Common use of Observation of Corporate Formalities Clause in Contracts

Observation of Corporate Formalities. Each party shall at all times observe the applicable legal requirements for the recognition of the other(s) as a corporate entity(ies) separate and apart from each other, including without limitation the following: (i) Each party shall maintain corporate records and books of account separate from those of the other party(ies); (ii) Each party shall not at any time commingle its funds with another party; (iii) Each party shall hold meetings of the Board of Directors as appropriate to authorize its corporate actions; (iv) Each party shall hold meetings of its shareholder(s) as appropriate and as required by the Corporations Code of the jurisdiction in which organized to authorize its actions; (v) Each party shall file all reports required by the Secretary of State in all jurisdictions in which it is licensed or qualified, including the annual statement by whatever name denominated, in a timely manner; and (vi) Each party shall ensure that yearly franchise taxes are paid in a timely manner so as to maintain its corporate existence uninterrupted.