Exhibit 2
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ASSET PURCHASE AGREEMENT
AMONG
SHEMIN NURSERIES, INC.
SHEMIN ACQUISITION CORPORATION
AND
IMPERIAL NURSERIES, INC.
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Dated:
January 5, 2001
TABLE OF CONTENTS
Page No.
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SECTION 1. BASIC TRANSACTION........................................-1-
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(a) PURCHASE AND SALE OF ASSETS..............................-1-
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(b) ASSUMPTION OF LIABILITIES................................-3-
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(c) EXCLUDED LIABILITIES.....................................-4-
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(d) NONASSIGNABLE CONTRACTS..................................-5-
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(e) PURCHASE PRICE...........................................-6-
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(f) DETERMINATION OF CERTAIN PURCHASE PRICE ADJUSTMENTS......-6-
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(g) RECEIVABLES..............................................-8-
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SECTION 2. CLOSING OF THE TRANSACTION...............................-9-
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(a) THE CLOSING..............................................-9-
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(b) DELIVERIES AT THE CLOSING................................-9-
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SECTION 3. CONDITIONS TO OBLIGATION TO CLOSE........................-9-
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(a) CONDITIONS TO OBLIGATION OF BUYER........................-9-
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(b) CONDITIONS TO OBLIGATION OF SELLER......................-11-
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SECTION 4. REPRESENTATIONS AND WARRANTIES OF SELLER................-13-
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(a) ORGANIZATION OF SELLER..................................-13-
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(b) AUTHORIZATION OF TRANSACTION............................-13-
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(c) NONCONTRAVENTION........................................-13-
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(d) BROKERS' FEES...........................................-13-
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(e) SUBSIDIARIES, INVESTMENTS...............................-13-
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(f) FINANCIAL STATEMENTS....................................-13-
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(g) SUBSEQUENT EVENTS.......................................-14-
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(h) UNDISCLOSED LIABILITIES.................................-15-
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(i) LEGAL COMPLIANCE........................................-16-
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(j) TAX MATTERS.............................................-16-
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(k) TITLE TO PERSONAL PROPERTY..............................-17-
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(l) REAL PROPERTY...........................................-17-
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(m) INTELLECTUAL PROPERTY...................................-18-
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(n) ACQUIRED ASSETS.........................................-18-
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(o) CONTRACTS...............................................-19-
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(p) INSURANCE...............................................-20-
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(q) LITIGATION..............................................-20-
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ii
(r) EMPLOYEES...............................................-21-
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(s) EMPLOYEE BENEFITS.......................................-21-
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(t) ENVIRONMENT, HEALTH AND SAFETY..........................-22-
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(u) AFFILIATE TRANSACTIONS..................................-23-
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(v) WARRANTY................................................-24-
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(w) INVESTMENT..............................................-24-
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(x) LIMITATIONS ON REPRESENTATIONS AND WARRANTIES...........-24-
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(y) CLOSING DATE. .........................................-24-
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SECTION 5. REPRESENTATIONS AND WARRANTIES OF PARENT AND BUYER......-24-
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(a) ORGANIZATION OF PARENT AND BUYER........................-24-
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(b) AUTHORIZATION OF TRANSACTION............................-24-
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(c) NONCONTRAVENTION........................................-24-
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(d) BROKERS' FEES...........................................-25-
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(e) CAPITALIZATION..........................................-25-
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(f) FINANCIAL STATEMENTS....................................-25-
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(g) SUBSEQUENT EVENTS.......................................-26-
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(h) FINANCING...............................................-27-
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(i) REAL PROPERTY...........................................-27-
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(j) LIMITATIONS ON REPRESENTATIONS AND WARRANTIES...........-27-
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(k) UNDISCLOSED LIABILITIES.................................-27-
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(l) LEGAL COMPLIANCE........................................-28-
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(m) CLOSING DATE............................................-28-
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SECTION 6. PRE-CLOSING COVENANTS...................................-28-
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(a) GENERAL.................................................-28-
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(b) NOTICES AND CONSENTS....................................-28-
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(c) OPERATION OF THE BUSINESS...............................-28-
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(d) PRESERVATION OF BUSINESS................................-28-
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(e) FULL ACCESS.............................................-29-
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(f) NOTICE OF DEVELOPMENTS..................................-29-
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(g) EXCLUSIVITY.............................................-29-
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SECTION 7. ADDITIONAL AGREEMENTS...................................-29-
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(a) SURVIVAL................................................-29-
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(b) INDEMNIFICATION. ......................................-30-
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(c) PRESS RELEASE AND ANNOUNCEMENTS.........................-33-
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(d) EXPENSES................................................-33-
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(e) CERTAIN TAXES...........................................-33-
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(f) FURTHER ASSURANCES......................................-34-
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(g) TRANSITION ASSISTANCE...................................-34-
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(h) CONFIDENTIALITY.........................................-34-
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(i) NONCOMPETITION AND NONSOLICITATION......................-35-
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(j) ACCESS TO BOOKS AND RECORDS.............................-36-
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(k) LEGENDS; TRANSFER OF PARENT COMMON STOCK................-36-
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(l) EMPLOYEE AND RELATED MATTERS............................-39-
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SECTION 8. TERMINATION.............................................-39-
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SECTION 9. DEFINITIONS.............................................-40-
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SECTION 10. MISCELLANEOUS..........................................-42-
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(a) NO THIRD PARTY BENEFICIARIES............................-42-
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(b) ENTIRE AGREEMENT........................................-42-
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(c) SUCCESSORS AND ASSIGNS..................................-42-
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(d) COUNTERPARTS............................................-42-
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(e) HEADINGS................................................-42-
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(f) NOTICES.................................................-42-
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(g) GOVERNING LAW...........................................-44-
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(h) AMENDMENTS AND WAIVERS..................................-44-
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(i) INCORPORATION OF EXHIBITS AND SCHEDULES.................-44-
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(j) CONSTRUCTION............................................-44-
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(k) REMEDIES................................................-44-
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(l) BULK SALES..............................................-44-
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(m) INSURANCE MATTERS.......................................-45-
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iv
DEFINITIONS
Page references for definitions of defined terms defined in the body of the
agreement rather than in the definition section.
Page
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"Acquired Assets"............................................................1
"Acquisition Proposal"......................................................29
"Agreement"..................................................................1
"Assumed Leases".............................................................2
"Assumed Liabilities"........................................................3
"Auditor"....................................................................8
"Beneficial Rights"..........................................................5
"Bulk Transfer Laws"........................................................44
"Business Employees"........................................................37
"Buyer Group"...............................................................30
"Buyer"......................................................................1
"Buyer's 401(k) Plan".......................................................39
"Buyer's Employee Benefit Plans"............................................38
"Cash Purchase Price"........................................................6
"Claim".....................................................................32
"Closing Balance Sheet"......................................................7
"Closing Date"...............................................................9
"Closing Working Capital"....................................................7
"Closing"....................................................................9
"Commingled Receivables".....................................................8
"Commitment Letter".........................................................10
"Estimated Closing Balance Sheet"............................................6
"Estimated Working Capital"..................................................6
"Excluded Assets"............................................................2
"Excluded Liabilities".......................................................4
"Financial Statements"......................................................13
"▇▇▇▇▇▇▇"...................................................................10
"HSR Act"...................................................................10
"Improvements"..............................................................18
"Inactive Employees"........................................................37
"Indebtedness"...............................................................4
"Indemnified Party".........................................................32
"Indemnifying Party"........................................................32
"Joinder Agreement".........................................................11
v
"Layoff Employees"..........................................................38
"Losses"....................................................................30
"Most Recent Balance Sheet".................................................14
"Noncompete Period".........................................................35
"Owned Real Property"........................................................2
"Parent Common Stock"........................................................6
"Parent Financial Statements"...............................................25
"Parent Most Recent Balance Sheet"..........................................25
"Parent".....................................................................1
"Permitted Encumbrances"....................................................17
"Plans."....................................................................22
"Purchase Price".............................................................6
"Retention Agreements"......................................................11
"Securities Act"............................................................24
"Seller Group"..............................................................31
"Seller".....................................................................1
"Seller's 401(k) Plan"......................................................39
"Severance Payments"........................................................11
"Stockholders Agreement"....................................................11
"Supply Agreement"..........................................................10
"Target Number Methodologies"................................................7
"Target Number"..............................................................6
"Transfer Date".............................................................39
"Transferred Employees".....................................................37
"Transition Agreement"......................................................11
vi
ASSET PURCHASE AGREEMENT
THIS AGREEMENT (this "AGREEMENT") is made and entered into as of
January 5, 2001, among Shemin Nurseries, Inc., a Delaware corporation ("BUYER"),
Shemin Acquisition Corporation, a Delaware Corporation ("PARENT"), and Imperial
Nurseries, Inc., a Delaware corporation ("SELLER"). Buyer, Parent and Seller are
referred to individually herein as a "PARTY" and collectively herein as the
"PARTIES." Capitalized terms used herein and not otherwise defined are defined
in Section 9 below.
Subject to the terms and conditions set forth in this Agreement,
Seller desires to sell to Buyer, and Buyer desires to acquire from Seller
certain assets and properties, operating as a going concern, of Seller's
Business (as defined herein).
NOW, THEREFORE, in consideration of the mutual promises herein made,
and in consideration of the representations, warranties and covenants herein
contained, the Parties agree as follows:
SECTION 1. BASIC TRANSACTION.
(a) PURCHASE AND SALE OF ASSETS. On and subject to the terms and
conditions of this Agreement, at the Closing (as hereinafter defined), Buyer
agrees to purchase from Seller, and Seller agrees to sell, transfer, convey and
deliver free and clear of all liens and encumbrances (other than Permitted
Encumbrances) to Buyer, all right, title and interest in and to all of the
following assets (other than Excluded Assets) of Seller, in each case to the
extent relating to the Business (collectively, the "ACQUIRED ASSETS"):
(i) up to $100,000 of cash and cash equivalents;
(ii) all accounts receivable (whether current or noncurrent) and
related finance charges resulting from sales of the Business;
(iii) all raw materials and supplies, finished goods and other items
of inventory of the Business;
(iv) all machinery, equipment, furniture, fixtures, vehicles, spare
and replacement parts and other tangible personal property used in the
Business, including, without limitation, the fixed assets set forth on
SCHEDULE 1(a)(iv) attached hereto;
(v) all software set forth on SCHEDULE 1(a)(v) attached hereto,
licenses and sublicenses granted and obtained with respect thereto, and
rights thereunder;
(vi) all agreements, contracts, purchase orders and other similar
arrangements (A) set forth on SCHEDULE 4(o) attached hereto and denoted by
a pound sign (#), and (B) not set forth on SCHEDULE 4(o) due solely to the
specific dollar threshold contained in Section 4(o) below, including those
capital leases set forth as items 7 through 29 on SCHEDULE 4(o)
(collectively, the "ASSUMED LEASES");
(vii) all prepayments and deposits of the Business;
(viii)all claims, refunds, rights of recovery, rights of set off and
rights of recoupment of any kind including all rights pursuant to any
warranty, representation or guarantee made by suppliers, contractors or
other third parties in connection with products or services used in the
Business;
(ix) to the extent transferable, all franchises, approvals, permits,
licenses, orders, registrations, certificates, variances and similar
rights obtained from governments and governmental agencies of the
Business;
(x) copies of all books, records, ledgers and files, documents,
correspondence, lists, drawings, specifications, advertising and
promotional materials, studies, reports, customer and supplier data, lists
and information, trade secrets, confidential information, know-how and
inventions and other printed or written materials of the Business,
provided that originals with respect thereto may be retained by Seller;
(xi) all real property set forth on SCHEDULE 4(l) (including all
buildings, fixtures, signage and improvements erected thereon and
appurtenances thereto and all of Seller's rights to easements, rights of
way and rights of use with respect to real property adjacent or
appurtenant thereto) (the "OWNED REAL PROPERTY");
(xii) all goodwill associated with the Business together with the
right to represent to third parties that Buyer is the successor to the
Business; and
(xiii)all property reflected on the Most Recent Balance Sheet other
than assets disposed of in the ordinary course of business since the date
of the Most Recent Balance Sheet.
All assets of Seller not constituting Acquired Assets shall be
retained by Seller and shall be considered "EXCLUDED ASSETS" for purposes of
this Agreement. Except as identified as an Acquired Asset, the Excluded Assets
shall include, but are not limited to, the following:
(A) all assets (including, without limitation, real and
personal property, inventory and accounts receivable) of the Seller
to the extent relating to its container growing operations;
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(B) the name of "Imperial Nurseries" and all of the Seller's
other Intellectual Property (other than the software listed on
SCHEDULE 1(a)(v) or otherwise included as Acquired Assets);
(C) all of Seller's assets located in Chalfont, Pennsylvania;
(D) all of the Seller's assets located at its headquarters in
Granby, Connecticut;
(E) qualifications to conduct business as a foreign
corporation and arrangements with registered agents relating to
foreign qualifications;
(F) any of the rights of Seller under this Agreement; and
(G) except as provided in Section 7(l), all assets and rights
related to the Plans.
(b) ASSUMPTION OF LIABILITIES. On and subject to the terms and conditions
of this Agreement, Buyer agrees to assume and pay, perform and discharge when
due, and shall indemnify Seller and its Affiliates against and hold them
harmless from, the obligations in respect of the following liabilities, in each
case to the extent relating to the Business (collectively, the "ASSUMED
LIABILITIES"):
(i) those liabilities set forth on the Closing Balance Sheet;
(ii) the liabilities of Seller to be assumed by Buyer pursuant to
Section 1(d);
(iii) the liabilities of Seller under each agreement, contract,
purchase order or other similar arrangements which is an Acquired Asset
pursuant to Section 1(a)(vi), other than liabilities with respect to
existing breaches by Seller of growing contracts and leases of vehicles
and equipment;
(iv) any liability of Seller arising out of or resulting from any
violation or alleged violation by Seller of any applicable law or in
connection with or arising out of the sale by Seller of any product or the
provision of any service;
(v) any obligation, violation or liability (contingent or otherwise
and including liability for response costs, personal injury, property
damage or natural resource damage) arising under Environmental, Health and
Safety Laws with respect to the Owned Real Property, including those
liabilities set forth on SCHEDULE 4(t) attached hereto (whether accruing
to the Seller or the Buyer in the first instance), except any such
liabilities arising in
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connection with offsite disposal of any materials by Seller or former
facilities owned or operated by Seller;
(vi) any liability arising out of, or resulting from, the sale of
products or services by Seller prior to the Closing Date; and
(vii) any liability arising out of, resulting from or relating to
infringement, misappropriation or other conflict arising after the Closing
in connection with the Intellectual Property that is an Acquired Asset.
(c) EXCLUDED LIABILITIES. Notwithstanding anything to the contrary in this
Agreement or any of the Schedules attached hereto, Buyer will not assume or be
liable for, and Seller shall retain and pay, perform and discharge when due, and
Seller shall indemnify Buyer and its Affiliates against and hold them harmless
from, any obligation or liability of Seller of any kind or nature, known or
unknown, contingent or otherwise, except those expressly assumed by Buyer in
Section 1(b) above (collectively, the "EXCLUDED LIABILITIES"), and Seller shall
retain and pay, perform, including, without limitation, the following Excluded
Liabilities:
(i) all indebtedness or other obligation of the Seller or any of its
Affiliates for borrowed money, whether current, short-term or long-term,
secured or unsecured, (ii) all indebtedness of the Seller or any of its
Affiliates for the deferred purchase price for purchases of property which
is not evidenced by trade accounts payables, (iii) all lease obligations
of the Seller or any of its Affiliates under leases which are capital
leases in accordance GAAP (other than the Assumed Leases), and (iv) any
liability of the Seller under deferred compensation plans, severance or
bonus plans or similar arrangements made payable as a result of the
transactions contemplated herein, other than the Severance Payments or
pursuant to the Retention Agreements (collectively, "INDEBTEDNESS");
(ii) any liability of Seller or any of its Affiliates for Taxes,
including Seller's pro rata portion of any real and personal property
taxes with respect to its ownership and use of any of the Acquired Assets
prior to the Closing Date;
(iii) except as provided in Section 7(l), any liability or
obligation under or with respect to any Plan or any other employee benefit
plan, program, policy or arrangement presently or formerly maintained or
contributed to by any member of the controlled group of companies (as such
term is defined in Section 414 of the Code) of which Seller is or was a
member, or with respect to which Seller or such controlled group member
has any liability;
(iv) any liability or obligation with respect to any former employee
of Seller or any employee of Seller who does not become a Transferred
Employee in accordance with Section 7(l);
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(v) any intercompany and intracompany payables;
(vi) any liability of the Seller or any of its Affiliates arising
out of, resulting from or relating to infringement, misappropriation or
other conflict in connection with the Seller's Intellectual Property or
the Intellectual Property of any third party, whether arising before or
after the Closing, except for any liability of arising after the Closing
in connection with any Intellectual Property that is an Acquired Asset;
(vii) any liability relating to the Seller's proposed horticultural
sales and service center that was to be located in Somerset, New Jersey
(other than the reimbursement of Seller referred to in Section 6(h));
(viii) any liability relating to any Excluded Asset;
(ix) any liability to any officer, director, employee, former
employee, consultant or agent of Seller, including workers' compensation,
union contracts, medical or sick pay liabilities, pension or profit
sharing liabilities or severance liabilities or any other employee benefit
offered by Seller incurred or arising prior to the Closing Date, other
than pursuant to the Retention Agreements and the Severance Agreements;
(x) any obligation, violation or liability (contingent or otherwise
and including liability for response costs, personal injury, property
damage or natural resource damage) arising under Environmental, Health and
Safety Laws (whether accruing to the Seller or the Buyer in the first
instance) in connection with offsite disposal of any materials by Seller
or former facilities owned or operated by Seller; and
(xi) all liabilities set forth in SCHEDULE 1(c)(xi).
(d) NONASSIGNABLE CONTRACTS. Notwithstanding anything set forth herein to
the contrary, no contracts, properties, rights or other assets of the Seller
shall be deemed sold, transferred or assigned to Buyer pursuant to this
Agreement if the attempted sale, transfer or assignment thereof to Buyer without
the consent or approval of another party or governmental entity would be
ineffective or would constitute a breach of contract or a violation of any law
or regulation or would in any other way materially and adversely affect the
rights of Seller (or Buyer as transferee or assignee) and such consent or
approval is not obtained on or prior to the Closing Date. In such case, to the
extent possible, (i) the beneficial interest in or to such contracts, properties
or other assets (collectively, the "BENEFICIAL RIGHTS") shall in any event pass
as of the Closing Date to Buyer under this Agreement, and (ii) pending such
consent or approval, Buyer shall assume or discharge the liabilities of the
Seller under such Beneficial Rights as agent for the Seller, and Seller shall
act as Buyer's agent in receipt of any benefits, rights or interests received
from the Beneficial Rights. Buyer and Seller shall use reasonable best efforts
(and bear their respective costs) without payment
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of any material fees, penalties or other amounts to any third party to obtain or
secure any and all consents or approvals that may be necessary to effect the
legal and valid sale, transfer or assignment of contracts, properties, rights or
other assets underlying the Beneficial Rights. Buyer and Seller shall make or
complete such transfers as soon as reasonably practicable and cooperate with
each other in any other reasonable arrangement designed to provide for Buyer the
Beneficial Rights including enforcement at the cost and for the account of Buyer
of any and all rights of Seller against the other party thereto, and to provide
for the discharge by Buyer of any liability under such contracts, properties or
other assets.
(e) PURCHASE PRICE. The purchase price (the "PURCHASE PRICE") for the
Acquired Assets shall be equal to $22,000,000 (the "CASH PURCHASE PRICE"), as
adjusted pursuant to Section 1(f) below plus (ii) an aggregate of 20,570.15
shares of common stock, par value $.01 per share, of Parent ("PARENT COMMON
STOCK").
(f) DETERMINATION OF CERTAIN PURCHASE PRICE ADJUSTMENTS.
(i) Within five (5) business days prior to the Closing Date, Seller
shall in good faith prepare and deliver to Buyer an estimate of the
Closing Balance Sheet (as defined in Section 1(f)(ii) below) (the
"ESTIMATED CLOSING BALANCE SHEET") based on Seller's (with respect to the
Business) books and records and other information then available, in an
attempt to determine Estimated Working Capital. For purposes hereof,
"ESTIMATED WORKING CAPITAL" means the book value of the total current
assets of the Business which are included as Acquired Assets MINUS the
total current liabilities of the Business which are included as Assumed
Liabilities, as determined from the Estimated Closing Balance Sheet;
provided that (a) the current portion of any Indebtedness, (b) any accrued
and unpaid income taxes, (c) any credits, deposits, advances or
prepayments in respect of income taxes, (d) any payments made by Seller to
its employees in connection with the cancellation of their options to
purchase shares of common stock of ▇▇▇▇▇▇▇, (e) the liability of the Buyer
to make the Severance Payments, (f) the liability of the Buyer to pay the
retention bonuses pursuant to the Retention Agreements, (g) the liability
of the Seller to pay bonuses to its employees relating to the fiscal year
ended December 2, 2000, in connection with their employment with the
Seller, (h) the effect of any leases of the Seller primarily related to
the Business (whether or not they are considered capital leases under
GAAP) and (i) the liability of Buyer to make the reimbursement payment of
out-of-pocket costs of the Seller referred to in Section 6(h), shall each
be excluded from the calculation of Estimated Working Capital.
Notwithstanding the foregoing, if Buyer in good faith disagrees with any
amounts of the Estimated Working Capital, such disputed amounts shall be
determined based on the amounts for the Business set forth on the Seller's
unconsolidated balance sheets as of the month-ending immediately prior to
the Closing Date. At the Closing, the Purchase Price will be either (A)
reduced by the amount $8,484,000 (the "TARGET NUMBER") exceeds the
Estimated Working Capital or (B) increased by the amount Estimated Working
Capital exceeds the Target Number. SCHEDULE 1(f)(i) attached hereto sets
forth the calculation of the Target Number together with all
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judgements, accounting methods, policies, practices, procedures,
classifications or estimation methodology used in calculating the Target
Number (the "TARGET NUMBER METHODOLOGIES").
(ii) As promptly as practicable after the Closing Date, Seller's
accountants will prepare an unconsolidated balance sheet of Seller, with
respect to the Business, as of the close of business on the Closing Date
(the "CLOSING BALANCE SHEET") for the purpose of establishing the Closing
Working Capital. For purposes hereof, "CLOSING WORKING CAPITAL" means the
book value of the total current assets of the Business which are included
as Acquired Assets MINUS the total current liabilities of the Business
which are included as Assumed Liabilities, as determined from the Closing
Balance Sheet; provided that (a) the current portion of any Indebtedness,
(b) any accrued and unpaid income taxes, (c) any credits, deposits,
advances or prepayments in respect of income taxes, (d) any payments made
by Seller to its employees in connection with the cancellation of their
options to purchase shares of common stock of ▇▇▇▇▇▇▇, (e) the liability
of the Buyer to make the Severance Payments, (f) the liability of the
Buyer to pay the retention bonuses pursuant to the Retention Agreements,
(g) the liability of the Seller to pay bonuses to its employees relating
to the fiscal year ended December 2, 2000, in connection with their
employment with the Seller, (h) the effect of any leases of the Seller
primarily related to the Business (whether or not they are considered
capital leases under GAAP) and (i) the liability of Buyer to make the
reimbursement payment of out-of-pocket costs of the Seller referred to in
Section 6(h), shall each be excluded from the calculation of Closing
Working Capital. The Closing Balance Sheet and the Estimated Closing
Balance Sheet shall (1) reflect only Acquired Assets and Assumed
Liabilities as at the close of business on the Closing Date, (2) be
prepared in accordance with GAAP (regardless of whether GAAP was applied
in prior periods) subject to the deviations from GAAP set forth in the
Target Number Methodologies, (3) be prepared using the Target Number
Methodologies, (4) not include any changes in assets or liabilities as a
result of purchase accounting adjustments arising from or resulting as a
consequence of the transactions contemplated hereby, and (5) reflect all
items and adjustments regardless of materiality. Within sixty (60) days
after the Closing Date, Seller shall deliver to Buyer the Closing Balance
Sheet.
(iii) If the Closing Working Capital exceeds the Estimated Working
Capital, Buyer shall, subject to Section 7(b)(vi) hereof, within three (3)
business days pay to Seller the amount of such excess. If the Closing
Working Capital is less than the Estimated Working Capital, Seller shall
within three (3) business days pay to Buyer the amount of such shortfall.
All amounts owed pursuant to this Section 1(f)(iii) shall include
interest, from the Closing Date to the date of payment, at the Applicable
Rate (compounded semiannually), calculated on the basis of a 365-day year.
(iv) If Buyer disagrees with any item on the Closing Balance Sheet,
Buyer shall notify Seller in writing of such disagreement within fifteen
(15) business days after Buyer's receipt thereof (such notice setting
forth the basis for such disagreement in reasonable detail)
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and Buyer and Seller shall thereafter negotiate in good faith to resolve
any such disagreements; PROVIDED, HOWEVER, that Seller shall within three
(3) business days pay to Buyer the amount determined pursuant to Section
1(f)(iii) above which is not subject to dispute, if any. If Buyer and
Seller are unable to resolve any such disagreements within thirty (30)
days, Buyer and Seller shall select an Auditor (as defined in Section
1(f)(v) below) to resolve the disagreements in accordance with Section
1(f)(v) below.
(v) The "AUDITOR" shall be Deloitte & Touche LLP. Buyer and Seller
shall use their best efforts to cause the Auditor to resolve all
disagreements over individual line items as soon as practicable. The
resolution of such disagreements by the Auditor shall be final and binding
on Buyer and Seller. The fees and expenses of the Auditor shall be shared
equally by Buyer and Seller.
(vi) Buyer and Seller agree that the Target Number is based on the
average working capital of the Business for the twelve months ended
October 28, 2000 (with cash balances deemed to equal $100,000).
Notwithstanding anything else in this Section 1(f) to the contrary, to the
extent that a disagreement relates to an error in the Closing Balance
Sheet and a similar error exists in the calculation of the Target Number
based on the average working capital of the Business for the twelve months
ended October 28, 2000, then if the Closing Working Capital is reduced or
increased as a result of such error, the applicable component(s) of the
Target Number for the applicable month(s), and thus the Target Number,
shall also be reduced or increased, as appropriate, to reflect such error,
and as a result thereof, only the difference between the Target Number (as
so adjusted) and the Closing Working Capital (as so adjusted) shall be the
purchase price adjustment contemplated by this Section 1(f). If Buyer and
Seller are unable to resolve any disagreement arising under this Section
1(f)(vi), such disagreement shall be resolved by the Auditor in accordance
with Section 1(f)(v) above.
(g) RECEIVABLES. In the event a payment is made to Seller or any of
Seller's Affiliates in respect of any accounts receivable constituting Acquired
Assets transferred to Buyer arising out of any transaction occurring on or
before the Closing Date, Seller or such Affiliate shall promptly forward such
payment to Buyer. With respect to any accounts receivable constituting Acquired
Assets transferred to Buyer which have been commingled with accounts receivable
of any of Seller's other businesses (the "COMMINGLED RECEIVABLES"), Buyer shall
have the right to collect any such Commingled Receivables from and after the
Closing Date. Buyer shall promptly account for any portion of such Commingled
Receivables which do not relate to the Business and promptly remit any such
amounts to the Seller. At Buyer's request, Seller shall use reasonable efforts
to assist Buyer in the collection of any Commingled Receivables.
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SECTION 2. CLOSING OF THE TRANSACTION.
(a) THE CLOSING. Subject to the satisfaction of the conditions set forth
herein, the closing of the transactions contemplated by this Agreement (the
"CLOSING") shall take place at the offices of ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇ in New York, New
York, at 10:00 a.m. local time on the later of (i) the first business day
following the satisfaction or waiver of all conditions to the obligations of the
Parties to consummate the transactions contemplated herein and (ii) January 19,
2001, or such other time and place as the Parties may mutually determine (the
"CLOSING DATE").
(b) DELIVERIES AT THE CLOSING. At the Closing:
(i) Seller will deliver to Buyer (A) the various certificates,
instruments and documents referred to in Section 3(a) below, (B) a ▇▇▇▇ of
sale and assignment, in form and substance reasonably acceptable to Buyer,
(C) a special or limited warranty deed (as customary in the applicable
jurisdiction) with respect to each parcel of Owned Real Property,
conveying fee simple title subject only to Permitted Encumbrances, and (D)
such other instruments of sale, transfer, conveyance and assignment as
Buyer reasonably may request; and
(ii) Buyer will deliver to Seller (A) the Cash Purchase Price, as
adjusted pursuant to the terms hereof and determined as of the Closing
Date, in immediately available funds, (B) one or more stock certificates
evidencing the Parent Common Stock issued in Seller's name, free and clear
of any liens, (C) the various certificates, instruments and documents
referred to in Section 3(b) below, (D) an assumption agreement in form and
substance reasonably acceptable to Seller and (E) such other instruments
of assumption as Seller reasonably may request.
SECTION 3. CONDITIONS TO OBLIGATION TO CLOSE.
(a) CONDITIONS TO OBLIGATION OF BUYER. The obligation of Buyer to
consummate the transactions to be performed by it in connection with the Closing
is subject to satisfaction of the following conditions:
(i) the representations and warranties set forth in Section 4 below
shall be true and correct in all material respects at and as of the
Closing Date (without taking into account any disclosure made pursuant to
Section 4(y) below);
(ii) Seller shall have performed and complied in all material
respects with all of its covenants hereunder through the Closing;
(iii) no action, suit, or proceeding shall be pending before any
court, arbitrator or other body or administrative agency of any federal,
state, local, or foreign jurisdiction
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wherein an unfavorable injunction, judgment, order, decree, ruling or
charge would prevent consummation of any of the transactions contemplated
by this Agreement (and no such injunction, judgment, order, decree, ruling
or charge shall be in effect);
(iv) all governmental filings, authorizations, and approvals that
are required for the consummation of the transactions contemplated hereby
shall have been duly made and obtained on terms reasonably satisfactory to
the Buyer (without limiting the generality of the foregoing, all
applicable waiting periods (and any extensions thereof) under the
▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Anti-Trust Improvements Act of 1976, as amended (the
"HSR ACT"), shall have expired or otherwise been terminated);
(v) Seller shall have delivered to Buyer a certificate to the effect
that each of the conditions specified above in Section 3(a)(i)-(iv) and
(x) is satisfied in all respects;
(vi) Seller shall have received all third party consents referred to
in Section 4(o) below and Seller and Buyer shall have received all other
authorizations, consents, and approvals of governments and governmental
agencies referred to in Section 4(c) and Section 5(c) below;
(vii) Seller shall have obtained any payoff letters for any
Indebtedness of Seller to be paid by Buyer on behalf of Seller at the
Closing in order for the Acquired Assets to be delivered free and clear of
all liens or encumbrances, and releases of any and all security interests
held by third parties shall have been obtained, all on terms reasonably
satisfactory to Buyer;
(viii)Buyer shall have received from counsel to Seller an opinion
substantially in the form of EXHIBIT A attached hereto, addressed to
Buyer, and dated as of the Closing Date;
(ix) Buyer shall have obtained the proceeds of the financing
necessary to consummate the transactions contemplated hereby and to
finance the continuing operations of the Business set forth in the bank
commitment letter attached hereto as EXHIBIT B (the "COMMITMENT LETTER");
(x) From November 30, 1999 until the Closing Date, there will have
been no material adverse change in the business, assets, financial
condition, operating results, customer relations or supplier relations of
the Business;
(xi) ▇▇▇▇▇▇▇ Land & Nurseries, Inc. ("▇▇▇▇▇▇▇") shall have entered
into a supply agreement with Buyer in substantially the form set forth on
EXHIBIT C attached hereto (the "SUPPLY AGREEMENT"), and the Supply
Agreement shall be in full force and effect (assuming due execution by the
Buyer) and shall not have been amended or modified;
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(xii) ▇▇▇▇▇▇▇ shall have entered into a transition agreement with
Buyer in substantially the form set forth on EXHIBIT D attached hereto
(the "TRANSITION AGREEMENT") which shall include the severance payments
(the "SEVERANCE PAYMENTS") set forth on EXHIBIT E attached hereto and a
license to use the Imperial trade name until November 30, 2001, and the
Transition Agreement shall be in full force and effect (assuming due
execution by the Buyer) and shall not have been amended or modified;
(xiii)Buyer shall have entered into retention agreements with each
individual listed on EXHIBIT F attached hereto in substantially the form
set forth on EXHIBIT G attached hereto (the "RETENTION AGREEMENTS"), and
each Retention Agreement shall be in full force and effect (assuming due
execution by the Buyer) and shall not have been amended or modified;
(xiv) Seller shall have entered into a joinder and amendment
agreement to become party to the Stockholders Agreement, dated as of
November 30, 1998, by and among Parent and its stockholders as amended
from time to time (the "STOCKHOLDERS AGREEMENT"), in substantially the
form set forth on EXHIBIT H attached hereto (the "JOINDER AGREEMENT"), and
the Joinder Agreement shall be in full force and effect (assuming due
execution by the other parties thereto) and shall not have been amended or
modified; and
(xv) ▇▇▇▇▇▇▇ shall have entered into a water supply agreement with
Buyer with respect to the Owned Real Property located in Windsor,
Connecticut, in a form mutually acceptable to ▇▇▇▇▇▇▇ and Buyer.
Buyer may waive any condition specified in this Section 3(a) if it executes a
writing so stating at or prior to the Closing.
(b) CONDITIONS TO OBLIGATION OF SELLER. The obligation of Seller to
consummate the transactions to be performed by it in connection with the Closing
is subject to satisfaction of the following conditions:
(i) the representations and warranties set forth in Section 5 below
shall be true and correct in all material respects at and as of the
Closing Date (without taking into account any disclosure made pursuant to
Section 5(m) below);
(ii) Buyer shall have performed and complied in all material
respects with all of its covenants hereunder through the Closing;
(iii) no action, suit, or proceeding shall be pending before any
court, arbitrator or other body or administrative agency of any federal,
state, local or foreign jurisdiction wherein an unfavorable injunction,
judgment, order, decree, ruling or charge would prevent consummation of
any of the transactions contemplated by this Agreement (and no such
injunction, judgment, order, decree, ruling, or charge shall be in
effect);
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(iv) all governmental filings, authorizations, and approvals that
are required for the consummation of the transactions contemplated hereby
shall have been duly made and obtained on terms reasonably satisfactory to
Seller (without limiting the generality of the foregoing, all applicable
waiting periods (and any extensions thereof) under the HSR Act shall have
expired or otherwise been terminated);
(v) Buyer shall have delivered to Seller a certificate to the effect
that each of the conditions specified above in Section 3(b)(i)-(iv) and
(viii) is satisfied in all respects;
(vi) Seller and Buyer shall have received all other authorizations,
consents, and approvals of governments and governmental agencies referred
to in Section 4(c) and Section 5(c) below;
(vii) Seller shall have received from counsel to Buyer an opinion
substantially in the form of EXHIBIT I attached hereto, addressed to
Seller, and dated as of the Closing Date;
(viii)From November 30, 1999 until the Closing Date, there will have
been no material adverse change in the business, assets, financial
condition, operating results, customer relations or supplier relations of
Parent;
(ix) Buyer shall have entered into the Supply Agreement, and the
Supply Agreement shall be in full force and effect (assuming due execution
by ▇▇▇▇▇▇▇) and shall not have been amended or modified;
(x) Buyer shall have entered into the Joinder Agreement, and the
Joinder Agreement shall be in full force and effect (assuming due
execution by Seller) and shall not have been amended or modified;
(xi) Buyer shall have entered into the Transition Agreement, and the
Transition Agreement shall be in full force and effect (assuming due
execution by ▇▇▇▇▇▇▇) and shall not have been amended or modified; and
(xii) Buyer shall have entered into the Retention Agreements, and
each Retention Agreement shall be in full force and effect (assuming due
execution by the individuals listed on EXHIBIT F) and shall not have been
amended or modified.
Seller may waive any condition specified in this Section 3(b) if it executes a
writing so stating at or prior to the Closing.
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SECTION 4. REPRESENTATIONS AND WARRANTIES OF SELLER. Seller represents and
warrants to Buyer as follows:
(a) ORGANIZATION OF SELLER. Seller is a corporation duly organized,
validly existing, and in good standing under the laws of the jurisdiction of its
incorporation. SCHEDULE 4(a) attached hereto lists all of the jurisdictions in
which Seller, with respect to the Business, is required to qualify to do
business as a foreign corporation.
(b) AUTHORIZATION OF TRANSACTION. Seller has full power and authority
(including corporate authority) to execute and deliver this Agreement and to
perform its obligations hereunder. The authorization of the Seller's shareholder
is not required for the execution, delivery and performance of this Agreement by
Seller. This Agreement constitutes the valid and legally binding obligation of
Seller, enforceable in accordance with its terms and conditions, subject to the
effect of bankruptcy, insolvency, reorganization or other similar laws and to
general principles of equity (whether considered in proceedings at law or in
equity).
(c) NONCONTRAVENTION. Except as set forth on SCHEDULE 4(c) attached
hereto, neither the execution and the delivery of this Agreement, nor the
consummation of the transactions contemplated hereby, will (i) violate any
constitution, statute, regulation, rule, injunction, judgment, order, decree,
ruling, charge, or other restriction of any government, governmental agency, or
court to which Seller is subject, (ii) violate or conflict with any provision of
the charter or bylaws of Seller, (iii) conflict with, result in a breach of,
constitute a default under, result in the acceleration of, create in any party
the right to accelerate, terminate, modify, or cancel, or require any notice
under any material agreement, contract, lease, license, instrument, or other
material arrangement to which Seller is a party or by which it is bound or to
which any of its assets is subject or (iv) result in the imposition of any
security interest upon any of the assets of the Business. Except as set forth on
SCHEDULE 4(c) attached hereto, Seller is not required to give any notice to,
make any filing with, or obtain any authorization, consent or approval of any
government or governmental agency in order for the Parties to consummate the
transactions contemplated by this Agreement, other than the filings required to
be made pursuant to the HSR Act.
(d) BROKERS' FEES. Except as set forth on SCHEDULE 4(d), neither Seller
nor any of its Affiliates has any liability or obligation to pay any fees or
commissions to any broker, finder, or agent with respect to the transactions
contemplated by this Agreement other than the fees and expenses to be paid to
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ Company, which are the sole responsibility of Seller.
(e) SUBSIDIARIES, INVESTMENTS. Seller has no Subsidiaries or investments
in any Person which relate to the Business.
(f) FINANCIAL STATEMENTS. SCHEDULE 4(f) attached hereto contains the
following financial statements (collectively the "FINANCIAL STATEMENTS"): (i)
the unaudited balance sheet as of November
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28, 1998 for Seller with respect to the Business; (ii) the unaudited balance
sheet and statement of income and statement of cash flows as of and for the
fiscal year ended November 27, 1999 for Seller with respect to the Business; and
(iii) unaudited balance sheet as of October 28, 2000 (the "MOST RECENT BALANCE
SHEET") and statement of income and statement of cash flows as of and for the
eleven-month period ended October 28, 2000 for Seller with respect to the
Business. The Financial Statements have been prepared in accordance with GAAP
(except for the absence of footnote disclosure in the Financial Statements and
except for the deviations from GAAP set forth on the Financial Statements)
throughout the periods covered thereby, present fairly in all material respects
the financial condition of Seller, with respect to the Business, as of such
dates and the results of operations of Seller, with respect to the Business, for
such periods, and are correct and complete and consistent with the books and
records of the Business (which books and records are correct and complete). All
accounts receivable of Seller are reflected properly on the Most Recent Balance
Sheet and in the books and records of Seller, are valid receivables subject to
no setoffs or counterclaims, subject only to the reserve for bad debts and the
reserve for unrealized finance charges reflected thereon and to be used in the
preparation of, and set forth on, the Closing Balance Sheet.
(g) SUBSEQUENT EVENTS. Since November 30, 1999, there has not been any
material adverse change in the business, assets, financial condition, operating
results, customer relations or supplier relations of the Business. Since
November 30, 1999, except as set forth on SCHEDULE 4(g) attached hereto:
(i) Seller has not sold, leased, transferred, or assigned any of the
assets of the Business, tangible or intangible, with an aggregate value
greater than $25,000, other than inventory in the ordinary course of
business;
(ii) Seller has not entered into any agreement, contract, lease, or
license (or series of related agreements, contracts, leases, and licenses)
relating to the Business and involving more than $25,000, other than in
the ordinary course of business;
(iii) no party (including Seller) has accelerated, terminated,
modified, or canceled any agreement, contract, lease, or license (or
series of related agreements, contracts, leases, and licenses) relating to
the Business involving more than $25,000 to which Seller is a party or by
which Seller is bound;
(iv) Seller, with respect to the Business, has maintained its assets
and has made capital expenditures consistent with the Business's normal
course of operations;
(v) Seller, with respect to the Business, has not experienced any
damage, destruction, or loss (whether or not covered by insurance) to its
property over $25,000 in the aggregate;
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(vi) Seller, with respect to the Business, has not entered into any
employment contract or collective bargaining agreement, written or oral,
or modified the terms of any existing such contract or agreement;
(vii) Since January 1, 2000, Seller, with respect to the Business,
has not granted any increase in the base compensation of any of its
directors, officers or employees other than as consistent with past custom
and practice;
(viii) Since January 1, 2000, Seller, with respect to the Business,
has not adopted, amended, modified, or terminated any bonus,
profit-sharing, incentive, severance, or other plan, contract, or
commitment for the benefit of any of its directors, officers and employees
(or taken any such action with respect to any Plan);
(ix) Seller, with respect to the Business, has not entered into any
transaction with any of its directors, officers, employees or Affiliates
(other than (A) ordinary course employment arrangements entered into in
accordance with past custom and practice and (B) management services,
technical and administrative support and supply provided by Seller and its
Affiliates, none of which Buyer will be bound by after the Closing other
than as set forth in the Transition Agreement);
(x) Seller, with respect to the Business, has not entered into any
agreement, contract or other arrangement with respect to the incurrence of
borrowed money;
(xi) there has not been any other occurrence, event, incident,
action, failure to act or transaction outside the ordinary course of
business involving the Business; and
(xii) Seller, with respect to the Business, has not committed to any
of the foregoing.
(h) UNDISCLOSED LIABILITIES. To the Seller's Knowledge, Seller, with
respect to the Business, has no liability or obligation (whether known or
unknown, asserted or unasserted, absolute or contingent, accrued or unaccrued,
liquidated or unliquidated) arising out of transactions entered into on or prior
to the Closing Date, or any action or inaction on or prior to the Closing Date,
or any state of facts existing on or prior to the Closing Date, except for (i)
liabilities or obligations set forth on the Most Recent Balance Sheet, (ii)
liabilities or obligations which have arisen after the Most Recent Balance Sheet
in the ordinary course of business (none of which relates to (A) breach of
contract, (B) breach of warranty, (C) tort, (D) infringement, (E) violation of
law, or (F) any action, suit or proceeding (including, without limitation, any
clean-up obligation or liability for personal injury or property damage under
any Environmental, Health and Safety Laws)), (iii) obligations to perform under
agreements, contracts and purchase orders set forth on the SCHEDULE 4(o)
attached hereto, and (iv) liabilities or obligations expressly identified on the
Schedules attached hereto and the other liabilities or obligations which are not
required to be disclosed on the Schedules due solely
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to the specific dollar threshold contained in the relevant representation and
warranty related to the applicable Schedule.
(i) LEGAL COMPLIANCE. Seller, with respect to the Business, and its
predecessors and Affiliates have complied with all applicable laws, rules and
regulations (other than Tax Matters, Employee Benefits and Environmental, Health
and Safety Laws which matters are addressed in Sections 4(j), 4(s) and 4(t)
below) of federal, state, local and foreign governments (and all agencies
thereof), and no action, suit, proceeding, hearing, investigation, charge,
complaint, claim, demand or notice has been filed or commenced against any of
them alleging any failure to so comply, except for such noncompliance, which
would not have a material adverse change in the business, assets, financial
condition, operating results, customer relations or supplier relations of the
Business.
(j) TAX MATTERS. Seller, with respect to the Business, has timely filed
all Tax returns required to be filed by Seller. Each such Tax return has been
prepared in compliance with all applicable laws and regulations and is complete
and accurate in all respects. All Taxes owed by Seller with respect to the
Business have been paid (or are accrued on the Most Recent Balance Sheet or will
be accrued on Seller's books and records as of the Closing Date). Seller, with
respect to the Business, has properly withheld and paid all Taxes required to
have been withheld and paid in connection with amounts paid or owing to any
employee, creditor, independent contractor or other third party. Seller is not a
"foreign person" within the meaning of Section 1445 of the Code. Except as set
forth on SCHEDULE 4(j) attached hereto:
(i) during the past five (5) years, there has been no deficiency or
proposed adjustment which has not been settled or otherwise resolved for
any amount of Tax that has been proposed, asserted or assessed by any
taxing authority against Seller with respect to the Business, and there is
no action, suit, taxing authority proceeding or audit now in progress,
pending, or, to Seller's Knowledge, threatened against or with respect to
Seller;
(ii) no claim has ever been made by a taxing authority in a
jurisdiction where Seller does not file Tax Returns that Seller is or may
be subject to Taxes assessed by such jurisdiction with respect to the
Business;
(iii) there are no liens for Taxes (other than for current Taxes not
yet due and payable) on any of the Acquired Assets;
(iv) none of the Assumed Liabilities consists of an obligation to
make any payments that will be non-deductible under Section 280G of the
Code (or any corresponding provision of state, local or foreign income Tax
law);
(v) the Seller has not waived any statute of limitations in respect
of Taxes or agreed to any extension of time with respect to a Tax
assessment or deficiency; and
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(vi) the Seller has not been a member of an affiliated group filing
a consolidated federal income Tax Return (other than a group the common
parent of which was the Seller) or has any liability for the Taxes of any
person (other than Seller) under Treasury Regulation Section 1.1502-6 (or
any similar provision of state, local or foreign law), as a transferee or
successor, by contract or otherwise.
(k) TITLE TO PERSONAL PROPERTY. Seller has good and marketable title to,
or a valid leasehold interest in, the Acquired Assets (other than the Owned Real
Property), free and clear of any security interest or restriction on transfer,
except for Permitted Encumbrances.
(l) REAL PROPERTY.
(i) OWNED REAL PROPERTY
(A) SCHEDULE 4(l) sets forth the address and description of
all Owned Real Property used by Seller in the operation of the
Business. With respect to each parcel of Owned Real Property: (A)
Seller has good and marketable indefeasible fee simple title to such
Owned Real Property, free and clear of all liens and encumbrances,
except Permitted Encumbrances (as defined herein); (B) except as set
forth in SCHEDULE 4(l), Seller has not leased or otherwise granted
to any Person the right to use or occupy such Owned Real Property or
any portion thereof; (C) other than the right of Buyer pursuant to
this Agreement, there are no outstanding options, rights of first
offer or rights of first refusal to purchase such Owned Real
Property or any portion thereof or interest therein, and (D) Seller
is not a party to any agreement or option to purchase any real
property or interest therein relating to, or intended to be used in
the operation of, the Business.
(B) The term "PERMITTED ENCUMBRANCES" shall mean: (A) all
taxes, including real estate taxes, assessments and other
governmental levies, fees or charges imposed but which are not due
and payable as of the Closing Date; (B) liens imposed by law, such
as materialmen's, workers', carriers', vendors', mechanics' and
other similar liens incurred in the ordinary course of business for
amounts which are not due and payable and which would not,
individually or in the aggregate, have a material adverse effect on
the Business conducted thereon; (C) zoning, building codes and other
land use laws regulating the use or occupancy of the Owned Real
Property or the activities conducted thereon which are imposed by
any governmental authority having jurisdiction over the Owned Real
Property which are not violated by the current use or occupancy of
the Owned Real Property or the operation of the Business thereon;
(D) easements, covenants, conditions, restrictions and other similar
matters of record affecting title to the Owned Real Property which
do not or would not materially impair the use or occupancy of the
Owned Real Property in the operation of the Business conducted
thereon; and (E) Assumed Liabilities.
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(ii) LEASED REAL PROPERTY. The Seller, with respect to the Business,
does not lease or sublease any real property.
(iii) IMPROVEMENTS. All buildings, structures, improvements,
fixtures, building systems and equipment, and all components thereof,
included in the Owned Real Property (the "IMPROVEMENTS") are sufficient
for the operation of the Business as currently conducted. To the Knowledge
of the Seller, there are no structural deficiencies or latent defects
affecting any of the Improvements which would, individually or in the
aggregate, interfere in the operation of the Business.
(iv) ACCESS. Each parcel of Owned Real Property has direct access to
a public street adjoining the Owned Real Property, and such access is not
dependent on any land or other real property interest which is not
included in the Owned Real Property. None of the Improvements or any
portion thereof is dependent for its access, use or operation on any land,
building, improvement or other real property interest which is not
included in the Owned Real Property.
(v) AVAILABILITY OF UTILITY SERVICES. All water, oil, gas,
electrical, steam, compressed air, telecommunications, sewer, storm and
waste water systems and other utility services or systems for the Owned
Real Property have been installed and are operational and sufficient for
the operation of the Business as currently conducted thereon, and all
hook-up fees or other similar fees or charges have been paid in full. Each
such utility service enters the Owned Real Property from an adjoining
public street or valid private easement in favor of the supplier of such
utility service or appurtenant to such Owned Real Property, and is not
dependent for its access, use or operation on any land, building,
improvement or other real property interest which is not included in the
Owned Real Property.
(m) INTELLECTUAL PROPERTY. Neither Seller nor any of its Affiliates owns
any Intellectual Property necessary for the operation of the Business as
currently conducted, other than the Intellectual Property included in Acquired
Assets and other than management services, technical and administrative support
and supply which will be provided by Seller and its Affiliates to Buyer pursuant
to the Transition Agreement. Seller has not infringed, misappropriated or
otherwise conflicted with, and the operation of the Business does not infringe,
misappropriate or otherwise conflict with, any Intellectual Property of any
third party. Seller is not aware of any facts which indicate a likelihood of any
of the foregoing and Seller has not received any notices regarding any of the
foregoing (including, without limitation, any demands or offers to license any
Intellectual Property from any third party).
(n) ACQUIRED ASSETS. The Acquired Assets include all inventory, equipment
and other tangible and intangible assets necessary for the conduct of the
Business as conducted immediately prior to the Closing Date (other than
management services, technical and administrative support and
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supply provided by Seller and its Affiliates) and no assets of the Business are
located in Chalfont, Pennsylvania or Granby, Connecticut. Each of the Acquired
Assets constituting equipment is free from defects, is in suitable operating
condition and repair as is customary for equipment used in operations of
businesses of the same type as the Business (subject to normal wear and tear),
and is suitable for the purposes for which it presently is used, except for
breaches of this representation which can be cured by repair expenses of no more
than $10,000 individually or $100,000 in the aggregate.
(o) CONTRACTS. SCHEDULE 4(o) lists the following contracts, agreements and
other arrangements related to the Business to which Seller is a party as of the
Closing Date and denotes with an asterisk (*) whether the consent of any third
party thereto is required as a result of the consummation of the transactions
contemplated by this Agreement:
(i) any agreement concerning a partnership or joint venture;
(ii) any agreement (or group of related agreements) under which it
has created, incurred, assumed, or guaranteed any indebtedness for
borrowed money or any capitalized lease obligation under which it has
imposed a security interest on any of its assets, tangible or intangible;
(iii) any agreement concerning confidentiality or noncompetition or
any Acquisition Proposal (as defined in Section 6(g));
(iv) any agreement, arrangement or understanding involving any of
its Affiliates or shareholders (including any shareholder's family members
by blood, marriage, adoption or otherwise) under which Buyer will be bound
following the Closing;
(v) any profit sharing, stock option, stock purchase, stock
appreciation, bonus, deferred compensation, severance, welfare benefit
plan or other plan or arrangement (whether formal or informal) for the
benefit of its current or former directors, officers and employees;
(vi) any agreement (whether formal or informal) with its directors,
officers and employees, including any collective bargaining agreement;
(vii) any agreement (or group of related agreements) for the lease
or sublease of personal property to or from any Person providing for
payments in excess of $25,000 per annum;
(viii) any open purchase orders related to the purchase of goods
providing for payments in excess of $25,000 per annum;
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(ix) any power of attorney;
(x) any agreement which may not be canceled by Seller in less than
sixty (60) days' notice without premium or penalty payable by Seller
providing for payments in excess of $25,000 per annum;
(xi) any agreement under which the consequences of a default or
termination could reasonably be expected to have a material adverse change
in the business, assets, financial condition, operating results, customer
relations or supplier relations of Seller, with respect to the Business;
or
(xii) any other agreement (or group of related agreements) the
performance of which involves consideration in excess of $25,000,
including but not limited to any distribution and supply agreements.
Seller has delivered or made available to Buyer a correct and complete copy of
each written agreement listed in SCHEDULE 4(o). Seller has also delivered to
Buyer a brief description of all oral contracts, agreements and other
arrangements required to be disclosed on SCHEDULE 4(o). With respect to Seller's
contracts or arrangements with respect to the Business: (A) such agreement,
contract or arrangement is legal, valid, binding, enforceable and in full force
and effect; (B) Seller is not in breach or default, and no event has occurred
which with notice or lapse of time would constitute a breach or default by
Seller or permit any third party to terminate, modify or accelerate such
agreement; and (C) to the best of Seller's Knowledge, no third party is in
breach or default, and no event has occurred which with notice or lapse of time
would constitute a breach or default by such third party or permit Seller to
terminate, modify or accelerate such agreement, contract or arrangement.
(p) INSURANCE. SCHEDULE 4(p) attached hereto sets forth the following
information with respect to each insurance policy to which Seller, with respect
to the Business, has been a party, a named insured or otherwise the beneficiary
of coverage at any time within the past five years:
(i) the name of the insurer, the name of the policyholder and the
name of each covered insured;
(ii) the scope, period and amount of coverage; and
(iii) a description of any retroactive premium adjustments or other
loss-sharing arrangements.
SCHEDULE 4(p) describes any self-insurance arrangements affecting Seller.
(q) LITIGATION. SCHEDULE 4(q) attached hereto sets forth each instance in
which Seller,
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with respect to the Business, (i) is subject to any outstanding injunction,
judgment, order, decree, ruling or charge or (ii) is a party or, to Seller's
Knowledge, is threatened to be made a party to any action, suit, proceeding,
hearing or investigation of, in or before any court, arbitrator or other body or
administrative agency of any federal, state, local or foreign jurisdiction. No
representation or warranty is made in this Section 4(q) with respect to the
matters covered in Section 4(t) (Environmental, Health and Safety).
(r) EMPLOYEES. To the best Knowledge of Seller, no executive, key employee
or group of employees of Seller who are related to the Business has any plans to
terminate employment with Seller (except for the employees of Seller who will
become employees of Buyer at the Closing) or Buyer. Seller has no Knowledge of
any organizational effort presently being made or threatened by or on behalf of
any labor union with respect to the employees of Seller, with respect to the
Business. Seller, with respect to the Business, has complied with all applicable
laws relating to the employment of labor and within the last five years Seller,
with respect to the Business, has not experienced any strikes, grievances,
unfair labor practice claims or other labor relation problems, including,
without limitation, any disputes with former employees regarding termination
and/or severance pay.
(s) EMPLOYEE BENEFITS.
(i) PENSION PLANS. Except as set forth in SCHEDULE 4(s) attached
hereto, with respect to all employees and former employees of Seller, with
respect to the Business, Seller does not maintain, contribute to or have
any liability under (or with respect to) any Employee Pension Benefit
Plan, whether or not terminated.
(ii) WELFARE PLANS. Except as set forth in SCHEDULE 4(s), with
respect to all employees and former employees of Seller, with respect to
the Business, Seller does not maintain or have any obligation to
contribute to (or any other liability with respect to) any Employee
Welfare Benefit Plan, whether or not terminated, which provides medical,
health, life insurance or other welfare-type benefits for current or
future retirees or current or future former employees or their spouses or
dependents (other than in accordance with Sec. 4980B(f) of the Code).
(iii) MULTIEMPLOYER PLANS. With respect to all employees and former
employees of Seller, with respect to the Business, Seller has no
obligation to contribute to (or any other liability with respect to) any
(i) Multiemployer Plan or (ii) any plan of the type described in Section
4063 and 4064 of ERISA or Section 413(c) of the Code, and Seller has not
incurred any current or potential withdrawal liability as a result of a
complete or partial withdrawal (or potential partial withdrawal) from any
Multiemployer Plan.
(iv) OTHER BENEFIT PLANS. Except as set forth in SCHEDULE 4(s),
Seller does not maintain, contribute to or have any liability under (or
with respect to) any deferred compensation or retirement plans or
arrangements, employee welfare, fringe benefit or bonus
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plan, program, policy or other arrangement for employees or any other
arrangement for employees or former employees of Seller, with respect to
the Business, or, their spouses or dependents, whether or not terminated.
(v) ADMINISTRATION AND COMPLIANCE OF THE PLANS. The plans, programs,
policies and other arrangement set forth on SCHEDULE 4(s) are hereinafter
referred to collectively as the "PLANS." With respect to each of the
Plans:
(A) all required or discretionary (in accordance with
historical practices) payments, premiums, contributions,
reimbursements or accruals for all periods ending prior to or as of
the Closing Date shall have been made or properly accrued on the
Closing Balance Sheet;
(B) there is no material unfunded liability which is not
reflected on the Most Recent Balance Sheet, or will not be reflected
on the Closing Balance Sheet;
(C) there have been no violations of ERISA with respect
thereto (including, without limitation, any Prohibited
Transactions); no Fiduciary (as defined in Section 3(21) of ERISA)
has any liability for breach of fiduciary duty or any other failure
to act or comply in connection with the administration or investment
of the assets thereof; no action, suit, proceeding, hearing or
investigation with respect to the administration or the investment
of the assets thereof (other than routine claims for benefits) is
pending or, to the best of Seller's Knowledge, threatened; and
Seller has no Knowledge of any basis for any such action, suit,
proceeding, hearing or investigation; and
(D) Seller has provided Buyer with true and complete copies of
all documents pursuant to which such Plan is maintained and
administered and the most recent annual reports (Form 5500 and
attachments) and financial statements therefor.
(t) ENVIRONMENT, HEALTH AND SAFETY.
(i) Except as set forth on SCHEDULE 4(t) attached hereto, each of
Seller and its predecessors and Affiliates has obtained and complied with
and is in compliance with all permits, licenses, and other authorizations
which are required for the ownership and operation of the Business and
Owned Real Property under all applicable Environmental, Health and Safety
Laws; a list of all significant permits, licenses and other authorizations
is set forth on SCHEDULE 4(t).
(ii) Except as set forth on SCHEDULE 4(t) attached hereto, none of
Seller or its predecessors has, with respect to the ownership and
operation of the Business, treated, stored, handled, released, disposed of
or arranged for or permitted the disposal of any substance
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(including without limitation any hazardous substance), exposed any
employee or other Person to any substance or condition, or owned or
operated the Business or any property or facility (and no such property or
facility is contaminated by any such substance) in a manner that has given
or would give rise to any liability or investigatory, corrective or
remedial obligation under any Environmental, Health and Safety Laws.
(iii) Except as set forth on SCHEDULE 4(t) attached hereto, Seller
and its predecessors have, with respect to the ownership and operation of
the Business, complied with, and are in compliance with, all
Environmental, Health and Safety Laws, and no action, suit, proceeding,
hearing, investigation, charge, complaint, claim or demand has been filed,
commenced or, to the Seller's Knowledge, threatened against any of them or
any oral or written notice or other information received alleging any
failure to so comply or alleging any liability or investigatory,
corrective or remedial obligations under any Environmental, Health and
Safety Laws.
(iv) None of Seller or its predecessors has, with respect to the
ownership and operation of the Business, either expressly or by operation
of law, assumed, undertaken or otherwise become subject to any liability
or obligation of any other Person under any Environmental, Health and
Safety Laws.
(v) Except as set forth on SCHEDULE 4(t), no underground storage
tanks, asbestos-containing materials, PCB-containing equipment or fluids
or landfills, surface impoundments or other disposal areas have been or
are present on any Owned Real Property listed on SCHEDULE 4(l).
(vi) Neither this Agreement nor the transactions contemplated by
this Agreement impose any obligations under any Environmental, Health and
Safety Laws for site investigation or cleanup, or notification to, or
consent of, any government agencies or third parties.
(vii) Seller has furnished to the Buyer all environmental audits,
reports and other material environmental documents relating to the current
and former operations and facilities of the Seller with respect to the
Business, which are in its possession, custody or control.
(u) AFFILIATE TRANSACTIONS. Except as disclosed on SCHEDULE 4(u) attached
hereto, no officer, director, stockholder, partner or Affiliate of Seller or any
individual related by marriage or adoption to any such individual or any entity
in which any such Person owns any beneficial interest is a party to any
agreement, contract, commitment or transaction with Seller or which is
pertaining to the Business under which Buyer will be bound after the Closing or
has any interest in any property, real or personal or mixed, tangible or
intangible, used in or pertaining to the Business.
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(v) WARRANTY. Except as disclosed on SCHEDULE 4(v) attached hereto, no
products or services offered by the Business are subject to any guarantee or
warranty other than through operation of law. The Seller, with respect to the
Business, has no liability arising out of, or resulting from, the sale of
products or services by Seller prior to the Closing Date other than the
guaranties and warranties set forth on SCHEDULE 4(v).
(w) INVESTMENT. Seller represents that (i) it understands that the Parent
Common Stock has not been registered under the Securities Act of 1933, as
amended from time to time (the "SECURITIES ACT"), or any applicable state
securities laws, and is being issued in reliance upon federal and state
exemptions for transactions not involving any public offering, (ii) it is
acquiring the Parent Common Stock solely for its own account for investment
purposes, and not with a view to the distribution thereof, and (iii) it is
either an accredited investor within the meaning of Regulation D promulgated
under the Securities Act or a sophisticated investor with knowledge and
experience in business and financial matters.
(x) LIMITATIONS ON REPRESENTATIONS AND WARRANTIES. Seller acknowledges
that none of Buyer, Parent or any other Person has made any representation or
warranty, express or implied, as to the accuracy or completeness of any
information regarding Parent's business or other matters that is not included in
this Agreement or the Schedules hereto.
(y) CLOSING DATE. The representations and warranties contained in this
Section 4 and elsewhere in this Agreement will be true and correct on the
Closing Date as though then made, except for written disclosures made by Seller
to Buyer prior to the Closing.
SECTION 5. REPRESENTATIONS AND WARRANTIES OF PARENT AND BUYER. Parent (for
purposes of this Section 5, "Parent" shall mean Parent and its Subsidiaries on a
consolidated basis) and Buyer represent and warrant to Seller as follows:
(a) ORGANIZATION OF PARENT AND BUYER. Each of Parent and Buyer is a
corporation duly organized, validly existing and in good standing under the laws
of the jurisdiction of its incorpo ration. Other than the Buyer and as set forth
on SCHEDULE 5(a), the Parent does not have any Subsidiaries.
(b) AUTHORIZATION OF TRANSACTION. Each of Parent and Buyer has full
corporate power and authority to execute and deliver this Agreement and to
perform its obligations hereunder. This Agreement constitutes the valid and
legally binding obligation of each of Parent and Buyer, enforceable in
accordance with its terms and conditions, subject to the effect of bankruptcy,
insolvency, reorganization or other similar laws and to general principles of
equity (whether considered in proceedings at law or in equity).
(c) NONCONTRAVENTION. Neither the execution and the delivery of this
Agreement, nor the consummation of the transactions contemplated hereby, will
(i) violate any constitution, statute,
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regulation, rule, injunction, judgment, order, decree, ruling, charge, or other
restriction of any government, governmental agency, or court to which Parent or
Buyer is subject or any provision of its charter or bylaws or (ii) conflict
with, result in a breach of, constitute a default under, result in the
acceleration of, create in any party the right to accelerate, terminate, modify,
or cancel, or require any notice under any agreement, contract, lease, license,
instrument, or other arrangement to which Parent or Buyer is a party or by which
it is bound or to which any of its assets is subject. Except as set forth on
SCHEDULE 5(c) attached hereto, Parent and Buyer do not need to give any notice
to, make any filing with, or obtain any authorization, consent, or approval of
any government or governmental agency in order for the Parties to consummate the
transactions contemplated by this Agreement.
(d) BROKERS' FEES. Except as disclosed on SCHEDULE 5(d) attached hereto,
neither Parent nor Buyer has any liability or obligation to pay any fees or
commissions to any broker, finder, or agent with respect to the transactions
contemplated by this Agreement.
(e) CAPITALIZATION. SCHEDULE 5(e) lists the authorized capital stock of
the Parent and the number of shares that are issued and outstanding. All of the
issued and outstanding capital stock of the Parent has been duly authorized, is
validly issued, fully paid, and nonassessable and were issued in compliance with
applicable federal and state securities laws, and is held of record and owned
beneficially by the Persons and in the manner described on SCHEDULE 5(e), free
and clear of all liens, and, except as set forth on SCHEDULE 5(e), are not
subject to, nor were they issued in violation of, any preemptive rights, rights
of first refusal or similar rights. Except as set forth on SCHEDULE 5(e), there
are no outstanding or authorized options, warrants, rights, contracts, calls,
puts, rights to subscribe, conversion rights, or other agreements or commitments
to which the Parent is a party or which are binding upon the Parent providing
for the issuance, disposition, or acquisition of the capital stock of the Parent
(other than pursuant to this Agreement). Other than as set forth on SCHEDULE
5(e), there are no outstanding or authorized stock appreciation, phantom stock,
or similar rights with respect to the Parent. Except as set forth on SCHEDULE
5(e), there are no voting trusts, proxies, or any other agreements or
understandings with respect to the voting of the capital stock of the Parent.
The Parent is not subject to any obligation (contingent or otherwise) to
repurchase or otherwise acquire or retire any shares of the its capital stock.
Except as set forth on SCHEDULE 5(e), the Parent has not granted or agreed to
grant any registration rights, including piggyback rights, to any Person. When
delivered at Closing, the shares of Parent Common Stock to be issued to the
Seller pursuant to this Agreement will be duly authorized, validly issued, fully
paid and nonassessable and free and clear of all liens.
(f) FINANCIAL STATEMENTS. SCHEDULE 5(f) attached hereto contains the
following financial statements (collectively the "PARENT FINANCIAL STATEMENTS"):
(i) audited balance sheet as of February 28, 1999 for Parent; (ii) audited
balance sheet and statement of income and statement of cash flows as of and for
the fiscal year ended February 27, 2000 for Parent; and (iii) the unaudited
balance sheet as of September 24, 2000 (the "PARENT MOST RECENT BALANCE SHEET")
and statement of income and statement of cash flows as of and for the
seven-month period ended September 24, 2000 for Parent. The Parent Financial
Statements (including the notes thereto) have been prepared in accordance with
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GAAP (except for the absence of footnote disclosure in the financial statements
referred to in clause (iii) above) throughout the periods covered thereby,
present fairly the financial condition of Parent as of such dates and the
results of operations of Parent for such periods, and are correct and complete
and consistent with the books and records of Parent (which books and records are
correct and complete).
(g) SUBSEQUENT EVENTS. Since February 27, 2000, there has not been any
material adverse change in the business, assets, financial condition, operating
results, customer relations or supplier relations of Parent. Since February 27,
2000, except as set forth on SCHEDULE 5(g) attached hereto:
(i) Parent has not sold, leased, transferred, or assigned any of the
assets of Parent, tangible or intangible with an aggregate value greater
than $100,000, other than inventory in the ordinary course of business;
(ii) Parent has not entered into any agreement, contract, lease, or
license (or series of related agreements, contracts, leases, and licenses)
involving more than $100,000, other than in the ordinary course of
business;
(iii) no party (including Parent) has accelerated, terminated,
modified, or canceled any agreement, contract, lease, or license (or
series of related agreements, contracts, leases, and licenses) involving
more than $100,000 to which Parent is a party or by which Parent is bound;
(iv) Parent has maintained its assets and made capital expenditures
consistent with the its normal course of operations;
(v) Parent has not experienced any damage, destruction, or loss
(whether or not covered by insurance) to its property in excess of
$100,000 in the aggregate;
(vi) Parent has not entered into any employment contract or
collective bargaining agreement, written or oral, or modified the terms of
any existing such contract or agreement;
(vii) Since January 1, 2000, Parent has not granted any increase in
the base compensation of any of its directors, officers or employees other
than as consistent with past custom and practice;
(viii)Since January 1, 2000, Parent has not adopted, amended,
modified, or terminated any bonus, profit-sharing, incentive, severance,
or other plan, contract, or commitment for the benefit of any of its
directors, officers and employees (or taken any such action with respect
to any Plan);
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(ix) Parent has not entered into any transaction with any of its
directors, officers, employees or Affiliates, other than ordinary course
employment arrangements entered into in accordance with past custom and
practice;
(x) Parent has not entered into any agreement, contract or other
arrangement with respect to the incurrence of borrowed money;
(xi) there has not been any other occurrence, event, incident,
action, failure to act or transaction outside the ordinary course of
business involving Parent; and
(xii) Parent has not committed to any of the foregoing.
(h) FINANCING. The Commitment Letter attached hereto as EXHIBIT B is a
true and correct copy of the commitment letter delivered to Buyer from Buyer's
lender. The proceeds of the financing contemplated by such Commitment Letter are
sufficient to enable the Buyer to consummate the transactions contemplated
hereby.
(i) REAL PROPERTY. SCHEDULE 5(i) attached hereto lists the address and
description of (i) all owned real property used by Parent and (ii) each leased
and subleased parcel of real property used by Parent.
(j) LIMITATIONS ON REPRESENTATIONS AND WARRANTIES. Buyer acknowledges that
neither Seller nor any other Person has made any representation or warranty,
express or implied, as to the accuracy or completeness of any information
regarding the Business or the Acquired Assets or other matters that is not
included in this Agreement or the Schedules hereto.
(k) UNDISCLOSED LIABILITIES. To the Parent's knowledge, other than as set
forth on SCHEDULE 5(k) Parent has no liability or obligation (whether asserted
or unasserted, absolute or contingent, accrued or unaccrued, liquidated or
unliquidated) arising out of transactions entered into on or prior to the
Closing Date, or any action or inaction on or prior to the Closing Date, or any
state of facts existing on or prior to the Closing Date, except for (i)
liabilities or obligations set forth on the Parent Most Recent Balance Sheet,
(ii) liabilities or obligations which have arisen after the Parent Most Recent
Balance Sheet in the ordinary course of business (none of which relates to (A)
breach of contract, (B) breach of warranty, (C) tort, (D) infringement, (E)
violation of law, or (F) any action, suit or proceeding (including, without
limitation, any clean-up obligation or liability for personal injury or property
damage under any Environmental, Health and Safety Laws)), (iii) liabilities or
obligations expressly identified on the Schedules attached hereto and the other
liabilities or obligations which are not required to be disclosed on the
Schedules due solely to the specific dollar threshold contained in the relevant
representation and warranty related to the applicable Schedule, and (iv) any
other liabilities or obligations reasonably expected to be less than $2 million
(net of proceeds received from insurance or indemnification).
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(l) LEGAL COMPLIANCE. Parent and its predecessors and Affiliates have
complied with all applicable laws, rules and regulations of federal, state,
local and foreign governments (and all agencies thereof), and no action, suit,
proceeding, hearing, investigation, charge, complaint, claim, demand or notice
has been filed or commenced against any of them alleging any failure to so
comply.
(m) CLOSING DATE. The representations and warranties contained in this
Section 5 and elsewhere in this Agreement will be true and correct on the
Closing Date as though then made, except for written disclosures made by Buyer
to Seller prior to the Closing.
SECTION 6. PRE-CLOSING COVENANTS. The Parties agree as follows with
respect to the period between the execution of this Agreement and the Closing.
(a) GENERAL. Each of the Parties will use its reasonable efforts to take
all action and to do all things necessary in order to consummate and make
effective the transactions contemplated by this Agreement.
(b) NOTICES AND CONSENTS. Seller will give any notices to third parties,
and Seller will use its reasonable efforts to obtain any third party consents,
that Buyer reasonably may request. Each of the Parties will give any notices to,
make any filings with, and use its reasonable efforts to obtain any
authorizations, consents, and approvals of governments and governmental agencies
in connection with the matters referred to in Section 4(c) and Section 5(c)
above.
(c) OPERATION OF THE BUSINESS. Except as contemplated in this Agreement or
as consented to by Buyer in writing, Seller will not engage in any practice,
take any action, or enter into any transaction relating to the Business outside
the ordinary course of business, including the management of its working capital
other than in accordance with past custom and practice. Without limiting the
generality of the foregoing, Seller will not engage in any practice, enter into
any agreement of the type described in Section 4(o) above (other than clause
(viii) thereof), take any action, or enter into any transaction which would be
required to be disclosed under Section 4(g) above, except that Seller will be
able to continue to make any capital expenditures relating to the Business
contemplated by Seller's budget for capital expenditures for the current fiscal
year. Seller will not make any reversals of balance sheet reserves against
inventory or accounts receivable or reversals of accrued warranty liabilities or
materially alter accounting policies for recognizing expenses related to such
reserves and liabilities or materially alter accounting policies for recognizing
expenses related to such reserves and liabilities, other than reversals
consistent with Seller's current accounting policies or practices.
(d) PRESERVATION OF BUSINESS. Each Party will conduct its business and
maintain its properties in accordance with past custom and practice, including
its present operations, physical facilities, equipment, working conditions, and
relationships with lessors, licensors, suppliers, customers, and employees.
Without limiting the generality of the foregoing, each Party will pay
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expenses and payables, purchase inventory, perform all maintenance and repairs,
make all capital expenditures and collect receivables in the ordinary course of
business in accordance with past custom and practice.
(e) FULL ACCESS. Each Party will permit representatives of the other Party
(including its accountants, attorneys, consultants, lenders and other agents) to
have full access at all reasonable times, and in a manner so as not to interfere
with the normal business operations of such Party to all premises, properties,
personnel, books, records (including Tax records), contracts, and documents.
(f) NOTICE OF DEVELOPMENTS. Each Party will give prompt written notice to
the other Party of any development causing, or reasonably likely to cause, a
breach of any of the representations and warranties in Section 4 or 5 above.
Subject to Sections 7(b)(i)(A) and 7(b)(iii)(A) below, no disclosure by any
Party pursuant to this Section 6(f), however, shall be deemed to cure any breach
of any representation or warranty contained herein.
(g) EXCLUSIVITY. Seller will not, and will cause its respective officers,
directors, agents and Affiliates to not, discuss a possible sale or other
disposition of all or any part of the assets of the Business (whether by merger,
reorganization, recapitalization or otherwise), other than inventory in the
ordinary course of business, with any party other than Buyer (an "ACQUISITION
PROPOSAL") or provide any information to any other party regarding the Business
other than information which is traditionally provided in the regular course of
its business operations to third parties where Seller and its respective
officers, directors, agents and Affiliates have no reason to believe that such
information may be utilized to evaluate a possible sale or other disposition of
the Business. Seller and its respective officers, directors and Affiliates (i)
do not have any agreement, arrangement or understanding with respect to any
Acquisition Proposal, (ii) will cease and cause to be terminated any and all
discussions with third parties regarding any Acquisition Proposal and (iii) will
promptly notify Buyer if any Acquisition Proposal, or any inquiry or contact
with any Person or entity with respect thereto, is made.
(h) REIMBURSEMENT. At the Closing, Buyer shall reimburse Seller for out of
pocket costs of $169,503.24 incurred by Seller in connection with the
termination of the acquisition of a wholesale horticultural sales and service
center that was to be located in Somerset, New Jersey.
SECTION 7. ADDITIONAL AGREEMENTS.
(a) SURVIVAL. Subject to Section 7(b) below, the representations,
warranties, covenants and agreements set forth in this Agreement or in any
certificate or other writing delivered in connection with this Agreement will
survive the Closing Date and the consummation of the transactions contemplated
hereby notwithstanding any examination made for or on behalf of Buyer or Seller
or the knowledge of any of Buyer's or Seller's officers, directors,
shareholders, employees, Affiliates or agents.
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(b) INDEMNIFICATION.
(i) Subject to the limitations set forth in Section 7(b)(ii) below,
Seller agrees to indemnify and hold harmless Buyer, its officers,
directors, shareholders, employees and Affiliates (collectively, the
"BUYER GROUP") harmless against any loss, liability, damage or expense,
including reasonable legal expenses and costs ("LOSSES"), which they may
suffer, sustain, or become subject to, as the result of:
(A) the breach of any representation or warranty contained in
Section 4 of this Agreement unless written notice of such breach was
provided in accordance with Section 6(f) above to Buyer prior to the
Closing Date;
(B) the breach of any representation, warranty, covenant or
agreement contained in this Agreement (other than the
representations and warranties contained in Section 4 of this
Agreement);
(C) any Excluded Liability; and
(D) the waiver by the Seller and Buyer of compliance with the
Bulk Transfer Laws.
(ii) With respect to claims for breaches of representations and
warranties referred to in Section 7(b)(i)(A) above, (x) Seller will be
liable to the Buyer Group for any such Losses only if the aggregate amount
of all such Losses relating to all such breaches exceeds $250,000, in
which case Seller will be liable only for such excess, (y) Seller's
liability to the Buyer Group for all such Losses hereunder shall not
exceed $3,500,000, and (z) Seller will not be liable for any such Losses
arising therefrom unless written notice of such breach is given by the
Buyer Group to Seller before the earlier of June 1, 2002 and the
completion of Buyer's audit for Buyer's fiscal year ending in 2002, except
for Losses arising from a breach of the representation and warranty
contained in (A) Section 4(j) (Tax Matters) above for which Seller will
not be liable for any Losses arising therefrom unless written notice of
such breach is given by the Buyer Group to Seller prior to thirty (30)
days after the expiration of the applicable statute of limitations, (B)
Section 4(a) (Organization), Section 4(b) (Authorization), Section 4(k)
(Title to Assets), Section 4(s) (Employee Benefits), and Section 4(t)
(Environmental, Health and Safety Laws) above for which Seller will not be
liable for any Losses arising therefrom unless written notice of such
breach is given by the Buyer Group to Seller within three years after the
Closing Date, and (C) Section 4(y) (Closing Date), with respect to claims
relating to the subject matter addressed in the representations and
warranties set forth in this clause (ii), as to which such claims may be
made at any time during the time period set forth in such clause. If any
Loss arising from a breach of representation or warranty referred to in
Section 7(b)(i)(A) above also constitutes a Loss arising out of or
relating to an Excluded Liability, such Loss will be deemed to be an
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Excluded Liability for purposes of Section 7(b)(i), and, thus, not subject
to the limitations set forth in the first sentence of this Section
7(b)(ii). Notwithstanding anything contained herein to the contrary, any
Losses arising from a breach of the representations and warranties
contained in Section 4(a) (Organization), Section 4(b) (Authorization),
Section 4(d) (Broker's Fees), Section 4(j) (Tax Matters) and Section 4(k)
(Title to Assets) shall not be subject to the limitations set forth in
clauses (x) and (y) of the first sentence of this Section 7(b)(ii).
(iii) Subject to Section 7(b)(iv) below, Buyer agrees to indemnify
and hold Seller, its officers, directors, shareholders, employees and
Affiliates (the "SELLER GROUP") harmless against any Losses which they may
suffer, sustain or become subject to, as the result of:
(A) the breach of any representation or warranty contained in
Section 5 of this Agreement unless written notice of such breach was
provided in accordance with Section 6(f) above to Seller prior to
the Closing Date;
(B) the breach of any representation, warranty, covenant or
agreement contained in this Agreement (other than the
representations and warranties contained in Section 5 of this
Agreement); and
(C) any Assumed Liability.
(iv) With respect to claims for breaches of representations and
warranties referred to in Section 7(b)(iii)(A) above, (x) Buyer will be
liable to the Seller Group for any such Losses only if the aggregate
amount of all such Losses relating to all such breaches exceeds $250,000,
in which case Buyer will be liable only for such excess, (y) Buyer's
liability to the Seller Group for all such Losses hereunder shall not
exceed $3,500,000, and (z) Buyer will not be liable for any such Losses
arising therefrom unless written notice of such breach is given by the
Seller Group to Buyer before June 1, 2002, except for Losses arising from
a breach of the representation and warranty contained in (A) Section 5(a)
(Organization), Section 5(b) (Authorization) and Section 5(e)
(Capitalization) above for which Buyer will not be liable for any Losses
arising therefrom unless written notice of such breach is given by the
Seller Group to Buyer within three years after the Closing Date and (B)
Section 5(m) (Closing Date), with respect to claims relating to the
subject matter addressed in the representations and warranties set forth
in this clause (iv), as to which such claims may be made at any time
during the time period set forth in such clause. If any Loss arising from
a breach of representation or warranty referred to in Section 7(b)(iii)(A)
above also constitutes a Loss arising out of or relating to an Assumed
Liability, such Loss will be deemed to be an Assumed Liability for
purposes of Section 7(b)(iii), and, thus, not subject to the limitations
set forth in the first sentence of this Section 7(b)(iv). Notwithstanding
anything contained herein to the contrary, any Losses arising from a
breach of the representations and warranties contained in Section 5(a)
(Organization), Section 5(b) (Authorization), Section 5(d) (Broker's
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Fees) and Section 5(e) (Capitalization) shall not be subject to the
limitations set forth in clauses (x) and (y) of the first sentence of this
Section 7(b)(iv).
(v) If any third party shall notify any party to this Agreement (the
"INDEMNIFIED PARTY") with respect to any matter which may give rise to a
claim (a "CLAIM") for indemnification against any other party to this
Agreement (the "INDEMNIFYING PARTY") under this Section 7(b), then the
Indemnified Party shall notify each Indemnifying Party thereof. Once the
Indemnified Party has given notice of the matter to all of the
Indemnifying Parties, the Indemnified Party may defend against the matter
in any manner it reasonably may deem appropriate. Within thirty (30) days
after receipt of notice of a particular matter, the Indemnifying Party may
assume the defense of such matter if the Indemnifying Party admits
responsibility and reaffirms its obligation for indemnification with
respect to such matter; PROVIDED, HOWEVER, that (x) the Indemnifying Party
will retain counsel reasonably acceptable to the Indemnified Party, (y)
the Indemnified Party may participate in the defense of such Claim with
co-counsel of its choice to the extent that the Indemnified Party believes
in its sole discretion that such matter will affect its ongoing business
and (z) the Indemnifying Party will not consent to the entry of any
judgment with respect to the matter or enter into any settlement with
respect to the matter which does not include a provision whereby the
plaintiff or claimant in the matter releases the Indemnified Party from
all liability with respect thereto. If, within such 30-day period, the
Indemnifying Party does not assume the defense of such matter, the
Indemnified Party may consent to the entry of any judgment with respect to
the matter or enter into any settlement with respect to the matter without
the consent of the Indemnifying Party.
(vi) Subject to the terms and conditions set forth in this Section
7(b), in the event that Seller breaches any representation, warranty,
covenant or agreement contained in this Agreement, Buyer may, at its
option, setoff all of any portion of the Losses which the Buyer Group
suffers, sustains or becomes subject to as a result of such breach against
any amounts due or to become due to Seller including, without limitation,
any amounts due or to become due to Seller under Section 1(f) hereof.
Subject to the terms and conditions set forth in this Section 7(b), in the
event that Buyer breaches any representation, warranty, covenant or
agreement contained in this Agreement, Seller may, at its option, setoff
all of any portion of the Losses which the Seller Group suffers, sustains
or becomes subject to as a result of such breach against any amounts due
or to become due to Buyer including, without limitation, any amounts due
or to become due to Buyer under Section 1(f) hereof. In addition, in the
event that the Buyer Group suffers or sustains Losses and becomes entitled
to indemnification from Seller for any Loss pursuant to this Section 7(b)
and within 45 days after the Buyer Group, as an Indemnified Party, has
notified the Seller, as Indemnifying Party, thereof, Seller shall not have
paid such Loss in cash, the Buyer Group, at its election, shall have the
option to purchase from Seller, at a price per share equal to the price
per share equal to $490.67, the number of shares of capital stock of
Parent owned by Seller equal to the amount of such Loss; provided that the
Buyer Group may not exercise such repurchase right until 15 days
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after either the parties have agreed to the amount of such Loss or a final
result, determination, finding, judgment or award has been rendered that
is not appealable (a "FINAL DETERMINATION"). The closing of such purchases
shall be within 5 days after notice thereof by the Buyer Group to Seller.
At the closing of the purchase of the Parent Common Stock, the Seller
shall deliver certificates representing all of the shares of capital stock
of the Parent being purchased, free and clear of all liens and
encumbrances, and duly endorsed for transfer to the Buyer Group with all
requisite transfer stamps (if any) affixed thereto and accompanied by duly
executed stock powers or other assignment or transfer certificate and upon
receipt thereof the Buyer Group shall pay for the purchase price of such
shares by offsetting amounts owed the Buyer Group in accordance with the
first sentence of this Section 7(b)(vi). The Buyer Group's right to
repurchase Parent Common Stock pursuant to this Section 7(b)(vi) shall end
on the earlier of (A) June 1, 2002 if there are no claims for
indemnification then outstanding pursuant to Section 7(b)(i)(A) hereof and
(B) the date Seller transfers the Parent Common Stock pursuant to Sections
6, 10, 12 or 13 of the Stockholders Agreement.
(c) PRESS RELEASE AND ANNOUNCEMENTS. No Party shall issue any press
release or make any public announcement relating to the subject matter of this
Agreement (including announcements to customers, suppliers, etc.) prior to the
Closing without the prior written approval of the other Party, except that any
party may make any announcement required by law after notice to the other party
and consultation with such party.
(d) EXPENSES. Except as otherwise provided herein, each of Buyer and
Seller will bear its own costs and expenses (including, without limitation, all
legal, accounting, consulting, investment banking, brokerage and other fees and
expenses) incurred in connection with this Agreement and the transactions
contemplated hereby. Buyer and Seller shall each bear 50% of all filing fees
under the HSR Act.
(e) CERTAIN TAXES.
(i) All transfer, documentary, sales, use, stamp, registration and
such Taxes and fees (including any penalties, interest and filing
expenses) incurred in connection with this Agreement, shall be paid 50% by
Seller and 50% by Buyer, and Buyer will file all necessary Tax Returns and
other documentation with respect to all such transfer, documentary, sales,
use, stamp, registration and other taxes and fees, and, if required by
applicable law, the Seller will, and will cause its Affiliates to, join in
the execution of any such Tax Returns and other documentation upon 10 day
prior written notice and reasonable approval by Seller.
(ii) All real property taxes, personal property taxes, AD VALOREM
obligations and similar taxes imposed on a periodic basis, in each case
levied with respect to the Acquired Assets, other than conveyance taxes
provided for in clause (i) above, for a taxable period which includes (but
does not end on) the Closing Date shall be apportioned between Seller
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and Buyer as of the Closing Date based on the number of days of such
taxable period included in the pre-Closing Tax period and the number of
days of such taxable period included in the post-Closing period. The
Seller shall be liable for the proportionate amount of such Taxes that is
attributable to the pre-Closing Tax period. Within 90 days after the
Closing, Seller and Buyer shall present a reimbursement to which each is
entitled under this clause (ii) together with such supporting evidence as
is reasonably necessary to calculate the proration amount; provided,
however, that if the final tax amount due for a taxable period that
includes the Closing Date is not determined within such period, a
reimbursement shall be based on the amount of the relevant tax for the
preceding taxable year, subject to an adjustment within 30 days after the
final amount of such tax is determined. The proration amount shall be paid
by the party owing it to the other within 10 days after delivery of such
statement. Thereafter, Seller shall notify Buyer upon receipt of any ▇▇▇▇
for real or personal property taxes relating to the Acquired Assets part
or all of which are attributable to the post-Closing Tax period, and shall
promptly deliver such ▇▇▇▇ to Buyer who shall pay the same to the
appropriate taxing authority, provided that if such ▇▇▇▇ covers the
pre-Closing Tax period, Seller shall also remit prior to the due date of
assessment to the Buyer payment for the proportionate amount of such ▇▇▇▇
that is attributable to the pre-Closing Tax period. In the event that
either Seller or Buyer shall thereafter make a payment for which it is
entitled to reimbursement under this clause (ii), the other party shall
make such reimbursement promptly but in no event later than 30 days after
the presentation of a statement setting forth the amount of reimbursement
to which the presenting party is entitled along with such supporting
evidence as is reasonably necessary to calculate the amount of
reimbursement. Any payment required under this clause (ii) and not made
within 10 days of delivery of the statement shall bear interest at the
rate per annum determined, from time to time, under the provisions of
Section 6621(a)(2) of the Code for each day until paid.
(f) FURTHER ASSURANCES. Seller will execute and deliver such further
instruments of conveyance and transfer and take such additional action as Buyer
may reasonably request to effect, consummate, confirm or evidence the transfer
to Buyer of the Acquired Assets, and Seller will execute such documents as may
be necessary to assist Buyer in preserving or perfecting its rights in the
Acquired Assets.
(g) TRANSITION ASSISTANCE. From the date hereof, Seller will not in any
manner take or cause to be taken any action which is designed, intended or might
reasonably be anticipated to have the effect of discouraging customers,
suppliers, lessors and other associates of the Business from maintaining the
same business relationships with Buyer after the date of this Agreement as were
maintained with the Business prior to the date of this Agreement.
(h) CONFIDENTIALITY. Whether or not the transactions contemplated hereby
are consummated, Buyer and Seller will keep confidential all information and
materials regarding the other party reasonably designated by such party as
confidential at the time of disclosure thereof, except that Buyer may disclose
such information and material to its accountants, attorneys, lenders
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and agents. If the transactions contemplated hereby are consummated, Seller will
maintain confidential and will not use or disclose, directly or indirectly
(except as required by law or as authorized in writing by Buyer prior to such
disclosure), any confidential or proprietary information or materials regarding
the Business.
(i) NONCOMPETITION AND NONSOLICITATION. Seller hereby agrees that Seller
and each of its executive officers and controlling shareholders:
(i) During the period from the date hereof to and including the
third anniversary of the date hereof (the "NONCOMPETE PERIOD"), such
Person shall not have any affiliation (other than passive investments by
the Seller and its Affiliates of less than 5% of the outstanding equity
securities of any entity listed for trading on a national stock exchange
or the Nasdaq National Market) with any corporation, partnership or other
business entity or enterprise (wherever located) which engages in the
re-wholesale of horticultural and irrigation products. Notwithstanding the
foregoing, Seller may conduct (x) a horticultural distribution business in
the Quincy or Tallahassee, Florida area, (y) other than sales to those
customers set forth on SCHEDULE 7(i) attached hereto, a brokerage business
involving sales of landscape nursery products, provided that for the one
year period following the Closing Date such sales to Direct-Ship Customers
and Horticultural Customers (each as defined in the brokerage agreement
attached hereto as EXHIBIT J (the "BROKERAGE AGREEMENT")) may only be made
pursuant to and in accordance with the terms of the Brokerage Agreement,
and (z) direct sales of landscape nursery products shipped from Seller's
or ▇▇▇▇▇▇▇'▇ owned farms, provided that with respect to landscape nursery
products that have not been grown at Seller's or ▇▇▇▇▇▇▇'▇ owned farms,
such landscape nursery products have been held by Seller at Seller's or
▇▇▇▇▇▇▇'▇ owned farms for at least one year prior to such shipment,
provided, further, that the foregoing proviso shall not apply to sales not
in excess of $500,000 in any fiscal year of landscape nursery products of
the same or similar species as those products grown at Seller's or
▇▇▇▇▇▇▇'▇ owned farms. For purposes of this Section 7(i), the term
"affiliation" shall mean any direct or indirect interest in such entity or
enterprise, whether as an officer, director, employee, investor, partner,
stockholder, sole proprietor, trustee or consultant; and
(ii) During the Noncompete Period, such Person shall not, and shall
not permit any of its executive officers or controlling shareholders to
(x) induce or attempt to induce any employee of Buyer to leave the employ
of Buyer, or in any way interfere with the relationship between Buyer and
any employee thereof, or (y) without the prior written consent of Buyer,
hire directly or through another entity any Person who was an employee of
Buyer at any time prior to or during the Noncompete Period; provided that
Seller shall not be prevented from employing any employee of Buyer who (A)
contacts Seller on his or her own initiative without direct or indirect
solicitation by Seller or its executive officers, directors or controlling
shareholders, (B) has been terminated by Buyer prior to the commencement
of employment discussions between Seller and such employee or (C) responds
to general
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advertisements placed by Seller in newspapers or similar publications that
are not specifically directed at Buyer or its employees. Notwithstanding
anything contained herein to the contrary, until the first anniversary of
the date hereof Seller shall not directly or indirectly hire any
Transferred Employee without the prior written consent of Buyer.
(iii) During the one year period following the termination of any
employee of Buyer who is a party to a Retention Agreement, such Person
shall not hire or otherwise have an affiliation with such employee.
Notwithstanding anything in this Section 7(i) to the contrary, if at any time a
court holds that the restrictions stated in Section 7(i)(i) or Section 7(i)(ii)
are unreasonable or otherwise unenforceable under circumstances then existing,
the parties hereto agree that the maximum period, scope or geographical area
determined to be reasonable under such circumstances by such court will be
substituted for the stated period, scope or area. Seller acknowledges and agrees
that money damages may not be an adequate remedy for any breach or threatened
breach of the provisions of subparagraph (i) or (ii) and that, in such event,
Buyer or its successors or assigns may, in addition to any other rights and
remedies existing in its favor, apply to any court of competent jurisdiction for
specific performance, injunctive and/or other relief in order to enforce or
prevent any violations of the provisions of this Section 7(i) (including, if the
court so determines, the extension of the Noncompete Period by a period equal to
the length of court proceedings necessary to stop such violation). Any
injunction shall be available without the posting of any bond or other security.
In the event of a Final Determination of a breach or violation by Seller of any
of the provisions of this Section 7(i), the Noncompete Period will be tolled
until such breach or violation is resolved. Seller agrees that the restrictions
contained in this Section 7(i) are reasonable in all respects.
(j) ACCESS TO BOOKS AND RECORDS. After the Closing, Seller will permit
Buyer and its representatives to have full access upon prior notice and at
reasonable times, and in a manner so as not to interfere with the normal
business operations of Seller to all books, records (including Tax records),
contracts and documents of or pertaining to the Business.
(k) LEGENDS; TRANSFER OF PARENT COMMON STOCK. Each share of Parent Common
Stock will be imprinted with a legend in substantially the following form:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY COMPARABLE STATE
SECURITIES LAW AND MAY NOT BE SOLD, PLEDGED, HYPOTHECATED, ENCUMBERED,
DISPOSED OF OR OTHERWISE TRANSFERRED WITHOUT COMPLIANCE WITH THE
SECURITIES ACT OF 1933 OR ANY EXEMPTION THEREUNDER AND APPLICABLE STATE
AND OTHER SECURITIES LAWS. THE SECURITIES REPRESENTED BY THIS CERTIFICATE
ARE SUBJECT TO THE RESTRICTIONS ON TRANSFER AND OTHER PROVISIONS OF A
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STOCKHOLDERS AGREEMENT, DATED AS OF NOVEMBER 30, 1998, BY AND AMONG SHEMIN
ACQUISITION CORPORATION (THE "COMPANY") AND CERTAIN OF ITS STOCKHOLDERS,
AS MAY BE AMENDED FROM TIME TO TIME (THE "STOCKHOLDERS AGREEMENT"), AND
MAY NOT BE SOLD, PLEDGED, HYPOTHECATED, ENCUMBERED, DISPOSED OF OR
OTHERWISE TRANSFERRED EXCEPT IN ACCORDANCE THEREWITH. A COPY OF THE
STOCKHOLDERS AGREEMENT IS ON FILE AT THE PRINCIPAL EXECUTIVE OFFICES OF
THE COMPANY.
Each holder desiring to transfer any Parent Common Stock first must furnish to
Parent a (i) written opinion from counsel reasonably satisfactory to Parent in
form, substance, and by reason of such counsel's experience to the effect that
the holder may transfer such Parent Common Stock as desired without registration
under the Securities Act or under any applicable state securities laws; and (ii)
written undertaking executed by the desired transferee reasonably satisfactory
to Parent in form and substance agreeing to be bound by the recoupment
provisions and the restrictions on transfer contained herein.
(l) EMPLOYEE AND RELATED MATTERS.
(i) TRANSFERRED EMPLOYEES. As of the Closing Date, Buyer shall offer
employment to all employees of Seller actively employed in the Business as
of the Closing Date other than those employees receiving Severance
Payments (the "BUSINESS EMPLOYEES"); PROVIDED, HOWEVER, that Buyer shall
have no obligation to offer employment as of the Closing Date to any
employee of Seller who, as of the Closing Date, is absent from active
employment with Seller for any reason (including as a result of layoff,
leave of absence, illness or injury) and who Buyer reasonably expects not
to be able to perform all of his or her regular duties in his or her
respective position within 30 days after the Closing Date (the "INACTIVE
EMPLOYEES"). To facilitate Buyer's obligations to offer employment under
this Section 7(l), Seller shall provide Buyer within a reasonable period
prior to the Closing (and again on the Closing Date) a true, complete and
accurate list of each Business Employee and each Inactive Employee,
including the date such Inactive Employee changed from active to inactive
status, the reason for such inactive status and, if applicable, the
anticipated date of return to active employment. Business Employees who,
on or immediately after the Closing Date, become employees of Buyer shall
be referred to herein as the "TRANSFERRED EMPLOYEES." Except as provided
in subsection (ii) below, Buyer shall not assume any liability whatsoever
and Seller shall retain, bear and discharge all liabilities and
obligations with respect to all Inactive Employees of Seller and any other
employees and former employees of Seller who do not become Transferred
Employees (including liabilities under Section 4980B of the Code). With
respect to each Transferred Employee, Buyer shall not assume any
responsibility whatsoever for any liabilities or obligations which occur
prior to the time such Transferred Employee commences employment with
Buyer or in any way relate to such Transferred Employee's employment
service with Seller. Except as otherwise specifically
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set forth herein, Seller shall have no responsibility whatsoever for any
liabilities or obligations which relate in any way to such Transferred
Employee's employment service with Buyer.
(ii) LAYOFF EMPLOYEES. Buyer currently anticipates that it will
offer employment to each Inactive Employee of Seller who is on layoff as
of the Closing Date at the time when such Inactive Employees would
normally return to work with Seller (the "RETURN DATE"). Inactive
Employees who eventually become employees of Buyer shall be referred to
herein as the "LAYOFF EMPLOYEES," and not as Transferred Employees.
SCHEDULE 7(l) sets forth the name of each such Inactive Employee who is
eligible to become a Layoff Employee along with such Inactive Employee's
Return Date. Except as otherwise provided in this Section 7(l), with
respect to each Layoff Employee, Buyer shall not assume responsibility for
any liabilities or obligations which occur prior to the time such Layoff
Employee commences employment with Buyer or in any way relate to such
Layoff Employee's employment service with Seller. Notwithstanding the
foregoing, Buyer shall reimburse Seller for the full amount of all
employer contributions paid by Seller with respect to each Layoff Employee
under any Employee Welfare Benefit Plan for each month beginning with the
calendar month next following the Closing Date and ending with the
calendar month in which such Inactive Employee becomes a Layoff Employee.
Buyer shall pay Seller any amounts due under the preceding sentence within
30 days of receiving the invoice therefor, and Seller shall provide Buyer
with any documentation reasonably requested by Buyer in connection
thereto. Except as otherwise specifically set forth herein, Seller shall
have no responsibility whatsoever for any liabilities or obligations which
relate in any way to such Layoff Employee's employment service with Buyer.
(iii) EMPLOYEE BENEFIT PLANS. Except as otherwise provided in this
Section 7(l), Buyer shall not assume and shall have no liability or
obligation whatsoever, and Seller shall retain, bear and discharge all
liabilities and obligations, under each Plan. Transferred Employees shall
remain in Seller's Plans which provide medical and life insurance benefits
until the end of the month in which the Closing Date occurs. As of the
Closing Date (or, with respect to medical and life insurance benefit
plans, as of the first day of the next month following the Closing Date),
Buyer shall cause each Transferred Employee who was covered under the
Plans immediately prior to the Closing Date to be covered under the
employee benefit plans, programs and arrangements of Buyer (the "BUYER'S
EMPLOYEE BENEFIT PLANS"). Buyer's Employee Benefit Plans shall, in the
aggregate, provide benefits to eligible Transferred Employees that are not
less favorable than the benefits, in the aggregate, generally provided to
other employees employed by the Buyer. Buyer's Employee Benefit Plans
shall recognize each Transferred Employee's prior service with Seller that
is recognized under the Plans (and prior service with Seller's
predecessors to the extent such prior service is recognized under the
Plans) for purposes of eligibility to participate, vesting and waiting
periods but not for purposes of benefit accruals.
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(iv) 401(K) PLAN. Effective as of the Closing Date, Buyer shall
amend its defined contribution plan ("BUYER'S 401(K) PLAN") to recognize
prior service with Seller for purposes of vesting and participation.
Seller shall cause the account balances of the Transferred Employees under
the ▇▇▇▇▇▇▇ Land and Nurseries, Inc. 401(k) Savings Plan ("SELLER'S 401(K)
PLAN") to be fully vested as of the Closing Date. In accordance with the
applicable provisions of Section 414(l) of the Code, Seller shall cause
the assets of Seller's 401(k) Plan attributable to the accounts (whether
or not vested) of each participant who is a Transferred Employee to be
transferred by the trustee of Seller's 401(k) Plan to the trustee of
Buyer's 401(k) Plan. Unless otherwise agreed to by the parties, such
transfer of assets shall be in cash (but shall include any promissory
notes or other evidences of indebtedness with respect to outstanding
loans), and shall be made as of and as soon as practicable after a
valuation date under Seller's 401(k) Plan occurring immediately following
the Closing Date, or as of such later valuation date as may be mutually
selected by Buyer and Seller. Such transfer shall account appropriately
for earnings during the period from the applicable valuation date to the
actual date of transfer (the "TRANSFER DATE"). From the Closing Date until
the Transfer Date, Buyer shall make continuous payroll deductions each pay
period from the pay of each employee of Buyer who has a loan outstanding
from Seller's 401(k) Plan of amounts sufficient to pay the installment
payments of principal and interest on each such loan as required by the
promissory note or other evidence of indebtedness relating to such loan.
Such deducted amounts shall be paid by Buyer to the trustee of Seller's
401(k) Plan who shall accept such payments for a credit against such
loans. On or prior to the Closing Date, Seller shall make on behalf of all
Transferred Employees a contribution to Seller's 401(k) Plan of the
amounts of any salary reduction, matching and profit sharing contributions
attributable to or payable on account of any such participant for any time
period ending on or prior to the Closing Date.
(v) MUTUAL COOPERATION. Seller shall provide promptly to Buyer, at
Buyer's reasonable request, any information or copies of personnel records
(including addresses, dates of birth, dates of hire and dependent
information) relating to the Transferred Employees and Layoff Employees or
relating to the service of Transferred Employees and Layoff Employees with
Seller prior to the Closing Date. Seller and Buyer shall each cooperate
with the other and shall provide to the other such documentation,
information and assistance as is reasonably necessary to effect the
provisions of this SECTION 7(L).
SECTION 8. TERMINATION. This Agreement may be terminated as provided
below:
(a) Buyer and Seller may terminate this Agreement by mutual written
consent at any time prior to the Closing;
(b) Buyer may terminate this Agreement by giving written notice to Seller
at any time prior to the Closing if the Closing shall not have occurred on or
before January 31, 2001, by reason of the failure of any condition precedent
under Section 3(a) above; and
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(c) Seller may terminate this Agreement by giving written notice to Buyer
at any time prior to the Closing if the Closing shall not have occurred on or
before January 31, 2001, by reason of the failure of any condition precedent
under Section 3(b) above.
Notwithstanding anything in this Section 8 to the contrary, no Party
may terminate this Agreement if the circumstance giving rise to such Party's
right to terminate results primarily from such Party itself breaching of any
representation, warranty or covenant contained in this Agreement. If any Party
terminates this Agreement pursuant to this Section 8, all rights and obligations
of the Parties hereunder shall terminate without any liability of any Party to
any other Party, except for any liability of any Party then in breach.
SECTION 9. DEFINITIONS.
"AFFILIATE" has the meaning set forth in Rule 12b-2 of the
regulations promulgated under the Securities Exchange Act of 1934, as amended.
"APPLICABLE RATE" means the corporate base rate of interest
announced from time to time by Chase Manhattan Bank.
"BUSINESS" means the operation by the Seller of the Horticultural
Centers.
"CODE" means the Internal Revenue Code of 1986, as amended from time
to time.
"EMPLOYEE PENSION BENEFIT PLAN" shall have the meaning set forth in
Section 3(2) of ERISA.
"EMPLOYEE WELFARE BENEFIT PLAN" shall have the meaning set forth in
Section 3(1) of ERISA.
"ENVIRONMENTAL, HEALTH AND SAFETY LAWS" means the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, the Resource
Conservation and Recovery Act of 1976, the Occupational Safety and Health Act of
1970, together with all other laws, rules and regulations of federal, state,
local, and foreign governments (and all agencies thereof), other requirements
having the force or effect of law, all judgments, orders and decrees of federal,
state, local and foreign governments (and all agencies thereof) issued or
promulgated thereunder, all contractual obligations and all common law
concerning pollution or protection of the environment, public health and safety,
or employee health and safety, each as amended and as now or hereafter in
effect.
"ERISA" means the Employee Retirement Income Security Act of 1974,
as amended.
-▇▇-
"▇▇▇▇" ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ generally accepted accounting principles,
applied on a consistent basis.
"HORTICULTURAL CENTERS" means the Seller's seven wholesale
horticultural sales and service centers located in (i) Windsor, Connecticut,
(ii) Aston, Pennsylvania, (iii) Pittsburgh, Pennsylvania, (iv) Columbus, Ohio,
(v) Cincinnati, Ohio, (vi) White ▇▇▇▇▇, Maryland and (vii) Manassas, Virginia.
"INTELLECTUAL PROPERTY" means all of the following in any
jurisdiction throughout the world: (i) patents, patent applications and patent
disclosures; (ii) trademarks, service marks, trade dress, trade names, corporate
names, logos and slogans (and all translations, adaptations, derivations and
combinations of the foregoing) and Internet domain names, together with all
goodwill associated with each of the foregoing; (iii) copyrights and
copyrightable works; (iv) registrations and applications for any of the
foregoing; (v) trade secrets, confidential information, know-how and inventions;
(vi) computer software (including but not limited to source code, executable
code, data, databases and documentation); and (vi) all other intellectual
property.
"KNOWLEDGE" when referring to the Seller means the actual knowledge
after due inquiry of ▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ with respect to Sections 4(f) and 4(h), ▇▇▇▇▇ ▇▇▇▇▇▇▇
with respect to Sections 4(h), 4(r) and 4(s), and ▇▇▇▇▇ ▇▇▇▇▇▇▇ with respect to
Sections 4(f) and 4(h).
"MULTIEMPLOYER PLAN" shall have the meaning set forth in Section
3(37) of ERISA.
"PERSON" means an individual, a partnership, a corporation, an
association, a joint stock company, a trust, a joint venture, an unincorporated
organization, or a governmental entity (or any department, agency, or political
subdivision thereof).
"PLAN" means any (a) nonqualified deferred compensation or
retirement plan or arrangement which is an Employee Pension Benefit Plan, (b)
qualified defined contribution retirement plan or arrangement which is an
Employee Pension Benefit Plan, (c) qualified defined benefit retirement plan or
arrangement which is an Employee Pension Benefit Plan (including any
Multiemployer Plan), or (d) Employee Welfare Benefit Plan, fringe benefit, bonus
plan or other plan or program.
"PROHIBITED TRANSACTION" has the meaning set forth in Sec. 406 of
ERISA and Sec. 4975 of the Code.
"SUBSIDIARY" means any corporation with respect to which a specified
Person (or a Subsidiary thereof) has the power to vote or direct the voting of
sufficient securities to elect a majority of the directors.
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"TAX" means any federal, state, local, or foreign income, gross
receipts, license, payroll, employment, excise, severance, stamp, occupation,
premium, windfall profits, environmental, customs duties, capital stock,
franchise, profits, withholding, social security, unem ployment, 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, and including any obligation to indemnify or otherwise assume
or succeed to the Tax liability of any other Person.
"TAX RETURN" means any return, declaration, report, claim for
refund, or information return or statement relating to Taxes, including any
schedule or attachment thereto, and including any amendment thereof.
SECTION 10. MISCELLANEOUS.
(a) NO THIRD PARTY BENEFICIARIES. This Agreement shall not confer any
rights or remedies upon any Person other than the Parties and their respective
successors and permitted assigns.
(b) ENTIRE AGREEMENT. This Agreement (including the documents referred to
herein) constitutes the entire agreement between the Parties and supersedes any
prior understandings, agree ments, or representations by or between the Parties,
written or oral, that may have related in any way to the subject matter hereof.
(c) SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and inure
to the benefit of the Parties named herein and their respective successors and
permitted assigns. No Party may assign either this Agreement or any of its
rights, interests or obligations hereunder without the prior written approval of
the other Party; PROVIDED, HOWEVER, that Buyer may (x) assign any or all of its
rights and interests hereunder to one or more of its Affiliates or to any lender
providing financing for the transactions contemplated hereby and (y) designate
one or more of its Affiliates to perform its obligations hereunder (in any or
all of which cases Buyer nonetheless shall remain responsible for the
performance of all of its obligations hereunder).
(d) COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original but all of which
together will constitute one and the same instrument.
(e) HEADINGS. The section headings contained in this Agreement are
inserted for convenience only and shall not affect in any way the meaning or
interpretation of this Agreement.
(f) NOTICES. All notices, requests, demands, claims, and other
communications hereunder will be in writing. Any notice, request, demand, claim,
or other communication hereunder shall be
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deemed duly given if (and then two (2) business days after) it is sent by
registered or certified mail, return receipt requested, postage prepaid, and
addressed to the intended recipient as set forth below:
IF TO SELLER:
Imperial Nurseries, Inc.
c/▇ ▇▇▇▇▇▇▇ Land & Nurseries, Inc.
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Chief Executive Officer
WITH A COPY TO:
▇▇▇▇▇▇ & ▇▇▇▇▇▇▇
53rd at Third, Suite 1000
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: R. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
IF TO BUYER:
Shemin Nurseries, Inc.
▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇
WITH A COPY TO:
Olympus Partners
Metro Center, ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
AND
▇▇▇▇▇▇▇▇ & ▇▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
Any Party may send any notice, request, demand, claim or other communication
hereunder to the intended recipient at the address set forth above using any
other means, but no such notice, request,
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demand, claim or other communication shall be deemed to have been duly given
unless and until it actually is received by the intended recipient. Any Party
may change the address to which notices, requests, demands, claims and other
communications hereunder are to be delivered by giving the other Party notice in
the manner herein set forth.
(g) GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the domestic laws of the State of New York without giving effect
to any choice or conflict of law provision or rule (whether of the State of New
York or any other jurisdiction) that would cause the application of the laws of
any jurisdiction other than the State of New York.
(h) AMENDMENTS AND WAIVERS. No amendment of any provision of this
Agreement shall be valid unless the same shall be in writing and signed by Buyer
and Seller. No waiver by any Party of any default, misrepresentation, or breach
of warranty or covenant hereunder, whether intentional or not, shall be deemed
to extend to any prior or subsequent default, misrepresentation or breach of
warranty or covenant hereunder or affect in any way any rights arising by virtue
of any prior or subsequent such occurrence.
(i) INCORPORATION OF EXHIBITS AND SCHEDULES. The exhibits and schedules
identified in this Agreement are incorporated herein by reference and made a
part hereof.
(j) CONSTRUCTION. Where specific language is used to clarify by example a
general statement contained herein, such specific language shall not be deemed
to modify, limit or restrict in any manner the construction of the general
statement to which it relates. Information set forth in each Schedule
specifically refers to the section of this Agreement to which such information
is responsive, and such information shall be deemed to have been disclosed with
respect to any statement made in any other section of this Agreement. Any
capitalized terms used in any Schedule, but not otherwise defined therein, shall
have the meanings as defined in this Agreement.
(k) REMEDIES. The parties shall each have and retain all other rights and
remedies existing in their favor at law or equity, including, without
limitation, any actions for specific performance and/or injunctive or other
equitable relief (including, without limitation, the remedy of rescission) to
enforce or prevent any violations of the provisions of this Agreement. Without
limiting the generality of the foregoing, Seller hereby agrees that in the event
Seller fails to convey the Acquired Assets to Buyer in accordance with the
provisions of this Agreement, Buyer's remedy at law may be inadequate. In such
event, Buyer shall have the right, in addition to all other rights and remedies
it may have, to specific performance of the obligations of Seller to convey the
Acquired Assets.
(l) BULK SALES. The parties do not contemplate complying with the
provisions of any so-called bulk transfer laws (including any applicable bulk
sale transfer notice requirements for state and local sales tax (or similar
tax)) (the "Bulk Transfer Laws") of any jurisdiction in connection with the sale
of Acquired Assets. Subject to the terms and conditions in Section 7(b) hereof,
Seller agrees
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to indemnify Buyer against all liability, damage or expense which Buyer may
suffer due to the failure to so comply.
(m) INSURANCE MATTERS. To the extent Seller has existing insurance
policies (with respect to the Business) that covers a pre-Closing liability
relating to the Business, Seller agrees to cooperate with Buyer to provide Buyer
with the benefit of such insurance policies. Upon written notice from Buyer to
Seller that Buyer is subject to a claim that is covered by any such insurance
policies, the Seller will cooperate to submit such claim to the Seller's
insurance company, provided that, the Buyer will pay all of the Seller's costs
and expenses (including, without limitation, any deductibles and administrative
expenses paid by Seller) in connection with the submission of such claim. Any
proceeds (net of any costs or expenses to be reimbursed to Seller) under such
claim received by Seller, shall be promptly remitted to Buyer; provided that
Seller may set off such amount against any indemnity payment Seller has made to
Buyer with respect to the subject matter of such insurance claim.
* * * * *
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IN WITNESS WHEREOF, the Parties hereto have executed this Asset
Purchase Agreement as of the date first above written.
IMPERIAL NURSERIES, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-----------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
---------------------------
Title: President and C.E.O.
--------------------------
SHEMIN NURSERIES, INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-----------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
---------------------------
Title: Vice President
--------------------------
SHEMIN ACQUISITION CORPORATION
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-----------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
---------------------------
Title: Vice President
--------------------------
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LIST OF EXHIBITS
Exhibit A - Form of Opinion of Seller's Counsel
Exhibit B - Commitment Letter
Exhibit C - Form of Supply Agreement
Exhibit D - Form of Transition Agreement
Exhibit E - Severance Payments
Exhibit F - Individuals to sign Retention Agreements
Exhibit G - Form of Retention Agreement
Exhibit H - Form of Joinder Agreement
Exhibit I - Form of Opinion of Buyer's Counsel
Exhibit J - Form of Brokerage Agreement
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LIST OF SCHEDULES
Schedule 1(a)(iv) - Tangible Personal Property
Schedule 1(a)(v) - Software
Schedule 1(c)(xi) - Excluded Liabilities
Schedule 1(f)(i) - Target Number
Schedule 4(a) - Organization of Seller
Schedule 4(c) - Noncontravention/Seller
Schedule 4(d) - Broker's Fees/Seller
Schedule 4(f) - Financial Statements/Seller
Schedule 4(g) - Subsequent Events/Seller
Schedule 4(j) - Tax Matters
Schedule 4(l) - Real Property
Schedule 4(o) - Contracts
Schedule 4(p) - Insurance
Schedule 4(q) - Litigation
Schedule 4(s) - Employee Benefits
Schedule 4(t) - Environment, Health and Safety
Schedule 4(u) - Affiliate Transactions
Schedule 4(v) - Warranty
Schedule 5(a) - Subsidiaries/Buyer
Schedule 5(c) - Noncontravention/Buyer
Schedule 5(d) - Broker's Fees/Buyer
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Schedule 5(e) - Capitalization/Buyer
Schedule 5(f) - Financial Statements/Buyer
Schedule 5(g) - Subsequent Events/Buyer
Schedule 5(i) - Real Property/Buyer
Schedule 5(k) - Undisclosed Liabilities/Buyer
Schedule 7(i) - Customers
Schedule 7(l) - Layoff Employees
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