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EXHIBIT 10.1
EXECUTION
COPY
ASSET PURCHASE
AGREEMENT
Dated as of February 13,
2008
By and Among
MACROVISION
CORPORATION
and
FLEXCO HOLDING COMPANY,
INC.
ASSET PURCHASE
AGREEMENT
THIS ASSET PURCHASE AGREEMENT
(this “ Agreement ”) is made and entered into as
of February 13, 2008, by and among Macrovision Corporation, a
Delaware corporation (“ Mars ”) and certain
Affiliates of Mars to be identified by Mars to take part in the
transaction (collectively with Mars, “ Sellers ”
and each individually with Mars, a “ Seller ”)
and Flexco Holding Company, Inc., a Delaware corporation (“
Pluto ”) and certain Affiliates of Pluto to be
identified by Pluto to take part in this transaction (collectively
with Pluto, “ Buyers ” and each individually
with Pluto, a “ Buyer ”). Prior to the Closing,
each of Mars and Pluto will inform the other of any of its
Affiliates which will become a party to any Transaction Documents
as of the Closing. Each of Mars and Pluto acknowledges and agrees
that the other retains the right to have all of its obligations
performed by, and all of its rights inure to the benefit of, its
identified Affiliates; provided, however, that any such designation
of Affiliates will not relieve such party of its obligations under
the Transaction Documents, to the extent such identified Affiliates
fail to perform such obligations. Each of Sellers and Buyers may
hereafter be referred to as a “party” or collectively
as “parties.”
RECITALS:
A. Seller is engaged, among
other things, in the business of designing, manufacturing,
marketing, selling and supporting its software business, which
consists of entitlement management and software asset management
solutions comprised of the FLEXnet segment and a suite of software
installation and packaging solutions comprised of the Installer and
the AdminStudio segments (the “ Business
”);
B. The Installer segment of
the Business is comprised of: (i) the InstallShield Windows
installation tool, (ii) the InstallAnywhere installation
toolset, and (iii) the InstallShield Collaboration product;
and the AdminStudio segment of the Business is comprised of:
(i) the AdminStudio toolset, and (ii) the Workflow
Manager application management system;
C. The FLEXnet segment of the
Business is comprised of the FLEXnet Publisher, FLEXnet Operations,
FLEXnet Delivery, FLEXnet Connect and FLEXnet Manager
solutions;
D. Buyer is interested in
purchasing, and Seller is interested in selling, the Business,
including, without limitation, all of Seller’s right, title
and interest in, to and under certain assets, properties and rights
of the Business as set forth herein; and
E. The Parties desire that
Seller sell, assign, transfer, convey and deliver to Buyer, and
that Buyer purchase from Seller, the Purchased Assets (as defined
below) that are owned by Seller, that Seller convey the rights in
the Licensed Assets (as defined below), that Buyer convey the
rights in the Licensed-Back Assets (as defined below), and that
Buyer assume from Seller the Assumed Liabilities (as defined
below), subject to the terms and conditions set forth in this
Agreement (the “ Acquisition ”), and desire to
enter into a Transitional Services Agreement in substantially the
form attached hereto as Exhibit A (the “
Transitional Services Agreement ”).
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NOW, THEREFORE, in
consideration of the mutual benefits to be derived and the
representations and warranties, conditions and promises contained
herein, and intending to be legally bound hereby, the Parties
hereby agree as follows:
ARTICLE I
Purchase and Sale of
the Assets;
Purchase Price;
Possession
1.1 Assets, Liabilities
and License Back.
(a) Purchased Assets .
Upon the terms and subject to the conditions of this Agreement, as
of the Closing, Buyer shall purchase from Seller, and Seller shall
sell, assign, transfer, convey and deliver to Buyer, all of
Seller’s right, title and interest in, to and under the
assets (i) exclusively used in the operation of the Business
or (ii) otherwise described on Exhibit B (collectively
the “ Purchased Assets ”).
(b) Excluded Assets .
Seller shall not sell, assign, transfer, convey or deliver to Buyer
hereunder, and Buyer shall not purchase hereunder, any assets of
Seller or Seller’s business of whatever nature whether
presently in existence or arising hereafter, except for the
Purchased Assets, and any such assets other than Purchased Assets,
are herein referred to as “ Excluded Assets ”.
However, Seller hereby grants Buyer certain rights to the Excluded
Assets listed in Schedule 1.1(b) (the “ Licensed
Assets ”) which rights are also described in Schedule
1.1(b). THE LICENSED ASSETS ARE LICENSED TO BUYER “AS
IS” WITHOUT WARRANTY OF ANY KIND, AND SELLER DISCLAIMS ALL
WARRANTIES PERTAINING THERETO, WHETHER EXPRESS OR IMPLIED,
INCLUDING WITHOUT LIMITATION, THE IMPLIED WARRANTIES OF
MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE AND
NON-INFRINGEMENT.
(c) Liabilities Assumed by
Buyer . Upon the terms and subject to the conditions of this
Agreement, and in reliance on the representations, warranties,
covenants and agreements made by Seller herein, effective as of the
Closing Date, Buyer shall assume and be obligated pursuant to this
Agreement to pay when due, perform or discharge only the debts,
claims, liabilities, obligations and expenses described below and
on Schedule 1.1(c) (collectively, the “ Assumed
Liabilities ”):
(i) (A) product liability for
the Inventory; and (B) executory obligations arising from the
Assumed Contracts which are to be performed after the Closing Date;
provided, however, that Buyer shall not assume any (x) accrued
legal costs or expenses related to any Excluded Liabilities, or
(y) obligations arising from any Contracts attributable or
relating to the Business, the rights to which are not, for any
reason, assigned to Buyer as required pursuant to the terms of this
Agreement;
(ii) Buyer’s share of
Transfer Taxes in accordance with Section 1.3;
(iii) subject to
Section 7.8, all Liabilities in connection with, arising under
or pursuant to, the Seller Intellectual Property comprising a
portion of the Purchased Assets, whether or not occurring prior to
the Closing Date;
(iv) all Liabilities of
Seller with respect to accrued vacation and severance, if any, of
all the Retained Employees;
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(v) all Liabilities of Seller
with respect to its office leases in Schaumburg, Illinois,
Cheshire, England, and Maidenhead, England;
(vi) Liabilities of Seller to
accept returns or to provide product warranty services with respect
to customers of the Business, regardless of when the products or
services associated with the Business were purchased;
and
(vii) all current trade
accounts payable, current accrued expenses and other current
liabilities, in each case to the extent related to the Business
arising in the ordinary course of business consistent with past
practice and calculated in accordance with GAAP (the “
Accounts Payable ”).
Buyer shall indemnify Seller with
respect to the Assumed Liabilities in accordance with Article VII.
Seller shall retain (and thereafter pay, perform, discharge or
otherwise satisfy in accordance with their respective terms, and
indemnify Buyer with respect thereto in accordance with Article VII
hereof), all other liabilities not specifically identified above
and/or on Schedule 1.1(c) .
(d) Excluded
Liabilities . Except as set forth in Section 1.1(c)
or any other express provision of this Agreement, Buyer shall not
assume or otherwise become obligated pursuant to this Agreement to
pay when due, perform or discharge any debts, claims, liabilities,
obligations, damages or expenses of Seller (whether known or
unknown, contingent or absolute, or arising before, on or after the
Closing Date), including, without limitation, any
(i) liability for Taxes (other than Taxes that are otherwise
expressly attributed to or assumed by Buyer pursuant to this
Agreement); (ii) obligations under Contracts of Seller not
constituting Assumed Contracts; (iii) payment of any amounts
pursuant to retention, stay bonus or similar agreements entered
into prior to the Closing by Seller in connection with or related
to the transactions contemplated by this Agreement;
(iv) obligations of Seller incurred in connection with
Seller’s operation of business activities other than the
Business; (v) obligations related to intellectual property
infringement claims known to Seller prior to the Closing Date;
(vi) obligations with respect to being a member or part of
Seller’s control group or affiliated group, or by virtue of
being owned or controlled by Seller, under ERISA, or with respect
to discrimination, wrongful termination or other employee claims
the underlying facts of which relate to the pre-Closing period;
(vii) obligations with respect to formerly leased or owned
real properties; (viii) obligations with respect to offsite
disposal of hazardous substances; (ix) any liability or
obligation of Seller arising out of or relating to the execution
and delivery of this Agreement, including any claim for payment of
fees and/or expenses as a broker or finder in connection with the
origination, negotiation, execution or consummation of this
Agreement based upon any alleged agreement between the claimant and
Seller; (x) any of Seller’s liabilities or obligations
for indebtedness other than Assumed Liabilities; (xi) any
liability or obligation relating to any Excluded Asset;
(xii) any accrued expenses (to the extent not included in the
definition of Accounts Payable); and (xiii) obligations with
respect to any Actions pending or threatened prior to the Closing
Date (collectively, the “ Excluded Liabilities
”).
(e) License Back .
Effective as of the Closing, upon the terms and subject to the
conditions of this Agreement, Buyer grants to Seller a fully-paid,
perpetual, irrevocable, world-wide, transferable, assignable,
sublicensable, non-exclusive license to use the Purchased Assets
set forth in Schedule 1.1(e) (the “ Licensed-Back
Assets ”) without restriction outside the
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Business. For the avoidance
of doubt, fields of use relating to: (i) the existing
businesses of Seller other than the Business, as currently
conducted, or as publicly disclosed to be contemplated to be
conducted, and (ii) any of the existing businesses to be
acquired in the acquisition of Gemstar-TV Guide International,
Inc., both (i) and (ii), as publicly disclosed in
Seller’s Form 8-K and Rule 425 filings with the Securities
and Exchange Commission between December 1, 2007 and the date
of this Agreement, shall not be considered to be in the field of
the Business. THE LICENSED-BACK ASSETS ARE LICENSED TO SELLER
“AS IS” WITHOUT WARRANTY OF ANY KIND, AND BUYER
DISCLAIMS ALL WARRANTIES PERTAINING THERETO, WHETHER EXPRESS OR
IMPLIED, INCLUDING WITHOUT LIMITATION, THE IMPLIED WARRANTIES OF
MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE AND
NON-INFRINGEMENT.
1.2 Purchase Price and
Payment Terms.
(a) The aggregate purchase
price for the Purchased Assets and the rights granted to the
Licensed Assets in Section 1.1(b) (the “ Cash
Purchase Price ”) is $200,000,000 adjusted by the
amount (if any) by which the Business’s Working Capital as
shown on the Closing Statement (the “ Closing Working
Capital ”) is more or less than $28,000,000 (not more
than $20,000,000 of which will be cash at Buyer’s election
not less than 10 days prior to the Closing). “ Working
Capital ” means the net book value as of the Closing Date
of (i) cash plus Accounts Receivable (as such term is defined
in Exhibit B ) minus (ii) the Accounts Payable. Working
Capital shall be calculated in the manner set forth on Schedule
1.2(a) .
(b) At the Closing, Buyer
shall purchase from Seller the Purchased Assets and the rights to
the Licensed Assets described in Section 1.1(b), and shall
assume the Assumed Liabilities.
(c) At the Closing, Buyer
shall deliver to Seller $200,000,000 in immediately available
funds.
(d) Within ninety
(90) days following the Closing Date, Buyer shall deliver to
Seller a statement (in its final and binding form as determined
below, the “ Closing Statement ”) setting forth
the Closing Working Capital as of the close of business on the day
before the Closing Date. The Closing Statement shall include all
known adjustments required in a year-end closing of the books and
shall be prepared in accordance with GAAP. Seller shall cooperate
as reasonably requested in connection with the preparation of the
Closing Statement. During the 30-day period immediately following
Seller’s receipt of the Closing Statement, Seller shall be
permitted to review Buyer’s working papers related to the
preparation of the Closing Statement and determination of the
Closing Working Capital. The Closing Statement shall become final
and binding upon the parties thirty (30) days following
Seller’s receipt thereof, unless Seller shall give written
notice of its disagreement (a “ Notice of Disagreement
”) to Buyer prior to such date. Any Notice of Disagreement
shall specify in reasonable detail the nature and dollar amount of
any disagreement so asserted. If a timely Notice of Disagreement is
received by Buyer, then the Closing Statement (as revised in
accordance with clause (x) or (y) below) shall become
final and binding upon the parties on the earliest of (x) the
date the parties resolve in writing any differences they have with
respect to the matters specified in the Notice of Disagreement or
(y) the date all matters in dispute are finally resolved in
writing by the Accounting Firm. During the
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twenty (20) days
following delivery of a Notice of Disagreement, Buyer and Seller
shall seek in good faith to resolve in writing any differences
which they may have with respect to the matters specified in the
Notice of Disagreement. Following delivery of a Notice of
Disagreement, Buyer and its agents and representatives shall be
permitted to review Seller’s and its representatives’
working papers relating to the Notice of Disagreement. If, at the
end of the 20-day period referred to above, the matters in dispute
have not been fully resolved, then the parties shall submit to a
mutually agreed upon independent accounting firm (the “
Accounting Firm ”) for review and resolution of all
matters (but only such matters) which remain in dispute, and the
Accounting Firm shall make a final determination of the Closing
Working Capital to the extent such amounts are in dispute, in
accordance with the guidelines and procedures set forth in this
Agreement. The parties will cooperate with the Accounting Firm
during the term of its engagement. In resolving any matters in
dispute, the Accounting Firm may not assign a value to any item in
dispute greater than the greatest value for such item assigned by
Buyer, on the one hand, or Seller, on the other hand, or less than
the smallest value for such item assigned by Buyer, on the one
hand, or Seller, on the other hand. The Accounting Firm’s
determination will be based solely on presentations by Buyer and
Seller which are in accordance with the guidelines and procedures
set forth in this Agreement ( i.e. , not on the basis of an
independent review). The Closing Statement and the determination of
the Closing Working Capital shall become final and binding on the
parties on the date the Accounting Firm delivers its final
resolution in writing to the parties (which the Accounting Firm
shall be instructed to deliver not more than forty-five
(45) days following submission of such disputed matters). The
fees and expenses of the Accounting Firm shall be shall be paid by
the party determined by the Accounting Firm to be the
non-prevailing party in connection with the dispute;
provided , however , that if the Accounting Firm
shall determine in its reasonable discretion that neither party
shall be the non-prevailing party, then such fees and expenses
shall be borne 50% by the Seller and 50% by the Buyer.
(e) If $200,000,000 is
greater than the Cash Purchase Price, Seller shall, within three
(3) business days after the Closing Statement becomes final
and binding on the parties, make payment by wire transfer to Buyer,
in immediately available funds the amount of such
difference.
(f) If the Cash Purchase
Price is greater than $200,000,000, Buyer shall, within three
(3) business days after the Closing Statement becomes final
and binding on the parties, make payment by wire transfer to
Seller, in immediately available funds the amount of such
difference.
1.3 Sales, Use and
Transfer Taxes. To the extent that the Transfer Taxes do not
exceed $1,000,000, Buyer and Seller shall each be responsible for
one half of any sale or use, transfer, value added, real property
gains, excise, stamp or other similar Taxes (“ Transfer
Taxes ”) imposed by reason of the transfer of the
Purchased Assets, the license rights granted in Section 1.1(b)
and the Assumed Liabilities provided hereunder and any deficiency,
interest or penalty asserted with respect thereto. The party which
is obligated by law to remit the Transfer Tax to the applicable
governmental agency shall pay the entire Transfer Tax when due, and
shall be reimbursed one-half of the Transfer Tax using the
reimbursement procedures set forth in Section 4.7(f). Buyer
and Seller agree to cooperate to the extent legally permitted to
minimize any transfer taxes arising out of or relating to the
transactions contemplated by this Agreement, including without
limitation by Buyer accepting delivery of software assets located
in the State
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of California by electronic transmission
from Seller’s place of business to Buyer’s computers in
accordance with California Sales and Use Tax Regulation
1502(f)(1)(D), with Seller having no obligation to deliver any
tangible assets in connection with the delivery of such software.
To the extent that the Transfer Taxes exceed $1,000,000 (such
amount, the “ Excess Transfer Taxes ”), Seller
shall be responsible for paying, shall promptly discharge when due,
and shall reimburse, indemnify and hold harmless Buyer from, any
such Excess Transfer Taxes imposed by reason of the transfer of the
Purchased Assets and the Assumed Liabilities provided hereunder and
any deficiency, interest or penalty asserted with respect
thereto.
1.4 Transfer of
Purchased Assets and Assumed Liabilities. The Purchased Assets
shall be sold, conveyed, transferred, assigned and delivered, and
the Assumed Liabilities shall be assumed, pursuant to transfer and
assumption agreements, deeds, endorsements, consents or other
instruments in such form as is necessary to effect a conveyance of
good right, title and interest in, to and under the Purchased
Assets and an assumption of the Assumed Liabilities in the
jurisdictions in which such transfers are to be made, and which
shall be satisfactory to the Buyer and the Seller, to be executed
and delivered (upon the terms and subject to the conditions hereof)
on the Closing Date by the Seller and/or its applicable
subsidiaries and the Buyer.
1.5 Procedures for
Assets and Contracts Not Transferable. Notwithstanding anything
to the contrary contained in this Agreement, to the extent that the
sale, conveyance, transfer, assignment or delivery or attempted
sale, conveyance, transfer, assignment or delivery to the Buyer of
any Purchased Asset is prohibited by applicable law or would
require any governmental or third-party authorizations, approvals,
consents or waivers (collectively, “ Consents ”)
or would constitute a breach or would in any way adversely affect
the rights of the Buyer to any Purchased Asset, each of the Seller
and the Buyer shall use its, and shall cause its subsidiaries and
Affiliates to use their respective, commercially reasonable efforts
to obtain such Consents prior to the Closing and if any such
Consents shall not have been obtained prior to the Closing, this
Agreement shall not constitute an agreement to sell, convey,
transfer, assign or deliver (or a sale, conveyance, transfer,
assignment or delivery of) such Purchased Asset if any of the
foregoing would constitute a breach of applicable Law or the rights
of any third party; provided, however, that, subject to the
satisfaction or waiver of the conditions set forth in this
Agreement, the Closing shall occur notwithstanding the foregoing on
the terms set forth herein; and provided further, however, that the
Seller shall not be relieved of its obligation to sell, convey,
transfer, assign and deliver, and the Buyer of its obligation to
purchase, such Purchased Assets. Following the Closing, the parties
shall use their commercially reasonable efforts and shall cooperate
with each other to obtain promptly such Consents. If such Consent
is obtained, Seller shall, and shall cause its subsidiaries and
Affiliates to, promptly convey, transfer, assign and deliver, or
cause to be conveyed, transferred, assigned and delivered, such
Purchased Asset to the Buyer. The provisions of this
Section 1.5 shall not in any way limit the Buyer’s
rights under this Agreement in the event that the conditions to
Closing are not satisfied.
1.6 Payments
Post-Closing. If, following the Closing Date, the Seller or any
of its subsidiaries receives any payment or other proceeds
(including the benefit of a mistaken payment) (i) relating to
any Purchased Assets, or (ii) otherwise relating to the
conduct or operation of the Business after the Closing Date, the
Seller shall, and shall cause its subsidiaries to, promptly remit
to the Buyer the amount of any such payments to the extent relating
to the Purchased Assets.
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ARTICLE II
Representations and
Warranties of Seller
Seller represents and
warrants to Buyer as follows, subject to such exceptions as are
disclosed in a disclosure schedule supplied by Seller to Buyer (the
“ Disclosure Schedule ”), which exceptions shall
be deemed to be representations and warranties as if made
hereunder, as of the date of this Agreement and as of the Closing
Date. The Disclosure Schedule exceptions shall be arranged
according to specific sections in this Article II and shall
provide exceptions to, or otherwise qualify in reasonable detail,
only the corresponding section in this Article II and any
other section in this Article II where it is reasonably
apparent that the disclosure would reasonably be expected to apply
to such other section. For the avoidance of doubt, each of the
representations and warranties set forth in this Article II shall
be read as applying equally to each of the Sellers and all
references herein to the “Seller” shall be read to
include, as appropriate, each Seller.
2.1
Organization. Seller is a corporation, duly incorporated,
validly existing and in good standing under the laws of the
jurisdiction of its formation and has the power and authority to
conduct the Business as it is presently being conducted and to sell
and convey the Purchased Assets to Buyer. With respect to the
Business, Seller is duly qualified or licensed to do business and
is in good standing as a foreign company in each of the
jurisdictions in which Seller currently operates, and there are no
other jurisdictions in which the conduct of its business or the
ownership or lease of its assets requires such qualification under
applicable law.
2.2
Authorization. The execution and delivery of this Agreement
and each agreement, instrument, certificate and document being or
to be executed and delivered by a Party pursuant to this Agreement
(each a “ Transaction Agreement ”) by Seller and
the performance of all obligations hereunder and thereunder have
been duly authorized and no other action or approval is necessary
for the execution, delivery or performance of this Agreement and
each Transaction Agreement by Seller. Seller has the requisite
corporate power and authority to execute and deliver this
Agreement, each Transaction Agreement and such other agreements and
instruments as are contemplated hereby. This Agreement and each
Transaction Agreement has been duly executed and delivered by
Seller and is a valid and binding obligation of Seller, enforceable
against Seller in accordance with its terms, except as such
enforceability may be limited by (a) bankruptcy, insolvency,
reorganization, moratorium or other similar laws now or hereafter
in effect, relating to or limiting creditors’ rights
generally and (b) general principles of equity (whether
considered in an action in equity or at law).
2.3 No
Conflict. Except for the filings, permits, authorizations,
consents and approvals as may be required under, and other
applicable requirements of, the Securities Exchange Act of 1934, as
amended (the “ Exchange Act ”), and the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended
(the “ HSR Act ”), neither the execution and
delivery of this Agreement or any Transaction Agreement by Seller,
nor the consummation of the transactions contemplated hereunder,
will:
(a) except for such
conflicts, breaches or defaults as would not (i) affect, in
any material respect, Seller’s ability to convey the
Purchased Assets or otherwise complete the transactions
contemplated hereunder, or (ii) materially affect the Business
or the Buyer’s ability
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to conduct the Business
following the Closing, conflict with or result in a breach by
Seller, or constitute default by Seller under, or create an event
that, with the giving of notice or the lapse of time, or both,
would be a default under or breach of, any of the terms, conditions
or provisions of: (W) any material mortgage, lease, deed of
trust, pledge, loan or credit agreement, license agreement, or any
other material Contract to which any of the Purchased Assets is
subject, (X) the Certificate of Incorporation or Bylaws of
Seller, or (Y) any judgment, order, writ, injunction, decree
or demand of any nation or any state, commonwealth, territory,
possession or tribe and any political subdivision, courts,
departments, commissions, boards, bureaus, agencies or other
instrumentalities of any of the foregoing (a “
Governmental Entity ”) to which any of the Purchased
Assets are subject;
(b) result in the creation or
imposition of any material lien, mortgage, pledge, security
interest, charge or encumbrance of any kind, whether voluntary or
involuntary, (including any conditional sale or other title
retention agreement, any lease in the nature thereof, and any
agreement to give any security interest) (collectively, an “
Encumbrance ”) upon the Purchased Assets;
(c) require the consent,
approval or authorization of, or declaration, filing or
registration with, any Governmental Entity or other Person to be
made or obtained by Seller in connection with the execution and
delivery by Seller of this Agreement or any of the Transaction
Agreements and the consummation of the transactions contemplated
hereby; or
(d) subject to obtaining
necessary consents, approvals and actions, making necessary filings
and giving required notices, violate any provision of applicable
law relating to the Business or the Purchased Assets (other than
such conflicts, violations or breaches which would not, in any
material respect, adversely affect (i) the validity or
enforceability of this Agreement or any of the Transaction
Agreements, or (ii) Seller’s ability to convey the
Purchased Assets free and clear of any claims or Encumbrances or
otherwise complete the transactions contemplated hereunder). As
used in this Agreement, any reference to any fact, circumstance,
event, effect or change having a “Material Adverse
Effect” or a “material adverse change” means a
fact, circumstance, event, effect or change that is materially
adverse to the Business, or when used in reference to a party, the
business or financial condition of such party and its subsidiaries,
taken as a whole, but shall not include events or effects relating
to or resulting from (A) changes in general economic or
political conditions on the securities, credit or financial markets
to the extent such changes do not have a materially
disproportionate impact on the Business or such party and its
subsidiaries, taken as a whole; (B) changes or developments in
the industries in which the Business operates to the extent such
changes or developments do not disproportionately impact the
Business; (C) changes in law to the extent such changes do not
disproportionately impact the Business or such party;
(D) compliance with the terms of, or the taking of any actions
required to be taken (other than the failure to perform a covenant
or deliver the Purchased Assets) by the Agreement; (E) any
acts of terrorism or war to the extent such acts do not
disproportionately impact the Business or such party;
(F) changes in generally accepted accounting principles or the
interpretation thereof to the extent such changes do not
disproportionately impact the Business or such party; (G) any
litigation relating to the announcement, negotiation, execution or
performance of this Agreement or the transactions contemplated
hereby; and (H) any failure to meet internal or published
projections, forecasts or revenue or earning predictions for any
period (but, for the avoidance of doubt, not the underlying facts
and circumstances).
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2.4 Judgments;
Litigation. There is no (a) outstanding judgment, order,
decree, award, stipulation or injunction of any Governmental Entity
against Seller, the Purchased Assets or the Business which seeks to
or is reasonably likely to have the effect of preventing Seller
from conveying the Purchased Assets, or (b) action, suit,
arbitration, hearing, inquiry, proceeding, complaint, charge or
investigation, whether civil, criminal or administrative (“
Action ”), by or before any Governmental Entity or
arbitrator or any appeal from any of the foregoing pending against
Seller, the Purchased Assets or the Business which, if resolved
adversely to Seller would be reasonably likely to impair
Seller’s ability to convey the Purchased Assets or materially
adversely affect the Business.
2.5 Intellectual Property
and Proprietary Rights.
(a) For the purposes of this
Agreement, “ Intellectual Property ” shall mean
all worldwide (i) patents (including but not limited to
continuations, continuations-in-part, divisionals, renewals,
reissues, and extensions thereof) and inventions or discoveries
(whether patentable or not and whether reduced to practice or not),
(ii) works of authorship and any copyrights therein (including
but not limited to databases and computer software, records and
data, and all media on which any of the foregoing is recorded),
(iii) trademarks, service marks, Internet domain names, URLs,
logos, trade names and trade dress, brand names and other source
indicators, and all goodwill related thereto, (iv) trade
secrets and confidential information (including confidential ideas,
research and development, know-how, formulas, compositions,
manufacturing and production processes and techniques, technical
data, designs, drawings, specifications, customer, sales prospect
and supplier lists, pricing and cost information, and marketing
plans and proposals), (v) all other intellectual property
rights under any laws or international conventions throughout the
world, and (vi) any registrations and applications for
registration of any of the foregoing, including all renewals,
reissues and extensions thereof.
(b) Except as described in
Schedule 2.5(b) , to the Seller’s knowledge, Seller
either has the exclusive right, title and interest in, or a valid
and binding right under an Assumed Contract to use, all
Intellectual Property used in the Business as currently conducted
(collectively, the “ Seller Intellectual Property
”). Other than with respect to patents, the Licensed Assets,
the Purchased Intellectual Property (as defined in Exhibit B
) and the Intellectual Property licensed pursuant to an Assumed
Contract constitutes all of the Intellectual Property necessary to
operate the Business in the manner currently conducted. To the
Seller’s knowledge, the patents necessary to use the Licensed
Assets, the patents constituting the Purchased Intellectual
Property and the Intellectual Property licensed pursuant to an
Assumed Contract together constitute all of the patents necessary
to operate the Business in the manner currently conducted.
Schedule 2.5(b) contains, to the extent included in the
Purchased Assets and the Licensed Assets, an accurate
(i) description of all patents, registered trademarks,
registered trade names, registered Internet domain names and
registered copyrights and all applications and registration
statements therefor, (any such registered intellectual property
rights being referred to herein as “ Registered Seller
Proprietary Rights ”) including the jurisdictions in
which each such Registered Seller Proprietary Right has been issued
or registered or in which any application for such issuance or
registration has been filed and the applicable registration
or
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application numbers and
dates, used in the operation of the Business, and (ii) list of
all material licenses and other material agreements with third
parties related to third party Intellectual Property used in the
operation of the Business (the “ Third Party Licenses
”), other than commercially available off-the-shelf software
licenses or non-exclusive customer agreements entered into in the
ordinary course of the Business, indicating for each such Third
Party License if it is not also an Assumed Contract (as defined in
Exhibit B ). All registrations with Governmental Entities in
respect of Registered Seller Proprietary Rights other than issued
patents and, to the Seller’s knowledge, issued patents are
valid and in full force and effect. Seller is not in default (or
with the giving of notice or lapse of time or both, would be in
default) in any material respect under any Contract involving
Intellectual Property used in the Business, nor, to Seller’s
knowledge, is any counterparty thereto. To the Seller’s
knowledge, the Intellectual Property of the Business is not being
infringed or misappropriated by any other Person. No cancellation,
termination, expiration or abandonment of any of the registrations
and applications in respect of Registered Seller Proprietary Rights
(except natural expiration or termination at the end of the full
possible term) is anticipated by Seller and Seller is not aware of
any questions or challenges with respect to the patentability,
validity of any claims of, or enforceability of any such
registrations and applications. Seller has not received written
notice that Seller is infringing or misappropriating any
Intellectual Property of any other Person, and to Seller’s
knowledge no claim is pending or has been made or asserted to such
effect that has not been resolved.
(c) Seller has taken
reasonable steps to protect and preserve the confidentiality of all
Seller Intellectual Property not otherwise disclosed in published
patents or patent applications or registered copyrights (“
Seller Confidential Information ”). Except as set
forth on Schedule 2.5(c) , all use by and disclosure to
employees or others of Seller Confidential Information has been
pursuant to the terms of valid and binding written confidentiality
and nonuse/restricted-use agreements or agreements that contain
similar obligations.
(d) Except as set forth on
Schedule 2.5(d) , each current and former employee and
contractor of Seller who is or was involved in, or who has
contributed to, the creation or development of any Seller
Intellectual Property has executed and delivered (and to the
Seller’s knowledge, is in compliance with) an agreement which
provides a valid written assignment to Seller of all title and
rights to all Seller Intellectual Property. No third party has
“moral rights” or rights to terminate any assignment or
license with respect thereto.
(e) To the Seller’s
knowledge, all Software is free of all viruses, worms, trojan
horses and other infections or harmful routines. Seller uses
commercially available antivirus software with the intention of
protecting the Business’s software products from becoming
infected by viruses and other harmful code. “ Software
” means software (whether in source code or object code),
programs, databases and related documentation, in any form
(including Internet sites, Internet content and links) that is
(i) material to the operation of the Business, including, but
not limited to, that operated by Seller on its web sites or used by
Seller in connection with processing customer’s orders,
storing customer’s information, or storing or archiving data,
or (ii) manufactured, distributed, sold, licensed or marketed
by the Business.
(f) During the 36 month
period prior to the Closing, Seller has not received any written
notice (A) contesting the right of the Seller or any of its
subsidiaries to use, exercise, sell, license, transfer or dispose
of any Seller Intellectual Property or any products, processes
or
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materials covered thereby in
any manner or (B) challenging the ownership, validity or
enforceability of any Seller Intellectual Property. No Seller
Intellectual Property owned by Seller and, to the knowledge of
Seller, no material in-licensed Intellectual Property that is
incorporated into products or services of the Business (“
In-Licensed IP ”) is subject to any outstanding order,
judgment, decree, stipulation or agreement related to or
restricting in any manner the licensing, assignment, transfer, use
or conveyance thereof by the Seller or any of its
subsidiaries.
(g) During the 36 month
period prior to the Closing, neither the Seller nor any of its
subsidiaries has brought any actions or lawsuits alleging
(A) infringement or misappropriation of any of the Seller
Intellectual Property or (B) breach of any license, sublicense
or other agreement authorizing another party to use any Seller
Intellectual Property, and, to the knowledge of the Seller, there
does not exist any facts which could currently form the basis of
any such action or lawsuit. Neither the Seller nor any of its
subsidiaries has entered into any agreement granting any third
party the right to bring infringement or misappropriation actions
with respect to, or otherwise to enforce rights with respect to,
any of the Seller Intellectual Property.
(h) To the extent that any
Seller Intellectual Property has been developed or created
independently or jointly by an independent contractor or other
third party for the Seller or any of its subsidiaries, the Seller
or one of its subsidiaries has a written agreement with such
independent contractor or third party and has thereby obtained
ownership of, and is the exclusive owner of all such independent
contractor’s or third party’s Intellectual Property in
such work, material or invention by operation of law or valid
assignment.
(i) Schedule 2.5(i)
separately lists: (A) all In-Licensed IP incorporated by
Seller into any currently marketed or distributed products or
services of the Business (“ Products ”);
(B) all Contracts pursuant to which Seller has granted a third
party exclusive rights or “most favorable” pricing with
respect to Products or the Intellectual Property of the Business;
(C) all such licenses, sublicenses and other agreements that
require the Seller or any of its subsidiaries to license, assign or
otherwise grant rights to additions, modifications or improvements
to material In-Licensed IP made by or for the Seller or any of its
subsidiaries back to the licensor of any Third Party License; and
(D) all licenses and other agreements entered into during the
five (5) year period prior to the Closing pursuant to which a
third party has been granted, with respect to Purchased
Intellectual Property, rights to access, possess or use source
code. The Seller has delivered or made available to the Buyer
copies of all licenses, sublicenses and other agreements listed on
Schedule 2.5(i) . The Seller and its subsidiaries are in
compliance with all material terms and conditions of all such
licenses, sublicenses, and other agreements, except where the
failure to comply would not have a material adverse
effect.
(j) No Software covered by or
embodying any Seller Intellectual Property or Product has been or
is being distributed, in whole or in part, or was used, or is being
used in conjunction with any Public Software in a manner which
would require that such software or Product (excluding the original
Public Software) be disclosed or distributed in source code form or
made available at no charge. “ Public Software ”
means any software that contains, or is derived in any manner (in
whole or in part) from, any software that is distributed as free
software, open source software (e.g., Linux) or similar licensing
or distribution models.
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(k) To the knowledge of
Seller, the operation of the Business does not infringe or
misappropriate any Intellectual Property of any third party,
violate any right of any third party (including any right to
privacy or publicity), or constitute unfair competition or trade
practices under the Laws of any jurisdiction, nor has Seller
received notice from a third party alleging any of the foregoing
with regard to the Business.
(l) The consummation of the
transactions contemplated by this Agreement will neither violate
nor result in a breach, modification, cancellation, termination,
suspension of any material Contracts relating to Seller
Intellectual Property or relating to In-Licensed IP; or any
acceleration of or increase in, or loss of, any payments or
benefits thereunder.
2.6 Employees and
Independent Contractors; Benefit Plans.
(a)
Schedule 2.6(a) contains a true and complete list, as
of February 12, 2008 of all employees employed in the Business
(the “ Employees ”), including, to the extent
applicable, each Employee’s (i) name, (ii) title,
wage, salary, and target bonus, (iii) principal location of
employment, and (iv) date of hire by Seller. Schedule
2.6(a) also contains a true and complete list of all Employees
who are as of such date on a short- or long-term disability leave
or other leave of absence (but not including vacation).
(b)
Schedule 2.6(b) contains a true and complete list, as
of December 31, 2007, of all consultants and other independent
contractors who are providing material services to the Business
(the “ Independent Contractors ”), including
(i) each Independent Contractor’s name, (ii) the
type of services being provided by each Independent Contractor,
(iii) the principal location where services are provided by
each Independent Contractor and (iv) date when each
Independent Contractor was retained by Seller. Copies of all
Contracts relating to Independent Contractors used in the Business
have been provided to Buyer.
(c) (i) Seller is not a
party to any collective bargaining agreement or other labor
contract applicable to any Employee, (ii) to the
Seller’s knowledge, no union has bargaining rights with
respect to any Employee and there are no threatened or apparent
union organizing activities involving any Employee,
(iii) there are no strikes, slowdowns or work stoppages
pending or, to the Seller’s knowledge, threatened between
Seller and an Employee, and (iv) to the Seller’s
knowledge, there are no unfair labor practice complaints involving
an Employee pending against Seller. The Seller shall be responsible
for providing continuation coverage to the extent required by
Section 4980B of the Code or similar state law (“
COBRA ”) to employees (other than Retained Employees),
and other qualified beneficiaries under COBRA with respect to such
employees, who have a COBRA qualifying event (due to termination of
employment with the Seller or otherwise) prior to or in connection
with the transactions contemplated by this Agreement. Except as
required by Law, neither the Buyer nor any of its Affiliates shall
be responsible for the failure of the Seller to comply with any of
the requirements of COBRA applicable to employees who are not
Retained Employees (as defined in Section 4.5), including
applicable notice requirements.
(d) Except as set forth on
Schedule 2.6(d) , no “employee benefit plan” (as
defined in Section 3(3) of ERISA) and each other benefit plan,
program, agreement or arrangement maintained, sponsored or
contributed or required to be contributed to by Seller
in
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connection with the Business
or with respect to which Seller, in connection with the Business,
has or could have any liability or obligation (each, a “
Benefit Plan ”) that provides health and welfare
benefits that exceed the type and/or level of benefits required by
applicable Law or Governmental Authority is maintained outside the
jurisdiction of the United States, or covers any Employee residing
or working outside the United States (any such Benefit Plan, a
“ Foreign Benefit Plan ”). With respect to any
Foreign Benefit Plans, (A) all such Foreign Benefit Plans have
been established, maintained and administered in compliance in all
material respects with their terms and all applicable statutes,
laws, ordinances, rules, orders, decrees, judgments, writs, and
regulations of any controlling Governmental Authority, (B) all
Foreign Benefit Plans that are required to be funded are funded to
the full extent required by Law, and with respect to all other
Foreign Benefit Plans, adequate reserves therefor have been
established on the Business Balance Sheet, and (C) no
liability or obligation of Seller or its subsidiaries exists with
respect to such Foreign Benefit Plans that will as a matter of Law
become a Liability of Buyer or its Affiliates.
(e) Seller does not maintain,
sponsor, contribute to, or have any current or potential liability
or obligation under or with respect to: (i) any
“multiemployer plan” (as defined in Section 3(37)
of ERISA); (ii) any “defined benefit plan” (as
defined in Section 3(35) of ERISA); (iii) any
“multiple employer welfare arrangement” (as defined in
Section 3(40) of ERISA); or (iv) any “multiple
employer plan” within the meaning of Section 210 of
ERISA or Section 413(c) of the Code. Seller does not have any
current or potential liability or obligation on account of at any
time being considered a single employer under Section 414 of
the Code with any other Person.
2.7 Financial
Statements; Absence of Liabilities. As of the Closing,
Schedule 2.7 of the Disclosure Schedule shall contain a true
and complete copy of the unaudited balance sheet for the Business
and the related unaudited consolidated statement of income for the
Business as of and for the twelve month period ended
December 31, 2007 (collectively, the “ Business
Financial Statements ”). The unaudited December 31,
2007 balance sheet is referred to herein as the “ Business
Balance Sheet .” The Business Financial Statements
present fairly, in all material respects, the financial condition
and results of operations of the Business, and the income statement
fairly presents the income of the Purchased Assets, as of their
respective dates and for the respective periods indicated therein.
The Business Financial Statements were prepared in good faith and
derived from the Seller’s financial statements. The Seller is
not aware of, is not contemplating, nor has it been notified, in
writing or orally, by its auditors or by the Securities and
Exchange Commission (the “ SEC ”) of any fact or
circumstance, or proposed or potential adjustment, that might
require an adjustment to the Seller financial statements which
would, if implemented, materially and adversely affect the Business
Financial Statements. All of the Liabilities reflected on the
Business Balance Sheet are related to the Business and arose out of
or were incurred in the ordinary course of business. Except as set
forth on Schedule 2.7 , Seller does not have and will not
have any obligation or liability relating to the Business or the
Purchased Assets (whether accrued, absolute, contingent,
unliquidated or otherwise, whether due or to become due and
regardless of when or by whom asserted) arising out of any
transaction entered at or prior to the date hereof, or any action
or inaction at or prior to the date hereof, or any state of facts
existing at or prior to the date hereof, other than
(a) liabilities reflected on the Business Financial
Statements, (b) liabilities and obligations which have arisen
after the date of the Business Financial Statements in the ordinary
course of business (none of which is a liability for breach of
contract, breach of warranty, tort, infringement, violation of law,
claim or lawsuit),
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(c) obligations under contracts and
commitments described on Schedule 2.20 or under contracts
and commitments entered into in the ordinary course of business
consistent with past practice which are not required to be
disclosed on such Schedule pursuant to Section 2.20 below (but
not liabilities for any breach of any such contract or commitment
occurring on or prior to the Closing Date), and (d) other
liabilities and obligations expressly disclosed in the other
Schedules referred to in this Article II.
2.8 Changes.
Since January 1, 2007, except as contemplated by or as
disclosed in this Agreement, Seller has conducted the Business only
in the ordinary course and in a manner consistent with past
practice and, since such date, (a) there has not been any
material adverse change in the Business or its financial results,
(b) Seller has not taken or committed to take any of the
actions specified in Section 4.3 and (c) Seller has
continued to provide the business with all financial and
operational support necessary to continue to operate in the
ordinary course and in a manner consistent with past
practice.
2.9 Assumed
Contracts. Each Assumed Contract that is currently in effect
and material to the Business (materiality for the purpose of this
sentence being determined based on the Business as of
December 31, 2007) (i) is in full force and effect and
constitutes a legal, valid and binding agreement of Seller,
enforceable in accordance with its terms, and to the Seller’s
knowledge, of each other party thereto, (ii) upon consummation
of the transactions contemplated by this Agreement, shall continue
in full force and effect without penalty or other adverse
consequence subject to the need to obtain the consents and
approvals set forth in Schedule 2.3 of the Disclosure
Schedule, and (iii) neither Seller nor, to the Seller’s
knowledge, any other party to such Assumed Contract, is in material
violation or breach of or default under such Assumed Contract (or
with notice or lapse of time or both, would be in violation or
breach of or default under such Assumed Contract in any material
respect). To the Seller’s knowledge, no event has occurred,
and no circumstance or condition exists, that (with or without
notice or lapse of time) will, or could reasonably be expected to,
(i) result in a material breach or violation of, or default
under, any such Assumed Contract, (ii) give any entity the
right to declare a default, seek damages or exercise any other
remedy under any such Assumed Contract, (iii) give any entity
the right to accelerate the maturity or performance of any such
Assumed Contract or (iv) give any entity the right to cancel,
terminate or modify any such Assumed Contract.
2.10 Compliance
with Laws. Seller is not in violation of or in default in any
material respect under any foreign or domestic (Federal, state or
local) law, statute, treaty, rule, regulation, ordinance,
franchise, permit, concession, license, order, decree, consent
decree or similar instrument or determination or award
(collectively a “ Law ”) applicable to it by
which any of the Purchased Assets or the Business is bound or
affected.
2.11 Taxes.
(a) The Purchased Assets are
not subject to any liens for Taxes, except liens for Taxes not yet
due, and Buyer will not become directly or indirectly liable for,
and no lien, claim or encumbrance will be placed upon the Purchased
Assets with respect to, (i) any Taxes attributable to the
ownership or use of the Purchased Assets with respect to periods
prior to and including the Closing Date or (ii) any other
Taxes attributable to the actions or activities of the Seller on or
prior to the Closing Date, in each case other than Transfer Taxes
as provided in Section 1.3.
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(b) “ Tax
” or, collectively, “ Taxes ” shall mean
(i) any and all federal, state, local, or non-US income, sales
and use taxes, real and personal property (tangible and intangible)
taxes, gross receipts taxes, documentary transfer taxes, excise
taxes, employment taxes, withholding taxes, unemployment insurance
contributions, value added taxes and any other taxes or
governmental charges of any kind, however denominated, including
any interest, penalties and additions to tax in respect thereto,
for which Buyer could become liable as a result of acquiring the
Business, the Purchased Assets, or the Assumed Liabilities or which
could result in a lien on or charge against the Purchased Assets,
and (ii) any liability for the payment of any amounts of the
type described in clause (i) as a result of any express or
implied obligation to indemnify any other person as a result of any
obligations under any agreements or arrangements with any other
person with respect to such amounts. “ Tax Returns
” means any return or report in respect of Taxes.
(c) All Tax Returns required
to be filed in connection with the Business have been timely filed.
All Taxes required to be paid (whether or not shown to be due on
such Tax Returns), the non-payment of which would result in an
Encumbrance on any Purchased Asset, have been timely paid. All such
Tax Returns are true, correct and complete in all material
respects. Except as otherwise disclosed on Schedule 2.11(c)
, there is no proceeding, investigation, audit or examination
proposed in writing or currently ongoing in connection with the
Business or the Purchased Assets in respect of any Tax. Except as
otherwise disclosed on Schedule 2.11(c) , no deficiencies
for any Taxes have been proposed, asserted or assessed in
connection with the Business or the Purchased Assets. Neither the
Seller nor any of its subsidiaries is currently the beneficiary of
any extension of time within which to pay any Tax, the non-payment
of which would result in an Encumbrance on any Purchased Asset, or
to file any Tax Return with respect to such Taxes. Neither the
Seller nor any of its subsidiaries has waived any statute of
limitations in respect of Taxes, the non-payment of which would
result in an Encumbrance on any Purchased Asset, or agreed to any
extension of time with respect to a Tax assessment or deficiency,
the non-payment of which would result in an Encumbrance on any
Purchased Asset. All Taxes required to have been withheld in
connection with the Business have been withheld and paid over to
the proper Governmental Authority. To the knowledge of the Seller,
no claim has ever been made by a Governmental Entity in a
jurisdiction where the Seller does not file Tax Returns that the
Seller is or may be subject to imposition of Taxes by that
jurisdiction.
2.12 Brokers.
Except for Cowen and Company, LLC, whose fees, commissions and
expenses are the sole responsibility of Seller, all negotiations
relative to this Agreement and the transactions contemplated hereby
have been carried out by Seller directly with Buyer without the
intervention of any Person on behalf of Seller in such manner as to
give rise to any valid claim by any Person against Buyer for a
finder’s fee, brokerage commission or similar
payment.
2.13 Purchased
Assets. The Purchased Assets together with the Licensed Assets
constitute all of the assets related to, belonging to, used in or
held for use in the Business. Seller or its applicable subsidiaries
have good and valid title to, or in the case of any leased
Purchased Assets have a valid leasehold interest in, all of the
Purchased Assets and Licensed Assets, and at
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the Closing will transfer and deliver to
Buyer good and valid title in, to and under the Purchased Assets,
free and clear of all Encumbrances except the Buyer Field of Use
Restrictions (as described in Schedule 1.1(b)) contained in the
license granted in Section 1.1(b). Except for the Purchased
Assets, Licensed Assets or as set forth on Schedule 2.13(i)
, there are no assets which either are reflected in the Business
Balance Sheet or are otherwise used primarily in the operation of
the Business.
2.14 Customers.
Listed in Schedule 2.14 are the names of the fifteen most
significant customers (by revenue) of each of the major solution
segments of the Business for the twelve-month period ended
December 31, 2007 (“ Significant Customers
”). Seller has not received any written notice and has no
reason to believe that any Significant Customer has ceased, or will
cease, to use the products, equipment, goods or services of the
Business or has substantially reduced, or will substantially
reduce, the use of such products, equipment, goods or
services.
2.15 Suppliers.
Schedule 2.15 contains a complete list of each of the ten
most significant suppliers of raw materials, supplies, merchandise,
services and other goods for the Business for the twelve-month
period ended December 31, 2007 (“ Significant
Suppliers ”) and the amount for which each such
Significant Supplier invoiced Seller during such period. Seller has
not received any notice and has no reason to believe that any
Significant Supplier will not sell raw materials, supplies,
merchandise, services and other goods to the Business at any time
after the Closing Date on terms and conditions similar to those
imposed on current sales to the Business, subject only to general
and customary price increases.
2.16 Legal
Proceedings. Schedule 2.16 of the Disclosure
Schedule sets forth, as of the date hereof, all proceedings pending
or, to the knowledge of the Seller, threatened against, the Seller
or any of its subsidiaries involving the Business or any of the
Purchased Assets or the Assumed Liabilities or challenging the
validity of this Agreement or any of the transactions contemplated
hereby. Neither the Seller nor any of its subsidiaries nor any of
their respective properties is or are subject to any order
affecting or involving the Business, the Purchased Assets or the
Assumed Liabilities, except for those that, individually or in the
aggregate, would not reasonably be expected to interfere in any
material respect with the conduct of the Business. To the knowledge
of the Seller, there are no formal or informal SEC inquiries or
investigations, other governmental inquiries or investigations or
internal investigations or material whistle-blower complaints
pending or threatened exclusively relating to or involving the
Business, the Purchased Assets or the Assumed
Liabilities.
2.17 Licenses and
Permits; Compliance with Laws. Except as, individually or in
the aggregate, has not and would not reasonably be expected to
interfere in any material respect with the conduct of the
Business:
(i) the Seller or a
subsidiary owns or possesses all material licenses and permits
(“ Licenses and Permits ”), and has made all
filings, applications and registrations with all Governmental
Authorities, and all such Licenses and Permits are in full force
and effect;
(ii) no loss of any such
material Licenses and Permits is pending in any proceeding or, to
the knowledge of the Seller, has been threatened by a Governmental
Authority, except for normal expirations in accordance with the
terms thereof or applicable Law and all such material Licenses and
Permits may be transferred to the Buyer or its
subsidiaries;
16
(iii) the Business has been
operated in material compliance with (A) all terms and
conditions of the Licenses and Permits and (B) all Laws
applicable to the operation of the Business and ownership or use of
the Purchased Assets, and neither the Seller nor any of its
subsidiaries has received any written notice of any pending
proceeding alleging facts which, if true, would constitute a
failure to comply with either (A) or (B) of this
Section 2.17(iii); and
(iv) there are no
(A) unresolved violations or exceptions noted by any
Governmental Authority in any report, comment letter or other
written statement relating to or based on any examinations related
to the Business or the Purchased Assets, or (B) written
agreements, memoranda of understanding or commitment letters or
similar undertakings to any Governmental Authority related to the
Business or the Purchased Assets, to which the Seller or its
subsidiaries is a party, or orders from, or any resolution adopted
at the request of, any Governmental Authority related to the
Business or the Purchased Assets.
2.18
Properties.
(a) Schedule 2.18(a)
contains a complete and accurate list as of the date hereof of
(A) all real property leased or subleased by Seller at which
any ongoing material portion of the Business is conducted or at
which any Employees are located and (B) the agreements under
which such real property is leased (the “ Leases
”). Except as, individually or in the aggregate, has not
interfered, and would not reasonably be expected to interfere in
any material respect with the conduct of the Business,
(A) each Lease has been executed and is in full force and
effect, (B) Seller is not in breach or default in any respect
under any such Lease, and, to the knowledge of Seller, no event has
occurred which, with notice or lapse of time or both, would
constitute such a material breach or default of such Lease, and
(C) to the knowledge of Seller, no party to such Lease is in
breach or default under such Lease or has repudiated any material
provision thereof.
(b) All of the Furniture,
Fixtures and Equipment and other tangible assets included in the
Purchased Assets have been maintained in accordance with normal
industry practice and are otherwise suitable for the purposes for
which they are currently used.
2.19 Books and
Records. The Books and Records are complete and correct in all
material respects, have been maintained in accordance with good
practice, and reflect the basis for the financial position and
results of operations of the Business as set forth on the Business
Financial Statements.
2.20 Certain
Contracts. Neither the Seller nor any of its subsidiaries is a
party to or bound by any Contract relating to th
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