UNIT PURCHASE AGREEMENT
among
Purchaser
and
and
THE UNIT HOLDERS LISTED ON EXHIBIT A,
Sellers
Dated as of
TABLE OF CONTENTS
ARTICLE 1. DEFINED TERMS ................................................................................................1
Section 1.1 Definitions ......................................................................................................1
Section 1.2 Accounting Terms .........................................................................................5
Section 1.3 Meaning of “Knowledge” .............................................................................5
Section 1.4 Disclosure Schedules .....................................................................................5
ARTICLE 2. PURCHASE OF UNITS ........................................................................................5
Section 2.1 Purchase and Sale of Units ...........................................................................5
Section 2.2 Cash Price ......................................................................................................5
Section 2.3 Contingent Purchase Price ...........................................................................5
Section 2.4 Transfer Taxes ..............................................................................................7
Section 2.5 Further Documents or Necessary Action ....................................................7
ARTICLE 3. REPRESENTATIONS AND WARRANTIES OF COMPANY,
_____________ AND .........................................................................................................8
Section 3.1 Organization ..................................................................................................8
Section 3.2 Power and Authority ....................................................................................8
Section 3.3 Legal Capacity and Authority, Capitalization ...........................................8
Section 3.4 Authorization; Enforceability ......................................................................8
Section 3.5 Absence of Certain Conflicts........................................................................9
Section 3.6 Financial Statements .....................................................................................9
Section 3.7 Absence of Material Changes ....................................................................10
Section 3.8 Title to Assets...............................................................................................11
Section 3.9 Leased Property ..........................................................................................11
Section 3.10 Contracts, Leases Agreements and Other Commitments .......................11
Section 3.11 Intellectual Property ...................................................................................12
Section 3.12 Taxes.............................................................................................................14
Section 3.13 Litigation; Judgments .................................................................................15
Section 3.14 Employee Benefit Plans ..............................................................................15
Section 3.15 Employees and Labor .................................................................................17
Section 3.16 Licenses, Permits and Authorizations; Compliance with Laws .............17
Section 3.17 Brokers and Finders ...................................................................................18
Section 3.18 Environmental Matters. .............................................................................18
Section 3.19 Personal Property .......................................................................................19
Section 3.20 Insurance .....................................................................................................19
Section 3.21 Liabilities .....................................................................................................20
Section 3.22 Customers ....................................................................................................20
Section 3.23 Actions Since Date of Reviewed Financial Statements ............................20
Section 3.24 Absence of Certain Practices .....................................................................20
Section 3.25 Related Party Transactions ........................................................................21
Section 3.26 Statements and Other Documents Not Misleading ..................................21
ARTICLE 4. REPRESENTATIONS AND WARRANTIES OF SELLERS ........................21
Section 4.1 Title to Units ................................................................................................21
Section 4.2 Capacity .......................................................................................................21
ARTICLE 5. REPRESENTATIONS AND WARRANTIES OF PURCHASER ..................21
Section 5.1 Corporate Organization .............................................................................22
Section 5.2 Corporate Power and Authority................................................................22
Section 5.3 Authorization; Enforceability ....................................................................22
Section 5.4 Absence of Certain Conflicts......................................................................23
Section 5.5 Brokers and Finders ...................................................................................23
Section 5.6 Consumer Credit ..................................... Error! Bookmark not defined.24
ARTICLE 6. OPERATIONS AND COVENANTS .................................................................23
Section 6.1 Company Covenants ...................................................................................23
Section 6.2 Purchaser Covenants ..................................................................................26
Section 6.3 Joint Covenants ...........................................................................................26
Section 6.4 HSR Filing ...................................................................................................26
Section 6.5 Supplements to Company Disclosure Schedule .......................................27
Section 6.6 WARN Act ...................................................................................................27
ARTICLE 7. CONDITIONS TO THE CLOSING ..................................................................27
Section 7.1 Conditions to Obligations of Parties .........................................................27
Section 7.2 Conditions to Obligations of Sellers and the Company...........................28
Section 7.3 Waiver of Conditions By Sellers ................................................................28
Section 7.4 Conditions to Obligations of Purchaser ....................................................28
Section 7.5 Waiver of Conditions By Purchaser..........................................................29
Section 7.6 Employee Matters .......................................................................................29
ARTICLE 8. CLOSING .............................................................................................................31
Section 8.1 Closing..........................................................................................................31
Section 8.2 Closing Deliveries by Sellers ......................................................................31
Section 8.3 Closing Deliveries by Purchaser ................................................................32
ARTICLE 9. INDEMNIFICATION .........................................................................................33
Section 9.1 Survival of Representations and Warranties ...........................................33
Section 9.2 Indemnification by Sellers ..........................................................................33
Section 9.3 Indemnification by Purchaser ...................................................................35
Section 9.4 Claims Procedure ........................................................................................35
Section 9.5 Insured Losses .............................................................................................36
Section 9.6 Limitation on Claims. .................................................................................36
Section 9.7 Sole Remedy ................................................................................................37
ARTICLE 10. POST-CLOSING COVENANTS ...........................................................37
Section 10.1 Retention of Records by Purchaser ...........................................................37
Section 10.2 Tax Matters .................................................................................................38
Section 10.3 Financial Statements ...................................................................................38
Section 10.4 Restrictive Covenant ...................................................................................38
Section 10.5 Approval Rates ........................................ Error! Bookmark not defined.40
Section 10.6 Collection of Accounts and Post-Closing Reconciliation .........................39
ARTICLE 11. MISCELLANEOUS ................................................................................39
Section 11.1 Amendments and Waivers .........................................................................39
Section 11.2 Successors and Assigns ...............................................................................39
Section 11.3 Damage to Assets and Property .................................................................39
Section 11.4 Termination .................................................................................................40
Section 11.5 Severability ..................................................................................................41
Section 11.6 Descriptive Headings ..................................................................................41
Section 11.7 Notices ..........................................................................................................41
Section 11.8 Governing Law ............................................................................................42
Section 11.9 Execution in Counterparts .........................................................................42
Section 11.10 Parties in Interest ........................................................................................42
Section 11.11 Expenses; Attorney’s Fees ..........................................................................42
Section 11.12 Dispute Resolution ......................................................................................42
Section 11.13 Sellers’ Agent ...............................................................................................43
Section 11.14 Entire Agreement ........................................................................................44
Exhibit A –Members
Exhibit B – Parent Agreement
Exhibit C – Form of Retention Agreement
Exhibit D – Form of Employment Agreement
Exhibit E – Form of Consulting Agreement
Exhibit F – Form of Opinion of
UNIT PURCHASE AGREEMENT
This UNIT PURCHASE AGREEMENT (“this Agreement”) made as of , by and
among (“Company”),
., a Delaware corporation (“Purchaser”),and the PERSONS AND ENTITIES
LISTED ON EXHIBIT A hereto (each, a “Seller” and collectively, the “Sellers”).
RECITALS
Company owns and operates certain assets used in the business of
. Sellers hold all of the outstanding membership interests of the Company,
and _____________ owns, directly or indirectly, a majority of such membership interests.
Purchaser desires to purchase all of the outstanding membership interests of the Company.
AGREEMENT
THEREFORE, in consideration of the foregoing, and intending to be legally bound, the
parties agree as follows:
ARTICLE 1.
DEFINED TERMS
Section 1.1 Definitions. In addition to the terms defined elsewhere in this
Agreement (which terms defined elsewhere in this Agreement are listed, with a reference to the
Section or paragraph of this Agreement containing each definition, in Schedule 1.1 attached hereto),
the following terms, when used herein, shall have the following meanings:
“Acquired Business” means the business carried on by Company of
.
“Affiliate” shall mean a Person that directly, or indirectly through one or more
intermediaries, controls or is controlled by, or is under common control with, the Person specified,
both before and after the Closing.
“Agreement” means any written, oral or implied contract, agreement, license, lease, power
of attorney, guaranty, warranty, surety arrangement or other commitment, including but not limited
to any contract or agreement for the purchase or sale of merchandise or for the rendition of services,
but not including this Agreement.
“Business Day” shall mean a day, other than Saturday or Sunday, on which banks in
Stamford, Connecticut are open to the public for the transaction of their normal banking business.
“Closing” and “Closing Date” shall have the meanings ascribed in Section 8.1.
“Code” means the Internal Revenue Code of 1986, as amended, and regulations
promulgated thereunder.
“Company Lease” means a lease by the Company of Company Leased Property.
“Company Leased Facility” means the portion of the property occupied by the Company at
occupied by the Company.
“Company Leased Property” means all real or personal property leased by the Company
and used in the Acquired Business.
“Confidentiality Agreement” means the agreement dated
between Company and Purchaser relating to the confidentiality of
information delivered by Company to Purchaser.
“Covered Affiliates” means Purchaser, and its direct and indirect subsidiaries.
“Encumbrance” means any Lien, superlien, pledge, right of first refusal, mortgage,
easement, covenant, restriction, reservation, conditional sale, prior assignment, or other
encumbrance, claim, burden or charge of any nature.
“Environmental Laws” means all Laws relating to the environment, health or safety of
Persons, natural resources, conservation, wildlife, waste management, Hazardous Substances, and
pollution (including without limitation, regulation of releases and disposals to air, soil, land water
and groundwater).
“ERISA” means the Employee Retirement Income Security Act of 1974, as amended.
“Existing Channels” means dental, veterinary, ophthalmology, weight loss, hair
replacement, infertility, audiology, and any other health care profession through which Purchaser or
a Covered Affiliate offers private label credit cards or other consumer credit programs that do not,
in either case, use the brand of a retailer or other participant.
“Extraordinary Change” means an extraordinary legal or regulatory change that has a
material and adverse effect on the Acquired Business or on the business of providing consumer
credit to participants in the Existing Channels.
“GAAP” means generally accepted accounting principles, consistently applied on a year-to-
year basis with respect to the financial statements of a Person.
“Governmental Authority” means any nation or government, foreign or domestic, any
state or other political subdivision thereof, and any agency or other entity exercising executive,
legislative, judicial, regulatory or administrative functions of government, including, without
limitation, all taxing authorities.
“Hazardous Substance” means materials that are or contain hazardous or toxic substances
or wastes, pollutants or contaminants including, without limitation, petroleum and petroleum
products, asbestos and polychlorinated biphenyls, radioactive substances and any other materials
which may be harmful to human health or the environment.
“Intangible” or “Intangibles” means any name, corporate name, fictitious name,
trademark, trademark application, service mark, service mark application, trade name, brand name,
product name, slogan, trade secret, know-how, patent, patent application, copyright, copyright
application, design, logo, formula, invention, product right, technology, Intellectual Property Right,
Software or other intangible asset of any nature, whether in use, operational, active, non-operative,
inactive, owned, marketed, maintained, supported, under development or design, used, licensed (as
licensor or licensee) or otherwise held for use by a Person, whether arising under statutory or
common law in any jurisdiction or otherwise, and including without limitation Intellectual Property
Rights associated with a website maintained by a Person.
“Intellectual Property Rights” means all intellectual property rights and industrial property
rights (throughout the world, in all media, now existing or created in the future, and for the entire
duration of such rights) arising under statutory or common law, contract or otherwise, and whether
or not perfected, including without limitation, all (a) patents, reissues and reexamined patents and
patent applications, whenever filed and wherever issued, including without limitation,
continuations, continuations in part, substitutes and divisions of such applications and all priority
rights result from such applications; (b) rights associated with works of authorship including, but
not limited to, copyrights, moral rights, copyright applications, copyright registrations; (c) rights
relating to the protection of trade secrets and confidential information; (d) rights in trademarks,
service marks, trade names, logos, symbols and the like; (e) rights analogous to those set forth in
this paragraph and any and all other proprietary rights relating to intangible property; and (f)
divisions, continuations, renewals, reissues and extensions of the foregoing (as and to the extent
applicable) now existing, hereafter filed, issued or acquired.
“Law” or “Laws” means any statute, rule, common law, ordinance, regulation, permit,
approval, authorization, order, writ, judgment, injunction, decree, determination, or award enacted
or promulgated by a Governmental Authority, to which a party, its business or assets is subject
(including state privacy, data protection and usury laws, the federal Truth-In-Lending Act, the Fair
Debt Collection Practices Act, the Equal Credit Opportunity Act, the Fair Credit Reporting Act, the
Gramm-Leach-Bliley Act, the Health Insurance Portability and Accountability Act of 1996, the
Electronic Fund Transfer Act and any implementing regulations under all such laws).
“Lien” means any interest, consensual or otherwise, in property securing a monetary
obligation owed to, or a claim by, a Person other than the owner of the subject property, whether
such interest is based on the common law, statute or contract.
“Loss” means any demand, obligation, liability (or action, suit or proceeding, including but
not limited to any inquiry or investigation with respect thereto), claim, loss, damage, cost or
expense, including, without limitation, interest, penalties and reasonable costs of preparation and
reasonable attorneys fees.
“Material Adverse Effect” means any event, occurrence or action which, with or without
the passage of time, could reasonably be expected to have a material adverse effect on the assets,
business, results of operations or condition (financial or otherwise) of the Acquired Business, but
excluding any change or event in the industry in which Company competes that does not singularly
affect Company or its assets and properties, and excluding political and economic matters of general
application and excluding any change resulting from the announcement of the transactions
contemplated hereby.
“Parent” means .
“Permits” means approvals, authorizations, consents, licenses, franchises, orders,
certifications and other permits issued by any Governmental Authority.
“Person” means an individual, corporation, partnership, limited liability company,
unincorporated association, trust, joint venture or other organization or entity, including a
Governmental Authority.
“Personal Property” means equipment, vehicles, machinery, computer hardware, office
equipment, tools, spare parts, furniture, appliances, and fixtures used or held for use by a Person.
“Prime Rate” means that rate of interest charged by .
as its base or prime rate as a component of the interest rate it charges credit card holders.
“Program Sales” means
“Related Documents” means the instruments, certificates and other documents and
agreements referred to herein, which shall be executed pursuant to or in connection with this
Agreement, as described in Article 8.
“Retention Agreements” means the agreements in the form of Exhibit C hereto that are
executed and delivered to Purchaser at Closing.
“Software” means any computer program, operating system, application system, firmware
or software of any nature, whether operational, active, under development or design, non-
operational or inactive, including all object code, source code, comment code, algorithms,
processes, formulae, interfaces, navigational devices, menu structures or arrangements, icons,
operational instructions, scripts, commands, syntax, screen design, reports, designs, concepts and
visual expressions, technical manuals, user manuals, test scripts and other documentation therefor,
whether in machine-readable form, programming language or any other language or symbols, and
whether stored, encoded, recorded or written on disk, tape firm, memory, device, paper or other
media of any nature, and any and all databases necessary or appropriate in the use of the computer
program, operating system, application, firmware or software, and any and all Intellectual Property
Rights therein and thereto.
“Tax” or “Taxes” means any income, gross receipts, excise, business and occupation,
franchise, real and personal property, sales and use, transfer, withholding, social security,
unemployment, disability, import duties or charges, and other taxes or governmental fees or charges
or other assessments (whether imposed directly or through withholding), including any interest or
penalties that may become payable in respect thereof, imposed by any Governmental Authority.
“Units” means the issued and outstanding membership interests of the Company.
Section 1.2 Accounting Terms. Any term that is used in the context of
describing or referring to an accounting concept and that is not specifically defined herein shall be
construed in accordance with GAAP.
Section 1.3 Meaning of “Knowledge”
For all purposes of this Agreement, any reference to the existence or absence of facts which
is indicated to be based on the Company’s or Sellers’ knowledge is intended to signify that, after
reasonable inquiry, no information has come to the attention of _____________, any officer of the
Company, or any Seller making the representation or warranty that would give such Person actual
knowledge of the existence or absence of such facts or would have given a reasonable person actual
knowledge of the existence or absence of such facts.
Section 1.4 Disclosure Schedules. Schedules delivered by Sellers and
Company to Purchaser (the “Seller Disclosure Schedules”) or by Purchaser to Company (the
“Purchaser Disclosure Schedules” and collectively with the Company Disclosure Schedules, the
“Disclosure Schedules”) in connection with the execution and delivery of this Agreement or after
the execution of this Agreement contain certain information and data required to be disclosed by
this Agreement. The Disclosure Schedules identify the information and data disclosed with
reference to the sections of this Agreement and shall be attached to and form a part of this
Agreement. Any matter set forth in the Disclosure Schedules with respect to any section of this
Agreement shall be deemed to have been disclosed for all purposes under this Agreement.
ARTICLE 2.
PURCHASE OF UNITS
Section 2.1 Purchase and Sale of Units. On the terms and subject to the
conditions set forth in this Agreement, Sellers shall sell, assign, transfer, convey and deliver to
Purchaser, and Purchaser shall purchase, acquire and accept from Sellers, free and clear of all Liens,
all of the Units.
Section 2.2 Cash Price. In consideration for the sale by Sellers of the
Units and the representations and warranties of the Company and Sellers, Purchaser shall pay to
Sellers the sum of $ (the “Initial Purchase Price”). $
to be delivered at Closing pro rata to all Sellers listed on Exhibit A and $
to be retained by Purchaser and applied to any payments required to be made
pursuant to the Retention Agreements with Company employees listed on Schedule 7.4(h)(2). Any
part of the retained amount not paid on or before the first anniversary of the Closing will be
distributed within 30 days after such anniversary pro rata to all Sellers listed on Exhibit A.
Section 2.3 Contingent Purchase Price
(a) Purchaser shall pay to Sellers the sum of $ (a “Tier
One Payment”) for each 12 month period commencing on the Closing Date or an anniversary
thereof, as applicable, ending in (the “Contingent Purchase Price
Measuring Periods”) during which Program Sales exceed the following annual amounts (each, a
“Base Amount”).
(b) Purchaser shall pay to Sellers an amount equal to in
excess of the Base Amount (a “Tier Two Payment”) during each 12 month period ending
(in each case, calculated as of the anniversary of the Closing
Date). Tier One Payments and Tier Two Payments shall be collectively referred to herein as the
“Contingent Purchase Price”.
(c) Tier One and Tier Two Payments for the periods ending in
shall be made within 30 days of the relevant anniversary of the
Closing Date. Any Tier One Payment or Tier Two Payment that is not paid within the time periods
prescribed in this Agreement shall accrue interest from the due date at the then applicable Prime
Rate. Any portion of any Tier One Payment or Tier Two Payment that is withheld or deferred by
Purchaser for any reason, and is subsequently paid or determined to be payable to Sellers under this
Agreement, shall bear interest at the applicable Prime Rate from the original due date thereof. Tier
One and Tier Two Payments for the period ending in 2005 may be deferred, at Purchaser’s sole
discretion, until all known, threatened or identified claims for indemnity pursuant to Section 9.2
with respect to which Purchaser has complied with the notice requirements of Section 9.4 have been
paid, released or otherwise satisfied. Interest will be imputed on the Tier One and Tier Two
Payments and calculated at the applicable federal rate as published by the Internal Revenue Service,
and will be reported by Sellers and Purchaser as interest income and expense. Purchaser will
provide its calculation of such imputed interest within 30 days of the end of each calendar year,
commencing in January, 2003. Nothing in this Section 2.3(d) shall be construed as requiring
Purchaser to make payments in amounts greater than the Tier One and Tier Two payments
calculated in Sections 2.3(a), (b) and (c) above.
(d) (i) Purchaser shall prepare and deliver to _____________, as agent for
Sellers, not later than ten business days after each Contingent Purchase Price Measuring Period a
written accounting setting forth in reasonable detail Purchaser’s calculation of (x) Program Sales for
such period, broken down by quarter, source and such other criteria as may be monitored by
Purchaser, and (z) the amount of any Program Sales Adjustment for such period, as determined
pursuant to Section 10.5(b). At the time set for the delivery of each Tier One and Tier Two
Payment, Purchaser shall deliver to Sellers, Purchaser’s calculation of such payment, together with
Program Sales (together with any Program Sales Adjustments) for each such Contingent Purchase
Price Measuring Period. Sellers shall have the right to have , or another national
accounting firm reasonably acceptable to Purchaser, as representatives of the Sellers, inspect the
books and records of Purchaser and its Covered Affiliates for purposes of determining compliance
with the Contingent Purchase Price and Approval Rate provisions of this Agreement. Any such
inspection must be initiated by written notice to Purchaser not more than 60 days after receipt by
_____________ of Purchaser’s calculation of the relevant Contingent Purchase Price payment, and
upon such notice Purchaser shall make all relevant books, records, and supporting documentation
reasonably available to Seller’s representative.
(ii) In the event the inspection by the Seller’s representative reveals a
shortfall, Purchaser shall within ten (10) days of receipt of written notice of such determination
either pay the shortfall amount, with interest as specified in this Agreement, or notify
_____________ as agent for the Sellers in writing that it disputes such determination. If the parties
are unable to resolve the dispute by negotiations, it shall be submitted to a single arbitrator for
binding resolution. The prevailing party in any such arbitration shall be entitled to recover the
expense of such arbitration, including such party’s reasonable attorney’s fees.
(iii) The cost of the inspection shall be borne by Sellers, provided that in
the event the inspection reveals a shortfall in Contingent Purchase Price payments to Sellers that is
finally determined to be in excess of $50,000, the cost of such inspection shall be borne by
Purchaser. Any shortfall, and interest thereon as provided in this Agreement, shall be paid within
ten (10) days of final determination of the shortfall amount.
(e) In order to protect Sellers’ interest in the Contingent Purchase Price,
Purchaser covenants and agrees with Sellers that, during the Contingent Purchase Price Measuring
Periods, it will refrain from, and not permit the Covered Affiliates to take, any action or omission
that is intended to divert Program Sales, or loan volume that would otherwise constitute Program
Sales, from the Company or the Covered Affiliates. Sellers agree that Purchaser retains complete
discretion over the operation of the Acquired Business, and is free to operate it in any manner, or to
cease or alter its operations, as it sees fit, provided, however, that should Purchaser cease operating
the Acquired Business, or materially and adversely reduce the resources devoted to the Acquired
Business, (other than as a result of an Extraordinary Change) before the end of the final Contingent
Purchase Price Measuring Period, it shall pay to Sellers the present value (discounted at the then
current Prime Rate) of any remaining unpaid Tier One Payments and the maximum amount of any
remaining unpaid Tier Two Payments, reduced by any offset pursuant to Section 2.3(c), not later
than 30 days after the event giving rise to the obligation to pay on an accelerated basis.
(f) Purchaser may prepay at any time the present value (discounted at the then
current Prime Rate) of any remaining unpaid Tier One Payments and the maximum amount of any
remaining unpaid Tier Two Payments, reduced by any offset pursuant to Section 2.3(c), and upon
such payment all obligations of Purchaser, or its Affiliates (other than indemnity obligations
pursuant to Article 9) to Sellers shall terminate.
Section 2.4 Transfer Taxes. Purchaser and Sellers shall split evenly
between them liability for federal, state or local transfer, use or value-added taxes arising from the
transactions contemplated by this Agreement.
Section 2.5 Further Documents or Necessary Action. Parent has
executed and delivered the Parent Agreement concurrently with the execution and delivery of this
Agreement. Sellers and Purchaser, respectively, shall take all such action as may be necessary or
appropriate in order to effectuate the transactions contemplated hereby. On or after the Closing
Date, Seller and Purchaser shall take all such further action as may be reasonably necessary to vest
Purchaser with full title to the Units. Each party shall bear its own costs and expenses in connection
with any such further actions.
ARTICLE 3.
REPRESENTATIONS AND WARRANTIES OF COMPANY, _____________ AND
_____________
Company, _____________ and _____________ hereby jointly and severally represent and
warrant to Purchaser that the following statements are true and correct on the date of this Agreement
(unless some other date is specified as of which the statement is made) and will be true and correct
on the Closing Date as though made on such date:
Section 3.1 Organization. Company is a limited liability company duly
organized and validly existing under the laws of the State of . Company is
duly qualified or licensed as a foreign entity and is in good standing in each jurisdiction listed on
Schedule 3.1 attached hereto, which constitutes all of the jurisdictions in which such qualification is
required. Company has no subsidiaries, does not own or control any other Person, and does not
have any direct or indirect equity investment in any other Person. The Units listed on Exhibit A
constitute all of the issued and outstanding ownership interests of Company, and there are no
options or rights to receive Units ownership interests, equity appreciation or similar rights of the
Company. Schedule 3.1 contains a complete list of all Company Affiliates.
Section 3.2 Power and Authority. Company has the legal power and
authority to own, lease, possess and operate the Acquired Business. Sellers have delivered to
Purchaser true and complete copies of the Articles of Organization, Bylaws and Operating
Agreement of the Company, with all amendments thereto. _____________ and _____________
each have the requisite legal capacity and competence to execute and deliver this Agreement and the
Related Documents to which he is a party and to carry out the transactions contemplated hereby and
thereby.
Section 3.3 Legal Capacity and Authority, Capitalization.
_____________ and _____________ have, and to their knowledge each of the other Sellers has, the
requisite legal capacity and competence to execute and deliver this Agreement and the Related
Documents to which he is a party and to carry out the transactions contemplated hereby and thereby.
The membership interests in the Company reflected on Exhibit A constitute all of the issued and
outstanding equity interests of the Company. Except as disclosed in Schedule 3.3, no person has
any preemptive right to purchase Units or any other securities of the Company, and there are no
outstanding securities or other instruments of the Company which are convertible into or
exchangeable for its membership interests. Other than this Agreement, the Company is not a party
to any contracts, arrangements, commitments or restrictions relating to the issuance, sale, transfer or
purchase or obtaining of Units or other securities or instruments of the Company.
Section 3.4 Authorization; Enforceability. The Manager of the
Company has duly approved, and on the Closing Date Company will have obtained the member
approval necessary for the authorization, execution, delivery and performance of, this Agreement by
Company and the consummation of the transactions contemplated hereby. This Agreement has
been duly executed and delivered by Company and Sellers. As of the Closing Date, each of the
Related Documents to which Company or Sellers are party will have been duly executed and
delivered by Company and/or Sellers. Assuming the due authorization, execution and delivery by
Purchaser, this Agreement constitutes a valid and binding obligation of Company and Sellers,
enforceable against Company and Sellers in accordance with its terms, except to the extent that
enforceability may be limited by bankruptcy, reorganization, insolvency or other laws affecting the
enforcement of creditors’ rights generally or the availability of equitable remedies subject to the
discretion of the court. Upon execution of the Related Documents, the Related Documents to which
Company and/or Sellers are party will be the valid and binding obligations of Company and/or
Sellers, enforceable against Company and/or Sellers in accordance with their respective terms,
except to the extent that enforceability may be limited by bankruptcy, reorganization, insolvency or
other laws affecting the enforcement of creditors’ rights generally or the availability of equitable
remedies subject to the discretion of the court.
Section 3.5 Absence of Certain Conflicts. Except as disclosed on
Schedule 3.5(a) attached hereto, neither the execution and delivery of this Agreement or the Related
Documents to which Company or Sellers are a party nor the consummation of the transactions
contemplated hereby and thereby will (a) conflict with or result in a breach of any provision of the
Articles of Organization or Operating Agreement of the Company; (b) require the payment or the
incurring of any obligation on the part of Company or any Seller, or result in a loss of rights or
default, conflict with, constitute a breach under, or give rise to any right of termination, cancellation
or acceleration, with or without notice or lapse of time, under any of the provisions of any
Agreement to which Company or any Seller is subject