HUGH » Topics » Section 6. Representations and Warranties.

This excerpt taken from the HUGH 10-Q filed May 10, 2007.

Section 6.     Representations and Warranties.

(a)     Representations and Warranties of the Company. The Company represents and warrants to the Purchaser as of the date of this Agreement as set forth below.

(i)    It is a company duly organized, validly existing and in good standing under the laws of the State of Delaware. It has full power and authority to execute, deliver and perform this Agreement and to consummate the transactions contemplated hereby, and the execution, delivery and performance by it of this Agreement and the consummation of the transactions contemplated hereby have been duly authorized by all necessary corporate action.

(ii)    This Agreement has been duly and validly executed and delivered by the Company and constitutes a legal and binding obligation of the Company, enforceable against the Company in accordance with its terms.

(iii)    The execution, delivery and performance by the Company of this Agreement and the consummation by the Company of the transactions contemplated hereby will not (A) violate any provision of Law to which the Company is subject, (B) violate any order, judgment or decree applicable to the Company or (C) conflict with, or result in a breach or default under, any term or condition of the Company’s certificate of formation or the LLC Agreement or any agreement or instrument to which the Company is a party or by which it is bound, except for such violations, conflicts, breaches or defaults that would not, in the aggregate, materially affect the Company’s ability to perform its obligations hereunder.

 

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(iv)    No consent, approval or authorization of, or declaration to or filing with, any Person is required to be made or obtained by the Company for the execution, delivery and performance by the Company of this Agreement or the consummation by the Company of the transactions contemplated hereby, including, the authorization, issuance and delivery of the Restricted Units.

(b)     General Representations and Warranties of the Purchaser. The Purchaser hereby represents and warrants to the Company as of the date of this Agreement as set forth below.

(i)    Each Document has been duly and validly executed and delivered by the Purchaser and each Document constitutes a legal and binding obligation of the Purchaser, enforceable against the Purchaser in accordance with its terms.

(ii)    The execution, delivery and performance by the Purchaser of each Document and the consummation by the Purchaser of the transactions contemplated by each such Document will not (A) violate any provision of any Law to which the Purchaser is subject, (B) violate any order, judgment or decree applicable to the Purchaser or (C) conflict with, or result in a breach or default under, any term or condition of any agreement or other instrument to which the Purchaser is a party or by which the Purchaser is bound, except for such violations, conflicts, breaches or defaults that would not, in the aggregate, materially affect the Purchaser’s ability to perform its obligations under each such Document.

(iii)    No consent, approval or authorization of, or declaration to or filing with, any Person is required to be made or obtained by the Purchaser for the execution, delivery and performance by the Purchaser of the Documents or the consummation by the Purchaser of the transactions contemplated the Documents.

(c)     Investment Representations of the Purchaser. The Purchaser hereby represents and warrants to the Company as of the date of this Agreement as set forth below.

(i)    The Purchaser understands that (A) the Restricted Units have not been registered under the Securities Act or registered or qualified under applicable state securities Laws by reason of their issuance by the Company in a transaction exempt from the registration and qualification requirements of the Securities Act and applicable state securities Laws, and (B) the Restricted Units issued to the Purchaser must be held by the Purchaser indefinitely unless a subsequent disposition thereof is registered or qualified under the Securities Act and applicable state securities Laws, or are exempt from such registration or qualification. The Purchaser further understands that in connection with the Transfer of the Restricted Units, that the Company may request, and if so requested the Purchaser will furnish, such certificates, legal opinions and other information as the Company may reasonably require to confirm that such share Transfer complies with the foregoing.

(ii)    The Purchaser further understands that, with respect to the Restricted Units, the exemption from registration afforded by Rule 144 (the provisions of which are known to the Purchaser) promulgated under the Securities Act depends on the

 

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satisfaction of various conditions, and that, if applicable, Rule 144 may only afford the basis for sales only under certain circumstances and only in limited amounts.

(iii)    The Purchaser will not Transfer the Restricted Units acquired by it hereunder, except in compliance with the Documents.

(iv)    The Purchaser is acquiring the Restricted Units for its own account, for investment only and not with a view to, or an intention of, the distribution thereof in violation of the Securities Act or any applicable state securities Laws.

(v)    The Purchaser is an “accredited investor” (as defined in Rule 501(a) of Regulation D promulgated under the Securities Act).

(vi)    The Purchaser has no need for liquidity in its investment in the Restricted Units and is able to bear the economic risk of his investment in the Restricted Units for an indefinite period of time.

(vii)    The Purchaser has been represented by counsel and/or advisors in connection with the execution and delivery of the Documents and has had an opportunity to ask questions and receive answers concerning the terms and conditions of the offering of the Restricted Units and has had full access to or been provided with all such other information concerning the Company as he has requested.

(viii)    The Purchaser has such knowledge and experience in financial and business matters and with respect to investments in securities of privately held companies such that the Purchaser is capable of evaluating the risks and merits of his investment in the Restricted Units

(ix)    The Purchaser further understands that this Agreement is made with the Purchaser in reliance upon its representations to the Company contained in Sections 5(b) and 5(c).

(d)    Acknowledgement of Purchaser. As an inducement to the Company to issue the Restricted Units to the Purchaser and as a condition thereto, the Purchaser acknowledges and agrees as set forth below.

(i)    Neither the issuance of the Restricted Units to the Purchaser nor any provision contained in the Documents shall entitle the Purchaser to obtain employment with or remain in the employment of the Company or any of its Subsidiaries or Affiliates or affect any right the Company or any Subsidiary or Affiliate of the Company may have to terminate the Purchaser’s employment, pursuant to the Employment Agreement or otherwise, for any reason.

(ii)    The Company shall have no duty or obligation to disclose to the Purchaser, and the Purchaser shall have no right to be advised of, any material information regarding the Company or any of its Subsidiaries or Affiliates at any time prior to, upon or in connection with the repurchase of the Restricted Units upon the termination of the Purchaser’s employment with the Company and any of its Subsidiaries or Affiliates or as otherwise provided in the Documents.

 

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(e)    The Optionee hereby acknowledges receipt of a complete copy of each of the Documents. The Optionee has reviewed each of the Documents and agrees to be bound by the terms of each of the Documents.

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