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Exhibit 2.1
EXECUTION COPY
ASSET PURCHASE AGREEMENT
dated as of September 23, 2004
between
Artisoft, Inc.
and
Vertical Networks Incorporated
TABLE OF CONTENTS
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ASSET PURCHASE AGREEMENT
This Asset Purchase Agreement is entered into as of September 23, 2004 by and between Artisoft, Inc., a Delaware corporation (the “Buyer”), and Vertical Networks Incorporated, a California corporation (the “Seller”).
This Agreement contemplates a transaction in which the Buyer will purchase substantially all of the assets of the Seller, other than patents and specified assets (if any) that are not used or useful in connection with or related to the Seller’s business, and assume certain of the liabilities of the Seller.
Capitalized terms used in this Agreement shall have the meanings ascribed to them in Article IX.
In consideration of the representations, warranties and covenants herein contained, the Parties agree as follows.
ARTICLE ITHE ASSET PURCHASE1.1 Purchase and Sale of Assets .(a) Upon and subject to the terms and conditions of this Agreement, the Buyer shall purchase from the Seller, and the Seller shall sell, transfer, convey, assign and deliver to the Buyer, at the Closing, for the consideration specified below in this Article I, all right, title and interest in, to and under the Acquired Assets.(b) Notwithstanding the provisions of Section 1.1(a), the Acquired Assets shall not include the Excluded Assets.1.2 Assumption of Liabilities .(a) Upon and subject to the terms and conditions of this Agreement, the Buyer shall assume and become responsible for, from and after the Closing, the Assumed Liabilities.(b) Notwithstanding the terms of Section 1.2(a) or any other provision of this Agreement to the contrary, the Buyer shall not assume or become responsible for, and the Seller shall remain liable for, the Retained Liabilities.1.3 Purchase Price .(a) The Purchase Price to be paid by the Buyer for the Acquired Assets at the Closing shall be $13,500,000 in cash.(b) The Purchase Price shall be increased by the amount(s), if any, which become payable from time to time under this Section 1.3(b).
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(i) Within 45 days after the last day of each fiscal quarter of each fiscal year beginning with the first fiscal quarter following the Closing Date and including the Buyer’s fiscal quarter during which the last payment due to the Buyer under (x) the CVS Agreement (as defined below) and/or (y) any sale or license to CVS of the Vertical Networks Fax Manager product made after the date hereof has been paid to the Buyer, the Buyer shall prepare and deliver to the Seller a written notice containing a list of all payments received in cash during such fiscal quarter from CVS Pharmacy, Inc. (“CVS”) pursuant to (A) the Software Purchase Agreement between the Seller and CVS, dated as of August 20, 2004 (the “CVS Agreement”) or (B) any future purchase by or license to CVS of the Vertical Networks Fax Manager product. The sum of all such payments (or portions thereof) that are not subject to any right of refund or rescission pursuant to Sections II(d) or II(e) of the CVS Agreement or, with respect only to the Vertical Networks Fax Manager product, any agreement contemplated in clause (B) above, pursuant to any provision of any other agreement contemplated in clause (B) above, as of the time of such notice shall be referred to as the “Qualifying Quarterly Earn-Out Revenues” for such fiscal quarter. Payments received in an earlier quarter that first become non-refundable in a later quarter shall be Qualifying Quarterly Earn-Out Revenues for such later quarter and not for such earlier quarter. Within 15 days after delivery of the Buyer’s notice, the Seller may deliver a written notice of dispute and the parties shall thereafter resolve such dispute in the same manner as Disputes regarding indemnification are to be resolved pursuant to Sections 7.3(d) and 7.3(e).(ii) Within 15 days after the latest of (A) 20 days after delivery of the notice referred to in Section 1.3(b)(i), (B) the resolution of any disputes in the manner provided in such Section or (C) the date that any payments received from CVS at any time become Qualified Quarterly Earn-Out Revenues, the Buyer shall pay to the Seller an amount (the “Definitive Earn-Out Payment” for such fiscal quarter) equal to 100% of the total Qualifying Quarterly Earn-Out Revenues for such fiscal quarter.(c) Notwithstanding the foregoing, in no case shall the total Definitive Earn-Out Payments for all periods exceed $5,500,000.(d) For purposes of this Section 1.3, amounts received from CVS shall be considered to be not subject to refund or rescission when either (i) a writing signed by CVS so indicates, (ii) an award made pursuant to the arbitration procedures set forth in the CVS Agreement so indicates, (iii) any other agreement contemplated in Section 1.3(a)(i)(B) so indicates, (iv) with respect to payments made for the purchase of the IOVS Software (as defined in the CVS Agreement), if CVS has not made a written claim pursuant to Section II(d) of the CVS Agreement for a refund on or prior to the 180 th day after the initial implementation at CVS of the “released version” of the Company’s IOVS Software or (v) with respect to payments for Software Subscription Services (as defined in the CVS Agreement), if CVS has not made a written claim for a refund pursuant to Section II(e) of the CVS Agreement on or prior to the 180 th day after the delivery of the software “upgrade” for which such payment is made. Notwithstanding the foregoing, if CVS brings a written claim, initiates an arbitration proceeding or files suit with respect to claims of the types contemplated by (i) Section 1.3(d)(iv) with respect to software defects or other conditions existing in the IOVS Software prior to the Closing or Section 1.3(d)(v) with respect to Software Subscription Services provided prior to Closing based upon software defects or other conditions existing prior to Closing after the time periods
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contemplated in such Sections 1.3(d)(iv) and 1.3(d)(v) or for damages under any other provision of the CVS Agreement relating to software defects or other conditions existing, or services provided, prior to Closing, then further payments pursuant to Section 1.3(b)(ii), in an amount sufficient to cover the damages claimed by CVS, shall be suspended until such time as such claim or proceeding shall have been definitively resolved in any of the following ways: (x) by a writing signed by CVS, (y) by an arbitration award which is either acknowledged in writing by CVS to be binding and conclusive or is not challenged by legal proceedings brought by CVS within 120 days after such arbitration award is made or (z) by a decision of a court of competent jurisdiction without possibility of further appeal or any other judicial proceedings; provided, however that Buyer shall have no right to suspend or offset any Definitive Earn-Out Payment, or to seek any other redress from Seller, for software defects or other conditions that first arise following the Closing or for services or upgrades to be provided by Buyer following the Closing except to the extent that software defects or other conditions existing prior to Closing cause defects or other conditions in such services or upgrades. If it is determined that any portion of any Definitive Earn-Out Payment paid to the Seller by the Buyer was subject to refund, and/or that any damages are payable to the Seller, the Buyer shall have, in addition to all other remedies available to it at law or in equity, the right to set off the amount of such refund and/or damages against any Definitive Earn-Out Payments that thereafter become payable to the Seller. The Buyer agrees that it shall defend in good faith any claims made by CVS and shall afford the Seller the right to participate in such defense if the Seller so requests.(e) Any amendment to the CVS Agreement which would reduce or delay the amounts payable to the Seller pursuant to Section 1.3(b) shall require the prior written consent of the Seller, which consent shall not be unreasonably withheld, except that no such consent shall be required with respect to an amendment which is entered into following the written assertion by CVS of a material breach of a material representation, warranty, covenant or condition contained in the CVS Agreement or any other material default under the CVS Agreement or asserting a termination of the CVS Agreement as a result of a material breach or default. It shall not be unreasonable for Seller to refuse consent to any amendment to the CVS Agreement if such amendment would reduce or delay any payment to Seller pursuant to this Section 1.3.1.4 Escrow . At the Closing, $1,000,000 in cash shall be paid by the Buyer to the Escrow Agent for the purpose of securing the indemnification obligations of the Seller and its successors and assigns set forth in this Agreement. The Escrow Fund shall be held by the Escrow Agent under the Escrow Agreement pursuant to the terms thereof until 12 months following the Closing Date (or later, in certain circumstances, as provided in the Escrow Agreement). The Escrow Fund shall be held as a trust fund and shall not be subject to any lien, attachment, trustee process or any other judicial process of any creditor of any party, and shall be held and disbursed solely for the purposes and in accordance with the terms of the Escrow Agreement.1.5 The Closing .(a) The Closing shall take place at the offices of Wilmer Cutler Pickering Hale and Dorr LLP in Boston, Massachusetts commencing at 1:00 p.m. local time on the Closing Date. All transactions at the Closing shall be deemed to take place simultaneously, and no transaction shall be deemed to have been completed and no documents or certificates shall be
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deemed to have been delivered until all other transactions are completed and all other documents and certificates are delivered.(b) At the Closing:(i) the Seller shall deliver to the Buyer the various certificates, instruments and documents referred to in Section 5.2;(ii) the Buyer shall deliver to the Seller the various certificates, instruments and documents referred to in Section 5.3;(iii) the Seller shall execute and deliver to the Buyer a bill of sale in substantially the form attached hereto as Exhibit B , one or more trademark assignments in substantially the form attached hereto as Exhibit C , and such other instruments of conveyance (such as real estate deeds, assigned certificates or documents of title, assigned negotiable instruments and stock transfer powers) as the Buyer may reasonably request in order to effect the sale, transfer, conveyance and assignment to the Buyer of valid ownership of the Acquired Assets;(iv) the Buyer shall execute and deliver to the Seller an instrument of assumption in substantially the form attached hereto as Exhibit D , and such other instruments as the Seller may reasonably request in order to effect the assumption by the Buyer of the Assumed Liabilities;(v) the Buyer and the Seller shall deliver joint written instructions that the documents referred to in Section 1.5(b) shall be delivered to the respective parties to whom they are addressed;(vi) the Buyer shall pay to the Seller, payable by wire transfer or other delivery of immediately available funds to an account designated by the Seller, the Purchase Price set forth in Section 1.3(a), less $1,000,000 which is to be deposited in escrow pursuant to Section 1.4;(vii) the Buyer, the Seller and the Escrow Agent shall execute and deliver the Escrow Agreement and the Buyer shall deposit $1,000,000 with the Escrow Agent in accordance with Section 1.4;(viii) the Seller shall deliver to the Buyer, or otherwise put the Buyer in possession and control of, all of the Acquired Assets of a tangible nature; and(ix) the Buyer and the Seller shall execute and deliver to each other a cross-receipt evidencing the transactions referred to above.1.6 Allocation . The Seller shall prepare a schedule with an allocation of the Purchase Price to the Acquired Assets (the “Allocation Schedule”) as promptly as possible but in any event within 15 days after the Closing Date. After preparation of the Allocation Schedule, it shall be submitted to the Buyer for review and approval. The Buyer and the Seller shall attempt to resolve any differences between them as to the allocation. If the Buyer and the Seller are
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unable to resolve any differences as to allocation, the disputed parts of the Allocation Schedule shall be submitted to a mutually agreeable nationally recognized accounting firm for resolution. Any determination by the accounting firm will be final and the Buyer and the Seller shall be deemed to have approved of the Allocation Schedule as modified by any such determination. After approval, the Allocation Schedule shall be conclusive and binding upon the Parties hereto and shall be used by them for all purposes, including financial accounting purposes and in the preparation of all Tax Returns, including any forms required by Section 1060 of the Code and any comparable provisions of state or local Tax law.1.7 Apportionment .(a) The Purchase Price set forth in Section 1.3 shall be subject to further adjustment as set forth in this Section 1.7 if, but only if, the adjustments hereunder amount to a net aggregate increase or decrease to the Purchase Price of $100,000 or more. In the event that any of the adjustments provided for in this Section 1.7 cannot be calculated as of the Closing Date, the appropriate payment shall be made by the Buyer or the Seller, as the case may be, to the other Party as promptly following the Closing Date as is practicable.(b) For each Assigned Contract (including leases of real estate or equipment and insurance policies) for which rent or other payments have been made in advance by the Seller covering a Payment Period that includes time after the Closing Date, the Purchase Price shall be increased by the amount determined by multiplying such advance payment by a fraction, the numerator of which is the number of days remaining in the Payment Period after the Closing Date and the denominator of which is the total number of days in the Payment Period.(c) For each Assigned Contract (including leases of real estate or equipment and insurance policies) for which rent or other payments are to be made in arrears by the Buyer covering a Payment Period that includes time on or before the Closing Date, the Purchase Price shall be decreased by the amount determined by multiplying such payment by a fraction, the numerator of which is the number of days in the Payment Period through and including the Closing Date and the denominator of which is the total number of days in the Payment Period.(d) For (i) any (A) water, sewer and fire protection and other service fees, any electricity, gas, telephone and other utility expenses, any fees relating to any Permits of the Seller transferred to the Buyer which relate to any site covered by a real estate lease that is being assigned by the Seller to the Buyer as an Assigned Contract and (B) Periodic Taxes that (ii) have been paid in advance by the Seller covering a Payment Period that includes time after the Closing Date, the Purchase Price shall be increased by the amount determined by multiplying such advance payment by a fraction, the numerator of which is the number of days remaining in the Payment Period after the Closing Date and the denominator of which is the total number of days in the Payment Period.(e) For (i) any (A) water, sewer and fire protection and other service fees, any electricity, gas, telephone and other utility expenses, any fees relating to any Permits of the Seller transferred to the Buyer which relate to any site covered by a real estate lease that is being assigned by the Seller to the Buyer as an Assigned Contract and (B) Periodic Taxes that (ii) are to be paid in arrears by the Buyer covering a Payment Period that includes time on or before the
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Closing Date, the Purchase Price shall be decreased by the amount determined by multiplying such payment by a fraction, the numerator of which is the number days in the Payment Period through and including the Closing Date and the denominator of which is the total number of days in the Payment Period.
(f) If the Purchase Price is adjusted pursuant to this Section 1.7, the allocation of the Purchase Price among the Acquired Assets as set forth in Schedule 1.6 attached hereto shall be appropriately modified to reflect such adjustment.1.8 Further Assurances . At any time and from time to time after the Closing, at the request of the Buyer and without further consideration, the Seller shall execute and deliver such other instruments of sale, transfer, conveyance and assignment and take such actions as the Buyer may reasonably request to more effectively transfer, convey and assign to the Buyer, and to confirm the Buyer’s rights to, title in and ownership of, the Acquired Assets and to place the Buyer in actual possession and operating control thereof.ARTICLE IIREPRESENTATIONS AND WARRANTIES OF THE SELLERThe Seller represents and warrants to the Buyer that, except as set forth in the Disclosure Schedule, the statements contained in this Article II are true and correct as of the date of this Agreement and (for purposes of Section 7.1 but not for purposes of Section 5.2(b)) will be true and correct as of the Closing as though made as of the Closing, except to the extent such representations and warranties are specifically made as of a particular date (in which case such representations and warranties will be true and correct as of such date). The Disclosure Schedule shall be arranged in sections and subsections corresponding to the numbered and lettered sections and subsections contained in this Article II, provided that the inclusion of an item as an exception to one section or subsection of this Agreement shall cause that item to be an exception to any other section or subsection o this Agreement where such disclosure is reasonably apparent. For purposes of this Article II, the phrase “to the knowledge of the Seller” or any phrase of similar import shall be deemed to refer to those matters which Seller’s executive officers know or should know after due inquiry with respect to the matter in question. The Parties hereby agree that for purposes of this Agreement the “executive officers” of the Seller are Scott Pickett, Doug Sinclair and Ben Alves and the “executive officers” of the Buyer are Steven G. Manson, Duncan Perry and Chris Brookins.
2.1 Organization. The Seller is a corporation duly organized, validly existing and in corporate and tax good standing under the laws of the State of California. The Seller is duly qualified to conduct business and is in corporate and tax good standing under the laws of each jurisdiction listed in Section 2.1 of the Disclosure Schedule, which jurisdictions constitute the only jurisdictions in which the nature of the Seller’s businesses or the ownership or leasing of its properties requires such qualification, except where the failure to be so qualified would reasonably be expected to have a Seller Material Adverse Effect or prevent, materially delay or impair the ability of the Seller to consummate the transactions contemplated by this Agreement.
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2.2 Corporate Power . The Seller has all requisite corporate power and authority to carry on the businesses in which it is engaged and to own and use the properties owned and used by it. The Seller has furnished to the Buyer complete and accurate copies of its Articles of Incorporation and by-laws. The Seller is not in default under or in violation of any provision of its Articles of Incorporation or by-laws.2.3 Authorization of Transaction . The Seller has all requisite power and authority to execute and deliver this Agreement and the Ancillary Agreements and to perform its obligations hereunder and thereunder, subject to obtaining the necessary approval of the Seller’s shareholders. The execution and delivery by the Seller of this Agreement and the performance by the Seller of this Agreement and the Ancillary Agreements and the consummation by the Seller of the transactions contemplated hereby and thereby have been duly and validly authorized by all necessary corporate action on the part of the Seller subject to obtaining the necessary approval of the Seller’s shareholders. Without limiting the generality of the foregoing, the Board of Directors of the Seller, at a meeting duly called and held, by the unanimous vote of all directors voting on the matter determined that the sale of assets contemplated by this Agreement is fair to and in the best interests of the Seller and its shareholders, approved this Agreement in accordance with the California Corporations Code, directed that such asset sale be submitted to the shareholders of the Seller for their approval, and resolved to recommend that the shareholders of the Seller vote in favor of the approval of such asset sale. This Agreement has been duly and validly executed and delivered by the Seller and constitutes, and each of the Ancillary Agreements, upon its execution and delivery by the Seller, will constitute, a valid and binding obligation of the Seller, enforceable against the Seller in accordance with its terms, assuming the due authorization, execution and delivery of this Agreement and the Ancillary Agreements by the Buyer.2.4 Noncontravention . Neither the execution and delivery by the Seller of this Agreement or the Ancillary Agreements, nor the consummation by the Seller of the transactions contemplated hereby or thereby, will (a) conflict with or violate any provision of the Articles of Incorporation or by-laws of the Seller, (b) require on the part of the Seller any notice to or filing with, or any permit, authorization, consent or approval of, any Governmental Entity, (c) conflict with, result in a breach of, constitute (with or without due notice or lapse of time or both) a default under, result in the acceleration of obligations under, create in any party the right to terminate, modify or cancel, or require any notice, consent or waiver under, any Material Contract, (d) result in the imposition of any Security Interest upon any assets of the Seller or (e) violate any order, writ, injunction, decree, statute, rule or regulation applicable to the Seller or any of its properties or assets, except in the case of clause (c) or (d) above, for any conflict, breach, default, acceleration, creation, imposition or requirement that, individually or in the aggregate, would not have a Seller Material Adverse Effect or prevent, materially delay or impair the ability of Seller to consummate the transactions contemplated by this Agreement.2.5 Subsidiaries .(a) Section 2.5 of the Disclosure Schedule sets forth the name of each Subsidiary and the jurisdiction of organization of each Subsidiary.
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(b) The Seller does not control directly or indirectly or have any direct or indirect equity participation or similar interest in any corporation, partnership, limited liability company, joint venture or other business association or entity which is not a Subsidiary.2.6 Financial Statements . The Seller has provided to the Buyer the Financial Statements. The Financial Statements have been prepared in accordance with GAAP applied on a consistent basis throughout the periods covered thereby, fairly present the consolidated financial condition, results of operations and cash flows of the Seller and the Subsidiaries as of the respective dates thereof and for the periods referred to therein and are consistent with the books and records of the Seller and the Subsidiaries; provided , however , that the Financial Statements referred to in clause (b) of the definition of such term are subject to normal recurring year-end adjustments (which will not be material) and do not include footnotes.2.7 Absence of Certain Changes . Since the date of the Financial Statements referred to in clause (a) of the definition of such term, except for matters that are reasonably apparent from a reading of the Financial Statements referred to in clause (b) of the definition of such term, there has occurred no event or development which, individually or in the aggregate, has had, or could reasonably be expected to have in the future, a Seller Material Adverse Effect. Since June 30, 2004, the Seller has not taken any of the actions set forth in paragraphs (b), (c), (d), (e), (g), (i), (k), (l) or (r) of Section 4.4.2.8 Undisclosed Liabilities . The Seller has no liability (whether known or unknown, whether absolute or contingent, whether liquidated or unliquidated and whether due or to become due), except for (a) liabilities shown on the Most Recent Balance Sheet, (b) liabilities which have arisen since the Most Recent Balance Sheet Date in the Ordinary Course of Business and (c) contractual and other liabilities incurred in the Ordinary Course of Business which are not required by GAAP to be reflected on a balance sheet and which are not material in amount, individually or in the aggregate except for, in the case of (b) and (c), liabilities for any breach, act or omission by the Seller prior to the Closing under any Assigned Contract.2.9 Tax Matters .(a) Each of the Seller and the Subsidiaries has filed on a timely basis all Tax Returns that it was required to file, and all such Tax Returns were and are complete and accurate in all material respects. Neither the Seller nor any Subsidiary is or has ever been a member of a group of corporations with which it has filed (or been required to file) consolidated, combined or unitary Tax Returns. Each of the Seller and the Subsidiaries has paid on a timely basis all Taxes that were due and payable. The unpaid Taxes of the Seller and the Subsidiaries for tax periods through the Most Recent Balance Sheet Date do not exceed the accruals and reserves for Taxes (excluding accruals and reserves for deferred Taxes established to reflect timing differences between book and Tax income) set forth on the Most Recent Balance Sheet. Since the Most Recent Balance Sheet Date, neither the Seller nor any Subsidiary has incurred any liability for Taxes other than in the Ordinary Course of Business, and each of the Seller and the Subsidiaries has continued to make all Tax deposits and payments in accordance with past practice and applicable law. Neither the Seller nor any Subsidiary has any actual or potential liability for any Tax obligation of any taxpayer (including any affiliated group of corporations or other entities that included the Seller or any Subsidiary during a prior period) other than the Seller and the
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Subsidiaries. All Taxes that the Seller or any Subsidiary is or was required by law to withhold or collect have been duly withheld or collected and, to the extent required, have been paid to the proper Governmental Entity.(b) The Seller has delivered to the Buyer complete and accurate copies of all Tax Returns, examination reports and statements of deficiencies assessed against or agreed to by the Seller or any Subsidiary since December 31, 2000. The federal income Tax Returns of the Seller and each Subsidiary have not been audited by the Internal Revenue Service. No examination or audit of any Tax Return of, nor any Tax claims or proceedings against, the Seller or any Subsidiary by any Governmental Entity is currently in progress or, to the knowledge of the Seller, threatened or contemplated. Neither the Seller nor any Subsidiary has been informed by any jurisdiction that the jurisdiction believes that the Seller or Subsidiary was required to file any Tax Return that was not filed. Neither the Seller nor any Subsidiary has waived any statute of limitations with respect to Taxes or agreed to an extension of time with respect to a Tax assessment or deficiency.(c) None of the assets of the Seller or any Subsidiary: (i) is “tax-exempt use property” within the meaning of Section 168(h) of the Code; or (ii) directly or indirectly secures any debt the interest on which is tax exempt under Section 103(a) of the Code.(d) None of the Assumed Liabilities includes an obligation to pay or reimburse the Taxes of any person or entity.2.10 Ownership of Assets . The Seller is the true and lawful owner, and has good title to, all of the Acquired Assets, free and clear of all Security Interests, except as set forth in Section 2.10 of the Disclosure Schedule. No Subsidiary owns any assets having a book value in excess of $25,000. Upon execution and delivery by the Seller to the Buyer of the instruments of conveyance referred to in Section 1.5(b)(iii), the Buyer will become the true and lawful owner of, and will receive good title to, the Acquired Assets, free and clear of all Security Interests other than those set forth in Section 2.10 of the Disclosure Schedule.2.11 Condition of Assets .(a) The Acquired Assets, together with the patent license contained in the agreement referred to in Section 5.2(h), are entirely sufficient for the conduct of the Seller’s businesses as presently conducted and constitute all assets used by the Seller in such businesses. Each tangible Acquired Asset is free from material defects, has been maintained in accordance with normal industry practice, is in good operating condition and repair (subject to normal wear and tear) and is suitable for the purposes for which it presently is used. During the past 12 months there has not been any significant interruption in the Seller’s operations due to inadequate maintenance of assets.(b) Section 2.11(b) of the Disclosure Schedule lists individually (i) all Acquired Assets which are fixed assets (within the meaning of GAAP), indicating the cost, accumulated book depreciation (if any) and the net book value of each such fixed asset as of the Most Recent Balance Sheet Date, and (ii) all other Acquired Assets of a tangible nature (other than inventories) whose book value exceeds $10,000.
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(c) Each item of equipment, each motor vehicle and each other asset that is being transferred to the Buyer as part of the Acquired Assets and that the Seller has possession of pursuant to a lease agreement or other contractual arrangement is in such condition that, upon its return to its lessor or owner under the applicable lease or contract, the obligations of the Seller to such lessor or owner will have been discharged in full.2.12 Real Property Leases . Section 2.12 of the Disclosure Schedule lists the sole Lease (including subleases) to which the Seller is a party which is still in effect. The Seller has delivered to the Buyer complete and accurate copies of the Lease. With respect to the Lease (including subleases):(a) such Lease is legal, valid, binding, enforceable and in full force and effect with respect to the Seller and, to the Seller’s knowledge, with respect to each other party thereto;(b) such Lease is assignable by the Seller to the Buyer without the consent or approval of any party (except as set forth in Section 2.4 of the Disclosure Schedule) and such Lease will continue to be legal, valid, binding, enforceable and in full force and effect immediately following the Closing in accordance with the terms thereof as in effect immediately prior to the Closing;(c) neither the Seller nor, to the knowledge of the Seller, any other party, is in breach or violation of, or default under, any such Lease, and no event has occurred, is pending or, to the knowledge of the Seller, is threatened, which, after the giving of notice, with lapse of time, or otherwise, would constitute a breach or default by the Seller or, to the knowledge of the Seller, any other party under such Lease;(d) there are no disputes, oral agreements or forbearance programs in effect as to such Lease;(e) the Seller has not assigned, transferred, conveyed, mortgaged, deeded in trust or encumbered any interest in the leasehold or subleasehold;(f) to the knowledge of the Seller, all facilities leased or subleased thereunder are supplied with utilities and other services adequate for the operation of said facilities; and(g) the Seller is not aware of any Security Interest, easement, covenant or other restriction applicable to the real property subject to such lease which would reasonably be expected to materially impair the current uses or the occupancy by the Seller of the property subject thereto.2.13 Intellectual Property .(a) Section 2.13(a) of the Disclosure Schedule lists (i) each patent, patent application, copyright registration or application therefor, mask work registration or application therefor, and trademark, service mark and domain name registration or application therefor of the Seller or any Subsidiary and (ii) by title, each Customer Deliverable of the Seller.
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(b) The Seller owns or has the right to use all Intellectual Property necessary (i) to use, manufacture, have manufactured, market and distribute the Customer Deliverables and (ii) to operate the Internal Systems. Upon execution and delivery by the Seller to the Buyer of the instruments of conveyance referred to in Section 1.5(b)(iii), each item of Seller Intellectual Property will be owned or available for use by the Buyer immediately following the Closing on substantially identical terms and conditions as it was immediately prior to the Closing. The Seller has taken all reasonable measures to protect the proprietary nature of each item of Seller Intellectual Property, and to maintain in confidence all trade secrets and confidential information, that it owns or uses for such time as the Seller deemed confidentiality to be appropriate. No other person or entity has any rights to any of the Seller Intellectual Property owned by the Seller (except pursuant to agreements or licenses specified in Section 2.13(d) of the Disclosure Schedule), and, to the knowledge of the Seller, no other person or entity is infringing, violating or misappropriating any of the Seller Intellectual Property.(c) None of the Customer Deliverables, or the marketing, distribution, provision or use by Seller thereof, infringes or violates, or constitutes a misappropriation of, any Intellectual Property rights of any person or entity. To the knowledge of the Seller, none of the Internal Systems, or the use thereof, infringes or violates, or constitutes a misappropriation of, any Intellectual Property rights of any person or entity. Section 2.13(c) of the Disclosure Schedule lists any complaint, claim or notice, or written threat thereof, received by the Seller alleging any such infringement, violation or misappropriation; and the Seller has provided to the Buyer complete and accurate copies of all written documentation in the possession of the Seller relating to any such complaint, claim, notice or threat. The Seller has provided to the Buyer complete and accurate copies of all written documentation in the Seller’s possession relating to claims or disputes known to the Seller concerning any Seller Intellectual Property.(d) Section 2.13(d) of the Disclosure Schedule identifies each license or other agreement pursuant to which the Seller has licensed, distributed or otherwise granted any rights to any third party with respect to, any Seller Intellectual Property. Except as described in Section 2.13(d) of the Disclosure Schedule, the Seller has not agreed to indemnify any person or entity against any infringement, violation or misappropriation of any Intellectual Property rights with respect to any Customer Deliverables.(e) Section 2.13(e) of the Disclosure Schedule identifies each item of Seller Intellectual Property that is owned by a party other than the Seller, and the license or agreement pursuant to which the Seller uses it (excluding off-the-shelf software programs licensed by the Seller pursuant to “shrink wrap” licenses).(f) The Seller has not disclosed the source code for the Software or other confidential information constituting, embodied in or pertaining to the Software to any person or entity, except pursuant to the agreements listed in Section 2.13(f) of the Disclosure Schedule, and the Seller has taken reasonable measures to prevent disclosure of such source code.(g) All of the copyrightable materials (including Software) incorporated in or bundled with the Customer Deliverables have been created by employees of the Seller within the scope of their employment by the Seller or by independent contractors of the Seller who have executed agreements expressly assigning all right, title and interest in such copyrightable
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materials and the copyrights therein to the Seller. No portion of such copyrightable materials was jointly developed with any third party.(h) Section 2.13(h) of the Disclosure Schedule lists Open Source Materials (as defined below) that the Seller has used in the development of Customer Deliverables and describes the manner in which such Open Source Materials have been used, including, without limitation, whether and how the Open Source Materials have been modified and/or distributed by the Seller. Except as set forth on Section 2.13(h) of the Disclosure Schedule, the Seller has not (i) incorporated Open Source Materials into, or combined Open Source Materials with, software developed or distributed by the Seller; (ii) distributed Open Source Materials in conjunction with any other software developed or distributed by the Seller; or (iii) used Open Source Materials that create, or purport to create, obligations for the Seller with respect to software developed or distributed by the Seller or grant, or purport to grant, to any third party, any rights or immunities under Intellectual Property Rights (including, but not limited to, using any Open Source Materials that require, as a condition of use, modification and/or distribution of such Open Source Materials that other software incorporated into, derived from or distributed with such Open Source Materials be (a) disclosed or distributed in source code form, (b) be licensed for the purpose of making derivative works, or (c) be redistributable at no charge). “Open Source Materials” means all software or other material that is distributed as “free software”, “open source software” or under a similar licensing or distribution model, including, but not limited to, the GNU General Public License (GPL), GNU Lesser General Public License (LGPL), Mozilla Public License (MPL), BSD Licenses, the Artistic License, the Netscape Public License, the Sun Community Source License (SCSL) the Sun Industry Standards License (SISL) and the Apache License.2.14 Inventory . All Inventory of the Seller, whether or not reflected on the Most Recent Balance Sheet, consists of a quality and quantity usable and saleable in the Ordinary Course of Business, except for obsolete items and items of below-standard quality, all of which have been written-off or written-down to net realizable value on the Most Recent Balance Sheet. All inventories not written-off have been priced at the lower of cost or net realizable value on a first-in, first-out basis. The quantities of each type of inventory, whether raw materials, work-in-process or finished goods, are not excessive in the Ordinary Course of Business.2.15 Contracts .(a) Section 2.15 of the Disclosure Schedule lists the following agreements (written or oral) to which the Seller is a party as of the date of this Agreement (collectively, the “Material Contracts”):(i) any agreement (or group of related agreements) for the purchase or sale of products or for the furnishing or receipt of services (A) which involves more than the sum of $100,000, or (B) in which the Seller has granted manufacturing rights, “most favored nation” pricing provisions or exclusive marketing or exclusive distribution rights relating to any products or territory or has agreed to purchase a minimum quantity of goods or services or has agreed to purchase goods or services exclusively from a certain party;
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(ii) any agreement (or group of related agreements) for the lease of personal property from or to third parties providing for lease payments in excess of $25,000 per annum;(iii) any agreement concerning the establishment or operation of a partnership, joint venture or limited liability company;(iv) any agreement (or group of related agreements) under which it has created, incurred, assumed or guaranteed indebtedness (including capitalized lease obligations) involving more than $25,000 or under which it has imposed a Security Interest on any of its assets, tangible or intangible;(v) any agreement for the disposition of any significant portion of the assets or business of the Seller (other than sales of products in the Ordinary Course of Business) or any agreement for the acquisition of the assets or business of any other entity (other than purchases of inventory or components in the Ordinary Course of Business);(vi) any confidentiality or noncompetition agreement that is material to the continued operation of the business (provided, that the Disclosure Schedule need not list any such agreements that are substantially in the form or forms provided to counsel for the Buyer);(vii) any employment or consulting agreement (provided, that the Disclosure Schedule need not list any such agreements that are substantially in the form or forms provided to counsel for the Buyer);(viii) any agreement involving any future payment or series of related future payments (except in regard to purchases of the Seller’s capital stock) in excess of $50,000 in the aggregate to or from any current or former officer, director or stockholder of the Seller or an Affiliate thereof;(ix) any agreement under which the consequences of a default or termination would reasonably be expected to have a Seller Material Adverse Effect;(x) any agreement which contains any provisions requiring the Seller to indemnify any other party (excluding indemnities contained in agreements for the purchase, sale or license of products entered into in the Ordinary Course of Business);(xi) all contracts or arrangements providing for “earn-outs,” “performance guarantees” or contingent payments by the Seller involving more than $50,000 over the term of the contract, agreement or arrangement,(xii) all distribution agreements or arrangements, whether as principal or agent involving any payment or series of related payments to or from the Company in excess of $50,000 in the aggregate since August 1, 2003;(xiii) all agreements or arrangements with customers, distributors or suppliers for the sharing of fees or other similar arrangements;
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(xiv) all agreements or arrangements involving indebtedness of the Seller for borrowed money, letters of credit, the deferred purchase price of property, conditional sale arrangements, capital lease obligations, obligations secured by a Security Interest, or interest rate or currency hedging activities (including guarantees (other than the Seller’s guarantee of its Subsidiaries warranty obligations) or other contingent liabilities in respect of any of the foregoing but in any event excluding trade payables arising in the Ordinary Course of Business, intercompany indebtedness and immaterial leases for telephones, copy machines, facsimile machines and other office equipment); and(xv) any other agreement (or group of related agreements) either involving more than $50,000 or not entered into in the Ordinary Course of Business.(b) The Seller has delivered or made available to the Buyer a complete and accurate copy of each Material Contract listed in Section 2.15 of the Disclosure Schedule. With respect to each Material Contract listed: (i) the agreement is legal, valid, binding and enforceable and in full force and effect with respect to the Seller and, to the Seller’s knowledge, with respect to each other party thereto; (ii) for those agreements to which the Seller is a party, the agreement is assignable by the Seller to the Buyer without the consent or approval of any party (except as set forth in Section 2.4 of the Disclosure Schedule) and will continue to be legal, valid, binding and enforceable and in full force and effect with respect to the Seller and, to the best of the Seller’s knowledge, with respect to the other parties thereto, immediately following the Closing in accordance with the terms thereof as in effect immediately prior to the Closing; and (iii) neither the Seller nor, to the knowledge of the Seller, any other party, is in breach or violation of, or default under, any term of any such agreement, and no event has occurred, is pending or, to the knowledge of the Seller, is threatened, which, after the giving of notice, with lapse of time, or otherwise, would constitute a breach or default by the Seller or, to the knowledge of the Seller, any other party under such agreement.2.16 Accounts Receivable . All Accounts Receivable of the Seller reflected on the Most Recent Balance Sheet (other than those paid since such date) are valid receivables subject to no setoffs or counterclaims and are current and collectible (within 90 days after the date on which it first became due and payable), net of the applicable reserve for bad debts on the Most Recent Balance Sheet. A complete and accurate list of the accounts receivable reflected on the Most Recent Balance Sheet, showing the aging thereof, is included in Section 2.16 of the Disclosure Schedule. All accounts receivable of the Seller that have arisen since the Most Recent Balance Sheet Date are valid receivables subject to no setoffs or counterclaims and are collectible (within 90 days after the date on which it first became due and payable), net of a reserve for bad debts in an amount proportionate to the reserve shown on the Most Recent Balance Sheet. The Seller has not received any notice from an account debtor stating that any account receivable in an amount in excess of $10,000 is subject to any contest, claim or setoff by such account debtor.2.17 Brokers’ Fees . The Seller has no any liability or obligation to pay any fees or commissions to any broker, finder or agent, other than DBW Kensington Green, LLC, with respect to the transactions contemplated by this Agreement.
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2.18 Insurance . Section 2.18 of the Disclosure Schedule lists each insurance policy (including fire, theft, casualty, comprehensive general liability, workers compensation, business interruption, environmental, product liability and automobile insurance policies and bond and surety arrangements) to which the Seller is a party, all of which are in full force and effect. There is no material claim pending under any such policy as to which coverage has been questioned, denied or disputed by the underwriter of such policy. All premiums due and payable under all such policies have been paid, the Seller is not liable for retroactive premiums or similar payments, and the Seller is otherwise in compliance in all material respects with the terms of such policies. The Seller has no knowledge of any threatened termination of, or premium increase outside the Ordinary Course of Business with respect to, any such policy. Each such policy which the Buyer has identified for assignment is assignable by the Seller to the Buyer without the consent or approval of any party and will continue to be enforceable and in full force and effect with respect to each other party thereto immediately following such assignment in accordance with the terms thereof as in effect immediately prior to such assignment.2.19 Litigation . Except as set forth in Section 2.19 of the Disclosure Schedule, there is no Legal Proceeding which is pending or has been threatened in writing against the Seller which (a) seeks either damages in excess of $25,000 or equitable relief or (b) in any manner challenges or seeks to prevent, enjoin, alter or delay the transactions contemplated by this Agreement, and there are no judgments, orders or decrees outstanding against the Seller.2.20 Warranties . Except as set forth in Section 2.20 of the Disclosure Schedule, no product or service manufactured, sold, leased, licensed or delivered by the Seller is subject to any guaranty, warranty, right of return, right of credit or other indemnity other than (i) the applicable standard terms and conditions of sale or lease of the Seller, which are set forth in Section 2.20 of the Disclosure Schedule, and (ii) manufacturers’ warranties. Section 2.20 of the Disclosure Schedule sets forth the aggregate expenses incurred by the Seller in fulfilling its obligations under its guaranty, warranty, right of return and indemnity provisions during each of the fiscal years and the interim period covered by the Financial Statements; and there is no basis in fact for supposing that such expenses should significantly increase as a percentage of sales in the future.2.21 Employees .(a) Section 2.21 of the Disclosure Schedule contains a list of all employees of the Seller whose annual rate of compensation exceeds $50,000 per year, along with the position and the annual rate of compensation of each such person. Each current or past employee of the Seller has entered into a confidentiality/assignment of inventions agreement with the Seller, a copy or form of which has previously been made available to the Buyer. Section 2.21 of the Disclosure Schedule contains a list of all employees of the Seller who are a party to a non-competition agreement with the Seller; copies of such agreements have previously been delivered to the Buyer. Each such agreement referenced in the two preceding sentences to which the Seller is a party is assignable by the Seller to the Buyer without the consent or approval of any party and will continue to be legal, valid, binding and enforceable and in full force and effect immediately following the Closing in accordance with the terms thereof as in effect immediately prior to the Closing. Section 2.21 of the Disclosure Schedule contains a list of all employees of the Seller who are not citizens of the United States. To the knowledge of the Seller, no key employee or group of employees has any plans to terminate employment with the Seller (other
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than for the purpose of accepting employment with the Buyer following the Closing) or not to accept employment with the Buyer.(b) The Seller is not a party to or bound by any collective bargaining agreement, nor has any of them experienced any strikes, grievances, claims of unfair labor practices or other collective bargaining disputes. The Seller has no knowledge of any organizational effort made or threatened, either currently or within the past two years, by or on behalf of any labor union with respect to employees of the Seller.2.22 Employee Benefits .(a) Section 2.22(a) of the Disclosure Schedule contains a complete and accurate list of all Seller Plans. Complete and accurate copies of (i) all Seller Plans which have been reduced to writing, (ii) written summaries of all unwritten Seller Plans, (iii) all related trust agreements, insurance contracts and summary plan descriptions, and (iv) all annual reports filed on IRS Form 5500, 5500C or 5500R and (for all funded plans) all plan financial statements for the last five plan years for each Seller Plan, have been delivered to the Buyer.(b) All the Seller Plans that are intended to be qualified under Section 401(a) of the Code have received determination letters from the Internal Revenue Service to the effect that such Seller Plans are qualified and the plans and the trusts related thereto are exempt from federal income taxes under Sections 401(a) and 501(a), respectively, of the Code, no such determination letter has been revoked and revocation has not been threatened, and no such Seller Plan has been amended since the date of its most recent determination letter or application therefor in any respect, and no act or omission has occurred, that would adversely affect its qualification or materially increase its cost. Each Seller Plan which is required to satisfy Section 401(k)(3) or Section 401(m)(2) of the Code has been tested for compliance with, and satisfies the requirements of Section 401(k)(3) and Section 401(m)(2) of the Code for each plan year ending prior to the Closing Date.(c) Neither the Seller, any Subsidiary, nor any ERISA Affiliate has ever maintained an Employee Benefit Plan subject to Section 412 of the Code or Title IV of ERISA.(d) At no time has the Seller, any Subsidiary or any ERISA Affiliate been obligated to contribute to any “multiemployer plan” (as defined in Section 4001(a)(3) of ERISA).(e) Section 2.22(e) of the Disclosure Schedule discloses each: (i) agreement with any executive officer or other key employee of the Seller or any Subsidiary (A) the benefits of which are contingent, or the terms of which are altered, upon the occurrence of a transaction involving the Seller or any Subsidiary of the nature of any of the transactions contemplated by this Agreement, (B) providing any term of employment or compensation guarantee or (C) providing severance benefits or other benefits after the termination of employment of such director, executive officer or key employee; (ii) agreement, plan or arrangement under which any person may receive payments from the Seller or any Subsidiary that may be subject to the tax imposed by Section 4999 of the Code or included in the determination of such person’s “parachute payment” under Section 280G of the Code; and (iii) agreement or plan binding the
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Seller or any Subsidiary, including any stock option plan, stock appreciation right plan, restricted stock plan, stock purchase plan, severance benefit plan or Seller Plan, any of the benefits of which will be increased, or the vesting of the benefits of which will be accelerated, by the occurrence of any of the transactions contemplated by this Agreement or the value of any of the benefits of which will be calculated on the basis of any of the transactions contemplated by this Agreement.(f) Section 2.22(l) of the Disclosure Schedule sets forth the policy of the Seller and any Subsidiary with respect to accrued vacation, accrued sick time and earned time off and the amount of such liabilities as of June 30, 2004.2.23 Environmental Matters .(a) The Seller has complied in all material respects with all applicable Environmental Laws. There is no pending or, to the knowledge of the Seller, threatened civil or criminal litigation, written notice of violation, formal administrative proceeding, or investigation, inquiry or information request by any Governmental Entity, relating to any Environmental Law involving the Seller.(b) The Seller has no liabilities or obligations arising from the release of any Materials of Environmental Concern into the environment.(c) The Seller is not a party to or bound by any court order, administrative order, consent order or other agreement with any Governmental Entity entered into in connection with any material legal obligation or material liability arising under any Environmental Law.(d) Set forth in Section 2.23(d) of the Disclosure Schedule is a list of all documents (whether in hard copy or electronic form) known to the Seller that contain any environmental reports, investigations and audits relating to premises currently or previously owned or operated by the Seller (whether conducted by or on behalf of the Seller or a third party, and whether done at the initiative of the Seller or directed by a Governmental Entity or other third party) which the Seller has possession of or access to. A complete and accurate copy of each such document has been provided to the Buyer.(e) The Seller is not aware of any material environmental liability of any solid or hazardous waste transporter or treatment, storage or disposal facility that has been used by the Seller.2.24 Legal Compliance . The Seller is currently conducting, and have at all times since January 1, 1999 conducted, its business in compliance with each applicable law (including rules and regulations thereunder) of any federal, state, local or foreign government, or any Governmental Entity. The Seller has not received any notice or communication from any Governmental Entity alleging noncompliance with any applicable law, rule or regulation.2.25 Customers and Suppliers .(a) Section 2.25(a) of the Disclosure Schedule sets forth a list of (a) each customer that accounted for more than 1% of the consolidated revenues of the Seller during the
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last full fiscal year or the interim period through the Most Recent Balance Sheet Date and the amount of revenues accounted for by such customer during each such period and (b) each supplier that is the sole supplier of any significant product or service to the Seller or a Subsidiary. No such customer that accounted for more than 5% of such consolidated revenues (each, a “Major Customer”) and no such sole-source supplier has indicated within the past year that it will stop, or decrease the rate of, buying products or supplying products, as applicable, to the Seller nor does the Seller know of any present condition or state of facts or circumstances that has had or would be reasonably expected to result in any of the foregoing. There are no unfilled customer orders or commitments obligating the Seller to process, manufacture or deliver products or perform services, other than orders and commitments entered into in the Ordinary Course of Business. No purchase order or commitment of the Seller is in excess of normal requirements, nor are prices provided therein in excess of current market prices for the products or services to be provided thereunder.(b) The Seller has, under binding agreements, at least the amounts of backlog for customer purchases, set forth on Section 2.25(b) of the Disclosure Schedule. The Seller is currently, and until the Closing Date will remain, in timely compliance with the schedule for the roll-out of installations at customer premises.2.26 Permits . Section 2.26 of the Disclosure Schedule sets forth a list of all Permits issued to or held by the Seller, other than Permits as to which the failure to obtain them, individually or in the aggregate, will not materially impair the Buyer’s ability to operate the Seller’s business following the Closing. Such listed Permits are the only Permits that are required for the Seller to conduct its respective business as presently conducted or as proposed to be conducted, except for such Permits which the failure to obtain them, individually or in the aggregate, will not materially impair the Buyer’s ability to operate the Seller’s business following the Closing. Each such Permit is in full force and effect; the Seller is in compliance with the terms of each such Permit; and, to the knowledge of the Seller, no suspension or cancellation of such Permit is threatened and there is no basis for believing that such Permit will not be renewable upon expiration. Each such Permit is assignable by the Seller to the Buyer without the consent or approval of any party and will continue in full force and effect immediately following the Closing.2.27 Certain Business Relationships With Affiliates . No Affiliate of the Seller (a) owns any property or right, tangible or intangible, which is used in the business of the Seller, (b) has any claim or cause of action against the Seller, or (c) owes any money to, or is owed any money by, the Seller. Section 2.27 of the Disclosure Schedule describes any transactions or relationships between the Seller and any Affiliate thereof which occurred or have existed since the beginning of the time period covered by the Financial Statements, other than with respect to (i) employment arrangements in the Ordinary Course of Business, (ii) stock incentive plans, (iii) equity financings and (iv) indebtedness or other Liabilities which are not being assumed by the Buyer.2.28 Books and Records .(a) The minute books and other similar records of the Seller contain complete and accurate records in all material respects of all actions taken at any meetings of the Seller’s
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shareholders, Board of Directors or any committee thereof and of all written consents executed in lieu of the holding of any such meeting. The books and records of the Seller accurately reflect in all material respects the assets, liabilities, business, financial condition and results of operations of the Seller and have been maintained in accordance with good business and bookkeeping practices. Section 2.28 of the Disclosure Schedule contains a list of all bank accounts and safe deposit boxes of the Seller and the names of persons having signature authority with respect thereto or access thereto.(b) The Seller has devised and maintained a system of internal accounting controls sufficient to provide reasonable assurances that (i) transactions are executed in accordance with management’s general or specific authorizations, (ii) transactions are recorded as necessary to permit preparation of financial statements in conformity with GAAP and to maintain accountability for the assets of the Seller, (iii) access to the assets of the Seller is permitted only in accordance with management’s general or specific authorization, (iv) the recorded accountability for the assets of the Seller is compared with the existing assets at reasonable intervals and appropriate action is taken with respect to any differences.2.29 Disclosure . No representation or warranty by the Seller contained in this Agreement, and no statement contained in the Disclosure Schedule or any other document, certificate or other instrument delivered or to be delivered by or on behalf of the Seller pursuant to this Agreement, contains or will contain any untrue statement of a material fact or omits or will omit to state any material fact necessary, in light of the circumstances under which it was or will be made, in order to make the statements herein or therein not misleading. The Seller has disclosed to the Buyer all material information relating to the business of the Seller or any Subsidiary or the transactions contemplated by this Agreement.ARTICLE IIIREPRESENTATIONS AND WARRANTIES OF THE BUYERThe Buyer represents and warrants to the Seller that the statements contained in this Article III are true and correct as of the date of this Agreement and will be true and correct as to the Closing as though made as of the Closing.
3.1 Organization and Corporate Power . The Buyer is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware. The Buyer has all requisite corporate power and authority to carry on the businesses in which it is engaged and to own and use the properties owned and used by it.3.2 Authorization of the Transaction . The Buyer has all requisite power and authority to execute and deliver this Agreement and the Ancillary Agreements and to perform its obligations hereunder and thereunder. The execution and delivery by the Buyer of this Agreement and the Ancillary Agreements and the consummation by the Buyer of the transactions contemplated hereby and thereby have been duly and validly authorized by all necessary corporate action on the part of the Buyer. This Agreement has been duly and validly executed and delivered by the Buyer and constitutes a valid and binding obligation of the Buyer,
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enforceable against it in accordance with its terms, assuming the due authorization, execution and delivery of this agreement and the Ancillary Agreements by the Seller.3.3 Noncontravention . Neither the execution and delivery by the Buyer of this Agreement or the Ancillary Agreements, nor the consummation by the Buyer of the transactions contemplated hereby or thereby, will (a) conflict with or violate any provision of the Certificate of Incorporation or by-laws of the Buyer, (b) require on the part of the Buyer any filing with, or permit, authorization, consent or approval of, any Governmental Entity, (c) conflict with, result in breach of, constitute (with or without due notice or lapse of time or both) a default under, result in the acceleration of obligations under, create in any party any right to terminate, modify or cancel, or require any notice, consent or waiver under, any contract or instrument to which the Buyer is a party or by which it is bound or to which any of its assets is subject, or (d) violate any order, writ, injunction, decree, statute, rule or regulation applicable to the Buyer or any of its properties or assets.3.4 Litigation . Except as disclosed in a writing given to the Seller by the Buyer on the date of this Agreement, no claim, action, proceeding or investigation is pending or, to the best knowledge of the Buyer, threatened, which seeks to delay or prevent the consummation of, or which would be reasonably likely to materially adversely affect the Buyer’s ability to consummate the transactions contemplated by this Agreement and the Ancillary Agreements.3.5 Brokers’ Fees . Buyer has no liability or obligation to pay any fees or commissions to any broker, finder or agent, other than ThinkEquity Partners LLC, with respect to the transactions contemplated by this Agreement.ARTICLE IVPRE-CLOSING COVENANTS4.1 Closing Efforts . Each of the Parties shall use its Reasonable Best Efforts to take all actions and to do all things necessary, proper or advisable to consummate the transactions contemplated by this Agreement, including using its Reasonable Best Efforts to ensure that (i) its representations and warranties remain true and correct in all material respects through the Closing Date and (ii) the conditions to the obligations of the other Party to consummate the transactions contemplated by this Agreement are satisfied.4.2 Governmental and Third-Party Notices and Consents .(a) Each Party shall use its Reasonable Best Efforts to obtain, at its expense, all waivers, permits, consents, approvals or other authorizations from Governmental Entities, and to effect all registrations, filings and notices with or to Governmental Entities, as may be required for such Party to consummate the transactions contemplated by this Agreement and to otherwise comply with all applicable laws and regulations in connection with the consummation of the transactions contemplated by this Agreement.(b) The Seller shall use its Reasonable Best Efforts to | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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