transactions contemplated hereby or thereby, nor the compliance by Franklin Covey with any of the provisions thereof will, as of the Closing Date, (i) result in a violation or breach of, or constitute (with or without due notice or lapse of time or both) a default (or give rise to any right of termination, cancellation or acceleration) under, any of the terms, conditions or provisions of any note, contract, agreement, commitment, bond, mortgage, indenture, license, lease, pledge agreement or other instrument or obligation to which Franklin Covey is a party or by which Franklin Covey or any of its properties or assets may be bound, (ii) violate or conflict with any provision of any Legal Requirement binding upon Franklin Covey; or (iii) result in, or require, the creation or imposition of any Encumbrance upon or with respect to any of the properties now owned or used by Franklin Covey. 3.4 BANKRUPTCY. Franklin Covey has not made any assignment for the benefit of creditors, filed any petition in bankruptcy, been adjudicated insolvent or bankrupt, petitioned or applied to any tribunal for any receiver, conservator or trustee of it or any of its property or assets, or commenced any Proceeding under any reorganization arrangement, readjustment of debt, conservation, dissolution or liquidation law or statute of any jurisdiction; and no such action or Proceeding has been commenced or threatened against Franklin Covey by any creditor, claimant, governmental authority or any other person. 3.5 NO BROKER'S OR FINDER'S FEES. No agent, broker, investment banker or similar Person has acted directly or indirectly on behalf of Franklin Covey in connection with this Agreement or the transactions contemplated hereby, and no Person, including Franklin Covey, is or will be entitled to any broker's or finder's fee or any other commission or similar fee or expense, directly or indirectly, in connection with this Agreement or the transactions contemplated hereby. 3.6 REPORTS. Franklin Covey previously has furnished to Seller complete and accurate copies of each report, schedule and proxy statement filed with the Securities and Exchange Commission on or after January 1, 1999 (the "Reports"). As of their respective dates, the Reports did not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading. 34 ARTICLE 4 CONDITIONS PRECEDENT TO THE OBLIGATIONS OF FRANKLIN COVEY The obligations of Franklin Covey to consummate the transactions contemplated by this Agreement and the Transaction Agreements at the Closing are subject to fulfillment of the following conditions on or prior to the Closing, any one or more of which may be waived in whole or in part by Franklin Covey in the manner provided for herein. 4.1 REPRESENTATIONS AND WARRANTIES TRUE AT CLOSING. The representations and warranties of Seller contained in this Agreement and the Transaction Agreements, including the Schedules thereto are true, correct and complete in all material respects as of the Closing Date. 4.2 SELLER'S COMPLIANCE WITH AGREEMENT AND TRANSACTION AGREEMENTS. Seller shall have performed and complied with all obligations, agreements, covenants and conditions required by this Agreement and the Transaction Agreements to be performed or complied with by Seller on or before the Closing Date. Seller shall have executed and delivered to Franklin Covey all of the Transaction Agreements to which Seller is a party and shall have made all other deliveries to Franklin Covey required by Section 1.9 hereof. 4.3 AUTHORIZATION; THIRD PARTY CONSENTS. All filings and registrations with, and notice to and each Governmental Authorization, consent or approval of any Governmental Authority, creditor or other person in a contractual relationship with Seller which is necessary in connection with Seller's execution and delivery of the Transaction Agreements, the performance of its obligations thereunder, or the consummation of the transactions contemplated thereby shall have been made or obtained, except where the failure to so obtain will not have a material adverse effect on the Assets or the Business. Such consents of third parties shall include, but not be limited to, the consents of lenders holding security interests in the Assets to the assignment of such Assets and the assumption of such obligations by eSolutions, Inc., and the consent, where required, to the assignment of all Contracts being assumed by eSolutions, Inc. Seller shall have delivered to Franklin Covey a certificate, executed by Seller, and dated as of the Closing Date, to the foregoing effect. On or prior to the Closing Date, Seller shall have furnished to Franklin Covey evidence of the foregoing consents. eSolutions, Inc. shall have or shall have obtained all licenses, permits, or Governmental Authorizations necessary for it to operate the Business as previously operated by DayTracker. 4.4 GOOD TITLE. Subject to the provisions of Section 2.15 above, and the Disclosure Schedules, the Assets ultimately transferred to eSolutions, Inc. pursuant to the transactions contemplated hereby shall be free and clear of all Encumbrances, except for Encumbrances represented by Assumed Liabilities or as otherwise set forth herein, as provided in the Contracts, or as otherwise disclosed and approved by Franklin Covey. No claim shall have been filed, made or threatened by any Person asserting that such Person is entitled to any part of the Purchase Price or other amounts paid for the Assets or pursuant to the Transaction Agreements or that any person has any claim or interest in any of the Assets. 35 4.5 NO PROHIBITION OF TRANSACTION. No Proceeding, regulation or legislation shall have been instituted, threatened or proposed before, nor any Order issued by, any Governmental Authority to enjoin, restrain, prohibit or obtain substantial damages in respect of, which is related to, or which arises out of, this Agreement or the Transaction Agreements. 4.6 NOTICES. Seller will give any notices to third parties required by agreements with such third parties or pursuant to Legal Requirements. 4.7 ACTIONS SATISFACTORY. The form and substance of all actions, Proceedings, instruments and documents required to consummate the transactions contemplated by this Agreement shall have been satisfactory in all reasonable respects to Franklin Covey and its counsel. 4.8 DISCLOSURE SCHEDULE. The Disclosure Schedule contemplated by Article 2 hereof has been delivered by Seller to Franklin Covey concurrently with execution of this Agreement and is satisfactory in all respects to Franklin Covey. ARTICLE 5 CONDITIONS PRECEDENT TO THE OBLIGATIONS OF SELLER The obligations of Seller to consummate the transactions contemplated by this Agreement at the Closing are subject to the fulfillment of the following conditions on or prior to the Closing, any one or more of which may be waived by Seller in the manner provided for herein. 5.1 REPRESENTATIONS AND WARRANTIES TRUE AT CLOSING. The representations and warranties of Franklin Covey contained in this Agreement shall be true, correct and complete in all material respects as of the Closing Date. 5.2 FRANKLIN COVEY'S PERFORMANCE; COMPLIANCE WITH AGREEMENT. Franklin Covey shall have performed and complied with all obligations, agreements, covenants and conditions required by this Agreement and the Transaction Agreements to be performed or complied with by Franklin Covey on or before the Closing Date. Franklin Covey shall have executed and delivered to Seller all of the Transaction Agreements and shall have made all of the other deliveries required by Section 1.9 hereof. 5.3 NO PROHIBITION OF TRANSACTION. No Proceeding, regulation or legislation shall have been instituted, threatened or proposed before, nor any Order issued by, any Governmental Authority to enjoin, restrain, prohibit or obtain substantial damages from Seller in respect of, which is related to, or which arises out of, this Agreement. 5.4 COMPLIANCE WITH LAW. There shall have been obtained any and all Governmental Authorizations which counsel for Seller may reasonably deem necessary or appropriate so that consummation of the transactions contemplated by this Agreement and the Transaction Agreements will be in compliance with Legal Requirements. 36 5.5 ACTIONS SATISFACTORY. The form and substance of all actions, Proceedings, instruments and documents required to consummate the transactions contemplated by this Agreement shall have been satisfactory in all reasonable respects to Seller and their counsel. ARTICLE 6 ADDITIONAL COVENANTS AND AGREEMENTS 6.1 EXPENSES. Except as otherwise expressly provided herein, each party to this Agreement shall bear its respective expenses incurred in connection with the preparation, execution and performance of this Agreement and the transactions contemplated hereby, including all fees and expenses of agents, representatives, counsel and accountants. The parties understand and acknowledge that Franklin Covey is acquiring portions of Seller's partnership interests in Day Tracker as set forth at Article 1.1, above, and that while Franklin Covey has agreed that Day Tracker will then have certain liabilities as more particularly set forth at Article 2.3, above, Franklin Covey has not agreed to assume or pay any of Seller's costs incurred in consummating the transactions contemplated hereby, including, but not limited to, any legal, accounting, tax or transaction costs. 6.2 PUBLIC ANNOUNCEMENTS. Any public announcement or similar publicity with respect to this Agreement or the transactions contemplated hereby shall be issued, if at all, at such time and in such manner as Franklin Covey and Seller shall determine, but , following the date upon which all contingencies to closing have been waived by both parties, either party may make such announcements, give such notices and provide such information to Governmental Authorities, employees, creditors, Affiliates and the public as its counsel may advise is legally required, following a good faith effort to meet and confer with the other party upon the form and content of such announcement. 6.3 CONFIDENTIALITY. Each party will maintain in confidence, and cause its directors, officers, employees, agents and advisors to maintain in confidence, all Confidential Information unless it is required to be disclosed by law, is disclosed pursuant to the written consent of the party from whom it has been obtained, or it ceases to be Confidential Information as provided below. Confidential Information shall not include information which: (a) is now, or hereafter becomes generally, known, or available through no act or failure to act on the part of the party to whom it has been disclosed, (b) is hereafter furnished to a party by a third party, as matter of right and without restriction on disclosure; (c) is subject to a written permission to disclose provided by the party that originally possesses such information. Each party may disclose the Confidential Information only to his or its representatives who need to know such information for the purpose of consummating the transactions called for by this Agreement. If the transactions contemplated by this Agreement are not consummated, each party will return all Confidential Information to the party from whom it was obtained. Neither party will use any confidential information of the other for any purpose other than for the carrying out of this Agreement or the transactions contemplated thereby. 37 6.4 OPERATION OF BUSINESS. Except as specifically provided in this Agreement, DayTracker will not engage in any practice, take any action or enter into any transaction outside the Ordinary Course of Business from the date of this Agreement until the Closing Date. Seller will use its best commercially reasonable efforts to keep the business and Assets of DayTracker substantially intact, to comply with all laws applicable to the Business and to maintain good working relationships with lessors, licensors, suppliers, customers and employees. Except as expressly contemplated by this Agreement, neither Seller nor DayTracker will enter into any transaction, arrangement or contract with, or distribute or transfer any property or other assets to any officer, director, stockholder, trustee or other insider or Affiliate of Seller (other than salaries and employee benefits in the Ordinary Course of Business). Until the Closing Date, Seller will give prompt written notice to Franklin Covey of any material development affecting the Assets, Liabilities, Business, financial condition, operations, results of operations or future prospects of DayTracker. Each party will give prompt written notice to the other of any material development affecting the ability of such party to consummate the transactions contemplated by this Agreement. No disclosure by any party pursuant to this Section 6.4 shall prevent or cure any misrepresentation, breach of warranty or breach of covenant. 6.5 NOTICE. From the date of this Agreement until and including the Closing Date, Seller will give Franklin Covey prompt notice of (i) any litigation instituted or threatened against Seller (which relates to DayTracker) or DayTracker or which could affect the ability of Seller to close the transactions contemplated by this Agreement, or of any governmental investigation or inquiry with respect to Seller (which relates to DayTracker) or DayTracker, and (ii) any event or circumstance which could have a material adverse effect on the transactions contemplated hereby or could cause any of the representations or warranties to be untrue at Closing or any other Closing condition not to be satisfied. 6.6 TRANSFER AND DUTIES. Following the Closing, Robinson and Barlow, individually and collectively, will dedicate as much time as they and each of them are able to dedicate, subject to their respective contractual commitments and constraints, if any, as of the Closing Date, to transfer to eSolutions, Inc. all information, trade secrets, know-how, processes, systems, designs, inventions, confidential information, technical information, work books, and all other tangible and intangible information and work product associated with DayTracker.com, and thereafter, and for a reasonable period of time, not to exceed six months, to facilitate the successful operation and growth of eSolutions, Inc.. Robinson and Barlow sh