CY » Topics » 3.7 Title to Assets; Real Property.

This excerpt taken from the CY 8-K filed Aug 4, 2008.

3.7 Title to Assets; Real Property.

(a) The Company or one of its Subsidiaries owns, and has good title to, or in the case of assets purported to be leased by the Company or its Subsidiaries, leases and has valid leasehold interest in, each of the tangible assets reflected as owned or leased by the Company or its Subsidiaries on the Most Recent Balance Sheet (except for tangible assets sold or disposed of since that date and except for tangible assets being leased to the Company or one of its Subsidiaries) free of any liens or encumbrances (other than Permitted Encumbrances). Neither the Company nor any Subsidiary owns any real property or interest in real property nor has the Company or any Subsidiary ever owned any real property or interest in real property.

(b) Part 3.7(b) of the Disclosure Schedule contains a complete and accurate list of all of the existing leases, subleases, licenses, or other agreements (collectively, the “Real Property Leases”) under which the Company or any of its Subsidiaries uses or occupies or has the right to use or occupy, now or in the future, any real property (the “Leased Premises”). The Company has heretofore made available to Parent true, correct and complete copies of all Real Property Leases (including all modifications, amendments, supplements, consents, waivers and side letters thereto and all agreements in connection therewith, including all work letters, improvement agreements, estoppel certificates, subordination agreements, and

 

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guarantees). The Closing will not affect the enforceability against any Person of any Real Property Lease or any rights of the Company or any of its Subsidiaries thereunder or otherwise with respect to any Leased Premises, including, the right to the continued use and possession of the Leased Premises for the conduct of business as presently conducted.

(c) The Real Property Leases are each in full force and effect and the Company or any of its Subsidiaries are not in breach of or default under, nor have they received written notice of any breach of or default under any Real Property Lease, and, to the knowledge of the Company, no event has occurred that with notice or lapse of time or both would constitute a breach or default thereunder by the Company or any other party thereto. Neither the Company nor any of its Subsidiaries have transferred or assigned any interest in any Real Property Lease, nor have they subleased or otherwise granted rights of use or occupancy of any of the premises described therein to any other person or entity. The Company or a Subsidiary currently occupies all of the Leased Premises for the operation of its business and there is no other person or entity with a right to occupy the Leased Premises.

(d) The Leased Premises and the personal property owned or leased by the Company or any of its Subsidiaries are in good operating condition and repair and free from any material defects, reasonable wear and tear excepted, and are suitable for the uses for which they are being used in all material respects. The operations of the Company and each of its Subsidiaries do not, nor to the Company’s knowledge, do any Leased Premises violate in any material respect any applicable building code, zoning requirement or other law relating to such property or operations thereon. To the knowledge of the Company, (i) there are no laws, statutes, rules, regulations or orders now in existence or under active consideration by any Governmental Authority which are reasonably likely to require the tenant of any Leased Premises to make any expenditure in excess of $25,000 to modify or improve such Leased Premises to bring it into compliance therewith, and (ii) the Company or any of its Subsidiaries shall not be required to expend more than $25,000 in the aggregate under all Real Property Leases to restore the Leased Premises at the end of the term of the applicable Real Property Lease to the condition required under the Real Property Lease (assuming the conditions existing in such Leased Premises as of the date hereof). Neither the Company, nor any of its Subsidiaries, owe any brokerage commissions or finders fees with respect to any Leased Premises, nor would the Company or any of its Subsidiaries owe any such fees if any existing Real Property Lease were renewed pursuant to any renewal options contained in such Real Property Lease. The Company and each of its Subsidiaries have performed all of their obligations under any termination agreements pursuant to which it has terminated any leases of real property that are no longer in effect and which were used in the operation of the business, and have no continuing liability with respect to such terminated real property leases.

3.8 Contracts. Part 3.8 of the Company Disclosure Schedule contains a list of each of the following Contracts, whether oral or written, to which the Company or any of its Subsidiaries is a party:

(a) each Contract that would be required to be filed as an exhibit to a Registration Statement on Form S-1 under the Securities Act or an Annual Report on Form 10-K pursuant to Item 601(b)(10) of Regulation S-K promulgated under the Exchange Act (if such registration statement or report was filed by the Company with the SEC on the date of this Agreement);

 

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(b) each Contract that restricts in any material respect the ability of the Company or any of its Subsidiaries to compete in any geographic area or line of business;

(c) each partnership, joint venture or other agreement pursuant to which revenue or income is or would be shared with another party;

(d) each indemnification or employment Contract with any director, officer or employee of the Company or its Subsidiaries;

(e) each employment Contract with any Employee requiring severance payments and each employment Contract with any Employee that is not terminable by the Company upon 30 days or less notice without cost or other liability to the Company or any of its Subsidiaries;

(f) each loan or credit agreement, indenture, mortgage, note or other Contract evidencing indebtedness for money borrowed by the Company or any of its Subsidiaries from a third party lender, and each Contract pursuant to which any such indebtedness for borrowed money is guaranteed by the Company or any of its Subsidiaries;

(g) each customer or supply Contract (excluding purchase orders given or received in the ordinary course of business) under which the Company or any Subsidiary of the Company paid or received in excess of $250,000 in fiscal year 2007, or is expected to pay or receive in excess of $250,000 in fiscal year 2008;

(h) each material “single source” supply Contract pursuant to which goods or materials are supplied to the Company or any Subsidiary of the Company from an exclusive source;

(i) each material exclusive sales representative, distribution or drop-ship Contract;

(j) each collective bargaining agreement;

(k) each Real Property Lease;

(l) each lease or rental Contract involving personal property (and not relating primarily to real property) pursuant to which the Company or any of its Subsidiaries is required to make rental payments in excess of $250,000 per year;

(m) each consulting Contract that is not terminable by the Company or any of its Subsidiaries on notice of 90 days or less;

(n) each Contract relating to the acquisition, sale or disposition of any material business unit or product line of the Company and its Subsidiaries that occurred after December 31, 2003;

 

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(o) any Contract relating to the creation of a Lien (other than Permitted Encumbrances) with respect to any asset of the Company or any of its Subsidiaries;

(p) any commercial Contract with the federal government, any foreign government, any state or local government or any division, subdivision, department, agency or instrumentality thereof;

(q) any material non-disclosure, confidentiality or similar agreement pursuant to which the Company or its Subsidiaries has ongoing obligations, including any such agreements that are being negotiated, but have not yet been executed;

(r) any current Contract that provides for indemnification or any guaranty (in each case, under which the Company has continuing obligations as of the date hereof), other than any Contract providing for indemnification entered into in connection with the distribution, sale or license of the Company Products in the ordinary course of business, which indemnification does not materially differ from the provisions embedded in Company’s standard forms of customer agreements as provided or made available to Parent;

(s) any Contract with a third party with respect to the development of any Intellectual Property Rights other than Contracts with the Company’s professional legal, financial or business advisors with respect to Intellectual Property Rights that are not incorporated into, used in or necessary for any Company Product;

(t) any Contract with non-solicitation or non-hire provisions pursuant to which the Company has ongoing obligations; and

(u) each Contract under which the Company is liable for benefits (including but not limited to severance pay, accelerated vesting, bonuses, and relocation expenses) to be provided to any Employee, director or officer upon or in connection with a change in control of the Company or any of its Subsidiaries.

Each Contract listed in Part 3.8 or Part 3.6 of the Company Disclosure Schedule shall be referred to as a “Material Contract”. There are no existing material breaches or defaults on the part of the Company or any of its Subsidiaries under any Material Contract; and, to the knowledge of the Company, there are no existing material breaches or defaults on the part of any other Person under any Material Contract. Each Material Contract is valid, has not been terminated prior to the date of this Agreement, is enforceable against the Company or the applicable Subsidiary of the Company that is a party to such Material Contract, and, to the knowledge of the Company, is enforceable against the other parties thereto, subject to (i) laws of general application relating to bankruptcy, insolvency and the relief of debtors, and (ii) rules of law governing specific performance, injunctive relief and other equitable remedies. The Company has made available to Parent copies (or in the case of oral agreements, a written summary) of each Material Contract, together with all amendments and supplements thereto.

3.9 Compliance with Legal Requirements. The Company and its Subsidiaries are in compliance in all material respects with all Legal Requirements applicable to their businesses. Since January 1, 2005, neither the Company nor any Subsidiary has (a) received any written notice from any Governmental Entity regarding any actual or possible violation of, or failure to

 

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comply with any material provision of, any Legal Requirement or (b) filed or otherwise provided any written notice to any Governmental Entity regarding any actual or possible material violation of, or failure to comply with any material provision of, any Legal Requirement, which notice in either case remains outstanding or unresolved.

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