Full opinion text
ORDER SARIS, District Judge. After hearing, I adopt the well-reasoned report and recommendation dated February 12,1998. I make only three brief comments. First, Dawson objects to the magistrate judge’s recommendation that the sellers be granted summary judgment on Counterclaim V, which asserts that the sellers breached Section 2.11 of the Stock Purchase Agreement relating to tax claims by the Japanese, Canadian, and Massachusetts authorities. The heart of this breach of contract claim is laid out in the October 11, 1996 set-off letter (Appendix 608-621) in which Dawson demands indemnification as a result of damages arising from the breaches of representations and warranties made in the Stock Purchase Agreement and Schedules. Specifically, Dawson sought indemnification for all unpaid taxes, stated it would set off $29,185 for the settlement of unpaid taxes owed to the Japanese tax authority, and reserved the right to set-off those amounts of unpaid taxes due to Massachusetts and Canada when they become more “precisely determinable.” In my review of the defendants’ brief (Docket No. 357) and the pleadings, Dawson never expressly raised before the magistrate judge the present claim that a breach of warranty as to potential future tax liability at the time of the Stock Purchase Agreement had an adverse impact on the value of Faxon, as measured by the difference between the purchase price and the actual value of Faxon. Her voluminous opinion which discusses in meticulous detail each and every claim doesn’t discuss this theory of breach of contract, and correctly in my opinion, analyzes the set-off claim articulated in the October 11, 1996 letter. At the hearing, I asked Dawson to point to any place in the extensive pleadings where this issue of diminution of the value of Faxon resulting from a breach of warranty on unpaid taxes at the time of the agreement had been expressly raised. The letter from counsel, dated March 26, 1998, does not do so, but concedes the summary judgment record was incomplete on this point. Accordingly, with respect to Counterclaim V, the issue of diminution of value has not been fairly presented or preserved. Second, with respect to Plaintiffs objection 16,1 agree that the relevant time for assessing the accuracy of the warranty in Section 2.4 is July 29, 1994. However, I wait until trial to determine whether any possible Ni-hon Faxon intercompany account loss could be “probable of occurrence” or “reasonably estimated” in light of the pending EBSCO offer on July 29,1994. Third, as stated at the hearing, plaintiffs may press a claim for a breach of the duty of good faith and fair dealing. REPORT AND RECOMMENDATION RE: PLAINTIFFS’ MOTION FOR PARTIAL SUMMARY JUDGMENT (DOCKET ENTRYém & 315); DEFENDANTS’ MOTION FOR PARTIAL SUMMARY JUDGMENT (DOCKET ENTRY #257) Feb. 12, 1998. BOWLER, United States Magistrate Judge. Pending before this court are: (1) a motion for partial summary judgment (Docket En-tryé313 & 315) filed by plaintiffs Judy Davis (“Davis”) and BankBoston, N.A., formerly known as The First National Bank of Boston (“FNB”) (collectively: “plaintiffs” or “the sellers”); and (2) a motion for partial summary judgment (Docket Entry # 257) filed by defendants Dawson, Inc. (“Dawson, Inc.”) and Dawson Holdings PLC (“Dawson PLC”) (collectively: “Dawson” or “the buyer”). The latter motion references four, separate supporting memorandum. Each memorandum addresses a particular subject matter and includes a separate statement of undisputed facts. Where, as here, there are cross motions for summary judgment, this court treats each motion separately and assesses the factual record differently depending on which party is the nonmovant and which party bears the underlying burden of proof at trial. Disputes as well as mere allegations set forth in the factual background are readily apparent. It is in the discussion section wherein this court resolves the factual disputes in favor of the nonmoving party to the extent necessary to resolve a summary judgment motion. The standard of review of a summary judgment motion is well established. “Summary judgment is appropriate when ‘the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law.’ ” Barbour v. Dynamics Research Corporation, 63 F.3d 32, 36-37 (1st Cir.1995), cert. denied, 516 U.S. 1113, 116 S.Ct. 914, 133 L.Ed.2d 845 (1996) (quoting Rule 56, Fed.R.Civ.P.). “ ‘[Ejvidence of the nonmovant is to be believed, and all justifiable inferences are to be drawn in his [or her] favor.’ ” Rogers v. Fair, 902 F.2d 140, 143 (1st Cir.1990) (citation omitted). Furthermore, it is particularly apropos to the case at bar, to acknowledge that credibility issues are not the proper subject of a summary judgment motion. In general, the role of a summary judgment motion “is to pierce the boilerplate of the pleadings and assay the parties’ proof in order to determine whether trial is actually required.” Coyne v. Taber Partners I, 53 F.3d 454, 457 (1st Cir.1995). “As to issues on which the summary judgment target bears the ultimate burden of proof, she [or he] cannot rely on an absence of competent evidence, but must affirmatively point to specific facts that demonstrate the existence of an authentic dispute.” McCarthy v. Northwest Airlines, Inc., 56 F.3d 313, 315 (1st Cir.1995). Once the moving party makes a proper showing as to the “ ‘absence of evidence to support the nonmoving party’s case,’ the burden of production shifts to the nonmovant,” Dow v. United Brotherhood of Carpenters, 1 F.3d 56, 58 (1st Cir.1993) (citation omitted), who may not rest on allegations in his briefs, Borschow Hospital & Medical v. Cesar Castillo, 96 F.3d 10, 14 (1st Cir.1996), or, as in the present case, allegations in a brief with inaccurate and, thus, irrelevant citations to the deposition testimony. See also LR. 56.1. FACTUAL BACKGROUND On October 4, 1994, Davis and FNB, Trustee of the Albert Davis Trust, as the sellers, and Dawson, Inc., as buyer, executed a Stock Purchase Agreement (“the agreement” or “the stock purchase agreement”) for the sale of The Faxon Company, Inc. (“Faxon”). Under the agreement, the sellers agreed to sell all of Faxon’s outstanding shares of stock to Dawson, Inc. for the purchase price of $14,000,000. The method of payment was for Dawson, Inc. to pay the sellers $3,000,000 in cash at the October 20, 1994 closing and the remaining $11,000,000 in seven annual installments as reflected in certain promissory notes (“the notes” or “the promissory notes”). Faxon, which began as a family owned business in 1918, is in the subscription service business. Based in Westwood, Massachusetts, the company manages subscriptions for libraries, universities and other institutions with large periodical subscription needs. More- specifically, Faxon accepts orders for periodicals from its customers and then forwards the orders, oftentimes with payment, to various pubJisher[s]. Faxon bills its customers for the subscriptions as well as service charges. Faxon’s customers often prepay Faxon for their subscriptions which will then arrive in the following calendar year. In early 1994 Faxon’s business consisted of its operations in Westwood (“Faxon domestic” or “Faxon Westwood”), two North American subsidiaries (The Turner Subscription Agency, Inc. (“Turner”) and Faxon Canada Limited (“Faxon Canada”)), seven European subsidiaries (“the European subsidiaries”) and a number of foreign operations and subsidiaries in Latin America, the Middle East and the Asia Pacific region (“the nonEurope-an subsidiaries”). In the early 1990s Faxon’s business began to decline and the company began experiencing significant losses. (A.232-233). In or around Faxon’s 1993 fiscal year, Chemical Bank declined to renew Faxon’s line of credit which covered the company’s high seasonal demands for cash during certain periods of the year. (A. 231; S.A. 76; P. 25). According to Jonathan S. Altman (“Altman”), the owner of Altman & Company and a financial turnaround consultant for businesses, Faxon unsuccessfully contacted a number of other banks for loans in early 1994. (P. 28). In or around this time period, a series of investments had also proven unproductive and Faxon became unable to pay certain publishers in a manner consistent with its past payment history. (A. 231-232; P. 28). Discussions noted in the minutes of Faxon’s March 14, 1994 Board of Directors meeting cite to “traumatic losses” and the depletion of equity resulting from payments to Judy Davis’s former husband, Richard Rowe. As a result, at the March 14, 1994 meeting, the Board of Directors (“the board”) of Faxon voted to authorize Altman to explore selling Faxon, in whole or in part. (P. 251). Davis supported this decision. (S.A.146). Similarly, the draft consolidated financial statements for Faxon and its subsidiaries for the years ending March 31, 1994 and 1993, prepared by Deloitte & Touche, L.P. (“De-loitte”), Faxon’s auditors, showed respective net losses of $8,330,692 and $7,893,917. (P. 25 & 104). These financials additionally reference Faxon’s default on principal payments to various publishers and question Faxon’s ability to continue operating as a “going concern.” (P. 104). In sum, by the spring of 1994 Faxon’s financial condition had deteriorated to the point where it was seriously exploring and considering the option of selling all or part of the company. Indeed, by letter dated April 19, 1994, Dawson PLC indicated a willingness “to pay up to $25 million” for Faxon’s European operations, subject to “full due diligence” and a contract “with the usual warranties.” (P. 47). While Dawson PLC was considering a bid for Faxon’s European operations, Faxon provided Dawson PLC with certain financial information. (A.669). The record is disputed with respect to the extent and the content of this disclosure of financial information in the spring of 1994. Faxon supplied the financial information to Dawson PLC in the spring of 1994 subject to the terms of a confidentiality agreement. The confidentiality agreement allowed Dawson PLC access to the financial information, described as “Evaluation Material” in the confidentiality agreement, provided that Dawson used the material solely for the purpose of evaluating the purchase or acquisition of Faxon. In the event Dawson PLC abandoned the prospective transaction, Dawson PLC agreed to redeliver the financial information to Faxon or to destroy the financial information without retaining copies. (A. 409M10; A. 669-670; S.A. 100). By letter dated May 9, 1994, Dawson PLC made an offer (subject to meeting with Fax-on creditors, conducting due diligence and standard warranties) to purchase Faxon and its subsidiaries for $6.8 million. (P. 50). The May 9, 1994 letter referred to additional financial information received the previous week and also reconfirmed Dawson PLC’s interest in buying Faxon’s European operations for an amount in the range of $12 to $15 million. (P. 50). Meanwhile, by letter dated April 28, 1994, EBSCO Industries, Inc. (“EBSCO”) offered Faxon $18 million in cash for Faxon. (P. 49 & 51). Although, according to plaintiffs Fax-on did not accept EBSCO’s offer (Docket Entry #317, p. 6), plaintiffs point out that Dawson Subscription Services sent a May 11, 1994 letter to the Federal Trade Commission (“the FTC”) complaining that EBSCO’s acquisition of Faxon would be anticompetitive. (P.53; S.A. 39-40). On May 20, 1994, Dawson PLC offered to pay Faxon $17.5 million for 40% of the capital stock of Faxon domestic and 100% of the capital stock of its subsidiaries subject to various adjustments and due diligence review. (P. 55 & 57). In a report dated May 25, 1994, Connolly reviewed the costs associated with buying Faxon and attached certain financial information relative to Faxon. (P. 56; P. 16, pp. 29-30, vol. IV). The report, which analyzes Dawson purchasing 100% of Faxon’s subsidiaries and 40% of Faxon, Inc., contains financial data as of March 31, 1994, for Faxon Westwood as well as for Faxon’s European operations and Faxon Canada. (P. 56). Ingleby characterized Dawson PLC’s efforts in the spring to acquire Faxon’s European operations as a “totally different acquisition” from Dawson, Inc.’s acquisition of Faxon and its nonEuropean operations in October 1994. Ingleby also failed to recollect viewing financials involving Faxon in May of 1994. (A.196). In short, Dawson PLC’s attempts in the spring of 1994 to acquire all or part of Faxon proved unsuccessful. The record is disputed as to exactly what documents Faxon provided Dawson and what documents Dawson reviewed relative to Faxon in the spring of 1994. Moreover, even viewing the record in plaintiffs’ favor, Dawson PLC’s focus and the nature of the proposed transactions in the spring of 1994 differed from its focus in the early fall of 1994 inasmuch as in August 1994 Faxon sold its European operations to another company. On May 31, 1994, EBSCO made additional offers for Faxon’s United States and non-United States operations. (P. 59 & 60). Also on May 31,1994, R.R. Donnelley & Sons Company (“Donnelley”) made an offer, subject to signing a definitive agreement, to purchase the domestic business of Faxon as well as Turner, Faxon Canada and certain Asian/Paeific operations. (P. 61). Davis accepted the offer. (P. 61). Faxon eventually terminated its discussions with Donnelley, however, as shown in Faxon’s August 5,1994 board minutes. (P. 251). As also shown in these minutes, Faxon considered liquidation as an option at that point in time but resolved to proceed with another offer from EBSCO. (P. 251; A. 181). According to Altman, by the spring and early summer of 1994 Faxon’s publishers took the position that Faxon had to sell all or part of the company. (P. 28). After the Donnelley transaction fell through, Altman began talking with Swets Zeitlinger, B.V. (“Swets”) about selling Faxon’s European operations. Thereafter, in a short period of time, Faxon consummated a deal with Swets in late July or early August of 1994 whereby Swets agreed to purchase Faxon’s European subsidiaries. (P. 28). Meanwhile, in July 1994 Faxon was in ongoing discussions with EBSCO about selling Faxon’s United States (“U.S.”) operations and/or Turner, Faxon Canada and non-U.S. subsidiaries. (P. 28 & 63). Dawson also remained in the negotiations and in early August 1994 received updated financial statements regarding Turner and Faxon Canada. (P. 65, 67 & 68). By facsimile transmission dated August 3, 1994, Ingleby transmitted a three sentence letter to Altman reminding him that, “Dawson is available as a back stop with cash available and a willingness to negotiate a better price than we previously discussed.” (P. 67). On August 5, 1994, Dawson offered to pay Faxon $11 million for Turner and Faxon Canada. (P. 69-71). EBSCO also made an offer to purchase Turner, Faxon Canada and Faxon’s remaining foreign subsidiaries, including Nihon Faxon Company Limited (Japan) (“Nihon Faxon”), on August 5, 1994. Specifically, EBSCO offered to pay Faxon $16.5 million for these entities subject to conducting due diligence and executing a mutually acceptable final contract. The offer also noted, “[W]e understand that [Faxon] will provide us an exclusive to negotiate on the balance of the Company.” Davis and Altman signed the offer. (P. 74). On August 8, 1994, Faxon’s agreement to sell Turner, Faxon Canada and its remaining foreign operations to EBSCO was announced to the press. (P. 75). The signed offer to purchase letter was due to expire within ten business days (August 19, 1994) in the event the parties failed to finalize a purchase agreement. (P. 74). During August 1994 Dawson continued to negotiate with Faxon to acquire Faxon’s domestic operations. By letter dated August 23, 1994, after expiration of the aforementioned EBSCO/Faxon exclusive, Connolly advised Altman of Dawson’s “confirmed interest” in acquiring various parts of Faxon, including Turner and Faxon Canada. (P. 77). Connolly’s letter closed with the statement that, “Our offer would be an all-cash offer for 100% of the stock of Faxon, Inc., including all remaining unsold subsidiaries.” The letter did not include a price range for the proposed transaction. (P. 77). At this time, Zuroff also sent a facsimile transmission to Connolly of financial information of Faxon for July 1994. Connolly then sent the materials by facsimile transmission to Cain. (P. 78 & 83). Also on August 24,1994, EBSCO transmitted to Faxon an offer to purchase “all of the equity of the parent” for $11 million. (P. 79). In a separate August 24, 1994 transmission, EBSCO reconfirmed its prior offer of $16.5 million for Turner and Faxon’s non-U.S. subsidiaries, including Nihon Faxon. (P. 80). On August 25, 1994, Connolly sent a letter to Altman confirming Dawson’s “intention to make a bid for 100% of the stock of Faxon, Inc. within the price range mentioned” in an earlier telephone conversation. (P. 81). The letter further noted that, “this offer does not include Faxon Canada, Turner, Latin America or Asia Pacific.” Connolly then confirmed that it was Dawson’s “intention to proceed with this offer in its entirety, including the above subsidiaries, in the event that the proposed sale of same should fall through for whatever reason.” (P. 81). By letter dated August 25, 1994, Connolly informed Zuroff and Altman that he, together with Cain, intended to visit Faxon in Westwood on August 30, 1994. In connection thereto, Connolly expressed an interest in reviewing, inter alia, financial statements for all Faxon subsidiaries and balance sheets vis-a-vis the aging of accounts receivables and the “collectability” of intercompany receivables. (P. 82). Connolly and Cain reviewed financial information of Faxon during their visit to the Westwood headquarters in late August 1994 and September 1, 1994. (P. 18). Connolly testified, in part, that he initially met with Zuroff and that, “In large part [the material requested in the August 25, 1994 letter] was not made available because it wasn’t available within the company.” (P. 16, p. 182, vol.I). As demonstrated below, the testimony regarding the extent and content of Dawson’s review of financials in August and September 1,1994, is disputed. Zuroff testified that he presented Connolly with a series of binders containing financial information during the late August 1994 visit. According to Zuroff, the binders would include legal ‘ and operational organization charts. Zuroff additionally testified that he provided Connolly with financial statements for all Faxon subsidiaries, including Nihon Faxon, and that Connolly reviewed accounts receivable. It was also Zuroffs practice to provide all potential buyers such as Dawson with the July 21, 1994 draft of Faxon’s consolidated financials (“the July consolidated financials” or “the July 1994 consolidated financials”) (P. 64) or an iteration thereof. (P. 21, pp. 68-72 & 147-150, vol. III). Zuroff also recalled discussing Nihon Fax-on’s intercompany balance with Connolly pri- or to the October 1994 closing. In fact, Zuroff characterized Nihon Faxon as the “single largest issue, aside from receivables, which” he talked about with Connolly. (P. 21, pp. 152-153, vol.HI). Furthermore, Connolly testified at one point that the cash flow projection provided by Faxon in August 1994 showing a full pay down of the intercompany receivable from Nihon Faxon was not a misrepresentation. (P. 16, pp. 266-268, vol.II). On August 31,1994, EBSCO sent a facsimile transmission to Davis withdrawing its offer to purchase all of the equity of the parent for $11 million. (P. 86). The communication nevertheless confirmed that progress was still being made on “the non-USA/Turner acquisition” and urged that the parties must enter into a “common letter” by September 2, 1994, with a closing by September 15,1994. (P. 86). By facsimile transmission of a letter dated September 1, 1994, EBSCO informed Davis that it was terminating “its consideration of the acquisition of [Faxon’s] non-USA operations and Turner.” (P. 87). Whether Dawson knew about the withdrawal of the EBSCO acquisition prior to entering into its own letter of intent to acquire Faxon’s domestic operations (P. 85; S.A. 459-465) on August 31,1994, is disputed. Notwithstanding the later date of the September 1, 1994 EBSCO withdrawal letter, Cain testified that on August 31, 1994, Altman advised both him and Connolly that “EBSCO may withdraw its offer.” Cain could not, however, remember whether Altman told him of the EBSCO withdrawal pri- or to the signing of Dawson’s letter of intent. (P. 18, pp. 33-35, vol.HI). Connolly testified that “there was a hypothesis on the part of Mr. Altman that as a result of [Dawson’s] bid EBSCO might withdraw their bid.” (P. 16, pp. 48^9, vol.IV). It is undisputed that on August 31, 1994, Dawson and Faxon accepted and agreed to Dawson’s letter of intent to acquire Faxon’s remaining domestic operations for $15 million cash and forgiveness of an estimated $2.2 million debt owed to Faxon by Davis. (p. 85; S.A. 459-465). The letter of intent included an attached domestic balance sheet showing the projected balance of the Nihon Faxon intercompany debt reduced to zero as of August 31,1994. (S.A.465). On September 1, 1994, EBSCO issued a press release announcing its decision to terminate its consideration of acquiring Faxon’s “non-US operations” and Turner. (P. 88). Due to EBSCO’s withdrawal, Faxon would not receive the anticipated proceeds from the $16.5 million transaction. Dawson was aware of the proposed EBSCO sale prior to entering into the letter of intent and Connolly understood that Faxon planned to apply the proceeds of the EBSCO sale to discharge Faxon’s debt to its publishers. (P. 16, pp. 138-140, vol. Ill; A. 138 & 153). By September 1 or 2, 1994, Dawson had learned about EBSCO’s withdrawal. (A. 153; P. 90). Dawson thus reevaluated its position with respect to its offer to purchase the domestic operations. According to Connolly, Dawson was troubled that the cash from the EBSCO sale would no longer be available to pay Faxon’s publishers’ debt. Although concerned about the lack of time to adequately investigate the remaining foreign subsidiaries, Dawson agreed to acquire Faxon’s remaining foreign subsidiaries as well as the domestic operations and made a public announcement to this effect on September 2, 1994. (P. 90; A. 154). ■ Dawson did not significantly reduce the $15 million purchase price contained in the letter of intent when it agreed to add the remaining foreign subsidiaries to the proposed transaction. Connolly testified that the parties came to a different agreement to defer payment of the purchase price in light of Dawson’s concern about the absence of cash resulting from the EBSCO withdrawal and Zuroffs assurance, described infra, that the subsidiaries would not effect the company’s net worth. (A. 154; P. 16, pp. 146-151, vol. III). During September 1994 the agreement thus evolved to provide for an $11 million deferred payment of the purchase price. (P. 16, pp. 149-150, vol.III). In a September 27, 1994 report to the Dawson PLC board Ingleby described the deferred payments as “an earn-out/consultancy/non compete of up to $12m spread over 7 years.” (P. 136; P. 17, pp. 124-125, vol. II). In the final agreement, the payment schedule included an initial cash payment of $3 million and the later installment payments totaling $11 million. The final agreement also included a purchase price adjustment mechanism. (P. 1). On September 6 or 7, 1994, Ingleby and Connolly met with one or more representatives from Reed Elsevier, Inc. (“Elsevier”), a major Faxon publisher. (P. 17, pp. 157-158, vol. II; A. 138; P. 16, p. 197, vol. I; P. 18, pp. 42-48, vol. I). Dawson desired assurances from Elsevier that it would resume normal trading terms with Faxon after Dawson’s acquisition. Dawson additionally sought reassurance that Elsevier would allow Dawson to proceed with the transaction. El-sevier was concerned about Dawson’s financial ability to complete the transaction. A facsimile transmission dated September 7, 1994, from Ingleby to Zuroff refers to the Elsevier meeting and requests “a cash flow analysis,” referenced by Elsevier at the meeting. A September 7, 1994 facsimile transmission by ZurofPs secretary reflects that she transmitted the July consolidated financials to Ingleby. Dawson’s meeting with Elsevier concluded on a cordial note, according to Ingleby. (P. 17, pp. 158-160, vol. II; P. 91; P. 16, p. 150, vol. II; P. 94; P. 16, pp. 197-202, vol. I). In September 1994 Elsevier, as well as other publishers, continued to pressure Fax-on for payment of its outstanding debt. At least in part due to Elsevier’s demands, Dawson and Faxon agreed to a separate and expedited sale of Turner and Faxon Canada. On or about September 20,1994, Dawson and Faxon entered into stock purchase agreements whereby Dawson purchased Turner and Faxon Canada for the aggregate total of $7.5 million. The $7.5 million proceeds were transferred directly to Faxon publishers. (P. 109; P. 16, pp. 127-128, vol. I; P. 16, pp. 170-178, vol. Ill; P. 76 & 110; A. 107 & 158). Connolly traveled to the Boston area on September 12, 1994, returning to the United Kingdom on September 15, 1994. During this visit, Connolly discussed with Zuroff the preparation of revised cash flow statements in light of the EBSCO withdrawal. He also reviewed the broad assumptions contained in the cash flows which were then used to obtain financing for Dawson. (A. 127-128; A. 156; P. 16, pp. 224-225, vol. I). According to Connolly, he asked Zuroff for financial statements relative to Nihon Faxon a number of times. Connolly testified that in September 1994 he reviewed certain financial documents but that there were no relevant or updated financial statements regarding Nihon Faxon for review. (P. 16, pp. 230, Yol. I; A. 162). The extent of Connolly’s review of Faxon’s financials both before the EBSCO withdrawal when Dawson was acquiring the domestic operations and after the EBSCO withdrawal when Dawson was also acquiring the remaining subsidiaries is disputed. At a minimum, although Connolly initially stated in answer to interrogatories that the interim balance sheet was the only financial information made available by the sellers, he acknowledged at his subsequent deposition that he had seen a copy of Faxon’s monthly consolidated report as of June or July 1994 prior to the EBSCO withdrawal. (P. 16, pp. 184-185, Yol. IV; P. 16, p. 231, Vol. I; P. 11, Int. 22). In addition, Zuroff testified that he provided “Dawson” with a copy of “the July consolidating financials” showing negative equity for Nihon Faxon as well as Asia Pacific. Zuroff also testified that, prior to the closing, he provided Connolly or Dawson with all of the financials which Nihon Faxon would have submitted to Faxon. (P. 21, pp. 83-85, vol. IV; P. 21, p. 100, vol. II; p. 113). The September 20, 1994 preliminary version of Faxon consolidated financials as of August 31, 1994, is also marked “Dawson” and shows Nihon Faxon’s net worth as negative $2,953,737 and a Nihon Faxon negative intercompany liability of $8,107,329 for Fax-on domestic. A September 16,1994 facsimile transmission from Zuroff to Connolly refers to attached financial proformas. A September 23, 1994 facsimile from Dawson contains financial projections for Faxon, referencing as a source Faxon’s “Projected Consolidated Financials” dated July 21,1994. It is also undisputed that on September 16, 1994, the July 1994 consolidated financials were faxed from Faxon to Attorney Leonard A. Ferber (“Ferber”) of Katten, Muehin & Zavis (“Katten Muehin”), Dawson’s counsel in 1994 and Assistant Secretary to Dawson, Inc. as of August 31, 1994. In addition, by letter dated September 26, 1994, Adam H. Schecter (“Schecter”) of Katten Muehin filed Dawson’s Hart Scott Rodino filing with the Federal Trade Commission. Therein, Schecter refers to Faxon’s $8 million loss through July 31, 1994. Dawson thus acknowledges, albeit not until answering an interrogatory in January 1997, that it is likely that it had the July 1994 consolidated financials in its possession prior to the closing. (P. 114; P. 128; P. 123; P. 130; P. 113; P. 20, pp. 7-8, 22-33 & 115-116, vol. I; S.A. 171-172; S.A. 169e-169f; Docket Entry # 356, p. 39; P. 14). Finally, a September 26,1994 letter signed by Connolly to an individual at Fleet Bank includes Faxon’s September 1994 Projected Consolidated Financials updated to reflect the sale of Turner and Faxon Canada to Dawson. These financials show the com-píete pay down of Nihon Faxon’s intercompa-ny debt by June 30, 1995. (P. 133; P. 16, pp. 112-115, vol. II). On the other hand, Connolly testified that in September 1994 and up to the closing he was occupied with arranging financing for the transaction and spent a significant amount of time arranging for a line of credit for the upcoming season from National Westminster Bank, Limited (“NatWest”), a clearing bank based in the United Kingdom. Connolly also spent a considerable amount of time dealing with Faxon’s publishers and obtaining their acquiescence to the transaction. Finally, almost on a daily basis in September 1994, Connolly spent time assuring Faxon customers of the safety of their subscription moneys. In light of these tasks, Connolly had less time to undertake a due diligenee review of Faxon. He also characterized the review of Faxon financial reports as less important than the aforementioned duties, in part, because he could rely on the upcoming audits of the business as of September 30, 1994. The importance of the audit provision, i.e., the purchase price adjustment mechanism, to Dawson is evident by the fact that Connolly discussed the provision with Dawson’s board. (P. 16, pp. 154-159 & 179-181, vol. Ill; A. 129, 158 & 162). Financial documents prepared before the closing show Nihon Faxon intercompany debt to Faxon of: (1) $10,444,000 as of July 29, 1994, and zero as of August 31, 1994; (2) $10,641,151 as of July 29,1994, and zero as of June 30, 1995; (3) $8,107,000 as of September 30, 1994, and zero as of June 30, 1995. (P. 64, 133 & 141). Another set of financial documents reflecting Faxon’s domestic balance has the date of June 27, 1994, in the lower right hand corner (“the June finan-cials”). These June financials show Nihon Faxon’s intercompany debt projected as: $10,840,000 as of March 31,1995; $10,340,000 as of June 30,1995; $5,816,000 as of September 30,1995; and $10,816,000 as of March 31, 1996. (A.438-440). In light of Nihon Faxon’s seasonal fluctuations, Zuroff explained that Nihon Faxon could realistically collect approximately $7,000,000 or perhaps $4,000,000 to $5,000,-000 of the receivables. As further explained by Zuroff, however, Faxon would later pay publishers on Nihon Faxon’s behalf thereby increasing Nihon Faxon’s intercompany debt. (P. 21, pp. 119-121, vol. IV; P. 21, pp. 75-77, vol. VI). According to Zuroff, he explained to Connolly the difficulty in bringing the Nihon Faxon intercompany balance down to zero and that it was not “realistic to make that assumption in the time frame that was indicated in the forecasts.” (P. 21, pp. 124-125, vol.IV). Connolly, however, testified that Zuroff assured him that there were “back-to-back receivables” and that the Nihon Faxon “inter-company receivable would be paid down as the external receivables were collected by Nihon Faxon.” Connolly recalls viewing cash flow projections showing “all of the Nihon receivable being paid down over a period of time going into the next calendar year.” (A.131). He also avers that he saw more than one cash flow projection showing the complete pay down of the Nihon Faxon intercompany receivable. (P. 16, p. 248, vol. I; P. 16, pp. 126-127, vol. II; P. 16, pp. 165 & 167, vol. III; S.A. 111-112; A. 157; A. 166; A. 666, ¶ 3; P. 136; P. 141). In a similar vein, Connolly testified that Zuroff stated that the impact of the additional subsidiaries “would not have an effect on the net worth of the company.” Connolly was also told on a number of occasions that the net worth of the newly added subsidiaries due to EBSCO’s withdrawal was a “wash” and/or that effectively the net worth of the added subsidiaries was zero. According to Connolly, a subsequent audit of Faxon revealed that the aggregate net worth of the newly added subsidiaries came to a deficit of $4 to $5 million as of September 30, 1994. (A. 128; A. 154-155). According to Zuroff, however, he spoke with' Connolly a number of times and advised him that by acquiring Asia Pacific in addition to Nihon Faxon that “all of Asia was close to a wash from a cash point of view” or that “Asia as a whole ... was approximately a wash in terms of cash flow” or that “when you acquire all of the foreign operations, it’s probably a wash.” (P. 21, pp. 58 & 107, vol. VI; P. 21, pp. 116-117, vol. IV). He also spoke “at length” with Connolly about Nihon Faxon and denied ever saying that Nihon Faxon would pay down or repay the intercompany debt. Zuroff also testified that he informed Connolly that Faxon “had a lot of difficulty getting information” from Nihon Faxon and that the company “had not been well managed over the years both operationally and financially.” (P. 21, p. 153, vol. Ill; P. 21, pp. 119-120, vol. IV). Meanwhile, between September 1 and 13, 1994, Minoru Taguchi (“Taguchi”), President of Nihon Faxon (P. 24, p. 155, vol.2), spoke by telephone with an individual identified as Connolly and explained the “general situation” but “nothing specifically.” (P. 24, pp. 168-178, vol.II). According to Connolly, it was after the closing that Zuroff told him that he didn’t know what was going on at Nihon Faxon. (P. 16, pp. 166-167, vol.IV). In light of these contrasting versions of events, therefore, whether Zuroff and/or the cash flow projections misrepresented to Connolly that the Nihon Faxon intercompany debt would be paid in full to Faxon is disputed. The circumstances surrounding Zuroffs “wash” statement are also disputed. More specifically, whether Zuroff limited the statement to cash flow or directed the statement to the net worth of the company is disputed. With respect to the loss of one of Nihon Faxon’s major clients (Tsukuba University), Zuroff was aware of the Tsukuba University problem prior to the closing. (P. 21, pp. 90-91, vol.VI). An August 24, 1994 facsimile transmission correspondingly suggests that Faxon knew of the probable loss of the Tsu-kuba University account and of Taguchi’s 50% projected loss of Nihon Faxon’s sales volume. (S.A. 40a-40b). In connection thereto, Faxon was discussing the option of recapitalizing Nihon Faxon’s intercompany debt to enable the company to successfully bid on the Tsukuba business. (P. 21, pp. 85-90,vol. VI; P.89). In fact, through a facsimile transmission dated September 1, 1994, Zuroff informed Taguchi that, pending an official board vote, Faxon “will recapitalize Nihon Faxon for the full amount of the intercompany debt.” (P. 89). Noting that the vote would increase Nihon Faxon’s equity by approximately $10 million, Zuroff concluded that he hoped “this will allow [Nihon Faxon] to win the bid with Tsukuba.” (P.89). Sometime between September 1 and 14, 1994, Zuroff testified that a board minute dated June 30, 1994, was prepared. (P. 21, p. 84, vol.VI). Davis could not recall the specifics of the meeting although she recollected that the meeting referred to in the June 30, 1994 minute took place in approximately August 1994. (A.175-176). Zuroff suspected that the minute was post dated and that the meeting did not actually take place on June 30,1994. (P. 21, p. 96, vol.VI). The minute, however, reads that, “A special meeting of the Board of Directors of the Faxon Company, Inc. was held ... on June 30, 1994.” (P. 105; A. 454(a)). Accordingly, there is a discrepancy as to the date of the meeting which took place prior to the closing. The minute reflects that the Faxon board voted to convert $6 million of the Nihon Faxon intercompany debt into “additional paid in capital” effective immediately. (P. 105; A 454(a)). The agenda for the meeting was Nihon Faxon’s intercompany debt and its ability to effectively bid on certain accounts. (P. 105; A. 454(a)). Whether the minute books of Faxon contained this minute and whether Faxon made this minute available to Dawson is disputed. Connolly attests that the June 30, 1994 minute was not among the copies of minutes he reviewed which were kept at Faxon West-wood. He also testified that he- did not see the minute before the closing. Moreover, the minute would have caused Connolly concern because it would contradict Zuroffs statement that the addition of the foreign subsidiaries was a wash and that the Nihon Faxon intercompany receivable was supported by back-to-back receivables. Connolly also viewed the minute as significant inasmuch as it effected the cash flow projections showing the pay down of the Nihon Faxon intercompany debt. (P. 16, pp. 225-226, vol. Ill; A. 666, ¶ 4; A. 165). It is also true that via a facsimile transmission dated September 8, 1994, Dawson’s counsel requested “all minutes” of the Faxon board “for the last five years.” (A.527). A copy of the minute with Zuroffs signature intersecting the “S” of the word “Secretary” (A.455) contains a handwritten note with the words, “Mark Z. said hold!”. (P. 23, pp. 54-55, vol.I). Diana Brewer (“Brewer”), who provided general support to Zuroff and was also Assistant to the President at Faxon in 1993 and 1994 (P. 23, pp. 8-13, vol.I), recognized the handwriting on the note as her handwriting. On the other hand, Brewer could not remember the actual instruction or why she was instructed to hold the note. Assuming that the instruction meant not to distribute the document, Brewer also did not know whether the instruction meant not to place the minute in the minute book. She does not remember anyone asking her not to put a minute in the minute book. (P. 23, pp. 53-55, vol.I). In June 1994 Faxon kept a complete list of the board minutes in one place, a Pendiflex folder or minute book in a fire safe file cabinet located outside the President’s office. For due diligence reviews, Zuroff testified that Faxon would create binders of financial materials containing an exhaustive list of board minutes. According to Zuroff, it was Brewer’s responsibility to keep the entire set of minutes in the minute book. (P. 21, pp. 96-98, vol. VI; P. 23, pp. 44-46, vol. I). Although Zuroff could not recall whether he provided a copy of the June 30, 1994 minute to Connolly, he does remember discussing with Connolly the issue of recapitalizing Nihon Faxon by converting its intercom-pany debt to paid in capital as one of several options or approaches to retain Tsukuba University as a Nihon Faxon client. Zuroff did not know or couldn’t be sure whether he told Connolly that, in fact, the board voted to recaptilize a portion of Nihon Faxon’s inter-company debt. Moreover, Connolly recalled that any discussions as to recaptilization took place after the closing. Brewer also could not remember whether the June 30, 1994 minute was included in the multitude of documents sent to Dawson. A student interning at the offices of Dawson’s counsel avers that the June 30, 1994 minute was not in the due diligence files produced by Fatten Muchin. (P. 21, pp. 85-87 & 98-99, vol. VI; P. 21, p. 138, vol. III; P. 21, pp. 104-105, vol. IV; P. 23, p. 56, vol. II; A. 981). On September 13,1994, via facsimile transmission, Zuroff sent Taguchi a copy of the June 30,1994 minute. (P. 105). On September 14, 1994, Taguchi replied that Japanese law prohibited conversion of the intercompa-ny debt to paid in capital. Taguchi also referred to a Dawson press release signed by Connolly. (P. 111). As previously noted, Zuroff stated that he passed along to Connolly the facsimile transmissions sent to him by Taguchi. (P. 21, p. 87, vol.VI). Neither Zuroff nor Frank Neczypor (“Neczypor”), a tax partner at Deloitte who reviewed and consulted with Faxon on tax matters in late 1993 and 1994, could recall whether Faxon implemented the action discussed in the June 30, 1994 minute, i.e., the conversion of $6 million of Nihon Faxon intercompany debt to paid in capital. In September 1994 Dawson was considering the option of closing or selling Nihon Faxon. (P. 26, pp. 15-16 & 119, vol. I; P. 21, pp. 100-103, vol. VI; P. 137; P. 11, Int. 15). During the week of September 19, 1994, both Ingleby and Cain visited Faxon’s West-wood facility. They met with individuals familiar with Faxon’s research and development, product marketing and publisher and clients services departments. They also met with Altman and Davis. On September 20, 21 and 22, 1994, Ingleby and Cain traveled respectively to Faxon’s operations in New York, Faxon Canada in Ontario and Faxon facilities in Ann Arbor, Michigan. (P. 125). Notwithstanding these visits, Ingleby testified that Dawson lacked the necessary two to three months to conduct due diligence but believed that Dawson had some protection under the stock purchase agreement. (S.A. 184). Connolly similarly stated that Dawson did not conduct any due diligence of Faxon. According to Connolly, Dawson needed to conclude an agreement within a short time period to alleviate the considerable unrest and concern within the library community. Consequently, Connolly testified that Dawson lacked the necessary time to conduct a thorough review of Faxon’s financial statements, internal controls, staffing, organization, customers and premises. (A. 155 & 162; P. 16, pp. 152-154, vol. III). On September 29,1994, the board of Dawson PLC met and discussed the acquisition of Faxon for $15 million with $12 million subject to deferred payments over various time periods. The minutes further reflect that Nat-West had agreed to provide acquisition funding and that, optimistically, Dawson would obtain $25 million of seasonal funding. The Dawson PLC board also heard reports from Connolly and Ingleby and thereafter approved Dawson, Inc.’s prospective acquisition of Faxon for $15 million. Also on September 29, 1994, the board of Dawson, Inc. issued a resolution to purchase Faxon for $15 million and provided Connolly with the authority to execute a written agreement. (P. 139 & 140). Concentrated efforts to negotiate the wording and to conclude a final agreement began in earnest in late September 1994. There were a series of drafts of the stock purchase circulated prior to the October 4, 1994 signing of the final agreement. (A.160). On September 28, 1994, Katten Muchin transmitted an initial draft of the agreement to Attorney John L. Bronson of Jager, Smith, Stetler & Arata (“JSSA,” “sellers’ counsel,” “plaintiffs’ counsel” or “Bronson”) requesting his comments. As explained in greater detail infra, the initial draft did not include the adjustments contained in subsection 1.5(a) through 1.5(g) of the final agreement. The benchmark net worth figure was also blank. Further, the last sentence of section 2.1, which is the first section under the representations and warranties section of the agreement (section 2), defined the term “Company” as including each subsidiary of Faxon. (P. 138). In other words, Dawson initially proposed including all of the subsidiaries in the representations and warranties section of the agreement. On September 30,1994, Bronson sent Kat-ten Muchin his comments and a marked-up draft of the agreement. (P. 146). Therein, sellers’ counsel proposed in a comment “that the representations and warranties should exclude the subsidiaries entirely” except for a representation as to Faxon’s ownership of the subsidiaries. The last sentence of section 2.1 is crossed out with a reference to the above comment. (P. 146). A subsequently drafted version contains the original last sentence of section 2.1 with handwriting excluding sections 2.3, 2.4 and 2.5 from the definition of the term “Company” which included the subsidiaries. (P. 151). The final agreement includes the subsidiaries in the representations and warranties section except for sections 2.3 (Capitalization), 2.4 (Financial Statements) and 2.5 (Books and Records). (P. 1). With respect to section 2.4, the initial draft included the representation and warranty that, “Such financial statements and notes fairly present the financial condition (or, in the ease of the Pro Forma Balance Sheet, ejected financial condition) and results of operations of the Company ... all in accordance with GAAP.” (P. 138). The reply draft of sellers’ counsel excluded the pro forma balance sheet from this sentence and proposed that the sentence read as follows: “Such .financial statements and notes (other than the Pro Forma Balance Sheet) fairly present the financial condition and results of the Company ... all in accordance with GAAP.” (P. 146). In the final agreement, this sentence does not contain the parenthetical and reads simply that, “Such financial statements and notes fairly present the financial condition and results of operations of the Company ..., all in accordance with GAAP.” The purchase price adjustment mechanism in sections 1.5 and 1.6 was also the subject of various revisions prior to the final agreement. The final section 1.5 contains a $4,118,000 benchmark net worth figure. The purchase price adjustment set forth in the final agreement provides that if the “Adjusted Closing Net Worth” of Faxon, as audited and determined by Deloitte as of October 2, 1994, was below $3,618,000, then the agreement allowed Dawson to take a downward adjustment of the purchase price for each dollar the adjusted closing net worth was below the benchmark $4,118,000 amount. According to Connolly, the parties derived the $4,118,000 figure from the $5,118,000 figure in the interim balance sheet attached to the letter of intent wherein the stockholder net equity figure for the domestic company is $5,118,000 as of July 29, 1994. Connolly explained that the $1,000,000 difference derived from the sellers advising Dawson that the sales proceeds from the European subsidiaries was $1,000,000 less than anticipated. (P. 16, pp. 194-195, vol.HI). With respect to the entirety of sections 1.5 and 1.6, sellers’ counsel pointed out, in the reply draft, that the basis for the adjustments needed to be changed due to the EB-SCO withdrawal and the sale of Turner and Faxon Canada. The comment reads as follows: The basis for the adjustments of the purchase price needs to be changed due to intervening developments since August (e.g. no EBSCO sale; Turner and Canada sales); the projected 9/30/94 balance sheet attached to the 8/31/94 letter agreement is no longer valid. Our suggestion is that if the operating loss for September should exceed a projected amount (on the order of $2 million) by more than $500,000, then an adjustment should be made. (P. 146). Altman testified that the purchase price adjustment was not included to compare a consolidated net worth to a domestic net worth. (P. 28, vol.III, pp. 36-37). As it appears in the final agreement, section 1.5 contains a list of adjustments, (a) through (g). The first handwritten version of these adjustments appears in an undated version of a draft circulated after the September 30,1994 revision draft by Dawson (P. 146). (P. 151). As previously noted, “INSERT I” in Ferber’s handwriting appears on page three of this draft (P. 20, vol.II, p. 291) and refers to a handwritten paragraph later in the draft which reads as follows: INSERT I For purposes hereof, “Adjusted Closing Net Worth” shall mean the net worth (assets minus liabilities) of the Company, on a consolidated basis with its subsidiaries, as shown on the Closing Balance Sheet (defined in Section 1.6) adjusted so as not to give effect to the following: (a) Operating losses of the Company and its Subsidiaries on a consolidated basis for August and September 1994; (b) the closing of Subsidiaries located in the Asia/Pacific region and Australia; (c) any increase in the bad debt reserve over $1,341,426; (d) any write-off of capitalized software development costs or write-down of related computer hardware; (e) gain on the sale of Turner Subscription Agency, Inc. and Fax-on Canada, Inc., and any taxes thereon; and (f) any other adjustments required so that the Closing Balance Sheet shall have been prepared on a consistent basis with the Interim Balance Sheet (defined in Sec- . tion 2.4). (P. 151) Ferber remembers that Connolly, Bronson, Attorney Mark Wood and himself discussed the list of purchase price adjustments on October 4,1994, prior to the signing of the agreement that day. Ferber’s understanding of subsection 1.5(g) was that it was designed to make sure that accounting policies did not change. (P. 20, pp. 69-72 & 82-84, vol. I). Connolly testified that he proposed the language in subsection 1.5(g) and that he discussed the subsection with the sellers. Like Ferber, Connolly recalls that the purpose of subpart (g) was to remedy inconsistencies in accounting practices between those of Dawson and those of Faxon. In contrast, Zuroff viewed subpart (g) as a recognition that “a closing balance sheet, a GAAP closing balance sheet by definition would have to be adjusted to reflect the basis that was used to put together the interim balance sheet.” (P. 16, pp. 200-201, vol. Ill; P. 16, pp. 214r-219, vol. II; P. 21, p. 170, vol. VI). Dawson’s initial draft of the agreement proposed the use of Coopers & Lybrand, Dawson’s auditors at the time, to conduct the audit in section 1.5, later renumbered as section 1.6. At Faxon’s suggestion, the parties substituted Deloitte as the auditors in section 1.6 of the agreement. Zuroff pointed out to Dawson that Deloitte would conduct an audit in a shorter period of time because of its familiarity with Faxon. Dawson agreed and Deloitte became the designated auditors in section 1.6 of the final agreement. (P. 138; A. 90-91; P. 21, pp. 19-20, vol. VII; P. 16, pp. 206-208, vol. III). The parties also focus their dispute on sections 2.8 and 8.2 of the agreement, the accounts receivable warranty and set off provisions. The final agreement defines the term “Accounts Receivable” as “all accounts receivable (individually on a gross basis) of the Company.” Section 2.1 provides that the term “Company” as used in section 2, except for sections 2.3, 2.4 and 2.5, is to include each of Faxon’s subsidiaries. The accounts receivable sections (§§ 2.8 and 8.2) therefore encompassed the receivables due to Nihon Faxon from Nihon Faxon’s customers. The language in the penultimate sentence of section 8.2 also establishes that the aggregate outstanding balance due under two demand notes owing to Faxon from Charles E. and Helen R. Rowe (“the Rowe notes”) was an account receivable within the meaning of sections 2.8 and 8.2. Under section 2.8, the sellers agreed to deliver to Dawson “at the Closing a complete and accurate schedule” of the accounts receivable as of October 2, 1994. The aggregate amount of the accounts receivable would then be reflected on the Closing Balance Sheet which, under section 1.6, was going to be prepared by Deloitte within 60 days after the closing. Under section 8.2, Dawson could reduce its installment payments under the notes if Faxon collected less than the aggregate accounts receivable. Specifically, if at the end of 335 days after the closing and thereafter annually, Faxon collected on the accounts receivable an amount less than the aggregate amount of the accounts receivable (minus a bad debt reserve of $1,341,426 for uncollectible accounts), then Dawson could reduce its annual installment payments under the notes by the amount of the uncollected receivables. With respect to section 2.8’s requirement that the sellers deliver to Dawson the “Accounts Receivable Schedule” at the closing, Zuroff testified that he made it clear to everyone that he could deliver a printed schedule. He further stated that all parties knew that delivering a schedule was impractical due to “its immense size.” According to Zuroff, “all parties were aware that the information was available to them electronically.” Moreover, all parties agreed it would be impractical for the sellers to bring a printed copy of the accounts receivable schedule to the offices of JSSA, according to Zuroff. With respect to the delivery and content of the accounts receivable, Zuroff stated that Faxon’s computing system could provide different slices of information. According to Zuroff, in lieu of delivering an unwieldy printed schedule, what was available at the closing was access to the information on Fax-on’s mainframe computer. Referring, to the accounts receivable schedule, Zuroff further testified that the information was available at the closing electronically. In fact, according to Zuroff, the parties could technically access the information at the closing by telephone. In addition, Zuroff testified that Faxon made an electronic copy on a computer tape of the receivables database as of October 2, 1994, and made the tape available to Connolly around the time of the closing. According to Zuroff, the accounts receivable database contained “detailed information.” He also testified that the tape was made available to Deloitte and that Deloitte had direct access to Faxon’s computer database. (P. 21, pp. 84-88, vol. VII; P. 21, pp. 88-92, vol. I). The existence of the tape discussed by Zuroff is buttressed by an inventory log for September 29, 1995, for Safesite, a national business records management company used by Faxon. The log describes as Faxon inventory certain CODA backup tapes for October 6,1994. Plaintiffs’s expert avers that “we” had access to the “Safesite tape” and reviewed a number of accounts therein. Zuroff acknowledged, however, that the sellers did not bring a hard copy of the schedule to the offices of JSSA on the day of the closing. Rather, the sellers gave Dawson access to the schedule and Zuroff advised Connolly that there was such access through Faxon’s computer system, according to Zu-roff. (P. 21, pp. 84-88, Vol. VII; P. 21, pp. 88-92, Vol. I; Docket Entry # 289, ¶, 10). Similarly, Mark J. Gisherman (“Gisher-man”), Treasury Manager at Faxon at the time of the closing, stated that he asked a Faxon employee to make sure that there was a hard copy of the accounts receivable as of the date of the acquisition which he believed was September 30, 1994. He also believed that the hard copy was kept in a filing cabinet outside his office. (P. 22, pp. 43-47, Vol.I). In contrast to the testimony of Zuroff and Gisherman, Connolly stated that the parties did not agree that the schedule did not have to be produced because of its volume. According to Connolly, he requested the schedule at the closing and Zuroff could not give him a schedule at the closing. Connolly also had no understanding that Zuroff had “downloaded a copy of the accounts receivable database” and “made a copy of the tape.” (A. 146; A. 147). With respect to the content and completeness of the receivables database, plaintiffs did not produce a list of accounts receivable for Nihon Faxon prior to the October 14, 1994 closing. (A.79). Plaintiffs also acknowledge that, “Although all of Faxon’s $64,808,224 accounts receivable were contained on the CODA tape, some of Nihon Faxon’s $1.2 million in accounts receivable were not included.” (Docket Entry # 317,, n. 23). In addition to plaintiffs’ concession, Davis testified that portions of Nihon Faxon’s export business were not reflected on the CODA system. Significantly, however, she was not sure how Nihon Faxon’s import business was reflected. In reference to hard copies or computer data at Faxon listing Nihon Faxon’s receivables, she further stated that “there probably was.” (A.192). Finally, Riley avers that the bulk of Nihon Faxon’s accounts receivable information was not contained in the CODA system. (A.677). Accordingly, whether the sellers made a delivery of a complete and accurate schedule at the closing as required under the first sentence of section 2.8 is disputed. It is therefore unnecessary to decide whether the integration clause (section 11.5) prevented the parties from mutually agreeing, not to enforce the requirement that the sellers deliver a schedule at the closing. In addition to the delivery of a complete and accurate schedule, the parties also dispute the meaning of the term “Accounts Receivable” and, specifically, the manner to calculate the accounts receivable. Dawson contends that, in light of the language “individually on a gross basis,” the accounts receivable calculation begins with a gross number, i.e., the gross debits owed by customers to Faxon. Plaintiffs assert that, given the entire text of the sections, accounts receivable begins with a net number, i.e., the net debit amount in customers’ accounts. The parenthetical words “individually on a gross basis” in section 2.8 were added to the agreement relatively late in the negotiation process. (A.89). Neither Davis (A.189) nor Zuroff could remember who suggested the language. Zuroff generally recalled, however, that the words were inserted to clarify that the sellers were providing Dawson with “information about both the debits and the credits.” Zuroff also understood that uncollected receivables was a net number which included debits and credits. Viewed in a light favorable to plaintiffs, therefore, Zu-roffs testimony (P. 21, pp. 88-93, vol. VII; P. 21, p. 181, vol. 1) establishes that there is some parol evidence in the record showing that the parties intended accounts receivable to include both debits and credits as opposed to simply gross debits. There is, however, parol evidence to the contrary. In particular, Connolly testified and his notes reflect that he understood that an account receivable was an amount owed by a customer individually on a gross basis excluding certain credits such as prepayments. Connolly understood that Dawson would determine the gross debit balances existing on September 30, 1994, and then compare this figure with the gross debit balances existing one year later in 1995 and then be able to make a claim for the outstanding difference, minus the bad debt reserve. In other words, according to Connolly, the sellers guaranteed the collection of gross debit balances as opposed to net receivables. Connolly also noted that Dawson was concerned about Faxon’s accounts receivable and that he discussed the issue at length, primarily with Zuroff. According to Connolly, he further understood that the words “individually on a gross basis” gave Dawson the protection it sought. (A. 145; A. 146; A. 147; A. 370-372; A. 166; A. 167). The construction of the term “Accounts Receivable” requires consideration of language in the final sentence of section 2.8. Dawson proposed the initial draft of this sentence which also appears in the final agreement. (P. 138). Dawson therefore drafted the final sentence in section 2.8. According to Zuroff, Faxon’s practice during his tenure was to examine a particular credit entry in an account receivable and to ascertain what caused the credit and whether it was proper to apply the credit to a particular receivable. Zuroff described the process of matching a particular credit to a debit as cumbersome and complicated. Similarly, Riley, who occupied the position at Faxon of Chief Financial Officer after the acquisition, averred that it took his staff a substantial number of hours to identify and to apply properly a particular debit to the corresponding credit within an account. (A. 681; P. 38; P. 21, pp. 93-95, vol. VII). The closing balance sheet prepared by De-loitte shows an entry of $63,466,818 as the accounts receivable minus a $1,343,000 allowance for doubtful