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 Exhibit 10.1

 
 
 
 
 
 
 
 
 
 
 
 
MEMBERSHIP INTEREST PURCHASE AGREEMENT
 
by and among
 
 
STEVEN MADDEN, LTD.
 
and
 
The Members
 
of
 
COMPO ENHANCEMENTS, LLC
 
Dated as of May 16, 2007
 
 
 
 
 
 

 

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TABLE OF CONTENTS
 

                                                                                    
Page    
 
ARTICLE I     Certain
Definitions                                                                        1
 
ARTICLE II    Purchase and
Sale                                                                                                         6
2.1    Purchase and Sale of Company
Interests                                                                  6
2.2    Cash Purchase
Price                                                                                                                     
7 
2.3    Post-Closing
Adjustments                                                                                   7
2.4    Earn-Out
Payment                                                                                 
9
 
ARTICLE
III          Closing                                                                                                    
9
3.1            Closing
Date                                                                                                   9
3.2            Certain Actions at Closing. At the
Closing:                                                                              9
 
ARTICLE IV          Representations and Warranties of
Sellers                                                                                             
10
4.1            Organization and Good
Standing                                                                      10
4.2           
Capitalization                                                                                                10
4.3           
Authorization                                                                               11
4.4            No
Conflicts                                                                                                 
11
4.5            Financial Statements; Undisclosed
Liabilities                                                         11
4.6           
Taxes                                                                                     
12
4.7            Title to Properties; Absence of
Encumbrances                                                               13
4.8            Intellectual
Property                                                                                    
14
4.9            Contracts and
Agreements                                                                                        
16
4.10         
Insurance                                                                                      
18
4.11         
Litigation                                                                                       
18
4.12          Condition and Sufficiency of
Assets                                                                               
18
4.13          Compliance with Law;
Licenses                                                                                
19
4.14         
Employees                                                                                     19
4.15          Employee Benefit
Plans                                                                       22
4.16          Environmental
Matters                                                                                       
24
4.17          Bank Accounts and Powers of
Attorney                                                                         25
4.18          Absence of Certain
Changes                                                                     25
4.19          Books and
Records                                                                             
28
4.20          Transactions with Affiliated
Persons                                                                       
28
4.21          Absence of Certain Business
Practices                                                            28
4.22          Brokers and
Finders                                                                                    
28
4.23          Restrictions on Business
Activities                                                                  29
4.24         
Payables                                                                                        
29
4.25         
Receivables                                                                                   
29
4.26          Business
Relations                                                                              
29
4.27         
Disclosure                                                                                             
29
 
ARTICLE V    Representations and Warranties of
Madden                                                                          
30
5.1    Organization and Good
Standing                                                                      
30
 
 
 
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5.2    Authorization                                                                                                               
30
5.3    No Conflicts;
Consents                                                                              
30
5.4    Litigation                                                                                       
30
5.5    Brokers and
Finders                                                                            
30
5.6    Investment
Intent                                                                                
30
5.7    Sufficient
Funds                                                                                   
31
 
ARTICLE VI   Covenants of
Sellers                                                                           
31
6.1    Ordinary
Course                                                                           
31
6.2    Conduct of
Business                                                                           
31
6.3    Certain
Filings                                                                                      
33
6.4    Consents and
Approvals                                                                    33
6.5    Efforts to Satisfy
Conditions                                                                                     
34
6.6    Further
Assurances                                                                            
34
6.7    Notification of Certain
Matters                                                                                                 
34
 
ARTICLE VII         Covenants of
Madden                                                                        
34
7.1    Certain
Filings                                                                              
34
7.2    Efforts to Satisfy
Conditions                                                                             
34
7.3    Further
Assurances                                                                            
35
7.4    Notification of Certain
Matters                                                                  35
 
ARTICLE VIII        Certain Other
Agreements                                                                                         
35
8.1    Certain Tax
Matters                                                                                                            
35
8.2    Company
Payments                                                                                            
36
8.3    Matters Relating to
Randel                                                                        
36
 
ARTICLE IX          Conditions Precedent to Obligations of
Madden                                                            37
9.1    Representations and
Warranties                                                                       
37
9.2    Compliance with
Covenants                                                                      
37
9.3    Lack of Adverse
Change                                                                     37
9.4    Update
Certificate                                                                                                
38
9.5    Regulatory
Approvals                                                                                        
38
9.6    Consents of Third
Parties                                                                                  
38
9.7    No Violation of
Orders                                                                                        38
9.8    Employment
Agreement                                                                             38
9.9    Transaction
Documents                                                                                             38
9.10          Other Closing
Matters                                                                                38
 
ARTICLE X   Conditions Precedent to Obligations of
Sellers                                                              38
10.1          Representations and
Warranties                                                                      39
10.2          Compliance with
Covenants                                                                              39
10.3          Update
Certificate                                                                                39
10.4          Regulatory
Approvals                                                                                        39
10.5          No Violation of
Orders                                                                        39
10.6          Transaction
Documents                                                                             39
10.7          Other Closing
Matters                                                                                39
 
 
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ARTICLE XI          Termination of
Agreement                                                                                                 
39
11.1          Conditions for
Termination                                                                       
39
11.2          Effect of
Termination                                                                          
40
 
ARTICLE XII        
Indemnification                                                                            40
12.1          Survival of Representations, Warranties and
Covenants                                                             40
12.2          Indemnification by
Silverman                                                                     41
12.3          Indemnification by
Madden                                                                       42
12.4          Assumption of
Defense                                                                      42
12.5          Non-Assumption of
Defense                                                                            
43
12.6          Indemnified Party’s Cooperation as to
Proceedings                                                              43
12.7          Payments Treated as Purchase Price
Adjustment                                                          44
 
ARTICLE XIII      
Miscellaneous                                                                                              
44
13.1         
Expenses                                                                                       
44
13.2          Entirety of
Agreement                                                                                        
44
13.3         
Notices                                                                                  
44
13.4         
Amendment                                                                                  
44
13.5         
Waiver                                                                                   
44
13.6          Counterparts;
Facsimile                                                                               45
13.7          Assignment; Binding Nature; No
Beneficiaries                                                       45
13.8         
Headings                                                                                45
13.9          Governing Law;
Jurisdiction                                                                 
 45
13.10        Construction;
Units                                                                             
45
13.11        Negotiated
Agreement                                                                        
46
13.12        Public
Announcements                                                                       
46
13.13        Remedies
Cumulative                                                                           
46
13.14       
Severability                                                                            
46
13.15        WAIVER OF JURY
TRIAL                                                                      46
13.16       Authority of Seller
Representative                                                                     
46

 
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MEMBERSHIP INTEREST PURCHASE AGREEMENT
 
THIS MEMBERSHIP INTEREST PURCHASE AGREEMENT (this “Agreement”), dated as of May
16, 2007, is entered into by and among Steven Madden, Ltd., a Delaware
corporation (“Madden”) and the individuals and/or entities set forth on the
signature pages hereto (each a “Seller” and collectively, “Sellers”).
 
RECITALS
 
WHEREAS, Sellers collectively own all of the issued and outstanding ownership
interests of Compo Enhancements, LLC, a Connecticut limited liability company
(the “Company”); and
 
WHEREAS, Madden desires to acquire and Sellers desire to sell, all of the issued
and outstanding ownership interests of the Company on the terms and conditions
contained herein and in the Earn Out Agreement (as defined below).
 
NOW, THEREFORE, in consideration of the premises and the mutual covenants and
agreements hereinafter set forth, the parties hereto, intending to be legally
bound, hereby agree as follows:
 
ARTICLE I
 
Certain Definitions
 
“Additional Working Capital Consideration” has the meaning set forth in Section
2.3(b)(i).
 
“Adjustment Payment Date” means a date which is within three (3) Business Days
after the Final Closing Balance Sheet is deemed final, binding and conclusive.
 
“Affiliate Loans” means loans made to Affiliated Persons by the Company.
 
“Affiliated Persons” means Sellers, any trustee or beneficiary of Sellers, any
spouse of Sellers or any Immediate Family Member of Sellers, or any other Person
(other than the Company) that, directly or indirectly, alone or together with
others, controls, is controlled by or is under common control with the Company,
Sellers or any trustee, beneficiary, spouse or Immediate Family Member of
Sellers.
 
“Agreement” has the meaning set forth in the preamble.
 
“Balance Sheet” means the balance sheet of the Company as of April 30, 2007.
 
“Business Day” means any day that is not a Saturday or Sunday or a legal holiday
on which banks are authorized or required by law to be closed in New York, New
York.
 
“Cash Purchase Price” has the meaning set forth in Section 2.2(a).
 
 
 

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“Cash Purchase Price Accounts” has the meaning set forth in Section 2.2(b).
 
“Closing” has the meaning set forth in Section 3.1.
 
“Closing Balance Sheet” means the balance sheet of the Company as of the close
of business on the Closing Date.
 
“Closing Date” has the meaning set forth in Section 3.1.
 
“COBRA” has the meaning set forth in Section 4.15(c).
 
“Code” means the U.S. Internal Revenue Code of 1986, as amended, or any
successor statute.
 
“Company” has the meaning set forth in the recitals.
 
“Company IP Rights” has the meaning set forth in Section 4.8(a).
 
“Company IP Rights Agreements” has the meaning set forth in Section 4.8(b).
 
“Company Interests” has the meaning set forth in Section 2.1.
 
“Contracts” has the meaning set forth in Section 4.9(a).
 
“Delivery Date” has the meaning set forth in Section 2.3(a)(ii).
 
“Disclosure Schedule” means the disclosure schedules of Sellers accompanying
this Agreement.
 
“Dispute Notice” has the meaning set forth in Section 2.3(a)(ii).
 
“Earn-Out Agreement” means the Earn-out Agreement among Sellers and Madden,
which has been executed and delivered prior to or simultaneously with the
execution and delivery of this Agreement and which shall become effective as of
the Closing, attached hereto as Exhibit A.
 
“Earn-Out Payment” has the meaning set forth in Section 2.4.
 
“Employee Benefit Plan” has the meaning set forth in Section 4.15(a).
 
“Employment Agreement” means the employment agreement between Madden and Jeff
Silverman which has been executed and delivered prior to or simultaneously with
the execution and delivery of this Agreement and which shall become effective as
of the Closing, attached hereto as Exhibit B.
 
“Encumbrance” means any lien, pledge, mortgage, security interest, charge,
restriction, adverse claim or other encumbrance of any kind or nature
whatsoever.
 
 
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“Environment” means soil, surface water, ground water, land, stream sediments,
surface or subsurface strata, ambient air and any environmental medium.
 
“Environmental Law” means any Law that governs protection or improvement of
human health or the Environment.
 
“Environmental Permit” means any permit, registration, certificate,
certification, license, authorization, consent or approval of any Governmental
Body required or issued under Environmental Laws.
 
“ERISA” has the meaning set forth in Section 4.15(a).
 
“ERISA Affiliate” has the meaning set forth in Section 4.15(a).
 
“Final Allocation” has the meaning set forth in Section 8.1(b)(ii).
 
“Final Closing Balance Sheet” has the meaning set forth in Section 2.3(a)(iii).
 
“Financial Statements” means the unaudited income statements of the Company as
of the fiscal year ended December 31, 2006.
 
“GAAP” means U.S. generally accepted accounting principles, as in effect on the
date of this Agreement, consistently applied.
 
“Governmental Body” means any governmental or regulatory body, agency,
authority, commission, department, bureau, court, tribunal, arbitrator or
arbitral body (public or private), or political subdivision, in any
jurisdiction.
 
“Hazardous Materials” means without regard to amount or concentration (a) any
element, compound, gas or chemical that is defined, listed, classified or
regulated as hazardous or toxic under any Environmental Law, including, without
limitation, any material or substance that is defined as a “hazardous waste,”
“hazardous material,” “hazardous substance,” “extremely hazardous waste,”
“restricted hazardous waste,” “subject waste,” “contaminant,” “waste,” “toxic
waste,” “toxic substance” or similar term under any provision of any
Environmental Law; (b) petroleum, petroleum-based or petroleum-derived products;
and (c) any substance containing polychlorinated biphenyls, asbestos, lead, urea
formaldehyde or radon gas.
 
“HIPAA” has the meaning set forth in Section 4.15(c).
 
“Immediate Family Member” with respect to any Person who is an individual, means
each of such Person’s spouse, children (whether by blood or adoption),
grandchildren, parents, siblings and trusts for the benefit of any of the
foregoing.
 
“Indemnification Obligations” means the respective indemnification obligations
of Sellers or Madden under Article XII.
 
“Independent Accounting Firm” means an independent accounting firm mutually
acceptable to Madden and the Seller Representative (which accounting firm has
not, within the
 
 
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prior 12 months, provided services to Madden, any affiliate of Madden, Sellers
or any Affiliated Person). If Madden and the Seller Representative are unable to
agree upon an independent accounting firm within thirty (30) days after the
Seller Representative’s delivery of the Dispute Notice to Madden, an independent
accounting firm selected by Madden (which accounting firm has not, within the
prior 12 months, provided services to Madden or any affiliate of Madden) and an
independent accounting firm selected by the Seller Representative (which
accounting firm has not, within the prior 12 months, provided services to
Sellers, the Company or any Affiliated Person) shall select an independent
accounting firm (which accounting firm has not, within the prior 12 months,
provided services to Madden, any affiliate of Madden, Sellers or any Affiliated
Person) and such independent accounting firm shall be the “Independent
Accounting Firm.”
 
“Intellectual Property Rights” means all intellectual property rights, including
trademarks, service marks, internet domain names, slogans, logos, trade names,
and the goodwill associated therewith, patents, copyrights, in both published
and unpublished works, and all registrations and applications for any of the
foregoing, rights of publicity/privacy, franchises, licenses, proprietary
know-how, proprietary trade secrets, proprietary customer lists, proprietary
vendor lists, proprietary information, proprietary processes, proprietary
formulae, proprietary computer programs and applications, proprietary layouts,
proprietary specifications, proprietary designs, proprietary inventions,
proprietary development tools and all documentation and media constituting,
describing or relating to the above, including manuals, memoranda and records
wherever created throughout the world.
 
“IRS” means the U.S. Internal Revenue Service.
 
“Knowledge” means, the knowledge, at any time of: in the case of Sellers and the
Company, Silverman and those employees of the Company with primary
responsibility for the relevant matter; and in the case of Madden, Jamieson A.
Karson and Ed Rosenfeld.
 
“Law” means any law in any jurisdiction (including common law), statute, code,
ordinance, rule, regulation, permit, order, decree or other requirement or
guideline.
 
“Licenses” has the meaning set forth in Section 4.13(b).
 
“Loss,” in respect of any matter, means any loss, liability, cost, expense,
judgment, settlement or damage arising as a result of such matter, including
reasonable attorneys’, consultants’ and other advisors’ fees and expenses,
reasonable costs of investigating or defending any claim, action, suit or
proceeding or of avoiding the same or the imposition of any judgment or
settlement and reasonable costs of enforcing any Indemnification Obligations.
 
“Madden” has the meaning set forth in the preamble.
 
“Madden Disclosure Schedule” means the disclosure schedule of Madden
accompanying this Agreement.
 
“Madden Indemnified Parties” has the meaning set forth in Section 12.2(a).
 
 
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“Material Adverse Effect” means any material adverse effect on the business,
operations, assets, condition (financial or otherwise), prospects, liabilities,
or results of operations of the Company.
 
“Net Working Capital” means, as of the Closing Date, the cash, inventory,
accounts receivable and prepaid expenses of the Company, minus the accounts
payable, accrued employee expenses, and Taxes payable, if any, of the Company,
in each case, as such terms have the meanings assigned to them by GAAP.
 
“Permitted Encumbrances” has the meaning set forth in Section 4.7(c).
 
“Person” means an individual, partnership, venture, unincorporated association,
organization, syndicate, corporation, limited liability company, or other
entity, trust, trustee, executor, administrator or other legal or personal
representative or any government or any agency or political subdivision thereof.
 
“Pre-Closing Period” means all taxable periods ending on or before the Closing
Date and the portion ending on or before the Closing Date of any taxable period
that includes (but does not begin or end on) the Closing Date.
 
“Real Property” has the meaning set forth in Section 4.7(a).
 
“Real Property Documents” has the meaning set forth in Section 4.7(a).
 
“Real Property Interests” has the meaning set forth in Section 4.7(a).
 
“Randel” means James Randel, a Seller.
 
“Release” means any releasing, spilling, leaching, pumping, leaking, pouring,
emitting, emptying, discharging, depositing, injecting, escaping, dumping,
migrating or disposing, whether intentional or otherwise, of any Hazardous
Material into the Environment.
 
“Remedial Action” means all actions, including any capital on-going operating
expenditures, required by any Governmental Body or voluntarily undertaken, on or
in connection with any property, to (A) clean up, remove, contain, treat, or in
any other way address any Hazardous Material or other substance; (B) prevent the
Release or threat of Release, or minimize the further Release, of any Hazardous
Material or other substance so it does not migrate or endanger or threaten to
endanger public health or welfare or the indoor or outdoor Environment; (C)
perform pre-remedial studies and investigations or post-remedial monitoring and
care; or (D) bring facilities on any property and operations conducted thereon
into compliance with all Environmental Laws and Environmental Permits. Remedial
Action shall include, without limitation, remedial actions conducted off-site to
address conditions emanating from any property currently or previously owned,
leased or operated by the Company.
 
“Returns” means any and all returns, reports, and information statements with
respect to Taxes required to be filed with a taxing or any other Governmental
Body (including the IRS), domestic or foreign, including consolidated, combined
and unitary tax returns, and returns in connection with any Employee Benefit
Plan.
 
 
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“Revised Closing Balance Sheet” has the meaning set forth in Section 2.3(a)(ii).
 
“SEC” means the U.S. Securities and Exchange Commission.
 
“Seller” and “Sellers” have the meanings set forth in the preamble.
 
“Seller Indemnified Parties” has the meaning set forth in Section 12.3(a).
 
“Seller Representative” means Silverman, or any other Seller(s) designated as
Seller Representative(s) pursuant to the terms of this Agreement.
 
“Silverman” means Jeffrey Silverman.
 
“Straddle Period” has the meaning set forth in Section 8.1(a)(ii).
 
“Tax” or “Taxes” means taxes, fees, levies, duties, tariffs, imposts and
governmental impositions or charges of any kind payable to any Governmental Body
in any jurisdiction including (i) income, capital, franchise, profits, gross
receipts, ad valorem, net worth, value added, sales, use, service, real or
personal property, special assessments, capital stock, license, payroll,
withholding, employment, employment insurance, estimated, social security,
workers’ compensation, unemployment compensation, utility, severance,
production, excise, stamp, occupation, premiums, windfall profits, transfer and
gains taxes, and (ii) interest, penalties, additional taxes and additions to tax
imposed with respect thereto.
 
“Threatened Release” means a substantial likelihood of a Release which requires
action to prevent or mitigate damage to the Environment that may result from
such Release.
 
“Transaction Documents” means this Agreement, the Employment Agreement, and the
Earn-Out Agreement.
 
“U.S.” means the United States of America.
 
“Working Capital Adjustment” has the meaning set forth in Section 2.3(b).
 
“Working Capital Refund” has the meaning set forth in Section 2.3(b)(ii).
 
ARTICLE II
 
Purchase and Sale
 
2.1  Purchase and Sale of Company Interests. Subject to and upon the terms and
conditions hereinafter set forth, at the Closing, and in reliance upon the
representations, warranties, covenants and other agreements contained in this
Agreement or made pursuant hereto, Sellers hereby agree to sell, assign,
transfer and deliver to Madden, and Madden hereby agrees to purchase from
Sellers, all of the issued and outstanding ownership interests of the Company as
set forth in Section 2.1 of the Disclosure Schedule (collectively the “Company
Interests”).
 
 
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2.2  Cash Purchase Price.
 
(a)  In consideration of the aforesaid sale, assignment, transfer and delivery
of the Company Interests, on the Closing Date Madden shall pay or cause to be
paid to Sellers, in cash, an aggregate amount (the “Cash Purchase Price”) equal
to (i) six million two hundred seventy five thousand dollars ($6,275,000). The
Cash Purchase Price shall be allocated among Sellers according to the
percentages set forth on Schedule A hereto. The Cash Purchase Price may be
adjusted as provided for in Section 2.3 hereof.
 
(b)  All payments of cash pursuant to Section 2.2(a) shall be made in
immediately available funds by wire transfer to an account or accounts (the
“Cash Purchase Price Accounts”) specified by the Seller Representative at least
two (2) Business Days prior to the date such payments are to be made.
 
2.3  Post-Closing Adjustments.
 
(a)  Closing Balance Sheet.
 
                    (i)  Preparation of Closing Balance Sheet. As promptly as
practicable, but in any event within seventy-five (75) days after the Closing
Date, Madden shall
         prepare and deliver to the Seller Representative (A) the Closing
Balance Sheet, which Closing Balance Sheet shall be prepared in accordance with
GAAP applied on a basis
                 consistent with the preparation of the Balance Sheet, and (B) a
calculation of Net Working Capital as of the close of business on the Closing
Date based upon the Closing
                 Balance Sheet, which shall explain in reasonable detail such
calculation of Net Working Capital.
 
                            (ii)  Closing Balance Sheet Disputes. The Seller
Representative may dispute the amount of the Net Working Capital reflected on
the Closing Balance Sheet
                 by sending written notice (a “Dispute Notice”) to Madden within
thirty (30) days after Madden’s delivery of the Closing Balance Sheet and Net
Working Capital calculation to
                 the Seller Representative (such delivery date, the “Delivery
Date”). The Dispute Notice shall identify, in reasonable detail, each disputed
item on the Closing Balance Sheet
                 specifying the amount of such dispute. In the event of such a
dispute, Madden and the Seller Representative shall attempt in good faith to
reconcile their differences
                 (including providing information that is reasonably requested
by the other party), and any resolution by them as to any disputed items shall
be final, binding and conclusive
                 on the parties and shall be evidenced by a writing signed by
Madden and the Seller Representative, including a revised Closing Balance Sheet
(the “Revised Closing Balance
                 Sheet”), reflecting such resolution. If Madden and the Seller
Representative are unable to resolve all disputed items within twenty (20) days
after the Seller Representative’s
                 delivery of the Dispute Notice to Madden, then Madden and the
Seller Representative shall promptly evidence any resolved disputes in a writing
signed by Madden and the
                 Seller Representative and submit any remaining disputed items
for final binding resolution to the Independent Accounting Firm. If any
remaining disputed items are submitted
                 to the Independent Accounting Firm for resolution (A) each
party will furnish to the Independent Accounting Firm such workpapers and other
documents and information
 
 
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                 relating to the remaining disputed items as the Independent
Accounting Firm may reasonably request and are available to such party, and each
party will be afforded the
                 opportunity to present to the Independent Accounting Firm any
material relating to the disputed items and to discuss the resolution of the
disputed items with the
                 Independent Accounting Firm; (B) each party will use its good
faith commercially reasonable efforts to cooperate with the resolution process
so that the disputed items can
                 be resolved within forty-five (45) days after submission of the
disputed items to the Independent Accounting Firm; (C) the determination by the
Independent Accounting
                 Firm, as set forth in a written notice to Madden and the Seller
Representative (which written notice shall include a Revised Closing Balance
Sheet), shall, subject to the
                 provisions of Section 2.3(a)(iii), be final, binding and
conclusive on the parties; and (D) the fees and disbursements of the Independent
Accounting Firm shall be allocated
                 between Madden and Sellers in the same proportion that the
aggregate amount of the disputed items submitted to the Independent Accounting
Firm that are unsuccessfully
                 disputed by each party (as finally determined by the
Independent Accounting Firm) bears to the total amount of all disputed items
submitted to the Independent Accounting
                 Firm.
 
                            (iii)     Final Closing Balance Sheet. The Closing
Balance Sheet, or, if one has been adopted pursuant to Section 2.3(a)(ii), the
Revised Closing Balance Sheet,
                 shall be deemed to be final, binding and conclusive on Madden
and Sellers (the “Final Closing Balance Sheet” upon the earliest of (A) the
failure of the Seller Representative
                 to deliver to Madden the Dispute Notice within thirty (30) days
after the Delivery Date; (B) the resolution of all disputes by Madden and the
Seller Representative, as
                 evidenced by a Revised Closing Balance Sheet; and (C) the
resolution of all disputes by the Independent Accounting Firm, as evidenced by a
Revised Closing Balance Sheet.
                 Any adjustment of the Cash Purchase Price based on the Final
Closing Balance Sheet, shall be made in accordance with Section 2.3(b) hereof.
 
(b)  Post-Closing Working Capital Adjustment. Upon the Final Closing Balance
Sheet being deemed final, binding and conclusive pursuant to Section
2.3(a)(iii), an adjustment to the Cash Purchase Price shall be made as follows
(the “Working Capital Adjustment”):
 
                            (i)  In the event that the Net Working Capital
reflected on the Final Closing Balance Sheet is at a deficit less than five
hundred twenty five thousand dollars
         ($525,000), then Madden shall be obligated to pay to Seller on the
Adjustment Payment Date the Additional Working Capital Consideration (as defined
below) in immediately
                 available funds by wire transfer to an account or accounts
specified, in writing, by Seller. The “Additional Working Capital Consideration”
means the amount by which the
                 Net Working Capital reflected on the Final Closing Balance
Sheet is at a deficit less than five hundred twenty five thousand dollars
($525,000).
 
                            (ii)      In the event that the Net Working Capital
reflected on the Final Closing Balance Sheet is at a deficit in excess of five
hundred twenty five thousand
                 dollars ($525,000),then Sellers shall be obligated to pay
Madden on the Adjustment Payment Date the Working Capital Refund (as defined
below) in immediately available
                 funds by wire transfer to an account specified, in writing, by
Madden. The “Working
 
 
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                 Capital Refund” means the amount by which the Net Working
Capital on the Final Closing Balance Sheet is at a deficit in excess of five
hundred twenty five thousand dollars
                 ($525,000).
 
2.4  Earn-Out Payment. Madden shall also pay to Sellers certain payments
(collectively, the “Earn-Out Payment”) in an amount, and pursuant to the terms,
set forth in the Earn-Out Agreement.
 
ARTICLE III
 
Closing
 
3.1  Closing Date. Subject to the fulfillment or waiver by the beneficiary
thereof of the agreements and conditions precedent set forth in Articles IX and
X, the closing of the transactions contemplated hereby (the “Closing”) shall be
held two (2) Business Days after the satisfaction or waiver of the conditions to
closing set forth in Articles IX and X of this Agreement, at 10:00 a.m.,
prevailing local time, at the offices of Kramer Levin Naftalis & Frankel LLP,
1177 Avenue of the Americas, New York, New York 10036, or on such other date or
at such other time or place as may be agreed to in writing by Madden and the
Seller Representative. The date on which the Closing actually occurs is herein
referred to as the “Closing Date.”
 
3.2  Certain Actions at Closing. At the Closing:
 
(a)  Sellers shall deliver, or cause to be delivered, to Madden certificates
representing the Company Interests (as appropriate), accompanied by transfer
powers duly endorsed in blank or duly executed instruments of transfer;
 
(b)  to the extent not previously executed and/or delivered, Sellers shall
execute and/or deliver, or cause to be executed and/or delivered to Madden each
of the Transaction Documents and any other document, certificate or other
instrument required to be executed and/or delivered by Sellers and/or the
Company under this Agreement at or prior to the Closing;
 
(c)  to the extent not previously executed and/or delivered, Madden shall
execute and/or deliver to Sellers each of the Transaction Documents and any
other document, certificate or other instrument required to be executed and/or
delivered by Madden under this Agreement at or prior to the Closing; and
 
(d)  Sellers shall be liable for and shall pay all stamp, transfer and similar
Taxes, direct or indirect, if any, attributable to the transfer of the Company
Interests and, in connection therewith, shall affix any necessary transfer
stamps to the certificates (or transfer powers) evidencing the Company
Interests.
 
 
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ARTICLE IV
 
Representations and Warranties of Sellers
 
Sellers hereby represent and warrant, jointly and severally, to Madden as
follows:
 
4.1  Organization and Good Standing. The Company is a limited liability company
duly organized, validly existing and in good standing under the laws of the
State of Connecticut. The Company has full power and authority to own or lease
its properties and to carry on its business as it is now being conducted. The
Company is duly qualified to transact business and is in good standing in each
jurisdiction wherein the nature of the business done or the property owned,
leased or operated by it requires such qualification, except where the failure
to be so qualified would not be reasonably likely to have a Material Adverse
Effect. Copies of the organizational documents (including, as applicable,
certificate of formation, articles of organization or operating agreement) of
the Company have been delivered to Madden and are true, complete and accurate in
all respects. The ownership interest register, ownership interest transfer
records, minutes and records of the Company have been made available to Madden
and are true, complete and accurate in all respects. The Company has no direct
or indirect subsidiaries and does not own any ownership or equity interest in
any Person.
 
4.2  Capitalization.
 
(a)  The capitalization of the Company is as set forth in Section 2.1 of the
Disclosure Schedule. The Company Interests are all of the issued and outstanding
ownership interests of the Company, and have been duly authorized and are
validly issued and outstanding, fully paid and non-assessable. Each Seller
represents that as to himself or herself, he/she owns, beneficially and of
record, and has valid and marketable title to, and the right to transfer to
Madden, all of the Company Interests set forth opposite such Seller’s name in
Section 2.1 of the Disclosure Schedule, free and clear of any and all
Encumbrances. At the Closing, Madden will own, and will have valid and
marketable title to, all of the issued and outstanding ownership interests of
the Company, free and clear of any and all Encumbrances. No Person other than
Madden has any written or oral agreement, arrangement, understanding or option
for, or any right or privilege (whether by law, preemption or contract) that is
or is capable of becoming an agreement, arrangement, understanding or option
for, the purchase or acquisition from the Company or any Person of, any
ownership interests or other securities of the Company.
 
(b)  There are no outstanding or authorized options, warrants, purchase
agreements, participation agreements, subscription rights, conversion rights,
exchange rights or other securities, contracts, arrangements, understanding or
commitments that could require the Company to issue, sell or otherwise cause to
become outstanding any of its authorized but unissued ownership interests or any
securities convertible into, exchangeable for or carrying a right or option to
purchase ownership interests, or to create, authorize, issue, sell or otherwise
cause to become outstanding any new class of ownership interests. None of the
issued and outstanding ownership interests of the Company have been issued in
violation of any rights of any Person or in violation of the registration
requirements of any applicable jurisdiction’s securities Laws.
 
 
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4.3  Authorization. Each Seller has full legal capacity and authority to enter
into and carry out such Seller’s obligations under this Agreement and the other
applicable Transaction Documents, and to consummate the transactions
contemplated hereby and thereby, and is not under any prohibition or
restriction, contractual, statutory or otherwise, against doing so. This
Agreement and the Earn-Out Agreement have been duly executed and delivered by
Sellers and, assuming due authorization, execution and delivery by Madden,
constitute legal, valid and binding obligations of Sellers, enforceable against
Sellers in accordance with their respective terms, except as such enforceability
may be limited by applicable bankruptcy, insolvency, moratorium or other laws
affecting the rights of creditors generally and by general principles of equity.
 
4.4  No Conflicts. Except as set forth in Section 4.4 of the Disclosure
Schedule, neither the execution and delivery by Sellers or the Company of this
Agreement or any of the Transaction Documents to which Sellers or the Company
are a party, nor the consummation of the transactions contemplated hereby or
thereby, will, with or without notice or lapse of time or both, directly or
indirectly, (i) conflict with or violate the organizational documents
(including, as applicable, articles of organization, certificate of formation,
operating agreement or articles of association) of or resolutions adopted by the
directors, members, or equityholders of the Company, (ii) conflict with,
violate, result in the breach of any term of, result in the acceleration of
performance of any obligation under, constitute a default under, give any Person
the right to cancel, terminate or modify, or require the consent or approval of
or any notice to or filing with any third party or Governmental Body, (x) any
note, mortgage, deed of trust, lease or other agreement or instrument to which
Sellers or the Company is a party or by which Sellers or the Company or any of
their respective properties or assets are bound, or (y) any Law, order, decree,
writ, injunction, or License of any Governmental Body having jurisdiction over
Sellers or the Company or any of their respective properties or assets, or
(iii) create an Encumbrance on any of the ownership interests or properties or
assets of the Company.
 
4.5  Financial Statements; Undisclosed Liabilities.
 
(a)  Except as set forth in Section 4.5(a) of the Disclosure Schedule, the
Financial Statements (true, complete and accurate copies of which have been
previously delivered to Madden) have been prepared from the books and records of
the Company in accordance with GAAP throughout the periods covered thereby and
fairly present the financial condition of the Company as at the date thereof.
 
(b)  As of the date of the Balance Sheet, other than those (i) set forth in
Section 4.5(b) of the Disclosure Schedule or (ii) which are reflected or
reserved against on the Balance Sheet the Company had no liabilities, debts or
obligations (whether absolute, accrued, contingent or otherwise). Since the date
of the Balance Sheet, the Company (i) has conducted its business in the ordinary
course and in a commercially reasonable manner, (ii) has not incurred any
liabilities, debts or obligations (whether absolute, accrued, contingent or
otherwise), except for liabilities incurred in the ordinary course of business
and in a commercially reasonable manner, which such liabilities are consistent
with the representations and warranties contained in this Agreement and (iii)
notwithstanding anything to the contrary in clause (i) or (ii) of this sentence
and except as set forth in Section 4.5(b) of the Disclosure Schedule, has not
incurred any liability, debt or obligation (whether absolute, accrued,
contingent or otherwise) to or of any
 
 
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Affiliated Person or made any Affiliate Loans. Since the date of the Balance
Sheet, there has been no Material Adverse Effect, and no event has occurred or
facts or circumstances exist which would be reasonably likely to result in a
Material Adverse Effect.
 
4.6  Taxes.
 
(a)  Except as set forth in Section 4.6(a) of the Disclosure Schedule, the
Company has timely filed with the appropriate taxing authorities all Returns
required to be filed by it (taking into account any extension of time to file).
The information on such Returns is complete and accurate. The Company has paid,
or, where payment is not yet due, has established an adequate accrual on the
Balance Sheet, in accordance with GAAP for the payment of all Taxes (whether or
not shown on any Return) due and payable. There are no liens for Taxes (other
than for Permitted Encumbrances) upon the properties or assets of the Company.
 
(b)  Except as set forth in Section 4.6(b) of the Disclosure Schedule, no unpaid
and unresolved deficiencies for Taxes have been claimed, proposed or assessed,
in each case in writing, by any taxing authority or other Governmental Body with
respect to the Company for any Pre-Closing Period, and there are no pending or,
to the Knowledge of Sellers or the Company, threatened audits, investigations,
claims or assessments for or relating to any liability in respect of Taxes of or
with respect to the Company. The Company has not requested any extension of time
within which to file any currently unfiled Returns in respect of any Taxes and
no waiver or extension of a statutory period of limitations for the assessment
of any Taxes is in effect with respect to the Company.
 
(c)  Except as set forth in Section 4.6(c) of the Disclosure Schedule, (i) the
Company has made or will make provision for all Taxes payable by them with
respect to any Pre-Closing Period which have not been paid prior to the Closing
Date which amounts will be reflected on the Balance Sheet; (ii) the provisions
for Taxes with respect to the Company for the Pre-Closing Period (excluding any
reserve for deferred Taxes established to reflect timing differences between
book and Tax income) are adequate to cover all Taxes with respect to such
period; (iii) the Company has withheld and paid all Taxes required to have been
withheld and paid in connection with amounts paid or owing to any employee,
independent contractor, creditor, shareholder or other third party; (iv) all
material elections with respect to Taxes affecting the Company as of the date
hereof are set forth in Section 4.6(c)(iv) of the Disclosure Schedule; (v) the
Company is not subject to the Tax imposed on certain built-in gains under
Section 1374 of the Code or the Tax imposed under Section 1375 of the Code or
any corresponding provisions of applicable state law; (vi) there are no advance
tax rulings in respect of any Tax issued to or pending between or with respect
to the Company and any taxing authority or any other written agreements with a
Tax authority with regard to any Tax; (vii) the tax year end for the Company is
December 31; (viii) the Company is not liable for Taxes of any other Person, and
is neither currently under any contractual obligation to or a party to any tax
sharing agreement nor any other agreement providing for payments by the Company
with respect to Taxes; (ix) the Company is not a party to any joint venture,
partnership or other arrangement or contract which could be treated as a
partnership for income tax purposes; (x) the Company has not granted any Person
a power of attorney with respect to Taxes; (xi) the Company has not entered into
any sale leaseback or any leveraged lease transaction; (xii) the Company, as of
the Closing Date, has not agreed or will be required, as a result of a change in
method of accounting
 
 
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or otherwise, to include any adjustment under Section 481 of the Code (or any
corresponding provision of state, local, or foreign law) in taxable income for
any period after the Closing Date; (xiii) Section 4.6(c)(xiii) of the Disclosure
Schedule contains a list of all jurisdictions in which the Company is required
to file any Return, and no written claim has ever been made by a taxing
authority in a jurisdiction where the Company does not currently file Returns
that the Company is or may be subject to taxation by that jurisdiction; (xiv)
the Company has not filed or been included in a combined, consolidated or
unitary return (or substantial equivalent thereof) of any Person; (xv) the
Company is not obligated under any agreement with respect to industrial
development bonds or other obligations with respect to which the excludability
from gross income of the holder for Federal or state income tax purposes could
be affected by the transactions contemplated hereunder; (xvi) the Company has
not engaged in any transaction for which its participation is required to be
disclosed under Treasury Regulation § 1.6011.4; (xvii) the Company is not a
“consenting corporation” under Section 341(f) of the Code or any corresponding
provision of Law; (xviii) the Company has not since its inception been a party
to a transaction intended to qualify under Section 355 of the Code or under so
much of Section 356 of the Code as relates to Section 355 of the Code; and (xix)
the Company has not made an election and is not required to treat any of its
assets as owned by another Person for Federal income tax purposes or as
tax-exempt bond financed property or tax-exempt use property within the meaning
of Section 168 of the Code (or any corresponding provision of Law).
 
4.7  Title to Properties; Absence of Encumbrances.
 
(a)  Section 4.7(a) of the Disclosure Schedule contains a complete list by
address of all real property owned, leased, operated or used by the Company
(collectively, the “Real Property”), indicating the nature of the interest of
the Company therein (collectively, the “Real Property Interests”). No
litigation, condemnation, expropriation, eminent domain or similar proceeding
affecting all or any portion of any Real Property is pending or to the Knowledge
of Sellers of the Company threatened. The Company has furnished to Madden true,
complete and accurate copies of all documents relating to the Real Property
Interests including, without limitation, all leases, licenses, deeds, evidences
of ownership, evidences of possession, amendments, estoppel certificates,
subordination, non disturbance and attornment agreements and assignment and/or
assumption agreements (collectively, the “Real Property Documents”), including
rent rolls and operating expense statements (if applicable). There are no oral
agreements with respect to any Real Property Interest. No Real Property Document
requires that the consent or approval of any third party be obtained in order to
consummate the transactions contemplated by this Agreement, nor do such
transactions violate any Real Property Document or cause the Company to be in
default under any Real Property Document. Neither Sellers nor the Company have
given or received any notice of any notice of default under any Real Property
Document, and neither Sellers nor the Company are in default thereunder. No
option to extend, renew, surrender, terminate or purchase arising under any Real
Property Document has been exercised. No guaranty or other undertaking with
respect to the performance of any obligation arising under any Real Property
Document has been delivered by the Company. All service, management, leasing and
other similar agreements with respect to any Real Property Interest are
terminable upon no more than thirty (30) days’ prior notice.
 
(b)  Except as set forth in Section 4.7(b) of the Disclosure Schedule, the
Company has good, marketable and insurable (in the case of Real Property
Interests) title to all
 
 
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of the properties and assets, real and personal, tangible and intangible, it
owns or purports to own, including those reflected on its books and records and
on the Balance Sheet (except those sold or disposed of subsequent to the date
thereof in the ordinary course of business and in a commercially reasonable
manner), free and clear of all Encumbrances, except for Permitted Encumbrances.
Except as set forth in Section 4.7(b) of the Disclosure Schedule, the Company
has a valid and enforceable fee, leasehold, license or other interest in all of
the other properties and assets, real or personal, tangible or intangible, which
are used in the operation of the business of the Company, free and clear of all
Encumbrances, except for Permitted Encumbrances. Except as set forth in Section
4.7(b) of the Disclosure Schedule, none of the properties or assets owned,
leased, operated or used by the Company is subject to any lease, sublease,
license sublicense or other agreement granting to any other Person any right to
the use, occupancy or enjoyment of such property or any portion thereof and no
leasehold interest of the Company is proposed to be surrendered or terminated.
 
(c)  “Permitted Encumbrances” means (i) liens for Taxes not yet due and payable
or which are being diligently contested in good faith by appropriate proceedings
and as to which appropriate reserves (to the extent required by GAAP) have been
established in the books and records of the Company; (ii) mechanics’,
materialmen’s, carriers’, warehousemen’s, landlord’s and similar liens securing
obligations not yet delinquent or which are being diligently contested in good
faith by appropriate proceedings and as to which appropriate reserves (to the
extent required by GAAP) have been established in the books and records of the
Company.
 
(d)  With respect to each lease of Real Property, except as set forth in Section
4.7(d) of the Disclosure Schedule: (i) all base rents, percentage rents (if
owing in accordance with the terms of the applicable lease) and additional rents
have been paid, (ii) no waiver, indulgence or postponement of the lessee’s
obligations has been granted by the lessor, (iii) there exists no event of
default or event, occurrence, condition or act which, with the giving of notice,
the lapse of time or the happening of any other event or condition, would become
a default under the lease, and (iv) all of the covenants to be performed by any
other party under the lease have been fully performed. Section 4.7(a) of the
Disclosure Schedule contains a list of all of the leases of Real Property
setting out, in respect of each such lease, a description of the leased premises
by shopping centre or location. Section 4.7(d) of the Disclosure Schedule
identifies the leases of Real Property that contain rent escalation provisions
which may be triggered as a result of the change of control of the Company as
tenant thereunder. The present use of each lease of Real Property is permitted
under the terms of such lease.
 
4.8  Intellectual Property.
 
(a)  Except as set forth in Section 4.8(a) of the Disclosure Schedule, the
Company owns, or has the valid right to use or license, all Intellectual
Property Rights as used in the Company’s business as presently conducted and as
it is expected to be conducted as of the Closing (such Intellectual Property
Rights hereinafter referred to as the “Company IP Rights”). The Company IP
Rights are sufficient to conduct the Company’s business.
 
(b)  The execution, delivery and performance of this Agreement and the
consummation of the transactions contemplated hereby will not (i) constitute a
breach of any instrument or agreement governing any Company IP Rights (the
“Company IP Rights
 
 
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Agreements”), (ii) cause the forfeiture or termination or give rise to a right
of forfeiture or termination of any Company IP Rights, or (iii) impair the right
of the Company or, after the Closing, Madden, to own, use or license any Company
IP Rights or portion thereof on the same terms as applied to Sellers prior to
the Closing Date.
 
(c)  Except as set forth in Section 4.8(c) of the Disclosure Schedule, there are
no royalties, honoraria, fees or other payments payable by the Company to any
Person for the use by the Company of any Company IP Rights.
 
(d)  Except as set forth in Section 4.8(d) of the Disclosure Schedule, (i) the
conduct of the business of the Company as presently conducted, does not and will
not violate or infringe any Intellectual Property Rights of any other Person,
and (ii) there is no pending or, to the Knowledge of Sellers and the Company,
threatened claim or litigation contesting the validity, ownership,
registrability, right to use or right to license any Company IP Rights, nor is
there any valid or reasonable basis for any such claim, nor has the Company or
any Seller received any notice asserting that any Company IP Rights or the
proposed use, registration or license thereof infringes or otherwise violates,
or will infringe or otherwise violate the rights of such Person.
 
(e)  Except as set forth in Section 4.8(e)(i) of the Disclosure Schedule, the
Company has taken all reasonable and practicable steps to safeguard and maintain
the secrecy and confidentiality of its trade secrets. Sellers have delivered to
Madden true, complete and accurate copies of all agreements that any directors,
officers, employees, contractors or consultants of the Company have executed
regarding (i) the protection of proprietary information, and (ii) the assignment
to the Company of all Intellectual Property Rights arising from the services
performed for the Company by such persons. Except as set forth in Section
4.8(e)(ii) of the Disclosure Schedule, no current or prior directors, officers,
employees, consultants or contractors of the Company claim or have a right to
claim an ownership interest in any Company IP Rights.
 
(f)  Section 4.8(f) of the Disclosure Schedule separately lists (i) all licenses
and other agreements under which the Company or any Person granted rights by the
Company uses any Company IP Rights, and (ii) all licenses and other agreements
under which the Company or any Person granted rights by the Company uses any
Intellectual Property of any other Person. All such licenses and other
agreements are valid, enforceable, in full force and effect, and without breach
and will continue to be so without change in any provision or term thereof after
the Closing.
 
(g)  Except as set forth in Section 4.8(g) of the Disclosure Schedule, neither
Sellers, nor the Company has (i) sent any notice, made any claim, or filed any
action asserting that any Person’s use of, or application for, any Intellectual
Property Rights infringes upon or otherwise violates any Company IP Rights, and
(ii) no Person is infringing upon or otherwise violating any Company IP Rights,
or has filed to register any Intellectual Property Rights which, if used by any
third party, would infringe upon or otherwise violate the Company IP Rights.
 
(h)  Section 4.8(h) of the Disclosure Schedule sets forth a list of all patents,
trademarks, service marks, trade dress, copyrights, slogans, trade names, and
internet domain names comprising the Company IP Rights, including without
limitation all registrations and
 
 
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applications for any of the foregoing owned, licensed, used or filed by or on
behalf of the Company anywhere in the world. For each trademark listed in
Section 4.8(h) of the Disclosure Schedule, identify the trademark, the
jurisdiction, the registration/application number, the registrant/applicant, the
class of goods/services, the status (including any rejections and the basis
therefore), and the principal terms of any license governing any such trademark.
All applications, registrations and licenses listed in Section 4.8(h) of the
Disclosure Schedule, unless otherwise indicated, are in full force and effect
and have not been cancelled, expired, rejected or abandoned. Except as set forth
in Section 4.8(d) of the Disclosure Schedule, there is no pending, existing or,
to the Knowledge of Sellers and the Company, threatened opposition,
interference, cancellation, proceeding or other legal or governmental proceeding
before any court or Governmental Body against or involving the applications or
registrations listed in Section 4.8(h) of the Disclosure Schedule.
 
4.9  Contracts and Agreements.
 
(a)  Section 4.9(a) of the Disclosure Schedule sets forth a true, complete and
accurate list of each of the following contracts, agreements, arrangements,
instruments or understandings, whether oral or written, to which the Company is
a party or by which the Company or its assets or properties are bound, except
for purchase orders entered into by the Company with customers, contractors,
manufactures and suppliers in the ordinary course of business and on forms
previously supplied to Madden (collectively, the “Contracts”):
 
(i)  each employment or other similar agreement providing for compensation,
severance or a fixed term of employment in respect of services performed by
                 any employees of the Company;
 
(ii)     each management, consulting, subcontractor, retainer or other similar
type of agreement under which services are provided by any Person to the
                 Company in excess of $25,000 per annum or $50,000 in the
aggregate;
 
(iii)    each other agreement or commitment for services and supplies provided
by any other Person to the Company with a term of more than one (1) year or
                 requiring payments of more than $25,000 per annum or $50,000 in
the aggregate;
 
                    (iv)    each agreement or commitment for the supply of
products or services by the Company to any other Person with a term of more than
one (1) year (other
                 than those that are terminable upon not more than thirty (30)
days’ notice by the Company without penalty) or involving payments of more than
$25,000 per annum or $50,000
                 in the aggregate;
 
                            (v)     each agreement that restricts in any manner
the operation of the business of the Company as presently conducted, including
each agreement that
                 restricts the ability of the Company to conduct business in any
geographic or product market, buy or sell particular goods or services, buy or
sell goods or services from any
                other Person or solicit customers, employees or other service
providers;
 
 
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                            (vi)    each agreement with an Affiliated Person,
or, to the Knowledge of Sellers and the Company, with any entity which an
officer or director of the Company
                 holds an interest;
 
                                            (vii)   each lease (as lessor,
lessee, sublessor or sublessee) of any real property;
 
                                           (viii)   each lease (as lessor,
lessee, sublessor or sublessee) of any tangible personal property requiring
payment during its term or any extension or renewal
                thereof in excess of $25,000;
 
                    (ix)     each license (as licensor, licensee, sublicensor or
sublicensee) of any Intellectual Property Rights (other than licenses of
commercially available,
                 “packaged, off the shelf,” shrink-wrap or click-through
computer software);
 
(x)      each agreement under which any money has been or may be borrowed or
loaned, or any note, bond, factoring agreement, indenture or other evidence of
                 indebtedness has been  issued or assumed, and each guaranty
(including “take-or-pay” and “keepwell” agreements) of any evidence of
indebtedness or other obligation, or
                 of the net worth, of any Person;
 
                                            (xi)     each mortgage agreement,
deed of trust, security agreement, purchase money agreement, conditional sales
contract or capital lease;
 
                            (xii)    each partnership, joint venture or similar
agreement;
 
                           (xiii)    each agreement relating to ownership
interests (or other securities, as applicable) of the Company, including
operating agreements, member- or
                 stockholder agreements, voting agreements, and any agreements
granting preferential rights to acquire ownership interests (or other
securities, as applicable) of the Company
                 or containing restrictions with respect to the payment of
dividends or other distributions in respect of the ownership interests or other
securities of the Company;
 
                                           (xiv)    each agreement or commitment
to make unpaid capital expenditures in excess of $25,000;
 
                                           (xv)     each agreement containing a
change of control provision;
 
                                           (xvi)    each agreement or other
arrangement providing for the development of software for, or license of
software (other than off-the-shelf, shrink-wrap, or click-
                 through software applications) or Intellectual Property Rights
to, the Company, which software or Intellectual Property Rights are used or
incorporated in any of the Company
                 Products, including rights of publicity;
 
                                           (xvii)   each agreement with respect
to any Company IP Rights;
 
                                           (xviii)  each agreement or
arrangement with respect to advertising (including co-op advertising) for the
Company or any of its services;
 
 
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                                            (xix)   each agreement that
obligates the Company to indemnify a third party; and
 
                                            (xx)    each other agreement (or
group of agreements) having an indefinite term or a fixed term of more than one
(1) year (other than those that are terminable
                 upon not more than thirty (30) days’ notice by the Company
without penalty), or requiring aggregate payments by the Company in excess of
$25,000 per year or the loss of
                 which could reasonably be expected to have, directly or
indirectly, individually or in the aggregate, a Material Adverse Effect.
 
Complete copies of all written (and summaries of all oral) Contracts required to
be disclosed pursuant to this Section 4.9(a) have been previously delivered to
Madden.
 
(b)  The Contracts are legal, valid, binding and in full force and effect and
are enforceable by the Company in accordance with their respective terms, except
as such enforceability may be limited by bankruptcy, insolvency, moratorium and
other similar laws affecting creditors’ rights generally and by general
principles of equity. Except as set forth in Section 4.9(b) of the Disclosure
Schedule, the Company is not (with or without the lapse of time or the giving of
notice, or both) in breach of or in default under any of the Contracts, and, to
the Knowledge of Sellers and the Company, no other party to any of the Contracts
is (with or without the lapse of time or the giving of notice, or both) in
breach of or in default under any of the Contracts.
 
4.10     Insurance. All insurance policies currently maintained by the Company,
under which the Company is insured are accurately listed in Section 4.10 of the
Disclosure Schedule and complete copies of such policies have been previously
delivered to Madden. Each such insurance policy is in full force and effect (and
to the Knowledge of Sellers and the Company, free from any presently exercisable
right of termination on the part of the insurance company issuing such policy
prior to the expiration of the term of such policy) and all premiums due and
payable in respect thereof have been paid. There are no pending claims with
respect to the Company or its properties or assets under any such insurance
policy. The Company has not received notice of cancellation or non-renewal of
any such policy. The transactions contemplated by this Agreement will not give
rise to a right of termination of any such policy by the insurance company
issuing the same prior to the expiration of the term of such policy.
 
4.11     Litigation. Except as set forth in Section 4.11 of the Disclosure
Schedule, and except with respect to environmental matters (which are addressed
in Section 4.16 of this Agreement), there is no lawsuit, governmental
investigation or legal, administrative or arbitration action or proceeding
pending or, to the Knowledge of Sellers and the Company, threatened against any
Seller, the Company or any of their properties or assets, or any director,
officer or employee of the Company, in his or her capacity as such, and the
Company is not identified as a party subject to any restrictions or limitations
under any judgment, order or decree of any Governmental Body.
 
4.12     Condition and Sufficiency of Assets. The properties and assets owned,
leased, operated or used by the Company in the conduct or operation of its
business are in good operating condition and repair and are suitable for the
purposes for which they are used and are
 
 
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all of the properties and assets necessary for the conduct and operation of the
business of the Company as currently conducted. The Company is the sole owners
of all material properties and assets, including trademarks, utilized in the
conduct or operation of the business of the Company, except for properties and
assets leased or licensed to the Company pursuant to Contracts listed in Section
4.9(a) of the Disclosure Schedule, to which the Company has a valid lease or
license. 
 
4.13     Compliance with Law; Licenses.
 
(a)  Except as set forth in Section 4.13(a) of the Disclosure Schedule, the
Company is and has been in compliance in all material respects with all
applicable Laws, orders and decrees governing the conduct or operation of its
business, and with all of its Licenses. Neither Sellers nor the Company has
received any notice of any violation of any such Law, order, decree or License,
and to the Knowledge of Sellers and the Company, no such violation has been
threatened.
 
(b)  All material governmental licenses, approvals, authorizations,
registrations, consents, orders, certificates, decrees, franchises and permits
(collectively, “Licenses”) of the Company, are listed in Section 4.13(b) of the
Disclosure Schedule. Such Licenses are all of the material Licenses necessary
for the Company’s ownership and operation of its properties and assets,
manufacturing, marketing, sale and distribution of the Company Products by the
Company and the conduct and operation of its business. All such Licenses are in
full force and effect; and no proceeding is pending or, to the Knowledge of
Sellers and the Company, threatened, seeking the revocation or limitation of any
such License. To the Knowledge of Sellers and the Company, there exists no state
of facts which could cause any Governmental Body to limit, revoke or fail to
renew any License related to or in connection with any business as currently
conducted or operated by the Company.
 
4.14     Employees.
 
(a)  Section 4.14(a) of the Disclosure Schedule sets forth, as of April
30, 2007, the total number of employees of the Company and indicates the
jurisdiction in which each such employee is employed. The Company generally has
good relationships with its employees.
 
(b)  Except as set forth in Section 4.14(b) of the Disclosure Schedule, the
Company (i) is and has been in compliance with all applicable Laws (including
any legal obligation to engage in affirmative action), agreements and contracts
relating to former, current, and prospective employees, independent contractors
and “leased employees” (within the meaning of Section 414(n) of the Code or
other similar law) of the Company, workplace practices, and terms and conditions
of employment with the Company or retention by the Company, including all such
Laws, agreements and contracts relating to wages, hours, collective bargaining,
employment discrimination, human rights, immigration, disability, civil rights,
fair labor standards, occupational safety and health, workers’ compensation, pay
equity, termination of employment or wrongful discharge and violation of the
potential rights of such former, current, and prospective employees, independent
contractors and leased employees, and (ii) has timely prepared and filed all
appropriate forms (including U.S. Immigration and Naturalization Service Form
I-9) required by any relevant Law or Governmental Body. The Company is not
engaged in any unfair labor practice.
 
 
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(c)  Other than as set forth on Section 4.14(c) of the Disclosure Schedule, no
collective bargaining agreement with respect to the business of the Company is
currently in effect or, to the Knowledge of Sellers and the Company, being
negotiated.  The Company has no obligation to negotiate any other collective
bargaining agreement, and, to the Knowledge of Sellers and the Company, no
employees of the Company that are not already so covered desire to be covered by
a collective bargaining agreement and  there are no threatened or pending union
organizing efforts in connection therewith.
 
(d)  No strike, slowdown or work stoppage is occurring or has occurred since the
inception of the Company nor, to the Knowledge of Sellers and the Company, is
threatened or has been threatened within the last year, with respect to the
employees of the Company.
 
(e)  There is no representation or certification claim or petition pending
before any labor agency or board (including the U.S. National Labor Relations
Board) of which the Company or any Seller has been notified and, to the
Knowledge of Sellers and the Company, no question concerning representation has
been raised or threatened respecting the employees of the Company.  No union or
employee bargaining agency has applied or threatened to apply to any labor
agency or board to have the Company declared a common, related or successor
employer pursuant to any applicable Laws.
 
(f)  Except as set forth in Section 4.14(f) of the Disclosure Schedule, no
notice has been received by the Company or any Seller of any complaint or
proceeding filed against the Company claiming that the Company has or may have
violated any applicable employment standards, human rights or other labor
legislation or employment Laws, or of any complaints or proceedings of any kind
involving the Company or, to the Knowledge of Sellers and the Company, against
any of the employees of the Company or threatened to be filed against the
Company before any agency, labor relations board or Governmental Body
(including, but not limited to, the U.S. National Labor Relations Board and U.S.
Equal Employment Opportunity Commission).  No notice has been received by the
Company or any Seller of the intent of any agency or other Governmental Body
responsible for the enforcement of labor or employment Laws to conduct an
investigation of the Company, and no such investigation is in progress.
 
(g)  There are no outstanding orders or charges against the Company under any
occupational health or safety legislation and, to the Knowledge of Sellers and
the Company, none have been threatened.  All material levies, assessments,
penalties, fines, liens and surcharges made against the Company pursuant to all
applicable workers compensation legislation as of the date of the Balance Sheet
have been paid or have been reserved for or accrued on the Balance Sheet by the
Company and the Company has not as of the Closing Date, been reassessed under
any such legislation and there are no claims or potential claims which may
adversely affect the accident cost experience of the Company.  To the Knowledge
of Sellers and the Company, no audit of the Company is being performed or
threatened pursuant to any workers’ compensation legislation.  There have been
no material levies, assessments or penalties imposed or, to the Knowledge of
Sellers and the Company, threatened against the Company since the date of the
Balance Sheet.
 
(h)  A schedule has been delivered to Madden setting forth a true, complete and
accurate list, as of April 30, 2007, of all of the employees, officers,
independent contractors
 
 
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and consultants of the Company, and with respect to each such employee, officer,
independent contractor and consultant:  (i) the total compensation (including,
without limitation, salary, bonuses, incentive compensation, fees or other
remuneration) received by such individual in the immediately preceding fiscal
year of the Company, (ii) such individual’s current compensation, (iii) such
individual’s current title, (iv) the number of years of continuous service of
such employee or officer and the period of service of such independent
contractor or consultant with the Company, and (v) outstanding loans to such
individuals.  Amounts have been withheld by the Company from its employees for
all periods in compliance with applicable law.  Federal, state, local and
foreign returns, as required by applicable law, have been filed by the Company
for all periods for which returns were due with respect to employee income tax
withholding, social security, employment insurance and unemployment taxes and
employer health taxes or premiums and the amounts shown thereof to be due and
payable have been paid, together with any interest and penalties that are due as
a result of the failure by the Company to file such returns when due and pay
when due the amounts shown thereon to be due.  Section 4.14(h) of the Disclosure
Schedule accurately sets forth a complete and correct list of all employment,
management, consulting or other agreements with any Persons retained by the
Company as employees, “leased employees” (within the meaning of Section 414(n)
or (o) of the Code or other similar Law), management or other independent
consultants, sales representatives, sales or commission agents and distributors,
true, complete and accurate copies of which have been delivered to Madden.
 
(i)        Section 4.14(i) of the Disclosure Schedule accurately sets forth all
severance or continuing payment obligations (either as part of a plan or
otherwise) of the Company, as well as all unpaid severance or continuing
payments of any kind (other than pursuant to a plan or program described in
Section 4.15 hereof) which are due or claimed in writing to be due from the
Company to any Person whose employment with the Company was terminated.  The
consummation of the transactions contemplated hereby, either alone or in
combination with another event, with respect to each director, officer,
employee, independent contractor and consultant of the Company, will not result
in (A) any payment (including, without limitation, severance, unemployment
compensation or bonus payments) becoming due under any Employee Benefit Plan or
agreement, (B) any increase in the amount of compensation, benefits or fees
payable to any such individual or (C) any acceleration of the vesting or timing
of payment of benefits, compensation or fees payable to any such individual.
 
(j)        Section 4.14(j) of the Disclosure Schedule accurately sets forth all
accrued, but unused, vacation time of all employees of the Company as of April
30, 2007 and the policies of the Company with respect thereto.  All amounts due
for all salary, wages, bonuses, commissions, vacation with pay and other
benefits have either been paid or are accurately reflected on the Balance Sheet.
 
(k)  Except as set forth in Section 4.14(h) of the Disclosure Schedule, each
employee of the Company is employed on an at-will basis and the Company has no
any written or oral agreements with any employees which would interfere with the
ability to discharge such employees. To the Knowledge of Sellers and the
Company, no key employee and no group of employees of the Company has any plans
to terminate or modify their status as an employee or employees of the Company
(including upon consummation of the transactions contemplated hereby).
 
 
 
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(l)        Neither any Seller nor the Company has promised, made any written or
oral statements or representations or distributed any written material to, any
employees, directors, officers, consultants, independent contractors, agents,
representatives or other personnel of the Company regarding continued (x)
employment or terms of employment, (y) continued engagement, or (z) continued
receipt of any particular benefit, with or from the Company subsequent to the
date hereof or the Closing Date.
 
4.15     Employee Benefit Plans.
 
(a)  Section 4.15(a) of the Disclosure Schedule lists all Employee Benefit
Plans.  “Employee Benefit Plan” means any “employee benefit plan” as defined in
Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended
from time to time (“ERISA”), all similar plans maintained outside the United
States and not required by applicable Law (a “Non-U.S. Plan”) and any other
plan, policy, program, practice, agreement, understanding or arrangement
(whether written or oral) providing compensation or other benefits to any
current or former officer, employee or consultant (or to any dependent or
beneficiary thereof), of the Company or any ERISA Affiliate, which are now, or
within the last six (6) years were, maintained by the Company or any ERISA
Affiliate, or with respect to which the Company or any ERISA Affiliate has or
may have any liability, including but not limited to any obligation to
contribute, including all employee pension, profit-sharing, savings, retirement,
incentive, bonus, deferred compensation, vacation, holiday, cafeteria, medical,
disability, life, accident or other insurance, stock purchase, stock option,
stock appreciation right, phantom stock, restricted stock or other equity-based
compensation plans, and any other plans, policies, programs, practices or
arrangements.  “ERISA Affiliate” means any entity (whether or not incorporated)
other than the Company that, together with the Company, is or could reasonably
be expected to be deemed to be a member of a controlled group of corporations
within the meaning of Section 414(b) of the Code, of a group of trades or
businesses under common control within the meaning of Section 414(c) of the
Code.
 
(b)  Section 4.15(b) of the Disclosure Schedule sets forth each employment
agreement, contract or Employee Benefit Plan that is subject to Section 409A of
the Code and any such Employee Benefit Plan has been operated in good faith
compliance with available treasury guidance since January 1, 2005.
 
(c)  The Company has delivered to Madden true, complete and accurate copies of
(i) any employment or severance agreements and any procedures and policies
relating to the employment of employees of the Company and the use of temporary
employees and independent contractors by the Company (including written
summaries of any procedures and policies that are unwritten), (ii) plan texts,
instruments and amendments thereto (including written summaries of any unwritten
plan or amendment) for all Employee Benefit Plans and related trust agreements,
insurance and other contracts (including policies), summary plan descriptions,
and summaries of material modifications and material communications distributed
to the participants of each Employee Benefit Plan (and written summaries of any
other communications that were not written), and (iii) forms or written
communications explaining employee and related beneficiaries rights under Part 6
of Subtitle B of Title I of ERISA and Section 4980B of the Code (“COBRA”), or
certifying group health insurance coverage pursuant to Part 7 of Subtitle B of
Title I of ERISA and Chapter 100 of the Code (“HIPAA”).
 
 
 
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(d)  Neither the Company nor any ERISA Affiliate maintains or contributes to, or
has ever maintained or contributed to, a “pension plan” within the meaning of
Section 3(2) of ERISA.
 
(e)  The Company has never maintained an Employee Benefit Plan that is a
severance plan or program.
 
(f)        No event has occurred in connection with which the Company or any
Employee Benefit Plan, directly or indirectly, could be subject to any liability
under ERISA, the Code or any other Law or governmental order applicable to any
Employee Benefit Plan.  Neither the Company nor any ERISA Affiliate has agreed
to indemnify or is required to indemnify any person against liability incurred
under, or for a violation or failure to satisfy the requirements of, any Law.
 
(g)  Each Employee Benefit Plan may, by its terms, be amended or terminated at
any time, and no additional liabilities to the Company or to such plan will
arise on account of any such termination (including, but not limited to,
retrospective premium adjustments or early cancellation penalties).
 
(h)  There are no actions, claims (other than routine claims for benefits),
lawsuits or arbitrations pending or threatened with respect to any Employee
Benefit Plan or against any fiduciary of any Employee Benefit Plan, and there
are no facts that could give rise to any such actions, claims, lawsuits or
arbitrations.
 
(i)        Each Employee Benefit Plan which is a “welfare plan” within the
meaning of Section 3(1) of ERISA and which provides health, disability or death
benefits is fully insured.
 
(j)        No Employee Benefit Plan provides for post-retirement medical,
health, life or death benefits (through insurance or otherwise) or provides for
the continuation of such benefits or coverage for any participant or any
dependent or beneficiary of any participant after such participant’s retirement
or other termination of employment, except as may be required by COBRA or any
other similar law.  There has been no communication to any person providing
services to the Company that that could reasonably be expected to promise or
grant any such person any retiree health or life insurance or any retiree death
benefits, except as required by COBRA or any other similar law.
 
(k)  All notices, filings and disclosures required by ERISA and the Code
(including COBRA notices and the provision of summary plan descriptions) have
been timely made.
 
(l)        The Company has not proposed, announced or agreed to create any
additional Employee Benefit Plans or to amend or modify any Employee Benefit
Plan in a manner that would (i) cause an increase in benefits under such
Employee Benefit Plan, (ii) cause the creation of new benefits or (iii) change
any employee coverage that would cause an increase in the expense of maintaining
such Plan.
 
(m)      The consummation of the transactions contemplated by this Agreement,
either alone or in combination with any other event, will not result in (i) any
payment (including,
 
 
 
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without limitation, severance, unemployment compensation, bonus payments or
otherwise) becoming due to any current or former director, officer, employee or
consultant of the Company, (ii) any increase in the amount of compensation or
benefits payable in respect of any director, officer, employee or consultant of
the Company, (iii) any acceleration of the vesting or timing of payment of any
benefits or compensation payable in respect of any director, officer, employee
or consultant of the Company, or (iv) any “parachute payment” under Section 280G
of the Code, whether or not such amount may be considered reasonable
compensation for personal services rendered.
 
(n)  There are no pending or threatened investigations by any Governmental Body
involving or relating to any Employee Benefit Plan or pending claims (except for
routine claims for benefits payable in the normal operation of the Employee
Benefit Plans), suits or proceedings against any Employee Benefit Plan, the
Company, any Seller, the trustees of any Seller, or any fiduciary or trustee of
any Employee Benefit Plan, nor, to the Knowledge of Sellers and the Company, are
there any facts that could give rise to any liability in the event of such
investigation, claim, suit or proceeding.
 
(o)  No condition exists as a result of which the Company could have any
material liability, whether actual or contingent, including any obligation under
any Employee Benefit Plan, as a result of or arising out of any
misclassification of any person performing services for the Company as an
independent contractor or the employee of a third party rather than as an
employee of the Company.
 
(p)  Section 4.15(p) of the Disclosure Schedule sets forth annual costs for the
last calendar year associated with the maintenance of each Employee Benefit
Plan, including, without limitation, annual premiums and contributions.
 
(q)  Section 4.15(q) of the Disclosure Schedule sets forth a true, complete and
accurate list of (i) all agreements with consultants obligating the Company to
make annual cash payments in an amount exceeding $25,000; and (ii) all
agreements with respect to the services of “leased employees” (within the
meaning of Section 414(n) or (o) of the Code) whether or not such “leased
employees” participate in any of the Employee Benefit Plans.  No individual
performs services for the Company as an employee of a third party, including any
“leased employee.”
 
(r)        No Employee Benefit Plan that is not a Non-U.S. Plan covers any
non-U.S. employees.
 
4.16     Environmental Matters.
 
(a)  Except as set forth in Section 4.16 of the Disclosure Schedule:
 
(i)  the Company is in material compliance with all applicable Environmental
Laws;
 
                                    (ii)     the Company possess all
Environmental Permits that are required for the lawful operation of the business
and each such Environmental Permit is in full force and effect and the Company
is in compliance with such Environmental Permits and
 
 
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         no proceeding is pending or to the Knowledge of Sellers and the Company
threatened and no grounds exist to revoke, suspend, modify or limit any such
Environmental Permit;
 
                                    (iii)     neither any Seller nor the Company
has received any oral or written notice with respect to the business of, or any
property currently or formerly owned or leased by the Company
                 from any Governmental Body or Person alleging that the Company
is in violation of any Environmental Law;
 
                                    (iv)     neither any Seller nor the Company
has received any oral or written notice from any Governmental Body or Person
that it is or may be required to conduct any Remedial Action
                 as a result of the operation of its business, or on any
property currently or formerly owned or leased by the Company;
 
                                    (v)      there has been no Release of a
Hazardous Material at or from any real property currently or formerly owned or
leased by the Company that would subject the Company to liability
                 under any Environmental Law, nor has any Seller or the Company
received written notice that it is a potentially responsible party under any
Environmental Law; and
 
                                    (vi)     the Company has not managed,
handled, generated, manufactured, refined, recycled, discharged, emitted,
buried, processed, produced, reclaimed, stored, treated, transported, or
                 disposed of any Hazardous Substance, except in compliance with
all Environmental Laws.
 
(b)  Sellers have provided Madden with all environmental audits or assessments
in the possession of the Company relating to the business of, or any property
owned or leased by, the Company.
 
4.17     Bank Accounts and Powers of Attorney.  Section 4.17 of the Disclosure
Schedule sets forth the name of each bank in which the Company has an account,
lock box or safe deposit box, the number of each such account, lock box and safe
deposit box, and the names of all Persons authorized to draw thereon or have
access thereto.  Except as set forth in Section 4.17 of the Disclosure Schedule,
no Person holds any power of attorney from the Company.
 
4.18     Absence of Certain Changes.  Since the date of the Balance Sheet, the
Company has operated its business in the ordinary course and has maintained its
relationships with customers, vendors, suppliers, employees, agents and others
in a commercially reasonable manner, and there has not occurred any event,
development or change which, individually or in the aggregate, has had or could
be reasonably expected to have a Material Adverse Effect. Without limiting the
generality of the immediately preceding sentence and except as set forth in
Section 4.18 of the Disclosure Schedule, since the date of the Balance Sheet,
the Company has not:
 
                                    (i)  amended or otherwise modified its
organizational documents (including, as applicable, its articles or
organization, certificate of formation, operating agreement or articles of
         association) or altered, through merger, liquidation, reorganization,
restructuring or in any other fashion its corporate structure or ownership;
 
 
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                                    (ii)      issued or sold, or authorized for
issuance or sale, or granted any options or made other agreements, arrangements
or understandings of the type referred to in Section 4.2(b)
                 with respect to any of its ownership interests or any other of
its securities or altered any term of any of its outstanding ownership interests
(or other securities) or made any change in its outstanding
                 ownership interests or other securities or its capitalization,
whether by reason of a reclassification, recapitalization, stock or interest
split or combination, exchange or readjustment of interests or
                 shares, dividend or otherwise;
 
                                            (iii)     mortgaged, pledged or
granted any security interest in any of its assets, except Permitted
Encumbrances and security interests solely in tangible personal property granted
                 pursuant to any purchase money agreement, conditional sales
contract or capital lease under which, solely with respect to conditional sales
contracts and capital leases, there exists an aggregate
                 future liability not in excess of $25,000 per contract or lease
(which amount was not more than the purchase price for such personal property
and which security interest does not extend to any other
                 item or items of personal property);
 
                                    (iv)    declared, set aside, made or paid
any dividend or other distribution to any holder with respect to its ownership
interests or other securities;
 
                                    (v)     redeemed, purchased or otherwise
acquired, directly or indirectly, any of its ownership interests or other
securities;
 
                                    (vi)    increased the compensation of any of
its non-executive employees, except in the ordinary course of business and in a
commercially reasonable manner, or increased the
                 compensation of any of its executive officers;
 
                                    (vii)   adopted or, except as required by
Law, amended, any Employee Benefit Plan;
 
                                    (viii)  extended, terminated or modified any
Contract, permitted any renewal notice period or option period to lapse with
respect to any Contract or received any written notice of
                 termination of any Contract, except for terminations of
Contracts upon their expiration during such period in accordance with their
terms;
 
                                    (ix)     incurred or assumed any
indebtedness for borrowed money or guaranteed any obligation or the net worth of
any Person, except for endorsements of negotiable instruments for
                 collection in the ordinary course of business and in a
commercially reasonable manner;
 
                                    (x)      incurred any liability, debt or
obligation (whether absolute, accrued, contingent or otherwise) to or of any
Affiliated Person, or made any Affiliate Loans;
 
                                    (xi)     discharged or satisfied any
Encumbrance other than those then required to be discharged or satisfied during
such period in accordance with their original terms;
 
 
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                                    (xii)    paid any material obligation or
liability (absolute, accrued, contingent or otherwise), whether due or to become
due, except for any current liabilities, and the current portion of
         any long term liabilities shown on the Financial Statements or incurred
since the date of the Balance Sheet in the ordinary course of business and in a
commercially reasonable manner;
 
                                    (xiii)   sold, transferred, leased to others
or otherwise disposed of any assets having a fair market value in excess of
$25,000, except sales of inventory in the ordinary course of
                 business and dispositions of obsolete assets no longer used or
useful in the business of the Company, in each case in the ordinary course of
business and in a commercially reasonable manner;
 
                                    (xiv)   cancelled, waived or compromised any
debt or claim;
 
                                    (xv)    suffered any damage or destruction
to, loss of, or condemnation or eminent domain proceeding relating to any of its
tangible properties or assets (whether or not covered by
          insurance) which has had or would reasonably be likely to have a
Material Adverse Effect;
 
                                    (xvi)   lost the employment services of any
employee whose annual salary exceeded $25,000;
 
                                    (xvii)  made any loan or advance to any
Person, other than travel and other similar routine advances to employees in the
ordinary course of business and in a commercially reasonable
                 manner;
 
                                   (xviii)  purchased or acquired any capital
stock or other securities of any other corporation or any ownership interest in
any other business enterprise or Person;
 
                                    (xix)   made any capital expenditures or
capital additions or betterments in amounts which exceeded $25,000, in the
aggregate;
 
                                    (xx)    changed its method of accounting or
its accounting principles or practices, including any policies or practices with
respect to the establishment of reserves for work-in-process
                 and accounts receivable, utilized in the preparation of the
Financial Statements, other than as required by GAAP;
 
                                    (xxi)   instituted or settled any litigation
or any legal, administrative or arbitration action or proceeding before any
court or Governmental Body relating to it or any of its properties or 
                 assets;
 
                                    (xxii)  made any settlements or new
elections or changed any current elections with respect to its Taxes;
 
                                   (xxiii)  entered into any transaction with
any Affiliated Person not otherwise disclosed in the Disclosure Schedule;
 
 
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                                   (xxiv)  entered into any agreements,
commitments or contracts, except those made in the ordinary course of business
and in a commercially reasonable manner; or
 
                                    (xxv)  entered into any agreement or
commitment to do any of the foregoing.
 
4.19    Books and Records.  The books and records of the Company with respect to
the Company, its operations, employees and properties have been maintained in
the usual, regular and ordinary manner, all entries with respect thereto have
been accurately made, and all transactions involving the Company have been
accurately accounted for.
 
4.20    Transactions with Affiliated Persons.
 
(a)  Except (i) for employment relationships otherwise disclosed pursuant to
this Agreement between employees and the Company, (ii) for remuneration by the
Company for services rendered as a director, officer or employee of the Company,
or (iii) as set forth in Section 4.20(a) of the Disclosure Schedule, (A) the
Company does not, and has not since its inception, in the ordinary course of
business or otherwise, directly or indirectly, purchased, leased or otherwise
acquired any property or obtained any services from, or sold, leased or
otherwise disposed of any property or furnished any services to any Affiliated
Person; (B) the Company does not owe any amount to any Affiliated Person; (C) no
Affiliated Person owes any amount to the Company; and (D) no part of the
property or assets of any Affiliated Person is used by the Company in the
conduct or operation of the business of the Company.
 
(b)  Except as set forth in Section 4.20(b) of the Disclosure Schedule, the
Company has no outstanding any Affiliate Loans.
 
4.21    Absence of Certain Business Practices.  Neither Sellers, the Company,
nor any of their directors or officers, nor to the Knowledge of Sellers and the
Company, any of the employees or agents of the Company or any of their
respective shareholders, directors, officers, employees or agents, have directly
or indirectly (a) made any contribution or gift which contribution or gift is in
violation of any applicable Law, (b) made any bribe, rebate, payoff, influence
payment, kickback or other payment to any Person, private or public, regardless
of form, whether in money, property or services (i) to obtain favorable
treatment in securing business, (ii) to pay for favorable treatment for business
secured, (iii) to obtain special concessions or for special concessions already
obtained for or in respect of the Company or any Affiliated Person, or (iv) in
violation of any Law or legal requirement, or (c) established or maintained any
fund or asset of the Company that has not been recorded in the books and records
of the Company.
 
4.22     Brokers and Finders.  Except as set forth in Section 4.22 of the
Disclosure Schedule, no broker, finder or investment advisor has been engaged by
Sellers or the Company in connection with the transactions contemplated by this
Agreement.  Sellers (and not the Company) shall be responsible for and shall pay
all fees, commissions and costs of any such broker, finder or investment
advisor.
 
 
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4.23     Restrictions on Business Activities.  Except as set forth in Section
4.23 of the Disclosure Schedule, there is no judgment, injunction, order or
decree binding upon the Company or any Seller or, to the Knowledge of Sellers
and the Company, threatened, that has or could reasonably be expected to have
the effect of prohibiting or impairing the conduct of the business by the
Company as currently conducted or any business practice of the Company,
including the acquisition of property, the sale of products, the provision of
services, the hiring of employees, and the solicitation of customers, in each
case either individually or in the aggregate.
 
4.24     Payables.  Except as set forth in Section 4.24 of the Disclosure
Schedule, all accounts payable of the Company  have arisen in the ordinary
course of business.  All items which are required by GAAP to be reflected as
payables on the Financial Statements and on the books and records of the Company
are so reflected and have been recorded in accordance with GAAP and in a
commercially reasonable manner.  There has been no material adverse change since
April 30, 2007 in the amount or delinquency of accounts payable of the Company.
 
4.25     Receivables.  Except as set forth in Section 4.25 of the Disclosure
Schedule, all accounts receivable of the Company  have arisen in the ordinary
course of business, represent valid obligations to the Company arising from bona
fide transactions, and are not subject to claims, set-off, or other defenses or
counterclaims.  All items which are required by GAAP to be reflected as
receivables on the Financial Statements and on the books and records of the
Company are so reflected and have been recorded in accordance with GAAP and in a
commercially reasonable manner.
 
4.26     Business Relations.  Other than as set forth in Section 4.26 of the
Disclosure Schedule, (i) the Company is not required to provide any bonding or
any other financial security arrangements in connection with any transaction
with any customer or supplier, (ii) since April 30, 2007, neither any Seller nor
the Company has received any notice of any disruption (including delayed
deliveries or allocations by suppliers) in the availability of any materials or
products used in the Company’s business, nor do any of them have reason to
believe that any such disruption will occur in connection with the business of
the Company, other than as set forth in Section 4.26 of the Disclosure
Schedule.  Other than as set forth in Section 4.26 of the Disclosure Schedule,
there are no sole source suppliers of goods, equipment or services used by the
Company (other than public utilities) with respect to which practical
alternative sources of supply are unavailable.
 
4.27     Disclosure.  No representation or warranty by Sellers contained in this
Agreement or any Transaction Document or any statement or certificate furnished
by Sellers to Madden or its representatives in connection herewith or therewith
or pursuant hereto or thereto contains any untrue statement of a material fact,
or omits to state any material fact required to make the statements herein or
therein contained not misleading.  There is no fact (other than matters of a
general economic or political nature which do not affect the Company’s business
uniquely) known to Sellers which might reasonably be expected to have a Material
Adverse Effect.
 
 
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ARTICLE V
 
Representations and Warranties of Madden
 
Madden represents and warrants to Sellers as follows:
 
5.1  Organization and Good Standing.  Madden is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware
and has full corporate power and authority to enter into and carry out its
obligations under this Agreement.
 
5.2  Authorization.  The execution and delivery by Madden of this Agreement and
the other Transaction Documents to which Madden is a party have been duly
authorized by all necessary corporate action required on the part of
Madden.  This Agreement and the other Transaction Documents to which Madden is a
party have been duly executed and delivered by Madden and, assuming due
authorization, execution and delivery by Sellers and/or the Company, as
applicable, constitute legal, valid and binding obligations of Madden,
enforceable against Madden in accordance with their respective terms, except as
such enforceability may be limited by applicable bankruptcy, insolvency,
moratorium or other laws affecting the rights of creditors generally and by
general principles of equity.
 
5.3  No Conflicts; Consents.  Neither the execution and delivery by Madden of
this Agreement nor any of the Transaction Documents to which Madden is a party
nor the consummation by Madden of the transactions contemplated hereby or
thereby will (i) conflict with or violate the charter or by-laws of Madden, or
(ii) conflict with, violate, result in the breach of any term of, constitute a
default under or require the consent or approval of or any notice to or filing
with any Person under, any note, mortgage, deed of trust or other agreement or
instrument to which Madden is a party or by which Madden is bound, or any Law,
decree, writ or injunction of any Governmental Body having jurisdiction over
Madden, except with respect to clause (ii) where such conflict, violation,
breach or default, or the failure to obtain such consent or approval, give such
notice or make such filing, would not materially adversely impair the ability of
Madden to consummate the transactions contemplated hereby.
 
5.4  Litigation.  No lawsuit, governmental investigation or legal,
administrative, or arbitration action or proceeding is pending or, to the
Knowledge of Madden, threatened against Madden, or any director, officer or
employee of Madden in his or her capacity as such, which questions the validity
of this Agreement or seeks to prohibit, enjoin or otherwise challenge the
consummation of the transactions contemplated hereby.
 
5.5  Brokers and Finders.  Except as set forth in Section 5.5 of the Madden
Disclosure Schedule, no broker, finder or financial advisor has been engaged by
Madden in connection with the transactions contemplated by this
Agreement.  Madden shall be responsible for and shall pay all fees, commissions
and costs of any such broker, finder or financial advisor.
 
5.6  Investment Intent.  Madden is acquiring all of the Company Interests for
its own account and for investment purposes and not with a view to the sale or
other distribution of any of the Company Interests.
 
 
 
 
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5.7  Sufficient Funds.  At the Closing, Madden will have all funds necessary and
sufficient to enable Madden to perform its obligations under this Agreement and
to consummate the transactions contemplated hereby.
 
ARTICLE VI
 
Covenants of Sellers
 
Sellers hereby covenant and agree as follows:
 
6.1  Ordinary Course.  From the date hereof until the Closing, other than as
contemplated by this Agreement or as set forth in Section 6.1 of the Disclosure
Schedule, Sellers will (a) cause the Company  to (i) maintain its existence in
good standing, (ii) maintain in effect all of its presently existing insurance
coverage (or substantially equivalent insurance coverage), preserve its business
organization substantially intact, keep the services of its present
principal employees and preserve its present business relationships with its
material suppliers and customers, (iii) maintain the lines of business of the
Company, and (iv) in all respects conduct its business in the usual and ordinary
course and in a commercially reasonable manner, without a material change in
current operational policies, and (b) permit Madden, its accountants, its legal
counsel and its other representatives reasonable access to the management,
accountants, legal counsel, minute books and stock or interest transfer records,
other books and records, contracts, agreements, properties and operations of the
Company at all reasonable times upon reasonable notice, subject, in each case to
the restrictions set forth in Section 6.2.
 
6.2  Conduct of Business.  From the date hereof until the Closing, other than as
contemplated by this Agreement or as set forth in Section 6.2 of the Disclosure
Schedule, Sellers will cause the Company not to do any of the following without
the prior written consent of Madden (either individually or in the aggregate):
 
(i)  amend or otherwise modify its organizational documents (including, as
applicable, articles of organization, certificate of formation, operating
agreement or articles of association)
                 or alter, through merger, liquidation, reorganization,
restructuring or in any other fashion, its structure or ownership;
 
                                            (ii)      other than pursuant to
Section 2.1, issue or sell, or authorize for issuance or sale, or grant any
options or make other agreements, arrangements or understandings of the type
                 referred to in Section 4.2(b) with respect to any of its
ownership interests or any other of its securities, or alter any term of any of
its outstanding ownership interests (or other securities) or make any
                 change in its outstanding ownership interests or other
securities or its capitalization, whether by reason of a reclassification,
recapitalization, stock or interest split or combination, exchange or
                 readjustment of interests or shares, dividend or otherwise;
 
                    (iii)     mortgage, pledge or grant any security interest in
any of its assets, except (A) Permitted Encumbrances and (B) security interests
solely in tangible personal property granted
                 pursuant to any purchase money agreement, conditional sales
contract or capital lease under which, solely with respect to conditional sales
contracts and capital
 
 
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                 leases, there exists an aggregate future liability not in
excess of $25,000 per contract or lease (which amount is not more than the
purchase price for such personal property and which security interest
                does not extend to any other item or items of personal
property);
 
                                            (iv)    declare, set aside, make or
pay any dividend or other distribution to any holder with respect to its
ownership interests or other securities;
 
                                            (v)     redeem, purchase or
otherwise acquire, directly or indirectly, any of its ownership interests or
other securities;
 
                                            (vi)    increase the compensation of
any of its non-executive employees, except in the ordinary course of business
and in a commercially reasonable manner, or increase the
 
                 compensation of any of its executive officers;
 
                                            (vii)   adopt or, except as
otherwise required by Law, amend, any Employee Benefit Plan or enter into any
collective bargaining agreement;
 
                                           (viii)   extend, terminate or modify
any Contract or permit any renewal notice period or option period to lapse with
respect to any Contract, except for terminations of Contracts upon their
                 expiration during such period in accordance with their terms;
 
                                           (ix)      incur or assume any
indebtedness for borrowed money or guarantee any obligation or the net worth of
any Person, except for endorsements of negotiable instruments for
                 collection in the ordinary course of business;
 
                                            (x)  incur any liability, debt or
obligation (whether absolute, accrued, contingent or otherwise) to or of any
Affiliated Person, or make any Affiliate Loans;
 
                                            (xi)     discharge or satisfy any
Encumbrance other than those which are required to be discharged or satisfied
during such period in accordance with their original terms;
 
                                            (xii)    pay any material obligation
or liability (absolute, accrued, contingent or otherwise), whether due or to
become due, except for any current liabilities, and the current portion of any
                 long term liabilities shown on the Financial Statements or
incurred since the date of the Balance Sheet in the ordinary course of business
and in a commercially reasonable manner;
 
                                           (xiii)    sell, transfer, lease to
others or otherwise dispose of any of its properties or assets having a fair
market value in excess of $25,000, except sales of inventory and dispositions of
                 obsolete assets no longer used or useful in its business, in
each case in the ordinary course of business and in a commercially reasonable
manner;
 
                                            (xiv)   cancel, waive or compromise
any debt or claim;
 
 
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                                            (xv)    make any loan or advance to
any Person, other than travel and other similar routine advances to employees in
the ordinary course of business and in a commercially reasonable
                 manner;
 
                                            (xvi)   purchase or acquire any
capital stock or other securities of any other corporation or any ownership
interest in any other business enterprise or Person;
 
                                           (xvii)   make any capital
expenditures or capital additions or betterments in amounts which exceed $25,000
in the aggregate;
 
                                          (xviii)   change its method of
accounting or its accounting principles or practices, including any policies or
practices with respect to the establishment of reserves for work-in-process,
                 inventory and accounts receivable, utilized in the preparation
of the Financial Statements, other than as required by GAAP;
 
                                           (xix)     institute or settle any
litigation or any legal, administrative or arbitration action or proceeding
before any court or Governmental Body relating to it or any of its properties or
                 assets;
 
                                           (xx)      make any settlements or new
elections, or change any current elections, with respect to its Taxes;
 
                                            (xxi)    (a) enter into any
agreements, commitments or contracts for any Real Property leases, (b) terminate
or close any facility or operation, or (c) surrender or diminish any leasehold
                 interest of the Company in any Real Property Interest;
 
                                           (xxii)    enter into any transaction
with any Affiliated Person;
 
                                           (xxiii)   enter into any other
agreements, commitments or contracts, except those made in the ordinary course
of business and in a commercially reasonable manner; or
 
                                           (xxiv)   enter into any agreement or
commitment to do any of the foregoing.
 
6.3  Certain Filings.  Sellers agree to make or cause to be made all filings
with Governmental Bodies that are required to be made by Sellers or by the
Company to carry out the transactions contemplated by this Agreement.  Sellers
agree to assist, and to cause the Company to assist Madden in making all such
filings, applications and notices as may be necessary or desirable in order to
obtain the authorization, approval or consent of any Governmental Body which may
be reasonably required or which Madden may reasonably request in connection with
the consummation of the transactions contemplated hereby.
 
6.4  Consents and Approvals.  Sellers agree to use their good faith commercially
reasonable efforts to obtain, or to cause the Company to obtain, as promptly as
practicable, but not later than the Closing in any event, all consents,
authorizations, approvals and waivers required in connection with the
consummation of the transactions contemplated by this Agreement.
 
 
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6.5  Efforts to Satisfy Conditions.  Sellers agree to use their good faith
commercially reasonable efforts to satisfy the conditions set forth in Article
IX.
 
6.6  Further Assurances.  Sellers agree to execute and deliver, and to cause the
Company to execute and deliver, such additional documents and instruments, and
to perform such additional acts as Madden may reasonably request to effectuate
or carry out and perform all the terms, provisions and conditions of this
Agreement and the other Transaction Documents and the transactions contemplated
hereby and thereby and to effectuate the intent and purposes hereof.
 
6.7  Notification of Certain Matters.  Promptly after obtaining knowledge
thereof, Sellers shall notify Madden in writing of (a) the occurrence or
non-occurrence of any fact or event which causes or would be reasonably likely
to cause (i) any representation or warranty of Sellers contained in this
Agreement to be untrue or inaccurate in any material respect at any time from
the date hereof to the Closing Date or (ii) any covenant, condition or agreement
of Sellers in this Agreement not to be complied with or satisfied in any
material respect, and (b) any failure of Sellers to comply with or satisfy any
covenant, condition or agreement to be complied with or satisfied by Sellers
hereunder in any material respect; provided, however, that no such notification
shall affect the representations or warranties of Sellers, or the right of
Madden to rely thereon, or the conditions to the obligations of Madden except as
provided in the following sentence.  If Sellers notify Madden in writing of any
matter referred to in the preceding clause (a)(i) and Madden nevertheless
consummates the transactions contemplated hereby, Madden shall have no claim
against Sellers for a breach of such representation or warranty based on the
information contained in such notification.  Sellers shall give prompt notice in
writing to Madden of any notice or other communication from any third party
alleging that the consent of such third party is or may be required to be
obtained by Sellers or the Company in connection with the transactions
contemplated by this Agreement.
 
ARTICLE VII
 
Covenants of Madden
 
Madden hereby covenants and agrees as follows:
 
7.1  Certain Filings.  Madden agrees to make or cause to be made all filings
with Governmental Bodies that are required to be made by Madden or its
affiliates to carry out the transactions contemplated by this Agreement.  Madden
agrees to assist Sellers in making all such filings, applications and notices as
may be necessary or desirable in order to obtain the authorization, approval or
consent of any Governmental Body which may be reasonably required or which
Sellers may reasonably request in connection with the consummation of the
transactions contemplated hereby.
 
7.2  Efforts to Satisfy Conditions.  Madden agrees to use its good faith
commercially reasonable efforts to satisfy the conditions set forth in Article X
hereof that are within its control.
 
 
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7.3  Further Assurances.  Madden agrees to execute and deliver such additional
documents and instruments, and to perform such additional acts, as Sellers may
reasonably request to effectuate or carry out and perform all the terms,
provisions and conditions of this Agreement and the other Transaction Documents
and the transactions contemplated hereby and thereby to effectuate the intent
and purposes hereof.
 
7.4  Notification of Certain Matters.  Promptly after obtaining knowledge
thereof, Madden shall notify Sellers of (a) the occurrence or non-occurrence of
any fact or event which causes or would be reasonably likely to cause (i) any
representation or warranty of Madden contained in this Agreement to be untrue or
inaccurate in any material respect at any time from the date hereof to the
Closing Date or (ii) any covenant, condition or agreement of Madden in this
Agreement not to be complied with or satisfied in any material respect and
(b) any failure of Madden to comply with or satisfy any covenant, condition or
agreement to be complied with or satisfied by it hereunder in any material
respect; provided, however, that no such notification shall affect the
representations or warranties of Madden or Sellers’ right to rely thereon, or
the conditions to the obligations of Sellers except as provided in the following
sentence.  If Madden notifies Sellers in writing of any matter referred to in
the preceding clause (a)(i) and Sellers nevertheless consummate the transactions
contemplated hereby, Sellers shall have no claim against Madden for a breach of
such representation or warranty based on the information contained in such
notification.  Madden shall give prompt notice in writing to Sellers of any
notice or other communication from any third party alleging that the consent of
such third party is or may be required to be obtained by Madden in connection
with the transactions contemplated by this Agreement.
 
ARTICLE VIII
 
Certain Other Agreements
 
8.1  Certain Tax Matters.  The parties hereby further covenant and agree as
follows:
 
(a)  Tax Returns and Cooperation.
 
                    (i)  Sellers shall, or shall use good faith commercially
reasonable efforts to cause the Company to, prepare and timely file, in a
commercially reasonable manner, (x) all Returns and
                 amendments thereto required to be filed by or for the Company
for all taxable periods ending on or before the Closing Date.  Madden will be
given a reasonable opportunity to review and comment on
                all such Returns required to be filed after the date hereof.
 
                    (ii)      Sellers shall be liable for all Taxes of the
Company for all Pre-Closing Periods (other than to the extent that the liability
for those Taxes is provided for on the Final Closing Balance
                 Sheet) and all Taxes of Sellers for any taxable year or taxable
period.  Notwithstanding the foregoing, in the case of any taxable period that
includes (but does not begin or end on) the Closing Date (a
                 “Straddle Period”), the portion of the Taxes of the Company for
such Straddle Period attributable to the period prior to close of the Closing
Date shall be treated as Taxes of a Pre-Closing Period for
 
 
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                 purposes of this Section 8.1(a)(ii).  The amount of Straddle
Period Taxes of the Company that are treated as Taxes of a Pre-Closing Period
shall be computed (x) in the case of income, franchise, sales,
                 or similar Taxes, pursuant to an interim closing of the books
method by assuming that the Company had a taxable year or period which ended on
the Closing Date, except that exemptions, allowances
                 or deductions that are calculated on an annual basis, such as
the deduction for depreciation, shall be apportioned on a per-diem basis and (y)
in the case of real property Taxes, personal property taxes
                 and similar ad valorem obligations by prorating such Taxes owed
for the Straddle Period on a per-diem basis.
 
                                            (iii)     Except as provided above
with respect to Straddle Periods, the Company shall be liable for any and all
Taxes imposed on them relating to or apportioned to any taxable year or
                 portion thereof beginning on or after the Closing Date and
ending after the Closing Date.
 
                                            (iv)    Madden and Sellers shall
each cooperate fully, as and to the extent reasonably requested by the other
party, in connection with the filing of Returns pursuant to this Section 8.1
                 (a) and any audit, litigation or other proceeding with respect
to Taxes.  Such cooperation shall include the retention and (upon the other
party’s request) the provision of records and information which
                 are reasonably relevant to any such audit, litigation or other
proceeding and making employees available on a mutually convenient basis to
provide additional information and explanation of any
                 material provided hereunder.  Sellers (before the Closing) and
Madden (after the Closing) shall each cause the Company (A) to retain all books
and records with respect to Tax matters pertinent to them
                 relating to any taxable period beginning before the Closing
Date until the expiration of the statutory period of limitations of the
respective taxable periods, and to abide by all record retention
                 agreements entered into with any taxing authority, and (B) to
give the other party reasonable written notice prior to transferring, destroying
or discarding any such books and records and, if the other
                 party so requests, Sellers or Madden, as the case may be, shall
allow the other party to take possession of such books and records.
 
                                            (v)      Madden and Sellers further
agree, upon request, to use good faith commercially reasonable efforts to obtain
any certificate or other document from any Governmental Body or any other Person
as may be necessary to mitigate, reduce or eliminate any Tax that could be
imposed (including, but not limited to, with respect to the transactions
contemplated hereby); provided that such certificate or other document does not
increase the Tax of Madden or Sellers.
 
8.2  Company Payments.  Simultaneously with the payment of the Purchase Price,
Madden shall make a capital contribution to the Company of one million nine
hundred thousand dollars ($1,900,000), which the Sellers have directed the
Company to pay as set forth on Schedule B attached hereto.
 
8.3  Matters Relating to Sellers other than Silverman.
 
(a)  Notwithstanding anything herein to the contrary, Madden hereby acknowledges
that, other than as a result of a breach by a Seller of such Seller’s
representations
 
 
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in the third sentence of Section 4.2(a) of this Agreement, only Silverman (and
no other Seller) shall have any liability to Madden of any kind or nature with
respect to this Agreement or the Transaction Documents.  Madden hereby
acknowledges that it has not relied on any representation, warranty, statement
or communication or, lack thereof, from any of the Sellers other than Silverman,
except with respect to each Seller’s representations in third sentence of
Section 4.2(a) of this Agreement.  Madden acknowledges that it has performed its
own due diligence with respect to its acquisition of the Company.  Except as set
forth in this Section 8.3(a) Madden hereby releases each and all of the Sellers
other than Silverman from any and all liability or obligation of any kind or
nature whatsoever from now until the end of time with respect to this Agreement
or the Transaction Documents or any other theory of law by which a Seller could
have any liability or obligation to Madden.
 
(b)  In the event that the personal guarantee of Randel under that
certain  Equipment Lease Agreement, dated April 21, 2006, between the Company
and General Electric Capital Corporation shall not be terminated as of the
Closing, Madden shall indemnify Randel for any amount Randel pays with respect
to such guarantee.
 
ARTICLE IX
 
Conditions Precedent to Obligations of Madden
 
The obligations of Madden under Article II and Article III shall be subject to
the satisfaction at or prior to the Closing of the following conditions, any one
or more of which may be waived by Madden:
 
9.1  Representations and Warranties.  Each and every representation and warranty
of Sellers contained in this Agreement, and any schedule or any certificate
delivered pursuant hereto, shall have been true, complete and accurate when made
and shall be repeated at the Closing and (a) if qualified by materiality (or any
variation of such term), shall be true, complete and accurate as of the Closing
Date, except that any such representation or warranty that is made as of a
specified date shall only be required to be true, complete and accurate as of
that date, and (b) if not qualified by materiality (or any variation of such
term), shall be true, complete and accurate in all material respects as of the
Closing Date, except that any such representation or warranty that is made as of
a specified date shall only be required to be true, complete and accurate in all
material respects as of that date.
 
9.2  Compliance with Covenants.  Sellers shall have performed and observed all
covenants and agreements to be performed or observed by Sellers under this
Agreement at or before the Closing.
 
9.3  Lack of Adverse Change.  Since the date of the Balance Sheet, there has not
occurred any circumstance or event which, individually or in the aggregate, has
had or is reasonably likely to result in a Material Adverse Effect, including a
material decrease in the revenue of the Company.
 
 
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9.4  Update Certificate.  Madden shall have received a favorable certificate,
dated  the Closing Date, signed by Silverman as to the matters set forth in
Sections 9.1, 9.2 and 9.3.
 
9.5  Regulatory Approvals.  All approvals and consents of Governmental Bodies
required to carry out the transactions contemplated by this Agreement shall have
been obtained.
 
9.6  Consents of Third Parties.  All consents from third parties to Contracts or
otherwise that are required to be listed in Section 4.4 of the Disclosure
Schedule in order to avoid a misrepresentation under Section 4.4 shall have been
obtained in writing in a form reasonably satisfactory to Madden.
 
9.7  No Violation of Orders.  No preliminary or permanent injunction or other
order issued by any Governmental Body, nor any statute, rule, regulation, decree
or executive order promulgated or enacted by any Governmental Body, that (a)
declares this Agreement invalid or unenforceable in any material respect, (b)
prevents or significantly delays the consummation of the transactions
contemplated hereby, or (c) imposes or will impose restrictions on Madden’s
right or ability to operate the business of the Company shall be in effect; and
no action or proceeding before any Governmental Body shall have been instituted
or, to the Knowledge of Sellers or the Company, threatened by any Governmental
Body, or by any other Person, which (i) seeks to prevent or delay the
consummation of the transactions contemplated by this Agreement or (ii)
challenges the validity or enforceability of this Agreement, (iii) seeks to
impose restrictions on Madden’s right or ability to operate the business of the
Company, or (iv) seeks to require Madden to dispose of any of its businesses,
operations, properties or assets or any claim relating to the equity of the
Company.
 
9.8  Employment Agreement.  Madden and Silverman shall have entered into the
Employment Agreement, and the Employment Agreement shall be in full force and
effect with no notice that Silverman does not intend to honor the Employment
Agreement.
 
9.9  Transaction Documents.  The Company and Sellers shall have entered into
each of the other Transaction Documents to which they are a party.
 
9.10     Other Closing Matters.  Madden shall have received such other
supporting information in confirmation of the representations, warranties,
covenants and agreements of Sellers and the satisfaction of the conditions to
Madden’s obligation to close hereunder as Madden or its counsel may reasonably
request.
 
ARTICLE X
 
Conditions Precedent to Obligations of Sellers
 
The obligations of Sellers under Article II and Article III shall be subject to
the satisfaction at or prior to the Closing of the following conditions, any one
or more of which may be waived by Sellers:
 
 
 
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10.1     Representations and Warranties.  Each and every representation and
warranty of Madden contained in this Agreement, and any schedule or any
certificate delivered pursuant hereto, shall have been true, complete and
accurate when made and shall be repeated at the Closing and (a) if qualified by
materiality (or any variation of such term), shall be true, complete and
accurate as of the Closing Date, except that any such representation or warranty
that is made as of a specified date shall only be required to be true, complete
and accurate as of that date, and (b) if not qualified by materiality (or any
variation of such term), shall be true, complete and accurate in all material
respects as of the Closing Date, except that any such representation or warranty
that is made as of a specified date shall only be required to be true, complete
and accurate in all material respects as of that date.
 
10.2     Compliance with Covenants.  Madden shall have performed and observed
all covenants and agreements to be performed or observed by it under this
Agreement at or before the Closing.
 
10.3     Update Certificate.  Sellers shall have received a favorable
certificate, dated the Closing Date, signed by Madden as to the matters set
forth in Sections 10.1 and 10.2.
 
10.4     Regulatory Approvals.  All approvals and consents of Governmental
Bodies required to carry out the transactions contemplated by this Agreement
shall have been obtained.
 
10.5     No Violation of Orders.  No preliminary or permanent injunction or
other order issued by any Governmental Body, nor any statute, rule, regulation,
decree or executive order promulgated or enacted by any Governmental Body, that
declares this Agreement invalid or unenforceable in any material respect or that
prevents or significantly delays the consummation of the transactions
contemplated hereby shall be in effect.
 
10.6     Transaction Documents.  Madden shall have entered into each of the
other Transaction Documents to which it is a party.
 
10.7     Other Closing Matters.  Sellers shall have received such other
supporting information in confirmation of the representations, warranties,
covenants and agreements of Madden and the satisfaction of the conditions to
Sellers’ obligations to close hereunder as the Seller Representative or its
counsel may reasonably request.
 
ARTICLE XI
 
Termination of Agreement
 
11.1    Conditions for Termination.  This Agreement may be terminated:
 
(a)  at any time prior to the Closing by mutual consent of Madden and Sellers;
 
(b)  by Madden if the Closing shall not have been consummated by seventy-five
(75) days after the date hereof, unless such failure of consummation shall be
due to a material breach of any representation or warranty, or the
nonfulfillment in any material respect,
 
 
 
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(a)  and failure to cure such nonfulfillment as set forth in clause (d) below,
of any covenant or agreement contained herein on the part of Madden; or
 
(b)  by Sellers if the Closing shall not have been consummated by seventy-five
(75) days after the date hereof, unless such failure of consummation shall be
due to a material breach of any representation or warranty, or the
nonfulfillment in any material respect, and failure to cure such nonfulfillment
as set forth in clause (d) below, of any covenant or agreement contained herein
on the part of Sellers; or
 
(c)  by Madden, on the one hand, or Sellers, on the other hand, if Madden or any
Seller fails to cure a material breach of any provision of this Agreement within
fifteen (15) days after its receipt of written notice of such breach from the
non-breaching party, provided, however, that a party shall not be entitled to
terminate this Agreement pursuant to this Section 11.1(d) if it is also in
material breach of any provision of this Agreement.
 
1.2  Effect of Termination. Upon the termination of this Agreement for any
reason, Madden and Sellers shall have no liability or further obligations
arising out of this Agreement, except for any liability resulting from any
intentional breach of a representation, warranty or covenant contained in this
Agreement prior to termination. Furthermore, the provisions of Sections 4.23,
5.5, this Section 11.2 and Articles XII and XIII shall survive any termination
of this Agreement.
 
ARTICLE II
  
Indemnification
 
12.1     Survival of Representations, Warranties and Covenants. The parties to
this Agreement hereby agree that the remedy for any breach of a representation
or warranty, covenant or agreement contained in this Agreement shall be the
indemnification provisions set out in this Article XII; provided, however, that
nothing in this Section 12.1 shall prohibit any party from seeking specific
performance or injunctive relief against any other party in respect of a breach
by such other party of any covenant hereunder; and provided further, that
nothing in this Section 12.1 shall limit any party’s remedies for a breach of a
covenant occurring prior to the Closing.
 
(a)  The representations and warranties of the parties contained in this
Agreement, any schedule or any certificate delivered pursuant hereto, shall
survive the Closing and shall continue in full force and effect (a) in the case
of the representations and warranties of Sellers and Madden contained in
Sections 4.6, 4.15, 4.16, 4.23 and 5.5 until thirty (30) days following the
expiration of the applicable statutory period of limitations with respect to the
matter to which the claim relates, as such limitation period may be extended
from time to time, (b) in the case of the representations and warranties of
Sellers and Madden contained in Sections 4.1, 4.2, 4.3, 4.20, 5.1 and 5.2,
indefinitely, and (c) in the case of all other representations and warranties of
the parties contained in this Agreement, and in any schedule or any certificate
delivered pursuant hereto, until twenty-four (24) months after the Closing Date.
Each party hereto shall be entitled to rely on any such representation or
warranty regardless of any independent knowledge of such party or any inquiry or
investigation made by or on behalf of
 
 
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such party. Notwithstanding the foregoing, any representation or warranty in
respect of which indemnity may be sought hereunder shall survive the time at
which it would otherwise terminate pursuant to this Section 12.1 if notice of
the breach thereof shall have been given to the party against whom such
indemnity may be sought prior to the expiration of the applicable survival
period.
 
(b)  The parties’ covenants and agreements under this Agreement shall survive
the Closing indefinitely unless a shorter period of performance is specified
with respect to such covenant or agreement.
 
12.2     Indemnification by Silverman.
 
(a)  Subject to Sections 12.2(b) and 12.7, Silverman shall indemnify and hold
harmless Madden, its affiliates and each of their respective stockholders,
directors, officers, employees, agents and representatives (other than
Silverman), and the successors and assigns of each of the foregoing
(collectively, the “Madden Indemnified Parties”) from and against any Loss
incurred or suffered by such Person as a result of or arising from, without
duplication:
 
                   (i)         a breach by any Seller of any representation or
warranty made by Sellers in this Agreement or any schedule or certificate
delivered pursuant hereto or
                 thereto; and
 
                                            (ii)  a failure by any Seller to
perform or comply with any covenant or agreement on the part of Sellers
contained herein.
 
Any amount paid pursuant to this Section 12.2(a) shall be paid to Madden or, at
Madden’s election, to the Company and shall be the amount required to put
Madden, the Company, as the case may be, in the position it or they would have
been in had such representation, warranty, covenant or agreement not been
breached.
 
(b)  Notwithstanding Section 12.2(a):
 
                    (i)  Silverman shall not have any obligation to indemnify
the Madden Indemnified Parties from and against any Loss under clause (i) of
Section 12.2(a) until
 
         the Madden Indemnified Parties have suffered aggregate Losses
collectively hereunder, in excess of two hundred thousand dollars
($200,000); provided that such threshold
                 shall not apply to any Loss as a result of, arising from or in
connection with a breach by any Seller of a representation or warranty contained
in Section 4.1, Section 4.2,
                 Section 4.3, Section 4.6, Section 4.20 or Section 4.23 herein;
and
 
                    (ii)  Silverman shall not have any obligation to indemnify
the Madden Indemnified Parties from and against any Loss under clause (i) of
Section 12.2(a) to the
                 extent the Madden Indemnified Parties have suffered aggregate
Losses collectively hereunder, in excess of five million dollars ($5,000,000);
provided that such aggregate limit
                 shall not apply to any Loss as a result of, arising from or in
connection with a breach by any Seller of a representation or warranty contained
in Section 4.1, Section 4.2,
                 Section 4.3, Section 4.6, Section 4.20 or Section 4.23 herein.
 
 
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(c)  Notwithstanding anything to the contrary contained in Section 12.2(b) or
anywhere else in this Agreement, Silverman shall indemnify and hold harmless the
Madden Indemnified Parties, without limitation, from and against any and all
Losses incurred or suffered by such Person after the Closing Date as a result of
or arising from any fraudulent act or willful or intentional misconduct by the
Company prior to the Closing Date, or by any Seller.
 
(d)  Indemnity as to Preschoolians. Silverman hereby agrees to indefinitely
indemnify the Madden Indemnified Parties for any and all Losses incurred by any
of them in connection with, relating to or arising from the so called
“Preschoolians” business.
 

12.3     Indemnification by Madden.
 
(a)  Madden shall indemnify and hold harmless Sellers and each of Sellers’
agents and representatives, and the successors and assigns of each of the
foregoing (the “Seller Indemnified Parties”), from and against any Loss incurred
or suffered by such Person as a result of or arising from:
 
                            (i)  a breach by Madden of any representation or
warranty made by Madden in this Agreement or in any schedule or certificate
delivered pursuant hereto or
                 thereto; and
 
                            (ii)  a failure by Madden to perform or comply with
any covenant or agreement on the part of Madden contained herein;
 
Any amount paid pursuant to this Section 12.3(a) shall be the amount required to
put Sellers in the position Sellers would have been in had such representation,
warranty, covenant or agreement not been breached.
 
(b)  Notwithstanding anything to the contrary contained in this Agreement,
Madden shall indemnify and hold harmless the Seller Indemnified Parties from and
against any Loss incurred or suffered by Sellers after the Closing Date as a
result of or arising from any fraudulent acts or willful misconduct by Madden.
The Seller Indemnified Parties shall not take any action the purpose or intent
of which is to prejudice the defense of any claim subject to indemnification
hereunder or to induce a third party to assert a claim subject to
indemnification hereunder.
 
12.4     Assumption of Defense. An indemnified party shall promptly give notice
to each indemnifying party after obtaining knowledge of any matter as to which
recovery may be sought against such indemnifying party because of the indemnity
set forth above, and, if such indemnity shall arise from the claim of a third
party, shall permit such indemnifying party to assume the defense of any such
claim or any proceeding resulting from such claim; provided, however, that
failure to give any such notice promptly shall not affect the indemnification
provided under this Article XII, except to the extent such indemnifying party
shall have been actually and materially prejudiced as a result of such failure.
Notwithstanding the foregoing, an indemnifying party may not assume the defense
of any such third-party claim if it does not demonstrate to the reasonable
satisfaction of the indemnified party that it has adequate financial resources
to defend such claim and pay any and all Losses that may result therefrom, or if
the
 
 
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claim (i) is reasonably likely to result in imprisonment of the indemnified
party, (ii) is reasonably likely to result in an equitable remedy which would
materially impair the indemnified party’s ability to exercise its rights under
this Agreement, or impair Madden’s right or ability to operate the Company, or
(iii) names both the indemnifying party and the indemnified party (including
impleaded parties) and representation of both parties by the same counsel would
create a conflict. If an indemnifying party assumes the defense of such third
party claim, such indemnifying party shall agree prior thereto, in writing, that
it is liable under this Article XII to indemnify the indemnified party in
accordance with the terms contained herein in respect of such claim, shall
conduct such defense diligently, shall have full and complete control over the
conduct of such proceeding on behalf of the indemnified party and shall, subject
to the provisions of this Section 12.4, have the right to decide all matters of
procedure, strategy, substance and settlement relating to such proceeding;
provided, however, that any counsel chosen by such indemnifying party to conduct
such defense shall be reasonably satisfactory to the indemnified party, and the
indemnifying party will not without the written consent of the indemnified party
consent to the entry of any judgment or enter into any settlement with respect
to the matter which does not include a provision whereby the plaintiff or the
claimant in the matter releases the indemnified party from all liability with
respect thereto, or which may be reasonably expected to have an adverse effect
on the indemnified party and does not provide that the indemnified party is
without fault, or, with respect to an indemnification relating to Taxes, if such
settlement could affect the Taxes of the Company or the Madden Indemnified
Parties for a period or portion thereof beginning on or after the Closing Date.
The indemnified party may participate in such proceeding and retain separate
co-counsel at its sole cost and expense. Failure by an indemnifying party to
notify the indemnified party of its election to defend any such claim or
proceeding by a third party within thirty (30) days after notice thereof shall
be deemed a waiver by such indemnifying party of its right to defend such claim
or action.
 
12.5     Non-Assumption of Defense. If no indemnifying party is permitted or
elects to assume the defense of any such claim by a third party or proceeding
resulting therefrom, the indemnified party shall diligently defend against such
claim or litigation in such manner as it may deem appropriate and, in such
event, the indemnifying party or parties shall promptly reimburse the
indemnified party for all reasonable out-of-pocket costs and expenses, legal or
otherwise, incurred by the indemnified party and its affiliates in connection
with the defense against such claim or proceeding, as such costs and expenses
are incurred. Any counsel chosen by such indemnified party to conduct such
defense must be reasonably satisfactory to the indemnifying party or parties,
and only one counsel shall be retained to represent all indemnified parties in
an action (except that if litigation is pending in more than one jurisdiction
with respect to an action, one such counsel may be retained in each jurisdiction
in which such litigation is pending). The indemnified party shall not settle or
compromise any such claim without the written consent of the indemnifying party,
which consent shall not be unreasonably withheld.
 
12.6     Indemnified Party’s Cooperation as to Proceedings. The indemnified
party will cooperate in all reasonable respects with any indemnifying party in
the conduct of any proceeding as to which such indemnifying party assumes the
defense. For the cooperation of the indemnified party pursuant to this Section
12.6, the indemnifying party or parties shall promptly reimburse the indemnified
party for all reasonable out-of-pocket costs and expenses, legal or otherwise,
incurred by the indemnified party or its affiliates in connection therewith, as
such costs and expenses are incurred.
 
 
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12.7     Payments Treated as Purchase Price Adjustment. To the extent permitted
by applicable law, any payment by Madden, the Company or Sellers under this
Article XII will be treated for Tax purposes as an adjustment to the
consideration hereunder for the Company Interests.
 
ARTICLE III
 
Miscellaneous
 
13.1    Expenses. Except as otherwise explicitly set forth herein, whether or
not the transactions contemplated hereby are consummated, each party hereto
shall pay all costs and expenses incurred by such party in respect of the
transactions contemplated hereby. All expenses incurred by the Company with
respect to the transactions contemplated hereby for the benefit of Sellers prior
to the Closing, including, without limitation, expenses for legal and investment
advisory services, shall be paid by Sellers.
 
13.2    Entirety of Agreement. This Agreement (including the Disclosure
Schedule, the Madden Disclosure Schedule and all other schedules, exhibits and
appendices hereto), together with the other Transaction Documents (including the
schedules and exhibits thereto) and certificates and other instruments delivered
hereunder and thereunder, state the entire agreement of the parties, merge all
prior negotiations, agreements and understandings, if any, and state in full all
representations, warranties, covenants and agreements which have induced this
Agreement. Each party agrees that in dealing with third parties no contrary
representations will be made..
 
13.3     Notices. All notices, demands and communications of any kind which any
party hereto may be required or desire to serve upon another party under the
terms of this Agreement shall be in writing and shall be given by: (a) personal
service upon such other party; (b) mailing a copy thereof by certified or
registered mail, postage prepaid, with return receipt requested; (c) sending a
copy thereof by Federal Express or equivalent courier service; or (d) sending a
copy thereof by facsimile, in each case to the parties at the respective
addresses and facsimile numbers set forth on the signature pages hereto.
 
In case of service by Federal Express or equivalent courier service or by
facsimile or by personal service, such service shall be deemed complete upon
delivery or transmission, as applicable. In the case of service by mail, such
service shall be deemed complete on the fifth Business Day after mailing. The
addresses and facsimile numbers to which, and persons to whose attention,
notices and demands shall be delivered or sent may be changed from time to time
by notice served as hereinabove provided by any party upon any other party.
 
13.4    Amendment. This Agreement may be modified or amended only by an
instrument in writing, duly executed by all of the parties hereto.
 
13.5    Waiver. No waiver by any party of any term, provision, condition,
covenant, agreement, representation or warranty contained in this Agreement (or
any breach thereof) shall be effective unless it is in writing executed by the
party against which such waiver is to be enforced. No waiver shall be deemed or
construed as a further or continuing waiver of
 
 
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any such term, provision, condition, covenant, agreement, representation or
warranty (or breach thereof) on any other occasion or as a waiver of any other
term, provision, condition, covenant, agreement, representation or warranty (or
of the breach of any other term, provision, condition, covenant, agreement,
representation or warranty) contained in this Agreement on the same or any other
occasion.
 
13.6     Counterparts; Facsimile. For the convenience of the parties, any number
of counterparts hereof may be executed, each such executed counterpart shall be
deemed an original and all such counterparts together shall constitute one and
the same instrument. Facsimile transmission of any signed original counterpart
and/or retransmission of any signed facsimile transmission shall be deemed the
same as the delivery of an original.
 
13.7     Assignment; Binding Nature; No Beneficiaries. This Agreement may not be
assigned by any party hereto without the written consent of Madden and Sellers;
provided, however, that Madden may assign its rights hereunder to any affiliate
of Madden which assumes the obligations of Madden hereunder, but no such
assignment shall relieve Madden of any such obligations. Subject to the
preceding sentence, this Agreement shall be binding upon, inure to the benefit
of, and be enforceable by the parties hereto and their respective heirs,
personal representatives, legatees, successors and permitted assigns. Except as
otherwise expressly provided in Article XII, this Agreement shall not confer any
rights or remedies upon any Person other than the parties hereto and their
respective heirs, personal representatives, legatees, successors and permitted
assigns.
 
13.8     Headings. The headings in this Agreement are inserted for convenience
only and shall not constitute a part hereof.
 
13.9     Governing Law; Jurisdiction. This Agreement and all the transactions
contemplated hereby, and all disputes between the parties under or related to
this Agreement or the facts and circumstances leading to its execution, whether
in contract, tort, or otherwise, shall be governed by, and construed and
enforced in accordance with, the laws of the State of New York including,
without limitation, Section 5-1401 of the New York General Obligations Law and
New York Civil Practice Laws and Rules 327. In the event of any controversy or
claim arising out of or relating to this Agreement or the breach or alleged
breach hereof, each of the parties hereto irrevocably (a) submits to the
non-exclusive jurisdiction of any New York State court sitting in the County of
New York or any federal court sitting in U.S. District Court for the Southern
District of the State of New York, (b) waives any objection which it may have at
any time to the laying of venue of any action or proceeding brought in any such
court, (c) waives any claim that such action or proceeding has been brought in
an inconvenient forum, and (d) agrees that service of process or of any other
papers upon such party by registered mail at the address to which notices are
required to be sent to such party under Section 13.3 shall be deemed good,
proper and effective service upon such party.
 
13.10   Construction; Units. In this Agreement (i) words denoting the singular
include the plural and vice versa, (ii) “it” or “its” or words denoting any
gender include all genders, (iii) the word “including” shall mean “including
without limitation,” whether or not expressed, (iv) any reference to a statute
shall mean the statute and any regulations thereunder in force as of the date of
this Agreement or the Closing Date, as applicable, unless otherwise
 
 
 
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expressly provided, (v) any reference herein to a Section, Article, Schedule or
Exhibit refers to a Section or Article of or a Schedule or Exhibit to this
Agreement or the Disclosure Schedule, as applicable, unless otherwise stated,
and (vi) when calculating the period of time within or following which any act
is to be done or steps taken, the date which is the reference day in calculating
such period shall be excluded and if the last day of such period is not a
Business Day, then the period shall end on the next day which is a Business
Day. 
 
13.11   Negotiated Agreement. Madden and Sellers acknowledge that they have been
advised and represented by counsel in the negotiation, execution and delivery of
this Agreement and the Transaction Documents and accordingly agree that if an
ambiguity exists with respect to any provision of this Agreement or the
Transaction Documents, such provision shall not be construed against any party
because such party or its representatives drafted such provision.
 
13.12   Public Announcements. Neither Madden nor Sellers shall issue any press
release or make any other public announcement concerning this Agreement or the
transactions contemplated hereby without the prior written approval of Madden,
in the case of an announcement by Sellers, and Sellers, in the case of an
announcement by Madden; provided, however, that Madden or its affiliates may,
upon written notice to Sellers, describe this Agreement and the transactions
contemplated hereby in any press release or filing with the SEC or other
Governmental Body it is required to make under applicable Law, and if required,
necessary or desirable, file this Agreement with the SEC.
 
13.13   Remedies Cumulative. The remedies provided for or permitted by this
Agreement shall be cumulative and the exercise by any party of any remedy
provided for herein shall not preclude the assertion or exercise by such party
of any other right or remedy provided for herein.
 
13.14   Severability. If any provision of this Agreement is found by a court of
competent jurisdiction to be invalid or unenforceable, such provision shall not
affect the other provisions, but such invalid or unenforceable provision shall
be deemed modified to the extent necessary to render it valid and enforceable,
preserving to the fullest extent permissible the intent of the parties set forth
herein.
 
13.15  WAIVER OF JURY TRIAL. MADDEN AND SELLERS HEREBY IRREVOCABLY WAIVE, TO THE
FULLEST EXTENT PERMITTED BY LAW, ALL RIGHTS TO TRIAL BY JURY IN ANY ACTION,
PROCEEDING OR COUNTERCLAIM (WHETHER BASED UPON CONTRACT, TORT OR OTHERWISE)
ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER TRANSACTION DOCUMENT
OR ANY OF THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY.
 
13.16   Authority of Seller Representative.
 
(a)  In order to facilitate the consummation of the transactions contemplated by
this Agreement and the other Transaction Documents and the resolution of certain
matters after the Closing between Madden and Sellers, Sellers hereby appoint
Silverman as the Seller
 
 
 
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Representative who shall serve as the attorney-in-fact and agent for each Seller
in connection with the transactions contemplated by this Agreement and the other
Transaction Documents. By executing and delivering this Agreement, the Seller
Representative (i) accepts his appointment and authorization as attorney-in-fact
and agent on behalf of each Seller in accordance with the terms of this
Agreement and (ii) agrees to perform his obligations under, and otherwise comply
with, this Agreement.
 
(b)  The Seller Representative has the authority, without restriction, to (i)
prepare, finalize, approve and authorize all exhibits, schedules and other
attachments to any of this Agreement, the other Transaction Documents, and the
other contracts, certificates, instruments and documents delivered by or on
behalf of Sellers pursuant to this Agreement and the other Transaction
Documents; (ii) deliver to Madden on behalf of Sellers the share or interest
certificates (as appropriate) representing all of the Company Interests; (iii)
execute, deliver, and accept delivery, on behalf of each Seller, any other
agreements, certificates, instruments and documents to be delivered by or on
behalf of Sellers pursuant to this Agreement or the other Transaction Documents;
(iv) execute, deliver, and accept delivery, on behalf of each Seller, such
amendments as may be deemed by the Seller Representative in his sole and
absolute discretion to be appropriate under this Agreement or the other
Transaction Documents; (v) bind Sellers by all notices received, by all
agreements and determinations made, and by all agreements, certificates,
instruments and other documents executed and delivered by Sellers under the
Transaction Documents (including in connection with the post-Closing adjustments
pursuant to Section 2.3 of this Agreement and the Earn-Out Payment); (vi)
dispute or refrain from disputing any claim made by Madden under any Transaction
Document; (vii) negotiate and compromise any dispute which may arise under, and
exercise or refrain from exercising remedies available under, any Transaction
Document (including in connection with the post-Closing adjustments pursuant to
Section 2.3 of this Agreement and the Earn-Out Payment) and sign any releases or
other documents with respect to such dispute or remedy; (viii) waive any
condition contained in any Transaction Document; (ix) give any and all consents
under any Transaction Document; (x) dispute or refrain from disputing the
Contingent Purchase Price Statement (as defined in the Earn-Out Agreement)
delivered in connection with the Earn-Out Agreement, or to deliver or refrain
from delivering a Notice of Election in connection with the Earn-Out Agreement;
(xi) give such instructions and perform such actions and refrain from performing
such actions as the Seller Representative shall in his sole and absolute
discretion deem necessary or appropriate to carry out the provisions of any
Transaction Document; (xii) receive any payments made to any Seller pursuant to
any Transaction Document; and (xiii) disburse to Sellers payments made to the
Seller Representative under any Transaction Document in accordance with the
allocation referred to in Section 2.2(a) hereof.
 
(c)  By executing and delivering this Agreement, each Seller hereby jointly and
severally agrees to indemnify and hold the Seller Representative harmless for
any and all liability, loss, cost, damage or expense (including attorneys’ fees)
reasonably incurred or suffered as a result of the performance of his duties as
Seller Representative under any Transaction Document, except such that arises
from such Seller Representative’s gross negligence or willful misconduct.
 
(d)  Madden and the other Madden Indemnified Parties shall be entitled to deal
exclusively with the Seller Representative as the sole and exclusive
representative and agent of
 
 
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Sellers in respect of this Agreement and the other Transaction Documents and all
matters arising under or pertaining to this Agreement and any Transaction
Document. Without limiting the foregoing, (i) any notice, communication, demand,
claim, action or proceeding required or permitted hereunder may be delivered by
Madden to or brought by Madden against the Seller Representative in his capacity
as agent and representative of Sellers with the same effect, and which shall be
binding and effective to the same degree, as if delivered to or brought against
all Sellers or any of them individually and (ii) any settlement or other
agreement of Madden with the Seller Representative in his capacity as agent and
representative of Sellers in respect of all matters arising under or pertaining
to this Agreement or any Transaction Document shall have the same effect, and be
binding upon, all Sellers to the same degree as if made with all Sellers or any
of them individually. Any decision, act, consent or instruction of the Seller
Representative shall be final, binding and conclusive upon each Seller, and
Madden may rely upon any such decision, act, consent or instruction of the
Seller Representative as being the decision, act, consent or instruction of
every Seller. Madden is hereby relieved from any liability to any Person for any
acts done by it in accordance with any decision, act, consent or instruction of
the Seller Representative.
 
(e)  Madden and any other Madden Indemnified Party shall be entitled to regard
as the Seller Representative the Person identified to it as such in accordance
with the provisions of this Agreement unless and until Madden shall have
received written notice, executed by Jeff Silverman, of the designation of
another Seller or Sellers as the Seller Representative(s).
 

[Signature pages follow]
 

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IN WITNESS WHEREOF, the parties hereto have duly executed and delivered this
Agreement as of the date first set forth above.
 

 
STEVEN MADDEN, LTD.
 
Address:
52-16 Barnett Ave.
Long Island City, New York 11104
Attention: Awadhesh Sinha
Facsimile No.: (718) 446-5999
 
By:/s/ Jamieson A. Karson
      Name: Jamieson A. Karson
      Title: Chairman and Chief Executive Officer
   
with copies to:
     
Kramer Levin Naftalis & Frankel LLP
1177 Avenue of the Americas
New York, New York 10036
United States of America
Attention: James A. Grayer, Esq.
Facsimile No.: (212) 715-8000
         

 
 

 
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SELLERS
Address:
 
 
___________________________________
___________________________________
Facsimile No.: ( )
 
 
/s/ Jeffrey Silverman
Jeffrey Silverman
   

___________________________________
___________________________________
Address:
 
 
___________________________________
___________________________________
Facsimile No.: ( )
 
 
/s/ James Randel
James Randel
   

Address:
 
___________________________________
___________________________________
 
Facsimile No.: ( )
 
 
/s/ Ron Offir
Ron Offir
   

Address:
 
___________________________________
___________________________________
 
Facsimile No.: ( )
 
 
/s/ Godfrey Baker
Godfrey Baker
   

Address:
 
___________________________________
___________________________________
 
Facsimile No.: ( )
 
 
/s/ Alyse Nathan
Alyse Nathan
   

Address:
 
___________________________________
___________________________________
 
Facsimile No.: ( )
 
 
/s/ Andrew Rosca
Andrew Rosca
   

 
 
50