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EXHIBIT 2.3
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STOCK PURCHASE AGREEMENT
Among
UOL PUBLISHING, INC.,
XXXXXX & ASSOCIATES, INC.,
XXXXX X. XXXXXX,
XXXXX X. XXXXXX
and
XXXXXX XXXXXXX
Dated as of April 30, 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 . . . . . . . . . . . . . . . . . . 6
2.3 Post-Closing Payments . . . . . . . . . . . . . . . . . . . . 6
ARTICLE 3
CLOSING AND TERMINATION . . . . . . . . . . . . . . . . . . . . . . . . . 7
3.1 Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
3.2 Termination . . . . . . . . . . . . . . . . . . . . . . . . . 7
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND COMPANY SHAREHOLDERS . 8
4.1 Organization of the Company; Authority . . . . . . . . . . . 8
4.2 Ability to Carry Out the Agreement . . . . . . . . . . . . . 8
4.3 Capitalization of the Company; 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 . . . . . . . . . . . . . . . . . . . . . . . . 22
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
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4.27 Manufacturing Rights . . . . . . . . . . . . . . . . . . . . 26
4.28 Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . 26
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF PURCHASER . . . . . . . . . . . . . . . 26
5.1 Organization and Authority . . . . . . . . . . . . . . . . . 27
5.2 Ability to Carry Out the Agreement . . . . . . . . . . . . . 27
5.3 Brokers and Intermediaries . . . . . . . . . . . . . . . . . 27
5.4 Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . 28
ARTICLE 6
CERTAIN COVENANTS AND AGREEMENTS . . . . . . . . . . . . . . . . . . . . 28
6.1 Full Access . . . . . . . . . . . . . . . . . . . . . . . . . 28
6.2 Regulatory Filings; Consents . . . . . . . . . . . . . . . . 28
6.3 Conduct of Business . . . . . . . . . . . . . . . . . . . . . 28
6.4 Confidentiality . . . . . . . . . . . . . . . . . . . . . . . 29
6.5 Books and Records . . . . . . . . . . . . . . . . . . . . . . 30
6.6 Announcement . . . . . . . . . . . . . . . . . . . . . . . . 30
6.7 Best Efforts . . . . . . . . . . . . . . . . . . . . . . . . 30
6.8 Discussion With Others . . . . . . . . . . . . . . . . . . . 30
6.9 Cooperation in Litigation . . . . . . . . . . . . . . . . . . 30
6.10 Confidentiality and Non-Disclosure Agreements . . . . . . . . 31
6.11 Xxxxxxx Xxxxxxx . . . . . . . . . . . . . . . . . . . . . . . 31
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 . . . . . . . . . . . . . . . . . . . . . . . . 32
7.5 No Violation . . . . . . . . . . . . . . . . . . . . . . . . 32
7.6 Consents . . . . . . . . . . . . . . . . . . . . . . . . . . 32
7.7 Opinion of the Purchaser's Counsel . . . . . . . . . . . . . 32
7.8 No Proceedings . . . . . . . . . . . . . . . . . . . . . . . 32
7.9 Employment Agreement . . . . . . . . . . . . . . . . . . . . 32
7.10 Miscellaneous Closing Deliveries . . . . . . . . . . . . . . 33
ARTICLE 8
CONDITIONS PRECEDENT OF PURCHASER . . . . . . . . . . . . . . . . . . . . 33
8.1 Representations and Warranties . . . . . . . . . . . . . . . 33
8.2 Agreements . . . . . . . . . . . . . . . . . . . . . . . . . 33
8.3 Performance Certificate . . . . . . . . . . . . . . . . . . . 33
8.4 No Injunction . . . . . . . . . . . . . . . . . . . . . . . . 33
8.5 No Violation . . . . . . . . . . . . . . . . . . . . . . . . 33
8.6 Consents . . . . . . . . . . . . . . . . . . . . . . . . . . 34
8.7 Opinion of Transferors' Counsel . . . . . . . . . . . . . . . 34
8.8 No Adverse Change . . . . . . . . . . . . . . . . . . . . . . 34
8.9 Confidentiality and Non-Disclosure Agreements . . . . . . . . 34
8.10 Resignations . . . . . . . . . . . . . . . . . . . . . . . . 34
8.11 No Proceedings . . . . . . . . . . . . . . . . . . . . . . . 34
8.12 Employment Agreements . . . . . . . . . . . . . . . . . . . . 35
8.13 Due Diligence . . . . . . . . . . . . . . . . . . . . . . . . 35
8.14 Xxxxxxx Engagement . . . . . . . . . . . . . . . . . . . . . 35
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8.15 Company Shareholders' Indebtedness to the Company . . . . . . 35
8.16 Miscellaneous Closing Deliveries . . . . . . . . . . . . . . 35
ARTICLE 9
SURVIVAL OF REPRESENTATIONS, WARRANTIES AND COVENANTS . . . . . . . . . . 36
9.1 Survival of Representations and Warranties . . . . . . . . . 36
9.2 Survival of Covenants and Agreements . . . . . . . . . . . . 36
ARTICLE 10
INDEMNIFICATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
10.1 Indemnification of Purchaser . . . . . . . . . . . . . . . . 36
10.2 Indemnification of Company Shareholders . . . . . . . . . . . 38
10.3 Limitations . . . . . . . . . . . . . . . . . . . . . . . . . 39
10.4 Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . 39
10.5 Survival . . . . . . . . . . . . . . . . . . . . . . . . . . 40
ARTICLE 11
MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
11.1 Further Assurances . . . . . . . . . . . . . . . . . . . . . 40
11.2 Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . 40
11.3 Applicable Law . . . . . . . . . . . . . . . . . . . . . . . 40
11.4 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
11.5 Entire Agreement . . . . . . . . . . . . . . . . . . . . . . 41
11.6 Amendments . . . . . . . . . . . . . . . . . . . . . . . . . 42
11.7 Headings; References . . . . . . . . . . . . . . . . . . . . 42
11.8 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . 42
11.9 Parties in Interest; Assignment . . . . . . . . . . . . . . . 42
11.10 Severability; Enforcement . . . . . . . . . . . . . . . . . . 42
11.11 JURISDICTION . . . . . . . . . . . . . . . . . . . . . . . . 42
11.12 Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
11.13 Incorporation of Exhibits and Schedules . . . . . . . . . . . 43
11.14 Construction . . . . . . . . . . . . . . . . . . . . . . . . 43
EXHIBITS AND SCHEDULES
Exhibit A Disclosure Schedule
Exhibit B Company Financial Statements
Exhibit C Form of Legal Opinion of Wyrick, Robbins,
Xxxxx & Xxxxxx L.L.P.
Exhibit D Form of Employment Agreement
Exhibit E Form of Legal Opinion of Xxxxxx X. Xxxxx, Esq.
Exhibit F Form of Non-Disclosure Agreement
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STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT (the "Agreement") is made and entered into
as of April 30, 1997, by and among UOL PUBLISHING, INC., a Delaware corporation
("Purchaser"), XXXXXX & ASSOCIATES, INC., an Illinois corporation (the
"Company"), and XXXXX X. XXXXXX, XXXXX X. XXXXXX and XXXXXX XXXXXXX, the
shareholders of the Company (each a "Company Shareholder" and together, the
"Company Shareholders"). The Company and the Company Shareholders 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, the Company has authorized capital stock of 194,000 shares of
Class A Common Stock and 21,500 of Class B Common Stock (the Class A Common
Stock and Class B Common Stock are referred to collectively as the "Company
Common Stock"), of which 182,000 shares of Class A Common Stock and no shares
of Class B Common Stock are issued and outstanding;
WHEREAS, the Company Shareholders currently own all of the outstanding
shares of the Company Common Stock (collectively, the "Company Shares");
WHEREAS, the Company Shareholders desire to sell to Purchaser, Purchaser
desires to purchase from the Company Shareholders, all right, title and
interest in and to the Company 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 Purchaser and the Company;
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.
"Audited/Reviewed Financial Statements" shall have the meaning set forth
in subsection 4.5(a).
"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.
"Company" shall have the meaning set forth in the first paragraph of this
Agreement.
"Company Common Stock" means the Common Stock, $.01 par value per share,
of the Company, consisting of Class A Common Stock and Class B Common Stock.
"Company Shares" shall have the meaning set forth in the second paragraph
of the recitals.
"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.
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"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).
"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).
"GAAP" 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,
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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.
"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 Quarter 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.
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"Proprietary Information" shall have the meaning set forth in subsection
4.16(g).
"RCRA" has the meaning set forth in subsection 4.24(a).
"Reportable Event" has the meaning set forth in ERISA Section 4043.
"Company Shareholders" 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.
"Unaudited Financial Statements" shall have the meaning set forth in
subsection 4.5(a).
"Purchaser" shall have the meaning set forth in the first paragraph of
this Agreement.
"Purchaser Common Stock" means the Common Stock, $0.01 par value per
share, of Purchaser.
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 Company Shareholders shall sell, assign, transfer, convey
and deliver to Purchaser, free and clear of all liens and encumbrances, and
Purchaser shall purchase and acquire from the Company Shareholders, all of the
Company Shares.
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2.2 Consideration at Closing. At the Closing, subject to the terms and
conditions hereof:
(a) the Company Shareholders shall cause to be delivered to Purchaser
certificates representing the Company Shares, together with stock powers duly
endorsed in blank for the transfer of the Company Shares to Purchaser, and, if
applicable, with all necessary transfer taxes paid or other revenue stamps
affixed thereto;
(b) Purchaser shall deliver to the Company Shareholders, by check or wire
transfer, cash in the aggregate amount of $3,000,000, to be paid ratably to the
Company Shareholders according to their proportional ownership of the Company
immediately prior to the Closing.
2.3 Post-Closing Payments. (a) Purchaser shall also deliver to the
Company Shareholders, by check or wire transfer, cash in the following
additional aggregate amounts (each a "Post-Closing Payment"), such amounts to
be paid ratably to the Company Shareholders according to their proportional
ownership of the Company immediately prior to the Closing as follows:
(i) $666,667 on the first anniversary of the Closing Date;
(ii) $666,667 on the second anniversary of the Closing Date; and
(iii) $666,666 on the third anniversary of the Closing Date;
provided, however, that all unpaid Post-Closing Payments shall automatically
become due and payable upon transfer by the Purchaser to a third party of all
or substantially all of the assets of the Company, whether by stock sale,
merger, asset sale or otherwise, and upon Purchaser's failure to pay any
Post-Closing Payment in a timely manner other than in exercising its right of
set-off under Section 10.3.
(b) In the event Purchaser shall fail to make any Post-Closing Payment
other than in exercising its right of set-off under Section 10.3, all unpaid
Post-Closing Payments shall automatically become due and payable, and bear
interest at 3% in excess of the prime interest rate then charged by First Union
National Bank.
(c) If action is instituted to collect any Post-Closing Payment due to a
default in the timely payment thereof by the Purchaser, the Purchaser promises
to pay all costs and expenses,
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including reasonable attorneys' fees if the Company Shareholders prevail,
incurred in connection with such action.
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"), which shall be no later than
April 30, 1997, at the offices of Purchaser, 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 Purchaser or the Company, if the transactions
contemplated hereby are not consummated on or before May 7, 1997, or such later
date as may be agreed upon in writing by the parties hereto;
(c) by Purchaser, if: (i) the Company or the Company Shareholders 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) the Company or the Company
Shareholders, 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 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 the Company, if: (i) Purchaser 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) Purchaser 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.
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ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND COMPANY SHAREHOLDERS
Except as otherwise set forth in the Disclosure Schedule attached hereto
as Exhibit A, the Company and the Company Shareholders hereby jointly and
severally represent and warrant to Purchaser as follows:
4.1 Organization of the Company; Authority. The Company is a
corporation duly organized, validly existing and in good standing under the
laws of the State of Illinois, 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. The Company 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. The Company is
domesticated and in good standing in the State of New Hampshire, and is not
qualified to do business in any other jurisdiction, which jurisdiction
constitutes the only jurisdiction in which the nature of the Company's business
requires 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 the
Company and the Company Shareholders. This Agreement has been duly executed
and delivered by the Company and the Company Shareholders and constitutes the
valid, binding and enforceable obligation of the Company and the Company
Shareholders, enforceable in accordance with its terms and conditions.
4.2 Ability to Carry Out the Agreement. Neither the Company nor any
Company Shareholder 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 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
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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 the Company and the Company Shareholders of this Agreement and
the transactions contemplated hereby.
4.3 Capitalization of the Company; Ownership; Investment. (a) The
authorized capital stock of the Company consists solely of 192,000 shares of
Class A Common Stock and 21,500 shares of Class B Common Stock. The Company
Shares are the only shares of capital stock and other securities of the Company
which are issued and outstanding. At the Closing the only classes, type, or
kind of capital stock or security of the Company outstanding shall be the
Company Common Stock. All shares of the Company 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 Company Shareholders. 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 the
Company 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 the Company, nor is the Company 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 the Company to the Company
Shareholders or their Affiliates, any advances made by the Company Shareholders
to the Company, any similar or related rights or interests owed to the Company
Shareholders, and any and all interest or dividends payable with respect to any
of the foregoing shall, without any liability on the part of the Company, be
converted into shares of the Company Common Stock. There are no outstanding or
authorized stock appreciation, phantom stock, profit participation or other
similar rights with respect to the Company. There are no voting trusts,
proxies, or other agreements, commitments, obligations, or understandings with
respect to the voting of the capital stock of the Company.
(b) The Company Shares are owned of record and beneficially by the
Company Shareholders in the amounts set forth in Section 4.3(b) of the
Disclosure Schedule. Each Company Shareholder has good, valid, and marketable
title to the Company Shares held by him, free and clear of any and all
Encumbrances, with full right and lawful authority to transfer, assign,
deliver, convert and exchange the Company Shares held by him pursuant to this
Agreement. None of the Company Shareholders is a party to any option, warrant,
purchase right, or other contract or commitment that could require him to sell,
transfer, or otherwise dispose of any capital stock of the Company (other than
pursuant to this Agreement).
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4.4 Subsidiaries and Affiliates. The Company 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
B are the following financial statements of the Company (collectively the
"Financial Statements"): (i) the reviewed balance sheets and statements of
income, changes in shareholders' equity and cash flows as at and for the fiscal
years ended December 31, 1994 and 1995, and the audited balance sheet and
statements of income, changes in shareholders' equity and cash flows as at and
for the fiscal year ended December 31, 1996 (collectively, the
"Audited/Reviewed Financial Statements"); and (ii) the unaudited balance sheet
and statement of income (the "Most Recent Financial Statements") as at and for
the three months ended March 31, 1997 (the "Most Recent Fiscal Quarter End").
The Audited/Reviewed Financial Statements and the Most Recent Financial
Statements (including the notes thereto) have been prepared in conformity with
United States generally accepted accounting principles ("GAAP") applied on a
consistent basis throughout the periods covered thereby, are true, correct, and
complete, fairly present the financial position of the Company at the dates
thereof and the results of operations of the Company for the periods covered
thereby, and are consistent with the books and records of the Company (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 the Company at the dates thereof and
the results of operations for the periods then ended.
(b) There are no Liabilities of the Company (and there is no Basis for
any present or future action, suit, proceeding, hearing, investigation, charge,
complaint, claims or demand against the Company 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).
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 the Company. Since such date, except as contemplated
in this Agreement the Company 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, the Company has
not:
(a) incurred any loss of, or injury to, the assets or properties of the
Company as the result of any fire, explosion,
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flood, windstorm, earthquake, labor trouble, riot, accident, act of God or
public enemy or armed forces, or other casualty (whether or not covered by
insurance payable to the Company);
(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 the Company (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, severance, pension or other employee benefit plan,
payment or
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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 the Company 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 the
Company;
(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 obligations together with Liabilities involving more
than $10,000 in the aggregate;
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(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) The
Company 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 the Company, 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 the Company constitute
all of the assets and properties necessary to conduct the business of the
Company 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 threatened against the Company in, before, or by any court or
arbitrator or governmental agency or authority. None of the Company
Shareholders and the directors and officers of the Company has any Basis to
believe that any Litigation may be brought or threatened against the Company.
The Company is not subject to any outstanding injunction, judgment, order,
decree, ruling, or charge.
(b) The Company 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, except where such breach or default has not and will
not have a material adverse effect on the business, prospects, properties,
assets or condition, financial or otherwise, of the Company.
4.9 Compliance with Law. The Company Shareholders and the Company and
its predecessors and Affiliates have complied in all 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 the Company (including all
agencies thereof) or to the assets, properties and business of the Company, and
no suit, action, proceeding, hearing, investigation, charge, complaint, claim,
demand or notice has been filed, commenced or threatened against the Company
alleging any failure to so comply. All material governmental approvals,
permits and licenses required by the Company 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. The Company 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 the Company, 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 the Company is a party:
(i) which involves the lease of personal property from or to third
parties providing for lease payments in excess of $10,000 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 $10,000;
(iii) which is in the nature of an employment, consulting or
severance agreement or collective bargaining agreement involving the
payment of more than $10,000 or not entered into in the ordinary course of
business;
(iv) which is with any of the Company Shareholders or their
Affiliates (other than the Company);
(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 $10,000 or more;
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(viii) which the consequences of a default or termination could have
a material adverse effect on the business, assets, financial condition,
operations, results of operations, or future prospects of the Company;
(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 year, result in financial loss to the
Company, or involves consideration in excess of $10,000; or
(xi) which is outside of the ordinary course of business or contains
any provision requiring the Company to indemnify any other party thereto.
(b) The Company has delivered to Purchaser 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 the Company 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 the Company or, to the best knowledge
of the Company or the Company Shareholders, by any other party thereto; (ii) an
event which, after notice or lapse of time or both, would constitute a default
or breach by the Company or, to the best knowledge of the Company or the
Company Shareholders, 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. No broker, finder, advisor, or other
intermediary other than The Xxxxxxx Company Incorporated (which shall be paid
by the Company Shareholders) is entitled to any broker's, finder's, or similar
fee or commission in connection with the transactions contemplated by this
Agreement or upon the consummation thereof.
4.12 Tax Matters. (a) The Company 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 the Company (whether or not shown on any Tax
Return) have been paid. The Company 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 the Company 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
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the Company that arose in connection with any failure (or alleged failure) to
pay any Tax.
(b) The Company 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, shareholder, or other third
Person.
(c) No Transferor or director or officer (or employee responsible for Tax
matters) of the Company 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 the Company 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 the
Company 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 the Company
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 Purchaser 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 the Company since its formation.
(d) The Company 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) The Company has not filed a consent under Code Section 341(f)
concerning collapsible corporations. The Company 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. The Company 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). The Company 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.
The Company is not a party to any Tax allocation or sharing agreement. The
Company 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
the Company) 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 the Company: (i) did not, as of the Most Recent
Fiscal Quarter End exceed the reserve for Tax Liability (rather than any
reserve for deferred Taxes established
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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 with the past custom and practice of the Company in
filing its Tax Returns.
(g) As of the Closing, the Company shall not have outstanding any
warrants, options, convertible securities, or any other type of right pursuant
to which any Person could acquire stock in the Company that, if exercised or
converted, would affect Purchaser's acquisition or retention of control of the
Company as defined in Code Section 368(c)(1).
4.13 Employee Benefits. (a) Section 4.13 of the Disclosure Schedule
lists each Employee Benefit Plan that the Company maintains or to which the
Company 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 the Company. 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 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 assumptions
applicable to an Employee Pension Benefit Plan terminating on the date for
determination.
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(f) The Company has delivered to Purchaser 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 the Company and the
Controlled Group of Corporations which includes the Company 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 Company Shareholders and the directors and
officers (and employees with responsibility for employee benefits matters)
of the Company has any Knowledge of any Basis for any such action, suit,
proceeding, hearing, or investigation.
(iii) The Company has not incurred, and none of the Company
Shareholders and the directors and officers (and employees with
responsibility for employee benefits matters) of the Company has any
reason to expect that the Company 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 the Company and the other members of the Controlled Group of
Corporations that includes the Company contributes to, ever has contributed to,
or ever has been required to contribute to any Multiemployer Plan or has any
Liability (including withdrawal Liability) under any Multiemployer Plan.
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(i) The Company 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. The Company has delivered to
Purchaser complete and correct copies of the Articles of Incorporation and
Bylaws of the Company, as currently in effect. The Transferors have not
defaulted under or violated any provision of the Articles of Incorporation or
Bylaws of the Company.
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 the Company 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 the Company.
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) the Company 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 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. The
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Company has been covered since the date of its formation by insurance in scope
and amount sufficient for the businesses in which it has engaged during the
aforementioned period.
4.16 Intellectual Property. (a) The Company 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 the Company as presently conducted and as presently proposed to be
conducted. Each item of Intellectual Property owned or used by the Company
immediately prior to the Closing hereunder shall be owned or used by the
Company on identical terms and conditions subsequent to the Closing, subject to
the provisions of any license agreement as to the term thereof. The Company
has reasonable actions to maintain and protect each item of Intellectual
Property that it owns or uses.
(b) The Company 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 the
Company has ever received any charge, complaint, claim, demand, or notice
alleging any such interference, infringement, misappropriation, or violation
(including any claim that the Company must license or refrain from using any
Intellectual Property rights of any third party). To the Knowledge of any of
the Transferors and the directors and officers of the Company, no third Person
has interfered with, infringed upon, misappropriated, or otherwise come into
conflict with any Intellectual Property rights of the Company.
(c) The Company 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 the Company. To its Knowledge, the Company believes that
all of the Intellectual Property owned by it was conceived of during the
corporate existence of the Company and was created by its employees within the
scope of their employment with the Company. Section 4.16(c) of the Disclosure
Schedule identifies each trade name or unregistered trademark used by the
Company in connection with its business and each patent or registration which
has been issued to the Company with respect to any of its Intellectual
Property, identifies each pending patent application or application for
registration which the Company has made with respect to any of its Intellectual
Property, identifies any of the Intellectual Property of the Company 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 the Company has granted to any third Person with respect to
any of its Intellectual Property (together with any exceptions). The Company
has delivered to Purchaser correct and complete copies of all such
registrations, applications, licenses, agreements and permissions (as amended
to date) and have made available to Purchaser correct and complete
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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) the Company 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) the Company 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 the Company
customers in the form previously delivered to Purchaser.
(d) Section 4.16(d) of the Disclosure Schedule identifies each item of
Intellectual Property that any third Person owns and that the Company
sublicenses commercially pursuant to license, sublicense, agreement, or
permission. The Company has delivered to Purchaser 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;
(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;
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(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) the Company 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) The Company'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 the Company 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 the Company.
(g) None of the Transferors and the directors and officers (and employees
with responsibility for Intellectual Property matters) of the Company 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. The Company 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 the Company in accordance
with the employee handbook of the Company.
(h) None of the Transferors and the directors and officers (or employees
with responsibility for Intellectual Property matters) of the Company has any
Knowledge that any of the Company's employees, officers or consultants is in
violation of his or her obligations of confidentiality.
4.17 Bank Accounts. Section 4.17 of the Disclosure Schedule sets forth
a true and complete list of all bank accounts
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of the Company and all authorized signatories to each such account.
4.18 Directors, Officers and Employees. The Company has heretofore
delivered to Purchaser a correct and complete listing as of the date hereof of
all of the directors, officers and employees of the Company, showing their
names, positions, and current wage or salary and bonuses.
4.19 Labor Relations; Employees. (a) The Company has no collective
bargaining agreements with any of its employees; there is no labor union
organizing activity pending or threatened with respect to the Company; and the
Company has not experienced any strikes, grievances, claims of unfair labor
practices, or other collective bargaining disputes. The Company 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 the Company. Copies of all personnel brochures or handbooks
delivered to employees or in effect since the formation of the Company have
been delivered to Purchaser.
(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 the Company 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 Company
Shareholders or any present or former officer, director or shareholder of the
Company, and no Affiliate of the Company Shareholders 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 the
Company of any such persons in the ordinary course of business) arrangement or
relationship with the Company, 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 the
Company.
4.21 Copies of Documents. True, correct, and complete copies of all
documents listed in the Disclosure Schedule have been heretofore delivered to
Purchaser and identified in writing as constituting such delivery.
4.22 Real Property. (a) The Company 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 the Company. The
Company has delivered to Purchaser 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) the Company 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) to the best knowledge of the Company and the Company
Shareholders, 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 impair the
current use, occupancy, or value, or the marketability of title, of the
property subject thereto.
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4.23 Books and Records. The stock records of the Company are in all
respects complete and accurate, and the minute books of the Company 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) The Company 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) The Company 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) The Company 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 the Company' 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 the Company 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 the Company's 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.
(e) None of the Transferors or the officers and directors (including
employees responsible for environmental matters) of
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the Company 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 the Company.
(f) None of the Transferors and the officers and directors (including
employees responsible for environmental matters) of the Company has any
Knowledge of any condition on any of the real property owned by the Company
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. The Company 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 Company Shareholders because of any
special characteristic of such Company Shareholders is required in connection
with the valid execution and delivery of this Agreement and the consummation by
the Company Shareholders of the transactions contemplated hereby.
4.27 Manufacturing Rights. The Company has not granted rights to
manufacture or sell its products, processes, Intellectual Property or
technology to any other Person.
4.28 Disclosure. No representation or warranty by the Company or the
Company Shareholders in this Agreement or in any written statement or
certificate furnished or to be furnished to the Purchaser pursuant to this
Agreement or in connection with the transactions contemplated by this Agreement
(when read together) contains or will contain any untrue statement of a
material fact or omits or will omit to state a material fact necessary in order
to make the statements contained herein or therein, in the light of the
circumstances under which they were made, not materially misleading.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser hereby represents and warrants to the Company Shareholders that:
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5.1 Organization and Authority. Purchaser 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
Purchaser. This Agreement has been duly executed and delivered by Purchaser
and constitutes the valid, binding and enforceable obligation of Purchaser,
subject to applicable bankruptcy, 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. Purchaser 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 Purchaser 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 Purchaser to perform its obligations hereunder.
5.3 Brokers and Intermediaries. Purchaser 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.
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5.4 Disclosure. No representation or warranty by the Purchaser in this
Agreement or in any written statement or certificate furnished or to be
furnished to the Company Shareholders pursuant to this Agreement or in
connection with the transactions contemplated by this Agreement (when read
together) contains or will contain any untrue statement of immaterial fact or
omits or will omit to state a material fact necessary in order to make the
statements contained herein or therein, in light of the circumstances under
which they were made, not materially misleading.
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, the Company
shall permit representatives of Purchaser to have full access at all reasonable
times, and in a manner so as not to interfere with the normal business
operations of the Company, to all premises, customers, employees, properties,
books, records, contracts, tax records, and documents of or pertaining to the
Company. From the date hereof until the earlier of the Closing or the
termination of this Agreement pursuant to Section 3.3 above, Purchaser 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 Purchaser, to all premises, customers, employees, properties,
books, records, contracts, tax records, and documents of or pertaining to
Purchaser. 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. The Company shall give any notices to third Persons,
and shall use its best efforts to obtain any third Person consents, that
Purchaser 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
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Purchaser in writing, the Company 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, the Company 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 the Company 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 the Company;
(d) maintain in full force and effect all of the Company'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 shareholders' 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 Purchaser in writing of: (i) any actions, suits
or proceedings instituted or threatened against the Company at law or in
equity or admiralty, before or by any court or governmental authority;
(ii) any changes in personnel; and (iii) any development causing a breach
of any of the representations and warranties contained in Article 4 above.
No disclosure by the Company 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 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
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other party shall be deemed confidential and shall not be disclosed to 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.
6.5 Books and Records. Purchaser shall retain all books, records and
other documents pertaining to the business of the Company 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 Company Shareholders at the Company
Shareholders's expense during the normal business hours of Purchaser, upon
reasonable request and upon reasonable notice.
6.6 Announcement. Promptly after the execution of this Agreement,
Purchaser shall make a public statement approved by Purchaser and the Company
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, the Company (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
Purchaser 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
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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 the Company 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.
6.10 Confidentiality and Non-Disclosure Agreements. Each of the Company
Shareholders agrees to use his best efforts to get each of the employees,
officers and regular consultants of the Company to enter into a Non-Disclosure
Agreement (as defined in Section 8.9 hereof) with the Company.
6.11 Xxxxxxx Xxxxxxx. Each of the Company Shareholders acknowledges
receipt of a copy of the Purchaser's Policy Against Trading on the Basis of
Inside Information and agrees to abide by such Policy.
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 Purchaser 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. Purchaser 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. The Company shall have been furnished
with a certificate of a proper officer of Purchaser, dated as of the Closing
Date, each certifying to the effect that
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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
Purchaser, 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 the Company or Purchaser, necessary on
the part of the Company or Purchaser, 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).
Purchaser 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 Purchaser's Counsel. The Company Shareholders shall
have received an opinion of Wyrick, Robbins, Xxxxx & Xxxxxx, L.L.P., counsel
for Purchaser, dated as of the Closing Date, addressed to the Company
Shareholders, to the effect and substantially in the form of Exhibit C.
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 Purchaser.
7.9 Employment Agreement. Each of the Company Shareholders shall have
entered into an employment agreement in substantially the form set forth in
Exhibit D and the same shall be in full force and effect.
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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 Purchaser 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 Purchaser approving the execution and delivery of
this Agreement and all other corporate action necessary to enable Purchaser to
comply with the terms of this Agreement.
ARTICLE 8
CONDITIONS PRECEDENT OF PURCHASER
The obligation of Purchaser to consummate the transactions to be performed
by them in connection with the Closing is subject to the satisfaction, or
written waiver by Purchaser, of each of the following conditions prior to or at
the Closing:
8.1 Representations and Warranties. The representations and warranties
of the Company Shareholders 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.
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. Purchaser shall have been furnished with
a certificate of the Company and the Company Shareholders, dated as of the
Closing Date, certifying that the conditions contained in Sections 8.1 and 8.2
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
Purchaser, 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
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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 the Company or Purchaser, necessary on
the part of the Company or Purchaser, 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).
Purchaser 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. Purchaser shall have received an
opinion of Xxxxxx X. Xxxxx, Esq., counsel of the Transferors, dated as of the
Closing Date, addressed to Purchaser to the effect and substantially in the
form of Exhibit E.
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 the Company, except
events or changes contemplated by this Agreement, changes consented to in
writing by Purchaser 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 Company
Shareholders shall have entered into a confidentiality and non-disclosure
agreement with the Company in form and substance as set forth in Exhibit F
(collectively the "Non-Disclosure Agreements" and individually a
"Non-Disclosure Agreement"), and the same shall be in full force and effect.
8.10 Resignations. Purchaser shall have received resignations,
effective as of the Closing, of each officer and director of the Company other
than those whom Purchaser 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 the Company.
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8.12 Employment Agreements. Each of the Company Shareholders shall have
entered into an employment agreement in substantially the form set forth in
Exhibit D and the same shall be in full force and effect.
8.13 Due Diligence. The completion of a due diligence investigation of
the Company by Purchaser satisfactory to Purchaser, 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 Xxxxxxx Engagement. The Company Shareholders shall have remitted
payment, or made arrangements to remit payment, to The Xxxxxxx Company
Incorporated ("Xxxxxxx") for investment advisory services provided by Xxxxxxx
in connection with the transactions contemplated by this Agreement, and the
Company shall owe no further obligations to, nor shall there be any
relationship with, Xxxxxxx.
8.15 Company Shareholders' Indebtedness to the Company. All promissory
notes or other indebtedness of the Company Shareholders to the Company, if any,
shall be paid in full by the Company Shareholders.
8.16 Miscellaneous Closing Deliveries. Purchaser shall have received
such evidence as Purchaser 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 Company
Shareholder proceedings to be taken in connection with the transactions
contemplated by this Agreement, together with certified copies of resolutions
duly adopted by the shareholders and directors of the Company 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 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 Purchaser. Subject to the provisions of Section
10.3, the Company Shareholders agree to defend, indemnify and hold harmless
Purchaser 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 Company Shareholders
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 Company Shareholders or the Company 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 Company Shareholders after the
Closing (including but not limited to the undertakings, agreements and
obligations to be performed by the Company Shareholders pursuant to
Section 6.9); (iii) any unknown or undisclosed Liabilities of the Company
arising out of or related to the conduct or operation of the Company's
business prior to the Closing (other than Liabilities incurred in the
ordinary
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course of business subsequent to the execution of this Agreement); and
(iv) except as disclosed in Schedule 4.11, any and all legal, investment
banking, accounting, auditing, and other professional fees and expenses of
the Company 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 Company Shareholders 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 Company
Shareholders 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; (ii) the Company Shareholders shall not have been
prejudiced thereby; and (iii) such notice shall have been given in accordance
with Section 9.1. Subject to rights of or duties to any insurer or other third
Person having liability therefor, the Company Shareholders 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
Company Shareholders shall have exercised their 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 Company
Shareholders) in any such matter, and in such event counsel selected by the
Company Shareholders 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 Company Shareholders those
employees of the Acquiror Indemnitees whose assistance, testimony or presence
is
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reasonably deemed by the Company Shareholders necessary or beneficial to assist
the Company Shareholders 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 as not to interfere
unreasonably with the operations of the businesses of the Acquiror Indemnitees.
10.2 Indemnification of Company Shareholders. Purchaser agrees to
defend, indemnify and hold harmless the Company Shareholders and their
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 Purchaser contained in this
Agreement; and (ii) any failure by Purchaser 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 Purchaser 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 Purchaser 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
Purchaser 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 Purchaser 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 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 Purchaser 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)
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Purchaser shall not have been prejudiced thereby. Subject to rights of or
duties to any insurer or other third Person having liability therefor,
Purchaser 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 Purchaser 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 Purchaser) in any such matter, and in such event counsel
selected by Purchaser 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 Purchaser or any Affiliate of Purchaser 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 Purchaser or any of its Affiliates.
10.3 Limitations. Notwithstanding any other provisions of this
Agreement to the contrary, none of the Company Shareholders shall have any
liability under Section 10.1: (a) for claims made after the second anniversary
of the Closing; (b) for any claims which individually are for less than $5,000;
and (c) unless the aggregate amount of the damages and losses (excluding
attorneys' fees) to the Acquiror Indemnitees from all other claims arising
under the provisions of this Agreement exceed $75,000.00, and in such event the
indemnifying parties shall be required to pay the entire amount of the damages
and losses (including attorneys' fees) to the Acquiror Indemnitees; provided,
however, that the total amount of damages and losses that the Company
Shareholders collectively may be obligated to pay pursuant to this Article 10
shall not exceed $500,000.00; but provided further, that such limit on
liability shall not apply to damages and losses to an Acquiror Indemnitee
resulting from fraud, intentional or wilful misrepresentation, or failure to
act in good faith. In calculating amounts payable pursuant to this Article 10,
the parties shall receive credit for (i) any reduction of actual tax
liabilities of any indemnified party directly 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.
10.4 Remedies. The Acquiror Indemnitees' sole remedy under Section 10.1
(except for damages and losses to an Acquiror
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Indemnitee resulting from fraud, intentional or wilful misrepresentation, or
failure to act in good faith) is to set-off any amounts for which
indemnification is claimed under Section 10.1 (subject to all of the
limitations set forth in Section 10.3) from the installment of the Post-Closing
Payment described in Section 2.3(a)(iii) only.
10.5 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 Company Shareholders and Purchaser 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:
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If to the Company Shareholders or the Company to:
Xxxxxx & Associates, Inc.
000 Xxxxxxxxx Xxxxxx
X.X. Xxx 0000
Xxxxxxxxxx, Xxx Xxxxxxxxx 00000
Telephone No.: (000) 000-0000
Telecopy No.: (000) 000-0000
Attention: Xxxxx Xxxxxx
with a copy to:
Xxxxx Xxxxx, Esq.
c/o Schoenberg, Fisher, Xxxxxx Ltd.
000 X. Xxxxxxxxx Xxxxx
Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Telephone No.: (000) 000-0000
Telecopy No.: (000) 000-0000
If to Purchaser, 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.
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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 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, except that the Company Shareholders may assign their rights to
receive the Post-Closing Payments upon written notice thereof to the Purchaser
received at least 10 days prior to the relevant payment date.
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 AND FEDERAL
COURTS LOCATED IN THE COMMONWEALTH OF VIRGINIA FOR ANY ACTIONS, SUITS, OR
PROCEEDINGS ARISING OUT OF OR RELATING TO THIS AGREEMENT AND THE TRANSACTIONS
CONTEMPLATED HEREBY, EACH PARTY HERETO AGREES THAT SERVICE OF ANY PROCESS,
SUMMONS, NOTICE OR DOCUMENT BY U.S. REGISTERED MAIL TO THE RESPECTIVE PARTY'S
ADDRESS SET FORTH ABOVE SHALL BE EFFECTIVE SERVICE OF PROCESS OF ANY ACTION,
SUIT OR PROCEEDING HEREUNDER BROUGHT IN ANY SUCH COURT. EACH OF THE PARTIES
HERETO HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY OBJECTION TO THE
LAYING OF VENUE OF ANY ACTION, SUIT OR PROCEEDING ARISING OUT OF THIS AGREEMENT
OR THE TRANSACTIONS CONTEMPLATED HEREBY, IN SUCH STATE OR FEDERAL COURTS AS
AFORESAID AND HEREBY FURTHER IRREVOCABLY AND UNCONDITIONALLY WAIVES AND AGREES
NOT TO PLEAD OR
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CLAIM IN ANY SUCH COURT THAT ANY SUCH ACTION, SUIT OR PROCEEDING BROUGHT IN ANY
SUCH COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.
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 Stock
Purchase Agreement as of the date first above written.
PURCHASER:
UOL PUBLISHING, INC.
By: /s/ XXXX X. XXXXX
------------------------------
Title: President
---------------------------
COMPANY:
XXXXXX & ASSOCIATES, INC.
By: /s/ XXXXX X. XXXXXX
--------------------------------
Xxxxx X. Xxxxxx, President
COMPANY SHAREHOLDERS:
/s/ XXXXX X. XXXXXX
-----------------------------------
Xxxxx X. Xxxxxx
/s/ XXXXX X. XXXXXX
-----------------------------------
Xxxxx X. Xxxxxx
/s/ XXXXXX XXXXXXX
-----------------------------------
Xxxxxx Xxxxxxx
44
