EXHIBIT 2.3
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STOCK PURCHASE AGREEMENT
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By and among
AGRIBIOTECH, INC.,
XXXXXXXX SEEDS INTERNATIONAL COMPANY
as the Buyer,
and
1304516 ONTARIO INC.,
as the Seller,
and
XXXXXXX X. EROS and XXXX X. EROS
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September 1, 1998
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STOCK PURCHASE AGREEMENT
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TABLE OF CONTENTS
Page
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Section 1. Sale and Purchase of the Shares.............................................1
Section 2. Closing.....................................................................1
Section 3. Description of Components of Purchase Price and Other Payments..............2
(a) Payment of Purchase Price to Seller at Closing........................2
(b) Portion of Purchase Price to be Held in Escrow........................2
(c) Lock-Up of ABT Shares.................................................2
(d) Guaranty of Net Proceeds..............................................3
(e) Non-Competition Agreement.............................................3
(f) Employment Agreements.................................................4
Section 4. Representations and Warranties of Seller and the Shareholders...............4
(a) Ownership of Shares...................................................4
(b) Capacity; Organization; Standing; Capitalization......................4
(c) Legal Proceedings.....................................................6
(d) Encumbrances..........................................................6
(e) Trade Names, etc......................................................6
(f) Patents, etc..........................................................7
(g) Financial Statements..................................................7
(h) Absence of Certain Changes............................................8
(i) Tax Matters...........................................................8
(j) Accounts Receivable and Inventory....................................11
(k) Title and Condition of Properties....................................11
(l) Description of Material Contracts....................................12
(m) Default; Violations or Restrictions..................................14
(n) Court Orders and Decrees.............................................14
(o) Books and Records....................................................14
(p) Benefit Plans........................................................14
(q) Insurance............................................................17
(r) Rights of Third Parties..............................................17
(s) Powers of Attorney...................................................17
(t) Labor Matters........................................................17
(u) Relationships with Vendors and Customers.............................18
(v) Approvals and Authorizations.........................................18
(w) Compensation Plans...................................................18
(x) Governmental Licenses................................................18
(y) Brokers..............................................................18
(z) Compliance With Laws.................................................19
(aa) Guarantees...........................................................20
-(ii)-
(bb) Benefits.........................................................20
(cc) Schedules........................................................20
(dd) Accuracy.........................................................20
(ee) No Legal or Tax Advice...........................................20
Section 5. Representations and Warranties of Buyer and ABT............................20
(a) Capacity.........................................................21
(b) Organization.....................................................21
(c) Consents and Approvals...........................................21
(d) Legal Proceedings................................................21
(e) Binding Obligation...............................................22
(f) Brokers; Finders.................................................22
(g) Accuracy.........................................................22
Section 6. Survival of Representations and Warranties; Indemnification.................22
(a) Survival of Representations and Warranties.......................22
(b) Indemnity by Seller and the Shareholders.........................23
(c) Indemnification by Buyer.........................................23
(d) Defense of Claims................................................23
Section 7. Covenants of Seller and the Shareholders....................................24
(a) Further Assurances...............................................24
(b) Access to the Company; Confidentiality...........................24
(c) Conduct of Business Pending Closing..............................25
(d) Closing Documents................................................25
(e) Tax Returns......................................................25
Section 8. Covenants of Buyer..........................................................25
(a) Closing Documents................................................25
(b) Noninterference..................................................26
(c) Confidentiality..................................................26
Section 9. Conditions Precedent to the Obligations of Buyer and ABT....................26
Section 10. Conditions Precedent to Seller's and the Company's Obligations..............29
Section 11. Conditions Precedent to Obligations of Seller, Buyer and ABT................30
(a) Due Diligence....................................................30
(b) No Injunctions...................................................30
(c) Consents.........................................................30
(d) Corporate Proceedings............................................30
Section 12. Termination.................................................................30
Section 13. Buyer's Obligations at Closing..............................................31
(iii)
Section 14. Seller's Obligations at Closing............................... 31
Section 15. Subsequent Events............................................. 31
Section 16. Parties in Interest........................................... 32
Section 17. Entire Agreement.............................................. 32
Section 18. Governing Law................................................. 32
Section 19. Expenses...................................................... 32
Section 20. Arbitration................................................... 32
Section 21. Severability.................................................. 33
Section 22. Notices....................................................... 33
Section 23. Non-Waivers................................................... 34
Section 24. Assignment.................................................... 34
Section 25. Disclosure.................................................... 35
Section 26. Miscellaneous................................................. 35
(a) Further Assurances........................................ 35
(b) Headings.................................................. 35
(c) Counterparts.............................................. 35
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Exhibits Description
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Exhibit 3(b) Form of Escrow Agreement
Exhibit 3(c) Form of Lock-Up Agreement
Exhibit 3(d)(i) Form of Guarantee Agreement
Exhibit 3(d)(iii) Form of Security Agreement
Exhibit 3(e)(i), (ii) and (iii) Non-Competition Agreements
Exhibit 3(f) Form of Employment Agreement
Exhibit 4(k) Leases of Real Property
Exhibit 9(h) Opinion of Counsel to Sellers and the Corporation
Exhibit 10(d) Opinion of Counsel to Buyer
Exhibit 10(g)(i) and (ii) Non-Qualified Stock Option Agreements
Exhibit 20 Rules for Arbitration
Schedules
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Schedule 4(b)(i) Consents of Other Persons
Schedule 4(b)(ii) Interest in Other Entities
Schedule 4(c)(i) Legal Proceedings, Seller and/or Corporation as Party
Schedule 4(c)(ii) Complaints, Claims, etc. from Customers,
Purchasers, etc.
Schedule 4(c)(iii) Claims Related to Products or Services
Schedule 4(d) Encumbrances
Schedule 4(e) Trademarks, Trade Names
Schedule 4(f) Patents, PVPA Certificates, etc.
Schedule 4(g) Financial Statements
Schedule 4(h) Material Adverse Changes
Schedule 4(i) Tax Matters
Schedule 4(k) Real Property Owned or Leased;
Personal Property Leased
Schedule 4(l) Material Contracts
Schedule 4(p) Pension & Profit Sharing Plan
Schedule 4(q) Insurance Policies
Schedule 4(r) Rights of Third Parties
Schedule 4(s) Powers of Attorney
Schedule 4(w) Compensation Plans
Schedule 4(x) Governmental Licenses
Schedule 4(z) Compliance with Laws
Schedule 4(aa) Guarantees by Sellers of Obligations of the Corporation
Schedule 4(bb) Benefits
STOCK PURCHASE AGREEMENT dated September 1, 1998, among 1304516
Ontario Inc., an Ontario corporation "Seller"), Xxxxxxx X. Eros and Xxxx X. Eros
(together the "Shareholders" and individually, a "Shareholder"), AgriBioTech,
Inc., a Nevada corporation ("ABT") and Xxxxxxxx Seed International Company, a
Nova Scotia limited company and a wholly-owned subsidiary of ABT ("Buyer").
RECITALS:
A. Seller owns 4,300 Class A shares and 100 common shares
(collectively, the "Shares") of Oseco Inc., an Ontario corporation (the
"Company"), constituting 100% of the Company's outstanding share capital.
B. Seller desires to sell, and Buyer desires to purchase, the Shares
upon the terms, and subject to the conditions, set forth in this Agreement.
C. Shareholders own all of the outstanding share capital of Seller
and desire to induce Buyer to purchase the Shares from Seller.
Accordingly, in consideration of the recitals, representations,
warranties and covenants of the parties set forth in this Agreement, the parties
agree as follows:
SECTION 1. SALE AND PURCHASE OF THE SHARES.
(a) Upon the terms, and subject to the conditions, set forth in this
Agreement, at the Closing (as hereinafter defined), Seller will sell, assign and
transfer to Buyer, and Buyer will purchase from Seller, the Shares, constituting
100% of the outstanding share capital of the Company, free and clear of all
liens, security interests, pledges, charges, claims, options, warrants and other
rights to purchase, or otherwise acquire or to sell the Shares and other
encumbrances of any kind whatsoever.
(b) The purchase price (the "Purchase Price") for the Shares is
$6,560,000, payable as provided in Section 3 hereof.
(c) All references herein to "$" or "dollars", unless otherwise
indicated, means currency of the Government of Canada which is legal tender in
Canada for the payment of public and private debts.
SECTION 2. CLOSING. The closing of the sale and purchase of the Shares (the
"Closing") shall take place at Fasken Xxxxxxxx Xxxxxxx, Toronto-Dominion Centre,
Toronto, Canada on or before September 1, 1998 (the "Closing Date") at 9:00 AM
or at such later date and time or other location as may mutually be agreed to by
the parties.
SECTION 3. DESCRIPTION OF COMPONENTS OF PURCHASE PRICE AND OTHER PAYMENTS.
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(a) Payment of Purchase Price to Seller at Closing. Upon the
satisfaction by the parties of their respective closing conditions under this
Agreement, Buyer shall pay to Seller the Purchase Price as follows:
(i) $4.5 Million, of which $4.2 Million shall be payable to Seller in
immediately available funds by electronic funds transfer to a deposit account
with a Canadian chartered bank notified to ABT at least two business days prior
to the Closing date or by other method reasonably acceptable to Seller and
$300,000 shall be deposited with Buyer's counsel as escrow agent pursuant to
Section 3(b) hereof.
(ii) $2.06 Million, payable by the delivery of one or more share
certificates representing 100,000 shares of the common stock, par value U.S.
$.001 per share, of ABT (the "ABT Shares") registered in Seller's name and
endorsed with a legend restricting transfer of the ABT Shares except in
compliance with applicable United States and Canadian federal, state and
provincial securities laws.
(b) PORTION OF PURCHASE PRICE TO BE HELD IN ESCROW. At the Closing,
Buyer will set aside and transfer $300,000 from the Purchase Price to Holmested
& Xxxxxx, as escrow agent (the "Escrow Agent"), pursuant to the terms of the
escrow agreement in the form of EXHIBIT 3(b) hereto (the "Escrow Agreement"),
$300,000 from the Purchase Price for the benefit of Buyer as described below
(the "Escrow Funds").
(c) LOCK-UP OF ABT SHARES.
(i) Resales of the ABT Shares shall be made pursuant to the terms of
a Lock- Up Agreement, in the form of EXHIBIT 3(c) hereto (the "Lock-Up
Agreement"), among Seller, the Shareholders and ABT, according to the following
schedule: from the Closing Date through December 31, 1998 (the "No-Sale
Period"), no ABT Shares shall be sold; beginning January 1, 1999, Seller may
sell up to an aggregate of 7,000 ABT Shares per week until all the ABT Shares
received hereunder have been sold.
(ii) All sales of ABT Shares shall be made by means of "in-the-market"
transactions. "In-the-market" means a sale made on the NASDAQ Stock Market
through customary trading channels. Seller and Shareholders will not knowingly
sell any ABT Shares to a resident of Canada. ABT agrees that it will file with
the United States Securities and Exchange Commission a supplement to its
Registration Statement on Form S-4 (No. 333-61097) listing the Seller as a
selling stockholder under such registration statement prior to the end of the
No-Sale Period.
(iii) Any sale of ABT shares in violation of the Lock-Up Agreement
shall constitute an event of default under this Stock Purchase Agreement and the
Lock-Up Agreement. All proceeds in excess of U.S. $15.75 per share from all
sales of ABT Shares, regardless of whether such proceeds derive from sales made
prior to,
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concurrent with or subsequent to such event of default shall promptly be paid in
cash to ABT. Inasmuch as the violation of the Lock-Up Agreement by the Seller
will cause serious and substantial damages to ABT, and it will be difficult, if
not impossible, to prove the amount of such damages, the foregoing is agreed to
as liquidated damages and not as a penalty.
(iv) Seller will, and the Shareholders will cause Seller to, forward
to Buyer and ABT all customary documentation reflecting each sale of ABT Shares
within 10 business days after receipt of such documentation by Seller.
(d) GUARANTY OF NET PROCEEDS.
(i) ABT will guarantee, pursuant to the terms of the price guaranty
agreement, in the form of EXHIBIT 3(d)(i) hereto (the "Price Guaranty
Agreement"), that the Net Proceeds (defined as the remainder of the gross sales
price after deduction of customary sales commissions and any applicable stock
transfer and sales taxes) from all sales of ABT Shares, when made in accordance
with the terms of the Lock-Up, shall be no less than $2.06 per million (the
"Guaranteed Price"). In consideration of the Price Guaranty Agreement, Seller
agrees that all Net Proceeds from all sales of ABT Shares in excess of $2.06
million will be paid to ABT in cash by Seller in accordance with the terms of
the Price Guaranty Agreement.
(ii) In accordance with the terms of the Price Guaranty Agreement,
provided that all of the ABT Shares have been sold by Seller prior to June 1,
1999 (or later date as provided in the Lock-Up Agreement) and the requisite
documentation pertaining to such sales has been provided to ABT by Seller as
required by SECTION 3(c)(iv), Buyer will pay to Seller in cash any deficit in
the Guaranteed Price or Seller will pay to ABT cash for any Net Proceeds in
excess of the Guaranteed Price in accordance with the terms of Section 2 of the
Price Guaranty Agreement (or such later date as provided in the Lock-Up
Agreement). Any payment by Seller to Buyer pursuant to this provision shall be
deemed a reduction of the Purchase Price. Deficits shall be calculated as
provided in the Price Guaranty Agreement.
(iii) Until Seller has received an aggregate of $2,060,000 from all
sales of ABT Shares made pursuant to the Lock-Up Agreement, the obligations of
Buyer and ABT under the Price Guaranty Agreement shall be secured by a first
priority security interest, wherever reasonably possible, on the fixed assets
and equipment of the Company pursuant to the terms of a security agreement (the
"Security Agreement") in the form of EXHIBIT 3(d)(iii) attached hereto.
(e) NON-COMPETITION AGREEMENT. At the Closing, Seller and each of the
Shareholders hereby agrees to enter into the Non-Competition Agreements with
Buyer and ABT attached hereto as EXHIBITS 3(e)(i), (ii) and (iii).
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(f) EMPLOYMENT AGREEMENTS. In addition to the foregoing, each of
Xxxxxxx X. Eros and Xxxx Eros will enter into an Employment Agreement with the
Company in the form annexed hereto as EXHIBIT 3(f).
SECTION 4. REPRESENTATIONS AND WARRANTIES OF SELLER AND THE SHAREHOLDERS. The
Seller and the Shareholders, jointly and severally, warrant and represent to
Buyer and ABT as follows, each such representation and warranty being deemed to
be material and to have been relied upon by Buyer and ABT (as used herein,
"Seller's and the Shareholders' best knowledge" or "to the best knowledge of the
Seller and the Shareholders" means information actually known by such persons
after due inquiry).
(a) OWNERSHIP OF SHARES. Seller is the owner, beneficially and of
record, of the Shares, which constitute 100% of the issued and outstanding share
capital of the Company. The Shares have been duly authorized and are validly
issued, fully paid and non-assessable. The Shares have not been pledged,
mortgaged or otherwise encumbered in any way and there is no lien, mortgage,
charge, claim, liability, security interest or encumbrance of any nature
against, or in respect of, the Shares. There are no options, warrants, rights
of subscription or conversion, puts, calls, commitments, agreements,
arrangements, understandings, plans, contracts, proxies, voting trusts, voting
agreements or instruments of any kind or character, oral or written, to which
Seller or the Company and/or any Shareholder is a party, or by which the Seller,
the Company or any Shareholder is bound, relating to the issuance, voting or
sale of the Shares or any authorized but unissued capital shares of the Company
or of any securities representing the right to purchase or otherwise receive any
such capital shares. There are no shareholders agreements, preemptive rights or
other agreements, arrangements, commitments or understandings, oral or written,
that have not been disclosed to Buyer, relating to the voting, issuance,
acquisition or disposition of shares of the Company and/or its Subsidiary (as
defined below) or the conduct or management of the Company and/or the Subsidiary
or their respective boards of directors. Seller has, and at the Closing will
have, good and marketable legal and beneficial ownership and title to the Shares
and full right to transfer title to the Shares, subject to any restrictions
imposed by Canadian provincial securities laws, free and clear of all liens,
mortgages, charges, liabilities, claims, security interests, options, warrants
or other rights to purchase or otherwise acquire the Shares and other
encumbrances of any nature whatsoever. The sale, conveyance, transfer and
delivery of the Shares by Seller to Buyer pursuant to this Agreement will
transfer full legal and beneficial right, title and interest in the Shares to
Buyer, free and clear of all liens, mortgages, charges, claims, liabilities,
security interests options, warrants or other rights to purchase or otherwise
acquire the Shares and other encumbrances of any nature whatsoever.
(b) CAPACITY; ORGANIZATION; STANDING; CAPITALIZATION. Each
Shareholder has full capacity to enter into and perform under this Agreement and
all other agreements and instruments to be entered into in connection with the
transactions contemplated hereby, and to consummate such transactions, and,
except as set forth
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in SCHEDULE 4(b) of this Agreement, no consent, waiver, release or joinder of
any other persons is required in connection with any of the foregoing. Seller is
a corporation duly organized, validly existing and in good standing under the
laws of the Province of Ontario with full corporate power and authority to own
the Shares, conduct its operations as presently conducted, to enter into this
Agreement and each other agreement and instrument to be executed and delivered
by it pursuant to this Agreement and to consummate the transactions contemplated
hereby and thereby. Seller has taken all necessary corporate action on its part
to authorize the execution and delivery by it of this Agreement and of each
other agreement and instrument to be executed and delivered by it pursuant to
this Agreement, the performance of its obligations hereunder and thereunder and
the consummation of the transactions contemplated hereby and thereby. No
consent, waiver, release or joinder of any other person is required in
connection with the execution and delivery by Seller of this Agreement and the
Other Documents (as defined below), the performance of its obligations hereunder
and thereunder and its consummation of the transactions contemplated hereby and
thereby. Except as set forth on SCHEDULE 4(b), neither Seller, nor any
Shareholder nor the Company has any interest in any entity, other than the
Company engaged, directly or indirectly, in businesses competitive with those of
the Company, Buyer or ABT. This Agreement has been, and each of the other
agreements and instruments executed hereunder (the "Other Agreements") will at
the Closing be, duly executed and delivered by Seller and the Shareholders to
the extent such person or persons are parties hereto or thereto. This Agreement
constitutes, and each of the Other Agreements will constitute, the legal, valid
and binding obligation of Seller and the Shareholders to the extent such person
or persons are parties hereto or thereto, enforceable in accordance with its
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.
The Company has only one Subsidiary, Precision Seed Coaters, Inc., an
Arizona corporation (the "Subsidiary"). Each of the Company and the Subsidiary
is duly organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation, and each 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 it requires such
qualification. The Articles of Incorporation of each of the Company and the
Subsidiary and all amendments thereto, certified by the Director under the
Business Corporations Act (Ontario) or other appropriate official of the
jurisdiction of its incorporation and the by-laws, as amended to the date of
this Agreement, of each of the Company and the Subsidiary, certified by the
Secretary of the Company or the Subsidiary, as applicable, and the minutes and
share records of the Company and the Subsidiary, delivered to Buyer and ABT are
complete and correct. Each of the Company and the Subsidiary has all necessary
licenses and authority to operate its business as now being conducted and as
will be conducted after the Closing, assuming such business is conducted as now
operated. The authorized capital of the Company consists of an unlimited number
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of Class A shares and 40,000 voting common shares, of which 4,300 Class A shares
and 100 common shares are issued and outstanding. All of the issued and
outstanding shares in the capital of the Company are owned by Seller and are
duly and validly issued, fully paid and non-assessable. The authorized and
issued capital of the Subsidiary is as specified on SCHEDULE 4(b). The Company
owns 100% of the outstanding shares of the Subsidiary free and clear of all
liens, mortgages, charges, liabilities, claims, security interests, options,
warrants or other rights to purchase or otherwise acquire the shares of the
Subsidiary and other encumbrances of any nature whatsoever.
(c) LEGAL PROCEEDINGS.
(i) Except as set forth in SCHEDULE 4(c)(i) of this Agreement, none of
the Seller, the Shareholders in their capacities as shareholders, officers or
directors of the Company, the Company or the Subsidiary is a party to any
pending litigation, arbitration or administrative proceeding or, to the best the
knowledge of Seller and the Shareholders, to any investigation, and no such
litigation, arbitration or administrative proceeding or investigation that might
result in any material adverse change in the financial condition, business or
properties of the Company and its subsidiaries, taken as a whole, is threatened.
(ii) Except as disclosed in SCHEDULE 4(c)(ii) to this Agreement, none
of Seller, the Shareholders or the Company has any knowledge, or has not
received notice, of any complaints, claims or threats, plans or intentions to
discontinue commercial relations or transactions from any customer of the
Company or the Subsidiary, any purchaser of goods or services from the Company
or the Subsidiary, any employee or independent contractor significant to the
conduct or operation of the Company or the Subsidiary or its businesses or any
party to any agreement to which the Company or the Subsidiary is a party.
(iii) Except as disclosed in SCHEDULE 4(c)(iii), there is no claim
(whether based on statute, negligence, breach of warranty, strict liability or
any other theory) relating directly or indirectly to any product manufactured or
sold, or any services performed by the Company or the Subsidiary.
(iv) Except as disclosed in SCHEDULE 4(c)(iv), neither the Company nor
the Subsidiary is under any obligation with respect to the return of goods in
the possession of customers.
(d) ENCUMBRANCES. Except as disclosed in SCHEDULE 4(d), there are no
liens, mortgages, deeds of trust, claims, charges, security interests or other
encumbrances or liabilities of any type whatsoever to which any of the assets of
the Company or the Subsidiary are subject.
(e) TRADE NAMES, ETC. Each of the Company and the Subsidiary owns or
is licensed or otherwise entitled to use the trade names, trademarks, service
marks,
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assumed names, copyrights and registrations therefor, if any (collectively
"Trademarks") specified in SCHEDULE 4(e), which Schedule is a complete and
correct list of all such assets. The Trademarks have been duly issued and have
not been canceled, abandoned or otherwise terminated, except as otherwise
indicated in SCHEDULE 4(e). SCHEDULE 4(e) also completely and correctly lists
all licenses and agreements relating to any of the Trade Names. Neither the
Company nor the Subsidiary is in default under any of the licenses or agreements
relating to the Trademarks as listed in SCHEDULE 4(e) and all of such licenses
and agreements are in effect. Neither the Company nor the Subsidiary has
granted, or will grant prior to the Closing, licenses or other rights to use
such Trademarks. No other Trademarks are either owned or used by the Company or
the Subsidiary. To the best knowledge of Seller and the Shareholders, neither
the operation of its business by the Company or the Subsidiary infringes on the
Trademarks of any third party. No claim has been made that there is any such
infringement. To the best knowledge of Seller and the Shareholders, no Trademark
of any other person infringes any Trademarks owned or used by the Company or the
Subsidiary.
(f) PATENTS, ETC. Each of the Company and the Subsidiary own or is
licensed or otherwise entitled to use the inventions, letters patent,
applications for letters patent and patent license rights, inventions,
processes, designs, formulas, trade secrets, Plant Breeders' Rights Act ("PBRA")
certificates of registration, Plant Variety Protection Act ("PVPA")
Certificates, know-how and other industrial property rights (collectively
"Patents") necessary for the conduct of its business as set forth in SCHEDULE
4(f), which Schedule is a complete and correct list of all such assets. The
Patents have been duly issued and have not been canceled, abandoned or otherwise
terminated, except as otherwise indicated in SCHEDULE 4(f). SCHEDULE 4(f) also
completely and correctly lists all licenses and agreements relating to any of
the Patents. Neither the Company nor the Subsidiary is in default under any of
the licenses or agreements relating to the Patents as listed in SCHEDULE 4(f)
and all of such licenses and agreements are in effect. Neither the Company nor
the Subsidiary has granted, or will grant prior to the Closing, licenses or
other rights to use such Patents. No other Patents are owned or used by the
Company or the Subsidiary. To the best of the knowledge of Seller and the
Shareholders, the operation of the business of the Company or the Subsidiary
does not infringe on the patent rights of any third party. No claim has been
made that there is any such infringement. To the best of the knowledge of
Seller and the Shareholders, no Patent of any person infringes any Patent owned
or used by the Company or the Subsidiary.
(g) FINANCIAL STATEMENTS.
(i) The consolidated and consolidating financial statements of the
Company and the Subsidiary as of and for the periods ended June 30, 1997, 1996,
1995, and 1994, together with the related notes and schedules, and the
consolidated and consolidating financial statements of the Company and the
Subsidiary as of and for the period ended March 31, 1998 together with the
related notes and schedules
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(collectively, the "Financials"), true and complete copies of which are attached
hereto as SCHEDULE 4(g) and except as disclosed on SCHEDULE 4(g), (A) have been
prepared on the basis stated therein and are in accordance with the books of
account and records of the Company; (B) present fairly, and are accurate and
complete statements of, the financial condition and the results of operations of
the Company and the Subsidiary as at and for the periods therein specified; and
(C) do not include or omit to state any fact which renders the Financials
misleading.
(ii) Except as and to the extent shown or provided for in the
Financials or the notes and schedules thereto or as disclosed in any of the
Schedules to this Agreement or for such current liabilities as may have been
incurred since March 31, 1998 in the ordinary course of business, neither the
Company nor the Subsidiary has any liabilities or obligations (whether accrued,
absolute, contingent or otherwise) which might be or become a charge against the
assets or liabilities of the Company or the Subsidiary; as of March 31, 1998,
there was no asset used by the Company or the Subsidiary in its operations that
has not been reflected in the Financials, and, except as set forth in the
Financials, no assets have been acquired by the Company or the Subsidiary since
such date except in the ordinary course of business.
(iii) Except as disclosed in the Financials, there has been no
decrease in stockholders' equity as compared with the amount shown for such
shareholders' equity as at March 31, 1998 and no material adverse changes in the
financial position of the Company and the Subsidiary, taken as a whole, since
March 31, 1998.
(iv) The Financials do not include any assets, liabilities, income or
expenses of any entity other than the Company and the Subsidiary. All
transactions between or among the Company, the Subsidiary and any other entity
in which any Shareholder is an officer and/or director or in which Seller or any
Shareholder, directly or indirectly, has an equity interest have been at prices
no less favorable to the Company or the Subsidiary than could have been obtained
from any independent third party.
(h) ABSENCE OF CERTAIN CHANGES. Except as disclosed on SCHEDULE 4(h),
since March 31, 1998, there has not been any material adverse change in the
condition (financial or otherwise), operations, assets, liabilities, earnings,
business, prospects or results of operations of the Company and the Subsidiary,
taken as a whole.
(i) TAX MATTERS.
(i) TAX RETURNS. Each of the Company and the Subsidiary has prepared
and filed all Tax Returns on time and with all appropriate Governmental
Authorities for all fiscal periods through June 30, 1997. Each such Tax Return
was correct and complete. True and complete copies of all Tax Returns prepared
and filed by the Company and the Subsidiary through June 30, 1998 have been
delivered to ABT.
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(ii) PAYMENT OF TAXES. Except as otherwise indicated on SCHEDULE
4(i), each of the Company and the Subsidiary has paid all Taxes due and payable
as reflected on its Tax Returns and have paid all assessments and reassessments
it has received in respect of Taxes. Each of the Company and the Subsidiary has
paid in full, or made satisfactory provision on the Financials in respect of,
all Taxes accruing due on or before the date hereof which are not reflected in
its Tax Returns. The provisions for Taxes reflected in the Financials are
sufficient to cover all liabilities for Taxes that have been assessed against
the Company and/or the Subsidiary, whether or not disputed, or that are accruing
due in respect of the business of the Company or the Subsidiary and their
respective operations and property during the periods covered by the Financials
and all prior periods.
(iii) REASSESSMENTS. There are no reassessments of Taxes that have
been issued and are outstanding. No Governmental Authority has challenged,
disputed or questioned the Company in respect of Taxes or of any Tax Returns.
Neither the Company nor the Subsidiary is negotiating any proposed assessment or
reassessment with any Governmental Authority. None of Seller, the Shareholders,
the Company or the Subsidiary is aware of any contingent liabilities of the
Company or the Subsidiary for Taxes or any grounds for an assessment or
reassessment including aggressive treatment of income, expenses, credits or
other claims for deduction under any return, filing or report. None of Seller,
the Shareholders, the Company or the Subsidiary has received any notice or other
indication from any Governmental Authority that an assessment or reassessment is
proposed in respect of any Taxes, regardless of its merits. Neither the Company
nor the Subsidiary has executed or filed with any Governmental Authority any
agreement extending the period for assessment, reassessment or collection of any
Taxes. Assessments under the Income Tax Act (Canada) and applicable provincial
legislation have been made with respect to the Company or the Subsidiary
covering all past periods through the fiscal year ended June 30, 1997, and all
taxation years ending in or prior to June 30, 1994 are considered closed by
Canadian federal and provincial Governmental Agencies for the purposes of all
Taxes and all taxation years ending on or prior to June 30, 1993 are considered
closed by Canadian provincial Governmental Authorities for the purpose of all
Taxes.
(iv) WITHHOLDINGS. Each of the Company and the Subsidiary has
withheld from each payment made to any of its present or former employees,
officers and directors, and to all persons who are non-residents of Canada for
the purposes of the Income Tax Act (Canada) all amounts required by law and will
continue to do so until the Closing Date and has remitted such withheld amounts
within the prescribed periods to the appropriate Governmental Authority. Each
of the Company and the Subsidiary has remitted all Canada Pension Plan
contributions, employment insurance premiums, employer health taxes and other
Taxes payable by it in respect of its employees and has or will have remitted
such amounts to the proper Governmental Authority within the time required by
the applicable law. Each of the Company and the Subsidiary has charged,
collected and
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remitted on a timely basis all taxes as required by the applicable law on any
sale, supply, or delivery whatsoever made by the Company or the Subsidiary and
has paid all Taxes as required by the applicable law on any sale, supply or
delivery whatsoever received by the Company and/or the Subsidiary.
(v) RESERVES. There are no circumstances existing which could result
in the application of any of section 78, 80, 80.01, 80.02, 80.03 and 80.04 of
the Income Tax Act (Canada) or any equivalent provincial provision to the
Company or the Subsidiary. Neither the Company nor the Subsidiary has claimed,
and will not claim, any reserve under any one or more of subparagraph
40(1(a)(iii), or paragraphs 20(1)(m) or 20(1(n) of the Income Tax Act (Canada)
or any equivalent provincial provisions, if any such amount could be included in
the income of the Company or the Subsidiary for any period ending after the
Closing Date.
(vi) LOSS UTILIZATION. The only business ever conducted by the Company
or the Subsidiary is the business as described on SCHEDULE 4(i). The non-
capital losses (as defined in the Income Tax Act (Canada) and any equivalent
provincial taxing statute) were incurred by the Company or the Subsidiary only
in carrying on such business.
(vii) ELECTIONS. Except as disclosed on SCHEDULE 4(i), neither the
Company nor the Subsidiary has ever made or filed any election under section 83
or section 85 of the Income Tax Act (Canada) or any equivalent provincial
provision. Neither the Company nor the Subsidiary will file any such election
before the Closing Date.
(viii) RETAIL SALES TAX. Each of the Company and the Subsidiary has
paid all Taxes imposed by the Retail Sales Tax Act (Ontario) and other relevant
provincial tax statute(s) on the acquisition of its tangible personal property
as defined in such statute, and none of its tangible personal property has been
transferred at any time on a tax-exempt basis under the provisions of section 13
of Regulation 1013 to the Retail Sales Tax Act (Ontario), or any predecessor
thereof, or under a similar provision of any other relevant provincial tax
statute.
(ix) NON-ARM'S LENGTH TRANSACTIONS. Except as disclosed on SCHEDULE
4(i), neither the Company nor the Subsidiary has ever acquired or had the use of
any of its assets from a person ("a Related Person") with whom the Company or
the Subsidiary was not dealing at arm's length, as determined under the Income
Tax Act (Canada). Neither the Company nor the Subsidiary has ever disposed of
any asset to a Related Person for proceeds less than the fair market value of
that asset. Neither the Company nor the Subsidiary shall either acquire or
dispose of any of its assets to any Related Person prior to the Closing Date.
(x) TAX STATUS. The Seller is not a non-resident of Canada as defined
in Income Tax Act (Canada). The Company is a registrant for purposes of the
goods
-11-
and services tax provided for under the Excise Tax Act and their registration
numbers are as set forth in SCHEDULE 4(i).
(xi) TAX ACCOUNTS AND TAX ATTRIBUTES. SCHEDULE 4(i) accurately sets
out the paid-up capital of all of the issued and outstanding shares of the
Company and the Subsidiary for the purposes of the Income Tax Act (Canada) or
any equivalent provincial provision.
(xii) DEFINITIONS. For purposes of this SECTION 4(i), "Taxes" means
all taxes and similar governmental charges, including
(A) Canadian federal, provincial, municipal and local, foreign or
other income, franchise, capital, real property, personal
property, tangible, withholding, payroll, employer health,
transfer, sales, use, excise, consumption, anti-dumping,
countervailing and value added taxes, all other taxes of any kind
for which the Company and/or the Subsidiary may have any
liability imposed by Canada or any province, municipality,
country or foreign government or subdivision or agency thereof,
whether disputed or not;
(B) assessments, charges, duties, fees, imposts, levies or other
governmental charges; and
(C) all Canada Pension Plan contributions and employment insurance
premiums;
(D) interest, penalties or additions associated with the foregoing.
(j) ACCOUNTS RECEIVABLE AND INVENTORY.
(i) ACCOUNTS RECEIVABLE. The accounts receivable of the Company and
the Subsidiary reflected in the Financials as at March 31, 1998 and the accounts
receivable acquired by the Company and the Subsidiary since such date are valid
subsisting claims for the aggregate amounts thereof reflected in the Financials,
net of the reserves or allowances for doubtful receivables reflected in the
Financials or thereafter in the books and records of the Company and the
Subsidiary uniformly maintained in accordance with the financial statements,
accounted for in accordance with GAAP, consistently applied, and neither Seller
or the Shareholders know of any reason that would make such accounts receivable,
net of such amounts as the Company and/or the Subsidiary has reserved on its
books as of March 31, 1998, taken as a whole, not collectible.
(ii) INVENTORY. The inventory of the Company and the Subsidiary
reflected in the Financials as at March 31, 1998, and the inventory acquired by
the Company and the Subsidiary since such date (a) has been purchased in the
ordinary
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course of business, (b) has been fully paid for unless otherwise reflected in
the Financials, (c) is marketable or adequate provision for obsolescence has
been provided and (d) Seller and the Shareholders know of no reason that would
make such inventory (net of such amounts as the Company and/or the Subsidiary
has reserved on its books as of March 31, 1998) taken as a whole, not
marketable.
(k) TITLE AND CONDITION OF PROPERTIES. Neither the Company nor the
Subsidiary owns any real property, except as disclosed on SCHEDULE 4(k). Except
as disclosed on SCHEDULE 4(k), each of the Company and the Subsidiary has good
and marketable title to all assets, real, mixed, tangible and intangible,
reflected in the Financials and all assets acquired subsequent to March 31,
1998, which have not been disposed of in the ordinary course of business since
March 31, 1998, which assets are not subject to any mortgage, lien, claim,
security interest, fixed or floating charge, debenture, conditional sales
agreement, easement, right-of-way or other encumbrance, except as disclosed on
SCHEDULE 4(k). SCHEDULE 4(k) contains a complete and accurate list of all
leases and other agreements under which the Company or the Subsidiary is a
lessee of any real or personal property. Except as disclosed on SCHEDULE 4(k),
each of the real property and personal property leases and agreements is in full
force and effect and constitutes the legal, valid and binding obligation of the
parties thereto. All equipment and other tangible personal property which are
material to the business, operations or condition (financial or otherwise) of
the Company and the Subsidiary are in good operating condition and, subject to
routine maintenance and ordinary wear and tear, have been maintained in
accordance with reasonable industry standards and are suitable for the purpose
for which they are used. Except as disclosed in SCHEDULE 4(k), none of Seller,
the Shareholders or the Company is aware of, or has received notice of, the
violation of any applicable zoning regulation, ordinance or other law, order,
regulation or requirement in force on the date hereof relating to the business
of the Company or the Subsidiary or its owned or leased real or personal
properties, with which the Company or the Subsidiary has not complied.
(l) DESCRIPTION OF MATERIAL CONTRACTS. Except for contracts of
purchase and sale entered into in the ordinary course of business of the Company
and the Subsidiary, none of which is, individually or in the aggregate,
materially adverse to the Company and the Subsidiary, taken as a whole, SCHEDULE
4(l) contains a complete 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, to which the Company or the Subsidiary is a party, under which
the Company or the Subsidiary has any rights or by which it or any of its
properties is 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 $10,000; (iii) collective bargaining
agreements; (iv) bonus, profit-sharing, compensation, stock option, pension,
retirement, deferred compensation or other plans, agreements, trusts, funds or
arrangements for the benefit of employees
-13-
(whether or not legally binding); (v) sales agency, manufacturer's
representative or distributorship agreements; (vi) agreements, orders or
commitments for the purchase by the Company or the Subsidiary of materials,
supplies or finished products exceeding $5,000 in the aggregate from any one
person; (vii) agreements, orders or commitments for the sale by the Company or
the Subsidiary of its 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 and development; (x) agreements relating to
PBRA certificates of registration or licenses or other rights to use PBRA
certificates of registration; (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 which individually or in the aggregate for
any one party involve any expenditure by the Company or the Subsidiary of more
than $5,000. The Company has made available to Buyer and ABT complete and
correct copies of all written agreements, contracts, commitments, obligations
and undertakings, together with all amendments thereto, listed on the Schedules
hereto, and such Schedules contain complete and accurate descriptions of all
oral agreements listed on such Schedules. All such agreements, contracts,
commitments, obligations and undertakings are in full force and effect and,
except as disclosed in SCHEDULE 4(l), all parties to, or otherwise bound by,
such agreements, contracts, commitments, obligations and undertakings have
performed all obligations required to be performed by them to date and neither
the Company nor the Subsidiary thereof is in default thereunder and no event,
occurrence, condition or act exists which gives rise to (or which with notice or
the lapse of time, or both, could result in) a default or right of cancellation,
acceleration or loss of contractual benefits under, any such contract,
agreement, lease commitment, obligation or undertaking. There has been no
threatened cancellations thereof, and there are no outstanding disputes under
any such contract, agreement, lease, commitment, obligation or undertaking.
Except as set forth in SCHEDULE 4(l), no consent or approval of any party is
required under any such contract, agreement, commitment, obligation or
undertaking which would make any thereof not binding and in full force and
effect as of the Closing Date. Any contracts, agreements, leases, commitments or
undertakings held in the name of Seller or any Shareholder and set forth in the
Schedules hereto (the "Material Agreements") shall be assigned to either Buyer
or the Company at or prior to the Closing Date.
Except as otherwise set forth in SCHEDULE 4(l), each contract, lease,
instrument and commitment required to be described in the Schedules hereto is,
on the date hereof, and will be at the Closing, in full force and effect and is
and will constitute a valid and binding obligation of the Company or the
Subsidiary and the respective parties to such agreements, and there is not,
under any such contract, lease, instrument or commitment, any existing default
by the Company or the Subsidiary or such other parties or any event that, with
notice, lapse of time or both, would constitute a default by the Company or the
Subsidiary or such other parties in
-14-
respect of which adequate steps have not been taken to cure such default or to
prevent a default from occurring or continuing.
No agreement, contract, commitment, obligation or undertaking listed
on the Schedules hereto which the Company or the Subsidiary is a party or by
which it or any of its assets is bound or affected, except as specifically set
forth in SCHEDULE 4(l), contains any provision which materially adversely
affects or in the future may (so far as Seller, the Shareholders and the Company
can reasonably now foresee) materially adversely affect the condition,
properties, assets, liabilities, business, operations or prospects of the
Company or the Subsidiary following the date hereof and upon the Closing Date.
Furthermore, to the best of the knowledge of Seller and the Shareholders, the
material suppliers, customers and clients of each of the Company and the
Subsidiary will continue to supply and purchase from the Company and the
Subsidiary after the Closing.
(m) Default; Violations or Restrictions. The execution, delivery and
performance of this Agreement and of any agreement to be executed and delivered
by the Company in connection with the transactions contemplated hereby, 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) result in the
breach of any term or provision of the Articles or By-laws of the Company or the
Subsidiary, as amended to date, or 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,
acceleration or otherwise be in conflict with or result in a loss of contractual
benefits to the Company or the Subsidiary, 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
Company, the Subsidiary, any Shareholder or Seller is a party or by which any of
them may be bound or affected, or require any consent, approval or notice under
any law, rule or order or any such document or instrument; or result in the
creation or imposition of any lien, claim, restriction, charge or encumbrance
upon the assets of the Company or the Subsidiary or interfere with or otherwise
adversely affect the ability of the Company or the Subsidiary to carry on
business after the Closing Date on substantially the same basis as it is now
conducted by the Company or the Subsidiary
(n) COURT ORDERS AND DECREES. Neither the Company nor the Subsidiary
has received written or oral notice that there is outstanding, pending, or
threatened any judgment, order, writ, injunction or decree of any court,
governmental authority or arbitration tribunal against or affecting the Company,
the Subsidiary, the Shares or any assets of the Company or the Subsidiary.
(o) BOOKS AND RECORDS. The books and records of the Company and the
Subsidiary are, in all material respects, complete and correct and have been
maintained in accordance with good business practice. True and complete copies
of
-15-
the articles of incorporation and by-laws of the Company and the Subsidiary and
all amendments thereto and true and complete copies of all minutes, resolutions,
stock certificates and stock transfer records of the Company and the Subsidiary
are contained in the minute books and stock transfer books that have been
delivered to Buyer and ABT for inspection and will be delivered to Buyer at the
Closing. The minute books, stock certificate books, stock transfer records and
such other books and records as may be requested by Buyer, as exhibited to Buyer
and its representatives, are complete and correct in all material respects.
(p) BENEFIT PLANS.
(i) Except as disclosed in SCHEDULE 4(p), neither the Company nor the
Subsidiary is a party to or bound by, nor does the Company or the Subsidiary
have any liability or contingent liability with respect to, any Benefit Plans
that are material to the Business and that impose any binding legal obligation
on the Company. SCHEDULE 4(p) contains a true and complete list of all Benefit
Plans of the Company and the Subsidiary. None of the Benefit Plans is a
registered pension plan (as that term is defined under the Income Tax Act
(Canada). Neither the Company nor the Subsidiary has any formal plan or
commitment, whether legally binding or not, to create any additional Benefit
Plan or to modify or change any existing Benefit Plan that would affect any
Employee or former employee of the Company or the Subsidiary, except such
modification or amendment as may be required to be made to secure the continued
registration of any existing Benefit Plan with each applicable Governmental
Authority.
(ii) With respect to each of the Benefit Plans, Seller and the
Shareholders have delivered to the Buyer true and complete copies of each of the
following documents:
(A) a copy of the Benefit Plan (including all amendments thereto);
(B) a copy of all employee communications relating to the Benefit
Plan, whether or not such communications have been or are
required to be, filed with any applicable Governmental Authority:
(C) if the Benefit Plan is funded through a trust or any third party
funding arrangement, a copy of the trust or other funding
agreement (including all amendments thereto) and the latest
financial statements thereof;
(D) all contracts relating to the Benefit Plans with respect to which
the Company or the Subsidiary may have any liability, including
insurance contracts, investment management agreements,
subscription and participation agreements and record keeping
agreements.
-16-
(iii) None of the Benefit Plans provides benefits, including death or
medical benefits (whether or not insured), with respect to Employees or former
employees of the Company beyond retirement or other termination of service,
except for:
(A) coverage required by applicable law,
(B) death or retirement benefits under any Pension Plan,
(C) deferred compensation benefits accrued as liabilities in the
Financial Statements, or
(D) benefits the full cost of which is borne by the Employee or
former employee (or his beneficiary).
(iv) To the best of the knowledge of Seller and the Shareholders,
there are no pending, threatened or anticipated claims by or on behalf of or
against any of the Benefit Plans, including claims by or on behalf of any of the
Benefit Plans against any person (other than routine claims for benefits).
(v) With respect to each Benefit Plan that is funded wholly or
partially through an insurance policy, except as disclosed on SCHEDULE 4(p),
there will be no liability of the Company or the Subsidiary as of the Closing
Date, under any such insurance policy or ancillary agreement with respect to
such insurance policy in the nature of a retroactive rate adjustment, loss
sharing arrangement or other actual or contingent liability arising wholly or
partially out of events occurring prior to the Closing time. With respect to
each Benefit Plan not funded through an insurance policy, each of the Company
and the Subsidiary has either fully funded such Benefit Plan through a trust or
has made appropriate provision for all liability of the Company and the
Subsidiary thereunder in the Financials.
(vi) As used in this Section 4(p) the following words shall have the
meanings ascribed to them:
"Benefit Plans" means all bonus, deferred compensation, incentive
compensation, share purchase, share appreciation and share option, severance or
termination pay, hospitalization or other medical benefits, life or other
insurance, dental, disability, salary continuation, vacation, supplemental
unemployment benefits, profit-sharing, mortgage assistance, employee loan,
employee assistance, pension, retirement or supplemental retirement plan or
agreement (including without limitation any defined benefit or defined
contribution pension plan and any group registered retirement savings plan), and
each other employee benefit plan or agreement (whether oral or written, formal
or informal, funded or unfunded) sponsored, maintained or contributed to or
required to be contributed to by the
-17-
Company and/or the Subsidiary for the benefit of any of the Employees or former
employees of the Company and/or the Subsidiary, whether or not insured and
whether or not subject to any Applicable Law, except that the term "Benefit
Plans" shall not include any statutory plans with which the company is required
to comply, including without limitation the Canada/Quebec Pension Plan or plans
administered pursuant to applicable provincial health tax, workers' compensation
and unemployment insurance legislation.
"Employees" means those employees who are employed by the Company
and/or the Subsidiary in their respective businesses at the Closing.
"Applicable Law" means any domestic or foreign statute, law (including
the common law), ordinance, rule, regulation, restriction, regulatory policy or
guideline, by-law (zoning or otherwise), or order, or any consent, exemption,
approval or license of any Governmental Authority, that applies in whole or in
part to the Company, the Subsidiary, any business of the Company and/or the
Subsidiary or the manner in which any such business is carried on.
"Governmental Authority" means any domestic or foreign government
whether federal, provincial, state or municipal and any governmental agency,
governmental authority, governmental tribunal or governmental commission of any
kind whatever.
(q) INSURANCE. SCHEDULE 4(q) contains a correct and complete
description of all policies of insurance maintained by or on behalf of the
Company and/or the Subsidiary or in which the Company and/or the Subsidiary is
named as an insured party, beneficiary or loss payable payee. Each of the
Company and the Subsidiary have at all times prior to the date hereof
maintained, and will at all times prior to the Closing Date, maintain insurance
coverage with respect to their respective properties, in respect of liabilities
and risks prudently insured against. The policies described in SCHEDULE 4(q)
are outstanding and in force as of the date hereof, cover risks normally insured
against and are in amounts normally carried and there is no default notice of
cancellation or non-renewal with respect to any material provision contained in
any such policy.
SCHEDULE 4(q) contains a correct and complete description of all such
policies of insurance held by or on behalf of the Company and/or the Subsidiary,
premiums paid for such insurance during the last three years and all outstanding
insurance claims in excess of $5,000 made by or against the Company and/or the
Subsidiary for damage to or loss of property or income which have been referred
to insurers or which Seller, the Shareholder or the Company believe to be
covered by commercial insurance. SCHEDULE 4(q) also contains a list of all
general comprehensive liability policies carried by the Company and/or the
Subsidiary for the past three years, including excess liability policies and any
agreements, arrangements or commitments under which the Company and/or the
Subsidiary
-18-
indemnifies any other person or is required to carry insurance for the benefit
of any other person.
(r) RIGHTS OF THIRD PARTIES. Other than as disclosed in SCHEDULE 4(r)
attached, or specifically provided for in this Agreement, neither the Company
nor the Subsidiary has 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 Company or the Subsidiary, and no person or other
corporation has any right to possession, use or occupancy of any of the property
of the Company or the Subsidiary.
(s) POWERS OF ATTORNEY. Except as disclosed in SCHEDULE 4(s), there
are no persons, firms, associations, corporations or business organizations
holding general or special powers of attorney from the Company and/or the
Subsidiary.
(t) LABOR MATTERS. Neither the Company nor the Subsidiary is a party
to any collective bargaining agreement with any labor union or association.
There are no discussions, negotiations, demands or proposals that are pending or
have been conducted or made with or by any labor union or association, and there
are not pending or threatened any labor disputes, strikes or work stoppages that
may have a material adverse effect upon the continued business or operation of
the Company and/or the Subsidiary. To the best of the knowledge of Seller and
the Shareholders, each of the Company and the Subsidiary (i) is in compliance
with all applicable Canadian federal and provincial laws respecting employment
and employment practices, terms and conditions of employment and wages and
hours, and (ii) is not engaged in any unfair labor practices.
(u) RELATIONSHIPS WITH VENDORS AND CUSTOMERS. Neither the Company,
Seller, or any Shareholder has knowledge of any present or future conditions or
state of facts or circumstances which would materially adversely affect the
Company or the Subsidiary on or after the Closing Date. The relationships of
the Company and the Subsidiary with their respective customers, clients and
vendors are satisfactory, and neither the Company, Seller nor any Shareholder
has any 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. Neither the Company, Seller nor any Shareholder has
knowledge of any material outstanding claims of any of its customers or clients
presently outstanding, pending or threatened against the Company and/or the
Subsidiary. Neither the Company, Seller nor any Shareholder has any knowledge
of any present or future condition or state of facts or circumstances which
would prevent the business of the Company and/or the Subsidiary from being
carried on by Buyer after the Closing Date in essentially the same manner as it
is presently being carried on.
(v) APPROVALS AND AUTHORIZATIONS. Each the Company and the Subsidiary
has obtained all necessary consents, approvals and authorizations in connection
with the transactions contemplated hereby which are required by law or otherwise
-19-
in order for the Company and the Subsidiary to continue all of its present
businesses as currently conducted following the Closing Date.
(w) COMPENSATION PLANS. SCHEDULE 4(w) contains a correct and complete
description of all compensation plans and arrangements; bonus and incentive
plans and arrangements; deferred compensation plans and arrangements; stock
purchase and stock option plans and arrangements; hospitalization and other
life, health or disability insurance or reimbursement programs; holiday, sick
leave, severance, vacation, tuition reimbursement, personal loan and product
purchase discount policies and arrangements, policy manuals and any other plans
or arrangements providing for benefits for employees of the Company and the
Subsidiary other those disclosed on SCHEDULE 4(w).
(x) GOVERNMENTAL LICENSES. SCHEDULE 4(x) contains a correct and
complete list of all governmental and administrative consents, permits,
appointments, approvals, licenses, certificates and franchises which are (i)
necessary for the operation of the Company and the Subsidiary, and (ii) required
in connection with the execution, delivery or performance of this Agreement by
Seller and the Shareholders, all of which have been duly obtained by the
Company, Seller or the Shareholders, as applicable, and are in full force and
effect.
(y) BROKERS. No agent, broker, investment banker, person, or firm
acting on behalf of any of Seller, the Shareholders, or any firm or corporation
affiliated with any of them, or under its authority, is or will be entitled to a
financial advisory fee, brokerage commission, finder's fee or other like payment
in connection with the transactions contemplated hereby, except for the broker
acting for Seller, whose payment is the sole responsibility of Seller.
(z) COMPLIANCE WITH LAWS.
(i) Except as disclosed in SCHEDULE 4(z), the operations and
activities of each of the Company and the Subsidiary has previously and continue
to comply with all applicable United States and Canadian federal, state,
provincial and municipal laws, statutes, codes, ordinances, rules, regulations,
permits, guidelines, 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 relating to occupational safety and health of
employees of the Company and the Subsidiary. Neither the ownership of the
Company or the Subsidiary, nor the conduct of the business of the Company or the
Subsidiary as currently 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 articles of incorporation or by-laws of the Company or the Subsidiary as
presently in effect, or any lien, security interest, encumbrance, mortgage, deed
of trust, lease, license, agreement, understanding, or Laws to which the Company
or the Subsidiary is a
-20-
party or by which it may be bound or affected. Neither the Company nor the
Subsidiary has received any notice or any other communication from any third
party asserting a failure to comply with any Laws, nor has the Company or the
Subsidiary received any notice that any governmental authority or other person
intends to seek enforcement against the Company and/or the Subsidiary to compel
compliance with any such Laws.
(ii) There are no existing claims, orders, directives, notices or
requests or, to the best of knowledge of Seller and the Shareholders, potential
claims, orders, directives, notices or requests which may exist against the
Company or the Subsidiary, for, with respect to, or as a direct or indirect
result of, the presence on, at or under, or the escape, seepage, leakage,
spillage, discharge, deposit or emission discharging, from the real property of
the Company of any "Hazardous Material."
(iii) Except as disclosed in SCHEDULE 4(z), since the date first
acquired, controlled or leased by the Company, none of Seller, the Company, the
Subsidiary or the Shareholders has placed any "Hazardous Material" on or under
any real property, at any time owned, controlled or leased by the Company and/or
the Subsidiary, and, to the best of knowledge of Seller and the Shareholders,
there has been no "Hazardous Material" on or under the real property owned,
controlled or leased by the Company or the Subsidiary.
(iv) Neither the Company or the Subsidiary, nor to the best of the
knowledge of the Sellers and the Shareholders, any officer, employee or agent of
the Company or the Subsidiary acting on its behalf, nor any other person acting
on its behalf within the last three (3) years, has, directly or indirectly,
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 Company or the Subsidiary (or assist the Company or the Subsidiary in
connection with any actual or proposed transaction) which (i) might subject the
Company or the Subsidiary to any damage or penalty in any civil, criminal or
governmental litigation or proceeding, (ii) if not given in the past might have
had an adverse effect on the assets, business or operation of the Company or the
Subsidiary, or (iii) if not continued in the future, might adversely affect the
assets, the business or the operations or prospects of the Company or the
Subsidiary, or which might subject the Company or the Subsidiary to suit or
penalty in any private or governmental litigation or proceeding.
(aa) GUARANTEES. Except as disclosed in SCHEDULE 4(cc), neither
Seller nor any of the Shareholders have personally guaranteed or otherwise
become obligated to pay, discharge or satisfy any obligation of the Company or
the Subsidiary.
(bb) BENEFITS. The particulars of all accrued holiday, vacation, sick
or other compensation or benefits to which employees of the Company or the
Subsidiary are entitled to receive from the Company or the Subsidiary as of June
30, 1998 are set
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forth on SCHEDULE 4(bb). The Company has an employee manual which sets forth the
Company's policies with respect to its employees of the Company and the
Subsidiary, and there are no policies other than as set forth in SCHEDULE 4(bb).
(cc) SCHEDULES. The respective Schedules to this Agreement (the
"Schedules") are complete and accurate and fully and accurately disclose all
information required to be disclosed therein pursuant to this Section 4.
Sellers and the Shareholders have delivered to ABT and Buyer complete and
correct copies of the documents and other material from which such Schedules
were compiled.
(dd) ACCURACY. No representation, warranty, covenant or statement by
the Seller and/or the Shareholders in this Agreement, including the Schedules
and Exhibits hereto, any of the Other Documents and the certificates furnished
or to be furnished to ABT and 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.
(ee) NO LEGAL OR TAX ADVICE. Neither Seller nor the Shareholders are
relying on any legal or tax advice from Buyer or ABT in connection with any of
the transactions contemplated hereby.
SECTION 5. REPRESENTATIONS AND WARRANTIES OF BUYER AND ABT. Each of Buyer and
ABT jointly and severally warrants and represents to Seller as follows (as used
herein, "Buyer's or ABT's best knowledge" or "to the best knowledge of Buyer or
ABT" shall mean information actually known by Buyer without due inquiry):
(a) CAPACITY. Each of Buyer and ABT has all necessary corporate
power and authority to execute and deliver this Agreement and the other
documents required to be executed by Buyer or ABT in connection herewith, to
perform its obligations hereunder and thereunder and to consummate the
transactions contemplated hereby and thereby. 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
memorandum of association or articles of association of Buyer or the certificate
of incorporation or by-laws of ABT or constitute a default under any material
law, rule, regulation, indenture, instrument, mortgage, deed of trust, or other
agreement or instrument to which Buyer or ABT is a party or by which either is
bound.
(b) ORGANIZATION.
(i) Buyer is a limited company duly incorporated, validly existing and
in good standing under the laws of the Province of Nova Scotia, and Buyer has
the corporate power and authority to carry on its business as now conducted and
to own, or lease and operate the assets now used by it in connection therewith.
The
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Buyer 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 requires such qualification.
(ii) ABT is a corporation duly incorporated, validly existing and in
good standing under the laws of the State of Nevada, and 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.
(c) CONSENTS AND APPROVALS. Except as disclosed in SCHEDULE 5(c), no
governmental license, permit or authorization, and no registration or filing
with, any court or other governmental authority is required in connection with
the execution, delivery or performance of this Agreement by Buyer or ABT. Each
of Buyer and ABT has taken all necessary corporate action to authorize the
execution and delivery by it of this Agreement and the other agreements and
instruments to be executed and delivered by is pursuant to this Agreement, and
no consent or other approval of any other party is required to be obtained by
Buyer or ABT in connection with the transactions contemplated hereby.
(d) LEGAL PROCEEDINGS. Neither Buyer nor any of its executive officers or
directors, nor ABT nor any of its officers or directors, 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, the performance of its obligations hereunder or the consummation
of the transactions contemplated hereby or that might result in any material
adverse change in the financial condition, business or properties of Buyer and
ABT, and to the best of knowledge of Buyer and ABT, no such litigation,
arbitration, proceeding or investigation is threatened.
(e) BINDING OBLIGATION. This Agreement has been duly executed and delivered
by Buyer and ABT and constitutes the legal, valid and binding obligation of
Buyer and ABT, enforceable against 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.
(f) BROKERS; FINDERS. No agent, broker, investment banker, person or
firm acting on behalf of Buyer or ABT or any firm or corporation affiliated with
Buyer or ABT or under the authority of either Buyer or ABT is or will be
entitled to any brokers' or finders' fee or any other commission or similar fee
in connection with any of the transactions contemplated hereby.
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(g) ACCURACY. No representation, warranty, covenant or statement by Buyer
or ABT in this Agreement, including the Schedules and Exhibits hereto and the
certificates furnished or to be furnished to Seller and the Shareholders
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 6. SURVIVAL OF REPRESENTATIONS AND WARRANTIES; INDEMNIFICATION.
(a) SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All representations
and warranties made by the Seller and the Shareholders, or by the Buyer and ABT
in this Agreement or any of the Other Documents, including, without limitation,
all representations and warranties made in any Exhibit or Schedule hereto or
certificate delivered hereunder, shall survive the Closing and any investigation
made with respect thereto until the second anniversary of the Closing Date (the
"Survival Date"); provided that (i) all representations and warranties made by
Seller and the Shareholders in Section 4(z) hereof shall survive the Closing and
any investigation made with respect thereto until and through one (1) year after
the expiration of the applicable statute of limitations (the "Extended Survival
Date"); (ii) all representations and warranties made by Seller and the
Shareholders in Section 4(i) hereof shall survive until the day which is 90 days
after the relevant Governmental Authority shall no longer be entitled to
reassess liability for Taxes against the Company and/or the Subsidiary in
respect of any fiscal year ended on or prior to the Closing Date, (iii) all
representations and warranties as to the title or ownership of the Shares shall
survive the Closing and any investigation made with respect thereto without
limitation; and (iv) any representation and warranty, with respect to which a
claim for indemnity has been made pursuant to this Section 6 on or before
expiration date of the relevant survival period, if any, shall continue in full
force and effect. "Governmental Authority" and "Taxes" shall have the meanings
ascribed to them in Section 4(i).
(b) INDEMNITY BY SELLER AND THE SHAREHOLDERS. Provided that the
transactions contemplated by this Agreement are consummated, Seller and the
Shareholders hereby, jointly and severally, agree 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)
("Claims") arising out of or relating to Claims made prior to the Survival Date
or the Extended Survival Date, if applicable, in the event that it is determined
that such Claims arise out of or from or are based upon (i) the inaccuracy in
any material respect of any representation or warranty contained in Section 4 or
in any agreement, document or certificate executed and delivered by Seller and
any of the Shareholders pursuant hereto made by Seller and the Shareholders; and
(ii) the non-performance by the Seller and the Shareholders in any material
respect of any covenant, agreement or obligation to be performed by the Seller
and/or the Shareholders under this
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Agreement or any such agreement, instrument or certificate executed and
delivered by Seller and/or any of the Shareholders.
In addition to the other indemnities provided hereunder, from and
after Closing, Seller and the Shareholders, jointly and severally, agree to
indemnify and save harmless ABT and the Buyer, and any successors thereto, of
and from any Claims under or pursuant to:
(i) any incorrectness in, or breach of, or default under any
representation or warranty made by Seller and the Shareholders in Section 4(i)
hereof; and
(ii) any assessment or reassessment for Taxes relating to the Company,
the business carried on by the Company, or the property of the Company for any
taxation year ending on or before the Effective Date to the extent that the
amount of taxes payable as a result of such assessment or reassessment exceeds
the amount accrued as a liability for such taxes in the Financials. "Taxes"
shall have the meaning ascribed in Section 4(i).
(c) INDEMNIFICATION BY BUYER. Provided that the transactions
contemplated by this Agreement are consummated, the Buyer hereby agrees to
indemnify, defend and hold harmless Seller and the Shareholders from and against
all Claims arising out of or from or based upon (i) the inaccuracy in any
material respect of any representation or warranty contained in Section 5 by
Buyer; (ii) the non-performance by the Buyer in any material respect of any
covenant, agreement or obligation to be performed by Buyer under this Agreement;
and (iii) any liabilities arising out of the operation of the business of the
Company by Buyer after the Closing Date.
(d) DEFENSE OF CLAIMS. Whenever any Claim shall arise for
indemnification hereunder, the party entitled to indemnification (the
"Indemnitee") shall notify the indemnifying party (the "Indemnitor") in writing
within 30 days after the Indemnitee has actual knowledge that it is entitled to
indemnification of such Claim 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.
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 his expense and through counsel of
his own choosing if he gives written notice of his 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.
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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 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 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.
Notwithstanding any provision of this Agreement to the contrary, no
claim for indemnification pursuant to this Section 6, by the Indemnitee shall be
asserted or claimed except to the extent any Claim exceeds, in the aggregate,
the sum of $10,000.
(e) 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 7. COVENANTS OF SELLER AND THE SHAREHOLDERS. Seller and the
Shareholders hereby, jointly and severally, covenant and agree as follows:
(a) FURTHER ASSURANCES. From time to time following the Closing Date,
Seller will, and the Shareholders will cause Seller to, without further
consideration, execute and deliver such additional instruments and take such
other action as Buyer may reasonably require to convey, assign, transfer and
deliver the Shares and otherwise to carry out the terms of this Agreement.
(b) ACCESS TO THE COMPANY; CONFIDENTIALITY.
(i) Subsequent to the date hereof and prior to the Closing Date,
Seller will, and the Shareholders will cause Seller to, continue to give to
Buyer and ABT, their counsel, accountants, and other representatives, full and
free access to all
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properties, books, contracts, commitments and records of the Company and the
Subsidiary so that Buyer and ABT may have full opportunity to make such
investigation as they shall desire.
(ii) From and after the date of this Agreement until the Closing or
the termination of this Agreement, Seller and the Shareholders will, and will
cause the Company and the Subsidiary, affiliates, officers, directors and
employees, to maintain the confidentiality of all documents and information of a
confidential nature disclosed to the by Buyer and/or ABT in the course of their
negotiations and Buyer's and ABT's due diligence review and will in no event use
any 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 each party may have
delivered to the other party and will not use any confidential information from
Buyer or ABT for their own benefit.
(c) CONDUCT OF BUSINESS PENDING CLOSING. From the date of this Agreement
to the Closing Date, except as expressly disclosed in the Schedules to this
Agreement, Seller and the Shareholders will cause the Company and the Subsidiary
to conduct their operations as engaged in at the date of this Agreement
according to its ordinary course of business, to 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.
(d) CLOSING DOCUMENTS. Provided that Buyer and ABT have fully performed
their obligations and the conditions precedent to Seller's obligation to sell
the Shares have been satisfied, Seller, the Shareholders and the Company will
execute and deliver all instruments and documents required as conditions
precedent to the Closing and take all action required to carry out the terms of
this Agreement and to consummate the transactions contemplated hereby.
(e) TAX RETURNS. Buyer will cause to be duly and timely filed all
Canadian federal and provincial and other tax returns of any nature required to
be filed by the Company and/or the Subsidiary in the proper governmental
authorities and cause to be duly and timely paid all taxes shown to be due
thereon.
SECTION 8. COVENANTS OF BUYER. The Buyer and ABT hereby covenant and agree as
follows:
(a) CLOSING DOCUMENTS. The Buyer and ABT will execute and deliver all
instruments and documents required as a condition precedent to Closing and take
all actions required to carry out the terms of this Agreement and to consummate
the transactions contemplated hereby.
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(b) NONINTERFERENCE. The Buyer and ABT will 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
5 of this Agreement, or (ii) would interfere with Buyer'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.
(c) CONFIDENTIALITY. From and after the date of this Agreement until the
Closing or the termination of this Agreement, Buyer, ABT and their
representatives will maintain the confidentiality of all documents and
information of a confidential nature disclosed by Seller or the Shareholders in
the course of their negotiations and Buyer's and ABT's due diligence review, and
will in no event use any confidential information for any purpose other than for
the evaluation of the transactions contemplated hereby and the financing of this
transaction. In the event this Agreement is terminated, Buyer and ABT will
destroy all copies of documentation which they received from Seller and/or the
Shareholders, other than any information pertaining or in any way relating to
the breach by Seller and/or the Shareholders of any of their representations,
warranties and agreements hereunder, and will not use any confidential
information for their own benefit other than for the purpose of defending
against any Claim asserted by Seller and/or the Shareholders.
SECTION 9. CONDITIONS PRECEDENT TO THE OBLIGATIONS OF BUYER AND ABT. The
obligations of Buyer and ABT under this Agreement are subject to the following
conditions:
(a) There shall not have been any breach of the representations,
warranties, covenants and agreements of Seller and the Shareholders contained in
this Agreement or the Schedules and Exhibits hereto, and all such
representations and warranties shall be true and complete at all times on and
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 and the Shareholders shall have performed and complied
with all covenants, agreements and conditions required by this Agreement to be
performed or complied with by them 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 Buyer and ABT and its counsel.
(c) There shall have been no material adverse change in the condition
(financial or otherwise), business, assets, liabilities, properties, results of
operations, earnings, or prospects of the Company and the Subsidiary, taken as a
whole.
(d) There shall be no outstanding actions or threats of action by any
party that may materially adversely affect the condition (financial or
otherwise), business,
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assets, liabilities, properties, results of operations, earnings or prospects of
the Company and the Subsidiary, taken as a whole.
(e) The Buyer and ABT shall have received certificates dated the
Closing Date and signed by Seller and the Shareholders, certifying that the
conditions specified in subsections (a), (b), (c) and (d) above have been
fulfilled, except to the extent that any nonfulfillment was disclosed in writing
to Buyer prior to the Closing Date.
(f) Seller and the Shareholders shall have obtained and delivered to
Buyer and ABT any required consents or approvals of governmental authorities and
third parties whose consent or approval is required for the execution, delivery
or performance of this Agreement and/or the consummation of the transaction
contemplated hereby.
(g) Buyer and ABT shall have received originals or certified copies,
reasonably satisfactory in form and substance to Buyer and ABT, of all such
corporate documents of the Company and the Subsidiary as Buyer and ABT shall
reasonably require, including without limitation the following:
(i) the articles of incorporation or other incorporation documents
of the Company and the Subsidiary and all amendments thereto and restatements
thereof certified as of a recent date by the Director under the Business
Corporations Act (Ontario) or other appropriate official of the jurisdiction of
its incorporation;
(ii) the By-laws of each of the Company and the Subsidiary and all
amendments thereto and restatements thereof certified as of the Closing Date by
an officer of the Company;
(iii) certificates of status or good standing issued, as applicable,
by the Director under the Business Corporations Act (Ontario) or other
appropriate official of the jurisdiction of incorporation, certifying as of a
recent date that each of the Company and the Subsidiary is in existence under
the laws of the jurisdiction of its incorporation and has not been dissolved;
(iv) copies of the resolutions of the board of directors and
shareholders of Seller authorizing and approving the execution and delivery by
Seller of this Agreement and of the agreements and instruments provided for
herein, the performance by the Seller of its obligations under this Agreement
and such other instruments and agreements, certified as of a recent date by the
Secretary or another officer of Seller;
(v) a certificate of incumbency identifying the officers of the
Seller authorized to execute this Agreement and the other agreements and
instruments to be executed pursuant hereto immediately before Closing;
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(vi) the articles of Seller and all amendments thereto and
restatements thereof certified as of a recent date by the Director under the
Business Corporations Act (Ontario);
(vii) the By-laws of Seller and all amendments thereto and
restatements thereof certified as of the Closing Date by the secretary or
another officer of Seller;
(viii) a certificate of status of the Director under the Business
Corporations Act (Ontario) certifying as of a recent date that Seller is in
existence under the law of that Province and has not been dissolved;
(ix) copies of resolutions of the board of directors Seller
authorizing and approving the execution and delivery by Seller of this Agreement
and of the agreements and instruments provided for herein, the performance by
Seller of its obligations hereunder and thereunder and the consummation of the
transactions contemplated hereby and thereby, certified as of a recent date by
the Secretary or another officer of Seller; and
(h) The Buyer shall have received a written opinion of counsel for Seller
and the Shareholders dated as of the Closing Date, in the form of EXHIBIT 9(h)
hereto.
(i) If requested by Buyer, the Company, the Seller and the Shareholders
will have executed and delivered to the Buyer assignments or consents to all of
the leases described in SCHEDULE 4(k).
(j) The Company shall have received the assignments of Material
Agreements, in accordance with SECTION 4(l) hereof and shall have delivered the
consent of any third party required under any contract, agreement, commitment,
lease or undertaking disclosed on SCHEDULE 4(l) hereto.
(k) If requested by Buyer, Seller and/or Shareholders shall have executed
and delivered to Buyer the assignment or endorsement in favor of Buyer or the
Company of coverage under the insurance policies maintained by the Seller and/or
the Shareholders or any of them covering the Company described to in SCHEDULE
4(q) to this Agreement.
(l) The Company shall have entered into employment agreements or otherwise
made arrangements that they deem satisfactory with such "key personnel" of the
Sellers as the Buyer deems necessary.
(m) The Shareholders and Xxxx Eros shall have executed and delivered to
Buyer and ABT the Employment Agreements and Non-Competition required to be
executed and delivered at Closing pursuant to Section 3.
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(n) The Shareholders, Buyer, ABT and the Escrow Agent shall have entered
into an Escrow Agreement satisfactory to Buyer, ABT and their counsel.
(o) Prior to the Closing, Buyer shall have received unaudited consolidated
financial statements for the Company and the Subsidiary as of and for the period
ended June 30, 1998.
(p) The Shareholders shall have executed and delivered to ABT a Lock-Up
Agreement in the form of Section 3(c) hereto and the Company and Ontario Seed
Cleaners and Dealers Limited shall entered into a lease for the land and
buildings occupied by the Company in Brampton, Ontario satisfactory in form and
substance to Buyer and ABT.
(q) The Company shall have entered into a new lease or extension of its
existing lease for its Brampton, Ontario premises at a market value rental
acceptable to Buyer and ABT.
SECTION 10. CONDITIONS PRECEDENT TO SELLER'S AND THE COMPANY'S OBLIGATIONS.
The obligations of Seller and the Shareholders under this Agreement are subject
to the following conditions:
(a) There shall not have been any breach of the representations,
warranties, covenants and agreements of 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 shall have performed and complied with all
agreements and conditions required by this Agreement to be performed or complied
with by them. All documents and instruments required in connection with this
Agreement shall be reasonably satisfactory in form and substance to Seller.
(c) Seller shall have received a certificate dated the Closing Date
from each of Buyer and ABT, certifying that the conditions specified in
Paragraphs 10(a) and 10(b) above have been fulfilled.
(d) Seller shall have received a written opinion of Snow Xxxxxx Xxxxxx
P.C., counsel for Buyer and ABT, dated as of the Closing Date, in the form of
EXHIBIT 10(d) hereto, which as to matters of Canadian and Ontario law may rely
on the opinion of Fasken Xxxxxxxx Xxxxxxx, Canadian special counsel to ABT and
Buyer.
(e) Seller shall have received originals or certified copies, reasonably
satisfactory in form and substance to Seller, of the following corporate
documents of Buyer and ABT:
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(i) a certificate of existence certifying as of a recent date that each of
Buyer and ABT is a limited company or corporation, as the case may be, duly
organized and validly existing under the laws of its jurisdiction of
incorporation;
(ii) copies of the resolutions of the Board of Directors of each of
Buyer and ABT authorizing and approving the execution and delivery by Buyer and
ABT of this Agreement and the agreements and instruments provided for herein,
the performance by Buyer and ABT of their obligations hereunder and thereunder,
certified as of a recent date by the Secretary or another officer of Buyer and
ABT, respectively; and
(iii) certificates of incumbency identifying the officers of Buyer
and ABT authorized to execute and deliver this Agreement and the other
agreements and instruments to be executed and delivered by Buyer and ABT
pursuant hereto; and
(f) ABT shall have executed and delivered to the Shareholders the
Price Guaranty Agreement in the form of EXHIBIT 3(d)(1) hereto and caused the
Company to execute and deliver to the Shareholders the Security Agreement in the
form of EXHIBIT 3(d)(2) hereto.
(g) Buyer and ABT shall have executed and delivered the Employment Agreements
required to be executed and delivered pursuant to Section 3 hereof and ABT shall
grant the non-qualified stock options to Xxxx Eros and Xxxxxxx Eros in pursuant
to the Non-Qualified Stock Option Agreements attached hereto as Exhibits
10(g)(i) and (ii).
SECTION 11. CONDITIONS PRECEDENT TO OBLIGATIONS OF SELLER, BUYER AND ABT. The
obligations of Seller, the Shareholders, Buyer and ABT to consummate
transactions contemplated hereby shall be subject to the fulfillment at or prior
to the Closing Date of the following conditions:
(a) Due Diligence. Buyer and ABT shall have been afforded the opportunity to
complete their due diligence and conduct a review of the business and prospects
of the Company, Seller and the Shareholders shall have been afforded the
opportunity to conduct a review of the business and prospects of ABT, and shall
be reasonably satisfied as to such business and prospects.
(b) No Injunctions. No action or proceeding shall have been instituted or
threatened by any governmental 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.
(c) Consents. Any consent to the transaction considered by Seller, Buyer or
ABT to be necessary or advisable under any agreement or contract, the
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withholding of which might have, in the judgment of Seller, the Shareholders,
Buyer or ABT, a material adverse effect on the financial condition of the other
party, shall have been obtained.
(d) Corporate Proceedings. All corporate and other proceedings in connection
with the transactions contemplated by this Agreement, and all documents and
instruments incident thereto, shall be reasonably satisfactory in substance and
form to Seller, the Shareholders, Buyer, ABT and their respective counsel, and
Seller, the Shareholders, Buyer, ABT and their respective counsel shall have
received all certificates, documents and instruments, or copies thereof,
certified if requested, as may be reasonably requested.
SECTION 12. TERMINATION. This Agreement may be terminated at any time prior to
the Closing Date:
(a) By written consent of Seller, Buyer and the Company, properly authorized
by their respective Boards of Directors and the Shareholders.
(b) By Buyer and ABT or by Seller and the Shareholders if the transactions
contemplated hereby have not been consummated by September 11, 1998, unless
extended by mutual consent.
(c) By Buyer and ABT if since March 31, 1998 there has been a material
adverse change in the condition (financial or otherwise), business, assets,
liabilities properties, results of operations, earnings or prospects of the
Company and the Subsidiary, taken as a whole.
SECTION 13. BUYER'S OBLIGATIONS AT CLOSING. At the Closing, in addition to
fulfilling the conditions to closing appearing in this Agreement, Buyer shall
deliver to Seller the Purchase Price as more specifically described in Section 3
hereof, together with all other documents and agreements required to be
delivered by it hereunder.
SECTION 14. SELLER'S OBLIGATIONS AT CLOSING. At the Closing, in addition to
fulfilling the conditions to closing appearing herein, Seller shall deliver to
Buyer:
(a) certificate(s) representing the Shares, free of all liens, security
interests, claims and other encumbrances (i) properly endorsed in blank, or with
stock powers executed in blank, and in either case, with the signatures thereon
guaranteed by a Canadian chartered bank, with any transfer, stamp or similar
taxes upon the transfer of the shares to Buyer paid in full by Seller, or (ii)
registered in the name of Buyer, together with a copy of a resolution of the
board of directors of the Company consenting to the transfer of the Shares to
Buyer, duly certified by the Company's Secretary;
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(b) all original minute books, stock books, stock transfer ledger, canceled
stock certificates, corporate seals and financial records and statements of the
Company; and
(c) if requested by Buyer, resignations, to be effective on delivery, of all
officers and directors of the Company.
SECTION 15. SUBSEQUENT EVENTS. Buyer may receive, at its own expense, audited,
consolidated financial statements of the Company and the Subsidiary ("Audited
Financial Statements"), certified by KPMG Peat Marwick LLP, independent
certified public accountants, for all periods required of Buyer under the rules
and regulations of the Securities and Exchange Commission (the "Rules"). Seller
and the Shareholders hereby agree to provide Buyer and their accountants with
full and free access to the books and records of the Company and to cooperate
fully with all such representatives of Buyer so that the Audited Financial
Statements may be prepared on a timely basis.
SECTION 16. PARTIES IN INTEREST. This Agreement shall be binding upon and
shall inure to the benefit of the parties and their successors, assigns and
legal representatives. Nothing herein expressed or implied is intended or shall
be construed to confer upon or to give any person, other than the parties
hereto, any rights or remedies under or by reason hereof.
SECTION 17. ENTIRE AGREEMENT. This Agreement, 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 18. GOVERNING LAW. This Agreement and all rights and obligations
hereunder shall be governed by, and construed in accordance with, the laws of
the Province of Ontario, applicable to agreements made and to be performed
wholly within said province, without regard to the conflict of laws principles
of such Province.
SECTION 19. EXPENSES. Buyer, ABT, Seller and each of the Shareholders will
each pay its, his or her own expenses incidental to the preparation of this
Agreement, the carrying out of the provisions of this Agreement and the
consummation of the transactions contemplated hereby.
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SECTION 20. 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 Arbitration and Mediation
Institute of Ontario Inc. (the "Institute") or such other mediation service as
is mutually agreeable to the parties to the dispute under either the Institute's
rules or such other commercial mediation rules are mutually agreeable to the
parties to the dispute. The mediation shall take place in Toronto, Ontario with
representatives of the parties present with full authority to negotiate a
settlement. Unless otherwise agreed by all parties to the dispute, the parties
must participate in the mediation process with a neutral mediator for at least
ten hours over at least two 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 arbitration.
Thereafter, any other unresolved dispute, including any question regarding the
existence of this Agreement, its existence, validity, interpretation or
termination, shall be submitted to and finally resolved by arbitration in
Ontario under the International Commercial Arbitration Act (Ontario) (the
"Act"), as amended from time to time and any statute substituted therefor. The
rules and procedures set out in the Act shall apply except to the extent that
they are modified by the rules for arbitration set out in EXHIBIT 20.
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 Ontario, Canada.
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.
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.
SECTION 21. 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
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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 22. NOTICES.
(a) All notices, requests, consents and demands by the parties hereunder
shall be delivered by hand, by facsimile transmission, confirmed by a copy of
the facsimile transmission sent by overnight courier, by recognized national
overnight courier, or by deposit in the mail, postage prepaid, by express or
priority mail, return receipt requested, addressed to the party to be notified
at the addresses set forth below:
(i) if to Seller and the Shareholders to:
Xx. Xxxxxxx X. Xxxx
X.X. 0
Xxxxxx, Xxxxxxx X0X IK0
Telecopier No.: (000)000-0000
with a copy to:
Holmested & Xxxxxx
0 Xxxx Xxxxxx Xxxx
Xxxxx 0000
Xxxxxxx, Xxxxxxx X0X 0X0
Attention: Xxxxxx X. Xxxxx, Q.C.
Telecopier No.: (000)000-0000
(ii) if to Buyer or ABT to:
Xxxxxxxx Seeds International Company
AgriBioTech, Inc.
000 Xxxxxxxxx Xxxx Xxxxx
Xxxxxxxxx, Xxxxxx 00000
Attention: Xxxxxx X. Xxxxxx, CEO
Telecopier No.: (000) 000-0000
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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 23. NON-WAIVERS. 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; 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 24. ASSIGNMENT. This Agreement may not be assigned by any party without
the prior consent of the other parties.
SECTION 25. DISCLOSURE. From and after the date of this Agreement until the
Closing or the termination of this Agreement, neither nor either of the
Shareholders and Seller will (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 Shares or the sale of all
or a substantial portion of the assets of the Company with anyone other than
Buyer and ABT; or (ii) discuss the sale of the Shares with anyone other than
Buyer and ABT and officers and directors of the Company and advisors to Seller
and the Shareholders and (iii) unless otherwise required by law or the
requirements of any applicable stock exchange, make any public announcement
without prior approval of the text of such announcement by Buyer and ABT.
SECTION 26. MISCELLANEOUS.
(a) FURTHER ASSURANCES: Each of the parties hereto shall use its best
efforts to take or cause to be taken, and to cooperate with the other party
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. Without limiting the generality of the foregoing, Seller and Buyer
shall cooperate with and provide assistance to the other in connection with the
preparation and filing of all United
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States and Canadian federal, state, provincial, local and foreign income tax
returns which relate to the Company and/or the Subsidiary and relate to pre-
Closing periods but which are not required to be filed until after the Closing,
and shall also cooperate with and provide assistance to the other or the Company
with respect to any audit of any tax returns filed prior to the Closing.
(b) HEADINGS. The headings contained herein are for reference
purposes only and shall not affect the meaning or interpretation of this
Agreement.
(c) 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.
Seller:
1304516 ONTARIO INC.
By: /s/ Xxxxxxx X. Eros
---------------------------------------
Xxxxxxx X. Eros, President
/s/ Xxxxxxx X. Eros
------------------------------------------
Xxxxxxx X. Eros
/s/ Xxxx X. Eros
------------------------------------------
Xxxx X. Eros
AGRIBIOTECH, INC.,
By: /s/ Xxxxxxxx X. Xxxxxxxxx
--------------------------------------
Xxxxxxxx X. Xxxxxxxxx, Vice President
XXXXXXXX SEEDS INTERNATIONAL COMPANY
By: /s/ Xxxxxxxx X. Xxxxxxxxx
---------------------------------------
Xxxxxxxx X. Xxxxxxxxx, Vice President
