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EXHIBIT 2.1
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STOCK PURCHASE AGREEMENT
Among
UOL PUBLISHING, INC.,
IVY SOFTWARE, INC.
and
XXXXXX X. XXXX
Effective as of March 1, 1997
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Table of Contents
Page
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ARTICLE 1 DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.1 Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE 2 BASIC TRANSACTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
2.1 Agreement to Sell and Purchase Securities . . . . . . . . . . . . . . . . . . . 5
2.2 Consideration at Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
2.3 Post Closing Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
2.4 Adjustments to Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
ARTICLE 3 CLOSING AND TERMINATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
3.1 Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
3.2 Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF STOCKHOLDER . . . . . . . . . . . . . . . . . . . 8
4.1 Organization of Ivy; Authority . . . . . . . . . . . . . . . . . . . . . . . . . 8
4.2 Ability to Carry Out the Agreement . . . . . . . . . . . . . . . . . . . . . . . 8
4.3 Capitalization of Ivy; Ownership; Investment . . . . . . . . . . . . . . . . . . 9
4.4 Subsidiaries and Affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . 10
4.5 Financial Statements; Liabilities . . . . . . . . . . . . . . . . . . . . . . . 10
4.6 Conduct of Business; Absence of Material Adverse Change . . . . . . . . . . . . 10
4.7 Title to Tangible Personal Properties; Absence of Liens . . . . . . . . . . . . 13
4.8 Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
4.9 Compliance with Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
4.10 Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
4.11 Brokers and Intermediaries . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
4.12 Tax Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
4.13 Employee Benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
4.14 Articles of Incorporation and Bylaws . . . . . . . . . . . . . . . . . . . . . . 19
4.15 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
4.16 Intellectual Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
4.17 Bank Accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
4.18 Directors, Officers and Employees . . . . . . . . . . . . . . . . . . . . . . . 23
4.19 Labor Relations; Employees . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
4.20 Transactions with Related Parties . . . . . . . . . . . . . . . . . . . . . . . 23
4.21 Copies of Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
4.22 Real Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
4.23 Books and Records . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
4.24 Environmental Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
4.25 Guaranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
4.26 Government Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
4.27 Manufacturing Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
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ARTICLE 5 REPRESENTATIONS AND WARRANTIES OF UOL . . . . . . . . . . . . . . . . . . . . . . . 26
5.1 Organization and Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
5.2 Ability to Carry Out the Agreement . . . . . . . . . . . . . . . . . . . . . . . 27
5.3 Brokers and Intermediaries . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
ARTICLE 6 CERTAIN COVENANTS AND AGREEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . 27
6.1 Full Access . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
6.2 Regulatory Filings; Consents . . . . . . . . . . . . . . . . . . . . . . . . . . 28
6.3 Conduct of Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
6.4 Confidentiality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
6.5 Books and Records . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
6.6 Announcement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
6.7 Best Efforts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
6.8 Discussion With Others . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
6.9 Cooperation in Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
ARTICLE 7 CONDITIONS PRECEDENT OF TRANSFERORS . . . . . . . . . . . . . . . . . . . . . . . . 31
7.1 Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . . . 31
7.2 Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
7.3 Performance Certificate . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
7.4 No Injunction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
7.5 No Violation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
7.6 Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
7.7 Opinion of the UOL's Counsel . . . . . . . . . . . . . . . . . . . . . . . . . . 32
7.8 No Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
7.9 Consulting Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
7.10 Miscellaneous Closing Deliveries . . . . . . . . . . . . . . . . . . . . . . . . 32
ARTICLE 8 CONDITIONS PRECEDENT OF THE UOL . . . . . . . . . . . . . . . . . . . . . . . . . . 32
8.1 Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . . . 32
8.2 Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
8.3 Performance Certificate . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
8.4 No Injunction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
8.5 No Violation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
8.6 Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
8.7 Opinion of Transferors' Counsel . . . . . . . . . . . . . . . . . . . . . . . . 33
8.8 No Adverse Change . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
8.9 Confidentiality and Non-Disclosure Agreements . . . . . . . . . . . . . . . . . 34
8.10 Resignations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
8.11 No Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
8.12 Consulting Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
8.13 Due Diligence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
8.14 Miscellaneous Closing Deliveries . . . . . . . . . . . . . . . . . . . . . . . . 34
ARTICLE 9 SURVIVAL OF REPRESENTATIONS, WARRANTIES AND COVENANTS . . . . . . . . . . . . . . . 35
9.1 Survival of Representations and Warranties . . . . . . . . . . . . . . . . . . . 35
9.2 Survival of Covenants and Agreements . . . . . . . . . . . . . . . . . . . . . . 35
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ARTICLE 10 INDEMNIFICATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
10.1 Indemnification of UOL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
10.2 Indemnification of Stockholder . . . . . . . . . . . . . . . . . . . . . . . . . 37
10.3 Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
10.4 Survival . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
ARTICLE 11 MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
11.1 Further Assurances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
11.2 Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
11.3 Applicable Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
11.4 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
11.5 Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
11.6 Amendments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
11.7 Headings; References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
11.8 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
11.9 Parties in Interest; Assignment . . . . . . . . . . . . . . . . . . . . . . . . 40
11.10 Severability; Enforcement . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
11.11 JURISDICTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
11.12 Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
11.13 Incorporation of Exhibits and Schedules . . . . . . . . . . . . . . . . . . . . 41
11.14 Construction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
EXHIBITS AND SCHEDULES
Exhibit A Software Conversion Specification Letter
Exhibit B Disclosure Schedule
Exhibit C Ivy Financial Statements
Exhibit D Form of Legal Opinion of Wyrick, Robbins, Xxxxx & Xxxxxx L.L.P.
Exhibit E Form of Consulting Agreement
Exhibit F Form of Legal Opinion of XxXxxxxx & Kudravetz, P.C.
Exhibit G Form of Non-Disclosure Agreement
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STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT (the "Agreement") is made and entered
into effective as of March 1, 1997, by and among UOL PUBLISHING, INC., a
Delaware corporation ("UOL"), IVY SOFTWARE, INC., a Virginia corporation
("Ivy"), and XXXXXX X. XXXX, the sole stockholder of Ivy (the "Stockholder").
Ivy and the Stockholder shall sometimes collectively be referred to as the
"Transferors" and individually as a "Transferor".
W I T N E S S E T H:
WHEREAS, Ivy has authorized capital stock of 100,000 shares of Ivy
Common Stock (as defined below), of which 51,000 shares are issued and
outstanding;
WHEREAS, the Stockholder currently owns all of the outstanding shares
of Ivy Common Stock (collectively the "Ivy Shares");
WHEREAS, the Stockholder desires to sell to UOL, and UOL desires to
purchase from the Stockholder, all right, title and interest in and to the Ivy
Shares; and
WHEREAS, the parties expect that the transactions contemplated hereby
shall further certain of their business objectives, including, without
limitation, the expansion of the combined companies' businesses and the
utilization of the technologies of both of UOL and Ivy;
NOW, THEREFORE, in reliance upon the premises, representations,
warranties and covenants made herein and in consideration of the mutual
agreements herein contained, the parties hereto hereby agree as follows:
ARTICLE 1
DEFINITIONS
1.1 Definitions. For purposes of this Agreement, the following
terms shall have the meaning set forth below:
"Acquiror Indemnitee" and "Acquiror Indemnitees" shall have the
respective meanings set forth in Section 10.1.
"Acquiror Indemnitor" and "Acquiror Indemnitors" shall have the
respective meanings set forth in Section 10.1.
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"Affiliate" means, with respect to any Person, any other Person
directly or indirectly Controlling, Controlled by, or under common Control with
such other Person.
"Affiliated Group" means any affiliated group within the meaning of
Code Section 1504.
"Agreement" shall have the meaning set forth in the first paragraph of
this Agreement.
"Basis" means any past or present fact, situation, circumstance,
status, condition, activity, practice, plan, occurrence, event, incident,
action, failure to act, or transaction that forms or could form the basis for
any specified consequence.
"CERCLA" shall have the meaning set forth in subsection 4.24(a).
"Closing" shall have the meaning set forth in Section 3.1.
"Closing Date" shall have the meaning set forth in Section 3.1.
"Code" means the Internal Revenue Code of 1986, as amended.
"Confidential Information" shall have the meaning set forth in Section
6.4.
"Controlled Group of Corporations" has the meaning set forth in Code
Section 1563.
"Contracts" shall have the meaning set forth in subsection 4.10(b).
"Control" (including, with correlative meanings, the terms "controlled
by", "controlling" and "under common control with"), as used with respect to
any Person, means the possession, directly or indirectly, of the power to
direct or cause the direction of the management and policies of such Person,
whether through ownership of voting securities, by contract or otherwise.
"Employee Benefit Plan" means any: (i) nonqualified deferred
compensation or retirement plan or arrangement which is an Employee Pension
Benefit Plan; (ii) qualified defined contribution retirement plan or
arrangement which is an Employee Pension Benefit Plan; (iii) qualified defined
benefit retirement plan or arrangement which is an Employee Pension Benefit
Plan (including any Multiemployer Plan); and (iv) Employee Welfare Benefit Plan
or fringe benefit plan or program.
"Employee Pension Benefit Plan" has the meaning set forth in ERISA
Section 3(2).
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"Employee Welfare Benefit Plan" has the meaning set forth in ERISA
Section 3(1).
"Encumbrances" means any and all restrictions on transfer, liens,
encumbrances, charges, pledges, security interests, taxes, options, warrants,
purchase rights, contracts, commitments, equities, claims and demands.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"Fiduciary" has the meaning set forth in ERISA Section 3(21).
"Financial Statements" shall have the meaning set forth in subsection
4.5(a).
"HSR Act" means the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of
1976, as amended.
"Intellectual Property" means: (i) all inventions (whether patentable
or unpatentable and whether or not reduced to practice and the record of
conception documentation relating thereto), all improvements thereto, and all
patents, patent applications, and patent disclosures, together with all
reissuances, divisions, continuations, renewals, continuations-in-part,
revisions, extensions, and reexaminations thereof; (ii) all trademarks, service
marks, certification marks, collective marks, trade dress, trade styles, logos,
trade names, company names, and corporate names, together with all
translations, adaptions, derivations, and combinations thereof and including
all goodwill associated therewith, and all applications, registrations,
recordings and renewals in connection therewith; (iii) all copyrightable works,
all copyrights, rights and interests in copyrights and all applications,
registrations, recordings and renewals in connection therewith; (iv) all mask
works and all applications, registrations, recordings and renewals in
connection therewith; (v) all trade secrets and confidential business
information (including ideas, research and development, know-how, formulas,
compositions, manufacturing and production processes and techniques, technical
data, designs, drawings, specifications, customer and supplier lists, pricing
and cost information, and business and marketing plans and proposals); (vi) all
computer software (including data and related documentation); (vii) all other
proprietary rights; (viii) all copies and tangible embodiments thereof (in
whatever form or medium); (ix) all income, royalties, damages or payments now
and hereafter due and/or payable under any of the foregoing with respect to any
of the foregoing and the right to xxx for past, present or future infringements
of any of the foregoing; (x) all licenses with respect to any of the foregoing;
and (xi) all rights corresponding to any of the foregoing throughout the world.
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"Ivy" shall have the meaning set forth in the first paragraph of this
Agreement.
"Ivy Common Stock" means the Common Stock, [$1.00] par value per share,
of Ivy.
"Ivy Shares" shall have the meaning set forth in the second paragraph
of the recitals.
"Knowledge" means knowledge after reasonable investigation.
"Liability" means any liability (whether known or unknown, whether
asserted or unasserted, whether absolute or contingent, whether accrued or
unaccrued, whether liquidated or unliquidated, and whether due or to become
due), including liability for Taxes.
"Litigation" shall have the meaning set forth in subsection 4.8(a).
"Most Recent Balance Sheet" shall have the meaning set forth in
subsection 4.7(a).
"Most Recent Financial Statements" shall have the meaning set forth in
subsection 4.5(a).
"Most Recent Fiscal Month End" shall have the meaning set forth in
subsection 4.5(a).
"Most Recent Fiscal Year End" shall have the meaning set forth in
subsection 4.5(a).
"Multiemployer Plan" has the meaning set forth in ERISA Section 3(37).
"Non-Disclosure Agreement" and "Non-Disclosure Agreements" shall have
the meaning set forth in Section 8.9.
"PBGC" means the Pension Benefit Guaranty Corporation.
"Person" means any individual, corporation, partnership, limited
partnership, limited liability company, trust, entity or unincorporated
organization or a government or any agency or political subdivision thereof.
"Prohibited Transaction" has the meaning set forth in ERISA Section 406
and Code Section 4975.
"Proprietary Information" shall have the meaning set forth in
subsection 4.16(g).
"RCRA" has the meaning set forth in subsection 4.24(a).
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"Reportable Event" has the meaning set forth in ERISA Section 4043.
"Stockholder" shall have the meaning set forth in the first paragraph
of this Agreement.
"Subsidiary" means any corporation with respect to which a specified
Person (or Subsidiary thereof) owns a majority of the common stock or has the
power to vote or direct the voting of sufficient securities to elect a majority
of the directors.
"Tax" or "Taxes" means any federal, state, local, foreign or other
income, gross receipts, profits, franchise, license, transfer, sales, use,
payroll, withholding, occupation, property (real or personal), excise and
similar taxes, fees, duties, assessments, withholdings or governmental charges
of any nature (including interest, penalties or additions to such taxes).
"Tax Returns" means all returns, reports, estimates, information
returns and statements of any nature with respect to Taxes.
"Termination Date" shall have the meaning set forth in subsection
3.3(b).
"Transferor" and "Transferors" shall have the respective meanings set
forth in the first paragraph of this Agreement.
"UOL" shall have the meaning set forth in the first paragraph of this
Agreement.
"UOL Common Stock" means the Common Stock, $0.01 par value per share,
of UOL.
ARTICLE 2
BASIC TRANSACTION
2.1 Agreement to Sell and Purchase Securities. For the
consideration hereinafter provided and subject to the terms and conditions of
this Agreement, at the Closing the Stockholder shall sell, assign, transfer,
convey and deliver to UOL, free and clear of all liens and encumbrances, and
UOL shall purchase and acquire from the Stockholder, all of the Ivy Shares.
2.2 Consideration at Closing. At the Closing, subject to the
terms and conditions hereof and subject to adjustment as set forth in Section
2.4 hereof:
(a) the Stockholder shall cause to be delivered to UOL
certificates representing the Ivy Shares, together with stock powers duly
endorsed in blank for the transfer of the Ivy
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Shares to UOL, and, if applicable, with all necessary transfer taxes paid or
other revenue stamps affixed thereto;
(b) UOL shall pay off Ivy's existing indebtedness to
Jefferson National Bank, Charlottesville, Virginia (the "JNB Loan"); and
(c) UOL shall deliver to the Stockholder by check or
wire transfer the sum of $313,643.00, less the amount, if any, by which the
pay-off of the JNB Loan exceeds $50,000.00.
2.3 Post Closing Payments. UOL shall also pay to the
Stockholder the following additional amounts by check or wire transfer at the
following times subject to adjustment as set forth in Section 2.4 hereof:
(a) $156,821.50 upon the earlier of the successful
completion of the transition of control of Ivy's operations to UOL or July 1,
1997;
(b) $156,821.50 in the event that Ivy's Total Revenue
for the year ending December 31, 1997, as reflected by financial statements
utilizing the accrual basis of accounting, as prepared by UOL and audited by
its auditors, is equal to or greater than $627,286.00. This $156,821.50 amount
shall be payable promptly upon receipt of the audit report for the year ending
December 31, 1997, UOL to cause such report to be completed not later than
February 28, 1998. For the purpose this section, "Total Revenue" shall mean
and refer to the sum of all product sales by Ivy (less returns, allowances and
credits), all service revenues of Ivy, all of Ivy's royalty revenues and billed
shipping charges, and all of UOL's sales of Ivy software products, including
derivatives thereof (less returns, allowances and credits); and
(c) $100,000 upon successful conversion of the Ivy
courseware listed on Schedule 2.3(c) from its current format into Authorware
format. "Successful conversion" shall be deemed achieved when the software has
been transferred and complies with the specifications and standards set forth
in a certain letter from Ivy to UOL, a copy of which is attached hereto as
Exhibit A.
2.4 Adjustments to Payments. In the event that at any time on
or prior to the first anniversary of the Closing, UOL's independent auditors
shall determine that Ivy's Total Revenue for the year ended December 31, 1996
("Ivy's 1996 Revenue") was not $627,286.00, then:
(a) the payment described in Section 2.2(c) shall be
adjusted to be equal to the sum of one-half of Ivy's 1996 Revenue, less the
amount, if any, by which the pay-off of the JNB Loan exceed $50,000.00; and
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(b) the payment amount "$156.821.50" set forth in
Sections 2.3(a) and (b) shall be adjusted to be equal to one-quarter of Ivy's
1996 Revenue.
Any amounts due from one party to another as a result of any such adjustment to
any such payment shall be paid on the later of (i) five days after such
determination, and (ii) the date the underlying payment is due.
2.5 Records. The Company shall keep full, true, clear and
accurate records and books of account documenting its calculation of Total
Revenue for purposes of this Agreement. Stockholder shall have reasonable
access (during the Company's normal business hours only) to all such books and
records for the purpose determining the Company's compliance with its
obligations under the Agreement. The Company shall not be required to provide
Stockholder with such access after the third anniversary of the Closing, nor
more than two (2) times per year, and such access shall require a minimum of 30
days prior written notice from Consultant.
ARTICLE 3
CLOSING AND TERMINATION
3.1 Closing. The closing of the transactions provided for
herein (the "Closing") shall take place at 10:00 a.m. (local time) on a date
to be specified by the parties (the "Closing Date"), and shall be effective as
of March 1, 1997, at the offices of UOL Publishing, Inc., 0000 Xxxxxxxxxx
Xxxxx, Xxxxx 000, XxXxxx, Xxxxxxxx 00000.
3.2 Termination. Notwithstanding any other provision to the
contrary herein, this Agreement may be terminated at any time:
(a) without liability on the part of any party hereto,
by mutual consent of all parties to this Agreement;
(b) without liability on the part of any party hereto
(unless occasioned by reason of failure of one of the parties hereto to perform
its obligations hereunder), by either UOL or Ivy, if the transactions
contemplated hereby are not consummated on or before March 31, 1997, or such
later date as may be agreed upon in writing by the parties hereto;
(c) by UOL, if: (i) Ivy or the Stockholder shall
breach in any material respect any of their respective representations,
warranties or obligations hereunder; (ii) such breach shall not have been
cured in all material respects or waived; and (iii) Ivy or the Stockholder, as
the case may be, shall not have provided reasonable assurance that such breach
shall be cured in all material respects on or before the Closing
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Date, but only if such breach, singly or together with all other such breaches,
constitutes a failure of the conditions contained in Sections 8.1 or 8.2 hereof
as of the date of such termination; or
(d) by Ivy, if: (i) UOL shall breach in any material
respect any of their respective representations, warranties or obligations
hereunder; (ii) such breach shall not have been cured in all material respects
or waived; and (iii) UOL shall not have provided reasonable assurance that such
breach shall be cured in all material respects on or before the Closing Date,
but only if such breach, singly or together with all other such breaches,
constitutes a failure of the conditions contained in Sections 7.1 or 7.2 hereof
as of the date of such termination.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF STOCKHOLDER
Except as otherwise set forth in the Disclosure Schedule attached
hereto as Exhibit B, Ivy and the Stockholder hereby jointly and severally
represent and warrant to UOL as follows:
4.1 Organization of Ivy; Authority. Ivy is a corporation duly
organized, validly existing and in good standing under the laws of the
Commonwealth of Virginia, with the full power and authority, corporate and
otherwise, to enter into this Agreement and to carry out and perform its
obligations under the terms of this Agreement. Ivy has the full and
unrestricted power and authority, corporate and otherwise, to own, operate and
lease its assets and properties and to carry on its business as currently
conducted and in which it presently proposes to engage. Ivy is not qualified
to do business in any other jurisdiction, and the nature of Ivy's business does
not require it to be so qualified. The execution and delivery of this Agreement
and the consummation of the transactions contemplated hereby have been duly
authorized by all requisite corporate or other action on the part of Ivy and
the Stockholder. This Agreement has been duly executed and delivered by Ivy
and the Stockholder and constitutes the valid, binding and enforceable
obligation of Ivy and the Stockholder, enforceable in accordance with its terms
and conditions.
4.2 Ability to Carry Out the Agreement. Neither Ivy nor the
Stockholder is subject to or bound by any provision of:
(i) any law, statute, rule, regulation, ordinance or
judicial or administrative decision;
(ii) any articles or certificate of incorporation or
bylaws;
(iii) any mortgage, deed of trust, lease, note,
stockholders' agreement, bond, indenture, other instrument
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or agreement, license, permit, trust, custodianship, other restriction
of any kind or character whatsoever; or
(iv) any judgment, order, writ, injunction or decree of
any court, governmental body, administrative agency or arbitrator;
that would prevent or be violated by, or would result in any penalty,
forfeiture or contract termination as a result of, or under which there would
be a default as a result of, nor is the consent of any Person under any
contract or agreement disclosed in Schedule 4.10(a) which has not been obtained
required for, the execution, delivery and performance by Ivy and the
Stockholder of this Agreement and the transactions contemplated hereby.
4.3 Capitalization of Ivy; Ownership; Investment. (a) The
authorized capital stock of Ivy consists solely of 100,000 shares of Ivy Common
Stock. The Ivy Shares are the only shares of capital stock and other
securities of Ivy which are issued and outstanding. At the Closing the only
class, type, or kind of capital stock or security of Ivy outstanding shall be
Ivy Common Stock. All shares of Ivy Common Stock are duly authorized, validly
issued, fully paid and nonassessable, were issued in compliance with all
applicable federal and state securities laws, and are held of record by the
Stockholder. There are no outstanding or authorized options, warrants,
purchase rights, subscription rights, conversion rights, exchange rights,
rights of first refusal, preemptive rights or other rights of any kind to
acquire, directly or indirectly, any shares of capital stock of Ivy or
securities convertible into or exchangeable for, or which otherwise confer on
the holder thereof any right to acquire, any shares of capital stock or
securities of Ivy, nor is Ivy committed to issue any such capital stock option,
warrant, right or security. Prior to the Closing all securities, any and all
notes and debts of Ivy to the Stockholder or his Affiliates, any advances made
by the Stockholder to Ivy, any similar or related rights or interests owed to
the Stockholder, and any and all interest or dividends payable with respect to
any of the foregoing shall, without any liability on the part of Ivy, be
converted into shares of Ivy Common Stock. There are no outstanding or
authorized stock appreciation, phantom stock, profit participation or other
similar rights with respect to Ivy. There are no voting trusts, proxies, or
other agreements, commitments, obligations, or understandings with respect to
the voting of the capital stock of Ivy.
(b) The Ivy Shares are owned of record and beneficially
by the Stockholder. The Stockholder has good, valid, and marketable title to
the Ivy Shares, free and clear of any and all Encumbrances, with full right and
lawful authority to transfer, assign, deliver, convert and exchange his Ivy
Shares pursuant to this Agreement. The Stockholder is not party to any option,
warrant, purchase right, or other contract or commitment that could require the
Stockholder to sell, transfer, or
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otherwise dispose of any capital stock of Ivy (other than pursuant to this
Agreement).
4.4 Subsidiaries and Affiliates. Ivy has no Subsidiaries and
does not control, directly or indirectly, or have any direct or indirect equity
participation or any interest in any corporation, partnership, trust, venture,
business, enterprise, firm or other business association.
4.5 Financial Statements; Liabilities. (a) Attached hereto as
Exhibit C are the following financial statements of Ivy (collectively the
"Financial Statements"): (i) the unaudited balance sheets and statements of
operations, stockholder's equity and cash flows as at and for the fiscal years
ended December 31, 1995 and 1996; and (ii) the unaudited balance sheet and
statements of operations as at and for the two months ended February 28, 1997
("Most Recent Fiscal Month End"). The Financial Statements (including the
notes thereto) have been prepared on a consistent basis throughout the periods
covered thereby, are true, correct, and complete, fairly present the financial
position of Ivy at the dates thereof and the results of operations of Ivy for
the periods covered thereby, and are consistent with the books and records of
Ivy (which books and records are correct and complete). All of the Financial
Statements have been prepared using consistent accounting and financial
principles and fairly present the financial position of Ivy at the dates
thereof and the results of operations for the periods then ended.
(b) There are no Liabilities of Ivy (and there is no
Basis for any present or future action, suit, proceeding, hearing,
investigation, charge, complaint, claims or demand against Ivy giving rise to
any Liability), except for those: (i) accrued or reflected on the face of the
Most Recent Financial Statements; or (ii) arising in the ordinary course of
business (none of which results from, arises out of, relates to, is in the
nature of, or was caused by any breach of contract, breach of warranty, tort
infringement, or violation of law).
(c) Ivy's 1996 Revenue was $627,286.00.
4.6 Conduct of Business; Absence of Material Adverse Change.
Since the Most Recent Fiscal Year End, there has been no material adverse
change in the business, operations, results of operations, assets, properties,
financial condition or prospects of Ivy. Since such date, except as
contemplated in this Agreement Ivy has conducted its business in the manner
theretofore conducted and only in the ordinary course consistent with past
practices. Without limiting the generality of the foregoing, Ivy has not:
(a) incurred any loss of, or injury to, the assets or
properties of Ivy as the result of any fire, explosion, flood, windstorm,
earthquake, labor trouble, riot, accident, act
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of God or public enemy or armed forces, or other casualty (whether or not
covered by insurance payable to Ivy);
(b) issued, sold, or otherwise disposed of, or
committed to issue, sell, or otherwise dispose of (other than as contemplated
in this Agreement), any capital stock, bonds or other securities of any kind or
nature, or granted any options, warrants or other rights to purchase or obtain
(including upon conversion, exchange, or exercise) any of its capital stock;
(c) incurred, or become subject to, any obligation or
Liability in excess of $5,000, either individually or in the aggregate, except
Liabilities incurred in the ordinary course of business consistent with past
practices and obligations under contracts listed in the Schedules;
(d) discharged or satisfied any lien or Encumbrance or
paid any obligation or Liability other than Liabilities reflected in the Most
Recent Fiscal Year End balance sheet and Liabilities incurred since the Most
Recent Fiscal Year End in the ordinary course of business consistent with past
practices;
(e) for any reason, declared or made payment of, or set
aside for payment, any dividends or distributions of any assets of any kind
whatsoever in respect of any shares of the capital stock of Ivy (whether in
cash or in kind), or purchased, redeemed or otherwise acquired any of its
capital stock, any securities convertible into capital stock, or any other
securities;
(f) mortgaged, pledged, or subjected to lien, charge,
security interest, or any other Encumbrance any of its assets or properties
with respect to any obligations;
(g) sold, exchanged, transferred or otherwise disposed
of any of its assets or properties, tangible and intangible, or cancelled any
debts or claims, except in each case in the ordinary course of business
consistent with past practices;
(h) written down the value of any assets or properties
or written off as uncollectible any notes or accounts receivable, except
write-downs and write-offs in the ordinary course of business consistent with
past practices;
(i) entered into any employment agreement or collective
bargaining agreement, written or oral; modified the terms of any such existing
agreement or contract; increased the rate of compensation payable, or to become
payable, by it to any of its officers, directors, employees, consultants,
agents, or independent contractors; adopted, amended, modified, terminated or
made any contributions to, or any commitments for, any contributions to, any
bonus, profit sharing, incentive,
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severance, pension or other employee benefit plan, payment or arrangement made
to, for or with any of the foregoing; or made any other change in employment
terms for any of its officers, directors, employees, consultants, agents, or
independent contractors outside of the ordinary course of business consistent
with past practices;
(j) made or permitted any amendment or termination of
any contract, agreement, lease or license to which it is a party or which it
owns otherwise than in the ordinary course of business consistent with past
practice;
(k) through negotiation or otherwise made any
commitment or incurred any Liability to any labor organization;
(l) paid any severance or termination pay to any
officer or employee in excess of two weeks' salary;
(m) made any material change in any method of
accounting or accounting practice;
(n) made any charitable contributions or pledges
outside of the ordinary course of business consistent with past practices;
(o) waived or released any rights of material value
other than in the ordinary course of business consistent with past practices;
(p) effected any material reduction or increase of
advertising, administrative, or research and development expenses of Ivy other
than in the ordinary course of business consistent with past practices;
(q) made or committed to make capital expenditures (or
series of related capital expenditures) either in excess of $5,000 in the
aggregate or outside of the ordinary course of business consistent with past
practices;
(r) made any accrual or arrangement for or payment of
bonuses or special compensation of any kind to any director, officer,
consultant or employee;
(s) made any investment in (capital or otherwise), any
loan to, or any acquisition of securities or assets of, any other Person (or
series of related investments, loans or acquisitions);
(t) made or authorized any change in the charter or
bylaws of Ivy;
(u) issued any note, bond, or other debt security,
increased bank debt, or created, incurred, assumed, or guaranteed any
indebtedness for borrowed money or capital lease
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obligations together with Liabilities involving more than $10,000 in the
aggregate;
(v) made any loan to, or entered into any other
transaction with, any of its directors, officers, and employees outside of the
ordinary course of business consistent with past practices; or
(w) agreed or committed, whether in writing or not, to
do any of the foregoing.
4.7 Title to Tangible Personal Properties; Absence of Liens.
(a) Ivy has good, valid and marketable title to, or valid and subsisting
leasehold interests in, all buildings, machinery, equipment and other tangible
personal properties and assets used in the business of Ivy, located on its
premises, or shown on the balance sheet of the Most Recent Financial Statements
(the "Most Recent Balance Sheet") or acquired after the date thereof, free and
clear of any and all Encumbrances, except for Encumbrances reflected in the
Most Recent Balance Sheet.
(b) The assets and properties owned or leased by Ivy
constitute all of the assets and properties necessary to conduct the business
of Ivy in the manner in which it has previously been conducted and as presently
proposed to be conducted. All such personal property is free from defects, has
been maintained in accordance with normal industry practice, is in good
operating condition and repair, ordinary wear and tear excepted, and is
suitable for the purposes for which it presently is used and presently is
proposed to be used.
4.8 Litigation. (a) There is no charge, complaint, action,
suit, arbitration, proceeding, hearing, or investigation (collectively,
"Litigation") pending or, to the best knowledge and belief of Ivy and the
Stockholder, threatened against Ivy in, before, or by any court or arbitrator
or governmental agency or authority. None of the Stockholder and the directors
and officers of Ivy has any Basis to believe that any Litigation may be brought
or threatened against Ivy. Ivy is not subject to any outstanding injunction,
judgment, order, decree, ruling, or charge.
(b) Ivy has not breached, and is not in default of, any
of its legal obligations with respect to any of its licensors, licensees,
collaborative and other partners, joint venturers, brokers, distributors,
business consultants, franchisees, franchisors, representatives or other
independent contractors.
4.9 Compliance with Law. The Stockholder and Ivy and its
predecessors and Affiliates have complied in all material respects with all
applicable statutes, laws, ordinances, regulations, rules, orders,
determinations, writs, injunctions, awards, judgments, and decrees of every
kind whatsoever of any
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and all governmental authorities applicable to Ivy (including all agencies
thereof) or to the assets, properties and business of Ivy, and no suit, action,
proceeding, hearing, investigation, charge, complaint, claim, demand or notice
has been filed, commenced or threatened against Ivy alleging any failure to so
comply. All material governmental approvals, permits and licenses required by
Ivy in connection with the conduct of its business have been obtained, are in
full force and effect, and are being complied with in all respects. Ivy and
all of its employees, agents, distributors or representatives have not paid or
received any bribe or other unlawful, questionable or unusual payment of money
or other thing of more than nominal value, granted or accepted any
extraordinary discount, or furnished or been given any other unlawful or
unusual inducement to or from any person, business association or governmental
entity in the United States or elsewhere in connection with or in furtherance
of the business of Ivy, and such business is not in any manner dependent upon
the making or receipt of such payment, discounts or other inducements.
4.10 Contracts. (a) Section 4.10(a) of the Disclosure Schedule
sets forth a list of each written and oral contract or agreement (collectively,
the "Contracts") outstanding as of the date hereof to which Ivy is a party:
(i) which involves the lease of personal property from
or to third parties providing for lease payments in excess of $1,000
per annum;
(ii) under which it has created, incurred, assumed or
guaranteed (or may create, incur, assume or guarantee) indebtedness for
borrowed money (including capitalized lease obligations) involving more
than $1,000;
(iii) which is in the nature of an employment, consulting
or severance agreement or collective bargaining agreement involving the
payment of more than $1,000 or not entered into in the ordinary course
of business;
(iv) which is with any of the Stockholder and his
Affiliates (other than Ivy);
(v) which concerns confidentiality, nondisclosure or
noncompetition;
(vi) which is a profit sharing, stock option, stock
appreciation, deferred compensation, severance or other plan or
arrangement for the benefit of its current or former directors,
officers and employees;
(vii) which by its terms is not terminable without
liability and involves the payment or receipt of $1,000 or more;
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(viii) which the consequences of a default or termination
could have an adverse effect on the business, assets, financial
condition, operations, results of operations, or future prospects of
Ivy;
(ix) which is in the nature of a partnership, joint
venture, or collaborative arrangement or relationship;
(x) which involves the purchase or sale of raw
materials, commodities, supplies, products, or other personal property,
or for the furnishing or receipt of services, the performance of which
shall extend over a period of more than one (1) year, result in
financial loss to Ivy, or involves consideration in excess of $1,000;
or
(xi) which is outside of the ordinary course of business
or contains any provision requiring Ivy to indemnify any other party
thereto.
(b) Ivy has delivered to UOL a correct and complete
copy of each written Contract, as amended to date, and a written summary
setting forth the terms and conditions of each oral Contract. All of the
Contracts are legal, valid, binding, enforceable in accordance with their
respective terms against Ivy and any other parties thereto, and are in full
force and effect on identical terms following the consummation of the
transactions contemplated in this Agreement. There is not under any Contract:
(i) any existing default, breach or violation by Ivy or by any other party
thereto; (ii) an event which, after notice or lapse of time or both, would
constitute a default or breach by Ivy or by any other party, or permit
termination, modification, or acceleration, under the Contract; or (iii) any
repudiation of any provision of any Contract.
4.11 Brokers and Intermediaries. None of the Transferors has
employed any broker, finder, advisor, or intermediary in connection with the
transactions contemplated by this Agreement which would be entitled to a
broker's, finder's, or similar fee or commission in connection therewith or
upon the consummation thereof.
4.12 Tax Matters. (a) Ivy has filed all Tax Returns that it has
been required to file. All such Tax Returns were correct and complete in all
respects. All Taxes owed by Ivy (whether or not shown on any Tax Return) have
been paid. Ivy currently is not the beneficiary of any extension of time
within which to file any Tax Return. No claim has ever been made by an
authority in a jurisdiction where Ivy does not file Tax Returns that it is or
may be subject to taxation by that jurisdiction. There are no Encumbrances on
any of the assets of Ivy that arose in connection with any failure (or alleged
failure) to pay any Tax.
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(b) Ivy has withheld and paid all Taxes required to
have been withheld and paid in connection with amounts paid or owing to any
employee, consultant, independent contractor, creditor, stockholder, or other
third Person.
(c) No Transferor or director or officer (or employee
responsible for Tax matters) of Ivy expects any authority to assess any
additional Taxes for any period for which Tax Returns have been filed. There
is no dispute or claim concerning any Tax Liability of Ivy either: (i) claimed
or raised by any authority in writing; or (ii) as to which any of the
Transferors or the directors and officers (and employees responsible for Tax
matters) of Ivy has Knowledge based upon personal contact with any agent of
such authority. Section 4.12(c) of the Disclosure Schedule lists all federal,
state, local, and foreign income Tax Returns filed with respect to Ivy for
taxable periods ended on or before December 31, 1996, indicates those Tax
Returns that have been audited, and indicates those Tax Returns that currently
are the subject of audit. The Transferors have delivered to UOL correct and
complete copies of all federal, state and local income Tax Returns, examination
reports, and statements of deficiencies assessed against or agreed to by Ivy
since its formation.
(d) Ivy has not waived any statute of limitations in
respect of Taxes or agreed to any extension of time with respect to a Tax
assessment or deficiency.
(e) Ivy has not filed a consent under Code Section
341(f) concerning collapsible corporations. Ivy has not made any payments, is
not obligated to make any payments, and is not a party to any agreement that
under certain circumstances could obligate it to make any payments that shall
not be deductible under Code Section 280G. Ivy has not been a United States
real property holding corporation within the meaning of Code Section 897(c)(2)
during the applicable period specified in Code Section 897(c)(1)(A)(ii). Ivy
has disclosed on its Federal income Tax Returns all positions taken therein
that could give rise to a substantial understatement of federal income Tax
within the meaning of Code Section 6662. Ivy is not a party to any Tax
allocation or sharing agreement. Ivy is not a member of an Affiliated Group
filing a consolidated Federal income Tax Return and has no Liability for the
Taxes of any Person (other than Ivy) under Treas. Reg. Section 1.1502-6 (or any
similar provision of state, local or foreign law), as a transferee or
successor, by contract, or otherwise.
(f) The unpaid Taxes of Ivy: (i) did not, as of the Most
Recent Fiscal Month End exceed the reserve for Tax Liability (rather than any
reserve for deferred Taxes established to reflect timing differences between
book and Tax income) set forth on the face of the Most Recent Balance Sheet
(rather than in any notes thereto); and (ii) do not exceed that reserve as
adjusted for the passage of time through the Closing Date in accordance
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with the past custom and practice of Ivy in filing its Tax Returns.
(g) As of the Closing, Ivy shall not have outstanding
any warrants, options, convertible securities, or any other type of right
pursuant to which any Person could acquire stock in Ivy that, if exercised or
converted, would affect UOL's acquisition or retention of control of Ivy as
defined in Code Section 368(c)(1).
(h) Ivy operates at least one significant historic
business line or owns at least a significant portion of its historic business
assets, in each case within the meaning of Treas. Reg. Section 1.368-1(d).
4.13 Employee Benefits. (a) Section 4.13 of the Disclosure
Schedule lists each Employee Benefit Plan that Ivy maintains or to which Ivy
contributes. Each such Employee Benefit Plan (and each related trust,
insurance contract, or fund) complies in form and in operation in all respects
with the applicable requirements of ERISA, the Code, and other applicable laws.
(b) All required reports and descriptions (including
Form 5500 Annual Reports, Summary Annual Reports, PBGC-1's, and Summary Plan
Descriptions) have been filed or distributed appropriately with respect to each
such Employee Benefit Plan. The requirements of Part 6 of Subtitle B of Title
I of ERISA and of Code Section 4980B have been met with respect to each such
Employee Benefit Plan which is an Employee Welfare Benefit Plan.
(c) All contributions (including all employer
contributions and employee salary reduction contributions) which are due have
been paid to each such Employee Benefit Plan which is an Employee Pension
Benefit Plan, and all contributions for any period ending on or before the
Closing Date which are not yet due have been paid to each such Employee Pension
Benefit Plan or accrued in accordance with the past custom and practice of Ivy.
All premiums or other payments for all periods ending on or before the Closing
Date have been paid with respect to each such Employee Benefit Plan which is an
Employee Welfare Benefit Plan.
(d) Each such Employee Benefit Plan which is an
Employee Pension Benefit Plan meets the requirements of a "qualified plan"
under Code Section 401(a) and has received, within the last two (2) years, a
favorable determination letter from the Internal Revenue Service.
(e) The market value of assets under each such Employee
Benefit Plan which is an Employee Pension Benefit Plan (other than any
Multiemployer Plan) equals or exceeds the present value of all vested and
nonvested Liabilities thereunder determined in accordance with PBGC methods,
factors, and
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assumptions applicable to an Employee Pension Benefit Plan terminating on the
date for determination.
(f) The Transferors have delivered to UOL correct and
complete copies of the plan documents and summary plan descriptions, the most
recent determination letter received from the Internal Revenue Service, the
most recent Form 5500 Annual Report, and all related trust agreements,
insurance contracts, and other funding agreements which implement each such
Employee Benefit Plan.
(g) With respect to each Employee Benefit Plan that Ivy
and the Controlled Group of Corporations which includes Ivy maintains or has
maintained within the last five years, or has contributed, or been required to
contribute within the last five years:
(i) No such Employee Benefit Plan which is in Employee
Pension Benefit Plan (other than any Multiemployer Plan) has been
completely or partially terminated or been the subject of a Reportable
Event as to which notices would be required to be filed with the PBGC.
No proceeding by the PBGC to terminate any such Employee Pension
Benefit Plan (other than any Multiemployer Plan) has been instituted or
threatened.
(ii) There have been no Prohibited Transactions with
respect to any such Employee Benefit Plan. No Fiduciary has any
Liability for breach of fiduciary duty or any other failure to act or
comply in connection with the administration or investment of the
assets of any such Employee Benefit Plan. No action, suit, proceeding,
hearing, or investigation with respect to the administration or the
investment of the assets of any such Employee Benefit Plan (other than
routine claims for benefits) is pending or threatened. None of the
Stockholder and the directors and officers (and employees with
responsibility for employee benefits matters) of Ivy has any Knowledge
of any Basis for any such action, suit, proceeding, hearing, or
investigation.
(iii) Ivy has not incurred, and none of the Stockholder
and the directors and officers (and employees with responsibility for
employee benefits matters) of Ivy has any reason to expect that Ivy
shall incur, any Liability to the PBGC (other than PBGC premium
payments) or otherwise under Title IV of ERISA (including any
withdrawal Liability) or under the Code with respect to any such
Employee Benefit Plan which is an Employee Pension Benefit Plan.
(h) None of Ivy and the other members of the Controlled
Group of Corporations that includes Ivy contributes to, ever has contributed
to, or ever has been required to
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contribute to any Multiemployer Plan or has any Liability (including withdrawal
Liability) under any Multiemployer Plan.
(i) Ivy does not maintain or contribute and never has
maintained or contributed, and never has been required to contribute to any
Employee Welfare Benefit Plan providing medical, health, or life insurance or
other welfare-type benefits for current or future retired or terminated
employees, their spouses, or their dependents (other than in accordance with
Code Sec. 4980B).
4.14 Articles of Incorporation and Bylaws. Ivy has delivered to
UOL complete and correct copies of the Articles of Incorporation and Bylaws of
Ivy, as currently in effect. The Transferors have not defaulted under or
violated any provision of the Articles of Incorporation or Bylaws of Ivy.
4.15 Insurance. Section 4.15 of the Disclosure Schedule sets
forth the following information with respect to each insurance policy
(including policies providing property, casualty, liability, and workers'
compensation coverage and bond and surety arrangements) to which Ivy has been a
party, a named insured, or otherwise the beneficiary of coverage at any time
since its formation:
(i) the name, address, and telephone number of the
agent;
(ii) the name of the insurer, the name of the
policyholder, and the name of each covered insured;
(iii) the policy number and the period of coverage;
(iv) the scope (including an indication of whether the
coverage was on a claims made, occurrence, or other basis) and amount
(including a description of how deductibles and ceilings are calculated
and operate) of coverage;
(v) a description of any retroactive premium
adjustments or other loss-sharing arrangements; and
(vi) any self-insurance arrangements affecting Ivy.
With respect to each such insurance policy: (i) the policy is legal, valid,
binding, enforceable, and in full force and effect; (ii) the policy shall
continue to be legal, valid, binding, enforceable, and in full force and effect
on identical terms following the consummation of the transactions contemplated
by this Agreement; (iii) Ivy is not nor is any other party to the policy in
breach or default (including with respect to the payment of premiums or the
giving of notices), and no event has occurred which, with notice or the lapse
of time, would
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constitute such a breach or default, or permit termination, modification, or
acceleration, under the policy; and (iv) no party to the policy has repudiated
any provision thereof. Ivy has been covered since the date of its formation by
insurance in scope and amount customary and reasonable for the businesses in
which it has engaged during the aforementioned period.
4.16 Intellectual Property. (a) Ivy owns or has the legal
right to use pursuant to license, sublicense, agreement, or permission all
Intellectual Property reasonably necessary for the operation of the businesses
of Ivy as presently conducted and as presently proposed to be conducted. Each
item of Intellectual Property owned or used by Ivy immediately prior to the
Closing hereunder shall be owned or used by Ivy on identical terms and
conditions subsequent to the Closing, subject to the provisions of any license
agreement as to the term thereof. Ivy has reasonable actions to maintain and
protect each item of Intellectual Property that it owns or uses.
(b) Ivy has not interfered with, infringed upon,
misappropriated, or otherwise come into conflict with, any Intellectual
Property rights of third Persons, and none of the Transferors and the directors
and officers of Ivy has ever received any charge, complaint, claim, demand, or
notice alleging any such interference, infringement, misappropriation, or
violation (including any claim that Ivy must license or refrain from using any
Intellectual Property rights of any third party), except where such action
would not have a material adverse effect upon Ivy. To the Knowledge of any of
the Transferors and the directors and officers of Ivy, no third Person has
interfered with, infringed upon, misappropriated, or otherwise come into
conflict with any Intellectual Property rights of Ivy.
(c) Ivy has not and shall not utilize any inventions of
any of its employees (or people it currently intends to hire, if any) made
prior to their employment by Ivy. To its Knowledge, Ivy believes that all of
the Intellectual Property owned by it was conceived of during the corporate
existence of Ivy and was created by its employees within the scope of their
employment with Ivy. Section 4.16(c) of the Disclosure Schedule identifies
each trade name or unregistered trademark used by Ivy in connection with its
business and each patent or registration which has been issued to Ivy with
respect to any of its Intellectual Property, identifies each pending patent
application or application for registration which Ivy has made with respect to
any of its Intellectual Property, identifies any of the Intellectual Property
of Ivy which is either a trade secret or claimed as proprietary and not subject
to a patent or pending patent application, and identifies each license,
agreement, or other permission which Ivy has granted to any third Person with
respect to any of its Intellectual Property (together with any exceptions).
Ivy has delivered to UOL correct and complete copies of all such registrations,
applications, licenses, agreements, and permissions (as amended to date) and
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have made available to UOL correct and complete copies of all other written
documentation evidencing ownership and prosecution (if applicable) of each such
item. With respect to each such item of Intellectual Property:
(i) Ivy possesses all right, title, and interest in and
to the item, free and clear of any Encumbrance, license, or other
restriction;
(ii) the item is not subject to any outstanding
injunction, judgment, order, decree, ruling, or charge;
(iii) no action, suit, proceeding, hearing,
investigation, charge, complaint, claim, or demand is pending or is
threatened which challenges the legality, validity, enforceability,
use, or ownership of the item; and
(iv) Ivy has never agreed in writing, or to its
Knowledge verbally, to indemnify any Person for or against any
interference, infringement, misappropriation, or other conflict with
respect to the item, except as set forth in the standard agreements
with Ivy customers in the form previously delivered to UOL.
(d) Section 4.16(d) of the Disclosure Schedule
identifies each item of Intellectual Property that any third Person owns and
that Ivy uses pursuant to license, sublicense, agreement, or permission. Ivy
has delivered to UOL correct and complete copies of all such licenses,
sublicenses, agreements, and permissions (as amended to date). With respect to
each such item of Intellectual Property:
(i) the license, sublicense, agreement, or permission
covering the item is legal, valid, binding, enforceable, and in full
force and effect;
(ii) the license, sublicense, agreement, or permission
shall continue to be legal, valid, binding, enforceable, and in full
force and effect on identical terms following the Closing, subject to
the provisions of any license agreements as to the term thereof;
(iii) to the Transferors' Knowledge, no party to the
license, sublicense, agreement, or permission is in breach or default,
and no event has occurred which with notice or lapse of time would
constitute a breach or default or permit termination, modification, or
acceleration thereunder;
(iv) no party to the license, sublicense, agreement, or
permission has repudiated any provision thereof;
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(v) with respect to each sublicense, the
representations and warranties set forth in clauses (i) through (iv)
immediately above are true and correct with respect to the underlying
license;
(vi) the underlying item of Intellectual Property is not
subject to any outstanding injunction, judgment, order, decree, ruling,
or charge;
(vii) no action, suit, proceeding, hearing,
investigation, charge, complaint, claim, or demand is pending or is
threatened which challenges the legality, validity, or enforceability
of the underlying item of Intellectual Property; and
(viii) Ivy has not granted any sublicense or similar right
with respect to the license, sublicense, agreement, or permission which
violates any term or condition thereof.
(e) Ivy's ownership and/or right to the use of its
Intellectual Property shall not interfere with, infringe upon, misappropriate,
or otherwise come into conflict with, any Intellectual Property rights of third
Persons as a result of the continued operation of its business as presently
conducted and as presently proposed to be conducted.
(f) None of the Transferors and the directors and
officers (and employees with responsibility for Intellectual Property matters)
of Ivy has or had any Knowledge of any new products, inventions, procedures, or
methods of manufacturing or processing that any competitors or other third
Persons have developed which reasonably could be expected to supersede or make
obsolete any product or process of Ivy.
(g) None of the Transferors and the directors and
officers (and employees with responsibility for Intellectual Property matters)
of Ivy has done anything to compromise the secrecy, confidentiality or value of
any of its trade secrets, know-how, inventions, prototypes, designs, processes
or technical data (collectively "Proprietary Information") required to conduct
its business as now conducted and as proposed to be conducted. Ivy has taken
reasonable security measures to protect the secrecy, confidentiality, and value
of its Proprietary Information important to the conduct of its business,
including requiring each employee and consultant to acknowledge a requirement
to safeguard proprietary or sensitive information of Ivy in accordance with the
employee handbook of Ivy.
(h) None of the Transferors and the directors and
officers (or employees with responsibility for Intellectual Property matters)
of Ivy has any Knowledge that any of Ivy's employees, officers, or consultants
is in violation of his or her obligations of confidentiality.
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4.17 Bank Accounts. Section 4.17 of the Disclosure Schedule
sets forth a true and complete list of all bank accounts of Ivy and all
authorized signatories to each such account.
4.18 Directors, Officers and Employees. Ivy has heretofore
delivered to UOL a correct and complete listing as of the date hereof of all of
the directors, officers and employees of Ivy, showing their names, positions,
and current wage or salary and bonuses.
4.19 Labor Relations; Employees. (a) Ivy has no collective
bargaining agreements with any of its employees; there is no labor union
organizing activity pending or threatened with respect to Ivy; and Ivy has not
experienced any strikes, grievances, claims of unfair labor practices, or other
collective bargaining disputes. Ivy has not committed any unfair labor
practices. To the Knowledge of the Transferors, no executive, key employee or
group of employees has any plans to terminate employment with Ivy. Copies of
all personnel brochures or handbooks delivered to employees or in effect since
the formation of Ivy have been delivered to UOL.
(b) There is no claim nor any Basis or grounds for any
claim by any Person or party (including, but not limited to, governmental
agencies of any kind) against Ivy arising out of any federal, state, county,
local or foreign statute, ordinance or regulation relating to discrimination
against employees or any other employee practices, including without limitation
retirement or labor relations, or occupational, safety and/or health standards,
sexual harassment or intentional infliction of emotional distress.
4.20 Transactions with Related Parties. None of the Stockholder
or any present or former officer, director or shareholder of Ivy, and no
Affiliate of the Stockholder or of such officer, director or shareholder: (a)
has been involved in any business (excluding relationships and payments arising
from the employment or retention by Ivy of any such persons in the ordinary
course of business) arrangement or relationship with Ivy, including, without
limitation, any contract, agreement, or other arrangement providing for the
employment of, furnishing of services, by, rental of real or personal property
from or otherwise requiring payment to any such officer, director, shareholder
or Affiliate; or (b) owns any asset, tangible or intangible, which is used in
the business of Ivy.
4.21 Copies of Documents. True, correct, and complete copies of
all documents listed in the Disclosure Schedule have been heretofore delivered
to UOL and identified in writing as constituting such delivery.
4.22 Real Property. (a) Ivy owns no real estate.
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(b) Section 4.22(b) of the Disclosure Schedule lists
and describes briefly all real property leased or subleased to or by Ivy. Ivy
has delivered to UOL correct and complete copies of such leases and subleases,
as amended to date. With respect to each such lease and sublease:
(i) the lease or sublease is legal, valid, binding,
enforceable, and in full force and effect;
(ii) the lease or sublease shall continue to be legal,
valid, binding, enforceable, and in full force and effect on identical
terms following the consummation of the transactions contemplated
hereby;
(iii) no party to the lease or sublease is in breach or
default, and no event has occurred which, with notice or lapse of time,
would constitute a breach or default or permit termination,
modification, or acceleration thereunder;
(iv) no party to the lease or sublease has repudiated
any provision thereof;
(v) there are no disputes, oral agreements, or
forbearance programs in effect as to the lease or sublease;
(vi) with respect to each sublease, the representations
and warranties set forth in clauses (i) through (v) above are true and
correct with respect to the underlying lease;
(vii) Ivy has not assigned, transferred, conveyed,
mortgaged, deeded in trust, or encumbered any interest in the leasehold
or subleasehold;
(viii) all facilities leased or subleased thereunder have
received all approvals of governmental authorities (including licenses
and permits) required in connection with the operation thereof and have
been operated and maintained in accordance with applicable laws, rules,
and regulations;
(ix) all facilities leased or subleased thereunder are
supplied with utilities and other services necessary for the operation
of said facilities; and
(x) the owner of the facility leased or subleased has
good and marketable title to the parcel of real property, free and
clear of any Encumbrance, easement, covenant, or other restriction,
except for installments of special easements not yet delinquent and
recorded easements, covenants, and other restrictions which do not
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impair the current use, occupancy, or value, or the marketability of
title, of the property subject thereto.
4.23 Books and Records. The stock records of Ivy are in all
respects complete and accurate, and the minute books of Ivy accurately reflect
the actions taken at shareholder and director meetings or by unanimous written
consent and are in all respects correct, complete, and accurate.
4.24 Environmental Matters. (a) Ivy has complied and is in
compliance with all local, state, and federal statutes, ordinances, and
regulations dealing with the protection of the environment or public health and
safety, including, but not limited to, the Comprehensive Environmental
Response, Compensation, and Liability Act (codified as amended, 42 U.S.C.
Sections 9601 et seq.) ("CERCLA") and the Resource Conservation and Recovery
Act (codified as amended, 42 U.S.C. Sections 6901 et seq.) ("RCRA").
(b) Ivy has obtained all required local, state and
federal permits, licenses, certificates and approvals relating to: (i) air
emissions; (ii) discharges to surface water or groundwater; (iii) noise
emissions, (iv) solid or liquid waste disposal; (v) the use, generation,
storage, transportation or disposal of toxic or hazardous substances or wastes
(intended hereby and hereafter to include any and all such materials listed in
any local, state or federal statute, ordinance, or regulation); (vi) the use,
storage, transportation or disposal of petroleum or petroleum products; or
(vii) other environmental, health and safety matters.
(c) Ivy has not caused, suffered, permitted or
sustained any emission, spill, release or discharge of any toxic or hazardous
substances or wastes, or any petroleum products, into or upon: (i) the air;
(ii) soils or any improvements located thereon, whether on Ivy' property or
elsewhere; (iii) surface water or groundwater; or (iv) a sewer, septic system
or waste treatment, storage or disposal system except in accordance with
applicable law or a valid government permit, license, certificate or approval.
(d) None of the Transferors or the officers and
directors (including employees responsible for environmental matters) of Ivy
has received written or oral notice of any actual or potential claims, orders,
directives, citations, or causes of action based on actual or alleged
violations of any local, state, or federal statutes, ordinances, or regulations
dealing with the protection of the environment or public health and safety,
including, but not limited to, CERCLA or RCRA, or oral or written notice of any
actual or potential common law claims or causes of action based upon Ivy'
actual or alleged involvement with or use of any substance regulated by local,
state, or federal statutes, ordinances, or regulations dealing with the
protection of the environment or public health and safety.
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(e) None of the Transferors or the officers and
directors (including employees responsible for environmental matters) of Ivy
has received oral or written notice of any actual or potential claims, orders,
directives, citations or causes of action under any local, state, or federal
statutes, ordinances, or regulations dealing with the protection of the
environment or public health and safety, including, but not limited to, CERCLA
and RCRA, based upon or arising out of its actual or alleged disposal of
hazardous wastes or substances, whether on or off real property being operated
by Ivy.
(f) None of the Transferors and the officers and
directors (including employees responsible for environmental matters) of Ivy
has any Knowledge of any condition on any of the real property owned by Ivy
which may give rise to any claim, order, directive, citation, or cause of
action based on any local, state, or federal statute, ordinance, or regulation
dealing with protection of the environment or public health and safety,
including, but not limited to, CERCLA or RCRA.
4.25 Guaranties. Ivy is not a guarantor or otherwise liable for
any Liability or obligation of any Person other than itself (including
indebtedness of any other Person).
4.26 Government Consents. No consent, approval or authorization
of or designation, declaration or filing with any state, federal, or foreign
governmental authority on the part of the Stockholder because of any special
characteristic of such Stockholder is required in connection with the valid
execution and delivery of this Agreement and the consummation by the
Stockholder of the transactions contemplated hereby.
4.27 Manufacturing Rights. Ivy has not granted rights to
manufacture or sell its products, processes, Intellectual Property or
technology to any other Person.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF UOL
UOL hereby represents and warrants to the Stockholder that:
5.1 Organization and Authority. UOL is a corporation duly
incorporated, validly existing and in good standing under the laws of the State
of Delaware, with the corporate power and authority to enter into this
Agreement and to perform its obligations hereunder. The execution and delivery
of this Agreement and the consummation of the transactions contemplated hereby
have been duly authorized by all requisite corporate action on the part of UOL.
This Agreement has been duly executed and delivered by UOL and constitutes the
valid, binding and enforceable obligation of UOL, subject to applicable
bankruptcy,
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reorganization, insolvency, moratorium and other laws affecting creditors'
rights generally from time to time in effect and to general equitable
principles.
5.2 Ability to Carry Out the Agreement. UOL is not subject to
or bound by any provision of:
(i) any law, statute, rule, regulation, ordinance or
judicial or administrative decision;
(ii) any articles or certificate of incorporation or
by-laws;
(iii) any mortgage, deed of trust, lease, note,
stockholders' agreement, bond, indenture, other instrument or
agreement, license, permit, trust, custodianship, other restriction, of
any kind or character whatsoever; or
(iv) any judgment, order, writ, injunction or decree of
any court, governmental body, administrative agency or arbitrator;
that would prevent or be violated by or would result in any penalty, forfeiture
or contract termination as a result of, or under which there would be a default
as a result of, nor is the consent of any Person under any material agreement
which has not been obtained required for, the execution, delivery and
performance by UOL of this Agreement and the transactions contemplated hereby,
other than violations, penalties, forfeitures, contract terminations, defaults
or failure to obtain consents which, singly or in the aggregate, shall not have
a material adverse effect on the enforceability or validity of this Agreement
or the ability of UOL to perform its obligations hereunder.
5.3 Brokers and Intermediaries. UOL has not employed any
broker, finder, advisor, or intermediary in connection with the transactions
contemplated by this Agreement which would be entitled to a broker's, finder's,
or similar fee or commission in connection therewith or upon the consummation
thereof; provided, however, that it may owe a fee to Friedman, Billings, Xxxxxx
& Co., Inc. in connection with the transactions contemplated hereby.
ARTICLE 6
CERTAIN COVENANTS AND AGREEMENTS
6.1 Full Access. From the date hereof until the earlier of the
Closing or the termination of this Agreement pursuant to Section 3.3 above, Ivy
shall permit representatives of UOL to have full access at all reasonable
times, and in a manner so as not to interfere with the normal business
operations of Ivy, to
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all premises, customers, employees, properties, books, records, contracts, tax
records, and documents of or pertaining to Ivy. From the date hereof until the
earlier of the Closing or the termination of this Agreement pursuant to Section
3.3 above, UOL shall permit representatives of the Transferors to have full
access at all reasonable times, and in a manner so as not to interfere with the
normal business operations of UOL, to all premises, customers, employees,
properties, books, records, contracts, tax records, and documents of or
pertaining to UOL. All access provided hereunder, and information with respect
thereto, shall be held in confidence.
6.2 Regulatory Filings; Consents. From the date hereof until
the earlier of the Closing or the termination of this Agreement pursuant to
Section 3.3 above, each of the parties hereto shall: (a) take any additional
action that is necessary, proper or advisable in connection with any notices
to, filings with, and authorizations, consents and approvals of governments and
governmental agencies that it is required to give, make, or obtain in order to
effect the transactions contemplated hereunder; and (b) furnish to the other
party or parties hereto, as the case may be, such necessary information and
reasonable assistance as such other party or parties may reasonably request in
connection with its or their preparation of necessary filings or submissions to
any governmental agency. Ivy shall give any notices to third Persons, and
shall use its best efforts to obtain any third Person consents, that UOL may
request in connection with the matters referred to in Section 4.2 above.
6.3 Conduct of Business. From the date hereof until the
earlier of the Closing or the termination of this Agreement pursuant to Section
3.3 above, and except as otherwise contemplated by this Agreement or consented
to or approved by UOL in writing, Ivy shall not engage in any practice, take an
action, embark on any course of action, or enter into any transaction outside
the ordinary course of business consistent with past practices. Without
limiting the generality of the foregoing, Ivy shall, during the period
specified in the first sentence of this Section 6.3:
(a) not take any action, engage in any practice or
enter into any transaction of the nature or sort referred to in subsections (a)
through (w) of Section 4.6, except as permitted therein;
(b) cause the business conducted by Ivy to be operated
in all respects in the ordinary and usual course and keep and preserve its
business and properties intact, including its present operations, physical
facilities, working conditions and relationships with employees, clients,
suppliers, customers, lessors and licensors of such business;
(c) not effect or authorize any change or amendment to
the Articles of Incorporation or Bylaws of Ivy;
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(d) maintain in full force and effect all of Ivy's
existing casualty, liability, and other insurance until the Closing Date in
amounts not less than those in effect on the date hereof;
(e) provide unaudited monthly balance sheets,
statements of income and expenses, changes in stockholders' equity and cash
flows within 15 days of the end of each such month;
(f) not declare, set aside, or pay any dividend or make
any distribution with respect to its capital stock or redeem, purchase, or
otherwise acquire any of its capital stock; and
(g) promptly notify UOL in writing of: (i) any
actions, suits or proceedings instituted or threatened against Ivy at law or in
equity or admiralty, before or by any court or governmental authority; (ii) any
changes in personnel; and (iii) any adverse development causing a breach of any
of the representations and warranties contained in Article 4 above. No
disclosure by Ivy pursuant to this subsection 6.3(vii) shall be deemed to amend
or supplement the disclosures contained in any Schedule or to prevent or cure
any misrepresentation, breach of warranty, or breach of covenant.
6.4 Confidentiality. Each party to this Agreement agrees and
covenants to the other that all information concerning the business and offices
of the other parties to the Agreement that is not generally available to the
public ("Confidential Information") and obtained from such other party shall be
deemed confidential and shall not be disclosed to, or utilized by, any Person
for any reason or purpose whatsoever, except in connection with this Agreement,
to the parties and their representatives involved in this transaction, or as
may by required by law or stock exchange or market regulation. Notwithstanding
any provision herein to the contrary, any party failing to comply in a full and
timely fashion with Section 6.4 shall indemnify the other for all losses,
damages, claims or expenses of any nature whatsoever, including reasonable
attorneys' fees, incurred by the other party and related to the unauthorized
disclosure or use of Confidential Information.
6.5 Books and Records. UOL shall retain all books, records and
other documents pertaining to the business of Ivy in existence on the Closing
Date for a period of at least three years from the Closing Date and to make the
same reasonably available after the Closing Date for such three year period for
inspection and copying by the Stockholder at the Stockholder's expense during
the normal business hours of UOL, upon reasonable request and upon reasonable
notice.
6.6 Announcement. Promptly after the execution of this
Agreement, UOL shall make a public statement approved by UOL and
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Ivy with respect to this Agreement and the transactions contemplated hereby.
Thereafter, prior to the Closing, no party to this Agreement shall issue any
press release or otherwise make any public statement with respect to this
Agreement and the transactions contemplated hereby without the prior consent of
the other parties to this Agreement (which consent shall not be unreasonably
withheld), except as may be required by applicable law or stock exchange
regulation.
6.7 Best Efforts. Without limiting the specific obligations of
any party hereto under any agreement or covenant hereunder, each of the parties
hereto shall use its respective best efforts to take all action and do such
acts and things necessary in order to consummate and make effective the
transactions contemplated by this Agreement (including satisfaction, but not
waiver, of the conditions to Closing set forth in Articles 7 and 8 below).
6.8 Discussion With Others. From the date hereof until the
earlier of the Closing or the termination of this Agreement pursuant to Section
3.3 above, none of the Transferors shall: (i) discuss, solicit, initiate, or
encourage the submission of any proposal or offer from any third Person
concerning the sale or acquisition of any capital stock or other voting
securities, or any significant assets of, Ivy (including any acquisition
structured as a merger, consolidation or share exchange); or (ii) engage or
participate in any discussions or negotiations regarding, enter into any
agreement with respect to, furnish any information with respect to, assist or
participate in, or facilitate in any other manner any effort or attempt by any
third Person to do or seek any of the foregoing. The Transferors shall
immediately notify UOL if any third Person makes any proposal, offer, inquiry,
or contact with respect to any of the foregoing.
6.9 Cooperation in Litigation. Each party hereto shall fully
cooperate with the other in the defense or prosecution of any litigation or
proceeding already instituted or which may be instituted hereafter against or
by such party relating to or arising out of the conduct of the business of Ivy
prior to or after the Closing Date (other than litigation arising out of the
transactions contemplated by this Agreement). The party requesting such
cooperation shall pay the out-of-pocket expenses (including legal fees and
disbursements) of the party providing such cooperation and of its officers,
directors, employees and agents reasonably incurred in connection with
providing such cooperation, but shall not be responsible to reimburse the party
providing such cooperation for such party's time spent in such cooperation or
the salaries or costs of fringe benefits or similar expenses paid by the party
providing such cooperation to its officers, directors, employees and agents
while assisting in the defense or prosecution of any such litigation or
proceeding.
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ARTICLE 7
CONDITIONS PRECEDENT OF TRANSFERORS
The obligation of the Transferors to consummate the transactions to be
performed by them in connection with the Closing is subject to the
satisfaction, or written waiver by the Transferors, of each of the following
conditions prior to or at the Closing:
7.1 Representations and Warranties. The representations and
warranties of UOL made hereunder shall be true in all material respects at and
as of the Closing Date, with the same force and effect as though made at and as
of the Closing Date, except for changes permitted or contemplated by this
Agreement and except to the extent that any representation or warranty is made
as of a specified date, in which case such representation or warranty shall be
true in all material respects as of such date.
7.2 Agreements. UOL shall have performed and complied in all
material respects with all its undertakings, covenants and agreements required
by this Agreement to be performed or complied with prior to or at the Closing.
7.3 Performance Certificate. Ivy shall have been furnished
with a certificate of a proper officer of UOL, dated as of the Closing Date,
each certifying to the effect that each of the conditions contained in Sections
7.1 and 7.2 above has been satisfied in all respects.
7.4 No Injunction. No injunction, restraining order or decree
of any nature of any court or governmental or regulatory authority shall exist
against UOL, the Transferors or any of their respective Affiliates, or any of
the principals, officers or directors of any of them, that restrains, prevents
or materially adversely changes the transactions contemplated hereby.
7.5 No Violation. The consummation of the transactions
contemplated hereunder shall not be in violation of any material applicable
law, statute, rule or regulation for which a waiver has not been obtained and
where such violation would make illegal or otherwise prevent the consummation
of the transactions contemplated hereby.
7.6 Consents. All material consents, approvals and
authorizations of governmental and regulatory authorities, and all material
filings with and notifications of governmental authorities and regulatory
agencies or other entities which regulate the business of Ivy or UOL, necessary
on the part of Ivy or UOL, or their respective Affiliates, to the execution and
delivery of this Agreement and the consummation of the transactions
contemplated hereby, shall have been obtained or effected (and all applicable
waiting periods, if any, including
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any extensions thereof, under any applicable law, statute, regulation or rule,
including but not limited to the HSR Act, if applicable, shall have expired or
terminated, as applicable). UOL shall have received the written consents or
approvals of any and all third Persons required under the terms of the
Contracts to the consummation of the transactions contemplated hereunder.
7.7 Opinion of the UOL's Counsel. The Stockholder shall have
received an opinion of Wyrick, Robbins, Xxxxx & Xxxxxx, L.L.P., counsel for
UOL, dated as of the Closing Date, addressed to the Stockholder, to the effect
and substantially in the form of Exhibit D.
7.8 No Proceedings. No claim, suit, action or other proceeding
shall be pending or threatened in writing before or by any court, governmental
agency or other entity against any of the parties to this Agreement with
respect to the transactions contemplated by this Agreement or which materially
adversely affect the assets, property, operations, results of operations,
financial condition, or prospects of UOL.
7.9 Consulting Agreement. The Stockholder shall have entered
into the consulting agreement in form and substance as set forth in Exhibit E
and the same shall be in full force and effect.
7.10 Miscellaneous Closing Deliveries. The Transferors shall
have received such evidence as they may reasonably request in order to
establish: (a) the power and authority of UOL to consummate the transactions
contemplated by this Agreement; (b) compliance with the conditions of Closing
set forth herein; and (c) satisfactory completion of all corporate proceedings
to be taken in connection with the transactions contemplated by this Agreement
together with certified copies of necessary resolutions duly adopted by the
stockholders and directors of UOL approving the execution and delivery of this
Agreement and all other corporate action necessary to enable UOL to comply with
the terms of this Agreement.
ARTICLE 8
CONDITIONS PRECEDENT OF THE UOL
The obligation of UOL to consummate the transactions to be performed by
them in connection with the Closing is subject to the satisfaction, or written
waiver by UOL, of each of the following conditions prior to or at the Closing:
8.1 Representations and Warranties. The representations and
warranties of the Stockholder made hereunder shall be true in all material
respects at and as of the Closing Date, with the same force and effect as
though made at and as of the Closing Date, except for changes permitted or
contemplated by this
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Agreement and except to the extent that any representation or warranty is made
as of a specified date, in which case such representation or warranty shall be
true in all material respects as of such date.
8.2 Agreements. The Transferors shall have performed and
complied in all material respects with all of their respective undertakings and
agreements required by this Agreement to be performed or complied with by them
prior to or at the Closing.
8.3 Performance Certificate. UOL shall have been furnished
with a certificate of the Stockholder, dated as of the Closing Date, certifying
that the conditions contained in Sections 8.1, 8.2 and 8.9 hereof have been
satisfied in all respects.
8.4 No Injunction. No injunction, restraining order or decree
of any nature of any court or governmental or regulatory authority shall exist
against UOL, the Transferors or any of their respective Affiliates, or any of
the principals, officers or directors of any of them, that restrains, prevents
or materially adversely changes the transactions contemplated hereby.
8.5 No Violation. The consummation of the transactions
contemplated hereunder shall not be in violation of any material applicable
law, statute, rule or regulation for which a waiver has not been obtained.
8.6 Consents. All material consents, approvals and
authorizations of governmental and regulatory authorities, and all material
filings with and notifications of governmental authorities and regulatory
agencies or other entities which regulate the business of Ivy or UOL, necessary
on the part of Ivy or UOL, or their respective Affiliates, to the execution and
delivery of this Agreement and the consummation of the transactions
contemplated hereby, shall have been obtained or effected (and all applicable
waiting periods, if any, including any extensions thereof, under any applicable
law, statute, regulation or rule, including but not limited to the HSR Act, if
applicable, shall have expired or terminated, as applicable). UOL shall have
received the written consents or approvals of any and all third Persons
required under the terms of the Contracts to the consummation of the
transactions contemplated hereunder.
8.7 Opinion of Transferors' Counsel. UOL shall have received
an opinion of XxXxxxxx & Kudravetz, P.C., counsel of the Transferors, dated as
of the Closing Date, addressed to UOL to the effect and substantially in the
form of Exhibit F.
8.8 No Adverse Change. Since the Most Recent Fiscal Year End,
there shall have been no material adverse change in the assets, business,
operations, results of operations, financial condition, or prospects of Ivy,
except events or changes
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contemplated by this Agreement, changes consented to by UOL and changes in the
ordinary course of business which are not, either individually or in the
aggregate, materially adverse.
8.9 Confidentiality and Non-Disclosure Agreements. Each of the
employees, officers, and regular consultants of Ivy shall have entered into a
confidentiality and non-disclosure agreement with Ivy in form and substance as
set forth in Exhibit G (collectively the "Non-Disclosure Agreements" and
individually a "Non-Disclosure Agreement"), and the same shall be in full force
and effect.
8.10 Resignations. UOL shall have received resignations,
effective as of the Closing, of each officer and director of Ivy other than
those whom UOL shall have specified in writing prior to the Closing.
8.11 No Proceedings. No claim, suit, action or other proceeding
shall be pending or threatened in writing before or by any court, governmental
agency or other entity against any of the parties to this Agreement with
respect to the transactions contemplated by this Agreement or which materially
adversely affect the assets, property, operations, results of operations,
financial condition, or prospects of Ivy.
8.12 Consulting Agreement. The Stockholder shall have entered
into the consulting agreement in form and substance as set forth in Exhibit E
and the same shall be in full force and effect.
8.13 Due Diligence. The completion of a due diligence
investigation of Ivy by UOL satisfactory to UOL, which such investigation shall
be for the purpose of confirming the validity of the representations and
warranties contained herein and shall be conducted in conformance with the
standards set forth in Section 6.1 hereof.
8.14 Miscellaneous Closing Deliveries. UOL shall have received
such evidence as UOL may reasonably request in order to establish: (a) the
power and authority of the Transferors to consummate the transactions
contemplated by this Agreement; (b) compliance with the conditions of Closing
set forth herein; and (c) satisfactory completion of all corporate and
stockholder proceedings to be taken in connection with the transactions
contemplated by this Agreement, together with certified copies of resolutions
duly adopted by the stockholders and directors of Ivy approving the
transactions contemplated hereby and the execution and delivery of this
Agreement and all other corporate action necessary to enable the Transferors to
comply with the terms of this Agreement.
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ARTICLE 9
SURVIVAL OF REPRESENTATIONS, WARRANTIES AND COVENANTS
9.1 Survival of Representations and Warranties. All of the
representations and warranties of the parties hereto contained in the Agreement
shall survive the Closing (even if the damaged party knew or had reason to know
of any misrepresentation or breach of warranty at the time of Closing) and
continue in full force and effect for a period of two years. Any claims with
respect to the foregoing sentence under Sections 10.1 and 10.2 below must be
asserted in writing with reasonable particularity by the party making such
claim within two years of the Closing, and the obligations of the indemnifying
party under Section 10.1 and 10.2 below with respect to such claims shall
continue until such claims have been resolved.
9.2 Survival of Covenants and Agreements. The respective
covenants and agreements of the parties contained in this Agreement shall
survive the Closing without limitation as to time. Any claims as to a breach
of a covenant or agreement under Sections 10.1 and 10.2 below must be asserted
in writing with reasonable particularity by the party making such claims.
ARTICLE 10
INDEMNIFICATION
10.1 Indemnification of UOL. The Stockholder agrees to defend,
indemnify and hold harmless UOL and its successors and assigns (individually an
"Acquiror Indemnitee", and collectively the "Acquiror Indemnitees") from,
against, and in respect of the following:
(a) any and all losses, damages, deficiencies or
liabilities caused by, resulting or arising from, or otherwise relating to:
(i) any breach of the representations and warranties of the Stockholder
contained in this Agreement; (ii) any failure by any of the Transferors to
perform or otherwise fulfill or comply with: (X) if this Agreement shall have
been terminated, Sections 6.4, 6.7, and 6.8 or any other covenant, undertaking,
agreement or obligation to be performed, fulfilled or complied with by the
Stockholder or Ivy prior to or in connection with the Closing; or (Y) if the
Closing shall occur, any undertaking or other agreement or obligation hereunder
to be performed, fulfilled or otherwise complied with by the Stockholder after
the Closing (including but not limited to the undertakings, agreements and
obligations to be performed by the Stockholder pursuant to Section 6.9); (iii)
any unknown or undisclosed Liabilities of Ivy arising out of or related to the
conduct or operation of Ivy's business prior to the Closing (other than
Liabilities incurred in the ordinary course of business subsequent to the
execution of this Agreement); and (iv)
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except as disclosed in Schedule 4.11, any and all legal, investment banking,
accounting, auditing, and other professional fees and expenses of Ivy related
to this Agreement and the transactions contemplated hereby; and
(b) any and all actions, suits, proceedings, claims,
liabilities, demands, assessments, judgments, interest, penalties, costs and
expenses, including reasonable attorneys' fees (whether or not incurred by the
Acquiror Indemnitees or in connection with investigating, defending, settling
or prosecuting any action, suit, proceeding or claim against any of the
Acquiror Indemnitors hereunder), incident to any of the items referred to
herein or such indemnification;
provided, however, that if any action, suit, proceeding, claim, liability,
demand or assessment shall be asserted against any Acquiror Indemnitee in
respect of which such Acquiror Indemnitee proposes to demand indemnification,
such Acquiror Indemnitee shall notify the Stockholder thereof within a
reasonable period of time after assertion thereof, and such notice shall
include copies of all suit, service and claim documents, all other relevant
documents in the possession of the Acquiror Indemnitee, and an explanation of
the Acquiror Indemnitee's contentions and defenses with as much specificity and
particularity as the circumstances permit, provided that the failure of the
Acquiror Indemnitee to give such notice shall not relieve the Stockholder of
his obligations under this Section 10.1, if the Acquiror Indemnitee shall have
demonstrated that: (i) it acted in good faith and without unreasonable delay;
and (ii) the Stockholder shall not have been prejudiced thereby. Subject to
rights of or duties to any insurer or other third Person having liability
therefor, the Stockholder shall have (subject to the prior written consent of
Acquiror Indemnitee, which consent shall not be unreasonably withheld) the
right within 10 days after receipt of such notice to assume the control of the
defense, compromise or settlement of any such action, suit, proceeding, claim,
liability, demand, or assessment, including, at its own expense, employment of
counsel; provided further, however, that if the Stockholder shall have
exercised his right to assume such control, the Acquiror Indemnitee: (x) may,
in its sole discretion and expense, employ counsel to represent it (in addition
to counsel employed by the Stockholder) in any such matter, and in such event
counsel selected by the Stockholder shall be required to cooperate with such
counsel of the Acquiror Indemnitee in such defense, compromise or settlement
for the purpose of informing and sharing information with such Acquiror
Indemnitee; and (y) shall, at its own expense, make available to the
Stockholder those employees of the Acquiror Indemnitees whose assistance,
testimony or presence is reasonably deemed by the Stockholder necessary or
beneficial to assist the Stockholder in evaluating and in defending any such
action, suit, proceeding, claim, liability, demand or assessment; provided
further, however, that any such access shall be conducted in such a manner
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as not to interfere unreasonably with the operations of the businesses of the
Acquiror Indemnitees.
Notwithstanding any other provisions of this Agreement to the contrary,
the Stockholder shall have no liability under this Article 10 unless the
aggregate amount of the damages and losses to the Acquiror Indemnitees from all
claims finally determined and arising under the provisions of this Agreement
exceed $10,000.00, and in such event the Stockholder shall be required to pay
only the amount by which the aggregate amount of such claims exceeds such
amount. In calculating amounts payable pursuant to this Article 10, the
Stockholder shall receive credit for (i) any reduction of actual tax
liabilities of any Acquiror Indemnitee arising from facts giving rise to a
claim of indemnification, and (ii) any insurance proceeds received with respect
to any damages or losses that are the subject of a claim for indemnification
hereunder.
10.2 Indemnification of Stockholder. UOL agrees to defend,
indemnify and hold harmless the Stockholder and his successors and assigns
(individually a "Transferor Indemnitee", and collectively the "Transferor
Indemnitees") from, against and in respect of:
(a) any and all losses, damages, deficiencies or
liabilities caused by, resulting or arising from or otherwise relating to: (i)
any breach of the representations and warranties of UOL contained in this
Agreement; and (ii) any failure by UOL to perform or otherwise fulfill or
comply with (X) if this Agreement shall have been terminated, Sections 6.4 or
6.7 or any other covenant, undertaking, agreement or obligation to be
performed, fulfilled, or complied with by UOL prior to or in connection with
the Closing, or (Y) if the Closing shall occur, any undertaking or other
agreement or obligation hereunder to be performed, fulfilled or otherwise
complied with by UOL after the Closing (including, but not limited to, the
undertaking, agreements and obligations to be performed pursuant to Section 6.9
hereof); and
(b) any and all actions, suits, proceedings, claims,
liabilities, demands, assessments, judgments, interest, penalties, costs and
expenses, including reasonable attorneys' fees (whether or not incurred by the
Transferor Indemnitees in connection with investigating, defending, settling or
prosecuting any action, suit, proceeding or claim against UOL hereunder),
incident to any of the items referred to herein or such indemnification;
provided, however, that if any action, suit, proceeding, claim, liability,
demand or assessment shall be asserted against any Transferor Indemnitee in
respect of which such Transferor Indemnitee proposes to demand indemnification,
such Transferor Indemnitee shall notify UOL thereof within a reasonable period
of time after assertion thereof, and such notice shall include
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copies of all suit, service and claim documents, all other relevant documents
in the possession of the Transferor Indemnitees and an explanation of the
Transferor Indemnitees' contentions and defenses with as much specificity and
particularity as the circumstances permit, provided that the failure of the
Transferor Indemnitee to give such notice shall not relieve UOL of its
obligations under this Section 10.2 if the Transferor Indemnitee shall have
demonstrated that: (i) it acted in good faith and without unreasonable delay;
and (ii) UOL shall not have been prejudiced thereby. Subject to rights of or
duties to any insurer or other third Person having liability therefor, UOL
shall have (subject to the prior written consent of Transferor Indemnitee,
which consent shall not be unreasonably withheld) the right within 10 days
after receipt of such notice to assume the control of the defense, compromise
or settlement of any such action, suit, proceeding, claim, liability, demand,
or assessment, including, at its own expense, employment of counsel; provided
further, however, that if UOL shall have exercised its right to assume such
control, the Transferor Indemnitees: (x) may, in their sole discretion and
expense, employ one counsel to represent them (in addition to counsel employed
by UOL) in any such matter, and in such event counsel selected by UOL shall be
required to cooperate with such counsel of the Transferor Indemnitees in such
defense, compromise or settlement for the purpose of informing and sharing
information with such Transferor Indemnitees; and (y) shall, at its own
expense, make available to Transferor Indemnitees those employees of UOL or any
Affiliate of UOL whose assistance, testimony or presence is reasonably deemed
by the Transferor Indemnitees necessary or beneficial to assist the Transferor
Indemnitees in evaluating and in defending any such action, suit, proceedings,
claim, liability, demand or assessment; provided further, however, that any
such access shall be conducted in such a manner as not to interfere
unreasonably with the operations of the business of UOL or any of its
Affiliates.
10.3 Remedies. The indemnification provisions of this Article
10 are in addition to, and not in lieu or in derogation of, any other rights or
remedies any party may have in equity for a breach of representations, warranty
or covenant. Each of the parties acknowledges and agrees that the other
parties hereto would be damaged irreparably in the event any of the provisions
of this Agreement are not performed in accordance with their specific terms or
otherwise are breached. Accordingly, each of the parties hereto agrees the
other parties hereto shall be entitled to an injunction or injunctions to
prevent breaches of the provisions of this Agreement and to enforce
specifically this Agreement and the terms and provisions hereof in any
competent court having jurisdiction over the parties (subject to the provisions
of Section 12.11 below), in addition to any other remedy to which they may be
entitled in equity.
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10.4 Survival. Except as otherwise expressly set forth herein,
this Article 10 shall survive termination of this Agreement without limitation.
ARTICLE 11
MISCELLANEOUS
11.1 Further Assurances. From time to time at or after the
Closing, each of the parties agrees to take, or cause to be taken, such further
actions, to execute, deliver and file, or cause to be executed, delivered and
filed, such further documents and instruments, and to obtain consents, as may
be necessary or reasonably requested in order to fully effectuate the purposes,
terms and conditions of this Agreement.
11.2 Expenses. Each of the Stockholder and UOL shall bear its
respective legal, investment banking, accounting, audit, and other costs and
expenses associated with this Agreement and the consummation of the
transactions contemplated hereby.
11.3 Applicable Law. Except as otherwise expressly provided
herein, this Agreement shall be governed by, and construed in accordance with,
the law of the Commonwealth of Virginia without reference to any choice or
conflict of law principle, provision or rule, including all matters of
construction, validity and performance.
11.4 Notices. All notices, requests, permissions, waivers, and
other communications hereunder shall be in writing and shall be deemed to have
been duly given (i) upon personal delivery or receipt of a telecopy
transmission, (ii) two days after being sent by registered or certified United
States mail, return receipt requested, or (iii) one (1) day after being
transmitted by a nationally recognized overnight courier service, properly
addressed and postage prepaid to the intended recipient as follows:
If to the Stockholder or Ivy to:
Ivy Software, Inc.
X.X. Xxx 0000
Xxxxxxxxxxxxxxx, Xxxxxxxx 00000
Telephone No.: (000) 000-0000
Telecopy No.: (000) 000-0000
with a copy to:
Xxxxx Xxxxxxxxx, Esq.
000 Xxxx Xxxxxx Xxxx
Xxxxxxxxxxxxxxx, Xxxxxxxx 00000
Telephone No.: (000) 000-0000
Telecopy No.: (000) 000-0000
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If to UOL, to:
UOL Publishing, Inc.
0000 Xxxxxxxxxx Xxxxx, Xxxxx 000
XxXxxx, Xxxxxxxx 00000
Telephone No.: (000) 000-0000
Telecopy No.: (000) 000-0000
Attention: Xx. Xxxxxxx X. Xxxxxxxx
with a copy to:
Wyrick, Robbins, Xxxxx & Xxxxxx L.L.P.
0000 Xxxx Xxxxx Xxxxx, Xxxxx 000
Xxxxxxx, Xxxxx Xxxxxxxx 00000
Telephone No.: (000) 000-0000
Telecopy No.: (000) 000-0000
Attention: Xxxxx X. Xxxxxxx, Esq.
11.5 Entire Agreement. This Agreement (including the Exhibits
and Schedules attached hereto and the documents referred to herein, all of
which are a part hereof) constitutes the entire agreement and understanding of
the parties hereto with respect to the subject matter contained herein,
supersedes and cancels all prior agreements, negotiations, correspondence,
undertakings and communications of the parties, oral or written, respecting
such subject matter. There are no restrictions, promises, representations,
warranties, agreements or undertakings of any party hereto with respect to the
transactions under this Agreement other than those set forth herein or made
hereunder.
11.6 Amendments. This Agreement may be amended only by a
written instrument executed by the parties or their respective successors or
assigns.
11.7 Headings; References. The article, section and paragraph
headings contained in this Agreement are for reference purposes only and shall
not affect in any way the meaning or interpretation of this Agreement. All
references herein to "Articles", "Sections", "Exhibits" or "Schedules" shall be
deemed to be references to Articles or Sections hereof or Exhibits or Schedules
hereto unless otherwise indicated.
11.8 Counterparts. This Agreement may be executed in one or
more counterparts and each counterpart shall be deemed to be an original.
11.9 Parties in Interest; Assignment. This Agreement shall
inure to the benefit of and be binding upon the parties hereto and their
respective successors. Nothing in this Agreement, express or implied, is
intended to confer upon any Person not a party to this Agreement any rights or
remedies under
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or by reason of this Agreement. No party to this Agreement may assign or
delegate all or any portion of its rights, obligations or liabilities under
this Agreement without the prior written consent of the other parties to this
Agreement.
11.10 Severability; Enforcement. The invalidity of any portion hereof
shall not affect the validity, force or effect of the remaining portions
hereof. If it is ever held that any restriction hereunder is too broad to
permit enforcement of such restriction to its fullest extent, each party agrees
that a court of competent jurisdiction may enforce such restriction to the
maximum extent permitted by law, and each party hereby consents and agrees that
such scope may be judicially modified accordingly in any proceeding brought to
enforce such restriction.
11.11 JURISDICTION. EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY AND
UNCONDITIONALLY SUBMITS TO THE EXCLUSIVE JURISDICTION OF THE STATE COURTS OF
THE COMMONWEALTH OF VIRGINIA AND TO VENUE IN VIRGINIA AS THE SAME SHALL BE
DETERMINED.
11.12 Waiver. Any of the conditions to Closing set forth in this
Agreement may be waived at any time prior to or at the Closing hereunder by the
party entitled to the benefit thereof. The failure of any party hereto to
enforce at any time any of the provisions of this Agreement shall in no way be
construed to be a waiver of any such provision, nor in any way to affect the
validity of this Agreement or any part hereof or the right of such party
thereafter to enforce each and every such provision. No waiver of any breach of
or non-compliance with this Agreement shall be held to be a waiver of any other
or subsequent breach or non-compliance.
11.13 Incorporation of Exhibits and Schedules. All of the Exhibits
and Schedules identified in this Agreement are incorporated by reference into
this Agreement and made a part hereof.
11.14 Construction. The parties hereto have participated jointly in
the negotiation and drafting of this Agreement. In the event of any ambiguity
or question of intent or interpretation arises, this Agreement shall be
construed as if grafted jointly by the parties hereto and no presumption or
burden of proof shall arise favoring or disfavoring any party hereto by virtue
of the authorship of any of the provisions of this Agreement.
[The next page is the signature page.]
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IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement effective as of the date first above written.
UOL:
---
UOL PUBLISHING, INC.
By: /s/ XXXX XXXXX
------------------------------
Title: President
Ivy:
---
IVY SOFTWARE, INC.
By: /s/ XXXXXX X. XXXX
--------------------------------
Xxxxxx X. Xxxx, President
STOCKHOLDER:
-----------
/S/ XXXXXX X. XXXX
--------------------------------
Xxxxxx X. Xxxx
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