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Exhibit 2(d)
------------
* Asset Purchase Agreement
dated as of November 11, 1998
between Monsanto Company
and The Scotts Company
* Certain portions of this Exhibit, indicated in the text by asterisk, have
been omitted based upon a request for confidential treatment filed with the
Securities and Exchange Commission ("SEC"). The non-public information has been
filed separately with the SEC in connection with that request.
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[EXECUTION COPY]
ASSET PURCHASE AGREEMENT
DATED AS OF
NOVEMBER 11, 1998
BETWEEN
MONSANTO COMPANY
AND
THE SCOTTS COMPANY
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TABLE OF CONTENTS
ARTICLE I. - PURCHASE AND SALE OF ASSETS........................................................................1
Section 1.1. Purchase and Sale...........................................................................1
Section 1.2. Excluded Assets.............................................................................4
Section 1.3. Transfer....................................................................................4
ARTICLE II. - PURCHASE PRICE.....................................................................................4
Section 2.1. Purchase Price..............................................................................4
Section 2.2. Purchase Price Adjustment...................................................................5
Section 2.3. Assumption of Liabilities...................................................................8
Section 2.4. Purchase Price Allocation...................................................................8
Section 2.5. Like-Kind Exchange..........................................................................9
ARTICLE III. - SELLER'S REPRESENTATIONS AND WARRANTIES............................................................9
Section 3.1. Organization and Corporate Standing........................................................10
Section 3.2. Corporate Power and Authority..............................................................10
Section 3.3. [Intentionally Omitted]....................................................................10
Section 3.4. Absence of Certain Changes and Events......................................................11
Section 3.5. No Violation of Law........................................................................12
Section 3.6. Properties.................................................................................13
Section 3.7. Title to Assets............................................................................14
Section 3.8. Leases.....................................................................................14
Section 3.9. Intellectual Property......................................................................15
Section 3.10. Litigation.................................................................................15
Section 3.11. Employees of the Business..................................................................15
Section 3.12. Employee Benefit Plans.....................................................................16
Section 3.13. Collective Bargaining......................................................................17
Section 3.14. Labor Matters..............................................................................17
Section 3.15. Environmental Matters......................................................................17
Section 3.16. Permits....................................................................................19
Section 3.17. Contracts..................................................................................19
Section 3.18. Required Consents, Approvals and Filings...................................................20
Section 3.19. No Conflict................................................................................20
Section 3.20. Assets Are Year 2000 Compliant.............................................................21
Section 3.21. Foreign Customers..........................................................................21
Section 3.22. Inventory..................................................................................21
Section 3.23. Accounts Receivable........................................................................22
Section 3.24. Assets.....................................................................................22
Section 3.25. Insurance..................................................................................23
Section 3.26. Products...................................................................................23
Section 3.27. Taxes......................................................................................23
Section 3.28. No Undisclosed Material Liabilities........................................................24
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Section 3.29. Transactions with Affiliates...............................................................24
Section 3.30. Rule 10b-5.................................................................................24
Section 3.31. Disclaimer.................................................................................24
Section 3.32. Aggregation................................................................................25
ARTICLE IV. - BUYER'S REPRESENTATIONS AND WARRANTIES.............................................................25
Section 4.1. Organization...............................................................................25
Section 4.2. Corporate Power and Authority..............................................................25
Section 4.3. Required Consents, Approvals and Filings...................................................26
Section 4.4. No Conflict................................................................................26
Section 4.5. Litigation.................................................................................27
Section 4.6. Rule 10b-5.................................................................................27
ARTICLE V. - COVENANTS OF THE PARTIES...........................................................................27
Section 5.1. Operations Pending Closing.................................................................27
Section 5.2. Access.....................................................................................29
Section 5.3. Preparation of Supporting Documents........................................................30
Section 5.4. Approvals of Third Parties; Satisfaction of Conditions to Closing..........................30
Section 5.5. Xxxx-Xxxxx-Xxxxxx Notification.............................................................30
Section 5.6. Financial and Tax Services.................................................................31
Section 5.7. Transfer Taxes.............................................................................32
Section 5.8. Compliance with EEOC Consent Decree........................................................32
Section 5.9. [Intentionally Omitted]....................................................................32
Section 5.10. Amendment of Schedules.....................................................................32
Section 5.11. Consultation with Works Council............................................................33
Section 5.12. Monsanto Compliance with Obligations to Chevron and Other Predecessors.....................33
Section 5.13. Chemcopack Agreement.......................................................................34
Section 5.14. Notice of Certain Events...................................................................34
Section 5.15. Other Offers...............................................................................35
Section 5.16. Noncompetition.............................................................................35
Section 5.17 Financial Statements.......................................................................37
Section 5.18. Cooperation................................................................................38
ARTICLE VI. - CASUALTY AND CONDEMNATION.........................................................................38
Section 6.1. Casualty...................................................................................38
Section 6.2. Condemnation...............................................................................39
ARTICLE VII. - COVENANTS AS TO EMPLOYEES.........................................................................40
Section 7.1. Offers of Employment.......................................................................40
Section 7.2. Benefits and Employment Conditions of Transferred Employees in the United
States.....................................................................................42
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Section 7.3. Access to Employee Information.............................................................45
Section 7.4. WARN Act Indemnification...................................................................46
Section 7.5. Workers' Compensation Claims...............................................................46
Section 7.6. General Employee Provisions................................................................46
Section 7.7. Employee Benefit Plans.....................................................................47
Section 7.8. Transfer of Employees in Europe............................................................48
Section 7.9. Transferred Employees Working on Visas or Work Permits....................................49
ARTICLE VIII. - CONDITIONS TO SELLER'S OBLIGATIONS...............................................................49
Section 8.1. Representations and Warranties True at Closing Date........................................49
Section 8.2. Litigation.................................................................................50
Section 8.3. Opinion of Counsel to Buyer................................................................50
Section 8.4. Required Governmental Approvals............................................................50
Section 8.5. Other Necessary Consents...................................................................50
Section 8.6. Supply Agreement...........................................................................51
Section 8.7. Formulation Agreement......................................................................51
Section 8.8. Transition Services Agreement..............................................................51
Section 8.9. No Material Adverse Change.................................................................51
ARTICLE IX. - CONDITIONS TO BUYER'S OBLIGATIONS................................................................52
Section 9.1. Representations and Warranties True at Closing Date........................................52
Section 9.2. Litigation.................................................................................52
Section 9.3. Opinion of Counsel to Seller...............................................................53
Section 9.4. Required Governmental Approvals............................................................53
Section 9.5. Other Necessary Consents...................................................................53
Section 9.6. Supply Agreement...........................................................................53
Section 9.7. Formulation Agreement......................................................................53
Section 9.8. Transition Services Agreement..............................................................53
Section 9.9. No Material Adverse Change.................................................................54
ARTICLE X. - CLOSING..........................................................................................54
Section 10.1. Closing....................................................................................54
Section 10.2. Termination Prior to Closing...............................................................54
Section 10.3. Termination of Obligations.................................................................56
ARTICLE XI. - INDEMNIFICATION..................................................................................57
Section 11.1. Seller Indemnification.....................................................................57
Section 11.2. Buyer Indemnification......................................................................58
Section 11.3. Indemnity Claims...........................................................................58
Section 11.4. Deductible.................................................................................59
Section 11.5. Notice of Claim............................................................................60
Section 11.6. Defense....................................................................................61
Section 11.7. Limitation of Liability....................................................................62
Section 11.8. Allocation and Apportionment of and Indemnification with Respect to Tax
Liabilities................................................................................63
Section 11.9. Exclusive Remedy; Release..................................................................64
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ARTICLE XII. - MISCELLANEOUS.....................................................................................65
Section 12.1. Expenses...................................................................................65
Section 12.2. Entire Agreement...........................................................................65
Section 12.3. Waivers....................................................................................66
Section 12.4. Parties Bound by Agreement; Successors and Assigns.........................................66
Section 12.5. Counterparts...............................................................................66
Section 12.6. Notices....................................................................................66
Section 12.7. Brokerage..................................................................................67
Section 12.8. Governing Law; Jurisdiction................................................................68
Section 12.9. Public Announcements.......................................................................70
Section 12.10. No Third-Party Beneficiaries...............................................................70
Section 12.11. Definition of Affiliate....................................................................70
Section 12.12. Knowledge..................................................................................70
Section 12.13. Bulk Sales Laws............................................................................71
Section 12.14. Interpretation.............................................................................71
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SCHEDULES
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1.1(f) Equipment
1.2 Excluded Assets
2.2(b) U.S. Working Capital Assignments
2.3 Excluded Liabilities
3.4 Certain Changes and Events
3.5 No Violation of Law
3.6(a) Real Property
3.6(b) Material Personal Property
3.6(d) Liens
3.7 Title to Assets
3.8 Leases
3.9 Intellectual Property
3.10 Litigation
3.11 Employees
3.12 Employee Benefit Plans
3.13 Collective Bargaining Agreements
3.14 Labor Matters
3.15 Environmental Matters
3.16 Permits
3.17 Contracts
3.18 Seller Required Consents, Approvals and Filings
3.19 No Conflict
3.20 Year 2000 Compliance
3.21 Foreign Customers
3.28 Undisclosed Material Liabilities
3.29 Affiliate Transactions
4.3 Buyer Required Consents, Approvals and Filings
5.1 Operation Pending Closing
5.1(b) Actions Prior to Closing
5.11 Works Council
7.1(a)(i) Employees Outside 100% Requirement
7.1(c) Employees Not Actively at Work
7.2(h) Relocation Assistance
7.8 European Employees
9.4 Required Governmental Approvals
9.5 Required Other Consents
12.12 Seller's Knowledge
EXHIBITS
--------
A Supply Agreement
B Formulation Agreement
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DEFINITIONS
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Term: First Defined in Section:
"1997 Balance Sheet" Section 3.3
"Affiliate" Section 12.11
"Acquisition Agreements" Section 5.12
"Acquisition Proposal" Section 5.15
"Agency Agreement" Section 10.2(h)
"Agreement" First paragraph of Agreement
"Assets" Section 1.1
"Assumed Liabilities" Section 2.3
"Assumed Liability Claims" Section 11.4(a)(ii)
"Assumed Liability Deduction" Section 11.4(a)(ii)
"Breaching Party" Section 5.16(g)
"Business" Section 1.1
"Buyer" First paragraph of Agreement
"Buyer Defined Benefit Plan" Section 7.2(a)
"Buyer Defined Contribution Plan" Section 7.2(b)
"Buyer Protected Parties" Section 11.1
"Buyer's General Deductible" Section 11.4(b)
"Cause" Section 7.1(b)
"Central Agreements" Section 5.13
"Central Garden" Section 5.13
"Central Garden Claims" Section 11.4(a)(i)
"Central Garden Deductible" Section 11.4(a)(i)
"Change of Control" Section 10.2(g)
"Closing" Section 10.1
"Closing Date" Section 10.1
"Code" Section 2.4
"comparable employment" Section 7.1(b)
"Consent Decree" Section 5.8
"Contracts" Section 1.1(e)
"Controlled Group Members" Section 7.7
"Employee Benefit Plans" Section 3.12
"Employees" Section 3.11
"Employees Acquired Rights Directive" Section 7.8
"Employment Date" Section 7.1(a)
"Environmental Claims" Section 3.15(a)(i)
"Environmental Laws" Section 3.15(a)(ii)
"Equipment" Section 1.1(f)
"Estimated Working Capital" Section 2.2(a)
"European Employees" Section 7.8
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"Excluded Assets" Section 1.2
"Excluded Liabilities" Section 2.3
"ERISA" Section 3.12
"FTC" Section 5.5
"Final Determination Date" Section 2.2(c)
"Financial Statements" Section 3.3
"Formulation Agreement" Section 8.7
"GAAP" Section 3.3
"Hazardous Materials" Section 3.15(a)(iii)
"HSR" Section 3.18
"Indemnifying Party" Section 11.5
"Independent Accounting Firm" Section 2.2(c)
"Information Systems" Section 3.20
"Justice Department" Section 5.5
"knowledge" Section 12.12
"Leases" Section 1.1(g)
"Lien" Section 3.6(a)
"Loss" Section 11.1
"Losses" Section 11.1
"Material" Section 3.17
"Nonbreaching Party" Section 5.16(g)
"Noncompetition Period" Section 5.16(a)
"Notice of Disagreement" Section 2.2(c)
"Off-Site Facility" Section 3.15(a)(iv)
"Other Intellectual Property" Section 1.1(b)(iv)
"Owned Real Property" Section 3.6(d)
"Patents" Section 1.1(b)(ii)
"Permits" Section 1.1(c)
"Permitted Liens" Section 3.6(d)
"Pre-Closing Tax Period" Section 3.27
"Purchase Price" Section 2.1
"Purchase Price Adjustment" Section 2.2(d)
"Real Property" Section 1.1(d)
"Registrations" Section 1.1(b)(iii)
"Release" Section 3.15(a)(v)
"Rights" Section 3.9
"Roundup Employee" Section 5.16(d)
"Seller" First paragraph of Agreement
"Seller's Deductible" Section 11.4(c)
"Seller's Defined Contribution Plans" Section 7.2(b)
"Seller's Pension Plans" Section 7.2(a)
"Seller Protected Parties" Section 11.2
"Software" Section 1.1(h)
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"Solaris" Whereas clause
"Statement of Working Capital" Section 2.2(b)
"Supply Agreement" Section 8.6
"Termination Payments" Section 7.1(b)
"To the Seller's Knowledge" Section 12.12
"Trademarks" Section 1.1(b)(i)
"Transaction Agreements" Section 3.2
"Transferred Employees" Section 7.1(a)
"Transition Services Agreement" Section 8.8
"WARN Act" Section 7.4
"Working Capital" Section 2.2(b)
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ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT (this "Agreement"), made and entered into
as of this 11th day of November, 1998, between Monsanto Company, a Delaware
corporation, having its principal place of business at 000 Xxxxx Xxxxxxxxx
Xxxx., Xx. Xxxxx, Xxxxxxxx 00000 (the "Seller"), and The Scotts Company, an Ohio
corporation, having its principal place of business at 00000 Xxxxxxxxxx Xxxx,
Xxxxxxxxxx, Xxxx 00000 (the "Buyer").
WITNESSETH:
WHEREAS, upon and subject to the terms and conditions of this
Agreement, the Seller desires to sell to the Buyer, and the Buyer desires to
purchase from the Seller, certain assets of the Solaris Group, an operating unit
of the Seller ("Solaris").
NOW, THEREFORE, in consideration of the mutual promises and covenants
and the terms and conditions set forth herein and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto agree as follows:
ARTICLE I. - PURCHASE AND SALE OF ASSETS
SECTION 1.1. PURCHASE AND SALE. Subject to the terms of this Agreement,
at the Closing (as defined in Section 10.1), the Seller will sell, convey,
transfer, assign and deliver to the Buyer, and the Buyer will purchase, acquire
and accept from the Seller, free and clear of any Liens other than Permitted
Liens, the assets, properties and rights of every kind, nature, character or
description, currently used principally by the Seller in the non-glyphosate
Solaris business to (i) develop, manufacture, sell and market non-glyphosate
weed control products (except for such glyphosate-containing weed control
products set forth on Schedule 1.1), insect control products,
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garden seeds and decorative garden items, fertilizers and applicators for use by
consumers for lawn and garden care and (ii) participate in a joint venture to
market a series of gardening and home improvement books for consumers (such
clauses (i) and (ii), collectively, the "Business"), including any additions to
such assets, properties and rights in the ordinary course of business between
the date hereof and the Closing, but specifically excluding (X) the Excluded
Assets (as defined in Section 1.2) and (Y) any deletions to such assets,
properties and rights in the ordinary course of business consistent with past
practices, except as prohibited by Section 5.1, between the date hereof and the
Closing (the "Assets"), including, but not limited to:
(a) The originals or copies of records, operating data and
business files, including, but not limited to, customer lists and
files, customer credit files, advertising materials and sales
literature, information directly relating to purchasing histories and
procedures, vendor files and financial records (including all sales
invoices and purchase order records and supporting documents with
respect to accounts receivable and accounts payable outstanding at the
Closing), other marketing information, and electronic files of employee
data for the Transferred Employees (as defined in Section 7.1(a)) which
are in the Seller's possession on the Closing Date (as defined in
Section 10.1);
(b) (i) Copyrights, trade names, trademarks, service marks and
trademark and service xxxx registrations and registration applications,
including the goodwill associated with the same, including, but not
limited to those listed on Schedule 3.9 hereto (the "Trademarks"); (ii)
inventions, patents and patent applications (including utility patents
and applications), including, but not limited to those listed on
Schedule 3.9 hereto (the "Patents"); (iii) governmental registrations,
registration applications, temporary registrations, all data pertaining
to such registrations as submitted to governmental agencies,
experimental use permits, applications and emergency use exemptions,
including, but not limited to those listed on Schedule 3.9 hereto (the
"Registrations"), and (iv) trade secrets, processes or any other
proprietary intellectual property rights, including, but not limited
to, those listed on Schedule 3.9 hereto (collectively, the "Other
Intellectual Property");
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(c) Governmental authorizations, licenses and permits (other
than the Registrations), including, but not limited to, those listed on
Schedule 3.16 (collectively, the "Permits");
(d) Real property (including the buildings, improvements and
fixtures located thereon), including that which is listed on Schedule
3.6(a) (the "Real Property");
(e) Contracts, agreements, intellectual property licenses,
arrangements, instruments, undertakings, commitments or understandings
(other than the Leases as defined in 1.1(g)), including any renewals
and amendments thereto and any new contracts entered into prior to the
Closing in accordance with the terms of this Agreement and in the
ordinary course of business, and including those listed on Schedule
3.17, but excluding any such contracts that expire or are terminated
prior to Closing (the "Contracts");
(f) Machinery, motor vehicles, tools, furniture, instruments,
laboratory equipment, research equipment, fixtures and personal
property, including, but not limited to those listed on Schedule 1.1(f)
hereto, and to the extent not included therein, those at Seller's Fort
Madison, Iowa and Corwen, UK facilities (the "Equipment");
(g) Leases of Real Property and Equipment, including those
listed on Schedule 3.8 (the "Leases");
(h) Computer, data processing and telecommunications systems
software, equipment and databases, including those listed on Schedule
3.9 (the "Software");
(i) Accounts receivable of the Business, net of trade or other
discounts, as of the Closing;
(j) Inventories shown on the books of the Business, including,
but not limited to, raw materials, finished goods and products, goods
and products in process, and other materials and supplies on hand and
in transit, as of the Closing; and
(k) All property, factual knowledge and information to the
extent used by the Seller principally in the Business, including all
chemical, biochemical, organic and manufacturing information and/or
formulation procedures whether or not capable of precise separate
description, but which in an accumulated form gives to the one
acquiring
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it an ability to study, test or produce something which one otherwise
would not have known how to study, test or produce with the accuracy
or precision necessary for commercial success or acceptance by
governmental regulatory agencies.
SECTION 1.2. EXCLUDED ASSETS. The Assets shall not include assets,
properties and rights of Seller not currently used principally in the Business,
and all other assets, properties and rights identified on Schedule 1.2 (the
"Excluded Assets").
SECTION 1.3. TRANSFER. The sale, conveyance, transfer, assignment and
delivery of the Assets by the Seller to the Buyer will be effected by such
deeds, bills of sale, endorsements, assignments, transfers and other instruments
of transfer and conveyance in forms reasonably satisfactory to the parties, and
the Seller and the Buyer hereby agree to cooperate in executing any such further
instruments necessary to consummate the transfer after the Closing Date as may
be reasonably requested from time to time by the parties.
ARTICLE II. - PURCHASE PRICE
SECTION 2.1. PURCHASE PRICE. The purchase price for the Assets shall be
Three Hundred Million Dollars ($300,000,000.00) subject to adjustment in
accordance with Section 2.2 hereof and, if applicable, Article 6 hereof (the
"Purchase Price"). The Purchase Price is payable by Buyer to Seller at Closing
in immediately available funds by wire transfer.
SECTION 2.2. PURCHASE PRICE ADJUSTMENT.
(a) At least five (5) business days prior to the Closing, the
Seller shall furnish to the Buyer a statement setting forth the
Seller's best estimate of Working Capital (as defined in Section
2.2(b)) as of the Closing Date (the "Estimated Working Capital"),
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based on the most recent unaudited financial statements of the Business
prepared in the ordinary course of business. To the extent that
the Estimated Working Capital is less than (or greater than) the sum of
$86,000,000 plus the Load Adjustment, if any, the cash payable to the
Seller at the Closing shall be decreased (or increased) dollar for
dollar by the amount of such difference; provided, however, that no
adjustment to the Purchase Price shall be made if the difference
between Estimated Working Capital and $86,000,000 plus such Load
Adjustment is less than $1,000,000. For purposes of this Section 2.2,
"Load Adjustment" shall mean the amount, calculated utilizing a
weighted average methodology, equal to the difference between (i) the
value of the accounts receivable reflected on the books of the Business
with respect to inventory deployed at Monsanto's initiative into
Central Garden & Pet Company branches and sub-agent branches from the
date hereof through the Closing in excess of Ten Million Dollars
($10,000,000), which inventory is not sold through to retail customers
prior to the Closing, and (ii) the inventory value of such accounts
receivable for inventory not sold through to retail customers prior to
the Closing.
(b) Within sixty (60) days after the Closing Date, the Buyer
shall cause its independent auditors to prepare and deliver to the
Seller a statement setting forth each of the components of Working
Capital as of the close of business on the Closing Date (the "Statement
of Working Capital"). As used herein, the term "Working Capital"
consists of the following items relating to the Business and included
in the Assets (i) accounts receivable of the Business, net of trade or
other discounts; plus (ii) inventory calculated on a first-in,
first-out basis (excluding the inventory premium associated with the
acquisition of the Ortho business as shown in the Financial
Statements); minus (iii) accounts payable and accrued liabilities,
except such payables and accrued liabilities which are Excluded
Liabilities (as defined in Section 2.3); provided that the items
described in clauses (i) through (iii) above shall be determined in
accordance with the principles set forth on Schedule 2.2(b) attached
hereto, and in each case shall be determined as of the close of
business on the Closing Date. The Statement of Working Capital shall be
prepared in accordance with the principles set forth on Schedule 2.2(b)
attached hereto.
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(c) During the thirty (30) days immediately following the
receipt of the Statement of Working Capital by the Seller, the Seller
and its accountants shall, at the Seller's expense, be entitled to
review the Statement of Working Capital and any working papers, trial
balances and similar materials (collectively, "Working Papers")
relating to the Statement of Working Capital prepared by the Buyer.
During such thirty (30) day period, the Buyer will provide the Seller
and its accountants with access, not unreasonably interfering with the
operations of the Business, during normal business hours, to the
personnel, properties, books and records of the Business. The
Statement of Working Capital shall become final and binding upon the
parties on the thirty-first (31st) day following delivery thereof
unless the Seller gives written notice to the Buyer of its disagreement
with the Statement of Working Capital (a "Notice of Disagreement")
prior to such date. Any Notice of Disagreement shall specify in
reasonable detail the nature of any disagreement so asserted. If a
timely Notice of Disagreement is delivered by the Buyer, then the
Statement of Working Capital (as revised, if at all, in accordance with
this Section 2.2), shall become final and binding upon the parties on
the earlier of (X) the date the parties hereto resolve in writing all
differences they have with respect to any matter specified in the
Notice of Disagreement or (Y) the date all matters in dispute are
finally resolved by the Independent Accounting Firm (as defined below)
(the date on which the Statement of Working Capital so becomes final
and binding being hereafter referred to as the "Final Determination
Date"). During the thirty (30) days immediately following the delivery
of any Notice of Disagreement, the Buyer and the Seller shall seek in
good faith to resolve in writing any differences which they may have
with respect to any matters specified in such Notice of Disagreement.
During such period, the Buyer and the Seller shall have access to the
other's working papers prepared in connection with the Statement of
Working Capital and the Notice of Disagreement, as the case may be. At
the end of such thirty (30) day period, the Buyer and the Seller shall
submit to an independent, national public accounting firm which has no
prior relationship with the Buyer or the
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Seller (the "Independent Accounting Firm") for review and resolution of
any and all matters which remain in dispute and which are included in
the Notice of Disagreement. The Independent Accounting Firm shall reach
a final resolution of all matters and shall furnish such resolution in
writing to the Buyer and Seller as soon as practicable, but in no event
more than thirty (30) days, after such matters have been referred to
the Independent Accounting Firm. Such resolution shall be made in
accordance with this Agreement and will be conclusive and binding upon
the Buyer and the Seller. The cost of such resolution shall be
allocated to the parties such that the party against whom any item set
forth in the Notice of Disagreement is resolved shall bear the costs
attributable to such item.
(d) Upon final determination of the Working Capital in
accordance with this Section 2.2, the following purchase price
adjustment will be paid in accordance with Section 2.2(f) (the
"Purchase Price Adjustment"):
i. If Working Capital (as finally stated in the
Statement of Working Capital) is greater than the Estimated
Working Capital by more than $1,000,000, then the Buyer shall
pay to the Seller the amount by which Working Capital exceeds
the Estimated Working Capital; or
ii. If Working Capital (as finally stated in the
Statement of Working Capital) is less than the Estimated
Working Capital by more than $1,000,000, then the Seller shall
pay to the Buyer the amount by which the Estimated Working
Capital exceeds Working Capital.
If Working Capital is equal to Estimated Working Capital or the
adjustment would be less than $1,000,000, no adjustment shall be made
to the Purchase Price.
(e) If no Notice of Disagreement has been given by the Seller,
the Seller shall remit to the Buyer or the Buyer shall remit to the
Seller, as the case may be, in immediately available funds, all amounts
constituting a Purchase Price Adjustment within thirty-three (33) days
after receipt by the Seller of the Statement of Working Capital in
accordance with this Section 2.2. If the Seller gives the Buyer a
Notice of Disagreement, payment shall be made in immediately available
funds within three (3) business days after the Final Determination
Date. Each payment made pursuant to this
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Section 2.2 shall be made with interest on the amount of such payment
at an annual rate equal to the prime interest rate per annum as stated
in the Wall Street Journal on the date of such payment for the period
from the Closing Date to the date of payment.
SECTION 2.3. ASSUMPTION OF LIABILITIES. At the Closing, pursuant to one
or more written agreements in a form reasonably satisfactory to the parties, the
Buyer will assume and agree to pay, perform and discharge, and, to the extent
set forth herein, to indemnify Seller against and hold it harmless from, all
obligations and liabilities of the Seller relating to the Assets or the Business
of any nature or kind, known or unknown, fixed, accrued, absolute or contingent,
which arise, accrue or are incurred before or after the Closing Date relating to
or based upon the past, present or future Business or operation of the Assets or
the Business as heretofore, currently or hereafter conducted ("Assumed
Liabilities"), including without limitation: (i) all liabilities and obligations
of Seller under the Contracts, Permits or Leases included in the Assets; (ii)
all accounts payable and accrued liabilities; (iii) all liabilities shown on the
books and records of the Business as of the Closing Date; (iv) the obligations
with respect to the Transferred Employees in accordance with Article 7 of this
Agreement; (v) the obligations of Seller pursuant to Section 2.3 of that certain
Asset Purchase Agreement, dated April 15, 1996 by and between the Seller and
White Swan, Ltd.; and (vi) all liabilities under Environmental Laws (as defined
in Section 3.15). Notwithstanding the foregoing, the Assumed Liabilities shall
not include, and Buyer shall not assume or become liable for, the obligations
and liabilities of Seller set forth on Schedule 2.3 (the "Excluded
Liabilities").
SECTION 2.4. PURCHASE PRICE ALLOCATION. Seller and Buyer agree that
they will report (and will cause their respective Affiliates to report, as
appropriate), to the extent required under Section 1060 of the Internal Revenue
Code of 1986, as amended or any successor federal tax legislation (the "Code")
and the temporary regulations thereunder and any other applicable laws and
regulations, the allocation of the Purchase Price (and all other capitalized
costs) to the Assets in a manner consistent with an appraisal to be performed
within ninety (90) days after the Closing Date. The firm conducting the
appraisal shall be selected by agreement between Seller and Buyer. The cost of
the appraisal shall be borne equally by the Buyer and the Seller.
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SECTION 2.5. LIKE-KIND EXCHANGE. Notwithstanding any other provision
hereof, in the event that Seller desires to transfer any of the Assets located
in the United States as part of a like-kind exchange pursuant to Section 1031 of
the Code, Buyer agrees that Seller may, upon prior written notice to Buyer,
assign its rights under this Agreement (but not its obligations under the
Agreement) insofar as may be required in order to effect such exchange, and
thereafter such assignee shall have such rights as assigned; provided, however,
Seller agrees to indemnify the Buyer for, and to hold the Buyer harmless from
and against, any and all damages arising or resulting from, such assignment or
like-kind exchange; and provided, further, that the Buyer shall incur no
additional costs, expenses, fees, delays or liabilities of any kind as a result
of or connected with such like-kind exchange.
ARTICLE III. - SELLER'S REPRESENTATIONS AND WARRANTIES
The Seller makes the representations and warranties set forth in this
Article.
SECTION 3.1. ORGANIZATION AND CORPORATE STANDING. The Seller is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware and has all requisite corporate power and authority to
carry on and conduct the Business as it is now being conducted and to own or
lease the Assets, and is duly qualified and in good standing in every
jurisdiction in which the conduct of the Business or the ownership of the Assets
requires it to be so qualified, and the absence of such qualification would have
a material adverse effect. For purposes of Articles III, V and VI of this
Agreement, a material adverse effect shall mean any material adverse effect on
the financial condition, the Assets or the operation of the Business, taken as a
whole. The terms "material" and "material adverse change" shall have a
corresponding meaning.
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SECTION 3.2. CORPORATE POWER AND AUTHORITY. The Seller has the right,
power and capacity to execute, deliver and perform this Agreement and all the
documents and instruments referred to herein and contemplated hereby together
with all other agreements to be signed or delivered at Closing (the "Transaction
Agreements") and to consummate the transaction contemplated by this Agreement.
The execution, delivery and performance of this Agreement and the Transaction
Agreements, and the consummation of the transactions contemplated hereby and
thereby, have been duly and validly authorized by all necessary corporate action
on the part of the Seller. This Agreement has been, and each of the Transaction
Agreements after execution and delivery thereof at the Closing will have been,
duly and validly executed and delivered by the Seller and constitute the
Seller's legal, valid and binding obligations, enforceable in accordance with
their respective terms.
SECTION 3.3. [INTENTIONALLY OMITTED].
SECTION 3.4. ABSENCE OF CERTAIN CHANGES AND EVENTS. Except as set forth
on Schedule 3.4, since December 31, 1997, the Seller has conducted the Business
in the ordinary course in all material respects, and has not:
(a) suffered any damage or destruction to the Assets which
individually or in the aggregate had a material adverse effect on the
Assets or the Business;
(b) caused the Business to incur or discharge any obligation
or liability, except in the ordinary course of business or obligations
and liabilities that did not have a material adverse effect;
(c) increased the rate or terms of the compensation payable to
the Transferred Employees (as defined in Section 7.1(a)); or increased
or amended any Employee Benefit Plan (as defined in Section 3.12) in
which the Transferred Employees participate; granted
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any severance or termination pay to any Transferred Employee; or
entered into any employment, deferred compensation or similar agreement
with any Transferred Employee, except increases, amendments, grants or
agreements occurring in the ordinary course of normal periodic
performance reviews and related compensation and benefit increases, or
as required by any Contract;
(d) incurred any material adverse change or any event,
occurrence, development or state of circumstances or facts which could
reasonably be expected to result in a material adverse change;
(e) effected any change in any method of accounting or
accounting practice with respect to the Business other than any change
required to conform to GAAP;
(f) incurred any indebtedness for borrowed money or agreed to
become contingently liable, by guaranty or otherwise, for the
obligations or indebtedness of any other Person, other than endorsement
of negotiable instruments for deposit or collection;
(g) other than as disclosed in any Schedule to this Agreement
or except in the ordinary course of business consistent with past
practices, engaged in any transaction with any Affiliate;
(h) created or assumed any Lien (as defined in Section 3.6) on
the Assets, except for Permitted Liens (as defined in Section 3.6);
(i) sold, transferred or otherwise disposed of any of the
Assets, except in the ordinary course of business and transfers which
did not have a material adverse effect;
(j) waived any claims or rights, except any waiver which did
not have a material adverse effect;
(k) entered into, amended or terminated any material contract,
agreement, franchise, permit or license except in the ordinary course
of business and except that did not have a material adverse effect;
(l) acquired any assets which are material, individually or in
the aggregate, to the Business, except in the ordinary course of
business and except that did not have a material adverse effect;
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(m) made any capital expenditure or commitment for a capital
expenditure, for additions to or improvements to property, plant or
equipment, except in the ordinary course of business consistent with
past practice;
(n) suffered any material labor dispute, other than routine
individual grievances, or any activity or proceeding by a labor union
or representative thereof to organize any employees of the Business,
which employees were not subject to a collective bargaining agreement
as of December 31, 1997, or any lockouts, strikes, material slowdowns,
material work stoppages or, to the Seller's knowledge, threats thereof,
by or with respect to such employees;
(o) made any payment or other distribution reducing any
Excluded Liability, other than in the ordinary course of business
consistent with past practice; or
(p) agreed to take any action described in this Section 3.4.
SECTION 3.5. NO VIOLATION OF LAW. Except as described on Schedule 3.5,
to the Seller's knowledge, the Seller is not in violation of any applicable
foreign, local, state, federal or foreign law, ordinance, regulation, order,
judgment, injunction or decree, or any other requirement of any arbitrator,
governmental or regulatory official, body, agency or authority or court binding
on it, or relating to the Assets or the Business, except for violations, if any,
which would not have a material adverse effect. Except as set forth in Schedule
3.5, Seller has received no written notice of an enforcement action against
Seller relating to the Business in connection with any violation or alleged
violation of applicable law.
SECTION 3.6. PROPERTIES.
(a) Schedule 3.6(a) sets forth a list of Real Property that
the Seller owns or leases, has agreed (or has an option) to purchase,
sell or lease, or may be obligated to purchase, sell or lease, which is
included in the Assets, together with, in the case of Real Property
owned, any title insurance policies and surveys with respect thereto
and any title defects or objections, liens, restrictions, claims,
charges, security interests, easements or other encumbrances (each, a
"Lien") thereon except Permitted Liens (as defined below).
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(b) Schedule 3.6(b) sets forth a list of all material personal
property used in the Business included in the Assets, including but not
limited to the Equipment and other trade fixtures and fixed assets,
which the Seller owns, leases or subleases.
(c) (i) The Real Property includes all real property, as is
used or held for use primarily in connection with the conduct of the
Business as of Closing;
(ii) The plants, buildings, structures and equipment
included in the Assets have no material defects, are in good
operating condition and repair and have been reasonably
maintained (ordinary wear and tear excepted), are suitable for
their present uses and, in the case of plants, buildings and
other structures, are structurally sound.
(iii) The plants, buildings and structures included in
the Assets currently have access to (1) public roads or valid
easements over private streets or private property for such
ingress to and egress from all such plants, buildings and
structures and (2) water supply, storm and sanitary sewer
facilities, telephone, gas and electrical connections, fire
protection, drainage and other public utilities, as is
reasonably necessary for the conduct of the Business.
(iv) To the Seller's knowledge, none of the material
structures on the Real Property encroaches upon real property
of another Person, and no structure of any other Person
substantially encroaches upon any Real Property.
(d) Except for (X) the Liens set forth on Schedule 3.6(d); and
(Y) Permitted Liens (as defined herein), the Seller (i) has good and
marketable fee simple title to all Real Property which is identified as
"Owned Real Property" on Schedule 3.6(a), and (ii) owns such Owned Real
Property, free and clear of all Liens. "Permitted Liens" are (A) Liens
for taxes not yet due and payable; (B) carriers', warehousemen's,
mechanics', materialmen's, repairmen's or other like liens arising in
the ordinary course of business, payment for which is not yet due or
which is being contested in good faith; (C) deposits to secure the
performance of utilities, leases, statutory obligations and surety and
appeal bonds and other obligations of a like nature incurred in the
ordinary course of business; and (D) title defects or objections,
liens, restrictions, claims, charges, security interests,
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easements or other encumbrances that do not materially affect the use
and enjoyment of such property for the purposes for which it is
currently used. The Real Property constitutes all of the real property
used in the Business, except for Excluded Assets.
SECTION 3.7. TITLE TO ASSETS. The Seller has good and marketable title
to the Assets which it owns, free and clear of all Liens, except (i) as set
forth on Schedule 3.7 and (ii) Permitted Liens.
SECTION 3.8. LEASES. Schedule 3.8 contains a list of material Leases
(including any capital leases) and lease-purchase arrangements pursuant to which
the Seller leases Real Property or Assets from others. Except as set forth on
Schedule 3.8, (i) all of the Leases are in full force and effect and have not
been modified or amended in any material respect, and (ii) there are no
disputes, oral agreements or forbearance programs in effect as to the Leases
except disputes, agreements and forbearance programs, if any, which would not
have a material adverse effect. There has not occurred any default by the Seller
of any such lease, except for defaults, if any, which would not have a material
adverse effect, and to the Seller's knowledge, there has not occurred any
material default thereunder by any other party thereto except for defaults, if
any, which would not have a material adverse effect.
SECTION 3.9. INTELLECTUAL PROPERTY. Schedule 3.9 sets forth a list of
all Trademarks, Patents, Registrations, Software and Other Intellectual Property
(collectively the "Rights"). Except as set forth on Schedule 3.9, the Seller
owns or is licensed to use all the Rights, free and clear of any Liens, except
for any Liens which would not have a material adverse effect. Unless otherwise
noted on Schedule 3.9, none of the Rights is subject to any pending or, to the
knowledge of the Seller, threatened challenge or reversion, except such
challenges which would not have a material adverse effect. To the Seller's
knowledge, the conduct of the Business as now being conducted, and the use of
the Rights in the conduct of the Business, do not infringe or otherwise conflict
with any trademarks, patents, registrations, or other intellectual property or
proprietary rights of others, nor has any claim been made that the
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conduct of the Business as now being conducted infringes or otherwise is covered
by the intellectual property of a third party, except for any conflict or
infringement which would not have a material adverse effect. To the knowledge of
the Seller, none of the Rights are currently being infringed by a third party.
SECTION 3.10. LITIGATION. Schedule 3.10 sets forth all litigation,
suits, actions, investigations, indictments or informations, or proceedings or
arbitrations pending, or to the knowledge of the Seller, threatened, before any
court, arbitration tribunal, or judicial, governmental or administrative agency,
against the Seller relating to the Business or the Assets that would have a
material adverse effect. Further, except as set forth in Schedule 3.10, there
are no judgments, orders, writs, injunctions, decrees, indictments or
informations, grand jury subpoenas or civil investigative demands, or awards
against the Seller relating to the Business or the Assets that would have a
material adverse effect.
SECTION 3.11. EMPLOYEES OF THE BUSINESS. Schedule 3.11 sets forth the
names and current compensation of all employees of the Seller who are now
working primarily in the Business (the "Employees"). Except as set forth on
Schedule 3.11, Seller has not received a copy of any agreement to which an
Employee is a party which would adversely affect the performance of his (or her)
duties as an employee of the Buyer.
SECTION 3.12. EMPLOYEE BENEFIT PLANS. Except as described on Schedule
3.12, the Seller's Employees do not participate in any employee benefit plans,
as defined in Section 3(3) of Employee Retirement Income Security Act of 1974,
as amended ("ERISA") nor any other type of retirement, deferred compensation,
insurance, bonus, medical, stock option, profit sharing, severance, retention,
vision, dental, vacation policy or other plan ("Employee Benefit Plans"). The
Seller has provided to the Buyer complete and correct copies of all Employee
Benefit Plans, related trust agreements, insurance contracts or other related
agreements, the current summary plan description for each Employee Benefit Plan
subject to ERISA, and any similar description of any other Employee Benefit
Plan. None of the Seller's
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Employees participate in a multiemployer plan (as defined in Section 3(37) of
ERISA) which is subject to Title IV of ERISA. The Employee Benefit Plans do not
violate any applicable local, state, federal or foreign law, ordinance,
regulation, order, judgment, injunction or decree or any other requirement of
any arbitrator or governmental or regulatory official, body, agency or authority
or court binding on it (including ERISA and the Code) except for violations, if
any, which would not have a material adverse effect. To Seller's knowledge, the
Assets are not currently subject to a lien or other process under Title IV of
ERISA and, except as described on Schedule 3.12, to the Seller's knowledge,
there is no threatened or pending action related to the Employee Benefit Plans
by an Employee or former employee, a plan participant, the Department of Labor,
Internal Revenue Service or Pension Benefit Guaranty Corporation or any other
party. Any group health plan maintained by the Seller covering any Employee or
former employee has, to Seller's knowledge, been administered in all material
respects in compliance with the health care continuation coverage provisions of
the Consolidated Omnibus Budget Reconciliation Act of 1985. Except as set forth
in Schedule 3.12, no officer of the Seller has agreed to any future increases in
benefit levels or the creation of new benefits with respect to any Employee
Benefit Plan.
SECTION 3.13. COLLECTIVE BARGAINING. Except as described on Schedule
3.13, Seller has no labor contracts or collective bargaining agreements covering
wages, hours or working conditions for any of the Employees and no collective
bargaining agreement or union contract is currently being negotiated by the
Seller. None of the Employees are represented by any union or labor
organization.
SECTION 3.14. LABOR MATTERS. The Seller is not in violation of any
applicable local, state, federal or foreign law, ordinance, regulation, order,
injunction, judgment or decree, or any other requirement of any arbitrator or
governmental or regulatory official, body, agency or authority or court binding
on it, respecting employment and employment practices except for violations, if
any, which would not have a material adverse effect. Except as set forth in
Schedule 3.14, the Seller has not received any written notification that any of
the Employees
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have any claim against the Seller. The Seller has received no notice of any
charge of, nor are there any actions or proceedings relating to, unfair labor
practices by the Seller pending before the National Labor Relations Board, the
Equal Employment Opportunity Commission, or the United States Department of
Labor. There is no labor strike or, to the knowledge of Seller, any other labor
trouble pending or threatened against the Business. To the Seller's
knowledge, there have not been any attempts to organize non-union employees.
SECTION 3.15. ENVIRONMENTAL MATTERS.
(a) Definitions. For purposes of this Section 3.15, the
following definitions apply:
i. The term "Environmental Claims" means any and
all administrative, regulatory or judicial actions or
proceedings relating to the Release (as defined in (v) below)
or alleged Release into the environment of any Hazardous
Material (as defined in (iii) below), including, without
limitation, Claims by any governmental or regulatory authority
or by any third party or other person for enforcement,
mitigation, cleanup, removal, response, remediation or other
actions for damages, fines, penalties, contribution,
indemnification, cost recovery, compensation or injunctive or
declaratory relief pursuant to any Environmental Law (as
defined in (ii) below).
ii. The term "Environmental Laws" means all
federal, state and local laws, rules and regulations relating
to the regulation or protection of human health, safety,
natural resources or the environment and applicable to the
Business, including but not limited to the Resource
Conservation and Recovery Act, 42 U.S.C. Section 6901, et
seq., as amended; the ComprehensivE Environmental Response,
Compensation & Liability Act of 1980, 42 U.S.C. Section 9601,
et seq., as amended; the Clean Water Act, 33 U.S.C. Section
1251, et seq., as amended; the Clean Air Act, 42 U.S.C.
Section 7401, et seq., as amended; the Toxic Substances
Control Act, 15 U.S.C. Section 2601, et seq., as amended; and
the Federal Insecticide, Fungicide and Rodenticide Act, 7
U.S.C. Section 136, et seq., as amended.
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iii. The term "Hazardous Materials" means any
substance or material that is included within the definition
of a "hazardous substance," "hazardous waste," "hazardous
constituent," "hazardous material," "hazardous chemical" or
"extremely hazardous substance" contained in the Environmental
Laws.
iv. The term "Off-Site Facility" means any site or
property other than the Real Property used by, for or in
connection with the Business.
v. The term "Release" means spilling, leaking,
pumping, pouring, emitting, emptying, discharging, injecting,
escaping, leaching, dumping or disposing into the environment
(including the abandonment or discarding of barrels,
containers, and other closed receptacles containing any
Hazardous Materials).
(b) Seller's Premises. Except as disclosed in Schedule 3.15,
to the Seller's knowledge, during the Seller's ownership and operation
of the Business, there have been no Releases of Hazardous Materials to
the Real Property that would have a material adverse effect, nor are
there any pending Environmental Claims against or relating to the
Business that would have a material adverse effect.
(c) Off-Site Facilities. Except as disclosed in Schedule 3.15,
to the Seller's knowledge: there are no pending Environmental Claims
against any Off-Site Facility and relating to any transportation,
recycling, handling, treatment, storage or disposal of Hazardous
Materials used or generated by the Seller, its Affiliates (as defined
in Section 12.11) or by its toll contractors on behalf of Seller that
are expected to have a material adverse effect (on the Business); there
are no pending Environmental Claims against any Off-Site Facility
relating to the production, formulation, packaging or mixing of
products on behalf of the Seller or its Affiliates that are expected to
have a material adverse effect and there are no pending Environmental
Claims arising from the use, application, release or testing of any
products of the Business at any Off-Site Facility that are expected to
have a material adverse effect.
SECTION 3.16. PERMITS. Schedule 3.16 contains a list of all material
Permits. The Permits disclosed on
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Schedule 3.16 are all material Permits or other authorizations of governmental
authorities necessary or required for the production and sale of products of the
Business or for the conduct of the Business as is being conducted by Seller as
of the Closing Date. There is no action pending, or to the Seller's knowledge,
threatened, seeking the revocation, cancellation, suspension or adverse
modification or amendment of any Permit, which action, if determined adversely
to the Business, would have a material adverse effect.
SECTION 3.17. CONTRACTS. Schedule 3.17 sets forth a list of the
material Contracts. For purposes of this Section 3.17, "material" shall mean any
(i) contract which requires payments by or to the Business of $200,000 or more
in the aggregate; (ii) contract for employment of any employee; (iii) agreement
for the sale (otherwise than in the ordinary course of business) of any material
Assets; (iv) agreement, contract or indenture relating to the borrowing of
money; (v) agreement with unions; (vi) lease of any real or personal property
involving an annual rental of $200,000 or more; and (vii) agreement restricting
the Business from competing with any person or in any geographic area. Except as
set forth on Schedule 3.17, such Contracts are valid, in full force and effect
and have not been modified or amended. To the Seller's knowledge, there are no
disputes, oral agreements or forbearance programs in effect as to the Contracts
except for disputes, agreements and forbearance programs, if any, which would
not have a material adverse effect. There has not occurred any default by Seller
of any such Contracts except for defaults, if any, which would not have a
material adverse effect and, to the Seller's knowledge, there has not occurred
any default thereunder by any other party thereto except for defaults, if any,
which would not have a material adverse effect.
SECTION 3.18. REQUIRED CONSENTS, APPROVALS AND FILINGS. Except as set
forth in Schedule 3.18, no consent or approval is required by virtue of the
execution hereof by the Seller or the consummation of any of the transactions
contemplated herein by the Seller to avoid the violation or breach of, or the
default under, or the creation of a lien or other encumbrance on the Assets
pursuant to the terms of any regulation, order, decree or award of any court or
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governmental agency or any lease, agreement, contract, mortgage, note or license
to which the Seller is a party or to which the Business or the Assets is
subject, the absence of which would have a material adverse effect. Except for
filings under the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as
amended ("HSR"), and as set forth on Schedule 3.18, there are no filings or
similar procedures required of Seller with respect to any governmental body in
connection with the consummation of the transactions contemplated hereby.
SECTION 3.19. NO CONFLICT. Subject to obtaining the consents and
approvals and making the filings described in Section 3.18 and except as set
forth on Schedule 3.19, the execution, delivery and performance of this
Agreement by the Seller, and the consummation of the transactions contemplated
herein by the Seller will not: (i) violate or conflict with any of the
provisions of any charter document or bylaw of the Seller, or (ii) violate,
conflict with or result in a breach or default under or cause termination of any
term or condition of any mortgage, indenture, contract, license, permit,
instrument, or other agreement, document or instrument to which the Seller is a
party or by which the Seller or the Business or Assets may be bound or affected,
or (iii) violate any provision of law or any valid and enforceable requirement,
order, judgment, decree or ruling of any court, arbitrator, governmental or
regulatory official body or authority, to which the Seller is a party or by
which it, the Business or Assets may be bound or affected, or (iv) result in the
creation or imposition of any Lien upon any Asset except as to clauses (i)
through (iv) above, any such matters that would not (x) have a material adverse
effect, or (y) prevent the consummation of the transactions contemplated herein.
SECTION 3.20. ASSETS ARE YEAR 2000 COMPLIANT. All of the computer, data
processing and telecommunications systems software, equipment and databases (the
"Information Systems") that are being transferred to the Buyer as part of the
Assets are warranted to be year 2000 compliant by the vendors from whom Seller
purchased, leased or licensed the Information Systems except as set forth in
Schedule 3.20 and except any noncompliance which would not have a material
adverse effect.
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SECTION 3.21. FOREIGN CUSTOMERS. Schedule 3.21 contains a true and
correct list of the largest ten (10) foreign customers (based on sales for the
fiscal years 1996 and 1997, respectively) of the Business for the last two
years. Except as set forth in Schedule 3.21, the Seller has no knowledge which
might reasonably indicate that any of its ten (10) largest foreign customers
(based on sales for the fiscal year 1997) intends to cease dealing with the
Seller or materially reduce its business with the Seller.
SECTION 3.22. INVENTORY. All raw materials, works-in-process, and
finished goods, including but not limited to finished goods purchased for
resale, held by the Business for manufacturing, assembly, processing, finishing,
sale, or resale to others, from time to time in the ordinary course of the
Business, whether or not reflected in the Financial Statements, are of a quality
and quantity usable and saleable in the ordinary course of business, except for
obsolete items and items of below standard quality, all of which do not have a
material adverse effect. Items included in the foregoing are carried on the
books of the Business, and are valued in the Financial Statements, at the lower
of cost or market and, in any event, at not greater than their net realizable
value, after appropriate deduction for costs of manufacture, marketing costs,
transportation expense, and allocation of overhead, except that glyphosate-based
products are carried on the books of the Business at the adjusted transfer price
of * as set forth in the notes to the Financial Statements.
SECTION 3.23. ACCOUNTS Receivable. All accounts receivable of the
Business set forth in the Statement of Working Capital represent or will
represent valid obligations arising from sales actually made in the ordinary
course of business or in accordance with the distribution alliance agreements
between Solaris and Central Garden and Pet Company and are fully collectible in
the aggregate amount thereof in the ordinary course of business (assuming
diligent collection efforts of the Buyer following the Closing consistent with
past practices of the Business), subject to normal and customary trade discounts
and less the reserve for doubtful accounts recorded on the Statement of Working
Capital.
---------------
* Confidential provision omitted and filed separately with the SEC, based upon a
request for confidential treatment filed with the SEC.
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SECTION 3.24. ASSETS. Except for assets disposed of in the ordinary
course of business consistent with past practices and Excluded Assets, the
Assets consist of all assets which have been used in the Business since December
31, 1997. Together with the assets and rights to be made available to the Buyer
pursuant to the Supply Agreement (described in Section 8.6) and the Transition
Services Agreement (described in Section 8.8), the Assets include all material
assets which are reasonably required to (i) operate the Business in the manner
the Business is being conducted by the Seller as of the Closing Date, and (ii)
allow Buyer to perform its obligations under the Formulation Agreement (as
defined in Section 8.7).
SECTION 3.25. INSURANCE. The Seller has provided to Buyer summaries of
all insurance policies owned by the Seller or inuring to the Seller's benefit
which insure any part of the Assets or the Business. All such insurance
policies are in full force and effect. The Seller has not knowingly made any
false statements in any application for such policies, and the Seller has no
knowledge of any failure to pay any premiums when due, or any other set of facts
or circumstances which might form the basis for termination of any such
policies. The Seller will maintain such insurance between the date hereof and
the Closing Date.
SECTION 3.26. PRODUCTS. Each of the products produced or sold by the
Seller in connection with the Business prior to the Closing (i) is, and except
as disclosed in Schedule 3.5, at all times has been, in compliance in all
material respects with all applicable Federal, state, local and foreign laws and
regulations and (ii) except as would not have a material adverse effect is, and
at all relevant times has been, fit for the ordinary purposes for which it is
intended to be used and conforms in all material respects to any promises or
affirmations of fact made on the container or label for such product or in
connection with its sale. Except as would not have a material adverse effect,
there is no design defect with respect to any of such products, and each of such
products contains adequate warnings, presented in a reasonably prominent manner,
in accordance with applicable laws and current industry practice with respect to
its contents and use.
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SECTION 3.27. TAXES. The Seller has timely paid all Taxes payable by it
for any Tax period (or portion thereof) ending on or before the close of
business on the Closing Date, or, with respect to any Tax period beginning
before and ending after the Closing Date, any portion thereof ending with the
close of business on the Closing Date (the "Pre-Closing Tax Period") which will
have been required to be paid on or prior to the Closing Date, the non-payment
of which would result in a Lien on any Assets, would otherwise materially
adversely affect the Business or would result in the Buyer becoming liable or
responsible therefor.
SECTION 3.28. NO UNDISCLOSED MATERIAL LIABILITIES. Except as set forth
on Schedule 3.28, there are no material liabilities of a type required to be
disclosed or provided for in the Financial Statements of the Business of any
kind whatsoever, whether accrued, contingent, absolute, determined, determinable
or otherwise, and, to the Seller's knowledge, there is no condition, situation
or set of circumstances which could reasonably be expected to result in any such
liability, other than:
i. liabilities disclosed in the Financial
Statements for the fiscal year ended December 31, 1997; and
ii. liabilities incurred in the ordinary course of
business consistent with past practices since December 31,
1997 which would not in the aggregate have a material adverse
effect.
SECTION 3.29. TRANSACTIONS WITH AFFILIATES. Except as set forth on
Schedule 3.29, the Seller is not a party to any material agreement, arrangement
or understanding or other obligation with any Affiliate of the Seller with
respect to the Assets or the Business.
SECTION 3.30. RULE 10B-5. No representation or warranty made by the
Seller in this Agreement contains any untrue statement of a material fact or
omits to state any material fact necessary to make the statements contained
herein or therein not misleading.
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SECTION 3.31. DISCLAIMER. EXCEPT AS SET FORTH IN THIS ARTICLE 3, (a)
SELLER MAKES NO REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, RELATING TO THE
ASSETS OR THE BUSINESS, INCLUDING, WITHOUT LIMITATION, ANY REPRESENTATION OR
WARRANTY AS TO VALUE, MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE OR FOR
ORDINARY PURPOSES, OR ANY OTHER MATTER, AND (b) THE ASSETS AND BUSINESS OF THE
SELLER BEING TRANSFERRED TO THE BUYER ARE CONVEYED ON AN "AS IS, WHERE IS" BASIS
AS OF THE CLOSING, AND, EXCEPT TO THE EXTENT SET FORTH HEREIN, BUYER SHALL RELY
UPON ITS OWN EXAMINATION THEREOF.
SECTION 3.32. AGGREGATION. The representations and warranties of Seller
set forth in this Article 3, disregarding any materiality, material adverse
effect or knowledge qualifications contained in such representations and
warranties, are true and correct with only such exceptions as would not in the
aggregate be reasonably expected to cause a Loss (as defined in Section 11.1
herein) in excess of Two Million Dollars ($2,000,000.00).
ARTICLE IV. - BUYER'S REPRESENTATIONS AND WARRANTIES
The Buyer makes the representations and warranties set forth in this
Article.
SECTION 4.1. ORGANIZATION. The Buyer is a corporation duly organized,
validly existing and in good standing under the laws of Ohio and has all
requisite corporate power and authority to carry on and conduct its business as
it is now being conducted, to own or lease its assets and properties and is duly
qualified and in good standing in every jurisdiction in which the conduct of its
business or ownership of its assets requires it to be so qualified, and the
absence of such qualification would have a material adverse effect on the Buyer.
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SECTION 4.2. CORPORATE POWER AND AUTHORITY. The Buyer has the right,
power and capacity to execute, deliver and perform this Agreement and the
Transaction Agreements and to consummate the transactions contemplated by this
Agreement. The execution, delivery and performance of this Agreement, and the
consummation of the transactions contemplated hereby, have been duly and validly
authorized by all necessary corporate action on the part of the Buyer. This
Agreement has been, and each of the Transaction Agreements after execution and
delivery thereof at the Closing will have been, duly and validly executed and
delivered by the Buyer and constitute the Buyer's legal, valid and binding
obligations, enforceable in accordance with their terms.
SECTION 4.3. REQUIRED CONSENTS, APPROVALS AND FILINGS. Except as set
forth in Schedule 4.3, no consent or approval is required by virtue of the
execution hereof by the Buyer or the consummation of any of the transactions
contemplated herein by the Buyer to avoid the violation or breach of, or the
default under, or the creation of a Lien on assets of the Buyer pursuant to the
terms of any regulation, order, decree or award of any court or governmental
agency or any lease, agreement, contract, mortgage, note, license, or any other
instrument to which the Buyer is a party or to which it or any of its property
is subject, the absence of which would have a material adverse effect upon the
Buyer's business, properties, financial condition, results of operations, or net
worth. Except for filings under HSR, and as set forth on Schedule 4.3, to the
Buyer's knowledge, there are no filings or similar procedures required with
respect to any governmental body in connection with the consummation of the
transactions contemplated hereby.
SECTION 4.4. NO CONFLICT. Subject to obtaining the consent and
approvals and making the filings described in Section 4.3, the execution and
delivery of this Agreement by the Buyer, and the consummation
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of the transactions contemplated herein by the Buyer will not, with or without
the giving of notice or the lapse of time, or both, (i) violate or conflict with
any of the provisions of any charter document or bylaw of the Buyer, (ii)
violate, conflict with or result in breach or default under or cause termination
of any term or condition of any mortgage, indenture, contract, license, permit,
instrument, or other agreement, document or instrument to which the Buyer is a
party or by which the Buyer or any of its properties may be bound, or (iii)
violate any provision of law or any valid and enforceable requirement, court
order, judgment or decree, or ruling of any court, arbitrator or governmental or
regulatory official, body or authority to which Buyer is a party or by which
Buyer or its properties may be bound, except, as to clauses (i) through (iii)
above, any such matters that would not (X) have a material adverse effect upon
Buyer's business, properties, financial condition, results of operations or net
worth, or (Y) prevent the consummation of the transactions contemplated herein.
SECTION 4.5. LITIGATION. There is no suit, investigation, action or
other proceeding pending, or to the Buyer's knowledge, threatened before any
court, arbitration tribunal, or judicial, governmental or administrative agency,
against the Buyer which would have a material adverse effect on the ability of
the Buyer to perform its obligations hereunder or which seeks to prevent the
consummation of the transactions contemplated herein.
SECTION 4.6. RULE 10B-5. No representation or warranty made by the
Buyer in this Agreement contains any untrue statement of material fact or omits
to state any material fact necessary to make the statements contained herein or
therein not misleading.
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ARTICLE V. - COVENANTS OF THE PARTIES
SECTION 5.1. OPERATIONS PENDING CLOSING. The Seller hereby agrees that,
except as set forth on Schedule 5.1 or as consented to in writing by the Buyer,
pending the Closing, the Seller will operate and conduct its business in the
ordinary course consistent with past practice. Pursuant thereto and not in
limitation of the foregoing:
(a) The Seller will maintain, in all material respects, the
Assets in their present state of repair (ordinary wear and tear
excepted), and will use commercially reasonable efforts to keep
available the services of the Employees and to preserve the goodwill of
the Business and relationships with the customers and suppliers, with
whom it has business relations.
(b) Except as forth on Schedule 5.1(b), the Seller will not
take any of the following actions after the date of this Agreement
without the prior written consent of the Buyer:
i. Sell, transfer or otherwise dispose of any
material Assets other than in the ordinary course of business;
ii. Enter into any new material contract, lease, or
commitment relating to the Business or the Assets (for
purposes of this Section 5.1, a "material" contract or
commitment shall mean a contract or commitment which would be
required to be disclosed on Schedule 3.17 hereto);
iii. Mortgage, pledge or subject to liens or other
encumbrances, any Assets, except by incurring Permitted Liens;
iv. Purchase or commit to purchase any capital
asset relating to the Business for a price exceeding $500,000
individually, or $1,000,000 in the aggregate;
v. Amend in any material respect or terminate any
Contract, including any Employee Benefit Plan (except as
otherwise contemplated by this Agreement) or any insurance
policy, in force on the date hereof relating to the Business
or the Assets;
vi. Make any election with respect to Taxes, or any
change in a current election with respect to Taxes, affecting
the Assets or the Business;
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vii. Deploy more than $10,000,000 of inventory into
Central Garden & Pet Company branches and sub-agent branches
during December 1998 without notifying the Buyer in writing of
the amount of such excess;
viii. Agree or commit to do any of the foregoing;
ix. Take or agree or commit to take any action that
would make any representation or warranty of the Seller
hereunder inaccurate in any material respect at, or as of any
time prior to, the Closing Date; or
x. Take, or fail to take, any other action which
would require disclosure on Schedule 3.4 under the terms of
Section 3.4 hereof.
SECTION 5.2. ACCESS From the date of this Agreement through the Closing
Date, the Seller will (i) provide the Buyer and its designees (officers,
counsel, accountants, actuaries, financing sources and other authorized
representatives) with such information, other than the employee information set
forth in Section 7.1 hereof, as the Buyer may from time to time reasonably
request with respect to the Assets and the Business and the transactions
contemplated by this Agreement, (ii) provide the Buyer and its designees access,
during regular business hours and upon reasonable notice, to the property,
books, records, offices, personnel, counsel, accountants and actuaries of the
Seller as such relate to the Business, other than the personnel records set
forth in Section 7.1 hereof, as the Buyer or its designees may from time to time
reasonably request; provided, however, that Buyer's designees shall not
intentionally interfere with or disrupt the ongoing management of the Business
prior to Closing, and (iii) permit the Buyer and its designees to make such
inspections thereof, as the Buyer may reasonably request. Any investigation will
be conducted in such a manner so as not to interfere unreasonably with the
operation of the business of the Seller, and any representative of Buyer shall,
at all times while in Seller's facilities, be accompanied by an employee or
representative of Seller. Buyer shall inform its representatives and agents of
the Confidentiality Agreement, by and between Seller and Buyer, and shall cause
said representatives to abide by such Confidentiality Agreement and Seller's
rules and regulations regarding safety, security and operations.
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SECTION 5.3. PREPARATION OF SUPPORTING DOCUMENTS. In addition to such
actions as the parties may otherwise be required to take under this Agreement or
applicable law in order to consummate this Agreement and the transactions
contemplated hereby and by the Transaction Agreements, the parties will take
such action, furnish such information, and prepare, or cooperate in preparing,
and execute and deliver such certificates, agreements and other instruments as
the other party may reasonably request from time to time, before, at or after
the Closing, with respect to compliance with obligations of the Buyer or the
Seller in connection with the transactions contemplated hereby or by the
Transaction Agreements.
SECTION 5.4. APPROVALS OF THIRD PARTIES; SATISFACTION OF CONDITIONS TO
CLOSING. The Seller and the Buyer will use their reasonable, good faith efforts,
and will cooperate with one another, to secure all necessary consents,
approvals, authorizations and exemptions from governmental agencies and other
third parties, including, without limitation, all consents required by Sections
8.4, 8.5, 9.4 and 9.5. The Seller will use its reasonable, good faith efforts to
obtain the satisfaction of the conditions specified in Article 9. The Buyer will
use its reasonable, good faith efforts to obtain the satisfaction of the
conditions specified in Article 8.
SECTION 5.5. XXXX-XXXXX-XXXXXX NOTIFICATION. The Seller and the Buyer
will each promptly prepare and file a notification with the United States
Justice Department (the "Justice Department") and the Federal Trade Commission
(the "FTC") as required by HSR by November 15, 1998. The Seller and the Buyer
will cooperate with each other in connection with the preparation of such
notification, including sharing information concerning sales and ownership and
such other information as may be needed to complete such notification, and
providing a copy of such notification to the other prior to filing. Each of the
Seller and the Buyer will keep confidential all information about the other
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obtained in connection with the preparation of such notification. The Buyer will
pay the filing fee required under the regulations promulgated pursuant to HSR.
Buyer and Seller will cooperate to respond to all inquiries and requests for
further information associated with the HSR filing. Buyer shall take all actions
as are reasonably prescribed by the FTC or the Justice Department as conditions
to the FTC's or the Justice Department's approval, pursuant to HSR, of the
transaction contemplated hereby; provided, however, Buyer need not take any such
action prescribed by the FTC or Justice Department which action, in the
reasonable judgment of Buyer, would materially and adversely affect the value of
the transactions contemplated by this Agreement or any other agreement between
the parties.
SECTION 5.6. FINANCIAL AND TAX SERVICES. It is recognized that one or
more parties may need tax, financial or other data after the Closing Date with
respect to the Business covering several fiscal periods prior to the Closing
Date in order to facilitate the preparation of Tax returns or in connection with
any audit, investigation, litigation, amended return, claim for refund or any
proceeding in connection therewith or to comply with the rules and regulations
of the Internal Revenue Service, the Securities and Exchange Commission or any
other governmental organization or agency. The parties will render reasonable
cooperation and will afford access during normal business hours to all books,
records, data and personnel concerning use and ownership of the Assets and the
operation and conduct of the Business, other than the personnel records set
forth in Section 7.1 hereof, with respect to periods prior to and including the
Closing Date to each other and their auditors, accountants, counsel or other
authorized representatives for such purpose; provided, however, that Buyer's
designees shall not intentionally interfere with or disrupt the ongoing
management of the Business prior to Closing. The parties will also each execute
such documents as the other may reasonably request in order to file any required
reports or Tax returns and provide the other with prompt written notice upon
receipt of any written claim, notice of deficiency or proposed or actual
assessment pertaining to the Business which could affect the Tax liability of
the other. The party requesting assistance from the other party will bear all
reasonable out-of-pocket costs and expenses incurred by such assisting party
(excluding salaries or wages of its employees).
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SECTION 5.7. TRANSFER TAXES. All sales or transfer Taxes, including but
not limited to, document recording fees, real property transfer Taxes, sales and
excise Taxes, arising out of or in connection with the consummation of the
transactions contemplated herein shall be paid equally by the Buyer and the
Seller.
SECTION 5.8. COMPLIANCE WITH EEOC CONSENT DECREE. Seller hereby
represents that it has complied in all material respects with each of the
obligations imposed by the Consent Decree entered in the United States District
Court for the Eastern District of Missouri in the matter of Billouin, et al. and
the Equal Employment Opportunity Commission v. Monsanto Company and Chevron
Chemical Company (the "Consent Decree"), up to and including the date of
Closing. Seller will undertake reasonable efforts to have the Consent Decree
vacated as soon as practicable following the Closing. From and after the
Closing, Buyer will assume any remaining obligations imposed by the Consent
Decree only to the extent provided by law; provided, however, that to the extent
Seller has any obligations under the Consent Decree following the Closing, Buyer
shall use reasonable efforts to assist Seller in complying with such
obligations.
SECTION 5.9. [Intentionally Omitted]
SECTION 5.10. AMENDMENT OF SCHEDULES. Each party hereto agrees that the
parties shall have the right and the obligation as of the Closing Date to
supplement or amend the Schedules hereto (except Schedule 1.2) with respect to
any matter hereafter arising or discovered which, if existing or known at the
date of this Agreement, would have been required to be set forth or described in
the Schedules, and subject to Section 9.1 and the rights set forth in Section
10.2, such supplement or amendment shall be deemed to cure any breach of the
representation and warranty to which such Schedule applies with respect to such
matter but shall not relieve the Seller of its obligations pursuant to Section
11.1 hereof.
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SECTION 5.11. CONSULTATION WITH WORKS COUNCIL. Prior to the Closing
Date, the Seller agrees to consult with all appropriate Works Council in the
European Union. Buyer agrees to provide Seller with information regarding its
intent with respect to each overseas location with a Works Council for Seller's
use in its consultations with such Works Councils. Buyer agrees to indemnify and
hold Seller harmless for any and all Losses incurred as a result of its use of
the information provided by the Seller. A list of overseas locations with Works
Councils is attached as Schedule 5.11.
SECTION 5.12. MONSANTO COMPLIANCE WITH OBLIGATIONS TO CHEVRON AND OTHER
PREDECESSORS. From and after the Closing, Buyer shall use reasonable efforts to
assist Seller in complying with Seller's continuing rights and obligations under
the following agreements, which Seller has provided Buyer with true and correct
copies of: (i) Sections 6.4, 6.6, 19.11(c), 19.14 and Article 16 of that certain
Asset Sale Agreement and related agreements dated May 14, 1993, by and between
Chevron Chemical Company and Monsanto Company; (ii) that certain Sale of
Business Agreement dated May 5, 1997, by and between Monsanto Australia Limited,
Monsanto Company, Defender Garden Products Pty. Limited, Defender Home Garden
Pty. Limited and Select Harvests Limited; (iii) that certain Asset Purchase
Agreement and related agreements, dated April 15, 1996 between Monsanto Company
and White Swan, Ltd., (iv) those certain documents related to the "Phostrogen"
Business Acquisition, dated June 6, 1997, by and between Monsanto p.l.c.,
Monsanto Company, Phostrogen Ltd., Xxxxxxx Properties Ltd., and X.X. Xxxxxxx;
and (v) that certain Asset Purchase Agreement and related agreements, dated June
1, 1994, by and between Monsanto Canada Inc., Green Cross Garden Products Ltd.,
and Sun Gro Horticulture Canada Ltd. (collectively, the "Acquisition
Agreements"). Buyer will cooperate with Seller to establish procedures necessary
to enable Seller to comply with such obligations, including, but not limited to,
providing to Seller all necessary information and assistance necessary to enable
Seller to preserve and prosecute its rights to indemnification under the
Acquisition Agreements.
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SECTION 5.13. CHEMCOPACK AGREEMENT. From and after the Closing, (i)
Buyer shall use its reasonable efforts to assist Seller in benefitting from
Seller's continuing rights and complying with Seller's continuing obligations
and (ii) Seller shall use its reasonable efforts to assist Buyer in procuring
and benefitting from the applicable rights pertaining to the Business and
complying with the applicable obligations pertaining to the Business, in each
case, which rights and obligations arise pursuant to that certain Service
Agreement, between Monsanto Europe S.A. and Chemcopack N.V. dated July 1, 1998.
SECTION 5.14. NOTICE OF CERTAIN EVENTS. So long as Seller is permitted
by contract and law to do so, the Seller shall promptly notify Buyer, and, so
long as permitted by contract and law to do so, Buyer shall promptly notify the
Seller, of:
i. any notice or other communication from any
Person alleging that the consent of such Person is or may be
required in connection with the transactions contemplated by
this Agreement;
ii. any notice of other communication from any
governmental or regulatory agency or authority in connection
with the transactions contemplated by this Agreement; and
iii. any actions, suits, claims, investigations or
proceedings commenced or, to the knowledge of the Seller or
Buyer, as the case may be, threatened against, relating to or
involving or otherwise affecting the Seller or the Business
that, if pending on the date of this Agreement, would have to
have been disclosed pursuant to Section 3.10 or that relate to
the consummation of the transactions contemplated by this
Agreement.
SECTION 5.15. OTHER OFFERS. From the date hereof until the earlier of
the termination of this Agreement and the Closing, the Seller agrees that none
of the Seller or any officer, director, employee or other agent of the Seller
will, directly or indirectly, (i) solicit, initiate or encourage any inquiries
or the making or implementation of any proposal or offer with respect to a
merger,
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acquisition, consolidation or similar transaction involving, or any purchase of
all or any significant portion of the Assets or the Business (an "Acquisition
Proposal"), other than the transactions contemplated by this Agreement, or (ii)
engage in negotiations with, or disclose any nonpublic information relating to
the Assets or the Business or afford access to the properties, books or records
of the Seller relating to the Assets or the Business to any Person that the
Seller reasonably believes may be considering making, or has made, an
Acquisition Proposal. The Seller will promptly notify Buyer upon receipt of any
Acquisition Proposal or any indication that any Person is considering making an
Acquisition Proposal or any request for nonpublic information relating to the
Assets or the Business or for access to the properties, books or records of the
Seller relating to the Assets or the Business by any Person that may be
considering making, or has made, an Acquisition Proposal and will keep Buyer
fully informed of the status and details of any such Acquisition Proposal,
indication or request.
SECTION 5.16. NONCOMPETITION.
(a) Noncompetition Period. The "Noncompetition Period" shall
be five (5) years.
(b) Seller Covenant. Seller covenants and agrees that for the
Noncompetition Period, Seller will not, nor will it permit any Affiliate to,
directly or indirectly, own, manage, operate or control, or participate in the
ownership, management, operation or control of, or be connected with or have any
interest in, as a shareholder, partner, creditor or otherwise, any Competitive
Business; provided, that Seller shall not be deemed to have violated this
covenant if Seller undertakes a transaction in which Seller (i) is acquired by
or merges with an unrelated third party who is engaged in a Competitive Business
(defined below) or (ii) acquires an unrelated third party engaged in a
Competitive Business, and, with respect to this clause (ii) only, which
Competitive Business is not a material component of such party's overall
business so long as Seller divests itself of the Competitive Business in such
time period as is reasonable for the completion of a transaction of such type
and complexity, but in no event later than nine months following the closing of
the acquisition of the Competitive Business. A Competitive Business shall be any
business which, anywhere in the world (x) develops, manufactures, sells and
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markets non-glyphosate weed control products, insect control products, garden
seeds and decorative garden items, fertilizers and applicators for use by
consumers for lawn and garden care or (y) markets gardening and home improvement
books for consumers; provided, however, this Section 5.16 shall not apply to
those actions of Seller or any Affiliate (A) to the extent such actions are
expressly contemplated by the Agency Agreement (as defined in Section 10.2(h)
herein), for the duration of the Agency Agreement, (B) to the extent that
immediately upon termination of the Agency Agreement, for whatever reason,
Seller or any Affiliates or successor to the Roundup L&G Business (as defined in
the Agency Agreement) continues to operate the Roundup L&G Business, or (C) to
the extent that Seller's interest in a Competitive Business, as a shareholder,
partner, creditor or otherwise, is equal to or less than 5%.
(c) Consideration. The consideration for the agreements
contained in this Section 5.16 are the mutual covenants contained herein, the
agreement of the parties to consummate the Transaction, and other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged.
(d) Modification. In the event a court (or other authority)
refuses to enforce the covenants and agreements contained in this Section 5.16,
either because of the scope of the geographical area specified in this Section
5.16, the duration of the restrictions, or otherwise, the parties hereto
expressly confirm their intention that the geographical areas covered hereby,
the time period of the restrictions, or such other provision, be deemed
automatically reduced to the minimum extent necessary to permit enforcement.
(e) Injunctive Relief. The parties acknowledge and agree that
the extent of damages to one party (the "non-breaching party") in the event of
an actual or threatened breach of this Section 5.16 by the other party (the
"breaching party") may be impossible to ascertain and there may be available to
the non-breaching party no adequate remedy at law to compensate the
non-breaching party in the event of such an actual or threatened reach by the
breaching party. Consequently, the parties agree that, in the event that either
party breaches or threatens to breach any such covenant or agreement, the
non-breaching party shall be entitled, in addition to any other remedy or relief
to which it may be entitled, including without limitation, money damages, to
seek to enforce any or all of such agreements or covenants against the breaching
party by injunctive or other equitable relief ordered by any court of competent
jurisdiction.
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SECTION 5.17 FINANCIAL STATEMENTS. Seller will deliver to
Buyer, as soon as is reasonably practicable, (a) an audited statement of the
assets of the Business to be purchased and the liabilities of the Business to be
assumed by Buyer as of December 31, 1997 (the "1997 Statement of Assets and
Liabilities") and the related audited statement of net sales, cost of sales and
direct operating costs of the Business for the year then ended and (b) an
unaudited statement of the assets of the Business to be purchased and the
liabilities of the Business to be assumed as of September 30, 1998 (the "Interim
Statement of Assets and Liabilities") and the related unaudited statement of net
sales, cost of sales and direct operating costs of the Business for the nine
months ended September 30, 1998 and 1997 (collectively, the "Financial
Statements"). At such time, Seller will provide to Buyer the following
representation and warranty with respect to the Financial Statements: "The
Financial Statements have been prepared from the books and records of Solaris in
conformity with generally accepted accounting principles in the United States
("GAAP"), and, subject in the case of the Interim Statement of Assets and
Liabilities and the related unaudited statements of net sales, cost of sales and
direct operating costs for the nine months ended September 30, 1998 and 1997, to
the absence of notes, (i) the 1997 Statement of Assets and Liabilities and the
Interim Statement of Assets and Liabilities, respectively, fairly present, in
all material respects, the assets that would have been purchased and the net
liabilities that would have been assumed by Buyer as of December 31, 1997 and
September 30, 1998, if the transactions contemplated hereby had been consummated
on December 31, 1997 (in the case of the 1997 Statement of Assets and
Liabilities) and September 30, 1998 (in the case of the Interim Statement of
Assets and Liabilities), respectively, and (ii) the statements of net sales,
cost of sales and direct operating costs of the Business fairly present, in all
material respects, the net sales, cost of sales and direct operating costs of
the Business for the year ended December 31, 1997 and for the nine months ended
September 30, 1998 and 1997, respectively." Following the delivery of the
Financial Statements to Buyer, Buyer shall have five (5) business days to accept
such Financial Statements, in which case the foregoing representation shall
become part of Seller's representations and warranties in Article III hereof, or
terminate this Agreement pursuant to Section 10.2(h) hereof.
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SECTION 5.18. COOPERATION. The Seller agrees to reasonably cooperate,
and to use reasonable efforts to cause its accountants to cooperate, with the
Buyer in connection with the preparation of financial statements or information
with respect to the Business that comply with the rules and regulations of the
Securities and Exchange Commission, if, and to the extent, so requested by the
Buyer in connection with the transactions contemplated hereby. The Buyer agrees
to indemnify the Seller for 100% of the incremental costs of the Seller's
accountants in connection with the preparation of such financial statements.
ARTICLE VI. - CASUALTY AND CONDEMNATION
SECTION 6.1. CASUALTY. The Seller will bear the risk of any loss or
damage or destruction to any of the Assets from fire or other casualty or cause
at all times prior to the Closing. Upon the occurrence of any loss or damage to
any of the Assets as a result of fire, casualty, or other causes prior to the
Closing, the Seller will notify the Buyer of the same in writing as soon as
practicable thereafter. If such loss or damage could reasonably be deemed to
have a material adverse effect, the Buyer will have the option, exercisable
within ten (10) days after receipt of such notice from the Seller to terminate
this Agreement. If Buyer elects to terminate, this Agreement will be of no
further force or effect and neither the Seller nor the Buyer will have any
further rights, duties, or obligations hereunder. If Buyer does not elect to
terminate this Agreement, this Agreement will remain in full force and effect,
the Closing shall be consummated, and the Buyer will accept the Assets in their
"then" condition without reduction of the Purchase Price; provided, however, if
the diminution in value, net of proceeds received by the Buyer under the
insurance policies referred to in the next sentence exceeds $1,000,000, the
Purchase Price will be reduced by the
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amount of such diminution. The Seller will assign to the Buyer all rights under
any insurance claim covering the loss and will pay over to the Buyer any
proceeds under any such insurance policy theretofore received by the Seller with
respect thereto.
SECTION 6.2. CONDEMNATION. If, prior to the Closing, any of the Real
Property has been taken by condemnation in any proceeding by a public authority
or other body vested with the power of eminent domain or has been acquired by a
public or quasi-public body for public purposes, or if condemnation proceedings
therefor have been instituted, the Seller will give the Buyer prompt notice of
such occurrence. If such condemnation takes, or proposes to take, all or any
portion of the Real Property which would have a material adverse effect, the
Buyer may cancel this Agreement by giving the Seller notice to such effect
within ten (10) days after the Seller's notice to the Buyer of such occurrence,
with the date of the Closing to be extended, if necessary, to provide such a ten
(10) day period. If the Buyer so elects, this Agreement will be terminated and
the parties hereto will have no further rights, duties, or obligations
hereunder. If this Agreement is not terminated as provided above, this Agreement
will remain in full force and effect and the purchase contemplated herein, less
any portion of the Real Property taken by eminent domain or condemnation, or
sold in lieu thereof, will be consummated with a corresponding reduction of the
Purchase Price. In such event, the Seller will, at the Closing, assign,
transfer, and set over to the Buyer all of the Seller's right, title and
interest in and to any awards or proceeds paid or payable for such taking or
sale in lieu thereof.
ARTICLE VII. - COVENANTS AS TO EMPLOYEES
SECTION 7.1. OFFERS OF EMPLOYMENT.
(a) Transferred Employees. At least one week prior to Closing,
the Buyer shall offer employment with the Buyer to 100% of the
Employees other than the Employees
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set forth on Schedule 7.1(a). All personnel records maintained by
Seller shall remain with the Seller after Closing. The Seller and its
Affiliates agree to release from their employment those Employees who
are offered and accept employment with the Buyer ("Transferred
Employees") to enable them to commence their employment with the Buyer.
Seller shall furnish Buyer with an electronic file of employee data
related to such Transferred Employees. The Seller makes no
representations or warranties concerning such file, or the contents or
sufficiency thereof. An offer of employment made by the Buyer will be
in writing and will at least equal the salary or wages (including, as
applicable, shift differentials, and premiums) provided by the Seller
to the Transferred Employee immediately prior to Closing and will
include comparable employee benefits provided by the Buyer to its
similarly situated employees. The Buyer shall not reduce any
Transferred Employee's initial salary or wages (including, as
applicable, shift differentials and premiums) as an employee of Buyer
during the twelve (12) month period after the date on which such
Transferred Employee commences work for the Buyer (the "Employment
Date").
(b) Termination of Employees. If (i) the Buyer terminates the
employment of any Transferred Employee without cause during the
eighteen (18) month period after the Employment Date and such
Transferred Employee is not offered "comparable employment" by the
Buyer or an Affiliate of the Buyer through the eighteen (18) month
anniversary of the Employment Date or (ii) the Buyer relocates any
Transferred Employee during the eighteen (18) month period after such
Transferred Employee's Employment Date without the Transferred
Employee's consent, the Buyer shall pay to such Transferred Employee
either (w) an amount at least equal to the amount, and offer the
benefits, set forth in Schedule 7.1(b)(1), or (x) if such Transferred
Employee signs a settlement agreement and general release provided by
Seller, an amount at least equal to the amount, and offer the benefits,
set forth in Schedule 7.1(b)(2) (the "Termination Payments"). In
consideration of Buyer's agreement to make the Termination Payments to
such Transferred Employees, the Seller shall reimburse the Buyer for
the lesser of (y) fifty percent (50%) of such Termination Payments, or
(z) five million dollars
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($5,000,000.00). For the purposes of this Section 7.1(b), "cause" shall
mean (A) the conviction of a felony, (B) the willful failure to perform
reasonable job-related requests, (C) an act of intentional fraud,
embezzlement or theft, (D) an act or omission of gross misconduct
injurious to Buyer, or (E) a material violation of Buyer's rules,
policies or procedures. For the purposes of this Section 7.1(b),
"comparable employment" shall mean a job of equal pay (including, as
applicable, shift differentials, incentives and premiums) and benefits
comparable to those provided by Buyer to its similarly situated
employees. The Buyer agrees to indemnify and hold the Seller harmless
from and against any and all claims, damages, liabilities or losses
arising out of or related to the Buyer's hiring, promotion or
termination of any Transferred Employee, including any severance
payments required under this Section 7.1(b).
(c) Employees Not Actively at Work. Attached hereto as
Schedule 7.1(c) is a schedule which identifies each Employee who is on
short-term disability, long-term disability or personal leave. Any
Employee who is on short-term disability or personal leave on the
Closing Date shall be offered employment by the Buyer if such Employee
returns to work within six (6) months after the Closing Date with any
appropriate doctors' releases. Any other Employee who was not actively
at work on the Closing Date will continue to be the responsibility of
the Seller after such date.
(d) Buyer and Seller agree to work cooperatively to assist in
the transfer of a Transferred Employee who is working for Seller under
a nonimmigrant visa. Buyer shall pay all severance costs with respect
to any such Transferred Employee who is unable or unwilling to obtain a
visa.
SECTION 7.2. BENEFITS AND EMPLOYMENT CONDITIONS OF TRANSFERRED
EMPLOYEES IN THE UNITED STATES.
(a) Defined Benefit Pension Plans. Any tax-qualified defined
benefit pension plans of the Seller (the "Seller's Pension Plans") will
retain the liability for, and will fully
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vest the Transferred Employees in, their accrued benefits under such
plans and, upon application for distribution under the terms of such
plans, will provide for distributions to any Transferred Employee who
is eligible for a distribution under the terms of such plans. The Buyer
shall have no responsibility for any determination made under the
Seller's Pension Plans regarding the type, amount or time of payment of
any benefit payable to a Transferred Employee under such plan. So long
as the Buyer maintains one or more defined benefit pension plans for
its other similarly situated employees, the Buyer shall include the
Transferred Employees in such plan(s) (the "Buyer Defined Benefit
Plan"). The Buyer Defined Benefit Plan shall recognize the Transferred
Employees' service recognized by the Seller as of their Employment
Dates for purposes of eligibility to participate and vesting, but not
for benefit accrual purposes. The Buyer Defined Benefit Plan shall not
be responsible for providing any "subsidized" benefit that could have
been earned by a Transferred Employee under any of the Seller's Pension
Plans had the Transferred Employee remained employed by the Seller
after Closing.
(b) Qualified Defined Contribution Plans. Any tax-qualified
defined contribution plans of the Seller (the "Seller's Defined
Contribution Plans") will fully vest the Transferred Employees in, and
will provide for the distribution to or on behalf of the Transferred
Employees of, their account balances in accordance with such Plans'
regular distribution rules for employees whose employment with the
Seller and its Affiliates has terminated, provided that the Seller
determines that such distributions will not adversely affect the
qualified status of the Seller's Defined Contribution Plans under
Section 401(a) of the Code. The Buyer shall have no responsibility for
any determination made under the Seller's Defined Contribution Plans.
So long as the Buyer maintains one or more defined contribution pension
plans for its other similarly situated employees, the Buyer shall
include the Transferred Employees in such plans (the "Buyer Defined
Contribution Plan"). The Buyer Defined Contribution Plan shall
recognize the Transferred Employees' service recognized by the Seller
for purposes of eligibility to participate and vesting.
(c) Vacation Pay. Effective as of the Closing Date, the Buyer
shall adopt a vacation schedule for the Transferred Employees that is
substantially the same as the
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Buyer's vacation program provided by Buyer to its similarly situated
employees. The Buyer will recognize a Transferred Employee's service
with the Business for purposes of determining the Transferred
Employee's eligibility for and amount of vacation benefits. Seller will
pay, as of the applicable Employment Date, its liability to each
Transferred Employee for vacation accrued but not taken or paid for by
the Seller. Buyer shall provide unpaid vacation leave during the
calendar year in which the Transferred Employee's Employment Date
occurs to a Transferred Employee in an amount equal to the vacation
accrued but not taken by the Transferred Employee and paid for by the
Seller.
(d) Medical and Dental Plans. As of his or her Employment
Date, each Transferred Employee will be eligible to enroll in a medical
and dental plan established or maintained by the Buyer which shall
provide coverage comparable to that provided by the Buyer to its
similarly situated employees. The Buyer will cause the Buyer's medical
and dental plans to waive any pre-existing condition limitations to the
extent reasonably possible under the terms of the applicable plan of
Buyer and to recognize each such Transferred Employee's (and his or her
covered dependents') expenditures under the corresponding Seller
medical and dental plans for the calendar year in which the Employment
Date occurs toward any applicable deductible and annual out-of-pocket
limit for such calendar year. The Seller will cause the Seller's
medical and dental plans to be liable for covered expenses of the
Transferred Employees and their dependents that were incurred before
the applicable Employment Date or during hospital stays that began
before such Employment Date, and the Buyer's medical and dental plans
may exclude liability for such expenses. Any benefits provided by the
Buyer pursuant to this paragraph are subject to the Buyer's right to
amend or terminate its medical and dental plans at any time.
(e) [Intentionally omitted.]
(f) Life Insurance Coverage. The Buyer agrees that as of a
Transferred Employee's Employment Date, the Transferred Employee may
elect the Buyer's group term and supplemental life insurance coverage
on his or her life without evidence of
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insurability; provided that such Transferred Employee was a participant
in Seller's group term and supplemental life insurance coverage as of
the Closing. The Buyer agrees that the plan will recognize the
Transferred Employee's service with the Business for purposes of
determining the Transferred Employee's eligibility for and amount of
coverage. Any benefits provided under this paragraph are subject to the
Buyer's right to amend or terminate its group-term and supplemental
life insurance coverage at any time.
(g) Disability Coverage. The Buyer agrees that as of a
Transferred Employee's Employment Date, the Transferred Employee shall
be eligible to enroll in any short-term and long-term disability plan
established by the Buyer; provided that such Transferred Employee is
not currently receiving short-term or long-term disability benefits
from Seller or under a plan maintained by Seller. The plan will
recognize the Transferred Employee's service with the Business for
purposes of determining the Transferred Employee's eligibility for and
amount of benefits and shall treat the date the Transferred Employee
was employed by the Seller as the date the Transferred Employee was
employed by the Buyer for purposes of defining a preexisting condition.
Any benefits provided under this paragraph are subject to the Buyer's
right to amend or terminate its disability plan at any time.
(h) Relocation Assistance. Schedule 7.2(h) lists the Employees
who as of the date of this Agreement are receiving or eligible to
receive relocation assistance or who are on temporary domestic
assignments working in full-time positions, and shows for each Employee
listed, if determinable on the date of this Agreement, the amount of
relocation assistance, as applicable, which the Employee would receive
after the Closing Date under the Seller's relocation policy described
in Schedule 3.12 if the Employee remained an employee of the Seller.
With respect to Transferred Employees listed on Schedule 7.2(h), the
Buyer shall provide such relocation assistance, as applicable, which
the Transferred Employee would have received under the Seller's
relocation policy.
(i) International Assignment. Buyer shall provide all payments
and benefits to Transferred Employees on international assignment as of
their Employment Date as such Transferred Employees would have received
under Seller's international assignment
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policy and will assist all such Transferred Employees in obtaining any
necessary work visas or papers. If the employment agreement of a
Transferred Employee on international assignment cannot be assigned to
the Buyer, such Transferred Employee shall remain an employee of the
Seller until such time as the Transferred Employee's employment
agreement with the Seller can be assigned to the Buyer. Buyer shall
reimburse Seller for the cost of salary, benefits and other assistance
provided by the Seller to such Transferred Employee.
(j) Additional Benefits. Buyer shall implement immediately
after the Closing a retention incentive plan which will target
approximately 40% of the Transferred Employees. Buyer shall permit each
Transferred Employee to participate in any incentive plan in which
Buyer's similarly situated employees participate.
SECTION 7.3. ACCESS TO EMPLOYEE INFORMATION. After the Closing Date,
the parties hereto will cooperate with each other in the administration of any
applicable Employee Benefit Plans and programs.
SECTION 7.4. WARN ACT INDEMNIFICATION. With respect to the transactions
contemplated by this Agreement, Buyer will comply in all material respects with
the provisions of the Workers Adjustment and Retraining Notification Act of
1988, as amended ("WARN Act"). The Buyer agrees to indemnify the Seller and its
directors, officers, employees, consultants and agents for, and to hold the
Seller and its directors, officers, employees, consultants and agents harmless
from and against, any and all Losses (as defined in Section 11.1) arising or
resulting, or alleged to arise or result from the notification or other
requirements of the WARN Act. The indemnifications contained in this Section
will survive the Closing and remain effective concurrent with the legal
limitations period applicable to WARN Act liability.
SECTION 7.5. WORKERS' COMPENSATION CLAIMS. The Seller will be
responsible for any workers' compensation claims by any Transferred Employee for
injuries incurred prior to such Transferred
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Employee's Employment Date. The Buyer will be responsible for any workers'
compensation claims for injuries incurred by any Transferred Employee on or
after such Transferred Employee's Employment Date.
SECTION 7.6. GENERAL EMPLOYEE PROVISIONS.
(a) The Seller and the Buyer will give notices required by law
and take whatever other actions with respect to the plans, programs and
policies described in this Article 7 as may be reasonably necessary to
carry out the arrangements described in this Article 7.
(b) The Seller and the Buyer will provide each other with such
plan documents and descriptions or other information as may be
reasonably required to carry out the arrangements described in this
Article 7.
(c) If any of the arrangements described in this Article 7 are
finally determined by the Internal Revenue Service or other applicable
governmental authority, or by a court of competent jurisdiction, to be
prohibited by law, the Seller and the Buyer will modify such
arrangements to as closely as possible retain the intent and economic
benefits and burdens of the parties as reflected herein in a manner
which is not prohibited by law.
(d) No provision of this Agreement will create any third party
beneficiary rights to any person, including without limitation any
Transferred Employee or any dependent of a Transferred Employee, in
respect of continued employment or resumed employment, and no provision
of this Agreement will create any third party beneficiary rights in any
person, including without limitation any Transferred Employee or any
dependent of a Transferred Employee, in respect of any employee benefit
plan or arrangement or any other arrangement which may be maintained
from time to time by the Buyer.
(e) The Seller and the Buyer agree to utilize the "Alternative
Procedure" provided in Section 5 of the Revenue Procedure 84-77, 1984-2
Cumulative Bulletin 753, as modified and superseded by Revenue
Procedure 96-60, 1996 Cumulative Bulletin 399, with respect to filing
and furnishing Internal Revenue Service Forms W-2, W-3, and 941.
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SECTION 7.7. EMPLOYEE BENEFIT PLANS. Except as expressly provided in
this Article 7, the Buyer will not adopt, assume or otherwise become responsible
for, either primarily or as a successor employer, any of the Employee Benefit
Plans, arrangements, commitments or policies currently provided by the Seller or
by any member of its controlled group under Code Section 414 (the "Controlled
Group Members"). In particular, but not by way of limitation, the Buyer will not
assume liability for any retiree medical benefits, or for any group health
continuation coverage or coverage rights under Code Section 4980B and ERISA
Section 606 which exist prior to the Closing Date or which arise as a result of
the Seller's dissolution and/or termination of its group health plan or plans.
In addition, the Buyer will not assume the Seller's obligations under Code
Section 4980B and ERISA Section 606 relating to individuals who are neither
Transferred Employees or dependents of Transferred Employees. The Seller agrees
to indemnify the Buyer and its directors, officers, employees, consultants and
agents for, and to hold them harmless from and against, any and all Losses
caused by any employee benefit plan, arrangement or policy currently provided by
the Seller or any Controlled Group Member. The indemnifications contained in
this Section shall survive the Closing and remain effective concurrent with the
legal limitations period applicable to any such employee benefit plan,
arrangement or policy.
SECTION 7.8. TRANSFER OF EMPLOYEES IN EUROPE. In accordance with "The
Employees Acquired Rights Directive" (EU Directive 77/187 of February 14, 1977
as implemented in each of the relevant member states), all employment agreements
with employees employed by Seller in connection with the business and listed in
Schedule 7.8 hereto (the "European Employees") shall be automatically
transferred to the Buyer on the date of Closing by operation of law. Each
European Employee shall, as from the Closing Date be employed by the Buyer under
the terms and conditions applicable to such employee just prior to the date of
Closing and each European Employee's seniority rights shall, for all purposes,
be honored by the Buyer. As soon as practicable after Closing Date and effective
as of the Closing Date, the Buyer shall have in place or establish incentive
plans, benefit plans and
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pension plans providing overall benefits not less favorable than those enjoyed
by the European Employees immediately before Closing. Buyer and Seller shall
each select an actuary to review and agree upon pension fund transfers as
required under local laws and regulations. If such actuaries are unable to agree
upon such pension fund transfers, then they shall mutually select a third
actuary who shall make a final decision. Seller and the Buyer shall meet
promptly after Closing to take all appropriate steps to protect fully all
European Employees' existing pension rights. Seller agrees to assist the Buyer,
at Buyer's expense, with respect to the transfer of the European Employees and
provide all necessary transition services to the Buyer to ensure payment of the
European Employees' salaries, benefits and compensation, taxes and social
security in the name and on behalf of the Buyer during the transition period.
The Buyer shall indemnify and hold Seller harmless from any and all costs and
liabilities which may arise out of the provisions of such services.
SECTION 7.9. TRANSFERRED EMPLOYEES WORKING ON VISAS OR WORK PERMITS.
Buyer will use its reasonable efforts to have the visas and work permits for
those Employees who are working under a visa and/or a work permit transferred or
issued to Buyer as the employer of record for such Employees. Seller will assist
Buyer in such efforts at Buyer's expense. Until such time as there is a valid
visa and/or work permit issued for such Employee showing Buyer as the employer
of record, each such Employee shall remain an Employee of Seller. Buyer shall
reimburse Seller for the employment costs of such Employees quarterly during the
period needed to obtain the new or revised visas and/or work permits. Actual
business expenses incurred by such Employees shall be paid by Buyer. Upon the
issuance of new or revised visas and/or work permits, such Employees will become
employees of Buyer and will be treated as Transferred Employees.
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ARTICLE VIII. - CONDITIONS TO SELLER'S OBLIGATIONS
Each of the obligations of the Seller to consummate the transactions
contemplated hereby will be subject to the satisfaction (or written waiver by
the Seller) at or prior to the Closing Date of each of the following conditions.
SECTION 8.1. REPRESENTATIONS AND WARRANTIES TRUE AT CLOSING DATE.
Except for changes as may be contemplated by this Agreement, each of the
representations and warranties of the Buyer contained in this Agreement,
disregarding all qualifications and exceptions contained therein relating to
materiality or material adverse effect, must be true in all material respects on
and as of the Closing Date with the same force and effect as though made on and
as of such date, unless the representation or warranty is made as of a specified
date; the Buyer must have performed and complied in all material respects with
the covenants and agreements set forth herein to be performed or complied with
by it on or before the Closing Date; and the Buyer must have delivered to the
Seller a certificate dated the Closing Date and signed by its duly authorized
officer to all such effects.
SECTION 8.2. LITIGATION. No suit, investigation, action or other
proceeding may be pending or overtly threatened against the Seller or its
Affiliates or the Buyer before any court or governmental agency which has
resulted in the restraint or prohibition of the Seller, or, could in the
reasonable opinion of counsel for the Seller, result in the assessment of
material damages or other relief against the Seller, in connection with this
Agreement or the consummation of the transactions contemplated hereby.
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SECTION 8.3. OPINION OF COUNSEL TO BUYER. The Seller must have received
from counsel to the Buyer an opinion, dated the Closing Date, in a form
reasonably satisfactory to counsel to Seller.
SECTION 8.4. REQUIRED GOVERNMENTAL APPROVALS. All governmental
authorizations, consents and approvals set forth on Schedule 9.4 must have been
obtained and must be in full force and effect. All applicable governmental
pre-acquisition filing, information furnishing and waiting period requirements,
including expiration of all applicable waiting periods pursuant to HSR, as set
forth on Schedule 9.4, must have been met or such compliance must have been
waived by the governmental authority having authority to grant such waivers.
SECTION 8.5. OTHER NECESSARY CONSENTS. The parties must have obtained
all consents and approvals listed on Schedule 9.5.
SECTION 8.6. SUPPLY AGREEMENT. The Buyer must have executed and
delivered to the Seller the Supply Agreement in the form attached hereto as
Exhibit A (the "Supply Agreement").
SECTION 8.7. FORMULATION AGREEMENT. The Buyer must have executed and
delivered to the Seller the Formulation Agreement in the form attached hereto as
Exhibit B (the "Formulation Agreement").
SECTION 8.8. TRANSITION SERVICES AGREEMENT. The Buyer must have
executed and delivered to the Seller a Transition Services Agreement in a form
mutually satisfactory to the parties (the "Transition Services Agreement").
SECTION 8.9. NO MATERIAL ADVERSE CHANGE. There shall have been no
material adverse change since December 31, 1997 in the business or financial
condition of the Buyer taken as a whole, or the financial ability of the Buyer
to consummate the transactions contemplated by this Agreement.
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ARTICLE IX. - CONDITIONS TO BUYER'S OBLIGATIONS
Each of the obligations of the Buyer to consummate the transactions
contemplated hereby is subject to the satisfaction (or written waiver by the
Buyer) at or prior to the Closing Date of each of the following conditions.
SECTION 9.1. REPRESENTATIONS AND WARRANTIES TRUE AT CLOSING DATE.
Except for changes as may be contemplated by this Agreement, each of the
representations and warranties of the Seller contained in this Agreement,
disregarding all qualifications and exceptions contained therein relating to
materiality or material adverse effect, must be true in all material respects on
and as of the Closing Date with the same force and effect as though made on and
as of such date, unless the representation or warranty is made as of a specified
date; the Seller must have performed and complied in all material respects with
the respective covenants and agreements set forth herein to be performed or
complied with by it on or before the Closing Date; and the Seller must have
delivered to the Buyer a certificate dated the Closing Date and signed by its
duly authorized officer to all such effects.
SECTION 9.2. LITIGATION. No suit, investigation, action or other
proceeding may be pending or overtly threatened against the Buyer or the Seller
or its Affiliates before any court or governmental agency which has resulted in
the restraint or prohibition of the Buyer, or, in the reasonable opinion of
counsel for the Buyer, is reasonably likely to result in the assessment of
material damages or other relief against the Buyer in connection with this
Agreement or the consummation of the transactions contemplated hereby.
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SECTION 9.3. OPINION OF COUNSEL TO SELLER. The Buyer must have received
from counsel to the Seller an opinion, dated the Closing Date, in a form
reasonably satisfactory to counsel to Buyer.
SECTION 9.4. REQUIRED GOVERNMENTAL APPROVALS. All governmental
authorizations, consents and approvals set forth on Schedule 9.4 must have been
obtained and must be in full force and effect. All applicable governmental
pre-acquisition filing, information furnishing and waiting period requirements,
including expiration of all applicable waiting periods pursuant to HSR, as set
forth on Schedule 9.4, must have been met or such compliance must have been
waived by the governmental authority having authority to grant such waivers.
SECTION 9.5. OTHER NECESSARY CONSENTS. The parties must have obtained
all consents and approvals listed on Schedule 9.5.
SECTION 9.6. SUPPLY AGREEMENT. The Seller must have executed and
delivered to the Buyer the Supply Agreement.
SECTION 9.7. FORMULATION Agreement. The Seller must have executed and
delivered to the Buyer the Formulation Agreement.
SECTION 9.8. TRANSITION SERVICES AGREEMENT. The Seller must have
executed and delivered to the Buyer the Transition Services Agreement.
SECTION 9.9. NO MATERIAL ADVERSE CHANGE. There shall have been no
material adverse change since December 31, 1997 in the business, results of
operations or financial condition of the Business taken as a whole.
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ARTICLE X. - CLOSING
SECTION 10.1. CLOSING. The closing of the transactions contemplated
hereby (the "Closing") will take place at 10:00 a.m. Central Time on the
"Closing Date," at the Seller's offices located at 000 Xxxxx Xxxxxxxxx Xxxx.,
Xx. Xxxxx Xxxxxx, Xxxxxxxx, or at such other place as may be mutually agreeable.
Subject to satisfaction or waiver of the conditions to the Seller's and the
Buyer's obligations set forth in Articles 8 and 9, respectively, the Closing
Date will be the later of the following: (a) February 15, 1999; (b) the date
which is sixty (60) days after the date of Seller's delivery to Buyer of the
Financial Statements pursuant to Section 5.17; (c) the date which is five (5)
business days after the receipt of the governmental approvals contemplated by
Sections 8.4 and 9.4 hereof; or (d) such other date as the parties may agree to
in writing. At the Closing, the parties hereto will duly execute and deliver all
documents and instruments required to be delivered, and the Buyer will make all
payments to the Seller required to be paid at the Closing as provided in this
Agreement.
SECTION 10.2. TERMINATION PRIOR TO CLOSING. Notwithstanding the
foregoing, the parties will be relieved of the obligation to consummate the
Closing and purchase or sell the Assets:
(a) By the mutual written consent of the Buyer and the
Seller;
(b) By the Seller in writing, without liability, if the Buyer
(i) fails to perform in any material respect its agreements contained
herein required to be performed by it on or prior to the Closing Date,
or (ii) materially breaches any of its representations, warranties or
covenants contained herein, which in either case is not cured within
ten (10) days after the Seller has notified the Buyer of its intent to
terminate this Agreement pursuant to this subparagraph;
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(c) By the Buyer in writing, without liability, if the Seller
(i) fails to perform in any material respect its agreements contained
herein required to be performed by them on or prior to the Closing
Date, or (ii) materially breaches any of its representations,
warranties or covenants contained herein, which in either case is not
cured within ten (10) days after the Buyer has notified the Seller of
its intent to terminate this Agreement pursuant to this subparagraph;
(d) Subject to Section 5.5 hereof, by either the Seller or the
Buyer in writing, without liability, if there is issued any order,
writ, injunction or decree of any court or governmental or regulatory
agency binding on the Buyer or the Seller which prohibits or materially
restrains the Buyer or the Seller from consummating the transactions
contemplated hereby; provided that the Buyer and the Seller have used
their reasonable, good faith efforts to have any such order, writ,
injunction or decree lifted and the same has not been lifted within
sixty (60) days after entry, by any such court or governmental or
regulatory agency;
(e) By the Buyer in writing, without liability, if Buyer
elects to terminate pursuant to Section 6.1 or Section 6.2 hereof;
(f) By either the Seller or the Buyer in writing, without
liability, if for any reason the Closing has not occurred by March 31,
1999 other than as a result of the breach of this Agreement by the
party attempting to terminate this Agreement;
(g) By Seller in writing, without liability, upon a "Change of
Control" of Buyer (for purposes of this Agreement, a "Change of
Control" means (i) the acquisition by any individual, corporation,
company, association, joint venture or other entity, of beneficial
ownership of 25% or more of the voting securities of the Buyer; or (ii)
individuals who, as of the date of this Agreement, constitute the Board
of Directors of the Buyer cease for any reason to constitute at least a
majority of the Board of Directors of the Buyer; or (iii) the
consummation by the Buyer of a reorganization, merger or consolidation,
or exchange of shares or sale or other disposition of all or
substantially all of the assets of the Buyer, if immediately after
giving effect to such transaction the individuals or entities who
beneficially own voting securities immediately prior to such
transaction beneficially own
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in the aggregate less than 75% of such voting securities immediately
following such transaction; or (iv) the consummation by the Buyer of
the sale or other disposition of all or substantially all of the assets
of the Buyer; or (v) the consummation by the Buyer of a plan of
complete liquidation or dissolution of the Buyer; or (vi) the public
announcement of the Buyer's intention to consummate any of the actions
in (i)-(v) herein); or By the Buyer in writing, without liability, in
the event that any matter disclosed by Seller after the date hereof in
a supplemented or amended Schedule hereto, individually or taken
together with all other matters disclosed by Seller after the date
hereof, would, in the reasonable judgment of Buyer, be likely to cause
a material adverse change in the business, properties, financial
position, results of operations, or net worth of the Business taken as
a whole;
(h) By Buyer in writing, without liability, within five (5)
business days of Buyer's receipt of the Financial Statements, if the
Financial Statements show that the earnings before interest, taxes and
amortization of the Business: (i) was less than * for the year ended
December 31, 1997 or (ii) was less than * for the nine months ended
September 30, 1998.
SECTION 10.3. TERMINATION OF OBLIGATIONS. Termination of this Agreement
pursuant to Section 10.2 will terminate all obligations of the parties
hereunder, except for the obligations under Article XI (Indemnity Claims), and
Sections 12.1 (Expenses), 12.7 (Brokerage) and 12.9 (Public Announcements);
provided that termination pursuant to subparagraphs (b), (c), (f), or (g) of
Section 10.2 will not relieve a defaulting or breaching party from any liability
to the other party hereto. Notwithstanding the foregoing, in the event that
Seller terminates this Agreement pursuant to Section 10.2(b) above, and such
termination arises out of Buyer's failure to consummate the transactions
contemplated hereby as a result of Buyer's failure to obtain financing, Buyer
shall pay to Seller in immediately available funds by wire transfer an amount
equal to Twenty Million Dollars ($20,000,000) (the "Liquidated Amount"). If the
Liquidated Amount is owing to Seller pursuant hereto, Buyer shall pay to Seller
the Liquidated Amount within two (2) business days of
---------------
* Confidential provision omitted and filed separately with the SEC, based upon a
request for confidential treatment filed with the SEC.
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Buyer's receipt of Seller's termination notice. Notwithstanding the foregoing,
Buyer shall not be obligated to pay such amount unless, at the time of such
termination, all of the conditions precedent to Buyer's obligation to consummate
the transactions contemplated hereby set forth in Article IX hereof have been
satisfied. Seller and Buyer agree that the agreement contained in this Section
10.3 concerning the Liquidated Amount is an integral part of the transactions
contemplated by this Agreement and constitutes liquidated damages and not a
penalty. Seller and Buyer agree that the injury which will be caused to the
Seller by the termination of this Agreement under the circumstances which shall
give rise to the payment of the Liquidated Amount, although foreseeable based on
the facts concerning Buyer's ability to finance the transactions contemplated
hereby and known by Buyer and Seller as of the date of this Agreement, is
nevertheless difficult or impossible of accurate estimation and that the sum
stipulated for the Termination Fee is a reasonable pre-estimate of the probable
loss which will be suffered by the Seller in the event of such termination,
including but not limited to lost opportunity costs, the expenses incurred
during the course of negotiating the transaction, and the likelihood of
consummating the sale with another party if the transactions contemplated hereby
should not be consummated.
ARTICLE XI. - INDEMNIFICATION
SECTION 11.1. SELLER INDEMNIFICATION. Except as otherwise provided in
this Article XI, Article VII, and Sections 2.5 and 12.7, the Seller will
indemnify and reimburse the Buyer for any and all claims, losses, liabilities,
damages, penalties, fines, costs and expenses (including reasonable attorneys'
fees, court costs and settlement costs) (individually, a "Loss", collectively,
"Losses") incurred by the Buyer and its Affiliates and their successors or
assigns, and their respective directors, officers, employees, consultants and
agents (the "Buyer Protected Parties"), as a result of, with respect to, or
arising out of (i) any Assumed Liabilities other than
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those set forth in the Statement of Working Capital or those arising after the
Closing; (ii) any breach or inaccuracy of any representation or warranty of the
Seller set forth in this Agreement; (iii) any breach of or noncompliance by the
Seller with any covenant of the Seller contained in this Agreement to be
performed after the Closing; or (iv) Excluded Liabilities.
SECTION 11.2. BUYER INDEMNIFICATION. Except as otherwise provided in
this Article XI, Article VII, and Sections 2.5 and 12.7, the Buyer will
indemnify and reimburse the Seller for any and all Losses incurred by the Seller
and its Affiliates and their successors or assigns, and their respective
directors, officers, employees, consultants and agents (the "Seller Protected
Parties") as a result of, or with respect to, (i) any breach or inaccuracy of
any representation or warranty of the Buyer set forth in this Agreement; (ii)
any breach of or noncompliance by the Buyer with any covenant or agreement of
the Buyer contained in this Agreement to be performed after the Closing, (iii)
the Assumed Liabilities; and (iv) the ownership or operation of the Assets or
the Business after the Closing.
SECTION 11.3. INDEMNITY CLAIMS.
(a) Survival. The representations, warranties, covenants and
agreements contained herein, except for covenants and agreements to be
performed by the parties prior to the Closing, will not be extinguished
by the Closing but will survive the Closing, subject to the limitations
set forth in subsection (b) below with respect to the time periods
within which claims for indemnity must be asserted. The covenants and
agreements to be performed by the parties prior to the Closing shall
expire at the Closing.
(b) Time to Assert Claims. All claims for indemnification
under this Article 11 which are not extinguished by the Closing in
accordance with Section 11.3(a) must be asserted no later than
September 30, 2000; provided, however, that claims with respect to
Losses arising out of or related in any way to the matters described in
Sections 3.7, 11.1(iii), 11.1(iv), 11.2(ii), 11.2(iii), 11.2(iv), or
11.8 may be made without limitation, except as limited by law.
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SECTION 11.4. DEDUCTIBLE.
(a) Buyer's Assumed Liability Deductible. The Buyer Protected
Parties may make no claim against the Seller for indemnification
pursuant to Section 11.1(i) unless and until:
i. With respect to any and all claims resulting
from or relating to the Central Agreements, including but not
limited to the writing off of any Accounts Receivable owing
from Central Garden & Pet Company to the Business (the
"Central Garden Claims"), the aggregate amount of Losses with
respect to such claims exceeds Two Million Dollars
($2,000,000) (subject to adjustment pursuant to Section
10.4(b), the "Central Garden Deductible") in excess of the
aggregate of the reserves provided for such Losses in the
Statement of Working Capital and net of any assets resulting
from or relating to the Central Agreements in excess of the
amounts provided for such assets in the Statement of Working
Capital, in which event the Buyer Protected Parties may claim
indemnification for the amount of such Losses in excess of the
Central Garden Deductible;
ii. With respect to any and all claims, resulting
from or relating to Assumed Liabilities, excluding the Central
Garden Claims and excluding other Assumed Liabilities set
forth in the Statement of Working Capital or arising after the
Closing (the "Assumed Liability Claims"), the aggregate amount
of Losses with respect to such claims exceeds One Million
Dollars ($1,000,000.00) (the "Assumed Liabilities Deductible")
and net of any assets, other than assets resulting from or
relating to the Central Agreements, in excess of the amounts
provided for such assets in the Statement of Working Capital,
in which event the Buyer Protected Parties may claim
indemnification for the amount of such Losses in excess of the
Assumed Liabilities Deductible;
(b) Buyer's General Deductible. The Buyer Protected Parties
may make no claim against the Seller for indemnification pursuant to
Section 11.1(ii) unless and until the aggregate amount of Losses with
respect to such claims exceeds Two Million Dollars
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($2,000,000.00) (the "Buyer's General Deductible") in which event the
Buyer Protected Parties may claim indemnification for the amount of
such Losses in excess of the Buyer's General Deductible; provided, that
the Buyer's General Deductible shall be increased by an amount equal to
that portion of each of the Central Garden Deductible and the Assumed
Liabilities Deductible which is in excess of the amount of Buyer's
Losses attributable to the Central Garden Claims and Assumed Liability
Claims, respectively, provided that the Central Garden Deductible, or
the Assumed Liabilities Deductible, as the case may be, shall be
reduced by a like amount. For purposes of determining whether the
Buyer's General Deductible has been reached, no effect shall be given
to the words "material," "material adverse effect," "knowledge" or
similar limiting language.
(c) Seller's Deductible. The Seller Protected Parties may make
no claim against the Buyer for indemnification pursuant to Section
11.2(i) unless and until the aggregate amount of Losses with respect to
such claims exceeds Five Million Dollars ($5,000,000.00) (the "Seller's
Deductible") in which event the Seller Protected Parties may claim
indemnification for the amount of such Losses in excess of the Seller's
Deductible. For purposes of determining whether the Seller's Deductible
has been reached, no effect shall be given to the words "material,"
"material adverse effect," "knowledge" or similar limiting language.
SECTION 11.5. NOTICE OF CLAIM. The Buyer Protected Party or the Seller
Protected Party, as the case may be, will notify the party against whom
indemnification under this Agreement is sought (the "Indemnifying Party"), in
writing, of any claim for indemnification, specifying in reasonable detail the
nature of the Loss, and, if known, the amount, or an estimate of the amount, of
the liability arising therefrom. The Buyer Protected Party or the Seller
Protected Party, as the case may be, will provide to the Indemnifying Party, as
promptly as practicable thereafter, such information and documentation as may be
reasonably requested by the Indemnifying Party to support and verify the claim
asserted, so long as such disclosure would not violate the attorney-client
privilege of the Buyer Protected Party or the Seller Protected Party, as the
case may be. Notwithstanding the foregoing, in the event of a claim for
indemnification based on a breach of
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Sections 3.22 or 3.23 hereof, the parties may, before making a formal claim for
indemnification under this Section 11.5, elect to meet and discuss such possible
claim and attempt to resolve such possible claim for a period of thirty (30)
days. Any formal claim for indemnification made subsequent to any meeting at
which the parties attempted to resolve such claim shall be deemed to be timely
made if made within thirty (30) days of such meeting notwithstanding the fact
that such claim may be made after September 30, 2000.
SECTION 11.6. DEFENSE.
(a) If the facts pertaining to a Loss arise out of the claim
of any third party, or if there is any claim against a third party
(other than a Buyer Protected Party or a Seller Protected Party)
available by virtue of the circumstances of the Loss, the Indemnifying
Party may assume the defense or the prosecution thereof by prompt
written notice to the Buyer Protected Party or the Seller Protected
Party, as the case may be, including the employment of counsel or
accountants, at the sole cost and expense of the Indemnifying Party.
The affected Protected Party will have the right to employ counsel
separate from counsel employed by the Indemnifying Party in any such
action and to participate therein, but the fees and expenses of such
counsel employed by the affected Protected Party will be at its
expense. The Indemnifying Party will not be liable for any settlement
of any such claim effected without its prior written consent, which
will not be unreasonably withheld; provided that if the Indemnifying
Party does not assume the defense or prosecution of a claim as provided
above within thirty (30) days after notice thereof from any Protected
Party, the affected Protected Party may settle such claim without the
Indemnifying Party's consent. The Indemnifying Party will not agree to
a settlement of any claim which provides for any payment of monetary
damages by any Protected Party or which could have a material
precedential impact or effect on the business or financial condition of
any Protected Party without the affected Protected Party's prior
written consent. Whether or not the Indemnifying Party chooses to so
defend or prosecute such claim, the Indemnifying Party and the affected
Protected Party will cooperate in the defense or prosecution thereof
and will furnish such records, information and testimony,
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and attend such conferences, discovery proceedings, hearings, trials
and appeals, as may be reasonably requested in connection therewith.
The Indemnifying Party will be subrogated to all rights and remedies of
any Protected Party, except to the extent they apply against another
Protected Party.
(b) To the extent claims with respect to Losses arising out of
or related to the matters described in Section 3.15 exceed the Buyer's
General Deductible in the aggregate with all other Losses, Seller may
assume the defense as provided in Section 11.6(a) above, or, if Seller
elects not to assume the defense, then Buyer shall consult with Seller
in defense of the claim or undertake the cleanup and shall obtain
Seller's consent before incurring significant cost or expense in
connection therewith. Seller, however, retains the right to access any
and all of the Real Property to verify the costs associated with the
claim.
SECTION 11.7. LIMITATION OF LIABILITY.
(a) In calculating any amount of damages to be paid by the
Indemnifying Party pursuant to this Agreement, the amount of such
damages will be reduced by all reimbursements credited to or received
by the other party, relating to such damages, and will be net of any
tax benefits and insurance proceeds received by the other party with
respect to the matter for which indemnification is claimed.
(b) In no event shall the Seller's aggregate obligation to
indemnify the Buyer Protected Parties nor the Buyer's aggregate
obligation to indemnify the Seller Protected Parties under Section
11.1(i), 11.1(ii), and 11.2(i), respectively, of this Agreement exceed
$100 million.
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SECTION 11.8. ALLOCATION AND APPORTIONMENT OF AND INDEMNIFICATION WITH
RESPECT TO TAX LIABILITIES.
(a) Real property, personal property and ad valorem Taxes or
other similar Taxes assessed upon the Assets and Real Property (whether
owned or leased) located in the State of Iowa, assessed on January 1,
1998 for the taxable year July 1, 1998 through June 30, 1999 shall be
prorated as of the Closing Date between the parties based upon their
respective periods of ownership during the taxable year 1998/1999.
(b) Real property, personal property and ad valorem Taxes or
other similar Taxes assessed upon the Assets and Real Property (whether
leased or owned) located in the State of California assessed on January
1, 1998 for the taxable period July 1, 1998 through June 30, 1999,
shall be prorated as of the Closing Date between the parties based upon
their respective periods of ownership during the taxable year
1998/1999. Any supplemental assessments resulting from the sale of the
Assets shall be the sole responsibility of the Buyer.
(c) Real property, personal property and ad valorem Taxes or
other similar Taxes assessed upon the Assets and Real Property (whether
leased or owned) located in any state other than Iowa and California
shall be prorated as of the Closing Date between the parties based upon
their respective periods of ownership, or tenancy as the case may be,
during the taxable period which includes the Closing Date, with
Seller's portion being from the beginning of any such period up to the
Closing Date.
(d) Seller shall be responsible for the timely payment of the
Taxes described in Section 11.8(a)-(c). Buyer shall reimburse Seller
for Buyer's pro rata share of such Taxes within twenty (20) days after
Seller pays such Taxes and notifies Buyer of Buyer's prorated share of
such taxes. Any benefits or additional Taxes and related costs derived
from a contest concerning the amount of such Taxes properly due shall
be prorated between the parties based upon their respective period of
ownership of the Assets during
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such Tax period, with Seller's portion being from the beginning of any
such period up to the Closing Date. Any expenses associated with such a
contest shall be prorated likewise, without regard to the success or
failure of the contest.
SECTION 11.9. EXCLUSIVE REMEDY; RELEASE.
(a) Except as otherwise provided in Section 10.3 hereof, the
indemnification provided pursuant to this Article XI, Article VII and
Sections 2.5, 12.7 and 12.14 shall be the sole and exclusive remedy
hereto for any Losses as a result of, with respect to or arising out of
the breach of this Agreement, or any of the transactions or other
agreements or instruments contemplated or entered into in connection
herewith (including, but not limited to, all Exhibits attached hereto);
provided, however, that such indemnification shall not be the sole and
exclusive remedy, and shall in no way limit the rights of the parties,
with respect to any breach or default under the Supply Agreement or the
Formulation Agreement.
(b) Except as specifically provided in this Article XI and
Sections 2.5 and 12.7, neither the Seller, nor its Affiliates or
representatives shall be liable to Buyer for, and Buyer hereby releases
and discharges Seller, its Affiliates, and their representatives from,
any and all Losses incurred as a result of, with respect to or arising
out of the ownership or operation of the Assets or the Business after
the Closing.
(c) Without limiting the generality of this Section 11.9,
Buyer understands and agrees that the rights accorded under this
Article XI are the sole and exclusive remedy of Buyer against Seller or
its Affiliates with respect to any matters relating to Environmental
Laws. Subject to the foregoing, Buyer hereby waives any right to seek
contribution or other recovery from Seller or its Affiliates under such
Environmental Laws, and Buyer hereby releases the Seller and its
Affiliates from any claims, demands or causes of actions that Buyer has
or may have in the future against Seller or its Affiliates under the
Environmental Laws.
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ARTICLE XII. - MISCELLANEOUS
SECTION 12.1. EXPENSES. Except as otherwise specifically provided in
this Agreement, the Seller and the Buyer will each pay all costs and expenses
incurred by each of them, or on their behalf respectively, in connection with
this Agreement and the transactions contemplated hereby, including fees and
expenses of their own financial consultants, accountants and counsel.
SECTION 12.2. ENTIRE AGREEMENT. This Agreement (including the Schedules
and Exhibits) and all other agreements to be signed or delivered at Closing
constitute the full understanding of the parties, a complete allocation of risks
between them and a complete and exclusive statement of the terms and conditions
of their agreement relating to the subject matter hereof and supersede any and
all prior agreements, whether written or oral, that may exist between the
parties with respect thereto; provided that this provision is not intended to
abrogate any Transaction Agreements executed with or after this Agreement.
Except as otherwise specifically provided in this Agreement, no conditions,
usage of trade, course of dealing or performance, understanding or agreement
purporting to modify, vary, explain or supplement the terms or conditions of
this Agreement will be binding unless hereafter made in writing and signed by
the party to be bound, and no modification will be effected by the
acknowledgment or acceptance of documents containing terms or conditions at
variance with or in addition to those set forth in this Agreement, except as
otherwise specifically agreed to by the parties in writing.
SECTION 12.3. WAIVERS. No waiver by a party with respect to any breach
or default or of any right or remedy and no course of dealing or performance,
will be deemed to constitute a continuing waiver of any other breach or default
or of any other right or remedy, unless such waiver is expressed in writing
signed by the party to be bound. Failure of a party to exercise any right will
not be deemed a waiver of such right or rights in the future.
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SECTION 12.4. PARTIES BOUND BY AGREEMENT; SUCCESSORS AND ASSIGNS. The
terms, conditions and obligations of this Agreement will inure to the benefit of
and be binding upon the parties hereto and the respective successors and assigns
thereof. No Party shall transfer or assign its rights, duties or obligations
hereunder or any part thereof to any other person or entity without the prior
written consent of the other Party. Notwithstanding the foregoing, Buyer may at
any time transfer its rights hereunder to any one or more of its subsidiaries or
other Affiliates of Buyer so long as Buyer remains liable for all of its
obligations hereunder, and so long as Buyer gives the Seller prior written
notice of such assignment.
SECTION 12.5. COUNTERPARTS. This Agreement may be executed in multiple
counterparts, each of which will for all purposes be deemed to be an original
and all of which will constitute the same instrument.
SECTION 12.6. NOTICES. Any notice, request, instruction or other
document to be given hereunder by any party hereto to any other party hereto
must be in writing and delivered personally (including by overnight courier or
express mail service) or sent by registered or certified mail, or be transmitted
by facsimile or other means of electronic data transmission, confirmed by
express mail or overnight courier, in each case with postage or fees prepaid,
If to the Buyer: The Scotts Company
00000 Xxxxxxxxxx Xxxx
Xxxxxxxxxx, Xxxx 00000
Attention: Xxxxxxx X. Xxxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
With a copy to: Vorys, Xxxxx, Xxxxxxx and Xxxxx LLP
00 Xxxx Xxx Xxxxxx
Xxxxxxxx, Xxxx 00000
Attention: Xxxxxx X. Xxxxxx, Xx.
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
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If to the Seller: Monsanto Company
000 Xxxxx Xxxxxxxxx Xxxxxxxxx
Xx. Xxxxx, Xxxxxxxx 00000
Attention: Office of the General Counsel
Facsimile No.: (000) 000-0000
With a copy to: Long Xxxxxxxx & Xxxxxx LLP
One Peachtree Center, Suite 5300
000 Xxxxxxxxx Xxxxxx, X.X.
Xxxxxxx, Xxxxxxx 00000
Attention: Xxxxxx X. Xxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
or to such other address as may be specified from time to time in a notice given
by such party. Any notice which is delivered personally in the manner provided
herein will be deemed to have been duly given to the party to whom it is
directed upon actual receipt by such party or the office of such party. Any
notice which is addressed and mailed in the manner herein provided will be
conclusively presumed to have been duly given to the party to which it is
addressed at the close of business, local time of the recipient, on the fourth
business day after the day it is so placed in the mail or, if earlier, the time
of actual receipt.
SECTION 12.7. BROKERAGE. The Seller and the Buyer do hereby expressly
warrant and represent, each to the other, that except for Xxxxxxx Xxxxx Barney
Inc. in the case of Buyer, and Xxxxxxx, Xxxxx & Co., in the case of Seller, no
broker, agent, or finder has rendered services in connection with the
transactions contemplated under this Agreement. The Seller hereby indemnifies
and agrees to hold harmless the Buyer from and against any and all Losses
arising or resulting, or sustained or incurred by the Buyer, by reason of any
claim by any broker, agent, finder, or other person or entity based upon any
arrangement or agreement made or alleged to have been made by the Seller in
connection with the transaction contemplated by this Agreement. The Buyer hereby
indemnifies and agrees to hold harmless the Seller from and against any and all
Losses arising or resulting, or sustained or incurred by the Seller, by reason
of any claim by any broker, agent, finder, or other person or entity based upon
any arrangement or agreement made or alleged to have been made by the Buyer in
connection with the transaction contemplated under this Agreement.
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SECTION 12.8. GOVERNING LAW; JURISDICTION.
(a) THE VALIDITY, INTERPRETATION AND PERFORMANCE OF THIS
AGREEMENT AND ANY DISPUTE CONNECTED WITH THIS AGREEMENT WILL BE
GOVERNED BY AND DETERMINED IN ACCORDANCE WITH THE STATUTORY, REGULATORY
AND DECISIONAL LAW OF THE STATE OF DELAWARE (EXCLUSIVE OF SUCH STATE'S
CHOICE OR CONFLICTS OF LAWS RULES) AND, TO THE EXTENT APPLICABLE, THE
FEDERAL STATUTORY, REGULATORY AND DECISIONAL LAW OF THE UNITED STATES
(EXCEPT FOR THE U.N. CONVENTION ON CONTRACTS FOR THE INTERNATIONAL SALE
OF GOODS, APRIL 10, 1980, U.N. DOC. A/CONF. 97/18, 19 I.L.M. 668, 671
(1980) REPRINTED IN PUBLIC NOTICE, 52 FED. REG. 662-80 (1987), WHICH IS
HEREBY SPECIFICALLY DISCLAIMED AND EXCLUDED).
(b) Any suit, action or proceeding against any party hereto
with respect to the subject matter of this Agreement, or any judgment
entered by any court in respect thereof, must be brought or entered in
the United States District Court for the District of Delaware, and each
such party hereby irrevocably submits to the jurisdiction of such court
for the purpose of any such suit, action, proceeding or judgment. If
such court does not have jurisdiction over the subject matter of such
proceeding or, if such jurisdiction is not available, then such action
or proceeding against any party hereto shall be brought or entered in
the Court of Chancery of the State of Delaware, County of New Castle,
and each party hereby irrevocably submits to the jurisdiction of such
court for the purpose of any such suit, action, proceeding or judgment.
Each party hereto hereby irrevocably waives any objection which either
of them may now or hereafter have to the laying of venue of any suit,
action or proceeding arising out of or relating to this Agreement
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brought as provided in this subsection, and hereby further irrevocably
waives any claim that any such suit, action or proceeding brought in
any such court has been brought in an inconvenient forum. To the extent
each party hereto has or hereafter may acquire any immunity from
jurisdiction of any court or from legal process with respect to itself
or its property, each party hereto hereby irrevocably waives such
immunity with respect to its obligations under this subsection. The
parties hereto agree that exclusive jurisdiction of all disputes,
suits, actions or proceedings between the parties hereto with respect
to the subject matter of this Agreement lies in the United States
District Court for Delaware, or the Court of Chancery of the State of
Delaware, County of New Castle, as hereinabove provided. Buyer hereby
irrevocably appoints CT Corporation, having an address at 0000 Xxxxxx
Xxxxxx, Xxxxxxxxxx, Xxxxxxxx 00000 and Seller hereby irrevocably
appoints CT Corporation, having an address at 0000 Xxxxxx Xxxxxx,
Xxxxxxxxxx, Xxxxxxxx 00000, as its agent to receive on behalf of each
such party and its respective properties, services of copies of any
summons and complaint and any other pleadings or process of any summons
and complaint and any other pleadings or process which may be served in
any such action or proceedings. Service by mailing (by certified mail,
return receipt requested) or delivering a copy of such process to a
party in care of its agent for service of process as aforesaid shall be
deemed good and sufficient service thereof, and each party hereby
irrevocably authorizes and directs its respective agent for service of
process to accept such service on its behalf.
SECTION 12.9. PUBLIC ANNOUNCEMENTS. No public announcement may be made
by any person with regard to the transactions contemplated by this Agreement
without the prior consent of the Seller and the Buyer; provided that either
party may make such disclosure if advised by counsel that it is required to do
so by applicable law or regulation of any governmental agency or stock exchange
upon which securities of such party are registered. The Seller and the Buyer
will discuss any public announcements or disclosures concerning the transactions
contemplated by this Agreement with the other parties prior to making such
announcements or disclosures.
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SECTION 12.10. NO THIRD-PARTY BENEFICIARIES. With the exception of the
parties to this Agreement and the Protected Parties, there exists no right of
any person to claim a beneficial interest in this Agreement or any rights
occurring by virtue of this Agreement.
SECTION 12.11. DEFINITION OF AFFILIATE. As used in this Agreement,
"Affiliate" of a person or entity shall mean: (i) any other person or entity
directly, or indirectly through one or more intermediaries, controlling,
controlled by, or under common control with such person or entity, (ii) any
officer, director, partner, employee, or direct or indirect beneficial owner of
10% or greater of the equity or voting interests of such person or entity, or
(iii) any other person or entity for which a person or entity described in
clause (ii) acts in such capacity.
SECTION 12.12. KNOWLEDGE. As used in this Agreement, the phrase "to the
Seller's knowledge" shall mean to the actual knowledge of those individuals
listed on Schedule 12.12 hereto with respect to each such individual's area of
responsibility as indicated on Schedule 12.12, as of the date of this Agreement
or the date as of which a particular representation or warranty is given based
on the Seller's knowledge.
SECTION 12.13. BULK SALES LAWS. Buyer and the Seller each hereby waive
compliance by the Seller with the provisions of the "bulk sales," "bulk
transfer" or similar laws of any state. The Seller agrees to indemnify and hold
Buyer harmless against any and all claims, losses, damages, liabilities, costs
and expenses incurred by Buyer or any of its Affiliates as a result of a failure
to comply with any such "bulk sales," "bulk transfer" or similar laws.
SECTION 12.14. INTERPRETATION. Words of the masculine gender will be
deemed and construed to include correlative words of the feminine and neuter
genders. Words importing the singular number will include the plural number and
vice versa unless the context will otherwise indicate. References to Articles,
Sections and other subdivisions of this Agreement are
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to the Articles, Sections and other subdivisions of this Agreement as originally
executed. The headings of this Agreement are for convenience and do not define
or limit the provisions hereof. Words importing persons include firms,
associations and corporations. The terms "herein," "hereunder," "hereby,"
"hereto," "hereof" and any similar terms refer to this Agreement; the term
"heretofore" means before the date of execution of this Agreement; and the term
"hereafter" means after the date of execution of this Agreement.
[Signatures on Next Page]
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IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed by their duly authorized representatives in the United States of
America as of the date first above written.
MONSANTO COMPANY, SELLER
By: /s/ XXXXXX X. XXXXXX
---------------------------------
Name: Xxxxxx X. Xxxxxx
Title: Senior Vice President
THE SCOTTS COMPANY, BUYER
By: /s/ XXXXXXX X. XXXXXX
---------------------------------
Name: Xxxxxxx X. Xxxxxx
Title: Chairman, President and C.E.O.
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SCHEDULES AND EXHIBITS TO ORTHO ASSET PURCHASE AGREEMENT
--------------------------------------------------------
Dated as of November 11, 1998
Between Monsanto Company and The Scotts Company
1.1(f) Equipment
1.2 Excluded Assets
2.2(b) U.S. Working Capital Assignments
2.3 Excluded Liabilities
3.4 Certain Changes and Events
3.5 No Violation of Law
3.6(a) Real Property
3.6(b) Material Personal Property
3.6(d) Liens
3.7 Title to Assets
3.8 Leases
3.9 Intellectual Property
3.10 Litigation
3.11 Employees
3.12 Employee Benefit Plans
3.13 Collective Bargaining Agreements
3.14 Labor Matters
3.15 Environmental Matters
3.16 Permits
3.17 Contracts
3.18 Seller Required Consents, Approvals and Filings
3.19 No Conflict
3.20 Year 2000 Compliance
3.21 Foreign Customers
3.28 Undisclosed Material Liabilities
3.29 Affiliate Transactions
4.3 Buyer Required Consents, Approvals and Filings
5.1 Operation Pending Closing
5.1(b) Actions Prior to Closing
5.11 Works Council
7.1(a)(i) Employees Outside 100% Requirement
7.1(c) Employees Not Actively at Work
7.2(h) Relocation Assistance
7.8 European Employees
9.4 Required Governmental Approvals
9.5 Required Other Consents
12.12 Seller's Knowledge
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EXHIBITS
--------
A Supply Agreement
B Formulation Agreement
The Schedules and Exhibits to the Asset Purchase Agreement have not been filed.
Titles to the omitted Schedules and Exhibits appear above. The Registrant hereby
agrees to furnish supplementally a copy of any omitted Schedule or Exhibit to
the SEC upon its request.
