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EXHIBIT 2(e)(ii)
[EXECUTION COPY]
CANADIAN ASSET PURCHASE AGREEMENT
DATED AS OF MARCH 29, 2000
BY AND AMONG
THE NU-GRO CORPORATION
("BUYER")
AND
THE SCOTTS COMPANY
AND
OMS INVESTMENTS, INC.
("SELLERS")
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INDEX
TO
ASSET PURCHASE AGREEMENT
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ARTICLE I -DEFINITIONS............................................................................................1
SECTION 1.01. TERMS...........................................................................................1
SECTION 1.02. ADDITIONAL TERMS.................................................................................6
ARTICLE II - PURCHASE AND SALE OF ASSETS..........................................................................7
SECTION 2.01. PROTURF ASSETS..................................................................................7
SECTION 2.02. EXCLUDED ASSETS.................................................................................8
SECTION 2.03. CONSIDERATION...................................................................................9
SECTION 2.04. BOOK VALUE OF INVENTORY.........................................................................9
SECTION 2.05. CLOSING........................................................................................10
SECTION 2.06. PRORATIONS.....................................................................................12
SECTION 2.07. ASSUMED LIABILITIES............................................................................12
SECTION 2.08. EXCLUDED LIABILITIES...........................................................................12
SECTION 2.09. ASSIGNMENT OF CONTRACTS AND RIGHTS.............................................................13
ARTICLE III - REPRESENTATIONS AND WARRANTIES OF SELLERS..........................................................13
SECTION 3.01. CORPORATE EXISTENCE AND POWER..................................................................13
SECTION 3.02. CORPORATE AUTHORITY............................................................................14
SECTION 3.03. CONSENTS AND APPROVALS; NO VIOLATIONS..........................................................14
SECTION 3.04. GOVERNMENTAL AUTHORIZATION.....................................................................15
SECTION 3.05. COMPLIANCE WITH LAWS...........................................................................15
SECTION 3.06. THE CANADIAN PROTURF ASSETS....................................................................15
SECTION 3.07. CONTRACTS......................................................................................15
SECTION 3.08. INTELLECTUAL PROPERTY..........................................................................16
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SECTION 3.09. LEGAL PROCEEDINGS..............................................................................16
SECTION 3.10. LICENSES.......................................................................................16
SECTION 3.11. EMPLOYEE AND RELATED MATTERS...................................................................16
SECTION 3.12. EMPLOYMENT BENEFIT PLANS.......................................................................16
SECTION 3.13. INVENTORY......................................................................................17
SECTION 3.14. PRODUCTS.......................................................................................17
SECTION 3.15. FINDER'S FEES..................................................................................17
SECTION 3.16. REPRESENTATIONS................................................................................17
ARTICLE IV - REPRESENTATIONS AND WARRANTIES OF BUYER.............................................................17
SECTION 4.01. CORPORATE EXISTENCE AND POWER..................................................................17
SECTION 4.02. CORPORATE AUTHORITY............................................................................17
SECTION 4.03. CONSENTS AND APPROVALS; NO VIOLATIONS..........................................................18
SECTION 4.04. GOVERNMENTAL AUTHORIZATION.....................................................................18
SECTION 4.05. LEGAL PROCEEDINGS..............................................................................18
SECTION 4.06. FINDER'S FEES..................................................................................18
SECTION 4.07. FINANCING......................................................................................18
ARTICLE V - COVENANTS OF SELLERS.................................................................................19
SECTION 5.01. CONDUCT OF BUSINESS............................................................................19
SECTION 5.02. REQUIRED APPROVALS.............................................................................19
SECTION 5.03. ACCESS TO INFORMATION..........................................................................19
SECTION 5.04. NOTICES OF CERTAIN EVENTS......................................................................20
SECTION 5.05. NON-COMPETITION................................................................................20
SECTION 5.06. TRANSFER OF REGISTRATIONS......................................................................21
ARTICLE VI - COVENANTS OF BUYER..................................................................................21
SECTION 6.01. REQUIRED APPROVALS.............................................................................21
SECTION 6.02. NON-COMPETITION................................................................................21
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SECTION 6.03. CONFIDENTIALITY................................................................................22
ARTICLE VII - COVENANTS OF ALL PARTIES...........................................................................23
SECTION 7.01. WARRANTY DISCLAIMER............................................................................23
SECTION 7.02. EXPENSES.......................................................................................23
SECTION 7.03. FURTHER ASSURANCES.............................................................................23
SECTION 7.04. PUBLIC ANNOUNCEMENTS...........................................................................23
SECTION 7.05. COLLECTION OF ACCOUNTS RECEIVABLE..............................................................23
SECTION 7.06. INSURANCE......................................................................................24
SECTION 7.07. USE OF THE "SCOTTS" TRADEMARK..................................................................25
ARTICLE VIII - CONDITIONS TO CLOSING.............................................................................26
SECTION 8.01. CONDITIONS TO OBLIGATIONS OF ALL PARTIES.......................................................26
SECTION 8.02. CONDITIONS TO OBLIGATIONS OF BUYER.............................................................27
SECTION 8.03. CONDITIONS TO OBLIGATIONS OF SELLERS...........................................................27
ARTICLE IX - SURVIVAL; INDEMNIFICATION...........................................................................28
SECTION 9.01. SURVIVAL OF WARRANTIES; TERMINATION............................................................28
SECTION 9.02. INDEMNIFICATION................................................................................28
SECTION 9.03. PROCEDURES.....................................................................................29
ARTICLE X - TAX MATTERS..........................................................................................30
SECTION 10.01. TAX COOPERATION...............................................................................30
SECTION 10.02. ALLOCATION OF TAXES...........................................................................31
SECTION 10.03. SALES AND USE TAXES...........................................................................31
ARTICLE XI - LABOR AND EMPLOYMENT MATTERS........................................................................31
ARTICLE XII - TERMINATION........................................................................................32
SECTION 12.01. GROUNDS FOR TERMINATION.......................................................................32
SECTION 12.02. EFFECT OF TERMINATION.........................................................................32
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ARTICLE XIII - MISCELLANEOUS.....................................................................................32
SECTION 13.01. NOTICES.......................................................................................32
SECTION 13.02. ASSIGNMENT....................................................................................34
SECTION 13.03. NO THIRD PARTY BENEFICIARIES..................................................................34
SECTION 13.04. COUNTERPARTS; EFFECTIVENESS...................................................................34
SECTION 13.05 ENTIRE AGREEMENT..............................................................................34
SECTION 13.06. AMENDMENTS; NO WAIVERS........................................................................34
SECTION 13.07. BULK SALES LAWS...............................................................................35
SECTION 13.08. SEVERABILITY..................................................................................35
SECTION 13.09. GOVERNING LAW.................................................................................35
SECTION 13.10. CONSENT TO JURISDICTION.......................................................................35
SECTION 13.11. CAPTIONS; EXHIBITS............................................................................35
SCHEDULES AND EXHIBITS...........................................................................................38
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CANADIAN ASSET PURCHASE AGREEMENT
THIS AGREEMENT (the "Agreement"), is made and entered into as of March
29, 2000 by and among The Nu-Gro Corporation, a Canadian corporation (the
"Buyer"), The Scotts Company, an Ohio corporation ("Scotts"), and OMS
Investments, Inc., a Delaware corporation ("OMS" and, together with Scotts, the
"Sellers").
WITNESSETH:
WHEREAS, Sellers own and operate assets that are employed by Sellers in
the Canadian ProTurf Business (as defined below in Section 1.01);
WHEREAS, Sellers desire to sell to Buyer certain assets of the Canadian
ProTurf Business, and Buyer desires to purchase from Sellers certain assets of
the Canadian ProTurf Business;
WHEREAS, Sellers desire to license to Buyer certain Intellectual
Property Rights of the Canadian ProTurf Business for use in the Territory (as
defined in Section 1.01) pursuant to a separate License Agreement in the form
attached hereto as Exhibit A (the "Canadian ProTurf License Agreement");
WHEREAS, as of the date hereof, Sellers have entered into an agreement
with The Andersons, Inc., an Ohio corporation ("Andersons") and The Anderson
Agriservices, Inc. ("TAAI"), to sell to Andersons and TAAI certain assets of the
U.S. ProTurf Business (as defined in Section 1.01) (the "U.S. Asset Purchase
Agreement"); and
WHEREAS, as of the Closing Date, Sellers will enter into a license
agreement to license to TAAI certain trademarks and other Intellectual Property
Rights of the U.S. ProTurf Business for use in the United States (the "U.S.
ProTurf License Agreement").
NOW, THEREFORE, in consideration of the premises and of their mutual
agreements, covenants, representations and warranties set forth in this
Agreement, and for other good and valuable consideration received to the full
satisfaction of each of them, the parties hereto make the following agreement,
intending to be bound legally thereby:
ARTICLE I
DEFINITIONS
Section 1.01. TERMS. When used in this Agreement, the following terms
shall have the meanings specified in this Section 1.01; and the plural of any
such term means more than one thereof:
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"Accounting Date" means 11:59 p.m. (local time at Columbus, Ohio) on
the Closing Date.
"Business Day" means a day other than a Saturday or a Sunday on which
national banks in Columbus, Ohio, are open.
"Canadian ProTurf Business" means the business of selling Products in
Canada for the Canadian Professional Turf Market, including the sale of Products
directly or through distributors or agents to golf courses, sports fields,
municipal properties and professional lawn care service providers in the
Territory; PROVIDED, that the Canadian ProTurf Business specifically excludes
the sale of Products through Retail Channels in the Territory.
"Canadian License Agreements" means the Canadian ProTurf License
Agreement, the Canadian Poly-S(R) License Agreement, the Canadian Peters(R) and
Starter(R) License Agreement and the Canadian Patent License Agreement.
"Canadian Patent License Agreement" means that certain patent and
technology license agreement entered into as of the Closing Date in
substantially the form attached as Exhibit E hereto pursuant to which Sellers
shall grant Buyer (i) certain long-term limited rights (ownership or license) to
certain patents and patent applications and (ii) certain limited rights to the
proprietary technology processes, trade secrets and know-how relating primarily
to the U.S. ProTurf Business for the term of such agreement, after which point
such proprietary technology, processes, trade secrets and know-how shall be
transferred to Buyer for use in the Canadian Professional Turf Market in the
Territory.
"Canadian Peters(R) and Starter(R) License Agreement" means that
certain trademark license agreement entered into as of the Closing Date in the
form attached hereto as Exhibit D pursuant to which Sellers shall grant Buyer
certain long-term, limited rights to the "PETERS" and "STARTER" trademarks in
the Territory.
"Canadian Poly-S(R) License Agreement" means that certain license
agreement entered into as of the Closing Date in the form attached hereto as
Exhibit C pursuant to which Sellers shall grant Buyer certain long-term, limited
rights to use the "POLY-S" trademark and certain other trademarks in the
Territory.
"Canadian Professional Turf Market" means the market in the Territory
for the sale, marketing and/or distribution of fertilizer, pesticide,
combination fertilizer and pesticide and similar products and related services
intended for use by golf courses, sports fields, municipal properties and
professional lawn care service providers.
"Canadian Supply Agreement" means that certain Supply Agreement in the
form attached hereto as Exhibit B entered into as of the Closing Date between
Scotts and Buyer relating to the manufacture and supply of materials used in the
Canadian ProTurf Business.
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"Claim" means a claim, loss, damage (excluding consequential or special
damages), liability and legal or other expense (including, without limitation,
reasonable attorneys' fees, witnesses' fees, investigation fees, court
reporters' fees and other out-of-pocket expenses) arising as a result of, among
other things, any action, suit, demand, assessment, order, award, decree,
judgment, cost, fine, injunction, arbitration, mediation, adjudication, other
similar proceeding or penalty, to the extent not compensated by insurance
proceeds or by a third party.
"Claim Notice" means a notice specifying, in reasonable detail, (i) the
nature of a Claim, (ii) each applicable provision of this Agreement or other
instrument under which such Claim arises, and (iii) if then known, the amount of
such Claim or the method of computation thereof.
"Closing" means the closing of the sale and purchase of the Canadian
ProTurf Assets contemplated by this Agreement.
"Closing Date" means the date of the Closing.
"Environmental Laws" means the EPA and any and all other federal,
provincial and local statutes, laws, regulations, ordinances, rules, judgments,
orders, decrees, codes, injunctions, permits and governmental restrictions,
relating to human health, the environment or to emissions, discharges or
releases of pollutants, contaminants, Hazardous Substances or wastes into the
environment, including without limitation ambient air, surface water, ground
water or land, or otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport or handling of
pollutants, contaminants, Hazardous Substances or wastes or the clean-up or
other remediation thereof.
"Environmental Liability" means all liabilities of the Sellers, whether
vested or unvested, contingent or fixed, actual or potential, known or unknown,
which arise in connection with or relate to (A) a violation of any Environmental
Law arising out of operations of the Canadian ProTurf Business on or before the
Closing Date or (B) any Release of a Hazardous Substance occurring on or before
the Closing Date (whether or not disclosed or required to be disclosed pursuant
to any section of this Agreement); PROVIDED, that "Environmental Liabilities"
shall not include any liabilities which arise principally as a result of actions
taken by Buyer or the Canadian ProTurf Business after the Closing Date other
than any such action taken to address the liabilities specified in clauses (A)
or (B) above and undertaken in response to (a) any order or ruling issued, or
proceeding or other action undertaken, by any court, administrative agency or
other governmental body of competent jurisdiction, (b) any litigation or
administrative action pending or threatened on or before the Closing Date or (c)
any settlement of any of the foregoing.
"EPA" means the Environmental Protection Act, R.S.O. 1990, c.E.19.
"Excluded Inventory" means (i) the inventory of products of the
Canadian ProTurf Business that have not had any sales activity within the
twelve-month period ended February 29, 2000, as set forth on Schedule 2.02(e);
(ii) the obsolete inventory set forth on Schedule 2.02(e), and (iii) the
inventory of discontinued products of the Canadian ProTurf Business in excess of
a 24-month supply, based on sales activity for the twelve-month period ended
February 29, 2000.
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"Hazardous Substance" means any hazardous substances; hazardous waste;
polychlorinated biphenyls; petroleum and/or petroleum products; dioxins; or
solid, liquid or gaseous waste, except for such waste that Sellers are
authorized to manage under any applicable Environmental Laws.
"Indemnitee" means a party hereto claiming indemnification from another
party hereto pursuant to the terms hereof.
"Indemnitor" means a party hereto from whom indemnification is claimed
pursuant to the terms hereof by an Indemnitee.
"Intellectual Property Right" means any trademark, service mark,
registration thereof or application for registration therefor, trade name,
patent, patent application, copyright, copyright registration, application for
copyright registration or any other similar type of proprietary intellectual
property right.
"Inventory" shall mean all finished goods, including but not limited to
finished goods purchased for resale, held by the Canadian ProTurf Business for
sale or resale to others, from time to time in the ordinary course of the
Canadian ProTurf Business, as set forth on Schedule 2.01(b)(4), but excluding
the Excluded Inventory (with such additions and/or deletions as occur in the
ordinary course of the Canadian ProTurf Business and consistent with the
provisions of this Agreement).
"Inventory Book Value" shall mean Scotts' standard cost at the time of
production (including provision for the cost of shipping from the production
facility to the distribution warehouse), as reflected in Scotts' books and
records.
"Last Twelve Month Sales" means, with respect to a particular SKU of
Inventory, the Inventory Book Value of such Inventory sold during the
twelve-month period ending at the end of the month immediately prior to the
Closing Date.
"Knowledge" means (i) in the case of Sellers, the actual knowledge of
any of the officers, directors or other employees of Scotts who have managerial
or supervisory responsibilities with respect to the Canadian ProTurf Business
and (ii) in the case of Buyer, the actual knowledge of any officers, directors
or other employees of Buyer who have managerial or supervisory responsibilities.
"Material Adverse Effect" means an effect that (i) is materially
adverse to the business, financial condition or results of operations of a
specified Person, and/or (ii) is materially adverse to the transactions
contemplated hereby, and/or (iii) materially impairs the ability of a party
hereto to consummate the transactions to be undertaken by it as contemplated
hereby.
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"MU Technology" means all of Scotts' Intellectual Property Rights
relating directly or indirectly to the manufacture, formulation or assembly by,
or at the direction of, Scotts of methylene urea.
"Net Inventory Book Value" means the aggregate Inventory Book Value of
the Inventory less the following discounts: (i) 50% of Inventory Book Value with
respect to any Inventory in excess of a 24-month supply, based on Last Twelve
Month Sales; and (ii) 25% of Inventory Book Value with respect to any Inventory
in excess of an 18-month supply, but less than or equal to a 24-month supply,
based on Last Twelve Month Sales.
"Person" means an individual, corporation, partnership, limited
liability company, firm, joint venture, association, trust, unincorporated
organization, governmental or regulatory authority, or other entity.
"Product Liability" means all liabilities of the Sellers, whether
vested or unvested, contingent or fixed, actual or potential, known or unknown,
which arise in connection with or relate to the manufacture, marketing,
distribution or sale by the Seller of any product of the Canadian ProTurf
Business prior to the Closing; PROVIDED, that such liability is not primarily
caused by the action or inaction of Buyer following the Closing.
"ProTurf License Agreements" means the Canadian ProTurf License
Agreement and the U.S. ProTurf License Agreement.
"Related Agreements" means the Canadian License Agreements and the
Canadian ProTurf Supply Agreement.
"Release" means any discharge, emission or release into the natural
environment, including, without limitation, a "release" as defined in the EPA.
The term "Released" has a corresponding meaning.
"Required Approval" means an approval, consent, authorization or
clearance of or filing with a governmental or regulatory authority or official
required in order to permit, authorize or entitle a specified party hereto to
execute and deliver this Agreement, to perform its obligations hereunder, or to
consummate one or more of the transactions to be undertaken by it as
contemplated hereby.
"Retail Channels" means any channel of distribution which reaches
consumer customers, including, but not limited to: (i) retail outlets; (ii)
retail nurseries and hardware co-ops; (iii) home centers (e.g., Home Depot or
Lowes); (iv) mass merchants (e.g., Wal-Mart or Kmart); (v) membership or
warehouse clubs (e.g., Sam's Club); (vi) the Internet and (vii) other current or
future channels of trade which arise or become retail channels in the lawn and
garden industry.
"Territory" shall have the meaning ascribed thereto in the Canadian
ProTurf License Agreement.
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"U.S. Professional Turf Market" means the market in the Unites States
for the sale, marketing and/or distribution of fertilizer, pesticide,
combination fertilizer and pesticide and similar products and related services
intended for use by golf courses, sports fields, municipal properties and
professional lawn care service providers.
"U.S. ProTurf Business" means the business of marketing, distributing
and/or selling Products or related services in the United States for the U.S.
Professional Turf Market, including, but not limited to, the marketing,
distribution and/or sale of Products directly or through distributors or agents
to golf courses, sports fields, municipal properties and professional lawn care
service providers in the United States; PROVIDED, that the U.S. ProTurf Business
specifically excludes the marketing, distribution and/or sale of Products
through Retail Channels in the United States.
"U.S. Supply Agreement" means that certain Supply Agreement entered
into as of the Closing Date between Scotts and Andersons and relating to the
manufacture and supply of materials used in the U.S. ProTurf Business.
Section 1.02. ADDITIONAL TERMS. When used in this Agreement, the
following terms shall have the meanings specified in that part hereof identified
in the following table:
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TERM DEFINED IN:
---- ----------
AAA Rules................................................. Section 2.04(b)
Andersons................................................. Preamble
Assumed Liabilities....................................... Section 2.07
Buyer..................................................... Preamble
Canadian ProTurf Assets................................... Section 2.01(a)
Canadian ProTurf License Agreement........................ Preamble
Closing Receivables....................................... Section 7.05(c)
Contracts ................................................ Section 2.01(b)(7)
Exchange Act.............................................. Section 3.04
Excluded Assets........................................... Section 2.02
Excluded Liabilities...................................... Section 2.12
Inventory Book Value...................................... Section 2.04(a)
Licenses.................................................. Section 3.09
OMS....................................................... Preamble
Product Information....................................... Section 2.01(b)(5)
Products.................................................. Section 2.01(b)(5)
ProTurf Assets............................................ Section 2.01
Purchase Price............................................ Section 2.03
Registrations............................................. Section 2.01(b)(1)
Scotts.................................................... Preamble
Scotts(R) Trademarks...................................... Section 5.06(a)
Sellers................................................... Preamble
TAAI...................................................... Preamble
Turf Partners Receivables................................. Section 7.05(c)
U.S. ProTurf License Agreement............................ Preamble
All references herein to dollar amounts or "$" shall be deemed to be U.S.
Dollars, unless specifically expressed to the contrary.
ARTICLE II
PURCHASE AND SALE OF ASSETS
Section 2.01. PROTURF ASSETS. (a) At the Closing, and upon the terms
and subject to the conditions set forth in this Agreement, Sellers shall sell,
transfer, assign and deliver to Buyer, and Buyer shall purchase from Sellers,
all of the right, title and interest in and to certain of the assets of Sellers,
tangible and intangible, owned by Sellers and used principally in the conduct of
the Canadian ProTurf Business (such assets, the "Canadian ProTurf Assets").
(b) The Canadian ProTurf Assets consist only of the following
property, plus such additions thereto and minus such deletions therefrom as
occur in the usual and ordinary course of the Canadian ProTurf Business, without
violating this Agreement, between the date of this Agreement and the Accounting
Date:
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(1) the federal and provincial registrations, applications,
permits and approvals of governmental authorities set forth on Schedule
2.01(b)(1) (the "Registrations");
(2) the rights to use the Intellectual Property Rights, which
are owned or licensed and used or held for use by the Sellers primarily for the
Canadian ProTurf Business, as specifically identified in Schedule 2.01(b)(2),
subject to, and only to the extent set forth in, the Canadian License
Agreements;
(3) the customer list included as Schedule 2.01(b)(3);
(4) the Inventory of the Canadian ProTurf Business as of the
Closing Date;
(5) Sellers' right, title and interest in and to the
specifications for the products (the "Products") identified on Schedule
2.01(b)(5), excluding the specifications for any Product containing MU
Technology (except to the extent set forth in the Canadian Patent License
Agreement) and excluding such specifications to the extent such specifications
are addressed by the Canadian Patent License Agreement, but including the
promotional brochures and advertising and marketing materials (collectively, the
"Product Information") for the Products used by Sellers in connection with the
Canadian ProTurf Business;
(6) those books and records relating to the Canadian ProTurf
Business;
(7) all rights arising under each contract or agreement listed
individually or by category on Schedule 2.01(b)(7), including all renewals,
extensions, amendments and modifications thereof and any additional agreements,
contracts and orders made or entered into by Sellers in the usual and ordinary
course of the Canadian ProTurf Business, without violating this Agreement, after
the date hereof that are in effect at the Accounting Date (hereinafter,
collectively, the "Contracts");
(8) the non-proprietary technology processes, exclusive of any
MU Technology, relating primarily to the Canadian ProTurf Business and, to the
extent set forth in the Canadian License Agreements, the proprietary technology
processes, trade secrets and know-how relating primarily to the Canadian ProTurf
Business; and
(9) the research and development information, data and
analyses related primarily to the Canadian ProTurf Business; provided that, to
the extent that such information, data and analyses are not readily available or
ascertainable, the parties shall cooperate in good faith to provide Buyer with
as much of such information, data and analyses as reasonably practicable.
Section 2.02. EXCLUDED ASSETS. Anything contained in this Agreement or
elsewhere to the contrary notwithstanding, the Canadian ProTurf Assets will not
include any assets, properties or rights, including, but not limited to,
Intellectual Property Rights, of Sellers not currently used primarily in the
Canadian ProTurf Business, and the following property, all of which shall be
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retained by Sellers and none of which shall be sold or transferred to Buyer (the
"Excluded Assets"):
(a) the rights of Sellers under (i) this Agreement and (ii) the
contracts listed on Schedule 2.02(a) (the "Excluded Contracts");
(b) the Intellectual Property Rights and other proprietary
technology processes, trade secrets and know-how of the Canadian ProTurf
Business, except to the extent set forth in the Canadian License Agreements or
otherwise hereunder;
(c) the MU Technology and all other Intellectual Property Rights
that are owned or licensed and used or held for use by the Sellers, except to
the extent specifically addressed by this Agreement or the Canadian ProTurf
License Agreement;
(d) [intentionally omitted];
(e) the Excluded Inventory, as set forth on Schedule 2.02(e);
(f) any of Sellers' (i) accounts receivable, (ii) cash, (iii)
checking account and savings account deposits, (iv) certificates of deposit, (v)
utility, security and other deposits, (vi) notes receivable, (vii) similar cash
equivalents, and (viii) real and personal property not used by Sellers
principally in the conduct of the Canadian ProTurf Business.
Section 2.03. CONSIDERATION. In consideration of the promises contained
herein and as consideration for the transactions contemplated by this Agreement
and the Related Agreements, at the Closing, Buyer shall pay to Sellers an
amount, denominated in U.S. Dollars, in cash or immediately available funds
equal to the sum of:
(a) the Net Inventory Book Value as furnished by Scotts pursuant to
Section 2.04(a) below; plus
(b) $46,000 in consideration for Sellers' covenant not to compete set
forth in Section 5.05 hereof; plus
(c) $54,000 as a royalty payment in advance pursuant to the terms of
the Canadian License Agreements.
Section 2.04. BOOK VALUE OF INVENTORY. (a) At least two business days
prior to the Closing, the Sellers shall furnish to the Buyer the Sellers' good
faith estimate of the Net Inventory Book Value as of the Closing Date.
(b) Prior to the Closing Date, Sellers agree to segregate the Inventory
within Sellers' warehouses in the U.S. or Canada and to store such Inventory in
a reasonable manner, in each case, in order to facilitate a physical inventory
by Buyer. If after conducting a physical inventory within 48 hours of the
Accounting Date and after payment at the Closing of the Net Inventory
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Book Value, as contemplated by Section 2.03(a), Buyer discovers discrepancies in
the amount of Inventory used in Sellers' calculation of the Net Inventory Book
Value, the Buyer shall provide written notice to the Sellers of such
discrepancy, together with the Buyer's recalculation of the Net Inventory Book
Value, within thirty days after the Closing Date. The Net Inventory Book Value
shall become final and binding upon the parties on the thirty-first day after
the Closing Date unless such a notice of disagreement has been delivered to
Sellers. In the event that such a notice of disagreement has been delivered, the
parties agree to negotiate in good faith for an additional thirty days to
determine the Net Inventory Book Value.
(c) If the parties have not reached agreement within the thirty-day
negotiation period set forth in Section 2.04(b), they shall submit the
resolution of the determination of Net Inventory Book Value to binding
arbitration for settlement in accordance with the Commercial Arbitration Rules
of the American Arbitration Association (the "AAA Rules"). The determination of
the arbitrator selected in accordance with the AAA Rules shall be final and
conclusive, and within five business days following resolution of the matter,
Sellers shall pay to Buyer the difference between the amount paid to Sellers on
the Closing Date and the final determination of Net Inventory Book Value, if
such difference is a positive number, or Buyer shall pay to Sellers such
difference, if such difference is a negative number. The costs, fees and
expenses of the arbitration shall be borne equally by the Buyer and the Sellers.
(d) The parties acknowledge that the adjustment process set forth in
this Section 2.04 is separate from, and in addition to, any indemnification set
forth in Section 9.02(a).
Section 2.05. CLOSING. (a) The Closing shall be held at the offices of
Vorys, Sater, Seymour and Pease LLP, 52 East Gay Street, Columbus, Ohio, and
shall take place on the date determined by Buyer as soon as reasonably
practicable after the satisfaction or, if applicable, waiver of the conditions
to Closing set forth in Article VIII hereof.
(b) At the Closing, Sellers shall cause all of the following to be
delivered to Buyer:
(i) an Assignment and Assumption Agreement, substantially
in the form attached hereto as Exhibit F, and Sellers
shall deliver to Buyer such bills of sale,
endorsements, consents, assignments and other good and
sufficient instruments of conveyance and assignment as
the parties and their respective counsel shall deem
reasonably necessary or appropriate to vest in Buyer
all right, title and interest in, to and under the
Canadian. ProTurf Assets;
(ii) a copy of the Canadian ProTurf License Agreement
executed by one or both Sellers;
(iii) a copy of the Canadian Supply Agreement executed by
Scotts;
(iv) a copy of the Canadian Poly-S(R) License Agreement
executed by one or both Sellers;
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(v) a copy of the Canadian Peters(R) and Starter(R) License
Agreement executed by one or both Sellers;
(vi) a copy of the Canadian Patent License Agreement
executed by one or both Sellers; and
(vii) such other documents as contemplated by this Agreement
to be delivered by the Sellers to the Buyer or as may
be reasonably requested by Buyer.
(c) At the Closing, Buyer shall cause all of the following to be
delivered to Sellers:
(i) a certified or official bank check payable to the order
of, or a wire transfer for the account of, Scotts in an
amount in immediately available funds, denominated in
U.S. Dollars, equal to the Net Inventory Book Value, as
set forth in Section 2.04(a);
(ii) a certified or official bank check payable to the order
of, or a wire transfer for the account of, Scotts in
the amount of U.S.$46,000 in immediately available
funds;
(iii) a certified or official bank check payable to the order
of, or a wire transfer for the account of, OMS in the
amount of U.S.$54,000 in immediately available funds;
(iv) a copy of the Canadian ProTurf License Agreement
executed by Buyer;
(v) a copy of the Canadian Supply Agreement executed by
Buyer;
(vi) a copy of the Canadian Poly-S(R) License Agreement
executed by Buyer;
(vii) a copy of the Canadian Peters(R) and Starter(R) License
Agreement executed by Buyer;
(viii) a copy of the Canadian Patent License Agreement
executed by Buyer;
(ix) one or more instruments of assumption, duly executed on
behalf of Buyer, as may be reasonably requested by
Sellers and their counsel and by which Buyer duly
assumes those liabilities of Sellers to be assumed by
Buyer pursuant to Sections 2.06 and 2.07; and
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(x) such other documents as contemplated by this Agreement
to be delivered by the Buyer to the Sellers or as may
be reasonably requested by Sellers.
Section 2.06. PRORATIONS. All prepaid, accrued, deferred and other
revenues, and all prepaid, accrued, deferred and other normal operating
liabilities and expenses, pertaining to the Canadian ProTurf Business shall be
prorated as of the Accounting Date, so that as between Sellers and Buyer,
Sellers shall receive all such revenues and shall be responsible for all such
liabilities and expenses allocable to the period ending at the Accounting Date,
and Buyer shall receive all such revenues (exclusive of those received by
Sellers or by Buyer, on behalf of Sellers, in payment of any of Sellers'
accounts receivable) and shall be responsible (subject to the provisions of
Section 2.08) for all such liabilities and expenses allocable to the period
commencing at the Accounting Date.
Section 2.07. ASSUMED LIABILITIES. From and after the Accounting Date,
Buyer shall, subject to Section 2.06, assume and timely pay, discharge, perform
and satisfy all liabilities and obligations of Seller (i) arising after Closing
under the Contracts (other than liabilities or obligations attributable to any
failure by Sellers to comply with the terms thereof); (ii) arising out of or
related to the Canadian ProTurf Assets after the Accounting Date and (iii)
arising out of the prorated portions of those other obligations and liabilities
of Sellers for which Buyer is to be responsible pursuant to Section 2.06
(collectively, the "Assumed Liabilities").
Section 2.08. EXCLUDED LIABILITIES. Notwithstanding any provision in
this Agreement to the contrary, Buyer is assuming only the Assumed Liabilities
and is not assuming any other liability or obligation of Sellers (or any
predecessor owner of all or part of the Canadian ProTurf Business) of whatever
nature whether presently in existence or arising hereafter, vested or unvested,
contingent or fixed, actual or potential, known or unknown. All such other
liabilities and obligations shall be retained by and remain obligations and
liabilities of Sellers (all such liabilities and obligations not being assumed
being herein referred to as the "Excluded Liabilities"). Notwithstanding
anything to the contrary in this Section 2.08, and without limitation, each of
the following shall be Excluded Liabilities for purposes of this Agreement:
(i) any liabilities or obligations relating to employee or
agent benefits, wages, salaries, commissions, bonuses, incentives
and/or other compensation arrangements existing on or prior to the
Closing Date, including, without limitation, retirement, pension and/or
unemployment compensation, workers' compensation and/or similar type
benefits;
(ii) any Product Liability;
(iii) any Environmental Liability;
(iv) any Claim against or relating to the Canadian ProTurf
Business that arose prior to the Closing Date; or
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(v) the obligations and liabilities of Sellers arising
under the Excluded Contracts.
Section 2.09. ASSIGNMENT OF CONTRACTS AND RIGHTS. Anything in this
Agreement to the contrary notwithstanding, this Agreement shall not constitute
an agreement to assign any claim, contract, license, lease, commitment, sales
order, purchase order or any claim or right or any benefit arising thereunder or
resulting therefrom if an attempted assignment thereof, without the consent of a
third party thereto, would constitute a breach or other contravention thereof or
in any way adversely affect the rights of Buyer or Sellers thereunder. The
parties hereto will use their reasonable efforts to obtain the consent of the
other parties to any such claim, contract, license, lease, commitment, sales
order, purchase order or any claim or right or any benefit arising thereunder
for the assignment thereof to Buyer as Buyer may request. If such consent is not
obtained, or if an attempted assignment thereof would be ineffective or would
adversely affect the rights of Sellers thereunder so that Buyer would not in
fact receive all such rights, Sellers and Buyer will cooperate in a mutually
agreeable arrangement under which Buyer would obtain the benefits and assume the
obligations under any such claims, contracts, licenses, leases, commitments,
sales orders or purchase orders, including subcontracting, sub-licensing, or
subleasing to Buyer, or which Sellers would enforce for the benefit of Buyer,
with Buyer's assuming Sellers' obligations, any and all rights of Sellers
against a third party thereto arising out of the breach of cancellation by such
third party or otherwise. Sellers will promptly pay to Buyer when received all
monies received by Sellers under any such claim, contract, license, lease,
commitment, sales order, purchase order or any claim or right or any benefit
arising thereunder, except to the extent the same represents an Excluded Asset.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SELLERS
Sellers, jointly and severally, represent and warrant to Buyer that, as
of the date hereof:
Section 3.01. CORPORATE EXISTENCE AND POWER.
(a) OMS is a corporation duly incorporated, validly existing and in
good standing under the laws of the State of Delaware; is duly qualified,
licensed and otherwise in good standing as a foreign corporation in each
jurisdiction where the ownership of its property or the conduct of its business
makes necessary such qualification, licensing or good standing, except to the
extent that the failure to be so qualified would not have a Material Adverse
Effect on Scotts.
(b) Scotts is a corporation duly incorporated, validly existing and in
good standing under the laws of the State of Ohio; is duly qualified, licensed
and otherwise in good standing as a foreign corporation in each jurisdiction
where the ownership of its property or the conduct of its business makes
necessary such qualification, licensing or good standing, except to the extent
that the failure to be so qualified would not have a Material Adverse Effect on
Scotts.
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Section 3.02. CORPORATE AUTHORITY.
(a) Each of OMS and Scotts has all requisite corporate power and
authority to execute and deliver this Agreement, to perform its obligations
hereunder and to consummate the transactions to be undertaken by it as
contemplated hereby.
(b) The execution and delivery of this Agreement by each of OMS and
Scotts, the performance by it of its obligations hereunder and the consummation
by it of the transactions to be undertaken by it as contemplated hereby have
been duly and validly authorized by all necessary corporate action of each of
OMS and Scotts.
(c) This Agreement has been duly and validly executed and delivered on
behalf of each of OMS and Scotts and constitutes its valid and binding
agreement.
Section 3.03. CONSENTS AND APPROVALS; NO VIOLATIONS.
(a) Neither the execution and delivery of this Agreement by Scotts, nor
its consummation of the transactions to be undertaken by it as contemplated
hereby, will (i) violate any provision of its amended and restated articles of
incorporation or regulations; (ii) constitute (upon notice, lapse of time or
otherwise) a breach or a default (or give rise to any right of termination,
cancellation or acceleration) under any note, bond, mortgage, indenture,
franchise, lease, contract or other agreement to which Scotts is a party or by
which it may be bound or subject; (iii) violate any order, judgment, injunction,
award or decree of any court, arbitrator or governmental or regulatory authority
against, or any agreement with or condition imposed by, any governmental or
regulatory authority, binding upon it; or (iv) violate any statute, law, rule or
regulation of any federal, state, local or other governmental authority
applicable to it or its property, assets or business, excluding from the
foregoing clauses (i) to and including (iv) such breaches, defaults, rights and
violations that, in the aggregate, do not have a Material Adverse Effect with
respect to the Canadian ProTurf Business or the Canadian ProTurf Assets.
(b) Neither the execution and delivery of this Agreement by OMS, nor
its consummation of the transactions to be undertaken by it as contemplated
hereby, will (i) violate any provision of its certificate of incorporation or
by-laws; (ii) constitute (upon notice, lapse of time or otherwise) a breach or a
default (or give rise to any right of termination, cancellation or acceleration)
under any note, bond, mortgage, indenture, franchise, lease, contract or other
agreement to which OMS is a party or by which it may be bound or subject; (iii)
violate any order, judgment, injunction, award or decree of any court,
arbitrator or governmental or regulatory authority against, or any agreement
with or condition imposed by, any governmental or regulatory authority, binding
upon it; or (iv) violate any statute, law, rule or regulation of any federal,
state, local or other governmental authority applicable to it or its property,
assets or business, excluding from the foregoing clauses (i) to and including
(iv) such breaches, defaults, rights and violations that, in the aggregate, do
not have a Material Adverse Effect with respect to the Canadian ProTurf Business
or the Canadian ProTurf Assets.
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Section 3.04. GOVERNMENTAL AUTHORIZATION. The execution, delivery and
performance by Sellers of this Agreement require and are subject to the Required
Approvals of any and all applicable governmental bodies, agencies, officials or
authorities, including, without limitation, (i) compliance with any applicable
environmental rules and regulations and (ii) any other applicable rules,
regulations and/or laws.
Section 3.05. COMPLIANCE WITH LAWS. (a) Neither OMS nor Scotts is in
violation of any applicable order, judgment, injunction, award, decree or other
requirement of any federal, state, local or foreign law, statute, ordinance,
rule, regulation, order, writ, injunction, or decree applicable to the Canadian
ProTurf Assets or the Canadian ProTurf Business, and Sellers have not received
notice (written or oral) from any governmental agency that any such violation is
being alleged; and (b) each of OMS and Scotts has complied in all material
respects with all laws, statutes, ordinances, rules, regulations and
requirements applicable to the conduct of the Canadian ProTurf Business and to
the Canadian ProTurf Assets, and neither Seller has received notice (written or
oral) from any governmental agency that any such violation is being alleged,
excluding from the foregoing clauses (a) and (b) such violations and failures to
comply that, in the aggregate, do not have a Material Adverse Effect on the
Canadian ProTurf Business or the Canadian ProTurf Assets.
Section 3.06. THE CANADIAN PROTURF ASSETS.
(a) The Canadian ProTurf Assets include all property and assets used by
Sellers primarily in the conduct of the Canadian ProTurf Business as of the date
hereof, plus such additions thereto and minus (i) such deletions therefrom as
arise in the ordinary course of the Canadian ProTurf Business, without violating
this Agreement, between the date hereof and the Accounting Date and (ii) the
Excluded Assets.
(b) Upon consummation of the transactions contemplated hereby, Buyer
will have acquired good and marketable title in and to each of the Canadian
ProTurf Assets, free and clear of all liens, security interests, pledges,
charges or other encumbrances.
Section 3.07. CONTRACTS. (a) Except as set forth on Schedule
2.01(b)(7), each of the Contracts listed therein is a valid and binding
agreement of a Seller and is in full force and effect, and neither Sellers nor,
to the Sellers' Knowledge, any other party thereto is in default in any material
respect under the terms of any such Contract.
(b) Except as described in Schedule 3.07, neither Seller is a party to
or bound by any of the types of agreements enumerated below which affects the
Canadian ProTurf Business or the Canadian ProTurf Assets:
(i) agreements or contracts not made in the ordinary
course of business;
(ii) employee collective bargaining agreements or other
contracts with any labor union;
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(iii) agreements or contracts with any shareholder,
officer, director or employee of either Seller or any
of their respective subsidiaries; or
(iv) agreements or contracts the terms of which could
reasonably be expected to have a Material Adverse
Effect on the Canadian ProTurf Business or the
Canadian ProTurf Assets.
Section 3.08. INTELLECTUAL PROPERTY. Neither Seller has infringed, or
received notice of any infringement, upon one or more of the rights of third
parties in respect of any Intellectual Property Right that is currently used
primarily in the Canadian ProTurf Business. Except to the extent set forth on
Schedule 3.08, Sellers have no Knowledge of any continuing material infringement
by any other Person of any Intellectual Property Right that is currently used
primarily in the Canadian ProTurf Business.
Section 3.09. LEGAL PROCEEDINGS. Except as set forth on Schedule 3.09,
neither Seller has received notice of nor has Knowledge of any, nor are there
any pending or outstanding, Claims or Claim Notices, by or affecting OMS or
Scotts, or any of the directors, officers or employees thereof in their
capacities as such, that could (i) prevent the performance of this Agreement or
the consummation of any of the transactions contemplated hereby, (ii) prevent
materially the use by Buyer of any of the Canadian ProTurf Assets in accordance
with past practices, (iii) affect the validity or enforceability of this
Agreement or compliance with the terms hereof by Sellers, (iv) affect materially
the business, financial condition or results of operations of the Canadian
ProTurf Business, or (v) have a Material Adverse Effect on the Canadian ProTurf
Assets or the Canadian ProTurf Business.
Section 3.10. LICENSES. Except as set forth on Schedule 3.10, there are
no licenses, permits or other governmental authorizations (collectively
hereinafter referred to as "Licenses") held by either Seller which affect the
Canadian ProTurf Business or the Canadian ProTurf Assets in any material manner.
Except as set forth on Schedule 3.10, (a) Sellers hold all Licenses which are
required for the operation of the Canadian ProTurf Business, (b) all such
Licenses are in full force and effect; and (c) all such Licenses will be
effectively transferred to Buyer at the Closing or as soon thereafter as
reasonably practicable.
Section 3.11. EMPLOYEE AND RELATED MATTERS. There are no
employment-related claims, actions, proceedings or investigations pending or
threatened against either Seller relating to the Canadian ProTurf Business or
the Canadian ProTurf Assets before any court, governmental, regulatory or
administrative authority or body, or arbitrator or arbitration panel, except for
such claims, actions, proceedings or investigations as would not be reasonably
likely to have a Material Adverse Effect on the Canadian ProTurf Business .
Section 3.12. EMPLOYMENT BENEFIT PLANS. There are no plans of either
Seller in effect for pension, profit sharing, deferred compensation, severance
pay, bonuses, stock options, stock
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purchases, or any other form of retirement or deferred benefit, or for any
health, accident or other welfare plan, as to which Buyer will become liable as
a result of the transactions contemplated hereby.
Section 3.13. INVENTORY. All of the Inventory is of a quality usable
and saleable in the ordinary course of the Canadian ProTurf Business in
accordance with past practices.
Section 3.14. PRODUCTS. Except as set forth on Schedule 3.14, each of
the Products produced or sold by Sellers in connection with the Canadian ProTurf
Business (a) is, and at all times has been, in compliance in all material
respects with all applicable federal, state, local and foreign laws and
regulations and (b) is, and at all relevant times has been, fit for the ordinary
purposes for which it is intended to be used and conforms in all material
respects to any promises or affirmations of fact made on the container or label
for such product or in connection with its sale. There is no design defect with
respect to any of such Products, and each of such Products contains adequate
warnings, presented in a reasonably prominent manner, in accordance with
applicable laws and current industry practice with respect to its contents and
use.
Section 3.15. FINDER'S FEES. There is no investment banker, broker,
finder or other intermediary which has been retained by or is authorized to act
on behalf of Sellers who might be entitled to any fee or commission from Buyer
or any of its affiliates upon consummation of the transactions contemplated by
this Agreement.
Section 3.16. REPRESENTATIONS. The representations and warranties of
Sellers contained in this Agreement, disregarding all qualifications and
exceptions contained therein relating to materiality or Material Adverse Effect,
are true and correct with only such exceptions as would not in the aggregate
reasonably be expected to have a Material Adverse Effect with respect to the
Canadian ProTurf Business or the Canadian ProTurf Assets.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to Sellers that:
Section 4.01. CORPORATE EXISTENCE AND POWER. Buyer is a Canadian
corporation duly incorporated, validly existing in good standing under the laws
of the province of Ontario and has all requisite corporate power and authority
to purchase, own and hold the Canadian ProTurf Assets and to conduct the
Canadian ProTurf Business.
Section 4.02. CORPORATE AUTHORITY. (a) Buyer has all requisite
corporate power and authority to execute and deliver this Agreement, to perform
its obligations hereunder and to consummate the transactions to be undertaken by
it as contemplated hereby.
(b) The execution and delivery of this Agreement by Buyer, the
performance by it of its obligations hereunder and the consummation by it of the
transactions to be undertaken by it as
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contemplated hereby have been duly and validly authorized by all necessary
corporate action of Buyer.
(c) This Agreement has been duly and validly executed and delivered on
behalf of Buyer and constitutes its valid and binding agreement.
Section 4.03. CONSENTS AND APPROVALS; NO VIOLATIONS. Neither the
execution and delivery of this Agreement by Buyer, nor its consummation of the
transactions to be undertaken by it as contemplated hereby, will (i) violate any
provision of its articles of incorporation or regulations (or any equivalent
governing documents); (ii) constitute (upon notice, lapse of time or otherwise)
a breach or a default (or give rise to any right of termination, cancellation or
acceleration) under any note, bond, mortgage, indenture, franchise, lease,
contract or other agreement to which Buyer is a party or by which it may be
bound or subject; (iii) violate any order, judgment, injunction, award or decree
of any court, arbitrator or governmental or regulatory authority against, or any
agreement with or condition imposed by, any governmental or regulatory
authority, binding upon it; or (iv) violate any statute, law, rule or regulation
of any federal, state, local or other governmental authority applicable to it or
its property, assets or business, excluding from the foregoing clauses (i) to
and including (iv) such breaches, defaults, rights and violations that, in the
aggregate, do not have a Material Adverse Effect on Buyer.
Section 4.04. GOVERNMENTAL AUTHORIZATION. The execution, delivery and
performance by Buyer of this Agreement require and are subject to the Required
Approvals of any and all applicable governmental bodies, agencies, officials or
authorities, including, without limitation, (i) compliance with any applicable
environmental rules and regulations and (ii) any other applicable rules,
regulations and/or laws.
Section 4.05. LEGAL PROCEEDINGS. Buyer has not received notice of nor
has Knowledge of any, nor are there any pending or outstanding, Claims or Claim
Notices by or affecting Buyer, or any of its directors, officers or employees in
their capacities as such, that could (i) prevent the performance of this
Agreement or the consummation of any of the transactions contemplated hereby or
(ii) affect the validity or enforceability of this Agreement or compliance with
the terms hereof by Buyer, excluding from the foregoing clauses (i) and (ii)
such orders, judgments, injunctions, awards and decrees that, in the aggregate,
do not have a Material Adverse Effect on Buyer.
Section 4.06. FINDER'S FEES. There is no investment banker, broker,
finder or other intermediary which has been retained by or is authorized to act
on behalf of Buyer who might be entitled to any fee or commission from Sellers
or any of their affiliates upon consummation of the transactions contemplated by
this Agreement.
Section 4.07. FINANCING. Buyer has sufficient funds available to make
the payments set forth in Section 2.03.
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ARTICLE V
COVENANTS OF SELLERS
Section 5.01. CONDUCT OF BUSINESS. Except as otherwise permitted or
required by this Agreement or as set forth on Schedule 5.01, from the date
hereof until the Closing Date:
(a) Sellers will use reasonable efforts to conduct the Canadian ProTurf
Business in the ordinary course of business consistent with past practices, use
reasonable efforts to preserve intact the business organizations and
relationships with third parties; and
(b) without limiting the generality of the foregoing, Sellers will not,
except in the ordinary course of business:
(i) incur, create or assume any mortgage, security
interest or other encumbrance on the Canadian ProTurf
Assets;
(ii) sell, assign, lease or otherwise transfer or dispose
of any of the Canadian ProTurf Assets;
(iii) renegotiate, modify, amend or terminate any of the
Contracts or fail to comply with the terms and
conditions of any of the Contracts in any material
respect; or
(v) agree or commit to do any of the foregoing.
Furthermore, Sellers will not take or agree or commit to take any action that
would make any of Sellers' representations and warranties contained in this
Agreement to become untrue or incorrect in any material respect at, or as of any
time prior to, the Closing Date. Notwithstanding anything to the contrary
contained herein, the parties acknowledge and agree that between the date hereof
and the Closing Date, Sellers will be actively marketing and selling the
Excluded Inventory and that such sales may be made outside of the ordinary
course of business and may be made above, at or below the standard cost of such
Excluded Inventory.
Section 5.02. REQUIRED APPROVALS. Sellers shall (a) take all reasonable
steps necessary or appropriate to obtain, as promptly as possible, all Required
Approvals required of them, (ii) cooperate reasonably with Buyer in obtaining
all Required Approvals required of Buyer and (iii) provide such information and
communications to governmental and regulatory authorities as any such authority
or Buyer reasonably requests in connection with obtaining any Required Approval
required of any party hereto.
Section 5.03. ACCESS TO INFORMATION. From the date hereof until the
Closing Date, Sellers (a) will give Buyer, its counsel, financial advisors,
auditors and other authorized representatives reasonable access to the offices,
properties, books and records of Sellers relating to the Canadian ProTurf
Business; (b) will furnish to Buyer, its counsel, financial advisors, auditors
and other authorized representatives such financial and operating data and other
information relating to the
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Canadian ProTurf Business as such Persons may reasonably request and (c) will
instruct the employees, counsel and financial advisors of Sellers to cooperate
with Buyer in its investigation of the Canadian ProTurf Business; PROVIDED that
no investigation pursuant to this Section shall affect any representation or
warranty given by Sellers hereunder; and, PROVIDED, FURTHER, that any
investigation pursuant to this Section shall be conducted in such manner as not
to interfere unreasonably with the conduct of the business of Seller.
Section 5.04. NOTICES OF CERTAIN EVENTS. Sellers shall promptly notify
Buyer of:
(a) any notice or other communication from any Person alleging that the
consent of such Person is or may be required in connection with the transactions
contemplated by this Agreement;
(b) any notice or other communication from any governmental or
regulatory agency or authority in connection with the transactions contemplated
by this Agreement; and
(c) any actions, suits, claims, investigations or proceedings commenced
or, to Sellers' Knowledge threatened against, relating to or involving or
otherwise affecting the Canadian ProTurf Business or the Canadian ProTurf Assets
that, if pending on the date of this Agreement, would have been required to have
been disclosed pursuant to Section 3.09 or that relate to the consummation of
the transactions contemplated by this Agreement.
Section 5.05. NON-COMPETITION.
(a) Sellers agree that for the period during which Buyer is paying
royalties to Sellers pursuant to the Canadian ProTurf License Agreement (or, in
the event that Buyer properly terminates the Canadian ProTurf License Agreement
before the fifth anniversary of the Closing Date, through the fifth anniversary
of the Closing Date), neither Seller shall engage, either directly or
indirectly, as a principal or for its own account or solely or jointly with
others in any business that competes with the Canadian ProTurf Business or that
competes in the Canadian Professional Turf Market, in each case, as it exists on
the Closing Date; PROVIDED, that nothing herein shall prohibit the acquisition
by Scotts or any of its affiliates of a diversified company having not more than
10% of its sales (based on its latest published annual audited financial
statements) attributable to any business that competes with the Canadian ProTurf
Business or in the Canadian Professional Turf Market.
(b) Notwithstanding anything to the contrary contained herein, Buyer
specifically acknowledges that this Section 5.05 shall not prohibit Scotts from
engaging, directly or indirectly, in any one or more of the following
activities: (i) the manufacture, formulation, marketing, distribution and/or
sale of grass seed products in and/or for use in the Territory, whether for the
Canadian Professional Turf Market or not; (ii) the manufacture or formulation of
any product, whether it competes with a Product or not, and the marketing,
distribution and/or sale of such product through Retail Channels in the
Territory, so long as such product does not bear any of the trademarks that are
being licensed to the Buyer pursuant to the Canadian ProTurf License Agreement;
(iii) the provision of services and products, whether such products compete
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with any Product or not, to residential and commercial properties (excluding
golf courses and excluding the sale of products, but not services, to the
remainder of the Canadian Professional Turf Market) through Scotts' lawn service
business (including locations owned by Scotts, those owned by Scotts'
franchisees and those owned by licensees of the "SCOTTS" trademark), so long as
such services and products do not bear any of the trademarks that are being
licensed to Buyer pursuant to the Canadian ProTurf License Agreement; (iv) the
manufacture, formulation, marketing, distribution and/or sale of any product or
service outside of the Territory or (v) the marketing, distribution and/or sale
of any or all of the Excluded Inventory at any time, or from time to time,
through August 31, 2000. Scotts agrees that, notwithstanding the definition of
"Retail Channels" and notwithstanding anything to the contrary contained herein,
Scotts shall not intentionally sell any products that compete with the Products
directly to participants in the Canadian Professional Turf Market via the
Internet.
(c) If any provision contained in this Section 5.05 shall for any
reason be held invalid, illegal or unenforceable in any respect, such
invalidity, illegality or unenforceability shall not affect any other provisions
of this Section, but this Section shall be construed as if such invalid, illegal
or unenforceable provision had never been contained herein. It is the intention
of the parties that if any of the restrictions or covenants contained herein is
held to cover a geographic area or to be for a length of time which is not
permitted by applicable law, or in any way construed to be too broad or to any
extent invalid, such provision shall not be construed to be null, void and of no
effect, but to the extent such provision would be valid or enforceable under
applicable law, a court of competent jurisdiction shall construe and interpret
or reform this Section 5.05 to provide for a covenant having the maximum
enforceable geographic area, time period and other provisions (not greater than
those contained herein) as shall be valid and enforceable under such applicable
law. Sellers acknowledge that Buyer would be irreparably harmed by any breach of
this Section 5.05 and that there would be no adequate remedy at law or in
damages to compensate Buyer for any such breach. Sellers agree that Buyer shall
be entitled to injunctive relief requiring specific performance by Sellers of
this Section 5.05.
Section 5.06. TRANSFER OF REGISTRATIONS. [Intentionally omitted.]
ARTICLE VI
COVENANTS OF BUYER
Section 6.01. REQUIRED APPROVALS. Buyer shall (i) take all steps
necessary or appropriate to obtain, as promptly as is possible, all Required
Approvals required of it; (ii) cooperate reasonably with Sellers in obtaining
all Required Approvals required of them; and (iii) provide such information and
communications to governmental and regulatory authorities as any such authority
or Scotts reasonably requests in connection with obtaining each Required
Approval required of any party hereto.
Section 6.02. NON-COMPETITION.
(a) Buyer agrees that for a period of five years following the Closing
Date, Buyer shall not, either directly or indirectly, as a principal or for its
own account or solely or jointly
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with others, sell any Product or any other product that bears any of the
trademarks that are subject of the Canadian License Agreements through any
Retail Channel in the Territory. The parties acknowledge and agree that
communications and transactions via the Internet to purchasers, potential
purchasers or their agents in the Canadian Professional Turf Market shall not be
deemed to be a violation of this Section 6.02(a). Furthermore, the parties
acknowledge and agree that this Section 6.02(a) is not intended to prevent, and
shall not be deemed to apply to, the manufacture, formulation, distribution,
marketing or sale of any professional turf product line through Retail Channels,
other than any Product or product that bears any of the trademarks subject to
the Canadian License Agreements.
(b) If any provision contained in this Section 6.02 shall for any
reason be held invalid, illegal or unenforceable in any respect, such
invalidity, illegality or unenforceability shall not affect any other provisions
of this Section, but this Section shall be construed as if such invalid, illegal
or unenforceable provision had never been contained herein. It is the intention
of the parties that if any of the restrictions or covenants contained herein is
held to cover a geographic area or to be for a length of time which is not
permitted by applicable law, or in any way construed to be too broad or to any
extent invalid, such provision shall not be construed to be null, void and of no
effect, but to the extent such provision would be valid or enforceable under
applicable law, a court of competent jurisdiction shall construe and interpret
or reform this Section 6.02 to provide for a covenant having the maximum
enforceable geographic area, time period and other provisions (not greater than
those contained herein) as shall be valid and enforceable under such applicable
law. Buyer acknowledges that Sellers would be irreparably harmed by any breach
of this Section 6.02 and that there would be no adequate remedy at law or in
damages to compensate Sellers for any such breach. Buyer agrees that Sellers
shall be entitled to injunctive relief requiring specific performance by Buyer
of this Section 6.02.
Section 6.03. CONFIDENTIALITY. Prior to the Closing Date and after any
termination of this Agreement, Buyer and its affiliates will hold, and will use
their reasonable best efforts to cause their respective officers, directors,
employees, accountants, counsel, consultants, advisors and agents to hold, in
confidence, unless compelled to disclose by judicial or administrative process
or by other requirements of law, all confidential documents and information
concerning the U.S. ProTurf Business, the Canadian ProTurf Business or Sellers
furnished to Buyer or its affiliates in connection with the transactions
contemplated by this Agreement, except to the extent that such information can
be shown to have been (i) previously known on a nonconfidential basis by Buyer,
(ii) in the public domain through no fault of Buyer or (iii) later lawfully
acquired by Buyer from sources other than Sellers; PROVIDED, that Buyer may
disclose such information to its officers, directors, employees, accountants,
counsel, consultants, advisors and agents in connection with the transactions
contemplated by this Agreement so long as such Persons are informed by Buyer of
the confidential nature of such information and are directed by Buyer to treat
such information confidentially. The obligation of Buyer and its affiliates to
hold any such information in confidence shall be satisfied if they exercise the
same care with respect to such information as they would take to preserve the
confidentiality of their own similar information. If this Agreement is
terminated, Buyer and its affiliates will, and will use their reasonable best
efforts to cause their respective officers, directors, employees, accountants,
counsel, consultants, advisors and agents to, destroy or deliver to Seller, upon
request, all documents and other
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materials, and all copies thereof, obtained by Buyer or its affiliates or on
their behalf from Sellers in connection with this Agreement that are subject to
such confidence.
ARTICLE VII
COVENANTS OF ALL PARTIES
Section 7.01. WARRANTY DISCLAIMER. Except to the extent set forth under
Section 9.02(a) or otherwise as expressly provided in this Agreement, Buyer and
Sellers agree that SELLERS MAKE NO FURTHER OR OTHER REPRESENTATION OR WARRANTY
OF ANY KIND, EXPRESS OR IMPLIED, AS TO MERCHANTABILITY, FITNESS FOR A PARTICULAR
PURPOSE OR ANY OTHER MATTER WITH RESPECT TO THE INVENTORY AND/OR ANY OTHER PART
OF THE CANADIAN PROTURF ASSETS, AND SELLERS SPECIFICALLY DISCLAIM ANY LIABILITY
FOR INCIDENTAL, CONSEQUENTIAL OR OTHER DAMAGES.
Section 7.02. EXPENSES. Except as otherwise expressly provided herein,
each party to this Agreement shall bear its own expenses incurred in connection
with the preparation, execution and performance of this Agreement and the
consummation of the transactions contemplated hereby, including, without
limitation, all fees of agents, representatives, legal counsel and accountants,
whether or not the transactions contemplated hereby shall be consummated.
Section 7.03. FURTHER ASSURANCES. Subject to the terms and conditions
of this Agreement, each party will use its reasonable efforts to take, or cause
to be taken, all actions and to do, or cause to be done, all things necessary or
desirable under applicable laws and regulations to consummate the transactions
contemplated by this Agreement. Each party agrees to execute and deliver such
other documents, certificates, agreements and other writings and to take such
other actions as may be necessary or desirable in order to consummate or
implement expeditiously the transactions contemplated by this Agreement
(including, but not limited to, the transfer of the Registrations) and to vest
in Buyer good and marketable title to the Canadian ProTurf Assets.
Section 7.04. PUBLIC ANNOUNCEMENTS. Except as may be required by law,
no party to this Agreement shall make, encourage or permit disclosure of any
kind or form in respect of this Agreement or the transactions contemplated
hereby unless Scotts and Buyer mutually agree in advance on the form, timing and
content of any such disclosure, whether to the financial community, a
governmental agency, the public generally or otherwise. Each party agrees to
promptly review any disclosure provided by the other party pursuant to this
Section 7.04 and shall not unreasonably withhold, delay or condition its consent
to any such disclosure.
Section 7.05. COLLECTION OF ACCOUNTS RECEIVABLE.
(a) As of the date hereof, there are outstanding accounts receivable
owing from Turf Partners, Inc. with respect to the U.S. ProTurf Business. Buyer
and Sellers specifically acknowledge and agree that none of the accounts
receivable of the Canadian ProTurf Business
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are included among the Canadian ProTurf Assets and that such accounts receivable
shall remain the property of Sellers.
(b) Between the date hereof and the Closing Date, Sellers agree to use
their reasonable efforts, consistent with past practices, to collect all of such
accounts receivable, including those from Turf Partners, Inc.
(c) In connection with the Closing, the parties shall mutually prepare
a statement setting forth (i) the amount of accounts receivable of the Canadian
ProTurf Business as of the Closing Date (the "Closing Receivables") and (ii) the
amount of accounts receivable attributable to Turf Partners, Inc. (the "Turf
Partners Receivable"), including, without limitation, to the extent available, a
schedule of all invoices for the Turf Partners Receivable.
(d) From and after the Closing Date, Buyer and Sellers agree to use
their reasonable efforts to collect the Closing Receivables on behalf of
Sellers. Any monies received by Buyer after the Closing Date in connection with
such Closing Receivables shall be for the benefit and account of Sellers and
shall be promptly remitted to Sellers. Scotts and Buyer agree to reasonably
cooperate in the collection of the Closing Receivables.
(e) From time to time after the Closing Date, Buyer and Scotts shall
consult with respect to the status of any uncollected Closing Receivables
generally, and specifically with respect to the Turf Partners Receivable. If,
and to the extent that, Andersons and Scotts determine in good faith that all or
any portion of the Turf Partners Receivable is uncollectible, Buyer agrees to
promptly reimburse Scotts for 3.75% of the portion of the Turf Partners
Receivable deemed uncollectible, up to an aggregate amount of U.S.$300,000;
PROVIDED, that, for purposes of the foregoing, any portion of the Turf Partners
Receivable that has not been collected within 120 days of its due date, shall
automatically be deemed to be uncollectible, unless Andersons and Scotts
mutually agree otherwise. If, and to the extent that Scotts or Andersons collect
any portion of the Turf Partners Receivable after it has been deemed
uncollectible, Buyer shall be reimbursed for 3.75% of such portion so collected
(net of any reasonable, out-of-pocket costs of collection) up to an aggregate
amount of U.S.$300,000.
Section 7.06. INSURANCE. As of the Closing Date, (i) Buyer agrees to
furnish insurance certificates naming the Sellers as additional insureds under
its general and automobile liability policies with limits of at least
U.S.$2,000,000 per occurrence and (ii) Sellers agree to furnish insurance
certificates naming the Buyer as an additional insured under its general and
automobile liability policies with limits of at least U.S.$2,000,000 per
occurrence. The specified limits of insurance may be satisfied by any
combination of a self-insured retention and primary or excess/umbrella liability
insurance policies. For purposes of this Section 7.06, "self-insured" means that
the party is itself acting as though it were the insurance company providing the
insurance required under the provisions hereof and shall pay any amounts due in
lieu of insurance proceeds which would have been payable if the insurance
policies had been carried by a third party insurance company, which amounts
shall be treated as insurance proceeds for all purposes under this Agreement.
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Section 7.07. USE OF THE "SCOTTS" TRADEMARK.
(a) Except as set forth in the other subsections of this Section 7.07,
after the Closing, neither Buyer nor any of its affiliates shall use any of the
following names or marks that were used in the Canadian ProTurf Business:
"SCOTTS" and "Scotts and Oval Design," as set forth on Schedule 7.07. Such names
shall be referred to, collectively or individually as the context requires, as
the "Scotts(R) Trademarks."
(b) After the Closing, Buyer shall have the right to sell existing
Inventory bearing any Scotts(R) Trademarks, and to use existing packaging,
labeling, containers, supplies, advertising materials, technical data sheets and
any similar materials with respect to such Inventory, until the earlier of (i)
August 31, 2001, and (ii) the date existing stocks are exhausted. Buyer shall
also have the right to continue to use existing brochures relating to the
Inventory, including technical data sheets bearing the Scotts(R) Trademarks,
until the earlier of (i) August 31, 2001 and (ii) the date existing stocks are
exhausted. Notwithstanding the foregoing, in the event that Buyer is unable to
exhaust the existing stocks of one or more SKUs of Inventory by August 31, 2001
so long as Buyer has used commercially reasonable efforts to do so, Scotts shall
consent in writing to extend such date, on a SKU by SKU basis, for a reasonable
period of time, as negotiated in good faith by Scotts and Buyer, to permit the
exhaustion of such SKUs of Inventory.
(c) Sellers agree to and do hereby grant to Buyer, for the period and
upon the terms and conditions set forth in this Section 7.07, the right and
license: (i) to use the Scotts(R) Trademarks solely within the Territory in the
sale of existing Inventory using existing packaging, labels, containers and
supplies and (ii) to produce advertising and promotional materials subject to
the terms herein. Buyer acknowledges and agrees that Sellers are the sole and
exclusive owners of the Scotts(R) Trademarks in any form or embodiment thereof
and are also the owners of the goodwill attached or which shall become attached
to the Scotts(R) Trademarks in connection with the business and goods in
relation of which the same has, is or shall be used. Buyer's rights to use the
Scotts(R) Trademarks shall be governed exclusively by this Agreement, and all
use of the Scotts(R) Trademarks by Buyer shall inure to the benefit of Sellers.
Any sales of Inventory bearing a Scotts(R) Trademark shall be deemed to have
been made by Sellers for purposes of trademark registration. All rights in the
Scotts(R) Trademarks other than those specifically granted in this Agreement are
reserved by Sellers for their own use and benefit.
(d) Buyer shall sell the Inventory in accordance with all applicable
laws, rules and regulations. Upon Sellers' reasonable request, Buyer will
provide samples of any batch of packaged Inventory or other inventory bearing a
Scotts(R) Trademark to enable Sellers to determine if Buyer is complying with
the Sellers' standards of quality control. Scotts shall approve or disapprove
(specifying the reasons for any disapproval) in writing within 30 days of
receipt of such sample. Failure to give notice of disapproval within such period
shall constitute Scotts' approval for that Inventory or other inventory bearing
a Scotts(R) Trademark.
(e) In addition to the foregoing, until no later than February 28,
2001, Buyer shall have the right to use the Scotts(R) Trademarks in advertising
and other promotional materials prepared by Buyer for the sole purpose of
transitioning the Canadian ProTurf Business from
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Sellers to Buyer. In connection with such advertising and promotion, Buyer shall
comply with all applicable laws and regulations. Buyer agrees not to use the
Scotts(R) Trademarks, trade dress or any reproduction thereof in any
advertising, promotion or display material without prior written approval from
Scotts. All copy and material utilizing the Scotts(R) Trademarks shall be
submitted for the approval of Scotts, and any material submitted and not
disapproved by Scotts within 30 days shall be deemed approved.
(f) Neither Buyer nor any of its affiliates will use any Scotts(R)
Trademark as all or a portion of Buyer's or any such affiliate's corporate name,
trade name or other designation. Buyer's employees will not represent themselves
as being representatives of or being from Sellers. Buyer will not associate the
Scotts(R) Trademarks with another trademark of packaging or containers without
the prior written approval of such other trademark by Scotts. Buyer agrees to
use the Scotts(R) Trademarks only in the form approved by Scotts and may not
modify, change or alter the Scotts(R) Trademarks in any manner whatsoever
without the prior written approval of Scotts, which approval shall not be
unreasonably delayed, conditioned or withheld. Buyer will display the Scotts(R)
Trademarks only in such form and manner as is specifically approved by Scotts,
which approval shall not be unreasonably delayed, conditioned or withheld.
(g) Sellers may terminate Buyer's rights to use the Scotts(R)
Trademarks pursuant to this Section 7.07 immediately: (i) if Buyer or any of its
affiliates breaches any of the provisions of this Section 7.07 and fails to cure
such breach within 10 days of written notice thereof by Scotts or (ii) upon the
insolvency of Buyer, any assignment by Buyer for the benefit of its creditors,
the failure to obtain the dismissal of any involuntary bankruptcy or
reorganization petition filed against Buyer within 60 days from the date of such
filing, the failure of Buyer to vacate the appointment of a receiver for all or
any part of its business within 60 days from the date of such appointment or the
dissolution of Buyer. Sellers shall provide Buyer prompt written notice of any
such termination.
(h) Buyer acknowledges that Sellers would be irreparably harmed by any
breach of this Section 7.07 by Buyer and that there would be no adequate remedy
at law or in damages to compensate Sellers for any such breach. Buyer agrees
that Sellers shall be entitled to injunctive relief requiring specific
performance by Buyer of this Section 7.07.
ARTICLE VIII
CONDITIONS TO CLOSING
Section 8.01. CONDITIONS TO OBLIGATIONS OF ALL PARTIES. The respective
obligations of the parties to this Agreement to consummate the transactions
contemplated hereby are subject to the satisfaction, at or prior to the Closing,
of each of the following conditions precedent:
(a) No judgment, injunction, order or decree of a court of competent
jurisdiction shall (i) prohibit the consummation of any of the transactions
contemplated hereby or (ii) restrain, prohibit or otherwise materially interfere
with the effect, operation or enjoyment by Buyer of all or any material portion
of the Canadian ProTurf Assets.
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(b) Each of the parties hereto shall have obtained each Required
Approval to be obtained by it, without conditions or limitations that
unreasonably restrict the ability of the parties hereto to perform this
Agreement, and each of Sellers and Buyer shall have been furnished with
appropriate evidence, reasonably satisfactory to it and its counsel, that each
such Required Approval has been obtained and is in full force and effect.
Section 8.02. CONDITIONS TO OBLIGATIONS OF BUYER. The obligations of
Buyer to consummate the transactions contemplated by this Agreement are subject
to the satisfaction, at or prior to the Closing, of each of the following
further conditions, any one or more of which may be waived by Buyer:
(a)(i) Sellers shall have performed in all material respects all of
their obligations hereunder required to be preformed by them at or prior to the
Closing Date; (ii) the representations and warranties of Sellers contained in
this Agreement and in any certificate or other writing delivered by Sellers
pursuant hereto, disregarding all qualifications and exceptions contained
therein relating to materiality or Material Adverse Effect, shall be true at and
as of the Closing Date, as if made at and as such time, with only such
exceptions as would not in the aggregate reasonably be expected to have a
Material Adverse Effect with respect to the Canadian ProTurf Assets or the
Canadian ProTurf Business; and (iii) Buyer shall have received a certificate
signed by an executive officer of each Seller to the foregoing effect.
(b) Sellers shall have delivered the documents referred to in Section
2.05(b).
(c) Buyer shall have received all documents it may reasonably request
relating to the existence of Sellers and the authority of Sellers for this
Agreement, all in form and substance reasonably satisfactory to Buyer.
Section 8.03. CONDITIONS TO OBLIGATIONS OF SELLERS. The obligations of
Sellers to consummate the transactions contemplated by this Agreement are
subject to the satisfaction, at or prior to the Closing, of each of the
following further conditions, any one or more of which may be waived by Scotts:
(a) Buyer shall have performed in all material respects all of its
obligations hereunder required to be performed by them at or prior to the
Closing Date; (ii) the representations and warranties of Buyer contained in this
Agreement and in any certificate or other writing delivered by Buyer pursuant
hereto, disregarding all qualifications and exceptions contained therein
relating to materiality or Material Adverse Effect, shall be true at and as of
the Closing Date, as if made at and as such time, with only such exceptions as
would not in the aggregate reasonably be expected to have a Material Adverse
Effect with respect to Buyer; and (iii) Sellers shall have received a
certificate signed by an executive officer of Buyer to the foregoing effect.
(b) Buyer shall have delivered the documents referred to in Section
2.05(c).
(c) All of the closing conditions to Sellers' obligations under the
U.S. Asset Purchase Agreement shall have been satisfied or shall have been
waived by Scotts, in its sole discretion.
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(d) Sellers shall have received all documents they may reasonably
request relating to the existence of Buyer and the authority of Buyer for this
Agreement, all in form and substance reasonably satisfactory to Scotts.
ARTICLE IX
SURVIVAL; INDEMNIFICATION
Section 9.01. SURVIVAL OF WARRANTIES; TERMINATION. Except as otherwise
set forth herein, the covenants, agreements, representations and warranties of
the parties contained in this Agreement shall survive the Closing and shall
expire on, and shall be of no further force and effect after, the first
anniversary of the Closing Date; PROVIDED, that the covenants set forth in
Section 5.05 and Section 6.02 shall survive the Closing and, except as otherwise
set forth therein, shall expire on and shall be of no further force and effect
after the fifth anniversary of the Closing Date; PROVIDED, FURTHER, that the
indemnities set forth in Section 9.02(a)(ii) and Section 9.02(b)(ii) and the
covenants set forth in Section 7.07, to the extent set forth therein, shall
survive the Closing without expiration. Notwithstanding the preceding sentence,
any covenant, agreement, representation or warranty in respect of which
indemnity may be sought under Section 9.02 shall survive the time at which it
would otherwise terminate pursuant to the preceding sentence, if notice of the
inaccuracy or breach thereof giving rise to such right to indemnity shall have
been given to the party against whom indemnity may be sought prior to such time.
Section 9.02. INDEMNIFICATION. (a) After consummation of the Closing,
Sellers hereby, jointly and severally, indemnify Buyer against and agree to hold
it harmless from any and all Claims incurred or suffered by Buyer, or any
officer, director, employee, agent, representative or affiliate thereof, arising
out of:
(i) any misrepresentation or breach of warranty, covenant
or agreement made or to be performed by Sellers
pursuant to this Agreement; or
(ii) any Excluded Liability or any obligation or liability
of the Canadian ProTurf Business relating to the
Excluded Assets; or
(iii) the Canadian ProTurf Business prior to Closing;
PROVIDED, that (x) Sellers shall not be liable under this Section 9.02(a)(i)
unless the aggregate amount of Buyer's Claims with respect to all matters
referred to in this Section 9.02(a) (determined without regard to any
materiality or Material Adverse Effect qualification contained in any
representation, warranty or covenant giving rise to the Claim) exceeds $50,000
and then only to the extent of such excess and (y) Sellers' maximum liability
under this Section 11.02(a) shall not exceed $200,000; PROVIDED, FURTHER, that
the immediately preceding proviso shall not apply to a breach of Sellers'
obligations pursuant to Section 5.05(a) or Section 13.07 for which Sellers shall
be liable from the first dollar and without limitation as to amount. In
addition, Sellers agree to indemnify Buyer and hold it harmless from any and all
Claims by Turf Partners,
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Inc. arising out of any alleged breach by Scotts of Scotts' distribution
agreement with Turf Partners, Inc. from the first dollar and without limitation
as to amount;
(b) After consummation of the Closing, and subject to the provisions of
Section 9.04, Buyer hereby indemnifies Sellers against and agree to hold them
harmless from any and all Claims incurred or suffered by either Seller, or any
officer, director, employee, agent, representative or affiliate thereof, arising
out of: In addition, Sellers agree to indemnify Buyer and hold it harmless from
any and all Claims by Turf Partners, Inc. arising out of any alleged breach by
Scotts of Scotts' distribution agreement with Turf Partners, Inc. from the first
dollar and without limitation as to amount;
(i) any misrepresentation or breach of warranty, covenant
or agreement made or to be performed by Buyer
pursuant to this Agreement;
(ii) any Assumed Liability;
(iii) any failure to pay any amounts due pursuant to
Section 7.05(e); or
(iv) the Canadian ProTurf Business after Closing;
PROVIDED, that (x) Buyer shall not be liable under this Section 9.02(b)(i)
unless the aggregate amount of Sellers' Claims with respect to all matters
referred to in this Section 9.02(b) (determined without regard to any
materiality or Material Adverse Effect qualification contained in any
representation, warranty or covenant giving rise to the Claim) exceeds $50,000
and then only to the extent of such excess and (y) Buyer's maximum liability
under this Section 11.02(b) shall not exceed $200,000; PROVIDED, FURTHER, that
the immediately preceding proviso shall not apply to (A) a breach of Buyer's
obligations pursuant to Section 7.05(e) for which Buyer shall be liable from the
first dollar up to the amount set forth in such Section 7.05(e) or (B) a breach
of Section 6.02 or Section 7.07 for which Buyer shall be liable from the first
dollar and without limitation as to amount.
Section 9.03. PROCEDURES. (a) The Indemnitee agrees to give prompt
notice to the Indemnitor of any Claim hereunder.
(b) In addition to, and not in limitation of, the foregoing, if any
Claim for which Indemnitee would be entitled to indemnification under this
Agreement arises out of a claim or liability asserted against or sought to be
collected from Indemnitee by a third party, Indemnitee shall promptly give to
Indemnitor a Claim Notice in respect of such Claim. Indemnitor shall have thirty
(30) Business Days following the giving of a Claim Notice to it to notify
Indemnitee whether or not Indemnitor elects to defend Indemnitee in respect of
such Claim; and
(i) If Indemnitor so elects to defend Indemnitee in
respect of such Claim, Indemnitor shall either settle
or, by appropriate proceedings, defend such Claim in
a manner intended to protect the interests of
Indemnitee; and Indemnitee shall cooperate as
reasonably requested
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by Indemnitor in connection with such settlement or
defense. Indemnitor shall (i) have the right to
control the defense or settlement of the Claim
involved, (ii) pay all costs and expenses of such
proceedings incurred by it, and (iii) pay the amount
of any resulting settlement, judgment or award if it
shall be determined that such Claim is subject to
indemnification by Indemnitor under this Agreement;
provided, however, that Indemnitor shall effect no
settlement of such Claim if such settlement would
affect the liability of Indemnitee unless Indemnitee
shall consent thereto in writing, which consent shall
not be unreasonably delayed or withheld. If
Indemnitee desires to participate in, without
controlling, any such defense or settlement by
Indemnitor, it may do so at Indemnitee's sole cost
and expense and without affecting any rights
Indemnitee may have against Indemnitor.
(ii) If Indemnitor shall not so elect to defend Indemnitee
in respect of such Claim, Indemnitee shall either
settle or, by appropriate proceedings, defend such
Claim in a manner intended to protect the interests
of Indemnitor; and Indemnitor shall cooperate as
reasonably requested by Indemnitee in connection with
such settlement or defense. Indemnitee shall (x) have
the right to control the defense or settlement of the
Claim involved and (y) be indemnified by Indemnitor
for its reasonable costs and expenses of such
defenses, and for the amount of any resulting
settlement, judgment or award, if it shall be
determined that such Claim is subject to
indemnification by Indemnitor under this Agreement;
PROVIDED, HOWEVER, that Indemnitee shall effect no
settlement of such Claim if such settlement would
affect the liability of Indemnitor unless Indemnitor
shall consent to such settlement in writing, which
consent shall not be unreasonably delayed or
withheld. If Indemnitor desires to participate in,
without controlling, any such defense or settlement
by Indemnitee, it may do so at its sole cost and
expense and without affecting any rights Indemnitor
may have against Indemnitee.
ARTICLE X
TAX MATTERS
Section 10.01. TAX COOPERATION. Buyer and Sellers agree to furnish or
cause to be furnished to each other, upon request, as promptly as practicable,
such information and assistance relating to the Canadian ProTurf Assets and the
Canadian ProTurf Business as is reasonably necessary for the filing of all tax
returns, and making of any election related to taxes, the preparation for any
audit by any taxing authority, and the prosecution or defense of any claim, suit
or proceeding relating to any tax return. Sellers and Buyer shall cooperate with
each other in the conduct of any audit or other proceeding related to taxes
involving the Canadian ProTurf
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Business and each shall execute and deliver such powers of attorney and other
documents as are necessary to carry out the intent of this Section 10.01.
Section 10.02. ALLOCATION OF TAXES. (a) All personal property taxes and
similar ad valorem obligations levied with respect to the Canadian ProTurf
Assets that accrue during the Sellers' taxable period that ends on the Closing
Date shall be paid by Sellers. All personal property taxes and similar ad
valorem obligations levied with respect to the Canadian ProTurf Assets that
accrue during Buyer's taxable period that begins after the Closing Date shall be
paid by Buyer. All personal property taxes and similar ad valorem obligations
levied with respect to the Canadian ProTurf Assets that accrue for a taxable
period which includes (but does not end on) the Closing Date shall be
apportioned between Sellers, on the one hand, and Buyer, on the other, as of the
Closing Date based on the number of days of such taxable period included in the
pre-Closing tax period and the number of days of such taxable period included in
the post-Closing tax period. Sellers shall be liable for the proportionate
amount of such taxes that is attributable to the pre-Closing tax period. Within
180 days after the Closing Date, Sellers and Buyer shall present a statement to
the other setting forth the amount of reimbursement to which each is entitled
under this Section 10.02 together with such supporting evidence as is reasonably
necessary to calculate any allocated amount. The allocated amount shall be paid
by the party or parties owing it to the other(s) within 10 days after delivery
of such statement. Thereafter, Sellers shall notify Buyer upon receipt of any
bill for personal property taxes relating to the Canadian ProTurf Assets, part
or all of which are attributable to the post-Closing tax period, and shall
promptly deliver such bill to Buyer who shall pay the same to the appropriate
taxing authority, PROVIDED, that if such bill covers the pre-Closing tax period,
Sellers shall also remit prior to the due date of assessment to Buyer payment
for the proportionate amount of such bill that is attributable to the
pre-Closing tax period. In the event that either Sellers, on the one hand, or
Buyer, on the other, shall thereafter make a payment for which it is entitled to
reimbursement under this Section 10.02, the other party or parties shall make
such reimbursement promptly but in no event later than 30 days after the
presentation of a statement setting forth the amount of reimbursement to which
the presenting party is entitled along with such supporting evidence as is
reasonably necessary to calculate the amount of reimbursement. Any payment
required under this Section and not made within 10 days of delivery of the
statement shall bear interest at the rate per annum determined, from time to
time, under the provisions of Section 6621(a)(2) of the U.S. Internal Revenue
Code of 1986, as amended, for each day until paid.
Section 10.03. SALES AND USE TAXES. Any transfer, documentary, sales,
use or other taxes assessed upon or with respect to the transfer of the Canadian
ProTurf Assets to Buyer and any recording of filing fees with respect thereto
shall be the responsibility of Buyer.
ARTICLE XI
LABOR AND EMPLOYMENT MATTERS
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The parties agree that Buyer is not assuming the employment of any
employees of Sellers with respect to the Canadian ProTurf Business.
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ARTICLE XII
TERMINATION
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Section 12.01. GROUNDS FOR TERMINATION. This Agreement may be
terminated at any time prior to the Closing, as follows:
(i) by the mutual, written consent of Scotts and Buyer;
(ii) by either Scotts or Buyer, if the Closing has not occurred by
May 31, 2000; or
(iii) by either Scotts or Buyer, if consummation of the transactions
contemplated hereby would violate any nonappealable final order, decree or
judgment of any court or governmental body having competent jurisdiction.
The party desiring to terminate this Agreement pursuant to clauses (ii)
or (iii) shall give notice of such termination to the other party.
Section 12.02. EFFECT OF TERMINATION. If this Agreement is terminated
as permitted by Section 12.01, such termination shall be without liability of
any party (or any shareholder, director, officer, employee, agent, consultant or
representative of such party) to the other parties to this Agreement; PROVIDED
that if such termination shall result from the willful failure of either party
to fulfill a condition to the performance of the obligations of the other party
or to perform a covenant of this Agreement or from a willful breach by either
party to this Agreement, such party shall be fully liable for any and all Claims
incurred or suffered by the other party as a result of such failure or breach.
The provisions of Sections 6.04 and 7.02 shall survive any termination hereof
pursuant to Section 12.01.
ARTICLE XIII
MISCELLANEOUS
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Section 13.01. NOTICES. Any notice or other communication required or
permitted hereunder must be in writing and shall be deemed to have been duly
given when (i) delivered to the party to whom it is given personally, (ii)
deposited in the U.S. or Canadian Mail if sent by certified or registered mail
(return receipt requested, postage prepaid and addressed to the party to whom it
is given as provided immediately below), or (iii) sent by facsimile transmission
if transmitted to each telephone number specified immediately below for so
giving such notice or communication to the party to whom it is given:
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if to Sellers, to:
The Scotts Company
14111 Scottslawn Road
Marysville, OH 43041
Attention: James Hagedorn
David Aronowitz
FAX Telephone No. (937) 644-7568
and
OMS Investments, Inc.
c/o Delaware Corporate Management
1105 N. Market Street
Wilmington, DE 19899
Attention: Susan T. Dubb
FAX Telephone No. (302) 427-7664
with a copy to:
Vorys, Sater, Seymour and Pease LLP
52 East Gay Street
Columbus, OH 43215
Attention: Ronald A. Robins, Jr.
FAX Telephone No. (614) 719-4926
if to Buyer, to:
The Nu-Gro Corporation
10 Craig Street
Brantford, Ontario
Canada N3R 7J1
Attention: John D. Hill
FAX Telephone No. (519) 757-0282
with a copy to:
McCarter Grespan Robson Beynon
675 Riverbend Drive
Kitchener, Ontario
Canada N2K 3S3
Attention: Paul Grespan
FAX Telephone No. (519) 742-1841
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Any party hereto may from time to time by notice given in accordance
with this Section 13.01 to each other party hereto substitute a different
address, telephone number or Person for receipt of notices and communications
hereunder by the party giving such notice.
Section 13.02. ASSIGNMENT. This Agreement shall be binding upon, and
shall inure to the benefit of and be enforceable by, the respective successors
and permitted assigns (including successive, as well as immediate, successors
and permitted assigns) of the parties hereto, but neither this Agreement nor any
right hereunder may be assigned by any party without the written consent of each
other party hereto; PROVIDED, HOWEVER, that Buyer may assign its rights
hereunder to any wholly-owned subsidiary of Buyer, or to any other subsidiary or
affiliate of Buyer of which Buyer owns more than 50% of the total voting power
and over which Buyer exercises actual control, in each case, so long as Buyer
unconditionally guarantees the assignee's performance of its obligations
hereunder; PROVIDED, FURTHER, that Scotts may assign its rights hereunder to any
subsidiary or affiliate of Scotts so long as Scotts unconditionally guarantees
the assignee's performance of its obligations hereunder.
Section 13.03. NO THIRD PARTY BENEFICIARIES. Nothing contained in this
Agreement is intended or shall be construed to afford to any Person, other than
a party hereto, any legal or equitable right, remedy or claim under or in
respect of this Agreement or any provision hereof.
Section 13.04. COUNTERPARTS; EFFECTIVENESS. This Agreement may be
executed in one or more counterparts, each of which shall be deemed to be a
duplicate original, but all of which, taken together, shall be deemed to
constitute a single instrument. This Agreement shall become effective when each
party shall have received a counterpart hereof signed by the other party hereto.
Section 13.05 ENTIRE AGREEMENT. This Agreement, the Canadian License
Agreements, the Canadian Supply Agreement and that certain Confidentiality
Agreement dated as of ___________, 1999, by and among Scotts and Buyer
constitute the entire agreement among the parties with respect to the subject
matter hereof and supersedes all prior agreements, understandings and
negotiations, both written and oral, between the parties with respect to the
subject matter of this Agreement. No representation, inducement, promise,
understanding, condition or warranty not set forth herein has been made or
relied upon by any party hereto. Neither this Agreement nor any provision hereof
is intended to confer upon a Person other than the parties hereto any rights or
remedies hereunder. Notwithstanding the foregoing, between the date hereof and
the Closing Date, the parties agree to enter into a mutual non-disclosure and
confidentiality agreement protecting each party's disclosure of information
pursuant to this Agreement or any of the Related Agreements.
Section 13.06. AMENDMENTS; NO WAIVERS. (a) Any provision of this
Agreement may be amended or waived prior to the Closing Date if, and only if,
such amendment or waiver is in writing and signed, in the case of an amendment,
by Scotts and Buyer or in the case of a waiver, by the party against whom the
waiver is to be effective.
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(b) No failure or delay by either party in exercising any right, power
or privilege hereunder shall operate as a waiver thereof nor shall any single or
partial exercise thereof preclude any other or further exercise thereof or the
exercise of any other right, power or privilege. The rights and remedies herein
provided shall be cumulative and not exclusive of any rights or remedies
provided by law.
Section 13.07. BULK SALES LAWS. Each of Buyer and Sellers hereby waives
compliance by Sellers with the provisions of the "bulk sales," "bulk transfer"
or similar laws of any province. Sellers agree to indemnify, defend and hold
Buyer harmless against any and all claims, losses, damages, liabilities, costs
and expenses incurred by Buyer or any of its affiliates (including, without
limitation, reasonable attorneys' fees and court and other costs) as a result of
any failure to comply with any such "bulk sales," "bulk transfer" or similar
laws.
Section 13.08. SEVERABILITY. If any provision of this Agreement shall
be invalid or unenforceable for any reason, such invalidity or unenforceability
shall not affect the validity or enforceability of any other provision or
portion hereof.
Section 13.09. GOVERNING LAW. This Agreement shall be governed by and
construed and enforced in accordance with the internal laws of the State of
Ohio, without giving effect to the choice-of-law or conflict-of-laws principles
thereof.
Section 13.10. CONSENT TO JURISDICTION. Each of the parties hereto
irrevocably submits to the jurisdiction of any Ohio state or federal court
sitting in the City of Columbus, Ohio over any suit, action or proceeding
arising out of or relating to this agreement or any related document. Each of
the parties hereto irrevocably waives, to the fullest extent permitted by law,
any objection which they may have or hereafter have to the laying of the venue
of any such suit, action or proceeding brought in such a court and any claim
that any such suit, action or proceeding has been brought in an inconvenient
forum.
Section 13.11. CAPTIONS; EXHIBITS. (a) The Article and Section headings
and any other captions appearing in this Agreement are included only for ease of
reference and do not define, limit, explain or modify this Agreement or its
interpretation, construction or meaning and are not to be construed as a part
hereof.
(b) Neither the specification of any dollar amount in the
representations and warranties of the parties contained herein nor the
indemnification provisions of Article IX nor the inclusion of any items in the
Schedules to this Agreement will be deemed to constitute an admission by any
party, or otherwise imply, that any such amounts or the items so included are
material for the purpose of this Agreement.
(c) The Schedules and Exhibits referred to herein and included herewith
are part of this Agreement as if fully set forth herein. All documents or
information disclosed in any of the Schedules are intended to be disclosed for
all purposes under this Agreement and will also be deemed to be incorporated by
reference in each of the other Schedules to which, and to the extent, they may
be applicable.
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(d) The parties acknowledge and agree that, between the date hereof and
the Closing Date, the Schedules and/or Exhibits to this Agreement may need to be
modified as a result of information that arises after the date hereof. The
parties agree to cooperate in good faith to make such modifications; PROVIDED,
that any such modification shall be agreed to in writing by Scotts and Buyer.
[signature page to follow]
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective authorized officers to be effective as of the
date first above written.
SELLERS: BUYER:
THE SCOTTS COMPANY THE NU-GRO CORPORATION
By: /s/ G. Robert Lucas By: /s/ John D. Hill
-------------------------------- --------------------------
Name: Name:
Title: Executive Vice President Title: President and
and General Counsel CEO
OMS INVESTMENTS, INC.
By: /s/ G. Robert Lucas
--------------------------------
Name:
Title: President and
Chief Executive Officer
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SCHEDULES AND EXHIBITS*
-----------------------
DESCRIPTION SCHEDULE NO.
----------- ------------
Registrations 2.01(b)(1)
Intellectual Property Rights........................................... 2.01(b)(2)
Customer List ......................................................... 2.01(b)(3)
Inventory.............................................................. 2.01(b)(4)
Products .............................................................. 2.01(b)(5)
Contracts.............................................................. 2.01(b)(7)
Excluded Contracts..................................................... 2.02(a)
Other Contracts........................................................ 3.07
Intellectual Property Infringement..................................... 3.08
Litigation............................................................. 3.09
Licenses............................................................... 3.10
Employees.............................................................. 3.11
Product Compliance..................................................... 3.14
Conduct of Business.................................................... 5.01
Scotts(R) Trademark..................................................... 7.07
DESCRIPTION EXHIBIT
----------- -------
Canadian ProTurf License Agreement Exhibit A
Canadian Supply Agreement Exhibit B
Canadian Poly-S(R) License Agreement Exhibit C
Canadian Peters(R) and Starter(R) License Agreement Exhibit D
Canadian Patent License Agreement Exhibit E
Assignment and Assumption Agreement Exhibit F
- --------------------------------------------------------------------------------
* Not filed with this Canadian Asset Purchase Agreement
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