Exhibit 10.1 - Acquisition Agreement
ACQUISITION AGREEMENT
Acquisition Agreement, made this 17th day of November, 2004 among:
HEARTLAND, INC.
00 Xxxxx Xxxx Xxxxx
Xxxxxxxxxx, Xxxx 00000
a Maryland corporation
("Buyer")
and
OHIO MULCH SUPPLY, INC.
0000 Xxxxxxxx Xxxxxx
Xxxxxxxx, Xxxx 00000
an Ohio corporation
(the "Company")
and
XXXXX X. XXXXX XX
(the "Seller")
WHEREAS;
A. Buyer, directly and through one or more subsidiaries, intends to engage in
the business of producing, marketing and selling fertilizer including mulch
throughout the United States.
B. Company, is engaged in the production and sales of mulch.
C. The parties hereto deem it to be in the best interest of each of them that
Buyer purchase 100 percent of the issued and outstanding capital stock of
the Company, and generally succeed to the business of the Company, all
pursuant to such terms, provisions and conditions as the parties hereto
shall agree.
NOW, THEREFORE, WITNESSETH, that for and in consideration of the premises
and of the mutual promises and covenants hereinafter set forth, the parties
hereto agree as follows:
A. PURCHASE AND PAYMENT
1. Purchase and Sale of Stock.
1.1 Buyer agrees to purchase from Seller and Seller agrees to sell,
assign, transfer and deliver to Buyer 100 percent of the issued
and outstanding stock of the Company owned by Seller consisting
of 600 shares of common stock, 0.01 par value (collectively, the
"Stock"). Buyer agrees to assume the responsibility for all
existing lines of credit currently issued to the Company so that
Seller is relieved of all personal liability thereunder.
Page 1 of 12
1.2 Payment by Buyer to Seller of the Purchase Price (as defined in
Section 2 below) for the Stock , and the sale, assignment,
transfer and delivery of the Stock by Seller to Buyer, shall take
place on the Closing Date at the Closing as those terms are
hereinafter defined, subject to the fulfillment of the conditions
hereinafter provided.
2. Purchase Price.
2.1 The aggregate purchase price of the Stock (the "Purchase Price")
is one million (1,000,000) shares of the common stock of the
Buyer (the "Purchase Shares"), subject to adjustments as noted in
2.2 below, plus Four Million ($4,000,000.00) US Dollars.
2.2 Buyer hereby agrees that the one million (1,000,000) shares in
the Purchase Price is based on a price of Four ($4.00) US Dollars
per share. On the one year anniversary from the Closing Date, in
the event that the average asking price for the Purchase Shares
for the prior 45 days from the one year anniversary date (the
"Average Price") is less than Four Million ($4,000,000) US
Dollars, then the Seller shall be entitled to additional shares,
the number of which shall be four million ($4,000,000) US
Dollars, less the Average Price, divided by the Average Price,
multiplied by one million.
B. REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer hereby warrants and represents to Company and Sellers that, as of the date
hereof, the following statements are true and correct:
1. Corporate Existence; Authority.
The Buyer is a corporation duly organized, validly existing and in
good standing under the laws of the State of Maryland, and has full
corporate power and authority to enter into this Agreement and the other
agreements contemplated by this Agreement to which it is a party
(collectively with this Agreement, the "Buyer Agreements") and to perform
its obligations hereunder and thereunder.
2. Corporate Approval
The Buyer will obtain prior to closing all necessary authorizations
and approvals from its Board of Directors and stockholders required for the
execution and delivery of the Buyer Agreements, the consummation of the
transactions contemplated hereby and the issuance of the Purchase Shares.
3. Non-Contravention.
The execution and delivery by the Buyer of the Buyer Agreements and
the consummation by the Buyer of the transactions contemplated hereby and
thereby will not (a) violate or conflict with any provisions of the
Certificate of Incorporation (or similar charter document) or By-Laws of
the Buyer, each as amended to date; or (b) constitute a violation of, or be
in conflict with, constitute or create a default under, or result in the
creation or imposition of any lien upon any property of the Buyer pursuant
to (i) any agreement or instrument to which the Buyer is a party or by
which the Buyer or any of its properties is bound or to which the Buyer or
any of its properties is subject, or (ii) any statute, judgment, decree,
order, regulation or rule of any court or governmental authority to which
the Buyer is subject.
4. Government Consents.
No consent, approval or authorization of, or registration,
qualification or filing with, any governmental agency or authority is
required for the execution and delivery by the Buyer of the Buyer
Agreements or for the consummation by the Buyer of the transactions
contemplated hereby or thereby.
Page 2 of 12
5. Capital Structure.
The authorized capital of the Buyer consists of (i) one hundred
million (100,000,000) shares of common stock, fourteen million one hundred
sixty four thousand one hundred six (14,164,106) shares of which are issued
and outstanding on the date hereof, exclusive of the Purchase Shares and
(ii) five million (5,000,000) shares of preferred stock, none of which are
issued and outstanding on the date hereof. Additionally, on the date
hereof, there are three hundred forty eight thousand ($348,000) dollars of
outstanding convertible notes convertible at one dollar to three hundred
forty eight (348,000) shares of the Buyer's common stock. Upon the Closing,
the Purchase Shares will be issued and outstanding, fully paid, and
non-assessable, twenty-five percent of which shall be freely transferable
on the Closing Date and seventy-five percent of which shall be freely
transferable on the one-year anniversary of the Closing Date. Except for
the Purchase Shares, and the outstanding convertible notes described above,
there are no commitments for the purchase or sale of, and no options,
warrants or other rights to subscribe for or purchase any securities of the
Buyer.
6. Litigation.
The Buyer is not a party to any pending or to its knowledge threatened
suit, action, proceeding, prosecution or litigation which might materially
adversely affect the financial condition, business, assets, properties,
certificates, rights, authorities, franchises or authorizations of the
Buyer, or materially interfere therewith, nor to the knowledge of the Buyer
is there any threatened or pending governmental investigation involving the
Buyer or any of its operations, including inquiries, citations or
complaints by any federal, state or local administration or agency, which
would materially adversely affect the financial condition, business, assets
or properties of the Buyer; and there are no outstanding, existing or
pending judgments, orders, decrees, rulings, directives, stipulations or
other mandates of any court or any public or quasi-public agency, body or
official which have been in any way violated as they relate to or affect
the Buyer or any of the Buyer's properties, businesses, operations, affairs
or activities.
7. Tax Returns.
All returns for federal, state and other governmental income taxes,
surtaxes, excess profits taxes, franchise taxes, sales and use taxes, real
and personal property taxes and any and all other taxes to which the Buyer,
or its assets, operations or income may be subject, due as of the date
hereof, have been duly prepared and filed in good faith and all taxes shown
thereon have been paid or are accrued on the books of the Buyer.
8. Compliance with Law.
To the best of the Buyer's knowledge, the Buyer has complied in all
material respects with and is in compliance in all material respects with
all laws, statutes, governmental regulations and all judicial or
administrative tribunal orders, judgments, writs, injunctions, decrees or
similar commands applicable to the Buyer or any of its properties
(including, without limitation, any labor, occupational health, zoning or
other law, regulation or ordinance). The Buyer has not committed, been
charged with, or been under investigation with respect to, nor does there
exist, any violation of any provision of any federal, state or local law or
administrative regulation in respect of the Buyer or any of its properties.
9. Infringements.
The Buyer has never been charged with infringement or violation of any
adversely held patent, trademark, trade name, or copyright, with claims
reading on operations of the Buyer or on apparatus or methods employed by
the Buyer in effecting the same, which would materially adversely affect
Page 3 of 12
any operation of the Buyer, nor is the Buyer using or in any way making use
of any confidential information or trade secrets, of any former employer or
any present or past employee of the Buyer except as a result of the
acquisition of the business of such former employer.
10. Truth of Representation.
No representation by the Buyer made in this Agreement and no statement
made in any certificate or schedule furnished in connection with the
transaction herein contemplated contains or will contain any knowingly
untrue statement of a material fact or knowingly omits or will omit to
state any material fact reasonably necessary to make any such
representation or any such statement not misleading to a prospective
purchaser of the Stock.
C. REPRESENTATIONS AND WARRANTIES OF SELLERS AND THE COMPANY
Seller and the Company hereby warrant and represent to Buyer that, as of
the date hereof, the following statements are true and correct.
1. Corporate Existence; Authority.
The Company is a corporation duly organized, validly existing and in
good standing under the laws of the State of Ohio, and has full corporate
power and authority to enter into this Agreement and the other agreement
contemplated by this Agreement to which it is a party (collectively with
this Agreement, the "Company Agreements") and to perform its obligations
hereunder and thereunder.
2. Corporate Approval
The Company will obtain all necessary authorizations and approvals
from its Board of Directors and stockholders required for the execution and
delivery of the Company Agreements to which it is a party and the
consummation of the transactions contemplated hereby prior to closing.
3. Non-Contravention
The execution and delivery by the Company of the Company Agreements
and the consummation by the Company of the transactions contemplated hereby
and thereby will not (a) violate or conflict with any provisions of the
Certificate of Incorporation or By-Laws of the Company, each as amended to
date; or (b) constitute a violation of, or be in conflict with, constitute
or create a default under, or result in the creation or imposition of any
lien upon any property of the Company pursuant to (i) any agreement or
instrument to which the Company is a party or by which the Company or any
of its properties is bound or to which the Company or any of its properties
is subject, or (ii) any statute, judgment, decree, order, regulation or
rule of any court or governmental authority to which the Company is
subject.
4. Government Consents
No consent, approval or authorization of, or registration,
qualification or filing with, any governmental agency or authority is
required for the execution and delivery by the Company of this Agreement
and the other Acquisition Agreements to which it is a party or for the
consummation by the Company of the transactions contemplated hereby or
thereby.
5. Capital Structure.
The authorized capital of the Company consists of six hundred (600)
shares of common stock, six hundred (600) shares of which are issued and
Page 4 of 12
outstanding on the date hereof. There are no commitments for the purchase
or sale of, and no options, warrants or other rights to subscribe for or
purchase, any securities of the Company.
6. Litigation.
The Company is not a party to any pending or to its knowledge
threatened suit, action, proceeding, prosecution or litigation which might
materially adversely affect the financial condition, business, assets,
properties, certificates, rights, authorities, franchises or authorizations
of the Company, or materially interfere therewith, nor to the knowledge of
the Company is there any threatened or pending governmental investigation
involving the Company or any of its operations, including inquiries,
citations or complaints by any federal, state or local administration or
agency, which would materially adversely affect the financial condition,
business, assets or properties of the Company; and there are no
outstanding, existing or pending judgments, orders, decrees, rulings,
directives, stipulations or other mandates of any court or any public or
quasi-public agency, body or official which have been in any way violated
as they relate to or affect the Company or any of the Company's properties,
businesses, operations, affairs or activities.
7. Tax Returns.
All returns for federal, state and other governmental income taxes,
surtaxes, excess profits taxes, franchise taxes, sales and use taxes, real
and personal property taxes and any and all other taxes to which the
Company, or its assets, operations or income may be subject, due as of the
date hereof, have been duly prepared and filed in good faith and all taxes
shown thereon have been paid or are accrued on the books of the Company.
8. Compliance with Law.
To the best of the Company's knowledge, the Company has complied in
all material respects with and is in compliance in all material respects
with all laws, statutes, governmental regulations and all judicial or
administrative tribunal orders, judgments, writs, injunctions, decrees or
similar commands applicable to the Company or any of its properties
(including, without limitation, any labor, occupational health, zoning or
other law, regulation or ordinance). The Company has not committed, been
charged with, or been under investigation with respect to, nor does there
exist, any violation of any provision of any federal, state or local law or
administrative regulation in respect of the Company or any of its
properties.
9. Infringements.
The Company has never been charged with infringement or violation of
any adversely held patent, trademark, trade name, or copyright, with claims
reading on operations of the Company or on apparatus or methods employed by
the Company in effecting the same, which would materially adversely affect
any operation of the Company, nor is the Company using or in any way making
use of any confidential information or trade secrets, of any former
employer or any present or past employee of the Company except as a result
of the acquisition of the business of such former employer.
Page 5 of 12
10. Financial Statements.
At or prior to the date of this Agreement, the Company has delivered
to Buyer internal financial statements as of September 30, 2004, and said
internal financial statements, including the related notes and explanatory
notes, present fairly the financial position of the Company at the date
thereof and the results of its operations for the periods therein
indicated, in conformity with generally accepted accounting principals
applied on a basis consistent in each case with that of the preceding year.
From the date of the most recent reviewed internal balance sheet included
in the Company's financials, the Company has:
(i) Not suffered any material adverse change in its financial
condition, assets, liabilities or business;
(ii) Not affirmatively waived, canceled or compromised any of its
rights, debts or claims of substantial value;
(iii)Not made any distribution to its shareholders, as shareholders,
of any assets, by way of dividends, purchase of shares or
otherwise, except as disclosed hereto;
(iv) Not mortgaged, pledged or granted a lien or encumbrance on any of
its properties or assets, except with respect to equipment
purchased by the Company during such period;
(v) Not sold or transferred any of its assets, tangible or
intangible, except motor vehicles and except inventory and other
assets sold or disposed of in the ordinary and usual course of
business;
(vi) Not incurred any extraordinary losses, within the meaning of
generally accepted accounting principles, and/or incurred or
become liable for any obligations or liabilities except current
liabilities, within the meaning of generally accepted accounting
principles, incurred in the ordinary and usual course of
business, or made any extraordinary expenditures, within the
meaning of generally accepted accounting principles, other than
for the purchase of motor vehicles and for additions and
betterments to existing plant, equipment and facilities;
(vii)Not increased the rate of compensation for any of its officers or
directors nor for any executive employees, except as may be in
accord with past practices and in the usual and ordinary course
of business of the Company;
(viii) Not experienced any material adverse effect on its business,
properties and assets as the result of any fire, explosion,
earthquake, flood, drought, windstorm, accident, strike, embargo,
confiscation of vital equipment, material or inventory,
cancellation of contracts by any domestic or foreign government,
or any agency thereof, or customer whose business with seller
represents 5% or more of sellers gross revenue, riot, activities
of armed forces, or acts of God or the public enemy;
(ix) To the best knowledge of Sellers, has not incurred any
liabilities, contingent or otherwise, except those stated in the
balance sheet of the Company as of November 30, 2004, and current
liabilities incurred in the ordinary and usual course of business
since the date of the said balance sheet.
11. Ownership of Stock.
All of the issued and outstanding shares of capital stock of the
Company are owned by Xxxxx X. Xxxxx XX. Seller owns 600 shares of common
stock, 0.01 par value beneficially and of record. Seller holds such stock
free and clear of all liens, claims, debts, encumbrances and assessments,
and any and all restrictions as to sale, assignment or transferability
thereof. Seller has full right, power and authority to sell, transfer and
Page 6 of 12
deliver all of the shares of Stock owned by said Seller and the
certificates therefor, sold hereunder, to Buyer in accordance with the
terms of this Agreement, and otherwise to consummate and close the
transaction provided for in this Agreement in the manner and upon the terms
herein specified.
12. Title to Property.
The Company has good and marketable title to all of its assets.
13. Peaceable Possession of Assets.
The ownership and possession of all of the assets of the Company have
been peaceable and undisturbed and the title thereto has never been
disputed or questioned to the knowledge of the Company; nor does the
Company know of any facts by reason of which the possession or title
thereof by the Company might be disturbed or questioned or by reason of
which any claim to its assets might arise or be set up adverse to the
Company.
14. Truth of Representation.
No representation by the Company made in this Agreement and no
statement made in any certificate or schedule furnished in connection with
the transaction herein contemplated contains or will contain any knowingly
untrue statement of a material fact or knowingly omits or will omit to
state any material fact reasonably necessary to make any such
representation or any such statement not misleading to a prospective
purchaser of the Stock.
D. CONDITIONS PRECEDENT TO CLOSING
All obligations of each party under this Agreement and the obligation of each
party to consummate the Closing, are subject to the satisfaction, on or before
closing, of each of the following conditions:
1. Effectiveness of Warranties.
Each and every one of the warranties and representations of the other
parties set forth in this Agreement shall be true at and as of the Closing
Date as though such representations were made at and as of such time.
2. Due Diligence Review
Each of the parties shall have the opportunity to conduct a review of
the other party's books and records prior to the Closing, and each shall
execute a written acknowledgment that they are satisfied with the review,
which may be withheld for any reason by either party, in that party's sole
discretion. If either party decides not to execute the acknowledgement,
this Agreement is terminated.
3. Consent of Banking Institutions.
Each banking institution providing lines of credit to the Company
shall agree to release Seller from any individual liability on those lines
of credit.
In the event any of the foregoing conditions shall not be fulfilled by the
responsible party at or prior to the Closing, unless caused by any action or
failure to act on the part of the counter party, the counter party shall have
the right to terminate the Agreement by notice thereof in writing to the
responsible party, and the parties hereto shall be restored as far as possible
to status quo, whereupon the parties hereto shall have no further obligations or
Page 7 of 12
liabilities hereunder, one against the other, except for the obligations of the
parties under Section I hereof which shall survive a termination of this
Agreement.
E. CLOSING
1. Time and Place.
The closing under this Agreement (the "Closing") and all deliveries
hereunder shall take place on or before February 17, 2004 at the offices of
the Company, 0000 Xxxxxxxx Xxxxxx, Xxxxxxxx, Xxxx 00000 or such other date
as shall be agreed upon by all the parties ("the Closing Date").
2. Deliverables
(a) At the Closing, Buyer shall deliver to the Seller and the Company:
(i) the Purchase Shares; and
(ii) Four Million ($4,000,000) US Dollars.
(b) At the Closing, Seller and Company shall deliver to Buyer:
(i) the original stock certificates representing all of the Stock;
and
(ii) stock powers, executed by the Sellers, with respect to the
transfer of the Stock to Buyer.
G. INDEMNIFICATION
1. Seller and the Company shall indemnify and hold harmless the Buyer from and
against any losses, damages or expenses which may be suffered or incurred
by Buyer arising from or by reason of the inaccuracy of any statement,
representation or warranty of Seller or the Company made herein or, in any
schedule hereto or certificate delivered in connection herewith, or the
failure of Seller or the Company to perform any agreement made by them
herein. Buyer shall give Seller prior written notice of any claim, demand,
suit or action with respect to which indemnity may be sought pursuant to
this Section. Seller, in every such case, shall have the right at his sole
expense and cost to participate in contesting the validity or the amount of
any such claim, demand, suit or action. In the event Buyer suffers loss,
damage or expense and is entitled to indemnification under this Section,
the amount of any such loss, damage or expense shall be assessed against
and shall be paid by Seller subject to the provisions of this Section G(1).
Seller shall have no liability under this Section unless a claim for
indemnification is made by the Buyer prior to the Two (2) year anniversary
of the Closing. Notwithstanding anything herein to the contrary, Sellers
shall have no liability under this Section for any loss, damage, expense or
amount suffered or incurred by Buyer or the Company (a) as a result of any
election made by the Buyer or the Company subsequent to the Closing under
Section 338 of the Internal Revenue Code of 1954, as amended, or (b) which
is covered by insurance maintained by the Company on the Closing Date.
2. The Buyer shall indemnify the Company and Seller and shall hold the Company
and Seller harmless, on demand, from and against any losses, damages or
expenses which may be suffered or incurred by the Company or Seller arising
from or by reason of the inaccuracy of any statement, representation or
warranty of the Buyer made herein or in any document or instrument
delivered by Buyer to Seller or the Company in connection with the
transactions herein contemplated, or the failure of Buyer to perform any
agreement or covenant made by it herein or in any document or instrument
delivered by Buyer to Seller or the Company in connection with the
transactions herein contemplated.
Page 8 of 12
H. CONFIDENTIALITY
All information and documentation provided or to be provided by the Company or
Seller to Buyer in connection with this Agreement and the transactions
contemplated hereby has been and shall be provided in the strictest confidence.
Pending the Closing, Buyer covenants and agrees not to use any of such
information or documentation in or for the benefit of any business engaged in
directly or indirectly by Buyer and not to furnish or disclose any of such
information or documentation to any person or company. If the transactions
contemplated by this Agreement are not consummated, Buyer covenants and agrees
to return all such information and documentation to the Company and not retain
any copies thereof, and Buyer further covenants and agrees to maintain the
confidentiality of such information and documentation and to neither use any of
it in or for the benefit of any business engaged in directly or indirectly by
the Buyer nor furnish or disclose any of it to any person or company.
I. GENERAL PROVISIONS
1. Survival of Representations, Warranties and Covenants.
Except as expressly provided herein, the representations, warranties,
covenants, indemnities and other agreements herein contained shall be
deemed to be continuing and shall survive the consummation of the
transactions contemplated by this Agreement.
2. Diligence.
The parties hereto agree that each shall with reasonable diligence
proceed to take all action which may be reasonably required to consummate
the transaction herein contemplated.
3. Waivers.
Each party hereto may:
3.1 Extend the time for performance of any of the obligations of the
other party;
3.2 Waive in writing any inaccuracies in representations and
warranties made to it contained in this Agreement or any schedule
hereto or any certificate or certificates delivered by any of the
other parties pursuant to this Agreement; and
3.3 Waive in writing the failure of performance of any of the
agreements, covenants, obligations or conditions of the other
parties herein set forth, or alternatively terminate this
Agreement for such failure.
4. Non-Waiver.
The waiver by any party hereto of any breach, default, inaccuracy or
failure by another party with respect to any provision in this Agreement or
any schedule hereto shall not operate or be construed as a waiver of any
other provision thereof or of any subsequent breach thereof.
5. Further Assurances.
Each party hereto agrees to execute such further documents or
instruments, requested by the other party, as may be reasonably necessary
or desirable to effect the purposes of this Agreement and to carry out its
provisions, at the expense of the party requesting the same.
Page 9 of 12
6. Entire Agreement.
This Agreement constitutes a complete statement of all the
arrangements, understandings and agreements between the parties. There are
no representations, warranties, covenants, conditions or other agreements
among the parties except as herein specifically set forth, and none of the
parties hereto shall rely on any statement by or on behalf of the other
parties which is not contained in this Agreement.
7. Governing Law.
Irrespective of the place of execution or performance of this
Agreement, it shall be governed by and construed in accordance with the
laws of the State of Ohio applicable to contracts made and to be performed
in the State of Ohio, and cannot be changed, modified, amended or
terminated except in writing, signed by the parties hereto.
8. Benefit and Assignability.
This Agreement shall bind and inure to the benefit of the parties
hereto and their respective successors and assigns, provided, however, that
this Agreement cannot be assigned by any party except by or with the
written consent of the others. Nothing herein expressed or implied is
intended or shall be construed to confer upon or to give any person, firm
or corporation other than the parties hereto and their respective legal
representatives, successors and assigns any rights or benefits under or by
reason of this Agreement.
9. Approval of Counsel.
The form of all legal proceedings and of all papers and documents used
or delivered hereunder, shall be subject to the approval of counsels to
Buyer and Seller.
10. Costs.
The Buyer shall bear its own costs and expenses of the transaction.
The costs and expenses of Sellers in connection with this Agreement and the
transactions contemplated hereby shall be borne and paid by the Sellers.
11. Counterparts.
This Agreement may be executed in any number of counterparts, each of
which shall be deemed an original, but all of which together shall
constitute one and the same Agreement.
12. Notices.
Any notices and other communications under this Agreement shall be in
writing and shall be considered given if delivered personally or mailed by
certified mail to the party, for whom such notice is intended, at the
address indicated at the outset hereof (or at such other address as such
party may specify by notice to the other parties hereto).
13. Headings.
The headings in this Agreement are intended solely for convenience of
reference and shall be given no effect in the construction or
interpretation of this Agreement.
Page 10 of 12
14. Further Action.
Any further action required or permitted to be taken under this
Agreement, including giving notices, executing documents, waiving
conditions, and agreeing to amendments or modifications, may be taken on
behalf of a party by its Board of Directors, its President or any other
person designated by its Board of Directors, and when so taken shall be
deemed the action of such party.
[INTENTIONALLY LEFT BLANK]
Page 11 of 12
IN WITNESS WHEREOF, the parties hereto have respectively executed this
Agreement the day and year first above written.
BUYER
HEARTLAND, INC.
By:/s/ Xxxxx Xxxxxxxxxxx
-----------------------------
Xxxxx Xxxxxxxxxxx, Chairman
SELLERS
By:/s/ Xxxxx X. Xxxxx XX
-----------------------------
Xxxxx X. Xxxxx XX
THE COMPANY
OHIO MULCH SUPPLY INC.
By:
----------------------------
Xxxxx X. Xxxxx XX, President
Page 12 of 12
