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EXHIBIT 2.1
AMENDED AND RESTATED
ASSET PURCHASE AGREEMENT
BETWEEN
XXXXXXXX'X NURSERY, INC.,
AS BUYER,
AND
XXXXXXXXX NURSERIES, INC.,
TURKEY CREEK FARMS, INC.,
AND
WHOLESALE LANDSCAPE DISTRIBUTORS, INC.,
AS SELLER
DATED AS OF JUNE 3, 1999
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AMENDED AND RESTATED
ASSET PURCHASE AGREEMENT
This ASSET PURCHASE AGREEMENT (this "Agreement") is entered into as of
June 3, 1999 among Xxxxxxxx'x Nursery, Inc., a Texas corporation ("Buyer"), and
Xxxxxxxxx Nurseries, Inc., a Texas corporation ("CNI"), Turkey Creek Farms, Inc.
("TCF"), and Wholesale Landscape Distributors, Inc. ("WLD" and collectively
referred to with CNI and TCF as "Seller").
RECITALS
WHEREAS, Seller and Buyer desire to set forth their agreement regarding
the purchase and sale of assets from Seller;
WHEREAS, Seller and Buyer have previously entered into that certain
Asset Purchase Agreement, dated as of June 3, 1999, among Seller and Buyer, and
wish to amend and restate in its entirety the terms of such Asset Purchase
Agreement and replace such Asset Purchase Agreement with this Agreement.
NOW THEREFORE, in consideration of the foregoing, the mutual
undertakings of the parties contained herein, and other good and valuable
consideration specified herein, the receipt and sufficiency of which are hereby
acknowledged, the parties to this Agreement agree as follows:
ARTICLE 1.
DEFINITIONS
For certain definitions used in this Agreement, see Annex I.
ARTICLE 2.
PURCHASE AND SALE OF ASSETS; ASSUMPTION OF LIABILITIES
2.1 AGREEMENT TO PURCHASE AND SELL.
(a) Subject to the terms and conditions of this Agreement, on
the Closing Date, CNI shall assign, transfer and deliver to Buyer, and
Buyer shall purchase, free and clear of all Encumbrances (other than
those Permitted Encumbrances listed on Part 2.1(a) of the Disclosure
Letter), the Assets.
(b) Subject to Section 2.2, the "Assets" shall consist of all
assets, wherever located, to which Seller has any right, title or
interest on the Closing Date, including:
(i) All the automobiles, trucks, trailers, rolling
stock, and other certificated vehicles owned by Seller,
including those described on Part 2.1(b)(i) of the Disclosure
Letter [to list all Vehicles owned by Seller] (the
"Vehicles");
(ii) The real property, including improvements
thereon, described on Part 2.1(b)(ii) of the Disclosure Letter
[to list all owned real estate] (the "Real
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Property"), together with all estates, rights, titles and
interests in and to all tenements, hereditaments, easements,
rights-of-way, rights, licenses, patents, rights of ingress
and egress, reversionary interests, privileges and
appurtenances belonging, pertaining or relating to the Real
Property, including any and all rights to the present or
future use of wastewater, wastewater capacity, drainage, water
or other utility facilities relating to the Real Property,
including, without limitation, all reservations of or
commitments or letters covering any such use in the future,
whether now owned or hereafter acquired, and the entire right,
title and interest of the Seller, if any, in, to and under all
streets, ways, alleys, passages, strips, gores, pipes,
pipelines, sewers, sewer rights, ditches, waters, water
courses, water rights and powers, air rights, railroad
sidings, minerals, mineral rights and mineral interests
adjoining, upon, above, in, under or pertaining to the Real
Property, all options and rights to purchase or otherwise
acquire real property that is adjacent to or nearby the Real
Property, and all claims or demands whatsoever of the Seller,
either in law or in equity, with respect to the Real Property,
including any unpaid awards to be made relating thereto,
including any unpaid awards or damages payable by reason of
damage thereto or by reason of a widening of any adjoining
streets or roads or a change of the grade with respect to the
same;
(iii) All estates, rights, titles and interests of
the Seller in and to all plants, factories, warehouses,
storage facilities, laboratories, buildings, works,
structures, fixtures, signage, landings, construction in
progress, improvements, betterments, installations and
additions constructed, erected or located on or attached or
affixed to the Real Property (the "Fixtures and
Improvements");
(iv) All right, title and interest of Seller in any
leases of real property, including those leases described on
Part 2.1(b)(iv) of the Disclosure Letter [to list all leased
real estate] and including rights to security deposits and all
other rights under such leases (the "Assigned Real Estate
Leases");
(v) All right, title and interest of Seller to any
leases of machinery, equipment, automobiles, trucks, trailers,
furniture and other tangible personal property, including
those leases described on Part 2.1(b)(v) of the Disclosure
Letter [to list all personal property leases of Seller] (the
"Assigned Personal Property Leases");
(vi) All right, title and interest of Seller in, to
and under (A) the Contracts described in Part 4.5(a) of the
Disclosure Letter (the "Scheduled Contracts") and (B) all
rights (including rights of refund and offset) privileges,
deposits, claims, causes of action and options relating or
pertaining to the Scheduled Contracts;
(vii) All of Seller's machinery, equipment,
furniture, tools, appliances and other tangible personal
property of every kind and description and all additions and
replacements thereto as are made in the Ordinary Course of
Business or that are required by the provisions of this
Agreement, including as described on Part 2.1(b)(vii) of the
Disclosure Letter [to list all tangible personal property of
Seller other than Vehicles] (collectively, the "Equipment");
(viii) All inventories, regardless of where located,
including raw materials, finished goods, and goods in process
at Seller's growing operation or elsewhere (the "Inventory");
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(ix) All of Seller's customer and supplier lists,
sales records and working files of correspondence with
customers and suppliers (both actual and prospective);
(x) The goodwill and going concern value associated
with the Assets and the business of Seller;
(xi) All right, title and interest of Seller with
respect to warranties owned by Seller, if any, and any claims
thereunder;
(xii) All right, title and interest of Seller in and
to all prepaid rentals, other prepaid expenses, bonds,
deposits, financial assurance requirements, and other current
assets relating to any of the Assets or the business of Seller
excluding those that secure Excluded Liabilities and are
listed in Part 2.1(b)(xii) on the Disclosure Letter, including
all prepaid expenses of the nature described in the Interim
Balance Sheet and prepaid insurance premiums;
(xiii) All right, title and interest of Seller in, to
and under all insurance proceeds and insurance claims of
Seller relating to all or any part of the Assets and, to the
extent transferable, the benefit of and the right to enforce
the covenants and warranties, if any, that Seller is entitled
to enforce with respect to the Assets against Seller's
predecessors in title to the Assets, Seller and Buyer hereby
agreeing to reasonably cooperate (at their own expense) in
connection with any such insurance claims;
(xiv) Originals or copies of all books, records,
files and papers, whether in hard copy or computer format,
including documents of title relating to the Assets,
accounting and financial information, engineering information,
blueprints, building and machinery diagrams, maintenance and
service records, environmental records, manuals and data,
sales and advertising materials, sales and purchase
correspondence, lists of present and former customers,
personnel and employment records, sales and property Tax
records, Tax Returns (Seller may retain copies of all such
documents) and information that is necessary for the
preparation of any Tax Returns to be filed by Buyer after the
Closing Date or the determination of the Tax basis of the
Assets, excluding (A) those matters relating to the Excluded
Assets or the Excluded Liabilities of Seller and (B) Seller's
organizational documents, corporate seals, minute books, stock
books and other records having to do with the corporate
organization of Seller;
(xv) All of Seller's rights, claims, credits, causes
of action, or right of setoff against third parties relating
to the Assets or the business of Seller, including all rights
under manufacturers' and vendors' warranties, except those
relating to Excluded Assets or Excluded Liabilities;
(xvi) All right, title and interest of Seller in, to
and under the Intellectual Property Assets and the right to
recover for infringement thereon;
(xvii) All right, title and interest of Seller in, to
and under all Permits relating to the Assets or the business
of Seller that are transferable, including the Permits listed
on Part 2.1(b)(xvii) of the Disclosure Letter;
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(xviii) All right, title and interest of Seller in,
to and under the name "Xxxxxxxxx Nurseries," "Turkey Creek
Farms," "Wholesale Landscape Distributors" and variations
thereof and all other names ever used by Seller (whether now
used or previously used);
(xix) All of Seller's stationery, purchase orders,
forms, supplies, labels, catalogs, brochures, art work,
photographs, advertising material and similar items; and
(xx) All other assets of Seller of every kind and
description and wherever located, including all that are used
or intended for use in connection with, or that are necessary
to the continued conduct of, the business of Seller as
presently being conducted other than Excluded Assets.
2.2 EXCLUDED ASSETS. The Assets shall not include, and Seller shall
retain and shall not transfer, assign or lease to Buyer at the Closing any of
the following assets of Seller (collectively, the "Excluded Assets"):
(a) all cash on hand, cash equivalents, time deposits and
other amounts on deposit with banks or financial institutions;
(b) all trade and other accounts and notes receivable of
Seller (including doubtful accounts) (the "Accounts Receivable");
(c) any note, account payable or other obligation of any
Affiliate of Seller to Seller; and
(d) those assets of Seller listed on Part 2.2(d) of the
Disclosure Letter.
2.3 ASSUMED LIABILITIES. Subject to the terms and conditions of this
Agreement, and pursuant to an Assumption Agreement in a form reasonably
satisfactory to Buyer and CNI (the "Assumption Agreement") to be entered into by
the Buyer and Seller at the Closing, Buyer shall assume, perform, discharge and
pay the unfulfilled liabilities and obligations of Seller based on or arising
out of or in connection with the following (collectively, the "Assumed
Liabilities"): the Scheduled Contracts, the Assigned Real Estate Leases and the
Assigned Personal Property Leases and the accounts payable relating to Christmas
Inventory to the extent provided in Section 3.3(c) (each only to the extent to
be performed, paid or discharged on or after the Closing Date, Buyer not being
responsible for any obligations of Seller under such agreements due prior to the
Closing Date).
In no event shall the liabilities and obligations assumed by Buyer
pursuant to this Agreement include any of the Excluded Liabilities. Seller shall
be responsible for paying, performing and discharging all liabilities and
obligations of Seller not expressly assumed by Buyer pursuant to this Agreement,
including the Excluded Liabilities.
2.4 EXCLUDED LIABILITIES. Buyer does not assume or agree to pay,
perform or discharge, and shall not be responsible for, any claims, liabilities
or obligations of Seller which are not Assumed Liabilities, whether accrued,
absolute, contingent or otherwise, and whether known or unknown to Seller or
Buyer. Without limiting the generality of the foregoing, Buyer does not assume
or agree to pay, perform or discharge, and shall not be responsible for, any
claims, liabilities or obligations based on, arising out of or in connection
with the following (collectively, the "Excluded Liabilities"):
(a) any advances, loans, notes, indebtedness or other
obligations for borrowed monies (including interest accrued on such
advances, loans, notes, indebtedness or other
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obligations) payable by Seller other than the Assumed Liabilities,
including any notes payable to officers, directors, or Affiliates of
Seller;
(b) except as provided in Section 3.3(c) any accounts payable
or liabilities listed on the Interim Balance Sheet of Seller and any
obligations, liabilities or accounts payable arising in the Ordinary
Course of Business since such date;
(c) the mortgage debt or other borrowings relating to the Real
Property described in Part 2.1(b)(ii) of the Disclosure Letter;
(d) any claims against Seller by any of their directors,
officers, employees, or shareholders, including claims by any of them
relating to or arising out of their employment by Seller;
(e) any dividend or other distribution declared or otherwise
payable by Seller;
(f) defective performance of or defaults by Seller prior to
the Closing under the Scheduled Contracts, Assigned Real Estate Leases
or Assigned Personal Property Leases, or any express or implied
warranty with respect to such performance;
(g) any note, account payable or other obligation of Seller to
any Affiliate of Seller;
(h) any claims, liabilities or obligations relating to the
Excluded Assets;
(i) any claim, liability or obligation involving criminal
activities, fraud or willful misconduct on the part of Seller or any of
its respective employees, agents, officers or directors;
(j) claims, liabilities, or obligations associated with any
Proceeding against Seller pending prior to the Closing Date;
(k) any claims, liabilities, or obligations of Seller that
arise out of the operation of the business of Seller prior to the
Closing Date that are not Assumed Liabilities;
(l) any Taxes attributable or relating to the Assets or the
business of Seller for any periods ending on or before the Closing
Date, or which may be applicable to Seller because of the
Reorganization, Seller's sale of the business or any of the Assets to
Buyer;
(m) any claims, liabilities or obligations of Seller under any
Contracts, other than the Assigned Real Estate Leases, Assigned
Personal Property Leases, and Scheduled Contracts; or
(n) any claims, liabilities or obligations arising under ERISA
and relating to the business of Seller before the Closing Date, except
as described in Section 11.3.
ARTICLE 3.
CLOSING; PURCHASE PRICE; RELATED TRANSACTIONS
3.1 CLOSING. The closing of the purchase and sale of the Assets (the
"Closing") shall take place at the offices of Xxxxxx and Xxxxx, LLP, at 000 Xxxx
Xxxxxx, Xxxxx 0000, Xxxxxx, Xxxxx 00000, at 10:00 a.m., Dallas time, on
September 21, 1999, or such other time and date as the parties may agree.
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3.2 PURCHASE PRICE. The consideration for the purchase and sale of the
Assets shall be the following:
(a) Closing Payment. Subject to Section 3.3 hereof, on the
Closing Date, Buyer shall pay to CNI the sum of $8,500,000 (the
"Closing Payment") by wire transfer of immediately available funds.
(b) Assumption of Liabilities. On the Closing Date, Buyer
shall, pursuant to the Assumption Agreement, assume the Assumed
Liabilities.
(c) Preferred Stock. Shares of Buyer's preferred stock, which
must be redeemed by Buyer on the fifth anniversary of the Closing Date
for an aggregate payment (including accrued dividends) of $4,000,000
(the "Deferred Payment"), subject to such terms and conditions as Buyer
and CNI may agree.
The Closing Payment, Assumed Liabilities and Deferred Payment are, collectively,
the "Purchase Price." At the Closing, Buyer shall also pay to CNI in immediately
available funds $26,939.40, representing deposits for which CNI will be
reimbursed.
3.3 ADJUSTMENTS. The amount of the Closing Payment shall be reduced
under the following circumstances:
(a) if the value of the Inventory (exclusive of the Christmas
Inventory except as provided in Section 3.3(c) below) on the Closing
Date, determined in accordance with the Physical Inventory Report, does
not equal at least $5,000,000, then the Closing Payment will be reduced
dollar for dollar by the amount of any such shortfall;
(b) if the value of the Real Property, determined in
accordance with the Appraisals, does not equal in the aggregate at
least $8,200,000, then the Closing Payment will be reduced dollar for
dollar by the amount of any such shortfall; and
(c) CNI, in its discretion, may elect that all or any portion
of the Christmas Inventory (which shall be shown separately on the
Physical Inventory Report) be counted toward the value of Inventory for
purposes of Section 3.3(a), in which event any accounts payable
relating to the Christmas Inventory so counted shall constitute an
Excluded Liability. Any accounts payable relating to Christmas
Inventory not so counted shall constitute Assumed Liabilities.
3.4 ALLOCATION. On or before the Closing Date, Buyer and CNI shall
reasonably agree on the proportion of the Purchase Price to be allocated to each
of the Assets purchased pursuant to this Agreement, and Buyer and CNI agree that
they shall not thereafter take any position or action inconsistent with such
allocation in the filing of any federal income Tax Returns. Buyer and CNI shall
file an IRS Form 8594 and such other documents as may be necessary to properly
reflect such allocation with the Internal Revenue Service and any other taxing
authority.
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ARTICLE 4.
REPRESENTATIONS AND WARRANTIES OF SELLER
Except as set forth in the Disclosure Letter or a supplement thereto,
which exceptions shall be appropriately numbered or otherwise designated to
indicate the specific representations and warranties to which they refer, Seller
(jointly and severally) represents and warrants to Buyer as follows:
4.1 ORGANIZATION AND GOOD STANDING. Seller is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Texas, with full corporate power and authority to conduct its business as it is
now being conducted, and to own or use the properties and assets that it
purports to own or use. Seller is duly qualified to do business as a foreign
corporation and is in good standing under the laws of each state or other
jurisdiction in which either the ownership or use of the properties owned or
used by it, or the nature of the activities conducted by it, requires such
qualification.
4.2 AUTHORITY; NO CONFLICT.
(a) Seller has full corporate power and authority to execute,
deliver and perform this Agreement and the transactions contemplated
hereby. Subject to Section 14.15, this Agreement and the transactions
contemplated hereby have been duly authorized, executed and delivered
by Seller and this Agreement constitutes the legal, valid and binding
obligation of Seller enforceable against Seller in accordance with its
terms.
(b) Except as set forth in Part 4.2 of the Disclosure Letter,
neither the execution and delivery of this Agreement nor the
consummation or performance of any of the transactions contemplated
hereby will, directly or indirectly, with or without notice or lapse of
time:
(i) contravene, conflict with or result in a
violation of any provision of the Articles of Incorporation or
Bylaws of Seller;
(ii) contravene, conflict with or result in a
violation of or give any Governmental Body or other Person the
right to challenge any of the transactions contemplated hereby
or to exercise any remedy or obtain any relief under, any
Legal Requirement or any Order to which Seller or any of the
Assets may be subject;
(iii) contravene, conflict with, or result in a
violation or breach of any provision of, or give any Person
the right to declare a default or exercise any remedy under,
or to accelerate the maturity or performance of, or to cancel,
terminate or modify, any Contract, Assigned Real Estate Lease
or Assigned Personal Property Lease (other than consents of
landlords of leases);
(iv) cause Buyer to become subject to, or to become
liable for the payment of, any Tax (other than ad valorem
taxes on the Assets accruing after the Closing Date); or
(v) result in the imposition or creation of any
Encumbrance upon or with respect to any of the Assets, except
Encumbrances created by Buyer.
Except as set forth in Part 4.2 of the Disclosure Letter, Seller is not
and will not be required to give any notice to or obtain any Consent from any
Person in connection with the execution and delivery of this Agreement or the
consummation or performance of any of the transactions contemplated hereby
(other than consents of landlords of leases).
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4.3 FINANCIAL STATEMENTS. Seller has delivered to Buyer true and
correct copies of: (a) the audited consolidated balance sheets of Seller as at
September 30 in each of the years 1996 through 1998, and the related audited
consolidated income statements for each of the fiscal years then ended, which
financial statements contain a report of Hidalgo, Banfill, Xxxxxxx & Xxxxxxx,
P.C., independent auditors, reporting thereon (the September 30, 1998
consolidated balance sheet being referred to as the "Balance Sheet"), and (b) an
unaudited consolidated balance sheet of Seller as at April 30, 1999 and the
related consolidated income statement for the seven months then ended (the April
30, 1999 balance sheet being referred to as the "Interim Balance Sheet"). Seller
has also delivered to Buyer the monthly financial statements referred to in
Section 6.12 for each of the ten (10) months from and including July 1998
through and including April 1999 (except for July, August and September of 1998,
which will be delivered immediately). All financial statements referred to above
are collectively referred to as the "Financial Statements." The Financial
Statements and notes thereto fairly present the financial condition and the
results of operations of Seller and its subsidiaries as at the respective dates
of and for the periods referred to in such Financial Statements, all in
accordance with GAAP, subject, in the case of the unaudited interim Financial
Statements, to normal recurring year-end adjustments, the effect of which will
not, individually or in the aggregate, be materially adverse, and the absence of
notes. The Financial Statements referred to in this Section 4.3 reflect the
consistent application of such accounting principles throughout the periods
involved, except as disclosed in the notes to such Financial Statements. In
addition, Seller has or will also delivered to Buyer all reports of Inventory
taken by Seller from June 1, 1997, through the date of this Agreement.
4.4 TITLE AND CONDITION OF ASSETS. Except as set forth in Part 4.4 of
the Disclosure Letter:
(a) General. Seller has, and on the Closing Date will have,
good title to the Vehicles, Inventory, Equipment, Contracts,
Intellectual Property Assets and other tangible and intangible personal
property that comprise the Assets, free and clear of Encumbrances
(other than Permitted Encumbrances). The Assets constitute all the
assets and properties that are necessary for the continued conduct of
the business of Seller as presently conducted. Since the date of the
Interim Balance Sheet, Seller has not sold, transferred, leased,
distributed or otherwise disposed of any of the Assets, or agreed to do
so, except for sales made in the Ordinary Course of Business or as
otherwise contemplated or permitted by this Agreement.
(b) Condition of Assets. The Vehicles, Equipment and other
tangible personal property constituting Assets (i) are in good
operating condition, order and repair, subject to ordinary wear and
tear, and have been maintained in accordance with the common practice
of Seller, and (ii) are adequate for the purposes for which they are
now being used and are capable of being used in the business of Seller
as presently conducted without present need for repair or replacement,
except for ordinary, routine maintenance and repairs that are not
material in nature or cost.
(c) Real Property. Part 2.1(b)(ii) of the Disclosure Letter
contains a complete legal description of each parcel of real property
constituting the Real Property, together with a summary description of
the buildings, structures and improvements thereon.
(i) Fee Simple. Except as specifically set forth in
Part 4.4(c) of the Disclosure List, Seller has, and on the
Closing Date CNI will have, good, indefeasible and marketable
title in fee simple absolute to the Real Property and to the
Fixtures and Improvements, in each case free and clear of all
Encumbrances, mortgages, assessments, easements, covenants,
reservations, defects in title, encroachments and other
burdens, whether arising by contract or under law
(collectively, "Liens"), whether or not the same
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render the title to such Real Property unmarketable. All
Fixtures and Improvements owned by Seller lie wholly within
the boundaries of the Real Property and do not encroach upon
the property of, or otherwise conflict with the property
rights of, any other Person.
(ii) Ingress and Egress; Eminent Domain. Seller has,
and on the Closing Date CNI will have, all easements and
rights of ingress and egress necessary for utilities and
services and for all operations of the Seller's business in
the manner and to the extent conducted by it. No portion of
the Real Property has been condemned, taken by right of
eminent domain requisitioned or otherwise taken by any
Governmental Body, and no such condemnation, taking by right
of eminent domain requisition or taking is threatened or
contemplated, and Seller does not have knowledge of any notice
regarding any such action.
(iii) Fixtures and Improvements. None of the Fixtures
or Improvements are in violation of any building line or use
or occupancy restriction, limitation, condition or covenant of
record or any zoning or building law, code or ordinance,
public utility or other easement or other applicable Legal
Requirement. Each facility located on the Real Property
currently is served by gas, electricity, water, sewage (or
septic tanks, as to TCF) and waste disposal and other
utilities adequate to operate such facility at its current
level of operation, and none of the utility companies serving
any such facility has threatened Seller with any reduction in
service. Such utilities either enter the Real Property through
adjoining public streets or, if they pass through adjoining
private land, do so in accordance with valid, permanent public
or private easements which, following the Closing, will inure
to the benefit of Buyer, its successors and assigns. All of
said utilities are installed and operating and all
installation and connection charges have been paid for in
full.
(iv) Real Property Taxes. There are no challenges or
appeals pending regarding the amount of the Taxes on, or the
assessed valuation of, the Real Property, and no special
arrangements or agreements exist with any Governmental Body
with respect thereto. There is no Tax assessment (in addition
to the normal, annual general real estate Tax assessment)
pending or, to Seller's knowledge, threatened with respect to
any portion of the Real Property.
(d) Leased Property. All real and tangible personal property
held by Seller under the Assigned Real Estate Leases and the Assigned
Personal Property Leases is held on the date hereof and will be held on
the Closing Date under a valid and binding lease agreement that is in
full force and effect. Except as set forth on Part 4.4 of the
Disclosure Letter, Seller is not in default and no notice of alleged
default has been received by Seller under any such lease and, to
Seller's knowledge, no lessor is in default or alleged to be in default
thereunder. None of the rights of Seller under any lease will be
impaired by the consummation of the transactions contemplated hereby,
assuming that the Consents described on Part 4.2 of the Disclosure
Letter are obtained and in full force and effect.
(e) Inventory. All Inventory, whether or not reflected in the
Balance Sheet or the Interim Balance Sheet, consists of a quality and
quantity usable and salable in the Ordinary Course of Business, except
for obsolete items and items of below-standard quality, all of which
have been written off or written down to net realizable value in the
Balance Sheet or the Interim
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Balance Sheet, as the case may be. All Inventory not written off has
been priced on a current cost basis or unit cost method.
4.5 CONTRACTS; NO DEFAULTS.
(a) Part 4.5(a) of the Disclosure Letter contains a complete
and accurate list, and Seller has delivered to Buyer true and complete
copies, of:
(i) each Contract that involves performance of
services by Seller;
(ii) each Contract that involves the provision of
services to Seller;
(iii) each Contract that was not entered into in the
Ordinary Course of Business;
(iv) each lease, rental or occupancy agreement,
license, installment and conditional sale agreement and other
Contract affecting the ownership of, leasing of, title to, use
of, or any leasehold or other interest in, any real or
personal property;
(v) each licensing agreement or other Contract with
respect to Patents, Marks, Copyrights or other intellectual
property, including agreements with current or former
employees, consultants or contractors regarding the
appropriation or the non-disclosure of any of the Intellectual
Property Assets;
(vi) each collective bargaining agreement and other
Contract to or with any labor union or other employee
representative of a group of employees;
(vii) each joint venture, partnership and other
Contract (however named) involving a sharing of profits,
losses, costs or liabilities by Seller with any other Person;
(viii) each Contract containing covenants that in any
way purport to restrict the business activity of Seller or any
Affiliate of Seller or limit the freedom of Seller or any
Affiliate of Seller to engage in any line of business or to
compete with any Person;
(ix) each Contract providing for payments to or by
any Person based on sales, purchases or profits, other than
direct payments for goods;
(x) each Contract entered into other than in the
Ordinary Course of Business that contains or provides for an
express undertaking by Seller to be responsible for
consequential damages;
(xi) each Contract for capital expenditures;
(xii) each written warranty, guaranty and or other
similar undertaking with respect to contractual performance
extended by Seller other than in the Ordinary Course of
Business;
(xiii) each Contract relating to Seller's computer
system (whether existing or to be installed), related hardware
and software, and anything relating to such computer system;
and
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(xiv) each amendment, supplement and modification
(whether oral or written) in respect of any of the foregoing.
(b) Except as set forth in Part 4.5(b) of the Disclosure
Letter, each Contract identified or required to be identified in Part
4.5(a) of the Disclosure Letter is in full force and effect and is
valid and enforceable in accordance with its terms.
(c) Except as set forth in Part 4.5(c) of the Disclosure
Letter:
(i) Seller is, and at all times since October 1,
1997, has been, in full compliance with all applicable terms
and requirements of each Contract identified or required to be
identified in Part 4.5(a) of the Disclosure Letter (except for
defaults that have been cured by Seller);
(ii) each Person other than Seller that has or had
any obligation or liability under any Contract identified or
required to be identified in Part 4.5(a) of the Disclosure
Letter is, and at all times since October 1, 1997 has been, in
full compliance with all applicable terms and requirements of
such Contract;
(iii) no event has occurred or circumstance exists
that (with or without notice or lapse of time) may contravene,
conflict with, or result in a violation or breach of, or give
Seller or any other Person the right to declare a default or
exercise any remedy under, or to accelerate the maturity or
performance of, or to cancel, terminate or modify, any
Contract identified or required to be identified in Part
4.5(a) of the Disclosure Letter; and
(iv) Seller has not given to or received from any
other Person, at any time since October 1, 1997, any notice or
other communication (whether oral or written) regarding any
actual, alleged, possible or potential violation or breach of
or default under, any Contract identified or required to be
identified in Part 4.5(a) of the Disclosure Letter.
4.6 INTELLECTUAL PROPERTY.
Intellectual Property Assets. The term "Intellectual Property Assets"
includes: (a) the name "Xxxxxxxxx Nurseries," the name "Turkey Creek Farms," the
name "Wholesale Landscape Distributors," and variations thereof and all
fictional business names, trade names, registered and unregistered trademarks,
service marks and applications (collectively, "Marks"); (b) all patents, patent
applications and inventions and discoveries that may be patentable
(collectively, "Patents"); (c) all copyrights in both published works and
unpublished works (collectively, "Copyrights"); and (d) all know-how, trade
secrets, confidential information, customer lists, software, technical
information, data, process technology, plans, drawings and blue prints
(collectively, "Trade Secrets"); in each case owned, used or licensed to or by
Seller as licensee or licensor.
(a) Intellectual Property Agreements. Part 4.6(b) of the
Disclosure Letter contains a complete and accurate list and summary
description, including any royalties paid or received by Seller, of all
Contracts relating to the Intellectual Property Assets to which Seller
is a party or by which Seller is bound.
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(b) Patents and Copyrights. Part 4.6(b) of the Disclosure
Letter contains a complete and accurate list and summary description of
all Patents. Seller is, and as of the Closing Date will be, the owner
of all right, title, and interest in and to each of the Patents, free
and clear of all liens, security interests, charges, encumbrances,
entities, and other adverse claims. All of the issued Patents are
currently in compliance with formal legal requirements (including
payment of filing, examination, and maintenance fees and proofs of
working or use), are valid and enforceable, and are not subject to any
maintenance fees or taxes or actions falling due within ninety days
after the Closing Date. Except as shown in Part 4.6(b) of the
Disclosure Letter, no Patent has been or is now involved in any
interference, reissue, reexamination, or opposition proceeding. To
Sellers' knowledge, there is no potentially interfering patent or
patent application of any third party. No Patent is infringed or, to
Sellers' knowledge, has been challenged or threatened in any way. None
of the products manufactured and sold, nor any process or know-how
used, by Seller infringes or is alleged to infringe any patent or other
proprietary right of any other Person. Seller does not possess any
registered Copyrights.
(c) Trademarks. Part 4.6(c) of the Disclosure Letter contains
a complete and accurate list and summary description of all Marks.
Seller is, and as of the Closing Date will be, the owner of all right,
title and interest in and to each of the Marks, free and clear of all
Encumbrances and other adverse claims. No Xxxx is infringed or, the
knowledge of Seller, has been challenged or Threatened in any way. None
of the Marks used by Seller infringes or is alleged to infringe any
trade name, trademark or service xxxx of any Person.
(d) Trade Secrets. No Trade Secret is subject to any adverse
claim or has, to the knowledge of Seller, been challenged or threatened
in any way.
4.7 INTENTIONALLY OMITTED.
4.8 NO UNDISCLOSED LIABILITIES. Except as set forth in Part 4.8 of the
Disclosure Letter, Seller has no liabilities or obligations of any nature
(whether known or unknown and whether absolute, accrued, contingent or
otherwise) except for liabilities or obligations reflected or reserved against
in the Balance Sheet or the Interim Balance Sheet and current liabilities
incurred in the Ordinary Course of Business since the respective dates thereof.
4.9 TAXES.
(a) Seller has timely filed or caused to be timely filed all
federal, state and local Tax Returns for all federal, state and local
Taxes, and all such Tax Returns are proper, complete and accurate and
copies of which for the years 1996 though 1998 have been delivered to
Buyer, and all amounts shown as owing thereon have been paid.
(b) Seller has paid or caused to be paid all Taxes which have
become due.
(c) The amounts set up as provisions for Taxes on the Interim
Balance Sheet are sufficient for the payment of all accrued and unpaid
Taxes of any kind.
(d) Seller has not received or has any knowledge of any notice
of deficiency or assessment with respect to Seller, the business of
Seller or any of the Assets, or any basis for any of the foregoing,
from any taxing authorities. Seller has not been notified by the IRS
that the IRS intends to audit the federal income Tax Returns of Seller.
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(e) There is no litigation, governmental or other Proceeding
(formal or informal), or investigation pending, or (to the best of
Seller's knowledge) threatened, with respect to any such federal, state
or local income Tax Return. There are no Tax liens upon, pending
against or, to the knowledge of Seller, threatened against any of the
Assets.
(f) All Taxes that Seller is or was required by Legal
Requirements to withhold or collect have been withheld or collected
and, to the extent required, have been paid to the proper Governmental
Body or other Person.
4.10 NO MATERIAL ADVERSE CHANGE. Except as disclosed in Part 4.10 of
the Disclosure Letter, since the date of the Balance Sheet, there has not been
any material adverse change in the business, operations, properties, prospects,
assets or condition of Seller, and no event has occurred or circumstance exists
that may result in such a material adverse change.
4.11 EMPLOYEE BENEFITS.
(a) Part 4.11 of the Disclosure Letter lists all "employee
benefit plans" (as defined in Section 3(3) of ERISA), any other
deferred compensation, bonus, overtime, fringe benefit, insurance,
welfare, medical, health, life, company car, disability, injury,
illness, accident, sick pay, sick leave, vacation, termination,
severance, retention, executive compensation, incentive, commission or
other plan, agreement, policy, trust fund or arrangement, maintained or
to which contributions are being made by Seller or which provide
benefits to Seller's employees (collectively, the "Benefit Plans").
True and correct copies of each Benefit Plan have been delivered to
Buyer. To the extent applicable, for each Benefit Plan, Seller has
provided to Buyer copies of (i) the most recent determination letter
and any outstanding request for a determination letter; (ii) IRS Forms
5500 with respect to the last two plan years; (iii) certified financial
statements; (iv) summary plan descriptions to employees purporting to
inform them of the Benefit Plan; (v) any related trust agreement; (vi)
all insurance contracts or other funding arrangements; and (vii) all
material communications received from or sent to the IRS or the
Department of Labor within the last two years. All contributions or
premiums required to be made by Seller as of the Closing Date on
account of, or under each, Benefit Plan have been paid or adequate
accruals have been made therefore on the books of Seller and, except as
disclosed on Part 4.11 of the Disclosure Letter, no such contribution
or premium is delinquent under the terms of the applicable Benefit
Plan. Seller does not maintain any Benefit Plan that provides
post-retirement or post-termination welfare benefits for retired
employees, except for continuing benefits required by applicable state
and federal laws.
(b) Except as shown in Part 4.11(b) of the Disclosure Letter,
Seller does not contribute to and has not, within the five-year period
ending on the Closing Date, contributed to (i) any "multi-employer
plan" (as defined in Section 4001(a)(3) of ERISA), (ii) any plan which
is subject to Section 412 of the IRC or Title IV of ERISA, or (iii) any
Benefit Plan that is an "employee pension benefit plan" as defined in
Section 3(2) of ERISA, other than Seller's 401(k) defined contribution
plan.
(c) Except as set forth on Part 4.11 of the Disclosure Letter,
no termination, retention, severance or similar benefit will become
payable as a result of any of the transactions contemplated hereby.
(d) Benefits under any Benefit Plan are as represented in said
documents and have not been increased or modified (whether written or
not written) subsequent to the dates of such
15
documents. Seller has not communicated to any employee or former
employee any intention or commitment to modify any Benefit Plan (except
to comply with changes in applicable Legal Requirements) or to
establish or implement any other employee or retiree benefit or
compensation arrangement.
(e) Each Benefit Plan has been maintained and administered in
compliance in all respects with its terms and in all respects with the
requirements (including reporting requirements) prescribed by any and
all Legal Requirements including ERISA and the IRC.
4.12 COMPLIANCE WITH LEGAL REQUIREMENTS; GOVERNMENTAL AUTHORIZATIONS.
(a) Except as set forth in Part 4.12(a) of the Disclosure
Letter:
(i) Seller is, and at all times since October 1, 1997
has been, in full compliance with each Legal Requirement that
is or was applicable to it or to the conduct or operation of
its business;
(ii) no event has occurred or circumstance exists
that (with or without notice or lapse of time) (A) may
constitute or result in a violation by Seller of, or a failure
on the part of Seller to comply with, any Legal Requirement,
or (B) may give rise to any obligation on the part of Seller
to undertake, or to bear all or any portion of the cost of,
any remedial action of any nature; and
(iii) Seller has not received, at any time since
January 1, 1997, any notice or other communication (whether
oral or written) from any Governmental Body or any other
Person regarding (A) any actual, alleged, possible or
potential violation of, or failure to comply with, any Legal
Requirement, or (B) any actual, alleged, possible or potential
obligation on the part of Seller to undertake, or to bear all
or any portion of the cost of, any remedial action of any
nature.
(b) Part 4.12(b) of the Disclosure Letter contains a complete
and accurate list of each Governmental Authorization that is held by
Seller or that otherwise relates to the Assets or the business of
Seller. Each Governmental Authorization listed or required to be listed
in Part 4.12(b) of the Disclosure Letter is valid and in full force and
effect. Except as set forth in Part 4.12(b) of the Disclosure Letter:
(i) Seller is, and at all times since October 1, 1997
has been, in full compliance with all of the terms and
requirements of each Governmental Authorization identified or
required to be identified in Part 4.12(b) of the Disclosure
Letter;
(ii) no event has occurred or circumstance exists
that may (with or without notice or lapse of time) (A)
constitute or result directly or indirectly in a violation of
or a failure to comply with any term or requirement of any
Governmental Authorization listed or required to be listed in
Part 4.12(b) of the Disclosure Letter or (B) result directly
or indirectly in the revocation, withdrawal, suspension,
cancellation or termination of, or any modification to, any
Governmental Authorization listed or required to be listed in
Part 4.12(b) of the Disclosure Letter; and
(iii) Seller has not received, at any time since
October 1, 1997, any notice or other communication (whether
oral or written) from any Governmental Body or any
16
other Person regarding (A) any actual, alleged, possible or
potential violation of or failure to comply with any term or
requirement of any Governmental Authorization or (B) any
actual, proposed, possible or potential revocation,
withdrawal, suspension, cancellation, termination of or
modification to any Governmental Authorization.
The Governmental Authorizations listed in Part 4.12(b) of the
Disclosure Letter collectively constitute all of the Governmental Authorizations
necessary to permit Seller lawfully to conduct and operate its business in the
manner it currently conducts and operates such business and to permit Seller to
own and use its assets in the manner in which it currently owns and uses such
assets.
4.13 LEGAL PROCEEDINGS; ORDERS.
(a) Except as set forth in Part 4.13(a) of the Disclosure
Letter, there is no pending Proceeding: (i) that has been commenced by
or against Seller or that otherwise relates to or may affect the Assets
or the business of Seller; or (ii) that challenges, or that may have
the effect of preventing, delaying, making illegal or otherwise
interfering with, any of the transactions contemplated hereby. To the
knowledge of Seller, (1) no such Proceeding has been Threatened and (2)
no event has occurred or circumstance exists that may give rise to or
serve as a basis for the commencement of any such Proceeding. The
Proceedings listed in Part 4.13(a) of the Disclosure Letter will not
have a material adverse effect on the business, operations, assets,
condition or prospects of Seller.
(b) Except as set forth in Part 4.13(b) of the Disclosure
Letter: (i) there is no Order to which Seller, or any of the Assets, is
subject and (ii) no partner, officer, director, agent or employee of
Seller is subject to any Order that prohibits such partner, officer,
director, agent or employee from engaging in or continuing any conduct,
activity or practice relating to the business of Seller.
(c) Except as set forth in Part 4.13(c) of the Disclosure
Letter: (i) Seller is, and at all times since October 1, 1997, has
been, in full compliance with all of the terms and requirements of each
Order to which it or any of the Assets is or has been subject; (ii) no
event has occurred or circumstance exists that may constitute or result
in (with or without notice or lapse of time) a violation of or failure
to comply with any term or requirement of any Order to which Seller, or
any of the Assets, is subject; and (iii) Seller has not received, at
any time since October 1, 1997, any notice or other communication
(whether oral or written) from any Governmental Body or any other
Person regarding any actual, alleged, possible or potential violation
of, or failure to comply with, any term or requirement of any Order to
which Seller, or any of the Assets, is or has been subject.
4.14 ABSENCE OF CERTAIN CHANGES AND EVENTS. Except as set forth in Part
4.14 of the Disclosure Letter, since the date of the Interim Balance Sheet,
Seller has conducted its business only in the Ordinary Course of Business and
there has not been any:
(a) payment or increase by Seller of any bonuses, salaries or
other compensation to any shareholder, director, officer or (except in
the Ordinary Course of Business) employee or entry by Seller into any
employment, severance or similar Contract with any director, officer or
employee;
17
(b) adoption of, or increase in the payments to or benefits
under, any profit sharing, bonus, deferred compensation, savings,
insurance, pension, retirement or other employee benefit plan for or
with any employee of Seller;
(c) damage to or destruction or loss of any asset or property
of Seller, whether or not covered by insurance, materially and
adversely affecting the properties, assets, business, financial
condition or prospects of Seller;
(d) entry into, termination of, or receipt of notice of
termination of, (i) any license, distributorship, dealer, sales
representative, joint venture, credit or similar agreement or (ii) any
Contract or transaction involving a total remaining commitment by or to
Seller of at least $10,000;
(e) sale (other than sales of Inventory in the Ordinary Course
of Business or as otherwise contemplated by this Agreement), lease or
other disposition of any asset or property of Seller or mortgage,
pledge or imposition of any lien or other Encumbrance on any material
asset or property of Seller;
(f) cancellation or waiver of any claims or rights with a
value to Seller (in the aggregate) in excess of $10,000;
(g) change in the accounting methods used by Seller; or
(h) agreement, whether oral or written, by Seller to do any of
the foregoing.
4.15 INSURANCE. Seller will deliver to Buyer true and complete copies
of all policies of insurance to which Seller is a party or under which Seller is
or has been covered at any time within the two years preceding the Closing Date.
4.16 ENVIRONMENTAL MATTERS. Except as set forth in Part 4.16 of the
Disclosure Letter:
(a) Seller is, and at all times since October 1, 1991 has
been, in full compliance with, and has not been and is not in violation
of or liable under, any Environmental Law and/or any Occupational
Safety and Health Law. Seller has no basis to expect, nor has it or any
other Person for whose conduct it is or may be held to be responsible
received, any actual or Threatened Order, notice or other communication
from (i) any Governmental Body or private citizen acting in the public
interest, or (ii) the current or prior owner or operator of any
Facilities, of any actual or potential violation or failure to comply
with any Environmental Law or Occupational Safety and Health Law or of
any actual or Threatened obligation to undertake or bear the cost of
any Environmental, Health and Safety Liabilities with respect to any of
the Facilities.
(b) There are no pending or, to the knowledge of Seller,
Threatened claims, Encumbrances or other restrictions of any nature,
resulting from any Environmental, Health and Safety Liabilities or
arising under or pursuant to any Environmental Law and/or any
Occupational Safety and Health Law, with respect to or affecting any of
the Facilities.
(c) Seller has no basis to expect, nor has it or any other
Person for whose conduct it is or may be held responsible, received,
any citation, directive, inquiry, notice, Order, summons, warning or
other communication that relates to Hazardous Activity, Hazardous
Materials or any
18
alleged, actual or potential violation or failure to comply with any
Environmental Law and/or any Occupational Safety and Health Law or of
any alleged, actual or potential obligation to undertake or bear the
cost of any Environmental, Health and Safety Liabilities with respect
to any of the Facilities.
(d) Neither Seller nor any other Person for whose conduct it
is or may be held responsible has any Environmental, Health and Safety
Liabilities with respect to the Facilities or at any property
geologically or hydrologically adjoining the Facilities.
(e) So far as known to Seller there are no Hazardous Materials
present on or in the Environment at the Facilities or at any
geologically or hydrologically adjoining property, including any
Hazardous Materials contained in barrels, above or underground storage
tanks, landfills, land deposits, dumps, equipment (whether moveable or
fixed) or other containers, either temporary or permanent, and
deposited or located in land, water, sumps or any other part of the
Facilities or such adjoining property or incorporated into any
structure therein or thereon. Neither Seller, any other Person for
whose conduct it is or may be held responsible, has permitted or
conducted, any Hazardous Activity conducted with respect to the
Facilities, except in full compliance with all applicable Environmental
Laws and Occupational Safety and Health Laws.
(f) There has been no Release or, to the knowledge of Seller,
Threat of Release, of any Hazardous Materials at or from the
Facilities, or any geologically or hydrologically adjoining property,
whether by Seller or any other Person.
(g) Seller will deliver to Buyer true and complete copies and
results of any reports, studies, analyses, tests or monitoring
possessed or initiated by Seller pertaining to Hazardous Materials or
Hazardous Activities in, on or under or related to the Facilities or
concerning compliance by Seller or any other Person for whose conduct
they are or may be held responsible, with Environmental Laws or
Occupational Safety and Health Laws.
4.17 LABOR RELATIONS; COMPLIANCE. Seller has not been and Seller is not
a party to any collective bargaining or other labor Contract. Since October 1,
1997, there has not been, there is not presently pending or existing, and, to
the knowledge of Seller, there is not Threatened, (a) any strike, slowdown,
picketing, work stoppage or employee grievance process; or (b) any Proceeding
against or affecting Seller relating to the alleged violation of any Legal
Requirement pertaining to labor relations or employment matters, including any
charge or complaint filed by an employee or union with the National Labor
Relations Board, the Equal Employment Opportunity Commission or any comparable
Governmental Body, organizational activity or other labor or employment dispute
against or affecting Seller or its premises. There is no lockout of any
employees by Seller and no such action is contemplated by Seller. Seller has
complied in all respects with all Occupational Safety and Health Laws and all
other Legal Requirements relating to employment, equal employment opportunity,
nondiscrimination, immigration (except as shown in Part 4.17 of the Disclosure
Letter), wages, hours, benefits, collective bargaining, the payment of social
security and similar Taxes and plant closing.
4.18 CUSTOMERS AND SUPPLIERS. Part 4.18 of the Disclosure Letter sets
forth (a) a list of the ten (10) largest customers of Seller in the terms of
revenue during the fiscal year ended September 30, 1998, and the seven (7)
months ended April 30, 1999, showing the approximate total revenue received from
each such customer during each such period, and (b) a list of the ten (10)
largest suppliers to Seller, in terms of purchases during the fiscal year ended
September 30, 1998, and the seven (7) months ended April 30, 1999, showing the
approximate total purchases by Seller from each supplier during each such
19
period. Except as set forth in Part 4.18 of the Disclosure Letter, since October
1, 1997, there has not been any adverse change in the business relationship of
Seller with any customer or supplier listed on Part 4.18 of the Disclosure
Letter.
4.19 BOOKS OF ACCOUNT. The books, records and accounts of Seller
maintained with respect to the Assets accurately and fairly reflect, in
reasonable detail, the transactions and the assets and liabilities of Seller
with respect to the Assets. Seller has not engaged in any transaction with
respect to the Assets, maintained any bank account for the Assets or used any of
the funds of Seller in the conduct of the business of Seller, except for
transactions, bank accounts and funds that have been and are reflected in the
normally maintained books and records of the business.
4.20 DISCLOSURE. No representation or warranty of Seller in this
Agreement and no statement in the Disclosure Letter omits to state a material
fact necessary to make the statements herein or therein, in light of the
circumstances in which they were made, not misleading. There is no fact known to
Seller that has specific application to Seller (other than general economic or
industry conditions) and that materially adversely affects or, as far as Seller
can reasonably foresee, materially threatens, the assets, business, prospects,
financial condition or results of operations of Seller that has not been set
forth in this Agreement or the Disclosure Letter.
ARTICLE 5.
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to Seller as follows:
5.1 ORGANIZATION AND GOOD STANDING. Buyer is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Texas, with full corporate power and authority to conduct its business as it is
now being conducted, and to own or use the properties and assets that it
purports to own or use.
5.2 AUTHORITY; NO CONFLICT.
(a) Buyer has full corporate power and authority to execute,
deliver and perform this Agreement and the transactions contemplated
hereby. This Agreement has been duly authorized, executed and delivered
by Buyer and constitutes the legal, valid and binding obligation of
Buyer enforceable against Buyer in accordance with its terms.
(b) Neither the execution and delivery of this Agreement nor
the consummation or performance of any of the transactions contemplated
hereby will, directly or indirectly (with or without notice or lapse of
time): (i) contravene, conflict with or result in a violation of any
provision of the Articles of Incorporation or Bylaws of Buyer; (ii)
contravene, conflict with or result in a violation of or give any
Governmental Body or other Person the right to challenge any of the
transactions contemplated hereby or to exercise any remedy or obtain
any relief under, any Legal Requirement or any Order to which Buyer is
subject; or (iii) constitute a default under any Contract to which
Buyer is a party.
(c) Buyer is not required to give any notice to or obtain any
Consent from any Person in connection with the execution and delivery
of this Agreement or the consummation or performance of any of the
transactions contemplated hereby.
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5.3 BROKERS OR FINDERS. No broker, investment banker, financial advisor
or other Person, other than Xxxx & Co., the fees and expenses of which will be
paid by Buyer, is entitled to any broker's, finder's, financial advisor's or
other similar fee or commission in connection with transactions contemplated
hereby based upon arrangements made by or on behalf of Buyer.
5.4 SALES AND ASSETS. As of this date Buyer has less than $100,000,000
in revenues and $100,000,000 in assets.
ARTICLE 6.
COVENANTS OF SELLER PRIOR TO CLOSING DATE
6.1 ACCESS AND INVESTIGATION. Subject to Section 6.8, between the date
of this Agreement and the Closing Date, upon reasonable prior notice by Buyer to
Seller and with Seller's consent which will not be unreasonably withheld, Seller
shall (a) afford Buyer and its representatives and prospective lenders and their
representatives (collectively, "Buyer's Advisors"), at Buyer's cost, reasonable
access to Seller's personnel, properties (including subsurface testing),
contracts, books and records and other documents and data during normal business
hours and at the facilities where such books and records, documents and data are
normally maintained by Seller, (b) furnish Buyer and Buyer's Advisors with
copies of all such contracts, books and records and other existing documents and
data as Buyer may reasonably request, and (c) furnish Buyer and Buyer's Advisors
with such additional financial, operating and other data and information as
Buyer may reasonably request. Any access or investigation under this Section 6.1
shall be conducted by Buyer without unreasonable interference with Seller's
business or operations.
6.2 OPERATION OF THE BUSINESS OF SELLER. Between the date of this
Agreement and the Closing Date, Seller shall (a) conduct its business as
currently conducted only in the Ordinary Course of Business or as permitted by
this Agreement; (b) use its best efforts to preserve intact the current business
organization of Seller (except as contemplated by Section 6.14), keep available
the services of the current officers, employees and agents of Seller, and
maintain Seller's relationships and good will with suppliers, customers,
landlords, creditors, employees, agents and others having business relationships
with Seller; (c) confer with Buyer concerning operational matters of a material
nature; (d) cause the tangible Assets to be maintained and in as good working
order and condition as at present, ordinary wear and tear excepted; (e) not
dispose of, or commit to dispose of, any Assets other than in the Ordinary
Course of Business (except as contemplated by Section 6.14); (f) perform in a
timely manner all of its obligations under this Agreement and all other
Contracts or other agreements relating to or affecting any of the Assets; (g)
keep in full force and effect present insurance policies or other comparable
insurance coverage; (h) maintain compliance with all Permits and Legal
Requirements; and (i) otherwise report periodically to Buyer concerning the
status of the business, operations and finances of Seller.
6.3 NEGATIVE COVENANT. Except as otherwise expressly permitted by this
Agreement or as contemplated by Section 6.14, between the date of this Agreement
and the Closing Date, Seller will not, without the prior consent of Buyer, take
any affirmative action, or fail to take any reasonable action within its
control, as a result of which any of the changes or events listed in Section
4.14 is likely to occur.
6.4 REQUIRED APPROVALS. Between the date of this Agreement and the
Closing Date, Seller shall (a) cooperate with Buyer with respect to all filings
that Buyer elects to make or is required by Legal Requirements to make in
connection with the transactions contemplated hereby, including filings or
21
other actions to obtain Permits required by Buyer to conduct the business of
Seller, and (b) cooperate with Buyer in obtaining all Consents identified in
Part 4.2 of the Disclosure Letter.
6.5 NOTIFICATION. Between the date of this Agreement and the Closing
Date, Seller shall promptly notify Buyer in writing if Seller becomes aware of
any fact or condition that causes or constitutes a Breach of Seller's
representations and warranties as of the date of this Agreement, or if Seller
becomes aware of the occurrence after the date of this Agreement of any fact or
condition that would (except as expressly contemplated by this Agreement) cause
or constitute a material Breach of any such representation or warranty had such
representation or warranty been made as of the time of occurrence or discovery
of such fact or condition. Should any such fact or condition require any change
in the Disclosure Letter if the Disclosure Letter were dated the date of the
occurrence or discovery of any such fact or condition, Seller shall promptly
deliver to Buyer a supplement to the Disclosure Letter specifying such change.
During the same period, Seller shall promptly notify Buyer of the occurrence of
any Breach of any covenant of Seller in this Article 6 or of the occurrence of
any event that could adversely affect the satisfaction of the conditions in
Articles 9 and 10.
6.6 EFFORTS. Between the date of this Agreement and the Closing Date,
Seller shall use its commercially reasonable efforts to cause the conditions in
Articles 9 and 10 to be satisfied, to the extent they are subject to Seller's
control.
6.7 NO SHOPPING. Seller shall not, directly or indirectly, through any
authorized partner, officer, director, agent or otherwise, (a) solicit, initiate
or encourage submission of proposals or offers from any Person (other than
Buyer) relating to any acquisition or purchase of all or a material amount of
the Assets or any equity interest in Seller, or any merger, consolidation or
business combination with Seller, or (b) participate in any discussions or
negotiations regarding, or furnish to any Person (other than Buyer) any
information with respect to, any of the foregoing, or (c) otherwise cooperate in
any way with, or assist or participate in, facilitate or encourage, any effort
or attempt by any other Person to do or seek any of the foregoing. Seller shall
promptly notify Buyer if Seller receives any such proposal or offer or any
inquiry or contact with respect thereto.
6.8 NO PUBLIC ANNOUNCEMENTS. Any public announcement or similar
publicity with respect to this Agreement or the transactions contemplated hereby
will be issued, at such time and in such manner as Seller and Buyer mutually
determine. Unless consented to by Buyer in advance, at all times prior to the
Closing, Seller shall, and shall cause its Affiliates to, keep this Agreement
strictly confidential and not make any disclosure of this Agreement to any
Person. Seller and Buyer will consult with each other concerning the means by
which Seller's employees, customers and suppliers and others having dealings
with Seller will be informed of the transactions contemplated hereby, and Buyer
will have the right to be present for any such communication. In addition, upon
execution of this Agreement, Buyer and Seller will confer and agree upon how to
address Seller's employees and will at that time describe the transactions
contemplated hereby to such employees. Notwithstanding any limitation on
disclosure set forth in this paragraph, Seller may make such disclosures
concerning this Agreement and the transactions contemplated hereby as may be
required by any Legal Requirement.
6.9 CHANGE OF CORPORATE NAME. Seller, in accordance with the Texas
Business Corporation Act, shall approve, and obtain the approval of its
shareholders of, amendments to their Articles of Incorporation (the "Name Change
Amendments") changing their corporate names to names that do not include the
words "Xxxxxxxxx," "Turkey Creek Farms," "Wholesale Landscape Distributors," or
any similar name.
22
6.10 PHYSICAL INVENTORY REPORT. On a date or dates mutually acceptable
to Buyer and Seller (each at their own expense), Buyer and Seller shall jointly,
and using individuals or parties mutually acceptable to Buyer and Seller, cause
to be prepared a count and valuation of the Inventory (the "Physical Inventory
Report"), which shall be signed jointly by Buyer and Seller for identification
purposes within five (5) days prior to the Closing. The Inventory shall be
valued on a current cost basis, shall take into account the cost records of
Seller relating to the Inventory, and shall also take into account an
observation of the Inventory in order to determine the marketability of the
Inventory as of the date of the Physical Inventory Report.
6.11 TITLE COMMITMENT; SURVEY. Within thirty (30) days from the date of
this Agreement, Seller, at Seller's sole cost and expense, shall cause to be
furnished to Buyer a current commitment for title insurance, issued by a title
company reasonably acceptable to Buyer, for each parcel of the Real Property.
The title commitment shall set forth the state of title to the Real Property,
including a list of title exceptions that would appear in an owner's title
policy. The title commitment shall contain the expressed commitment of the title
company to issue a title policy to Buyer for each tract of Real Property in the
aggregate amount of $8,200,000. Along with the title commitment, Seller shall
also cause to be furnished to Buyer true, correct, and legible copies of all
instruments that create or evidence title exceptions affecting the Real
Property. Buyer, at Buyer's expense, shall have the right to obtain a survey for
each tract of the Real Property; provided, however, that at the Closing Seller
shall reimburse Buyer for the cost of the surveys.
6.12 FINANCIAL STATEMENTS. Within twenty (20) days after the end of
each month following the date of this Agreement, Seller shall deliver to Buyer
(a) the unaudited consolidated balance sheet of Seller as of the end of such
month, and (b) the unaudited consolidated income statement of Seller as of the
end of such month, in each case for each "unit" of Seller's business, including
(i) the growing operations, (ii) the distribution centers, (iii) each of
Seller's retail stores, and (iv) corporate and administrative, all in the form
previously provided to Buyer. All such financial statements shall be deemed to
be a part of the "Financial Statements" for the purposes of this Agreement.
6.13 LEASE. At the Closing, CNI shall cause C. Xxxxxxxx Xxxxxxxxx, as
Trustee of the Xxxxxxxx Xxxxxxxxx Management Trust, to execute a lease with
Buyer for six (6) acres on Old Richmond Road, for a term of five (5) years, with
Buyer's right to renew for three (3) five (5) year terms, at a renewal of
$20,000 per year which shall constitute an "Assigned Real Estate Lease".
6.14 REORGANIZATION. Prior to the Closing Date, to the extent not
already owned by CNI, TCF and WLD will each transfer to CNI all of its Vehicles,
Fixtures and Improvements, Equipment, Inventory, and Assets described in Section
2.1(b)(xii) (the "Reorganization").
6.15 ENVIRONMENTAL AUDITS. Seller shall, at Seller's expense, cause to
be prepared, by an independent environmental consultant or consultants
reasonably satisfactory to Seller and Buyer, Phase I environmental audit reports
(the "Environmental Audits") covering each parcel of real property owned or
leased by Seller, and shall deliver copies thereof to Buyer.
ARTICLE 7.
COVENANTS OF BUYER PRIOR TO CLOSING DATE
7.1 APPROVALS OF GOVERNMENTAL BODIES. Between the date of this
Agreement and the Closing Date, Buyer shall (a) cooperate with Seller with
respect to all filings that Seller is required by
23
Legal Requirements to make in connection with the transactions contemplated
hereby, and (b) cooperate with Seller in obtaining all Consents identified in
Part 4.2 of the Disclosure Letter.
7.2 INTENTIONALLY OMITTED.
7.3 EFFORTS. Between the date of this Agreement and the Closing Date,
Buyer shall use commercially reasonable efforts to cause the conditions in
Articles 9 and 10 to be satisfied to the extent in Buyer's control.
7.4 DISCLOSURE LETTER. Buyer and Seller acknowledge that Seller has not
delivered to Buyer the Disclosure Letter as of the execution and delivery of
this Agreement. Seller shall deliver to Buyer, and Buyer shall have received,
the Disclosure Letter in connection with this Agreement on or before June 18,
1999. Buyer may terminate this Agreement by notice to Seller and without any
liability to Seller if Buyer has not received the Disclosure Letter on or before
such date. After receipt of the Disclosure Letter, Buyer may review the
Disclosure Letter and determine whether Buyer desires to proceed with the
transactions contemplated under this Agreement or to terminate this Agreement.
Buyer may, in its sole discretion, terminate this Agreement by notice to Seller
and neither Buyer nor Seller shall be liable to the other as a result of
termination under this Section 7.4. If Seller delivers to Buyer a supplement or
supplements to the Disclosure Letter with respect to a fact or condition that
arose, or of which Seller became aware, after the date of delivery of the
original Disclosure Letter, then Buyer in its sole discretion may terminate this
Agreement by notice to Seller and without any liability to Seller and neither
Buyer nor Seller shall be liable to the other as a result of such termination.
If Seller delivers to Buyer a supplement to the Disclosure Letter within five
(5) business days of the Closing Date then the Closing Date shall automatically
be extended five (5) business days unless Buyer waives this provision.
7.5 BUYER'S EXPENSES. Buyer shall pay all expenses required to obtain
its financing, including any Appraisals.
ARTICLE 8.
POST-CLOSING COVENANTS OF THE PARTIES
8.1 COOPERATION; FURTHER ASSURANCES. After the Closing Date: (a) Seller
and Buyer shall promptly execute and deliver, at the cost of the requesting
party, those instruments, documents and certificates as Seller or Buyer may
reasonably request to more effectively consummate the transactions contemplated
hereby; (b) Seller shall as promptly as practical, but in no event later than
five (5) business days after receipt, deliver to Buyer any mail, packages,
notices, copies of service of process and other similar items received by Seller
that relate to the Assets or the business of Buyer, or the Assumed Liabilities
or that otherwise should be delivered to Buyer and all moneys, checks or other
instruments of payment to which Buyer is entitled; (c) Seller authorizes Buyer
to receive and open all mail and other communications received by Buyer and to
act with respect to such communications in such manner as Buyer may elect if
such communications relate to the Assets, the business of Buyer or the Assumed
Liabilities or, if such communications do not so relate, to forward the same
promptly to Seller but in no event less than five (5) business days after
receipt; (d) Seller shall promptly forward to Buyer any telephone calls,
telecopies and other similar communications received by Seller that relate to
the Assets, the business of Buyer or the Assumed Liabilities; and (e) Buyer
shall as promptly as practical, but in no event later than five business days
after receipt, deliver to Seller any mail, packages, notices, copies of service
of process, and other similar items received by Buyer that relate to the
Excluded Assets, the Excluded Liabilities, or that should otherwise be delivered
to Seller, and all monies, checks or other instruments of payment to which
Seller is entitled; and (f) Buyer shall promptly forward to Seller any
24
telephone calls, telecopies, and other similar communications received by Buyer
that relate to the Excluded Assets or Excluded Liabilities. Seller shall have
the right to audit within ninety days of the Closing Date the receivables
collected by Buyer following the Closing Date to determine the amount of
Accounts Receivable due Seller. If an account debtor pays an account receivable
of Buyer, but validly offsets or validly reduces the payment to Buyer as a
result of any services provided by Seller to the account debtor prior to
Closing, such amount shall be included in "Damages" as defined herein.
8.2 COOPERATION ON CERTAIN MATTERS. Seller and Buyer shall cooperate
fully, as and to the extent reasonably requested by the other party, in
connection with any audit, litigation, or other proceeding with respect to
Taxes. Such cooperation shall include the retention and (upon the other party's
request) the provision of records and information which are reasonably relevant
to any such matter. Buyer and Seller agree (a) to retain until the expiration of
the applicable statute of limitations all books and records which are relevant
to the determination of the Tax liabilities pertinent to the Assets relating to
any Tax period prior to the Closing Date and to abide by all record retention
agreements entered into with any Tax authority, and (b) to give the other party
reasonable written notice prior to destroying or discarding any such books and
records and if the other party so requests, Buyer or Seller, as the case may be,
shall allow the other party to take possession of such books and records.
8.3 TRANSFER TAXES. Seller shall pay, or cause to be paid, all Taxes or
recording fees imposed on any transfers of the Assets as contemplated by this
Agreement, and all sales and use Taxes applicable to transfers of the Assets as
contemplated hereby.
8.4 APPORTIONED CHARGES; TAXES.
(a) Apportioned Charges. Charges for (i) unmetered water,
sewer and other utilities directly related to the Assets; (ii) accrued
and unpaid wages, and other payments to employees of Seller who are
associated with any of the Assets; and (iii) rental and other payments
under any of the Scheduled Contracts, the Assigned Personal Property
Leases or the Assigned Real Estate Leases assigned to Buyer pursuant
hereto shall be apportioned between CNI and Buyer, at and as of the
Closing Date. There shall also be apportioned between CNI and Buyer, at
and as of the Closing Date any rebates, allowances, and the like which
are or became payable by Buyer after the Closing Date in accordance
with the terms of any agreement or transaction entered into by Seller
with any customer or other party that relates to any period prior to
the Closing Date. If any item cannot be apportioned accurately at the
Closing Date or if it is apportioned incorrectly at the Closing Date or
subsequent thereto, such item shall be apportioned or reapportioned, as
the case may be, as soon as practicable after the Closing Date or the
date on which the apportionment error is discovered, as applicable.
Within 90 days from the Closing Date, CNI or Buyer, as the case may be,
shall pay CNI or Buyer, as the case may be, in immediately available
funds the net amount due CNI or Buyer, as the case may be, under this
Section 8.4(a) not otherwise paid at the Closing.
(b) Apportioned Tax Obligations. All real property Taxes,
personal property Taxes and similar ad valorem obligations levied or
assessed with respect to the Assets for assessment periods during which
the Closing Date occurs shall be apportioned between CNI and Buyer at
and as of the Closing Date based on the number of days in any such
period through the day immediately preceding the Closing Date and the
number of days thereafter. If any item cannot be apportioned accurately
at the Closing Date or if it is apportioned incorrectly at the Closing
Date or subsequent thereto, such item shall be apportioned or
reapportioned, as the case may be, as soon as practicable after the
Closing Date or the date on which the apportionment error is
discovered, as applicable. Within 90 days after the Closing Date, CNI
or Buyer, as the case may
25
be, shall pay CNI or Buyer, as the case may be, in immediately
available funds the net amount due CNI or Buyer, as the case may be,
under this Section 8.4(b) not otherwise paid at the Closing.
Thereafter, CNI shall notify Buyer upon receipt of any xxxx for real or
personal property Taxes relating to the Assets, part or all of which
are attributable to any period on or after the Closing Date, and shall
promptly deliver such xxxx to Buyer, which shall pay the same to the
appropriate Governmental Body; provided, however, that if such xxxx
covers any period before the Closing Date with respect to Assets, CNI
shall also remit to Buyer prior to the due date payment for the
proportionate amount of such xxxx that is attributable to such period
before the Closing Date. In the event that CNI or Buyer shall
thereafter make a payment for which it is entitled to reimbursement
under this Section, the other party shall make such reimbursement
promptly but in no event later than 60 days following the presentation
of such supporting evidence as may be reasonably requested by the
reimbursing party.
8.5 BOARD REPRESENTATION. After the Closing and until CNI has received
the Deferred Payment in full in cash or by exercise of right to offset (as
provided in Section 13.10), Buyer shall use its best efforts to (i) cause C.
Xxxxxxxx Xxxxxxxxx to be elected to the Board of Directors of Buyer and (ii)
cause his name to be placed in nomination at each meeting at which Directors are
to be elected and (iii) have certain shareholders execute a voting agreement at
Closing in accordance with Section 10.6.
8.6 NAME. Until the Deferred Payment is made in full in cash or by
exercise of right to offset (as provided in Section 13.10), Buyer will operate
the Assets under the name "Xxxxxxxxx," unless Buyer and CNI consent to a change
of name, in which event CNI's consent will not be unreasonably withheld.
ARTICLE 9.
CONDITIONS PRECEDENT TO
BUYER'S OBLIGATION TO CLOSE
Buyer's obligation to consummate the transactions contemplated hereby
and to take the other actions required to be taken by Buyer at the Closing is
subject to the satisfaction, at or prior to the Closing, of each of the
following conditions (any of which may be waived by Buyer, in whole or in part):
9.1 ACCURACY OF REPRESENTATIONS.
(a) All of Seller's representations and warranties in this
Agreement (considered collectively), and each of these representations
and warranties (considered individually), must have been accurate in
all material respects as of the date of this Agreement, and must be
accurate in all material respects as of the Closing Date as if made on
the Closing Date, giving effect to the Disclosure Letter but without
giving effect to any supplement to the Disclosure Letter.
(b) Each of Seller's representations and warranties (i) set
forth in Section 4.4(a) and (ii) that is qualified as to materiality,
must have been accurate in all respects as of the date of this
Agreement, and must be accurate in all respects as of the Closing Date
as if made on the Closing Date, giving effect to the Disclosure Letter
but without giving effect to any supplement to the Disclosure Letter.
9.2 SELLER'S PERFORMANCE. All of the covenants and obligations that
Seller or CNI is required to perform or to comply with pursuant to this
Agreement at or prior to the Closing (considered collectively), and each of
these covenants and obligations (considered individually), must have been duly
26
performed and complied with in all material respects. Each document required to
be delivered pursuant to Section 9.4 must have been delivered, and each of the
other covenants and obligations in Section 6.4, Section 6.6 and Section 6.9 must
have been complied with in all respects.
9.3 CONSENTS. Each of the Consents identified in Part 4.2 of the
Disclosure Letter must have been obtained and must be in full force and effect.
9.4 DELIVERIES. Each of the following documents must have been
delivered to Buyer:
(a) a general conveyance, transfer and assignment relating to
the Assets in a form reasonably satisfactory to Buyer, duly executed by
each of CNI, TCF and WLD;
(b) for each tract Real Property, a standard Form T-1 Texas
Owner Policy of Title Insurance, at CNI's expense, for each parcel of
the Real Property, in the aggregate amount of $8,200,000, and otherwise
in form and substance reasonably acceptable to Buyer; together with
real estate deeds (or other documents of conveyance), in form
reasonably acceptable to Buyer, conveying fee title to the Real
Property to Buyer;
(c) an Employment Agreement, (the "Employment Agreement"),
duly executed by C. Xxxxxxxx Xxxxxxxxx to employ C. Xxxxxxxx Xxxxxxxxx
as President of the entity which owns and operates the Assets, for a
term of three (3) years, at a salary of $125,000 plus ten percent (10%)
of the pre-tax profits generated by the entity which owns and operates
the Assets, and containing such other terms and conditions as Buyer and
Xx. Xxxxxxxxx may agree;
(d) executed originals of Name Change Amendments of CNI, TCF
and WLD, each in form suitable for filing with the Secretary of State
of Texas;
(e) a certificate executed by Seller to the effect that each
of the conditions specified in Sections 9.1, 9.2, 9.6, 9.8 and 10.4 has
been satisfied;
(f) an opinion of Xxxxxxxx Xxxxxxxx & Xxxxxx P.C., legal
counsel for Seller, dated the Closing Date, in form reasonably
acceptable to Buyer;
(g) estoppel certificates executed by each of the landlords
under the Assigned Real Property Leases, each in a form reasonably
satisfactory to Buyer;
(h) a certificate of existence, certificate of good standing,
and a Certificate of No Tax Due, of each of CNI, TCF and WLD as of a
recent date, from the Secretary of State of Texas and the Texas
Comptroller of Public Accounts, respectively;
(i) certified copies of resolutions of the Board of Directors
and shareholders of Seller approving the transactions contemplated
hereby and the Name Change Amendments;
(j) an incumbency certificate for the officers of each of CNI,
TCF and WLD executing this Agreement;
(k) the executed counterpart copies of the Consents identified
in Part 4.2 of the Disclosure Letter, each in a form reasonably
satisfactory to Buyer;
27
(l) evidence reasonably satisfactory to Buyer of the release
of all liens and security interests on the Assets (other than Permitted
Liens);
(m) such keys, lock and safe combinations and other similar
items as Buyer shall require to obtain full occupation and control of
the Assets;
(n) a list of Transferred Employees pursuant to Section
11.3(c);
(o) evidence reasonably satisfactory to Buyer of the
consummation of the Reorganization; and
(p) such other documents as Buyer may reasonably request.
9.5 NO PROCEEDINGS. Since the date of this Agreement, there must not
have been commenced or Threatened against Buyer or any Affiliate of Buyer any
Proceeding (a) involving any challenge to, or seeking damages or other relief in
connection with, any of the transactions contemplated hereby, (b) that may have
the effect of preventing, delaying, making illegal or causing the rescission of
or otherwise interfering with any of the transactions contemplated hereby, or
(c) that may adversely effect the right of the Buyer to own the Assets or
operate the business formerly conducted by Seller.
9.6 NO CLAIM REGARDING ASSETS OR SALE PROCEEDS. There must not have
been made or Threatened by any Person any claim asserting that such Person (a)
is the holder or the beneficial owner of, or has the right to acquire or to
obtain beneficial ownership of, any of the Assets or (b) is entitled to all or
any portion of the Purchase Price.
9.7 NO PROHIBITION. Neither the consummation nor the performance of any
of the transactions contemplated hereby will, directly or indirectly (with or
without notice or lapse of time), materially contravene or conflict with, or
result in a material violation of, or cause Buyer to suffer any material adverse
consequence under, (a) any applicable Legal Requirement or Order or (b) any
Legal Requirement or Order that has been published, introduced or otherwise
proposed by or before any Governmental Body.
9.8 NO MATERIAL ADVERSE CHANGE. There shall not have been any material
adverse change in Seller's overall financial condition or prospects, assets,
liabilities, legal circumstances, business, labor arrangements or operations
since April 30, 1999 or as disclosed in the Disclosure Letter.
9.9 PHYSICAL INVENTORY REPORT. The Physical Inventory Report shall show
the value of the Inventory to be at least $5,000,000.
9.10 FINANCING. Buyer shall have obtained financing in the amount
necessary to consummate the transactions contemplated hereby, with such
financing having terms and conditions satisfactory to Buyer in its sole
discretion.
9.11 DUE DILIGENCE. Buyer (in its sole and absolute discretion) shall
be satisfied with its investigation of Seller's prospects, assets, liabilities,
legal circumstances, business and operations, including the results of the
Appraisals, Environmental Audits and Physical Inventory Report.
9.12 REORGANIZATION. Prior to the Closing Date, CNI shall have acquired
all of the Vehicles, Fixtures and Improvements, Equipment, Inventory, and Assets
described in Section 2.1(b)(xii) of each of TCF and WLD.
28
ARTICLE 10.
CONDITIONS PRECEDENT TO
SELLER'S OBLIGATION TO CLOSE
Seller's obligation to consummate the transactions contemplated hereby
and to take the other actions required to be taken by Seller at the Closing is
subject to the satisfaction, at or prior to the Closing, of each of the
following conditions (any of which may be waived by Seller, in whole or in
part):
10.1 ACCURACY OF REPRESENTATIONS. All of Buyer's representations and
warranties in this Agreement (considered collectively), and each of these
representations and warranties (considered individually), must have been
accurate in all material respects as of the date of this Agreement and must be
accurate in all material respects as of the Closing Date as if made on the
Closing Date.
10.2 BUYER'S PERFORMANCE. All of the covenants and obligations that
Buyer is required to perform or to comply with pursuant to this Agreement at or
prior to the Closing (considered collectively), and each of these covenants and
obligations (considered individually), must have been performed and complied
with in all material respects.
10.3 DELIVERIES. Buyer must have caused the following to be delivered
to CNI:
(a) the Closing Payment;
(b) the Assumption Agreement, duly executed by Buyer;
(c) a certificate executed by Buyer as to the matters in
Sections 9.5, 10.1, 10.2, and 10.5;
(d) certified copies of resolutions of the Board of Directors
of Buyer, approving the transactions contemplated hereby;
(e) incumbency certificate for the officers of Buyer executing
this Agreement;
(f) an opinion of Xxxxxx and Xxxxx, LLP, dated the Closing
Date, in form reasonably acceptable to CNI;
(g) certificates for the preferred stock constituting the
Deferred Payment described in Section 3.2(c), in such denominations or
increments as CNI may desire;
(h) the Employment Agreement signed by Buyer; and
(i) such other documents as CNI may reasonably request.
10.4 NO PROCEEDINGS. Since the date of this Agreement, there must not
have been commenced or Threatened against Seller, or against any Affiliate of
Seller, any Proceeding (a) involving any challenge to, or seeking damages or
other relief in connection with, any of the transactions contemplated hereby, or
(b) that may have the effect of preventing, delaying, making illegal or
otherwise interfering with any of the transactions contemplated hereby.
29
10.5 NO PROHIBITION. Neither the consummation nor the performance of
any of the transactions contemplated hereby will, directly or indirectly (with
or without notice or lapse of time), materially contravene or conflict with, or
result in a material violation of, or cause Seller to suffer any material
adverse consequence under, (a) any applicable Legal Requirement or Order or (b)
any Legal Requirement or Order that has been published, introduced or otherwise
proposed by or before any Governmental Body.
10.6 VOTING AGREEMENT. Buyer shall have delivered to CNI a Voting
Agreement signed by Xxxxx X. Xxxxxx, Xxxx X. Xxxxx and Xxxx X. Xxxxxx committing
to cast their votes, as shareholders, for the election of C. Xxxxxxxx Xxxxxxxxx
to the Board of Directors of Buyer at each meeting at which directors are
elected until the Deferred Payment has been received by CNI in cash.
ARTICLE 11.
EMPLOYEE BENEFITS
11.1 MEETINGS WITH EMPLOYEES. At any time before the Closing Date,
Buyer shall have the right to meet with employees of Seller to arrange for the
transition of ownership of Seller; provided, however, that such meetings shall
be held at times and dates reasonably satisfactory to Seller, and shall be held
at such times and in such manner as not to adversely interfere with Seller's
normal business operations.
11.2 EMPLOYMENT BY BUYER. As of the Closing, Seller shall terminate the
employment of all of its employees and Buyer shall, effective immediately after
the Closing, hire, or offer employment to, all of such employees.
Notwithstanding the foregoing, this Agreement shall not be deemed to restrict
the right of Buyer to deal with the employees who accept employment with Buyer
as employees-at-will, in the same manner as it would be free to deal with such
employees in the absence of this Agreement.
11.3 SELLER'S 401(k) PLAN. To the extent Buyer's plans allow:
(a) If Buyer reasonably determines that Seller's 401(k) plan
is a qualified plan under Section 401(a) of the Code, Buyer shall use
commercially reasonable efforts to cause the trustee of Buyer's 401(k)
plan to accept a transfer of assets from Seller's 401(k) plan in an
amount in cash equal in value to the account balances of the employees
of Seller who are employed by Buyer immediately after the Closing (the
"Transferred Employees"); provided that to the extent the account
balance to be transferred consists in whole or in part of outstanding
loans, Buyer shall cause the trustee of Buyer's 401(k) plan to accept,
in lieu of cash, the promissory notes and related documents evidencing
such loans. Buyer and Seller shall take such actions as may be required
to effect the assignment of such loans by the trustee of the Seller's
401(k) plan to the trustee of the Buyer's 401(k) plan. The foregoing
transfer of assets shall occur as soon as reasonably practicable after
Closing following Buyer's determination that Seller's 401(k) plan is a
qualified plan. After the date of the transfer of assets from Seller's
401(k) to Buyer's 401(k) plan pursuant to this Section, Buyer and its
affiliates shall assume all liabilities for the benefits payable to or
with respect to or with respect to the Transferred Employees under the
Seller's 401(k) plan, and Seller and the Seller's 401(k) plan and the
related trust shall retain no liability for such benefits.
(b) If assets are not transferred from the Seller's 401(k)
plan to the Buyer's 401(k) plan in accordance with the foregoing
provisions of Section 11.3(a), Seller will terminate Seller's 401(k)
plan at Seller's expense within a reasonable period of time following
the Closing. Buyer
30
shall use commercially reasonable efforts to cause the trustee of
Buyer's 401(k) plan to allow Transferred Employees to roll over to
Buyer's 401(k) plan eligible rollover distributions from Seller's
401(k) plan, including rollovers of participant loans distributed in
kind from Seller's 401(k) plan.
(c) For purposes of eligibility and vesting under the Buyer's
401(k) plan, each Transferred Employee shall be credited with service
as of the Closing Date in an amount equal to the service accredited to
such Transferred Employee under the Seller's 401(k) plan as determined
under the terms of such plan as of the Closing Date. At Closing, Seller
shall deliver to Buyer a list of the Transferred Employees eligible to
participate in the Seller's 401(k) plan, together with each such
employee's credited service as of the Closing Date.
11.4 WELFARE BENEFITS AND COBRA.
(a) Except to the extent provided in Section 11.3, Buyer does
not assume any Benefit Plans of Seller or any liabilities or
obligations under any such plans. Specifically, Buyer does not assume
any obligation to provide continuation coverage under COBRA after the
Closing Date to former employees of Seller, including the Transferred
Employees. Except to the extent provided in Section 11.3 above, Seller
will terminate all of Seller's Benefit Plans following the Closing.
Notwithstanding anything in Article 13 to the contrary, Seller shall
not be obligated to indemnify Buyer or any Benefit Plan of Buyer with
respect to any obligation of Buyer or any Benefit Plan of Buyer to
provide continuation coverage under COBRA to the Transferred Employees
or to any former employees of Seller who are receiving or entitled to
receive continuation coverage under COBRA as of the Closing Date.
(b) To the extent Buyer's benefits plans allow, the
Transferred Employees shall be credited with their service with Seller
for purposes of all Benefit Plans of Buyer for which such Transferred
Employees are eligible to participate. To the extent permitted by the
terms of Buyer's Benefit Plans, any restrictions on coverage for
pre-existing conditions or requirements for evidence of insurability
under such plans shall be waived for the Transferred Employees, and the
Transferred Employees shall receive credit under each such plan for
co-payments and payments under a deductible limit made by them and for
out-of-pocket maximums and similar limits applicable to them under the
terms of Seller's Benefit Plans for the plan year in which the Closing
occurs. As soon as reasonably practicable after the Closing Date,
Seller shall deliver to Buyer a list of the Transferred Employees who
had service credited under any such Benefit Plans of Seller, together
with each such employee's service, co-payment amounts, deductible, and
out-of-pocket and similar limits under each such plan.
ARTICLE 12.
TERMINATION
12.1 TERMINATION EVENTS. This Agreement may, by notice given prior to
or at the Closing, be terminated:
(a) by either Buyer, on the one hand, or Seller, on the other
hand, if a material Breach of any provision of this Agreement has been
committed by the other party and such Breach has not been waived;
(b) by Buyer if any of the conditions in Article 9 has not
been satisfied as of the Closing Date or if satisfaction of such a
condition is or becomes impossible (other than through
31
the failure of Buyer to comply with its obligations under this
Agreement) and Buyer has not waived such condition on or before the
Closing Date;
(c) by Seller, if any of the conditions in Article 10 has not
been satisfied of the Closing Date or if satisfaction of such a
condition is or becomes impossible (other than through the failure of
Seller to comply with its obligations under this Agreement) and Seller
has not waived such condition on or before the Closing Date;
(d) by mutual written consent of Buyer and Seller;
(e) by Buyer if the Closing has not occurred on or before
October 15, 1999, by reason of the failure of any condition precedent
under Article 9; and
(f) by Seller if the Closing has not occurred on or before
October 15, 1999, by reason of the failure of any condition precedent
under Article 10.
12.2 EFFECT OF TERMINATION. Each party's right of termination under
Section 12.1 is in addition to any other rights it may have under this Agreement
or otherwise, and the exercise of a right of termination will not be an election
of remedies. If this Agreement is terminated pursuant to Section 12.1, all
further obligations of the parties under this Agreement will terminate, except
that the obligations in Sections 14.4 and 6.8 will survive; provided, however,
that if this Agreement is terminated by a party because of the Breach of the
Agreement by the other party, the terminating party's right to pursue all legal
remedies will survive such termination unimpaired.
12.3 CONFIDENTIALITY. If this Agreement is terminated under this
Article 12, Buyer shall not disclose any of the information about Seller or the
Assets which it obtained pursuant to this Agreement, and shall return all
documents, records and information which it obtained hereunder.
ARTICLE 13.
INDEMNIFICATION; REMEDIES
13.1 SURVIVAL. All representations, warranties, covenants and
obligations in this Agreement, the Disclosure Letter, the supplements to the
Disclosure Letter, and any other certificate or document delivered pursuant to
this Agreement will survive the Closing for the time period described in Section
13.5.
13.2 INDEMNIFICATION AND PAYMENT OF DAMAGES BY SELLER. Seller shall
jointly and severally indemnify and hold harmless Buyer and its representatives
and Affiliates (collectively, the "Buyer Indemnified Persons") for, and will pay
to the Indemnified Persons the amount of, any loss, liability, claim, damage
(excluding incidental and consequential damages and lost profits), expense
(including costs of investigation and defense and reasonable attorneys' fees),
or diminution of value, whether or not involving a third-party claim
(collectively, "Damages"), arising, directly or indirectly, from or in
connection with:
(a) any Breach of any representation or warranty made by
Seller in this Agreement (after giving effect to any supplement to the
Disclosure Letter), the Disclosure Letter, the supplements to the
Disclosure Letter or any other certificate or document delivered by
Seller pursuant to this Agreement;
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(b) any Breach of any representation or warranty made by
Seller in this Agreement as if such representation or warranty were
made on and as of the Closing Date after giving effect to any
supplement to the Disclosure Letter, other than any such Breach that is
disclosed in the Disclosure Letter or any supplement to the Disclosure
Letter;
(c) any Breach by Seller of any covenant or obligation of
Seller in this Agreement;
(d) any claims which may be made against Buyer by any Person,
including, any Proceeding against Buyer, which arise from the conduct
of the business of Seller prior to the Closing (other than the Assumed
Liabilities), including any claims arising from any products sold by,
or services performed by, Seller prior to the Closing Date;
(e) any claim by any Person for brokerage or finder's fees or
commissions or similar payments based upon any agreement or
understanding alleged to have been made by any such Person with Seller
(or any Person acting on Seller's behalf) in connection with any of the
transactions contemplated hereby;
(f) the Excluded Liabilities;
(g) Taxes associated with the Assets arising before the
Closing Date; and
(h) WARN.
The remedies provided in this Article 13 will be exclusive and shall limit any
other remedies that may be available to Buyer or the other Buyer Indemnified
Persons.
13.3 (a) INDEMNIFICATION AND PAYMENT OF DAMAGES BY SELLER --
ENVIRONMENTAL MATTERS. In addition to the provisions of Section 13.2, Seller
shall indemnify and hold harmless Buyer and the other Buyer Indemnified Persons
for, and will pay to Buyer and the other Buyer Indemnified Persons the amount
of, any Damages (including costs of cleanup, containment, or other remediation)
incurred or suffered by or asserted against an Indemnified Person and arising,
directly or indirectly, from or in connection with:
(i) any Environmental, Health and Safety Liabilities arising
out of or relating to: (i) (A) the ownership, operation or condition at
any time on or prior to the Closing Date of the Facilities (whether
real, personal or mixed) which Seller has conveyed to Buyer or (B) any
Hazardous Materials or other contaminants that were present on the
Facilities at any time on or prior to the Closing Date; or (ii) (A) any
Hazardous Materials or other contaminants, wherever located, that were,
or were allegedly, generated, transported, stored, treated, Released or
otherwise handled by Seller or by any other Person for whose conduct it
is or may be held responsible from the Facilities at any time on or
prior to the Closing Date or (B) any Hazardous Activities that were, or
were allegedly, conducted by Seller or by any other Person for whose
conduct it is or may be held responsible at the Facilities prior to the
Closing Date; or
(ii) any bodily injury (including illness, disability and
death and regardless of when any such bodily injury occurred, was
incurred or manifested itself), personal injury, property damage
(including trespass, nuisance, wrongful eviction and deprivation of the
use of real property) or other damage of or to any Person, including
any employee or former employee of Seller or any other Person for whose
conduct it is or may be held responsible, in any way arising from or
allegedly arising from any Hazardous Activity conducted or allegedly
conducted with
33
respect to the Facilities or the operation of the Assets prior to the
Closing Date or from Hazardous Material that was (i) present on or
before the Closing Date on or at the Facilities (or present or
suspected to be present on any other property, if such Hazardous
Material emanated or allegedly emanated from any of the Facilities and
was present or suspected to be present on any of the Facilities on or
prior to the Closing Date) or (ii) Released or allegedly Released from
the Facilities by Seller or any other Person for whose conduct Seller
is or may be held responsible, at any time on or prior to the Closing
Date.
The scope of Seller's agreement to indemnify and hold harmless includes
any Damages under CERCLA and comparable state laws. Buyer and Seller will
jointly control, and reasonably cooperate in, any Cleanup, any related
Proceeding and, except as provided in the following sentence, any other
Proceeding with respect to which indemnity may be sought under this Section
13.3(a). The procedure described in Section 13.8 will apply to any claim solely
for monetary damages relating to a matter covered by this Section 13.3(a).
(b) INDEMNIFICATION AND PAYMENT OF DAMAGES BY BUYER -- ENVIRONMENTAL
MATTERS. In addition to the provisions of Section 13.4, Buyer shall indemnify
and hold harmless Seller and the other Seller Indemnified Persons for, and will
pay to Seller and the other Seller Indemnified Persons the amount of, any
Damages (including costs of cleanup, containment, or other remediation) incurred
or suffered by or asserted against an Indemnified Person and arising, directly
or indirectly, from or in connection with:
(i) any Environmental, Health and Safety Liabilities arising
out of or relating to: (i) (A) the ownership, operation or condition at
any time only after the Closing Date of the Facilities (whether real,
personal or mixed) or (B) any Hazardous Materials or other contaminants
that were present on the Facilities or such other properties and assets
at any time only after the Closing Date; or (ii) (A) any Hazardous
Materials or other contaminants, wherever located, that were, or were
allegedly, generated, transported, stored, treated, Released or
otherwise handled by Buyer or by any other Person for whose conduct it
is or may be held responsible from the Facilities at any time only
after the Closing Date or (B) any Hazardous Activities that were, or
were allegedly, conducted by Buyer or by any other Person for whose
conduct it is or may be held responsible at the Facilities only after
the Closing Date; or
(ii) any bodily injury (including illness, disability and
death and regardless of when any such bodily injury occurred, was
incurred or manifested itself), personal injury, property damage
(including trespass, nuisance, wrongful eviction and deprivation of the
use of real property) or other damage of or to any Person, including
any employee or former employee of Buyer or any other Person for whose
conduct it is or may be held responsible, in any way arising from or
allegedly arising from any Hazardous Activity conducted or allegedly
conducted with respect to the Facilities or the operation of the Assets
only after the Closing Date or from Hazardous Material that was (i)
present only after the Closing Date on or at the Facilities (or present
or suspected to be present on any other property, if such Hazardous
Material emanated or allegedly emanated from any of the Facilities and
was present or suspected to be present on any of the Facilities only
after the Closing Date) or (ii) Released or allegedly Released from the
Facilities by Buyer or any other Person for whose conduct Buyer is or
may be held responsible, at any time only after the Closing Date.
The scope of Buyer's agreement to indemnify and hold harmless includes
any Damages under CERCLA and comparable state laws. Seller and Buyer will
jointly control, and reasonably cooperate in, any Cleanup, any related
Proceeding and, except as provided in the following sentence, any other
Proceeding with respect to which indemnity may be sought under this Section
13.3(b). The procedure
34
described in Section 13.8 will apply to any claim solely for monetary damages
relating to a matter covered by this Section 13.3(b).
13.4 INDEMNIFICATION AND PAYMENT OF DAMAGES BY BUYER. Buyer will
indemnify and hold harmless Seller, and will pay to Seller the amount of any
Damages incurred or suffered by or asserted against Seller, its representatives
and Affiliates (the "Seller Indemnified Persons") and arising, directly or
indirectly, from or in connection with (a) any Breach of any representation or
warranty made by Buyer in this Agreement or in any certificate or document
delivered by Buyer pursuant to this Agreement as if made on the Closing Date,
(b) any Breach by Buyer of any covenant or obligation of Buyer in this
Agreement, (c) any claim by any Person for brokerage or finder's fees or
commissions or similar payments based upon any agreement or understanding
alleged to have been made by any such Person with Buyer (or any Person acting on
Buyer's behalf) in connection with any of the transactions contemplated hereby,
(d) any claims which may be made against Seller Indemnified Persons by any
Person, including any Proceedings against Seller, which arise from the conduct
of the business of Buyer, or the ownership or operation of the Assets, only
after the Closing Date (other than Excluded Liabilities) including any claims
arising from any products sold by, or services performed by Buyer, after the
Closing Date, (e) the Assumed Liabilities, or (f) Taxes associated with the
Assets accruing after the Closing Date. The remedies provided in this Article 13
will be exclusive and shall limit any other remedies that may be available to
Seller or the Seller Indemnified Persons.
13.5 TIME LIMITATIONS. If the Closing occurs, Seller shall have no
liability (for indemnification or otherwise) with respect to any representation
or warranty, or covenant or obligation to be performed and complied with prior
to the Closing Date, other than those in Sections 4.4(a), 4.9, 4.11 (but only as
to ERISA claims) and 4.16 unless on or before the third anniversary of the
Closing Date Buyer notifies Seller of a claim specifying the factual basis of
that claim in reasonable detail to the extent then known by Buyer; a claim with
respect to Sections 4.4(a), 4.9, 4.11, or 4.16, may be made at any time, until
the applicable statute of limitations. If the Closing occurs, Buyer shall have
no liability (for indemnification or otherwise) with respect to any
representation or warranty, or covenant or obligation to be performed and
complied with prior to the Closing Date, unless on or before the third
anniversary of the Closing Date Seller notifies Buyer of a claim specifying the
factual basis of that claim in reasonable detail to the extent then known by
Seller.
13.6 LIMITATIONS ON AMOUNT -- SELLER. Seller shall have no liability
(for indemnification or otherwise) with respect to the matters described in
Section 13.2(a), 13.2(b) or 13.2(d) until the total of all Damages with respect
to such matters exceeds $40,000, and then only for the amount by which such
Damages exceed $40,000. However, this limitation will not apply to any Breach of
Section 4.4(a), and Seller shall be liable for all Damages with respect to such
Breach.
13.7 LIMITATIONS ON AMOUNT -- BUYER. Buyer will have no liability (for
indemnification or otherwise) with respect to the matters described in Section
13.4(a) or 13.4(d) until the total of all Damages with respect to such matters
exceeds $40,000, and then only for the amount by which such Damages exceed
$40,000.
13.8 PROCEDURE FOR INDEMNIFICATION -- PROCEEDINGS.
(a) Promptly after receipt by any party entitled to indemnity
under Article 13, of notice of the commencement of any Proceeding or
that a Proceeding has been Threatened against it, such indemnified
party will, if a claim is to be made against an indemnifying party
under such Section, give notice to the indemnifying party of such
commencement or threat, but the failure to notify the indemnifying
party will not relieve the indemnifying party of any liability that it
may
35
have to any indemnified party, except to the extent that the defense of
such action is materially prejudiced by the indemnified party's failure
to give such notice.
(b) If any Proceeding referred to in Section 13.8(a) is
brought against an indemnified party and it gives notice to the
indemnifying party of the commencement of such Proceeding, the
indemnifying party will be entitled to participate in such Proceeding
and, to the extent that it wishes (unless (i) the indemnifying party is
also a party to such Proceeding and the indemnified party determines in
good faith that joint representation would be inappropriate or (ii) the
indemnifying party fails to provide reasonable assurance to the
indemnified party of its financial capacity to defend such Proceeding
and provide indemnification with respect to such Proceeding) to assume
the defense of such Proceeding with counsel satisfactory to the
indemnified party and, after notice from the indemnifying party to the
indemnified party of its election to assume the defense of such
Proceeding, the indemnifying party will not, as long as it diligently
conducts such defense, be liable to the indemnified party under this
Article 13 for any fees of other counsel or any other expenses with
respect to the defense of such Proceeding, in each case subsequently
incurred by the indemnified party in connection with the defense of
such Proceeding, other than reasonable costs of investigation. If the
indemnifying party assumes the defense of a Proceeding, it will be
conclusively established for purposes of this Agreement that the claims
made in that Proceeding are within the scope of and subject to
indemnification; (ii) no compromise or settlement of such claims may be
effected by the indemnifying party without the indemnified party's
consent unless (A) there is no finding or admission of any violation of
Legal Requirements or any violation of the rights of any Person and no
effect on any other claims that may be made against the indemnified
party, and (B) the sole relief provided is monetary damages that are
paid in full by the indemnifying party; and (iii) the indemnified party
will have no liability with respect to any compromise or settlement of
such claims effected without its consent. If notice is given to an
indemnifying party of the commencement of any Proceeding and the
indemnifying party does not, within fifteen (15) days after the
indemnified party's notice is given, give notice to the indemnified
party of its election to assume the defense of such Proceeding, the
indemnifying party will be bound by any determination made in such
Proceeding or any compromise or settlement effected by the indemnified
party.
(c) Notwithstanding the foregoing, if an indemnified party
determines in good faith that there is a reasonable probability that a
Proceeding may adversely affect it or its Affiliates other than as a
result of monetary damages for which it would be entitled to
indemnification under this Agreement, the indemnified party may, by
notice to the indemnifying party, assume at its expense the exclusive
right to defend, compromise or settle such Proceeding, but the
indemnifying party will not be bound by nor have any liability or
obligation for any determination of a Proceeding so defended or any
compromise or settlement effected without its consent (which may not be
unreasonably withheld).
(d) Seller hereby consents to the non-exclusive jurisdiction
of any court in which a Proceeding is brought against any Indemnified
Person for purposes of any claim that an Indemnified Person may have
under this Agreement with respect to such Proceeding or the matters
alleged therein and agree that process may be served on Seller with
respect to such a claim anywhere in the world.
13.9 PROCEDURE FOR INDEMNIFICATION -- OTHER CLAIMS. A claim for
indemnification for Damages in any matter not involving a Proceeding may be
asserted by notice to the party from whom indemnification is sought. Such notice
must be given promptly upon the party seeking such indemnification acquiring
knowledge of such claim.
36
13.10 OFFSET. No part of the Deferred Payment may be offset by Buyer
except to the extent (i) consented to by Seller or (ii) awarded to Buyer in a
judgment in a Proceeding involving Buyer and Seller. If Buyer asserts any claims
against Seller that are not agreed to or resolved by judgment in a Proceeding
prior to the date on which payment of the Deferred Payment is due, Buyer must
deposit an amount equal to the disputed amount or claim into the registry of the
court and commence a Proceeding involving such claim.
ARTICLE 14.
MISCELLANEOUS PROVISIONS
14.1 AMENDMENT AND MODIFICATION. This Agreement may be amended,
modified, or supplemented only by written agreement of the parties hereto.
14.2 WAIVER OF COMPLIANCE; CONSENTS. Any failure of a party to comply
with any obligation, covenant, agreement or condition herein may be waived by
the other party; provided, however, that any such waiver may be made only by a
writing signed by the party granting such waiver, but such waiver or failure to
insist upon strict compliance with such obligation, covenant, agreement or
condition shall not operate as a waiver of, or estoppel with respect to, any
subsequent or other failure. Whenever this Agreement requires or permits consent
by or on behalf of any party hereto, such consent shall be given in writing in a
manner consistent with the requirements for a waiver of compliance as set forth
in this Section 14.2, with appropriate notice in accordance with Section 14.7
hereof.
14.3 ASSIGNMENT. This Agreement and all of the provisions hereof shall
be binding upon and inure to the benefit of the parties hereto and their
respective successors and permitted assigns. No party may assign any of its
rights hereunder without the written consent of the other party, except as
follows: (i) Buyer may assign its rights hereunder to a wholly-owned subsidiary
of Buyer, and such subsidiary may consummate the transactions contemplated
hereby in place of Buyer in which event Buyer shall remain obligated hereunder
and such subsidiary shall be included in all references to "Buyer" herein, and
(ii) Buyer may mortgage, pledge or collaterally assign its rights hereunder (and
under any document executed in connection with this Agreement) to its lenders
solely for the purpose of enforcing Buyer's rights under such agreements, and
without creating any additional rights for such lenders or any additional
liability of Seller.
14.4 EXPENSES. Except as otherwise expressly provided in this
Agreement, each party to this Agreement will bear its respective expenses
incurred in connection with the preparation, execution and performance of this
Agreement and the transactions contemplated hereby, including all fees and
expenses of its representatives. In the event of termination of this Agreement,
the obligation of each party to pay its own expenses will be subject to any
rights of such party arising from a Breach of this Agreement by another party.
14.5 GOVERNING LAW; CHOICE OF FORUM. This Agreement shall be governed
by and construed in accordance with the Laws of the State of Texas (without
regard to its conflicts of law doctrines). Any Proceeding seeking to enforce any
provision of, or based on any right arising out of, this Agreement may be
brought against any of the parties in the State of Texas, or, if it has or can
acquire jurisdiction, in the United States District Court for the Northern
District of Texas, and Seller and Buyer consent to the jurisdiction of such
courts (and of the appropriate appellate courts) in any such Proceeding and
waives any objection to service laid therein.
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14.6 COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument and shall become a binding
Agreement when one or more of the counterparts have been signed by each of the
parties and delivered to the other party.
14.7 NOTICES. Unless otherwise specified, whenever this Agreement
requires or permits any consent, approval, notice, request or demand from one
party to another, that communication must be in writing (which may be by
telecopy) to be effective and is deemed to have been given (a) if by telecopy,
when transmitted to the appropriate telecopy number, (b) if by certified or
registered mail, on the third business day after it is enclosed in an envelope
and properly addressed, stamped, sealed, and deposited in the appropriate
official postal service with a return receipt requested, or (c) if by any other
means, when actually delivered. Until changed by notice pursuant to this
Agreement, the address (and fax number) for Seller and Buyer are:
If to Seller:
Before the Closing:
Xxxxxxxxx Nurseries, Inc.
0000 X. Xxxx Xxxx
Xxxxxxx, Xxxxx 00000
Attention: C. Xxxxxxxx Xxxxxxxxx
Facsimile: (000) 000-0000
After the Closing:
Mr. C. Xxxxxxxx Xxxxxxxxx
00000 Xxxxx Xxxx
Xxxxxxx, Xxxxx 00000
with copies to:
Xxxxxxxx Xxxxxxxx & Xxxxxx P.C.
000 Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000-0000
Attention: Xxxxxxx X. Xxxxxxxx
Facsimile: (000) 000-0000
If to Buyer:
Xxxxxxxx'x Nursery, Inc.
0000 Xxxxxxx Xxxxxxx, Xxxxx 000
Xxxx Xxxxx, Xxxxx 00000-0000
Attention: Xxxxx X. Xxxxxx
Facsimile: (000) 000-0000
38
with a copy to:
Xxxxxx and Xxxxx, LLP
000 Xxxx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000-0000
Attention: Xxxxx X. Xxxx
Facsimile: (000) 000-0000
14.8 HEADINGS. The Article and Section headings contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement.
14.9 ENTIRE AGREEMENT. This Agreement, including the Disclosure Letter,
Schedules, Exhibits and other documents and instruments referred to herein,
embodies the entire agreement and understanding of the parties hereto in respect
of the subject matter contained herein. This Agreement supersedes all prior
agreements and understandings between the parties with respect to such subject
matter. This Agreement is an amendment to and restatement in its entirety of
that certain Asset Purchase Agreement, dated as of June 3, 1999, by and among
Buyer and Seller.
14.10 SEVERABILITY. If any one or more provisions contained in this
Agreement shall, for any reason, be held to be invalid, illegal, or
unenforceable in any respect, such invalidity, illegality or unenforceability
shall not affect any other provision of this Agreement, but this Agreement shall
be construed as if such invalid, illegal or unenforceable provision had never
been contained herein.
14.11 SCHEDULES; EXHIBITS. All Schedules and Exhibits attached hereto
are hereby incorporated in and made a part as if set forth in full herein.
14.12 THIRD PARTY BENEFICIARIES. Except for the Indemnified Parties not
a party to this Agreement, no Person that is not a party to this Agreement may
be deemed to be a third party beneficiary under this Agreement.
14.13 TIME IS OF THE ESSENCE. With regard to all dates and time periods
set forth or referred to in this Agreement, time is of the essence.
14.14 DISPUTE RESOLUTION. Before initiating any Proceeding seeking to
enforce any provision of, or based on any right arising out of, this Agreement
(except for emergency relief), the aggrieved party shall notify the other party
of the dispute. Thereafter, the parties shall in good faith attempt to settle
the matter in dispute by non-binding mediation, to occur within twenty (20) days
of the dispute notice; provided that nothing herein shall prevent a party from
seeking or obtaining injunctive or other equitable relief without such notice
and/or delay, to the extent permitted by applicable law.
14.15 AUTHORITY. Seller's obligation to consummate the transactions
described herein, and its representations under Section 4.2(a), are subject to
obtaining the approval of Seller's directors and shareholders, and Seller shall
exert its commercially reasonable efforts to obtain such approvals as soon as
reasonably possible, and shall provide Buyer with notice thereof.
39
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the day and year first above written.
BUYER:
XXXXXXXX'X NURSERY, INC.
By: /s/ Xxxxx X. Xxxxxx
-----------------------------------
Xxxxx X. Xxxxxx, President
SELLER:
XXXXXXXXX NURSERIES, INC.
By: /s/ C. Xxxxxxxx Xxxxxxxxx
-----------------------------------
C. Xxxxxxxx Xxxxxxxxx,
Chairman of the Board
TURKEY CREEK FARMS, INC.
By: /s/ C. Xxxxxxxx Xxxxxxxxx
-----------------------------------
C. Xxxxxxxx Xxxxxxxxx,
Chairman of the Board
WHOLESALE LANDSCAPE DISTRIBUTORS,
INC.
By: /s/ C. Xxxxxxxx Xxxxxxxxx
-----------------------------------
C. Xxxxxxxx Xxxxxxxxx,
Chairman of the Board
40
ANNEX I
DEFINITIONS
For purposes of this Agreement, the following terms have the meanings:
"Accounts Receivable" is defined in Section 2.2(b).
"Affiliate" means, with respect to any Person, any other Person
directly or indirectly controlling or controlled by or under direct or indirect
common control with such specified Person. For purposes of this definition, the
term "control" means (a) the power to direct the management and policies of a
Person, or (b) the ownership directly or indirectly of more than 50% of the
securities having voting power generally in the election of directors of a
corporation or more than 50% of the partnership or other ownership interests in
any other Person.
"Agreement" is defined in the first paragraph to this Agreement.
"Appraisals" means appraisals of each parcel of property constituting
the Real Property, to be prepared by Buyer after the date hereof and prior to
the Closing Date.
"Assets" is defined in Section 2.1(b).
"Assigned Personal Property Leases" is defined in Section 2.1(b)(v).
"Assigned Real Estate Leases" is defined in Section 2.1(b)(iv).
"Assumed Liabilities" is defined in Section 2.3.
"Assumption Agreement" is defined in Section 2.3.
"Balance Sheet" is defined in Section 4.3.
"Benefit Plans" is defined in Section 4.11(a).
"Breach" means the following: a "Breach" of a representation, warranty,
covenant, obligation or other provision of this Agreement or any instrument
delivered pursuant to this Agreement will be deemed to have occurred if there is
(a) any inaccuracy in or breach of, or any failure to perform or comply with,
such representation, warranty, covenant, obligation or other provision or (b)
any claim (by any Person) or other occurrence or circumstance that is
inconsistent with such representation, warranty, covenant, obligation or other
provision, and the term "Breach" means any such inaccuracy, breach, failure,
claim or occurrence or circumstance.
"Buyer" is defined in the first paragraph of this Agreement.
"Buyer's Advisors" is defined in Section 6.1.
"Closing" is defined in Section 3.1.
41
"Closing Date" means the date and time as of which the Closing actually
takes place.
"Closing Payment" is defined in Section 3.2(a).
"COBRA" means the Consolidated Omnibus Budget Reconciliation Act of
1985, as amended.
"Consent" means any approval, consent, ratification, waiver or other
authorization (including any Governmental Authorization).
"Contract" means any executory agreement, "booking," contract,
obligation, promise, undertaking or other arrangement (whether written or oral
and whether express or implied) that is legally binding.
"Copyrights" is defined in Section 4.6.
"Damages" is defined in Section 13.2.
"Deferred Payment" is defined in Section 3.2(c).
"Disclosure Letter" means the disclosure letter delivered by Seller to
Buyer.
"Employment Agreement" is defined in Section 9.4(c).
"Encumbrance" means any charge, claim, community property interest,
condition, equitable interest, lien, option, pledge, security interest, right of
first refusal or restriction of any kind (other than laws or regulations of any
Governmental Body), including any restriction on use, voting, transfer, receipt
of income or exercise of any other attribute of ownership.
"Environment" means soil, land surface or subsurface strata, surface
waters (including navigable waters, ocean waters, streams, ponds, drainage
basins and wetlands), groundwaters, drinking water supply, stream sediments,
ambient air (including indoor air), plant and animal life and any other
environmental medium or natural resource.
"Environmental Audits" is defined in Section 7.2.
"Environmental, Health and Safety Liabilities" means any cost, damages,
expense, liability, obligation or other responsibility arising from or under
Environmental Law or Occupational Safety and Health Law and consisting of or
relating to: (a) any environmental, health or safety matters or conditions
(including on-site or off-site contamination, occupational safety and health and
regulation of Hazardous Materials, chemical substances or products); (b) fines,
penalties, judgments, awards, settlements, legal or administrative proceedings,
damages, losses, claims, demands and response, investigative, remedial or
inspection costs and expenses arising under Environmental Law or Occupational
Safety and Health Law; (c) financial responsibility under Environmental Law or
Occupational Safety and Health Law for cleanup costs or corrective action,
including any investigation, cleanup, removal, containment or other remediation
or response actions ("Cleanup") required by applicable Environmental Law or
Occupational Safety and Health Law (whether or not such Cleanup has been
required or requested by any Governmental Body or any other Person) and for any
natural resource damages; or (d) any other compliance, corrective, investigative
or remedial measures required under Environmental Law or
42
Occupational Safety and Health Law. The terms "removal," "remedial," and
"response action," include the types of activities covered by the United States
Comprehensive Environmental Response, Compensation and Liability Act, 42 U.S.C.
Section 9601 et seq., as amended ("CERCLA").
"Environmental Law" means any Legal Requirement that requires or
relates to: (a) advising appropriate authorities, employees and the public of
intended or actual Releases or uses of Hazardous Materials, violations of
discharge limits or other prohibitions and of the commencements of activities,
such as resource extraction or construction, that could have significant impact
on the Environment; (b) preventing or reducing the Release of Hazardous
Materials into or in the Environment; (c) reducing the quantities, preventing
the Release or minimizing the hazardous or other characteristics of Hazardous
Materials, including wastes that are generated; (d) assuring that products are
designed, formulated, packaged and used so that they do not present risks to
human health or the Environment when used or disposed of; (e) protecting the
Environment, resources, species or ecological amenities; (f) reducing the risks
inherent in the transportation of Hazardous Materials; (g) cleaning up Hazardous
Materials that are present or have been Released, preventing the Threat of
Release of Hazardous Materials or paying the costs of such clean up or
prevention; (h) generating, processing, treating, storing, transporting,
disposing, using, handling or managing Hazardous Materials; or (i) making
responsible parties pay private parties, or groups of them, for damages done to
their health or the Environment or permitting self-appointed representatives of
the public interest to recover for injuries done to public assets.
"Equipment" is defined in Section 2.1(b)(vii).
"ERISA" means the Employee Retirement Income Security Act of 1974, and
regulations and rules issued pursuant to that Act.
"Excluded Assets" is defined in Section 2.2.
"Excluded Liabilities" is defined in Section 2.4.
"Facilities" means the Real Property and leased real estate and any
buildings, plants, or structures located thereon or attached thereto, currently
owned, used or leased by Seller and being sold to Buyer.
"Financial Statements" is defined in Section 4.3.
"Fixtures and Improvements" is defined in Section 2.1(b)(iii).
"GAAP" means generally accepted United States accounting principles,
applied on a basis consistent with the basis on which the Balance Sheet and the
other Financial Statements were prepared.
"Governmental Authorization" means any approval, consent, license,
permit, waiver or other authorization issued, granted, given or otherwise made
available by or under the authority of any Governmental Body or pursuant to any
Legal Requirement, but excluding those applicable generally to all business
regardless of their specific business (for example, a certificate of occupancy).
"Governmental Body" means any: (a) nation, state, county, city, town,
village, district or other jurisdiction of any nature; (b) federal, state,
local, municipal, foreign or other government; (c) governmental or
quasi-governmental authority of any nature (including any governmental agency,
43
branch, department, official or entity and any court or other tribunal); (d)
multi-national organization or body; or (e) body exercising or entitled to
exercise, any administrative, executive, judicial, legislative, police,
regulatory or taxing authority or power of any nature.
"Hazardous Activity" means the distribution, management, disposal,
generation, handling, importing, management, manufacturing, processing,
production, refinement, Release, storage, transfer, transportation, treatment or
use (including any withdrawal or other use of groundwater) of Hazardous
Materials in, on, under, about or from the Facilities or any part thereof in or
into the Environment, and any other act, business, operation or thing that
increases the danger, or risk of danger, or poses risk of harm to Persons or
property on or off the Facilities or that may affect the value of the Facilities
or the Assets or the value of Seller.
"Hazardous Materials" means any waste or other substance that, as of
the date of this Agreement, is (i) listed, defined, designated or classified as,
or otherwise determined to be, hazardous, radioactive or toxic or a pollutant or
a contaminant under or pursuant to any Environmental Law or Occupational Safety
and Health Law, or (ii) prohibited, limited or regulated under any Environmental
Law or Occupational Safety and Health Law.
"Indemnified Persons" is defined in Section 13.2.
"Intellectual Property Assets" is defined in Section 4.6.
"Interim Balance Sheet" is defined in Section 4.3.
"Inventory" is defined in Section 2.1(b)(viii).
"IRC" means the Internal Revenue Code of 1986, and regulations issued
by the IRS pursuant to the Internal Revenue Code.
"IRS" means the United States Internal Revenue Service or any successor
agency, and, to the extent relevant, the United States Department of the
Treasury.
"Legal Requirement" means any federal, state, local, municipal,
foreign, international, multinational or other administrative order,
constitution, law, ordinance, principle of common law, regulation, statute or
treaty.
"Liens" is defined in Section 4.4(c)(i).
"Marks" is defined in Section 4.6.
"Name Change Amendment" is defined in Section 6.9.
"Occupational Safety and Health Law" means any Legal Requirement
designed to provide safe and healthful working conditions and to reduce
occupational safety and health hazards, and any governmental program designed to
provide safe and healthful working conditions.
44
"Order" means any award, decision, injunction, judgment, order, ruling,
subpoena or verdict entered, issued, made or rendered by any court,
administrative agency or other Governmental Body or by any arbitrator, in effect
as of the date hereof and issued specifically regarding Seller.
"Ordinary Course of Business" means the following: an action taken by a
Person will be deemed to have been taken in the "Ordinary Course of Business"
only if such action is consistent with the past practices of such Person and is
taken in the ordinary course of the normal day-to-day operations of such Person.
"Patents" is defined in Section 4.6.
"Permits" means all permits, authorizations, certificates, approvals,
registrations, variances, exemptions, rights-of-way, franchises, privileges,
immunities, grants, ordinances, licenses and other rights of every kind and
character (a) under any (1) Legal Requirement, (2) Order or (3) contract with
any Governmental Body or (b) granted by any Governmental Body.
"Permitted Encumbrances" means (a) the encumbrances described or
referred to in Part 2.1(a) of the Disclosure Letter, (b) liens for current Taxes
and assessments not yet due and payable, including liens for nondelinquent ad
valorem Taxes, nondelinquent statutory liens arising other than by reason of any
default on the part of Seller and (c) such liens, minor imperfections of title,
or easements on the Real Property or any of Seller's leasehold estates, as do
not in any material respect detract from the value thereof and do not interfere
with the present use of the property subject thereto.
"Person" means any individual, corporation (including any non-profit
corporation), general or limited partnership, limited liability company, joint
venture, estate, trust, association, organization, labor union or other entity
or Governmental Body.
"Physical Inventory Report" is defined in Section 6.10.
"Proceeding" means any action, arbitration, audit, hearing,
investigation, litigation or suit (whether civil, criminal, administrative,
investigative or informal) commenced, brought, conducted or heard by or before,
or otherwise involving, any Governmental Body or arbitrator.
"Purchase Price" is defined in Section 3.2.
"Real Property" is defined in Section 2.1(b)(ii).
"Release" means any spilling, leaking, emitting, discharging,
depositing, escaping, leaching, dumping or other releasing into the Environment,
whether intentional or unintentional.
45
"Reorganization" is described in Section 9.12.
"Scheduled Contracts" is defined in Section 2.1(b)(vi).
"Seller" is defined in the first paragraph to this Agreement.
"Tax" means any federal, state, local or foreign income, gross
receipts, license, payroll, employment, excise, severance, stamp, occupation,
premium, windfall profits, environmental (including taxes under IRC Section
59A), customs duties, capital stock, franchise, profits, withholding, social
security (or similar), unemployment, disability, real property, personal
property, sales, use, transfer, registration, value added, alternative or add-on
minimum, estimated or other tax of any kind whatsoever, including any interest,
penalty or addition thereto, whether disputed or not.
"Tax Return" means any return (including any information return),
report, statement, schedule, notice, form or other document or information filed
with or submitted to, or required to be filed with or submitted to, any
Governmental Body in connection with the determination, assessment, collection
or payment of any Tax or in connection with the administration, implementation
or enforcement of or compliance with any Legal Requirement relating to any Tax.
"Threat of Release" means a likelihood of a Release that would require
action in order to prevent or mitigate damage to the Environment that may result
from such Release.
"Threatened" means the following: a claim, Proceeding, dispute, action
or other matter will be deemed to have been "Threatened" if any demand or
statement has been made (orally or in writing) or any notice has been given
(orally or in writing), that would lead a prudent Person to conclude that such a
claim, Proceeding, dispute, action or other matter is likely to be asserted,
commenced, taken or otherwise pursued in the future.
"Trade Secret" is defined in Section 4.6.
"Vehicles" is defined in Section 2.1(b)(i).
