MEMBERSHIP INTERESTS PURCHASE AGREEMENT

 

Exhibit 10.1

MEMBERSHIP INTERESTS PURCHASE AGREEMENT

 

by and among

SOUTHPEAK INTERACTIVE CORPORATION,

VID AGON, LLC

and

VID SUB, LLC

 

October 10, 2008

 

 

TABLE OF CONTENTS

ARTICLE I DEFINITIONS AND INTERPRETATION			1
	1.1	Definitions	1
	1.2	Other Defined Terms	4
	1.3	Interpretation	5
ARTICLE II PURCHASE AND SALE OF THE MEMBERSHIP INTERESTS			6
	2.1	Purchase of the Membership Interests from the Member	6
	2.2	Purchase Price	6
	2.3	Payments of the Purchase Price	7
ARTICLE III THE CLOSING			7
	3.1	Closing	7
	3.2	Closing Deliveries by the Member and the Seller	7
	3.3	Closing Deliveries by the Buyer	8
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE SELLER AND THE MEMBER			8
	4.1	Organization and Qualification	8
	4.2	Subsidiaries	9
	4.3	Capitalization	9
	4.4	Authority Relative to this Agreement	10
	4.5	No Conflict; Required Filings and Consents.	10
	4.6	Compliance	11
	4.7	Financial Statements	11
	4.8	No Undisclosed Liabilities	12
	4.9	Absence of Certain Changes or Events	13
	4.10	Contracts	13
	4.11	Litigation.	14
	4.12	Employee Benefit Plans	15
	4.13	Employment Matters	15
	4.14	Restrictions on Business Activities	16
	4.15	Title to Property.	16
	4.16	Taxes	16
	4.17	Intellectual Property	17
	4.18	Brokers; Third Party Expenses	18
	4.19	Investment Intent.	18
ARTICLE V REPRESENTATIONS AND WARRANTIES OF THE BUYER			19
	5.1	Organization and Qualification	19
	5.2	Capitalization	19
	5.3	Valid Issuance of the Warrant	19
	5.4	Authority Relative to this Agreement	20
	5.5	No Conflict; Required Filings and Consents	20
	5.6	Compliance	20
	5.7	Reporting Company Status	21
	5.8	Private Placement	21
	5.9	No Integrated Offering	21
	5.10	Board Approval	21

 

 

ARTICLE VI ADDITIONAL AGREEMENTS			21
	6.1	Non-Competition; Non-Solicitation.	21
	6.2	Confidentiality	22
	6.3	Public Disclosure	23
	6.4	Consents; Cooperation	23
	6.5	Legal Requirements	23
	6.6	Blue Sky Laws	23
	6.7	Further Assurances	23
ARTICLE VII INDEMNIFICATION			23
	7.1	Indemnification of Buyer	23
	7.2	Indemnification Claims.	24
	7.3	Limitations	25
	7.4	Termination of Indemnification.	25
	7.5	No Right of Contribution	25
	7.6	Mitigation	26
	7.7	Anti-Sandbagging	26
ARTICLE VIII GENERAL PROVISIONS			26
	8.1	Notices	26
	8.2	Counterparts	27
	8.3	Entire Agreement; Nonassignability; Parties in Interest	27
	8.4	Severability	27
	8.5	Amendment	27
	8.6	Governing Law	28
	8.7	Rules of Construction	28
	8.8	Tax Returns	28

 

EXHIBITS

Exhibit A	Warrant
Exhibit B	Assignment of Membership Interests

 

SCHEDULES

Schedule I	Company Titles
Schedule II	Persons responsible for knowledge

MEMBERSHIP INTEREST PURCHASE AGREEMENT

This Membership Interest Purchase Agreement (the “ Agreement ”) is made and entered into this 10th day of October, 2008, by and among SouthPeak Interactive Corporation, a Delaware corporation (“ Buyer ”), Vid Sub, LLC, a Delaware limited liability company, as majority member of the Company (as defined below) (the “ Member ”), and Vid Agon, LLC, a Delaware limited liability company and sole member of the Member (the “ Seller ”).

WHEREAS, the Seller owns all of the outstanding membership interests of the Member (the “ Membership Interests ”);

WHEREAS, subject to the assignment of the membership interests held by the Seller to the Member prior to the date hereof (the “ Restructuring ”), the Member owns all of the Series A Preferred Units, which constitute a majority of the membership interests, of Gone Off Deep, LLC, a Delaware limited liability company (the “ Company ”);

WHEREAS, the members of the Company and their respective membership interests therein are set forth in the LLC Agreement, subject to the Restructuring; and

WHEREAS, the Buyer desires to acquire the Membership Interests from the Seller, and the Seller desires to exchange the Membership Interests for the consideration set forth below, subject to the terms and conditions of this Agreement.

NOW, THEREFORE, in consideration of the mutual promises hereinafter set forth and other good and valuable consideration, the receipt and adequacy of which is hereby acknowledged, the parties hereby agree as follows:

ARTICLE I

DEFINITIONS AND INTERPRETATION

1.1   Definitions . For purposes of this Agreement, the following terms have the respective meanings set forth below:

“ Affiliate ” means, with respect to any Person, any other Person that, directly or indirectly through one or more intermediaries, controls, or is controlled by, or is under common control with, such Person, and the term “ control ” (including the terms “ controlled by ” and “ under common control with ”) means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such Person, whether through ownership of voting securities, by contract or otherwise.

“ Business ” means videogame development, publishing, production and distribution.

“ Business Entity ” means any corporation, partnership, limited liability company, trust or other domestic or foreign form of business association or organization.

 

“ Company Contracts ” mean all contracts, agreements, leases, mortgages, indentures, notes, bonds, licenses, permits, franchises, purchase orders, sales orders, and other understandings, commitments and obligations (including without limitation outstanding offers and proposals) of any kind, whether written or oral, to which the Company is a party or by or to which any of the properties or assets of the Company may be bound, subject or affected (including without limitation notes or other instruments payable to the Company).

“ Company Products ” means all current versions of products or service offerings of the Company.

“ Company Titles ” means all the videogame titles set forth on Schedule I attached hereto including the versions of the videogames previously developed or under development and any modifications, but not bona fide sequels, thereto.

“ Existing Customer or Developer ” means any Person (or an Affiliate thereof) to which the Seller or any Affiliate thereof provided products related to the Business, or contracted for or agreed to the development or production of products related to the Business, during the two years immediately preceding the Closing Date.

“ GAAP ” mean United States generally accepted accounting principles applied on a consistent basis throughout the periods involved.

“ Governmental Action/Filing ” means any franchise, license, certificate of compliance, authorization, consent, order, permit, approval, consent or other action of, or any filing, registration or qualification with, any federal, foreign, state, provincial, municipal, foreign or other governmental, administrative or judicial body, agency or authority.

“ Independent Accountants ” means Grant Thornton LLP or an independent accounting firm of national or regional reputation which has not performed services for the Buyer, the Seller and the Member, or any of their respective Affiliates, during the preceding three year period, which is selected by the Buyer and the Seller (or if they cannot agree, by the Buyer’s and the Seller’s respective independent accounting firms).

“ Intellectual Property ” means any or all of the following and all worldwide common law and statutory rights in, arising out of, or associated therewith: (a) patents and applications therefor and all reissues, divisions, renewals, extensions, provisionals, continuations and continuations-in-part thereof (“ Patents ”); (b) inventions (whether patentable or not), invention disclosures, improvements, trade secrets, proprietary information, know how, technology, technical data and customer lists, and all documentation relating to any of the foregoing; (c) copyrights, copyrights registrations and applications therefor, and all other rights corresponding thereto throughout the world (“ Copyrights ”); (iv) software and software programs; (d) domain names, uniform resource locators and other names and locators associated with the Internet (e) industrial designs and any registrations and applications therefor; (f) trade names, logos, common law trademarks and service marks, trademark and service mark registrations and applications therefor (collectively, “ Trademarks ”); (g) all databases and data collections and all rights therein; (h) all moral and economic rights of authors and inventors, however denominated, and (i) any similar or equivalent rights to any of the foregoing (as applicable).

 

“ knowledge ” means, when referencing the Seller, the Member or the Company, the actual knowledge or awareness as to a specified fact or event of the Persons named on Schedule II .

“ Legal Requirements ” means any federal, state, local, municipal, foreign or other law, statute, constitution, principle of common law, resolution, ordinance, code, edict, decree, rule, regulation, ruling or requirement issued, enacted, adopted, promulgated, implemented or otherwise put into effect by or under the authority of any Governmental Entity and all requirements set forth in applicable Company Contracts.

“ Lien ” means any mortgage, pledge, security interest, encumbrance, lien, restriction or charge of any kind (including, without limitation, any conditional sale or other title retention agreement or lease in the nature thereof, any sale with recourse against the seller or any affiliate of the seller, or any agreement to give any security interest).

“ LLC Agreement ” means that certain amended and restated operating agreement of the Company, as amended, by and among the parties set forth therein, dated December 13, 2007.

“ Losses” means any obligations and other liabilities (whether known or unknown, absolute or contingent, liquidated or unliquidated, due or to become due, accrued or not accrued, asserted or unasserted), losses, claims, damages, deficiencies, judgments, assessments, fines, fees, penalties and expenses (including amounts paid in settlement, interest, court costs, costs of investigators, fees and expenses of attorneys, accountants, financial advisors, consultants and other experts, and other expenses of litigation), that may be imposed or otherwise incurred or suffered by the specified Person; provided, however, that Losses shall not include any punitive, exemplary, indirect, incidental, consequential or other special damages, lost profits, damage to goodwill or loss of business of the other party.

“ Material Adverse Effect ” means any change, event, violation, inaccuracy, circumstance or effect, individually or when aggregated with other changes, events, violations, inaccuracies, circumstances or effects, that is materially adverse to the business, assets, revenues, financial condition, results of operations or business prospects of an entity; provided, however, that (a) changes in general industry or economic conditions, (b) adverse effects arising from the announcement or consummation of the transactions contemplated hereby, or (c) changes GAAP that apply generally to the industry in which the Company operates, shall not constitute a Material Adverse Effect.

 

“ Permitted Liens ” means (a) liens for current Taxes and other statutory liens and trusts for Taxes not yet due and payable or that are being contested in good faith, (b) liens incurred in the ordinary course of business, such as carriers’, warehousemen’s, landlords’ and mechanics’ liens and other similar liens arising in the ordinary course of business, (c) liens on personal property leased under operating leases, (d) liens, pledges or deposits incurred or made in connection with workmen’s compensation, unemployment insurance and other social security benefits, or securing the performance of bids, tenders, leases, contracts (other than for the repayment of borrowed money), statutory obligations, progress payments, surety and appeal bonds and other obligations of like nature, in each case incurred in the ordinary course of business, (e) pledges of or liens on manufactured products as security for any drafts or bills of exchange drawn in connection with the importation of such manufactured products in the ordinary course of business, (f) liens under Article 2 of the Uniform Commercial Code that are special property interests in goods identified as goods to which a contract refers, (g) liens under Article 9 of the Uniform Commercial Code that are purchase money security interests, (h) such liens, imperfections or defects of title, easements, rights-of-way and other similar restrictions (if any) that do not materially detract from the value or materially interfere with the present or proposed use of the properties or assets of the party subject thereto or affected thereby, and do not otherwise materially adversely affect or impair the business or operations of such party, and (i) items set forth on the Disclosure Schedule or within the dollar threshold limits in any representation in this Agreement.

“ Person ” means any individual, corporation, partnership, firm, joint venture, limited liability company, association, joint-stock company, trust, unincorporated organization, Governmental Entity or other entity.

“ Prospective Customer or Developer ” means any Person (or its Affiliates) to which the Seller or an Affiliate thereof has submitted a written or oral proposal for the sale or provision of any products or services related to the Business, or the development or production of products related to the Business, during the two (2) years immediately preceding the Closing Date.

“ Subsidiary ” means with respect to any Person, any Business Entity of which a majority of outstanding voting securities or other voting equity interests, or a majority of any other interests having the power to direct or cause the direction of the management and policies of or otherwise exert control over such Business Entity, are owned, directly or indirectly, by such Person.

“ SEC ” means the Securities and Exchange Commission.

“ Tax ” or “ Taxes ” refers to any and all federal, foreign, state, provincial, local and foreign taxes, including, without limitation, gross receipts, income, profits, sales, use, occupation, value added, ad valorem, transfer, franchise, withholding, payroll, recapture, employment, excise and property taxes, assessments, governmental charges and duties together with all interest, penalties and additions imposed with respect to any such amounts and any obligations under any agreements or arrangements with any other Person with respect to any such amounts and including any liability of a predecessor entity for any such amounts.

1.2   Other Defined Terms . For purposes of this Agreement, the following terms have the respective meanings set forth in the section opposite each such term:

 

1.3   Interpretation . In this Agreement, unless clear contrary intention appears:

(a)   A reference herein to days shall mean calendar days unless otherwise specified, and any day or deadline or end of a time period hereunder which falls on a day other than a business day shall be deemed to refer to the first business day following such day or deadline or end of the time period, as the case may be;

 

(b)   A reference in this Agreement to an article, section, exhibit or schedule shall mean an article or section of, or exhibit or schedule attached to, this Agreement, as the case may be;

(c)   The word “including” shall be deemed to be followed by the words “without limitation”; the word “or” is not exclusive and is used in the inclusive sense of “and/or,” and the words “herein,” “hereof,” “hereby,” “hereto” and “hereunder” refer to this Agreement as a whole;

(d)   A reference to document, instrument or agreement shall be deemed to refer as well to all addenda, exhibits, schedules or amendments thereto; and

(e)   All words used in this Agreement will be construed to be of such gender or number as the circumstances require.

ARTICLE II

PURCHASE AND SALE OF THE MEMBERSHIP INTERESTS

2.1   Purchase of the Membership Interests from the Member . Subject to and upon the terms and conditions of this Agreement, at the closing of the transactions contemplated by this Agreement (the “ Closing ”), the Seller shall sell, transfer, convey, assign and deliver to the Buyer, and the Buyer shall purchase, acquire and accept from the Seller, all of the Membership Interests.

2.2   Purchase Price . The purchase price (the “ Purchase Price ”) to be paid by the Buyer for the Membership Interests shall be:

(a)   a warrant to purchase up to 700,000 shares of the Buyer’s common stock, substantially in the form attached hereto as Exhibit A (the “ Warrant ”);

(b)   7% of gross revenue reported in the Company’s financial statements, determined in accordance with GAAP, attributable to United States sales of the Company Titles (the “ Domestic Earn-Out Amount ”); and

(c)   7% of gross revenue reported in the Company’s financial statements, determined in accordance with GAAP consistently applied, attributable to international sales of the Company Titles net of distribution fees and advances to the extent such distribution fees were agreed to prior to the Closing and such advances were received prior to the Closing (the “ International Earn-Out Amount ,” and together with the Domestic Earn-Out Amount, the “ Earn-Out Amount ”).

 

2.3   Payments of the Purchase Price . The Warrant shall be issued to the Seller at the Closing. Payments of the Earn-Out Amount shall be calculated and made quarterly, beginning with the quarter ended December 31, 2008, within 60 days of the end of the applicable quarter, subject to the provisions of this Section 2.3 and provided that the payment related to the quarter ended December 31, 2008 may be made within 150 days of the quarter end. Buyer shall pay Seller the Earn-Out Amount by electronic wire transfer in immediately available funds to an account designated in writing by the Seller. Buyer shall provide the Seller with a notice of the Earn-Out Amount for the applicable quarter, including adequate backup documentation, and the proposed Earn-Out Payment, if any, within 30 days after the end of such quarter. If the Seller does not object in writing within 30 days of the date of the notice (such notice of objection must contain the basis of the Seller’s objection), then the Earnout Amount payable to the applicable quarter, if any, shall be deemed agreed upon and shall be paid in accordance with this Section 2.3 . If the Seller provides a notice of objection within 15 days, then the Buyer and the Seller shall endeavor to reach agreement within the 15 day period following the receipt by the Buyer of any notice of objection. If the parties are unable to reach agreement within such 15 day period, then the matter shall be submitted to the Independent Accountants for determination, which determination shall be final and binding on the parties. In connection with the resolution of any such dispute, each party shall pay its own fees and expenses, including, without limitation, its own legal, accounting and consulting fees and expenses. If the determination by the Independent Accountants results in an adjustment to an Earn-Out Amount more beneficial to the Seller in an amount that exceeds $10,000.00, then the cost and expense of the Independent Accounts shall be paid by the Buyer. If the determination by the Independent Accounts does not result in an adjustment to the Earn-Out Amount more beneficial to the Seller by an amount that exceeds $10,000.00, then the cost and expense of the Independent Accounts shall be paid by the Seller. For the purposes of this Section 2.3 , Buyer shall, upon reasonable prior written notice, give Seller and its professional advisors, at Seller’s sole expense, access during normal business hours to the Company’s and the Buyer’s books and records related to the calculation of the Earn-Out Amount.

ARTICLE III

THE CLOSING

3.1   Closing . The Closing shall take place at the offices of Greenberg Traurig, LLP, 1750 Tysons Boulevard, Suite 1200, McLean, Virginia 22102 at 10:00 p.m., Eastern Time, on October 10, 2008 (the “ Closing Date ”). The documents to be delivered at the Closing (other than certificates evidencing the Warrant) may, at the election of the parties, be exchanged by facsimile or electronic transmission in portable document format (“ PDF ”), provided original executed copies shall be provided promptly following the Closing.

3.2   Closing Deliveries by the Member and the Seller . The Member, and the Seller shall deliver to the Buyer at the Closing such documents, instruments or certificates as the Buyer may reasonably request, including without limitation:

(a)   certificates of the Secretaries of the Company and the Member attesting to the incumbency of the Company’s and the Member’s officers, the authenticity of the resolutions authorizing the transactions contemplated by this Agreement, and the authenticity and continuing validity of the organizational documents delivered pursuant to Section 4.1 ;

(b)   the assignment of membership interests substantially in the form attached hereto as Exhibit B ;

(c)   the original minute books of the Company and the Member to the extent they exist;

 

(d)   all consents, permissions, approvals, novations, authorizations or waivers, in form reasonably satisfactory to the Buyer, required to be obtained under this Agreement;

(e)   a resignation, effective as of the Closing, of each Series A Director (as defined in the LLC Agreement) and each officer and manager of the Member from each such position; and

(f)   a cross receipt executed by the Seller for the Warrant.

3.3   Closing Deliveries by the Buyer . The Buyer shall deliver to the Seller at the Closing such documents, instruments or certificates as the Seller may reasonably request, including without limitation a certificate evidencing the Warrant.

ARTICLE IV

REPRESENTATIONS AND WARRANTIES OF THE SELLER AND THE MEMBER 

Except as set forth in the disclosure schedule delivered by the Seller and the Member concurrently with the execution of this Agreement (the “ Disclosure Schedule ”), which shall identify exceptions by specific section references, each of the Seller and the Member severally and jointly represent and warrant to the Buyer, as set forth below in this Article IV . Except for the representations and warranties in Sections 4.1 , 4.2 , 4.3 and 4.4 , all representations and warranties of the Seller and the Member in this Agreement shall be limited to Seller’s knowledge.

(a)   The Company is a limited liability company, duly organized, validly existing and in good standing under the laws of the State of Delaware and has the requisite limited liability company power and authority to own, lease and operate its assets and properties and to carry on its business as it is now being or currently planned by the Company to be conducted. The Company is in possession of all franchises, grants, authorizations, licenses, permits, easements, consents, certificates, approvals and orders (“ Approvals ”) necessary to own, lease and operate the properties it purports to own, operate or lease and to carry on its business as it is now being or currently planned by the Company to be conducted, except where the failure to have such Approvals could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect on the Company. Complete and correct copies of the certificate of formation and operating agreement of the Company, as amended and currently in effect, have been heretofore delivered to Buyer or Buyer’s counsel. The Company is not in violation of any of the provisions of its certificate of formation or operating agreement.

(b)   The Company is duly qualified or licensed to do business as a foreign limited liability company and is in good standing in each jurisdiction where the character of the properties owned, leased or operated by it or the nature of its activities makes such qualification or licensing necessary, except for such failures to be so duly qualified or licensed and in good standing that could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect on the Company. Each jurisdiction in which the Company is so qualified or licensed is listed in Schedule 4.1(b) .

 

(c)   The Member is a limited liability company, duly organized, validly existing and in good standing under the laws of the State of Delaware and has the requisite limited liability company power and authority to own, lease and operate its assets and properties and to carry on its business as it is now being or currently planned by the Member to be conducted. Complete and correct copies of the certificate of formation and operating agreement of the Member, as amended and currently in effect, have been heretofore delivered to Buyer or Buyer’s counsel. The Member is not in violation of any of the provisions of its certificate of formation or operating agreement.

(d)   Except for the membership interests it holds in the Company, the Member does not have any assets or properties of any kind, does not now conduct and has never conducted any business, and has no obligations or liabilities of any nature whatsoever except such obligations and liabilities as are imposed under this Agreement or under the LLC Agreement.

4.2   Subsidiaries . Except for Gamecock Media Europe Limited, a company organized under the laws of England and Wales and wholly-owned subsidiary of the Company, the Company does not directly or indirectly own any equity or similar interest in, or any interest convertible or exchangeable or exercisable for, any equity or similar interest in, any Subsidiary. The Member is the majority member of the Company.

(a)   The capitalization of the Company consists of the Interests (as defined in the LLC Agreement and subject to the Restructuring) subject to the term of those certain management restricted unit purchase agreements and incentive unit agreements entered into between the Company and the parties thereto (the “ Unit Agreements ”). All of the Interests are validly issued, fully paid and nonassessable. All of the Interests that are owned by the Member are held free and clear of any Liens other than as a result of the LLC Agreement.

(b)   The capitalization of the Member consists of the Membership Interests, all of which are held by the Seller. All of the Membership Interests are validly issued, fully paid and nonassessable. All of the Membership Interests are held free and clear of any Liens and the Seller has all right to sell and transfer its Membership Interests as contemplated by this Agreement and upon such sale and transfer, such Membership Interests shall be acquired by the Buyer as contemplated by Section 2.1 of this Agreement free and clear of any Liens other than as a result of the LLC Agreement.

(c)   Except as set forth in the LLC Agreement and the Unit Agreements, there are no subscriptions, options, warrants, equity securities, partnership interests or similar ownership interests, calls, rights (including preemptive rights), commitments or agreements of any character to which the Company or the Member is a party or by which either the Company or the Member is bound obligating the Company or the Member to issue, deliver or sell, or cause to be issued, delivered or sold, or repurchase, redeem or otherwise acquire, or cause the repurchase, redemption or acquisition of, any of the Company’s Interests or the Member’s Membership Interests, as applicable, or similar equity security of the Company or the Member or obligating the Company or the Member, as applicable, to grant, extend, accelerate the vesting of or enter into any such subscription, option, warrant, equity security, call, right, commitment or agreement.

 

(d)   The Interests and the Membership Interests have been issued in compliance with all applicable securities laws and other applicable laws and regulations.

(e)   Except as set forth in the LLC Agreement and the Unit Agreements and as contemplated by this Agreement, there are no registration rights, and there is no voting trust, proxy, rights plan, antitakeover plan or other agreement or understanding to which the Company or the Member is a party or by which the Company or the Member is bound with respect to any equity security of any class of the Company or the Member, as applicable.

(f)   Except as set forth in the LLC Agreement and the Unit Agreements, the Interests and the Membership Interests are not unvested or are subject to a repurchase option, risk of forfeiture or other condition under any applicable agreement with the Company or the Member, as applicable.

(a)   The Member and the Seller have all necessary power and authority to execute and deliver this Agreement and to perform their respective obligations hereunder and to consummate the transactions contemplated hereby.

(b)   The execution and delivery of this Agreement and the consummation by the Member and the Seller of the transactions contemplated hereby have been duly and validly authorized by all necessary limited liability company action on the part of the Member and the Seller and no other limited liability company proceedings on the part of the Member or the Seller are necessary to authorize this Agreement or to consummate the transactions contemplated hereby pursuant to the applicable law and the terms and conditions of this Agreement.

(c)   This Agreement has been duly and validly executed and delivered by the Member and the Seller, and assuming the due authorization, execution and delivery thereof by the other parties hereto, constitutes the legal and binding obligation of the Member and the Seller, enforceable against the Member and the Seller in accordance with its terms, except as may be limited by bankruptcy, insolvency, reorganization or other similar laws affecting the enforcement of creditors’ rights generally and by general principles of equity.

(a)   The execution and delivery of this Agreement by the Member and the Seller do not, and the performance of this Agreement by such Persons shall not, (i) conflict with or violate the Member’s or the Seller’s certificate of formation, (ii) conflict with or violate any Legal Requirements, (iii) result in any breach of or constitute a default (or an event that with notice or lapse of time or both would become a default) under, or materially impair the Company’s rights or, to the Seller’s knowledge, materially alter the rights or obligations of any third party under, or, to the Seller’s knowledge, give to others any rights of termination, amendment, acceleration or cancellation of, or result in the creation of a Lien (other than a Permitted Lien) or encumbrance on any of the properties or assets of the Company pursuant to, any Company Contracts, or (iv) except as set forth in Schedule 4.5(a) , result in the triggering, acceleration or increase of any payment to any Person pursuant to any Company Contract, including any “change in control” or similar provision of any Company Contract, except, with respect to clauses (ii), (iii) or (iv), for any such conflicts, violations, breaches, defaults, triggerings, accelerations, increases or other occurrences that would not, individually and in the aggregate, have a Material Adverse Effect on the Company.

 

(b)   The execution and delivery of this Agreement by the Member and the Seller does not, and the performance of this Agreement by such Persons shall not, require any consent, approval, authorization or permit of, or filing with or notification to, any Governmental Entity or other third party (including, without limitation, lenders and lessors, except (i) for applicable requirements, if any, of the Securities Act of 1933, amended (the “ Securities Act ”), the Securities Exchange Act of 1934, as amended (the “ Exchange Act ”) or state securities laws (“ Blue Sky Laws ”), and the rules and regulations thereunder, and appropriate documents received from or filed with the relevant authorities of other jurisdictions in which the Company is licensed or qualified to do business, (ii) the consents, approvals, authorizations and permits described in Schedule 4.5(b) hereto, and (iii) where the failure to obtain such consents, approvals, authorizations or permits, or to make such filings or notifications, would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect on the Company or prevent consummation of the transactions contemplated hereby or otherwise prevent the parties hereto from performing their obligations under this Agreement.

4.6   Compliance . To the Seller’s knowledge, the Company has materially complied with and is not in violation of any Legal Requirements with respect to the conduct of its business, or the ownership or operation of its business, except for failures to comply or violations which, individually or in the aggregate, have not had and are not reasonably likely to have a Material Adverse Effect on the Company. Except as set forth in Schedule 4.6 , to the Seller’s knowledge, no written notice of non-compliance with any Legal Requirements has been received by the Company. To the Seller’s knowledge, the Company is not in violation of any term of any Company Contract, except for failures to comply or violations which are described on Schedule 4.6 or which, individually or in the aggregate, have not had and are not reasonably likely to have a Material Adverse Effect on the Company.

(a)   The Seller has provided to the Buyer unaudited financial statements (including any related notes thereto) for the fiscal years ended September 30, 2007 and 2006 (the “ Annual Financial Statements ”). Except as set forth in Schedule 4.7(a) , the Annual Financial Statements fairly present in all material respects the financial position of the Company at the respective dates thereof and the results of its operations and cash flows for the periods indicated, except that such statements do not contain notes and are subject to normal audit adjustments.

(b)   The Seller has provided to the Buyer a correct and complete copy of the unaudited financial statements of the Company for the ten-month period ended July 31, 2008, (the “ Stub Financial Statements ,” and with the Annual Financial Statement, the “ Financial Statements ”). The Stub Financial Statements comply as to form in all material respects, and, except as set forth in Schedule 4.7(a) , are consistent with the Annual Financial Statements and fairly present in all material respects the financial position of the Company at the date thereof and the results of its operations and cash flows for the period indicated, except that such statements do not contain notes and are subject to normal audit adjustments.

 

(c)   The books of account and other books and records pertaining to the Interests in the Company have been maintained in accordance with go