<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): August 4, 1997
UNITED STATES FILTER CORPORATION
(Exact name of Registrant as specified in its charter)
Delaware 33-0266015
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
40-004 Cook Street, Palm Desert, California 92211
(Address of principal executive offices) (Zip code)
(760) 340-0098
(Registrant's telephone number including area code)
Not applicable
(Former name and former address, if changed since last report)
ITEM 5. OTHER EVENTS
Reference is made to the Agreement for Sale and Purchase of
Partnership Interests dated as of August 3, 1997, by and among Western Farm &
Cattle Company, California Land & Cattle Company, N.N. Investors, L.P., ST Ranch
GenPar, Inc., FW Ranch Partners, L.P., and United States Filter Corporation, and
to the New Release dated August 4, 1997, issued by United States Filter
Corporation, attached as Exhibit 2.1 and Exhibit 99.1, respectively, which are
incorporated herein by reference.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(C) EXHIBITS
2.1 Agreement for Sale and Purchase of Partnership Interests
dated as of August 3, 1997, by and among Western Farm &
Cattle Company, California Land & Cattle Company, N.N.
Investors, L.P., ST Ranch GenPar, Inc., FW Ranch Partners,
L.P., and United States Filter Corporation
99.1 New Release dated August 4, 1997, issued by United States
Filter Corporation
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
United States Filter Corporation
August 12, 1997 By: /s/ Damian C. Georgino
- --------------- --------------------------------------------------
Date Damian C. Georgino, Senior Vice President, General
Counsel and Secretary
<PAGE>
================================================================================
AGREEMENT FOR SALE AND PURCHASE
OF PARTNERSHIP INTERESTS
DATED AS OF AUGUST 3, 1997
BY AND AMONG
WESTERN FARM & CATTLE COMPANY,
CALIFORNIA LAND & CATTLE COMPANY
N.N. INVESTORS, L.P.,
ST RANCH GENPAR, INC.,
FW RANCH PARTNERS, L.P.,
AND
UNITED STATES FILTER CORPORATION
================================================================================
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<C> <S> <C>
ARTICLE 1 DEFINITIONS.............................................. 3
1.1 DEFINITIONS.............................................. 3
ARTICLE 2 THE ACQUISITION.......................................... 11
2.1 THE ACQUISITION; THE CLOSING............................. 11
2.2 STOCK CONSIDERATION...................................... 12
2.3 FRACTIONAL SHARES........................................ 13
ARTICLE 3 REPRESENTATIONS AND WARRANTIES OF SELLERS................ 13
3.1 ORGANIZATION AND POWER................................... 13
3.2 AUTHORIZATION............................................ 17
3.3 CONSENTS, APPROVALS, ETC................................. 21
3.4 NON-CONTRAVENTION........................................ 22
3.5 CAPITALIZATION........................................... 24
3.6 ALL ASSETS NECESSARY..................................... 26
3.7 SUBSIDIARIES............................................. 26
3.8 FINANCIAL STATEMENTS; BOOKS AND RECORDS.................. 26
3.9 ABSENCE OF CERTAIN CHANGES............................... 28
3.10 UNDISCLOSED LIABILITIES.................................. 28
3.11 MATERIAL CONTRACTS....................................... 29
3.12 LITIGATION............................................... 32
3.13 COMPLIANCE WITH LAWS..................................... 33
3.14 PROPERTIES............................................... 34
3.15 WATER RIGHTS............................................. 38
3.16 LICENSES AND PERMITS; REGULATORY MATTERS................. 45
3.18 ENVIRONMENTAL MATTERS.................................... 46
3.19 LABOR AND EMPLOYEE BENEFIT MATTERS....................... 47
3.20 INFORMATION SUPPLIED..................................... 47
3.21 NO BROKER................................................ 47
3.22 INSURANCE................................................ 48
3.23 NOT MISLEADING........................................... 48
ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF BUYER.................. 48
4.1 CORPORATE EXISTENCE AND POWER............................ 48
4.2 CORPORATE AUTHORIZATION.................................. 49
4.3 CONSENTS, APPROVALS, ETC................................. 49
4.4 NON-CONTRAVENTION........................................ 50
4.5 CAPITALIZATION........................................... 50
4.6 SEC FILINGS; FINANCIAL STATEMENTS; BOOKS AND RECORDS..... 51
4.7 NO BROKER................................................ 51
---------
</TABLE>
i
<PAGE>
<TABLE>
<C> <S> <C>
ARTICLE 5 COVENANTS SELLERS........................................ 52
5.1 CONDUCT.................................................. 52
5.2 ACCESS TO INFORMATION.................................... 57
5.3 NOTICES OF CERTAIN EVENTS................................ 58
5.4 NO SOLICITATION OR NEGOTIATION........................... 58
5.5 CONFIDENTIALITY AGREEMENTS............................... 60
5.6 MEETINGS................................................. 60
5.7 COVENANTS RELATING TO THE PROPERTIES..................... 61
5.8 TITLE UPDATES............................................ 61
ARTICLE 6 COVENANTS OF BUYER....................................... 62
6.1 CONDUCT.................................................. 62
6.2 CONFIDENTIALITY.......................................... 62
6.3 INDEMNIFICATION AND INSURANCE............................ 63
6.4 REPRESENTATION ON BUYER'S BOARD OF DIRECTORS............. 63
6.5 COPIES OF SEC FILINGS.................................... 63
6.6 ACCESS TO INFORMATION.................................... 63
ARTICLE 7 COVENANTS OF BUYER AND SELLERS........................... 64
7.1 REASONABLE EFFORTS....................................... 64
7.2 PUBLIC ANNOUNCEMENTS..................................... 66
7.3 CONSENTS................................................. 67
ARTICLE 8 TAX MATTERS; CERTAIN COVENANTS........................... 67
8.1 REPRESENTATIONS, WARRANTIES AND COVENANTS................ 67
8.2 TAX MATTERS.............................................. 71
ARTICLE 9 INDEMNIFICATION.......................................... 75
9.1 INDEMNIFICATION.......................................... 75
9.2 LIMITATIONS TO INDEMNIFICATION OBLIGATIONS............... 76
9.3 NOTICE OF CLAIM.......................................... 76
9.4 THIRD PARTY CLAIMS....................................... 77
9.5 PAYMENTS OF INDEMNITY.................................... 78
ARTICLE 10 CONDITIONS TO CLOSING.................................... 79
10.1 CONDITIONS TO OBLIGATIONS OF BUYER PARTIES AND SELLERS... 79
10.2 FURTHER CONDITIONS TO OBLIGATION OF BUYER................ 81
10.3 FURTHER CONDITIONS TO OBLIGATION OF SELLERS.............. 83
ARTICLE 11 SURVIVAL................................................. 85
11.1 SURVIVAL................................................. 85
ARTICLE 12 TERMINATION.............................................. 85
12.1 GROUNDS FOR TERMINATION.................................. 85
12.2 EFFECT OF TERMINATION.................................... 86
</TABLE>
ii
<PAGE>
<TABLE>
<C> <S> <C>
ARTICLE 13 MISCELLANEOUS............................................ 87
13.1 NOTICES.................................................. 87
13.2 AMENDMENTS AND WAIVERS................................... 90
13.3 EXPENSES................................................. 90
13.4 SUCCESSORS AND ASSIGNS................................... 90
13.5 GOVERNING LAW; SUBMISSION TO JURISDICTION................ 90
13.7 COUNTERPARTS............................................. 92
13.8 NO THIRD PARTY BENEFICIARIES............................. 92
13.9 ENTIRE AGREEMENT......................................... 92
13.10 INVALID PROVISIONS....................................... 92
13.11 CONSTRUCTION............................................. 93
13.12 SPECIFIC PERFORMANCE..................................... 93
</TABLE>
iii
<PAGE>
AGREEMENT FOR SALE AND PURCHASE
OF PARTNERSHIP INTERESTS
THIS AGREEMENT FOR SALE AND PURCHASE OF PARTNERSHIP INTERESTS is made and
entered into as of August 3, 1997, by and among Western Farm & Cattle Company, a
California corporation ("Western Farm & Cattle"), California Land & Cattle
Company, a Delaware corporation ("CLCC"), N.N. Investors, L.P., a Delaware
limited partnership ("N.N. Investors"), ST Ranch GenPar, Inc., a Texas
corporation ("GenPar"), FW Ranch Partners, L.P., a Texas limited partnership
("FW Ranch"), and United States Filter Corporation, a Delaware corporation
("Buyer").
RECITALS
WHEREAS, Western Farm & Cattle is the sole general partner of, and the
holder of a 1% general partner interest (the "WFLP GP Interest") in, Western
Farms, L.P., a California limited partnership ("WFLP"), and California Farms,
L.P., a Delaware limited partnership ("California Farms"), is the sole limited
partner of, and the holder of a 99% limited partner interest (the "WFLP LP
Interest") in, WFLP;
WHEREAS, CLCC is the sole general partner of, and the holder of a 1%
general partner interest (the "California Farms GP Interest") in, California
Farms, and N.N. Investors is the sole limited partner of, and the holder of a
99% limited partner interest (the "California Farms LP Interest") in, California
Farms;
WHEREAS, GenPar is the sole general partner of, and the holder of a 1%
general partner interest (the "FWRLP GP Interest") in, FW Ranchlands, L.P., a
Texas limited partnership ("FWRLP"), and FW Ranch is the sole limited partner
of, and the holder of a 99% limited partner interest (the "FWRLP LP Interest")
in, FWRLP;
<PAGE>
WHEREAS, Western Farm & Cattle desires to sell the WFLP GP Interest to
Buyer, and Buyer desires to purchase the WFLP GP Interest from Western Farm &
Cattle, and CLCC desires to sell the California Farms GP Interest to Buyer, and
Buyer desires to purchase the California Farms GP Interest from CLCC, and N.N.
Investors desires to sell the California Farms LP Interest to Buyer and Buyer
desires to purchase the California Farms LP Interest from N.N. Investors; and
GenPar desires to sell the FWRLP GP Interest to Buyer, and Buyer desires to
purchase the FWRLP GP Interest from GenPar, and FW Ranch desires to sell the
FWRLP LP Interest to Buyer, and Buyer desires to purchase the FWRLP LP Interest
from FW Ranch, all on the terms and subject to the conditions set forth herein
(such purchases and sales collectively, the "Acquisition");
WHEREAS, the boards of directors of Western Farm & Cattle, CLCC and GenPar,
the general partners of WFLP, California Farms and FWRLP, respectively, and a
majority in interest of the limited partners of FW Ranch and the board of
directors of Buyer has approved the Acquisition;
WHEREAS, in connection with and concurrently with the Acquisition, (i)
Buyer, Western Farm & Cattle, CLCC, N.N. Investors, GenPar and FW Ranch will
enter into a Transfer, Registration Rights and Governance Agreement (the
"Governance Agreement") substantially in the form attached hereto as Exhibit A,
(ii) WFLP and N.N. Investors will enter into a Farm Lease Agreement with respect
to certain real property to be owned by WFLP upon consummation of the
Acquisition (the "California Farm Lease") substantially in the form attached
hereto as Exhibit B; and (iii) FWRLP and FW Ranch will enter into a Farm Lease
Agreement with respect
-2-
<PAGE>
to certain real property to be owned by FWRLP upon consummation of the
Acquisition (the "Texas Farm Lease") substantially in the form attached hereto
as Exhibit C;
WHEREAS, Western Farm & Cattle, CLCC, N.N. Investors, GenPar, FW Ranch, and
Buyer desire to make certain representations, warranties, covenants and
agreements in connection with the Acquisition;
NOW, THEREFORE, in consideration of the premises and the mutual
representations, warranties, covenants and agreements of the parties set forth
herein, the parties hereto do hereby agree as follows:
ARTICLE 1
DEFINITIONS
1.1 DEFINITIONS. The following terms, as used herein, have the following
-----------
meanings:
"ACQUISITION" shall have the meaning set forth in the Recitals.
-----------
"ACQUISITION PROPOSAL" shall have the meaning specified in Section 5.4.
--------------------
"AFFILIATE" means, with respect to any Person, any other Person directly or
---------
indirectly controlling, controlled by, or under common control with such Person.
"AGREEMENT" means this Agreement for Sale and Purchase of Partnership
---------
Interests, including the schedules and exhibits hereto.
"ANCILLARY AGREEMENTS" means the Governance Agreement, the California Farm
--------------------
Lease, the Texas Farm Lease, the Keepwell Agreements and the Warrant Agreement.
"AVERAGE TRADING PRICE" means the average (rounded to the nearest one-
---------------------
thousandth (.001)) of the daily closing sales prices of a share of Buyer Stock
as reported on the New York Stock Exchange Composite Tape (as reported by The
Wall Street Journal or, if not reported thereby, as reported by another source
as mutually agreed by Buyer Parties and Sellers), for the
-3-
<PAGE>
twenty consecutive full trading days ending on the trading date that is five
business days prior to the Closing Date.
"BENEFIT ARRANGEMENT" means any employment, consulting, indemnification,
-------------------
severance or similar contract, arrangement or policy, or any plan or arrangement
(whether or not written) providing for severance benefits, insurance coverage
(including any self-insured arrangements), workers' compensation, disability
benefits, supplemental unemployment benefits, vacation benefits, retirement
benefits, deferred compensation, profit-sharing, bonuses, stock options, stock
appreciation rights or other forms of incentive compensation or post-retirement
insurance, compensation or benefits that (i) is not an Employee Plan, (ii) is
entered into or maintained, as the case may be, by WFLP or FWRLP and (iii)
covers any employee or former employee of WFLP or FWRLP.
"BENEFIT PLAN" means any Employee Plan or Benefit Arrangement.
------------
"BUSINESS DAY" means any day other than a Saturday, Sunday or any other day
------------
on which commercial banks in New York, New York are required or permitted to be
closed.
"BUYER" shall have the meaning specified in the paragraph preceding the
-----
Recitals.
"BUYER STOCK" means the common stock, $.01 par value, of the Buyer.
-----------
"CALIFORNIA FARM LEASE" shall have the meaning specified in the Recitals.
---------------------
"CALIFORNIA FARMS" shall have the meaning specified in the paragraph
----------------
preceding the Recitals.
"CALIFORNIA FARMS GP INTEREST" shall have the meaning specified in the
----------------------------
Recitals.
"CALIFORNIA FARMS LIMITED PARTNERSHIP AGREEMENT" means the limited
----------------------------------------------
partnership agreement, as amended, of California Farms.
-4-
<PAGE>
"CALIFORNIA FARMS LP INTEREST" shall have the meaning specified in the
----------------------------
Recitals.
"CALIFORNIA PROPERTIES" shall have the meaning specified in Section
---------------------
3.15(a).
"CLCC" shall have the meaning specified in the Recitals.
----
"CLOSING" shall have the meaning specified in Section 2.1.
-------
"CLOSING DATE" shall have the meaning specified in Section 2.1.
------------
"CODE" means the United States Internal Revenue Code of 1986, as amended.
----
"CONFIDENTIALITY AGREEMENT" means that certain Confidentiality Agreement
-------------------------
dated July 2, 1997, between WFLP and Buyer.
"DELAWARE SUPERIOR COURT" shall have the meaning specified in Section 13.5.
-----------------------
"EMPLOYEE PLAN" means any "employee benefit plan," as defined in Section
-------------
3(3) of ERISA, that (i) is subject to any provision of ERISA, (ii) is
maintained, administered or contributed to by WFLP or FWRLP and (iii) covers any
employee or former employee of WFLP or FWRLP.
"ENCUMBRANCE" shall have the meaning specified in Section 3.14.
-----------
"ENVIRONMENTAL LAWS" means any local, state or federal statute, rule,
------------------
regulation, binding judicial or administrative order, code or ordinance and any
binding judicial or administrative interpretation thereof or requirement
thereunder pertaining to: (A) the regulation or protection of public health,
safety and the indoor or outdoor environment; (B) the conservation, management,
development, control and/or use of land (including zoning laws and ordinances),
natural resources and wildlife; (C) the protection or use of surface water and
ground water; (D) the management, manufacture, possession, presence, use,
generation, transportation, treatment, storage, disposal, release, threatened
release, abatement, removal, remediation, or
-5-
<PAGE>
handling of, or exposure to, any Hazardous Material; or (E) pollution (including
any release to air, land, surface water and ground water).
"ERISA" means the United States Employee Retirement Income Security Act of
-----
1974, as amended.
"ERISA AFFILIATE" of any entity means any other entity which, together with
---------------
such entity, would be treated as a single employer under Section 414 of the
Code.
"EXCHANGE ACT" means the United States Securities Exchange Act of 1934, as
------------
amended, and the rules and regulations promulgated thereunder.
"FEDERAL TAX" means any Tax imposed under the Code.
-----------
"FW RANCH" shall have the meaning specified in the Recitals.
--------
"FW RANCH PARTNERS' APPROVAL" shall have the meaning specified in Section
---------------------------
5.6.
"FW RANCH PARTNERS' MEETING" shall have the meaning specified in Section
--------------------------
5.6.
"FWRLP" shall have the meaning specified in the Recitals.
-----
"FWRLP GP INTEREST" shall have the meaning specified in the Recitals.
-----------------
"FWRLP INTEREST" means the FWRLP GP Interest and the FWRLP Interest.
--------------
"FWRLP INTEREST" shall have the meaning specified in the Recitals.
--------------
"FWRLP LIMITED PARTNERSHIP AGREEMENT" means the limited partnership
-----------------------------------
agreement, as amended, of FWRLP.
"GAAP" means United States generally accepted accounting principles.
----
"GENPAR" shall have the meaning specified in the Recitals.
------
"GOVERNANCE AGREEMENT" shall have the meaning specified in the Recitals.
--------------------
-6-
<PAGE>
"GOVERNMENTAL APPROVAL" means any permit, license, variance, certificate,
---------------------
consent, letter, clearance, closure, exemption, authorization, decision or
action or approval of any federal, state or local Governmental Body with
jurisdiction over any Environmental Law.
"GOVERNMENTAL BODY" means any federal, state, municipal, political
-----------------
subdivision or other governmental legislature, court, tribunal, arbitrator,
authority, official, department, commission, board, bureau, agency or
instrumentality, whether U.S. or non-U.S.
"HAZARDOUS MATERIAL" means any substance, chemical, compound, product,
------------------
solid, gas, liquid, waste, by-product, pollutant, contaminant, or material which
is hazardous or toxic, and includes without limitation, asbestos or any
substance containing asbestos, polychlorinated biphenyls, petroleum (including
crude oil or any fraction thereof), and any hazardous or toxic waste, material,
or substance regulated under any federal, state or local statute, regulation,
rule, order, code or ordinance.
"HSR ACT" means the Hart-Scott-Rodino Antitrust Improvements Act of 1976,
-------
as amended.
"IID" shall have the meaning specified in Section 3.15.
---
"IID WATER" shall have the meaning specified in Section 3.15.
---------
"KEEPWELL AGREEMENTS" means the separate Keepwell Agreements and related
-------------------
inducement letters in substantially the form agreed to by the parties.
"KNOWLEDGE OF SELLERS" means the actual knowledge after due inquiry of the
--------------------
individuals named on Schedule 1.1.
"LAW" means any statute, law, rule, regulation or ordinance of any
---
Governmental Body and any international treaty or interstate compact.
-7-
<PAGE>
"LEASE" shall have the meaning specified in Section 3.14.
-----
"LIEN" means, with respect to any property or asset, any mortgage, deed of
----
trust, lien, pledge, charge, security interest, encumbrance or other adverse
claim of any kind in respect of such property or asset. For the purposes of
this Agreement, a Person shall be deemed to own subject to a Lien any property
or asset which it has acquired or holds subject to the interest of a vendor or
lessor under any conditional sale agreement, capital lease or other title
retention agreement relating to such property or asset.
"MATERIAL ADVERSE EFFECT" means, with respect to any Person or Persons, a
-----------------------
material adverse effect on the financial condition, results of operations,
business, assets or liabilities of such Person or Persons and its or their
Subsidiaries, taken as whole, or a material adverse effect on the consummation
of the transactions contemplated hereby.
"N. N. INVESTORS" shall have the meaning specified in the Recitals.
---------------
"ORDER" means any judgment, injunction, decree, order, writ, permit or
-----
license of any Governmental Body.
"PERMITS" shall have the meaning specified in Section 3.16.
-------
"PERSON" means an individual, corporation, partnership, association, trust,
------
limited liability company or other entity or organization, including a
government or political subdivision or an agency or instrumentality thereof.
"PREFERRED STOCK" means the Preferred Stock, $.10 par value, of Buyer.
---------------
"PROCEEDING" shall have the meaning specified in Section 13.5.
----------
"PROPERTIES" means, with respect to any Person, all real property,
----------
including all improvements and appurtenances thereon, that are owned, leased,
held, used and/or on which
-8-
<PAGE>
operations are based by such Person and/or its Subsidiaries on or before the
Closing Date, but does not include Water Rights.
"REPRESENTATIVE" shall have the meaning specified in Section 5.4.
--------------
"SEC" means the United States Securities and Exchange Commission.
---
"SEC REPORTS" shall have the meaning specified in Section 4.6.
-----------
"SELLERS" means Western Farm & Cattle, CLCC, N.N. Investors, GenPar and FW
-------
Ranch.
"SIGNIFICANT AGREEMENTS" shall have the meaning specified in Section 3.1.
----------------------
"STOCK CONSIDERATION" shall have the meaning specified in Section 2.2.
-------------------
"SUBSIDIARY" means, with respect to any Person, any entity of which
----------
securities or other ownership interests having ordinary voting power to elect
50% or more of the board of directors or other persons performing similar
functions are at the time directly or indirectly owned by such Person.
"SUMMARY PROCEEDING" shall have the meaning specified in Section 13.5.
------- ----------
"SUMMARY PROCEEDING RULES" shall have the meaning specified in Section
------- ----------------
13.5.
"TAXES" means all taxes, charges, fees, levies or other assessments,
-----
including but not limited to any net income tax or franchise tax based on net
income, any alternative or add-on minimum taxes, any gross income, gross
receipts, premium, sales, use, ad valorem, value added, transfer, profits,
license, social security, Medicare, payroll, employment, excise, severance,
stamp, occupation, property, environmental or windfall profit tax, custom, duty
or other tax, governmental fee or other like assessment, together with any
interest, penalty, addition to tax or additional amount imposed by any Taxing
Authority.
-9-
<PAGE>
"TAX CLAIMS" shall mean any claims, actions, causes of action, liabilities,
----------
losses, damages, deficiencies, judgments, settlements, costs and expenses
whatsoever (including reasonable out-of-pocket expenses and reasonable
attorneys' fees), whether or not resulting from third party claims, relating to
Taxes.
"TAX RETURN" shall mean any return, report, statement, information or other
----------
document including any amendment thereto filed or to be filed or required to be
filed or supplied to any federal, state, or local Taxing Authority or any other
government entity with respect to Taxes, including, where permitted or required,
combined or consolidated returns for any group of entities.
"TAXING AUTHORITY" means any Governmental Body (U.S. or non-U.S.)
----------------
responsible for the imposition of any Taxes.
"TEXAS FARM LEASE" shall have the meaning specified in the Recitals.
----------------
"TEXAS PROPERTIES" shall have the meaning specified in Section 3.15(b).
----------------
"WARRANT AGREEMENT" means the Warrant Agreement to be entered into by Buyer
-----------------
and Sellers at the Closing substantially in the form set forth as Exhibit D to
this Agreement.
"WARRANTS" means warrants to acquire 600,000 shares of Buyer Stock at a
--------
price of $50.00 per share and 600,000 shares of Buyer Stock at a price of $60.00
per share, substantially in the form attached as Exhibit A to the Warrant
Agreement.
"WATER RIGHTS" means any and all surface and subterranean water rights of
------------
any nature and from any source whatsoever, whether riparian, overlying,
appropriative, prescriptive, contractual or otherwise, and whether or not
appurtenant to one or more of the Properties,
-10-
<PAGE>
including, without limitation, (i) all rights associated with the irrigation of,
and wells located on, the Properties and (ii) all rights of the California
Properties to water service from the IID.
"WESTERN FARM & CATTLE" shall have the meaning specified in the paragraph
---------------------
preceding the Recitals.
"WFLP" shall have the meaning specified in the Recitals.
----
"WFLP GP INTEREST" shall have the meaning specified in the Recitals.
----------------
"WFLP INTERESTS" means the WFLP GP Interest, the California Farms GP
--------------
Interest and the California Farms LP Interest.
"WFLP LP INTEREST" shall have the meaning specified in the Recitals.
----------------
"WFLP LIMITED PARTNERSHIP AGREEMENT" means the Limited Partnership
----------------------------------
Agreement, as amended, of WFLP.
ARTICLE 2
THE ACQUISITION
2.1 THE ACQUISITION; THE CLOSING. (a) The Acquisition shall be
----------------------------
consummated at a closing (the "Closing") to be held at the offices of LeBoeuf,
Lamb, Greene & MacRae, L.L.P., 125 West 55th Street, New York, N.Y. 10019, or
such other place as the parties may agree, on a date set by Buyer and Sellers
(the "Closing Date"), which date shall be within five Business Days following
the date upon which all other conditions set forth in Article 10 hereof have
been satisfied or waived.
(b) Subject to the terms and conditions hereof, at the Closing and in
accordance with the provisions of this Agreement and applicable provisions of
Law; (i) GenPar shall transfer and deliver to Buyer, an assignment and
assumption agreement substantially in the form of Exhibit E
-11-
<PAGE>
hereto conveying to Buyer all of GenPar's right, title and interest in FWRLP;
(ii) FW Ranch shall transfer and deliver to Buyer an assignment and assumption
agreement substantially in the form of Exhibit E hereto conveying to Buyer, all
of FW Ranch's right, title and interest in FWRLP; (iii) Western Farm & Cattle
shall transfer and deliver to Buyer, an assignment and assumption agreement
substantially in the form of Exhibit E hereto conveying to Buyer all of Western
Farm & Cattle's right, title and interest in WFLP; (iv) CLCC shall transfer and
deliver to Buyer an assignment and assumption agreement substantially in the
form of Exhibit E hereto conveying to Buyer all of CLCC's right, title and
interest in California Farms; (v) N.N. Investors shall transfer and deliver to
Buyer an assignment and assumption agreement substantially in the form of
Exhibit E hereto conveying to Buyer all of N.N. Investors' right, title and
interest in California Farms; and (vi) Buyer shall issue and deliver to the
respective Sellers in the amounts specified on Schedule 2.1, (A) certificates
registered in the names of the respective Sellers, representing, in the
aggregate, the Stock Consideration and cash in respect of fractional shares of
Buyer Stock, if any, and (B) certificates registered in the names of the
respective Sellers, representing, in the aggregate, the Warrants. The Buyer
Stock and Warrants will be allocated among Sellers in accordance with Schedule
2.1 hereto. Buyer may assign the right to purchase the various general partner
and limited partner interests to be purchased in the Acquisition to one or more
wholly-owned Subsidiaries of Buyer.
2.2 STOCK CONSIDERATION. Subject to Section 2.3, the Stock Consideration
-------------------
shall be (i) if the Average Trading Price is at least $25.05 and not greater
than $37.575, an aggregate of 8,000,000 shares of Buyer Stock, (ii) if the
Average Trading Price is less than $25.05, the number of shares of Buyer Stock
determined by dividing $200,400,000 by the Average Trading
-12-
<PAGE>
Price and (iii) if the Average Trading Price is greater than $37.575, the number
of shares of Buyer Stock determined by dividing $300,600,000 by the Average
Trading Price.
2.3 FRACTIONAL SHARES. No fractional shares of Buyer Stock shall be
-----------------
issued as Stock Consideration. In lieu of the issuance of any fractional shares
of Buyer Stock as Stock Consideration, cash adjustments shall be paid to the
respective Sellers in respect of any fractional share of Buyer Stock that would
otherwise be issuable, and the amount of such cash adjustment shall be equal to
the product of such fractional amount and the Average Trading Price. No
fractional Warrants shall be issued.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF SELLERS
Sellers, jointly and severally, represent and warrant to Buyer as of the
date hereof and as of the Closing Date (but as of no other dates unless
expressly so stated) that:
3.1 ORGANIZATION AND POWER. (a) WFLP (i) has been duly organized and is
----------------------
validly existing as a limited partnership in good standing under the laws of the
State of California, (ii) has the authority to own, lease and operate its
properties and to carry on its business as now conducted and (iii) is duly
qualified to do business and is in good standing in each jurisdiction where such
qualification is necessary, except for those jurisdictions where failure to be
so qualified would not, individually or in the aggregate, have a Material
Adverse Effect on WFLP. WFLP has heretofore delivered or made available to
Buyer true and complete copies of the WFLP Limited Partnership Agreement as in
effect on the date hereof. WFLP is not in violation of any of the provisions of
the WFLP Limited Partnership Agreement.
-13-
<PAGE>
(b) Western Farm & Cattle (i) has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the State of
California, (ii) has the authority to own, lease and operate its properties and
to carry on its business as now conducted and (iii) is duly qualified to do
business as a foreign corporation and is in good standing in each jurisdiction
where such qualification is necessary, except for those jurisdictions where
failure to be so qualified would not, individually or in the aggregate, have a
Material Adverse Effect on Western Farm & Cattle. Western Farm & Cattle has
heretofore delivered or made available to Buyer true and complete copies of its
articles of incorporation and bylaws as in effect on the date hereof. Western
Farm & Cattle is not in violation of any of the provisions of its articles of
incorporation or bylaws.
(c) N.N. Investors (i) has been duly organized and is validly existing as a
limited partnership in good standing under the laws of the State of Delaware,
(ii) has the authority to own, lease and operate its properties and to carry on
its business as now conducted and (iii) is duly qualified to do business and is
in good standing in each jurisdiction where such qualification is necessary,
except for those jurisdictions where failure to be so qualified would not,
individually or in the aggregate, have a Material Adverse Effect on N.N.
Investors. N.N. Investors has heretofore delivered or made available to Buyer
true and complete copies of its limited partnership agreement as in effect on
the date hereof. N.N. Investors is not in violation of any of the provisions of
its limited partnership agreement.
(d) CLCC (i) has been duly organized and is validly existing as a
corporation in good standing under the laws of the State of Delaware; (ii) has
the authority to own, lease and operate its properties and to carry on its
businesses as now conducted; and (iii) is duly qualified to do
-14-
<PAGE>
business as a foreign corporate and is in good standing in each jurisdiction
where such qualification is necessary, except for those jurisdictions where
failure to be so qualified would not, individually or in the aggregate, have a
Material Adverse Effect on CLCC. CLCC has heretofore delivered or made available
to Buyer true and complete copies of its certificate of incorporate and bylaws
as in effect on the date hereof. CLCC is not in violation of any of the
provisions of its certificate of incorporation or bylaws.
(e) FWRLP (i) has been duly organized and is validly existing as a limited
partnership in good standing under the laws of the State of Texas, (ii) has the
authority to own, lease and operate its properties and to carry on its business
as now conducted and (iii) is duly qualified to do business and is in good
standing in each jurisdiction where such qualification is necessary, except for
those jurisdictions where failure to be so qualified would not, individually or
in the aggregate, have a Material Adverse Effect on FWRLP. FWRLP has heretofore
delivered or made available to Buyer true and complete copies of the FWRLP
Limited Partnership Agreement as in effect on the date hereof. FWRLP is not in
violation of any of the provisions of the FWRLP Limited Partnership Agreement.
(f) GenPar (i) has been duly incorporated and is validly existing as a
corporation in good standing under the laws of the State of Texas, (ii) has the
authority to own, lease and operate its properties and to carry on its business
as now conducted and (iii) is duly qualified to do business and is in good
standing in each jurisdiction where such qualification is necessary, except for
those jurisdictions where failure to be so qualified would not, individually or
in the aggregate, have a Material Adverse Effect on GenPar. GenPar has
heretofore delivered or made available to Buyer true and complete copies of its
articles of incorporation and bylaws as in
-15-
<PAGE>
effect on the date hereof. GenPar is not in violation of any of the provisions
of its articles of incorporation or bylaws.
(g) FW Ranch (i) has been duly organized and is validly existing as a
limited partnership in good standing under the laws of the State of Texas, (ii)
has the authority to own, lease and operate its properties and to carry on its
business as now conducted and (iii) is duly qualified to do business and is in
good standing in each jurisdiction where such qualification is necessary, except
for those jurisdictions where failure to be so qualified would not, individually
or in the aggregate, have a Material Adverse Effect on FW Ranch. FW Ranch has
heretofore delivered or made available to Buyer true and complete copies of its
limited partnership agreement as in effect on the date hereof. FW Ranch is not
in violation of any of the provisions of its limited partnership agreement.
(h) California Farms (i) has been duly organized and is validly existing as
a limited partnership in good standing under the laws of the State of Delaware,
(ii) has the authority to own, lease and operate its properties and to carry on
its business as now conducted and (iii) is duly qualified to do business and is
in good standing in each jurisdiction where such qualification is necessary,
except for those jurisdictions where failure to be so qualified would not,
individually or in the aggregate, have a Material Adverse Effect on California
Farms. California Farms has heretofore delivered or made available to Buyer a
true and complete copy of the California Farms Limited Partnership Agreement as
in effect on the date hereof. California Farms is not in violation of any of
the provisions of the California Farms Limited Partnership Agreement.
-16-
<PAGE>
3.2 AUTHORIZATION. (a) Western Farm & Cattle has all requisite power,
-------------
authority and legal right to enter into this Agreement and the Ancillary
Agreements to which it is a party and consummate the transactions contemplated
hereby and thereby. The execution, delivery and, subject to the receipt of the
approvals referred to in Section 3.3 and the approval of this Agreement and the
Ancillary Agreements to which Western Farm & Cattle is a party by the
shareholders of Western Farm & Cattle, performance by Western Farm & Cattle of
this Agreement and the Ancillary Agreement to which Western Farm & Cattle is a
party have been duly authorized by all necessary corporate action on the part of
Western Farm & Cattle, and this Agreement has been duly executed and delivered
by Western Farm & Cattle. Other than the approval of this Agreement and the
Ancillary Agreements to which Western Farm & Cattle is a party by the board and
shareholders of Western Farm & Cattle, no proceedings on the part of Western
Farm & Cattle are necessary to authorize the execution, delivery and performance
of this Agreement and the Ancillary Agreements to which Western Farm & Cattle is
a party by Western Farm & Cattle and the consummation by Western Farm & Cattle
of the transactions contemplated hereby and thereby. This Agreement and the
Ancillary Agreements to which Western Farm & Cattle is a party constitute valid
and legally binding agreements of Western Farm & Cattle, enforceable against
Western Farm & Cattle in accordance with their respective terms, subject to (i)
bankruptcy, insolvency, reorganization, fraudulent transfer, moratorium and
other similar laws now or hereafter in effect relating to or affecting
creditors' rights generally and (ii) general principles of equity (regardless of
whether considered in a proceeding at law or in equity).
-17-
<PAGE>
(b) CLCC has all requisite power, authority and legal right to enter into
this Agreement and the Ancillary Agreements to which it is a party and
consummate the transactions contemplated hereby and thereby. The execution,
delivery and, subject to the receipt of the approvals referred to in Section 3.3
and the approval of this Agreement and the Ancillary Agreements to which CLCC is
a party by the stockholders of CLCC, performance by CLCC of this Agreement and
the Ancillary Agreements to which CLCC is a party have been duly authorized by
all necessary corporate action on the part of CLCC, and this Agreement has been
duly executed and delivered by CLCC. Other than the approval of this Agreement
and the Ancillary Agreements to which CLCC is a party by the board and
shareholders of CLCC, no proceedings on the part of CLCC are necessary to
authorize the execution, delivery and performance of this Agreement and the
Ancillary Agreements to which CLCC is a party by CLCC and the consummation by
CLCC of the transactions contemplated hereby and thereby. This Agreement and
the Ancillary Agreements to which CLCC is a party constitute valid and legally
binding agreements of CLCC, enforceable against CLCC in accordance with their
respective terms, subject to (i) bankruptcy, insolvency, reorganization,
fraudulent transfer, moratorium and other similar laws now or hereafter in
effect relating to or affecting creditors' rights generally and (ii) general
principles of equity (regardless of whether considered in a proceeding at law or
in equity).
(c) N.N. Investors has all requisite power, authority and legal right to
enter into this Agreement and the Ancillary Agreements to which it is a party
and consummate the transactions contemplated hereby and thereby. The execution,
delivery and, subject to the receipt of the approvals referred to in Section
3.3, performance by N.N. Investors of this Agreement and the
-18-
<PAGE>
Ancillary Agreements to which N.N. Investors is a party have been duly
authorized by all necessary partnership action on the part of N.N. Investors,
and this Agreement has been duly executed and delivered by N.N. Investors. No
proceedings on the part of N.N. Investors and its general and limited partners
are necessary to authorize the execution, delivery and performance of this
Agreement and the Ancillary Agreements to which N.N. Investors is a party by
N.N. Investors and the consummation by N.N. Investors of the transactions
contemplated hereby and thereby. This Agreement and the Ancillary Agreement to
which N.N. Investors is a party constitute valid and legally binding agreements
of N.N. Investors, enforceable against N.N. Investors in accordance with their
respective terms, subject to (i) bankruptcy, insolvency, reorganization,
fraudulent transfer, moratorium and other similar laws now or hereafter in
effect relating to or affecting creditors' rights generally and (ii) general
principles of equity (regardless of whether considered in a proceeding at law or
in equity).
(d) GenPar has all requisite power, authority and legal right to enter into
this Agreement and the Ancillary Agreements to which it is a party and
consummate the transactions contemplated hereby and thereby. The execution,
delivery and, subject to the receipt of the approvals referred to in Section 3.3
and approval of this Agreement and the Ancillary Agreements to which GenPar is a
party by the board of directors and sole shareholder of GenPar, performance by
GenPar of this Agreement and the Ancillary Agreements to which GenPar is a party
have been duly authorized by all necessary corporate action on the part of
GenPar, and this Agreement has been duly executed and delivered by GenPar.
Other than the approval of this Agreement and the Ancillary Agreements to which
GenPar is a party by the board of directors and sole shareholder of GenPar, no
proceedings on the part of GenPar are necessary to authorize
-19-
<PAGE>
the execution, delivery and performance of this Agreement and the Ancillary
Agreements to which GenPar is a party by GenPar and the consummation by GenPar
of the transactions contemplated hereby and thereby. This Agreement and the
Ancillary Agreements to which GenPar is a party constitute valid and legally
binding agreements of GenPar, enforceable against GenPar in accordance with
their respective terms, subject to (i) bankruptcy, insolvency, reorganization,
fraudulent transfer, moratorium and other similar laws now or hereafter in
effect relating to or affecting creditors' rights generally and (ii) general
principles of equity (regardless of whether considered in a proceeding at law or
in equity).
(e) FW Ranch has all requisite power, authority and legal right to enter
into this Agreement and the Ancillary Agreements to which it is a party and
consummate the transactions contemplated hereby and thereby. The execution,
delivery and, subject to the receipt of the approvals referred to in Section 3.3
and the approval of this Agreement and the Ancillary Agreements to which FW
Ranch is a party by the partners of FW Ranch, performance by FW Ranch of this
Agreement and the Ancillary Agreements to which it is a party have been duly
authorized by all necessary partnership action on the part of FW Ranch, and this
Agreement has been duly executed and delivered by FW Ranch. Other than the
approval of this Agreement and the Ancillary Agreements and the Ancillary
Agreements to which FW Ranch is a party by the partners of FW Ranch, no
proceedings on the part of FW Ranch and its general and limited partners are
necessary to authorize the execution, delivery and performance of this Agreement
and the Ancillary Agreements to which FW Ranch is a party by FW Ranch and the
consummation by FW Ranch of the transactions contemplated hereby and thereby.
This Agreement and the Ancillary Agreements to which FW Ranch is a party
constitute valid and
-20-
<PAGE>
legally binding agreements of FW Ranch, enforceable against FW Ranch in
accordance with their respective terms, subject to (i) bankruptcy, insolvency,
reorganization, fraudulent transfer, moratorium and other similar laws now or
hereafter in effect relating to or affecting creditors' rights generally and
(ii) general principles of equity (regardless of whether considered in a
proceeding at law or in equity).
3.3 CONSENTS, APPROVALS, ETC. (a) The execution, delivery and performance
-------------------------
by Western Farm & Cattle, CLCC and N.N. Investors of this Agreement and the
Ancillary Agreements to which such entities are parties require no consent,
approval or action of, filing with or notice to any Governmental Body or other
public or private third party other than (i) compliance with any applicable
requirements of the HSR Act, (ii) filings and notices not required to be made or
given until after the Closing Date, (iii) filings, at any time, of tax returns,
tax reports and tax information statements, and (iv) any such action or filing
as to which the failure to take or make such action or filing would not,
individually or in the aggregate, have a Material Adverse Effect on WFLP,
Western Farm & Cattle, CLCC or N.N. Investors.
(b) The execution, delivery and performance by GenPar and FW Ranch of this
Agreement and the Ancillary Agreements to which such entities are parties
require no consent, approval or action of, filing with or notice to any
Governmental Body or other public or private third party other than (i)
compliance with any applicable requirements of the HSR Act, (ii) filings and
notices not required to be made or given until after the Closing Date, (iii)
filings, at any time, of tax returns, tax reports and tax information
statements, and (iv) any such action or filing as to which the failure to take
or make such action or filing would not, individually or in the aggregate, have
a Material Adverse Effect on FWRLP, GenPar or FW Ranch.
-21-
<PAGE>
3.4 NON-CONTRAVENTION. (a) The execution, delivery and performance by
-----------------
Western Farm & Cattle, CLCC and N.N. Investors of this Agreement and the
Ancillary Agreements to which such entities are parties do not and will not (i)
violate the WFLP Limited Partnership Agreement, California Farms Limited
Partnership Agreement, the articles of incorporation and bylaws of Western Farm
& Cattle or CLCC or the limited partnership agreement of N.N. Investors, (ii)
assuming compliance with the matters referred to in Section 3.3, violate any
applicable Law or Order, (iii) require any consent or other action by any Person
under, violate, conflict with, result in a breach of, constitute (with or
without due notice or lapse of time or both) a default under, or give rise to
any right of termination, cancellation or acceleration of any right or
obligation of WFLP, Western Farm & Cattle or California Farms or to a loss of
any benefit to which WFLP, Western Farm & Cattle or California Farms is
entitled, under any material agreement or other material instrument binding upon
WFLP, Western Farm & Cattle or California Farms or any of their properties or
assets or any material license, franchise, permit or other similar authorization
held by WFLP, Western Farm & Cattle or California Farms or (iv) result in the
creation or imposition of any material Lien on any asset of WFLP, the WFLP GP
Interest or the WFLP LP Interest.
(b) The execution, delivery and performance by Western Farm & Cattle, CLCC
and N.N. Investors of this Agreement and the Ancillary Agreements to which such
entities are parties do not and will not (i) violate the articles of
incorporation and bylaws of CLCC or the limited partnership agreement of N.N.
Investors; (ii) assuming compliance with the matters referred to in Section 3.3,
violate any applicable Law or Order; (iii) require any consent or other action
by any Person under, violate, conflict with, result in a breach of, constitute
(with or without due notice
-22-
<PAGE>
or lapse of time or both) a default under, or give rise to any right of
termination, cancellation or acceleration of any right or obligation of Western
Farm & Cattle, California Farms or WFLP or to a loss of any benefit to which
California Farms or WFLP is entitled, under any material agreement or other
material instrument binding upon Western Farm & Cattle, California Farms or WFLP
or any of their properties or assets or any material license, franchise, permit
or other similar authorization held by Western Farm & Cattle, California Farms
or WFLP; or (iv) result in the creation or imposition of any material Lien on
any asset of California Farms, the California Farms GP Interest or the
California Farms LP Interest.
(c) The execution, delivery and performance by GenPar or FW Ranch of this
Agreement and the Ancillary Agreements to which such entities are parties do not
and will not (i) violate the FWRLP Limited Partnership Agreement, the articles
of incorporation and bylaws of GenPar or the limited partnership agreement of FW
Ranch, (ii) assuming compliance with the matters referred to in Section 3.3,
violate any applicable Law or Order, (iii) require any consent or other action
by any Person under, violate, conflict with, result in a breach of, constitute
(with or without due notice or lapse of time or both) a default under, or give
rise to any right of termination, cancellation or acceleration of any right or
obligation of FWRLP, GenPar or FW Ranch or to a loss of any benefit to which
FWRLP, GenPar or FW Ranch is entitled, under any material agreement or other
material instrument binding upon FWRLP, GenPar or FW Ranch or any of their
properties or assets or any material license, franchise, permit or other similar
authorization held by FWRLP, GenPar or FW Ranch or (iv) result in the creation
or imposition of any material Lien on any asset of FWRLP, GenPar or FW Ranch,
the FWRLP GP Interest or the FWRLP LP Interest.
-23-
<PAGE>
3.5 CAPITALIZATION. (a) Western Farm & Cattle is the sole general
--------------
partner of WFLP and California Farms is the sole limited partner of WFLP. The
equity of WFLP consists of the WFLP GP Interest, which represents a 1% interest
in WFLP, and the WFLP LP Interest, which represents a 99% interest in WFLP.
There are no outstanding interests in WFLP other than the WFLP GP Interest and
the WFLP LP Interest.
(b) All outstanding WFLP Interests have been duly authorized and validly
issued and are fully paid and non-assessable and free of preemptive rights.
Except as set forth in Section 3.5(a), there are no outstanding (i) interests in
WFLP or (ii) options, warrants, calls, rights, preemptive rights or other
contracts, commitments, arrangements or understandings under which any Person
has the right to acquire from WFLP, or WFLP is obligated to issue, sell or
deliver, any WFLP interests. There are no outstanding obligations of WFLP or
any of its Affiliates to repurchase, redeem or otherwise acquire any interest in
WFLP.
(c) Western Farm & Cattle owns the WFLP GP Interest, and California Farms
owns the WFLP LP Interest, in each case free and clear of all Liens.
(d) GenPar is the sole general partner of FWRLP, and FW Ranch is the sole
limited partner of FWRLP. The equity of FWRLP consists of the FWRLP GP
Interest, which represents a 1% interest in FWRLP, and the FWRLP LP Interest,
which represents a 99% interest in FWRLP. There are no outstanding interests in
FWRLP other than the FWRLP GP Interest and the FWRLP Interest.
(e) All outstanding FWRLP Interests have been duly authorized and validly
issued and are fully paid and non-assessable and free of preemptive rights.
Except as set forth in Section 3.5(d), there are no outstanding (i) interests in
FWRLP or (ii) options, warrants, calls,
-24-
<PAGE>
rights, preemptive rights or other contracts, commitments, arrangements or
understandings under which any Person has the right to acquire from FWRLP, or
FWRLP is obligated to issue, sell or deliver, any interests in FWRLP. There are
no outstanding obligations of FWRLP or any of its Affiliates to repurchase,
redeem or otherwise acquire any interest in FWRLP.
(f) GenPar owns the FWRLP GP Interest, and FW Ranch owns the FWRLP LP
Interest, in each case free and clear of all Liens.
(g) CLCC is the sole general partner of California Farms, and N.N.
Investors is the sole limited partner of California Farms. The equity of
California Farms consists of the California Farms GP Interest, which represents
a 1% interest in California Farms, and the California Farms LP Interest, which
represents a 99% interest in California Farms. There are no outstanding
interests in California Farms other than the California Farms GP Interest and
the California Farms LP Interest.
(h) All outstanding California Farms Interests have been duly authorized
and validly issued and are fully paid and non-assessable and free of preemptive
rights. Except as set forth in Section 3.5(h), there are no outstanding (i)
interests in California Farms or (ii) options, warrants, calls, rights,
preemptive rights or other contracts, commitments, arrangements or
understandings under which any Person has the right to acquire from California
Farms, or California Farms is obligated to issue, sell or deliver, any interests
in California Farms. There are no outstanding obligations of California Farms
or any of its Affiliates to repurchase, redeem or otherwise acquire any interest
in California Farms.
(i) CLCC owns the California Farms GP Interest, and N.N. Investors owns the
California Farms LP Interest, in each case free and clear of all Liens.
-25-
<PAGE>
3.6 ALL ASSETS NECESSARY. (a) WFLP owns, leases or licenses all material
--------------------
property and assets necessary to carry on its businesses and operations as
presently conducted, and all such assets and properties (other than as Buyer and
Sellers may mutually agree) will be conveyed to Buyer at the Closing and will as
of the Closing permit Buyer to conduct such businesses and operations in the
same manner as such businesses and operations have been conducted prior to the
Closing.
(b) FWRLP owns, leases or licenses all material property and assets
necessary to carry on its businesses and operations as presently conducted, and
all such assets and properties (other than as Buyer and Sellers may mutually
agree) will be conveyed to Buyer at the Closing and will as of the Closing
permit Buyer to conduct such businesses and operations in the same manner as
such businesses and operations have been conducted prior to the Closing.
(c) California Farms owns, leases or licenses all material property and
assets necessary to carry on its businesses and operations as presently
conducted, and all such assets and properties (other than as Buyer and Sellers
may mutually agree) will be conveyed to Buyer at the Closing and will as of the
Closing permit Buyer to conduct such businesses and operations in the same
manner as such businesses and operations have been conducted prior to the
Closing.
3.7 SUBSIDIARIES. WFLP does not have any Subsidiaries. FWRLP does not
------------
have any Subsidiaries. California Farms does not have any Subsidiaries other
than WFLP.
3.8 FINANCIAL STATEMENTS; BOOKS AND RECORDS. (a) The pro forma restated
---------------------------------------
combined financial statements of WFLP (as nominee for California Farms) and
FWRLP for the years ended December 31, 1996 and 1995, copies of which have been
furnished to Buyer, have been prepared to reflect the assets and continuing
liabilities of WFLP and its property and leasing
-26-
<PAGE>
operations after eliminating cattle operations and non-recurring and certain
discretionary expenses not related to the leasing operations. Such pro forma
restated combined financial statements, subject to such pro forma adjustments
and certain assumptions described therein, have been prepared on a consistent
basis during the periods involved and present fairly, in all material respects,
the restated pro forma combined financial position of the property of WFLP (as
nominee for California Farms) and FWRLP as of December 31, 1996 and 1995 and the
results of operations of WFLP (as nominee for California Farms) and FWRLP for
the years ended December 31, 1996 and 1995. The books of account, record books,
minutes books and other partnership records of WFLP are in all material respects
complete and correct and have been maintained in accordance with good business
practices.
(b) The projected pro forma combined financial statements of WFLP (as
nominee for California Farms) and FWRLP for the eight months ended August 31,
1997, copies of which have been furnished to Buyer, have been prepared to
reflect the assets and continuing liabilities of WFLP and FWRLP and their
property and leasing operations after eliminating cattle operations and non-
recurring and certain discretionary expenses not relating to the leasing
operations. Such projected pro forma restated combined financial statements,
subject to such pro forma adjustments and certain assumptions described therein,
present on the basis of the assumptions stated, the projected pro forma combined
financial position of WFLP (as nominee for California Farms) and FWRLP at August
31, 1997 and the projected pro forma combined income and expenses of the
property and leasing operations of such entities for the eight months ended
August 31, 1997.
-27-
<PAGE>
3.9 ABSENCE OF CERTAIN CHANGES. (a) Except as disclosed in Schedule 3.9,
--------------------------
since January 1, 1997, the businesses of WFLP and California Farms have been
conducted in the ordinary course consistent with past practices, and neither
WFLP nor California Farms has taken or permitted to occur any action which, if
taken after the date hereof, would constitute a breach of Section 5.1.
(b) Since its formation, the business of FWRLP has been conducted in the
ordinary course, and FWRLP has not taken or permitted to occur any action which,
if taken after the date hereof, would constitute a breach of Section 5.1.
3.10 UNDISCLOSED LIABILITIES. (a) There are no liabilities of WFLP,
-----------------------
California Farms or FWRLP of any kind whatsoever, whether accrued, contingent,
absolute, determined or otherwise, other than:
(i) liabilities provided for in the pro forma restated combined
balance sheet of WFLP (as nominee for California Farms) and FWRLP as of December
31, 1996;
(ii) liabilities disclosed on Schedule 3.10(a);
(iii) liabilities incurred since December 31, 1996 in the ordinary
course of business consistent with past practice and in amounts and on terms
consistent with past practice; and
(iv) other undisclosed liabilities that are not individually or in the
aggregate material to WFLP, California Farms or FWRLP.
(b) Except as disclosed in Schedule 3.10(b), neither WFLP, nor California
Farms nor FWRLP has entered into or invested in any derivative financial
instruments.
-28-
<PAGE>
3.11 MATERIAL CONTRACTS. (a) Except as disclosed in Schedule 3.11 or
------------------
Schedule 3.14(a), as of the date hereof, neither WFLP, nor California Farms nor
FWRLP is a party to or bound by:
(i) any lease of real property where WFLP, California Farms or FWRLP
is tenant (A) providing for annual base rentals of $50,000 or more, (B) expiring
after December 31, 2002 or (C) where WFLP, California Farms or FWRLP or any of
their respective Affiliates holds an equity or fee interest in such real
property;
(ii) any agreement for the purchase of materials, supplies, goods,
services, equipment or other assets that provides for either (A) annual payments
by WFLP, California Farms or FWRLP of $50,000 or more or (B) aggregate required
payments by WFLP, California Farms or FWRLP of $500,000 or more;
(iii) any limited partnership, joint venture or other unincorporated
business organization or similar arrangement or agreement in which WFLP,
California Farms or FWRLP serves as a general partner or otherwise has unlimited
liability or for which WFLP, California Farms or FWRLP would be subject to
further mandatory funding, contribution or loss sharing obligations;
(iv) any agreement relating to the acquisition or disposition of any
business (whether by merger, sale of stock, sale of assets or otherwise);
(v) any agreement relating to indebtedness for borrowed money or any
guarantee or similar agreement or arrangement relating thereto;
(vi) any contractual commitment to make any loan, advance or capital
contribution to, or investment in, any other Person in excess of $50,000;
-29-
<PAGE>
(vii) any license, franchise or similar agreement material to WFLP,
California Farms or FWRLP;
(viii) any agency, dealer, sales representative, marketing or other
similar agreement material to WFLP, California Farms or FWRLP;
(ix) any agreement that restricts or prohibits WFLP, California Farms
or FWRLP from competing with any Person in any line of business or from
competing in, engaging in or entering into any line of business in any area and
which would so restrict or prohibit WFLP, California Farms or FWRLP after the
Closing Date;
(x) any agreement material to the conduct of the business of WFLP or
FRWLP containing "change in control" or similar provisions relating to change in
control of WFLP, California Farms or FWRLP;
(xi) any agreements (other than their respective limited partnership
agreements and any indemnification provisions in the Loan Documents with
Metropolitan Life) material to WFLP, California Farms or FWRLP pursuant to which
WFLP, California Farms or FWRLP is obligated to indemnify any other Person; or
(xii) any agreement with any of WFLP's, California Farms' or FWRLP's
Affiliates.
(b) WFLP, California Farms and FWRLP have heretofore furnished or made
available to Buyer complete and correct copies of the contracts, agreements and
instruments listed on Schedule 3.11, each as amended or modified to the date
hereof, including any waivers with respect thereto (the "Significant
Agreements"). Except as specifically disclosed on Schedule 3.11, and except to
the extent not material, individually or in the aggregate, to WFLP,
-30-
<PAGE>
California Farms or FWRLP: (i) each of the Significant Agreements is in full
force and effect and enforceable in accordance with its terms, subject to (A)
bankruptcy, insolvency, reorganization, fraudulent transfer, moratorium and
other similar laws now or hereafter in effect relating to or affecting
creditors' rights generally and (B) general principles of equity (regardless of
whether considered in a proceeding at law or in equity); (ii) neither Sellers,
nor WFLP, nor California Farms, nor FWRLP have received any notice (written or
oral) of cancellation or termination of, or any expression or indication of an
intention or desire to cancel or terminate, any of the Significant Agreements;
(iii) no Significant Agreement is the subject of, or, to the Knowledge of
Sellers, has been threatened to be made the subject of, any arbitration, suit or
other legal proceeding; and (iv) there exists no material event of default or
occurrence, condition or act on the part of WFLP, California Farms or FWRLP or,
to the Knowledge of Sellers, on the part of any other party to the Significant
Agreements that constitutes or would constitute (with notice or lapse of time or
both) a material breach or violation of or material default in the performance
or observance of any term or provision of any of the Significant Agreements.
(c) Except as set forth on Schedule 3.11 or Schedule 3.14(a), there are no
transactions, commitments or obligations between WFLP, California Farms or FWRLP
and any beneficial owner, directly or indirectly, of any general partner
interest in WFLP, California Farms or FWRLP or any limited partner interest of
five percent or more in WFLP, California Farms or FWRLP or any of such
beneficial owner's Affiliates which will continue after the Closing. In
addition, except as set forth on Schedule 3.11, none of the matters listed on
Schedule 3.11 will provide to WFLP, California Farms or FWRLP assets, income,
financing or business on a basis significantly more or less favorable than that
available from unaffiliated Persons.
-31-
<PAGE>
Schedule 3.11 (i) states the amounts due from WFLP, California Farms or FWRLP to
any beneficial owner, directly or indirectly, of any general partner interest in
WFLP, California Farms or FWRLP or any limited partner interest of five percent
or more in WFLP, California Farms or FWRLP or any of such beneficial owner's
Affiliates, (ii) describes the transactions out of which such amounts due arose
and (iii) describes any interest of any beneficial owner, directly or
indirectly, of any general partner interest in WFLP, California Farms or FWRLP
or any limited partner interest of five percent or more in WFLP, California
Farms or FWRLP or any of such beneficial owner's affiliates in any supplier or
customer of, or any other entity that will have business dealings with WFLP,
California Farms or FWRLP after the Closing. To the knowledge of WFLP,
California Farms or FWRLP neither any beneficial owner, directly or indirectly,
of any general partner interest in WFLP, California Farms or FWRLP or any
limited partner interest of five percent or more in WFLP, California Farms or
FWRLP or any of such beneficial owner's Affiliates, nor any officer or key
employee (each key employee being listed on Schedule 3.11 to this Agreement) of
WFLP, California Farms or FWRLP possesses, directly or indirectly, any ownership
interest in, or is a director, officer, employee or consultant to, any
corporation or other business which is a client, supplier, customer, lessor,
tenant or competitor of WFLP, California Farms or FWRLP.
3.12 LITIGATION. Except as disclosed on Schedule 3.12, there is no action,
----------
suit, arbitration, investigation or proceeding pending against, or, to the
Knowledge of Sellers, threatened against, or affecting the properties, real,
personal or other, of WFLP, California Farms or FWRLP before any Governmental
Body and, to the Knowledge of Sellers, there is no reasonable basis for any such
claim in which the damages alleged or sought exceeds or could
-32-
<PAGE>
reasonably be expected to exceed $50,000 or which seeks or could reasonably be
expected to result in non-monetary relief, other than non-monetary relief that
would not reasonably be expected, individually or in the aggregate, to have a
Material Adverse Effect on WFLP, California Farms or FWRLP. As of the date
hereof and as of no other date, there is no action, suit, investigation or
proceeding pending against, or, to the Knowledge of Sellers, threatened against,
or affecting the properties of, WFLP, California Farms or FWRLP before any
Governmental Body which challenges or seeks to prevent the transactions
contemplated hereby. Neither WFLP nor California Farms nor FWRLP nor any of
their respective properties is subject to any Order which would prevent or delay
the consummation of the transactions contemplated hereby or which could
reasonably be expected to have a Material Adverse Effect on WFLP, California
Farms, FWRLP or Buyer.
3.13 COMPLIANCE WITH LAWS. To the Knowledge of Sellers, except as
--------------------
disclosed on Schedule 3.13, WFLP and California Farms are and have been at all
times since January 1, 1996 (and FWRLP is and since its formation has been) in
compliance with all applicable material Laws and Orders, except to the extent
that failure to be in compliance would not have a Material Adverse Effect on
WFLP, California Farms or FWRLP. To the Knowledge of Sellers, no investigation
by any Governmental Body of WFLP, California Farms or FWRLP is pending or
threatened, other than, in each case, those the outcome of which, as far as
reasonably can be foreseen, will not have a Material Adverse Effect on WFLP or
FWRLP. All Properties held by WFLP, California Farms and FWRLP and the Water
Rights associated therewith since January 1, 1996 have been held and operated in
compliance with all applicable Laws and Orders, except to the extent that
failure to be in compliance would not have a Material Adverse Effect.
-33-
<PAGE>
3.14 PROPERTIES. (a) Title and Certain Other Matters. Schedule 3.14(a)
---------- -------------------------------
(the "Property Schedule") lists all of WFLP's, California Farms' and FWRLP's
Properties, except as may be otherwise specifically indicated on the Property
Schedule with respect to each Property.
(i) WFLP, California Farms or FWRLP is the owner of, and has good and
marketable (or, in the case of Properties located in Texas, good and
indefeasible) fee title to, the Property and has full right, power, and
authority to contract to convey and to convey the Property without the joinder
or consent of any other person or entity. Except as may have been disclosed in
the title policies and/or title reports furnished to Buyer, to the Knowledge of
Sellers, there are no material leases, licenses, encumbrances, or other
agreements, liens or rights affecting the Property that would extend beyond the
Closing.
(ii) There are no pending, threatened or contemplated condemnation or
similar proceedings, claims, governmental investigations, litigations, or other
proceedings affecting the Property or any portion thereof.
(iii) There exist no notices of violations that are uncured which
have been served by any Governmental Body or authority of violations of Law that
would affect the Property or any portion thereof or its proposed development or
use.
(iv) To the Knowledge of Sellers, there exist no material adverse
facts relating to the physical condition of the Property or any portion thereof,
including, without limitation, adverse soil conditions, and contamination by
Hazardous Materials.
(v) To the Knowledge of Sellers, the parcels comprising the Property
located in California are legal parcels in compliance with the California
Subdivision Map Act and all applicable local subdivision ordinances.
-34-
<PAGE>
(vi) Subject to pro-ration for taxes and other assessments, there are
no outstanding obligations to any governmental authorities, utility companies,
school districts, or other governmental agencies which would apply to Buyer or
its successors or assigns.
(b) Other Matters. The Property Schedule accurately sets forth for each
-------------
Property the date of acquisition by WFLP, California Farms or FWLRP's
predecessor in title and the total price paid for and acreage of the Property.
Except as may be otherwise specifically set forth on the Property Schedule:
(i) Neither Sellers, nor WFLP, nor California Farms, nor FWRLP has
received any notice alleging, or has any knowledge, that the current use of any
of the Properties does or will constitute a violation of, any of the easements,
covenants, conditions, agreements, restrictions, liens, or other encumbrances or
title matters ("Encumbrances") affecting any of the Properties, and all consents
required therefor under those Encumbrances, if any, have been obtained and not
revoked. To the Knowledge of Sellers, there are no defaults under any of the
Encumbrances by any party thereto and no condition exists that, with notice or
lapse of time or both, would constitute a default thereunder. The Encumbrances
do not as a whole, prevent the practical use of the Property for agriculture or
as currently used. The benefits and obligations of the Encumbrances shall
continue to enure to WFLP and FWRLP after the Closing.
(ii) Since the date of acquisition of each of the Properties by WFLP,
California Farms (if any) or FWRLP's predecessor in title, there have been no
exploration, drilling, mining, or other investigation or activities on the
Property in respect of any oil, gas, hydrocarbons, minerals, geothermal energy
or resources, or the like.
-35-
<PAGE>
(iii) Since the date of acquisition of each of the Properties by
WFLP, California Farms (if any) or FWRLP's predecessor in title, there has been
no challenge to the title of WFLP, California Farms or FWRLP to the Property or
any portion of the Property or any easement or other interest or right
appurtenant to the Property, and WFLP, California Farms or FWRLP has been in
exclusive possession of the Property, subject only to the rights of tenants
under the Leases.
(c) Taxes. The Property Schedule accurately sets forth, for each of the
-----
Properties, (i) the tax lot(s) or other tax-map designation(s) comprising the
Property, (ii) the current assessed valuation for each tax lot comprising the
Property, and (iii) the total real estate taxes and assessments and personal
property taxes and assessment of whatever nature, payable in respect of the
Property for the current fiscal year. Except as set forth on the Property
Schedule, there are no tax abatements or exemptions affecting any of the
Properties. Each of the Properties identified on the Property Schedule
constitutes a separate and distinct lot or parcel, or lots and parcels, for
purposes of real estate taxation, and no part of any of the Properties is part
of a tax lot or parcel with any property not part of the Property. No special
assessments have been levied, or to the Knowledge of Sellers, are contemplated
or pending, against any such Property or any part thereof.
(d) Leases. Attached to this Agreement as Schedule 3.14(d) (the "Rent
------
Roll") is an accurate schedule of all existing leases, tenancies, licenses or
other occupancy or use agreements or arrangements affecting any of the
Properties shown on the Property Schedule (each, a "Lease"), accurately setting
forth, among other things, the name of the tenant thereunder, the commencement
and expiration date of the Lease, whether there is any right of renewal or
-36-
<PAGE>
extension of the Lease, and, if so, whether such right has been exercised and
the outside date to which the term maybe extended, the rent payable under the
Lease and the date to which rent has been paid, and any security received in
connection with the Lease. Except as may be otherwise specifically set forth on
the Rent Roll, for each Lease:
(i) the term of each has commenced and the tenant thereunder is
occupying or otherwise has taken possession of the premises leased to it and has
commenced the payment of rent;
(ii) all of the landlord's material covenants and obligations
thereunder accrued to date have been performed;
(iii) no construction, alteration, decoration, or other work remains
to be performed or paid for thereunder by the landlord, and all allowances or
other sums, if any, to be paid to any tenants has been paid;
(iv) there has been no material default, nor any claim of default, on
the part of any party thereto, and to the Knowledge of Sellers, no event has
occurred that, with notice or lapse of time or both, would constitute a default
by any party thereto;
(v) no rent, additional rent, or other charge has been paid for more
than three months in advance;
(vi) no tenant has exercised any option granted to it under its Lease
to cancel or terminate its Lease or shorten the term thereof (unless such tenant
or another tenant has entered into a new lease replacing the terminated lease),
renew or extend the term thereof, or lease additional property;
-37-
<PAGE>
(vii) no tenant has any option to purchase, or right of refusal,
right of first offer, or other preemptive right with respect to the purchase of
the Property or any part thereof; and
(viii) there are no leasing, broker's, or finder's commissions or
compensations of any kind that are unpaid although due and payable or due or to
become due after the Closing with respect to any of the Leases, with respect to
the primary terms of any such Leases.
(e) Insurance. Neither Sellers, nor WFLP, nor California Farms nor FWRLP
---------
has received (or has any knowledge of) any notice or request from any insurance
company that has issued insurance in respect of the Property or any board of
fire underwriters (or organization exercising similar functions) requiring the
performance of any work in respect of the Property or any part thereof, or
canceling or threatening to cancel any existing insurance policies pertaining to
the Property.
(f) To the Knowledge of Sellers, the map relating to the California
---------------------------------------------------------------
Properties delivered by Sellers to Buyer generally depicts the location of the
- ------------------------------------------------------------------------------
Properties of WFLP and California Farms in all material respects. To the
- ---------------------------------------------------------------------------
Knowledge of Sellers, the surveys that were ordered by Sellers or their
- ------------------------------------------------------------------------
Affiliates in connection with the purchase of such Properties (which were
- -------------------------------------------------------------------------
delivered to Buyer by Sellers) were prepared in accordance with the standards
- -----------------------------------------------------------------------------
for a Category 1B, Rural, Condition IV survey as specified by the latest
- --------------------------------------------------------------------------
edition of the Manual of Practice for Land Surveying.
- ----------------------------------------------------
3.15 WATER RIGHTS. This Section 3.15 addresses Water Rights in California
------------
and Texas.
(a) California Properties. With respect to the real properties situated
---------------------
in California ("California Properties"):
-38-
<PAGE>
(i) By virtue of WFLP's fee ownership of approximately 41,868 acres
of land in Imperial County, California as set forth on the Property Schedule,
a11 of which land is located within the Imperial Irrigation District (the "IID")
and within the irrigation service area of the IID, WFLP, as owner of the
California Properties, is entitled to use water diverted by the IID from the
Colorado River and distributed to the California Properties through the
facilities of the IID (the "IID Water") for reasonable and beneficial use,
subject only to the availability to the IID of Colorado River water under
existing IID title, rights, contracts, and Laws and Orders.
(ii) To the Knowledge of Sellers, each of the California Properties,
during its period of ownership by WFLP, has been used solely for agricultural
purposes, and in connection with those agricultura1 activities, has received IID
Water from the IID. Schedule 3.15 (a)(ii) accurately sets forth the annual
consumptive water usage of IID Water for the respective California Properties
for the periods shown on that schedule. Those usage amounts are based on
information provided to WFLP by the IID, and to the Knowledge of Sellers,
reflect, in all material respects, the records of the IID.
(iii) To the Knowledge of Sellers, the annua1 allocation of Colorado
River water to WFLP's California Properties by the IID depends upon the amount
of Colorado River water made available to IID under its 1932 Contract with the
United States Department of the Interior, Bureau of Reclamation (the "Bureau"),
as more fully described in Schedule 3.15(a)(iii) attached.
(iv) Were there to be a drought or other condition that would reduce
the amount of Colorado River water available to the IID, such that landowners
within the IID would not be entitled to receive all water requested by them, the
owner(s) of the California Properties
-39-
<PAGE>
(WFLP or any subsequent owner) would be entitled to receive its pro rata share
of water available to the IID as determined by the IID under applicable Law.
(v) To the Knowledge of Sellers, WFLP has never been denied delivery
to the respective California Properties of the full amount of IID Water
requested by it for the irrigation of crops grown on the California Properties,
or by agents or tenants on behalf of WFLP. To the Knowledge of Sellers, no
Person has contested, challenged, or otherwise called into question WFLP'S
right, as owner of the California Properties, to the receipt and use of all IID
Water requested by it to irrigate the California Properties,
(vi) WFLP has at a11 times during its ownership of the California
Properties complied in all material respects with the rules and regulations
promulgated by the IID, and with any other applicable Law or Order, for the
distribution and use of water from the Colorado River. Without limiting the
generality of the foregoing, to the Knowledge of Sellers, WFLP has at all times
during its ownership of the California Properties duly and properly filed, and
kept in ful1 force and effect, all necessary applications for the delivery of
IID Water to the California Properties, including, without limitation, for each
of the Ca1ifornia Properties, a "Certificate of Ownership and Authorization of
Agent or Tenant," true and complete copies of which have been furnished to
Buyer.
(vii) Subject only to and in accordance with applicable regulations
and procedures that may be established by the IID or the Bureau and other
applicable Laws and Orders, without the consent of any other Person, WFLP, as
owner of the California Properties, has been advised and believes in good faith
that it has the right to transfer, through an IID program, IID Water to any
California Person inside or outside the IID (it being recognized that
-40-
<PAGE>
thus far no specific allocation of IID water on a property-by-property basis has
been established by the IID, since IID Water for reasonable and beneficia1 use
for agriculture has been readily available within the IID, as requested by the
landowners). WFLP has not sold, assigned, or otherwise transferred, or agreed or
attempted to do so, that right (nor any title to or interest in the IID Water).
WFLP has been advised and in good faith believes that, under applicable Law, the
Bureau will approve an intrastate transfer of Colorado River water conserved by
IID landowners.
(viii) In connection with all transfers of IID Water by WFLP, as owner
of the California Properties, WFLP has been advised and believes in good faith
that it will receive the proceeds from the sale or other transfer of IID Water,
reduced by at present indeterminable non-discriminatory Taxes, costs, and
charges imposed in connection with the transfer. Neither WFLP nor any of its
Affiliates has received any opinion of counsel retained by WFLP, or by any
Affiliate of WFLP or any of the Sellers, that concludes that there is any
substantial likelihood that WFLP could not sell or otherwise transfer its IID
Water through a program established by the IID, and receive the proceeds, net of
Taxes, costs and charges, from such sales or other transfers.
(ix) Sellers are not aware of any policy of the IID that would suggest
that the IID would not permit the sale or other transfer by the IID of Colorado
River water outside the service area of IID, or would not permit landowners,
including WFLP or its successor-in-interest, to receive the proceeds, net of
Taxes, costs and charges, from the sale or other transfer of IID Water to
Persons outside the IID. WFLP has a good faith belief, after due inquiry, that
WFLP, through the IID, will be able to market and sell IID Water and receive the
proceeds therefrom, net of Taxes, costs and charges.
-41-
<PAGE>
(x) To the Knowledge of Sellers, there exist no notices, cured or
not, which have been issued by the IID or any other Person during WFLP's
ownership of the California Properties, which could materially affect the
entitlement to or delivery of IID Water to WFLP's California Properties or
WFLP's entitlement to sell or otherwise transfer IID Water in conjunction within
IID and Bureau policies and procedures and other applicable Laws and Orders.
(xi) All rights of landowners within the IID to water from the IID are
appurtenant to the land and run with the land, and cannot be severed from the
land. Accordingly, any reservation of water or rights to water in deeds of the
California Properties to WFLP or in any prior deeds or other conveyances of the
California Properties would not affect the rights of WFLP, as owner of the
California Properties, to IID Water.
(b) TEXAS PROPERTIES. With respect to the real properties situated in
----------------
Texas ("Texas Properties"):
(i) By virtue of FWRLP's fee ownership of approximately 4,549 acres
of land in Texas as set forth on the Property Schedule, all of which land is
located above the body of underground water known as the Edwards Aquifer, FWRLP,
as owner of the Texas Properties, is and will after the Closing be entitled to
draw water from the Edwards Aquifer (the "EA Water") annually for beneficial
use, subject to applicable Law or Orders.
(ii) Since acquisition of the Texas Properties by FWRLP or any of its
Affiliates (or nominees for any of its Affiliates), EA Water has been drawn for
agricultural purposes at the Texas Properties on an interim basis at historical
levels, based upon authorization contained in, and in accordance with,
applicable Law.
-42-
<PAGE>
(iii) FWRLP, or its predecessors in interest, has applied to receive
Initial Regular Permits issued by the Edwards Aquifer Authority (the "EA
Authority") and all other licenses, certificates, approvals, or other Permits
required by the Edwards Aquifer Authority Act, the procedures of the EA
Authority, or any other Governmental Body, so as to establish and perfect
FWRLP's right and entitlement, from and after the Closing, to the EA Water by
virtue of the ownership of the Texas Properties.
(iv) Without limiting the generality of the foregoing, FWRLP or its
predecessors in interest has filed on a timely basis and in proper form and in
compliance with all applicable Law and Orders, on behalf of the owner(s) of the
Texas Properties and in a manner that will accrue to the benefit of FWRLP, from
and after the Closing, all applications and declarations required by the EA
Authority for the issuance of Initial Regular Permits, as authorized by Section
1.16 of the Edwards Aquifer Authority Act, and for the interim withdrawal and
beneficial use of groundwater, pursuant to Section 1.17 of the Edwards Aquifer
Authority Act, based on the historical use of water from the Edwards Aquifer.
No uncured notice specific to FWRLP's application has been received, from the EA
Authority or any other Governmental Body, to the effect that any such
application is deficient. The application amounts of water for the respective
Texas Properties, as well as historical usages of EA Water at the respective
Texas Properties (on an acreage basis), are set forth on the Property Schedule.
(v) To the Knowledge of Sellers, FWRLP has never been denied
delivery to the respective Texas Properties of the full amount of EA water
requested by it or by agents or tenants on behalf of FWRLP.
(vi) Subject to and in accordance with any applicable regulations and
-43-
<PAGE>
procedures of the EA Authority and Laws or Orders, to the Knowledge of Sellers,
FWRLP will have the right to use and/or transfer the EA Water to any Person;
neither that right, nor any title to or interest in the EA Water, has been sold,
assigned, or otherwise transferred or encumbered by FWRLP, except pursuant to
the farming leases for the Texas Properties for use by tenants in agricultural
operations at the respective Texas Properties only during the terms of the
respective farming leases.
(vii) In connection with all transfers of EA Water, FWRLP, as owner
of the Texas Properties, from and after the Closing will have the right to
receive all proceeds from the sale or other transfer of that EA Water, subject
only to Taxes, costs and charges.
(viii) The owner(s) of the Texas Properties affiliated with Sellers
have at all times during their ownership of the Texas Properties complied in all
material respects with the rules and regulations promulgated by the EA Authority
for the withdrawing, distribution, and use of water from the Edwards Aquifer
(the EA Water), and complied with any other applicable provisions of any Law or
Order concerning the EA Water.
(ix) To the Knowledge of Sellers, there exist no uncured notices
specific to the Texas Properties which have been issued by the EA Authority that
could materially affect the eligibility of FWRLP to qualify for the issuance and
thereafter the continuing effectiveness of Initial Regular Permits, as
authorized by Section 1.16 of the Edwards Aquifer Authority Act, and all other
Permits that may be required under any applicable Law or Order, for the annual
withdrawal and beneficial use of groundwater pursuant to the Edwards Aquifer
Authority Act based on the historical use of water from the Edwards Aquifer, or
any right to transfer EA Water
-44-
<PAGE>
in conjunction with any applicable EA Authority policies and procedures or any
other applicable Law or Order.
3.16 LICENSES AND PERMITS; REGULATORY MATTERS. (a) WFLP, California Farms
----------------------------------------
or FWRLP holds or has received all licenses, franchises, exemptions, orders,
approvals, permits or other similar authorizations (the "Permits") necessary for
the ownership and conduct of their respective businesses or the operation of the
Properties of WFLP, California Farms or FWRLP in the manner now conducted or to
be conducted immediately prior to the Closing in each of the jurisdictions in
which WFLP, California Farms or FWRLP conducts or operates their respective
businesses, and such Permits are in full force and effect except where any
failure to hold any Permit or any failure of any Permit to be in full force and
effect would not, individually or in the aggregate, materially impair the
ability of WFLP, California Farms or FWRLP to conduct their respective
businesses. No material violations exist in respect of any Permit of WFLP,
California Farms or FWRLP, and no proceeding or investigation is pending or, to
the Knowledge of Sellers, threatened, that would be reasonably likely to result
in the suspension of, revocation of or material limitation or restriction on any
Permit and, to the Knowledge of Sellers, there is no reasonable basis for the
assertion of any such violation or the institution of any such proceeding.
Except to the extent that failure to file or comply would not reasonably be
expected to have a Material Adverse Effect on WFLP, California Farms or FWRLP,
WFLP, California Farms and FWRLP have filed all reports, statements, documents,
registrations, filings or submissions required to be filed by any of them with
any applicable Governmental Body, and all such reports, statements, documents,
registrations, filings and submissions complied in all material respects with
applicable Law in effect when filed and no material deficiencies have been
asserted by any
-45-
<PAGE>
such Governmental Body with respect to such reports, statements, documents,
registrations, filings or submissions that have not been satisfied.
3.17 [Reserved]
3.18 ENVIRONMENTAL MATTERS. (a) Except as would not, individually or in
---------------------
the aggregate, have a Material Adverse Effect on WFLP, California Farms or
FWRLP: (i) WFLP, California Farms and FWRLP and their respective Properties are
each in compliance with all applicable Environmental Laws and have all
Governmental Approvals required for their operations and their Properties
necessary to conduct WFLP's, California Farms' or FWRLP's current operations,
and WFLP, California Farms or FWRLP has taken or will prior to the Closing take
all necessary actions to ensure the transferability of all Governmental
Approvals which are required with respect to its operations and its Properties
or use of its Water Rights under any Environmental Law; (ii) to the Knowledge of
Sellers, there are no pending or threatened claims against WFLP, California
Farms or FWRLP or their respective Properties alleging a violation of any
Environmental Laws; (iii) to the Knowledge of Sellers, there are no persons who
have caused any release, threatened release, or disposal of any Hazardous
Material on, onto or from the Properties that has resulted in or could result in
a violation of any Environmental Law, the creation of liabilities or obligations
under any Environmental Law or material diminution in value of the Properties;
(iv) there are no Properties that are adversely affected by any release,
threatened release, or disposal of a Hazardous Material originating or emanating
from any other property, nor were any Hazardous Materials manufactured, used,
generated, stored, treated, transported, disposed of, released, or otherwise
managed at any of the Properties; (v) there is no liability for response or
corrective action, natural resources damage, or any other harm pursuant
-46-
<PAGE>
to any Environmental Law at any of the Properties or at any other property and
neither Sellers, nor WFLP, nor California Farms, nor FWRLP has received any
written or oral request for information under Section 104 of the Comprehensive
Environmental Response, Compensation and Liability Act (42 U.S.C. (S) 9604) or
comparable state or local laws; (vi) the Properties are not subject to any
restrictions (except for requirements not to waste water), or imminent
restrictions, on the ownership, occupancy, use or transferability of the
Properties in connection with any (A) Environmental Law, or (B) release,
threatened release, or disposal of any Hazardous Material; and (vii) Sellers
have provided to Buyer any and all reports, records, data, site assessments or
any other documents in their possession with respect to the Properties
concerning Hazardous Materials and compliance with any Environmental Laws.
3.19 LABOR AND EMPLOYEE BENEFIT MATTERS. Neither WFLP, nor California
----------------------------------
Farms, nor FWRLP maintains any Benefit Plan.
3.20 INFORMATION SUPPLIED. Neither the information supplied or to be
--------------------
supplied by or on behalf of Sellers, WFLP, California Farms or FWRLP for
inclusion in any document to be filed by Buyer with the SEC or any self-
regulatory organization in connection with the Acquisition will, on the date of
its filing or effectiveness, contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under which
they are made, not misleading.
3.21 NO BROKER. No broker, finder, agent or similar intermediary has acted
---------
for or on behalf of WFLP, California Farms or FWRLP in connection with this
Agreement or the transactions contemplated hereby, and no other broker, finder,
agent or similar intermediary is
-47-
<PAGE>
entitled to any brokers', finders' agents' or similar fee or other commission in
connection therewith based on any agreement, arrangement or understanding with
WFLP, California Farms or FWRLP or any action taken by WFLP, California Farms or
FWRLP.
3.22 INSURANCE. Each of WFLP, California Farms and FWRLP has, and will
---------
make provision through the Closing Date for, insurance coverage on its property
and assets customary for similar businesses and consistent with past practice.
3.23 NOT MISLEADING. To the Knowledge of Sellers, none of the
--------------
representations and warranties of Sellers in this Agreement or in any
certificate or schedule delivered pursuant hereto or in connection with the
transactions contemplated hereby, contain, or will contain at the time made or
delivered, any untrue statement of a material fact or, omit to state a material
fact necessary in order to make the statements herein and therein, in light of
the circumstances in which they are made, not misleading.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to Sellers as of the date hereof and as of
the Closing Date (but as of no other dates unless expressly so stated) that:
4.1 CORPORATE EXISTENCE AND POWER. Buyer (i) has been duly incorporated
-----------------------------
and is validly existing as a corporation in good standing under the laws of
Delaware, (ii) has all corporate powers required to own, lease or operate its
properties and to carry on its business as now conducted and (iii) is duly
qualified to do business as a foreign corporation and is in good standing in
each jurisdiction where such qualification is necessary, except for those
jurisdictions
-48-
<PAGE>
where the failure to be so qualified would not, individually or in the
aggregate, have a Material Adverse Effect on Buyer. Buyer has heretofore
delivered or made available to Sellers true and complete copies of the
certificate of incorporation and bylaws of Buyer as in effect on the date
hereof. Buyer is not in violation of any of the provisions of its articles of
incorporation or bylaws.
4.2 CORPORATE AUTHORIZATION. Buyer has all requisite power, authority and
-----------------------
legal right to enter into this Agreement and the Ancillary Agreements and
consummate the transactions contemplated hereby. The execution, delivery and,
subject to the receipt of the approvals referred to in Sections 4.3 and 10.2(d),
performance by Buyer of this Agreement and the Ancillary Agreements to which
Buyer is a party has been duly authorized by all necessary corporate action on
the part of Buyer and this Agreement has been duly executed and delivered by
Buyer. This Agreement and the Ancillary Agreements to which Buyer is a party
constitute valid and legally binding agreements of Buyer, enforceable against
Buyer in accordance with their respective terms, subject to (i) bankruptcy,
insolvency, reorganization, fraudulent conveyance, moratorium and other similar
laws now or hereafter in effect relating to or affecting creditors' rights
generally and (ii) general principles of equity (regardless of whether
considered in a proceeding at law or in equity).
4.3 CONSENTS, APPROVALS, ETC. The execution, delivery and performance by
-------------------------
Buyer of this Agreement and the Ancillary Agreements to which Buyer is a party
require no consent, approval or action of, filing with or notice to any
Governmental Body or other public or private third party other than (i)
compliance with any applicable requirements of the HSR Act, (ii) filings and
notices not required to be made or given until after the Closing Date, (iii)
filings, at any time,
-49-
<PAGE>
of tax returns, tax reports and tax information statements, (iv) any such action
or filing as to which the failure to take such action or filing would not,
individually or in the aggregate, have a Material Adverse Effect on the ability
of Buyer to consummate the Acquisition, and (v) compliance with any applicable
requirements under the listing rules of the New York Stock Exchange.
4.4 NON-CONTRAVENTION. The execution, delivery and performance by Buyer
-----------------
of this Agreement and the Ancillary Agreements do not and will not (i) violate
the certificate of incorporation or bylaws of Buyer, (ii) assuming compliance
with the matters referred to in Section 4.3, violate any applicable Law or
Order, (iii) require any consent or other action by any Person under, violate,
conflict with, result in a breach of, constitute (with or without due notice or
lapse of time or both) a default under, or give rise to any right of
termination, cancellation or acceleration of any right or obligation of Buyer or
to a loss of any benefit to which Buyer is entitled under, any material
agreement or other material instrument binding upon Buyer or any of its
properties or assets or any material license, franchise, permit or other similar
authorization held by Buyer, or (iv) result in the creation or imposition of any
material Lien on any asset of Buyer.
4.5 CAPITALIZATION. (a) As of June 23, 1997, the authorized capital
--------------
stock of Buyer consisted of 150,000,000 shares of Buyer Stock, of which
80,377,604 shares are issued and outstanding, and 3,000,000 shares of Preferred
Stock, of which no shares are issued and outstanding.
(b) All outstanding shares of Buyer Stock have been duly authorized and
validly issued and are fully paid and non-assessable and free of preemptive
rights, except for those
-50-
<PAGE>
preemptive rights disclosed in agreements described on Schedule 6.4(d) to the
Governance Agreement. At the Closing, Buyer will have reserved 1,200,000 shares
of Buyer Stock for issuance upon exercise of the Warrants. The shares of Buyer
Stock to be issued in accordance with Article 2 hereof and issuable upon
exercise of Warrants have been duly authorized and will be validly issued, fully
paid and non-assessable. There are no outstanding obligations of Buyer or any of
its Subsidiaries to repurchase, redeem or otherwise acquire any Buyer Stock.
4.6 SEC FILINGS; FINANCIAL STATEMENTS; BOOKS AND RECORDS. Buyer has filed
----------------------------------------------------
all forms, reports and documents required to be filed with the SEC and has
previously furnished to Sellers true and complete copies of its Annual Report on
Form 10-K for the year ended March 31, 1997 and all material filings made by
Buyer under the Exchange Act since the end of its most recent fiscal year
(collectively, the "SEC Reports"). Each filing, when filed, complied in all
material respects with the requirements of the Exchange Act and the applicable
rules and regulations thereunder and none of such SEC Reports contained, as of
their respective dates, any untrue statement of a material fact or omits to
state a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances in which they were made, not
misleading.
4.7 NO BROKER. No broker, finder, agent or similar intermediary has acted
---------
for or on behalf of Buyer in connection with this Agreement or the transactions
contemplated hereby, and no other broker, finder, agent or similar intermediary
is entitled to any brokers', finders', agents' or similar fee or other
commission in connection therewith based on any agreement, arrangement or
understanding with Buyer or any action taken by Buyer.
-51-
<PAGE>
ARTICLE 5
COVENANTS OF SELLERS
5.1 CONDUCT. (a) Sellers agree that, except as otherwise expressly
-------
provided in this Agreement, during the period from the date hereof to the
Closing, WFLP, California Farms and FWRLP will: (i) conduct their operations
according to their ordinary course of business consistent with past practice;
and (ii) use commercially reasonable efforts to (A) preserve intact their
business organizations; (B) keep available the services of their officers and
employees, if any; and (C) maintain existing relationships with tenants, agents,
licensors, licensees, suppliers, contractors, customers and others having
business relationships with them to the end that their goodwill and ongoing
business and operations shall be unimpaired at the time of the Closing. Without
limiting the generality of the foregoing, and except as otherwise expressly
provided in this Agreement or as set forth in Schedule 5.1(a), neither WFLP, nor
California Farms, nor FWRLP will without the prior written consent of Buyer:
(1) amend the WFLP Limited Partnership Agreement, the California Farms
Limited Partnership Agreement or the FWRLP Limited Partnership Agreement;
(2) authorize for issuance, issue, sell, deliver or agree or commit to
issue, sell or deliver (whether through the issuance or granting of options,
warrants, commitments, subscriptions, rights to purchase or otherwise) any
partnership interest or any other securities or equity equivalents, or amend any
of the terms of any such securities or equity equivalents outstanding as of the
date hereof;
(3) (A) split, combine or reclassify any interests in WFLP, California
Farms or FWRLP, (B) set aside or pay any distribution (whether in cash,
securities or property or any combination thereof) in respect of any interests
in WFLP, California Farms or FWRLP, (C)
-52-
<PAGE>
redeem, repurchase or otherwise acquire any of their respective securities or
any options or rights to acquire any such securities, or (D) adopt a plan of
complete or partial liquidation or resolutions providing for or authorizing such
liquidation or a dissolution, merger, consolidation, restructuring,
recapitalization or other reorganization;
(4) issue, deliver or sell, or authorize or propose the issuance,
delivery or sale of, any options, calls, rights, preemptive rights or other
contracts, commitments, arrangements or understandings under which any Person
has the right to acquire from Sellers, WFLP, California Farms or FWRLP, or
Sellers, WFLP, California Farms or FWRLP is obligated to issue, sell, or
deliver, any interests in WFLP, California Farms or FWRLP;
(5) (A) incur any indebtedness for borrowed money (except for short-
term indebtedness incurred in the ordinary course of business consistent with
past practice pursuant to existing lines of credit) or issue any debt securities
or, except in the ordinary course of business consistent with past practice,
assume, guarantee or endorse the obligations of any other Person; (B) make any
loans, advances or capital contributions to, or investments in, any other
Person, in excess of $50,000 in the aggregate; (C) pledge or otherwise encumber
any interests in WFLP, California Farms or FWRLP; (D) enter into or invest in
any derivative financial instruments; or (E) except in the ordinary course of
business consistent with past practice, mortgage or pledge any assets of WFLP,
California Farms or FWRLP, tangible or intangible, or create or suffer to exist
any Lien thereupon;
(6) to the extent payable directly or indirectly by WFLP, California
Farms or FWRLP: (A) enter into, adopt or (except as may be required by Law or
the terms of any such arrangement) terminate any bonus, profit sharing,
compensation, severance, termination, stock
-53-
<PAGE>
option, stock appreciation right, restricted stock, performance unit, stock
equivalent, stock purchase agreement, pension, retirement, deferred
compensation, employment, consulting, indemnification, severance or other
employee benefit agreement, trust, plan, fund or other arrangement for the
benefit or welfare of any officer or employee of WFLP, California Farms or
FWRLP; or (B) amend any such arrangement as it relates to any such officers or
employees or (other than scheduled annual increases in base compensation, and
changes in benefits in accordance with plans or arrangements in effect as of the
date hereof, in each case in the ordinary course of business consistent with
past practice, that do not constitute in the aggregate a change in the
employer's approach to compensation or benefit increases and that, in the
aggregate, do not result in a material increase in compensation or benefit
expense to WFLP, California Farms or FWRLP) change in any manner the
compensation or other benefits payable to any officer or employee of WFLP,
California Farms or FWRLP; provided, that Buyer agrees it will not unreasonably
--------
withhold its consent, if requested by WFLP, California Farms or FWRLP, to
transactions governed by this paragraph (6);
(7) acquire, sell, lease or dispose of any assets outside the ordinary
course of business consistent with past practices or any assets which in the
aggregate are material to WFLP, California Farms or FWRLP;
(8) relinquish any contract or right other than in the ordinary course
of business consistent with past practice;
(9) except to the extent required by applicable law, permit any
material change in (A) any marketing, purchasing, investment, accounting,
financial reporting, inventory, credit, allowance or tax practice, policy,
method or procedure or (B) any method of calculating
-54-
<PAGE>
any bad debt, contingency or other reserve for accounting, financial reporting
or tax purposes, except as may be required as a result of a change occurring
subsequent to the date hereof in law or GAAP;
(10) make any material tax election or settle or compromise any
material income tax liability with any Governmental Body;
(11) (A) acquire (by merger, consolidation or acquisition of stock or
assets, but excluding foreclosure) any corporation, partnership or other
business organization or division thereof; (B) authorize any new capital
expenditures; or (C) enter into or amend any contract, agreement, commitment or
arrangement with respect to any of the foregoing;
(12) pay, discharge or satisfy any material claims, liabilities or
obligations (absolute, accrued, asserted or unasserted, contingent or
otherwise), other than the payment, discharge or satisfaction in the ordinary
course of business consistent with past practice or in accordance with its or
their terms of existing indebtedness for borrowed money and other liabilities
reflected or reserved against in the pro forma restated combined financial
statements (or the notes thereto) of WFLP (as nominee for California Farms) and
FWRLP or incurred in the ordinary course of business consistent with past
practice;
(13) terminate, or in any manner material thereto modify, amend or
waive compliance with, any provision of any of the Significant Agreements;
(14) enter into any agreement providing for acceleration of payment or
performance or other consequence as a result of a change of control of WFLP,
California Farms or FWRLP;
-55-
<PAGE>
(15) make any capital expenditures or commitments in excess of $50,000
in the aggregate for additions to plant, property or equipment constituting
capital assets except in the ordinary course of business;
(16) except to the extent permitted by paragraphs (1) through (15)
above, enter into any Significant Agreement of the type described in Section
3.11(a); or
(17) authorize or agree in writing or otherwise to take, any of the
actions described above in this Section 5.1(a).
(b) Sellers agree to cause each of WFLP, California Farms and FWRLP to,
except as otherwise expressly provided in this Agreement, during the period from
the date hereof to the Closing: (i) conduct its operations according to its
ordinary course of business consistent with past practice; and (ii) use
commercially reasonable efforts to (A) preserve intact its business
organizations; (B) keep available the services of its officers and employees, if
any; and (C) maintain existing relationships with tenants, agents, licensors,
licensees, suppliers, contractors, customers and others having business
relationships with them to the end that its goodwill and ongoing business and
operations shall be unimpaired at the time of the Closing. Without limiting the
generality of the foregoing, and except as otherwise expressly provided in this
Agreement or as set forth in Schedule 5.1(b), Sellers will cause each of WFLP,
California Farms and FWRLP to not , without the prior written consent of Buyer:
(1) amend its limited partnership agreement;
(2) adopt a plan of complete or partial liquidation or resolutions
providing for or authorizing such liquidation or a dissolution, merger,
consolidation, restructuring, recapitalization or other reorganization;
-56-
<PAGE>
(3) issue, deliver or sell, or authorize or propose the issuance,
delivery or sale of, any options, calls, rights, preemptive rights, or other
contracts, commitments, arrangements or understandings under which any Person
has the right to acquire, or Sellers, WFLP, California Farms or FWRLP is
obligated to issue, sell, or deliver, any interests in WFLP, California Farms or
FWRLP;
(4) (A) pledge or otherwise encumber any interests in WFLP, California
Farms or FWRLP; or (B) except in the ordinary course of business consistent with
past practice, mortgage or pledge any assets of WFLP, California Farms or FWRLP,
tangible or intangible, or create or suffer to exist any Lien thereupon;
(5) authorize, or agree in writing or otherwise to take, any of the
actions described above in this Section 5.1(b).
5.2 ACCESS TO INFORMATION. (a) Sellers agree that, from the date hereof
---------------------
until the Closing Date, subject to the terms of the Confidentiality Agreement,
WFLP, California Farms and FWRLP will (i) give to Buyer and its counsel,
financial advisors, auditors and other authorized representatives full access,
upon reasonable prior notice and during normal business hours, to their
respective offices, properties, information systems, books, records, contracts,
commitments and personnel, (ii) furnish to Buyer and its counsel, financial
advisors, auditors and other authorized representatives such business,
financial, operating and personnel data and other information relating to WFLP,
California Farms or FWRLP as such Persons may reasonably request and (iii)
instruct their respective employees, counsel and financial advisors to cooperate
with Buyer in its investigation of WFLP, California Farms and FWRLP; provided
that this
-57-
<PAGE>
Section 5.2 shall not obligate WFLP, California Farms or FWRLP to provide or
make available to Buyer any employee medical records.
(b) Sellers agree that they shall cause WFLP, California Farms and FWRLP
and their Affiliates not to issue any communication to their employees and
agents, other than those in the ordinary course of business consistent with past
practice, including with respect to the transactions contemplated hereby,
without the prior consent of Buyer, such consent not to be unreasonably
withheld.
5.3 NOTICES OF CERTAIN EVENTS. Sellers agree that they shall cause WFLP,
-------------------------
California Farms and FWRLP to notify Buyer promptly of any actions, suits,
claims, investigations or proceedings commenced or, to the Knowledge of Sellers,
threatened against, relating to or involving or otherwise affecting WFLP,
California Farms or FWRLP that, if pending on the date of this Agreement, would
have been required to have been disclosed pursuant to Section 3.12 or that
relate to the consummation of the transactions contemplated by this Agreement.
Sellers shall give Buyer the opportunity to participate in the defense or
settlement of any such action, suit, claim, investigation or proceeding;
provided, however, that no such settlement shall be agreed without Buyer's
- -------- -------
consent.
5.4 NO SOLICITATION OR NEGOTIATION. (a) Sellers agree that Sellers,
------------------------------
WFLP, California Farms and FWRLP will immediately cease any existing discussions
or negotiations with any third parties conducted prior to the date hereof with
respect to any Acquisition Proposal (as defined below). Neither Sellers, WFLP,
California Farms, FWRLP nor any of their respective Affiliates shall, directly
or indirectly, through any officer, director, employee, investment banker,
attorney or other advisor, representative or agent (each, a "Representative") of
any of them, (i)
-58-
<PAGE>
entertain, pursue, solicit, initiate or encourage any inquiries or proposals
that constitute, or would lead to, a proposal or offer for a merger,
consolidation or business combination involving WFLP, California Farms or FWRLP
or to acquire or cause to be acquired in any manner, directly or indirectly, any
of the assets or business, or any interest in, WFLP, California Farms or FWRLP,
or any similar transaction, other than the transactions contemplated by this
Agreement (any of the foregoing inquiries or proposals being referred to in this
Agreement as an "Acquisition Proposal"), (ii) engage in negotiations or
discussions concerning, or provide any information to any person or entity
relating to, any Acquisition Proposal or (iii) agree to or approve any
Acquisition Proposal.
(b) Sellers and each of the general and limited partners of N.N. Investors
and FW Ranch shall not: (i) withdraw or modify, or propose to withdraw or
modify, in a manner adverse to Buyer, its approval or recommendation of this
Agreement or the Acquisition; (ii) entertain, pursue, approve or recommend, or
propose to entertain, pursue, approve or recommend, or allow WFLP, California
Farms or FWRLP to entertain, pursue, approve or recommend, any Acquisition
Proposal; or (iii) cause WFLP, California Farms or FWRLP to enter into any
agreement with respect to any Acquisition Proposal. Nothing contained in this
Section 5.4(b) shall prohibit WFLP, California Farms, N.N. Investors, FWRLP or
FW Ranch from making any disclosure to its partners, or Western Farm & Cattle,
CLCC or GenPar from making any disclosure to its stockholders, which, in the
good faith and reasonable judgment of the general partner of WFLP, California
Farms, N.N. Investors, FWRLP or FW Ranch, or the directors of Western Farm &
Cattle, CLCC or GenPar, as the case may be, based on the advice of outside
counsel, is required under applicable law; provided, that except as permitted in
--------
accordance with
-59-
<PAGE>
this Section 5.4(b), neither Sellers, WFLP, California Farms, FWRLP,, nor any of
the general or limited partners of California Farms withdraws or modifies its
position with respect to this Agreement or the Acquisition or entertains,
pursues, approves or recommends an Acquisition Proposal.
5.5 CONFIDENTIALITY AGREEMENTS. Sellers agree that, without Buyer's
--------------------------
consent, after the date hereof and until the expiration of such agreements, they
will not, and they will not permit WFLP, California Farms or FWRLP to,
terminate, amend, waive or modify any provision of any confidentiality agreement
pursuant to which information was provided to any Person (other than Buyer) with
respect to WFLP, California Farms or FWRLP or their respective business and
operations. If, to the Knowledge of Sellers, any breach of a confidentiality
agreement is threatened or has occurred, Sellers shall immediately notify Buyer
and shall, at Buyer's expense, take all action reasonably requested by Buyer to
enforce the terms of each such confidentiality agreement.
5.6 MEETINGS. GenPar and FW Ranch agree that (i) FW Ranch will take all
--------
action necessary in accordance with applicable law and its limited partnership
agreement and bylaws either (A) to convene a meeting of its partners (the "FW
Ranch Partners' Meeting") as promptly as practicable to consider and vote upon
the approval of this Agreement and the Ancillary Agreements and the Acquisition
and the other transactions contemplated hereby (the "FW Ranch Partners'
Approval") or (B) to obtain the written consent of such partners and (ii) FW
Ranch shall take all lawful action to solicit, and use all reasonable efforts to
obtain, such approval.
-60-
<PAGE>
5.7 COVENANTS RELATING TO THE PROPERTIES. Sellers agree that, until the
------------------------------------
Closing:
(i) Sellers shall cause WFLP, California Farms and FWRLP to perform
all their respective obligations under and comply with all applicable provisions
of the Leases, any Permits, and any other document or agreement by which WFLP,
California Farms or FWRLP or any of their respective Properties is bound or
affected and all applicable legal requirements and insurance requirements
pertaining to any of the Properties.
(ii) Buyer and its agents and representatives may enter any of the
Properties during normal business hours for the purpose of conducting the
studies, inspections and tests described above, and Sellers shall cause WFLP,
California Farms and FWRLP to grant Buyer and its agents a license for the
duration of this Agreement to so enter upon any such Property.
(iii) Sellers shall not, nor permit WFLP, California Farms or FWRLP
to, create or suffer any additional easements, leaseholds, tenancies, liens, or
other encumbrances with respect to any of the Properties whatsoever without
Buyer's prior written approval, which approval may be withheld in Buyer's sole
discretion.
5.8 TITLE UPDATES. At Sellers sole cost and expense, at Closing Sellers
-------------
shall cause title insurance policies relating to the Properties of WFLP,
California Farms and FWRLP to be issued in favor of Buyer by a mutually
acceptable and nationally recognized title insurance company which policies
shall contain as exceptions only those items set forth in the title policies and
reports delivered by Sellers to Buyer and, mortgages and deeds of trust which
will be discharged prior to or at Closing and easements or rights of way granted
to any Governmental Body.
-61-
<PAGE>
ARTICLE 6
COVENANTS OF BUYER
Buyer agrees that:
6.1 CONDUCT. Except as otherwise expressly provided in this Agreement,
-------
during the period from the date hereof to the Closing, Buyer will, and will
cause its Subsidiaries to, conduct their respective operations according to
their ordinary course of business consistent with past practice. Without
limiting the generality of the foregoing, and except as otherwise expressly
provided in this Agreement or as set forth in Schedule 6.1, Buyer will not, and
will cause each Subsidiary of Buyer not to, without the prior written consent of
Sellers:
(i) amend its articles of incorporation (other than the amendment
scheduled to be considered at Buyer's annual meeting on August 14, 1997) or
bylaws or other comparable organizational documents;
(ii) (A) split, combine or reclassify any shares of Buyer Stock, (B)
set aside or pay any dividend or other distribution (whether in cash, securities
or property or any combination thereof) in respect of the Buyer Stock, (C)
redeem, repurchase or otherwise acquire any of its securities or any options or
rights to acquire any such securities, or (D) adopt a plan of complete or
partial liquidation or resolutions providing for or authorizing such liquidation
or a dissolution, merger, consolidation, restructuring, recapitalization or
other reorganization; or
(iii) authorize or agree in writing or otherwise to take any of the
actions described above in this Section 6.1.
6.2 CONFIDENTIALITY. All information provided to Buyer or any of the
---------------
Persons referred to in Section 5.2 will be treated as if provided under the
Confidentiality Agreement.
-62-
<PAGE>
6.3 INDEMNIFICATION AND INSURANCE. Buyer agrees that all rights to
-----------------------------
indemnification and exculpation from liability for acts or omissions occurring
prior to the Closing now existing in favor of the current or former officers or
employees of WFLP, California Farms or FWRLP, as provided in the WFLP Limited
Partnership Agreement, the California Farms Limited Partnership Agreement, or
the FWRLP Limited Partnership Agreement or in indemnification agreements to
which any of WFLP, California Farms or FWRLP is a party listed on Schedule 6.3,
shall survive the Closing and shall continue in full force and effect in
accordance with their respective terms for a period of not less than six (6)
years after the Closing Date.
6.4 REPRESENTATION ON BUYER'S BOARD OF DIRECTORS. At or prior to the
--------------------------------------------
Closing, Buyer shall increase the size of its Board of Directors by one member
to eleven members. At the Closing, Buyer shall use its best efforts to nominate
Ardon Moore and cause him to be elected or appointed to Buyer's Board of
Directors in accordance with Section 4.2 of the Governance Agreement. At
Buyer's 2000 Annual Meeting of stockholders, Buyer shall use its best efforts to
nominate the aforesaid individual to Buyer's Board of Directors as a Class I
Director and cause him to be elected to one full three-year term in accordance
with Section 4.2 of the Governance Agreement.
6.5 COPIES OF SEC FILINGS. From the date hereof until the Closing Date,
---------------------
Buyer shall furnish to WFLP on behalf of Sellers a copy of any material filing
made by Buyer under the Exchange Act promptly after such filing is made with the
SEC.
6.6 ACCESS TO INFORMATION. Buyer agrees that, from the date hereof until
---------------------
the Closing Date, subject to the terms of the Confidentiality Agreement, Buyer
will (i) give to Sellers and their counsel, financial advisors, auditors and
other authorized representatives agreed upon
-63-
<PAGE>
access upon reasonable prior notice and during normal business hours, to the
offices, properties, information systems, books, records, contracts, commitments
and personnel of Buyer, (ii) furnish to Sellers and their counsel, financial
advisors, auditors and other authorized representatives such business, financial
and operating data as Buyer and Sellers may agree, and (iii) instruct the
employees, counsel and financial advisors of Buyer to cooperate with Sellers in
their investigation of Buyer.
ARTICLE 7
COVENANTS OF BUYER AND SELLERS
Buyer and Sellers agree that:
7.1 REASONABLE EFFORTS. (a) Subject to the terms and conditions of this
------------------
Agreement, each of them will use its reasonable efforts to take, or cause to be
taken, all actions and to do, or cause to be done, all things reasonably
necessary or desirable under applicable laws and regulations or otherwise to
consummate the transactions contemplated by this Agreement as promptly as
practicable. Buyer, on one side, and Sellers, on the other side, will promptly,
and in any event within 20 days of the date hereof, prepare and file all
applications, notices, consents and other documents necessary or advisable to
obtain the consents, approvals or actions make the filings and give the notices
specified in Section 4.3 and Section 3.3, respectively, promptly file all
supplements or amendments thereto and use reasonable efforts to obtain such
consents, approvals or actions, make such filings and give such notice as
promptly as practicable; provided that nothing in this Section 7.1 or elsewhere
--------
in this Agreement shall require Buyer or Sellers, in order to obtain any such
consent, approval, or action, make such filing or give such notice, to
-64-
<PAGE>
accept or agree to any condition that would be materially disadvantageous to it
other than those customarily imposed. Buyer, on the one side, and Sellers, on
the other side, will provide each other and their counsel the opportunity to
review in advance and comment on all such filings, notices, applications and
similar documents. Buyer, on the one side, and Sellers, on the other side, will
keep each other informed of the status of matters relating to the consents,
approvals, actions, filings and notices specified in Section 4.3 and Section
3.3. Buyer, on the one side, and Sellers, on the other side, agree to use their
reasonable efforts to execute and deliver such other documents, certificates,
agreements and other writings and to take such other actions as may be necessary
or desirable in order to consummate or implement expeditiously the transactions
contemplated by this Agreement. In addition to and not in limitation of the
foregoing, each of the parties will (i) promptly take all actions necessary to
make the filings required of Buyer and Sellers or their respective Affiliates or
Subsidiaries under the HSR Act, (ii) comply at the earliest practicable date
with any request for additional information received by such party or its
Affiliates or Subsidiaries from the United States Federal Trade Commission (the
"FTC") or the Antitrust Division of the United States Department of Justice (the
"Antitrust Division") pursuant to the HSR Act, (iii) cooperate with the other
party in connection with such party's filings under the HSR Act using their
reasonable efforts to resolve any investigation or other inquiry concerning the
Acquisition or the other matters contemplated by this Agreement commenced by
either the FTC or the Antitrust Division or state attorneys general and (iv)
request early termination of the waiting period under the HSR Act.
(b) Buyer, on one side, and Sellers, on the other side, will notify the
other of any event, transaction or circumstance, as soon as practical after it
becomes known to such party, that
-65-
<PAGE>
causes or will cause any covenant or agreement of Buyer, on one side, or
Sellers, on the other side, under this Agreement to be breached or any of the
conditions to the consummation of the transactions contemplated hereby not to be
satisfied or that renders or will render untrue any representation or warranty
of Buyer, on one side, or Sellers, on the other side, contained in this
Agreement. Buyer, on the one side, and Sellers, on the other side, also will
notify the other in writing of any violation or breach, as soon as practical
after it becomes known to such party, of any representation, warranty, covenant
or agreement made by Buyer, on one side, or Sellers, on the other side. In
connection therewith, Buyer and Sellers will promptly supplement or amend the
various schedules to this Agreement to reflect any matter which, if existing,
occurring or known on the date of this Agreement, would have been required to be
set forth or described in such schedules or which is necessary to correct any
information in such schedules which was or has been rendered inaccurate thereby.
No notice given pursuant to this Section 7.1 or supplements or amendments to the
schedules to this Agreement shall have any effect on the representations,
warranties, covenants or agreements contained in this Agreement for purposes of
determining satisfaction of any condition contained herein.
7.2 PUBLIC ANNOUNCEMENTS. The parties to this Agreement agree to consult
--------------------
with each other before issuing any press release or making any public statement
with respect to this Agreement or the transactions contemplated hereby or in the
Ancillary Agreements and to provide the other party an opportunity to comment
thereon and, except as may be required by applicable Law, by regulatory
authorities or by any listing agreement with any national securities exchange,
will not issue any such press release or make any such public statement without
the consent of the other party, such consent not to be unreasonably withheld.
Without limiting the
-66-
<PAGE>
generality of the foregoing, Buyer agrees that, without the prior consent of
Sellers, it will not make any public announcement or issue any press release
that names, describes or attributes statements or actions to Sellers, their
direct and indirect partners or their affiliates, except as otherwise required
by applicable law.
7.3 CONSENTS. Between the date hereof and the Closing Date, Sellers and
--------
Buyer shall use their respective best efforts, without payment of any
consideration to the persons from whom or which consents or agreements are
required, to obtain at the earliest practicable date, and prior to the Closing
Date, all consents and agreements of third parties necessary or advisable for
the performance by Sellers and Buyer of their respective obligations under this
Agreement or any agreement referred to herein or contemplated hereby or to the
consummation of the transactions contemplated hereby or thereby. No
consideration, whether such consideration shall consist of the payment of money
or shall take any other form, for any such consent or agreement necessary to the
consummation of the transactions contemplated hereby or by the Ancillary
Agreements shall be given or promised by either Sellers or Buyer or any of their
respective Subsidiaries without the prior written approval of the other party.
ARTICLE 8
TAX MATTERS; CERTAIN COVENANTS
8.1 REPRESENTATIONS, WARRANTIES AND COVENANTS. (a) Except as set forth on
-----------------------------------------
Schedule 8.1, Sellers represent, warrant and covenant to Buyer that as of the
Closing Date:
(i) CLCC is the tax matters partner of California Farms, GenPar is the
tax matters partner of FWRLP and Western Farm & Cattle is the tax matters
partner of WFLP;
-67-
<PAGE>
(ii) Each of FWRLP, California Farms and WFLP is and has been since
its date of inception properly treated as a partnership, and not as an
association taxable as a corporation, pursuant to Section 7701(a)(2) of the Code
and any corresponding provision of state and local Law and will be treated as a
partnership for Tax purposes at all times from the date hereof through the
Closing Date;
(iii) With respect to periods ending on or before the Closing Date:
(A) FWRLP, California Farms and WFLP have filed when due (including extensions)
all Tax Returns that are required to be filed by FWRLP, California Farms and
WFLP; (B) such returns were prepared in the manner required by applicable Laws
and are true, correct, and complete in all material respects; and (C) FWRLP,
California Farms and WFLP have timely paid all Taxes imposed on or incurred by
FWRLP, California Farms and WFLP as shown on such Tax Returns as being owed,
except for Taxes which are being contested in good faith by appropriate
proceedings;
(iv) True and complete copies of all Tax Returns and all schedules
thereto filed by, or on behalf of, FWRLP, California Farms and WFLP for all
prior taxable years and all written communications to or from such Taxing
Authorities relating to all such returns have been delivered to Buyer for
inspection on or before the Closing Date;
(v) Except for the Nominee Agreement (as defined in clause (ix) of
this Section 8.1), there have been no agreements in connection with FWRLP,
California Farms and WFLP providing for allocations of income, losses or
distributions of cash, other than as set forth in the FWRLP Limited Partnership
Agreement, the California Farms Limited Partnership Agreement and the WFLP
Limited Partnership Agreement;
-68-
<PAGE>
(vi) There are no Tax liens upon the assets of FWRLP. California
Farms and WFLP except liens for Taxes not yet due;
(vii) With respect to periods ending on or before the Closing Date,
FWRLP, California Farms and WFLP have established on their books and records (A)
reserves adequate to pay all Taxes imposed on or incurred by them not yet due
and payable and (B) reserves for deferred Taxes imposed on or incurred by it, in
each case, in accordance with GAAP; FWRLP, California Farms, and WFLP have not
received a Tax Ruling (as defined below) or entered into a Closing Agreement (as
defined below) with any Taxing Authority that would have a continuing Material
Adverse Effect on FWRLP, California Farms, WFLP or the Buyer after the Closing
Date. "Tax Ruling", as used in this Agreement, shall mean a written ruling of a
Taxing Authority relating to Taxes imposed on or incurred by California Farms or
WFLP; "Closing Agreement", as used in this Agreement, shall mean a written and
legally binding agreement with a Taxing Authority relating to Taxes imposed on
or incurred by FWRLP, California Farms or WFLP;
(viii) None of FWRLP, California Farms, and WFLP is a party to any
allocation or sharing agreement regarding Taxes with any Person except for the
Nominee Agreement dated June 1, 1993 between WFLP and California Farms (the
"Nominee Agreement");
(ix) FWRLP, California Farms and WFLP have no liability for Taxes of
any Person other than FWRLP, California Farms or WFLP under Treasury Regulation
Section 1.1502-6 (or any similar provision of state, local or foreign law), as a
transferee or successor, by contract or otherwise;
(x) FWRLP, California Farms, or WFLP have not requested any
extension of time within which to file any Tax Return, which Tax Return has not
since been filed;
-69-
<PAGE>
(xi) FWRLP, California Farms and WFLP have not requested or executed
any outstanding waivers or comparable consents regarding the application of the
statute of limitations with respect to any Taxes imposed on or incurred by
FWRLP, California Farms or WFLP or Tax Returns of FWRLP, California Farms or
WFLP;
(xii) The Tax Returns of FWRLP, California Farms and WFLP have not
been examined by the appropriate Taxing Authorities, for any period. No
deficiency for any Taxes has been proposed, asserted or assessed against
California Farms or WFLP that has not been resolved and paid in full;
(xiii) No audits or other administrative proceedings or court
proceedings are presently pending with regard to any Taxes or Tax Returns of
FWRLP, California Farms or WFLP. There is no threatened action, audit, or
administrative or court proceeding with respect to any such Taxes or Tax Returns
of FWRLP, California Farms or WFLP. No power of attorney with respect to Taxes
imposed on or incurred by California Farms or WFLP currently in force has been
granted by FWRLP, California Farms or WFLP;
(xiv) FWRLP, California Farms and WFLP have not initiated any
voluntary changes in accounting method, and the United States Internal Revenue
Service has not proposed any such adjustment or change in accounting method;
(xv) Neither FWRLP nor California Farms nor WFLP nor any of their
respective stockholders or partners are nonresident alien individuals or foreign
corporations within the meaning of Section 897 of the Code;
-70-
<PAGE>
(xvi) Schedule 8.1 (a)(xvii) sets forth all of the states in which
either California Farms or WFLP has been required to file Tax Returns during the
most recent three-year period; and
(xvii) On the Closing Date, FWRLP, California Farms and WFLP shall be
eligible to make an election pursuant to Section 754 of the Code and their
respective limited partnership agreements shall provide for such election.
8.2 TAX MATTERS.
-----------
(a) Transfer Taxes. Sellers shall pay all sales, use, transfer (other than
--------------
real property transfer), recording, gains, stock transfer and other similar
taxes and fees ("Transfer Taxes") if any, and Sellers and Buyer shall each pay
one-half of real property transfer taxes, if any, arising out of or in
connection with the transactions effected pursuant to this Agreement. Buyer and
Sellers shall indemnify, defend, and hold harmless the other with respect to
such Transfer Taxes and its share of any real property transfer taxes. WFLP,
California Farms and FWRLP shall file all necessary documentation and Tax
Returns with respect to such Transfer Taxes.
(b) Indemnification. (i) After the Closing Date, Sellers shall jointly
---------------
and severally indemnify and hold harmless Buyer, FWLP, California Farms and
WFLP from and against any and all Tax Claims, resulting from, arising out of or
relating to: (A) any and all Taxes imposed on or incurred by a Buyer, FWLP,
California Farms or WFLP relating to any taxable period beginning before the
Closing Date (and the portion of any Overlap Period (as defined below) beginning
before the Closing Date) attributable to operations or activities occurring
before the Closing Date; (B) any and all Taxes imposed on or incurred by FWLP,
California Farms or WFLP relating to any taxable period ending on or prior to
the Closing Date ("Pre-Closing
-71-
<PAGE>
Taxes"); (C) with respect to any taxable period ending on or after the Closing
Date that includes the Closing Date (the "Overlap Period"), any and all Taxes
imposed on or incurred by FWRLP, California Farms or WFLP attributable to the
period ending on or prior to the Closing Date; and (D) any and all Taxes
resulting from, or that would not have been incurred but for, any breach of any
representation or warranty of Sellers contained in Section 8.1. For purposes of
the Overlap Period, Taxes shall be attributable to the period ending on or prior
to the Closing Date: (X) in the case of any real or personal property Tax
imposed on or incurred by WFLP, California Farms or FWRLP in an amount equal to
the real or personal property Tax for the entire period multiplied by a fraction
the numerator of which is the number of days in the period for which such real
or personal property Tax is paid ending on the Closing Date and the denominator
of which is the number of days in the entire period; and (Y) in the case of any
other Taxes imposed on or incurred by WFLP, California Farms and FWRLP to the
extent of any Taxes imposed on or incurred by WFLP, California Farms and FWRLP
that would be payable if the taxable year ended on the Closing Date; provided,
--------
however, that the Tax liability shall be reduced, in each case, for (A) any
- -------
previously made estimated Tax payments and (B) any amounts provided as a Tax
reserve on the taxpayer's books and records as of the Closing Date; and
(ii) After the Closing Date, Buyer shall indemnify and hold harmless
Seller from and against any and all Tax Claims resulting from, arising out of or
relating to (A) any and all Taxes imposed on or incurred by WFLP, FWRLP or
California Farms relating to any taxable period beginning after the Closing Date
(and the portion of any Overlap Period beginning after the Closing Date)
attributable to Buyer or any Subsidiary of Buyer owning an interest in WFLP,
FWRLP or California Farms after the Closing Date, and (B) any and all Taxes
imposed on or
-72-
<PAGE>
incurred by WFLP, California Farms or FWRLP relating to any taxable period after
the Closing Date (and the portion of any Overlap Period beginning after the
Closing Date). For purposes of any Overlap Period, Taxes shall be attributable
to the period beginning after the Closing Date: (A) in the case of any real or
personal property Tax imposed on or incurred by WFLP, California Farms or FWRLP,
in an amount equal to the real or personal property Tax for the entire period
multiplied by a fraction the numerator of which is the number of days in the
period for which such real or personal property Tax is paid beginning after the
Closing Date and the denominator of which is the number of days in the entire
period; and (B) in the case of any other Taxes, to the extent of any Taxes that
would be payable if the taxable year began after the Closing Date; provided,
--------
however, the Tax liability shall be reduced, in each case, for (A) any
- -------
previously made estimated Tax payments and (B) any amounts provided as a Tax
reserve on the taxpayer's books and records as of the Closing Date.
(c) Refunds. Any refund or credit of any WFLP, California Farms or FWRLP
-------
Pre-Closing Taxes shall be for the benefit of Sellers and Buyer shall pay any
such refund to Sellers within 30 days after receipt or actual realization of the
benefit of such credit.(d) Contests. The appropriate tax matters partner of
--------
WFLP, California Farms and FWRLP for the relevant Tax period (the "TMP") shall
have the right to control any audit, examination, proposed adjustment,
administrative or judicial proceeding, or other matter related to any Pre-
Closing Taxes. Buyer agrees that, in the event WFLP, California Farms or FWRLP
receives notice in writing of any examination, audit, claim, settlement,
proposed adjustment, administrative or judicial proceeding, or other matter
related to any Pre-Closing Taxes, Buyer shall notify the TMP in writing as soon
as reasonably practical (but in no event not more than 10 business days) after
-73-
<PAGE>
receipt of notice and the TMP shall be entitled to control, at its own expense,
all such matters. Sellers will pay any Taxes found to be owing. Buyer shall
and shall cause WFLP, California Farms and FWRLP to cooperate with the TMP by
giving the TMP and its representatives, on prior reasonable notice, access and
cooperation during normal business hours to all information, books and records
pertaining to WFLP's, California Farms or FWRLP's Pre-Closing Taxes. To the
extent any audit, examination, proposed adjustment, administrative or judicial
proceeding, or other matter related to any Pre-Closing Taxes could result in
liability for Buyer, WFLP, California Farms or FWRLP pursuant to this Agreement,
Buyer shall notify the TMP of such event, and the TMP shall not agree to the
resolution of any issue relating to Taxes arising as a result of or in
connection with such event, without the prior written consent of Buyer, which
consent shall not be unreasonably withheld.
(e) Information. Sellers, on one side, and Buyer, on the other side, will
-----------
make available to each other, and Buyer will cause WFLP, California Farms and
FWRLP to make available as reasonably requested, and to any Taxing Authority,
all information, records, or documents relating to the liability or potential
liability for Pre-Closing Taxes and will preserve such information, records or
documents until the expiration of any applicable statute of limitations or
extensions thereof.
(f) Preparation of Tax Returns and Code Section 754 Election. For all tax
--------------------------------------------------------
years of California Farms, WFLP, and FWRLP that end on or before the Closing
Date, the TMP shall prepare and file, or cause to be prepared and filed, all Tax
returns. The TMP shall (if requested by a Buyer) elect and cause WFLP,
California Farms and FWRLP to elect under Code
-74-
<PAGE>
Section 754 with respect to the Tax Year which includes the Closing Date to
adjust the basis of assets under Code Section 743 or make any other tax election
requested by Buyer.
(g) Assistance and Cooperation. Except as specifically provided in this
--------------------------
Agreement, no party shall take any actions with respect to WFLP, California
Farms, FWRLP or the interests in WFLP, California Farms or FWRLP out of the
ordinary course of business on or prior to the Closing Date.
ARTICLE 9
INDEMNIFICATION
9.1 INDEMNIFICATION. Except as otherwise limited by this Agreement,
---------------
Sellers shall jointly and severally indemnify and hold harmless Buyer and its
successors and permitted assigns (each, an "Indemnified Party") against and in
respect of (i) any and all claims, losses, liabilities, damages, and reasonable
costs and expenses, net of any Tax benefit received by such Indemnified Party
(collectively, "Losses"), directly suffered or incurred or disbursed by any
Indemnified Party (whether incurred under tort, contract, strict or any other
form of liability) as a result of, or with respect to, any breach or inaccuracy
of any representation or warranty of Sellers; and (ii) any and all actions,
claims, proceedings, investigations, audits, fines, judgments, costs and other
expenses (including, without limitation, reasonable legal fees and expenses)
incident to any of the foregoing or to the enforcement of this Section 9.1;
provided, however, that the indemnity set forth in this Section 9.1 shall not
- -------- -------
include Tax Claims relating to any Taxes, which claims shall be covered
exclusively in Article 8.
-75-
<PAGE>
9.2 LIMITATIONS TO INDEMNIFICATION OBLIGATIONS. Notwithstanding anything
------------------------------------------
contained herein to the contrary, (a) Sellers shall not be obligated to make any
payment pursuant to Section 9.1 or pursuant to Article 8 (other than with
respect to Taxes which are the subject of clause (x) of the last sentence of
Section 8.2(b)(i)) hereof, unless, and only to the extent that, all such Losses
and Tax Claims, in the aggregate, exceed $1,200,000 (provided that if aggregate
--------
Losses and Tax Claims shall exceed $1,200,000, Sellers shall pay all such Losses
and Tax Claims from the first dollar thereof), and (b) in no event shall the
aggregate liability of Sellers under this Article 9 and Article 8 hereof exceed
the sum of $120,000,000. The obligations of Sellers under this Article 9 and
Article 8 shall expire on the date that their representations and warranties
expire under Section 11.1, unless (i) prior to such date of expiration, Buyer
gives written notice to each of Sellers of its claim for indemnification
(setting forth in reasonable detail the specific facts and circumstances
pertaining thereto), and (ii) Sellers do not satisfy (or provide for the
satisfaction of) such claim within 30 days after such notice is given and Buyer
commences a legal action or proceeding within 60 days after the giving of such
notice. It is specifically understood and agreed that the remedy of any
Indemnified Party specified in Section 9.1 or Article 8 for Losses and Tax
Claims covered by the indemnification provided in this Article 9 and in Article
8 shall be limited to such indemnification, and Sellers shall not otherwise have
any liability under this Agreement (or otherwise) in connection with or arising
out of the transactions contemplated by this Agreement.
9.3 NOTICE OF CLAIM. If any Indemnified Party believes that it has
---------------
suffered or incurred or disbursed any claims, losses, liabilities, damages, or
reasonable costs or expenses for which it is entitled to such indemnification
provided in this Agreement (hereinafter, collectively,
-76-
<PAGE>
a "Loss" or "Losses"), such Indemnified Party shall promptly notify each of
Sellers (each, an "Indemnifying Party") and shall promptly provide each
Indemnifying Party with such information as is then available or thereafter
becomes available to enable the Indemnifying Party to evaluate the claim of such
Indemnified Party for indemnity. If any legal action is instituted by or against
a third party with respect to which any Indemnified Party intends to claim any
Losses, such Indemnified Party shall promptly notify each Indemnifying Party of
such action. The failure of an Indemnified Party to give any notice required by
this Section 9.3 shall not affect any of such Indemnified Party's rights
hereunder except to the extent such failure is actually prejudicial to the
rights or obligations of any Indemnifying Party.
9.4 THIRD PARTY CLAIMS. If a claim made pursuant to Section 9.3 arises
------------------
out of the claim of any third party, or if there is any claim against a third
party available by virtue of the circumstances relating thereto, the
Indemnifying Party shall have thirty (30) days after receipt of the notice
referred to in Section 9.3 to notify the Indemnified Party that it elects to
conduct and control such action. If the Indemnifying Party does not give the
foregoing notice, the Indemnified Party shall have the right to defend, contest
and, subject to the prior written consent of the Indemnifying Party, which
consent shall not be unreasonably withheld, settle or compromise such action in
the exercise of its reasonable discretion, and the Indemnifying Party shall,
upon request from the Indemnified Party, promptly pay to such Indemnified Party,
in accordance with the other terms hereof, the amount of any Losses for which
indemnification is provided hereunder. If the Indemnifying Party gives the
foregoing notice, the Indemnifying Party shall have the right to undertake,
conduct and control, through counsel of its own choosing and at its sole
expense, the conduct and settlement of such action and the Indemnified Party
shall
-77-
<PAGE>
cooperate with the Indemnifying Party in connection therewith; provided,
--------
however, that (a) the Indemnifying Party shall not, without the consent of the
- -------
affected Indemnified Party, enter into any settlement the effect of which is to
create or impose any lien upon any of the properties or assets of the
Indemnified Party; (b) the Indemnifying Party shall not consent to any
settlement that does not include as an unconditional term thereof the giving of
a complete release from liability with respect to such action to the Indemnified
Party; (c) the Indemnifying Party shall not enter into any settlement the effect
of which is to permit any injunction, declaratory judgment or other nonmonetary
relief to be entered against the Indemnified Party; (d) the Indemnifying Party
shall permit the Indemnified Party to participate in such conduct or settlement
through counsel chosen by the Indemnified Party, with the fees and expenses of
such counsel borne by the Indemnified Party unless under then applicable
standards of professional conduct a conflict would exist, or be reasonably
foreseeable to arise, between the Indemnifying Party and the Indemnified Party
in which event such fees and expenses of such counsel shall be borne by the
Indemnifying Party, but under no circumstance shall the Indemnifying Party be
required to pay the expenses of more than one such separate counsel in
connection with such claim other than separate local counsel; and (e) the
Indemnifying Party shall agree promptly to reimburse the Indemnified Party for
the full amount of any Losses resulting from such action (except for expenses
borne by the Indemnified Party pursuant to clause (d) hereof) incurred by the
Indemnified Party, including reasonable fees and expenses of counsel for the
Indemnified Party.
9.5 PAYMENTS OF INDEMNITY. If any Indemnifying Party notifies an
---------------------
Indemnified Party within 60 days of receipt of the notice provided by the
Indemnified Party under Section 9.3 that such Indemnifying Party does not
dispute the claim specified in such notice, the amount of
-78-
<PAGE>
such claim shall be conclusively deemed a liability of the Indemnifying Party
hereunder, and the amount of such claim shall be increased as may be necessary
so that after making all required deductions or withholdings (including
deductions or withholdings applicable to additional amounts paid under this
Section 9.5 of Taxes based on net income), the Indemnified Party shall receive
an amount equal to the amount it would have received if no deduction or
withholding had been made in the relevant jurisdiction.
ARTICLE 10
CONDITIONS TO CLOSING
10.1 CONDITIONS TO OBLIGATIONS OF BUYER AND SELLERS. The obligations of
----------------------------------------------
Sellers and Buyer to consummate the Acquisition are subject to the satisfaction
of the following conditions:
(a) Any applicable waiting period under the HSR Act relating to the
transactions contemplated hereby shall have expired or been terminated.
(b) All other consents, approvals or clearances from any Governmental Body
necessary for the consummation of the Acquisition shall have been obtained and
shall be in full force and effect, and such consents, approvals and clearances
shall be subject to no conditions other than those customarily imposed, and no
provision of any applicable Law shall prohibit the consummation of the
Acquisition.
(c) All consents, approvals or waivers of all non-governmental Persons
necessary for the consummation of the Acquisition shall have been obtained,
other than any such consent, approval or waiver which, if not obtained, would
not individually or in the aggregate have a Material Adverse Effect on Buyer or
Sellers.
-79-
<PAGE>
(d) There shall not have been any Law or Order promulgated, entered,
enforced, enacted, issued or deemed applicable to the transactions contemplated
by this Agreement by any Governmental Body which, directly or indirectly, (i)
prohibits or imposes any material limitations on Buyer's ownership or operation
(or that of any of its Subsidiaries or Affiliates) of, or compels Buyer (or its
Subsidiaries or Affiliates) to dispose of any portion of its, WFLP's, California
Farms' or FWRLP's businesses or assets which is material to the business of
WFLP, California Farms or FWRLP, or material to their business, or otherwise
results in a material diminution of the benefits of the transactions
contemplated by this Agreement to Buyer, (ii) prohibits, restrains or makes
illegal any of the transactions contemplated by this Agreement, (iii) imposes
limitations on the ability of Buyer effectively to control in any material
respect any material portion of the business or assets of WFLP, California Farms
or FWRLP, or any material portion of their business or assets, or (iv) has the
effect of making illegal or otherwise preventing, prohibiting or materially
restricting consummation of the transactions contemplated by this Agreement or
the Ancillary Agreements.
(e) There shall be no instituted or pending action or proceeding (whether
civil or criminal) before any Governmental Body (or any such action threatened
by or before any Governmental Body) which (i) in the case of any such action or
proceeding brought by any Governmental Body, seeks any Order having any effect
set forth in paragraph (d) above or (ii) in the case of any such action or
proceeding brought by any other Person, could reasonably be expected to result
in any Order having any effect set forth in paragraph (d) above.
-80-
<PAGE>
(f) WFLP, California Farms and FWRLP each shall have obtained all necessary
approvals from their respective general and limited partners in accordance with
applicable Law and their respective limited partnership agreements.
10.2 FURTHER CONDITIONS TO OBLIGATION OF BUYER. The obligation of Buyer to
-----------------------------------------
consummate the Acquisition is subject to the satisfaction of the following
further conditions:
(a) (i) Sellers shall have performed in all material respects all of their
respective obligations hereunder required to be performed by them on or prior to
the Closing Date, (ii) the representations and warranties of Sellers contained
in this Agreement that contain materiality qualifications or exceptions shall be
true and correct as of the date of this Agreement and the representations and
warranties of Sellers contained in this Agreement that do not contain
materiality qualifications or exceptions shall be true and correct in all
material respects as of the date of this Agreement, except for those
representations and warranties made as of a specified date, which
representations and warranties shall be true and correct, or true and correct in
all material respects, as applicable, as of such date, (iii) the representations
and warranties of Sellers contained in this Agreement shall be true and correct
at and as of the Closing Date, as if made at and as of such date (without giving
effect to any materiality qualifications or materiality exceptions contained
therein), except for those representations and warranties made as of a specified
date which shall be true and correct as of the date specified (without giving
effect to any materiality qualifications or materiality exceptions contained
therein); provided that this condition (iii) shall be deemed satisfied if any
--------
failures of such representations and warranties to be true and correct at and as
of the Closing Date (without giving effect to any materiality qualifications or
materiality exceptions contained therein) would not, individually or in the
-81-
<PAGE>
aggregate, have or reasonably be expected to have a Material Adverse Effect on
Sellers, WLFP, California Farms or FWRLP other than those resulting from any
change since the date of this Agreement in general economic conditions, and (iv)
Buyer shall have received a certificate, dated the Closing Date, from the chief
executive officer of each Seller that is a corporation and of the general
partner of each Seller that is a limited partnership to the effect that the
foregoing conditions have been satisfied.
(b) Buyer shall have received a certificate, dated as of the Closing Date,
from each of the secretaries or assistant secretaries of Western Farm & Cattle,
as general partner of WFLP, CLCC, as general partner of California Farms, and
GenPar, as general partner of FWRLP, certifying as to the accuracy and
completeness of the attached respective limited partnership agreement; a
certificate, dated as of the Closing Date, from the secretary or assistant
secretary of each of GenPar, Western Farm & Cattle and CLCC certifying as to the
accuracy and completeness of the attached certificate of incorporation and
bylaws and a certificate, dated the Closing Date, from the secretary or
assistant secretary of each Seller that is a corporation and of the general
partner of each Seller that is a limited partnership, as to the accuracy and
completeness of the attached resolutions, consents and authorizations with
respect to the execution and delivery of this Agreement, the Ancillary
Agreements to which such Seller is a party and the transactions contemplated
hereby.
(c) Sellers shall have delivered a certificate to Buyer, dated as of the
Closing Date, that satisfies the requirements of Treasury Regulation (S) 1.1445-
11T(d)(2) (a certificate of non-foreign status).
-82-
<PAGE>
(d) The Ancillary Agreements shall have been executed and delivered and
shall be in full force and effect.
(e) WFLP, California Farms and FWRLP shall have repaid or provided in a
manner satisfactory to Buyer all of their existing indebtedness for borrowed
money in accordance with its terms, provided Buyer with certificates, dated as
of the Closing Date, from the chief financial officer of each of WFLP,
California Farms and FWRLP to the effect that the foregoing condition has been
satisfied and cause all deeds of trust and mortgages relating to the Properties
of WFLP, California Farms and FWRLP to be released.
(f) WFLP, California Farms and FWRLP shall have exercised and closed, or
deposited funds sufficient to permit the exercise and close, of all options to
purchase Properties and agreements to purchase Properties listed on Schedule
10.2.
10.3 FURTHER CONDITIONS TO OBLIGATION OF SELLERS. The obligation of Sellers
-------------------------------------------
to consummate the Acquisition is subject to the satisfaction of the following
further conditions:
(a) (i) Buyer shall have performed in all material respects all of its
respective obligations hereunder required to be performed by it at or prior to
the Closing Date, (ii) the representations and warranties of Buyer contained in
this Agreement that contain materiality qualifications or exceptions shall be
true and correct as of the date of this Agreement and the representations and
warranties of Buyer contained in this Agreement that do not contain materiality
qualifications or exceptions shall be true and correct in all material respects
as of the date of this Agreement, except for those representations and
warranties made as of a specified date, which representations and warranties
shall be true and correct, or true and correct in all material respects, as
applicable, as of such date, (iii) the representations and warranties of Buyer
-83-
<PAGE>
contained in this Agreement shall be true and correct at and as of the Closing
Date, as if made at and as of such date (without giving effect to any
materiality qualifications or materiality exceptions contained therein), except
for those representations and warranties made as of a specified date, which
shall be true and correct as of the date specified (without giving effect to any
materiality qualifications or materiality exceptions contained therein);
provided that this condition (iii) shall be deemed satisfied if any failures of
- --------
any such representations and warranties to be true and correct at and as of the
Closing Date (without giving effect to any materiality qualifications or
materiality exceptions contained therein) would not, individually or in the
aggregate, have or reasonably be expected to have a Material Adverse Effect on
Buyer other than those resulting from any change since the date of this
Agreement in general economic conditions, and (iv) Sellers shall have received a
certificate signed by the chief financial officer of Buyer to the effect that
the foregoing conditions have been satisfied.
(b) Sellers shall have received a certificate, dated as of the Closing
Date, from the secretary or assistant secretary of Buyer certifying as to the
accuracy and completeness of the attached articles of incorporation and bylaws,
and resolutions, consents and authorizations of Buyer with respect to the
execution and delivery of this Agreement and the transactions contemplated
hereby. The Ancillary Agreements shall have been executed and delivered and
shall be in full force and effect.
-84-
<PAGE>
ARTICLE 11
SURVIVAL
11.1 SURVIVAL. (a) Except as provided in Article 9 and in Sections
--------
11.1(b), the covenants, agreements, representations and warranties of the
parties hereto contained in this Agreement shall not survive the Closing;
provided, that the covenants and agreements that, by their terms, are to have
- --------
effect or be performed after the Closing Date shall survive in accordance with
their terms.
(b) Notwithstanding anything to the contrary in Section 11.1(a), and except
as provided in Article 9, the representations and warranties of Sellers made
herein shall survive for a period of one (1) year following the Closing, except
that the representations and warranties of Sellers made in Sections 3.1, 3.2,
3.3 and 3.4 shall survive indefinitely, the representations and warranties of
Sellers made in Section 3.18 shall survive for a period of four years following
the Closing, and the representations and warranties made in Section 8.1 shall
survive until the statute of limitations shall have expired as to the tax
matters set out therein.
ARTICLE 12
TERMINATION
12.1 GROUNDS FOR TERMINATION. This Agreement may be terminated and the
-----------------------
Acquisition may be abandoned at any time prior to the Closing:
(a) by mutual written agreement of Sellers and Buyer;
(b) by Sellers, on one side, or Buyer, on the other side, upon written
notice to the other parties if the Acquisition shall not have been consummated
on or before November 1,
-85-
<PAGE>
1997; provided that the right to terminate this Agreement under this clause (b)
--------
shall not be available to any party whose failure to fulfill any obligation
under this Agreement has been the cause of or has resulted in the failure of the
Acquisition to occur on or before such date; or
(c) by Sellers, on one side, or Buyer, on the other side, if any court of
competent jurisdiction in the United States or any other Governmental Body in
the United States shall have issued an Order or taken any other action
permanently restraining, enjoining or otherwise prohibiting the Acquisition and
such Order or other action shall have become final and nonappealable.
12.2 EFFECT OF TERMINATION. If this Agreement is terminated as permitted
---------------------
by Section 12.1, termination shall be without liability of any party (or any
shareholder, director, officer, employee, agent, consultant or representative of
such party) to any other party to this Agreement, except for payment of costs
and expenses in accordance with Section 13.3 and except that no such termination
shall relieve Buyer of its obligations under Section 6.2; and provided that if
--------
such termination shall result from the willful failure of any party to fulfill a
condition to the performance of the obligations of any other party or to perform
a covenant of this Agreement or from a willful breach by any party to this
Agreement, such party shall be fully liable for any and all damage, loss,
liability and expense (including but not limited to reasonable expenses of
investigation and reasonable attorneys' fees and expenses in connection with any
action, suit or proceeding) incurred or suffered by the other party as a result
of such failure or breach. The provisions of this Section 12.2, Section 13.3
and Section 13.5 shall survive any termination hereof pursuant to Section 12.1.
-86-
<PAGE>
ARTICLE 13
MISCELLANEOUS
13.1 NOTICES. All notices, requests, demands and other communications
-------
hereunder shall be in writing and shall be deemed to have been duly given when
delivered by hand, or when sent by facsimile transmission (with receipt
confirmed by an electronically generated written confirmation), addressed as
follows (or to such other address as a party may designate by notice to the
others):
(a) if to Buyer, to:
United States Filter Corporation
40-004 Cook Street
Palm Desert, CA 92211
Attention: Damian Georgino,
Senior Vice President, General Counsel and Secretary
Fax: 760-346-4024
with a copy to:
LeBoeuf, Lamb, Greene & MacRae, L.L.P.
125 West 55th Street
New York, NY 10019
Attention: Joseph L. Seiler III, Esq.
Fax: 212-424-8500
(b) if to Western Farm & Cattle, to:
Western Farm & Cattle Company
3200 Texas Commerce Bank Tower
Fort Worth, TX 76102
Attention: Ardon Moore
Fax: 817-338-2026
-87-
<PAGE>
with a copy to:
Kelly, Hart & Hallman
2500 Texas Commerce Bank Tower
Fort Worth, TX 76102
Attention: F. Richard Bernasek, Esq.
Fax: 817-878-9280
(c) if to CLCC, to:
California Land & Cattle Co.
3200 Texas Commerce Bank Tower
Fort Worth, TX 76102
Attention: Ardon Moore
Fax: 817-338-2026
with a copy to:
Kelly, Hart & Hallman
2500 Texas Commerce Bank Tower
Fort Worth, TX 76102
Attention: F. Richard Bernasek, Esq.
Fax: 817-878-9280
(d) if to N.N. Investors, to:
N.N. Investors, L.P.
3200 Texas Commerce Bank Tower
Fort Worth, TX 76102
Attention: Ardon Moore
Fax: 817-338-2026
-88-
<PAGE>
with a copy to:
Kelly, Hart & Hallman
2500 Texas Commerce Bank Tower
Fort Worth, TX 76102
Attention: F. Richard Bernasek, Esq.
Fax: 817-878-9280
(e) if to GenPar, to:
ST Ranch GenPar, Inc.
3200 Texas Commerce Bank Tower
Fort Worth, TX 76102
Attention: Ardon Moore
Fax: 817-338-2026
with a copy to:
Kelly, Hart & Hallman
2500 Texas Commerce Bank Tower
Fort Worth, TX 76102
Attention: F. Richard Bernasek, Esq.
Fax: 817-878-9280
(f) if to FWRLP, to:
FW Ranch Partners, L.P.
3200 Texas Commerce Bank Tower
Fort Worth, TX 76102
Attention: Ardon Moore
Fax: 817-338-2026
with a copy to:
Kelly, Hart & Hallman
2500 Texas Commerce Bank Tower
Fort Worth, TX 76102
Attention: F. Richard Bernasek, Esq.
Fax: 817-878-9280
or at such other address or facsimile number for a party as shall be specified
by like notice.
-89-
<PAGE>
13.2 AMENDMENTS AND WAIVERS. (a) Any provision of this Agreement may be
----------------------
amended or waived if, but only if, such amendment or waiver is explicit and in
writing and is signed, in the case of an amendment, by each party to this
Agreement or, in the case of a waiver, by the party against whom the waiver is
to be effective.
(b) No failure or delay by any party in exercising any right, power or
privilege hereunder shall operate as a waiver thereof nor shall any single or
partial exercise thereof preclude any other or further exercise thereof or the
exercise of any other right, power or privilege. Other than as provided herein,
the rights and remedies herein provided shall be cumulative and not exclusive of
any rights or remedies provided by law.
13.3 EXPENSES. Except as otherwise expressly provided herein, the fee for
--------
filing an application pursuant to the HSR Act and all other costs and expenses
incurred in connection with this Agreement and the Ancillary Agreements,
including all brokers', finders', agents' investment advisory or similar fees,
shall be paid by the party incurring or responsible for incurring such cost or
expense.
13.4 SUCCESSORS AND ASSIGNS. The provisions of this Agreement shall be
----------------------
binding upon and inure to the benefit of the parties hereto and their respective
successors and assigns; provided that, except as provided in Section 2.1, no
--------
party may assign, delegate or otherwise transfer any of its rights or
obligations under this Agreement without the consent of each other party hereto.
13.5 GOVERNING LAW; SUBMISSION TO JURISDICTION.
------------------------------------------
(a) This Agreement shall be governed by, and construed in accordance with,
the laws of the State of Delaware applicable to contracts executed in and to be
performed in that state.
-90-
<PAGE>
(b) Any action, suit or proceeding where the amount in controversy as to at
least one party, exclusive of interest and costs, exceeds U.S. $1,000,000 (a
"Summary Proceeding"), arising out of or relating to this Agreement or the
breach, termination or validity thereof, shall be litigated exclusively in the
Superior Court of the State of Delaware (the "Delaware Superior Court") as a
summary proceeding pursuant to rules 124-131 of the Delaware Superior Court, or
any successor rules (the "Summary Proceeding Rules"). Each of the parties
hereto hereby irrevocably and unconditionally (i) submits to the jurisdiction of
the Delaware Superior Court for any Summary Proceeding, (ii) agrees not to
commence any Summary Proceeding except in the Delaware Superior Court, (iii)
waives, and agrees not to plead or to make, any objection to the venue of any
Summary Proceeding in the Delaware Superior Court, (iv) waives, and agrees not
to plead or to make, any claim that any Summary Proceeding brought in the
Delaware Superior Court has been brought in an improper or otherwise
inconvenient forum, (v) waives, and agrees not to plead or to make, any claim
that the Delaware Superior Court lacks personal jurisdiction over it, (vi)
waives its right to remove any Summary Proceeding to the federal courts except
where such courts are vested with sole and exclusive jurisdiction by statute,
and (vii) understands and agrees that it shall not seek a jury trial or punitive
damages in any Summary Proceeding based upon or arising out of or otherwise
related to this Agreement and waives any and all rights to any such jury trial
or to seek punitive damages.
(c) In the event any action, suit or proceeding where the amount in
controversy as to at least one party, exclusive of interest and costs, does not
exceed U.S. $1,000,000 (a "Proceeding"), arising out of or relating to this
Agreement or the breach, termination or validity thereof is brought, the parties
to such Proceeding agree to make application to the Delaware
-91-
<PAGE>
Superior Court to proceed under the Summary Proceeding Rules. Until such time as
such application is rejected, such Proceeding shall be treated as a Summary
Proceeding and all of the foregoing provisions of this Section 13.5 relating to
Summary Proceeding shall apply to such Proceeding.
13.6 COUNTERPARTS. This Agreement may be signed in any number of
------------
counterparts, each of which shall be an original, but all of which together
shall constitute one instrument. Each counterpart may consist of a number of
copies each signed by less than all, but together signed by all, the parties
hereto.
13.7 NO THIRD PARTY BENEFICIARIES. No provision of this Agreement is
----------------------------
intended to confer upon any Person other than the parties hereto any rights or
remedies hereunder, except for the indemnification provisions contained in
Articles 8 and 9, which provisions may be enforced by the parties to be
indemnified thereunder.
13.8 ENTIRE AGREEMENT. This Agreement (together with all Exhibits and
----------------
Schedules hereto which are incorporated herein by reference), the
Confidentiality Agreement and the Ancillary Agreements constitute the entire
agreement among the parties with respect to the subject matter hereof and
thereof and supersede all prior agreements and understandings, both oral and
written, among the parties with respect to such subject matter. No
representation, inducement, promise, understanding, condition or warranty not
set forth herein has been made or relied upon by any party hereto.
13.9 INVALID PROVISIONS. If any provision of this Agreement is held to be
------------------
illegal, invalid or unenforceable under any present or future law or order, and
if the rights or obligations of any party hereto under this Agreement will not
be materially and adversely affected thereby,
-92-
<PAGE>
(a) such provision will be fully severable, (b) this Agreement will be construed
and enforced as if such illegal, invalid or unenforceable provision had never
comprised a part hereof, and (c) the remaining provisions of this Agreement will
remain in full force and effect and will not be affected by the illegal, invalid
or unenforceable provision or by its severance herefrom.
13.10 CONSTRUCTION. Whenever the context may require, any pronoun used in
------------
this Agreement shall include the corresponding masculine, feminine or neuter
forms, and the singular form of nouns, pronouns and verbs shall include the
plural and vice versa. The name assigned this Agreement and the section
captions used herein are for convenience of reference only and shall not affect
the interpretation and construction hereof. Unless otherwise specified, (a) the
terms "hereof," "herein" and similar terms refer to this Agreement as a whole
and (b) references herein to Articles, Sections, Schedules or Exhibits refer to
articles or sections of or schedules or exhibits to this Agreement. This
Agreement is the result of arms-length negotiations among the parties hereto and
has been prepared jointly by the parties. In applying and interpreting the
provisions of this Agreement, there shall be no presumption that the Agreement
was prepared by any one party or that this Agreement shall be construed in favor
of or against any one party.
13.11 SPECIFIC PERFORMANCE. The parties acknowledge that money damages
--------------------
are not an adequate remedy for violations of this Agreement and that any party
may, in its sole discretion, apply to a court of competent jurisdiction for
specific performance or injunctive or such other relief as such court may deem
just and proper in order to enforce this Agreement or to prevent any violation
hereof, this remedy being in addition to any other remedy to which it is
entitled at law or in equity. To the extent permitted by applicable law, each
party waives any objection to the imposition of such relief.
-93-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective authorized officers as of the date first above
written.
WESTERN FARM & CATTLE COMPANY
By:
________________________________
Name:
Title:
CALIFORNIA LAND & CATTLE COMPANY
By:
________________________________
Name:
Title:
N.N. INVESTORS, L.P.
By: California Land & Cattle Company,
its general partner
By:
________________________________
Name:
Title:
ST RANCH GENPAR, INC.
By:
________________________________
Name:
Title:
FW RANCH PARTNERS, L.P.
By: ST Ranch GenPar, Inc.,
its general partner
By:
________________________________
Name:
Title:
-94-
<PAGE>
UNITED STATES FILTER CORPORATION
By: _______________________________
Name:
Title:
-95-
<PAGE>
(c) SCHEDULE 2.1
Allocation of Buyer Stock and Warrants
<TABLE>
<CAPTION>
SELLER NAME PERCENTAGE BUYER STOCK * WARRANTS
----------- ---------- ------------ --------
- -------------------------------------------------------------------
<S> <C> <C> <C>
(c) GenPar 0.072% 5,760 864
- -------------------------------------------------------------------
FW Ranch 7.128% 570,240 85,536
- -------------------------------------------------------------------
Western Farm & Cattle 0.928% 74,240 11,136
- -------------------------------------------------------------------
CLCC 0.91872% 73,498 11,025
- -------------------------------------------------------------------
N.N. Investors 90.95328% 7,276,262 1,091,439
- -------------------------------------------------------------------
</TABLE>
* Assumes Stock Consideration of 8,000,000 shares of common stock.
-96-
<PAGE>
EXHIBIT 99.1
NEWS RELEASE
40-004 COOK STREET
PALM DESERT, CA 92211
(760) 340-0098
FOR FURTHER INFORMATION
CONTACT: DORRIE B. OSBORNE
(760) 340-0098
UNITED STATES FILTER CORPORATION
ANNOUNCES RECORD FIRST QUARTER EPS
OF $0.26 VS. $0.15 AND THE ACQUISITION OF
THE PROPERTY AND WATER RIGHTS IN CALIFORNIA
AND THE SOUTHWEST OWNED BY BASS ENTITIES
PALM DESERT, CALIFORNIA, August 4, 1997 - United States Filter Corporation
(NYSE:USF) announced record results for its fiscal first quarter ended June 30,
1997, as well as the acquisition of approximately 50,000 acres of land and water
rights in the Southwest from entities, including Western Farms, L.P., owned by
members of the Bass family of Fort Worth, Texas, in exchange for U.S. Filter
common stock and warrants.
First Quarter revenues were $598,234,000 up 168% from $222,958,000 for last
year's first quarter, net income was $20,726,000 up 169% from $7,694,000 for the
same period a year ago. Earnings per share were $0.26 vs. $0.15, a 73% increase
over the same period last year. The weighted average number of shares
outstanding grew 57% to 80,653,000 from 51,480,000 last year. Backlog was a
record $719,392,000 up from $228,232,000 for the same period last year and
$644,535,000 in the fourth quarter of last fiscal year, ended March 31, 1997.
The land acquired in exchange for Company stock and warrants includes
approximately 45,000 acres in the Imperial Valley of California and more than
5,000 acres in other parts of the Southwestern United States. Along with the
land, U.S. Filter acquired the associated water rights to approximately 250,000
acre feet per year of water usage, most of which are Colorado River water
rights, through the Imperial Irrigation District (IID) of California.
In exchange, the Bass entities will receive 8,000,000 common shares of U.S.
Filter and warrants to acquire another 1.2 million shares of U.S. Filter stock.
As to the warrants, 600,000 will be exercisable at $50.00 per USF share and
600,000 will be exercisable at $60.00 per share of USF stock, subject to certain
conditions. The Bass entities have agreed not to exercise their demand
registration rights on the acquired U.S. Filter stock until the year 2000. In
addition, the Bass entities will receive a Board seat on the Company's Board of
Directors. The Company indicated that rental income from agricultural use of
the acquired property is sufficient to make the transaction non-dilutive.
"We think U.S. Filter is uniquely qualified to take advantage of the tremendous
assets being acquired in this transaction," said Richard J. Heckmann, Chairman,
President and CEO of U.S. Filter. "We now add the most important product the
water to our one-stop shop business strategy. Importantly, we are also adding a
major new customer segment agriculture one which we believe we can serve in
many ways."
<PAGE>
"We have the most complete array of technologies for the distribution,
transportation, treatment, recovery, recycle and reuse of the massive amounts of
water that will be necessary for the Southwestern United States to continue to
grow. Our ability to treat and conserve the agriculture drainage from the
Imperial Valley and other areas should open up many new possibilities for the
`win-win' transfer of conserved water. Our goal is to serve as a partner of
agriculture in saving water; farming more efficiently and providing the
necessary treatment needed to ensure that conservation measures are good for the
environment.
"These land and water assets, added to our already formidable balance sheet,
position us to provide all of the products and services required by our
industrial, commercial, agricultural, residential and municipal customers,"
Heckmann said. "We have long believed that the most important ingredient in the
global growth of industries and municipalities will be water. We look forward
to working with Imperial Valley farmers and the IID in pursuing the much-needed
conservation programs already underway. This is a great way to bring much-
needed capital investment into the Imperial Valley economy and to preserve their
tremendous agricultural heritage, " he said.
Ardon Moore, President of Western Farms, L.P., the principal entity for these
Bass holdings, stated, "We see this transaction much more than an exchange of
land for shares. It represents a merger of the largest agricultural land owner
in the area with the largest business enterprise in the Southern California
desert area; a new partnership that we see as the perfect way to continue our
focus on helping the Imperial Valley strengthen its agriculture economy while
providing reliable and more affordable water supplies to urban areas. I can't
think of a better partner for pursuing this vision than U.S. Filter. Perhaps
most important, U.S. Filter shares our vision for helping agriculture meet its
water conservation challenges in a way that benefits the farm economy and the
environment."
With annualized revenues of over $2.3 billion, U.S. Filter is the leading global
provider of water and wastewater treatment equipment, systems and services. With
corporate offices in Palm Desert, California, U.S. Filter services its customers
and substantial installed base of systems through its worldwide network of more
than 495 sales and service facilities, including 65 manufacturing plants. In
addition, U.S. Filter is the leading international provider of service
deionization and outsourced water services, including the operation of water and
wastewater treatment systems at customer sites. U.S. Filter invites you to
visit its Web site at http://www.usfilter.com.
------------------------
####
<PAGE>
UNITED STATES FILTER CORPORATION
AND SUBSIDIARIES
CONSOLIDATED INCOME STATEMENTS
June 30, 1997
(Unaudited)
<TABLE>
<CAPTION>
Three Three
Months Ended Months Ended
June 30, June 30,
1997 1996
------------ ------------
(in thousand, except per share data)
<S> <C> <C>
Revenues $598,234 222,958
Cost of sales 450,427 163,808
-------- -------
Gross profit 147,807 59,152
Selling, general and
administrative expenses 109,351 44,481
-------- -------
Operating income 38,456 14,671
Other income (expense):
Interest expense (8,859) (4,536)
Other 925 602
-------- -------
(7,934) (3,934)
-------- -------
Income before income taxes 30,522 10,737
Income taxes 9,796 3,043
-------- -------
Net income $ 20,726 7,694
======== =======
Net income per common share $ 0.26 0.15
======== =======
Weighted average number of
shares outstanding 80,553 51,480
</TABLE>
