asset acquisitions - Jackson Walker LLP

2. If Buyer proceeds with the asset purchase, will Seller be required to indemnifyBuyer against any damages arising from the Blocking Patent?YES. Under Section 11.2(a)(iv), Seller is required to indemnify Buyer against alldamages suffered as a result of any inaccuracy in Seller’s representations as“brought down” to the closing date. Because Seller’s representations in Sections3.6, 3.25, 3.29 and 3.33 are inaccurate as of the closing date, Seller will berequired under Section 11.2(a)(iv) to indemnify Buyer with respect to theBlocking Patent.Since the Shareholder could have cured the problem by assigning the patent toSeller prior to closing so that Seller could in turn assign it to Buyer, theShareholder may have breached his covenant in Section 5.7 to use his Best Effortsto cause the conditions in Article 7 to be satisfied. If Seller did not use its BestEfforts to cause the Shareholder to assign the patent, Seller also may havebreached its covenant in Section 5.7. Seller and both Shareholders may beobligated, jointly and severally, to indemnify Buyer under Section 11.2(b) againstany resulting Damages suffered. There is no basket or other materiality qualifierto Buyer’s indemnity rights under Section 11.2(b).SCENARIO 2.7(immaterial post-signing condition not disclosed in supplement to Disclosure Letter)Assumed Facts:• A few days after the signing of the Asset Purchase Agreement, the BlockingPatent is discovered by Buyer’s counsel and brought to the attention of Seller.The Blocking Patent is not “material”--the affected Assets are neither strategicallysignificant nor particularly valuable, and no claim is made for infringement of theBlocking Patent.• Seller does not disclose the Blocking Patent in a supplement to its DisclosureLetter.• The Blocking Patent is not assigned to Seller or Buyer on or before the scheduledclosing date.1. Can Buyer refuse to consummate the asset purchase (i.e., does Buyer have a“walk right”)?NO. Because the Blocking Patent is not material, the representations in Sections3.6, 3.25, 3.29 and 3.33 are accurate as of the scheduled closing date in allmaterial respects, and the “bring down” condition in the second clause of Section7.1(a) is also satisfied. Therefore, Buyer has no “walk right” and must proceedwith the closing.2415253v1Appendix E – Page 10