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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT (date of earliest event reported): April 20, 2000
EMERGE INTERACTIVE, INC.
(Exact name of registrant as specified in its charter)
Delaware 000-29037 65-0534535
(State or other Jurisdiction (Commission File Number) (I.R.S. Employer
of incorporation or Identification No.)
organization)
10315 102nd Terrace, Sebastian, Florida 32958
(Address of principal executive offices)
(561) 589-7331
(Registrant's telephone number, including area code)
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Item 2. Acquisition or Disposition of Assets.
Purchase of Assets from Eastern Livestock Co., Inc.
On April 20, 2000 eMerge Interactive, Inc. entered into an Agreement
for the Purchase and Sale of Assets with Eastern Livestock Co., and its
shareholders, which closed on May 1, 2000. eMerge purchased Eastern's rollover
business which engages in buying cattle for immediate or short-term resale. The
purchase of the rollover business includes acquisition of all tangible and
intangible systems used in the conduct or operation of the business, all
furniture and/or equipment and systems associated with the business, and any
presence on the World Wide Web, including email addresses, maintained by or on
behalf of Eastern in connection with the rollover business. The purchase price
for these assets consisted of (i) $17,000,000 in cash, (ii) 1,215,913 shares of
eMerge common stock and (iii) $4,500,000 in cash to be paid one year after the
closing date or earlier upon certain events occurring. The Agreement for the
Purchase and Sale of Assets is attached hereto as Exhibit 2.1. The related
Registration Rights and Restricted Stock Agreement, Supply and Support
Agreement, and Cattle Purchase Contract Agreement are attached hereto as
Exhibits 2.2, 2.3 and 2.4 respectively.
Purchase of Assets from W.P. Land and Livestock, Inc.
On April 21, 2000 eMerge Interactive entered into an Agreement for the
Purchase and Sale of Assets with W.P. Land and Livestock, Inc., and its
shareholders, which purchase is expected to close on or before May 15, 2000.
Upon the closing of this purchase, eMerge will purchase all of the tangible and
intangible property of W.P. Land and Livestock relating to its business of
purchasing and reselling of cattle through auction as well as any presence on
the World Wide Web maintained by or on behalf of W.P. Land and Livestock,
including the page located at URL http://www.jordancattle.com and any email
addresses used in connection with the business. The purchase price for these
assets will be $2,784,595 in cash plus the value of certain inventory. The
Agreement for the Purchase and Sale of Assets is attached hereto as Exhibit
2.5.
On April 21, 2000 eMerge entered into a Contract for Sale and Purchase
of Real Estate with the shareholders of W.P. Land and Livestock to purchase
three parcels of land used in the above described business of W.P. Land and
Livestock for a purchase price of $3,472,000 in cash. This sale will close at
the time of the closing of the above described purchase of assets. The Contract
for Sale and Purchase of Real Estate is attached hereto as Exhibit 2.6
Item 7. Financial Statements & Exhibits
Financial Statements of Businesses Acquired:
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To be filed by amendment on or before July 5, 2000, in accordance with the
provisions of paragraph (a)(4) of this Item.
Pro Forma Financial Information:
To be filed by amendment on or before July 5, 2000, in accordance with the
provisions of paragraph (a)(4) of this Item.
Exhibits:
<TABLE>
<S> <C>
2.1 Agreement for the Purchase and Sale of Assets, dated April 20, 2000
2.2 Registration Rights and Restricted Stock Agreement, dated May 1, 2000
2.3 Supply and Support Agreement, dated May 1, 2000
2.4 Cattle Purchase Contract Agreement, dated May 1, 2000
2.5 Agreement for the Purchase and Sale of Assets, dated April 21, 2000
2.6 Contract for Sale and Purchase of Real Estate, dated April 21, 2000
</TABLE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
EMERGE INTERACTIVE, INC.
/s/ T. Michael Janney
- -------------------------------------
T. Michael Janney,
Treasurer and Chief Financial Officer
Date: May 5, 2000
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EXHIBIT 2.1
AGREEMENT FOR THE PURCHASE AND SALE OF ASSETS, DATED APRIL 20, 2000
AGREEMENT FOR THE
PURCHASE AND SALE OF ASSETS
BY AND BETWEEN
EMERGE INTERACTIVE, INC.
AND
EASTERN LIVESTOCK CO., INC.
THOMAS P. GIBSON
JOHN S. GIBSON
DATED
APRIL 20, 2000
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AGREEMENT FOR THE
PURCHASE AND SALE OF ASSETS
THIS AGREEMENT FOR THE PURCHASE AND SALE OF ASSETS (the "Agreement") is
made and entered into this 20th day of April, 2000 (the "Contract Date"), by and
between: (I) EMERGE INTERACTIVE, INC., a Delaware corporation, referred to
herein as the "Purchaser;" (II) EASTERN LIVESTOCK CO., INC., a Kentucky
corporation, referred to herein as the "Seller;" (III) THOMAS P. GIBSON
("Gibson"); (IV) JOHN S. GIBSON ("Brother"), with Gibson and Brother referred to
herein individually as a "Shareholder" and jointly as the "Shareholders." The
Purchaser, the Shareholders and the Seller, or any combination thereof, as the
context may require, are referred to collectively herein as the "Parties."
BACKGROUND
A. Headquartered in Louisville, Kentucky, Seller is engaged in
the business of buying cattle for immediate resale and in the business of
buying cattle to place on pasture or feed (hereinafter collectively referred to
as the "Cattle Business").
B. The Cattle Business has two separate but interrelated
components: the "Rollover Business" and the "Long-Term Business." The "Rollover
Business" includes the buying of cattle for immediate resale (and/or on a
short-term basis). The Rollover Business generates profits based on the
difference between the purchase price and the selling price of the cattle, and
generates profits by the buying or selling of cattle for others on a commission
or other basis. The Rollover Business includes, without limitation, the
activities known in the livestock industry as dealing, brokering and trading.
The "Long-Term Business" includes the purchasing of cattle to be owned on a
long term basis. The Long-Term Business generates profits based on the increase
in value of cattle because of weight gain during the time of ownership, in
addition to the difference between the purchase price and the selling price.
The Long-Term Business also generates profits as a result of the fees earned in
connection with certain profit sharing arrangements with third-party
caretakers, known as its Pasture Contracts program. The Seller's Financial
Statements segregate and compile the financial results of certain of its
business activities as being attributable to the Long-Term Business, and the
definition of the Rollover Business contained herein incorporates any and all
such activities not attributable to such.
C. Seller is the record and beneficial owner of certain assets
used by it in the Rollover Business (the "Purchased Assets," as more
particularly described herein); and
D. This Agreement contemplates a transaction in which the
Purchaser will purchase all of the Purchased Assets of the Seller in return for
cash and securities, as described more particularly hereinbelow.
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NOW, THEREFORE, for good and valuable consideration the receipt and
sufficiency of which are hereby acknowledged and in consideration of the mutual
covenants, representations, warranties and agreements contained herein, the
Parties hereby agree as follows:
AGREEMENT
ARTICLE 1 - DEFINITIONS
"Affiliate" has the meaning set forth in Rule 12b-2 of the regulations
promulgated under the Securities Exchange Act of 1934, as amended.
"Assignment and Assumption Agreement" shall mean that certain
Assignment and Assumption Agreement with respect to contracts and leases to be
assumed by Purchaser in substantially the form attached hereto as Exhibit A.
"Assumed Liabilities" means only those liabilities set forth in
Section 2(b) of the Disclosure Schedule, and then, only to the extent stated
therein.
"Bill of Sale" shall mean that certain Bill of Sale with respect to
the transfer and sale of the Purchased Assets, in substantially the form
attached hereto as Exhibit B.
"Cattle Business" has the meaning set forth in Paragraph A above of
the "Background" Section of this Agreement.
"Cattle Purchase Contract Agreement" shall mean that certain Cattle
Purchase Contract Agreement between Purchaser and Seller in substantially the
form attached hereto as Exhibit J.
"Closing" shall be defined as the closing of the transactions
contemplated pursuant to this Agreement.
"Closing Date" has the meaning set forth in Section 2(c) below.
"Confidential Information" has the meaning set forth in Section
6(a)(ii) below.
"Code" means the Internal Revenue Code of 1986, as amended.
"Contract Date" has the meaning set forth in the preface above.
"Disclosure Schedule" shall have the meaning set forth in Article 3
hereof.
"Employee Benefit Plan" means any (a) nonqualified deferred
compensation or retirement plan or arrangement, (b) qualified defined
contribution retirement plan or arrangement which is an
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Employee Pension Benefit Plan, (c) qualified defined benefit retirement plan or
arrangement which is an Employee Pension Benefit Plan (including any
Multiemployer Plan), or (d) Employee Welfare Benefit Plan or material fringe
benefit or other retirement, bonus, or incentive plan or program.
"Employee Pension Benefit Plan" has the meaning set forth in ERISA ss.
3(2).
"Employee Welfare Benefit Plan" has the meaning set forth in ERISA ss.
3(1).
"Employment Agreements" shall mean each of those certain Employment
Agreements between the Purchaser (or the Purchaser's Affiliate) and the
Shareholders, in substantially the form attached hereto as Exhibit F.
"Environmental, Health, and Safety Requirements" shall mean all
federal, state, local and foreign statutes, regulations, ordinances and similar
provisions having the force or effect of law, all judicial and administrative
orders and determinations, and all common law concerning public health and
safety, worker health and safety, and pollution or protection of the
environment, including without limitation all those relating to the presence,
use, production, generation, handling, transportation, treatment, storage,
disposal, distribution, labeling, testing, processing, discharge, release,
threatened release, control, or cleanup of any hazardous materials, substances
or wastes, chemical substances or mixtures, pesticides, pollutants,
contaminants, toxic chemicals, petroleum products or byproducts, asbestos,
polychlorinated biphenyls, noise or radiation.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"ERISA Affiliate" means each entity that is treated as a single
employer with Seller for purposes of Code ss. 414.
"GAAP" means United States generally accepted accounting principles as
in effect from time to time.
"Income Tax" means any federal, state, local, or foreign income tax,
including any interest, penalty, or addition thereto, whether disputed or not.
"Income Tax Return" means any return, declaration, report, claim for
refund, or information return or statement relating to Income Taxes, including
any schedule or attachment thereto, and including any amendment thereof.
"Intellectual Property" means (a) all inventions (whether patentable
or unpatentable and whether or not reduced to practice), all improvements
thereto, and 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 (whether or not registered,
and including, without limitation, the name "Eastern Livestock Co."), together
with all translations, adaptations, derivations, and combinations
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thereof and including all goodwill associated therewith, and all applications,
registrations, and renewals in connection therewith, (c) all copyrightable
works, all 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
business information (including, without limitation, the Systems and all 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), (g) all other proprietary rights,
and (h) all copies and tangible embodiments thereof (in whatever form or
medium).
"Knowledge" means actual knowledge after limited investigation.
"License Agreement" shall mean that certain license agreement between
the Purchaser and the Seller whereby the Seller has the exclusive right, on a
royalty-free basis and for a period of twenty (20) years, to use and sublicense
the name: "Eastern Livestock Co." and any derivatives thereof as may be used by
the Seller in the conduct of the Long-Term Business (with any uses of such name
in any manner outside the use as such name was customarily being used in
connection with the Long-Term Business immediately prior to the Closing to be
subject to the prior written approval of the Purchaser).
"Long-Term Business" has the meaning set forth in Paragraph B above of
the "Background" Section of this Agreement.
"Multiemployer Plan" has the meaning set forth in ERISA ss. 3(37).
"Office Sharing Agreement" shall mean that certain Office Sharing
Agreement in substantially the form attached hereto as Exhibit I.
"Ordinary Course of Business" means the ordinary course of business
consistent with past custom and practice.
"Party" has the meaning set forth in the preface above.
"Person" means an individual, a partnership, a corporation, an
association, a joint stock company, a trust, a joint venture, an unincorporated
organization, or a governmental entity (or any department, agency, or political
subdivision thereof).
"Purchased Assets" means all right, title, and interest in and to the
assets of the Seller described in Section 2(a) of the Disclosure Schedule,
which assets shall include, without limitation, the Rollover Business, the
Systems, any furniture and/or equipment related to either the Rollover Business
and/or the Systems, and also, any presence on the World Wide Web portion of the
Internet maintained by or on behalf of the Seller in connection with the
Rollover Business and any e-mail
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address used by the Seller in connection with the Cattle Rollover Business. The
Purchased Assets do not include the cattle inventory or the accounts receivable
of the Rollover Business.
"Purchase Price" shall have the meaning set forth in Section 2(b)
hereof.
"Restricted Stock Agreement shall mean that certain Registration
Rights and Restricted Stock Agreement between the Purchaser, the Seller and
Gibson in substantially the form attached hereto as Exhibit H.
"Rollover Business" has the meaning set forth in Paragraph B above of
the "Background" Section of this Agreement.
"Sale Shares" shall have the meaning set forth in Section 2(b)(ii)
below.
"Sales Tax" means an federal, state, local, or foreign sales tax,
including any interest, penalty, or addition thereto whether disputed or not.
"Sales Tax Return" means any return, declaration, report, claim for
refund, or information return or statement relating to Sales Taxes, including
any schedule or attachment thereto, and including any amendment thereof.
"Security Interest" means any mortgage, pledge, lien, encumbrance,
charge, or other security interest, other than (a) mechanic's, materialmen's,
and similar liens, (b) liens for taxes not yet due and payable or for taxes
that the taxpayer is contesting in good faith through appropriate proceedings,
(c) purchase money liens and liens securing rental payments under capital lease
arrangements, and (d) other liens arising in the Ordinary Course of Business
and not incurred in connection with the borrowing of money.
"Share" shall mean one (1) fully paid unregistered share of the
Purchaser's common stock, par value $.008 per share.
"Subsidiary" means any corporation with respect to which a specified
Person (or a Subsidiary thereof) owns a majority of the common stock or has the
power to vote or direct the voting of sufficient securities to elect a majority
of the directors.
"Supply and Support Agreement" means that certain supply and support
agreement, in substantially the form attached hereto as Exhibit C.
"Systems" means any and all tangible and intangible systems used by
the Seller in connection with the conduct or operation of the Rollover
Business, whether they relate to accounting, bookkeeping or other financial
matters, or the development, maintenance, monitoring, or retention of suppliers
or customers, together with all furniture, equipment (including, without
limitation, all computer equipment), and software related to or supporting any
such system.
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ARTICLE 2 - BASIC TRANSACTION
(a) Purchase and Sale of Assets. Subject to and on the terms and
conditions of this Agreement, at the Closing, the Purchaser shall purchase from
the Seller, and the Seller shall sell, assign, transfer and deliver to the
Purchaser, all of the Purchased Assets, free and clear of all liens, claims,
options, charges, security interests and encumbrances of any nature, for the
Purchase Price.
(b) Purchase Price. On and subject to the terms and conditions of
this Agreement and in reliance upon the representations, warranties, covenants
and agreements of the Seller and the Shareholders contained in this Agreement,
the "Purchase Price" to be payable by the Purchaser to the Seller hereunder
shall equal Thirty-Six Million Dollars ($36,000,000), with such amount to be
paid in a combination of cash and securities in accordance with and pursuant to
the following:
(i) At the Closing, the Purchaser shall pay to the
Seller Seventeen Million Dollars ($17,000,000) by wire transfer or delivery of
other immediately available funds to the account of the Seller as designated by
the Seller in writing and delivered to the Purchaser concurrent herewith.
(ii) At the Closing, the Purchaser shall transfer,
convey, and deliver to the Seller one or more certificates representing that
number of Shares having an aggregate value equal to Fourteen Million Five
Hundred Thousand Dollars ($14,500,000) (the "Sale Shares"). This value shall be
determined based upon the average of the per Share closing price of the
Purchaser's publicly traded Shares, as reported in the Wall Street Journal for
the five (5) business days immediately preceding the Contract Date. The Sale
Shares shall be issued under, pursuant, and subject to the terms and conditions
of the Restricted Stock Agreement.
(iii) The balance of the Purchase Price of Four Million
Five Hundred Thousand Dollars ($4,500,000), shall be paid by the Purchaser by
wire transfer or delivery of other immediately available funds to the account
of the Seller as designated by the Seller in writing and delivered to the
Purchaser on or before the payment date, upon the earlier to occur of (A) the
irrevocable listing for sale on the Purchaser's online cattle marketplace by
the Seller and the Seller Affiliates of at least thirty-five percent (35%) of
the Seller and the Seller Affiliates' combined, total cattle inventory listed
or otherwise available for sale (on a cumulative basis) during any rolling
ninety (90) day period commencing on or after the Closing Date, or (B) the date
that is one (1) year after the Closing Date.
(iv) In addition, Purchaser shall assume the liabilities
listed on the Disclosure Schedule attached hereto, according to the terms of
the Assignment and Assumption Agreement.
(c) Closing. On and subject to the provisions and conditions of
this Agreement, the Closing will take place at the offices of Middleton &
Reutlinger, 2500 Brown & Williamson Tower, Louisville, Kentucky 40202, on or
before May 1, 2000, or on such other date as the Parties to this Agreement
agree in writing.
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(d) Deliveries at the Closing.
(i) At the Closing, the Seller and the Shareholders
will, as appropriate, execute, acknowledge and/or deliver to the Purchaser:
(A) the Assignment and Assumption Agreement;
(B) the Bill of Sale;
(C) the Supply and Support Agreement;
(D) the Restricted Stock Agreement;
(E) the Employment Agreements;
(F) the Office Sharing Agreement;
(G) the Cattle Purchase Contract Agreement;
(H) Legal Opinion; and
(I) such other instruments of sale, transfer,
conveyance, and assignment as the Purchaser
and its counsel may reasonably request.
(ii) At the Closing, the Purchaser will, as appropriate,
execute, acknowledge and/or deliver to the Seller:
(A) the Assignment and Assumption Agreement;
(B) the Supply and Support Agreement;
(C) the Restricted Stock Agreement;
(D) the Employment Agreements;
(E) the Office Sharing Agreement;
(F) the Cattle Purchase Contract Agreement;
(G) Legal Opinion; and
(H) the portion of the Purchase Price properly
due, payable and/or issuable at the
Closing.
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(e) Allocation. The Parties agree to allocate the Purchase Price
(and all other capitalized costs) among the Purchased Assets for all purposes
(including financial accounting and tax purposes) in accordance with the
allocation schedule set forth in Section 2(e) of the Disclosure Schedule
attached hereto.
ARTICLE 3 - REPRESENTATIONS AND WARRANTIES OF SELLER AND SHAREHOLDERS
The Seller and Gibson, jointly and severally, and Brother, severally,
warrant and represent that each of the statements set forth in this Article 3
is true and correct, except as set forth in the disclosure schedule
accompanying this Agreement (the "Disclosure Schedule"). The Disclosure
Schedule will be arranged in sections corresponding to the lettered and
numbered sections contained in this Article 3. The Purchaser's obligation to
close under this Agreement is conditioned and contingent upon the
representations and warranties contained in this Article 3 being true, and
correct as of the Closing Date.
(a) Organization of the Seller. The Seller is a corporation duly
organized, validly existing and in good standing under the laws of the
Commonwealth of Kentucky and is duly qualified to do business in the
Commonwealth of Kentucky and has full power and authority to carry on and
conduct the Rollover Business and to own, use, possess and sell the Purchased
Assets.
(b) Authorization and Effect of Transaction. The Seller has the
full power and authority (including full corporate power and authority) to
execute, deliver and fully perform its obligations under this Agreement.
Without limiting the generality of the foregoing, the execution and delivery of
this Agreement to the Purchaser and the carrying out of the provisions hereof,
have been duly authorized by all necessary action of the Seller, and this
Agreement constitutes a valid and binding obligation of Seller and of each of
the Shareholders enforceable against each of them in accordance with its terms
and conditions, subject to applicable bankruptcy, insolvency and similar laws
of general application relating to, or affecting, creditors' rights and to
general equitable principles. Each individual Shareholder has the legal
capacity and capability to execute, deliver and fully perform his obligations
under this Agreement, likewise subject to applicable bankruptcy, insolvency and
similar laws of general application relating to, or affecting, creditors'
rights and to general equitable principles.
(c) Noncontravention. Neither the execution and the delivery of
this Agreement, nor the consummation of the transactions contemplated hereby
(including the assignments and assumptions referred to in Article 2, above)
will: (i) to the Knowledge of Seller, violate any constitution, statute,
regulation, rule, injunction, judgment, order, decree, ruling, charge, or other
restriction of any government, governmental agency, or court to which the
Seller is subject, (ii) violate any provision of the charter or bylaws of the
Seller, or (iii) conflict with, result in a breach of, constitute a default
under, result in the acceleration of, create in any party the right to
accelerate, terminate, modify, or cancel, or require any notice under any
agreement, contract, lease, license, instrument, loan, or other arrangement to
which the Seller is a party or by which it is bound or to which any of its
assets is
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subject (or result in the imposition of any Security Interest upon any of its
assets). To the Knowledge of Seller, Seller does not need to give any notice
to, make any filing with, or obtain any authorization, consent, or approval of
any government or governmental agency in order for the Parties to consummate
the transactions contemplated by this Agreement (including the assignments and
assumptions referred to in Article 2, above).
(d) Broker's Fees. The Seller has no liability or obligation to
pay any fees or commissions to any broker, finder, or agent with respect to the
transactions contemplated by this Agreement.
(e) Title to Purchased Assets. The Seller has good and marketable
title to each of the Purchased Assets, free and clear of any Security Interest
or restriction on transfer. All of the tangible Purchased Assets are in good
working order and condition, ordinary wear and tear excepted. All of the
Purchased Assets are being used in conformity in all respects to all applicable
building, zoning, fire, health and other laws, ordinances or regulations and no
notice of any violation with respect thereto has been received by the Seller.
(f) Subsidiaries. The Seller does not have any Subsidiaries.
(g) Financial Statements and Financial Condition. Attached hereto
as Exhibit D-1 are the following financial statements (collectively the "Seller
Financial Statements"): (i) audited balance sheets and statements of income,
changes in stockholders' equity, and cash flow (the "Audited Financial
Statements") as of and for the fiscal years ended September 30, 1997, 1998 and,
1999 (the "Most Recent Seller Fiscal Year End") for the Seller; and (ii)
unaudited consolidated balance sheet and statement of income, and cash flow
(the "Most Recent Seller Financial Statements") as of and for the two months
ended February 29, 2000 (the "Most Recent Seller Fiscal Month End") for the
Seller. The Seller Financial Statements (including the notes thereto) have been
prepared in accordance with GAAP applied on a consistent basis throughout the
periods covered thereby, present fairly the financial condition of the Seller
as of such dates and the results of operations of the Seller for such periods,
and are consistent with the books and records of the Seller; provided, however,
that the Most Recent Seller Financial Statements are subject to normal year-end
adjustments (which will not be material individually or in the aggregate) and
lack footnotes and other presentation items. Each representation and warranty
made by the Seller to its auditors in connection with the preparation and
issuance of the Audited Financial Statements, as contained in the Seller's
Management Representation letter issued by the Seller to such auditors (a copy
of which is attached hereto as Exhibit D-2), are hereby made and given by the
Seller and the Shareholders to the Purchaser in connection with the Purchaser's
reliance upon the information contained in the Audited Financial Statements.
(h) Events Subsequent to Most Recent Fiscal Year End. Since the
Most Recent Seller Fiscal Year End, there has not been any material adverse
change in the business, financial condition, operations, or results of
operations of the Seller.
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(i) Undisclosed Liabilities. To the Knowledge of Seller, it has
no liabilities or obligations whatsoever (whether known or unknown, whether
asserted or unasserted, whether absolute or contingent, whether accrued or
unaccrued, whether liquidated or unliquidated, and whether due or to become
due) and there is no basis for any present or future action, suit, proceeding,
hearing, investigation, charge, complaint, claim, or demand against the Seller
giving rise to any such liability or obligation, except for (i) liabilities set
forth on the Most Recent Seller Balance Sheet, (ii) liabilities that have
arisen after the Most Recent Seller Fiscal Month End in the Ordinary Course of
Business (iii) routine liabilities, (iv) liabilities covered by insurance, and
(v) liabilities set forth on the Disclosure Schedule.
(j) Legal Compliance. To the Knowledge of Seller, it has complied
with all applicable laws (including, without limitation, all rules,
regulations, codes, plans, injunctions, judgments, orders, decrees, rulings,
and charges thereunder) of federal, state, local, and foreign governments (and
all agencies thereof), and no action, suit, proceeding, hearing, investigation,
charge, complaint, claim, demand, or notice has been filed or commenced against
the Seller alleging any failure so to comply.
(k) Tax Matters.
(i) There are no material Security Interests on any of
the Purchased Assets of the Seller that arose in connection with any failure
(or alleged failure) to pay any Income or Sales Tax.
(ii) There is no dispute or claim concerning any Income
Tax or Sales Tax liability of the Seller either (A) claimed or raised by any
authority in writing or (B) as to which any of the Shareholders of the Seller
has Knowledge based upon personal contact with any agent of such authority.
(iii) Section 3(k) of the Disclosure Schedule lists all
federal, state, local, and foreign Income Tax Returns and Sales Tax Returns
filed with respect to the Seller for all taxable periods ended on or after
December 31, 1997, indicates those Income Tax Returns and Sales Tax Returns
that have been audited, and indicates those Income Tax Returns and Sales Tax
Returns that currently are the subject of audit. The Seller has delivered to
the Purchaser correct and complete copies of all federal Income Tax Returns,
examination reports, and statements of deficiencies assessed against or agreed
to by the Seller since January 1, 1997. The Seller has not waived any statute
of limitations in respect of Income Taxes or Sales Taxes or agreed to any
extension of time with respect to an Income Tax or Sales Tax assessment or
deficiency.
(l) Systems. The Seller owns all right, title and interest in, to
and under the Systems, and at the Closing shall transfer, assign and convey the
right to use the System to the Purchaser. No person or entity other than the
Seller owns any proprietary interest or license in, to, under or with respect
to the Systems, other than as set forth on the Disclosure Schedule.
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(m) Intellectual Property.
(i) The Seller owns or has the right to use pursuant to
a license, sublicense, agreement, or permission all Intellectual Property
necessary or desirable for the operation of the Rollover Business as presently
conducted and as presently proposed to be conducted. Each such item of
Intellectual Property owned or used by the Seller immediately prior to the
Closing hereunder will be owned or available for use by the Purchaser on
identical terms and conditions immediately subsequent to the Closing hereunder.
The Seller has taken all necessary and desirable action to maintain and protect
each item of Intellectual Property that it owns or uses in connection with the
Rollover Business.
(ii) The Seller has not interfered with, infringed upon,
misappropriated, or otherwise come into conflict with any Intellectual Property
rights of third parties, and the Seller and the directors and officers (and
employees with responsibility for Intellectual Property matters) of the Seller
have never received any charge, complaint, claim, demand, or notice alleging
any such interference, infringement, misappropriation, or violation (including
any claim that the Seller must license or refrain from using any Intellectual
Property rights of any third party). To the Knowledge of the Seller and its
directors and officers (and employees with responsibility for Intellectual
Property matters), no third party has interfered with, infringed upon,
misappropriated, or otherwise come into conflict with any Intellectual Property
rights of the Seller.
(iii) Section 3(m)(iii) of the Disclosure Schedule
identifies each patent or registration that has been issued to the Seller with
respect to any of its Intellectual Property, identifies each pending patent
application or application for registration that the Company has made with
respect to any of its Intellectual Property, and identifies each license,
agreement, or other permission that the Seller has granted to any third party
with respect to any of its Intellectual Property (together with any
exceptions). The Seller has delivered to the Purchaser correct and complete
copies of all such patents, registrations, applications, licenses, agreements,
and permissions (as amended to date) and has made available to the Purchaser
correct and complete copies of all other written documentation evidencing
ownership and prosecution (if applicable) of each such item. Section 3(m)(iii)
of the Disclosure Schedule also identifies each trade name or unregistered
trademark used by the Seller in connection with the Rollover Business or any
other business. With respect to each item of Intellectual Property required to
be identified in Section 3(m)(iii) of the Disclosure Schedule:
(A) the Seller possesses all right, title, and
interest in and to the item, free and clear of any Security Interest, license,
or other restriction;
(B) the item is not subject to any outstanding
injunction, judgment, order, decree, ruling, or charge;
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(C) no action, suit, proceeding, hearing,
investigation, charge, complaint, claim, or demand is pending or is threatened
which challenges the legality, validity, enforceability, use, or ownership of
the item; and
(D) the Seller has never agreed to indemnify
any Person for or against any interference, infringement, misappropriation, or
other conflict with respect to the item.
(iv) Section 3(m)(iv) of the Disclosure Schedule
identifies each item of Intellectual Property that any third party owns and
that the Seller uses pursuant to license, sublicense, agreement, or permission.
The Seller has delivered to the Purchaser correct and complete copies of all
such licenses, sublicenses, agreements, and permissions (as amended to date).
With respect to each item of Intellectual Property required to be identified in
Section 3(m)(iv) of the Disclosure Schedule;
(A) the license, sublicense, agreement, or
permission covering the item is legal, valid, binding, enforceable, and in full
force and effect;
(B) the license, sublicense, agreement, or
permission will continue to be legal, valid, binding, enforceable, and in full
force and effect on identical terms following the consummation of the
transactions contemplated hereby (including the assignments and assumptions
referred to in Article 2, above);
(C) no party to the license, sublicense,
agreement, or permission is in breach or default, and no event has occurred
that with notice or lapse of time would constitute a breach or default or
permit termination, modification, or acceleration thereunder;
(D) no party to the license, sublicense,
agreement, or permission has repudiated any provision thereof;
(E) with respect to each sublicense, the
representations and warranties set forth in subsections (A) through (D) above
are true and correct with respect to the underlying license;
(F) the underlying item of Intellectual
Property is not subject to any outstanding injunction, judgment, order, decree,
ruling, or charge;
(G) no action, suit, proceeding, hearing,
investigation, charge, complaint, claim, or demand is pending or is threatened
that challenges the legality, validity, or enforceability of the underlying
item of Intellectual Property; and
(H) the Seller has not granted any sublicense
or similar right with respect to the license, sublicense, agreement, or
permission.
(v) To the Knowledge of any of the Shareholders, or any
director or officer (or employee with responsibility for Intellectual Property
matters) of the Seller, the Seller will not
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interfere with, infringe upon, misappropriate, or otherwise come into conflict
with, any Intellectual Property rights of third parties as a result of the
continued operation of the Rollover Business as presently conducted and as
presently proposed to be conducted.
(n) Contracts. Section 3(n) of the Disclosure Schedule lists the
following contracts and other agreements to which the Seller is a party
(hereinafter referred to as "Material Contracts"):
(i) any agreement (or group of related agreements) for
the lease of personal property to or from any Person providing for lease
payments in excess of $100,000 per annum;
(ii) any agreement for the purchase or sale of raw
materials, commodities, supplies, products, or other personal property in
excess of $25,000, or as to cattle contracts involving 500 head or more, or for
the furnishing or receipt of services in excess of $10,000 (except to the
extent that such agreement or contract is entered into solely in connection
with the Long-Term Business);
(iii) any agreement concerning a partnership or joint
venture;
(iv) any agreement (or group of related agreements) under
which it has created, incurred, assumed, or guaranteed any indebtedness for
borrowed money, or any capitalized lease obligation, in excess of $100,000 or
under which it has imposed a Security Interest on any of its assets, tangible
or intangible;
(v) any agreement concerning confidentiality or
noncompetition;
(vi) any profit sharing, stock option, stock purchase,
stock appreciation, deferred compensation, severance, or other plan or
arrangement for the benefit of its current or former directors, officers, and
employees;
(vii) any collective bargaining agreement;
(viii) any agreement for the employment of any individual
on a full-time, part-time, consulting, or other basis providing annual
compensation in excess of $100,000 or providing severance benefits;
(ix) any agreement under which it has advanced or loaned
any amount to any of its directors, officers, or employees outside the Ordinary
Course of Business;
(x) any agreement under which the consequences of a
default or termination could have a material adverse effect on the business,
financial condition, operations, or results of operations of Seller; or
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(xi) any other agreement the performance of which
involves consideration in excess of $100,000.
The Seller has delivered to the Purchaser a copy of each written agreement
listed in Section 3(n) of the Disclosure Schedule (as amended to date). With
respect to each such agreement: (A) the agreement is legal, valid, binding,
enforceable, and in full force and effect in all material respects; (B) no
party is in material breach or material default, and no event has occurred that
with notice or lapse of time would constitute a material breach or material
default, or permit termination, modification, or acceleration, under the
agreement; and (C) no party has repudiated any provision of the agreement.
(o) Powers of Attorney. There are no outstanding powers of
attorney executed on behalf of the Seller.
(p) Insurance. Section 3(p) of the Disclosure Schedule sets forth
the following information with respect to each insurance policy (including
policies providing property, casualty, liability, and workers' compensation
coverage and bond and surety arrangements) with respect to which the Seller is
a party, a named insured, or otherwise the beneficiary of coverage:
(i) the name, address, and telephone number of the
agent;
(ii) the name of the insurer, the name of the
policyholder, and the name of each covered insured; and
(iii) the policy number and the period of coverage;
With respect to each such insurance policy: (A) the policy is legal, valid,
binding, enforceable, and in full force and effect in all material respects;
(B) neither the Seller nor, to the Knowledge of Seller, any other party to the
policy is in breach or default (including with respect to the payment of
premiums or the giving of notices), and, to the Knowledge of Seller, no event
has occurred which, with notice or the lapse of time, would constitute such a
breach or default, or permit termination, modification, or acceleration, under
the policy; and (C) to the Knowledge of Seller, no party to the policy has
repudiated any provision thereof. Section 3(p) of the Disclosure Schedule
describes any self-insurance arrangements affecting the Seller.
(q) Litigation. Section 3(q) of the Disclosure Schedule sets
forth each instance in which the Seller (i) is subject to any outstanding
injunction, judgment, order, decree, ruling, or charge, or (ii) is a party or,
to the Knowledge of any of the Shareholders of the Seller, is threatened to be
made a party to any action, suit, proceeding, hearing, or investigation of, in,
or before any court or quasi-judicial or administrative agency of any federal,
state, local, or foreign jurisdiction or before any arbitrator.
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(r) Employees. To the Knowledge of any of the Shareholders of the
Seller, no executive, key employee, or significant group of employees plans to
terminate employment with the Seller during the next 12 months. The Seller is
not a party to or bound by any collective bargaining agreement, nor has it
experienced any strike or material grievance, claim of unfair labor practices,
or other collective bargaining dispute since the date it was incorporated. The
Seller has not committed any unfair labor practice. None of the Shareholders
has any Knowledge of any organizational effort presently being made or
threatened by or on behalf of any labor union with respect to employees of the
Seller.
(s) Employee Benefits. Neither the Seller nor any ERISA Affiliate
maintains, has ever maintained, contributes, has ever contributed, has the
obligation to contribute, or has ever had the obligation to contribute to any
Employee Benefit Plan.
(t) Guaranties. The Seller is not a guarantor nor otherwise
responsible for any liability or obligation (including indebtedness) of any
other Person.
(u) Environmental, Health, and Safety Matters.
(i) Each of the Seller and its respective predecessors
and Affiliates has complied and is in compliance, in each case in all material
respects, with all Environmental, Health, and Safety Requirements.
(ii) Without limiting the generality of the foregoing,
each of the Seller and its respective Affiliates, has obtained, has complied,
and is in compliance with, in each case in all material respects, all permits,
licenses and other authorizations that are required pursuant to Environmental,
Health, and Safety Requirements for the occupation of its facilities and the
operation of the Rollover Business; a list of all such permits, licenses and
other authorizations is set forth in Section 3(u)(ii) of the Disclosure
Schedule.
(iii) Seller has not received any written or oral notice,
report or other information regarding any actual or alleged violation of
Environmental, Health, and Safety Requirements, or any liabilities or potential
liabilities (whether accrued, absolute, contingent, unliquidated or otherwise),
including any investigatory, remedial or corrective obligations, relating to
any of them or its facilities arising under Environmental, Health, and Safety
Requirements.
(iv) Except as set forth in Section 3(u)(iv) of the
Disclosure Schedule none of the following exists at any property or facility
owned or operated by the Seller: (1) underground storage tanks, (2)
asbestos-containing material in any friable and damaged form or condition, (3)
materials or equipment containing polychlorinated biphenyls, or (4) landfills,
surface impoundments, or disposal areas.
(v) Seller has not treated, stored, disposed of,
arranged for or permitted the disposal of, transported, handled, or released
any substance, including without limitation any
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hazardous substance, or owned or operated any property or facility (and no such
property or facility is contaminated by any such substance) in a manner that
has given or would give rise to liabilities, including any liability for
response costs, corrective action costs, personal injury, property damage,
natural resources damages or attorney fees, pursuant to the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as amended
("CERCLA") or the Solid Waste Disposal Act, as amended ("SWDA") or any other
Environmental, Health, and Safety Requirements.
(vi) Neither this Agreement nor the consummation of the
transaction that is the subject of this Agreement will result in any
obligations for site investigation or cleanup, or notification to or consent of
government agencies or third parties, pursuant to any of the so-called
"transaction-triggered" or "responsible property transfer" Environmental,
Health, and Safety Requirements.
(v) Certain Business Relationships With the Seller. None of the
Shareholders has been involved in any material business arrangement or
relationship with the Seller within the past 12 months, and none of the
Shareholders owns any material asset, tangible or intangible, that is used in
the Rollover Business.
(w) Experience. The Seller and the Shareholders have such
Knowledge and experience in financing and business matters that they are
capable of evaluating the merits and risks of this investment and of making an
informed decision with respect to the purchase of the Sale Shares.
(x) Investment. The Seller is acquiring the Sale Shares for
investment for its own account and not with the view to, or for resale in
connection with, any distribution thereof. The Seller understands that at the
time of the offer and issuance thereof to it the Sale Shares have not been
registered under the Securities Act of 1933, as amended (the "Securities Act"),
by reason of a specified exemption from the registration provisions of the
Securities Act and state securities laws which depends upon, among other
things, the bona fide nature of its investment intent as expressed herein. The
Seller (i) has had an opportunity to ask questions of, and receive answers
from, appropriate officers of the Purchaser concerning the Purchaser and the
terms and conditions of the issuance of the Sale Shares; (ii) specifically
acknowledges receipt of a copy of both the Purchaser's registration statement
on Form S-1/A, filed on February 3, 2000, and annual report on Form 10-K for
the year ended December 31, 1999 (the "Form 10-K"); and (iii) has had the
opportunity to obtain any additional information which the Purchaser possesses
or can acquire without unreasonable effort or expense that is necessary to
verify the accuracy of the information contained in the documents described in
Section (x)(ii).
(y) Rule 144. The Seller acknowledges that the Sale Shares must
be held indefinitely unless they are subsequently registered under the
Securities Act or an exemption from such registration is available. It has been
advised or is aware of the provisions of Rule 144 promulgated under the
Securities Act, which permit limited resale of securities purchased in a
private placement subject to the satisfaction of certain conditions, and
understands that such Rule may not become available for resale of the Sale
Shares.
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(z) Disclosure. No covenant, representation or warranty of the Seller
or any Shareholder contained in this Agreement, the Disclosure Schedule, or any
other documents or instrument delivered or to be delivered by or on behalf of
the Seller or Shareholders to the Purchaser or any of the Purchaser's
representatives, including auditors or counsel, in connection with this
Agreement or any of the transactions contemplated hereby, contains or will
contain any untrue material statement or a material fact or omits any material
fact necessary to make the statements contained herein or therein not false or
misleading.
ARTICLE 4 - REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
The Purchaser warrants and represents to the Seller that each of the
statements contained in this Article 4 is true and correct, except as set forth
in the Disclosure Schedule. The Disclosure Schedule will be arranged in
sections corresponding to the lettered and numbered sections contained in this
Article 4. The Seller's obligation to close under this Agreement is conditioned
and contingent upon the representations and warranties contained in this
Article 4 being true and correct as of the Closing Date.
(a) Organization of the Purchaser. The Purchaser is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Delaware; on the Closing Date; Purchaser will have full power and
authority to carry on and conduct the Rollover Business and to own, use,
possess and purchase the Purchased Assets.
(b) Authorization of Transaction. The Purchaser has full power
and authority (including full corporate power and authority) to execute and
deliver this Agreement and to perform its obligations hereunder. Without
limiting the generality of the foregoing, the execution and delivery of this
Agreement to the Seller and the carrying out of the provisions hereof, have
been duly authorized by all necessary action of the Purchaser and this
Agreement constitutes a valid and binding obligation of Purchaser, enforceable
against Purchaser in accordance with its terms and conditions, subject to
applicable bankruptcy, insolvency and similar laws of general application
relating to, or affecting, creditors' rights and to general equitable
principles.
(c) Noncontravention. Neither the execution and the delivery of
this Agreement, nor the consummation of the transactions contemplated hereby
(including the assignments and assumptions referred to in Article 2 above),
will (i) violate any constitution, statute, regulation, rule, injunction,
judgment, order, decree, ruling, charge, or other restriction of any
government, governmental agency, or court to which the Purchaser is subject or
any provision of its charter or bylaws, or (ii) conflict with, result in a
breach of, constitute a default under, result in the acceleration of, create in
any party the right to accelerate, terminate, modify, or cancel, or require any
notice under any agreement, contract, lease, license, instrument, or other
arrangement to which the Purchaser is a party or by which it is bound or to
which any of its assets is subject. To the Knowledge of Purchaser, Purchaser
does not need to give any notice to, make any filing with, or obtain any
authorization, consent, or approval of any government or governmental agency in
order for the
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Parties to consummate the transactions contemplated by this Agreement
(including the assignments and assumptions referred to in Article 2, above);
PROVIDED, that certain disclosures filings may need to be made with the
Securities and Exchange Commission (e.g., Form D and Form 8-K).
(d) Broker's Fees. The Purchaser has no liability or obligation to pay
any fees or commissions to any broker, finder, or agent with respect to the
transactions contemplated by this Agreement.
(e) Events Subsequent to the Filing of the Form 10-K. Since the filing
of the Form 10-K, there has not been any material adverse change in the
business, financial condition, operations, or results of operations of the
Purchaser.
(f) Undisclosed Liabilities. To the Knowledge of Purchaser, it has no
liabilities or obligations whatsoever (whether known or unknown, whether
asserted or unasserted, whether absolute or contingent, whether accrued or
unaccrued, whether liquidated or unliquidated, and whether due or to become
due) and there is no basis for any present or future action, suit, proceeding,
hearing, investigation, charge, complaint, claim, or demand against the
Purchaser giving rise to any such liability or obligation, except for (i)
liabilities disclosed in the Form 10-K, (ii) liabilities that have arisen after
the filing of the Form 10-K in the Ordinary Course of Business (iii) routine
liabilities, (iv) and liabilities covered by insurance.
(g) Legal Compliance. To the Knowledge of Purchaser, it has complied
with all applicable laws (including, without limitation, all rules,
regulations, codes, plans, injunctions, judgments, orders, decrees, rulings,
and charges thereunder) of federal, state, local, and foreign governments (and
all agencies thereof), and no action, suit, proceeding, hearing, investigation,
charge, complaint, claim, demand, or notice has been filed or commenced against
the Purchaser alleging any failure so to comply.
(h) Tax Matters.
(i) The Purchaser has filed all Income Tax Returns and Sales Tax
Returns that it has been required to file, except where the failure to do so
would not have a materially adverse effect on the transactions contemplated
herein. All such Income Tax Returns and Sales Tax Returns were correct and
complete in all material respects. All Income and Sales Taxes owed by the
Purchaser (as shown on its Income Tax Returns or Sales Tax Returns) have been
paid. No claim has ever been received by Seller from an authority in a
jurisdiction where the Purchaser does not file an Income Tax Return or Sales
Tax Return that it is or may be subject to taxation by that jurisdiction. There
are no material Security Interests on any of the assets of the Purchaser that
arose in connection with any failure (or alleged failure) to pay any Income or
Sales Tax.
(ii) The Purchaser has withheld and paid all Income and Sales
Taxes required to have been withheld and paid in connection with amounts paid
or owing to any employee, independent contractor, creditor, stockholder, or
other third party.
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(iii) There is no dispute or claim concerning any Income Tax or
Sales Tax liability of the Purchaser, which claim, if successful, would have a
material adverse effect on the transactions contemplated herein, either (A)
claimed or raised by any authority in writing or (B) as to which any of
Purchaser has Knowledge based upon personal contact with any agent of such
authority.
(iv) The Purchaser has not waived any statute of limitations in
respect of Income Taxes or Sales Taxes or agreed to any extension of time with
respect to an Income Tax or Sales Tax assessment or deficiency.
(i) Litigation. The Purchaser (i) is not subject to any outstanding
injunction, judgment, order, decree, ruling, or charge, or (ii) is not a party
or, to the Knowledge of Purchaser, is not threatened to be made a party, to any
action, suit, proceeding, hearing, or investigation of, in, or before any court
or quasi-judicial or administrative agency of any federal, state, local, or
foreign jurisdiction or before any arbitrator, except: (A) as disclosed in the
Form 10-K, (B) for litigation that has arisen after the filing of the Form 10-K
in the Ordinary Course of Business (C) routine litigation, and (D) litigation
that will not have a materially adverse effect on the transactions contemplated
herein in the event such litigation is not disclosed by the Purchaser
hereunder.
(j) Environmental, Health, and Safety Matters.
(i) Except as set forth in the Form 10-K, each of the Purchaser
and its respective predecessors and Affiliates has complied and is in
compliance, in each case in all material respects, with all Environmental,
Health, and Safety Requirements.
(ii) Without limiting the generality of the foregoing, Purchaser
and its respective Affiliates, has obtained, has complied, and is in compliance
with, in each case in all material respects, all permits, licenses and other
authorizations that are required pursuant to Environmental, Health, and Safety
Requirements for the occupation of its facilities and the operation of the
Rollover Business.
(iii) Purchaser has not received any written or oral notice,
report or other information regarding any actual or alleged violation of
Environmental, Health, and Safety Requirements, or any liabilities or potential
liabilities (whether accrued, absolute, contingent, unliquidated or otherwise),
including any investigatory, remedial or corrective obligations, relating to
any of them or its facilities arising under Environmental, Health, and Safety
Requirements.
(iv) Except as set forth in the Form 10-K, to the Knowledge of
Purchaser none of the following exists at any property or facility owned or
operated by the Purchaser: (1) underground storage tanks, (2)
asbestos-containing material in any friable and damaged form or condition, (3)
materials or equipment containing polychlorinated biphenyls, or (4) landfills,
surface impoundments, or disposal areas.
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(v) Purchaser has not treated, stored, disposed of, arranged for
or permitted the disposal of, transported, handled, or released any substance,
including without limitation any hazardous substance, or owned or operated any
property or facility (and no such property or facility is contaminated by any
such substance) in a manner that has given or would give rise to liabilities,
including any liability for response costs, corrective action costs, personal
injury, property damage, natural resources damages or attorney fees, pursuant
to the Comprehensive Environmental Response, Compensation and Liability Act of
1980, as amended ("CERCLA") or the Solid Waste Disposal Act, as amended
("SWDA") or any other Environmental, Health, and Safety Requirements.
(vi) Purchaser does not have any obligations for site
investigation or cleanup, or notification to or consent of government agencies
or third parties, pursuant to any of the so-called "transaction-triggered" or
"responsible property transfer" Environmental, Health, and Safety Requirements.
ARTICLE 5 - CONDITIONS TO OBLIGATION TO CLOSE
(a) Conditions to Obligation of the Purchaser. The obligation of the
Purchaser to consummate the transactions to be performed by it in connection
with the Closing is subject to satisfaction of the following conditions:
(i) the Seller shall have procured all of the material third party
consents necessary in order to consummate the transactions described herein;
(ii) no action, suit, or proceeding shall be pending before any
court or quasi-judicial or administrative agency of any federal, state, local,
or foreign jurisdiction or before any arbitrator wherein an unfavorable
injunction, judgment, order, decree, ruling, or charge would (A) prevent
consummation of any of the transactions contemplated by this Agreement, (B)
cause the transactions contemplated by this Agreement to be rescinded following
consummation, or (have a material adverse effect on the right of the Purchaser
to own the Purchased Assets and operate the Rollover Business;
(iii) the Purchaser shall have received all material
authorizations, consents, and approvals of governments and governmental
agencies necessary in order to consummate the transactions described herein;
(iv) an opinion of legal counsel for the Seller and the
Shareholders in substantially the form set forth in Exhibit G attached hereto;
(v) all actions to be taken by the Seller and the Shareholder in
connection with consummation of the transactions contemplated hereby and all
certificates, opinions, instruments, and other documents required to effect the
transactions contemplated hereby will be reasonably satisfactory in form and
substance to the Purchaser; and
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(vi) the Purchaser, acting in good faith, shall be reasonably
satisfied with the results of its continuing business, legal, environmental,
and accounting due diligence, including, without limitation, its review or
evaluation of any matter addressed in any section of the Disclosure Schedule
regarding the Company.
The Purchaser may waive any condition specified in this Section 5(a) if it
executes a writing so stating at or prior to the Closing.
(b) Conditions to Obligation of the Seller. The obligation of the
Seller to consummate the transactions to be performed by it in connection with
the Closing is subject to satisfaction of the following conditions:
(i) the representations and warranties set forth in Article 3
above shall be true and correct in all material respects at and as of the
Closing Date;
(ii) the Purchaser shall have performed and complied with all of
its covenants hereunder in all material respects through the Closing;
(iii) the Purchaser shall have procured all of the material third
party consents necessary, if any, in order to consummate the transactions
described herein;
(iv) no action, suit, or proceeding shall be pending before any
court or quasi-judicial or administrative agency of any federal, state, local,
or foreign jurisdiction or before any arbitrator wherein an unfavorable
injunction, judgment, order, decree, ruling, or charge would (A) prevent
consummation of any of the transactions contemplated by this Agreement, (B)
cause the transactions contemplated by this Agreement to be rescinded following
consummation, or (C) have a material adverse effect on the right of the
Purchaser to own the Purchased Assets and operate the Rollover Business.
(v) the Seller shall have received all material authorizations,
consents, and approvals of governments and governmental agencies necessary, if
any, in order to consummate the transactions described herein;
(vi) an opinion of legal counsel for the Purchasers in
substantially the form set forth in Exhibit G attached hereto; and
(vii) all actions to be taken by the Purchaser in connection with
consummation of the transactions contemplated hereby and all certificates,
opinions, instruments, and other documents required to effect the transactions
contemplated hereby will be reasonably satisfactory in form and substance to
the Seller.
The Seller and the Shareholders may waive any condition specified in this
Section 5(b) if it executes a writing so stating at or prior to the Closing.
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ARTICLE 6 - TRADE SECRETS; CONFIDENTIAL AND PROPRIETARY INFORMATION COVENANTS;
NONCOMPETITION; NONSOLICITATION; AND NONDISCLOSURE
(a) Trade Secrets, Confidential and Proprietary Information Covenants.
(i) Seller and Shareholders expressly acknowledge that the
Rollover Business involves trade secrets, confidential and proprietary
information and personal relationships with customers, and that the success of
the Rollover Business is due in large part to the exclusive retention of such
trade secrets, confidential and proprietary information and the undisturbed
continuation of such personal relationships with customers.
(ii) Seller and Shareholders agree and acknowledge that all
information pertaining to the Rollover Business's personnel, finances,
facilities, and customers constitute trade secrets, and valuable confidential
and proprietary information that the Seller and Shareholders will sell to the
Purchaser and allow Purchaser to use such information, pursuant to this
Agreement and in which, thereafter, the Purchaser will have a proprietary
interest (collectively the "Confidential Information"). The Seller and
Shareholders recognize that the Confidential Information is not readily
available to the public and is information from which the Purchaser will derive
an independent economic value from not being known and that the information is
subject to efforts that are reasonable to maintain its secrecy. The failure to
mark any documents, reports, data or information "confidential" shall not
affect the confidential nature of the material.
(iii) The Seller and Shareholders expressly covenant and agree
that neither the Seller nor the Shareholders shall at any time, directly or
indirectly, reveal, divulge, disclose, disseminate, fax, transmit, publish or
communicate to any person, firm, or corporation, or other entity, other than to
employees of the Purchaser, or copy or utilize, for their own benefit (except
solely as contemplated under the Supply and Support Agreement) or for the
benefit of others, any Confidential Information of any kind, nature, or
description concerning any matters affecting or relating to the Rollover
Business or customers of the Rollover Business without the express prior
written consent of the Purchaser, nor will any of the Seller or the
Shareholders make use of such Confidential Information for any of such Parties'
personal benefit at any time other than in connection with such Parties
carrying out their responsibilities under this Agreement (or under the Supply
and Support Agreement). The prohibition provided in this Section 6(a)(iii) is
effective during the period beginning on the Closing Date and shall continue
indefinitely.
(iv) All Confidential Information shall become property of the
Purchaser on and after the Closing Date. Not later than the Closing Date, the
Seller and the Shareholders shall surrender to the Purchaser all documents,
records, computer programs or disks, and similar repositories of or containing
Confidential Information, including, but not limited to, all lists (including,
without limitation, customer lists), charts, schedules, reports, financial
statements, books,
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records and tangible evidence of any type which relate in any way to the
Rollover Business, and all copies thereof, to the Purchaser.
(b) Noncompetition. Each of the Seller and Shareholders covenant and
agree that from the date of Closing until that date which is five (5) years
therefrom (the "Covenant Period") they will not, directly or indirectly, engage
or otherwise be involved in, or own, or otherwise receive any monetary benefits
from or in connection with the Rollover Business, or any other transaction,
business or activity in the cattle or livestock industry other than the
Long-Term Business, with all such activities (other than the Long-Term
Business) collectively referred to herein as the "Prohibited Business"), or
accept employment with, or otherwise agree to provide any services to any
Prohibited Business anywhere within the United States or on or through the
World Wide Web portion of the Internet, and will not solicit or attempt to
solicit, divert, or obtain any Prohibited Business from any of the Seller's or
the Purchaser's customers existing as of the Closing, without the express
written permission of the Purchaser, which permission may be given or withheld
in Purchaser's sole discretion.
(c) Nonsolicitation. Each of the Seller and Shareholders covenant and
agree that during the Covenant Period, they will not, without the express prior
written permission of the Purchaser, either directly or indirectly, on their
own behalf or in the service of others, solicit, divert, service, accept or
hire or attempt to solicit, divert, service, accept, entice or hire to any
competing business or induce to terminate employment with the Purchaser any
person that was employed by the Seller immediately before the Closing Date,
whether or not such employee is a full-time employee or a temporary employee of
the Purchaser and whether or not such employment is pursuant to a written
agreement and whether or not such employment is for a determined period or at
will.
(d) Nondisclosure. The Seller and Shareholders covenant and agree that
they shall not disclose or disseminate any of the business methods and
procedures of the Rollover Business, nor the list of any of the Rollover
Business's customers, directly or indirectly, in any manner whatsoever, to any
person, firm, corporation, association or other entity for any reason or
purpose whatsoever.
(e) Provisions Applicable to Above Covenants and Agreements. The
following apply to the covenants and agreements contained above in Sections
6(a) through 6(d):
(i) If any Seller or Shareholder seeks employment with any
Prohibited Business, such Seller and/or Shareholder will notify such Prohibited
Business of the terms of this Agreement and specifically the covenants
contained in this Article 6, and each Seller further agrees that the Purchaser
may notify the Prohibited Business by whom such Seller may become employed of
the existence of this Agreement.
(ii) The Seller and the Shareholders acknowledge and agree that
the covenants and agreements contained in this Article 6 are of the essence of
this Agreement; that each of such covenants is reasonable and necessary to
protect and preserve the Confidential Information and the
23
<PAGE> 25
legitimate business interests of the Purchaser; that irreparable harm, loss and
damage, which cannot be remedied in damages in an action at law, will be
suffered by the Purchaser should any Seller or Shareholder breach any of the
covenants and agreements contained in this Article 6; that a breach of any such
covenant and agreement may constitute an infringement of the Purchaser's rights
in and to the Rollover Business's trade secrets; that each of such covenants or
agreements is separate, distinct and severable not only from the other of such
covenants and agreements but also from the other and remaining provisions of
this Agreement; that the unenforceability of any other such covenant or
agreement shall not affect the validity or enforceability of any other
provision or provisions of this Agreement; and that, in addition to other
rights and remedies available to it as a matter of law or equity, the Purchaser
shall be entitled to an immediate temporary injunction and also to a permanent
injunction to prevent a breach or contemplated breach by any of the Seller or
the Shareholders of any of such covenants or agreements.
(iii) Seller and Shareholders have each carefully read and
considered the terms and provisions of this Article 6 and, having done so,
agree that the restrictions set forth herein are fair and reasonable and are
reasonably necessary for the protection of the Confidential Information and the
legitimate business interests of the Purchaser, including the Purchaser's
goodwill and substantial relationships with clients and customers. It is the
belief of the Parties that the best protection that can be given to the
Purchaser that does not infringe on the rights of any of the Seller and
Shareholders to conduct the Long Term Business and any unrelated business, is
to provide for restrictions described above. In the event any of said
restrictions are to be held unenforceable as over broad, overlong, not
reasonably necessary to protect the legitimate business interests of the
Purchaser, or for any other reason, the Parties agree that the court shall
modify such restriction and grant the relief necessary to protect such
interests. As so modified, such restriction shall be as fully enforceable as if
it had been set forth herein by the Parties. It is the intent of the Parties
that the court in so establishing substitute restrictions, recognize that the
Parties hereto desire that the aforedescribed restrictions be imposed and
maintained to the maximum lawful extent.
(iv) No Seller or Shareholder shall assert as a defense that the
Purchaser has no (or insufficient) legitimate business interests to support the
covenants and agreements contained in this Article 6, and no Seller or
Shareholder shall assert as a defense that the Purchaser has an adequate remedy
at law or that the harm to the Purchaser is not irreparable.
(v) The Seller and Shareholders agree the covenants and agreements
shall be fully enforceable against them. The covenants and agreements set out
in this Article 6 shall survive either or both of the Closing and/or the
termination of this Agreement.
ARTICLE 7 - SELLER'S CURRENT EMPLOYEES
(a) Employment Agreements. On or before the Closing Date, and as a
condition to the Closing, each of the Shareholders shall enter into the Supply
and Support Agreement and an Employment Agreement with Purchaser (or
Purchaser's Affiliate). Each of the Shareholders hereby
24
<PAGE> 26
expressly acknowledges to Purchaser that: (i) his execution and delivery of,
and faithful performance under, such agreements are a material and substantial
inducement and primary condition for the Purchaser's execution and delivery of
this Agreement, (ii) he hereby represents and warrants to the Purchaser that he
currently intends to, and he shall, faithfully and diligently perform his
duties and obligations under the Employment Agreement and the Supply and
Support Agreement pursuant to and in accordance with the terms and conditions
thereof, and (iii) but for the Purchaser's reasonable expectation of the
occurrence of such performance based upon his express representation contained
in subsection 7(a)(ii) above, the Purchaser would not have entered into this
Agreement or otherwise agreed to Close the transactions contemplated herein and
hereunder.
(b) Other Employment Matters. Seller acknowledges that the Purchaser
is not required under the terms of this Agreement to offer employment to any
employees or independent contractors currently working for the Seller other
than Gibson and those employees designated on the Disclosure Schedule. Section
7 to the Disclosure Schedule attached hereto discloses to the Purchaser the
complete and accurate list of the name, and any vacation or holiday pay, and
any other compensation arrangements or fringe benefits of each current employee
of the Seller. Seller agrees to pay all accrued and unpaid wages, bonuses,
vacation or leave time, sick pay, holiday pay, and all federal and state FICA,
withholding taxes, unemployment taxes and workers' compensation insurance
premiums with respect to the Seller's employees through the Closing Date,
including any worker's compensation, unemployment compensation, or other
premiums that occur or are charged to the Seller after the Closing Date for
periods before the Closing Date.
It is understood by Purchaser that, after the Closing, and so long
as Gibson is employed by the Purchaser as the manager of the Rollover Business
pursuant to the Employment Agreement, he shall have the authority, after
consulting with the Purchaser's President or other designated executive officer
(with regard to compliance with any and all applicable labor and employment
laws and with the Purchaser's existing employment policies and procedures) to
hire and fire employees in the ordinary course of business. Purchaser agrees to
be responsible for the payment of all federal and state FICA, withholding
taxes, unemployment taxes and worker's compensation insurance premiums with
respect to employees hired by the Purchaser, if any, after the date of hire.
The Purchaser will not adopt or assume at the Closing any of the Employee
Benefit Plans that the Seller maintains or any trust, insurance contract,
annuity contract, or other funding arrangement that the Seller has established
with respect thereto.
Seller shall notify all employees in writing of their rights with
regard to any group health plan coverage, shall timely collect and remit all
premiums to the appropriate party, and perform all other actions mandated by
Title X of the Consolidated Omnibus Budget Reconciliation Act of 1985 ("COBRA")
and that are required to be given, collected, or otherwise performed as a
result of the Closing.
25
<PAGE> 27
ARTICLE 8 - SURVIVAL AND INDEMNIFICATION
(a) Survival. All representations, covenants, warranties,
indemnifications and obligations contained in this Agreement or in any
certificate, document or statement delivered pursuant to this Agreement shall
survive the Closing for a period of two (2) years after the Closing (or, to the
extent a longer period of time is expressly provided for herein or therein
(e.g., the duration of the restrictive covenants), for such longer period as
herein or therein so provided).
(b) Indemnification. Each of Seller and the Shareholders hereby agrees
to indemnify, defend and hold harmless the Purchaser or the Purchaser's
successors or assigns for all losses, damages, liabilities and claims, and all
fees, costs and expenses of any kind related to, including and without
limitation, any and all attorneys' fees arising out of, based upon or resulting
from any individual Seller or Shareholder's breach of, or failure to perform,
the covenants, obligations, representations and warranties contained or made by
Seller or Shareholders in this Agreement. The indemnification provisions of
this Agreement shall not be deemed to preclude or otherwise limit in any way
the exercise of any other rights or pursuit of any other remedies for the
breach of this Agreement or with respect to any misrepresentation or any breach
of warranty by Seller or any Shareholder. The Purchaser shall have the right to
set off any monies owed by the Purchaser to the Seller against any and all
claims the Purchaser may have against any Seller or Shareholder or monies owed
by the Purchaser to Seller or any Shareholder.
(c) Purchaser Indemnification. Purchaser hereby agrees to indemnify,
defend and hold harmless the Seller and each Shareholder and their respective
successors, assigns or heirs for all losses, damages, liabilities and claims,
and all fees, costs and expenses of any kind related to, including and without
limitation, any and all attorneys' fees arising out of, based upon or resulting
from a breach of, or failure to perform, the covenants, obligations,
representations and warranties contained or made by purchaser pursuant to this
Agreement. The indemnification provisions of this Agreement shall not be deemed
to preclude or otherwise limit in any way the exercise of any other rights or
pursuit of any other remedies for the breach of this Agreement or with respect
to any misrepresentation or any breach of warranty by Purchaser.
(d) Limitation. Notwithstanding the foregoing indemnification
provisions of this Article 8, the indemnification obligations of the parties
shall be subject to the following limitations:
(i) No indemnification shall be made pursuant to this Article 8
until the total indemnifiable damages for which the indemnifying party would be
liable exceeds $250,000, in which event the indemnifying party shall indemnify
to the full amount of such damages subject to the other provisions of this
Article 8.
(ii) No indemnification shall be made pursuant to this Article 8
with respect to any single claim unless and only to the extent such claim
exceeds $25,000.
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<PAGE> 28
(iii) No indemnification shall be made pursuant to this Article 8
to the extent indemnifiable damages to be paid by the indemnifying party exceed
the total value of the stock portion of the purchase price.
(iv) An indemnifying party shall be obligated to indemnify an
indemnified party pursuant to this Article 8 only for those indemnifiable
damages as to which the indemnified party has given the indemnifying party
written notice thereof within two (2) years after the Closing Date.
(v) In the event insurance coverage maintained by any of the
indemnifying parties prior to closing is available with respect to any claim,
the indemnified party shall first seek recovery of indemnifiable damages from
such insurance coverage before pursuing recovery from the indemnifying parties.
To the extent recovery is obtained from insurance coverage, no duplicate
recovery shall be permitted.
(vi) The indemnifying party shall be afforded a reasonable
opportunity to collect, settle or mitigate any claim following receipt of
notice of the claim from the indemnified party, provided that the indemnifying
party acknowledges that the claim is subject to indemnification hereunder.
ARTICLE 9 - TAX MATTERS
The following provisions shall govern the allocation of responsibility
as between the Purchaser and the Seller for certain tax matters following the
Closing Date:
(a) Each of Seller and Shareholders shall cooperate fully, as and to
the extent requested by the Purchaser, in connection with the filing of tax
returns pursuant to this Article 9 and any audit, litigation or other
proceeding with respect to taxes. Such cooperation shall include the retention
and (upon the other party's request) the provision of records and information
which are relevant to any such audit, litigation or other proceeding and making
employees available on a mutually convenient basis to provide additional
information and explanation of any material provided hereunder. Seller agrees
(i) to retain all books and records with respect to tax matters pertinent to
the Seller relating to any taxable period beginning before the Closing Date
until the expiration of the statute of limitations (and, to the extent notified
by the Purchaser, any extensions thereof) of the respective taxable periods,
and to abide by all record retention agreements entered into with any taxing
authority, and (ii) to give the Purchaser reasonable written notice prior to
transferring, destroying or discarding any such books and records and, if the
Purchaser so requests, the Seller shall allow the other party to take
possession of such books and records.
(b) Seller further agrees, upon request, to use its best efforts to
obtain any certificate or other document from any governmental authority or any
other person as may be necessary to mitigate, reduce or eliminate any tax that
could be imposed (including, but not limited to, with respect to the
transactions contemplated hereby).
27
<PAGE> 29
ARTICLE 10 - TERMINATION OF AGREEMENT
Certain of the Parties may terminate this Agreement as provided below:
(a) the Purchaser and the Seller may terminate this Agreement by mutual
written consent at any time prior to the Closing;
(b) the Purchaser may terminate this Agreement by giving written
notice to the Seller at any time prior to the Closing (A) in the event any
Seller has breached any material representation, warranty, or covenant
contained in this Agreement in any material respect, the Purchaser has notified
the Seller of the breach, and the breach has continued without cure for a
period of ten (10) days after the notice of breach or (B) if the Closing shall
not have occurred within sixty (60) days of the Contract Date, by reason of the
failure of any condition precedent under Section 5(a) hereof (unless the
failure results primarily from the Purchaser itself breaching any
representation, warranty, or covenant contained in this Agreement); and
(c) the Seller may terminate this Agreement by giving written notice
to the Purchaser at any time prior to the Closing in the event the Purchaser
has breached any material representation, warranty, or covenant contained in
this Agreement in any material respect, the seller has notified the Purchaser
of the breach, and the breach has continued without cure for a period of ten
(10) days after the notice of breach.
ARTICLE 11 - MISCELLANEOUS
(a) Books and Records; Inspection; Reporting. The Seller shall in good
faith use its best efforts to keep and maintain, or cause to be maintained,
complete and accurate books, records and accounts of their individual and
combined total cattle inventory that is listed on the Purchaser's online cattle
marketplace or otherwise available for sale (on a cumulative basis) during any
rolling ninety (90) day period commencing on or after the Closing Date and
ending on or before the date that is one (1) year after the Closing Date. Such
books, records and accounts shall be kept at all times at the principal offices
of the Seller. The Purchaser and its duly authorized representatives shall have
the right to examine such books, records and accounts at any and all reasonable
times and to make copies or extracts therefrom, at Purchaser's expense. The
Seller shall provide to the Purchaser bi-weekly statements beginning on the
date that is two weeks from the Closing Date reflecting such information as is
necessary to allow the Purchaser to determine whether the Seller has satisfied
the condition described in Section 2(b)(iii)(A) and such other information as
is requested by the Purchaser from time to time.
(b) Press Releases and Public Announcements. No Party shall issue any
press release or make any public announcement relating to the subject matter of
this Agreement prior to the Closing without the prior written approval of the
other Party, and both the content and the timing
28
<PAGE> 30
of such release(s) shall be subject to joint approval of the Parties; provided,
however, that any Party may make any public disclosure it believes in good
faith is required by applicable law or any listing or trading agreement
concerning its publicly-traded securities (in which case the disclosing Party
will use its reasonable best efforts to advise the other Party prior to making
the disclosure).
(c) No Third-Party Beneficiaries. This Agreement shall not confer any
rights or remedies upon any Person other than the Parties and their respective
successors and permitted assigns.
(d) Entire Agreement. This Agreement (including the agreements
referred to herein) constitutes the entire agreement between the Parties and
supersedes any prior understandings, agreements, or representations by or
between the Parties, written or oral, to the extent they related in any way to
the subject matter hereof.
(e) Succession and Assignment. This Agreement shall be binding upon
and inure to the benefit of the Parties named herein and their respective
successors and permitted assigns. No Party may assign either this Agreement or
any of its rights, interests, or obligations hereunder without the prior
written approval of the other Party; provided, however, that the Purchaser may
(i) assign any or all of its rights and interests hereunder to one or more of
its Affiliates and (ii) designate one or more of its Affiliates to perform its
obligations hereunder (in any or all of which cases the Purchaser nonetheless
shall remain responsible for the performance of all of its obligations
hereunder).
(f) Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original but all of which
together will constitute one and the same instrument. All facsimile executions
shall be treated as originals for all purposes.
(g) Headings. The section headings contained in this Agreement are
inserted for convenience only and shall not affect in any way the meaning or
interpretation of this Agreement.
(h) Notices. All notices, requests, demands, claims, and other
communications hereunder will be in writing. Any notice, request, demand,
claim, or other communication hereunder shall be deemed duly given if (and then
three (3) business days after) it is sent by registered or certified mail,
return receipt requested, postage prepaid, and addressed to the intended
recipient as set forth below:
If to the Seller: Eastern Livestock, Inc.
1065 East Main Street
Louisville, Kentucky 40206
Attn: Tommy Gibson, President
If to the Shareholders: Thomas P. Gibson
7892 Tandy Road
Janesville, Indiana 47136
29
<PAGE> 31
With a copy to: Middleton & Reutlinger
2500 Brown & Williamson Tower
401 South Fourth Avenue
Louisville, Kentucky 40202
Attn: James N. Williams, Esq.
If to the Purchaser: eMerge Interactive, Inc.
10315 102nd Terrace
Sebastian, Florida 32958
Attn: Scott Matthews, President
Copy to: Gray, Harris & Robinson, P.A.
201 E. Pine St., Suite 1200
Orlando, Florida 32801
Attn: Michael E. Neukamm, Esq.
Any Party may send any notice, request, demand, claim, or other communication
hereunder to the intended recipient at the address set forth above using any
other means (including personal delivery, expedited courier, messenger service,
telecopy, telex, ordinary mail, or electronic mail), but no such notice,
request, demand, claim, or other communication shall be deemed to have been
duly given unless and until it actually is received by the intended recipient.
Any Party may change the address to which notices, requests, demands, claims,
and other communications hereunder are to be delivered by giving the other
Party notice in the manner herein set forth.
(i) Governing Law. This Agreement shall be governed by and construed
in accordance with the domestic laws of the Commonwealth of Kentucky without
giving effect to any choice or conflict of law provision or rule that would
cause the application of the laws of any jurisdiction other than the
Commonwealth of Kentucky.
(j) Amendments and Waivers. No amendment of any provision of this
Agreement shall be valid unless the same shall be in writing and signed by the
Purchaser, the Seller and each Shareholder. The Seller, with the prior
authorization of its board of directors, and the Shareholders, together, may
consent to any such amendment at any time prior to the Closing. No waiver by
any Party of any default, misrepresentation, or breach of warranty or covenant
hereunder, whether intentional or not, shall be deemed to extend to any prior
or subsequent default, misrepresentation, or breach of warranty or covenant
hereunder or affect in any way any rights arising by virtue of any prior or
subsequent such occurrence.
(k) Severability. Any term or provision of this Agreement that is
invalid or unenforceable in any situation in any jurisdiction shall not affect
the validity or enforceability of the remaining terms and provisions hereof or
the validity or enforceability of the offending term or provision in any other
situation or in any other jurisdiction.
30
<PAGE> 32
(l) Expenses. Each of the Purchaser, the Seller and the Shareholders
will bear their own costs and expenses (including legal fees and expenses)
incurred in connection with this Agreement and the transactions contemplated
hereby.
(m) Construction. The Parties have participated jointly in the
negotiation and drafting of this Agreement. In the event an ambiguity or
question of intent or interpretation arises, this Agreement shall be construed
as if drafted jointly by the Parties and no presumption or burden of proof
shall arise favoring or disfavoring any Party by virtue of the authorship of
any of the provisions of this Agreement. Any reference to any federal, state,
local, or foreign statute or law shall be deemed also to refer to all rules and
regulations promulgated thereunder, unless the context requires otherwise. The
word "including" shall mean including without limitation.
(n) Incorporation of Exhibits and Schedules. The Exhibits and
Schedules (including, without limitation, the Disclosure Schedule) identified
in this Agreement are incorporated herein by reference and made a part hereof.
(o) Specific Performance. Each of the Parties acknowledges and agrees
that the other Party would be damaged irreparably in the event any of the
provisions of this Agreement are not performed in accordance with their
specific terms or otherwise are breached. Accordingly, each of the Parties
agrees that the other Party shall be entitled to an injunction or injunctions
to prevent breaches of the provisions of this Agreement and to enforce
specifically this Agreement and the terms and provisions hereof in any action
instituted in any court of the United States or any state thereof having
jurisdiction over the Parties and the matter (subject to the provisions set
forth in Section 11(p) below), in addition to any other remedy to which it may
be entitled, at law or in equity.
(p) Submission to Jurisdiction. Each of the Parties submits to the
jurisdiction of any state or federal court sitting in Jefferson County,
Kentucky, in any action or proceeding arising out of or relating to this
Agreement and agrees that all claims in respect of the action or proceeding may
be heard and determined in any such court. Each Party also agrees not to bring
any action or proceeding arising out of or relating to this Agreement in any
other court. Each of the Parties waives any defense of inconvenient forum to
the maintenance of any action or proceeding so brought and waives any bond,
surety, or other security that might be required of any other Party with
respect thereto. Each Party agrees that a final judgment in any action or
proceeding so brought shall be conclusive and may be enforced by suit on the
judgment or in any other manner provided by law or in equity.
[Remainder of Page Intentionally Left Blank]
31
<PAGE> 33
IN WITNESS WHEREOF, the Parties hereto have executed this Agreement
for the Purchase and Sale of Assets on the date first above written.
SELLER:
EASTERN LIVESTOCK CO., INC., a
KENTUCKY CORPORATION
By: /s/ Thomas P. Gibson
--------------------------------
Thomas P. Gibson, President
SHAREHOLDERS:
/s/ Thomas P. Gibson
-----------------------------------
Thomas P. Gibson, Individually
/s/ John S. Gibson
-----------------------------------
John S. Gibson, Individually
PURCHASER:
eMERGE INTERACTIVE, INC., a
DELAWARE CORPORATION
By: /s/ T. Michael Janney
--------------------------------
T. Michael Janney, CFO
32
<PAGE> 34
LIST OF EXHIBITS:
<TABLE>
<S> <C>
A Assignment and Assumption Agreement
B Bill of Sale
C Supply and Support Agreement
D Seller Financial Statements
E [Intentionally Left Blank]
F Employment Contract
G Form Legal Opinions
H Registration Rights and Restricted Stock Agreement
I Office Sharing Agreement
J Cattle Purchase Contract Agreement
</TABLE>
<PAGE> 1
EXHIBIT 2.2
REGISTRATION RIGHTS AND
RESTRICTED STOCK AGREEMENT, DATED MAY 1, 2000
THIS REGISTRATION RIGHTS AND RESTRICTED STOCK AGREEMENT (the
"Agreement"), entered into as of the 1st day of May, 2000, by and between
EASTERN LIVESTOCK CO., INC., a Kentucky corporation ("Eastern"), and EMERGE
INTERACTIVE, INC., a Delaware corporation (the "Company"), and acknowledged,
confirmed and agreed to by THOMAS P. GIBSON, an individual resident of the state
of Kentucky ("Employee").
W I T N E S S E T H:
WHEREAS, Employee is an employee and principal stockholder of Eastern;
WHEREAS, as part of its cattle industry operations, Eastern conducts a
business line commonly referred to as the "Rollover Business" (as defined in
that certain Agreement for the Purchase and Sale of Assets entered into by the
Company, on the one hand, and Eastern and Employee, on the other, on or about
April 20, 2000 (the "Asset Purchase Agreement"));
WHEREAS, pursuant to the Asset Purchase Agreement, among other things,
the Company will purchase, and Eastern and Employee will sell, certain of the
assets utilized in connection with the Rollover Business (collectively, the
"Asset Purchase"), the closing of which will occur simultaneous with the
execution of this Agreement;
WHEREAS, a portion of the consideration paid by the Company to effect
the Asset Purchase consists of the Sale Shares (as that term is defined in the
Asset Purchase Agreement);
WHEREAS, simultaneous with the execution and delivery of this Agreement
and the closing of the transactions contemplated under the Asset Purchase
Agreement, Employee is entering into an Employment Agreement (the "Employment
Agreement") pursuant to which Employee will be employed as a Director of the
Company's Cattle Auction Sales division;
WHEREAS, simultaneous with the execution and delivery of this Agreement
and the closing of the transactions contemplated under the Asset Purchase
Agreement, Eastern and Employee are entering into a Supply and Support Agreement
(the "Supply Agreement") pursuant to which such parties will provide certain
assistance to the Company in connection with its conduct of the Rollover
Business;
WHEREAS, Eastern's and Employee's representations and warranties set
forth in the Asset Purchase Agreement, their covenants and agreements contained
in the Supply Agreement, and Employee's agreement to establish and maintain his
employment relationship with the Company pursuant to the Employment Agreement
are substantial and material inducements to the Company to execute and deliver
the Asset Purchase Agreement and issue the Sale Shares pursuant thereto;
<PAGE> 2
WHEREAS, to provide recourse to the Company in the event of Eastern's
or Employee's breach of any material term of any of the Asset Purchase
Agreement, the Supply Agreement, or the Employment Agreement, it is necessary
and in the best interests of the Company for it to impose certain restrictions
on the transfer of the Sale Shares and to make provision for the imposition and
payment of damages and/or liquidated damages (in the form of the assignment and
transfer by Eastern to the Company of some or all of the Sale Shares) under
certain circumstances; and
WHEREAS, Eastern and Employee believe that it is reasonable and
appropriate that Eastern accept the Sale Shares as partial consideration for the
Asset Purchase subject to the transfer restrictions, damage satisfaction
provisions, and other terms and conditions contained herein.
NOW, THEREFORE, for and in consideration of the premises and of the
mutual promises and conditions herein contained, and for other valuable
consideration, the receipt and sufficiency of which is hereby acknowledged, the
parties do hereby agree as follows:
1. Issuance of Sale Shares. Pursuant to the Asset Purchase
Agreement, and conditioned upon the occurrence of the Closing (as defined
therein), the Company hereby agrees to issue to Eastern the Sale Shares as of
the date first written above (the "Issuance Date"), which date shall coincide
with the Closing Date (as defined in the Asset Purchase Agreement). All of the
Sale Shares shall be issued subject to the damage satisfaction provisions,
transfer restrictions, and other terms and conditions that are contained in this
Agreement.
2. Restrictions on Transfer.
a. Scope of Agreement. This Agreement shall apply to all
Transfers (as defined below) of the Sale Shares and to any other shares of
capital stock issued to Eastern pursuant to a stock split, stock dividend,
reorganization, or similar transaction, or otherwise with respect to the Sale
Shares (with all the Sale Shares and such other shares referred to herein as the
"Stock").
b. Restrictions on Transfer by Eastern.
(i) Except as expressly provided in this
Agreement, Eastern shall not, without the prior written consent of the Company
(which consent may be given or withheld in Company's sole discretion), sell,
exchange, deliver or assign, dispose of, gift, pledge, mortgage, or otherwise
encumber, transfer, or permit to be transferred ("Transfer"), all or any of the
Stock. Effective as of each of the following dates, and provided that such Stock
has not either become subject to a claim by the Company pursuant to the Section
3 below or been transferred and assigned to the Company pursuant to Section 3
below, the following portions of the Stock (on a cumulative basis) may be
transferred free of any restrictions on Transfer imposed hereunder:
2
<PAGE> 3
<TABLE>
<CAPTION>
CUMULATIVE PERCENTAGE
TRANSFER RESTRICTIONS LAPSE DATE OF UNRESTRICTED STOCK
-------------------------------- ----------------------
<S> <C>
6 Months from Issuance Date 33.0%
7 Months from Issuance Date 38.5%
8 Months from Issuance Date 44.0%
9 Months from Issuance Date 49.5%
10 Months from Issuance Date 55.0%
11 Months from Issuance Date 60.5%
12 Months from Issuance Date 66.0%
13 Months from Issuance Date 68.8%
14 Months from Issuance Date 71.6%
15 Months from Issuance Date 74.4%
16 Months from Issuance Date 77.2%
17 Months from Issuance Date 80.0%
18 Months from Issuance Date 82.8%
19 Months from Issuance Date 85.6%
20 Months from Issuance Date 88.4%
21 Months from Issuance Date 91.2%
22 Months from Issuance Date 94.0%
23 Months from Issuance Date 96.8%
24 Months from Issuance Date 100.0%
</TABLE>
The twenty-four (24) month period described above shall be referred to
as the "Restrictions Period." It is understood and agreed that upon the
occurrence of an Event of Default (as defined in Section 3 below), the
Restrictions Period shall be tolled until such time as the Company's claim with
regard thereto is fully resolved, at which time, any Stock that would have
become unrestricted pursuant to the above absent the tolling shall be
unrestricted except and to the extent that such Stock is paid or payable as
damages pursuant to Section 3 below. Any shares of Stock the Transfer of which
is restricted pursuant to the terms of the preceding schedule shall be referred
to herein as "Restricted Shares" (but only for so long as such restrictions
shall apply). Any and all Restricted Shares shall, together with at least
nineteen (19) related Stock Powers executed in blank, be placed in escrow with
an escrow agent determined by the Company and reasonably acceptable to Eastern
(the "Escrow Agent") pursuant to an escrow agreement in substantially the form
attached hereto as Exhibit A (the "Escrow Agreement"). The Escrow Agreement
shall provide that the Escrow Agent shall release the Stock (and the related
Stock Powers) to Eastern in accordance with the above schedule unless and until
it receives written notice from the Company that an Event of Default has
occurred, at which time it shall cease the release of such Stock until such time
as the Company instructs the Escrow Agent otherwise.
(ii) Notwithstanding the restrictions on Transfer
contained in subsection (i) above, Eastern shall be permitted to transfer any or
all of the Stock to Employee and Employee's family members, at the request of
Eastern, provided that (A) Eastern delivers written notice to the
3
<PAGE> 4
Company of such intention to transfer such Stock, (B) pursuant to an opinion of
counsel acceptable to the Company, the transfer qualifies for an exemption from
registration under applicable federal and state securities laws (or the shares
of Stock to be sold have been previously registered in accordance with the
provisions of Section 5 below), and (C) any such transferee joins in this
Agreement and agrees to be subject to the restrictions on Transfer contained
herein and be bound by the provisions of this Agreement, including without
limitation, Section 3 below.
(iii) Notwithstanding the restrictions on Transfer
contained in subsection (i) above, Eastern shall be permitted to sell, on an
arm's length basis and for their then fair value, any or all of the Restricted
Shares provided that: (A) Eastern delivers written notice to the Company of such
intention to sell, (B) pursuant to an opinion of counsel acceptable to the
Company, the sale qualifies for an exemption from registration under applicable
federal and state securities laws (or the shares of Stock to be sold have been
previously registered in accordance with the provisions of Section 5 below), and
(C) all of the proceeds attributable to such sale of any Restricted Shares are
deposited with and delivered to the Escrow Agent (the "Escrowed Cash"). Any
Escrowed Cash shall be released by the Escrow Agent to Eastern at such time as
the Stock to which such Escrowed Cash was attributable would have been released
in accordance with the procedures described in subsection (i) above. At the time
of its release from escrow, such Escrowed Cash shall no longer be considered
"Escrowed Cash" for purposes of this Agreement.
c. Permitted Transfer in the Event of Involuntary
Transfer of Stock. In the event of the involuntary Transfer or the Transfer by
operation of law of all or any portion of the Stock for any reason, including,
without limitation, in connection with (i) a property division in conjunction
with a proceeding for dissolution of marriage, (ii) a sale upon execution or in
foreclosure of any pledge, encumbrance, hypothecation, lien or charge, (iii) an
acquisition of an interest therein by a trustee or receiver in Bankruptcy, or
(iv) the death of Employee (with any such involuntary Transfer or Transfer by
operation of law referred to herein as an "Involuntary Transfer" and such
transferee (including any trustee, spouse, or personal representative) referred
to herein as an "Involuntary Transferee"), all of the Stock registered on the
books of the Company in the name of Eastern may be Transferred to the
Involuntary Transferee, and the Transfer shall be registered on the books of the
Company; provided, that, as a condition precedent to the Transfer of the Stock,
the prospective Involuntary Transferee of the Stock shall provide to Company, if
requested by Company, sufficient evidence of the legal right and authority of
the prospective Involuntary Transferee to have the Stock so Transferred and
registered. In the event that any Stock is Involuntarily Transferred to any
party other than Company, the Involuntary Transferee shall take such Stock
pursuant to all provisions, conditions, and covenants of this Agreement, and, as
a further condition precedent to the Transfer of such Stock, the Involuntary
Transferee shall agree in writing, for and on behalf of himself or itself, his
or its legal representatives, and his or its transferees and assigns, to be
bound by all terms of this Agreement as a party hereto, including, without
limitation the terms of Section 4. In the event that there shall be any such
Involuntary Transfer, all references herein to Eastern shall thereafter be
deemed to include the Involuntary Transferee.
4
<PAGE> 5
d. Stock Transfer Record. Company shall keep a stock
transfer book in which shall be recorded the name and address of each
shareholder. No Transfer or issuance of any Stock shall be effective or valid
unless and until recorded in the stock transfer book. Company agrees not to
record, and shall not be obligated to record, any Transfer or issuance of Stock
in the stock transfer book unless the Transfer or issuance is in strict
compliance with all provisions of this Agreement. Eastern agrees that, in the
event it desires to make a Transfer within the terms of this Agreement, it shall
furnish to Company such evidence of its compliance with this Agreement as may be
reasonably required by the Board of Directors of, or counsel for, Company.
e. Endorsement on Stock Certificates. Each certificate
representing Stock now or hereafter held by Eastern shall bear any legend or
legends required by applicable securities laws and, in addition thereto, shall
bear a statement in substantially the following form:
The voluntary or involuntary encumbrance, transfer, or other
disposition (including, without limitation, any disposition
pursuant to the laws of bankruptcy, intestacy, descent and
distribution or succession) of the shares of stock evidenced
by this certificate is restricted under the terms of a
Registration Rights and Restricted Stock Agreement dated
effective as of May 1, 2000, a copy of which is on file and
available for inspection at the principal office of the
Company.
3. Damages in the Event of Material Breach.
a. Event of Default. The Sale Shares have been issued to
Eastern in partial consideration for Eastern and Employee entering into the
Asset Purchase Agreement and the Supply Agreement, and Employee entering into
the Employment Agreement, in reliance upon their representations and warranties
contained therein, and in reliance upon the full and complete performances
thereunder. The occurrence of any of the following events shall be considered an
"Event of Default" (with the Events of Default described in subsections (i) and
(ii) below being referred to herein as "Purchase Agreement Events of Default"
and the Event of Default described in subsection (iii) below being referred to
herein as an "Employment Agreement Event of Default"):
(i) Either of Employee or Eastern materially
breaches any of his or its covenants or agreements as contained in the Asset
Purchase Agreement, the Employment Agreement (other than as described in
subsection (iii) below), and/or the Supply Agreement,
(ii) Any of the material representations or
warranties made by Eastern or Employee in the Asset Purchase Agreement or the
Supply Agreement are determined to be false, misleading or inaccurate, or
(iii) Either of the following occur:
5
<PAGE> 6
(A) The Company terminates Employee's
employment pursuant to Section 9 of the Employment Agreement (i.e., a
termination by the Company "for Cause," as such term is defined in the
Employment Agreement), or
(B) Employee's employment is terminated
pursuant to Section 12 of the Employment Agreement (i.e., a termination by
Employee "without Cause," as such term is defined in the Employment Agreement).
b. Determination and Payment of Damages.
(i) Definitions. For purposes of this Section 3,
the following definitions shall apply: the "Security" shall mean all of the
Restricted Stock and the Escrowed Cash, if any; and the "Determined Damages"
shall mean, with respect to any claim brought by the Company against Eastern,
the amount of damages as are determined by a court of competent jurisdiction (or
as may be fixed by settlement agreement, arbitration or other mutually agreed
procedure) to have resulted to the Company due to the occurrence of a Purchase
Agreement Event of Default, together with any and all attorneys' fees and costs
incurred by the Company in investigating, pursuing, enforcing and resolving such
claim.
(ii) Purchase Agreement Event of Default. In the
event a Purchase Agreement Event of Default (which would otherwise give rise to
a claim under the indemnification provisions of Article 8 of the Asset Purchase
Agreement) occurs during the Restrictions Period, all of the then Security
shall, upon the Company providing written notice to Eastern, be subject to such
claim for damages and be held by the Escrow Agent until such time as the
Company's claim for damages is resolved and the Determined Damages are fixed, at
which time the Escrow Agent shall release to the Company, as payment against
such claim, all or that portion of the Security, as appropriate, as shall equal
the amount of the Determined Damages. The value of any shares of Restricted
Stock issued by the Escrow Agent to the Company in satisfaction of any
Determined Damages shall be fixed based upon the average of the per share
closing price of the Company's publicly traded shares, as reported in the Wall
Street Journal for the five (5) business days immediately preceding the date
such shares of Restricted Stock are disbursed out of escrow. The Escrow Agent
shall further deliver that number of the Stock Powers as may be necessary in
order to effect the transfer and assignment of the Restricted Stock by Eastern
to the Company in accordance with this provision. The parties acknowledge and
agree that the Company's rights and remedies hereunder are not its exclusive
rights and remedies in the event of a Purchase Agreement Event of Default, and
that Company is entitled to any other rights or remedies available to the
Company under applicable law.
(iii) Employment Agreement Event of Default. In
the event an Employment Agreement Event of Default occurs at any time during the
Restrictions Period, Eastern and Employee shall be liable, jointly and
severally, and shall pay to the Company, upon written demand by the Company,
liquidated damages (the "Liquidated Damages") in an amount determined in
accordance with the following table (with the amount of such Liquidated Damages
to be equal to
6
<PAGE> 7
the amount reflected on such table based upon the date on which the Employment
Agreement Event of Default actually occurred, and not the date that such
Employment Agreement Event of Default may be agreed or otherwise determined by
the parties, by adjudication, or otherwise, as having occurred):
<TABLE>
<CAPTION>
DATE OF OCCURRENCE OF EMPLOYMENT AMOUNT OF
AGREEMENT EVENT OF DEFAULT LIQUIDATED DAMAGES
------------------------------------------------ ------------------
<S> <C>
During the first 6 Months from the Issuance Date $14,000,000
During the 7th Month from the Issuance Date $9,400,000
During the 8th Month from the Issuance Date $8,625,000
During the 9th Month from the Issuance Date $7,850,000
During the 10th Month from the Issuance Date $7,075,000
During the 11th Month from the Issuance Date $6,300,000
During the 12th Month from the Issuance Date $5,525,000
During the 13th Month from the Issuance Date $4,750,000
During the 14th Month from the Issuance Date $4,350,000
During the 15th Month from the Issuance Date $3,950,000
During the 16th Month from the Issuance Date $3,550,000
During the 17th Month from the Issuance Date $3,150,000
During the 18th Month from the Issuance Date $2,750,000
During the 19th Month from the Issuance Date $2,350,000
During the 20th Month from the Issuance Date $1,950,000
During the 21st Month from the Issuance Date $1,550,000
During the 22nd Month from the Issuance Date $1,150,000
During the 23rd Month from the Issuance Date $750,000
During the 24th Month from the Issuance Date $350,000
</TABLE>
In such event, simultaneous with the delivery of such written demand,
the Company shall deliver written notice of the occurrence of such Employment
Agreement Event of Default to the Escrow Agent and the Escrow Agent shall
deliver all or that portion of the Security, as appropriate, as shall equal the
amount of the Liquidated Damages. The value of any shares of Restricted Stock
issued by the Escrow Agent to the Company in satisfaction of any Liquidated
Damages shall be fixed based upon the average of the per share closing price of
the Company's publicly traded shares, as reported in the Wall Street Journal for
the five (5) business days immediately preceding the date such shares of
Restricted Stock are disbursed out of escrow. The Escrow Agent shall further
deliver that number of the Stock Powers as may be necessary in order to effect
the transfer and assignment of the Restricted Stock by Eastern to the Company in
accordance with this provision. The parties acknowledge and agree that, in the
event such Security is insufficient to satisfy the amount of the Liquidated
Damages then due and payable, Eastern and Employee shall, jointly and severally,
and within ten (10) days of the release of the Security from escrow, pay and
remit the remaining balance of such Liquidated Damages to the Company.
7
<PAGE> 8
(iv) Adjustment to Security Release Schedule.
(A) Computation. In the event any
portion of the Security is utilized to satisfy any claim or damage (including
any Liquidated Damages), the amount of the Security subject to the lapse of
restrictions shall be modified such that (1) the amount of the Security to which
the percentage contained in the table in Section 2(b)(i) is applied will be
reduced by the amount of the Security disbursed in satisfaction of said claim or
damage, and (2) no further Security shall be released until such time as the
amount of Security actually released equals the amount of Security that should
have been released based upon the adjustment made pursuant to Section
3(b)(iv)(A)(1).
(B) Example. The following example will
be used to illustrate the application of the principles contained in Section
3(b)(iv)(A) above. Security of $100 is being released at the rate of 5% per
month, and at the conclusion of month 10 (i.e., the half-way point under this
schedule, with $50 of Security having been released), $20 of Security is
utilized to satisfy damages resulting from a claim. In this situation, following
satisfaction of the claim, the monthly rate of release would decrease from $5 to
$4 (i.e., ($100 - $20) x 5%), and the amount of Security that should have been
released through such date would equal $40 (compared to the actual amount of
$50). In order to "correct" the amount of Security that had been released (an
"excess" of $10 of Security had been released in this example), no additional
Security would be released for the next two months, in the third month, Security
of $2 would be released. Thereafter, the release schedule would again continue
at the rate of $4 per month, until released in full (or applied against
subsequent damages).
4. Liquidated Damages.
(a) Eastern and Employee acknowledge and agree that the
assignment and transfer of any or all of the Security upon the occurrence of an
Employment Agreement Event of Default:
(i) Constitute consideration for damages
resulting to the Company due to the occurrence of such Event of Default and are
not as a form of penalty or restraint on trade of either Eastern or Employee,
and that such damages result from a mutual determination by the parties based
upon relevant factors including, but not limited to, the facts that a
substantial part of the assets being purchased by the Company pursuant to the
Asset Purchase Agreement comprise the represented goodwill and going concern of
Eastern, and that Eastern's and Employee's compliance with the terms of the
Supply Agreement and the terms of the Employment Agreement are substantial and
material inducements, and primary conditions, to the Company's execution and
delivery of, and performance under, the Asset Purchase Agreement, and that the
Company would not have entered into or performed under the Asset Purchase
Agreement but for the accuracy of the representations and warranties of Eastern
and Employee under the Asset Purchase Agreement and but for the agreements by
Eastern and Employee, as appropriate, to execute and deliver the Employment
8
<PAGE> 9
Agreement, the Supply Agreement, and this Agreement and be bound by and perform
under the terms and conditions contained in all such Agreements; and
(ii) Are reasonable and appropriate under the
circumstances, including, without limitation, in recognition of the substantial
purchase price paid by the Company pursuant to the Asset Purchase Agreement, and
to protect and preserve the legitimate business interests of the Company.
(b) Eastern and Employee acknowledge and agree that
neither party will assert as a defense to the imposition or payment of the
Liquidated Damages described herein (i.e., the transfer and assignment to the
Company (without further consideration) of any of the Security) that the Company
has no (or insufficient) legitimate business interests to support the
application of such remedy, or that the imposition of the Liquidated Damages
provisions described in Section 3 are other than reasonable and appropriate to
protect the Company's legitimate business interests.
(c) It is understood and intended by and between the
parties hereto that the provisions of Section 3 shall be construed as an
agreement independent of any other provision of this Agreement. The existence of
any claim or cause of action that the Eastern or Employee might have against the
Company, whether predicated upon this Agreement or otherwise, shall not
constitute a defense to the enforcement by the Company of Section 3 or in any
way serve to offset the Liquidated Damages due and payable to the Company
pursuant to Section 3 hereof.
5. Piggyback Registration Rights.
(a) If, at any time, the Company shall determine to
register any of its securities either for its own account or the account of a
security holder or holders exercising their respective demand registration
rights, other than a registration relating solely to employee benefit plans, or
a registration relating solely to a Rule 145 transaction (as promulgated by the
Securities and Exchange Commission under the Securities Act of 1933) (relating
to registrations resulting from mergers, reorganizations or similar
transactions), or a registration on any registration form which does not permit
secondary sales, the Company will:
(i) Promptly give Eastern written notice thereof
(which shall include a list of the jurisdictions in which the Company intends to
attempt to qualify such securities under the applicable blue sky or other state
securities laws); and
(ii) Include in such registration (and any
related qualification under blue sky laws or other compliance), and in any
underwriting involved therein, all the Stock specified in a written request or
requests, made by Eastern within thirty (30) days after receipt of the written
notice from the Company described in clause (i) above, except as set forth in
Section 5(b) below. Such written request may specify all or a part of the Stock.
9
<PAGE> 10
(b) If the registration of which the Company gives
Eastern notice pursuant to Section 5(a)(i) above is for a registered public
offering involving an underwriting, the Company shall so advise Eastern as a
part of such written notice. In such event, Eastern's right to registration
pursuant to Section 5 shall be conditioned upon Eastern's participation in such
underwriting and the inclusion of Eastern's shares of Stock in the underwriting
to the extent provided herein. All holders (including Eastern) proposing to
distribute their securities through such underwriting shall (together with the
Company) enter into an underwriting agreement in customary form with the
underwriter or underwriters selected by the Company, which underwriters shall be
reasonably acceptable to a majority in interest of the participating holders.
Notwithstanding any other provision of this Section 5, if the underwriter
advises the Company in writing that marketing factors require a limitation on
the number of shares to be underwritten, the underwriter may limit the number of
shares of the Company's capital stock to be included in the registration and
underwriting. The Company shall so advise all holders of securities requesting
registration, and the number of shares of securities that are entitled to be
included in the registration and underwriting shall be allocated on a pro rata
basis among all of such holders.
(c) The Company shall bear all Registration Expenses
incurred in connection with any registration, qualification or compliance
pursuant to this Section 5. All Selling Expenses shall be borne by the holders,
including the Company, of the securities so registered pro rata on the basis of
the number of their shares so registered. For this purpose, "Registration
Expenses" shall mean all registration and filing fees, printing expenses, fees
and disbursements of counsel for the Company; blue sky fees and expenses, and
related expenses. "Selling Expenses" shall mean all underwriting discounts and
selling commissions applicable to the sale of shares being registered and all
fees and disbursements of counsel for any holder (other than the fees and
disbursements of counsel included in Registration Expenses).
6. Notice. Any notice under this Agreement shall be sufficient if
in writing sent by certified mail, return receipt requested to Eastern at 1065
East Main Street, Louisville, Kentucky 40206, to Employee at 7892 Tandy Road,
Lanesville, Indiana 47136, in either case with a copy to Middleton & Reutlinger,
2500 Brown & Williamson Tower, 401 South Fourth Avenue, Louisville, Kentucky
40202, Attn: James N. Williams, and to Company at 102nd Terrace, Sebastian,
Florida 32958, Attn: Chief Executive Officer, with a copy thereof to Gray,
Harris & Robinson, P.A., 201 East Pine Street, Orlando, Florida, 32801,
Attention: Michael E. Neukamm, or to such other address as any party shall
designate by written notice to the other. The second day following posting of
the written notice in the mails shall constitute the date of receipt.
7. Jurisdiction. This Agreement shall be subject to and governed
by the laws of the Commonwealth of Kentucky.
8. Severability and Substitution of Valid Provisions. If any
provision of this Agreement shall be held to be invalid or unenforceable by a
court of competent jurisdiction, and if such provision can be rendered
enforceable by limiting its scope, then such provision shall be deemed revised
to incorporate such limitation and shall be enforced to the full extent possible
consistent with
10
<PAGE> 11
such limitation. In the event that any such provision cannot be rendered
enforceable, then such invalidity shall not affect the validity or
enforceability of any other portion of this Agreement, and this Agreement shall
be construed, to the extent possible, as if such invalid provision were not
contained herein.
9. Waiver of Compliance. Any failure of either party to comply
with any obligation, covenant, agreement or condition herein may be expressly
waived in writing by the other, but such waiver or failure to insist upon strict
compliance with such obligation, covenant, agreement or condition shall not
operate as a waiver of, or estoppel with respect to, any subsequent or other
failure.
10. Attorneys' Fees. In the event any dispute, arbitration,
litigation or controversy arises out of or in connection with this Agreement
between the parties hereto, the prevailing party in such dispute, arbitration,
litigation or controversy shall be entitled to recover from the other party all
reasonable attorneys' fees, expenses and suit costs, including those associated
with any appellate or post-judgment collection proceedings.
11. Expenses. Each of the parties shall bear all expenses incurred
by it in connection with the negotiation and execution of this Agreement and in
the consummation of, and preparation for, the transactions contemplated by this
Agreement.
12. Construction. This Agreement, having been fully reviewed and
negotiated by the parties and their respective counsel, shall be construed
without regard to or aid of any rule, presumption or canon requiring or
permitting construction against the party that caused this Agreement to be
drafted. In the event an ambiguity or question of intent or interpretation
arises, this Agreement shall be construed as if drafted jointly by the parties
and no presumption or burden of proof shall arise favoring or disfavoring any
party by virtue of the authorship of any of the provisions of this Agreement.
13. Successors and Assigns. The terms and conditions of this
Agreement shall be binding upon and inure to the benefit of the parties to this
Agreement and their respective successors and permitted assigns.
14. Amendment. This Agreement may be amended or modified only by a
written instrument duly executed by each party to this Agreement.
15. No Assignment. Eastern shall not assign its rights or delegate
its obligations pursuant to this Agreement unless and until any such assignment
or delegation shall first be consented to in a written instrument executed by
the Company (with such consent to be given or withheld at the Company's sole
discretion).
16. Specific Performance. The parties declare that it is
impossible to measure in money the damages which will accrue to a party hereto
by reason of a breach of this Agreement by a party
11
<PAGE> 12
hereto or a failure of a party hereto to otherwise perform any of the
obligations under this Agreement. Therefore, if any party shall institute any
action or proceeding to enforce the provisions hereof, any person against whom
any such action or proceeding is brought hereby waives the claim or defense
therein that such party has or had an adequate remedy at law, and such person
shall not urge in any such action or proceeding the claim or defense that such
remedy at law exists. Further, the parties hereto expressly agree that any
non-breaching party shall have the right to injunctive relief or any other
equitable remedy necessary or appropriate to cause specific performance for any
failure to perform any obligation hereunder or for breach of any of the terms
hereof, plus damages for such failure or breach to the maximum extent permitted
by law.
17. Entire Agreement. This writing constitutes the entire
agreement between the parties hereto with respect to the subject matter hereof
and may not be changed or modified except by a writing signed by the party or
parties to be charged thereby.
18. Headings. Section headings contained within are solely for the
purpose of aiding in the speedy location of subject matter and are not in any
sense to be given weight in the construction of this Agreement.
19. Counterparts and Facsimiles. This Agreement may be executed
simultaneously in two or more counterparts, each of which shall be deemed an
original, but all of which together shall constitute one and the same
instrument. All facsimile executions shall be treated as originals for all
purposes.
[Remainder of Page Intentionally Left Blank]
12
<PAGE> 13
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
day and year first above written.
eMERGE INTERACTIVE, INC., a Florida
corporation
By: /s/ T. Michael Janney
-------------------------------------
Name: T. Michael Janney
-----------------------------------
Its: CFO
-----------------------------------
EASTERN LIVESTOCK CO., INC., a
Kentucky corporation
By: /s/ Thomas P. Gibson
-------------------------------------
Name: Thomas P. Gibson
-----------------------------------
Its: President
-----------------------------------
ACKNOWLEDGED, CONFIRMED AND
AGREED TO BY EMPLOYEE:
/s/ Thomas Gibson
-----------------------------------------
Thomas Gibson
13
<PAGE> 1
EXHIBIT 2.3
SUPPLY AND SUPPORT AGREEMENT, DATED MAY 1, 2000
THIS SUPPLY AND SUPPORT AGREEMENT (the "Agreement") is made and entered
into this 1st day of May, 2000, by and between: (I) EMERGE INTERACTIVE, INC., a
Delaware corporation, referred to herein as "eMerge;"(II) EASTERN LIVESTOCK CO.,
INC., a Kentucky corporation, referred to herein as "Eastern;" (III) THOMAS P.
GIBSON ("Gibson"); (IV) JOHN S. GIBSON ("Brother"), with Gibson and Brother
referred to herein jointly as the "Gibsons." eMerge, Eastern, and the Gibsons,
or any combination thereof, as the context may require, are referred to
collectively herein as the "Parties."
BACKGROUND
A. Headquartered in Louisville, Kentucky, Eastern is engaged in
the business of buying cattle for immediate resale and in the business of buying
cattle to place on pasture or feed (hereinafter collectively referred to as the
"Cattle Business").
B. The Cattle Business has two separate but interrelated
components: the "Rollover Business" and the "Long-Term Business." The "Rollover
Business" includes the buying of cattle for immediate resale (and/or on a
short-term basis). The Rollover Business generates profits based on the
difference between the purchase price and the selling price of the cattle, and
generates profits by the buying or selling of cattle for others on a commission
or other basis. The Rollover Business includes, without limitation, the
activities known in the livestock industry as dealing, brokering and trading.
The "Long-Term Business" includes the purchasing of cattle to be owned on a long
term basis. The Long-Term Business generates profits based on the increase in
value of cattle because of weight gain during the time of ownership, in addition
to the difference between the purchase price and the selling price. The
Long-Term Business also generates profits as a result of the fees earned in
connection with certain profit sharing arrangements with third-party caretakers,
known as its Retained Ownership Program. Eastern's Financial Statements
segregate and compile the financial results of certain of its business
activities as being attributable to the Long-Term Business, and the definition
of the Rollover Business contained herein incorporates any and all such
activities not attributable to such.
C. Simultaneous with the execution of this Agreement, eMerge will
close a transaction with Eastern and the Gibsons whereby eMerge will acquire
certain assets used by Eastern in the Rollover Business (the "Business
Acquisition") pursuant to that certain Agreement for the Purchase and Sale of
Assets (the "Asset Purchase Agreement"), and the Gibsons will enter into
employment agreements with eMerge (the "Employment Agreements"), with their
duties thereunder to include assisting eMerge with conducting the Rollover
Business and eMerge's related Internet-based cattle auction and marketplace
(collectively, the "eMerge Cattle Business") following the Business Acquisition.
<PAGE> 2
D. Following the Business Acquisition, Eastern will continue to
conduct and operate the Long-Term Business, and each of the Gibsons will
continue to conduct various activities in the cattle industry relating to or
supporting the Long-Term Business, including without limitation, various
feedlots (e.g., Rocking E Feeders, LLC), sorting facilities (e.g., Providence),
and buying stations (e.g., Edmonton) (with any and all such activities, whether
being currently operated by any of Eastern or the Gibsons or whether to be
established, directly or indirectly, by any of such Parties in the future,
referred to herein as the "Gibson Businesses").
E. Prior to the Business Acquisition, the Rollover Business was
supported by various activities conducted by the Gibson Businesses.
F. Prior to the Business Acquisition, various independent
contractors, purchaser representatives, and buyers assisted Eastern in obtaining
supply sources for the Rollover Business' cattle inventory (with these
individuals or businesses, including, without limitation, those listed on
Exhibit A attached hereto, referred to as "Facilitators").
G. Prior to the Business Acquisition, various persons or
businesses sold or otherwise supplied cattle inventory to the Rollover Business
(with these individuals or businesses, including, without limitation, those
listed on Exhibit B attached hereto, referred to as "Suppliers").
H. Prior to the Business Acquisition, various persons or
businesses purchased cattle inventory from the Rollover Business (with these
individuals ad businesses, including, without limitation, those listed on
Exhibit C attached hereto, referred to as the "Customers").
H. Following the Business Acquisition, the parties desire that
the Gibson Businesses continue to provide support to the eMerge Cattle Business,
at eMerge's request, in a manner comparable to the manner in which they provided
such support to Eastern's conduct of the Rollover Business.
I. Following the Business Acquisition, the parties desire that
eMerge continue the existing business relationships that Eastern has with the
Facilitators, Suppliers and Customers, at eMerge's request, in a manner at least
comparable to (in terms of the volume of purchases or sales, as appropriate) the
manner in which they were conducted prior to the Business Acquisition.
J. As a material inducement for eMerge to enter into the Asset
Purchase Agreement and to consummate the Business Acquisition, the Parties
desire to set forth in writing their agreements and understandings in this
regard and to be legally bound by the terms hereof.
NOW, THEREFORE, for good and valuable consideration the receipt and
sufficiency of which are hereby acknowledged and in consideration of the mutual
covenants, representations, warranties and agreements contained herein, the
Parties hereby agree as follows:
2
<PAGE> 3
AGREEMENT
1. Support by Gibson Businesses. The parties acknowledge that the
eMerge Cattle Business may desire to use and/or have access to, or otherwise be
supported by, the Gibson Businesses, including, without limitation, any of their
sorting facilities, buying stations, feedlots, pasture land, barns, and/or other
equipment or infrastructure, and further including, without limitation, their
personnel, administrative support and/or business relationships. In this regard,
Eastern and the Gibsons hereby covenant and agree that, during the term of this
Agreement, they shall cause the Gibson Businesses to provide, on an arm's length
and fair value basis, any and all support to the eMerge Cattle Business that
eMerge may reasonably request. Eastern and the Gibsons further covenant and
agree to provide such requested support in a manner at least consistent with the
manner in which the Gibson Businesses provided such support to Eastern's
Rollover Business in the past.
2. Continuing Relationships with Facilitators, Suppliers and
Customers. At the request of eMerge:
(i) Eastern and the Gibsons hereby covenant and agree
that, during the term of this Agreement, they will use their best efforts to
cause the Facilitators to assist eMerge in obtaining cattle inventory supply
sources for the eMerge Cattle Business in a manner comparable to the manner in
which such Facilitators provided such assistance to Eastern's Rollover Business
in the past.
(ii) Eastern and the Gibsons hereby covenant and agree
that, during the term of this Agreement, they will use their best efforts to
cause the Suppliers to sell or otherwise supply cattle inventory to the eMerge
Cattle Business in a manner comparable to the manner in which such Suppliers
supplied cattle to Eastern's Rollover Business in the past.
(iii) Eastern and the Gibsons hereby covenant and agree
that, during the term of this Agreement, they will use their best efforts to
cause the Customers to purchase cattle inventory from the eMerge Cattle Business
in a manner comparable to the manner in which such Customers purchased cattle
from Eastern's Rollover Business in the past.
(iv) In the event any Gibson Business is also a
Facilitator, Supplier or Customer, Eastern and the Gibsons further covenant and
agree that, during the term of this Agreement, they shall cause such Gibson
Business to conduct any and all activities and types of transactions with the
eMerge Cattle Business as such Gibson Business had previously conducted with
Eastern's Rollover Business, including, without limitation, first offering for
sale to eMerge any and all cattle inventory that is available for sale by such
Gibson Business, at current market rates.
(v) Eastern and the Gibsons hereby covenant and agree
that, during the term of this Agreement, they will use their best efforts to
obtain other facilitators, suppliers, and customers for the eMerge Cattle
Business (and to increase the volume of activity conducted by any current
Facilitator, Supplier and Customer).
3
<PAGE> 4
(vi) Eastern and the Gibsons hereby covenant and agree
that, during the term of this Agreement, they will assist eMerge in all
reasonable respects in establishing and maintaining business and strategic
relationships with the Facilitators, Suppliers and Customers, and to establish
and maintain similar relationships with other facilitators, suppliers and
customers.
3. Term of this Agreement. This Agreement shall have an initial
term of five (5) years, and shall continue and be extended thereafter for
additional one (1) year terms, unless and until one Party to this Agreement
shall give written notice to the others on or before sixty (60) days prior to
the conclusion of any such one (1) year extension.
4. Books and Records; Inspection; Reporting. Eastern and the
Gibsons shall cause the Gibson Businesses to use their best efforts to keep and
maintain, or cause to be maintained, complete and accurate books, records and
accounts of their cattle inventory that is sold and/or disposed of (whether
through or to the eMerge Cattle Business or otherwise) during the term of this
Agreement. Such books, records and accounts shall be kept at all times at the
principal offices of Eastern or such other Gibson Business, as appropriate.
eMerge and its duly authorized representatives shall have the right to examine
such books, records and accounts at any and all reasonable times and to make
copies or extracts therefrom, at eMerge's expense. Eastern and the Gibson shall
cause the Gibson Businesses to provide to eMerge monthly statements during the
term of this Agreement (with the statement for each month to be delivered not
later than the 20th day of the immediately following month) reflecting the
amount of the cattle inventory purchased and sold by each Gibson Business.
5. Further Assurances. Each Party agrees to execute such other
documents, instruments and agreements as may be reasonably requested by any
other Party hereto in order to effect the transactions and establish the
relationships contemplated hereunder.
6. Remedies; Continuation of Obligations. The parties understand
and agree that, in the event damages are payable hereunder by any of Eastern or
the Gibsons, such payment may be partly or fully satisfied out of the "Security"
being held in escrow pursuant to that certain Registration Rights and Restricted
Stock Agreement, dated the date hereof and entered into between eMerge, Eastern
and Thomas P. Gibson (it being understood that such Security is not intended to
serve as any form of limitation or ceiling on the amount of any potential
damages, and no such limitation should be inferred or imposed). Notwithstanding
anything to the contrary contained herein, eMerge shall not be entitled to
assert a claim for damages under this Agreement against any party in the event
such damages originate substantially and primarily from the occurrence of the
death or disability of either Gibson. With respect to each Gibson, the
termination of either his or his brother's employment with the Company shall not
excuse him from his obligations hereunder, except solely in the event his
employment with the Company shall terminate because of: (i) his death, (ii) his
disability, or (iii) the material breach by the Company of his Employment
Agreement, which breach is not timely cured by the Company in accordance with
Section 11 thereof.
4
<PAGE> 5
7. No Third-Party Beneficiaries. This Agreement shall not confer
any rights or remedies upon any person or entity other than the Parties and
their respective successors and permitted assigns.
8. Entire Agreement. This Agreement (including the agreements
referred to herein) constitutes the entire agreement between the Parties and
supersedes any prior understandings, agreements, or representations by or
between the Parties, written or oral, to the extent they related in any way to
the subject matter hereof.
9. Succession and Assignment. This Agreement shall be binding
upon and inure to the benefit of the Parties named herein and their respective
successors and permitted assigns. No Party may assign either this Agreement or
any of its rights, interests, or obligations hereunder without the prior written
approval of the other Party; provided, however, that eMerge may, upon providing
written notice to Eastern and the Gibsons, assign any or all of its rights and
interests hereunder to one or more of its affiliates and/or to any
successor-in-interest to the eMerge Cattle Business.
10. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original but all of which
together will constitute one and the same instrument. All facsimile executions
shall be treated as originals for all purposes.
11. Headings. The section headings contained in this Agreement are
inserted for convenience only and shall not affect in any way the meaning or
interpretation of this Agreement.
12. Notices. All notices, requests, demands, claims, and other
communications hereunder will be in writing. Any notice, request, demand, claim,
or other communication hereunder shall be deemed duly given if (and then three
(3) business days after) it is sent by registered or certified mail, return
receipt requested, postage prepaid, and addressed to the intended recipient as
set forth below:
<TABLE>
<S> <C>
If to Eastern: Eastern Livestock, Inc.
1065 East Main Street
Louisville, Kentucky 40206
Attn: Tommy Gibson, President
If to the Gibsons: Thomas P. Gibson
7892 Tandy Road
Janesville, Indiana 47136
With a copy to: James N. Williams
Middleton & Reutlinger
2500 Brown & Williamson Tower
401 South Fourth Avenue
Louisville, Kentucky 40202
</TABLE>
5
<PAGE> 6
<TABLE>
<S> <C>
If to eMerge: eMerge Interactive, Inc.
10315 102nd Terrace
Sebastian, Florida 32958
Attn: Scott Matthews, President
Copy to: Gray, Harris & Robinson, P.A.
201 E. Pine St., Suite 1200
Orlando, Florida 32801
Attn: Michael E. Neukamm, Esq.
</TABLE>
Any Party may send any notice, request, demand, claim, or other communication
hereunder to the intended recipient at the address set forth above using any
other means (including personal delivery, expedited courier, messenger service,
telecopy, telex, ordinary mail, or electronic mail), but no such notice,
request, demand, claim, or other communication shall be deemed to have been duly
given unless and until it actually is received by the intended recipient. Any
Party may change the address to which notices, requests, demands, claims, and
other communications hereunder are to be delivered by giving the other Party
notice in the manner herein set forth.
13. Governing Law. This Agreement shall be governed by and
construed in accordance with the domestic laws of the Commonwealth of Kentucky
without giving effect to any choice or conflict of law provision or rule that
would cause the application of the laws of any jurisdiction other than the
Commonwealth of Kentucky.
14. Amendments and Waivers. No amendment of any provision of this
Agreement shall be valid unless the same shall be in writing and signed by the
Parties. No waiver by any Party of any default, misrepresentation, or breach of
warranty or covenant hereunder, whether intentional or not, shall be deemed to
extend to any prior or subsequent default, misrepresentation, or breach of
warranty or covenant hereunder or affect in any way any rights arising by virtue
of any prior or subsequent such occurrence.
15. Severability. Any term or provision of this Agreement that is
invalid or unenforceable in any situation in any jurisdiction shall not affect
the validity or enforceability of the remaining terms and provisions hereof or
the validity or enforceability of the offending term or provision in any other
situation or in any other jurisdiction.
16. Expenses. Each of eMerge, Eastern and the Gibsons will bear
their own costs and expenses (including legal fees and expenses) incurred in
connection with this Agreement and the transactions contemplated hereby.
17. Construction. The Parties have participated jointly in the
negotiation and drafting of this Agreement. In the event an ambiguity or
question of intent or interpretation arises, this Agreement shall be construed
as if drafted jointly by the Parties and no presumption or burden of proof shall
arise favoring or disfavoring any Party by virtue of the authorship of any of
6
<PAGE> 7
the provisions of this Agreement. Any reference to any federal, state, local, or
foreign statute or law shall be deemed also to refer to all rules and
regulations promulgated thereunder, unless the context requires otherwise. The
word "including" shall mean including without limitation.
18. Specific Performance. Each of the Parties acknowledges and
agrees that the other Party would be damaged irreparably in the event any of the
provisions of this Agreement are not performed in accordance with their specific
terms or otherwise are breached. Accordingly, each of the Parties agrees that
the other Party shall be entitled to an injunction or injunctions to prevent
breaches of the provisions of this Agreement and to enforce specifically this
Agreement and the terms and provisions hereof in any action instituted in any
court of the United States or any state thereof having jurisdiction over the
Parties and the matter, in addition to any other remedy to which it may be
entitled, at law or in equity.
IN WITNESS WHEREOF, the Parties hereto have executed this Agreement on
the date first above written.
EASTERN LIVESTOCK CO., INC., A
KENTUCKY CORPORATION
By: /s/ Thomas P. Gibson
------------------------------------
Thomas P. Gibson, President
/s/ Thomas P. Gibson
------------------------------------
Thomas P. Gibson, Individually
/s/ John S. Gibson
-------------------------------------
John S. Gibson, Individually
EMERGE INTERACTIVE, INC., A
DELAWARE CORPORATION
By: /s/ T. Michael Janney
-------------------------------------
T. Michael Janney, CFO
7
<PAGE> 1
EXHIBIT 2.4
CATTLE PURCHASE CONTRACT AGREEMENT
THIS CATTLE PURCHASE CONTRACT AGREEMENT (the "Agreement") is made this
1st day of May, 2000, by and among EMERGE INTERACTIVE, INC., a Delaware
corporation ("Purchaser"); EASTERN LIVESTOCK CO., INC., a Kentucky corporation
("Seller") and THOMAS P. GIBSON and JOHN SHIRLEY GIBSON ("Shareholders").
W I T N E S S E T H:
WHEREAS, Purchaser is this date closing the purchase of the Rollover
Business of Seller pursuant to that certain Agreement for Purchase and Sale of
Assets dated April 20, 2000 (the "Purchase Agreement"); and
WHEREAS, a portion of the assets of such Rollover Business is the
forward contracts of Seller for the purchase and sale of cattle in the future,
as listed on Exhibit A attached hereto (the "Forward Contracts"); and
WHEREAS, the Purchase Agreement provides, as part of the consideration
therefor, that the parties will enter into this Agreement; and
WHEREAS, Shareholders own all of the outstanding capital stock of
Seller; and
WHEREAS, the parties desire to enter into this Agreement;
NOW THEREFORE, in consideration of the premises and of the mutual
agreements herein, and for other good and valuable consideration, the receipt
and sufficiency of which is hereby acknowledged, the parties agree as follows:
1. Purchaser and Seller agree that all profit, if any, derived
from the performance of the Forward Contracts shall belong to Purchaser.
Likewise, Seller and Shareholders agree to indemnify Purchaser from any loss
derived from the performance of the Forward Contracts, taken as a whole.
2. As each Forward Contract for the purchase of cattle matures,
Purchaser shall wire to Seller adequate funds to pay for such cattle, and Seller
shall cause such cattle to be delivered directly to Purchaser. Title and
ownership to such purchase cattle shall vest exclusively in Purchaser at such
time.
<PAGE> 2
3. As each Forward Contract for the sale of cattle matures,
Purchaser shall deliver to Seller sufficient cattle to meet such Forward
Contract, and Seller shall cause the proceeds of such sales to be paid directly
to Purchaser.
4. After all the Forward Contracts are performed and closed out,
the Purchaser shall reconcile the net profit and loss derived from the
performance of each Forward Contract. The overall net profit shall be retained
by Purchaser, and in the event an overall net loss is derived therefrom, then
within ten (10) days following written demand by Purchaser, which notice shall
include a reconciliation of the Forward Contracts and proof of the sum due,
Seller shall wire funds to Purchaser in an amount equal to such overall net
loss.
5. Each party agrees to execute such other documents, instruments
and agreements as may be reasonably requested by any other party hereto in order
to effect and perform the transactions and obligations contemplated hereunder.
6. The parties understand and agree that, in the event Seller
does not remit payment of the overall net loss, as provided in Section 4 above
(and assuming Seller does not reasonably dispute, in writing, Purchaser's
computation thereof), within thirty (30) days following the written demand by
Purchaser, then such payment may be partly or fully satisfied, in Purchaser's
discretion, out of the "Security" being held in escrow pursuant to that certain
Registration Rights and Restricted Stock Agreement, dated the date hereof and
entered into between Purchaser, Seller and Thomas P. Gibson.
7. This Agreement shall not confer any rights or remedies upon
any person or entity other than the parties and their respective successors and
permitted assigns.
8. This Agreement may be executed simultaneously in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument. All facsimile executions
shall be treated as originals for all purposes.
[Remainder of Page Intentionally Left Blank]
<PAGE> 3
EXECUTED on the day first above written.
EASTERN LIVESTOCK CO., INC., a Kentucky
corporation
By: /s/ Thomas P. Gibson
---------------------------------------
THOMAS P. GIBSON, President
/s/ Thomas P. Gibson
---------------------------------------
THOMAS P. GIBSON, Individually
/s/ John S. Gibson
---------------------------------------
JOHN S. GIBSON, Individually
EMERGE INTERACTIVE, INC., A DELAWARE
CORPORATION
By: /s/ T. Michael Janney
---------------------------------------
T. Michael Janney, CFO
<PAGE> 1
EXHIBIT 2.5
AGREEMENT FOR THE PURCHASE AND SALE
OF ASSETS, DATED APRIL 21, 2000
BY AND BETWEEN
EMERGE INTERACTIVE, INC.
AND
W.P. LAND AND LIVESTOCK, INC.
D/B/A JORDAN CATTLE AUCTION
AND
KENNETH AND KYNDA JORDAN
AND
WILLARD AND PEGGY JORDAN
DATED AS OF
APRIL 21, 2000
<PAGE> 2
AGREEMENT FOR THE
PURCHASE AND SALE OF ASSETS
THIS AGREEMENT FOR THE PURCHASE AND SALE OF ASSETS (the "Agreement") is
made and entered into this 21st day of April, 2000 (the "Contract Date"), by and
between: (i) W.P. LAND AND LIVESTOCK, INC., D/B/A JORDAN CATTLE AUCTION, a Texas
corporation, referred to herein as the "Seller;" (ii) EMERGE INTERACTIVE, INC.,
a Delaware corporation, referred to herein as the "Purchaser;" (iii) KENNETH AND
KYNDA JORDAN, each being individual residents of Texas, referred to herein as
the "Key Employees" and with Kenneth Jordan individually referred to herein as
"Jordan," and (iv) WILLARD AND PEGGY JORDAN, also each being individual
residents of Texas, jointly referred to herein as the "Shareholders." The
Purchaser, the Shareholders, the Key Employees and the Seller, or any
combination thereof as the context may require, are referred to collectively
herein as the "Parties."
BACKGROUND
A. The Seller is engaged in the business of purchasing cattle
for resale through the Seller's cattle auction operation in San Saba, Brownwood
and Mason, Texas (with the Seller's business referred to herein as the "Cattle
Business");
B. The Cattle Business involves the buying and selling of cattle
on a short term basis, and derives its profits primarily from buying and
reselling cattle and/or these services on behalf of other businesses on a
commission basis. The Cattle Business includes, without limitation, the
activities known in the livestock industry as order buying, dealing, brokering,
and trading.
C. The Seller is the record and beneficial owner, which as of
the Closing Date shall be free and clear of all liens and adverse claims, of
certain assets used by the Seller in the Cattle Business (the "Purchased
Assets," as more particularly described herein); and
D. This Agreement contemplates a transaction in which the
Purchaser will purchase all of the Purchased Assets of the Seller in return for
cash.
NOW, THEREFORE, for good and valuable consideration the receipt and
sufficiency of which are hereby acknowledged and in consideration of the mutual
covenants, representations, warranties and agreements contained herein, the
Parties hereby agree as follows:
1
<PAGE> 3
AGREEMENT
ARTICLE 1 - DEFINITIONS
"Affiliate" has the meaning set forth in Rule 12b-2 of the regulations
promulgated under the Securities Exchange Act of 1934, as amended.
"Closing" shall be defined as the closing of the transactions
contemplated pursuant to this Agreement.
"Closing Date" has the meaning set forth in Section 2(d) below.
"Confidential Information" has the meaning set forth in Section
7(a)(i) below.
"Code" means the Internal Revenue Code of 1986, as amended.
"Contract Date" has the meaning set forth in the preface above.
"Disclosure Schedule" shall have the meaning set forth in Article 3
hereof.
"Employee Benefit Plan" means any (a) nonqualified deferred
compensation or retirement plan or arrangement, (b) qualified defined
contribution retirement plan or arrangement which is an Employee Pension
Benefit Plan, (c) qualified defined benefit retirement plan or arrangement
which is an Employee Pension Benefit Plan (including any Multiemployer Plan),
or (d) Employee Welfare Benefit Plan or material fringe benefit or other
retirement, bonus, or incentive plan or program.
"Employee Pension Benefit Plan" has the meaning set forth in ERISA ss.
3(2).
"Employee Welfare Benefit Plan" has the meaning set forth in ERISA ss.
3(1).
"Environmental, Health, and Safety Requirements" shall mean all
federal, state, local and foreign statutes, regulations, ordinances and similar
provisions having the force or effect of law, all judicial and administrative
orders and determinations, and all common law concerning public health and
safety, worker health and safety, and pollution or protection of the
environment, including without limitation all those relating to the presence,
use, production, generation, handling, transportation, treatment, storage,
disposal, distribution, labeling, testing, processing, discharge, release,
threatened release, control, or cleanup of any hazardous materials, substances
or wastes, chemical substances or mixtures, pesticides, pollutants,
contaminants, toxic chemicals, petroleum products or byproducts, asbestos,
polychlorinated biphenyls, noise or radiation.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
2
<PAGE> 4
"ERISA Affiliate" means each entity that is treated as a single
employer with the Seller for purposes of Code ss. 414.
"GAAP" means United States generally accepted accounting principles as
in effect from time to time.
"Income Tax" means any federal, state, local, or foreign income tax,
including any interest, penalty, or addition thereto, whether disputed or not.
"Income Tax Return" means any return, declaration, report, claim for
refund, or information return or statement relating to Income Taxes, including
any schedule or attachment thereto, and including any amendment thereof.
"Intellectual Property" means (a) all inventions (whether patentable
or unpatentable and whether or not reduced to practice), all improvements
thereto, and 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 (whether or not
registered), together with all translations, adaptations, derivations, and
combinations thereof and including all goodwill associated therewith, and all
applications, registrations, and renewals in connection therewith, (c) all
copyrightable works, all 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 business 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), (g) all other proprietary rights, and (h) all copies and
tangible embodiments thereof (in whatever form or medium).
"Inventory Value" means the cost of the Seller's electronic ear tag,
trailer and feed inventory on hand on the Closing Date. The Parties anticipate
that the Inventory Value will not exceed One Hundred Thousand Dollars
($100,000).
"Key Employee" has the meaning set forth in the preface above.
"Knowledge" means actual knowledge after reasonable investigation.
"Multiemployer Plan" has the meaning set forth in ERISA ss. 3(37).
"Ordinary Course of Business" means the ordinary course of business
consistent with past custom and practice (including with respect to quantity
and frequency).
"Party" has the meaning set forth in the preface above.
3
<PAGE> 5
"Person" means an individual, a partnership, a corporation, an
association, a joint stock company, a trust, a joint venture, an unincorporated
organization, or a governmental entity (or any department, agency, or political
subdivision thereof).
"Purchased Assets" means all right, title, and interest in and to the
assets of the Seller described in Section 1(a) of the Disclosure Schedule, and
shall further include all right, title and interest in and to the following:
(i) all Intellectual Property and all goodwill, going concern, trade names,
customer and supplier lists, and similar intangible property relating to the
Cattle Business, and (ii) any presence on the World Wide Web portion of the
Internet maintained by or on behalf of the Seller in connection with the Cattle
Business, including, without limitation, the page located at the uniform
recourse locator address HTTP://WWW.JORDANCATTLE.COM, and any e-mail address
used by the Seller in connection with the Cattle Business, including, without
limitation, all e-mail addresses using the suffix "@jordancattle.com."
"Purchase Price" shall have the meaning set forth in Section 2(c)
hereof.
"Real Property Purchase Contract" means that certain Contract for Sale
and Purchase of Real Estate by and between the Purchaser and the Seller of even
date herewith, pursuant to which the Shareholders shall sell to the Purchaser,
and the Purchaser shall purchase from the Shareholders approximately fifteen
(15) acres in San Saba, Texas, thirty-five and 9/10 (35.9) acres in Brownwood,
Texas, and four (4) acres in Mason, Texas.
"Sales Tax" means an federal, state, local, or foreign sales tax,
including any interest, penalty, or addition thereto whether disputed or not.
"Sales Tax Return" means any return, declaration, report, claim for
refund, or information return or statement relating to Sales Taxes, including
any schedule or attachment thereto, and including any amendment thereof.
"Security Interest" means any mortgage, pledge, lien, encumbrance,
charge, or other security interest, other than (a) mechanic's, materialmen's,
and similar liens, (b) liens for taxes not yet due and payable or for taxes
that the taxpayer is contesting in good faith through appropriate proceedings,
(c) purchase money liens and liens securing rental payments under capital lease
arrangements, and (d) other liens arising in the Ordinary Course of Business
and not incurred in connection with the borrowing of money.
"Subsidiary" means any corporation with respect to which a specified
Person (or a Subsidiary thereof) owns a majority of the common stock or has the
power to vote or direct the voting of sufficient securities to elect a majority
of the directors.
4
<PAGE> 6
ARTICLE 2 - BASIC TRANSACTION
(a) Purchase and Sale of Assets. Subject to and on the terms and
conditions of this Agreement, at the Closing, the Purchaser shall purchase from
the Seller, and the Seller shall sell, assign, transfer and deliver to the
Purchaser, all of the Purchased Assets, free and clear of all liens, claims,
options, charges, security interests and encumbrances of any nature, for the
Purchase Price.
(b) Assumption of Liabilities. Intentionally Left Blank.
(c) Purchase Price. On and subject to the terms and conditions of
this Agreement and in reliance upon the representations, warranties, covenants
and agreements of the Seller, the Shareholders and the Key Employees contained
in this Agreement, the Purchaser shall pay to the Seller at the Closing the sum
of Two Million Seven Hundred Eighty-Four Thousand Five Hundred Ninety-Five
Dollars ($2,784,595) plus an amount equal to the Inventory Value (collectively,
the "Purchase Price") by wire transfer or delivery of other immediately
available funds to the account(s) of the Seller as designated by the Seller in
writing and delivered to the Purchaser concurrent herewith.
(d) Closing. On and subject to the provisions and conditions of
this Agreement, the Closing will take place at the offices of Gray, Harris &
Robinson, P.A., 201 East Pine Street, Suite 1200, Orlando, Florida 32801, on or
before May 15, 2000, or on such other date as the Parties to this Agreement
agree in writing (the "Closing Date").
(e) Deliveries at the Closing.
(i) At the Closing, the Seller and the Key Employees, as
appropriate, will execute, acknowledge and/or deliver to the Purchaser:
(A) the various certificates, instruments, and
documents referred to in Section 6(a) below;
(B) the Bill of Sale in the form attached
hereto as Exhibit B;
(C) the Employment Agreements in the form
attached hereto as Exhibit A; and
(D) such other instruments of sale, transfer,
conveyance, and assignment as the Purchaser and its counsel may reasonably
request.
5
<PAGE> 7
(ii) At the Closing, the Purchaser will, as appropriate,
execute, acknowledge and/or deliver to the Seller:
(A) the various certificates, instruments, and
documents referred to in Section 6(b) below;
(B) the Employment Agreements in the form
attached hereto as Exhibit A; and
(C) the Purchase Price.
(f) Allocation. The Parties agree to allocate the Purchase Price
(and all other capitalized costs) among the Purchased Assets for all purposes
(including financial accounting and tax purposes) in accordance with the
allocation schedule set forth in Section 2(f) of the Disclosure Schedule
attached hereto.
ARTICLE 3 - REPRESENTATIONS AND WARRANTIES OF SELLER, SHAREHOLDERS AND KEY
EMPLOYEES
The Seller, the Shareholders and the Key Employees, jointly and
severally, warrant and represent that each of the statements set forth in this
Article 3 are true, correct and complete as of the Contract Date and will be
true, correct and complete as of the Closing Date (as though made then and as
though the Closing Date were substituted for the Contract Date throughout this
Article 3), except as set forth in the disclosure schedule accompanying this
Agreement (the "Disclosure Schedule"). Notwithstanding the foregoing, the Key
Employees do not join in the making of the representations and warranties
contained in Sections 3(a), 3(b), 3(c)(1), and 3(f) below, it being understood
that such representations and warranties are being made solely by the Seller
and the Shareholders, jointly and severally. Notwithstanding the foregoing, it
is understood that the Key Employees, jointly and severally, join in the making
of the remaining representations and warranties contained in this Section 3
only to the extent of their Knowledge. The Disclosure Schedule will be arranged
in sections corresponding to the lettered and numbered sections contained in
this Article 3. The Purchaser's obligation to close under this Agreement is
conditioned and contingent upon the representations and warranties contained in
this Article 3 being true, correct and complete as of the Closing Date.
(a) Organization of the Seller. The Seller is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Texas and is duly qualified to do business in the State of Texas and has full
power and authority to carry on and conduct the Cattle Business and to own,
use, possess and sell the Purchased Assets.
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(b) Authorization and Effect of Transaction. The Seller has the
full power and authority (including full corporate power and authority) to
execute, deliver and fully perform its obligations under this Agreement.
Without limiting the generality of the foregoing, the execution and delivery of
this Agreement to the Purchaser and the carrying out of the provisions hereof,
have been duly authorized by all necessary action of the Seller's Board of
Directors and its shareholders, and this Agreement constitutes a valid and
binding obligation of the Seller enforceable against the Seller in accordance
with its terms and conditions. Each of the Shareholders and Key Employees has
the legal capacity and capability to execute, deliver and fully perform his or
her obligations under this Agreement.
(c) Noncontravention. Neither the execution and the delivery of
this Agreement, nor the consummation of the transactions contemplated hereby
(including the assignments and assumptions referred to in Article 2, above)
will (i) violate any constitution, statute, regulation, rule, injunction,
judgment, order, decree, ruling, charge, or other restriction of any
government, governmental agency, or court to which the Seller is subject or any
provision of the charter or bylaws of the Seller, or (ii) conflict with, result
in a breach of, constitute a default under, result in the acceleration of,
create in any party the right to accelerate, terminate, modify, or cancel, or
require any notice under any agreement, contract, lease, license, instrument,
loan, or other arrangement to which the Seller is a party or by which it is
bound or to which any of its assets is subject (or result in the imposition of
any Security Interest upon any of its assets). The Seller is not required to
give any notice to, make any filing with, or obtain any authorization, consent,
or approval of any government or governmental agency in order for the Parties
to consummate the transactions contemplated by this Agreement (including the
assignments and assumptions referred to in Article 2, above).
(d) Broker's Fees. The Seller has no liability or obligation to
pay any fees or commissions to any broker, finder, or agent with respect to the
transactions contemplated by this Agreement.
(e) Title to Purchased Assets. The Seller has good and marketable
title to each of the Purchased Assets, free and clear of any Security Interest
or restriction on transfer. All of the tangible Purchased Assets are in good
working order and condition, ordinary wear and tear excepted. All of the
Purchased Assets are being used in conformity in all respects to all applicable
building, zoning, fire health and other laws, ordinances or regulations and no
notice of any violation with respect thereto has been received by the Seller.
(f) Subsidiaries. The Seller does not have any Subsidiaries.
(g) Financial Statements and Financial Condition. Attached hereto
as Exhibit C are the following financial statements (collectively the
"Financial Statements"): (i) unaudited balance sheets and statements of income,
changes in stockholders' equity, and cash flow as of and for the fiscal years
ended December 31, 1997, 1998 and 1999 (the "Most Recent Fiscal Year End") for
the Seller; and (ii) unaudited consolidated balance sheet and statement of
income, changes in stockholders' equity, and cash flow (the "Most Recent
Financial Statements") as of and for the two months ended
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February 29, 2000 (the "Most Recent Fiscal Month End") for the Seller. On or
before the Closing Date, the Seller will have provided to the Purchaser audited
balance sheets and statements of income, changes in stockholders' equity, and
cash flow as of and for the fiscal years ended December 31, 1997, 1998 and 1999
for the Seller, which financial statements (including the notes thereto) shall
be prepared in accordance with GAAP applied on a consistent basis throughout
the periods covered thereby (with such financial statements being included
within the definition of "Financial Statements" as of the Closing Date). The
Financial Statements (including the notes thereto) present fairly the financial
condition of the Seller as of such dates and the results of operations of the
Seller for such periods, are correct and complete, and are consistent with the
books and records of the Seller (which books and records are correct and
complete); provided, however, that the Most Recent Financial Statements are
subject to normal year-end adjustments (which will not be material individually
or in the aggregate) and lack footnotes and other presentation items.
(h) Events Subsequent to Most Recent Fiscal Year End. Since the
Most Recent Fiscal Year End, there has not been any adverse change in the
business, financial condition, operations, results of operations, or future
prospects of the Seller.
(i) Undisclosed Liabilities. The Seller has no liabilities or
obligations whatsoever (whether known or unknown, whether asserted or
unasserted, whether absolute or contingent, whether accrued or unaccrued,
whether liquidated or unliquidated, and whether due or to become due, including
any liability for taxes) and there is no basis for any present or future
action, suit, proceeding, hearing, investigation, charge, complaint, claim, or
demand against the Seller giving rise to any such liability or obligation,
except for (i) liabilities set forth on the face of the Most Recent Balance
Sheet (rather than in any notes thereto) and (ii) liabilities that have arisen
after the Most Recent Fiscal Month End in the Ordinary Course of Business (none
of which results from, arises out of, relates to, is in the nature of, or was
caused by any breach of contract, breach of warranty, tort, infringement, or
violation of law).
(j) Legal Compliance. The Seller has complied with all applicable
laws (including, without limitation, all rules, regulations, codes, plans,
injunctions, judgments, orders, decrees, rulings, and charges thereunder) of
federal, state, local, and foreign governments (and all agencies thereof), and
no action, suit, proceeding, hearing, investigation, charge, complaint, claim,
demand, or notice has been filed or commenced against the Seller alleging any
failure so to comply.
(k) Tax Matters.
(i) The Seller has filed all material Income Tax Returns
and Sales Tax Returns that it has been required to file. All such Income Tax
Returns and Sales Tax Returns were correct and complete in all material
respects. All material Income and Sales Taxes owed by the Seller (whether or
not shown on any Income Tax Return or Sales Tax Return) have been paid. No
material claim has ever been made by an authority in a jurisdiction where the
Seller does not file an Income Tax Return or Sales Tax Return that it is or may
be subject to taxation by that jurisdiction. There
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are no material Security Interests on any of the assets of the Seller that
arose in connection with any failure (or alleged failure) to pay any Income or
Sales Tax.
(ii) The Seller has withheld and paid all material Income
and Sales Taxes required to have been withheld and paid in connection with
amounts paid or owing to any employee, independent contractor, creditor,
stockholder, or other third party.
(iii) None of the Key Employees, the Shareholders, or any
director or officer (or other responsible employee) of the Seller expects any
authority to assess any additional, material Income or Sales Tax for any period
for which Income or Sales Tax Returns have been filed. There is no material
dispute or claim concerning any Income Tax or Sales Tax liability of the Seller
either (A) claimed or raised by any authority in writing or (B) as to which any
of the Key Employees, the Shareholders, or the directors or officers (or other
responsible employees) of the Seller has Knowledge based upon personal contact
with any agent of such authority.
(iv) Section 3(k) of the Disclosure Schedule lists all
material federal, state, local, and foreign Income Tax Returns and Sales Tax
Returns filed with respect to the Seller for all taxable periods ended on or
after December 31, 1997, indicates those Income Tax Returns and Sales Tax
Returns that have been audited, and indicates those Income Tax Returns and
Sales Tax Returns that currently are the subject of audit. The Seller has
delivered to the Purchaser correct and complete copies of all federal Income
Tax Returns, examination reports, and statements of deficiencies assessed
against or agreed to by the Seller since January 1, 1997. The Seller has not
waived any statute of limitations in respect of Income Taxes or Sales Taxes or
agreed to any extension of time with respect to an Income Tax or Sales Tax
assessment or deficiency.
(v) The Seller has disclosed on its federal Income Tax
Returns all positions taken therein that could give rise to a substantial
understatement of federal Income Tax within the meaning of Code ss. 6662. The
Seller is not a party to any Income Tax allocation or sharing agreement.
(vi) The Seller has not been a member of an affiliated
group filing a consolidated federal Income Tax Return nor does it have any
liability for the Income Taxes of any Person under Reg ss. 1.1502-6 (or any
similar provision of state, local, or foreign law), as a transferee or
successor, by contract or otherwise.
(vii) The unpaid Income Taxes of the Seller (A) did not,
as of the Most Recent Fiscal Month End, materially exceed the reserve for
Income Tax liability (rather than any reserve for deferred taxes established to
reflect timing differences between book and tax income) set forth on the face
of the Most Recent Balance Sheet (rather than in any notes thereto) and (B)
will not materially exceed that reserve as adjusted for operations and
transactions through the Closing Date in accordance with the past custom and
practice of the Seller in filing its Income Tax Returns.
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(I) Intellectual Property.
(i) The Seller owns or has the right to use pursuant to
a license, sublicense, agreement, or permission all Intellectual Property
necessary or desirable for the operation of each of its businesses (including,
without limitation, the Cattle Business) as presently conducted and as
presently proposed to be conducted. Each such item of Intellectual Property
owned or used by the Seller immediately prior to the Closing hereunder will be
owned or available for use by the Purchaser on identical terms and conditions
immediately subsequent to the Closing hereunder. The Seller has taken all
necessary and desirable action to maintain and protect each item of
Intellectual Property that it owns or uses in connection with any of its
businesses (including, without limitation, the Cattle Business).
(ii) The Seller has not interfered with, infringed upon,
misappropriated, or otherwise come into conflict with any Intellectual Property
rights of third parties, and none of the Seller, the Shareholders, the Key
Employees, or the directors and officers (and employees with responsibility for
Intellectual Property matters) of the Seller has ever received any charge,
complaint, claim, demand, or notice alleging any such interference,
infringement, misappropriation, or violation (including any claim that the
Seller must license or refrain from using any Intellectual Property rights of
any third party). To the Knowledge of the Shareholders, the Key Employees and
the directors and officers (and employees with responsibility for Intellectual
Property matters) of the Seller, no third party has interfered with, infringed
upon, misappropriated, or otherwise come into conflict with any Intellectual
Property rights of the Seller.
(iii) Section 3(l)(iii) of the Disclosure Schedule
identifies each patent or registration that has been issued to the Seller with
respect to any of its Intellectual Property, identifies each pending patent
application or application for registration that the Seller has made with
respect to any of its Intellectual Property, and identifies each license,
agreement, or other permission that the Seller has granted to any third party
with respect to any of its Intellectual Property (together with any
exceptions). The Seller has delivered to the Purchaser correct and complete
copies of all such patents, registrations, applications, licenses, agreements,
and permissions (as amended to date) and has made available to the Purchaser
correct and complete copies of all other written documentation evidencing
ownership and prosecution (if applicable) of each such item. Section 3(l)(iii)
of the Disclosure Schedule also identifies each trade name or unregistered
trademark used by the Seller in connection with the Cattle Business or any
other business. With respect to each item of Intellectual Property required to
be identified in Section 3(m)(iii) of the Disclosure Schedule:
(A) the Seller possesses all right, title, and
interest in and to the item, free and clear of any Security Interest, license,
or other restriction;
(B) the item is not subject to any outstanding
injunction, judgment, order, decree, ruling, or charge;
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<PAGE> 12
(C) no action, suit, proceeding, hearing,
investigation, charge, complaint, claim, or demand is pending or is threatened
which challenges the legality, validity, enforceability, use, or ownership of
the item; and
(D) the Seller has never agreed to indemnify
any Person for or against any interference, infringement, misappropriation, or
other conflict with respect to the item.
(iv) Section 3(l)(iv) of the Disclosure Schedule
identifies each item of Intellectual Property that any third party owns and
that the Seller uses pursuant to license, sublicense, agreement, or permission.
The Seller has delivered to the Purchaser correct and complete copies of all
such licenses, sublicenses, agreements, and permissions (as amended to date).
With respect to each item of Intellectual Property required to be identified in
Section 3(l)(iv) of the Disclosure Schedule;
(A) the license, sublicense, agreement, or
permission covering the item is legal, valid, binding, enforceable, and in full
force and effect;
(B) the license, sublicense, agreement, or
permission will continue to be legal, valid, binding, enforceable, and in full
force and effect on identical terms following the consummation of the
transactions contemplated hereby (including the assignments and assumptions
referred to in Article 2, above);
(C) no party to the license, sublicense,
agreement, or permission is in breach or default, and no event has occurred
that with notice or lapse of time would constitute a breach or default or
permit termination, modification, or acceleration thereunder;
(D) no party to the license, sublicense,
agreement, or permission has repudiated any provision thereof;
(E) with respect to each sublicense, the
representations and warranties set forth in subsections (A) through (D) above
are true and correct with respect to the underlying license;
(F) the underlying item of Intellectual
Property is not subject to any outstanding injunction, judgment, order, decree,
ruling, or charge;
(G) no action, suit, proceeding, hearing,
investigation, charge, complaint, claim, or demand is pending or is threatened
that challenges the legality, validity, or enforceability of the underlying
item of Intellectual Property; and
(H) the Seller has not granted any sublicense
or similar right with respect to the license, sublicense, agreement, or
permission.
(v) To the Knowledge of all of the Shareholders, the Key
Employees, and any director or officer (or employee with responsibility for
Intellectual Property matters) of the Seller,
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the Seller will not interfere with, infringe upon, misappropriate, or otherwise
come into conflict with, any Intellectual Property rights of third parties as a
result of the continued operation of the Cattle Business as presently conducted
and as presently proposed by the Purchaser to be conducted after the Closing.
(m) Tangible Assets. The Seller owns or leases all buildings,
machinery, equipment, and other tangible assets necessary for the conduct of
the Cattle Business as presently conducted (and as presently proposed to be
conducted by the Purchaser). To the Knowledge of the Seller, the Shareholders,
and the Key Employees, the buildings, machinery, equipment, and other tangible
assets that the Seller owns and leases are free from defects (patent and
latent), have been maintained in accordance with normal industry practice, and
are in good operating condition and repair (subject to normal wear and tear),
and are suitable for the purposes for which it presently is used (and presently
are proposed to be used by the Purchaser).
(n) Inventory. The inventory of the Seller consists of trailers
and feed, all of which is merchantable and fit for the purpose for which it was
procured, and none of which is obsolete, damaged, or defective, subject only to
the reserve for inventory writedown set forth on the face of the Most Recent
Balance Sheet (rather than in any notes thereto) as adjusted for operations and
transactions through the Closing Date in accordance with the past custom and
practice of the Seller.
(o) Contracts. Section 3(o) of the Disclosure Schedule lists the
following contracts and other agreements to which the Seller is a party:
(i) any agreement (or group of related agreements) for
the lease of personal property to or from any Person providing for lease
payments in excess of $100,000 per annum;
(ii) any agreement for the purchase or sale of raw
materials, commodities, supplies, products, or other personal property, or for
the furnishing or receipt of services;
(iii) any agreement concerning a partnership or joint
venture;
(iv) any agreement (or group of related agreements) under
which it has created, incurred, assumed, or guaranteed any indebtedness for
borrowed money, or any capitalized lease obligation, in excess of $100,000 or
under which it has imposed a Security Interest on any of its assets, tangible
or intangible;
(v) any agreement concerning confidentiality or
noncompetition;
(vi) any agreement involving the Seller and/or its
Affiliates;
(vii) any profit sharing, stock option, stock purchase,
stock appreciation, deferred compensation, severance, or other plan or
arrangement for the benefit of its current or former directors, officers, and
employees;
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(viii) any collective bargaining agreement;
(ix) any agreement for the employment of any individual
on a full-time, part-time, consulting, or other basis providing annual
compensation in excess of $100,000 or providing severance benefits;
(x) any agreement under which it has advanced or loaned
any amount to any of its directors, officers, and employees outside the
Ordinary Course of Business;
(xi) any agreement under which the consequences of a
default or termination could have an adverse effect on the business, financial
condition, operations, results of operations, or future prospects of the
Seller; or
(xii) any other agreement (or group of related agreements)
the performance of which involves consideration in excess of $100,000.
The Seller has delivered to the Purchaser a correct and complete copy of each
written agreement listed in Section 3(o) of the Disclosure Schedule (as amended
to date) and a written summary setting forth the material terms and conditions
of each oral agreement referred to in Section 3(o) of the Disclosure Schedule.
With respect to each such agreement: (A) the agreement is legal, valid,
binding, enforceable, and in full force and effect in all material respects;
(B) the agreement will continue to be legal, valid, binding, enforceable, and
in full force and effect on identical terms following the Closing; (C) no party
is in breach or default, and no event has occurred that with notice or lapse of
time would constitute a breach or default, or permit termination, modification,
or acceleration, under the agreement; and (D) no party has repudiated any
provision of the agreement.
(p) Powers of Attorney. There are no outstanding powers of
attorney executed on behalf the Seller.
(q) Insurance. Section 3(q) of the Disclosure Schedule sets forth
the following information with respect to each insurance policy (including
policies providing property, casualty, liability, and workers' compensation
coverage and bond and surety arrangements) with respect to which the Seller is
a party, a named insured, or otherwise the beneficiary of coverage:
(i) the name, address, and telephone number of the
agent;
(ii) the name of the insurer, the name of the
policyholder, and the name of each covered insured;
(iii) the policy number and the period of coverage;
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(iv) the scope (including an indication of whether the
coverage is on a claims made, occurrence, or other basis) and amount (including
a description of how deductibles and ceilings are calculated and operate) of
coverage; and
(v) a description of any retroactive premium adjustments
or other material loss-sharing arrangements.
With respect to each such insurance policy: (A) the policy is legal, valid,
binding, enforceable, and in full force and effect in all material respects;
(B) neither the Seller nor any other party to the policy is in breach or
default (including that respect to the payment of premiums or the giving of
notices), and no event has occurred which, with notice or the lapse of time,
would constitute such a breach or default, or permit termination, modification,
or acceleration, under the policy; and (C) no party to the policy has
repudiated any provision thereof. Section 3(q) of the Disclosure Schedule
describes any self-insurance arrangements affecting the Seller.
(r) Litigation. Section 3(r) of the Disclosure Schedule sets
forth each instance in which the Seller (i) is subject to any outstanding
injunction, judgment, order, decree, ruling, or charge or (ii) is a party or,
to the Knowledge of any of either of the Key Employees or Shareholders, or any
director or officer of the Seller, is threatened to be made a party to any
action, suit, proceeding, hearing, or investigation of, in, or before any court
or quasi-judicial or administrative agency of any federal, state, local, or
foreign jurisdiction or before any arbitrator.
(s) Employees. To the Knowledge of any of the Seller, the
Shareholders, and the Key Employees, no Key Employee or other employee that
contributes significantly to the conduct of the Cattle Business (including,
without limitation, Greg Miller), plans to terminate employment with the Seller
or the Purchaser (or Purchaser's Affiliate), as appropriate, during the next 12
months. The Seller is not a party to or bound by any collective bargaining
agreement, nor has it experienced any strike or material grievance, claim of
unfair labor practices, or other collective bargaining dispute since the date
it was incorporated. The Seller has not committed any unfair labor practice.
None of the Seller, the Shareholders, the Key Employees, nor any director or
officer of the Seller, has any Knowledge of any organizational effort presently
being made or threatened by or on behalf of any labor union with respect to
employees of the Seller.
(t) Employee Benefits. Neither the Seller nor any ERISA Affiliate
maintains, has ever maintained, contributes, has ever contributed, has the
obligation to contribute, or has ever had the obligation to contribute to any
Employee Benefit Plan.
(u) Guaranties. The Seller is not a guarantor or otherwise
responsible for any liability or obligation (including indebtedness) of any
other Person.
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(v) Environmental, Health, and Safety Matters.
(i) The Seller and its predecessors and Affiliates has
complied and is in compliance, in each case in all respects, with all
Environmental, Health, and Safety Requirements.
(ii) Without limiting the generality of the foregoing,
the Seller and its Affiliates, has obtained, has complied, and is in compliance
with, in each case in all respects, all permits, licenses and other
authorizations that are required pursuant to Environmental, Health, and Safety
Requirements for the occupation of its facilities and the operation of the
Cattle Business; a list of all such permits, licenses and other authorizations
is set forth in Section 3(w)(ii) of the Disclosure Schedule.
(iii) Neither the Seller nor any of the Seller's
Affiliates has received any written or oral notice, report or other information
regarding any actual or alleged violation of Environmental, Health, and Safety
Requirements, or any liabilities or potential liabilities (whether accrued,
absolute, contingent, unliquidated or otherwise), including any investigatory,
remedial or corrective obligations, relating to any of them or its facilities
arising under Environmental, Health, and Safety Requirements.
(iv) Except as set forth in Section 3(v)(ii) of the
Disclosure Schedule, to the Knowledge of the Seller, the Shareholders, and the
Key Employees, none of the following exists at any property or facility owned
or operated by the Seller or included as one of the Purchased Assets: (1)
underground storage tanks, (2) asbestos-containing material in any friable and
damaged form or condition, (3) materials or equipment containing
polychlorinated biphenyls, or (4) landfills, surface impoundments, or disposal
areas.
(v) To the Knowledge of the Seller, the Shareholders,
and the Key Employees, neither the Seller nor any of its predecessors or
Affiliates has treated, stored, disposed of, arranged for or permitted the
disposal of, transported, handled, or released any substance, including without
limitation any hazardous substance, or owned or operated any property or
facility (and no such property or facility is contaminated by any such
substance) in a manner that has given or would give rise to liabilities,
including any liability for response costs, corrective action costs, personal
injury, property damage, natural resources damages or attorney fees, pursuant
to the Comprehensive Environmental Response, Compensation and Liability Act of
1980, as amended ("CERCLA") or the Solid Waste Disposal Act, as amended
("SWDA") or any other Environmental, Health, and Safety Requirements.
(vi) Neither this Agreement nor the consummation of the
transaction that is the subject of this Agreement will result in any
obligations for site investigation or cleanup, or notification to or consent of
government agencies or third parties, pursuant to any of the so-called
"transaction-triggered" or "responsible property transfer" Environmental,
Health, and Safety Requirements.
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(w) Certain Business Relationships With the Seller. None of the
Shareholders, the Key Employees, or any of his or her Affiliates has been
involved in any material business arrangement or relationship with the Seller
within the past 12 months, and, other than as set forth in Section 3(w) of the
Disclosure Schedule, none of the Shareholders, the Key Employees, or any of his
or her Affiliates owns any material asset, tangible or intangible, that is used
in the Cattle Business.
(x) Disclosure. No covenant, representation or warranty of any of
the Seller, the Shareholders, or the Key Employees contained in this Agreement,
the Disclosure Schedule, or any other documents or instrument delivered or to
be delivered by or on behalf of any of the Seller, the Shareholders, or the Key
Employees to the Purchaser or any of the Purchaser's representatives, including
auditors or counsel, in connection with this Agreement or any of the
transactions contemplated hereby, contains or will contain any untrue statement
or a fact or omits any fact necessary to make the statements contained herein
or therein not false or misleading.
ARTICLE 4 - REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
The Purchaser warrants and represents to the Seller that each of the
statements contained in this Article 4 is true and correct as of the Contract
Date and will be true and correct as of the Closing Date (as though made then
and as though the Closing Date were substituted for the Contract Date
throughout this Article 4), except as set forth in the Disclosure Schedule. The
Disclosure Schedule will be arranged in sections corresponding to the lettered
and numbered sections contained in this Article 4.
(a) Organization of the Purchaser. The Purchaser is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Delaware.
(b) Authorization of Transaction. The Purchaser has full power
and authority (including full corporate power and authority) to execute and
deliver this Agreement and to perform its obligations hereunder.
(c) Noncontravention. Neither the execution and the delivery of
this Agreement, nor the consummation of the transactions contemplated hereby
(including the assignments and assumptions referred to in Article 2 above),
will (i) violate any constitution, statute, regulation, rule, injunction,
judgment, order, decree, ruling, charge, or other restriction of any
government, governmental agency, or court to which the Purchaser is subject or
any provision of its charter or bylaws or (ii) conflict with, result in a
breach of, constitute a default under, result in the acceleration of, create in
any party the right to accelerate, terminate, modify, or cancel, or require any
notice under any agreement, contract, lease, license, instrument, or other
arrangement to which the Purchaser is a party or by which it is bound or to
which any of its assets is subject.
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ARTICLE 5 - PRE-CLOSING COVENANTS
The Parties agree as follows with respect to the period between the
Contract Date and the Closing.
(a) General. Each of the Parties will use its reasonable best
efforts to take all action and to do all things necessary or advisable in order
to consummate and make effective the transactions contemplated by this
Agreement (including satisfaction, but not waiver, of the closing conditions
set forth in Article 6, below).
(b) Notices and Consents. The Seller will give any notices to
third parties, and the Seller will use its reasonable best efforts to obtain
any third party consents, that the Purchaser may request in connection with the
matters referred to in Section 3(c) above. Each of the Parties will give any
notices to, make any filings with, and use its reasonable best efforts to
obtain any authorizations, consents, and approvals of governments and
governmental agencies in connection with the matters referred to in Section
3(c) and Section 4(c) above.
(c) Operation of Business. The Seller will not engage in any
practice, take any action, or enter into any transaction outside the Ordinary
Course of Business. Without limiting the generality of the foregoing, the
Seller will not (i) declare, set aside, or pay any dividend or make any
distribution with respect to its capital stock or redeem, purchase, or
otherwise acquire any of its capital stock, (ii) pay any amount to any third
party with respect to any liability or obligation (including any costs and
expenses the Seller has incurred or may incur in connection with this Agreement
and the transactions contemplated hereby) outside of the Ordinary Course of
Business, or (iii) otherwise engage in any practice, take any action, or enter
into any transaction of the sort described in Section 3(h) above.
(d) Preservation of Business. The Seller will keep its business
and properties substantially intact, including its present operations, physical
facilities, working conditions, and relationships with lessors, licensors,
suppliers, customers, and employees.
(e) Full Access. The Seller will permit representatives of the
Purchaser to have full access to all premises, properties, personnel, books,
records (including tax records), contracts, and documents of or pertaining to
the Seller.
(f) Notice of Developments. Each Party will give prompt written
notice to the other Parties of any material adverse development causing a
breach of any of its own representations and warranties in Article 3 and
Article 4 above. No disclosure by any Party pursuant to this Section 5(f),
however, shall be deemed to amend or supplement the Disclosure Schedule or to
prevent or cure any misrepresentation, breach of warranty, or breach of
covenant.
(g) Exclusivity. None of the Seller, Shareholders, or Key
Employees will (i) solicit, initiate, or encourage the submission of any
proposal or offer from any Person relating to the
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acquisition of any capital stock or other voting securities, or any substantial
portion of the assets, of the Seller (including any acquisition structured as a
merger, consolidation, or share exchange) or (ii) participate in any
discussions or negotiations regarding, furnish any information with respect to,
assist or participate in, or facilitate in any other manner any effort or
attempt by any Person to do or seek any of the foregoing. The Seller will
notify the Purchaser immediately if any Person makes any proposal, offer,
inquiry, or contact with respect to any of the foregoing.
ARTICLE 6 - CONDITIONS TO OBLIGATION TO CLOSE
(a) Conditions to Obligation of the Purchaser. The obligation of
the Purchaser to consummate the transactions to be performed by it in
connection with the Closing is subject to satisfaction of the following
conditions:
(i) Each of the conditions set forth in the Real
Property Purchase Contract shall have been satisfied, and, simultaneously with
the Closing, the Purchaser and the Shareholders shall consummate the
transactions to be performed by them pursuant to the Real Property Purchase
Contract;
(ii) the Purchaser shall be reasonably satisfied with the
results of its continuing business, legal, environmental, and accounting due
diligence, including, without limitation, its review or evaluation of any
matter addressed in any section of the Disclosure Schedule regarding the Seller
and the Cattle Business;
(iii) the representations and warranties set forth in
Article 3 above shall be true and correct in all material respects at and as of
the Closing Date;
(iv) each of the Seller, Shareholders, and Key Employees
shall have performed and complied with all of its, his or her covenants
hereunder in all material respects through the Closing;
(v) the Seller shall have procured all of the material
third party consents specified in Section 5(b) above;
(vi) no action, suit, or proceeding shall be pending
before any court or quasi-judicial or administrative agency of any federal,
state, local, or foreign jurisdiction or before any arbitrator wherein an
unfavorable injunction, judgment, order, decree, ruling, or charge would (A)
prevent consummation of any of the transactions contemplated by this Agreement,
(B) cause any of the transactions contemplated by this Agreement to be
rescinded following consummation, or (C) affect adversely the right of the
Purchaser to own the Purchased Assets and operate the Cattle Business.
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(vii) the Seller shall have paid all Income Taxes and
Sales Taxes owed by the Seller, as set forth in Section 3(k) of the Disclosure
Schedule.
(viii) the Seller shall have delivered to the Purchaser a
certificate executed by its President to the effect that each of the conditions
specified above in Section 6(a)(iii)-(vi) is satisfied in all respects;
(ix) the Purchaser shall have received all other material
authorizations, consents, and approvals of governments and governmental
agencies referred to in Section 3(c) and Section 4(c) above;
(x) the employment agreements as set forth in Exhibits
A-1 and A-2 attached hereto shall be in full force and effect (or will be in
full force and effect as of the Closing Date);
(xi) the Seller shall have provided to the Purchaser, at
the Purchaser's sole cost and expense, audited balance sheets and statements of
income, changes in stockholders' equity, and cash flow as of and for the fiscal
years ended December 31, 1997, 1998 and 1999 for the Seller, which financial
statements (including the notes thereto) shall be prepared in accordance with
GAAP applied on a consistent basis throughout the periods covered thereby; and
(xii) all actions to be taken by the Seller, Shareholders,
and Key Employees in connection with consummation of the transactions
contemplated hereby and all certificates, opinions, instruments, and other
documents required to effect the transactions contemplated hereby will be
reasonably satisfactory in form and substance to the Purchaser.
The Purchaser may waive any condition specified in this Section 6(a) if it
executes a writing so stating at or prior to the Closing.
(b) Conditions to Obligation of the Seller. The obligation of the
Seller to consummate the transactions to be performed by it in connection with
the Closing is subject to satisfaction of the following conditions:
(i) the representations and warranties set forth in
Article 4 above shall be true and correct in all material respects at and as of
the Closing Date; and
(ii) the Purchaser shall have performed and complied with
all of its covenants hereunder in all material respects through the Closing.
The Seller may waive any condition specified in this Section 6(b) if they
execute a writing so stating at or prior to the Closing.
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ARTICLE 7 - TRADE SECRETS; CONFIDENTIAL AND PROPRIETARY INFORMATION COVENANTS;
NONCOMPETITION; NONSOLICITATION; AND NONDISCLOSURE
(a) Each of the Key Employees, the Shareholders and the Seller
expressly acknowledges that the Cattle Business involves trade secrets,
confidential and proprietary information and personal relationships with
customers, and that the success of the Cattle Business is due in large part to
the exclusive retention of such trade secrets, confidential and proprietary
information and the undisturbed continuation of such personal relationships
with customers.
(i) Each of the Key Employees, the Shareholders and the
Seller agrees and acknowledges that all information pertaining to the Seller's
personnel, finances, facilities, and customers constitute trade secrets, and
valuable confidential and proprietary information that the Seller will sell to
the Purchaser pursuant to this Agreement and in which, thereafter, the
Purchaser will have a proprietary interest (collectively the "Confidential
Information"). Each of the Key Employees, the Shareholders and the Seller
recognizes that the Confidential Information is not readily available to the
public and is information from which the Purchaser will derive an independent
economic value from not being known and that the information is subject to
efforts that are reasonable to maintain its secrecy. The failure to mark any
documents, reports, data or information "confidential" shall not affect the
confidential nature of the material.
(ii) Each of the Key Employees, the Shareholders and the
Seller expressly covenants and agrees that the neither the Seller, either of
the Shareholders nor either of the Key Employees shall at any time, directly or
indirectly, reveal, divulge, disclose, disseminate, fax, transmit, publish or
communicate to any person, firm, or corporation, or other entity, other than to
employees of the Purchaser, or copy or utilize for its, his or her own benefit,
or the benefit of others, in any manner whatsoever, any Confidential
Information of any kind, nature, or description concerning any matters
affecting or relating to the Cattle Business or customers of the Cattle
Business without the express prior written consent of the Purchaser, nor will
the Seller, either of the Shareholders or either of the Key Employees make use
of such Confidential Information for its, his or her personal benefit at any
time other than in connection with the carrying out of its, his or her
responsibilities under this Agreement. The prohibition provided in this
Paragraph 7(a)(ii) is effective beginning on the Contract Date and shall
continue indefinitely thereafter.
(iii) All Confidential Information shall become property
of the Purchaser on and after the Closing Date. Not later than the Closing
Date, the Seller, each of the Shareholders and each of the Key Employees shall
surrender to the Purchaser all documents, records, computer programs or disks,
and similar repositories of or containing Confidential Information, including,
but not limited to, all lists (including, without limitation, customer lists),
charts, schedules, reports, financial statements, books, records and tangible
evidence of any type which relate in any way to the Cattle Business, and all
copies thereof, to the Purchaser.
(b) Noncompetition. Each of the Key Employees, each of the
Shareholders and the Seller jointly and severally covenants and agrees that
from the date of Closing until that date which is five
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(5) years therefrom (the "Covenant Period") he, she or it, as appropriate, will
not, directly or indirectly, own, manage, operate, join, control, be employed
by, be engaged on an independent contractor basis or other representative
capacity, or participate in the ownership, management, operation, or control
of, receive any monetary benefits from or in connection with, or be connected
in any other manner with, any individual, corporation, partnership or other
entity (other than the Purchaser) that is engaged in, or any other transaction
or activity in, the business of any of buying or selling of cattle or other
livestock for resale, or order buying, brokering, selling, trading, auctioning,
or otherwise dealing in or with cattle or livestock anywhere within the State
of Texas or on or through the World Wide Web portion of the Internet (whether
with respect to purchasers or sellers inside or outside the State of Texas)
(with any such business or activity referred to herein as a "Prohibited
Business"), without the prior express written permission of the Purchaser,
which permission may be given or withheld in the Purchaser's sole discretion;
provided, however, a Prohibited Business shall expressly exclude any cattle
ranching activities not involving the sale of cattle, and shall further exclude
the ultimate sale of cattle used in any cattle ranching activities to the
extent at least ninety-five percent (95%) of such sales are made on a
"long-term" basis (i.e., the period of time between the purchase of the cattle
and the sale of such cattle exceeds (4) months).
(c) Nonsolicitation. Each of the Key Employees, each of the
Shareholders and the Seller jointly and severally covenant and agree that
during the Covenant Period, he, she or it, as appropriate, will not, without
the express prior written permission of the Purchaser, either directly or
indirectly, on his, her or its own behalf or in the service of others, solicit,
divert, service, accept or hire or attempt to solicit, divert, service, accept,
entice or hire to any competing business or induce to terminate employment with
the Purchaser any person that was employed by the Seller immediately before the
Closing Date, whether or not such employee is a full-time employee or a
temporary employee of the Purchaser and whether or not such employment is
pursuant to a written agreement and whether or not such employment is for a
determined period or at will.
(d) Nondisclosure. Each of the Key Employees, each of the
Shareholders and the Seller jointly and severally covenant and agree that
during the Covenant Period he, she or it, as appropriate, shall not disclose or
disseminate any of the business methods and procedures of the Cattle Business,
nor the list of any of the Cattle Business's customers, directly or indirectly,
in any manner whatsoever, to any person, firm, corporation, association or
other entity for any reason or purpose whatsoever.
(e) Provisions Applicable to Above Covenants and Agreements. The
following apply to the covenants and agreements contained above in Paragraphs
7(a) through 7(d):
(i) If any of the Key Employees or Shareholders seeks
employment with any Prohibited Business, such Key Employee or Shareholder, as
appropriate, will notify such Prohibited Business of the terms of this
Agreement and specifically the covenants contained in this Article 7, and each
Key Employee and Shareholder further agrees that the Purchaser may notify the
Prohibited Business by whom such Key Employee or Shareholder, as appropriate,
may become employed of the existence of this Agreement.
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(ii) Each of the Key Employees, each of the Shareholders
and the Seller acknowledges and agrees that the covenants and agreements
contained in this Article 7 are of the essence of this Agreement; that each of
such covenants is reasonable and necessary to protect and preserve the
Confidential Information and the legitimate business interests of the
Purchaser; that irreparable harm, loss and damage, which cannot be remedied in
damages in an action at law, will be suffered by the Purchaser should any of
the Seller, the Shareholders, or the Key Employees breach any of the covenants
and agreements contained in this Article 7; that a breach of any such covenant
and agreement may constitute an infringement of the Purchaser's rights in and
to the Cattle Business's trade secrets; that each of such covenants or
agreements is separate, distinct and severable not only from the other of such
covenants and agreements but also from the other and remaining provisions of
this Agreement; that the unenforceability of any other such covenant or
agreement shall not affect the validity or enforceability of any other
provision or provisions of this Agreement; and that, in addition to other
rights and remedies available to it as a matter of law or equity, the Purchaser
shall be entitled to an immediate temporary injunction and also to a permanent
injunction to prevent a breach or contemplated breach by any of the Seller, the
Shareholders, or the Key Employees of any of such covenants or agreements.
(iii) In the event that any of the Seller, the
Shareholders or the Key Employees shall breach any or all of the covenants set
forth in this Article 7, the running of the period of the restrictions set
forth in such subparagraphs breached shall be tolled during the continuation(s)
of any such breach or breaches by any of the Seller, the Shareholders or the
Key Employees and the running of the period of such restrictions shall commence
or commence again only upon compliance by such breaching party with the terms
of the applicable subparagraph breached.
(iv) Each of the Key Employees, Shareholders, and the
Seller has carefully read and considered the terms and provisions of this
Article 7 and, having done so, agree that the restrictions set forth herein are
fair and reasonable and are reasonably necessary for the protection of the
Confidential Information and the legitimate business interests of the
Purchaser, including the Purchaser's goodwill and substantial relationships
with clients and customers. It is the belief of the Parties that the best
protection that can be given to the Purchaser that does not infringe on the
rights of any of the Seller, the Shareholders or the Key Employees to conduct
any unrelated business, is to provide for restrictions described above. In the
event any of said restrictions are to be held unenforceable as over broad,
overlong, not reasonably necessary to protect the legitimate business interests
of the Purchaser, or for any other reason, the Parties agree that the court
shall modify such restriction and grant the relief necessary to protect such
interests. As so modified, such restriction shall be as fully enforceable as if
it had been set forth herein by the Parties. It is the intent of the Parties
that the court in so establishing substitute restrictions, recognize that the
Parties hereto desire that the aforedescribed restrictions be imposed and
maintained to the maximum lawful extent.
(v) None of the Key Employees, the Shareholders or the
Seller shall assert as a defense that the Purchaser has no (or insufficient)
legitimate business interests to support the covenants and agreements contained
in this Article 7, and none of the Key Employees, the
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Shareholders or the Seller shall assert as a defense that the Purchaser has an
adequate remedy at law or that the harm to the Purchaser is not irreparable.
(vi) Each of the Key Employees, the Shareholders and the
Seller agrees the covenants and agreements shall be fully enforceable against
them. The covenants and agreements set out in this Article 7 shall survive
either or both of the Closing and/or the termination of this Agreement.
(vii) The Parties agree that, notwithstanding anything to
the contrary contained herein, One Thousand Dollars ($1,000) of the Purchase
Price shall be paid directly to the Shareholders as partial consideration for
the covenants and agreements contained in this Article 7 made by the
Shareholders, which, when taken together with the other consideration being
paid to the Seller (the payment of which, the Shareholders jointly assert and
agree, substantially benefits the Shareholders), constitute good and fair
consideration under applicable Texas law for the joinder by the Shareholders in
the covenants and agreements of this Article 7, the making by the Shareholders
of such covenants and agreements, and the subsequent enforcement thereof. In
the event that the Purchaser is required to enforce any covenant or agreement
made by any Shareholder under this Article 7 or elsewhere in this Agreement (or
seek remedy or claim damage for the breach thereof), neither Shareholder shall
assert or attempt to assert that such Shareholder received insufficient or
inadequate consideration hereunder when taking into account the remedies then
being sought or the damages then being claimed by the Purchaser.
(viii) The Parties agree that One Thousand Dollars ($1,000)
of additional consideration shall be paid by the Purchaser to the Key Employees
as partial consideration for the covenants and agreements contained in this
Article 7 made by the Key Employees, which, when taken together with the other
consideration being paid to the Seller (the payment of which, the Key Employees
assert and agree, substantially benefits the Key Shareholders), constitute good
and fair consideration under applicable Texas law for the joinder by the Key
Employees in the covenants and agreements of this Article 7, the making by the
Key Employees of such covenants and agreements, and the subsequent enforcement
thereof. In the event that the Purchaser is required to enforce any covenant or
agreement made by any Key Employee under this Article 7 or elsewhere in this
Agreement (or seek remedy or claim damage for the breach thereof), neither Key
Employee shall assert or attempt to assert that such Key Employee received
insufficient or inadequate consideration hereunder when taking into account the
remedies then being sought or the damages then being claimed by the Purchaser.
ARTICLE 8 - SELLER'S CURRENT EMPLOYEES
(a) Key Employees. On or before the Closing Date, and as a
condition to the Closing, each of the Key Employees shall enter into an
Employment Agreement with the Purchaser, which agreement shall be substantially
in the same form as the Employment Agreement attached hereto as Exhibit A. Each
of the Seller, the Shareholders and the Key Employees hereby expressly
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acknowledges to the Purchaser that: (i) Jordan's execution and delivery of, and
faithful performance under, such employment agreement is a material and
substantial inducement and primary condition for the Purchaser's execution and
delivery of this Agreement, (ii) Jordan hereby represents and warrants to the
Purchaser that he currently intends to, and he shall, faithfully and diligently
perform his duties and obligations under his Employment Agreement pursuant to
and in accordance with the terms and conditions thereof, and (iii) but for the
Purchaser's reasonable expectation of the occurrence of Jordan's performance
under his Employment Agreement based upon his express representation contained
in subsection 8(a)(ii) above, the Purchaser would not have entered into this
Agreement or otherwise agreed to Close the transactions contemplated herein and
hereunder.
(b) Other Employment Matters. The Seller acknowledges that the
Purchaser is not required under the terms of this Agreement to hire any other
employees or independent contractors currently working for the Seller. Section
8 to the Disclosure Schedule attached hereto discloses to the Purchaser the
complete and accurate list of the name, current rate of compensation, and any
vacation or holiday pay, and any other compensation arrangements or fringe
benefits of each current employee of the Seller. The Seller agrees to pay all
accrued and unpaid wages, bonuses, vacation or leave time, sick pay, holiday
pay, and all federal and state FICA, withholding taxes, unemployment taxes and
workers' compensation insurance premiums with respect to the Seller's employees
through the Closing Date, including any worker's compensation, unemployment
compensation, or other premiums that occur or are charged to the Seller after
the Closing Date for periods before the Closing Date.
Purchaser may in its sole discretion hire none, some or all current
employees of the Seller. In the event that the Purchaser does hire any such
employees, the Purchaser agrees to be responsible for the payment of all
federal and state FICA, withholding taxes, unemployment taxes and worker's
compensation insurance premiums with respect to such employees hired by the
Purchaser, if any, after the date of hire. The Purchaser will not adopt or
assume at the Closing any of the Employee Benefit Plans that the Seller
maintains or any trust, insurance contract, annuity contract, or other funding
arrangement that the Seller has established with respect thereto. In no event
shall the Purchaser have any liability to the Seller or to any employee or
independent contractor of the Seller for any cause or reason, and the Seller
shall fully indemnify, hold the Purchaser, its agents, employees and assigns,
harmless and defend against any claims by former employees or independent
contractors of the Seller for claims relating to the Seller's business
(including, without limitation, the Cattle Business) prior to the Closing Date.
The Seller shall notify all employees in writing of their rights with
regard to any group health plan coverage, shall timely collect and remit all
premiums to the appropriate party, and perform all other actions mandated by
Title X of the Consolidated Omnibus Budget Reconciliation Act of 1985 ("COBRA")
and that are required to be given, collected, or otherwise performed as a
result of the Closing.
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ARTICLE 9 - SURVIVAL AND INDEMNIFICATION
(a) Survival. All representations, covenants, warranties,
indemnifications and obligations contained in this Agreement or in any
certificate, document or statement delivered pursuant to this Agreement shall
survive the Closing, and, in the event of a Party's breach of this Agreement
resulting in the termination of this Agreement, such representations,
covenants, warranties, indemnifications and obligations shall further survive
the termination of this Agreement, shall continue in full force and effect
forever thereafter, and shall not be affected in any respect by such
termination or by the Closing and investigation conducted by the Purchaser and
any information that the Purchaser may have from time to time.
(b) Indemnification. Each of the Seller, the Shareholders, and
the Key Employees, jointly and severally, hereby agree to indemnify, defend and
hold harmless the Purchaser or the Purchaser's successors or assigns for all
losses, damages, liabilities and claims, and all fees, costs and expenses of
any kind related to, including and without limitation, any and all attorneys'
fees arising out of, based upon or resulting from the Seller's, or any
Shareholder's or Key Employee's breach of, or failure to perform, the
covenants, obligations, representations and warranties contained or made
pursuant to this Agreement. The indemnification provisions of this Agreement
shall not be deemed to preclude or otherwise limit in any way the exercise of
any other rights or pursuit of any other remedies for the breach of this
Agreement or with respect to any misrepresentations or breaches of warranty by
any of the Seller, the Shareholders or the Key Employees.
(c) Liquidated Damages. The Parties acknowledge that Jordan
shall, as a condition to the Closing, enter into an Employment Agreement with
the Purchaser, and each of the Seller and the Shareholders further acknowledge,
understand and agree that the Purchase Price is being paid by the Purchaser to
the Seller in substantial reliance upon Jordan's representation and warranty
contained in Section 8(a)(ii) above that he currently intends to, and he shall,
faithfully and diligently perform his duties and obligations under his
Employment Agreement pursuant to and in accordance with the terms and
conditions thereof.
(i) Liquidating Event of Default. For purposes of this
Article 9, the occurrence of any of the following events shall be a
"Liquidating Event of Default:"
(A) Jordan terminates his employment with the
Purchaser for any reason (including, without limitation, by reason of Jordan's
death or disability) other than solely as a direct result of the uncured breach
by the Purchaser of any material term of the Employment Agreement, or
(B) The Purchaser terminates Jordan's
employment with the Purchaser because either:
(1) Jordan is convicted of, pleads
guilty to, or pleads nolo contendere to a felony or other crime involving moral
turpitude, or
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(2) Jordan has engaged in material
wrongful conduct, such as fraud, conversion, embezzlement, falsifying records
or reports, or a similar act involving the Purchaser's property.
(ii) Consequence of Liquidating Event of Default. Upon
the occurrence of a Liquidating Event of Default at any time during the three
(3) year period beginning on the Closing Date, the Seller and the Shareholders,
jointly and severally, agree to and shall pay and deliver to the Purchaser, on
or before that date that is ten (10) days from the date on which the Purchaser
provides such Parties with written demand for payment, as liquidated damages
for such Liquidating Event of Default (the "Liquidated Damages") an amount
determined pursuant to the following:
(i) If such Liquidating Event of Default occurs
at any time on or before the date that is one (1) year after the Closing Date,
the Liquidated Damages shall be One Million Nine Hundred Thousand Dollars
($1,900,000);
(ii) If such Liquidating Event of Default occurs
at any time between the date that is one (1) year after the Closing Date and
the date that is two (2) years after the Closing Date, the Liquidated Damages
shall be Eight Hundred Fifty Thousand Dollars ($850,000); and
(C) If such Liquidating Event of Default occurs
at any time on or between the date that is two (2) years after the Closing Date
and the date that is three (3) years after the Closing Date, the Liquidated
Damages shall be Two Hundred Thousand Dollars ($200,000).
(iii) Other Provisions with regard to Liquidated Damages.
Each of the Seller and the Shareholders, jointly and severally, acknowledge and
agree that (A) their payment of the liquidated damages to the Purchaser
constitutes consideration for damages resulting to the Purchaser due to the
occurrence of the Liquidating Event of Default and are not as a form of penalty
or restraint on trade of any of the Seller, the Shareholders or the Key
Employees, and that such damages result from a mutual determination by the
Parties based upon relevant factors including, but not limited to, the fact
that a substantial part of the assets being purchased by the Purchaser pursuant
to this Agreement comprise the represented goodwill and going concern of the
Seller, that Jordan's continued employment with the Purchaser is a substantial
and material inducement, and a primary condition, to the Purchaser's execution
and delivery of, and performance under, this Agreement, and that the Purchaser
would not have entered into or performed under this Agreement but for the
accuracy of the representations and warranties of each of the Seller, the
Shareholders and the Key Employees under this Agreement, and but for Jordan's
agreement to continue his employment with the Purchaser; and (B) are reasonable
and appropriate under the circumstances, including, without limitation, in
recognition of the substantiality of the Purchase Price, and to protect and
preserve the legitimate business interests of the Purchaser.
(iii) Each of the Seller, the Shareholders and the Key
Employees acknowledges and agrees that none such Parties will assert as a
defense to the imposition or payment of the liquidated damages described in
this Section 9(c) that the Purchaser has no (or insufficient)
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legitimate business interests to support the application of such remedy, or
that the imposition of the liquidated damages provisions described in this
Section 9(c) is other than reasonable and appropriate to protect the
Purchaser's legitimate business interests.
(iv) It is understood and intended by and among the
parties hereto that the provisions of this Section 9(c) shall be construed as
an agreement independent of any other provision of this Agreement. The
existence of any claim or cause of action that any of the Seller, the
Shareholders, or the Key Employees might have against the Purchaser, whether
predicated upon this Agreement, the Employment Agreement, or otherwise, shall
not constitute a defense to the enforcement by the Purchaser of this Section
9(c) or in any way serve to offset the liquidated damages due and payable to
the Purchaser pursuant to this Section 9(c) hereof.
ARTICLE 10 - TAX MATTERS
The following provisions shall govern the allocation of responsibility
as between the Purchaser and the Seller for certain tax matters following the
Closing Date:
(a) Cooperation on Tax Matters.
(i) The Seller, the Shareholders and the Key Employees
shall cooperate fully, as and to the extent requested by the Purchaser, in
connection with the filing of tax returns pursuant to this Article 10 and any
audit, litigation or other proceeding with respect to taxes. Such cooperation
shall include the retention and (upon the other party's request) the provision
of records and information which are relevant to any such audit, litigation or
other proceeding and making employees available on a mutually convenient basis
to provide additional information and explanation of any material provided
hereunder. Each of the Seller, the Shareholders and the Key Employees agrees
(A) to retain all books and records with respect to tax matters pertinent to
the Seller relating to any taxable period beginning before the Closing Date
until the expiration of the statute of limitations (and, to the extent notified
by the Purchaser, any extensions thereof) of the respective taxable periods,
and to abide by all record retention agreements entered into with any taxing
authority, and (B) to give the Purchaser reasonable written notice prior to
transferring, destroying or discarding any such books and records and, if the
Purchaser so requests, each of the Seller, the Shareholders and the Key
Employees shall allow the other party to take possession of such books and
records.
(ii) Each of the Seller, the Shareholders and the Key
Employees further agrees, upon request, to use its, his or her best efforts to
obtain any certificate or other document from any governmental authority or any
other person as may be necessary to mitigate, reduce or eliminate any tax that
could be imposed (including, but not limited to, with respect to the
transactions contemplated hereby).
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(b) Certain Taxes. All transfer, documentary, sales, use, stamp,
registration and other such taxes and fees (including any penalties and
interest) incurred in connection with this Agreement shall be paid by the
Seller when due, and the Seller will, at its own expense, file all necessary
tax returns and other documentation with respect to all such transfer,
documentary, sales, use, stamp, registration and other taxes and fees, and, if
required by applicable law.
ARTICLE 11 - TERMINATION OF AGREEMENT
Certain of the Parties may terminate this Agreement as provided below:
(a) the Purchaser and the Seller may terminate this Agreement by
mutual written consent at any time prior to the Closing;
(b) the Purchaser may terminate this Agreement at any time by
giving written notice to the Seller if the Purchaser is not satisfied with the
results of its continuing business, legal, and accounting due diligence
regarding the Seller or the Cattle Business;
(c) the Purchaser may terminate this Agreement by giving written
notice to the Seller at any time prior to the Closing (A) in the event that any
of the Seller, the Shareholders or the Key Employees has breached any material
representation, warranty, or covenant contained in this Agreement in any
material respect, the Purchaser has notified the Seller of the breach, and the
breach has continued without cure for a period of ten (10) days after the
notice of breach; (B) the Real Property Purchase Contract has been terminated
in accordance with the terms thereof; or (C) if the Closing shall not have
occurred within thirty (30) days of the Contract Date, by reason of the failure
of any condition precedent under Section 6(a) hereof (unless the failure
results primarily from the Purchaser itself breaching any representation,
warranty, or covenant contained in this Agreement); and
(d) the Seller may terminate this Agreement by giving written
notice to the Purchaser at any time prior to the Closing in the event the
Purchaser has breached any material representation, warranty, or covenant
contained in this Agreement in any material respect, the Seller has notified
the Purchaser of the breach, and the breach has continued without cure for a
period of ten (10) days after the notice of breach.
ARTICLE 12 - MISCELLANEOUS
(a) Survival of Representations and Warranties. All of the
representations and warranties of the Parties contained in this Agreement shall
survive the Closing.
(b) Press Releases and Public Announcements. No Party shall issue
any press release or make any public announcement relating to the subject
matter of this Agreement prior to the
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Closing without the prior written approval of the other Party; provided,
however, that any Party may make any public disclosure it believes in good
faith is required by applicable law or any listing or trading agreement
concerning its publicly-traded securities (in which case the disclosing Party
will use its reasonable best efforts to advise the other Party prior to making
the disclosure).
(c) No Third-Party Beneficiaries. This Agreement shall not confer
any rights or remedies upon any Person other than the Parties and their
respective successors and permitted assigns.
(d) Entire Agreement. This Agreement (including the agreements
referred to herein) constitutes the entire agreement between the Parties and
supersedes any prior understandings, agreements, or representations by or
between the Parties, written or oral, to the extent they related in any way to
the subject matter hereof.
(e) Succession and Assignment. This Agreement shall be binding
upon and inure to the benefit of the Parties named herein and their respective
successors and permitted assigns. No Party may assign either this Agreement or
any of its rights, interests, or obligations hereunder without the prior
written approval of the other Party; provided, however, that the Purchaser may
(i) assign any or all of its rights and interests hereunder to one or more of
its Affiliates and (ii) designate one or more of its Affiliates to perform its
obligations hereunder (in any or all of which cases the Purchaser nonetheless
shall remain responsible for the performance of all of its obligations
hereunder).
(f) Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original but all of which
together will constitute one and the same instrument. All facsimile executions
shall be treated as originals for all purposes.
(g) Headings. The section headings contained in this Agreement
are inserted for convenience only and shall not affect in any way the meaning
or interpretation of this Agreement.
(h) Notices. All notices, requests, demands, claims, and other
communications hereunder will be in writing. Any notice, request, demand,
claim, or other communication hereunder shall be deemed duly given if (and then
two (2) business days after) it is sent by registered or certified mail, return
receipt requested, postage prepaid, and addressed to the intended recipient as
set forth below:
If to any of the Seller,
Kenneth and Kynda Jordan,
or Willard and Peggy Jordan: P.O. Box 158
San Saba, Texas 76877
With a copy to: 315 Jefferson Street
Sulphur Springs, Texas 75482
Attn: Carl Bryan, Esq.
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<PAGE> 31
If to the Purchaser: eMerge Interactive, Inc.
10315 102nd Terrace
Sebastian, Florida 32958
Attn: Michael T. Janney
Copy to: Gray, Harris & Robinson, P.A.
201 E. Pine St., Suite 1200
Orlando, Florida 32801
Attn: Michael E. Neukamm, Esq.
Any Party may send any notice, request, demand, claim, or other communication
hereunder to the intended recipient at the address set forth above using any
other means (including personal delivery, expedited courier, messenger service,
telecopy, telex, ordinary mail, or electronic mail), but no such notice,
request, demand, claim, or other communication shall be deemed to have been
duly given unless and until it actually is received by the intended recipient.
Any Party may change the address to which notices, requests, demands, claims,
and other communications hereunder are to be delivered by giving the other
Party notice in the manner herein set forth.
(i) Governing Law. This Agreement shall be governed by and
construed in accordance with the domestic laws of the State of Texas without
giving effect to any choice or conflict of law provision or rule that would
cause the application of the laws of any jurisdiction other than the State of
Texas.
(j) Amendments and Waivers. No amendment of any provision of this
Agreement shall be valid unless the same shall be in writing and signed by the
Purchaser and each of the Seller, the Shareholders and the Key Employees. The
Seller, with the prior authorization of its board of directors, and the
Shareholders and Key Employees, together, may consent to any such amendment at
any time prior to the Closing. No waiver by any Party of any default,
misrepresentation, or breach of warranty or covenant hereunder, whether
intentional or not, shall be deemed to extend to any prior or subsequent
default, misrepresentation, or breach of warranty or covenant hereunder or
affect in any way any rights arising by virtue of any prior or subsequent such
occurrence.
(k) Severability. Any term or provision of this Agreement that is
invalid or unenforceable in any situation in any jurisdiction shall not affect
the validity or enforceability of the remaining terms and provisions hereof or
the validity or enforceability of the offending term or provision in any other
situation or in any other jurisdiction.
(l) Expenses. Each of the Purchaser, the Seller, the Shareholders
and the Key Employees will bear its own costs and expenses (including legal
fees and expenses) incurred in connection with this Agreement and the
transactions contemplated hereby.
(m) Construction. The Parties have participated jointly in the
negotiation and drafting of this Agreement. In the event an ambiguity or
question of intent or interpretation arises, this
30
<PAGE> 32
Agreement shall be construed as if drafted jointly by the Parties and no
presumption or burden of proof shall arise favoring or disfavoring any Party by
virtue of the authorship of any of the provisions of this Agreement. Any
reference to any federal, state, local, or foreign statute or law shall be
deemed also to refer to all rules and regulations promulgated thereunder,
unless the context requires otherwise. The word "including" shall mean
including without limitation. Nothing in the Disclosure Schedule shall be
deemed adequate to disclose an exception to a representation or warranty made
herein unless the Disclosure Schedule identifies the exception with
particularity and describes the relevant facts in detail. Without limiting the
generality of the foregoing, the mere listing (or inclusion of a copy) of a
document or other item shall not be deemed adequate to disclose an exception to
a representation or warranty made herein (unless the representation or warranty
has to do with the existence of the document or other item itself). The Parties
intend that each representation, warranty, and covenant contained herein shall
have independent significance. If any Party has breached any representation,
warranty, or covenant contained herein in any respect, the fact that there
exists another representation, warranty, or covenant relating to the same
subject matter (regardless of the relative levels of specificity) that the
Party has not breached shall not detract from or mitigate the fact that the
Party is in breach of the first representation, warranty, or covenant.
(n) Incorporation of Exhibits and Schedules. The Exhibits and
Schedules (including, without limitation, the Disclosure Schedule) identified
in this Agreement are incorporated herein by reference and made a part hereof.
(o) Specific Performance. Each of the Parties acknowledges and
agrees that the other Party would be damaged irreparably in the event any of
the provisions of this Agreement are not performed in accordance with their
specific terms or otherwise are breached. Accordingly, each of the Parties
agrees that the other Party shall be entitled to an injunction or injunctions
to prevent breaches of the provisions of this Agreement and to enforce
specifically this Agreement and the terms and provisions hereof in any action
instituted in any court of the United States or any state thereof having
jurisdiction over the Parties and the matter (subject to the provisions set
forth in Section 12(p) below), in addition to any other remedy to which it may
be entitled, at law or in equity.
[Remainder of Page Intentionally Left Blank]
31
<PAGE> 33
IN WITNESS WHEREOF, the Parties hereto have executed this Agreement on
the date first above written.
SELLER:
W.P. LAND AND LIVESTOCK, INC.
D/B/A JORDAN CATTLE AUCTION
By: /s/ Willard K. Jordan
-----------------------------------------
Name: Willard K. Jordan
--------------------------------------
Title: President
--------------------------------------
KEY EMPLOYEES:
/s/ Kenneth Jordan
---------------------------------------------
Kenneth Jordan
/s/ Kynda Jordan
---------------------------------------------
Kynda Jordan
SHAREHOLDERS:
/s/ Willard K. Jordan
---------------------------------------------
Willard Jordan
/s/ Peggy Jordan
---------------------------------------------
Peggy Jordan
PURCHASER:
EMERGE INTERACTIVE, INC.
By: /s/ T. Michael Janney
-----------------------------------------
Name: T. Michael Janney
--------------------------------------
Title: CFO
--------------------------------------
32
<PAGE> 1
EXHIBIT 2.6
CONTRACT FOR SALE AND PURCHASE
OF REAL ESTATE
THIS CONTRACT FOR SALE AND PURCHASE OF REAL ESTATE (the "Contract") is
made as of the Date of this Contract (as defined hereafter) among the following
parties:
Buyer: eMerge Interactive, Inc., a Delaware corporation
Attention: Scott Mathews, President
10315 102nd Terrace
Sebastian, Florida 32958
Phone: 561-581-7179
Fax: 561-589-3779
Sellers: Willard and Peggy Jordan, husband and wife
P.O. Box 158
San Saba, Texas 76877
Phone: (915) 372-5159
Fax: (915) 372-5045
BACKGROUND
Sellers are the owners of the Properties (as defined in paragraph 1) as
husband and wife. Buyer desires to purchase the Properties, and Sellers desire
to sell the Properties to Buyer, subject to and upon the terms and conditions of
this Contract.
AGREEMENT
NOW, THEREFORE, in consideration of the agreements contained herein,
and good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the Buyer and Sellers (the "Parties") agree as follows:
1. Properties. Sellers agree to sell to Buyer, and Buyer agrees
to purchase from Sellers, the land described on Exhibit "A", consisting of
approximately fifteen and 1/100 (15.01) acres, more or less, located in San
Saba, Texas (the "San Saba Property"), three (3) tracts comprising approximately
thirty-nine and 258/1000 (39.258) acres, more or less, located in Brownwood,
Texas (collectively, the "Brownwood Property"), and four (4) tracts comprising
approximately four (4) acres, more or less, in Mason, Texas (collectively, the
"Mason Property"), with the San Saba Property, the Brownwood Property and the
Mason Property and, to the extent applicable, each tract comprised therein,
sometimes referred to herein as a "Property" and collectively referred to herein
as the "Properties"), which Properties shall include, without limitation, all
rights and appurtenances pertaining to the Properties, including any right,
title and interest of Sellers in and to adjacent streets, alleys and rights of
way, all trees and landscaping
<PAGE> 2
located on the Properties and all improvements, structures and fixtures placed
now or hereafter constructed or installed on the Properties, other items of
personal property more particularly described in Exhibit "B" attached hereto and
incorporated herein, and all other tangible and intangible personal property
that is used or useful in connection with the Properties, including, without
limitation, sewer and water rights, sewer deposits, sewer fees, prepaid impact
fees, surveys, studies, test results, plans and specifications, leases, tenant
deposits and prepaid rents, permits, utility deposits, architectural,
contractor's and manufacturer's warranties, and trade names, trade symbols,
trademarks and logos relating to the subject property. The San Saba Property is
located in San Saba County, Texas, the Brownwood Property is located in Brown
County, Texas, and the Mason Property is located in Mason County, Texas. None of
the Properties is subject to any zoning restriction or requirement that prevents
or in any way limits it being used for the purposes that it presently is used or
is proposed to be used by the Buyer.
2. Purchase Price. The purchase price (the "Purchase Price") of
the Properties shall be $3,472,000, which shall be allocated among the
Properties as follows:
<TABLE>
<S> <C>
San Saba Property $1,700,000
Brownwood Property 1,000,000
Mason Property 772,000
-----------
$3,472,000
</TABLE>
2.1 Payment of Purchase Price. The Purchase Price shall be
paid at Closing by cashier's check drawn on a local bank or by wired funds,
subject to adjustments and prorations.
3. Costs and Prorations.
3.1 Sellers shall pay the documentary stamp or transfer tax
applicable to this transaction, if any, the cost of the title search, the title
examination fees, and the owners' title insurance premium, including, without
limitation, the cost of an endorsement deleting the survey exception. Buyer
shall pay the cost of recording the deeds, and the cost of any surveys, soil
tests, or other testing Buyer obtains. Each Party shall pay its own attorney's
fees.
3.2 Ad valorem taxes assessed against the Properties for the
year in which the Closing occurs shall be prorated as of the day of Closing
based on the maximum available discount, if any, for the early payment of taxes.
If the proration is not based on the actual tax bill for the year of Closing,
the proration shall be based upon the most recent tax bill and shall be adjusted
when the actual tax bill is available.
4. Title. Sellers shall convey good, marketable and insurable
title to each of the Properties to Buyer by general warranty deed, which shall
expressly be made subject only to the matters approved or waived by Buyer as set
forth below. Without limiting the generality of the foregoing, none of the
Properties shall be subject to any (i) mortgage, security agreement, judgment,
lien or claim of lien, or any other title exception or defect that is monetary
in nature, or
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<PAGE> 3
(ii) any leases, rental agreements or other rights of occupancy of any kind,
whether written or oral, or (iii) any easement, restriction, zoning,
prohibition, or requirement of private parties or governmental authorities that
would prevent the use of any of the Properties for its Intended Use as described
hereafter. Sellers hereby agree to pay and satisfy of record any such title
defects or exceptions prior to or at Closing at Sellers' expense. The title for
each of the Properties shall be subject to current and future ad valorem
property taxes. Sellers shall at their expense furnish to Buyer, within fifteen
(15) days from the Date of this Contract by the Parties hereto, a commitment for
title insurance covering each of the Properties and issued by a title insurance
company acceptable to Buyer with copies of all exceptions contained therein.
Such commitment shall agree to issue to Buyer, upon Closing of this transaction,
a TEXAS OWNER'S POLICY in the full amount of the Purchase Price, which policy
shall insure that the Buyer owns fee simple title to each of the Properties
subject to no exception other than (i) exceptions approved by the Buyer, (ii)
the restrictive covenant exception shall be endorsed "none of record" except for
restrictive covenants approved by the Buyer, (iii) the boundary and survey
exception shall be endorsed to be limited to "shortages in area," and (iv) the
exception as to taxes shall be limited to the year of closing and endorsed "not
yet due and payable." Buyer shall have thirty (30) days in which to examine the
commitment and to give Notice (as defined hereafter) to Sellers of any
objections which Buyer may have.
If Buyer fails to give any Notice to Sellers by such date, Buyer shall
be deemed to have waived this right to object to any other title exceptions or
defects. If Buyer does give Sellers Notice of objection to any other title
exceptions or defects, Sellers shall then have the obligation to cure or satisfy
such objection within ninety (90) days of such Notice. Sellers will, if title is
found unmarketable, use diligent effort to correct the defect(s) within the time
provided, including the bringing of necessary suits. If the objection is not so
satisfied by Sellers, then Buyer shall have the right to Terminate (as defined
hereafter) this Contract by Notice to Sellers, or take such actions as may be
necessary to cure the objection and deduct the cost thereof from the Purchase
Price. If Sellers do so cure or satisfy the objection, within the time provided,
then this Contract shall continue in effect. Buyer shall have the right at any
time to waive any objections that it may have made and thereby preserve this
Contract in effect. Sellers agree not to further alter or encumber in any way
Sellers' title to any of the Properties after the Date of this Contract.
5. Closing. Buyer is entering into an Agreement for the Purchase
and Sale of Assets with W.P. Land and Livestock, Inc., a Texas corporation,
d/b/a Jordan Cattle Auction ("Jordan Cattle"), Sellers and Ken and Kynda Jordan
(the "Asset Purchase Agreement") simultaneous with the execution and delivery of
this Contract. The Closing ("Closing") of the transaction contemplated under
this Contract shall be held at the same location as the closing of the
transactions contemplated in the Asset Purchase Agreement or by a mail-away
escrow closing, at such time and on such date, and in the event of and solely
upon the simultaneous occurrence of, the closing of the transactions
contemplated in the Asset Purchase Agreement.
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<PAGE> 4
6. Broker. The Parties each warrant and represent to the other
that such Party has not employed or dealt with a real estate broker or agent in
connection with the transaction contemplated hereby.
7. Survey. Sellers shall furnish Buyer with copies of all
surveys they have on any of the Properties, if any, within ten (10) days of the
Date of this Contract. Buyer may have any or all of the Properties re-surveyed
at Buyer's expense. If the survey (or re-survey, if applicable) shows any
encroachments on any of the Properties, or that improvements located on any of
the Properties encroach on setback lines, easements, lands of others, or violate
any restrictions, contract, covenants or applicable governmental regulation, or
that any gaps exist so that any of the Properties is not contiguous or does not
have access, then the same shall constitute a title defect. Buyer shall give
Sellers Notice of such defect within thirty (30) days of receipt of the survey
(or re-survey, if applicable). Thereafter, Sellers and Buyer shall proceed under
paragraph 4.
8. Inspection.
8.1 Inspection Period. The inspection period ("Inspection
Period") shall commence on the Date of this Contract and terminate simultaneous
with the conclusion of Buyer's due diligence activities under the Asset Purchase
Agreement.
8.2 Plans and Reports. Sellers shall furnish Buyer within ten
(10) days of the Date of this Contract with copies of all permits, environmental
reports, wetland studies, wetland determinations, engineering reports, soil
studies, master plan agreements, development approvals, concurrency vesting
determinations, stormwater management permits, declaration of covenants and
restrictions (actual or proposed), property owners association articles of
incorporation and by-laws, and similar reports and studies owned or in
possession of Sellers with respect to any or all of the Properties. Without
limiting the generality of the foregoing, Sellers shall furnish Buyer with
copies of any environmental management, protection, assessment or impact reports
and any permits, certificates of compliance or certificates of non-compliance
relating to any or all of the Properties or the handling, treatment, storage,
use, transportation, spillage, leakage, dumping, discharge, disposal or clean-up
of any substances or wastes regulated under local, state or federal law or
regulation, upon or about any or all of the Properties whether prepared or
obtained by or for Sellers, any tenant of any or all of the Properties, any
government agency or authority, or any other person or entity, and any
approvals, conditions, orders, declarations and correspondence to or issued by
any governmental agency or authority relating thereto which as to any or all of
the above. Sellers shall immediately deliver to Buyer copies of any of the
foregoing that come as received by Sellers during the term of this Contract.
8.3 Inspection. Buyer and Buyer's agents, employees and
independent contractors shall have the right and privilege (but not the
obligation) to enter upon each of the Properties prior to Closing to survey and
inspect such Property and the structures thereon and to conduct soil borings and
other geological tests, engineering tests and such other inspections and
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<PAGE> 5
studies as Buyer may desire, all at Buyer's sole cost and expense. The Buyer
and Buyer's agents shall be allowed access to each of the Properties during
normal business hours to show any such Property to any prospective tenants of
such Property.
8.4 Termination and Repairs. If, in its sole discretion, Buyer
determines that any Property is not satisfactory for its purposes (the "Excluded
Property"), Buyer shall have the right to elect either (i) not to purchase the
Excluded Property (but still purchase the other Properties (the "Remaining
Properties"), or (ii) terminate this Contract by written notice delivered to
Sellers prior to the expiration of the Inspection Period (whereupon this
Contract shall be terminated). If Buyer elects to purchase only the Remaining
Properties, then the Purchase Price shall be reduced by the amount of the
Purchase Price allocated to the Excluded Property as set forth in paragraph 2
hereof. In the event Buyer does not notify Sellers in writing prior to the
expiration of the Inspection Period that Buyer has elected to either purchase
only the Remaining Properties or to terminate this Contract, then Buyer shall
have waived its right to make such elections pursuant to this paragraph.
8.5 Indemnity. Buyer hereby covenants and agrees to indemnify
and hold harmless Sellers from any and all loss, liability, costs, claims,
demands, damages, actions, causes of actions, and suits arising out of or in any
manner related to the exercise by Buyer of Buyer's rights under this paragraph
8.
9. Eminent Domain. If, after the Date of this Contract and prior
to Closing, Sellers receive notice of the commencement or threatened
commencement of eminent domain or other like proceedings against any of the
Properties or any portion thereof (the "Condemned Property"), Sellers shall
immediately give Notice thereof to Buyer. Buyer shall elect within thirty (30)
days by Notice to Sellers either (i) to Terminate this Contract, (ii) to
purchase only the Properties other than the Condemned Property, in which case
the Purchase Price shall be reduced by the amount of the Purchase Price
allocated to the Condemned Property as set forth in paragraph 2, or (iii) to
close the transaction contemplated hereby in accordance with its terms but
subject to such proceedings, in which event the Purchase Price shall not be
reduced but Sellers shall assign to Buyer Sellers' rights in any condemnation
award or proceeds. If Buyer does not give Notice timely, Buyer shall be deemed
to have elected to close the transaction contemplated hereby in accordance with
clause (iii) above.
10. Documents. With respect to each of the Properties, Sellers
shall deliver to Buyer at Closing (i) Sellers' general warranty deed subject to
no exceptions other than as contemplated in paragraph 4 hereof; (ii) a bill of
sale transferring the personal property which is a part of such Property; (iii)
possession of such Property; (iv) affidavits sufficient to permit the title
company to issue the owner's title policy without standard exceptions for
mechanic's, materialmen's, or other statutory liens or rights of parties in
possession; (v) estoppel letters with respect to any contracts being assumed;
(vi) a trust affidavits or other appropriate resolutions authorizing the sale;
and (vii) reasonable evidence that neither of the Sellers is a foreign person
against whom withholding
5
<PAGE> 6
is required under the Internal Revenue Code, and such other documents as may be
required to perfect the conveyance of such Property to Buyer.
11. Default and Remedies. If Sellers fail or refuse to convey each
of the Properties in accordance with the terms of this Contract or otherwise
perform their obligations hereunder, and such failure or refusal is not cured
within twenty (20) days after Notice from Buyer, then Buyer shall have the right
to seek specific performance without thereby waiving any action for damages
resulting from Seller's breach.
12. Sellers' Agreements. Sellers, jointly and severally, warrant,
represent and agree that:
12.1 Sellers are the owners of each of the Properties free
and clear of all liens and encumbrances.
12.2 That no one is in possession of any portion of the
Property except Sellers and Jordan Cattle.
12.3 Neither of the Sellers is subject to any rule, agreement
or restriction of any kind or character which would prevent the consummation of
this Contract. This Contract has been validly executed and delivered by the
Sellers and constitutes a valid and binding obligation of the Sellers in
accordance with its terms. Each of the Sellers has the legal capacity and
capability to execute, deliver and fully perform his or her obligations under
this Contract.
12.4 Each of the Sellers represent and warrant that (i) none
of the Properties, nor the use or operation of any of the Properties by the
Sellers or Jordan Cattle, violates any land use, environmental, hazardous or
regulated material and/or waste handling, storage, treatment, disposal or
discharge laws or other laws, building codes, zoning or other ordinances, rules
or regulations, fire insurance regulations, or covenants, conditions and
restrictions whether federal, state, local or private; and (ii) there exists no
violation of any covenants or agreements of any kind with tenants, or with any
governmental jurisdiction or private party purporting or acting to restrict in
any way the individual use any of the Properties; and (iii) none of the
Properties nor the present operation and use of any of the Properties,
constitute an illegal use under any zoning or land use law or regulation, and
none of the foregoing is the subject of any variance pursuant to any zoning or
land use law or regulation; and (iv) there has not occurred upon or about any of
the Properties, any spillage, leakage, discharge or release into the air, soil
or groundwater of any hazardous or regulated materials or wastes.
Notwithstanding the foregoing, each of the Sellers represent and warrant, only
to the extent of his or her knowledge, that (i) no underground storage tanks,
asbestos-containing material in any friable and damaged form or condition,
materials or equipment containing polychlorinated biphenyls, or landfills,
impoundments, or disposal areas exist on any of the Properties; and (ii) no
predecessor of the Sellers has treated, stored, disposed of, arranged for or
permitted the disposal of, transported, handled, or released any substance,
including without limitation any hazardous substance, or owned or operated any
property or
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<PAGE> 7
facility (and no such property or facility is contaminated by any such
substance) in a manner that has given or would give rise to liabilities,
including any liability for response costs, corrective action costs, personal
injury, property damage, natural resources damages or attorney fees, pursuant to
the Comprehensive Environmental Response, Compensation and Liability Act of
1980, as amended, or the Solid Waste Disposal Act, as amended, or any other
environmental, health or safety requirements.
12.5 Neither of the Sellers has received notice nor has any
knowledge of any pending or contemplated proceedings (i) to modify or amend any
building code or zoning or land use law or regulation or development order which
affects any of the Properties; (ii) to impose any special assessment against or
upon any of the Properties or any portion thereof; (iii) to condemn any of the
Properties or any portion thereof; (iv) to modify, amend, suspend, revoke or
terminate any environmental, occupancy, use, operating or other permit issued or
pending in connection with any of the Properties, or the occupancy, use of
operation thereon of any tenant thereon; or (v) with respect to any
environmental, hazardous or regulated material violation affecting any of the
Properties.
12.6 The representations and warranties in this paragraph 12
shall survive the Closing.
13. Risk of Loss. Sellers, jointly and severally, shall bear all
risk of casualty loss to any of the Properties occurring prior to Closing and
shall maintain in full force and effect all hazard insurance now in force and
insuring each of Properties against loss and damage or destruction through the
Closing Date. In the event of any damage or destruction to any of the
improvements on any of the Properties prior to Closing, not restored by Closing,
Buyer shall have the option to either:
13.1 Rescind this Contract;
13.2 Purchase only the Properties other than the Property (the
"Damaged Property") the improvements on which were damaged or destroyed without
restoration by the Sellers.
13.3 Close this transaction and be entitled to receive the
full amount of any proceeds of such insurance payable on the account of loss,
damage, or destruction.
In the event Buyer elects to close this transaction under
subparagraph 13.2 of this paragraph, the Purchase Price shall be reduced by the
amount of the Purchase Price that is allocated to the Damaged Property as set
forth in Section 2. In the event Buyer elects to close this transaction under
subparagraph 13.3 of this paragraph, any loss shall be settled with the insurers
only with the written consent of Buyer, and, if at Closing there shall be any
losses which
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<PAGE> 8
shall not have been settled or adjusted, Sellers shall transfer and assign the
insurance claim to Buyer, and this transaction shall be consummated in the same
manner as if there had been no damage or destruction to such Property. The
determination of the insurance adjuster for the respective insurance carrier
regarding the extent of such loss shall be determinative as between Buyer and
Sellers relative to the value placed on such loss. Buyer acknowledges that the
payment of insurance proceeds shall be subject to the rights of Sellers'
mortgage lender.
14. Leases. Each of the Properties is currently leased to Jordan
Cattle, which leases will be terminated prior to or simultaneously with the
Closing.
15. Conditions to Buyer's Obligations. The Buyer's obligations
under this Contract are, at the option of Buyer, subject to conditions at
Closing that:
15.1 The Sellers have fulfilled all the terms and conditions
required to be fulfilled by the Sellers hereunder.
15.2 Sellers' representations and warranties contained in this
Contract shall, as a condition to Closing, be true at the time of Closing as
though such representations and warranties were made at such time.
15.3 Each of the contingencies described in paragraph 29 has
been satisfied.
15.4 The closing of the transaction contemplated in the Asset
Purchase Agreement simultaneous herewith (it being understood that in the event
that Buyer properly terminates the Asset Purchase Agreement, Buyer shall have
the permitted right to Terminate this Contract).
16. Notice. Wherever in this Contract it shall be required or
permitted that notice, request, consent, or demand be given by either Party to
this Contract to or on the other (hereafter collectively "Notice" for the
purpose of this paragraph), such Notice shall not be deemed to have been duly
given unless in writing, and either personally delivered, mailed, sent by
overnight commercial delivery service or telecopied as follows:
Buyer: eMerge Interactive, Inc., a Delaware corporation
Attention: Scott Mathews, President
10315 102nd Terrace
Sebastian, Florida 32958
Fax: 561-589-3779
Seller: Willard and Peggy Jordan
P.O. Box 158
San Saba, Texas 76877
Fax: ____________________
8
<PAGE> 9
Counsel for the Parties set forth herein may deliver or receive notice
on behalf of the Parties.
Any Notice sent by United States Mail, registered or certified, postage
prepaid, return receipt requested, shall be deemed received three days after it
is so mailed. All other Notices shall be deemed delivered only upon actual
delivery at the address (or telecopy number) set forth herein. Notices delivered
after 5:00 p.m. (at the place of delivery) or on a non-business day shall be
regarded as delivered on the next business day. Saturdays, Sundays and legal
holidays of the United States government (when the U.S. Post Office in
Sebastian, Florida is closed) shall not be regarded as business days.
If any time for giving Notice or other time period contained in this
Contract would otherwise expire on non-business day, the Notice period shall be
extended to the next succeeding business day. Any Party or other person to whom
Notices are to be sent or copied may notify the other Parties and addressees of
any change in address or telecopy number or addresses to whom copies are to be
sent to which Notices shall be sent by six (6) days written notice to the
Parties and addressees set forth herein.
When any period of time prescribed herein is less than six (6) days,
intermediate non-business days shall be excluded in the computation.
17. Assignment of Contract by Buyer. Buyer may assign this
Contract at its sole discretion to any of its subsidiaries.
18. Time of Essence. Time is of the essence of this Contract.
19. Entire Agreement. This Contract constitutes the entire
agreement of the Parties and may not be amended except by written instrument
executed by Buyer and Sellers.
20. Interpretation.
20.1 The paragraph headings are inserted for convenience only
and are in no way intended to interpret, define, or limit the scope or content
of this Contract or any provision hereof. If any Party is made up of more than
one person or entity, then all such persons and entities shall be included
jointly and severally, even though the defined term for such Party is used in
the singular in this Contract. If any right of approval or consent by a Party is
provided for in this Contract, the Party shall exercise the right promptly, in
good faith and reasonably, unless this Contract expressly gives such Party the
right to use its sole discretion.
20.2 If any time period under this Contract ends on a day
other than a Business Day (as hereinafter defined), then the time period shall
be extended until the next business day. The term "Business Day" shall mean
Monday through Friday excluding legal holidays
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recognized by the United States government when the U.S. Post Office in
Sebastian, Florida is closed.
21. Attorney's Fees. In any litigation arising out of this
Contract, the prevailing Party shall be entitled to recover attorney's fees and
costs.
22. Survival.
22.1 The provisions of this Contract shall survive Closing
unless and to the extent expressly provided otherwise.
22.2 The provisions of this Contract concerning brokerage
commissions, Buyer's entering upon any of the Properties and any others
expressly so indicated shall survive Termination.
23. Termination. "Terminate" or "Termination" shall mean the
termination of this Contract pursuant to a right to do so provided herein.
24. Possession. Sellers shall deliver actual Possession of each of
the Properties at Closing, free and clear of all tenancies.
25. Applicable Law. This Contract shall be construed and
interpreted in accordance with the laws of the State of Texas.
26. Persons Bound. This Contract shall be binding upon and inure
to the benefit of the Parties and their respective successors and assigns as
provided herein.
27. Exhibits. The exhibits and schedules referred to in and
attached to this Contract are incorporated herein in full by reference.
28. Offer, Acceptance and Contract. This document shall constitute
an offer by Buyer. This offer is open for acceptance by Sellers until five (5)
days after the date it was signed by Buyer. Sellers agree to immediately provide
to Buyer a complete counterpart of this Contract signed by Seller. If this offer
is so accepted by Sellers, it shall become a binding contract. As used herein,
the phrase "Date of this Contract" shall mean the date on which the acceptance
of the offer is completed by the signing of the offer by Sellers. Acceptance of
the offer by Sellers shall be immediately communicated to Buyer.
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29. Contingencies.
29.1 Use of Properties. The Contract is contingent upon the
Buyer being able to use each of the Properties for Buyer's business of
purchasing cattle for resale, which involves holding cattle on a short-term
basis, and related uses.
29.2 Environmental Reports. This Contract is contingent upon
the Buyer receiving an environmental report by a qualified engineer approved by
the Buyer that each of the Properties is free and clear of all hazardous
substances.
30. FIRPTA Affidavit. Sellers, jointly and severally, represent
and warrant to Buyer that neither of the Sellers is a "foreign person," as
defined in the Federal Foreign Investment in Real Property Tax Act ("FIRPTA").
At closing, each of the Sellers shall execute and deliver to Buyer a
"Non-Foreign Certificate," in form and substance satisfactory to Buyer which
shall state, among other items, the taxpayer identification number of such
Seller and that such Seller is not a foreign person, as defined by FIRPTA. Each
of the Sellers acknowledges that in the event either Seller fails to deliver the
Non-Foreign Certificate, the Buyer shall then be authorized to withhold from the
closing proceeds an amount equal to ten percent (10%) of the gross amount of the
Purchase Price and to remit the same to the Internal Revenue Service, as
required by FIRPTA. Each of the Sellers does hereby forever release and
discharge Buyer from all liabilities resulting from, or arising out of, Buyer's
good faith compliance with the requirements of FIRPTA. Further, each of the
Sellers hereby agrees to indemnify, defend and hold harmless Buyer and Buyer's
attorneys, Gray, Harris & Robinson, P.A., in connection with any loss, cost,
damage or expense, including attorneys fees and court costs, and including such
costs on appeal, incurred by Buyer or Buyer's attorneys because of any of the
Sellers' noncompliance with the requirements of FIRPTA, which indemnifications
shall survive the closing of this transaction.
31. Confidentiality. Prior to the Closing, neither Sellers nor
Buyer shall initiate the issuance of any press release or similar publicity,
make any public comment or provide information to anyone without the consent of
the other Party (except as required or contemplated by any provision of this
Contract or as may be required by law upon the advice of counsel) regarding the
transaction contemplated herein to any person or entity other than (i)
employees, representatives, agents, attorneys and accountants of Sellers or
Buyer; or (ii) to any title insurance company issuing a title insurance and/or
commitment and/or title policy to Buyer and/or Buyer's lender with respect to
any of the Properties; or (iii) any holder of an existing mortgage or deed of
trust; or (iv) any proposed lender of Buyer with respect to any of the
Properties; or (v) any assignee of Buyer permitted pursuant to the provisions
hereof; or (vi) to any tenant in connection with obtaining an estoppel letter;
or (vii) any vendor whose consent is required for the assumption of a contract
to the extent as may be necessary, to parties having a relationship with any of
the Properties from whom certificates or other instruments are required to be
obtained pursuant to the provisions of this Contract.
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IN WITNESS WHEREOF, the Parties have set their hands and seals hereto
as of the day and year indicated next to their signatures.
WITNESSES: BUYER:
EMERGE INTERACTIVE, INC.,
a Delaware corporation
- ------------------------
By: /s/ T. Michael Janney
---------------------------------------
- ------------------------ Name: T. Michael Janney
-------------------------------------
Title: CFO
------------------------------------
Date signed by Buyer: April 21, 2000
SELLERS (AS HUSBAND AND WIFE):
- ------------------------ /s/ Willard K. Jordan
------------------------------------------
- ------------------------ Willard Jordan_______________
- ------------------------ /s/ Peggy Jordan
------------------------------------------
- ------------------------ Peggy Jordan___________
Date signed by Sellers: April 21, 2000
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EXHIBIT "A"
LEGAL DESCRIPTION OF REAL PROPERTY
<PAGE> 14
EXHIBIT "B"
LIST OF PERSONAL PROPERTY
1. All furniture, fixtures and equipment located on the
properties described in Exhibit "A."
