EXHIBIT 10.14
ASSET PURCHASE AGREEMENT
Among
XXXXXXX PERENNIAL GARDENS, INC.,
XXXXXX X. XXXXXXX
and
XXXXX HORTICULTURE, INC.
dated as of
August 30, 1996
TABLE OF CONTENTS
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Page
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ARTICLE 1.................................................................................. 1
DEFINITIONS.............................................................................. 1
1.01 Definitions................................................................ 1
ARTICLE 2.................................................................................. 5
PURCHASE AND SALE OF ASSETS........................................................... 5
2.01 Purchase and Sale of Assets................................................ 5
2.02 Limited Assumption of Liabilities.......................................... 9
2.03 Purchase Price............................................................. 12
2.04 Closing.................................................................... 13
2.05 Assignment of Contracts.................................................... 13
ARTICLE 3.................................................................................. 13
CONDITIONS TO CLOSING................................................................. 13
3.01 Conditions to Buyer's Obligation........................................... 13
3.02 Conditions to Seller's Obligations......................................... 17
ARTICLE 4.................................................................................. 18
ARTICLE 5.................................................................................. 18
REPRESENTATIONS AND WARRANTIES OF SELLER AND SHAREHOLDER.............................. 18
5.01 Organization and Power; Capitalization; Subsidiaries and Investments....... 18
5.02 Authorization.............................................................. 19
5.03 No Breach.................................................................. 19
5.04 Financial Information...................................................... 20
5.05 Inventories................................................................ 20
5.06 Notes and Accounts Receivable.............................................. 20
5.07 Absence of Undisclosed Liabilities......................................... 21
5.08 No Material Adverse Changes................................................ 21
5.09 Absence of Certain Developments............................................ 21
5.10 Title and Condition of Properties.......................................... 24
5.11 Contracts and Commitments.................................................. 27
5.12 Proprietary Rights......................................................... 29
5.13 Product Warranty........................................................... 30
5.14 Licenses and Permits....................................................... 30
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5.15 Litigation and Other Proceedings........................................... 30
5.16 Compliance with Laws; Certain Operations................................... 30
5.17 Environmental and Safety Requirements...................................... 31
5.18 Employees.................................................................. 32
5.19 Employee Benefit Plans..................................................... 32
5.20 Insurance.................................................................. 34
5.21 Tax Matters................................................................ 35
5.22 Customers.................................................................. 35
5.23 Suppliers.................................................................. 35
5.24 Brokerage.................................................................. 35
5.25 Affiliate Transactions..................................................... 36
ARTICLE 6.................................................................................. 36
REPRESENTATIONS AND WARRANTIES OF BUYER............................................... 36
6.01 Organization and Power..................................................... 36
6.02 Authorization.............................................................. 36
6.03 No Violation............................................................... 36
6.04 Governmental Authorities and Consents...................................... 37
6.05 Litigation................................................................. 37
6.06 Brokerage.................................................................. 37
6.07 Closing Date............................................................... 37
ARTICLE 7.................................................................................. 37
ADDITIONAL AGREEMENTS; COVENANTS AFTER CLOSING........................................ 37
7.01 Survival of Representations, Warranties and Covenants...................... 37
7.02 Liability for Environmental Matters........................................ 37
7.03 Indemnification............................................................ 38
7.04 Mutual Assistance and Records.............................................. 41
7.05 Press Release and Announcements............................................ 42
7.06 Expenses................................................................... 42
7.07 Further Transfers.......................................................... 42
7.08 Non-Competition; Non-Solicitation.......................................... 43
7.09 Communications............................................................. 44
7.10 Compliance with Bulk Sales Laws............................................ 44
7.11 Employees.................................................................. 44
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7.12 Confidentiality............................................................ 44
7.13 Taxes; Recording Charges................................................... 44
7.14 Prairie Haven Agreement.................................................... 45
ARTICLE 8.................................................................................. 45
MISCELLANEOUS......................................................................... 45
8.01 Amendment and Waiver....................................................... 45
8.02 Notices.................................................................... 45
8.03 Assignment................................................................. 46
8.04 Severability............................................................... 47
8.05 No Strict Construction..................................................... 47
8.06 Captions................................................................... 47
8.07 No Third Party Beneficiaries............................................... 47
8.08 Representations and Warranties; Disclosure Schedules....................... 47
8.09 Complete Agreement......................................................... 47
8.10 Counterparts............................................................... 47
8.11 Governing Law.............................................................. 47
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ASSET PURCHASE AGREEMENT
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This ASSET PURCHASE AGREEMENT (this "Agreement") is made as of August
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30, 1996 by and among Xxxxxxx Perennial Gardens, Inc., a Delaware corporation
("Seller"), Xxxxxx X. Xxxxxxx, the sole shareholder of Seller ("Shareholder"),
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and Xxxxx Horticulture, Inc., a California corporation ("Buyer").
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On the terms and subject to the conditions set forth in this
Agreement, Buyer desires to acquire from Seller and Shareholder, and Seller and
Shareholder desire to sell to Buyer, substantially all of the assets and
properties of and relating to the green goods production and distribution
business conducted by Seller in South Carolina (the "Business"), and Buyer
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desires to assume, and Seller and Shareholder desire to assign and transfer,
certain limited liabilities of Seller and Shareholder incurred solely in
connection with the Business.
NOW, THEREFORE, in consideration of the mutual promises and covenants
set forth herein, the parties hereto agree as follows:
ARTICLE 1
DEFINITIONS
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1.01 Definitions. For purposes of this Agreement, the following terms
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shall have the meanings set forth below:
"Accounts Receivable" shall mean all accounts receivable, including
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without limitation, all trade accounts receivable, notes receivable from
customers, vendor credits and accounts receivable from employees and all other
obligations from customers with respect to sales of goods, whether or not
evidenced by a note.
"Affiliate" of any particular Person shall mean any other Person
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controlling, controlled by or under common control with such Person.
"Affiliated Group" shall mean an affiliated group as defined in
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Section 1504 of the Code (or any analogous combined, consolidated or unitary
group defined under state, local or foreign income Tax law) of which Seller is
or has been a member.
"Assumed Liabilities" shall have the meaning set forth in Section
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2.02(a).
"Balance Sheet" shall have the meaning set forth in Section 5.04
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hereof.
"Business" shall have the meaning set forth in the preamble hereto.
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"Buyer Group" shall have the meaning set forth in Section 7.03(a)
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hereof.
"Closing" shall have the meaning set forth in Section 2.04 hereof.
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"Closing Date" shall have the meaning set forth in Section 2.04
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hereof.
"Code" shall mean the Internal Revenue Code of 1986, as amended.
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"Consulting and Noncompetition Agreement" shall have the meaning set
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forth in Section 3.01(i) hereof.
"Contracts" shall have the meaning set forth in Section 2.02(a)(i)
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hereof.
"Controlled Group" shall have the meaning set forth in Section 5.19(e)
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hereof.
"Employee Pension Plans" shall have the meaning set forth in Section
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5.19(a) hereof.
"Employee Welfare Plans" shall have the meaning set forth in Section
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5.19(a) hereof.
"Environmental and Safety Requirements" shall mean all federal, state,
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local and foreign statutes, regulations, ordinances and similar provisions
having the force or effect of law, all judicial and administrative orders and
determinations, all contractual obligations and all common law concerning public
health and safety, worker health and safety, and pollution or protection of the
environment, including without limitation all those relating to the presence,
use, production, generation, handling, transportation, treatment, storage,
disposal, distribution, labeling, testing, processing, discharge, release,
threatened release, control, or cleanup of any hazardous materials, substances
or wastes, chemical substances or mixtures, pesticides, agricultural chemicals,
pollutants, contaminants, toxic chemicals, petroleum products or byproducts,
asbestos, polychlorinated biphenyls, noise or radiation.
"ERISA" shall mean the Employee Retirement Income Security Act of
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1974, as amended.
"Escrow Account" shall have the meaning set forth in the Escrow
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Agreement.
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"Escrow Agreement" shall have the meaning set forth in Section 3.01(k)
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hereof.
"Excluded Assets" shall have the meaning set forth in Section 2.01(b)
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hereof.
"Excluded Liabilities" shall have the meaning set forth in Section
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2.02(b) hereof.
"Financial Statements" shall have the meaning set forth in Section
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5.04 hereof.
"Indemnitee" shall have the meaning set forth in Section 7.03(d)
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hereof.
"Indemnitor" shall have the meaning set forth in Section 7.03(d)
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hereof.
"Xxxxxxx/IPG Lease" shall have the meaning set forth in Section
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3.01(g)(vii) hereof.
"Latest Balance Sheet" shall have the meaning set forth in Section
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5.04 hereof.
"Licenses" shall have the meaning set forth in Section 5.14 hereof.
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"Liens" shall mean any mortgage, pledge, security interest,
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conditional sale or other title retention agreement, encumbrance, lien,
easement, option, debt, charge, claim or restriction of any kind.
"Losses" shall have the meaning set forth in 7.03(a) hereof.
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"Material Adverse Effect" shall have the meaning set forth in Section
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4.02(a)(ii) hereof.
"Material Customer" shall mean any customer of the Business who
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accounted for at least $50,000 in total sales during 1995.
"Multiemployer Plan" shall have the meaning set forth in Section
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5.19(a) hereof.
"Noncompetition Period" shall have the meaning set forth in the
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Consulting and Noncompetition Agreement.
"Other Plans" shall have the meaning set forth in Section 5.19(a)
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hereof.
"PBGC" shall mean the Pension Benefit Gauranty Corporation.
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"Permitted Encumbrances" shall mean (i) minor imperfections of title,
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if any, none of which materially detracts from the value or impairs the use of
any such asset subject thereto,
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(ii) lessor's, materialmen's, mechanics', warehousemen's, carriers', repairmen's
or other like liens arising in the ordinary course of business for amounts not
yet due and which are not individually or in the aggregate material to the
Business or the Purchased Assets, (iii) liens for current taxes, assessments or
other governmental charges not yet due, (iv) statutory liens incurred or
deposits made in the ordinary course of business in connection with workers'
compensation, unemployment insurance and other types of social security, or to
secure the performance of tenders, statutory obligations, surety and appeal
bonds, bids, leases, government contracts, performance and return-of-money
bonds, and similar obligations which are not yet delinquent and (v) liens or
encumbrances created by Buyer.
"Person" shall mean any individual, sole proprietorship, partnership,
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joint venture, trust, unincorporated association, limited liability company,
corporation, or governmental entity (whether federal, state, county, city or
otherwise and including, without limitation, any instrumentality, division,
agency or department thereof).
"Plan" shall have the meaning set forth in Section 5.19 hereof.
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"Products" shall have the meaning set forth in Section 7.08 hereof.
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"Proprietary Rights" shall have the meaning set forth in Section
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2.01(a)(x) hereof.
"Purchase Price" shall have the meaning set forth in Section 2.03
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hereof.
"Purchased Assets" shall have the meaning set forth in Section 2.01(a)
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hereof.
"Real Property" shall have the meaning set forth in Section 5.10(b)
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hereof.
"Returned Assumed Liabilities" shall have the meaning set forth in
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Section 7.03(f) hereof.
"Seller's Knowledge" shall mean to the actual knowledge of Shareholder
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or Xxx Xxxxx after due inquiry and reasonable investigation. "Seller's
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Knowledge" shall be deemed to exclude implied, imputed, constructive or any
other type of knowledge.
"Survey" shall have the meaning set forth in Section 3.01(g)(vi)
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hereof.
"Survival Date" shall have the meaning set forth in Section 7.03(a)
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hereof.
"Tax" shall mean any federal, state, local or foreign income, gross
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receipts, franchise, estimated, alternative minimum, add-on minimum, sales, use,
transfer, real property gains, registration, value added, excise, natural
resources, severance, stamp, occupation, premium, windfall
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profit, environmental, customs, duties, real property, personal property,
capital stock, social security, unemployment, disability, payroll, license,
employee or other withholding, or other tax, of any kind whatsoever, including
any interest, penalties or additions to tax or additional amounts in respect of
the foregoing; the foregoing shall include any transferee or secondary liability
for a Tax and any liability assumed by agreement or arising as a result of being
(or ceasing to be) a member of any Affiliated Group (or being included (or
required to be included) in any Tax Return relating thereto).
"Tax Return" shall mean any return, declaration, report, claim for
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refund, information return or other document (including any related or
supporting schedule, statement or information) filed or required to be filed in
connection with the determination, assessment or collection of any Tax of any
party or the administration of any laws, regulations or administrative
requirements relating to any Tax.
"Temporary Lien" shall mean a vendor's perfected, unrecorded,
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temporary purchase money security interest created pursuant to Article 9 of the
Uniform Commercial Code as enacted in the State of South Carolina.
"Unpaid Loss" shall have the meaning set forth in Section 7.03(f)
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hereof.
ARTICLE 2
PURCHASE AND SALE OF ASSETS
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2.01 Purchase and Sale of Assets.
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(a) Purchased Assets. On the terms and subject to the conditions
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contained in this Agreement, on the Closing Date, Buyer shall purchase from
Seller or Shareholder, and Seller or Shareholder shall sell, convey, assign,
transfer and deliver to Buyer, free and clear of all Liens (except for the
Permitted Encumbrances and the Assumed Liabilities) by appropriate special
warranty deeds, bills of sale, assignments and other instruments reasonably
satisfactory to Buyer and its counsel, all assets, properties, rights, titles
and interests of every kind and nature owned or leased by Seller or Shareholder
(including indirect and other forms of beneficial ownership) as of the Closing
Date, which are used in or otherwise associated with the Business (including,
without limitation, all assets located on the premises of the Business), whether
tangible, intangible, real or personal and wherever located and by whomever
possessed, including, without limitation, all of the following assets used in or
otherwise associated with the Business, but excluding all Excluded Assets
(collectively, the "Purchased Assets"):
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(i) all Accounts Receivable;
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(ii) all prepayments and prepaid expenses;
(iii) all interests in real estate (including, without limitation,
land, buildings, fixtures, fittings and improvements thereon, and
easements, licenses, rights of way, permits, and the other appurtenants
thereto, including appurtenant rights in and to public streets, whether or
not vacated), whether owned in fee, leased (except as set forth in Section
2.01(b)), subleased or otherwise owned by Seller or Shareholder and used in
connection with the operation of the Business;
(iv) all inventory, raw materials, manufactured and purchased
parts, work-in-process, finished goods, supplies and packaging materials,
and all growing stock and Day Lilly clumps located at Seller's Illinois
facilities or in transit to Seller's South Carolina facilities;
(v) all fixed assets, including all machinery, equipment, tools,
dies, jigs, molds, patterns, furniture, automobiles, trucks, tractors,
trailers and other vehicles, spare parts and supplies, computers and all
related equipment, telephones and all related equipment and all other
tangible personal property;
(vi) all rights existing under supply and distribution agreements
and arrangements, sales and purchase agreements and orders, under all
Contracts, agreements and arrangements entered into in the ordinary course
of business in a manner consistent with past custom and practice including,
without limitation, those listed on the attached "Contracts Schedule" and
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the attached "Leases Schedule";
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(vii) all distribution systems and networks (including, without
limitation, all rights to employ sales representatives) and all rights to
hire employees;
(viii) all lists and records pertaining to customers (whether past or
current), suppliers, distributors, personnel and agents and all other
books, ledgers, files, documents, correspondence, computer programs,
studies, reports, creative and advertising materials, business records and
all other printed or written material of every kind and nature;
(ix) all claims, deposits, prepayments (including, without
limitation, payments received for goods not yet delivered by Seller),
warranties, guarantees, refunds, causes of action, rights of recovery,
rights with respect to cash advances or other loans to employees, rights of
set-off and rights of recoupment of every kind and nature, other than those
relating exclusively to Excluded Assets or Excluded Liabilities;
(x) all patents, patent applications, patent disclosures and
inventions (whether or not patentable and whether or not reduced to
practice); all registered and unregistered
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statutory and common law copyrights; all registrations, applications and
renewals for any of the foregoing; all trade secrets, confidential
information, ideas, formulae, compositions, know-how, manufacturing and
production processes and techniques, research and development information,
drawings, specifications, designs, plans, improvements, proposals,
technical and computer data, financial, business and marketing plans, and
customer and supplier lists and related information; all license agreements
and sublicense agreements to and from third parties relating to any of the
foregoing; all other proprietary rights (including, without limitation, all
computer software and documentation); and all copies and tangible
embodiments of the foregoing (in whatever form or medium) (all of the
foregoing (other than items constituting Excluded Assets) are referred to
herein as the "Proprietary Rights"); all income, royalties, damages and
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payments due at Closing or thereafter with respect to the Proprietary
Rights and all other rights thereunder including, without limitation,
damages and payments for past, present or future infringements or
misappropriations thereof, the right to xxx and recover for past, present
or future infringements or misappropriations thereof; all rights to use all
of the foregoing forever and all other rights in, to, and under the
foregoing in the United States of America;
(xi) all permits, licenses, franchises, orders, registrations,
certificates, variances, approvals and similar rights obtained from
governments and governmental agencies, including, without limitation, those
listed on the attached "Licenses Schedule" and all data and records
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pertaining thereto;
(xii) all trademarks, service marks, trade names, trade dress, logos
and corporate names and all goodwill associated therewith;
(xiii) all goodwill as a going concern and associated with the
Business and the Purchased Assets;
(xiv) all insurance, warranty and condemnation proceeds received
after the Closing Date with respect to damage, non-conformance of or loss
to the Purchased Assets;
(xv) all rights to receive mail and other communications addressed
to Seller and relating to the Business or the Purchased Assets including,
without limitation, Accounts Receivable payments; and
(xvi) all books, records, ledgers, files, documents, correspondence,
lists, studies and reports and other printed or written materials, except
as set forth in Section 2.01(b) (v) hereof.
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(b) Excluded Assets. Notwithstanding the foregoing, the following
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assets are expressly excluded from the purchase and sale contemplated hereby
(the "Excluded Assets") and, as such, are not included in the Purchased Assets:
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(i) Seller's rights under or pursuant to this Agreement and the other
agreements contemplated hereby;
(ii) all cash and cash equivalents;
(iii) amounts due to Seller from Shareholder in an amount not to exceed
$17,211.19;
(iv) all prepayments, deposits, claims, rights of action, refunds,
reimbursements or other recoveries with respect to any Excluded Asset,
Excluded Liability or income tax paid by Shareholder;
(v) Seller's general ledger, accounting records, tax records, minute
books and corporate seal; provided that Buyer shall be given copies of the
general ledger, accounting records and tax records as such documents exist
as of the Closing Date;
(vi) any life insurance on Shareholder, including the cash surrender
value thereon;
(vii) all claims and rights of recovery with respect to that certain
lawsuit entitled Xxxxxxx'x Perennial Gardens, Inc. v. Logistics Edge, Inc.
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and Xxxxxxx Xxxxx;
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(viii) any right to receive mail and other communications addressed to
any Seller relating exclusively to the Excluded Assets or the Excluded
Liabilities;
(ix) all contracts, agreements and arrangements and all leases and
subleases of Seller not entered into in the ordinary course of business or
in accordance with the past custom and practice of the Business, including
without limitation, those which are expressly specified to be not assumed
by the Buyer on the "Contracts Schedule" or the "Leases Schedule;"
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(x) any assets relating to any program, Plan, policy or arrangement
(whether or not terminated) (A) which is or has been maintained,
established, or offered by Seller, (B) to which Seller contributes or has
contributed, (C) to which Seller has or has had any obligation to
contribute or (D) to which any Seller has or has had any liability or
potential liability and under which current or former employees, retirees,
individual contractors (or their spouses, dependents or other
beneficiaries) may receive benefits or have received benefits, including
but not limited to any Plan;
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(xi) any assets and property located at Seller's Illinois
facilities, including the proceeds from the sale of such assets (other than
the growing stock and Day Lilly clumps, wherever located), and the
receivables due to Seller or Shareholder arising exclusively from the sale
of Seller's retail nursery located in Illinois to Prairie Haven, Ltd.;
(xii) the three bedroom house located across the street from Seller's
main office in South Carolina;
(xiii) the personal art collection of Shareholder located in Seller's
main office in South Carolina;
(xiv) Seller's van used primarily by Shareholder; and
(xv) Seller's seed germination equipment to the extent such
equipment is not used by Seller in connection with the operation of the
Business.
2.02 Limited Assumption of Liabilities.
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(a) Limited Assumed Liabilities. On the terms and subject to
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the conditions specified in this Agreement, from and after the Closing Date,
Buyer will not assume or in any way be responsible for any liabilities or
obligations of Seller or Shareholder or any other liabilities or obligations
whatsoever related to the operation of the Business or condition of the
Purchased Assets at any time prior to the Closing Date, except as specifically
provided below. Except as specifically provided in this Section 2.02(a), and
notwithstanding any disclosure made by Seller or Shareholder in Article 5
hereof, Buyer shall not assume any liability or obligation relating to or
arising out of or as result of (1) any transaction, status, event, condition,
occurrence, situation, charge, complaint, action, suit, proceeding, hearing,
investigation, claim or demand existing, occurring or arising on or prior to the
Closing Date, whether arising through any action or failure to act by Seller,
its officers, directors, employees or agents or the Shareholder, or otherwise or
(2) any violation of law, breach of contract, fraud, breach of warranty, tort or
infringement occurring on or prior to the Closing Date. To the extent such
liability or obligation is not an Excluded Liability (as defined below) or arise
as a result of a breach of any representation, warranty or covenant of Seller or
Shareholder, Buyer will be responsible for all liabilities and obligations
arising after the Closing Date resulting solely from Buyer's operation of the
Business and ownership of the Purchased Assets. Subject to the provisions of
Section 7.03(f) hereof, from and after the Closing Date, Buyer will assume and
agree to pay, defend, discharge and perform as and when due only the following
specific liabilities and obligations of (i) Seller that relate exclusively to
the Business or (ii) Shareholder that relate exclusively to the assets being
purchased from Shareholder pursuant to Sections 2.01(a)(iii) and 2.01(a)(x)
(collectively, the "Assumed Liabilities"):
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(i) liabilities and obligations to the extent arising after the
Closing Date pursuant to all contracts, leases, licences, instruments,
arrangements, purchase orders or other agreements entered into in the
ordinary course of business in a manner consistent with past custom and
practice including, without limitation, those contracts and leases which
are set forth on the "Contracts Schedule" or the "Leases Schedule"
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(collectively, the "Contracts");
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(ii) liabilities resulting from express product warranties given by
Seller in the ordinary course of business in a manner consistent with past
custom and practice including, without limitation, those product warranties
set forth on the "Assumed Product Warranties Schedule;"
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(iii) liabilities to former employees of Seller, other than
Shareholder, for unused 1996 vacation days to the extent specifically
described on and for the number of days set forth on the "Assumed
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Liabilities Schedule," which schedule shall be true and complete as of a
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date not prior to July 31, 1996, plus liabilities to such employees for
unused vacation days accrued by Seller in the ordinary course of business
in a manner consistent with past custom and practice after the date of such
schedule through and including the Closing Date, and excluding any
liability or obligation of Seller to its employees for payment in cash for
accrued vacation days in lieu of time off;
(iv) liabilities and obligations for all accounts payable and
accrued expenses related exclusively to the removal and transfer of growing
stock and Day Lilly clumps from the Seller's Illinois facilities to the
Seller's South Carolina facilities; and
(v) liabilities and obligations, whether arising under any Contract
or otherwise, for all accounts payable and accrued expenses related
exclusively to the Business and incurred by Seller or Shareholder in the
ordinary course of business in a manner consistent with past custom and
practice including, without limitation, all accounts payable and accrued
expenses specifically described on and in the amounts set forth on the
"Assumed Liabilities Schedule."
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(b) Excluded Liabilities. Notwithstanding anything to the contrary
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contained in this Agreement and regardless of whether such liability is
disclosed herein or on any schedule hereto, Buyer will not assume or be liable
for any of Seller's debts, liabilities or obligations of any nature whatsoever,
whether accrued, absolute or contingent, whether known or unknown, whether
disclosed or undisclosed, whether due or to become due, and whether arising out
of, related to or associated with the Business, the Purchased Assets or
otherwise, and regardless of when or by whom incurred, other than the Assumed
Liabilities, including, without limitation, the following liabilities and
obligations of Seller (the "Excluded Liabilities"):
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(i) liabilities or obligations for any contracts, agreements,
leases or other arrangements, accounts payable, accrued liabilities or
other short-term liabilities other than those described in Section 2.02(a)
hereof, or any contingent liabilities;
(ii) liabilities or obligations with respect to all Taxes (other
than those included in Section 2.02(a)(v) hereof), including without
limitation, all income taxes of Seller and Shareholder relating to the
ownership or operation of the Business and/or the Purchased Assets on or
prior to the Closing Date and all Taxes arising out of or relating to any
of the transactions contemplated hereby;
(iii) liabilities or obligations of Seller or Shareholder for costs
and expenses incurred in connection with this Agreement and the
consummation of the transactions contemplated hereby (except to the extent
set forth in Section 7.06 hereof);
(iv) liabilities or obligations of Seller under this Agreement or
the agreements contemplated hereby;
(v) liabilities or obligations arising out of, resulting from or
relating to the Excluded Assets;
(vi) liabilities or obligations arising out of the business of
Seller conducted in Illinois including, without limitation, all accounts
payable relating thereto (other than those included in Section 2.02(a)(iv)
above) and set forth on the Excluded Accounts Payable Schedule;
(vii) liabilities or obligations of Seller for indebtedness for
borrowed money or any capitalized leases;
(viii) liabilities or obligations of Seller arising out of or related
to the same facts or circumstances as those which gave rise to that certain
lawsuit entitled Xxxxxxx'x Perennial Gardens, Inc. v. Logistics Edge, Inc.
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and Xxxxxxx Xxxxx, including, without limitation, any liability or
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obligation of Seller to Logistics Edge, Inc. or Xxxxxxx Xxxxx;
(ix) liabilities or obligations for any claims (whenever made) or
proceedings arising out of, relating to, resulting from or caused by any
products delivered and sold by Seller or any of its Affiliates with respect
to the Business (or any predecessor) at any time on or prior to the Closing
Date (except to the extent set forth in Section 2.02(a));
(x) liabilities or obligations for any claims (whenever made)
arising out of, relating to, resulting from or caused by any transaction,
event or occurrence existing, arising or occurring (A) in connection with
the ownership or operation of the Business and/or the
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Purchased Assets on or prior to the Closing Date or (B) in connection with
Seller's or any of its Affiliates' businesses or activities at any time
prior to or on or after the Closing Date (except to the extent set forth in
Section 2.02(a));
(xi) liabilities or obligations for any claims (whenever made)
arising out of or relating to any claims by employees or former employees
or independent contractors (including dependents, spouses and other
beneficiaries) of Seller, its subsidiaries or Plan Affiliates (or any
predecessors) for (a) medical costs and expenses incurred as a result of
claims made or injuries occurring on or prior to the Closing Date
including, without limitation, any claims, costs or expenses relating to or
arising under any Plan, if any (including any claims, costs or expenses
related to continuation coverage as set forth in Section 601 of ERISA
provided to any former employee or dependent thereof as of or prior to the
Closing Date, other than accounts payable or accrued expenses existing as
of the Closing Date, but excluding any accounts payable or accrued expenses
arising on or after the Closing Date), and (b) costs, expenses and other
liabilities under any workers compensation laws, regulations, requirements
or programs to the extent related to any claim arising from or alleged to
arise from or in connection with any fact, event, claim, injury or
condition existing on or prior to the Closing Date; (Notwithstanding the
foregoing, Seller will continue to perform the administrative functions of
processing after the Closing such medical and workers compensation claims
contemplated hereby. Nothing herein expressed or implied is intended or
shall be construed to confer upon or give to any person, firm or
corporation, other than the parties hereto and their respective permitted
successors and assigns, any rights or remedies under or by reason of this
Agreement.);
(xii) with respect to all current and former employees, independent
contractors, their spouses, dependents and beneficiaries, all obligations,
duties, contributions and liabilities relating to any claims for severance
pay, vacation pay, accrued vacation pay, death, disability or other welfare
or fringe benefits, including, without limitation, any benefit offered or
available under any Employee Welfare Plan, payable as a result of facts,
actions or conditions existing on or prior to the Closing Date or which are
provided to any person who is not an active employee (or a dependent
thereof) of Seller, its subsidiaries or any Plan Affiliate on or
immediately prior to the Closing Date, except as provided in Section
2.02(a) hereof;
(xiii) any liabilities or obligations (including but not limited to
any claim of any governmental agency, any trustee, any fiduciary, any plan
administrator, any person dealing with any Plan, any employee or any
beneficiary and without regard to whether such liability or obligation
arises prior to or after the Closing Date or results from an event, prior
to or after the Closing Date) which relate to (A) program, plan, policy or
arrangement (whether or not terminated) (i) which is or has been
maintained, established, or offered by Seller, (ii) to
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which Seller contributes or has contributed; (iii) to which Seller has or
has had any obligation to contribute; or (iv) to which Seller has or has
had any liability or potential liability and under which current or former
employees, retirees, individual contractors (or their spouses, dependents
or other beneficiaries) may receive benefits or have received benefits,
including but not limited to any Plan; (B) any Tax, penalty, assessment,
fine or other liability relating to any such program, plan, policy, or
Plan, which may result as a violation of law, including any violation of
the Code, ERISA or any proposed, temporary or final regulation thereunder
or (C) any liability, including any potential or actual liability, relating
to any failure to comply with the requirements of the Code and/or ERISA; or
(xiv) any liabilities (whether accrued, absolute, contingent,
unliquidated or otherwise) or obligations (whether investigatory,
corrective, remedial or otherwise) arising under any Environmental and
Safety Requirements with respect to the operation of the Business or
condition of the Purchased Assets prior to the Closing Date, whether or not
set forth on any schedule to this Agreement or otherwise disclosed to or
known by Buyer prior to the date hereof (including without limitation any
liability for attorney and consultant fees, personal injury, property
damage, onsite or offsite cleanup costs or damage to natural resources).
2.03 Purchase Price. Subject to the conditions contained in this
--------------
Agreement, the total consideration to be delivered at the Closing by Buyer for
the Purchased Assets (the "Purchase Price") shall be (i) $1,000,000 payable by
--------------
wire transfer of immediately available funds to the Escrow Account, (ii) payment
by wire transfer of immediately available funds of amounts directed and
authorized by Seller and Shareholder in the "Payment Authorization Letter"
attached hereto as Exhibit F, (iii) payment by wire transfer of immediately
---------
available funds of amounts due under certain mortgages on real property being
purchased by Buyer from Shareholder hereunder in the amounts and to the parties
as set forth on the "Mortgage Payoff Schedule" attached hereto, (iv) $9,045,000
minus the sum of amounts paid under clause (ii) and (iii) above, payable by wire
transfer of immediately available funds to an account designated by Seller and
(v) the assumption by Buyer of the Assumed Liabilities.
2.04 Closing. Subject to the satisfaction or waiver of the conditions
-------
contained in this Agreement, the closing of the transactions contemplated by
Sections 2.01, 2.02 an 2.03 hereof (the "Closing") will occur at the offices of
-------
Xxxxxxxx & Xxxxx, 000 Xxxx Xxxxxxxx Xxxxx, Xxxxxxx, Xxxxxxxx 00000, at 10 a.m.
on August 30, 1996 or at such other time and on such other date as the parties
hereto mutually agree (the "Closing Date").
------------
2.05 Assignment of Contracts. Seller shall obtain all consents and
-----------------------
approvals necessary to assign to Buyer any Contract, permit or other asset of
Seller that is included in the Purchased Assets. To the extent that the
assignment hereunder by Seller to Buyer of any Contract is not permitted or is
not permitted without the consent of any other party to the Contract, this
-13-
Agreement shall not be deemed to constitute an assignment of any such Contract
if such consent is not given or if such assignment otherwise would constitute a
breach of, or cause a loss of contractual benefits under, any such Contract, and
Buyer shall assume no obligations or liabilities thereunder. Seller shall advise
Buyer promptly in writing with respect to any Contract under which it knows or
has reason to believe it will not receive the required consent. Seller shall
take all actions requested by Buyer and cooperate with Buyer to obtain such
consent or any new Contract (if necessary) on substantially similar terms and
conditions as those under the existing Contracts. Without in any way limiting
Seller's obligations to obtain all consents and waivers necessary for the sale,
transfer, assignment and delivery of the Contracts and the Purchased Assets to
Buyer hereunder, if any such consent is not obtained or if such assignment is
not permitted irrespective of consent and the Closing hereunder is consummated,
Seller shall continue to use its reasonable best efforts to obtain such consents
and shall cooperate with Buyer in any arrangement designed to provide Buyer with
the rights and benefits (subject to the obligations) under the Contracts.
ARTICLE 3
CONDITIONS TO CLOSING
---------------------
3.01 Conditions to Buyer's Obligation. Except as otherwise expressly
--------------------------------
provided in this Agreement, the obligation of Buyer to consummate the
transactions contemplated by this Agreement is subject to the satisfaction of
the following conditions on or before the Closing Date:
(a) the representations and warranties set forth in Article 5 hereof
will be true and correct at and as of the Closing Date;
(b) Seller will have performed all of the covenants and agreements
required to be performed by it under this Agreement prior to the Closing;
(c) there will have been no material adverse change in the assets,
liabilities, condition (financial or otherwise), operating results, employee,
customer or supplier relations, business activities or business prospects of
Seller, and Seller will not have lost any Material Customer (or any material
portion of any Material Customer's business), since January 1, 1996;
(d) all consents and approvals by governmental agencies that are
necessary or (in the opinion of Buyer) desirable for the consummation of the
transactions contemplated hereby or the other agreements contemplated hereby or
by third parties that are required in order to prevent a breach of, or a default
under or a termination or modification of, any instrument, contract, lease or
other agreement to which Seller is a party or to which the Purchased Assets is
subject and releases of all Liens on the Purchased Assets (other than the
Assumed Liabilities) will have been obtained on terms and conditions no less
favorable to Buyer than they are to Seller;
-14-
(e) all licenses, permits and authorizations that are required to
own and operate the Purchased Assets and to carry on the Business as now
conducted will have been transferred to or obtained (or, if not required at
Closing, applied for) by Buyer on terms and conditions no less favorable to
Buyer than they are to Seller;
(f) no suit, action or proceeding before any court, arbitrator or
government body will be pending or threatened which, in the judgment of Buyer,
made in good faith upon advice of counsel, makes it inadvisable or undesirable
to consummate the transactions contemplated by this Agreement;
(g) on the Closing Date, Seller will have delivered to Buyer at
Seller's expense (unless otherwise specifically provided herein) each of the
following:
(i) a certificate from an officer of Seller in the form set forth
as Exhibit A attached hereto, dated the Closing Date, stating that the
---------
preconditions specified in subsections (a) through (f) hereof, inclusive,
have been satisfied;
(ii) certified copies of the resolutions duly adopted by Seller's
board of directors and shareholders unanimously authorizing the execution,
delivery and performance of this Agreement and the other agreements
contemplated hereby, and the consummation of all other transactions
contemplated hereby and thereby;
(iii) copies of all necessary governmental and third party consents,
approvals, releases and filings required in order for Seller to effect the
transactions contemplated by this Agreement and the other agreements
contemplated hereby;
(iv) such instruments of sale, transfer, assignment, conveyance and
delivery (including, without limitation, a special warranty deed for
Shareholder's real property subject only to the Permitted Encumbrances, and
all vehicle titles), in form and substance satisfactory to counsel for
Buyer, as are required in order to transfer to Buyer good and marketable
title to the Purchased Assets, free and clear of all Liens (other than
Temporary Liens on inventory and the Permitted Encumbrances);
(v) the following title insurance commitments, policies and
endorsements:
(A) With respect to each parcel of owned real property
listed on the "Owned Real Property Schedule" and included in the
----------------------------
Purchased Assets, an ALTA Form B - 1970 Owner's Policy of Title
Insurance (or equivalent policy acceptable to Buyer if the Owner Real
Property is located in a state in which an ALTA Form B - 1970 Owner's
Policy of Title Insurance is not available) issued by a title insurer
reasonably satisfactory to Buyer, in an amount equal to the value of
-15-
each such parcel of owned real property (including all improvements
located thereon) set forth on the "Allocation Schedule" attached
-------------------
hereto, insuring title to such owned real property to be in Buyer as
of the Closing, subject only to the Permitted Encumbrances.
(B) Each title insurance policy delivered under Section
3.01(g)(v)(A) above shall (1) insure title to the real property
subject thereto and all recorded easements benefitting such real
property, (2) contain an "extended coverage endorsement" insuring over
the general exceptions contained customarily in such policies, (3)
contain an ALTA Zoning Endorsement 3.1 (or equivalent), (4) contain an
endorsement insuring that the real property described in the title
insurance policy is the same real estate as shown on the Survey (as
defined in Subsection 3.01(g)(vi) below) delivered with respect to
such real property, (5) contain an endorsement insuring that each
street adjacent to the real property is a public street and that there
is direct and unencumbered pedestrian and vehicular access to such
street from the real property, (6) if the real property consists of
more than one record parcel, contain a "contiguity" endorsement
insuring that all of the record parcels are contiguous to one another,
(7) a tax parcel number endorsement and (8) such other endorsements as
Buyer or Buyer's lender may reasonably request. Shareholder shall be
responsible for and shall pay all of the costs and expenses incurred
in connection with the delivery and procurement of the title policies
required under this Section 3.01(g)(v).
(C) Such further affidavits, agreements and assurances
reasonably required by the title insurer in order to facilitate
Buyer's efforts and ability to obtain the ALTA Owner's Policies of
Title Insurance identified in this Section 3.01(g)(v).
(vi) With respect to each parcel of owned real property listed on
the "Owned Real Property Schedule" and included in the Purchased Assets, an
----------------------------
update of those certain surveys of owned real property prepared by C.
Xxxxxx Xxxx, dated November 25, 1994 and December 29, 1994, respectively,
and certified to Buyer, the title insurer, any third party lending
institution designated by Buyer and any other party reasonably designated
by Buyer, prepared by such surveyor and conforming to current Minimum
Standards Manual for the Practice of Land Surveying for South Carolina (the
"Survey"). The Survey shall not disclose any survey defect or encroachment
------
from or onto the real property subject to such Survey which is material to
the Business or the Purchased Assets. Shareholder shall be responsible for
and shall pay all of the costs and expenses incurred in connection with the
delivery and procurement of the Surveys required under this Section
3.01(g)(vi).
(vii) A termination of that certain unrecorded lease agreement
between Shareholder, as landlord, and Seller, as tenant, for the owned real
property (the "Xxxxxxx/IPG Lease") in form and substance reasonably
-----------------
satisfactory to Buyer and Buyer's lenders.
-16-
(viii) An assignment of lease for each of the Leases set forth in the
Leases Schedule, in form and substance reasonably satisfactory to Buyer.
(ix) Such other documents or instruments as Buyer reasonably
requests to effect the transactions contemplated hereby.
(h) Seller shall not have lost any of its sales representatives or
any of its employees who, in the opinion of Buyer, constitute key employees;
(i) Shareholder and Buyer will have entered into a consulting,
confidentiality and noncompetition agreement in the form of Exhibit B attached
---------
hereto (the "Consulting and Noncompetition Agreement"), and the Consulting and
---------------------------------------
Noncompetition Agreement will not have been amended or modified and will be in
full force and effect as of the Closing;
(j) Buyer will have received from Seller's counsel, Xxxxxxx &
Xxxxx, an opinion with respect to the matters set forth in Exhibit C attached
---------
hereto, addressed to Buyer and dated the Closing Date, in form and substance
reasonably satisfactory to Buyer;
(k) Seller, Shareholder and Buyer will have entered into an Escrow
Agreement in the form of Exhibit D attached hereto (the "Escrow Agreement"), and
--------- ----------------
the Escrow Agreement will not have been amended or modified and will be in full
force and effect as of the Closing;
(l) Seller, Shareholder and Buyer will have entered into an Access
License Agreement in the form of Exhibit E attached hereto (the "Access License
--------- --------------
Agreement"), and the Access License will not have been amended or modified and
---------
will be in full force and effect as of the Closing; and
(m) all proceedings to be taken by Seller in connection with the
consummation of the Closing and the other transactions contemplated hereby and
all certificates, opinions, instruments and other documents required to effect
the transactions contemplated hereby reasonably requested by Buyer will be
reasonably satisfactory in form and substance to Buyer and its counsel.
Any conditions specified in this Section 3.01 may be waived by Buyer; provided,
that no such waiver will be effective unless it is set forth in a writing
executed by Buyer.
3.02 Conditions to Seller's Obligations. Except as otherwise
----------------------------------
expressly provided herein, the obligation of Seller to consummate the
transactions contemplated by this Agreement is subject to the satisfaction of
the following conditions on or before the Closing Date:
(a) the representations and warranties set forth in Article 6
hereof will be true and correct in all material respects at and as of the
Closing Date;
-17-
(b) Buyer will have performed in all material respects all the
covenants and agreements required to be performed by it under this Agreement
prior to the Closing;
(c) all consents and approvals by governmental agencies that are
required for the consummation of the transactions contemplated hereby by Seller
or Shareholder or the other agreements contemplated hereby will have been
obtained on terms and conditions reasonably satisfactory to Seller;
(d) no suit, action or proceeding before any court, arbitrator or
government body will be pending or threatened which, in the judgment of Seller,
made in good faith and upon advice of counsel, makes it inadvisable or
undesirable for Seller to consummate the transactions contemplated by this
Agreement;
(e) Buyer and Shareholder will have entered into the Consulting and
Noncompetition Agreement, and the Consulting and Noncompetition Agreement will
not have been amended or modified and will be in full force and effect as of the
Closing;
(f) Seller, Shareholder and Buyer will have entered into the Escrow
Agreement, and the Escrow Agreement will not have been amended or modified and
will be in full force and effect as of the Closing; and
(g) Seller, Shareholder and Buyer will have entered into the Access
License Agreement, and the Access License Agreement will not have been amended
or modified and will be in full force and effect as of the Closing; and
(h) all proceedings to be taken by Buyer in connection with the
consummation of the Closing and the other transactions contemplated hereby and
all certificates, opinions, instruments and other documents required to effect
the transactions contemplated hereby reasonably requested by Seller will be
reasonably satisfactory in form and substance to Seller and its counsel.
Any condition specified in this Section 3.02 may be waived by Seller; provided,
that no such waiver will be effective against Seller unless it is set forth in a
writing executed by Seller.
-18-
ARTICLE 4
[INTENTIONALLY OMITTED]
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF SELLER AND SHAREHOLDER
---------------------------------------------------------
As an inducement to Buyer to enter into this Agreement, each of Seller
and Shareholder hereby jointly and severally represents and warrants to Buyer
that as of the date of this Agreement and as of the Closing Date:
5.01 Organization and Power; Capitalization; Subsidiaries and
--------------------------------------------------------
Investments. Seller is a corporation duly organized, validly existing and in
-----------
good standing under the laws of Delaware. Seller is qualified to do business as
a foreign corporation and is in good standing in each jurisdiction in which its
ownership of properties or conduct of business requires Seller to be so
qualified, except for jurisdictions where the failure to be so qualified will
not have a material adverse effect on Seller's ability to perform its
obligations hereunder. Seller has all requisite corporate power and authority
and all licenses, permits and authorizations necessary to own and operate the
Purchased Assets and to carry on the Business as now conducted and as presently
proposed to be conducted. Seller has all requisite power and authority to
execute and deliver this Agreement and the other agreements contemplated hereby
and to perform its obligations hereunder and thereunder, subject to the consents
and approvals required to be obtained and listed on the attached "Restrictions
------------
Schedule," all of which shall have been obtained at or prior to the Closing.
--------
The attached "Capitalization Schedule" accurately sets forth the authorized and
-----------------------
outstanding capital stock of Seller and the name and number of shares of capital
stock held by each stockholder of Seller. Seller does not own or control
(directly or indirectly) any stock, partnership interest, joint venture
interest, equity participation or other security or interest in any other
Person. The certificate of incorporation and bylaws of Seller that have
previously been furnished to Buyer reflect all amendments thereto and are
correct and complete in all material respects.
5.02 Authorization. The execution, delivery and performance by Seller
-------------
and Shareholder of this Agreement, the other agreements contemplated hereby and
the transactions contemplated hereby and thereby have been duly and validly
authorized by Seller and Shareholder and no other corporate act or proceeding on
the part of Seller, its Board of Directors or its stockholders is necessary to
authorize the execution, delivery or performance by Seller of this Agreement or
any other agreement contemplated hereby or the consummation of the transactions
contemplated hereby or thereby. All of the shareholders of Seller have approved
and consented in
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writing to the consummation of the transactions contemplated by this Agreement.
This Agreement has been duly executed and delivered by each of Seller and
Shareholder and this Agreement constitutes, and the other agreements
contemplated hereby upon execution and delivery by Seller and/or Shareholder, as
appropriate, will each constitute a valid and binding obligation of Seller
and/or Shareholder, as appropriate, enforceable against in accordance with its
terms, except to the extent that the enforcement thereof may be limited by
bankruptcy, insolvency, reorganization, rehabilitation, moratorium and similar
laws now or hereafter in effect relating to creditors' rights generally or
general equitable principles.
5.03 No Breach. Except as set forth on the attached "Restrictions
--------- ------------
Schedule," the execution, delivery and performance by Seller of this Agreement
--------
and the other agreements contem plated hereby and the consummation of the
transactions contemplated hereby and thereby do not and will not (a) violate,
conflict with, result in any breach of, constitute a default under, result in
the termination or acceleration of, create in any party the right to accelerate,
terminate, modify or cancel, or require any notice under, Seller's certificate
of incorporation or bylaws, or any contract, agreement, indenture, mortgage,
loan agreement, lease, sublease, license, sublicense, franchise, permit,
indenture, mortgage, obligation or instrument to which Seller is a party or by
which it is bound or affected or to which any of the Purchased Assets is bound
or affected, (b) result in the creation or imposition of any lien, security
interest, charge, restriction or encumbrance upon any of the Purchased Assets,
(c) require any authorization, consent, approval, exemption or other action by
or notice to any court, other governmental body or other person or entity under,
the provisions of any law, statute, rule, regulation, judgment, order or decree
or any contract, agreement, lease, sublease, license, franchise, permit,
indenture, mortgage, obligation or instrument to which Seller is subject, bound
or affected or to which the Purchased Assets are bound or affected or (d)
violate or require any consent or notice under law, statute, regulation, rule,
judgment, decree, order, stipulation, injunction, charge or other restriction of
any government, governmental agency or court to which Seller or any of the
Purchased Assets is subject, bound or affected. Except as set forth on the
Restrictions Schedule, no permit, consent, approval or authorization of,
declaration to or filing with, or notice to, any governmental authority or any
third party is required in connection with the execution, delivery and
performance by Seller of this Agreement or the other agreements contemplated
hereby, or the consummation by Seller of any other transactions contemplated
hereby or thereby.
5.04 Financial Information. The attached "Financial Statement
--------------------- -------------------
Schedule" contains the following financial statements (the "Financial
-------- ---------
Statements"):
(a) the audited balance sheet of Seller as of December 31, 1995 (the
"Balance Sheet") and the related reviewed statements of income, changes in
--------------
stockholders' equity and cash flow for the twelve-month period then ended; and
-20-
(b) the unaudited balance sheet of Seller as of June 30, 1996 (the
"Latest Balance Sheet"), and the related unaudited statements of income, changes
---------------------
in stockholders' equity and cash flow for the six-month periods then ended.
Each of the foregoing Financial Statements (including in all cases the notes
thereto, if any) is consistent with the books and records of Seller (which are
true, accurate and complete in all material respects) and presents fairly in all
material respects the financial condition and results of operations of Seller in
accordance with generally accepted accounting principles consistently applied
throughout the periods covered thereby (unless otherwise noted in the footnotes
thereto or in the accompanying letter from Seller's independent public
accountants); provided, however, that the interim Financial Statements are
subject to normal year end adjustments (which, individually or in the aggregate,
will not be material) and lack footnotes and other presentation items.
5.05 Inventories. The inventories of Seller (a) are properly
-----------
reflected on Seller's books and records in accordance with generally accepted
accounting principles consistently applied at the lower of cost or market on a
first-in, first-out basis and (b) are not obsolete or damaged. All of the
inventories of Seller (other than inventory in transit) are located on its
premises in South Carolina or in Illinois.
5.06 Notes and Accounts Receivable. All Accounts Receivable (a) are
-----------------------------
valid receivables incurred in the ordinary course of business, (b) are properly
reflected on Seller's books and records in accordance with generally accepted
accounting principles consistently applied, (c) are not and will not be subject
to any valid counterclaim, deduction, credit, set-off or other offset, and (d)
are current and as of the Closing Date are collectible within a commercially
reasonable period of time at full face amounts without offset, subject to a
reserve for bad debts established in a manner consistent with the reserve for
bad debts reflected on the Balance Sheet, and not varying therefrom in any
material respect, and further subject to customary discounts and adjustments,
which shall not be material either individually or in the aggregate. The
attached "Accounts Receivable Schedule" contains a true and complete list of all
----------------------------
Accounts Receivable of Seller as of the effective date of such schedule,
relating to or arising out of the Business.
5.07 Absence of Undisclosed Liabilities. With respect to the Business
----------------------------------
or the Purchased Assets, to Seller's Knowledge, Seller has no debts, liabilities
or obligations of any nature (whether accrued, absolute, contingent, direct,
indirect, perfected, inchoate, unliquidated or otherwise, whether due or to
become due) arising out of transactions entered into at or prior to the Closing,
or any transaction, series of transactions, action or inaction at or prior to
the Closing, or any state of facts or condition existing at or prior to the
Closing (regardless of when any such liability or obligation is asserted),
including, without limitation, Taxes with respect to or based upon
transactions or events occurring on or before the Closing, except (a) material
liabilities and obligations under agreements, contracts, leases or commitments
described on the Leases Schedule or the Contracts Schedule (none of which
relates to any breach of contract, breach of warranty, tort,
-21-
infringement, or violation of law or arose out of any charge, complaint, action,
suit, proceeding, hearing, investigation, claim or demand), (b) liabilities and
obligations to the extent specifically reflected and reserved against on the
Latest Balance Sheet, (c) liabilities and obligations expressly described on the
attached "Undisclosed Liabilities Schedule" and (d) liabilities and obligations
--------------------------------
of Seller as provided in Section 2.02(a) hereof and incurred in the ordinary
course of business since the date of the Latest Balance Sheet.
5.08 No Material Adverse Changes. Except as set forth on the attached
---------------------------
"Developments Schedule," since the date of the Latest Balance Sheet, there has
---------------------
been no material adverse change in the assets, liabilities, condition (financial
or otherwise), operating results, or employee or supplier relations of Seller
and to Seller's Knowledge Seller has not lost any Material Customer (or any
material portion of any Material Customer's business).
5.09 Absence of Certain Developments. Except as set forth in the
-------------------------------
Developments Schedule attached hereto:
---------------------
(a) Since the date of the Latest Balance Sheet, except as otherwise
expressly provided herein, Seller has:
(i) conducted the Business only in the usual and ordinary course of
business in accordance with past custom and practice (including placing
purchase orders only for reasonable quantities and at reasonable prices and
accepting customer orders only for reasonable quantities on reasonable
terms and at rates and in amounts consistent with past custom and
practice);
(ii) used reasonable best efforts to keep in full force and effect
its present business organization and the Business;
(iii) used reasonable efforts to (A) retain the employees of the
Business who are performing satisfactorily, (B) preserve the present
business relationships with all customers and all material suppliers and
distributors of the Business, to the extent such relationships are
beneficial to the Business, (C) preserve the goodwill of the Business and
(D) promote the smooth transition of such customers, suppliers and
distributors from Seller to Buyer;
(iv) maintained all of the material Purchased Assets in good
repair, order and condition, except for ordinary wear and tear not caused
by neglect, and maintained insurance reasonably comparable to that in
effect on the date of the Latest Balance Sheet; and
(v) conducted the cash management customs and practices of the
Business (including the collection of receivables and payment of payables
and maintenance of inventory control and pricing and credit practices) in
the usual and ordinary course of
-22-
business in accordance with past custom and practice, or as of the Closing
Date failed to pay any account payable on or prior to the date on which
such payment was first due, notwithstanding any extension or waiver.
(b) Since the date of the Latest Balance Sheet, except as otherwise
provided herein, Seller has not, with respect to the Business:
(i) incurred any liability other than in the ordinary course of
business consistent with past custom and practice;
(ii) entered into any transaction, arrangement or contract
(including, without limitation, any transfer of the Purchased Assets or
placing a Lien on any of the Purchased Assets) except on an arm's-length
basis in the ordinary course of business consistent with past custom and
practice;
(iii) entered into any transaction, arrangement or contract with any
officer, director, partner, stockholder or other insider or Affiliate of
Seller including, without limitation, any sale, transfer, assignment or
conveyance of inventory;
(iv) instituted any material change in the conduct of Business or
any change in its method of purchase, sale, lease, management, marketing,
operation or accounting;
(v) made any purchases for the Business other than in the ordinary
course of business consistent with past custom and practice;
(vi) discharged or satisfied any material lien or encumbrance or
paid any material obligation or liability, other than current liabilities
paid in the ordinary course of business consistent with past custom and
practice, or canceled, compromised, waived or released any right or claim;
(vii) except as set forth on the "Licenses Schedule," modified,
-----------------
sold, assigned, transferred, abandoned or permitted to lapse any licenses
or permits which, individually or in the aggregate, are material to the
Business or any portion thereof, or any of the Proprietary Rights or other
intangible assets, or disclosed any material proprietary confidential
information to any Person, except in the ordinary course of business
consistent with past custom and practice, or granted any license or
sublicense of any rights under or with respect to any Proprietary Rights;
(viii) made or granted any bonus or any wage or salary increase to
any employee, officer or director, or directly or indirectly made any other
material change in employment
-23-
terms for any employee, officer or director, other than bonuses and
increases in the ordinary course of business to non-executive employees
consistent with past custom and practice;
(ix) made or granted any increase in, or amended or terminated, any
existing plan, program, policy or arrangement, including without
limitation, any Plan, employee benefit plan or arrangement, or adopted any
new employee benefit plan or arrangement, or amended or renegotiated any
existing collective bargaining agreement or entered into any new collective
bargaining agreement or multiemployer plan;
(x) made any capital expenditures or commitments therefor such that
the aggregate outstanding amount of unpaid obligations and commitments with
respect thereto shall comprise in excess of $25,000 of Assumed Liabilities
on the Closing Date;
(xi) made any loans or advances to, or pledges or guarantees for
the benefit of, or entered into any transaction with any employee, officer
or director, except for the transactions contemplated by this Agreement,
and for advances consistent with past custom and practice made to
employees, officers and directors for expenses incurred in the ordinary
course of business;
(xii) suffered any extraordinary loss, damage, destruction or
casualty loss or waived any rights of material value, whether or not
covered by insurance and whether or not in the ordinary course of business
or consistent with past custom and practice;
(xiii) received notification that any Material Customer or supplier
will stop or decrease in any material respect the rate of business done
with Seller;
(xiv) borrowed any amount or incurred or become subject to any
material liabilities, except liabilities under Seller's existing bank
facilities or current liabilities incurred in the ordinary course of
business and liabilities under contracts entered into in the ordinary
course of business consistent with past custom and practice;
(xv) pledged to make any charitable or other capital contribution;
(xvi) made any capital investment in, any loan to, or any
acquisition of the securities or assets of any other Person or taken any
steps to incorporate any subsidiary;
(xvii) entered into any other material transaction, other than in the
ordinary course of business consistent with past custom and practice; or
(xviii) committed to any of the foregoing.
-24-
(c) Seller and Shareholder represent and warrant that between July
24, 1996 and the Closing Date, neither Seller nor Shareholder has (and has not
permitted any Affiliate, employee, officer, director, stockholder, agent or
other person acting on its behalf to) discussed any possible sale of, solicited
or accepted any offer to, or negotiated, agreed to or sold, all or any part of
the securities or assets of the Business (other than the sale or other
disposition of inventory or other assets in the ordinary course of business
consistent with past custom and practice) to or with any other party (other than
Buyer or its representatives) or provided any information to any other party
(other than Buyer or its representatives) concerning Seller (other than
information which Seller provides to other parties in the ordinary course of its
business consistent with past custom and practice, so long as Seller has no
reason to believe that the information may be utilized to evaluate a possible
acquisition).
(d) Seller has not at any time made or committed to make any payments
for bribes, kickback payments or other illegal payments.
(e) Seller has not accelerated, terminated, modified, or canceled any
contract, lease, sublease, license, sublicense or other agreement set forth on
the attached "Contracts Schedule" or "Leases Schedule" (except for the
------------------ ---------------
cancellation of agreements entered into between Seller and Shareholder), and to
Seller's Knowledge, no other party has accelerated, terminated, modified, or
canceled any contract, lease, sublease, license, sublicense or other agreement
set forth on the attached "Contracts Schedule" or "Leases Schedule" (except for
------------------ ---------------
the cancellation of agreements entered into between Seller and Shareholder).
5.1 Title and Condition of Properties.
---------------------------------
(a) Owned Real Property. The attached "Owned Real Property Schedule"
------------------- ----------------------------
lists and sets forth a legal description of all real property owned by Seller or
Shareholder and to be transferred to Buyer. Except as set forth in the Owned
Real Property Schedule, with respect to each such parcel of owned real property:
(i) the identified owner has good and marketable title to the
parcel of real property, free and clear of any Lien, easement, covenant or
other restriction, except for the Permitted Encumbrances;
(ii) there are no (A) pending or to Seller's Knowledge threatened
condemnation proceedings relating to the property, (B) pending or to
Seller's Knowledge threatened litigation or administrative actions relating
to the property, or (C) to Seller's Knowledge other matters affecting
adversely the current use, occupancy, or value thereof;
(iii) to Seller's Knowledge, unless shown to the contrary on the
Surveys, the buildings and improvements are located within the boundary
lines of the described parcels
-25-
of land and do not encroach on any easement which may burden the land, and
access to the property is provided by paved public right-of-way with
adequate curb cuts available;
(iv) to Seller's Knowledge, except as may be shown on the title
commitments, policies and endorsements, and except as shown on the Surveys,
the buildings and improvements located on the property are not in violation
of applicable setback requirements, zoning laws and ordinances (and none of
the properties or buildings or improvements thereon are subject to
"permitted non-conforming use" or "permitted non-conforming structure"
classifications), the land does not serve any adjoining property for any
purpose inconsistent with the use of the land, and the property is not
located within any flood plain or subject to any similar type restriction
for which any flood hazard insurance, permits or licenses necessary to the
use thereof have not been obtained;
(v) all facilities have received all approvals of governmental
authorities (including licenses and permits) required in connection with
the ownership or operation thereof and have been operated and maintained in
accordance with applicable laws, rules, and regulations;
(vi) there are no leases, subleases, licenses, concessions, or
other agreements, written or oral, granting to any party or parties the
right of use or occupancy of any portion of the parcel of real property;
(vii) there are no outstanding options or rights of first refusal to
purchase the parcel of real property, or any portion thereof or interest
therein;
(viiii) there are no parties (other than Seller) in possession of the
parcel of real property;
(ix) all facilities located on the parcel of real property are
supplied with utilities and other services necessary for the operation of
such facilities, including gas, electricity, water, telephone, sanitary
sewer, and storm sewer, all of which services are adequate for Seller's use
and in accordance with all applicable laws, ordinances, rules, and
regulations and are provided via public roads or via permanent, irrevocable
(subject to applicable South Carolina law governing the taking of property
by the government), appurtenant easements benefitting the parcel of real
property;
(x) each parcel of real property abuts on and has direct vehicular
access to a public road or access to a public road via a permanent,
irrevocable (subject to applicable South Carolina law governing the taking
of property by the government), appurtenant easement benefitting the parcel
of real property; and
-26-
(xi) the parcel of real property has access to water resources for
irrigation purposes as reasonably required for the cultivation of nursery
stock in the ordinary course of the Business, the Seller's or Shareholder's
access to and use of such water resources is not dependant upon the
ownership of any real property or interest therein, contractual rights,
governmental permits or other rights or privileges of any kind which are
not included in the Purchased Assets. Seller and Shareholder are in
compliance with all laws, rules or regulations governing the use of any
such water resources.
(b) Leased Property. Other than the Xxxxxxx/IPG Lease to be
---------------
terminated at Closing, the leases described on the attached "Leases Schedule"
---------------
constitute all of the leases, subleases, licenses, concessions or other
agreements held by Seller or Shareholder for the use or occupancy of real
property in connection with the Business (the "Leases") under which Seller or
------
Shareholder holds a leasehold interest in real estate and/or personal property
used in connection with the Business. The real estate described on the "Owned
-----
Real Property Schedule" and the Leases described on the "Leases Schedule"
---------------------- ---------------
constitute all of the real estate owned, leased, used or occupied by Seller in
connection with the Business (collectively, the "Real Property"). Except as set
-------------
forth on the attached "Leases Schedule," the Leases described on the Leases
---------------
Schedule are in full force and effect and Seller hold a valid and existing
leasehold, subleasehold, license, concession or other such interest under each
of such Leases. Seller has delivered to Buyer complete and accurate copies of
each of the Leases described on the Leases Schedule and none of such Leases have
been modified in any material respect, except to the extent that such
modifications are disclosed by the copies delivered to Buyer. Except as set
forth on the attached "Leases Schedule," Seller is not in default and no
---------------
circumstances exist which would result in such default, under any of such
Leases, and no other party to such Leases has the right to terminate, accelerate
performance under or otherwise modify (including upon the giving of notice or
the passage of time) any of such Leases. No third party to any such Lease is in
default in any material respect under any of such Leases. All properties
leased, used or occupied under such Leases have unqualified access to public
roads and have access to all utilities necessary to conduct the Business as
presently constituted.
(c) Title. Seller owns good and marketable title, free and clear of
-----
all Liens (other than the Permitted Encumbrances), to all of the personal
property and assets shown on the Latest Balance Sheet or acquired thereafter or
otherwise included in the Purchased Assets and all intangible personal property
and assets of Seller included within the Purchased Assets, except for rights of
licensors and lessors of such Purchased Assets which are subject to license or
lease as described in the "Contracts Schedule" or the "Leases Schedule," Liens
------------------ ---------------
for current Taxes not yet due and payable and Liens disclosed on the attached
"Liens Schedule." At the Closing, Seller will convey, assign and transfer good
---------------
and marketable title to all of its real and personal property and assets
included within the Purchased Assets, free and clear of all Liens (other than
rights of licensors and lessors of such Purchased Assets which are subject to
license or lease as described in the Contracts Schedule or the Lease Schedule,
or Permitted Encumbrances or Temporary Liens on inventory). The Purchased
Assets so conveyed will include all of those assets (real, personal, tangible
and intangible) used
-27-
during the twelve months prior to the Closing Date (other than inventory or raw
materials used, sold or consumed in the ordinary course of business) and will
enable Buyer to operate the Business in the same manner as operated by Seller
prior to and as of the Closing Date.
(d) Condition. All of Seller's or Shareholder's buildings,
---------
improvements, machinery, equipment and other tangible personal property and
assets are in good condition and repair in all respects and except as set forth
on the attached "Condition of Property Schedule", except for ordinary wear and
------------------------------
tear not caused by neglect, and are useable in the ordinary course of business.
The Purchased Assets, together with the Excluded Assets, include all assets
necessary to the conduct of the Business as presently constituted and all assets
which were used to conduct the Business since the date of the Latest Balance
Sheet, other than assets sold or otherwise disposed of in the ordinary course of
business to non-affiliated third parties (except as set forth on the Contracts
Schedule) in accordance with past custom and practice.
(e) No Violations. To Seller's Knowledge, except as may be shown on
-------------
the title commitments, policies and endorsements, Seller is not in violation of
any applicable zoning, building code or subdivision ordinance or other law,
regulation or requirement relating to the operation of properties described on
the Leases Schedule or any of the Purchased Assets (including applicable
occupational health and safety laws and regulations), which violations,
individually or in the aggregate, could have a material and adverse effect upon
the assets, liabilities, condition (financial or otherwise), operating results,
employee or customer or supplier relations of Seller (a "Material Adverse
----------------
Effect"). Within the three (3) years prior to the date of this Agreement,
------
Seller has not received any notice of any such violation or any condemnation
proceeding with respect to any properties described on the Leases Schedule or
any of the Purchased Assets.
5.1 Contracts and Commitments.
-------------------------
(a) Except as set forth in the attached "Contracts Schedule," Seller
------------------
is not a party to or bound by any written or oral:
(i) collective bargaining agreement or contract with any labor
union or written contract for the employment of any officer, individual
employee or other Person on a full-time, part-time or consulting basis;
(ii) agreement or indenture relating to the borrowing of money,
mortgaging, pledging or otherwise placing a Lien on any of the Purchased
Assets;
(iii) agreement or commitment with respect to the lending or
investment of funds to or in other persons or entities;
-28-
(iv) guaranty of any obligation for borrowed money or otherwise,
other than endorsements made for collection in the ordinary course of
business;
(v) lease or agreement under which it is lessee or lessor of or
holds or operates any personal property owned by any other party for which
the annual rental exceeds $10,000;
(vi) lease or agreement under which it is lessor of or permits any
third party to hold or operate any property, real or personal, owned or
controlled by it for which the annual rental exceeds $10,000;
(vii) contract or group of related contracts or orders with the same
party for the purchase or sale of products under which the undelivered
balance of such products or services has a price in excess of $50,000;
(viii) contract relating to the supply or distribution of Seller's
products;
(ix) contract or group of related contracts with the same party
continuing over a period of more than six (6) months from the date or dates
thereof that is not terminable by each party thereto on thirty (30) days or
less notice without penalty;
(x) license or royalty agreement;
(xi) agreement, arrangement or understanding with any officer,
director, partner, stockholder or other insider or Affiliate of Seller
(other than for employment in customary terms);
(xii) contract which prohibits it from freely engaging in business
anywhere in the world; or
(xiii) other agreement material to the Business or the Purchased
Assets, whether or not entered into in the ordinary course of business.
(b) Except as disclosed in the Contracts Schedule, (i) to Seller's
Knowledge no contract or commitment included in the Purchase Assets has been
breached in any material respect or canceled by the other party that has not
been duly cured or reinstated, (ii) Seller has in all material respects
performed all of its obligations required to be performed by it under such
contracts and commitments to the date of this Agreement and is not in receipt of
any written claim of default under any such contract or commitment, (iii) no
event has occurred which with the passage of time or the giving of notice or
both would result in a breach or default under any such contract or commitment,
(iv) Seller has no Knowledge of any anticipated breach by any other party to any
such contract or
-29-
commitment and (v) to Seller's Knowledge, Seller is not a party to any contract
or contracts which, individually or in the aggregate, could have a Material
Adverse Effect.
(c) Buyer has been supplied with a true and correct copy of all
written contracts as specified on the Contracts Schedule, together with all
amendments, waivers or other changes thereto.
5.12 Proprietary Rights.
------------------
(a) The Proprietary Rights Schedule attached hereto contains a
complete and accurate list of (i) all patented and registered Proprietary Rights
owned by Seller and all pending patent applications and applications for the
registration of other Proprietary Rights owned or filed by Seller, (ii) all
trade or corporate names used by Seller, (iii) all licenses and other rights
granted by Seller to any third party with respect to the Proprietary Rights and
all licenses and other rights granted by any third party to Seller with respect
to the Proprietary Rights and (iv) all coexistence agreements, permissions or
agreements to which Seller is a party (or which is currently under negotiation
for Proprietary Rights.
(b) Except as set forth on the Proprietary Rights Schedule (i)
Seller owns and possesses a legally protectible right, title and interest in and
to all Proprietary Rights, (ii) Seller owns or has the valid right to use all of
the intellectual property necessary for the operation of Seller's business as
presently conducted or as currently proposed to be conducted, (iii) no claim by
any third party contesting the validity, enforceability, use, or ownership of
any Proprietary Rights has been made, is currently outstanding or is threatened
and there are no grounds for any such claim, (iv) neither Seller nor any
employee or agent of Seller has received any notices of, nor are they aware of
any facts which indicate a likelihood of, any infringement or misappropriation
by, or conflict with, any third party with respect to the Proprietary Rights,
nor has Seller or any employee or agent of Seller received any claims of
infringement or misappropriation of or other conflict with any intellectual
property rights of any third party and (v) Seller has not infringed,
misappropriated or otherwise conflicted with any rights of any third parties,
nor is Seller aware of any infringement, misappropriation or conflict which will
occur as a result of the continued operation of the Business as presently
conducted or as currently proposed to be conducted.
(c) The Proprietary Rights constitute all of the intellectual
property necessary for the operation of the Business as currently conducted.
Seller has taken all necessary action to protect the Proprietary Rights so as
not to materially and adversely affect the validity, enforcement, use or
ownership of such Proprietary Rights. The Proprietary Rights owned or used by
Seller immediately prior to the Closing hereunder will be owned or available for
use on identical terms and conditions immediately subsequent the Closing
hereunder.
-30-
5.13 Product Warranty. All products sold and delivered by Seller in
----------------
connection with the Business at any time prior to the Closing Date have been in
conformity with all applicable contractual commitments and all express or
implied warranties. No material liability exists for replacement thereof or
other damages in connection with such sales or deliveries at any time prior to
the Closing Date. No products heretofore delivered or sold by Seller in
connection with the Business or products with respect to which any offer or
agreement to sell has been made by Seller are now subject to any guarantee or
warranty, except to the extent described on the attached "Product Warranty
----------------
Schedule."
--------
5.14 Licenses and Permits. The attached "Licenses Schedule" contains
-------------------- -----------------
a complete listing and summary description of all permits, licenses,
certificates, approvals and other authorizations of foreign (if applicable),
federal, state and local governments or other similar rights (collectively, the
"Licenses") used by Seller in the conduct of the Business. Except as indicated
--------
on the Licenses Schedule, Seller owns or possesses all right, title and interest
in and to all of the Licenses that are necessary to own and operate the
Purchased Assets and to conduct the Business as presently constituted,
including, without limitation, all Licenses required under any federal, state or
local law relating to public health and safety, employee health and safety,
pollution or protection of the environment. Seller is in compliance in all
material respects with the terms and conditions of such Licenses and has
received no notices that it is in violation of any of the terms or conditions of
such Licenses. Seller has taken all necessary action to maintain such Licenses.
To Seller's Knowledge, no loss or expiration of any such License is threatened,
pending or reasonably foreseeable other than expiration in accordance with the
terms thereof. Except as indicated on the Licenses Schedule, all of the
Licenses are transferable to Buyer and will be transferred by Seller to Buyer on
or before the Closing Date.
5.15 Litigation and Other Proceedings. Except as set forth on the
--------------------------------
attached "Litigation Schedule," there are no actions, suits, proceedings,
-------------------
hearings, orders, investigations, charges, complaints or claims pending or to
Seller's Knowledge threatened against or affecting Seller, the Business or the
Purchased Assets (or pending or to Seller's Knowledge threatened against or
affecting any of the officers, directors or employees of Seller with respect to
the Business), or to which Seller or the Purchased Assets may be bound or
affected, at law or in equity, or before or by any federal, state, municipal,
foreign or other governmental department, commission, board, bureau, agency or
instrumentality, domestic or foreign, and there is no basis for any of the
foregoing; Seller is not subject to any judgment, order or decree of any court
or governmental agency; Seller has not received any opinion or memorandum or
legal advice from legal counsel to the effect that it is exposed, from a legal
standpoint, to any liability or disadvantage which may have a Material Adverse
Effect on the Business or the Purchased Assets.
5.16 Compliance with Laws; Certain Operations. Except as disclosed on
----------------------------------------
the attached "Compliance Schedule," Seller, and with respect to the Business and
-------------------
the Purchased Assets Shareholder, are in material compliance with and has not
violated any applicable law, rule or
-31-
regulation of any federal, state, local or foreign government or agency thereof
which affects the Business or the Purchased Assets, including, without
limitation, the Xxxxxxx Act, the Xxxxxxx Act, the Xxxxxxxx-Xxxxxx Act, the
Federal Trade Commission Act, or any other federal or state acts (including
rules and regulations thereunder) regulating or affecting antitrust or trade
regulations or the Immigration Reform and Control Act of 1986, as amended.
Except as disclosed on the attached "Compliance Schedule," no notice, claim,
-------------------
charge, complaint, action, suit, proceeding, investigation or hearing has been
received by Seller or Shareholder or filed, commenced or to Seller's Knowledge
threatened against Seller or Shareholder alleging a violation of or liability or
potential responsibility under any such law or regulation which affect the
Business or the Purchased Assets or to which Seller may be subject and which
have not heretofore been duly cured and for which there is no remaining
liability, except as set forth on the Compliance Schedule.
5.17 Environmental and Safety Requirements. Except as set forth and
-------------------------------------
described with particularity on the attached "Environmental Schedule":
----------------------
(a) Seller has complied and is in compliance in all material respects
with any applicable Environmental and Safety Requirements;
(b) Seller has obtained and complied with, and is in compliance in
all material respects with, all permits, licenses and other authorizations that
may be required pursuant to Environmental and Safety Requirements for the
occupation of the Facility and the operation of the Business which such permits,
licenses and authorizations may be relied upon by Buyer for the lawful operation
of the Business and the Facility on and after the Closing without transfer,
reissuance or other governmental action;
(c) Seller has not received any written notice, report or other
written information regarding any actual or alleged violation of Environmental
and Safety Requirements, or any liabilities or potential liabilities (whether
accrued, absolute, contingent, unliquidated or otherwise), including any
investigatory, remedial or corrective obligations, relating to the Business or
the Real Property and arising under Environmental and Safety Requirements;
(d) none of the following exists at any property or facility owned or
operated by the Seller in connection with the Business (i) underground storage
tanks, (ii) asbestos-containing material in any form or condition, (iii)
materials or equipment containing polychlorinated biphenyls or (iv) landfills,
surface impoundments, or disposal areas;
(e) Seller has not treated, stored, disposed of, arranged for or
permitted the disposal of, transported, handled, or released any substance,
including without limitation any hazardous substance, or owned or operated any
property or facility (and no such property or facility is contaminated by any
such substance) in a manner that has given or would give rise to material
liabilities, including any liability for response costs, corrective action
costs, personal injury, property
-32-
damage, natural resources damages or attorney fees, or any investigative,
corrective or remedial obligations, pursuant to the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, as amended ("CERCLA") or the
------
Solid Waste Disposal Act, as amended ("SWDA") or any other Environmental and
----
Safety Requirements;
(f) no facts, events or conditions relating to the past or present
facilities, properties or operations of Seller or the Business will materially
prevent, hinder or limit continued compliance by the Business with Environmental
and Safety Requirements, give rise to any material investigatory, remedial or
corrective obligations pursuant to Environmental and Safety Requirements, or
give rise to any other material liabilities (whether accrued, absolute,
contingent, unliquidated or otherwise) pursuant to Environmental and Safety
Requirements, including without limitation any relating to onsite or offsite
releases or threatened releases of hazardous materials, substances or wastes,
personal injury, property damage or natural resources damage;
(g) neither this Agreement nor the consummation of the transaction
that is the subject of this Agreement will result in any obligations for site
investigation or cleanup, or notification to or consent of government agencies
or third parties, pursuant to any of the so-called "transaction-triggered" or
"responsible property transfer" Environmental and Safety Requirements; and
(h) Seller has not expressly assumed or undertaken any liability,
including without limitation any obligation for corrective or remedial action,
of any other person relating to Environmental and Safety Requirements.
5.18 Employees. Except as contemplated by this Agreement, to Seller's
---------
Knowledge, no key employee and no group of employees has any plans to terminate
employment with Seller. Seller has complied in all material respects and is in
compliance with all applicable laws relating to the employment of labor,
including laws relating to wages, hours, equal opportunity, collective
bargaining, immigration and the payment of social security and other taxes.
There are no administrative charges or court complaints pending or, to Seller's
Knowledge, threatened against Seller before any government agency. Within the
last three (3) years, Seller has not experienced any union organization
attempts, labor disputes or work stoppage or slowdowns due to labor
disagreements. There is no labor strike, dispute, work stoppage or slowdown
pending or to Seller's Knowledge threatened. There is no request for
representation pending and no question concerning representation has been
raised. There is no grievance or arbitration proceeding pending which might have
a Material Adverse Effect on Seller or the Business. Seller is not a party to
any labor, collective bargaining or union agreement relating to the Business.
Seller has not implemented any plant closing or mass layoff of employees as
those terms are defined in the Worker Adjustment Retraining and Notification
("WARN") Act of 1988, as amended, or any similar state or local law or
regulation.
-33-
5.19 Employee Benefit Plans.
----------------------
(a) Except as set forth on the attached "Employee Benefits Schedule,"
--------------------------
with respect to current or former employees of Seller, independent contractors,
or the spouses, beneficiaries or dependents thereof, Seller does not maintain,
contribute to or have any liability or potential liability with respect to any
(i) ongoing or terminated funded or unfunded employee welfare benefit plan (as
defined in Section 3(1) of ERISA) ("Employee Welfare Plans"), (ii) ongoing or
----------------------
terminated employee pension benefit plan (as defined in Section 3(2) of ERISA)
("Employee Pensions Plans") or (iii) plan, policy, program or arrangement
-----------------------
(whether or not terminated) which provides nonqualified deferred compensation
benefits, bonus benefits or compensation, incentive benefits or compensation,
severance benefits or compensation, "change of control" (as set forth in Code
Section 280G) benefits or compensation or any program, plan, policy or
arrangement which provides any health, life, disability, accident, vacation,
tuition reimbursement or other fringe benefits ("Other Plans"). Seller does not
-----------
maintain, has not contributed to and has no actual or potential liability with
respect to any defined benefit plan or arrangement (whether or not terminated)
(as defined in Section 3(35) of ERISA). Seller does not and has not participated
in or contributed to any multiemployer plan (as defined in Section 3(37) of
ERISA) ("Multiemployer Plan") nor does Seller have any other liability,
------------------
including any potential withdrawal liability, with respect to any Multiemployer
Plan, and Seller has not incurred any current or potential withdrawal liability
as a result of a compete or partial withdrawal (or potential partial withdrawal)
from any Multiemployer Plan. Seller does not maintain or have any obligation to
contribute to (or any other liability with respect to) any funded or unfunded
Employee Welfare Plan or Other Plan which provides post-retirement health,
accident or life insurance benefits to current or former employees, current or
former independent contractors, current or future retirees, their spouses,
dependents or beneficiaries, other than limited medical benefits required to be
provided to former employees, their spouses and other dependents under Code
Section 4980B ("COBRA"). Seller has complied with the requirements of COBRA.
-----
(The Employee Pension Plans, the Employee Welfare Plans and any Other Plans
shall be referred to herein collectively as the "Plans").
-----
(b) All Plans (and related trusts and insurance contracts) comply in
form and in operation in all respects with the applicable requirements of ERISA
and the Code and the Employee Pension Plans which are intended to be "qualified
plans" under Section 401(a) of the Code, are so qualified and each such Employee
Pension Plan has received a favorable determination letter from the Internal
Revenue Service.
(c) All required reports and descriptions (including Form 5500 Annual
Reports, summary annual reports and the summary plan descriptions) with respect
to all Plans have been properly and timely filed with the appropriate government
agency and distributed to employees and/or their beneficiaries.
-34-
(d) With respect to each Employee Pension Plan, all contributions
which are due have been made, and all contributions which are not yet due
(including with respect to the current plan year for the period ending on the
Closing Date) have been made or adequately accrued for as a liability on the
Latest Balance Sheet. With respect to all Employee Welfare Plans and all Other
Plans, all premiums and/or contributions, whether or not due, for prior plan
years and the current plan year for the period ending on the Closing Date and
all payments or other benefits payable, have been paid or, to the extent not yet
due, have been adequately accrued for as a liability on the Latest Balance
Sheet. None of the Plans maintained by Seller have any unfunded liabilities.
Seller has disclosed on the "Employee Benefits Schedule" all former employees of
--------------------------
Seller (and their dependents) who are eligible as of the Closing Date for
continuation coverage under COBRA. Seller has no liability to pay any severance
benefit or other separation pay to its current or former employees, and no event
contemplated by this Agreement would cause any such benefits or pay to become
payable.
(e) Neither Seller nor any of its subsidiaries have incurred any
liability to the PBGC, the Internal Revenue Service, the Department of Labor,
any other governmental agency, any Multiemployer Plan or any person with respect
to any Plan currently or previously maintained by members of the controlled
group of companies (as defined in Section 414 of the Code) that includes Seller
and/or its subsidiaries (the "Controlled Group") that has not been satisfied in
----------------
full, and no condition exists that presents a material risk to Seller or any of
its subsidiaries or any other member of the Controlled Group of incurring such a
liability.
(f) Except as disclosed on the Employee Benefits Schedule, with
respect to each Plan, (i) there have been no prohibited transactions as defined
in Section 406 of ERISA or Section 4975 of the Code, (ii) no fiduciary (as
defined in Section 3(21) of ERISA) has any liability for breach of fiduciary
duty or any other failure to act or comply in connection with the administration
or investment of the assets of the Plans, (iii) no fiduciary has engaged in any
transactions with respect to the Plans which could subject Seller, any
fiduciary, any plan administrator or any party dealing with any such plan to
either a civil penalty assessed pursuant to Section 501(i) of ERISA or the tax
or penalty on prohibited transactions imposed by Section 4975 of the Code, and
(iv) no actions, investigations, suits or claims with respect to the assets
thereof (other than routine claims for benefits) are pending or threatened, and
Seller has no knowledge of any facts which would give rise to or could
reasonably be expected to give rise to any such actions, suits or claims against
any Plan, any fiduciary with respect to such Plans or the assets of such Plans.
(g) With respect to each Plan, Seller has furnished to Buyer true and
complete copies of (i) the plan documents, summary plan descriptions, any other
document required to be filed with a governmental agency or any document
distributed to any employee, participant or beneficiary of such Plan, (ii) the
most recent determination letter received from the Internal Revenue Service,
(iii) the last Form 5500 Annual Report and actuarial report, and (iv) all
related trust agreements, insurance contracts or other funding agreements which
implement the Plans.
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5.20 Insurance. The attached "Insurance Schedule" sets forth an
--------- ------------------
accurate description of each insurance policy to which Seller is a party, a
named insured or otherwise the beneficiary of coverage. All of such insurance
policies are legal, valid, binding and enforceable and in full force and effect,
except to the extent that the enforcement thereof may be limited by bankruptcy,
insolvency, reorganization, rehabilitation, moratorium and similar laws now or
hereafter in effect relating to creditors' rights generally or general equitable
principles. Seller is not in any material breach or default with respect to its
obligations under such insurance policies.
5.21 Tax Matters. (a) Seller has timely filed all Tax Returns
-----------
required to be filed by it, each such Tax Return has been prepared in compliance
with all applicable laws and regulations, and all such Tax Returns are true and
accurate in all respects. All Taxes due and payable by Seller (whether or not
shown on any Tax Return) have been paid.
(b) Other than as set forth on the attached "Taxes Schedule" (i) no
--------------
deficiency or proposed adjustment which has not been settled or otherwise
resolved for any amount of Tax has been proposed, asserted or assessed by any
taxing authority against Seller, (ii there is no action, suit, taxing authority
proceeding or audit now in progress, pending or, to Seller's Knowledge,
threatened against or with respect to Seller with respect to any Tax, (ii no
claim has been made by a taxing authority in a jurisdiction where Seller does
not pay Tax or file Tax Returns that Seller is or may be subject to Taxes
assessed by this jurisdiction within ten years prior to the date hereof and (iv
Seller has withheld and paid all Taxes required to have been withheld and paid
in connection with amounts paid or owing to any employee, creditor, independent
contractor or other third party.
(c) The only states, territories and jurisdictions (whether foreign
or domestic) in which Seller is required to file Tax Returns relating to the
Business are the States of South Carolina and Illinois.
(d) On or before the Closing Date, Seller will provide to Buyer a
certification that Seller is not a foreign person in the form provided in
section 1.1445-2(b)(2)(iii)(A) of the United States Treasury regulations.
5.22 Customers. The attached "Customers Schedule" lists all Material
--------- ------------------
Customers. Seller has not received any notice and to Seller's Knowledge no
Material Customer intends to terminate or materially reduce its business with
Seller and no Material Customer has terminated or materially reduced its
business with Seller in the last twelve (12) months.
5.23 Suppliers. The attached "Suppliers Schedule" lists Seller's ten
--------- ------------------
(10) largest vendors. Seller has not received any notice and to Seller's
Knowledge no such vendor intends to terminate or materially reduce its business
with Seller and no such vendor has terminated or materially reduced its business
with Seller in the last twelve (12) months.
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5.24 Brokerage. There are no claims for brokerage commissions,
---------
finders fees or similar compensation in connection with the transactions
contemplated by this Agreement based on any arrangement or agreement made by or
on behalf of Seller or Shareholder or any Affiliate thereof.
5.25 Affiliate Transactions. Except as set forth on the Affiliate
----------------------
Transaction Schedule attached hereto, no officer, director or employee of Seller
or any Person related by blood or marriage to any such Person, or entity in
which any such Person owns any beneficial interest, is a party to any agreement,
contract, commitment or transaction with Seller or its Affiliates or which
pertains to the Business or the Purchased Assets, or has any interest in any
property, real or personal or mixed, intangible or tangible, relating to the
Business or the Purchased Assets. The Affiliated Transaction Schedule describes
all material intercompany or affiliated services provided to or on behalf of
Seller by its Affiliates and to or on behalf of such Affiliates by Seller.
ARTICLE 6
REPRESENTATIONS AND WARRANTIES OF BUYER
----------------------------------------
As an inducement to Seller and Shareholder to enter into this
Agreement, Buyer represents and warrants to Seller and Shareholder that:
6.01 Organization and Power. Buyer is a corporation duly organized,
----------------------
validly existing and in good standing under the laws of the State of California.
As of the Closing, Buyer will be qualified to do business and will be in good
standing in each jurisdiction in which the ownership of properties or the
conduct of business requires it to be so qualified, except for jurisdictions
where the failure to be so qualified will not have a material adverse effect on
Buyer's ability to perform its obligations hereunder.
6.02 Authorization. Buyer has all requisite corporate power and
-------------
authority to execute and deliver this Agreement and the other agreements
contemplated hereby and to perform its obligations hereunder and thereunder.
The execution, delivery and performance by Buyer of this Agreement and the other
agreements contemplated hereby and the consummation of the transactions
contemplated hereby and thereby have been duly and validly authorized by all
requisite corporate action, and no other corporate act or proceeding on the part
of Buyer, its board of directors or shareholders is necessary to authorize the
execution, delivery or performance of this Agreement or the other agreements
contemplated hereby and the consummation of the transactions contemplated hereby
or thereby. This Agreement has been duly executed and delivered by Buyer and
this Agreement constitutes, and the other agreements contemplated hereby upon
execution and delivery by Buyer will each constitute, a valid and binding
obligation of Buyer, enforceable in accordance with its terms, except to the
extent that the enforcement thereof may be limited by bankruptcy,
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insolvency, reorganization, rehabilitation, moratorium and similar laws now or
hereafter in effect relating to creditors' rights generally or general equitable
principles.
6.03 No Violation. The execution, delivery or performance of this
------------
Agreement and the other agreements contemplated hereby and the consummation of
the transactions contemplated hereby or thereby will not breach or violate
Buyer's certificate of incorporation or bylaws, any applicable law, rule or
regulation of any governmental authority, or any agreement, instrument, license
or permit, or subject to any order, writ, injunction or decree.
6.04 Governmental Authorities and Consents. No permit, consent,
-------------------------------------
approval or authorization of, or declaration to or filing with, any governmental
or regulatory authority or any other party or person is required in connection
with the execution, delivery or performance of this Agreement by Buyer, or the
consummation by Buyer of the transactions contemplated hereby and thereby.
6.05 Litigation. There are no actions, suits, proceedings, orders or
----------
investigations pending or, to the best of Buyer's knowledge after due inquiry,
threatened against or affecting Buyer, at law or in equity, or before or by any
federal, state, municipal or other governmental department, commission, board,
bureau, agency or instrumentality, domestic or foreign, which would adversely
affect Buyer's performance under this Agreement, the other agreements
contemplated hereby or the consummation of the transactions contemplated hereby
or thereby.
6.06 Brokerage. There are no claims for brokerage commissions,
---------
finders' fees or similar compensation in connection with the transactions
contemplated by this Agreement based on any arrangement or agreement made by or
on behalf of Buyer.
6.07 Closing Date. All of the representations and warranties
------------
contained in this Article 6 and elsewhere in this Agreement are true and correct
in all material respects on the Closing Date.
ARTICLE 7
ADDITIONAL AGREEMENTS; COVENANTS AFTER CLOSING
-----------------------------------------------
7.01 Survival of Representations, Warranties and Covenants. Subject
-----------------------------------------------------
to the provisions of Section 7.03(a) and 7.03 (c), all of the representations,
warranties, covenants and agreements set forth in this Agreement, the agreements
contemplated hereby or in any writing delivered to Buyer or Seller in connection
with this Agreement shall survive the execution and delivery of this Agreement
and the consummation of the transactions contemplated hereby indefinitely,
regardless of any investigation, inquiry or examination made for or on behalf of
or any
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knowledge of Buyer, Seller or any of Buyer's or Seller's Affiliates, partners,
officers, directors, employees, agents, or representatives or the acceptance by
Buyer or Seller of any certificate or opinion.
7.02 Liability for Environmental Matters. Except for accounts payable
-----------------------------------
and accrued expenses incurred in the ordinary course of business in accordance
with past custom and practice, and assumed by Buyer as Assumed Liabilities
pursuant to Section 2.02(a) hereof, Seller and Shareholder shall assume and be
solely responsible on a joint and several basis for all obligations, duties,
claims and liabilities relating to any fact, event or condition existing or
threatened on or prior to the Closing Date (whether or not disclosed in any
schedule hereto) pertaining to the operation of the Business or the condition of
the Purchased Assets prior to the Closing Date, which at any time interferes
with or prevents continued compliance with, or gives rise to any investigation,
claim or liability under any Environmental and Safety Requirements.
7.03 Indemnification.
---------------
(a) Seller Indemnification. Seller and Shareholder, jointly and
----------------------
severally, shall indemnify Buyer, its Affiliates, stockholders, officers,
directors, employees, agents, representatives, successors and permitted assigns
(collectively, the "Buyer Group") and save and hold each of them harmless
-----------
against and pay on behalf of or reimburse such party as and when incurred for
any loss (including, without limitation, diminutions in value and consequential
damages), liability, demand, claim, action, cause of action, cost, damage,
deficiency, Tax, penalty, fine or expense, whether or not arising out of third
party claims (including, without limitation, interest, penalties, reasonable
attorneys' fees and expenses) and all amounts paid in investigation, defense or
settlement of any of the foregoing (collectively, "Losses") which any such party
------
may suffer, sustain or become subject to, but reduced by (1) the amount of any
insurance proceeds received on account of such loss, less the reasonably
anticipated present value or any increase in insurance premiums to be incurred
by Buyer, (2) the amount of any tax benefits reasonably expected to be actually
realized within one year from the date any Loss is incurred and (3) any recovery
or reimbursement from any other party to the extent actually received, as a
result of, in connection with, relating or incidental to or by virtue of:
(i) any misrepresentation or breach of warranty on the part of
Seller or Shareholder under Article 5 of this Agreement;
(ii) any nonfulfillment or breach of any covenant or agreement
on the part of Seller or Shareholder under this Agreement or any agreement
or instrument delivered pursuant to or in connection herewith; or
(iii) the imposition against Buyer of any Excluded Liability.
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With respect to claims for breaches of representations and warranties
contained in Article 5 hereof (except for Sections 5.01, 5.02 and 5.10(c)),
Seller and Shareholder will not be liable with respect to any breaches of such
Article 5 representations and warranties unless written notice of a possible
claim for indemnification is given by Buyer to Seller on or before the first
anniversary of the Closing Date (the "Survival Date"), it being understood that
-------------
so long as such written notice is given on or prior to the Survival Date, such
representations and warranties shall continue to survive until such matter is
resolved. Notwithstanding the foregoing, any willful or fraudulent breach of any
other representations or warranties or Seller or Shareholder contained herein,
or any breach of a representation or warranty contained in Sections 5.01, 5.02
and 5.10(c) hereof, or the covenants and agreements of Seller or Shareholder
contained herein, including, without limitation, any breach of the covenants and
agreements contained in this Article 7, or in any instrument, document,
certificate or agreement delivered to the Buyer at the Closing will not be
subject to any time limitations. For purposes of determining the amount of any
Losses that are the subject matter of a claim for indemnification hereunder (but
not for the purpose of determining whether any breach of a representation or
warranty has occurred), each representation and warranty contained in this
Agreement shall be read without regard and without giving effect to any
materiality standard or qualification contained in such representation or
warranty. With respect to any Losses giving rise to a claim for indemnification
by Buyer under Section 7.03(a) hereof, to the extent permitted by law, the
remedies provided herein shall be exclusive and shall preclude assertion by any
party hereto of any other rights or the seeking of any other remedies (other
than in any appropriate case, any equitable remedies, including injunction and
specific performance) against any other party hereto.
(b) Buyer Indemnification. Buyer shall indemnify Seller, Shareholder
---------------------
and each of their officers, directors, employees, agents Affiliates,
representatives, successors and permitted assigns and hold each of them harmless
against and pay on behalf of or reimburse such party as and when incurred for
any Losses which any such party may suffer sustain or become subject to, as the
result of or in connection, arising out of or by virtue of:
(i) any misrepresentation or breach of warranty on the part of
Buyer under Article 6 of this Agreement;
(ii) any nonfulfillment or breach of any covenant or agreement on
the part of Buyer under this Agreement; or
(iii) the imposition against Seller or Shareholder of any Assumed
Liability.
With respect to claims for breaches of representation and warranties
contained herein, Buyer will not be liable for any Losses unless written notice
of a claim for such breach is given by Seller to Buyer on or before the Survival
Date. Notwithstanding the foregoing, any breaches of the representations and
warranties contained in Sections 6.01 and 6.02 hereof and of the covenants
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and agreements of the Buyer contained herein, including, without limitation, any
breach of the covenants and agreements contained in this Article 7, or in any
instrument, document, certificate or agreement delivered by the Buyer at the
Closing will not be subject to any time limitations.
(c) Certain Limitations. Neither Seller and Shareholder on the one
-------------------
hand, nor Buyer on the other hand, will be liable for Losses incurred pursuant
to Sections 7.03(a)(i) or 7.03(b)(i) hereof, unless the aggregate amount of all
such Losses suffered by the other party exceeds $200,000, and if the aggregate
amount of all such Losses exceeds $200,000 then such party shall be liable for
the total amount of Losses in excess of the first $200,000 of Losses. Neither
Seller and Shareholder on the one hand, nor Buyer on the other hand, will be
liable for Losses incurred pursuant to Sections 7.03(a)(i) or 7.03(b)(i) hereof
in an aggregate amount in excess of $1,000,000. For purposes of determining
the amount of any Losses that are the subject matter of a claim for
indemnification hereunder (but not for the purpose of determining whether any
breach of a representation or warranty has occurred), each representation and
warranty contained in this Agreement shall be read without regard and without
giving effect to any materiality standard or qualification contained in such
representation or warranty. The limitations on indemnification set forth in this
subsection (c) shall not be applicable to any willful breach of any
representation or warranty by Seller, Shareholder or Buyer, or to any covenant
or agreement contained in this Agreement (whether willful or otherwise)
including, without limitation, the agreements to indemnify for Assumed
Liabilities and Excluded Liabilities contained in this Section 7.03, or to any
claim based on fraud.
(d) Defense of Claims. Any party making a claim for indemnification
-----------------
under this Section 7.03 (an "Indemnitee") shall notify the indemnifying party
----------
(an "Indemnitor") of the claim in writing promptly after receiving written
----------
notice of any action, lawsuit, proceeding, investigation or other claim against
it (if by a third party) or discovering the liability, obligation or facts
giving rise to such claim for indemnification, describing the claim, the amount
thereof (if known and quantifiable), and the basis thereof; provided, that the
failure to so notify an Indemnitor shall not relieve the Indemnitor of its
obligations hereunder except to the extent such failure shall have harmed the
Indemnitor. With respect to any third party claim, any Indemnitor shall be
entitled to participate in the defense of such action, lawsuit, proceeding,
investigation or other claim giving rise to Indemnitee's claim for
indemnification at its expense, and at its option (subject to the limitations
set forth below) shall be entitled to appoint lead counsel of such defense with
a nationally recognized reputable counsel acceptable to Indemnitee; provided,
that prior to Indemnitor assuming control of such defense it shall first (i)
verify to the Indemnitee in writing that such Indemnitor shall be fully
responsible (with no reservation of any rights) for all liabilities and
obligations relating to such claim for indemnification, subject to the
limitations set forth in Section 7.03(c) and that it will provide full
indemnification (whether or not otherwise required hereunder) to Indemnitee with
respect to such action, lawsuit, proceeding, investigation, or other claim
giving rise to such claim for indemnification hereunder and (ii) furnish the
Indemnitee with evidence which, in the sole judgment of Indemnitee, is and will
be sufficient to satisfy any such liability; provided further, that:
-41-
(i) The Indemnitee shall be entitled to participate in the
defense of such claim and to employ counsel of its choice for such purpose,
the fees and expenses of such separate counsel which shall be borne by
Indemnitee. Notwithstanding the foregoing, the fees and expenses of such
separate counsel incurred prior to the date the Indemnitor effectively
assumes control of such defense shall be borne by the Indemnitor;
(ii) The Indemnitor shall not be entitled to assume control of
such defense and shall pay the fees and expenses of counsel retained by the
Indemnitee if (A) the claim for indemnification relates to or arises in
connection with any criminal proceeding, action, indictment, allegation or
investigation; (B) Indemnitee reasonably believes an adverse determination
with respect to the action, lawsuit, investigation, proceeding or other
claim giving rise to such claim for indemnification would be materially
detrimental to or materially injure Indemnitee's reputation or future
business prospects, (C) the claim seeks an injunction or equitable relief
against Indemnitee or (D) upon petition by Indemnitee, the appropriate
court rules that the Indemnitor failed or is failing to vigorously
prosecute or defend such claim; and
(iii) if the Indemnitor, with the consent of the Indemnitee, shall
control the defense of any such claim, the Indemnitor shall obtain the
prior written consent of the Indemnitee (which shall not be unreasonably
withheld) before entering into any settlement of a claim or ceasing to
defend such claim, if pursuant to or as a result of such settlement or
cessation, injunction or other equitable relief will be imposed against the
Indemnitee or if such settlement does not expressly unconditionally release
Indemnitee from all liabilities and obligations with respect to such claim
and all other claims arising out of the same set of facts and circumstances
out of which such claim arose, without prejudice.
(e) Amounts paid to Buyer as indemnification shall be treated as
adjustments to the Purchase Price.
(f) Waiver. Seller and Shareholder agree that to the extent any
------
certificate of incorporation, bylaw or agreement between Seller and Shareholder
conflicts with, contradicts or is inconsistent with any of the representations,
warranties, covenants and agreements of Seller and Shareholder set forth herein
(including the schedules and exhibits hereto) or in the documents executed in
connection herewith, the representations, warranties, covenants and agreements
of Seller and Shareholder set forth herein (including the schedules and exhibits
hereto) or in the documents executed in connection herewith shall govern and
control, and Shareholder and Seller hereby waive all rights to raise any defense
to a claim by any member of the Buyer Group for indemnification hereunder based
upon such certificate of incorporation, bylaw or agreement between Seller and
Shareholder.
-42-
(g) Escrow. Pursuant to Section 2.04 hereof, at the Closing
------
$1,000,000 shall be set aside in the Escrow Account as security for payment of
Seller's and Shareholder's indemnification obligations set forth in this Section
7.03 or elsewhere in this Agreement. The Escrow Agreement shall be Buyer's
exclusive remedy for breaches of the representations and warranties of Seller
and the Shareholder contained in Article 5 hereof.
7.04 Mutual Assistance and Records. Buyer, Seller and
-----------------------------
Shareholder agree that they will mutually cooperate in the expeditious filing of
all notices, reports and other filings with any governmental authority required
to be submitted jointly by Buyer and Seller in connection with the execution and
delivery of this Agreement, the other agreements contemplated hereby and the
consummation of the transactions contemplated hereby or thereby. Subsequent to
the Closing, Seller and Buyer, at their own cost, will assist each other
(including by the retention and provision of access to relevant records) in the
preparation of their respective Tax Returns and the filing and execution of Tax
elections, if required, as well as in the defense of any audits or litigation
that may ensue as a result of the filing thereof, to the extent that such
assistance is reasonably requested. The Purchase Price shall be allocated among
the Purchased Assets in the manner set forth in the "Allocation Schedule"
-------------------
attached hereto. Buyer and Seller each hereby covenant and agree to prepare and
timely file all applicable Tax Returns and information reports in accordance
with the Allocation Schedule, which allocations are intended to comply with
Section 1060 of the Code. Seller acknowledges and agrees that from and after
the Closing, except as set forth in Section 2.01(b), Buyer will be entitled to
possession of all original documents, books, records (including Tax records),
agreements, and financial data of any sort relating to the Business and the
Purchased Assets. Buyer shall provide the Seller reasonable access during
regular business hours to the documents, books, records, agreements and data of
the Business that relate to the period before the Closing Date and that are
described in a writing provided to Buyer a reasonable time in advance of the
date on which Seller desires access to such materials; provided that Seller has
a valid business purpose unrelated to any matter in dispute between the parties;
and provided further that Buyer may, in its sole discretion, terminate all or
any portion of Seller's access rights hereunder at any time Buyer in good faith
determines that Seller's interests are adverse to Buyer's with regard to a
matter arising in connection with this Agreement or otherwise. Buyer shall
notify Seller in writing upon making a determination that Seller's access rights
hereunder are terminated.
7.05 Press Release and Announcements. Unless required by law,
-------------------------------
after the Closing Date, neither Seller nor Shareholder on the one hand, nor
Buyer on the other shall make any press releases, announcements to the
employees, customers or suppliers of Seller or other releases of information
related to this Agreement or the transactions contemplated hereby without the
written consent of the other.
7.06 Expenses. Except as otherwise expressly provided herein,
--------
Buyer, on the one hand, and Seller and Shareholder, on the other hand, will each
pay all of their own fees and expenses (and Shareholder will pay all of Seller's
fees and expenses, none of which will be paid with the assets
-43-
of Seller) in connection with this Agreement and the consummation of the
transactions contemplated hereby. Seller agrees that it has not paid to any
third party, and will not pay any amount to any third party until after the
Closing, with respect to the fees, costs and expenses of Seller arising from,
related to or in connection with this Agreement or any other instrument or
agreement contemplated hereby or any of the transactions contemplated hereby or
thereby, and that such fees, costs and expenses whenever paid, shall be paid out
of the proceeds of the sale of the Purchased Assets and not with the Purchased
Assets themselves.
7.07 Further Transfers. Each of Seller and Shareholder will, and
-----------------
will cause its Affiliates to, execute and deliver such further instruments of
conveyance and transfer and take such additional action as Buyer may reasonably
request to effect, consummate, confirm or evidence the transfer to Buyer of the
Purchased Assets. Seller and Shareholder will execute such documents as may be
necessary to assist Buyer in preserving or perfecting its rights in the
Purchased Assets. Buyer will execute and deliver such further instruments and
take such additional actions as Seller may reasonably request to effect,
consummate, confirm or evidence the assumption by Buyer of the Assumed
Liabilities.
7.08 Non-Competition; Non-Solicitation. As condition precedent
---------------------------------
to Buyer to enter into and perform its obligations under this Agreement, Seller
agrees that:
(a) During the Noncompetition Period, it shall not, anywhere in
the United States of America, directly or indirectly, either for itself or for
any other Person, own, operate, manage, control, engage in, participate in,
invest in, permit its name to be used by, act as consultant or advisor to,
render services for (alone or in association with any Person) or otherwise
assist in any manner, any Person that engages in or owns, invests in, operates,
manages or controls any venture or enterprise which directly or indirectly
engages or proposes to engage in the distribution or sale of the Products. For
purposes hereof, "Products" shall mean any products or goods sold or delivered
--------
by the Business during the Noncompetition Period, or any products or goods that
are similar to, may be used as substitutes for, are in competition with or may
detract from any products or goods sold or delivered by the Business prior to
the Noncompetition Period. Nothing herein shall prohibit Seller from being a
passive owner of not more than 2% of the outstanding stock of any class of
securities of a publicly traded corporation engaged in such business, so long as
it has no active participation in the business of such corporation.
(b) During the Non-Competition Period and for a period of one
year thereafter, Seller will not directly or indirectly offer employment to or
hire (in any capacity) any former employee of Seller who is hired by Buyer
without the prior written consent of Buyer.
(c) If, at the time of enforcement of this Section 7.08, a court
shall hold that the duration, scope, geographic area or other restrictions
stated herein are unreasonable under circumstances then existing, the parties
agree that the maximum duration, scope, geographic area
-44-
or other restrictions deemed reasonable under such circumstances by such court
shall be substituted for the stated duration, scope, geographic area or other
restrictions.
(d) Seller recognizes and affirms that in the event of breach by
it of any of the provisions of this Section 7.08, money damages would be
inadequate and Buyer would have no adequate remedy at law. Accordingly, Seller
agrees that Buyer shall have the right, in addition to any other rights and
remedies existing in its favor, to enforce its rights and Seller's and
Shareholder's obligations under this Section 7.08 not only by an action or
actions for damages, but also by an action or actions for specific performance,
injunction and/or other equitable relief in order to enforce or prevent any
violations (whether anticipatory, continuing or future) of the provisions of
this Section 7.08 (including, without limitation, the extension of the Non-
Competition Period by a period equal to (i) the length of the violation of this
Section 7.08 plus (ii) the length of any court proceedings necessary to stop
such violation). In the event of a breach or violation by Seller of any of the
provisions of this Section 7.08, the running of the Non-Competition Period (but
not of Seller's obligations under this Section 7.08) shall be tolled with
respect to Seller during the continuance of any actual breach or violation.
7.09 Communications. All mail and other communications relating
--------------
to the Purchased Assets, Assumed Liabilities or the Business received by Seller
at any time after the Closing Date shall be promptly turned over to Buyer by
Seller. All mail and other communications not relating to the Purchased Assets,
Assumed Liabilities or the Business received by Buyer at any time after the
Closing shall be promptly turned over to Seller by Buyer.
7.10 Compliance with Bulk Sales Laws. Seller hereby agrees to
-------------------------------
indemnify Buyer for any Losses suffered as a result of any failure to comply
with the requirements of any so called "bulk sales" or transfer laws of any
jurisdiction in connection with the sale of the Purchased Assets to Buyer,
provided, however, that Seller shall not be liable to Buyer for any Losses
arising as a result of any noncompliance with such laws which shall arise as a
result of Buyer's failure to discharge obligations owed to creditors with
respect to the Assumed Liabilities as they become due.
7.11 Employees. Seller shall terminate the employment of all its
---------
employees immediately prior to the Closing. Immediately after the Closing,
Buyer shall offer employment to the employees employed by Seller immediately
prior to the Closing Date only to the extent expressly set forth on the attached
"Employee Schedule."
-----------------
7.12 Confidentiality. After the Closing, Seller shall continue
---------------
to maintain the confidentiality of all information, documents and materials
relating to the Business, except to the extent disclosure of any such
information is required by law or authorized by Buyer or reasonably occurs in
connection with disputes over the terms of this Agreement, and Buyer shall
maintain the confidentiality of all information, documents and materials
relating to Seller (other than that relating to the Business) which Buyer has
obtained in connection with this Agreement or with the
-45-
transactions contemplated herein, except to the extent disclosure of any such
information is required by law or authorized by Seller or reasonably occurs in
connection with disputes over the terms of this Agreement. In the event that any
party reasonably believes after consultation with counsel that it is required by
law to disclose any confidential information described in this Section 7.12, the
disclosing party will (a) provide the other party with prompt notice before such
disclosure in order that any party may attempt to obtain a protective order or
other assurance that confidential treatment will be accorded such confidential
information and (b) cooperate with the other party in attempting to obtain such
order or assurance. The provisions of this Section 7.12 shall not apply to any
information, documents or materials which are, as shown by appropriate written
evidence, in the public domain or, as shown by appropriate written evidence,
shall come into the public domain, other than by reason of default by the
applicable party bound hereunder or its Affiliates.
7.13 Taxes; Recording Charges. All sales, use, transfer, stamp,
------------------------
conveyance, income, gains, value added or other Taxes, and all title insurance
premiums arising out of the sale of the Purchased Assets or otherwise incurred
in connection with this Agreement or the consummation of the transactions
contemplated hereby and all charges for or in connection with the recording of
any document or instrument contemplated hereby shall (subject to Section 7.06
hereof) be paid by such party hereto as is customary in the jurisdiction in
which such transaction occurs (as reasonably determined by the parties). The
Buyer shall provide Seller with resale certificates with respect to any
inventory included in the Purchased Assets in accordance with applicable state
and local sales, use or transfer tax laws.
7.14 Prairie Haven Agreement. Seller and Shareholder shall
-----------------------
indemnify and hold Buyer harmless from and against any and all Losses arising
out of or relating to the Agreement entered into by and between Seller and
Prairie Haven, Ltd., dated as of November 8, 1995 relating to the sale by Seller
of certain assets related to Seller's Illinois garden center business. Seller
hereby covenants to Buyer that it will fully enforce the provisions of paragraph
7 (entitled "Prairie Haven Covenant Not to Compete") of such agreement against
Prairie Haven, Ltd. and will take all actions reasonably necessary (at its sole
cost and expense) in connection with such enforcement.
ARTICLE 8
MISCELLANEOUS
--------------
8.01 Amendment and Waiver. This Agreement may be amended, and
--------------------
any provision of this Agreement may be waived; provided, that any such amendment
or waiver will be binding on Seller and Shareholder only if such amendment or
waiver is set forth in a writing executed by Seller and Shareholder and that any
such amendment or waiver will be binding upon Buyer only if such amendment or
waiver is set forth in a writing executed by Buyer. No course of dealing between
or among any Persons having any interest in this Agreement will be deemed
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effective to modify, amend or discharge any part of this Agreement or any rights
or obligations of any person under or by reason of this Agreement. No waiver of
any of the provisions of this Agreement shall be deemed or shall constitute, a
waiver of any other provisions, whether or not similar, nor shall any waiver
constitute a continuing waiver.
8.02 Notices. All notices, demands and other communications to
-------
be given or delivered to Buyer, Seller or Shareholder under or by reason of the
provisions of this Agreement will be in writing and will be deemed to have been
given when personally delivered, sent by reputable overnight courier,
transmitted by facsimile or telecopy (followed by overnight delivery by
reputable courier) or mailed by first class mail, return receipt requested, to
the addresses indicated below (unless another address is so specified in
writing):
Notices to Seller or Shareholder:
--------------------------------
XXXXXXX PERENNIAL GARDENS, INC.
X.X. Xxx 000
Xxxxxx, Xxxxxxxx 00000
Attention: Xxxxxx X. Xxxxxxx
with a copy to:
XXXXXXX & XXXXX
000 Xxxxx XxXxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxxxx, Esq.
Notices to Buyer:
----------------
XXXXX HORTICULTURE, INC.
00000 Xxxxxxx Xxxx
Xxxxxx, Xxxxxxxxxx 00000
Attention: President
with a copy to:
MADISON DEARBORN PARTNERS, INC.
Three First National Plaza, Suite 1330
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxx X. Xxxx
and
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XXXXXXXX & XXXXX
000 Xxxx Xxxxxxxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxxx X. Xxxx, P.C.
8.03 Assignment. This Agreement and all of the provisions hereof
----------
shall be binding upon and inure to the benefit of Buyer, Seller, Shareholder and
their respective successors and assigns. Neither this Agreement nor any rights,
benefits or obligations set forth herein may be assigned by Seller, Shareholder
or Buyer, except that Buyer may assign this Agreement and any of the provisions
hereof without consent of Seller or Shareholder (i) to any Affiliate of Buyer,
(ii) in connection with the sale of all or a substantial part of its assets or
business or (iii) to any of its financing sources as collateral security,
provided that no such assignment by Buyer shall relieve Buyer of its obligations
hereunder.
8.04 Severability. Whenever possible, each provision of this
------------
Agreement will be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement is held to be prohibited
by or invalid under applicable law, such provision will be ineffective only to
the extent of such prohibition or invalidity, without invalidating the remainder
of such provision or the remaining provisions of this Agreement.
8.05 No Strict Construction. The language used in this Agreement
----------------------
shall be deemed to be the language chosen by the parties hereto to express their
mutual intent, and no rule of strict construction will be applied against any
person.
8.06 Captions. The captions used in this Agreement are for
--------
convenience of reference only and do not constitute a part of this Agreement and
shall not be deemed to limit, characterize or in any way affect any provision of
this Agreement, and all provisions of this Agreement shall be enforced and
construed as if no caption had been used in this Agreement.
8.07 No Third Party Beneficiaries. Nothing herein expressed or
----------------------------
implied is intended or shall be construed to confer upon or give to any person,
firm or corporation, other than the parties hereto and their respective
permitted successors and assigns, any rights or remedies under or by reason of
this Agreement, such third parties specifically including, without limitation,
any investors of Buyer, employees or creditors of Seller or insurers of any
parties hereto.
8.08 Representations and Warranties; Disclosure Schedules. Any
----------------------------------------------------
event, fact or circumstance described with particularity in any schedule
attached hereto shall be deemed to be a disclosure for purposes of all other
representations and warranties contained in Article 5 hereof. Notwithstanding
any representation or warranty of Seller or Shareholder contained in Article 5
hereof, or any matter described by Seller or Shareholder in any schedule
attached hereto, Buyer is
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purchasing only the Purchased Assets and assuming only the Assumed Liabilities
pursuant to this Agreement.
8.09 Complete Agreement. This document and the documents
------------------
referred to herein contain the complete agreement between the parties and
supersede any prior understandings, agreements or representations by or between
the parties, written or oral, which may have related to the subject matter
hereof in any way.
8.10 Counterparts. This Agreement may be executed in one or more
------------
counterparts, all of which taken together shall constitute one and the same
instrument.
8.11 Governing Law. This Agreement shall be governed by and
-------------
construed in accordance with the laws of the State of Illinois without giving
effect to any choice or conflict of law provision or rule (whether of the State
of Illinois or any other jurisdiction) that would cause the application of the
laws of any jurisdiction other than the State of Illinois.
* * * * *
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement
as of the date first written above.
XXXXX HORTICULTURE, INC.
By: /s/ Xxxx X. Xxxx
-----------------------------
Its: Vice President
----------------------------
XXXXXXX PERENNIAL GARDENS, INC.
By: /s/ Xxxxxx X. Xxxxxxx
-----------------------------
Its: Chairman
---------------------------
/s/ Xxxxxx X. Xxxxxxx
--------------------------------
XXXXXX X. XXXXXXX
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LIST OF SCHEDULES
-----------------
Assumed Product Warranties Schedule 2.02
Assumed Liabilities Schedule 2.02
Leases Schedule 2.02
Excluded Accounts Payable Schedule 2.02
Mortgage Payoff Schedule 2.03
Capitalization Schedule 5.01
Restrictions Schedule 5.03
Financial Statements Schedule 5.04
Accounts Receivable Schedule 5.06
Liabilities Schedule 5.07
Developments Schedule 5.08
Owned Real Property Schedule 5.10
Liens Schedule 5.10
Leases Schedule 5.10
Condition of Property Schedule 5.10
Contracts Schedule 5.11
Proprietary Rights Schedule 5.12
Product Warranty Schedule 5.13
Licenses Schedule 5.14
Litigation Schedule 5.15
Compliance Schedule 5.16
Environmental Schedule 5.17
Employee Benefits Schedule 5.19
Insurance Schedule 5.20
Tax Schedule 5.21
Customers Schedule 5.22
Suppliers Schedule 5.23
Affiliated Transactions Schedule 5.25
Allocation Schedule 7.04
Employee Schedule 7.14
LIST OF EXHIBITS
----------------
Exhibit A - Officer's Certificate of Seller
Exhibit B - Consulting and Noncompetition Agreement
Exhibit C - Opinion of Seller's Counsel
Exhibit D - Escrow Agreement
Exhibit E - Access License Agreement
Exhibit F - Payment Authorization Letter
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