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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): August 28, 1998
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AgriBioTech, Inc.
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(Exact name of registrant as specified in its charter)
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Nevada 0-19352 85-0325742
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<S> <C> <C>
(State or Other Jurisdiction (Commission File Number) (IRS Employer Ident. No.)
of Incorporation)
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120 Corporate Park Drive, Henderson, Nevada 89014
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(Address of Principal Executive Offices) (Zip Code)
(702) 566-2440
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Registrant's telephone number, including area code
<PAGE>
Item 2. Acquisition or Disposition of Assets..
-------------------------------------
A. Acquisition of Allied Seed Division.
-----------------------------------
On August 28, 1998, AgriBioTech, Inc., a Nevada corporation (the
"Registrant"), and Clark Seeds, Inc. ("Buyer"), an Idaho corporation and wholly-
owned subsidiary of the Registrant, pursuant to the terms of an Asset Purchase
Agreement dated August 28, 1998, completed the acquisition from Agway, Inc.
("Seller") of certain tangible and intangible assets associated with Seller's
business of producing, selling and marketing alfalfa, red clover and other farm
seed at its facilities in Nampa, Idaho and Powell, Wyoming through its Allied
Seed Division.
The aggregate purchase price was $14,000,000 together with the Buyer's
assumption of certain of Seller's liabilities and was paid in cash at the
closing.
In addition to the purchase and sale of the Assets as described above, at
the Closing, Seller entered into a Non-Competition Agreement with the Buyer, in
consideration of which Seller received an additional cash payment of $500,000.
Under the terms of the Non-competition Agreement, Seller agreed that for a
period commencing on the Closing Date and terminating on June 30, 2003 it would
neither (i) produce, clean or grow alfalfa or red clover nor (ii) sell or market
alfalfa, red clover forages or other farm grasses outside of the following
territory: Maine, New Hampshire, Vermont, Massachusetts, Connecticut, Rhode
Island, New York, New Jersey, Pennsylvania, Delaware, Maryland, Ohio, Virginia
and Ontario, Canada; provided , however, that Seller may enter into a merger,
joint venture or other business combination with another entity so long as: (i)
the objective of the transaction is not to serve the alfalfa or red clover seed
market; and (ii) serving the alfalfa or red clover seed markets is not the
primary element of the other entity's business or, if that service is such an
element, the Seller, its affiliate(s) and its personnel will have no involvement
with that element of the combined business.
In addition, at the Closing David McWilliams, formerly employed by Seller
as General Manager of its Allied Seed Division, entered into a 5 year Employment
Agreement with Buyer, in consideration for which he received six year-options to
purchase up to 25,000 shares of Registrant's common stock at an exercise price
of $8.125 per share.
B. Acquisition of Oseco Inc.
------------------------
On September 1, 1998, AgriBioTech, Inc., a Nevada corporation (the
"Registrant"), and Rothwell Seeds International Company, a Nova Scotia limited
company and a wholly-owned subsidiary of the Registrant, pursuant to the terms
of a Stock Purchase Agreement dated September 1, 1998, completed the acquisition
of 100% of the issued and outstanding share capital (the "Shares") of Oseco
Inc., an Ontario corporation, from 1304516 Ontario Inc., ("Seller") an Ontario
corporation owned by Gabriel A. Eros and Mary E. Eros.
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The aggregate purchase price was $6,560,000 Canadian, $4.5 million in cash
and $2.06 million in the form of 100,000 shares of the Registrant's Common
Stock. Registrant and Seller also entered into a Price Guaranty Agreement
pursuant to which Registrant guaranteed that the Net Proceeds (as defined in the
Stock Purchase Agreement) from all sales of Registrant's common Stock, when made
in accordance with the terms of a Lock-Up Agreement, shall be no less than
$2.06 million Canadian. In consideration of the Price Guaranty Agreement,
Seller agreed that all Net Proceeds from all sales of Registrant's Common Stock
in excess of $2.06 million Canadian will be paid to Registrant in cash by
Seller.
At the Closing, Gabriel A. Eros entered into an Employment Agreement with
the Registrant. In addition, Seller, Gabriel A. Eros and Mary E. Eros entered
into Non-Competition Agreements with the Registrant. The term of the Non-
Competition Agreements for Seller and Mary E. Eros commenced on the Closing
Date and continues for a period of three years. The term of the Non-Competition
Agreement for Gabriel A.. Eros commenced on the Closing Date and continues for
a period of two years from the end of his Employment Agreement, but in no event
less than three years. In connection with his Employment Agreement, Gabriel A.
Eros also received three-year options to purchase 100,000 shares of Registrant's
Common Stock exercisable at U.S. $8.625 per share.
Item 5. Other Events.
-------------
On August 28, 1998, AgriBioTech, Inc. (the "Company") entered into
Securities Purchase Agreements to sell an aggregate of $17,438,649 of
Securities. The Company sold 1,752,820 shares of Common Stock at $8.9375 per
share and 886,410 Common Stock Purchase Warrants (the "Warrants") at $2.00 per
Warrant and exercisable at $12.00 per share. The shares of Common Stock were
sold to Quantum Partners LDC, a fund managed by Soros Fund Management (1,140,000
shares); The State of Wisconsin Investment Board (512,820 shares); and Fidelity
Commonwealth Trust: Fidelity Small Cap Stock Fund (100,000 shares). The
Warrants were sold to Quantum Partners LDC, a fund managed by Soros Fund
Management (570,000 Warrants); Fidelity Commonwealth Trust: Fidelity Small Cap
Stock Fund (60,000 Warrants) and an unaffiliated third party investor (256,410
Warrants). The closing under each Securities Purchase Agreement occurred
concurrently with the execution of each Securities Purchase Agreement.
The shares of Common Stock were registered as an original issuance as part
of the Registrant's Registration Statement on Form S-3 (No. 333-61127) .
Pursuant to the Securities Purchase Agreements, the Company is required to file
a new registration statement in connection with the shares of Common Stock
underlying the Warrants and to use its commercially reasonable best efforts to
cause such registration statement to be declared effective within 90 days of the
closing.
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Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
------------------------------------------------------------------
(a) Financial Statements of AgriBioTech, Inc., of Business Acquired.
(1) It is impracticable for the Registrant to file the financial
statements for the acquisition of the Allied Seed Division as
required by Item 7(a)(1) of Form 8-K. Such information will be
filed by amendment to this Form 8-K within sixty days from the
due date hereof in accordance with Item 7(a)(4) of Form 8-K.
(2) Oseco's June 30, 1997 and March 31, 1998 financial statements
have been filed as part of the Company's Current Report on Form
8-K for May 22, 1998.
(b) Pro Forma Financial Information.
(1) It is impracticable for the Registrant to file the pro forma
financial information for the acquisition of the Allied Seed
Division as required by Item 7(b)(1) of Form 8-K. Such
information will be filed by amendment to this Form 8-K within
sixty days from the due date hereof in accordance with Item
7(b)(2) of Form 8-K.
(2) Pro forma financial information including Oseco for June 30, 1997
and March 31, 1998 has been filed as part of the Company's
Current Report on Form 8-K for May 22, 1998.
(c) Exhibits.
2.1 Asset Purchase Agreement dated August 28, 1998 by and among Agway,
Inc., Clark Seeds, Inc., and AgriBioTech, Inc.
2.2 Omitted Schedules and Exhibits to the Asset Purchase Agreement dated
August 28, 1998 by and among Agway, Inc., Clark Seeds, Inc., and
AgriBioTech, Inc.
2.3 Stock Purchase Agreement dated September 1, 1998 by and among, 1304516
Ontario Inc., Gabriel A. Eros and Mary E., AgriBioTech, Inc., and
Rothwell Seeds International Company.
2.4 Omitted Schedules and Exhibits to the Stock Purchase Agreement dated
September 1, 1998 by and among, 1304516 Ontario Inc., Gabriel A. Eros
and Mary E., AgriBioTech, Inc., and Rothwell Seeds International
Company.
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<PAGE>
2.5 Price Guaranty Agreement dated September 1, 1998 between 1304516
Ontario Inc., and AgriBioTech, Inc.
4.1 Form of Securities Purchase Agreement dated August 28, 1998 regarding
the Warrants.
4.2 Form of Common Stock Purchase Warrant dated August 28, 1998.
SIGNATURE
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Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
AGRIBIOTECH, INC.
(Registrant)
Date: September 11, 1998 /s/ Henry A. Ingalls
--------------------------
Henry A. Ingalls,
Vice President
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EXHIBIT INDEX
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Exhibit No. Description
- ----------- -----------
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2.1 Asset Purchase Agreement dated August 28, 1998 by and among
Agway, Inc., Clark Seeds, Inc., and AgriBioTech, Inc..
2.2 Omitted Schedules and Exhibits to the Asset Purchase Agreement
dated August 28, 1998 by and among Agway, Inc., Clark Seeds,
Inc., and AgriBioTech, Inc.
2.3 Stock Purchase Agreement dated September 1, 1998 by and among,
1304516 Ontario Inc., Gabriel A. Eros and Mary E., AgriBioTech,
Inc., and Rothwell Seeds International Company.
2.4 Omitted Schedules and Exhibits to the Stock Purchase Agreement
dated September 1, 1998 by and among, 1304516 Ontario Inc.,
Gabriel A. Eros and Mary E., AgriBioTech, Inc., and Rothwell
Seeds International Company.
2.5 Price Guaranty Agreement dated September 1, 1998 between 1304516
Ontario Inc., and AgriBioTech, Inc.
4.1 Form of Securities Purchase Agreement dated August 28, 1998
regarding the Warrants.
4.2 Form of Common Stock Purchase Warrant dated August 28, 1998.
</TABLE>
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<PAGE>
Exhibit 2.1
ASSET PURCHASE AGREEMENT
BY AND AMONG
AGRIBIOTECH, INC.,
CLARK SEEDS, INC.,
a wholly-owned Nevada subsidiary of AgriBioTech, Inc.,
as Buyer,
and
AGWAY, INC.
as Seller
August 28, 1998
<PAGE>
ASSET PURCHASE AGREEMENT
------------------------
ASSET PURCHASE AGREEMENT (the "Agreement") dated August 28, 1998
(hereinafter referred to as the "Signing Date" or the "Signing") by and among
Agway, Inc., a Delaware corporation (the "Seller"), Clark Seeds, Inc., an Idaho
corporation (the "Buyer") and AgriBioTech, Inc. ("ABT"), a Nevada corporation.
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, the Buyer is a wholly-owned subsidiary of ABT;
WHEREAS, the Seller has been engaged in the business of producing, selling
and marketing alfalfa, red clover and other farm seed at its facilities in
Nampa, Idaho and Powell, Wyoming through its Allied Seed Division (the
"Business"), which Business shall cease as currently organized and be
reconstituted as a new business of the Buyer; and
WHEREAS, the Seller wishes to sell and the Buyer wishes to purchase certain
tangible and intangible assets associated with the Business (the "Assets").
NOW, THEREFORE, in consideration of the foregoing and the terms,
conditions, representations, warranties and mutual covenants appearing in this
Agreement, the parties hereto hereby agree as follows:
SECTION 1. SALE AND PURCHASE OF ASSETS. Upon the terms and subject to
---------------------------
the conditions set forth in this Agreement, at the Closing (as hereinafter
defined) effective as of the Effective Date (as hereinafter defined), the Seller
shall sell, assign, transfer and deliver to the Buyer, and the Buyer shall
purchase, acquire, accept and take possession of all of the Seller's right,
title and interest in and to the following assets of the Seller described below
(all of which are hereinafter sometimes referred to as the "Assets," which shall
be defined as those assets set forth in Sections 1(a) through 1(q) as of end of
business August 28, 1998:
(a) The Seller's inventory, which relates to the Business (the
"Inventory"), as set forth on Schedule 1(a) attached hereto.
(b) The Seller's land, which relates to the Business (the "Real Property"),
as set forth on Schedule 1(b) attached hereto.
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(c) The Seller's buildings and improvements, including storage, which
relate to the Business, as set forth on Schedule 1(c) attached hereto.
(d) The Seller's equipment and machinery, including repair parts, tools and
miscellaneous property, which relate to the Business, as set forth on Schedule
1(d) attached hereto.
(e) The Seller's office furniture and fixtures, which relate to the
Business, as set forth on Schedule 1(e) attached hereto.
(f) The Seller's automobiles, trucks, forklifts and other vehicles, which
relate to the Business, as set forth on Schedule 1(f) attached hereto.
(g) The Assets set forth in subsections (b) through (f) above are sometimes
referred to herein as the "Fixed Assets."
(h) The Seller's pre-paid assets, which relate to the Business, as set
forth on Schedule 1(h) attached hereto (the "Pre-Paid Assets").
(i) The Seller's other assets, which relate to the business, including
germplasm and other technology, as set forth on Schedule 1(i) attached hereto
(the "Other Assets").
(j) Intentionally left blank.
(k) The Seller's trade name, which relates to the Business, as set forth on
Schedule 1(k) attached hereto.
(l) Intentionally left blank.
(m) The Seller's rights, if any, to varieties, including, but not limited
to, all Plant Variety Protection Act ("PVPA") Certificates, which relate to the
Business, as set forth on Schedule 1(m) attached hereto.
(n) The customer list of the Seller, which relates to the Business, as set
forth on Schedule 1(n) attached hereto.
(o) The Seller's goodwill relating to the Business.
(p) The Assets set forth in subsections (k) through (o) above, along with
the non-competition agreements described in Section 3(d) hereof, are sometimes
referred to herein as the "Intangible Assets."
(q) Intentionally left blank.
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(r) The Assets shall be conveyed free and clear of all liabilities,
obligations, liens, security interests and encumbrances of any character
whatsoever, excepting only those liabilities and obligations, if any, which are
expressly to be assumed by the Buyer hereunder (the "Assumed Liabilities"), as
set forth on Schedule 1(r) attached hereto.
Except for the Assumed Liabilities, if any, the Buyer shall not assume
nor be responsible for any liabilities or obligations which relate in any way to
the operation of the Business prior to the Effective Date.
SECTION 2. PURCHASE PRICE. In full consideration for the sale,
--------------
transfer, conveyance, assignment and delivery of the Assets by the Seller to the
Buyer and in reliance upon the representations and warranties made herein by the
Seller and for other consideration set forth herein, the Buyer hereby agrees to
pay to the Seller at the Closing (as hereinafter defined) a purchase price (the
"Purchase Price") of FOURTEEN MILLION AND 00/100 ($14,000,000) DOLLARS together
with the Buyer's assumption of the Seller's liabilities pursuant to Section 1(r)
of this Agreement. The Purchase Price shall be payable at the Closing as
described in Section 3 below.
The sum of FIVE HUNDRED THOUSAND AND 00/100 ($500,000) DOLLARS shall be
paid at Closing as the aggregate consideration for the Non-Competition Agreement
of Seller, as anticipated by Section 3(c) below. This consideration is to be
paid in addition to the Purchase Price.
SECTION 3. DESCRIPTION OF COMPONENTS OF PURCHASE PRICE AND OTHER
-----------------------------------------------------
PAYMENTS.
- --------
(a) Payment of Purchase Price to the Seller at Closing. Upon the
--------------------------------------------------
completion by the parties of their respective closing conditions under this
Agreement (unless waived in writing by the parties hereto), the Buyer shall pay
to the Seller the Purchase Price, payable in immediately available funds by
Fedwire or other method reasonably acceptable to Seller, in exchange for
delivery of the Assets at the Closing.
(b) Portion of Purchase Price to be Held in Escrow. At the Closing, Buyer
----------------------------------------------
shall deposit $300,000 of the Purchase Price with the Escrow Agent in accordance
with the Escrow Agreement attached as Exhibit 3(b). The funds held by the
Escrow Agent, and any interest or investment earnings thereon, are referred to
herein as the "Escrow Funds." The Escrow Funds shall be made available to ABT
and the Buyer in the event of any claims arising pursuant to Section 9(b) hereof
for which ABT or the Buyer is entitled to payment, subject to the $50,000
threshold set forth in Section 9(d) hereof.
The Escrow Funds shall be reduced to the levels set forth in the
following schedule:
4
<PAGE>
DATE ESCROW FUNDS
---- ------------
CLOSING $300,000
FIRST ANNIVERSARY OF CLOSING DATE 200,000
SECOND ANNIVERSARY OF CLOSING DATE 100,000
THIRD ANNIVERSARY OF CLOSING DATE -0-
Excess Escrow Funds held by the Escrow Agent at such times shall be paid to
Seller in accordance with the Escrow Agreement.
(c) Non-Competition Agreement. In addition to the purchase and sale of the
-------------------------
Assets as described above, at the Closing, Seller shall enter into a Non-
Competition Agreement with the Buyer in the form annexed hereto as EXHIBIT
3(c).
(d) Intentionally left blank.
(e) Effective Date of the Sale. The parties hereto agree that the purchase
--------------------------
and sale of the Assets and the assumption of the Assumed Liabilities shall be
accounted for as if such transactions had occurred at the end of business on
August 28, 1998 (the "Effective Date") regardless of when the Closing in fact
occurs. The Buyer shall realize any operating profit or loss from the operation
of the Business of the Seller after the Effective Date. Accordingly, the Seller
agrees to consult the Buyer on any material issues or contracts which relate to
a period of time beyond the Effective Date. Furthermore, the Seller agrees not
to enter into any new capital obligations or capital expenditures which relate
to the Business prior to the Closing Date.
SECTION 4. EXCLUDED ASSETS.
---------------
(a) The Seller shall retain ownership of all of the assets of the Business,
except for those assets transferred to the Buyer pursuant to this Agreement,
including, but not limited to, the corporate records (but not the business
records) of the Business, and those assets more specifically listed on Schedule
4(a)(1) ,attached hereto (the "Excluded Assets"). The Seller shall retain
ownership of the Accounts Receivable of the Business accrued as of the Effective
Date (the "Seller's Accounts Receivable") as set forth as Schedule 4(a)(2). The
Seller shall be responsible for collecting Seller's Accounts Receivable, and the
Buyer or ABT shall transfer or deliver to the Seller from time to time (but not
less than weekly), promptly upon receipt thereof by the Buyer or ABT, all cash
or other property due the Seller that the Buyer may receive in respect of any
Seller's Accounts Receivable.
(b) ABT and Buyer shall allow Seller and its representatives and
professional advisers access to all business records of the Business that relate
to conduct of the Business prior to Closing. Such access shall be related to a
bona fide business interest of Seller, and shall be conducted during normal
business hours following forty-eight (48) hour advance notice of the
5
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need to review such records. Seller may also make and retain copies of any such
business records it determines appropriate either before or after Closing.
SECTION 5. NON-ASSUMPTION OF LIABILITIES. It is understood and agreed
-----------------------------
by the parties hereto that the Assets will be sold, conveyed, transferred and
assigned to the Buyer at the Closing free and clear of all liens, charges and
encumbrances whatsoever, and it is further understood and agreed by the parties
hereto that the Buyer does not assume, accept or undertake any obligations,
commitments, duties, debts or liabilities of any kind whatsoever (the
"Obligations"), except for the Assumed Liabilities assumed by the Buyer pursuant
to this Agreement as listed in Schedule 1(r) attached hereto.
SECTION 6. CLOSING. The closing of the sale and purchase of the Assets
-------
provided for in Sections 1 and 2 of this Agreement (the "Closing") shall take
place at the offices of Seller's attorney in Boise, Idaho on the 28th day of
August 1998, or such other time and place as the parties may agree. The day on
which the Closing occurs is sometimes hereinafter referred to as the "Closing
Date."
SECTION 7. REPRESENTATIONS AND WARRANTIES OF THE SELLER. The Seller
--------------------------------------------
warrants and represents to the Buyer and ABT as follows:
(a) Title. Except as set forth in SCHEDULE 7(a) of this Agreement, the
-----
Seller owns, and at the Closing shall have, good, valid, insurable and
marketable title to the Assets and full right to transfer title to the Assets
free and clear of all liens, mortgages, charges, liabilities, claims, security
interests or encumbrances of every type whatsoever, except the Assumed
Liabilities, statutory liens and liabilities created by Buyer.
Except as set forth in SCHEDULE 7(a) of this Agreement, the sale,
conveyance, transfer and delivery of the Assets by the Seller to the Buyer
pursuant to this Agreement will transfer full legal and equitable right, title
and interest in the Assets to the Buyer, free and clear of all liens, mortgages,
charges, claims, liabilities, security interests and encumbrances of any nature
whatsoever, except the Assumed Liabilities, statutory liens and liabilities
created by Buyer.
(b) Capacity; Organization; Existence. The Seller has full capacity to
---------------------------------
enter into and perform under this Agreement, and all other agreements to be
entered into in connection with the transactions contemplated hereby (the "Other
Agreements") and to consummate such transactions; and no other consent or
joinder of any other persons or corporations is required. This Agreement has
been, and each of the Other Agreements executed by the Seller hereunder will at
the Closing, be duly authorized, executed and delivered by the Seller. This
Agreement constitutes, and each of the Other Agreements executed by the Seller
will constitute, the legal, valid and binding obligations of the Seller
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
6
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principles. The Seller is duly organized and validly existing under the laws of
the State of Delaware. The Seller has full corporate power and authority to
conduct its business as it is now being conducted 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 the Seller requires such
qualification. With respect to the Business, the Seller has all necessary
licenses and authority to operate its business as now being conducted in the
States of Idaho and Wyoming.
(c) Legal Proceedings; Claims. Except as set forth in SCHEDULE 7(c) of
-------------------------
this Agreement, the Seller is not a party to any pending litigation, arbitration
or administrative proceeding or investigation, with respect to or relating to
the Assets or the Business and, to the Seller's best knowledge and belief, no
litigation, arbitration or administrative proceeding or investigation that would
have a material adverse effect on the Assets or the Business is threatened.
Except as set forth in SCHEDULE 7(c) of this Agreement, there are no warranty
claims or other claims relating to any products sold by the Seller's Business.
(d) Trade Name. With respect to the Business, the Seller owns or has the
----------
right to use the trade name set forth on SCHEDULE 7(d). The Seller has not
granted, and will not grant prior to the Closing, licenses or other rights to
use such trade. Except as disclosed in SCHEDULE 7(d), no other trade names or
trademarks are owned or used by the Seller exclusively in relation to the
Business. To the Seller's best knowledge and belief, the operation of the
Business does not infringe on the trade names, trademarks or any other
intellectual property rights of any third party. To the Seller's best
knowledge, no claim has been made that there is any such infringement. To the
Seller's best knowledge and belief, no trade name or trademarks of any person
infringes the trade names or trademarks which relate to the Business.
(e) Intentionally left blank.
(f) Description of Material Contracts. SCHEDULE 7(f) contains a complete
---------------------------------
and correct list as of the date hereof of all agreements, contracts and
commitments, obligations and understandings which are not set forth in any other
Schedule delivered hereunder, of the following types, written or oral (the
"Material Agreements") which relate to the Business and to which the Seller is a
party or by which it or any of its properties are bound, as of the date hereof:
(i) mortgages, indentures, security agreements and other agreements
and instruments relating to the borrowing of money or extension of credit; (ii)
employment and consulting agreements with annual compensation in excess of
$40,000; (iii) collective bargaining agreements; (iv) bonus and incentive,
profit-sharing, compensation, stock purchase and stock option, pension,
retirement, deferred compensation, hospitalization and other life, health or
disability insurance, holiday, sick leave, severance, vacation, tuition
reimbursement, personal loan and product purchase discount, policy manuals, or
other plans, agreements, trusts, funds or arrangements for the benefit of
employees (whether or not legally binding); (v) sales agency, manufacturer's
representative or distributorship agreements; (vi) agreements, orders or
commitments for the purchase by the Seller of materials, supplies or finished
products exceeding
7
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$5,000 in the aggregate from any one person; (vii) agreements, orders or
commitments for the sale of products or services exceeding $5,000; (viii)
agreements or commitments for capital expenditures in excess of $5,000 for any
single project (it being warranted that the commitment for all undisclosed
contracts for such agreements or commitments does not exceed $5,000 in the
aggregate); (ix) agreements relating to research; (x) agreements relating to
PVPA Certificates or licenses or other rights to use PVPA Certificates; (xi)
agreements relating to the payment of royalties; (xii) seed purchase contracts
or other contracts with growers; (xiii) brokerage or finder's agreements; (xiv)
joint venture agreements; and (xv) other agreements, contracts and commitments
that individually or in the aggregate for any one party involve any expenditure
by the Seller of more than $5,000. All of the Material Agreements constitute
valid and legally binding obligations of the parties thereto, 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, are in
full force and effect and, except as otherwise specified in Schedule 7(f), are
validly assignable to the Buyer without the consent of any party so that, after
the assignment thereof to the Buyer pursuant hereto, the Buyer will be entitled
to the full benefits thereof. There is not under any Material Agreement any
existing default, or event which, after notice or lapse of time, or both, would
constitute a default or result in a right to accelerate or loss of rights under
any Material Agreement. The Seller has not received any notice of termination of
any Material Agreement. True and complete copies of all of the Material
Agreements have been delivered to the Buyer.
No agreement, contract, commitment, obligation or undertaking listed on
Schedule 7(f) to which the Seller is a party or by which any of its properties
are bound, except as specifically set forth in Schedule 7(f), contains any
provision which materially adversely affects or in the future may (so far as the
Seller can now foresee) materially adversely affect the Assets.
(g) Default; Violations or Restrictions. The Seller is not in default
-----------------------------------
under, nor has any event occurred which, with the lapse of time or action by a
third party, could result in a default under any outstanding note, indenture,
mortgage, contract or agreement to which it is bound, relating to the Assets.
Except as disclosed in SCHEDULE 7(g), the execution, delivery and performance of
this Agreement and of any agreement to be executed and delivered by the Seller
pursuant hereto, 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) 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 or acceleration or
otherwise be in conflict with or result in a loss of contractual benefits to the
Seller, as such relates to the Assets, under any law, order, writ, injunction,
decree, statute, rule or regulation of any court, governmental agency or
arbitration tribunal or 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
Seller is a party or by which it may be bound, or require any consent, approval
or notice under the laws of any such
8
<PAGE>
document or instrument; or result in the creation or imposition of any lien,
claim, restriction, charge or encumbrance upon the Assets.
(h) Court Orders and Decrees. Except as set forth on SCHEDULE 7(h), the
------------------------
officers of the Seller 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
Assets.
(i) Approvals and Authorizations. The Seller has obtained all necessary
----------------------------
consents, approvals or authorizations in connection with the transactions
contemplated hereby that are required by law or otherwise in order to make this
Agreement binding upon the Seller, except for those consents, approvals or
authorizations which individually or in the aggregate would not have a
materially adverse effect on the Assets or the Business.
(j) Governmental Licenses. SCHEDULE 7(j) attached hereto contains a
---------------------
correct and complete list of all governmental and administrative consents,
permits, appointments, approvals, licenses, certificates and franchises which
are required in connection with the Seller's execution, delivery or performance
of this Agreement, all of which have been obtained and are in full force and
effect. The Seller has not received any notice of any violation with respect to
any such consent, permit, license or other regulatory order that remain
unabated. Except as set forth on SCHEDULE 7(j), the Seller is in compliance
with all Laws and Environmental Laws material to the Business, their properties
or operation as presently conducted.
(k) Hazardous Material and Nuisance. Except as disclosed on SCHEDULE 7(k)
-------------------------------
attached hereto, there are no known claims or potential claims which may exist
against the Seller relating to the Business and/or the Assets, 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 Seller 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.
(l) Employee Benefit Plans. Except as disclosed on SCHEDULE 7(l) attached
----------------------
hereto, there is not now nor, since the Seller has owned the Business, has there
ever been any "Employee Benefit Plan" (as defined in Section 3(3) of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA")), or any
other profit sharing, deferred compensation, bonus, stock option, stock
purchase, pension or other compensation plan, or any other plan or arrangement
to benefit employees maintained or contributed to by the Seller or any person,
firm or corporation (an "Affiliate") which are members of a "controlled group of
corporations" (within the meaning of Section 414(b) of the Code, except that 50%
will be substituted for 80% in Section 1563(a) of
9
<PAGE>
the Code) with the Seller and in which any of the employees of the Seller or any
Affiliate participates or is eligible to participate. No funding deficiency
exists or has existed with respect to any Employee Benefit Plan covering any
present or former employee of the Seller or any Affiliate which may cause or
result in a lien upon any of the Assets.
(m) Absence of Certain Business Practices. Neither the Seller, nor to its
-------------------------------------
best knowledge and belief, any of its officers, employees or agents acting on
its behalf, nor any other person acting on its behalf, has, directly or
indirectly, within the past three (3) years given or agreed to give 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 Business (or assist the
Seller in connection with any actual or proposed transaction) that (i) might
subject the Seller to any damage or penalty in any civil, criminal or
governmental litigation or proceeding, or (ii) if not given in the past would
have had an adverse effect on the assets, business or operation of the Business
and if not continued in the future, would adversely affect the Assets, the
Business or its operations or prospects.
(n) Brokers. The Seller has not entered into and will not enter into any
-------
agreement, arrangement or understanding with any person or firm which will
result in an obligation of the Buyer or ABT to pay any finder's fee, brokerage
commission, or similar payment in connection with the transactions contemplated
by this Agreement.
(o) Financial Statements. The Seller has delivered to the Buyer during the
--------------------
process of the Buyer's due diligence investigation copies of all financial
statements requested by the Buyer (hereinafter collectively called the
"Financial Statements") and which are attached hereto as EXHIBIT 7(O). The
Financial Statements were prepared by management of the Seller in the ordinary
course of business for periods through and including the month ended August 28,
1998, 1998 (the "Balance Sheet Date") and are complete and correct as shown on
and as prepared from the books and records of the Seller and fairly present the
financial condition of the Seller as at their respective dates and the results
of the Seller's operations for the periods covered thereby, and are true and
correct statements of the financial condition of the Seller at such Balance
Sheet Date, and do not include or omit to state any fact which renders such
Financial Statements false or misleading. The Financial Statements of the
Business as of and for the period ended August 28, 1998 reflect the consistent
application of accounting principles throughout the periods involved, but do not
contain footnotes and may not be prepared in accordance with generally accepted
accounting principles ("GAAP"), and might be regarded as misleading in the
absence of the explanations usually included in such footnotes.
(p) Absence of Undisclosed Liabilities and Conditions. Except as and to
-------------------------------------------------
the extent reflected or reserved against on the face of the Financial
Statements, or as set forth on SCHEDULE 7(p) attached hereto, as of the Closing
Date, the Business had no debts, liabilities or obligations (whether due or to
become due, absolute, accrued, contingent or otherwise) of any nature
whatsoever, including, without limitation, any foreign or domestic tax
liabilities or deferred tax liabilities incurred in respect of or measured by
the Business' income, or its period prior to the
10
<PAGE>
Closing or any other debts, liabilities or obligations relating to or arising
out of any act, transaction, circumstance or state of facts which occurred or
existed on or before the Closing Date, whether or not then known, due or
payable. The Financial Statements do not include any assets or liabilities of
any entity other than the Seller nor any expense of any entity other than the
Seller. The Seller has no knowledge of any currently existing facts that
materially adversely affect or are likely in the future to materially adversely
affect the Assets.
(q) Compliance With Laws. Except as disclosed on SCHEDULE 7(q), the
--------------------
operations and activities of the Business concerning the Assets have previously
and continue to comply in all respects with all material 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. Neither the ownership nor use of
the Assets nor the conduct of the Business as presently conducted conflicts with
the rights of any other person, firm or corporation or violates, or 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 the Seller's Certificate of Incorporation or
Bylaws as presently in effect, or any lien, encumbrance, mortgage, deed of
trust, lease, license, agreement, understanding (hereinafter collectively
referred to as "Liens"), or Laws to which the Seller is a party or by which it
or the Assets may be bound or affected. The Seller has not received any notice
or communication from any third party asserting a failure to comply with any
Laws, nor has the Seller received any notice that any authority or third party
intends to seek enforcement against it to compel compliance with any such Laws.
The Seller has no knowledge that any third party may assert a failure to comply
with any Laws, nor has the Seller any knowledge that any authority or third
party intends to seek enforcement against it to compel compliance with any such
Laws.
(r) Taxes. As of the Closing Date, all taxes, including, without
-----
limitation, income, property, sales, use, franchise, added value, employees'
income withholding and social security taxes, to the extent they are due, and
all interest and penalties thereon, imposed by any governmental entity
whatsoever, which are due or payable by the Seller in connection with the
Business, have been paid in full, all tax returns required to be filed in
connection therewith have been timely filed and all deposits required by law to
be made by the Seller with respect to employee's withholding taxes have been
duly made. The Seller has not been delinquent in the payment of any tax,
assessment or governmental charge or deposit and has no tax deficiency or claim
outstanding, proposed or assessed against it. Except for amounts accrued, but
not payable as of the Effective Date, (i) the Seller is not liable for the
payment of any taxes relating to the Assets or the operation of the Business,
and (ii) the Buyer shall have no liability for any taxes related to the
ownership or operation of the Assets or the Business prior to the Effective
Date. The Seller does not know of any tax deficiency or claim outstanding,
proposed, or assessed against it with respect to any taxes, including, without
limitation, income, property, sales, use, franchise, valued-added, employees'
income withholding, and social security taxes imposed by the United States or by
an foreign country or by any state, municipality, subdivision, or
11
<PAGE>
instrumentality of the United States or of any foreign country, or by any other
taxing authority that could have a material effect on the Buyer, the Assets, or
the Business, or result in the imposition of a tax lien upon any of the Assets.
(s) Absence of Changes or Events. Without limiting the foregoing, since
----------------------------
the Balance Sheet Date and through the Signing Date, there has been no material
adverse change in the Business. Except as set forth in SCHEDULE 7(s) attached
hereto, since the Balance Sheet Date, the Seller has conducted its business only
in the ordinary course and has not:
(i) Incurred any obligation or liability, except current liabilities
for trade or business obligations incurred in the ordinary course of business
and consistent with its prior practice, none of which liabilities materially and
adversely affects the Assets or the Business;
(ii) Mortgaged, pledged or subjected to lien, charge, security
interest or any other encumbrance or restriction on any of the Assets;
(iii) Except for the sale of Inventory, in the ordinary course of
business, sold, transferred, leased to others or otherwise disposed of any of
the Assets;
(iv) Received any notice of termination of any agreement or suffered
any damage, destruction or loss which has had or, with the passage of time,
could have a materially adverse effect on the Assets or the Business;
(v) Made any change in its pricing, advertising or personnel practices
inconsistent with its prior practice and prudent business practices prevailing
in the industry;
(vi) Suffered any change, event or condition which, has had or may
have a materially adverse effect on the Assets, the Business or the operations
or prospects thereof;
(vii) Entered into any transaction, contract or commitment other than
in the ordinary course of business which had a material adverse effect on the
Assets or the Business; or
(viii) Instituted, settled or agreed to settle any litigation, action
or proceeding before any court or governmental body relating to the Seller, the
Assets or the Business.
(t) Inventory. The Inventory of the Seller (a) has been purchased in the
---------
ordinary course of business, (b) has been fully paid for unless otherwise
reflected in the Financial Statements, (c) is marketable or adequate provision
for obsolescence has been provided, and (d) the Seller knows no reason that
would make such Inventory, taken as a whole, not marketable.
(u) Labor Relations. The Seller, in connection with the Business, is not
---------------
(i) a party to any collective bargaining agreement relating to any of its
employees and its employees have not recognized, are not required to recognize,
and have not received a demand for recognition by,
12
<PAGE>
any collective bargaining representative, (ii) a party to any contract with and
has no liability to any of its employees, agents, consultants, officers, sales
representatives, distributors or dealers that is not cancelable by the Seller
without penalty on not more than thirty (30) days' notice, except as set forth
on SCHEDULE 7(u) attached hereto, (iii) subject to any strike or work stoppage
in effect or threatened against the Business nor has any strike or work stoppage
been authorized by any order, writ, injunction or decree of any court or
federal, state, municipal or other governmental agency or instrumentality.
(v) Customer Lists. With respect to the Business, all agreements,
--------------
arrangements or commitments with or respecting any customer of the Seller to
which the Seller is a party or is bound have been described in SCHEDULE 1(n)
attached hereto, except for those not involving a consideration of at least
$1000 per annum.
(w) Books and Records. With respect to the Business, the books and records
-----------------
of the Seller are, in all material respects, complete and correct and have been
maintained in accordance with standard business practice.
(x) Insurance. SCHEDULE 7(x) contains a correct and complete description
---------
of all policies of insurance by or on behalf of the Seller in which the Seller
is named as an insured party, beneficiary or loss payable payee. The Seller has
at all times prior to the date hereof maintained and will at all times prior to
the Closing Date maintain such insurance coverage. There is no default notice of
cancellation or non-renewal with respect to any material provision contained in
any such policy. SCHEDULE 7(x) contains a correct and complete description of
all outstanding insurance claims in excess of $5,000 made by or against the
Seller for damage to or loss of property or income which have been referred to
insurers or which the Seller believes to be covered by commercial insurance
within the five years preceding the Effective Date.
(y) Rights of Third Parties. Other than as disclosed in SCHEDULE 7(y), or
-----------------------
specifically provided for in this Agreement, the Seller has 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 Seller,
and no person or other corporation has any right to possession, use or occupancy
of any of the property of the Seller.
(z) Relationships with Vendors and Customers. Other than the transactions
----------------------------------------
contemplated by this Agreement, the Seller has no knowledge of any present
conditions or state of facts or circumstances which would materially adversely
affect the Business after the Closing Date. The Seller's relationships with its
material customers, clients and vendors are satisfactory, and, other than as
disclosed in SCHEDULE 7(z), the Seller has 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. The
Seller has no knowledge of any material outstanding claims of any of its
customers or clients presently outstanding, pending or threatened against them.
The Seller has no knowledge of any present condition or state of facts or
13
<PAGE>
circumstances which would prevent the Business from being carried on by the
Buyer after the Closing Date in essentially the same manner as it is presently
being carried on.
(aa) Schedules. The Seller has delivered to the Buyer complete and
---------
correct Schedules, in form and substance reasonably acceptable to the Buyer, as
of the Signing Date, and complete and correct copies of the documents and other
material from which such schedules were compiled.
(bb) Accuracy. No representation, warranty, covenant or statement by the
--------
Seller in this Agreement, the Schedules attached hereto and the certificates or
other documents furnished or to be furnished to the Buyer 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.
SECTION 8. REPRESENTATIONS AND WARRANTIES OF THE BUYER AND ABT. Each
---------------------------------------------------
of the Buyer and ABT, jointly and severally, warrants and represents to the
Seller as follows:
(a) Capacity. The Buyer and ABT have full right, power and capacity to
--------
execute, deliver and perform their respective obligations under this Agreement
and the other documents required to be executed by the Buyer or ABT 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, constitute a breach of any
term or provision of the certificate of incorporation or by-laws of the Buyer or
ABT or constitute a default under any material law, rule, regulation, indenture,
instrument, mortgage, deed of trust, or other agreement or instrument to which
the Buyer or ABT is a party or by which they are bound.
(b) Organization.
------------
(i) The Buyer is a corporation duly organized, validly existing and in
good standing under the laws of the State of Idaho, and the Buyer has corporate
power and authority to carry on its business as now conducted and as will be
conducted as supplemented by the Business, and to own, lease or operate the
properties and assets now used by it in connection therewith and the Assets.
(ii) ABT is a corporation duly organized, validly existing and in good
standing under the laws of the State of Nevada, and ABT 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. ABT is 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. All of the ABT Shares are validly issued, fully paid
and nonassessable.
14
<PAGE>
(c) 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 the Buyer's and
ABT's execution, delivery or performance of this Agreement. The Buyer and ABT
each shall execute, deliver and perform its obligations under this Agreement and
no consent or other approval or any other party is required to be obtained by
the Buyer or ABT in connection with the transactions contemplated hereby.
(d) Legal Proceedings. Neither ABT nor the Buyer 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 and adverse change in the financial condition, business or properties
of the Buyer or ABT and to the best of their respective knowledge no such
litigation, arbitration, proceeding or investigation is threatened.
(e) Accuracy. No representation, warranty, covenant or statement by the
--------
Buyer or ABT in this Agreement, any Exhibit attached hereto, the Schedules
attached hereto and the certificates or other documents furnished or to be
furnished to the Sellers pursuant hereto (including the Schedules, if any,
provided for in this Section 8 and Exhibits thereto), 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.
(f) Binding Obligation. This Agreement, and any other agreement required
------------------
to be delivered by the Buyer or ABT pursuant to this Agreement, has been duly
executed and delivered by the Buyer and ABT and constitutes the legal, valid and
binding obligation of the Buyer and ABT, enforceable against the Buyer and ABT
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 Board of Directors of the Buyer and ABT and all other corporate
action necessary to authorize the execution, delivery and performance of this
Agreement and the consummation of the transactions contemplated hereby have been
duly and validly taken.
(g) Brokers; Finders. No agent, broker, investment banker, person or firm
----------------
acting on behalf of the Buyer or ABT or any firm or corporation affiliated with
the Buyer or ABT or under their authority is or will be entitled to any brokers'
or finders' fee or any other commission or similar fee directly or indirectly
from the Seller or any person or entity affiliated with the Seller in connection
with any of the transactions contemplated hereby.
SECTION 9. SURVIVAL OF REPRESENTATIONS AND WARRANTIES; INDEMNIFICATION.
-----------------------------------------------------------
(a) Survival of Representations and Warranties. All representations and
------------------------------------------
warranties made by the Seller or the Buyer and ABT in this Agreement, including,
without limitation, all
15
<PAGE>
representations and warranties made in any Exhibit or Schedule hereto or
certificate delivered hereunder, shall survive the Closing until and through the
second anniversary of the Closing Date (the "Survival Date") provided, however,
that all representations and warranties made by the Seller in Sections 7(k),
7(l) and 7(q) and 7(r) hereof shall survive the Closing until and through one
(1) year after the expiration of the applicable statute of limitations (the
"Extended Survival Date").
(b) Indemnification by Seller. The Seller hereby agrees to indemnify,
-------------------------
defend and hold harmless the Buyer and ABT from and against all liabilities,
losses, costs or damages whatsoever (including expenses and reasonable fees of
legal counsel) (collectively, "Damages"), arising out of or from or are based
upon (i) the inaccuracy in any material respect of any representation or
warranty contained in Section 7 made by the Seller; (ii) the non-performance by
the Seller in any material respect of any covenant, agreement or obligation to
be performed by the Seller under this Agreement; (iii) the non-compliance of the
provisions of any applicable bulk transfer laws in connection with the sale of
the Assets to the Buyer; (iv) any liability relating to the Business prior to
the Signing Date other than the Assumed Liabilities set forth on SCHEDULE 1(r);
(v) any legal proceedings; (vi) any potential environmental claim that relates
to a condition that arose out of Seller's conduct on the property prior to the
Closing and to the extent it has not accrued on Seller's financial statements;
(vii) any liability relating to the Seller's Employee Benefit Plans, set forth
on SCHEDULE 7(l), prior to the Signing Date; and (viii) any liability relating
to the Seller's termination of employees of the Business. Except with respect
to any potential environmental claims, such indemnity shall expire on August 28,
2001.
Notwithstanding any provision of this Agreement to the contrary, Seller
shall defend and hold harmless the Buyer and ABT from and against all Damages
arising out of or from or based upon the matter described on Schedule 7(k).
This indemnification shall be unlimited both as to duration as well as to the
amount of damages.
(c) Indemnification by Buyer. The Buyer and ABT hereby agree to indemnify,
------------------------
defend and hold harmless the Seller from and against all Damages arising out of
or from or that are based upon (i) the inaccuracy in any material respect of any
representation or warranty contained in Section 8 made by the Buyer; (ii) the
non-performance by the Buyer in any material respect of any covenant, agreement
or obligation to be performed by the Buyer under this Agreement; (iii) the
Assumed Liabilities set forth on Schedule 1(r); and (iv) any liabilities arising
out of the operations of the Business by Buyer after the Closing Date.
(d) Defense of Claims. Whenever any claim shall arise for indemnification
------------------
hereunder, the party entitled to indemnification hereunder (the "Indemnitee")
shall notify the indemnifying party (the "Indemnitor") in writing within 30 days
after the Indemnitee has actual knowledge of the facts 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.
16
<PAGE>
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 of its own
choosing) to contest or defend such claim at its expense and through counsel of
its own choosing if the Indemnitor gives written notice of its 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.
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 reasonable 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. Provided, however, that in the event the Indemnitor refuses to accept
such reasonable offer to settle a claim as described above and the Indemnitee
continues to contest or defend such claim, the indemnification provided for
herein shall be deemed to include the value of management's time spent in
connection with the defense of such claim. 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 or litigation and, in such event, the total maximum
liability of the Indemnitor to indemnify or otherwise reimburse the Indemnitee
hereunder with respect to such claim or litigation 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.
For the purposes of the preceding paragraph, the question of whether a
settlement offer is reasonable shall be determined by considering whether the
Indemnitee regards the offer as reasonable and, if a final settlement has been
reached, whether the offer was within ten percent (10%) of the amount of such
final settlement.
In settlement of indemnification to which the Indemnitee is entitled
under this Section 9, the amount of any loss, liability or damage as to which
the Indemnitee is otherwise entitled to indemnity shall be reduced by the amount
of insurance proceeds previously paid, if any, to the Indemnitee in cash with
respect to such loss, liability or damage, and any claim held by the Indemnitee
for the payment of insurance proceeds in respect of the matter then being
settled shall be assigned to the Indemnitor at the time of such settlement. At
the request of the Indemnitor, the Indemnitee shall use its reasonable efforts
(at the Indemnitor's expense) to assist the Indemnitor in obtaining any such
insurance payment.
17
<PAGE>
Notwithstanding any provision of this Agreement to the contrary, no
claim for indemnification pursuant to this Section 9 by the Indemnitee shall be
asserted or claimed except to the extent of damages exceeding, in the aggregate,
the sum of $50,000.
Notwithstanding any provision of this Agreement to the contrary,
neither Seller's nor Buyer's maximum liability for indemnification shall exceed
the Purchase Price.
SECTION 10. COVENANTS OF THE SELLER. The Seller hereby covenants and
-----------------------
agrees:
(a) Further Assurances. The Seller hereby agrees that from time to time at
------------------
the reasonable request of the Buyer or ABT, and without further consideration,
to execute and deliver such additional instruments and to take such other action
as the Buyer or ABT may reasonably require to convey, assign, transfer and
deliver the Assets and otherwise to carry out the terms of this Agreement.
(b) Access to Information; Confidentiality.
--------------------------------------
(i) Subsequent to the date hereof and prior to the Closing Date, the
Seller will continue to give to the Buyer, ABT, their counsel, accountants, and
other representatives, full and free access to all books, contracts, commitments
and records of the Seller relating to the Assets so that the Buyer and ABT may
have full opportunity to make such investigation as they shall desire. Prior to
the Closing, ABT and Buyer shall notify in writing Seller of any information or
knowledge obtained either independently or as a result of any such investigation
of the Seller which would constitute a breach of any representation or warranty.
In such event, Buyer's and ABT's sole remedy shall be to terminate this
Agreement, provide Seller with reasonable time to cure the breach or accept the
information as having been properly disclosed.
(ii) From and after the date of this Agreement until the Closing or
the termination of this Agreement, the Seller and its representatives will
maintain the confidentiality of all documents and information of a confidential
nature disclosed to Seller in the course of its negotiations and the Buyer's and
ABT's due diligence review and will in no event use any such 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 that ABT or Buyer may have delivered to
Seller and will not use any confidential information from the Buyer or ABT for
its own benefit.
(c) Closing Documents. The Seller shall execute and deliver all
-----------------
instruments and documents required under Section 12 as a condition precedent to
the Closing hereof and take all action required to carry out the terms of this
Agreement and to consummate the transactions contemplated hereby.
(d) Conduct of Business. From the date of this Agreement to the Closing
-------------------
Date, except as expressly disclosed in the Schedules to this Agreement, the
Seller shall conduct its
18
<PAGE>
operations as engaged in at the date of this Agreement according to its ordinary
course of business, shall maintain its 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.
(e) If the Closing occurs after the Effective Date, Seller shall enter
into a management service agreement to enable Buyer and ABT to fully operate the
Business, subject to the rights of termination in Section 18.
SECTION 11. COVENANTS OF THE BUYER AND ABT. The Buyer and ABT hereby
------------------------------
covenant and warrant as follows:
(a) Noninterference. The Buyer and ABT 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 Section
8 of this Agreement, or (ii) would interfere with the Buyer's or ABT's ability
to perform or would prevent performance of any of its obligations under this
Agreement or any of the other agreements or instruments provided for herein.
(b) Closing Documents. The Buyer and ABT shall execute and deliver all
-----------------
instruments and documents required under Section 16 as a condition precedent to
the Closing hereof and take all action required to carry out the terms of this
Agreement and to consummate the transactions contemplated hereby.
(c) Confidentiality. From and after the date of this Agreement until the
---------------
Closing or the termination of this Agreement, the Buyer and ABT and their
respective employees and representatives will maintain the confidentiality of
all documents and information of a confidential nature disclosed to either of
them in the course of their negotiations and the Buyer's and ABT's due diligence
review of Seller and will in no event use any such 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 Seller may have delivered to ABT or Buyer and will not
use any confidential information from the Seller for their own benefit.
(d) Employees. All employees of the Seller employed solely in connection
---------
with the Business shall be terminated effective as of September 25, 1998. The
Seller shall pay all such employees all compensation, including compensation for
accrued vacation time, earned by them for the period January 1, 1998 through
September 25, 1998. Seller shall continue its payroll, including benefits, for
the account of the Buyer through September 25, 1998. Buyer shall reimburse
Seller for such service in an amount equal to Seller's cost plus 30%. The Buyer
thereafter shall use its best efforts to hire all of the Seller's employees
subject to each such employee complying with customary ABT employee practices.
The Buyer will facilitate the transfer of such employees to the Buyer's standard
benefit plans, subject to the eligibility
19
<PAGE>
requirements contained therein. For all such employees, the Buyer shall deem the
period of employment with the Seller to be employment with the Buyer for benefit
plan eligibility and vesting purposes if such employees comply with customary
ABT employee practices.
SECTION 12. CONDITIONS PRECEDENT TO THE BUYER'S AND ABT'S OBLIGATIONS.
---------------------------------------------------------
The obligations of the Buyer and ABT under this Agreement are subject to the
following conditions (any of which may be waived in writing in whole or in part
by the Buyer or ABT):
(a) There shall not have been any breach of the representations,
warranties, covenants and agreements of the Seller contained in this Agreement
or the Schedules hereto and all such representations and warranties shall be
true at all times on or 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.
(b) The Seller 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 it 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 the Buyer.
(c) The Buyer shall have received a certificate dated the date of the
Closing and signed by the Seller, certifying that the conditions specified in
subsections (a) and (b) above have been fulfilled.
(d) The Buyer shall have received a certificate dated the date of the
Closing and signed by the Seller, certifying that there has been no material
adverse change in the Assets since the Signing Date.
(e) Intentionally left blank.
(f) The Buyer shall have received a written opinion of counsel for the
Seller dated as of the Closing Date, in the form of Exhibit 12(f) hereto.
(g) The Buyer shall have received a bill of sale or bills of sale and
documentation and such other good and sufficient instruments of transfer and
conveyance as, in the reasonable opinion of counsel to the Buyer, shall be
effective to vest in the Buyer good and valid title to the Assets, as herein
provided.
(h) The Buyer shall have received certified copies, reasonably satisfactory
in form and substance to the Buyer, of all such corporate documents of the
Seller as the Buyer shall reasonably require, including without limitation the
following:
20
<PAGE>
(i) the Certificate of Incorporation of the Seller and all
amendments thereto and restatements thereof certified as of a recent date by the
Secretary of State of the State of Delaware;
(ii) the By-laws of the Seller and all amendments thereto and
restatements thereof certified as of the Closing Date by an officer of the
Seller;
(iii) certificate of existence of the Secretary of State of the State
of Delaware, certifying as of a recent date that the Seller exists under the
laws of its state of incorporation;
(i) The Buyer shall have received certified resolutions of the Seller's
Board of Directors authorizing the transactions contemplated by this Agreement.
(j) The Seller and the Buyer shall have entered into a three-year supply
agreement whereby the Buyer shall sell to Seller and its wholly-owned
subsidiaries alfalfa and red clover, pursuant to the contract annexed hereto as
EXHIBIT 12(j).
(k) Seller shall enter in a Non-Competition Agreement with the Buyer in the
form annexed hereto as EXHIBIT 3(c).
(l) Intentionally left blank.
(m) The Buyer shall have received at the Closing, at Seller's expense, a
standard owners title insurance policy with regard to the Nampa, Idaho real
property interests transferred to the Buyer in such amount and subject to such
exceptions as are satisfactory to the Buyer.
(n) The Buyer shall have completed its due diligence review to its
satisfaction and, among other things (i) determined that a satisfactory
percentage of customers of the Seller will continue to do business with the
Buyer following the Closing; and (ii) agreed in writing with the Seller upon an
allocation of the Purchase Price among the Assets.
(o) The Buyer shall have received assumption and assignment agreements for
each material agreement requiring such agreement to be executed in order to be
assigned and such other good and sufficient instruments of conveyance,
assignment and transfer, in form and substance satisfactory to Buyer, as shall
be effective to vest in the Buyer good and marketable title to the Assets to put
the Buyer in actual possession and operating control thereof and to assist the
Buyer in exercising all rights with respect thereto.
(p) The Buyer shall have received Seller's financial statements relating to
the Business.
21
<PAGE>
(q) Since the Balance Sheet Date and through the Closing Date, there shall
not have occurred any material change in the Assets or the condition (financial
or otherwise) of the Business, its properties or prospects.
(r) The Buyer shall have received all material documents required to be
delivered to the Buyer under any other provision of this Agreement.
(s) The Buyer shall have received a Certificate of Incumbency identifying
the officers and directors of the Seller immediately before Closing.
(t) The Buyer shall have received evidence satisfactory to the Buyer that
Seller has paid or made provision for the payment of any transfer tax due in
connection with recording of the deed(s) to the real property interests to be
conveyed to the Buyer.
(u) The Buyer shall have received deeds duly executed and acknowledged in
recordable form by the Seller conveying the real property satisfactory in form
to the Buyer.
SECTION 13. CONDITION OF ASSETS.
-------------------
(a) Except as otherwise provided herein, the Fixed Assets will be sold "as
is, where is and with all faults."
(b) Except as otherwise provided herein, Seller makes no representations or
warranties with respect to the physical condition or any other aspect of the
Real Property, including without limitation, the structural integrity of any
improvements on the Real Property, the conformity of the improvements to any
plans or specifications for the Real Property that may be provided to Buyer, the
conformity of the Real Property to applicable zoning or building code
requirements, the existence of soil stability, past soil repairs, non-
susceptibility to landslides, sufficiency or under-shoring, sufficiency of
drainage, or any other matter affecting the stability or integrity of the land
or any buildings or improvements situated thereon.
(c) It is understood and agreed that the Purchase Price has been adjusted
by prior negotiation to reflect that the Fixed Assets and the real property and
improvements thereon are sold by Seller and purchased by Buyer subject to the
foregoing.
SECTION 14. RISK OF LOSS; DAMAGE TO OR DESTRUCTION OF ASSETS.
------------------------------------------------
Seller assumes all risks and liability for damage or injury occurring to
the Assets by fire, storm, accident, or other casualty until the Closing has
been consummated. If the Assets sustain major or material damage during the
period from and after the date hereof and prior to the Closing caused by fire or
other casualty, either Seller or Buyer may respectively elect to terminate this
Agreement by written notice to the other within fifteen (15) days after notice
of such event, or at Closing, whichever is earlier. If neither Seller nor Buyer
so elects pursuant to
22
<PAGE>
this Section 14 to terminate its obligations under this Agreement, the Closing
will take place as provided herein without abatement of the Purchase Price and
Seller will have no obligation of repair or replacement.
SECTION 15. CONDEMNATION OF REAL PROPERTY.
-----------------------------
In the event that the entire Real Property or any material part thereof
becomes the subject of a condemnation proceeding prior to Closing, Seller agrees
immediately to advise Buyer thereof. In the event of such condemnation, Buyer
will have the option to (1) take title in accordance with the terms and
conditions of this Agreement and permit Seller to negotiate with the condemning
authority and to receive the condemnation award, reducing the Purchase Price by
the amount actually received by Seller; (2) take title in accordance with the
terms and conditions of this Agreement and negotiate with the said condemning
authority for the condemnation award and to receive the benefits thereof without
affecting the Purchase Price; or (3) terminate this Agreement. Notice of the
exercise of such option by Buyer will be in writing, delivered to Seller at
least ten (10) days prior to the Closing Date. If notice is not received in a
timely manner as required by this Section 15, Buyer will be deemed to have
elected to proceed in accordance with clause (2) above.
SECTION 16. CONDITIONS PRECEDENT TO THE SELLER'S OBLIGATIONS. The
------------------------------------------------
obligations of the Seller under this Agreement are subject to the following
conditions (any of which may be waived in writing in whole or in part by the
Seller):
(a) There shall not have been any breach of the representations,
warranties, covenants and agreements of the Buyer or ABT 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.
(b) The Buyer and ABT each 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 either of them. All documents and
instruments required in connection with this Agreement shall be reasonably
satisfactory in form and substance to the Seller.
(c) The Seller shall have received a certificate dated the date of the
Closing and signed by the Buyer and ABT, certifying that the conditions
specified in subsections (a) and (b) above have been fulfilled.
(d) The Seller shall have received a written opinion of counsel for the
Buyer and ABT, dated as of the date of Closing, in the form of EXHIBIT 16(d)
attached hereto.
(e) At the Closing, the Seller shall have received the Purchase Price and
the consideration for the Non-Competition Agreement as set forth in Sections 2
and 3 hereof.
23
<PAGE>
(f) The Seller shall have received copies of the minutes and resolutions of
the Board of Directors of the Buyer and ABT showing the authorization and
approval by such Boards of the execution and delivery by the Buyer and ABT to
the Seller of this Agreement and the agreements and instruments provided for
herein and of the performance of the obligations of the Buyer and ABT under this
Agreement and such other instruments and agreements, and evidencing the
authority of each person executing this Agreement and such other instruments and
agreements on behalf of each of them to do so, certified as of a recent date by
each Secretary or another officer of the Buyer and ABT, as the Seller may
reasonably request.
(g) The Seller shall have received a certificate of incumbency identifying
the officers and directors of the Buyer and ABT immediately before Closing.
(h) The Seller shall have received all documents required to be delivered
to the Seller under any other provision of this Agreement.
(i) Intentionally left blank.
(j) Intentionally left blank.
(k) Delivery to Seller of the Escrow Agreement anticipated by Section 3(b),
executed by all parties thereto.
SECTION 17. CONDITIONS PRECEDENT TO OBLIGATIONS OF BOTH SELLER AND
------------------------------------------------------
BUYER. The obligations of both the Seller and the Buyer to complete this
- -----
transaction shall be subject to the fulfillment at or prior to the Closing Date
of the following conditions:
(a) 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.
(b) Due Diligence. The Seller and the Buyer shall each have been afforded
-------------
the opportunity to complete their due diligence and conduct a review of the
business and prospects of the other, and shall be reasonably satisfied as to
such business and prospects.
(c) Consents. Any consent to the transaction considered by the Seller or
--------
the Buyer to be necessary or advisable under any agreement or contract, the
withholding of which might have, in the judgment of the Seller or the Buyer, a
material adverse effect on the financial condition of the Business, shall have
been obtained.
24
<PAGE>
SECTION 18. TERMINATION.
-----------
(a) Unless the Buyer and the Seller agree otherwise in writing, this
Agreement and any management agreement shall terminate on September 30, 1998 if
there has been no closing.
(b) This Agreement may be terminated at any time prior to the Closing Date:
(i) By mutual written consent of the Seller, the Buyer and ABT;
or
(ii) By the Buyer, if the Seller has materially breached any of
its representations, warranties or covenants under this Agreement; or
(iii) By the Seller, if the Buyer or ABT has materially breached
any of its representations, warranties or covenants under this Agreement.
(c) In the event of termination of this Agreement, Sections 10 (b)(ii),
11(c), 23, 24, 26 and 30 of this Agreement shall survive any such termination.
(d) Each party to this Agreement may be subject to pay as liquidated
damages and not as a penalty the amount of THREE MILLION AND 00/100 DOLLARS
($3,000,000) as follows:
(i) If the Buyer and ABT fail to close for any reason other than
clearly identified problems with the Business discovered during due diligence,
then the Buyer and ABT shall pay such liquidated damages to Seller;
(ii) If the Buyer and ABT have completed due diligence on a
timely basis and are prepared to complete the purchase for at least $13,300,000
(exclusive of the $500,000 as compensation for the Non-Competition Agreement)
after any adjustments resulting from due diligence and Seller refuses to close,
then Seller shall pay such liquidated damages to Buyer and ABT;
(iii) If the Closing does not occur and any party believes it is
entitled to such liquidated damages, the parties shall agree to one arbitrator,
who shall determine which party, if any, is entitled to such liquidated damages.
Notwithstanding any provision requiring mediation, such arbitration shall
proceed pursuant to Section 27 of this Agreement.
SECTION 19. BULK SALE ACT. The Seller and the Buyer agree to waive
-------------
compliance with all applicable State Bulk Sales Acts and the rules and
regulations promulgated thereunder. However, the Seller shall indemnify and hold
harmless the Buyer for any losses or expenses incurred by the Buyer as a result
of such waiver of compliance with such Bulk Sales Acts, as set forth in Section
8(b) hereof.
SECTION 20. ORDERLY TRANSFER. The Seller shall, and hereby agrees to,
----------------
cooperate with the Buyer and ABT in all reasonable ways, at no direct or
indirect cost to the Seller, in effecting any orderly transfer to the Buyer of
the Assets to be acquired by the Buyer hereunder.
25
<PAGE>
SECTION 21. PARTIES IN INTEREST. Subject to Section 32, this Agreement
-------------------
shall be binding upon and shall inure to the benefit of the parties and their
successors and assigns. Nothing herein expressed or implied is intended or shall
be construed to confer upon or to give any person, firm, or corporation other
than the parties hereto any rights or remedies under or by reason hereof.
SECTION 22. ENTIRE AGREEMENT. This instrument, including the Schedules
----------------
and Exhibits hereto, contains the entire agreement and understanding among the
parties hereto 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.
SECTION 23. GOVERNING LAW; CONSENT TO JURISDICTION. 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.
SECTION 24. EXPENSES. Each party hereto shall pay its own expenses and
--------
fees incidental to the preparation of this Agreement, the carrying out of the
provisions of this Agreement and the consummation of the transactions
contemplated hereby, except as hereinafter described. The Seller shall pay for
the standard coverage title insurance policy, recording charges, real estate
conveyance taxes and through taxes (if any), one-half of all escrow fees and
other closing costs not detailed above, and the Seller's share of prorations
pursuant to Section 25 below. The Buyer shall pay one-half of all escrow fees
and closing costs, and the Buyer's share of prorations pursuant to Section 25
below.
SECTION 25. PRORATIONS.
----------
(a) General. Rental revenues, and other income, if any, from the Real
-------
Property and presently existing taxes, assessments, improvement bonds, and other
expenses, if any, affecting the Real Property, shall be prorated as of the day
following the Closing Date. For the purpose of calculating prorations, the Buyer
shall be deemed to be in title to the Real Property and, therefore, entitled to
the income and responsibility for the expenses for the entire day following the
Closing Date.
(b) Intentionally left blank.
(c) Intentionally left blank.
26
<PAGE>
(d) Method of Prorations. All prorations shall be made in accordance with
---------------------
customary practice in Canyon County, Idaho, except as expressly provided herein.
The Buyer and the Seller agree to cause their accountants to prepare a schedule
of tentative prorations before the Closing Date. Such prorations, if and to the
extent known and agreed on as of the Closing Date, shall be paid by the Buyer to
the Seller (if the prorations result in a net credit to the Seller) or by the
Seller to the Buyer (if the prorations result in a net credit to the Buyer) by
increasing or reducing the cash to be paid by the Buyer at Closing. Any such
prorations not determined or not agreed on as of the Closing Date shall be paid
by the Buyer to the Seller, or by the Seller to the Buyer, as the case may be,
in cash as soon as practicable following the Closing Date. A copy of the
schedule of prorations as agreed upon by the Buyer and the Seller shall be
exchanged at least three business days before the Closing Date.
SECTION 26. IRS FORMS 8594. Buyer and Seller agree to attach to their
---------------
respective federal income tax returns for the taxable year in which the Closing
occurs IRS Form 8594 completed consistently with the allocation of the Purchase
Price agreed upon in accordance with Section 12(n).
SECTION 27. ARBITRATION. Any dispute with respect to this Agreement
-----------
shall be resolved by mediation and, if mediation is not successful, then by
arbitration as provided herein.
The parties agree first to endeavor to settle the dispute in an amicable
manner by mediation administered by the American Arbitration Association (the
"AAA") or such other mediation service as is mutually agreeable to the parties
to the dispute under either the AAA's Commercial Mediation Rules or such other
commercial mediation rules as is mutually agreeable to the parties to the
dispute. The mediation shall take place in Chicago, Illinois with
representatives of the parties present with full authority to negotiate a
settlement. The parties must participate in the Mediation process with a
neutral mediator for at least 10 hours over at least 2 days prior to
commencement of any arbitration. If a party to the dispute refuses to
participate in the mediation, the party demanding mediation may either compel
mediation by seeking an appropriate order from a court of competent jurisdiction
or proceed immediately to arbitration. Thereafter, any unresolved dispute shall
be settled by arbitration administered by the AAA or such other arbitration
service as is mutually agreeable to the parties to the dispute in accordance
with the AAA's Commercial Arbitration Rules or such other commercial arbitration
rules as is mutually agreeable to the parties to the dispute. Judgment upon the
award rendered by the arbitrator(s) may be entered in any court having
jurisdiction thereof, and the resolution of the disputed matter as determined by
the arbitrator(s) shall be binding on the parties. Any such mediation or
arbitration shall be conducted in Chicago, Illinois.
Any party may, without inconsistency with this Agreement, seek from a court
any interim or provisional relief that may be necessary to protect the rights or
property of that party pending the establishment of the arbitral tribunal, or
pending the arbitral tribunal's determination of the merits of the controversy.
27
<PAGE>
The arbitrator(s) may award costs and fees to the prevailing party if, in
his/her (their) discretion, the non-prevailing party did not prosecute the
arbitration or settlement of the dispute in good faith. "Costs and fees" for
this purpose shall mean reasonable pre-award expenses of the arbitration,
including fees for the arbitrator(s), administrative fees, travel expenses, out-
of-pocket expenses such as copying and telephone, court costs, witness fees and
attorneys' fees. Except as otherwise awarded by the arbitrator(s), all costs
and fees shall be borne by the party incurring such costs and fees.
The award shall be in writing and shall be signed by the arbitrator(s) and
shall include a statement regarding the disposition of any statutory claim.
SECTION 28. KNOWLEDGE. Whenever any provision of this Agreement or
----------
any agreement attached as an exhibit to this Agreement refers to the "knowledge"
or the "best knowledge" of any person, such person will be deemed to have
knowledge of a particular fact or other matter only if such person is actually
aware of such fact or other matter. Seller will be deemed to have "knowledge"
of a particular fact or other matter only if any of the following individuals
has, or at any time had, knowledge of such fact or other matter: David
McWilliams and Jennifer Hicks. Buyer and ABT will be deemed to have knowledge
of a particular fact or other matter with respect to the Business if any
individual who participated in the due diligence review of the Business for or
on behalf of Buyer or ABT has, or at any time had, knowledge of such fact or
matter.
SECTION 29. 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 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.
SECTION 30. NOTICES.
-------
(a) All notices, requests, consents and demands by the parties hereunder
shall be delivered 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
addresses set forth below:
28
<PAGE>
(i) if to the Seller:
Agway, Inc.
333 Butternut Drive
DeWitt, New York 13214
Attention: President, Country Products Group
P.O. Box 4933
Syracuse, New York 13221
with a copy to:
Agway, Inc.
333 Butternut Drive
DeWitt, NY 13214
Attention: General Counsel
P.O. Box 4933
Syracuse, New York 13221
(ii) if to the Buyer to:
AgriBioTech, Inc.
120 Corporate Park Drive
Henderson, NV 89014
Attention: Johnny R. Thomas, President
Telecopier No.: (702) 566-2450
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.
SECTION 31. AMENDMENT; NON-WAIVERS. Any provision of this Agreement may
----------------------
be amended, if and only if, such amendment is written and signed by each party
to this Agreement. 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,
29
<PAGE>
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.
SECTION 32. ASSIGNMENT. This Agreement may not be assigned by any party
----------
without the prior written consent of the other parties.
SECTION 33. DISCLOSURE. From and after the date of this Agreement until
----------
the Closing or the termination of this Agreement, the Seller 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 Assets with anyone other than the Buyer; or (ii)
unless otherwise required by law, neither party shall make any public
announcement without prior approval of the language of such announcement by the
other.
SECTION 34. FURTHER ACTION Each of the parties hereto shall use its
---------------
best efforts to take or cause to be taken, and to cooperate with the other
parties hereto to the extent necessary with respect to, all action, 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.
SECTION 35. HEADINGS. The headings contained herein are for reference
--------
purposes only and shall not affect the meaning or interpretation of this
Agreement.
SECTION 36. 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.
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement on the date first above written.
AGWAY, INC. (SELLER)
By: /s/ Jennifer L. Hicks
___________________________________
Jennifer L. Hicks, Assistant Treasurer
CLARK SEEDS, INC. (BUYER)
By: /s/ Kathleen L. Gillespie
___________________________________
Kathleen L. Gillespie, Vice President
AGRIBIOTECH, INC.
30
<PAGE>
By: /s/ Kathleen L. Gillespie
_____________________________________
Kathleen L. Gillespie, Vice President
31
<PAGE>
SCHEDULES TO THE ASSET PURCHASE AGREEMENT
AMONG AGWAY, INC.
CLARK SEEDS, INC. AND AGRIBIOTECH, INC.
---------------------------------------
Schedule No. Description
- ----------- -----------
1(a) The Inventory
1(b) The Real Property
1(c) The Buildings and Improvements
1(d) The Equipment and Machinery
1(e) The Office Furniture and Fixtures
1(f) The Automobiles, Trucks, Forklifts and Other Vehicles
1(h) The Pre-Paid Assets
1(i) The Other Assets
1(k) The Trade Name
1(m) Plant Variety Protection Act Certificates
1(n) The Customer List
1(r) The Assumed Liabilities
4(a)(1) The Excluded Assets
4(a)(2) Accounts Receivable
7(a) Exceptions to Title
7(c) Legal Proceedings; Claims
7(d) Trade Name
7(f) Material Agreements, Contracts, Commitments,
Obligations and Understandings
7(g) Violations or Restrictions
7(h) Court Orders and Decrees
7(j) Governmental Licenses, Permits, Etc.
7(k) Environmental Claims
7(l) Employee Benefit Plans
7(p) The Seller's Undisclosed Liabilities and Conditions
7(q) Compliance with Laws
7(s) Changes Outside of Ordinary Course
7(u) Non-Cancelable Labor Contracts
7(x) Insurance
7(y) Right's of Third Parties
7(z) Relationships with Vendors and Customers
12(o) List of Agreements to be Assigned and Assumed
i
<PAGE>
EXHIBITS TO THE ASSET PURCHASE AGREEMENT
AMONG CANARY, INC.
CLARK SEEDS, INC. AND AGRIBIOTECH, INC.
---------------------------------------
Exhibit No. Description
- ---------- -----------
3(b) Escrow Agreement
3(c) Form of Non-Competition Agreement
7(o) The Seller's Financial Statements
12(f) Form of the Seller's Legal Opinion
16(d) Form of the Buyer's Legal Opinion
ii
<PAGE>
Exhibit 2.2
OMITTED SCHEDULES AND EXHIBITS TO
THE ASSET PURCHASE AGREEMENT
AMONG AGWAY, INC.
CLARK SEEDS, INC. AND AGRIBIOTECH, INC.
---------------------------------------
Registrant will furnish to the Securities and Exchange Commission a copy of
any of the following Schedules or Exhibits upon request.
<TABLE>
<CAPTION>
Schedule No. Description
- ----------- -----------
<S> <C>
1(a) The Inventory
1(b) The Real Property
1(c) The Buildings and Improvements
1(d) The Equipment and Machinery
1(e) The Office Furniture and Fixtures
1(f) The Automobiles, Trucks, Forklifts and Other Vehicles
1(h) The Pre-Paid Assets
1(i) The Other Assets
1(k) The Trade Name
1(m) Plant Variety Protection Act Certificates
1(n) The Customer List
1(r) The Assumed Liabilities
4(a)(1) The Excluded Assets
4(a)(2) Accounts Receivable
7(a) Exceptions to Title
7(c) Legal Proceedings; Claims
7(d) Trade Name
7(f) Material Agreements, Contracts, Commitments,
Obligations and Understandings
7(g) Violations or Restrictions
7(h) Court Orders and Decrees
7(j) Governmental Licenses, Permits, Etc.
7(k) Environmental Claims
7(l) Employee Benefit Plans
7(p) The Seller's Undisclosed Liabilities and Conditions
7(q) Compliance with Laws
7(s) Changes Outside of Ordinary Course
7(u) Non-Cancelable Labor Contracts
7(x) Insurance
7(y) Right's of Third Parties
7(z) Relationships with Vendors and Customers
12(o) List of Agreements to be Assigned and Assumed
</TABLE>
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<CAPTION>
Exhibit No. Description
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<S> <C>
3(b) Escrow Agreement
3(c) Form of Non-Competition Agreement
7(o) The Seller's Financial Statements
12(f) Form of the Seller's Legal Opinion
16(d) Form of the Buyer's Legal Opinion
</TABLE>
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<PAGE>
EXHIBIT 2.3
- --------------------------------------------------------------------------------
STOCK PURCHASE AGREEMENT
- --------------------------------------------------------------------------------
By and among
AGRIBIOTECH, INC.,
ROTHWELL SEEDS INTERNATIONAL COMPANY
as the Buyer,
and
1304516 ONTARIO INC.,
as the Seller,
and
GABRIEL A. EROS and MARY E. EROS
- --------------------------------------------------------------------------------
September 1, 1998
- --------------------------------------------------------------------------------
<PAGE>
STOCK PURCHASE AGREEMENT
------------------------
TABLE OF CONTENTS
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Section 1. Sale and Purchase of the Shares.............................................1
Section 2. Closing.....................................................................1
Section 3. Description of Components of Purchase Price and Other Payments..............2
(a) Payment of Purchase Price to Seller at Closing........................2
(b) Portion of Purchase Price to be Held in Escrow........................2
(c) Lock-Up of ABT Shares.................................................2
(d) Guaranty of Net Proceeds..............................................3
(e) Non-Competition Agreement.............................................3
(f) Employment Agreements.................................................4
Section 4. Representations and Warranties of Seller and the Shareholders...............4
(a) Ownership of Shares...................................................4
(b) Capacity; Organization; Standing; Capitalization......................4
(c) Legal Proceedings.....................................................6
(d) Encumbrances..........................................................6
(e) Trade Names, etc......................................................6
(f) Patents, etc..........................................................7
(g) Financial Statements..................................................7
(h) Absence of Certain Changes............................................8
(i) Tax Matters...........................................................8
(j) Accounts Receivable and Inventory....................................11
(k) Title and Condition of Properties....................................11
(l) Description of Material Contracts....................................12
(m) Default; Violations or Restrictions..................................14
(n) Court Orders and Decrees.............................................14
(o) Books and Records....................................................14
(p) Benefit Plans........................................................14
(q) Insurance............................................................17
(r) Rights of Third Parties..............................................17
(s) Powers of Attorney...................................................17
(t) Labor Matters........................................................17
(u) Relationships with Vendors and Customers.............................18
(v) Approvals and Authorizations.........................................18
(w) Compensation Plans...................................................18
(x) Governmental Licenses................................................18
(y) Brokers..............................................................18
(z) Compliance With Laws.................................................19
(aa) Guarantees...........................................................20
</TABLE>
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(bb) Benefits.........................................................20
(cc) Schedules........................................................20
(dd) Accuracy.........................................................20
(ee) No Legal or Tax Advice...........................................20
Section 5. Representations and Warranties of Buyer and ABT............................20
(a) Capacity.........................................................21
(b) Organization.....................................................21
(c) Consents and Approvals...........................................21
(d) Legal Proceedings................................................21
(e) Binding Obligation...............................................22
(f) Brokers; Finders.................................................22
(g) Accuracy.........................................................22
Section 6. Survival of Representations and Warranties; Indemnification.................22
(a) Survival of Representations and Warranties.......................22
(b) Indemnity by Seller and the Shareholders.........................23
(c) Indemnification by Buyer.........................................23
(d) Defense of Claims................................................23
Section 7. Covenants of Seller and the Shareholders....................................24
(a) Further Assurances...............................................24
(b) Access to the Company; Confidentiality...........................24
(c) Conduct of Business Pending Closing..............................25
(d) Closing Documents................................................25
(e) Tax Returns......................................................25
Section 8. Covenants of Buyer..........................................................25
(a) Closing Documents................................................25
(b) Noninterference..................................................26
(c) Confidentiality..................................................26
Section 9. Conditions Precedent to the Obligations of Buyer and ABT....................26
Section 10. Conditions Precedent to Seller's and the Company's Obligations..............29
Section 11. Conditions Precedent to Obligations of Seller, Buyer and ABT................30
(a) Due Diligence....................................................30
(b) No Injunctions...................................................30
(c) Consents.........................................................30
(d) Corporate Proceedings............................................30
Section 12. Termination.................................................................30
Section 13. Buyer's Obligations at Closing..............................................31
</TABLE>
<PAGE>
(iii)
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<S> <C> <C>
Section 14. Seller's Obligations at Closing............................... 31
Section 15. Subsequent Events............................................. 31
Section 16. Parties in Interest........................................... 32
Section 17. Entire Agreement.............................................. 32
Section 18. Governing Law................................................. 32
Section 19. Expenses...................................................... 32
Section 20. Arbitration................................................... 32
Section 21. Severability.................................................. 33
Section 22. Notices....................................................... 33
Section 23. Non-Waivers................................................... 34
Section 24. Assignment.................................................... 34
Section 25. Disclosure.................................................... 35
Section 26. Miscellaneous................................................. 35
(a) Further Assurances........................................ 35
(b) Headings.................................................. 35
(c) Counterparts.............................................. 35
</TABLE>
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<S> <C>
Exhibits Description
- -------- -----------
Exhibit 3(b) Form of Escrow Agreement
Exhibit 3(c) Form of Lock-Up Agreement
Exhibit 3(d)(i) Form of Guarantee Agreement
Exhibit 3(d)(iii) Form of Security Agreement
Exhibit 3(e)(i), (ii) and (iii) Non-Competition Agreements
Exhibit 3(f) Form of Employment Agreement
Exhibit 4(k) Leases of Real Property
Exhibit 9(h) Opinion of Counsel to Sellers and the Corporation
Exhibit 10(d) Opinion of Counsel to Buyer
Exhibit 10(g)(i) and (ii) Non-Qualified Stock Option Agreements
Exhibit 20 Rules for Arbitration
Schedules
- ---------
Schedule 4(b)(i) Consents of Other Persons
Schedule 4(b)(ii) Interest in Other Entities
Schedule 4(c)(i) Legal Proceedings, Seller and/or Corporation as Party
Schedule 4(c)(ii) Complaints, Claims, etc. from Customers,
Purchasers, etc.
Schedule 4(c)(iii) Claims Related to Products or Services
Schedule 4(d) Encumbrances
Schedule 4(e) Trademarks, Trade Names
Schedule 4(f) Patents, PVPA Certificates, etc.
Schedule 4(g) Financial Statements
Schedule 4(h) Material Adverse Changes
Schedule 4(i) Tax Matters
Schedule 4(k) Real Property Owned or Leased;
Personal Property Leased
Schedule 4(l) Material Contracts
Schedule 4(p) Pension & Profit Sharing Plan
Schedule 4(q) Insurance Policies
Schedule 4(r) Rights of Third Parties
Schedule 4(s) Powers of Attorney
Schedule 4(w) Compensation Plans
Schedule 4(x) Governmental Licenses
Schedule 4(z) Compliance with Laws
Schedule 4(aa) Guarantees by Sellers of Obligations of the Corporation
Schedule 4(bb) Benefits
</TABLE>
<PAGE>
STOCK PURCHASE AGREEMENT dated September 1, 1998, among 1304516
Ontario Inc., an Ontario corporation "Seller"), Gabriel A. Eros and Mary E. Eros
(together the "Shareholders" and individually, a "Shareholder"), AgriBioTech,
Inc., a Nevada corporation ("ABT") and Rothwell Seed International Company, a
Nova Scotia limited company and a wholly-owned subsidiary of ABT ("Buyer").
RECITALS:
A. Seller owns 4,300 Class A shares and 100 common shares
(collectively, the "Shares") of Oseco Inc., an Ontario corporation (the
"Company"), constituting 100% of the Company's outstanding share capital.
B. Seller desires to sell, and Buyer desires to purchase, the Shares
upon the terms, and subject to the conditions, set forth in this Agreement.
C. Shareholders own all of the outstanding share capital of Seller
and desire to induce Buyer to purchase the Shares from Seller.
Accordingly, in consideration of the recitals, representations,
warranties and covenants of the parties set forth in this Agreement, the parties
agree as follows:
SECTION 1. SALE AND PURCHASE OF THE SHARES.
(a) Upon the terms, and subject to the conditions, set forth in this
Agreement, at the Closing (as hereinafter defined), Seller will sell, assign and
transfer to Buyer, and Buyer will purchase from Seller, the Shares, constituting
100% of the outstanding share capital of the Company, free and clear of all
liens, security interests, pledges, charges, claims, options, warrants and other
rights to purchase, or otherwise acquire or to sell the Shares and other
encumbrances of any kind whatsoever.
(b) The purchase price (the "Purchase Price") for the Shares is
$6,560,000, payable as provided in Section 3 hereof.
(c) All references herein to "$" or "dollars", unless otherwise
indicated, means currency of the Government of Canada which is legal tender in
Canada for the payment of public and private debts.
SECTION 2. CLOSING. The closing of the sale and purchase of the Shares (the
"Closing") shall take place at Fasken Campbell Godfrey, Toronto-Dominion Centre,
Toronto, Canada on or before September 1, 1998 (the "Closing Date") at 9:00 AM
or at such later date and time or other location as may mutually be agreed to by
the parties.
SECTION 3. DESCRIPTION OF COMPONENTS OF PURCHASE PRICE AND OTHER PAYMENTS.
<PAGE>
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(a) Payment of Purchase Price to Seller at Closing. Upon the
satisfaction by the parties of their respective closing conditions under this
Agreement, Buyer shall pay to Seller the Purchase Price as follows:
(i) $4.5 Million, of which $4.2 Million shall be payable to Seller in
immediately available funds by electronic funds transfer to a deposit account
with a Canadian chartered bank notified to ABT at least two business days prior
to the Closing date or by other method reasonably acceptable to Seller and
$300,000 shall be deposited with Buyer's counsel as escrow agent pursuant to
Section 3(b) hereof.
(ii) $2.06 Million, payable by the delivery of one or more share
certificates representing 100,000 shares of the common stock, par value U.S.
$.001 per share, of ABT (the "ABT Shares") registered in Seller's name and
endorsed with a legend restricting transfer of the ABT Shares except in
compliance with applicable United States and Canadian federal, state and
provincial securities laws.
(b) PORTION OF PURCHASE PRICE TO BE HELD IN ESCROW. At the Closing,
Buyer will set aside and transfer $300,000 from the Purchase Price to Holmested
& Sutton, as escrow agent (the "Escrow Agent"), pursuant to the terms of the
escrow agreement in the form of EXHIBIT 3(b) hereto (the "Escrow Agreement"),
$300,000 from the Purchase Price for the benefit of Buyer as described below
(the "Escrow Funds").
(c) LOCK-UP OF ABT SHARES.
(i) Resales of the ABT Shares shall be made pursuant to the terms of
a Lock- Up Agreement, in the form of EXHIBIT 3(c) hereto (the "Lock-Up
Agreement"), among Seller, the Shareholders and ABT, according to the following
schedule: from the Closing Date through December 31, 1998 (the "No-Sale
Period"), no ABT Shares shall be sold; beginning January 1, 1999, Seller may
sell up to an aggregate of 7,000 ABT Shares per week until all the ABT Shares
received hereunder have been sold.
(ii) All sales of ABT Shares shall be made by means of "in-the-market"
transactions. "In-the-market" means a sale made on the NASDAQ Stock Market
through customary trading channels. Seller and Shareholders will not knowingly
sell any ABT Shares to a resident of Canada. ABT agrees that it will file with
the United States Securities and Exchange Commission a supplement to its
Registration Statement on Form S-4 (No. 333-61097) listing the Seller as a
selling stockholder under such registration statement prior to the end of the
No-Sale Period.
(iii) Any sale of ABT shares in violation of the Lock-Up Agreement
shall constitute an event of default under this Stock Purchase Agreement and the
Lock-Up Agreement. All proceeds in excess of U.S. $15.75 per share from all
sales of ABT Shares, regardless of whether such proceeds derive from sales made
prior to,
<PAGE>
-3-
concurrent with or subsequent to such event of default shall promptly be paid in
cash to ABT. Inasmuch as the violation of the Lock-Up Agreement by the Seller
will cause serious and substantial damages to ABT, and it will be difficult, if
not impossible, to prove the amount of such damages, the foregoing is agreed to
as liquidated damages and not as a penalty.
(iv) Seller will, and the Shareholders will cause Seller to, forward
to Buyer and ABT all customary documentation reflecting each sale of ABT Shares
within 10 business days after receipt of such documentation by Seller.
(d) GUARANTY OF NET PROCEEDS.
(i) ABT will guarantee, pursuant to the terms of the price guaranty
agreement, in the form of EXHIBIT 3(d)(i) hereto (the "Price Guaranty
Agreement"), that the Net Proceeds (defined as the remainder of the gross sales
price after deduction of customary sales commissions and any applicable stock
transfer and sales taxes) from all sales of ABT Shares, when made in accordance
with the terms of the Lock-Up, shall be no less than $2.06 per million (the
"Guaranteed Price"). In consideration of the Price Guaranty Agreement, Seller
agrees that all Net Proceeds from all sales of ABT Shares in excess of $2.06
million will be paid to ABT in cash by Seller in accordance with the terms of
the Price Guaranty Agreement.
(ii) In accordance with the terms of the Price Guaranty Agreement,
provided that all of the ABT Shares have been sold by Seller prior to June 1,
1999 (or later date as provided in the Lock-Up Agreement) and the requisite
documentation pertaining to such sales has been provided to ABT by Seller as
required by SECTION 3(c)(iv), Buyer will pay to Seller in cash any deficit in
the Guaranteed Price or Seller will pay to ABT cash for any Net Proceeds in
excess of the Guaranteed Price in accordance with the terms of Section 2 of the
Price Guaranty Agreement (or such later date as provided in the Lock-Up
Agreement). Any payment by Seller to Buyer pursuant to this provision shall be
deemed a reduction of the Purchase Price. Deficits shall be calculated as
provided in the Price Guaranty Agreement.
(iii) Until Seller has received an aggregate of $2,060,000 from all
sales of ABT Shares made pursuant to the Lock-Up Agreement, the obligations of
Buyer and ABT under the Price Guaranty Agreement shall be secured by a first
priority security interest, wherever reasonably possible, on the fixed assets
and equipment of the Company pursuant to the terms of a security agreement (the
"Security Agreement") in the form of EXHIBIT 3(d)(iii) attached hereto.
(e) NON-COMPETITION AGREEMENT. At the Closing, Seller and each of the
Shareholders hereby agrees to enter into the Non-Competition Agreements with
Buyer and ABT attached hereto as EXHIBITS 3(e)(i), (ii) and (iii).
<PAGE>
-4-
(f) EMPLOYMENT AGREEMENTS. In addition to the foregoing, each of
Gabriel A. Eros and Paul Eros will enter into an Employment Agreement with the
Company in the form annexed hereto as EXHIBIT 3(f).
SECTION 4. REPRESENTATIONS AND WARRANTIES OF SELLER AND THE SHAREHOLDERS. The
Seller and the Shareholders, jointly and severally, warrant and represent to
Buyer and ABT as follows, each such representation and warranty being deemed to
be material and to have been relied upon by Buyer and ABT (as used herein,
"Seller's and the Shareholders' best knowledge" or "to the best knowledge of the
Seller and the Shareholders" means information actually known by such persons
after due inquiry).
(a) OWNERSHIP OF SHARES. Seller is the owner, beneficially and of
record, of the Shares, which constitute 100% of the issued and outstanding share
capital of the Company. The Shares have been duly authorized and are validly
issued, fully paid and non-assessable. The Shares have not been pledged,
mortgaged or otherwise encumbered in any way and there is no lien, mortgage,
charge, claim, liability, security interest or encumbrance of any nature
against, or in respect of, the Shares. There are no options, warrants, rights
of subscription or conversion, puts, calls, commitments, agreements,
arrangements, understandings, plans, contracts, proxies, voting trusts, voting
agreements or instruments of any kind or character, oral or written, to which
Seller or the Company and/or any Shareholder is a party, or by which the Seller,
the Company or any Shareholder is bound, relating to the issuance, voting or
sale of the Shares or any authorized but unissued capital shares of the Company
or of any securities representing the right to purchase or otherwise receive any
such capital shares. There are no shareholders agreements, preemptive rights or
other agreements, arrangements, commitments or understandings, oral or written,
that have not been disclosed to Buyer, relating to the voting, issuance,
acquisition or disposition of shares of the Company and/or its Subsidiary (as
defined below) or the conduct or management of the Company and/or the Subsidiary
or their respective boards of directors. Seller has, and at the Closing will
have, good and marketable legal and beneficial ownership and title to the Shares
and full right to transfer title to the Shares, subject to any restrictions
imposed by Canadian provincial securities laws, free and clear of all liens,
mortgages, charges, liabilities, claims, security interests, options, warrants
or other rights to purchase or otherwise acquire the Shares and other
encumbrances of any nature whatsoever. The sale, conveyance, transfer and
delivery of the Shares by Seller to Buyer pursuant to this Agreement will
transfer full legal and beneficial right, title and interest in the Shares to
Buyer, free and clear of all liens, mortgages, charges, claims, liabilities,
security interests options, warrants or other rights to purchase or otherwise
acquire the Shares and other encumbrances of any nature whatsoever.
(b) CAPACITY; ORGANIZATION; STANDING; CAPITALIZATION. Each
Shareholder has 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, and to consummate such transactions, and,
except as set forth
<PAGE>
-5-
in SCHEDULE 4(b) of this Agreement, no consent, waiver, release or joinder of
any other persons is required in connection with any of the foregoing. Seller is
a corporation duly organized, validly existing and in good standing under the
laws of the Province of Ontario with full corporate power and authority to own
the Shares, conduct its operations as presently conducted, to enter into this
Agreement and each other agreement and instrument to be executed and delivered
by it pursuant to this Agreement and to consummate the transactions contemplated
hereby and thereby. Seller has taken all necessary corporate action on its part
to authorize the execution and delivery by it of this Agreement and of each
other agreement and instrument to be executed and delivered by it pursuant to
this Agreement, the performance of its obligations hereunder and thereunder and
the consummation of the transactions contemplated hereby and thereby. No
consent, waiver, release or joinder of any other person is required in
connection with the execution and delivery by Seller of this Agreement and the
Other Documents (as defined below), the performance of its obligations hereunder
and thereunder and its consummation of the transactions contemplated hereby and
thereby. Except as set forth on SCHEDULE 4(b), neither Seller, nor any
Shareholder nor the Company has any interest in any entity, other than the
Company engaged, directly or indirectly, in businesses competitive with those of
the Company, Buyer or ABT. This Agreement has been, and each of the other
agreements and instruments executed hereunder (the "Other Agreements") will at
the Closing be, duly executed and delivered by Seller and the Shareholders to
the extent such person or persons are parties hereto or thereto. This Agreement
constitutes, and each of the Other Agreements will constitute, the legal, valid
and binding obligation of Seller and the Shareholders to the extent such person
or persons are parties hereto or thereto, enforceable in accordance with its
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.
The Company has only one Subsidiary, Precision Seed Coaters, Inc., an
Arizona corporation (the "Subsidiary"). Each of the Company and the Subsidiary
is duly organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation, and each has full corporate power and
authority to conduct its business as it is now being conducted 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 it requires such
qualification. The Articles of Incorporation of each of the Company and the
Subsidiary and all amendments thereto, certified by the Director under the
Business Corporations Act (Ontario) or other appropriate official of the
jurisdiction of its incorporation and the by-laws, as amended to the date of
this Agreement, of each of the Company and the Subsidiary, certified by the
Secretary of the Company or the Subsidiary, as applicable, and the minutes and
share records of the Company and the Subsidiary, delivered to Buyer and ABT are
complete and correct. Each of the Company and the Subsidiary 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. The authorized capital of the Company consists of an unlimited number
<PAGE>
-6-
of Class A shares and 40,000 voting common shares, of which 4,300 Class A shares
and 100 common shares are issued and outstanding. All of the issued and
outstanding shares in the capital of the Company are owned by Seller and are
duly and validly issued, fully paid and non-assessable. The authorized and
issued capital of the Subsidiary is as specified on SCHEDULE 4(b). The Company
owns 100% of the outstanding shares of the Subsidiary free and clear of all
liens, mortgages, charges, liabilities, claims, security interests, options,
warrants or other rights to purchase or otherwise acquire the shares of the
Subsidiary and other encumbrances of any nature whatsoever.
(c) LEGAL PROCEEDINGS.
(i) Except as set forth in SCHEDULE 4(c)(i) of this Agreement, none of
the Seller, the Shareholders in their capacities as shareholders, officers or
directors of the Company, the Company or the Subsidiary is a party to any
pending litigation, arbitration or administrative proceeding or, to the best the
knowledge of Seller and the Shareholders, to any investigation, and 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 Company and its subsidiaries, taken as a whole, is threatened.
(ii) Except as disclosed in SCHEDULE 4(c)(ii) to this Agreement, none
of Seller, the Shareholders or the Company has any knowledge, or has not
received notice, of any complaints, claims or threats, plans or intentions to
discontinue commercial relations or transactions from any customer of the
Company or the Subsidiary, any purchaser of goods or services from the Company
or the Subsidiary, any employee or independent contractor significant to the
conduct or operation of the Company or the Subsidiary or its businesses or any
party to any agreement to which the Company or the Subsidiary is a party.
(iii) Except as disclosed in SCHEDULE 4(c)(iii), there is no claim
(whether based on statute, negligence, breach of warranty, strict liability or
any other theory) relating directly or indirectly to any product manufactured or
sold, or any services performed by the Company or the Subsidiary.
(iv) Except as disclosed in SCHEDULE 4(c)(iv), neither the Company nor
the Subsidiary is under any obligation with respect to the return of goods in
the possession of customers.
(d) ENCUMBRANCES. Except as disclosed in SCHEDULE 4(d), 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 Company or the Subsidiary are subject.
(e) TRADE NAMES, ETC. Each of the Company and the Subsidiary owns or
is licensed or otherwise entitled to use the trade names, trademarks, service
marks,
<PAGE>
-7-
assumed names, copyrights and registrations therefor, if any (collectively
"Trademarks") specified in SCHEDULE 4(e), which Schedule is a complete and
correct list of all such assets. The Trademarks have been duly issued and have
not been canceled, abandoned or otherwise terminated, except as otherwise
indicated in SCHEDULE 4(e). SCHEDULE 4(e) also completely and correctly lists
all licenses and agreements relating to any of the Trade Names. Neither the
Company nor the Subsidiary is in default under any of the licenses or agreements
relating to the Trademarks as listed in SCHEDULE 4(e) and all of such licenses
and agreements are in effect. Neither the Company nor the Subsidiary has
granted, or will grant prior to the Closing, licenses or other rights to use
such Trademarks. No other Trademarks are either owned or used by the Company or
the Subsidiary. To the best knowledge of Seller and the Shareholders, neither
the operation of its business by the Company or the Subsidiary infringes on the
Trademarks of any third party. No claim has been made that there is any such
infringement. To the best knowledge of Seller and the Shareholders, no Trademark
of any other person infringes any Trademarks owned or used by the Company or the
Subsidiary.
(f) PATENTS, ETC. Each of the Company and the Subsidiary own or is
licensed or otherwise entitled to use the inventions, letters patent,
applications for letters patent and patent license rights, inventions,
processes, designs, formulas, trade secrets, Plant Breeders' Rights Act ("PBRA")
certificates of registration, Plant Variety Protection Act ("PVPA")
Certificates, know-how and other industrial property rights (collectively
"Patents") necessary for the conduct of its business as set forth in SCHEDULE
4(f), which Schedule is a complete and correct list of all such assets. The
Patents have been duly issued and have not been canceled, abandoned or otherwise
terminated, except as otherwise indicated in SCHEDULE 4(f). SCHEDULE 4(f) also
completely and correctly lists all licenses and agreements relating to any of
the Patents. Neither the Company nor the Subsidiary is in default under any of
the licenses or agreements relating to the Patents as listed in SCHEDULE 4(f)
and all of such licenses and agreements are in effect. Neither the Company nor
the Subsidiary has granted, or will grant prior to the Closing, licenses or
other rights to use such Patents. No other Patents are owned or used by the
Company or the Subsidiary. To the best of the knowledge of Seller and the
Shareholders, the operation of the business of the Company or the Subsidiary
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 knowledge of
Seller and the Shareholders, no Patent of any person infringes any Patent owned
or used by the Company or the Subsidiary.
(g) FINANCIAL STATEMENTS.
(i) The consolidated and consolidating financial statements of the
Company and the Subsidiary as of and for the periods ended June 30, 1997, 1996,
1995, and 1994, together with the related notes and schedules, and the
consolidated and consolidating financial statements of the Company and the
Subsidiary as of and for the period ended March 31, 1998 together with the
related notes and schedules
<PAGE>
-8-
(collectively, the "Financials"), true and complete copies of which are attached
hereto as SCHEDULE 4(g) and except as disclosed on SCHEDULE 4(g), (A) have been
prepared on the basis stated therein and are in accordance with the books of
account and records of the Company; (B) present fairly, and are accurate and
complete statements of, the financial condition and the results of operations of
the Company and the Subsidiary as at and for the periods therein specified; and
(C) do not include or omit to state any 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 for such current liabilities as may have been
incurred since March 31, 1998 in the ordinary course of business, neither the
Company nor the Subsidiary has any liabilities or obligations (whether accrued,
absolute, contingent or otherwise) which might be or become a charge against the
assets or liabilities of the Company or the Subsidiary; as of March 31, 1998,
there was no asset used by the Company or the Subsidiary in its operations that
has not been reflected in the Financials, and, except as set forth in the
Financials, no assets have been acquired by the Company or the Subsidiary since
such date except in the ordinary course of business.
(iii) Except as disclosed in the Financials, there has been no
decrease in stockholders' equity as compared with the amount shown for such
shareholders' equity as at March 31, 1998 and no material adverse changes in the
financial position of the Company and the Subsidiary, taken as a whole, since
March 31, 1998.
(iv) The Financials do not include any assets, liabilities, income or
expenses of any entity other than the Company and the Subsidiary. All
transactions between or among the Company, the Subsidiary and any other entity
in which any Shareholder is an officer and/or director or in which Seller or any
Shareholder, directly or indirectly, has an equity interest have been at prices
no less favorable to the Company or the Subsidiary than could have been obtained
from any independent third party.
(h) ABSENCE OF CERTAIN CHANGES. Except as disclosed on SCHEDULE 4(h),
since March 31, 1998, 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 Company and the Subsidiary,
taken as a whole.
(i) TAX MATTERS.
(i) TAX RETURNS. Each of the Company and the Subsidiary has prepared
and filed all Tax Returns on time and with all appropriate Governmental
Authorities for all fiscal periods through June 30, 1997. Each such Tax Return
was correct and complete. True and complete copies of all Tax Returns prepared
and filed by the Company and the Subsidiary through June 30, 1998 have been
delivered to ABT.
<PAGE>
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(ii) PAYMENT OF TAXES. Except as otherwise indicated on SCHEDULE
4(i), each of the Company and the Subsidiary has paid all Taxes due and payable
as reflected on its Tax Returns and have paid all assessments and reassessments
it has received in respect of Taxes. Each of the Company and the Subsidiary has
paid in full, or made satisfactory provision on the Financials in respect of,
all Taxes accruing due on or before the date hereof which are not reflected in
its Tax Returns. The provisions for Taxes reflected in the Financials are
sufficient to cover all liabilities for Taxes that have been assessed against
the Company and/or the Subsidiary, whether or not disputed, or that are accruing
due in respect of the business of the Company or the Subsidiary and their
respective operations and property during the periods covered by the Financials
and all prior periods.
(iii) REASSESSMENTS. There are no reassessments of Taxes that have
been issued and are outstanding. No Governmental Authority has challenged,
disputed or questioned the Company in respect of Taxes or of any Tax Returns.
Neither the Company nor the Subsidiary is negotiating any proposed assessment or
reassessment with any Governmental Authority. None of Seller, the Shareholders,
the Company or the Subsidiary is aware of any contingent liabilities of the
Company or the Subsidiary for Taxes or any grounds for an assessment or
reassessment including aggressive treatment of income, expenses, credits or
other claims for deduction under any return, filing or report. None of Seller,
the Shareholders, the Company or the Subsidiary has received any notice or other
indication from any Governmental Authority that an assessment or reassessment is
proposed in respect of any Taxes, regardless of its merits. Neither the Company
nor the Subsidiary has executed or filed with any Governmental Authority any
agreement extending the period for assessment, reassessment or collection of any
Taxes. Assessments under the Income Tax Act (Canada) and applicable provincial
legislation have been made with respect to the Company or the Subsidiary
covering all past periods through the fiscal year ended June 30, 1997, and all
taxation years ending in or prior to June 30, 1994 are considered closed by
Canadian federal and provincial Governmental Agencies for the purposes of all
Taxes and all taxation years ending on or prior to June 30, 1993 are considered
closed by Canadian provincial Governmental Authorities for the purpose of all
Taxes.
(iv) WITHHOLDINGS. Each of the Company and the Subsidiary has
withheld from each payment made to any of its present or former employees,
officers and directors, and to all persons who are non-residents of Canada for
the purposes of the Income Tax Act (Canada) all amounts required by law and will
continue to do so until the Closing Date and has remitted such withheld amounts
within the prescribed periods to the appropriate Governmental Authority. Each
of the Company and the Subsidiary has remitted all Canada Pension Plan
contributions, employment insurance premiums, employer health taxes and other
Taxes payable by it in respect of its employees and has or will have remitted
such amounts to the proper Governmental Authority within the time required by
the applicable law. Each of the Company and the Subsidiary has charged,
collected and
<PAGE>
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remitted on a timely basis all taxes as required by the applicable law on any
sale, supply, or delivery whatsoever made by the Company or the Subsidiary and
has paid all Taxes as required by the applicable law on any sale, supply or
delivery whatsoever received by the Company and/or the Subsidiary.
(v) RESERVES. There are no circumstances existing which could result
in the application of any of section 78, 80, 80.01, 80.02, 80.03 and 80.04 of
the Income Tax Act (Canada) or any equivalent provincial provision to the
Company or the Subsidiary. Neither the Company nor the Subsidiary has claimed,
and will not claim, any reserve under any one or more of subparagraph
40(1(a)(iii), or paragraphs 20(1)(m) or 20(1(n) of the Income Tax Act (Canada)
or any equivalent provincial provisions, if any such amount could be included in
the income of the Company or the Subsidiary for any period ending after the
Closing Date.
(vi) LOSS UTILIZATION. The only business ever conducted by the Company
or the Subsidiary is the business as described on SCHEDULE 4(i). The non-
capital losses (as defined in the Income Tax Act (Canada) and any equivalent
provincial taxing statute) were incurred by the Company or the Subsidiary only
in carrying on such business.
(vii) ELECTIONS. Except as disclosed on SCHEDULE 4(i), neither the
Company nor the Subsidiary has ever made or filed any election under section 83
or section 85 of the Income Tax Act (Canada) or any equivalent provincial
provision. Neither the Company nor the Subsidiary will file any such election
before the Closing Date.
(viii) RETAIL SALES TAX. Each of the Company and the Subsidiary has
paid all Taxes imposed by the Retail Sales Tax Act (Ontario) and other relevant
provincial tax statute(s) on the acquisition of its tangible personal property
as defined in such statute, and none of its tangible personal property has been
transferred at any time on a tax-exempt basis under the provisions of section 13
of Regulation 1013 to the Retail Sales Tax Act (Ontario), or any predecessor
thereof, or under a similar provision of any other relevant provincial tax
statute.
(ix) NON-ARM'S LENGTH TRANSACTIONS. Except as disclosed on SCHEDULE
4(i), neither the Company nor the Subsidiary has ever acquired or had the use of
any of its assets from a person ("a Related Person") with whom the Company or
the Subsidiary was not dealing at arm's length, as determined under the Income
Tax Act (Canada). Neither the Company nor the Subsidiary has ever disposed of
any asset to a Related Person for proceeds less than the fair market value of
that asset. Neither the Company nor the Subsidiary shall either acquire or
dispose of any of its assets to any Related Person prior to the Closing Date.
(x) TAX STATUS. The Seller is not a non-resident of Canada as defined
in Income Tax Act (Canada). The Company is a registrant for purposes of the
goods
<PAGE>
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and services tax provided for under the Excise Tax Act and their registration
numbers are as set forth in SCHEDULE 4(i).
(xi) TAX ACCOUNTS AND TAX ATTRIBUTES. SCHEDULE 4(i) accurately sets
out the paid-up capital of all of the issued and outstanding shares of the
Company and the Subsidiary for the purposes of the Income Tax Act (Canada) or
any equivalent provincial provision.
(xii) DEFINITIONS. For purposes of this SECTION 4(i), "Taxes" means
all taxes and similar governmental charges, including
(A) Canadian federal, provincial, municipal and local, foreign or
other income, franchise, capital, real property, personal
property, tangible, withholding, payroll, employer health,
transfer, sales, use, excise, consumption, anti-dumping,
countervailing and value added taxes, all other taxes of any kind
for which the Company and/or the Subsidiary may have any
liability imposed by Canada or any province, municipality,
country or foreign government or subdivision or agency thereof,
whether disputed or not;
(B) assessments, charges, duties, fees, imposts, levies or other
governmental charges; and
(C) all Canada Pension Plan contributions and employment insurance
premiums;
(D) interest, penalties or additions associated with the foregoing.
(j) ACCOUNTS RECEIVABLE AND INVENTORY.
(i) ACCOUNTS RECEIVABLE. The accounts receivable of the Company and
the Subsidiary reflected in the Financials as at March 31, 1998 and the accounts
receivable acquired by the Company and the Subsidiary since such date are valid
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 books and records of the Company and the
Subsidiary uniformly maintained in accordance with the financial statements,
accounted for in accordance with GAAP, consistently applied, and neither Seller
or the Shareholders know of any reason that would make such accounts receivable,
net of such amounts as the Company and/or the Subsidiary has reserved on its
books as of March 31, 1998, taken as a whole, not collectible.
(ii) INVENTORY. The inventory of the Company and the Subsidiary
reflected in the Financials as at March 31, 1998, and the inventory acquired by
the Company and the Subsidiary since such date (a) has been purchased in the
ordinary
<PAGE>
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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) Seller and the Shareholders know of no reason that would
make such inventory (net of such amounts as the Company and/or the Subsidiary
has reserved on its books as of March 31, 1998) taken as a whole, not
marketable.
(k) TITLE AND CONDITION OF PROPERTIES. Neither the Company nor the
Subsidiary owns any real property, except as disclosed on SCHEDULE 4(k). Except
as disclosed on SCHEDULE 4(k), each of the Company and the Subsidiary has good
and marketable title to all assets, real, mixed, tangible and intangible,
reflected in the Financials and all assets acquired subsequent to March 31,
1998, which have not been disposed of in the ordinary course of business since
March 31, 1998, which assets are not subject to any mortgage, lien, claim,
security interest, fixed or floating charge, debenture, conditional sales
agreement, easement, right-of-way or other encumbrance, except as disclosed on
SCHEDULE 4(k). SCHEDULE 4(k) contains a complete and accurate list of all
leases and other agreements under which the Company or the Subsidiary is a
lessee of any real or personal property. Except as disclosed on SCHEDULE 4(k),
each of the real property and personal property leases and agreements is in full
force and effect and constitutes the legal, valid and binding obligation of the
parties thereto. All equipment and other tangible personal property which are
material to the business, operations or condition (financial or otherwise) of
the Company and the Subsidiary are in good operating condition and, subject to
routine maintenance and ordinary wear and tear, have been maintained in
accordance with reasonable industry standards and are suitable for the purpose
for which they are used. Except as disclosed in SCHEDULE 4(k), none of Seller,
the Shareholders or the Company is aware of, or has 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 business
of the Company or the Subsidiary or its owned or leased real or personal
properties, with which the Company or the Subsidiary has not complied.
(l) DESCRIPTION OF MATERIAL CONTRACTS. Except for contracts of
purchase and sale entered into in the ordinary course of business of the Company
and the Subsidiary, none of which is, individually or in the aggregate,
materially adverse to the Company and the Subsidiary, taken as a whole, SCHEDULE
4(l) contains a complete and correct list as of the date hereof of all
agreements, contracts and commitments, obligations and understandings which are
not set forth in any other Schedule delivered hereunder, of the following types,
written or, oral, to which the Company or the Subsidiary is a party, under which
the Company or the Subsidiary has any rights or by which it or any of its
properties is bound, as of the date hereof: (i) mortgages, indentures, security
agreements and other agreements and instruments relating to the borrowing of
money or extension of credit; (ii) employment and consulting agreements with
annual compensation in excess of $10,000; (iii) collective bargaining
agreements; (iv) bonus, profit-sharing, compensation, stock option, pension,
retirement, deferred compensation or other plans, agreements, trusts, funds or
arrangements for the benefit of employees
<PAGE>
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(whether or not legally binding); (v) sales agency, manufacturer's
representative or distributorship agreements; (vi) agreements, orders or
commitments for the purchase by the Company or the Subsidiary of materials,
supplies or finished products exceeding $5,000 in the aggregate from any one
person; (vii) agreements, orders or commitments for the sale by the Company or
the Subsidiary of its products or services exceeding $5,000; (viii) agreements
or commitments for capital expenditures in excess of $5,000 for any single
project (it being warranted that the commitment for all undisclosed contracts
for such agreements or commitments does not exceed $5,000 in the aggregate);
(ix) agreements relating to research and development; (x) agreements relating to
PBRA certificates of registration or licenses or other rights to use PBRA
certificates of registration; (xi) agreements relating to the payment of
royalties; (xii) seed purchase contracts or other contracts with growers; (xiii)
brokerage or finder's agreements; (xiv) joint venture agreements; and (xv) other
agreements, contracts and commitments which individually or in the aggregate for
any one party involve any expenditure by the Company or the Subsidiary of more
than $5,000. The Company has made available to Buyer and 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 complete and accurate descriptions of all
oral agreements listed on such Schedules. All such agreements, contracts,
commitments, obligations and undertakings are in full force and effect and,
except as disclosed in SCHEDULE 4(l), 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 neither
the Company nor the Subsidiary thereof is in default thereunder 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, lease commitment, obligation or undertaking. There has been no
threatened cancellations thereof, and there are no outstanding disputes under
any such contract, agreement, lease, commitment, obligation or undertaking.
Except as set forth in SCHEDULE 4(l), no consent or approval of any party is
required under any such contract, agreement, commitment, obligation or
undertaking which would make any thereof not binding and in full force and
effect as of the Closing Date. Any contracts, agreements, leases, commitments or
undertakings held in the name of Seller or any Shareholder and set forth in the
Schedules hereto (the "Material Agreements") shall be assigned to either Buyer
or the Company at or prior to the Closing Date.
Except as otherwise set forth in SCHEDULE 4(l), 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, in full force and effect and is
and will constitute a valid and binding obligation of the Company or the
Subsidiary and the respective parties to such agreements, and there is not,
under any such contract, lease, instrument or commitment, any existing default
by the Company or the Subsidiary or such other parties or any event that, with
notice, lapse of time or both, would constitute a default by the Company or the
Subsidiary or such other parties in
<PAGE>
-14-
respect of which adequate steps have not been taken to cure such default or to
prevent a default from occurring or continuing.
No agreement, contract, commitment, obligation or undertaking listed
on the Schedules hereto which the Company or the Subsidiary is a party or by
which it or any of its assets is bound or affected, except as specifically set
forth in SCHEDULE 4(l), contains any provision which materially adversely
affects or in the future may (so far as Seller, the Shareholders and the Company
can reasonably now foresee) materially adversely affect the condition,
properties, assets, liabilities, business, operations or prospects of the
Company or the Subsidiary following the date hereof and upon the Closing Date.
Furthermore, to the best of the knowledge of Seller and the Shareholders, the
material suppliers, customers and clients of each of the Company and the
Subsidiary will continue to supply and purchase from the Company and the
Subsidiary after the Closing.
(m) Default; Violations or Restrictions. The execution, delivery and
performance of this Agreement and of any agreement to be executed and delivered
by the Company in connection with the transactions contemplated hereby, 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) result in the
breach of any term or provision of the Articles or By-laws of the Company or the
Subsidiary, as amended to date, or 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 Company or the Subsidiary, under any law, order, writ,
injunction, decree, statute, rule or regulation of any court, governmental
agency or arbitration tribunal or 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
Company, the Subsidiary, any Shareholder or Seller is a party or by which any of
them may be bound or affected, or require any consent, approval or notice under
any law, rule or order or any such document or instrument; or result in the
creation or imposition of any lien, claim, restriction, charge or encumbrance
upon the assets of the Company or the Subsidiary or interfere with or otherwise
adversely affect the ability of the Company or the Subsidiary to carry on
business after the Closing Date on substantially the same basis as it is now
conducted by the Company or the Subsidiary
(n) COURT ORDERS AND DECREES. Neither the Company nor the Subsidiary
has received written or oral notice that there is outstanding, pending, or
threatened any judgment, order, writ, injunction or decree of any court,
governmental authority or arbitration tribunal against or affecting the Company,
the Subsidiary, the Shares or any assets of the Company or the Subsidiary.
(o) BOOKS AND RECORDS. The books and records of the Company and the
Subsidiary are, in all material respects, complete and correct and have been
maintained in accordance with good business practice. True and complete copies
of
<PAGE>
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the articles of incorporation and by-laws of the Company and the Subsidiary and
all amendments thereto and true and complete copies of all minutes, resolutions,
stock certificates and stock transfer records of the Company and the Subsidiary
are contained in the minute books and stock transfer books that have been
delivered to Buyer and ABT for inspection and will be delivered to Buyer at the
Closing. The minute books, stock certificate books, stock transfer records and
such other books and records as may be requested by Buyer, as exhibited to Buyer
and its representatives, are complete and correct in all material respects.
(p) BENEFIT PLANS.
(i) Except as disclosed in SCHEDULE 4(p), neither the Company nor the
Subsidiary is a party to or bound by, nor does the Company or the Subsidiary
have any liability or contingent liability with respect to, any Benefit Plans
that are material to the Business and that impose any binding legal obligation
on the Company. SCHEDULE 4(p) contains a true and complete list of all Benefit
Plans of the Company and the Subsidiary. None of the Benefit Plans is a
registered pension plan (as that term is defined under the Income Tax Act
(Canada). Neither the Company nor the Subsidiary has any formal plan or
commitment, whether legally binding or not, to create any additional Benefit
Plan or to modify or change any existing Benefit Plan that would affect any
Employee or former employee of the Company or the Subsidiary, except such
modification or amendment as may be required to be made to secure the continued
registration of any existing Benefit Plan with each applicable Governmental
Authority.
(ii) With respect to each of the Benefit Plans, Seller and the
Shareholders have delivered to the Buyer true and complete copies of each of the
following documents:
(A) a copy of the Benefit Plan (including all amendments thereto);
(B) a copy of all employee communications relating to the Benefit
Plan, whether or not such communications have been or are
required to be, filed with any applicable Governmental Authority:
(C) if the Benefit Plan is funded through a trust or any third party
funding arrangement, a copy of the trust or other funding
agreement (including all amendments thereto) and the latest
financial statements thereof;
(D) all contracts relating to the Benefit Plans with respect to which
the Company or the Subsidiary may have any liability, including
insurance contracts, investment management agreements,
subscription and participation agreements and record keeping
agreements.
<PAGE>
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(iii) None of the Benefit Plans provides benefits, including death or
medical benefits (whether or not insured), with respect to Employees or former
employees of the Company beyond retirement or other termination of service,
except for:
(A) coverage required by applicable law,
(B) death or retirement benefits under any Pension Plan,
(C) deferred compensation benefits accrued as liabilities in the
Financial Statements, or
(D) benefits the full cost of which is borne by the Employee or
former employee (or his beneficiary).
(iv) To the best of the knowledge of Seller and the Shareholders,
there are no pending, threatened or anticipated claims by or on behalf of or
against any of the Benefit Plans, including claims by or on behalf of any of the
Benefit Plans against any person (other than routine claims for benefits).
(v) With respect to each Benefit Plan that is funded wholly or
partially through an insurance policy, except as disclosed on SCHEDULE 4(p),
there will be no liability of the Company or the Subsidiary as of the Closing
Date, under any such insurance policy or ancillary agreement with respect to
such insurance policy in the nature of a retroactive rate adjustment, loss
sharing arrangement or other actual or contingent liability arising wholly or
partially out of events occurring prior to the Closing time. With respect to
each Benefit Plan not funded through an insurance policy, each of the Company
and the Subsidiary has either fully funded such Benefit Plan through a trust or
has made appropriate provision for all liability of the Company and the
Subsidiary thereunder in the Financials.
(vi) As used in this Section 4(p) the following words shall have the
meanings ascribed to them:
"Benefit Plans" means all bonus, deferred compensation, incentive
compensation, share purchase, share appreciation and share option, severance or
termination pay, hospitalization or other medical benefits, life or other
insurance, dental, disability, salary continuation, vacation, supplemental
unemployment benefits, profit-sharing, mortgage assistance, employee loan,
employee assistance, pension, retirement or supplemental retirement plan or
agreement (including without limitation any defined benefit or defined
contribution pension plan and any group registered retirement savings plan), and
each other employee benefit plan or agreement (whether oral or written, formal
or informal, funded or unfunded) sponsored, maintained or contributed to or
required to be contributed to by the
<PAGE>
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Company and/or the Subsidiary for the benefit of any of the Employees or former
employees of the Company and/or the Subsidiary, whether or not insured and
whether or not subject to any Applicable Law, except that the term "Benefit
Plans" shall not include any statutory plans with which the company is required
to comply, including without limitation the Canada/Quebec Pension Plan or plans
administered pursuant to applicable provincial health tax, workers' compensation
and unemployment insurance legislation.
"Employees" means those employees who are employed by the Company
and/or the Subsidiary in their respective businesses at the Closing.
"Applicable Law" means any domestic or foreign statute, law (including
the common law), ordinance, rule, regulation, restriction, regulatory policy or
guideline, by-law (zoning or otherwise), or order, or any consent, exemption,
approval or license of any Governmental Authority, that applies in whole or in
part to the Company, the Subsidiary, any business of the Company and/or the
Subsidiary or the manner in which any such business is carried on.
"Governmental Authority" means any domestic or foreign government
whether federal, provincial, state or municipal and any governmental agency,
governmental authority, governmental tribunal or governmental commission of any
kind whatever.
(q) INSURANCE. SCHEDULE 4(q) contains a correct and complete
description of all policies of insurance maintained by or on behalf of the
Company and/or the Subsidiary or in which the Company and/or the Subsidiary is
named as an insured party, beneficiary or loss payable payee. Each of the
Company and the Subsidiary have at all times prior to the date hereof
maintained, and will at all times prior to the Closing Date, maintain insurance
coverage with respect to their respective properties, in respect of liabilities
and risks prudently insured against. The policies described in SCHEDULE 4(q)
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.
SCHEDULE 4(q) contains a correct and complete description of all such
policies of insurance held by or on behalf of the Company and/or the Subsidiary,
premiums paid for such insurance during the last three years and all outstanding
insurance claims in excess of $5,000 made by or against the Company and/or the
Subsidiary for damage to or loss of property or income which have been referred
to insurers or which Seller, the Shareholder or the Company believe to be
covered by commercial insurance. SCHEDULE 4(q) also contains a list of all
general comprehensive liability policies carried by the Company and/or the
Subsidiary for the past three years, including excess liability policies and any
agreements, arrangements or commitments under which the Company and/or the
Subsidiary
<PAGE>
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indemnifies any other person or is required to carry insurance for the benefit
of any other person.
(r) RIGHTS OF THIRD PARTIES. Other than as disclosed in SCHEDULE 4(r)
attached, or specifically provided for in this Agreement, neither the Company
nor the Subsidiary has 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 Company or the Subsidiary, and no person or other
corporation has any right to possession, use or occupancy of any of the property
of the Company or the Subsidiary.
(s) POWERS OF ATTORNEY. Except as disclosed in SCHEDULE 4(s), there
are no persons, firms, associations, corporations or business organizations
holding general or special powers of attorney from the Company and/or the
Subsidiary.
(t) LABOR MATTERS. Neither the Company nor the Subsidiary is 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 Company and/or the Subsidiary. To the best of the knowledge of Seller and
the Shareholders, each of the Company and the Subsidiary (i) is in compliance
with all applicable Canadian federal and provincial laws respecting employment
and employment practices, terms and conditions of employment and wages and
hours, and (ii) is not engaged in any unfair labor practices.
(u) RELATIONSHIPS WITH VENDORS AND CUSTOMERS. Neither the Company,
Seller, or any Shareholder has knowledge of any present or future conditions or
state of facts or circumstances which would materially adversely affect the
Company or the Subsidiary on or after the Closing Date. The relationships of
the Company and the Subsidiary with their respective customers, clients and
vendors are satisfactory, and neither the Company, Seller nor any Shareholder
has any 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. Neither the Company, Seller nor any Shareholder has
knowledge of any material outstanding claims of any of its customers or clients
presently outstanding, pending or threatened against the Company and/or the
Subsidiary. Neither the Company, Seller nor any Shareholder has any knowledge
of any present or future condition or state of facts or circumstances which
would prevent the business of the Company and/or the Subsidiary from being
carried on by Buyer after the Closing Date in essentially the same manner as it
is presently being carried on.
(v) APPROVALS AND AUTHORIZATIONS. Each the Company and the Subsidiary
has obtained all necessary consents, approvals and authorizations in connection
with the transactions contemplated hereby which are required by law or otherwise
<PAGE>
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in order for the Company and the Subsidiary to continue all of its present
businesses as currently conducted following the Closing Date.
(w) COMPENSATION PLANS. SCHEDULE 4(w) 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 Company and the
Subsidiary other those disclosed on SCHEDULE 4(w).
(x) GOVERNMENTAL LICENSES. SCHEDULE 4(x) contains a correct and
complete list of all governmental and administrative consents, permits,
appointments, approvals, licenses, certificates and franchises which are (i)
necessary for the operation of the Company and the Subsidiary, and (ii) required
in connection with the execution, delivery or performance of this Agreement by
Seller and the Shareholders, all of which have been duly obtained by the
Company, Seller or the Shareholders, as applicable, and are in full force and
effect.
(y) BROKERS. No agent, broker, investment banker, person, or firm
acting on behalf of any of Seller, the Shareholders, or any firm or corporation
affiliated with any of them, or under its 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 for the broker
acting for Seller, whose payment is the sole responsibility of Seller.
(z) COMPLIANCE WITH LAWS.
(i) Except as disclosed in SCHEDULE 4(z), the operations and
activities of each of the Company and the Subsidiary has previously and continue
to comply with all applicable United States and Canadian federal, state,
provincial and municipal laws, statutes, codes, ordinances, rules, regulations,
permits, guidelines, 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 relating to occupational safety and health of
employees of the Company and the Subsidiary. Neither the ownership of the
Company or the Subsidiary, nor the conduct of the business of the Company or the
Subsidiary as currently conducted, conflicts with the rights of any other
person, firm or corporation or violates, or 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
the articles of incorporation or by-laws of the Company or the Subsidiary as
presently in effect, or any lien, security interest, encumbrance, mortgage, deed
of trust, lease, license, agreement, understanding, or Laws to which the Company
or the Subsidiary is a
<PAGE>
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party or by which it may be bound or affected. Neither the Company nor the
Subsidiary has received any notice or any other communication from any third
party asserting a failure to comply with any Laws, nor has the Company or the
Subsidiary received any notice that any governmental authority or other person
intends to seek enforcement against the Company and/or the Subsidiary to compel
compliance with any such Laws.
(ii) There are no existing claims, orders, directives, notices or
requests or, to the best of knowledge of Seller and the Shareholders, potential
claims, orders, directives, notices or requests which may exist against the
Company or the Subsidiary, for, with respect to, or as a direct or indirect
result of, the presence on, at or under, or the escape, seepage, leakage,
spillage, discharge, deposit or emission discharging, from the real property of
the Company of any "Hazardous Material."
(iii) Except as disclosed in SCHEDULE 4(z), since the date first
acquired, controlled or leased by the Company, none of Seller, the Company, the
Subsidiary or the Shareholders has placed any "Hazardous Material" on or under
any real property, at any time owned, controlled or leased by the Company and/or
the Subsidiary, and, to the best of knowledge of Seller and the Shareholders,
there has been no "Hazardous Material" on or under the real property owned,
controlled or leased by the Company or the Subsidiary.
(iv) Neither the Company or the Subsidiary, nor to the best of the
knowledge of the Sellers and the Shareholders, any officer, employee or agent of
the Company or the Subsidiary acting on its behalf, nor any other person acting
on its behalf within the last three (3) years, has, directly or indirectly,
given or agreed to give 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 Company or the Subsidiary (or assist the Company or the Subsidiary in
connection with any actual or proposed transaction) which (i) might subject the
Company or the Subsidiary 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 Company or the
Subsidiary, or (iii) if not continued in the future, might adversely affect the
assets, the business or the operations or prospects of the Company or the
Subsidiary, or which might subject the Company or the Subsidiary to suit or
penalty in any private or governmental litigation or proceeding.
(aa) GUARANTEES. Except as disclosed in SCHEDULE 4(cc), neither
Seller nor any of the Shareholders have personally guaranteed or otherwise
become obligated to pay, discharge or satisfy any obligation of the Company or
the Subsidiary.
(bb) BENEFITS. The particulars of all accrued holiday, vacation, sick
or other compensation or benefits to which employees of the Company or the
Subsidiary are entitled to receive from the Company or the Subsidiary as of June
30, 1998 are set
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forth on SCHEDULE 4(bb). The Company has an employee manual which sets forth the
Company's policies with respect to its employees of the Company and the
Subsidiary, and there are no policies other than as set forth in SCHEDULE 4(bb).
(cc) SCHEDULES. The respective Schedules to this Agreement (the
"Schedules") are complete and accurate and fully and accurately disclose all
information required to be disclosed therein pursuant to this Section 4.
Sellers and the Shareholders have delivered to ABT and Buyer complete and
correct copies of the documents and other material from which such Schedules
were compiled.
(dd) ACCURACY. No representation, warranty, covenant or statement by
the Seller and/or the Shareholders in this Agreement, including the Schedules
and Exhibits hereto, any of the Other Documents and the certificates furnished
or to be furnished to ABT and Buyer 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.
(ee) NO LEGAL OR TAX ADVICE. Neither Seller nor the Shareholders are
relying on any legal or tax advice from Buyer or ABT in connection with any of
the transactions contemplated hereby.
SECTION 5. REPRESENTATIONS AND WARRANTIES OF BUYER AND ABT. Each of Buyer and
ABT jointly and severally warrants and represents to Seller as follows (as used
herein, "Buyer's or ABT's best knowledge" or "to the best knowledge of Buyer or
ABT" shall mean information actually known by Buyer without due inquiry):
(a) CAPACITY. Each of Buyer and ABT has all necessary corporate
power and authority to execute and deliver this Agreement and the other
documents required to be executed by Buyer or ABT in connection herewith, to
perform its obligations hereunder and thereunder and to consummate the
transactions contemplated hereby and thereby. The execution and delivery of
this Agreement does not, and the consummation of the transactions contemplated
by this Agreement will not, constitute a breach of any term or provision of the
memorandum of association or articles of association of Buyer or the certificate
of incorporation or by-laws of ABT or constitute a default under any material
law, rule, regulation, indenture, instrument, mortgage, deed of trust, or other
agreement or instrument to which Buyer or ABT is a party or by which either is
bound.
(b) ORGANIZATION.
(i) Buyer is a limited company duly incorporated, validly existing and
in good standing under the laws of the Province of Nova Scotia, and Buyer has
the corporate power and authority to carry on its business as now conducted and
to own, or lease and operate the assets now used by it in connection therewith.
The
<PAGE>
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Buyer is 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 requires such qualification.
(ii) ABT is a corporation duly incorporated, validly existing and in
good standing under the laws of the State of Nevada, and 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. ABT is 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.
(c) CONSENTS AND APPROVALS. Except as disclosed in SCHEDULE 5(c), no
governmental license, permit or authorization, and no registration or filing
with, any court or other governmental authority is required in connection with
the execution, delivery or performance of this Agreement by Buyer or ABT. Each
of Buyer and ABT has taken all necessary corporate action to authorize the
execution and delivery by it of this Agreement and the other agreements and
instruments to be executed and delivered by is pursuant to this Agreement, and
no consent or other approval of any other party is required to be obtained by
Buyer or ABT in connection with the transactions contemplated hereby.
(d) LEGAL PROCEEDINGS. Neither Buyer nor any of its executive officers or
directors, nor ABT nor any of its 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, the performance of its obligations hereunder or the consummation
of the transactions contemplated hereby or that might result in any material
adverse change in the financial condition, business or properties of Buyer and
ABT, and to the best of knowledge of Buyer and ABT, no such litigation,
arbitration, proceeding or investigation is threatened.
(e) BINDING OBLIGATION. This Agreement has been duly executed and delivered
by Buyer and ABT and constitutes the legal, valid and binding obligation of
Buyer and ABT, enforceable against Buyer and ABT 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.
(f) BROKERS; FINDERS. No agent, broker, investment banker, person or
firm acting on behalf of Buyer or ABT or any firm or corporation affiliated with
Buyer or ABT or under the authority of either Buyer or ABT 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.
<PAGE>
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(g) ACCURACY. No representation, warranty, covenant or statement by Buyer
or ABT in this Agreement, including the Schedules and Exhibits hereto and the
certificates furnished or to be furnished to Seller and the Shareholders
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.
SECTION 6. SURVIVAL OF REPRESENTATIONS AND WARRANTIES; INDEMNIFICATION.
(a) SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All representations
and warranties made by the Seller and the Shareholders, or by the Buyer and ABT
in this Agreement or any of the Other Documents, including, without limitation,
all representations and warranties made in any Exhibit or Schedule hereto or
certificate delivered hereunder, shall survive the Closing and any investigation
made with respect thereto until the second anniversary of the Closing Date (the
"Survival Date"); provided that (i) all representations and warranties made by
Seller and the Shareholders in Section 4(z) hereof shall survive the Closing and
any investigation made with respect thereto until and through one (1) year after
the expiration of the applicable statute of limitations (the "Extended Survival
Date"); (ii) all representations and warranties made by Seller and the
Shareholders in Section 4(i) hereof shall survive until the day which is 90 days
after the relevant Governmental Authority shall no longer be entitled to
reassess liability for Taxes against the Company and/or the Subsidiary in
respect of any fiscal year ended on or prior to the Closing Date, (iii) all
representations and warranties as to the title or ownership of the Shares shall
survive the Closing and any investigation made with respect thereto without
limitation; and (iv) any representation and warranty, with respect to which a
claim for indemnity has been made pursuant to this Section 6 on or before
expiration date of the relevant survival period, if any, shall continue in full
force and effect. "Governmental Authority" and "Taxes" shall have the meanings
ascribed to them in Section 4(i).
(b) INDEMNITY BY SELLER AND THE SHAREHOLDERS. Provided that the
transactions contemplated by this Agreement are consummated, Seller and the
Shareholders hereby, jointly and severally, agree to indemnify, defend and hold
harmless the Buyer and ABT from and against all liabilities, losses, costs or
damages whatsoever (including expenses and reasonable fees of legal counsel)
("Claims") arising out of or relating to Claims made prior to the Survival Date
or the Extended Survival Date, if applicable, in the event that it is determined
that such Claims arise out of or from or are based upon (i) the inaccuracy in
any material respect of any representation or warranty contained in Section 4 or
in any agreement, document or certificate executed and delivered by Seller and
any of the Shareholders pursuant hereto made by Seller and the Shareholders; and
(ii) the non-performance by the Seller and the Shareholders in any material
respect of any covenant, agreement or obligation to be performed by the Seller
and/or the Shareholders under this
<PAGE>
-24-
Agreement or any such agreement, instrument or certificate executed and
delivered by Seller and/or any of the Shareholders.
In addition to the other indemnities provided hereunder, from and
after Closing, Seller and the Shareholders, jointly and severally, agree to
indemnify and save harmless ABT and the Buyer, and any successors thereto, of
and from any Claims under or pursuant to:
(i) any incorrectness in, or breach of, or default under any
representation or warranty made by Seller and the Shareholders in Section 4(i)
hereof; and
(ii) any assessment or reassessment for Taxes relating to the Company,
the business carried on by the Company, or the property of the Company for any
taxation year ending on or before the Effective Date to the extent that the
amount of taxes payable as a result of such assessment or reassessment exceeds
the amount accrued as a liability for such taxes in the Financials. "Taxes"
shall have the meaning ascribed in Section 4(i).
(c) INDEMNIFICATION BY BUYER. Provided that the transactions
contemplated by this Agreement are consummated, the Buyer hereby agrees to
indemnify, defend and hold harmless Seller and the Shareholders from and against
all Claims arising out of or from or based upon (i) the inaccuracy in any
material respect of any representation or warranty contained in Section 5 by
Buyer; (ii) the non-performance by the Buyer in any material respect of any
covenant, agreement or obligation to be performed by Buyer under this Agreement;
and (iii) any liabilities arising out of the operation of the business of the
Company by Buyer after the Closing Date.
(d) DEFENSE OF CLAIMS. 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.
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 of its own
choosing) to contest or defend such claim at his expense and through counsel of
his own choosing if he gives written notice of his 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.
<PAGE>
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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. Provided, however, that in the event the Indemnitor refuses to accept
such offer to settle a claim as described above and the Indemnitee continues to
contest or defend such claim, the indemnification provided for herein shall be
deemed to include the value of management's time spent in connection with the
defense of such claim. 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 or litigation and, in such event, the total maximum liability of the
Indemnitor to indemnify or otherwise reimburse the Indemnitee hereunder with
respect to such claim or litigation 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.
Notwithstanding any provision of this Agreement to the contrary, no
claim for indemnification pursuant to this Section 6, by the Indemnitee shall be
asserted or claimed except to the extent any Claim exceeds, in the aggregate,
the sum of $10,000.
(e) Notwithstanding any provision of this Agreement to the contrary,
neither Seller's nor Buyer's maximum liability for indemnification shall exceed
the Purchase Price.
SECTION 7. COVENANTS OF SELLER AND THE SHAREHOLDERS. Seller and the
Shareholders hereby, jointly and severally, covenant and agree as follows:
(a) FURTHER ASSURANCES. From time to time following the Closing Date,
Seller will, and the Shareholders will cause Seller to, without further
consideration, execute and deliver such additional instruments and take such
other action as Buyer may reasonably require to convey, assign, transfer and
deliver the Shares and otherwise to carry out the terms of this Agreement.
(b) ACCESS TO THE COMPANY; CONFIDENTIALITY.
(i) Subsequent to the date hereof and prior to the Closing Date,
Seller will, and the Shareholders will cause Seller to, continue to give to
Buyer and ABT, their counsel, accountants, and other representatives, full and
free access to all
<PAGE>
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properties, books, contracts, commitments and records of the Company and the
Subsidiary so that Buyer and ABT may have full opportunity to make such
investigation as they shall desire.
(ii) From and after the date of this Agreement until the Closing or
the termination of this Agreement, Seller and the Shareholders will, and will
cause the Company and the Subsidiary, affiliates, officers, directors and
employees, to maintain the confidentiality of all documents and information of a
confidential nature disclosed to the by Buyer and/or ABT in the course of their
negotiations and Buyer's and ABT'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 in the event of termination of this
Agreement will destroy all copies of documentation which each party may have
delivered to the other party and will not use any confidential information from
Buyer or ABT for their own benefit.
(c) 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, Seller and the Shareholders will cause the Company and the Subsidiary
to conduct their operations as engaged in at the date of this Agreement
according to its ordinary course of business, to maintain its 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.
(d) CLOSING DOCUMENTS. Provided that Buyer and ABT have fully performed
their obligations and the conditions precedent to Seller's obligation to sell
the Shares have been satisfied, Seller, the Shareholders and the Company will
execute and deliver all instruments and documents required as conditions
precedent to the Closing and take all action required to carry out the terms of
this Agreement and to consummate the transactions contemplated hereby.
(e) TAX RETURNS. Buyer will cause to be duly and timely filed all
Canadian federal and provincial and other tax returns of any nature required to
be filed by the Company and/or the Subsidiary in the proper governmental
authorities and cause to be duly and timely paid all taxes shown to be due
thereon.
SECTION 8. COVENANTS OF BUYER. The Buyer and ABT hereby covenant and agree as
follows:
(a) CLOSING DOCUMENTS. The Buyer and ABT will execute and deliver all
instruments and documents required as a condition precedent to Closing and take
all actions required to carry out the terms of this Agreement and to consummate
the transactions contemplated hereby.
<PAGE>
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(b) NONINTERFERENCE. The Buyer and ABT will 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 Section
5 of this Agreement, or (ii) would interfere with Buyer's ability to perform or
would prevent performance of any of its obligations under this Agreement or any
of the other agreements or instruments provided for herein.
(c) CONFIDENTIALITY. From and after the date of this Agreement until the
Closing or the termination of this Agreement, Buyer, ABT and their
representatives will maintain the confidentiality of all documents and
information of a confidential nature disclosed by Seller or the Shareholders in
the course of their negotiations and Buyer's and ABT'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 hereby and the financing of this
transaction. In the event this Agreement is terminated, Buyer and ABT will
destroy all copies of documentation which they received from Seller and/or the
Shareholders, other than any information pertaining or in any way relating to
the breach by Seller and/or the Shareholders of any of their representations,
warranties and agreements hereunder, and will not use any confidential
information for their own benefit other than for the purpose of defending
against any Claim asserted by Seller and/or the Shareholders.
SECTION 9. CONDITIONS PRECEDENT TO THE OBLIGATIONS OF BUYER AND ABT. The
obligations of Buyer and ABT under this Agreement are subject to the following
conditions:
(a) There shall not have been any breach of the representations,
warranties, covenants and agreements of Seller and the Shareholders contained in
this Agreement or the Schedules and Exhibits hereto, and all such
representations and warranties shall be true and complete 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.
(b) The Seller and the Shareholders shall have performed and complied
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 Buyer and ABT and its counsel.
(c) There shall have been no material adverse change in the condition
(financial or otherwise), business, assets, liabilities, properties, results of
operations, earnings, or prospects of the Company and the Subsidiary, taken as a
whole.
(d) There shall be no outstanding actions or threats of action by any
party that may materially adversely affect the condition (financial or
otherwise), business,
<PAGE>
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assets, liabilities, properties, results of operations, earnings or prospects of
the Company and the Subsidiary, taken as a whole.
(e) The Buyer and ABT shall have received certificates dated the
Closing Date and signed by Seller and the Shareholders, certifying that the
conditions specified in subsections (a), (b), (c) and (d) above have been
fulfilled, except to the extent that any nonfulfillment was disclosed in writing
to Buyer prior to the Closing Date.
(f) Seller and the Shareholders shall have obtained and delivered to
Buyer and ABT any required consents or approvals of governmental authorities and
third parties whose consent or approval is required for the execution, delivery
or performance of this Agreement and/or the consummation of the transaction
contemplated hereby.
(g) Buyer and ABT shall have received originals or certified copies,
reasonably satisfactory in form and substance to Buyer and ABT, of all such
corporate documents of the Company and the Subsidiary as Buyer and ABT shall
reasonably require, including without limitation the following:
(i) the articles of incorporation or other incorporation documents
of the Company and the Subsidiary and all amendments thereto and restatements
thereof certified as of a recent date by the Director under the Business
Corporations Act (Ontario) or other appropriate official of the jurisdiction of
its incorporation;
(ii) the By-laws of each of the Company and the Subsidiary and all
amendments thereto and restatements thereof certified as of the Closing Date by
an officer of the Company;
(iii) certificates of status or good standing issued, as applicable,
by the Director under the Business Corporations Act (Ontario) or other
appropriate official of the jurisdiction of incorporation, certifying as of a
recent date that each of the Company and the Subsidiary is in existence under
the laws of the jurisdiction of its incorporation and has not been dissolved;
(iv) copies of the resolutions of the board of directors and
shareholders of Seller authorizing and approving the execution and delivery by
Seller of this Agreement and of the agreements and instruments provided for
herein, the performance by the Seller of its obligations under this Agreement
and such other instruments and agreements, certified as of a recent date by the
Secretary or another officer of Seller;
(v) a certificate of incumbency identifying the officers of the
Seller authorized to execute this Agreement and the other agreements and
instruments to be executed pursuant hereto immediately before Closing;
<PAGE>
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(vi) the articles of Seller and all amendments thereto and
restatements thereof certified as of a recent date by the Director under the
Business Corporations Act (Ontario);
(vii) the By-laws of Seller and all amendments thereto and
restatements thereof certified as of the Closing Date by the secretary or
another officer of Seller;
(viii) a certificate of status of the Director under the Business
Corporations Act (Ontario) certifying as of a recent date that Seller is in
existence under the law of that Province and has not been dissolved;
(ix) copies of resolutions of the board of directors Seller
authorizing and approving the execution and delivery by Seller of this Agreement
and of the agreements and instruments provided for herein, the performance by
Seller of its obligations hereunder and thereunder and the consummation of the
transactions contemplated hereby and thereby, certified as of a recent date by
the Secretary or another officer of Seller; and
(h) The Buyer shall have received a written opinion of counsel for Seller
and the Shareholders dated as of the Closing Date, in the form of EXHIBIT 9(h)
hereto.
(i) If requested by Buyer, the Company, the Seller and the Shareholders
will have executed and delivered to the Buyer assignments or consents to all of
the leases described in SCHEDULE 4(k).
(j) The Company shall have received the assignments of Material
Agreements, in accordance with SECTION 4(l) hereof and shall have delivered the
consent of any third party required under any contract, agreement, commitment,
lease or undertaking disclosed on SCHEDULE 4(l) hereto.
(k) If requested by Buyer, Seller and/or Shareholders shall have executed
and delivered to Buyer the assignment or endorsement in favor of Buyer or the
Company of coverage under the insurance policies maintained by the Seller and/or
the Shareholders or any of them covering the Company described to in SCHEDULE
4(q) to this Agreement.
(l) The Company shall have entered into employment agreements or otherwise
made arrangements that they deem satisfactory with such "key personnel" of the
Sellers as the Buyer deems necessary.
(m) The Shareholders and Paul Eros shall have executed and delivered to
Buyer and ABT the Employment Agreements and Non-Competition required to be
executed and delivered at Closing pursuant to Section 3.
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(n) The Shareholders, Buyer, ABT and the Escrow Agent shall have entered
into an Escrow Agreement satisfactory to Buyer, ABT and their counsel.
(o) Prior to the Closing, Buyer shall have received unaudited consolidated
financial statements for the Company and the Subsidiary as of and for the period
ended June 30, 1998.
(p) The Shareholders shall have executed and delivered to ABT a Lock-Up
Agreement in the form of Section 3(c) hereto and the Company and Ontario Seed
Cleaners and Dealers Limited shall entered into a lease for the land and
buildings occupied by the Company in Brampton, Ontario satisfactory in form and
substance to Buyer and ABT.
(q) The Company shall have entered into a new lease or extension of its
existing lease for its Brampton, Ontario premises at a market value rental
acceptable to Buyer and ABT.
SECTION 10. CONDITIONS PRECEDENT TO SELLER'S AND THE COMPANY'S OBLIGATIONS.
The obligations of Seller and the Shareholders under this Agreement are subject
to the following conditions:
(a) There shall not have been any breach of the representations,
warranties, covenants and agreements of Buyer or ABT 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.
(b) The Buyer and ABT shall have performed and complied with all
agreements and conditions required by this Agreement to be performed or complied
with by them. All documents and instruments required in connection with this
Agreement shall be reasonably satisfactory in form and substance to Seller.
(c) Seller shall have received a certificate dated the Closing Date
from each of Buyer and ABT, certifying that the conditions specified in
Paragraphs 10(a) and 10(b) above have been fulfilled.
(d) Seller shall have received a written opinion of Snow Becker Krauss
P.C., counsel for Buyer and ABT, dated as of the Closing Date, in the form of
EXHIBIT 10(d) hereto, which as to matters of Canadian and Ontario law may rely
on the opinion of Fasken Campbell Godfrey, Canadian special counsel to ABT and
Buyer.
(e) Seller shall have received originals or certified copies, reasonably
satisfactory in form and substance to Seller, of the following corporate
documents of Buyer and ABT:
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(i) a certificate of existence certifying as of a recent date that each of
Buyer and ABT is a limited company or corporation, as the case may be, duly
organized and validly existing under the laws of its jurisdiction of
incorporation;
(ii) copies of the resolutions of the Board of Directors of each of
Buyer and ABT authorizing and approving the execution and delivery by Buyer and
ABT of this Agreement and the agreements and instruments provided for herein,
the performance by Buyer and ABT of their obligations hereunder and thereunder,
certified as of a recent date by the Secretary or another officer of Buyer and
ABT, respectively; and
(iii) certificates of incumbency identifying the officers of Buyer
and ABT authorized to execute and deliver this Agreement and the other
agreements and instruments to be executed and delivered by Buyer and ABT
pursuant hereto; and
(f) ABT shall have executed and delivered to the Shareholders the
Price Guaranty Agreement in the form of EXHIBIT 3(d)(1) hereto and caused the
Company to execute and deliver to the Shareholders the Security Agreement in the
form of EXHIBIT 3(d)(2) hereto.
(g) Buyer and ABT shall have executed and delivered the Employment Agreements
required to be executed and delivered pursuant to Section 3 hereof and ABT shall
grant the non-qualified stock options to Paul Eros and Gabriel Eros in pursuant
to the Non-Qualified Stock Option Agreements attached hereto as Exhibits
10(g)(i) and (ii).
SECTION 11. CONDITIONS PRECEDENT TO OBLIGATIONS OF SELLER, BUYER AND ABT. The
obligations of Seller, the Shareholders, Buyer and ABT to consummate
transactions contemplated hereby shall be subject to the fulfillment at or prior
to the Closing Date of the following conditions:
(a) Due Diligence. Buyer and ABT shall have been afforded the opportunity to
complete their due diligence and conduct a review of the business and prospects
of the Company, Seller and the Shareholders shall have been afforded the
opportunity to conduct a review of the business and prospects of ABT, and shall
be reasonably satisfied as to such business and prospects.
(b) No Injunctions. No action or proceeding shall have been instituted or
threatened by any governmental 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.
(c) Consents. Any consent to the transaction considered by Seller, Buyer or
ABT to be necessary or advisable under any agreement or contract, the
<PAGE>
-32-
withholding of which might have, in the judgment of Seller, the Shareholders,
Buyer or ABT, a material adverse effect on the financial condition of the other
party, shall have been obtained.
(d) 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 Seller, the Shareholders, Buyer, ABT and their respective counsel, and
Seller, the Shareholders, Buyer, ABT and their respective counsel shall have
received all certificates, documents and instruments, or copies thereof,
certified if requested, as may be reasonably requested.
SECTION 12. TERMINATION. This Agreement may be terminated at any time prior to
the Closing Date:
(a) By written consent of Seller, Buyer and the Company, properly authorized
by their respective Boards of Directors and the Shareholders.
(b) By Buyer and ABT or by Seller and the Shareholders if the transactions
contemplated hereby have not been consummated by September 11, 1998, unless
extended by mutual consent.
(c) By Buyer and ABT if since March 31, 1998 there has been a material
adverse change in the condition (financial or otherwise), business, assets,
liabilities properties, results of operations, earnings or prospects of the
Company and the Subsidiary, taken as a whole.
SECTION 13. BUYER'S OBLIGATIONS AT CLOSING. At the Closing, in addition to
fulfilling the conditions to closing appearing in this Agreement, Buyer shall
deliver to Seller the Purchase Price as more specifically described in Section 3
hereof, together with all other documents and agreements required to be
delivered by it hereunder.
SECTION 14. SELLER'S OBLIGATIONS AT CLOSING. At the Closing, in addition to
fulfilling the conditions to closing appearing herein, Seller shall deliver to
Buyer:
(a) certificate(s) representing the Shares, free of all liens, security
interests, claims and other encumbrances (i) properly endorsed in blank, or with
stock powers executed in blank, and in either case, with the signatures thereon
guaranteed by a Canadian chartered bank, with any transfer, stamp or similar
taxes upon the transfer of the shares to Buyer paid in full by Seller, or (ii)
registered in the name of Buyer, together with a copy of a resolution of the
board of directors of the Company consenting to the transfer of the Shares to
Buyer, duly certified by the Company's Secretary;
<PAGE>
-33-
(b) all original minute books, stock books, stock transfer ledger, canceled
stock certificates, corporate seals and financial records and statements of the
Company; and
(c) if requested by Buyer, resignations, to be effective on delivery, of all
officers and directors of the Company.
SECTION 15. SUBSEQUENT EVENTS. Buyer may receive, at its own expense, audited,
consolidated financial statements of the Company and the Subsidiary ("Audited
Financial Statements"), certified by KPMG Peat Marwick LLP, independent
certified public accountants, for all periods required of Buyer under the rules
and regulations of the Securities and Exchange Commission (the "Rules"). Seller
and the Shareholders hereby agree to provide Buyer and their accountants with
full and free access to the books and records of the Company and to cooperate
fully with all such representatives of Buyer so that the Audited Financial
Statements may be prepared on a timely basis.
SECTION 16. PARTIES IN INTEREST. This Agreement shall be binding upon and
shall inure to the benefit of the parties and their successors, assigns and
legal representatives. Nothing herein expressed or implied is intended or shall
be construed to confer upon or to give any person, other than the parties
hereto, any rights or remedies under or by reason hereof.
SECTION 17. ENTIRE AGREEMENT. This Agreement, including the Schedules and
Exhibits hereto, contains the entire agreement and understanding among the
parties hereto 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.
SECTION 18. GOVERNING LAW. This Agreement and all rights and obligations
hereunder shall be governed by, and construed in accordance with, the laws of
the Province of Ontario, applicable to agreements made and to be performed
wholly within said province, without regard to the conflict of laws principles
of such Province.
SECTION 19. EXPENSES. Buyer, ABT, Seller and each of the Shareholders will
each pay its, his or her 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.
<PAGE>
-34-
SECTION 20. ARBITRATION. Any dispute with respect to this Agreement shall be
resolved by mediation and, if mediation is not successful, then by arbitration
as provided herein.
The parties agree first to endeavor to settle the dispute in an
amicable manner by mediation administered by the Arbitration and Mediation
Institute of Ontario Inc. (the "Institute") or such other mediation service as
is mutually agreeable to the parties to the dispute under either the Institute's
rules or such other commercial mediation rules are mutually agreeable to the
parties to the dispute. The mediation shall take place in Toronto, Ontario with
representatives of the parties present with full authority to negotiate a
settlement. Unless otherwise agreed by all parties to the dispute, the parties
must participate in the mediation process with a neutral mediator for at least
ten hours over at least two days prior to commencement of any arbitration. If a
party to the dispute refuses to participate in the mediation, the party
demanding mediation may either compel mediation by seeking an appropriate order
from a court of competent jurisdiction or proceed immediately arbitration.
Thereafter, any other unresolved dispute, including any question regarding the
existence of this Agreement, its existence, validity, interpretation or
termination, shall be submitted to and finally resolved by arbitration in
Ontario under the International Commercial Arbitration Act (Ontario) (the
"Act"), as amended from time to time and any statute substituted therefor. The
rules and procedures set out in the Act shall apply except to the extent that
they are modified by the rules for arbitration set out in EXHIBIT 20.
Judgment upon the award rendered by the arbitrator(s) may be entered
in any court having jurisdiction thereof, and the resolution of the disputed
matter as determined by the arbitrator(s) shall be binding on the parties. Any
such mediation or arbitration shall be conducted in Ontario, Canada.
Any party may, without inconsistency with this Agreement, seek from a
court any interim or provisional relief that may be necessary to protect the
rights or property of that party pending the establishment of the arbitral
tribunal, or pending the arbitral tribunal's determination of the merits of the
controversy.
The arbitrator(s) may award costs and fees to the prevailing party if,
in his/her (their) discretion, the non-prevailing party did not prosecute the
arbitration or settlement of the dispute in good faith. "Costs and fees" for
this purpose shall mean reasonable pre-award expenses of the arbitration,
including fees for the arbitrator(s), administrative fees, travel expenses, out-
of-pocket expenses such as copying and telephone, court costs, witness fees and
attorneys' fees. Except as otherwise awarded by the arbitrator(s), all costs
and fees shall be borne by the party incurring such costs and fees.
SECTION 21. 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
<PAGE>
-35-
law, be narrowed or replaced, to the extent possible, with a judicial
construction in such jurisdiction that effectuates 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.
SECTION 22. NOTICES.
(a) All notices, requests, consents and demands by the parties hereunder
shall be delivered by hand, by facsimile transmission, confirmed by a copy of
the facsimile transmission sent by overnight courier, by recognized national
overnight courier, or by deposit in the mail, postage prepaid, by express or
priority mail, return receipt requested, addressed to the party to be notified
at the addresses set forth below:
(i) if to Seller and the Shareholders to:
Mr. Gabriel A. Eros
R.R. 1
Norval, Ontario L0P IK0
Telecopier No.: (905)877-3312
with a copy to:
Holmested & Sutton
4 King Street West
Suite 1201
Toronto, Ontario M5H 1B6
Attention: Linton W. Scott, Q.C.
Telecopier No.: (416)364-9118
(ii) if to Buyer or ABT to:
Rothwell Seeds International Company
AgriBioTech, Inc.
120 Corporate Park Drive
Henderson, Nevada 89014
Attention: Johnny R. Thomas, CEO
Telecopier No.: (888) 800-4841
<PAGE>
-36-
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.
SECTION 23. 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.
SECTION 24. ASSIGNMENT. This Agreement may not be assigned by any party without
the prior consent of the other parties.
SECTION 25. DISCLOSURE. From and after the date of this Agreement until the
Closing or the termination of this Agreement, neither nor either of the
Shareholders and Seller will (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 Shares or the sale of all
or a substantial portion of the assets of the Company with anyone other than
Buyer and ABT; or (ii) discuss the sale of the Shares with anyone other than
Buyer and ABT and officers and directors of the Company and advisors to Seller
and the Shareholders and (iii) unless otherwise required by law or the
requirements of any applicable stock exchange, make any public announcement
without prior approval of the text of such announcement by Buyer and ABT.
SECTION 26. MISCELLANEOUS.
(a) 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 action, 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. Without limiting the generality of the foregoing, Seller and Buyer
shall cooperate with and provide assistance to the other in connection with the
preparation and filing of all United
<PAGE>
-37-
States and Canadian federal, state, provincial, local and foreign income tax
returns which relate to the Company and/or the Subsidiary 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 Company
with respect to any audit of any tax returns filed prior to the Closing.
(b) HEADINGS. The headings contained herein are for reference
purposes only and shall not affect the meaning or interpretation of this
Agreement.
(c) 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.
IN WITNESS WHEREOF, the parties hereto have executed and delivered
this Agreement on the date first above written.
Seller:
1304516 ONTARIO INC.
By: /s/ Gabriel A. Eros
---------------------------------------
Gabriel A. Eros, President
/s/ Gabriel A. Eros
------------------------------------------
Gabriel A. Eros
/s/ Mary E. Eros
------------------------------------------
Mary E. Eros
AGRIBIOTECH, INC.,
By: /s/ Kathleen L. Gillespie
--------------------------------------
Kathleen L. Gillespie, Vice President
ROTHWELL SEEDS INTERNATIONAL COMPANY
By: /s/ Kathleen L. Gillespie
---------------------------------------
Kathleen L. Gillespie, Vice President
<PAGE>
Exhibit 2.4
OMITTED SCHEDULES AND EXHIBITS TO
THE STOCK PURCHASE AGREEMENT
AMONG 1304516 ONTARIO INC.,
ROTHWELL SEEDS INTERNATIONAL COMPANY,
AGRIBIOTECH, INC. AND GABRIEL A. EROS and MARY E. EROS
------------------------------------------------------
Registrant will furnish to the Securities and Exchange Commission a
copy of any of the following Schedules or Exhibits upon request.
<TABLE>
<CAPTION>
Exhibits Description
- -------- -----------
<S> <C>
Exhibit 3(b) Form of Escrow Agreement
Exhibit 3(c) Form of Lock-Up Agreement
Exhibit 3(d)(i) Form of Guarantee Agreement
Exhibit 3(d)(iii) Form of Security Agreement
Exhibit 3(e)(i), (ii) and (iii) Non-Competition Agreements
Exhibit 3(f) Form of Employment Agreement
Exhibit 4(k) Leases of Real Property
Exhibit 9(h) Opinion of Counsel to Sellers and the Corporation
Exhibit 10(d) Opinion of Counsel to Buyer
Exhibit 10(g)(i) and (ii) Non-Qualified Stock Option Agreements
Exhibit 20 Rules for Arbitration
</TABLE>
<TABLE>
<CAPTION>
Schedules
- ---------
<S> <C>
Schedule 4(b)(i) Consents of Other Persons
Schedule 4(b)(ii) Interest in Other Entities
Schedule 4(c)(i) Legal Proceedings, Seller and/or Corporation as Party
Schedule 4(c)(ii) Complaints, Claims, etc. from Customers, Purchasers, etc.
Schedule 4(c)(iii) Claims Related to Products or Services
Schedule 4(d) Encumbrances
Schedule 4(e) Trademarks, Trade Names
Schedule 4(f) Patents, PVPA Certificates, etc.
Schedule 4(g) Financial Statements
Schedule 4(h) Material Adverse Changes
Schedule 4 (i) Tax Matters
Schedule 4(k) Real Property Owned or Leased; Personal Property Leased
Schedule 4(l) Material Contracts
Schedule 4(p) Pension & Profit Sharing Plan
Schedule 4(q) Insurance Policies
</TABLE>
-9-
<PAGE>
<TABLE>
<S> <C>
Schedule 4(r) Rights of Third Parties
Schedule 4(s) Powers of Attorney
Schedule 4(w) Compensation Plans
Schedule 4(x) Governmental Licenses
Schedule 4(z) Compliance with Laws
Schedule 4(aa) Guarantees by Sellers of Obligations of the Corporation
Schedule 4(bb) Benefits
</TABLE>
-10-
<PAGE>
EXHIBIT 2.5
PRICE GUARANTY AGREEMENT dated September 1, 1998 (the "Closing Date")
between 1304516 Ontario Inc., an Ontario corporation ("Seller"), and
AgriBioTech, Inc., a Nevada corporation ("ABT").
R E C I T A L S:
A. Rothwell Seeds International Company ("Buyer") has agreed to purchase
from the Seller an aggregate of 4,300 Class A Shares and 100 voting shares of
Oseco Inc., an Ontario corporation (the "Company"), pursuant to a Stock Purchase
Agreement dated September 1, 1998 (the "Stock Purchase Agreement") among the
Seller, Gabriel A. Eros and Mary E. Eros (the "Shareholders"), Buyer and ABT.
B. Pursuant to Section 3(a) of the Stock Purchase Agreement, ABT will
deliver to the Seller 100,000 shares of the common stock, par value $.001, of
ABT (the "ABT Shares").
C. Pursuant to Section 3(c) of the Stock Purchase Agreement, Seller and
the Shareholder have entered into a Lock-Up Agreement (the "Lock-Up Agreement")
pursuant to which they have agreed that Seller will not sell, transfer or
otherwise dispose of the ABT Shares, except as specified in the Lock-Up,
Agreement and, pursuant to Section 3(d) of the Stock Purchase Agreement, ABT has
agreed to enter into this Price Guaranty Agreement with Seller.
Accordingly, in consideration of the foregoing recitals and the mutual
covenants contained in this Agreement, the parties hereto hereby agree as
follows:
(1) (a) ABT agrees to pay to Seller any deficiency in the Net Proceeds
from sales by Seller of the ABT Shares in accordance with the terms of the Lock-
Up Agreement, provided that all of the ABT Shares are sold by June 1, 1999, or
such later date as all the ABT Shares are sold if sales are delayed by
interruption of trading or any other factor not the fault of Seller, and copies
of sale confirmations and other documentation have been provided to ABT by
Seller as required by the Lock-Up Agreement. In the event that Seller has not
sold all the ABT Shares by October 15, 1998 as a result of an interruption of
trading or any other factor not the fault of Seller, Seller may declare ABT in
default hereunder; ABT shall pay the Seller in cash any deficiency in the Net
Proceeds within 10 days of such declaration of default and Seller shall return
to ABT all remaining ABT Shares. If ABT fails to make such cash payment within
10 days of the declaration of a default, Seller may exercise its rights to
foreclose on the collateral under the Security Agreement (as defined in the
Stock Purchase Agreement). As used herein, "Net Proceeds" means the remainder
of subtracting customary sales commission and applicable stock transfer and
sales taxes from the gross sales price of the ABT Shares sold pursuant to the
Lock-Up Agreement.
(b) ABT's obligations hereunder will be secured by a first priority
security interest, whenever reasonably possible, on the fixed assets and
equipment of
<PAGE>
-2-
the Company pursuant to the terms of a security agreement between the Company
and Seller.
(2) (a) The Net Proceeds shall be determined within 15 days following
June 1, 1999.
(b) Subject to the provisions of the Stock Purchase Agreement and the
Lock- Up Agreement, to the extent that the Net Proceeds from sales of ABT Shares
pursuant to the Lock-Up Agreement are less then $2.06 million, ABT will pay to
the Seller cash in an amount equal to any such deficiency on September 1, 1999,
plus interest from June 30, 1998 at a rate of 8% per annum.
(c) To the extent that the Net Proceeds from sales of ABT Shares
pursuant to the Lock-Up Agreement exceed $2.06 million, Seller will pay to ABT
cash in an amount equal to such surplus within 15 business days after June 1,
1999.
(d) Seller shall prepare and deliver to ABT within 15 days after June
1, 1999 a cumulative statement, supported by documentation, reflecting all sales
of ABT Shares by Seller pursuant to the Lock-Up Agreement and the Net Proceeds
from all such sales.
(e) In the event that the Seller or the Shareholders offer, sell,
transfer or otherwise dispose of the ABT Shares in violation of the Lock-Up
Agreement, (i) ABT's obligations hereunder will immediately terminate, and (ii)
all proceeds in excess of U.S. $15.75 per share from all sales of ABT Shares
regardless of whether such proceeds derive from sales made prior to, concurrent
with or subsequent to such event of default shall promptly be paid in cash to
ABT in accordance with the terms of the Lock-Up Agreement.
(3) Subject to Section 6, this Agreement shall enure to the benefit of and
be binding upon ABT, its successors and assigns, and Seller, its successor and
assigns.
(4) Should any provision of this Agreement, for any reason whatsoever, be
determined by a count of competent jurisdiction or arbitrator to be invalid,
illegal, or incapable of being enforced, in whole or in part, such determination
shall not affect the validity of the remaining provisions, which will remain in
full force and effect as if this Agreement had been executed with the invalid
portion thereof deleted.
(5) This Agreement shall be governed by, construed and enforced in
accordance with the internal substantive laws of the State of Nevada without
giving effect to the choice of law rules thereof.
(6) This Agreement and all rights hereunder are personal to the parties and
shall not be assignable, and any purported assignment in violation thereof shall
be null and void.
<PAGE>
-3-
(7) (a) All notices, requests, consents, and demands by the parties
hereunder shall be delivered by hand, sent by facsimile transmission (confirmed
by a "hard copy" sent by mail or overnight courier), recognized national
overnight courier or by deposit in the mail, postage prepaid, by express or
priority mail, return receipt requested, addressed to the party to be notified
at the address set forth below:
(i) if to the Seller to:
Gabriel A. Eros
R.R. #1
Norval, Ontario L0P IK0
Telecopier: (905)877-3312
with a copy to:
Holmested & Sutton
Suite 1201
4 King Street West
Toronto, Ontario M5H 1B6
Attention: Linton W. Scott, Q.C.
Telecopier No.: (416)364-9918
(ii) if to the Buyer or ABT to:
AgriBioTech, Inc.
120 Corporate Park Drive
Henderson, Nevada 89014
Attention: Johnny R. Thomas, CEO
Telecopier No.: (888) 800-4841
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.
<PAGE>
-4-
(8) In the event that ABT fails to make a payment to Seller required to be
made by it hereunder within 30 days after receipt of written notice from Seller
demanding such payment and Seller has fully complied with its obligations
hereunder, under the Stock Purchase Agreement and the Lock-Up Agreement, ABT
shall be in default under this Agreement with respect to such payment. Upon
such default by ABT, Seller may declare a default under the Security Agreement
and pursue all remedies to which it is entitled.
(9) 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 such
provisions, terms and conditions shall remain in full force and effect. No
waiver of any term or condition of this 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.
(10) All references herein to "$" or "dollars", unless otherwise indicated,
means currency of the Government of Canada which is legal tender for the payment
of public and private debts.
(11) Any dispute hereunder shall be resolved in accordance with Section 20
of the Stock Purchase Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Guarantee as of
the day and year first written above.
1304516 ONTARIO INC.
By: /s/ Gabriel A. Eros
------------------------------------
Gabriel A. Eros, President
AGRIBIOTECH, INC.
By: /s/ Kathleen L. Gillespie
------------------------------------
Kathleen L. Gillespie
Vice President
To induce AgriBioTech, Inc. to enter into the foregoing Price Guaranty
Agreement with 1304526 Ontario, Inc., in which the undersigned have a
substantial financial interest and in consideration of other consideration, the
receipt and sufficiency of which they hereby acknowledge, the undersigned agree,
jointly and
<PAGE>
-5-
severally, to take all action that may be necessary or expedient to cause such
corporation to perform and comply with its obligations thereunder.
/s/ Gabriel A. Eros
--------------------------------------
Gabriel A. Eros
/s/ Mary E. Eros
--------------------------------------
Mary E. Eros
<PAGE>
Exhibit 4.1
SECURITIES PURCHASE AGREEMENT
This Securities Purchase Agreement (this "Agreement"), dated as of August
---------
28, 1998 is entered into by and between ________________________________________
_______________________________________________________________________ with an
address at _____________________________________________________ (the
"Purchaser") and AgriBioTech, Inc., a Nevada corporation with an address at 120
---------
Corporate Park Drive, Henderson, Nevada 89014 (the "Company").
-------
The Company has privately offered for sale, and the Purchaser has agreed to
purchase ______________ (______) Common Stock Purchase Warrants (the "Warrants")
of the Company on the terms and conditions herein provided. In connection
herewith, the Company and the Purchaser hereby agree as follows:
1. Purchase and Sale of Warrants. Upon the basis of the representations and
-----------------------------
warranties and subject to the terms and conditions set forth herein, the Company
agrees to issue and sell the Warrants to the Purchaser on the Closing Date (as
herein defined) at $2.00 per Warrant, or an aggregate purchase price of $_______
(the "Purchase Price") and, upon the basis of the representations and warranties
--------------
and subject to the terms and conditions set forth herein, the Purchaser agrees
to purchase the Warrants from the Company on the Closing Date at the Purchase
Price.
2. Closing. The closing of the purchase and sale of the Warrants shall take
-------
place at 10:00 a.m., New York City Time, on August 31, 1998 as coordinated by
Snow Becker Krauss P.C., the Company's counsel, or on such other date or at such
other time and place as the Company and the Purchaser may agree upon (such time
and date of the closing being referred to herein as the "Closing Date"). Upon
------------
payment of the Purchase Price in full in immediately available funds by or on
behalf of the Purchaser to the Company by wire transfer to an account specified
by the Company to the Purchaser prior to the Closing Date, the Company will
promptly cause its Warrant Agent to deliver to the Purchaser on the Closing Date
certificates representing the Warrants in such denominations and registered in
such names as the Purchaser shall request.
3. Registration.
------------
(a) Within 30 days after the Closing Date, the Company will file a
new registration statement on Form S-3 (including all exhibits
thereto and all information and documents incorporated by reference
therein, the "Registration Statement") with the Securities and
Exchange Commission (the "Commission"), to effect a continuous
offering of the shares of Common Stock underlying the Warrants (the
"Warrant Shares") and any other securities of the Company
(collectively, the "Shares"), held by the Purchaser (and by holders
of such other shares of Common Stock as the
<PAGE>
Company may determine in its discretion) pursuant to Rule 415 under
the Securities Act of 1933, as amended (the "Act"), providing for
sales of shares thereunder to be effected through normal broker
transactions, through market makers in the Common Stock, in
privately negotiated transactions or any combination thereof. The
Company will use its commercially reasonable best efforts to cause
the Registration Statement to be declared effective by the
Commission within 90 days after the Closing Date to remain effective
under the Act for a period through the second anniversary of the
Closing Date, (or the earlier of the date when all of the Shares
have been sold or withdrawn from registration by the Purchaser) (the
"Registration Period") provided that such two-year period will be
extended by the aggregate number of days during which the Purchaser
is prevented from selling Shares as a result of Section 3(b) or 3(c)
below, subject to the restrictions imposed on the Purchaser from
selling Shares during the Registration Period under this Section
3(a) or under Section 3(b) or 3(c) below. From the Closing Date
through the Registration Period, the Purchaser will not sell any
Shares pursuant to the Registration Statement unless, at the time of
sale, the Registration Statement (and the most recently filed post-
effective amendment thereto, if any) has been declared effective by
the Commission and no stop orders are in force or pending with
respect thereto, if Purchaser has been so advised by the Company.
(b) During the Registration Period if the Company shall notify the
Purchaser's counsel in writing that in its discretionary judgment
(i) due to a change in circumstances, a pending transaction or
otherwise, the Registration Statement as then in effect may contain
an untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the
statements therein not misleading in light of the circumstances in
which they were made and (ii) the public disclosure required to
correct such potential material misstatement or omission would be
injurious or detrimental to the Company (financially or otherwise),
then the Purchaser will refrain from selling any Shares pursuant to
the Registration Statement or otherwise for the period of time, not
to exceed 45 days in each instance, requested by the Company. The
Company will use its commercially reasonable efforts to minimize the
time period during which the Purchaser is required to refrain from
selling Shares under this paragraph and will advise the Purchaser
promptly when such restrictions are no longer in effect.
(c) If, during the Registration Period, the Company advises the
Purchaser's counsel on a confidential basis that it intends to
commence an underwritten public offering of its Common Stock on its
own behalf then
-2-
<PAGE>
(in addition to any other restrictions on sale of the Shares under
this Agreement or the federal laws then applicable to the Purchaser)
the Purchaser will refrain from selling Shares pursuant to the
Registration Statement or otherwise for a period of time beginning
ten business days before the anticipated effective date with the
Commission of the Company's underwritten public offering (as
disclosed by the Company or its underwriters to the Purchaser) and
ending 90 days after such effective date. The limitations on sale of
this Section 3.(c). shall only be applicable to the first such
-------------
underwritten public offering undertaken by the Company.
(d) During the Registration Period, if Purchaser desires to sell any
Shares pursuant to the Registration Statement, the Purchaser shall
advise the Chief Executive Officer of the Company in writing at
least three business days prior to the filing of the Registration
Statement of the name of the person or entity for whose account the
Shares will be offered and sold, the number of shares of Common
Stock owned by such selling person or entity prior to the
consummation of the proposed offering, the number of Shares to be
offered for such selling person's or entity's account and the number
of shares of Common Stock and (if one percent or more) the
percentage of the class to be owned by such selling person or entity
after completion of the offering, as well as any other related
information required under the Act or the rules and regulations
thereunder so as to enable such offer and sale to be made pursuant
to the Registration Statement and sales of such Shares by the
Purchaser must be made by Purchaser in accordance with the
Registration Statement, as supplemented or amended. The Company will
then promptly prepare any required supplement to the prospectus
constituting a part of the Registration Statement containing the
information described above and any other required information which
will be furnished to the relevant holder, for use in connection with
any such offer and sale. The Purchaser will otherwise promptly
furnish to the Company, at the Company's reasonable request, such
other information as is required in connection with the preparation
of the Registration Statement and any supplement required with
respect to the prospectus constituting a part thereof and will
cooperate fully with the reasonable requests of the Company, any
underwriter or any broker-dealer in respect of such sale.
(e) Promptly after the Closing Date, the Company shall take all
requisite action to list the Warrant Shares for trading on The
Nasdaq National Market and shall take such other action it deems
appropriate under the Act and any applicable state securities laws
to claim an exemption from the registration requirements thereof for
the issuance of the Warrant Shares hereunder.
-3-
<PAGE>
(f) the Company has not provided and will not provide the Purchaser,
except upon the Purchaser's request, with any notice or information
from the Company hereunder respecting any contemplated or pending
underwritten public offering of Common Stock or of any
circumstances, pending transactions or other matters which may cause
the Registration Statement as then in effect to contain an untrue
statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements
therein not misleading in light of the circumstances in which they
were made, and in such event until advised by the Company, the
Purchaser shall strictly maintain the confidentiality of such
information and shall make no public disclosures or comments with
respect thereto, and shall not otherwise trade in any securities of
the Company until such offering is effected or information is
otherwise publicly disclosed by the Company, but in any event for
not longer than 30 days in the aggregate from when disclosed to the
Purchaser.
(g) The Company will bear all reasonable and customary expenses
arising or incurred by it in connection with any registration under
the Act of the Shares hereunder, including without limitation,
registration fees, printing expenses and the Company's accounting
and legal fees and expenses; provided that the Purchaser will bear
the expense of any underwriting or brokerage fees, discounts or
commissions applicable to its sale of the Warrant Shares and the
fees and expenses of any separate legal counsel or accounting firm
engaged by the Purchaser.
(h) The Company agrees to indemnify and hold harmless the Purchaser,
each person, if any, who controls the Purchaser within the meaning
of Section 15 of the Act and each officer, director, employee and
agent of the Purchaser and of any such controlling person against
any and all liabilities, claims, damages or expenses and will
reimburse the Purchaser for its reasonable legal and other expenses
(including the reasonable cost of any investigation and preparation,
and including the reasonable fees and expenses of counsel) incurred,
arising out of (i) a misstatement of a material fact or omission to
state a material fact required to be stated in or necessary to make
the statements therein not misleading in light of the circumstances
in which they were made in the Registration Statement described in
Section 3(a) above, or any final Prospectus contained in such
------------
Registration Statement, as supplemental or amended, as the case may
be, unless the Purchaser was notified by the Company to refrain from
selling any Shares pursuant to the Registration Statement as set
forth in Section 3(b) above; or (ii) the Registration
------------
Statement or Prospectus, as supplemented or amended, not being in
compliance with the Federal and applicable State securities laws, in
all material respects.
-4-
<PAGE>
The Company agrees that if any indemnification sought pursuant to
this Section 3(h) were for any reason not to be available to the
---- ------------
Purchaser or insufficient to hold it harmless as and to the extent
contemplated by this Section, then the Company shall contribute to
the amount paid or payable by such Purchaser in respect of losses,
claims, damages and liabilities in such proportion as is appropriate
to reflect the relative faults of such parties as well as any other
equitable considerations.
4. Representations and Warranties of the Company. The Company represents and
---------------------------------------------
warrants, as of the date hereof and as of the Closing Date, as follows:
(a) no consent, approval, authorization or order of any court,
governmental agency or body or arbitrator having jurisdiction over
the Company or any of the Company's affiliates is required for the
execution of this Agreement or the sale of the Warrants to the
Purchaser;
(b) neither the sale of the Warrants nor the performance of the
Company's other obligations pursuant to this Agreement will violate,
conflict with, result in a breach of, or constitute a default (or an
event that, with the giving of notice or the lapse of time or both,
would constitute a default) under (i) the Certificates of
Incorporation or bylaws of the Company; (ii) any decree, judgment,
order or determination of any court, governmental agency or body, or
arbitrator having jurisdiction over the Company or any of the
Company's properties or assets; (iii) any law, treaty, rule or
regulation applicable to the Company (other than the federal
securities laws, representations and warranties with respect to
which are made by the Company solely in paragraphs (e) through (h)
of this Section 4), or the requirements of the Nasdaq Stock Market);
or (iv) the terms of any bond, debenture, note or other evidence of
indebtedness, or any agreement, stock option or similar plan by
which the Company is bound or to which any property of the Company
is subject, in any event above, which violation, conflict or breach
would have a material adverse effect on the Company;
(c) the Company has taken all corporate action required to authorize
the execution and delivery of this Agreement and the performance of
its obligations hereunder;
(d) the Company has duly authorized the issuance of the Warrants
and, when issued and delivered to and paid for by the Purchaser in
accordance with the terms hereof, the Warrants will be duly and
validly issued, fully paid and non-assessable; the Shares underlying
the Warrants when issued
-5-
<PAGE>
and paid for will also be duly and validly issued, fully paid and
non-assessable and the issuance of the Warrant Shares to the
Purchaser will not be subject to any preemptive or similar rights;
(e) based in substantial part on Purchaser's representations and
warranties below and the provisions in Paragraph 5, the sale of the
Warrants by the Company to Purchaser hereunder is not part of a plan
or scheme to evade the registration requirements of the Act;
(f) neither the Company or, to its knowledge, any person acting on
behalf of the Company has offered or sold any of the Warrants by any
form of general solicitation or general advertising;
(g) the Company has offered the Warrants for sale only to
"accredited investors," as such term is defined in Rule 501(a) under
the Act, who by reason or their business and financial experience
have such knowledge, sophistication and experience in business and
financial matters as to be capable of evaluating the merits and
risks of the investment in the Warrants.
(h) the Company's Prospectus dated August 14, 1998, included in the
Company's Registration Statement on Form S-3 (Registration No. 333-
61127 attached hereto as Exhibit "A"); the Company's Annual Report
on Form 10-KSB (as amended) for its Fiscal Year Ended June 30, 1997;
the Company's proxy statement dated January 20, 1998 for its Annual
Meeting held on February 23, 1998; the Company's Quarterly Reports
on Form 10-Q for the fiscal quarters ended March 31, 1996 (as
amended), September 30, 1997 (as amended), December 31, 1997 (as
amended) and March 31, 1998 (as amended); the Company's Current
Reports on Form 8-K for October 30, 1996 (as amended), May 15, 1997
(as amended), June 18, 1997, August 22, 1997 (as amended), October
22, 1997, December 1, 1997, January 6, 1998 (as amended), January 9,
1998 (as amended), January 26, 1998 (as amended), March 31, 1998,
April 8, 1998, May 26, 1998, June 23, 1998 and August 11, 1998
(collectively, the "Disclosure Documents") have been delivered to
Purchaser and, as of the date of each such respective document
included therein and when considered together and with this
Agreement (and any similar agreements being executed by the
Company), such "Disclosure Documents" do not contain any untrue
--------------------
statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements
therein not misleading in light of the circumstances in which they
were made with respect to the Company;
-6-
<PAGE>
(i) the Company's Financial Statements for the year ended June 30,
1997, as amended, included in the Disclosure Documents comply in all
material respects with the applicable requirements of the Securities
Exchange Act of 1934, as amended, and have been prepared, and fairly
present in all material respects the consolidated financial
condition, results of operations and cash flows of the Company and
its subsidiaries at the respective dates and for the respective
periods indicated, in accordance with generally accepted accounting
principles consistently applied throughout such periods (except as
noted therein) and will not be restated any time within the 120-day
period following the Closing Date, if ever except for a change in
the law or generally accepted accounting principles ("GAAP");
(j) except as set forth in the Disclosure Documents or pursuant to
this Agreement (or any similar agreements being executed by the
Company) since March 31, 1998 (i) the Company has not incurred any
material liabilities, direct or contingent except in the ordinary
course of business and additional borrowings and increases under the
revolving lines of credit of the Company and its subsidiaries, those
liabilities incurred in connection with the acquisitions consummated
by the Company since March 31, 1998, and borrowings under a
revolving credit facility (the Loan and Security Agreement dated
June 23, 1998, as amended) with BankAmerica Business Credit Inc., as
agent, and Deutsche Services Finances Corporation as administrative
agent and a bridge loan obtained from Deutsche Bank A.G. New York
Branch on July 3, 1998, and (ii) there has been no material adverse
change in the properties, business, results of operations or
financial condition of the Company; and
(k) as of August 7, 1998 (and without giving effect to the sale of
Shares of Common Stock hereunder), the Company had a total of
37,424,477 shares of Common Stock issued and outstanding;
approximately 7,630,000 shares of Common Stock were reserved for
issuance pursuant to existing stock options under the Company's
current stock option plans or outside of the plans and approximately
an additional 3,743,000 shares were issuable upon exercise of
options available for future grant; 400,000 shares of Common Stock
were reserved for issuance upon grant of Shares under the Bonus
Plan, and 586,500 shares were reserved for issuance pursuant to
exercise of outstanding Warrants.
5. Representations and Warranties of the Purchaser. The Purchaser represents
-----------------------------------------------
and warrants that:
-7-
<PAGE>
(a) the purchase of the Warrants by the Purchaser is not part of a
plan or scheme to evade the registration requirements of the Act;
(b) the Purchaser is an "accredited investor," as such term is
defined in Rule 501(a) under the Act, who by reason of its business
and financial experience has such knowledge, sophistication and
experience in business and financial matters as to be fully capable
of evaluating the merits and risks of an investment in the Warrants
and, having had access to or having been furnished prior to the
Closing Date with all such information as it has considered
necessary (including, without limitation, the Disclosure Documents),
has concluded that it fully understands and is able to bear to those
risks;
(c) the Purchaser is purchasing the Warrants for its own account or
an account with respect to which it exercises sole investment
discretion and that it and any such account is a "qualified
institutional buyer" (as defined in Rule 144A promulgated under the
Securities Act ("QIB") although the sale of the Warrants is not
being made pursuant to Rule 144A), or an institutional accredited
investor (as defined in Rule 501(a)(1), (2), (3) or (7) of
Regulation D under the Securities Act);
(d) the Purchaser understands that the Warrants and underlying
Warrant Shares constitute "restricted securities" within the meaning
of Rule 144 under the Act and may not be sold, pledged or otherwise
disposed of unless they are subsequently registered under the Act
and applicable state securities laws or unless an exemption from
registration thereunder is available and that a restrictive transfer
legend will be placed on the certificates for the Warrants and
underlying Warrant Shares and stop transfer orders with respect
thereto will be provided to the Company's transfer agent for the
Company's Common Stock and Warrants with substantially the following
legend:
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "ACT"), OR ANY APPLICABLE STATE SECURITIES LAWS AND MAY NOT BE
OFFERED OR SOLD UNLESS THE SECURITIES ARE REGISTERED UNDER THE ACT OR ANY
APPLICABLE STATE SECURITIES LAWS, OR AN EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF THE ACT OR ANY APPLICABLE STATE SECURITIES LAWS IS AVAILABLE.
(e) in making any subsequent offering or sales of the Warrants and
underlying Warrant Shares the Purchaser will be acting only for
itself and
-8-
<PAGE>
not as part of a sale or planned distribution in violation of the
Act or any applicable state securities laws;
(f) the Warrants were not offered to the Purchaser by any form of
general solicitation or general advertising;
(g) the Purchaser understands that no federal or state or other
governmental agency has passed upon or made any recommendation or
endorsement with respect to the Warrants;
(h) the Purchaser is purchasing the Warrants or underlying Warrant
Shares not with a view to, or for sale in connection with, any
distribution of such securities in violation of the Act or any
applicable state securities laws;
(i) the Purchaser shall not resell or otherwise transfer such
Warrants or underlying Warrant Shares within two years after the
original issuance of such securities except (i) to the Company or any
subsidiary thereof, (ii) pursuant to an exemption from registration
provided by Rule 144 promulgated under the Securities Act (if
available) or any other exemption available, or (iii) pursuant to an
effective registration statement under the Securities Act;
(j) no consent, approval, authorization or order of any court,
government agency or body or arbitrator having jurisdiction over the
Purchaser or any of the Purchaser's affiliates is required for the
execution of this Agreement, or the performance of the Purchaser's
obligations hereunder, including, without limitation, the purchase of
the Warrants by the Purchaser; and
(k) the Purchaser has or, prior to the Closing Date, will have taken
all corporate action required to authorize the execution and delivery
of this Agreement and the performance of its obligation hereunder.
6. Conditions of Closing. The obligations of each party hereunder shall be
---------------------
subject to (a) the accuracy in all material respects of the representations and
warranties of the other party hereto as of the date hereof and as of the Closing
Date, as if such representations and warranties had been made again on and as of
the Closing Date and (b) the performance in all material respects by the other
party of its obligations hereunder which must be performed prior to the Closing
Date.
-9-
<PAGE>
7. Indemnification.
---------------
(a) The Company agrees to indemnify and hold harmless the Purchaser,
each person, if any, who controls the Purchaser within the meaning of
Section 15 of the Act and each officer, director, employee and agent
of the Purchaser and of any such controlling person against any and
all liabilities, claims, damages or expenses whatsoever, as incurred
arising out of any representation, warranty, covenant or undertaking
by the Company contained in this Agreement, and the Company will
reimburse the Purchaser for its reasonable legal and other expenses
(including the reasonable cost of any investigation and preparation,
and including the reasonable fees and expenses of counsel) incurred in
connection therewith.
(b) The Purchaser agrees to indemnify and hold harmless the Company,
each person, if any, who controls the Company within the meaning of
Section 15 of the Act and each officer, director, employee and agent
of the Company and of any such controlling person against any and all
losses, liabilities, claims, damages or expenses whatsoever, as
incurred arising out of or resulting from any breach or alleged breach
or other violation or alleged violation of any representation,
warranty, covenant or undertaking by the Purchaser contained in this
Agreement, and the Purchaser will reimburse the Company for its
reasonable legal and other expenses (including the reasonable cost of
any investigation and preparation, and including the reasonable fees
and expenses of counsel) incurred in connection therewith.
8. Survival of Representations and Warranties. The respective agreements,
------------------------------------------
representations, warranties, indemnities and other statements made by or on
behalf of each party hereto pursuant to this Agreement, as of the date they were
made, shall survive until the termination of the Registration Period.
9. Miscellaneous.
-------------
(a) This Agreement may he executed in one or more counterparts and
such counterparts shall constitute but one and the same agreement and
authorized signatures may be evidenced to the other party by
facsimile copies thereof; provided that the originally signed
signature page of any party is provided to the other party within two
business days after original execution.
(b) This Agreement shall inure to the benefit of and be binding upon
the parties hereto. This Agreement shall not be assignable by any
party hereto without the prior written consent of the other party
hereto and no
-10-
<PAGE>
other person shall have any right or obligation hereunder. Without
limiting the foregoing, the rights of Purchaser set forth in
Paragraph 2 shall not be transferable to subsequent purchasers of the
Warrants. Any assignment contrary to the terms hereof shall be null
and void and of no force or effect.
(c) This Agreement obtains the entire agreement between the parties
with respect to the subject matter hereof and supersedes any prior
agreements or understandings, whether written or oral, between the
parties respecting such subject matter.
10. Governing Law. This Agreement shall be governed by the internal laws of
-------------
the State of Nevada.
[Signature Page Follows]
-11-
<PAGE>
IN WITNESS WHEREOF, the parties have entered into this Agreement as of the
date first set forth above.
AGRIBIOTECH, INC.
By:
_________________________________________
Johnny R. Thomas, Chief Executive Officer
____________________________________
By: __________________________
Name: ________________________
Title: _______________________
-12-
<PAGE>
Exhibit 4.2
THE SECURITIES EVIDENCED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED. (THE "ACT") OR ANY APPLICABLE STATE SECURITIES LAWS
AND THE SECURITIES MAY NOT BE OFFERED OR SOLD, UNLESS THE SECURITIES ARE
REGISTERED UNDER THE ACT OR ANY APPLICABLE STATE SECURITIES LAWS, OR AN
EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE ACT OR ANY APPLICABLE STATES
SECURITIES LAWS IS AVAILABLE.
Warrant to Purchase _______ Shares of Common Stock
WARRANT TO PURCHASE SHARES OF COMMON STOCK
OF
AGRIBIOTECH, INC.
This is to certify that, FOR VALUE RECEIVED, ______________________________
______________________________ ("Holder") having an office
________________________ __________________, Attn: __________________, is
entitled to purchase, subject to the provisions of this Warrant, from
AgriBioTech, Inc., a Nevada corporation (the "Company"),
______________________________________ (_______) fully paid, validly issued and
non-assessable shares of Common Stock (the "Common Stock"), par value $.001 per
share, of the Company at any time or from time to time for three years from the
date hereof until 5:00 PM. Pacific Time, on August 27, 2001, at a price of
$12.00 per share. This Warrant was sold on this date by the Company to the
Holder at a cost of $2.00 per Warrant.
The number of shares of Common Stock to be received upon the exercise of
this Warrant and the price to be paid for each share of Common Stock may be
adjusted from time to time as hereinafter set forth. The shares of Common
Stock deliverable upon such exercise, and as
<PAGE>
adjusted from time to time, are hereinafter sometimes referred to as "Warrant
Shares" and the exercise price of a share of Common Stock in effect at any time
and as adjusted from time to time is hereinafter sometimes referred to as the
"Exercise Price."
(a) EXERCISE OF WARRANT. This Warrant may be exercised in whole or in part
-------------------
(but no partial exercise shall be for less than ten thousand (10,000) Warrant
Shares) at any time or from time to time on or after the date hereof and until
August 27, 2001; provided, however, that if such day is a day on which banking
institutions in the State of Nevada are authorized by law to close, then this
Warrant may be exercised on the next succeeding day which shall not be such a
day. This Warrant may be exercised by presentation and surrender hereof to the
Company at its principal office or to the Company's warrant agent, if any has
been so appointed, with the Purchase Form annexed hereto duly executed and
accompanied by payment of the Exercise Price, in cash or by certified or bank
cashier's check, for the number of Warrant Shares specified in such form. As
soon as practicable after each such exercise of the Warrants, the Company shall
issue or cause to be issued and delivered to the Holder a certificate or
certificates for the Warrant Shares issuable upon such exercise, registered in
the name of the Holder. The Warrant shall be deemed to have been exercised
immediately prior to the close of business on the date of any such exercise,
provided such exercise is in accordance with the provisions set forth herein.
If this Warrant should be exercised in part only, the Company shall, upon
surrender of this Warrant for cancellation, execute and deliver a new Warrant
evidencing the rights of the Holder thereof to purchase the balance of the
Warrant Shares purchasable thereunder in such denominations requested by the
Holder, but not to purchase less than 10,000 Warrant Shares. Upon receipt by
the Company of this Warrant at its office in proper form for exercise, the
Holder shall be deemed
-2-
<PAGE>
to be the holder of record of the shares of Common Stock issuable upon such
exercise, notwithstanding that the stock transfer books of the Company shall
then be closed or that certificates representing such shares of Common Stock
shall not then be physically delivered to the Holder.
Notwithstanding the foregoing, commencing ninety (90) days from the date
hereof, if, and only if, at the time of exercise of this Warrant, the Warrant
Shares are not saleable pursuant to an effective registration statement, then in
addition to the exercise of all or a part of this Warrant by payment of the
Exercise Price in cash as provided above, and in lieu of such payment, the
Holder shall have the right at any time and from time to time as provided above
to exercise this Warrant in whole or in part by surrendering this Warrant in
exchange for the number of shares of Common Stock equal to the product of (x)
the number of shares as to which this Warrant is being exercised multiplied by
(y) a fraction the numerator of which is the current market value of the Common
Stock less the Exercise Price then in effect and the denominator of which is the
current market value (in each case adjusted for fractional shares as herein
provided).
(b) RESERVATION OF SHARES. The Company shall at all times reserve for
----------------------
issuance and/or delivery upon exercise of this Warrant such number of shares of
its Common Stock as shall be required for issuance and delivery upon exercise of
this Warrant.
(c) FRACTIONAL SHARES. No fractional shares or script representing
-----------------
fractional shares shall be issued upon the exercise of this Warrant. No
adjustment shall be made in respect of cash dividends on Warrant Shares
delivered upon exercise of any Warrant. With respect to any fraction of a share
called for upon exercise hereof, the Company shall pay to the Holder an amount
in cash equal to such fraction multiplied by the average closing bid and asked
prices of the
-3-
<PAGE>
Common Stock on the last available date for which quotations are available
immediately preceding the date of exercise of this Warrant, or if the bid and
asked prices are not so reported, then the current market value shall be an
amount, not less than the book value thereof as at the end of the most recent
fiscal year of the Company ending prior to the date of the exercise of the
Warrant, determined in such reasonable manner as may be prescribed by the Board
of Directors of the Company.
(d) EXCHANGE OR LOSS OF WARRANT. This Warrant is exchangeable, without
---------------------------
expense, at the option of the Holder, upon presentation and surrender hereof to
the Company for other Warrants of different denominations entitling the holder
thereof to purchase in the aggregate the same number of shares of Common Stock
purchasable hereunder. This Warrant may be divided or combined with other
Warrants which carry the same rights upon presentation hereof at the principal
office of the Company with a written notice specifying the denominations in
which new Warrants are to be issued and signed by the Holder hereof. The term
"Warrant" as used herein includes any Warrants into which this Warrant may be
divided or exchanged. Upon receipt by the Company or its warrant agent, if
any, of evidence satisfactory to it of the loss, theft, destruction or
mutilation of this Warrant, and (in the case of loss, theft or destruction) of
reasonably satisfactory indemnification, and upon surrender and cancellation of
this Warrant, if mutilated, the Company will execute and deliver a new Warrant
of like tenor and date.
(e) RIGHTS OF THE HOLDER. The Holder shall not, by virtue hereof, be
--------------------
entitled to any rights of a stockholder in the Company, either at law or equity,
and the rights of the Holder are limited to those expressed in the Warrant and
are not enforceable against the Company except to the extent set forth herein
and in any warrant agreement entered into by and between the
-4-
<PAGE>
Company and a warrant agent with respect to the Warrants. In the event the
Company enters into a warrant agreement with a warrant agent, the terms of the
Warrant shall be embodied in the warrant agreement; and the acceptance of this
Warrant by the Holder shall be deemed consent by the Holder for the Company to
enter into any such warrant agreement, upon such terms and conditions mutually
agreeable between the Company and any such warrant agent, provided such warrant
agreement does not adversely affect any of the rights of the Holder, as set
forth in this Warrant.
(f) ANTI-DILUTION PROVISIONS. After each adjustment of the Exercise Price
------------------------
pursuant to this Section (f), the number of shares of Common Stock purchasable
upon the exercise of the Warrant shall be the number of Warrant Shares
receivable upon exercise thereof prior to such adjustment multiplied by a
fraction the numerator of which shall be the original Exercise Price as defined
above and the denominator of which shall be such adjusted Exercise Price. The
Exercise Price shall be subject to adjustment as set forth below:
(i) In the event that the Company shall hereafter (A) pay a dividend
or make a distribution on its Common Stock in shares of its capital stock
(whether shares of Common Stock or of capital stock of any other class), (B)
subdivide its outstanding shares of Common Stock, (C) combine its outstanding
shares of Common Stock into a smaller number of shares, or (D) issue by
reclassification of its shares of Common Stock any shares of capital stock of
the Company, the Exercise Price in effect immediately prior to such action shall
be adjusted so that the Holder of any Warrant thereafter exercised shall be
entitled to receive the number of shares of capital stock of the Company which
the Holder would have owned immediately following such action had such Warrant
been exercised immediately prior thereto. An adjustment made pursuant
-5-
<PAGE>
to this subsection shall become effective immediately after the record date in
the case of a dividend and shall become effective immediately after the
effective date in the case of a subdivision, combination or reclassification.
(ii) No adjustment in the Exercise Price shall be required to be made
unless such adjustment would require an increase or decrease of at least $.10;
provided, however, that any adjustments which by reason of this subsection are
not required to be made shall be carried forward and taken into account in any
subsequent adjustment. All calculations under this Section (f) shall be made to
the nearest cent or to the nearest one-one hundredth of a share, as the case may
be, but in no event shall the Company be obligated to issue fractional shares
upon the exercise of any Warrant.
(iii) No adjustment of the Exercise Price shall be made except on
the conditions set forth in this Section (f). Without limitation to the
foregoing, there shall be no adjustment pursuant to this Section (f) should the
Company issue any capital stock for cash or other consideration on terms
approved by the Board of Directors.
(iv) In the event of any change of outstanding shares of Common Stock
issuable upon exercise of the Warrants (other than a change in par value or from
par value to no par value or from no par value to par value or as a result of a
subdivision or combination), or in case of any consolidation or merger of the
Company with or into another corporation (other than a merger with a Subsidiary
in which merger the Company is the continuing corporation and which does not
result in any reclassification or change of the then outstanding shares of
Common Stock or other capital stock issuable upon exercise of the Warrants other
than a change in par value or from par value to no par value or from no par
value to par value) or in the case of any sale or
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<PAGE>
conveyance to another corporation of the property of the Company as an entirety
or substantially as an entirety, then, as a condition of such change,
consolidation, merger, sale or conveyance, the Company, or such successor or
purchasing corporation, as the case may be, shall make lawful and adequate
provision whereby the Holder of the Warrants shall have the right thereafter to
receive on exercise of such Warrant the kind and amount of shares of stock and
other securities and property receivable upon such reclassification, change,
consolidation, merger, sale or conveyance by a holder of the number of shares of
Common Stock issuable upon exercise of such Warrant immediately prior to such
change, consolidation, merger, sale or conveyance. Such provisions shall include
provision for adjustments which shall be as nearly equivalent as may be
practicable to the adjustments provided elsewhere in this Section (f). The above
provisions of this Section (f) shall similarly apply to successive
consolidations, mergers, sales or conveyances.
(v) Before taking any action which would cause an adjustment reducing
the Exercise Price below the then par value of the shares of Common Stock
issuable upon exercise of the Warrants, the Company will take any corporate
action which may, in the opinion of its counsel, be necessary in order that the
Company may validly and legally issue fully paid and non-assessable shares of
the Company at such adjusted Exercise Price.
(g) REGISTRATION RIGHTS. Section 3, with the heading "Registration," of
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the Securities Purchase Agreement executed on the date hereof pursuant to which
this Warrant was issued is incorporated here in by reference and shall govern
the registration of the Warrant Shares.
(h) TRANSFERABILITY; INVESTMENT REPRESENTATION. This Warrant shall be
------------------------------------------
fully transferrable, except as provided herein. No transfer may take place in
violation of any securities laws or regulations. By accepting this Warrant, the
Holder acknowledges that it is
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being taken for his own account as principal, for investment purposes only, and
not with a view to, or for, resale (except to or with the Company's consent),
distribution or fractionalization thereof, in whole or in part, and no other
person has a direct or indirect beneficial interest in such Warrant and such
Warrant may only be transferred, subject to compliance with the legend set forth
on the first page. Unless the shares issuable upon the exercise of this Warrant
are registered under the Securities Act of 1933, as amended (the "Act"), the
Holder, upon exercise of this Warrant will be required to provide the Company
with an investment letter and the certificates representing such shares will
contain a legend to the effect that the Holder may not transfer, sell, pledge or
hypothecate such shares unless the registration provisions of the Act have been
complied with and unless the Company has received an opinion of counsel that
such registration is not required.
(i) MANDATORY CONVERSION. This Warrant shall be automatically converted by
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the Company into Common Stock, if it has not previously been exercised, upon
five (5) business days prior written notice (the sixth business day being the
"Conversion Date") to the Holder of the Company's intent to exercise the right
of mandatory conversion, provided that the Closing sale price of the Company's
Common Stock has closed at or above $19.50 per share for twenty (20) trading
days out of any thirty (30) consecutive trading day period, ending within
fifteen (15) calender days of the Company's mailing of the notice of conversion.
The Warrant Shares shall be delivered to the Holder of converted Warrants
within five (5) business days after the Conversion Date specified in the notice
of such conversion to such Holder; provided, however, that the Company shall not
be obligated to deliver any Warrant Shares unless either the Warrants are
delivered to the Company or its Warrant agent as provided in Section (a),
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or the Holder notifies the Company or the Warrant Agent that such certificates
have been lost, stolen or destroyed and executes an agreement satisfactory to
the Company to indemnify the Company from any loss incurred by it in connection
with such certificates.
In the event that neither the Warrants are delivered to the Company or its
Warrant Agent or a satisfactory indemnity is not delivered to the Company as set
forth in the preceding sentence prior to the Conversion Date, the Holder's right
to convert this Warrant shall terminate and be null and void and the Company
shall have the right to have this Warrant transferred on its transfer books to a
standby purchaser who shall be entitled to exercise same. The transfer shall be
deemed to have occurred simultaneous with the Conversion Date.
(j) NOTICES. All notices and other communications which are required or
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may be given under this Warrant shall be in writing and shall be deemed to have
been duly given when delivered in person or transmitted by facsimile, one (1)
day after being sent by overnight courier service or three (3) days after being
mailed, postage prepaid, in the case of the Company to 120 Corporate Park Drive,
Henderson, Nevada 89014, and in the case of the Holder to the address set forth
herein, or to such other address as such party shall have specified by notice to
the other party hereto. If notice is given by registered or certified first
class mail, postage prepaid, return receipt requested, the return receipt shall
be conclusive evidence of the notice having been mailed on the date set forth.
(k) MISCELLANEOUS. This Agreement contains the entire Agreement and
--------------
supersedes all prior agreements and understandings, oral or written, between the
parties hereto with respect to the subject matter hereof. This Warrant may not
be changed orally, but only by an agreement in writing signed by the party
against whom any waiver, change, amendment,
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<PAGE>
modification or discharge is sought, provided, however, that this Warrant may be
amended or modified without the consent of the Holder if such amendment or
modification does not adversely affect the rights of the Holder hereunder. This
Agreement will not be assigned by either party hereto and shall be interpreted
under the laws of the State of Nevada without application to the principles of
conflicts of laws.
[Remainder of this page intentionally left blank.]
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<PAGE>
AGRIBIOTECH, INC.
By:
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Johnny R. Thomas
Chief Executive Officer
ATTEST:
__________________________
Elliot H. Lutzker
Dated: August 28, 1998
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<PAGE>
PURCHASE FORM
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Dated _______________, 19__
The undersigned hereby irrevocably elects to exercise the within Warrant to
the extent of purchasing ____________shares of Common Stock and hereby makes
payment of ______________________________ in payment of the actual exercise
price thereof.
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INSTRUCTIONS FOR REGISTRATION OF STOCK
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Name
----------------------------------------------------------------------------
(Please typewrite or print in block letters)
Address
-------------------------------------------------------------------------
Social Security No. TIN number
---------------------------------
Signature
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