Page ARTICLE I Certain Definitions 1
Exhibit
10.1
by
and
among
▇▇▇▇▇▇
▇▇▇▇▇▇, LTD.
and
The
Members
of
COMPO
ENHANCEMENTS, LLC
Dated
as
of May 16, 2007
TABLE
OF CONTENTS
Page
ARTICLE
I
Certain
Definitions 1
ARTICLE
II Purchase
and
Sale 6
2.1 Purchase
and Sale of Company Interests 6
2.2 Cash
Purchase Price
7
2.3 Post-Closing
Adjustments 7
2.4 Earn-Out
Payment
9
ARTICLE
III Closing
9
3.1
Closing
Date 9
3.2
Certain
Actions at Closing. At the Closing: 9
ARTICLE
IV Representations
and Warranties of Sellers
10
4.1
Organization
and Good Standing 10
4.2
Capitalization 10
4.3
Authorization 11
4.4
No
Conflicts
11
4.5
Financial
Statements; Undisclosed Liabilities
11
4.6
Taxes
12
4.7
Title
to
Properties; Absence of Encumbrances
13
4.8
Intellectual
Property
14
4.9
Contracts
and Agreements
16
4.10
Insurance
18
4.11
Litigation
18
4.12
Condition
and Sufficiency of Assets
18
4.13
Compliance
with Law; Licenses
19
4.14
Employees 19
4.15
Employee
Benefit Plans
22
4.16
Environmental
Matters
24
4.17
Bank
Accounts and Powers of Attorney 25
4.18
Absence
of Certain Changes 25
4.19
Books
and
Records
28
4.20
Transactions
with Affiliated Persons
28
4.21
Absence
of Certain Business Practices 28
4.22
Brokers
and Finders
28
4.23
Restrictions
on Business Activities
29
4.24
Payables
29
4.25
Receivables
29
4.26
Business
Relations
29
4.27
Disclosure
29
ARTICLE
V Representations
and Warranties of Madden
30
5.1 Organization
and Good Standing
30
i
5.2 Authorization
30
5.3 No
Conflicts; Consents
30
5.4 Litigation
30
5.5 Brokers
and Finders
30
5.6 Investment
Intent
30
5.7 Sufficient
Funds
31
ARTICLE
VI Covenants
of Sellers
31
6.1 Ordinary
Course
31
6.2 Conduct
of Business
31
6.3 Certain
Filings
33
6.4 Consents
and Approvals 33
6.5 Efforts
to Satisfy Conditions
34
6.6 Further
Assurances
34
6.7 Notification
of Certain
Matters
34
ARTICLE
VII Covenants
of Madden
34
7.1 Certain
Filings
34
7.2 Efforts
to Satisfy Conditions
34
7.3 Further
Assurances
35
7.4 Notification
of Certain Matters
35
ARTICLE
VIII Certain
Other Agreements
35
8.1 Certain
Tax
Matters
35
8.2 Company
Payments
36
8.3 Matters
Relating to ▇▇▇▇▇▇
36
ARTICLE
IX Conditions
Precedent to Obligations of Madden
37
9.1 Representations
and Warranties
37
9.2 Compliance
with Covenants
37
9.3 Lack
of
Adverse Change
37
9.4 Update
Certificate
38
9.5 Regulatory
Approvals
38
9.6 Consents
of Third Parties
38
9.7 No
Violation of Orders 38
9.8 Employment
Agreement 38
9.9 Transaction
Documents 38
9.10
Other
Closing Matters 38
ARTICLE
X Conditions
Precedent to Obligations of Sellers 38
10.1
Representations
and Warranties 39
10.2
Compliance
with Covenants 39
10.3
Update
Certificate 39
10.4
Regulatory
Approvals 39
10.5
No
Violation of Orders 39
10.6
Transaction
Documents 39
10.7
Other
Closing Matters 39
ii
ARTICLE
XI Termination
of Agreement
39
11.1
Conditions
for Termination
39
11.2
Effect
of
Termination
40
ARTICLE
XII Indemnification 40
12.1
Survival
of Representations, Warranties and Covenants 40
12.2
Indemnification
by ▇▇▇▇▇▇▇▇▇
41
12.3
Indemnification
by Madden
42
12.4
Assumption
of Defense
42
12.5
Non-Assumption
of Defense
43
12.6
Indemnified
Party’s Cooperation as to Proceedings
43
12.7
Payments
Treated as Purchase Price Adjustment
44
ARTICLE
XIII Miscellaneous
44
13.1
Expenses
44
13.2
Entirety
of Agreement
44
13.3
Notices
44
13.4
Amendment
44
13.5
Waiver
44
13.6
Counterparts;
Facsimile 45
13.7
Assignment;
Binding Nature; No Beneficiaries 45
13.8
Headings 45
13.9
Governing
Law; Jurisdiction
45
13.10
Construction;
Units
45
13.11
Negotiated
Agreement
46
13.12
Public
Announcements
46
13.13
Remedies
Cumulative
46
13.14
Severability
46
13.15
WAIVER
OF
JURY TRIAL
46
13.16
Authority
of Seller Representative
46
iii
THIS
MEMBERSHIP INTEREST PURCHASE AGREEMENT (this “Agreement”), dated as of May 16,
2007, is entered into by and among ▇▇▇▇▇▇ ▇▇▇▇▇▇, Ltd., a Delaware corporation
(“Madden”) and the individuals and/or entities set forth on the signature pages
hereto (each a “Seller” and collectively, “Sellers”).
RECITALS
WHEREAS,
Sellers collectively own all of the issued and outstanding ownership interests
of Compo Enhancements, LLC, a Connecticut limited liability company (the
“Company”); and
WHEREAS,
Madden desires to acquire and Sellers desire to sell, all of the issued and
outstanding ownership interests of the Company on the terms and conditions
contained herein and in the Earn Out Agreement (as defined below).
NOW,
THEREFORE, in consideration of the premises and the mutual covenants and
agreements hereinafter set forth, the parties hereto, intending to be legally
bound, hereby agree as follows:
ARTICLE
I
Certain
Definitions
“Additional
Working Capital Consideration” has the meaning set forth in Section
2.3(b)(i).
“Adjustment
Payment Date” means a date which is within three (3) Business Days after the
Final Closing Balance Sheet is deemed final, binding and
conclusive.
“Affiliate
Loans” means loans made to Affiliated Persons by the Company.
“Affiliated
Persons” means Sellers, any trustee or beneficiary of Sellers, any spouse of
Sellers or any Immediate Family Member of Sellers, or any other Person (other
than the Company) that, directly or indirectly, alone or together with others,
controls, is controlled by or is under common control with the Company, Sellers
or any trustee, beneficiary, spouse or Immediate Family Member of
Sellers.
“Agreement”
has the meaning set forth in the preamble.
“Balance
Sheet” means the balance sheet of the Company as of April
30,
2007.
“Business
Day” means any day that is not a Saturday or Sunday or a legal holiday on which
banks are authorized or required by law to be closed in New York, New
York.
“Cash
Purchase Price” has the meaning set forth in Section 2.2(a).
“Cash
Purchase Price Accounts” has the meaning set forth in Section
2.2(b).
“Closing”
has the meaning set forth in Section 3.1.
“Closing
Balance Sheet” means the balance
sheet of the Company as of the close of business on the Closing
Date.
“Closing
Date” has the meaning set forth in Section 3.1.
“COBRA”
has the meaning set forth in Section 4.15(c).
“Code”
means the U.S. Internal Revenue Code of 1986, as amended, or any successor
statute.
“Company”
has the meaning set forth in the recitals.
“Company
IP Rights” has the meaning set forth in Section 4.8(a).
“Company
IP Rights Agreements” has the meaning set forth in
Section 4.8(b).
“Company
Interests” has the meaning set forth in Section 2.1.
“Contracts”
has the meaning set forth in Section 4.9(a).
“Delivery
Date” has the meaning set forth in Section 2.3(a)(ii).
“Disclosure
Schedule” means the disclosure schedules of Sellers accompanying this
Agreement.
“Dispute
Notice” has the meaning set forth in Section 2.3(a)(ii).
“Earn-Out
Agreement” means the Earn-out Agreement among Sellers and Madden, which has been
executed and delivered prior to or simultaneously with the execution and
delivery of this Agreement and which shall become effective as of the Closing,
attached hereto as Exhibit
A.
“Earn-Out
Payment” has the meaning set forth in Section 2.4.
“Employee
Benefit Plan” has the meaning set forth in Section 4.15(a).
“Employment
Agreement” means the employment agreement between Madden and ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
which has been executed and delivered prior to or simultaneously with the
execution and delivery of this Agreement and which shall become effective
as of
the Closing, attached hereto as Exhibit
B.
“Encumbrance”
means any lien, pledge, mortgage, security interest, charge, restriction,
adverse claim or other encumbrance of any kind or nature
whatsoever.
2
“Environment”
means soil, surface water, ground water, land, stream sediments, surface
or
subsurface strata, ambient air and any environmental medium.
“Environmental
Law” means any Law that governs protection or improvement of human health or the
Environment.
“Environmental
Permit” means any permit, registration, certificate, certification, license,
authorization, consent or approval of any Governmental Body required or issued
under Environmental Laws.
“ERISA”
has the meaning set forth in Section 4.15(a).
“ERISA
Affiliate” has the meaning set forth in Section 4.15(a).
“Final
Allocation” has the meaning set forth in Section 8.1(b)(ii).
“Final
Closing Balance Sheet” has the meaning set forth in Section
2.3(a)(iii).
“Financial
Statements” means the unaudited income statements of the Company as of the
fiscal year ended December 31, 2006.
“GAAP”
means U.S. generally accepted accounting principles, as in effect on the
date of
this Agreement, consistently applied.
“Governmental
Body” means any governmental or regulatory body, agency, authority, commission,
department, bureau, court, tribunal, arbitrator or arbitral body (public
or
private), or political subdivision, in any jurisdiction.
“Hazardous
Materials” means without regard to amount or concentration (a) any element,
compound, gas or chemical that is defined, listed, classified or regulated
as
hazardous or toxic under any Environmental Law, including, without limitation,
any material or substance that is defined as a “hazardous waste,” “hazardous
material,” “hazardous substance,” “extremely hazardous waste,” “restricted
hazardous waste,” “subject waste,” “contaminant,” “waste,” “toxic waste,” “toxic
substance” or similar term under any provision of any Environmental Law; (b)
petroleum, petroleum-based or petroleum-derived products; and (c) any substance
containing polychlorinated biphenyls, asbestos, lead, urea formaldehyde or
radon
gas.
“HIPAA”
has the meaning set forth in Section 4.15(c).
“Immediate
Family Member” with respect to any Person who is an individual, means each of
such Person’s spouse, children (whether by blood or adoption), grandchildren,
parents, siblings and trusts for the benefit of any of the
foregoing.
“Indemnification
Obligations” means the respective indemnification obligations of Sellers or
Madden under Article XII.
“Independent
Accounting Firm” means an independent accounting firm mutually acceptable to
Madden and the Seller Representative (which accounting firm has not, within
the
3
prior
12
months, provided services to Madden, any affiliate of Madden, Sellers or
any
Affiliated Person). If Madden and the Seller Representative are unable to
agree
upon an independent accounting firm within thirty (30) days after the Seller
Representative’s delivery of the Dispute Notice to Madden, an independent
accounting firm selected by Madden (which accounting firm has not, within
the
prior 12 months, provided services to Madden or any affiliate of Madden)
and an
independent accounting firm selected by the Seller Representative (which
accounting firm has not, within the prior 12 months, provided services to
Sellers, the Company or any Affiliated Person) shall select an independent
accounting firm (which accounting firm has not, within the prior 12 months,
provided services to Madden, any affiliate of Madden, Sellers or any Affiliated
Person) and such independent accounting firm shall be the “Independent
Accounting Firm.”
“Intellectual
Property Rights” means all intellectual property rights, including trademarks,
service marks, internet domain names, slogans, logos, trade names, and the
goodwill associated therewith, patents, copyrights, in both published and
unpublished works, and all registrations and applications for any of the
foregoing, rights of publicity/privacy, franchises, licenses, proprietary
know-how, proprietary trade secrets, proprietary customer lists, proprietary
vendor lists, proprietary information, proprietary processes, proprietary
formulae, proprietary computer programs and applications, proprietary layouts,
proprietary specifications, proprietary designs, proprietary inventions,
proprietary development tools and all documentation and media constituting,
describing or relating to the above, including manuals, memoranda and records
wherever created throughout the world.
“IRS”
means the U.S. Internal Revenue Service.
“Knowledge”
means, the knowledge, at any time of: in the case of Sellers and the Company,
▇▇▇▇▇▇▇▇▇ and those employees of the Company with primary responsibility
for the
relevant matter; and in the case of Madden, Jamieson ▇. ▇▇▇▇▇▇ and ▇▇
▇▇▇▇▇▇▇▇▇.
“Law”
means any law in any jurisdiction (including common law), statute, code,
ordinance, rule, regulation, permit, order, decree or other requirement or
guideline.
“Licenses”
has the meaning set forth in Section 4.13(b).
“Loss,”
in respect of any matter, means any loss, liability, cost, expense, judgment,
settlement or damage arising as a result of such matter, including reasonable
attorneys’, consultants’ and other advisors’ fees and expenses, reasonable costs
of investigating or defending any claim, action, suit or proceeding or of
avoiding the same or the imposition of any judgment or settlement and reasonable
costs of enforcing any Indemnification Obligations.
“Madden”
has the meaning set forth in the preamble.
“Madden
Disclosure Schedule” means the disclosure schedule of Madden accompanying this
Agreement.
“Madden
Indemnified Parties” has the meaning set forth in Section 12.2(a).
4
“Material
Adverse Effect” means any material adverse effect on the business, operations,
assets, condition (financial or otherwise), prospects, liabilities,
or results of operations of the Company.
“Net
Working Capital” means, as of the Closing Date, the cash, inventory, accounts
receivable and prepaid expenses of the Company, minus the accounts payable,
accrued employee expenses, and Taxes payable, if any, of the Company, in
each
case, as such terms have the meanings assigned to them by GAAP.
“Permitted
Encumbrances” has the meaning set forth in Section 4.7(c).
“Person”
means an individual, partnership, venture, unincorporated association,
organization, syndicate, corporation, limited liability company, or other
entity, trust, trustee, executor, administrator or other legal or personal
representative or any government or any agency or political subdivision thereof.
“Pre-Closing
Period” means all taxable periods ending on or before the Closing Date and the
portion ending on or before the Closing Date of any taxable period that includes
(but does not begin or end on) the Closing Date.
“Real
Property” has the meaning set forth in Section 4.7(a).
“Real
Property Documents” has the meaning set forth in Section 4.7(a).
“Real
Property Interests” has the meaning set forth in Section 4.7(a).
“▇▇▇▇▇▇”
means ▇▇▇▇▇ ▇▇▇▇▇▇, a Seller.
“Release”
means any releasing, spilling, leaching, pumping, leaking, pouring, emitting,
emptying, discharging, depositing, injecting, escaping, dumping, migrating
or
disposing, whether intentional or otherwise, of any Hazardous Material into
the
Environment.
“Remedial
Action” means
all
actions, including any capital on-going operating expenditures, required
by any
Governmental Body or voluntarily undertaken, on or in connection with any
property, to (A) clean up, remove, contain, treat, or in any other way address
any Hazardous Material or other substance; (B) prevent the Release or threat
of
Release, or minimize the further Release, of any Hazardous Material or other
substance so it does not migrate or endanger or threaten to endanger public
health or welfare or the indoor or outdoor Environment; (C) perform pre-remedial
studies and investigations or post-remedial monitoring and care; or (D) bring
facilities on any property and operations conducted thereon into compliance
with
all Environmental Laws and Environmental Permits. Remedial Action shall include,
without limitation, remedial actions conducted off-site to address conditions
emanating from any property currently or previously owned, leased or operated
by
the Company.
“Returns”
means any and all returns, reports, and information statements with respect
to
Taxes required to be filed with a taxing or any other Governmental Body
(including the IRS), domestic or foreign, including consolidated, combined
and
unitary tax returns, and returns in connection with any Employee Benefit
Plan.
5
“Revised
Closing Balance Sheet” has the meaning set forth in Section
2.3(a)(ii).
“SEC”
means the U.S. Securities and Exchange Commission.
“Seller”
and “Sellers” have the meanings set forth in the preamble.
“Seller
Indemnified Parties” has the meaning set forth in Section 12.3(a).
“Seller
Representative” means ▇▇▇▇▇▇▇▇▇, or any other Seller(s) designated as Seller
Representative(s) pursuant to the terms of this Agreement.
“▇▇▇▇▇▇▇▇▇”
means ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇.
“Straddle
Period” has the meaning set forth in Section 8.1(a)(ii).
“Tax”
or
“Taxes” means taxes, fees, levies, duties, tariffs, imposts and governmental
impositions or charges of any kind payable to any Governmental Body in any
jurisdiction including (i) income, capital, franchise, profits, gross receipts,
ad
valorem,
net
worth, value added, sales, use, service, real or personal property, special
assessments, capital stock, license, payroll, withholding, employment,
employment insurance, estimated, social security, workers’ compensation,
unemployment compensation, utility, severance, production, excise, stamp,
occupation, premiums, windfall profits, transfer and gains taxes, and (ii)
interest, penalties, additional taxes and additions to tax imposed with respect
thereto.
“Threatened
Release” means a substantial likelihood of a Release which requires action to
prevent or mitigate damage to the Environment that may result from such
Release.
“Transaction
Documents” means this Agreement, the Employment Agreement, and the Earn-Out
Agreement.
“U.S.”
means the United States of America.
“Working
Capital Adjustment” has the meaning set forth in Section 2.3(b).
“Working
Capital Refund” has the meaning set forth in Section 2.3(b)(ii).
ARTICLE
II
Purchase
and Sale
2.1 Purchase
and Sale of Company Interests.
Subject
to and upon the terms and conditions hereinafter set forth, at the Closing,
and
in reliance upon the representations, warranties, covenants and other agreements
contained in this Agreement or made pursuant hereto, Sellers hereby agree
to
sell, assign, transfer and deliver to Madden, and Madden hereby agrees to
purchase from Sellers, all of the issued and outstanding ownership interests
of
the Company as set forth in Section 2.1 of the Disclosure Schedule (collectively
the “Company Interests”).
6
2.2 Cash
Purchase Price.
(a) In
consideration of the aforesaid sale, assignment, transfer and delivery of
the
Company Interests, on the Closing Date Madden shall pay or cause to be paid
to
Sellers, in cash, an aggregate amount (the “Cash Purchase Price”) equal to (i)
six million two hundred seventy five thousand dollars ($6,275,000). The Cash
Purchase Price shall be allocated among Sellers according to the percentages
set
forth on Schedule
A
hereto.
The Cash Purchase Price may be adjusted as provided for in Section 2.3 hereof.
(b) All
payments of cash pursuant to Section 2.2(a) shall be made in immediately
available funds by wire transfer to an account or accounts (the “Cash Purchase
Price Accounts”) specified by the Seller Representative at least two (2)
Business Days prior to the date such payments are to be made.
2.3 Post-Closing
Adjustments.
(a) Closing
Balance Sheet.
(i) Preparation
of Closing Balance Sheet.
As
promptly as practicable, but in any event within seventy-five (75) days after
the Closing Date, Madden shall
prepare and deliver to the Seller Representative (A) the Closing Balance
Sheet,
which Closing Balance Sheet shall be prepared in accordance with GAAP applied
on
a basis
consistent with the preparation of the Balance Sheet, and (B) a calculation
of
Net Working Capital as of the close of business on the Closing Date based
upon
the Closing
Balance Sheet, which shall explain in reasonable detail such calculation
of Net
Working Capital.
(ii) Closing
Balance Sheet Disputes.
The
Seller Representative may dispute the amount of the Net Working Capital
reflected on the Closing Balance Sheet
by sending written notice (a “Dispute Notice”) to Madden within thirty (30) days
after Madden’s delivery of the Closing Balance Sheet and Net Working Capital
calculation to
the Seller Representative (such delivery date, the “Delivery Date”). The Dispute
Notice shall identify, in reasonable detail, each disputed item on the Closing
Balance Sheet
specifying the amount of such dispute. In the event of such a dispute, Madden
and the Seller Representative shall attempt in good faith to reconcile their
differences
(including providing information that is reasonably requested by the other
party), and any resolution by them as to any disputed items shall be final,
binding and conclusive
on the parties and shall be evidenced by a writing signed by Madden and the
Seller Representative, including a revised Closing Balance Sheet (the “Revised
Closing Balance
Sheet”), reflecting such resolution. If Madden and the Seller Representative are
unable to resolve all disputed items within twenty (20) days after the Seller
Representative’s
delivery of the Dispute Notice to Madden, then Madden and the Seller
Representative shall promptly evidence any resolved disputes in a writing
signed
by Madden and the
Seller Representative and submit any remaining disputed items for final binding
resolution to the Independent Accounting Firm. If any remaining disputed
items
are submitted
to the Independent Accounting Firm for resolution (A) each party will furnish
to
the Independent Accounting Firm such workpapers and other documents and
information
7
relating to the remaining disputed items as the Independent Accounting Firm
may
reasonably request and are available to such party, and each party will be
afforded the
opportunity to present to the Independent Accounting Firm any material relating
to the disputed items and to discuss the resolution of the disputed items
with
the
Independent Accounting Firm; (B) each party will use its good faith
commercially reasonable efforts to cooperate with the resolution process
so that
the disputed items can
be resolved within forty-five (45) days after submission of the disputed
items
to the Independent Accounting Firm; (C) the determination by the
Independent Accounting
Firm, as set forth in a written notice to Madden and the Seller Representative
(which written notice shall include a Revised Closing Balance Sheet), shall,
subject to the
provisions
of Section 2.3(a)(iii), be final, binding and conclusive on the parties;
and
(D) the fees and disbursements of the Independent Accounting Firm shall be
allocated
between Madden and Sellers in the same proportion that the aggregate amount
of
the disputed items submitted to the Independent Accounting Firm that are
unsuccessfully
disputed by each party (as finally determined by the Independent Accounting
Firm) bears to the total amount of all disputed items submitted to the
Independent Accounting
Firm.
(iii)
Final
Closing Balance Sheet.
The
Closing Balance Sheet, or, if one has been adopted pursuant to Section
2.3(a)(ii), the Revised Closing Balance Sheet,
shall be deemed to be final, binding and conclusive on Madden and Sellers
(the
“Final Closing Balance Sheet” upon the earliest of (A) the failure of the Seller
Representative
to deliver to Madden the Dispute Notice within thirty (30) days after the
Delivery Date; (B) the resolution of all disputes by Madden and the Seller
Representative, as
evidenced by a Revised Closing Balance Sheet; and (C) the resolution of all
disputes by the Independent Accounting Firm, as evidenced by a Revised Closing
Balance Sheet.
Any adjustment of the Cash Purchase Price based on the Final Closing Balance
Sheet, shall be made in accordance with Section 2.3(b) hereof.
(b) Post-Closing
Working Capital Adjustment.
Upon
the Final Closing Balance Sheet being deemed final, binding and conclusive
pursuant to Section 2.3(a)(iii), an adjustment to the Cash Purchase Price
shall
be made as follows (the “Working Capital Adjustment”):
(i) In
the
event that the Net Working Capital reflected on the Final Closing Balance
Sheet
is at a deficit less than five hundred twenty five thousand dollars
($525,000), then Madden shall
be obligated to pay to Seller on the Adjustment Payment Date the Additional
Working Capital Consideration (as defined below) in immediately
available funds by wire transfer to an account or accounts specified, in
writing, by Seller. The “Additional Working Capital Consideration” means the
amount by which the
Net Working Capital reflected on the Final Closing Balance Sheet is at a
deficit
less than five hundred twenty five thousand dollars ($525,000).
(ii) In
the
event that the Net Working Capital reflected on the Final Closing Balance
Sheet
is at a deficit in excess of five
hundred twenty five thousand
dollars ($525,000),then
Sellers shall be obligated to pay Madden on the Adjustment Payment Date the
Working Capital Refund (as defined below) in immediately available
funds by wire transfer to an account specified, in writing, by Madden. The
“Working
8
Capital Refund” means the amount by which the Net Working Capital on the Final
Closing Balance Sheet is at a deficit in excess of five hundred twenty five
thousand dollars
($525,000).
2.4 Earn-Out
Payment.
Madden
shall also pay to Sellers certain payments (collectively, the “Earn-Out
Payment”) in an amount, and pursuant to the terms, set forth in the Earn-Out
Agreement.
ARTICLE
III
Closing
3.1 Closing
Date.
Subject
to the fulfillment or waiver by the beneficiary thereof of the agreements
and
conditions precedent set forth in Articles IX and X, the closing of the
transactions contemplated hereby (the “Closing”) shall be held two (2) Business
Days after the satisfaction or waiver of the conditions to closing set forth
in
Articles IX and X of this Agreement, at 10:00 a.m., prevailing local time,
at the offices of ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ LLP, ▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, or on such other date or at such other
time
or place as may be agreed to in writing by Madden and the Seller Representative.
The date on which the Closing actually occurs is herein referred to as the
“Closing Date.”
3.2 Certain
Actions at Closing.
At the
Closing:
(a) Sellers
shall deliver, or cause to be delivered, to Madden certificates representing
the
Company Interests (as appropriate), accompanied by transfer powers duly endorsed
in blank or duly executed instruments of transfer;
(b) to
the
extent not previously executed and/or delivered, Sellers shall execute and/or
deliver, or cause to be executed and/or delivered to Madden each of the
Transaction Documents and any other document, certificate or other instrument
required to be executed and/or delivered by Sellers and/or the Company under
this Agreement at or prior to the Closing;
(c) to
the
extent not previously executed and/or delivered, Madden shall execute and/or
deliver to Sellers each of the Transaction Documents and any other document,
certificate or other instrument required to be executed and/or delivered
by
Madden under this Agreement at or prior to the Closing; and
(d) Sellers
shall be liable for and shall pay all stamp, transfer and similar Taxes,
direct
or indirect, if any, attributable to the transfer of the Company Interests
and,
in connection therewith, shall affix any necessary transfer stamps to the
certificates (or transfer powers) evidencing the Company Interests.
9
ARTICLE
IV
Representations
and Warranties of Sellers
Sellers
hereby represent and warrant, jointly and severally, to Madden as
follows:
4.1 Organization
and Good Standing.
The
Company is a limited liability company duly organized, validly existing and
in
good standing under the laws of the State of Connecticut. The Company has
full
power and authority to own or lease its properties and to carry on its business
as it is now being conducted. The Company is duly qualified to transact business
and is in good standing in each jurisdiction wherein the nature of the business
done or the property owned, leased or operated by it requires such
qualification, except where the failure to be so qualified would not be
reasonably likely to have a Material Adverse Effect. Copies of the
organizational documents (including, as applicable, certificate of formation,
articles of organization or operating agreement) of the Company have been
delivered to Madden and are true, complete and accurate in all respects.
The
ownership interest register, ownership interest transfer records, minutes
and
records of the Company have been made available to Madden and are true, complete
and accurate in all respects. The Company has no direct or indirect subsidiaries
and does not own any ownership or equity interest in any Person.
4.2 Capitalization.
(a) The
capitalization of the Company is as set forth in Section 2.1 of the Disclosure
Schedule. The Company Interests are all of the issued and outstanding ownership
interests of the Company, and have been duly authorized and are validly issued
and outstanding, fully paid and non-assessable. Each Seller represents that
as
to himself or herself, he/she owns, beneficially and of record, and has valid
and marketable title to, and the right to transfer to Madden, all of the
Company
Interests set forth opposite such Seller’s name in Section 2.1 of the Disclosure
Schedule, free and clear of any and all Encumbrances. At the Closing, Madden
will own, and will have valid and marketable title to, all of the issued
and
outstanding ownership interests of the Company, free and clear of any and
all
Encumbrances. No Person other than Madden has any written or oral agreement,
arrangement, understanding or option for, or any right or privilege (whether
by
law, preemption or contract) that is or is capable of becoming an agreement,
arrangement, understanding or option for, the purchase or acquisition from
the
Company or any Person of, any ownership interests or other securities of
the
Company.
(b) There
are
no outstanding or authorized options, warrants, purchase agreements,
participation agreements, subscription rights, conversion rights, exchange
rights or other securities, contracts, arrangements, understanding or
commitments that could require the Company to issue, sell or otherwise cause
to
become outstanding any of its authorized but unissued ownership interests
or any
securities convertible into, exchangeable for or carrying a right or option
to
purchase ownership interests, or to create, authorize, issue, sell or otherwise
cause to become outstanding any new class of ownership interests. None of
the
issued and outstanding ownership interests of the Company have been issued
in
violation of any rights of any Person or in violation of the registration
requirements of any applicable jurisdiction’s securities Laws.
10
4.3 Authorization.
Each
Seller has full legal capacity and authority to enter into and carry out
such
Seller’s obligations under this Agreement and the other applicable Transaction
Documents, and to consummate the transactions contemplated hereby and thereby,
and is not under any prohibition or restriction, contractual, statutory or
otherwise, against doing so. This Agreement and the Earn-Out Agreement have
been
duly executed and delivered by Sellers and, assuming due authorization,
execution and delivery by Madden, constitute legal, valid and binding
obligations of Sellers, enforceable against Sellers in accordance with their
respective terms, except as such enforceability may be limited by applicable
bankruptcy, insolvency, moratorium or other laws affecting the rights of
creditors generally and by general principles of equity.
4.4 No
Conflicts.
Except
as set forth in Section 4.4 of the Disclosure Schedule, neither the execution
and delivery by Sellers or the Company of this Agreement or any of the
Transaction Documents to which Sellers or the Company are a party, nor the
consummation of the transactions contemplated hereby or thereby, will, with
or
without notice or lapse of time or both, directly or indirectly, (i) conflict
with or violate the organizational documents (including, as applicable, articles
of organization, certificate of formation, operating agreement or articles
of
association) of or resolutions adopted by the directors, members, or
equityholders of the Company, (ii) conflict with, violate, result in the
breach of any term of, result in the acceleration of performance of any
obligation under, constitute a default under, give any Person the right to
cancel, terminate or modify, or require the consent or approval of or any
notice
to or filing with any third party or Governmental Body, (x) any note, mortgage,
deed of trust, lease or other agreement or instrument to which Sellers or
the
Company is a party or by which Sellers or the Company or any of their respective
properties or assets are bound, or (y) any Law, order, decree, writ, injunction,
or License of any Governmental Body having jurisdiction over Sellers or the
Company or any of their respective properties or assets, or (iii) create an
Encumbrance on any of the ownership interests or properties or assets of
the
Company.
4.5 Financial
Statements; Undisclosed Liabilities.
(a) Except
as
set forth in Section 4.5(a) of the Disclosure Schedule, the Financial Statements
(true, complete and accurate copies of which have been previously delivered
to
Madden) have been prepared from the books and records of the Company in
accordance with GAAP throughout the periods covered thereby and fairly present
the financial condition of the Company as at the date thereof.
(b) As
of the
date of the Balance Sheet, other than those (i) set forth in Section 4.5(b)
of
the Disclosure Schedule or (ii) which are reflected or reserved against on
the
Balance Sheet the Company had no liabilities, debts or obligations (whether
absolute, accrued, contingent or otherwise). Since the date of the Balance
Sheet, the Company (i) has conducted its business in the ordinary course
and in
a commercially reasonable manner, (ii) has not incurred any liabilities,
debts
or obligations (whether absolute, accrued, contingent or otherwise), except
for
liabilities incurred in the ordinary course of business and in a commercially
reasonable manner, which such liabilities are consistent with the
representations and warranties contained in this Agreement and (iii)
notwithstanding anything to the contrary in clause (i) or (ii) of this sentence
and except as set forth in Section 4.5(b) of the Disclosure Schedule, has
not
incurred any liability, debt or obligation (whether absolute, accrued,
contingent or otherwise) to or of any
11
Affiliated
Person or made any Affiliate Loans. Since the date of the Balance Sheet,
there
has been no Material Adverse Effect, and no event has occurred or facts or
circumstances exist which would be reasonably likely to result in a Material
Adverse Effect.
4.6 Taxes.
(a) Except
as
set forth in Section 4.6(a) of the Disclosure Schedule, the Company has timely
filed with the appropriate taxing authorities all Returns required to be
filed
by it (taking into account any extension of time to file). The information
on
such Returns is complete and accurate. The Company has paid, or, where payment
is not yet due, has established an adequate accrual on the Balance Sheet,
in
accordance with GAAP for the payment of all Taxes (whether or not shown on
any
Return) due and payable. There are no liens for Taxes (other than for Permitted
Encumbrances) upon the properties or assets of the Company.
(b) Except
as
set forth in Section 4.6(b) of the Disclosure Schedule, no unpaid and unresolved
deficiencies for Taxes have been claimed, proposed or assessed, in each case
in
writing, by any taxing authority or other Governmental Body with respect
to the
Company for any Pre-Closing Period, and there are no pending or, to the
Knowledge of Sellers or the Company, threatened audits, investigations, claims
or assessments for or relating to any liability in respect of Taxes of or
with respect to the Company. The Company has not requested any extension
of time
within which to file any currently unfiled Returns in respect of any Taxes
and
no waiver or extension of a statutory period of limitations for the assessment
of any Taxes is in effect with respect to the Company.
(c) Except
as
set forth in Section 4.6(c) of the Disclosure Schedule, (i) the Company has
made
or will make provision for all Taxes payable by them with respect to any
Pre-Closing Period which have not been paid prior to the Closing Date which
amounts will be reflected on the Balance Sheet; (ii) the provisions for Taxes
with respect to the Company for the Pre-Closing Period (excluding any reserve
for deferred Taxes established to reflect timing differences between book
and
Tax income) are adequate to cover all Taxes with respect to such period;
(iii) 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,
independent contractor, creditor, shareholder or other third party; (iv)
all
material elections with respect to Taxes affecting the Company as of the
date
hereof are set forth in Section 4.6(c)(iv) of the Disclosure Schedule;
(v) the Company is not subject to the Tax imposed on certain built-in gains
under Section 1374 of the Code or the Tax imposed under Section 1375 of the
Code
or any corresponding provisions of applicable state law; (vi) there are no
advance tax rulings in respect of any Tax issued to or pending between or
with
respect to the Company and any taxing authority or any other written agreements
with a Tax authority with regard to any Tax; (vii) the tax year end for the
Company is December 31; (viii) the Company is not liable for Taxes of any
other Person, and is neither currently under any contractual obligation to
or a
party to any tax sharing agreement nor any other agreement providing for
payments by the Company with respect to Taxes; (ix) the Company is not a
party to any joint venture, partnership or other arrangement or contract
which
could be treated as a partnership for income tax purposes; (x) the Company
has
not granted any Person a power of attorney with respect to Taxes; (xi) the
Company has not entered into any sale leaseback or any leveraged lease
transaction; (xii) the Company, as of the Closing Date, has not agreed or
will
be required, as a result of a change in method of accounting
12
or
otherwise, to include any adjustment under Section 481 of the Code (or any
corresponding provision of state, local, or foreign law) in taxable income
for
any period after the Closing Date; (xiii) Section 4.6(c)(xiii) of the Disclosure
Schedule contains a list of all jurisdictions in which the Company is required
to file any Return, and no written claim has ever been made by a taxing
authority in a jurisdiction where the Company does not currently file Returns
that the Company is or may be subject to taxation by that jurisdiction; (xiv)
the Company has not filed or been included in a combined, consolidated or
unitary return (or substantial equivalent thereof) of any Person; (xv) the
Company is not obligated under any agreement with respect to industrial
development bonds or other obligations with respect to which the excludability
from gross income of the holder for Federal or state income tax purposes
could
be affected by the transactions contemplated hereunder; (xvi) the Company
has
not engaged in any transaction for which its participation is required to
be
disclosed under Treasury Regulation § 1.6011.4; (xvii) the Company is not a
“consenting corporation” under Section 341(f) of the Code or any corresponding
provision of Law; (xviii) the Company has not since its inception been a
party
to a transaction intended to qualify under Section 355 of the Code or under
so
much of Section 356 of the Code as relates to Section 355 of the Code; and
(xix)
the Company has not made an election and is not required to treat any of
its
assets as owned by another Person for Federal income tax purposes or as
tax-exempt bond financed property or tax-exempt use property within the meaning
of Section 168 of the Code (or any corresponding provision of Law).
4.7 Title
to Properties; Absence of Encumbrances.
(a) Section
4.7(a)
of the
Disclosure Schedule contains a complete list by address of all real property
owned, leased, operated or used by the Company (collectively, the “Real
Property”), indicating the nature of the interest of the Company therein
(collectively, the “Real Property Interests”). No litigation, condemnation,
expropriation, eminent domain or similar proceeding affecting all or any
portion
of any Real Property is pending or to the Knowledge of Sellers of the Company
threatened.
The
Company has furnished to Madden true, complete and accurate copies of all
documents relating to the Real Property Interests including, without limitation,
all leases, licenses, deeds, evidences of ownership, evidences of possession,
amendments, estoppel certificates, subordination, non disturbance and attornment
agreements and assignment and/or assumption agreements (collectively, the
“Real
Property Documents”), including rent rolls and operating expense statements (if
applicable). There are no oral agreements with respect to any Real Property
Interest. No Real Property Document requires that the consent or approval
of any
third party be obtained in order to consummate the transactions contemplated
by
this Agreement, nor do such transactions violate any Real Property Document
or
cause the Company to be in default under any Real Property Document. Neither
Sellers nor the Company have given or received any notice of any notice of
default under any Real Property Document, and neither Sellers nor the Company
are in default thereunder. No option to extend, renew, surrender, terminate
or
purchase arising under any Real Property Document has been exercised. No
guaranty or other undertaking with respect to the performance of any obligation
arising under any Real Property Document has been delivered by the Company.
All
service, management, leasing and other similar agreements with respect to
any
Real Property Interest are terminable upon no more than thirty (30) days’ prior
notice.
(b) Except
as
set forth in Section 4.7(b) of the Disclosure Schedule, the Company has good,
marketable and insurable (in the case of Real Property Interests) title to
all
13
of
the
properties and assets, real and personal, tangible and intangible, it owns
or
purports to own, including those reflected on its books and records and on
the
Balance Sheet (except those sold or disposed of subsequent to the date thereof
in the ordinary course of business and in a commercially reasonable manner),
free and clear of all Encumbrances, except for Permitted Encumbrances. Except
as
set forth in Section 4.7(b) of the Disclosure Schedule, the Company has a
valid
and enforceable fee, leasehold, license or other interest in all of the other
properties and assets, real or personal, tangible or intangible, which are
used
in the operation of the business of the Company, free and clear of all
Encumbrances, except for Permitted Encumbrances. Except as set forth in Section
4.7(b) of the Disclosure Schedule, none of the properties or assets owned,
leased, operated or used by the Company is subject to any lease, sublease,
license sublicense or other agreement granting to any other Person any right
to
the use, occupancy or enjoyment of such property or any portion thereof and
no leasehold interest of the Company is proposed to be surrendered or
terminated.
(c) “Permitted
Encumbrances” means (i) liens for Taxes not yet due and payable or which are
being diligently contested in good faith by appropriate proceedings and as
to
which appropriate reserves (to the extent required by GAAP) have been
established in the books and records of the Company; (ii) mechanics’,
materialmen’s, carriers’, warehousemen’s, landlord’s and similar liens securing
obligations not yet delinquent or which are being diligently contested in
good
faith by appropriate proceedings and as to which appropriate reserves (to
the
extent required by GAAP) have been established in the books and records of
the
Company.
(d) With
respect to each lease of Real Property, except as set forth in Section 4.7(d)
of
the Disclosure Schedule: (i) all base rents, percentage rents (if owing in
accordance with the terms of the applicable lease) and additional rents have
been paid, (ii) no waiver, indulgence or postponement of the lessee’s
obligations has been granted by the lessor, (iii) there exists no event of
default or event, occurrence, condition or act which, with the giving of
notice,
the lapse of time or the happening of any other event or condition, would
become
a default under the lease, and (iv) all of the covenants to be performed
by any
other party under the lease have been fully performed. Section 4.7(a) of
the
Disclosure Schedule contains a list of all of the leases of Real Property
setting out, in respect of each such lease, a description of the leased premises
by shopping centre or location. Section 4.7(d) of the Disclosure Schedule
identifies the leases of Real Property that contain rent escalation provisions
which may be triggered as a result of the change of control of the Company
as
tenant thereunder. The present use of each lease of Real Property is permitted
under the terms of such lease.
4.8 Intellectual
Property.
(a) Except
as
set forth in Section 4.8(a) of the Disclosure Schedule, the Company owns,
or has
the valid right to use or license, all Intellectual Property Rights as used
in
the Company’s business as presently conducted and as it is expected to be
conducted as of the Closing (such Intellectual Property Rights hereinafter
referred to as the “Company IP Rights”). The Company IP Rights are sufficient to
conduct the Company’s business.
(b) The
execution, delivery and performance of this Agreement and the consummation
of
the transactions contemplated hereby will not (i) constitute a breach of
any
instrument or agreement governing any Company IP Rights (the “Company IP Rights
14
Agreements”),
(ii) cause the forfeiture or termination or give rise to a right of forfeiture
or termination of any Company IP Rights, or (iii) impair the right of the
Company or, after the Closing, Madden, to own, use or license any Company
IP
Rights or portion thereof on the same terms as applied to Sellers prior to
the
Closing Date.
(c) Except
as
set forth in Section 4.8(c) of the Disclosure Schedule, there are no royalties,
honoraria, fees or other payments payable by the Company to any Person for
the
use by the Company of any Company IP Rights.
(d) Except
as
set forth in Section 4.8(d) of the Disclosure Schedule, (i) the conduct of
the
business of the Company as presently conducted, does not and will not violate
or
infringe any Intellectual Property Rights of any other Person, and (ii) there
is
no pending or, to the Knowledge of Sellers and the Company, threatened claim
or
litigation contesting the validity, ownership, registrability, right to use
or
right to license any Company IP Rights, nor is there any valid or reasonable
basis for any such claim, nor has the Company or any Seller received any
notice
asserting that any Company IP Rights or the proposed use, registration or
license thereof infringes or otherwise violates, or will infringe or otherwise
violate the rights of such Person.
(e) Except
as
set forth in Section 4.8(e)(i) of the Disclosure Schedule, the Company has
taken
all reasonable and practicable steps to safeguard and maintain the secrecy
and
confidentiality of its trade secrets. Sellers have delivered to Madden true,
complete and accurate copies of all agreements that any directors, officers,
employees, contractors or consultants of the Company have executed regarding
(i)
the protection of proprietary information, and (ii) the assignment to the
Company of all Intellectual Property Rights arising from the services performed
for the Company by such persons. Except as set forth in Section 4.8(e)(ii)
of
the Disclosure Schedule, no current or prior directors, officers, employees,
consultants or contractors of the Company claim or have a right to claim
an
ownership interest in any Company IP Rights.
(f) Section
4.8(f)
of the
Disclosure Schedule separately lists (i) all licenses and other agreements
under
which the Company or any Person granted rights by the Company uses any Company
IP Rights, and (ii) all licenses and other agreements under which the Company
or
any Person granted rights by the Company uses any Intellectual Property of
any
other Person. All such licenses and other agreements are valid, enforceable,
in
full force and effect, and without breach and will continue to be so without
change in any provision or term thereof after the Closing.
(g) Except
as
set forth in Section 4.8(g) of the Disclosure Schedule, neither Sellers,
nor the
Company has (i) sent any notice, made any claim, or filed any action asserting
that any Person’s use of, or application for, any Intellectual Property Rights
infringes upon or otherwise violates any Company IP Rights, and (ii) no Person
is infringing upon or otherwise violating any Company IP Rights, or has filed
to
register any Intellectual Property Rights which, if used by any third party,
would infringe upon or otherwise violate the Company IP Rights.
(h) Section
4.8(h)
of the
Disclosure Schedule sets forth a list of all patents, trademarks, service
marks,
trade dress, copyrights, slogans, trade names, and internet domain names
comprising the Company IP Rights, including without limitation all registrations
and
15
applications
for any of the foregoing owned, licensed, used or filed by or on behalf of
the
Company anywhere in the world. For each trademark listed in Section 4.8(h)
of
the Disclosure Schedule, identify the trademark, the jurisdiction, the
registration/application number, the registrant/applicant, the class of
goods/services, the status (including any rejections and the basis therefore),
and the principal terms of any license governing any such trademark. All
applications, registrations and licenses listed in Section 4.8(h) of the
Disclosure Schedule, unless otherwise indicated, are in full force and effect
and have not been cancelled, expired, rejected or abandoned. Except as set
forth
in Section 4.8(d) of the Disclosure Schedule, there is no pending, existing
or,
to the Knowledge of Sellers and the Company, threatened opposition,
interference, cancellation, proceeding or other legal or governmental proceeding
before any court or Governmental Body against or involving the applications
or
registrations listed in Section 4.8(h) of the Disclosure Schedule.
4.9 Contracts
and Agreements.
(a) Section
4.9(a)
of the
Disclosure Schedule sets forth a true, complete and accurate list of each
of the
following contracts, agreements, arrangements, instruments or understandings,
whether oral or written, to which the Company is a party or by which the
Company
or its assets or properties are bound, except for purchase orders entered
into
by the Company with customers, contractors, manufactures and suppliers in
the
ordinary course of business and on forms previously supplied to Madden
(collectively, the “Contracts”):
(i) each
employment or other similar agreement providing for compensation, severance
or a
fixed term of employment in respect of services performed by
any employees of the Company;
(ii) each
management, consulting, subcontractor, retainer or other similar type of
agreement under which services are provided by any Person to the
Company in excess of $25,000
per
annum
or $50,000
in
the aggregate;
(iii) each
other agreement or commitment for services and supplies provided by any other
Person to the Company with a term of more than one (1) year or
requiring payments of more than
$25,000 per annum or $50,000 in the aggregate;
(iv) each
agreement or commitment for the supply of products or services by the Company
to
any other Person with a term of more than one (1) year (other
than those that are terminable upon not more than thirty (30) days’ notice by
the Company without penalty) or involving payments of more than $25,000 per
annum or $50,000
in the aggregate;
(v) each
agreement that restricts in any manner the operation of the business of the
Company as presently conducted, including each agreement that
restricts the ability of the Company to conduct business in any geographic
or
product market, buy or sell particular goods or services, buy or sell goods
or
services from any
other Person or solicit customers, employees or other service
providers;
16
(vi) each
agreement with an Affiliated Person, or, to the Knowledge of Sellers and
the
Company, with any entity which an officer or director of the
Company
holds an interest;
(vii) each
lease (as lessor, lessee, sublessor or sublessee) of any real
property;
(viii) each
lease (as lessor, lessee, sublessor or sublessee) of any tangible personal
property requiring payment during its term or any extension or
renewal
thereof in excess of $25,000;
(ix) each
license (as licensor, licensee, sublicensor or sublicensee) of any Intellectual
Property Rights (other than licenses of commercially available,
“packaged, off the shelf,” shrink-wrap or click-through computer
software);
(x)
each
agreement under which any money has been or may be borrowed or loaned, or
any
note, bond, factoring agreement, indenture or other evidence of
indebtedness has been issued
or assumed, and each guaranty (including “take-or-pay” and “keepwell”
agreements) of any evidence of indebtedness or other obligation, or
of the net worth, of any Person;
(xi) each
mortgage agreement, deed of trust, security agreement, purchase money agreement,
conditional sales contract or capital lease;
(xii) each
partnership, joint venture or similar agreement;
(xiii) each
agreement relating to ownership interests (or other securities, as applicable)
of the Company, including operating agreements, member- or
stockholder agreements, voting agreements, and any agreements granting
preferential rights to acquire ownership interests (or other securities,
as
applicable) of the Company
or containing restrictions with respect to the payment of dividends or other
distributions in respect of the ownership interests or other securities of
the
Company;
(xiv) each
agreement or commitment to make unpaid capital expenditures in excess of
$25,000;
(xv) each
agreement containing a change of control provision;
(xvi) each
agreement or other arrangement providing for the development of software
for, or
license of software (other than off-the-shelf, shrink-wrap, or
click-
through software applications) or Intellectual Property Rights to, the Company,
which software or Intellectual Property Rights are used or incorporated in
any
of the Company
Products, including rights of publicity;
(xvii) each
agreement with respect to any Company IP Rights;
(xviii) each
agreement or arrangement with respect to advertising (including co-op
advertising) for the Company or any of its services;
17
(xix) each
agreement that obligates the Company to indemnify a third party;
and
(xx) each
other agreement (or group of agreements) having an indefinite term or a fixed
term of more than one (1) year (other than those that are
terminable
upon not more than thirty (30)
days’ notice by the Company without penalty), or requiring aggregate payments by
the Company in excess of $25,000 per year or the loss of
which could reasonably be expected to have, directly or indirectly, individually
or in the aggregate, a Material Adverse Effect.
Complete
copies of all written (and summaries of all oral) Contracts required to be
disclosed pursuant to this Section 4.9(a) have been previously delivered
to
Madden.
(b) The
Contracts are legal, valid, binding and in full force and effect and are
enforceable by the Company in accordance with their respective terms, except
as
such enforceability may be limited by bankruptcy, insolvency, moratorium
and
other similar laws affecting creditors’ rights generally and by general
principles of equity. Except as set forth in Section 4.9(b) of the Disclosure
Schedule, the Company is not (with or without the lapse of time or the giving
of
notice, or both) in breach of or in default under any of the Contracts, and,
to
the Knowledge of Sellers and the Company, no other party to any of the Contracts
is (with or without the lapse of time or the giving of notice, or both) in
breach of or in default under any of the Contracts.
4.10
Insurance.
All
insurance policies currently maintained by the Company, under which the Company
is insured are accurately listed in Section 4.10 of the Disclosure Schedule
and
complete copies of such policies have been previously delivered to Madden.
Each
such insurance policy is in full force and effect (and to the Knowledge of
Sellers and the Company, free from any presently exercisable right of
termination on the part of the insurance company issuing such policy prior
to
the expiration of the term of such policy) and all premiums due and payable
in
respect thereof have been paid. There are no pending claims with respect
to the
Company or its properties or assets under any such insurance policy. The
Company
has not received notice of cancellation or non-renewal of any such policy.
The
transactions contemplated by this Agreement will not give rise to a right
of
termination of any such policy by the insurance company issuing the same
prior
to the expiration of the term of such policy.
4.11
Litigation.
Except
as set forth in Section 4.11 of the Disclosure Schedule, and except with
respect
to environmental matters (which are addressed in Section 4.16 of this
Agreement), there is no lawsuit, governmental investigation or legal,
administrative or arbitration action or proceeding pending or, to the Knowledge
of Sellers and the Company, threatened against any Seller, the Company or
any of
their properties or assets, or any director, officer or employee of the Company,
in his or her capacity as such, and the Company is not identified as a party
subject to any restrictions or limitations under any judgment, order or decree
of any Governmental Body.
4.12
Condition
and Sufficiency of Assets.
The
properties and assets owned, leased, operated or used by the Company in the
conduct or operation of its business are in good operating condition and
repair
and are suitable for the purposes for which they are used and are
18
all
of
the properties and assets necessary for the conduct and operation of the
business of the Company as currently conducted. The Company is the sole owners
of all material properties and assets, including trademarks, utilized in
the
conduct or operation of the business of the Company, except for properties
and
assets leased or licensed to the Company pursuant to Contracts listed in
Section
4.9(a) of the Disclosure Schedule, to which the Company has a valid lease
or
license.
4.13
Compliance
with Law; Licenses.
(a) Except
as
set forth in Section 4.13(a) of the Disclosure Schedule, the Company is and
has
been in compliance in all material respects with all applicable Laws, orders
and
decrees governing the conduct or operation of its business, and with all
of its
Licenses. Neither Sellers nor the Company has received any notice of any
violation of any such Law, order, decree or License, and to the Knowledge
of
Sellers and the Company, no such violation has been threatened.
(b) All
material governmental licenses, approvals, authorizations, registrations,
consents, orders, certificates, decrees, franchises and permits (collectively,
“Licenses”) of the Company, are listed in Section 4.13(b) of the Disclosure
Schedule. Such Licenses are all of the material Licenses necessary for the
Company’s ownership and operation of its properties and assets, manufacturing,
marketing, sale and distribution of the Company Products by the Company and
the
conduct and operation of its business. All such Licenses are in full force
and
effect; and no proceeding is pending or, to the Knowledge of Sellers and
the
Company, threatened, seeking the revocation or limitation of any such License.
To the Knowledge of Sellers and the Company, there exists no state of facts
which could cause any Governmental Body to limit, revoke or fail to renew
any
License related to or in connection with any business as currently conducted
or
operated by the Company.
4.14
Employees.
(a) Section
4.14(a) of the Disclosure Schedule sets forth, as of April
30, 2007,
the
total number of employees of the Company and indicates the jurisdiction in
which
each such employee is employed. The Company generally has good relationships
with its employees.
(b) Except
as
set forth in Section 4.14(b) of the Disclosure Schedule, the Company (i)
is and
has been in compliance with all applicable Laws (including any legal obligation
to engage in affirmative action), agreements and contracts relating to former,
current, and prospective employees, independent contractors and “leased
employees” (within the meaning of Section 414(n) of the Code or other similar
law) of the Company, workplace practices, and terms and conditions of employment
with the Company or retention by the Company, including all such Laws,
agreements and contracts relating to wages, hours, collective bargaining,
employment discrimination, human rights, immigration, disability, civil rights,
fair labor standards, occupational safety and health, workers’ compensation, pay
equity, termination of employment or wrongful discharge and violation of
the
potential rights of such former, current, and prospective employees, independent
contractors and leased employees, and (ii) has timely prepared and filed
all
appropriate forms (including U.S. Immigration and Naturalization Service
Form
I-9) required by any relevant Law or Governmental Body. The Company is not
engaged in any unfair labor practice.
19
(c) Other
than as set forth on Section 4.14(c) of the Disclosure Schedule, no collective
bargaining agreement with respect to the business of the Company is currently
in
effect or, to the Knowledge of Sellers and the Company, being
negotiated. The Company has no obligation to negotiate any other
collective bargaining agreement, and, to the Knowledge of Sellers and the
Company, no employees of the Company that are not already so covered desire
to
be covered by a collective bargaining agreement and there are no
threatened or pending union organizing efforts in connection
therewith.
(d) No
strike, slowdown or work stoppage is occurring or has occurred since the
inception of the Company nor, to the Knowledge of Sellers and the Company,
is
threatened or has been threatened within the last year, with respect to
the
employees of the Company.
(e) There
is
no representation or certification claim or petition pending before any
labor
agency or board (including the U.S. National Labor Relations Board) of
which the
Company or any Seller has been notified and, to the Knowledge of Sellers
and the
Company, no question concerning representation has been raised or threatened
respecting the employees of the Company. No union or employee
bargaining agency has applied or threatened to apply to any labor agency
or
board to have the Company declared a common, related or successor employer
pursuant to any applicable Laws.
(f) Except
as
set forth in Section 4.14(f) of the Disclosure Schedule, no notice has
been
received by the Company or any Seller of any complaint or proceeding filed
against the Company claiming that the Company has or may have violated
any
applicable employment standards, human rights or other labor legislation
or
employment Laws, or of any complaints or proceedings of any kind involving
the
Company or, to the Knowledge of Sellers and the Company, against any of
the
employees of the Company or threatened to be filed against the Company
before
any agency, labor relations board or Governmental Body (including, but
not
limited to, the U.S. National Labor Relations Board and U.S. Equal Employment
Opportunity Commission). No notice has been received by the Company
or any Seller of the intent of any agency or other Governmental Body responsible
for the enforcement of labor or employment Laws to conduct an investigation
of
the Company, and no such investigation is in progress.
(g) There
are
no outstanding orders or charges against the Company under any occupational
health or safety legislation and, to the Knowledge of Sellers and the Company,
none have been threatened. All material levies, assessments,
penalties, fines, liens and surcharges made against the Company pursuant
to all
applicable workers compensation legislation as of the date of the Balance
Sheet
have been paid or have been reserved for or accrued on the Balance Sheet
by the
Company and the Company has not as of the Closing Date, been reassessed
under
any such legislation and there are no claims or potential claims which
may
adversely affect the accident cost experience of the Company. To the
Knowledge of Sellers and the Company, no audit of the Company is being
performed
or threatened pursuant to any workers’ compensation
legislation. There have been no material levies, assessments or
penalties imposed or, to the Knowledge of Sellers and the Company, threatened
against the Company since the date of the Balance Sheet.
(h) A
schedule has been delivered to Madden setting forth a true, complete and
accurate list, as of April 30, 2007, of all of the employees, officers,
independent contractors
20
and
consultants of the Company, and with respect to each such employee, officer,
independent contractor and consultant: (i) the total compensation
(including, without limitation, salary, bonuses, incentive compensation,
fees or
other remuneration) received by such individual in the immediately preceding
fiscal year of the Company, (ii) such individual’s current compensation,
(iii) such individual’s current title, (iv) the number of years of
continuous service of such employee or officer and the period of service
of such
independent contractor or consultant with the Company, and (v) outstanding
loans
to such individuals. Amounts have been withheld by the Company from
its employees for all periods in compliance with applicable
law. Federal, state, local and foreign returns, as required by
applicable law, have been filed by the Company for all periods for which
returns
were due with respect to employee income tax withholding, social security,
employment insurance and unemployment taxes and employer health taxes or
premiums and the amounts shown thereof to be due and payable have been
paid,
together with any interest and penalties that are due as a result of the
failure
by the Company to file such returns when due and pay when due the amounts
shown
thereon to be due. Section 4.14(h) of the Disclosure Schedule
accurately sets forth a complete and correct list of all employment, management,
consulting or other agreements with any Persons retained by the Company
as
employees, “leased employees” (within the meaning of Section 414(n) or (o) of
the Code or other similar Law), management or other independent consultants,
sales representatives, sales or commission agents and distributors, true,
complete and accurate copies of which have been delivered to
Madden.
(i)
Section
4.14(i) of the Disclosure Schedule accurately sets forth all severance
or
continuing payment obligations (either as part of a plan or otherwise)
of the
Company, as well as all unpaid severance or continuing payments of any
kind
(other than pursuant to a plan or program described in Section 4.15 hereof)
which are due or claimed in writing to be due from the Company to any Person
whose employment with the Company was terminated. The consummation of
the transactions contemplated hereby, either alone or in combination with
another event, with respect to each director, officer, employee, independent
contractor and consultant of the Company, will not result in (A) any payment
(including, without limitation, severance, unemployment compensation or
bonus
payments) becoming due under any Employee Benefit Plan or agreement, (B)
any
increase in the amount of compensation, benefits or fees payable to any
such
individual or (C) any acceleration of the vesting or timing of payment
of
benefits, compensation or fees payable to any such individual.
(j) Section
4.14(j) of the Disclosure Schedule accurately sets forth all accrued, but
unused, vacation time of all employees of the Company as of April 30, 2007
and
the policies of the Company with respect thereto. All amounts due for
all salary, wages, bonuses, commissions, vacation with pay and other benefits
have either been paid or are accurately reflected on the Balance
Sheet.
(k) Except
as
set forth in Section 4.14(h) of the Disclosure Schedule, each employee
of the
Company is employed on an at-will basis and the Company has no any written
or
oral agreements with any employees which would interfere with the ability
to
discharge such employees. To the Knowledge of Sellers and the Company,
no key
employee and no group of employees of the Company has any plans to terminate
or
modify their status as an employee or employees of the Company (including
upon
consummation of the transactions contemplated hereby).
21
(l)
Neither
any Seller nor the Company has promised, made any written or oral statements
or
representations or distributed any written material to, any employees,
directors, officers, consultants, independent contractors, agents,
representatives or other personnel of the Company regarding continued (x)
employment or terms of employment, (y) continued engagement, or (z) continued
receipt of any particular benefit, with or from the Company subsequent
to the
date hereof or the Closing Date.
4.15
Employee
Benefit Plans.
(a) Section
4.15(a) of the Disclosure Schedule lists all Employee Benefit
Plans. “Employee Benefit Plan” means any “employee benefit plan” as
defined in Section 3(3) of the Employee Retirement Income Security Act
of 1974,
as amended from time to time (“ERISA”), all similar plans maintained outside the
United States and not required by applicable Law (a “Non-U.S. Plan”) and any
other plan, policy, program, practice, agreement, understanding or arrangement
(whether written or oral) providing compensation or other benefits to any
current or former officer, employee or consultant (or to any dependent
or
beneficiary thereof), of the Company or any ERISA Affiliate, which are
now, or
within the last six (6) years were, maintained by the Company or any ERISA
Affiliate, or with respect to which the Company or any ERISA Affiliate
has or
may have any liability, including but not limited to any obligation to
contribute, including all employee pension, profit-sharing, savings, retirement,
incentive, bonus, deferred compensation, vacation, holiday, cafeteria,
medical,
disability, life, accident or other insurance, stock purchase, stock option,
stock appreciation right, phantom stock, restricted stock or other equity-based
compensation plans, and any other plans, policies, programs, practices
or
arrangements. “ERISA Affiliate” means any entity (whether or not
incorporated) other than the Company that, together with the Company, is
or
could reasonably be expected to be deemed to be a member of a controlled
group
of corporations within the meaning of Section 414(b) of the Code, of a
group of
trades or businesses under common control within the meaning of Section
414(c)
of the Code.
(b) Section
4.15(b) of the Disclosure Schedule sets forth each employment agreement,
contract or Employee Benefit Plan that is subject to Section 409A of the
Code
and any such Employee Benefit Plan has been operated in good faith compliance
with available treasury guidance since January 1, 2005.
(c) The
Company has delivered to Madden true, complete and accurate copies of (i)
any
employment or severance agreements and any procedures and policies relating
to
the employment of employees of the Company and the use of temporary employees
and independent contractors by the Company (including written summaries
of any
procedures and policies that are unwritten), (ii) plan texts, instruments
and
amendments thereto (including written summaries of any unwritten plan or
amendment) for all Employee Benefit Plans and related trust agreements,
insurance and other contracts (including policies), summary plan descriptions,
and summaries of material modifications and material communications distributed
to the participants of each Employee Benefit Plan (and written summaries
of any
other communications that were not written), and (iii) forms or written
communications explaining employee and related beneficiaries rights under
Part 6
of Subtitle B of Title I of ERISA and Section 4980B of the Code (“COBRA”), or
certifying group health insurance coverage pursuant to Part 7 of Subtitle
B of
Title I of ERISA and Chapter 100 of the Code (“HIPAA”).
22
(d) Neither
the Company nor any ERISA Affiliate maintains or contributes to, or has
ever
maintained or contributed to, a “pension plan” within the meaning of Section
3(2) of ERISA.
(e) The
Company has never maintained an Employee Benefit Plan that is a severance
plan
or program.
(f)
No
event
has occurred in connection with which the Company or any Employee Benefit
Plan,
directly or indirectly, could be subject to any liability under ERISA,
the Code
or any other Law or governmental order applicable to any Employee Benefit
Plan. Neither the Company nor any ERISA Affiliate has agreed to
indemnify or is required to indemnify any person against liability incurred
under, or for a violation or failure to satisfy the requirements of, any
Law.
(g) Each
Employee Benefit Plan may, by its terms, be amended or terminated at any
time,
and no additional liabilities to the Company or to such plan will arise
on
account of any such termination (including, but not limited to, retrospective
premium adjustments or early cancellation penalties).
(h) There
are
no actions, claims (other than routine claims for benefits), lawsuits or
arbitrations pending or threatened with respect to any Employee Benefit
Plan or
against any fiduciary of any Employee Benefit Plan, and there are no facts
that
could give rise to any such actions, claims, lawsuits or
arbitrations.
(i)
Each
Employee Benefit Plan which is a “welfare plan” within the meaning of Section
3(1) of ERISA and which provides health, disability or death benefits is
fully
insured.
(j)
No
Employee Benefit Plan provides for post-retirement medical, health, life
or
death benefits (through insurance or otherwise) or provides for the continuation
of such benefits or coverage for any participant or any dependent or beneficiary
of any participant after such participant’s retirement or other termination of
employment, except as may be required by COBRA or any other similar
law. There has been no communication to any person providing services
to the Company that that could reasonably be expected to promise or grant
any
such person any retiree health or life insurance or any retiree death benefits,
except as required by COBRA or any other similar law.
(k) All
notices, filings and disclosures required by ERISA and the Code (including
COBRA
notices and the provision of summary plan descriptions) have been timely
made.
(l)
The
Company has not proposed, announced or agreed to create any additional
Employee
Benefit Plans or to amend or modify any Employee Benefit Plan in a manner
that
would (i) cause an increase in benefits under such Employee Benefit Plan,
(ii)
cause the creation of new benefits or (iii) change any employee coverage
that
would cause an increase in the expense of maintaining such Plan.
(m)
The
consummation of the transactions contemplated by this Agreement, either
alone or
in combination with any other event, will not result in (i) any payment
(including,
23
without
limitation, severance, unemployment compensation, bonus payments or otherwise)
becoming due to any current or former director, officer, employee or consultant
of the Company, (ii) any increase in the amount of compensation or benefits
payable in respect of any director, officer, employee or consultant of
the
Company, (iii) any acceleration of the vesting or timing of payment of
any
benefits or compensation payable in respect of any director, officer, employee
or consultant of the Company, or (iv) any “parachute payment” under Section
280G of the Code, whether or not such amount may be considered reasonable
compensation for personal services rendered.
(n) There
are
no pending or threatened investigations by any Governmental Body involving
or
relating to any Employee Benefit Plan or pending claims (except for routine
claims for benefits payable in the normal operation of the Employee Benefit
Plans), suits or proceedings against any Employee Benefit Plan, the Company,
any
Seller, the trustees of any Seller, or any fiduciary or trustee of any
Employee
Benefit Plan, nor, to the Knowledge of Sellers and the Company, are there
any
facts that could give rise to any liability in the event of such investigation,
claim, suit or proceeding.
(o) No
condition exists as a result of which the Company could have any material
liability, whether actual or contingent, including any obligation under
any
Employee Benefit Plan, as a result of or arising out of any misclassification
of
any person performing services for the Company as an independent contractor
or
the employee of a third party rather than as an employee of the
Company.
(p) Section
4.15(p) of the Disclosure Schedule sets forth annual costs for the last
calendar
year associated with the maintenance of each Employee Benefit Plan, including,
without limitation, annual premiums and contributions.
(q) Section
4.15(q) of the Disclosure Schedule sets forth a true, complete and accurate
list
of (i) all agreements with consultants obligating the Company to make annual
cash payments in an amount exceeding $25,000; and (ii) all agreements with
respect to the services of “leased employees” (within the meaning of Section
414(n) or (o) of the Code) whether or not such “leased employees” participate in
any of the Employee Benefit Plans. No individual performs services
for the Company as an employee of a third party, including any “leased
employee.”
(r)
No
Employee Benefit Plan that is not a Non-U.S. Plan covers any non-U.S.
employees.
4.16
Environmental
Matters.
(a) Except
as
set forth in Section 4.16 of the Disclosure Schedule:
(i) the
Company is in material compliance with all applicable Environmental
Laws;
(ii) the
Company possess all Environmental Permits that are required for the lawful
operation of the business and each such Environmental Permit is in
full force
and effect and the Company
is in compliance with such Environmental Permits and
24
no
proceeding is pending or to the Knowledge of Sellers and the Company threatened
and no grounds exist to revoke, suspend,
modify
or limit any such Environmental Permit;
(iii)
neither
any Seller nor the Company has received any oral or written notice with
respect
to the business of, or any property currently or formerly owned or leased
by the
Company
from
any Governmental Body or Person alleging that the Company is in violation
of any
Environmental Law;
(iv) neither
any Seller nor the Company has received any oral or written notice from
any
Governmental Body or Person that it is or may be required to conduct any
Remedial Action
as a result of the operation of its business, or on any property currently
or
formerly owned or leased by the Company;
(v) there
has
been no Release of a Hazardous Material at or from any real property currently
or formerly owned or leased by the Company that would subject the Company
to
liability
under any Environmental Law, nor has any Seller or the Company received
written
notice that it is a potentially responsible party under any Environmental
Law;
and
(vi) the
Company has not managed, handled, generated, manufactured, refined, recycled,
discharged, emitted, buried, processed, produced, reclaimed, stored, treated,
transported, or
disposed of any Hazardous Substance, except in compliance with all Environmental
Laws.
(b) Sellers
have provided Madden with all environmental audits or assessments in the
possession of the Company relating to the business of, or any property
owned or
leased by, the Company.
4.17
Bank
Accounts and Powers of Attorney. Section 4.17 of the Disclosure
Schedule sets forth the name of each bank in which the Company has an account,
lock box or safe deposit box, the number of each such account, lock box
and safe
deposit box, and the names of all Persons authorized to draw thereon or
have
access thereto. Except as set forth in Section 4.17 of the Disclosure
Schedule, no Person holds any power of attorney from the Company.
4.18
Absence
of Certain Changes. Since the date of the Balance Sheet, the
Company has operated its business in the ordinary course and has maintained
its
relationships with customers, vendors, suppliers, employees, agents and
others
in a commercially reasonable manner, and there has not occurred any event,
development or change which, individually or in the aggregate, has had
or could
be reasonably expected to have a Material Adverse Effect. Without limiting
the
generality of the immediately preceding sentence and except as set forth
in
Section 4.18 of the Disclosure Schedule, since the date of the Balance
Sheet,
the Company has not:
(i) amended
or otherwise modified its organizational documents (including, as applicable,
its articles or organization, certificate of formation, operating agreement
or
articles of
association) or altered, through merger, liquidation, reorganization,
restructuring or in any other fashion its corporate structure or
ownership;
25
(ii) issued
or
sold, or authorized for issuance or sale, or granted any options or made
other
agreements, arrangements or understandings of the type referred to in Section
4.2(b)
with
respect to any of its ownership interests or any other of its securities
or
altered any term of any of its outstanding ownership interests (or other
securities) or made any change in its outstanding
ownership interests or other securities or its capitalization, whether
by reason
of a reclassification, recapitalization, stock or interest split or combination,
exchange or readjustment of interests or
shares, dividend
or otherwise;
(iii) mortgaged,
pledged or granted any security interest in any of its assets, except Permitted
Encumbrances and security interests solely in tangible personal property
granted
pursuant to any purchase money agreement, conditional sales contract or
capital
lease under which, solely with respect to conditional sales contracts and
capital leases, there exists an aggregate
future liability not in excess of $25,000 per contract or lease (which
amount
was not more than the purchase price for such personal property and which
security interest does not extend to any other
item or items of personal property);
(iv) declared,
set aside, made or paid any dividend or other distribution to any holder
with
respect to its ownership interests or other securities;
(v) redeemed,
purchased or otherwise acquired, directly or indirectly, any of its ownership
interests or other securities;
(vi) increased
the compensation of any of its non-executive employees, except in the ordinary
course of business and in a commercially reasonable manner, or increased
the
compensation of any of its executive officers;
(vii) adopted
or, except as required by Law, amended, any Employee Benefit Plan;
(viii) extended,
terminated or modified any Contract, permitted any renewal notice period
or
option period to lapse with respect to any Contract or received any written
notice of
termination of any Contract, except for terminations of Contracts upon
their
expiration during such period in accordance with their terms;
(ix) incurred
or assumed any indebtedness for borrowed money or guaranteed any obligation
or
the net worth of any Person, except for endorsements of negotiable instruments
for
collection in the ordinary course of business and in a commercially reasonable
manner;
(x) incurred
any liability, debt or obligation (whether absolute, accrued, contingent
or
otherwise) to or of any Affiliated Person, or made any Affiliate
Loans;
(xi) discharged
or satisfied any Encumbrance other than those then required to be discharged
or
satisfied during such period in accordance with their original
terms;
26
(xii) paid
any
material obligation or liability (absolute, accrued, contingent or otherwise),
whether due or to become due, except for any current liabilities, and the
current portion of
any long term liabilities shown on the Financial Statements or incurred
since
the date of the Balance Sheet in the ordinary course of business and in
a
commercially reasonable manner;
(xiii) sold,
transferred, leased to others or otherwise disposed of any assets having
a fair
market value in excess of $25,000, except sales of inventory in the ordinary
course of
business and dispositions of obsolete assets no longer used or useful in
the
business of the Company, in each case in the ordinary course of business
and in
a commercially reasonable manner;
(xiv) cancelled,
waived or compromised any debt or claim;
(xv) suffered
any damage or destruction to, loss of, or condemnation or eminent domain
proceeding relating to any of its tangible properties or assets (whether
or not
covered by
insurance)
which has had or would reasonably be likely to have a Material Adverse
Effect;
(xvi) lost
the
employment services of any employee whose annual salary exceeded
$25,000;
(xvii) made
any
loan or advance to any Person, other than travel and other similar routine
advances to employees in the ordinary course of business and in a commercially
reasonable
manner;
(xviii)
purchased
or acquired any capital stock or other securities of any other corporation
or
any ownership interest in any other business enterprise or Person;
(xix)
made
any
capital expenditures or capital additions or betterments in amounts which
exceeded $25,000, in the aggregate;
(xx) changed
its method of accounting or its accounting principles or practices, including
any policies or practices with respect to the establishment of reserves
for
work-in-process
and accounts receivable, utilized in the preparation of the Financial
Statements, other than as required by GAAP;
(xxi) instituted
or settled any litigation or any legal, administrative or arbitration action
or
proceeding before any court or Governmental Body relating to it or any
of its
properties or
assets;
(xxii) made
any
settlements or new elections or changed any current elections with respect
to
its Taxes;
(xxiii) entered
into any transaction with any Affiliated Person not otherwise disclosed
in the
Disclosure Schedule;
27
(xxiv) entered
into any agreements, commitments or contracts, except those made in the
ordinary
course of business and in a commercially reasonable manner; or
(xxv) entered
into any agreement or commitment to do any of the foregoing.
4.19
Books
and Records. The books and records of the Company with respect to
the Company, its operations, employees and properties have been maintained
in
the usual, regular and ordinary manner, all entries with respect thereto
have been accurately made, and all transactions involving the Company have
been
accurately accounted for.
4.20
Transactions
with Affiliated Persons.
(a) Except
(i) for employment relationships otherwise disclosed pursuant to this Agreement
between employees and the Company, (ii) for remuneration by the Company
for
services rendered as a director, officer or employee of the Company, or
(iii) as
set forth in Section 4.20(a) of the Disclosure Schedule, (A) the Company
does not, and has not since its inception, in the ordinary course of business
or
otherwise, directly or indirectly, purchased, leased or otherwise acquired
any
property or obtained any services from, or sold, leased or otherwise disposed
of
any property or furnished any services to any Affiliated Person; (B) the
Company does not owe any amount to any Affiliated Person; (C) no Affiliated
Person owes any amount to the Company; and (D) no part of the property
or assets
of any Affiliated Person is used by the Company in the conduct or operation
of
the business of the Company.
(b) Except
as
set forth in Section 4.20(b) of the Disclosure Schedule, the Company has
no
outstanding any Affiliate Loans.
4.21
Absence
of Certain Business Practices. Neither Sellers, the Company, nor
any of their directors or officers, nor to the Knowledge of Sellers and
the
Company, any of the employees or agents of the Company or any of their
respective shareholders, directors, officers, employees or agents, have
directly
or indirectly (a) made any contribution or gift which contribution or gift
is in
violation of any applicable Law, (b) made any bribe, rebate, payoff, influence
payment, kickback or other payment to any Person, private or public, regardless
of form, whether in money, property or services (i) to obtain favorable
treatment in securing business, (ii) to pay for favorable treatment for
business
secured, (iii) to obtain special concessions or for special concessions
already obtained for or in respect of the Company or any Affiliated Person,
or
(iv) in violation of any Law or legal requirement, or (c) established or
maintained any fund or asset of the Company that has not been recorded
in the
books and records of the Company.
4.22
Brokers
and Finders. Except as set forth in Section 4.22 of the
Disclosure Schedule, no broker, finder or investment advisor has been engaged
by
Sellers or the Company in connection with the transactions contemplated
by this
Agreement. Sellers (and not the Company) shall be responsible for and
shall pay all fees, commissions and costs of any such broker, finder or
investment advisor.
28
4.23
Restrictions
on Business Activities. Except as set forth in Section 4.23 of
the Disclosure Schedule, there is no judgment, injunction, order or decree
binding upon the Company or any Seller or, to the Knowledge of Sellers
and the
Company, threatened, that has or could reasonably be expected to have the
effect
of prohibiting or impairing the conduct of the business by the Company
as
currently conducted or any business practice of the Company, including
the
acquisition of property, the sale of products, the provision of services,
the
hiring of employees, and the solicitation of customers, in each case either
individually or in the aggregate.
4.24
Payables. Except
as set forth in Section 4.24 of the Disclosure Schedule, all accounts payable
of
the Company have arisen in the ordinary course of
business. All items which are required by GAAP to be reflected as
payables on the Financial Statements and on the books and records of the
Company
are so reflected and have been recorded in accordance with GAAP and in
a
commercially reasonable manner. There has been no material adverse
change since April 30, 2007 in the amount or delinquency of accounts payable
of
the Company.
4.25
Receivables. Except
as set forth in Section 4.25 of the Disclosure Schedule, all accounts receivable
of the Company have arisen in the ordinary course of business,
represent valid obligations to the Company arising from bona fide transactions,
and are not subject to claims, set-off, or other defenses or
counterclaims. All items which are required by GAAP to be reflected
as receivables on the Financial Statements and on the books and records
of the
Company are so reflected and have been recorded in accordance with GAAP
and in a
commercially reasonable manner.
4.26
Business
Relations. Other than as set forth in Section 4.26 of the
Disclosure Schedule, (i) the Company is not required to provide any bonding
or
any other financial security arrangements in connection with any transaction
with any customer or supplier, (ii) since April 30, 2007, neither any Seller
nor
the Company has received any notice of any disruption (including delayed
deliveries or allocations by suppliers) in the availability of any materials
or
products used in the Company’s business, nor do any of them have reason to
believe that any such disruption will occur in connection with the business
of
the Company, other than as set forth in Section 4.26 of the Disclosure
Schedule. Other than as set forth in Section 4.26 of the Disclosure
Schedule, there are no sole source suppliers of goods, equipment or services
used by the Company (other than public utilities) with respect to which
practical alternative sources of supply are unavailable.
4.27
Disclosure. No
representation or warranty by Sellers contained in this Agreement or any
Transaction Document or any statement or certificate furnished by Sellers
to
Madden or its representatives in connection herewith or therewith or pursuant
hereto or thereto contains any untrue statement of a material fact, or
omits to
state any material fact required to make the statements herein or therein
contained not misleading. There is no fact (other than matters of a
general economic or political nature which do not affect the Company’s business
uniquely) known to Sellers which might reasonably be expected to have a
Material
Adverse Effect.
29
ARTICLE
V
Representations
and Warranties of Madden
Madden
represents and warrants to Sellers as follows:
5.1 Organization
and Good Standing. Madden is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware
and has full corporate power and authority to enter into and carry out
its
obligations under this Agreement.
5.2 Authorization. The
execution and delivery by Madden of this Agreement and the other Transaction
Documents to which Madden is a party have been duly authorized by all necessary
corporate action required on the part of Madden. This Agreement and
the other Transaction Documents to which Madden is a party have been duly
executed and delivered by Madden and, assuming due authorization, execution
and
delivery by Sellers and/or the Company, as applicable, constitute legal,
valid
and binding obligations of Madden, enforceable against Madden in accordance
with
their respective terms, except as such enforceability may be limited by
applicable bankruptcy, insolvency, moratorium or other laws affecting the
rights
of creditors generally and by general principles of equity.
5.3 No
Conflicts; Consents. Neither the execution and delivery by Madden
of this Agreement nor any of the Transaction Documents to which Madden
is a
party nor the consummation by Madden of the transactions contemplated hereby
or
thereby will (i) conflict with or violate the charter or by-laws of Madden,
or (ii) conflict with, violate, result in the breach of any term of,
constitute a default under or require the consent or approval of or any
notice
to or filing with any Person under, any note, mortgage, deed of trust or
other
agreement or instrument to which Madden is a party or by which Madden is
bound,
or any Law, decree, writ or injunction of any Governmental Body having
jurisdiction over Madden, except with respect to clause (ii) where such
conflict, violation, breach or default, or the failure to obtain such consent
or
approval, give such notice or make such filing, would not materially adversely
impair the ability of Madden to consummate the transactions contemplated
hereby.
5.4 Litigation. No
lawsuit, governmental investigation or legal, administrative, or arbitration
action or proceeding is pending or, to the Knowledge of Madden, threatened
against Madden, or any director, officer or employee of Madden in his or
her
capacity as such, which questions the validity of this Agreement or seeks
to
prohibit, enjoin or otherwise challenge the consummation of the transactions
contemplated hereby.
5.5 Brokers
and Finders. Except as set forth in Section 5.5 of the Madden
Disclosure Schedule, no broker, finder or financial advisor has been engaged
by
Madden in connection with the transactions contemplated by this
Agreement. Madden shall be responsible for and shall pay all fees,
commissions and costs of any such broker, finder or financial
advisor.
5.6 Investment
Intent. Madden is acquiring all of the Company Interests for its
own account and for investment purposes and not with a view to the sale
or other
distribution of any of the Company Interests.
30
5.7 Sufficient
Funds. At the Closing, Madden will have all funds necessary and
sufficient to enable Madden to perform its obligations under this Agreement
and
to consummate the transactions contemplated hereby.
ARTICLE
VI
Covenants
of Sellers
Sellers
hereby covenant and agree as follows:
6.1 Ordinary
Course. From the date hereof until the Closing, other than as
contemplated by this Agreement or as set forth in Section 6.1 of the Disclosure
Schedule, Sellers will (a) cause the Company to (i) maintain its
existence in good standing, (ii) maintain in effect all of its presently
existing insurance coverage (or substantially equivalent insurance coverage),
preserve its business organization substantially intact, keep the services
of
its present principal employees and preserve its present business
relationships with its material suppliers and customers,
(iii) maintain the lines of business of the Company, and (iv) in all
respects conduct its business in the usual and ordinary course and in a
commercially reasonable manner, without a material change in current operational
policies, and (b) permit Madden, its accountants, its legal counsel and
its
other representatives reasonable access to the management, accountants,
legal
counsel, minute books and stock or interest transfer records, other books
and
records, contracts, agreements, properties and operations of the Company
at all
reasonable times upon reasonable notice, subject, in each case to the
restrictions set forth in Section 6.2.
6.2 Conduct
of Business. From the date hereof until the Closing, other than
as contemplated by this Agreement or as set forth in Section 6.2 of the
Disclosure Schedule, Sellers will cause the Company not to do any of the
following without the prior written consent of Madden (either individually
or in
the aggregate):
(i) amend
or
otherwise modify its organizational documents (including, as applicable,
articles of organization, certificate of formation, operating agreement
or
articles of association)
or alter, through merger, liquidation,
reorganization, restructuring or in any other fashion, its structure or
ownership;
(ii) other
than pursuant to Section 2.1, issue or sell, or authorize for issuance
or sale,
or grant any options or make other agreements, arrangements or understandings
of
the type
referred to in Section 4.2(b) with respect to any of its ownership interests
or
any other of its securities, or alter any term of any of its outstanding
ownership interests (or other securities) or make any
change in its outstanding ownership interests or other securities or its
capitalization, whether by reason of a reclassification, recapitalization,
stock
or interest split or combination, exchange or
readjustment of interests or shares, dividend or otherwise;
(iii) mortgage,
pledge or grant any security interest in any of its assets, except (A)
Permitted
Encumbrances and (B) security interests solely in tangible personal property
granted
pursuant to any purchase money agreement, conditional sales contract or
capital
lease under which, solely with respect to conditional sales contracts and
capital
31
leases, there exists an aggregate future
liability not in excess of $25,000 per contract or lease (which amount
is not
more than the purchase price for such personal property and which security
interest
does not extend
to any other item or
items
of personal property);
(iv) declare,
set aside, make or pay any dividend or other distribution to any holder
with
respect to its ownership interests or other securities;
(v) redeem,
purchase or otherwise acquire, directly or indirectly, any of its ownership
interests or other securities;
(vi) increase
the compensation of any of its non-executive employees, except in the ordinary
course of business and in a commercially reasonable manner, or increase
the
compensation of any of its executive officers;
(vii) adopt
or,
except as otherwise required by Law, amend, any Employee Benefit Plan or
enter
into any collective bargaining agreement;
(viii) extend,
terminate or modify any Contract or permit any renewal notice period or
option
period to lapse with respect to any Contract, except for terminations of
Contracts upon their
expiration during such period in accordance with their terms;
(ix) incur
or
assume any indebtedness for borrowed money or guarantee any obligation
or the
net worth of any Person, except for endorsements of negotiable instruments
for
collection in the ordinary course of business;
(x) incur
any
liability, debt or obligation (whether absolute, accrued, contingent or
otherwise) to or of any Affiliated Person, or make any Affiliate
Loans;
(xi) discharge
or satisfy any Encumbrance other than those which are required to be discharged
or satisfied during such period in accordance with their original
terms;
(xii) pay
any
material obligation or liability (absolute, accrued, contingent or otherwise),
whether due or to become due, except for any current liabilities, and the
current portion of any
long term liabilities shown on the Financial Statements or incurred since
the
date of the Balance Sheet in the ordinary course of business and in a
commercially reasonable manner;
(xiii) sell,
transfer, lease to others or otherwise dispose of any of its properties
or
assets having a fair market value in excess of $25,000, except sales of
inventory and dispositions of
obsolete assets no longer used
or useful in its business, in each case in the ordinary course of business
and
in a commercially reasonable manner;
(xiv) cancel,
waive or compromise any debt or claim;
32
(xv) make
any
loan or advance to any Person, other than travel and other similar routine
advances to employees in the ordinary course of business and in a commercially
reasonable
manner;
(xvi) purchase
or acquire any capital stock or other securities of any other corporation
or any
ownership interest in any other business enterprise or Person;
(xvii) make
any
capital expenditures or capital additions or betterments in amounts which
exceed
$25,000 in the aggregate;
(xviii) change
its method of accounting or its accounting principles or practices, including
any policies or practices with respect to the establishment of reserves
for
work-in-process,
inventory and accounts receivable, utilized in the preparation of the Financial
Statements, other than as required by GAAP;
(xix) institute
or settle any litigation or any legal, administrative or arbitration action
or
proceeding before any court or Governmental Body relating to it or any
of its
properties or
assets;
(xx) make
any
settlements or new elections, or change any current elections, with respect
to
its Taxes;
(xxi) (a)
enter
into any agreements, commitments or contracts for any Real Property leases,
(b)
terminate or close any facility or operation, or (c) surrender or diminish
any
leasehold
interest of the Company in any Real Property Interest;
(xxii) enter
into any transaction with any Affiliated Person;
(xxiii) enter
into any other agreements, commitments or contracts, except those made
in the
ordinary course of business and in a commercially reasonable manner;
or
(xxiv) enter
into any agreement or commitment to do any of the foregoing.
6.3 Certain
Filings. Sellers agree to make or cause to be made all filings
with Governmental Bodies that are required to be made by Sellers or by the
Company to carry out the transactions contemplated by this
Agreement. Sellers agree to assist, and to cause the Company to
assist Madden in making all such filings, applications and notices as may
be
necessary or desirable in order to obtain the authorization, approval or
consent
of any Governmental Body which may be reasonably required or which Madden
may
reasonably request in connection with the consummation of the transactions
contemplated hereby.
6.4 Consents
and Approvals. Sellers agree to use their good faith commercially
reasonable efforts to obtain, or to cause the Company to obtain, as promptly
as
practicable, but not later than the Closing in any event, all consents,
authorizations, approvals and waivers required in connection with the
consummation of the transactions contemplated by this Agreement.
33
6.5 Efforts
to Satisfy Conditions. Sellers agree to use their good faith
commercially reasonable efforts to satisfy the conditions set forth in
Article
IX.
6.6 Further
Assurances. Sellers agree to execute and deliver, and to cause
the Company to execute and deliver, such additional documents and instruments,
and to perform such additional acts as Madden may reasonably request to
effectuate or carry out and perform all the terms, provisions and conditions
of
this Agreement and the other Transaction Documents and the transactions
contemplated hereby and thereby and to effectuate the intent and purposes
hereof.
6.7 Notification
of Certain Matters. Promptly after obtaining knowledge thereof,
Sellers shall notify Madden in writing of (a) the occurrence or
non-occurrence of any fact or event which causes or would be reasonably
likely
to cause (i) any representation or warranty of Sellers contained in this
Agreement to be untrue or inaccurate in any material respect at any time
from
the date hereof to the Closing Date or (ii) any covenant, condition or
agreement
of Sellers in this Agreement not to be complied with or satisfied in any
material respect, and (b) any failure of Sellers to comply with or satisfy
any
covenant, condition or agreement to be complied with or satisfied by Sellers
hereunder in any material respect; provided, however, that no such
notification shall affect the representations or warranties of Sellers,
or the
right of Madden to rely thereon, or the conditions to the obligations of
Madden
except as provided in the following sentence. If Sellers notify
Madden in writing of any matter referred to in the preceding clause (a)(i)
and
Madden nevertheless consummates the transactions contemplated hereby, Madden
shall have no claim against Sellers for a breach of such representation
or
warranty based on the information contained in such
notification. Sellers shall give prompt notice in writing to Madden
of any notice or other communication from any third party alleging that
the
consent of such third party is or may be required to be obtained by Sellers
or
the Company in connection with the transactions contemplated by this
Agreement.
ARTICLE
VII
Covenants
of Madden
Madden
hereby covenants and agrees as follows:
7.1 Certain
Filings. Madden agrees to make or cause to be made all filings
with Governmental Bodies that are required to be made by Madden or its
affiliates to carry out the transactions contemplated by this
Agreement. Madden agrees to assist Sellers in making all such
filings, applications and notices as may be necessary or desirable in order
to
obtain the authorization, approval or consent of any Governmental Body
which may
be reasonably required or which Sellers may reasonably request in connection
with the consummation of the transactions contemplated hereby.
7.2 Efforts
to Satisfy Conditions. Madden agrees to use its good faith
commercially reasonable efforts to satisfy the conditions set forth in
Article X
hereof that are within its control.
34
7.3 Further
Assurances. Madden agrees to execute and deliver such additional
documents and instruments, and to perform such additional acts, as Sellers
may
reasonably request to effectuate or carry out and perform all the terms,
provisions and conditions of this Agreement and the other Transaction Documents
and the transactions contemplated hereby and thereby to effectuate the
intent
and purposes hereof.
7.4 Notification
of Certain Matters. Promptly after obtaining knowledge thereof,
Madden shall notify Sellers of (a) the occurrence or non-occurrence of any
fact or event which causes or would be reasonably likely to cause (i) any
representation or warranty of Madden contained in this Agreement to be
untrue or
inaccurate in any material respect at any time from the date hereof to
the
Closing Date or (ii) any covenant, condition or agreement of Madden in this
Agreement not to be complied with or satisfied in any material respect
and
(b) any failure of Madden to comply with or satisfy any covenant, condition
or agreement to be complied with or satisfied by it hereunder in any material
respect; provided, however, that no such notification shall affect
the representations or warranties of Madden or Sellers’ right to rely thereon,
or the conditions to the obligations of Sellers except as provided in the
following sentence. If Madden notifies Sellers in writing of any
matter referred to in the preceding clause (a)(i) and Sellers nevertheless
consummate the transactions contemplated hereby, Sellers shall have no
claim
against Madden for a breach of such representation or warranty based on
the
information contained in such notification. Madden shall give prompt
notice in writing to Sellers of any notice or other communication from
any third
party alleging that the consent of such third party is or may be required
to be
obtained by Madden in connection with the transactions contemplated by
this
Agreement.
ARTICLE
VIII
Certain
Other Agreements
8.1 Certain
Tax Matters. The parties hereby further covenant and agree as
follows:
(a) Tax
Returns and Cooperation.
(i) Sellers
shall, or shall use good faith commercially reasonable efforts to cause
the
Company to, prepare and timely file, in a commercially reasonable manner,
(x)
all Returns and
amendments thereto required to be filed by or for the Company for all taxable
periods ending on or before the Closing Date. Madden will be given a
reasonable opportunity to review and comment on
all such Returns required to be filed after the date hereof.
(ii) Sellers
shall be liable for all Taxes of the Company for all Pre-Closing Periods
(other
than to the extent that the liability for those Taxes is provided for on
the
Final Closing Balance
Sheet) and all Taxes of Sellers for any taxable year or taxable
period. Notwithstanding the foregoing, in the case of any taxable
period that includes (but does not begin or end on) the Closing Date (a
“Straddle Period”), the portion of the Taxes of the Company for such Straddle
Period attributable to the period prior to close of the Closing Date shall
be
treated as Taxes of a Pre-Closing Period for
35
purposes of this Section 8.1(a)(ii). The amount of Straddle Period
Taxes of the Company that are treated as Taxes of a Pre-Closing Period
shall be
computed (x) in the case of income, franchise, sales,
or similar Taxes, pursuant to an interim closing of the books method by
assuming
that the Company had a taxable year or period which ended on the Closing
Date,
except that exemptions, allowances
or deductions that are calculated on an annual basis, such as the deduction
for
depreciation, shall be apportioned on a per-diem basis and (y) in the case
of
real property Taxes, personal property taxes
and similar ad valorem obligations by prorating such Taxes owed for the
Straddle
Period on a per-diem basis.
(iii) Except
as
provided above with respect to Straddle Periods, the Company shall be liable
for
any and all Taxes imposed on them relating to or apportioned to any taxable
year
or
portion thereof beginning on or after the Closing Date and ending after
the
Closing Date.
(iv) Madden
and Sellers shall each cooperate fully, as and to the extent reasonably
requested by the other party, in connection with the filing of Returns
pursuant
to this Section 8.1
(a) and any audit, litigation or other proceeding with respect to
Taxes. Such cooperation shall include the retention and (upon the
other party’s request) the provision of records and information
which
are reasonably relevant to any such audit, litigation or other proceeding
and
making employees available on a mutually convenient basis to provide additional
information and explanation of any
material provided hereunder. Sellers (before the Closing) and Madden
(after the Closing) shall each cause the Company (A) to retain all books
and
records with respect to Tax matters pertinent to them
relating to any taxable period beginning before the Closing Date until
the
expiration of the statutory period of limitations of the respective taxable
periods, and to abide by all record retention
agreements entered into with any taxing authority, and (B) to give the
other
party reasonable written notice prior to transferring, destroying or discarding
any such books and records and, if the other
party so requests, Sellers or Madden, as the case may be, shall allow the
other
party to take possession of such books and records.
(v) Madden
and Sellers further agree, upon request, to use good faith commercially
reasonable efforts to obtain any certificate or other document from any
Governmental Body or any other Person as may be necessary to mitigate,
reduce or
eliminate any Tax that could be imposed (including, but not limited to,
with
respect to the transactions contemplated hereby); provided that such certificate
or other document does not increase the Tax of Madden or Sellers.
8.2 Company
Payments. Simultaneously with the payment of the Purchase Price,
Madden shall make a capital contribution to the Company of one million
nine
hundred thousand dollars ($1,900,000), which the Sellers have directed
the
Company to pay as set forth on Schedule B attached hereto.
8.3 Matters
Relating to Sellers other than ▇▇▇▇▇▇▇▇▇.
(a) Notwithstanding
anything herein to the contrary, Madden hereby acknowledges that, other
than as
a result of a breach by a Seller of such Seller’s representations
36
in
the
third sentence of Section 4.2(a) of this Agreement, only ▇▇▇▇▇▇▇▇▇ (and
no other
Seller) shall have any liability to Madden of any kind or nature with respect
to
this Agreement or the Transaction Documents. Madden hereby
acknowledges that it has not relied on any representation, warranty, statement
or communication or, lack thereof, from any of the Sellers other than ▇▇▇▇▇▇▇▇▇,
except with respect to each Seller’s representations in third sentence of
Section 4.2(a) of this Agreement. Madden acknowledges that it has
performed its own due diligence with respect to its acquisition of the
Company. Except as set forth in this Section 8.3(a) Madden hereby
releases each and all of the Sellers other than ▇▇▇▇▇▇▇▇▇ from any and
all
liability or obligation of any kind or nature whatsoever from now until
the end
of time with respect to this Agreement or the Transaction Documents or
any other
theory of law by which a Seller could have any liability or obligation
to
Madden.
(b) In
the
event that the personal guarantee of ▇▇▇▇▇▇ under that
certain Equipment Lease Agreement, dated April 21, 2006, between the
Company and General Electric Capital Corporation shall not be terminated
as of
the Closing, Madden shall indemnify ▇▇▇▇▇▇ for any amount ▇▇▇▇▇▇ pays with
respect to such guarantee.
ARTICLE
IX
Conditions
Precedent to Obligations of Madden
The
obligations of Madden under Article II and Article III shall be subject
to the
satisfaction at or prior to the Closing of the following conditions, any
one or
more of which may be waived by Madden:
9.1 Representations
and Warranties. Each and every representation and warranty of
Sellers contained in this Agreement, and any schedule or any certificate
delivered pursuant hereto, shall have been true, complete and accurate
when made
and shall be repeated at the Closing and (a) if qualified by materiality
(or any
variation of such term), shall be true, complete and accurate as of the
Closing
Date, except that any such representation or warranty that is made as of
a
specified date shall only be required to be true, complete and accurate
as of
that date, and (b) if not qualified by materiality (or any variation of
such
term), shall be true, complete and accurate in all material respects as
of the
Closing Date, except that any such representation or warranty that is made
as of
a specified date shall only be required to be true, complete and accurate
in all
material respects as of that date.
9.2 Compliance
with Covenants. Sellers shall have performed and observed all
covenants and agreements to be performed or observed by Sellers under this
Agreement at or before the Closing.
9.3 Lack
of Adverse Change. Since the date of the Balance Sheet, there has
not occurred any circumstance or event which, individually or in the aggregate,
has had or is reasonably likely to result in a Material Adverse Effect,
including a material decrease in the revenue of the Company.
37
9.4 Update
Certificate. Madden shall have received a favorable certificate,
dated the Closing Date, signed by ▇▇▇▇▇▇▇▇▇ as to the matters set
forth in Sections 9.1, 9.2 and 9.3.
9.5 Regulatory
Approvals. All approvals and consents of Governmental Bodies
required to carry out the transactions contemplated by this Agreement shall
have
been obtained.
9.6 Consents
of Third Parties. All consents from third parties to Contracts or
otherwise that are required to be listed in Section 4.4 of the Disclosure
Schedule in order to avoid a misrepresentation under Section 4.4 shall
have been
obtained in writing in a form reasonably satisfactory to Madden.
9.7 No
Violation of Orders. No preliminary or permanent injunction or
other order issued by any Governmental Body, nor any statute, rule, regulation,
decree or executive order promulgated or enacted by any Governmental Body,
that
(a) declares this Agreement invalid or unenforceable in any material respect,
(b) prevents or significantly delays the consummation of the transactions
contemplated hereby, or (c) imposes or will impose restrictions on Madden’s
right or ability to operate the business of the Company shall be in effect;
and
no action or proceeding before any Governmental Body shall have been instituted
or, to the Knowledge of Sellers or the Company, threatened by any Governmental
Body, or by any other Person, which (i) seeks to prevent or delay the
consummation of the transactions contemplated by this Agreement or (ii)
challenges the validity or enforceability of this Agreement, (iii) seeks
to
impose restrictions on Madden’s right or ability to operate the business of the
Company, or (iv) seeks to require Madden to dispose of any of its businesses,
operations, properties or assets or any claim relating to the equity of
the
Company.
9.8 Employment
Agreement. Madden and ▇▇▇▇▇▇▇▇▇ shall have entered into the
Employment Agreement, and the Employment Agreement shall be in full force
and
effect with no notice that ▇▇▇▇▇▇▇▇▇ does not intend to honor the Employment
Agreement.
9.9 Transaction
Documents. The Company and Sellers shall have entered into each
of the other Transaction Documents to which they are a party.
9.10
Other
Closing Matters. Madden shall have received such other supporting
information in confirmation of the representations, warranties, covenants
and
agreements of Sellers and the satisfaction of the conditions to Madden’s
obligation to close hereunder as Madden or its counsel may reasonably
request.
ARTICLE
X
Conditions
Precedent to Obligations of Sellers
The
obligations of Sellers under Article II and Article III shall be subject
to the
satisfaction at or prior to the Closing of the following conditions, any
one or
more of which may be waived by Sellers:
38
10.1
Representations
and Warranties. Each and every representation and warranty of
Madden contained in this Agreement, and any schedule or any certificate
delivered pursuant hereto, shall have been true, complete and accurate
when made
and shall be repeated at the Closing and (a) if qualified by materiality
(or any
variation of such term), shall be true, complete and accurate as of the
Closing
Date, except that any such representation or warranty that is made as of
a
specified date shall only be required to be true, complete and accurate
as of
that date, and (b) if not qualified by materiality (or any variation of
such
term), shall be true, complete and accurate in all material respects as
of the
Closing Date, except that any such representation or warranty that is made
as of
a specified date shall only be required to be true, complete and accurate
in all
material respects as of that date.
10.2
Compliance
with Covenants. Madden shall have performed and observed all
covenants and agreements to be performed or observed by it under this Agreement
at or before the Closing.
10.3
Update
Certificate. Sellers shall have received a favorable certificate,
dated the Closing Date, signed by Madden as to the matters set forth in
Sections
10.1 and 10.2.
10.4
Regulatory
Approvals. All approvals and consents of Governmental Bodies
required to carry out the transactions contemplated by this Agreement shall
have
been obtained.
10.5
No
Violation of Orders. No preliminary or permanent injunction or
other order issued by any Governmental Body, nor any statute, rule, regulation,
decree or executive order promulgated or enacted by any Governmental Body,
that
declares this Agreement invalid or unenforceable in any material respect
or that
prevents or significantly delays the consummation of the transactions
contemplated hereby shall be in effect.
10.6
Transaction
Documents. Madden shall have entered into each of the other
Transaction Documents to which it is a party.
10.7
Other
Closing Matters. Sellers shall have received such other
supporting information in confirmation of the representations, warranties,
covenants and agreements of Madden and the satisfaction of the conditions
to
Sellers’ obligations to close hereunder as the Seller Representative or its
counsel may reasonably request.
ARTICLE
XI
Termination
of Agreement
11.1
Conditions
for Termination. This Agreement may be terminated:
(a) at
any
time prior to the Closing by mutual consent of Madden and Sellers;
(b) by
Madden
if the Closing shall not have been consummated by seventy-five (75) days
after
the date hereof, unless such failure of consummation shall be due to a
material
breach of any representation or warranty, or the nonfulfillment in any
material
respect,
39
(a) and
failure to cure such nonfulfillment as set forth in clause (d) below, of
any
covenant or agreement contained herein on the part of Madden; or
(b) by
Sellers if the Closing shall not have been consummated by seventy-five
(75) days
after the date hereof, unless such failure of consummation shall be due
to a
material breach of any representation or warranty, or the nonfulfillment
in any
material respect, and failure to cure such nonfulfillment as set forth
in clause
(d) below, of any covenant or agreement contained herein on the part of
Sellers;
or
(c) by
Madden, on the one hand, or Sellers, on the other hand, if Madden or any
Seller
fails to cure a material breach of any provision of this Agreement within
fifteen (15) days after its receipt of written notice of such breach from
the
non-breaching party, provided, however, that a party shall not be entitled
to
terminate this Agreement pursuant to this Section 11.1(d) if it is also
in
material breach of any provision of this Agreement.
1.2 Effect
of Termination.
Upon
the termination of this Agreement for any reason, Madden and Sellers shall
have
no liability or further obligations arising out of this Agreement, except
for
any liability resulting from any intentional breach of a representation,
warranty or covenant contained in this Agreement prior to termination.
Furthermore, the provisions of Sections 4.23, 5.5, this Section 11.2 and
Articles XII and XIII shall survive any termination of this
Agreement.
ARTICLE
II
Indemnification
12.1
Survival
of Representations, Warranties and Covenants.
The
parties to this Agreement hereby agree that the remedy for any breach of
a
representation or warranty, covenant or agreement contained in this Agreement
shall be the indemnification provisions set out in this Article XII;
provided,
however,
that
nothing in this Section 12.1 shall prohibit any party from seeking specific
performance or injunctive relief against any other party in respect of
a breach
by such other party of any covenant hereunder; and provided further,
that
nothing in this Section 12.1 shall limit any party’s remedies for a breach of a
covenant occurring prior to the Closing.
(a) The
representations and warranties of the parties contained in this Agreement,
any
schedule or any certificate delivered pursuant hereto, shall survive the
Closing
and shall continue in full force and effect (a) in the case of the
representations and warranties of Sellers and Madden contained in Sections
4.6,
4.15, 4.16, 4.23 and 5.5 until thirty (30) days following the expiration of
the applicable statutory period of limitations with respect to the matter
to
which the claim relates, as such limitation period may be extended from
time to
time, (b) in the case of the representations and warranties of Sellers
and
Madden contained in Sections 4.1, 4.2, 4.3, 4.20, 5.1 and 5.2, indefinitely,
and
(c) in the case of all other representations and warranties of the parties
contained in this Agreement, and in any schedule or any certificate delivered
pursuant hereto, until twenty-four (24) months after the Closing Date.
Each
party hereto shall be entitled to rely on any such representation or warranty
regardless of any independent knowledge of such party or any inquiry or
investigation made by or on behalf of
40
such
party. Notwithstanding the foregoing, any representation or warranty in
respect
of which indemnity may be sought hereunder shall survive the time at which
it
would otherwise terminate pursuant to this Section 12.1 if notice of the
breach
thereof shall have been given to the party against whom such indemnity
may be
sought prior to the expiration of the applicable survival period.
(b) The
parties’ covenants and agreements under this Agreement shall survive the Closing
indefinitely unless a shorter period of performance is specified with respect
to
such covenant or agreement.
12.2
Indemnification
by ▇▇▇▇▇▇▇▇▇.
(a) Subject
to Sections 12.2(b) and 12.7, ▇▇▇▇▇▇▇▇▇ shall indemnify and hold harmless
Madden, its affiliates and each of their respective stockholders, directors,
officers, employees, agents and representatives (other than ▇▇▇▇▇▇▇▇▇),
and the
successors and assigns of each of the foregoing (collectively, the “Madden
Indemnified Parties”) from and against any Loss incurred or suffered by such
Person as a result of or arising from, without duplication:
(i) a
breach
by any Seller of any representation or warranty made by Sellers in this
Agreement or any schedule or certificate delivered pursuant hereto
or
thereto;
and
(ii) a
failure
by any Seller to perform or comply with any covenant or agreement on the
part of
Sellers contained herein.
Any
amount paid pursuant to this Section 12.2(a) shall be paid to Madden or,
at
Madden’s election, to the Company and shall be the amount required to put
Madden, the Company, as the case may be, in the position it or they would
have
been in had such representation, warranty, covenant or agreement not been
breached.
(b) Notwithstanding
Section 12.2(a):
(i) ▇▇▇▇▇▇▇▇▇
shall not have any obligation to indemnify the Madden Indemnified Parties
from
and against any Loss under clause (i) of Section 12.2(a) until
the Madden Indemnified Parties have suffered aggregate Losses collectively
hereunder, in excess of two hundred
thousand dollars ($200,000); provided that such
threshold
shall not apply to any Loss as a result of, arising from or in connection
with a
breach by any Seller of a representation or warranty contained in Section
4.1,
Section 4.2,
Section 4.3, Section 4.6, Section 4.20 or Section 4.23 herein; and
(ii) ▇▇▇▇▇▇▇▇▇
shall not have any obligation to indemnify the Madden Indemnified Parties
from
and against any Loss under clause (i) of Section 12.2(a) to the
extent the Madden Indemnified Parties have suffered aggregate Losses
collectively hereunder, in excess of five million dollars ($5,000,000);
provided that such
aggregate limit
shall not apply to any Loss as a result of, arising from or in connection
with a
breach by any Seller of a representation or warranty contained in Section
4.1,
Section 4.2,
Section 4.3, Section 4.6, Section 4.20 or Section 4.23 herein.
41
(c) Notwithstanding
anything to the contrary contained in Section 12.2(b) or anywhere else
in this
Agreement, ▇▇▇▇▇▇▇▇▇ shall indemnify and hold harmless the Madden Indemnified
Parties, without limitation, from and against any and all Losses incurred
or
suffered by such Person after the Closing Date as a result of or arising
from
any fraudulent act or willful or intentional misconduct by the Company
prior to
the Closing Date, or by any Seller.
(d) Indemnity
as to Preschoolians.
▇▇▇▇▇▇▇▇▇ hereby agrees to indefinitely indemnify the Madden Indemnified
Parties
for any and all Losses incurred by any of them in connection with, relating
to
or arising from the so called “Preschoolians” business.
12.3
Indemnification
by Madden.
(a) Madden
shall indemnify and hold harmless Sellers and each of Sellers’ agents and
representatives, and the successors and assigns of each of the foregoing
(the
“Seller Indemnified Parties”), from and against any Loss incurred or suffered by
such Person as a result of or arising from:
(i) a
breach
by Madden of any representation or warranty made by Madden in this Agreement
or
in any schedule or certificate delivered pursuant hereto or
thereto; and
(ii) a
failure
by Madden to perform or comply with any covenant or agreement on the part
of
Madden contained herein;
Any
amount paid pursuant to this Section 12.3(a) shall be the amount required
to put
Sellers in the position Sellers would have been in had such representation,
warranty, covenant or agreement not been breached.
(b) Notwithstanding
anything to the contrary contained in this Agreement, Madden shall indemnify
and
hold harmless the Seller Indemnified Parties from and against any Loss
incurred
or suffered by Sellers after the Closing Date as a result of or arising
from any
fraudulent acts or willful misconduct by Madden. The Seller Indemnified
Parties
shall not take any action the purpose or intent of which is to prejudice
the
defense of any claim subject to indemnification hereunder or to induce
a third
party to assert a claim subject to indemnification hereunder.
12.4
Assumption
of Defense.
An
indemnified party shall promptly give notice to each indemnifying party
after
obtaining knowledge of any matter as to which recovery may be sought against
such indemnifying party because of the indemnity set forth above, and,
if such
indemnity shall arise from the claim of a third party, shall permit such
indemnifying party to assume the defense of any such claim or any proceeding
resulting from such claim; provided,
however,
that
failure to give any such notice promptly shall not affect the indemnification
provided under this Article XII, except to the extent such indemnifying
party
shall have been actually and materially prejudiced as a result of such
failure.
Notwithstanding the foregoing, an indemnifying party may not assume the
defense
of any such third-party claim if it does not demonstrate to the reasonable
satisfaction of the indemnified party that it has adequate financial resources
to defend such claim and pay any and all Losses that may result therefrom,
or if
the
42
claim
(i)
is reasonably likely to result in imprisonment of the indemnified party,
(ii) is
reasonably likely to result in an equitable remedy which would materially
impair
the indemnified party’s ability to exercise its rights under this Agreement, or
impair Madden’s right or ability to operate the Company, or (iii) names both the
indemnifying party and the indemnified party (including impleaded parties)
and
representation of both parties by the same counsel would create a conflict.
If
an indemnifying party assumes the defense of such third party claim, such
indemnifying party shall agree prior thereto, in writing, that it is liable
under this Article XII to indemnify the indemnified party in accordance
with the
terms contained herein in respect of such claim, shall conduct such defense
diligently, shall have full and complete control over the conduct of such
proceeding on behalf of the indemnified party and shall, subject to the
provisions of this Section 12.4, have the right to decide all matters of
procedure, strategy, substance and settlement relating to such proceeding;
provided,
however,
that
any counsel chosen by such indemnifying party to conduct such defense shall
be
reasonably satisfactory to the indemnified party, and the indemnifying
party
will not without the written consent of the indemnified party consent to
the
entry of any judgment or enter into any settlement with respect to the
matter
which does not include a provision whereby the plaintiff or the claimant
in the
matter releases the indemnified party from all liability with respect thereto,
or which may be reasonably expected to have an adverse effect on the indemnified
party and does not provide that the indemnified party is without fault,
or, with
respect to an indemnification relating to Taxes, if such settlement could
affect
the Taxes of the Company or the Madden Indemnified Parties for a period
or
portion thereof beginning on or after the Closing Date. The indemnified
party
may participate in such proceeding and retain separate co-counsel at its
sole
cost and expense. Failure by an indemnifying party to notify the indemnified
party of its election to defend any such claim or proceeding by a third
party
within thirty (30) days after notice thereof shall be deemed a waiver by
such
indemnifying party of its right to defend such claim or action.
12.5
Non-Assumption
of Defense.
If no
indemnifying party is permitted or elects to assume the defense of any
such
claim by a third party or proceeding resulting therefrom, the indemnified
party
shall diligently defend against such claim or litigation in such manner
as it
may deem appropriate and, in such event, the indemnifying party or parties
shall
promptly reimburse the indemnified party for all reasonable out-of-pocket
costs
and expenses, legal or otherwise, incurred by the indemnified party and
its
affiliates in connection with the defense against such claim or proceeding,
as
such costs and expenses are incurred. Any counsel chosen by such indemnified
party to conduct such defense must be reasonably satisfactory to the
indemnifying party or parties, and only one counsel shall be retained to
represent all indemnified parties in an action (except that if litigation
is
pending in more than one jurisdiction with respect to an action, one such
counsel may be retained in each jurisdiction in which such litigation is
pending). The indemnified party shall not settle or compromise any such
claim
without the written consent of the indemnifying party, which consent shall
not
be unreasonably withheld.
12.6
Indemnified
Party’s Cooperation as to Proceedings.
The
indemnified party will cooperate in all reasonable respects with any
indemnifying party in the conduct of any proceeding as to which such
indemnifying party assumes the defense. For the cooperation of the indemnified
party pursuant to this Section 12.6, the indemnifying party or parties
shall
promptly reimburse the indemnified party for all reasonable out-of-pocket
costs
and expenses, legal or otherwise, incurred by the indemnified party or
its
affiliates in connection therewith, as such costs and expenses are
incurred.
43
12.7
Payments
Treated as Purchase Price Adjustment.
To the
extent permitted by applicable law, any payment by Madden, the Company
or
Sellers under this Article XII will be treated for Tax purposes as an adjustment
to the consideration hereunder for the Company Interests.
ARTICLE
III
Miscellaneous
13.1 Expenses.
Except as otherwise explicitly set forth herein, whether or not the transactions
contemplated hereby are consummated, each party hereto shall pay all costs
and
expenses incurred by such party in respect of the transactions contemplated
hereby. All expenses incurred by the Company with respect to the transactions
contemplated hereby for the benefit of Sellers prior to the Closing, including,
without limitation, expenses for legal and investment advisory services,
shall
be paid by Sellers.
13.2
Entirety
of Agreement.
This
Agreement (including the Disclosure Schedule, the Madden Disclosure Schedule
and
all other schedules, exhibits and appendices hereto), together with the
other
Transaction Documents (including the schedules and exhibits thereto) and
certificates and other instruments delivered hereunder and thereunder,
state the
entire agreement of the parties, merge all prior negotiations, agreements
and
understandings, if any, and state in full all representations, warranties,
covenants and agreements which have induced this Agreement. Each party
agrees
that in dealing with third parties no contrary representations will be
made..
13.3
Notices. All notices, demands and communications of any kind which any
party hereto may be required or desire to serve upon another party under
the
terms of this Agreement shall be in writing and shall be given by: (a)
personal
service upon such other party; (b) mailing a copy thereof by certified
or
registered mail, postage prepaid, with return receipt requested; (c) sending
a
copy thereof by Federal Express or equivalent courier service; or
(d) sending a copy thereof by facsimile, in each case to the parties at the
respective addresses and facsimile numbers set forth on the signature pages
hereto.
In
case
of service by Federal Express or equivalent courier service or by facsimile
or
by personal service, such service shall be deemed complete upon delivery
or
transmission, as applicable. In the case of service by mail, such service
shall
be deemed complete on the fifth Business Day after mailing. The addresses
and
facsimile numbers to which, and persons to whose attention, notices and
demands
shall be delivered or sent may be changed from time to time by notice served
as
hereinabove provided by any party upon any other party.
13.4
Amendment.
This
Agreement may be modified or amended only by an instrument in writing,
duly
executed by all of the parties hereto.
13.5 Waiver.
No waiver by any party of any term, provision, condition, covenant, agreement,
representation or warranty contained in this Agreement (or any breach thereof)
shall be effective unless it is in writing executed by the party against
which
such waiver is to be enforced. No waiver shall be deemed or construed as
a
further or continuing waiver of
44
any
such
term, provision, condition, covenant, agreement, representation or warranty
(or
breach thereof) on any other occasion or as a waiver of any other term,
provision, condition, covenant, agreement, representation or warranty (or
of the
breach of any other term, provision, condition, covenant, agreement,
representation or warranty) contained in this Agreement on the same or
any other
occasion.
13.6
Counterparts;
Facsimile.
For the
convenience of the parties, any number of counterparts hereof may be executed,
each such executed counterpart shall be deemed an original and all such
counterparts together shall constitute one and the same instrument. Facsimile
transmission of any signed original counterpart and/or retransmission of
any
signed facsimile transmission shall be deemed the same as the delivery
of an
original.
13.7
Assignment;
Binding Nature; No Beneficiaries.
This
Agreement may not be assigned by any party hereto without the written consent
of
Madden and Sellers; provided,
however,
that
Madden may assign its rights hereunder to any affiliate of Madden which
assumes
the obligations of Madden hereunder, but no such assignment shall relieve
Madden
of any such obligations. Subject to the preceding sentence, this Agreement
shall
be binding upon, inure to the benefit of, and be enforceable by the parties
hereto and their respective heirs, personal representatives, legatees,
successors and permitted assigns. Except as otherwise expressly provided
in
Article XII, this Agreement shall not confer any rights or remedies upon
any
Person other than the parties hereto and their respective heirs, personal
representatives, legatees, successors and permitted assigns.
13.8
Headings.
The
headings in this Agreement are inserted for convenience only and shall
not
constitute a part hereof.
13.9
Governing
Law; Jurisdiction.
This
Agreement and all the transactions contemplated hereby, and all disputes
between
the parties under or related to this Agreement or the facts and circumstances
leading to its execution, whether in contract, tort, or otherwise, shall
be
governed by, and construed and enforced in accordance with, the laws of
the
State of New York including, without limitation, Section 5-1401 of the
New York
General Obligations Law and New York Civil Practice Laws and Rules 327.
In the
event of any controversy or claim arising out of or relating to this Agreement
or the breach or alleged breach hereof, each of the parties hereto irrevocably
(a) submits to the non-exclusive jurisdiction of any New York State court
sitting in the County of New York or any federal court sitting in U.S.
District
Court for the Southern District of the State of New York, (b) waives any
objection which it may have at any time to the laying of venue of any action
or
proceeding brought in any such court, (c) waives any claim that such action
or
proceeding has been brought in an inconvenient forum, and (d) agrees that
service of process or of any other papers upon such party by registered
mail at
the address to which notices are required to be sent to such party under
Section
13.3 shall be deemed good, proper and effective service upon such
party.
13.10
Construction;
Units.
In this
Agreement (i) words denoting the singular include the plural and vice versa,
(ii) “it” or “its” or words denoting any gender include all genders,
(iii) the word “including” shall mean “including without limitation,”
whether or not expressed, (iv) any reference to a statute shall mean the
statute
and any regulations thereunder in force as of the date of this Agreement
or the
Closing Date, as applicable, unless otherwise
45
expressly
provided, (v) any reference herein to a Section, Article, Schedule or Exhibit
refers to a Section or Article of or a Schedule or Exhibit to this Agreement
or
the Disclosure Schedule, as applicable, unless otherwise stated, and (vi)
when
calculating the period of time within or following which any act is to
be done
or steps taken, the date which is the reference day in calculating such
period
shall be excluded and if the last day of such period is not a Business
Day, then
the period shall end on the next day which is a Business Day.
13.11 Negotiated
Agreement.
Madden
and Sellers acknowledge that they have been advised and represented by
counsel
in the negotiation, execution and delivery of this Agreement and the Transaction
Documents and accordingly agree that if an ambiguity exists with respect
to any
provision of this Agreement or the Transaction Documents, such provision shall
not be construed against any party because such party or its representatives
drafted such provision.
13.12
Public
Announcements.
Neither
Madden nor Sellers shall issue any press release or make any other public
announcement concerning this Agreement or the transactions contemplated
hereby
without the prior written approval of Madden, in the case of an announcement
by
Sellers, and Sellers, in the case of an announcement by Madden; provided,
however,
that
Madden or its affiliates may, upon written notice to Sellers, describe
this
Agreement and the transactions contemplated hereby in any press release
or
filing with the SEC or other Governmental Body it is required to make under
applicable Law, and if required, necessary or desirable, file this Agreement
with the SEC.
13.13
Remedies
Cumulative.
The
remedies provided for or permitted by this Agreement shall be cumulative
and the
exercise by any party of any remedy provided for herein shall not preclude
the
assertion or exercise by such party of any other right or remedy provided
for
herein.
13.14
Severability.
If any
provision of this Agreement is found by a court of competent jurisdiction
to be
invalid or unenforceable, such provision shall not affect the other provisions,
but such invalid or unenforceable provision shall be deemed modified to
the
extent necessary to render it valid and enforceable, preserving to the
fullest
extent permissible the intent of the parties set forth herein.
13.15
WAIVER
OF JURY TRIAL.
MADDEN
AND SELLERS HEREBY IRREVOCABLY WAIVE, TO THE FULLEST EXTENT PERMITTED BY
LAW,
ALL RIGHTS TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM (WHETHER
BASED UPON CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR RELATING TO THIS
AGREEMENT OR ANY OTHER TRANSACTION DOCUMENT OR ANY OF THE TRANSACTIONS
CONTEMPLATED HEREBY OR THEREBY.
13.16
Authority
of Seller Representative.
(a) In
order
to facilitate the consummation of the transactions contemplated by this
Agreement and the other Transaction Documents and the resolution of certain
matters after the Closing between Madden and Sellers, Sellers hereby appoint
▇▇▇▇▇▇▇▇▇ as the Seller
46
Representative
who shall serve as the attorney-in-fact and agent for each Seller in connection
with the transactions contemplated by this Agreement and the other Transaction
Documents. By executing and delivering this Agreement, the Seller Representative
(i) accepts his appointment and authorization as attorney-in-fact and agent
on
behalf of each Seller in accordance with the terms of this Agreement and
(ii)
agrees to perform his obligations under, and otherwise comply with, this
Agreement.
(b) The
Seller Representative has the authority, without restriction, to (i) prepare,
finalize, approve and authorize all exhibits, schedules and other attachments
to
any of this Agreement, the other Transaction Documents, and the other contracts,
certificates, instruments and documents delivered by or on behalf of Sellers
pursuant to this Agreement and the other Transaction Documents; (ii) deliver
to
Madden on behalf of Sellers the share or interest certificates (as appropriate)
representing all of the Company Interests; (iii) execute, deliver, and
accept
delivery, on behalf of each Seller, any other agreements, certificates,
instruments and documents to be delivered by or on behalf of Sellers pursuant
to
this Agreement or the other Transaction Documents; (iv) execute, deliver,
and
accept delivery, on behalf of each Seller, such amendments as may be deemed
by
the Seller Representative in his sole and absolute discretion to be appropriate
under this Agreement or the other Transaction Documents; (v) bind Sellers
by all
notices received, by all agreements and determinations made, and by all
agreements, certificates, instruments and other documents executed and
delivered
by Sellers under the Transaction Documents (including in connection with
the
post-Closing adjustments pursuant to Section 2.3 of this Agreement and
the
Earn-Out Payment); (vi) dispute or refrain from disputing any claim made
by
Madden under any Transaction Document; (vii) negotiate and compromise any
dispute which may arise under, and exercise or refrain from exercising
remedies
available under, any Transaction Document (including in connection with
the
post-Closing adjustments pursuant to Section 2.3 of this Agreement and
the
Earn-Out Payment) and sign any releases or other documents with respect
to such
dispute or remedy; (viii) waive any condition contained in any Transaction
Document; (ix) give any and all consents under any Transaction Document;
(x)
dispute or refrain from disputing the Contingent Purchase Price Statement
(as
defined in the Earn-Out Agreement) delivered in connection with the Earn-Out
Agreement, or to deliver or refrain from delivering a Notice of Election
in
connection with the Earn-Out Agreement; (xi) give such instructions and
perform
such actions and refrain from performing such actions as the Seller
Representative shall in his sole and absolute discretion deem necessary
or
appropriate to carry out the provisions of any Transaction Document; (xii)
receive any payments made to any Seller pursuant to any Transaction Document;
and (xiii) disburse to Sellers payments made to the Seller Representative
under
any Transaction Document in accordance with the allocation referred to
in
Section 2.2(a) hereof.
(c) By
executing and delivering this Agreement, each Seller hereby jointly and
severally agrees to indemnify and hold the Seller Representative harmless
for
any and all liability, loss, cost, damage or expense (including attorneys’ fees)
reasonably incurred or suffered as a result of the performance of his duties
as
Seller Representative under any Transaction Document, except such that
arises
from such Seller Representative’s gross negligence or willful
misconduct.
(d) Madden
and the other Madden Indemnified
Parties shall be entitled to deal exclusively with the Seller Representative
as
the sole and exclusive representative and agent of
47
Sellers
in respect of this Agreement and the other Transaction Documents and all
matters
arising under or pertaining to this Agreement and any Transaction Document.
Without limiting the foregoing, (i) any notice, communication, demand,
claim, action or proceeding required or permitted hereunder may be delivered
by
Madden to or brought by Madden against the Seller Representative in his
capacity
as agent and representative of Sellers with the same effect, and which
shall be
binding and effective to the same degree, as if delivered to or brought
against
all Sellers or any of them individually and (ii) any settlement or other
agreement of Madden with the Seller Representative in his capacity as agent
and
representative of Sellers in respect of all matters arising under or pertaining
to this Agreement or any Transaction Document shall have the same effect,
and be
binding upon, all Sellers to the same degree as if made with all Sellers
or any
of them individually. Any decision, act, consent or instruction of the
Seller
Representative shall be final, binding and conclusive upon each Seller,
and
Madden may rely upon any such decision, act, consent or instruction of
the
Seller Representative as being the decision, act, consent or instruction
of
every Seller. Madden is hereby relieved from any liability to any Person
for any
acts done by it in accordance with any decision, act, consent or instruction
of
the Seller Representative.
(e) Madden
and any other Madden Indemnified Party shall be entitled to regard as the
Seller
Representative the Person identified to it as such in accordance with the
provisions of this Agreement unless and until Madden shall have received
written
notice, executed by ▇▇▇▇ ▇▇▇▇▇▇▇▇▇, of the designation of another Seller
or
Sellers as the Seller Representative(s).
[Signature
pages follow]
48
IN
WITNESS WHEREOF, the
parties hereto have duly executed and delivered this Agreement as of the
date
first set forth above.
|
▇▇▇▇▇▇
▇▇▇▇▇▇, LTD.
|
|
|
Address:
▇▇-▇▇
▇▇▇▇▇▇▇ ▇▇▇.
▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention:
▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile
No.: (▇▇▇) ▇▇▇-▇▇▇▇
|
By:/s/
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Name: ▇▇▇▇▇▇▇▇
▇. ▇▇▇▇▇▇
Title: Chairman
and Chief Executive Officer
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with
copies to:
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▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ LLP
1177
Avenue of the Americas
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▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇
▇▇▇▇▇▇ of America
Attention:
▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Facsimile
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49
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SELLERS
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Address:
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