The most important part of the asset purchase agreement (APA) deal with representations and warranties (R&Ws). R&Ws are a long list of promises that a seller gives a buyer. If the seller misrepresents anything in the R&Ws, it will likely have to pay the buyer damages. 

To the Best of Seller's Knowledge

One of the key caveats to R&Ws is whether the it is absolute or conditioned on seller's knowledge. A simple example:

  • The sun is 92.95 million miles from the earth. 
  • To the best of seller's knowledge, the sun is 92.95 million miles from the earth.

In the first R&W, if the seller is wrong, the seller is liable for damages. Liability exists regardless of reasonability or knowledge. There is no honest mistake. 

In the second R&W, the buyer must show that the R&W is wrong and seller knew or should have known it was wrong. This is an added burden of proof on the buyer. It is added protection for the seller.

In this case, the representation is wrong. The sun is 92.96 million miles from the earth according to Google. However, supposed the R&W actually said 92.96 million miles from the sun. If it is absolutely represented by the seller, it is still wrong if the distance isn't exactly 92.96 million miles on the date of the R&W. The distance between the earth and sun varies, so an absolute R&W can cause the seller a problem. 

This same principle applies to all R&Ws. Keep that in mind as you read the rest of this article. 

The List of R&Ws

Below, we provide actual R&Ws. The left column is "buyer friendly" and the right column is "seller friendly."

Authority

To the best of Seller's knowledge, Seller has full corporate power, right and authority to enter into and perform its obligations under the Asset Purchase Agreement and each of the transaction documents. 

Seller has full corporate power, right and authority to enter into and perform its obligations under the Asset Purchase Agreement and each of the transaction documents. 


To the best of Seller's knowledge, the execution, delivery and performance of the Asset Purchase Agreement and each of the transaction documents to which Seller is a party has been duly and properly authorized by Seller by all requisite action in accordance with applicable law and with the governing documents of Seller.

The execution, delivery and performance of the Asset Purchase Agreement and each of the transaction documents to which Seller is a party has been duly and properly authorized by Seller by all requisite action in accordance with applicable law and with the governing documents of Seller.


Same.

 

 

 

This Agreement and each of the Transaction Documents to which Seller is a party has been duly executed and delivered by Seller, and, assuming due and valid authorization, execution and delivery hereof and thereof by the other parties hereto and thereto, constitute the valid and legally binding obligation of Seller and are enforceable against Seller in accordance with their respective terms.


Incorporation

To the best of Seller's knowledge, Seller is a corporation duly organized, validly existing and in good standing under the laws of Idaho.

Seller is a corporation duly organized, validly existing and in good standing under the laws of Idaho.


Same.

 

Complete and correct copies of the governing documents of Seller and all amendments thereto to date have been delivered to Buyer, along with a certificate of existence from the Secretary of State of Idaho.


Qualification of Seller

Seller is duly licensed and/or qualified to do business and is in good standing in each jurisdiction in which the ownership of the Acquired Assets, performance of the Acquired Contracts or the operation of the Business as currently conducted makes such licensing or qualification reasonably necessary.

 

 

 

 

 

Seller is duly licensed and/or qualified to do business and is in good standing in each jurisdiction in which the ownership of the Acquired Assets, performance of the Acquired Contracts or the operation of the Business as currently conducted makes such licensing or qualification reasonably necessary, except where such failures to be so qualified or in good standing would not have a Material Adverse Effect.*

 

*Material Adverse Effect means any material adverse effect on the business, condition (financial or otherwise) or results of operation of the applicable entity of a monetary value of more than $25,000.


Ownership of Seller

Same.

Schedule ## sets forth the name of each Person owning any capital stock of Seller.


Same.

There are no options (or any other similar right) to buy any equity in Seller.


Transaction Not a Breach

The execution, delivery and performance by Seller of this Agreement and the Transaction Documents to which it is a party and the consummation of the transactions contemplated hereby or thereby will not: (a) violate or conflict with or result in a breach of or default under any provision of any Law except where such conflict or breach or default would not have a Material Adverse Effect; (b) violate or conflict with or constitute a default under the governing documents of Seller; (c) constitute (with or without due notice or lapse of time or both) a default under or an event which would give rise to any right of notice, modification, acceleration payment or cancellation under or permit any party to terminate under any Acquired Contract by which any of the assets of Sellers may be bound or subject except where such default under or an event which would give rise to any right of notice, modification, acceleration payment or cancellation under or permit any party to terminate under any Acquired Contract would not have a Material Adverse Effect; (d) result in the creation or imposition of any Lien upon any of the Acquired Assets; or (e) require any authorization, consent, order, approval, filing, registration, exemption or other action by, or notice to, any Governmental Authority or other Person except where failure to do so has no Material Adverse Effect.

The execution, delivery and performance by Seller of this Agreement and the Transaction Documents to which it is a party and the consummation of the transactions contemplated hereby or thereby will not: (a) violate or conflict with or result in a breach of or default under any provision of any Law; (b) violate or conflict with or constitute a default under the governing documents of Seller; (c) constitute (with or without due notice or lapse of time or both) a default under or an event which would give rise to any right of notice, modification, acceleration payment or cancellation under or permit any party to terminate under any Acquired Contract by which any of the assets of Sellers may be bound or subject; (d) result in the creation or imposition of any Lien upon any of the Acquired Assets; or (e) require any authorization, consent, order, approval, filing, registration, exemption or other action by, or notice to, any Governmental Authority or other Person.

 

 

 

 


Compliance with Laws

Since [date], to the best of Sellers’ Knowledge, Seller and its directors, shareholders, officers, employees, agents, and managers are, and have been, in compliance with all Laws applicable to the operation, billing, use, occupancy or ownership of all of their assets and the conduct of the Business, and none of Sellers, or any agent or representative thereof have received notice from any Governmental Authority regarding any failure to so comply.

Since [date], Seller and its directors, shareholders, officers, employees, agents, and managers are, and have been, in compliance with all Laws applicable to the operation, billing, use, occupancy or ownership of all of their assets and the conduct of the Business, and none of Sellers, or any agent or representative thereof have received notice from any Governmental Authority regarding any failure to so comply.


To the best of Sellers’ Knowledge, Seller and its directors, shareholders, officers, employees, agents, and managers, or any other Person or entity acting on behalf of any, acting alone or together, have: (i) received, directly or indirectly, any rebates, payments, commissions, promotional allowances or any other economic benefits, regardless of their nature or type, from any customer, supplier, governmental employee or other Person or entity with whom Seller has done business directly or indirectly, or (ii) paid or caused to be paid or given, directly or indirectly, gave or agreed to give any contribution, gift, bribe, rebate, payoff, influence payment, kickback or similar benefit to any customer, supplier, governmental employee or other Person or entity, regardless of form, whether in money, property or services, which receipt or payment would constitute a violation of any Law. 

Seller and its directors, shareholders, officers, employees, agents, and managers, or any other Person or entity acting on behalf of any, acting alone or together, have: (i) received, directly or indirectly, any rebates, payments, commissions, promotional allowances or any other economic benefits, regardless of their nature or type, from any customer, supplier, governmental employee or other Person or entity with whom Seller has done business directly or indirectly, or (ii) paid or caused to be paid or given, directly or indirectly, gave or agreed to give any contribution, gift, bribe, rebate, payoff, influence payment, kickback or similar benefit to any customer, supplier, governmental employee or other Person or entity, regardless of form, whether in money, property or services, which receipt or payment would constitute a violation of any Law.  


Same.

Seller has instituted and maintains policies and procedures for the Business that are designed to ensure compliance with all applicable Laws.


Same.

 

 

 

 

 

 

 

 

 

 

Neither the Seller nor its directors, shareholders, officers, employees, agents, and managers, have been convicted of, charged with or investigated for, or have engaged in conduct that would: (i) constitute, a Medicare or other federal health care program (as defined in 42 U.S.C. §1320a-7(b)(f)) ("Federal Health Care Program") related offense, or (ii) been convicted of, charged with or investigated for, or engaged in conduct that would constitute, a violation of any Law related to fraud, theft, embezzlement, breach of fiduciary duty, kickbacks, bribes, other financial misconduct, obstruction of an investigation or controlled substances, and none of such parties have received notice in respect of any such matters.


Neither Seller nor its directors, shareholder, officers, nor, to the best of Seller’s knowledge, its agents or representatives thereof, has received any written communication from a Governmental Authority, or commercial payor that alleges any of them or the Acquired Assets are not in compliance with any Law, including all applicable Information Privacy or Security Laws.

Neither Seller nor its directors, shareholder, officers, agents or representatives thereof, have received any written communication from a Governmental Authority, or commercial payor that alleges any of them or the Acquired Assets are not in compliance with any Law, including all applicable Information Privacy or Security Laws.


To the best of Seller's knowledge, Seller is not under investigation by any Governmental Authority for a violation of any Information Privacy or Security Laws, including receiving any notices from the United States Department of Health and Human Services Office of Civil Rights, FTC or Justice Department relating to any such violations.

Seller is not under investigation by any Governmental Authority for a violation of any Information Privacy or Security Laws, including receiving any notices from the United States Department of Health and Human Services Office of Civil Rights, FTC or Justice Department relating to any such violations.


Neither Seller nor its directors, shareholders, officers, employees, agents, and managers, have: 

(i) made or caused to be made a false statement or representation of a Material Fact* in any application for any benefit or payment under any Law, including any Federal Health Care Program; 

(ii) made or caused to be made a false statement or representation of a Material Fact in determining rights to any benefit or payment under any Law, including any Federal Health Care Program; 

(iii) presented or caused to be presented a claim for reimbursement for services that is for an item or service that was known or should have been known to be (x) not provided as claimed, or (y) false and fraudulent; 

(iv) failed to disclose the occurrence of any event affecting the initial or continued right to any benefit or payment with intent to fraudulently secure such benefit or payment under any Law, including any Federal Health Care Program;

or (v) knowingly engaged in any other activity that violates any applicable Law (including any Healthcare Laws) prohibiting fraudulent, abusive or unlawful practices under any governmental program (including any Federal Health Care Programs and/or Health Care Law).

*Material Fact may be defined as a fact that results in more than [insert dollar amount e.g., $75,000] of liability.

Neither Seller nor its directors, shareholders, officers, employees, agents, and managers, have:

(i) made or caused to be made a false statement or representation of a material fact in any application for any benefit or payment under any Law, including any Federal Health Care Program;

(ii) made or caused to be made a false statement or representation of a material fact in determining rights to any benefit or payment under any Law, including any Federal Health Care Program;

(iii) presented or caused to be presented a claim for reimbursement for services that is for an item or service that was known or should have been known to be (x) not provided as claimed, or (y) false and fraudulent;

(iv) failed to disclose the occurrence of any event affecting the initial or continued right to any benefit or payment with intent to fraudulently secure such benefit or payment under any Law, including any Federal Health Care Program;

or (v) engaged in any other activity that violates any applicable Law (including any Healthcare Laws) prohibiting fraudulent, abusive or unlawful practices under any governmental program (including any Federal Health Care Programs and/or Health Care Law).


To the best of Seller's knowledge, Seller has maintained all records required to be maintained by or under all applicable Laws.

Seller has maintained all records required to be maintained by or under all applicable Laws.


To the best of Seller's knowledge, Seller has complied with and is in compliance with all Environmental and Safety Requirements.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Seller has complied with and is in compliance with all Environmental and Safety Requirements.*

 

*A common definition used is: 

Environmental and Safety Requirements means all federal, state, local and foreign statutes, regulations, ordinances and similar 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, and pollution or protection of the environment, including without limitation all those relating to the presence, use, production, generation, handling, transport, treatment, storage, disposal, distribution, labeling, testing, processing, discharge, release, threatened release, control, or cleanup of any hazardous or otherwise regulated materials, substances or wastes, chemical substances or mixtures, pesticides, pollutants, contaminants, toxic chemicals, petroleum products or byproducts, asbestos, polychlorinated biphenyls, noise or radiation as in effect prior to, or on or after the Closing.

This is a very broad definition.


To the best of Seller's knowledge, Seller has obtained and complied with, and is in compliance with, all permits, licenses and other authorizations that are required pursuant to Environmental and Safety Requirements for the occupation of their facilities and the operation of the Business, and such permits, licenses and other authorizations may be relied upon for continued lawful operation of the Business of Seller on and after the Effective Date without transfer, reissuance, or other governmental approval or action.

Seller has obtained and complied with, and is in compliance with, all permits, licenses and other authorizations that are required pursuant to Environmental and Safety Requirements for the occupation of their facilities and the operation of the Business, and such permits, licenses and other authorizations may be relied upon for continued lawful operation of the Business of Seller on and after the Effective Date without transfer, reissuance, or other governmental approval or action.


Same. The Seller should represent and warrant it has not received notice of a claim.

 

 

Seller has not received any claim, complaint, citation, report or other written or oral notice regarding any liabilities or potential liabilities (whether accrued, absolute, contingent, unliquidated or otherwise), including any investigatory, remedial or corrective obligations, arising under Environmental and Safety Requirements.


Seller has not knowingly treated, stored, disposed of, arranged for or permitted the disposal of, transported, handled, or released any substance, including without limitation any hazardous substance, or owned or operated any property or facility (and no such property or facility is contaminated by any such substance) in a manner that has given or would give rise to liabilities, including any liability for response costs, corrective action costs, personal injury, property damage, natural resource, damages or attorney fees, or any investigative, corrective or remedial obligations, pursuant to the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended or the Solid Waste Disposal Act, as amended or any other Environmental and Safety Requirements.

Seller has not treated, stored, disposed of, arranged for or permitted the disposal of, transported, handled, or released any substance, including without limitation any hazardous substance, or owned or operated any property or facility (and no such property or facility is contaminated by any such substance) in a manner that has given or would give rise to liabilities, including any liability for response costs, corrective action costs, personal injury, property damage, natural resource, damages or attorney fees, or any investigative, corrective or remedial obligations, pursuant to the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended or the Solid Waste Disposal Act, as amended or any other Environmental and Safety Requirements.


To the best of Seller's knowledge, none of the following exists at any property occupied by Seller: (i) underground storage tanks, surface impoundments or disposal areas, (ii) asbestos-containing material in any form or condition, or (iii) materials or equipment containing polychlorinated biphenyls.

Note: The Seller should carefully review its facilities if it plans to make this R&W. PCBs were manufactured from the late 1920s until 1979 when their manufacture was banned by the Toxic Substances Control Act. Caulk and other PCB containing products like paint and sealants were used in many buildings in the 1950s through the 1970s.

None of the following exists at any property occupied by Seller: (i) underground storage tanks, surface impoundments or disposal areas, (ii) asbestos-containing material in any form or condition, or (iii) materials or equipment containing polychlorinated biphenyls.


To the best of Seller's knowledge, no facts, events or conditions relating to the past or present facilities, properties or operations of Seller shall prevent, hinder or limit continued compliance with Environmental and Safety Requirements, give rise to any investigatory, remedial or corrective obligations pursuant to Environmental and Safety Requirements, or give rise to any other liabilities (whether accrued, absolute, contingent, unliquidated or otherwise) pursuant to Environmental and Safety Requirements (including any relating to onsite or offsite releases or threatened releases of hazardous or otherwise regulated materials, substances or wastes, personal injury, property damage or natural resources damage).

Note: The liability under this R&W could be substantial. The Seller should perform its due diligence before making this R&W.

No facts, events or conditions relating to the past or present facilities, properties or operations of Seller shall prevent, hinder or limit continued compliance with Environmental and Safety Requirements, give rise to any investigatory, remedial or corrective obligations pursuant to Environmental and Safety Requirements, or give rise to any other liabilities (whether accrued, absolute, contingent, unliquidated or otherwise) pursuant to Environmental and Safety Requirements (including any relating to onsite or offsite releases or threatened releases of hazardous or otherwise regulated materials, substances or wastes, personal injury, property damage or natural resources damage).


To the best of Seller's knowledge, neither this Agreement nor the transactions that are the subject of this Agreement imposes any obligations for site investigation or cleanup, or notification to or consent of government agencies or third parties, pursuant to any so-called “transaction-triggered” Environmental and Safety Requirement.

Note: Some states, including New Jersey and Connecticut, have adopted "transaction-triggered" environmental laws.

Neither this Agreement nor the transactions that are the subject of this Agreement imposes any obligations for site investigation or cleanup, or notification to or consent of government agencies or third parties, pursuant to any so-called “transaction-triggered” Environmental and Safety Requirement.


Neither Seller nor any Subsidiary has expressly assumed or undertaken any liability or corrective or remedial obligation of any other Person relating to Environmental and Safety Requirements.

 

Neither Seller nor any Subsidiary has, either expressly or by operation of law, assumed or undertaken any liability or corrective or remedial obligation of any other Person relating to Environmental and Safety Requirements.

Note: The clause "by operation of law" makes the R&W much broader than simply stating "expressly assumed".


Note: Seller should do a lien search before agreeing to this R&W.

No Environmental Lien has attached to any property owned, leased or operated by Seller.


Note: Seller must diligently review files in its possession and in the possession of its consultants.

The Selling Parties have furnished to Buyer all environmental audits, reports and other material environmental documents relating to Seller which are in its or Owners’ possession or under its reasonable control.


Personal Property

The Acquired Assets include all of the Personal Property used in the Business as presently conducted and permit Buyer to conduct the Business after the Effective Date in the same manner as the Business has been conducted by Seller prior to the Effective Date.  

 

 

 

 

The Acquired Assets include all of the Personal Property used in or necessary to conduct the Business as presently conducted and as currently proposed to be conducted or necessary to permit Buyer to conduct the Business after the Effective Date in the same manner as the Business has been conducted by Seller prior to the Effective Date.  

Note: These additions expand the R&W to include an R&W as to what is "necessary" and looks to the future as to what is "currently proposed to be conducted." If included, the Seller should ask: "What is currently proposed to be conducted?"


Buyer has inspected all items of Personal Property and confirmed them to be in good condition and repair and are useable in the ordinary and usual course of business consistent with past custom and practice.

Note: The Buyer will want the Seller to absolutely warrant that the Personal Property is in good condition and can be used in the ordinary course of the business. If it is not, the Buyer can claim that some item of Personal Property was not usable and ask the Seller to pay damages.

All items of Personal Property are in good condition and repair and are useable in the ordinary and usual course of business consistent with past custom and practice.


Delete. The Buyer should do its due diligence to verify the Personal Property is in an acceptable condition.

Except as set forth on Schedule [##], all items of Personal Property are in the condition expected based upon their age, use, appearances or value.


Note: The Seller must be able to make this R&W.

All Acquired Assets are located at Seller’s Facilities, or under Seller’s direct control.


The continued possession by Seller of the Excluded Assets shall have no Material Adverse Effect on the Business.

Note: The difference between the R&W the Buyer would prefer is absolute.

The continued possession by Seller of the Excluded Assets shall have no negative impact on the Business in any manner whatsoever.


Inventory

The Inventory:

(i) has been properly handled and maintained in a manner consistent with industry standards, product labels, and, to the best of Seller's knowledge, applicable Law;

(ii) is in date; and,

(iii) is properly labeled and packaged.

The Inventory:

(i) has been properly handled and maintained in a manner consistent with industry standards, product labels, and applicable Law;

(ii) is in date; and,

(iii) is properly labeled and packaged.


The Inventory is of a quantity and quality usable and saleable in the ordinary course of business consistent with past practice without discount, and is merchantable and fit for its particular purposes. 

The Inventory is of a quantity and quality usable and saleable in the ordinary course of business without discount, and is merchantable and fit for its particular purposes. 


Same, if true.

There are no consigned products included in the Inventory nor does the Business have any of the Inventory consigned to a third party.  


To the best of Seller's knowledge, there are no products included in the Inventory that would require the approval of any Governmental Authority prior to commercial distribution of such products.

Note: If the Buyer does not accept the caveat of knowledge, then narrowing of the definition of Governmental Authority should be proposed.

 

There are no products included in the Inventory that would require the approval of any Governmental Authority* prior to commercial distribution of such products.

*Governmental Authority can be defined to mean any court, tribunal, arbitral body, administrative or governmental body, entity, department, commission, board, agency or instrumentality, legislative, executive or regulatory authority or agency of any nature. 


Title

Same, if true to the Liens.

 

Seller has good and marketable title to, or a valid leasehold interest in or a valid right to use, all of the Acquired Assets, in each case free and clear of all Liens.  


Same, if true.

 

 

The Warranty Bill of Sale and Assignment and the deeds, endorsements, assignments and other instruments to be executed and delivered by Seller to Buyer on the Effective Date will effectively vest in Buyer good, valid and marketable title to, and ownership of, the Acquired Assets, free and clear of all Liens.  


Same, if true.

Except for the Excluded Assets, all of the assets used in the Business are owned (or leased) by Seller, and not any third party.


Intellectual Property

Seller is the only owner of any type of Intellectual Property related to the Business (i.e., no Subsidiary owns or uses any such Intellectual Property, and no Owner owns or uses any such Intellectual Property in an individual capacity).

Note: The "and/or user" R&W must be true.

Note: The Seller should also carefully review the definition of Intellectual Property to be sure all the requested assets are listed.

Seller is the only owner and/or user of any type of Intellectual Property related to the Business (i.e., no Subsidiary owns or uses any such Intellectual Property, and no Owner owns or uses any such Intellectual Property in an individual capacity).


Based on the foregoing, Schedule [##] sets forth a complete and correct list of: 

(a) all registered and material unregistered Intellectual Property owned or used by Seller in connection with the Business, and 

(b) all licenses or similar agreements or arrangements to which Seller is a party, either as licensee or licensor.

Note: The Seller should also carefully review the definition of Intellectual Property to be sure all the requested assets are listed.

Based on the foregoing, Schedule [##] sets forth a complete and correct list of:

(a) all registered and material unregistered Intellectual Property owned or used by Seller in connection with the Business, and

(b) all licenses or similar agreements or arrangements to which Seller is a party, either as licensee or licensor.


Seller owns and possesses all right, title and interest in, to and under, or has a valid and enforceable license to use pursuant to a written license agreement, all of the Intellectual Property required to be set forth on such Schedule and all other Intellectual Property necessary for the operation of the Business as currently conducted or as currently proposed to be conducted (the “Business IP”), and no claim by any third party contesting the validity, enforceability, use or ownership of the Business IP has been made, is currently outstanding or, to the best of Seller's knowledge, is threatened or reasonably foreseeable; the Business IP is not subject to any Liens, and is not subject to any restrictions or limitations regarding use or disclosure other than pursuant to a written license agreement set forth on such Schedule.

Seller owns and possesses all right, title and interest in, to and under, or has a valid and enforceable license to use pursuant to a written license agreement, all of the Intellectual Property required to be set forth on such Schedule and all other Intellectual Property necessary for the operation of the Business as currently conducted or as currently proposed to be conducted (the “Business IP”), and no claim by any third party contesting the validity, enforceability, use or ownership of the Business IP has been made, is currently outstanding or, is threatened or reasonably foreseeable; the Business IP is not subject to any Liens, and is not subject to any restrictions or limitations regarding use or disclosure other than pursuant to a written license agreement set forth on such Schedule.


Same, if true.

Seller has procured and paid for all necessary or appropriate seat licenses (or similar rights).


No loss or expiration of the Business IP is pending or, to the best of Seller's knowledge, is threatened or reasonably foreseeable.

No loss or expiration of the Business IP is pending or is threatened or reasonably foreseeable.


Same, if true.

 

 

 

No Selling Party has received any notices of, nor is any Selling Party aware of any facts which indicate a likelihood of, any infringement or misappropriation by, or conflict with, any Intellectual Property of any third party, including any demand or request that Seller license rights from a third party.


To the best of the Seller's knowledge, no third party has infringed, misappropriated, or otherwise conflicted with, any of Business IP and Seller has no knowledge of any facts that indicate a likelihood of any of the foregoing

No third party has infringed, misappropriated, or otherwise conflicted with, any of Business IP and there is no likelihood of any of the foregoing.


Neither the Business nor Seller has infringed, misappropriated, or otherwise come into conflict with, any rights of any third parties, and Seller has no knowledge of any infringement, misappropriation, or conflict which will occur as a result of the continued operation of the Business as currently conducted, or as currently proposed to be conducted.

 

Neither the Business nor Seller has infringed, misappropriated, or otherwise come into conflict with, any rights of any third parties, and no infringement, misappropriation, or conflict will occur as a result of the continued operation of the Business as currently conducted, or as currently proposed to be conducted.


Same.

 

Subject to subsection [##], above, all of the Business IP shall be assigned or licensed to Buyer at the Closing and shall be available to Buyer from and after the Effective Date on identical terms and conditions as those of Seller immediately prior to the Effective Date.  


To the best of Seller's knowledge, Seller has taken all necessary and desirable action to maintain and protect such Intellectual Property.  

Seller has taken all necessary and desirable action to maintain and protect such Intellectual Property.  


Same, but Seller must be sure it has these agreements and provides them to the Buyer. If the Seller does not have them, it should state that none exist or that they do not exist for certain employees/independent contractors.

 

 

 

 

Without limiting the generality of the foregoing, except as set forth on Schedule [##], Seller has entered into valid, binding and enforceable written agreements with all of its employees and independent contractors acknowledging Seller’s ownership of all Intellectual Property created or developed by such employees and independent contractors within the scope of their employment or engagement, including the entering into of reasonable instruments of assignment in favor of Seller as assignee to transfer sole and exclusive ownership of such Intellectual Property to Seller.


To the best of the Seller's knowledge, the owners of any Intellectual Property licensed to Seller have taken all necessary and desirable actions to maintain and protect the Intellectual Property which is subject to such licenses.

Note: From the Seller's perspective, unless it actually verifies that third-parties have taken steps to protect their IP, this R&W should be caveated with personal knowledge.

The owners of any Intellectual Property licensed to Seller have taken all necessary and desirable actions to maintain and protect the Intellectual Property which is subject to such licenses.


Seller has taken reasonable actions to protect the confidentiality, integrity and security of its software, databases, customer names and other information, systems, networks and Internet sites and all information stored or contained therein or transmitted thereby from any unauthorized use, access, interruption or modification by third parties.

Note: This raises a question for a Court if this R&W is alleged to be breached. Did the Seller take "reasonable actions?"

Seller has taken all actions to protect the confidentiality, integrity and security of its software, databases, customer names and other information, systems, networks and Internet sites and all information stored or contained therein or transmitted thereby from any unauthorized use, access, interruption or modification by third parties.


To the best of Seller's knowledge, all software, databases, systems, networks and Internet sites are free from any material defect, malicious computer code or programs that can cause harm to computer systems or other software, including any material worms, bugs viruses, Trojan horses, documentation error or corruptant, malware or any “spyware,” and anything similar to the foregoing.  

Note: The Seller has an obligation to actually look into whether the these issues even with the caveat. Knowledge is usually defined as "known or should have known."

All software, databases, systems, networks and Internet sites are free from any material defect, malicious computer code or programs that can cause harm to computer systems or other software, including any material worms, bugs viruses, Trojan horses, documentation error or corruptant, malware or any “spyware,” and anything similar to the foregoing.  


To the best of Seller's knowledge, Seller complies in all material respects with all applicable laws and its own policies with respect to the privacy of all users and customers and any of their personally identifiable information, and no claims have been asserted or, to the best of Seller's knowledge, threatened against Seller by any person alleging a violation of any of the foregoing.

Seller complies in all material respects with all applicable laws and its own policies with respect to the privacy of all users and customers and any of their personally identifiable information, and no claims have been asserted or threatened against Seller by any person alleging a violation of any of the foregoing.


Distributions to Owners

Same.

Note: If there is a calculation of net working capital , then the asset purchase agreement should discuss how distributed assets will affect that calculation.

Except as specifically described on Schedule [##], since [insert date], Seller has not distributed any asset of any nature (including cash) to Owners or any Affiliates or family members of any Owner.


Taxes

The Seller has timely filed all Tax Returns required to be filed by them with regard to the Acquired Assets and the Business, and, to the best of Seller's knowledge, all such Tax Returns are true, correct and complete in all respects, the nonpayment of which could result in an encumbrance on the Acquired Assets.

Note: The personal knowledge caveat is added to protect the Seller from making an honest mistake on its tax return and getting hammered.

Seller timely filed all Tax Returns required to be filed by them with regard to the Acquired Assets and the Business, and all such Tax Returns are true, correct and complete in all respects.


Seller duly and timely paid all Taxes, the nonpayment of which could result in an encumbrance on the Acquired Assets. (including estimated taxes) and other charges for which it is liable.

Seller duly and timely paid all Taxes (including estimated taxes) and other charges for which each is liable (whether or not shown on any Tax Return).


To the best of Seller's knowledge, Seller has duly and timely withheld and deposited with the appropriate taxing authorities all amounts required to be so withheld and deposited from amounts paid or owing to any employee, independent contractor, creditor or other third party.

Seller has duly and timely withheld and deposited with the appropriate taxing authorities all amounts required to be so withheld and deposited from amounts paid or owing to any employee, independent contractor, creditor or other third party.


Same, if true.

 

 

Seller has duly and timely withheld and deposited with the appropriate taxing authorities all amounts required to be so withheld and deposited from amounts paid or owing to any employee, independent contractor, creditor or other third party.


Same, if true.

No audit or other examination of any Tax Return of the Seller is presently in progress. 


In the past [##] years, Seller has not received any notice that any audit or other proceeding by any United States federal, state or local or foreign court, Governmental Authority, or similar Person is pending or threatened with respect to any Taxes due from Seller, the nonpayment of which could result in an encumbrance on the Acquired Assets, or any Tax Return filed or required to be filed by, relating to or including Seller.

Note: If no audits are pending, then the R&W can be made without a caveat.

In the past [##], Seller has not received any notice that any audit or other proceeding by any United States federal, state or local or foreign court, Governmental Authority, or similar Person is pending or threatened with respect to any Taxes due from Seller or any Tax Return filed or required to be filed by, relating to or including Seller.


Same, if true.

There are no Liens for Taxes (other than for current Taxes not yet due and payable) upon any of the Acquired Assets.


No deficiencies for any Taxes have been asserted or assessed, or to the best of Seller's knowledge, against the Seller executed has not executed any waiver of any statute of limitations on or extending the period for the assessment or collection of any Tax.

No deficiencies for any Taxes have been asserted or assessed against the Seller, and none of the Selling Parties have executed any waiver of any statute of limitations on or extending the period for the assessment or collection of any Tax.


Seller is not liable for Taxes of any other Person under any contractual obligation to indemnify any Person with respect to Taxes, or is a party to any Tax sharing agreement or any other agreement providing for payments by such Seller with respect to Taxes, the nonpayment of which could result in an encumbrance on the Acquired Assets.

Seller is not liable for Taxes of any other Person by operation of applicable Law or otherwise, or is currently under any contractual obligation to indemnify any Person with respect to Taxes, or is a party to any Tax sharing agreement or any other agreement providing for payments by such Seller with respect to Taxes.


Seller has not filed, and does not have pending, any ruling requests with any Taxing authority, including any requests to change any accounting method, which could result in an encumbrance on the Acquired Assets.

Seller has not filed, and does not have pending, any ruling requests with any Taxing authority, including any requests to change any accounting method.


Same, if true.

Note: ADD DESCRIPTION

 

 

 

 

Seller has not engaged in a “reportable transaction,” as set forth in Treasury Regulation Section 1.6011-4(b), or any transaction that is the same as or substantially similar to one of the types of transactions that the Internal Revenue Service has determined to be a Tax avoidance transaction and identified by notice, regulation or other form of published guidance as a “listed transaction,” as set forth in Treasury Regulation Section 1.6011-4(b)(2). 


To the best of Seller's knowledge, Seller disclosed on its Tax Returns all positions taken therein that could give rise to a substantial understatement penalty under Section 6662 of the Code or any similar provision of other Applicable Law, and are in possession of supporting documentation as may be required under any such provision.

Note: Internal Revenue Code (IRC) §§ 6662(b)(1) and (2) authorize the IRS to impose a penalty if a taxpayer’s negligence or disregard of rules or regulations caused an underpayment of tax, or if an underpayment exceeded a computational threshold called a substantial understatement, respectively. For individuals, the understatement of tax is substantial if it exceeds the greater of $5,000 or ten percent of the tax that must be shown on the return. For corporations (other than S corporations or personal holding companies), an understatement is substantial if it exceeds the lesser of ten percent of the tax required to be shown on the return (or, if greater, $10,000), or $10,000,000.

This R&W may also be deleted if Seller R&Ws that all taxes were paid.

Seller disclosed on its Tax Returns all positions taken therein that could give rise to a substantial understatement penalty under Section 6662 of the Code or any similar provision of other Applicable Law, and are in possession of supporting documentation as may be required under any such provision.


Same, if true.

 

None of the Acquired Assets are required to be depreciated under the alternative depreciation system under Section 168(g)(2) of the Code or are “tax-exempt use property” within the meaning of Section 168(h) of the Code.


Contracts

Same.

Schedule [##] contains a true and complete list of the Acquired Contracts.


Same, if true.

Correct and complete copies of the items required to be set forth on Schedule [##] have been furnished to Buyer.


To the best of Seller's knowledge, except as set forth on Schedule [##], all of the Acquired Contracts shall, following the Effective Date, remain enforceable by Buyer and binding on the other parties thereto without the consent, approval, novation or waiver of any third party.

Except as set forth on Schedule [##], all of the Acquired Contracts shall, following the Effective Date, remain enforceable by Buyer and binding on the other parties thereto without the consent, approval, novation or waiver of any third party.


To the best of Seller's knowledge, Seller is not in default under any Acquired Contract, and no other party to any such Acquired Contract is in default thereof.  

If the buyer will not accept this revision, then the seller should propose:

Seller is not in default under any Acquired Contract, and, to the best of Seller's knowledge, no other party to any such Acquired Contract is in default thereof.

This revision limits the R&W to seller saying that it is not in default of any acquired contract.

Seller is not in default under any Acquired Contract, and no other party to any such Acquired Contract is in default thereof.  


To the best of Seller's knowledge, each of the Acquired Contracts is in full force and effect, is valid and enforceable in accordance with its terms and is not subject to any claims, charges, setoffs or defenses.

Each of the Acquired Contracts is in full force and effect, is valid and enforceable in accordance with its terms and is not subject to any claims, charges, setoffs or defenses.


Same.

Each Acquired Contract was effected on market terms in arm’s-length negotiations.  


Delete. This is unnecessary in an asset purchase agreement. The Buyer is purchasing assets. It does not assume any liability other than those that are expressly assigned. There is no reason for the Seller to R&W that is not made other express or implied warranties or guarantees. Seller will be responsible for the liability if it did.

Seller has not made any express or implied warranties or guarantees other than as provided in the items required to be set forth on Schedule [##].


Real Property

Same, if true.

Seller owns no real property.  


This R&W may be made if it is true or Seller can insist on deleting it. It can be addressed under the Acquired Contracts. The reason a Buyer will include it is it wants to know of all leases that relate to the business.

Schedule [##] lists all leases, subleases, licenses and other agreements (collectively, “Leases”) to which Seller is a party.


Same, if true.

Seller has delivered to Buyer a true and complete copy of each such Lease document.  


With respect to each of the Leases: (a) Seller’s possession and quiet enjoyment of such Lease has not been disturbed and there are no disputes with respect to such Lease; (b) Seller is not and the landlord is not in breach or default under such Lease, and, to the best of Seller's knowledge, no event has occurred or circumstance exists which, with the delivery of notice, the passage of time or both, could reasonably be expected to constitute such a breach or default, or permit the termination, modification or acceleration of rent under such Lease; and (c) Seller has not collaterally assigned or granted any other security interest in such Lease or any sublease or other interest therein.

With respect to each of the Leases: (a) Seller’s possession and quiet enjoyment of such Lease has not been disturbed and there are no disputes with respect to such Lease; (b) Seller is not and the landlord is not in breach or default under such Lease, and no event has occurred or circumstance exists which, with the delivery of notice, the passage of time or both, could reasonably be expected to constitute such a breach or default, or permit the termination, modification or acceleration of rent under such Lease; and (c) Seller has not collaterally assigned or granted any other security interest in such Lease or any sublease or other interest therein.


Litigation

Except as set forth on Schedule [##], (a) there are no, and since [date], there have been no, Actions pending by or against or, to the best of Seller's Knowledge, threatened by or against, the Acquired Assets or Seller or any of their officers, directors or employees with respect to their business activities, and (b) since [date], Seller has not been subject to or bound by any Order.  

Buyer should pay close attention to definitions. In this R&W, the reference is to "Actions". A common definition is: "'Action' means any legal, administrative, arbitral or other suit, claim, demand, action, inquiry, mediation, proceeding, audit, investigation or other similar proceeding of any nature."

 

Except as set forth on Schedule [##], (a) there are no, and since [date], there have been no, Actions pending by or against or threatened by or against, the Acquired Assets or Seller or any of their officers, directors or employees with respect to their business activities, and (b) since January 1, 2013, Seller has not been subject to or bound by any Order.  


Conduct of Business

Except as set forth on Schedule [##], since [date], Seller has conducted the Business only in the ordinary and usual course of business consistent with past custom and practice, including no unreasonable delay in capital expenditures, no unreasonable delay in payment of obligations and no acceleration (or the change in terms) of any accounts receivable.  

Except as set forth on Schedule [##], since [date], Seller has conducted the Business only in the ordinary and usual course of business consistent with past custom and practice, including no delay in capital expenditures, no delay in payment of obligations and no acceleration (or the change in terms) of any accounts receivable.  


Since [date], there has been no material adverse change in the assets, liabilities, condition (financial or otherwise), operations or results of operations, cash flows, employees, business or prospects of the Business.

The parties should define "material adverse change." In some cases, defining it as a change that reduces assets, increases liabilities or changes cash flows by more than a certain dollar amount (e.g., $100,00).

Since [date], there has been no change in the assets, liabilities, condition (financial or otherwise), operations or results of operations, cash flows, employees, business or prospects of the Business.


Insurance

Same.

Schedule [##] is a correct and complete list and description of all insurance policies relating to the Business. 


Same, if true.

Such policies are in full force and effect, all premiums due thereon have been paid and Seller is not in default thereunder.  


Seller has not received any notice of cancellation or intent to cancel with respect to such insurance policies nor, to the best of Seller's Knowledge, is there any basis for any such action.

This R&W is not pertinent in an asset purchase. The Seller could ask for it be excluded. Again, the Buyer is getting the assets and not assuming any liability. If liability exists, it is the Seller's problem.

On the other hand, the Buyer will argue that if assets could be encumbered, it wants to be sure insurance exist to protect it.

Seller has not received any notice of cancellation or intent to cancel with respect to such insurance policies nor is there any basis for any such action.


Licenses and Permits

To the best of Seller's Knowledge, (a) Seller owns, holds, possesses or lawfully uses all of the Permits necessary or desirable for the ownership, use, occupancy or operation of the Acquired Assets and the conduct and operation of the Business; (b) no Subsidiary owns, holds or uses any Permit, and none are necessary; and (c) each director, officer, Owner, manager, employee and agent of Seller has all Permits necessary or desirable for the performance of his or her duties for Seller in respect of the Business.

Seller (a) owns, holds, possesses or lawfully uses all of the Permits necessary or desirable for the ownership, use, occupancy or operation of the Acquired Assets and the conduct and operation of the Business; (b) no Subsidiary owns, holds or uses any Permit, and none are necessary; and (c) each director, officer, Owner, manager, employee and agent of Seller has all Permits necessary or desirable for the performance of his or her duties for Seller in respect of the Business.


Schedule [##] sets forth a list of all Permits issued to Seller.  

Schedule [##] sets forth a list of all Permits issued to Seller and any Person acting for or on behalf of Seller in the Business.  


Same, if true.

 

Seller has not received any notice from any Governmental Authority that any of its properties, its Facilities, equipment, operations or business procedures or practices fails to comply with any applicable Law or Permit.


Employee Benefit Plans; Employment Matters

Same.

 

 

 

 

 

 

 

 

Schedule [##] is a true and complete list of all Employee Benefit Plans sponsored, maintained or contributed to by Seller or any Affiliate thereof, or by any trade or business, whether or not incorporated, that together with Seller or any Affiliate thereof would be deemed a “single employer” within the meaning of Section 4001(b) of ERISA (an “ERISA Affiliate”) and in which any one or more of the current or former employees of the Business (as the case may be) or any current or former ERISA Affiliate (including beneficiaries of employees or former employees) participates, is eligible to participate or has participated within the immediately preceding six (6) years.


No liability under Title IV or Section 302 of ERISA has been incurred by Seller or any ERISA Affiliate that has not been satisfied in full, and, to the best of Seller's Knowledge, no condition exists that presents a risk to Seller or any ERISA Affiliate of incurring any such liability, other than liability for premiums due the Pension Benefit Guaranty Corporation (which premiums have been paid when due). 

No liability under Title IV or Section 302 of ERISA has been incurred by Seller or any ERISA Affiliate that has not been satisfied in full, and no condition exists that presents a risk to Seller or any ERISA Affiliate of incurring any such liability, other than liability for premiums due the Pension Benefit Guaranty Corporation (which premiums have been paid when due). 


To the best of Seller's Knowledge, each Employee Benefit Plan has been maintained, in form and operation, in compliance with its terms and all applicable Laws, including ERISA and the Code.  

Each Employee Benefit Plan has been maintained, in form and operation, in compliance with its terms and all applicable Laws, including ERISA and the Code.  


No event has occurred and, to the best of Seller's Knowledge, no condition exists with respect to any Employee Benefit Plan that could subject Buyer or any of its Affiliates to any Tax, fine, penalty or other liability.

No event has occurred and no condition exists with respect to any Employee Benefit Plan that could subject Buyer or any of its Affiliates to any Tax, fine, penalty or other liability.


Employees

Same.

 

 

 

 

 

 

Except as set forth on Schedule [##], with respect to the Business, Seller is not a party to or obligated with respect to any (a) outstanding contracts or arrangements with current or former employees, agents, consultants, advisers, salesmen, sales representatives, distributors, sales agents, independent contractors, or dealers, or (b) collective bargaining agreements, contracts or arrangements with any labor union or other representative of employees or any employee benefits provided for by any such agreement.


No strike, union organizational activity, request or petition for union representation, unfair labor practice, grievance, allegation, charge or complaint of employment discrimination, wage and hour violations or other similar occurrence has occurred or is pending or, to the best of the Seller's Knowledge, threatened against Seller.

No strike, union organizational activity, request or petition for union representation, unfair labor practice, grievance, allegation, charge or complaint of employment discrimination, wage and hour violations or other similar occurrence has occurred or is pending or threatened against Seller.


There are no administrative charges or court complaints pending or, to the best of the Seller's Knowledge, threatened against Seller or the Business before the U.S. Equal Employment Opportunity Commission or any state or federal court or agency concerning alleged employment discrimination, wage and hour or any other matters relating to the employment of labor.

There are no administrative charges or court complaints pending or threatened against Seller or the Business before the U.S. Equal Employment Opportunity Commission or any state or federal court or agency concerning alleged employment discrimination, wage and hour or any other matters relating to the employment of labor.


Same.

Schedule [##] lists an employment roll of Seller.  


Same, if true.

All employees of Seller are residents in the United States.


Same, if true.

 

 

Each current and former employee of Seller and any Subsidiary has entered into a Non-Disclosure Agreement with Seller and such Subsidiary (as applicable), in each case, in substantially the forms of such agreements attached hereto as Exhibits __ and __.


Except as set forth on Schedule [##], each such executed Employment Agreement or Non-Disclosure Agreement is, to the best of the Seller's Knowledge, in full force and effect, enforceable in accordance with its terms and contains no material deviations from the terms set forth in the form agreements attached.

Except as set forth on Schedule [##], each such executed Employment Agreement or Non-Disclosure Agreement is in full force and effect, enforceable in accordance with its terms and contains no material deviations from the terms set forth in the form agreements attached.


Customer/Vendor Relationships

Same.

 

 

 

 

 

Schedule [##] sets forth (a) a true, correct and complete list of the top [##] customers of the Business (the “Customers”) and sets forth opposite the name of each such Customer the percentage of consolidated net sales attributable to such Customer during the most recent two fiscal years, and (b) a true, correct and complete list of the [##] largest vendors, suppliers and service providers of the Business (the “Key Vendors”) based on consolidated expenses for the most recent [years] fiscal years.  


Same, if true.

 

 

 

Except as set forth on Schedule [##], (x) in the last [##] months no Customer or Key Vendor has provided any written notice to Seller to the effect that such Person intends to terminate or alter its relationship or terms with the Business and (y) Seller is not involved in any dispute with any such Customer or Key Vendor.    


To the best of Seller's Knowledge, the consummation of the transactions contemplated by this Agreement will not adversely affect the relationship of the Business with any Customer or Key Vendor.

The consummation of the transactions contemplated by this Agreement will not adversely affect the relationship of the Business with any Customer or Key Vendor.


Affiliate Transactions

Same, if true.

 

 

 

 

Except as set forth in Schedule [##], no Affiliate of any Selling Party: (a) owns any property or right, whether tangible or intangible, which is used by Seller in the Business; (b) is a party to any contract or other arrangement with Seller with respect to the Business; or (c) provides services or resources to Seller in connection with the Business.


Solvency

Same, if true.

 

 

 

Immediately after giving effect to the consummation of the transactions contemplated by this Agreement, (a) the assets of Seller will exceed its liabilities, and (b) Seller will not have incurred liabilities (including any actual or contingent liabilities resulting from the transactions contemplated hereby) beyond its ability to pay such liabilities as they mature.


Revenue; Receivables

Same.

Schedule [##] sets forth the total revenues of the Business for the [##]-month period ended [date].  


Same.

Such disclosed information is consistent with the books and records of Seller.  


To the best of Seller's Knowledge, all accounts receivable listed in connection with the calculation of Net Working Capital are collectible in the ordinary course of business.

Note: It is impossible to say that the ARs are all collectible. 

All accounts receivable listed in connection with the calculation of Net Working Capital are collectible in the ordinary course of business.


Absence of Undisclosed Liabilities

To the best of Seller's Knowledge, Seller does not, with respect to the Business, have any debts, liabilities or obligations of any nature (whether accrued, absolute, contingent, direct, indirect, perfected, inchoate, unliquidated or otherwise and whether due or to become due) arising out of transactions entered into at or prior to the Closing, or any transaction, series of transactions, action or inaction at or prior to the Closing, or any state of facts or condition existing at or prior to the Closing (regardless of when such liability or obligation is asserted), including liabilities or obligations on account of Taxes or governmental charges or penalties, interest or fines thereon or in respect thereof, except for liabilities specifically delineated on Schedule [##].

Seller does not, with respect to the Business, have any debts, liabilities or obligations of any nature (whether accrued, absolute, contingent, direct, indirect, perfected, inchoate, unliquidated or otherwise and whether due or to become due) arising out of transactions entered into at or prior to the Closing, or any transaction, series of transactions, action or inaction at or prior to the Closing, or any state of facts or condition existing at or prior to the Closing (regardless of when such liability or obligation is asserted), including liabilities or obligations on account of Taxes or governmental charges or penalties, interest or fines thereon or in respect thereof, except for liabilities specifically delineated on Schedule [##].


Same.

 

Seller has previously delivered to Buyer [un]audited financial statements (“Financial Statements”) of the Business for the (i) fiscal years ending [date] and [date], and (ii) fiscal month ending [date].


To the best of Seller's Knowledge, each of the Financial Statements is complete and correct in all respects, is prepared in accordance with GAAP, is consistent with the books and records of the Business (which, in turn, are accurate and complete in all respects) and fairly presents the Business’ financial condition, assets and liabilities as of its date and the results of operations and cash flows for the period related thereto.

Each of the Financial Statements is complete and correct in all respects, is prepared in accordance with GAAP, is consistent with the books and records of the Business (which, in turn, are accurate and complete in all respects) and fairly presents the Business’ financial condition, assets and liabilities as of its date and the results of operations and cash flows for the period related thereto.


Same.

 

Neither Seller nor any of its Affiliates has any liability to pay any finders’, brokers’ or similar agents’ fees or commissions with respect to the transactions contemplated hereby.


No Misrepresentation

To the best of Seller's Knowledge, none of the representations and warranties of set forth in this Agreement, in any of the certificates, schedules, lists, documents, exhibits, or other instruments delivered, or to be delivered, to Buyer as contemplated by any provision hereof (including the Transaction Documents), contain any untrue statement of a Material Fact or omit to state a Material Fact necessary to make the statements contained herein or therein not misleading.

None of the representations and warranties of set forth in this Agreement, in any of the certificates, schedules, lists, documents, exhibits, or other instruments delivered, or to be delivered, to Buyer as contemplated by any provision hereof (including the Transaction Documents), contain any untrue statement of a Material Fact or omit to state a Material Fact necessary to make the statements contained herein or therein not misleading.


To the best of Seller's Knowledge, there is no fact which has not been disclosed to Buyer in this Agreement which adversely affects or could adversely affect the Business or Seller’s ability to consummate the transactions contemplated hereby, and in particular, each of the Selling Parties represents and warrants that each does not have any Knowledge of any present or future plans of any Person regarding the entry into the market of any new competitors of the Business.

There is no fact which has not been disclosed to Buyer in this Agreement which adversely affects or could adversely affect the Business or Seller’s ability to consummate the transactions contemplated hereby, and in particular, the Seller represents and warrants that it does not have any Knowledge of any present or future plans of any Person regarding the entry into the market of any new competitors of the Business.


Authority of Owners

Same.

 

Each Owner has full power, right and authority to enter into and perform all obligations under this Agreement and each of the Transaction Documents to which each is a party. 


Same.

 

The execution, delivery and performance of this Agreement and each of the Transaction Documents to which each Owner is a party has been duly and properly authorized by such Owner by all requisite action. 


Same.

 

 

 

 

This Agreement and each of the Transaction Documents to which each Owner is a party has been duly executed and delivered by such Owner, and, assuming due and valid authorization, execution and delivery hereof and thereof by the other parties hereto and thereto, constitute the valid and legally binding obligation of each Owner and are enforceable against each Owner in accordance with their respective terms.


Transaction Not a Breach by Owners

To the best of the Owner's Knowledge, the execution, delivery and performance by each Owner of this Agreement and the Transaction Documents to which each is a party and the consummation of the transactions contemplated hereby or thereby will not: (a) violate or conflict with or result in a breach of or default under any provision of any Law; (b) violate or conflict with or constitute a default under the any documents to which each Owner is a party or by which Owner is bound; (c) constitute (with or without due notice or lapse of time or both) a default under or an event which would give rise to any right of notice, modification, acceleration payment or cancellation under or permit any party to terminate under any Acquired Contract, any other agreement of Seller or by which the assets of Seller may be bound or subject; (d) result in the creation or imposition of any Lien upon any of the Acquired Assets; or (e) require any authorization, consent, order, approval, filing, registration, exemption or other action by, or notice to, any Governmental Authority or other Person.

The execution, delivery and performance by each Owner of this Agreement and the Transaction Documents to which each is a party and the consummation of the transactions contemplated hereby or thereby will not: (a) violate or conflict with or result in a breach of or default under any provision of any Law; (b) violate or conflict with or constitute a default under the any documents to which each Owner is a party or by which Owner is bound; (c) constitute (with or without due notice or lapse of time or both) a default under or an event which would give rise to any right of notice, modification, acceleration payment or cancellation under or permit any party to terminate under any Acquired Contract, any other agreement of Seller or by which the assets of Seller may be bound or subject; (d) result in the creation or imposition of any Lien upon any of the Acquired Assets; or (e) require any authorization, consent, order, approval, filing, registration, exemption or other action by, or notice to, any Governmental Authority or other Person.


Conclusion

The R&Ws are the meat of any asset purchase agreement. The negotiation of what will be absolutely represented and warranted versus what will be caveated with "knowledge" is key to the allocation of liability. Though this blog is intended to introduce many of the R&Ws, it is in no way a substitute for competent legal counsel.