ASSET PURCHASE AGREEMENT

 

 

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Exhibit 10.1

 

 

                            ASSET PURCHASE AGREEMENT

 

                                 by and between

 

                   NORTH COUNTRY ENVIRONMENTAL SERVICES, INC.,

 

                                       and

 

                          NCES EQUIPMENT COMPANY, INC.

 

                            collectively, as Seller,

 

                                       and

 

                              VERIDIUM CORPORATION,

 

                                       and

 

                             ENVIROSAFE CORPORATION,

 

                           collectively, as Purchaser,

 

                           Dated as of March 31, 2005

 

                                    V.3.30.05

 

 

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                            ASSET PURCHASE AGREEMENT

 

THIS AGREEMENT is made as of the 31st day of March, 2005

AMONG:

 

            VERIDIUM   CORPORATION,   a company formed pursuant to the laws of the

            State of Delaware and having an office for   business   located at 14B

            Jan Sebastian   Drive,   Sandwich,   Massachusetts   02563   (referred to

            herein individually as "Veridium" or together with EnviroSafe as the

            "Purchaser")

 

AND:

 

            ENVIROSAFE CORPORATION, a company formed pursuant to the laws of the

            State of Massachusetts   and having an office for business located at

            14B Jan Sebastian Drive, Sandwich,   Massachusetts 02563 (referred to

            herein individually as "EnviroSafe" or together with Veridium as the

            "Purchaser")

 

AND:

 

            NORTH   COUNTRY   ENVIRONMENTAL   SERVICES,    INC.,   a   company   formed

            pursuant   to the laws of the State of   Massachusetts   and   having an

            office for business located at 31 Granite Street,   Suite 8, Milford,

            Massachusetts (referred to herein individually as "NCES" or together

            with NCES Equipment as the "Seller")

 

AND:

 

            NCES EQUIPMENT COMPANY,   INC., a company formed pursuant to the laws

            of the State of   Massachusetts   and   having an office   for   business

            located   at 31   Granite   Street,   Suite   8,   Milford,   Massachusetts

            (referred to herein   individually   as "NCES   Equipment"   or together

            with NCES as the "Seller")

 

WHEREAS:

 

A.     The Purchaser is an environmental   services   provider   specializing in the

      recycling    and   reuse   of   industrial    hazardous    waste   that   provides

      transportation,   storage, disposal, remediation and recycling services for

      public and private sector clients;

 

B.     The Seller is engaged in the business of providing   environmental services

      through the operation of service centers in Sagamore Beach, Massachusetts,

       Milford, Massachusetts,   and Barre, Vermont (the "Business") incidental to

      which it has certain assets including but not limited to the following:

 

      (a)   Accounts    receivable,    inventories,    prepaid   expenses   and   other

miscellaneous assets;

 

      (b) Certain equipment and vehicles;

 

      (c) Certain computer equipment and fixtures, furniture and the like;

 

      (d) Certain telephone and facsimile numbers; and,

 

C.     The   Purchaser   desires to purchase and acquire and the Seller   desires to

      sell, convey, assign and transfer, or cause to be sold, conveyed, assigned

      and transferred, to the Purchaser, the Seller's Assets.

 

NOW THEREFORE THIS AGREEMENT   WITNESSETH THAT in   consideration   of the premises

and the mutual covenants,   agreements,   representations and warranties contained

herein, and other good and valuable   consideration,   the receipt and sufficiency

of which is hereby acknowledged, the parties hereto hereby agree as follows:

 

                                    ARTICLE I

                                   DEFINITIONS

 

      As used herein, the terms below shall have the following meanings:

 

      (a) "Accounts Receivable" has the meaning set forth in Section 2.1(a)(i).

 

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      (b)   "Affiliate"   of a Person   means any other   Person   that,   directly or

indirectly,   through one or more intermediaries,   controls, is controlled by, or

is under common control with, the first mentioned Person.

 

      (c) "Agreement" means this Asset Purchase Agreement.

 

      (d) "Assumed Liabilities" has the meaning set forth in Section 2.3.

 

      (e) "Balance Sheet" means the balance sheet of the Business.

 

      (f) "Business" has the meaning set forth in the Recitals.

 

      (g) "Closing" has the meaning set forth in Section 3.1.

 

      (h) "Closing Date" has the meaning set forth in Section 3.1.

 

      (i)    "Customer    Contracts"    has   the    meaning   set   forth   in   Section

2.1(b)(ii)(A).

 

      (j) "Excluded   Liabilities"   means any liabilities   and   obligations   with

respect to, arising out of or relating to, the   ownership,   possession or use of

the Seller's   Assets and the operation of the Business prior to the Closing Date

except those liabilities expressly assumed pursuant to Section 2.3 hereunder.

 

      (k) "Financial Statements" has the meaning set forth in Section 4.4.

 

      (l) "GAAP" means United States generally accepted accounting principles as

in effect from time to time.

 

      (m) "Governmental   Entity" means any federal,   state,   provincial,   local,

county   or   municipal    government,    governmental,    judicial,    regulatory   or

administrative   agency,    commission,    board,   bureau   or   other   authority   or

instrumentality, domestic or foreign.

 

      (n) "Person" means an individual, corporation,   partnership,   association,

limited liability company,   trust, joint venture,   unincorporated   organization,

other entity or group (as defined in Section 13(d)(3) of the Securities Exchange

Act of 1934, as amended).

 

      (o) "Purchase Price" has the meaning set forth in Section 2.5

 

      (p) "Purchaser" has the meaning set forth in the Preamble.

 

      (q) "Seller" has the meaning set forth in the Preamble.

 

      (r) "Seller's Assets" has the meaning set forth in Section 2.1.

 

Section 1.2 Captions and Section Numbers

 

The headings and section   references in this   Agreement are for   convenience   of

reference   only and do not form a part of this Agreement and are not intended to

interpret,   define or limit the scope, extent or intent of this Agreement or any

provision thereof.

 

Section 1.3 Section References and Schedules

 

Any reference to a particular   "Article",   "section",   "paragraph",   "clause" or

other   subdivision   is to the   particular   Article,   section,   clause   or   other

subdivision   of this   Agreement   and any   reference to a Schedule by letter will

mean the appropriate   Schedule   attached to this Agreement and by such reference

the appropriate Schedule is incorporated into and made part of this Agreement

 

Section 1.4 Severability of Clauses

 

If any part of this   Agreement   other than Section 2.5 is declared or held to be

invalid   for any reason,   such   invalidity   will not affect the   validity of the

remainder   which will   continue in full force and effect and be   construed as if

this Agreement had been executed without the invalid   portion,   and it is hereby

declared   the   intention   of the   parties   that this   Agreement   would have been

executed   without   reference   to any   portion   which   may,   for any   reason,   be

hereafter declared or held to be invalid.

 

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                                   ARTICLE II

                           PURCHASE AND SALE OF ASSETS

 

Section 2.1 Acquired Assets

 

On the terms and subject to the conditions set forth in this   Agreement,   at the

Closing the Seller   shall sell,   assign,   transfer,   convey,   and deliver to the

Purchaser free and (where applicable) clear of all liens, claims,   interests and

encumbrances of any nature, and the Purchaser shall purchase and accept from the

Seller the assets of the Seller (the "Seller   Assets") as hereinafter   described

(collectively,   the   assets set forth in this   Section   2.1 are   referred   to as

"Seller's   Assets").    Any   liens   or   encumbrances   assumed   by   Purchaser   are

identified in Schedule 2.2:

 

      (a) all legal and   beneficial   right,   title,   and interest of the Seller,

whether prospective or actual, in and to the Seller Assets,   whether tangible or

intangible,   real, personal or mixed, wherever situated,   owned, held or used by

the   Seller or in which the   Seller has any   right,   title or   interest   that is

owned, directly or indirectly, leased or otherwise held primarily for use in the

Business and specifically including the following:

 

            (i) all   accounts   receivable   arising out of the   operation   of the

Business existing on the date hereof including, without limitation, those listed

or described on Schedule 2.1(a)(i),   or arising in the ordinary course under the

Customer Contracts after the date hereof (the "Accounts Receivable");

 

            (ii) all rights and incidents of interest of the Seller to:

 

                  (A) all of the   services   agreements   between the Seller and a

customer in any way relating to the Business (the "Customer Contracts") existing

on the date hereof or arising in the   ordinary   course after the date hereof and

listed or described on Schedule   2.1(a)(ii)(A)   (which Schedule will be provided

by Purchaser prior to the Closing Date);

 

                  (B) the   agreements,   contracts and   arrangements   between the

Seller and a vendor or other third party providing goods or services relating to

the Business listed on Schedule   2.1(a)(ii)(B)   (which Schedule will be provided

by the Purchaser prior to the Closing Date);

 

                  (C) all of the rights of the Seller regarding   confidentiality

and/or non-competition with respect to its current and former employees; and

 

            (iii) all equipment,   computers, furniture,   furnishings,   fixtures,

office supplies,   vehicles and all other tangible   personal   property   currently

owned by,   or on order to be   delivered   to,   the   Seller,   that are used in the

operation of the   Business or are located on, or to be   delivered   to, any owned

real property or premises subject to the real property leases (collectively, the

"Tangible   Personal   Property"),   including   without   limitation,   such   of   the

foregoing as are listed or described on Schedule 2.1(a)(iii);

 

            (iv) all trade names,   trademarks,   registered   copyrights,   service

marks, trademark registrations and applications,   service mark registrations and

applications,   copyright registrations and applications,   internet addresses and

other internet related assets used primarily in the operation of the Business as

are listed or described on Schedule 2.1(a)(iv) (the "Intellectual Property");

 

            (v)   all   rights   and   claims   under   all    contracts,    warranties,

representations and guarantees made by suppliers,   manufacturers and contractors

in   connection   with the Seller's   Assets and all rights and claims   relating to

Assumed Liabilities except those shown or described on Schedule 2.1(a)(v);

 

            (vi) all licenses,   permits,   authorizations and approvals issued to

the Seller by any Governmental Entity relating to the operation of the Business,

including without   limitation,   such of the foregoing as are listed or described

on Schedule 2.1(a)(vii);

 

            (vii) all surety bonds,   collateral bonds,   letters of credit,   cash

trusts,   cash   deposits   or the   proceeds   thereof for the   Financial   Assurance

requirements   or performance   bond   requirements,   whether or not required under

applicable Environmental Laws;

 

            (viii) all books and records of the Business;

 

      (x) all   inventories of supplies and spare parts of the Seller relating to

the operation of the Business;

 

            (xi) the   following   telephone   numbers:   (508)   634-9800   and (508)

634-8259 (facsimile) and those numbers listed on Schedule 2.1(a)(xi);

 

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            (xii) all goodwill primarily related to the Business; and,

 

            (xiii) to the extent assignable,   rights of indemnification from all

non-affiliated   third parties for liabilities   and   obligations   relating to the

Business or the Seller's Assets.

 

Section 2.2 Encumbrances

 

The sale and transfer of the Seller's Assets at the time of the Closing shall be

free and clear of all obligations,   security interests,   liens and encumbrances,

except as   identified   above and   described in Schedule 2.2 and other   schedules

attached hereto, or unless expressly assumed in writing by the Purchaser.

 

Section 2.3 Assumed Liabilities

 

On the terms and subject to the conditions set forth in this   Agreement,   at the

Closing,   the Purchaser shall assume from the Seller and thereafter pay, perform

or otherwise discharge in accordance with their terms all of the liabilities and

obligations   of the Seller with   respect to,   arising out of or relating to, the

ownership,   possession   or use of the Seller's   Assets and the   operation of the

Business other than the Excluded   Liabilities,   including without limitation the

following:

 

      (a) the   Wellesley   Co-operative   Bank   line   of   credit   facility   in the

approximate   amount of $355,000   (which   amount is to be paid off at the Closing

hereof);

 

      (b) certain   Seller   officer loans in the   approximate   amount of $178,000

(which amount is to be paid off at the Closing hereof); and,

 

      (c)   liabilities   and   obligations   with   respect   to,   arising   out of or

relating to, the   ownership,   possession   or use of the Seller's   Assets and the

operation of the Business   arising   after the Closing   Date, as well as accounts

payable, accruals for expected accounts payable, notes payable, accrued salaries

and   wages,   and   other   accrued   miscellaneous   expenses   associated   with   the

Business, as shown in Schedule 2.3.

 

Section 2.4 Excluded Liabilities

 

Notwithstanding anything to the contrary contained in this Agreement, and except

as set forth in   Section   2.3 above and as set   forth on   Schedule   2.3   hereto,

Purchaser   shall not assume or agree to pay,   perform or otherwise   discharge or

have   any   liability   whatsoever   for   any   Excluded   Liabilities   or any   other

liabilities,   obligations or expenses,   if any, of Seller   whatsoever other than

the Assumed   Liabilities.   Included in the foregoing,   without limitation of the

Excluded Liabilities, are the following:

 

      (a)   Purchaser   does not   assume or agree to pay,   satisfy,   discharge   or

perform, and shall not be deemed by virtue of the execution and delivery of this

Agreement or the conveyance of the Assets hereunder, or of any instrument, paper

or document   delivered by it pursuant to this   Agreement,   or as a result of the

consummation   of the   transactions   contemplated   by   this   Agreement,   to   have

assumed, or to have agreed to pay, satisfy, discharge or perform, any liability,

obligation or indebtedness of Seller (whether absolute,   accrued, or contingent,

whether filed or asserted prior to or after the Closing Date and whether arising

out of or in any way   connected   with   the   Assets   or   Business   of   Seller   or

otherwise   except   those set forth on   Schedule   2.3 or   included in Section 2.3

hereof) all of which,   Seller   agrees to pay,   satisfy,   discharge   and perform.

Without   limitation of the   foregoing,   the following   liabilities   shall not be

assumed by Purchaser:

 

            (i) any   obligation or liability of Seller to perform this Agreement

or   relating   to the breach of any   representation   or   warranty   made by Seller

hereunder;

 

            (ii) any   obligation   or   liability of Seller for   expenses,   taxes,

commissions,   fees   and   charges,   legal   costs   and   damages   incident   to   the

preparation   of   this   Agreement   or   the    consummation   of   the    transactions

contemplated hereby;

 

            (iii) any liability of Seller to its stockholders,   members,   equity

owners   or to its   creditors,   including   with   respect   to trade   creditors   or

landlords or lessors or disputes with   stockholders,   members,   equity owners or

any and all other accounts payable or liabilities   (except such specific amounts

as are expressly assumed by Purchaser and subject to Section 2.3 hereof);

 

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            (v) any   liability   of Seller   with   respect to its   capital   stock,

membership   units,   or other   securities of Seller or any   warrants,   options or

rights to purchase its capital stock, membership units or other securities;

 

            (vi) any   liability   claimed as a result of any service   provided by

Seller,   or any   liability   for death,   personal   injuries   (including   libel or

slander),   property damages or incidental or   consequential   damages relating to

any act or   omission   alleged to have been taken by Seller   prior to the Closing

Date;

 

            (vii)   any    liability    for   claims   based   solely   upon    Seller's

negligence:

 

            (viii) any liability or obligation under any agreement   binding upon

Seller,   including,   without limitation,   any liability or obligation   resulting

from any breach or failure of Seller to perform or any alleged breach or failure

to perform prior to the Closing Date or any liability for   non-performance   with

respect to any   agreement   which   cannot be timely   performed   after the Closing

Date;

 

            (ix) any liability or obligation,   prior to the Closing Date,   under

any collective bargaining agreement with any labor union or liability for claims

thereunder including, without limitation, any liability for premature withdrawal

from any multi-employer plan.

 

            (x) any liability to employees or former   employees of Seller or any

of   their   respective   beneficiaries,   heirs   or   assignees,   including   (i) any

liabilities   arising   by virtue of any   collective   bargaining   relationship   or

agreement or pursuant to the   National   Labor   Relations   Act or any other labor

relations law or pursuant to any employment agreement,   (ii) any liabilities for

workers' compensation,   and (iii) any liabilities or obligations under any ERISA

Plan Compensation Commitment or any other agreements or understandings involving

employees of Seller;

 

            (xi) any liability to the Pension   Benefit   Guaranty   Corporation or

United States Department of Labor or any similar   organization,   whether arising

out of the   employment   by   Seller   of any   employees   or   former   employees   or

otherwise;

 

            (xii) any   liability   under any law   ordinance,   rule or   regulation

including,   without limitation,   antitrust, civil rights, health, safety, labor,

discrimination   and   environmental   laws,   ordinances,   rules   and   regulations,

including, without limitation, any environmental clean-up liability;

 

            (xiii) any liability arising out of or based upon any action,   suit,

claim, investigation,   consent decree, review or proceeding, at law or in equity

or before   any   Federal,   state,   municipal   or other   governmental   department,

commission,   board, bureau, agency or other instrumentality,   that exists now or

at the   Closing   or that   arises   after the   Closing   with   respect   to   matters

occurring at or prior to the Closing; and,

 

            (xiv) any liability under any   compensation   commitment of Seller or

any   liability in   connection   with the layoff,   termination   or other action or

inaction affecting   Sellers'   employees,   including,   but not limited to, claims

arising out of or related to   Seller's   obligations   under the Labor   Management

Relations   Act,   as   amended,   Title VII of the   Civil   Rights   Act of 1964,   as

amended,   all state fair employment   practice laws, ERISA, COBRA, any collective

bargaining agreement to which any Seller is a party, and any individual or other

collective contracts of employment.

 

Section 2.5        Purchase Price

 

In   consideration   for the Seller's   Assets,   the Purchaser   shall:   (a) pay off

Seller's line of credit facility with Wellesley Co-operative Bank at the Closing

by the sum of THREE HUNDRED   FIFTY-FIVE   THOUSAND DOLLARS   ($355,000) in cash by

wire transfer of immediately   available   funds; (b) pay off Seller's loan to Rob

Berger at the Closing by the sum of ONE HUNDRED   SEVENTY-EIGHT   THOUSAND DOLLARS

($178,000),   FIFTY   THOUSAND   DOLLARS   ($50,000) of such amount shall be paid in

cash   by   wire   transfer   of   immediately    available   funds,   and   ONE   HUNDRED

TWENTY-EIGHT THOUSAND DOLLARS ($128,000) of this amount shall be paid out of the

earnings before interest, taxes depreciation and amortization of the Business in

the form of cash or, at the sole option of Rob Berger, shares of Veridium common

stock, on or before the end of the sixth month after the Closing; and (c), issue

to Seller shares of Veridium common stock in the amount of SEVENTY-FIVE THOUSAND

DOLLARS ($75,000).

 

<PAGE>

 

                                   ARTICLE III

                                    THE CLOSING

 

Section 3.1        Closing

 

The   consummation   of the   transactions   contemplated   by   this   Agreement   (the

"Closing")   shall take place on or before   April 30,   2005 at (i) the offices of

Purchaser's   attorney or, (ii) if   requested   by the   Purchaser at least two (2)

business days prior to the Closing,   at the   Purchaser's   place of business (the

date of the Closing being herein referred to as the "Closing Date").

 

Section 3.2 Deliveries at Closing

 

      (a) At the Closing, the Seller shall deliver to the Purchaser:

 

            (i) duly   executed   instruments   or   other   evidence   sufficient   to

transfer to Purchaser Seller's Assets;

 

            (ii)   duly   executed   bills   of sale,   substantially   in the form of

Exhibit A attached hereto, transferring Seller's Assets to Purchaser;

 

            (iii) an employment agreement,   substantially in the form of Exhibit

B attached hereto, duly executed by Paul Connors;

 

            (iv)   Seller's   Assets   (as set forth on   Schedule   2.1),   by making

Seller's   Assets   available to   Purchaser   at their   locations as of the Closing

Date; and,

 

            (v) any documents or certificates   that are necessary to transfer to

Purchaser good,   clear and marketable title all of the Assets and assignments of

all Company Contracts, and (ii) all opinions, certificates and other instruments

and documents   required by the terms of this Agreement to be delivered by Seller

at or prior to Closing or otherwise required in connection with the Acquisition.

 

      (b) At the Closing, the Purchaser shall deliver to the Seller:

 

            (i) the cash   portion   of the   Purchase   Price by wire   transfer   in

immediately available funds paid directly to Wellesley Co-operative Bank and Rob

Berger in accordance with the Purchase Price provisions hereof;

 

            (ii)   Veridium   common stock in accordance   with the Purchase   Price

provisions hereof; and,

 

            (iii) all documents   required to be delivered by Purchaser to Seller

at or prior to the Closing Date in connection with this Agreement.

 

Section 3.3 Post-Closing Matters

 

Forthwith after the Closing,   the parties,   as the case may be, agree to use all

their best efforts to:

 

      (a) issue a news release reporting the Closing;

 

       (b) file a Form 8K with the Securities and Exchange Commission   disclosing

the terms of this   Agreement   within 4 days of the Closing and, not more than 60

days   following   the   filing   of the Form 8K,   file   and   amended   Form 8K which

includes   the   financial   statements   of Seller   as well as pro forma   financial

information   of Purchaser and Seller as required by Item 310 of Regulation SB as

promulgated by the Securities and Exchange Commission.

 

                                   ARTICLE IV

                   REPRESENTATIONS AND WARRANTIES OF THE SELLER

 

Seller   represents and warrants that as of the date hereof and as of the Closing

Date, the following   representations shall be true and correct and in full force

and effect:

 

Section 4.1 Organization and Good Standing

 

North Country Environmental   Services,   Inc. and NCES Equipment Corporation each

is a   corporation   duly   organized   and validly   existing   under the laws of the

Commonwealth of Massachusetts   and has the corporate power and authority to own,

lease and operate the Assets used in the   Business   and to carry on the Business

as now being conducted.

 

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Section 4.2 Authority, Approvals and Consents

 

Seller has the corporate power and authority to enter into this Agreement and to

perform their obligations hereunder. The execution,   delivery and performance of

this Agreement and the consummation of the transactions contemplated hereby have

been duly   authorized   and validly   approved by the Board of Directors of Seller

and by their respective stockholders and no other corporate or other proceedings

on the part of Seller are necessary to authorize and approve this   Agreement and

the transactions   contemplated   hereby.   Seller hereby expressly represents that

they   have   fully   and   properly    complied    with   all   aspects   of   applicable

Massachusetts corporate law in entering into this Agreement and for consummating

the transactions   contemplated hereunder.   This Agreement has been duly executed

and   delivered   by, and   constitutes   a valid and binding   obligation of Seller,

enforceable against Seller in accordance with its terms.

 

Except   as set   forth or   referred   to   above on   Schedule   4.2(ii)   hereto,   no

authorization,   consent,   order, permit or approval of, or notice to, or filing,

registration or qualification with, any governmental, administrative or judicial

authority is   necessary to be obtained or made by Seller to enable   Purchaser to

continue   to conduct   the   Business   and use the Assets   after the   Closing in a

manner   which is in all   material   respects   consistent   with   that in which the

Business   is   presently   conducted   and as the   Assets are   currently   utilized.

Furthermore, no authorization,   consent, order, permit or approval of, or notice

to,   or   filing,    registration   or    qualification    with,   any    governmental,

administrative or judicial authority, creditor or other party is necessary to be

obtained   or has not been   obtained   by Seller   prior to Closing to   effectively

convey to Purchaser good, clear and marketable title to the Assets,   free of any

and all claims of any party with respect thereto (except as set forth in Section

4.4 herein below and provided in Schedule 4.2(ii)).

 

Section 4.3 Consents and Approvals

 

No   consent,    approval,   or   authorization   of,   or   declaration,    filing,   or

registration   with,   any   Governmental   Entity   will be   required   to be made or

obtained by Seller in connection with the execution,   delivery,   and performance

of this Agreement and the consummation of the transactions   contemplated hereby,

except as set forth on Schedule 4.2(ii) hereto.   Excluded from the foregoing are

any and all state or federal   environmental   regulatory   agency   requirements or

filings which shall be Purchaser's sole responsibility;   provided, however, that

Seller does hereby agree to provide reasonable cooperation to assist Purchaser's

satisfaction of such requirements.

 

Section 4.4 Financial Information

 

Schedule 4.4 contains an unaudited   Balance Sheet and income statement   prepared

by the finance and   accounting   staff of Seller for the   Business as of December

31, 2004,   with the   representation   that they have been   prepared in accordance

with GAAP (the   "Financial   Statements")   on a review (not audited)   basis (with

exception for footnotes,   summaries and statements of cash flows). The Financial

Statements were prepared by Sellers and have not been reviewed by an independent

certified public   accounting   firm.   Except as set forth on Schedule 4.4 hereto,

the Financial   Statements   are in   accordance   with the books and records of the

Seller and fairly and   accurately   present the   financial   position,   results of

operations,   stockholder's   equity   and cash flows of Seller as of the dates and

for the periods   indicated,   in each case in conformity with GAAP,   consistently

applied (with exception for footnotes,   summaries and statements of cash flows).

The statements of income included in the Financial Statements do not contain any

items of special or nonrecurring   income except as expressly   specified therein,

and the balance sheets   included in the Financial   Statements do not reflect any

write-up or revaluation   increasing the book value of any Assets.   The books and

accounts of Seller are complete and correct and fully and fairly   reflect all of

the   transactions   of Seller and are presently   located solely at the offices of

Seller and not at any other location.

 

Section 4.5 Title to Property/Assets

 

The Seller's Assets comprise all of the property and assets of the Business, and

no other   person,   firm or   corporation   owns any   assets   used by Seller or its

subsidiaries in operating the Business,   whether under a lease, rental agreement

or other   arrangement.   Except as set forth in Schedule 4.5 attached   hereto and

incorporated   herein by this reference   verbatim and at length,   the sale of the

Assets by Seller pursuant hereto will effectively convey to Purchaser all of the

Assets,   including all tangible and intangible   assets and properties of Seller,

as specified on Schedule 2.2. Seller has good, clear and marketable title to all

of the Assets and to all other properties   reflected on the Financial Statements

or acquired   after the date thereof   (other than   properties   and assets sold or

 

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otherwise   disposed   of   after   the   date   thereof   in the   ordinary   course   of

business),   and each   such   Asset   is held   free   and   clear of (i) all   leases,

licenses and other   rights to occupy or use such   property and (ii) all Security

Interests,   rights   of   way,   easements,   restrictions,   exceptions,   variances,

reservations,   covenants   or other   title   defects or   limitations   of any kind,

except   (with   respect to all such   properties)   those set forth on Schedule 4.5

hereto,   none of which has a Material   Adverse   Effect on such   property   or its

present or contemplated use in the Business.   All Equipment is in good operating

and working condition for its continued use as it has been used in the Business.

 

Section 4.6 Absence of Material Adverse Change; Conduct of Business

 

Since December 31, 2004,   there has been no Material Adverse Effect and there is

no condition,   development   or   contingency   of any kind existing or in prospect

which,   so far as   reasonably   can be foreseen   at this time,   may result in any

Material   Adverse   Effect to the   Business   or which would   violate   Section 6.1

hereof.   With the   exception   of   transactions   listed on   Schedule   4.6,   since

December 31, 2004:

 

      (a) Seller has not sold or transferred any assets that are material to the

Business other than in the ordinary course of business;

 

      (b) the has been no labor dispute,   strike, union organizational   activity

allegation or other   similar   occurrence   which might   reasonably be expected to

materially and adversely affect the Business; and

 

      (c) Seller has not taken any   actions   which   would   adversely   effect the

Financial   Statements   or any   Company   Agreements   and   has   not   obtained   any

information relative to the Financial State