Exhibit 10.1
Execution Copy
ASSET PURCHASE
AGREEMENT
BY AND AMONG
FASTTRACK, LLC
AND
COTELLIGENT, INC.
COTELLIGENT USA,
INC.
CZG MOBILE VENTURES,
INC.
BSMART.TO LLC
JAS CONCEPTS, INC.
DATED APRIL 1,
2005
ASSET PURCHASE
AGREEMENT
This asset purchase agreement
(“ Agreement ”) is dated April 1, 2005, by and
among FastTrack, LLC, a California limited liability company
(“ Buyer ”), Cotelligent, Inc., a Delaware
corporation (“ Parent ”), Cotelligent USA, Inc.,
a California corporation, CZG Mobile Ventures, Inc., a Delaware
corporation, bSmart.to LLC, a Delaware limited liability company,
and JAS Concepts, Inc. a Pennsylvania corporation (together with
Parent, the “ Sellers ” and each, a “
Seller ”).
R ECITALS
Sellers desire to sell, and Buyer
desires to purchase, substantially all of the assets related solely
to the Seller’s business of sales force automation Software
and services solutions uniquely designed to serve niche grocery and
consumer packaged goods industries comprised of two main software
components known as “FastTrack,” which is divided into
two sections, field application and data server, and
“Exchange Lynx,” which consists of proprietary data
communications management product as a going concern, including the
design, manufacture, and sale of its products and the furnishing of
advisory and consulting services to customers as well as any
goodwill associated therewith (the “ Business
”), and Buyer is willing to assume certain obligations of
Sellers relating to the Business, for the consideration and on the
terms set forth in this Agreement.
The parties, intending to be legally
bound, agree as follows:
1. Definitions and Usage
1.1 DEFINITIONS
For purposes of this Agreement, the
following terms and variations thereof have the meanings specified
or referred to in this Section 1.1:
“Accounts
Receivable”—(a) all trade accounts receivable and other
rights to payment from customers of Sellers related solely to the
Business and the full benefit of all security for such accounts or
rights to payment, including all trade accounts receivable
representing amounts receivable in respect of goods shipped or
products sold or services rendered to customers of each Seller
related solely to the Business, (b) all other accounts or notes
receivable of each Seller related solely to the Business and the
full benefit of all security for such accounts or notes and (c) any
claim, remedy or other right related to any of the
foregoing.
“Affected Employees”
— all employees of Sellers employed principally in connection
with the Business, including persons on vacation, temporary layoff,
approved leave of absence, sick leave, family medical leave under
the Family and Medical Leave Act, or short-term disability leave;
and excluding persons on long-term disability leave under a
long-term disability plan maintained by any Seller.
“Affiliate” means, with
respect to any Person, any other Person directly or indirectly
controlling, controlled by or under common control with such
Person, and in the case of any natural Person shall include all
relatives and immediate family members of such Person. For purposes
of
this definition, a Person shall be deemed to
control another Person if such first Person directly or indirectly
owns or holds fifty percent (50%) or more of the ownership
interests in such other Person.
“Assets”—as
defined in Section 2.1.
“Assigned
Contract”—as defined in Section 2.1(c).
“Assigned
Lease”—as defined in Section 2.1(d).
“Assignment and Assumption
Agreement”—as defined in Section 2.8(a)(ii).
“Assumed
Liabilities”—as defined in Section 2.4(a).
“Balance Sheet
Statement”—as defined in Section 3.3.
“Bill of Sale”—as
defined in Section 2.8(a)(i).
“Breach”—any
breach of, or any inaccuracy in, any representation or warranty or
any breach of, or failure to perform or comply with, any covenant
or obligation, in or of this Agreement or any other Contract, or
any event which with the passing of time or the giving of notice,
or both, would constitute such a breach, inaccuracy or
failure.
“Bulk Sales
Laws”—as defined in Section 5.4.
“Business”—as
defined in the recitals to this Agreement.
“Business Day”—any
day other than (a) Saturday or Sunday or (b) any other day on which
banks in Los Angeles, California are permitted or required to be
closed.
“Buyer”—as defined
in the preamble to this Agreement.
“Buyer Contact”—as
defined in Section 12.2(a).
“Buyer Group”—as
defined in Section 6.1.
“Buyer
Indemnitees”—as defined in Section 11.2.
“Closing”—as
defined in Section 2.7.
“Closing Accrued
Vacation”—as defined in Section 2.3(b)(ii).
“Closing Cash
Payment”—as defined in Section 2.3(a).
“Closing Date”—as
defined in Section 2.7.
“COBRA”— the
Consolidated Omnibus Budget Reconciliation Act of 1985, as
amended.
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“Code”—the
Internal Revenue Code of 1986, as amended.
“Competing
Business”—as defined in Section 10.2(a).
“Confidential
Information”—as defined in Section 12.1(a).
“Consent”—any
approval, consent, ratification, waiver or other
authorization.
“Contemplated
Transactions”—all of the transactions contemplated by
this Agreement.
“Contract” or
“Contracts”—any agreement, contract (including
any Government Contract), Lease, commitment or other undertaking or
arrangement.
“Damages”—as
defined in Section 11.2.
“Disclosing
Party”—as defined in Section 12.1(a).
“Earn-Out
Amount”—as defined in Section 2.9.
“Earn-Out
Statement”—as defined in Section 2.9(c).
“Effective
Time”—12:01 a.m. on the Closing Date.
“Election
Period”—as defined in Section 11.6(d).
“Encumbrance”—any
charge, claim, condition, equitable interest, lien, option, pledge,
security interest, mortgage, right of way, easement, encroachment,
servitude, right of first option, right of first refusal or similar
restriction, including any restriction on use, voting (in the case
of any security or equity interest), transfer, receipt of income or
exercise of any other attribute of ownership.
“ERISA”—the
Employee Retirement Income Security Act of 1974.
“Estimated Accrued
Vacation”—as defined in Section 2.3(b)(i).
“Exchange Act”—the
Securities Exchange Act of 1934.
“Excluded
Assets”—as defined in Section 2.2.
“Facilities”—any
real property, leasehold or other interest in real property related
solely to the Business and currently owned or operated by any
Seller, including the Tangible Personal Property used or operated
by any Seller at the respective locations of the Real Property
specified in Section 3.6.
“GAAP”—generally
accepted accounting principles for financial reporting in the
United States, applied on a consistent basis.
“General Ledger”
—as defined in Section 3.3.
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“Governmental
Authorization”—any Consent, license, registration or
permit issued, granted, given or otherwise made available by or
under the authority of any Governmental Body or pursuant to any
Legal Requirement, which consent, license, registration or permit
is related primarily to or required for the operation of the
Business.
“Governmental
Body”—any:
(a) nation, state, county, city,
town, borough, village, district or other jurisdiction;
(b) federal, state, local,
municipal, foreign or other government;
(c) governmental or
quasi-governmental authority of any nature (including any agency,
branch, department, board, commission, court, tribunal or other
entity exercising governmental or quasi-governmental
powers);
(d) body exercising, or entitled or
purporting to exercise, any administrative, executive, judicial,
legislative, police, regulatory or taxing authority or power;
or
(e) official of any of the
foregoing.
“Indemnitee”—as
defined in Section 11.6(a).
“Indemnitor”—as
defined in Section 11.6(a).
“Independent
Accountants” —as defined in Section 2.9(e).
“Intellectual
Property”—(a) all patents, patent applications, and
patent disclosures, together with all reissuances, continuations,
continuations-in-part, revisions, extensions, and reexaminations
thereof, (b) all trademarks, service marks, trade dress, logos,
trade names, and corporate names, and including all goodwill
associated therewith, and all applications, registrations and
renewals in connection therewith, (c) all registered copyrights and
all applications, registrations and renewals in connection
therewith, (d) all mask works and all applications, registrations
and renewals in connection therewith, (e) all trade secrets and
confidential information (including ideas, research and
development, know-how, formulas, compositions, manufacturing and
production processes and techniques, technical data, designs,
drawings, specifications, customer and supplier lists, pricing and
cost information, and business and marketing plans and proposals),
(f) all computer Software (including data and related
documentation), and (g) all copies and tangible embodiments thereof
(in whatever form or medium).
“Intellectual Property
Licenses”—as defined in Section 3.20(b).
“Inventories”—all
inventories of Sellers related solely to the Business, wherever
located, including all finished goods, work in process, raw
materials, spare parts and all other materials and supplies used or
consumed by Sellers in the production of finished goods for the
Business.
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“IRS”—the United
States Internal Revenue Service and, to the extent relevant, the
United States Department of the Treasury.
“Knowledge”—with
respect to Sellers, Sellers will be deemed to have Knowledge of a
particular fact or other matter if James R. Lavelle or Curtis J.
Parker is actually aware of that fact or matter, and with respect
to Buyer, Buyer will be deemed to have Knowledge of a particular
fact or other matter if any Person relating thereto is actually
aware of that fact or matter.
“Lease”—any Real
Property Lease or any lease or rental agreement, license, right to
use or installment and conditional sale agreement to which any
Seller is a party related solely to the Business and any other
Seller Contract related solely to the Business pertaining to the
leasing or use of any Tangible Personal Property.
“Legal
Requirement”—any federal, state or municipal law,
ordinance, regulation, statute or treaty.
“Liability” or
“Liabilities”—with respect to any Person, any
liability or obligation of such Person of any kind, character or
description, whether known or unknown, absolute or contingent,
accrued or unaccrued, disputed or undisputed, liquidated or
unliquidated, secured or unsecured, joint or several, due or to
become due, vested or unvested, executory, determined, determinable
or otherwise, and whether or not the same is required to be accrued
on the financial statements of such Person.
“License Agreement”
—as defined in Section 2.8(a)(iv).
“Material Adverse
Effect”—means a material adverse effect on the assets,
Liabilities, results of operations or financial condition of the
Business taken as a whole, other than changes (a) relating to
generally applicable United States economic conditions or the
Business industry, (b) resulting from the execution of this
Agreement or the consummation of the transactions contemplated
hereby or thereby, or the public disclosure of any information
relating thereto, or (c) arising out of or resulting from the fact
that the Business prior to the Closing Date was operated as part of
a larger company which provided corporate services and other
support and had never operated as a stand alone
business.
“Net Names”—as
defined in Section 2.1(h).
“Non-Real Estate
Encumbrances”—as defined in Section 3.7(b).
“Order”—any order,
injunction, judgment, decree, ruling, assessment or arbitration
award of any Governmental Body or arbitrator.
“Owned Intellectual
Property”—as defined in Section 3.20(a).
“Parent”—as
defined in the preamble to this Agreement.
“Parent Stockholder
Approval”—as defined in Section 8.4.
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“Permitted
Encumbrances”—means (a) liens for Taxes and other
governmental charges and assessments which are not yet due and
payable or which are being contested in good faith, (b) liens
relating to deposits made in the ordinary course of business in
connection with workers’ compensation, unemployment insurance
and other types of social security or to secure the performance of
leases, trade contracts or other similar agreements, (c) any and
all Legal Requirements relating to zoning and land use and (d) any
utility company rights, easements and franchises.
“Person”—an
individual, partnership, corporation, business trust, limited
liability company, limited liability partnership, joint stock
company, trust, unincorporated association, joint venture or other
entity or a Governmental Body.
“Proceeding”—any
action, arbitration, audit, hearing, investigation, litigation or
suit (whether civil, criminal, administrative, judicial or
investigative, whether public or private) commenced, brought,
conducted or heard by or before, or otherwise involving, any
Governmental Body or arbitrator.
“Purchase
Price”—as defined in Section 2.3.
“Real Property
Lease”—any ground lease or Space Lease.
“Receiving
Party”—as defined in Section 12.1(a).
“Record”—information that is
inscribed on a tangible medium or that is stored in an electronic
or other medium and is retrievable in perceivable form.
“Related
Person”—With respect to a specified Person:
(f) any Person that directly or
indirectly controls, is directly or indirectly controlled by or is
directly or indirectly under common control with such specified
Person;
(g) any Person that holds a Material
Interest in such specified Person;
(h) each Person that serves as a
director, officer, partner, executor or trustee of such specified
Person (or in a similar capacity);
(i) any Person in which such
specified Person holds a Material Interest; and
(j) any Person with respect to which
such specified Person serves as a general partner or a trustee (or
in a similar capacity).
For purposes of this definition, (a)
“ control ” (including
“controlling,” “controlled by,” and
“under common control with”) means the possession,
direct or indirect, of the power to direct or cause the direction
of the management and policies of a Person, whether through the
ownership of voting securities, by contract or otherwise, and shall
be construed as such term is used in the rules promulgated under
the Securities Act; and (b) “ Material Interest
” means direct or indirect beneficial ownership (as defined
in Rule 13d-3 under the Exchange Act) of voting securities
or
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other voting interests representing at least ten
percent (10%) of the outstanding voting power of a Person or equity
securities or other equity interests representing at least ten
percent (10%) of the outstanding equity securities or equity
interests in a Person.
“Representative”—with respect
to a particular Person, any director, officer, manager, employee,
agent, consultant, advisor, accountant, financial advisor, legal
counsel or other representative of that Person.
“Restrictive
Covenants”—as defined in Section 11.11(a).
“Retained
Liabilities”—as defined in Section 2.4(b).
“Securities Act”—
the Securities Act of 1933, as amended.
“Seller” or
“Sellers”—as defined in the preamble to this
Agreement.
“Seller Benefit
Plans”—all (i) material employee welfare benefit plans
or employee pension benefit plans as defined in sections 3(1) and
3(2) of ERISA, including plans that provide retirement income or
result in deferrals of income by employees for periods extending to
their terminations of employment or beyond, and plans that provides
medical, surgical or hospital care benefits or benefits in the
event of sickness, accident, disability, death or unemployment and
(ii) other material employee benefit agreements or arrangements
that are not ERISA plans, including any deferred compensation
plans, incentive plans, bonus plans or arrangements, stock option
plans, stock purchase plans, stock award plans, golden parachute
agreements, severance pay plans, dependent care plans, cafeteria
plans, employee assistance programs, scholarship programs,
retention incentive agreements, noncompetition agreements, vacation
policies and, or other similar plans, agreement or arrangements
that (a) are maintained by any Seller or any of its Related Persons
for the benefit of Affected Employees, (b) have been approved by
any Seller or any of its Related Persons but are not yet effective
for the benefit of Affected Employees or their beneficiaries, or
(c) were previously maintained by any Seller or any of its Related
Persons for the benefit of the Affected Employees or their
beneficiaries and with respect to which Seller or any of its
Related Persons may have any liability, contingent or otherwise.
However, Seller Benefit Plans shall not include any agreements
between the Seller and any Affected Employees pursuant to which the
Seller has agreed to pay Affected Employees additional compensation
in consideration of their services rendered in connection with the
sale of the Assets.
“Seller
Contact”—as defined in Section 12.2(a).
“Seller
Contract”—any Contract related solely to the Business
(a) under which any Seller has or may acquire any rights or
benefits; (b) under which any Seller has or may become subject to
any obligation or liability; or (c) by which any Seller or any of
the Assets may become bound.
“Seller Disclosure
Letter”—the disclosure letter delivered by Sellers to
Buyer concurrently with the execution and delivery of this
Agreement.
“Seller
Indemnitees”—as defined in Section 11.3.
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“Software”—all
computer software and subsequent versions thereof, including source
code, object, executable or binary code, objects, comments,
screens, user interfaces, report formats, templates, menus, buttons
and icons and all files, data, materials, manuals, design notes and
other items and documentation related thereto or associated
therewith.
“Space Lease”—any
lease or rental agreement pertaining to the occupancy of any
improved space on any Land related solely to the
Business.
“Subsidiary”—with
respect to any Person (the “ Owner ”), any
corporation or other Person of which securities or other interests
having the power to elect a majority of that corporation’s or
other Person’s board of directors or similar governing body,
or otherwise having the power to direct the business and policies
of that corporation or other Person (other than securities or other
interests having such power only upon the happening of a
contingency that has not occurred), are held by the Owner or one or
more of its Subsidiaries.
“Survival
Period”—as defined in Section 11.5.
“Tangible Personal
Property”—all machinery, equipment, tools, furniture,
office equipment, computer hardware, supplies, materials, vehicles
and other items of tangible personal property (other than
Inventories) of every kind owned or leased by any Seller related
solely to the Business, together with any express or implied
warranty by the manufacturers or sellers or lessors of any item or
component part thereof and all maintenance records and other
documents relating thereto.
“Tax”—any federal,
state, local or foreign income, gross receipts, license, payroll,
employment, excise, severance, stamp, occupation, premium,
property, environmental, windfall profit, customs, vehicle,
airplane, boat, vessel or other title or registration, capital
stock, franchise, employees’ income withholding, withholding,
social security, unemployment, disability, real property, personal
property, sales, use, transfer, value added, alternative, add-on
minimum and other tax, fee, assessment, levy, tariff, charge or
duty of any kind whatsoever and any interest, penalty, addition or
additional amount thereon imposed, assessed or collected by or
under the authority of any Governmental Body or payable under any
tax-sharing agreement or any other Contract.
“Tax Return”—any
return (including any information return), report, statement,
schedule, notice, form, declaration, claim for refund or other
document or information filed with or submitted to, or required to
be filed with or submitted to, any Governmental Body in connection
with the determination, assessment, collection or payment of any
Tax or in connection with the administration, implementation or
enforcement of or compliance with any Legal Requirement relating to
any Tax.
“Third Party”—a
Person that is not a party to this Agreement.
“Third Party
Claim”—any claim against any Indemnitee by a Third
Party that could give rise to a right of indemnification under this
Agreement.
“Transaction
Agreements”—as defined in Section 11.11(a).
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“Transferred
Employee”—as defined in Section 10.1(a).
“Transition Services
Agreement”—as defined in Section 2.8(a)(vi).
“US Tobacco”—as
defined in Section 2.10.
“US Tobacco
Contract”—as defined in Section 2.10.
“US Tobacco Refund
Amount”—as defined in Section 2.10.
1.2 USAGE
(a) Interpretation. In this
Agreement, unless a clear contrary intention appears:
(i) the singular number includes the
plural number and vice versa;
(ii) reference to any Person
includes such Person’s successors and assigns but, if
applicable, only if such successors and assigns are not prohibited
by this Agreement, and reference to a Person in a particular
capacity excludes such Person in any other capacity or
individually;
(iii) reference to any gender
includes each other gender;
(iv) reference to any agreement,
document or instrument means such agreement, document or instrument
as amended or modified and in effect from time to time in
accordance with the terms thereof;
(v) reference to any Legal
Requirement means, unless expressly indicated otherwise, such Legal
Requirement as amended, modified, codified, replaced or reenacted,
in whole or in part, and in effect from time to time, including
rules and regulations promulgated thereunder, and reference to any
section or other provision of any Legal Requirement means, unless
expressly indicated otherwise, that provision of such Legal
Requirement from time to time in effect and constituting the
substantive amendment, modification, codification, replacement or
reenactment of such section or other provision;
(vi) “hereunder,”
“hereof,” “hereto,” and words of similar
import shall be deemed references to this Agreement as a whole and
not to any particular Article, Section or other provision
hereof;
(vii) “including” (and
with correlative meaning “include”) means including
without limiting the generality of any description preceding such
term;
(viii) “or” is used in
the inclusive sense of “and/or”;
(ix) with respect to the
determination of any period of time, “from” means
“from and including” and “to” means
“to but excluding”; and
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(x) references to documents,
instruments or agreements shall be deemed to refer as well to all
addenda, exhibits, schedules or amendments thereto.
(b) Accounting Terms and
Determinations. Unless otherwise specified herein, all accounting
terms used herein shall be interpreted and all accounting
determinations hereunder shall be made in accordance with
GAAP.
(c) Legal Representation of the
Parties. This Agreement was negotiated by the parties with the
benefit of legal representation, and any rule of construction or
interpretation otherwise requiring this Agreement to be construed
or interpreted against any party shall not apply to any
construction or interpretation hereof.
2. Sale and Transfer of Assets;
Closing
2.1 ASSETS TO BE SOLD
Upon the terms and subject to the
conditions set forth in this Agreement, at the Closing and
effective as of the Effective Time, each Seller shall sell, convey,
assign, transfer, and deliver to Buyer, and Buyer shall purchase
and acquire from such Seller, free and clear of any Encumbrances
other than Permitted Encumbrances all of such Seller’s right,
title, and interest in and to the Business, including the following
(but excluding the Excluded Assets):
(a) all Tangible Personal
Property;
(b) all Inventories;
(c) Except as set forth in Section
2.2(k), all Seller Contracts, and all outstanding offers or
solicitations made by or to any Seller to enter into any Contract
related solely to the Business (the “ Assigned
Contracts ”);
(d) the Real Property Lease set
forth in the Seller Disclosure Letter, together with any leasehold
improvements thereunder (the “ Assigned Lease
”);
(e) all Governmental Authorizations
related solely to the Business and all pending applications
therefor or renewals thereof, in each case to the extent permitted
by applicable Legal Requirement and otherwise transferable to
Buyer;
(f) the data and Records of each
Seller related solely to the Business that, consistent with such
Seller’s past practices, are located at a facility located on
the land or located at a property subject to a Real Property Lease,
including client and customer lists and Records, referral sources,
research and development reports and Records, production reports
and Records, service and warranty Records, equipment logs,
operating guides and manuals, financial and accounting Records,
creative materials, advertising materials, promotional materials,
studies, reports, correspondence and other similar documents and
Records and, subject to Legal Requirements, copies of all personnel
Records;
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(g) all of the intangible rights and
property of Sellers used solely in the Business, including going
concern value, goodwill, Software, and the Owned Intellectual
Property (including Sellers’ right, title and interest in or
to any assumed fictional business names, trade names, registered
and unregistered trademarks, service marks, applications, logos,
icons or any other trade designation or derivative of
“FastTrack” or “Exchange Lynx”);
(h) all rights in the internet web
sites and internet domain names set forth in the Seller Disclosure
Letter; and
(i) all claims of Seller against
Third Parties relating to the Business or the Assets, whether
choate or inchoate, known or unknown, contingent or non-contingent;
and
(j) all rights of Sellers relating
to deposits and prepaid expenses, claims for refunds and rights to
offset in respect thereof, in each case related to the
Business.
All of the property and assets to be
transferred to Buyer hereunder are herein referred to collectively
as the “ Assets .”
Notwithstanding the foregoing, to
the extent that any of the Assigned Contracts (other than those
required to be assigned or renewed pursuant to Section 2.8(a)(ix)
hereof) are not assignable without the consent, waiver or approval
of another party, this Agreement shall not constitute an assignment
or an attempted assignment thereof if such assignment or attempted
assignment would constitute a breach thereof. Parent and Sellers,
in consultation with Buyer, shall use reasonable efforts to obtain
such consents as contemplated by Section 5.1 hereof, and Buyer
shall submit any financial information reasonably requested by the
contract party in connection with the purchase of the Business in
applying for such consents. If any such consent is not obtained
prior to the Closing Date, Parent and Sellers shall cooperate with
Buyer in any reasonable arrangement designed to provide for Buyer
the benefits intended to be assigned to the Buyer under the
relevant contract, including enforcement at the cost and for the
account of the Buyer of any and all rights of the Seller against
the other party thereto arising out of the breach or cancellation
thereof by such other party or otherwise; provided that Buyer shall
undertake to (i) pay or satisfy the corresponding Liabilities for
the enjoyment of such benefit to the extent that Buyer would have
been responsible therefor hereunder if such consent, waiver or
approval had been obtained, (ii) pay all the reasonable costs and
expenses of Parent and Sellers, other than non out-of-pocket
expenses (e.g., time of Parent’s and Sellers’
employees), in providing such arrangements and taking such actions,
and (iii) indemnify Parent and Sellers in full for any loss, claims
or damages resulting to Parent and Sellers (including reasonable
attorneys’ fees and expenses) in providing such arrangements
and taking such actions.
2.2 EXCLUDED ASSETS
Notwithstanding anything to the
contrary in this Agreement, Sellers shall not contribute, convey,
assign, or transfer to Buyer, and Buyer shall not acquire or have
any rights to acquire any assets (the “ Excluded
Assets ”) other than those specifically set forth in
Section 2.1. Without limiting the generality of the foregoing,
unless and to the extent specifically set forth in Section 2.1, the
following shall constitute Excluded Assets:
(a) all cash, cash equivalents,
securities, money on deposit with banks, certificates of deposit
and similar instruments and short-term investments;
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(b) all Accounts
Receivable;
(c) all personnel Records and other
Records that Seller is required by Legal Requirement to retain in
its possession;
(d) all claims for refund or credit
of Taxes, Tax loss carryforwards and other governmental charges of
whatever nature;
(e) all rights in connection with
and assets of the Seller Benefit Plans;
(f) all rights of Sellers under this
Agreement, the Bill of Sale, the Assignment and Assumption
Agreement, the Transition Services Agreement and the other
Transaction Agreements;
(g) all corporate or organizational
records and minute books of each Seller;
(h) nontransferable Governmental
Authorizations;
(i) the hardware listed in the
Seller Disclosure Letter;
(j) the administrative Software and
internet web sites and internet domain names listed in the Seller
Disclosure Letter;
(k) subject to the license agreement
to be entered into pursuant to Section 2.8(a)(iv), the JASware
software in object code and source code;
(l) the Seller Contract listed in
Section 2.2(l) of the Seller Disclosure Letter;
(m) all insurance policies of each
Seller relating to the Business, any refunds paid or payable in
connection with the cancellation or discontinuance of any insurance
policies applicable to the Business, and any claims made on/or
under such insurance policies; and
(n) accounts, notes or debts owed to
the Business from, or by the Business to, an Affiliate of any
Seller.
2.3 CONSIDERATION
(a) The consideration for the Assets
(the “ Purchase Price ”) will be (i) Two Million
Eight Hundred Thousand dollars ($2,800,000), subject to adjustment
as provided in Section 2.3(b) (the “ Closing Cash
Payment ”), (ii) plus the Earn-Out Amount, if any, (iii)
minus the US Tobacco Refund Amount, if any, (iv) plus the
assumption of the Assumed Liabilities. In accordance with Section
2.8(b), at the Closing, the Closing Cash Payment of the Purchase
Price shall be delivered by Buyer to Sellers by wire transfer of
immediately available funds. The Earn-Out Amount, if any, shall be
paid by Buyer to Parent in accordance with Section 2.9 and the US
Tobacco Refund Amount, if any, shall be paid by Sellers to Buyer in
accordance with Section 2.10.
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(b) The Purchase Price shall be
adjusted as follows:
(i) Five days prior to the Closing
Date, the Sellers shall deliver to the Buyer the latest statement
from Administaff, Inc., the Parent’s payroll firm (“
Administaff ”), which statement shall include the
Liabilities for vacation for the Transferred Employees accrued as
of the date of such statement (the “ Estimated Accrued
Vacation ”) and which shall be substantially in the form
set forth in the Seller Disclosure Letter. If the Estimated Accrued
Vacation is less than the vacation accrual for the Transferred
Employees set forth on the Balance Sheet Statement, then the
Closing Cash Payment to be paid by the Buyer at the Closing shall
be decreased by an amount equal to such shortfall. If the Estimated
Accrued Vacation is greater than the vacation accrual for the
Transferred Employees set forth on the Balance Sheet Statement,
then the Closing Cash Payment shall be increased by an amount equal
to such excess.
(ii) As promptly as practicable, but
no later than 30 calendar days after the Closing Date, the Sellers
shall cause Administaff to prepare and deliver to the Sellers and
the Buyer a statement that includes the Liabilities for vacation
for the Transferred Employees accrued as of the Effective Time (the
“ Closing Accrued Vacation ”), which shall be
substantially in the form set forth in the Seller Disclosure
Letter. If the Closing Accrued Vacation is greater than the
Estimated Accrued Vacation, then the Buyer shall pay to the Seller
an amount equal to the difference between the Estimated Accrued
Vacation and the Closing Accrued Vacation within five Business Days
after delivery of the statement of Closing Accrued Vacation to the
Buyer and the Sellers, and if the Closing Accrued Vacation is less
than the Estimated Accrued Vacation, then the $50,000 amount set
forth in Section 2.9(b)(ii) shall be deemed increased by an amount
equal to such shortfall. If the Final Accrued Vacation is equal to
the Estimated Accrued Vacation, then no adjustment shall be
made.
2.4 LIABILITIES
(a) Assumed Liabilities. On the
Closing Date, but effective as of the Effective Time, Buyer shall
assume and agree to discharge the following Liabilities of Sellers
(the “ Assumed Liabilities ”):
(i) any Liability to any
Seller’s customers incurred by such Seller in the ordinary
course of business for orders outstanding as of the Effective
Time;
(ii) any Liability to any of
Seller’s customers under warranties implied by law and any
warranty agreements and indemnities given by any Seller to its
customers prior to the Effective Time in connection with the
Business pursuant to any Assigned Contract;
(iii) all of each Seller’s
obligations, Liabilities and commitments under the Assigned
Contracts and the Assigned Lease attributable to the period
subsequent to the Closing Date; provided , that such
Assigned Contract has been assigned in accordance with this
Agreement;
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(iv) Liabilities for vacation for
the Transferred Employees accrued for periods prior to the
Effective Time and all Liabilities relating to the Transferred
Employees arising after the Effective Time and assumed by Buyer
pursuant to Section 10.1, subject to adjustment pursuant to Section
2.3(b);
(v) any Liability under any
Environmental Law at or relating to the Facilities, but excluding
any Liability arising from the transportation prior to the Closing
Date of materials from the Facilities to another location;
and
(vi) all other Liabilities relating
to the Business that arise after the Effective Time.
(b) Retained Liabilities. The
Retained Liabilities shall remain the sole responsibility of and
shall be retained, paid, performed and discharged solely by
Sellers. “ Retained Liabilities ” shall mean
every Liability of Sellers other than the Assumed Liabilities,
including:
(i) any Liability for Taxes arising
as a result of any Seller’s operation of the Business or
ownership of the Assets prior to the Effective Time;
(ii) any Liability under any
Contract not assumed by Buyer under Section 2.4(a);
(iii) any Liability of Seller under
the Seller Benefit Plans or relating to payroll, sick leave,
workers’ compensation or unemployment benefits for any
Seller’s employees or, to the extent such Liability arises
prior to the Effective Time out of or relating to the operation of
the Business, former employees or both;
(iv) any Liability under any
employment, severance, retention or termination agreement with any
employee of any Seller or any of its Related Persons;
(v) any Liability of any Seller to
any Related Person of such Seller;
(vi) any Liability to indemnify,
reimburse or advance amounts to any officer, director, employee or
agent of any Seller (other than the Liabilities with respect to the
Transferred Employees that are being assumed by Buyer pursuant to
Section 2.4(a)(iv);
(vii) except for the Liabilities
assumed by Buyer pursuant to Section 2.4(a), all other Liabilities
relating to the Business that existed prior to the Effective Time;
and
(viii) any Liability of any Seller
under this Agreement or any other document executed in connection
with the Contemplated Transactions.
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2.5 SALES AND TRANSFER TAXES;
RECORDING FEES
Buyer will pay all sales, motor
vehicle sales and use, transfer and documentary Taxes, if any,
payable in connection with the sale, conveyances, assignments,
transfers and deliveries to be made to Buyer hereunder. Buyer shall
promptly pay any such Taxes directly to the Governmental Body
assessing them or reimburse Sellers for any such Tax upon demand
and receipt of supporting evidence that any Seller made such
payment. Appropriate sales Taxes will be due by Buyer at Closing if
valid exemption certificates are not provided by Buyer at Closing.
In the event that Seller is audited in connection with such Taxes,
such Seller will notify Buyer of such audit and will not object to
Buyer’s appearance in the audit.
2.6 ALLOCATION OF PURCHASE
PRICE
The Purchase Price, together with
Assumed Liabilities, shall be allocated as set forth on Section 2.6
of the Seller Disclosure Letter. Sellers and Buyer shall each
report federal, state, local and other Tax consequences of the
purchase and sale contemplated hereby (including the filing of
Internal Revenue Service Form 8594) in a manner consistent with
such allocation, and none of them shall take any position in any
Tax Return, or other filing, proceeding or audit or otherwise that
is inconsistent with such allocation
2.7 CLOSING
The purchase and sale provided for
in this Agreement (the “ Closing ”) will take
place at the offices of Morgan, Lewis & Bockius LLP, 101 Park
Avenue, New York, New York, commencing at 10:00 a.m. (local time)
on the third Business Day immediately following the satisfaction or
waiver of all conditions to the obligations of the parties hereto
set forth in Articles 7 and 8, unless Buyer and Sellers otherwise
agree (the date on which the Closing occurs, the “ Closing
Date ”).
2.8 CLOSING OBLIGATIONS
In addition to any other documents
to be delivered under other provisions of this Agreement, at the
Closing:
(a) Sellers shall deliver to
Buyer:
(i) a bill of sale for all of the
Assets that are Tangible Personal Property, substantially in the
form of Exhibit A (the “ Bill of Sale ”),
executed by Sellers;
(ii) an assignment and assumption
agreement that provides for the assignment of all of the Assigned
Contracts and Assumed Liabilities by Sellers to Buyer and the
assumption of the same by Buyer, substantially in the form of
Exhibit B (the “ Assignment and Assumption
Agreement ”), executed by Sellers;
(iii) for the Assigned Lease, an
Assignment and Assumption of Lease, substantially in the form of
Exhibit C or such other appropriate document or instrument
of transfer, as the case may require, each in form and substance
reasonably satisfactory to Buyer and its counsel and executed by
the applicable Seller;
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(iv) a License Agreement (the
“ License Agreement ”), substantially in the
form of Exhibit D , pursuant to which the Sellers shall
license the JASware software to the Buyer;
(v) assignments of all Intellectual
Property Assets and separate assignments of all registered
trademarks, patents and copyrights, substantially in the form of
Exhibit E , executed by each Seller;
(vi) a transition services
agreement, substantially in the form of Exhibit F (the
“ Transition Services Agreement ”), pursuant to
which Buyer shall provide certain transition services to Sellers
for a period of up to three (3) months at no cost, executed by
Sellers;
(vii) such other bills of sale,
assignments, certificates of title, documents and other instruments
of transfer and conveyance as may reasonably be requested by Buyer,
each in form and substance reasonably satisfactory to Buyer and its
legal counsel and executed by each Seller;
(viii) the certificates required by
Sections 7.1 and 7.2 of this Agreement;
(ix) subject to the provisions of
Section 2.10, fully executed assigned and renewed Contracts
relating to the Business from the existing clients set forth in the
Seller Disclosure Letter;
(x) a certificate of the Secretary
of each Seller certifying, as complete and accurate as of the
Closing, attached copies of the Certificate of Incorporation in the
case of the Parent, and Certificate of Incorporation, certificate
of formation, operating agreement and bylaws, as the case may be,
of such Seller as in effect on the date thereof, certifying and
attaching all requisite resolutions or actions of such
Seller’s board of directors or board of managers or other
governing body approving the execution and delivery of this
Agreement and the consummation of the Contemplated Transactions and
certifying to the incumbency and signatures of the officers or
members of such Seller executing this Agreement and any other
document relating to the Contemplated Transactions; and
(b) Buyer shall deliver to
Sellers:
(i) the Closing Cash Payment by wire
transfer of immediately available funds to an account specified by
Sellers in a writing delivered to Buyer at least two (2) Business
Days prior to the Closing Date;
(ii) the Assignment and Assumption
Agreement, executed by Buyer;
(iii) the Transition Services
Agreement, executed by Buyer;
(iv) the License Agreement, executed
by Buyer;
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(v) the certificates required by
Sections 8.1 and 8.2 of this Agreement; and
(vi) a certificate of the Secretary
of Buyer certifying, as complete and accurate as of the Closing,
attached copies of the articles of organization and operating
agreement of Buyer as in effect on the date thereof and certifying
and attaching all requisite resolutions or actions of Buyer’s
managing member approving the execution and delivery of this
Agreement and the consummation of the Contemplated Transactions and
certifying to the incumbency and signatures of the managing member
of Buyer executing this Agreement and any other document relating
to the Contemplated Transactions.
2.9 POST-CLOSING EARN-OUT
Sellers shall be entitled to receive
a post-closing earn-out (the “ Earn-Out Amount
”) determined in accordance with and paid at the time and
manner set forth in this Section 2.9.
(a) Subject to the provisions of
this Section 2.9, including without limitation, Sections 2.9(b)
below, with respect to each of the years ending on the first,
second and third anniversary of the Closing Date, Buyer shall pay
to Parent (on behalf of Sellers) an aggregate cash payment equal to
3% of the annual gross sales generated by Buyer in connection with
Buyer’s operation of the Assets and the Business for each
year within such three year period; provided , that Parent
shall only be entitled to such payment in the event the annual
gross sales for any such year are equal to or greater than $4.9
million.
(b) Notwithstanding anything herein
to the contrary, in no event shall (i) the aggregate cumulative
payments of the Earn-Out Amounts made by Buyer under Section 2.9(a)
exceed $1,000,000 and (ii) the Buyer have any obligation to pay the
first $50,000 earned pursuant to this Section 2.9; provided
, however , that such $50,000 shall be counted toward the
maximum Earn-Out Amount that may be earned pursuant to this Section
2.9.
(c) After the end of each of the
first three anniversaries of the Closing Date, Buyer shall prepare
a statement (each, an “ Earn-Out Statement ”)
setting forth the annual gross sales with respect to such year,
which statement shall be prepared on the same basis and applying
the same accounting principles, policies and practices that were
used by Sellers in preparing the Balance Sheet Statement. Buyer
shall then determine the Earn-Out Amount, if any, for each such
year based upon the Earn-Out Statement for such year. Buyer shall
deliver the Earn-Out Statement and its determination of the
relevant Earn-Out Amount to Sellers within sixty (60) days
following each of the first three anniversaries of the Closing
Date. Sellers and their independent auditors and other
Representatives shall have the right to review and verify each
Earn-Out Statement and determination of the related Earn-Out Amount
when received and Buyer shall provide Sellers with access to all
related working papers.
(d) If within thirty (30) days
following delivery of any Earn-Out Statement and the related
Earn-Out Amount calculation Sellers have not given Buyer written
notice of their objection as to the relevant Earn-Out Amount
calculation (which notice shall state the basis of Seller’s
objection), then the Earn-Out Amount calculated by Buyer shall be
binding and conclusive on the parties and such amount shall paid by
Buyer to Parent (on behalf of Sellers) as provided in Section
2.9(f).
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(e) If Sellers duly give Buyer such
notice of objection, and if Sellers and Buyer fail to resolve the
issues outstanding with respect to any Earn-Out Statement and the
calculation of the related Earn-Out Amount within thirty (30) days
of Buyer’s receipt of Sellers’ objection notice,
Sellers and Buyer shall submit the issues remaining in dispute to
Ernst & Young LLP, independent public accountants or such other
independent accounting firm mutually agreed to by Buyer and Sellers
(the “ Independent Accountants ”), for
resolution. If issues are submitted to the Independent Accountants
for resolution, (i) Sellers and Buyer shall furnish or cause to be
furnished to the Independent Accountants such work papers and other
documents and information relating to the disputed issues as the
Independent Accountants may request and are available to that party
or its agents and shall be afforded the opportunity to present to
the Independent Accountants any material relating to the disputed
issues and to discuss the issues with the Independent Accountants;
(ii) the determination by the Independent Accountants, as set forth
in a notice to be delivered to both Sellers and Buyer within sixty
(60) days of the submission to the Independent Accountants of the
issues remaining in dispute, shall be final, binding and conclusive
on the parties and shall be used in the calculation of the relevant
Earn-Out Amount; and (iii) Parent and Buyer will each bear fifty
percent (50%) of the fees and costs of the Independent Accountants
for such determination.
(f) If any Earn-Out Statement
delivered with respect to each of the years ending on the first,
second and third anniversary of the Closing Date indicates that any
Earn-Out Amount is payable, Buyer shall make payment to Parent (on
behalf of the Sellers) in the aggregate amount of such Earn-Out
Amount within 10 days of the earlier of (i) the expiration of the
30-day period in which Sellers had to deliver a notice of
disagreement pursuant to Section 2.9(d) but did not do so, (ii)
within five (5) days of the day on which Buyer receives a written
notice signed by Sellers to the effect that they will not be
delivering a notice of disagreement pursuant to Section 2.9(d) or
(iii) within five (5) days of the day on which any matters disputed
in a notice of disagreement are decided by agreement between Buyer
and Sellers or by decision of the Independent Accountant. Any
payments to Parent under this Section 2.9 shall be made by wire
transfer of immediately available funds to an account specified by
Sellers in a writing delivered to Buyer at least two (2) Business
Days prior to the date such payment is to be made.
2.10 POST-CLOSING REFUND
In the event United States Tobacco
(“ US Tobacco ”) does not renew its services and
support contract (the “ US Tobacco Contract ”)
with Cotelligent USA, Inc. currently scheduled to expire on May 31,
2005 or enter into a new services and support contract with Buyer
by May 31, 2005, Buyer shall be entitled to receive a post-closing
refund (the “ US Tobacco Refund Amount ”) of up
to $700,000, with the actual US Tobacco Refund Amount determined in
accordance with and paid at the time and manner set forth in this
Section 2.10.
(a) In the event US Tobacco renews
the US Tobacco Contract or enters into a new contract with Buyer or
its Related Persons which provides for the payment by US Tobacco of
80% or greater of the total dollar amount generated by the US
Tobacco Contract for the fiscal year ended December 31, 2004, the
US Tobacco Refund Amount shall be zero.
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(b) In the event the US Tobacco
Contract is not renewed, or in the event US Tobacco renews the US
Tobacco Contract or enters into a new contract with Buyer or its
Related Persons which provides for the payment by US Tobacco of
less than 80% of the total dollar amount associated with the
monthly service and support charges under the US Tobacco Contract
for the fiscal year ended December 31, 2004, the US Tobacco Refund
Amount shall be an amount equal to the difference between (i)
$700,000 and (ii) $700,000 multiplied by a fraction, the numerator
of which shall be the twelve (12) month amortized dollar amount of
payments to be made by US Tobacco pursuant to such renewed or new
contract, and the denominator of which shall be 1,406,851. Any US
Tobacco Refund Amount under this Section 2.10(b) shall paid by
Sellers to Buyer within ten (10) days of Parent’s receipt of
written notice from Buyer regarding the execution and delivery by
US Tobacco and Buyer of such renewed or new contract and such
payment shall be made by Sellers by wire transfer of immediately
available funds to the account designated by Buyer at least two (2)
Business Days prior to the date such payment is to be
made.
(c) Notwithstanding the foregoing,
in the event the US Tobacco Contract is not renewed but US Tobacco
continues to pay the monthly service and support charges in effect
as of the date hereof under the US Tobacco Contract for a period of
eight (8) consecutive months following the Closing Date, Buyer
shall not be entitled to any US Tobacco Refund Amount.
3. Representations and Warranties of
Sellers
Sellers represent and warrant to
Buyer as follows:
3.1 ORGANIZATION AND GOOD
STANDING
Parent is a corporation duly
incorporated, validly existing and in good standing under the laws
of the State of Delaware with full corporate power and authority to
own, operate and lease properties and assets and to carry on
businesses in the places and in the manner currently conducted.
Each Seller is duly qualified to do business as a foreign
corporation and is in good standing under the laws of each State or
other jurisdiction in which either the ownership or use of the
properties owned or used by it, or the nature of the activities
conducted by it, requires such qualification, except where the
failure to do so would not reasonably be expected to have a
Material Adverse Effect on such Seller or the Business.
3.2 ENFORCEABILITY; AUTHORITY; NO
CONFLICT
(a) Each Seller has all requisite
corporate or limited liability company power and authority to enter
into this Agreement and the documents to be delivered by such
Seller at the Closing and to perform its obligations hereunder and
thereunder, including the Contemplated Transactions. This Agreement
has been duly executed and delivered by Sellers and, assuming the
due execution and delivery of this Agreement by Buyer, constitutes
a legal, valid and binding obligation of Seller, enforceable
against such Seller in accordance with its terms, except as
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws from time to time in
effect that affect creditors’ rights generally and by legal
and equitable limitations on the availability of specific remedies.
This Agreement and the Contemplated Transactions have been duly
authorized by all necessary action by Sellers’ board
of
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directors or similar governing body. Except for
the Parent Stockholder Approval, which is required to consummate
the Contemplated Transactions, no further corporate or stockholder
action is necessary on the part of Sellers to execute and deliver
this Agreement or to consummate the Contemplated
Transactions.
(b) Except as set forth in the
Seller Disclosure Letter and except for the Parent Stockholder
Approval, neither the execution and delivery of this Agreement nor
the consummation or performance of any of the Contemplated
Transactions will, directly or indirectly (with or without notice
or lapse of time):
(i) Conflict with or violate the
Articles of Incorporation (or operating agreements as the case may
be) of Parent or Sellers;
(ii) Conflict with, constitute a
material breach, violation or termination of any provision of, or
give rise to any right of termination, cancellation or
acceleration, or loss of any material right or benefit or both,
under any Seller Contract;
(iii) Result in an acceleration or
increase of any indebtedness or other amounts due with respect to
the Business or the Assets;
(iv) Result in the imposition or
creation of any Encumbrance (other than a Permitted Encumbrance)
upon or with respect to any of the Assets; or
(v) To the Knowledge of Sellers,
contravene, conflict with or result in a violation or breach of any
Governmental Authorization, Legal Requirement or Order applicable
to Sellers, the Business or the Assets or to which Sellers, the
Business or any of the Assets may be subject, except for any such
violation or breach that would not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect
on Sellers, the Assets or the Business.
(c) Except as set forth in Section
3.2(c) of the Seller Disclosure Letter, no Seller is required to
give any notice to or obtain any Consent from any Person in
connection with the execution and delivery of this Agreement or the
consummation or performance of any of the Contemplated
Transactions, except where the failure to notify or obtain such a
consent would not reasonably be expected, as of the date hereof, to
have a Material Adverse Effect on Sellers, the Assets or the
Business.
3.3 FINANCIAL STATEMENTS
Sellers have delivered to Buyer (i)
an unaudited statement of certain assets and certain liabilities of
the Business as of December 31, 2004 (the “ Balance Sheet
Statement ”) and (ii) an unaudited statement of the
general ledger (including the reconciliation thereof) of the
Business (the “ General Ledger ”), copies of
which are set forth in the Seller Disclosure Letter. The Balance
Sheet Statement and General Ledger were each created specially by
Sellers in connection with the transactions contemplated hereby
from Sellers’ financial records. Subject to the foregoing
circumstances with respect to their creation and subject to
Sellers’ disclosure to Buyer that certain internal
allocations of expenses shared with other business units of the
Sellers, as well as certain
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direct liabilities of the Business, are not
allocated to the Balance Sheet Statement of the Business or the
General Ledger, the Balance Sheet Statement and the General Ledger
are in accordance with the books and records of the Sellers and the
Balance Sheet Statement presents fairly, in all material respects,
the assets and liabilities of the Business as of the date thereof
and the General Ledger presents fairly, in all material respects,
the revenue and expenses of the Business for the period
thereof.
3.4 BOOKS AND RECORDS
The books of account and other
financial Records of Sellers related to the Business, all of which
have been made available to Buyer, are complete and correct and
represent actual, bona fide transactions and have been maintained
in accordance with sound business practices.
3.5 SUFFICIENCY OF ASSETS
Except as set forth in the Seller
Disclosure Letter, to the Knowledge of Sellers the Assets
constitute all of the assets, tangible and intangible, of any
nature whatsoever, necessary to operate the Business in materially
the same manner in which it is presently operated by
Sellers.
3.6 DESCRIPTION OF LEASED REAL
PROPERTY
Section 2.1(d) of the Seller
Disclosure Letter contains a list of all Real Property Leases which
are used solely in the Business.
3.7 TITLE TO ASSETS;
ENCUMBRANCES
(a) Seller has a valid and
subsisting leasehold interest in the Real Property described in the
Seller Disclosure Letter.
(b) Sellers own good and
transferable title to all of the Tangible Personal Property free
and clear of any Encumbrances other than Permitted Encumbrances and
those Encumbrances described in the Seller Disclosure Letter
(“ Non-Real Estate Encumbrances ”). Sellers
warrant to Buyer that, at the time of Closing, all such Tangible
Personal Property shall be free and clear of all Non-Real Estate
Encumbrances other than (i) those identified in the Seller
Disclosure Letter, (ii) the interest of any United States
Governmental Body in technical data, computer software, and patents
under the clauses pertaining thereto in any government Contract
relating to the Business, if any, and (iii) Encumbrances or other
rights of Governmental Bodies or other Persons in respect of
property or assets delivered to Seller for repair, maintenance, or
other improvements.
3.8 INVENTORIES
All items included in the
Inventories consist of a quality and quantity consistent in all
material respects with past practices or reasonable future
expectations except for obsolete items, slow-moving items and items
of below-standard quality. Inventories on hand that were purchased
after the date of the Balance Sheet Statement were purchased in the
ordinary course of business consistent with past practices or
reasonable future expectations at a cost generally not exceeding
market prices prevailing at the time of purchase.
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3.9 NO UNDISCLOSED
LIABILITIES
Except as set forth in the Seller
Disclosure Letter, to Sellers’ Knowledge, no Seller has any
material Liability related to the Business or affecting the Assets
except for Liabilities disclosed in the Seller Disclosure Letter,
Liabilities reflected, reserved against or otherwise described in
the Balance Sheet Statement, the consolidated financial statements
of Parent, and current liabilities incurred in the ordinary course
of business consistent with past practices or reasonable future
expectations since the date of the Balance Sheet
Statement.
3.10 TAXES
(a) There are no Encumbrances other
than Permitted Encumbrances on any of the Assets that arose in
connection with any failure (or alleged failure) to pay any Tax,
and Sellers have no Knowledge of any basis for assertion of any
claims attr
