EXHIBIT 2.1
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STOCK PURCHASE AGREEMENT
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By and among
AGRIBIOTECH, INC.,
as the Buyer,
and
▇▇▇▇ ▇▇▇▇▇▇▇▇ and ▇▇▇▇ ▇▇▇▇,
as the Sellers,
and
▇.▇. ▇▇▇▇▇▇▇▇▇▇ & SONS, INC.
an Oregon Corporation
and
▇.▇. ▇▇▇▇▇▇▇▇▇▇'▇, INC.
(a wholly-owned subsidiary of ▇.▇. ▇▇▇▇▇▇▇▇▇▇ & Sons)
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May 15, 1997
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STOCK PURCHASE AGREEMENT
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TABLE OF CONTENTS
PAGE
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1. Sale and Purchase of the Stock......................................... 1
2. Closing................................................................ 1
3. Description of Components of Purchase Price and Other Payments......... 2
4. Representations and Warranties of the Sellers and the Corporation...... 2
5. Representations and Warranties of the Buyer............................ 16
6. Survival of Representations and Warranties; Indemnification............ 18
7. Covenants of the Sellers............................................... 20
8. Covenants of the Buyer................................................. 21
9. Conditions Precedent to the Buyer's Obligations........................ 21
10. Conditions Precedent to the Sellers' Obligations....................... 23
11. Conditions Precedent to Obligations of the Sellers and the
Buyer.................................................................. 24
12. Termination............................................................ 25
13. The Buyer's Obligations at Closing..................................... 25
14. The Sellers' Obligations at Closing.................................... 25
15. Subsequent Events...................................................... 26
16. Parties in Interest.................................................... 26
17. Entire Agreement....................................................... 26
18. Governing Law; Consent to Jurisdiction................................. 26
19. Expenses............................................................... 27
21. Severability........................................................... 28
22. Notices................................................................ 28
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STOCK PURCHASE AGREEMENT
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TABLE OF CONTENTS
PAGE
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23. Non-Waivers............................................................ 29
24. Assignment............................................................. 29
25. Disclosure............................................................. 29
26. Miscellaneous.......................................................... 30
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Exhibits Description
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Exhibit 3(c) Form of Employment and Non-Competition Agreement
Exhibit 3(d) Form of Stock Option Agreement
Exhibit 3(e) Form of Option Agreement
Exhibit 4(g) Financial Statements, 12/31/95, 12/31/96, 3/31/97
Exhibit 4(k) Leases of Real Property
Exhibit 9(g) Opinion of Counsel to Sellers and the Corporation
Exhibit 10(d) Opinion of Counsel to Buyer
Schedules
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Schedule 4(aa) Consents of Other Persons
Schedule 4(c)(i) Legal Proceedings, Seller and/or Corporation as Party
Schedule 4(c)(ii) Complaints, Claims, etc. from Customers, Purchasers, etc.
Schedule 4(c)(iii) Claims Related to Products or Services
Schedule 4(d) Encumbrances
Schedule 4(e) Trademarks, Tradenames
Schedule 4(f) Patents, PVPA Certificates, etc.
Schedule 4(h) Material Adverse Changes
Schedule 4(k) Real Property Owned or Leased; Personal Property Leased
Schedule 4(l) Material Contracts
Schedule 4(p) Pension & Profit Sharing Plan
Schedule 4(q) Insurance Policies
Schedule 4(r) Rights of Third Parties
Schedule 4(s) Powers of Attorney
Schedule 4(w) Compensation Plans
Schedule 4(x) Governmental Licenses, Permits, etc.
Schedule 4(aa) Guarantees by Sellers of Obligations of the Corporation
Schedule 4(bb) Benefits
Schedule 6(b) Indemnification
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STOCK PURCHASE AGREEMENT
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STOCK PURCHASE AGREEMENT dated May 15, 1997, by and among ▇.▇. ▇▇▇▇▇▇▇▇▇▇ &
Sons, an Oregon corporation ("EFB"), ▇.▇. ▇▇▇▇▇▇▇▇▇▇'▇, Inc., a Guam corporation
and wholly-owned subsidiary of EFB ("GWB") (EFB and GWB are sometimes
collectively referred to as the "Corporation"), ▇▇▇▇ ▇▇▇▇▇▇▇▇ and ▇▇▇▇ ▇▇▇▇
(collectively, the "Sellers") and AgriBioTech, Inc., a Nevada corporation (the
"Buyer").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, the Sellers own an aggregate of two (2) shares of common stock,
$100 par value per share, of EFB (the "Stock"), which constitute all of the
issued and outstanding shares of capital stock of EFB; and
WHEREAS, the Sellers wish to sell and the Buyer wishes to purchase the
Stock, on the terms and subject to the conditions set forth in this Agreement.
NOW, THEREFORE, in consideration of the foregoing and the terms,
conditions, representations, warranties and covenants appearing in this
Agreement, the Buyer and the Sellers hereby agree as follows:
SECTION 1. SALE AND PURCHASE OF THE STOCK. (a) Upon the terms and subject
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to the conditions set forth in this Agreement, at the Closing (as hereinafter
defined), the Sellers shall sell, transfer and deliver to the Buyer, and the
Buyer shall purchase from the Sellers, the Stock, which constitutes one hundred
percent (100%) of the issued and outstanding shares of capital stock of EFB,
free and clear of all liens, mortgages, deeds of trust, security interests,
pledges, charges, encumbrances, liabilities and claims of every kind.
(b) The purchase price of NINE MILLION SIX HUNDRED THOUSAND AND 00/100
($9,600,000) DOLLARS (the "Purchase Price"), payable by the Buyer to the Sellers
for the Stock, together with stock options and other payments to be made on the
Closing Date (as hereinafter defined), shall be paid as described in and subject
to adjustment as set forth in Section 3 below.
SECTION 2. CLOSING. The closing of the sale and purchase of the Stock
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provided for in Section 1 of this Agreement (the "Closing") shall take place at
the offices of ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP, at 10:00 a.m. on or before May 15,
1997, (the "Closing Date") or at such later date, time or location as may be
agreed to by the parties.
SECTION 3. DESCRIPTION OF COMPONENTS OF PURCHASE PRICE AND OTHER
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PAYMENTS.
(a) Payment of Purchase Price to the Sellers at Closing. Upon the
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completion by the parties of their respective closing conditions under this
Agreement (unless waived in writing by the parties hereto), the Buyer shall pay
to the Sellers the Purchase Price, payable in cash, in exchange for delivery of
the Stock at the Closing.
(b) Portion of Purchase Price to be Held in Escrow. At the Closing, the
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Sellers shall set-aside One Hundred Fifty Thousand and 00/100 ($150,000) Dollars
from the Purchase Price for the benefit of the Buyer as described below (the
"Escrow Funds"). The Escrow Funds shall either be (1) placed in an interest-
bearing account with a bank or other financial institution or (2) invested in
United States Government securities, short term certificates of deposit, money
market securities, investment grade commercial paper or other short-term
interest-bearing investment-grade securities.
The Escrow Funds shall be made available to the Buyer in the event of any
Claims arising pursuant to Section 6(b) hereof for which Buyer is entitled to
payment, subject to the $50,000 threshold set forth in Section 6(d) hereof.
The Escrow Funds shall be reduced to the levels set forth in the following
schedule:
DATE ESCROW FUNDS
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Closing Date $150,000
First Anniversary of Closing Date $100,000
Second Anniversary of Closing Date $ 50,000
Third Anniversary of Closing Date -0-
Any interest accrued on the Escrow Funds shall inure to the benefit of the
Sellers.
(c) Non-Competition Agreement. In addition to the purchase and sale of
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the Stock as described above, at the Closing, each of the Sellers hereby agrees
to enter into Employment and Non-Competition Agreements with the Buyer in the
form annexed hereto as EXHIBIT 3(c) (as more fully described in Section 9(j)
below), and Buyer shall pay to each Seller $250,000 in cash at the Closing as
consideration for the non-compete provisions in such Agreement.
(d) Stock Options. At the Closing, each Seller shall be granted options
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to purchase 200,000 shares of common stock of the Buyer in accordance with the
schedule set forth in the Stock Option
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Agreements with the Buyer in the form annexed hereto as Exhibit 3(d).
(e) Option to Purchase Facilities. At the Closing, the Buyer and the
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Corporation shall grant to the Sellers an option to purchase the Corporation's
facilities located at ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ (the "Facilities"),
more particularly described in the Option Agreement with the Buyer in the form
annexed hereto as Exhibit 3(e) to this Agreement.
(f) Effective Date of the Sale. The parties hereto agree that the
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purchase and sale of the Stock shall be accounted for as if such transactions
had occurred prior to the opening of business on April 1, 1997 (the "Effective
Date"), regardless of when the Closing in fact occurs. The Buyer shall realize
any operating profit or loss from the operation of the business of the
Corporation after the Effective Date. Accordingly, the Sellers agree to
consult the Buyer on any material issues or contracts which relate to a period
of time beyond the Effective Date. Furthermore, the Sellers agree not to enter
into any new capital obligations or capital expenditures which relate to the
Corporation prior to the Closing.
SECTION 4. REPRESENTATIONS AND WARRANTIES OF THE SELLERS AND THE
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CORPORATION. The Sellers and the Corporation, jointly and severally, warrant
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and represent to the Buyer as follows (as used herein, "Sellers' best knowledge"
or "to the best knowledge of the Sellers" shall mean information actually known
by the Sellers without due inquiry):
(a) Ownership of Shares. The Sellers are the owners, beneficially and of
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record, of the Stock, which constitutes one hundred percent (100%) of the issued
and outstanding shares of capital stock of the Corporation. The Stock is the
sole voting stock of the Corporation and is duly authorized, validly issued,
fully paid and non-assessable. The Stock has not been pledged, mortgaged or
otherwise encumbered in any way and there is no lien, mortgage, charge, claim,
liability, security interest or encumbrance of any nature against the Stock.
There are no options, warrants, rights of subscription or conversion, calls,
commitments, agreements, arrangements, understandings, plans, contracts,
proxies, voting trusts, voting agreements or instruments of any kind or
character, oral or written, to which the Sellers or the Corporation is a party,
or by which the Sellers or the Corporation is bound, relating to the issuance,
voting or sale of the Stock or any authorized but unissued shares of capital
stock of the Corporation or of any securities representing the right to purchase
or otherwise receive any such shares of capital stock. The Sellers have, and at
the Closing shall have, good and marketable title to the Stock and full right to
transfer title to the Stock, subject to any restrictions imposed by state or
federal securities laws, free and clear of all liens, mortgages, charges,
liabilities, claims,
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security interests or encumbrances of every type whatsoever. The sale,
conveyance, transfer and delivery of the Stock by the Sellers to the Buyer
pursuant to this Agreement will transfer full legal and equitable right, title
and interest in the Stock to the Buyer, free and clear of all liens, mortgages,
charges, claims, liabilities, security interests and encumbrances of any nature
whatsoever.
(b) Capacity; Organization; Standing; Capitalization. The Sellers have
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full capacity to enter into and perform under this Agreement and all other
agreements and instruments to be entered into in connection with the
transactions contemplated hereby, and to consummate such transactions, and,
except as set forth in Schedule 4(b) of this Agreement, no other consent or
joinder of any other persons or corporations is required to consummate such
transactions. EFB has no subsidiaries other than GWB, a Guam corporation and a
wholly-owned subsidiary of EFB. Neither the Sellers nor the Corporation have any
interest in any entity other than the Corporation engaged, directly or
indirectly, in businesses competitive with those of the Corporation. This
Agreement has been, and each of the other agreements and instruments executed
hereunder (the "Other Agreements") will at the Closing, be duly executed and
delivered by the Sellers. This Agreement constitutes, and each of the Other
Agreements will constitute, the legal, valid and binding obligation of the
Sellers enforceable in accordance with its respective terms, except as such
enforceability may be limited by bankruptcy, insolvency, reorganization,
moratorium and similar laws affecting creditors' rights generally or by general
equitable principles. The Corporation is duly organized and validly existing
under the laws of the State of Oregon, has full corporate power and authority to
conduct its business as it is now being conducted and is duly qualified to do
business in each jurisdiction where the nature of the property owned or leased,
or the nature of the business conducted by the Corporation requires such
qualification. The Certificate of Incorporation and all amendments certified by
the Secretary of State of Oregon with respect to EFB and the appropriate
authorities of the territory of Guam with respect to GWB and the By-laws, as
amended to the date of this Agreement, certified by the Secretary of the
Corporation and the minutes and stock records of the Corporation delivered to
the Buyer are complete and correct. The Corporation has all necessary licenses
and authority to operate its business as now being conducted and as will be
conducted after the Closing assuming such business is conducted as now operated.
The authorized capital stock of EFB consists of 4,000 shares of voting common
stock, $100 par value, of which two (2) shares are issued and outstanding. All
of the issued and outstanding shares of EFB are owned by the Sellers and are
duly and validly issued, fully paid and non-assessable. The authorized capital
stock of GWB consists of 1,000 shares of voting common stock, $25 par value, of
which one hundred (100) shares are issuable and outstanding. All of the
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issued and outstanding shares of GWB are owned by EFB and are duly and validly
issued, fully paid and non-assessable.
(c) Legal Proceedings.
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(i) Except as set forth in SCHEDULE 4(c)(i) of this Agreement,
neither the Sellers in their capacity as stockholders and/or as officers or
directors of the Corporation, nor the Corporation is a party to any pending
litigation, arbitration or administrative proceeding or, to the best of Sellers'
knowledge, to any investigation, and no such litigation, arbitration or
administrative proceeding or investigation that might result in any material
adverse change in the financial condition, business or properties of the
Corporation or of the Sellers is threatened.
(ii) Except as disclosed in SCHEDULE 4(c)(ii) to this Agreement,
the Sellers and the Corporation have no knowledge of and have not received
notice of any complaints, claims or threats, plans or intentions to discontinue
commercial relations or transactions from any customer of the Corporation, any
purchaser of goods or services from the Corporation, any employee or independent
contractor significant to the conduct or operation of the Corporation or its
businesses or any party to any agreement to which the Corporation is a party.
(iii) To the best of Sellers' knowledge, except as disclosed in
SCHEDULE 4(c)(iii), there is no claim (whether based on statute, negligence,
breach of warranty, strict liability or any other theory) relating directly or
indirectly to any product manufactured or sold, or any services performed by the
Corporation.
(iv) To the best of Sellers' knowledge, the Corporation is under no
obligation with respect to the return of goods in the possession of customers.
(d) Encumbrances. Except as disclosed in SCHEDULE 4(d), there are no
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liens, mortgages, deeds of trust, claims, charges, security interests or other
encumbrances or liabilities of any type whatsoever to which any of the assets of
the Corporation are subject.
(e) Trade Names, etc. The Corporation owns the trade names, trademarks,
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service marks, assumed names, copyrights and registrations therefor, if any
(collectively "Trademarks") specified in SCHEDULE 4(e). The registered
Trademarks have been duly issued and have not been canceled, abandoned or
otherwise terminated. The Corporation is not in default under any of the
licenses or agreements relating to the Trademarks as listed in SCHEDULE 4(e) and
all of such licenses and agreements are in effect. The Corporation has not
granted, and will not grant prior to the Closing, licenses or other rights to
use such Trademarks. No other Trademarks are either owned or used by the
Corporation. To the best of Sellers' knowledge, the operation of the
Corporation's business does not infringe on the Trademarks of any third party.
No claim has been made that there is any such infringement. To the
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best of the Sellers' and the Corporation's knowledge, no Trademark of any other
person infringes the Trademarks of the Corporation.
(f) Patents, etc. The Corporation owns the inventions, letters patent,
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applications for letters patent and patent license rights, inventions,
processes, designs, formulas, trade secrets, Plant Variety Protection Act
("PVPA") Certificates, know-how and other industrial property rights
(collectively "Patents") necessary for the conduct of its business, specified as
belonging to it in SCHEDULE 4(f). The Patents have been duly issued and have
not been canceled, abandoned or otherwise terminated. The Corporation is not in
default under any of the licenses or agreements relating to the Patents as
listed in SCHEDULE 4(f) and all of such licenses and agreements are in effect.
The Corporation has not granted, and will not grant prior to the Closing,
licenses or other rights to use such Patents. No other Patents are owned or
used by the Corporation. To the best of Sellers' knowledge, the operation of the
Corporation's business does not infringe on the Patent rights of any third
party. No claim has been made that there is any such infringement. To the best
of the Sellers' and the Corporation's knowledge, no Patent of any person
infringes the Patents of the Corporation.
(g) Financial Statements.
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(i) The unaudited financial statements (the "Financials") of EFB and
GWB, respectively, as of and for the periods ended March 31, 1997, December 31,
1996 and December 31, 1995, together with the related notes and schedules, true,
correct and complete copies of which are attached hereto as EXHIBIT 4(g), (A)
are in accordance with the books of account and records of EFB and GWB; (B)
present fairly, and are true, correct and complete statements of the financial
condition and the results of operations of EFB and GWB as at and for the periods
therein specified; and (C) do not include or omit to state any fact which
renders the Financials misleading.
(ii) Except as and to the extent shown or provided for in the
Financials or the notes and schedules thereto or as disclosed in any of the
Schedules to this Agreement or such current liabilities as may have been
incurred since March 31, 1997 in the ordinary course of business, neither EFB
nor GWB has any liabilities or obligations (whether accrued, absolute,
contingent or otherwise) which might be or become a charge against the assets or
liabilities of EFB or GWB, respectively; as of March 31, 1997, there was no
asset used by EFB or GWB in its operations that has not been reflected in the
Financials, and, except as set forth in the Financials, no assets have been
acquired by either EFB or GWB since such date except in the ordinary course of
business.
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(iii) Except as disclosed in the Financials, there has been no
decrease in stockholders' equity as compared with the amount shown for such
stockholders' equity as at March 31, 1997, and no material adverse changes in
the financial position of EFB or GWB since March 31, 1997.
(iv) The Financials do not include any assets, liabilities, income or
expenses of any entity other than EFB and GWB. All transactions in the years
1995-1997 between the Corporation and any other entity in which any of the
Sellers is an officer, director or have an equity interest have been at prices
no less favorable to the Corporation than could have been obtained from any
independent third party.
(h) Absence of Certain Changes. Except as disclosed on SCHEDULE 4(h),
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since March 31, 1997, there has not been any material adverse change in the
condition (financial or otherwise), operations, assets, liabilities, earnings,
business, prospects or results of operations of the Corporation.
(i) Tax Matters.
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(i) The Corporation has timely filed all federal, state and local
income tax returns and has timely filed with all other appropriate governmental
agencies all sales, ad valorem, franchise and other tax, license, gross receipts
and other similar returns and reports required to be filed by the Corporation.
The Corporation has reported all taxable income and losses on those returns on
which such information is required to be reported, and paid or provided for the
payment of all taxes on said returns or taxes due pursuant to any assessment
received by it, including without limitation, any taxes required by law to be
withheld and/or paid in connection with any officer's or employee's compensation
or due pursuant to any assessment received by it. There are no agreements for
the extension of time for the assessment or payment of any amounts of tax. The
Sellers have made available to the Buyer for inspection copies of income tax
returns that are true and complete copies of the federal and applicable state,
local or other income tax returns filed by the Corporation for the taxable years
ended December 31, 1996, December 31, 1995, December 31, 1994 and any other open
tax periods. All tax liabilities of the Corporation arising through the end of
the taxable year ended December 31, 1996 have been paid. The Corporation shall
bear all expenses and responsibilities for the filing of federal and applicable
state, local or other income tax returns and reports of the Corporation for the
taxable year ended December 31, 1996. All tax liabilities of the Corporation
arising after December 31, 1996 have been paid or adequately disclosed and
properly reserved for on the books and records and financial statements of the
Corporation. No federal or applicable state, local or other tax return of the
Sellers or the Corporation for any period has been or is currently under audit
by the Internal Revenue Service or any state, local or other tax
7
authorities. No claim has been made by federal, state, local or other
authorities relating to any such returns or any audit. For purposes of this
Section 4(i), the word "timely" shall mean that such returns were filed within
the time prescribed by law for the filing thereof, including the time permitted
under any applicable extensions. The Sellers and the Corporation are not aware
of any facts which they believe would constitute the basis for the proposal of
any tax deficiencies for any unexamined year. All taxes which the Corporation is
required by law to withhold and collect have been duly withheld and collected,
and has been timely paid over to the proper authorities to the extent due and
payable.
(j) (i) Accounts Receivable. The accounts receivable of the Corporation
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reflected in the Financials as at March 31, 1997, and the accounts receivable
acquired by the Corporation since such date are valid subsisting claims for the
aggregate amounts thereof reflected in the Financials net of the reserves or
allowances for doubtful receivables reflected in the Financials or thereafter in
the Corporation's books and records uniformly maintained in accordance with the
financial statements, accounted for in accordance with generally accepted
accounting principles, and the Sellers know of no reason that would make such
accounts receivable, taken as a whole, not collectible.
(ii) Inventory. The inventory of the Corporation reflected in the
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Financials as at March 31, 1997, and the inventory acquired by the Corporation
since such date (a) has been purchased in the ordinary course of business, (b)
has been fully paid for unless otherwise reflected in the Financials, (c) is
marketable or adequate provision for obsolescence has been provided and (d)
Sellers know of no reason that would make such inventory, taken as a whole, not
marketable.
(k) Title and Condition of Properties. The Corporation does not own any
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real property, except as disclosed on SCHEDULE 4(k). Except as disclosed on
SCHEDULE 4(k), the Corporation has good and marketable title to all properties
and assets, real and personal, tangible and intangible, reflected in the
Financials and all properties acquired subsequent to March 31, 1997, which have
not been disposed of in the ordinary course of business since March 31, 1997,
which property is subject to no mortgage, lien, deed of trust, claim, security
interest, liability, conditional sales agreement, easement, right-of-way or any
other encumbrance.
SCHEDULE 4(k) contains an accurate list of all leases and other agreements
under which the Corporation is lessee of any personal property. Each of the
real property and personal property leases and agreements is in full force and
effect and constitutes the legal, valid and binding obligation of the parties
thereto.
All personal property, machinery and equipment which are material to the
business, operations or condition (financial or
8
otherwise) of the Corporation is in operating condition and, subject to routine
maintenance and ordinary wear and tear, have been maintained in accordance with
reasonable industry standards and is suitable for the purpose for which it is
used. Except as disclosed in SCHEDULE 4(k), neither the Sellers nor the
Corporation is aware of or have received notice of, the violation of any
applicable zoning regulation, ordinance or other law, order, regulation or
requirement in force on the date hereof relating to the Corporation's business
or its owned or leased real or personal properties, with which the Corporation
has not complied.
(l) Description of Material Contracts. To the best of Sellers' knowledge,
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SCHEDULE 4(l) contains a complete and correct list as of the date hereof of all
agreements, contracts and commitments, obligations and understandings which are
not set forth in any other Schedule delivered hereunder, of the following types,
written or, oral, to which the Corporation is a party, under which it has any
rights or by which it or any of its properties is bound, as of the date hereof:
(a) mortgages, indentures, security agreements and other agreements and
instruments relating to the borrowing of money or extension of credit; (b)
employment and consulting agreements with annual compensation in excess of
$40,000; (c) collective bargaining agreements; (d) bonus, profit-sharing,
compensation, stock option, pension, retirement, deferred compensation or other
plans, agreements, trusts, funds or arrangements for the benefit of employees
(whether or not legally binding); (e) sales agency, manufacturer's
representative or distributorship agreements; (f) agreements, orders or
commitments for the purchase by the Corporation of materials, supplies or
finished products exceeding $5,000 in the aggregate from any one person; (g)
agreements, orders or commitments for the sale by the Corporation of its
products or services exceeding $5,000; (h) agreements or commitments for capital
expenditures in excess of $5,000 for any single project (it being warranted that
the commitment for all undisclosed contracts for such agreements or commitments
does not exceed $5,000 in the aggregate); (i) agreements relating to research;
(j) agreements relating to PVPA Certificates or licenses or other rights to use
PVPA Certificates; (k) agreements relating to the payment of royalties; (l) seed
purchase contracts or other contracts with growers; (m) brokerage or finder's
agreements; (n) joint venture agreements; and (o) other agreements, contracts
and commitments which individually or in the aggregate for any one party involve
any expenditure by the Corporation of more than $5,000.
The Corporation has made available to the Buyer complete and correct
copies of all written agreements, contracts, commitments, obligations and
undertakings, together with all amendments thereto, listed on the Schedules
hereto, and such Schedules contain accurate descriptions of all oral agreements
listed on such Schedules. To the best of Sellers' knowledge, all such
agreements, contracts, commitments, obligations and undertakings are in full
force and
9
effect and, except as disclosed in SCHEDULE 4(l), all parties to, or otherwise
bound by, such agreements, contracts, commitments, obligations and undertakings
have performed all obligations required to be performed by them to date and the
Corporation is not in default and no event, occurrence, condition or act exists
which gives rise to (or which with notice or the lapse of time, or both, could
result in) a default or right of cancellation, acceleration or loss of
contractual benefits under, any such contract, agreement, commitment, obligation
or undertaking. There has been no threatened cancellations thereof, and there
are no outstanding disputes under any such contract, agreement, commitment,
obligation or undertaking. Except as set forth in SCHEDULE 4(l), no consent of
any party is required under any such contract, agreement, commitment, obligation
or undertaking which would make such agreements not binding and in full force
and effect as of the Closing Date. Any contracts, agreements, leases or
commitments held in the name of any of the Sellers and set forth in the
Schedules hereto shall be assigned to either the Buyer or the Corporation prior
to the Closing Date.
Except as otherwise set forth in SCHEDULE 4(l), to the best of Sellers'
knowledge, each contract, lease, instrument and commitment required to be
described in the Schedules hereto is, on the date hereof, and will be at the
Closing, in full force and effect and is and will constitute a valid and binding
obligation of the Corporation and the respective parties to such agreements, and
there is not, under any such contract, lease, instrument or commitment, any
existing default by the Corporation or such other parties or any event that,
with notice, lapse of time or both, would constitute a default by the
Corporation or such other parties in respect of which adequate steps have not
been taken to cure such default or to prevent a default from occurring or
continuing. Any contracts, leases or commitments held in the names of any of
the Sellers and listed on the Schedules shall be assigned either to the Buyer or
the Corporation prior to the Closing Date.
No agreement, contract, commitment, obligation or undertaking listed on
the Schedules hereto which the Corporation is a party or by which it or any of
its properties is bound, except as specifically set forth in SCHEDULE 4(l),
contains any provision which materially adversely affects or in the future may
(so far as the Sellers and the Corporation can now foresee) materially adversely
affect the condition, properties, assets, liabilities, business, operations or
prospects of the Corporation following the date hereof and upon the Closing
Date. Furthermore, to the best of the Sellers' knowledge, the material
suppliers, customers and clients of the Corporation will continue to supply and
purchase from the Corporation after the Closing.
(m) Default; Violations or Restrictions. The execution, delivery and
-----------------------------------
performance of this Agreement and of any agreement to be executed and delivered
by the Corporation in connection with the
10
transactions contemplated hereby and the consummation of any of the transactions
contemplated hereby or thereby will not (or with the giving of notice or the
lapse of time or both would) result in the breach of any term or provision of
the Certificate of Incorporation or by-laws of the Corporation or violate any
provision of or result in the breach of, modification of, acceleration of the
maturity of obligations under, or constitute a default, or give rise to any
right of termination, cancellation, acceleration or otherwise be in conflict
with or result in a loss of contractual benefits to the Corporation, under any
law, order, writ, injunction, decree, statute, rule or regulation of any court,
governmental agency or arbitration tribunal or any of the terms, conditions or
provisions of any contract, lease, note, bond, mortgage, deed of trust,
indenture, license, security agreement, agreement or other instrument or
obligation by which the Corporation or the Sellers is a party or by which either
of them may be bound, or require any consent, approval or notice under any law,
rule or decree or any such document or instrument; or result in the creation or
imposition of any lien, claim, restriction, charge or encumbrance upon the
Corporation's assets or interfere with or otherwise adversely affect the ability
to carry on the business of the Corporation after the Closing Date on
substantially the same basis as it is now conducted by the Corporation.
(n) Court Orders and Decrees. The Corporation has not received written or
------------------------
oral notice that there is outstanding, pending, or threatened any order, writ,
injunction or decree of any court, governmental agency or arbitration tribunal
against or affecting the Corporation, the Stock or any of the Corporation's
assets. To the best of Sellers' knowledge, the Corporation is in material
compliance with all applicable Federal, state, county, municipal (or of any
subdivision thereof) laws, regulations and administrative orders in force at any
applicable time to which the Corporation may be subject.
(o) Books and Records. The books and records of the Corporation are, in
-----------------
all material respects, complete and correct and have been maintained in
accordance with good business practice. True and complete copies of the
Certificate of Incorporation and By-laws of the Corporation and all amendments
thereto and true and complete copies of all minutes, resolutions, stock
certificates and stock transfer records of the Corporation are contained in the
minute books and stock transfer books that have been delivered to the Buyer for
inspection and will be delivered to the Buyer at the Closing. The minute books,
stock certificate books, stock transfer records and such other books and records
as may be requested by the Buyer, as exhibited to the Buyer and its
representatives, are complete and correct in all material respects.
11
(p) Pension and Welfare Plans.
-------------------------
(i) Pension and Profit Sharing Plans. Except as disclosed in SCHEDULE
--------------------------------
4(p), the Corporation does not have in effect any pension, profit sharing or
other employee benefit plan described under Section 3(2)(A) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"). All benefits
payable under any terminated employee pension benefit plan (as such term is
defined in Section 3(2)(A) of ERISA) previously maintained by the Corporation or
to which it has previously contributed have been paid in full and/or that the
Corporation does not have any material unfunded liability in respect of any such
plan to the Pension Benefit Guaranty Corporation or to the participants in such
plan or to the beneficiaries of such participants. Each such terminated plan
was terminated substantially in accordance with the applicable provisions of law
or any agreement or contract relating to any such plan and has been terminated
without liability to the Corporation.
(ii) Welfare Plans. For each plan, fund, or arrangement of the
-------------
Corporation which is an employee welfare benefit plan, whether or not currently
maintained (within the meaning of ERISA Section 3(1)) (a "Welfare Plan"), the
following is true:
(A) each such Welfare Plan intended to meet the requirements for
tax-favored treatment under Subchapter B of Chapter 1 of the Code meets such
requirements;
(B) there is no voluntary employees' beneficiary association
(within the meaning of Section 501(c)(9) of the Code) maintained with respect to
any such Welfare Plan;
(C) there is no disqualified benefit (as such term is defined in
Code Section 4976(b)) which would subject the Corporation or the Buyer to a tax
under Code Section 4976(a);
(D) each such Welfare Plan which is a group health plan complies
and has complied with the applicable requirements of Code Section 4980B, and
would comply with Sections 9801 through 9806 if such provisions were now in
effect, Title XXII of the Public Health Service Act, and the applicable
provisions of the Social Security Act and is not and has not been a
nonconforming group health plan under Section 5000(c) of the Code;
(E) each such Welfare Plan (including any such plan covering
former employees of the Corporation) may be amended or terminated by the
Corporation or the Buyer, on or at anytime after, the Closing Date and after any
advance notice to participants or similar measures required by law which are
non-waivable under the Welfare Plan;
(F) no such Welfare Plan provides for continuing benefits or
coverage for any participant (including past, present or future retirees) or
such participant's beneficiary after termination of employment except as
required by the Consolidated Omnibus Reconciliation Act of 1985 ("COBRA") or any
other state or Federal law; and
12
(G) no claims have been made after September 30, 1995, and no
other events have occurred that might form the basis of a claim which has
substantially increased or based on customary insurance industry practice might
substantially increase, the premiums or other charges of the Corporation under
any Welfare Plan.
(q) Insurance. SCHEDULE 4(q) contains a correct and complete description
---------
of all policies of insurance by or on behalf of the Corporation in which the
Corporation is named as an insured party, beneficiary or loss payable payee.
The Corporation has at all times prior to the date hereof maintained and will at
all times prior to the Closing Date maintain insurance coverage with respect to
its properties, including, without limitation, products liability, property
damage, workers' compensation and general liability insurance, in respect of
liabilities and risks prudently insured against by comparable businesses as may
be required pursuant to any franchise, license, agreement or permit to which the
Corporation is a party. The policies described in SCHEDULE 4(q) are outstanding
and in force as of the date hereof, cover risks normally insured against and are
in amounts normally carried by companies similarly situated and there is no
default notice of cancellation or non-renewal with respect to any material
provision contained in any such policy.
SCHEDULE 4(q) contains a correct and complete description of all such
policies of insurance held by or on behalf of the Corporation, premiums paid for
such insurance during the last three years and all outstanding insurance claims
in excess of $5,000 made by or against the Corporation for damage to or loss of
property or income which have been referred to insurers or which the Sellers
believe to be covered by commercial insurance. SCHEDULE 4(q) shall also contain
a list of all general comprehensive liability policies carried by the
Corporation for the past three years, including excess liability policies and
any agreements, arrangements or commitments under which the Corporation
indemnifies any other person or is required to carry insurance for the benefit
of any other person.
(r) Right's of Third Parties. Other than as disclosed in SCHEDULE 4(r)
------------------------
attached, or specifically provided for in this Agreement, the Corporation has
not entered into any leases, licenses, easements or other agreements, recorded
or unrecorded, granting rights to third parties in any real or personal property
of the Corporation, and no person or other corporation has any right to
possession, use or occupancy of any of the property of the Corporation.
13
(s) Powers of Attorney. Except as disclosed in SCHEDULE 4(s), there are
------------------
no persons, firms, associations, corporations or business organizations holding
general or special powers of attorney from the Corporation.
(t) Labor Matters. The Corporation is not a party to any collective
-------------
bargaining agreement with any labor union or association. There are no
discussions, negotiations, demands or proposals that are pending or have been
conducted or made with or by any labor union or association, and there are not
pending or threatened any labor disputes, strikes or work stoppages that may
have a material adverse effect upon the continued business or operation of the
Corporation. To the best of Sellers' knowledge, the Corporation (i) is in
compliance with all federal and state laws respecting employment and employment
practices, terms and conditions of employment and wages and hours, and (ii) is
not engaged in any unfair labor practices.
(u) Relationships with Vendors and Customers. The Corporation and the
----------------------------------------
Sellers have no knowledge of any present or future conditions or state of facts
or circumstances which would materially adversely affect the Corporation after
the Closing Date. The Corporation's relationships with its customers, clients
and vendors are satisfactory, and the Corporation and the Sellers have no
knowledge of any facts or circumstances which might materially alter, negate,
impair or in any way materially adversely affect the continuity of any such
relationships. The Corporation and the Sellers have no knowledge of any
material outstanding claims of any of its customers or clients presently
outstanding, pending or threatened against the Corporation. The Corporation and
the Sellers have no knowledge of any present or future condition or state of
facts or circumstances which would prevent the business of the Corporation from
being carried on by the Buyer after the Closing Date in essentially the same
manner as it is presently being carried on.
(v) Approvals and Authorizations. The Corporation has obtained all
----------------------------
necessary consents, approvals and authorizations in connection with the
transactions contemplated hereby which are required by law or otherwise in order
for the Corporation to continue all of its present business following the
Closing Date.
(w) Compensation Plans. SCHEDULE 4(w) contains a correct and complete
------------------
description of all compensation plans and arrangements; bonus and incentive
plans and arrangements; deferred compensation plans and arrangements; stock
purchase and stock option plans and arrangements; hospitalization and other
life, health or disability insurance or reimbursement programs; holiday, sick
leave, severance, vacation, tuition reimbursement, personal loan and product
purchase discount policies and arrangements, policy manuals and any other plans
or arrangements providing for benefits for employees of the Corporation.
14
(x) Governmental Licenses. SCHEDULE 4(x) contains a correct and complete
---------------------
list of all material governmental and administrative consents, permits,
appointments, approvals, licenses, certificates and franchises which are (i)
necessary for the operation of the Corporation, and (ii) required in connection
with Sellers' execution, delivery or performance of this Agreement, all of which
have been obtained by the Corporation and are in full force and effect.
(y) Brokers. No agent, broker, investment banker, person, or firm acting
-------
on behalf of any of the Sellers, the Corporation or any firm or corporation
affiliated with any of them, or under its authority, is or will be entitled to a
financial advisory fee, brokerage commission, finder's fee or other like payment
in connection with the transactions contemplated hereby.
(z) Compliance With Laws.
--------------------
(i) The operations and activities of the Corporation have previously
and continue to comply in all material respects with all applicable Federal,
state and local laws, statutes, codes, ordinances, rules, regulations, permits,
judgments, orders, writs, awards, decrees or injunctions (collectively, the
"Laws"), as in effect on or before the date of this Agreement, including,
without limitation, all Laws relating to seed labeling and all rules and
regulations of the Occupational Safety and Health Administration. To the best
of Sellers' knowledge, neither the ownership of the Corporation nor the conduct
of the business of the Corporation as presently conducted conflicts with the
rights of any other person, firm or corporation or violates, or with or without
the giving of notice or the passage of time, or both, will violate, conflict
with or result in a default, right to accelerate or loss of rights under, any
terms or provisions of its Certificate of Incorporation or By-laws as presently
in effect, or any lien, encumbrance, mortgage, deed of trust, lease, license,
agreement, understanding, or Laws to which the Corporation is a party or by
which it may be bound or affected. The Corporation has received no notice of
communication from any third party asserting a failure to comply with any Laws,
nor has the Corporation received any notice that any authority or third party
intends to seek enforcement against the Corporation to compel compliance with
any such Laws.
(ii) There are no known claims or potential claims which may exist
against the Corporation, for, with respect to, or as direct or indirect result
of, the presence on or under, or the escape, seepage, leakage, spillage,
discharge, or emission discharging, from the real property of the Corporation of
any "Hazardous Material," including, without limitation, any losses,
liabilities, damages, injuries, costs, expenses, reasonable fees of counsel or
claims asserted or arising under the Comprehensive Environmental Response,
Compensation and Liabilities Act ("CERCLA"), any so-called "Super Fund" or
"Super Lien" law or any other
15
applicable federal, state or local statute, law, ordinance, code, rule,
regulation, order or decree now or at any time hereafter in effect, regulating,
relating to or imposing liability or standards of conduct concerning any
Hazardous Material.
(iii) Neither the Corporation nor the Sellers, nor to the best knowledge
and belief of the Sellers, any officer, employee or agent of the Corporation
acting on its behalf, nor any other person acting on its behalf, has, directly
or indirectly, within the past three (3) years given or agreed to give any gift
or similar benefit to any customer, supplier, governmental employee or other
person who is or may be in a position to help or hinder the Corporation (or
assist the Corporation in connection with any actual or proposed transaction)
which (i) might subject the Corporation to any damage or penalty in any civil,
criminal or governmental litigation or proceeding, (ii) if not given in the past
might have had an adverse effect on the assets, business or operation of the
Corporation, or (iii) if not continued in the future, might adversely affect the
assets, the business or the operations or prospects of the Corporation, or which
might subject the Corporation to suit or penalty in any private or governmental
litigation or proceeding.
(aa) Guarantees. Except as disclosed in SCHEDULE 4(aa), the Sellers have
----------
not personally guaranteed any of the obligations of the business of the
Corporation.
(bb) Benefits. All accrued holiday, vacation, sick or other compensation
--------
or benefits to which employees of the Corporation are entitled to receive from
the Corporation is set forth on SCHEDULE 4(bb). The Corporation has an employee
manual which sets forth the Corporation's policies with respect to its
employees, and there are no policies other than as set forth in SCHEDULE 4(bb).
(cc) Schedules. The Sellers and the Corporation have delivered to the
---------
Buyer complete and correct schedules (the "Schedules"), in form and substance
reasonably acceptable to the Buyer, as of the date of this Agreement, specifying
with respect to the business, properties, assets and obligations of the
Corporation each and every item in the categories listed as Schedules hereunder,
and complete and correct copies of the documents and other material from which
such Schedules were compiled.
(dd) Accuracy. No representation, warranty, covenant or statement by the
--------
Sellers or the Corporation in this Agreement, including the Schedules and
Exhibits attached hereto and the certificates furnished or to be furnished to
the Buyer pursuant hereto, contains or will contain any untrue statement of a
material fact, or omits or will omit to state a material fact required to be
stated herein or therein or necessary to make the statements contained herein or
therein in light of the circumstances under which they were made, not false or
materially misleading.
16
There are no stockholders agreements, preemptive rights or other
agreements, arrangements, groups, commitments or understandings, oral or
written, that have not been disclosed to the Buyer, relating to the voting,
issuance, acquisition or disposition of shares of the Corporation or the conduct
or management of the Corporation by its Board of Directors.
SECTION 5. REPRESENTATIONS AND WARRANTIES OF THE BUYER. The Buyer
-------------------------------------------
warrants and represents to the Sellers as follows:
(a) Legal Proceedings. Neither the Buyer nor any of its' executive
-----------------
officers or directors are a party to or affected by any pending litigation,
arbitration or any governmental proceeding or investigation that would in any
manner affect its entering into this Agreement or performing the transactions
contemplated hereby or that might result in any material adverse change in the
financial condition, business or properties of the Buyer, and to the best of its
knowledge no such litigation, arbitration, proceeding or investigation is
threatened. Neither the Buyer nor any of its' executive officers or directors
have any knowledge of and have not received notice of any material complaints,
claims or threats, relating to any other Stock Purchase Agreement executed by
the Buyer.
(b) Capacity. The Buyer has full right, power and capacity to execute,
--------
deliver and perform its obligations under this Agreement (including, but not
limited to, its obligation to enter into the Agreements in the form annexed
hereto as Exhibit 3(c) and its obligation to grant the options described in
Section 3(d) hereof) and the other documents required to be executed by the
Buyer in connection herewith and to consummate the transactions contemplated
hereby. The execution and delivery of this Agreement does not, and the
consummation of the transactions contemplated by this Agreement will not,
constitute a breach of any term or provision of the Certificate of Incorporation
or By-laws of the Buyer or constitute a default under any material law, rule,
regulation, indenture, instrument, mortgage, deed of trust, or other agreement
or instrument to which the Buyer is a party or by which it is bound.
(c) Organization. The Buyer is a corporation duly organized, validly
------------
existing and in good standing under the laws of the State of Nevada, and the
Buyer has corporate power and authority to carry on its business as now
conducted and to own, lease or operate the properties and assets now used by it
in connection therewith.
(d) Consents and Approvals. No governmental license, permit or
----------------------
authorization, and no registration or filing with any court, governmental
authority or regulatory agency, is required in connection with the Buyer's
execution, delivery or performance of this Agreement. The Sellers shall
execute, deliver and perform
17
their obligations under this Agreement, and no consent or other approval of any
other party is required to be obtained by the Buyer in connection with the
transactions contemplated hereby.
(e) Binding Obligation. This Agreement has been duly executed and
------------------
delivered by the Buyer and constitutes the legal, valid and binding obligation
of the Buyer, enforceable against the Buyer in accordance with its terms, except
to the extent that such enforceability may be limited by general principles of
equity or bankruptcy, insolvency and other similar laws affecting the
enforcement of creditors' rights generally. All action of the Board of
Directors of the Buyer and all other corporate action necessary to authorize the
execution, delivery and performance of this Agreement and the consummation of
the transactions contemplated hereby has been duly and validly taken.
(f) Brokers; Finders. No agent, broker, investment banker, person or firm
----------------
acting on behalf of the Buyer or any firm or corporation affiliated with the
Buyer or under its authority is or will be entitled to any brokers' or finders'
fee or any other commission or similar fee in connection with any of the
transactions contemplated hereby.
(g) Accuracy. No representation, warranty, covenant or statement by the
--------
Buyer in this Agreement, including the Schedules and Exhibits attached hereto
and the certificates furnished or to be furnished to the Sellers pursuant
hereto, contains or will contain any untrue statement of a material fact, or
omits or will omit to state a material fact required to be stated herein or
therein or necessary to make the statements contained herein or therein in light
of the circumstances under which they were made, not false or materially
misleading.
SECTION 6. SURVIVAL OF REPRESENTATIONS AND WARRANTIES; INDEMNIFICATION
-----------------------------------------------------------
(a) Survival of Representations and Warranties. All representations and
------------------------------------------
warranties made by the Sellers or the Buyer in this Agreement, including without
limitation all representations and warranties made in any Exhibit or Schedule
hereto or certificate delivered hereunder, shall survive the Closing until and
through the later of (i) the first anniversary of the Closing Date or (ii) until
such time as the Sellers are no longer employed by the Corporation or the Buyer,
but in no event beyond the second anniversary of the Closing Date (the "Survival
Date"); provided, however, that all representations and warranties made by the
Sellers in Sections 4(i), 4(p) and 4(z) hereof shall survive the Closing until
and through one (1) year after the expiration of the applicable statute of
limitations (the "Extended Survival Date").
(b) Indemnity by Sellers. The Sellers hereby agree to indemnify, defend
--------------------
and hold harmless the Buyer from and against all
18
liabilities, losses, costs or damages whatsoever (including expenses and
reasonable fees of legal counsel) ("Claims") arising out of or relating to
claims made prior to the Survival Date or the Extended Survival Date, if
applicable, in the event that it is determined that such Claims arise out of or
from or are based upon the inaccuracy in any material respect of any
representation or warranty contained in Section 4 made by the Sellers or the
non-performance by the Sellers in any material respect of any covenant,
agreement or obligation to be performed by the Sellers under this Agreement. [A
break-out of specific obligations for indemnification and the relationship with
the set-asides to be negotiated, as described in Section 3(b) hereof, is yet to
be determined.]
(c) Indemnification by Buyer. The Buyer hereby agrees to indemnify,
------------------------
defend and hold harmless the Sellers from and against all Claims arising out of
or from or based upon (i) the inaccuracy in any material respect of any
representation or warranty contained in Section 5 by the Buyer; (ii) the non-
performance by the Buyer in any material respect of any covenant, agreement or
obligation to be performed by the Buyer under this Agreement; and (iii) any
liabilities arising out of the operation of the business of the Corporation by
Buyer after the Closing Date.
(d) Defense of Claims. Whenever any claim shall arise for indemnification
-----------------
hereunder, the party entitled to indemnification (the "Indemnitee") shall notify
the indemnifying party (the "Indemnitor") in writing within 30 days after the
Indemnitee has actual knowledge that it is entitled to indemnification of such
claim constituting the basis for such claim (the "Notice of Claim"). The Notice
of Claim shall specify all facts known to the Indemnitee giving rise to such
indemnification claim and the amount or an estimate of the amount of the
liability arising therefrom.
If the facts giving rise to any such indemnification shall involve any
actual, threatened or possible claim or demand by any person against the
Indemnitee, the Indemnitor shall be entitled (without prejudice to the right of
the Indemnitee to participate at its expense through co-counsel of its own
choosing) to contest or defend such claim at his expense and through counsel of
his own choosing if he gives written notice of his intention to do so to the
Indemnitee within 10 days after receipt of the Notice of Claim; provided that
Indemnitor diligently prosecutes or defends such claim.
The Indemnitee shall not settle any claim which would give rise to
liability on the part of the Indemnitor under the indemnity contained in this
Section without the written consent of the Indemnitor, which consent shall not
unreasonably be withheld. If a firm offer is made to settle a claim or
litigation defended by the Indemnitee and the Indemnitor refuses to accept such
offer within 20 days after receipt of written notice from the Indemnitee
19
of the terms of such offer, then, in such event, the Indemnitee shall continue
to contest or defend such claim and shall be indemnified pursuant to the terms
hereof. Provided, however, that in the event the Indemnitor refuses to accept
such offer to settle a claim as described above and the Indemnitee continues to
contest or defend such claim, the indemnification provided for herein,
determined in accordance with SCHEDULE 6(b) hereof, shall be deemed to include
the value of management's time spent in connection with the defense of such
claim. If a firm offer is made to settle a claim or litigation and the
Indemnitor notifies the Indemnitee in writing that the Indemnitor desires to
accept and agree to such settlement, but the Indemnitee elects not to accept or
agree to it, the Indemnitee may continue to contest or defend such claim or
litigation and, in such event, the total maximum liability of the Indemnitor to
indemnify or otherwise reimburse the Indemnitee hereunder with respect to such
claim or litigation shall be limited to and shall not exceed the amount of such
settlement offer, plus reasonable out-of-pocket costs and expenses (including
reasonable attorneys' fees and disbursements) to the date of notice that the
Indemnitor desires to accept such settlement.
Notwithstanding any provision of this Agreement to the contrary, no
claim for indemnification pursuant to this Section 6, by the Indemnitee shall be
asserted or claimed except to the extent any Claim exceeds, in the aggregate,
the sum of $50,000.
Notwithstanding any provision of this Agreement to the contrary,
Sellers' maximum liability for indemnification shall not exceed the Purchase
Price.
SECTION 7. COVENANTS OF THE SELLERS. The Sellers hereby covenant and
------------------------
agree:
(a) Further Assurances. The Sellers hereby agree that, from time to time
------------------
at the reasonable request of the Buyer, and without further consideration, they
shall execute and deliver such additional instruments and take such other action
as the Buyer may reasonably require to convey, assign, transfer and deliver the
Stock and otherwise to carry out the terms of this Agreement.
(b) Access to Corporation; Confidentiality.
--------------------------------------
(i) Subsequent to the date hereof and prior to the Closing Date, the
Sellers will continue to give to the Buyer, their counsel, accountants, and
other representatives, full and free access to all properties, books, contracts,
commitments and records of the Corporation so that the Buyer may have full
opportunity to make such investigation as it shall desire.
(ii) From and after the date of this Agreement until the Closing or
the termination of this Agreement, the Sellers and the Corporation and their
representatives will maintain the
20
confidentiality of all documents and information of a confidential nature
disclosed to the other party in the course of their negotiations and the Buyer's
due diligence review and will in no event use any confidential information for
any purpose other than for the evaluation of the transactions contemplated
herein and the financing of this transaction and in the event of termination of
this Agreement will destroy all copies of documentation which each party may
have delivered to the other party and will not use any confidential information
from the Buyer for their own benefit.
(c) Conduct of Business Pending Closing. From the date of this Agreement
-----------------------------------
to the Closing Date, except as expressly disclosed in the Schedules to this
Agreement, the Corporation shall conduct its operations as engaged in at the
date of this Agreement according to its ordinary course of business, shall
maintain its records and books of account in a manner that fairly and currently
reflects its financial condition and results of operations and shall not engage
in any transactions other than as contemplated by this Agreement.
(d) Closing Documents. The Sellers shall execute and deliver all
-----------------
instruments and documents required as a condition precedent to the Closing under
Section 9 hereof and take all action required to carry out the terms of this
Agreement and to consummate the transactions contemplated hereby.
SECTION 8. COVENANTS OF THE BUYER. The Buyer hereby covenants and
----------------------
warrants as follows:
(a) Closing Documents. The Buyer shall execute and deliver all
-----------------
instruments and documents required as a condition precedent to Closing under
Section 10 hereof and take all action required to carry out the terms of this
Agreement and to consummate the transactions contemplated hereby.
(b) Noninterference. The Buyer shall not take or omit to take any action
---------------
that (i) if taken or omitted on or before the date of this Agreement, would make
untrue any of the representations and warranties contained in Section 5 of this
Agreement, or (ii) would interfere with the Buyer's ability to perform or would
prevent performance of any of its obligations under this Agreement or any of the
other agreements or instruments provided for herein.
(c) Confidentiality. From and after the date of this Agreement until the
---------------
Closing or the termination of this Agreement, the Buyer and its employees and
representatives will maintain the confidentiality of all documents and
information of a confidential nature disclosed to the other party in the course
of their negotiations and the Buyer's due diligence review and will in no event
use any confidential information for any purpose other than for the evaluation
of the transactions contemplated herein and the financing of this transaction
and in the event of termination of
21
this Agreement will destroy all copies of documentation which each party may
have delivered to the other party and will not use any confidential information
from the Sellers or the Corporation for its own benefit.
(d) Investment. The Buyer is acquiring the Stock for investment, not as a
----------
nominee or agent, and not with the view to, or for resale in connection with any
distribution thereof.
SECTION 9. CONDITIONS PRECEDENT TO THE BUYER'S OBLIGATIONS. The
-----------------------------------------------
obligations of the Buyer under this Agreement are subject to the following
conditions which may be waived by the Buyer:
(a) There shall not have been any breach of the representations,
warranties, covenants and agreements of the Sellers or the Corporation contained
in this Agreement or the Schedules and Exhibits hereto, subject to the terms and
conditions of Section 6(a) of this Agreement, and all such representations and
warranties shall be true at all times on and before the Closing as if given at
such times, except to the extent that any such representation or warranty is
expressly stated to be true as of some other time.
(b) The Sellers and the Corporation shall have performed and complied in
all material respects with all covenants, agreements and conditions required by
this Agreement to be performed or complied with by them prior to or at the
Closing Date. All documents and instruments required in connection with this
Agreement shall be reasonably satisfactory in form and substance to Snow ▇▇▇▇▇▇
▇▇▇▇▇▇ P.C., counsel for the Buyer.
(c) The Buyer shall have received certificates dated the Closing Date and
signed by the Sellers and the Corporation, certifying that there has been no
material adverse change in the condition (financial or otherwise), business,
assets, liabilities or earnings of the Corporation.
(d) The Buyer shall have received certificates dated the Closing Date and
signed by the Sellers and the Corporation, certifying that the conditions
specified in subsections (a), (b) and (c) above have been fulfilled.
(e) The Corporation and the Sellers shall have obtained and delivered to
the Buyer any required consents or approvals of any third parties whose consent
is required to the transactions contemplated hereunder.
(f) The Buyer shall have received originals or certified copies,
reasonably satisfactory in form and substance to the Buyer, of all such
corporate documents of the Corporation as the Buyer shall reasonably require,
including without limitation the following:
22
(i) the Certificates of Incorporation of EFB and GWB and all
amendments thereto and restatements thereof certified as of a recent date by the
Secretary of State of Oregon with respect to EFB and appropriate authorities of
the territory of Guam with respect to GWB;
(ii) the By-laws of EFB and GWB and all amendments thereto and
restatements thereof certified as of the Closing Date by an officer of EFB and
GWB, respectively;
(iii) certificate of existence of the Secretary of State of Oregon,
certifying as of a recent date that EFB is in existence under the laws of that
State and evidence from the territory of Guam with respect to GWB as to its good
standing under the laws of Guam;
(iv) copies of the minutes and resolutions of the Board of Directors
and stockholders of EFB and GWB showing the authorization and approval by such
Boards of the execution and delivery by EFB and GWB to the Buyer of this
Agreement and of the agreements and instruments provided for herein and of the
performance of the obligations of EFB and GWB under this Agreement and such
other instruments and agreements, certified as of a recent date by the Secretary
or another officer of EFB and GWB; and
(v) a certificate of incumbency identifying the officers and directors
of EFB and GWB immediately before Closing.
(g) The Buyer shall have received a written opinion of counsel for the
Sellers and the Corporation dated as of the Closing Date, in the form of
EXHIBIT 9(g) hereto.
(h) The Corporation and the Sellers shall have executed and delivered to
the Buyer an assignment or consent to all of the leases described in SCHEDULE
4(k).
(i) The Sellers shall have executed and delivered to the Buyer the
assignment or endorsement in favor of the Buyer of coverage under the insurance
policies maintained by the Sellers covering the Corporation described to in
SCHEDULE 4(q) to this Agreement.
(j) The Buyer shall have received from the Sellers pursuant to Section
3(c) above, an agreement in the form of EXHIBIT 3(c) attached hereto, whereby
the Sellers agree, for the period ending the later of (i) March 31, 2002, or
(ii) three years from the date the Seller ceases to be an employee of the
Corporation, not to compete with the Buyer in selling any products to customers
of the Corporation as existing on the date each of the Sellers ceases to be an
employee of the Corporation or the Buyer. Such agreement shall be reasonably
satisfactory in form and substance to counsel for the Buyer.
23
(k) The Corporation shall have arranged for the Buyer, at its option, to
assume the Corporation's Bank Line of Credit.
SECTION 10. CONDITIONS PRECEDENT TO THE SELLERS' OBLIGATIONS. The
------------------------------------------------
obligations of the Sellers under this Agreement are subject to the following
conditions which may be waived by the Sellers:
(a) There shall not have been any material breach of the representations,
warranties, covenants and agreements of the Buyer contained in this Agreement,
and all such representations and warranties shall be true at all times at and
before the Closing, except to the extent that any such representation or
warranty is expressly stated to be true as of some other time.
(b) The Buyer shall have performed and complied in all material respects
with all agreements and conditions required by this Agreement to be performed or
complied with by it. All documents and instruments required in connection with
this Agreement shall be reasonably satisfactory in form and substance to ▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP, counsel for the Sellers.
(c) The Sellers shall have received a certificate dated the Closing Date
and signed by the Buyer, certifying that the conditions specified in Paragraphs
10(a) and 10(b) above have been fulfilled.
(d) The Sellers shall have received a written opinion of counsel for the
Buyer, dated as of the Closing Date, in the form of EXHIBIT 10(D) hereto.
(e) The Sellers shall have received originals or certified copies,
reasonably satisfactory in form and substance to the Sellers, of the following
corporate documents of the Buyer:
(i) a certificate of existence of the Secretary of State of Nevada
certifying as of a recent date that the Buyer is a corporation in good standing
under the laws of that State;
(ii) copies of the minutes and resolutions of the Board of Directors
of the Buyer showing the authorization and approval by such Board of the
execution and delivery by the Buyer to the Sellers of this Agreement and the
agreements and instruments provided for herein and of the performance of the
obligations of the Buyer under this Agreement and such other instruments and
agreements, certified as of a recent date by the Secretary or another officer of
the Buyer; and
(iii) a certificate of incumbency identifying the officers and
directors of the Buyer immediately before Closing.
(f) The Sellers shall have been granted options to purchase common stock
of the Buyer as described in Section 3(d) hereof.
24
(g) The Sellers shall have been granted an option to purchase the
Facilities as described in Section 3(e) hereof.
SECTION 11. CONDITIONS PRECEDENT TO OBLIGATIONS OF THE SELLERS AND THE
----------------------------------------------------------
BUYER. The obligations of both the Sellers and the Buyer to complete this
-----
transaction shall be subject to the fulfillment at or prior to the Closing Date
of the following conditions:
(a) Due Diligence. The Sellers and the Buyer shall each have been
-------------
afforded the opportunity to complete their due diligence and conduct a review of
the business and prospects of the other, and shall be reasonably satisfied as to
such business and prospects.
(b) No Injunctions. No action or proceeding shall have been instituted or
--------------
threatened by any public authority or private person prior to the Closing before
any court or administrative body to restrain, enjoin or otherwise prevent the
consummation of this transaction or to recover any damages or obtain other
relief as a result of this transaction.
(c) Consents. Any consent to the transaction considered by the Sellers or
--------
the Buyer to be necessary or advisable under any agreement or contract, the
withholding of which might have, in the judgment of the Sellers or the Buyer, a
material adverse effect on the financial condition of the other party, shall
have been obtained.
(d) Corporate Proceedings. All corporate and other proceedings in
---------------------
connection with the transactions contemplated by this Agreement, and all
documents and instruments incident thereto, shall be reasonably satisfactory in
substance and form to the Sellers and the Buyer and their counsel, and the
Sellers and the Buyer and their counsel shall have received all certificates,
documents and instruments, or copies thereof, certified if requested, as may be
reasonably requested.
SECTION 12. TERMINATION. This Agreement may be terminated at any time
-----------
prior to the Closing Date:
(a) By mutual written consent of the Sellers, the Buyer and the
Corporation properly authorized by their respective Boards of Directors.
(b) By the Buyer if since March 31, 1997, there has been a material
adverse change in the condition (financial or otherwise), business, assets,
liabilities or earnings of the Corporation.
SECTION 13. THE BUYER'S OBLIGATIONS AT CLOSING.
----------------------------------
25
At the Closing, in addition to fulfilling the conditions to closing
appearing in this Agreement, the Buyer shall deliver to the Sellers (i)
$9,600,000 pursuant to Section 3(a) hereof, (ii) $600,000 pursuant to Section
3(c) hereof, (iii) the stock options pursuant to Section 3(d) hereof, (iv) the
option for the purchase of the Facilities pursuant to Section 3(e) hereof and
(v) all other documents and agreements required to be delivered by it hereunder.
SECTION 14. THE SELLERS' OBLIGATIONS AT CLOSING. At the Closing, in
-----------------------------------
addition to fulfilling the conditions to closing appearing herein, the Sellers
shall deliver to the Buyer:
(a) stock certificate(s) representing the Stock free of all liens, claims
and encumbrances properly endorsed, or with stock powers executed in blank, and
with any and all transfer, stamp or similar taxes upon the transfer of the
shares to the Buyer paid in full by the Sellers ;
(b) all original minute books, stock books, stock transfer ledger,
canceled stock certificates, corporate seals and financial records and
statements of the Corporation.
SECTION 15. SUBSEQUENT EVENTS. The Buyer will receive, at its own
-----------------
expense, audited financial statements, of the Corporation ("Audited Financial
Statements"), certified by KPMG Peat Marwick LLP, independent certified public
accountants, for all periods required of the Buyer under the rules and
regulations of the Securities and Exchange Commission (the "Rules"). The
Corporation and the Sellers hereby agree to provide the Buyer and their
accountants with full and free access to the books and records of the
Corporation and to cooperate fully with all such representatives of the Buyer so
that the Audited Financial Statements may be prepared on a timely basis.
SECTION 16. PARTIES IN INTEREST. This Agreement shall be binding upon
-------------------
and shall inure to the benefit of the parties and their successors and assigns.
Nothing herein expressed or implied is intended or shall be construed to confer
upon or to give any person, firm, or corporation other than the parties hereto
any rights or remedies under or by reason hereof.
SECTION 17. ENTIRE AGREEMENT. This Agreement, including the Schedules
----------------
and Exhibits hereto, contains the entire agreement and understanding among the
parties hereto with respect to the subject matter hereof and shall not be
modified or affected by any offer, proposal, statement or representation, oral
or written, made by or for any party in connection with the negotiation of the
terms hereof. All references herein to this Agreement shall specifically
include, incorporate and refer to the Schedules and Exhibits attached hereto
which are hereby made a part hereof. There are no representations, promises,
warranties, covenants, undertakings or assurances (express or implied) other
than those expressly set
26
forth or provided for herein and in the other documents referred to herein. This
Agreement may not be modified or amended orally, but only by a writing signed by
all the parties hereto.
SECTION 18. GOVERNING LAW; CONSENT TO JURISDICTION. This Agreement and
--------------------------------------
all rights and obligations hereunder shall be governed by, and construed in
accordance with, the laws of the State of Nevada, applicable to agreements made
and to be performed wholly within said State, without regard to the conflicts of
laws principles of such State.
SECTION 19. EXPENSES. The Buyer and the Sellers shall each pay their
--------
own expenses incidental to the preparation of this Agreement, the carrying out
of the provisions of this Agreement and the consummation of the transactions
contemplated hereby.
SECTION 20. ARBITRATION. Notwithstanding any other provision in this
-----------
Agreement to the contrary, controversies between Buyer and Sellers shall be
resolved, to the extent possible, by informal meetings and discussions in good
faith between the parties. Such meetings and discussions shall, upon
commencement, occur daily and for at least two hours each day.
If a dispute between the parties cannot be resolved by informal meetings
and discussions within five days after commencement thereof, either party to
this Agreement may elect to exercise its right to require mediation of the
dispute. During mediation, the parties agree to negotiate in good faith as to
the matter submitted to mediation. In such event, the parties shall either: (i)
appoint a single mediator; or (ii) if the parties cannot agree on a single
mediator, each appoint one mediator, and the two mediators shall appoint a third
mediator. No mediator shall be an employee, officer, Board member, consultant,
supplier or customer, or otherwise affiliated with a party to this Agreement and
shall be reasonably qualified to act as a mediator with respect to the
negotiation of agreements similar to this Agreement. Each party shall share
equally in the out-of-pocket costs for mediation; provided that the mediators
shall be empowered to require one party to pay more than one-half of the
expenses if the mediators determine that such party is not negotiating in good
faith in the mediation process. The location of the mediation and specific
procedures relating to the mediation shall be determined by the mediator(s), and
each party agrees to comply with all decisions, directions, instructions and
procedures made or established in good faith by the mediator(s). Any mediated
resolution between the parties shall be as consistent as is practical with the
existing agreements between the parties and shall not serve to modify, amend or
otherwise change their respective rights and obligations under such existing
agreements.
If the parties are unable to resolve a controversy within fifteen (15)
days after commencement thereof, the dispute shall be
27
settled by binding arbitration, and a corresponding judgment may be entered in a
court of competent jurisdiction. Arbitration of any dispute may be initiated by
one party by sending a written demand for arbitration to the other party. This
demand will specify the matter in dispute and request the appointment of an
arbitration panel. The arbitration panel will consist of one arbitrator named by
Buyer, one arbitrator named by Sellers and a third arbitrator named by the two
arbitrators so chosen. The arbitration hearing will be conducted in accordance
with the procedural rules set forth in the commercial arbitration rules of the
American Arbitration Association. The situs of the arbitration will be Portland,
Oregon. The arbitrators shall not be empowered to award punitive or exemplary
damages to either party.
SECTION 21. SEVERABILITY. If any part of this Agreement is held to be
------------
unenforceable or invalid under, or in conflict with, the applicable law of any
jurisdiction, the unenforceable, invalid or conflicting part shall, to the
extent permitted by applicable law, be narrowed or replaced, to the extent
possible, with a judicial construction in such jurisdiction that effectuates the
intent of the parties regarding this Agreement and such unenforceable, invalid
or conflicting part. To the extent permitted by applicable law, notwithstanding
the unenforceability, invalidity or conflict with applicable law of any part of
this Agreement, the remaining parts shall be valid, enforceable and binding on
the parties.
SECTION 22. NOTICES.
-------
(a) All notices, requests, consents and demands by the parties hereunder
shall be delivered by hand, by recognized national overnight courier or by
deposit in the United States mail, postage prepaid, by registered or certified
mail, return receipt requested, addressed to the party to be notified at the
addresses set forth below:
(i) (a) if to the Corporation to:
▇.▇. ▇▇▇▇▇▇▇▇▇▇ & Sons
▇.▇. ▇▇▇ ▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇▇▇
Telecopier No.:
(b) if to the Sellers to:
▇▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇
Telecopier No.:
▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇.▇. ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇
Telecopier No.:
28
with a copy to:
▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP
2300 First Interstate Tower
▇▇▇▇ ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
Telecopier No.: (▇▇▇)▇▇▇-▇▇▇▇
(ii) if to the Buyer to:
AgriBioTech, Inc.
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇-▇▇
▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, President
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
Snow ▇▇▇▇▇▇ ▇▇▇▇▇▇ P.C.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
(b) Notices given by mail shall be deemed effective on the earlier of the
date shown on the proof of receipt of such mail or, unless the recipient proves
that the notice was received later or not received, three (3) days after the
date of mailing thereof. Other notices shall be deemed given on the date of
receipt. Any party hereto may change the address specified herein by written
notice to the other parties hereto.
SECTION 23. NON-WAIVERS. Neither any failure nor any delay on the part
-----------
of any party to this Agreement in exercising any right, power or privilege
hereunder shall operate as a waiver of any rights of such party, unless such
waiver is made by a writing executed by the party and delivered to the other
parties hereto; nor shall a single or partial exercise of any right preclude any
other or further exercise of any other right, power or privilege accorded to any
party hereto.
SECTION 24. ASSIGNMENT. This Agreement may not be assigned by any party
----------
without the prior consent of the other parties.
SECTION 25. DISCLOSURE. From and after the date of this Agreement
----------
until the Closing or the termination of this Agreement, the Sellers will not
(i) solicit or encourage inquiries or proposals with respect to, or furnish any
information relating to,
29
or participate in any negotiations or discussions concerning the sale of the
Stock or the sale of all or a substantial portion of the assets of the
Corporation with anyone other than the Buyer; or (ii) discuss the sale of the
Stock with anyone other than the Buyer and other officers, directors and
shareholders of the Corporation and the Sellers' advisors and (iii) unless
otherwise required by law or the requirements of any applicable stock exchange,
make any public announcement without prior approval of the language of such
announcement by the Buyer.
SECTION 26. MISCELLANEOUS.
-------------
(a) Further Assurances: Each of the parties hereto shall use its best
------------------
efforts to take or cause to be taken, and to cooperate with the other party
hereto to the extent necessary with respect to, all action, and to do, or cause
to be done, consistent with applicable law, all things necessary, proper or
advisable to consummate and make effective the transactions contemplated by this
Agreement. Without limiting the generality of the foregoing, the Sellers shall
cooperate with and provide assistance to the Buyer in connection with the
preparation and filing of all federal, state, local and foreign income tax
returns which relate to the Corporation and relate to pre-Closing periods but
which are not required to be filed until after the Closing, and shall also
cooperate with and provide assistance to the Buyer or the Corporation with
respect to any audit of any tax returns filed prior to the Closing.
(b) Headings. The headings contained herein are for reference purposes
--------
only and shall not affect the meaning or interpretation of this Agreement.
(c) Counterparts. This Agreement may be executed and delivered in
------------
multiple counterpart copies, each of which shall be an original and all of which
shall constitute one and the same agreement.
30
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement on the date first above written.
/s/▇▇▇▇ ▇▇▇▇▇▇▇▇
--------------------------------------
▇▇▇▇ ▇▇▇▇▇▇▇▇, Seller
(One Share)
/s/▇▇▇▇ ▇▇▇▇
--------------------------------------
▇▇▇▇ ▇▇▇▇, Seller
(One Share)
▇.▇. ▇▇▇▇▇▇▇▇▇▇ & SONS
By: /s/▇▇▇▇ ▇▇▇▇
----------------------------------
▇▇▇▇ ▇▇▇▇, President
▇.▇. ▇▇▇▇▇▇▇▇▇▇'▇ INC.
By: /s/▇▇▇▇ ▇▇▇▇
----------------------------------
▇▇▇▇ ▇▇▇▇, President
AGRIBIOTECH, INC.
By: /s/▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
----------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
President
31