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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
XXXXXXX AND XXXXX XXXXXX
AND
XXXXXXX AND XXXXX XXXXXX
DATED AS OF
APRIL 21, 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 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) XXXXXXX AND
XXXXX XXXXXX, each being individual residents of Texas, referred to herein as
the "Key Employees" and with Xxxxxxx Xxxxxx individually referred to herein as
"Jordan," and (iv) XXXXXXX AND XXXXX XXXXXX, 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:
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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.
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"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.
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"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 XXXX://XXX.XXXXXXXXXXXX.XXX, 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 "@xxxxxxxxxxxx.xxx."
"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.
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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) 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 &
Xxxxxxxx, P.A., 000 Xxxx Xxxx Xxxxxx, Xxxxx 0000, Xxxxxxx, Xxxxxxx 00000, 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 Xxxx 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.
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(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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(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, Xxxx Xxxxxx), 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 xxxx 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,
Xxxxxxx and Xxxxx Xxxxxx,
or Xxxxxxx and Xxxxx Xxxxxx: X.X. Xxx 000
Xxx Xxxx, Xxxxx 00000
With a copy to: 000 Xxxxxxxxx Xxxxxx
Xxxxxxx Xxxxxxx, Xxxxx 00000
Attn: Xxxx Xxxxx, Esq.
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If to the Purchaser: eMerge Interactive, Inc.
00000 000xx Xxxxxxx
Xxxxxxxxx, Xxxxxxx 00000
Attn: Xxxxxxx X. Xxxxxx
Copy to: Gray, Harris & Xxxxxxxx, P.A.
000 X. Xxxx Xx., Xxxxx 0000
Xxxxxxx, Xxxxxxx 00000
Attn: Xxxxxxx X. Xxxxxxx, 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
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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]
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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/ Xxxxxxx X. Xxxxxx
-----------------------------------------
Name: Xxxxxxx X. Xxxxxx
--------------------------------------
Title: President
--------------------------------------
KEY EMPLOYEES:
/s/ Xxxxxxx Xxxxxx
---------------------------------------------
Xxxxxxx Xxxxxx
/s/ Xxxxx Xxxxxx
---------------------------------------------
Xxxxx Xxxxxx
SHAREHOLDERS:
/s/ Xxxxxxx X. Xxxxxx
---------------------------------------------
Xxxxxxx Xxxxxx
/s/ Xxxxx Xxxxxx
---------------------------------------------
Xxxxx Xxxxxx
PURCHASER:
EMERGE INTERACTIVE, INC.
By: /s/ T. Xxxxxxx Xxxxxx
-----------------------------------------
Name: T. Xxxxxxx Xxxxxx
--------------------------------------
Title: CFO
--------------------------------------
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