EXHIBIT 10.6

 

MEMBERSHIP INTEREST PURCHASE AGREEMENT,

 

dated as of March 6, 2015

 

among

 

MONROVIA MONEY TRAIN, INC.,

 

MONEY TRAIN TITLE LOANS, LLC,

 

ON TRACK, LLC,

 

AND

 

THE OTHER PARTIES SET FORTH ON SCHEDULE A

 

 
1

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TABLE OF CONTENTS

 

 

Page

 

 

ARTICLE I DEFINITIONS

6

1.1

Certain Definitions.

 

 

6

 

ARTICLE II PURCHASE AND SALE OF THE INTERESTS

 

 

10

 

2.1

Purchase and Sale of the Interests.

 

 

10

 

2.2

Adjustments to Purchase Price.

 

 

11

 

(a)

Working Capital Adjustment.

 

 

11

 

2.3

Closing.

 

 

12

 

2.4

Transactions to be Effected at the Closing.

 

 

12

 

ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE SELLERS

 

 

13

 

3.1

Organization; Authority and Enforceability.

 

 

13

 

3.2

Noncontravention.

 

 

13

 

3.3

The Interests.

 

 

14

 

3.4

Brokers’ Fees.

 

 

14

 

ARTICLE IV REPRESENTATIONS AND WARRANTIES CONCERNING THE COMPANIES

 

 

14

 

4.1

Organization, Qualification and Limited Liability Company Power; Authority and
Enforceability.

 

 

14

 

4.2

Subsidiaries.

 

 

15

 

4.3

Capitalization.

 

 

15

 

4.4

Noncontravention.

 

 

16

 

4.5

Financial Statements.

 

 

16

 

4.6

Taxes.

 

 

17

 

4.7

Compliance with Laws and Orders; Permits.

 

 

17

 

4.9

Tangible Personal Assets.

 

 

18

 

4.10

Real Property.

 

 

18

 

4.11

Intellectual Property.

 

 

19

 

4.12

Absence of Certain Changes or Events.

 

 

20

 

4.13

Contracts.

 

 

21

 

4.14

Litigation.

 

 

22

 

4.15

Employee Benefits.

 

 

22

 

 

 
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TABLE OF CONTENTS 

 

 

 

Page

 

 

 

 

 

 

 

4.16

Labor and Employment Matters.

 

 

22

 

4.17

Environmental.

 

 

22

 

4.18

Insurance.

 

 

23

 

4.19

Brokers’ Fees.

 

 

23

 

4.20

Certain Business Relationships with the Companies.

 

 

23

 

4.21

Title Loans Receivable.

 

 

23

 

4.22

Disclosure.

 

 

23

 

ARTICLE V REPRESENTATIONS AND WARRANTIES OF THE BUYER

 

 

24

 

5.1

Organization.

 

 

24

 

5.2

Authorization.

 

 

24

 

5.3

Noncontravention.

 

 

24

 

ARTICLE VI COVENANTS

 

 

25

 

6.1

Consents.

 

 

25

 

6.2

Operation of the Companies’ Business.

 

 

25

 

6.3

Access.

 

 

26

 

6.4

Resignations.

 

 

26

 

6.5

Transfer of Cash and Cash Equivalents.

 

 

26

 

6.6

Notice of Developments.

 

 

27

 

6.7

No Solicitation.

 

 

27

 

6.8

Taking of Necessary Action; Further Action.

 

 

27

 

6.9

Covenant not to Compete.

 

 

28

 

6.10

Financial Information.

 

 

28

 

6.11

Disclosure Schedule.

 

 

28

 

ARTICLE VII CONDITIONS TO OBLIGATIONS TO CLOSE

 

 

29

 

7.1

Conditions to Obligation of the Buyer.

 

 

29

 

7.2

Conditions to Obligation of the Sellers.

 

 

31

 

ARTICLE VIII TERMINATION; AMENDMENT; WAIVER

 

 

32

 

8.1

Termination of Agreement.

 

 

32

 

8.2

Effect of Termination.

 

 

32

 

8.3

Amendments.

 

 

32

 

8.4

Waiver.

 

 

33

 

 

 
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TABLE OF CONTENTS

 

 

 

Page

 

 

 

 

 

 

ARTICLE IX INDEMNIFICATION

 

 

33

 

9.1

Survival.

 

 

33

 

9.2

Indemnification by Sellers.

 

 

34

 

9.3

Indemnification by Buyer.

 

 

34

 

9.4

Indemnification Procedure.

 

 

34

 

9.5

Failure to Give Timely Notice.

 

 

35

 

9.6

Limitation on Indemnifiction Obligation.

 

 

35

 

9.7

Payments.

 

 

35

 

9.8

Other Indemnification.

 

 

36

 

ARTICLE X MISCELLANEOUS

 

 

36

 

10.1

Press Releases and Public Announcement.

 

 

36

 

10.2

No Third-Party Beneficiaries.

 

 

36

 

10.3

Entire Agreement.

 

 

36

 

10.4

Succession and Assignment.

 

 

37

 

10.5

Construction.

 

 

37

 

10.6

Notices.

 

 

37

 

10.7

Governing Law.

 

 

37

 

10.8

Consent to Jurisdiction and Service of Process.

 

 

38

 

10.9

Headings.

 

 

38

 

10.10

Severability.

 

 

38

 

10.11

Expenses.

 

 

39

 

10.12

Incorporation of Exhibits and Schedules.

 

 

39

 

10.13

Limited Recourse.

 

 

39

 

10.14

Specific Performance.

 

 

39

 

10.15

Counterparts.

 

 

39

 

With a copy (which shall not constitute notice) to:

 

 

 

 

BEVILACQUA PLLC

 

 

 

 

1629 K Street, NW, Suite 300

 

 

 

 

Washington, DC 20006

 

 

 

 

Attn: Louis A. Bevilacqua, Esq.

 

 

 

 

Fax: 301-874-8635

 

 

 

 

 

 
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TABLE OF CONTENTS 

 

 

  Page  

 

SCHEDULE A – List of Sellers and Interests in Companies

 

41

 

SCHEDULE B – Initial Disclosures

   

42

 

DISCLOSURE SCHEDULE – To be provided as per Section 6.11

   

 

 

 

 
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MEMBERSHIP INTEREST PURCHASE AGREEMENT

 

MEMBERSHIP INTEREST PURCHASE AGREEMENT, dated as of March 6, 2015 (the
“Agreement”), among MONROVIA MONEY TRAIN, INC., a Delaware corporation (the
“Buyer”), MONEY TRAIN TITLE LOANS, a Utah limited liability company (the “Money
Train”), ON TRACK, LLC, a Utah limited liability company (“On Track,” and
together with Money Train, the “Companies” and, each a “Company”) and the other
parties set forth on Schedule A hereto (the “Sellers”).

 

BACKGROUND

 

Each Seller is the record and beneficial owner of the percentage of membership
interests (the “Interests”) of each of the Companies set forth opposite each
such Seller’s name on Schedule A under the heading “Percentage Interests.” The
Sellers collectively own 100% of the issued and outstanding Interests in each
Company. The Sellers desire to sell all of the Interests to the Buyer, and the
Buyer desires to purchase all of the Interests from the Sellers, upon the terms
and subject to the conditions set forth in this Agreement (such sale and
purchase of the Interests, the “Acquisition”).

 

NOW, THEREFORE, in consideration of the foregoing premises and the respective
representations and warranties, covenants and agreements contained herein, the
parties hereto agree as follows:

 

ARTICLE I
DEFINITIONS

 

1.1 Certain Definitions.

 

(a) When used in this Agreement, the following terms will have the meanings
assigned to them in this Section 1.1(a):

 

“Action” means any claim, action, suit, inquiry, hearing, proceeding or other
investigation.

 

“Affiliate” means, with respect to a Person, any other Person that, directly or
indirectly, through one or more intermediaries, Controls, is Controlled by or is
under common Control with, such Person. For purposes of this definition,
“Control” (including the terms “Controlled by” and “under common Control with”)
means possession of the power to direct or cause the direction of the management
or policies of a Person, whether through the ownership of stock, membership
interests or other equity interests, as trustee or executor, by Contract or
otherwise.

 

 
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 “Benefit Plan” means any “employee benefit plan” as defined in ERISA Section
3(3), including any (a) nonqualified deferred compensation or retirement plan or
arrangement which is an Employee Pension Benefit Plan (as defined in ERISA
Section 3(2)), (b) qualified defined contribution retirement plan or arrangement
which is an Employee Pension Benefit Plan, (c) qualified defined benefit
retirement plan or arrangement which is an Employee Pension Benefit Plan
(including any Multiemployer Plan (as defined in ERISA Section 3(37)), (d)
Employee Welfare Benefit Plan (as defined in ERISA Section 3(1)) or material
fringe benefit plan or program, or (e) stock purchase, stock option, severance
pay, employment, change-in-control, vacation pay, company award, salary
continuation, sick leave, excess benefit, bonus or other incentive compensation,
life insurance, or other employee benefit plan, contract, program, policy or
other arrangement, whether or not subject to ERISA, under which any present or
former employee of either of the Companies has any present or future right to
benefits sponsored or maintained by either of the Companies or any ERISA
Affiliate.

 

“Business Day” means a day other than a Saturday, Sunday or other day on which
banks located in Midvale City, Utah are authorized or required by Law to close.

 

“Closing Working Capital” means the difference, as of the Closing Date, between
(a) the sum of the cash, and other prepaid expenses of the Companies, as
reflected on the Closing Date Balance Sheet, less (b) the accounts payable,
customer deposits, sales taxes payable, and other current liabilities of the
Companies as reflected on the Closing Date Balance Sheet, in each case,
determined in accordance with GAAP.

 

“Code” means the Internal Revenue Code of 1986, as amended.

 

 “Contract” means any written agreement, contract, commitment, arrangement or
understanding.

 

 “ERISA” means the Employee Retirement Income Security Act of 1974, as amended.

 

“ERISA Affiliate” means any Person who is, or at any time was, a member of a
“controlled group of corporations” within the meaning of Section 414(b) or (c)
of the Code and, for the purpose of Section 302 of ERISA and/or Section 412,
4971, 4977, 4980D, 4980E and/or each “applicable section” under Section
414(f)(2) of the Code, within the meaning of Section 412(n)(6) of the Code that
includes, or at any time included, either of the Companies or any Affiliate
thereof, or any predecessor of any of the foregoing.

 

“Exchange Act” means the Securities Exchange Act of 1934, as amended.

 

 “GAAP” means United States generally accepted accounting principles.

 

“Governmental Entity” means any entity or body exercising executive,
legislative, judicial, regulatory or administrative functions of or pertaining
to United States federal, state or local government or foreign, international,
multinational or other government, including any department, commission, board,
agency, bureau, official or other regulatory, administrative or judicial
authority thereof.

 

 
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 “Independent Accounting Firm” means any nationally recognized independent
registered public accounting firm which has not represented either of the
Companies or the Sellers or any of their Affiliates for the past five years as
will be agreed by the Companies and the Buyer in writing.

 

 “IRS” means the Internal Revenue Service.

 

“Knowledge of the Sellers” or any similar phrase means the actual knowledge of
the following persons: Jarrod Clarke, Mike Rossberg, Mandy Stroup, and Sara
Haldeman in each case without obligation of inquiry.

 

“Law” means any statute, law, ordinance, rule, regulation of any Governmental
Entity.

 

“Liability” means all indebtedness, obligations and other liabilities and
contingencies of a Person, whether absolute, accrued, contingent, fixed or
otherwise, or whether due or to become due.

 

“Lien” means, with respect to any property or asset, any mortgage, lien, pledge,
charge, security interest, hypothecation or other encumbrance in respect of such
property or asset.

 

 “Material Adverse Effect” means any material adverse effect on the assets,
properties, condition (financial or otherwise), operations of the Companies and
their respective Subsidiaries, if any, taken as a whole.

 

“Order” means any award, injunction, judgment, decree, order, ruling, subpoena
or verdict or other decision issued, promulgated or entered by or with any
Governmental Entity of competent jurisdiction.

 

“Permit” means any authorization, approval, consent, certificate, license,
permit or franchise of or from any Governmental Entity of competent jurisdiction
or pursuant to any Law.

 

“Permitted Liens” means (a) Liens for current real or personal property Taxes
that are not yet due and payable or that may hereafter be paid without material
penalty or that are being contested in good faith, (b) statutory Liens of
landlords and workers’, carriers’ and mechanics’ or other like Liens incurred in
the ordinary course of businessor that are being contested in good faith, (c)
Liens and encroachments which do not materially interfere with the present or
proposed use of the properties or assets they affect, (d) Liens that will be
released prior to or as of the Closing, (e) Liens arising under this Agreement,
(f) Liens created by or through the Buyer, and (g) Liens set forth on Section
1.1 of the Disclosure Schedule.

 

 
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“Person” means an individual, a corporation, a partnership, a limited liability
company, a trust, an unincorporated association, a Governmental Entity or any
agency, instrumentality or political subdivision of a Governmental Entity, or
any other entity or body.

 

“Preliminary Working Capital” means the difference, as of the date of the
Preliminary Balance Sheet, between (a) the sum of the cash, and other prepaid
expenses of the Companies, as reflected on the Preliminary Balance Sheet, less
(b) the accounts payable, customer deposits, sales taxes payable, and other
current liabilities of the Companies as reflected on the Preliminary Balance
Sheet, in each case, determined in accordance with GAAP.

 

 “Representatives” means, with respect to any Person, the respective directors,
officers, employees, counsel, accountants and other representatives of such
Person.

 

 “Subsidiary” means, with respect to any Person, any corporation, partnership,
joint venture or other legal entity of which such Person (either alone or
through or together with any other Subsidiary), owns, directly or indirectly,
more than 50% of the stock or other equity interests, the holders of which are
generally entitled to vote for the election of the board of directors or other
governing body of a non-corporate Person.

 

“Taxes” means all federal, state, local and foreign income, profits, franchise,
gross receipts, environmental, customs duty, capital stock, severance, stamp,
payroll, sales, transfer, employment, unemployment, disability, use, property,
withholding, excise, production, value added, occupancy and other taxes, duties
or assessments of any nature whatsoever.

 

“Taxing Authority” means any Governmental Entity having or purporting to
exercise jurisdiction with respect to any Tax.

 

“Tax Returns” means any return, declaration, report, claim for refund, or
information return or statement relating to Taxes, including any schedule or
attachment thereto, and including any amendment thereof.

 

 “Transaction Proposal” means any unsolicited written bona fide proposal made by
a third party relating to (i) any direct or indirect acquisition or purchase of
all or substantially all assets of either or both of the Companies, (ii) any
direct or indirect acquisition or purchase of a majority of the combined voting
power of the Interests of either or both of the Companies, (iii) any merger,
consolidation, business combination, recapitalization, liquidation, dissolution
or similar transaction involving the Companies in which the other party thereto
or its stockholders will own 51% or more of the combined voting power of the
parent entity resulting from any such transaction, or (iv) any other transaction
that is inconsistent with the intent and purpose of this Agreement.

 

“Transfer Taxes” means sales, use, transfer, recording, documentary, stamp,
registration and stock transfer Taxes and any similar Taxes.

 

 
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“$” means United States dollars.

 

(b) For purposes of this Agreement, except as otherwise expressly provided
herein or unless the context otherwise requires: (i) the meaning assigned to
each term defined herein will be equally applicable to both the singular and the
plural forms of such term and vice versa, and words denoting any gender will
include all genders as the context requires; (ii) where a word or phrase is
defined herein, each of its other grammatical forms will have a corresponding
meaning; (iii) the terms “hereof”, “herein”, “hereunder”, “hereby” and
“herewith” and words of similar import will, unless otherwise stated, be
construed to refer to this Agreement as a whole and not to any particular
provision of this Agreement; (iv) when a reference is made in this Agreement to
an Article, Section, paragraph, Exhibit or Schedule without reference to a
document, such reference is to an Article, Section, paragraph, Exhibit or
Schedule to this Agreement; (v) a reference to a subsection without further
reference to a Section is a reference to such subsection as contained in the
same Section in which the reference appears, and this rule will also apply to
paragraphs and other subdivisions; (vi) the word “include”, “includes” or
“including” when used in this Agreement will be deemed to include the words
“without limitation”, unless otherwise specified; (vii) a reference to any party
to this Agreement or any other agreement or document will include such party’s
predecessors, successors and permitted assigns; (viii) a reference to any Law
means such Law as amended, modified, codified, replaced or reenacted as of the
date hereof, and all rules and regulations promulgated thereunder as of the date
hereof; and (ix) all accounting terms used and not defined herein have the
respective meanings given to them under GAAP.

 

ARTICLE II
PURCHASE AND SALE OF THE INTERESTS

 

2.1 Purchase and Sale of the Interests.

 

Upon the terms and subject to the conditions set forth in this Agreement, at the
Closing each Seller will sell, transfer and deliver, and the Buyer will purchase
from each Seller, all of the Interests set forth opposite such Seller’s name on
Schedule A under the heading “Number of Interests” for a purchase price per
Interest (each interest being equal to 1% of each of the Companies) of Sixty
Thousand Dollars ($60,000) (the “Per-Interest Payment”), for an aggregate
purchase price for all of the Interests of (a) Four Million, Five Hundred
Thousand Dollars ($4,500,000) in cash, plus (b) One Million Dollars ($1,000,000)
worth of Common Shares (the “Holdings Shares”) of the Buyer’s parent company,
1847 Holdings LLC, a Delaware limited liability company (“Holdings”)
(collectively, the cash portion of the purchase price and the Holdings Shares
are referred to as the “Aggregate Purchase Price”), payable as set forth in
Section 2.4.

 

 
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2.2 Adjustments to Purchase Price.

 

(a) Working Capital Adjustment.

 

(i) At, or as soon as practicable following, the Closing (and in any event
within five (5) days following the Closing), the Sellers shall deliver to the
Buyer an unaudited consolidated balance sheet of the Companies (the “Preliminary
Balance Sheet”) as at the Closing together with a certificate of the Sellers
stating that the Preliminary Balance Sheet was prepared in accordance with GAAP
so as to present fairly in all material respects the financial condition of
Company as of such date.

 

(ii) As soon as practicable following the Closing Date (but not later than 60
days after the Closing Date), the Buyer shall cause its auditor to prepare and
deliver to the Parties an audited consolidated balance sheet of the Companies
(the “Closing Date Balance Sheet”) as of the Closing Date. The Closing Date
Balance Sheet shall be prepared in accordance with GAAP in a manner consistent
with the Preliminary Balance Sheet so as to present fairly in all material
respects the financial condition of the Companies.

 

(iii) If the Closing Working Capital exceeds the Preliminary Working Capital,
then the Buyer shall pay to the Sellers in cash the amount of such excess. If
the Preliminary Working Capital exceeds the Closing Working Capital, then the
Sellers shall pay to the Buyer in cash the amount of such excess. Any such
payment shall be made within ten (10) Business Days after the Closing Working
Capital is deemed final and conclusive pursuant hereto. Any such adjustment
shall be treated as an adjustment to the Aggregate Purchase Price.

 

(iv) In the event the Sellers do not agree with the Closing Working Capital as
reflected on the Closing Date Balance Sheet, the Sellers shall so inform the
Buyer in writing within 15 days of the Sellers’ receipt thereof, such writing to
set forth the objections of the Sellers in reasonable detail. If the Sellers and
the Buyer cannot reach agreement as to any disputed matter relating to the
Closing Working Capital within 15 days after notification by the Sellers to the
Buyer of a dispute, they shall forthwith refer the dispute to an Independent
Accounting Firm mutually agreeable to the Sellers and the Buyer for resolution,
with the understanding that such firm shall resolve all disputed items within 20
days after such disputed items are referred to it. If the Buyer and the Sellers
are unable to agree on the choice of an Independent Accounting Firm, they shall
select an Independent Accounting Firm by lot (after excluding their respective
regular outside accounting firms). Each of the Sellers, on the one hand, and the
Buyer, on the other hand, shall bear one-half of the costs of such accounting
firm. The decision of the accounting firm with respect to all disputed matters
relating to the Closing Working Capital shall be deemed final and conclusive and
shall be binding upon the Sellers and the Buyer. In addition, if the Sellers do
not object to the Closing Working Capital within the 15-day period referred to
above, the Closing Working Capital, as reflected on the Closing Date Balance
Sheet as so prepared, shall be deemed final and conclusive and binding upon the
Sellers and the Buyer.

 

 
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(v) The Sellers shall be entitled to have access to the books and records of the
Companies and the Buyer’s work papers prepared in connection with the Closing
Date Balance Sheet and shall be entitled to discuss such books and records and
work papers with the Buyer and those persons responsible for the preparation
thereof.

 

(b) Adjustment for Outstanding Indebtedness. The cash portion of the Aggregate
Purchase Price shall be decreased by the amount of any outstanding indebtedness
of the Companies existing as of the Closing Date.

 

2.3 Closing.

 

The consummation of the Acquisition (the “Closing”) will take place by the
reciprocal delivery of closing documents by electronic mail, regular mail, fax
or any other means mutually agreed upon by the Parties on a date that is no
later than two Business Days immediately following the day on which the last of
the conditions to closing contained in Article VII (other than any conditions
that by their nature are to be satisfied at the Closing) is satisfied or waived
in accordance with this Agreement or at such other location or on such other
date as the Buyer and the Companies may mutually determine (the date on which
the Closing actually occurs is referred to as the “Closing Date”). The Parties
expect the Closing to occur no later than May 1, 2015.

 

2.4 Transactions to be Effected at the Closing.

 

(a) At the Closing, the Buyer will (i) pay to the Person(s) identified by the
Sellers to the Buyer in writing prior to the Closing, the amounts next to such
Person’s name which such amounts represent all indebtedness of the Companies for
borrowed money, (ii) pay to each of the Sellers their pro rata portion of the
difference between the cash portion of the Aggregate Purchase Price less the
amounts paid pursuant to subsection 2.4(a)(i) above, by paying such sum to each
Seller by transfer of immediately available funds in accordance with the
instructions provided by the Sellers to the Buyer in writing prior to the
Closing, (iii) issue to each of the Sellers their pro rata portion of the
Holdings Shares, by causing Holdings’ transfer agent to issue to each Seller the
number of Holdings Shares set forth for such Seller on Schedule A, and (iv)
deliver to the Sellers all other documents, instruments or certificates required
to be delivered by the Buyer at or prior to the Closing pursuant to this
Agreement.

 

(b) At the Closing, (i) the Sellers will deliver to the Buyer a certificate or
certificates representing the Interests, if certificated, duly endorsed or
accompanied by membership interest powers duly endorsed in blank, (ii) the
Sellers will execute and deliver an amended and restated limited liability
company operating agreement for each of the Companies that shows the Buyer as
the owner of 100% of the Interests of each of the Companies and (ii) the Sellers
will deliver to the Buyer all other documents, instruments or certificates
required to be delivered by the Sellers at or prior to the Closing pursuant to
this Agreement.

 

 
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ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE SELLERS

 

Each of the Sellers, jointly and severally, represents and warrants to the Buyer
that each statement contained in this Article III is true and correct as of the
date hereof, except as set forth in the Schedules accompanying this Agreement
(collectively, the “Disclosure Schedule”). The Disclosure Schedule has been
arranged for purposes of convenience only, in sections corresponding to the
Sections of this Article III and Article IV. Each section of the Disclosure
Schedule will be deemed to incorporate by reference all information disclosed in
any other section of the Disclosure Schedule.

 

3.1 Organization; Authority and Enforceability.

 

Such Seller, if a legal entity, is duly organized, validly existing and in good
standing under the Laws of the jurisdiction of its incorporation or other
formation. Such Seller has the requisite power and authority, and, in the case
of any Seller that is an individual, the requisite legal capacity, to execute
and deliver this Agreement, to perform its obligations hereunder and to
consummate the Acquisition and the other transactions contemplated hereby. The
execution, delivery and performance by such Seller of this Agreement and the
consummation by such Seller of the Acquisition and the other transactions
contemplated hereby have been duly authorized by all necessary action on the
part of such Seller and no other action is necessary on the part of such Seller
to authorize this Agreement or to consummate the Acquisition or the other
transactions contemplated hereby. This Agreement has been duly executed and
delivered by such Seller and, assuming the due authorization, execution and
delivery by each other party hereto, constitutes a legal, valid and binding
obligation of such Seller, enforceable against such Seller in accordance with
its terms, except as limited by (a) bankruptcy, insolvency, reorganization,
moratorium, fraudulent conveyance or other similar Laws relating to creditors’
rights generally and (b) general principles of equity, whether such
enforceability is considered in a proceeding in equity or at Law.

 

3.2 Noncontravention.

 

(a) Neither the execution and the delivery of this Agreement nor the
consummation of the Acquisition or the other transactions contemplated by this
Agreement, will, with or without the giving of notice or the lapse of time or
both, (i) to the actual knowledge of such Seller and assuming compliance with
the filing and notice requirements set forth in Section 3.2(b)(i), violate any
Law applicable to such Seller or (ii) violate any Contract to which such Seller
is a party, except in the case of clauses (i) and (ii) to the extent that any
such violation would not reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect.

 

(b) The execution and delivery of this Agreement by such Seller does not, and
the performance of this Agreement by such Seller will not, require any consent,
approval, authorization or Permit of, or filing with or notification to, any
Governmental Entity, except for (i) the filings set forth in Section 3.2(b) of
the Disclosure Schedule or (ii) where the failure to take such action would not
reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect.

 

 
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3.3 The Interests.

 

(a) Such Seller holds of record and owns beneficially all of the issued and
outstanding Interests of the Companies set forth opposite such Seller’s name on
Schedule A under the heading “Number of Interests”, free and clear of all Liens
(other than Permitted Liens). The number of Interests set forth opposite such
Seller’s name on Schedule A under the heading “Number of Interests” correctly
sets forth all of Interests owned of record or beneficially by such Seller.

 

(b) Except as set forth in this Agreement or in Section 3.3(b) of the Disclosure
Schedule, such Seller is not party to any Contract obligating such Seller to
vote or dispose of any Interests, or other equity or voting interests in, either
of the Companies.

 

3.4 Brokers’ Fees.

 

Except as set forth in Schedule 3.4 of the Disclosure Schedule, such Seller does
not have any Liability to pay any fees or commissions to any broker, finder or
agent with respect to this Agreement, the Acquisition or the transactions
contemplated by this Agreement.

 

ARTICLE IV
REPRESENTATIONS AND WARRANTIES CONCERNING THE COMPANIES

 

Each of the Sellers, jointly and severally, represents and warrants to the Buyer
that each statement contained in this Article IV is true and correct as of the
date hereof, except as set forth in the Disclosure Schedule.

 

4.1 Organization, Qualification and Limited Liability Company Power; Authority
and Enforceability.

 

(a) Each of the Companies is a limited liability company duly organized, validly
existing and in good standing under the Laws of the State of formation, and has
all requisite limited liability company power and authority, directly or
indirectly, to own, lease and operate its properties and assets and to carry on
its business as it is now being conducted. Each of the Companies is duly
qualified or licensed as a foreign corporation to do business, and is in good
standing, in each jurisdiction where the character of its properties or assets
owned, leased or operated by it or the nature of its activities makes such
qualification or licensing necessary, except where the failure to be so
qualified or licensed would not be reasonably expected to have, individually or
in the aggregate, a Material Adverse Effect.

 

 
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(b) Each of the Companies has the requisite power and authority to execute and
deliver this Agreement, to perform its obligations hereunder and to consummate
the transactions contemplated hereby. The execution, delivery and performance by
each of the Companies of this Agreement and the consummation by each of the
Companies of the transactions contemplated hereby have been duly authorized by
all necessary action on the part of the Companies, and no other action is
necessary on the part of the Companies to authorize this Agreement or to
consummate the Acquisition or the other transactions contemplated hereby. This
Agreement has been duly executed and delivered by each of the Companies and,
assuming the due authorization, execution and delivery by each other party
hereto, constitutes a legal, valid and binding obligation of each of the
Companies, enforceable against each of the Companies in accordance with its
terms, except as limited by (a) bankruptcy, insolvency, reorganization,
moratorium, fraudulent conveyance or other similar Laws relating to creditors’
rights generally and (b) general principles of equity, whether such
enforceability is considered in a proceeding in equity or at Law.

 

4.2 Subsidiaries.

 

Neither of the Companies has any Subsidiaries.

 

4.3 Capitalization.

 

(a) The authorized capitalization of each of the Companies consists of One
Hundred (100) Interests (with each Interest constituting a one percent (1%)
membership interest in the respective Company), all of which are outstanding. No
other equity or equity linked securities of either of the Companies is
authorized, issued or outstanding.

 

(b) Neither of the Companies has any plans or agreements pursuant to which
either of the Companies has granted or committed to grant any option or right to
acquire membership interests or any other award payable in or based upon the
membership interests of either of the Companies. There are no outstanding
options, warrants or other securities or subscription, preemptive or other
rights convertible into or exchangeable or exercisable for any membership
interests or other equity or voting interests of either of the Companies and
there are no “phantom interest” rights, interest appreciation rights or other
similar rights with respect to either of the Companies. There are no Contracts
of any kind to which either of the Companies is a party or by which either of
the Companies is bound, obligating either of the Companies to issue, deliver,
grant or sell, or cause to be issued, delivered, granted or sold, additional
membership interests, or other equity or voting interests in, or options,
warrants or other securities or subscription, preemptive or other rights
convertible into, or exchangeable or exercisable for, membership interests, or
other equity or voting interests in, either of the Companies, or any “phantom
interests” right, interest appreciation right or other similar right with
respect to either of the Companies, or obligating either of the Companies to
enter into any such Contract.

 

 
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(c) There are no securities or other instruments or obligations of either of the
Companies, the value of which is in any way based upon or derived from any
equity or voting interests of either of the Companies or having the right to
vote (or convertible into, or exchangeable or exercisable for, securities having
the right to vote) on any matters on which any of either Companies members may
vote.

 

(d) There are no Contracts, contingent or otherwise, obligating either of the
Companies to repurchase, redeem or otherwise acquire any membership interests
of, or other equity or voting interests in, either of the Companies. There are
no voting trusts, registration rights agreements or member agreements to which
either of the Companies is a party with respect to the voting of membership
interests in either of the Companies or with respect to the granting of
registration rights for any of the membership interests in either of the
Companies. There are no rights plans affecting either of the Companies.

 

(e) Except as set forth in Section 4.3(e) of the Disclosure Schedule, there are
no bonds, debentures, notes or other indebtedness of either of the Companies.

 

4.4 Noncontravention.

 

(a) Neither the execution and delivery of this Agreement nor the consummation of
the Acquisition and the other transactions contemplated by this Agreement will,
with or without the giving of notice or the lapse of time or both, (i) violate
any provision of the articles of organization or formation or limited liability
company operating agreement (or comparable organization documents, as
applicable) of either of the Companies, (ii) to the Knowledge of the Sellers and
assuming compliance with the filing and notice requirements set forth in Section
4.4(b)(i), violate any Law applicable to either of the Companies on the date
hereof or (iii) except as set forth in Section 4.4(a) of the Disclosure
Schedule, violate any Contract to which either of the Companies is a party,
except in the case of clauses (ii) and (iii) to the extent that any such
violation would not reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect.

 

(b) The execution and delivery of this Agreement by each of the Companies does
not, and the performance of this Agreement by each of the Companies will not,
require any consent, approval, authorization or Permit of, or filing with or
notification to, any Governmental Entity, except for (i) the filings set forth
in Section 4.4(b) of the Disclosure Schedule or (ii) where the failure to take
such action would not reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect.

 

4.5 Financial Statements.

 

Section 4.5 of the Disclosure Schedule contains true and complete copies of (i)
the unaudited consolidated balance sheet of the Companies as of December 31,
2014 and the related unaudited statements of income, members’ equity and cash
flows for the two years ended December 31, 2014 and December 31, 2013 (the
“Annual Financial Statements”) and (ii) the unaudited balance sheet of the
Companies as of February 28, 2015 and the related statements of income, members’
equity and cash flows for the two-month period ended February 28, 2015 (the
“Interim Financial Statements” and, together with the Annual Financial
Statements, the “Financial Statements”). The Financial Statements have been
prepared in accordance with GAAP applied on a consistent basis throughout the
periods involved (except as may be indicated in the notes thereto) and, on that
basis, fairly present, in all material respects, the financial condition,
results of operations and cash flows of the Companies as of the indicated dates
and for the indicated periods (subject, in the case of the Interim Financial
Statements, to normal year-end adjustments and the absence of notes).

 

 
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4.6 Taxes.

 

(a) All material Tax Returns required to have been filed by the Companies have
been filed, and each such Tax Return reflects the liability for Taxes in all
material respects. All Taxes shown on such Tax Returns as due have been paid or
accrued.

 

(b) Except as set forth on Section 4.6(b) of the Disclosure Schedule, to the
Knowledge of the Sellers, there is no audit pending against either of the
Companies in respect of any Taxes. There are no Liens on any of the assets of
the Companies that arose in connection with any failure (or alleged failure) to
pay any Tax, other than Liens for Taxes not yet due and payable.

 

(c) Each of the Companies has withheld and paid or accrued for all material
Taxes required to have been withheld and paid or accrued for in connection with
amounts paid or owing to any third party.

 

(d) Neither of the Companies has waived any statute of limitations in respect of
Taxes or agreed to any extension of time with respect to a Tax assessment or
deficiency.

 

(e) Neither of the Companies is not a party to any Tax allocation or sharing
agreement, except for the agreements set forth in Section 4.6(e) of the
Disclosure Schedule.

 

4.7 Compliance with Laws and Orders; Permits.

 

(a) Except as set forth in Section 4.7(a) of the Disclosure Schedule, each of
the Companies is in compliance with all Laws and Orders to which the business of
each of the Companies is subject, except where such failure to comply would not
reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect.

 

(b) Except as set forth in Section 4.7(b) of the Disclosure Schedule, each of
the Companies owns, holds, possesses or lawfully uses in the operation of its
business all Permits that are necessary for it to conduct its business as now
conducted, except where such failure to own, hold, possess or lawfully use such
Permit would not reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect.

 

 
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4.8  No Undisclosed Liabilities.

 

Neither of the Companies has any Liability, except for (i) Liabilities set forth
on the Interim Financial Statements (rather than in any notes thereto) and (ii)
Liabilities which have arisen since the date of the Interim Financial Statements
in the ordinary course of business (none of which results from, arises out of,
relates to, is in the nature of, or was caused by any breach of contract, breach
of warranty, tort, infringement, or violation of law).

 

4.9 Tangible Personal Assets.

 

(a) Each of the Companies has good title to, or a valid interest in, all of its
tangible personal assets, free and clear of all Liens, other than (i) Permitted
Liens or (ii) Liens that, individually or in the aggregate, do not materially
interfere with the ability of either of the Companies to conduct its business as
currently conducted and do not adversely affect the value of, or the ability to
sell, such personal properties and assets.

 

(b) Each of the Companies’ tangible personal assets are in good operating
condition, working order and repair, subject to ordinary wear and tear, free
from defects (other than defects that do not interfere with the continued use
thereof in the conduct of normal operations) and are suitable for the purposes
for which they are currently being used.

 

4.10 Real Property.

 

(a) Owned Real Property.

 

Neither of the Companies owns any real property.

 

(b) Leased Real Property.

 

Section 4.10(b) of the Disclosure Schedule contains a list of all leases and
subleases (collectively, the “Real Property Leases”) under which either of the
Companies is either lessor or lessee (the “Real Property”). The Sellers have
heretofor made available to the Buyer true and complete copies of each Real
Property Lease. To the Knowledge of the Sellers, (i) all Real Property Leases
are valid and binding Contracts of one of the Companies and are in full force
and effect (except for those that have terminated or will terminate by their own
terms), and (ii) neither the Companies or any other party thereto, is in
violation or breach of or default (or with notice or lapse of time, or both,
would be in violation or breach of or default) under the terms of any such
Contract, in each case, except where such default would not reasonably be
expected to have, individually or in the aggregate, a Material Adverse Effect.

 

 
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4.11 Intellectual Property.

 

(a) “Intellectual Property” means (i) trade secrets, inventions, confidential
and proprietary information, know-how, formulae and processes, (ii) patents
(including all provisionals, reissues, divisions, continuations and extensions
thereof) and patent applications, (iii) trademarks, trade names, trade dress,
brand names, domain names, trademark registrations, trademark applications,
service marks, service mark registrations and service mark applications (whether
registered, unregistered or existing at common law, including all goodwill
attaching thereto), (iv) copyrights, including copyright registrations,
copyright applications and unregistered common law copyrights; (v) and all
licenses for the Intellectual Property listed in items (i) – (iv) above.

 

(b) Section 4.11(b) of the Disclosure Schedule sets forth a list that includes
all material Intellectual Property owned by either of the Companies (the
“Company-Owned Intellectual Property”) that is registered or subject to an
application for registration (including the jurisdictions where such
Company-Owned Intellectual Property is registered or where applications have
been filed, and all registration or application numbers, as appropriate).

 

(c) Except as set forth on Section 4.11(c) of the Disclosure Schedule, all
necessary registration, maintenance and renewal fees have been paid and all
necessary documents have been filed with the United States Patent and Trademark
Office or foreign patent and trademark office in the relevant foreign
jurisdiction for the purposes of maintaining the registered Company-Owned
Intellectual Property.

 

(d) Except as set forth on Section 4.11(d) of the Disclosure Schedule, (i) each
of the Companies is the exclusive owner of the Company-Owned Intellectual
Property free and clear of all Liens (other than Permitted Liens); (ii) to the
Knowledge of the Sellers no proceedings have been instituted, are pending or are
threatened that challenge the rights of either of the Companies in or the
validity or enforceability of the Company-Owned Intellectual Property; (iii) to
the Knowledge of the Sellers, neither the use of the Company-Owned Intellectual
Property as currently used by the Companies in the conduct of the Companies’
business, nor the conduct of the business as presently conducted by the
Companies infringes, dilutes, misappropriates or otherwise violates in any
material respect the Intellectual Property rights of any Person; and (iv) as of
the date of this Agreement, neither of the Companies has made any claim of a
violation, infringement, misuse or misappropriation by any Person, of their
rights to, or in connection with, the Company-Owned Intellectual Property.

 

(e) Except as set forth in Schedule 4.11(e) of the Disclosure Schedule, the
Companies have not permitted or licensed any Person to use any Company-Owned
Intellectual Property.

 

(f) Section 4.11(f) of the Disclosure Schedule sets forth a complete and
accurate list of all licenses, other than “off the shelf” commercially available
software programs, pursuant to which either of the Companies licenses from a
Person Intellectual Property that is material to and used in the conduct of the
business by the Companies.

 

 
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(g) To the Knowledge of the Sellers, neither of the Companies is in default in
the performance, observance or fulfillment of any obligation, covenant or
condition contained in any Contract pursuant to which any third party is
authorized to use any Company-Owned Intellectual Property or pursuant to which
either of the Companies is licensed to use Intellectual Property owned by a
third party, except where such default would not reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect.

  

4.12 Absence of Certain Changes or Events.

 

Since the date of the Interim Financial Statements, no event has occurred that
has had, individually or in the aggregate, a Material Adverse Effect. Without
limiting the generality of the foregoing, since that date:

 

(a) neither of the Companies has not sold, leased, transferred, or assigned any
of its assets, tangible or intangible, other than for a fair consideration in
the ordinary course of business;

 

(b) neither of the Companies has entered into any agreement, contract, lease, or
license (or series of related agreements, contracts, leases, and licenses)
either involving more than $50,000 or outside the ordinary course of business;
the foregoing shall not apply to planned capital expenditures, or opening of new
studios or relocations of existing studios;

 

(c) no party (including either of the Companies) has accelerated, terminated,
modified, or cancelled any agreement, contract, lease, or license (or series of
related agreements, contracts, leases, and licenses) involving more than $50,000
to which either of the Companies is a party or by which any of them is bound;

 

(d) neither of the Companies has imposed any Liens upon any of its assets,
tangible or intangible;

 

(e) neither of the Companies has made any capital expenditure (or series of
related capital expenditures) either involving more than $50,000 or outside the
ordinary course of business;

 

(f) neither of the Companies has made any capital investment in, any loan to, or
any acquisition of the securities or assets of, any other Person (or series of
related capital investments, loans, and acquisitions) either involving more than
$50,000 or outside the ordinary course of business;

 

(g) neither of the Companies has transferred, assigned, or granted any license
or sublicense of any rights under or with respect to any Intellectual Property;

 

 
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(h) there has been no change made or authorized in the charter or bylaws of
either of the Companies;

 

(i) neither of the Companies has issued, sold, or otherwise disposed of any of
its membership interests, or granted any options, warrants, or other rights to
purchase or obtain (including upon conversion, exchange, or exercise) any of its
membership interests;

 

(j) neither of the Companies has made any loan to, or entered into any other
transaction with, any of its directors, officers, and employees outside the
ordinary course of business;

 

(k) neither of the Companies has entered into any employment contract or
modified the terms of any existing such contract or agreement;

 

(l) neither of the Companies has granted any increase in the base compensation
of any of its directors, officers, and employees outside the ordinary course of
business;

 

(m) neither of the Companies has committed to any of the foregoing.

 

4.13 Contracts.

 

(a) Except as set forth in Section 4.13(a) of the Disclosure Schedule, as of the
date hereof, neither of the Companies is a party to or bound by any: (i)
Contract not contemplated by this Agreement that materially limits the ability
of either of the Companies to engage or compete in any manner of the business
presently conducted by either of the Companies; (ii) Contract that creates a
partnership or joint venture or similar arrangement with respect to any material
business of either of the Companies; (iii) indenture, credit agreement, loan
agreement, security agreement, guarantee, note, mortgage or other evidence of
indebtedness or agreement providing for indebtedness in excess of $50,000; (iv)
Contract that relates to the acquisition or disposition of any material business
(whether by merger, sale of equity, sale of assets or otherwise) other than this
Agreement; and (v) Contract that involves performance of services or delivery of
goods or materials by or to either of the Companies in an amount or with a value
in excess of $50,000 in any 12-month period (which period may extend past the
Closing).

 

(b) The Sellers have heretofor made available to the Buyer true and complete
copies of each of the Contracts set forth in Section 4.13(a) of the Disclosure
Schedule. To the Knowledge of the Sellers, (i) all such Contracts are valid and
binding, (ii) all such Contracts are in full force and effect (except for those
that have terminated or will terminate by their own terms), and (iii) neither of
the Companies nor any other party thereto, is in violation or breach of or
default under (or with notice or lapse of time, or both, would be in violation
or breach of or default under) the terms of any such Contract, in each case,
except where such default would not reasonably be expected to have, individually
or in the aggregate, a Material Adverse Effect.

 

 
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4.14 Litigation.

 

Except as set forth in Section 4.14 of the Disclosure Schedule, there is no
Action pending or, to the Knowledge of the Sellers, threatened against either of
the Companies that (a) challenges or seeks to enjoin, alter or materially delay
the Acquisition or (b) would reasonably be expected to have, individually or in
the aggregate, a Material Adverse Effect.

 

4.15 Employee Benefits.

 

(a) Section 4.15(a) of the Disclosure Schedule includes a list of all Benefit
Plans maintained or contributed to by either of the Companies (the “Company
Benefit Plans”). The Sellers have delivered or made available to the Buyer
copies of (i) each Company Benefit Plan, (ii) the most recent summary plan
description for each Company Benefit Plan for which such a summary plan
description is required and (iii) the most recent favorable determination
letters from the IRS with respect to each Company Benefit Plan intended to
qualify under Section 401(a) of the Code.

 

(b) Except as set forth in Section 4.15(b) of the Disclosure Schedule:

 

(i) none of the Companies’ Benefit Plans is subject to Title IV of ERISA;

 

(ii) each Company Benefit Plan that is intended to be qualified under Section
401(a) of the Code is subject to a favorable determination letter from the IRS
and, to the Knowledge of the Sellers, no event has occurred and no condition
exists that is reasonably likely to result in the revocation of any such
determination; and

 

(iii) each Company Benefit Plan is in compliance with all applicable provisions
of ERISA and the Code, except for instances of noncompliance that would not
reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect.

 

4.16 Labor and Employment Matters.

 

Section 4.16 of the Disclosure Schedule sets forth a list of all written
employment agreements that obligate either of the Companies to pay an annual
salary of $50,000 or more and to which either of the Companies is a party. To
the Knowledge of the Sellers, there are no pending labor disputes, work
stoppages, requests for representation, pickets, work slow-downs due to labor
disagreements or any actions or arbitrations that involve the labor or
employment relations of either of the Companies. Neither of the Companies is a
party to any collective bargaining agreement.

  

4.17 Environmental.

 

Except (i) as set forth in Section 4.17 of the Disclosure Schedule or (ii) for
any matter that would not reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect, to the Knowledge of the Sellers (a) each
of the Companies is in compliance with all applicable Laws relating to
protection of the environment (“Environmental Laws”), (b) each of the Companies
possesses and is in compliance with all Permits required under any Environmental
Law for the conduct of its operations and (c) there are no Actions pending
against either of the Companies alleging a violation of any Environmental Law.

 

 
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4.18 Insurance.

 

Section 4.18 of the Disclosure Schedule sets forth a list of each insurance
policy that covers either of the Companies or its businesses, properties,
assets, directors, officers or employees (the “Policies”). Such Policies are in
full force and effect in all material respects and neither of the Companies is
in violation or breach of or default under any of its obligations under any such
Policy, except where such default would not reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect.

 

4.19 Brokers’ Fees.

 

Except as set forth in Schedule 4.19 of the Disclosure Schedule, which such fees
shall be paid prior to or at Closing with cash of the Companies, and except as
set forth in the last sentence of this Section 4.19, neither of the Companies
has any Liability to pay any fees or commissions to any broker, finder or agent
with respect to this Agreement, the Acquisition or the transactions contemplated
by this Agreement.

 

4.20 Certain Business Relationships with the Companies.

 

Except as set forth in Seciton 4.20 of the Disclosure Schedule, no Seller, nor
any Affiliate of a Seller, has been involved in any business arrangement or
relationship with either of the Companies within the past 12 months, and no
Seller, nor any Affiliate of a Seller, owns any asset, tangible or intangible,
which is used in the Business.

 

4.21 Title Loans Receivable.

 

The Preliminary Balance Sheet that is being delivered at or shortly after the
Closing shall show at least $2,300,000 of title loan receivables. All title
loans receivable of the Companies set forth on the Preliminary Balance Sheet are
valid receivables subject to no set off or counterclaim and were incurred in the
ordinary course of business of the Companies.

 

4.22 Disclosure.

 

The representations and warranties contained in this Article IV do not contain
any untrue statement of a material fact or omit to state any material fact
necessary in order to make the statements and information contained in this
Article IV not misleading.

 

 
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ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE BUYER

 

The Buyer represents and warrants to each of the Sellers that each statement
contained in this Article V is true and correct as of the date hereof.

 

5.1 Organization.

 

The Buyer is a corporation, duly organized, validly existing and in good
standing under the laws of the state of Delaware.

 

5.2 Authorization.

 

The Buyer has the requisite power and authority to execute and deliver this
Agreement, to perform its obligations hereunder and to consummate the
transactions contemplated hereby. The execution, delivery and performance by the
Buyer of this Agreement, and the consummation of the transactions contemplated
hereby, have been duly authorized by all necessary action, and no other action
on the part of the Buyer is necessary to authorize this Agreement or to
consummate the transactions contemplated hereby (other than compliance with the
filing and notice requirements set forth in Section 5.3(b)(i)). This Agreement
has been duly executed and delivered by the Buyer and, assuming the due
authorization, execution and delivery by each of the other parties hereto,
constitutes a legal, valid and binding obligation of the Buyer enforceable
against the Buyer in accordance with its terms, except as limited by (a)
bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance or
other similar Laws relating to creditors’ rights generally and (b) general
principles of equity, whether such enforceability is considered in a proceeding
in equity or at Law.

 

5.3 Noncontravention.

 

(a) Neither the execution and the delivery of this Agreement, nor the
consummation of the Acquisition and the other transactions contemplated by this
Agreement, will, with or without the giving of notice or the lapse of time or
both, (i) violate any provision of the certificate of incorporation or bylaws
(or comparable organization documents, as applicable) of the Buyer, (ii) violate
any Law applicable to the Buyer on the date hereof or (iii) violate any Contract
to which the Buyer is a party, except in the case of clauses (ii) and (iii) to
the extent that any such violation would not reasonably be expected to prevent
or materially delay the consummation of the Acquisition and the other
transactions contemplated by this Agreement.

 

(b) The execution and delivery of this Agreement by the Buyer does not, and the
performance of this Agreement by the Buyer will not, require any consent,
approval, authorization or Permit of, or filing with or notification to, any
Governmental Entity, except for (i) the filings set forth in Section 3.2(b) of
the Disclosure Schedule or (ii) where the failure to take such action would not
reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect.

  

(c) Brokers’ Fees. The Buyer has no Liability to pay any fees or commissions to
any broker, finder or agent with respect to this Agreement, the Acquisition or
the transactions contemplated by this Agreement that could result in any
Liability being imposed on the Sellers or either of the Companies.

 

 
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ARTICLE VI
COVENANTS

 

6.1 Consents.

 

Each of the Companies will use their commercially reasonable efforts to obtain
any required third-party consents to the Acquisition and the other transactions
contemplated by this Agreement in writing from each Person.

 

6.2 Operation of the Companies’ Business.

 

During the period commencing on the date hereof and ending at the earlier of the
Closing and the termination of this Agreement in accordance with Article VIII,
the Companies, except (i) as set forth on Schedule 6.2, (ii) as otherwise
contemplated by this Agreement, (iii) as required by applicable Law or (iv) with
the prior written consent of the Buyer (which consent will not be unreasonably
withheld or delayed), will use commercially reasonable efforts to carry on its
business in a manner consistent with past practice and not take any action or
enter into any transaction that would result in the following:

 

(a) any change in the articles of organization or formation or the limited
liability company operating agreement of either of the Companies or any
amendment of any material term of any outstanding security of either of the
Companies;

 

(b) any issuance or sale of any additional membership interests of, or rights of
any kind to acquire any membership interests of, either of the Companies;

 

(c) any incurrence, guarantee or assumption by either of the Companies of any
indebtedness for borrowed money other than in the ordinary course of business in
amounts and on terms consistent with past practice;

 

(d) any change in any method of accounting, accounting principle or accounting
practice by either of the Companies which would reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect;

 

(e) except in the ordinary course of business (i) any adoption or material
amendment of any Company Benefit Plan, (ii) any entry into any collective
bargaining agreement with any labor organization or union, (iii) any entry into
an employment agreement or (iv) any increase in the rate of compensation to any
employee in an amount that exceeds 10% of such employee’s current compensation;
provided, that either of the Companies may (A) take any such action for
employees in the ordinary course of business or pursuant to any existing
Contracts or Company Benefit Plans and (B) adopt or amend any Company Benefit
Plan if the cost to such Person of providing benefits thereunder is not
materially increased;

 

 
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(f) except in the ordinary course of business, any cancellation, modification,
termination or grant of waiver of any material Permits or Contracts to which
either of the Companies is a party, which cancellation, modification,
termination or grant of waiver would, individually or in the aggregate, have a
Material Adverse Effect;

 

(g) any change in the Tax elections made by either of the Companies or in any
accounting method used by either of the Companies for Tax purposes, where such
Tax election or change in accounting method may have a material effect upon the
Tax Liability of either of the Companies for any period or set of periods, or
the settlement or compromise of any material income Tax Liability of either of
the Companies;

 

(h) except in the ordinary course of business, any acquisition or disposition of
any business or any material property or asset of any Person (whether by merger,
consolidation or otherwise) by either of the Companies;

 

(i) any grant of a Lien on any properties and assets of either of the Companies
that would have, individually or in the aggregate, a Material Adverse Effect; or

 

(j) any entry into any agreement or commitment to do any of the foregoing.

 

6.3 Access.

 

Each of the Companies will permit the Buyer and its Representatives to have
reasonable access at all reasonable times, and in a manner so as not to
interfere with the normal business operations of either of the Companies, to the
premises, properties, personnel, books, records (including Tax records),
Contracts and documents of or pertaining to either of the Companies.

 

6.4 Resignations.

 

As of the Closing, the Sellers will cause to be delivered to the Buyer duly
signed resignations, effective immediately upon the Closing, of each manager of
his position as a manager (and, if requested by the Buyer in writing at least
ten Business Days prior to the Closing, of any officer of his position as an
officer) of either of the Companies.

  

6.5 Transfer of Cash and Cash Equivalents.

 

On or prior to the Closing, each of the Companies and Sellers will transfer, or
cause to be distributed all cash and cash equivalents of each of the Companies
to, among other things, pay any fees owed by Company to brokers or advisors
(including termination fees under any advisory agreement) and any indebtedness
for borrowed money.

 

 
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6.6 Notice of Developments.

 

The Sellers and each of the Companies will give prompt written notice to the
Buyer of any event that would reasonably be expected to give rise to,
individually or in the aggregate, a Material Adverse Effect or would reasonably
be expected to cause a breach of any of its respective representations,
warranties, covenants or other agreements contained herein. The Buyer will give
prompt written notice to the Sellers and each of the Companies of any event that
could reasonably be expected to cause a breach of any of its representations,
warranties, covenants or other agreements contained herein or could reasonably
be expected to, individually or in the aggregate, prevent or materially delay
the consummation of the Acquisition and the other transactions contemplated by
this Agreement. The delivery of any notice pursuant to this Section 6.6 will not
limit, expand or otherwise affect the remedies available hereunder (if any) to
the party receiving such notice.

 

6.7 No Solicitation.

 

(a) The Sellers and each of the Companies will, and will cause each of their
Representatives to, cease immediately any existing discussions regarding a
Transaction Proposal.

 

(b) From and after the date of this Agreement, without the prior consent of the
Buyer, none of the Sellers nor either of the Companies will, nor will they
authorize or permit any of their respective Representatives to, directly or
indirectly through another Person to, (i) solicit, initiate or encourage
(including by way of furnishing information), or take any other action designed
to facilitate any inquiries, proposals or offers from any Person that
constitute, or would reasonably be expected to constitute, a Transaction
Proposal, (ii) participate in any discussions or negotiations (including by way
of furnishing information) regarding any Transaction Proposal or (iii) otherwise
cooperate in any way with, or assist or participate in, facilitate or encourage,
any effort or attempt by any other Person to do or seek any of the foregoing.

 

(c) In addition, the Sellers shall immediately communicate to the Buyer the
terms of any Transaction Proposal received by any of the Sellers or either of
the Companies, or any of their Representatives.

 

6.8 Taking of Necessary Action; Further Action.

 

Subject to the terms and conditions of this Agreement, each of the Sellers, the
Companies and the Buyer will take all such reasonable and lawful action as may
be necessary or appropriate in order to effectuate the Acquisition in accordance
with this Agreement as promptly as practicable.

 

 
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6.9 Covenant not to Compete.

 

For a period of three years from and after the Closing (the “Noncompetition
Period”), the Sellers shall not engage directly or indirectly in any business
that is competitive with the current business of either of the Companies (the
“Business”) in any geographic area in which the Business is conducted or in
which the Buyer plans to conduct the Business as of the Closing Date; provided,
however, that no owner of less than 1% of the outstanding stock of any
publicly-traded corporation shall be deemed to engage solely by reason thereof
in any of its businesses. During the Noncompetition Period, the Sellers shall
not induce or attempt to induce any customer, or supplier of the Buyer or any
affiliate of the Buyer to terminate its relationship with the Buyer or any
Affiliate of the Buyer or to enter into any business relationship to provide or
purchase the same or substantially the same services as are provided to or
purchased from the Business which might harm the Buyer or any Affiliate of the
Buyer. During the Noncompetition Period, the Sellers shall not, on behalf of any
entity other than the Buyer or an Affiliate of the Buyer, hire or retain, or
attempt to hire or retain, in any capacity any Person who is, or was at any time
during the preceding twelve (12) months, an employee or officer of the Buyer or
an Affiliate of the Buyer. If the final judgment of a court of competent
jurisdiction declares that any term or provision of this Section 6.9 is invalid
or unenforceable, the parties agree that the court making the determination of
invalidity or unenforceability shall have the power to reduce the scope,
duration, or area of the term or provision, to delete specific words or phrases,
or to replace any invalid or unenforceable term or provision with a term or
provision that is valid and enforceable and that comes closest to expressing the
intention of the invalid or unenforceable term or provision, and this Agreement
shall be enforceable as so modified after the expiration of the time within
which the judgment may be appealed.

 

6.10 Financial Information.

 

The Sellers shall cooperate with the Buyer and the Buyer’s independent certified
public accounting firm in order to enable the Buyer to create audited financial
statements prepared in accordance with the GAAP for the two full fiscal years
ending December 31, 2014, by making available the Sellers’ records as they are
maintained in the ordinary course of business and answering reasonable
questions.

 

6.11 Disclosure Schedule.

 

The parties acknowledge and agree that (i) the Sellers and the Companies have
not yet delivered a definitive Disclosure Schedule to this Agreement to the
Buyer, and (ii) Buyer has not been provided with copies of, nor had an
opportunity to review, the items to be referred to on the Disclosure Schedule.
Sellers have provided to Buyer Schedule B, which contains a preliminary list of
material disclosures that will be incorporated into the Disclosure Schedule once
delivered. The Sellers shall deliver (and shall cause the Companies to deliver)
to the Buyer all of the schedules, including a definitive Disclosure Schedule to
the Agreement, and documents referred to thereon, in final form within 20 days
of the date hereof. The Buyer shall have 20 days following delivery of such
schedules and such documents in which to review. The Buyer may terminate this
Agreement only if the Buyer objects to any material adverse information
contained in such schedules and the Buyer and Sellers cannot agree on a mutually
satisfactory modifications thereto. For the avoidance of doubt, the Buyer shall
not be able to object to information in the Disclosure Schedule that is
disclosed on Schedule B.

 

 
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ARTICLE VII
CONDITIONS TO OBLIGATIONS TO CLOSE

 

7.1 Conditions to Obligation of the Buyer.

 

The obligation of the Buyer to consummate the Acquisition is subject to the
satisfaction or waiver by the Buyer of the following conditions:

 

(a) The representations and warranties of the Sellers set forth in this
Agreement will be true and correct in all respects as of the date of this
Agreement and as of the Closing Date (except to the extent such representations
and warranties speak as of another date, in which case such representations and
warranties will be true and correct as of such other date), except where the
failure of such representations and warranties to be so true and correct
(without giving effect to any limitation as to “materiality” or “Material
Adverse Effect” set forth therein) does not have, and would not reasonably be
expected to have, individually or in the aggregate, a Material Adverse Effect.
The Buyer will have received a certificate signed by the Sellers to such effect.

 

(b) Each of the Sellers and each of the Companies will have performed all of the
covenants required to be performed by it under this Agreement at or prior to the
Closing, except where the failure to perform does not have, and would not
reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect or materially adversely affect the ability of each of the Sellers
and each of the Companies to consummate the Acquisition or perform its other
obligations hereunder. The Buyer will have received a certificate signed by the
Sellers to such effect.

 

(c) All applicable waiting periods (and any extensions thereof) will have
expired or otherwise been terminated, and the parties hereto will have received
all other authorizations, consents and approvals of all Governmental Entities in
connection with the execution, delivery and performance of this Agreement and
the transactions contemplated hereby.

 

(d) No temporary, preliminary or permanent restraining Order preventing the
consummation of the Acquisition will be in effect.

 

(e) There shall not have been any occurrence, event, incident, action, failure
to act, or transaction since the date of the Interim Financial Statements which
has had or is reasonably likely to cause a Material Adverse Effect.

 

(f) The Buyer shall have completed its business, accounting and legal due
diligence review of each of the Companies and the Business, its assets and
liabilities, and the results thereof shall be reasonably satisfactory to the
Buyer.

 

 
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(g) As requsted by the Buyer, each of the Companies and the respective lessors
for each of the Real Property locations shall have entered into the new leases
or amendments to existing leases that are satisfactory in form and substance to
the Buyer.

 

(h) The Buyer shall have received such pay-off letters and releases relating to
the indebtedness as it shall have requested and such pay-off letters shall be in
form and substance satisfactory to it.

 

(i) Each of the Companies shall have delivered evidence reasonably satisfactory
to Buyer of each of the Companies’ corporate organization and proceedings and
its existence in the jurisdiction in which it is incorporated, including
evidence of such existence as of the Closing.

 

(j) The Buyer shall have obtained on terms and conditions satisfactory to it all
of the financing it needs in order to consummate the transactions contemplated
hereby and fund the working capital requirements of each of the Companies after
the Closing.

 

(k) The Buyer shall have received fully-executed employment and non-competition
agreements with key Company executives as reasonably requested by the Buyer.

 

(l) Each party, as appropriate, shall have obtained any required consents,
permits, licenses, approvals or notifications of any lenders, lessors,
suppliers, customers or other third parties for which the Buyer will assume
responsibility for properly completing any and all necessary forms required when
applying for and securing any necessary transfers.

 

(m) The Sellers shall have obtained releases of any liens, charges or
encumbrances against any of the assets of the Companies, at the Sellers’
expense.

 

(n) To the extent that the leased Real Property is owned by the Sellers, the
Sellers shall have executed new leases for such Real Property that are mutually
satisfactory to the parties. To the extent that the leased Real Property is not
owned by the Sellers, then the Buyer may require amendments to the existing
leases of the Companies as a condition to the Closing.

 

(o) The Buyer shall have received unaudited consolidated financial statements of
the Companies for the last two completed fiscal years and of unaudited finnacial
statements for any interim period leading up to the Closing Date.

 

(p) A total of $30,000 in cash shall be available for use by the Buyer in the
Business at the Closing.

 

 
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(q) All actions to be taken by the Sellers in connection with consummation of
the transactions contemplated hereby and all certificates, instruments, and
other documents required to effect the transactions contemplated hereby will be
satisfactory in form and substance to the Buyer.

 

7.2 Conditions to Obligation of the Sellers.

 

The obligation of the Sellers to consummate the Acquisition is subject to the
satisfaction or waiver by the Sellers of the following conditions:

 

(a) The representations and warranties of the Buyer set forth in this Agreement
will be true and correct in all respects as of the date of this Agreement and as
of the Closing Date (except to the extent such representations and warranties
speak as of another date, in which case such representations and warranties will
be true and correct as of such other date), except where the failure of such
representations and warranties to be so true and correct does not adversely
affect the ability of the Buyer to consummate the Acquisition and the other
transactions contemplated by this Agreement. The Sellers will have received a
certificate signed on behalf of the Buyer by a duly authorized officer of of the
Buyer to such effect.

 

(b) The Buyer will have performed in all material respects all of the covenants
required to be performed by it under this Agreement at or prior to the Closing
except such failures to perform as do not materially adversely affect the
ability of the Buyer to consummate the Acquisition and the other transactions
contemplated by this Agreement. The Sellers will have received a certificate
signed on behalf of the Buyer by a duly authorized officer of the Buyer to such
effect.

 

(c) All applicable waiting periods (and any extensions thereof) will have
expired or otherwise been terminated and the parties hereto will have received
all other authorizations, consents and approvals of all Governmental Entities in
connection with the execution, delivery and performance of this Agreement and
the transactions contemplated hereby.

 

(d) Each party, as appropriate, shall have obtained any required consents,
permits, licenses, approvals or notifications of any Governmental Entities,
lenders, lessors, suppliers, customers or other third parties for which the
Buyer will assume responsibility for properly completing any and all necessary
forms required when applying for and securing any necessary transfers.

 

(e) No temporary, preliminary or permanent restraining Order preventing the
consummation of the Acquisition will be in effect.

 

 
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ARTICLE VIII
TERMINATION; AMENDMENT; WAIVER

 

8.1 Termination of Agreement.

 

This Agreement may be terminated as follows (the date of such termination, the
“Termination Date”):

 

(a) by mutual written consent of the Buyer and the Sellers at any time prior to
the Closing;

 

(b) by either the Buyer or the Sellers if any Governmental Entity will have
issued an Order or taken any other action permanently enjoining, restraining or
otherwise prohibiting the transactions contemplated by this Agreement;

 

(c) by either the Buyer or the Sellers if the Closing does not occur on or
before the ninetieth day (90th) following the date hereof; provided that the
right to terminate this Agreement under this Section 8.1(c) will not be
available to any party whose breach of any provision of this Agreement results
in the failure of the Closing to occur by such time;

 

(d) by the Buyer if any of the Sellers or either of the Companies has breached
their respective representations and warranties or any covenant or other
agreement to be performed by it in a manner such that the Closing conditions set
forth in Section 7.1(a) or 7.1(b) would not be satisfied; or

 

(e) by Sellers if either the Buyer has breached its representations and
warranties or any covenant or other agreement to be performed by it in a manner
such that the Closing conditions set forth in Section 7.2(a) or 7.2(b) would not
be satisfied.

 

8.2 Effect of Termination.

 

In the event of termination of this Agreement by either Sellers or the Buyer as
provided in Section 8.1, this Agreement will forthwith become void and have no
effect, without any Liability (other than with respect to any suit for breach of
this Agreement) on the part of the Buyer, the Companies or the Sellers (or any
member, stockholder agent, consultant or Representative of any such party);
provided, that the provisions of Sections 10.1, 10.6, 10.7, 10.8, 10.11, 10.13,
10.14 and this Section 8.2 will survive any termination hereof pursuant to
Section 8.1.

 

8.3 Amendments.

 

This Agreement may be amended by the parties hereto, by action taken or
authorized by, in the case of the Buyer, by the Buyer’s Board of Directors, in
the case of the Companies, by its respective manager, and in the case of the
Sellers, by each of the Sellers. This Agreement may not be amended except by an
instrument in writing signed on behalf of the Buyer, the Companies and the
Sellers.

 

 
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8.4 Waiver.

 

At any time prior to the Closing, the Buyer may (a) extend the time for the
performance of any of the covenants, obligations or other acts of the Sellers
and the Companies or (b) waive any inaccuracy of any representations or
warranties or compliance with any of the agreements, covenants or conditions of
the Sellers or any conditions to its own obligations. Any agreement on the part
of the Buyer to any such extension or waiver will be valid only if such waiver
is set forth in an instrument in writing signed on its behalf by its duly
authorized officer. At any time prior to the Closing, the Sellers and the
Companies, may (a) extend the time for the performance of any of the covenants,
obligations or other acts of the Buyer or (b) waive any inaccuracy of any
representations or warranties or compliance with any of the agreements,
covenants or conditions of the Buyer or any conditions to their own obligations.
Any agreement on the part of the Sellers and the Companies to any such extension
or waiver will be valid only if such waiver is set forth in an instrument in
writing signed by the Sellers and the Companies. The failure of any party to
this Agreement to assert any of its rights under this Agreement or otherwise
will not constitute a waiver of such rights. The waiver of any such right with
respect to particular facts and other circumstances will not be deemed a waiver
with respect to any other facts and circumstances, and each such right will be
deemed an ongoing right that may be asserted at any time and from time to time.

 

ARTICLE IX
INDEMNIFICATION

 

9.1 Survival.

 

The representations and warranties made herein and in any certificate delivered
in connection herewith shall survive for a period of twenty four (24) months
following the Closing Date, at which time they shall expire; provided, however,
that (i) the representations and warranties set forth in Sections 3.1
(Organization; Authority and Enforceability), 3.3 (The Interests), 3.4 (Brokers
Fees), 4.1 (Organization, Qualification, Limited Liability Company Power;
Authority and Enforeceability), 4.3 (Capitalization), and 4.19 (Broker’s Fees)
of this Agreement shall survive indefinitely and (ii) the representations and
warranties in Section 4.6 (Taxes) of this Agreement shall survive until the
expiration of the applicable statue of limitations. The representations and
warranties identified in subsection (i) of the immediately preceding sentence
are referred to herein as the “Fundamental Representations.” If written notice
of a claim has been given prior to the expiration of the applicable
representations and warranties, then notwithstanding any statement herein to the
contrary, the relevant representations and warranties shall survive as to such
claim, until such claim is finally resolved. Unless a specified period is set
forth in this Agreement (in which event such specified period will control), all
agreements and covenants contained in this Agreement will survive the Closing
and remain in effect indefinitely.

 

 
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9.2 Indemnification by Sellers.

 

From and after the Closing, Sellers agree, severally and not jointly, to
indemnify, defend and save Buyer and its Affiliates, stockholders, officers,
directors, employees, agents and representatives (each, a “Buyer Indemnified
Party” and collectively, the “Buyer Indemnified Parties”) harmless from and
against any and all liabilities, deficiencies, demands, claims, Actions,
assessments, losses, costs, expenses, interest, fines, penalties and damages
(including fees and expenses of attorneys and accountants and costs of
investigation) (individually and collectively, the “Losses”) suffered, sustained
or incurred by any Buyer Indemnified Party arising out of or otherwise by virtue
of: (a) any breach of any of the representations or warranties of Sellers or the
Companies contained in Article III or IV of this Agreement; (b) the failure of
Sellers to perform any of their covenants or obligations contained in this
Agreement; (c) any indebtedness of either of the Companies for borrowed money
existing as of immediately prior to the Closing, (d) any Liabilities arising out
of the ownership of the Interests or the use or operation of the business of the
Companies prior to the Closing (except to the extent accrued on the Closing Date
Balance Sheet) or (e) any other business or operations (other than of the
Companies) owned in whole or in part by any of the Sellers.

 

9.3 Indemnification by Buyer.

 

From and after the Closing, Buyer agrees to indemnify, defend and save each
Seller and to the extent applicable, such Seller’s Affiliates, members,
managers, officers, directors, employees, agents and representatives (each, a
“Seller Indemnified Party” and collectively the “Seller Indemnified Parties”)
harmless from and against any and all Losses sustained or incurred by any Seller
Indemnified Party arising out of or otherwise by virtue of: (a) any breach of
any of the representations and warranties of Buyer contained in Article V of
this Agreement or (b) the failure of Buyer to perform any of its covenants or
obligations contained in this Agreement.

 

9.4 Indemnification Procedure.

 

(a) If a Buyer Indemnified Party or a Seller Indemnified Party seeks
indemnification under this Article IX, such party (the “Indemnified Party”)
shall give written notice to the other party (the “Indemnifying Party”) of the
facts and circumstances giving rise to the claim. In that regard, if any Action,
Liability or obligation shall be brought or asserted by any third party which,
if adversely determined, would entitle the Indemnified Party to indemnity
pursuant to this Article IX (a “Third-Party Claim”), the Indemnified Party shall
promptly notify the Indemnifying Party of such Third-Party Claim in writing,
specifying the basis of such claim and the facts pertaining thereto, and the
Indemnifying Party, if the Indemnifying Party so elects, shall assume and
control the defense thereof (and shall consult with the Indemnified Party with
respect thereto), including the employment of counsel reasonably satisfactory to
the Indemnified Party and the payment of all necessary expenses. If the
Indemnifying Party elects to assume control of the defense of a Third-Party
Claim, the Indemnified Party shall have the right to employ counsel separate
from counsel employed by the Indemnifying Party in any such action and to
participate in the defense thereof, but the fees and expenses of such counsel
employed by the Indemnified Party shall be at the expense of the Indemnified
Party unless (x) the Indemnifying Party has been advised by the Indemnifying
Party’s counsel that a reasonable likelihood exists of a conflict of interest
between the Indemnifying Party and the Indemnified Party, or (y) the
Indemnifying Party has failed to assume the defense and employ counsel; in which
case the fees and expenses of the Indemnified Party’s counsel shall be paid by
the Indemnifying Party. All claims other than Third-Party Claims (a “Direct
Claim”) may be asserted by the Indemnified Party giving notice to the
Indemnifying Party. Absent an emergency or other extenuating circumstance, the
Indemnified Party shall give written notice to the Indemnifying Party of such
Direct Claim prior to taking any material actions to remedy such Direct Claim.

 

 
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(b) In no event shall the Indemnified Party pay or enter into any settlement of
any claim or consent to any judgment with respect to any Third-Party Claim
without the prior written consent of the Indemnifying Party (which consent shall
not be unreasonably withheld, conditioned or delayed) if such settlement or
judgment would require the Indemnifying Party to pay any amount. The
Indemnifying Party may enter into a settlement or consent to any judgment
without the consent of the Indemnified Party so long as (i) such settlement or
judgment involves monetary damages only and (ii) a term of the settlement or
judgment is that the Person or Persons asserting such Third-Party Claim
unconditionally release all Indemnified Parties from all liability with respect
to such claim; otherwise the consent of the Indemnified Party shall be required
in order to enter into any settlement of, or consent to the entry of a judgment
with respect to, any Third-Party Claim, which consent shall not be unreasonably
withheld, conditioned or delayed.

 

9.5 Failure to Give Timely Notice.

 

A failure by an Indemnified Party to provide notice as provided in Section 9.4
will not affect the rights or obligations of any Person except and only to the
extent that, as a result of such failure, any Person entitled to receive such
notice was damaged as a result of such failure to give timely notice. Nothing
contained in this Section 9.4 shall be deemed to extend the period for which
Sellers’ representations and warranties will survive Closing as set forth in
Section 9.1 above

 

9.6 Limitation on Indemnifiction Obligation.

 

Notwithstanding anything to the contrary in Sections 9.2 or 9.3, in no event
shall the Sellers have or assert any claim for Losses against the Buyer, or the
Buyer have or assert any claim for Losses against the Sellers based upon or
arising out of the breach of any representation or warranty other than a
Fundamental Representation (which shall not be limited) unless, until and to the
extent that the aggregate of all such claims for Losses under 9.3(a), in the
case of claims by the Sellers, or under 9.2(a) in the case of claims by the
Buyer, exceeds one percent (1%) of the Aggregate Purchase Price (at which point
the Indemnifying Party will be obligated to indemnify the Indemnified Party from
and against all such Losses relating back to the first dollar). Furthermore, the
Sellers shall not, in the aggregate, be liable to the Buyer Indemnified Parties
for Losses arising under Section 9.2(a) other than in connection with
Fundamental Representations (which shall not be limited) to the extent that the
amounts otherwise indemnifiable for such breaches exceeds an aggregate maximum
equal to the Aggregate Purchase Price.

 

9.7 Payments.

 

Payments of all amounts owing by an Indemnifying Party under this Article IX
shall be made promptly upon the determination in accordance with this Article IX
that an indemnification obligation is owing by the Indemnifying Party to the
Indemnified Party.

 

 
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9.8 Other Indemnification.

 

Each of the Sellers hereby agrees that he or it will not make any claim for
indemnification against either of the Companies by reason of the fact that he or
it was a manager, officer, employee, or agent of either of the Companies or was
serving at the request of any such entity as a partner, trustee, manager,
director, officer, employee, or agent of another entity (whether such claim is
for judgments, damages, penalties, fines, costs, amounts paid in settlement,
losses, expenses, or otherwise and whether such claim is pursuant to any
statute, charter document, bylaw, agreement, or otherwise) with respect to any
action, suit, proceeding, complaint, claim, or demand brought by the Buyer
against such Seller (whether such action, suit, proceeding, complaint, claim, or
demand is pursuant to this Agreement, applicable law, or otherwise).

 

ARTICLE X
MISCELLANEOUS

 

10.1 Press Releases and Public Announcement.

 

Neither the Buyer on the one hand, nor the Sellers or the Companies on the
other, will issue any press release or make any public announcement relating to
this Agreement, the Acquisition or the other transactions contemplated by this
Agreement without the prior written approval of the other party; provided,
however, that the Buyer may make regulatory filings referring to this Agreement
or attaching a copy hereof as may be required by applicble law.

 

10.2 No Third-Party Beneficiaries.

 

This Agreement will not confer any rights or remedies upon any Person other than
the parties hereto and their respective successors and permitted assigns.

 

10.3 Entire Agreement.

 

This Agreement (including the Exhibits and the Schedules hereto) constitutes the
entire agreement among the parties hereto and supersedes any prior
understandings, agreements or representations by or among the parties hereto,
written or oral, to the extent they related in any way to the subject matter
hereof.

 

 
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10.4 Succession and Assignment.

 

This Agreement will be binding upon and inure to the benefit of the parties
named herein and their respective successors and permitted assigns. No party
hereto may assign either this Agreement or any of its rights, interests or
obligations hereunder without the prior written approval, in the case of
assignment by the Buyer, by the Sellers, and, in the case of assignment by the
Sellers or the Companies, the Buyer.

 

10.5 Construction.

 

The parties have participated jointly in the negotiation and drafting of this
Agreement, and, in the event an ambiguity or question of intent or
interpretation arises, this Agreement will be construed as if drafted jointly by
the parties, and no presumption or burden of proof will arise favoring or
disfavoring any party by virtue of the authorship of any of the provisions of
this Agreement.

 

10.6 Notices.

 

All notices, requests and other communications hereunder must be in writing and
will be deemed to have been duly given only if delivered personally against
written receipt or by facsimile transmission or mailed (by registered or
certified mail, postage prepaid, return receipt requested) or delivered by
reputable overnight courier, fee prepaid, to the parties hereto at the addresses
of the parties as specified on the signature pages hereto. Any party may change
the address to which notices, requests, demands, claims and other communications
hereunder are to be delivered by giving the other parties notice in the manner
set forth herein.

 

10.7 Governing Law.

 

This Agreement will be governed by, and construed in accordance with, the Laws
of the State of Delaware, without giving effect to any choice of Law or conflict
of Law provision or rule that would cause the application of the Laws of any
jurisdiction other than the State of Delaware.

 

 
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10.8 Consent to Jurisdiction and Service of Process.

 

EACH OF THE PARTIES HERETO CONSENTS TO THE JURISDICTION OF ANY STATE OR FEDERAL
COURT LOCATED WITHIN THE STATE OF DELAWARE AND IRREVOCABLY AGREES THAT ALL
ACTIONS OR PROCEEDINGS RELATING TO THIS AGREEMENT, THE ACQUISITION OR THE OTHER
TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT MAY BE LITIGATED IN SUCH COURTS.
EACH OF THE PARTIES HERETO ACCEPTS FOR ITSELF AND IN CONNECTION WITH ITS
RESPECTIVE PROPERTIES, GENERALLY AND UNCONDITIONALLY, THE EXCLUSIVE JURISDICTION
OF THE AFORESAID COURTS AND WAIVES ANY DEFENSE OF FORUM NON CONVENIENS, AND
IRREVOCABLY AGREES TO BE BOUND BY ANY FINAL AND NONAPPEALABLE JUDGMENT RENDERED
THEREBY IN CONNECTION WITH THIS AGREEMENT, THE ACQUISITION OR THE OTHER
TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT. EACH OF THE PARTIES HERETO FURTHER
IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS OUT OF ANY OF THE AFOREMENTIONED
COURTS IN ANY SUCH ACTION OR PROCEEDING BY THE MAILING OF COPIES THEREOF BY
REGISTERED OR CERTIFIED MAIL, POSTAGE PREPAID, TO SUCH PARTY AT THE ADDRESS
SPECIFIED IN THIS AGREEMENT, SUCH SERVICE TO BECOME EFFECTIVE 15 CALENDAR DAYS
AFTER SUCH MAILING. NOTHING HEREIN WILL IN ANY WAY BE DEEMED TO LIMIT THE
ABILITY OF ANY PARTY HERETO TO SERVE ANY SUCH LEGAL PROCESS, SUMMONS, NOTICES
AND DOCUMENTS IN ANY OTHER MANNER PERMITTED BY APPLICABLE LAW OR TO OBTAIN
JURISDICTION OVER OR TO BRING ACTIONS, SUITS OR PROCEEDINGS AGAINST ANY OTHER
PARTY HERETO IN SUCH OTHER JURISDICTIONS, AND IN SUCH MANNER, AS MAY BE
PERMITTED BY ANY APPLICABLE LAW.

 

10.9 Headings.

 

The descriptive headings contained in this Agreement are included for
convenience of reference only and will not affect in any way the meaning or
interpretation of this Agreement.

 

10.10 Severability.

 

If any provision of this Agreement is held to be illegal, invalid or
unenforceable under any present or future Law (a) such provision will be fully
severable, (b) this Agreement will be construed and enforced as if such illegal,
invalid or unenforceable provision had never comprised a part hereof, (c) the
remaining provisions of this Agreement will remain in full force and effect and
will not be affected by the illegal, invalid or unenforceable provision or by
its severance herefrom and (d) in lieu of such illegal, invalid or unenforceable
provision, there will be added automatically as a part of this Agreement a
legal, valid and enforceable provision as similar in terms of such illegal,
invalid or unenforceable provision as may be possible.

 

 
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10.11 Expenses.

 

Except as otherwise provided in this Agreement, whether or not the Acquisition
is consummated, all Expenses incurred in connection with this Agreement and the
transactions contemplated hereby will be paid by the party incurring such
Expenses. As used in this Agreement, “Expenses” means the out-of-pocket fees and
expenses of the financial advisor, counsel and accountants incurred in
connection with this Agreement and the transactions contemplated hereby.

 

10.12 Incorporation of Exhibits and Schedules.

 

The Exhibits and Schedules identified in this Agreement are incorporated herein
by reference and made a part hereof.

 

10.13 Limited Recourse.

 

Notwithstanding anything in this Agreement to the contrary, the obligations and
Liabilities of the parties hereunder will be without recourse to any stockholder
or member of such party or any of such stockholder’s or member’s Affiliates
(other than such party), or any of their respective Representatives or agents
(in each case, in their capacity as such).

 

10.14 Specific Performance.

 

The parties hereto agree that irreparable damage would occur in the event that
any provision of this Agreement was not performed in accordance with the terms
hereof and that the parties will be entitled to specific performance of the
terms hereof in addition to any other remedy at Law or equity.

 

10.15 Counterparts.

 

This Agreement may be executed in one or more counterparts, and by the different
parties hereto in separate counterparts, each of which when executed will be
deemed to be an original but all of which taken together will constitute one and
the same instrument. Delivery of an executed counterpart of a signature page to
this Agreement by facsimile will be effective as delivery of a manually executed
counterpart of this Agreement.

 

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

 

 
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed as of the date first above written.

 

BUYER:   MONROVIA MONEY TRAIN, INC.          By: /s/ Ellery W. Roberts    

Name: Ellery W. Roberts

   

Title: CEO

       

Address: 590 Madison Avenue, 18th Floor

New York, NY 10022

Attention: Ellery W. Roberts, CEO

 

With a copy (which shall not constitute notice) to:

 

BEVILACQUA PLLC

1629 K Street, NW, Suite 300

Washington, DC 20006

Attn: Louis A. Bevilacqua, Esq.

Fax: 301-874-8635

 

COMPANY:    

COMPANY:

       

MONEY TRAIN TITLE LOANS, LLC

ON TRACK, LLC 

    By: /s/ Jarrod Clarke     /s/ Jarrod Clarke     Name: Jarrod Clarke    
Name: Jarrod Clarke, Manager     Title: President and Manager           Address:
8661 Sandy Parkway Address: 8661 Sandy Parkway Sandy, UT 84070 Sandy, UT 84070
Fax No. 801-930-9575 Fax No. 801-930-9575 Attention:
________________________________ Attention: ________________________________    
    SELLER:

SELLER:

   

 

JARROD CLARKE HOLDINGS, INC.     /s/ Jarrod Clarke /s/ Jarrod Clarke Name:
JARROD CLARKE Name: Jarrod Clarke Title: President   Address: 8661 Sandy Parkway

Address: 8661 Sandy Parkway

Sandy, UT 84070

Sandy, UT 84070

Fax No. 801-930-9575

Fax No. 801-930-9575

Attention:________________________________

Attention:_________________________________

 

 
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SCHEDULE A

 

Name of Seller

  Number of Interests in Money Train Title Loans, LLC     Number of Interests in
On Track, LLC  

Jarrod Clarke

 

99

%

 

99

%

Jarrod Clarke Holdings, Inc.

   

1

%

   

1

%

  

 
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SCHEDULE B

 

Initial Disclosures

 

Each Initial disclosure will have a definitive disclosure schedule provided
pursuant to section 6.11 in purchase agreement.

 

1.

Pending litigation with American Title Loans(ATL).

 

Buyer has been made aware of the pending litigation with ATL. Buyer and Seller
have agreed that Seller will indemnify Buyer against settlement, judgment and/or
legal costs to associated with ATL litigation.

2.

Advertising and marketing contract will be entered into with Robert Lund and
Jarrod Clarke. Robert Lund will provide advertising jingles(up to 2 jingles per
month per market) in the existing Money Train markets. Jarrod will provide media
placement and media buying services. Existing and future Jingles are considered
intellectual property of Robert Lund. Annual marketing contract entitles Money
Train the exclusive use of all previous Money Train jingles. Robert Lund jingles
will be exclusive to Money train and exclusive in the financial services market.
Annual cost is $90,000.00

3.

Employment contract for Mike Rossberg as CEO. Annual Salary $150,000 plus bonus
and stock plan.

4.

Board of Directors placement of Jarrod Clarke with annual board compensation of
$100,000 per year for 3 years.

5.

Commercial lease agreements for the following properties owned by Jarrod Clark
and used by Money Train. Monthly rents listed. 3 year contract with 2% per year
increases with 5 year renewal clauses.

 

a.

7129 S State Midvale UT $3,000 option for back office $3,000

 

b.

3300 S 27 W. Salt Lake City UT $2,800

 

c.

3163 Wall Ave Ogden UT $3,200

 

d.

8661 Sandy Parkway $3,100

6.

Due the nature of the company’s business and collection procedures the age of
receivables are significantly older than typical standards that GAAP would
accept as collectable. The Buyer as agreed to omit accounts receivable from the
working capital definition.

7.

Seller has provided the buyer an income statement for 2014 prepared on a cash
basis that represents $978,236 of net operating income.

   

 

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