TABLE OF CONTENTS

 

Title			Page
ARTICLE I	DEFINITIONS AND TERMS		1
Section 1.1		Defined Terms	1
Section 1.2		Terms Generally	1
ARTICLE II	ACQUISITION AND DISPOSITION OF ASSETS		2
Section 2.1		Purchase and Sale	2
Section 2.2		Operating Agreement	2
ARTICLE III	PAYMENT AND DELIVERY		2
Section 3.1		Purchase Price	2
Section 3.2		Adjustments to Closing Cash Payment and Purchase Price	2
Section 3.3		Payment of Purchase Price	3
Section 3.4		Earnout Payment	4
Section 3.5		Closing	5
Section 3.6		Deliveries by the Members	5
Section 3.7		Deliveries by the Purchaser	6
ARTICLE IV	REPRESENTATIONS AND WARRANTIES OF THE MEMBERS		7
Section 4.1		Authorization and Validity	7
Section 4.2		Capitalization, Subsidiaries	7
Section 4.3		Organization	8
Section 4.4		No Conflict	8
Section 4.5		Governmental Consents	8
Section 4.6		Financial Statements	9
Section 4.7		Absence of Certain Changes or Events	9
Section 4.8		Absence of Undisclosed Liabilities	12
Section 4.9		Property; Assets	12
Section 4.10		Litigation and Claims; Compliance with Laws	13
Section 4.11		Taxes	14
Section 4.12		Insurance	16
Section 4.13		Environmental Matters	16
Section 4.14		Material Contracts	17
Section 4.15		Intellectual Property	19
Section 4.16		Employee Benefits; ERISA	22
Section 4.17		Labor Matters	24
Section 4.18		Records	25
Section 4.19		Affiliate Transactions	25
Section 4.20		Indebtedness and Cash on Hand at Closing	26
Section 4.21		Brokers, Finders, Etc.	26
Section 4.22		Questionable Payments	26
Section 4.23		Competing Business	26

 

 

Section 4.24		Other Information	26
Section 4.25		Product Warranty and Liability	26
Section 4.26		Naturalization of the Employees	27
Section 4.27		Bank Accounts	27
Section 4.28		Business Relationships	27
Section 4.29		Accredited Investor Status	28
Section 4.30		FDA Legal Compliance and Permits	28
ARTICLE V	REPRESENTATIONS AND WARRANTIES OF PURCHASER		29
Section 5.1		Authorization and Validity	30
Section 5.2		Organization	30
Section 5.3		No Conflict	30
Section 5.4		Governmental Consents	30
Section 5.5		Capital Stock	31
Section 5.6		Investment	31
Section 5.7		Public Reports	32
Section 5.8		Financial Statements	32
Section 5.9		Events Subsequent to Most Recent Fiscal Quarter End	32
Section 5.10		Undisclosed Liabilities	32
Section 5.11		Other Information	32
ARTICLE VI	COVENANTS		33
Section 6.1		Further Assurances; Cooperation	33
Section 6.2		Transition	33
Section 6.3		Confidentiality	33
Section 6.4		Tax Matters; Proration	34
Section 6.5		Real Estate	34
ARTICLE VII	SURVIVAL AND INDEMNIFICATION		35
Section 7.1		Survival of Representations and Warranties	35
Section 7.2		Indemnification by the Members	35
Section 7.3		Indemnification by the Purchaser	36
Section 7.4		Notice and Resolution of Claim	37
ARTICLE VIII	MISCELLANEOUS		38
Section 8.1		Notices	38
Section 8.2		Amendment, Waiver	40
Section 8.3		Assignment	40
Section 8.4		Entire Agreement	40
Section 8.5		Parties in Interest	40
Section 8.6		Expense	40
Section 8.7		Governing Law; Jurisdiction; Service of Process	41
Section 8.8		Specific Performance	41
Section 8.9		Transfer and Similar Taxes	41
Section 8.10		Counterparts; Facsimile Signature	41
Section 8.11		Headings	41

 

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EXHIBITS
Exhibit A		Certificate of Designation
Exhibit B		Subscription Agreement
Exhibit C		Voting Agreement
Exhibit D		Parent Shareholders’ Agreement
Exhibit E		Parent Registration Rights Agreement
Exhibit F		Escrow Agreement
Exhibit G		Secretary Certificate
Exhibit H		Special Warranty Deed
Exhibit I		Release
Exhibit J		Employment Agreement
Exhibit K		Non-competition Agreement
Exhibit L		Legal Opinion
SCHEDULES
Schedule 3.3(a)		Cash Purchase Price Allocation
Schedule 4.2(a)		Capitalization
Schedule 4.4(b)		Conflicts
Schedule 4.5		Consents
Schedule 4.7		Certain Changes or Events
Schedule 4.8		Undisclosed Liabilities
Schedule 4.9(a)		Liens
Schedule 4.9(b)(i)		Real Property
Schedule 4.9(b)(ii)		Transfers of Real Property
Schedule 4.9(b)(iii)		Consents to Leases
Schedule 4.9(c)(i)		Personal Property
Schedule 4.9(c)(ii)		Personal Property Leases
Schedule 4.10(a)		Litigation
Schedule 4.11(a)(i)		Tax Returns
Schedule 4.11(a)(ii)		Tax Jurisdictions
Schedule 4.11(c)(i)		Additional Taxes
Schedule 4.11(c)(ii)		Filed Tax Returns
Schedule 4.11(d)		Power of Attorney
Schedule 4.11(f)		Tax Elections
Schedule 4.11(g)		Unpaid Taxes
Schedule 4.12		Insurance
Schedule 4.13(c)		Environmental Permits
Schedule 4.14(a)		Material Contracts
Schedule 4.14(b)		Consents to Material Contracts
Schedule 4.15(a)		Intellectual Property
Schedule 4.15(c)		Computer Programs
Schedule 4.15(d)		Licenses

 

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Schedule 4.16(a)		Employee Benefits Plans
Schedule 4.17		Labor Matters
Schedule 4.19		Affiliate Transactions
Schedule 4.20		Indebtedness
Schedule 4.21		Brokers
Schedule 4.27		Bank Accounts
Schedule 4.28(a)		Customers and Suppliers
Schedule 4.28(b)		Disputes with Customers or Suppliers
Schedule 4.30(e)		FD&C Permits
Schedule 5.3(b)		Conflicts
Schedule 5.5		Capital Stock
Schedule 5.9		Events Subsequent to Most Recent Fiscal Quarter
Schedule 5.10		Undisclosed Liabilities

 

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INTEREST PURCHASE AGREEMENT

 

This INTEREST PURCHASE AGREEMENT, dated as of October 6, 2005 (this “Agreement”), is made and entered into by and among Accellent Corp. (the “Purchaser”), a Colorado corporation and each of the members of Machining Technology Group, LLC (the “Company”), a Tennessee limited liability company (each such member hereinafter individually referred to as a “Member” and collectively referred to as the “Members”).

 

WITNESSETH

 

WHEREAS, the Company is engaged in the business of developing, engineering, prototyping and manufacturing specialized implants and instruments for medical device companies (the “Business”);

 

WHEREAS, the Purchaser and UTI Holding Company, a Delaware corporation and wholly-owned subsidiary of the Purchaser (the “Purchaser Affiliate”) desire to acquire from the Members and the Members desire to sell to the Purchaser and the Purchaser Affiliate all of the Ownership Interests in the Company;

 

WHEREAS, the Purchaser is a wholly-owned subsidiary of Accellent Inc., a Maryland corporation (the “Parent”); and

 

WHEREAS, the Members have agreed to accept a portion of the purchase price hereunder in shares of the Parent’s convertible preferred stock.

 

NOW THEREFORE, in consideration of the mutual promises and covenants contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto hereby agree as follows:

 

ARTICLE I
DEFINITIONS AND TERMS

 

Section 1.1                                       Defined Terms .  Each capitalized term used and not otherwise defined herein shall have the respective meaning ascribed to such term in Schedule 1.1 attached hereto or in the Section referenced in such Schedule 1.1 .

 

Section 1.2                                       Terms Generally .  The definitions in Schedule 1.1 shall apply equally to both the singular and plural forms of the terms defined.  Whenever the context may require, any pronoun shall include the corresponding masculine, feminine and neuter forms.  The words “include,” “includes” and “including” shall be deemed to be followed by the phrase “without limitation” even if not followed actually by such phrase unless the context expressly provides otherwise.  Unless otherwise expressly defined, terms defined in the Agreement shall have the same meanings when used in any Exhibit or Schedule and terms defined in any Exhibit or Schedule shall have the same meanings when used in the Agreement or in any other Exhibit or Schedule.  Unless the context requires otherwise, references to Articles and Sections refer to Articles and Sections of this Agreement, and references to Schedules or Exhibits refer to the Schedules and Exhibits attached to this Agreement, each of which is made a part hereof for all

 

 

purposes.  The words “herein,” “hereof,” “hereto” and “hereunder” and other words of similar import refer to this Agreement as a whole and not to any particular provision of this Agreement.  The phrase “made available” in this Agreement shall mean that the information referred to has been made available by the party in question.  The phrases “the date of this Agreement,” “the date hereof” and terms of similar import, unless the context otherwise requires, shall be deemed to refer to the date set forth in the introductory paragraph of this Agreement.  References to “dollars” or “$” in this Agreement shall be deemed to refer to the applicable denomination of federal funds of the United States of America.

 

ARTICLE II
ACQUISITION AND DISPOSITION OF ASSETS

 

Section 2.1                                       Purchase and Sale .  At the Closing, upon the terms and subject to the conditions set forth in this Agreement, the Members shall sell and deliver to the Purchaser and the Purchaser Affiliate and the Purchaser shall and shall cause the Purchaser Affiliate to purchase from the Members, the Ownership Interests free and clear of all Liens.

 

Section 2.2                                       Operating Agreement .  The Members hereby waive and shall cause the Company to waive, as of the Closing, any and all of their respective rights under the Operating Agreement and agree that the Purchaser and the Purchaser Affiliate shall be deemed substitute members of the Company in accordance with the terms of the Operating Agreement and the Act.

 

ARTICLE III
PAYMENT AND DELIVERY

 

Section 3.1                                       Purchase Price .  The aggregate consideration (the “Purchase Price”) to the Members under this Agreement shall be an amount equal to (a) FORTY-FOUR MILLION DOLLARS ($44,000,000), (b) minus the amount of any Closing Adjustment as provided in Section 3.2 below, and (c) plus any portion of the Earnout Amount (as defined in Section 3.3(c) below) to which the Members may become entitled, which amounts shall be payable in accordance with Sections 3.3 and 3.4 below.

 

Section 3.2                                       Adjustments to Closing Cash Payment and Purchase Price .

 

The Closing Cash Payment (as defined in Section 3.3(a) below) will be subject to the following adjustment on the Closing Date (the “Closing Adjustment”), based on the difference between the Closing Date Cash and THREE HUNDRED THOUSAND DOLLARS ($300,000) (the “Baseline Closing Cash Amount”).

 

(a)                                   if the Baseline Closing Cash Amount exceeds the amount of Closing Date Cash, the Closing Cash Payment will be decreased by the amount by which the Baseline Closing Cash Amount exceeds the Closing Date Cash; and

 

(b)                                  if the Baseline Closing Cash Amount is equal to or less than the amount of Closing Date Cash, the Closing Cash Payment will not be adjusted pursuant to this Section 3.2.

 

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For purposes of this Agreement, “Closing Date Cash” shall mean the book balance of cash of the Company in the Closing Date Cash Account as of the close of business on the day immediately prior to the Closing Date (and not thereafter removed).  For purposes of this Agreement, “Closing Date Cash Account” shall mean the bank account of the Company identified on Schedule 4.27 .

 

Section 3.3                                       Payment of Purchase Price .

 

(a)                                   THIRTY THREE MILLION DOLLARS ($33,000,000) of the Purchase Price (the “Closing Cash Payment”), minus any Closing Adjustment thereto made pursuant to Section 3.2, minus the aggregate of the payoff amounts for the Company Indebtedness required to be delivered pursuant to the payoff letters described in Section 3.6(e), and minus the Escrow Amount, shall be paid in cash on the Closing Date by the Purchaser (the “Adjusted Closing Cash Payment”) for the benefit of the Members by inter-bank wire transfers of immediately available federal funds payable in the amounts and to the Persons set forth in Schedule 3.3(a) .

 

(b)                                  ELEVEN MILLION DOLLARS ($11,000,000) of the Purchase Price shall be paid on the Closing Date by the Parent to the Members (or the Members’ designees on the Members’ behalf) on behalf of the Purchaser by the issuance of 407,407 shares of Parent’s Class A-9 5% Convertible Preferred Stock (the “Class A-9 Preferred Stock”).  The Class A-9 Preferred Stock shall have the rights and preferences set forth in the certificate of designation for the Class A-9 Preferred Stock attached hereto as Exhibit A (the “Certificate of Designation”).  In connection with the issuance of the Class A-9 Preferred Stock pursuant to this Section 3.3(b), the Members and their permitted designees, if any, shall each be required to execute (i) a subscription agreement substantially in the form attached hereto as Exhibit B (the “Subscription Agreement”), (ii) a voting agreement substantially in the form attached hereto as Exhibit C (the “Voting Agreement”) and (iii) joinders (the “Joinders”) to the Parent Shareholders’ Agreement and Parent Registration Rights Agreement, the current versions of which are attached to this Agreement as Exhibit D and Exhibit E , respectively, as all of such agreements may be amended or restated from time to time.

 

(c)                                   SIX MILLION DOLLARS ($6,000,000) (the “Earnout Amount”) of the Purchase Price shall be paid after the Closing, if at all, pursuant to the terms of the earnout arrangement set forth in Section 3.4 hereof.

 

(d)                                  A portion of the Purchase Price equal to NINE HUNDRED THOUSAND DOLLARS ($900,000) (the “Escrow Amount”) shall not be paid to the Members at Closing and instead shall be deposited into an account (the “Escrow Account”) to be applied by the Escrow Agent in accordance with the terms of the escrow agreement substantially in the form attached hereto as Exhibit F (the “Escrow Agreement”).

 

(e)                                   Notwithstanding any other provision in this Agreement to the contrary, in the event that the Purchaser becomes entitled to indemnification under Article VII, the Purchaser shall be entitled to receive payment from the Escrow Account in accordance with the terms of the Escrow Agreement, on a dollar-for-dollar basis, in the full amount of any such adjustment or right to indemnification.

 

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Section 3.4                                       Earnout Payment . 

 

(a)                                   If, and only if, the consolidated EBITDA of the Company’s Business for the fiscal year ended December 31, 2006 (the “2006 EBITDA”) is equal to or greater than SEVEN MILLION NINE HUNDRED THOUSAND DOLLARS ($7,900,000), then, subject to Section 3.4(b) below, the Purchaser shall pay the Earnout Amount to the Members, in proportion to their respective percentage ownership of the Company Interests set forth on Schedule 4.2(a) , by wire transfer of immediately available federal funds.

 

(b)                                  Notwithstanding any other provision in this Agreement to the contrary, in the event that the Purchaser becomes entitled to indemnification under Article VII, the Purchaser may offset all or any portion of the Earnout Amount on a dollar-for-dollar basis, against the full amount of any such adjustment or right to indemnification.

 

(c)                                   On or before the earlier of (i) thirty (30) days after the Purchaser’s receipt of its outside auditor’s report with respect to the audit of the financial statements of the Purchaser for the fiscal year ending December 31, 2006 or (ii) March 30, 2007, the Purchaser shall provide to the Members a statement (the “2006 EBITDA Statement”) setting forth in reasonable detail the 2006 EBITDA.  The Purchaser shall provide the Members and their authorized representatives access to the Purchaser’s books and records (including financial statements) during normal business hours for the sole purpose of verifying the 2006 EBITDA.  The Earnout Amount, to the extent not offset in accordance with Section 3.4(b), shall be payable within five (5) days after (i) receipt by the Purchaser of written notice from the Members that they have accepted the 2006 EBITDA Statement, or (ii) becoming conclusive and binding pursuant to Section 3.4(d) below.  The Earnout Amount, to the extent not offset in accordance with Section 3.4(b), shall be paid by wire transfer of immediately available federal funds to an account or accounts designated by the Members and shall be made in proportion to the Member’s respective percentage ownership of the Company Interests set forth on Schedule 4.2(a) .

 

(d)                                  The Members shall notify the Purchaser in writing (the “2006 EBITDA Dispute Notice”) within thirty (30) days after receipt of the 2006 EBITDA Statement, with respect to its acceptance or dispute of such 2006 EBITDA Statement.  In the event that the Members dispute such 2006 EBITDA Statement, the Members shall set forth in such notice the facts of the dispute and, to the best of their ability, their calculation of 2006 EBITDA.  The Purchaser and the Members shall meet and use commercially reasonable efforts to resolve the items or amounts in dispute.  If the parties are unable to reach an agreement within thirty (30) days after the Purchaser’s receipt of the 2006 EBITDA Dispute Notice, then the Auditor shall be requested to conduct a review of the disputed items or amounts and compute the 2006 EBITDA.  In making its calculation, the Auditor shall consider only the items or amounts in dispute (and to the extent required, any other amounts necessary to derive the disputed items or amounts).  Such determination shall be made within thirty (30) days after the date on which the Auditor begins its review and shall be binding on the parties.  Fifty percent (50%) of the costs and expenses of the Auditor contemplated by this Section 3.4(d) shall be borne by the Purchaser and the remainder of such costs shall be borne jointly and severally by the Members.

 

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(e)                                   2006 EBITDA shall not include any management charges paid by the Company to the Purchaser of its Affiliates.  Although extraordinary, one-time or non-recurring items are excluded from the definition of EBITDA for purposes of this Agreement, any extraordinary, one-time or non-recurring items may be included in the definition of EBITDA, but only if such items are agreed upon between the Purchaser and the Members.  These items may include but will not be limited to:  (i) acquisitions of other medical device manufacturers, (ii) material changes in benefit programs or incentive plans or (iii) additional overhead incurred unrelated to the Company’s Business as of Closing.

 

Section 3.5                                       Closing .  The consummation of the transactions contemplated by this Agreement (hereinafter called the “Closing”) shall take place at the offices of Hogan & Hartson LLP in Denver, Colorado, on the date of the execution of this Agreement, or on such other date or at such other time and place (including remotely or by facsimile) as may be mutually agreed upon by the parties hereto.  The date on which the Closing occurs is referred to herein as the “Closing Date.”  Notwithstanding the foregoing or any other provision of this Agreement to the contrary, the parties hereto agree that the Closing shall be deemed to take effect at 12:01 A.M. (Eastern Standard Time) on the Closing Date.

 

Section 3.6                                       Deliveries by the Members .  At the Closing, the Members shall deliver to the Purchaser or cause to be delivered to the Purchaser:

 

(a)                                   Resignations of the Company’s managers and officers;

 

(b)                                  A duly executed certificate of the secretary of the Company or other appropriate officer of the Company with primary responsibility for the custody of the books and records of the Company, dated as of the Closing Date, in the form attached hereto as Exhibit G ;

 

(c)                                   A special warranty deed in the form attached hereto as Exhibit H , duly executed and acknowledged by GT Management, LLC, a Tennessee limited liability company (“GTM”), conveying to the Company fee simple title to the Real Property subject to the Real Property Lease Agreement dated December 31, 2004, between the Industrial Development Board of the Town of Arlington, Tennessee and GTM (the “GTM Property”), together with a Title Policy or Title Policies (or unconditional commitments therefor) insuring that fee simple title to the GTM Property is owned by the Company subject only to exceptions that are satisfactory to the Purchaser, in its discretion, with all premiums therefor paid by the Purchaser;

 

(d)                                  Copies of all consents, approvals, authorizations, agreements and other documentation required to be obtained by the Company and the Members to consummate the transactions contemplated by this Agreement without breaching any of the Members’ representations or warranties;

 

(e)                                   Payoff letters stating the payoff amounts for the Company’s Indebtedness and written evidence satisfactory to the Purchaser of the release of all Liens on the property and assets of the Company;

 

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(f)                                     A written release of claims against the Company, duly executed by the Members and GTM, in the form attached hereto as Exhibit I ;

 

(g)                                  A Subscription Agreement, Voting Agreement and the Joinders, duly executed by the Members;

 

(h)                                  The Escrow Agreement, duly executed by the Members;

 

(i)                                      Employment Agreements, each substantially in the form attached hereto as Exhibit J (the “Employment Agreements”) duly executed by the Members;

 

(j)                                      Non-competition Agreements, each substantially in the form attached hereto as Exhibit K (the “Non-competition Agreements”) duly executed by the Members;

 

(k)                                   An opinion of Martin, Tate, Morrow & Marston, P.C., counsel to the Company and the Members, dated as of the Closing Date, in form attached hereto as Exhibit L ;

 

(l)                                      A copy of the Financial Statements, as certified by the Members; and

 

(m)                                Such other documents, instruments and writings reasonably requested by Purchaser at or prior to the Closing.

 

Section 3.7                                       Deliveries by the Purchaser .  At the Closing, the Purchaser shall deliver or cause to be delivered to the Members:

 

(a)                                   The Adjusted Closing Cash Payment by inter-bank wire transfer of immediately available federal funds of the United States of America, which amount shall be paid and delivered to or for the benefit of the Members in the amounts and to the Persons set forth on Schedule 3.3(a) ;

 

(b)                                  A duly executed certificate of the secretary or an assistant secretary of the Purchaser, dated the Closing Date, in form attached hereto as Exhibit G ;

 

(c)                                   Copies of all consents, approvals, authorizations, agreements and other documentation required to be obtained by the Purchaser to consummate the transactions contemplated by this Agreement without breaching the Purchaser’s representations or warranties;

 

(d)                                  The Escrow Agreement, duly executed by the Purchaser;

 

(e)                                   Employment Agreements, duly executed by the Purchaser;

 

(f)                                     Non-competition Agreements, duly executed by the Purchaser;

 

(g)                                  Share certificates evidencing the Class A-9 Preferred Stock issued to the Members by the Parent;

 

(h)                                  A Subscription Agreement, Voting Agreement and the Joinders duly executed by the Parent; and

 

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(i)                                      Such other documents, instruments and writings reasonably requested by the Members at or prior to the Closing.

 

ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE MEMBERS

 

The Members hereby jointly and severally represent and warrant to the Purchaser that the statements contained in this Article IV are accurate and complete as of the date hereof, except as set forth in the disclosure schedules accompanying this Agreement.  The disclosure schedules will be arranged in numbered and lettered paragraphs corresponding to the numbered and lettered Sections contained in this Article IV.

 

Section 4.1                                       Authorization and Validity .  The Members have full individual power and the legal capacity to enter into this Agreement and the other documents and instruments to be executed and delivered by the Members pursuant hereto and to carry out the Members’ obligations hereunder and thereunder.  The execution, delivery and performance of any documents and instruments to be executed and delivered by the Company pursuant hereto, and the consummation by the Company of the transactions contemplated thereby, have been duly and validly authorized by all necessary action of the Company and the Members (in all cases, entity action or otherwise) and no other act or proceeding on the part of the Company or the Members, as applicable, is necessary to authorize the execution and delivery by the Members of this Agreement or the other documents or instruments to be executed and delivered by the Company or the Members pursuant hereto, or the consummation by the Company and the Members of the transactions contemplated hereby or thereby, as the case may be.  This Agreement and the other documents and instruments to be executed and delivered by the Company and the Members pursuant hereto (to the extent that such Person is a party hereto or thereto) have been duly and validly executed and delivered by the Company and the Members (to the extent that such Person is a party hereto or thereto) and, assuming this Agreement and the other documents and instruments to be executed and delivered by the Company and the Members pursuant hereto (to the extent that such Person is a party hereto or thereto) are the valid and binding obligation of any other parties hereto or thereto, constitutes a valid and binding obligation of the Company and the Members (to the extent that such Person is a party hereto or thereto) enforceable against the Company and the Members (to the extent that such Person is a party hereto or thereto) in accordance with its terms, except that (i) such enforcement may be subject to applicable bankruptcy, insolvency or other similar laws, now or hereafter in effect, affecting creditors’ rights generally, and (ii) the remedy of specific performance and injunctive and other forms of equitable relief may be subject to equitable defenses and to the discretion of the court before which any proceeding therefor may be brought.

 

Section 4.2                                       Capitalization, Subsidiaries .

 

(a)                                   Schedule 4.2(a)  sets forth the percentage of all outstanding Company Interests owned by each Member next to each Member’s name.  The Members hold of record and beneficially the Company Interests set forth next to their respective names on Schedule 4.2(a)  free and clean of any Liens.

 

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(b)                                  The Company Interests constitute 100% of the Ownership Interests.  Neither the Company, nor any Member has ever transferred, assigned, pledged, encumbered or hypothecated any of the Ownership Interests.

 

(c)                                   Other than the Operating Agreement, there are no buy/sell agreements, interest holder, equity holder or member agreements, subscriptions, options, warrants, calls, profit participation or similar rights, contracts, commitments, understandings, restrictions or arrangements relating to the issuance, sale, transfer or voting of any Ownership Interests, including any rights of conversion or exchange under any outstanding securities or other instruments.

 

(d)                                  The Company has no Subsidiaries.  The Company does not own any equity or other ownership interests in any other Person.

 

Section 4.3                                       Organization .  The Company (a) is a limited liability company, duly organized, validly existing and in good standing under the laws of the State of Tennessee, and (b) has full power and authority to own all of its properties and assets and to carry on the Business as it is now being conducted.  The Company is duly licensed or qualified to do business and is in good standing as a foreign entity in each jurisdiction where the ownership, lease or operation of its assets and properties or the conduct of the Business requires such license or qualification.  The Members have delivered to the Purchaser a complete and correct copy of the articles of organization, Operating Agreement and other organizational documents of the Company (collectively, the “Organizational Documents”).  Such Organizational Documents are in full force and effect and neither the Company nor any Member is in violation of any provision thereof.

 

Section 4.4                                       No Conflict .  Neither the execution, delivery or performance of this Agreement or the other documents and instruments to be executed and delivered by the Company or the Members pursuant hereto, nor the consummation by the Company or the Members of the transactions contemplated hereby or thereby, nor compliance by the Company or the Members with any of the provisions hereof or thereof will (a) conflict with or result in any breach of any provision of any Organizational Document of the Company, (b) except as set forth in Schedule 4.4(b) , constitute a change in control under, or require the consent from or the giving of notice to any third party (other than the spousal consent of the Members’ spouses), result in a violation or breach of, or constitute (with or without notice or lapse of time or both) a default (or give rise to any right of termination, amendment, cancellation or acceleration) under, or result in the creation of any Lien upon or affecting any of the assets, including contracts, of the Company pursuant to, any of the terms, conditions or provisions of any contractual obligation of the Company, (c) violate any order, writ, injunction, decree, statute, rule or regulation of any Governmental Authority applicable to the Company or the Members or to which any of their properties or assets may be bound, or (d) result in triggering of any right of first refusal or other right under any joint venture or other agreement to which the Company or any Member is a party.

 

Section 4.5                                       Governmental Consents .  Except as set forth in Schedule 4.5 , no consent, order or authorization of, or registration, declaration or filing with, any Governmental Authority

 

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is required in connection with the execution, delivery and performance of this Agreement or the consummation of the transactions contemplated hereby by the Company or the Members.

 

Section 4.6                                       Financial Statements .  The Members have previously furnished to the Purchaser a balance sheet of the Company and GTM dated as of June 30, 2005 (the “Second Quarter Balance Sheet”) and the Financial Statements.  The Financial Statements (including the notes thereto) and the Second Quarter Balance Sheet have been prepared in accordance with GAAP applied on a consistent basis during the periods involved, fairly present the financial position of the Company on the dates thereof, fairly present the results of operations of the Company for the periods involved and are in accordance with the books and records of the Company (which books and records are accurate and complete).   Reserves are reflected on the balance sheets in the Financial Statements, the Second Quarter Balance Sheet and the Closing Balance Sheet against assets in amounts that have been established on a basis consistent with the past practice.  There have been no changes in reserves of the Company since December 31, 2004.

 

Section 4.7                                       Absence of Certain Changes or Events .  Except as set forth in Schedule 4.7 , since December 31, 2004, (a) the Company has conducted its Business only in the ordinary course and consistent with past practice, (b) there have not been any developments or events which have had or could reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect and (c) except as contemplated in this Agreement, in the cases of (i) and (ii) the Company and the Members have not, and in the remaining subparagraphs in this Section 4.7, the Company has not:

 

(i)                                      adopted or consented to any amendment to the Organizational Documents of the Company;

 

(ii)                                   issued, sold or otherwise disposed of any Ownership Interests, or granted any options, warrants, phantom, equity appreciation, profit participation or other rights to purchase or obtain (including upon conversion, exchange or exercise) any Ownership Interests;

 

(iii)                                declared, set aside or paid any or made any distribution with respect to any Ownership Interests (whether in cash or in kind) or redeemed, purchased or otherwise acquired any of its Ownership Interests;

 

(iv)                               (A) sold, leased, transferred or disposed of any assets or rights, other than assets or rights that individually or in the aggregate would not be material, in either case, and other than in the ordinary course of business consistent with past practice, (B) incurred any Lien upon any assets or rights, except for Liens incurred in the ordinary course of business consistent with past practice, (C) acquired or leased any assets or rights other than in the ordinary course of business consistent with past practice, or (D) entered into any commitment or transaction with respect to (A), (B) or (C) above;

 

(v)                                  (A) incurred, assumed or refinanced any Indebtedness or (B) made any loans, advances or capital contributions to, or investments in, any Person;

 

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(vi)                               paid, discharged or satisfied any liability, obligation, or Lien other than payment, discharge or satisfaction of (A) Indebtedness as it matures and becomes due and payable or (B) liabilities, obligations or Liens in the ordinary course of business consistent with past practice;

 

(vii)                            (A) changed any of the accounting or Tax principles, practices or methods used by the Company, except as required by changes in applicable Tax Laws, or (B) changed reserve amounts or policies;

 

(viii)                         entered into any employment contract or other arrangement or made any change in the compensation payable or to become payable to any Member or any of the Company’s officers, employees, agents, consultants or Persons acting in a similar capacity (other than general increases in wages to employees who are not Members, officers or Persons acting in a similar capacity or Affiliates, in the ordinary course consistent with past practice), or to Persons providing management services, entered into or amended any employment, severance, consulting, termination or other agreement or employee benefit plan or made any loans to any of its Affiliates, officers, members, employees, agents or consultants or Persons acting in a similar capacity or made any change in its existing borrowing or lending arrangements for or on behalf of any of such Persons pursuant to an employee benefit plan or otherwise;

 

(ix)                                 paid or made any accrual or arrangement for payment of any pension, retirement allowance or other employee benefit pursuant to any existing plan, agreement or arrangement to any Affiliate, officer, member, employee or Person acting in a similar capacity; or paid or agreed to pay or made any accrual or arrangement for payment to any Affiliate, officers, members, employees or Persons acting in a similar capacity of any amount relating to unused vacation days, except payments and accruals made in the ordinary course consistent with past practice; grant, issue, accelerate or accrue salary or other payments or benefits pursuant to any pension, profit-sharing, bonus, extra compensation, incentive, deferred compensation, equity purchase, option, equity appreciation right, group insurance, severance pay, retirement or other employee benefit plan, agreement or arrangement, or any employment or consulting agreement with or for the benefit of any Affiliate, officer, member, employee, agent or consultant or Person acting in a similar capacity, whether past or present; or amend in any material respect any such existing plan, agreement or arrangement in a manner consistent with the foregoing;

 

(x)                                    entered into any collective bargaining agreement;

 

(xi)                                 made any payments, loans, advances or any other distributions to, or entered into any transaction, agreement or arrangement with, the Company’s Affiliates, officers, members, employees, agents, consultants or Persons acting in a similar capacity, shareholders of their Affiliates, associates or family members;

 

(xii)                              made or authorized any capital expenditures, except in the ordinary course consistent with past practice not in excess of $100,000 individually or $250,000 in the aggregate;

 

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(xiii)                           incurred any Taxes, except in the ordinary course of business consistent with past practice;

 

(xiv)                          settled or compromised any Tax liability or agreed to any adjustment of any Tax attribute or made any election with respect to Taxes;

 

(xv)                             failed to duly and timely file any Tax Return with the appropriate Governmental Authorities required to be filed by it in a true and complete and correct form and to timely pay all Taxes shown to be due thereon;

 

(xvi)                          (A) entered into, amended, renewed or permitted the automatic renewal of, terminated or waived any right under, any Material Contract, or, except in the ordinary course of business consistent with past practice, any other agreement, or (B) took any action or failed to take any action that, with or without either notice or lapse of time, would constitute a default under any Material Contract;

 

(xvii)                       (A) made any change in its working capital practices generally, including accelerating any collections of cash or accounts receivable or deferring payments or (B) failed to make timely accruals, including with respect to accounts payable and liabilities incurred in the ordinary course of business consistent with past practice;

 

(xviii)                    failed to renew (at levels consistent with presently existing levels), and has not terminated or amended or failed to perform, any of its obligations or permitted any material default to exist or caused any material breach under, or entered into (except for renewals in the ordinary course of business consistent with past practice), any material policy of insurance;

 

(xix)                            experienced any damage, destruction, or loss to its property not covered by insurance that could have a Material Adverse Effect on the Company;

 

(xx)                               disposed of or permitted to lapse any material Intellectual Property or granted any license or sublicense of any rights with respect to Intellectual Property;

 

(xxi)                            experienced significant failure on the part of the Company to operate the Business in the ordinary course and consistent with past practice so as to preserve its business operations intact or to preserve the goodwill of suppliers, customers and others having business relations with the Company;

 

(xxii)                         received, and the Company and the Members have no Knowledge of, any notice or other indication that any key supplier, vendor or customer of the Company will cease doing business with the Company (whether as a result of the consummation of the transactions contemplated hereby or otherwise) in the same manner and at the same level as previously conducted with the Company;

 

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(xxiii)                      except in the ordinary course of business consistent with past practice pursuant to appropriate confidentiality agreements, and except as required by any Law, provided any confidential information to any Person other than the Purchaser;

 

(xxiv)                     changed the compensation levels (including any bonus or formula for the calculation of any bonus) applicable to any class of the Company’s employees; or

 

(xxv)                        cancelled, compromised, waived or released any rights or claims.

 

Section 4.8                                       Absence of Undisclosed Liabilities .  Except as set forth on Schedule 4.8 , the Company has no Liabilities (and there is no basis for any present or future Claims against the Company giving rise to such Liabilities), except for (i) Liabilities set forth on the face of the Second Quarter Balance Sheet (rather than in the notes thereto) and (ii) Liabilities which have arisen after the date of the Second Quarter Balance Sheet in the ordinary course of business consistent with past practice (none of which would reasonably be expected to result in a Material Adverse Effect).

 

Section 4.9                                       Property; Assets .

 

(a)                                   The Company owns, or otherwise has a valid leasehold interest providing sufficient and legally enforceable rights to use, all of the property and assets necessary or otherwise material to the conduct of the Business.  Except as set forth on Schedule 4.9(a) , the Company has good and marketable title to all assets reflected on the Closing Balance Sheet, free and clear of all Liens.  All such assets are in good operating condition and repair (ordinary wear and tear excepted), have been reasonably maintained consistent with standards generally followed in the industry, are suitable for their present uses and, in the case of owned or leased structures, are structurally sound.

 

(b)                                  Schedule 4.9(b)(i)  contains a list of all real property owned, leased, subleased or used by or to the Company (the “Real Property”), indicating whether such property is owned, leased, subleased or used.  The current use of the Real Property does not violate the certificate of occupancy thereof or any local zoning or similar land use or other Laws and none of the structures on the Real Property encroaches upon real property of another Person, and no structure of any other Person encroaches upon any Real Property.   All facilities located on the Real Property have received all approvals of Governmental Authorities (including licenses and permits) required in connection with the operation thereof and have been operated and maintained in compliance with applicable laws. The Company has not received notice of any pending or threatened condemnation proceeding, or of any sale or other disposition in lieu of condemnation, affecting any of the Real Property.  Each parcel of Real Property abuts on or has direct vehicular access to a public road.  Except as otherwise indicated in Schedule 4.9(b)(ii) , the Company has not assigned, transferred, conveyed, mortgaged, deeded in trust or encumbered any interest in the Real Property.  With respect to each lease or sublease listed, except as otherwise indicated on Schedule 4.9(b)(iii) :

 

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(i)                                      the lease or sublease is in full force and effect and shall remain in full force and effect on identical terms after the Closing, without the need to obtain the consent of any party thereto;

 

(ii)                                   the Company is in possession of the leased or subleased premises and all rental and other obligations of the Company are current;

 

(iii)                                the Company is not in default and no event has occurred which, with or without notice or lapse of time, would constitute a breach or default or permit termination, modification or acceleration under such lease or sublease;

 

(iv)                               no party has repudiated any provision of any such lease or sublease; and

 

(v)                                  there are no disputes, oral agreements or forbearance programs in effect as to any lease or sublease to which the Company is a party.

 

(c)                                   Schedule 4.9(c)(i)  sets forth as of the date hereof, a complete and accurate list of all furniture, equipment, fixed assets, leasehold improvements, manufacturing equipment, automobiles and all other tangible personal property (including its net book value) owned by, in the possession of, or used by the Company in connection with the Business.  Except as set forth in Schedule 4.9(c)(ii) , such personal property is not held under any lease, security agreement, conditional sales contract, or other title retention or security arrangement or subject to any Liens or encumbrances, and is not located other than in the possession of the Company.

 

(d)                                  All receivables of the Company reflected on the Second Quarter Balance Sheet or created after the date of the Second Quarter Balance Sheet and accurately reflected on the Closing Balance Sheet arose from valid transactions in the ordinary course of business consistent with past practice.

 

Section 4.10                                 Litigation and Claims; Compliance with Laws .

 

(a)                                   Schedule 4.10(a)  sets forth all Litigation as of the date hereof, including the name of the claimant, the date of the alleged act or omission, a detailed narrative as to the nature of the alleged act or omission, the date the matter was referred to an insurance carrier of the Company (if referred), the estimated amount of exposure, the amount the Company has reserved, or the amount of the Company’s claim and estimated expenses of the Company in connection with such matters.  There is no Litigation which is not fully covered by the insurance policies referenced in Section 4.12.  Neither the Company nor any of the assets or properties of the Company, any Member or any Affiliate of any Member is subject to any order, consent decree, settlement or similar agreement with any Governmental Authority.  There is no judgment, injunction, decree, order or other determination of an arbitrator or Governmental Authority specifically applicable to the Company, any Member, any Affiliate of any Member, or any of the Company’s, any Member’s or any Affiliate’s of any Member properties or assets.  There is no Litigation relating to alleged unlawful discrimination or sexual harassment.  As of the date hereof, there is no Litigation which seeks to prevent consummation of the transactions

 

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contemplated hereby or which seeks material damages in connection with the transactions contemplated hereby.

 

(b)                                  The Company has complied and is in compliance with all Laws applicable to the Company and the Business.  The Company holds all material licenses, permits and other authorizations of Governmental Authorities necessary to conduct the Business as now being conducted or, under currently applicable Laws, to continue to conduct the Business as now being conducted.  To the Knowledge of the Company and the Members, there is no intent to make any changes in the conduct of the Company’s business that will result in or cause the Company to be in noncompliance with applicable Laws or that will require changes in or a loss of any such licenses, permits or other authorizations or an increase in any expenses related thereto.  Such licenses, permits and other authorizations as aforesaid held by the Company are valid and in full force and effect, and there are no (i) actions pending, or to the Knowledge of the Company and Members, threatened or (ii) to the Knowledge of the Company and the Members, investigations pending or threatened that could result in the termination, impairment or nonrenewal thereof.

 

Section 4.11                                 Taxes .

 

(a)                                   The Company has filed all Tax Returns that it was required to file except the Tax Return for the partial year arising by virtue of this transaction, which such filing shall be accomplished promptly after the Closing by the Members.  Except as set forth on Schedule 4.11(a)(i) , all such Tax Returns were correct and complete in all respects.  All Taxes owed by the Company (whether or not shown on any Tax Return) have been paid.  The Company is not currently the beneficiary of any extensions of time within which to file any Tax Return.  No claim has ever been made by an authority in a jurisdiction where the Company does not file Tax Returns that it is or may be subject to taxation by that jurisdiction.  Schedule 4.11(a)(ii)  contains a list of all jurisdictions (whether foreign or domestic) in which the Company has been or is required to file (or be included in) a Tax Return or pay any Tax.  There are no Liens on any of the assets or properties of the Company or the Members that arose in connection with any failure (or alleged failure) to pay any Tax.

 

(b)                                  The Company has complied in all respects with all applicable laws, rules and regulations relating to the payment and withholding of Taxes (including, without limitation, withholding of Taxes pursuant to Sections 1441, 1442, 1445 and 1446 of the Code and similar provisions under any applicable state or foreign laws) and has, within the time and in the manner prescribed by law, paid over to the proper Governmental Authorities all amounts so withheld.

 

(c)                                   Except as set forth on Schedule 4.11(c)(i) , neither the Company, nor any Member, manager or officer of the Company expects any authority to assess any additional Taxes for any period for which Tax Returns have been filed.  There is no dispute or claim concerning any Tax liabilities of the Company either (A) claimed or raised by any Governmental Authority or (B) as to which any of the Company or any of the Members has Knowledge.  Schedule 4.11(c)(ii)  lists all federal, state, local and foreign income Tax Returns filed with respect to the Company for taxable periods ended on or after January 1, 2000, indicates those Tax Returns that have been audited and indicates those Tax Returns that currently are the subject of audit.  The Company has delivered to the Purchaser correct and complete copies of all income Tax Returns,

 

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examination reports and statements of deficiencies filed by or on behalf of or issued with respect to the Company since January 1, 2000.

 

(d)                                  The Company has not waived any statute of limitations in respect of Taxes or agreed to any extension of time with respect to a Tax assessment or deficiency, which waiver or extension is still in effect.  Except as set forth in Schedule 4.11(d) , no power of attorney with respect to any Taxes for which the Company may be liable is currently in force.

 

(e)                                   The Company has not made any payments, is not obligated to make any payments and is not a party to any agreement that under certain circumstances could obligate it to make any payments that will not be deductible under Code Section 280G or Section 263 or otherwise.  The Company has not agreed to make, and is (and will not be as a result of any transactions contemplated by this Agreement) not required to make, any adjustment under Code Section 481 (or any similar provision of the Tax laws of any jurisdiction) by reason of a change in accounting method or otherwise.  None of the assets of the Company (a) is required to be treated as being owned by any other Person pursuant to the so-called “safe harbor lease” provisions of former Code Section 168(f)(8), (b) directly or indirectly secures any debt, the interest on which is tax-exempt under Code Section 103(a) or (c) is a “tax-exempt use property” within the meaning of Code Section 168(h).  The Company has not been a United States real property holding corporation within the meaning of Code Section 897(c)(2) during the applicable period specified in Code Section 897(c)(l)(A)(ii). No Member is a “foreign person” as defined in Code Section 1445(f)(3).  The Company has disclosed on its federal income Tax Returns all positions taken therein that could give rise to a substantial understatement of federal income Tax within the meaning of Code Section 6662.  The Company is not a party to any Tax allocation, indemnity or sharing agreement.  The Company (A) has not been a member of an Affiliated Group filing a consolidated federal income Tax Return and (B) does not have any Liabilities for the Taxes of any Person other than the Company under Treasury Regulation Section 1.1502-6 (or any similar provision of state, local or foreign law) or as a transferee or successor, by contract or otherwise.

 

(f)                                     All material elections with respect to Taxes affecting the Company are set forth on Schedule 4.11(f) .

 

(g)                                  Except as set forth on Schedule 4.11(g) , the unpaid Taxes of the Company (A) do not exceed the reserve for Tax Liabilities (rather than any reserve for deferred Taxes established to reflect timing differences between book and Tax income) set forth on the face of the Second Quarter Balance Sheet (rather than in any notes thereto) and (B) will not exceed the reserve for Tax Liabilities (rather than any reserve for deferred Taxes established to reflect timing differences between book and Tax income) as adjusted for the passage of time through the Closing Date.

 

(h)                                  The Company does not have any Liabilities pursuant to Code Section 6901 or otherwise under applicable state or federal law by virtue of any transfer of an asset or assets to it, and the Purchaser will not be subject to such Liabilities as a result of any of the transactions contemplated by this Agreement.

 

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(i)                                      The Company is currently taxed as a partnership for all applicable Tax purposes, and is not a partner or member of, any joint venture, partnership or other arrangement or contract that would result in the Company being treated as a partner for income tax purposes.

 

Section 4.12                                 Insurance .  Schedule 4.12 sets forth a complete and accurate list as of the date hereof of all primary, excess and umbrella policies, bonds and other forms of insurance owned or held by or on behalf of or providing insurance coverage to the Company, properties and assets of the Company (or its officers, salespersons, agents or employees or Persons acting in a similar capacity) and the extent, if any, to which the limits of liability under such policies have been exhausted.  True and complete copies of such policies are attached to Schedule 4.12 .  All such policies are in full force and effect and all such policies in such amounts will be outstanding and in full force and effect at the Closing.  The Company has not received notice of default under any such policy, nor has it received written notice of any pending or threatened termination of cancellation, coverage limitation or reduction, or material premium increase with respect to any such policy.  Schedule 4.12 sets forth a complete and accurate summary of all of the self-insurance coverage provided by the Company.  The Company is covered by insurance in scope and amount customary and reasonable for the business in which it is engaged.  No letters of credit have been posted and no cash has been restricted to support any reserves for insurance on the Second Quarter Balance Sheet or on the Closing Balance Sheet.

 

Section 4.13                                 Environmental Matters .

 

(a)                                   The Company has complied and is in compliance with, and the Real Property and all improvements thereon are in compliance with, all Environmental Laws.

 

(b)                                  The Company has no liability, known or unknown, contingent or absolute, under any Environmental Law, nor is the Company responsible for any such liability of any other Person under any Environmental Law, whether by contract, by operation of law or otherwise.   There are no facts, circumstances, or conditions existing, initiated or occurring prior to the Closing Date, which have or will result in liability to the Company under Environmental Laws.  There are no pending or to the Knowledge of the Company and the Members, threatened Environmental Claims.

 

(c)                                   The Company has been duly issued, and maintains all Environmental Permits necessary to operate the Business, assets and property of the Company as currently operated.  A true and complete list of all such Environmental Permits, all of which are valid and in full force and effect, is set forth in Schedule 4.13(c) .  The Company has timely filed applications for all Environmental Permits.  None of the Environmental Permits set forth in Schedule 4.13(c)  require consent, notification, or other action to remain in full force and effect following consummation of the transactions contemplated hereby.

 

(d)                                  The Real Property contains no underground improvements, including but not limited to treatment or storage tanks, or underground piping associated with such tanks, used currently or in the past for the management of Hazardous Materials, and no portion of the Real Property is or has been used as a dump or landfill or consists of or contains filled in land or wetlands.  With respect to any real property formerly owned, operated, or leased by the

 

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Company, during the period of such ownership, operation or tenancy, no portion of such property was used as a dump or landfill, and neither the Company nor the members is aware of any such use at any time prior to the Company’s ownership, operation, or tenancy of such real property.  Neither PCBs, “toxic mold,” nor asbestos-containing materials are present on or in the Real Property or the improvements thereon.  There has been no Release of Hazardous Materials at, on, under, or from the Real Property, nor was there such a Release at any real property formerly owned, operated or leased by the Company during the period of such ownership, operation, or tenancy, such that the Company is or could be liable for Remediation with respect to such Hazardous Materials.   No water body into which Hazardous Materials are Released in connection with the Company’s business is currently listed or proposed for listing under 33 U.S.C. §1313(d), nor are such properties adjacent to any such water body.

 

(e)                                   The Company has furnished to the Purchaser accurate and complete copies of all environmental assessments, reports, audits and other documents in its possession or under its control that relate to the Real Property, compliance with Environmental Laws, or any other real property that the Company formerly owned, operated, leased or used.  Any information the Company has furnished to the Purchaser concerning the environmental conditions of the Real Property, prior uses of the Real Property, and the operations of the Company related to compliance with Environmental Laws is accurate and complete.

 

(f)                                     No Real Property, and no property to which Hazardous Materials originating on or from such properties or the Business or assets of the Company has been sent for treatment or disposal, is listed or proposed to be listed on the National Priorities List or CERCLIS or on any other governmental database or list of properties that may or do require Remediation under Environmental Laws.  The Company has not arranged, by contract, agreement, or otherwise, for the transportation, disposal or treatment of Hazardous Materials at any location such that it is or could be liable for Remediation of such location pursuant to Environmental Laws.

 

(g)                                  No Lien in favor of any person relating to or in connection with any Environmental Claim has been filed or has attached to the Real Property.

 

(h)                                  No authorization, notification, recording, filing, consent, waiting period, Remediation, or approval is required under any Environmental Law in order to consummate the transactions contemplated hereby.

 

(i)                                      No proposed or final regulation published pursuant to Environmental Laws and no Environmental Permit for which the Company has or should have applied, could reasonably be expected to result in a capital expenditure in excess of $10,000.

 

Section 4.14                                 Material Contracts .

 

(a)                                   Schedule 4.14(a)  lists each of the following contracts and other agreements (or, in the case of oral contracts, summaries thereof) to which the Company is a party or by or to which the Company or any of its assets or properties is bound or subject (such contracts and agreements being “Material Contracts”):

 

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(i)                                      any advertising, market research or other marketing agreements;

 

(ii)                                   any employment, severance, non-competition, consulting or other agreements of any nature with any current or former member, officer or employee of the Company or any Affiliate of any of such Persons;

 

(iii)                                any agreements relating to the making of any loan, guarantee or advance by the Company;

 

(iv)                               any agreements providing for the indemnification by the Company of any Person;

 

(v)                                  any agreements with any Governmental Authority;

 

(vi)                               any contracts, agreements and other arrangements for the sale of assets or for the furnishing of services, goods or products by or to the Company (A) with firm commitments having a value in excess of $10,000 or (B) having a term which is greater than six (6) months and which is not terminable by the Company on less than ninety (90) days’ notice without the payment of any termination fee or similar payment;

 

(vii)                            any broker, distributor, dealer, representative or agency agreements;

 

(viii)                         any agreements (including settlement agreements) currently in effect pursuant to which the Company licenses the right to use any Intellectual Property to any Person or from any Person, and any research and development agreements;

 

(ix)                                 any confidentiality agreements entered into by the Company during the period commencing four (4) years prior to the date hereof pursuant to which confidential information has been provided to a third party or by which the Company was restricted from providing information to third parties;

 

(x)                                    any voting trust or similar agreements relating to the Ownership Interests;

 

(xi)                                 any leases of Real Property;

 

(xii)                              any joint venture, partnership or similar documents or agreements;

 

(xiii)                           any agreements that limit or purport to limit the ability of the Company, any Member, employee or independent contractor or to own, operate, sell, transfer, pledge or otherwise dispose of any assets or to compete with any business (including the Company);

 

(xiv)                          any agreement (or group of related agreements) under which the Company has incurred, assumed, or guaranteed any indebtedness or borrowed money or

 

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any capitalized lease obligation in excess of $25,000 in the aggregate or under which it has imposed a security interest on any of its assets, tangible or intangible;

 

(xv)                             any other agreement (or group of related agreements) under which the consequences of a default or termination could reasonably be expected to have a Material Adverse Effect;

 

(xvi)                          any other agreement (or group of related agreements) the performance of which involves the payment of consideration in excess of $50,000 in the aggregate during any twelve (12)-month period; or

 

(xvii)                       all other agreements, contracts or commitments not made in the ordinary course of business and consistent with past practice which are material to the Company.

 

(b)                                  Each Material Contract is legal, valid and binding on and enforceable against the Company and, to the Knowledge of the Company and the Members, the other parties thereto, and is in full force and effect.  Except as set forth in Schedule 4.14(b) , upon consummation of the transactions contemplated by this Agreement, each Material Contract shall remain in full force and effect without any loss of benefits thereunder and without the need to obtain the consent of any party thereto to the transactions contemplated by this Agreement.  The Company is not (and with or without the giving of notice or lapse of time would not be) in material breach of, or material default under, any Material Contract and, to the Knowledge of the Company and the Members, no other party thereto is in material breach of, or material default under, any Material Contract.  Neither the Company nor the Members have received any notice that any Material Contract is not enforceable against any party thereto, that any Material Contract has been terminated or repudiated before the expiration of its term or that any party to a Material Contract intends to terminate or repudiate such Material Contract prior to the termination date specified therein, or that any other party is in breach of, or default under, any Material Contract.  True and complete copies of all Material Contracts or, in the case of oral agreements, if any, written summaries thereof, have been delivered to the Purchaser.

 

Section 4.15                                 Intellectual Property .

 

(a)                                   The Company is the sole and exclusive owner of, or has the valid right to use, sell and license, all Intellectual Property necessary or otherwise material to the conduct of the Business as currently conducted and as currently proposed to be conducted free and clear of all Liens.  Schedule 4.15(a)  sets forth a complete and accurate list (including whether the Company is the owner or licensee thereof) of all (i) patents and patent applications, (ii) trademark or service mark registrations and applications, (iii) copyright registrations and applications and (iv) material unregistered copyrights, service marks, trademarks and trade names, each as owned or licensed by the Company.  The Company is currently listed in the records of the appropriate federal, state or other governmental agency as the sole owner of record for each owned application and registration listed in Schedule 4.15(a) .

 

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(b)                                  Each item of Intellectual Property listed in Schedule 4.15(a)  is valid and subsisting, in full force and effect in all material respects, and has not been canceled, expired or abandoned.  The Company possesses all right, title and interest in and to each such item free and clear of all Liens.  There is no pending, existing, or to the Knowledge of the Company and the Members, threatened, opposition, interference, cancellation proceeding or other legal or governmental proceeding before any court or registration authority in any jurisdiction against the items listed in Schedule 4.15(a)  or the Intellectual Property.  No Intellectual Property registration or application is subject to any maintenance fees or taxes or actions falling due, including without limitation the filing of an affidavit of use, renewal or response to an official action, within six (6) months after the Closing Date.  All products, made, used or sold under the Intellectual Property are marked with the proper patent, copyright and other notices.

 

(c)                                   Schedule 4.15(c)  lists all of the Computer Programs which are licensed, leased or otherwise used by the Company in connection with the operation of the Business as currently conducted, and identifies which is licensed, leased or otherwise used, as the case may be.   The Company does not own any Computer