Exhibit 2.1
ASSET PURCHASE AGREEMENT
BY AND AMONG
AGRIBIOTECH, INC.,
XXXXX SEEDS, INC.,
a wholly-owned Nevada subsidiary of AgriBioTech, Inc.,
as Buyer,
and
AGWAY, INC.
as Seller
August 28, 1998
ASSET PURCHASE AGREEMENT
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ASSET PURCHASE AGREEMENT (the "Agreement") dated August 28, 1998
(hereinafter referred to as the "Signing Date" or the "Signing") by and among
Agway, Inc., a Delaware corporation (the "Seller"), Xxxxx Seeds, Inc., an Idaho
corporation (the "Buyer") and AgriBioTech, Inc. ("ABT"), a Nevada corporation.
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, the Buyer is a wholly-owned subsidiary of ABT;
WHEREAS, the Seller has been engaged in the business of producing, selling
and marketing alfalfa, red clover and other farm seed at its facilities in
Nampa, Idaho and Xxxxxx, Wyoming through its Allied Seed Division (the
"Business"), which Business shall cease as currently organized and be
reconstituted as a new business of the Buyer; and
WHEREAS, the Seller wishes to sell and the Buyer wishes to purchase certain
tangible and intangible assets associated with the Business (the "Assets").
NOW, THEREFORE, in consideration of the foregoing and the terms,
conditions, representations, warranties and mutual covenants appearing in this
Agreement, the parties hereto hereby agree as follows:
SECTION 1. SALE AND PURCHASE OF ASSETS. Upon the terms and subject to
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the conditions set forth in this Agreement, at the Closing (as hereinafter
defined) effective as of the Effective Date (as hereinafter defined), the Seller
shall sell, assign, transfer and deliver to the Buyer, and the Buyer shall
purchase, acquire, accept and take possession of all of the Seller's right,
title and interest in and to the following assets of the Seller described below
(all of which are hereinafter sometimes referred to as the "Assets," which shall
be defined as those assets set forth in Sections 1(a) through 1(q) as of end of
business August 28, 1998:
(a) The Seller's inventory, which relates to the Business (the
"Inventory"), as set forth on Schedule 1(a) attached hereto.
(b) The Seller's land, which relates to the Business (the "Real Property"),
as set forth on Schedule 1(b) attached hereto.
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(c) The Seller's buildings and improvements, including storage, which
relate to the Business, as set forth on Schedule 1(c) attached hereto.
(d) The Seller's equipment and machinery, including repair parts, tools and
miscellaneous property, which relate to the Business, as set forth on Schedule
1(d) attached hereto.
(e) The Seller's office furniture and fixtures, which relate to the
Business, as set forth on Schedule 1(e) attached hereto.
(f) The Seller's automobiles, trucks, forklifts and other vehicles, which
relate to the Business, as set forth on Schedule 1(f) attached hereto.
(g) The Assets set forth in subsections (b) through (f) above are sometimes
referred to herein as the "Fixed Assets."
(h) The Seller's pre-paid assets, which relate to the Business, as set
forth on Schedule 1(h) attached hereto (the "Pre-Paid Assets").
(i) The Seller's other assets, which relate to the business, including
germplasm and other technology, as set forth on Schedule 1(i) attached hereto
(the "Other Assets").
(j) Intentionally left blank.
(k) The Seller's trade name, which relates to the Business, as set forth on
Schedule 1(k) attached hereto.
(l) Intentionally left blank.
(m) The Seller's rights, if any, to varieties, including, but not limited
to, all Plant Variety Protection Act ("PVPA") Certificates, which relate to the
Business, as set forth on Schedule 1(m) attached hereto.
(n) The customer list of the Seller, which relates to the Business, as set
forth on Schedule 1(n) attached hereto.
(o) The Seller's goodwill relating to the Business.
(p) The Assets set forth in subsections (k) through (o) above, along with
the non-competition agreements described in Section 3(d) hereof, are sometimes
referred to herein as the "Intangible Assets."
(q) Intentionally left blank.
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(r) The Assets shall be conveyed free and clear of all liabilities,
obligations, liens, security interests and encumbrances of any character
whatsoever, excepting only those liabilities and obligations, if any, which are
expressly to be assumed by the Buyer hereunder (the "Assumed Liabilities"), as
set forth on Schedule 1(r) attached hereto.
Except for the Assumed Liabilities, if any, the Buyer shall not assume
nor be responsible for any liabilities or obligations which relate in any way to
the operation of the Business prior to the Effective Date.
SECTION 2. PURCHASE PRICE. In full consideration for the sale,
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transfer, conveyance, assignment and delivery of the Assets by the Seller to the
Buyer and in reliance upon the representations and warranties made herein by the
Seller and for other consideration set forth herein, the Buyer hereby agrees to
pay to the Seller at the Closing (as hereinafter defined) a purchase price (the
"Purchase Price") of FOURTEEN MILLION AND 00/100 ($14,000,000) DOLLARS together
with the Buyer's assumption of the Seller's liabilities pursuant to Section 1(r)
of this Agreement. The Purchase Price shall be payable at the Closing as
described in Section 3 below.
The sum of FIVE HUNDRED THOUSAND AND 00/100 ($500,000) DOLLARS shall be
paid at Closing as the aggregate consideration for the Non-Competition Agreement
of Seller, as anticipated by Section 3(c) below. This consideration is to be
paid in addition to the Purchase Price.
SECTION 3. DESCRIPTION OF COMPONENTS OF PURCHASE PRICE AND OTHER
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PAYMENTS.
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(a) Payment of Purchase Price to the Seller at Closing. Upon the
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completion by the parties of their respective closing conditions under this
Agreement (unless waived in writing by the parties hereto), the Buyer shall pay
to the Seller the Purchase Price, payable in immediately available funds by
Fedwire or other method reasonably acceptable to Seller, in exchange for
delivery of the Assets at the Closing.
(b) Portion of Purchase Price to be Held in Escrow. At the Closing, Buyer
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shall deposit $300,000 of the Purchase Price with the Escrow Agent in accordance
with the Escrow Agreement attached as Exhibit 3(b). The funds held by the
Escrow Agent, and any interest or investment earnings thereon, are referred to
herein as the "Escrow Funds." The Escrow Funds shall be made available to ABT
and the Buyer in the event of any claims arising pursuant to Section 9(b) hereof
for which ABT or the Buyer is entitled to payment, subject to the $50,000
threshold set forth in Section 9(d) hereof.
The Escrow Funds shall be reduced to the levels set forth in the
following schedule:
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DATE ESCROW FUNDS
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CLOSING $300,000
FIRST ANNIVERSARY OF CLOSING DATE 200,000
SECOND ANNIVERSARY OF CLOSING DATE 100,000
THIRD ANNIVERSARY OF CLOSING DATE -0-
Excess Escrow Funds held by the Escrow Agent at such times shall be paid to
Seller in accordance with the Escrow Agreement.
(c) Non-Competition Agreement. In addition to the purchase and sale of the
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Assets as described above, at the Closing, Seller shall enter into a Non-
Competition Agreement with the Buyer in the form annexed hereto as EXHIBIT
3(c).
(d) Intentionally left blank.
(e) Effective Date of the Sale. The parties hereto agree that the purchase
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and sale of the Assets and the assumption of the Assumed Liabilities shall be
accounted for as if such transactions had occurred at the end of business on
August 28, 1998 (the "Effective Date") regardless of when the Closing in fact
occurs. The Buyer shall realize any operating profit or loss from the operation
of the Business of the Seller after the Effective Date. Accordingly, the Seller
agrees to consult the Buyer on any material issues or contracts which relate to
a period of time beyond the Effective Date. Furthermore, the Seller agrees not
to enter into any new capital obligations or capital expenditures which relate
to the Business prior to the Closing Date.
SECTION 4. EXCLUDED ASSETS.
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(a) The Seller shall retain ownership of all of the assets of the Business,
except for those assets transferred to the Buyer pursuant to this Agreement,
including, but not limited to, the corporate records (but not the business
records) of the Business, and those assets more specifically listed on Schedule
4(a)(1) ,attached hereto (the "Excluded Assets"). The Seller shall retain
ownership of the Accounts Receivable of the Business accrued as of the Effective
Date (the "Seller's Accounts Receivable") as set forth as Schedule 4(a)(2). The
Seller shall be responsible for collecting Seller's Accounts Receivable, and the
Buyer or ABT shall transfer or deliver to the Seller from time to time (but not
less than weekly), promptly upon receipt thereof by the Buyer or ABT, all cash
or other property due the Seller that the Buyer may receive in respect of any
Seller's Accounts Receivable.
(b) ABT and Buyer shall allow Seller and its representatives and
professional advisers access to all business records of the Business that relate
to conduct of the Business prior to Closing. Such access shall be related to a
bona fide business interest of Seller, and shall be conducted during normal
business hours following forty-eight (48) hour advance notice of the
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need to review such records. Seller may also make and retain copies of any such
business records it determines appropriate either before or after Closing.
SECTION 5. NON-ASSUMPTION OF LIABILITIES. It is understood and agreed
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by the parties hereto that the Assets will be sold, conveyed, transferred and
assigned to the Buyer at the Closing free and clear of all liens, charges and
encumbrances whatsoever, and it is further understood and agreed by the parties
hereto that the Buyer does not assume, accept or undertake any obligations,
commitments, duties, debts or liabilities of any kind whatsoever (the
"Obligations"), except for the Assumed Liabilities assumed by the Buyer pursuant
to this Agreement as listed in Schedule 1(r) attached hereto.
SECTION 6. CLOSING. The closing of the sale and purchase of the Assets
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provided for in Sections 1 and 2 of this Agreement (the "Closing") shall take
place at the offices of Seller's attorney in Boise, Idaho on the 28th day of
August 1998, or such other time and place as the parties may agree. The day on
which the Closing occurs is sometimes hereinafter referred to as the "Closing
Date."
SECTION 7. REPRESENTATIONS AND WARRANTIES OF THE SELLER. The Seller
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warrants and represents to the Buyer and ABT as follows:
(a) Title. Except as set forth in SCHEDULE 7(a) of this Agreement, the
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Seller owns, and at the Closing shall have, good, valid, insurable and
marketable title to the Assets and full right to transfer title to the Assets
free and clear of all liens, mortgages, charges, liabilities, claims, security
interests or encumbrances of every type whatsoever, except the Assumed
Liabilities, statutory liens and liabilities created by Buyer.
Except as set forth in SCHEDULE 7(a) of this Agreement, the sale,
conveyance, transfer and delivery of the Assets by the Seller to the Buyer
pursuant to this Agreement will transfer full legal and equitable right, title
and interest in the Assets to the Buyer, free and clear of all liens, mortgages,
charges, claims, liabilities, security interests and encumbrances of any nature
whatsoever, except the Assumed Liabilities, statutory liens and liabilities
created by Buyer.
(b) Capacity; Organization; Existence. The Seller has full capacity to
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enter into and perform under this Agreement, and all other agreements to be
entered into in connection with the transactions contemplated hereby (the "Other
Agreements") and to consummate such transactions; and no other consent or
joinder of any other persons or corporations is required. This Agreement has
been, and each of the Other Agreements executed by the Seller hereunder will at
the Closing, be duly authorized, executed and delivered by the Seller. This
Agreement constitutes, and each of the Other Agreements executed by the Seller
will constitute, the legal, valid and binding obligations of the Seller
enforceable in accordance with their respective terms, except as such
enforceability may be limited by bankruptcy, insolvency, reorganization,
moratorium and similar laws affecting creditors' rights generally or by general
equitable
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principles. The Seller is duly organized and validly existing under the laws of
the State of Delaware. The Seller has full corporate power and authority to
conduct its business as it is now being conducted and is duly qualified to do
business in each jurisdiction where the nature of the property owned or leased,
or the nature of the business conducted by the Seller requires such
qualification. With respect to the Business, the Seller has all necessary
licenses and authority to operate its business as now being conducted in the
States of Idaho and Wyoming.
(c) Legal Proceedings; Claims. Except as set forth in SCHEDULE 7(c) of
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this Agreement, the Seller is not a party to any pending litigation, arbitration
or administrative proceeding or investigation, with respect to or relating to
the Assets or the Business and, to the Seller's best knowledge and belief, no
litigation, arbitration or administrative proceeding or investigation that would
have a material adverse effect on the Assets or the Business is threatened.
Except as set forth in SCHEDULE 7(c) of this Agreement, there are no warranty
claims or other claims relating to any products sold by the Seller's Business.
(d) Trade Name. With respect to the Business, the Seller owns or has the
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right to use the trade name set forth on SCHEDULE 7(d). The Seller has not
granted, and will not grant prior to the Closing, licenses or other rights to
use such trade. Except as disclosed in SCHEDULE 7(d), no other trade names or
trademarks are owned or used by the Seller exclusively in relation to the
Business. To the Seller's best knowledge and belief, the operation of the
Business does not infringe on the trade names, trademarks or any other
intellectual property rights of any third party. To the Seller's best
knowledge, no claim has been made that there is any such infringement. To the
Seller's best knowledge and belief, no trade name or trademarks of any person
infringes the trade names or trademarks which relate to the Business.
(e) Intentionally left blank.
(f) Description of Material Contracts. SCHEDULE 7(f) contains a complete
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and correct list as of the date hereof of all agreements, contracts and
commitments, obligations and understandings which are not set forth in any other
Schedule delivered hereunder, of the following types, written or oral (the
"Material Agreements") which relate to the Business and to which the Seller is a
party or by which it or any of its properties are bound, as of the date hereof:
(i) mortgages, indentures, security agreements and other agreements
and instruments relating to the borrowing of money or extension of credit; (ii)
employment and consulting agreements with annual compensation in excess of
$40,000; (iii) collective bargaining agreements; (iv) bonus and incentive,
profit-sharing, compensation, stock purchase and stock option, pension,
retirement, deferred compensation, hospitalization and other life, health or
disability insurance, holiday, sick leave, severance, vacation, tuition
reimbursement, personal loan and product purchase discount, policy manuals, or
other plans, agreements, trusts, funds or arrangements for the benefit of
employees (whether or not legally binding); (v) sales agency, manufacturer's
representative or distributorship agreements; (vi) agreements, orders or
commitments for the purchase by the Seller of materials, supplies or finished
products exceeding
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$5,000 in the aggregate from any one person; (vii) agreements, orders or
commitments for the sale of products or services exceeding $5,000; (viii)
agreements or commitments for capital expenditures in excess of $5,000 for any
single project (it being warranted that the commitment for all undisclosed
contracts for such agreements or commitments does not exceed $5,000 in the
aggregate); (ix) agreements relating to research; (x) agreements relating to
PVPA Certificates or licenses or other rights to use PVPA Certificates; (xi)
agreements relating to the payment of royalties; (xii) seed purchase contracts
or other contracts with growers; (xiii) brokerage or finder's agreements; (xiv)
joint venture agreements; and (xv) other agreements, contracts and commitments
that individually or in the aggregate for any one party involve any expenditure
by the Seller of more than $5,000. All of the Material Agreements constitute
valid and legally binding obligations of the parties thereto, enforceable in
accordance with their respective terms, except as such enforceability may be
limited by bankruptcy, insolvency, reorganization, moratorium and similar laws
affecting creditors' rights generally or by general equitable principles, are in
full force and effect and, except as otherwise specified in Schedule 7(f), are
validly assignable to the Buyer without the consent of any party so that, after
the assignment thereof to the Buyer pursuant hereto, the Buyer will be entitled
to the full benefits thereof. There is not under any Material Agreement any
existing default, or event which, after notice or lapse of time, or both, would
constitute a default or result in a right to accelerate or loss of rights under
any Material Agreement. The Seller has not received any notice of termination of
any Material Agreement. True and complete copies of all of the Material
Agreements have been delivered to the Buyer.
No agreement, contract, commitment, obligation or undertaking listed on
Schedule 7(f) to which the Seller is a party or by which any of its properties
are bound, except as specifically set forth in Schedule 7(f), contains any
provision which materially adversely affects or in the future may (so far as the
Seller can now foresee) materially adversely affect the Assets.
(g) Default; Violations or Restrictions. The Seller is not in default
-----------------------------------
under, nor has any event occurred which, with the lapse of time or action by a
third party, could result in a default under any outstanding note, indenture,
mortgage, contract or agreement to which it is bound, relating to the Assets.
Except as disclosed in SCHEDULE 7(g), the execution, delivery and performance of
this Agreement and of any agreement to be executed and delivered by the Seller
pursuant hereto, and the consummation of any of the transactions contemplated
hereby or thereby will not (or with the giving of notice or the lapse of time or
both would) violate any provision of or result in the breach of, modification
of, acceleration of the maturity of obligations under, or constitute a default,
or give rise to any right of termination, cancellation or acceleration or
otherwise be in conflict with or result in a loss of contractual benefits to the
Seller, as such relates to the Assets, under any law, order, writ, injunction,
decree, statute, rule or regulation of any court, governmental agency or
arbitration tribunal or any of the terms, conditions or provisions of any
contract, lease, note, bond, mortgage, deed of trust, indenture, license,
security agreement, agreement or other instrument or obligation by which the
Seller is a party or by which it may be bound, or require any consent, approval
or notice under the laws of any such
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document or instrument; or result in the creation or imposition of any lien,
claim, restriction, charge or encumbrance upon the Assets.
(h) Court Orders and Decrees. Except as set forth on SCHEDULE 7(h), the
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officers of the Seller have not received written or oral notice that there is
outstanding, pending, or threatened any order, writ, injunction or decree of any
court, governmental agency or arbitration tribunal against or affecting the
Assets.
(i) Approvals and Authorizations. The Seller has obtained all necessary
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consents, approvals or authorizations in connection with the transactions
contemplated hereby that are required by law or otherwise in order to make this
Agreement binding upon the Seller, except for those consents, approvals or
authorizations which individually or in the aggregate would not have a
materially adverse effect on the Assets or the Business.
(j) Governmental Licenses. SCHEDULE 7(j) attached hereto contains a
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correct and complete list of all governmental and administrative consents,
permits, appointments, approvals, licenses, certificates and franchises which
are required in connection with the Seller's execution, delivery or performance
of this Agreement, all of which have been obtained and are in full force and
effect. The Seller has not received any notice of any violation with respect to
any such consent, permit, license or other regulatory order that remain
unabated. Except as set forth on SCHEDULE 7(j), the Seller is in compliance
with all Laws and Environmental Laws material to the Business, their properties
or operation as presently conducted.
(k) Hazardous Material and Nuisance. Except as disclosed on SCHEDULE 7(k)
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attached hereto, there are no known claims or potential claims which may exist
against the Seller relating to the Business and/or the Assets, for, with respect
to, or as direct or indirect result of, the presence on or under, or the escape,
seepage, leakage, spillage, discharge, or emission discharging, from the real
property of the Seller of any "Hazardous Material," including, without
limitation, any losses, liabilities, damages, injuries, costs, expenses,
reasonable fees of counsel or claims asserted or arising under the Comprehensive
Environmental Response, Compensation and Liabilities Act ("CERCLA"), any so-
called "Super Fund" or "Super Lien" law or any other applicable federal, state
or local statute, law, ordinance, code, rule, regulation, order or decree now or
at any time hereafter in effect, regulating, relating to or imposing liability
or standards of conduct concerning any Hazardous Material.
(l) Employee Benefit Plans. Except as disclosed on SCHEDULE 7(l) attached
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hereto, there is not now nor, since the Seller has owned the Business, has there
ever been any "Employee Benefit Plan" (as defined in Section 3(3) of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA")), or any
other profit sharing, deferred compensation, bonus, stock option, stock
purchase, pension or other compensation plan, or any other plan or arrangement
to benefit employees maintained or contributed to by the Seller or any person,
firm or corporation (an "Affiliate") which are members of a "controlled group of
corporations" (within the meaning of Section 414(b) of the Code, except that 50%
will be substituted for 80% in Section 1563(a) of
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the Code) with the Seller and in which any of the employees of the Seller or any
Affiliate participates or is eligible to participate. No funding deficiency
exists or has existed with respect to any Employee Benefit Plan covering any
present or former employee of the Seller or any Affiliate which may cause or
result in a lien upon any of the Assets.
(m) Absence of Certain Business Practices. Neither the Seller, nor to its
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best knowledge and belief, any of its officers, employees or agents acting on
its behalf, nor any other person acting on its behalf, has, directly or
indirectly, within the past three (3) years given or agreed to give any gift or
similar benefit to any customer, supplier, governmental employee or other person
who is or may be in a position to help or hinder the Business (or assist the
Seller in connection with any actual or proposed transaction) that (i) might
subject the Seller to any damage or penalty in any civil, criminal or
governmental litigation or proceeding, or (ii) if not given in the past would
have had an adverse effect on the assets, business or operation of the Business
and if not continued in the future, would adversely affect the Assets, the
Business or its operations or prospects.
(n) Brokers. The Seller has not entered into and will not enter into any
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agreement, arrangement or understanding with any person or firm which will
result in an obligation of the Buyer or ABT to pay any finder's fee, brokerage
commission, or similar payment in connection with the transactions contemplated
by this Agreement.
(o) Financial Statements. The Seller has delivered to the Buyer during the
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process of the Buyer's due diligence investigation copies of all financial
statements requested by the Buyer (hereinafter collectively called the
"Financial Statements") and which are attached hereto as EXHIBIT 7(O). The
Financial Statements were prepared by management of the Seller in the ordinary
course of business for periods through and including the month ended August 28,
1998, 1998 (the "Balance Sheet Date") and are complete and correct as shown on
and as prepared from the books and records of the Seller and fairly present the
financial condition of the Seller as at their respective dates and the results
of the Seller's operations for the periods covered thereby, and are true and
correct statements of the financial condition of the Seller at such Balance
Sheet Date, and do not include or omit to state any fact which renders such
Financial Statements false or misleading. The Financial Statements of the
Business as of and for the period ended August 28, 1998 reflect the consistent
application of accounting principles throughout the periods involved, but do not
contain footnotes and may not be prepared in accordance with generally accepted
accounting principles ("GAAP"), and might be regarded as misleading in the
absence of the explanations usually included in such footnotes.
(p) Absence of Undisclosed Liabilities and Conditions. Except as and to
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the extent reflected or reserved against on the face of the Financial
Statements, or as set forth on SCHEDULE 7(p) attached hereto, as of the Closing
Date, the Business had no debts, liabilities or obligations (whether due or to
become due, absolute, accrued, contingent or otherwise) of any nature
whatsoever, including, without limitation, any foreign or domestic tax
liabilities or deferred tax liabilities incurred in respect of or measured by
the Business' income, or its period prior to the
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Closing or any other debts, liabilities or obligations relating to or arising
out of any act, transaction, circumstance or state of facts which occurred or
existed on or before the Closing Date, whether or not then known, due or
payable. The Financial Statements do not include any assets or liabilities of
any entity other than the Seller nor any expense of any entity other than the
Seller. The Seller has no knowledge of any currently existing facts that
materially adversely affect or are likely in the future to materially adversely
affect the Assets.
(q) Compliance With Laws. Except as disclosed on SCHEDULE 7(q), the
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operations and activities of the Business concerning the Assets have previously
and continue to comply in all respects with all material Federal, state and
local laws, statutes, codes, ordinances, rules, regulations, permits, judgments,
orders, writs, awards, decrees or injunctions (collectively, the "Laws"), as in
effect on or before the date of this Agreement, including, without limitation,
all Laws relating to seed labeling and all rules and regulations of the
Occupational Safety and Health Administration. Neither the ownership nor use of
the Assets nor the conduct of the Business as presently conducted conflicts with
the rights of any other person, firm or corporation or violates, or with or
without the giving of notice or the passage of time, or both, will violate,
conflict with or result in a default, right to accelerate or loss of rights
under, any terms or provisions of the Seller's Certificate of Incorporation or
Bylaws as presently in effect, or any lien, encumbrance, mortgage, deed of
trust, lease, license, agreement, understanding (hereinafter collectively
referred to as "Liens"), or Laws to which the Seller is a party or by which it
or the Assets may be bound or affected. The Seller has not received any notice
or communication from any third party asserting a failure to comply with any
Laws, nor has the Seller received any notice that any authority or third party
intends to seek enforcement against it to compel compliance with any such Laws.
The Seller has no knowledge that any third party may assert a failure to comply
with any Laws, nor has the Seller any knowledge that any authority or third
party intends to seek enforcement against it to compel compliance with any such
Laws.
(r) Taxes. As of the Closing Date, all taxes, including, without
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limitation, income, property, sales, use, franchise, added value, employees'
income withholding and social security taxes, to the extent they are due, and
all interest and penalties thereon, imposed by any governmental entity
whatsoever, which are due or payable by the Seller in connection with the
Business, have been paid in full, all tax returns required to be filed in
connection therewith have been timely filed and all deposits required by law to
be made by the Seller with respect to employee's withholding taxes have been
duly made. The Seller has not been delinquent in the payment of any tax,
assessment or governmental charge or deposit and has no tax deficiency or claim
outstanding, proposed or assessed against it. Except for amounts accrued, but
not payable as of the Effective Date, (i) the Seller is not liable for the
payment of any taxes relating to the Assets or the operation of the Business,
and (ii) the Buyer shall have no liability for any taxes related to the
ownership or operation of the Assets or the Business prior to the Effective
Date. The Seller does not know of any tax deficiency or claim outstanding,
proposed, or assessed against it with respect to any taxes, including, without
limitation, income, property, sales, use, franchise, valued-added, employees'
income withholding, and social security taxes imposed by the United States or by
an foreign country or by any state, municipality, subdivision, or
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instrumentality of the United States or of any foreign country, or by any other
taxing authority that could have a material effect on the Buyer, the Assets, or
the Business, or result in the imposition of a tax lien upon any of the Assets.
(s) Absence of Changes or Events. Without limiting the foregoing, since
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the Balance Sheet Date and through the Signing Date, there has been no material
adverse change in the Business. Except as set forth in SCHEDULE 7(s) attached
hereto, since the Balance Sheet Date, the Seller has conducted its business only
in the ordinary course and has not:
(i) Incurred any obligation or liability, except current liabilities
for trade or business obligations incurred in the ordinary course of business
and consistent with its prior practice, none of which liabilities materially and
adversely affects the Assets or the Business;
(ii) Mortgaged, pledged or subjected to lien, charge, security
interest or any other encumbrance or restriction on any of the Assets;
(iii) Except for the sale of Inventory, in the ordinary course of
business, sold, transferred, leased to others or otherwise disposed of any of
the Assets;
(iv) Received any notice of termination of any agreement or suffered
any damage, destruction or loss which has had or, with the passage of time,
could have a materially adverse effect on the Assets or the Business;
(v) Made any change in its pricing, advertising or personnel practices
inconsistent with its prior practice and prudent business practices prevailing
in the industry;
(vi) Suffered any change, event or condition which, has had or may
have a materially adverse effect on the Assets, the Business or the operations
or prospects thereof;
(vii) Entered into any transaction, contract or commitment other than
in the ordinary course of business which had a material adverse effect on the
Assets or the Business; or
(viii) Instituted, settled or agreed to settle any litigation, action
or proceeding before any court or governmental body relating to the Seller, the
Assets or the Business.
(t) Inventory. The Inventory of the Seller (a) has been purchased in the
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ordinary course of business, (b) has been fully paid for unless otherwise
reflected in the Financial Statements, (c) is marketable or adequate provision
for obsolescence has been provided, and (d) the Seller knows no reason that
would make such Inventory, taken as a whole, not marketable.
(u) Labor Relations. The Seller, in connection with the Business, is not
---------------
(i) a party to any collective bargaining agreement relating to any of its
employees and its employees have not recognized, are not required to recognize,
and have not received a demand for recognition by,
12
any collective bargaining representative, (ii) a party to any contract with and
has no liability to any of its employees, agents, consultants, officers, sales
representatives, distributors or dealers that is not cancelable by the Seller
without penalty on not more than thirty (30) days' notice, except as set forth
on SCHEDULE 7(u) attached hereto, (iii) subject to any strike or work stoppage
in effect or threatened against the Business nor has any strike or work stoppage
been authorized by any order, writ, injunction or decree of any court or
federal, state, municipal or other governmental agency or instrumentality.
(v) Customer Lists. With respect to the Business, all agreements,
--------------
arrangements or commitments with or respecting any customer of the Seller to
which the Seller is a party or is bound have been described in SCHEDULE 1(n)
attached hereto, except for those not involving a consideration of at least
$1000 per annum.
(w) Books and Records. With respect to the Business, the books and records
-----------------
of the Seller are, in all material respects, complete and correct and have been
maintained in accordance with standard business practice.
(x) Insurance. SCHEDULE 7(x) contains a correct and complete description
---------
of all policies of insurance by or on behalf of the Seller in which the Seller
is named as an insured party, beneficiary or loss payable payee. The Seller has
at all times prior to the date hereof maintained and will at all times prior to
the Closing Date maintain such insurance coverage. There is no default notice of
cancellation or non-renewal with respect to any material provision contained in
any such policy. SCHEDULE 7(x) contains a correct and complete description of
all outstanding insurance claims in excess of $5,000 made by or against the
Seller for damage to or loss of property or income which have been referred to
insurers or which the Seller believes to be covered by commercial insurance
within the five years preceding the Effective Date.
(y) Rights of Third Parties. Other than as disclosed in SCHEDULE 7(y), or
-----------------------
specifically provided for in this Agreement, the Seller has not entered into any
leases, licenses, easements or other agreements, recorded or unrecorded,
granting rights to third parties in any real or personal property of the Seller,
and no person or other corporation has any right to possession, use or occupancy
of any of the property of the Seller.
(z) Relationships with Vendors and Customers. Other than the transactions
----------------------------------------
contemplated by this Agreement, the Seller has no knowledge of any present
conditions or state of facts or circumstances which would materially adversely
affect the Business after the Closing Date. The Seller's relationships with its
material customers, clients and vendors are satisfactory, and, other than as
disclosed in SCHEDULE 7(z), the Seller has no knowledge of any facts or
circumstances which might materially alter, negate, impair or in any way
materially adversely affect the continuity of any such relationships. The
Seller has no knowledge of any material outstanding claims of any of its
customers or clients presently outstanding, pending or threatened against them.
The Seller has no knowledge of any present condition or state of facts or
13
circumstances which would prevent the Business from being carried on by the
Buyer after the Closing Date in essentially the same manner as it is presently
being carried on.
(aa) Schedules. The Seller has delivered to the Buyer complete and
---------
correct Schedules, in form and substance reasonably acceptable to the Buyer, as
of the Signing Date, and complete and correct copies of the documents and other
material from which such schedules were compiled.
(bb) Accuracy. No representation, warranty, covenant or statement by the
--------
Seller in this Agreement, the Schedules attached hereto and the certificates or
other documents furnished or to be furnished to the Buyer pursuant hereto,
contains or will contain any untrue statement of a material fact, or omits or
will omit to state a material fact required to be stated herein or therein or
necessary to make the statements contained herein or therein, in light of the
circumstances under which they were made, not false or materially misleading.
SECTION 8. REPRESENTATIONS AND WARRANTIES OF THE BUYER AND ABT. Each
---------------------------------------------------
of the Buyer and ABT, jointly and severally, warrants and represents to the
Seller as follows:
(a) Capacity. The Buyer and ABT have full right, power and capacity to
--------
execute, deliver and perform their respective obligations under this Agreement
and the other documents required to be executed by the Buyer or ABT in
connection herewith and to consummate the transactions contemplated hereby. The
execution and delivery of this Agreement does not, and the consummation of the
transactions contemplated by this Agreement will not, constitute a breach of any
term or provision of the certificate of incorporation or by-laws of the Buyer or
ABT or constitute a default under any material law, rule, regulation, indenture,
instrument, mortgage, deed of trust, or other agreement or instrument to which
the Buyer or ABT is a party or by which they are bound.
(b) Organization.
------------
(i) The Buyer is a corporation duly organized, validly existing and in
good standing under the laws of the State of Idaho, and the Buyer has corporate
power and authority to carry on its business as now conducted and as will be
conducted as supplemented by the Business, and to own, lease or operate the
properties and assets now used by it in connection therewith and the Assets.
(ii) ABT is a corporation duly organized, validly existing and in good
standing under the laws of the State of Nevada, and ABT has corporate power and
authority to carry on its business as now conducted and to own, lease or operate
the properties and assets now used by it in connection therewith. ABT is duly
qualified and in good standing to do business in each jurisdiction in which the
nature of its business or the ownership or leasing of its properties make such
qualification necessary. All of the ABT Shares are validly issued, fully paid
and nonassessable.
14
(c) Consents and Approvals. No governmental license, permit or
----------------------
authorization, and no registration or filing with any court, governmental
authority or regulatory agency, is required in connection with the Buyer's and
ABT's execution, delivery or performance of this Agreement. The Buyer and ABT
each shall execute, deliver and perform its obligations under this Agreement and
no consent or other approval or any other party is required to be obtained by
the Buyer or ABT in connection with the transactions contemplated hereby.
(d) Legal Proceedings. Neither ABT nor the Buyer is a party to or affected
-----------------
by any pending litigation, arbitration or any governmental proceeding or
investigation that would in any manner affect its entering into this Agreement
or performing the transactions contemplated hereby or that might result in any
material and adverse change in the financial condition, business or properties
of the Buyer or ABT and to the best of their respective knowledge no such
litigation, arbitration, proceeding or investigation is threatened.
(e) Accuracy. No representation, warranty, covenant or statement by the
--------
Buyer or ABT in this Agreement, any Exhibit attached hereto, the Schedules
attached hereto and the certificates or other documents furnished or to be
furnished to the Sellers pursuant hereto (including the Schedules, if any,
provided for in this Section 8 and Exhibits thereto), contains or will contain
any untrue statement of a material fact, or omits or will omit to state a
material fact required to be stated herein or therein or necessary to make the
statements contained herein or therein, in light of the circumstances under
which they were made, not false or materially misleading.
(f) Binding Obligation. This Agreement, and any other agreement required
------------------
to be delivered by the Buyer or ABT pursuant to this Agreement, has been duly
executed and delivered by the Buyer and ABT and constitutes the legal, valid and
binding obligation of the Buyer and ABT, enforceable against the Buyer and ABT
in accordance with its terms, except to the extent that such enforceability may
be limited by general principles of equity or bankruptcy, insolvency and other
similar laws affecting the enforcement of creditors' rights generally. All
action of the Board of Directors of the Buyer and ABT and all other corporate
action necessary to authorize the execution, delivery and performance of this
Agreement and the consummation of the transactions contemplated hereby have been
duly and validly taken.
(g) Brokers; Finders. No agent, broker, investment banker, person or firm
----------------
acting on behalf of the Buyer or ABT or any firm or corporation affiliated with
the Buyer or ABT or under their authority is or will be entitled to any brokers'
or finders' fee or any other commission or similar fee directly or indirectly
from the Seller or any person or entity affiliated with the Seller in connection
with any of the transactions contemplated hereby.
SECTION 9. SURVIVAL OF REPRESENTATIONS AND WARRANTIES; INDEMNIFICATION.
-----------------------------------------------------------
(a) Survival of Representations and Warranties. All representations and
------------------------------------------
warranties made by the Seller or the Buyer and ABT in this Agreement, including,
without limitation, all
15
representations and warranties made in any Exhibit or Schedule hereto or
certificate delivered hereunder, shall survive the Closing until and through the
second anniversary of the Closing Date (the "Survival Date") provided, however,
that all representations and warranties made by the Seller in Sections 7(k),
7(l) and 7(q) and 7(r) hereof shall survive the Closing until and through one
(1) year after the expiration of the applicable statute of limitations (the
"Extended Survival Date").
(b) Indemnification by Seller. The Seller hereby agrees to indemnify,
-------------------------
defend and hold harmless the Buyer and ABT from and against all liabilities,
losses, costs or damages whatsoever (including expenses and reasonable fees of
legal counsel) (collectively, "Damages"), arising out of or from or are based
upon (i) the inaccuracy in any material respect of any representation or
warranty contained in Section 7 made by the Seller; (ii) the non-performance by
the Seller in any material respect of any covenant, agreement or obligation to
be performed by the Seller under this Agreement; (iii) the non-compliance of the
provisions of any applicable bulk transfer laws in connection with the sale of
the Assets to the Buyer; (iv) any liability relating to the Business prior to
the Signing Date other than the Assumed Liabilities set forth on SCHEDULE 1(r);
(v) any legal proceedings; (vi) any potential environmental claim that relates
to a condition that arose out of Seller's conduct on the property prior to the
Closing and to the extent it has not accrued on Seller's financial statements;
(vii) any liability relating to the Seller's Employee Benefit Plans, set forth
on SCHEDULE 7(l), prior to the Signing Date; and (viii) any liability relating
to the Seller's termination of employees of the Business. Except with respect
to any potential environmental claims, such indemnity shall expire on August 28,
2001.
Notwithstanding any provision of this Agreement to the contrary, Seller
shall defend and hold harmless the Buyer and ABT from and against all Damages
arising out of or from or based upon the matter described on Schedule 7(k).
This indemnification shall be unlimited both as to duration as well as to the
amount of damages.
(c) Indemnification by Buyer. The Buyer and ABT hereby agree to indemnify,
------------------------
defend and hold harmless the Seller from and against all Damages arising out of
or from or that are based upon (i) the inaccuracy in any material respect of any
representation or warranty contained in Section 8 made by the Buyer; (ii) the
non-performance by the Buyer in any material respect of any covenant, agreement
or obligation to be performed by the Buyer under this Agreement; (iii) the
Assumed Liabilities set forth on Schedule 1(r); and (iv) any liabilities arising
out of the operations of the Business by Buyer after the Closing Date.
(d) Defense of Claims. Whenever any claim shall arise for indemnification
------------------
hereunder, the party entitled to indemnification hereunder (the "Indemnitee")
shall notify the indemnifying party (the "Indemnitor") in writing within 30 days
after the Indemnitee has actual knowledge of the facts constituting the basis
for such claim (the "Notice of Claim"). The Notice of Claim shall specify all
facts known to the Indemnitee giving rise to such indemnification claim and the
amount or an estimate of the amount of the liability arising therefrom.
16
If the facts giving rise to any such indemnification shall involve any
actual, threatened or possible claim or demand by any person against the
Indemnitee, the Indemnitor shall be entitled (without prejudice to the right of
the Indemnitee to participate at its expense through co-counsel of its own
choosing) to contest or defend such claim at its expense and through counsel of
its own choosing if the Indemnitor gives written notice of its intention to do
so to the Indemnitee within 10 days after receipt of the Notice of Claim;
provided that Indemnitor diligently prosecutes or defends such claim.
The Indemnitee shall not settle any claim which would give rise to
liability on the part of the Indemnitor under the indemnity contained in this
Section without the written consent of the Indemnitor, which consent shall not
unreasonably be withheld. If a reasonable firm offer is made to settle a claim
or litigation defended by the Indemnitee and the Indemnitor refuses to accept
such offer within 20 days after receipt of written notice from the Indemnitee of
the terms of such offer, then, in such event, the Indemnitee shall continue to
contest or defend such claim and shall be indemnified pursuant to the terms
hereof. Provided, however, that in the event the Indemnitor refuses to accept
such reasonable offer to settle a claim as described above and the Indemnitee
continues to contest or defend such claim, the indemnification provided for
herein shall be deemed to include the value of management's time spent in
connection with the defense of such claim. If a firm offer is made to settle a
claim or litigation and the Indemnitor notifies the Indemnitee in writing that
the Indemnitor desires to accept and agree to such settlement, but the
Indemnitee elects not to accept or agree to it, the Indemnitee may continue to
contest or defend such claim or litigation and, in such event, the total maximum
liability of the Indemnitor to indemnify or otherwise reimburse the Indemnitee
hereunder with respect to such claim or litigation shall be limited to and shall
not exceed the amount of such settlement offer, plus reasonable out-of-pocket
costs and expenses (including reasonable attorneys' fees and disbursements) to
the date of notice that the Indemnitor desires to accept such settlement.
For the purposes of the preceding paragraph, the question of whether a
settlement offer is reasonable shall be determined by considering whether the
Indemnitee regards the offer as reasonable and, if a final settlement has been
reached, whether the offer was within ten percent (10%) of the amount of such
final settlement.
In settlement of indemnification to which the Indemnitee is entitled
under this Section 9, the amount of any loss, liability or damage as to which
the Indemnitee is otherwise entitled to indemnity shall be reduced by the amount
of insurance proceeds previously paid, if any, to the Indemnitee in cash with
respect to such loss, liability or damage, and any claim held by the Indemnitee
for the payment of insurance proceeds in respect of the matter then being
settled shall be assigned to the Indemnitor at the time of such settlement. At
the request of the Indemnitor, the Indemnitee shall use its reasonable efforts
(at the Indemnitor's expense) to assist the Indemnitor in obtaining any such
insurance payment.
17
Notwithstanding any provision of this Agreement to the contrary, no
claim for indemnification pursuant to this Section 9 by the Indemnitee shall be
asserted or claimed except to the extent of damages exceeding, in the aggregate,
the sum of $50,000.
Notwithstanding any provision of this Agreement to the contrary,
neither Seller's nor Buyer's maximum liability for indemnification shall exceed
the Purchase Price.
SECTION 10. COVENANTS OF THE SELLER. The Seller hereby covenants and
-----------------------
agrees:
(a) Further Assurances. The Seller hereby agrees that from time to time at
------------------
the reasonable request of the Buyer or ABT, and without further consideration,
to execute and deliver such additional instruments and to take such other action
as the Buyer or ABT may reasonably require to convey, assign, transfer and
deliver the Assets and otherwise to carry out the terms of this Agreement.
(b) Access to Information; Confidentiality.
--------------------------------------
(i) Subsequent to the date hereof and prior to the Closing Date, the
Seller will continue to give to the Buyer, ABT, their counsel, accountants, and
other representatives, full and free access to all books, contracts, commitments
and records of the Seller relating to the Assets so that the Buyer and ABT may
have full opportunity to make such investigation as they shall desire. Prior to
the Closing, ABT and Buyer shall notify in writing Seller of any information or
knowledge obtained either independently or as a result of any such investigation
of the Seller which would constitute a breach of any representation or warranty.
In such event, Buyer's and ABT's sole remedy shall be to terminate this
Agreement, provide Seller with reasonable time to cure the breach or accept the
information as having been properly disclosed.
(ii) From and after the date of this Agreement until the Closing or
the termination of this Agreement, the Seller and its representatives will
maintain the confidentiality of all documents and information of a confidential
nature disclosed to Seller in the course of its negotiations and the Buyer's and
ABT's due diligence review and will in no event use any such confidential
information for any purpose other than for the evaluation of the transactions
contemplated herein and in the event of termination of this Agreement will
destroy all copies of documentation that ABT or Buyer may have delivered to
Seller and will not use any confidential information from the Buyer or ABT for
its own benefit.
(c) Closing Documents. The Seller shall execute and deliver all
-----------------
instruments and documents required under Section 12 as a condition precedent to
the Closing hereof and take all action required to carry out the terms of this
Agreement and to consummate the transactions contemplated hereby.
(d) Conduct of Business. From the date of this Agreement to the Closing
-------------------
Date, except as expressly disclosed in the Schedules to this Agreement, the
Seller shall conduct its
18
operations as engaged in at the date of this Agreement according to its ordinary
course of business, shall maintain its records and books of account in a manner
that fairly and currently reflects its financial condition and results of
operations and shall not engage in any transactions other than as contemplated
by this Agreement.
(e) If the Closing occurs after the Effective Date, Seller shall enter
into a management service agreement to enable Buyer and ABT to fully operate the
Business, subject to the rights of termination in Section 18.
SECTION 11. COVENANTS OF THE BUYER AND ABT. The Buyer and ABT hereby
------------------------------
covenant and warrant as follows:
(a) Noninterference. The Buyer and ABT shall not take or omit to take any
---------------
action that (i) if taken or omitted on or before the date of this Agreement,
would make untrue any of the representations and warranties contained in Section
8 of this Agreement, or (ii) would interfere with the Buyer's or ABT's ability
to perform or would prevent performance of any of its obligations under this
Agreement or any of the other agreements or instruments provided for herein.
(b) Closing Documents. The Buyer and ABT shall execute and deliver all
-----------------
instruments and documents required under Section 16 as a condition precedent to
the Closing hereof and take all action required to carry out the terms of this
Agreement and to consummate the transactions contemplated hereby.
(c) Confidentiality. From and after the date of this Agreement until the
---------------
Closing or the termination of this Agreement, the Buyer and ABT and their
respective employees and representatives will maintain the confidentiality of
all documents and information of a confidential nature disclosed to either of
them in the course of their negotiations and the Buyer's and ABT's due diligence
review of Seller and will in no event use any such confidential information for
any purpose other than for the evaluation of the transactions contemplated
herein and in the event of termination of this Agreement will destroy all copies
of documentation which Seller may have delivered to ABT or Buyer and will not
use any confidential information from the Seller for their own benefit.
(d) Employees. All employees of the Seller employed solely in connection
---------
with the Business shall be terminated effective as of September 25, 1998. The
Seller shall pay all such employees all compensation, including compensation for
accrued vacation time, earned by them for the period January 1, 1998 through
September 25, 1998. Seller shall continue its payroll, including benefits, for
the account of the Buyer through September 25, 1998. Buyer shall reimburse
Seller for such service in an amount equal to Seller's cost plus 30%. The Buyer
thereafter shall use its best efforts to hire all of the Seller's employees
subject to each such employee complying with customary ABT employee practices.
The Buyer will facilitate the transfer of such employees to the Buyer's standard
benefit plans, subject to the eligibility
19
requirements contained therein. For all such employees, the Buyer shall deem the
period of employment with the Seller to be employment with the Buyer for benefit
plan eligibility and vesting purposes if such employees comply with customary
ABT employee practices.
SECTION 12. CONDITIONS PRECEDENT TO THE BUYER'S AND ABT'S OBLIGATIONS.
---------------------------------------------------------
The obligations of the Buyer and ABT under this Agreement are subject to the
following conditions (any of which may be waived in writing in whole or in part
by the Buyer or ABT):
(a) There shall not have been any breach of the representations,
warranties, covenants and agreements of the Seller contained in this Agreement
or the Schedules hereto and all such representations and warranties shall be
true at all times on or before the Closing as if given at such times, except to
the extent that any such representation or warranty is expressly stated to be
true as of some other time.
(b) The Seller shall have performed and complied in all material respects
with all covenants, agreements and conditions required by this Agreement to be
performed or complied with by it prior to or at the Closing Date. All documents
and instruments required in connection with this Agreement shall be reasonably
satisfactory in form and substance to the Buyer.
(c) The Buyer shall have received a certificate dated the date of the
Closing and signed by the Seller, certifying that the conditions specified in
subsections (a) and (b) above have been fulfilled.
(d) The Buyer shall have received a certificate dated the date of the
Closing and signed by the Seller, certifying that there has been no material
adverse change in the Assets since the Signing Date.
(e) Intentionally left blank.
(f) The Buyer shall have received a written opinion of counsel for the
Seller dated as of the Closing Date, in the form of Exhibit 12(f) hereto.
(g) The Buyer shall have received a xxxx of sale or bills of sale and
documentation and such other good and sufficient instruments of transfer and
conveyance as, in the reasonable opinion of counsel to the Buyer, shall be
effective to vest in the Buyer good and valid title to the Assets, as herein
provided.
(h) The Buyer shall have received certified copies, reasonably satisfactory
in form and substance to the Buyer, of all such corporate documents of the
Seller as the Buyer shall reasonably require, including without limitation the
following:
20
(i) the Certificate of Incorporation of the Seller and all
amendments thereto and restatements thereof certified as of a recent date by the
Secretary of State of the State of Delaware;
(ii) the By-laws of the Seller and all amendments thereto and
restatements thereof certified as of the Closing Date by an officer of the
Seller;
(iii) certificate of existence of the Secretary of State of the State
of Delaware, certifying as of a recent date that the Seller exists under the
laws of its state of incorporation;
(i) The Buyer shall have received certified resolutions of the Seller's
Board of Directors authorizing the transactions contemplated by this Agreement.
(j) The Seller and the Buyer shall have entered into a three-year supply
agreement whereby the Buyer shall sell to Seller and its wholly-owned
subsidiaries alfalfa and red clover, pursuant to the contract annexed hereto as
EXHIBIT 12(j).
(k) Seller shall enter in a Non-Competition Agreement with the Buyer in the
form annexed hereto as EXHIBIT 3(c).
(l) Intentionally left blank.
(m) The Buyer shall have received at the Closing, at Seller's expense, a
standard owners title insurance policy with regard to the Nampa, Idaho real
property interests transferred to the Buyer in such amount and subject to such
exceptions as are satisfactory to the Buyer.
(n) The Buyer shall have completed its due diligence review to its
satisfaction and, among other things (i) determined that a satisfactory
percentage of customers of the Seller will continue to do business with the
Buyer following the Closing; and (ii) agreed in writing with the Seller upon an
allocation of the Purchase Price among the Assets.
(o) The Buyer shall have received assumption and assignment agreements for
each material agreement requiring such agreement to be executed in order to be
assigned and such other good and sufficient instruments of conveyance,
assignment and transfer, in form and substance satisfactory to Buyer, as shall
be effective to vest in the Buyer good and marketable title to the Assets to put
the Buyer in actual possession and operating control thereof and to assist the
Buyer in exercising all rights with respect thereto.
(p) The Buyer shall have received Seller's financial statements relating to
the Business.
21
(q) Since the Balance Sheet Date and through the Closing Date, there shall
not have occurred any material change in the Assets or the condition (financial
or otherwise) of the Business, its properties or prospects.
(r) The Buyer shall have received all material documents required to be
delivered to the Buyer under any other provision of this Agreement.
(s) The Buyer shall have received a Certificate of Incumbency identifying
the officers and directors of the Seller immediately before Closing.
(t) The Buyer shall have received evidence satisfactory to the Buyer that
Seller has paid or made provision for the payment of any transfer tax due in
connection with recording of the deed(s) to the real property interests to be
conveyed to the Buyer.
(u) The Buyer shall have received deeds duly executed and acknowledged in
recordable form by the Seller conveying the real property satisfactory in form
to the Buyer.
SECTION 13. CONDITION OF ASSETS.
-------------------
(a) Except as otherwise provided herein, the Fixed Assets will be sold "as
is, where is and with all faults."
(b) Except as otherwise provided herein, Seller makes no representations or
warranties with respect to the physical condition or any other aspect of the
Real Property, including without limitation, the structural integrity of any
improvements on the Real Property, the conformity of the improvements to any
plans or specifications for the Real Property that may be provided to Buyer, the
conformity of the Real Property to applicable zoning or building code
requirements, the existence of soil stability, past soil repairs, non-
susceptibility to landslides, sufficiency or under-shoring, sufficiency of
drainage, or any other matter affecting the stability or integrity of the land
or any buildings or improvements situated thereon.
(c) It is understood and agreed that the Purchase Price has been adjusted
by prior negotiation to reflect that the Fixed Assets and the real property and
improvements thereon are sold by Seller and purchased by Buyer subject to the
foregoing.
SECTION 14. RISK OF LOSS; DAMAGE TO OR DESTRUCTION OF ASSETS.
------------------------------------------------
Seller assumes all risks and liability for damage or injury occurring to
the Assets by fire, storm, accident, or other casualty until the Closing has
been consummated. If the Assets sustain major or material damage during the
period from and after the date hereof and prior to the Closing caused by fire or
other casualty, either Seller or Buyer may respectively elect to terminate this
Agreement by written notice to the other within fifteen (15) days after notice
of such event, or at Closing, whichever is earlier. If neither Seller nor Buyer
so elects pursuant to
22
this Section 14 to terminate its obligations under this Agreement, the Closing
will take place as provided herein without abatement of the Purchase Price and
Seller will have no obligation of repair or replacement.
SECTION 15. CONDEMNATION OF REAL PROPERTY.
-----------------------------
In the event that the entire Real Property or any material part thereof
becomes the subject of a condemnation proceeding prior to Closing, Seller agrees
immediately to advise Buyer thereof. In the event of such condemnation, Buyer
will have the option to (1) take title in accordance with the terms and
conditions of this Agreement and permit Seller to negotiate with the condemning
authority and to receive the condemnation award, reducing the Purchase Price by
the amount actually received by Seller; (2) take title in accordance with the
terms and conditions of this Agreement and negotiate with the said condemning
authority for the condemnation award and to receive the benefits thereof without
affecting the Purchase Price; or (3) terminate this Agreement. Notice of the
exercise of such option by Buyer will be in writing, delivered to Seller at
least ten (10) days prior to the Closing Date. If notice is not received in a
timely manner as required by this Section 15, Buyer will be deemed to have
elected to proceed in accordance with clause (2) above.
SECTION 16. CONDITIONS PRECEDENT TO THE SELLER'S OBLIGATIONS. The
------------------------------------------------
obligations of the Seller under this Agreement are subject to the following
conditions (any of which may be waived in writing in whole or in part by the
Seller):
(a) There shall not have been any breach of the representations,
warranties, covenants and agreements of the Buyer or ABT contained in this
Agreement, and all such representations and warranties shall be true at all
times at and before the Closing, except to the extent that any such
representation or warranty is expressly stated to be true as of some other time.
(b) The Buyer and ABT each shall have performed and complied in all
material respects with all agreements and conditions required by this Agreement
to be performed or complied with by either of them. All documents and
instruments required in connection with this Agreement shall be reasonably
satisfactory in form and substance to the Seller.
(c) The Seller shall have received a certificate dated the date of the
Closing and signed by the Buyer and ABT, certifying that the conditions
specified in subsections (a) and (b) above have been fulfilled.
(d) The Seller shall have received a written opinion of counsel for the
Buyer and ABT, dated as of the date of Closing, in the form of EXHIBIT 16(d)
attached hereto.
(e) At the Closing, the Seller shall have received the Purchase Price and
the consideration for the Non-Competition Agreement as set forth in Sections 2
and 3 hereof.
23
(f) The Seller shall have received copies of the minutes and resolutions of
the Board of Directors of the Buyer and ABT showing the authorization and
approval by such Boards of the execution and delivery by the Buyer and ABT to
the Seller of this Agreement and the agreements and instruments provided for
herein and of the performance of the obligations of the Buyer and ABT under this
Agreement and such other instruments and agreements, and evidencing the
authority of each person executing this Agreement and such other instruments and
agreements on behalf of each of them to do so, certified as of a recent date by
each Secretary or another officer of the Buyer and ABT, as the Seller may
reasonably request.
(g) The Seller shall have received a certificate of incumbency identifying
the officers and directors of the Buyer and ABT immediately before Closing.
(h) The Seller shall have received all documents required to be delivered
to the Seller under any other provision of this Agreement.
(i) Intentionally left blank.
(j) Intentionally left blank.
(k) Delivery to Seller of the Escrow Agreement anticipated by Section 3(b),
executed by all parties thereto.
SECTION 17. CONDITIONS PRECEDENT TO OBLIGATIONS OF BOTH SELLER AND
------------------------------------------------------
BUYER. The obligations of both the Seller and the Buyer to complete this
-----
transaction shall be subject to the fulfillment at or prior to the Closing Date
of the following conditions:
(a) No Injunctions. No action or proceeding shall have been instituted or
--------------
threatened by any public authority or private person prior to the Closing before
any court or administrative body to restrain, enjoin or otherwise prevent the
consummation of this transaction or to recover any damages or obtain other
relief as a result of this transaction.
(b) Due Diligence. The Seller and the Buyer shall each have been afforded
-------------
the opportunity to complete their due diligence and conduct a review of the
business and prospects of the other, and shall be reasonably satisfied as to
such business and prospects.
(c) Consents. Any consent to the transaction considered by the Seller or
--------
the Buyer to be necessary or advisable under any agreement or contract, the
withholding of which might have, in the judgment of the Seller or the Buyer, a
material adverse effect on the financial condition of the Business, shall have
been obtained.
24
SECTION 18. TERMINATION.
-----------
(a) Unless the Buyer and the Seller agree otherwise in writing, this
Agreement and any management agreement shall terminate on September 30, 1998 if
there has been no closing.
(b) This Agreement may be terminated at any time prior to the Closing Date:
(i) By mutual written consent of the Seller, the Buyer and ABT;
or
(ii) By the Buyer, if the Seller has materially breached any of
its representations, warranties or covenants under this Agreement; or
(iii) By the Seller, if the Buyer or ABT has materially breached
any of its representations, warranties or covenants under this Agreement.
(c) In the event of termination of this Agreement, Sections 10 (b)(ii),
11(c), 23, 24, 26 and 30 of this Agreement shall survive any such termination.
(d) Each party to this Agreement may be subject to pay as liquidated
damages and not as a penalty the amount of THREE MILLION AND 00/100 DOLLARS
($3,000,000) as follows:
(i) If the Buyer and ABT fail to close for any reason other than
clearly identified problems with the Business discovered during due diligence,
then the Buyer and ABT shall pay such liquidated damages to Seller;
(ii) If the Buyer and ABT have completed due diligence on a
timely basis and are prepared to complete the purchase for at least $13,300,000
(exclusive of the $500,000 as compensation for the Non-Competition Agreement)
after any adjustments resulting from due diligence and Seller refuses to close,
then Seller shall pay such liquidated damages to Buyer and ABT;
(iii) If the Closing does not occur and any party believes it is
entitled to such liquidated damages, the parties shall agree to one arbitrator,
who shall determine which party, if any, is entitled to such liquidated damages.
Notwithstanding any provision requiring mediation, such arbitration shall
proceed pursuant to Section 27 of this Agreement.
SECTION 19. BULK SALE ACT. The Seller and the Buyer agree to waive
-------------
compliance with all applicable State Bulk Sales Acts and the rules and
regulations promulgated thereunder. However, the Seller shall indemnify and hold
harmless the Buyer for any losses or expenses incurred by the Buyer as a result
of such waiver of compliance with such Bulk Sales Acts, as set forth in Section
8(b) hereof.
SECTION 20. ORDERLY TRANSFER. The Seller shall, and hereby agrees to,
----------------
cooperate with the Buyer and ABT in all reasonable ways, at no direct or
indirect cost to the Seller, in effecting any orderly transfer to the Buyer of
the Assets to be acquired by the Buyer hereunder.
25
SECTION 21. PARTIES IN INTEREST. Subject to Section 32, this Agreement
-------------------
shall be binding upon and shall inure to the benefit of the parties and their
successors and assigns. Nothing herein expressed or implied is intended or shall
be construed to confer upon or to give any person, firm, or corporation other
than the parties hereto any rights or remedies under or by reason hereof.
SECTION 22. ENTIRE AGREEMENT. This instrument, including the Schedules
----------------
and Exhibits hereto, contains the entire agreement and understanding among the
parties hereto with respect to the subject matter hereof and shall not be
modified or affected by any offer, proposal, statement or representation, oral
or written, made by or for any party in connection with the negotiation of the
terms hereof. All references herein to this Agreement shall specifically
include, incorporate and refer to the Schedules and Exhibits attached hereto
which are hereby made a part hereof. There are no representations, promises,
warranties, covenants, undertakings or assurances (express or implied) other
than those expressly set forth or provided for herein and in the other documents
referred to herein. This Agreement may not be modified or amended orally, but
only by a writing signed by all the parties hereto.
SECTION 23. GOVERNING LAW; CONSENT TO JURISDICTION. This Agreement and
--------------------------------------
all rights and obligations hereunder shall be governed by, and construed in
accordance with, the laws of the State of Nevada, applicable to agreements made
and to be performed wholly within said State, without regard to the conflicts of
laws principles of such State.
SECTION 24. EXPENSES. Each party hereto shall pay its own expenses and
--------
fees incidental to the preparation of this Agreement, the carrying out of the
provisions of this Agreement and the consummation of the transactions
contemplated hereby, except as hereinafter described. The Seller shall pay for
the standard coverage title insurance policy, recording charges, real estate
conveyance taxes and through taxes (if any), one-half of all escrow fees and
other closing costs not detailed above, and the Seller's share of prorations
pursuant to Section 25 below. The Buyer shall pay one-half of all escrow fees
and closing costs, and the Buyer's share of prorations pursuant to Section 25
below.
SECTION 25. PRORATIONS.
----------
(a) General. Rental revenues, and other income, if any, from the Real
-------
Property and presently existing taxes, assessments, improvement bonds, and other
expenses, if any, affecting the Real Property, shall be prorated as of the day
following the Closing Date. For the purpose of calculating prorations, the Buyer
shall be deemed to be in title to the Real Property and, therefore, entitled to
the income and responsibility for the expenses for the entire day following the
Closing Date.
(b) Intentionally left blank.
(c) Intentionally left blank.
26
(d) Method of Prorations. All prorations shall be made in accordance with
---------------------
customary practice in Canyon County, Idaho, except as expressly provided herein.
The Buyer and the Seller agree to cause their accountants to prepare a schedule
of tentative prorations before the Closing Date. Such prorations, if and to the
extent known and agreed on as of the Closing Date, shall be paid by the Buyer to
the Seller (if the prorations result in a net credit to the Seller) or by the
Seller to the Buyer (if the prorations result in a net credit to the Buyer) by
increasing or reducing the cash to be paid by the Buyer at Closing. Any such
prorations not determined or not agreed on as of the Closing Date shall be paid
by the Buyer to the Seller, or by the Seller to the Buyer, as the case may be,
in cash as soon as practicable following the Closing Date. A copy of the
schedule of prorations as agreed upon by the Buyer and the Seller shall be
exchanged at least three business days before the Closing Date.
SECTION 26. IRS FORMS 8594. Buyer and Seller agree to attach to their
---------------
respective federal income tax returns for the taxable year in which the Closing
occurs IRS Form 8594 completed consistently with the allocation of the Purchase
Price agreed upon in accordance with Section 12(n).
SECTION 27. ARBITRATION. Any dispute with respect to this Agreement
-----------
shall be resolved by mediation and, if mediation is not successful, then by
arbitration as provided herein.
The parties agree first to endeavor to settle the dispute in an amicable
manner by mediation administered by the American Arbitration Association (the
"AAA") or such other mediation service as is mutually agreeable to the parties
to the dispute under either the AAA's Commercial Mediation Rules or such other
commercial mediation rules as is mutually agreeable to the parties to the
dispute. The mediation shall take place in Chicago, Illinois with
representatives of the parties present with full authority to negotiate a
settlement. The parties must participate in the Mediation process with a
neutral mediator for at least 10 hours over at least 2 days prior to
commencement of any arbitration. If a party to the dispute refuses to
participate in the mediation, the party demanding mediation may either compel
mediation by seeking an appropriate order from a court of competent jurisdiction
or proceed immediately to arbitration. Thereafter, any unresolved dispute shall
be settled by arbitration administered by the AAA or such other arbitration
service as is mutually agreeable to the parties to the dispute in accordance
with the AAA's Commercial Arbitration Rules or such other commercial arbitration
rules as is mutually agreeable to the parties to the dispute. Judgment upon the
award rendered by the arbitrator(s) may be entered in any court having
jurisdiction thereof, and the resolution of the disputed matter as determined by
the arbitrator(s) shall be binding on the parties. Any such mediation or
arbitration shall be conducted in Chicago, Illinois.
Any party may, without inconsistency with this Agreement, seek from a court
any interim or provisional relief that may be necessary to protect the rights or
property of that party pending the establishment of the arbitral tribunal, or
pending the arbitral tribunal's determination of the merits of the controversy.
27
The arbitrator(s) may award costs and fees to the prevailing party if, in
his/her (their) discretion, the non-prevailing party did not prosecute the
arbitration or settlement of the dispute in good faith. "Costs and fees" for
this purpose shall mean reasonable pre-award expenses of the arbitration,
including fees for the arbitrator(s), administrative fees, travel expenses, out-
of-pocket expenses such as copying and telephone, court costs, witness fees and
attorneys' fees. Except as otherwise awarded by the arbitrator(s), all costs
and fees shall be borne by the party incurring such costs and fees.
The award shall be in writing and shall be signed by the arbitrator(s) and
shall include a statement regarding the disposition of any statutory claim.
SECTION 28. KNOWLEDGE. Whenever any provision of this Agreement or
----------
any agreement attached as an exhibit to this Agreement refers to the "knowledge"
or the "best knowledge" of any person, such person will be deemed to have
knowledge of a particular fact or other matter only if such person is actually
aware of such fact or other matter. Seller will be deemed to have "knowledge"
of a particular fact or other matter only if any of the following individuals
has, or at any time had, knowledge of such fact or other matter: Xxxxx
XxXxxxxxxx and Xxxxxxxx Xxxxx. Buyer and ABT will be deemed to have knowledge
of a particular fact or other matter with respect to the Business if any
individual who participated in the due diligence review of the Business for or
on behalf of Buyer or ABT has, or at any time had, knowledge of such fact or
matter.
SECTION 29. SEVERABILITY. If any part of this Agreement is held to be
------------
unenforceable or invalid under, or in conflict with, the applicable law of any
jurisdiction, the unenforceable, invalid or conflicting part shall, to the
extent permitted by applicable law, be narrowed or replaced, to the extent
possible, with a judicial construction in such jurisdiction that effectuates the
intent of the parties regarding this Agreement and such unenforceable, invalid
or conflicting part. To the extent permitted by applicable law, notwithstanding
the unenforceability, invalidity or conflict with applicable law of any part of
this Agreement, the remaining parts shall be valid, enforceable and binding on
the parties.
SECTION 30. NOTICES.
-------
(a) All notices, requests, consents and demands by the parties hereunder
shall be delivered by hand, by recognized national overnight courier or by
deposit in the United States mail, postage prepaid, by registered or certified
mail, return receipt requested, addressed to the party to be notified at the
addresses set forth below:
28
(i) if to the Seller:
Agway, Inc.
000 Xxxxxxxxx Xxxxx
XxXxxx, Xxx Xxxx 00000
Attention: President, Country Products Group
X.X. Xxx 0000
Xxxxxxxx, Xxx Xxxx 00000
with a copy to:
Agway, Inc.
000 Xxxxxxxxx Xxxxx
XxXxxx, XX 00000
Attention: General Counsel
X.X. Xxx 0000
Xxxxxxxx, Xxx Xxxx 00000
(ii) if to the Buyer to:
AgriBioTech, Inc.
000 Xxxxxxxxx Xxxx Xxxxx
Xxxxxxxxx, XX 00000
Attention: Xxxxxx X. Xxxxxx, President
Telecopier No.: (000) 000-0000
with a copy to:
Snow Xxxxxx Xxxxxx P.C.
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx X. Xxxxxxx, Esq.
Telecopier No.: (000) 000-0000
(b) Notices given by mail shall be deemed effective on the earlier of the
date shown on the proof of receipt of such mail or, unless the recipient proves
that the notice was received later or not received, three (3) days after the
date of mailing thereof. Other notices shall be deemed given on the date of
receipt. Any party hereto may change the address specified herein by written
notice to the other parties hereto.
SECTION 31. AMENDMENT; NON-WAIVERS. Any provision of this Agreement may
----------------------
be amended, if and only if, such amendment is written and signed by each party
to this Agreement. Neither any failure nor any delay on the part of any party to
this Agreement in exercising any right, power or privilege hereunder shall
operate as a waiver of any rights of such party, unless such waiver is made by a
writing executed by the party and delivered to the other parties hereto,
29
nor shall a single or partial exercise of any right preclude any other or
further exercise of any other right, power or privilege accorded to any party
hereto.
SECTION 32. ASSIGNMENT. This Agreement may not be assigned by any party
----------
without the prior written consent of the other parties.
SECTION 33. DISCLOSURE. From and after the date of this Agreement until
----------
the Closing or the termination of this Agreement, the Seller will not (i)
solicit or encourage inquiries or proposals with respect to, or furnish any
information relating to, or participate in, any negotiations or discussions
concerning the sale of the Assets with anyone other than the Buyer; or (ii)
unless otherwise required by law, neither party shall make any public
announcement without prior approval of the language of such announcement by the
other.
SECTION 34. FURTHER ACTION Each of the parties hereto shall use its
---------------
best efforts to take or cause to be taken, and to cooperate with the other
parties hereto to the extent necessary with respect to, all action, and to do,
or cause to be done, consistent with applicable law, all things necessary,
proper or advisable to consummate and make effective the transactions
contemplated by this Agreement.
SECTION 35. HEADINGS. The headings contained herein are for reference
--------
purposes only and shall not affect the meaning or interpretation of this
Agreement.
SECTION 36. COUNTERPARTS. This Agreement may be executed and delivered
------------
in multiple counterpart copies, each of which shall be an original and all of
which shall constitute one and the same agreement.
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement on the date first above written.
AGWAY, INC. (SELLER)
By: /s/ Xxxxxxxx X. Xxxxx
___________________________________
Xxxxxxxx X. Xxxxx, Assistant Treasurer
XXXXX SEEDS, INC. (BUYER)
By: /s/ Xxxxxxxx X. Xxxxxxxxx
___________________________________
Xxxxxxxx X. Xxxxxxxxx, Vice President
AGRIBIOTECH, INC.
30
By: /s/ Xxxxxxxx X. Xxxxxxxxx
_____________________________________
Xxxxxxxx X. Xxxxxxxxx, Vice President
31
SCHEDULES TO THE ASSET PURCHASE AGREEMENT
AMONG AGWAY, INC.
XXXXX SEEDS, INC. AND AGRIBIOTECH, INC.
---------------------------------------
Schedule No. Description
----------- -----------
1(a) The Inventory
1(b) The Real Property
1(c) The Buildings and Improvements
1(d) The Equipment and Machinery
1(e) The Office Furniture and Fixtures
1(f) The Automobiles, Trucks, Forklifts and Other Vehicles
1(h) The Pre-Paid Assets
1(i) The Other Assets
1(k) The Trade Name
1(m) Plant Variety Protection Act Certificates
1(n) The Customer List
1(r) The Assumed Liabilities
4(a)(1) The Excluded Assets
4(a)(2) Accounts Receivable
7(a) Exceptions to Title
7(c) Legal Proceedings; Claims
7(d) Trade Name
7(f) Material Agreements, Contracts, Commitments,
Obligations and Understandings
7(g) Violations or Restrictions
7(h) Court Orders and Decrees
7(j) Governmental Licenses, Permits, Etc.
7(k) Environmental Claims
7(l) Employee Benefit Plans
7(p) The Seller's Undisclosed Liabilities and Conditions
7(q) Compliance with Laws
7(s) Changes Outside of Ordinary Course
7(u) Non-Cancelable Labor Contracts
7(x) Insurance
7(y) Right's of Third Parties
7(z) Relationships with Vendors and Customers
12(o) List of Agreements to be Assigned and Assumed
i
EXHIBITS TO THE ASSET PURCHASE AGREEMENT
AMONG CANARY, INC.
XXXXX SEEDS, INC. AND AGRIBIOTECH, INC.
---------------------------------------
Exhibit No. Description
---------- -----------
3(b) Escrow Agreement
3(c) Form of Non-Competition Agreement
7(o) The Seller's Financial Statements
12(f) Form of the Seller's Legal Opinion
16(d) Form of the Buyer's Legal Opinion
ii
