No Conflicts The execution, delivery and performance by the Company of this Agreement and the other Transaction Documents to which it is a party, the issuance and sale of the Securities and the consummation by it of the transactions contemplated hereby and thereby do not and will not (i) conflict with or violate any provision of the Company’s or any Subsidiary’s certificate or articles of incorporation, bylaws or other organizational or charter documents, or (ii) conflict with, or constitute a default (or an event that with notice or lapse of time or both would become a default) under, result in the creation of any Lien upon any of the properties or assets of the Company or any Subsidiary, or give to others any rights of termination, amendment, anti-dilution or similar adjustments, acceleration or cancellation (with or without notice, lapse of time or both) of, any agreement, credit facility, debt or other instrument (evidencing a Company or Subsidiary debt or otherwise) or other understanding to which the Company or any Subsidiary is a party or by which any property or asset of the Company or any Subsidiary is bound or affected, or (iii) subject to the Required Approvals, conflict with or result in a violation of any law, rule, regulation, order, judgment, injunction, decree or other restriction of any court or governmental authority to which the Company or a Subsidiary is subject (including federal and state securities laws and regulations), or by which any property or asset of the Company or a Subsidiary is bound or affected; except in the case of each of clauses (ii) and (iii), such as could not have or reasonably be expected to result in a Material Adverse Effect.
Authority; No Conflict (a) This Agreement constitutes the legal, valid, and binding obligation of Sellers, enforceable against Sellers in accordance with its terms. As to any Seller who is a party thereto, upon the execution and delivery by such Seller of the Employment Agreements, the Sellers’ Releases, the Consulting Agreement and the Stock Pledge Agreement (collectively, the “Sellers’ Closing Documents”), the Sellers’ Closing Documents will, as to such Seller, constitute the legal, valid, and binding obligations of such Seller, enforceable against such Seller in accordance with their respective terms except (i) as limited by applicable bankruptcy, insolvency, reorganization, moratorium; fraudulent conveyance, or other laws of general application relating to or affecting the enforcement of creditors’ rights generally, (ii) as limited by laws relating to the availability of specific performance, injunctive relief, or other equitable remedies, and (iii) to the extent the indemnification provisions and the choice of law provisions contained in the Sellers’ Closing Documents may be limited by applicable laws. Sellers have the absolute and unrestricted right, power, authority, and capacity to execute and deliver this Agreement and, as to any Seller who is a party thereto, the Sellers’ Closing Documents, and to perform their obligations under this Agreement and the Sellers’ Closing Documents.
(b) Neither the execution and delivery of this Agreement nor the consummation or performance of any of the Contemplated Transactions will, directly or indirectly (with or without notice or lapse of time):
(i) contravene, conflict with, or result in a violation of (A) any material provision of the Organizational Documents of the Company, or (B) any resolution adopted by the board of directors or the stockholders of the Company;
(ii) contravene, conflict with, or result in a violation of; or give any Governmental Body or other Person the right to challenge any of the Contemplated Transactions or to exercise any remedy or obtain any relief under, any material Legal Requirement or any material Order to which the Company or any Seller, or any of the assets owned or used by Company, maybe subject;
(iii) contravene, conflict with, or result in a violation of any of the terms or requirements of, or give any Governmental Body the right to revoke, withdraw, suspend, cancel, terminate, or modify, any material Governmental Authorization that is held by the Company;
(iv) cause Buyer or the Company to become subject to, or to become liable for the payment of, any material amount of Tax;
(v) cause any of the assets owned by the Company to be reassessed or revalued by any taxing authority or other Governmental Body;
(vi) contravene, conflict with, or result in a violation or breach of any material provision of or give any Person the right to declare a default or exercise any remedy under, or to accelerate the maturity or performance of; or to cancel, terminate, or modify, any Seller Material Contract; or
(vii) result in the imposition or creation of any material Encumbrance upon or with respect to any of the assets owned or used by the Company. Neither the Sellers nor the Company is or will be required to give any notice to or obtain any Consent from any Person in connection with the execution and delivery of this Agreement or the consummation or performance of any of the Contemplated Transactions.
(c) Sellers are acquiring the Buyer Shares for their own account and not with a view to their distribution within the meaning of Section 2(11) of the Securities Act. Each Seller is an “accredited investor” as such term is defined in Rule 501(a) under the Securities Act.
(d) Each Seller has had an opportunity to (1) ask questions of and receive answers from Buyer concerning the terms and conditions of the Contemplated Transactions, (ii) obtain any additional information which Buyer possesses or can acquire without unreasonable effort or expense that is necessary to verify the accuracy of the information furnished, and (iii) consult and seek advice from an attorney of such Seller’s own choosing prior to entering into this Agreement. The Company and each Seller acknowledge that, except as set forth herein, no representations or warranties have been made to it, or to its Representatives, by Buyer or others with respect to Buyer’s business and its financial condition and has obtained, in its judgment, sufficient information from Buyer to evaluate the merits and risks of an investment in the Buyer Shares. Each Seller acknowledges that it has received full and fair disclosure and carefully considered each of the following items in its entirety: (i) the Buyer’s Business Plan, dated March 2006 and all exhibits thereto; (ii) the audited financial statements of the Buyer as of and for the year ended June 30, 2004 and 2005, and unaudited interim financial statements as of and for the twelve months ended June 30, 2006; and (iii) the Risk Factors attached hereto as Exhibit 3.2(d)(iii). Each Seller is aware of the risks inherent in an investment in the Buyer Shares and acknowledges that there can be no assurance of the future viability or profitability of Buyer, nor can there be any assurance relating to the current or future value of the Buyer Shares. The foregoing, however, does not limit or modify the representations and warranties of Buyer in Section 4 of this Agreement or the right of Sellers to rely thereon.
(e) Each Seller has such knowledge and experience in financial, investment and business matters as to be capable of evaluating the merits and risk of an investment in the Buyer Shares. Each Seller represents and warrants that (i) the Seller’s overall commitment to investments which are not readily marketable, including the purchase of Buyer Shares, is reasonable in relation to the Seller’s net worth; (ii) each Seller is acquiring the Buyer Shares for investment for the Seller’s own account, and not with a view towards the resale or distribution of any or all such Buyer Shares; and (iii) the Seller can bear the economic risk of losing the Seller’s entire investment.
Approvals; No Conflicts The Transactions (a) do not require any consent or approval of, registration or filing with, or any other action by, any Governmental Authority or any other third Person, nor is any such consent, approval, registration, filing or other action necessary for the validity or enforceability of any Loan Document or the consummation of the Transactions, except such as have been obtained or made and are in full force and effect other than (i) the recording and filing of the Security Instruments as required by this Agreement and (ii) those third party approvals or consents which, if not made or obtained, would not cause a Default hereunder, could not reasonably be expected to have a Material Adverse Effect or do not have an adverse effect on the enforceability of the Loan Documents, (b) will not violate any applicable law or regulation or the charter, by-laws or other organizational documents of the Borrower or any Restricted Subsidiary or any order of any Governmental Authority, (c) will not violate or result in a default under any indenture, agreement or other instrument binding upon the Borrower or any Restricted Subsidiary or its Properties, or give rise to a right thereunder to require any payment to be made by the Borrower or such Restricted Subsidiary and (d) will not result in the creation or imposition of any Lien on any Property of the Borrower or any Restricted Subsidiary (other than the Liens created by the Loan Documents).
