Asset Purchase Agreement - eMerge Vision Systems Inc. and CIN LLC
ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT ("Agreement") is made and entered into
this 24th day of February, 1999 by and among eMERGE Vision Systems, Inc., a
Delaware corporation ("Buyer"), CIN, LLC, a Kansas limited liability company
formerly known as Cattle Management Network, L.L.C. ("Seller"), and Dr. Scott
Crain ("Crain").
RECITALS
A. Seller is in the business of developing, marketing, licensing, and
distributing software programs for use in agriculture, veterinary medicine, and
animal food sciences markets (the "Business") including the software product
commonly referred to as "Industry Net" and "Beef Industry Information
Integrator," Feed Yard Information System" and "Veterinary Information System"
(the "Software Program");
B. Seller desires to sell, and Buyer desires to purchase, the Business
and substantially all of the tangible and intangible assets used in the
Business, including, but not limited to, the Software Program, on the terms and
subject to the conditions set forth in this Agreement; and
C. As the majority owner of Seller, owing together with his wife,
approximately 81% of the equity of Seller, Crain will derive significant benefit
from the transactions contemplated by this Agreement and, as a condition to
Buyer entering into this Agreement, Crain is required to make certain
representations, warranties, and covenants specifically provided in this
Agreement.
NOW, THEREFORE, for and in consideration of the mutual covenants and
agreements set forth herein and other good and valuable consideration, the
receipt, sufficiency, and adequacy of which are hereby acknowledged, Seller,
Crain, and Buyer agree as follows:
AGREEMENTS
ARTICLE I
SALE AND PURCHASE OF ASSETS
Effective as of the close of business on the Closing Date (as defined
in Section 4.1) and subject to the terms and conditions hereof and in reliance
on the representations and warranties contained herein, Seller shall sell,
convey, transfer, assign, and deliver to Buyer at the Closing (as defined in
Section 4.1), and Buyer shall purchase from Seller, all of the properties,
business, and assets of Seller and Crain used in connection with the Business,
of every kind and description, personal and mixed, tangible and intangible,
wherever located (except the Excluded Assets, defined
-1-
<PAGE> 2
in Article II) (collectively, the "Purchased Assets"). Without limiting the
generality of the foregoing, the Purchased Assets shall include the following:
(a) all of Seller's inventory as of the Closing Date,
including, without limitation: (i) computer program code (in all media)
and materials, including the Software Program; (ii) computer program
documentation, including user materials; (iii) all other unused or
reusable materials, stores, supplies, works in progress, finished
goods, product samples, packaging, and shipping materials, as listed on
Schedule 1(a) hereto (collectively, the "Inventory");
(b) all technical and descriptive materials (other than
Inventory) relating to the acquisition, design, development, use, or
maintenance of computer code and program documentation and materials,
including, but not limited to, all technical and programming notes (the
"Technical Documentation");
(c) all of the rights and benefits accruing to Seller under or
pursuant to any and all contracts, agreements, licenses, and other
commitments and arrangements, oral or written, with any person or
entity relating to the ownership, license, acquisition, design,
development, distribution, marketing, use, or maintenance of computer
program code, related technical or user documentation, and databases,
in each case relating to or arising out of the Business, including, but
not limited to: (i) licenses from third parties; (ii) development
contracts, work-for-hire agreements, and consulting and employment
agreements; (iii) distributorships and manufacturer's representation
contracts; (iv) licenses and sublicenses to others (including without
limitation the Feedyard and Veterinary Data Agreements); and (v)
maintenance, support, or enhancement agreements, as listed on Schedule
1(c) hereto (collectively, the "Software Contracts");
(d) all equipment and devices (including data processing
hardware and related telecommunications equipment, media, and tools)
used in the Business, as listed on Schedule 1(d) hereto (the "Computer
Equipment"), including, but not limited to, Seller's rights under all
related warranties;
(e) all equipment (other than Computer Equipment), including,
but not limited to, all furniture, office equipment, and other personal
property, as listed on Schedule 1(e) hereto;
(f) all accounts receivable of Seller relating to the
Business, arising from sales of products in the ordinary course of
business as of the date of this Agreement, including all license fees
and maintenance fees and charges owing or to become owing to Seller
under Software Contracts, as are listed on Schedule 1(f) hereto (the
"Accounts Receivable");
(g) all operating data and records of Seller related to the
Business, including, but not limited to, all customer lists, vendor
lists, price lists, correspondence, customer files, account histories,
customer specifications, dealer and distributor lists, promotional
materials, sales literature, art work, sales data, and other historical
and current
-2-
<PAGE> 3
information relating to sales, financial, accounting, and credit
records, correspondence, budgets, and other similar documents and
records;
(h) all of the rights and benefits accruing to Seller under or
pursuant to the Accounts Receivable, contracts, agreements, including,
but not limited to, all distributorship or sales representation
agreements, licenses, leases, arrangements, commitments, and unshipped,
open, and blanket purchase orders, other than the Software Contracts,
and certain oral agreements to provide discounted services to feedyard
customers, all as identified (and with respect to the oral agreements
described in detail) on Schedule 1(h) (the "Purchased Contracts");
(i) all claims Seller may have against any person relating to
or arising from the Purchased Assets, the Software Contracts, the
Purchased Contracts, or the Business, including rights to recoveries
for damages or defective goods, refunds, insurance claims, and causes
in action;
(j) all of Seller's right, title, and interest in and to the
names "CIN, LLC," "Cattlemen's Information Network L.L.C.," "Cattle
Management Network, LLC," "Industry Net," and "Beef Industry
Information Integrator," and all variants thereof, all of Seller's
right, title, and interest in and to the Internet domain name
"cattleinfo.com" and all iterations or permutations thereof and the
registrations therefor, any and all trademarks, service marks, trade
names, and copyrights of Seller and all licenses, registrations, and
applications therefor, and all other intellectual property rights,
rights to the data compiled through the use of the Software Program
technology, know-how, trade secrets, computer software, code, slogans,
patents, formulae, processes, and other similar intangible rights
relating to the Business (the "Intellectual Property"), as are listed
on Schedule 1(j) hereto; and
(k) all of Seller's right, title, and interest in and to the
goodwill of Seller relating to the Business and all other assets of
every kind and description, wherever located, used or useful in, or
related to the Business.
ARTICLE II
EXCLUDED ASSETS
Seller is not selling or assigning to Buyer, and the Purchased Assets
shall not include, any of the following (collectively, the "Excluded Assets"):
(a) all cash consideration to be received by Seller, and
Seller's other rights, under this Agreement;
-3-
<PAGE> 4
(b) all limited liability company records, equity record
books, files, and other documentation of Seller, not relating to
operation of the Business or the Purchased Assets;
(c) all of Seller's cash, cash equivalents, deposits in banks,
securities, and prepaid and deferred items, existing on the Closing
Date with respect to the Business;
(d) any insurance policies relating to the Business;
(e) any and all vehicles owned or used in the Business;
(f) the 316-873-2181 telephone number of the Business;
(g) any assets of Crain's veterinary practice or farming,
ranching and cattle businesses, which items are not specifically listed
on any Schedule to this Agreement listing the Purchased Assets;
(h) items listed on Schedule 2; and
(i) any items of the Purchased Assets that Buyer expressly
elects not to accept or otherwise take.
ARTICLE III
PURCHASE PRICE, LIABILITIES
AND OTHER RELATED MATTERS
3.1 Purchase Price. Subject to adjustment as provided herein, the
purchase price (the "Purchase Price") for the Purchased Assets shall be the cash
and other consideration specified in this Section 3.1 and the assumption of the
Assumed Liabilities (as defined in Section 3.2). The Purchase Price shall be
paid by Buyer as follows:
(a) Six hundred thousand (600,000) shares of Common Stock, par
value one cent ($.01) per share, of Buyer (the "Shares"), by delivery
of stock certificate therefor issued in the name of Seller at the
Closing;
(b) Three Hundred Eighty Three Thousand Dollars ($383,000.00)
on or before October 31, 1999 (the "October Payment"), subject to
adjustment under Section 3.4 below, at Buyer's election by certified or
cashier's check payable to the order of Seller or by wire transfer to
an account designated by Seller; and
(c) Three Hundred Fifty Thousand Dollars ($350,000.00) of the
first net sales collected by Buyer (if any) arising from the sale of
third party products by Buyer through or using the Internet within the
five (5) year period from the Closing Date utilizing the Software
Program, or any other technology acquired from Seller hereunder, or any
-4-
<PAGE> 5
derivatives thereof (the "Net Sales Payment"), subject to adjustment
under Section 3.4 below, payable within thirty (30) days of the
collection of such amounts, at Buyer's election by certified check or
cashier's check payable to the order of Seller or by wire transfer to
an account designated by Seller.
3.2 Assumed Liabilities. On the Closing Date, (i) Buyer shall assume
and agree to pay, perform, and discharge in full when due the accounts payable
and accrued expenses of Seller listed on Schedule 3.2 under the heading
"Accounts Payable" and such other normal operating expenses incurred through
February 26, 1999, including trade accounts payable, accrued compensation and
related payroll taxes (the "Accounts Payable"), and Seller's obligations under
the Software Contracts and the Purchased Contracts; and (ii) Buyer shall pay in
full, at the Closing, Seller's indebtedness (including principal and interest)
to Meade State Bank ("the Bank") (subsections (i) and (ii) are hereafter
collectively referred to as the "Assumed Liabilities"), all as listed on
Schedule 3.2 hereto;
3.3 Non-Assumption of Liabilities and Obligations of Seller. Other than
the Assumed Liabilities, Buyer shall not assume or become liable for any
liabilities, obligations, or commitments of Seller of any nature whatsoever,
including, but not limited to (collectively, the "Excluded Liabilities"): (i)
any liabilities or obligations of Seller for Federal, state, local, foreign, or
other taxes, including, without limitation, income, sales, use, franchise, real
or personal property, or other taxes, assessments, duties, levies, or imposts,
or for any penalties or interest with respect to any of the foregoing, related
to any period; (ii) any liabilities or obligations with respect of any pension,
profit sharing, medical insurance, or other employee benefit plan or fringe
benefit arrangement established or maintained by Seller, whether or not any such
plans or benefits thereunder relate to employees who may be employed by Buyer
following consummation of the transactions contemplated hereby, including,
without limitation, all health insurance benefits payable with respect to costs
incurred on or prior to the Closing Date, whether or not claims therefor are
submitted on or prior to the Closing Date, and all disability benefits payable
with respect to disabilities occurring on or prior to the Closing Date, all of
which shall be paid by Seller; (iii) any liabilities or obligations whatsoever
to or with respect to any employees or independent contractors of Seller,
specifically including, without limitation, any obligations to pay salaries,
wages, bonuses, commissions, vacation, severance, or termination pay, employee
benefits, health insurance benefits, or unemployment compensation; (iv) any
liabilities or obligations arising out of any workers' compensation claims
relating to employment by Seller, or product liability claims for personal
injury, property damage, or otherwise relating to products sold or distributed
by Seller; (v) any liabilities, obligations, or commitments for product warranty
or returns or exchanges of products sold or distributed by Seller prior to the
Closing; (vi) any liabilities or obligations, whether or not known to Seller,
based on, arising out of or otherwise in respect to any act or omission of
Seller, or any other party, or any event or condition on or off any premises of
Seller, occurring at any time on or prior to the Closing Date; (vii) any
liabilities, obligations, or expenses to be borne by Seller in connection with
this Agreement and the transactions contemplated hereby, including, but not
limited to, all costs and expenses of legal counsel to Seller; (viii) any
liabilities or obligations with respect to that certain Contribution Agreement
dated January 15, 1997, between John F. Wilson and Cattle Management Network,
L.L.C., or that certain Agreement dated December 10, 1998 between
-5-
<PAGE> 6
John F. Wilson and Cattle Management Network, L.L.C. d/b/a/ Cattle Information
Network; and (ix) any other liabilities or obligations of Seller, known,
unknown, fixed, contingent, accrued, absolute, or otherwise, except the Assumed
Liabilities.
3.4 Adjustment of Purchase Price. A post-Closing adjustment shall be
made to the Purchase Price, in the manner described below, to the extent that
the Accounts Payable and the amount paid to the Bank at Closing (the "Monetary
Obligations") are greater than or less than Six Hundred Thousand Dollars
($600,000.00). For that purpose, Buyer will, within sixty (60) days of the
Closing Date, audit the books and records of the Business to determine the
actual value of the Monetary Obligations. The value of the Monetary Obligations
shall be the greater of the value as carried on the books and records of the
Business as of the Closing Date, prior to any reduction thereof, and the amount
paid in satisfaction of such obligations by Buyer. To the extent the Monetary
Obligations exceed Six Hundred Thousand Dollars ($600,000.00), the Net Sales
Payment shall be decreased on a dollar-for-dollar basis. If and to the extent
the Monetary Obligations exceed Six Hundred Thousand Dollars ($600,000.00) by
greater than Three Hundred Fifty Thousand Dollars ($350,000.00), the October
Payment shall also be decreased, on a dollar-for-dollar basis. In the event and
to the extent the Monetary Obligations are less than Five Hundred Fifty Thousand
Dollars ($550,000.00), the amount of the Net Sales Payment shall be increased on
a dollar-for-dollar basis. Under no circumstance shall the October Payment be
increased.
3.5 Allocation of Purchase Price. The Purchase Price shall be allocated
among each item, class, or category of the Purchased Assets, as mutually
determined by Buyer and Seller and set forth on Schedule 3.5. Seller and Buyer
shall prepare and file their respective Federal and any state or local income
tax returns based on such allocation of the Purchase Price. Seller and Buyer
shall prepare and file any notices or other filings required pursuant to Section
1060 of the Internal Revenue Code of 1986, as amended (the "Code") and any such
notices and filings shall be prepared based on such allocation of the Purchase
Price.
3.6 Audit Rights. At Seller's request, during Buyer's normal business
hours, from time to time before the sixth (6th) anniversary of the Closing Date,
but not more often than once during any twelve (12) month period, Buyer will
permit an independent firm of public accountants and auditors selected by
Seller, but subject to the reasonable approval of Buyer, to audit the books and
records of Buyer to verify that Buyer has paid Seller the proper payments owed
pursuant to Section 3.1((c)). Seller shall bear the costs associated with such
verification.
ARTICLE IV
THE CLOSING
4.1 Time and Place of Closing. The closing of the sale and purchase of
the Business and the Purchased Assets (the "Closing") shall take place at 10:00
a.m. local time on February 22,1999 at the offices of Buyer, 10315 102nd
Terrace, Sebastian, Florida, on such date as Seller and Buyer
-6-
<PAGE> 7
may mutually determine (the "Closing Date"), but in no event later than March
10, 1999, unless extended by mutual agreement.
4.2 Seller's Closing Deliveries. At the Closing, in addition to any
other documents specifically required to be delivered pursuant to this
Agreement, Seller shall execute and deliver, or cause to be executed and
delivered, as appropriate, to Buyer the following:
4.2.1 Bill of Sale and Assignment. A bill of sale substantially in
the form attached hereto as Exhibit A and such other forms of assignment,
endorsements, and other good and sufficient instruments of sale, assignment,
conveyance, and transfer, as may be necessary to sell, assign, transfer, and
deliver the Purchased Assets.
4.2.2 Assignment and Assumption Agreement. Assignment and
assumption agreement in the form attached hereto as Exhibit B, and consents of
the appropriate third parties, relating to the assignment and assumption of the
Software Contracts and the Purchased Contracts.
4.2.3 Assignment of Intellectual Property. Assignment agreement in
the form attached hereto as Exhibit C, relating to the assignment of the
Intellectual Property.
4.2.4 Certified Resolutions. Copies of the resolutions of the
Manager and the members of Seller authorizing the execution, delivery, and
performance of this Agreement and all related agreements, documents, and
certificates, and the transactions contemplated hereby and thereby, certified as
of the Closing Date by its Manager.
4.2.5 [Intentionally omitted].
4.2.6 Stockholders' and Registration Rights Agreement. A
stockholders' and registration rights agreement between Seller and Buyer with
respect to the Shares, in the form attached hereto as Exhibit E (the
"Stockholders' Agreement").
4.2.7 Lease. A lease agreement between Crain and Buyer for the
office facilities used by the Business located 15124 Road 18, Meade, Kansas, in
the form attached hereto as Exhibit F (the "Lease").
4.2.8 Certificate of Good Standing. Certificate of good standing of
Seller issued by the Secretary of State of Kansas, dated not more than fourteen
(14) days prior to the Closing Date.
4.2.9 Articles of Organization. A copy of the Articles of
Organization of Seller, and all amendments thereto, certified by the Secretary
of State of Kansas not more than fourteen (14) days prior to the Closing Date.
4.2.10 Manager's Certificate. A certificate of the Manager of
Seller, dated as of the Closing Date, certifying a copy of the Operating
Agreement of Seller and as to the incumbency and signatures of the Manager of
Seller executing this Agreement and all other
-7-
<PAGE> 8
agreements, documents, or certificates contemplated or delivered under this
Agreement (with such signature being certified by a member of Seller if there is
only one Manager of Seller).
4.2.11 Legal Opinion. The legal opinion of counsel to Seller, in
the form attached hereto as Exhibit G.
4.2.12 Lien Termination Statements. UCC-3 termination statements
with respect to the liens specified in Schedule 4.2.12 hereto or a letter from
the holders of such liens, in form satisfactory to Buyer, providing that upon
payment of the amounts owed to each such holder, the liens will be full and
adequately released.
4.2.13 Other. Such other documents and certificates required to be
executed or delivered at the Closing in accordance with the terms of this
Agreement or as reasonably required by Buyer or its counsel.
4.3 Buyer's Closing Deliveries. At the Closing, in addition to any
other documents specifically required to be delivered pursuant to this
Agreement, Buyer shall execute and deliver, as appropriate, to Seller the
following:
4.3.1 Purchase Price. A stock certificate in the name of Seller
representing the Shares pursuant to Section 3((b)).
4.3.2 Assignment and Assumption Agreement. Assignment and
assumption agreement in the form attached hereto as Exhibit B relating to the
assignment and assumption of the Software Contracts and the Purchased Contracts.
4.3.3 Stockholders' Agreement. The Stockholders' Agreement.
4.3.4 Lease. The Lease.
4.3.5 Side Letter. A side letter from XL Vision, Inc. relating to
its commitment to assess the viability of spinning out the Agrivision Technology
(as defined in Section 8.4), in form satisfactory to Seller.
4.3.6 Legal Opinion. The legal opinion of in-house counsel to
Buyer, in the form attached hereto as Exhibit H.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
OF SELLER AND CRAIN
Seller and Crain, jointly and severally, represent and warrant to
Buyer, on and as of the date hereof and on and as of the Closing Date, as
follows:
-8-
<PAGE> 9
5.1 Organization of Seller. Seller is a limited liability company duly
organized, validly existing, and in good standing under the laws of the State of
Kansas and is duly qualified to do business and is in good standing as a foreign
limited liability company in each jurisdiction in which the character of the
properties owned or held under lease by Seller or the nature of the businesses
transacted by Seller requires such qualification. All of the members of Seller
are as set forth on Schedule 5.1.
5.2 Power and Authority. Seller has all requisite power and authority
to own, lease, and operate its properties, to conduct its business as it has
been and is now being conducted, to enter into this Agreement, and all other
agreements or documents to be executed or delivered in connection herewith, and,
subject to any required approvals or consents by other parties to contracts to
which Seller is a party (which shall be obtained by Seller prior to Closing,
except the Bank which is being paid-off at the Closing by Buyer) to perform the
obligations to be performed by it hereunder. All member and other actions
required to be taken by or on the part of Seller to execute, deliver, and carry
out the terms of this Agreement and all other agreements or documents to be
executed or delivered in connection herewith, and to authorize Seller to sell,
assign, transfer, convey, and deliver the Purchased Assets to Buyer, have been
duly and properly taken. This Agreement and all other agreements and documents
to be executed and delivered by Seller in connection herewith, when executed and
delivered by all parties thereto, shall constitute the legal, valid, and binding
obligations of Seller enforceable against Seller in accordance with their
respective terms and this Agreement and all other agreements and documents to be
executed and delivered by Crain in connection herewith, when executed and
delivered by all parties thereto, shall constitute the legal, valid, and binding
obligations of Crain enforceable against Crain in accordance with their
respective terms.
5.3 Subsidiaries. Seller does not own, directly or indirectly, any
outstanding capital stock, or securities convertible into capital stock, of any
other corporation or any participating interest in any partnership, joint
venture, or other business enterprise.
5.4 No Violation to Result. The execution and delivery of this
Agreement and all other agreements and documents to be executed or delivered in
connection herewith, and the consummation of the transactions contemplated
hereby and thereby:
(a) except with respect to the Bank (which is being paid-off
at the Closing by Buyer), are not in violation or breach of, do not
conflict with or constitute a default under, and will not accelerate or
permit the acceleration of the performance required by, any of the
terms of the charter documents or Operating Agreement of Seller or any
note, debt instrument, security agreement, or mortgage, or any other
contract or agreement, written or oral, to which Seller is a party or
by which Seller or any of its properties or assets are bound;
(b) will not be an event that, after notice or lapse of time
or both, will result in any such violation, breach, conflict, default,
or acceleration;
(c) will not result in a violation under any law, judgment,
decree, order, rule, regulation, or other legal requirement of any
governmental authority, court or arbitration
-9-
<PAGE> 10
tribunal, whether Federal, state, or local (within the United States or
otherwise) at law or in equity, and applicable to Seller or any of its
properties or assets, which could have a material adverse effect on the
Business;
(d) will not result in the creation or imposition of any lien,
option, encumbrance, security agreement, restriction, charge, or claim
of any kind in favor of any third party upon any of the properties or
assets of Seller; and
(e) will not result in the termination of any contract, lease,
or other commitment of Seller relating to the Business, including,
without limitation, any of the Software Contracts and Purchased
Contracts.
5.5 No Existing Defaults. Seller is not in default of, and has no
notice or knowledge of any default under: (i) any of the terms of any note, debt
instrument, security agreement, mortgage, or under any other commitment,
contract, agreement, license, lease, or other instrument, whether written or
oral, to which it is a party or by which it or any of its properties or assets
is bound including, without limitation, any of the Software Contracts and
Purchased Contracts; or (ii) any law, judgment, decree, order, rule, regulation,
or other legal requirement of any governmental authority, court, or arbitration
tribunal whether Federal, state, or local (within the United States or
otherwise), at law or in equity, and applicable to it or to any of its
properties or assets which could have a material adverse effect on the Business.
To the best of Seller's knowledge, there exists no condition or event that,
after notice or lapse of time or both, would constitute a default under any of
the foregoing.
5.6 [intentionally omitted]
5.7 Adverse Changes. From January 31, 1999 to the Closing Date, the
Business has been conducted only in the ordinary and regular course, and there
have not been any material adverse changes in the condition (financial or
otherwise), assets, liabilities, commitments, business prospects of the
Business, the Purchased Assets, or the Assumed Liabilities.
5.8 Taxes. Except as provided on Schedule 5.8 hereto, Seller has
prepared (or caused to be prepared) and timely and properly filed (or caused to
be timely and properly filed) with the appropriate Federal, state, and local
authorities (within the United States or otherwise) all tax returns, information
returns, and other reports required to be filed and has paid or accrued (or
caused to be paid or accrued) in full all taxes, interest, penalties,
assessments, or deficiencies, if any, due to, or claimed to be due by, any
taxing authority, excepting only any such taxes that are being duly and timely
contested in good faith by Seller and adequately reserved on the books of
Seller. Seller has not executed or filed with any taxing authority any agreement
extending the period for assessment or collection of any taxes. Seller is not a
party to any pending action or proceeding, nor is any such action or proceeding
threatened against Seller by any governmental authority for the assessment or
collection of taxes, and no claim for assessment or collection of taxes has been
asserted against Seller. During the course of any audit currently in process or
not completed, no issues have been suggested by any representative of any
governmental authority that, if asserted, would result in a proposed assessment
of taxes, interest, or penalties against
-10-
<PAGE> 11
Seller. Seller has not executed or filed any consent agreement to extend the
period for assessment or collection of any taxes.
5.9 Condition of Assets. All equipment and other items of tangible
personal property owned, leased, or otherwise used by Seller in the Business and
included in the Purchased Assets, are now and on the Closing Date shall be (i)
in the possession of Seller and in useable condition. All equipment and other
items of tangible personal property owned, leased, or otherwise used by Seller
in the Business and included in the Purchased Assets, are located at the
premises listed on Schedule 5.28.2.
5.10 Title to Assets. At the Closing, Seller shall have and shall
transfer to Buyer, good and marketable title to all of the Purchased Assets,
free and clear of any mortgage, pledge, lien, conditional sale or other
agreement, option, encumbrance, restriction, charge, or claim of any kind,
except the liens of the Bank which will be released upon satisfaction of the
obligations to the Bank at Closing. There are no assets used in the operation of
the Business that are not included in the Purchased Assets (except the Excluded
Assets).
5.11 Inventory. Schedule 1((a)) constitutes a true and complete list of
all Inventory.
5.12 Licenses and Permits. Seller possesses all material licenses and
other required governmental or official approvals, permits, and authorizations,
as to which the failure to so possess would have a material adverse effect on
the Business, financial condition, or results of operations of Seller. All such
licenses, approvals, permits, and authorizations are in full force and effect,
Seller is in compliance with their requirements, and no proceedings are pending
or, to the knowledge of Seller, threatened, to revoke or amend any of them.
Schedule 5.12 hereto contains a complete list of all such licenses, approvals,
permits, and authorizations.
5.13 Consents. Except as set forth on Schedule 5.13 hereto, no consent,
approval, authorization, or pre-notification of, or declaration, filing, or
registration with, any governmental or regulatory authority or any third party
is required in connection with the execution, delivery, and performance of this
Agreement by Seller. Except as set forth on Schedule 5.13, all of the Purchased
Assets, including, but not limited to, all contracts, agreements, licenses,
permits, and other rights, are assignable without the prior consent of any third
party.
5.14 Intellectual Property. Schedule 1((j)) constitutes a true and
complete list of all Intellectual Property. Seller or Crain owns or possesses
adequate and enforceable licenses or other rights to use all of the Intellectual
Property, all of which are included in the Purchased Assets and assignable to
Buyer at the Closing. Seller is not in default under any such licensing or
similar agreements, and has not received any notice or other knowledge of
conflict with or infringement (or alleged infringement) of any rights of others
and no officer, manager, employee, member, or former member of Seller, or any
Person (as defined in this Section 5.14), controlling, controlled, by or under
common control with Seller, has any rights in or to any of the Intellectual
Property. The Intellectual Property does not infringe any proprietary right of
any third party. No trade secret information has been wrongfully appropriated by
any third party. To the best of Seller's knowledge, the Intellectual Property is
not being infringed. Except for the payment obligations set forth under Section
10.1 of the Advanced Agricultural
-11-
<PAGE> 12
Innovation/Commercialization Fund Agreement by and between Cattle Management
Network, LLC and Kansas Technology Enterprise Corporation dated as of September
6, 1996, the use in the Business of any of the Intellectual Property and other
technical or proprietary data has not required and does not require the payment
of any royalty or similar payment to any Person, and, on the Closing Date,
Seller and Crain will transfer to Buyer good and marketable title thereto, free
and clear of any claims of any kind, without the payment of any royalty or other
special consideration. In addition to, and without limiting the generality of
the foregoing, Seller has and shall convey to Buyer at the Closing the all of
Seller's rights to use the names "CIN, LLC," "Cattlemen's Information Network
L.L.C.," "Industry Net," "Beef Industry Information Integrator," "Feed Yard
Information System" and "Veterinary Information System" and any names similar
thereto, and the sole and exclusive rights to use the Internet domain name
"cattleinfo.com" and all iterations and permutations thereof, together with all
logos, slogans, trademarks, and service marks relating thereto or heretofore
used by Seller in connection therewith. To the best of Seller's knowledge and
except as set forth in Schedule 5.14, there are no names similar to the names
specified in the prior sentence, used in the agriculture, veterinary medicine,
and animal food sciences markets. Seller and Crain have at all times maintained
in strictest confidence all Intellectual Property (excepting only patents,
copyrights, trademarks, trade names, and service marks). Neither Seller nor
Crain has received any comments from the United States Patent and Trademark
Office the (the "Patent Office") with respect to the patent application referred
to on Schedule 1((j)). Prior to the filing of such patent application with the
Patent Office, neither Seller nor Crain made any public disclosure of any of the
claims asserted thereon which would bar the patentability of the invention(s)
under 35 USC Section 102. Seller or Crain owns the right to obtain, use and
transfer the data compiled through the use of the Software Program and included
in the Intellectual Property (the "Data") pursuant to certain Software Contracts
identified in Section 1(c), and has not conveyed to any third party any interest
in, the rights (including copyright rights) to the Data. The Data has been
selected, coordinated, and arranged in a manner completely original with Seller.
Except as identified in Schedule 5.14, Seller and/or Crain has full right and
authority to use and manipulate the Data and to convey to Buyer all rights
(including copyright rights) to the Data. Except as identified in Schedule 5.14,
there are no Federal or state laws or regulations, or restrictions of any third
party, restricting such rights to use, manipulate, or convey the Data. As used
in this Agreement, the term "Person" means any individual, sole proprietorship,
corporation, partnership, limited liability company, incorporated or
unincorporated association, joint venture, joint stock company, or other entity
of any kind, as the context requires.
5.15 Procedures for Copyright Protection. Schedule 5.15 sets forth the
form and placement of the proprietary legends and copyright notices displayed in
or on the Software Program. In no instance has the eligibility of the Software
Program for protection under applicable copyright law been forfeited to the
public domain by omission of any required notice or any other action.
5.16 Procedures for Trade Secret Protection. Seller has promulgated and
used its best efforts to enforce its trade secret protection program set forth
in Schedule 5.16. Seller has no knowledge of any material violation of such
program by any Person. The source code and system documentation relating to the
Software Program: (i) have at all times been maintained in
-12-
<PAGE> 13
confidence by Seller and, to the best of Seller's knowledge, by any other Person
who has at any time had access to such materials; and (ii) have been disclosed
by Seller only to employees and consultants having a "need to know" the contents
thereof in connection with the performance of their duties to Seller and who are
obligated by common law or by written agreement (which agreements are being
transferred to Buyer pursuant to the transactions contemplated by this
Agreement) to keep such information confidential.
5.17 Personnel Agreements. Anyone, including, but not limited to, all
employees, agents, consultants, and contractors, who have contributed to or
participated in the conception and development of the Software Program,
Technical Documentation, or Intellectual Property on behalf of Seller either:
(i) have been party to a "work-for-hire" arrangement or agreement with Seller,
in accordance with applicable Federal and state law, that has afforded Seller
full, effective, exclusive, and original ownership of all tangible and
intangible property thereby arising; or (ii) have executed appropriate
instruments of assignment in favor of Seller as assignee that have conveyed, in
accordance with applicable Federal and state law, to Seller full, effective, and
exclusive ownership of all tangible and intangible property thereby arising.
5.18 Adequacy of Technical Documentation. The Technical Documentation
includes the source code, system documentation and schematics for the Software
Programs, as well as any pertinent commentary or explanation that may be
necessary to render such materials understandable and usable by a trained
computer programmer. The Technical Documentation also includes any programs
(including compilers), "workbenches," tools, and higher level (or "proprietary")
languages used for the development, maintenance, and implementation of the
Software Program.
5.19 Third-Party Components in the Software Program. Seller has validly
and effectively obtained the right and license to use, copy, modify, and
distribute the third-party programming and materials contained in the Software
Program and the Technical Documentation, pursuant to the Software Contracts
identified as "licenses from third parties" in Schedule 1((c)). The Software
Program and the Technical Documentation contain no other programming or
materials in which any third party may claim superior, joint, or common
ownership, including any right or license. The Software Program and the
Technical Documentation do not contain derivative works of any programming or
materials not owned in their entirety by Seller or Crain and included in the
Purchased Assets.
5.20 Third-Party Interests or Marketing Rights in the Software Program.
Seller has not granted, transferred, or assigned any right or interest in the
Software Program, the Technical Documentation, or the Intellectual Property to
any Person, except pursuant to the Software Contracts identified as "Feedyard or
Veterinary Data Agreements" or "licenses and sublicenses to others" in Schedule
1((c)). Except as set forth in Schedule 1((c)), all Software Contracts
identified as "licenses and sublicenses to others" in Schedule 1((c)) constitute
only end-user agreements, each of which grants the end-user thereunder solely
the nonexclusive right and license to use the Software Program and related user
documentation, for internal purposes only, on a single central processing unit.
There are no contracts, agreements, licenses, and other commitments and
arrangements in effect with respect to the marketing, distribution, licensing,
or
-13-
<PAGE> 14
promotion of the Software Program or any other independent salesperson,
distributor, sublicensor, or other remarketer or sales organization, except for
the Software Contracts identified as "distributorships and manufacturer's
representation contracts" in Schedule 1((c)).
5.21 [Intentionally Omitted]
5.22 Equipment. Schedules 1((d)) and 1((e)) hereto constitutes a true
and complete list of the Computer Equipment and other equipment owned by Seller
or with respect to which it may have ownership rights. Each such piece of
equipment is located at Seller's premises indicated on Schedule 5.28.2.
5.23 Litigation; Warranty Claims. Except as set forth on Schedule 5.23,
for the ten (10) year period occurring immediately prior to the date of this
Agreement, there has not been and currently there is no litigation, suit,
proceeding, action, claim, or investigation, at law or in equity, pending or
threatened against or affecting Seller or involving any property or assets of
Seller, before any court, agency, authority, or arbitration tribunal, including,
but not limited to, any claims related to the Intellectual Property, any product
liability, workers' compensation or wrongful dismissal claims, or claims,
actions, suits, or proceedings relating to toxic materials, hazardous
substances, pollution, or the environment. Seller is not aware of any facts that
might result in any such litigation, suit, proceeding, action, claim, or
investigation that relates to the Purchased Assets or the transactions
contemplated hereby. Seller is not subject to or in default with respect to any
notice, order, writ, injunction, or decree of any court, agency, authority, or
arbitration tribunal. Schedule 5.23 lists all warranty claims asserted against
Seller during the three (3) year period occurring immediately prior to the date
of this Agreement, relating to products sold or distributed by Seller.
5.24 Compliance with Laws. Each of Seller and the Purchased Assets are
in compliance with all laws, statutes, rules, regulations, and other
requirements imposed by Federal, state, local, and other governmental
authorities applicable to the operation or ownership of the Business or the
Purchased Assets, the noncompliance with which would have a material adverse
effect on the Business.
5.25 Employee Benefits. Except as set forth on Schedule 5.25, Seller
has not established or maintained or is not obligated to make contributions to
or under or otherwise participate in, with respect to any current or former
employee, director, or independent contractor of the Seller: (i) any equity
option, restricted equity, equity appreciation rights, bonus, or other type of
incentive compensation plan, program, agreement, or arrangement; (ii) any
severance, pension, profit-sharing, thrift or savings, retirement, deferred
compensation, employee equity ownership, employee equity purchase, or
supplemental executive retirement plan, agreement, or arrangement; or (iii) any
life insurance, death benefit, health and hospitalization, disability, employee
assistance, education or tuition assistance, vacations benefit or fringe benefit
plan, or other employee benefit plan, program, agreement, or arrangement. All
such plans listed on Schedule 5.25 in which any of the Seller's employees
participate (collectively, the "Employee Benefit Plans") have been operated and
administered in all material respects in accordance with all applicable laws,
rules, and regulations and are fully funded. Seller has no obligation or
-14-
<PAGE> 15
commitment (formal or informal) to create any new benefit plan or program, or to
amend any existing Employee Benefit Plan to increase the benefits thereunder.
5.26 Employee Matters; Labor Relations.
5.26.1 Employment Agreements. None of the employees of the Business
are covered by employment contracts, written or oral. None of the employees of
the Business are members of any union or covered by any union contracts. Seller
is not aware of any plan or solicitation of employees of the Business to form or
join a union in the past two (2) years. Seller is not a party to or bound by any
employment agreement (written or oral) or any collective bargaining or other
labor agreement that could in any way affect Buyer, the Purchased Assets, or any
employees of the Business that Buyer may hire after the Closing Date.
5.26.2 Labor Laws. With respect to Seller's employees, Seller has
complied in all material respects with the Immigration Reform and Control Act of
1986, as amended, and all other applicable Federal, state, or local laws
relating to the employment of labor, including, but not limited to, the
provisions thereof relating to wages, non-discriminatory hiring, promotional and
employment practices and procedures, collective bargaining and payment of Social
Security, unemployment compensation, workers' compensation, and similar taxes,
and Seller is not presently liable to any Person or governmental agency for any
wage in arrears or subject to any liabilities or penalties for failure to comply
with any of the foregoing laws. With respect to Seller's employees, there are no
outstanding charges or claims of a material nature against Seller or any of its
officers, directors, agents, or employees involving any alleged or actual
violation of Seller, or, to the best of Seller's knowledge, any such Person, of
any provision of the National Labor Relations Act, the Age Discrimination in
Employment Act, the Equal Employment Opportunity Act of 1964, or any other
Federal, state, or local law concerning equal employment opportunities, equal
pay legislation, or wage and hour obligations contained in the Fair Labor
Standards Act; nor, to Seller's knowledge, has there been any threat of any such
claim or charge.
5.27 Insurance. Seller presently maintains and has maintained,
liability (excluding product liability which Seller has never maintained),
casualty, property loss, and other insurance coverage upon the properties
included in the Purchased Assets and with respect to the Business, in such
amounts, of such kinds, and with such insurance carriers as are indicated on
Schedule 5.27 hereto. Schedule 5.27 is a true and complete list of all policies
of insurance relating to the Business, the Purchased Assets, and the Assumed
Liabilities, whether currently in force or otherwise applicable to any current
or future liability, setting forth the type of coverage, policy number, policy
periods, and the status of premiums paid thereon.
5.28 Leases, Contracts, and Other Commitments.
5.28.1 Contracts and Other Commitments. Except for the Purchased
Contracts described in Schedule 1((h)) attached hereto, the Software Contracts
described in Schedule 1((c)), and the Property Leases and except with respect to
any Excluded Asset, Seller has no outstanding contracts or other commitments,
written or oral, for the performance or receipt of services, or for the payment
of monies, or for the purchase, sale, lease, license, use, or acquisition of
real or personal property of any kind or character relating to the Business, the
-15-
<PAGE> 16
Purchased Assets, or the Assumed Liabilities, except for the purchase orders,
sales orders, and other similar commitments incurred in the ordinary course of
business which (i) in the case of contracts or commitments that involve the
performance of services or the sale of products by Seller, do not involve the
payment to Seller of any amount in excess of Two Thousand Five Hundred Dollars
($2,500.00) in any single case and Ten Thousand Dollars ($10,000.00) in the
aggregate, (ii) in the case of contracts or commitments that involve the receipt
of services or the purchase, lease, or other acquisition of property by Seller,
do not involve the payment of any amount in excess of Two Thousand Five Hundred
Dollars ($2,500.00) in any single case or Ten Thousand Dollars ($10,000.00) in
the aggregate, and (iii) in either case, none of which, by its terms, cannot be
performed within one (1) year from the date of such contract or commitment.
Specifically, without limiting the generalities of the foregoing, Seller has no
written or oral contract, agreement, or understanding with any sales
representative, commission agent, distributor, consultant, or similar Person,
nor any written or oral employment contract, agreement, or understanding with
any Person, that relates to the Business, the Purchased Assets, or the Assumed
Liabilities, except as may be disclosed in the attached Schedule 1((h)).
5.28.2 Property Leases. Schedule 5.28.2 identifies each of the real
properties in which Seller has a valid and subsisting leasehold interest (the
"Property Leases") and describes each of the Property Leases thereto. Seller
does not own any real property that is used in or useful in the operation of the
Business.
5.28.3 Compliance with Contracts. Seller is in compliance with the
provisions of all contracts, leases, and other commitments that relate to the
Business, the Purchased Assets, and the Assumed Liabilities, the noncompliance
with which would have a material adverse effect on the Business, the Purchased
Assets or the Assumed Liabilities, and to the best of Seller's knowledge, no
default exists by any party to any such contract, lease, or commitment;
furthermore, to the best of Seller's knowledge, no event has occurred that, with
the passage of time or giving of notice or both, would constitute a default
under any such contract, lease, or commitment, nor is Seller aware of any event
or circumstance that could reasonably cause such a default or event to occur in
the future. All such contracts, leases, and commitments are valid, binding, and
enforceable in accordance with their terms and are in full force and effect. No
outstanding purchase commitment of Seller is in excess of the normal, ordinary,
and usual requirements of the Business, and no contract price in any outstanding
purchase commitment of Seller is excessive of the current market prices for the
relevant materials, products, commodities or services. Further, the grant of
rights to use the data obtained pursuant to the Feedyard Data Agreements and
Veterinary Data Agreements being transferred to Buyer are sufficient to allow
manipulation of the data by the Feedyard Information System and Veterinary
Information System, respectively, in their current and anticipated
configurations. No outstanding sales or lease commitment by Seller in connection
with the Business obligates Seller to sell or lease any products or services at
a price which, in view are currently prevailing and projected costs of
manufacturing, overhead and administrative and general expenses applicable
thereto, would result in, when all such sales and lease commitments are taken in
the aggregate, any loss.
-16-
<PAGE> 17
5.29 Accounts Receivable. Schedule 1((f)) constitutes a true and
complete list of all Accounts Receivable. All Accounts Receivable arose from
bona fide transactions in the ordinary course of business and are not subject to
any offset, counterclaim, or set-off.
5.30 Accounts Payable. Schedule 3.2 constitutes a true and complete
list of all accounts payable and accrued expenses included within the Assumed
Liabilities. All such accounts payable and accrued expenses arose from bona fide
transactions in the ordinary course of business.
5.31 Customers. Attached hereto as Schedule 5.31, is a complete and
accurate list of Seller's feedyard and veterinary customers during the twelve
(12) month period ending as of the date hereof, indicating the existing
contractual arrangements, if any, with each such customer. There are no
outstanding disputes with any customer listed on Schedule 5.31 and no such
customer has refused to, or stated its intention not to, continue to do business
with Seller or otherwise to materially change its arrangements with Seller.
5.32 Related Party Transactions. Except as set forth on Schedule 5.32
hereto, None of the members, managers, or officers of Seller: (i) are currently
a party to any transaction with Seller, including, but not limited to, any
contract, agreement, or other arrangement providing for the furnishing of
services to or by, providing for rental of real or personal property to or from,
or otherwise requiring payments to or from, any such Person, or to or from any
corporation, partnership, limited liability company, trust, or other entity in
which any such Person owns in excess of five percent (5%) of the outstanding
equity interest; (ii) own, directly or indirectly, any interest in, excepting
not more than five percent (5%) equity holdings for investment purposes,
securities of any publicly held or traded company; (iii) are an officer,
director, employee, or consultant of any Person that is a competitor, customer,
or supplier of Seller; (iv) own, directly or indirectly, in full or in part, any
copyright, trademark, trade name, service mark, franchise, patent, invention,
permit, license, trade secret, or confidential information that Seller is using
or the use of which is necessary for the Business; or (v) have any cause of
action or other claim whatsoever against, or owes any amount to Seller.
5.33 Brokers. Seller has not expressly or impliedly retained any
broker, finder, investment banker, or financial advisor in connection with this
Agreement or the transactions contemplated hereby. Seller has not taken any
actions that will cause Buyer to incur or be required to pay, any broker,
finder, investment banker, financial advisor, or similar fee in connection with
this Agreement or any transaction contemplated hereby, to any Person acting as
broker, finder, investment banker, financial advisor, or in any similar capacity
on behalf of Seller.
5.34 Full Disclosure. No representation or warranty of Seller, and none
of the information furnished by Seller or by any of the authorized managers,
officers, employees, agents, accountants, or representatives of Seller, to Buyer
pursuant to this Agreement (whether furnished prior to, at, or subsequent to the
date hereof), or the information contained in the Schedules to this Agreement,
or any other information furnished to Buyer by Seller or by any of the
authorized directors, officers, employees, agents, accountants, or
representatives of Seller at
-17-
<PAGE> 18
any time prior to the Closing (pursuant to the request of Buyer or otherwise),
contains, or will contain, any misstatement of a material fact or omits, or will
omit, any material fact required to be stated herein or therein or necessary to
make all such statements and information not misleading. For purposes of this
Section 5.34, all managers and officers of Seller are authorized persons. As of
the Closing, there will be no material facts relating to the Purchased Assets,
Assumed Liabilities, earnings, properties, or operation of the Business that
have not been disclosed to Buyer in writing in this Agreement or the Schedules
hereto.
5.35 Investment in Shares. Seller has such knowledge and experience in
financial and business matters that it is capable of protecting its own
interests in connection with the acquisition of the Shares and evaluating the
merits and risks of its investment in the Shares. Seller has been provided, to
its satisfaction, the opportunity to ask questions concerning the terms and
conditions of its investment in the Shares, has had all such questions answered
to its satisfaction, and has been supplied all additional information deemed
necessary to evaluate an investment in the Shares. Seller is satisfied that,
whether or not Seller has chosen to utilize it, Seller has had effective access
to all material information about Buyer by reason of its relationship to Buyer
or one or more of Buyer's officers, directors, or stockholders. Seller
understands that an investment in the Shares involves a high degree of risk, is
familiar with the type of investment that the Shares constitutes, and has
reviewed the investment in the Shares with tax and legal counsel to the extent
that Seller has deemed such review to be advisable. Seller is investing in the
Shares solely for its own account, for investment, and not with a view to or for
any distribution, resale, subdivision, or fractionalization thereof in
connection with any distribution of securities within the meaning of the
Securities Act of 1933, as amended (the "Act"). Seller is the sole and true
party in interest and is not investing for the benefit of any other Person, nor
investing in a fiduciary capacity for any other Person. Seller acknowledges that
the Shares are being transferred to Seller in a private transaction, pursuant to
exemptions afforded by Section 4(2) of the Act and Section 17-1262 of the Kansas
Securities Act, and not registered thereunder or under the securities laws of
any other state or foreign jurisdiction, and that consequently, the Shares must
be held indefinitely unless they are subsequently registered under the Act, or
unless an exemption from registration is available thereunder. Seller further
acknowledges that Buyer has no obligation to register the Shares, except as
provided in the Registration Rights Agreement, and the certificate that will be
issued to Seller upon the issuance of the Shares shall contain a legend
substantially in the form set forth below with reference to the necessity for
compliance with Federal and state securities laws in connection with any
subsequent transfer of the Shares; Seller hereby agrees to deal with these
Shares only in compliance with such requirements:
THE SHARES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED, OR ANY STATE OR OTHER SECURITIES LAWS, AND MAY NOT BE
OFFERED, SOLD, TRANSFERRED, OR ASSIGNED EXCEPT: (i) PURSUANT TO
REGISTRATIONS UNDER APPLICABLE SECURITIES LAWS; OR (ii) IF, IN THE
OPINION OF COUNSEL REASONABLY ACCEPTABLE TO THE CORPORATION, THE
PROPOSED TRANSFER MAY BE EFFECTED IN COMPLIANCE WITH APPLICABLE
SECURITIES LAWS WITHOUT REGISTRATION.
-18-
<PAGE> 19
5.36 True Copies. All documents furnished to Buyer by or on behalf of
Seller are true and correct copies, and there are no amendments or modifications
thereto except as set forth in such documents.
5.37 Survival of Representations and Warranties. The representations
and warranties of Seller made in this Agreement are correct, true, and complete
in all material aspects as of the date hereof and will be correct, true, and
complete in all material aspects at the Closing Date with the same force and
effect as though such representations and warranties had been made at the
Closing Date, and shall survive the Closing as provided in Article IX.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES
OF BUYER
Buyer represents and warrants to Seller, on and as of the date hereof
and on and as of the Closing Date, as follows:
6.1 Organization of Buyer. Buyer is a corporation duly organized,
validly existing, and in good standing under the laws of the State of Delaware.
6.2 Power and Authority. Buyer has all requisite power and authority to
enter into this Agreement, and all other agreements in connection herewith, and
to perform the obligations to be performed by it hereunder. All corporate and
other proceedings required to be taken by or on the part of Buyer to execute,
deliver, and carry out the terms of this Agreement, and all other agreements or
documents to be executed or delivered in connection herewith, and to perform its
obligations hereunder and thereunder, have been duly and properly taken. This
Agreement, and all other agreements and documents to be executed and delivered
by Buyer in connection herewith when executed and delivered, constitute the
legal, valid, and binding obligations of Buyer, enforceable against Buyer in
accordance with their respective terms.
6.3 No Violation to Result. The execution and delivery of this
Agreement and all other agreements and documents to be executed and delivered in
connection herewith, and the consummation of the transactions contemplated
hereby and thereby:
(a) are not in violation or breach of, do not conflict with or
constitute a default under, and will not accelerate or permit the
acceleration of the performance required by, any of the terms of the
charter documents or by-laws of Buyer or any note, debt instrument,
security agreement, or mortgage, or any other contract or agreement,
written or oral, to which Buyer is a party or by which Buyer or any of
its properties or assets is bound;
(b) will not be an event that, after notice or lapse of time
or both, will result in any such violation, breach, conflict, default,
or acceleration; and
-19-
<PAGE> 20
(c) will not result in a violation under any law, judgment,
decree, order, rule, regulation or other legal requirement of any
governmental authority, court, or arbitration tribunal whether Federal,
state, or local (within the United States or otherwise) at law or in
equity, and applicable to Buyer.
6.4 Capitalization. The authorized capital stock of Buyer immediately
prior to the Closing, consists of 20,000,000 shares of Common Stock, par value
one cent ($.01) per share, of Buyer (the "Common Stock"), 4,676,500 shares of
which are outstanding as of the Closing, and 10,000,000 shares of Preferred
Stock (the "Preferred Stock"). As of the date of the Closing, 6,500,000 shares
of Preferred Stock have been designated as Series A, of which 6,443,606 shares
of which are outstanding. The Shares have been duly authorized for issuance.
Assuming the accuracy of the representations of Seller set forth in Section
5.35, the Shares will have been offered, issued, sold and delivered in
compliance with all applicable state and federal laws concerning the issuance of
securities, and when issued, will be validly issued, fully paid and
non-assessable shares of Common Stock, and will not have been issued in
violation of the preemptive rights of any person. Other than as described in
this Section 6.4 or set forth in Schedule 6.4, there are no outstanding shares
of Common Stock, Preferred Stock, or any other securities of Buyer, and except
as described on Schedule 6.4 hereto, there are no options, warrants, call
conversion rights, commitments, or agreements of any character to which Buyer is
a party or by which Buyer may be bound that do or may obligate Buyer to issue,
deliver, or sell, or cause to be issued, delivered, or sold, additional shares
of Common Stock, Preferred Stock, or other securities of Buyer, or that do or
may obligate Buyer to grant, extend, or enter into any such option, warrant,
call conversion right, commitment, or agreement. Except as set forth in Schedule
6.4, there are no outstanding arrangements, agreements, commitments, or
understandings of any kind affecting or relating to the voting, issuance,
purchase, redemption, repurchase, or transfer of any capital stock or any other
securities of Buyer.
6.5 Brokers. Buyer has not expressly or impliedly retained any broker,
finder, investment banker, or financial advisor in connection with this
Agreement or the transactions contemplated hereby. Buyer has not taken any
actions that will cause Seller to incur or be required to pay, any broker,
finder, investment banker, financial advisor, or similar fee in connection with
this Agreement or any transaction contemplated hereby, to any Person acting as
broker, finder, investment banker, financial advisor, or in any similar capacity
on behalf of Buyer.
ARTICLE VII
FURTHER AGREEMENTS AND ASSURANCES OF SELLER
7.1 Obligations to Employees. Seller shall terminate the employment of
each of its employees as of February 26, 1999. To the extent any employee of
Seller rejects Buyer's offer of employment made pursuant to Section 8.3 hereof,
Seller shall be responsible for, and shall pay, all amounts (excluding any
amounts included in the Assumed Liabilities), including wages, salaries,
bonuses, commissions, vacation pay, and severance pay, if any, and all other
employee
-20-
<PAGE> 21
benefits due to any or all of Seller's employees or independent contractors.
Specifically, but not in limitation of the foregoing, Seller shall be
responsible for providing COBRA health continuation coverage under Section 4980B
of the Code to all of its employees to the extent required by law, as well as
complying with all Federal, state, and local laws, rules, and regulations
promulgated thereunder, relating to the termination of employees, including, but
not limited to, the Worker's Adjustment and Retraining Notification Act. Buyer
does not assume and Seller shall indemnify, defend, and hold harmless Buyer
against any and all obligations and responsibilities with respect to each and
every employee of Seller under any employment agreement, current or future
pension, retirement, deferred compensation, bonus, profit-sharing, insurance, or
similar plan, agreement, arrangement, or formal or informal understanding, for
the benefit of employees, in each case whether or not legally binding, that
Seller maintains or ever has maintained or to which Seller contributes or ever
has contributed or to which Seller is obligated to contribute including, but not
limited to, the Employee Benefit Plans. Buyer shall have no liability whatsoever
to employees of Seller with respect to accrued benefits under any Employee
Benefit Plans for employees' service with Seller, whether or not any of such
employees are offered employment by, or become employees of, Buyer. Seller shall
be responsible for and shall indemnify, defend, and hold harmless Buyer against
all employee benefit claims (including long-term disability and medical and
hospitalization claims) of any nature whatsoever and workers' compensation
claims: (a) that have arisen on or before the Closing Date for any and all
employees of Seller; (b) for employees of Seller who are or become retired on or
before the Closing Date with respect to disability, illness, or any other state
of facts occurring before or after the Closing Date; (c) for any and all
employees of Seller (or their eligible dependents) with respect to events or
situations that may lead to a determination of eligibility or disability,
illness, or any other state of facts occurring before the Closing Date; and (d)
in respect of all of Seller's employees. Buyer shall have no liability
whatsoever in respect of any of the foregoing.
7.2 Non-Disclosure and Non-Competition Relating to the Business. From
and after the Closing Date, Seller and Crain shall not:
(a) at any time or in any manner, either directly or
indirectly, divulge, disclose, or communicate to any Person (other than
Buyer's employees and representatives), except the authorized
attorneys, accountants, or representatives of Seller or Crain who have
a need to know in connection with their respective services for Seller
or Crain, in any manner whatsoever, any Confidential Information (as
defined in this Section);
(b) for a period of five (5) years from and after the Closing
Date, in any manner, either directly or indirectly, as an owner,
partner, officer, director, consultant, agent, employee, independent
contractor, or equity holder (as applicable) of any Person, engage in
the business of developing, marketing, distributing, or selling
services or software designed to provide information services, imaging
tools, or animal supplements (except for the sale, prescription, or
distribution of annual supplements in the ordinary course of a bovine
and equine veterinary practice) in the markets of veterinary medicine,
animal sciences, or human medicine, anywhere within the United States
of America;
-21-
<PAGE> 22
(c) for a period of five (5) years from and after the Closing
Date, in any manner, either directly or indirectly, solicit any
employee of Buyer (or the Business) to work for any Person other than
Buyer, or engage in any activity that would cause any employee to
violate any agreement with Buyer, or dissuade, or attempt to dissuade,
any such employee from faithfully discharging such employee's
contractual and fiduciary obligations to serve Buyer's interests with
undivided loyalty; and
(d) induce or persuade any customer or supplier of Buyer (or
the Business) to terminate its relationship with Buyer (or the
Business) or to enter into any relationship with any other Person
engaged in the business of developing, marketing, distributing, or
selling services or software designed to provide information services,
imaging tools, or animal supplements (except for the sale,
prescription, or distribution of annual supplements in the ordinary
course of a bovine and equine veterinary practice) in the markets of
veterinary medicine, animal sciences, or human medicine, anywhere
within the United States of America.
Notwithstanding the foregoing, Crain shall not be deemed to be competing with
the Business pursuant to his employment by Buyer and neither Seller nor Crain
shall be deemed to be in violation of subsection ((b)) immediately preceding, by
reason of the fact that certain employees of Crain's veterinary practice (being
Crain, Dr. Nate McDonald, Cathy Rosenberry and Shane Walter) may also be
employed on a shared basis with Buyer. For purposes of this Section 7.2,
"Confidential Information" means any information not in the public domain
concerning any matters affecting or relating to the Business, including, but not
limited to, inventions, trade secrets, confidential knowledge, data, or other
proprietary information relating to products, processes, know-how, designs,
formulas, developmental or experimental work, computer programs, source code,
databases, other original works of authorship, records, ideas and research
relating to design, coding, operation, use, installation, or maintenance of
computer software or proposed computer software products of the Business, any
portion of any reports, analyses or other materials generated or used in
connection with the Business, the prices Seller obtains or has obtained from the
sale of, or at which it sells or has sold, its products and services, and
listings of any or all of the foregoing, in whatever form, or any other
information concerning the Business without regard to whether all or any part of
the foregoing matter would otherwise be deemed "confidential" or "material," the
parties hereto stipulating that, as between them, the same are confidential and
material and significantly affect the effective and successful conduct of the
Business. If any clause or provision of this Section 7.2 be found unenforceable
by a court of competent jurisdiction, then such clause or provision shall be
deemed to be enforceable to the extent permitted by law and every other clause
and provision shall continue in full force and effect. Seller and Crain
acknowledge that the restraints imposed upon it or him, as applicable, pursuant
to this Section 7.2 are no greater than is reasonably necessary to preserve and
protect the assets and legitimate business interests of Buyer and that such
restraints will not impose undue hardship on Seller or Crain, and that a
violation of this Section by Seller or Crain would irreparably injure Buyer.
Accordingly, Buyer may, in addition to pursuing its other remedies, obtain an
injunction from any court having jurisdiction of the matter against Seller or
Crain, as applicable, for any such violation without having to prove the
inadequacies of monetary relief and no bond or other security shall be required
in connection with such injunction. The agreements contained in this Section 7.2
-22-
<PAGE> 23
shall be construed and enforced independently of any other provision of this
Agreement or any other understanding or agreement between the parties, and the
existence of any claim or choses of action of Seller or Crain against Buyer, of
whatever nature, shall not constitute a defense to the enforcement of the
agreements contained in this Section 7.2 against Seller.
7.3 Satisfaction of Excluded Liabilities. From and after the Closing
Date, Seller shall pay, perform, and otherwise satisfy in full when due, all
liabilities and obligations that relate to or may affect the Business or the
Purchased Assets, including, but not limited to, the Excluded Liabilities,
excepting only the Assumed Liabilities.
7.4 Further Assurances. From time to time after the Closing, without
additional consideration, Seller shall execute and deliver all such other
instruments of sale, assignment, conveyance, and transfer and shall take all
such other action, as Buyer may request to more effectively transfer and vest in
Buyer, and to put Buyer in possession of, any of the Purchased Assets including,
but not limited to, the Intellectual Property.
7.5 Name Change. Seller shall take all necessary action to approve the
withdrawal or cancellation of every registration or a limited liability company
or assumed name incorporating the names "CIN, LLC," "Cattle Management Network,
L.L.C.," "Cattlemen's Information Network, L.L.C.," "Industry Net," and "Beef
Industry Information Integrator" in each state where Seller has registered a
limited liability company or assumed name incorporating such names. Seller shall
prepare and deliver to Buyer at Closing, all documentation and filings necessary
to effect such actions, in forms appropriate for filing by Buyer. After the
Closing Date, Seller shall refrain from using the names "CIN, LLC," "Cattle
Management Network, L.L.C.," "Cattlemen's Information Network, L.L.C.,"
"Industry Net," and "Beef Industry Information Integrator" or any derivation
thereof, except in an historical manner.
7.6 Collection of Accounts Receivable. For a period of ninety (90) days
from the Closing Date, Seller shall reasonably assist Buyer in the collection of
the Accounts Receivable.
ARTICLE VIII
FURTHER AGREEMENTS AND ASSURANCES OF BUYER
8.1 Satisfaction of Conditions by Buyer. Buyer shall not voluntarily
undertake any course of action inconsistent with the satisfaction of the
requirements or conditions applicable to it in this Agreement, including, but
not limited to, the satisfaction of the Assumed Liabilities, and Buyer shall
promptly do all such acts and take all such measures as may be appropriate to
enable it to perform the obligations herein provided to be performed by it.
8.2 Buyer to Assist in Obtaining Consents. Buyer shall provide
assistance, as reasonably requested by Seller, to secure consents to the
assignment of any of the contracts to be assumed by Buyer hereafter.
-23-
<PAGE> 24
8.3 Employment. Buyer shall offer at-will employment effective as of
March 1, 1999, subject to execution of Buyer's Non-Disclosure, Proprietary
Information, Assignment And Non-Competition Agreement, to all employees of
Seller set forth on Schedule 8.2. All such offers of employment shall include
all benefits available to other similarly situated employees of Buyer (as
determined by Buyer) and shall include participation in the Buyers health
insurance without any waiting period or exclusions for preexisting conditions.
For the benefit of Seller, Buyer shall offer all such employees a bonus, as
specified on Schedule 8.2, payable on or before October 31, 1999, with such
bonuses in the aggregate not to exceed One Hundred Seventeen Thousand Dollars
($117,000.00).
8.4 Spin Out. Buyer covenants and agrees that Buyer shall use
commercially reasonable efforts to assess or cause to be assessed the viability
of spinning out a portion of the Business as a separate company for the purpose
of developing, marketing, and distributing software applications developed from
the Software Program solely for use in the agricultural industry (being business
devoted to the science and art of producing crops, but specifically excluding
livestock, poultry, or any other food animals) (the "Agrivision Technology"). In
the event such a spin out company is formed (the "Spin Out"), and as additional
consideration for the transaction contemplated under this Agreement, the Spin
Out entity shall issue to Seller shares of its common equity constituting
twenty-five percent (25%) of the initial equity of the Spin Out, but in no event
less than one million (1,000,000) shares of such equity. So long as Seller's
ownership interest in the Spin Out remains between twenty-five percent (25%) and
ten percent (10%), contemporaneously with any acquisition by XL Vision, Inc.
("XL Vision") of additional equity in the Spin Out, Seller shall be offered the
opportunity to purchase an additional amount of equity on the same terms as XL
Vision so that Seller may maintain a percentage ownership in the Spin Out in the
same proportion as its ownership interest relates to the ownership interest of
by XL Vision in the Spin Out immediately prior to such offer. Further, if
Seller's ownership interest in the Spin Out falls below ten percent (10%), Buyer
shall use its best commercial efforts to cause the Spin Out to grant Seller
pre-emptive rights relating to capital-raising transactions (excluding, by way
of example and without limitation, issuances relating to any "Excluded
Transaction" as defined in the immediately following sentence. For purposes of
this Section, "Excluded Transaction" shall mean the issuance of any equity
securities (including any common stock, preferred stock, or other security, any
security convertible into common stock, preferred stock, or other security, or
any right to, or security carrying any right to, subscribe to or purchase any
common stock, preferred stock, or other security): (i) to any employees,
officers, or directors of, or consultants or advisors (excluding Buyer or XL
Vision) to, the Spin Out or any subsidiary, pursuant to any stock purchase or
stock option plan or other arrangement that has been approved by the board of
directors of the Spin Out; (ii) pursuant to a merger, consolidation,
acquisition, or similar business combination (for consideration other than
cash); (iii) pursuant to any stock split, stock dividend, or recapitalization
(assume that all shares of the same class of stock are effected in the same
manner) by the Spin Out; (iv) pursuant to the conversion of any convertible
equity securities or the exercise of any rights to subscribe to or purchase any
equity securities; (v) pursuant to any equipment leasing arrangement or debt
financing from a bank or similar financial institution; (vi) pursuant to a
registration statement filed under the Act; or (vii) in connection with any
strategic transaction involving the Spin Out and other entities, including (a)
joint ventures, manufacturing, marketing, or distribution
-24-
<PAGE> 25
arrangements or (b) technology transfer or development arrangements, provided
that such strategic transaction, and the issuance of equity securities in
connection therewith, has been approved by the board of directors of the Spin
Out. For so long as Crain owns at least ten percent (10%) of the Spin Out, Buyer
will use its best commercial efforts to cause Crain to be elected to the Board
of Directors of the Spin Out. In the event Buyer has not formed a spin out
company based on the Agrivision Technology within ninety (90) days of the first
anniversary of the Closing Date, Seller shall have ninety (90) days within which
to request in writing that Buyer grant Seller or an entity designated by Seller,
a perpetual, limited, royalty-free license to the Software Program for the sole
purpose of developing, marketing, and distributing the Agrivision Technology. In
consideration of such license, Buyer shall be issued equity constituting five
percent (5%) of the equity of the licensee entity.
ARTICLE IX
SURVIVAL OF REPRESENTATIONS AND WARRANTIES; INDEMNIFICATION
9.1 Survival of Representations and Warranties. Notwithstanding any
other provision of this Agreement, each and every representation and warranty of
Seller and Crain set forth in this Agreement or any other agreement or document
executed or delivered in connection herewith, shall survive the Closing for a
period of two (2) years from the Closing Date, despite any investigations made
by or on behalf of any party hereto, excepting only that the representations and
warranties of Seller and Crain set forth in Sections 5.2 and 5.10, shall survive
the Closing without limitation, and the representations and warranties with
respect to taxes set forth in Section 5.8, shall survive until the expiration of
any statutes of limitation applicable with respect to such taxes, including any
extensions with respect to such statutes granted by or on behalf of Seller.
Notwithstanding any other provision of this Agreement, each and every
representation and warranty of Buyer set forth in this Agreement or any other
agreement or document executed or delivered in connection herewith, shall
survive the Closing for a period of two (2) years from the Closing Date, despite
any investigations made by or on behalf of any party hereto, excepting only that
the representations and warranties of Buyer set forth in Section 6.2, shall
survive the Closing without limitation. All of the covenants and other
agreements of the parties hereto shall survive the Closing until the expiration
of any statutes of limitation applicable thereto.
9.2 Indemnification.
9.2.1 By Seller and Crain. Seller and Crain, jointly and severally,
hereby indemnify and agree to defend and hold Buyer and its officers, directors,
shareholders, affiliates, employees, successors, and assigns (collectively, the
"Buyer Indemnitees") harmless from and against any and all liabilities, losses,
damages, costs, and expenses (including, without limitation, court costs, costs
of investigation, and reasonable attorneys' fees), incurred or sustained by any
of the Buyer Indemnitees because of any inaccuracy in, or breach or violation
of, any of the representations, warranties, covenants, or agreements made by
Seller or Crain pursuant to this Agreement or any other agreement or document
executed or delivered in connection herewith, whether or not such inaccuracy,
breach, or violation was known or should have been known, by
-25-
<PAGE> 26
Buyer, Seller, or Crain on the Closing Date, it being the acknowledged intention
of the parties that Seller and Crain shall be completely responsible for, and
Buyer shall be conclusively deemed to have relied upon, such representations,
warranties, and covenants in the consummation of the purchase and sale
transactions contemplated herein. In addition, Seller and Crain, jointly and
severally, hereby indemnify and agree to defend and hold the Buyer Indemnitees
harmless from and against any and all liabilities, lawsuits, damages, costs and
expenses (including, but not limited to, court costs, costs of investigation,
and reasonable attorneys' fees), incurred or sustained by any of the Buyer
Indemnitees as a result of: (i) any and all debts, liabilities (including, but
not limited to, the Excluded Liabilities set forth in Section 3.3), obligations,
or commitments of Seller or Crain of any nature whatsoever, whether approved,
liquidated, unliquidated, ordinary, extraordinary, absolute, contingent,
unknown, known, or otherwise, except the Assumed Liabilities, which Buyer
expressly agrees to assume pursuant to Section 3.2; and (ii) any and all suits,
actions, or claims (including, but not limited to, product liability, patent
infringement, and unfair trade practice claims) relating to the sale or any
other form of transaction, or any action or inaction on the part of Seller or
Crain at any time on or prior to the Closing Date, whether or not pending as of
the Closing Date.
9.2.2 By Buyer. Buyer hereby indemnifies and agrees to defend and
hold Seller and its officers, Manager, members, affiliates, employees,
successors, and assigns (collectively, the "Seller Indemnitees") harmless from
and against any and all liabilities, losses, damages, costs, and expenses
(including, without limitation, court costs, costs of investigation, and
reasonable attorneys' fees), incurred or sustained by any of the Seller
Indemnitees because of any inaccuracy in, or breach or violation of, any of the
representations, warranties, covenants, or agreements made by Buyer pursuant to
this Agreement or any other agreement or document executed or delivered in
connection herewith, whether or not such inaccuracy, breach, or violation was
known or should have been known, by Buyer, Seller, or Crain on the Closing Date,
it being the acknowledged intention of the parties that Buyer shall be
completely responsible for, and Seller shall be conclusively deemed to have
relied upon, such representations, warranties, and covenants in the consummation
of the purchase and sale transactions contemplated herein. In addition, Buyer
hereby indemnifies and agrees to defend and hold the Seller Indemnitees harmless
from and against any and all liabilities, lawsuits, damages, costs and expenses
(including, but not limited to, court costs, costs of investigation, and
reasonable attorneys' fees), incurred or sustained by any of the Seller
Indemnitees as a result of: (i) any and all debts, liabilities (including, but
not limited to, the Assumed Liabilities set forth in Section 3.3), obligations,
or commitments of Buyer of any nature whatsoever, whether approved, liquidated,
unliquidated, ordinary, extraordinary, absolute, contingent, unknown, known, or
otherwise, except the Excluded Liabilities, which Seller expressly agrees to
retain and satisfy pursuant to Section 3.2; and (ii) any and all suits, actions,
or claims (including, but not limited to, product liability, patent
infringement, and unfair trade practice claims) relating to the sale or any
other form of transaction, or any action or inaction on the part of Buyer at any
time after the Closing Date.
9.2.3 DeMinimus Exclusion and Limitation of Liability.
Notwithstanding either of the immediately preceding two subsections, it is
understood and agreed that with respect to inaccuracies or breaches of the
representations and warranties set forth in this Agreement, Seller
-26-
<PAGE> 27
and Crain or Buyer, as the case may be, shall be obligated to indemnify and hold
harmless, in the case of Seller and Crain, Buyer and, in the case of Buyer,
Seller, only to the extent that the aggregate sum of the liabilities, damages,
costs and expenses incurred or sustained by such other with respect to all such
inaccuracies or breaches shall exceed the sum of Twenty-Five Thousand Dollars
($25,000.00). The foregoing sentence is intended to be and shall be applicable
solely with respect to inaccuracies or breaches of the representations and
warranties set forth in this Agreement, and shall not be deemed to limit the
parties' respective obligations (including indemnification obligations) with
respect to any breaches or violations of any covenants or other provisions of
this Agreement. Specifically, and without limiting the generality of the
foregoing, the first sentence of this Section shall not be applicable to: (i)
any failure by Seller to transfer any of the Purchased Assets to Buyer, to pay,
perform and discharge the Excluded Liabilities, or to comply with the terms of
Article 7 of this Agreement, or (ii) any failure by Buyer to pay the Purchase
Price hereunder, to pay, perform and discharge the Assumed Liabilities, or to
comply with the terms of Article 8 of this Agreement. Notwithstanding this
Section, in no event shall the liability of Seller and Crain under this
Agreement for any and all causes of action exceed Two Million Six Hundred
Thousand Dollars ($2,600,000.00), in the aggregate and in no event shall the
liability of Buyer under this Agreement for any and all causes of action exceed
Two Million Six Hundred Thousand Dollars ($2,600,000.00), in the aggregate and
including the value of the Purchase Price paid hereunder.
9.3 Set-off. Upon written notice to Seller, Buyer may set off against
any and all amounts otherwise to be paid to Seller under Sections 3.1((b)) and
((c)) or otherwise, any amounts claimed in good faith to be owed to Seller by
Buyer.
ARTICLE X
AMENDMENT; WAIVER
10.1 Amendment. This Agreement may only be amended in a writing that
refers to this Agreement and is executed by the parties hereto.
10.2 Integration. This Agreement (including the Exhibits and Schedules
hereto), and each agreement or document executed or delivered in connection
herewith, embodies the entire agreement of the parties hereto in relation to the
purchase and sale of the Purchased Assets and the other transactions
contemplated herein, and supersedes all prior understandings and agreements of
the parties with respect to the subject matter hereof, including, but not
limited to that certain Proposal for Investment letter dated February 3, 1999,
to Seller and Crain from Buyer and XL Vision.
10.3 Waiver; Remedies. No delay on the part of any party in exercising
any right, power, or privilege shall operate as a waiver thereof, nor shall any
waiver of any right, power, or privilege operate as a waiver of any other right,
power, or privilege, nor shall any single or partial exercise of any right,
power, or privilege preclude any other or further exercise thereof or of any
other right, power, or privilege. The rights and remedies herein provided are
cumulative and are
-27-
<PAGE> 28
not exclusive of any rights or remedies that the parties otherwise may have at
law or in equity, by statute or otherwise.
ARTICLE XI
MISCELLANEOUS
11.1 Successors, Assigns, and Third Parties. This Agreement shall inure
to the benefit of and be binding upon the parties hereto and their respective
successor and assigns; provided, however, that Seller may not make any
assignment of this Agreement or any interest herein or obligation hereunder,
without the prior written consent of Buyer. Nothing herein expressed or implied
is intended or shall be construed to confer upon or give to any Person, other
than the parties hereto and their respective successors and assigns, any rights
or remedies under or by reason of this Agreement.
11.2 Governing Law. This Agreement shall in all respects be
interpreted, construed, and governed by and in accordance with the laws of the
State of Delaware, applicable to contracts made and to be performed therein.
Seller and Crain agree that any court proceedings brought by either of them
against Buyer arising out of this Agreement, will only be brought in a Federal
or state court located in the State of Florida, County of Indian River and in
that regard each irrevocably consents to the jurisdiction and venue (and waives
any inconvenient forum objection) of such Federal and state courts, for the
purposes of any court proceedings brought by either of them hereunder and to
accept service of process by mail. Buyer agrees that any court proceedings
brought by it against either Seller or Crain arising out of this Agreement, will
only be brought in a Federal or state court located in the State of Kansas,
County of Sedgwick and in that regard irrevocably consents to the jurisdiction
and venue (and waives any inconvenient forum objection) of such Federal and
state courts, for the purposes of any court proceedings brought by it hereunder
and to accept service of process by mail.
11.3 Specific Performance. The purpose of Buyer in entering this
Agreement is to gain control of the Purchased Assets of the Business. Such
Business and the Purchased Assets are unique and cannot be readily obtained on
the open market. If Seller refuses to perform its obligations under this
Agreement, Buyer shall be entitled to specific performance. In any action to
enforce the provisions of this Agreement, Seller shall waive the defense that
there is an adequate remedy at law.
11.4 Certain Words. Words such as "herein," "hereof," "hereby,"
"hereunder" and words of similar import refer to this Agreement as a whole and
not to any particular Section or subsection of this Agreement unless the context
indicates otherwise. Wherever appropriate in the context, terms used herein in
the singular also include the plural, and vice versa, and each masculine,
feminine, or neuter pronoun shall also include the other genders.
11.5 Notices. Except as otherwise expressly provided herein, any
notice, consent, or other communication required or permitted to be given
hereunder shall be in writing and shall be
-28-
<PAGE> 29
deemed to have been given three (3) days after the date sent if sent by United
States certified mail, return receipt requested, with proper postage thereon,
one (1) day after the date sent if sent by overnight courier of national
recognition, or when transmitted, if sent by facsimile, and shall be addressed
as follows:
(a) If to Buyer: eMERGE Vision Systems, Inc.
10315 102nd Terrace
Sebastian, FL 32968
Attention: Charles L. Abraham
Chief Executive Officer
Phone Number: 561/589-5310
Facsimile Number: 561/589-3779
with a copy to: Gordon & Glickson
444 N. Michigan Avenue
Suite 3600
Chicago, IL 60611
Attention: Diana J. P. McKenzie
Phone Number: 312/321-1700
Facsimile Number: 312/321-9324
(b) If to Seller: CIN, LLC
P.O. Box 654
Meade, KS 67864
Attention: Dr. Scott Crain
Phone Number: 316-873-2181
Facsimile Number: 316-873-2182
with a copy to: Foulston & Siefkin, LLP
100 N. Broadway, Suite 700
Attention: Harvey R. Sorensen
Phone: 316/267-6371
Facsimile Number: 316/267-6345
or at such other address or addresses as the party addressed may from time to
time designate in writing.
11.6 Expenses. All sales and similar taxes arising out of the transfer
of the Purchased Assets and the transactions contemplated hereby shall be paid
by the party responsible by law for such tax. All legal, accounting, and other
costs and expenses incurred in connection herewith and the transactions
contemplated hereby shall be paid by the party incurring such expenses.
11.7 Confidentiality. All nonpublic information disclosed heretofore or
hereafter by Buyer or Seller to the other in connection with this Agreement
shall be kept confidential by such
-29-
<PAGE> 30
other, and shall not be used other than in connection with this Agreement,
except to the extent it was known when received or as it is or hereafter becomes
lawfully obtainable from other sources, or to the extent such duty as to
confidentiality and non-use is waived, or except as may be required by court
order or any governmental agency. Such obligation as to confidentiality and
non-use shall survive any termination of this Agreement.
11.8 Headings. The headings in this Agreement are intended solely for
convenience of reference and shall be given no effect in the construction or
interpretation of this Agreement.
11.9 Severability. If any provision of this Agreement shall be held or
deemed to be, or shall in fact be, illegal, inoperative, or unenforceable, the
same shall not affect any other provision contained herein, or render the same
invalid, inoperative, or unenforceable to any extent whatsoever, which
provisions shall remain in full force and effect.
11.10 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original but all of which shall
constitute the same agreement.
11.11 Record Retention. The parties hereto agree to retain for a period
of seven (7) years from and after the Closing, and make available to each other
and their respective agents, counsel, accountants, employees or representatives,
all of the books, records and documents (including records with respect to
accounts receivable, accounts payable and general ledger maintained on magnetic
tape or any other electronic medium) relating to Seller which existed on the
date next preceding the Closing and which were in the possession of any of them.
[SIGNATURE PAGE FOLLOWS]
-30-
<PAGE> 31
IN WITNESS WHEREOF, the parties have caused this Asset Purchase
Agreement to be executed and delivered by its duly authorized officer as of the
date first written in the Preamble to this Agreement.
SELLER:
CIN, LLC
By: /s/: Dr. Scott Crain
---------------------
Its: Manager
CRAIN:
Dr. Scott Crain
--------------------------------
Dr. Scott Crain
eMERGE Vision Systems, Inc.
By: Charles L. Abraham
-----------------------
Its: Chief Executive Officer
-----------------------
-31-
<PAGE> 32
LIST OF EXHIBITS AND SCHEDULES
EXHIBITS
Exhibit A Bill of Sale and Assignment
Exhibit B Assignment and Assumption Agreement
Exhibit C Assignment of Intellectual Property
Exhibit D [Intentionally Omitted]
Exhibit E Shareholders' Agreement
Exhibit F Lease
Exhibit G Legal Opinion - Seller's Counsel
Exhibit H Legal Opinion - Buyer's Counsel
SCHEDULES
Schedule 1((a)) Inventory
Schedule 1((c)) Software Contracts
Schedule 1((d)) Computer Equipment
Schedule 1((e)) Equipment
Schedule 1((f)) Accounts Receivable
Schedule 1((h)) Purchased Contracts
Schedule 1((j)) Intellectual Property
Schedule 2 Excluded Assets
Schedule 3.2 Assumed Liabilities
Schedule 3.5 Allocation of Purchase Price
Schedule 4.2.12 Lien Termination Statements
Schedule 5.1 Members
Schedule 5.8 Taxes
Schedule 5.12 Licenses and Permits
Schedule 5.13 Consents
Schedule 5. 14 Intellectual Property Exceptions
Schedule 5.15 Copyright Protection
Schedule 5.16 Trade Secret Protection
Schedule 5.23 Litigation; Warranty Claims
Schedule 5.25 Employee Benefit Plans
Schedule 5.27 Insurance
Schedule 5.28.2 Property Leases
Schedule 5.31 Customers
Schedule 5.32 Related Parties
Schedule 6.4 Capitalization of Buyer
Schedule 8.3 Employee Bonus Amounts
LIST OF EXHIBITS AND SCHEDULES - PAGE 1
<PAGE> 33
EXHIBIT A
TO
ASSET PURCHASE AGREEMENT
BILL OF SALE AND ASSIGNMENT
KNOW ALL PERSONS BY THESE PRESENTS, that CIN, LLC, a Kansas limited
liability company ("Seller"), for and in consideration of the sum of Ten Dollars
($10.00), lawful money of the United States, and other good and valuable
consideration to it paid by eMERGE Vision Systems, Inc., a Delaware corporation
("Buyer"), the receipt, sufficiency, and adequacy of which are hereby
acknowledged, does hereby bargain, sell, assign, transfer, convey, and deliver
unto Buyer and its successors and assigns, all of the Purchased Assets, as that
term is defined in that certain Asset Purchase Agreement dated February __, 1999
by and among Seller, Buyer, and Dr. Scott Crain (the "Agreement"), excluding the
Excluded Assets, as that term in defined in the Agreement.
TO HAVE AND TO HOLD, all and singular, the Purchased Assets unto Buyer,
its successors and assigns, for itself and their own use forever.
AND FURTHER, Seller hereby represents and warrants to Buyer that Seller
is the absolute owner of the Purchased Assets, free and clear of all liens,
claims, conditional sale agreements, and encumbrances of any nature, except the
liens of Meade State Bank.
AND FURTHER, Seller does for itself and its successors and assigns,
covenant and agree to and with Buyer, its successors and assigns, to warrant and
forever defend the sale of the Purchased Assets hereby made to Buyer against all
and every person or persons whomever claiming title thereto.
AND FURTHER, Seller hereby covenants and agrees to execute and deliver,
and to do or make or cause to be done or made, upon reasonable request by Buyer,
any and all agreements, instruments, deeds, acts, or things supplemental,
confirmatory, or otherwise, as may be reasonably required by Buyer for the
purpose of or in connection with acquiring, or more effectively vesting, or
evidencing the vesting, in Buyer, the Purchased Assets transferred, assigned,
conveyed, and granted, or intended to be transferred, assigned, conveyed or
granted, hereby or hereunder.
EXHIBIT A - PAGE 1
<PAGE> 34
IN WITNESS WHEREOF, Seller has caused this Bill of Sale and Assignment
to be executed and delivered to Buyer by its duly authorized officer this _____
day of February, 1999.
CIN, LLC
By:______________________________
Its:_____________________________
As certain of the Purchased Assets may be owned by the undersigned, Dr. Scott
Crain, individually or in the name of another business controlled by the
undersigned, the undersigned for purposes of more fully vesting the ownership of
the Purchased Assets in Buyer for the benefit of Buyer, does hereby agree to
each of the agreements, covenants, and representations of Seller in this Bill of
Sale and Assignment, as if the undersigned was the Seller hereunder, to the
extent that any of the Purchased Asset are owned by him or another entity under
his control other than Seller and conveyed hereby.
___________________________
Dr. Scott Crain
EXHIBIT A - PAGE 2
<PAGE> 35
EXHIBIT B
TO
ASSET PURCHASE AGREEMENT
ASSIGNMENT AND ASSUMPTION AGREEMENT
THIS ASSIGNMENT AND ASSUMPTION AGREEMENT ("Agreement") is made and
entered into this _____ day of February, 1999, by and between CIN, LLC a Kansas
limited liability company ("Seller") and eMERGE VISION SYSTEMS, INC., a Delaware
corporation ("Buyer").
RECITALS:
A. Buyer is acquiring certain assets of Seller pursuant to the terms of
that certain Asset Purchase Agreement dated February __, 1999, by and among
Seller, Buyer, and Dr. Scott Crain (the "Asset Purchase Agreement").
B. Seller desires to assign to Buyer all of Seller's right, title, and
interest in and to those certain Software Contracts and Purchased Contracts (as
those terms are defined in the Asset Purchase Agreement) and Buyer desires to
assume all of Seller's obligations under the Software Contracts and Purchased
Contracts.
NOW, THEREFORE, in consideration of the recitals, the sale of the
aforementioned assets by Seller to Buyer, and other good and valuable
consideration, the receipt, sufficiency, and adequacy of which are hereby
acknowledged, the parties hereby agree as follows:
1. ASSIGNMENT OF SOFTWARE CONTRACTS AND PURCHASED CONTRACTS. Seller
hereby transfers, assigns, and conveys as of the date hereof, all of Seller's
right, title, and interest in and to the Software Contracts and the Purchased
Contracts listed on Schedules 1((c)) and 1((h)) to the Asset Purchase Agreement
and made a part hereof, from and after the date hereof.
2. ASSUMPTION OF SOFTWARE CONTRACTS AND PURCHASED CONTRACTS. Buyer
hereby assumes and agrees to perform the obligations of Seller under the
Software Contracts and Purchased Contracts, from and after the date hereof.
3. NO DEFAULTS. Seller represents and warrants to Buyer that it is not
in default of any of its obligations under any of the Software Contracts or
Purchased Contracts.
4. AGREEMENT BINDING; GOVERNING LAW. This Agreement shall be binding
upon the parties hereto and their respective successors and assigns. This
Agreement shall in all respects be interpreted, construed, and governed by and
in accordance with the laws of the State of Delaware, applicable to contracts
made and to be performed therein. Seller agrees that any court proceedings
brought by it against Buyer arising out of this Agreement, will only be brought
in a Federal or state court located in the State of Florida, County of Indian
River and in
EXHIBIT B - PAGE 1
<PAGE> 36
that regard irrevocably consents to the jurisdiction and venue (and waives any
inconvenient forum objection) of such Federal and state courts, for the purposes
of any court proceedings brought by it hereunder and to accept service of
process by mail. Buyer agrees that any court proceedings brought by it against
Seller arising out of this Agreement, will only be brought in a Federal or state
court located in the State of Kansas, County of Sedgwick and in that regard
irrevocably consents to the jurisdiction and venue (and waives any inconvenient
forum objection) of such Federal and state courts, for the purposes of any court
proceedings brought by it hereunder and to accept service of process by mail.
IN WITNESS WHEREOF, each of the parties has caused this Assignment and
Assumption Agreement to be executed and delivered by its duly authorized officer
as of the date first written in the Preamble hereof.
CIN, LLC
By:_________________________________________
Its:________________________________________
eMERGE VISION SYSTEMS, INC.
By:_________________________________________
Its:________________________________________
As certain of the Software Contracts and the Purchased Contracts are in the name
of the undersigned, Dr. Scott Crain, individually or in the name of another
business controlled by the undersigned, the undersigned for purposes of more
fully assigning the Software Contracts and the Purchased Contracts to Buyer and
for the benefit of Buyer, does hereby agree to each of the agreements,
covenants, and representations of Seller in this Assignment and Assumption
Agreement Assignment, as if the undersigned was the Seller hereunder, to the
extent that any of the Software Contract and Purchased Contracts are being
assigned by him or an entity he controls other than Seller and conveyed hereby.
__________________________________________
Dr. Scott Crain
EXHIBIT B - PAGE 2