ASSET PURCHASE AGREEMENT
BETWEEN
________
AND
__________________________
_______ ____, ____

TABLE OF CONTENTS
§1. Definitions	4
§2. Basic Transaction	14
(a) Purchase and Sale of Assets	14
(b) Assumption of Liabilities	14
(c) Purchase Price	15
(d) Closing	16
(e) Deliveries at Closing	16
(f) Allocation	16
§3. Target’s Representations and Warranties	16
(a) Organization of Target	17
(b) Authorization of Transaction	17
(c) Non-contravention	17
(d) Brokers’ Fees	17
(e) Title to Assets	17
(f) Subsidiaries	18
(g) Financial Statements	18
(h) Events Subsequent to Most Recent Fiscal Year End	19
(i) Undisclosed Liabilities	21
(j) Legal Compliance	21
(k) Tax Matters	22
(l) Real Property	26
(m) Intellectual Property	30
(n) Tangible Assets	32
(o) Inventory	32
(p) Contracts	32
(q) Notes and Accounts Receivable	34
(r) Powers of Attorney	34
(s) Insurance	34
(t) Litigation	34
(u) Product Warranty	34
(v) Product Liability	35
(w) Employees	35
(x) Employee Benefits	36
(y) Guaranties	39
(z) Environmental, Health, and Safety Matters	39
(aa) IT Assets	40
(bb) Certain Business Relationships with Division and Division Subsidiaries	40
(cc) Customers and Suppliers	41
(dd) Data Privacy and Security	41
(ee) Disclosure	41
(ff) Investment	41
§4. Buyer’s Representations and Warranties	42
(a) Organization of Buyer	42
(b) Authorization of Transaction	42
(c) Non-contravention	42
(d) Brokers’ Fees	42
§5. Pre-Closing Covenants	42
(a) General	42
(b) Notices and Consents	43
(c) Union Assignment/Assumption Agreement(s) 	43
(d) Operation of Business	43
(e) Preservation of Business	43
(f) Full Access	43
(g) Notice of Developments	44
(h) Exclusivity	44
(i) Maintenance of Real Property	44
(j) Leases	44
(k) Title Insurance and Surveys	44
§6. Post-Closing Covenants	44
(a) General	44
(b) Litigation Support	45
(c) Transition	45
(d) Confidentiality	45
(e) Non-Compete Covenant	45
(f) Buyer Notes	46
§7. Conditions to Obligation to Close	46
(a) Conditions to Buyer’s Obligation	46
(b) Conditions to Target’s Obligation	51
§8. Remedies for Breaches of This Agreement	51
(a) Survival of Representations and Warranties	52
(b) Indemnification Provisions for Buyer’s Benefit	53
(c) Indemnification Provisions for Target’s Benefit	56
(d) Matters Involving Third Parties	56
(e) Determination of Adverse Consequences	57
(f) Recoupment Against Escrow Agreement and Buyer Notes	57
(g) Other Indemnification Provisions	58
§9. Termination	58
(a) Termination of Agreement	58
(b) Effect of Termination	59
§10. Miscellaneous	59
(a) Press Releases and Public Announcements	59
(b) No Third-Party Beneficiaries	59
(c) Entire Agreement	59
(d) Succession and Assignment	59
(e) Counterparts	59
(f) Headings	59
(g) Notices	59
(h) Governing Law	60
(i) Amendments and Waivers	60
(j) Severability	60
(k) Expenses	60
(l) Construction	61
(m) Incorporation of Exhibits and Schedules	61
(n) Specific Performance	61
(o) Submission to Jurisdiction	61
(p) Governing Language	62
(q) Tax Matters	62
(r) Employee Benefits Matters	63
(s) Bulk Transfer Laws	64
(t) Tax Disclosure Authorization	64

Exhibit A—Form of Buyer Notes
Exhibit B—Escrow Agreement
Exhibit C—Forms of Assignments
Exhibit D—Form of Assumption
Exhibit E—Historical Financial Statements
Exhibit F—Forms of Side Agreements
Exhibit G—Form of Opinion of Target’s Counsel
Exhibit H—Form of Opinion of Buyer’s Counsel
Disclosure Schedule—Exceptions to Representations and Warranties
[EXHIBITS AND SCHEDULES HAVE BEEN OMITTED FROM THIS SAMPLE ACQUISITION AGREEMENT 2401]
ASSET PURCHASE AGREEMENT
This Divisional Asset Purchase Agreement (this ‘‘Agreement’’) is entered into on [as of] _________ ___, _______, by and between _______, a _________ corporation (‘‘Buyer’’), and _______, a _________ corporation (‘‘Target’’). Buyer and Target are referred to collectively herein as the ‘‘Parties.’’
This Agreement contemplates a transaction in which Buyer will purchase all assets (and assume certain liabilities) of Division in return for cash and the Buyer Notes.
Now, therefore, in consideration of the premises and the mutual promises herein made, and in consideration of the representations, warranties, and covenants herein contained, the Parties agree as follows.
§1. Definitions.
‘‘Accredited Investor’’ has the meaning set forth in Regulation D promulgated under the Securities Act.
‘‘Acquired Assets’’ means all right, title, and interest in and to all of the assets constituting Division, including all of its (a) Owned Real Property and Leased Real Property, (b) tangible personal property (such as machinery, equipment, inventories of raw materials and supplies, manufactured and purchased parts, goods in process and finished goods, furniture, automobiles, trucks, tractors, trailers, tools, jigs, and dies), (c) Intellectual Property, goodwill associated therewith, licenses, sublicenses, agreements, covenants not to sue, and permissions granted and obtained with respect thereto, and rights thereunder, remedies against past, present, and future infringements thereof, and rights to protection of past, present, and future interests therein under the laws of all jurisdictions, (d) leases, subleases, and rights thereunder, (e) agreements, contracts, indentures, mortgages, instruments, Liens, guaranties, other similar arrangements, and rights thereunder, (f) accounts, notes, and other receivables, (g) securities (including the capital stock in Division Subsidiaries), (h) claims, deposits, pre-payments, refunds, causes of action, choses in action, rights of recovery, rights of set-off, and rights of recoupment (including any such item relating to the payment of Taxes), (i) franchises, approvals, permits, licenses, orders, registrations, certificates, variances, and similar rights obtained from governments and governmental agencies, (j) books, records, ledgers, files, documents, correspondence, lists, plats, architectural plans, drawings, and specifications, creative materials, advertising and promotional materials, studies, reports, and other printed or written materials, (k) Cash and (l) [rights in and with respect to the assets associated with its Employee Benefit Plans]; provided, however, that the Acquired Assets shall not include (i) the corporate charter, qualifications to conduct business as a foreign corporation, arrangements with registered agents relating to foreign qualifications, taxpayer and other identification numbers, seals, minute books, stock transfer books, blank stock certificates, and other documents relating to the organization, maintenance, and existence of Target as a corporation or (ii) any of the rights of Target under this Agreement (or under any side agreement between Target on the one hand and Buyer on the other hand entered into on or after the date of this Agreement).
‘‘Adverse Consequences’’ means all actions, suits, proceedings, hearings, investigations, charges, complaints, claims, demands, injunctions, judgments, orders, decrees, rulings, damages, dues, penalties, fines, costs, amounts paid in settlement, Liabilities, obligations, Taxes, Liens, losses, expenses, and fees, including court costs and [reasonable] attorneys’ fees and expenses.
‘‘Affiliate’’ has the meaning set forth in Rule 12b-2 of the regulations promulgated under the Securities Exchange Act.
‘‘Affiliated Group’’ means any affiliated group within the meaning of Code §1504(a) or any similar group defined under a similar provision of state, local, or non-U.S. law.
‘‘Applicable Rate’’ means the corporate base rate of interest publicly announced from time to time by [Financial Institution] [plus/minus ________% per annum].
‘‘Assumed Liabilities’’ means (a) all Liabilities of Division set forth on the face of the Most Recent Balance Sheet (rather than in any notes thereto), (b) all Liabilities of Division that have arisen after the Most Recent Fiscal Month End in the Ordinary Course of Business (other than any Liability resulting from, arising out of, relating to, in the nature of, or caused by any breach of contract, breach of warranty, tort, infringement or misappropriation, violation of law, or environmental matter, including without limitation those arising under Environmental, Health, and Safety Requirements), (c) all obligations of Division under the agreements, contracts, leases, licenses, and other arrangements referred to in the definition of Acquired Assets either (i) to furnish goods, services, and other non-Cash benefits to another party after the Closing or (ii) to pay for goods, services, and other non-Cash benefits that another party will furnish to it after the Closing, (d) [all Liabilities and obligations of Division under the Employee Benefit Plans set forth on §3(x)(i) of the Disclosure Schedule], and (e) [all other Liabilities and obligations of Division set forth in the Disclosure Schedule under an express statement (that Buyer has initialled) to the effect that the definition of Assumed Liabilities will include the Liabilities and obligations so disclosed]; provided, however, that, notwithstanding the above, the Assumed Liabilities shall not include (i) any Liability of Target for Taxes (with respect to Division or otherwise), (ii) any Liability of Target for income, transfer, sales, use, and other Taxes arising in connection with the consummation of the transactions contemplated hereby (including any income Taxes arising because Target is transferring the Acquired Assets), (iii) any Liability of Target for the unpaid Taxes of any Person under Reg. §1.1502-6 (or any similar provision of state, local, or non-U.S. law), as a transferee or successor, by contract or otherwise, (iv) any obligation of Target to indemnify any Person (including any of Target Stockholders) by reason of the fact that such Person was a director, officer, employee, or agent of Target or any of its Subsidiaries or was serving at the request of any such entity as a partner, trustee, director, officer, employee, or agent of another entity (whether such indemnification is for judgments, damages, penalties, fines, costs, amounts paid in settlement, losses, expenses, or otherwise and whether such indemnification is pursuant to any statute, charter document, bylaw, agreement, or otherwise), (v) any Liability of Target for costs and expenses incurred in connection with this Agreement and the transactions contemplated hereby, or (vi) any Liability or obligation of Target under this Agreement (or under any side agreement between Target on the one hand and Buyer on the other hand entered into on or after the date of this Agreement).
Alternative—add the following language if the Parties are seeking a Purchase Price Adjustment and Taxes are taken into account: [; provided further, however, that in the case of clauses (i), (ii) and (iii) in the proviso above, Assumed Liabilities shall exclude such Taxes only to the extent that such Taxes exceed the amount, if any, specifically reserved for such Taxes of Division in the final determination of Closing Indebtedness and taken into account in determining the Purchase Price pursuant to §2(e) below.]
‘‘Basis’’ means any past or present fact, situation, circumstance, status, condition, activity, practice, plan, occurrence, event, incident, action, failure to act, or transaction that forms or could form the basis for any specified consequence.
‘‘Buyer’’ has the meaning set forth in the preface above.
‘‘Buyer Notes’’ has the meaning set forth in §2(c) below.
‘‘Cash’’ means cash and cash equivalents (including marketable securities and short-term investments) calculated in accordance with GAAP applied on a basis consistent with the preparation of the Financial Statements.
‘‘CERCLA’’ has the meaning set forth in §3(z) below.
‘‘Closing’’ has the meaning set forth in §2(e) below.
‘‘Closing Date’’ has the meaning set forth in §2(e) below.
‘‘Closing Purchase Price’’ has the meaning set forth in §2(c) below.
‘‘COBRA’’ means the requirements of Part 6 of Subtitle B of Title I of ERISA and Code §4980B and of any similar state law.
‘‘Code’’ means the Internal Revenue Code of 1986, as amended.
‘‘Confidential Information’’ means any information concerning the business and affairs of Division and Division Subsidiaries that is not already generally available to the public.
‘‘Controlled Group’’ has the meaning set forth in Code §1563.
“COVID-19” means SARS-CoV-2 or COVID-19, and any evolutions thereof or related or associated epidemics, pandemic, or disease outbreaks.
“COVID-19 Measures” means any quarantine, “shelter in place,” “stay at home,” workforce reduction, social distancing, shut down, closure, sequester, or any other law, order, directive, guidelines, or recommendations by any governmental entity in connection with or in response to COVID-19, including, but not limited to, the Coronavirus Aid, Relief, and Economic Security Act (CARES).
‘‘Data Laws’’ means laws, regulations, guidelines, and rules in any jurisdiction (federal, state, local, and non-U.S.) applicable to data privacy, data security, and/or personal information[, as well as industry standards applicable to Division or any Division Subsidiary].
‘‘Disclosure Schedule’’ has the meaning set forth in §3 below.
‘‘Division’’ means Target with respect to its __________ division.
‘‘Division Subsidiary’’ means any Subsidiary of Target included within Division.
‘‘Employee Benefit Plan’’ means any ‘‘employee benefit plan’’ (as such term is defined in ERISA §3(3)) and any other [material] employee benefit plan, program or arrangement of any kind.
‘‘Employee Pension Benefit Plan’’ has the meaning set forth in ERISA §3(2).
‘‘Employee Welfare Benefit Plan’’ has the meaning set forth in ERISA §3(1).
‘‘Encumbrance Documents’’ has the meaning set forth in §3(l) below.
‘‘Environmental, Health, and Safety Requirements’’ means, whenever in effect, all federal, state, local, and non-U.S. statutes, regulations, ordinances, and other provisions having the force or effect of law, all judicial and administrative orders and determinations, all contractual obligations, and all common law concerning public health and safety, worker health and safety, pollution, or protection of the environment, including, without limitation, all those relating to the presence, use, production, generation, handling, transportation, treatment, storage, disposal, distribution, labeling, testing, processing, discharge, release, threatened release, control, exposure to, or cleanup of any hazardous materials, substances, or wastes, chemical substances or mixtures, pesticides, pollutants, contaminants, toxic chemicals, petroleum products or byproducts, asbestos, polychlorinated biphenyls, per- and polyfluoroalykl substances, noise, odor, mold, or radiation.
‘‘ERISA’’ means the Employee Retirement Income Security Act of 1974, as amended.
‘‘ERISA Affiliate’’ means each entity that is treated as a single employer with Target for purposes of Code §414.
‘‘Escrow Agent’’ has the meaning set forth in §2(c) below.
‘‘Escrow Agreement’’ means the Escrow Agreement entered into concurrently herewith and attached hereto as Exhibit B.
‘‘Escrow Amount’’ means $__________.
‘‘Estoppel Certificates’’ has the meaning set forth in §7(a) below.
‘‘Fiduciary’’ has the meaning set forth in ERISA §3(21).
‘‘Financial Statements’’ has the meaning set forth in §3(g) below.
‘‘FIRPTA Affidavit’’ has the meaning set forth in §7(a) below.
‘‘GAAP’’ means United States generally accepted accounting principles as in effect from time to time, consistently applied.
‘‘Hart-Scott-Rodino Act’’ means the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended.
‘‘Improvements’’ has the meaning set forth in §3(l) below.
‘‘Indemnified Party’’ has the meaning set forth in §8(d) below.
‘‘Indemnifying Party’’ has the meaning set forth in §8(d) below.
“Intellectual Property” means all of the following in any jurisdiction throughout the world: (a) all inventions (whether patentable or unpatentable and whether or not reduced to practice), all improvements thereto, and all patents, patent applications, and patent disclosures, together with all reissuances, continuations, divisions, continuations-in-part, revisions, extensions, and reexaminations thereof, (b) all trademarks, service marks, trade dress, logos, slogans, trade names, corporate names, Internet domain names, other source identifiers, and rights in telephone numbers and social media assets, together with all translations, adaptations, derivations, and combinations thereof and including all goodwill associated therewith, and all applications, registrations, and renewals in connection therewith, (c) all rights of publicity, privacy, and endorsement (including rights to the use of names, voices, likenesses, images, appearances, signatures, and biographical information of real persons), (d) rights in databases and collections of data, and all copyrightable works, all copyrights, and all applications, registrations, and renewals in connection therewith, (e) all mask works and all applications, registrations, and renewals in connection therewith, (f) all trade secrets and confidential, technical, and business information (including ideas, research and development, know-how, formulas, compositions, manufacturing and production processes and techniques, technical data, designs, drawings, specifications, customer and supplier lists, pricing and cost information, and business and marketing plans and proposals), (g) all computer software (including source code, object code, and related documentation), (h) all advertising and promotional materials, (i) all other proprietary rights, and (j) all copies and tangible embodiments thereof (in whatever form or medium).
“Intercompany Transaction” has the meaning set forth in Reg. §1.1502-13.
“IT Systems” has the meaning set forth in §3(aa) below.
“Knowledge” means actual knowledge after reasonable investigation.
“Lease Consents” has the meaning set forth in §7(a) below.
‘‘Leased Real Property’’ means all leasehold or subleasehold estates and other rights to use or occupy any land, buildings, structures, improvements, fixtures, or other interest in real property held by Division or any Division Subsidiary.
‘‘Leases’’ means all leases, subleases, licenses, concessions and other agreements (written or oral), including all amendments, extensions, renewals, guaranties, and other agreements with respect thereto, pursuant to which Division or any Division Subsidiary holds any Leased Real Property, including the right to all security deposits and other amounts and instruments deposited by or on behalf of Division or any Division Subsidiary thereunder.
‘‘Liability’’ means any liability (whether known or unknown, whether asserted or unasserted, whether absolute or contingent, whether accrued or unaccrued, whether liquidated or unliquidated, and whether due or to become due), including any liability for Taxes.
‘‘Lien’’ means any mortgage, pledge, lien, encumbrance, charge, or other security interest [other than (a) liens for Taxes not yet due and payable [or for Taxes that the taxpayer is contesting in good faith through appropriate proceedings], (b) purchase money liens and liens securing rental payments under capital lease arrangements, and (c) other liens arising in the Ordinary Course of Business and not incurred in connection with Intellectual Property or the borrowing of money].
‘‘Material Adverse Effect’’ or ‘‘Material Adverse Change’’ means any effect or change that would be (or could be reasonably expected to be) materially adverse to the business, assets, condition (financial or otherwise), operating results, operations, or business prospects (including as projected in any revenue, earnings, or other forecast, whether internal or published) of Division and Division Subsidiaries, taken as a whole (regardless of whether or not such adverse effect or change can be or has been cured at any time or whether Buyer has knowledge of such effect or change on the date hereof), including any adverse change, event, development, or effect arising from or relating to (a) general business or economic conditions, including such conditions related to the business of Division and Division Subsidiaries, (b) national or international political or social conditions, including the engagement by the United States in hostilities, whether or not pursuant to the declaration of a national emergency or war, or the occurrence of any military or terrorist attack upon the United States, or any of its territories, possessions, or diplomatic or consular offices or upon any military installation, equipment or personnel of the United States, (c) financial, banking, or securities markets (including any disruption thereof or any decline in the price of securities generally or any market or index), (d) changes in United States generally accepted accounting principles, (e) changes in laws, rules, regulations, orders, or other binding directives issued by any governmental entity, and (f) the taking of any action contemplated by this Agreement and the other agreements contemplated hereby. In no event need any effect or change adversely affect a party’s long-term earnings power or potential in a durationally significant manner in order to constitute a Material Adverse Effect or a Material Adverse Change, it being understood and agreed that a short-term adverse effect may constitute a Material Adverse Effect or a Material Adverse Change.
‘‘Material Leased Real Property’’ has the meaning set forth in §7(a) below.
‘‘Most Recent Balance Sheet’’ means the balance sheet contained within the Most Recent Financial Statements.
‘‘Most Recent Financial Statements’’ has the meaning set forth in §3(g) below.
‘‘Most Recent Fiscal Month End’’ has the meaning set forth in §3(g) below.
‘‘Most Recent Fiscal Year End’’ has the meaning set forth in §3(g) below.
‘‘Multiemployer Plan’’ has the meaning set forth in ERISA §3(37).
‘‘Non-Disturbance Agreements’’ has the meaning set forth in §7(a) below.
‘‘Non-U.S. Workplace Standards which are compatible with U.S. workplace standards’’ means, without limitation, the following labor standards: (i) full compliance with the applicable laws, rules, and regulations of the country where the facility is located; (ii) payment to workers of at least the minimum wage prescribed by applicable local law, payment to workers of overtime compensation in compliance with applicable local law, and the provision of benefits to workers that at the least conform to the requirements of applicable local law; (iii) limitation of working hours and overtime to a level consistent with humane and productive working conditions and in accordance with applicable local law; (iv) no use of prison, indentured, bonded, or involuntary labor; (v) no use of workers who are younger than the compulsory age to be in school or the minimum legal working age in the country; (vi) all workers are provided with a safe and healthy work environment; (vii) workers are employed on the basis of their ability to do the job and not on the basis of other personal characteristics or beliefs; (viii) no use of corporal punishment or any other form of physical or psychological coercion against workers; (ix) the lawful exercise of workers’ rights to free association is recognized and respected; and (x) full compliance with applicable environmental laws and regulations.
‘‘Ordinary Course of Business’’ means the ordinary course of business consistent with past custom and practice (including with respect to quantity and frequency).
‘‘Owned Real Property’’ means all land, together with all buildings, structures, improvements and fixtures located thereon, including all electrical, mechanical, plumbing and other building systems, fire protection, security and surveillance systems, telecommunications, computer wiring, and cable installations, utility installations, water distribution systems, and landscaping, together with all easements and other rights and interests appurtenant thereto (including air, oil, gas, mineral, and water rights), owned by Division or any Division Subsidiary.
‘‘Party’’ has the meaning set forth in the preface above.
‘‘PBGC’’ means the Pension Benefit Guaranty Corporation.
‘‘Permitted Encumbrances’’ means with respect to each parcel of Real Property: (a) real estate taxes, assessments and other governmental levies, fees, or charges imposed with respect to such Real Property that are (i) not due and payable as of the Closing Date or (ii) being contested in good faith and for which appropriate reserves have been established in accordance with GAAP; (b) mechanics’ liens and similar liens for labor, materials, or supplies provided with respect to such Real Property incurred in the Ordinary Course of Business for amounts that are (i) not due and payable as of the Closing Date or (ii) being contested in good faith and for which appropriate reserves have been established in accordance with GAAP; (c) zoning, building codes and other land use laws regulating the use or occupancy of such Real Property or the activities conducted thereon that are imposed by any governmental authority having jurisdiction over such Real Property that are not violated by the current use or occupancy of such Real Property or the operation of Division’s or any Division Subsidiary’s business as currently conducted thereon; and (d) easements, covenants, conditions, restrictions, and other similar matters of record affecting title to such Real Property that do not or would not impair the use or occupancy of such Real Property in the operation of Division’s or any Division Subsidiary’s business as currently conducted thereon.
‘‘Person’’ means an individual, a partnership, a corporation, a limited liability company, an association, a joint stock company, a trust, a joint venture, an unincorporated organization, any other business entity, or a governmental entity (or any department, agency, or political subdivision thereof).
‘‘Process Agent’’ has the meaning set forth in §10(o) below.
‘‘Prohibited Transaction’’ has the meaning set forth in ERISA §406 and Code §4975.
‘‘Purchase Price’’ has the meaning set forth in §2(c) below.
‘‘Real Estate Impositions’’ has the meaning set forth in §3(l) below.
‘‘Real Property’’ has the meaning set forth in §3(l) below.
‘‘Real Property Laws’’ has the meaning set forth in §3(l) below.
‘‘Real Property Permits’’ has the meaning set forth in §3(l) below.
‘‘Reportable Event’’ has the meaning set forth in ERISA §4043.
‘‘Securities Act’’ means the Securities Act of 1933, as amended.
‘‘Securities Exchange Act’’ means the Securities Exchange Act of 1934, as amended.
‘‘Subsidiary’’ means, with respect to any Person, any corporation, limited liability company, partnership, association, or business entity of which (i) if a corporation, a majority of the total voting power of shares of stock entitled (without regard to the occurrence of any contingency) to vote in the election of directors, managers, or trustees thereof is at the time owned or controlled, directly or indirectly, by that Person or 1 or more of the other Subsidiaries of that Person or a combination thereof or (ii) if a limited liability company, partnership, association, or other business entity (other than a corporation), a majority of the partnership or other similar ownership interests thereof is at the time owned or controlled, directly or indirectly, by that Person or 1 or more Subsidiaries of that Person or a combination thereof and for this purpose, a Person or Persons own a majority ownership interest in such a business entity (other than a corporation) if such Person or Persons shall be allocated a majority of such business entity’s gains or losses or shall be or control any managing director or general partner of such business entity (other than a corporation). The term ‘‘Subsidiary’’ shall include all Subsidiaries of such Subsidiary.
‘‘Surveys’’ has the meaning set forth in §7(a) below.
‘‘Target’’ has the meaning set forth in the preface above.
‘‘Target Share’’ means any share of the common stock, par value $________ per share, of Target.
‘‘Target Stockholder’’ means any person who or that holds any Target Shares.
‘‘Tax’’ or ‘‘Taxes’’ means any federal, state, local, or non-U.S. income, gross receipts, license, payroll, employment, excise, severance, stamp, occupation, premium, windfall profits, environmental, customs duties, capital stock, franchise, profits, withholding, social security (or similar), unemployment, disability, real property, personal property, sales, use, transfer, registration, value added, alternative or add-on minimum, estimated, or other tax of any kind whatsoever, whether computed on a separate or consolidated, unitary or combined basis or in any other manner, including any interest, penalty, or addition thereto, whether disputed or not and including any obligation to indemnify or otherwise assume or succeed to the Tax liability of any other Person.
‘‘Tax Return’’ means any return, declaration, report, claim for refund, or information return or statement relating to Taxes, including any schedule or attachment thereto, and including any amendment thereof.
‘‘Third-Party Claim’’ has the meaning set forth in §8(d) below.
‘‘Title Commitments’’ has the meaning set forth in §7(a) below.
‘‘Title Company’’ has the meaning set forth in §7(a) below.
‘‘Title Policies’’ has the meaning set forth in §7(a) below.
‘‘WARN Act’’ has the meaning set forth in §3(h) below.
§2. Basic Transaction.
(a) Purchase and Sale of Assets. On and subject to the terms and conditions of this Agreement, Buyer agrees to purchase from Target, and Target agrees to sell, transfer, convey, and deliver to Buyer, all of the Acquired Assets at the Closing for the consideration specified below in this §2.
(b) Assumption of Liabilities. On and subject to the terms and conditions of this Agreement, Buyer agrees to assume and become responsible for all of the Assumed Liabilities at the Closing. Buyer will not assume or have any responsibility, however, with respect to any other Liability of Target not included within the definition of Assumed Liabilities.
(c) Purchase Price. Buyer agrees to pay to Target at the Closing $__________ (the ‘‘Purchase Price’’) less the Escrow Amount (such difference, the ‘‘Closing Purchase Price’’) by delivery of (i) its promissory notes (the ‘‘Buyer Notes’’) in the form of Exhibit A attached hereto in the principal amount of $__________ and (ii) cash for the balance of the Closing Purchase Price payable by wire transfer or delivery of other immediately available funds. Buyer agrees to pay to __________, as escrow agent (the ‘‘Escrow Agent’’), at the Closing the Escrow Amount in cash payable by wire transfer or delivery of other immediately available funds for deposit into the escrow account. The Escrow Amount plus any interest accrued thereon will be available to satisfy any amounts owed by Target to Buyer under this Agreement in accordance with the terms of the Escrow Agreement attached hereto as Exhibit B.
(d) Closing. The closing of the transactions contemplated by this Agreement (the ‘‘Closing’’) shall take place either (i) at the offices of _________, in ___________, __________, or (ii) remotely by exchange of documents and signatures (or their electronic counterparts), in each case, commencing at 9:00 a.m. local time on the [second] business day following the satisfaction or waiver of all conditions to the obligations of the Parties to consummate the transactions contemplated hereby (other than conditions with respect to actions the respective Parties will take at the Closing itself) or such other date, place, or time as the Parties may mutually determine (the ‘‘Closing Date’’); provided, however, that the Closing Date shall be no earlier than _________ ___, _______.
(e) Deliveries at Closing. At the Closing, (i) Target will deliver to Buyer the various certificates, instruments, and documents referred to in §7(a) below; (ii) Buyer will deliver to Target the various certificates, instruments, and documents referred to in §7(b) below; (iii) Target will execute, acknowledge (if appropriate), and deliver to Buyer (A) assignments (including Real Property and Intellectual Property transfer documents) in the forms attached hereto as Exhibits C-1 through C-_____ and (B) such other instruments of sale, transfer, conveyance, and assignment as Buyer and its counsel may [reasonably] request; (iv) Buyer will execute, acknowledge (if appropriate), and deliver to Target (A) an assumption in the form attached hereto as Exhibit D and (B) such other instruments of assumption as Target and its counsel may [reasonably] request; and (v) Buyer will deliver to Target and the Escrow Agent the consideration specified in §2(c) above.
(f) Allocation. Buyer shall prepare an allocation of the Purchase Price (and all other capitalized costs) among the Acquired Assets in accordance with Code §1060 and the Treasury regulations thereunder (and any similar provision of state, local, or non-U.S. law, as appropriate), which allocation shall be binding upon Target. Buyer shall deliver such allocation to Target within 60 days after the Closing Date. Buyer and Target and their Affiliates shall report, act, and file Tax Returns (including, but not limited to Internal Revenue Service Form 8594) in all respects and for all purposes consistent with such allocation prepared by Buyer. Target shall timely and properly prepare, execute, file and deliver all such documents, forms and other information as Buyer may reasonably request to prepare such allocation. Neither Buyer nor Target shall take any position (whether in audits, tax returns or otherwise) that is inconsistent with such allocation unless required to do so by applicable law.
§3. Target’s Representations and Warranties. Target represents and warrants to Buyer that the statements contained in this §3 are correct and complete as of the date of this Agreement and will be correct and complete as of the Closing Date (as though made then and as though the Closing Date were substituted for the date of this Agreement throughout this §3), except as set forth in the disclosure schedule accompanying this Agreement and initialed by the Parties (the ‘‘Disclosure Schedule’’). The Disclosure Schedule will be arranged in paragraphs corresponding to the lettered and numbered paragraphs contained in this §3.
(a) Organization of Target. Target is a corporation duly organized, validly existing, and in good standing under the laws of the jurisdiction of its incorporation.
(b) Authorization of Transaction. Target has full power and authority (including full corporate or other entity power and authority) to execute and deliver this Agreement and to perform its obligations hereunder. [Without limiting the generality of the foregoing, the board of directors of Target and Target Stockholders have duly authorized the execution, delivery, and performance of this Agreement by Target.] This Agreement constitutes the valid and legally binding obligation of Target, enforceable in accordance with its terms and conditions.
(c) Non-contravention. Neither the execution and delivery of this Agreement, nor the consummation of the transactions contemplated hereby (including the assignments and assumptions referred to in §2 above), will (i) violate any constitution, statute, regulation, rule, injunction, judgment, order, decree, ruling, charge, or other restriction of any government, governmental agency, or court to which any of Target and Division Subsidiaries is subject or any provision of the charter or bylaws of any of Target and Division Subsidiaries or (ii) conflict with, result in a breach of, constitute a default under, result in the acceleration of, create in any party the right to accelerate, terminate, modify, or cancel, or require any notice under any agreement, contract, lease, license, instrument, or other arrangement to which any of Target and Division Subsidiaries is a party or by which it is bound or to which any of its assets is subject (or result in the imposition of any Lien upon any of its assets). Neither Target nor any Division Subsidiary needs to give any notice to, make any filing with, or obtain any authorization, consent, or approval of any government or governmental agency in order for the Parties to consummate the transactions contemplated by this Agreement (including the assignments and assumptions referred to in §2 above).
(d) Brokers’ Fees. Target has no Liability to pay any fees or commissions to any broker, finder, or agent with respect to the transactions contemplated by this Agreement for which Buyer could become liable or obligated. Division Subsidiaries do not have any Liability or obligation to pay any fees or commissions to any broker, finder, or agent with respect to the transactions contemplated by this Agreement.
(e) Title to Assets. Division and Division Subsidiaries have good and marketable title to, or a valid leasehold interest in, the properties and assets used by them, located on their premises, or shown on the Most Recent Balance Sheet or acquired after the date thereof, free and clear of all Liens, except for properties and assets disposed of in the Ordinary Course of Business since the date of the Most Recent Balance Sheet. Without limiting the generality of the foregoing, Division has good and marketable title to all of the Acquired Assets, free and clear of any Liens or restriction on transfer.
(f) Subsidiaries. §3(f) of the Disclosure Schedule sets forth for each Division Subsidiary (i) its name and jurisdiction of incorporation, (ii) the number of authorized shares for each class of its capital stock, (iii) the number of issued and outstanding shares of each class of its capital stock, the names of the holders thereof, and the number of shares held by each such holder, (iv) the number of shares of its capital stock held in treasury, and (v) its directors and officers. Each Division Subsidiary is a corporation duly organized, validly existing, and in good standing under the laws of the jurisdiction of its incorporation. Each Division Subsidiary is duly authorized to conduct business and is in good standing under the laws of each jurisdiction where such qualification is required. Each Division Subsidiary has full corporate power and authority and all licenses, permits, and authorizations necessary to carry on the business in which it is engaged [and in which it presently proposes to engage] and to own and use the properties owned and used by it. Target has delivered to Buyer correct and complete copies of the charter and bylaws of each Division Subsidiary (as amended to date). All of the issued and outstanding shares of capital stock of each Division Subsidiary have been duly authorized and are validly issued, fully paid, and non-assessable. Target or 1 or more Division Subsidiaries hold of record and own beneficially all of the outstanding shares of each Division Subsidiary, free and clear of any restrictions on transfer (other than restrictions under the Securities Act and state securities laws), Taxes, Liens, options, warrants, purchase rights, contracts, commitments, equities, claims, and demands. There are no outstanding or authorized options, warrants, purchase rights, subscription rights, conversion rights, exchange rights, or other contracts or commitments that could require Target or any Division Subsidiary to sell, transfer, or otherwise dispose of any capital stock of any Division Subsidiary or that could require any Division Subsidiary to issue, sell, or otherwise cause to become outstanding any of its own capital stock (other than this Agreement). There are no outstanding stock appreciation, phantom stock, profit participation, or similar rights with respect to any Division Subsidiary. There are no voting trusts, proxies, or other agreements or understandings with respect to the voting of any capital stock of any Division Subsidiary. The minute books (containing the records of meetings of the stockholders, the board of directors, and any committees of the board of directors), the stock certificate books, and the stock record books of each Division Subsidiary are correct and complete. None of the Division Subsidiaries is in default under or in violation of any provision of its charter or bylaws. Neither Target nor any Division Subsidiary controls directly or indirectly or has any direct or indirect equity participation in any Person that is not a Division Subsidiary. Except for Division Subsidiaries set forth in §3(f) of the Disclosure Schedule, neither Target nor any Division Subsidiary owns or has any right to acquire, directly or indirectly, any outstanding capital stock of, or other equity interests in, any Person.
(g) Financial Statements. Attached hereto as Exhibit E are the following financial statements (collectively the ‘‘Financial Statements’’): (i) audited consolidated and unaudited consolidating balance sheets and statements of income, changes in stockholders’ equity, and cash flow as of and for the fiscal years ended _________ ___, _______, _________ ___, _______, _________ ___, _______, _________ ___, _______, and _________ ___, _______ (the ‘‘Most Recent Fiscal Year End’’) for Division and Division Subsidiaries; and (ii) unaudited consolidated and consolidating balance sheets and statements of income, changes in stockholders’ equity, and cash flow (the ‘‘Most Recent Financial Statements’’) as of and for the ____ months ended _________ ___, _______ (the ‘‘Most Recent Fiscal Month End’’) for Division and Division Subsidiaries. The Financial Statements (including the notes thereto) have been prepared in accordance with GAAP throughout the periods covered thereby, present fairly the financial condition of Division and Division Subsidiaries as of such dates and the results of operations of Division and Division Subsidiaries for such periods, are correct and complete, and are consistent with the books and records of Division and Division Subsidiaries (which books and records are correct and complete)[; provided, however, that the Most Recent Financial Statements are subject to normal year-end adjustments (which will not be material individually or in the aggregate) and lack footnotes and other presentation items]. Target maintains a separate Cash account for Division (into which Target deposits all of the receipts of Division and out of which Target makes all of the disbursements of Division).
(h) Events Subsequent to Most Recent Fiscal Year End. Since the Most Recent Fiscal Year End, there has not been any Material Adverse Change. Without limiting the generality of the foregoing, since that date:
(i) neither Division nor any Division Subsidiary has sold, leased, transferred, or assigned any of its assets, tangible or intangible, other than for a fair consideration in the Ordinary Course of Business;
(ii) neither Division nor any Division Subsidiary has entered into any agreement, contract, lease, or license (or series of related agreements, contracts, leases, and licenses) either involving more than $__________ or outside the Ordinary Course of Business;
(iii) no party (including Division and any Division Subsidiary) has accelerated, terminated, modified, or cancelled any agreement, contract, lease, or license (or series of related agreements, contracts, leases, and licenses) involving more than $__________ to which Division or any Division Subsidiary are a party or by which any of them is bound;
(iv) neither Division nor any Division Subsidiary has imposed or permitted to exist any Lien upon any of its assets, tangible or intangible;
(v) neither Division nor any Division Subsidiary has made any capital expenditure (or series of related capital expenditures) either involving more than $__________ or outside the Ordinary Course of Business;
(vi) neither Division nor any Division Subsidiary has made any capital investment in, any loan to, or any acquisition of the securities or assets of, any other Person (or series of related capital investments, loans, and acquisitions) either involving more than $__________ or outside the Ordinary Course of Business;
(vii) neither Division nor any Division Subsidiary has issued any note, bond, or other debt security or created, incurred, assumed, or guaranteed any indebtedness for borrowed money or capitalized lease obligation either involving more than $__________ singly or $__________ in the aggregate;
(viii) neither Division nor any Division Subsidiary has delayed or postponed the payment of accounts payable and other Liabilities outside the Ordinary Course of Business;
(ix) neither Division nor any Division Subsidiary has cancelled, compromised, waived, or released any right or claim (or series of related rights and claims) either involving more than $___________ or outside the Ordinary Course of Business;
(x) neither Division nor any Division Subsidiary has transferred, assigned, or granted any license, sublicense, agreement, covenant not to sue, or permission with respect to any Intellectual Property;
(xi) there has been no change made or authorized in the charter or bylaws of any Division Subsidiary;
(xii) no Division Subsidiary has issued, sold, or otherwise disposed of any of its capital stock, or granted any options, warrants, or other rights to purchase or obtain (including upon conversion, exchange, or exercise) any of its capital stock;
(xiii) no Division Subsidiary has declared, set aside, or paid any dividend or made any distribution with respect to its capital stock (whether in cash or in kind) or redeemed, purchased, or otherwise acquired any of its capital stock;
(xiv) neither Division nor any Division Subsidiary has experienced any damage, destruction, or loss (whether or not covered by insurance) to its property;
(xv) neither Division nor any Division Subsidiary has made any loan to, or entered into any other transaction with, any of the directors, officers, and employees of Target and its Subsidiaries (including Division Subsidiaries) outside the Ordinary Course of Business;
(xvi) neither Division nor any Division Subsidiary has entered into, negotiated, or terminated any employment contract or collective bargaining agreement, written or oral, or modified the terms of any existing such contract or agreement, or become bound by any collective bargaining relationship;
(xvii) neither Division nor any Division Subsidiary has granted any increase in the base compensation of any of the directors, officers, and employees of Target and its Subsidiaries (including Division Subsidiaries) outside the Ordinary Course of Business;
(xviii) neither Division nor any Division Subsidiary has adopted, amended, modified, or terminated any bonus, profit sharing, incentive, severance, or other plan, contract, or commitment for the benefit of any of the directors, officers, and employees of Target and its Subsidiaries (including Division Subsidiaries) (or taken any such action with respect to any other Employee Benefit Plan);
(xix) neither Division nor any Division Subsidiary has made any other change in employment terms for any of the directors, officers, and employees of Target and its Subsidiaries (including Division Subsidiaries) outside the Ordinary Course of Business;
(xx) neither Division nor any Division Subsidiary has implemented any employee layoffs, plant closings, or other workforce actions implicating or that could implicate the Worker Adjustment and Retraining Notification Act of 1988, as amended, or any similar state, local, or non-U.S. law, regulation, or ordinance (collectively the ‘‘WARN Act’’);
(xxi) neither Division nor any Division Subsidiary has made or pledged to make any charitable or other capital contribution outside the Ordinary Course of Business;
(xxii) neither Division nor any Division Subsidiary has paid any amount to any third party with respect to any Liability (including any costs and expenses Target has incurred or may incur in connection with this Agreement and the transactions contemplated hereby) that would not constitute an Assumed Liability if in existence as of the Closing;
(xxiii) there has not been any other [material] occurrence, event, incident, action, failure to act, or transaction outside the Ordinary Course of Business involving Division or any Division Subsidiary;
(xxiv) neither Division nor any Division Subsidiary has discharged a material Liability or Lien outside the Ordinary Course of Business;
(xxv) neither Division nor any Division Subsidiary has made any loans or advances of money;
(xxvi) neither Division nor any Division Subsidiary has disclosed any Confidential Information, except pursuant to a non-disclosure agreement (on usual and customary terms), or other obligation of confidentiality, that protects the rights of Division and Division Subsidiaries in such Confidential Information;
(xxvii) neither Target nor any of its Subsidiaries has experienced any business interruptions or Liabilities arising out of, resulting from, or related to COVID-19 or COVID-19 Measures, whether directly or indirectly, including (a) disruptions to Target’s or any of its Subsidiaries’ supply chains, (b) the failure of Target’s or any of its Subsidiaries’ suppliers to timely manufacture, ship, or deliver raw materials and goods, (c) the failure of Target’s or any of its Subsidiaries’ agents and service providers to timely perform services, (d) labor shortages, (e) reductions in customer demand, (f) any claim of force majeure by Target or any of its Subsidiaries or a counterparty to any Contract, (g) any default under a Contract to which Target or any of its Subsidiaries is a party, (h) non-fulfillment of customer orders, (i) restrictions on Target’s or any of its Subsidiaries’ operations, (j) reduced hours of operations or reduced aggregate labor hours, (k) restrictions on uses of the Leased Real Property, or (l) the failure to comply with any COVID-19 Measures; and
(xxviii) neither Division nor any Division Subsidiary has committed to any of the foregoing.
(i) Undisclosed Liabilities. Neither Division nor any Division Subsidiary has any Liability (and there is no Basis for any present or future action, suit, proceeding, hearing, investigation, charge, complaint, claim, or demand against any of them giving rise to any Liability), except for (i) Liabilities set forth on the face of the Most Recent Balance Sheet (rather than in any notes thereto) and (ii) Liabilities that have arisen after the Most Recent Fiscal Month End in the Ordinary Course of Business (none of which results from, arises out of, relates to, is in the nature of, or was caused by any breach of contract, breach of warranty, tort, infringement or misappropriation, or violation of law).
(j) Legal Compliance. Each of Division, Division Subsidiaries, and their respective predecessors and Affiliates has complied with all applicable laws and COVID-19 Measures (including rules, regulations, codes, plans, injunctions, judgments, orders, decrees, rulings, and charges thereunder and including the Foreign Corrupt Practices Act, 15 U.S.C. §78dd-1, et seq.) of federal, state, local, and non-U.S. governments (and all agencies thereof), and no action, suit, proceeding, hearing, investigation, charge, complaint, claim, demand, or notice has been filed or commenced against any of them alleging any failure so to comply.
(k) Tax Matters.
(i) Each of Division and Division Subsidiaries has timely filed all Tax Returns that it was required to file. All such Tax Returns were correct and complete in all respects. All Taxes owed by Division or a Division Subsidiary (whether or not shown on any Tax Return) have been paid. Neither Division nor any Division Subsidiary currently is the beneficiary of any extension of time within which to file any Tax Return. No claim has ever been made by an authority in a jurisdiction where Division or any Division Subsidiary does not file Tax Returns that it is or may be subject to taxation by that jurisdiction. There are no Liens on any of the assets of Division or any Division Subsidiary that arose in connection with any failure (or alleged failure) to pay any Tax.
(ii) Each of Division and Division Subsidiaries has withheld and paid all Taxes required to have been withheld and paid in connection with amounts paid or owing to any employee, independent contractor, creditor, stockholder, or other third party and all Forms W-2 and 1099 required with respect thereto have been properly completed and timely filed.
(iii) No Target Stockholder or director or officer (or employee responsible for Tax matters) of Target or any Subsidiary expects any authority to assess any additional Taxes with respect to Division or any Division Subsidiary for any period for which Tax Returns have been filed. There is no dispute or claim concerning any Tax Liability of Division or any Division Subsidiary either (A) claimed or raised by any authority in writing or (B) as to which Target Stockholders and the directors and officers (and employees responsible for Tax matters) of Target and its Subsidiaries has Knowledge based upon personal contact with any agent of such authority. §3(k) of the Disclosure Schedule lists all federal, state, local, and non-U.S. income Tax Returns filed with respect to Division or any Division Subsidiary for taxable periods ended on or after _________ ___, _______, indicates those Tax Returns that have been audited, and indicates those Tax Returns that currently are the subject of audit. Target has delivered to Buyer correct and complete copies of all income Tax Returns, examination reports, and statements of deficiencies assessed against or agreed to by Division or any Division Subsidiary since _________ ___, _______.
(iv) Neither Division nor any Division Subsidiary has waived any statute of limitations in respect of Taxes or agreed to any extension of time with respect to a Tax assessment or deficiency.
Alternative 1—Add the following paragraph if none of the Acquired Assets include stock of a Division Subsidiary:
[(v) None of the Assumed Liabilities is an obligation to make a payment that is not deductible under Code §280G. [Target has disclosed on its federal income Tax Returns all positions taken therein that could give rise to a substantial understatement of federal income Tax with respect to Division within the meaning of Code §6662.] Target is not a party to any Tax allocation or sharing agreement. Target (A) has not been a member of an Affiliated Group (other than a group the common parent of which was Target) and (B) has no Liability for the Taxes of any Person under Reg. §1.1502-6 (or any similar provision of state, local, or non-U.S. law), as a transferee or successor, by contract or otherwise.]
Alternative 2—add the following paragraphs if the Acquired Assets include stock of a Division Subsidiary:
[(v) Neither Division nor any Division Subsidiary is a party to any agreement, contract, arrangement or plan that has resulted or could result, separately or in the aggregate, in the payment of (i) any ‘‘excess parachute payment’’ within the meaning of Code §280G (or any corresponding provision of state, local, or non-U.S. Tax law) or (ii) any amount that will not be fully deductible as a result of Code §162(m) (or any corresponding provision of state, local, or non-U.S. Tax law). No Division Subsidiary has been a United States real property holding corporation within the meaning of Code §897(c)(2) during the applicable period specified in Code §897(c)(1)(A)(ii). [Each Division Subsidiary has disclosed on its federal income Tax Returns all positions taken therein that could give rise to a substantial understatement of federal income Tax within the meaning of Code §6662.] Neither Division nor any Division Subsidiary is a party to any Tax allocation or sharing agreement. No Division Subsidiary (A) has been a member of an Affiliated Group filing a consolidated federal income Tax Return (other than a group the common parent of which was Target) or (B) has any Liability for the Taxes of any Person (other than Target or any of its Subsidiaries) under Reg. §1.1502-6 (or any similar provision of state, local, or non-U.S. law), as a transferee or successor, by contract, or otherwise.]
(vi) §3(k)(vi) of the Disclosure Schedule sets forth the following information with respect to each Division Subsidiary as of the most recent practicable date [(as well as on an estimated pro forma basis as of the Closing giving effect to the consummation of the transactions contemplated hereby)]: (A) the basis of such Division Subsidiary in its assets; and (B) the amount of any net operating loss, net capital loss, unused investment or other credit, unused foreign tax credit, or excess charitable contribution allocable to such Division Subsidiary.
(vii) The unpaid Taxes of Division Subsidiaries (A) did not, as of the Most Recent Fiscal Month End, exceed the reserve for Tax Liability (rather than any reserve for deferred Taxes established to reflect timing differences between book and Tax income) set forth on the face of the Most Recent Balance Sheet (rather than in any notes thereto) and (B) do not exceed that reserve as adjusted for the passage of time through the Closing Date in accordance with the past custom and practice of Division Subsidiaries in filing their Tax Returns.
(viii) No Division Subsidiary will be required to include any item of income in, or exclude any item of deduction from, taxable income for any taxable period (or portion thereof) ending after the Closing Date as a result of any:
(A) change in method of accounting for a taxable period (or portion thereof) ending on or prior to the Closing Date;
(B)	use of an improper method of accounting for a taxable period ending on or prior to the Closing Date;
(C) ‘‘closing agreement,’’ as described in Code §7121 (or any corresponding or similar provision of state, local, or non-U.S. income Tax law);
(D) Intercompany Transaction or any Excess Loss Account (or any corresponding or similar provision or administrative rule of federal, state, local, or non-U.S. income Tax law);
(E) installment sale or open transaction made on or prior to the Closing Date;
(F) prepaid amount received on or prior to the Closing Date; or
(G) election under Code §108(i).
(ix) No Division Subsidiary has distributed stock of another Person, or has had its stock distributed by another Person, in a transaction that was purported or intended to be governed in whole or in part by Code §355 or Code §361.
(x) Each Affiliated Group of which Target or any Division Subsidiary is or has been a member (a ‘‘Target Affiliated Group’’) has timely filed all material Tax Returns that it was required to file. All such Tax Returns were correct and complete in all material respects. All material Taxes owed by any Target Affiliated Group (whether or not shown or required to be shown on any Tax Return) have been paid. The unpaid Taxes of each Target Affiliated Group (including Taxes arising as a result of transactions contemplated by this Agreement) (A) did not, as of the Most Recent Fiscal Month End, exceed the reserve for Tax Liability (rather than any reserve for deferred Taxes established to reflect timing differences between book and Tax income) set forth on the face of the Most Recent Balance Sheet (rather than in any notes thereto) and (B) do not exceed that reserve as adjusted for the passage of time through the Closing Date in accordance with the past custom and practice of any Target Affiliated Group in filing its Tax Returns.
(xi) Neither Target nor any of its Subsidiaries is or has been a party to any ‘‘reportable transaction,’’ as defined in Code §6707A(c)(1) and Reg. §1.6011-4(b).
(xii) No Division Subsidiary is (A) a ‘‘controlled foreign corporation’’ as defined in Code §957 or (B) a ‘‘passive foreign investment company’’ within the meaning of Code §1297. Neither Division nor any Division Subsidiary has a permanent establishment (within the meaning of an applicable Tax treaty) or otherwise has an office or fixed place of business in a country other than the country in which it is organized.
(xiii) No Division Subsidiary has received any letter ruling from the Internal Revenue Service (or any comparable ruling from any other taxing authority).
(l) Real Property.
(i) §3(l)(i) of the Disclosure Schedule sets forth the address and description of each parcel of Owned Real Property. With respect to each parcel of Owned Real Property:
(A) Division or 1 of Division Subsidiaries has good and marketable indefeasible fee simple title, free and clear of all liens and encumbrances, except Permitted Encumbrances;
(B) except as set forth in §3(l)(i)(B) of the Disclosure Schedule, neither Division nor any Division Subsidiary has leased or otherwise granted to any Person the right to use or occupy such Owned Real Property or any portion thereof; and
(C) other than the right of Buyer pursuant to this Agreement, there are no outstanding options, rights of first offer or rights of first refusal to purchase such Owned Real Property or any portion thereof or interest therein.
(ii) §3(l)(ii) of the Disclosure Schedule sets forth the address of each parcel of Leased Real Property, and a true and complete list of all Leases for each such Leased Real Property (including the date and name of the parties to such Lease document). Target has delivered to Buyer a true and complete copy of each such Lease document, and in the case of any oral Lease, a written summary of the material terms of such Lease. Except as set forth in §3(l)(ii) of the Disclosure Schedule, with respect to each of the Leases:
(A) such Lease is legal, valid, binding, enforceable and in full force and effect;
(B) the transactions contemplated by this Agreement do not require the consent of any other party to such Lease (except for those Leases for which Lease Consents are obtained), will not result in a breach of or default under such Lease, and will not otherwise cause such Lease to cease to be legal, valid, binding, enforceable and in full force and effect on identical terms following the Closing;
(C) neither Division’s nor any Division Subsidiary’s possession and quiet enjoyment of the Leased Real Property under such Lease has been disturbed and there are no disputes with respect to such Lease;
(D) neither Division, nor any Division Subsidiary, nor any other party to the Lease is in breach of or default under such Lease, and no event has occurred or circumstance exists that, with the delivery of notice, the passage of time or both, would constitute such a breach or default, or permit the termination, modification or acceleration of rent under such Lease;
(E) no security deposit or portion thereof deposited with respect to such Lease has been applied in respect of a breach of or default under such Lease that has not been redeposited in full;
(F) neither Division nor any Division Subsidiary owes, or will owe in the future, any brokerage commissions or finder’s fees with respect to such Lease;
(G) the other party to such Lease is not an Affiliate of, and otherwise does not have any economic interest in, Division or any Division Subsidiary;
(H) neither Division nor any Division Subsidiary has subleased, licensed or otherwise granted any Person the right to use or occupy the Leased Real Property or any portion thereof;
(I) neither Division nor any Division Subsidiary has collaterally assigned or granted any other Lien in such Lease or any interest therein; and
(J) there are no Liens on the estate or interest created by such Lease.
(iii) The Owned Real Property identified in §3(l)(i) of the Disclosure Schedule and the Leased Real Property identified in §3(l)(ii) of the Disclosure Schedule (collectively, the ‘‘Real Property’’) comprise all of the real property used [or intended to be used] in, [or otherwise related to], Division’s and Division Subsidiaries’ business; and neither Division nor any Division Subsidiary is a party to any agreement or option to purchase any real property or interest therein.
(iv) All buildings, structures, fixtures, building systems and equipment, and all components thereof, including the roof, foundation, load-bearing walls and other structural elements thereof, heating, ventilation, air conditioning, mechanical, electrical, plumbing and other building systems, environmental control, remediation and abatement systems, sewer, storm and waste water systems, irrigation and other water distribution systems, parking facilities, fire protection, security and surveillance systems, and telecommunications, computer wiring, and cable installations, included in the Real Property (the ‘‘Improvements’’) are in good condition and repair and sufficient for the operation of Division’s and Division Subsidiaries’ business. There are no structural deficiencies or latent defects affecting any of the Improvements and there are no facts or conditions affecting any of the Improvements that would, individually or in the aggregate, interfere in any respect with the use or occupancy of the Improvements or any portion thereof in the operation of Division’s or Division Subsidiaries’ business as currently conducted thereon.
(v) There is no condemnation, expropriation or other proceeding in eminent domain, pending or threatened, affecting any parcel of Real Property or any portion thereof or interest therein. There is no injunction, decree, order, writ or judgment outstanding, nor any claim, litigation, administrative action or similar proceeding, pending or threatened, relating to the ownership, lease, use or occupancy of the Real Property or any portion thereof, or the operation of Division’s or Division Subsidiaries’ business as currently conducted thereon.
(vi) The Real Property is in compliance with all applicable building, zoning, subdivision, health and safety and other land use laws, including The Americans with Disabilities Act of 1990, as amended, and all insurance requirements affecting the Real Property (collectively, the ‘‘Real Property Laws’’), and the current use and occupancy of the Real Property and operation of Division’s and Division Subsidiaries’ business thereon does not violate any Real Property Laws. Neither Target, Division, nor any Division Subsidiary has received any notice of violation of any Real Property Law and there is no Basis for the issuance of any such notice or the taking of any action for such violation. There is no pending or anticipated change in any Real Property Law that will materially impair the ownership, lease, use or occupancy of any Real Property or any portion thereof in the continued operation of Division’s or Division Subsidiaries’ business as currently conducted thereon.
(vii) Each parcel of Real Property has direct vehicular and pedestrian access to a public street adjoining the Real Property, or has vehicular and pedestrian access to a public street via an insurable, permanent, irrevocable and appurtenant easement benefitting such parcel of Real Property, and such access is not dependent on any land or other real property interest that is not included in the Real Property. None of the Improvements or any portion thereof is dependent for its access, use or operation on any land, building, improvement or other real property interest that is not included in the Real Property.
(viii) All water, oil, gas, electrical, steam, compressed air, telecommunications, sewer, storm and waste water systems and other utility services or systems for the Real Property have been installed and are operational and sufficient for the operation of Division’s and Division Subsidiaries’ business as currently conducted thereon. Each such utility service enters the Real Property from an adjoining public street or valid private easement in favor of the supplier of such utility service or appurtenant to such Real Property, and is not dependent for its access, use or operation on any land, building, improvement or other real property interest that is not included in the Real Property.
(ix) All certificates of occupancy, permits, licenses, franchises, consents, approvals, and authorizations (collectively, the ‘‘Real Property Permits’’) of all governmental authorities, board of fire underwriters, association, any quasi-governmental agency, or any other entity having jurisdiction over the Real Property that are required or appropriate to use or occupy the Real Property or operate Division’s or Division Subsidiaries’ business as currently conducted thereon, have been issued and are in full force and effect. §3(l)(ix) of the Disclosure Schedule lists all material Real Property Permits held by Division and Division Subsidiaries with respect to each parcel of Real Property. Each of Target and its Subsidiaries has delivered to Buyer a true and complete copy of all Real Property Permits. Neither Target, Division nor any Division Subsidiary has received any notice from any governmental authority or other entity having jurisdiction over the Real Property threatening a suspension, revocation, modification or cancellation of any Real Property Permit and there is no Basis for the issuance of any such notice or the taking of any such action. The Real Property Permits are transferable to Buyer without the consent or approval of the issuing governmental authority or entity; no disclosure, filing or other action by Division or any Division Subsidiary is required in connection with such transfer, and Buyer shall not be required to assume any additional liabilities or obligations under the Real Property Permits as a result of such transfer.
(x) The classification of each parcel of Real Property under applicable zoning laws, ordinances and regulations permits the use and occupancy of such parcel and the operation of Division’s and Division Subsidiaries’ business as currently conducted thereon, and permits the Improvements located thereon as currently constructed, used and occupied. There are sufficient parking spaces, loading docks and other facilities at such parcel to comply with such zoning laws, ordinances and regulations. Each of Division’s and Division Subsidiaries’ use or occupancy of the Real Property or any portion thereof or the operation of Division’s or Division Subsidiaries’ business as currently conducted thereon is not dependent on a ‘‘permitted non-conforming use’’ or ‘‘permitted non-conforming structure’’ or similar variance, exemption or approval from any governmental authority.
(xi) The current use and occupancy of the Owned Real Property and the operation of Division’s and Division Subsidiaries’ business as currently conducted thereon do not violate any easement, covenant, condition, restriction or similar provision in any instrument of record or other unrecorded agreement affecting such Owned Real Property (the ‘‘Encumbrance Documents’’). Neither Target, Division, nor any Division Subsidiary has received any notice of violation of any Encumbrance Documents, and there is no Basis for the issuance of any such notice or the taking of any action for such violation.
(xii) None of the Improvements encroaches on any land that is not included in the Real Property or on any easement affecting such Real Property, or violates any building lines or set-back lines, and there are no encroachments onto any of the Real Property, or any portion thereof, that would interfere with the use or occupancy of such Real Property or the continued operation of Division’s or Division Subsidiaries’ business as currently conducted thereon.
(xiii) Each parcel of Real Property is a separate lot for real estate tax and assessment purposes, and no other real property is included in such tax parcel. There are no Taxes, assessments, fees, charges or similar costs or expenses imposed by any governmental authority, association or other entity having jurisdiction over the Real Property (collectively, the ‘‘Real Estate Impositions’’) with respect to any Real Property or portion thereof that are delinquent. The Title Commitments set forth all Real Estate Impositions that are due and payable with respect to such parcel. There is no pending or threatened increase or special assessment or reassessment of any Real Estate Impositions for such parcel.
(xiv) None of the Real Property or any portion thereof is located in a flood hazard area (as defined by the Federal Emergency Management Agency).
(xv) There is no amount due and payable to any architect, contractor, subcontractor, materialman, or other person or entity for work or labor performed for, or materials or supplies provided to, or in connection with, any Real Property or portion thereof which is delinquent. There is no work or labor being performed for, or materials or supplies being provided to, or in connection with, any Real Property or portion thereof, or to be performed or supplied prior to Closing, other than routine maintenance and repair work which costs and expenses through [completion will not exceed $__________/which shall be paid in full prior to Closing].
(xvi) Each Real Property has access to water resources necessary in the operation of Target’s or its Subsidiaries’ business as currently conducted thereon, and such access to and use of such water resources is not dependent on the ownership or lease of any other real property, easements, or real property interests, contractual rights, shares, certificates, permits, or other rights, interests, or privileges of any kind which are not held by Target or its Subsidiary (as the case may be).
(xvii) There are no pending property insurance claims with respect to any Real Property or any portion thereof. Neither Target nor its Subsidiaries have received any notice from any insurance company or any board of fire underwriters (or any entity exercising similar functions) with respect to any Real Property or any portion thereof: (i) requesting Target or its Subsidiary to perform any repairs, alterations, improvements, or other work for such Real Property which Target or its Subsidiary has not completed in full or (ii) notifying Target or its Subsidiary of any defects or inadequacies in such Real Property which would materially adversely affect the insurability of the Real Property or the premiums for the insurance thereof.
(m) Intellectual Property.
(i) Division and Division Subsidiaries own or have the right to access and use (pursuant to a valid and enforceable written license, sublicense, agreement, covenant not to sue, or permission set forth on §3(m)(iv) of the Disclosure Schedule) all Intellectual Property necessary or desirable for the operation of their business as presently conducted and as presently proposed to be conducted. Each item of Intellectual Property owned, accessed, or used by Division or any Division Subsidiary immediately prior to the Closing will be owned or available for access and use by Buyer or the Subsidiary on identical terms and conditions immediately subsequent to the Closing. Each of Division and Division Subsidiaries has taken all necessary and desirable action to maintain and protect each item of Intellectual Property that it owns or uses.
(ii) None of Division or any of its Subsidiaries, or any of its or their respective businesses as presently conducted, and as presently proposed to be conducted, has or will interfere with, has or will infringe upon, has or will dilute, has or will misappropriate, or otherwise has or will come into conflict with, any Intellectual Property rights of third parties; there are no facts indicating a likelihood of the foregoing; and none of Target Stockholders has ever received any charge, complaint, claim, demand, or notice alleging any such interference, infringement, dilution, misappropriation, or conflict (including any claim that Division or any Division Subsidiary must license or refrain from accessing or using any Intellectual Property rights of any third party). To the Knowledge of any of Target Stockholders, no third party has interfered with, infringed upon, diluted, misappropriated, or otherwise come into conflict with, any Intellectual Property rights of Division or any Division Subsidiary.
(iii) §3(m)(iii) of the Disclosure Schedule identifies each unexpired patent or registration which has been issued to Division or any Division Subsidiary with respect to any of its Intellectual Property, identifies each pending patent application or application for registration that Division or any Division Subsidiary has made with respect to any of its Intellectual Property, and identifies each existing license, sublicense, agreement, covenant not to sue, or other permission that Division or any Division Subsidiary has granted to any third party with respect to any of its Intellectual Property (each as amended to date). Target has delivered to Buyer correct and complete copies of all such licenses, sublicenses, agreements, covenants not to sue, and permissions (each as amended to date). §3(m)(iii) of the Disclosure Schedule also identifies each of the following owned by Division or any Division Subsidiary: (a) [material] unregistered trademarks, service marks, logos, slogans, trade names, corporate names, or other source identifiers; (b) Internet domain names (along with, in the case of each such Internet domain name, the registrar, registered holder, and administrative contact of record); (c) computer software items (other than commercially available off-the-shelf software purchased or licensed solely for internal use and not in connection with any product or service offered by Division or any Division Subsidiary, for which the purchase or license fee for such computer software items was less than a total cost of [$10,000] in the aggregate); (d) material databases and collections of data, (e) material unregistered copyrights[; and (f) non-confidential descriptions of [material] trade secrets and Confidential Information]. With respect to each item of Intellectual Property identified or required to be identified in §3(m)(iii) of the Disclosure Schedule:
(A) Division and Division Subsidiaries own all right, title, and interest in and to the item, free and clear of any Lien, license, or other restriction or limitation regarding access, use, or disclosure (except, with respect to personal information included in the item, such restrictions or limitations imposed by Data Laws);
(B) the item is not subject to any outstanding injunction, judgment, order, decree, ruling, or charge;
(C) no action, suit, proceeding, hearing, investigation, charge, complaint, claim, or demand is pending or[, to the Knowledge of any Target Stockholders and the directors and officers (and employees with responsibility for Intellectual Property matters) of Target and its Subsidiaries,] is threatened that challenges the legality, validity, enforceability, access, use, or ownership of the item, and there are no grounds for the same;
(D) neither Division nor any Division Subsidiary is subject to any existing agreement to indemnify any Person for or against any interference, infringement, dilution, misappropriation, or other conflict with respect to the item; and
(E) no loss or expiration of the item is threatened, pending, or reasonably foreseeable, except for patents or copyrights expiring at the end of their statutory terms (and not as a result of any act or omission by Division or any Division Subsidiary, including, without limitation, a failure by Division or any Division Subsidiary to pay any required maintenance or renewal fees).
(iv) §3(m)(iv) of the Disclosure Schedule identifies each license, sublicense, agreement, covenant not to sue, or permission pursuant to which Division or any Division Subsidiary accesses or uses any Intellectual Property owned by a third party. Target has delivered to Buyer correct and complete copies of all such licenses, sublicenses, agreements, covenants not to sue, and permissions (each as amended to date). With respect to each license, sublicense, agreement, covenant not to sue, or permission identified or required to be identified in §3(m)(iv) of the Disclosure Schedule:
(A) the license, sublicense, agreement, covenant not to sue, or permission is legal, valid, binding, enforceable, and in full force and effect;
(B) the license, sublicense, agreement, covenant not to sue, or permission will continue to be legal, valid, binding, enforceable, and in full force and effect on identical terms following the consummation of the transactions contemplated hereby (including the assignments and assumptions referred to in §2 above);
(C) no party to the license, sublicense, agreement, covenant not to sue, or permission is in breach or default, and no event has occurred that with notice or lapse of time would constitute a breach or default or permit termination, modification, or acceleration thereunder;
(D) no party to the license, sublicense, agreement, covenant not to sue, or permission has repudiated any provision thereof;
(E) with respect to each sublicense, the representations and warranties set forth in subsections (A) through (D) above are true and correct with respect to the underlying license;
(F) the underlying items of Intellectual Property are not subject to any outstanding injunction, judgment, order, decree, ruling, or charge;
(G) no action, suit, proceeding, hearing, investigation, charge, complaint, claim, or demand is pending or[, to the Knowledge of any of Target Stockholders and the directors and officers (and employees with responsibility for Intellectual Property matters) of Target and its Subsidiaries,] is threatened that challenges the legality, validity, or enforceability of the underlying item of Intellectual Property, and there are no grounds for the same; and
(H) neither Division nor any Division Subsidiary has granted any sublicense or similar right with respect to the license, sublicense, agreement, covenant not to sue, or permission.
[(v) None of Target Stockholders and the directors and officers (and employees with responsibility for Intellectual Property matters) of Target and its Subsidiaries has any Knowledge of any new products, inventions, procedures, or methods of manufacturing or processing that any competitors or other third parties have developed that reasonably could be expected to supersede or make obsolete any product or process of Division or any Division Subsidiary or to limit the business of Division and Division Subsidiaries as presently conducted [or as presently proposed to be conducted].]
(vi) Division and Division Subsidiaries have taken all necessary and desirable actions to maintain and protect all of the Intellectual Property of Division and Division Subsidiaries and will continue to maintain and protect all of the Intellectual Property of Division and Division Subsidiaries [prior to Closing] so as not to [materially] adversely affect the validity or enforceability thereof. To the Knowledge of Division and Division Subsidiaries, the owners of any of the Intellectual Property licensed to, or used by, Division and Division Subsidiaries have taken all necessary and desirable actions to maintain and protect the Intellectual Property. [Without limiting the generality of any other representation or warranty herein, each current and former employee, officer, director, founder, shareholder, agent, representative, independent contractor, and consultant of Division or any Division Subsidiary (each, an “Employee”) has executed an agreement with Division or the respective Division Subsidiary pursuant to which the Employee (A) if not otherwise subject to an obligation of confidentiality to Target and its Subsidiaries, agrees to protect the Confidential Information of Division and Division Subsidiaries, and (B) if such Employee is or was involved (either alone or jointly with others) in the authorship, conception, development, reduction to practice, modification, or improvement of Intellectual Property owned by, or used in the business of, Division or any Division Subsidiary, makes a present assignment to the Target or such Division Subsidiary (as applicable) of all right, title, and interest in and to all such Intellectual Property (to the extent consistent with applicable laws) without further consideration or any restrictions or obligations whatsoever.]
(vii) Division and Division Subsidiaries have complied with, and are presently in compliance with, all federal, state, local, and non-U.S. governmental laws, regulations, guidelines, and rules applicable to any Intellectual Property or to data privacy and security and Division and Division Subsidiaries shall take all steps necessary to ensure such compliance until Closing.
(n) Tangible Assets. Division and Division Subsidiaries own or lease all buildings, machinery, equipment, and other tangible assets necessary for the conduct of their business as presently conducted [and as presently proposed to be conducted]. Each such tangible asset is free from defects (patent and latent), 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 [and presently is proposed to be used].
(o) Inventory. The inventory of Division and Division Subsidiaries consists of raw materials and supplies, manufactured and purchased parts, goods in process, and finished goods, all of which is merchantable and fit for the purpose for which it was procured or manufactured, and none of which is slow-moving, obsolete, damaged, or defective, subject only to the reserve for inventory writedown set forth on the face of the Most Recent Balance Sheet (rather than in any notes thereto) as adjusted for the passage of time through the Closing Date in accordance with the past custom and practice of Division and Division Subsidiaries.
(p) Contracts. §3(p) of the Disclosure Schedule lists the following contracts and other agreements to which Division or any Division Subsidiary is a party:
(i) any agreement (or group of related agreements) for the lease of personal property to or from any Person providing for lease payments in excess of $__________ per annum;
(ii) any agreement (or group of related agreements) for the purchase or sale of raw materials, commodities, supplies, products, or other personal property, or for the furnishing or receipt of services, the performance of which will extend over a period of more than 1 year, result in a [material] loss to Division or any Division Subsidiary, or involve consideration in excess of $__________;
(iii) any agreement concerning a partnership or joint venture;
(iv) any agreement (or group of related agreements) under which it has created, incurred, assumed, or guaranteed any indebtedness for borrowed money, or any capitalized lease obligation, in excess of $__________ or under which it has imposed a Lien on any of its assets, tangible or intangible;
(v) any agreement concerning confidentiality or non-competition;
(vi) any agreement involving any of Target Stockholders and their Affiliates (including Target and its Subsidiaries other than Division Subsidiaries);
(vii) any profit sharing, stock option, stock purchase, stock appreciation, deferred compensation, severance, or other [material] plan or arrangement for the benefit of the current or former directors, officers, and employees of Target and its Subsidiaries (including Division Subsidiaries);
(viii) any collective bargaining agreement;
(ix) any agreement for the employment of any individual on a full-time, part-time, consulting, or other basis providing annual compensation in excess of $__________ or providing severance benefits;
(x) any agreement under which it has advanced or loaned any amount to any of the directors, officers, and employees of Target and its Subsidiaries (including Division Subsidiaries) outside the Ordinary Course of Business;
(xi) any agreement under which the consequences of a default or termination could have a Material Adverse Effect;
(xii) any agreement under which it has granted any Person any registration rights (including, without limitation, demand and piggyback registration rights);
(xiii) any settlement, conciliation or similar agreement with any Governmental Entity or which will require satisfaction of any obligations after the execution date of this Agreement;
(xiv) any agreement under which Division or any Division Subsidiary has advanced or loaned any other Person amounts in the aggregate exceeding $__________; or
(xv) any other agreement (or group of related agreements) the performance of which involves consideration in excess of $__________.
Target has delivered to Buyer a correct and complete copy of each written agreement (as amended to date) listed in §3(p) of the Disclosure Schedule and a written summary setting forth the terms and conditions of each oral agreement referred to in §3(p) of the Disclosure Schedule. With respect to each such agreement: (A) the agreement is legal, valid, binding, enforceable, and in full force and effect; (B) the agreement will continue to be legal, valid, binding, enforceable, and in full force and effect on identical terms following the consummation of the transactions contemplated hereby (including the assignments and assumptions referred to in §2 above); (C) no party is in breach or default, and no event has occurred that with notice or lapse of time would constitute a breach or default, or permit termination, modification, or acceleration, under the agreement; and (D) no party has repudiated any provision of the agreement.
(q) Notes and Accounts Receivable. All notes and accounts receivable of Division and Division Subsidiaries are reflected properly on their books and records, are valid receivables subject to no setoffs or counterclaims, are current and collectible, and will be collected in accordance with their terms at their recorded amounts, subject only to the reserve for bad debts set forth on the face of the Most Recent Balance Sheet (rather than in any notes thereto) as adjusted for the passage of time through the Closing Date in accordance with the past custom and practice of Division and Division Subsidiaries.
(r) Powers of Attorney. There are no outstanding powers of attorney executed on behalf of Division or any Division Subsidiary.
(s) Insurance. §3(s) of the Disclosure Schedule sets forth the following information with respect to each insurance policy (including policies providing property, casualty, liability, and workers’ compensation coverage and bond and surety arrangements) to which Division or any Division Subsidiary has been a party, a named insured, or otherwise the beneficiary of coverage at any time within the past [10] years:
(i) the name, address, and telephone number of the agent;
(ii) the name of the insurer, the name of the policyholder, and the name of each covered insured;
(iii) the policy number and the period of coverage;
(iv) the scope (including an indication of whether the coverage was on a claims made, occurrence, or other basis) and amount (including a description of how deductibles and ceilings are calculated and operate) of coverage; and
(v) a description of any retroactive premium adjustments or other loss-sharing arrangements.
With respect to each such insurance policy: (A) the policy is legal, valid, binding, enforceable, and in full force and effect; (B) the policy will continue to be legal, valid, binding, enforceable, and in full force and effect on identical terms following the consummation of the transactions contemplated hereby (including the assignments and assumptions referred to in §2 above); (C) neither Division nor any Division Subsidiary nor any other party to the policy is in breach or default (including with respect to the payment of premiums or the giving of notices), and no event has occurred that, with notice or the lapse of time, would constitute such a breach or default, or permit termination, modification, or acceleration, under the policy; and (D) no party to the policy has repudiated any provision thereof. Each of Division and Division Subsidiaries has been covered during the past [10] years by insurance in scope and amount customary and reasonable for the business in which it has engaged during the aforementioned period. §3(s) of the Disclosure Schedule describes any self-insurance arrangements affecting any of Division and Division Subsidiaries.
(t) Litigation. §3(t) of the Disclosure Schedule sets forth each instance in which Division or any Division Subsidiary is or, at any time during the three (3) years prior to the date of this Agreement, was (i) subject to any outstanding injunction, judgment, order, decree, ruling, or charge or (ii) a party or[, to the Knowledge of any of Target Stockholders and the directors and officers (and employees with responsibility for litigation matters) of Target and its Subsidiaries,] threatened to be made a party to any action, suit, proceeding, hearing, or investigation of, in, or before (or that could come before) any court or quasi-judicial or administrative agency of any federal, state, local, or non-U.S. jurisdiction or before (or that could come before) any arbitrator. None of the actions, suits, proceedings, hearings, and investigations set forth in §3(t) of the Disclosure Schedule could result in any Material Adverse Change. None of Target Stockholders and the directors and officers (and employees with responsibility for litigation matters) of Target and its Subsidiaries has any reason to believe that any such action, suit, proceeding, hearing, or investigation may be brought or threatened against Division or any Division Subsidiary.
(u) Product Warranty. Each product manufactured, sold, leased, or delivered by Division or any Division Subsidiary has been in conformity with all applicable contractual commitments and all express and implied warranties, and neither Division nor any Division Subsidiary has any Liability (and there is no Basis for any present or future action, suit, proceeding, hearing, investigation, charge, complaint, claim, or demand against any of them giving rise to any Liability) for replacement or repair thereof or other damages in connection therewith, subject only to the reserve for product warranty claims set forth on the face of the Most Recent Balance Sheet (rather than in any notes thereto) as adjusted for the passage of time through the Closing Date in accordance with the past custom and practice of Division and Division Subsidiaries. No product manufactured, sold, leased, or delivered by Division or any Division Subsidiary is subject to any guaranty, warranty, or other indemnity beyond the applicable standard terms and conditions of sale or lease. §3(u) of the Disclosure Schedule includes copies of the standard terms and conditions of sale or lease for each of Division and Division Subsidiaries (containing applicable guaranty, warranty, and indemnity provisions).
(v) Product Liability. Neither Division nor any Division Subsidiary has any Liability (and there is no Basis for any present or future action, suit, proceeding, hearing, investigation, charge, complaint, claim, or demand against any of them giving rise to any Liability) arising out of any injury to individuals or property as a result of the ownership, possession, or use of any product manufactured, sold, leased, or delivered by Division or any Division Subsidiary.
(w) Employees.
(i) With respect to Division and any Division Subsidiary:
(A) there is no collective bargaining agreement or other contract with a labor union, works council, or other labor organization or collective bargaining relationship with any labor organization;
(B) to the Knowledge of any of Sellers, Division, or any Division Subsidiary, no executive or manager of Division or any Division Subsidiary (1) has any present intention to terminate his or her employment, or (2) is a party to any confidentiality, non-competition, proprietary rights or other such agreement between such employee and any Person besides such entity that would be material to the performance of such employees employment duties, or the ability of such entity or Buyer to conduct the business of such entity;
(C) no labor organization or group of employees has filed any representation or certification petition or made any written or oral demand for recognition;
(D) to the Knowledge of any of Sellers, Division, or any Division Subsidiary, no union organizing or decertification efforts have occurred, or are underway or threatened, and no other question concerning representation exists;
(E) no labor strike, work stoppage, slowdown, or other material labor dispute has occurred, and none is underway or, to the Knowledge of Division or any Division Subsidiary, threatened;
(F) there is no employment-related claim, charge, complaint, grievance, investigation, inquiry or proceeding of any kind, pending or threatened in any forum, relating to an alleged violation or breach by Division or any Division Subsidiary (or its or their officers or directors) of any law, regulation or contract, and no material such claim, charge, complaint, grievance, investigation, inquiry or proceeding has occurred in the past three (3) years; and,
(G) no employee or agent of Division or any Division Subsidiary has committed any act or omission giving rise to material liability for any violation or breach identified in subsection (F) above.
(ii) Except as set forth in §3(w) of the Disclosure Schedule, (A) there are no employment contracts or severance agreements with any employees of Division or any Division Subsidiary, and (B) there are no written personnel policies, rules, or procedures applicable to employees of Division or any Division Subsidiary. True and complete copies of all such documents have been provided to Buyer prior to the date of this Agreement.
(iii) With respect to this transaction, any notice required under any law or collective bargaining agreement has been or prior to the Closing Date will be given, and all notice, consultation, or bargaining obligations owed to any employee or any employee representative have been or prior to the Closing Date will be satisfied. [Within the past 3 years], neither Division nor any Division Subsidiary has implemented any plant closing, layoff of employees, or other workforce action that could implicate the WARN Act.
(iv) Each of Target and its Subsidiaries has paid all wages, salary, commissions, bonuses, wage supplements, reimbursements, severance, and other payments that have come due and payable by it pursuant to applicable law, contract, or Target policy. Each individual who is providing or within the past three (3) years has provided services to Target or any of its Subsidiaries and is or was classified and treated as an independent contractor or other individual service provider is or was properly classified and treated as such.
(v) Except as set forth in §3(w) of the Disclosure Schedule, within the past [3] years, neither Division nor any Division Subsidiaries has received any allegations of sexual harassment or similar misconduct involving any of its current or former directors, officers, executives, or employees. Division and the Division Subsidiaries have promptly, thoroughly, and impartially investigated all such allegations. Neither Division nor any Division Subsidiary has any material liability with respect to any such allegations. Except as set forth in §3(w)(v) of the Disclosure Schedule, neither Target nor any of its Subsidiaries is party to a settlement agreement with a current or former director, officer, employee, or other individual service provider resolving allegations of sexual harassment or similar misconduct.
(vi) Each of Target and its Subsidiaries has established and adheres to procedures that require all of their non-U.S. suppliers of merchandise (including components and raw materials for merchandise) to comply with Non-U.S. Workplace Standards which are compatible with U.S. workplace standards in the facilities where merchandise for the Company or its Subsidiaries is made or otherwise handled and that require all of their non-U.S. suppliers to certify annually their compliance with such Non-U.S. Workplace Standards in such facilities.
(x) Employee Benefits.
(i) §3(x)(i) of the Disclosure Schedule lists each Employee Benefit Plan that Division or any Division Subsidiary (or any other Target Subsidiary) maintains or contributes to on behalf of Division employees, or with respect to which Division or any Division Subsidiary has any Liability.
(A) Each such Employee Benefit Plan (and each related trust, insurance contract, or fund) has been maintained, funded and administered in accordance with the terms of such Employee Benefit Plan and the terms of any applicable collective bargaining agreement and complies in form and in operation in all respects with the applicable requirements of ERISA, the Code, and other applicable laws.
(B) All required reports and descriptions (including Form 5500 annual reports, summary annual reports, and summary plan descriptions) have been timely filed and/or distributed in accordance with the applicable requirements of ERISA and the Code with respect to each such Employee Benefit Plan. The requirements of COBRA have been met with respect to each such Employee Benefit Plan and each Employee Benefit Plan maintained by Target or an ERISA Affiliate that is an Employee Welfare Benefit Plan subject to COBRA.
(C) All contributions (including all employer contributions and employee salary reduction contributions) that are due have been made within the time periods prescribed by ERISA and the Code to each such Employee Benefit Plan that is an Employee Pension Benefit Plan and all contributions for any period ending on or before the Closing Date that are not yet due have been made to each such Employee Pension Benefit Plan or accrued in accordance with the past custom and practice of Division and Division Subsidiaries. All premiums or other payments for all periods ending on or before the Closing Date have been paid with respect to each such Employee Benefit Plan that is an Employee Welfare Benefit Plan.
(D) Each such Employee Benefit Plan that is intended to meet the requirements of a ‘‘qualified plan’’ under Code §401(a) has received a determination from the Internal Revenue Service that such Employee Benefit Plan is so qualified, and nothing has occurred since the date of such determination that could adversely affect the qualified status of any such Employee Benefit Plan. All such Employee Benefit Plans have been timely amended for all such requirements and have been submitted to the Internal Revenue Service for a favorable determination letter within the latest applicable remedial amendment period.
(E) There have been no Prohibited Transactions with respect to any such Employee Benefit Plan or any Employee Benefit Plan maintained by Target or an ERISA Affiliate. No Fiduciary has any Liability for breach of fiduciary duty or any other failure to act or comply in connection with the administration or investment of the assets of any such Employee Benefit Plan. No action, suit, proceeding, hearing, or investigation with respect to the administration or the investment of the assets of any such Employee Benefit Plan (other than routine claims for benefits) is pending or[, to the Knowledge of Target Stockholders and the directors and officers (and employees with responsibility for employee benefits matters) of Target and its Subsidiaries,] threatened. None of Target Stockholders and the directors and officers (and employees with responsibility for employee benefits matters) of Target and its Subsidiaries has any Knowledge of any Basis for any such action, suit, proceeding, hearing, or investigation.
(F) Target has delivered to Buyer correct and complete copies of the plan documents and summary plan descriptions, the most recent determination letter received from the Internal Revenue Service, the most recent annual report (Form 5500, with all applicable attachments), and all related trust agreements, insurance contracts, and other funding arrangements that implement each such Employee Benefit Plan.
Alternative 1—add the following paragraph if there are No Defined Benefit Plans:
[(ii) Neither Target, nor any of its Subsidiaries, nor any ERISA Affiliate contributes to, has any obligation to contribute to, or has any Liability under or with respect to any Employee Pension Benefit Plan that is a ‘‘defined benefit plan’’ (as defined in ERISA §3(35)). No asset of Division or any Division Subsidiary is subject to any Lien under ERISA or the Code.]
Alternative 2—add the following paragraphs if there are Defined Benefit Plans:
[(ii) With respect to each Employee Benefit Plan that Target, any of its Subsidiaries, or any ERISA Affiliate maintains, to which any of them contributes or has any obligation to contribute, or with respect to which any of them has any Liability:
(A) No such Employee Benefit Plan that is an Employee Pension Benefit Plan (other than any Multiemployer Plan) has been completely or partially terminated or been the subject of a Reportable Event. No proceeding by the PBGC to terminate any such Employee Pension Benefit Plan (other than any Multiemployer Plan) has been instituted or[, to the Knowledge of any Target Stockholder and the directors and officers (and employees with responsibility for employee benefits matters) of Target and its Subsidiaries,] threatened. The market value of assets under each such Employee Benefit Plan that is an Employee Pension Benefit Plan (other than any Multiemployer Plan) equals or exceeds the present value of all vested and non-vested Liabilities thereunder determined in accordance with PBGC methods, factors, and assumptions, including methods, factors, and assumptions required under the Pension Protection Act of 2006, applicable to an Employee Pension Benefit Plan terminating on the date for determination. No Employee Benefit Plan is considered to be in ‘‘at-risk’’ status under Code §430.
(B) Neither Target nor any Subsidiary has incurred, and none of Target Stockholders and the directors and officers (and employees with responsibility for employee benefits matters) of Target and its Subsidiaries has any reason to expect that any of Target and its Subsidiaries will incur, any Liability to the PBGC (other than with respect to PBGC premium payments not yet due) or otherwise under Title IV of ERISA or under the Code with respect to any such Employee Benefit Plan that is an Employee Pension Benefit Plan.]
Alternative 1—add the following paragraph if there are No Multiemployer Plans:
[(iii) Neither Target, nor any of its Subsidiaries, nor any ERISA Affiliate contributes to, has any obligation to contribute to, or has any Liability (including withdrawal liability as defined in ERISA §4201) under or with respect to any Multiemployer Plan.]
Alternative 2—add the following paragraph if there are Multiemployer Plans:
[(iii) Neither Target, nor any of its Subsidiaries, nor any ERISA Affiliate has incurred any Liability on account of a ‘‘partial withdrawal’’ or a ‘‘complete withdrawal’’ (within the meaning of ERISA §4205 and §4203, respectively) from any Multiemployer Plan, no such Liability has been asserted, and there are no events or circumstances that could result in any such partial or complete withdrawal; and neither Target, nor any of its Subsidiaries, nor any ERISA Affiliate is bound by any contract or agreement or has any obligation or Liability described in ERISA §4204. Each Multiemployer Plan complies in form and has been administered in accordance with the requirements of ERISA and, where applicable, the Code, and each Multiemployer Plan is qualified under Code §401(a). No Multiemployer Plan is considered to be in ‘‘endangered’’ or ‘‘critical’’ status under Code §432.]
(iv) Neither Division nor any Division Subsidiary maintains, contributes to or has an obligation to contribute to, or has any Liability with respect to, any Employee Welfare Benefit Plan or other arrangement providing health or life insurance or other welfare-type benefits for current or future retired or terminated directors, officers or employees (or any spouse or other dependent thereof) of Division or any Division Subsidiary or any other Person other than in accordance with COBRA.
(v) The consummation of the transactions contemplated by this Agreement will not accelerate the time of the payment or vesting of, or increase the amount of, or result in the forfeiture of compensation or benefits under, any Employee Benefit Plan.
(vi) §3(x)(v) of the Disclosure Schedule lists each agreement, contract, plan, or other arrangement—whether or not written and whether or not an Employee Benefit Plan (collectively a ‘‘Plan’’)—to which Target or any of its Subsidiaries is a party that is a ‘‘nonqualified deferred compensation plan’’ subject to Code §409A. Each Plan complies with the requirements of Code §409A(a)(2), (3), and (4) and any Internal Revenue Service guidance issued thereunder [(except that to the extent Internal Revenue Service guidance allows Code §409A to be satisfied by maintenance of a Plan in good faith compliance with Code §409A, such Plan has been so maintained)] and no amounts under any such Plan is or has been subject to the interest and additional tax set forth under Code §409A(a)(1)(B). Neither Target nor any of its Subsidiaries has any actual or potential obligation to reimburse or otherwise ‘‘gross-up’’ any Person for the interest or additional tax set forth under Code §409A(a)(1)(B).
(y) Guaranties. Neither Division nor any Division Subsidiary is a guarantor or otherwise is liable for any Liability (including indebtedness) of any other Person.
(z) Environmental, Health, and Safety Matters.
(i) Each of Division, Division Subsidiaries, and their respective predecessors and Affiliates has at all times complied and is in compliance with all Environmental, Health, and Safety Requirements.
(ii) Without limiting the generality of the foregoing, each of Division, Division Subsidiaries, and their respective Affiliates has obtained and at all times complied with, and is in compliance with, all permits, licenses, certifications, registrations, and other authorizations that are required pursuant to Environmental, Health, and Safety Requirements for the occupation of its facilities and the operation of its business.
(iii) Neither Division, nor any Division Subsidiary, nor their respective predecessors or Affiliates has received any notice, report, order, directive, or other information regarding any actual or alleged violation of Environmental, Health, and Safety Requirements, or any Liabilities, including any investigatory, remedial, or corrective obligations, relating to any of them, their business, or their past or current facilities arising under Environmental, Health, and Safety Requirements.
(iv) Neither Division, nor any Division Subsidiary, nor their respective predecessors or Affiliates has treated, stored, disposed of, arranged for or permitted the disposal of, transported, handled, manufactured, distributed, exposed any person to, or released any substance, including without limitation any hazardous substance, or owned or operated any property or facility which is or has been contaminated by any such substance so as to give rise to any current or future Liabilities, including any Liability for fines, penalties, response costs, corrective action costs, personal injury, property damage, natural resources damages, or attorneys’ fees, pursuant to the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended (‘‘CERCLA’’), the Solid Waste Disposal Act, as amended (‘‘SWDA’’), or any other Environmental, Health, and Safety Requirements.
(v) Neither this Agreement nor the consummation of the transactions that are subject of this Agreement will result in any obligations for site investigation or cleanup, or notification to or consent of government agencies or third parties, pursuant to any of the so-called ‘‘transaction-triggered’’ or ‘‘responsible property transfer’’ Environmental, Health, and Safety Requirements.
(vi) Neither Division, Division Subsidiaries, nor any of their respective predecessors or Affiliates has designed, manufactured, sold, marketed, installed, repaired, or distributed products or other items containing asbestos and none of such entities is or will become subject to any Liabilities with respect to the presence of asbestos in any product or item or in or upon any property, premises, or facility.
(vii) Neither Division nor any Division Subsidiary has assumed, undertaken, provided an indemnity with respect to, or otherwise become subject to, any Liability including without limitation any obligation for corrective or remedial action, of any other Person relating to Environmental, Health, and Safety Requirements.
(viii) No facts, events, or conditions relating to the past or present facilities, properties, or operations of Division, Division Subsidiaries, or any of their respective predecessors or Affiliates will prevent, hinder, or limit continued compliance with Environmental, Health, and Safety Requirements, give rise to any investigatory, remedial, or corrective obligations pursuant to Environmental, Health, and Safety Requirements, or give rise to any other Liabilities pursuant to Environmental, Health, and Safety Requirements, including without limitation any Liability relating to on-site or off-site releases or threatened releases of, or exposure to, hazardous materials, substances or wastes, personal injury, property damage or natural resources damage.
(ix) Division and Division Subsidiaries have furnished to Buyer all environmental audits, reports, and other material environmental documents relating to their or their respective predecessors’ or Affiliates’ past or current properties, facilities, or operations that are in their possession, custody, or under their reasonable control.
(aa) IT Assets.
(i) Without limiting the generality of any representation or warranty herein, (A) none of the computer software, computer hardware (whether general or special purpose), telecommunications capabilities (including all voice, data, and video networks) and other similar or related items of automated, computerized, and/or software systems and any other networks or systems and related services that are used by or relied on by Division or any Division Subsidiary in the conduct of its or their business (collectively, the “IT Systems”) have experienced bugs, failures, breakdowns, or continued substandard performance in the past 12 months that has caused any substantial disruption or interruption in or to the use of any IT Systems or data by Division or any Division Subsidiary; and (B) the IT Systems are sufficient for the needs of the businesses of Division and Division Subsidiaries, 
(ii) Division and each Division Subsidiary has taken all reasonable steps to safeguard the IT Systems, including the implementation of procedures to ensure that such IT Systems are free from any malicious or disabling codes or instructions, timer, copy protection device, clock, counter, or other limiting design or routing and any “back door,” “time bomb,” “Trojan horse,” “worm,” “drop dead device,” “virus,” documentation error or corrupt code, malware, “spyware,” or other software routines or hardware components that in each case permit unauthorized access to, or the unauthorized disablement or unauthorized erasure of, any of the IT Systems, data, or other software by a third party, and to date there have been no successful unauthorized intrusions or breaches of the security of the IT Systems.
(bb) Certain Business Relationships with Division and Division Subsidiaries. None of Target Stockholders and their Affiliates, Target Stockholders’ directors, officers, employees and shareholders, and Division’s and Division Subsidiaries’ directors, officers, employees, and shareholders has been involved in any business arrangement or relationship with Division or any Division Subsidiary within the past 12 months, and none of Target Stockholders and their Affiliates, Target Stockholders’ directors, officers, employees and shareholders, and Division’s and Division Subsidiaries’ directors, officers, employees, and shareholders own any asset, tangible or intangible, that is used in the business of Division or any Division Subsidiary.
(cc) Customers and Suppliers.
(i) §3(cc) of the Disclosure Schedule lists the _________ largest customers of Division (on a consolidated basis) for each of the 2 most recent fiscal years and sets forth opposite the name of each such customer the percentage of consolidated net sales attributable to such customer. §3(cc) of the Disclosure Schedule also lists any additional current customers that Division anticipates shall be among the ________ largest customers for the current fiscal year.
(ii) Since the date of the Most Recent Balance Sheet, no [material] supplier of Division or any Division Subsidiary has indicated [in writing] that it shall stop, or [materially] decrease the rate of, supplying materials, products or services to Division or any Division Subsidiary, and no customer listed on §3(cc) of the Disclosure Schedule has indicated [in writing] that it shall stop, or [materially] decrease the rate of, buying materials, products or services from Division or any Division Subsidiary.
(dd) Data Privacy and Security. Division’s and Division Subsidiaries’ respective businesses have complied with and, as presently conducted [and as presently proposed to be conducted], are in compliance with, all Data Laws. Division and Division Subsidiaries have complied with, and are presently in compliance with, its and their respective policies applicable to data privacy, data security, and/or personal information. None of Division or any of the Division Subsidiaries has experienced any incident in which personal information or other data was or may have been stolen or improperly accessed, acquired, destroyed, damaged, disclosed, corrupted, or altered, and none of Division or any Division Subsidiary is aware of any facts suggesting the likelihood of the foregoing, including without limitation, any breach of security or receipt of any notices or complaints from any Person regarding personal information or other data.
(ee) Disclosure. The representations and warranties contained in this §3 do not contain any untrue statement of a [material] fact or omit to state any [material] fact necessary in order to make the statements and information contained in this §3 not misleading.
(ff) Investment. Target (i) understands that the Buyer Notes have not been, and will not be, registered under the Securities Act, or under any state securities laws, and are being offered and sold in reliance upon federal and state exemptions for transactions not involving any public offering, (ii) is acquiring the Buyer Notes solely for its own account for investment purposes, and not with a view to the distribution thereof (except to Target Stockholders), (iii) is a sophisticated investor with knowledge and experience in business and financial matters, (iv) has received certain information concerning Buyer and has had the opportunity to obtain additional information as desired in order to evaluate the merits and the risks inherent in holding the Buyer Notes, (v) is able to bear the economic risk and lack of liquidity inherent in holding the Buyer Notes, and (vi) is an Accredited Investor for the reasons set forth in §3(ff) of the Disclosure Schedule.
§4. Buyer’s Representations and Warranties. Buyer represents and warrants to Target that the statements contained in this §4 are correct and complete as of the date of this Agreement and will be correct and complete as of the Closing Date (as though made then and as though the Closing Date were substituted for the date of this Agreement throughout this §4), except as set forth in the Disclosure Schedule. The Disclosure Schedule will be arranged in paragraphs corresponding to the lettered and numbered paragraphs contained in this §4.
(a) Organization of Buyer. Buyer is a corporation (or other entity) duly organized, validly existing, and in good standing under the laws of the jurisdiction of its incorporation (or other formation).
(b) Authorization of Transaction. Buyer has full power and authority (including full corporate power and authority) to execute and deliver this Agreement and to perform its obligations hereunder. This Agreement constitutes the valid and legally binding obligation of Buyer, enforceable in accordance with its terms and conditions. The execution, delivery, and performance of this Agreement and all other agreements contemplated hereby have been duly authorized by Buyer.
(c) Non-contravention. Neither the execution and delivery of this Agreement, nor the consummation of the transactions contemplated hereby (including the assignments and assumptions referred to in §2 above), will (i) violate any constitution, statute, regulation, rule, injunction, judgment, order, decree, ruling, charge, or other restriction of any government, governmental agency, or court to which Buyer is subject or any provision of its charter, bylaws, or other governing documents or (ii) conflict with, result in a breach of, constitute a default under, result in the acceleration of, create in any party the right to accelerate, terminate, modify, or cancel, or require any notice under any agreement, contract, lease, license, instrument, or other arrangement to which Buyer is a party or by which it is bound or to which any of its assets are subject. Buyer does not need to give any notice to, make any filing with, or obtain any authorization, consent, or approval of any government or governmental agency in order for the Parties to consummate the transactions contemplated by this Agreement (including the assignments and assumptions referred to in §2 above).
(d) Brokers’ Fees. Buyer has no Liability to pay any fees or commissions to any broker, finder, or agent with respect to the transactions contemplated by this Agreement for which Target could become liable or obligated.
§5. Pre-Closing Covenants. The Parties agree as follows with respect to the period between the execution of this Agreement and the Closing:
(a) General. Each of the Parties will use its [reasonable] best efforts to take all actions and to do all things necessary[, proper, or advisable] in order to consummate and make effective the transactions contemplated by this Agreement (including satisfaction, but not waiver, of the Closing conditions set forth in §7 below).
(b) Notices and Consents. Target will give (and will cause each Division Subsidiary to give) any notices to third-parties, and Target will use its [reasonable] best efforts (and will cause each Division Subsidiary to use its [reasonable] best efforts) to obtain any third-party consents that Buyer may [reasonably] request in connection with the matters referred to in §3(c) above. Each of the Parties will (and Target will cause each Division Subsidiary to) give any notices to, make any filings with, and use its [reasonable] best efforts to obtain any authorizations, consents, and approvals of governments and governmental agencies in connection with the matters referred to in §3(c) and §4(c) above. Without limiting the generality of the foregoing, each of the Parties will file (and Target will cause each of Division Subsidiary to file) any Notification and Report Forms and related material that it may be required to file with the Federal Trade Commission and the Antitrust Division of the United States Department of Justice under the Hart-Scott-Rodino Act, will use its [reasonable] best efforts to obtain (and Target will cause each Division Subsidiary to use its [reasonable] best efforts to obtain) an early termination of the applicable waiting period, and will make (and Target will cause each Division Subsidiary to make) any further filings pursuant thereto that may be necessary[, proper, or advisable] in connection therewith.
(c) Union Assignment/Assumption Agreement(s). Target will cause each Division and Division Subsidiary to use its [reasonable] best efforts to procure enforceable agreements from each union that is party to a collective bargaining agreement being assumed by Buyer under this Agreement, pursuant to which such union agrees to the assignment to and assumption by Buyer of such collective bargaining agreement and to be bound itself by such collective bargaining agreement as of and after the Closing.
(d) Operation of Business. Target will not cause or permit Division or any Division Subsidiary to engage in any practice, take any action, or enter into any transaction outside the Ordinary Course of Business. Without limiting the generality of the foregoing, Target will not cause or permit Division or any Division Subsidiary to (i) declare, set aside, or pay any dividend or make any distribution with respect to its capital stock or redeem, purchase or otherwise acquire any of its capital stock, (ii) pay any amount to any third party with respect to any Liability (including any costs and expenses Target and its Subsidiaries have incurred or may incur in connection with this Agreement and the transactions contemplated hereby) that would not constitute an Assumed Liability if in existence as of the Closing, (iii) _____________, or (iv) otherwise engage in any practice, take any action, or enter into any transaction of the sort described in §3(h) above.
(e) Preservation of Business. Target will cause each of Division and Division Subsidiaries to keep its business and properties substantially intact, including its present operations, physical facilities, working conditions, and relationships with lessors, licensors, suppliers, customers, and employees.
(f) Full Access. Target will permit (and will cause Division and each Division Subsidiary to permit) representatives of Buyer to have full access [at all reasonable times, and in a manner so as not to interfere with the normal business operations of Division and Division Subsidiaries,] to all premises, properties, personnel, books, records (including Tax records), contracts, and documents of or pertaining to Division and each Division Subsidiary.
(g) Notice of Developments. Each Party will give prompt written notice to the other Party of any material adverse development causing a breach of any of its own representations and warranties in §3 and §4 above. No disclosure by any Party pursuant to this §5(g), however, shall be deemed to amend or supplement the Disclosure Schedule or to prevent or cure any misrepresentation, breach of warranty, or breach of covenant.
(h) Exclusivity. Target will not (and will not cause or permit Division or any Division Subsidiary to) (i) solicit, initiate, or encourage the submission of any proposal or offer from any Person relating to the acquisition of any capital stock or other voting securities, or any substantial portion of the assets, of Division or any Division Subsidiary (including any acquisition structured as a merger, consolidation, or share exchange) or (ii) participate in any discussions or negotiations regarding, furnish any information with respect to, assist or participate in, or facilitate in any other manner any effort or attempt by any Person to do or seek any of the foregoing. Target will notify Buyer immediately if any Person makes any proposal, offer, inquiry, or contact with respect to any of the foregoing.
(i) Maintenance of Real Property. Target will cause Division and each Division Subsidiary to maintain the Real Property, including all of the Improvements, in substantially the same condition as existed on the date of this Agreement, ordinary wear and tear excepted, and shall not demolish or remove any of the existing Improvements, or erect new improvements on the Real Property or any portion thereof, without the prior written consent of Buyer.
(j) Leases. Target will not (and will not cause or permit Division or any Division Subsidiary to) amend, modify, extend, renew or terminate any Lease, nor shall Division or any Division Subsidiary enter into any new lease, sublease, license or other agreement for the use or occupancy of any Real Property, without the prior written consent of Buyer.
(k) Title Insurance and Surveys. Target will (and will cause each of Division and Division Subsidiaries to) use best efforts to assist Buyer in obtaining the Title Commitments, Title Policies and Surveys in form and substance as set forth in §7 of this Agreement, within the time periods set forth therein, including removing from title any Liens that are not Permitted Encumbrances. Target, Division, and each Division Subsidiary shall provide the Title Company with any affidavits, indemnities, memoranda or other assurances requested by the Title Company to issue the Title Policies.
§6. Post-Closing Covenants. The Parties agree as follows with respect to the period following the Closing:
(a) General. In case at any time after the Closing any further actions are necessary [or desirable] to carry out the purposes of this Agreement, each of the Parties will take such further actions (including the execution and delivery of such further instruments and documents) as the other Party may [reasonably] request, all at the sole cost and expense of the requesting Party (unless the requesting Party is entitled to indemnification therefor under §8 below). Target acknowledges and agrees that from and after the Closing Buyer will be entitled to possession of all documents, books, records (including Tax records), agreements, and financial data of any sort relating to Division and Division Subsidiaries.
(b) Litigation Support. In the event and for so long as any Party actively is contesting or defending against any action, suit, proceeding, hearing, investigation, charge, complaint, claim, or demand in connection with (i) any transaction contemplated under this Agreement or (ii) any fact, situation, circumstance, status, condition, activity, practice, plan, occurrence, event, incident, action, failure to act, or transaction on or prior to the Closing Date involving Division or any Division Subsidiary, the other Party will cooperate with the contesting or defending Party and its counsel in the contest or defense, make available its personnel, and provide such testimony and access to its books and records as shall be necessary in connection with the contest or defense, all at the sole cost and expense of the contesting or defending Party (unless the contesting or defending Party is entitled to indemnification therefor under §8 below).
(c) Transition. Target will not take any action that is designed or intended to have the effect of discouraging any lessor, licensor, customer, supplier, or other business associate of Division or any Division Subsidiary from maintaining the same business relationships with Buyer and Division Subsidiaries after the Closing as it maintained with Division and Division Subsidiaries prior to the Closing. Target will refer all customer inquiries relating to the business of Division and Division Subsidiaries to Buyer from and after the Closing.
(d) Confidentiality. Target, using the same degree of care with which it treats its own [most sensitive] confidential information (but not less than a reasonable standard of care), will treat and hold as such all of the Confidential Information, refrain from using any of the Confidential Information except in connection with this Agreement, and deliver promptly to Buyer or destroy, at the request and option of Buyer, all tangible embodiments (and all copies) of the Confidential Information that are in its possession. In the event that Target is requested or required (by oral question or request for information or documents in any legal proceeding, interrogatory, subpoena, civil investigative demand, or similar process) to disclose any Confidential Information, Target will notify Buyer promptly of the request or requirement so that Buyer may seek an appropriate protective order or waive compliance with the provisions of this §6(d). If, in the absence of a protective order or the receipt of a waiver hereunder, Target is, on the advice of counsel, compelled to disclose any Confidential Information to any tribunal or else stand liable for contempt, Target may disclose the Confidential Information to the tribunal; provided, however, that Target shall use its [reasonable] best efforts to obtain, at the [reasonable] request of Buyer, an order or other assurance that confidential treatment will be accorded to such portion of the Confidential Information required to be disclosed as Buyer shall designate.
(e) Non-Compete Covenant. For a period of [5 years] from and after the Closing Date, Target will not engage directly or indirectly in any business that Division or any Division Subsidiary conducts as of the Closing Date [in any geographic area in which Division or any Division Subsidiary conducts that business as of the Closing Date]; provided, however, that no owner of less than 1% of the outstanding stock of any publicly traded corporation shall be deemed to engage solely by reason thereof in its business. If the final judgment of a court of competent jurisdiction declares that any term or provision of this §6(e) is invalid or unenforceable, the Parties agree that the court making the determination of invalidity or unenforceability shall have the power to reduce the scope, duration, or area of the term or provision, to delete specific words or phrases, or to replace any invalid or unenforceable term or provision with a term or provision that is valid and enforceable and that comes closest to expressing the intention of the invalid or unenforceable term or provision, and this Agreement shall be enforceable as so modified after the expiration of the time within which the judgment may be appealed.
(f) Buyer Notes. The Buyer Notes will be imprinted with a legend substantially in the following form:
The payment of principal and interest on this Note is subject to certain recoupment provisions set forth in an Asset Purchase Agreement dated as of _________ ___, _______ (the ‘‘Agreement’’) between the issuer of this Note and the person to which this Note originally was issued. This Note was originally issued on _________ ___, _______, and has not been registered under the Securities Act of 1933, as amended, or any state securities act, and may not be sold or transferred in the absence of such registration or qualification or an exemption therefrom under the securities act or any such state securities laws that may be applicable. The transfer of this Note is subject to certain restrictions set forth in the Agreement. The issuer of this Note will furnish a copy of these provisions to the holder hereof without charge upon written request.
Each holder desiring to transfer a Buyer Note first must furnish Buyer with (i) a written opinion [reasonably] satisfactory to Buyer in form and substance from counsel [reasonably] satisfactory to Buyer by reason of experience to the effect that the holder may transfer the Buyer Note as desired without registration under the Securities Act and (ii) a written undertaking executed by the desired transferee [reasonably] satisfactory to Buyer in form and substance agreeing to be bound by the recoupment provisions and the restrictions on transfer contained herein.
§7. Conditions to Obligation to Close.
(a) Conditions to Buyer’s Obligation. Buyer’s obligation to consummate the transactions to be performed by it in connection with the Closing is subject to satisfaction of the following conditions:
(i) the representations and warranties set forth in §3 above shall be true and correct in all material respects at and as of the Closing Date, except to the extent that such representations and warranties are qualified by the term ‘‘material,’’ or contain terms such as ‘‘Material Adverse Effect’’ or ‘‘Material Adverse Change,’’ in which case such representations and warranties (as so written, including the term ‘‘material’’ or ‘‘Material’’) shall be true and correct in all respects at and as of the Closing Date;
(ii) Target shall have performed and complied with all of its covenants hereunder in all material respects through the Closing, except to the extent that such covenants are qualified by the term ‘‘material,’’ or contain terms such as ‘‘Material Adverse Effect’’ or ‘‘Material Adverse Change,’’ in which case Target shall have performed and complied with all of such covenants (as so written, including the term ‘‘material’’ or ‘‘Material’’) in all respects through the Closing;
(iii) Target, Division and Division Subsidiaries shall have procured all of the third-party consents specified in §5(b) above;
(iv) no action, suit, or proceeding shall be pending [or threatened] before (or that could come before) any court or quasi-judicial or administrative agency of any federal, state, local, or non-U.S. jurisdiction [or before (or that could come before) any arbitrator] wherein an unfavorable injunction, judgment, order, decree, ruling, or charge would (A) prevent consummation of any of the transactions contemplated by this Agreement, (B) cause any of the transactions contemplated by this Agreement to be rescinded following consummation, (C) adversely affect the right of Buyer to own the Acquired Assets, to operate the former business of Division, and to control Division Subsidiaries, or (D) adversely affect the right of any Division Subsidiary to own its assets and to operate its business (and no such injunction, judgment, order, decree, ruling, or charge shall be in effect);
(v) Target shall have delivered to Buyer a certificate to the effect that each of the conditions specified above in §7(a)(i)-(iv) is satisfied in all respects;
[(vi) all applicable waiting periods (and any extensions thereof) under the Hart-Scott-Rodino Act shall have expired or otherwise been terminated and Target, Division Subsidiaries, and Buyer shall have received all other authorizations, consents, and approvals of governments and governmental agencies referred to in §3(c) and §4(c) above;]
(vii) the relevant parties shall have entered into side agreements in form and substance as set forth in Exhibits F-1 through F-________ attached hereto and the same shall be in full force and effect;
(viii) Buyer shall have received from counsel to Target an opinion in form and substance as set forth in Exhibit G attached hereto, addressed to Buyer and on which Buyer’s lenders shall be entitled to rely, and dated as of the Closing Date;
(ix) Buyer shall have received the resignations, effective as of the Closing, of each director and officer of Division Subsidiaries other than those whom Buyer shall have specified in writing at least [5] business days prior to the Closing;
(x) Buyer shall have obtained on terms and conditions [reasonably] satisfactory to it all of the financing it needs in order to consummate the transactions contemplated hereby [and fund the working capital requirements of the acquired business after the Closing];
(xi) all actions to be taken by Target in connection with consummation of the transactions contemplated hereby and all certificates, opinions, instruments, and other documents required to effect the transactions contemplated hereby shall be [reasonably] satisfactory in form and substance to Buyer;
(xii) Buyer shall have obtained, no later than 10 days prior to the Closing Date, a commitment for an ALTA Owner’s Title Insurance Policy 2006 Form or other form of policy acceptable to Buyer for each Owned Real Property (other than Owned Real Property located outside the United States) and each Leased Real Property identified by Buyer (the ‘‘Material Leased Real Property’’), issued by a title insurance company satisfactory to Buyer (the ‘‘Title Company’’), together with a copy of all documents referenced therein (the ‘‘Title Commitments’’);
(xiii) at Closing, Buyer shall have obtained title insurance policies from the Title Company (which may be in the form of a mark-up of a pro forma of the Title Commitments) in accordance with the Title Commitments, insuring Buyer’s fee simple title to each Owned Real Property or Buyer’s legal, valid, binding and enforceable leasehold interest in each Material Leased Real Property (as the case may be), as of the Closing Date (including all recorded appurtenant easements, insured as separate legal parcels), with gap coverage from Target through the date of recording, subject only to Permitted Encumbrances, in such amount as Buyer [reasonably] determines to be the value of the Real Property insured thereunder and which shall include the endorsements identified herein (the ‘‘Title Policies’’); the Title Policies shall have the creditor’s rights exception deleted, and shall include the following endorsements (to the extent available in the applicable jurisdiction, but regardless of whether any additional amount is charged for such endorsement), in form and substance reasonably acceptable to Buyer: (i) extended coverage endorsement (insuring over the general or standard exceptions); (ii) ALTA Form 3.1 zoning endorsement (with parking and loading docks), or if unavailable in the applicable jurisdiction, a satisfactory zoning letter from the local zoning authorities; (iii) a survey accuracy endorsement (insuring that the Real Property described therein is the real property shown on the Survey (as defined below) delivered with respect thereto and that such Survey is an accurate survey thereof); (iv) access endorsement (insuring that the Real Property described therein is adjacent to a public street and has direct and unencumbered pedestrian and vehicular access to such public street); (v) ALTA Form 9 owner’s comprehensive endorsement; (vi) tax parcel number endorsement (insuring that the tax parcel number in the endorsement includes all of the Real Property insured thereunder and no other real property); (vii) if the Real Property insured therein consists of 1 or more adjacent parcels, a contiguity endorsement (insuring that all of such parcels are contiguous to one another without any gaps or gores); (viii) utilities endorsement (insuring the availability of utilities to the Real Property); and (ix) such other endorsements as reasonably requested by Buyer; and Target shall pay all fees, costs and expenses with respect to the Title Commitments and Title Policies.
(xiv) with respect to any Owned Real Property and Material Leased Real Property located outside the United States, Target, Division, and Division Subsidiaries, at Target’s cost and expense, shall provide Buyer with an equivalent form of title assurance in accordance with local custom satisfactory to Buyer for each parcel of such Owned Real Property and Material Leased Real Property;
(xv) Buyer shall have obtained, no later than 10 days prior to the Closing Date, a survey for each parcel of Owned Real Property and Material Leased Real Property, dated no earlier than the date of this Agreement, prepared by a surveyor licensed in the jurisdiction where the real property is located, satisfactory to Buyer, and conforming to 2011 ALTA/ACSM Minimum Detail Requirements for Land Title Surveys, including Table A Items Nos. 1, 2, 3, 4, 6, 7(a), 7(b)(1), 7(c), 8, 9, 10, 11(b), 13, 14, 15, and 16, and such other standards as the Title Company and Buyer require as a condition to the removal of any survey exceptions from the Title Policies, and certified to Buyer, Buyer’s lender and the Title Company, in a form and with a certification satisfactory to each of such parties (the ‘‘Surveys’’); the Surveys shall not disclose any encroachment from or onto any of the Real Property or any portion thereof or any other survey defect that has not been cured or insured over to Buyer’s reasonable satisfaction prior to the Closing; and Target shall have paid or committed to pay all fees, costs and expenses with respect to the Surveys;
(xvi) Target shall (and shall cause Division and each Division Subsidiary to) have obtained and delivered to Buyer a written consent for the assignment of each of the Leases, and, if requested by Buyer’s lender, a waiver of landlord liens, collateral assignment of lease or leasehold mortgage from the landlord or other party whose consent thereto is required under such Lease (the ‘‘Lease Consents’’), in form and substance satisfactory to Buyer and Buyer’s lender;
(xvii) Target shall (and shall cause Division and each Division Subsidiary to) have obtained and delivered to Buyer an estoppel certificate with respect to each of the Leases, dated no more than 30 days prior to the Closing Date, from the other party to such Lease, in form and substance satisfactory to Buyer (the ‘‘Estoppel Certificates’’);
(xviii) Target shall (and shall cause Division and each Division Subsidiary to) have obtained and delivered to Buyer a non-disturbance agreement with respect to each of the Leases for the Material Leased Real Property, in form and substance satisfactory to Buyer, from each lender encumbering any real property underlying the Leased Real Property for such Lease (the ‘‘Non-Disturbance Agreements’’);
(xix) Target shall deliver to Buyer a non-foreign affidavit dated as of the Closing Date, sworn under penalty of perjury and in form and substance required under the Treasury Regulations issued pursuant to Code §1445 stating that Target is not a ‘‘foreign person’’ as defined in Code §1445 (the ‘‘FIRPTA Affidavit’’);
(xx) no damage or destruction or other change has occurred with respect to any of the Real Property or any portion thereof that, individually or in the aggregate, would materially impair the use or occupancy of the Real Property or the operation of Division’s or Division Subsidiaries’ business as currently conducted thereon;
(xxi) each of __________, __________, __________, and __________ shall have entered into employment and equity agreements with Buyer on terms reasonably satisfactory to Buyer, and such agreements shall be in full force and effect as of the Closing;
(xxii) Target shall have delivered to Buyer copies of the certificate of incorporation (or formation) of each of Target Stockholders, Target, and each Division Subsidiary certified on or soon before the Closing Date by the Secretary of State (or comparable officer) of the jurisdiction of each such Person’s incorporation (or formation);
(xxiii) Target shall have delivered to Buyer copies of the certificate of good standing of each of Target Stockholders, Target, and each Division Subsidiary issued on or soon before the Closing Date by the Secretary of State (or comparable officer) of the jurisdiction of each such Person’s organization [and of each jurisdiction in which each such Person is qualified to do business];
(xxiv) Target Stockholders shall have delivered to Buyer a certificate of the secretary or an assistant secretary of each of Target Stockholders, dated the Closing Date, in form and substance reasonably satisfactory to Buyer, as to: (i) no amendments to the certificate of incorporation (or other formation) of such Target Stockholder since the date specified in clause (xxii) above; (ii) the bylaws (or other organizational documents) of such Target Stockholder; (iii) the resolutions of the board of directors (or other authorizing body) (or a duly authorized committee thereof) of such Target Stockholder authorizing the execution, delivery, and performance of this Agreement and the transactions contemplated hereby; and (iv) incumbency and signatures of the officers of such Target Stockholder executing this Agreement or any other agreement contemplated by this Agreement; and
(xxv) Target Stockholders shall have delivered to Buyer a certificate of the secretary or an assistant secretary of Target and each Division Subsidiary, dated the Closing Date, in form and substance reasonably satisfactory to Buyer, as to: (i) no amendments to the certificate of incorporation (or other formation) of such Person since the date specified in clause (xxii) above; (ii) the bylaws (or other organizational documents) of such Person; and (iii) any resolutions of the board of directors (or other authorizing body) (or a duly authorized committee thereof) of such Person relating to this Agreement and the transactions contemplated hereby.
Buyer may waive any condition specified in this §7(a) if it executes a writing so stating at or prior to the Closing.
(b) Conditions to Target’s Obligation. Target’s obligation to consummate the transactions to be performed by it in connection with the Closing is subject to satisfaction of the following conditions:
(i) the representations and warranties set forth in §4 above shall be true and correct in all material respects at and as of the Closing Date, except to the extent that such representations and warranties are qualified by the term ‘‘material,’’ or contain terms such as ‘‘Material Adverse Effect’’ or ‘‘Material Adverse Change,’’ in which case such representations and warranties (as so written, including the term ‘‘material’’ or ‘‘Material’’) shall be true and correct in all respects at and as of the Closing Date;
(ii) Buyer shall have performed and complied with all of its covenants hereunder in all material respects through the Closing, except to the extent that such covenants are qualified by the term ‘‘material,’’ or contain terms such as ‘‘Material Adverse Effect’’ or ‘‘Material Adverse Change,’’ in which case Buyer shall have performed and complied with all of such covenants (as so written, including the term ‘‘material’’ or ‘‘Material’’) in all respects through the Closing;
(iii) no action, suit, or proceeding shall be pending [or threatened] before any court or quasi-judicial or administrative agency of any federal, state, local, or non-U.S. jurisdiction [or before any arbitrator] wherein an unfavorable injunction, judgment, order, decree, ruling, or charge would (A) prevent consummation of any of the transactions contemplated by this Agreement or (B) cause any of the transactions contemplated by this Agreement to be rescinded following consummation (and no such injunction, judgment, order, decree, ruling, or charge shall be in effect);
(iv) Buyer shall have delivered to Target a certificate to the effect that each of the conditions specified above in §7(b)(i)-(iii) is satisfied in all respects;
(v) [all applicable waiting periods (and any extensions thereof) under the Hart-Scott-Rodino Act shall have expired or otherwise been terminated and] Target, Division Subsidiaries, and Buyer shall have received all [other] authorizations, consents, and approvals of governments and governmental agencies referred to in §3(c) and §4(c) above;
(vi) the relevant parties shall have entered into side agreements in form and substance as set forth in Exhibits F-1 through F-________ attached hereto and the same shall be in full force and effect;
(vii) Target shall have received from counsel to Buyer an opinion in form and substance as set forth in Exhibit H attached hereto, addressed to Target, and dated as of the Closing Date;
(viii) all actions to be taken by Buyer in connection with consummation of the transactions contemplated hereby and all certificates, opinions, instruments, and other documents required to effect the transactions contemplated hereby will be [reasonably] satisfactory in form and substance to Target.
Target may waive any condition specified in this §7(b) if it executes a writing so stating at or prior to the Closing.
§8. Remedies for Breaches of This Agreement.
(a) Survival of Representations and Warranties.
Alternative 1—add the following paragraph if the Parties are seeking Full Indemnification:
[All of the representations and warranties of Buyer and Target contained in this Agreement shall survive the Closing (even if the damaged Party knew or had reason to know of any misrepresentation or breach of warranty at the time of Closing) and continue in full force and effect for the maximum period for bringing a breach of contract claim permitted under the statute of limitations of the jurisdiction specified in §10(h).]
Alternative 2—add the following paragraph if the Parties are seeking Limited Indemnification:
[The Parties, intending to shorten the applicable statute of limitations period, agree that all of the representations and warranties of Target contained in §3(g)-(j), §3(l)-(y), and §3(aa)-(ff) of this Agreement shall survive the Closing (even if Buyer knew or had reason to know of any misrepresentation or breach of warranty at the time of Closing) and shall expire on the [third] anniversary of the Closing. All of the other representations and warranties of Buyer and Target contained in this Agreement (including the representations and warranties of Target contained in §3(a)-(f), §3(k), and §3(z) hereof) shall survive the Closing (even if the damaged Party knew or had reason to know of any misrepresentation or breach of warranty at the time of Closing) and continue in full force and effect for the maximum period for bringing a breach of contract claim permitted under the statute of limitations of the jurisdiction specified in §10(h).]
(b) Indemnification Provisions for Buyer’s Benefit.
(i) In the event Target breaches (or in the event any third party alleges facts that, if true, would mean Target has breached) any of its representations, warranties, and covenants contained in this Agreement [(determined without regard to the Disclosure Schedule and any limitations or qualifications by materiality)], and provided that Buyer makes a written claim for indemnification (including any claim with a factual basis that would reasonably be expected to result in a future indemnification obligation hereunder) against Target pursuant to §10(g) below before expiration of the applicable survival period set forth in §8(a) above, then such survival period shall not expire with respect to such claim and Target shall  be obligated to indemnify Buyer from and against the entirety of any Adverse Consequences Buyer  has suffered or incurred or may in the future suffer or incur, whether or not the amount of Adverse Consequences has been determined or is due for payment (including any Adverse Consequences Buyer may suffer after the end of any applicable survival period) resulting from, arising out of, relating to, in the nature of, or caused by the breach (or the alleged breach)[, and any applicable statute of limitations period on filing a lawsuit with respect to such claim shall not expire until 1 year after the later of (1) the date of Buyer’s written claim for indemnification and (2) the expiration of the applicable survival period set forth in §8(a) above].
Alternative 2—add the following language if the Parties are seeking Limited Indemnification: [; provided, however, that Target shall not have any obligation to indemnify Buyer from and against any Adverse Consequences resulting from, arising out of, relating to, in the nature of, or caused by the breach (or alleged breach) of any representation or warranty of Target contained in §3(g)–(j), §3(l)–(y), and §3(aa)–(ff) above until Buyer has suffered Adverse Consequences by reason of all such breaches (or alleged breaches) in excess of a $__________ aggregate threshold (at which point Target will be obligated to indemnify Buyer from and against all such Adverse Consequences relating back to the first dollar).]
(ii) Target shall be obligated to indemnify Buyer from and against the entirety of any Adverse Consequences Buyer may suffer resulting from, arising out of, relating to, in the nature of, or caused by:
(A) any Liability of Target that is not an Assumed Liability (including any Liability of Target that becomes a Liability of Buyer under any bulk transfer law of any jurisdiction, under any common law doctrine of de facto merger or successor liability, under Environmental, Health, and Safety Requirements, or otherwise by operation of law);
(B) any Liability of any Division Subsidiary for unpaid Taxes with respect to any Tax year or portion thereof ending on or before the Closing Date (or for any Tax year beginning before and ending after the Closing Date to the extent allocable to the portion of such period beginning before and ending on the Closing Date)[, including any Taxes attributable to a Code [§338(h)(10)] [§336(e)] election made with respect to the purchase of any Division Subsidiary pursuant to this Agreement][, but excluding any Taxes resulting from a Code §338 election made with respect to the purchase of any Division Subsidiary pursuant to this Agreement];
Alternative—add the following language if the Parties are seeking a Purchase Price Adjustment and Taxes are taken into account: [to the extent that such Taxes exceed the amount, if any, specifically reserved for such Taxes in the final determination of Closing Indebtedness and taken into account in determining the Purchase Price pursuant to §2(e) above]; or
(C) any Liability of any Division Subsidiary for the unpaid Taxes of any Person under Reg. §1.1502-6 (or any similar provision of state, local, or non-U.S. law), as a transferee or successor, by contract, or otherwise.
(iii) Target shall be obligated to indemnify Buyer from and against the entirety of any Adverse Consequences Buyer may suffer resulting from, arising out of, relating to, in the nature of, or caused by ______________.
(c) Indemnification Provisions for Target’s Benefit.
(i) In the event Buyer breaches (or in the event any third party alleges facts that, if true, would mean Buyer has breached) any of its representations, warranties, and covenants contained in this Agreement and, provided that Target makes a written claim for indemnification against Buyer pursuant to §10(g) below within the survival period (if there is an applicable survival period pursuant to §8 above), then Buyer shall indemnify Target from and against the entirety of any Adverse Consequences suffered (excluding any Adverse Consequences suffered after the end of any applicable survival period) resulting from, arising out of, relating to, in the nature of, or caused by the breach (or the alleged breach).
(ii) Buyer agrees to indemnify Target from and against the entirety of any Adverse Consequences Target may suffer resulting from, arising out of, relating to, in the nature of, or caused by any Assumed Liability.
(d) Matters Involving Third Parties.
(i) If any third party notifies any Party (the ‘‘Indemnified Party’’) with respect to any matter (a ‘‘Third-Party Claim’’) that may give rise to a claim for indemnification against the other Party (the ‘‘Indemnifying Party’’) under this §8, then the Indemnified Party shall promptly notify the Indemnifying Party thereof in writing; provided, however, that no delay on the part of the Indemnified Party in notifying the Indemnifying Party shall relieve the Indemnifying Party from any obligation hereunder unless (and then solely to the extent) the Indemnifying Party is thereby prejudiced.
(ii) The Indemnifying Party will have the right to defend the Indemnified Party against the Third-Party Claim with counsel of its choice [reasonably] satisfactory to the Indemnified Party so long as (A) the Indemnifying Party notifies the Indemnified Party in writing within [15 days] after the Indemnified Party has given notice of the Third-Party Claim that the Indemnifying Party will indemnify the Indemnified Party from and against the entirety of any Adverse Consequences the Indemnified Party may suffer resulting from, arising out of, relating to, in the nature of, or caused by the Third-Party Claim, (B) the Indemnifying Party provides the Indemnified Party with evidence [reasonably] acceptable to the Indemnified Party that the Indemnifying Party will have the financial resources to defend against the Third-Party Claim and fulfill its indemnification obligations hereunder, (C) the Third-Party Claim involves only money damages and does not seek an injunction or other equitable relief, (D) settlement of, or an adverse judgment with respect to, the Third-Party Claim is not, in the good faith judgment of the Indemnified Party, likely to establish a precedential custom or practice [materially] adverse to the continuing business interests or the reputation of the Indemnified Party, and (E) the Indemnifying Party conducts the defense of the Third-Party Claim actively and diligently.
(iii) So long as the Indemnifying Party is conducting the defense of the Third-Party Claim in accordance with §8(d)(ii) above, (A) the Indemnified Party may retain separate co-counsel at its sole cost and expense and participate in the defense of the Third-Party Claim, (B) the Indemnified Party will not consent to the entry of any judgment on or enter into any settlement with respect to the Third-Party Claim without the prior written consent of the Indemnifying Party [(not to be unreasonably withheld)], and (C) the Indemnifying Party will not consent to the entry of any judgment on or enter into any settlement with respect to the Third-Party Claim without the prior written consent of the Indemnified Party [(not to be unreasonably withheld)].
(iv) In the event any of the conditions in §8(d)(ii) above is or becomes unsatisfied, however, (A) the Indemnified Party may defend against, and consent to the entry of any judgment on or enter into any settlement with respect to, the Third-Party Claim in any manner it may [reasonably] deem appropriate (and the Indemnified Party need not consult with, or obtain any consent from, the Indemnifying Party in connection therewith), (B) the Indemnifying Party will reimburse the Indemnified Party promptly and periodically for the costs of defending against the Third-Party Claim (including [reasonable] attorneys’ fees and expenses), and (C) the Indemnifying Party will remain responsible for any Adverse Consequences the Indemnified Party may suffer resulting from, arising out of, relating to, in the nature of, or caused by the Third-Party Claim to the fullest extent provided in this §8.
(e) Determination of Adverse Consequences. [The Parties shall take into account the time cost of money (using the Applicable Rate as the discount rate) in determining Adverse Consequences for purposes of this §8.] All indemnification payments under this §8 shall be deemed adjustments to the Purchase Price.
(f) Recoupment Against Escrow Agreement and Buyer Notes. Any indemnification to which Buyer is entitled under this §8 as a consequence of any Adverse Consequences it may suffer shall first be made as a payment to Buyer from the escrow account in accordance with the terms of the Escrow Agreement and, to the extent that the aggregate amount of such payments exceeds the Escrow Amount plus any interest accrued thereon, Buyer shall have the option of recouping all or any part of any remaining or additional Adverse Consequences it may suffer (in lieu of seeking any indemnification to which it is entitled under this §8) by notifying Target that Buyer is reducing the principal amount outstanding under the Buyer Note. This shall affect the timing and amount of payments required under the Buyer Note in the same manner as if Buyer had made a permitted prepayment (without premium or penalty) thereunder.
(g) Other Indemnification Provisions. The foregoing indemnification provisions are in addition to, and not in derogation of, any statutory, equitable, or common law remedy (including without limitation any such remedy arising in tort or under Environmental, Health and Safety Requirements) any Party may have for breach of representation, warranty, or covenant with respect to Division, Division Subsidiaries, or the transactions contemplated by this Agreement.
§9. Termination.
(a) Termination of Agreement. Certain of the Parties may terminate this Agreement as provided below:
(i) Buyer and Target may terminate this Agreement by mutual written consent at any time prior to the Closing;
(ii) Buyer may terminate this Agreement by giving written notice to Target on or before the [30th] day following the date of this Agreement if Buyer is not [reasonably] satisfied with the results of its continuing business, legal, environmental, and accounting due diligence regarding Division and Division Subsidiaries;
(iii) Buyer may terminate this Agreement by giving written notice to Target at any time prior to the Closing (A) in the event Target has breached any material representation, warranty, or covenant contained in this Agreement in any material respect, Buyer has notified Target of the breach, and the breach has continued without cure for a period of [30 days] after the notice of breach or (B) if the Closing shall not have occurred on or before _________ ___, _______, by reason of the failure of any condition precedent under §7(a) hereof (unless the failure results primarily from Buyer itself breaching any representation, warranty, or covenant contained in this Agreement); and
(iv) Target may terminate this Agreement by giving written notice to Buyer at any time prior to the Closing (A) in the event Buyer has breached any material representation, warranty, or covenant contained in this Agreement in any material respect, Target has notified Buyer of the breach, and the breach has continued without cure for a period of [30 days] after the notice of breach or (B) if the Closing shall not have occurred on or before _________ ___, _______, by reason of the failure of any condition precedent under §7(b) hereof (unless the failure results primarily from Target itself breaching any representation, warranty, or covenant contained in this Agreement).
(b) Effect of Termination. If any Party terminates this Agreement pursuant to §9(a) above, all rights and obligations of the Parties hereunder shall terminate without any Liability of any Party to the other Party (except for any Liability of any Party then in breach).
§10. Miscellaneous.
(a) Press Releases and Public Announcements. No Party shall issue any press release or make any public announcement relating to the subject matter of this Agreement [prior to the Closing] without the prior written approval of the other Party; provided, however, that any Party may make any public disclosure it believes in good faith is required by applicable law or any listing or trading agreement concerning its publicly traded securities (in which case the disclosing Party will use its [reasonable] best efforts to advise the other Party prior to making the disclosure).
(b) No Third-Party Beneficiaries. This Agreement shall not confer any rights or remedies upon any Person other than the Parties and their respective successors and permitted assigns.
(c) Entire Agreement. This Agreement (including the documents referred to herein) constitutes the entire agreement between the Parties and supersedes any prior understandings, agreements, or representations by or between the Parties, written or oral, to the extent they relate in any way to the subject matter hereof.
(d) Succession and Assignment. This Agreement shall be binding upon and inure to the benefit of the Parties named herein and their respective successors and permitted assigns. No Party may assign either this Agreement or any of its rights, interests, or obligations hereunder without the prior written approval of the other Party; provided, however, that Buyer may (i) assign any or all of its rights and interests hereunder to 1 or more of its Affiliates and (ii) designate 1 or more of its Affiliates to perform its obligations hereunder (in any or all of which cases Buyer nonetheless shall remain responsible for the performance of all of its obligations hereunder).
(e) Counterparts. This Agreement may be executed in any number of counterparts (including by pdf or other readable electronic format), each of which shall be deemed an original, with the same effect as if the signatures thereto and hereto were upon the same instrument, and will become effective when one or more counterparts have been signed by each of the parties and delivered (including by email) to the other parties, and all such counterparts together will constitute one and the same instrument.
(f) Headings. The section headings contained in this Agreement are inserted for convenience only and shall not affect in any way the meaning or interpretation of this Agreement.
(g) Notices. All notices, requests, demands, claims, and other communications hereunder shall be in writing. Any notice, request, demand, claim, or other communication hereunder shall be deemed duly given (i) when delivered personally to the recipient, (ii) 1 business day after being sent to the recipient by reputable overnight courier service (charges prepaid), (iii) 1 business day after being sent to the recipient by facsimile transmission or electronic mail, or (iv) 4 business days after being mailed to the recipient by certified or registered mail, return receipt requested and postage prepaid, and addressed to the intended recipient as set forth below:
If to Target:	Copy to:	
If to Buyer:	Copy to:	
If to Process Agent:	Copy to:	
Any Party may change the address to which notices, requests, demands, claims, and other communications hereunder are to be delivered by giving the other Party notice in the manner herein set forth.
(h) Governing Law. This Agreement shall be governed by and construed in accordance with the domestic laws of the State of _________ without giving effect to any choice or conflict of law provision or rule (whether of the State of ____________ or any other jurisdiction) that would cause the application of the laws of any jurisdiction other than the State of __________.
(i) Amendments and Waivers. No amendment of any provision of this Agreement shall be valid unless the same shall be in writing and signed by Buyer and Target. [Target may consent to any such amendment at any time prior to the Closing with the prior authorization of its board of directors; provided, however, that any amendment effected after Target Stockholders have approved this Agreement will be subject to the restrictions contained in the [APPLICABLE CORPORATION STATUTE]. No waiver by any Party of any default, misrepresentation, or breach of warranty or covenant hereunder, whether intentional or not, shall be valid unless the same shall be in writing and signed by the Party making such waiver nor shall such waiver be deemed to extend to any prior or subsequent default, misrepresentation, or breach of warranty or covenant hereunder or affect in any way any rights arising by virtue of any prior or subsequent default, misrepresentation, or breach of warranty or covenant.
(j) Severability. Any term or provision of this Agreement that is invalid or unenforceable in any situation in any jurisdiction shall not affect the validity or enforceability of the remaining terms and provisions hereof or the validity or enforceability of the offending term or provision in any other situation or in any other jurisdiction.
(k) Expenses. Each of Buyer, Target Stockholders, Target, and Division Subsidiaries will bear his, her, or its own costs and expenses (including legal fees and expenses) incurred in connection with this Agreement and the transactions contemplated hereby; provided, however, that Target will also bear the costs and expenses of Division and Division Subsidiaries (including all of their legal fees and expenses) in connection with this Agreement and the transactions contemplated hereby in the event that the transactions contemplated by this Agreement are consummated. Without limiting the generality of the foregoing, all transfer, documentary, sales, use, stamp, registration and other such Taxes, and all conveyance fees, recording charges and other fees and charges (including any penalties and interest) incurred in connection with the consummation of the transactions contemplated by this Agreement shall be paid by Target when due, and Target will, at its own expense, file all necessary Tax Returns and other documentation with respect to all such Taxes, fees and charges, and, if required by applicable law, the Parties will, and will cause their Affiliates to, join in the execution of any such Tax Returns and other documentation.
(l) Construction. [The Parties have participated jointly in the negotiation and drafting of this Agreement. In the event an ambiguity or question of intent or interpretation arises, this Agreement shall be construed as if drafted jointly by the Parties and no presumption or burden of proof shall arise favoring or disfavoring any Party by virtue of the authorship of any of the provisions of this Agreement.] Any reference to any federal, state, local, or non-U.S. statute or law shall be deemed also to refer to all rules and regulations promulgated thereunder, unless the context requires otherwise. The word ‘‘including’’ shall mean including without limitation. Nothing in the Disclosure Schedule shall be deemed adequate to disclose an exception to a representation or warranty made herein unless the Disclosure Schedule identifies the exception with [reasonable] particularity and describes the relevant facts in [reasonable] detail. Without limiting the generality of the foregoing, the mere listing (or inclusion of a copy) of a document or other item shall not be deemed adequate to disclose an exception to a representation or warranty made herein (unless the representation or warranty has to do with the existence of the document or other item itself). The Parties intend that each representation, warranty, and covenant contained herein shall have independent significance. If any Party has breached any representation, warranty, or covenant contained herein in any respect, the fact that there exists another representation, warranty, or covenant relating to the same subject matter (regardless of the relative levels of specificity) that the Party has not breached shall not detract from or mitigate the fact that the Party is in breach of the first representation, warranty, or covenant.
(m) Incorporation of Exhibits and Schedules. The Exhibits and Schedules identified in this Agreement are incorporated herein by reference and made a part hereof.
(n) Specific Performance. Each Party acknowledges and agrees that the other Party would be damaged irreparably in the event any provision of this Agreement is not performed in accordance with its specific terms or otherwise breached, so that a Party shall be entitled to injunctive relief to prevent breaches of the provisions of this Agreement and to enforce specifically this Agreement and the terms and provisions hereof in addition to any other remedy to which such Party may be entitled, at law or in equity. In particular, the Parties acknowledge that the business of Division and Division Subsidiaries is unique and recognize and affirm that in the event Target breaches this Agreement, money damages would be inadequate and Buyer would have no adequate remedy at law, so that Buyer shall have the right, in addition to any other rights and remedies existing in its favor, to enforce its rights and the other Parties’ obligations hereunder not only by action for damages but also by action for specific performance, injunctive, and/or other equitable relief.
(o) Submission to Jurisdiction. Each of the Parties submits to the jurisdiction of any state or federal court sitting in _____________, __________ in any action or proceeding arising out of or relating to this Agreement and agrees that all claims in respect of the action or proceeding may be heard and determined in any such court. [Each Party also agrees not to bring any action or proceeding arising out of or relating to this Agreement in any other court.] Each of the Parties waives any defense of inconvenient forum to the maintenance of any action or proceeding so brought and waives any bond, surety, or other security that might be required of any other Party with respect thereto. Each Party appoints ____________ (the ‘‘Process Agent’’) as its agent to receive on its behalf service of copies of the summons and complaint and any other process that might be served in the action or proceeding. Any Party may make service on the other Party by sending or delivering a copy of the process (i) to the Party to be served at the address and in the manner provided for the giving of notices in §10(g) above or (ii) to the Party to be served in care of the Process Agent at the address and in the manner provided for the giving of notices in §10(g) above. Nothing in this §10(o), however, shall affect the right of any Party [to bring any action or proceeding arising out of or relating to this Agreement in any other court or] to serve legal process in any other manner permitted by law or in equity. Each Party agrees that a final judgment in any action or proceeding so brought shall be conclusive and may be enforced by suit on the judgment or in any other manner provided by law or in equity.
(p) Governing Language. This Agreement has been negotiated and executed by the Parties in English. In the event any translation of this Agreement is prepared for convenience or any other purpose, the English version shall prevail.
(q) Tax Matters.
[(i) Any agreement between Target and any Division Subsidiary regarding allocation or payment of Taxes or amounts in lieu of Taxes shall be deemed terminated at and as of the Closing.
(ii) Target will be responsible for the preparation and filing of all Tax Returns for Target for all periods as to which Tax Returns are due after the Closing Date (including the consolidated, unitary, and combined Tax Returns for Target that include the operations of Division and Division Subsidiaries for any period ending on or before the Closing Date). Target will make all payments required with respect to any such Tax Return.
(iii) Buyer will be responsible for the preparation and filing of all Tax Returns for Division Subsidiaries for all periods as to which Tax Returns are due after the Closing Date (other than for Taxes with respect to periods for which the consolidated, unitary, and combined Tax Returns of Target will include the operations of Division and Division Subsidiaries). Buyer will make all payments required with respect to any such Tax Return; provided, however, that Target will reimburse Buyer concurrently therewith to the extent any payment Buyer is making relates to the operations of Division or any Division Subsidiary for any period ending on or before the Closing Date.
(iv) Buyer and Target will (A) cooperate in the preparation and filing of an election under Code [§338(h)(10)] [§336(e)] with respect to the sale of the stock of Division Subsidiaries hereunder and (B) take all such actions as are required in order to give effect to the election for state, local, and non-U.S. Tax purposes to the greatest extent permitted by law.
(v) Buyer and Target agree to utilize, or cause their respective Affiliates to utilize, the [standard] [alternate] procedure set forth in Rev. Proc. 2004-53 with respect to wage reporting.]
(r) Employee Benefits Matters. [Buyer will adopt and assume at and as of the Closing each of the Employee Benefit Plans that are maintained or to which contributions are made solely for the benefit of current and former Division employees and each trust, insurance contract, annuity contract, or other funding arrangement thereunder. Target will transfer (or cause the plan administrators to transfer) at and as of the Closing all of the corresponding assets associated with the Employee Benefit Plans that Buyer is adopting and assuming. With respect to each Multiemployer Plan, the Parties shall take all actions necessary to comply with the requirements of ERISA §4204.] Nothing contained herein, express or implied: (i) shall be construed to establish, amend, or modify any benefit plan, program, agreement, or arrangement, (ii) shall alter or limit Buyer’s ability to amend, modify, or terminate any benefit plan, program, agreement, or arrangement at any time assumed, established, sponsored, or maintained by Buyer, (iii) is intended to confer upon any current or former employee any right to employment or continued employment for any period of time by reason of this Agreement, or any right to a particular term or condition of employment, or (iv) is intended to confer upon any individual (including employees, retirees, or dependents or beneficiaries of employees or retirees) any right as a third-party beneficiary of this Agreement. Notwithstanding any other provision of this Agreement, all covenants in this §10(r) regarding Buyer’s assumption, establishment, sponsorship, or maintenance of benefit plans, programs, agreements, or arrangements shall expire on the date which is [1 year] after the Closing Date.
(s) Bulk Transfer Laws. Buyer acknowledges that Target will not comply with the provisions of any bulk transfer laws of any jurisdiction in connection with the transactions contemplated by this Agreement.
[(t) Tax Disclosure Authorization. Notwithstanding anything herein to the contrary, the Parties (and each Affiliate and Person acting on behalf of any Party) agree that each Party (and each employee, representative, and other agent of such Party) may disclose to any and all Persons, without limitation of any kind, the tax treatment and tax structure (as such terms are used in regulations promulgated under Code §6011) of the transactions contemplated by this agreement; [provided, however, that such disclosure may not be made until the earlier of date of (A) public announcement of discussions relating to the transaction, (B) public announcement of the transaction, or (C) execution of an agreement (with or without conditions) to enter into the transaction.] This authorization is not intended to permit disclosure of any other information including (without limitation) (A) any portion of any materials to the extent not related to the transaction’s tax treatment or tax structure, (B) the identities of participants or potential participants, (C) the existence or status of any negotiations, (D) any pricing or financial information (except to the extent such pricing or financial information is related to the transaction’s tax treatment or tax structure), or (E) any other term or detail not relevant to the transaction’s tax treatment or the tax structure.]
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IN WITNESS WHEREOF, the Parties hereto have executed this Agreement on [as of] the date first above written.
[BUYER]
By: ______________________________________
Title: _____________________________________
[TARGET]
By: _______________________________________
Title: ______________________________________