COURSE AND CONSISTENT IN TYPE WITH
THE LIABILITIES REFLECTED IN THE DELIVERED FINANCIAL STATEMENTS AND THE
CONTRACTS ENTERED INTO PRIOR TO THE DATE HEREOF AND DISCLOSED IN THE SCHEDULES
ANNEXED TO THIS AGREEMENT AND THE DELIVERED FINANCIAL STATEMENTS.
IN
FURTHERANCE OF, AND WITHOUT LIMITING THE GENERALITY OF, THE FOREGOING, SINCE THE
BALANCE SHEET DATE, EXCEPT AS SPECIFICALLY STATED ON SCHEDULE 5.3(B), NEITHER
SELLER NOR ANY AFFILIATE THEREOF HAS INCURRED ANY LIABILITY OR OBLIGATION OF ANY
NATURE (WHETHER ACCRUED, ABSOLUTE, CONTINGENT OR OTHERWISE), EXCEPT IN THE
ORDINARY COURSE OF SELLER'S BUSINESS; PERMITTED ANY OF ITS ASSETS TO BE
SUBJECTED TO ANY MORTGAGE, PLEDGE, LIEN, SECURITY INTEREST, ENCUMBRANCE,
RESTRICTION OR CHARGE OF ANY KIND; SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF
ANY ASSETS EXCEPT IN THE ORDINARY COURSE OF SELLER'S BUSINESS; MADE ANY SINGLE
CAPITAL EXPENDITURE OR COMMITMENT THEREFOR INVOLVING THE EXPENDITURE OF MORE
THAN FIVE THOUSAND DOLLARS ($5,000) (FOR THE AVOIDANCE OF DOUBT PURCHASES OF
MEDIA INVENTORY SHALL NOT BE DEEMED CAPITAL EXPENDITURES); CANCELED OR WAIVED
ANY CLAIMS OR RIGHTS OF SUBSTANTIAL VALUE; AND MADE ANY CHANGE IN ANY METHOD OF
ACCOUNTING OR AUDITING PRACTICE.
5.4
Books and Records.
Except as set forth on Schedule 5.4, all accounts, financial books and records,
ledgers, and other similar business records of Seller and its Affiliates of
whatsoever kind related to the Acquired Assets (including, without limitation,
the Clockwork Assets) and the Seller's Business have been properly and
accurately kept and completed, and there are no material inaccuracies or
discrepancies of any kind contained or reflected therein.
Seller does not own
or possess any records, systems, controls, data or information material or
necessary to the conduct of the Seller's Business, which are recorded, stored,
maintained, operated or otherwise wholly or partly dependent on or held by any
means (including all means of access thereto and therefrom) that are not under
the exclusive ownership and direct control of Seller, other than financial
records which are maintained at the locations identified on Schedule 5.4 annexed
hereto, and which, after the Closing Date, are readily available to Traffix and
Purchaser.
25
5.5
Real Property; Personal Property; Machinery
and Equipment.
(A)
EXCEPT AS SET FORTH IN SCHEDULE 5.5(A),
SELLER DOES NOT OWN OR HAVE ANY LEASEHOLD OR OTHER INTEREST IN ANY REAL
PROPERTY.
PRIOR TO JANUARY 1, 2005 SELLER OPERATED SELLER'S BUSINESS FROM THE
RESIDENCE OF SELLER'S SHAREHOLDER.
(B)
EXCEPT AS SET FORTH IN SCHEDULE 5.5(B),
SELLER HAS GOOD TITLE OR HOLDS A VALID, EXISTING, ENFORCEABLE LEASE OR LICENSE
TO THE ACQUIRED ASSETS, SUBJECT TO NO LIEN OR OTHER RESTRICTION OF ANY KIND OR
CHARACTER.
(C)
EXCEPT AS SET FORTH IN SCHEDULE 5.5(C), THE
MACHINERY AND EQUIPMENT ARE, INDIVIDUALLY AND IN THE AGGREGATE, IN GOOD
OPERATING CONDITION, NORMAL WEAR AND TEAR EXCEPTED.
ALL OF SELLER'S MACHINERY
AND EQUIPMENT IS SET FORTH ON SCHEDULE 5.5(C).
SELLER HAS NO CAPITAL OR
OPERATING LEASES WITH RESPECT TO THE MACHINERY AND EQUIPMENT.
SELLER IS NOT A
PARTY TO ANY CONTRACT FOR THE PURCHASE OF AS YET UNDELIVERED MACHINERY OR
EQUIPMENT.
(D)
EXCEPT