AGREEMENT AND PLAN OF MERGER
by and among
ECO SOIL SYSTEMS, INC.,
a Nebraska corporation,
ECO TURF PRODUCTS, INC.,
a Delaware corporation,
TURF PRODUCTS, INC.,
an Illinois corporation,
XXXXXX XXXXX
and
XXXXXX XXXXX, AS TRUSTEE OF
THE XXXXX FAMILY CHARITABLE REMAINDER TRUST
May 31, 1996
TABLE OF CONTENTS
Section 1 Definitions
Section 2 The Merger
2.1 Merger
2.2 Use of Name
2.3 Certificate of Incorporation and Bylaws
2.4 Conversion and Exchange of Shares
2.5 Effective Date
2.6 Closing
2.7 Further Assurances
Section 3 Representations and Warranties of Turf Products and
Shareholder
3.1 Shareholder
3.2 Corporate Organization and Good Standing
3.3 Capitalization
3.4 Subsidiaries
3.5 Financial Statements
3.6 Absence of Undisclosed Liabilities
3.7 Absence of Certain Changes
3.8 Litigation
3.9 Contracts
3.10 Title
3.11 Tax Returns
3.12 No Violation
3.13 Corporate Authority
3.14 Hazardous Waste and Materials
3.15 Employee and Employee Benefit Matters
3.16 Reliance
3.17 Merger Consideration
3.18 Restrictive Legend
3.19 Accredited Investor
3.20 Full Disclosure
3.21 Legal and Tax Advice
3.22 Trust
Section 4 Representations and Warranties of Parent
4.1 Corporate Organization, Good Standing, and Capitalization
4.2 Corporate Authority
4.3 Financial Statements of Parent
4.4 Shares to Be Issued
4.5 No Material Adverse Change
4.6 Private Placement Memorandum
4.7 Additional Capital
4.8 Reliance
Section 5 Representations and Warranties of Subsidiary
5.1 Corporate Organization, Good Standing, and Capitalization
5.2 Corporate Authority
5.3 Liabilities
5.4 Continued Activity
Section 6 Conduct of Turf Products Pending the Closing
6.1 Certificate of Incorporation and Bylaws
6.2 Capitalization
6.3 Shareholders' Meeting
6.4 Conduct of Business
6.5 Termination of the Profit Sharing Plan
Section 7 Covenants of Parent and Subsidiary Pending the Closing
7.1 meeting of Parent's Directors
7.2 Meeting of Subsidiary's Shareholders
7.3 Information
7.4 Contribution to Subsidiary
Section 8 Covenants of Parent and Turf Products Pending the Closing
8.1 Announcement
8.2 Information
Section 9 Conditions to Obligations of Parent Subsidiary
9.1 Representations and Warranties True
9.2 Absence of Litigation
9.3 Requisite Approvals
9.4 Governmental Permits
9.5 Opinion of Turf Products' Counsel
Section 10 Conditions to Obligations of Tuft Products
10.1 Representations and Warranties True
10.2 Absence of Litigation
10.3 Requisite Approvals
10.4 Governmental Permits
10.5 Opinion of Parent's Counsel
Section 11 Termination
11.1 Circumstances of Termination
11.2 Effect of Termination
Section 12 Certain Post-Closing Matters
12.1 Employment of Shareholder; Covenant Not to Compete
12.2 Employment of Turf Products Employment
Section 13 Indemnification
13.1 Indemnification of Parent Subsidiary
13.2 Indemnification of Shareholder
13.3 Defense of Claims
Section 14 Accounting, Adjustments and Put Right
14.1 Accounting
14.2 Post-Closing Adjustment and Put Right
14.3 No Duplication of Recovery
Section 15 General Provisions
15.1 Acknowledgement
15.2 Alterations and Waivers
15.3 Attorneys Fees
15.4 Post Judgment Fees
15.5 Authority to Execute
15.6 Broker Fees
15.7 Choice of Laws
15.8 Confidentiality
15.9 Counterparts
15.10 Cumulative Rights
15.11 Enforceability and Severability
15.12 Entire Agreement
15.13 Exhibits
15.14 Fictitious Business Name
15.15 Further Acts
15.16 Recitals
15.17 Joint and Several Obligations
15.18 Jurisdiction and Venue
15.19 Survival
15.20 Headings
15.21 Assignability
15.22 Notice
15.23 Parties
15.24 Time of Essence
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (the "AGREEMENT"), dated as of May
31, 1996, is entered into by and among ECO SOIL SYSTEMS, [NC., a Nebraska
corporation (the "PARENT"), ECO Turf Products, Inc., a Delaware corporation (the
"Subsidiary"), Turf Products, Ltd., an Illinois corporation ("TURF PRODUCTS"),
XXXXXX XXXXX ("XXXXX"), and XXXXXX XXXXX, AS TRUSTEE OF THE XXXXX FAMILY
CHARITABLE REMAINDER TRUST ("TRUST") Xxxxx and Trust being the owners of record
of all of the issued and outstanding stock of Turf Products. Xxxxx and Trust
sometimes are referred to herein collectively as "SHAREHOLDER".
WHEREAS, the boards of directors of Parent, Subsidiary, and Turf
Products deem the merger of Turf Products into Subsidiary on the terms herein
set forth to be desirable and in the best interests of their respective
stockholders, and have approved this Agreement, and the boards of directors of
Subsidiary and Turf Products have directed that the Agreement be submitted to
their respective stockholders for approval.
NOW, THEREFORE, Subsidiary and Turf Products agree that Turf Products
shall be merged into Subsidiary, which shall be the surviving corporation, and
that the plan, terms, and conditions of such merger shall be as follows:
SECTION 1 -- DEFINITIONS
This Section I sets forth certain defined terms used from time to time in this
Agreement. Additional terms are defined in the text of the Agreement.
"CLOSING DATE" shall mean the first date upon which all of the steps
described in Section 2.6 hereof have been completed.
"CONSTITUENT CORPORATIONS" shall mean Subsidiary and Turf Products.
"EXISTING INDEBTEDNESS TO SHAREHOLDER" shall mean any and all claims or
obligations of any nature whatsoever owed by Turf Products to Shareholder or any
Shareholder Affiliate.
"HEADQUARTERS PROPERTY" shall mean the real property (and all
improvements thereon) described in Exhibit "A" attached hereto and incorporated
herein by reference.
"INTERIM BALANCE SHEET DATE" shall mean April 30, 1996.
"MERGER" shall mean the merger of Turf Products into Subsidiary as
contemplated by Section 2.1 hereof.
"SHAREHOLDER AFFILIATE" shall mean: (a) any natural person who has a
relationship with Xxxxx or Xxxxx' spouse, by blood, marriage or adoption, that
is no more remote than second cousin (and any spouse of any such person); (b)
any trust or estate of which Xxxxx or any other person referenced in clause (a)
of this definition is a beneficiary or a trustee, executor or other fiduciary;
or (c) any corporation, association, partnership, joint venture, limited
liability company, other organization or entity (i) for which Xxxxx or any other
person referenced in clause (a) of this definition, individually or in the
aggregate, directly or indirectly owns 10% or more of the voting stock of such
entity or otherwise owns 10% or more of the equity interests in such entity,
(ii) which Xxxxx and/or any person reference in clause (a) of this definition,
individually or in the aggregate, has the capacity to cause the direction and
management of the policies or operations of such entity, whether through
ownership of voting securities partnership interests or other debt or equity
securities, employment contracts or relationships, or other means.
"TRANSACTION DOCUMENTS" means this Agreement, the Mutual Release, the
Pledge Agreement, the Employment Agreement, the Headquarters Lease, and any
additional agreement or instrument required to be executed and delivered by a
party pursuant to the terms of any of the foregoing.
SECTION 2--THE MERGER
2.1 MERGER. On the Closing Date, Turf Products shall be merged into
Subsidiary (Subsidiary being the surviving corporation), the separate existence
of Turf Products shall cease, and Subsidiary as the surviving corporation shall
continue its corporate existence under the laws of the State of Delaware under
the name of Eco Turf Products, Inc., dba Turf Products; and Subsidiary shall
possess all the rights, privileges, powers and franchises of a public as well as
private nature and be subject to all of the restrictions and duties of Turf
Products; and all rights, privileges, powers, and franchises of Turf Products
and all property, real, personal, tangible and intangible belonging to Turf
Products shall be vested in Subsidiary; and all property, rights, privileges,
powers, and franchises and every other interest shall be the property of
Subsidiary as they were of Turf Products, and the title to any real estate
vested by deed or otherwise in Turf Products shall not revert or be in any way
impaired by reason of this merger, provided that all rights of creditors, and
all liens upon any property of Turf Products, shall be preserved unimpaired and
all debts, liabilities, and duties of Turf Products shall thenceforth attach to
Subsidiary and may be enforced against Subsidiary to the same extent as if said
debts, liabilities, and duties had been incurred or contracted by Subsidiary.
2.2 USE OF NAME. The parties agree to take whatever actions are
necessary to ensure that the "Turf Products" name is available to Subsidiary for
its use from and after the Closing. For example, within the discretion of
Subsidiary, (a) the certificate of incorporation of Subsidiary may be amended,
by changing Article I thereof so as to read in its entirety as follows: "The
name of the corporation is Turf Products Inc.," or (b) Subsidiary may use such
name as a dba.
2.3 CERTIFICATE OF INCORPORATION AND BYLAWS. The certificate of
incorporation and bylaws of Subsidiary in effect immediately prior to the
Closing shall continue to be the certificate of incorporation and bylaws of
Subsidiary, as the surviving corporation, from and after the Merger.
2.4 CONVERSION AND EXCHANGE OF SHARES. The manner of converting or
exchanging the shares of each of the Constituent Corporations shall be as
follows:
(a) The Merger shall effect no change in any of the shares of
Subsidiary stock, and none of its shares shall be converted or issued as a
result of the Merger.
(b) All of Turf Products' stock which is issued and
outstanding on the Closing Date (the "TURF STOCK") shall, by virtue of the
Merger, be converted at the Closing into, without action on the part of
Shareholder, Four Hundred Thousand (400,000) shares of Parent common stock (the
"PARENT STOCK") and cash in the amount of $1,310,000 (which cash shall be
provided by Subsidiary). Such Parent Stock and cash shall be distributed to
Xxxxx and Trust pro rata in proportion to their holdings of the Turf Stock.
2.5 EFFECTIVE DATE. The parties intend for the Merger to be effective
as of May 31, 1996 (the "EFFECTIVE DATE"), and for the closing of the Merger
(the "CLOSING") to occur in accordance with Section 2.6 hereof on such date or
as soon thereafter as reasonably possible. If any applicable laws dictate that
the Merger cannot become effective for legal purposes until a later date, then
the parties, to the extent practically feasible and consistent with the intent
of this Agreement, nonetheless shall cause the accounting and the treatment of
any revenues, earnings, expenses and expenditures of the Constituent
Corporations subsequent to the Effective Date to be handled as if the Merger had
become legally effective on May 31, 1996, and Subsidiary hereby consents to and
ratifies all expenses paid by Turf Products from such date to the Closing Date.
2.6 CLOSING. The Closing shall be held at the principal offices of
Parent, unless another place is agreed upon in writing by the parties. In
connection with the Closing, the parties shall cause the following steps to be
taken:
(a) Subsidiary and Turf Products shall file each of the
following:
(i) A Certificate of Merger substantially in the form
of Exhibit "B" attached here to (the "CERTIFICATE OF MERGER") shall be executed
and filed in the office of the Secretary of State for the State of Delaware;
(ii) A duplicate original of the Certificate of
Merger shall be filed in the office of the Secretary of State for the State of
Illinois;
(iii) Illinois BCA Forms 11.25 and 14.35 shall be
filed in the office of Secretary of State for the State of Illinois.
(b) Subsidiary shall deliver to Shareholder the Parent Stock
and cash described in Section 2.4(b) hereof.
(c) Shareholder shall surrender to Subsidiary for cancellation
the certificates representing the Turf Stock. Until so presented and
surrendered, each certificate which represents issued and outstanding shares of
Turf Stock shall be deemed for all purposes to evidence ownership of the Parent
Stock into which such Turf Stock have been converted pursuant to the Merger.
However, until surrender of the Turf Stock, Shareholder shall not be entitled to
vote at any meeting of Parent's shareholders.
(d) Shareholder and Subsidiary shall execute and deliver a
Mutual Release and Settlement Agreement in the form attached hereto as Exhibit
"C" (the "MUTUAL RELEASE"), pursuant to which, as more fully set forth therein
and subject to the terms thereof, Subsidiary shall pay to Xxxxx and his spouse
on the Closing Date the sums described in Section 1 thereof and Xxxxx, his
spouse and Subsidiary shall release all claims which they may have against each
other as of the Closing Date, other than claims arising under this Agreement and
the other Transaction Agreements.
(e) Shareholder shall deliver to Subsidiary a Pledge Agreement
in the form attached hereto as Exhibit "D" (the "PLEDGE AGREEMENT"), pursuant to
which, as more fully set forth therein and subject to the terms thereof,
Shareholder shall provide to Parent and Subsidiary a first priority security
interest in the shares of Parent Stock received by Shareholder at the Closing,
which security interest shall secure the obligations of Shareholder under
Sections 13.1 and 14.2(b) hereof.
(f) Subsidiary and Xxxxx shall execute and deliver an
"Employment Agreement" in the form attached hereto as Exhibit "E" (the
"EMPLOYMENT AGREEMENT"), pursuant to which, as more fully set forth therein and
subject to the terms thereof, Subsidiary shall agree to employ Xxxxx and Xxxxx
shall agree to work for Subsidiary.
(g) Subsidiary and Xxxxx, as beneficial owner, shall enter
into a lease in the form attached hereto as Exhibit "G" (the "HEADQUARTERS
LEASE"), pursuant to which, as more fully set forth therein and subject to the
terms thereof, Subsidiary shall lease the Headquarters Property from Xxxxx.
(h) Parent and Subsidiary shall deliver the certificates
called for by Sections 4.2 5.2 and 10.1 hereof and the opinion called for by
Section 10.5 hereof.
(i) Shareholder and Turf Products shall deliver the
certificates called for by Sections 3.13 and 9.1 hereof and the opinion called
for by Section 9.5 hereof.
2.7 FURTHER ASSURANCES. From time to time as and when requested by
Subsidiary or its successors or assigns, the officers and directors of Turf
Products last in office shall execute and deliver such deeds and other
instruments and shall take or cause to be taken such other actions as shall be
necessary to vest or perfect in or to confirm of record or otherwise,
Subsidiary's title to, and possession of, all the property, interests, assets,
rights, privileges, powers, franchises, and authority of Turf Products, and
otherwise to carry out the purposes of this Agreement.
SECTION 3--REPRESENTATIONS AND WARRANTIES OF
TURF PRODUCTS AND SHAREHOLDER
Turf Products and Shareholder represent and warrant to Parent and
Subsidiary that the following are and shall be true and correct as of the
Effective Date and as of the Closing Date:
3.1 SHAREHOLDER. Xxxxx and Trust are the only shareholders of Turf
Products and they own their shares free and clear of all liens, encumbrances and
any liabilities.
3.2 CORPORATE ORGANIZATION AND GOOD STANDING. Turf Products is a
corporation duly organized, validly existing, and in good standing under the
laws of the State of Illinois, with full corporate power and authority to
conduct its business as it presently is being conducted and to own and lease its
properties and assets. Turf Products is qualified to do business as a foreign
corporation in each jurisdiction, if any, in which its property or business
requires such qualification. Copies of the articles and by-laws of Turf
Products, and all amendments thereto, heretofore delivered to Parent are
accurate and complete.
3.3 CAPITALIZATION. Turf Products' authorized capital stock consists of
100 shares of Turf Products Common Stock, $10.00 par value, of which 100 shares
are issued and outstanding, fully paid and nonassessable. Xxxxx owns 95 shares
of Turf Products Common Stock; Trust owns 5 shares of Turf Products Common
Stock. There are no options, warrants, or rights outstanding of any kind to
purchase or acquire shares of Turf Products Common Stock.
3.4 SUBSIDIARIES. Except as set forth on Exhibit "O". Turf Products has
no subsidiaries.
3.5 FINANCIAL STATEMENTS. Turf Products' unaudited balance sheets as of
December 31, 1993, 1994, 1995, and short year ending on the Interim Balance
Sheet Date, and the related statements of income and retained earnings for the
years then ended, copies of which are attached hereto as Exhibit "H", fairly
present in all material respects the financial condition of Turf Products as of
said dates and the results of its operations for the periods then ended, on an
accrual basis and in conformity with generally accepted tax accounting
principles consistently applied for the periods covered. Further, Exhibit "I"
attached hereto lists the names and addresses of all of the material customers
of Turf Products during calendar year 1995.
3.6 ABSENCE OF UNDISCLOSED LIABILITIES. Except to the extent reflected
or reserved against in Turf Products' balance sheet as of DECEMBER 31, 1995 and
short year ending on the Interim Balance Sheet Date, Turf Products did not have
on such dates any liabilities or obligations (secured, unsecured, contingent, or
otherwise) of a nature customarily reflected in a corporate balance sheet
prepared in accordance with generally accepted accounting principles. Further,
the aggregate Existing Indebtedness to Shareholder equals $440,000. All such
Existing Indebtedness to Shareholder is reflected in the balance sheet for Turf
Products referenced in Section 3.6 prepared as of the Interim Balance Sheet
Date.
3.7 ABSENCE OF CERTAIN CHANGES. Except as set forth on Exhibit "J"
attached hereto, (a) Turf Products has not incurred, since the Interim Balance
Sheet Date, any additional liabilities except for liabilities incurred in the
ordinary course of business and in accordance with reasonably prudent business
practices, and (b) there have been no material adverse changes in the business,
properties, or financial condition of Turf Products since December 31, 1995.
3.8 LITIGATION. Except as set forth on Exhibit "K" attached hereto,
there is no litigation, proceeding, or investigation pending or, to the
knowledge of Turf Products or Shareholder threatened against Turf Products or
Shareholder which if successful might result in an adverse change in the
business, properties, or financial conditions of Turf Products or which
questions the validity or legality of this Agreement or of any action taken or
to be taken by Turf Products or Shareholder in connection with this Agreement.
In addition, Shareholder has no knowledge of any facts or circumstances that
could lead to any such litigation or arbitration against Turf Products or
Shareholder (including without limitation litigation or arbitration that might
be brought by past or present employees of Turf Products).
3.9 CONTRACTS. Except as set forth in Exhibit "L" attached hereto, Turf
Products is not a party to any material contract which is to be performed in
whole or in part at or after the date of this Agreement. A material contract
shall include any contract which provides for more than $40,000 in payments over
the term of the contract.
3.10 TITLE. Xxxxx has good and marketable fee title to the Headquarters
property. Turf Products has good and valid title to all property (excluding the
real estate) included in the balance sheet of Turf Products as of the Interim
Balance Sheet Date, other than property disposed of in the ordinary course of
business after said date. Except as set forth in Exhibit "M" attached hereto,
the properties of Turf Products, if any, are not subject to any mortgage,
encumbrance, or lien of any kind except minor encumbrances not of a financial
nature, which do not materially interfere with the use of the property in the
conduct of the business of Turf Products.
3.11 TAX RETURNS. The federal income tax returns of Turf Products have
been filed with the Internal Revenue Service for all years to and including the
taxable year ending December 31, 1995. Turf Products has provided Parent with
accurate and complete copies of all federal and state income tax returns filed
for Turf Products for the 1992, 1993, 1994 and 1995 calendar years. The
provisions for federal and state taxes reflected in the financial statements
referred to in Section 3.5 hereof are adequate to cover any such taxes which may
be assessed against Turf Products in respect of its business and its operations
during the periods covered by said financial statements and all prior periods.
3.12 NO VIOLATION. Consummation of the merger will not constitute or
result in a breach or default under any provision of any charter, bylaw,
indenture, mortgage, lease, or agreement, or any order, judgment, decree, law,
or regulation to which any property of Turf Products is subject or by which Turf
Products is bound, except for breaches or defaults which in the aggregate would
not have a materially adverse effect on Turf Product's properties, business
operations or financial condition. To the best knowledge of Xxxxx, Turf Products
has complied with and is not in violation of any applicable federal, state, and
local laws and regulations affecting the operation of its business, except (i)
for any such noncompliance which in the aggregate would not have a materially
adverse effect on Turf Product's properties, business operations or financial
condition, and (ii) the provisions of this Section 3.12 shall not apply to
environmental laws, which are the subject of Section 3.14 hereof.
3.13 CORPORATE AUTHORITY. Turf Products has full corporate power and
authority to enter into this Agreement and to carry out its obligations
hereunder and will deliver to Parent at the Closing a certified copy of the
minutes of its Sole Director and Sole Shareholder authorizing execution of this
Agreement by its officers and performance thereunder in substantially the same
form as is attached hereto as Exhibit "N".
3.14 HAZARDOUS WASTE AND MATERIALS. Turf Products and Shareholder have
been in material compliance with all environmental laws including, but not
limited to, those spelled out in the Comprehensive Environmental Resource
Compensation and Liability Act, 42 U.S.C. ss.9600 et seq., Resources
Conservation and Recovery Act, 42 U.S.C., ss.6900 et seq., Clean Water Act, 33
U.S.C. ss.1251 et seq., as well as other federal, state and local laws which
relate to the creation, storage and disposal of hazardous materials. To the best
knowledge of Xxxxx, there are no claims pending or threatened, by any person or
agency, against Turf Products or Shareholder or any property owned or leased by
Turf Products under any environmental laws (and no circumstances have occurred
which could form the basis for any such claims). Neither Turf Products nor
Shareholder has created, utilized, stored nor disposed of, or suffered the
existence of, any material or substance which may be hazardous on any property
or land owned or leased by Turf Products or Shareholder, except in accordance
with all applicable laws and in the ordinary course of its business.
3.15 EMPLOYEE AND EMPLOYEE BENEFIT MATTERS. Exhibit "O" attached hereto
lists all of the employees of Turf Products. No such employees have any right to
accrued vacation (or payment in lieu of all or part thereof) in excess of 10
business days. Other than the plans described on Exhibit "O" there are no
employee benefit plans in place including, but not limited to, pension, stock
bonus, 401(k), employee stock ownership, money purchase, stock option,
cafeteria, medical expense reimbursement or phantom stock plans, under which
Turf Products is subject to liability. Shareholder hereby agrees to defend and
hold Parent and Subsidiary harmless from any and all liability relating to any
such employee benefit plans, including the profit sharing plan to be terminated
pursuant to Section 6.5 hereof.
3.16 RELIANCE. Turf Products and Shareholder have inspected and
investigated for themselves all of the assets and liabilities of Parent and
Subsidiary and have been given access to such information as they have
requested, and relies on no representations or warranties of Parent and
Subsidiary in entering into this Agreement, except as specifically set forth
herein.
3.17 MERGER CONSIDERATION. The Parent Stock to be delivered at the
Closing is being acquired for Xxxxx and Trust's respective own accounts, with no
intention of assigning any participation or interest therein, and without a view
to the distribution of any portion thereof, except in accordance with the
Securities Act of 1933 (as amended from time to time) (the "SECURITIES ACT") and
all applicable state securities laws. Xxxxx is a resident solely of the State of
Illinois, Trust is organized and existing under the laws of the State of
Illinois, and all material negotiations relating to this Agreement and the
transactions contemplated hereby occurred while such Xxxxx was in the State of
Illinois. Xxxxx and Trust understand that the Parent Stock to be delivered at
the Closing is not being registered under the Securities Act or any state
securities law and must be held unless and until such time as it is subsequently
registered thereunder or an exemption from such registration is available. Xxxxx
and Trust further understand that, except as otherwise provided in this
Agreement, the Parent Stock to be delivered at the Closing is not being
registered under the Securities Act or any state securities law in part on the
grounds that the issuance thereof is exempt under Section 4(2) of the Securities
Act, and Regulation D promulgated thereunder, as a transaction by an issuer not
involving any public offering; that Parent's reliance on such exemption is
predicated in part on the foregoing representation and warranty of Xxxxx and
Trust and that in the view of the Securities and Exchange Commission, the
statutory basis for the exemption claimed would not be present if,
notwithstanding such representation and warranty, Xxxxx or Trust contemplates
acquiring any of the Parent Stock for sale upon the occurrence or non-occurrence
of some predetermined event. Shareholder understands and acknowledges that the
sale of the Parent Stock may be restricted or limited by the qualification or
listing requirements of any securities exchange upon which the common stock of
Parent may subsequent to Closing become designated or listed for trading.
3.18 RESTRICTIVE LEGEND. Shareholder understands that Parent will have
an appropriate stop order placed on its records indicating the existence of the
terms of this Agreement, and that the certificates representing the Parent Stock
shall bear the following legend:
"The shares represented by this certificate have not been
registered under the Securities Act of 1933 (the "Act"), but
have been issued pursuant to an exemption thereunder. The
registered holder of such shares has agreed not to effect a
disposition of such shares until either: (1) the holder has
received the opinion of counsel acceptable to the Company that
registration under the Act is not required, or (2) a
registration statement under the Act covering such shares and
disposition has become effective under the Act."
3.19 ACCREDITED INVESTOR. Xxxxx is an "accredited investor" as that
term is defined in Rule 501(a) of the Securities and Exchange Commission.
Exhibit "P" attached hereto sets forth in reasonable detail all bases upon which
Shareholder qualifies is an "accredited investor."
3.20 FULL DISCLOSURE. None of the representations and warranties made
by Turf Products and Shareholder contain or will contain any untrue statement of
a material fact or omit any material fact, the omission of which would be
misleading.
3.21 LEGAL AND TAX ADVICE. Each of Turf Products and Shareholder has
had an opportunity to discuss this Agreement with counsel of their respective
choosing, and to have the legal consequences of the Transaction Agreements and
the transactions contemplated thereby explained by such counsel. Shareholder
also has had an opportunity to seek and obtain the advice of a competent tax
professional with respect to the tax consequences of the Transaction Agreements
and the transactions contemplated hereby. Neither Turf Products nor Shareholder
is relying upon Parent, Subsidiary or any of their respective stockholders,
directors, officers, attorneys, accountants, agents or representatives for
purposes of interpreting the provisions of the Transaction Agreements or
assessing the consequences hereof.
3.22 TRUST. Xxxxx is the sole grantor that created the Trust. Xxxxx
also is the sole Trustee of the Trust.
SECTION 4--REPRESENTATIONS AND WARRANTIES OF PARENT
Parent represents and warrants to Turf Products that the following are
and shall be true and correct as of the Effective Date and the Closing Date:
4.1 CORPORATE ORGANIZATION, GOOD STANDING, AND CAPITALIZATION. Parent
is a corporation duly organized, existing, and in good standing under the laws
of the State of Nebraska, with the corporate power to own its properties and to
carry on its business as now being conducted. Complete and correct copies of
Parent's Certificate of Incorporation and Bylaws, as amended to the date hereof,
have been delivered to Turf Products. As of May 30, 1996, (a) Parent's
authorized capital stock consisted of Ten Million (10,000,000) shares of common
stock, of which, Five Million, Two Hundred Thirty-One Thousand, One Hundred
Eighty-Three (5,231,183) shares were issued and outstanding all fully paid and
nonassessable, and (b) warrants, options, rights or conversion privileges
permitting the holders to acquire an additional Four Million Twenty-Five
Thousand Four Hundred and Seven (4,025,407) shares of Parent's Common Stock were
outstanding. As of the Closing, the authorized Parent's authorized capital stock
will be Fifteen Million (15,000,000). In addition to the stock, warrants,
options, rights and conversion privileges referenced above, it is anticipated
that as of the Closing (i) if the private placement contemplated by the
Confidential Private Placement Memorandum referenced in Section 4.6 below has
closed by such date, then there will be outstanding additional warrants
permitting the holders thereof to acquire up to an additional One Million
(1,000,000) shares of Parent's common stock; and (ii) if the acquisition of the
Northeast independent dealer referenced on page 29 of such Confidential Private
Placement Memorandum has closed by such date, then there will be outstanding up
to an additional Five Hundred Thousand (500,000) shares of Parent's common
stock. The certificates representing the shares of Parent common stock issued
and outstanding as of the Closing Date will contain restrictive legends
substantially similar to that described in Section 3.18 above.
4.2 CORPORATE AUTHORITY. This Agreement has been approved of by all
necessary corporation action of Parent and Parent will deliver to Turf Products
at the closing a certified copy of the minutes of its Board of Directors
authorizing the execution of this Agreement by its officers and performance
thereunder in substantially the same form as is attached hereto as Exhibit "O".
Neither the execution and delivery of this Agreement, nor performance hereunder,
will conflict with, or result in a breach of the terms, conditions, or
provisions of, or constitute a default under, the Certificate of Incorporation
or Bylaws of Parent or any agreement or instrument to which Parent is a party or
by which it is bound.
4.3 FINANCIAL STATEMENTS OF PARENT. Parent has furnished Turf Products
with the audited consolidated financial statements of Parent and its
consolidated subsidiaries, if any, as of December 31, 1993, 1994 and 1995 and
for the years ended on such dates. Such financial statements fairly present, the
financial position of Parent and its consolidated subsidiaries, if any, on the
dates indicated, and the results of their operations for the periods then ended,
in conformity with generally accepted accounting principles applied on a
consistent basis, except as noted therein.
4.4 SHARES TO BE ISSUED. The shares of Parent Stock to be issued and
delivered pursuant to this Agreement will be duly and validly issued, fully
paid, and nonassessable.
4.5 NO MATERIAL ADVERSE CHANGE. Since December 31, 1995, there has not
been any change in the business, assets, operations, or financial condition of
Parent nor its consolidated subsidiaries, if any, that materially adversely
affects the business of Parent and its consolidated subsidiaries, if any, as a
whole.
4.6 PRIVATE PLACEMENT MEMORANDUM. Parent has provided Shareholder with
a copy of the Confidential Private Placement Memorandum pertaining to units to
be sold by Parent consisting of notes and warrants to purchase shares of
Parent's common stock. The matters set forth therein pertaining to the business
and affairs of Parent are true and correct in all material respects.
4.7 ADDITIONAL CAPITAL. Parent presently intends to seek from time to
time to raise additional capital as it deems appropriate in order to enhance the
value of the shares of Parent's common stock. The primary option presently being
considered is an initial public offering of Parent's common stock, and Parent's
present plans are to continue to pursue such an offering. The parties recognize,
however, that a number of factors could impact the ultimate decision as to
whether and when to consummate such an offering, and accordingly there can be no
assurance as to if and when such a public offering might occur.
4.8 RELIANCE. Parent and Subsidiary have inspected and investigated for
themselves all of the assets and liabilities of Turf Products and have been
given access to such information as they have requested, and rely on no
representations or warranties of Turf Products in entering into this Agreement,
except as specifically set forth herein.
SECTION 5--REPRESENTATIONS AND WARRANTIES OF SUBSIDIARY
Subsidiary represents and warrants to Turf Products that the following
are and shall be true and correct as of the Effective Date and the Closing Date:
5.1 CORPORATE ORGANIZATION, GOOD STANDING, AND CAPITALIZATION. On the
Closing Date, Subsidiary shall be a corporation duly organized, existing, and in
good standing under the laws of the State of Delaware, with authorized capital
stock of 1,000 shares of common stock, par value $.01, 100 of which shall be
issued, outstanding, and owned by Parent (with no other shares issued or
outstanding).
5.2 CORPORATE AUTHORITY. This Agreement has been approved of by the
Board of Directors of Subsidiary and Subsidiary will deliver to Turf Products at
the closing a certified copy of the minutes of its Sole Shareholder and Board of
Directors authorizing the execution of this Agreement by its officers and
performance thereunder in substantially the same form as is attached hereto as
Exhibit "R". Neither the execution and delivery of this Agreement, nor
performance hereunder, will conflict with, or result in a breach of the terms,
conditions, or provisions of, or constitute a default under, the Certificate of
Incorporation or Bylaws of Subsidiary or any agreement or instrument to which
Subsidiary is a party or by which it is bound.
5.3 LIABILITIES. Subsidiary has no liabilities except liabilities for
organizational expenses and expenses in connection with the merger contemplated
by this Agreement.
5.4 CONTINUED ACTIVITY. Following the merger, Subsidiary will continue
the active conduct of the business to be acquired from Turf Products and has no
plan or intention to liquidate or sell its assets other than in the ordinary
course of business.
SECTION 6--CONDUCT OF TURF PRODUCTS PENDING THE CLOSING
Turf Products and Shareholder agree that between the date of this
Agreement and the Closing:
6.1 CERTIFICATE OF INCORPORATION AND BYLAWS. No change will be made in
Turf Products' certificate of incorporation or bylaws.
6.2 CAPITALIZATION. Turf Products will not make any change in its
authorized or issued capital stock, declare or pay any dividend or other
distribution, or issue, encumber, purchase, or otherwise acquire any of its
capital stock.
6.3 SHAREHOLDERS' MEETING. By the execution of this Agreement,
Shareholder hereby approves of the terms and conditions contained herein and no
further approval by Turf Products, its Shareholder or Board of Directors is
required.
6.4 CONDUCT OF BUSINESS. Except as provided in Section 6.5 hereof, Turf
Products will use its best efforts to maintain and preserve its business
organization, employee relationships, and goodwill intact, and will not, without
the written consent of Parent and Subsidiary, except in good faith and in the
ordinary course of business, enter into any contracts or other commitments,
amend any existing contracts, increase, directly or indirectly, the compensation
or benefits of any officer or employee, hire any new employees, borrow money,
make loans, or sell any of its assets or client lists.
6.5 TERMINATION OF THE PROFIT SHARING PLAN. Prior to the Closing, Turf
Products and Shareholders shall terminate the Profit Sharing Plan (as identified
in Exhibit "O" attached hereto), and Turf Products and Shareholder shall take
all necessary and appropriate action to transfer full and complete authority, to
the trustees of such plan, to consummate the termination of such plan, including
without limitation, effecting the distribution of benefits thereunder.
SECTION 7--COVENANTS OF PARENT AND SUBSIDIARY PENDING THE CLOSING
Parent and Subsidiary agree that between the date hereof and the Closing:
7.1 MEETING OF PARENT* DIRECTORS. Parent will submit and recommend the
merger of Turf Products into Subsidiary to Parent's Directors at a special
meeting to be duly called and held prior to the Closing, (or such other date as
may be agreed upon in writing by Parent and Turf Products).
7.2 MEETING OF SUBSIDIARY'S SHAREHOLDERS. Parent will vote all the
outstanding shares of common stock of Subsidiary in favor of the merger of Turf
Products into Subsidiary at a special meeting of Subsidiary's shareholders to be
duly called and held prior to the Closing (or such other date as may be agreed
upon in writing by Subsidiary and Turf Products).
7.3 INFORMATION. Parent will furnish Turf Products with all information
reasonably requested by Turf Products prior to the Closing concerning Parent or
Subsidiary in connection with the transactions contemplated by this Agreement.
Shareholder acknowledges that it has received the Confidential Private Placement
Memorandum pertaining to units to be sold by Parent consisting of notes and
warrants to purchase shares of Parent's common stock.
7.4 CONTRIBUTION TO SUBSIDIARY. Parent will contribute to Subsidiary
such cash as may be required in order for Subsidiary to make the payments
contemplated by Section 2.6(b) hereof and Section I of the Mutual Release.
SECTION 8--COVENANTS OF PARENT AND TURF PRODUCTS PENDING THE CLOSING
8.1 ANNOUNCEMENT. Prior to the Closing, neither Turf Products nor
Parent, without the prior approval of the other, will make any announcement or
other statement to the public, and each will promptly forward to the other a
copy of any general announcement or statement to its employees, customers, or
suppliers concerning the transactions covered by this Agreement.
8.2 INFORMATION. Turf Products and Shareholder will furnish Parent and
Subsidiary, or their representative, with all information reasonably requested
by Parent or Subsidiary prior to the Closing concerning Turf Products or
Shareholder in connection with the transactions contemplated by this Agreement.
SECTION 9--CONDITIONS TO OBLIGATIONS OF PARENT AND SUBSIDIARY
The obligations of Parent and Subsidiary to effect the Merger are, at
the option of Parent or Subsidiary, subject to the following conditions:
9.1 REPRESENTATIONS AND WARRANTIES TRUE. The representations and
warranties of Turf Products contained herein (other than those set forth in
Sections 3.14 or the last sentence of Section 3.12 hereof) shall be true at and
as of the Effective Date and the Closing Date with the same effect as though
made at and as of such dates; Turf Products shall have performed all obligations
and complied with all covenants required by this Agreement to be performed or
complied with by it prior to the Closing; and Turf Products shall have delivered
to Parent and Subsidiary a certificate, dated the Closing Date and signed by
Turf Products' president and its secretary, to both such effects.
9.2 ABSENCE OF LITIGATION. There shall be no actual or threatened
litigation against Turf Products or any actual or threatened litigation to
restrain or invalidate the merger or any other transaction contemplated in this
Agreement, the defense of which would, in the judgment of the Board of Directors
of Parent, made in good faith and based on the advice of counsel, involve
expense or lapse of time that would be materially adverse to the interests of
Parent.
9.3 REQUISITE APPROVALS. The requisite approvals of this Agreement and
the transactions contemplated herein shall have been given by the Boards of
Directors of Parent, Subsidiary, and Turf Products and the consent of any other
party to the transfer to Subsidiary of all the rights of Turf Products in, to,
and under any contract, agreement, lease, or other instrument and any property
or asset, tangible or intangible, pursuant to the merger contemplated by this
Agreement, shall have been obtained.
9.4 GOVERNMENTAL PERMITS. All governmental authorizations and permits
necessary for the consummation of the merger shall have been secured.
9.5 OPINION OF TURF PRODUCTS' COUNSEL. Parent shall have received a
favorable opinion, dated the Closing Date, of counsel for Turf Products, in form
and substance satisfactory to Parent and its counsel, to the effect that:
(a) All proceedings, other than the filings described in
Section 2.6(a) hereof, necessary to be taken by Turf Products or Shareholder
under Illinois law in order to effectuate the merger of Turf Products into
Subsidiary have been duly taken by Turf Products and Shareholder in accordance
with Illinois law, and, upon such filings, Turf Products will be duly merged
with and into Subsidiary;
(b) The shares of capital stock of Turf Products outstanding
immediately prior to the Effective Date and the Closing are, to the best
counsel's actual knowledge, validly authorized and issued and duly paid and
nonassessable; and
(c) Neither the execution and delivery of this Agreement, nor
the performance hereunder, will conflict with, or result in a breach of the
terms, conditions, or provisions of, or constitute a default under, Turf
Product's Certificate of Incorporation or Bylaws or any agreement, instrument,
judgment, decree, regulation, or other restriction of which such counsel has
knowledge and to which Turf Products is a party or by which it is bound.
SECTION 10--CONDITIONS TO OBLIGATIONS OF TURF PRODUCTS
The obligations of Turf Products to effect the Merger are, at the
option of Turf Products, subject to the conditions that:
10.1 REPRESENTATIONS AND WARRANTIES TRUE. The representations and
warranties of Parent and Subsidiary contained herein shall be true at and as of
the Effective Date and the Closing with the same effect as though made at and as
of such dates; Parent and Subsidiary shall have performed all obligations and
complied with all covenants required by this Agreement to be performed or
complied with by it prior to the Closing; and Parent and Subsidiary shall have
delivered to Turf Products a certificate, dated the Closing Date and signed by
the president and secretary of Parent and Subsidiary, to both such effects.
10.2 ABSENCE OF LITIGATION. There shall be no actual or threatened
litigation to restrain or invalidate the merger or any other transaction
contemplated in this Agreement, the defense of which would, in the judgment of
the Board of Directors of Turf Products, made in good faith and based on the
advice of counsel, involve expense or lapse of time that would be materially
adverse to the interests of Turf Products.
10.3 REQUISITE APPROVALS. The requisite approvals of this Agreement and
the transactions contemplated herein shall have been given by the Boards of
Directors of Parent, the Board of Directors and Shareholder of Subsidiary, and
Turf Products and the consent of any other party to the transfer to Subsidiary
of all the rights of Turf Products in, to and under any contract, agreement,
lease, or other instrument and any property or asset, tangible or intangible,
pursuant to the merger contemplated by this Agreement, shall have been obtained.
10.4 GOVERNMENTAL PERMITS All governmental authorizations and permits
necessary for the consummation of the merger shall have been secured.
10.5 OPINION OF PARENT'S COUNSEL.
(a) Shareholder shall have received a favorable opinion, dated
the Closing Date, of counsel to Parent, in form and substance satisfactory to
Turf Products and its counsel, to the effect that: the shares of Parent Stock
which are to be issued and delivered to the Shareholder of Turf Products upon
the consummation of the Merger are validly authorized and, when so issued, will
be, to the best of counsel's actual knowledge, validly issued, fully paid,
nonassessable; and
(b) All proceedings, other than the filings described in
Section 2.6(a) hereof, necessary to be taken by Parent or Subsidiary under
Delaware law in order to effectuate the merger of Turf Products into Subsidiary
have been taken by Parent and Subsidiary in accordance with Delaware law, and,
upon such filings, Turf Products will be duly merged with and into Subsidiary.
SECTION 11--TERMINATION
11.1 CIRCUMSTANCES OF TERMINATION. This Agreement may be terminated
prior to Closing:
(a) By the mutual consent in writing of the Board of Directors
of Turf Products and Parent.
(b) By the Board of Directors of Turf Products if any
condition provided in Section 10 hereof has not been satisfied or waived on or
before the Closing.
(c) By the Board of Directors of Parent if any condition
provided in Section 9 hereof has not been satisfied or waived on or before the
Closing.
11.2 EFFECT OF TERMINATION. In the event of a termination of this
Agreement pursuant to Section 11.1 hereof, each party shall pay the costs and
expenses incurred by it in connection with this Agreement and no party (or any
of its officers, directors, and shareholders) shall be liable to any other party
for any costs, expenses, damage, or loss of anticipated profits hereunder.
SECTION 12--CERTAIN POST-CLOSING MATTERS
12.1 EMPLOYMENT OF SHAREHOLDER; COVENANT NOT TO COMPETE. Shareholder
and Subsidiary shall execute and deliver at Closing the Employment Agreement.
Shareholder acknowledges and agrees that Section 8 of the Employment Agreement
includes, as more fully set forth therein, certain covenants by Shareholder not
to compete with the business of Parent or Subsidiary. Shareholder further
acknowledges and agrees that the covenants set forth in the Employment Agreement
are being made to induce Parent to enter into this Agreement and are required by
Parent for the purpose of preserving the business and goodwill of Turf Products,
Subsidiary and Parent for the benefit of Parent. Accordingly, Parent shall have
the rights of a third party beneficiary with respect to such covenants and shall
have the right to enforce said covenants separately and independently from
Subsidiary.
12.2 EMPLOYMENT OF TURF PRODUCTS EMPLOYEES. It is the general intent of
Subsidiary to employ the existing employees of Turf Products (other than
Shareholder) on an "at will" basis and otherwise on terms substantially akin to
those under which said employees are employed by Turf Products prior to the
Closing (it being understood, however, that Subsidiary may alter such terms to
the extent reasonably necessary in order to cause them to be consistent with the
general employment policies of Subsidiary and/or Parent).
12.3 REGISTRATION RIGHTS. Shareholder acknowledges and agrees that the
Parent Stock being delivered by Subsidiary in connection with the Merger is
being acquired by Shareholder without any registration rights whatsoever, except
as set forth in the immediately succeeding sentence. Parent agrees that in the
event that Xxxxxxx X. Xxxxx is granted piggyback registration rights with
respect to Parent Stock in connection with the registration under the Securities
Act of 1933 of other securities of Parent and such registration rights are
exercised by Xx. Xxxxx, then Shareholder shall be afforded the opportunity to
similarly register one share of Parent Stock held by Shareholder for each 3.62
shares of Parent Stock so registered by Xx. Xxxxx. In such event, Shareholder's
registration rights with respect to such registration shall be otherwise subject
to the same terms and conditions as Xx. Xxxxx' registration rights. The
foregoing shall not be construed as (a) providing Shareholder with any rights to
demand that Parent commence a registration of its securities or (b) providing
Shareholder with any right to sell or otherwise dispose of any of the common
stock which it holds in Parent in a manner not permitted by the Pledge
Agreement.
SECTION 13--INDEMNIFICATION
13.1 INDEMNIFICATION OF PARENT AND SUBSIDIARY. The Shareholder agrees
to indemnify, defend, and hold Parent and Subsidiary harmless against any and
all claims, costs, obligations, loss, damage or expense (including interest,
penalties and reasonable attorneys' fees) suffered by Parent and/or Subsidiary
(collectively, "Damages") from (a) any breach by Shareholder or Turf Products of
any of their covenants under this Agreement or any inaccuracy in or (b) breach
of any of the representations or warranties of Shareholder or Turf Products
herein; provided however, that (i) Shareholder shall not be liable for any such
Damages to the extent the same are covered by recoveries from insurance carriers
(without reservations of rights) identified by Shareholder as providing coverage
for such Damages (it being understood that to the extent Shareholder reasonably
identifies any such insurance carriers, Parent, Subsidiary and Shareholder shall
work together in good faith to reasonably pursue such recoveries), and (ii)
Shareholder's aggregate liability under this Section 13.1 (excluding, of course,
Damages covered through insurance recoveries) shall not exceed the sum of (A)
$1,750,000 plus (B) any amounts that Parent or Subsidiary may recover through
the exercise of any remedies under the Pledge Agreement with respect to the
collateral encumbered thereby.
13.2 INDEMNIFICATION OF SHAREHOLDER. Parent and Subsidiary agree to
indemnify, defend, and hold Shareholder harmless against any and all claims,
costs, litigation, loss, damage or expense (including interest, penalties, and
reasonable attorneys' fees) suffered by Shareholder from any breach by Parent or
Subsidiary of any of their covenant under this Agreement or any inaccuracy in or
breach of any of the representations or warranties by Parent and Subsidiary
herein.
13.3 DEFENSE OF CLAIMS. Upon obtaining knowledge thereof, the
indemnified party shall promptly notify the indemnifying party of any claim
which has given or could give rise to a right of indemnification under this
Agreement. If the right of indemnification related to a claim asserted by a
third party against the indemnified party, the indemnifying party shall have the
right to employ counsel acceptable to the indemnified party to cooperate in the
defense of any such claim. So long as the indemnifying party is defending any
such claim in good faith, the indemnifying party will not settle such claim. If
the indemnifying party does not elect to defend any such claim, the indemnified
party shall have no obligation to do so.
SECTION 14--ACCOUNTING, ADJUSTMENTS AND PUT RIGHT
14.1 ACCOUNTING. In order to permit the parties to confirm the accuracy
of certain of the representations and warranties of Shareholder set forth
herein, Subsidiary shall engage an accounting firm promptly following the
Closing to review the books and records of Turf Products and prepare a balance
sheet for Turf Products reflecting the assets and liabilities of Turf Products
as of the earlier of the Closing Date and June 30, 1996. Said balance sheet
shall be prepared in accordance with generally accepted accounting principles
applied in a manner consistent with those applied in preparation of the balance
sheet prepared as of the Interim Balance Sheet Date (as modified for calculation
of depreciation in accordance with federal tax laws). Turf Products and
Shareholder shall cooperate with Subsidiary and such accountants in preparing
said balance sheet. Subsidiary shall apply its best efforts to cause the
accounting firm to complete the balance sheet and deliver the same to
Shareholder within 30 days after the Closing Date. In any event, the balance
sheet shall be completed within 60 days after the Closing Date. If Shareholder
objects to the balance sheet prepared by the accounting firm selected by
Subsidiary, then Shareholder shall have the right to deliver to Subsidiary,
within five (5) days after its receipt of such balance sheet, a written
statement detailing the nature of the objections. If Shareholder does not timely
deliver such notice, then Shareholder shall be deemed to have approval of the
balance sheet prepared by the accounting firm selected by Subsidiary. If
Shareholder timely delivers such objection notice and if Subsidiary, Shareholder
and the accounting firm selected by Subsidiary cannot resolve such objections
within ten (10) days after Subsidiary's receipt of such notice, then Shareholder
shall have the right to engage a separate accounting firm to prepare a separate
balance sheet (to speak as the Closing Balance Sheet Date) to be delivered to
Subsidiary within twenty-five (25) days after Shareholder's receipt of the
balance sheet prepared by the accounting firm selected by Subsidiary. If such
separate balance sheet is not so delivered, then the accounting firm selected by
Subsidiary shall be deemed approved by Shareholder. If Shareholder timely
delivers such separate balance sheet, and if Subsidiary objects to said balance
sheet, then Subsidiary shall have the right to deliver to Shareholder, within
five (5) days after its receipt of such balance sheet, a written statement
detailing the nature of the objections. If Subsidiary does not timely deliver
such notice, then Subsidiary shall be deemed to have approved the balance sheet
prepared by the accounting firm selected by Shareholder. If Subsidiary timely
delivers the objection notice, and if Subsidiary, Shareholder and the accounting
firm selected by Shareholder are unable to resolve such objections within ten
(10) days after Shareholder's receipt of such notice, then the accounting firm
selected by Subsidiary and the accounting firm selected by Shareholder mutually
shall select a third accounting firm to prepare a balance sheet in accordance
with this section, and the balance sheet so prepared shall be deemed approved by
Subsidiary and Shareholder. The balance sheet ultimately deemed approved by
Subsidiary and Shareholder pursuant to this Section 14.1 shall be referred to
herein as the "Closing Balance Sheet."
14.2 POST-CLOSING ADJUSTMENT AND PUT RIGHT. The parties acknowledge and
agree that Parent and Subsidiary have entered into this Agreement with the
expectation that the Closing Balance Sheet will confirm that the excess of the
assets of Turf Products over the liabilities of Turf Products, as determined by
the Closing Balance Sheet as of the Closing Balance Sheet Date (the "NET CLOSING
ASSETS"), will equal at least $1,100,000. In the event that the Closing Balance
Sheet indicates that the Net Closing Assets are less than this sum, then Parent
and Subsidiary agree as follows:
(a) The amount by which the Net Closing Assets are less than
$1,100,000, as indicated by the Closing Balance Sheet, shall be referred to
herein as the "Closing Deficiency".
(b) If the Closing Deficiency is greater than $110,000, then
Parent shall have the right to make an election (an "ADJUSTMENT ELECTION") to
require Shareholder to return to Parent and Subsidiary a portion of the
consideration provided to Shareholder pursuant to this Agreement, as hereinafter
provided. Parent shall make the Adjustment Election, if at all, by delivery of
notice to such effect to Shareholder within 30 days after approval of the
Closing Balance Sheet in accordance with Section 14.1. If Parent timely makes
the Adjustment Election, then:
(i) On the l5th day after Parent's delivery of the
Adjustment Election, Shareholder shall convey to Parent, free and clear of all
claims or encumbrances of any kind whatsoever, a number of shares of Parent
Stock (rounded down to the nearest whole number) equal to the product of (A) the
Closing Deficiency times (b) 50.7% divided by (C) $4.50;
(ii) Concurrently therewith, Shareholder shall
deliver to Parent, free and clear of any claims or encumbrances of any kind
whatsoever, cash equal to the product of (A) the Closing Deficiency times (B)
49.3%.
(c) If the Closing Deficiency is more than $275,000, then
Parent shall have the right to make an election (a "PUT ELECTION") to transfer
to Shareholder all of the issued and outstanding stock of Subsidiary. Parent
shall make the Put Election, if at all, by delivery of written notice to such
effect to Shareholder within 30 days after the approval of the Closing Balance
Sheet in accordance with Section 14.1. If Parent timely makes the Put
Election, then:
(i) On the 15th day after the delivery of such
notice, Parent shall deliver to Shareholder all of the issued and outstanding
stock of Subsidiary, free and clear of all encumbrances and shall return all
funds distributed by Subsidiary after the Closing, other than funds paid out for
expenses incurred in the ordinary course of business;
(ii) Concurrently therewith, Shareholder shall
deliver to Parent, free and clear of any claims or encumbrances of any kind
whatsoever, all of the Parent Stock and cash delivered to Shareholder pursuant
to Section 2.6(b) hereof and any cash delivered to Shareholder pursuant to
Section I of the Mutual Release;
(iii) Promptly thereafter, Shareholder and Subsidiary
shall take such steps as Parent may from time to time request in order to assure
that there will be no confusion between the business or assets of Subsidiary and
Parent. Such steps shall include without limitation the deletion of the word
"ECO" from Subsidiary's name; and
(iv) All confidential information provided by any
party to another shall be held strictly confidential and shall not be used in
any manner.
14.3 NO DUPLICATION OF RECOVERY. The remedies provided by Section
14.2(b) and 14.2(c) are not intended to be duplicative of each other.
Accordingly Parent shall not be entitled to make both the Adjustment Election
and the Put Election.
SECTION 15--GENERAL PROVISIONS
15.1 ACKNOWLEDGMENT. The parties acknowledge that they have read this
Agreement in its entirety, understand its contents, and sign it freely and
voluntarily. The parties affirm that neither party, nor their representatives,
have made any representations concerning the terms or effects of this Agreement
other than those contained herein. The parties further acknowledge that they
have negotiated with each other over the terms and language of this Agreement
and the other Transaction Agreements, and have had the opportunity to consult
with an attorney of their own choosing prior to executing this Agreement. The
rule of construction and interpretation that provides that any ambiguity or
drafting error is to be construed against the drafting party and in favor of the
interpretation advocated by the non-drafting party is waived and it is deemed
that all parties hereto co-equally drafted this Agreement.
15.2 ALTERATIONS AND WAIVERS. No alteration or modification of any of
the provisions of this Agreement shall be binding unless in writing and signed
by the parties hereto. Further, the failure of either party at any time to
enforce any of the provisions of this Agreement, or any rights it may have in
respect thereto, or to exercise any right herein provided, shall in no way be
considered to be a waiver of such provisions or rights or in any way affect the
validity of this Agreement.
15.3 ATTORNEYS FEES. In the event any attorney is employed by either
party to this Agreement with regard to any legal actions, arbitration or other
proceeding brought by either party for the enforcement of this Agreement, or
because of an alleged dispute, breach, default or misrepresentation in
connection with any of the provisions of this Agreement, then the party
prevailing in such proceeding, whether at trial or upon appeal, shall be
entitled to recover reasonable attorneys' fees and other costs and expenses
incurred, in addition to any other relief to which it may be entitled.
15.4 POST JUDGMENT FEES. In the event a party obtains a judgment in a
proceeding brought to enforce this Agreement, that party shall also be entitled
to recover attorneys' fees and costs incurred in enforcing said judgment. This
provision is intended to be severable from the other provisions of this
Agreement, shall not be deemed merged into but shall survive any such judgment.
15.5 AUTHORITY TO EXECUTE. Each party hereto hereby warrants and
represents to each other party that it has the legal authority and capacity to
enter into this Agreement and that all resolutions or other actions have been
taken so as to enable it to enter into and perform this Agreement.
15.6 BROKER FEES. Parent and Subsidiary agree to indemnify Turf
Products and Shareholder against any liability, loss, cost, damage, or expense
arising out of claims for fees or commissions of brokers employed or alleged to
have been employed by Parent and Subsidiary. Turf Products and Shareholder or
their affiliates agree to indemnify Parent and Subsidiary against any liability,
loss, cost, damage or expense arising out of claims for fees or commissions of
brokers employed or alleged to have been employed by Turf Products, Shareholder
or its affiliates.
15.7 CHOICE OF LAWS. This Agreement shall be governed by and construed
in accordance with the laws of the State of Illinois.
15.8 CONFIDENTIALITY. The parties agree that they and any of their
officers, directors, or other representatives will hold in strictest confidence,
and will not disclose any of the terms and conditions or other details of this
Agreement, and will not disclose any information furnished by or obtained from
any other party hereto in connections with the negotiation and preparation of
this Agreement, except with the prior written consent of all parties hereto.
15.9 COUNTERPARTS. This Agreement may be executed simultaneously in two
or more counterparts, each of which shall be deemed an original and all of which
together shall constitute but one and the same instrument.
15.10 CUMULATIVE RIGHTS. The various rights, options, elections, powers
and remedies of a party or parties to this Agreement shall be construed as
cumulative and no one of them exclusive of any other, or of any other legal or
equitable remedy which said party or parties might otherwise have in the event
of breach or default of the terms hereof. The exercise of one right or remedy by
a party or parties shall not in any way impair his rights to any other right or
remedy and to all obligations imposed on a party or parties to have been fully
performed.
15.11 ENFORCEABILITY AND SEVERABILITY. If any provision of this
Agreement in held by a court of competent jurisdiction to be invalid, illegal or
unenforceable by reason of any rule of law or public policy, all other
provisions of this Agreement shall nevertheless remain in effect. No provision
of this Agreement shall be deemed dependent on any other provision unless so
expressed herein.
15.12 ENTIRE AGREEMENT. This Agreement supersedes any and all other
Agreements, either oral or in writing, between the parties hereto with respect
to the subject matter hereof, and no other agreement, statement or promise
relating to the subject matter of this Agreement which is not contained herein
or in any other documents to be delivered as contemplated hereby shall be valid
or binding.
15.13 EXHIBITS. All exhibits to which reference is made are deemed
incorporated in this Agreement, whether or not actually attached.
15.14 FICTITIOUS BUSINESS NAME. The parties hereto covenant and
represent that if any or all of them are doing business under a fictitious name,
they, and each of them, have fully and completely complied with California and
Illinois law in relation to doing business under such fictitious name.
15.15 FURTHER ACTS. The parties hereto agree to execute, acknowledge
and deliver any and all additional papers, documents and other assurances and
shall perform any and all acts and things reasonably necessary in connection
with the performance of the obligations hereunder to carry out the intent of the
parties hereto.
15.16 RECITALS. The above recitals are incorporated herein as if set
forth in full.
15.17 JOINT AND SEVERAL OBLIGATIONS. If any party (e.g., Shareholder)
consists of more than one person or entity, the obligation of all such persons
or entities is joint and several.
15.18 JURISDICTION AND VENUE. If any legal action is brought for the
enforcement of any term or provision of this instrument, or because of an
alleged dispute, breach, default or misrepresentation, the parties agree that
the proper venue shall be the United States District Court, Northern District of
Illinois.
15.19 SURVIVAL. All statements contained in any of the instruments,
certificates, opinions or other writings delivered pursuant hereto shall be
deemed to be representations and warranties of the party delivering the same
under this Agreement. All such representations and warranties and the covenants
and agreements to be performed or complied with by the respective parties for or
upon the Closing Date, shall be deemed to be continuing and shall survive the
Closing for a period of 18 months. Nothing in this paragraph shall affect the
obligations of the parties with respect to covenants and agreements contained in
this Agreement or any of the other Transaction Agreements that are permitted to
be performed, in whole or in part, after the Closing Date.
15.20 HEADINGS. The paragraphs headings used in this Agreement are for
reference and convenience only and shall not in any way limit or amplify the
terms and provisions hereof, nor affect the interpretation of this Agreement.
15.21 ASSIGNABILITY. This Agreement is personal in nature and is not
assignable by either party without the prior written consent of the
non-assigning party. Any purported assignment or delegation without such consent
shall be null and void and of no force and effect. Subject to the foregoing,
this Agreement shall be binding upon and inure to the benefit to the parties and
their respective heirs, legatees, legal representatives, successors and assigns.
15.22 NOTICE. Notices given under this Agreement shall be in writing
and shall be either served personally or delivered by first-class U.S. mail,
postage prepaid. Notice shall be deemed received at the earlier of actual
receipt or three (3) days following deposit in the U.S. mail, postage prepaid.
Notices shall be directed to the addresses shown on the signature page hereto,
provided that a party may change his address for notice by giving written notice
to all other parties in accordance with this paragraph.
15.23 PARTIES. Nothing in this Agreement, whether express or implied,
is intended to confer any rights or remedies under or by reason of this
Agreement on any person other than the parties to it and their permitted
respective successors and assigns, nor is anything in this Agreement intended to
relieve or discharge the obligation or liability of any third personal to any
party to this Agreement, nor shall any provision give any third person any right
of subrogation or actions over or against any party to this Agreement.
15.24 TIME OF ESSENCE. Time is of the essence of this Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
PARENT: ADDRESS
ECO SOIL SYSTEMS, INC., 00000 Xxxxxxxxx Xxxx, #000
a Nebraska corporation Xxx Xxxxx, Xxxxxxxxxx 00000
By: /s/ Xxxxxxx X. Xxxxx
---------------------------------
CEO
SUBSIDIARY: ADDRESS:
ECO Turf Products, Inc. 00000 Xxxxxxxxx Xxxx #000
a Delaware corporation Xxx Xxxxx, Xxxxxxxxxx 00000
By: /s/ Xxxxxxx X. Xxxxx
---------------------------------
CEO
TURF PRODUCTS: ADDRESS:
Turf Products, Ltd., 2 North 000 Xxxxxx Xxxx Xxxx Xxxx
an Illinois corporation Xxxxxxx, Xxxxxxxx 00000
By: /s/ Xxxxxx X. Xxxxx
---------------------------------
President
SHAREHOLDER: ADDRESS:
2 North 000 Xxxxxx Xxxx Xxxx Xxxx
/s/ Xxxxxx X. Xxxxx Xxxxxxx, Xxxxxxxx 00000
-------------------------------------
XXXXXX XXXXX
THE XXXXX FAMILY
CHARITABLE REMAINDER TRUST: ADDRESS:
2 North 000 Xxxxxx Xxxx Xxxx Xxxx
By: /s/ Xxxxxx X. Xxxxx Xxxxxxx, Xxxxxxxx 00000
---------------------------------
Xxxxxx Xxxxx, Trustee
SPOUSAL CONSENT
I, Xxxxxx Xxxx Xxxxx, have reviewed the Agreement and Plan of Merger
and the Exhibits attached thereto and agree to be bound by all of its and their
terms and conditions.
Dated: ________________________ /s/ Xxxxxx X. Xxxxx
---------------------------------
Xxxxxx X. Xxxxx
