<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No. ____)*
AgriBioTech, Inc.
- --------------------------------------------------------------------------------
(Name of Issuer)
Common Stock $.001 par value per share
- --------------------------------------------------------------------------------
(Title of Class of Securities)
008494-10-6
- --------------------------------------------------------------------------------
(CUSIP Number)
Gerald L. Chrisco
Budd Services, Inc.
2325 South Stratford Road
Winston-Salem, NC 27103
(910) 659-5040
- --------------------------------------------------------------------------------
(Name, Address and Telephone Number of Person Authorized to Receive Notices and
Communications)
December 1, 1997
- --------------------------------------------------------------------------------
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1(b)(3) or (4), check the following box [_].
Note: Six copies of this statement, including all exhibits, should be filed with
the Commission. See Rule 13d-1(a) for the other parties to whom copies are to be
sent.
* The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities, and
for any subsequent amendment containing information which would alter
disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be deemed
to be "filed" for the purpose of Section 18 of the Securities Exchange Act of
1934 ("Act") or otherwise subject to the liabilities of that section of the Act
but shall be subject to all other provisions of the Act (however, see the
Notes).
<PAGE> 2
Page 2 of 12
CUSIP No. 008494-10-6
- ------------------------------------------------------------------------------
1) Names of Reporting Persons: John D. Budd
I.R.S. Identification Nos. of Above Persons (entities only):
- ------------------------------------------------------------------------------
2) Check the Appropriate Box if a Member of a Group (See Instructions)
(a) [x]
(b) [_]
- ------------------------------------------------------------------------------
3) SEC Use Only
- ------------------------------------------------------------------------------
4) Source of Funds (See Instructions): OO
- ------------------------------------------------------------------------------
5) Check if Disclosure of Legal Proceedings is Required Pursuant to Items
2(d) or 2(e): [_]
- ------------------------------------------------------------------------------
6) Citizenship or Place of Organization: United States
- ------------------------------------------------------------------------------
Number of (7) Sole Voting Power: 388,586
Shares -------------------------------------------------------------
(8) Shared Voting Power: 64,925
Beneficially
-------------------------------------------------------------
Owned by (9) Sole Dispositive Power: 388,586
Each Reporting ------------------------------------------------------------
(10) Shared Dispositive Power: 64,925
Person With
- ------------------------------------------------------------------------------
11) Aggregate Amount Beneficially Owned by Each Reporting Person: 453,511
- ------------------------------------------------------------------------------
12) Check if the Aggregate Amount in Row (11) Excludes Certain Shares (See
Instructions): [_]
- ------------------------------------------------------------------------------
13) Percent of class Represented by Amount in Row (11): 1.6%
- ------------------------------------------------------------------------------
14) Type of Reporting Person (See Instructions): IN
- ------------------------------------------------------------------------------
<PAGE> 3
Page 3 of 12
CUSIP No. 008494-10-6
- -------------------------------------------------------------------------------
1) Names of Reporting Persons: Joseph R. Budd
Identification Nos. of Above Persons (entities only):
- -------------------------------------------------------------------------------
2) Check the Appropriate Box if a Member of a Group (See Instructions)
(a)[x]
(b)[_]
- -------------------------------------------------------------------------------
3) SEC Use Only
- -------------------------------------------------------------------------------
4) Source of Funds (See Instructions): OO
- -------------------------------------------------------------------------------
5) Check if Disclosure of Legal Proceedings is Required Pursuant to Items
2(d) or 2(e): [_]
- -------------------------------------------------------------------------------
6) Citizenship or Place of Organization: United States
- -------------------------------------------------------------------------------
Number of (7) Sole Voting Power: 270,519
Shares -------------------------------------------------------------
(8) Shared Voting Power: 64,925
Beneficially
-------------------------------------------------------------
Owned by (9) Sole Dispositive Power: 270,519
Each Reporting -------------------------------------------------------------
(10) Shared Dispositive Power: 64,925
Person With
- -------------------------------------------------------------------------------
11) Aggregate Amount Beneficially Owned by Each Reporting Person: 335,444
- -------------------------------------------------------------------------------
12) Check if the Aggregate Amount in Row (11) Excludes Certain Shares (See
Instructions): [_]
- -------------------------------------------------------------------------------
13) Percent of class Represented by Amount in Row (11): 1.2%
- -------------------------------------------------------------------------------
14) Type of Reporting Person (See Instructions): IN
- -------------------------------------------------------------------------------
<PAGE> 4
Page 4 of 12
CUSIP No. 008494-10-6
- -------------------------------------------------------------------------------
1) Names of Reporting Persons: Kenneth R. Budd
Identification Nos. of Above Persons (entities only):
- -------------------------------------------------------------------------------
2) Check the Appropriate Box if a Member of a Group (See Instructions)
(a) [x]
(b) [_]
- -------------------------------------------------------------------------------
3) SEC Use Only
- -------------------------------------------------------------------------------
4) Source of Funds (See Instructions): OO
- -------------------------------------------------------------------------------
5) Check if Disclosure of Legal Proceedings is Required Pursuant to Items
2(d) or 2(e): [_]
- -------------------------------------------------------------------------------
6) Citizenship or Place of Organization: United States
- -------------------------------------------------------------------------------
Number of (7) Sole Voting Power: 201,052
Shares -------------------------------------------------------------
(8) Shared Voting Power: None
Beneficially
-------------------------------------------------------------
Owned by (9) Sole Dispositive Power: 201,052
Each Reporting -------------------------------------------------------------
(10) Shared Dispositive Power: None
Person With
- -------------------------------------------------------------------------------
11) Aggregate Amount Beneficially Owned by Each Reporting Person: 201,052
- -------------------------------------------------------------------------------
12) Check if the Aggregate Amount in Row (11) Excludes Certain Shares (See
Instructions): [_]
- -------------------------------------------------------------------------------
13) Percent of class Represented by Amount in Row (11): 0.7%
- -------------------------------------------------------------------------------
14) Type of Reporting Person (See Instructions): IN
- -------------------------------------------------------------------------------
<PAGE> 5
Page 5 of 12
CUSIP No. 008494-10-6
- -------------------------------------------------------------------------------
1) Names of Reporting Persons: Richard P. Budd
Identification Nos. of Above Persons (entities only):
- -------------------------------------------------------------------------------
2) Check the Appropriate Box if a Member of a Group (See Instructions)
(a) [x]
(b) [_]
- -------------------------------------------------------------------------------
3) SEC Use Only
- -------------------------------------------------------------------------------
4) Source of Funds (See Instructions): OO
- -------------------------------------------------------------------------------
5) Check if Disclosure of Legal Proceedings is Required Pursuant to Items
2(d) or 2(e): [_]
- -------------------------------------------------------------------------------
6) Citizenship or Place of Organization: United States
- -------------------------------------------------------------------------------
Number of (7) Sole Voting Power: 719,351
Shares -------------------------------------------------------------
(8) Shared Voting Power: None
Beneficially
-------------------------------------------------------------
Owned by (9) Sole Dispositive Power: 719,351
Each Reporting -------------------------------------------------------------
(10) Shared Dispositive Power: None
Person With
- -------------------------------------------------------------------------------
11) Aggregate Amount Beneficially Owned by Each Reporting Person: 719,351
- -------------------------------------------------------------------------------
12) Check if the Aggregate Amount in Row (11) Excludes Certain Shares (See
Instructions): [_]
- -------------------------------------------------------------------------------
13) Percent of class Represented by Amount in Row (11): 2.6%
- -------------------------------------------------------------------------------
14) Type of Reporting Person (See Instructions): IN
- -------------------------------------------------------------------------------
<PAGE> 6
Page 6 of 13
CUSIP No. 008494-10-6
- -------------------------------------------------------------------------------
1) Names of Reporting Persons: Theodore P. Budd
Identification Nos. of Above Persons (entities only):
- -------------------------------------------------------------------------------
2) Check the Appropriate Box if a Member of a Group (See Instructions)
(a) [x]
(b) [_]
- -------------------------------------------------------------------------------
3) SEC Use Only
- -------------------------------------------------------------------------------
4) Source of Funds (See Instructions): OO
- -------------------------------------------------------------------------------
5) Check if Disclosure of Legal Proceedings is Required Pursuant to
Items 2(d) or 2(e): [_]
- -------------------------------------------------------------------------------
6) Citizenship or Place of Organization: United States
- -------------------------------------------------------------------------------
Number of (7) Sole Voting Power: 270,519
Shares -------------------------------------------------------------
(8) Shared Voting Power: 64,925
Beneficially
-------------------------------------------------------------
Owned by (9) Sole Dispositive Power: 270,519
Each Reporting -------------------------------------------------------------
(10) Shared Dispositive Power: 64,925
Person With
- -------------------------------------------------------------------------------
11) Aggregate Amount Beneficially Owned by Each Reporting Person: 335,444
- -------------------------------------------------------------------------------
12) Check if the Aggregate Amount in Row (11) Excludes Certain Shares (See
Instructions): [_]
- -------------------------------------------------------------------------------
13) Percent of class Represented by Amount in Row (11): 1.2%
- -------------------------------------------------------------------------------
14) Type of Reporting Person (See Instructions): IN
- -------------------------------------------------------------------------------
<PAGE> 7
Page 7 of 12
CUSIP No. 008494-10-6
- --------------------------------------------------------------------------------
1) Names of Reporting Persons I.R.S.: Gerald L. Chrisco
Identification Nos. of Above Persons (entities only):
- --------------------------------------------------------------------------------
2) Check the Appropriate Box if a Member of a Group (See Instructions)
(a) [x]
(b) [_]
- --------------------------------------------------------------------------------
3) SEC Use Only
- --------------------------------------------------------------------------------
4) Source of Funds (See Instructions): OO
- --------------------------------------------------------------------------------
5) Check if Disclosure of Legal Proceedings is Required Pursuant to
Items 2(d) or 2(e): [_]
- --------------------------------------------------------------------------------
6) Citizenship or Place of Organization: United States
- --------------------------------------------------------------------------------
Number of (7) Sole Voting Power: 84,447
Shares --------------------------------------------------------------
(8) Shared Voting Power: None
Beneficially
--------------------------------------------------------------
Owned by (9) Sole Dispositive Power: 84,447
Each Reporting --------------------------------------------------------------
(10) Shared Dispositive Power: None
Person With
- --------------------------------------------------------------------------------
11) Aggregate Amount Beneficially Owned by Each Reporting Person: 84,447
- --------------------------------------------------------------------------------
12) Check if the Aggregate Amount in Row (11) Excludes Certain Shares
(See Instructions): [_]
- --------------------------------------------------------------------------------
13) Percent of class Represented by Amount in Row (11): 0.3%
- --------------------------------------------------------------------------------
14) Type of Reporting Person (See Instructions): IN
- --------------------------------------------------------------------------------
<PAGE> 8
Page 8 of 12
ITEM 1. SECURITY AND ISSUER.
This statement on Schedule 13D (the "Statement") relates to
shares of common stock, par value $0.001 per share (the "Common Stock"), of
AgriBioTech, Inc., a Nevada corporation (the "Issuer"). The principal executive
offices of the Issuer are located at 2700 Sunset Road, Suite C-25, Las Vegas,
Nevada 89120.
ITEM 2. IDENTITY AND BACKGROUND.
The information required to be disclosed about each member of
the group (a "Reporting Party" and, collectively, the "Reporting Parties")
appears on Schedule I hereto. The Reporting Parties constitute a group because,
pursuant to the Merger Agreement (defined below), they have agreed to execute
the Lock-Up Agreement (defined below) which restricts their ability to dispose
of the Common Stock they have the right to acquire pursuant to the Merger
Agreement.
ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
Each of the purchases described in this Statement will be made
as part of the Agreement and Plan of Reorganization (the "Merger Agreement"),
dated as of December 1, 1997, between and among the Issuer, Lofts Seed, Inc.
("Lofts Seed"), Budd Seed, Inc. ("Budd Seed"), Lofts Mergerco, Inc. ("Lofts
Mergerco") and the shareholders of Lofts Seed and Budd Seed (the
"Shareholders"). All of the Reporting Parties are Shareholders. A copy of the
Merger Agreement is appended hereto as Exhibit A.
Pursuant to the Merger Agreement, Budd Seed and Lofts Seed
(collectively, the "Acquired Companies") will each merge into Lofts Mergerco, a
wholly-owned subsidiary of the Issuer, unless Lofts Seed and Budd Seed have
previously merged with each other in which case the combined entity (and all of
their prior subsidiaries) would merge into Lofts Mergerco (the "Merger"). Lofts
Mergerco will be the surviving party following the Merger and will remain a
wholly-owned subsidiary of the Issuer. In consideration of the Merger, the
Shareholders will receive consideration (the "Merger Consideration") based on
aggregate consideration equal to $34,000,000 (the "Model Merger Consideration"),
which amount is subject to adjustment as described below. The Model Merger
Consideration will consist of (a) 2,000,000 shares of the Common Stock, valued
by the parties at $8.50 per share (subject to adjustment as provided below) and
(b) $17,000,000 in cash. The Model Merger Consideration will be adjusted as
follows. First, there will either be added to the Model Merger Consideration the
amount by which the Closing Working Capital (defined in the Merger Agreement)
exceeds $15,161,000, or subtracted therefrom the amount by which $15,161,000
exceeds the Closing Working Capital. Then, there will either be added to the
Model Merger Consideration the amount by which the $12,213,000 exceeds the
Closing Debt (defined in the Merger Agreement), or subtracted therefrom the
amount by which the Closing Debt exceeds $12,213,000. The aggregate amount
determined by applying the preceding adjustments (the "Adjustments") will be the
Merger Consideration.
Any adjustment to the Model Merger Consideration to determine
the Merger Consideration will be made in the form of cash. In the event,
however, that the aggregate value of the number of shares of Common Stock
(valued at $8.50 per share) comprising the Merger Consideration does not equal
at least 43% of the total Merger Consideration, the number of shares of Common
Stock shall be increased such that aggregate value of the Common Stock
constitutes at least 43% of the Merger Consideration. All of such additional
shares of Common Stock will be valued at the average closing price of Common
Stock for the five consecutive trading days preceding the date of such
adjustment.
The Merger Consideration will be allocated as follows (i)
83.18% to the shareholders of Lofts Seed and (ii) 16.82% to the shareholders of
Budd Seed. Each Shareholder will receive a predetermined percentage of the
Merger Consideration.
<PAGE> 9
PAGE 9 OF 12
For the purposes of the Closing (defined below), the Acquired
Companies will prepare and deliver a Preliminary Statement of Merger
Consideration based on the Acquired Companies' November 30, 1997 unaudited
financial statements giving effect to the estimated operation of the Acquired
Companies during December 1997. The Preliminary Statement of Merger
Consideration will use the Adjustments in calculating the Merger Consideration
in order to calculate the preliminary merger consideration (the "Preliminary
Merger Consideration") to be delivered to the Shareholders at the closing on
January 5, 1998 (the "Closing"). At Closing, the Issuer will deliver 90% of the
Preliminary Merger Consideration to the Shareholders. The remainder of the
Preliminary Merger Consideration will be held in a trust account pending final
determination of the Merger Consideration which will be determined as provided
below. Upon final determination of the Merger Consideration, the reminder of
the Merger Consideration will be delivered to the Shareholders.
By January 30, 1998, Lofts Mergerco will prepare a Final
Statement of Merger Consideration as of December 31, 1997 setting forth the
final computation of the Merger Consideration. The parties to the Merger
Agreement will have 30 days to review the audited financial statements of the
Acquired Companies as of November 30, 1997 and for the period then ended and
Final Statement of Merger Consideration, and to object, if so desired. If no
objection is filed, as soon as practicable following the close of such 30-day
period, the remainder of the Merger Consideration, if any, will be distributed
to the Shareholders (the "Final Statement"). A portion of the Merger
Consideration, in cash and/or in Common Stock, may be escrowed for the purpose
of satisfying claims under the Merger Agreement. The escrow will terminate the
following mutual resolution and satisfaction of any claims, and the proceeds
therefrom will be distributed to the Shareholders.
ITEM 4. PURPOSE OF TRANSACTION.
Each Reporting Person has acquired beneficial ownership of
shares of Common Stock for investment purposes only. Each Reporting Person
reserves the right to make occasional purchases and sales of Common Stock from
time to time in observance of the limitations contained in the Lock-Up
Agreement.
ITEM 5. INTEREST IN SECURITIES OF THE ISSUER
(a) According to the terms of the Merger Agreement, the
Reporting Parties have the right to acquire, upon the Closing and Final
Settlement as provided in the Merger Agreement, an aggregate of approximately
2,000,000 shares of Common Stock which will be equivalent to approximately 7.1%
of the outstanding shares of Common Stock. The exact aggregate amount of shares
of Common Stock the Reporting Parties will acquire pursuant to the Merger
Agreement may be adjusted as described in Item 3 above.
The following table indicates the aggregate number and
percentage of the Common Stock each Reporting Party beneficially owns as of the
date of this Statement:
<TABLE>
<CAPTION>
NAME OF REPORTING NUMBER OF SHARES OF COMMON PERCENTAGE OF OUTSTANDING
PARTY STOCK BENEFICIALLY OWNED COMMON STOCK
<S> <C> <C>
John D. Budd 453,511 1.6%
Joseph R. Budd 355,444 1.2%
Kenneth R. Budd 201,052 0.7%
Richard P. Budd 719,351 2.6%
Theodore P. Budd 335,444 1.2%
</TABLE>
<PAGE> 10
Page 10 of 12
<TABLE>
<CAPTION>
NAME OF REPORTING NUMBER OF SHARES OF COMMON PERCENTAGE OF OUTSTANDING
PARTY STOCK BENEFICIALLY OWNED COMMON STOCK
<S> <C> <C>
Gerald L. Chrisco 84,447 0.3%
</TABLE>
(b) The following table indicates the number of shares of
Common Stock with respect to which each Reporting Party will, upon the Closing
and Final Settlement has provided in the Merger Agreement, have sole and shared
voting and dispositive power:
<TABLE>
<CAPTION>
NUMBER OF SHARES OF COMMON STOCK
---------------------------------------------------------------------------
SOLE POWER SHARED POWER TO
NAME OF SOLE POWER TO SHARED POWER TO DISPOSE OR DISPOSE OR TO
REPORTING VOTE OR TO TO VOTE OR TO TO DIRECT THE DIRECT THE
PARTY DIRECT TO VOTE DIRECT TO VOTE DISPOSITION DISPOSITION
<S> <C> <C> <C> <C>
John D. Budd 388,586 64,925(1) 388,586 64,925(1)
Joseph R. Budd 270,519 64,925(1) 270,519 64,925(1)
Kenneth R. Budd 201,052(2) 0 201,052(2) 0
Richard P. Budd 719,351 0 719,351 0
Theodore P. Budd 270,519 64,925(1) 270,519 64,925(1)
Gerald L. Chrisco 84,447 0 84,447 0
</TABLE>
- ------------------
(1) Represents shares held of record by the Richard P. Budd Irrevocable Living
Trust U/A dated September 13, 1997 (the "Trust"). John D. Budd, Joseph R.
Budd and Theodore P. Budd, as trustees of the Trust, will, upon the Closing
and Final Settlement as provided in the Merger Agreement, have shared power,
with each other, to vote and to control the disposition of such shares. The
agreement governing the Trust is silent as to the voting and disposition
rights of the trustees with respect to the Common Stock. North Carolina law
provides that, unless otherwise provided in a trust agreement, where a trust
has more than two trustees the approval of a majority of the trustees is
required with respect to the voting and disposition of securities held by
the trust. Accordingly, each of the trustees has shared power to direct the
vote of, and to direct the disposition of, shares of Common Stock held by
the Trust.
(2) Includes 17,052 shares to be held by Kenneth R. Budd as Custodian for his
minor children, Elizabeth Budd and Ryan Budd, pursuant to the North Carolina
Uniform Transfer to Minors Act.
(c) Apart from the acquisitions described in this Statement,
none of the Reporting Parties has effected any transactions in Common Stock
during the past 60 days.
<PAGE> 11
Page 11 of 12
(d) Once the Common Stock is distributed to the Shareholders
as provided in the Merger Agreement, the Trust will have the right to receive
dividends from, and the proceeds from the sale of, 64,925 shares of Common Stock
which are part of the corpus of the Trust.
(e) Not applicable.
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH
RESPECT TO SECURITIES OF THE ISSUER.
Merger Agreement
Each of the Reporting Parties is a party to the Merger
Agreement. The description of the Merger Agreement contained in Item 3 and in
this Item 6 covers only certain elements of the Merger Agreement and is
qualified in its entirety by reference to the complete text of the Merger
Agreement appended hereto as Exhibit A and incorporated herein by reference.
Lock-Up Agreement
Pursuant to the Merger Agreement, upon the Closing, the
Reporting Parties will enter into a Lock-Up Agreement with the Issuer (the
"Lock-Up Agreement"), the form of which is appended as Exhibit B hereto. The
form of the Lock-Up Agreement prohibits each of the Shareholders, including each
of the Reporting Parties, during the period (the "No Sale Period") commencing on
the effective date of the Merger and ending on the earlier of (a) six months
from the date of the closing of an underwritten public offering of Common Stock
or (b) August 1, 1998, from offering, selling, transferring or otherwise
disposing of the shares of Common Stock without the prior written consent of the
Issuer. Thereafter, for a period of two years (the "Sale Period"), shares of
Common Stock may be sold by all Shareholders in the public over-the-counter
market in amounts not to exceed, in the aggregate, 94,000 shares of Common Stock
per month, 21,000 shares of Common Stock per week or 7,000 shares of Common
Stock per day. The Lock-Up Agreement also prohibits each Shareholder from
engaging in a short sale of Common Stock prior to the expiration of the Sale
Period.
In the event that any Shareholder offers, sells, transfers or
otherwise disposes of Common Stock in violation of the Lock-Up Agreement, the
Issuer shall be entitled to all gross proceeds received by such Shareholder from
all sales of Common Stock above $8.50 per share on such sales and on all sales
by such Shareholder before and after such default. The Lock-Up Agreement
requires the Shareholders to coordinate sales among themselves to avoid
exceeding the limitations set forth above; however, a violation of the Lock-Up
Agreement by any Shareholder does not constitute a violation of the Lock-Up
Agreement by all Shareholders, i.e., the liability of the Shareholders to the
Issuer under the Lock-Up Agreement is several and not joint.
Any shares of Merger Common Stock that are not sold during the
Sale Period will become eligible for sale beginning two years from the date the
No Sale Period expires in such quantities as the Shareholders desire.
ITEM 7. MATERIAL TO BE FILED AS EXHIBITS.
Exhibit A Agreement and Plan of Reorganization,
dated as of December 1, 1997, by and among
AgriBioTech, Inc., Lofts Seed, Inc., Budd
Seed, Inc., Lofts Mergerco, Inc. and the
shareholders of Lofts Seed, Inc. and Budd
Seed, Inc.
Exhibit B Form of Lock-up Agreement to be executed
by and among AgriBioTech, Inc. and the
shareholders of Lofts Seed, Inc. and Budd
Seed, Inc.
<PAGE> 12
Page 12 of 12
Exhibit C Agreement dated December 10, 1997, by and
among John D. Budd, Joseph R. Budd, Kenneth
R. Budd, Richard P. Budd, Theodore P. Budd
and Gerald L. Chrisco.
SIGNATURE
After reasonable inquiry and to the best of my knowledge and
belief, I certify that the information set forth in this statement is true,
complete and correct.
Date: December 10, 1997
/s/ John D. Budd
----------------------------------------------
John D. Budd
/s/ Joseph R. Budd
----------------------------------------------
Joseph R. Budd
/s/ Kenneth R. Budd
----------------------------------------------
Kenneth R. Budd
/s/ Richard P. Budd
----------------------------------------------
Richard P. Budd
/s/ Theodore P. Budd
----------------------------------------------
Theodore P. Budd
/s/ Gerald L. Chrisco
----------------------------------------------
Gerald L. Chrisco
ATTENTION: INTENTIONAL MISSTATEMENTS OR OMISSIONS OF FACT
CONSTITUTE FEDERAL CRIMINAL VIOLATIONS (See 18 U.S.C. 1001).
<PAGE> 13
SCHEDULE I
<TABLE>
<CAPTION>
Name Business Address Employment Information
- ----------------- ------------------------- -----------------------------
<S> <C> <C>
John D. Budd 2325 South Stratford Road Salesperson, Budd Seed, Inc.*
Winston-Salem, NC 27103
Joseph R. Budd 2325 South Stratford Road President, Budd Services, Inc.*
Winston-Salem, NC 27103
Kenneth R. Budd 2325 South Stratford Road President, Lofts Seed, Inc.*
Winston-Salem, NC 27103
Richard P. Budd 2325 South Stratford Road Chief Executive Officer, Budd
Winston-Salem, NC 27103 Services, Inc.*; Chief Executive
Officer, Lofts Seed, Inc.*
Theodore P. Budd 2325 South Stratford Road Student
Winston-Salem, NC 27103
Gerald L. Chrisco 2325 South Stratford Road Chief Financial Officer, Budd
Winston-Salem, NC 27103 Services, Inc.*; Chief Financial
Officer, Lofts Seed, Inc.*
</TABLE>
None of the persons listed above has, during the last five years, been
convicted in a criminal proceeding (excluding traffic violations or similar
misdemeanors) or been a party to a civil proceeding of a judicial or
administrative body of competent jurisdiction and, as a result of such
proceeding, was or is subject to a judgment, decree or final order enjoining
future violations of, or prohibiting or mandating activities subject to, federal
or state securities laws or finding any violation with respect to such laws.
Each of the persons listed above is a citizen of the United States of America.
- ------------------
* Budd Seed, Inc. distributes grass seeds to retailers and end
users. The principal address of Budd Seed, Inc. is 2325 South
Stratford Road, Winston-Salem, North Carolina, 27103. Budd
Services, Inc. provides facility services including
janitorial, landscape and unarmed security services to its
clients. The principal business address of Budd Services, Inc.
is 2325 South Stratford Road, Winston-Salem, North Carolina,
27103. Lofts Seed, Inc. researches varieties of grass seeds,
contracts with growers to produce varieties of grass seeds and
distributes grass seeds to retailers and end users. The
principal address of Lofts Seed, Inc. is 2325 South Stratford
Road, Winston-Salem, North Carolina, 27103.
<PAGE> 14
EXHIBIT A
AGREEMENT AND PLAN OF REORGANIZATION
BY AND AMONG
AGRIBIOTECH, INC.
LOFTS SEED, INC.
BUDD SEED, INC.
LOFTS MERGERCO, INC.
AND
THE SHAREHOLDERS OF
LOFTS SEED, INC. AND
BUDD SEED, INC.
AS OF DECEMBER 1, 1997
<PAGE> 15
TABLE OF CONTENTS
<TABLE>
<S> <C>
ARTICLE I THE MERGER...........................................................................................2
1.1 The Merger.............................................................................2
1.2 Effective Time. .......................................................................3
1.3 Effect of the Merger...................................................................3
1.4 Further Assurances. ..................................................................4
1.5 Certificate of Incorporation and
By-laws of Lofts Mergerco. ...................................................4
1.6 Directors and Officers of the
Surviving Corporation.........................................................4
1.7 Closing................................................................................5
1.8 Taking of Necessary Action; Further Action.............................................5
ARTICLE II MERGER CONSIDERATION; CONVERSION AND EXCHANGE OF SECURITIES..........................................5
2.1 Aggregate Merger Consideration.........................................................5
2.2 Allocation of Merger Consideration. ...................................................7
2.3 Merger Consideration; Delivery.........................................................7
2.4 Conversion of Shares; Payment of
Merger Consideration.........................................................12
2.5 Lock-Up of ABT Common Stock...........................................................15
2.6 Registration Rights...................................................................17
2.7 Abandoned Property Laws...............................................................20
2.8 Non-Competition Agreement. ..........................................................20
2.9 Employment Agreements.................................................................21
ARTICLE III CERTAIN ACTIONS.....................................................................................21
3.1 Reasonable Efforts....................................................................21
3.2 Effective Date of the Merger for Accounting
and Tax Purposes.............................................................22
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE ACQUIRED COMPANIES............................................22
4.1 Ownership of Shares...................................................................22
4.2 Capacity; Organization; Standing......................................................23
4.3 Legal Proceedings.....................................................................24
4.4 Authorization and Binding Effect;
No Governmental Consents Required............................................25
4.5 Encumbrances..........................................................................25
4.6 Trademarks............................................................................25
4.7 Patents, etc..........................................................................26
4.8 Financial Statements..................................................................26
4.9 Absence of Certain Changes............................................................28
4.10 Tax Matters...........................................................................28
4.11 Accounts Receivable and Inventory.....................................................29
4.12 Title and Condition of Properties.....................................................30
4.13 Description of Material Contracts.....................................................31
4.14 Accounts Payable......................................................................33
</TABLE>
-i-
<PAGE> 16
<TABLE>
<S> <C> <C>
4.15 Default; Violations or Restrictions,
Third Party Consents.........................................................33
4.16 Court Orders and Decrees..............................................................34
4.17 Books and Records.....................................................................35
4.18 Pension and Welfare Plans.............................................................35
4.19 Insurance.............................................................................36
4.20 Rights of Third Parties...............................................................37
4.21 Powers of Attorney....................................................................37
4.22 Labor Matters.........................................................................38
4.23 Relationships with Vendors and Customers..............................................38
4.24 Approvals and Authorizations..........................................................38
4.25 Compensation Plans....................................................................38
4.26 Governmental Licenses.................................................................39
4.27 Brokers...............................................................................39
4.28 Compliance With Laws..................................................................39
4.29 Guarantees............................................................................41
4.30 Benefits..............................................................................41
4.31 Schedules.............................................................................41
4.32 Disclosure............................................................................42
ARTICLE V REPRESENTATIONS AND WARRANTIES OF ABT AND LOFTS MERGERCO............................................42
5.1 Organization; Capitalization..........................................................42
5.2 Capacity..............................................................................43
5.3 Legal Proceedings.....................................................................43
5.4 Consents and Approvals................................................................44
5.5 Binding Obligation....................................................................44
5.6 Brokers; Finders......................................................................44
5.7 Accuracy..............................................................................44
5.8 SEC Filings...........................................................................45
5.9 Financial Statements; Adverse Change..................................................45
5.10 Interim Operations of Lofts Mergerco..................................................45
ARTICLE VI SURVIVAL OF REPRESENTATIONS AND WARRANTIES; INDEMNIFICATION.........................................46
6.1 Survival of Representations and Warranties............................................46
6.2 Indemnification by Shareholders.......................................................46
6.3 Indemnification by ABT and Lofts Mergerco. ..........................................47
6.5 Defense of Claims.....................................................................48
ARTICLE VII COVENANTS OF THE ACQUIRED COMPANIES.................................................................49
7.1 Further Assurances....................................................................49
7.2 Access to the Acquired Companies; Confidentiality.....................................49
7.3 Conduct of Business Pending Closing...................................................50
7.4 Closing Documents. ..................................................................50
7.5 Third Party Consents..................................................................50
7.6 Notice of Events or Changes...........................................................51
7.7 Conduct of Business Until Closing.....................................................51
7.8 Update Schedules......................................................................53
</TABLE>
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7.9 No Solicitation of Competing Offers...................................................53
7.10 Limitation of Transfers of Shares.....................................................53
ARTICLE VIII COVENANTS OF ABT AND LOFTS MERGERCO.................................................................54
8.1 Closing Documents.....................................................................54
8.2 Noninterference.......................................................................54
8.3 Confidentiality.......................................................................54
8.4 Access................................................................................55
8.5 Membership on Board of Directors......................................................55
8.6 Vote in Favor of Merger...............................................................55
ARTICLE IX CONDITIONS PRECEDENT TO ABT AND LOFTS MERGERCO'S OBLIGATIONS........................................55
9.1 No Breach of Representations, etc.....................................................55
9.2 Compliance with Covenants, etc........................................................55
9.3 No Material Adverse Change............................................................56
9.4 Certificates..........................................................................56
9.5 Consents and Approvals................................................................56
9.6 Corporate Documents...................................................................56
9.7 Opinions of Acquired Companies' Counsel...............................................57
9.8 Assignment of Leases. ...............................................................57
9.9 Insurance Policies. .................................................................57
9.10 Purchase of Real Property.............................................................57
9.11 No Termination........................................................................58
9.12 Non-Competition Agreements............................................................58
9.13 Employment Agreements.................................................................58
9.14 Financial Statements..................................................................58
9.15 Services Agreement. .................................................................58
9.16 Regulatory Approvals..................................................................58
9.17 New Lease.............................................................................59
ARTICLE X CONDITIONS PRECEDENT TO THE SHAREHOLDERS' AND THE ACQUIRED COMPANIES' OBLIGATIONS ..................59
10.1 No Breach of Representations, etc.....................................................59
10.2 Compliance with Agreements............................................................59
10.3 No Termination........................................................................59
10.4 Certificates..........................................................................59
10.5 Opinion of Counsel....................................................................60
10.6 No Material Change....................................................................60
10.7 Corporate Documents...................................................................60
10.8 Release of Guarantors.................................................................60
10.9 Management Services Agreement.........................................................60
10.10 Opinion of Womble Carlyle.............................................................61
10.11 Non-Competition Agreement.............................................................61
10.12 Employment Agreements.................................................................61
10.13 Lease.................................................................................61
10.14 Purchase of Real Property.............................................................61
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ARTICLE XI CONDITIONS PRECEDENT TO OBLIGATIONS OF THE SHAREHOLDERS AND ABT AND LOFTS MERGERCO..................61
11.1 Due Diligence.........................................................................61
11.2 No Injunctions........................................................................62
11.3 Consents..............................................................................62
11.4 Corporate Proceedings.................................................................62
11.5 Mergers Interrelated. ...............................................................62
11.6 Status of Schedules and Exhibits as of
Signature Date...............................................................62
ARTICLE XII TERMINATION.........................................................................................63
ARTICLE XIII ABT AND LOFTS MERGERCO'S OBLIGATIONS AT CLOSING.....................................................64
ARTICLE XIV THE SHAREHOLDERS' OBLIGATIONS AT CLOSING............................................................65
ARTICLE XV SUBSEQUENT EVENTS...................................................................................65
15.1 Audited Financial Statements..........................................................65
15.2 Option to Purchase Key Man Life Insurance.............................................65
ARTICLE XVI PARTIES IN INTEREST................................................................................66
ARTICLE XVII ENTIRE AGREEMENT...................................................................................66
ARTICLE XVIII GOVERNING LAW......................................................................................66
ARTICLE XIX EXPENSES...........................................................................................67
ARTICLE XX NONBINDING MEDIATION; ARBITRATION..................................................................67
20.1 Non-binding Mediation.................................................................67
20.2 Arbitration...........................................................................68
ARTICLE XXI SEVERABILITY.......................................................................................68
ARTICLE XXII NOTICES............................................................................................68
ARTICLE XXIII NON-WAIVERS........................................................................................70
ARTICLE XXIV ASSIGNMENT ........................................................................................70
ARTICLE XXV DISCLOSURE.........................................................................................70
ARTICLE XXVI MISCELLANEOUS......................................................................................70
26.1 Further Assurances....................................................................71
26.2 Headings..............................................................................71
26.3 Counterparts..........................................................................71
</TABLE>
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EXHIBITS
Exhibit A Lofts Articles of Merger
Exhibit B Budd Articles of Merger
Exhibit 1.5 Certificate of Incorporation and By-laws of Lofts
Mergerco, Inc.
Exhibit 2.1 Sample Purchase Model
Exhibit 2.5 Form of Lock-Up Agreement
Exhibit 2.8 Form of Non-Competition Agreement
Exhibit 2.9 Form of Employment and Non-Competition Agreement
Exhibit 9.7 Form of Opinion of Counsel for the Acquired
Companies
Exhibit 9.17 Form of Lease
Exhibit 10.5 Form of Opinion of Counsel for ABT and Lofts
Mergerco
Exhibit 10.9 Form of Management Services Agreement
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LIST OF SCHEDULES
Schedule 1.6 Initial Officers of the Surviving Corporation
Schedule 2.2 Allocation of Merger Consideration
Schedule 4.1 Capitalization of Acquired Companies
Schedule 4.2 Capacity; Organization; Standing
Schedule 4.3 Legal Proceedings
Schedule 4.5 Encumbrances
Schedule 4.6 Trademarks
Schedule 4.7 Patents
Schedule 4.8 Financials
Schedule 4.9 Material Changes
Schedule 4.10 Tax matters
Schedule 4.11 Inventory
Schedule 4.12 Real Property
Schedule 4.13 Material Contracts
Schedule 4.14 Accounts Payable
Schedule 4.15 Consents of Parties to Material Contracts
Schedule 4.16 Court Orders and Decrees
Schedule 4.18 Pension, Profit Sharing and Welfare Plans
Schedule 4.19 Insurance
Schedule 4.20 Rights of Third Parties
Schedule 4.21 Powers of Attorney
Schedule 4.22 Collective Bargaining Agreements
Schedule 4.23 Material Claims by Customers
Schedule 4.25 Compensation Plans
Schedule 4.26 Governmental Licenses
Schedule 4.28 Compliance with Laws
Schedule 4.29 Personal Guarantees by Shareholders
Schedule 4.30 Benefits
Schedule 6.5 Indemnification
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AGREEMENT AND PLAN OF REORGANIZATION
AGREEMENT AND PLAN OF REORGANIZATION (the "Agreement"), dated as of
December 1, 1997, by and among AgriBioTech, Inc., a Nevada corporation ("ABT"),
Lofts Mergerco, Inc., a Nevada corporation and a wholly-owned subsidiary of ABT
("Lofts Mergerco"), Lofts Seed, Inc., a New Jersey corporation including its
wholly-owned subsidiary Sunbelt Seed ("Lofts"), Budd Seed, Inc., a North
Carolina corporation ("Budd Seed") (collectively referred to with Lofts as the
"Acquired Companies"), and all of the shareholders of Lofts and Budd Seed (each
a "Shareholder" or collectively the "Shareholders")whose names appear on the
signature page hereto.
WHEREAS, the respective Boards of Directors of ABT, the Acquired Companies
and Lofts Mergerco have approved and deem it in the best interests of their
respective shareholders to consummate the business combination transaction
provided for herein, in which Lofts and Budd Seed would each merge with and
into Lofts Mergerco unless they have previously merged with each other in which
case the combined entity (and all of their prior subsidiaries) would merge into
Lofts Mergerco;
WHEREAS, each such merger shall take place pursuant to a plan of merger
("Plan of Merger") in the form set forth in Articles of Merger attached hereto
as EXHIBIT A ("Lofts Merger") and EXHIBIT B ("Budd Merger"); the merger of
Lofts into Lofts Mergerco is referred to herein as the "Lofts Merger" and the
Merger of Budd into Lofts Mergerco is referred to herein as the "Budd Merger;"
the Lofts Merger and the Budd Merger collectively are referred to herein as the
"Merger;"
WHEREAS, following the Merger, Lofts Mergerco will change its name to Lofts
Seed, Inc., and the surviving corporation of the Merger will remain a
wholly-owned subsidiary of ABT (Lofts Mergerco, Budd Seed and Lofts are
hereinafter referred to as the "Constituent Corporations");
WHEREAS, the Shareholders of Lofts and Budd Seed by their execution of this
Agreement have agreed to vote in favor of the Merger and to execute the
Certificates of Merger, as defined below;
WHEREAS, the laws of the States of Nevada, New Jersey and North
Carolina permit such mergers, and the Constituent Corporations desire to merge
under and pursuant to the provisions of such laws;
WHEREAS, the parties desire to make certain undertakings, conditions,
representations, warranties and covenants in connection with the Merger; and
<PAGE> 22
WHEREAS, for Federal income tax purposes it is intended that the Merger
qualify as a statutory merger under Sections 368(a)(1)(A) and 368(a)(2)(D) of
the Internal Revenue Code of 1986, as amended (the "Code").
NOW, THEREFORE, in consideration of the premises and the respective
representations, warranties, covenants and agreements set forth herein, the
parties hereto agree as follows:
ARTICLE I
THE MERGER
1.1 THE MERGER. The Merger shall not become effective unless this
Agreement and each Plan of Merger is duly approved by Shareholders holding the
requisite number of shares of each of Lofts, Budd and Lofts Mergerco. Subject to
the terms and conditions of this Agreement, at the Effective Time (as defined in
SECTION 1.3), (i) the Acquired Companies shall be merged with and into Lofts
Mergerco in accordance with the provisions of the General Corporate Law of the
State of Nevada (the "GCL"), the Business Corporation Act of the State of North
Carolina (the "NCBCA"), and the Business Corporation Act of the State of New
Jersey, (the "NJBCA"), unless Lofts and Budd Seed are merged with each other
prior to the Effective Time, in which case all references in this Agreement to
the Acquired Companies shall be to such combined entity, (ii)the separate
corporate existence of each of the Acquired Companies shall cease, (iii)the
Merger shall in all respects have the effects provided in SECTION 1.3 below, and
(iv)Lofts Mergerco shall continue as the surviving corporation (hereinafter
sometimes referred to as the "Surviving Corporation")under the laws of the State
of Nevada under the name "Lofts Seed, Inc."
1.2 EFFECTIVE TIME. Upon fulfillment or waiver of the conditions
specified in Articles IX, X and XI and provided that this Agreement has not been
terminated Pursuant to Article XII, and subject to the remaining terms and
provisions of this Agreement, there shall be filed with the Nevada Department of
State, as soon as practicable on or after the Closing Date (as defined in
SECTION L.7), certificates of merger with respect to the Merger (the
"Certificates of Merger"), in such form as is required by, and executed in
accordance with, the applicable provisions of the GCL. The Merger shall become
effective at the time of filing, by the Department of State of the State of
Nevada in accordance with the GCL, of the original, properly executed
Certificates of Merger, or at the time specified as the effective time in the
Certificates of Merger. The Certificates of Merger shall be submitted for filing
at the time of the Closing and may be submitted prior thereto for clearance. The
time at which the
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Merger shall become effective is referred to herein as the "Effective Time."
Each Plan of Merger is incorporated herein by reference, and adoption of this
Agreement by the Board of Directors of each of the respective Constituent
Corporations and approval by the shareholders of each of the respective
Constituent Corporations shall constitute adoption and approval of each Plan of
Merger.
1.3 EFFECT OF THE MERGER. The Merger shall have the effects set forth
in Section 92A.250 of the GCL. Without limiting the generality of the foregoing,
and subject thereto, from and after the Effective Time (i) the corporate
identity, existence, purposes, powers, objects, franchises, rights, immunities,
liabilities and duties of and property (real, personal and mixed), and all debts
due on whatever account, including subscriptions for shares, and all other
choses in action and every other interest of or belonging to the Surviving
Corporation shall continue unaffected and unimpaired by the Merger; and (ii) the
corporate identity, existence, purposes, powers, objects, franchises, rights,
immunities, liabilities and duties of and all property (real, personal and
mixed), rights, privileges, powers and franchises of the Acquired Companies
shall vest in Lofts Mergerco, and all debts due on whatever account, including
subscriptions to shares and all other causes of action and every other
liabilities and duties of the Acquired Companies shall become the debts,
liabilities and duties of the Surviving Corporation as of the Effective Time.
From and after the Effective Time, by virtue of the filing of the Merger
Certificates with the Nevada Department of State, all of the above shall be
deemed to be transferred and so vested in the Surviving Corporation without
further act or deed.
1.4 FURTHER ASSURANCES. If, at any time after the Effective Time, the
Surviving Corporation considers or is advised that any deeds, bills of sale,
assignments, assurances in law or any other actions or things are necessary,
desirable or proper to vest, perfect or confirm of record, or otherwise, in the
Surviving Corporation its right, title or interest in, to or under any of the
rights, properties or assets of the Acquired Companies, or otherwise to carry
out the intent and purposes of this Agreement, the officers and directors of the
Surviving Corporation will be authorized to execute and deliver, in the name and
on behalf of the Acquired Companies all such proper deeds, bills of sale,
assignments and assurances and to take and do, in the name and on behalf of the
Acquired Companies all such other actions and things as may be necessary or
desirable to vest, perfect or confirm any and all right, title and interest in,
to and under such rights, properties or assets in the Surviving Corporation and
otherwise to carry out the purpose of this Agreement, and that the proper
officers and directors of the
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Surviving Corporation are fully authorized and directed in the name of the
Constituent Corporations or otherwise to take any and all such actions. Neither
the rights of creditors nor any liens upon the property of any of the
Constituent Corporations shall be impaired by the Merger.
1.5 CERTIFICATE OF INCORPORATION AND BY-LAWS OF LOFTS MERGERCO. The
Certificate of Incorporation of Lofts Mergerco, as in effect immediately prior
to the Effective Time, shall be the Certificate of Incorporation of the
Surviving Corporation until thereafter amended in accordance with the GCL and
the terms of such Certificate of Incorporation. The By-laws of Lofts Mergerco,
as in effect immediately prior to the Effective Time, shall be the Bylaws of the
Surviving Corporation until thereafter amended in accordance with the GCL, the
Certificate of Incorporation of the Surviving Corporation and such By-laws. The
Certificate of Incorporation and By-laws of Lofts Mergerco at the Effective Time
shall be in the form set forth in EXHIBIT 1.5.
1.6 DIRECTORS AND OFFICERS OF THE SURVIVING CORPORATION. The initial
directors of the Surviving Corporation shall be the directors of the Surviving
Corporation at the Effective Time, and all such directors will continue to hold
office from the Effective Time until their respective successors are duly
elected or appointed and qualify in the manner provided in the Certificate of
Incorporation and By-laws of the Surviving Corporation, or as otherwise provided
by applicable law. The initial officers of the Surviving Corporation shall be
the persons set forth in SCHEDULE 1.6, and all such officers will continue to
hold office from the Effective Time until their respective successors are duly
appointed and qualify in the manner provided in the By-laws of the Surviving
Corporation, or as otherwise provided by applicable law.
1.7 CLOSING. The closing of the transactions contemplated by this
Agreement (the "Closing") shall take place at the offices of Womble Carlyle
Sandridge & Rice, at 10:00 a.m., local time, on January 5, 1998, unless another
place, date or time is agreed to by ABT and the Acquired Companies (the date on
which the Closing takes place being referred to herein as the "Closing Date").
1.8 TAKING OF NECESSARY ACTION; FURTHER ACTION. Each of Lofts, Budd
Seed, Lofts Mergerco and ABT will take all such reasonable and lawful action as
may be necessary or appropriate in order to effectuate the Merger in accordance
with this Agreement as promptly as possible. If, at any time after the Effective
Time, any such further action is necessary or desirable to carry out the
purposes of this Agreement or to vest the Surviving Corporation with full right,
title and possession to
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<PAGE> 25
all assets, property, rights, privileges, powers and franchises of ABT and Lofts
Mergerco, the officers and directors of ABT and Lofts Mergerco immediately prior
to the Effective Time are fully authorized in the name of their respective
corporations or otherwise to take, and will take, all such lawful and necessary
action.
ARTICLE II
MERGER CONSIDERATION; CONVERSION AND EXCHANGE OF SECURITIES
2.1 AGGREGATE MERGER CONSIDERATION. The aggregate consideration (the
"Merger Consideration") issuable to the shareholders pursuant to the Merger
shall equal $34,000,000 (the "Model Merger Consideration") as adjusted below.
The Model Merger Consideration consists of (a) 2,000,000 shares of ABT Common
Stock, $.001 par value ("ABT Common Stock"), valued by the parties at $8.50 per
share (subject to adjustment as provided in SECTION 2.4(VI), and (b) seventeen
million ($17,000,000) dollars in cash. The Model Merger Consideration shall be
adjusted as follows. First, there shall either be added to the Model Merger
Consideration the excess of Closing Working Capital (defined below) over the
Model Working Capital (defined below), or subtracted therefrom the excess of the
Model Working Capital over the Closing Working Capital. Then, there shall be
added the amount by which the Model Debt (defined below) exceeds the Closing
Debt (defined below), or subtracted the amount by which the Closing Debt exceeds
the Model Debt. The aggregate amount determined by applying the preceding
provisions of this SECTION 2.1 shall be the Merger Consideration. In applying
such preceding provisions (i) the "Closing Working Capital" shall mean the
excess of current assets over current liabilities of the Acquired Companies
(including subsidiaries, prepared on a consolidated basis, and eliminating all
notes payable) as determined from the unaudited financial statements of the
Acquired Companies as of the close of business on December 31, 1997 (the
"Unaudited December 31, 1997 Financial Statements"); (ii) the "Model Working
Capital" ($15,161,000) shall mean the excess of current assets over current
liabilities of the Acquired Companies, including subsidiaries, prepared on a
consolidated basis and as adjusted from the Sample Purchase Model presented to
ABT by the Acquired Companies on August 26, 1997 and attached hereto as EXHIBIT
2.1; (iii) the "Model Debt" shall mean the "Total Debt Payoff" (consisting of
any and all indebtedness owed to banks and other financial institution and to
Budd Services, Inc.)as shown on the Sample Purchase Model($12,213,000); and (iv)
the "Closing Debt" shall mean the Total Debt Payoff derived from the Unaudited
December 31, 1997 Financial Statements. The computation of the Merger
Consideration, the Closing Working Capital and the Closing Debt shall be
prepared as provided in SECTION 2.3 hereof using the same accounting methods
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and procedures used by the Acquired Companies in preparing, and otherwise on a
basis consistent in all respects with, the EBITDA pro forma, Average Balance
Sheet and Sample Purchase Model annexed hereto as EXHIBIT 2.1.
The adjustment to the Model Merger Consideration to determine the
Merger Consideration shall be made in the form of cash. In the event, however,
that the number of shares of ABT Common Stock comprising the Merger
Consideration (valued at $8.50 per share) does not equal at least 43% of the
total Merger Consideration (meaning the cash Merger Consideration is in excess
of 57% of the Merger Consideration) the number of shares of ABT Common Stock
shall be increased to at least 43% of the Merger Consideration. All of such
additional shares of ABT Common Stock shall be valued at the average closing
price of ABT Common Stock for the five consecutive trading days preceding the
date of such adjustment.
2.2 ALLOCATION OF MERGER CONSIDERATION. The Merger Consideration shall
be allocated as follows: (i) 83.18% to the Shareholders of Lofts, and (ii)
16.82% to the Shareholders of Budd. Each Shareholder of record of the Acquired
Companies at the Effective Time shall receive the percentage of the Merger
Consideration and in the form with respect to each Shareholder set forth in
SCHEDULE 2.2. For the purpose of allocating the Merger Consideration, ABT Common
Stock (in whole numbers of Shares) shall be valued as provided in SECTION 2.1
immediately preceding.
2.3 MERGER CONSIDERATION; DELIVERY.
(i) Computation and Delivery of the Preliminary Merger Consideration.
For purposes of Closing, a Preliminary Statement of Merger Consideration will be
prepared by the Acquired Companies and delivered to ABT by December 15, 1997
based on the Acquired Companies' November 30, 1997 unaudited financial
statements giving effect to the estimated operation of the Acquired Companies
during December 1997. The Preliminary Statement of Merger Consideration will use
the formula provisions of SECTION 2.1 used in calculating the Merger
Consideration in order to calculate the preliminary merger consideration (the
"Preliminary Merger Consideration") to be delivered to the Shareholders at
Closing. If ABT disagrees with the calculation of the Preliminary Merger
Consideration, it must inform the Acquired Companies of the nature of its
disagreement by December 29, 1997. The parties agree to resolve the amount of
Preliminary Merger Consideration to be paid at Closing on or before January 2,
1998. At the Closing, ABT shall cause to be delivered to the Womble Carlyle
Sandridge & Rice Trust Account (the "Trust Account") the Preliminary Merger
Consideration, in the form of
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2,000,000 shares of ABT Common Stock valued at $8.50 per share (or such adjusted
number of shares as provided in SECTION 2.1) and the remainder in cash as
determined in SECTION 2.1; receipt in the Trust Account of the Preliminary
Merger Consideration shall be deemed to be delivery of the Preliminary Merger
Consideration by ABT for purposes of this Agreement. In addition to the
Preliminary Merger Consideration, ABT shall deliver to Womble Carlyle Sandridge
& Rice acknowledgment by ABT that it has received from each Shareholder (A)
letters of transmittal (the "Transmittal Letter") with accompanying stock
certificates in accordance with subsection (vii) below and (B) an "Affiliate
Letter" stating, among other things, that no withholding is required, or, if
withholding is required, the amount to be withheld.
(ii) Distribution of Preliminary Merger Consideration. At the Closing,
Womble Carlyle Sandridge & Rice shall distribute from the Trust Account to each
Shareholder, 90% of the Preliminary Merger Consideration allocable to each in
accordance with SCHEDULE 2.2. Any fractional Share of ABT Common Stock
distributable to Shareholders at the Closing shall be disregarded. The remainder
of the Preliminary Merger Consideration shall be held in the Trust Account
pending distribution thereof following final determination of the Merger
Consideration as provided in SECTION 2.3(III) hereof. All cash held or received
in the Trust Account shall be invested in savings accounts or certificates of
deposit in federally insured United States banks; or securities issued or
guaranteed by the United States government or an agency thereof; or prime
commercial paper of United States issuers; or Repurchase Agreements that are
fully secured by obligations of or are issued or guaranteed by the United States
or any agency thereof; or a common, mixed or commingled fund invested primarily
in obligations of the type described above. Womble Carlyle Sandridge & Rice
shall not be liable for any losses resulting from any investment, or the sale or
redemption of any investment, made in accordance with the foregoing
authorization. The interest earned shall be distributable to the Shareholders
and to ABT in the proportion that funds held in the Trust Account are
distributable to each as provided herein.
(iii) Determination of Merger Consideration. The Merger Consideration
shall be determined by the following procedure:
(A) By January 30, 1998, the Surviving Corporation shall cause
to be prepared a statement of merger consideration as of December 31, 1997 (the
"Final Statement of Merger Consideration") setting forth the computation of the
Merger Consideration. The Final Statement of Merger Consideration shall be (i)
prepared in a manner consistent with methods and
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<PAGE> 28
procedures previously utilized by the Acquired Companies and with the
Preliminary Statement of Merger Consideration and (ii) derived from the Audited
November 30, 1997 Financial Statements rolled forward to the Unaudited December
31, 1997 Financial Statements, to be delivered together with the Final Statement
of Merger Consideration and prepared in accordance with generally accepted
accounting principles consistently applied with prior periods.
(B) Audit. The financial statements as of November 30, 1997
and for the period then ended (the "Post-Closing Financial Statements") shall be
audited and reported on by E.H. Cannon & Co., independent certified public
accountants (the "Auditors"), subject to review by KPMG Peat Marwick LLP. The
report of the Auditors shall be unqualified, and ABT shall be responsible for
the fees and expenses of the Auditors for the services herein. The Surviving
Corporation shall cause the Post-Closing Financial Statements together with the
draft report of the Auditors thereon, to be delivered to the Shareholders and
ABT as soon as practicable, but no later than January 30, 1998. Such delivery
shall be made to Richard P. Budd, as representative of the Shareholders (the
"Shareholder Representative") and delivery to the Shareholder Representative
shall be deemed to be delivery to all Shareholders. The Shareholder
Representative and ABT and their designees shall be permitted to participate in
the audit process, to observe all aspects of the audit, and to collaborate with
the Auditors in preparation of the Post-Closing Financial Statements.
(C) Review. Following delivery of the Post-Closing Financial
Statements and Final Statement of Merger Consideration to the Shareholder
Representative and ABT, the Auditors shall be authorized to provide the
Shareholder Representative and ABT and their designees with an opportunity to
review the Auditors' work papers related to the audit and to discuss the same
with the Auditors' representatives. The parties shall have thirty (30) days to
review the Post-Closing Financial Statements and Final Statement of Merger
Consideration and to give notice to the Surviving Corporation of any
disagreement regarding such statements (an "Objection Notice"). Absent such
Objection Notice, the Post- Closing Financial Statements and Final Statement of
Merger Consideration as delivered to the Shareholder Representative and ABT
shall be final and binding on the parties hereto.
(D) Objection Period. If the Shareholder Representative
or ABT, gives an Objection Notice in a timely manner, and the Surviving
Corporation and the Shareholder Representative are able to resolve such
objections, the Post-Closing Financial Statements and Final Statement of Merger
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<PAGE> 29
Consideration, as the case may be, as modified to resolve such objections, shall
be binding on the parties hereto. If the Surviving Corporation and the
Shareholder Representative are unable to reach agreement as to all differences
within 20 days after the Surviving Corporation's receipt of the Objection
Notice, then the unresolved differences shall be resolved as provided in Article
XX hereof.
(iv) Escrow Funds. The Shareholders shall set-aside from the Merger
Consideration for the benefit of ABT and Lofts Mergerco as described in the
table below (the "Escrow Funds") such amounts and for such periods to be
mutually negotiated specifically based upon ABT determining during its due
diligence prior to the Closing that there are open issues for which an escrow
needs to be created (the "Open Items"). The Escrow Funds shall either be in the
form of cash or ABT Common Stock (valued at $8.50 per share), at the election of
the Shareholder Representative. To the extent the Escrow Funds are in the form
of cash, such cash shall be invested in (1) an interest-bearing account with a
bank or other financial institution; (2) United States Government securities,
short term certificates of deposit, money market securities, investment grade
commercial paper or other short-term interest-bearing investment- grade
securities; or (3) a common, mixed or commingled fund invested primarily in
obligations of the type described in (1) or (2) above. The Escrow Funds shall be
established for the purpose of satisfying the Open Issues (and for no other
purpose), subject to the $100,000 threshold set forth in SECTION 6.5(IV) hereof.
If any portion of the Escrow Funds shall be in the form of ABT Common Stock, any
shares of such Common Stock delivered to ABT and Lofts Mergerco in satisfaction
of any Open Issues shall be valued (for the purpose of satisfying such Open
Issues at the greater of $8.50 per share or the average selling price per share
for the ten trading days ending on the last trading day preceding the date of
delivery of such shares in satisfaction of the Open Issues. Any interest or
dividends accrued on the Escrow Funds shall inure to the benefit of the
Shareholders and shall be distributed to them periodically as available. The
Escrow Fund shall terminate (and any funds or property remaining therein shall
be paid or distributed to the Shareholders) following mutual resolution and
satisfaction of the Open Issue or Issues with respect to which the Escrow Fund
was established.
(v) Distribution of Merger Consideration. The Merger Consideration
shall be distributed as follows as soon as practicable following the close of
the 30-day period described in SECTION 2.3(III)(C) if an Objection Notice has
not been timely filed. If an Objection Notice is timely filed, the portion of
the Merger Consideration that ABT and the Shareholder Representative agree is
distributable shall be distributed as
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follows (disregarding any fractional shares of ABT Common Stock and exclusive
of the Escrow Funds), as soon as practicable following the close of such 30-day
period, and the remainder of the Merger Consideration, if any, shall be
distributed as soon as practicable following final resolution of all objections
in the Objection Notice.
(A) In the event that the amount of the Preliminary Merger
Consideration shall exceed the amount of the Merger Consideration by an amount
greater than the amount of cash from the Preliminary Merger Consideration held
in the Trust Account and not distributed pursuant to SECTION 2.3 (II), each
Shareholder shall pay his pro rata portion of such deficiency to the Trust
Account in cash.
(B) Womble Carlyle Sandridge & Rice shall distribute to ABT
from the Trust Account the amount by which the Preliminary Merger Consideration
exceeds the Merger Consideration (as set forth in SUBSECTION (V)(A) above) plus
the interest earned in the Trust Account on such distribution. Any amount
remaining in the Trust Account (after such distribution to ABT) shall be
distributed to each Shareholder as provided in (D) below.
(C) In the event that the amount of the Merger Consideration
exceeds the Preliminary Merger Consideration the amount of such excess shall be
delivered by ABT to the Trust
Account in cash.
(D) Womble Carlyle Sandridge & Rice shall distribute to each
Shareholder from the Trust Account together with the interest earned on cash
held in the Trust Account for each Shareholder, the remaining amount of the
Merger Consideration allocable to each Shareholder (as set forth in SUBSECTION
(V)(C) above) reduced by the amount of the Escrow Funds, if any, allocable to
each Shareholder.
(vi) Fractional ABT Shares. With respect to each Shareholder, the
portion of the Merger Consideration to be received in the form of ABT Common
Stock, shall be rounded to the nearest whole share of ABT Common Stock, and the
cash portion of the Merger Consideration allocable to each Shareholder shall be
correspondingly increased or decreased to adjust for such rounding based on the
assumed value of ABT Common Stock of $8.50 per share.
(vii) Receipt of Shareholder Letters. Notwithstanding any other
provisions hereof, if any Transmittal Letter (and accompanying stock
certificates) and/or Affiliate Letter of any Shareholder has not been received
by ABT at the Closing, the Preliminary Merger Consideration and any subsequent
Merger
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Consideration distributable to such Shareholder shall be held in the Trust
Account until such time as ABT shall deliver to Womble Carlyle Sandridge & Rice,
an acknowledgment that such Transmittal Letter (and accompanying certificates)
and Affiliate Letter has been received (which ABT shall do immediately upon
receipt by it), at which time any Preliminary Merger Consideration and Merger
Consideration of such Shareholder shall be distributed from the Trust Account
together with the interest earned on cash held in the Trust Account for each
Shareholder.
(viii) Womble Carlyle Sandridge & Rice shall be fully protected in
making distributions to the Shareholders from the Trust Account in accordance
with SCHEDULE 2.2, this SECTION 2.3 and accompanying acknowledgments from ABT,
and Womble Carlyle Sandridge & Rice shall have no obligation with respect to any
party hereto or any Shareholder beyond making distributions from the Trust
Account in accordance with SCHEDULE 2.2, this SECTION 2.3 and acknowledgments
from ABT. Womble Carlyle Sandridge & Rice shall have no liability to ABT, any
Shareholder, or any other person for making such distributions provided such
distributions are made in accordance with SCHEDULE 2.2, this SECTION 2.3 and any
acknowledgments from ABT.
2.4 CONVERSION OF SHARES; PAYMENT OF MERGER CONSIDERATION
(i) All of the (A) shares of ABT Common Stock, and (B) the
cash portion of the Merger Consideration shall be exchanged for all of the
validly issued, fully paid and nonassessable shares of common stock of the
Acquired Companies. At the Effective Time, by virtue of the Merger and without
any action the part of any party hereto, each share of common stock of Lofts and
Budd Seed issued and outstanding immediately prior to the Effective Time shall
be converted into and shall represent the right to receive, upon surrender of
the certificate representing such shares (as provided in SUBSECTION (IV) below),
the proportion of the Merger Consideration allocable to it.
All shares of ABT Common Stock and cash issued upon the surrender for
exchange of shares of common stock of the Acquired Companies in accordance with
the terms hereof shall be deemed to have been issued and paid in full
satisfaction of all rights pertaining to such shares of the Acquired Companies
common stock. If, after the Effective Time, certificates are presented to the
Surviving Corporation for any reason, they shall be canceled and exchanged as
provided in this ARTICLE II.
(ii) Each share of the common stock of Lofts Mergerco issued
and outstanding immediately prior to the Effective Time shall continue to be
issued and outstanding.
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(iii) Until surrendered, each outstanding certificate which
prior to the Effective Time represented one or more shares of common stock of
Lofts or Budd Seed shall be deemed upon the Effective Time for all purposes to
represent only the right to receive the Merger Consideration. No interest will
be paid or accrued on the Merger Consideration upon the surrender of the
certificate or certificates representing such shares, except as specifically
provided herein. With respect to any certificate for common stock of Lofts or
Budd Seed that has been lost or destroyed, ABT shall direct distribution of the
Merger Consideration attributable to such certificate upon receipt of a surety
bond or other adequate indemnity as required in accordance with ABT's standard
policy, and evidence reasonably satisfactory to ABT of ownership of the shares
represented thereby. After the Effective Time, no transfer of the shares of
common stock of Lofts or Budd Seed outstanding immediately prior to the
Effective Time shall be made on the stock transfer books of the Surviving
Corporation.
(iv) At least ten days prior to the Effective Time, ABT shall
cause to be delivered or mailed to each Shareholder a form of letter of
transmittal and instructions for use in effecting the surrender of the
certificates which, immediately prior to the Effective Time, represented shares
of common stock of Lofts or Budd Seed in exchange for the Merger Consideration.
Upon surrender at or after the Effective Time of such certificates, together
with such letter of transmittal duly executed and completed in accordance with
the instructions thereto, and such other documents as may be reasonably
requested, ABT shall direct that the Merger Consideration be transferred to the
persons entitled thereto as provided herein.
(v) The Surviving Corporation shall pay any dividends or
other distributions with a record date prior to the Effective Time which have
been declared or made by Lofts or Budd Seed in respect of shares of common
stock in accordance with the terms of this Agreement and which remain unpaid at
the Effective Time. To the extent permitted by law, all shareholders shall be
entitled to vote after the Effective Time at any meeting of ABT stockholders
the number of whole shares of ABT Common Stock into which their respective
shares of Lofts or Budd Seed common stock are converted, regardless of whether
such holders have exchanged their certificates representing Lofts or Budd Seed
common stock for certificates representing ABT Common Stock in accordance with
the provisions of this Agreement. Whenever a dividend or other distribution is
declared by ABT on ABT Common Stock the record date for which is at or after
the Effective Time, the declaration shall include dividends or other
distributions on all ABT Common Stock issuable pursuant to this Agreement, but
after the Effective Time no dividend or other distribution payable to the
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holders of record of ABT Common Stock as of any time subsequent to the Effective
Time shall be delivered to the holder of any certificate representing Lofts or
Budd Seed shares until such holder surrenders such certificate for exchange as
provided in this SECTION 2.4. Upon surrender of such certificate, both the
certificate for ABT Common Stock and any undelivered dividends shall be
delivered and paid.
(vi) In the event ABT changes the number of shares of ABT
Common Stock issued and outstanding prior to the Effective Time as a result of a
stock split, stock dividend or other similar recapitalization, and the record
date thereof (in the case of a stock dividend) or the effective date thereof (in
the case of a stock split or similar recapitalization for which a record date is
not established) shall be prior to the Effective Time, the amount of the Merger
Consideration represented by shares of ABT Common Stock shall be proportionately
adjusted.
(vii) Any Shareholder who shall have dissented from the Lofts
Merger or Budd Merger in accordance with applicable state law, and who has
properly exercised such Shareholder's right to demand payment of the value of
the Shareholder's shares of Lofts or Budd Seed(the "Dissenting Shares") shall
thereafter have only such rights, if any, as are provided a dissenting
shareholder under applicable state law and shall have no rights under this
SECTION 2.4; provided, however, that if such Shareholder shall withdraw the
demand for such appraisal or shall become ineligible for such appraisal, then
such Shareholder's Dissenting Shares automatically shall cease to be Dissenting
Shares and shall be converted into and represent only the right to receive the
Merger Consideration provided for in this Section upon surrender of the
certificate representing the Dissenting Shares. Notwithstanding the foregoing,
pursuant to SECTION 4.4 herein, each of the Shareholders has represented and
warranted that (s)he will vote for the Merger at the shareholders meetings of
the Acquired Companies.
2.5 LOCK-UP OF ABT COMMON STOCK.
(i) The shares of ABT Common Stock received as Merger
Consideration, shall be sold pursuant to the terms of a Lock-Up Agreement to be
entered into by each Shareholder, the form of which is attached hereto as
EXHIBIT 2.5, pursuant to the following schedule: no shares of ABT Common Stock
shall be sold by the Shareholders prior to the earlier to occur of August 1,
1998 or six months from the closing of an underwritten public offering of ABT
Common Stock (the "No-Sale Period"). Thereafter, the Shareholders may sell
publicly in the over-the-counter market, up to 84,000 shares per month, but no
more than 21,000 shares per week or 7,000 shares per day (the "Lock-Up
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Limitations");
(ii) Sales of shares in excess of the numbers in subsection
(i) shall constitute an event of default by the selling Shareholders under the
Lock-Up Agreement and all gross proceeds to such selling Shareholders above
$8.50 per share from any sale of ABT Common Stock on the defaulting sales and
all sales before or after such default shall be paid by such selling
Shareholders to ABT; however, ABT shall not have any other recourse against the
selling Shareholders for violation of the Lock-Up Agreement other than ABT's
ability to seek specific performance of the Lock-Up Agreement.
(iii) ABT and the Shareholders acknowledge that the
liability of the Shareholders to ABT is several and a violation of a Lock-Up
Agreement by one Shareholder shall not constitute a joint violation by all
Shareholders, although the Shareholders recognize that the nature of this
Lock-Up Agreement will require them to coordinate sales among themselves to
avoid any violation of the aggregate Lock-Up Limitations set forth in
SUBSECTION 2.5(I) above.
(iv) Any shares of ABT Common Stock that the Shareholders
elect not to sell during any period as set forth in SUBSECTION (2.5)(I) above
shall be eligible for sale in such quantities as the Shareholders desire
subject to the registration requirements of the Securities Act of 1933, as
amended (the "Securities Act"), commencing two years from the date the shares
of ABT Common Stock first became eligible for resale hereunder.
(v) ABT reserves the right to waive the Lock-Up
Limitations and/or resale limitations set forth in the Lock-Up Agreement, in
whole or in part.
(vi) The Shareholders shall forward to ABT all customary
documentation reflecting any sale of shares of Common Stock within ten (10)
business days of such sale.
(vii) Privately negotiated sales, transfers among
Shareholders, transfers to family members and/or to trusts for the benefit of
shareholders and family members of ABT Common Stock by the Shareholders shall
be permitted only if the transferee of such shares executes a Lock-Up Agreement
substantially in the form of the Lock-Up Agreement attached as EXHIBIT 2.5.
(viii) Prior to the end of the No-Sale Period, the
Shareholder Representative shall provide ABT with a definitive schedule of the
individual allocations of the Lock-Up Limitations among the Shareholders.
Following the No-Sale Period, if a
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Shareholder wishes to sell Shares of ABT Common Stock in excess of his
individual allocation of the Lock-Up Limitations the Shareholder Representative
shall advise ABT of the revised allocation of the Lock-Up Limitations at least
one business day prior to such sale. Such sale may be made only if the
aggregate Lock-Up Limitations are not exceeded.
2.6 REGISTRATION RIGHTS.
(a) Of the shares of ABT Common Stock issued to the Shareholders at the
Closing as set forth in Section 2.1 above, one-half (rounded up to the nearest
whole share) of such shares (the "Registered Shares") shall be registered with
the Securities and Exchange Commission ("SEC")for sale under the Securities Act
pursuant to ABT's Registration Statement on Form S-3 (Reg. No. 333- 33367) (the
"Registration Statement"), and the balance of such shares shall not be
registered for resale (the "ABT Restricted Shares"). Notwithstanding the
registration of shares of ABT Common Stock under this SECTION 2.6, all such
shares shall be subject to the Lock-Up Agreement described in SECTION 2.5.
(b) In the event that any of the Registered Shares cannot be sold
pursuant to the Registration Statement or the ABT Restricted Shares cannot be
sold pursuant to Rule 144 commencing one year from the Closing Date
("Registration Conditions"), the Shareholders shall have the demand registration
rights provided in this Section 2.6. If at any time during the period commencing
upon the expiration of the No-Sale Period (as such term is defined in the
Lock-Up Agreement attached as EXHIBIT 2.5 hereto) and ending two years
thereafter Registration Conditions exist, ABT covenants and agrees with the
Shareholders that, upon written request of the then holder(s) of at least 25% of
the remaining shares of ABT Common Stock, the Company will file with the SEC as
promptly as practicable and, in any event, within 45 days after receipt of such
written request, on one occasion at ABT's sole expense, and on two other
occasions at the Shareholders' expense, a registration statement (the "Demand
Registration Statement" and, together with the Registration Statement, the
"Registration Statements") on a form which would be available for the resale of
the ABT Common Stock by the Shareholders under the Securities Act, registering
or qualifying the ABT Common Stock requested to be so registered for sale. Such
request shall specify the shares of ABT Common Stock intended to be sold and the
intended method of disposition. ABT shall not, without the consent of the
Shareholders, grant to any person registration rights, that would entitle such
holders to include any securities of the Company in the Demand Registration
Statement.
(c) ABT will use its best efforts, through its officers, directors,
auditors and counsel in all matters necessary or
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advisable, to file and cause to become effective the Registration Statements as
promptly as practicable and to maintain the effectiveness of the Registration
Statements for a period of two years thereafter, subject to subparagraph (e)
below.
(d) ABT shall notify each Shareholder upon discovery that, or upon the
happening of any event as a result of which, the prospectus included in any of
the Registration Statements includes an untrue statement of a material fact or
omits to state any material fact required to be stated therein or necessary to
make the statements therein not misleading in the light of the circumstances
under which they were made; and, at the request of any Shareholder, ABT shall
promptly prepare and furnish to such Shareholder a reasonable number of copies
of a supplement or an amendment to such prospectus as may be necessary.
(e) ABT shall prepare and file with the SEC such amendments and
supplements to the Registration Statements and the prospectuses contained
therein as may be necessary to keep the Registration Statements effective and to
comply with the provisions of the Securities Act with respect to the disposition
of all securities covered by the Registration Statements until such time as all
shares of ABT Common Stock have been disposed of in accordance with the intended
methods of disposition by the Shareholders set forth in such Registration
Statements; provided, that ABT shall not be required to maintain the
effectiveness of any Registration Statement as to any shares of ABT Common Stock
that may then be sold by a Shareholder in accordance with Rule 144.
(f) ABT shall furnish to each Shareholder such number of preliminary
and final prospectuses included in any of the Registration Statements and of
each such amendment and supplement thereto as such Shareholder may reasonably
request.
(g) ABT shall use its best efforts to file in a timely manner all
reports required to be filed with the SEC pursuant to Section 13 of the
Securities Exchange Act of 1934, as amended, and shall otherwise maintain its
eligibility to use Form S-3 and comply with the public information requirements
of paragraph (c) of Rule 144.
(h) ABT shall indemnify and hold harmless the Shareholders against any
losses, claim damages, liabilities, costs (including, without limitation, the
reasonable cost of preparation and attorney's fees) and reasonable expenses
(collectively, "Losses") arising out of or based upon any untrue statement or
alleged untrue statement of a material fact contained in any of the Registration
Statements or any prospectus or preliminary prospectus included therein or
arising out of or based upon any
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omission or alleged omission of a material fact required to be stated therein or
necessary to make the statements therein not misleading, except insofar as the
same are based solely upon information furnished in writing to ABT by such
Shareholders expressly for use therein.
(i) In connection with any registration in which a Shareholder is
participating, such Shareholder shall furnish to ABT in writing such information
as ABT reasonably requests for use in connection therewith and agrees to
indemnify and hold harmless ABT, its directors, officers, agents and employees
and each person who controls ABT (within the meaning of Section 15 of the
Securities Act or Section 20 of the Securities Exchange Act of 1934) from and
against all Losses arising out of or based upon any untrue statement or alleged
untrue statement of a material fact contained in any of the Registration
Statements or any prospectus or preliminary prospectus included therein or
arising out of or based upon any omission of a material fact required to be
stated therein or necessary to make the statements therein not misleading, to
the extent, but only to the extent, that such untrue statement or omission is
contained in any information so furnished in writing by such Shareholder to ABT
expressly for use in such Registration Statement, prospectus or preliminary
prospectus and that such information was solely relied upon by ABT in
preparation of such Registration Statement, prospectus or preliminary
prospectus. In no event shall the liability of any Shareholder hereunder be
greater in amount than the dollar amount of the proceeds (net of the payment of
all expenses) received by such Shareholder upon the sale of shares of ABT Common
Stock giving rise to such indemnification obligation.
(j) ABT will pay all expenses of ABT and the Shareholders in connection
with the Registration Statement described in SECTION 2.6(A) and one Demand
Registration Statement described in SECTION 2.6(B) above, in each instance
exclusive of any underwriting discount or commission and the fees and expenses
of Shareholders' legal counsel in connection with the sale of shares by the
Shareholders pursuant to such registration.
(k) ABT acknowledges that the registration rights provided in
this SECTION 2.6 are also for the benefit of any of the
Shareholders' permitted transferees.
2.7 ABANDONED PROPERTY LAWS. Payment or delivery of any shares of ABT
Common Stock, any cash in lieu of fractional shares of ABT Common Stock and any
dividends or distributions with respect to ABT Common Stock shall be subject to
applicable abandoned property, escheat and similar laws and neither ABT nor the
Surviving Corporation shall be liable to any holder of shares of the Acquired
Companies common stock for any such shares, for
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<PAGE> 38
any dividends or distributions with respect thereto or for any cash in lieu of
fractional shares which may be delivered to any public official pursuant to any
abandoned property, escheat or similar laws.
2.8 NON-COMPETITION AGREEMENT. In addition to the conversion of Lofts
common stock and Budd Seed common stock, at the Closing, each of the four
principal Shareholders named below, (the "Principal Shareholders")hereby agrees
to enter into Non- Competition Agreements with ABT in consideration of ABT
paying to the Principal Shareholders an aggregate additional Seven Hundred
Seventeen Thousand Dollars ($717,000). The Non-Competition Agreements shall be
either in the form annexed hereto as EXHIBIT 2.8 concerning Richard P. Budd and
Gerald L. Chrisco or as part of Employment and Non-Competition Agreements to be
entered into by Kenneth R. Budd and John D. Budd pursuant to SECTION 2.9 below.
The Non-Competition provisions shall prohibit each of the Principal Shareholders
from competing in any line of business that constitutes 5% or more of ABT's net
sales on the date of such principal Shareholder's termination of employment with
Lofts or termination of the Management Services Agreement with Budd Services,
Inc. (as described in SECTION 10.9), as the case may be, for the period
beginning on the Closing Date and ending as follows:
(i) With respect to John D. Budd and Kenneth R. Budd, the
third anniversary of the termination of employment with
Lofts in accordance with their respective Employment
Agreements described in SECTION 2.9 below, and
(ii) With respect to Richard P. Budd and Gerald L. Chrisco,
the second anniversary of termination of the Management
Services Agreement to be entered into by the Surviving
Corporation and Budd Services, Inc. as described in
SECTION 10.9.
2.9 EMPLOYMENT AGREEMENTS. At the Closing, Kenneth R.
Budd and John D. Budd shall each enter into an Employment and Non-
Competition Agreement with Lofts Mergerco in the form annexed
hereto as EXHIBIT 2.9.
ARTICLE III
CERTAIN ACTIONS
3.1 REASONABLE EFFORTS. Subject to the terms and conditions of this
Agreement and applicable law, each of the parties hereto shall 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, proper or advisable to
consummate
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and make effective the transactions contemplated by this Agreement as soon as
reasonably practicable, including such actions or things as any other party
hereto may reasonably request in order to cause any of the conditions to such
other party's obligation to consummate such transactions to be fully satisfied.
Without limiting the generality of the foregoing, the parties shall (and shall
cause their respective subsidiaries, and use their reasonable efforts to cause
their respective affiliates, directors, officers, employees, agents, attorneys,
accountants and representatives, to) consult and fully cooperate with and
provide reasonable assistance to each other in (i) obtaining all necessary
consents, approvals, waivers, licenses, permits, authorizations, registrations,
qualifications or other permission or action by, and giving all necessary
notices to and making all necessary filings with and applications and
submissions to, any Governmental Entity or other person or entity, (ii)
providing all such information about such party, its subsidiaries and its
officers, directors, partners and affiliates and making all applications and
filings as may be necessary or reasonably requested in connection with ABT
securities filings (which obligation shall survive the consummation of the
Merger); and (iii) in general, consummating and making effective the
transactions contemplated hereby.
3.2 EFFECTIVE DATE OF THE MERGER FOR ACCOUNTING AND TAX PURPOSES. In
the event that the Closing is consummated, the parties hereto agree that the
Merger shall be treated for accounting and tax purposes as if such transaction
had occurred prior to the opening of business on January 1, 1998 (the "Effective
Date"), regardless of when the Closing in fact occurs. In the event that the
Closing is consummated, ABT shall realize any operating profit or loss from the
operation of the business of the Acquired Companies after the Effective Date and
shall be responsible for the payment of all income taxes, both federal and
local, on taxable income from and after January 1, 1998. The shareholders of the
Acquired Companies shall be responsible for the payment of all income taxes,
both federal and state on taxable income prior to January 1, 1998 and ABT shall
not be responsible for any taxes owing for any period prior to January 1, 1998.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE ACQUIRED COMPANIES
The Acquired Companies warrant and represent to ABT and Lofts Mergerco
as follows (as used herein, the "Acquired Companies' best knowledge" or "to the
best knowledge of the Acquired Companies" shall mean information actually known
by Executive Management of the Acquired Companies without due
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<PAGE> 40
inquiry.
4.1 OWNERSHIP OF SHARES. The authorized, issued and outstanding capital
stock of each of the Acquired Companies (collectively, the "Stock") is set forth
in SCHEDULE 4.1. The owners of record, of the issued and outstanding shares of
capital stock of the Acquired Companies is set forth on SCHEDULE 4.1. The voting
stock set forth on SCHEDULE 4.1 is the sole issued and outstanding voting stock
of the Acquired Companies and the non-voting stock shown on SCHEDULE 4.1 is the
sole issued and outstanding non-voting stock of the Corporation. All of the
outstanding shares of Stock are duly authorized, validly issued, fully paid and
non-assessable. Except as set forth on SCHEDULE 4.1, the Stock has not been
pledged, mortgaged or otherwise encumbered in any way; there is no lien,
mortgage, charge, claim, pledge, liability, security interest or encumbrance of
any nature against the Stock; there are no options, warrants, rights of
subscription or conversion, calls, commitments, agreements, arrangements,
understandings, plans, contracts, proxies, voting trusts, voting agreements or
instruments of any kind or character, oral or written, to which any Shareholder
of or the Acquired Companies is a party, or by which any Shareholder of the
Acquired Companies is bound, relating to the issuance, voting or sale of the
Stock or any authorized but unissued shares of capital stock of the Acquired
Companies or of any securities representing the right to purchase or otherwise
receive any such shares of capital stock.
4.2 CAPACITY; ORGANIZATION; STANDING. The Acquired Companies have full
capacity to enter into and perform under this Agreement and all other
agreements and instruments to be entered into in connection with the
transactions contemplated hereby (the "Other Agreements"), and to consummate
such transactions, and, except as set forth in SCHEDULE 4.2 of this Agreement,
no other consent or joinder of any other persons or corporations is required to
consummate such transactions. Except as set forth on SCHEDULE 4.2, the Acquired
Companies; (a) own no other subsidiaries; (b) own 100% of the issued and
outstanding capital stock of each subsidiary listed on SCHEDULE 4.2; (c) and do
not own, directly or indirectly, shares or other securities in any other
corporation, or any interest in any partnership, joint venture or other
business entity. Except as set forth on SCHEDULE 4.2 of this Agreement, the
Acquired Companies have no interest in any entity engaged, directly or
indirectly, in businesses competitive with those of the Corporation or ABT.
This Agreement has been, and each of the Other Agreements and instruments
executed hereunder will, at the Closing, be duly executed and delivered by the
Acquired Companies. This Agreement constitutes, and each of the Other
Agreements will constitute, the legal, valid and binding obligations of the
Acquired
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Companies enforceable in accordance with their respective terms, except as such
enforceability may be limited by bankruptcy, insolvency, reorganization,
moratorium and similar laws affecting creditors' rights generally or by general
equitable principles. No proceedings for the bankruptcy or insolvency of the
Acquired Companies are pending or, to the best of their knowledge, are
contemplated. Each of Lofts and Budd Seed has been duly organized and is
validly existing under the laws of the States of New Jersey (Lofts) and North
Carolina (Budd Seed), respectively, has full corporate power and authority to
conduct its business as it is now being conducted and, except as set forth in
SCHEDULE 4.2, and is duly qualified to do business in each jurisdiction where
the nature of the property owned or leased, or the nature of the business
conducted by each of the Acquired Companies requires such qualification. The
Certificate of Incorporation of each of the Acquired Companies and all
amendments certified by the Secretary of State of New Jersey (Lofts) and North
Carolina (Budd Seed) and the By-laws, as amended to the date of this Agreement,
certified by the Secretary of the Corporation and stock records of each of the
Acquired Companies delivered to Lofts Mergerco are complete and correct. Each
of the Acquired Companies has all necessary licenses and authority to operate
its business as now being conducted and as will be conducted after the Closing
assuming such business is conducted as now operated.
4.3 LEGAL PROCEEDINGS.
(i) Except as set forth in SCHEDULE 4.3 of this Agreement,
the Acquired Companies are not a party to any pending litigation, arbitration or
administrative proceeding or, to the best of the Acquired Companies' knowledge:
(a) to any investigation, and (b) no such litigation, arbitration or
administrative proceeding or investigation that might result in any material
adverse change in the financial condition, business or properties of the
Acquired Companies is threatened.
(ii) Except as disclosed in SCHEDULE 4.3 to this Agreement,
the Acquired Companies have no knowledge of and have not received notice of any
complaints, claims or threats, plans or intentions to discontinue commercial
relations or transactions from any customer of the Acquired Companies, any
purchaser of goods or services from the Acquired Companies, or any employee or
independent contractor in each such case material or significant to the conduct
or operation of the Acquired Companies or their businesses or any party to any
agreement to which the Acquired Companies is a party.
(iii) Except as disclosed in SCHEDULE 4.3, to the best of
the Acquired Companies' knowledge, there is no claim (whether based on statute,
negligence, breach of warranty, strict
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liability or any other theory) relating directly or indirectly to any product
manufactured or sold, or any services performed, by the Acquired Companies.
(iv) To the best of the Acquired Companies' knowledge, the
Acquired Companies are under no obligation with respect to the return of goods
in the possession of customers.
4.4 AUTHORIZATION AND BINDING EFFECT; NO GOVERNMENTAL CONSENTS
REQUIRED. The execution and delivery by the Acquired Companies of this
Agreement, the Certificates of Merger and the consummation of the transactions
contemplated by this Agreement, as well as the performance of their obligations
under this Agreement, have been duly and validly authorized by all necessary
corporate action on the part of the Acquired Companies, including, but not
limited to, approval of the Acquired Companies' Boards of Directors. The
Shareholders by their signature to this Agreement, hereby agree to vote their
shares in favor of approval of this Agreement and of the Merger. This Agreement
has been duly executed and delivered by the Acquired Companies and constitutes
the legal, valid and binding obligations of the Acquired Companies, enforceable
in accordance with its terms. No consent, approval, or authorization of, notice
to, or declaration, filing or registrations with, any governmental body is
required in connection with the execution, delivery and performance of this
Agreement, or the consummation of the transactions contemplated by this
Agreement.
4.5 ENCUMBRANCES. Except as disclosed in SCHEDULE 4.5, there are no
liens, mortgages, deeds of trust, claims, charges, security interests or other
encumbrances or liabilities of any type whatsoever to which any of the assets of
the Acquired Companies are subject.
4.6 TRADEMARKS. The Acquired Companies own the trademarks, the trade
names, service marks, assumed names, copyrights and registrations therefor
(collectively "Trademarks") specified in SCHEDULE 4.6. The Trademarks have been
duly issued and have not been canceled, abandoned or otherwise terminated except
as otherwise indicated in SCHEDULE 4.6. The Acquired Companies are not in
default under any of the licenses or agreements relating to the Trademarks as
listed in SCHEDULE 4.6 and all of such licenses and agreements are in effect.
The Acquired Companies have not granted, and will not grant prior to the
Closing, licenses or other rights to use such Trademarks. No other Trademarks
are either owned or used by the Acquired Companies. To the best of the Acquired
Companies' knowledge, the operation of the Acquired Companies' business does not
infringe on the Trademarks of any third party. No claim has been made that there
is any such infringement. To the best of the Acquired
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Companies' knowledge, no Trademark of any other person infringes the Trademarks
of the Acquired Companies.
4.7 PATENTS, ETC. The Acquired Companies own the inventions, letters
patent, applications for letters patent and patent license rights, inventions,
processes, designs, formulas, trade secrets, Plant Variety Protection Act
("PVPA") Certificates, know-how and other industrial property rights
(collectively "Patents") necessary for the conduct of its business, specified as
belonging to it in SCHEDULE 4.7. The Patents have been duly issued and have not
been canceled, abandoned or otherwise terminated except as otherwise indicated
in SCHEDULE 4.7. The Acquired Companies are not in default under any of the
licenses or agreements relating to the Patents as listed in SCHEDULE 4.7 and all
of such licenses and agreements are in effect. The Acquired Companies have not
granted, and will not grant prior to the Closing, licenses or other rights to
third parties to use such Patents. No other Patents are owned or used by the
Acquired Companies. To the best of the Acquired Companies' knowledge, the
operation of the Acquired Companies' business does not infringe on the Patent
rights of any third party. No claim has been made that there is any such
infringement. To the best of the Acquired Companies' knowledge, no Patent of any
person infringes the Patents of the Acquired Companies.
4.8 FINANCIAL STATEMENTS.
(i) The audited financial statements of Budd Seed as of and
for the years ended December 31, 1994, 1995 and 1996, and of Lofts for the years
ended June 30, 1995 and 1996 and December 31, 1996 previously delivered to ABT,
the audited financial statements of Budd Seed and Lofts as of and for the Eleven
Months ended November 30, 1997 and the unaudited financial statements of Budd
Seed and Lofts as of October 31, 1997 and December 31, 1997 which shall be
delivered to ABT (collectively, the "Financials") together with the related
notes and schedules, when required, true, correct and complete copies of which
are attached hereto as SCHEDULE 4.8, (a) are in accordance with the books of
account and records of the Acquired Companies; (b) except as disclosed on
SCHEDULE 4.8 present fairly in all material respects, and are true, correct and
complete statements of the financial condition and the results of operations of
the Acquired Companies as at and for the periods therein specified; and (c) do
not include or omit to state any material fact which renders the Financials
misleading.
(ii) Except as and to the extent shown or provided for in
the Financials or the notes and schedules thereto or as disclosed in any of the
Schedules to this Agreement or such
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current liabilities as may have been incurred since October 31, 1997 in the
ordinary course of business, the Acquired Companies have no material claims,
liabilities or obligations (whether accrued, absolute, contingent or otherwise)
which might be or become a charge against the assets or liabilities of the
Acquired Companies; as of October 31, 1997, there was no material asset used by
the Acquired Companies in their operations that has not been reflected in the
Financials, and, except as set forth in the Financials, no assets have been
acquired by the Acquired Companies since such date except in the ordinary course
of business; and (b) all reserves (if any) established by the Acquired Companies
and set forth in the Financials are adequate, appropriate and reasonable and
there are no loss contingencies (as such term is used in Statement of Financial
Accounting Standard No. 5, of the Financial Accounting Standards Board) which
are not adequately provided for in the Financial Statements.
(iii) Except as disclosed in the Financials, there has been
no decrease in shareholders' equity as compared with the amount shown for such
shareholders' equity as at October 31, 1997, and no material adverse changes in
the financial position of the Acquired Companies (on a consolidated basis,
including both Lofts and Budd and subsidiaries) since October 31, 1997 (for this
subsection (iii) customary or seasonal fluctuations in the Financials as a
result of ordinary and normal operation of the business of the Acquired
Companies shall not constitute a material adverse change).
(iv) The Financials do not include any assets, liabilities,
income or expenses of any entity other than the Acquired Companies. All
transactions between the Acquired Companies and any other entity in which any of
the Shareholders is an officer, director or owns 5% or more of the equity have,
since June 28, 1996, been at prices no less favorable to the Acquired Companies
than could have been obtained from any independent third party and prior to June
28, 1996, the Acquired Companies are not aware of any such material transaction
except as set forth on SCHEDULE 4.8.
4.9 ABSENCE OF CERTAIN CHANGES. Except as disclosed in SCHEDULE 4.9,
since October 31, 1997, there has not been any material adverse change in the
condition (financial or otherwise), operations, assets, liabilities, earnings,
business, prospects or results of operations of the Acquired Companies, on a
consolidated basis, including both Lofts and Budd and each of their subsidiaries
(for this SECTION 4.9 customary or seasonal fluctuations in the Financials as a
result of ordinary and normal operation of the business of the Acquired
Companies shall not constitute a material adverse change).
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4.10 TAX MATTERS.
(i) Except as disclosed on SCHEDULE 4.10, Budd Seed has had
in effect, for its last three tax years, an election under Subchapter S of the
Code and Lofts has had such election in effect since July 1, 1996; and Budd Seed
and Lofts will each terminate such election with ABT's review of such
terminations, as of January 1, 1998 and each has timely filed all federal, state
and local income tax returns and has timely filed with all other appropriate
governmental agencies all sales, ad valorem, franchise and other tax, license,
gross receipts and other similar returns and reports required to be filed by the
Acquired Companies. The Acquired Companies have reported all taxable income and
losses on those returns on which such information is required to be reported,
and paid or provided for the payment of all taxes due and payable by the
Acquired Companies on said returns or taxes due pursuant to any assessment
received by it, including without limitation, any taxes required by law to be
withheld and/or paid in connection with any officer's or employee's compensation
or due pursuant to any assessment received by it. There are no agreements for
the extension of time for the assessment or payment of any amounts of tax. The
Shareholders have made available to ABT for inspection copies of income tax
returns that are true and complete copies of the federal and applicable state,
local or other income tax returns filed by the Acquired Companies for the
taxable years ended December 31, 1994, December 31, 1995, December 31, 1996 and
any other open tax periods, as set forth on SCHEDULE 4.10. The Acquired
Companies shall bear all expenses and responsibilities for the filing of federal
and applicable state, local or other income tax returns and reports of the
Acquired Companies for the taxable year ended December 31, 1997, but ABT and the
Acquired Companies hereby covenant and agree that the Acquired Companies will
not file amended income tax returns for any period ending on or before December
31, 1997 without first notifying the Shareholder Representative. All tax
liabilities of the Acquired Companies arising through the end of the taxable
year ended December 31, 1996 have been paid. All tax liabilities of the Acquired
Companies arising after December 31, 1996 have been paid or adequately disclosed
and properly reserved for on the books and records and financial statements of
the Acquired Companies. No federal or applicable state, local or other tax
return of the Acquired Companies for any period is currently under audit by the
Internal Revenue Service or any state, local or other tax authorities except as
set forth on SCHEDULE 4.10. No claim has been made by federal, state, local or
other authorities relating to any such returns or any audit. For purposes of
this SECTION 4.10, the word "timely" shall mean that such returns were filed
within the time prescribed by law for the filing thereof,
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including the time permitted under any applicable extensions. All taxes which
the Acquired Companies are required by law to withhold and collect have been
duly withheld and collected, and have been timely paid over to the proper
authorities to the extent due and payable.
4.11 ACCOUNTS RECEIVABLE AND INVENTORY. (i) The accounts receivable of
the Acquired Companies reflected in the Financials as at October 31, 1997, and
the accounts receivable acquired by the Acquired Companies since such date are
valid, bona fide, subsisting claims for the aggregate amounts thereof reflected
in the Financials net of the reserves or allowances for doubtful receivables
reflected in the Financials or thereafter in the Acquired Companies' books and
records uniformly maintained in accordance with the Financials, accounted for in
accordance with generally accepted accounting principles; the Company believes
it is performing substantially as presented in the Sample Purchase Model; and
the Acquired Companies know of no reason that would make such accounts
receivable, net of such amounts as the Acquired Companies have reserved on their
books as of October 31, 1997, taken as a whole, not collectible.
(ii) The inventory of the Acquired Companies reflected in
the Financials as at October 31, 1997, and the inventory acquired by the
Acquired Companies since such date and as set forth on SCHEDULE 4.11 (a) has
been purchased in the ordinary course of business, (b) has been fully paid for
unless otherwise reflected in the Financials, (c) is marketable or adequate
provision for obsolescence has been provided and (d) to the best of the Acquired
Companies' knowledge, there is no reason that would make such inventory, net of
such amounts as the Acquired Companies have reserved on their books as of
October 31, 1997, taken as a whole, not marketable.
4.12 TITLE AND CONDITION OF PROPERTIES. (i) The Acquired Companies do
not own any real property, except as disclosed on SCHEDULE 4.12. Except as
disclosed in SCHEDULE 4.12, the Acquired Companies have good and marketable
title to all properties and assets, real and personal, tangible and intangible,
reflected in the Financials and all properties acquired subsequent to October
31, 1997, which have not been disposed of in the ordinary course of business
since October 31, 1997, which property is subject to no mortgage, lien, deed of
trust, claim, security interest, liability, conditional sales agreement,
easement, right-of-way or any other encumbrance except as disclosed in SCHEDULE
4.12.
(ii) SCHEDULE 4.12 contains an accurate list of all leases
and other agreements under which any of the Acquired Companies is lessee of any
real property and/or any personal
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property (the "Leases"). Each of the Leases is in full force and effect and
constitutes the legal, valid and binding obligation of the parties thereto. The
Acquired Companies enjoy peaceful and undisturbed possession under all of the
Leases. True and correct copies of the Leases have heretofore been furnished to
ABT. No notice of default or claim under any of the Leases, or to the best of
the Acquired Companies knowledge, no indication of any default or claim has
occurred or desire not to renew any of the Leases, has been received by the
Acquired Companies, and the Acquired Companies have performed in all material
respects, all obligations required to be performed by them to date under the
Leases.
(iii) All personal property, machinery and equipment which
is material to the business, operations or condition (financial or otherwise) of
the Acquired Companies is in operating condition and, subject to routine
maintenance and ordinary wear and tear, have been maintained in accordance with
reasonable industry standards and is suitable for the purpose for which it is
used. Except as disclosed in Schedule 4.12, the Acquired Companies are not aware
of nor have they received notice of, the violation of any applicable zoning
regulation, ordinance or other law, order, regulation or requirement in force on
the date hereof relating to the Acquired Companies' businesses or their owned or
leased real or personal properties.
4.13 DESCRIPTION OF MATERIAL CONTRACTS. (i) Schedule 4.13
contains a complete and correct list as of the date hereof of all agreements,
contracts, instruments and commitments, obligations and understandings of the
following types, written or oral, to which any of the Acquired Companies is a
party, under which they have any rights or by which they or any of their
properties is bound, as of the date hereof: (a) mortgages, indentures, security
agreements and other agreements and instruments relating to the borrowing of
money or extension of credit; (b) employment and consulting agreements with
annual compensation in excess of $52,000; (c) collective bargaining agreements;
(d) bonus, profit-sharing, compensation, stock option, pension, retirement,
deferred compensation or other plans, agreements, trusts, funds or arrangements
for the benefit of sales and management personnel (whether or not legally
binding); (e) sales agency, manufacturer's representative or distributorship
agreements; (f) agreements, orders or commitments for the purchase by the
Acquired Companies of materials, supplies or finished products exceeding
$100,000 in the aggregate from any one person; (g) agreements, orders or
commitments for the sale by the Acquired Companies of their products or services
exceeding $25,000; (h) agreements or commitments for capital expenditures in
excess of $25,000 for any single project (it being warranted that the commitment
for all undisclosed contracts for such
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agreements or commitments does not exceed $100,000 in the aggregate); (i)
agreements relating to research; (j) agreements relating to PVPA Certificates or
licenses or other rights to use PVPA Certificates; (k) agreements relating to
the payment of royalties; (l) seed purchase contracts or other contracts with
growers; (m) brokerage or finder's agreements; (n) joint venture agreements; and
(o) other agreements, contracts and commitments which individually or in the
aggregate for any one party involve any expenditure by the Acquired Companies of
more than $100,000.
(ii) The Acquired Companies have made available to ABT
complete and correct copies of all written agreements, contracts, commitments,
obligations and undertakings, together with all amendments thereto, listed on
the Schedules hereto, and such Schedules contain accurate descriptions of all
oral agreements listed on such Schedules. To the best of the Acquired Companies'
knowledge, all such agreements, contracts, commitments, obligations and
undertakings are in full force and effect and, except as disclosed in Schedule
4.13, all parties to, or otherwise bound by, such agreements, contracts,
commitments, obligations and undertakings have performed all obligations
required to be performed by them to date and the Acquired Companies are not in
default and no event, occurrence, condition or act exists which gives rise to
(or which with notice or the lapse of time, or both, could result in) a default
or right of cancellation, acceleration or loss of contractual benefits under,
any such contract, agreement, commitment, obligation or undertaking. There has
been no threatened cancellations thereof, and there are no outstanding disputes
under any such contract, agreement, commitment, obligation or undertaking.
Except as set forth in Schedule 4.13, or in the express terms of any written
contract, agreement, commitment, obligation or undertaking, no consent of any
party is required under any such contract, agreement, commitment, obligation or
undertaking which would make such agreements not binding and in full force and
effect as of the Closing Date.
(iii) Except as otherwise set forth in Schedule 4.13, to the
best of the Acquired Companies' knowledge, each contract, lease, instrument and
commitment required to be described in the Schedules hereto is, on the date
hereof, and will be at the Closing, except to the extent it terminates or is
terminable by its terms in full force and effect and is and will constitute a
legal, valid and binding obligation of the Acquired Companies and the respective
parties to such agreements, and there is not, under any such contract, lease,
instrument or commitment, any existing default by the Acquired Companies or such
other parties or any event that, with notice, lapse of time or both, would
constitute a default by the Acquired Companies or such other parties in respect
of which adequate steps have not
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been taken to cure such default or to prevent a default from occurring or
continuing. Any contracts, leases or commitments held in the names of any of the
Shareholders which will not belong to Lofts Mergerco by operation of law
following the Closing and listed on the Schedules as belonging to the Acquired
Companies shall be assigned either to Lofts Mergerco or the Acquired Companies
prior to the Closing Date.
(iv) No agreement, contract, commitment, obligation or
undertaking listed on the Schedules hereto to which the Acquired Companies is a
party or by which they or any of their properties is bound, except as
specifically set forth in Schedule 4.13, contains any provision which materially
adversely affects or in the future may (so far as the Acquired Companies can
reasonably now foresee) materially adversely affect the condition, properties,
assets, liabilities, business, operations or prospects of the Acquired Companies
following the date hereof and upon the Closing Date. Furthermore, to the best of
the Acquired Companies' knowledge, the material suppliers, customers and clients
of the Acquired Companies will continue to supply and purchase from the Acquired
Companies after the Closing.
4.14 ACCOUNTS PAYABLE. Schedule 4.14 to this Agreement sets
forth a true, correct and complete list of all accounts payable of the Acquired
Companies at October 31, 1997, including amounts payable to trade creditors (the
"Trade Creditors") and other short-term liabilities commonly identified as
accounts payable, which are, to the best of their knowledge, bona fide, valid
and binding obligations of the Acquired Companies incurred in the ordinary
course of business on an arms-length basis.
4.15 DEFAULT; VIOLATIONS OR RESTRICTIONS, THIRD PARTY CONSENTS.
The execution, delivery and performance of this Agreement and of any agreement
to be executed and delivered by the Acquired Companies in connection with the
transactions contemplated hereby and the fulfillment of the terms and conditions
herein set forth and the consummation of any of the transactions contemplated
hereby or thereby will not (or with the giving of notice or the lapse of time or
both would not) (i) result in the breach of any term or provision of the
Certificates of Incorporations or By-laws of the Acquired Companies or (ii)
violate any provision of or result in the breach of, modification of,
acceleration of the maturity of obligations under, or constitute a default, or
give rise to any right of termination, cancellation, acceleration or otherwise
be in conflict with or result in a loss of contractual benefits to the Acquired
Companies, under any of the terms, conditions or provisions of any contract,
lease, note, bond, mortgage, deed of trust, indenture, license, security
agreement, agreement or other instrument or obligation by which the Acquired
Companies or the
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Shareholders is a party or by which any of them may be bound, or require any
consent, approval or notice under any law, rule or decree or any such document
or instrument; or result in the creation or imposition of any lien, claim,
restriction, charge or encumbrance upon any of the Acquired Companies' assets or
interfere with or otherwise adversely affect the ability to carry on the
business of the Acquired Companies after the Closing Date on substantially the
same basis as it is now conducted by the Acquired Companies. Except as set forth
in Schedule 4.15, no consent of any party to any material agreement, contract,
instrument, lease, license, note, bond, mortgage, indenture or other obligation
to which the Acquired Companies is a party, or by which them or any of their
assets is subject, is required for the execution, delivery and performance of
this Agreement and the consummation of the transactions contemplated hereby and
the continuation thereof after the Merger without the Surviving Corporation
becoming obligated to make payments greater than would have been required in the
event the Merger was not consummated.
4.16 COURT ORDERS AND DECREES. Except as set forth in Schedule
4.16, the Acquired Companies have not received written or oral notice that there
is outstanding, pending, or threatened any order, writ, injunction or decree of
any court, governmental agency or arbitration tribunal against or affecting the
Acquired Companies, the Stock or any of the Acquired Companies' assets. To the
Acquired Companies' best knowledge the Acquired Companies are in compliance in
all material respects with all applicable Federal, state, county, municipal (or
of any subdivision thereof) laws, regulations and administrative orders in force
at any applicable time to which the Acquired Companies may be subject.
4.17 BOOKS AND RECORDS. The books and records of the Acquired
Companies are in all material respects, complete and correct and have been
maintained in accordance with good business practice. True and complete copies
of the Certificates of Incorporation and By-laws of the Acquired Companies and
all amendments thereto and true and complete copies of all minutes, resolutions,
stock certificates and stock transfer records of the Acquired Companies are
contained in the minute books and stock transfer books of the Acquired Companies
and will be delivered to Lofts Mergerco at the Closing. The minute books, stock
certificate books, stock transfer records and such other books and records as
may be requested by Lofts Mergerco, as exhibited to Lofts Mergerco and its
representatives, are complete and correct in all material respects.
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4.18 PENSION AND WELFARE PLANS.
(i) Pension and Profit Sharing Plans. Except as set forth
in Schedule 4.18, the Acquired Companies do not have in effect any pension,
profit sharing or other employee benefit plan described under Section 3(2)(A) of
the Employee Retirement Income Security Act of 1974, as amended ("ERISA"). All
benefits payable under any terminated employee pension benefit plan (as such
term is defined in Section 3(2)(A) of ERISA) previously maintained by the
Acquired Companies or to which it has previously contributed have been paid in
full, and the Acquired Companies do not have any material unfunded liability in
respect of any such plan to the Pension Benefit Guaranty Corporation or to the
participants in such plan or to the beneficiaries of such participants. Each
such terminated plan was terminated substantially in accordance with the
applicable provisions of law or any agreement or contract relating to any such
plan and has been terminated without liability to the Acquired Companies.
(ii) Welfare Plans. For each plan, fund, or arrangement of
the Acquired Companies which is an employee welfare benefit plan, whether or not
currently maintained (within the meaning of ERISA Section 3(1)) (a "Welfare
Plan"), the following is true:
(A) each such Welfare Plan intended to meet the
requirements for tax-favored treatment under Subchapter B of Chapter 1 of the
Code meets such requirements in all material respects;
(B) there is no voluntary employees' beneficiary
association (within the meaning of Section 501(c)(9) of the Code) maintained
with respect to any such Welfare Plan;
(C) there is no disqualified benefit (as such term is
defined in Code Section 4976(b)) which would subject the Acquired Companies, ABT
or Lofts Mergerco to a tax under Code Section 4976(a);
(D) each such Welfare Plan which is a group health plan
complies and has complied in all material respects with the applicable
requirements of Code Section 4980B, and would comply in all material respects
with Sections 9801 through 9806 if such provisions were now in effect, Title
XXII of the Public Health Service Act, and the applicable provisions of the
Social Security Act and is not and has not been a nonconforming group health
plan under Section 5000(c) of the Code;
(E) each such Welfare Plan may be amended or terminated by
the Acquired Companies, ABT or Lofts Mergerco, on or at any time after, the
Closing Date and after any advance notice to participants or similar measures
required by law which are non-waivable under the Welfare Plan;
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(F) no such Welfare Plan provides for continuing benefits
or coverage for any participant (including past, present or future retirees) or
such participant's beneficiary after termination of employment except as
required by the Consolidated Omnibus Reconciliation Act of 1985 ("COBRA") or any
other state or Federal law or except as provided in Schedule 4.18; and
(G) no claims have been made and no other events have
occurred that might form the basis of a claim which has substantially increased
or based on customary insurance industry practice might substantially increase,
the premiums or other charges of the Acquired Companies under any Welfare Plan.
4.19 INSURANCE. (i) Schedule 4.19 contains a correct and complete
description of all current policies of insurance by or on behalf of the Acquired
Companies in which the Acquired Companies are named as an insured party,
beneficiary or loss payable payee. The Acquired Companies have at all times
since June 28, 1996 maintained and will at all times prior to the Closing Date
maintain insurance coverage with respect to their properties, in respect of
liabilities and risks prudently insured against. The policies described in
Schedule 4.19 are outstanding and in force as of the date hereof, cover risks
normally insured against and are in amounts normally carried and there is no
default notice of cancellation or non-renewal with respect to any material
provision contained in any such policy.
(ii) Schedule 4.19 contains a correct and complete description of all
such policies of insurance held by or on behalf of the Acquired Companies,
current premiums paid and all outstanding insurance claims since June 30, 1996
in excess of $25,000 made by or against the Acquired Companies for damage to or
loss of property or income which have been referred to insurers or which the
Acquired Companies believe to be covered by commercial insurance. Schedule 4.19
also contains a list of all current general comprehensive liability policies
carried by the Acquired Companies including excess liability policies and any
agreements, arrangements or commitments under which the Acquired Companies
indemnify any other person or are required to carry insurance for the benefit of
any other person.
4.20 RIGHTS OF THIRD PARTIES. Other than as disclosed in
Schedule 4.20 attached hereto, or specifically provided for in this Agreement,
the Acquired Companies have not entered into any leases, licenses, easements or
other agreements, recorded or unrecorded, granting rights to third parties in
any real or personal property of the Acquired Companies, and no person or other
entity has any right to possession, use or occupancy of any of the property of
the Acquired Companies.
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4.21 POWERS OF ATTORNEY. Except as set forth in Schedule 4.21,
and except for powers of attorney authorizing representation of the Acquired
Companies before the Internal Revenue Service, there are no persons, firms,
associations, corporations or business organizations holding general or special
powers of attorney from the Acquired Companies.
4.22 LABOR MATTERS. Except as set forth in Schedule 4.22, the
Acquired Companies are not a party to any collective bargaining agreement with
any labor union or association. There are no discussions, negotiations, demands
or proposals that are pending or have been conducted or made with or by any
labor union or association, and there are not pending or threatened any labor
disputes, strikes or work stoppages that may have a material adverse effect upon
the continued business or operation of the Acquired Companies. To the best of
the Acquired Companies' knowledge, the Acquired Companies (i) are in compliance
with all federal and state laws respecting employment and employment practices,
terms and conditions of employment and wages and hours, and (ii) are not engaged
in any unfair labor practices.
4.23 RELATIONSHIPS WITH VENDORS AND CUSTOMERS. To the best
knowledge of the Acquired Companies there are no present or future conditions or
state of facts or circumstances that would materially adversely affect the
financial or business condition of the Acquired Companies after the Closing
Date. The Acquired Companies' relationships with their customers, clients and
vendors are satisfactory, and the Acquired Companies have no knowledge of any
facts or circumstances which might materially alter, negate, impair or in any
way materially adversely affect the continuity of any such relationships. Except
as set forth in Schedule 4.23, the Acquired Companies have no knowledge of any
material outstanding claims of any of its customers or clients presently
outstanding, pending or threatened against the Acquired Companies. The Acquired
Companies have no knowledge of any present or future condition or state of facts
or circumstances which would prevent the business of the Acquired Companies from
being carried on by Lofts Mergerco after the Closing Date in essentially the
same manner as it is presently being carried on.
4.24 APPROVALS AND AUTHORIZATIONS. The Acquired Companies have
obtained all necessary consents, approvals and authorizations in connection with
the transactions contemplated hereby that are required by law or otherwise in
order for the Acquired Companies to continue all of their present business
following the Closing Date.
4.25 COMPENSATION PLANS. Schedule 4.25 contains a correct and
complete list of all employees of the Corporation whose annual compensation for
1997 is expected to exceed $52,000.
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Schedule 4.25 contains a correct and complete description of all compensation
plans and arrangements; bonus and incentive plans and arrangements; deferred
compensation plans and arrangements; stock purchase and stock option plans and
arrangements; hospitalization and other life, health or disability insurance or
reimbursement programs; holiday, sick leave, severance, vacation, tuition
reimbursement, personal loan and product purchase discount policies and
arrangements, policy manuals and any other plans or arrangements providing for
benefits for employees of the Acquired Companies.
4.26 GOVERNMENTAL LICENSES. Schedule 4.26 contains a correct and
complete list of all material governmental and administrative consents, permits,
appointments, approvals, licenses, certificates and franchises which are (i)
necessary for the operation of the Acquired Companies, and (ii) required in
connection with the Shareholders' and the Acquired Companies' execution,
delivery or performance of this Agreement, all of which have been obtained by
the Acquired Companies and are in full force and effect.
4.27 BROKERS. No agent, broker, investment banker, person, or
firm acting on behalf of any of the Shareholders, the Acquired Companies or any
firm or corporation affiliated with any of them, or under their authority, is or
will be entitled to a financial advisory fee, brokerage commission, finder's fee
or other like payment in connection with the transactions contemplated hereby
except NationsBank, whose fee is to be paid by the Acquired Companies.
4.28 COMPLIANCE WITH LAWS.
(i) The operations and activities of the Acquired Companies
have previously and continue to comply in all material respects with all
applicable Federal, state and local laws, statutes, codes, ordinances, rules,
regulations, permits, judgments, orders, writs, awards, decrees or injunctions
(collectively, the "Laws"), as in effect on or before the date of this
Agreement, including, without limitation, all Laws relating to seed labeling and
all rules and regulations of the Occupational Safety and Health Administration.
To the best of the Acquired Companies' knowledge, neither the ownership of the
Acquired Companies nor the conduct of the business of the Acquired Companies as
presently conducted conflicts with the rights of any other person, firm or
company or violates, with or without the giving of notice or the passage of
time, or both, will violate, conflict with or result in a default, right to
accelerate or loss of rights under, any terms or provisions of their
Certificates of Incorporation or By-laws as presently in effect, or any lien,
encumbrance, mortgage, deed of trust, lease,
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license, agreement, understanding, or Laws to which the Acquired Companies are a
party or by which they may be bound or affected. Except as set forth in Schedule
4.28, the Acquired Companies have received no notice of communication from any
third party asserting a failure to comply with any Laws, nor have the Acquired
Companies received any notice that any authority or third party intends to seek
enforcement against the Acquired Companies to compel compliance with any such
Laws.
(ii) Except as set forth in Schedule 4.28, there are no
existing claims or to the best of the Acquired Companies' knowledge, potential
claims which may exist against the Acquired Companies, for, with respect to, or
as direct or indirect result of, the presence on or under, or the escape,
seepage, leakage, spillage, discharge, or emission discharging, from the real
property of the Acquired Companies of any "Hazardous Material," including,
without limitation, any losses, liabilities, damages, injuries, costs, expenses,
reasonable fees of counsel or claims asserted or arising under the Comprehensive
Environmental Response, Compensation and Liabilities Act ("CERCLA"), any
so-called "Super Fund" or "Super Lien" law or any other applicable federal,
state or local statute, law, ordinance, code, rule, regulation, order or decree
now or at any time hereafter in effect, regulating, relating to or imposing
liability or standards of conduct concerning any Hazardous Material.
(iii) Except as set forth in Schedule 4.28, since the date
first acquired or leased by the Acquired Companies, the Acquired Companies have
not placed any "Hazardous Material" on or under the real property owned or
leased by the Acquired Companies and, to the best of the Acquired Companies'
knowledge, there has been no "Hazardous Material" on or under the real property
owned or leased by the Acquired Companies.
(iv) Neither the Acquired Companies nor to the best
knowledge and belief of the Acquired Companies, any officer, employee or agent
of the Acquired Companies acting on its behalf, nor any other person acting on
its behalf, has, directly or indirectly, within the past three years given,
agreed to give or received or agreed to receive any gift or similar benefit to
any customer, supplier, governmental employee or other person who is or may be
in a position to help or hinder the Acquired Companies (or assist the Acquired
Companies in connection with any actual or proposed transaction) which (i) might
subject the Acquired Companies to any damage or penalty in any civil, criminal
or governmental litigation or proceeding, (ii) if not given in the past might
have had an adverse effect on the assets, business or operation of the Acquired
Companies, or (iii) if not continued in the future, might adversely affect the
assets, the business or the operations or prospects of the Acquired Companies,
or which
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might subject the Acquired Companies to suit or penalty in any private or
governmental litigation or proceeding.
4.29 GUARANTEES. Except as disclosed in Schedule 4.29, the
Shareholders have not personally guaranteed any of the obligations of the
business of the Acquired Companies.
4.30 BENEFITS. All accrued holiday, vacation, sick or other
compensation or benefits to which employees of the Acquired Companies are
entitled to receive from the Acquired Companies is set forth on Schedule 4.30.
4.31 SCHEDULES. The Acquired Companies will deliver to ABT
complete and correct schedules (the "Schedules"), in form and substance
reasonably acceptable to ABT as described in Section 11.6, specifying with
respect to the business, properties, assets and obligations of the Acquired
Companies each and every item in the categories listed as Schedules hereunder,
and complete and correct copies of the documents and other material from which
such Schedules were compiled. The Acquired Companies will deliver updated
schedules, supplemented as reasonably required by ABT prior to the Closing Date,
as described in Section 11.6. Absent any such notice of objection the Schedules
as delivered to ABT shall be final and binding on the parties hereto.
4.32 DISCLOSURE. (i) No representation, warranty, covenant or
statement by the Acquired Companies in this Agreement, including the Schedules
and Exhibits attached hereto and the certificates furnished or to be furnished
to ABT and Lofts Mergerco pursuant hereto, contains or will contain any untrue
statement of a material fact, or omits or will omit to state a material fact
required to be stated herein or therein or necessary to make the statements
contained herein or therein in light of the circumstances under which they were
made, not false or materially misleading.
(ii) There are no stockholders agreements, preemptive
rights or other agreements, arrangements, groups, commitments or understandings,
oral or written, that have not been disclosed to ABT and Lofts Mergerco,
relating to the voting, issuance, acquisition or disposition of shares of the
Acquired Companies or the conduct or management of the Acquired Companies by its
Board of Directors.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF ABT
AND LOFTS MERGERCO
ABT and Lofts Mergerco warrant and represent jointly
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and severally to the Shareholders and the Acquired Companies as follows (as used
herein, "ABT and "Lofts Mergerco's best knowledge" or to the best knowledge of
ABT and Lofts Mergerco" shall mean information actually known by Executive
Management of ABT without due inquiry):
5.1 ORGANIZATION; CAPITALIZATION. ABT and Lofts Mergerco are
each a corporation duly organized, validly existing and in good standing under
the laws of the State of Nevada, and each has corporate power and authority to
carry on its business as now conducted and to own, lease or operate the
properties and assets now used by it in connection therewith and to consummate
the transactions contemplated by this Agreement. ABT and Lofts Mergerco are each
duly qualified and in good standing to do business in each jurisdiction in which
the nature of its business or the ownership or leasing of its properties make
such qualification necessary.
The authorized capital stock of ABT consists of 50,000,000
shares of common stock, of which 25,282,222 shares are issued and outstanding on
September 19, 1997. All outstanding shares of Common Stock have been duly
authorized and are validly issued, fully paid and nonassessable. The ABT shares
of Common Stock reserved for issuance pursuant to this Agreement are free of any
rights in others and have not been reserved for any other purpose, and such
shares are available for issuance as provided pursuant to the Plan of Merger.
Holders of ABT shares of Common Stock do not have preemptive rights. ABT has
issued warrants, options, rights and securities convertible into ABT Common
Stock and other arrangements or commitments which obligate ABT to issue shares
of its common stock. At June 30, 1997, an aggregate of 1,123,600 options were
outstanding under ABT's 1994 Employee stock Option Plan (the"Plan"); as of
September 19, 1997 officers and employees of ABT held an aggregate of 3,545,000
options granted outside of the Plan. No other warrants, options, rights,
convertible securities or other arrangements or commitments are outstanding as
of September 30, 1997.
5.2 CAPACITY. ABT and Lofts Mergerco each has full right, power
and capacity to execute, deliver and perform its obligations under this
Agreement and the Other Agreements required to be executed by the ABT and Lofts
Mergerco each in connection herewith and to consummate the transactions
contemplated hereby. The execution and delivery of this Agreement does not, and
the consummation of the transactions contemplated by this Agreement will not,
conflict with or constitute a breach of any term or provision of the
Certificates of Incorporation or By-laws of ABT or Lofts Mergerco or constitute
a default under any material law, rule, regulation, indenture, instrument,
mortgage, deed of trust, or other
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agreement or instrument to which ABT or Lofts Mergerco is a party or by which it
is bound.
5.3 LEGAL PROCEEDINGS. Neither ABT, Lofts Mergerco nor any of
their executive officers or directors is a party to or affected by any pending
litigation, arbitration or any governmental proceeding or investigation that
would in any manner affect its entering into this Agreement or performing the
transactions contemplated hereby or that might result in any material adverse
change in the financial condition, business or properties of ABT or Lofts
Mergerco, and to the best of ABT and Lofts Mergerco's knowledge, no such
litigation, arbitration, proceeding or investigation is threatened.
5.4 CONSENTS AND APPROVALS. No governmental license, permit or
authorization, and no registration or filing with any court, governmental
authority or regulatory agency, is required in connection with ABT and Lofts
Mergerco's execution, delivery or performance of this Agreement. ABT and Lofts
Mergerco shall execute, deliver and perform their obligations under this
Agreement, and no consent or other approval of any other party is required to be
obtained by ABT and Lofts Mergerco in connection with the transactions
contemplated hereby.
5.5 BINDING OBLIGATION. This Agreement has been duly executed
and delivered by ABT and Lofts Mergerco and upon delivery of the Schedules to
ABT and acceptance of same, as provided in Section 11.6(1)(A), constitutes the
legal, valid and binding obligations of ABT and Lofts Mergerco, enforceable
against ABT and Lofts Mergerco in accordance with its terms, except to the
extent that such enforceability may be limited by general principles of equity
or bankruptcy, insolvency and other similar laws affecting the enforcement of
creditors' rights generally. All action of the Boards of Directors of ABT and
Lofts Mergerco and all other corporate action necessary to authorize the
execution, delivery and performance of this Agreement and the consummation of
the transactions contemplated hereby has been duly and validly taken.
5.6 BROKERS; FINDERS. No agent, broker, investment banker,
person or firm acting on behalf of ABT and Lofts Mergerco or any firm or
corporation affiliated with ABT and Lofts Mergerco or under their authority is
or will be entitled to any brokers' or finders' fee or any other commission or
similar fee in connection with any of the transactions contemplated hereby
including the fact that ABT and Lofts Mergerco shall not be responsible for any
fees due NationsBank in connection with the transactions contemplated hereby all
of which shall be paid by the Acquired Companies.
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5.7 ACCURACY. No representation, warranty, covenant or
statement by ABT and Lofts Mergerco in this Agreement, including the Schedules
and Exhibits attached hereto and the certificates furnished or to be furnished
to the Shareholders and the Acquired Companies pursuant hereto, contains or will
contain any untrue statement of a material fact, or omits or will omit to state
a material fact required to be stated herein or therein or necessary to make the
statements contained herein or therein in light of the circumstances under which
they were made, not false or materially misleading.
5.8 SEC FILINGS. ABT has made available to the Shareholders for
inspection a true and complete copy of each report, schedule, registration
statement and definitive proxy statement filed by ABT with the SEC since July 1,
1995 and prior to the date of this Agreement (the "SEC Documents"), which are
all the documents (other than preliminary material) that ABT was required to
file with the SEC since such date. As of their respective dates, the SEC
Documents complied in all material respects with the requirements of the
Securities Act or the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), as the case may be, and the rules and regulations of the SEC promulgated
thereunder applicable to such SEC Documents, and none of the SEC Documents
contained as of the date of its filing any untrue statement of a material fact
or omitted to state a material fact required to be stated therein or necessary
to make the statement therein, in light of the circumstances under which they
were made, not misleading.
5.9 FINANCIAL STATEMENTS; ADVERSE CHANGE. The financial
statements of ABT as and for the periods ended June 30, 1995, 1996 and 1997
together with related notes and schedules, true, correct and complete copies of
which have been delivered to the Acquired Companies, (a) are in accordance with
the books of account and records of ABT; (b) present fairly in all material
respects, and are true, correct statements of the financial condition and the
results of operations of ABT as at and for the periods therein specified; and
(c) do not include or omit to state any fact which renders said financial
statements misleading. Since June 30, 1997, there has not been any material
adverse change in the condition (financial or otherwise), operation, assets,
liabilities, earnings, business, prospects or results of operations of ABT. All
material liabilities of ABT are disclosed in its most recent financial
statements or incurred in the ordinary course of business since the date of
ABT's most recent financial statements.
5.10 INTERIM OPERATIONS OF LOFTS MERGERCO. Prior to the
Effective Time, Lofts Mergerco will engage in no business activities and will
have no subsidiaries and will conduct its
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operations only as contemplated by this Agreement.
ARTICLE VI
SURVIVAL OF REPRESENTATIONS AND WARRANTIES; INDEMNIFICATION
6.1 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All
representations and warranties made by the Acquired Companies, ABT or Lofts
Mergerco in this Agreement, including without limitation all representations and
warranties made in any Exhibit or Schedule hereto or certificate delivered
hereunder, shall survive the Closing until September 30, 1999 (the due date for
ABT's Annual Report on Form 10-K for the year ended June 30, 1999)(the "Survival
Date"); provided, however, that all representations and warranties made by the
Acquired Companies in Sections 4.10 and 4.18, hereof shall survive the Closing
until and through three months after the expiration of the applicable statute of
limitations (the "Extended Survival Date").
6.2 INDEMNIFICATION BY SHAREHOLDERS. As an inducement to ABT to
enter into this Agreement, provided that the Merger contemplated by this
Agreement is closed, the Shareholders jointly and severally hereby agree to
indemnify, defend and hold harmless ABT and Lofts Mergerco from and against all
liabilities, losses, costs or damages whatsoever, both monetary and non-monetary
(including expenses and reasonable fees of legal counsel) ("Claims") made prior
to the Survival Date or the Extended Survival Date, if applicable, arising out
of or based upon the inaccuracy in any material respect of any representation,
warranty, covenant or any other agreement or obligation, of the Acquired
Companies set forth in this Agreement (except to the extent of any inaccuracy
disclosed in writing to ABT and Lofts Mergerco prior to the Closing Date), to
the extent of 25% of the Merger Consideration through the filing of ABT's Annual
Report on Form 10-K for the fiscal year ending June 30, 1998 and to the extent
of 12.5% thereafter (but in any event together with any claims made during the
first year ending with the filing of the Form 10-K for the fiscal year ending
June 30, 1998 not to exceed 25% of the Merger Consideration) and through the
filing of ABT's Annual Report on Form 10-K for the fiscal year ending June 30,
1999. Notwithstanding the foregoing, the 25% and 12.5% limitations set forth in
the immediately preceding sentence shall not apply to any Claims concerning any
personal or corporate tax liabilities of or concerning the Acquired Companies
set forth under Section 4.10. Any amounts paid on any Claims made under Sections
4.10 shall, however, count towards such limitations in the event any other
Claims are made in said year. The Shareholders hereby waive any rights of
contribution and/or indemnification from the Acquired Companies and/or the
Surviving Corporation.
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Prior to the Closing, the foregoing indemnity shall be
provided solely by the Acquired Companies and not the Shareholders. However,
once the Closing has occurred, the Shareholders shall not seek contribution
from the Acquired Companies. The Shareholders shall have the right to pay ABT,
at their election, in cash or Shares of ABT Common Stock, valued at $8.50 per
share for any payment made to ABT under this Article VI.
6.3 INDEMNIFICATION BY ABT AND LOFTS MERGERCO. Provided that
the Merger contemplated by this Agreement is closed, ABT and Lofts Mergerco
hereby agree to indemnify, defend and hold harmless the Shareholders from and
against all Claims made prior to the Survival Date arising out of or from or
based upon the inaccuracy in any material respect of any representation or
warranty contained in Article V by ABT and Lofts Mergerco, the non-performance
by ABT and Lofts Mergerco in any material respect of any covenant, agreement or
obligation to be performed by ABT and Lofts Mergerco under this Agreement, or
any liabilities arising out of the operation of the business of the Acquired
Companies by ABT and Lofts Mergerco after the Closing Date.
6.4 MUTUAL INDEMNIFICATION. In the event that the Merger is
consummated, ABT and Lofts Mergerco agree to indemnify the Shareholders against
all costs and expenses with respect to their state and federal income tax
liability for income tax items allocated to them as Shareholders of the Acquired
Companies with respect to the period January 1, 1998 through the Closing Date,
other than taxes if any resulting from the Merger and the Shareholders agree to
reimburse ABT for any state and federal income tax benefits allocated to the
Shareholders with respect to the operation of the Acquired Companies for the
period January 1, 1998 through the Closing Date.
6.5 DEFENSE OF CLAIMS. (i) Whenever any Claim shall arise for
indemnification hereunder, the party entitled to indemnification (the
"Indemnitee") shall notify the indemnifying party (the "Indemnitor") in writing
within 30 days after the Indemnitee has actual knowledge that it is entitled to
indemnification of such Claim constituting the basis for such Claim (the "Notice
of Claim"). The Notice of Claim shall specify all facts known to the Indemnitee
giving rise to such indemnification claim and the amount or an estimate of the
amount of the liability arising therefrom.
(ii) If the facts giving rise to any such indemnification
shall involve any actual, threatened or possible Claim or demand by any person
against the Indemnitee, the Indemnitor shall be entitled (without prejudice to
the right of the Indemnitee to participate at its expense through co-counsel
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of its own choosing) to contest or defend such Claim at its expense and through
counsel of its own choosing if it gives written notice of the intention to do so
to the Indemnitee within 10 days after receipt of the Notice of Claim; provided
that Indemnitor diligently prosecutes or defends such Claim.
(iii) The Indemnitee shall not settle any claim which
would give rise to liability on the part of the Indemnitor under the indemnity
contained in this Section without the written consent of the Indemnitor, which
consent shall not unreasonably be withheld. If a firm offer is made to settle a
Claim or litigation defended by the Indemnitee and the Indemnitor refuses to
accept such offer within 20 days after receipt of written notice from the
Indemnitee of the terms of such offer, then, in such event, the Indemnitee shall
continue to contest or defend such claim and shall be indemnified pursuant to
the terms hereof. If a firm offer is made to settle a Claim or litigation and
the Indemnitor notifies the Indemnitee in writing that the Indemnitor desires to
accept and agree to such settlement, but the Indemnitee elects not to accept or
agree to it, the Indemnitee may continue to contest or defend such Claim and, in
such event, the total maximum liability of the Indemnitor to indemnify or
otherwise reimburse the Indemnitee hereunder with respect to such Claim shall be
limited to and shall not exceed the amount of such settlement offer, plus
reasonable out-of-pocket costs and expenses (including reasonable attorneys'
fees and disbursements) to the date of notice that the Indemnitor desires to
accept such settlement.
(iv) Notwithstanding any provision of this Agreement
to the contrary, no claim for indemnification pursuant to this Article VI, by
the Indemnitee shall be asserted or claimed except to the extent any Claim
exceeds, in the aggregate, the sum of $100,000.
ARTICLE VII
COVENANTS OF THE ACQUIRED COMPANIES
The Acquired Companies hereby covenant and agree:
7.1 FURTHER ASSURANCES. From time to time at the reasonable
request of ABT and Lofts Mergerco, and without further consideration, the
Acquired Companies shall execute and deliver such additional instruments and
take such other action as ABT and Lofts Mergerco may reasonably require to
carry out the terms of this Agreement.
7.2 ACCESS TO THE ACQUIRED COMPANIES; CONFIDENTIALITY.
(i) Subsequent to the date hereof and prior to the
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Closing Date, the Acquired Companies will continue to give to ABT and Lofts
Mergerco, their counsel, accountants, and other representatives, reasonable
access during normal business hours to all of their properties, books,
contracts, commitments and records so that ABT and Lofts Mergerco may have full
opportunity to make such investigation as they shall reasonably desire. ABT may
use such information to commence the audit of the Acquired Companies, using
either the Acquired Companies' independent auditors or KPMG Peat Marwick LLP.
The Acquired Companies shall provide copies of all prior audits and shall assist
ABT in gaining previous auditors' consent to use said audits in connection with
any SEC filings required of ABT.
(ii) From and after the date of this Agreement until the
Closing or the termination of this Agreement, the Acquired Companies and their
representatives will maintain the confidentiality of all documents and
information of a confidential nature disclosed to them in the course of
negotiations and their due diligence review and will in no event use any
confidential information for any purpose other than for the evaluation of the
transactions contemplated herein, and in the event of termination of this
Agreement will destroy all copies of documentation which each party may have
delivered to them and will not use any confidential information from ABT and
Lofts Mergerco for their own benefit.
7.3 CONDUCT OF BUSINESS PENDING CLOSING. From the date of this
Agreement to the Closing Date, except as expressly disclosed in the Schedules to
this Agreement, the Acquired Companies shall conduct their operations as engaged
in at the date of this Agreement according to their ordinary course of business,
shall maintain their records and books of account in a manner that fairly and
currently reflects its financial condition and results of operations and shall
not engage in any transactions other than as contemplated by this Agreement.
Without the prior written consent of ABT, neither of the Acquired Companies
shall make any payment of a dividend or bonus (other than dividends reasonably
estimated to pay taxes on corporate earnings or designed to equalize the Closing
Merger Consideration and the Merger Consideration, and bonuses payable pursuant
to existing plans or agreements), sell, use or transfer any assets outside of
the ordinary course of business, or enter into any obligations to acquire
capital assets.
7.4 CLOSING DOCUMENTS. Provided that ABT and Lofts Mergerco
have fully performed their obligations and the Shareholders and Acquired
Companies' conditions have been satisfied, the Acquired Companies shall execute
and deliver all instruments and documents required as a condition precedent to
the Closing under Article IX hereof and take all action required
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to carry out the terms of this Agreement and to consummate the transactions
contemplated hereby.
7.5 THIRD PARTY CONSENTS. The Acquired Companies will obtain
and deliver to Lofts Mergerco all written consents of third parties to any
material contracts as specified on the Schedules in connection with the Merger
and to enable Lofts Mergerco to obtain the benefits intended to be conferred by
this Agreement.
7.6 NOTICE OF EVENTS OR CHANGES. The Acquired Companies shall
promptly notify ABT and Lofts Mergerco of any event, occurrence or transaction
which would have been required to have been disclosed on any Schedule to this
Agreement, had such event, occurrence or transaction existed on the Effective
Date, including, without limitation, any actions, claims, or legal,
administrative or arbitration proceedings, or investigations, threatened or
commenced, which, if pending on the Effective Date, would have been required to
be described in any Schedule hereto, or which otherwise relate to or affect its
business or assets in any material respect. The Acquired Companies shall use
their best efforts to defend against any such actions, claims, proceedings or
investigations.
7.7 CONDUCT OF BUSINESS UNTIL CLOSING. The Acquired Companies
agree that until the Closing Date, unless they have received the prior written
consent of ABT, they will:
(i) operate their business only in the usual, regular
and ordinary course consistent with reasonable business practice;
(ii) use all reasonable efforts as to events within the
Acquired Companies control to prevent the occurrence of any change or event
which would prevent any of the representations and warranties of the Acquired
Companies contained herein from being true at and as of the Closing Date with
the same effect as though such representations and warranties had been made at
and as of the Closing Date;
(iii) use their best efforts to preserve their present
relationship with suppliers, customers and others having business dealings with
them;
(iv) pay and discharge all costs and expenses of carrying
on its business consistent with past business practices;
(v) not increase the compensation (including wages and
benefits described in Schedule 4.25) of any Employee or make any representation
or commitment to do so;
(vi) not create or suffer any Liens upon any of
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their assets (other than Liens set forth in the Schedules);
(vii) not acquire or dispose of any assets or enter
into any transaction, exclusive of the proposed merger of Sunbelt Seed with and
into Lofts and/or the proposed merger of Lofts and Budd Seed with each other,
except in the ordinary course of business consistent with past practice;
(viii) maintain books, accounts and records in the
usual, regular, true and ordinary manner;
(ix) not incur any obligation or liability (fixed or
contingent), except in the ordinary course of business consistent with past
practice;
(x) not make any dividend or bonus disbursements
without ABT's prior approval; provided, however, that the parties hereto
acknowledge the provisions of Section 7.3 above and that dividends to pay any
taxes on corporate earnings and bonuses payable pursuant to existing plans or
arrangements are customary and permitted;
(xi) not cancel or compromise any material debt or
claim, other than in the ordinary course of business consistent with past
practice;
(xii) not waive or release any rights of material value
with respect to its assets, except in the ordinary course of business consistent
with past practice;
(xiii) not modify or change in any material respect or
terminate any existing license, lease, contract or other document required to be
listed on the Schedules to this Agreement other than in the ordinary course of
business consistent with past practice, except that the Acquired Companies shall
be permitted to modify or change existing licenses, leases, Contracts and other
documents to obtain the consents referred in any Schedule hereto if Lofts
Mergerco consents to such modification or change, which consent shall not be
unreasonably withheld;
(xiv) not make any loans or extensions of credit,
except to trade purchasers in the ordinary course of business consistent with
past practice;
(xv) maintain its properties, machinery and equipment
in their present condition and repair, normal wear and tear excepted; and
(xvi) continue all policies of insurance in full force
and effect up to and including the Closing Date.
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7.8 UPDATE SCHEDULES. The Acquired Companies will update by
amendments or supplements each of the Schedules delivered pursuant to Section
4.31 and any other written disclosure in writing from the Acquired Companies to
reflect any change in the information set forth in said Schedules or other
disclosure. The Acquired Companies hereby represent and warrant that such
Schedules and such written disclosures, as so amended or supplemented, shall be
true, correct and complete in all material respects as of the date or dates
thereof.
7.9 NO SOLICITATION OF COMPETING OFFERS. Prior to the Closing Date,
the Acquired Companies and the Shareholders will not, directly or indirectly,
seek, solicit, initiate or encourage (including by way of furnishing any
non-public information concerning the business, properties or assets of the
Acquired Companies) or enter into any discussions or negotiations with any
person or group regarding any Acquisition Proposal (as defined below). The
Acquired Companies will notify Lofts Mergerco promptly by telephone, and
thereafter confirm in writing, if any Acquisition Proposal is received by The
Acquired Companies. As used in this Agreement, "Acquisition Proposal" shall mean
any proposal received by the Acquired Companies or the Shareholders prior to the
Closing Date for a merger or other business combination involving the Acquired
Companies or relating to the acquisition of the capital stock of the Acquired
Companies or the disposition of any of the assets of the Acquired Companies
except for dispositions of assets for not less than fair market value which are
made in the ordinary course of business and are consistent with past practice
and with this Agreement.
7.10 LIMITATION OF TRANSFERS OF SHARES. The Shareholders agree from
and after the date hereof and through the Closing Date, the Shareholders shall
not sell, assign, convey, pledge, or otherwise transfer title, ownership or
possession, legal or equitable, of or in, the Acquired Companies capital stock.
Furthermore, the Acquired Companies shall not issue additional shares from and
after the date hereof through the Effective Time except with ABT's prior written
consent. Furthermore, in all events, all sales or other transfers of the shares
of the Acquired Companies must be made in compliance with applicable federal and
state securities laws, rules and regulations.
ARTICLE VIII
COVENANTS OF ABT AND LOFTS MERGERCO
ABT and Lofts Mergerco hereby covenant and warrant as follows:
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8.1 CLOSING DOCUMENTS. Provided that the Acquired Companies and
the Shareholders have fully performed their respective obligations and the
conditions set forth in Articles IX and XI (to the extent within the control of
the Acquired Companies) hereof have been satisfied, ABT and Lofts Mergerco shall
execute and deliver all instruments and documents required as a condition
precedent to Closing under Article X hereof and take all action required to
carry out the terms of this Agreement and to consummate the transactions
contemplated hereby.
8.2 NONINTERFERENCE. ABT and Lofts Mergerco shall not take or
omit to take any action that (i) if taken or omitted on or before the date of
this Agreement, would make untrue any of the representations and warranties
contained in Article V of this Agreement, or (ii) would interfere with ABT and
Lofts Mergerco's ability to perform or would prevent performance of any of their
obligations under this Agreement or any of the Other Agreements or instruments
provided for herein.
8.3 CONFIDENTIALITY. From and after the date of this Agreement
until the Closing or the termination of this Agreement, ABT and Lofts Mergerco
and their representatives will maintain the confidentiality of all documents and
information of a confidential nature disclosed by the Shareholders and the
Acquired Companies in the course of their negotiations and ABT and Lofts
Mergerco's due diligence review and will in no event use any confidential
information for any purpose other than for the evaluation of the transactions
contemplated herein and the financing of this transaction. In the event this
Agreement is terminated, ABT and Lofts Mergerco will destroy all copies of
documentation which it received from the Acquired Companies and will not use any
confidential information for its own benefit.
8.4 ACCESS. Subsequent to the date hereof, and prior to the
Closing Date, ABT will give to the Acquired Companies, their counsel,
accountants and other representatives, reasonable access to all of its
properties, books, contracts, commitments and records, so that the Acquired
Corporations may have full opportunity to make such investigation as they shall
reasonably desire.
8.5 MEMBERSHIP ON BOARD OF DIRECTORS. As of the Effective Time,
Richard P. Budd shall be appointed to the Board of Directors of ABT.
8.6 VOTE IN FAVOR OF MERGER. As of the Effective Time, ABT
shall vote its shares in Lofts Mergerco in favor of the Merger.
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ARTICLE IX
CONDITIONS PRECEDENT TO ABT AND LOFTS MERGERCO'S OBLIGATIONS
The obligations of ABT and Lofts Mergerco under this Agreement are
subject to the following conditions:
9.1 NO BREACH OF REPRESENTATIONS, ETC. There shall not have
been any breach of the representations, warranties, covenants and agreements of
the Acquired Companies contained in this Agreement, and all such representations
and warranties shall be true at all times on and before the Closing as if given
at such times, except to the extent that any such representation or warranty is
expressly stated to be true as of some other time.
9.2 COMPLIANCE WITH COVENANTS, ETC. The Acquired Companies
shall have performed and complied in all material respects with all covenants,
agreements and conditions required by this Agreement to be performed or complied
with by them prior to or at the Closing Date. All documents and instruments
required in connection with this Agreement shall be reasonably satisfactory in
form and substance to Snow Becker Krauss P.C., counsel for ABT and Lofts
Mergerco.
9.3 NO MATERIAL ADVERSE CHANGE. There shall have been no
material adverse change in the condition (financial or otherwise), business,
assets, liabilities or earnings of the Acquired Companies on a consolidated
basis (including subsidiaries). For this purpose, customary or seasonal
fluctuations in the Acquired Companies' financial statements as a result of
ordinary and normal operation of their respective businesses shall not
constitute a material adverse change.
9.4 CERTIFICATES. ABT and Lofts Mergerco shall have received
certificates dated the Closing Date and signed by the Acquired Companies,
certifying that the conditions specified in subsections 9.1, 9.2 and 9.3 above
have been fulfilled except to the extent that any nonfulfillment was disclosed
in writing to ABT and Lofts Mergerco prior to the Closing Date.
9.5 CONSENTS AND APPROVALS. The Acquired Companies shall have
obtained and delivered to ABT and Lofts Mergerco any required consents or
approvals of any third parties whose consent is required to the transactions
contemplated hereunder.
9.6 CORPORATE DOCUMENTS. ABT and Lofts Mergerco shall have
received originals or certified copies, reasonably satisfactory in form and
substance to ABT and Lofts Mergerco, of all such corporate documents of the
Acquired Companies as ABT and
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Lofts Mergerco shall reasonably require, including without limitation the
following:
(i) the Certificates of Incorporation of the Acquired
Companies and all amendments thereto and restatements thereof certified as of a
recent date by the Secretary of State of the state of its incorporation;
(ii) the By-laws of the Acquired Companies and all
amendments thereto and restatements thereof certified as of the Closing Date by
officers of the Acquired Companies;
(iii) Certificate of Existence of the Secretary of State of
the state of its incorporation, certifying as of a recent date that the Acquired
Companies is in existence under the laws of that State;
(iv) copies of the minutes and resolutions of the Board of
Directors and stockholders of the Acquired Companies showing the authorization
and approval by each such Boards of the execution and delivery by the Acquired
Companies to ABT and Lofts Mergerco of this Agreement and of the agreements and
instruments provided for herein and of the performance of the obligations of the
Acquired Companies under this Agreement and such other instruments and
agreements, certified as of a recent date by the Secretaries or other officers
of the Acquired Companies; and
(v) a Certificate of Incumbency identifying the officers
and directors of the Acquired Companies immediately before Closing.
9.7 OPINIONS OF ACQUIRED COMPANIES' COUNSEL. ABT and Lofts
Mergerco shall have received written opinions of counsel for the Acquired
Companies dated as of the Closing Date, in the form of Exhibit 9.7 hereto, and
as described in Section 10.10 concerning tax matters.
9.8 ASSIGNMENT OF LEASES. The Acquired Companies and the
Shareholders shall use their best efforts to have executed and delivered to ABT
and Lofts Mergerco without any significant expense to the Acquired Companies and
the Shareholders an assignment to all of the outside leases described in
Schedule 4.12.
9.9 INSURANCE POLICIES. The Shareholders shall have delivered
to ABT and Lofts Mergerco copies of the insurance policies maintained by the
Acquired Companies described in Schedule 4.19 to this Agreement with no
obligation of the Shareholders or the Acquired Companies to maintain any of such
policies past the Closing Date.
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9.10 PURCHASE OF REAL PROPERTY. Lofts Mergerco and Richard P.
Budd and his wife, Sylvia, (the "Budds") shall have entered into agreements
pursuant to which Lofts Mergerco shall purchase for cash from the Budds the
following three parcels of real property and all improvements thereon (the
"Property"), to close on the date of Closing of the Merger and simultaneously
therewith, for the following purchase price with respect to each such parcel:
<TABLE>
<CAPTION>
Parcel Purchase Price
------ --------------
<S> <C>
Massachusetts Distribution Center $ 419,800
Oregon office and warehouse facility $ 1,729,273
Oregon research farm $ 305,000
</TABLE>
The parties shall enter into a Purchase Agreement which provides for
the transfer of the Property by the Budds to Lofts Mergerco. The Budds shall
deliver good, valid and marketable title to the Property free and clear of all
liens, mortgages, liabilities, claims, security interests or encumbrances of any
type. In the event that the Budds are unable to transfer the Property as set
forth above, the Budds shall deliver and Lofts Mergerco shall accept a leasehold
interest in the Property as lessee from the Budds for a three-year period upon
commercially reasonable terms to the parties hereto.
9.11 NO TERMINATION. This Agreement shall not have been
terminated prior to the Effective Time by mutual consent or by ABT, as permitted
in Article XII.
9.12 NON-COMPETITION AGREEMENTS. ABT shall have received from
Richard P. Budd and Gerald L. Chrisco, the Non-Competition Agreements in the
form of Exhibit 2.8 attached hereto.
9.13 EMPLOYMENT AGREEMENTS. ABT shall have received from Kenneth
R. Budd and John D. Budd the Employment and Non-Competition Agreements in the
form of Exhibit 2.9 attached hereto.
9.14 FINANCIAL STATEMENTS. ABT shall have received audited and
unaudited financial statements of the Acquired Companies for the respective
periods set forth in Section 4.8.
9.15 SERVICES AGREEMENT. Budd Services, Inc. shall have executed
and delivered the Management Services Agreement between it and ABT substantially
in the form of Exhibit 10.9 attached hereto.
9.16 REGULATORY APPROVALS. The parties shall have
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received all regulatory approvals required in connection with the transactions
contemplated by this Agreement, all notice periods and waiting periods required
after the granting of any such approvals shall have passed, and all such
approvals shall be in effect.
9.17 NEW LEASE. Richard P. Budd and his wife shall enter into a
lease with Lofts Mergerco to lease the warehouse facilities located at 2325
South Stratford Road, Winston Salem, North Carolina to Lofts Mergerco at the
current rent rate for at least five years in the form of Exhibit 9.17 attached
hereto.
ARTICLE X
PRECEDENT TO THE SHAREHOLDERS' AND THE ACQUIRED
COMPANIES' OBLIGATIONS
The obligations of the Shareholders and the Acquired Companies under
this Agreement are subject to the following conditions:
10.1 NO BREACH OF REPRESENTATIONS, ETC. There shall not have
been any breach of the representations, warranties, covenants and agreements of
ABT and Lofts Mergerco contained in this Agreement, and all such representations
and warranties shall be true at all times at and before the Closing, except to
the extent that any such representation or warranty is expressly stated to be
true as of some other time.
10.2 COMPLIANCE WITH AGREEMENTS. ABT and Lofts Mergerco shall
have performed and complied in all material respects with all agreements and
conditions required by this Agreement to be performed or complied with by it.
All documents and instruments required in connection with this Agreement shall
be reasonably satisfactory in form and substance to Womble Carlyle Sandridge &
Rice, PLLC, counsel for the Acquired Companies.
10.3 NO TERMINATION. This Agreement shall not be terminated
prior to the Effective time by mutual consent or by the Acquired Companies, as
permitted in Article XII hereof.
10.4 CERTIFICATES. The Shareholders shall have received
certificates dated the Closing Date and signed by ABT and Lofts Mergerco,
certifying that the conditions specified in Subsections 10.1, 10.2 and 10.3
above have been fulfilled.
10.5 OPINION OF COUNSEL. The Shareholders shall have received a
written opinion of Snow Becker Krauss P.C., counsel for ABT and Lofts Mergerco,
dated as of the Closing Date, in the
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form of Exhibit 10.5 hereto.
10.6 NO MATERIAL CHANGE. There shall have been no material
adverse change in the condition (financial or otherwise), business, assets,
liabilities or earnings of ABT.
10.7 CORPORATE DOCUMENTS. The Shareholders shall have received
originals or certified copies, reasonably satisfactory in form and substance to
the Shareholders, of the following corporate documents of ABT and Lofts
Mergerco:
(i) a certificate of existence certifying as of a recent
date that ABT and Lofts Mergerco is each a corporation in good standing under
the laws of the State of Nevada;
(ii) copies of the minutes and resolutions of the Boards of
Directors of ABT and Lofts Mergerco showing the authorization and approval by
such Boards of the execution and delivery by ABT and Lofts Mergerco to the
Shareholders of this Agreement and the agreements and instruments provided for
herein and of the performance of the obligations of ABT and Lofts Mergerco under
this Agreement and such other instruments and agreements, certified as of a
recent date by the Secretary or another officer of ABT and Lofts Mergerco; and
(iii) a certificate of incumbency identifying the officers
and directors of ABT and Lofts Mergerco immediately before Closing.
10.8 RELEASE OF GUARANTORS. ABT shall obtain the release of the
Shareholders as guarantors of any indebtedness of the Acquired Companies.
10.9 MANAGEMENT SERVICES AGREEMENT. Lofts Mergerco shall have
entered into a satisfactory agreement with Budd Services, Inc. similar to an
agreement currently in effect whereby Budd Services, Inc. will continue to
render management services for Lofts Mergerco in the form of Exhibit 10.9.
10.10 OPINION OF WOMBLE CARLYLE. The Acquired Companies shall
have received a written opinion of Womble Carlyle Sandridge & Rice, PLLC,
counsel to the Acquired Companies, dated as of the Closing Date and in form and
content satisfactory to the Acquired Companies, to the effect that the Merger
constitutes a reorganization within the meaning of Section 368(a)(1)(A) of the
Code and that Shareholders of the Acquired Companies will not recognize any
income tax to the extent that the Merger Consideration consists of shares of ABT
Common Stock.
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10.11 NON-COMPETITION AGREEMENT. ABT shall have delivered to each
of Richard P. Budd and Gerald L. Chrisco the Non-Competition Agreement in the
form of Exhibit 2.8 attached hereto, and the consideration in exchange for the
covenants therein.
10.12 EMPLOYMENT AGREEMENTS. ABT shall have delivered to Kenneth
R. Budd and John D. Budd executed Employment and Non-Competition Agreements in
the form of Exhibit 2.9 attached hereto, and the consideration in exchange for
the covenants therein.
10.13 LEASE. ABT shall have executed and delivered the Lease in
the form attached as Exhibit 9.17 hereto.
10.14 PURCHASE OF REAL PROPERTY. Loft Mergerco shall close on
the purchase of the parcels of real property described in Section 9.10 on the
terms described in Section 9.10.
ARTICLE XI
CONDITIONS PRECEDENT TO OBLIGATIONS OF
THE SHAREHOLDERS AND ABT AND LOFTS MERGERCO
The obligations of the Shareholders, ABT and Lofts Mergerco to complete
the Merger shall be subject to the fulfillment at or prior to the Closing Date
of the following conditions:
11.1 DUE DILIGENCE. The Shareholders, ABT and Lofts Mergerco
shall each have been afforded the opportunity to complete their due diligence
and conduct a review of the business and prospects of the other.
11.2 NO INJUNCTIONS. No action or proceeding shall have been
instituted or threatened by any public authority or private person prior to the
Closing before any court or administrative body to restrain, enjoin or otherwise
prevent the consummation of this transaction or to recover any damages or obtain
other relief as a result of this transaction.
11.3 CONSENTS. Any consent to the transaction considered by any
party to be necessary or advisable under any agreement or contract, the
withholding of which might have, in the judgment of such party, a material
adverse effect on the financial condition of the other party, shall have been
obtained.
11.4 CORPORATE PROCEEDINGS. All corporate and other proceedings
in connection with the transactions contemplated by this Agreement, and all
documents and instruments incident thereto, shall be reasonably satisfactory in
substance and form to the parties hereto and their counsel, and the parties
hereto
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and their counsel shall have received all certificates, documents and
instruments, or copies thereof, certified if requested, as may be reasonably
requested.
11.5 MERGERS INTERRELATED. Each of the Lofts Merger and Budd
Merger is conditioned upon the other, and no party hereto shall be obligated or
empowered to consummate either Merger unless the other Merger is consummated
concurrently therewith.
11.6 STATUS OF SCHEDULES AND EXHIBITS AS OF SIGNATURE DATE.
(i) The parties each acknowledge and agree that as of the
date this Agreement is executed and delivered, none of the Schedules or Exhibits
to this Agreement have been prepared, delivered, reviewed, or approved by the
parties or their respective counsel. In addition to and without in any way
limiting, any other express and implied condition precedent to the obligations
of any of the parties under this Agreement, the obligations of each of the
parties under this Agreement are hereby made subject to and contingent upon the
following:
(a) The preparation and delivery, in whole or in part,
within ten (10) days of the signing of this Agreement by the
Acquired Companies and the acceptance by ABT and Lofts
Mergerco within ten (10) days of receipt of the Schedules
described in this Agreement, however once the Schedules have
been accepted by ABT, ABT and Lofts Mergerco shall no longer
have the right to terminate this Agreement, as set forth in
Section 12(v), although ABT and Lofts Mergerco shall retain
the right to commence an action in a court of competent
jurisdiction as provided in Section 20.2 to terminate this
Agreement pursuant to Section 12(iii)for breach of any
warranty based on any misstatement or omission contained in
the Schedules;
(b) The preparation, delivery, and approval by the
parties of all of the Exhibits to this Agreement; and
(c) All other express and implied conditions
precedent to the obligations of the parties under this
Agreement shall have been satisfied or waived at or prior to
the Closing.
(ii) In addition, notwithstanding any other term,
condition, covenant, or provision of this Agreement or of any of the Other
Agreements, any representations or warranties with respect to the following
documents (if not attached to this Agreement when
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executed) shall be made (unless waived or amended) only as of the Closing Date,
and only with respect to the Schedules and Exhibits delivered prior to the
Closing Date:
(a) Schedules described in this Agreement; and
(b) Exhibits to this Agreement.
ARTICLE XII
TERMINATION
This Agreement may be terminated at any time (except where noted)prior
to the Closing Date:
(i) By mutual written consent of the Shareholders, ABT and Lofts
Mergerco, and the Acquired Companies properly authorized by their respective
Boards of Directors.
(ii) By either ABT, the Acquired Companies or the Shareholders if
this transaction is not completed by January 31, 1998, unless extended by mutual
consent.
(iii) At any time prior to the Closing Date, by either the Acquired
Companies or the Shareholders on the one hand, or ABT on the other hand (a) in
the event of a material breach by the other party of any covenant or agreement
contained in this Agreement, or (b) in the event of an inaccuracy of any
representation or warranty of the other party contained in this Agreement, which
inaccuracy would have a material adverse effect on the condition (financial or
otherwise), business, assets, liabilities or earnings of the other; and, in the
case of (a) or (b), if such breach or inaccuracy has not been cured by the
earlier of the Closing Date or thirty days following written notice thereof to
the party committing such breach or permitting such inaccuracy.
(iv) In the event this Agreement is terminated pursuant to this
Article XII, this Agreement shall become void and have no effect, except that
(i) the provisions hereof relating to confidentiality and expenses set forth in
Section 7.2, 8.3 and Article XIX, respectively, shall survive any such
termination and (ii) a termination pursuant to Section 12(iii) shall not relieve
the party at fault from liability for an uncured breach or inaccuracy giving
rise to such termination.
(v) By ABT if the Schedules to this Agreement have not been provided
to ABT within ten days of the execution of this Agreement and/or if ABT objects
to the contents of any Schedule delivered to it within ten days of ABT's receipt
of such Schedules.
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ARTICLE XIII
ABT AND LOFTS MERGERCO'S OBLIGATIONS AT CLOSING
At the Closing, in addition to fulfilling the conditions to
closing appearing in this Agreement, ABT and Lofts Mergerco shall deliver to the
Shareholders the Purchase Price as more specifically described in Article III
hereof, together with all other documents and agreements required to be
delivered by them hereunder.
ARTICLE XIV
THE SHAREHOLDERS' OBLIGATIONS AT CLOSING
At the Closing, in addition to fulfilling the conditions to
Closing appearing herein, the Shareholders shall deliver to ABT and Lofts
Mergerco all original minute books, stock books, stock transfer ledger, canceled
stock certificates, corporate seals and financial records and statements of the
Acquired Companies together with all other documents and agreements required to
be delivered by them hereunder.
ARTICLE XV
SUBSEQUENT EVENTS TO CLOSING
15.1 AUDITED FINANCIAL STATEMENTS. ABT shall receive the audited
financial statements of the Acquired Companies for the eleven month period ended
November 30, 1997 certified by the Auditors and the unaudited financial
statements of the Acquired Companies for the one-month period ended December 31,
1997 pursuant to Section 4.8 above and may also receive, at its own expense,
additional audited financial statements, of the Acquired Companies in addition
to the financial statements in Section 4.8 above ("Audited Financial
Statements")for all periods required of ABT under the rules and regulations of
the Securities and Exchange Commission (the "Rules"). The Acquired Companies
hereby agree to provide ABT and their accountants with full and free access to
the books and records of the Acquired Companies and to cooperate fully with all
such representatives of ABT so that the Audited Financial Statements may be
prepared on a timely basis.
15.2 OPTION TO PURCHASE KEY MAN LIFE INSURANCE. Each of the
respective Principal Shareholders shall be entitled to purchase from the
Acquired Companies any policy of key person life insurance on their life owned
by the Acquired Companies. Each of the respective Principal Shareholders may
make a written election to purchase such policy and remit the purchase price to
the Acquired Companies at any time within thirty (30) days following the Closing
Date. The purchase price shall be equal to the cash value of the policy plus any
unearned premiums at the
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Closing Date less any policy loans, and shall be payable in cash.
ARTICLE XVI
PARTIES IN INTEREST
This Agreement shall be binding upon and shall inure to the benefit of
the parties and their successors and assigns and nothing herein expressed or
implied is intended or shall be construed to confer upon or to give any person,
firm, or the Acquired Companies other than the parties hereto any rights or
remedies under or by reason hereof.
ARTICLE XVII
ENTIRE AGREEMENT
This Agreement, including the Schedules and Exhibits hereto, contains
the entire agreement and understanding among the parties hereto and supersedes
any prior agreements and understandings, with respect to the subject matter
hereof and shall not be modified or affected by any offer, proposal, statement
or representation, oral or written, made by or for any party in connection with
the negotiation of the terms hereof. All references herein to this Agreement
shall specifically include, incorporate and refer to the Schedules and Exhibits
attached hereto which are hereby made a part hereof. There are no
representations, promises, warranties, covenants, undertakings or assurances
(express or implied) other than those expressly set forth or provided for herein
and in the other documents referred to herein. This Agreement may not be
modified or amended orally, but only by a writing signed by all the parties
hereto.
ARTICLE XVIII
GOVERNING LAW
This Agreement and all rights and obligations hereunder shall be
governed by, and construed in accordance with, the laws of the State of Nevada,
applicable to agreements made and to be performed wholly within said State,
without regard to the conflicts of laws principles of such State.
ARTICLE XIX
EXPENSES
ABT and the Shareholders shall each pay their own expenses incidental
to the preparation of this Agreement, the carrying out of the provisions of this
Agreement and the consummation of the transactions contemplated hereby. To the
extent that any such transaction expenses allocable to the Acquired Companies
have not been accrued as of December 31, 1997, they shall become the obligation
of the Shareholders.
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ARTICLE XX
NONBINDING MEDIATION; ARBITRATION
Notwithstanding any other provision in this Agreement to the contrary,
controversies between ABT and Lofts Mergerco on the one hand and the
Shareholders and the Acquired Companies on the other hand shall be resolved, to
the extent possible, by informal meetings and discussions in good faith between
the parties.
20.1 NON-BINDING MEDIATION. If a dispute between the parties
cannot be resolved by informal meetings and discussions within 20 days after
commencement thereof, either party to this Agreement may elect to exercise its
right to require non-binding mediation of the dispute. During such mediation,
the parties agree to negotiate in good faith as to the matter submitted to
mediation. In such event, the parties shall either: (i) appoint a single
mediator; or (ii) if the parties cannot agree on a mediator, each shall
designate an individual and the two individuals shall appoint the mediator. No
mediator or designated individual shall be an employee, officer, Board member,
consultant, supplier or customer, or otherwise affiliated with a party to this
Agreement and any mediator shall be reasonably qualified to act as a mediator
with respect to the negotiation of agreements similar to this Agreement. Each
party shall share equally in the out-of-pocket costs for mediation. The location
of the mediation and specific procedures relating to the mediation shall be
determined by the mediator, and each party agrees to comply with all decisions,
directions, instructions and procedures made or established in good faith by the
mediator.
20.2 ARBITRATION. If the parties are unable to resolve a
controversy within thirty (30) days after commencement of mediation thereof, the
dispute shall be settled by binding arbitration or by either party initiating an
action in a court of competent jurisdiction. Arbitration of any dispute may be
initiated by one party by sending a written demand for arbitration to the other
party. This demand will specify the matter in dispute and request the
appointment of an arbitration panel. The arbitration panel will consist of one
arbitrator named by ABT, one arbitrator named by the Shareholders and a third
arbitrator named by the two arbitrators so chosen. The arbitration hearing will
be conducted by the American Arbitration Association or Center for Public
Resources, in accordance with the rules and procedures of the American
Arbitration Association. The situs of the arbitration will be Chicago, IL. The
arbitrators shall not be empowered to award punitive or exemplary damages to
either party.
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ARTICLE XXI
SEVERABILITY
If any part of this Agreement is held to be unenforceable or invalid
under, or in conflict with, the applicable law of any jurisdiction, the
unenforceable, invalid or conflicting part shall, to the extent permitted by
applicable law, be narrowed or replaced, to the extent possible, with a judicial
construction in such jurisdiction that effectuates to the maximum extent
possible the intent of the parties regarding this Agreement and such
unenforceable, invalid or conflicting part. To the extent permitted by
applicable law, notwithstanding the unenforceability, invalidity or conflict
with applicable law of any part of this Agreement, the remaining parts shall be
valid, enforceable and binding on the parties.
ARTICLE XXII
NOTICES
(a) All notices, requests, consents and demands by the parties
hereunder shall be delivered by hand, or telecopier at the applicable telecopier
numbers designated below (with confirmation received) by recognized national
overnight courier or by deposit in the United States mail, postage prepaid, by
registered or certified mail, return receipt requested, addressed to the party
to be notified at the addresses set forth below:
(i) (a) if to the Acquired Companies or the Shareholders to:
Richard P. Budd
Budd Services, Inc.
2325 South Stratford Road
Winston-Salem, NC 27103
Telecopier No.: 910 768-1927
with a copy to:
William A. Davis, II, Esq.
Womble Carlyle Sandridge & Rice, PLLC
200 West Second St.
Winston-Salem, NC 27102
Telecopier No.: 910 733-8364
(ii) if to ABT and Lofts Mergerco to:
AgriBioTech, Inc.
2700 Sunset Road, Suite C-25
Las Vegas, Nevada 89120
Attention: Johnny R. Thomas, President
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Telecopier No.: (702) 798-8808
with a copy to:
Snow Becker Krauss P.C.
605 Third Avenue
New York, New York 10158
Attention: Elliot H. Lutzker, Esq.
Telecopier No.: (212) 949-7052
(b) Notices given by mail shall be deemed effective on the earlier
of the date shown on the proof of receipt of such mail or, unless the recipient
proves that the notice was received later or not received, three (3) days after
the date of mailing thereof. Other notices shall be deemed given on the date of
receipt. Any party hereto may change the address specified herein by written
notice to the other parties hereto.
ARTICLE XXIII
NON-WAIVERS
Neither any failure nor any delay on the part of any party to this
Agreement in exercising any right, power or privilege hereunder shall operate as
a waiver of any rights of such party, unless such waiver is made by a writing
executed by the party and delivered to the other parties hereto; nor shall a
single or partial exercise of any right preclude any other or further exercise
of any other right, power or privilege accorded to any party hereto.
ARTICLE XXIV
ASSIGNMENT
This Agreement may not be assigned by any party without the prior
consent of the other parties
ARTICLE XXV
DISCLOSURE
From and after the date of this Agreement until the Closing or the
termination of this Agreement, the Shareholders and the Acquired Companies will
not (i) solicit or encourage inquiries or proposals with respect to, or furnish
any information relating to, or participate in any negotiations or discussions
concerning the sale of the Stock or the sale of all or a substantial portion of
the assets of the Acquired Companies with anyone other than ABT; or (ii) discuss
the sale of the Stock with anyone other than ABT and Lofts Mergerco and other
officers, directors and shareholders of the Acquired Companies and the
Shareholders' advisors and (iii) unless otherwise required by law or the
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requirements of any applicable stock exchange, make any public announcement
without prior approval of the language of such announcement by ABT and Lofts
Mergerco.
ARTICLE XXVI
MISCELLANEOUS
26.1 FURTHER ASSURANCES. Each of the parties hereto shall use
its best efforts to take or cause to be taken, and to cooperate with the other
party hereto to the extent necessary with respect to all actions, and to do, or
cause to be done, consistent with applicable law, all things necessary, proper
or advisable to consummate and make effective the transactions contemplated by
this Agreement and to comply with the conditions set forth in Article IX, X and
XI hereof. Without limiting the generality of the foregoing, all parties shall
cooperate with and provide assistance to the other in connection with the
preparation and filing of all federal, state, local and foreign income tax
returns which relate to the Acquired Companies and relate to pre-Closing periods
but which are not required to be filed until after the Closing, and shall also
cooperate with and provide assistance to the other or the Acquired Companies
with respect to any audit of any tax returns filed prior to the Closing;
provided, however, that ABT and Lofts Mergerco and the Acquired Companies hereby
covenant and agree that the Acquired Companies will not file amended income tax
returns for any period prior to January 1, 1998 without first notifying the
Shareholders and the Acquired Companies.
26.2 HEADINGS. The headings contained herein are for reference
purposes only and shall not affect the meaning or interpretation of this
Agreement.
26.3 COUNTERPARTS. This Agreement may be executed and delivered
in multiple counterpart copies, each of which shall be an original and all of
which shall constitute one and the same agreement.
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IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement on the date first above written.
Shareholders as to Section 6.2 and
all other sections expressly
applicable to the Shareholders
/s/ Richard P. Budd
----------------------------------------
Richard P. Budd
/s/ Joseph R. Budd
----------------------------------------
Joseph R. Budd
/s/ John D. Budd
----------------------------------------
John D. Budd
/s/ Theodore P. Budd
----------------------------------------
Theodore P. Budd
/s/ Kenneth R. Budd
----------------------------------------
Kenneth R. Budd
/s/ Gerald L. Chrisco
----------------------------------------
Gerald L. Chrisco
/s/ Kenneth R. Budd
----------------------------------------
Kenneth R. Budd, custodian for
Elizabeth Budd under the NCUTMA
/s/ Kenneth R. Budd
----------------------------------------
Kenneth R. Budd, custodian for
Ryan Budd under the NCUTMA
/s/ Joseph R. Budd
----------------------------------------
Joseph R. Budd, as Trustee of the
Richard P. Budd Irrevocable Living
Trust Agreement, dated September
13, 1997
/s/ John D. Budd
----------------------------------------
John D. Budd, as Trustee of the
Richard P. Budd Irrevocable Living
Trust Agreement, dated September
13, 1997
/s/ Theodore P. Budd
----------------------------------------
Theodore P. Budd, as Trustee of the
Richard P. Budd Irrevocable Living
Trust Agreement, dated September
13, 1997
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<PAGE> 83
LOFTS SEED, INC.
By: /s/
----------------------------
BUDD SEED, Inc.
By: /s/
----------------------------
LOFTS MERGERCO, INC.
By: /s/
----------------------------
AGRIBIOTECH, INC.
BY: /s/
----------------------------
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<PAGE> 84
EXHIBIT B
FORM OF LOCK-UP AGREEMENT
LOCK-UP AGREEMENT (the "Lock-Up Agreement") dated November __, 1997
(the "Closing Date"), by and among each of the shareholders listed on Schedule I
hereto including all of the shareholders of Lofts Seed, Inc. and Budd Seed, Inc.
(the "Shareholders") and AgriBioTech, Inc., a Nevada corporation ("ABT"). The
individual Shareholder signing this Lock-Up Agreement with ABT is hereinafter
referred to as the Shareholder.
W I T N E S S E T H:
WHEREAS, ABT has agreed to purchase from the Shareholders all of the
issued and outstanding shares of capital stock of Lofts Seed, Inc. and of Budd
Seed, Inc., pursuant to an Agreement and Plan of Reorganization dated November
__, 1997 (the "Reorganization Agreement"), by and among ABT, Lofts Mergerco,
Inc., Lofts Seed, Inc., Budd Seed, Inc., and the Shareholders of Lofts Seed,
Inc. and Budd Seed, Inc.; and
WHEREAS, pursuant to Article II of the Reorganization Agreement, ABT
will transfer to the Shareholders an aggregate of 2,000,000 shares of the Common
Stock of ABT (the "ABT Shares"); and
WHEREAS, pursuant to Section 2.5(i) of the Reorganization Agreement,
the Shareholders have agreed not to sell, transfer or otherwise dispose of the
ABT Shares except as set forth in this Lock-Up Agreement.
NOW, THEREFORE, in consideration of the foregoing and the terms,
conditions and mutual covenants appearing in this Lock-Up Agreement, the parties
hereto hereby agree as follows:
SECTION 1. (A) (i) The Shareholder hereby agrees that, during the
period (the "No-Sale Period") commencing on the Effective Date of the Merger and
ending on the earlier of (a) six months from the date of the closing of an
underwritten public offering of ABT Common Stock, or (b) August l, 1998, he will
not offer, sell, transfer or otherwise dispose of the ABT Shares without the
prior written consent of ABT. Thereafter, for a period of two years (the "Sale
Period"), the ABT Shares may be sold by all Shareholders in the public
over-the-counter market in amounts not to exceed in the aggregate 84,000 ABT
Shares per month, 21,000 ABT Shares per week or 7,000 ABT Shares per day.
(ii) In the event that the Shareholder offers, sells,
transfers or otherwise disposes of ABT Shares in violation of subsection 1
(A)(i) above, without the prior written consent of ABT, ABT shall be entitled to
all gross proceeds received by the Shareholder from all sales of ABT Shares
above $8.50 per Share on the defaulting sales and all sales before and after
such default. The Shareholder acknowledges that a violation of this provision by
the Shareholder does not constitute a violation by all Shareholders and that the
liability of the Shareholders to
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<PAGE> 85
ABT is several, although the Shareholder recognizes that the nature of the
Lock-Up Agreement requires all Shareholders to coordinate sales among themselves
to avoid any violation of the aggregate lock-up limitations contained in
subsection 1(A)(i) above.
(iii) Any ABT Shares that the Shareholders elects not to sell
during the Sale Period shall be eligible for sale beginning two years from the
date the ABT Shares first became eligible for sale under Section 1(A)(i) above
in such quantities as the Shareholder desires.
(B) The Shareholder further agrees that he will not engage in the
sale of any ABT Shares which he does not own or any sale which is consummated
by the delivery of ABT Shares borrowed by or from the Shareholder prior to the
expiration of the Sale Period.
(C) The Shareholder will, within ten (10) business days of the
sale of any ABT Shares, provide ABT with copies of all customary documentation,
including confirmation tickets, relating to the sale of any ABT Shares.
(D) The Shareholder acknowledges that the breach or impending
violation of any of the provisions of this Lock-Up Agreement may cause
irreparable damage to ABT for which remedies at law would be inadequate. The
Shareholder further acknowledges that the provisions set forth herein are
essential terms and conditions of the Reorganization Agreement and this Lock-Up
Agreement. The Shareholder therefore agrees that ABT shall be entitled to a
decree or order by any court of competent jurisdiction enjoining such impending
or actual violation of any of such provisions. Such decree or order, to the
extent appropriate, shall specifically enforce the full performance of any such
provision by the Shareholder, and the Shareholder and ABT hereby consent to the
jurisdiction of any such court of competent jurisdiction, state or federal,
sitting in the State of Nevada, and the Shareholder authorizes the entry on its
behalf of any required appearance for such purpose. ABT's rights to receive all
gross proceeds in excess of $8.50 per share in accordance with Section 1(A)(ii)
and its above-described right to specific performance shall be ABT's sole
remedies in law or equity. If any portion of this Section 1 is adjudicated to be
invalid or unenforceable, this Section 1 shall be deemed amended to delete
therefrom the portion so adjudicated, such deletion to apply only with respect
to the operation of this Section 1 in the jurisdiction in which such
adjudication is made.
SECTION 2. Subject to Section 5 hereunder, this Lock-Up Agreement shall
inure to the benefit of and be binding upon ABT, its successors and assigns,
and upon the Shareholder, his heirs, executors, administrators, legatees and
legal representatives.
SECTION 3. Should any part of this Lock-Up Agreement, for any reason
whatsoever, be declared invalid, illegal, or incapable of being enforced in
whole or in part, such decision shall not affect the validity of any remaining
portion, which remaining portion shall remain in full force and effect as if
this Lock-Up Agreement had been executed with the invalid portion thereof
eliminated, and it is hereby declared the intention of the parties hereto that
they would have executed the remaining portion of this Lock-Up Agreement without
including therein any portion which may for any reason be declared invalid.
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<PAGE> 86
SECTION 4. This Lock-Up Agreement shall be construed and enforced in
accordance with the laws of the State of Nevada applicable to agreements made
and to be performed in such State without application of the principles of
conflicts of laws of such State.
SECTION 5. This Lock-Up Agreement and all rights hereunder are
personal to the parties and shall not be assignable by ABT without the
Shareholder's written consent or by the Shareholder without ABT's written
consent, and any purported assignment in violation hereof shall be null and
void. Notwithstanding the foregoing, the undersigned Shareholder shall be
permitted to transfer his ABT Shares in privately negotiated sales, transfers
among Shareholders, transfers to family members and/or to trusts for the benefit
of the Shareholder and the Shareholder's family members, provided the transferee
of such shares executes a Lock-Up Agreement in the form of this Lock-Up
Agreement.
SECTION 6. (A) All notices, requests, consents, and demands by the
parties hereunder shall be delivered by fax, by hand, by recognized national
overnight courier or by deposit in the United States Mail, postage prepaid, by
registered or certified mail, return receipt requested, addressed to the party
to be notified at the address set forth in Section XXII(a) of the Reorganization
Agreement.
(B) Notices given by mail shall be deemed effective on
the earlier of the date shown on the proof of receipt of such mail or, unless
the recipient proves that the notice was received later or not received, three
(3) days after the date of mailing thereof. Other notices shall be deemed
given on the date of receipt. Any party hereto may change the address specified
herein by written notice to the other parties hereto.
(C) Capitalized terms used but not otherwise defined
herein shall have the meanings ascribed to them in the Reorganization Agreement.
SECTION 7. The failure of either party to insist upon the strict
performance of any of the terms, conditions and provisions of this Agreement
shall not be construed as a waiver or relinquishment of future compliance
therewith, and said terms, conditions and provisions shall remain in full force
and effect. No waiver of any term or any condition of this Lock-Up Agreement on
the part of either party shall be effective for any purpose whatsoever unless
such waiver is in writing and signed by such party.
IN WITNESS WHEREOF, the parties hereto have executed this Lock-Up
Agreement as of the day and year first written above.
AGRIBIOTECH, INC.
By:
--------------------------------
Kathleen L. Gillespie
Vice President
SHAREHOLDER:
- ------------------------------
- ------------------------------
Name
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<PAGE> 87
EXHIBIT C
AGREEMENT
THIS AGREEMENT (the "Agreement") is made this tenth day of December,
1997, by and among John D. Budd, Joseph R. Budd, Kenneth R. Budd, Richard P.
Budd, Theodore P. Budd and Gerald L. Chrisco (the "Parties").
RECITALS:
WHEREAS, the Parties are parties to the Agreement and Plan of
Reorganization, dated as of January 25, 1997, by and among AgriBioTech, Inc.
("ABT"), Lofts Seed, Inc., Budd Seed, Inc., Lofts Mergerco, Inc. and the
shareholders of Lofts Seed, Inc. and Budd Seed, Inc. (the "Merger Agreement");
and
WHEREAS, pursuant to the Merger Agreement, the Parties have agreed to
enter into the Lock-Up Agreement (as defined in the Merger Agreement); and
WHEREAS, pursuant to the Merger Agreement and the Lock-Up Agreement,
the Parties constitute a "group" under Section 13(d) of the Securities Exchange
Act of 1934 with respect to more than 5% of the outstanding shares of ABT and
must file a statement on Schedule 13D; and
WHEREAS, the Parties desire to make a joint filing on behalf of each
Party on Schedule 13D; and
NOW, THEREFORE, the Parties hereby agree that a statement on Schedule
13D to which this Agreement is attached as Exhibit C shall be filed on behalf of
each of them.
/s/ John D. Budd /s/ Richard P. Budd
- ---------------------------------- -------------------------------------
John D. Budd Richard P. Budd
/s/ Joseph R. Budd /s/ Theodore P. Budd
- ---------------------------------- -------------------------------------
Joseph R. Budd Theodore P. Budd
/s/ Kenneth R. Budd /s/ Gerald L. Chrisco
- ---------------------------------- -------------------------------------
Kenneth R. Budd Gerald L. Chrisco
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