EXHIBIT 2.1
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STOCK PURCHASE AGREEMENT
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By and among
AGRIBIOTECH, INC.,
as the Buyer,
and
Xxxx X. Xxxxx, Xxxxx X. Xxxxx and Xxxxxx X. Xxxxx-Xxxxx,
as the Sellers,
and
Xxxxx Performance Seeds, Inc.
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April 8, 1998
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TABLE OF CONTENTS
Section 1. Sale and Purchase of the Securities...................................... 1
Section 2. Closing.................................................................. 1
Section 3. Description of Components of Purchase Price and Other Payments........... 2
Section 4. Representations and Warranties of the Sellers and the Acquired Company... 4
Section 5. Representations and Warranties of the Buyer..............................18
Section 6. Survival of Representations and Warranties; Indemnification..............19
Section 7. Covenants of the Sellers and the Acquired Company........................21
Section 8. Covenants of the Buyer...................................................22
Section 9. Conditions Precedent to the Obligations of the Buyer.....................22
Section 10. Conditions Precedent to the Sellers' and the Acquired Company's
Obligations..............................................................24
Section 11. Conditions Precedent to Obligations of the Sellers and the Buyer.........25
Section 12. Termination..............................................................25
Section 13. The Buyer's Obligations at Closing.......................................26
Section 14. The Sellers' Obligations at Closing......................................26
Section 15. Subsequent Events........................................................26
Section 16. Parties in Interest......................................................27
Section 17. Entire Agreement.........................................................27
Section 18. Governing Law............................................................27
Section 19. Expenses.................................................................27
Section 20. Arbitration; Consent to Jurisdiction.....................................27
Section 21. Severability.............................................................28
Section 22. Notices..................................................................28
Section 23. Non-Waivers..............................................................30
Section 24. Assignment...............................................................30
Section 25. Disclosure...............................................................30
Section 26. Miscellaneous............................................................30
PURCHASE AGREEMENT
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STOCK PURCHASE AGREEMENT (the "Agreement") dated April 8, 1998, by and
among Xxxx X. Xxxxx, Xxxxx X. Xxxxx and Xxxxxx X. Xxxxx-Xxxxx (collectively, the
"Sellers"), Xxxxx Performance Seeds, Inc., a New Jersey corporation ("Xxxxx" or
the "Acquired Company") and AgriBioTech, Inc., a Nevada corporation ("ABT" or
the "Buyer").
W I T N E S E T H:
- - - - - - - - -
WHEREAS, Sellers own 100% of the issued and outstanding shares of common
stock (the "Stock" or the "Securities") of Xxxxx;
WHEREAS, the Sellers wish to sell and the Buyer wishes to purchase the
Securities on the terms and subject to the conditions set forth in this
Agreement.
NOW, THEREFORE, in consideration of the foregoing and the terms,
conditions, representations, warranties and covenants appearing in this
Agreement, the parties hereto agree as follows:
SECTION 1. SALE AND PURCHASE OF THE SECURITIES.
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(a) Upon the terms and subject to the conditions set forth in this
Agreement, at the Closing (as hereinafter defined), the Sellers shall sell,
transfer and deliver to the Buyer, and the Buyer shall purchase from the
Sellers, the Securities, which constitutes one hundred percent (100%) of the
issued and outstanding shares of capital stock of Xxxxx, free and clear of all
liens, mortgages, deeds of trust, security interests, pledges, charges,
encumbrances, liabilities and claims of every kind.
(b) The purchase price of THREE MILLION AND 00/100 ($3,000,000) DOLLARS
(the "Purchase Price") payable, by the Buyer to the Sellers for the Securities,
shall be paid as described in and subject to adjustment as set forth in Section
3 below.
SECTION 2. CLOSING.
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The closing of the sale and purchase of the Securities provided for in
Section 1 of this Agreement (the "Closing") shall take place at the offices of
Xxxxxxx Xxxxx, 000 Xxxx Xxxxxx, Xxxxxxxxxx, Xxx Xxxxxx at 10:00 a.m. on April 8,
1998, or at such other date, time or location as may be agreed to by the parties
(the "Closing Date).
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SECTION 3. DESCRIPTION OF COMPONENTS OF PURCHASE PRICE AND OTHER PAYMENTS.
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(a) Payment of the Purchase Price to the Sellers at Closing. Upon the
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completion by the parties of their respective closing conditions under this
Agreement, the Buyer shall pay to the Sellers, in exchange for delivery of the
Securities at the Closing THREE MILLION AND 00/100 ($3,000,000) DOLLARS, payable
in an aggregate of three hundred thousand (300,000) unregistered shares of
Common Stock of ABT (the "ABT Shares"), valued at $10.00 per share, issuable to
the Sellers as follows:
Xxxx X. Xxxxx 249,000 ABT Shares
Xxxxx X. Xxxxx 30,000 ABT Shares
Xxxxxx X. Xxxxx-Xxxxx 21,000 ABT Shares
(b) Escrow Agreement. At the Closing, the Sellers shall enter into
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an escrow agreement (the "Escrow Agreement") attached hereto as EXHIBIT 3(B).
The escrow funds shall be made available to the Buyer in the event of
any Claims arising pursuant to Section 6(b) hereof for which Buyer is entitled
to payment, subject to the $10,000 threshold set forth in Section 6(d) hereof.
Any interest accrued on the Escrow Funds shall inure to the benefit of the
Sellers.
(c) Lock-Up of ABT Shares.
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(i) The resale of the ABT Shares shall be pursuant to the terms
of a Lock-Up Agreement, in the form of EXHIBIT 3(C) attached
hereto (the "Lock-Up") according to the following schedule:
during the period beginning on the Closing Date and ending on
June 30, 1998 (the "No-Sale Period"), Sellers may sell zero
(0) ABT Shares; beginning July 1, 1998, Sellers may sell up
to an aggregate of five thousand (5,000) ABT Shares per day,
not to exceed an aggregate of twelve thousand (12,000) ABT
Shares per week, until all the ABT Shares received hereunder
have been sold. Buyer shall register ABT Shares for resale
prior to the time such Shares can be sold pursuant to the
Lock-Up.
(ii) The limitations set forth in the Lock-Up shall apply to the
Sellers as a group and not as individuals. Any sales of ABT
Shares in violation of the Lock-Up by any of the Sellers
shall constitute an event of default under the Lock-Up as to
all of the Sellers and all proceeds in excess of $10.00 per
share from the sale of all ABT Shares by all of the Sellers,
regardless
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of whether such proceeds derive from sales made prior to,
concurrent with or subsequent to such event of default, shall
be paid to ABT.
(iii) ABT reserves the right to waive the lock-up limitations
and/or resale limitations set forth in the Lock-Up, in whole
or in part.
(iv) Sellers shall forward to the Buyer and ABT all customary
documentation reflecting any sale of ABT Shares within ten
(10) business days of receipt by Sellers.
(d) Non-Competition Agreement. In addition to the purchase and sale of
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the Securities described above, each of the Sellers hereby agrees to enter into
a Non-Competition Agreement with ABT, in the form annexed hereto as EXHIBIT
3(D), for a period commencing on the Closing date and running through and
including the date three years from the termination date of their respective
employment with ABT in accordance with the terms of their respective Employment
Agreements, as hereinafter described. In consideration for such Non-Competition
Agreements, ABT agrees to make additional cash payments at the Closing of
$100,000 to Xxxx X. Xxxxx; $50,000 to Xxxxxx X. Xxxxx-Xxxxx, and $25,000 to
Xxxxx X. Xxxxx.
(e) Employment Agreements; Non-Qualified Stock Option Agreements. In
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addition to the purchase and sale of the Securities described above, each of the
Sellers shall enter into an Employment Agreement with the Buyer in the form
annexed hereto as EXHIBIT 3(E)(1). In consideration for their continued
performance pursuant to their Employment Agreements, the Buyer shall grant to
Xxxx X. Xxxxx and Xxxxxx X. Xxxxx-Xxxxx non-qualified stock options for each to
purchase shares of ABT common stock in accordance with a schedule set forth in a
Non-Qualified Stock Option Agreement, in the form annexed hereto as EXHIBIT
3(E)(2).
(f) Effective Date of the Sale. In the event that the Closing is
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consummated, the parties hereto agree that the purchase and sale of the
Securities shall be accounted for as if such transactions had occurred prior to
the opening of business on January 1, 1998 (the "Effective Date"), regardless of
when the Closing in fact occurs. In the event that the Closing is consummated,
the Buyer shall realize any operating profit or loss from the operation of the
business of the Acquired Company after the Effective Date. Accordingly, the
Sellers agree to consult the Buyer on any material issues or contracts that
relate to a period of time beyond the Effective Date. Furthermore, the Sellers
agree not to enter into any new capital obligations or capital expenditures
which relate to the Acquired Company prior to the Closing.
SECTION 4. REPRESENTATIONS AND WARRANTIES OF THE SELLERS AND THE ACQUIRED
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COMPANY. The Sellers and the Acquired Company, jointly and severally, warrant
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and represent to the Buyer as follows (as used herein, "Sellers' best knowledge"
or "to the best knowledge of the Sellers" shall mean information actually known
by the Sellers without due inquiry).
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(a) Ownership of Securities. The Sellers are the owners, beneficially and
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of record, of the Securities, which constitutes one hundred percent (100%) of
the issued and outstanding Stock of Xxxxx. The Stock is the sole voting stock
of Xxxxx and is duly authorized, validly issued, fully paid and non-assessable.
The Securities 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 the Securities. There are no options,
warrants, rights of subscription or conversion, calls, commitments, agreements,
arrangements, understandings, plans, contracts, proxies, voting trusts, voting
agreements or instruments of any kind or character, oral or written, to which
the Sellers or Xxxxx is a party, or by which the Sellers or Xxxxx is bound,
relating to the issuance, voting or sale of the Stock or any authorized but
unissued shares of capital stock of Xxxxx or of any securities representing the
right to purchase or otherwise receive any such shares of capital stock. There
are no stockholders agreements, preemptive rights or other agreements,
arrangements, groups, commitments or understandings, oral or written, that have
not been disclosed to the Buyer, relating to the voting, issuance, acquisition
or disposition of shares of Xxxxx, or the conduct or management of Xxxxx by its
Board of Directors. The Sellers have, and at the Closing shall have, good and
marketable title to the Securities and full right to transfer title to the
Securities, subject to any restrictions imposed by state or federal securities
laws, free and clear of all liens, mortgages, charges, liabilities, claims,
security interests or encumbrances of every type whatsoever. The sale,
conveyance, transfer and delivery of the Securities by the Sellers to the Buyer
pursuant to this Agreement will transfer full legal and equitable right, title
and interest in the Securities to the Buyer, free and clear of all liens,
mortgages, charges, claims, liabilities, security interests and encumbrances of
any nature whatsoever.
(b) Capacity; Organization; Standing; Capitalization. The Sellers have
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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 in SCHEDULE 4(B)(I) of this Agreement, no other consent or
joinder of any other persons or corporations is required to consummate such
transactions. The Acquired Company has no subsidiaries. Except as set forth
on SCHEDULE 4(B)(II) of this Agreement, neither the Sellers nor the Acquired
Company has any interest in any entity other than the Acquired Company that is
engaged, directly or indirectly, in businesses competitive with those of the
Acquired Company 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 the Sellers. This Agreement
constitutes, and each of the Other Agreements will constitute, the legal, valid
and binding obligation of the Sellers 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. Xxxxx is duly organized
and validly existing under the laws of the State of New Jersey, 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
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qualification. The Certificate of Incorporation of Xxxxx and all amendments
certified by the Secretary of State of New Jersey and the By-laws, as amended to
the date of this Agreement, certified by the Secretary of Xxxxx and the minutes
and stock records of Xxxxx delivered to the Buyer and ABT are complete and
correct. The Acquired Company 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 stock of Xxxxx consists of 1,000 shares of voting common stock, ___ par
value, of which 100 shares are issued and outstanding. All of the issued and
outstanding shares of Xxxxx are owned by the Sellers and are duly and validly
issued, fully paid and non-assessable.
(c) Legal Proceedings.
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(i) Except as set forth in SCHEDULE 4(C)(I) of this Agreement,
neither the Sellers in their capacity as stockholders and/or as
officers or directors of Xxxxx, nor is the Acquired Company a
party to any pending litigation, arbitration or administrative
proceeding or, to the best of Sellers' knowledge, 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 Acquired Company or of the Sellers is
threatened.
(ii) Except as disclosed in SCHEDULE 4(C)(II) to this Agreement, the
Sellers and the Acquired Company has no knowledge of and have
not received notice of any complaints, claims or threats, plans
or intentions to discontinue commercial relations or
transactions from any customer of the Acquired Company, any
purchaser of goods or services from the Acquired Company, any
employee or independent contractor significant to the conduct or
operation of the Acquired Company or its businesses or any party
to any agreement to which the Acquired Company 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 Acquired Company.
(iv) Except as disclosed in SCHEDULE 4(C)(IV), the Acquired Company
is not 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
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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 Acquired Company is subject.
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(e) Trade Names, etc. The Acquired Company owns the trade names,
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trademarks, service marks, assumed names, copyrights and registrations therefor,
if any (collectively "Trademarks") specified in SCHEDULE 4(E). The Trademarks
have been duly issued and have not been canceled, abandoned or otherwise
terminated except as otherwise indicated in SCHEDULE 4(E). The Acquired Company
is not 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. The Acquired Company has not granted, and will not grant prior to
the Closing, licenses or other rights to use such Trademarks. No other
Trademarks are either owned or used by the Acquired Company. To the best of
Sellers' knowledge, the operation of the Acquired Company's business does not
infringe on the Trademarks of any third party. No claim has been made that
there is any such infringement. To the best of the Sellers' and the Acquired
Company's knowledge, no Trademark of any other person infringes the Trademarks
of the Acquired Company.
(f) Patents, etc. The Acquired Company owns the inventions, letters
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patent, applications for letters patent and patent license rights, inventions,
processes, designs, formulas, trade secrets, Plant Variety Protection Act
("PVPA") certificates, know-how and other industrial property rights
(collectively "Patents") necessary for the conduct of its business, specified as
belonging to it in SCHEDULE 4(F). The Patents have been duly issued and have
not been canceled, abandoned or otherwise terminated except as otherwise
indicated in SCHEDULE 4(F). The Acquired Company is not 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. The Acquired Company has
not granted, and will not grant prior to the Closing, licenses or other rights
to use such Patents. No other Patents are owned or used by the Acquired
Company. To the best of Sellers' knowledge, the operation of the Acquired
Company's business 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
Sellers' and the Acquired Company's knowledge, no Patent of any person infringes
the Patents of the Acquired Company.
(g) Financial Statements.
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(i) The unaudited financial statements of the Acquired Company as of
and for the periods ended December 31, 1994, 1995, and 1996,
together with the related notes and schedules, and the financial
statements of the corporation as of and for the period ended
December 31, 1997, together with the related notes and schedules
(collectively, the "Financials"), true, correct and complete
copies of which are attached hereto as SCHEDULE 4(G), (A) are in
accordance with the books of account and records of the
Corporation; (B) present fairly, and are true, correct and
complete statements of the financial condition and the results of
operations of the Acquired Company as at and for the periods
therein specified; and (C) do
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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 such current liabilities
as may have been incurred since December 31, 1997 in the ordinary
course of business, the Acquired Company has no liabilities or
obligations (whether accrued, absolute, contingent or otherwise)
which might be or become a charge against the assets or
liabilities of the Acquired Company; as of December 31, 1997,
there was no asset used by the Acquired Company 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
Acquired Company since such date except in the ordinary course of
business.
(iii) Except as disclosed in the Financials or with respect to the
payment from retaining earnings for 1997 income taxes in the
estimated amount of $360,000, there has been no decrease in
stockholders' equity in Xxxxx as compared with the amount shown
for such stockholders' equity as at December 31, 1997, and no
material adverse changes in the financial position of Xxxxx since
December 31, 1997.
(iv) The Financials do not include any assets, liabilities, income or
expenses of any entity other than the Acquired Company. All
transactions in the years 1995-1997 between the Acquired Company
and any other entity in which any of the Sellers is an officer,
director or has an equity interest have been at prices no less
favorable to the Acquired Company than could have been obtained
from any independent third party.
(h) Absence of Certain Changes. Except as disclosed on SCHEDULE 4(H),
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since December 31, 1997, 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 Acquired Company.
(i) Tax Matters.
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Xxxxx has had in effect, for at least the past three (3) years, an
election under Subchapter S of the Internal Revenue Code. Xxxxx has timely
filed all federal, state and local income tax returns and has timely filed with
all other appropriate governmental agencies all sales, ad valorem, franchise and
other tax, license, gross receipts and other similar returns and reports
required to be filed by it. The Acquired Company has reported all taxable
income and losses on those returns on which such information is required to be
reported, and paid or provided for the payment of all
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taxes due and payable on said returns or taxes due pursuant to any assessment
received by it, including without limitation, any taxes required by law to be
withheld and/or paid in connection with any officer's or employee's compensation
or due pursuant to any assessment received by it. There are no agreements for
the extension of time for the assessment or payment of any amounts of tax. The
Sellers have made available to the Buyer for inspection copies of income tax
returns that are true and complete copies of the federal and applicable state,
local or other income tax returns filed by the Acquired Company for the taxable
years ended December 31, 1994, 1995, and 1996, and any other open tax periods.
The Acquired Company shall bear all expenses and responsibilities for the filing
of federal and applicable state, local or other income tax returns and reports
of the Acquired Company for the taxable year ended December 31, 1997, but the
Buyer and the Acquired Company hereby covenant and agree that the Acquired
Company will not file any amended income tax returns for any period prior to
January 1, 1998 without first notifying the Sellers. All tax liabilities of the
Acquired Company arising through the end of the taxable year ended December 31,
1997 have been paid. All tax liabilities of the Acquired Company arising after
December 31, 1997 have been paid or adequately disclosed and properly reserved
for on the books and records and financial statements of the Acquired Company.
Sellers are responsible for the payment of all taxes for all periods through
December 31, 1997. No federal or applicable state, local or other tax return of
the Sellers or the Acquired Company for any period has been or is currently
under audit by the Internal Revenue Service or any state, local or other tax
authorities. No claim has been made by federal, state, local or other
authorities relating to any such returns or any audit. For purposes of this
Section 4(i), the word "timely" shall mean that such returns were filed within
the time prescribed by law for the filing thereof, including the time permitted
under any applicable extensions. The Sellers and the Acquired Company are not
aware of any facts which they believe would constitute the basis for the
proposal of any tax deficiencies for any unexamined year. All taxes which the
Acquired Company is required by law to withhold and collect have been duly
withheld and collected, and have been timely paid over to the proper authorities
to the extent due and payable.
(j) Accounts Receivable and Inventory..
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(i) Accounts Receivable. The accounts receivable of the Acquired
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Company reflected in the Financials as at December 31, 1997, and
the accounts receivable acquired by the Acquired Company 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 Acquired Company's books and records uniformly
maintained in accordance with the financial statements, accounted
for in accordance with generally accepted accounting principles,
and the Sellers know of no reason that would make such accounts
receivable, net of such amounts as the Acquired Company has
reserved on its books as of December 31, 1997, taken as a whole,
not collectible.
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(ii) Inventory. The inventory of the Acquired Company reflected in
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the Financials as at December 31, 1997, and the inventory acquired
by the Acquired Company since such date (a) has been purchased in
the ordinary 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)
Sellers know of no reason that would make such inventory, net of
such amounts as the Acquired Company has reserved on its books as
of December 31, 1997, taken as a whole, not marketable.
(k) Title and Condition of Properties. The Acquired Company does not own
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any real property, except as disclosed on SCHEDULE 4(K). Except as disclosed on
SCHEDULE 4(K), the Acquired Company has good and marketable title to all
properties and assets, real and personal, tangible and intangible, reflected in
the Financials and all properties acquired subsequent to December 31, 1997,
which have not been disposed of in the ordinary course of business since
December 31, 1997, which property is subject to no mortgage, lien, deed of
trust, claim, security interest, liability, conditional sales agreement,
easement, right-of-way or any other encumbrance except as disclosed on SCHEDULE
4(K).
SCHEDULE 4(K) contains an accurate list of all leases and other
agreements under which the Acquired Company is lessee of any personal property.
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 personal property, machinery and equipment which are material to
the business, operations or condition (financial or otherwise) of the Acquired
Company is in operating condition and, subject to routine maintenance and
ordinary wear and tear, has been maintained in accordance with reasonable
industry standards and is suitable for the purpose for which it is used. Except
as disclosed in SCHEDULE 4(K), neither the Sellers nor the Acquired 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 Acquired Company's business or its owned or
leased real or personal properties, with which it has not complied.
Before Closing, the Buyer may engage consultants or engineers of the
Buyer's choosing to conduct site studies of the real property as the Buyer deems
necessary. The Buyer or its agents shall have the right to enter the real
property at reasonable times before closing to make such tests, inspections,
studies, and other investigations as the Buyer may require, at the Buyer's
expense and risk. The Buyer shall indemnify and hold the Sellers harmless from
any loss, damage, or claim arising out of the Buyer's access to the real
property for the purpose of making tests, inspections, studies, and other
investigations. It shall be a condition to closing that the results of such
studies or analyses be acceptable to the Buyer in its sole discretion.
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(l) Description of Material Contracts. SCHEDULE 4(L) contains a complete
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and correct list as of the date hereof of all agreements, contracts and
commitments, obligations and understandings which are not set forth in any other
Schedule delivered hereunder, of the following types, written or, oral, to which
the Acquired Company is a party, under which it has any rights or by which it or
any of its properties is bound, as of the date hereof: (a) mortgages,
indentures, security agreements and other agreements and instruments relating to
the borrowing of money or extension of credit; (b) employment and consulting
agreements with annual compensation in excess of $40,000; (c) collective
bargaining agreements; (d) bonus, profit-sharing, compensation, stock option,
pension, retirement, deferred compensation or other plans, agreements, trusts,
funds or arrangements for the benefit of employees (whether or not legally
binding); (e) sales agency, manufacturer's representative or distributorship
agreements; (f) agreements, orders or commitments for the purchase by the
Acquired Company of materials, supplies or finished products exceeding $5,000 in
the aggregate from any one person; (g) agreements, orders or commitments for the
sale by the Acquired Company of its products or services exceeding $5,000; (h)
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); (i) agreements relating to research; (j) agreements relating to PVPA
Certificates or licenses or other rights to use PVPA Certificates; (k)
agreements relating to the payment of royalties; (l) seed purchase contracts or
other contracts with growers; (m) brokerage or finder's agreements; (n) joint
venture agreements; and (o) other agreements, contracts and commitments which
individually or in the aggregate for any one party involve any expenditure by
the Acquired Company of more than $5,000.
The Acquired Company has made available to the Buyer 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 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 the Acquired
Company is not in default 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, commitment, obligation
or undertaking. There has been no threatened cancellations thereof, and there
are no outstanding disputes under any such contract, agreement, commitment,
obligation or undertaking. Except as set forth in SCHEDULE 4(1), no consent of
any party is required under any such contract, agreement, commitment, obligation
or undertaking which would make such agreements not binding and in full force
and effect as of the Closing Date. Any contracts, agreements, leases or
commitments held in the name of any of the Sellers and set forth in the
Schedules hereto shall be assigned to either the Buyer or the Acquired Company
prior to the Closing Date.
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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 respective parties to
such agreements, and there is not, under any such contract, lease, instrument or
commitment, any existing default by any of the parties or any event that, with
notice, lapse of time or both, would constitute a default by any of the parties
in respect of which adequate steps have not been taken to cure such default or
to prevent a default from occurring or continuing. Any contracts, leases or
commitments held in the names of any of the Sellers and listed on the Schedules
shall be assigned either to the Buyer or the Acquired Company prior to the
Closing Date.
No agreement, contract, commitment, obligation or undertaking listed
on the Schedules hereto to which the Acquired Company is a party or by which it
or any of its properties is bound, except as specifically set forth in SCHEDULE
4(L), contains any provision which materially adversely affects or in the future
may (so far as the Sellers and the Acquired Company can reasonably now foresee)
materially adversely affect the condition, properties, assets, liabilities,
business, operations or prospects of the Acquired Company following the date
hereof and upon the Closing Date. Furthermore, to the best of the Sellers'
knowledge, the material suppliers, customers and clients of the Acquired Company
will continue to supply and purchase from the Acquired Company 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 Acquired 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 Certificate of
Incorporation or By-laws of Xxxxx, 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 Acquired Company, 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 it or
the Sellers is a party or by which it or the Sellers may be bound, or require
any consent, approval or notice under any law, rule or decree or any such
document or instrument; or result in the creation or imposition of any lien,
claim, restriction, charge or encumbrance upon the assets or interfere with or
otherwise adversely affect the ability to carry on the business of the Acquired
Company after the Closing Date on substantially the same basis as it is now
conducted by them.
(n) Court Orders and Decrees. The Acquired Company has not received
------------------------
written or oral notice that there is outstanding, pending, or threatened any
order, writ, injunction or decree of any court, governmental agency or
arbitration tribunal against or affecting it, the Stock, or any of the Acquired
Company's assets. The Acquired Company is in compliance in all material
respects with
11
all applicable Federal, state, county, municipal (or of any subdivision thereof)
laws, regulations and administrative orders in force at any applicable time to
which they may be subject.
(o) Books and Records. The books and records of the Acquired Company is,
-----------------
in all material respects, complete and correct and have been maintained in
accordance with good business practice. True and complete copies of the
Certificate of Incorporation and By-laws of Xxxxx and all amendments thereto,
and true and complete copies of all minutes, resolutions, stock certificates and
stock transfer records of Xxxxx are contained in the minute books and stock
transfer books that have been delivered to the Buyer for inspection and will be
delivered to the Buyer at the Closing. The minute books, stock certificate
books, stock transfer records and such other books and records as may be
requested by the Buyer, as exhibited to the Buyer, and their representatives,
are complete and correct in all material respects.
(p) Pension and Welfare Plans.
-------------------------
(i) Pension and Profit Sharing Plans. Except as disclosed in SCHEDULE
--------------------------------
4(P), the Acquired Company does not have in effect any pension,
profit sharing or other employee benefit plan described under
Section 3(2)(A) of the Employee Retirement Income Security Act of
1974, as amended ("ERISA"). All benefits payable under any
terminated employee pension benefit plan (as such term is defined
in Section 3(2)(A) of ERISA) previously maintained by the Acquired
Company or to which it previously has contributed has been paid in
full and/or terminated and neither has any unfunded liability in
respect of any such plan to the Pension Benefit Guaranty
Corporation or to the participants in such plan or to the
beneficiaries of such participants. Each such terminated plan was
terminated substantially in accordance with the applicable
provisions of law or any agreement or contract relating to any
such plan and has been terminated without liability to the
Acquired Company.
(ii) Welfare Plans. For each plan, fund, or arrangement of the
-------------
Acquired Company that is an employee welfare benefit plan, whether
or not currently maintained (within the meaning of ERISA Section
3(1)) (a "Welfare Plan"), the following is true:
(A) each such Welfare Plan intended to meet the requirements for
tax-favored treatment under Subchapter B of Chapter 1 of the
Code meets such requirements;
(B) there is no voluntary employees' beneficiary association
(within the meaning of Section 501(c)(9) of the Code)
maintained with respect to any such Welfare Plan;
12
(C) there is no disqualified benefit (as such term is defined in
Code Section 4976(b)) which would subject the Acquired Company
or the Buyer to a tax under Code Section 4976(a);
(D) each such Welfare Plan which is a group health plan complies
and has complied with the applicable requirements of Code
Section 4980B, and would comply with Sections 9801 through
9806 if such provisions were now in effect, Title XXII of the
Public Health Service Act, and the applicable provisions of
the Social Security Act, and is not and has not been a
nonconforming group health plan under Section 5000(c) of the
Code;
(E) each such Welfare Plan may be amended or terminated by the
Acquired Company or the Buyer, on or at anytime after the
Closing Date and after any advance notice to participants or
similar measures required by law which are non-waivable under
the Welfare Plan;
(F) no such Welfare Plan provides for continuing benefits or
coverage for any participant (including past, present or
future retirees) or such participant's beneficiary after
termination of employment except as required by the
Consolidated Omnibus Reconciliation Act of 1985 ("COBRA") or
any other state or Federal law; and
(G) no claims have been made and no other events have occurred
that might form the basis of a claim which has substantially
increased or, based on customary insurance industry practice,
might substantially increase the premiums or other charges of
the Acquired Company under any Welfare Plan.
(q) Insurance. SCHEDULE 4(Q) contains a correct and complete description
---------
of all policies of insurance by or on behalf of the either of Acquired Company
in which such Acquired Company is named as an insured party, beneficiary or loss
payable payee. The Acquired Company has 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 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 Acquired Company, 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
13
Acquired Company for damage to or loss of property or income which have been
referred to insurers or which the Sellers believe to be covered by commercial
insurance. SCHEDULE 4(Q) also contains a list of all general comprehensive
liability policies carried by the Acquired Company for the past three years,
including excess liability policies and any agreements, arrangements or
commitments under which the Acquired Company indemnifies any other person or is
required to carry insurance for the benefit of any other person.
(r) Right's of Third Parties. Other than as disclosed in SCHEDULE 4(R)
------------------------
attached, or specifically provided for in this Agreement, the Acquired Company
has not entered into any leases, licenses, easements or other agreements,
recorded or unrecorded, granting rights to third parties in any of its real or
personal property, and no person or other corporation has any right to
possession, use or occupancy of any of the property of the Acquired Company.
(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 Acquired Company.
(t) Labor Matters. The Acquired Company is not 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
either of Acquired Company. To the best of Sellers' knowledge, the Acquired
Company (i) is in compliance with all federal and state 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. The Acquired Company and
----------------------------------------
the Sellers have no knowledge of any present or future conditions or state of
facts or circumstances which would materially adversely affect the Acquired
Company after the Closing Date. The Acquired Company's relationships with their
customers, clients and vendors are satisfactory, and the Acquired Company and
the Sellers have no knowledge of any facts or circumstances that might
materially alter, negate, impair or in any way materially adversely affect the
continuity of any such relationships. The Acquired Company and the Sellers have
no knowledge of any material outstanding claims of any of their customers or
clients that are presently outstanding, pending or threatened against the
Acquired Company. Neither the Acquired Company nor the Sellers have any
knowledge of any present or future condition or state of facts or circumstances
that would prevent the business of the Acquired Company from being conducted by
the Buyer after the Closing Date in essentially the same manner as it is
presently being conducted.
(v) Approvals and Authorizations. The Acquired Company has obtained all
----------------------------
necessary consents, approvals and authorizations in connection with the
transactions contemplated hereby that
14
are required by law or otherwise in order for the Acquired Company to continue
all of its present business activities 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 Acquired Company.
(x) Governmental Licenses. SCHEDULE 4(X) contains a correct and complete
---------------------
list of all material governmental and administrative consents, permits,
appointments, approvals, licenses, certificates and franchises which are (i)
necessary for the operation of the Acquired Company, and (ii) required in
connection with Sellers' execution, delivery or performance of this Agreement,
all of which have been obtained by the Acquired Company and are in full force
and effect.
(y) Brokers. No agent, broker, investment banker, person, or firm acting
-------
on behalf of any of the Sellers, the Acquired Company 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.
(z) Compliance With Laws.
--------------------
(i) The operations and activities of the Acquired Company have
previously and continue to comply with all applicable Federal,
state and local laws, statutes, codes, ordinances, rules,
regulations, permits, judgments, orders, writs, awards, decrees or
injunctions (collectively, the "Laws"), as in effect on or before
the date of this Agreement, including, without limitation, all
Laws relating to seed labeling and all rules and regulations of
the Occupational Safety and Health Administration. Neither the
ownership of the Acquired Company nor the conduct of the business
of the Acquired Company as presently conducted conflicts with the
rights of any other person, firm or corporation or violates, or
with or without the giving of notice or the passage of time, or
both, will violate, conflict with or result in a default, right to
accelerate or loss of rights under, any terms or provisions of the
Certificate of Incorporation or By-laws of Xxxxx, as presently in
effect, or any lien, encumbrance, mortgage, deed of trust, lease,
license, agreement, understanding, or Laws to which the Acquired
Company is a party or by which it may be bound or affected. The
Acquired Company has not received notice or communication from any
third party asserting a failure to comply with any Laws, nor has
the Acquired Company received any notice that any
15
authority or third party intends to seek enforcement against it to
compel compliance with any such Laws.
(ii) There are no existing claims or to the best of Sellers' knowledge,
potential claims that may exist against the Acquired Company for,
with respect to, or as direct or indirect result of, the presence
on or under, or the escape, seepage, leakage, spillage, discharge,
or emission discharging, from the real property of the Acquired
Company of any "Hazardous Material," including, without
limitation, any losses, liabilities, damages, injuries, costs,
expenses, reasonable fees of counsel or claims asserted or arising
under the Comprehensive Environmental Response, Compensation and
Liabilities Act ("CERCLA"), any so-called "Super Fund" or "Super
Lien" law or any other applicable federal, state or local statute,
law, ordinance, code, rule, regulation, order or decree now or at
any time hereafter in effect, regulating, relating to or imposing
liability or standards of conduct concerning any Hazardous
Material.
(iii) Since the date first acquired or leased by the Sellers or the
Acquired Company, none of the Sellers nor the Acquired Company has
placed any "Hazardous Material" on or under the real property
owned or leased by the Acquired Company and, to the best of
Sellers' knowledge, there has been no "Hazardous Material" on or
under the real property owned or leased by the Acquired Company.
"Hazardous Materials" as used in this Agreement means any
hazardous or toxic material, substance, pollutant, contaminant or
waste, or similar terms, defined by or regulated as such under any
Environmental Laws, but shall not include (a) supplies for
cleaning and maintenance in commercially reasonable amounts
required for use in the ordinary course of business, provided such
items are incidental to the use of the property and are stored and
used in compliance with all Environmental Laws, (b) standard
office supplies in commercially reasonably amounts required for
use in the ordinary course of business, provided such items are
incidental to the use of the property and are stored and used in
compliance with all Environmental Laws, or (c) materials stored
and used in compliance with all Environmental Laws used in the
ordinary course of the Acquired Company's business.
(iv) Neither the Acquired Company nor the Sellers, nor to the best
knowledge and belief of the Sellers, any officer, employee or
agent of the Acquired Company acting on its behalf, nor any other
person acting on its behalf, has, directly or indirectly, within
the past three (3) years given or received or agreed to give or
receive 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 either of the Acquired Company (or
assist the Acquired Company in
16
connection with any actual or proposed transaction) which (i)
might subject such Acquired Company to any damage or penalty in
any civil, criminal or governmental litigation or proceeding, (ii)
if not given or received in the past might have had an adverse
effect on the assets, business or operation of such Acquired
Company, or (iii) if not continued in the future, might adversely
affect the assets, the business or the operations or prospects of
the Acquired Company, or which might subject the Acquired Company
to suit or penalty in any private or governmental litigation or
proceeding.
(aa) Guarantees. Except as disclosed in SCHEDULE 4(AA), the Sellers have
----------
not personally guaranteed any of the obligations of the business of the Acquired
Company.
(bb) Benefits. All accrued holiday, vacation, sick or other compensation
--------
or benefits to which employees of the Acquired Company is entitled to receive
from the Acquired Company is set forth on SCHEDULE 4(BB). The Acquired Company
has an employee manual which sets forth its policies with respect to its
employees, and there are no policies other than as set forth in SCHEDULE 4(BB).
(cc) Schedules. The Sellers and the Acquired Company has delivered to the
---------
Buyer complete and correct schedules (the "Schedules"), in form and substance
reasonably acceptable to the Buyer, as of the date of this Agreement, specifying
with respect to the business, properties, assets and obligations of the Acquired
Company each and every item in the categories listed as Schedules hereunder, and
complete and correct copies of the documents and other material from which such
Schedules were compiled.
(dd) No Legal or Tax Advice. Sellers are not relying on any legal or tax
----------------------
advice from the Buyer in connection with the transactions contemplated by this
Agreement.
(ee) Accuracy. No representation, warranty, covenant or statement by the
--------
Sellers or the Acquired Company in this Agreement, including the Schedules and
Exhibits attached hereto and the certificates furnished or to be furnished to
the Buyer pursuant hereto, contains or will contain any untrue statement of a
material fact, or omits or will omit to state a material fact required to be
stated herein or therein or necessary to make the statements contained herein or
therein in light of the circumstances under which they were made, not false or
materially misleading.
SECTION 5. REPRESENTATIONS AND WARRANTIES OF THE BUYER. The Buyer warrants
--------------------------------------------
and represents to the Sellers as follows (as used herein, "Buyer's best
knowledge" or "to the best knowledge of the Buyer" shall mean information
actually known by the Buyer without due inquiry):
(a) Capacity. The Buyer has full right, power and capacity to execute,
--------
deliver and perform its obligations under this Agreement and the other documents
required to be executed by it in connection herewith and to consummate the
transactions contemplated hereby. The execution
17
and delivery of this Agreement does not, and the consummation of the
transactions contemplated by this Agreement will not, constitute a breach of any
term or provision of the Certificate of Incorporation or By-laws of the Buyer or
constitute a default under any material law, rule, regulation, indenture,
instrument, mortgage, deed of trust, or other agreement or instrument to which
the Buyer is a party or by which it is bound.
(b) Organization. The Buyer is a corporation duly organized, validly
------------
existing and in good standing under the laws of the State of Nevada, and the
Buyer 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. The 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 make such qualification necessary.
(c) Consents and Approvals. No governmental license, permit or
----------------------
authorization, and no registration or filing with any court, governmental
authority or regulatory agency, is required in connection with the execution,
delivery or performance of this Agreement by the Buyer. The Buyer shall execute,
deliver and perform its obligations under this Agreement, and no consent or
other approval of any other party is required to be obtained by the Buyer in
connection with the transactions contemplated hereby.
(d) Legal Proceedings. Neither the Buyer nor any of its executive 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 or performing the transactions contemplated
hereby or that might result in any material adverse change in the financial
condition, business or properties of the Buyer, and to the best of Buyer's
knowledge, no such litigation, arbitration, proceeding or investigation is
threatened.
(e) Binding Obligation. This Agreement has been duly executed and
------------------
delivered by the Buyer and constitutes the legal, valid and binding obligation
of the Buyer, enforceable against the Buyer in accordance with its terms, except
to the extent that such enforceability may be limited by general principles of
equity or bankruptcy, insolvency and other similar laws affecting the
enforcement of creditors' rights generally. All action of the Board of
Directors of the Buyer and all other corporate action necessary to authorize the
execution, delivery and performance of this Agreement and the consummation of
the transactions contemplated hereby has been duly and validly taken.
(f) Brokers; Finders. No agent, broker, investment banker, person or firm
----------------
acting on behalf of the Buyer or any firm or corporation affiliated with the
Buyer or under the authority of either the Buyer 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.
18
(g) Accuracy. No representation, warranty, covenant or statement by the
--------
Buyer in this Agreement, including the Schedules and Exhibits attached hereto
and the certificates furnished or to be furnished to the Sellers 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 Sellers or the Buyer in this Agreement, including without
limitation all representations and warranties made in any Exhibit or Schedule
hereto or certificate delivered hereunder, shall survive the Closing until the
second anniversary of the Closing Date (the "Survival Date"); provided, however,
that all representations and warranties made by the Sellers in Sections 4(i),
4(p) and 4(z) hereof shall survive the Closing until and through one (1) year
after the expiration of the applicable statute of limitations (the "Extended
Survival Date").
(b) Indemnity by Sellers. Provided that the transaction contemplated by
--------------------
this Agreement is closed, the Sellers hereby agree to indemnify, defend and hold
harmless the Buyer 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 made
by the Sellers; (ii) the non-performance by the Sellers in any material respect
of any covenant, agreement or obligation to be performed by the Sellers under
this Agreement; or (iii) the assessment of any federal, state local or other tax
liabilities due and payable by the Acquired Company for all periods prior to
January 1, 1998.
(c) Indemnification by Buyer. Provided that the transaction contemplated
------------------------
by this Agreement is closed, the Buyer hereby agrees to indemnify, defend and
hold harmless the Sellers 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 the Buyer; (ii) the non-performance by the
Buyer in any material respect of any covenant, agreement or obligation to be
performed by the Buyer under this Agreement; and (iii) any liabilities arising
out of the operation of the business of the Acquired Company by Buyer after the
Closing Date.
In the event that the Closing is consummated, the Buyers agree to
indemnify Sellers against all costs and expenses with respect to their state and
federal income tax liability for income tax items allocated to them as
shareholders of Xxxxx with respect to the period January 1, 1998 through the
Closing Date or the termination of Xxxxx'x Subchapter S status, whichever last
occurs.
19
(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.
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.
Notwithstanding any provision of this Agreement to the contrary,
neither Sellers' nor Buyer's maximum liability for indemnification shall exceed
the Purchase Price.
SECTION 7. COVENANTS OF THE SELLERS AND THE ACQUIRED COMPANY. The Sellers
-------------------------------------------------
and the Acquired Company hereby covenant and agree:
20
(a) Further Assurances. The Sellers and the Acquired Company hereby agree
------------------
that, from time to time at the reasonable request of the Buyer, and without
further consideration, they shall execute and deliver such additional
instruments and take such other action as the Buyer may reasonably require to
convey, assign, transfer and deliver the Securities and otherwise to carry out
the terms of this Agreement.
(b) Access to the Acquired Company; Confidentiality.
------------------------------------------------
(i) Subsequent to the date hereof and prior to the Closing Date, the
Sellers will continue to give to the Buyer, its counsel,
accountants, and other representatives, full and free access to
all properties, books, contracts, commitments and records of the
Acquired Company so that the Buyer 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, the Sellers and the Acquired
Company and their representatives will maintain the
confidentiality of all documents and information of a confidential
nature disclosed to the other party in the course of their
negotiations and the Buyer'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 the Buyer
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, the Acquired Company shall conduct its operations as engaged in at
the date of this Agreement according to its ordinary course of business, shall
maintain its records and books of account in a manner that fairly and currently
reflects its financial condition and results of operations and shall not engage
in any transactions other than as contemplated by this Agreement.
(d) Closing Documents. Provided that the Buyer have fully performed their
-----------------
obligations and Sellers' conditions have been satisfied, the Sellers and the
Acquired Company shall execute and deliver all instruments and documents
required as a condition precedent to the Closing and take all action required to
carry out the terms of this Agreement and to consummate the transactions
contemplated hereby.
SECTION 8. COVENANTS OF THE BUYER. The Buyer hereby covenants and warrants
----------------------
as follows:
21
(a) Closing Documents. The Buyer shall 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.
(b) Noninterference. The Buyer shall not take or omit to take any
---------------
action that (i) if taken or omitted on or before the date of this Agreement,
would make untrue any of the representations and warranties contained in Section
5 of this Agreement, or (ii) would interfere with the 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, the Buyer and its
representatives will maintain the confidentiality of all documents and
information of a confidential nature disclosed by the Sellers in the course of
their negotiations and the Buyer'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 the financing of this transaction.
In the event this Agreement is terminated, the Buyer will destroy all copies of
documentation which they received from Sellers and will not use any confidential
information for its own benefit.
SECTION 9. CONDITIONS PRECEDENT TO THE OBLIGATIONS OF THE BUYER. The
----------------------------------------------------
obligations of the Buyer 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 the Sellers or the Acquired Company
contained in this Agreement or the Schedules and Exhibits hereto, and all such
representations and warranties shall be true 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 Sellers and the Acquired Company 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 the Buyer.
(c) There shall have been no material adverse change in the condition
(financial or otherwise), business, assets, liabilities, properties, results of
operations, or earnings of the Acquired Company.
(d) There shall be no outstanding actions or threats of action by any party
that may materially adversely effect the condition (financial or otherwise),
business, assets, liabilities, properties, results of operations, or earnings of
the Acquired Company.
22
(e) The Buyer and ABT shall have received certificates dated the Closing
Date and signed by the Sellers and the Acquired Company, certifying that the
conditions specified in subsections (a), (b), (c) ands (d) above have been
fulfilled, except to the extent that any nonfulfillment was disclosed in writing
to the Buyer prior to the Closing Date.
(f) The Acquired Company and the Sellers shall have obtained and delivered
to the Buyer and ABT any required consents or approvals of any third parties
whose consent is required to the transactions contemplated hereunder.
(g) The Buyer shall have received originals or certified copies, reasonably
satisfactory in form and substance to the Buyer, of all such corporate documents
of the Acquired Company as the Buyer shall reasonably require, including without
limitation the following:
(i) the Certificate of Incorporation of Xxxxx and all amendments
thereto and restatements thereof certified as of a recent date by
the Secretary of State of the State of New Jersey;
(ii) the By-laws of Xxxxx and all amendments thereto and restatements
thereof certified as of the Closing Date by an officer of Xxxxx;
(iii) certificate of existence of the Secretary of State of the State of
New Jersey, certifying as of a recent date that the Xxxxx is duly
organized, validly existing and in good standing under the laws of
that State;
(iv) copies of the minutes and resolutions of the Board of Directors and
stockholders of Xxxxx showing the authorization and approval by
such Board of the execution and delivery by Xxxxx of this Agreement
and of the agreements and instruments provided for herein and of
the performance of the obligations of Xxxxx under this Agreement
and such other instruments and agreements, certified as of a recent
date by the Secretary or another officer of Xxxxx;
(v) a certificate of incumbency identifying the officers and directors
of Xxxxx immediately before Closing;
(h) The Buyer shall have received a written opinion of counsel for the
Sellers and the Acquired Company dated as of the Closing Date, in the form of
EXHIBIT 9(H) hereto.
(i) The Acquired Company and the Sellers shall have executed and delivered
to the Buyer an assignment or consent to all of the leases described in SCHEDULE
4(K).
23
(j) The Sellers shall have executed and delivered to the Buyer the
assignment or endorsement in favor of the Buyer of coverage under the insurance
policies maintained by the Sellers covering the Acquired Company described to in
SCHEDULE 4(Q) to this Agreement.
(k) The Buyer shall have received from each of the Sellers a Non-
Competition Agreement in the form of EXHIBIT 3(E)(1) attached hereto.
(l) The Buyer shall have received from each of the Sellers an Employment
Agreement in the form of EXHIBIT 3(E)(2) attached hereto.
(m) The Buyer shall have entered into employment agreements or otherwise
made arrangements that they deem satisfactory with such "key personnel" of the
Sellers as Buyer deems necessary.
(n) The Sellers agree that at the Buyer's request , the Sellers shall
execute and deliver an irrevocable election under Section 338(h)(10) of the
Internal Revenue Code of 1986.
SECTION 10. CONDITIONS PRECEDENT TO THE SELLERS' AND THE ACQUIRED COMPANY'S
---------------------------------------------------------------
OBLIGATIONS. The obligations of the Sellers and the Acquired Company 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 the Buyer 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 shall have performed and complied with all agreements and
conditions required by this Agreement to be performed or complied with by it.
All documents and instruments required in connection with this Agreement shall
be reasonably satisfactory in form and substance to the Sellers.
(c) The Sellers shall have received a certificate dated the Closing Date
and signed by the Buyer, certifying that the conditions specified in Paragraphs
10(a) and 10(b) above have been fulfilled.
(d) The Sellers shall have received a written opinion of Snow Xxxxxx Xxxxxx
P.C., counsel for the Buyer, dated as of the Closing Date, in the form of
EXHIBIT 10(D) hereto.
(e) The Sellers shall have received originals or certified copies,
reasonably satisfactory in form and substance to the Sellers, of the following
corporate documents of the Buyer:
24
(i) a certificate of existence certifying as of a recent date that the
Buyer is a corporation in good standing under the laws of its
state of incorporation;
(ii) copies of the minutes and resolutions of the Board of Directors of
the Buyer showing the authorization and approval by such Board of
the execution and delivery by the Buyer of this Agreement and the
agreements and instruments provided for herein and of the
performance of the obligations of the Buyer under this Agreement
and such other instruments and agreements, certified as of a
recent date by the Secretary or another officer of the Buyer; and
(iii) a certificate of incumbency identifying the officers and directors
of the Buyer immediately before Closing.
SECTION 11. CONDITIONS PRECEDENT TO OBLIGATIONS OF THE SELLERS AND THE BUYER.
----------------------------------------------------------------
The obligations of the Sellers and the Buyer to complete this transaction shall
be subject to the fulfillment at or prior to the Closing Date of the following
conditions:
(a) Due Diligence. The Sellers and the Buyer shall have been afforded the
-------------
opportunity to complete their due diligence and conduct a review of the business
and prospects of the other, and shall be reasonably satisfied as to such
business and prospects.
(b) No Injunctions. No action or proceeding shall have been instituted or
--------------
threatened by any public authority or private person prior to the Closing before
any court or administrative body to restrain, enjoin or otherwise prevent the
consummation of this transaction or to recover any damages or obtain other
relief as a result of this transaction.
(c) Consents. Any consent to the transaction considered by the Sellers or
--------
the Buyer to be necessary or advisable under any agreement or contract, the
withholding of which might, in the judgment of the Sellers or the Buyer, have
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 the Sellers, the Buyer and their counsel, and the Sellers,
the Buyer, and their 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 mutual written consent of the Sellers, the Buyer and the Acquired
Company properly authorized by their respective Boards of Directors.
25
(b) By the Buyer or the Sellers if this transaction is not completed by
April 30, 1998, unless extended by mutual consent.
(c) By the Buyer if since December 31, there has been a material adverse
change in the condition (financial or otherwise), business, assets, liabilities
properties, results of operations, or earnings of the Acquired Company.
SECTION 13. THE BUYER'S OBLIGATIONS AT CLOSING. At the Closing, in addition
----------------------------------
to fulfilling the conditions to closing appearing in this Agreement, the Buyer
shall deliver to the Sellers 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. THE SELLERS' OBLIGATIONS AT CLOSING. At the Closing, in addition
-----------------------------------
to fulfilling the conditions to closing appearing herein, the Sellers shall
deliver to the Buyer:
(a) stock certificate(s) representing the Stock of Xxxxx, free of all
liens, claims and encumbrances properly endorsed, or with stock powers executed
in blank, and with any and all transfer, stamp or similar taxes upon the
transfer of the shares to the Buyer paid in full by the Sellers;
(b) all original minute books, stock books, stock transfer ledger, canceled
stock certificates, corporate seals and financial records and statements of the
Acquired Company.
SECTION 15. SUBSEQUENT EVENTS.
-----------------
(a) The Buyer may receive, at its own expense, audited financial
statements, of the Acquired Company ("Audited Financial Statements"), certified
by KPMG Peat Marwick LLP, independent certified public accountants, for all
periods required of the Buyer under the rules and regulations of the Securities
and Exchange Commission (the "Rules"). The Acquired Company and the Sellers
hereby agree to provide the Buyer and their accountants with full and free
access to the books and records of the Acquired Company and to cooperate fully
with all such representatives of the Buyer so that the Audited Financial
Statements may be prepared on a timely basis.
(b) Each of the respective Sellers shall be entitled to purchase from the
Acquired Company any policy of key person life insurance on their life owned by
the Acquired Company. Each of the respective Sellers may make a written
election to purchase such policy and remit the purchase price to the Acquired
Company at any time within thirty (30) days following the Closing Date. The
purchase price shall be equal to the cash value of the policy plus any unearned
premiums at the Closing Date less any policy loans, and shall be payable in
cash.
SECTION 16. PARTIES IN INTEREST. This Agreement shall be binding upon and
-------------------
shall inure to the benefit of the parties and their successors and assigns.
Nothing herein expressed or implied is
26
intended or shall be construed to confer upon or to give any person, firm, or
corporation other than the parties hereto any rights or remedies under or by
reason hereof.
SECTION 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 State of Nevada, applicable to agreements made and to be performed wholly
within said State, without regard to the conflicts of laws principles of such
State.
SECTION 19. EXPENSES. The Buyer, the Acquired Company and the Sellers shall
--------
each pay their 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. To the extent that any such transaction
expenses allocable to the Acquired Company has not been accrued as of January 1,
1998, they shall become the obligation of the Sellers.
SECTION 20. ARBITRATION; CONSENT TO JURISDICTION. Notwithstanding any other
------------------------------------
provision in this Agreement to the contrary, controversies between Buyer and
Sellers shall be resolved, to the extent possible, by informal meetings and
discussions in good faith between the parties.
(a) Arbitration. If a dispute between the parties cannot be resolved by
------------
informal meetings and discussions, the dispute shall be settled by binding
arbitration, and a corresponding judgment may be entered in a court of competent
jurisdiction. Arbitration of any dispute may be initiated by one party by
sending a written demand for arbitration to the other party, which demand will
preclude any party hereto from initiating an action in any court. This demand
will specify the matter in dispute and request the appointment of an arbitration
panel. The arbitration panel will consist of one arbitrator named by Buyer, one
arbitrator named by Sellers and a third arbitrator named by the two arbitrators
so chosen. The arbitration hearing will be conducted in accordance with the
procedural rules set forth in the commercial arbitration rules of the American
Arbitration Association. The situs of the arbitration will be New York, New
York. The arbitrators shall not be empowered to award punitive or exemplary
damages to either party.
27
(b) Consent to Jurisdiction; Waiver of Jury Trial. In the event that
---------------------------------------------
litigation of a dispute is initiated by either of the parties hereto, each of
the parties hereto (i) consents to submit itself to the personal jurisdiction of
the Courts of the State of Nevada or the United States District Court for the
District of Nevada to the extent that such court would have subject matter
jurisdiction with respect to such dispute; (ii) agrees that it will not attempt
to deny or defeat such personal jurisdiction or venue by motion or other request
for leave from any such court; (iii) agrees that it will not bring any action
relating to this Agreement or any of the transactions contemplated by this
Agreement in any Court other than such courts; (iv) agrees that service of
process in any such action or proceeding may be effected by mailing a copy
thereof by registered or certified mail (or any substantially similar form of
mail), postage prepaid, to a party at its address set forth in Section 22 or at
such other address of which a party shall have been notified pursuant thereto;
(v) agrees that nothing herein shall affect the right to effect service of
process in any other manner permitted by law; and (vi) waives the right to a
jury trial.
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 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 recognized national overnight courier or by
deposit in the United States mail, postage prepaid, by registered or certified
mail, return receipt requested, addressed to the party to be notified at the
addresses set forth below:
(i) (a) if to the Acquired Company to:
Xxxxx Performance Seeds, Inc.
000 Xxxxxxx Xxxxxx
Xxxxxxx, XX 00000
Attention: Xxxx X. Xxxxx
Telecopier No.: (000) 000-0000
28
(b) if to the Sellers to:
Xx. Xxxx X. Xxxxx
Xxxxx Performance Seeds, Inc.
000 Xxxxxxx Xxxxxx
Xxxxxxx, XX 00000
Xx. Xxxxx X. Xxxxx
Xxxxx Performance Seeds, Inc.
000 Xxxxxxx Xxxxxx
Xxxxxxx, XX 00000
Xx. Xxxxxx X. Xxxxx-Xxxxx
0000 Xxxxxx Xxxx
Xxxxxxxxx, XX 00000
with a copy to:
Xxxxxxx Xxxxx
000 Xxxx Xxxxxx
Xxxxxxxxxx, XX 00000
Attention: Xxxxx Xxxxxxx, Esq.
Telecopier No.: (000) 000-0000
(ii) if to the Buyer to:
AgriBioTech, Inc.
0000 Xxxxxx Xxxx, Xxxxx X-00
Xxx Xxxxx, Xxxxxx 00000
Attention: Xxxxxx X. Xxxxxx, President
Telecopier No.: (000) 000-0000
with a copy to:
Snow Xxxxxx Xxxxxx P.C.
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx X. Xxxxxxx, Esq.
29
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, the Sellers will not (i) solicit
or encourage inquiries or proposals with respect to, or furnish any information
relating to, or participate in any negotiations or discussions concerning the
sale of the Securities or the sale of all or a substantial portion of the assets
of the Acquired Company with anyone other than the Buyer; or (ii) discuss the
sale of the Securities with anyone other than the Buyer and other officers,
directors and shareholders of the Acquired Company and the Sellers' advisors and
(iii) unless otherwise required by law or the requirements of any applicable
stock exchange, make any public announcement without prior approval of the
language of such announcement by the Buyer.
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, the Sellers and
Buyer shall cooperate with and provide assistance to the other in connection
with the preparation and filing of all federal, state, local and foreign income
tax returns which relate to the Acquired Company 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 Acquired
Company with respect to any audit of any tax returns filed prior to the Closing;
provided, however, that the Buyer and the Acquired Company hereby covenant and
agree that the Acquired Company will not file any amended income tax return for
any period prior to January 1, 1998 without first notifying the Sellers.
30
(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.
-------------------------------------
Xxxx X. Xxxxx, Seller
-------------------------------------
Xxxxx X. Xxxxx, Seller
-------------------------------------
Xxxxxx X. Xxxxx-Xxxxx, Seller
XXXXX PERFORMANCE SEEDS, INC.
By:
-------------------------------
Xxxx X. Xxxxx, President
AGRIBIOTECH, INC., Buyer
By:
-------------------------------
Xxxxxxxx X. Xxxxxxxxx, Vice President
31
