UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): August 3, 1998
LANDCARE USA, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 001-14089 76-0562801
(State or other (Commission file number) (IRS employer identification
jurisdiction no.) of incorporation)
THREE RIVERWAY, SUITE 630, HOUSTON, TEXAS 77056
(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code: (713) 965-0336
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
Between August 3, 1998 and August 14, 1998, LandCARE USA, Inc. (the
"Company") acquired, in separate merger or stock purchase transactions, seven
businesses engaged in the landscape and tree services industry (together, the
"Businesses Acquired"), as follows: (i) Continental Landscape Management, Inc.,
on August 3, 1998; (ii) Gator & Gator Landscaping Company, on August 4, 1998;
(iii) Landscape West, Inc., on August 5, 1998; (iv) Clean Cut, Inc., on August
5, 1998; (v) Horticultural Industries, Inc., on August 5, 1998; (vi) Landscape
Resources, Inc., on August 10, 1998; and (vii) R.L. Company, Inc., on August 14,
1998. The consideration for the acquisitions consisted of an aggregate of
3,101,647 shares of the Company's common stock, valued at $23,090,718, and
approximately $14,587,500 in cash. The consideration paid by the Company in the
acquisitions, the cash portion of which constituted borrowing under the
Company's credit line, was determined through arm's length negotiations between
representatives of the Company and the Businesses Acquired.
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ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(a) Financial Statements of Businesses Acquired.
In accordance with Rule 3-05 of Regulation S-X, no financial
statements are required to be filed for the Businesses Acquired,
either individually or in the aggregate.
(b) Pro Forma Financial Information.
In accordance with Rule 11-01 of Regulation S-X, pro forma financial
information is not required to be filed.
(c) Exhibits.
The following materials are filed as exhibits to this Current Report
on Form 8-K.
EXHIBIT
NUMBER DESCRIPTION
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2.1 Agreement and Plan of Merger dated August 3, 1998, by
and among the Company, Desert Care Landscaping, Inc.,
Continental Landscape Management, Inc. and Aaron Eubank.
2.2 Agreement and Plan of Merger dated August 4, 1998, by
and among the Company, Ground Control Landscaping, Inc.,
Gator & Gator Landscaping Company and the stockholders
named therein.
2.3 Agreement and Plan of Merger dated August 4, 1998, by
and among the Company, LW Acquisition Corp, Landscape
West, Inc. and Barry Konier.
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2.4 Agreement and Plan of Merger dated August 5, 1998, by
and among the Company, CCI Acquisition Corp., Clean Cut,
Inc. and the stockholders named therein.
2.5 Agreement and Plan of Merger dated August 5, 1998, by
and among the Company, HI Acquisition Corp.,
Horticultural Industries, Inc. and William H. Davoli.
2.6 Stock Purchase Agreement dated August 10, 1998, by and
among the Company, Landscape Resources, Inc. and Stephen
W. Barley and the other parties thereto.
2.7 Agreement and Plan of Merger dated August 14, 1998, by
and among the Company, RLC Acquisition Corp., R.L.
Company, Inc. and Lebo Newman.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
LANDCARE USA, INC.
Dated: August 26, 1998 By: /s/ WILLIAM L. FIEDLER
William L. Fiedler
Senior Vice President, General
Counsel and Secretary
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EXHIBIT INDEX
Exhibit
NUMBER DESCRIPTION
2.1 Agreement and Plan of Merger dated August 3, 1998, by
and among the Company, Desert Care Landscaping, Inc.,
Continental Landscape Management, Inc. and Aaron Eubank.
2.2 Agreement and Plan of Merger dated August 4, 1998, by
and among the Company, Ground Control Landscaping, Inc.,
Gator & Gator Landscaping Company and the stockholders
named therein.
2.3 Agreement and Plan of Merger dated August 4, 1998, by
and among the Company, LW Acquisition Corp, Landscape
West, Inc. and Barry Konier.
2.4 Agreement and Plan of Merger dated August 5, 1998, by
and among the Company, CCI Acquisition Corp., Clean Cut,
Inc. and the stockholders named therein.
2.5 Agreement and Plan of Merger dated August 5, 1998, by
and among the Company, HI Acquisition Corp.,
Horticultural Industries, Inc. and William H. Davoli.
2.6 Stock Purchase Agreement dated August 10, 1998, by and
among the Company, Landscape Resources, Inc. and Stephen
W. Barley and the other parties thereto.
2.7 Agreement and Plan of Merger dated August 14, 1998, by
and among the Company, RLC Acquisition Corp., R.L.
Company, Inc. and Lebo Newman.
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EXHIBIT 2.1
EXECUTION COPY
AGREEMENT AND PLAN OF MERGER
dated as of August 3, 1998
by and among
LANDCARE USA, INC.,
DESERT CARE LANDSCAPING, INC.,
CONTINENTAL LANDSCAPE MANAGEMENT, INC.
and
Aaron Eubank
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TABLE OF CONTENTS
Page
1. THE MERGER.............................................................1
1.1 The Merger.......................................................1
1.2 Effective Time...................................................1
1.3 Articles of Incorporation, By-laws, Directors
and Officers of Surviving Corporation...........................2
1.4 Effect of Merger.................................................2
1.5 Manner of Conversion.............................................3
1.6 Delivery of Certificates.........................................3
1.7 Closing..........................................................3
2. REPRESENTATIONS AND WARRANTIES OF THE STOCKHOLDER......................4
2.1 Due Organization.................................................4
2.2 Authorization....................................................4
2.3 Capital Stock of the Company.....................................4
2.4 Subsidiaries.....................................................5
2.5 Financial Statements.............................................5
2.6 Liabilities and Obligations......................................5
2.7 Accounts and Notes Receivable....................................6
2.8 Permits and Intangibles..........................................6
2.9 Environmental Matters............................................6
2.10 Personal Property................................................7
2.11 Significant Customers; Material Contracts and Commitments........8
2.12 Real Property....................................................8
2.13 Insurance........................................................9
2.14 Compensation; Employment Agreements; Organized Labor Matters.....9
2.15 Employee Benefit Plans..........................................10
2.16 Conformity with Law; Litigation.................................11
2.17 Taxes...........................................................11
2.18 No Violations; All Required Consents Obtained...................13
2.19 Absence of Changes..............................................13
2.20 Powers of Attorney..............................................15
2.21 Competing Lines of Business; Related-party Transactions.........15
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2.22 Disclosure......................................................15
2.23 Certain Business Practices......................................15
2.24 Notice to Bargaining Agents.....................................16
2.25 Notices and Consents............................................16
2.26 Inventory; Working Capital; Other Financial Matters.............16
2.27 Reliance Upon Oral Representations..............................16
3. REPRESENTATIONS OF LANDCARE...........................................16
3.1 Due Organization................................................16
3.2 Authorization...................................................16
3.3 No Violations...................................................17
3.4 Validity of Obligations.........................................17
3.5 Reliance upon Oral Representations..............................17
4. DELIVERIES............................................................17
4.1 Instruments of Transfer.........................................17
4.2 Certificate of Merger...........................................17
4.3 Employment Agreement............................................17
4.4 Opinion of Counsel..............................................17
4.5 Good Standing Certificates......................................17
4.6 Lease...........................................................17
4.7 Indebtedness to Company.........................................18
4.8 Consents........................................................18
4.9 Resignations of Directors and Officers..........................18
4.10 Deliveries by LandCare..........................................18
4.11 Environmental Indemnity.........................................18
4.12 Agreement Regarding SBA Loan....................................18
5. POST-CLOSING COVENANTS................................................18
5.1 Future Cooperation; Further Assurances..........................19
5.2 Expenses........................................................19
5.3 Certain Agreements..............................................19
5.4 Preparation and Filing of Tax Returns...........................19
6. INDEMNIFICATION.......................................................20
6.1 Survival of Stockholder's Representations and Warranties. .....20
6.2 General Indemnification by the Stockholder......................21
6.3 Indemnification by LandCARE.....................................21
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6.4 Third Person Claims.............................................21
6.5 Method of Payment...............................................22
6.6 Limitations on Indemnification..................................22
6.7 Insurance.......................................................22
7. NONCOMPETITION........................................................22
7.1 Prohibited Activities...........................................22
7.2 Equitable Relief................................................23
7.3 Reasonable Restraint............................................23
7.4 Severability; Reformation.......................................24
7.5 Independent Covenant............................................24
8. NONDISCLOSURE OF CONFIDENTIAL INFORMATION.............................24
8.1 General.........................................................24
8.2 Equitable Relief................................................25
8.3 Survival........................................................25
9 INTENDED TAX TREATMENT
.....................................................................25
9.1 Tax-Free Reorganization.........................................25
9.2 Restrictions on Resale..........................................26
10 SECURITIES LAW MATTERS................................................26
10.1 Economic Risk; Sophistication...................................26
10.2 Compliance with Law.............................................26
11. GENERAL...............................................................26
11.1 Successors and Assigns..........................................26
11.2 Entire Agreement................................................26
11.3 Counterparts....................................................27
11.4 Brokers and Agents..............................................27
11.5 Notices.........................................................27
11.6 Governing Law...................................................28
11.7 Survival of Representations and Warranties......................28
11.8 Exercise of Rights and Remedies.................................28
11.9 Time............................................................28
11.10 Reformation and Severability....................................28
11.11 Remedies Cumulative.............................................28
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11.12 Schedules & Captions............................................28
11.13 Press Releases and Public Announcements.........................28
11.14 No Third-Party Beneficiaries....................................29
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SCHEDULES
SCHEDULE 2.1. Due Organization
SCHEDULE 2.4. Subsidiaries
SCHEDULE 2.5. Financial Statements
SCHEDULE 2.6. Liabilities and Obligations
SCHEDULE 2.6A. Tangible Net Worth Adjustments
SCHEDULE 2.7. Accounts and Notes Receivable
SCHEDULE 2.8. Permits and Intangibles
SCHEDULE 2.9. Environmental Matters
SCHEDULE 2.10. Personal Property
SCHEDULE 2.11. Significant Customers; Material Contracts and
Commitments
SCHEDULE 2.12. Real Property
SCHEDULE 2.13. Insurance
SCHEDULE 2.14. Compensation; Employment Agreements; Organized
Labor Matters
SCHEDULE 2.15. Employee Benefit Plans
SCHEDULE 2.16. Conformity with Law; Litigation
SCHEDULE 2.17 Taxes
SCHEDULE 2.18. No Violations; No Consents Required
SCHEDULE 2.19. Absence of Changes
SCHEDULE 2.20. Powers of Attorney
SCHEDULE 2.21. Competing Lines of Business; Related Party Transactions
SCHEDULE 4.5. Leases
SCHEDULE 6.3. Guaranteed Indebtedness
SCHEDULE 9.2. Summary of Liquidity Plan
ANNEXES
Annex I - Form of Employment Agreement
Annex II - Form of Opinion of Counsel to Company and
Stockholder
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AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (this "Agreement") is made and entered
into as of August 3, 1998 by and among LandCARE USA, Inc., a Delaware
corporation ("LandCARE"), Desert Care Landscaping, Inc., an Arizona corporation
and wholly owned subsidiary of LandCARE ("Desert Care"), Continental Landscape
Management, Inc., an Arizona corporation (the "Company" or "CLM"), and Aaron
Eubank (the "Stockholder"). The Stockholder is the only holder of capital stock
of the Company.
WHEREAS, the respective Boards of Directors of Desert Care and the Company
(collectively called the "Constituent Corporations") deem it advisable and in
the best interests of the Constituent Corporations and their respective
stockholders that the Company merge with and into Desert Care pursuant to this
Agreement and the applicable provisions of the laws of the State of Arizona (the
"State of Incorporation"); and
WHEREAS, the Boards of Directors of the Constituent Corporations have
approved and adopted this Agreement as a plan of reorganization under Section
368 of the Internal Revenue Code of 1986, as amended (the "Code"); and
WHEREAS, on the date hereof the parties are consummating the transactions
described herein;
NOW, THEREFORE, in consideration of the premises and of the mutual
agreements contained herein, the parties hereto, intending to be legally bound,
agree as follows:
1. THE MERGER
1.1 THE MERGER. On the terms and subject to the conditions of this
Agreement, at the Effective Time (as defined below), the Company shall be merged
with and into Desert Care (the "Merger") and the separate existence of the
Company shall cease, all in accordance with the provisions of the law of the
State of Incorporation. Desert Care shall be the surviving corporation in the
Merger and is sometimes hereinafter called the "Surviving Corporation."
1.2 EFFECTIVE TIME. The Merger shall become effective at such time (the
"Effective Time") as articles of merger, in a form appropriate for filing, are
filed with the Arizona Corporation
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Commission (the "Merger Filing"). The Merger Filing shall be made simultaneously
with or as soon as practicable after the execution and delivery of this
Agreement.
1.3 ARTICLES OF INCORPORATION, BY-LAWS, DIRECTORS AND OFFICERS OF
SURVIVING CORPORATION. At the Effective Time, the Articles of Incorporation of
Desert Care then in effect shall be the Articles of Incorporation of the
Surviving Corporation, and the By-laws of Desert Care then in effect shall be
By-laws of the Surviving Corporation. The directors and officers of Desert Care
immediately prior to the Effective Time shall be the directors and officers of
the Surviving Corporation.
1.4 EFFECT OF MERGER. At the Effective Time, the effect of the Merger
shall be as provided in the law of the State of Incorporation. Except as herein
specifically set forth, the identity, existence, purposes, powers, objects,
franchises, privileges, rights and immunities of Desert Care shall continue
unaffected and unimpaired by the Merger and the corporate franchises, existence
and rights of the Company shall be merged with and into Desert Care, and Desert
Care, as the Surviving Corporation, shall be fully vested therewith. At the
Effective Time, the separate existence of the Company shall cease and, in
accordance with the terms of this Agreement, the Surviving Corporation shall
possess all the rights, privileges, immunities and franchises, of a public, as
well as of a private, nature, and all property, real, personal and mixed, and
all debts due on whatever account, including subscriptions to shares, and all
taxes, including those due and owing and those accrued, and all other choses in
action, and all and every other interest of or belonging to or due to the
Company and Desert Care shall be taken and deemed to be transferred to, and
vested in, the Surviving Corporation without further act or deed; and all
property, rights and privileges, powers and franchises and all and every other
interest shall be thereafter as effectually the property of the Surviving
Corporation as they were of the Company and Desert Care; and the title to any
real estate, or interest therein, whether by deed or otherwise, under the laws
of the State of Incorporation vested in the Company and Desert Care, shall not
revert or be in any way impaired by reason of the Merger. Except as otherwise
provided herein, the Surviving Corporation shall thenceforth be responsible and
liable for all the liabilities and obligations of the Company and Desert Care
and any claim existing, or action or proceeding pending, by or against the
Company or Desert Care may be prosecuted as if the Merger had not taken place,
or the Surviving Corporation may be substituted in their place. Neither the
rights of creditors nor any liens upon the property of the Company or Desert
Care shall be impaired by the Merger, and all debts, liabilities and duties of
the Company and Desert Care shall attach to the Surviving Corporation, and may
be enforced against the Surviving Corporation to the same extent as if said
debts, liabilities and duties had been incurred or contracted by such Surviving
Corporation.
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1.5 MANNER OF CONVERSION. The manner of converting the outstanding shares
of capital stock of the Company ("Company Stock") and the outstanding shares of
capital stock of Desert Care ("Desert Care Stock") shall be as follows:
As of the Effective Time:
1. The Company Stock issued and outstanding immediately prior
to the Effective Time, by virtue of the Merger and without any action on the
part of the holder thereof, automatically shall be converted into the right to
receive at Closing, in the aggregate, (i) 103,704 shares of common stock, par
value $.01 per share, of LandCARE ("LandCARE Stock") (such number being equal to
$962,500 divided by the average of the closing prices of LandCARE Stock on the
New York Stock Exchange for the ten consecutive business days beginning on the
fifteenth business day prior to the date hereof) and (ii) an aggregate of
$962,500 in cash (the "Cash Consideration"), less an aggregate of $167,157.22 to
be withhold by LandCare, with the balance of $795,342.78 being paid by wire
transfer.
2. All shares of Company Stock, if any, that are held by the
Company as treasury stock shall be canceled and retired, and no shares of
LandCARE Stock or other consideration shall be delivered or paid in exchange
therefor; and
3. As of the Effective Time, each outstanding share of Desert
Care Stock shall remain outstanding and unchanged.
1.6 DELIVERY OF CERTIFICATES. At the Closing, (i) the Stockholder shall
deliver to LandCARE the certificates representing the Company Stock, duly
endorsed in blank by the Stockholder, or accompanied by blank stock powers, and
with all necessary transfer tax and other revenue stamps, acquired at the
Stockholder's expense, affixed and canceled, and (ii) LandCARE shall cause its
stock transfer agent to deliver to the Stockholder certificates representing the
LandCARE Stock as described above. The Stockholder agrees promptly to cure any
deficiencies with respect to the endorsement of the stock certificates or other
documents of conveyance with respect to such Company Stock or with respect to
the stock powers accompanying any Company Stock.
1.7 CLOSING. The transactions contemplated by this Agreement are being
consummated on the date hereof, and the date hereof is sometimes herein called
the "Closing Date."
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2. REPRESENTATIONS AND WARRANTIES OF THE STOCKHOLDER
The Stockholder hereby represents and warrants to LandCARE as follows.
2.1 DUE ORGANIZATION. The Company is a corporation duly organized, validly
existing and in good standing under the laws of the State of Incorporation, and
has all requisite power and authority to carry on its business as it is now
being conducted. The Company is duly qualified to do business and is in good
standing in each jurisdiction in which the nature of its business or the
ownership or leasing of its properties makes such qualification necessary,
except where the failure to be so authorized or qualified would not have a
material adverse effect on the business, assets, operations or condition
(financial or otherwise) of the Company (as used herein with respect to the
Company, or with respect to any other person, a "Material Adverse Effect").
SCHEDULE 2.1 sets forth a list of all jurisdictions in which the Company is
authorized or qualified to do business. True, complete and correct copies of the
Articles of Incorporation and By-laws, each as amended, of the Company (the
"Charter Documents") are all attached to SCHEDULE 2.1. The stock records of the
Company, a copy of which is attached to SCHEDULE 2.1, are correct and complete
in all material respects. All records of all proceedings of the Board of
Directors and stockholders of the Company have been made available to LandCARE.
2.2 AUTHORIZATION. (i) The representative of the Company executing this
Agreement has the authority to enter into and bind the Company to the terms of
this Agreement and (ii) the Company has the full legal right, power and
authority to enter into this Agreement and the transactions contemplated hereby,
all of which have been approved by the Stockholder and the Board of Directors of
the Company. This Agreement has been validly executed and delivered by the
Company and the Stockholder and constitutes the legal, valid and binding
obligation of each of them, enforceable in accordance with its terms.
2.3 CAPITAL STOCK OF THE COMPANY. The authorized capital stock of the
Company consists solely of 100,000 shares of common stock, par value $ 1.00 per
share, of which 100 shares are issued and outstanding and constitute all of the
issued and outstanding shares of Company Stock (the "Shares"). All of the Shares
are owned of record and beneficially by the Stockholder and are owned free and
clear of all liens, security interests, pledges, charges, voting trusts,
restrictions, encumbrances and claims of every kind. All of the Shares have been
duly authorized and validly issued, are fully paid and nonassessable, and were
offered, issued, sold and delivered by the Company in compliance with all
applicable state and federal laws governing the issuance of securities. None of
the Shares were issued in violation of any preemptive rights or similar rights
of any person. No option, warrant, call, conversion right or commitment of any
kind exists which
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obligates the Company to issue any additional shares of its capital stock or
obligates the Stockholder to transfer any of the Shares to any person except
pursuant to this Agreement.
2.4 SUBSIDIARIES. Except as set forth on SCHEDULE 2.4, the Company has no
subsidiaries or d/b/a names and has not conducted business under any other name
except its legal name as set forth in its Charter Documents. Except as set forth
in SCHEDULE 2.4, the Company does not own, of record or beneficially, or
control, directly or indirectly, any capital stock, securities convertible into
capital stock or any other equity interest in any corporation, association or
other business entity, and the Company is not, directly or indirectly, a
participant in any joint venture, partnership or other non-corporate entity.
2.5 FINANCIAL STATEMENTS. Complete and correct copies of the following
financial statements are attached as SCHEDULE 2.5:
(i) The balance sheets of the Company as of January 31, 1998 (the
"Balance Sheet Date") and any related statements of operations,
stockholder's equity and cash flows for the three-year period then ended,
together with any related notes and schedules (the "Year-end Financial
Statements"); and
(ii) The balance sheet (the "Interim Balance Sheet") of the Company
as of May 31, 1998 and the related statements of operations for the
four-month period then ended (the "Interim Financial Statements"). (The
Year-end Financial Statements and the Interim Financial Statements are
herein collectively called the "Financial Statements".)
The Financial Statements have been prepared from the books and records of
the Company and present fairly in all material respects the financial position
and results of operations of the Company as of the dates of such statements and
for the periods covered thereby. Said Financial Statements are in the form of
Accountants' Compilation Reports. The books of account of the Company have been
kept accurately in all material respects in the ordinary course of business, the
transactions entered therein represent bona fide transactions, and the revenues,
expenses, assets and liabilities of the Company have been properly recorded
therein in all material respects.
2.6 LIABILITIES AND OBLIGATIONS. Except as and to the extent disclosed and
adequately provided for in the Financial Statements or on SCHEDULE 2.6 hereto,
the Company has no liabilities or obligations of any kind, whether accrued,
absolute, secured or unsecured, contingent or otherwise. Except and to the
extent disclosed on SCHEDULE 2.6, there are no claims, liabilities or
obligations, nor any reasonable basis for assertion against the Company, of any
claim, liability or obligation, of any nature whatsoever. Except as expressly
set forth on SCHEDULE 2.6, all of the contingent liabilities of
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the Company listed on SCHEDULE 2.6 are covered by the Company's insurance
policies, and no such liability will exceed the policy limits of such insurance
policies. SCHEDULE 2.6 contains a reasonable estimate of the maximum amount
which may be payable with respect to known liabilities which are not fixed. For
each such known liability for which the amount is not fixed, SCHEDULE 2.6
includes a summary description of each known liability, together with copies of
all relevant documentation relating thereto. The Company's total
interest-bearing debt as of the Closing Date, calculated using the
average-month-end balance for August 1997-July 1998 for the Company's line of
credit, does not exceed $210,000.
2.7 ACCOUNTS AND NOTES RECEIVABLE. SCHEDULE 2.7 sets forth an accurate
list of the accounts and notes receivable of the Company, as of the most recent
date practicable (which date is set forth thereon), showing accounts receivable
amounts due in 30-day aging categories. Except to the extent reflected on
SCHEDULE 2.7, all such accounts receivable were incurred in the ordinary course
of business and are collectible in the amounts shown on SCHEDULE 2.7, net of
reserves reflected in (a) the balance sheet as of the Balance Sheet Date and/or
(b) on Schedule 2.6.
2.8 PERMITS AND INTANGIBLES. The Company holds all licenses, franchises,
permits and other governmental authorizations required or necessary in
connection with the conduct of the Company's business. SCHEDULE 2.8 sets forth
an accurate list of all such licenses, franchises, permits and other
governmental authorizations. The Company holds no patents, patent applications
or copyrights. The software utilized by the Company is believed to be licensed
to it by various licensors. It is agreed that a list of all environmental
permits and other environmental approvals is set forth on SCHEDULE 2.9). The
governmental authorizations listed on SCHEDULES 2.8 and 2.9 are valid except as
otherwise stated in said Schedules, and the Company has not received any notice
that any person intends to cancel, terminate or not renew any such governmental
authorization. The Company has conducted and is conducting its business in
compliance with the requirements, standards, criteria and conditions set forth
in the governmental authorizations listed on SCHEDULES 2.8 and 2.9 and is not,
to the best of Stockholder's knowledge, in violation of any of the foregoing.
Except as specifically set forth on SCHEDULE 2.8 or 2.9, the transactions
contemplated by this Agreement will not, to the best of Stockholder's knowledge,
result in a default under or a breach or violation of, or adversely affect the
rights and benefits afforded to the Company by, any such governmental
authorizations.
2.9 ENVIRONMENTAL MATTERS. The Company has complied with and is in
compliance with all federal, state, local and foreign statutes (civil and
criminal), laws, ordinances, regulations, rules, notices, permits, judgments,
orders and decrees applicable to any of them or any of their respective
properties, assets, operations and businesses relating to environmental
protection (collectively "Environmental Laws"), including, without limitation,
Environmental Laws relating
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to air, water, land and the generation, storage, use, handling, transportation,
treatment or disposal of Hazardous Wastes, Hazardous Materials and Hazardous
Substances (including petroleum and petroleum products) (as such terms are
defined in any applicable Environmental Law) except to the extent that
noncompliance with any Environmental Laws, either singly or in the aggregate,
has not had and will not have a Material Adverse Effect on the Company or any of
its operations. The Company has obtained and adhered to all necessary permits
and other approvals necessary to treat, transport, store, dispose of and
otherwise handle Hazardous Wastes, Hazardous Materials and Hazardous Substances,
a list of all of which permits and approvals is set forth on SCHEDULE 2.9, and
have reported to the appropriate authorities, to the extent required by all
Environmental Laws, all past and present sites owned and operated by the Company
where Hazardous Wastes, Hazardous Materials or Hazardous Substances have been
treated, stored, disposed of or otherwise handled. There have been no releases
or threats of releases (as defined in Environmental Laws) at, from, in, under or
on any property owned or operated by the Company except as permitted by
Environmental Laws. There is no on-site or off-site location to which the
Company has transported or disposed of Hazardous Wastes, Hazardous Materials or
Hazardous Substances or arranged for the transportation of Hazardous Wastes,
Hazardous Materials or Hazardous Substances which is the subject of any federal,
state, local or foreign enforcement action or any other investigation which
could lead to any claim against the Company or LandCARE for any clean-up cost,
remedial work, damage to natural resources, property damage or personal injury,
including, but not limited to, any claim under (i) the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as amended, (ii)
the Resource Conservation and Recovery Act, as amended, (iii) the Hazardous
Materials Transportation Act, as amended, or (iv) comparable state or local
statutes and regulations. The Company has no contingent liability in connection
with any release of any Hazardous Waste, Hazardous Material or Hazardous
Substance into the environment.
2.10 PERSONAL PROPERTY. SCHEDULE 2.10 sets forth an accurate list of (a)
all personal property included in "plant, property and equipment" or any similar
category on the balance sheet of the Company, (b) all other personal property
owned by the Company with a fair market value in excess of $5,000, and (c) all
leases and agreements with respect to personal property, copies of which have
been delivered to LandCARE. None of said assets is currently owned, or was
formerly owned, by the Stockholder or any affiliate of the Company or the
Stockholder. Except as set forth on SCHEDULE 2.10, (i) all material personal
property used by the Company in its business is either owned by the Company or
leased by the Company pursuant to a lease included on SCHEDULE 2.10, (ii) the
personal property listed on SCHEDULE 2.10 is generally in good working order and
condition, ordinary wear and tear excepted and (iii) all leases and agreements
included on SCHEDULE 2.10 are (subject to bankruptcy, insolvency,
reorganization, moratorium and other similar laws now or hereafter in effect
relating to creditors' rights; and the availability of equitable remedies,
including specific performance and injunctive relief, is subject to the
discretion of the court before which any
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proceeding therefor may be brought) in full force and effect and constitute
valid and binding agreements of the parties (and their successors) thereto in
accordance with their respective terms. Except as set forth on SCHEDULE 2.10,
the Company has good and marketable title to the tangible and intangible
personal property it purports to own, subject to no security interest, pledge,
lien, claim, conditional sales agreement, encumbrance, charge or restriction on
transfer.
2.11 SIGNIFICANT CUSTOMERS; MATERIAL CONTRACTS AND COMMITMENTS. SCHEDULE
2.11 sets forth a list of (i) all customers representing 1% or more of the
Company's revenues in its last full fiscal year ("Significant Customers"), and
(ii) all material contracts, commitments and similar agreements to which the
Company is a party or by which it or any of its properties are bound (including,
but not limited to, contracts with Significant Customers, joint venture or
partnership agreements, contracts with any labor organizations, strategic
alliances and options to purchase land). Except as described in Schedule 2.11,
true, complete and correct copies of such agreements have been delivered to
LandCARE. Except as described on SCHEDULE 2.11, (i) none of the Significant
Customers have canceled or substantially reduced or, to the knowledge of the
Company, are currently attempting or threatening to cancel a contract or
substantially reduce utilization of the services provided by the Company, and
(ii) the Company has complied with all commitments and obligations pertaining to
it, and is not in default under any contracts or agreements listed on SCHEDULE
2.11 and no notice of default under any such contract or agreement has been
received. The transactions contemplated by this Agreement will not result in a
default under or a breach or violation of, or adversely affect the rights and
benefits afforded to the Company by, any such contracts or agreements. There are
no plans or projects relating to the Company's business involving the opening of
new operations, expansion of existing operations, the acquisition of any
property, business or assets requiring, in any event, the payment of more than $
5,000 in the aggregate.
2.12 REAL PROPERTY. SCHEDULE 2.12 includes a list of all real property
owned or leased by the Company at the date hereof (the "Real Property"), and all
other real property, if any, used by the Company in the conduct of its business.
True, complete and correct copies of all leases and agreements with respect to
Real Property leased by the Company have been delivered to LandCARE, and an
indication as to which such properties, if any, are currently owned, or were
formerly owned, by the Stockholder or any affiliates of the Company or the
Stockholder is included in SCHEDULE 2.12. All leases relating to Real Property
leased by the Company from the Stockholder or any affiliate of the Stockholder
has been terminated. Except as set forth on SCHEDULE 2.12, all of such leases
included on SCHEDULE 2.12 are in full force and effect and constitute valid and
binding agreements of the parties (and their successors) thereto in accordance
with their respective terms. There are no leases, tenancy agreements, easements,
covenants, restrictions or any other instruments, agreements or arrangements
which create in or confer on any party, other than the Company, the right to
occupy or possess all or any portion of the Real Property or create in or confer
on any such party any right,
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title or interest in or to the Real Property or any portion thereof or any
interest therein; no party other than the Company occupies or possesses the Real
Property or any portion thereof; there is legal and adequate ingress and egress
between each tract of Real Property and an adjacent (or, if none, the closest)
public roadway; the Real Property is properly zoned in order to allow its
current use in the Company's businesses; and there are no claims or demands
pending or threatened by any party against the Real Property which, if valid,
would create in, or confer on, any party other than the Company, any right,
title or interest in or to the Real Property or any portion thereof. None of the
buildings, structures or improvements described on SCHEDULE 2.12, or the
operation or maintenance thereof as now operated or maintained, contravenes any
zoning ordinance or other administrative regulation or violates any restrictive
covenant or any provision of law, the effect of which would materially interfere
with or prevent their continued use for the purposes for which they are now
being used or would adversely affect the value thereof or the interest of the
Company therein. The Stockholder has furnished to LandCARE a true and correct
copy of all owner's policies of title insurance and surveys pertaining to the
real property owned by the Company.
2.13 INSURANCE. SCHEDULE 2.13 sets forth an accurate list as of the date
hereof of all insurance policies now carried by the Company. True, complete and
correct copies of all insurance policies currently in effect have been delivered
to LandCARE. Such insurance policies evidence all of the insurance that the
Company is required to carry pursuant to all of its contracts and other
agreements and pursuant to all applicable laws. Except as set forth on SCHEDULE
2.13, none of such policies is a "claims made" policy.
2.14 COMPENSATION; EMPLOYMENT AGREEMENTS; ORGANIZED LABOR MATTERS.
SCHEDULE 2.14 sets forth an accurate list showing all officers, directors and
key employees of the Company, listing all employment agreements with such
officers, directors and key employees and the rate of compensation (and the
portions thereof attributable to salary, bonus and other non-Schedule 2.15
compensation, respectively) of each of such persons as of May 31, 1998. Except
as set forth on SCHEDULE 2.14, since May 31, 1998, there have been no increases
in the base compensation payable or any special bonuses to any officer,
director, key employee or other employee.
Except as set forth on SCHEDULE 2.14, (i) the Company is not bound by or
subject to (and none of its respective assets or properties is bound by or
subject to) any arrangement with any labor union, (ii) no employees of the
Company are represented by any labor union or covered by any collective
bargaining agreement, (iii) to the knowledge of the Company, no campaign to
establish such representation is in progress and (iv) there is no pending or, to
the best of the Company's knowledge, threatened, labor dispute involving the
Company and any group of its employees. The Company has not experienced any
labor interruptions over the past five years.
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2.15 EMPLOYEE BENEFIT PLANS. SCHEDULE 2.15 sets forth an accurate schedule
showing all employee benefit plans of Company, including all agreements or
arrangements (other than agreements or arrangements set forth on SCHEDULE 2.14)
containing "golden parachute" or other similar provisions, and deferred
compensation agreements, together with true, complete and correct copies of such
plans, agreements and any trusts related thereto as of May 31, 1998. Except for
the employee benefit plans, if any, described on SCHEDULE 2.15, the Company does
not sponsor, maintain or contribute to any plan, program, fund or arrangement
that constitutes an "employee pension benefit plan," nor does the Company have
any obligation to contribute to or accrue or pay any benefits under any deferred
compensation or retirement funding arrangement on behalf of any employee or
employees (such as, for example, and without limitation, any individual
retirement account or annuity, any "excess benefit plan" (within the meaning of
Section 3(36) of the Employee Retirement Income Security Act of 1974, as amended
("ERISA")), or any non-qualified deferred compensation arrangement). For the
purposes of this Agreement, the term "employee pension benefit plan" shall have
the same meaning as is given that term in Section 3(2) of ERISA. The Company has
not sponsored, maintained or contributed to any employee pension benefit plan
and is not required to contribute to any retirement plan pursuant to the
provisions of any collective bargaining agreement establishing the terms and
conditions of employment of any of the Company's employees other than the plans
set forth on SCHEDULE 2.15.
The Company is not now, and will not as a result of its past activities
become, liable to the Pension Benefit Guaranty Corporation (the "PBGC") or to
any multi employer employee pension benefit plan under the provisions of Title
IV of ERISA. All employee benefit plans listed on SCHEDULE 2.15 and the
administration thereof are, except as otherwise set forth on SCHEDULE 2.15, in
substantial compliance with their terms and all applicable provisions of ERISA
and the regulations issued thereunder, as well as with all other applicable
federal, state and local statutes, ordinances and regulations. All accrued
contribution obligations of the Company with respect to any plan listed on
SCHEDULE 2.15 have either been fulfilled in their entirety or are fully
reflected on the balance sheet of the Company as of the Balance Sheet Date. All
plans listed on SCHEDULE 2.15 that are intended to qualify (the "Qualified
Plans") under Section 401(a) of the Internal Revenue Code of 1986, as amended
(the "Code"), are, and have been, so qualified and have been determined by the
Internal Revenue Service to be so qualified. Except as disclosed on SCHEDULE
2.15, all reports and other documents required to be filed with any governmental
agency or distributed to plan participants or beneficiaries have been timely
filed or distributed, and the most recent copies thereof, if any, are included
as part of SCHEDULE 2.15. Neither the Stockholder, nor any plan listed in
SCHEDULE 2.15 nor the Company has engaged in any transaction prohibited under
the provisions of Section 4975 of the Code or Section 406 of ERISA. No plan
listed on SCHEDULE 2.15 has incurred an accumulated funding deficiency, as
defined in Section 412(a) of the Code and Section 302(1) of ERISA; and the
Company has not incurred any liability for excise tax or penalty due to the
Internal Revenue Service
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or any liability to the PBGC. There have been no terminations, partial
terminations or discontinuance of contributions to any such Qualified Plan
intended to qualify under Section 401(a) of the Code without notice to and
approval by the Internal Revenue Service; no plan listed on SCHEDULE 2.15
subject to the provisions of Title IV of ERISA has been terminated; there have
been no "reportable events" (as that phrase is defined in Section 4043 of ERISA)
with respect to any such plan listed on SCHEDULE 2.15; the Company has not
incurred liability under Section 4062 of ERISA; and no circumstances exist
pursuant to which the Company could have any direct or indirect liability
whatsoever (including, but not limited to, any liability to any multi employer
plan or the PBGC under Title IV of ERISA or to the Internal Revenue Service for
any excise tax or penalty, or being subject to any statutory lien to secure
payment of any such liability) with respect to any plan now or heretofore
maintained or contributed to by any entity other than the Company that is, or at
any time was, a member of a "controlled group" (as defined in Section
412(n)(6)(B) of the Code) that includes the Company.
2.16 CONFORMITY WITH LAW; LITIGATION. Except as set forth on SCHEDULE
2.16, there are no claims, actions, suits or proceedings pending or, to the best
knowledge of the Stockholder, threatened, against or affecting the Company (as
any of its officers and directors in their capacities as such), at law or in
equity, or before or by any federal, state, municipal or other governmental
department, commission, board, bureau, agency or instrumentality having
jurisdiction over the Company. Except as set forth on SCHEDULE 2.16, no notice
of any unresolved claim, action, suit or proceeding, whether pending or
threatened, has been received by the Company during the last five years and, to
the best knowledge of the Stockholder, there is no basis therefor. Except as set
forth on SCHEDULE 2.16, there are no outstanding judgments, orders, writs,
injunctions or decrees against the Company. Except as set forth on SCHEDULE
2.16, the Company has conducted and now conducts its business in material
compliance with all laws, regulations, writs, injunctions, decrees and orders
applicable to the Company or its assets. The Company is not in material
violation of any law or regulation or any order of any court or federal, state,
municipal or other governmental department, commission, board, bureau, agency or
instrumentality having jurisdiction over any of them. The Company has conducted
and is conducting its business in substantial compliance with the requirements,
standards, criteria and conditions set forth in applicable federal, state and
local statutes, ordinances, permits, licenses, orders, approvals, variances,
rules and regulations, including all such permits, licenses, orders and other
governmental approvals set forth on SCHEDULES 2.8 and 2.9.
2.17 TAXES. For purposes of this Agreement, the term "Taxes" shall mean
all taxes, charges, fees, levies or other assessments, including, without
limitation, income, gross receipts, excise, property, sales, withholding, social
security, unemployment, occupation, use, service, license, payroll, franchise,
transfer and recording taxes, fees and charges, imposed by the United States or
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any state, local or foreign government or subdivision or agency thereof ("Taxing
Authority"), whether computed on a separate, consolidated, unitary, combined or
any other basis; and such term shall include any interest, fines, penalties or
additional amounts attributable to or imposed with respect to any such taxes,
charges, fees, levies or other assessments. As used herein, the term "Company
Subsidiaries" means the subsidiaries, if any, of the Company; it being
understood that there may be no such subsidiaries.
Except as set forth on SCHEDULE 2.17, all Tax returns ("Returns") required
to be filed with respect to any Tax for which any of the Company and the Company
Subsidiaries (if any) is liable have been duly and timely filed with the
appropriate Taxing Authority, each Tax shown to be payable on each such Return
has been paid, each Tax payable by the Company or a Company Subsidiary by
assessment has been timely paid in the amount assessed, and adequate reserves
have been established on the consolidated books of the Company and the Company
Subsidiaries for all Taxes for which any of the Company and the Company
subsidiaries is liable, but the payment of which is not yet due. Neither the
Company nor any Company Subsidiary is, or ever has been, liable for any Tax
payable by reason of the income or property of a person or entity other than the
Company or a Company Subsidiary. Each of the Company and the Company
Subsidiaries has timely filed true, correct and complete declarations of
estimated Tax in each jurisdiction in which any such declaration is required to
be filed by it. No Liens for Taxes exist upon the assets of the Company or any
Company Subsidiary except Liens for Taxes which are not yet due. Neither the
Company nor any Company Subsidiary is, or ever has been, subject to Tax in any
jurisdiction outside the United States. No litigation with respect to any Tax
for which the Company or any Company Subsidiary is asserted to be liable is
pending or, to the knowledge of the Company or the Stockholder, threatened, and
no basis which the Company or any Stockholder believes to be valid exists on
which any claim for any such Tax can be asserted against the Company or any
Company Subsidiary. There are no requests for rulings or determinations in
respect of any Taxes pending between the Company or any Company Subsidiary and
any Taxing Authority. No extension of any period during which any Tax may be
assessed or collected and for which the Company or any Company Subsidiary is or
may be liable has been granted to any Taxing Authority. Neither the Company nor
any Company Subsidiary is or has been party to any tax allocation or sharing
agreement. All amounts required to be withheld by any of the Company and the
Company Subsidiaries and paid to governmental agencies for income, social
security, unemployment insurance, sales, excise, use and other Taxes have been
collected or withheld and paid to the proper Taxing Authority. The Company and
each Company Subsidiary have made all deposits required by law to be made with
respect to employees' withholding and other employment Taxes. Neither the
Company nor the Stockholder is a "foreign person," as that term is referred to
in Section 1445(f)(3) of the Code. The Company has not filed a consent pursuant
to Section 341 (f) of the Code or any comparable provision of any other tax
statute and has not agreed to have Section 341 (f)(2) of the
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Code or any comparable provision of any other Tax statute apply to any
disposition of an asset. The Company has not made, is not obligated to make and
is not a party to any agreement that could require it to make any payment that
is not deductible under Section 280G of the Code. Except as otherwise disclosed
to LandCARE, no accounting method changes of the Company or of any Company
Subsidiary exist or are proposed or threatened which could give rise to an
adjustment under Section 481 of the Code. The Company uses the cash method of
accounting for income tax purposes, and the Company's methods of accounting have
not changed in the past five years. The Company is not an investment company as
defined in Section 351(e)(1) of the Code. The Company has a taxable year ended
January 31. The Company is not party to any joint venture, partnership, or other
arrangement that is treated as a partnership for federal income tax purposes.
2.18 NO VIOLATIONS; ALL REQUIRED CONSENTS OBTAINED. The Company is not in
violation of any of its Charter Documents. Neither the Company nor, to the
knowledge of the Stockholder, any other party thereto is in material default
under any lease, instrument, license, permit or material agreement to which the
Company is a party or by which its properties are bound (the "Material
Documents"). Except as set forth on SCHEDULE 2.18, (a) the execution of this
Agreement by the Company and the Stockholder and the performance by the Company
and the Stockholder of their obligations hereunder and the consummation of the
transactions contemplated hereby will not result in any violation or breach or
constitute a default under any of the terms or provisions of the Material
Documents or the Charter Documents, and (b) at and after the Closing Date the
Surviving Corporation will be entitled to the rights and benefits under the
Material Documents to which the Company is entitled immediately prior to the
Closing. Except as set forth on SCHEDULE 2.18 (and except for consents already
obtained), none of the Material Documents requires notice to, or the consent or
approval of, any governmental agency or other third party with respect to any of
the transactions contemplated hereby in order to remain in full force and
effect, and consummation of the transactions contemplated hereby will not give
rise to any right to termination, cancellation or acceleration or loss of any
right or benefit. Except as set forth on SCHEDULE 2.18, none of the Material
Documents prohibits the use or publication of the name of any other party to
such Material Document, and none of the Material Documents prohibits or
restricts the Surviving Corporation or will prevent or restrict the Company or
LandCARE from freely providing services to any person.
2.19 ABSENCE OF CHANGES. Since the Balance Sheet Date, the Company has
conducted its operations in the ordinary course of business and, except as set
forth on SCHEDULE 2.19, there has not been:
(i) any change in the business, assets, liabilities or financial
condition of the Company which would have a Material Adverse Effect;
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(ii) any damage, destruction or loss (whether or not covered by
insurance) affecting any of the material assets of the Company or the
business of the Company which would have a Material Adverse Effect;
(iii) any change in the authorized capital of the Company or its
outstanding securities or any change in its ownership interests or any
grant of any options, warrants, calls, conversion rights or commitments;
(iv) any declaration or payment of any dividend or distribution with
respect to the capital stock or any direct or indirect redemption,
purchase or other acquisition of any of the capital stock of the Company;
(v) since May 31, 1998, any increase or commitment to increase the
compensation, bonus, sales commissions or fee arrangement payable or to
become payable by the Company to any of its officers, directors,
stockholders, employees, consultants or agents;
(vi) any work interruptions, labor grievances or claims filed, or
any event or condition of any character, materially adversely affecting
the business of the Company;
(vii) any sale or transfer, or any agreement to sell or transfer,
any material assets, property or rights of the Company to any person;
(viii) any cancellation, or agreement to cancel, any indebtedness or
other obligation owing to the Company;
(ix) any plan, agreement or arrangement granting any preferential
rights to purchase or acquire any interest in any of the assets, property
or rights of the Company or requiring consent of any party to the transfer
and assignment of any such assets, property or rights;
(x) any purchase or acquisition of, or agreement, plan or
arrangement to purchase or acquire, any property, rights or assets outside
of the ordinary course of the Company's business;
(xi) any waiver of any material rights or claims of the Company;
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(xii) any amendment or termination of any contract, agreement,
license, permit or other right to which the Company is a party which would
have a Material Adverse Effect;
(xiii)any contract, commitment or liability entered into or incurred
or any capital expenditures made except in the normal course of business
consistent with past practice in an individual amount not in excess of $
1,000.00 and in an aggregate amount not in excess of $ 5,000.00; or
(xiv) any transaction by the Company outside the ordinary course of
its business.
2.20 POWERS OF ATTORNEY. SCHEDULE 2.20 sets forth a schedule as of the
date of this Agreement of the name of each person, corporation, firm or other
entity holding any general or special power of attorney from the Company and a
description of the terms of each such power.
2.21 COMPETING LINES OF BUSINESS; RELATED-PARTY TRANSACTIONS. Except as
set forth on SCHEDULE 2.21, neither the Stockholder nor any other affiliate of
the Company owns, directly or indirectly, any interest in, or is an officer,
director, employee or consultant of or otherwise receives remuneration from, any
business which is a competitor, lessor, lessee, customer or supplier of the
Company. Except as set forth on SCHEDULE 2.21, no officer, director or
stockholder of the Company has, nor during the period beginning January 1, 1995
through the date hereof had, any interest in any property, real or personal,
tangible or intangible, used in or pertaining to the Company's business.
2.22 DISCLOSURE. No representation or warranty of the Stockholder
contained in this Agreement contains any untrue statement or omits to state a
material fact necessary in order to make the statements herein or therein, in
light of the circumstances under which they were made, not misleading. There is
no fact which has specific application to the Company or its business or assets
(other than general economic or industry conditions) which would have a Material
Adverse Effect or, so far as the Stockholder can reasonably foresee, threatens
to have a Material Adverse Effect, on the Company or its business or assets, or
the condition (financial or otherwise), results of operations or prospects of
the Company, which has not been described in the Schedules hereto.
2.23 CERTAIN BUSINESS PRACTICES. Neither the Company nor any person acting
on behalf of the Company has given or offered anything of value to any
governmental official, political party or candidate for government office nor
has it or any of them otherwise taken any action which would cause the Company
to be in violation of the Foreign Corrupt Practices Act of 1977, as amended, or
any law of similar effect.
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2.24 NOTICE TO BARGAINING AGENTS. The Company has satisfied any
requirement for notice of the transactions contemplated by this Agreement under
applicable collective bargaining agreements.
2.25 NOTICES AND CONSENTS. Except as set forth in Schedule 2.18, the
Company has given any notices to third parties and has obtained any third party
consents that may be necessary to consummate the transactions contemplated
hereby.
2.26 INVENTORY; WORKING CAPITAL; OTHER FINANCIAL MATTERS. The Company's
inventory and working capital levels are adequate to successfully operate the
business, and there has been no unusual build-up of cash needs at the date
hereof.
2.27 RELIANCE UPON ORAL REPRESENTATIONS. The Company and the Stockholder
each represent and warrant: (a) that each has been fully informed by his or its
legal counsel and by his or its own independent judgment of the terms,
conditions and effects of this Agreement; (b) that each has been represented by
independent legal counsel of his or its choice throughout all negotiations
preceding the execution of this Agreement and has received the advice of his or
its attorney in entering into this Agreement; (c) that each, both personally and
through his or its independently- retained attorneys, is fully satisfied with
the terms and effects of this Agreement; (d) that no promise or inducement has
been offered or made to him or it except as expressly stated in this Agreement;
and (e) that this Agreement is executed without reliance on any oral statement
or oral representation by any other party or any other party's agent or
attorney.
3. REPRESENTATIONS OF LANDCARE
LandCARE represents and warrants as follows:
3.1 DUE ORGANIZATION. LandCARE is duly incorporated, validly existing and
in good standing under the laws of the state of Delaware, and has the requisite
power and authority to carry on its business as it is now being conducted.
LandCARE is qualified to do business and is in good standing in each
jurisdiction in which the nature of its business makes such qualification
necessary, except where the failure to be so authorized or qualified would not
have a Material Adverse Effect.
3.2 AUTHORIZATION. (i) The representative of LandCARE executing this
Agreement has the authority to enter into and bind LandCARE to the terms of this
Agreement and (ii) LandCARE has the full legal right, power and authority to
enter into this Agreement and to consummate the transactions contemplated
hereby.
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3.3 NO VIOLATIONS. The execution of this Agreement and the performance of
the obligations hereunder and the consummation of the transactions contemplated
hereby will not result in any violation or breach or constitute a default under
any of the terms or provisions of the Restated Certificate of Incorporation, as
amended, or Bylaws, as amended, of LandCARE.
3.4 VALIDITY OF OBLIGATIONS. The execution and delivery of this Agreement
by LandCARE and the performance of the transactions contemplated hereby have
been duly and validly authorized by the Board of Directors of LandCARE and this
Agreement has been duly and validly authorized by all necessary corporate action
and is a legal, valid and binding obligation of LandCARE.
3.5 RELIANCE UPON ORAL REPRESENTATIONS. This Agreement is executed without
reliance on any oral statement or oral representation by any other party or any
other party's agent or attorney. No promise or inducement has been made or
offered to LandCARE except as expressly stated in this Agreement.
4. DELIVERIES
4.1 INSTRUMENTS OF TRANSFER. The Stockholder is delivering to LandCARE
certificates representing all of the Shares, duly endorsed (or accompanied by
duly executed stock powers).
4.2 CERTIFICATE OF MERGER. The appropriate parties hereto are executing
and delivering for filing with the appropriate authorities Articles of Merger
for purposes of effecting the Merger.
4.3 EMPLOYMENT AGREEMENT. Desert Care and Mr. Aaron Eubank are entering
into an Employment Agreement in the form of Annex I.
4.4 OPINION OF COUNSEL. Counsel to the Company and the Stockholder is
delivering an opinion to LandCARE dated the date hereof in the form attached
hereto as Annex II.
4.5 GOOD STANDING CERTIFICATES. The Stockholder is delivering to LandCARE
certificates, dated as of a date no earlier than ten days prior to the date
hereof, duly issued by the appropriate governmental authority in the State of
Incorporation and in each state in which the Company is authorized to do
business, showing the Company to be in good standing and authorized to do
business therein.
4.6 LEASE. The Stockholder, in his capacity as the lessor under the lease
of the property utilized by the Company, hereby consents to the Merger and
agrees that such lease shall be terminated effective upon the later of (a)
LandCARE having delivered, on behalf of the Stockholder,
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to the entit(ies) entitled thereto the portion of the cash funds otherwise
payable to, and withheld from, Stockholder at Closing that are necessary to pay
off the "Loan" described in Schedule 2.12 and (b) Desert Care having fully
vacated the premises that served as the principal collateral securing repayment
of said Loan.
4.7 INDEBTEDNESS TO COMPANY. The Stockholder is repaying any outstanding
indebtedness he has to the Company, said repayment to take the form of
LandCARE's withholding $90,557.22 at the Closing from the Cash Consideration and
then immediately remitting same, on behalf of the Stockholder, to the Company.
4.8 CONSENTS. The Stockholder is, subject to Schedule 2.18, delivering to
LandCARE copies of any third party consents required in connection with the
consummation of the transactions contemplated hereby.
4.9 RESIGNATIONS OF DIRECTORS AND OFFICERS. The Stockholder is delivering
to LandCARE the resignations of such directors and officers of the Company as
have been requested by LandCARE.
4.10 DELIVERIES BY LANDCARE. LandCare is delivering to the Stockholder the
Cash Consideration (less amounts being paid on behalf of the Stockholder as
described elsewhere herein) and stock certificates representing the shares of
LandCare Stock being issued to the Stockholder pursuant to this Agreement (or,
if such certificates are not available on the Closing Date, a copy of an
irrevocable letter to LandCare's stock transfer agent authorizing and directing
the issuance of such certificates to the Stockholder), which shares of LandCare
Stock are free and clear of all liens, restrictions and encumbrances except as
otherwise provided herein or as may be imposed by law.
4.11 ENVIRONMENTAL INDEMNITY. The Stockholder is delivering to LandCare an
Environmental Indemnification Agreement in form and substance reasonably
satisfactory to LandCare and the Stockholder.
4.12 AGREEMENT REGARDING SBA LOAN. The Stockholder and the Company are
executing and delivering an Agreement relating to the repayment of the
Stockholder's SBA loan.
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5. POST-CLOSING COVENANTS
The parties to this Agreement further covenant and agree as follows:
5.1 FUTURE COOPERATION; FURTHER ASSURANCES. The Stockholder, the Surviving
Corporation and LandCARE shall each deliver or cause to be delivered to the
other following the date hereof such additional instruments as the other may
reasonably request for the purpose of effecting the Merger and fully carrying
out the intent of this Agreement. LandCARE shall provide the Stockholder
reasonable access to the books and records of the Surviving Corporation after
the Closing Date for purposes of tax compliance and any other reasonable
purpose.
5.2 EXPENSES. LandCARE will pay the fees, expenses and disbursements of
LandCARE and its agents, representatives, financial advisors, accountants and
counsel incurred in connection with the execution, delivery and performance of
this Agreement. The Stockholder will pay the fees, expenses and disbursements of
the Stockholder and its agents, representatives, financial advisors, accountants
and counsel incurred in connection with the execution, delivery and performance
of this Agreement. The Stockholder shall pay any sales, use, transfer, real
property transfer, recording, gains, stock transfer and other similar taxes and
fees ("Transfer Taxes") imposed in connection with the Merger except to the
extent any such Transfer Tax is imposed solely as a result of the Closing being
deemed to have occurred, in part, in the State of Texas. The Stockholder shall
file all necessary documentation and returns with respect to such Transfer
Taxes. In addition, the Stockholder acknowledges that the Stockholder, and not
the Surviving Corporation or LandCARE, will pay all taxes (income or otherwise,
but excluding any Transfer Taxes imposed by the State of Texas, as described
above), if any, due upon the Stockholder's receipt of the consideration payable
pursuant to this Agreement.
5.3 CERTAIN AGREEMENTS. Upon the request of LandCARE at any time after the
Closing, the Stockholder and the Surviving Corporation shall terminate any
existing agreements to which the Company and the Stockholder are parties.
5.4 PREPARATION AND FILING OF TAX RETURNS.
(a) The Stockholder shall file or cause to be filed all Tax Returns
for all taxable periods that end on or before the Closing Date, but in each case
only after LandCARE has reviewed such filings and consented thereto. Such
consent shall not be unreasonably delayed or withheld.
(b) LandCARE shall file or cause to be filed all Tax Returns for all
taxable periods ending after the Closing Date.
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(c) Each party hereto shall, and shall cause its subsidiaries and
affiliates to, provide to each of the other parties hereto such cooperation and
information as any of them reasonably may request in filing any Tax Returns,
amended Tax Returns or claim for refund, determining a liability for Taxes or a
right to refund of Taxes or in conducting any audit or other proceeding with
respect to Taxes. Such cooperation and information shall include providing
copies of all relevant portions of relevant Tax Returns, together with relevant
accompanying schedules and relevant work papers, relevant documents relating to
rulings or other determinations by Taxing Authorities and relevant records
concerning the ownership and Tax basis of property, which such party may
possess. Each party shall make its employees reasonably available on a mutually
convenient basis at its cost to provide explanation of any documents or
information so provided.
6. INDEMNIFICATION
The Stockholder and LandCARE each make the following covenants that are
applicable to them, respectively:
6.1 SURVIVAL OF STOCKHOLDER'S REPRESENTATIONS AND WARRANTIES.
(a) The representations and warranties of the Stockholder made in
Sections 2.1 (Due Organization), 2.2 (Authorization), 2.3 (Capital Stock of the
Company) and 2.17 (Taxes) of this Agreement shall survive the Closing until the
expiration of the periods prescribed by the applicable statutes of limitations
(including any extensions thereof) relating thereto; the representations and
warranties of the Stockholder made in Section 2.9 (Environmental Matters) of
this Agreement shall survive the Closing for a period of five years after the
Closing Date; and all other representations and warranties of the Stockholder
made in this Agreement shall survive the Closing for a period of one year
following the Closing Date; provided, however, that representations and
warranties and indemnification provisions with respect to which a claim is made
within the survival period shall survive until such claim is finally determined
and paid.
(b) The representations and warranties of LandCARE made in this
Agreement shall survive the Closing for a period of one year following the
Closing Date; provided, however, that representations and warranties with
respect to which a claim is made within such one-year period shall survive until
such claim is finally determined and paid.
(c) The date on which a representation or warranty expires as
provided herein is herein called the "Expiration Date." No claim for
indemnification may be made with respect to a representation or warranty after
the Expiration Date, other than claims based on fraud.
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6.2 GENERAL INDEMNIFICATION BY THE STOCKHOLDER. The Stockholder covenants
and agrees that it will indemnify, defend, protect, and hold harmless the
Surviving Corporation, LandCARE and its subsidiaries and all of their officers,
directors, employees, stockholders, agents, representatives and affiliates at
all times from and after the date of this Agreement until the Expiration Date
from and against all claims, damages actions, suits, proceedings, demands,
assessments, adjustments, costs and expenses (including specifically, but
without limitation, reasonable attorneys' fees and expenses of investigation)
(collectively "Damages") incurred by such indemnified person as a result of or
incident to (i) any breach of any representation or warranty of the Stockholder
set forth herein, and (ii) any breach or nonfulfillment of any covenant or
agreement by the Company or the Stockholder under this Agreement and/or any
instrument delivered by Stockholder as a part of the Closing.
6.3 INDEMNIFICATION BY LANDCARE. LandCARE covenants and agrees that it
will indemnify, defend, protect and hold harmless the Stockholder at all times
from and after the date of this Agreement until (a) the Expiration Date from and
against all Damages incurred by the Stockholder as a result of (i) any breach of
any representation or warranty of LandCARE set forth herein; and (ii) any breach
or nonfulfillment of any covenant or agreement by LandCARE under this Agreement
and/or any instrument delivered by LandCARE as a part of the Closing and/or (b)
the Surviving Corporation's failure to timely perform any duty or obligation
identified on SCHEDULE 6.3 hereto (for which Stockholder has previously given
any third party a Guaranty, whether styled as such or as a co-lessee).
6.4 THIRD PERSON CLAIMS. Promptly after any party hereto (the "Indemnified
Party") has received notice of or has knowledge of any claim by a person not a
party to this Agreement ("Third Person") or the commencement of any action or
proceeding by a Third Person that may give rise to a right of indemnification
hereunder, such Indemnified Party shall give to the party obligated to provide
indemnification hereunder (an "Indemnifying Party") written notice of such claim
or the commencement of such action or proceeding; provided, however, that the
failure to give such notice will not relieve such Indemnifying Party from
liability under this Section with respect to such claim, action or proceeding,
except to the extent that the Indemnifying Party has been actually prejudiced as
a result of such failure. The Indemnifying Party (at its own expense) shall have
the right and shall be given the opportunity to associate with the Indemnified
Party in the defense of such claim, suit or proceedings, and may select counsel
for the Indemnified Party, such counsel to be reasonably satisfactory to the
Indemnified Party. The Indemnified Party shall not, except at its own cost, make
any settlement with respect to any such claim, suit or proceeding without the
prior consent of the Indemnifying Party, which consent shall not be unreasonably
withheld or delayed. It is understood and agreed that in situations where
failure of the Indemnifying Party to settle a claim expeditiously could have an
adverse effect on the Indemnified Party, the failure of the Indemnifying Party
to act
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upon the Indemnified Party's request for consent to such settlement (which
request shall include a statement as to why expeditious settlement is desirable,
if such be the case) within five business days of the Indemnifying Party's
receipt of notice thereof from the Indemnified Party shall be deemed to
constitute consent by the Indemnifying Party of such settlement for purposes of
this Section.
6.5 METHOD OF PAYMENT. All claims for indemnification shall be paid in
cash.
6.6 LIMITATIONS ON INDEMNIFICATION. LandCARE and the other persons
indemnified pursuant to this Section shall not assert any claim for
indemnification hereunder against the Stockholder until such time as, the
aggregate of all uninsured potential Damages resulting from claims such persons
may have against the Stockholder shall exceed $50,000 (the "Indemnification
Threshold") and then only to the extent that such amounts exceed the
Indemnification Threshold. The Stockholder shall not assert any claim for
indemnification hereunder until such time as the aggregate of all claims the
Stockholder may have hereunder shall exceed the Indemnification Threshold, and
then only to the extent that such claims exceed the Indemnification Threshold.
The aggregate liability of the Stockholder hereunder shall not exceed
$1,000,000. The aggregate liability of LandCARE hereunder shall not exceed
$1,000,000.
6.7 INSURANCE. To the extent that, prior to the Merger, the Company has
paid premiums for insurance coverage that may give the Company a claim for
matters as to which the Stockholder may be obligated to provide indemnification
under this Agreement, (a) the Company agrees to use reasonable good faith
efforts and diligence to pursue any such claim it may have under any such
insurance policy or policies corresponding with such premiums, and (b) the
amount of each such insurance recovery (net of the related direct cost to the
Company of advancing the claim), if any, shall be applied toward satisfaction of
Stockholder's indemnity obligations hereunder. The parties acknowlege that the
Company shall have no such obligation with respect to insurance policies, if
any, implemented after the Closing Date.
7. NONCOMPETITION
7.1 PROHIBITED ACTIVITIES. As partial consideration for the execution,
delivery and performance of this Agreement by LandCARE, the Stockholder will
not, for a period of five years following the Closing Date, for any reason
whatsoever, directly or indirectly, for himself or on behalf of or in
conjunction with any other person, persons, company, partnership, corporation or
business of whatever nature:
(i) own, manage, operate, join, control, consult or advise (whether
or not compensated for such consultation or advice), or participate in, or
render assistance to, or
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derive any benefit whatever from, any business offering services or
products in direct competition with the Surviving Corporation within 100
miles of where the Company conducted business at any time within one year
prior to the Closing Date (the "Territory");
(ii) engage, as an officer, director, shareholder, owner, partner,
joint venturer, or in a sales or managerial capacity, whether as an
employee, independent contractor, consultant or advisor, or as a sales
representative, in any business offering services or products in direct
competition with the Surviving Corporation or LandCARE within the
Territory;
(iii) call upon any person who is, at that time, an employee of
LandCARE or any of its subsidiaries (including the Surviving Corporation)
for the purpose or with the intent of enticing such employee away from or
out of the employ of LandCARE or any of its subsidiaries (including the
Surviving Corporation);
(iv) call upon any person or entity which is known by the
Stockholder to be, at that time or within one year prior to the Closing
Date, a customer of LandCARE, the Company or any of LandCARE's
subsidiaries (including the Surviving Corporation) for the purpose of
soliciting or selling products or services in direct competition with
LandCARE or any of its subsidiaries (including the Company) within the
Territory.
Notwithstanding the above, the foregoing covenants shall not be deemed to
prohibit the Stockholder from acquiring as a passive investor with no
involvement in the operations or management of the business, not more than two
percent (2%) of the capital stock of a competing business whose stock is
publicly traded on a national securities exchange or over-the-counter market.
The provisions of this Section are independent of the noncompetition
provisions contained in any consulting or employment agreement to which the
Stockholder may be or may become a party in connection with the transactions
contemplated hereby. All such provisions are intended to be observed and
enforced in accordance with their terms.
7.2 EQUITABLE RELIEF. Because of the difficulty of measuring economic
losses to LandCARE as a result of a breach of the foregoing covenant, and
because of the immediate and irreparable damage that could be caused to LandCARE
for which it would have no other adequate remedy, the Stockholder agrees that
the foregoing covenant may be enforced by LandCARE in the event of breach by the
Stockholder, by injunctions, restraining orders and other equitable actions.
7.3 REASONABLE RESTRAINT. It is agreed by the parties hereto that the
foregoing covenants in this Section impose a reasonable restraint on the
Stockholder.
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7.4 SEVERABILITY; REFORMATION. The covenants in this Section are severable
and separate, and the unenforceability of any specific covenant shall not affect
the provisions of any other covenant. Moreover, in the event any court of
competent jurisdiction shall determine that the scope, time or territorial
restrictions set forth are unreasonable, then it is the intention of the parties
that such restrictions be enforced to the fullest extent which the court deems
reasonable, and the Agreement shall thereby be reformed.
7.5 INDEPENDENT COVENANT. The Stockholder acknowledges that his covenants
set forth in this Section are material conditions to LandCARE's willingness to
execute and deliver this Agreement and to consummate the transactions
contemplated hereby. All of the covenants in this Section shall be construed as
an agreement independent of any other provision in this Agreement, and the
existence of any claim or cause of action of the Stockholder against LandCARE or
any subsidiary thereof, whether predicated on this Agreement or otherwise, shall
not constitute a defense to the enforcement by LandCARE of such covenants. It is
specifically agreed that the period of five years stated at the beginning of
this Section, during which the agreements and covenants of the Stockholder made
in this Section shall be effective, shall be computed by excluding from such
computation any time during which the Stockholder is in violation of any
provision of this Section. The covenants contained in Section shall not be
affected by any breach of any other provision hereof by any party hereto.
8. NONDISCLOSURE OF CONFIDENTIAL INFORMATION
8.1 GENERAL. The Stockholder recognizes and acknowledges that he has had
access to certain customer lists, confidential information of the Company, such
as operational policies, pricing and cost policies, and other information, that
will be valuable, special and unique assets of the Surviving Corporation and
LandCARE after the Closing Date. The Stockholder agrees that he will not
disclose such confidential information, or any confidential information of the
Surviving Corporation or LandCARE to which they may have access in the future,
to any person, firm, corporation, association or other entity for any purpose or
reason whatsoever, except (a) to authorized representatives of LandCARE, (b)
following the Closing, such information may be disclosed by the Stockholder as
may be required in the course of performing his duties for the Surviving
Corporation and (c) to counsel and other advisers, provided that such advisers
(other than counsel) agree to the confidentiality provisions of this Section,
unless (i) such information becomes known to the public generally through no
fault of the Stockholder, or (ii) disclosure is required by law or the order of
any governmental authority, provided, that prior to disclosing any information
pursuant to this clause (ii), the Stockholder shall give prior written notice
thereof to LandCARE and provide LandCARE with the opportunity to contest such
disclosure. In the event of a breach or threatened breach by the Stockholder of
the provisions of this Section, LandCARE shall be entitled
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to injunctive or other equitable relief restraining the Stockholder from
disclosing, in whole or in part, such confidential information. Nothing herein
shall be construed as prohibiting LandCARE from pursuing any other available
remedy for such breach or threatened breach, including the recovery of damages.
8.2 EQUITABLE RELIEF. Because of the difficulty of measuring economic
losses as a result of the breach of the foregoing covenants, and because of the
immediate and irreparable damage that would be caused for which LandCARE would
have no other adequate remedy, the Stockholder agrees that the foregoing
covenants may be enforced against him by injunctions, restraining orders and
other appropriate equitable relief.
8.3 SURVIVAL. The obligations of the parties under this Section shall
survive the termination of this Agreement for an unlimited time with respect to
proprietary information and a period of two years with respect to
non-proprietary information.
9 INTENDED TAX TREATMENT
9.1 TAX-FREE REORGANIZATION. The parties are entering into this Agreement
with the intention that the Merger qualify as a tax-free reorganization for
federal income tax purposes, except to the extent of any "boot" received, and
the Stockholder and LandCare will not take any actions that disqualify the
Merger for such treatment. The Stockholder represents, warrants and covenants
that:
(i) the Company operates at least one historic business line, or
owns at least a significant portion of its historic business assets, in each
case within the meaning of Reg. 1.368-1(d) under the Code; and
(ii) immediately after the Merger, the Surviving Corporation will
hold "substantially all of its properties" within the meaning of Section
368(a)(2)(D) of the Code (that is, immediately after the Effective Time, the
Surviving Corporation will hold at least 90% of the fair market value of the net
assets, and at least 70% of the gross assets, held by the Company immediately
prior to the Effective Time). For purposes of the preceding sentence, amounts
paid by the Company to shareholders who receive cash or other property and the
Company assets used to pay reorganization expenses and all stock redemptions and
distributions (except for normal dividends) made by the Company immediately
preceding the Effective Time, pursuant to this Agreement or otherwise as part of
the plan of Merger provided for herein, will be considered assets of the Company
held immediately prior to the Effective Time.
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9.2 RESTRICTIONS ON RESALE. The Stockholder agrees that he will not sell,
offer to sell, or otherwise transfer or dispose of, any shares of the LandCARE
Stock received by the Stockholder, engage in put, call, short-sale, straddle or
similar transactions, or in any other way reduce the Stockholder's risk of
owning shares of LandCARE Stock prior to the date two years after the Closing
Date except as set forth below, and agrees that the certificates evidencing the
LandCARE Stock to be received by the Stockholder will bear a legend evidencing
this restriction. Beginning one year after the Closing Date, the Stockholder
shall be permitted to sell shares of such LandCARE Stock pursuant to the
LandCARE Liquidity Plan, a summary of which is attached hereto as SCHEDULE 9.2.
LandCare represents and warrants to the Stockholder that the LandCare Liquidity
Plan, as implemented, comports with all applicable securities laws.
10 SECURITIES LAW MATTERS
10.1 ECONOMIC RISK; SOPHISTICATION. The Stockholder acknowledges and
confirms that he has received and reviewed a Prospectus from LandCARE relating
to his acquisition of shares of LandCARE Stock hereunder. The Stockholder (A)
has such knowledge, sophistication and experience in business and financial
matters that he is capable of evaluating the merits and risks of an investment
in the shares of LandCARE Stock, (B) fully understands the nature, scope and
duration of any limitations on transfer of LandCARE Stock described in this
Agreement and (C) can bear the economic risk of an investment in the shares of
LandCARE Stock.
10.2 COMPLIANCE WITH LAW. The Stockholder covenants that none of the
LandCARE Stock acquired by the Stockholder hereunder will be offered, sold,
assigned, hypothecated, transferred or otherwise disposed of by the Stockholder
except in full compliance with all applicable securities laws.
11. GENERAL
11.1 SUCCESSORS AND ASSIGNS. This Agreement and the rights of the parties
hereunder may not be assigned (except by operation of law) and shall be binding
upon and shall inure to the benefit of the parties hereto, the successors of
LandCARE, and the heirs and legal representatives of the Stockholder.
11.2 ENTIRE AGREEMENT. This Agreement (including the schedules, exhibits
and annexes attached hereto) and the documents delivered pursuant hereto
constitute the entire agreement and understanding among the Stockholder, the
Company, Desert Care and LandCARE, and supersede any
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prior or contemporaneous agreement and understanding relating to the subject
matter of this Agreement. This Agreement, upon execution, constitutes a valid
and binding agreement of the parties hereto, enforceable in accordance with its
terms, and may be modified or amended only by a written instrument executed by
the parties hereto.
11.3 COUNTERPARTS. This Agreement may be executed simultaneously in two or
more counterparts, each of which shall be deemed an original and all of which
together shall constitute but one and the same instrument. The signatures to
this Agreement need not all be on a single copy of this Agreement, and may be
facsimiles rather than originals, and shall be fully as effective as though all
signatures were originals on the same copy.
11.4 BROKERS AND AGENTS. Each party represents and warrants that it
employed no broker or agent in connection with this transaction and agrees to
indemnify the other parties hereto against all loss, cost, damages or expense
arising out of claims for fees or commission of brokers employed or alleged to
have been employed by such indemnifying party.
11.5 NOTICES. All notices and communications required or permitted
hereunder shall be in writing and may be given by depositing the same in United
States mail, addressed to the party to be notified, postage prepaid and
registered or certified with return receipt requested, or by delivering the same
in person to an officer or agent of such party, or by facsimile, as follows:
If to LandCARE, addressed to it at:
LandCARE USA, Inc.
5850 San Felipe, Suite 500
Houston, Texas 77057
Attn: General Counsel
Facsimile No. (713) 965-0343
If to the Company, addressed to it at:
Continental Landscape Management
Attn: Aaron C. Eubank, President
508 West Watkins
Phoenix, Arizona 85003
Facsimile No. (602) 252-3514
If to the Stockholder, addressed to him at the Company's address,
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or to such other address as any party hereto shall specify pursuant to this
Section from time to time.
11.6 GOVERNING LAW. This Agreement shall be construed in accordance with
the laws of the State of Arizona without regard to its principles governing
conflicts of laws.
11.7 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The representations,
warranties, covenants and agreements of the parties made herein and at the time
of the Closing or in writing delivered pursuant to the provisions of this
Agreement shall survive the consummation of the transactions contemplated hereby
and any examination on behalf of the parties.
11.8 EXERCISE OF RIGHTS AND REMEDIES. Except as otherwise provided herein,
no delay of or omission in the exercise of any right, power or remedy accruing
to any party as a result of any breach or default by any other party under this
Agreement shall impair any such right, power or remedy, nor shall it be
construed as a waiver of or acquiescence in any such breach or default, or of
any similar breach or default occurring later; nor shall any waiver of any
single breach or default be deemed a waiver of any other breach or default
occurring before or after that waiver.
11.9 TIME. Time is of the essence with respect to this Agreement.
11.10 REFORMATION AND SEVERABILITY. In case any provision of this
Agreement shall be invalid, illegal or unenforceable, it shall, to the extent
possible, be modified in such manner as to be valid, legal and enforceable but
so as to most nearly retain the intent of the parties, and if such modification
is not possible, such provision shall be severed from this Agreement, and in
either case the validity, legality and enforceability of the remaining
provisions of this Agreement shall not in any way be affected or impaired
thereby.
11.11 REMEDIES CUMULATIVE. No right, remedy or election given by any term
of this Agreement shall be deemed exclusive but each shall be cumulative with
all other rights, remedies and elections available at law or in equity.
11.12 SCHEDULES & CAPTIONS. The headings of this Agreement are inserted
for convenience only, and shall not constitute a part of this Agreement or be
used to construe or interpret any provision hereof. Any liability or obligation
disclosed on any Schedule to this Agreement shall be deemed to have been
disclosed on all other Schedules to this Agreement requiring disclosure of such
liability or obligation.
11.13 PRESS RELEASES AND PUBLIC ANNOUNCEMENTS. No party shall issue any
press release or make any public announcement relating to the subject matter of
this Agreement without the prior
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written approval of the other party; provided, however, that LandCARE may issue
a press release in accordance with its customary practices without such approval
and any party may make any public disclosure it believes in good faith is
required by applicable law or any listing or trading agreement concerning its
publicly-traded securities.
11.14 NO THIRD-PARTY BENEFICIARIES. This Agreement shall not confer any
rights or remedies upon any person other than the parties and their respective
successors and permitted assigns.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
day and year first above written.
LANDCARE USA, INC.
By:________________________________
Name:___________________________
Title:__________________________
DESERT CARE LANDSCAPING, INC.
By: _______________________________
Name: _________________________
Title: ________________________
CONTINENTAL LANDSCAPE MANAGEMENT, INC.
By: _______________________________
Name: _________________________
Title: ________________________
___________________________________
Aaron Eubank
<PAGE>
EXHIBIT 2.2
EXECUTION COPY
AGREEMENT AND PLAN OF MERGER
dated as of August 4, 1998
by and among
LANDCARE USA, INC.,
GROUND CONTROL LANDSCAPING, INC.,
GATOR & GATOR LANDSCAPING COMPANY
and
the Stockholders named herein
<PAGE>
TABLE OF CONTENTS
Page
1. THE MERGER.............................................................1
1.1 The Merger.......................................................1
1.2 Effective Time...................................................1
1.3 Articles of Incorporation, By-laws, Directors
and Officers of Surviving Corporation............................2
1.4 Effect of Merger.................................................2
1.5 Manner of Conversion.............................................3
1.6 Delivery of Certificates.........................................3
1.7 Closing..........................................................3
1.8 Stockholders' Rights.............................................3
2. REPRESENTATIONS AND WARRANTIES OF THE STOCKHOLDERS.....................4
2.1 Due Organization.................................................4
2.2 Authorization....................................................4
2.3 Capital Stock of the Company.....................................4
2.4 Subsidiaries.....................................................5
2.5 Financial Statements.............................................5
2.6 Liabilities and Obligations......................................5
2.7 Accounts and Notes Receivable....................................6
2.8 Permits and Intangibles..........................................6
2.9 Environmental Matters............................................7
2.10 Personal Property................................................7
2.11 Significant Customers; Material Contracts and Commitments........8
2.12 Real Property....................................................8
2.13 Insurance........................................................9
2.14 Compensation; Employment Agreements; Organized Labor Matters.....9
2.15 Employee Benefit Plans..........................................10
2.16 Conformity with Law; Litigation.................................11
2.17 Taxes...........................................................11
2.18 No Violations; All Required Consents Obtained...................13
2.19 Absence of Changes..............................................13
2.20 Powers of Attorney..............................................15
2.21 Competing Lines of Business; Related-party Transactions.........15
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2.22 Disclosure......................................................15
2.23 Certain Business Practices......................................15
2.24 Notice to Bargaining Agents.....................................16
2.25 Notices and Consents............................................16
2.26 Inventory; Working Capital; Other Financial Matters.............16
2.27 Year 2000 Compliance............................................16
3. REPRESENTATIONS OF LANDCARE...........................................16
3.1 Due Organization................................................16
3.2 Authorization...................................................16
3.3 No Violations...................................................17
3.4 Validity of Obligations.........................................17
3.5 Prospectus and the Absence of Certain Changes...................17
3.6 Issuance of LandCARE Stock......................................17
3.7 Listing.........................................................18
3.8 Compliance with Law and Applicable Government Relations.........18
3.9 Improper and Other Payments.....................................18
3.10 Disclosure......................................................18
4. DELIVERIES............................................................18
4.1 Instruments of Transfer.........................................18
4.2 Certificate of Merger...........................................19
4.3 Employment Agreement............................................19
4.4 Opinion of Counsel..............................................19
4.5 Good Standing Certificates......................................19
4.6 Indebtedness to Company.........................................19
4.7 Consents........................................................19
4.8 Resignations of Directors and Officers..........................19
4.9 Accounting Treatment............................................19
5. POST-CLOSING COVENANTS................................................19
5.1 Future Cooperation; Further Assurances..........................19
5.2 Expenses........................................................20
5.3 Certain Agreements..............................................20
5.4 Preparation and Filing of Tax Returns...........................20
6. INDEMNIFICATION.......................................................21
6.1 Survival of Stockholders' Representations and Warranties. .....21
6.2 General Indemnification by the Stockholders.....................21
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6.3 Indemnification by LandCARE.....................................21
6.4 Third Person Claims.............................................22
6.5 Method of Payment...............................................22
7. NONCOMPETITION........................................................22
7.1 Prohibited Activities...........................................22
7.2 Equitable Relief................................................23
7.3 Reasonable Restraint............................................23
7.4 Severability; Reformation.......................................24
7.5 Independent Covenant............................................24
8. NONDISCLOSURE OF CONFIDENTIAL INFORMATION.............................24
8.1 General.........................................................24
8.2 Equitable Relief................................................25
8.3 Survival........................................................25
9 INTENDED TAX TREATMENT................................................25
9.1 Tax-Free Reorganization.........................................25
9.2 Restrictions on Resale..........................................25
10 SECURITIES LAW MATTERS................................................26
10.1 Economic Risk; Sophistication...................................26
10.2 Compliance with Law.............................................26
11. GENERAL...............................................................26
11.1 Successors and Assigns..........................................26
11.2 Entire Agreement................................................26
11.3 Counterparts....................................................27
11.4 Brokers and Agents..............................................27
11.5 Notices.........................................................27
11.6 Governing Law...................................................28
11.7 Survival of Representations and Warranties......................28
11.8 Effect of Investigation.........................................28
11.9 Exercise of Rights and Remedies.................................28
11.10 Time............................................................28
11.11 Reformation and Severability....................................28
11.12 Remedies Cumulative.............................................28
11.13 Captions........................................................28
11.14 Press Releases and Public Announcements.........................29
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11.15 No Third-Party Beneficiaries....................................29
11.16 Reliance Upon Oral Representations..............................29
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SCHEDULES
SCHEDULE 2.1. Due Organization
SCHEDULE 2.4. Subsidiaries
SCHEDULE 2.5. Financial Statements
SCHEDULE 2.6. Liabilities and Obligations
SCHEDULE 2.7. Accounts and Notes Receivable
SCHEDULE 2.8. Permits and Intangibles
SCHEDULE 2.9. Environmental Matters
SCHEDULE 2.10. Personal Property
SCHEDULE 2.11. Significant Customers; Material Contracts and Commitments
SCHEDULE 2.12. Real Property
SCHEDULE 2.13. Insurance
SCHEDULE 2.14. Compensation; Employment Agreements; Organized Labor Matters
SCHEDULE 2.15. Employee Benefit Plans
SCHEDULE 2.16. Conformity with Law; Litigation
SCHEDULE 2.18. No Violations; No Consents Required
SCHEDULE 2.19. Absence of Changes
SCHEDULE 2.20. Powers of Attorney
SCHEDULE 2.21. Competing Lines of Business; Related Party Transactions
SCHEDULE 3.5. Prospectus
SCHEDULE 4.3 Persons Entering into Employment Agreements
SCHEDULE 4.5. Leases
ANNEXES
Annex I - Form of Employment Agreement
Annex II - Form of Opinion of Counsel to Company and
Stockholders
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AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (this "Agreement") is made and entered
into as of August 4, 1998 by and among LandCARE USA, Inc., a Delaware
corporation ("LandCARE"), Ground Control Landscaping, Inc., a Florida
corporation and wholly owned subsidiary of LandCARE ("Ground Control"), Gator &
Gator Landscaping Company, a Florida corporation (the "Company"), and the
persons listed on the signature pages of this Agreement as the stockholders of
the Company (the "Stockholders"). The Stockholders are the only holders of
capital stock of the Company.
WHEREAS, the respective Boards of Directors of Ground Control and the
Company (collectively called the "Constituent Corporations") deem it advisable
and in the best interests of the Constituent Corporations and their respective
stockholders that the Company merge with and into Ground Control pursuant to
this Agreement and the applicable provisions of the laws of the State of Florida
(the "State of Incorporation"); and
WHEREAS, the Boards of Directors of the Constituent Corporations have
approved and adopted this Agreement as a plan of reorganization under Section
368 of the Internal Revenue Code of 1986, as amended (the "Code"); and
WHEREAS, on the date hereof the parties are consummating the transactions
described herein;
NOW, THEREFORE, in consideration of the premises and of the mutual
agreements contained herein, the parties hereto, intending to be legally bound,
agree as follows:
1. THE MERGER
1.1 THE MERGER. On the terms and subject to the conditions of this
Agreement, at the Effective Time (as defined below), the Company shall be merged
with and into Ground Control (the "Merger") and the separate existence of the
Company shall cease, all in accordance with the provisions of the law of the
State of Incorporation. Ground Control shall be the surviving corporation in the
Merger and is sometimes hereinafter called the "Surviving Corporation."
1.2 EFFECTIVE TIME. The Merger shall become effective at such time (the
"Effective Time") as a certificate of merger, in a form appropriate for filing,
is filed with the Secretary of State (or other appropriate authority) of the
State of Incorporation (the "Merger Filing"). The Merger
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Filing shall be made simultaneously with or as soon as practicable after the
execution and delivery of this Agreement.
1.3 ARTICLES OF INCORPORATION, BY-LAWS, DIRECTORS AND OFFICERS OF
SURVIVING CORPORATION. At the Effective Time, the Articles of Incorporation of
Ground Control then in effect shall be the Articles of Incorporation of the
Surviving Corporation, and the By-laws of Ground Control then in effect shall be
By-laws of the Surviving Corporation. At the Effective Time, the officers of the
Surviving Corporation shall consist of (a) the officers of Ground Control
immediately prior to the Effective Time and (b) Scott L. Annan and Charles
Richardson. At the Effective Time, William L. Fiedler and William F. Murdy shall
become the directors of the Surviving Corporation.
1.4 EFFECT OF MERGER. At the Effective Time, the effect of the Merger
shall be as provided in the law of the State of Incorporation. Except as herein
specifically set forth, the identity, existence, purposes, powers, objects,
franchises, privileges, rights and immunities of Ground Control shall continue
unaffected and unimpaired by the Merger and the corporate franchises, existence
and rights of the Company shall be merged with and into Ground Control, and
Ground Control, as the Surviving Corporation, shall be fully vested therewith.
At the Effective Time, the separate existence of the Company shall cease and, in
accordance with the terms of this Agreement, the Surviving Corporation shall
possess all the rights, privileges, immunities and franchises, of a public, as
well as of a private, nature, and all property, real, personal and mixed, and
all debts due on whatever account, including subscriptions to shares, and all
taxes, including those due and owing and those accrued, and all other choses in
action, and all and every other interest of or belonging to or due to the
Company and Ground Control shall be taken and deemed to be transferred to, and
vested in, the Surviving Corporation without further act or deed; and all
property, rights and privileges, powers and franchises and all and every other
interest shall be thereafter as effectually the property of the Surviving
Corporation as they were of the Company and Ground Control; and the title to any
real estate, or interest therein, whether by deed or otherwise, under the laws
of the State of Incorporation vested in the Company and Ground Control, shall
not revert or be in any way impaired by reason of the Merger. Except as
otherwise provided herein, the Surviving Corporation shall thenceforth be
responsible and liable for all the liabilities and obligations of the Company
and Ground Control and any claim existing, or action or proceeding pending, by
or against the Company or Ground Control may be prosecuted as if the Merger had
not taken place, or the Surviving Corporation may be substituted in their place.
Neither the rights of creditors nor any liens upon the property of the Company
or Ground Control shall be impaired by the Merger, and all debts, liabilities
and duties of the Company and Ground Control shall attach to the Surviving
Corporation, and may be enforced against the Surviving Corporation to the same
extent as if said debts, liabilities and duties had been incurred or contracted
by such Surviving Corporation.
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1.5 MANNER OF CONVERSION. The manner of converting the outstanding shares
of capital stock of the Company ("Company Stock") and the outstanding shares of
capital stock of Ground Control ("Ground Control Stock") shall be as follows:
As of the Effective Time:
1. Each share of Company Stock issued and outstanding
immediately prior to the Effective Time, by virtue of the Merger and without any
action on the part of the holder thereof, automatically shall be converted into
the right to immediately receive the corresponding pro rata interest in the
aggregate consideration payable to all holders of Company Stock, which
consideration shall consist of an aggregate of 222,222 shares of validly issued,
voting common stock, par value $.01 per share, of LandCARE ("LandCARE Stock")
(such number of shares being equal to $2,000,000 divided by $9.00);
2. All shares of Company Stock, if any, that are held by the
Company as treasury stock shall be canceled and retired, and no shares of
LandCARE Stock or other consideration shall be delivered or paid in exchange
therefor; and
3. As of the Effective Time, each outstanding share of Ground
Control Stock shall remain outstanding and unchanged.
1.6 DELIVERY OF CERTIFICATES. At the Closing, (i) the Stockholders shall
deliver to LandCARE the certificates representing the Company Stock, duly
endorsed in blank by the Stockholders, or accompanied by blank stock powers, and
with all necessary transfer tax and other revenue stamps, acquired at the
Stockholders' expense, affixed and canceled, and (ii) LandCARE shall cause its
stock transfer agent to deliver to the Stockholders certificates representing
the LandCARE Stock as described above free of any restrictions or encumbrances
except as provided in Section 9.2 below. The Stockholders and LandCARE agree
promptly to cure any deficiencies with respect to the endorsement of the stock
certificates or other documents of conveyance with respect to such Company Stock
and/or LandCARE Stock, as applicable, or with respect to the stock powers
accompanying any Company Stock.
1.7 CLOSING. The transactions contemplated by this Agreement are being
consummated on the date hereof, and the date hereof is sometimes herein called
the "Closing Date."
1.8 STOCKHOLDERS' RIGHTS. The Stockholders who, except for the
applicability of Section 607.1104 of the Florida Statutes, would be entitled to
vote and who dissent from the Merger of the Company with and into Ground Control
may, pursuant to Section 607.1320 of the Florida Statute, be entitled, if they
comply with the provisions of the General Corporation Act of Florida regarding
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the rights of dissenting stockholders, to be paid the fair value of their
shares. However, the holders of one hundred percent (100%) of the Company Stock
(defined below) have voted in favor of the Merger, and there are and can be no
dissenters.
2. REPRESENTATIONS AND WARRANTIES OF THE STOCKHOLDERS
The Stockholders jointly and severally hereby represent and warrant to
LandCARE as follows.
2.1 DUE ORGANIZATION. The Company is a corporation duly organized, validly
existing and in good standing under the laws of the State of Incorporation, and
has all requisite power and authority to carry on its business as it is now
being conducted. The Company is duly qualified to do business and is in good
standing in each jurisdiction in which the nature of its business or the
ownership or leasing of its properties makes such qualification necessary,
except where the failure to be so authorized or qualified would not have a
material adverse effect on the business, assets, operations or condition
(financial or otherwise) of the Company (as used herein with respect to the
Company, or with respect to any other person, a "Material Adverse Effect").
SCHEDULE 2.1 sets forth a list of all jurisdictions in which the Company is
authorized or qualified to do business. True, complete and correct copies of the
Articles of Incorporation and By-laws, each as amended, of the Company (the
"Charter Documents") are all attached to SCHEDULE 2.1. The stock records of the
Company, a copy of which is attached to SCHEDULE 2.1, are correct and complete
in all material respects. All records of all proceedings of the Board of
Directors and stockholders of the Company have been made available to LandCARE.
2.2 AUTHORIZATION. (i) The representative of the Company executing this
Agreement has the authority to enter into and bind the Company to the terms of
this Agreement and (ii) the Company has the full legal right, power and
authority to enter into this Agreement and the transactions contemplated hereby,
all of which have been approved by the Stockholders and the Board of Directors
of the Company. This Agreement has been validly executed and delivered by the
Company and the Stockholders and constitutes the legal, valid and binding
obligation of each of them, enforceable in accordance with its terms.
2.3 CAPITAL STOCK OF THE COMPANY. The authorized capital stock of the
Company consists solely of 7,500 shares of common stock, par value $ 1.00 per
share, of which 1000 shares are issued and outstanding and constitute all of the
issued and outstanding shares of Company Stock (the "Shares"). All of the Shares
are owned of record and beneficially by the Stockholders and are owned free and
clear of all liens, security interests, pledges, charges, voting trusts,
restrictions, encumbrances and claims of every kind. All of the Shares have been
duly authorized and validly issued, are fully paid and nonassessable, and were
offered, issued, sold and delivered by the Company in compliance with all
applicable state and federal laws governing the issuance of
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securities. None of the Shares were issued in violation of any preemptive rights
or similar rights of any person. No option, warrant, call, conversion right or
commitment of any kind exists which obligates the Company to issue any
additional shares of its capital stock or obligates the Stockholders to transfer
any of the Shares to any person except pursuant to this Agreement.
2.4 SUBSIDIARIES. Except as set forth on SCHEDULE 2.4, the Company has no
subsidiaries or fictitious names and has not conducted business under any other
name except its legal name as set forth in its Charter Documents. Except as set
forth in SCHEDULE 2.4, the Company does not own, of record or beneficially, or
control, directly or indirectly, any capital stock, securities convertible into
capital stock or any other equity interest in any corporation, association or
other business entity, and the Company is not, directly or indirectly, a
participant in any joint venture, partnership or other non-corporate entity.
2.5 FINANCIAL STATEMENTS. Complete and correct copies of the following
financial statements are attached as SCHEDULE 2.5:
(i) The balance sheets of the Company as of February 28, 1998 (the
"Balance Sheet Date") and any related statements of operations,
stockholder's equity and cash flows for the three-year period then ended,
together with any related notes and schedules (the "Year-end Financial
Statements"); and
(ii) The balance sheet (the "Interim Balance Sheet") of the Company
as of June 30, 1998 and the related statements of operations for the
four-month period then ended (the "Interim Financial Statements"). (The
Year-end Financial Statements and the Interim Financial Statements are
herein collectively called the "Financial Statements".)
The Year-end Financial Statements have been prepared from the books and
records of the Company in conformity with generally accepted accounting
principles applied on a basis consistent with preceding years and throughout the
periods involved ("GAAP") and present fairly the financial position and results
of operations of the Company as of the dates of such statements and for the
periods covered thereby. The Interim Financial Statements present fairly the
financial position and results of operations of the Company as of the dates of
such statements and for the periods covered thereby. The books of account of the
Company have been kept accurately in the ordinary course of business, the
transactions entered therein represent bona fide transactions, and the revenues,
expenses, assets and liabilities of the Company have been properly recorded
therein in all material respects.
2.6 LIABILITIES AND OBLIGATIONS. Except as and to the extent disclosed and
adequately provided for in the Financial Statements or on SCHEDULE 2.6 hereto,
the Company has no liabilities
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or obligations of any kind, whether accrued, absolute, secured or unsecured,
contingent or otherwise. Except and to the extent disclosed on SCHEDULE 2.6,
there are no claims, liabilities or obligations, nor any reasonable basis for
assertion against the Company, of any claim, liability or obligation, of any
nature whatsoever. Except as expressly set forth on SCHEDULE 2.6, all of the
contingent liabilities of the Company listed on SCHEDULE 2.6 are covered by the
Company's insurance policies, and no such liability will exceed the policy
limits of such insurance policies. SCHEDULE 2.6 contains a reasonable estimate
of the maximum amount which may be payable with respect to known liabilities
which are not fixed. For each such known liability for which the amount is not
fixed, SCHEDULE 2.6 includes a summary description of each known liability,
together with copies of all relevant documentation relating thereto. The
Company's total interest bearing debt as of the Closing Date, calculated using
the twelve-month average balance for the Company's line of credit, does not
exceed $255,000. As of the Closing Date the Company's tangible net worth is at
least $90,000.
2.7 ACCOUNTS AND NOTES RECEIVABLE. SCHEDULE 2.7 sets forth an accurate
list of the accounts and notes receivable of the Company, as of the most recent
date practicable (which date is set forth thereon), showing amounts due in
30-day aging categories. Except to the extent reflected on SCHEDULE 2.7, all
such accounts, notes and other receivables were incurred in the ordinary course
of business and are collectible in the amounts shown on SCHEDULE 2.7, in
accordance with the Company's prior history, provided that Stockholders
represent and warrant that the reserves reflected in the balance sheet as of the
Balance Sheet Date are reasonable.
2.8 PERMITS AND INTANGIBLES. The Company holds all licenses, franchises,
permits and other governmental authorizations required or necessary in
connection with the conduct of the Company's business. SCHEDULE 2.8 sets forth
an accurate list and summary description of all such licenses, franchises,
permits and other governmental authorizations, including permits, titles
(including licenses, franchises, certificates, trademarks, trade names, patents,
patent applications and copyrights owned or held by the Company or any of its
employees (including interests in software or other technology systems, programs
and intellectual property) (collectively, the "Intangible Assets") (it being
understood and agreed that a list of all environmental permits and other
environmental approvals is set forth on SCHEDULE 2.9). The Intangible Assets and
other governmental authorizations listed on SCHEDULES 2.8 and 2.9 are valid, and
the Company has not received any notice that any person intends to cancel,
terminate or not renew any such Intangible Assets or other governmental
authorization. The Company has conducted and is conducting its business in
compliance with the requirements, standards, criteria and conditions set forth
in the Intangible Assets and other governmental authorizations listed on
SCHEDULES 2.8 and 2.9 and is not in violation of any of the foregoing. Except as
specifically set forth on SCHEDULE 2.8 or 2.9, the transactions contemplated by
this Agreement will not result in a default under or a breach or violation of,
or adversely affect the rights and benefits afforded to the Company by, any such
Intangible Assets or other governmental authorizations.
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2.9 ENVIRONMENTAL MATTERS. The Company has complied with and is in
compliance with all federal, state, local and foreign statutes (civil and
criminal), laws, ordinances, regulations, rules, notices, permits, judgments,
orders and decrees applicable to any of them or any of their respective
properties, assets, operations and businesses relating to environmental
protection (collectively "Environmental Laws"), including, without limitation,
Environmental Laws relating to air, water, land and the generation, storage,
use, handling, transportation, treatment or disposal of Hazardous Wastes,
Hazardous Materials and Hazardous Substances (including petroleum and petroleum
products) (as such terms are defined in any applicable Environmental Law) except
to the extent that noncompliance with any Environmental Laws, either singly or
in the aggregate, has not had and will not have a Material Adverse Effect on the
Company or any of its operations. The Company has obtained and adhered to all
necessary permits and other approvals necessary to treat, transport, store,
dispose of and otherwise handle Hazardous Wastes, Hazardous Materials and
Hazardous Substances, a list of all of which permits and approvals is set forth
on SCHEDULE 2.9, and have reported to the appropriate authorities, to the extent
required by all Environmental Laws, all past and present sites owned and
operated by the Company where Hazardous Wastes, Hazardous Materials or Hazardous
Substances have been treated, stored, disposed of or otherwise handled. There
have been no releases or threats of releases (as defined in Environmental Laws)
at, from, in, under or on any property owned or operated by the Company except
as permitted by Environmental Laws. There is no on-site or off-site location to
which the Company has transported or disposed of Hazardous Wastes, Hazardous
Materials or Hazardous Substances or arranged for the transportation of
Hazardous Wastes, Hazardous Materials or Hazardous Substances which is the
subject of any federal, state, local or foreign enforcement action or any other
investigation which could lead to any claim against the Company or LandCARE for
any clean-up cost, remedial work, damage to natural resources, property damage
or personal injury, including, but not limited to, any claim under (i) the
Comprehensive Environmental Response, Compensation and Liability Act of 1980, as
amended, (ii) the Resource Conservation and Recovery Act, as amended, (iii) the
Hazardous Materials Transportation Act, as amended, or (iv) comparable state or
local statutes and regulations. The Company has no contingent liability in
connection with any release of any Hazardous Waste, Hazardous Material or
Hazardous Substance into the environment.
2.10 PERSONAL PROPERTY. SCHEDULE 2.10 sets forth an accurate list of (a)
all personal property included in "plant, property and equipment" or any similar
category on the Interim Balance Sheet of the Company with a fair market value of
$100 or more, (b) all other personal property owned by the Company with a fair
market value in excess of $5,000, and (c) all leases and agreements with respect
to personal property, copies of which have been delivered to LandCARE. SCHEDULE
2.10 indicates which of such assets are currently owned, or were formerly owned,
by the Stockholders or any affiliate of the Company or the Stockholders. Except
as set forth on SCHEDULE 2.10, (i) all material personal property used by the
Company in its business is either owned by the
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Company or leased by the Company pursuant to a lease included on SCHEDULE 2.10,
(ii) all of the personal property listed on SCHEDULE 2.10 is in good working
order and condition, ordinary wear and tear excepted and (iii) all leases and
agreements included on SCHEDULE 2.10 are in full force and effect and constitute
valid and binding agreements of the parties (and their successors) thereto in
accordance with their respective terms. Except as set forth on SCHEDULE 2.10,
the Company has good and valid title to the tangible and intangible personal
property it purports to own, subject to no security interest, pledge, lien,
claim, conditional sales agreement, encumbrance, charge or restriction on
transfer.
2.11 SIGNIFICANT CUSTOMERS; MATERIAL CONTRACTS AND COMMITMENTS. SCHEDULE
2.11 sets forth a list of (i) all customers representing 1% or more of the
Company's revenues in its last full fiscal year, provided that Schedule 2.11
shall include no more than those 25 customers most contributing to such revenues
on an individual basis ("Significant Customers"), and (ii) all material
contracts, commitments and similar agreements to which the Company is a party or
by which it or any of its properties are bound (including, but not limited to,
contracts with Significant Customers, joint venture or partnership agreements,
contracts with any labor organizations, strategic alliances and options to
purchase land). True, complete and correct copies of such agreements have been
delivered to LandCARE. Except as described on SCHEDULE 2.11, (i) none of the
Significant Customers have canceled or substantially reduced or, to the
knowledge of the Company, are currently attempting or threatening to cancel a
contract or substantially reduce utilization of the services provided by the
Company, and (ii) the Company has complied with all commitments and obligations
pertaining to it, and is not in default under any contracts or agreements listed
on SCHEDULE 2.11 and no notice of default under any such contract or agreement
has been received. Except as described in Schedule 2.11, the transactions
contemplated by this Agreement will not result in a default under or a breach or
violation of, or adversely affect the rights and benefits afforded to the
Company by, any such contracts or agreements. SCHEDULE 2.11 also includes a
summary description of all plans or projects relating to the Company's business
involving the opening of new operations, expansion of existing operations, the
acquisition of any property, business or assets requiring, in any event, the
payment of more than $50,000 in the aggregate.
2.12 REAL PROPERTY. SCHEDULE 2.12 includes a list of all real property
owned or leased by the Company at the date hereof (the "Real Property"), and all
other real property, if any, used by the Company in the conduct of its business.
True, complete and correct copies of all leases and agreements with respect to
Real Property leased by the Company have been delivered to LandCARE, and an
indication as to which such properties, if any, are currently owned, or were
formerly owned, by the Stockholders or any affiliates of the Company or the
Stockholders is included in SCHEDULE 2.12. All leases relating to Real Property
leased by the Company from any of the Stockholders or any affiliate of any of
the Stockholders has been terminated. Except as set forth on SCHEDULE 2.12, all
of such leases included on SCHEDULE 2.12 are in full force and effect and
constitute valid and
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binding agreements of the parties (and their successors) thereto in accordance
with their respective terms. To the best knowledge of the Stockholders, there
are no leases, tenancy agreements, easements, covenants, restrictions or any
other instruments, agreements or arrangements which create in or confer on any
party, other than the Company, the right to occupy or possess all or any portion
of the Real Property or create in or confer on any such party any right, title
or interest in or to the Real Property or any portion thereof or any interest
therein; no party other than the Company occupies or possesses the Real Property
or any portion thereof; there is legal and adequate ingress and egress between
each tract of Real Property and an adjacent (or, if none, the closest) public
roadway; the Real Property is properly zoned in order to allow its current use
in the Company's businesses; and there are no claims or demands pending or
threatened by any party against the Real Property which, if valid, would create
in, or confer on, any party other than the Company, any right, title or interest
in or to the Real Property or any portion thereof. None of the buildings,
structures or improvements described on SCHEDULE 2.12, or the operation or
maintenance thereof as now operated or maintained, contravenes any zoning
ordinance or other administrative regulation or violates any restrictive
covenant or any provision of law, the effect of which would materially interfere
with or prevent their continued use for the purposes for which they are now
being used or would adversely affect the value thereof or the interest of the
Company therein.
2.13 INSURANCE. SCHEDULE 2.13 sets forth an accurate list as of the date
hereof of all insurance policies now carried by the Company and an accurate list
of all insurance loss runs and workers compensation claims received for the past
three policy years. True, complete and correct copies of all insurance policies
currently in effect have been delivered to LandCARE. Such insurance policies
evidence all of the insurance that the Company is required to carry pursuant to
all of its contracts and other agreements and pursuant to all applicable laws,
and provide adequate coverage against the risks involved in the Company's
business. Except as set forth on SCHEDULE 2.13, none of such policies is a
"claims made" policy.
2.14 COMPENSATION; EMPLOYMENT AGREEMENTS; ORGANIZED LABOR MATTERS.
SCHEDULE 2.14 sets forth an accurate list showing all officers, directors and
key employees of the Company, listing all employment agreements with such
officers, directors and key employees and the rate of compensation (and the
portions thereof attributable to salary, bonus and other compensation,
respectively) of each of such persons as of the Balance Sheet Date. Except as
set forth on SCHEDULE 2.14, since the Balance Sheet Date, there have been no
increases in the base compensation payable or any special bonuses to any
officer, director, key employee or other employee.
Except as set forth on SCHEDULE 2.14, (i) the Company is not bound by or
subject to (and none of its respective assets or properties is bound by or
subject to) any arrangement with any labor union, (ii) no employees of the
Company are represented by any labor union or covered by any collective
bargaining agreement, (iii) to the knowledge of the Company, no campaign to
establish such
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representation is in progress and (iv) there is no pending or, to the best of
the Company's knowledge, threatened, labor dispute involving the Company and any
group of its employees. The Company has not experienced any labor interruptions
over the past five years.
2.15 EMPLOYEE BENEFIT PLANS. SCHEDULE 2.15 sets forth an accurate schedule
showing all employee benefit plans of Company, including all agreements or
arrangements (other than agreements or arrangements set forth on SCHEDULE 2.14)
containing "golden parachute" or other similar provisions, and deferred
compensation agreements, together with true, complete and correct copies of such
plans, agreements and any trusts related thereto, and classifications of
employees covered thereby as of the Balance Sheet Date. Except for the employee
benefit plans, if any, described on SCHEDULE 2.15, the Company does not sponsor,
maintain or contribute to any plan, program, fund or arrangement that
constitutes an "employee pension benefit plan," nor does the Company have any
obligation to contribute to or accrue or pay any benefits under any deferred
compensation or retirement funding arrangement on behalf of any employee or
employees (such as, for example, and without limitation, any individual
retirement account or annuity, any "excess benefit plan" (within the meaning of
Section 3(36) of the Employee Retirement Income Security Act of 1974, as amended
("ERISA")), or any non-qualified deferred compensation arrangement). For the
purposes of this Agreement, the term "employee pension benefit plan" shall have
the same meaning as is given that term in Section 3(2) of ERISA. The Company has
not sponsored, maintained or contributed to any employee pension benefit plan
and is not required to contribute to any retirement plan pursuant to the
provisions of any collective bargaining agreement establishing the terms and
conditions of employment of any of the Company's employees other than the plans
set forth on SCHEDULE 2.15.
The Company is not now, and will not as a result of its past activities
become, liable to the Pension Benefit Guaranty Corporation (the "PBGC") or to
any multi employer employee pension benefit plan under the provisions of Title
IV of ERISA. All employee benefit plans listed on SCHEDULE 2.15 and the
administration thereof are in substantial compliance with their terms and all
applicable provisions of ERISA and the regulations issued thereunder, as well as
with all other applicable federal, state and local statutes, ordinances and
regulations. All accrued contribution obligations of the Company with respect to
any plan listed on SCHEDULE 2.15 have either been fulfilled in their entirety or
are fully reflected on the balance sheet of the Company as of the Balance Sheet
Date. All plans listed on SCHEDULE 2.15 that are intended to qualify (the
"Qualified Plans") under Section 401(a) of the Internal Revenue Code of 1986, as
amended (the "Code"), are, and have been, so qualified and have been determined
by the Internal Revenue Service to be so qualified. Except as disclosed on
SCHEDULE 2.15, all reports and other documents required to be filed with any
governmental agency or distributed to plan participants or beneficiaries have
been timely filed or distributed, and the most recent copies thereof are
included as part of SCHEDULE 2.15. Neither the Stockholders, nor any plan listed
in SCHEDULE 2.15 nor the Company has engaged in any transaction
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prohibited under the provisions of Section 4975 of the Code or Section 406 of
ERISA. No plan listed on SCHEDULE 2.15 has incurred an accumulated funding
deficiency, as defined in Section 412(a) of the Code and Section 302(1) of
ERISA; and the Company has not incurred any liability for excise tax or penalty
due to the Internal Revenue Service or any liability to the PBGC. There have
been no terminations, partial terminations or discontinuance of contributions to
any such Qualified Plan intended to qualify under Section 401(a) of the Code
without notice to and approval by the Internal Revenue Service; no plan listed
on SCHEDULE 2.15 subject to the provisions of Title IV of ERISA has been
terminated; there have been no "reportable events" (as that phrase is defined in
Section 4043 of ERISA) with respect to any such plan listed on SCHEDULE 2.15;
the Company has not incurred liability under Section 4062 of ERISA; and no
circumstances exist pursuant to which the Company could have any direct or
indirect liability whatsoever (including, but not limited to, any liability to
any multi employer plan or the PBGC under Title IV of ERISA or to the Internal
Revenue Service for any excise tax or penalty, or being subject to any statutory
lien to secure payment of any such liability) with respect to any plan now or
heretofore maintained or contributed to by any entity other than the Company
that is, or at any time was, a member of a "controlled group" (as defined in
Section 412(n)(6)(B) of the Code) that includes the Company.
2.16 CONFORMITY WITH LAW; LITIGATION. Except as set forth on SCHEDULE
2.16, there are no claims, actions, suits or proceedings pending or, to the best
knowledge of the Stockholders, threatened, against or affecting the Company (as
any of its officers and directors in their capacities as such), at law or in
equity, or before or by any federal, state, municipal or other governmental
department, commission, board, bureau, agency or instrumentality having
jurisdiction over the Company. Except as set forth on SCHEDULE 2.16, no notice
of any claim, action, suit or proceeding, whether pending or threatened, has
been received by the Company during the last five years and, to the best
knowledge of the Stockholders, there is no basis therefor. Except as set forth
on SCHEDULE 2.16, there are no outstanding judgments, orders, writs, injunctions
or decrees against the Company. Except as set forth on SCHEDULE 2.16, the
Company has conducted and now conducts its business in material compliance with
all laws, regulations, writs, injunctions, decrees and orders applicable to the
Company or its assets. The Company is not in violation of any material law or
regulation or any order of any court or federal, state, municipal or other
governmental department, commission, board, bureau, agency or instrumentality
having jurisdiction over any of them. The Company has conducted and is
conducting its business in substantial compliance with the requirements,
standards, criteria and conditions set forth in applicable federal, state and
local statutes, ordinances, permits, licenses, orders, approvals, variances,
rules and regulations, including all such permits, licenses, orders and other
governmental approvals set forth on SCHEDULES 2.8 and 2.9.
2.17 TAXES. For purposes of this Agreement, the term "Taxes" shall mean
all taxes, charges, fees, levies or other assessments, including, without
limitation, income, gross receipts,
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excise, property, sales, withholding, social security, unemployment, occupation,
use, service, license, payroll, franchise, transfer and recording taxes, fees
and charges, imposed by the United States or any state, local or foreign
government or subdivision or agency thereof ("Taxing Authority"), whether
computed on a separate, consolidated, unitary, combined or any other basis; and
such term shall include any interest, fines, penalties or additional amounts
attributable to or imposed with respect to any such taxes, charges, fees, levies
or other assessments. As used herein, the term "Company Subsidiaries" means the
subsidiaries, if any, of the Company; it being understood that there may be no
such subsidiaries.
All Tax returns ("Returns") required to be filed with respect to any Tax
for which any of the Company and the Company Subsidiaries (if any) is liable
have been duly and timely filed with the appropriate Taxing Authority, each Tax
shown to be payable on each such Return has been paid, each Tax payable by the
Company or a Company Subsidiary by assessment has been timely paid in the amount
assessed, and adequate reserves have been established on the consolidated books
of the Company and the Company Subsidiaries for all Taxes for which any of the
Company and the Company subsidiaries is liable, but the payment of which is not
yet due. Neither the Company nor any Company Subsidiary is, or ever has been,
liable for any Tax payable by reason of the income or property of a person or
entity other than the Company or a Company Subsidiary. Each of the Company and
the Company Subsidiaries has timely filed true, correct and complete
declarations of estimated Tax in each jurisdiction in which any such declaration
is required to be filed by it. No Liens for Taxes exist upon the assets of the
Company or any Company Subsidiary except Liens for Taxes which are not yet due.
Neither the Company nor any Company Subsidiary is, or ever has been, subject to
Tax in any jurisdiction outside the United States. No litigation with respect to
any Tax for which the Company or any Company Subsidiary is asserted to be liable
is pending or, to the knowledge of the Company or any Stockholder, threatened,
and no basis which the Company or any Stockholder believes to be valid exists on
which any claim for any such Tax can be asserted against the Company or any
Company Subsidiary. There are no requests for rulings or determinations in
respect of any Taxes pending between the Company or any Company Subsidiary and
any Taxing Authority. No extension of any period during which any Tax may be
assessed or collected and for which the Company or any Company Subsidiary is or
may be liable has been granted to any Taxing Authority. Neither the Company nor
any Company Subsidiary is or has been party to any tax allocation or sharing
agreement. All amounts required to be withheld by any of the Company and the
Company Subsidiaries and paid to governmental agencies for income, social
security, unemployment insurance, sales, excise, use and other Taxes have been
collected or withheld and paid to the proper Taxing Authority. The Company and
each Company Subsidiary have made all deposits required by law to be made with
respect to employees' withholding and other employment Taxes. Neither the
Company nor any Stockholder is a "foreign person," as that term is referred to
in Section 1445(f)(3) of the Code. The Company has not filed a consent pursuant
to Section 341 (f) of the Code or any comparable provision of any other tax
statute and has not agreed to have Section
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341 (f)(2) of the Code or any comparable provision of any other Tax statute
apply to any disposition of an asset. The Company has not made, is not obligated
to make and is not a party to any agreement that could require it to make any
payment that is not deductible under Section 280G of the Code. No asset of the
Company or of any Company Subsidiary is subject to any provision of applicable
law which eliminates or reduces the allowance for depreciation or amortization
with respect to that asset below the allowance generally available to an asset
of its type. Except as previously disclosed to LandCARE, no accounting method
changes of the Company or of any Company Subsidiary exist or are proposed or
threatened which could give rise to an adjustment under Section 481 of the Code.
The Company uses the accrual method of accounting for income tax purposes, and
the Company's methods of accounting have not changed in the past five years. The
Company is not an investment company as defined in Section 351(e)(1) of the
Code. The Company has a taxable year ended February 28. The Company is not party
to any joint venture, partnership, or other arrangement that is treated as a
partnership for federal income tax purposes.
2.18 NO VIOLATIONS; ALL REQUIRED CONSENTS OBTAINED. The Company is not in
violation of any of its Charter Documents. Neither the Company nor, to the
knowledge of the Stockholders, any other party thereto is in material default
under any lease, instrument, license, permit or material agreement to which the
Company is a party or by which its properties are bound (the "Material
Documents"). Except as set forth on SCHEDULE 2.18, (a) the execution of this
Agreement by the Company and the Stockholders and the performance by the Company
and the Stockholders of their obligations hereunder and the consummation of the
transactions contemplated hereby will not result in any violation or breach or
constitute a default under any of the terms or provisions of the Material
Documents or the Charter Documents, and (b) at and after the Closing Date the
Surviving Corporation will be entitled to the rights and benefits under the
Material Documents to which the Company is entitled immediately prior to the
Closing. Except as set forth on SCHEDULE 2.18 (and except for consents already
obtained), none of the Material Documents requires notice to, or the consent or
approval of, any governmental agency or other third party with respect to any of
the transactions contemplated hereby in order to remain in full force and
effect, and consummation of the transactions contemplated hereby will not give
rise to any right to termination, cancellation or acceleration or loss of any
right or benefit. Except as set forth on SCHEDULE 2.18, none of the Material
Documents prohibits the use or publication of the name of any other party to
such Material Document, and none of the Material Documents prohibits or
restricts the Company or will prevent or restrict the Surviving Corporation or
LandCARE from freely providing services to any person.
2.19 ABSENCE OF CHANGES. Since the Balance Sheet Date, the Company has
conducted its operations in the ordinary course of business and, except as set
forth on SCHEDULE 2.19, there has not been:
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(i) any change in the business, assets, liabilities or financial
condition of the Company which would have a Material Adverse Effect;
(ii) any damage, destruction or loss (whether or not covered by
insurance) affecting any of the material assets of the Company or the
business of the Company which would have a Material Adverse Effect;
(iii) any change in the authorized capital of the Company or its
outstanding securities or any change in its ownership interests or any
grant of any options, warrants, calls, conversion rights or commitments;
(iv) any declaration or payment of any dividend or distribution with
respect to the capital stock or any direct or indirect redemption,
purchase or other acquisition of any of the capital stock of the Company;
(v) any increase or commitment to increase the compensation, bonus,
sales commissions or fee arrangement payable or to become payable by the
Company to any of its officers, directors, stockholders, employees,
consultants or agents;
(vi) any work interruptions, labor grievances or claims filed, or
any event or condition of any character, materially adversely affecting
the business of the Company;
(vii) any sale or transfer, or any agreement to sell or transfer,
any material assets, property or rights of the Company to any person;
(viii)any cancellation, or agreement to cancel, any indebtedness or
other obligation owing to the Company;
(ix) any plan, agreement or arrangement granting any preferential
rights to purchase or acquire any interest in any of the assets, property
or rights of the Company or requiring consent of any party to the transfer
and assignment of any such assets, property or rights;
(x) any purchase or acquisition of, or agreement, plan or
arrangement to purchase or acquire, any property, rights or assets outside
of the ordinary course of the Company's business;
(xi) any waiver of any material rights or claims of the Company;
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(xii) any amendment or termination of any contract, agreement,
license, permit or other right to which the Company is a party which would
have a Material Adverse Effect;
(xiii)any contract, commitment or liability entered into or incurred
or any capital expenditures made except in the normal course of business
consistent with past practice in an individual amount not in excess of $
20,000.00 and in an aggregate amount not in excess of $ 150,000.00; or
(xiv) any transaction by the Company outside the ordinary course of
its business.
2.20 POWERS OF ATTORNEY. SCHEDULE 2.20 sets forth a schedule as of the
date of this Agreement of the name of each person, corporation, firm or other
entity holding any general or special power of attorney from the Company and a
description of the terms of each such power.
2.21 COMPETING LINES OF BUSINESS; RELATED-PARTY TRANSACTIONS. Except as
set forth on SCHEDULE 2.21, neither the Stockholders nor any other affiliate of
the Company owns, directly or indirectly, any interest in, or is an officer,
director, employee or consultant of or otherwise receives remuneration from, any
business which is a competitor, lessor, lessee, customer or supplier of the
Company. Except as set forth on SCHEDULE 2.21, no officer, director or
stockholder of the Company has, nor during the period beginning January 1, 1995
through the date hereof had, any interest in any property, real or personal,
tangible or intangible, used in or pertaining to the Company's business.
2.22 DISCLOSURE. The Stockholders have provided LandCARE with all the
information that LandCARE has requested in analyzing whether to consummate the
transactions contemplated hereby. None of the information so provided nor any
representation or warranty of the Stockholders contained in this Agreement
contains any untrue statement or omits to state a material fact necessary in
order to make the statements herein or therein, in light of the circumstances
under which they were made, not misleading. There is no fact which has specific
application to the Company or its business or assets (other than general
economic or industry conditions) which would have a Material Adverse Effect or,
so far as the Stockholders can reasonably foresee, threatens to have a Material
Adverse Effect, on the Company or its business or assets, or the condition
(financial or otherwise), results of operations or prospects of the Company,
which has not been described in the Schedules hereto.
2.23 CERTAIN BUSINESS PRACTICES. Neither the Company nor any person acting
on behalf of the Company has given or offered anything of value to any
governmental official, political party or candidate for government office nor
has it or any of them otherwise taken any action which would cause the Company
to be in violation of the Foreign Corrupt Practices Act of 1977, as amended, or
any law of similar effect.
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2.24 NOTICE TO BARGAINING AGENTS. The Company has satisfied any
requirement for notice of the transactions contemplated by this Agreement under
applicable collective bargaining agreements.
2.25 NOTICES AND CONSENTS. The Company has given any notices to third
parties and has obtained any third party consents that may be necessary to
consummate the transactions contemplated hereby.
2.26 INVENTORY; WORKING CAPITAL; OTHER FINANCIAL MATTERS. The Company's
inventory and working capital levels are adequate to successfully operate the
business, and there has been no unusual build-up of cash needs at the date
hereof. The parties hereto acknowledge, however, that the Company's cash needs
are comparatively higher during the summer months than during the other months
of the year.
2.27 YEAR 2000 COMPLIANCE. The properties and assets of the Company (apart
from the Company's computer software), including, but not limited to, computer
hardware, microprocessor driven equipment, and data, owned or used by the
Company will accurately process date and time data after December 31, 1999, and
the Company will suffer no loss of functional ability when processing dates and
related data outside the 1900-1999 year range with the proper software update.
3. REPRESENTATIONS OF LANDCARE
LandCARE represents and warrants as follows:
3.1 DUE ORGANIZATION. LandCARE is duly incorporated, validly existing and
in good standing under the laws of the state of Delaware, and has the requisite
power and authority to carry on its business as it is now being conducted.
LandCARE is qualified to do business and is in good standing in each
jurisdiction in which the nature of its business makes such qualification
necessary, except where the failure to be so authorized or qualified would not
have a Material Adverse Effect.
3.2 AUTHORIZATION. (i) The representative of LandCARE executing this
Agreement has the authority to enter into and bind LandCARE to the terms of this
Agreement and (ii) LandCARE has the full legal right, power and authority to
enter into this Agreement and to consummate the transactions contemplated
hereby, all of which have been approved by the Board of Directors of LandCARE
and no other corporate proceeding on the part of LandCARE and/or Ground Control
is necessary to authorize this Agreement and the transactions contemplated
hereby.
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3.3 NO VIOLATIONS. The execution of this Agreement and the performance of
the obligations hereunder and the consummation of the transactions contemplated
hereby will not result in any violation or breach or constitute a default under
any of the terms or provisions of the Restated Certificate of Incorporation, as
amended, or Bylaws, as amended, of LandCARE. Except as described in Schedule
3.3, the execution, performance and delivery by LandCARE of this Agreement, and
any and all other agreements contemplated hereby, and the fulfillment of and
compliance with the respective terms hereof and thereof by LandCARE do not and
will not:
(a) conflict with or result in a breach of the terms, conditions or
provisions of, (b) constitute a default or event of default under (with
due notice, lapse of time or both) (c) result in the creation of any lien
upon the capital stock or assets of LandCARE pursuant
to,
(d) give any third party the right to accelerate any obligation under, (e)
result in a violation of, or (f) require any authorization, consent,
approval, exemption or other action by or notice
to any court or governmental authority pursuant to
any law, regulation, order, contract or agreement to which LandCARE is subject.
3.4 VALIDITY OF OBLIGATIONS. The execution and delivery of this Agreement
by LandCARE and the performance of the transactions contemplated hereby have
been duly and validly authorized by the Board of Directors of LandCARE and this
Agreement has been duly and validly authorized by all necessary corporate action
and is a legal, valid and binding obligation of LandCARE.
3.5 PROSPECTUS AND THE ABSENCE OF CERTAIN CHANGES. Attached as Exhibit 3.5
hereto is a copy of the Prospectus (the "Prospectus") LandCARE has delivered to
the Stockholders. The Prospectus delivered to the Stockholders, receipt of which
is hereby acknowledged, does not contain a misrepresentation of a material fact
or omit to state a material fact necessary to make statements made therein, in
light of the circumstances under which they were made, not misleading. There has
been no material adverse change in the business or affairs of LandCARE since the
date of the Prospectus.
3.6 ISSUANCE OF LANDCARE STOCK. The LandCARE Stock to be issued by
LandCARE to the Stockholders, in accordance with the terms and subject to the
conditions set forth in this Agreement, shall, upon issuance and delivery, be
duly authorized, validly issued, fully paid, nonassessable, and shall be free
and clear of all liens, encumbrances, charges, and restrictions of any kind
except as described in Subparagraph 9.2 below. The offer and sale of such shares
have been registered under the Securities act of 1933, as amended (the
"Securities Act").
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3.7 LISTING. The LandCARE Stock to be issued to the Stockholders has been
or will be approved for listing on the New York Stock Exchange.
3.8 COMPLIANCE WITH LAW AND APPLICABLE GOVERNMENT RELATIONS. LandCARE is
in material compliance with all applicable federal, state, local and
administrative laws, regulations and orders. There are no material claims with
respect to any such laws, regulations or orders pending, nor to the best
knowledge of LandCARE threatened, nor has LandCARE received any written notice
regarding any such violation.
3.9 IMPROPER AND OTHER PAYMENTS. (a) Neither LandCARE, any director,
officer, employee thereof, nor to LandCARE's knowledge any agent or
representative of LandCARE nor any individual or entity acting on behalf of any
of them has made, paid or received any unlawful bribes, kickbacks or other
similar payments to or from any person or authority; (b) no improper
contributions have been directly or indirectly made to a domestic or foreign
political party or candidate; (c) no improper foreign payment (as defined in the
Foreign Corrupt Practices Act) has been made; and (d) the internal accounting
controls of LandCARE are believed by LandCARE's management to be adequate to
detect any of the foregoing under current circumstances.
3.10 DISCLOSURE. LandCARE has provided the Stockholders with all the
information that the Stockholders have requested in writing analyzing whether to
consummate the transactions contemplated hereby. None of the information so
provided nor any representation or warranty of LandCARE contained in this
Agreement contains any untrue statement or omits to state a material fact
necessary in order to make the statements herein or therein, in light of the
circumstances under which they were made, not misleading. There is no fact which
has specific application to LandCARE or its business or assets (other than
general economic or industry conditions) which would have a Material Adverse
Effect or, so far as LandCARE can reasonably foresee, threatens to have a
Material Adverse Effect, on LandCARE or its business or assets, or the condition
(financial or otherwise), results of operations or prospects of LandCARE, which
has not been described in the Schedules hereto.
4. DELIVERIES
4.1 INSTRUMENTS OF TRANSFER. The Stockholders are delivering to LandCARE
certificates representing all of the Shares, duly endorsed (or accompanied by
duly executed stock powers). LandCARE is delivering to the Shareholders stock
certificates representing 222,222 shares of LandCARE voting common stock or a
copy of an irrevocable instruction letter to its transfer agent authorizing the
issuance of such certificate.
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4.2 CERTIFICATE OF MERGER. The appropriate parties hereto are executing
and delivering for filing with the appropriate authorities a certificate of
merger or similar document for purposes of effecting the Merger.
4.3 EMPLOYMENT AGREEMENT. Ground Control and the persons identified in
SCHEDULE 4.3 are entering into Employment Agreements in the form of Annex I.
4.4 OPINION OF COUNSEL. Counsel to the Company and the Stockholders is
delivering an opinion to LandCARE dated the date hereof in the form attached
hereto as Annex II.
4.5 GOOD STANDING CERTIFICATES. The Stockholders are delivering to
LandCARE certificates, dated as of a date no earlier than ten days prior to the
date hereof, duly issued by the appropriate governmental authority in the State
of Incorporation and in each state in which the Company is authorized to do
business, showing the Company to be in good standing and authorized to do
business therein.
4.6 INDEBTEDNESS TO COMPANY. The Stockholders and their affiliates are
repaying any outstanding indebtedness they may have to the Company.
4.7 CONSENTS. The Stockholders are delivering to LandCARE copies of any
third party consents required in connection with the consummation of the
transactions contemplated hereby.
4.8 RESIGNATIONS OF DIRECTORS AND OFFICERS. The Stockholders are
delivering to LandCARE the resignations of such directors and officers of the
Company as have been requested by LandCARE.
4.9 ACCOUNTING TREATMENT. LandCARE is receiving advice from its
independent accountants that the transactions contemplated hereby may be
accounted for by LandCARE as a pooling of interests.
5. POST-CLOSING COVENANTS
The parties to this Agreement further covenant and agree as follows:
5.1 FUTURE COOPERATION; FURTHER ASSURANCES. The Stockholders, the
Surviving Corporation and LandCARE shall each deliver or cause to be delivered
to the other following the date hereof such additional instruments as the other
may reasonably request for the purpose of effecting the Merger and fully
carrying out the intent of this Agreement. LandCARE shall provide the
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Stockholders reasonable access to the books and records of the Surviving
Corporation after the Closing Date for purposes of tax compliance and any other
reasonable purpose.
5.2 EXPENSES. LandCARE will pay the fees, expenses and disbursements of
LandCARE and its agents, representatives, financial advisors, accountants and
counsel incurred in connection with the execution, delivery and performance of
this Agreement. The Company will pay the fees, expenses and disbursements of the
Stockholders and their agents, representatives, financial advisors, accountants
and counsel incurred in connection with the execution, delivery and performance
of this Agreement. The Company shall pay any sales, use, transfer, real property
transfer, recording, gains, stock transfer and other similar taxes and fees
("Transfer Taxes") imposed in connection with the Merger. The Stockholders shall
file all necessary documentation and returns with respect to such Transfer
Taxes. In addition, the Stockholders acknowledge that the Stockholders, and not
the Surviving Corporation or LandCARE, will pay all taxes (income or otherwise),
if any, due upon receipt of the consideration payable pursuant to this
Agreement.
5.3 CERTAIN AGREEMENTS. Upon the request of LandCARE at any time after the
Closing, the Stockholders and the Surviving Corporation shall terminate any
existing agreements between the Company and any of the Stockholders or their
affiliates are parties.
5.4 PREPARATION AND FILING OF TAX RETURNS.
(a) The Stockholders shall file or cause to be filed all Tax Returns
for all taxable periods that end on or before the Closing Date, but in each case
only after LandCARE has reviewed such filings and consented thereto.
(b) LandCARE shall file or cause to be filed all Tax Returns for all
taxable periods ending after the Closing Date.
(c) Each party hereto shall, and shall cause its subsidiaries and
affiliates to, provide to each of the other parties hereto such cooperation and
information as any of them reasonably may request in filing any Tax Returns,
amended Tax Returns or claim for refund, determining a liability for Taxes or a
right to refund of Taxes or in conducting any audit or other proceeding with
respect to Taxes. Such cooperation and information shall include providing
copies of all relevant portions of relevant Tax Returns, together with relevant
accompanying schedules and relevant work papers, relevant documents relating to
rulings or other determinations by Taxing Authorities and relevant records
concerning the ownership and Tax basis of property, which such party may
possess. Each party shall make its employees reasonably available on a mutually
convenient basis at its cost to provide explanation of any documents or
information so provided.
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Subject to the preceding sentence, each party required to file tax returns
pursuant to this Agreement shall bear all costs of filing such tax returns.
6. INDEMNIFICATION
The Stockholders and LandCARE each make the following covenants that are
applicable to them, respectively:
6.1 SURVIVAL OF STOCKHOLDERS' REPRESENTATIONS AND WARRANTIES.
(a) The representations and warranties of the Stockholders made in
this Agreement shall survive the Closing for a period of one year following the
Closing Date; provided, however, that representations and warranties with
respect to which a claim is made within such one-year period shall survive until
such claim is finally determined and paid.
(b) The representations and warranties of LandCARE made in this
Agreement shall survive the Closing for a period of one year following the
Closing Date; provided, however, that representations and warranties with
respect to which a claim is made within such one-year period shall survive until
such claim is finally determined and paid.
(c) The date on which a representation or warranty expires as
provided herein is herein called the "Expiration Date." No claim for
indemnification may be made with respect to a representation or warranty after
the Expiration Date, other than claims based on fraud.
6.2 GENERAL INDEMNIFICATION BY THE STOCKHOLDERS. The Stockholders covenant
and agree that they will indemnify, defend, protect, and hold harmless the
Surviving Corporation, LandCARE and its subsidiaries and all of their officers,
directors, employees, stockholders, agents, representatives and affiliates at
all times from and after the date of this Agreement until the Expiration Date
from and against all claims, damages actions, suits, proceedings, demands,
assessments, adjustments, costs and expenses (including specifically, but
without limitation, reasonable attorneys' fees and expenses of investigation)
(collectively "Damages") incurred by such indemnified person as a result of or
incident to (i) any breach of any representation or warranty of the Stockholders
set forth herein, and (ii) any breach or nonfulfillment of any covenant or
agreement by the Company or the Stockholders under this Agreement.
6.3 INDEMNIFICATION BY LANDCARE. LandCARE covenants and agrees that it
will indemnify, defend, protect and hold harmless the Stockholders at all times
from and after the date of this Agreement until the Expiration Date from and
against all Damages in excess of $500 incurred by the Stockholders as a result
of or incident to (i) any breach of any representation or warranty of
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LandCARE set forth herein; (ii) any breach or nonfulfillment of any covenant or
agreement by LandCARE under this Agreement; (iii) the operation of the Surviving
Corporation from and after the Closing Date, except to the extent any such
Damages are attributable to the actions of any of the Stockholders, in their
capacities as such or otherwise; and (iv) any debt or liability of the Surviving
Corporation arising on or after the Closing Date.
6.4 THIRD PERSON CLAIMS. Promptly after any party hereto (the "Indemnified
Party") has received notice of or has knowledge of any claim by a person not a
party to this Agreement ("Third Person") or the commencement of any action or
proceeding by a Third Person that may give rise to a right of indemnification
hereunder, such Indemnified Party shall give to the party obligated to provide
indemnification hereunder (an "Indemnifying Party") written notice of such claim
or the commencement of such action or proceeding; provided, however, that the
failure to give such notice will not relieve such Indemnifying Party from
liability under this Section with respect to such claim, action or proceeding,
except to the extent that the Indemnifying Party has been actually prejudiced as
a result of such failure. The Indemnifying Party (at its own expense) shall have
the right and shall be given the opportunity to associate with the Indemnified
Party in the defense of such claim, suit or proceedings, and may select counsel
for the Indemnified Party, such counsel to be reasonably satisfactory to the
Indemnified Party. The Indemnified Party shall not, except at its own cost, make
any settlement with respect to any such claim, suit or proceeding without the
prior consent of the Indemnifying Party, which consent shall not be unreasonably
withheld or delayed. It is understood and agreed that in situations where
failure of the Indemnifying Party to settle a claim expeditiously could have an
adverse effect on the Indemnified Party, the failure of the Indemnifying Party
to act upon the Indemnified Party's request for consent to such settlement
within five business days of the Indemnifying Party's receipt of notice thereof
from the Indemnified Party shall be deemed to constitute consent by the
Indemnifying Party of such settlement for purposes of this Section.
6.5 METHOD OF PAYMENT. All claims for indemnification shall be paid in
LandCARE Stock valued at $ 9.00 per share.
7. NONCOMPETITION
7.1 PROHIBITED ACTIVITIES. As partial consideration for the execution,
delivery and performance of this Agreement by LandCARE, the Stockholders will
not, for a period of five years following the Closing Date, for any reason
whatsoever, directly or indirectly, for themselves or on behalf of or in
conjunction with any other person, persons, company, partnership, corporation or
business of whatever nature:
(i) own, manage, operate, join, control, consult or advise (whether
or not compensated for such consultation or advice), or participate in, or
render assistance to, or
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derive any benefit whatever from, any business offering services or
products in direct competition with the Surviving Corporation within 100
miles of where the Company conducted business at any time within one year
prior to the Closing Date (the "Territory");
(ii) engage, as an officer, director, shareholder, owner, partner,
joint venturer, or in a sales or managerial capacity, whether as an
employee, independent contractor, consultant or advisor, or as a sales
representative, in any business offering services or products in direct
competition with the Surviving Corporation or LandCARE within the
Territory;
(iii) call upon any person who is, at that time, an employee of
LandCARE or any of its subsidiaries (including the Surviving Corporation)
for the purpose or with the intent of enticing such employee away from or
out of the employ of LandCARE or any of its subsidiaries (including the
Surviving Corporation);
(iv) call upon any person or entity which is, at that time, or which
has been, within one year prior to the Closing Date, a customer of
LandCARE, the Company or any of LandCARE's subsidiaries (including the
Surviving Corporation) for the purpose of soliciting or selling products
or services in direct competition with LandCARE or any of its subsidiaries
(including the Company) within the Territory.
Notwithstanding the above, the foregoing covenants shall not be deemed to
prohibit any Stockholder from acquiring as a passive investor with no
involvement in the operations or management of the business, not more than two
percent (2%) of the capital stock of a competing business whose stock is
publicly traded on a national securities exchange or over-the-counter market.
The provisions of this Section are independent of the noncompetition
provisions contained in any consulting or employment agreement to which any
Stockholder may be or may become a party in connection with the transactions
contemplated hereby. All such provisions are intended to be observed and
enforced in accordance with their terms.
7.2 EQUITABLE RELIEF. Because of the difficulty of measuring economic
losses to LandCARE as a result of a breach of the foregoing covenant, and
because of the immediate and irreparable damage that could be caused to LandCARE
for which it would have no other adequate remedy, the Stockholders agree that
the foregoing covenant may be enforced by LandCARE in the event of breach by
such Stockholders, by injunctions, restraining orders and other equitable
actions.
7.3 REASONABLE RESTRAINT. It is agreed by the parties hereto that the
foregoing covenants in this Section impose a reasonable restraint on the
Stockholders.
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7.4 SEVERABILITY; REFORMATION. The covenants in this Section are severable
and separate, and the unenforceability of any specific covenant shall not affect
the provisions of any other covenant. Moreover, in the event any court of
competent jurisdiction shall determine that the scope, time or territorial
restrictions set forth are unreasonable, then it is the intention of the parties
that such restrictions be enforced to the fullest extent which the court deems
reasonable, and the Agreement shall thereby be reformed.
7.5 INDEPENDENT COVENANT. The Stockholders acknowledge that their
covenants set forth in this Section are material conditions to LandCARE's
willingness to execute and deliver this Agreement and to consummate the
transactions contemplated hereby. All of the covenants in this Section shall be
construed as an agreement independent of any other provision in this Agreement,
and the existence of any claim or cause of action of any Stockholder against
LandCARE or any subsidiary thereof, whether predicated on this Agreement or
otherwise, shall not constitute a defense to the enforcement by LandCARE of such
covenants. It is specifically agreed that the period of five years stated at the
beginning of this Section, during which the agreements and covenants of the
Stockholders made in this Section shall be effective, shall be computed by
excluding from such computation any time during which any such Stockholder is in
violation of any provision of this Section. The covenants contained in Section
shall not be affected by any breach of any other provision hereof by any party
hereto.
8. NONDISCLOSURE OF CONFIDENTIAL INFORMATION
8.1 GENERAL. The Stockholders recognize and acknowledge that they have had
access to certain customer lists, confidential information of the Company, such
as operational policies, pricing and cost policies, and other information, that
will be valuable, special and unique assets of the Surviving Corporation and
LandCARE after the Closing Date. The Stockholders agree that they will not
disclose such confidential information, or any confidential information of the
Surviving Corporation or LandCARE to which they may have access in the future,
to any person, firm, corporation, association or other entity for any purpose or
reason whatsoever, except (a) to authorized representatives of LandCARE, (b)
following the Closing, such information may be disclosed by any Stockholder as
may be required in the course of performing his duties for the Surviving
Corporation or LandCARE and (c) to counsel and other advisers, provided that
such advisers (other than counsel) agree to the confidentiality provisions of
this Section, unless (i) such information becomes known to the public generally
through no fault of the Stockholder, or (ii) disclosure is required by law or
the order of any governmental authority, provided, that prior to disclosing any
information pursuant to this clause (ii), the Stockholder shall give prior
written notice thereof to LandCARE and provide LandCARE with the opportunity to
contest such disclosure. In the event of a breach or threatened breach by any
Stockholder of the provisions of this Section, LandCARE shall be entitled to
injunctive or other equitable relief restraining such Stockholder from
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disclosing, in whole or in part, such confidential information. Nothing herein
shall be construed as prohibiting LandCARE from pursuing any other available
remedy for such breach or threatened breach, including the recovery of damages.
8.2 EQUITABLE RELIEF. Because of the difficulty of measuring economic
losses as a result of the breach of the foregoing covenants, and because of the
immediate and irreparable damage that would be caused for which LandCARE would
have no other adequate remedy, the Stockholders agree that the foregoing
covenants may be enforced against them by injunctions, restraining orders and
other appropriate equitable relief.
8.3 SURVIVAL. The obligations of the parties under this Section shall
survive the termination of this Agreement for an unlimited time with respect to
proprietary information and a period of five years with respect to
non-proprietary information.
9 INTENDED TAX TREATMENT
9.1 TAX-FREE REORGANIZATION. The parties are entering into this Agreement
with the intention that the Merger qualify as a tax-free reorganization for
federal income tax purposes, except to the extent of any "boot" received, and
the Stockholders will not take any actions that disqualify the Merger for such
treatment. The Stockholders represent, warrant and covenant that:
(i) the Company operates at least one historic business line, or
owns at least a significant portion of its historic business assets, in each
case within the meaning of Reg. 1.368-1(d) under the Code; and
(ii) the Company will hold "substantially all of its properties"
within the meaning of Section 368(a)(2)(D) of the Code (that is, after the
Closing, the Company will hold at least 90% of the fair market value of the net
assets and at least 70% of the gross assets held by the Company immediately
prior to the Closing). For purposes of the preceding sentence, amounts paid by
the Company to dissenters, amounts paid by the Company to shareholders who
receive cash or other property and the Company assets used to pay its
reorganization expenses and all redemptions and distributions (except for normal
dividends) made by the Company immediately preceding the Closing, pursuant to
this Agreement or otherwise as part of the plan of Merger provided for herein,
will be included as assets of the Company held immediately prior to the Merger.
9.2 RESTRICTIONS ON RESALE. LandCARE has informed the Stockholders that it
intends to account for the transactions contemplated by this Agreement as a
pooling of interests. LandCARE has also informed the Stockholders that its
ability to account for the transactions contemplated hereby as a pooling of
interests was a material factor considered by LandCARE in its decision to enter
into this Agreement. Therefore, pursuant to the rules of the Securities and
Exchange Commission
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relating to pooling of interests transactions, prior to the publication and
dissemination by LandCARE of consolidated financial results which include
results of the combined operations of the Company and LandCARE for at least
thirty days on a consolidated basis following the Effective Time, the
Stockholders shall not sell, offer to sell or otherwise transfer or dispose of,
any shares of the LandCARE Stock received by Stockholders, engage in put, call,
short-sale, straddle or similar transactions, or in any other way reduce the
Stockholders' risk of owning shares of LandCARE Stock. The certificates
evidencing the LandCARE Stock to be received by the Stockholders will bear a
legend to that effect. LandCARE will publish quarterly financial results in
accordance with applicable laws and regulations.
10 SECURITIES LAW MATTERS
10.1 ECONOMIC RISK; SOPHISTICATION. Each Stockholder acknowledges and
confirms that he or she has received and reviewed a Prospectus from LandCARE
relating to his or her acquisition of shares of LandCARE Stock hereunder. Each
Stockholder (A) has such knowledge, sophistication and experience in business
and financial matters that he is capable of evaluating the merits and risks of
an investment in the shares of LandCARE Stock, (B) fully understands the nature,
scope and duration of any limitations on transfer of LandCARE Stock described in
this Agreement and (C) can bear the economic risk of an investment in the shares
of LandCARE Stock.
10.2 COMPLIANCE WITH LAW. Each Stockholder covenants that none of the
LandCARE Stock acquired by such Stockholder hereunder will be offered, sold,
assigned, hypothecated, transferred or otherwise disposed of by such Stockholder
except in full compliance with all applicable securities laws.
11. GENERAL
11.1 SUCCESSORS AND ASSIGNS. This Agreement and the rights of the parties
hereunder may not be assigned (except by operation of law) and shall be binding
upon and shall inure to the benefit of the parties hereto, the successors of
LandCARE, and the heirs and legal representatives of the Stockholders.
11.2 ENTIRE AGREEMENT. This Agreement (including the schedules, exhibits
and annexes attached hereto) and the documents delivered pursuant hereto
constitute the entire agreement and understanding among the Stockholders, the
Company and LandCARE, and supersede any prior agreement and understanding
relating to the subject matter of this Agreement. This Agreement, upon
execution, constitutes a valid and binding agreement of the parties hereto,
enforceable in
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<PAGE>
accordance with its terms, and may be modified or amended only by a written
instrument executed by the parties hereto.
11.3 COUNTERPARTS. This Agreement may be executed simultaneously in two or
more counterparts, each of which shall be deemed an original and all of which
together shall constitute but one and the same instrument. The signatures to
this Agreement need not all be on a single copy of this Agreement, and may be
facsimiles rather than originals, and shall be fully as effective as though all
signatures were originals on the same copy.
11.4 BROKERS AND AGENTS. Each party represents and warrants that it
employed no broker or agent in connection with this transaction and agrees to
indemnify the other parties hereto against all loss, cost, damages or expense
arising out of claims for fees or commission of brokers employed or alleged to
have been employed by such indemnifying party.
11.5 NOTICES. All notices and communications required or permitted
hereunder shall be in writing and may be given by depositing the same in United
States mail, addressed to the party to be notified, postage prepaid and
registered or certified with return receipt requested, or by delivering the same
in person to an officer or agent of such party, or by facsimile, as follows:
If to LandCARE, addressed to it at:
LandCARE USA, Inc.
Houston, Texas 77056
Attn: General Counsel
Facsimile No. (713) 965-0343
If to the Company, addressed to it at:
Gator & Gator Landscape Co., Inc.
910 Charles Street
Longwood, Florida 32750
with copy to:
Frank L. Pohl, Esq.
280 W. Canton Avenue, Suite 410
Winter Park, Florida 32789
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<PAGE>
If to the Stockholders, addressed to them at the Company's address,
or to such other address as any party hereto shall specify pursuant to this
Section from time to time.
11.6 GOVERNING LAW. This Agreement shall be construed in accordance with
the laws of the State of Florida without regard to its principles governing
conflicts of laws.
11.7 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The representations,
warranties, covenants and agreements of the parties made herein and at the time
of the Closing or in writing delivered pursuant to the provisions of this
Agreement shall survive the consummation of the transactions contemplated hereby
and any examination on behalf of the parties.
11.8 EFFECT OF INVESTIGATION. No investigation by the parties hereto in
connection with this Agreement or otherwise shall affect the representations and
warranties of the parties contained herein or in any certificate or other
document delivered in connection herewith and each such representation and
warranty shall survive such investigation.
11.9 EXERCISE OF RIGHTS AND REMEDIES. Except as otherwise provided herein,
no delay of or omission in the exercise of any right, power or remedy accruing
to any party as a result of any breach or default by any other party under this
Agreement shall impair any such right, power or remedy, nor shall it be
construed as a waiver of or acquiescence in any such breach or default, or of
any similar breach or default occurring later; nor shall any waiver of any
single breach or default be deemed a waiver of any other breach or default
occurring before or after that waiver.
11.10 TIME. Time is of the essence with respect to this Agreement.
11.11 REFORMATION AND SEVERABILITY. In case any provision of this
Agreement shall be invalid, illegal or unenforceable, it shall, to the extent
possible, be modified in such manner as to be valid, legal and enforceable but
so as to most nearly retain the intent of the parties, and if such modification
is not possible, such provision shall be severed from this Agreement, and in
either case the validity, legality and enforceability of the remaining
provisions of this Agreement shall not in any way be affected or impaired
thereby.
11.12 REMEDIES CUMULATIVE. No right, remedy or election given by any term
of this Agreement shall be deemed exclusive but each shall be cumulative with
all other rights, remedies and elections available at law or in equity.
11.13 CAPTIONS. The headings of this Agreement are inserted for
convenience only, and shall not constitute a part of this Agreement or be used
to construe or interpret any provision hereof.
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<PAGE>
11.14 PRESS RELEASES AND PUBLIC ANNOUNCEMENTS. No party shall issue any
press release or make any public announcement relating to the subject matter of
this Agreement without the prior written approval of the other party; provided,
however, that LandCARE may issue a press release in accordance with its
customary practices without such approval and any party may make any public
disclosure it believes in good faith is required by applicable law or any
listing or trading agreement concerning its publicly-traded securities.
11.15 NO THIRD-PARTY BENEFICIARIES. This Agreement shall not confer any
rights or remedies upon any person other than the parties and their respective
successors and permitted assigns.
11.16 RELIANCE UPON ORAL REPRESENTATIONS. The Company and the Stockholders
and each other party hereto hereby represents and warrants: (a) that each has
been fully informed by his or its legal counsel and by his or its own
independent judgment of the terms, conditions and effects of this Agreement; (b)
that each has been represented by independent legal counsel of his or its choice
throughout all negotiations preceding the execution of this Agreement and has
received the advice of his or its attorney in entering into this Agreement; (c)
that each, both personally and through his or its independently-retained
attorneys, is fully satisfied with the terms and effects of this Agreement; (d)
that no promise or inducement has been offered or made to him or it except as
expressly stated in this Agreement; and (e) that this Agreement is executed
without reliance on any oral statement or oral representation by any other party
or any other party's agent or attorney.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
day and year first above written.
LANDCARE USA, INC.
By:__________________________________
Name:_____________________________
Title:____________________________
GROUND CONTROL LANDSCAPING, INC.
By: _________________________________
Name: ___________________________
Title: _________________________
GATOR & GATOR LANDSCAPING COMPANY
By: _________________________________
Name: ___________________________
Title: _________________________
<PAGE>
Stockholders and Spouses:
________________________________________
Scott L. Annan
________________________________________
______ (spouse of Scott L. Annan)
_________________________________________
Charles Richardson
_________________________________________
_______ (spouse of Charles Richardson)
<PAGE>
EXHIBIT 2.3
EXECUTION COPY
AGREEMENT AND PLAN OF MERGER
dated as of August 4, 1998
by and among
LANDCARE USA, INC.,
LW ACQUISITION CORP.,
LANDSCAPE WEST, INC.
and
Barry Konier
<PAGE>
TABLE OF CONTENTS
Page
1. THE MERGER.............................................................1
1.1 THE MERGER.......................................................1
1.2 EFFECTIVE TIME...................................................1
1.3 ARTICLES OF INCORPORATION, BY-LAWS, DIRECTORS
AND OFFICERS OF SURVIVING CORPORATION............................2
1.4 EFFECT OF MERGER.................................................2
1.5 MANNER OF CONVERSION.............................................3
1.6 DELIVERY OF CERTIFICATES.........................................3
1.7 CLOSING..........................................................3
2. REPRESENTATIONS AND WARRANTIES OF THE STOCKHOLDER......................4
2.1 DUE ORGANIZATION.................................................4
2.2 AUTHORIZATION....................................................4
2.3 CAPITAL STOCK OF THE COMPANY.....................................4
2.4 SUBSIDIARIES.....................................................4
2.5 FINANCIAL STATEMENTS.............................................5
2.6 LIABILITIES AND OBLIGATIONS......................................5
2.7 ACCOUNTS AND NOTES RECEIVABLE....................................6
2.8 PERMITS AND INTANGIBLES..........................................6
2.9 ENVIRONMENTAL MATTERS............................................6
2.10 PERSONAL PROPERTY................................................7
2.11 SIGNIFICANT CUSTOMERS; MATERIAL CONTRACTS AND COMMITMENTS........8
2.12 REAL PROPERTY....................................................8
2.13 INSURANCE........................................................9
2.14 COMPENSATION; EMPLOYMENT AGREEMENTS; ORGANIZED LABOR MATTERS.....9
2.15 EMPLOYEE BENEFIT PLANS...........................................9
2.16 CONFORMITY WITH LAW; LITIGATION.................................11
2.17 TAXES...........................................................11
2.18 NO VIOLATIONS; ALL REQUIRED CONSENTS OBTAINED...................13
2.19 ABSENCE OF CHANGES..............................................13
2.20 POWERS OF ATTORNEY..............................................15
2.21 COMPETING LINES OF BUSINESS; RELATED-PARTY TRANSACTIONS.........15
2.22 DISCLOSURE......................................................15
2.23 CERTAIN BUSINESS PRACTICES......................................15
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2.24 NOTICE TO BARGAINING AGENTS.....................................15
2.25 NOTICES AND CONSENTS............................................16
2.26 INVENTORY; WORKING CAPITAL; OTHER FINANCIAL MATTERS.............16
2.27 YEAR 2000 COMPLIANCE............................................16
2.28 RELIANCE UPON ORAL REPRESENTATIONS..............................16
3. REPRESENTATIONS OF LANDCARE...........................................16
3.1 DUE ORGANIZATION................................................16
3.2 AUTHORIZATION...................................................16
3.3 NO VIOLATIONS...................................................17
3.4 VALIDITY OF OBLIGATIONS.........................................17
3.5 PROSPECTUS......................................................17
3.6 REGISTRATION....................................................17
4. DELIVERIES............................................................17
4.1 INSTRUMENTS OF TRANSFER.........................................17
4.2 CERTIFICATE OF MERGER...........................................17
4.3 EMPLOYMENT AGREEMENT............................................17
4.4 OPINION OF COUNSEL..............................................17
4.5 GOOD STANDING CERTIFICATES......................................18
4.6 LEASE...........................................................18
4.7 INDEBTEDNESS TO COMPANY.........................................18
4.8 CONSENTS........................................................18
4.9 RESIGNATIONS OF DIRECTORS AND OFFICERS..........................18
4.10 CERTAIN INDEBTEDNESS............................................18
4.11 INDEMNIFICATION AGREEMENT.......................................18
5. POST-CLOSING COVENANTS................................................18
5.1 FUTURE COOPERATION; FURTHER ASSURANCES..........................18
5.2 EXPENSES........................................................19
5.3 CERTAIN AGREEMENTS..............................................19
5.4 PREPARATION AND FILING OF TAX RETURNS...........................19
5.5 ADDITIONAL AGREEMENTS...........................................20
6. INDEMNIFICATION.......................................................20
6.1 SURVIVAL OF STOCKHOLDER'S REPRESENTATIONS AND WARRANTIES. .....20
6.2 GENERAL INDEMNIFICATION BY THE STOCKHOLDER......................20
6.3 INDEMNIFICATION BY LANDCARE.....................................21
6.4 THIRD PERSON CLAIMS.............................................21
6.5 METHOD OF PAYMENT...............................................21
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7. NONCOMPETITION........................................................21
7.1 PROHIBITED ACTIVITIES...........................................21
7.2 EQUITABLE RELIEF................................................22
7.3 REASONABLE RESTRAINT............................................22
7.4 SEVERABILITY; REFORMATION.......................................22
7.5 INDEPENDENT COVENANT............................................23
8. NONDISCLOSURE OF CONFIDENTIAL INFORMATION.............................23
8.1 GENERAL.........................................................23
8.2 EQUITABLE RELIEF................................................24
8.3 SURVIVAL........................................................24
9 INTENDED TAX TREATMENT
.....................................................................24
9.1 TAX-FREE REORGANIZATION.........................................24
9.2 RESTRICTIONS ON RESALE..........................................24
10 SECURITIES LAW MATTERS................................................25
10.1 ECONOMIC RISK; SOPHISTICATION...................................25
10.2 COMPLIANCE WITH LAW.............................................25
11. GENERAL...............................................................25
11.1 SUCCESSORS AND ASSIGNS..........................................25
11.2 ENTIRE AGREEMENT................................................25
11.3 COUNTERPARTS....................................................26
11.4 BROKERS AND AGENTS..............................................26
11.5 NOTICES.........................................................26
11.6 GOVERNING LAW...................................................26
11.7 SURVIVAL OF REPRESENTATIONS AND WARRANTIES......................26
11.8 EFFECT OF INVESTIGATION.........................................27
11.9 EXERCISE OF RIGHTS AND REMEDIES.................................27
11.10 TIME............................................................27
11.11 REFORMATION AND SEVERABILITY....................................27
11.12 REMEDIES CUMULATIVE.............................................27
11.13 CAPTIONS........................................................27
11.14 PRESS RELEASES AND PUBLIC ANNOUNCEMENTS.........................27
11.15 NO THIRD-PARTY BENEFICIARIES....................................28
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SCHEDULES
SCHEDULE 2.1. Due Organization
SCHEDULE 2.4. Subsidiaries
SCHEDULE 2.5. Financial Statements
SCHEDULE 2.6. Liabilities and Obligations
SCHEDULE 2.7. Accounts and Notes Receivable
SCHEDULE 2.8. Permits and Intangibles
SCHEDULE 2.9. Environmental Matters
SCHEDULE 2.10. Personal Property
SCHEDULE 2.11. Significant Customers; Material Contracts and Commitments
SCHEDULE 2.12. Real Property
SCHEDULE 2.13. Insurance
SCHEDULE 2.14. Compensation; Employment Agreements; Organized Labor Matters
SCHEDULE 2.15. Employee Benefit Plans
SCHEDULE 2.16. Conformity with Law; Litigation
SCHEDULE 2.18. No Violations; No Consents Required
SCHEDULE 2.19. Absence of Changes
SCHEDULE 2.20. Powers of Attorney
SCHEDULE 2.21. Competing Lines of Business; Related Party Transactions
SCHEDULE 4.3 Persons Entering into Employment Agreements
SCHEDULE 4.5. Leases
SCHEDULE 4.10. Certain Indebtedness
ANNEXES
Annex I - Form of Employment Agreement
Annex II - Form of Opinion of Counsel to Company and
Stockholder
Annex III - Form of Lease
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<PAGE>
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (this "Agreement") is made and entered
into as of August 4, 1998 by and among LandCARE USA, Inc., a Delaware
corporation ("LandCARE"), LW Acquisition Corp., a Delaware corporation and
wholly owned subsidiary of LandCARE ("Newco"), Landscape West, Inc., a
California corporation (the "Company"), and Barry Konier (the "Stockholder").
The Stockholder is the only holder of capital stock of the Company.
WHEREAS, the respective Boards of Directors of Newco and the Company
(collectively called the "Constituent Corporations") deem it advisable and in
the best interests of the Constituent Corporations and their respective
stockholders that the Company merge with and into Newco pursuant to this
Agreement and the applicable provisions of the laws of the State of California
(the "State of Incorporation") and of the State of Delaware; and
WHEREAS, the Boards of Directors of the Constituent Corporations have
approved and adopted this Agreement as a plan of reorganization under Section
368 of the Internal Revenue Code of 1986, as amended (the "Code"); and
WHEREAS, on the date hereof the parties are consummating the transactions
described herein;
NOW, THEREFORE, in consideration of the premises and of the mutual
agreements contained herein, the parties hereto, intending to be legally bound,
agree as follows:
1. THE MERGER
1.1 THE MERGER. On the terms and subject to the conditions of this
Agreement, at the Effective Time (as defined below), the Company shall be merged
with and into Newco (the "Merger") and the separate existence of the Company
shall cease, all in accordance with the provisions of the laws of the State of
Incorporation and of the State of Delaware. Newco shall be the surviving
corporation in the Merger and is sometimes hereinafter called the "Surviving
Corporation."
1.2 EFFECTIVE TIME. The Merger shall become effective at such time (the
"Effective Time") as a certificate of merger, in form appropriate for filing, is
filed with the Secretary of State (or other appropriate authority) of the State
of Delaware (the "Merger Filing"). The Merger Filing shall be made
simultaneously with or as soon as practicable after the execution and delivery
of this
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Agreement. A copy of the Merger Filing, together with such other documents as
may be necessary or appropriate, shall be filed with the appropriate authorities
of the State of California promptly, and in any case within six months, after
the Closing.
1.3 ARTICLES OF INCORPORATION, BY-LAWS, DIRECTORS AND OFFICERS OF
SURVIVING CORPORATION. At the Effective Time, the Articles of Incorporation of
Newco then in effect shall be the Articles of Incorporation of the Surviving
Corporation, and the By-laws of Newco then in effect shall be By-laws of the
Surviving Corporation. As part of the Merger Filing, or at any time thereafter,
the Surviving Corporation shall have the right to change its name to "Landscape
West, Inc." The directors and officers of Newco immediately prior to the
Effective Time shall be the directors and officers of the Surviving Corporation.
1.4 EFFECT OF MERGER. At the Effective Time, the effect of the Merger
shall be as provided in the law of the State of Incorporation and the State of
California. Except as herein specifically set forth, the identity, existence,
purposes, powers, objects, franchises, privileges, rights and immunities of
Newco shall continue unaffected and unimpaired by the Merger and the corporate
franchises, existence and rights of the Company shall be merged with and into
Newco, and Newco, as the Surviving Corporation, shall be fully vested therewith.
At the Effective Time, the separate existence of the Company shall cease and, in
accordance with the terms of this Agreement, the Surviving Corporation shall
possess all the rights, privileges, immunities and franchises, of a public, as
well as of a private, nature, and all property, real, personal and mixed, and
all debts due on whatever account, including subscriptions to shares, and all
taxes, including those due and owing and those accrued, and all other choses in
action, and all and every other interest of or belonging to or due to the
Company and Newco shall be taken and deemed to be transferred to, and vested in,
the Surviving Corporation without further act or deed; and all property, rights
and privileges, powers and franchises and all and every other interest shall be
thereafter as effectually the property of the Surviving Corporation as they were
of the Company and Newco; and the title to any real estate, or interest therein,
whether by deed or otherwise, under the laws of the State of Incorporation or
otherwise vested in the Company and Newco, shall not revert or be in any way
impaired by reason of the Merger. Except as otherwise provided herein, the
Surviving Corporation shall thenceforth be responsible and liable for all the
liabilities and obligations of the Company and Newco and any claim existing, or
action or proceeding pending, by or against the Company or Newco may be
prosecuted as if the Merger had not taken place, or the Surviving Corporation
may be substituted in their place. Neither the rights of creditors nor any liens
upon the property of the Company or Newco shall be impaired by the Merger, and
all debts, liabilities and duties of the Company and Newco shall attach to the
Surviving Corporation, and may be enforced against the Surviving Corporation to
the same extent as if said debts, liabilities and duties had been incurred or
contracted by such Surviving Corporation.
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1.5 MANNER OF CONVERSION. The manner of converting the outstanding shares
of capital stock of the Company ("Company Stock") and the outstanding shares of
capital stock of Newco ("Newco Stock") shall be as follows:
As of the Effective Time:
1. The Company Stock issued and outstanding immediately prior
to the Effective Time, by virtue of the Merger and without any action on the
part of the holder thereof, automatically shall be converted into the right to
receive, in the aggregate, (i) 456,683 shares of common stock, par value $.01
per share, of LandCARE ("LandCARE Stock") (such number being equal to $4,250,000
divided by the average of the closing prices of LandCARE Stock on the New York
Stock Exchange for the ten consecutive business days beginning on the fifteenth
business day prior to the date hereof) and (ii) an aggregate of $4,125,000 (such
number being equal to $4,425,000 less $300,000 of Accumulated Adjustment Account
("AAA") distributions made by the Company to the Stockholder) in cash paid by
wire transfer.
2. All shares of Company Stock, if any, that are held by the
Company as treasury stock shall be canceled and retired, and no shares of
LandCARE Stock or other consideration shall be delivered or paid in exchange
therefor; and
3. As of the Effective Time, each outstanding share of Newco
Stock shall remain outstanding and unchanged.
1.6 DELIVERY OF CERTIFICATES. At the Closing, (i) the Stockholder shall
deliver to LandCARE the certificates representing the Company Stock, duly
endorsed in blank by the Stockholder or accompanied by a stock transfer
endorsement separate from certificate together with an Affidavit of Lost
Certificate and Indemnification Agreement satisfactory to LandCare, and with all
necessary transfer tax and other revenue stamps, acquired at the Stockholder's
expense, affixed and canceled, and (ii) LandCARE shall cause its stock transfer
agent to deliver to the Stockholder certificates representing the LandCARE Stock
as described above (or shall deliver to the Stockholder a copy of an irrevocable
authorization to such transfer agent authorizing the issuance of such
certificates to the Stockholder). The Stockholder agrees promptly to cure any
deficiencies with respect to the endorsement of the stock certificates or other
documents of conveyance with respect to such Company Stock or with respect to
the stock powers accompanying any Company Stock.
1.7 CLOSING. The transactions contemplated by this Agreement are being
consummated on the date hereof, and the date hereof is sometimes herein called
the "Closing Date."
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2. REPRESENTATIONS AND WARRANTIES OF THE STOCKHOLDER
The Stockholder hereby represents and warrants to LandCARE as follows.
2.1 DUE ORGANIZATION. The Company is a corporation duly organized, validly
existing and in good standing under the laws of the State of Incorporation, and
has all requisite power and authority to carry on its business as it is now
being conducted. The Company is duly qualified to do business and is in good
standing in each jurisdiction in which the nature of its business or the
ownership or leasing of its properties makes such qualification necessary,
except where the failure to be so authorized or qualified would not have a
material adverse effect on the business, assets, operations or condition
(financial or otherwise) of the Company (as used herein with respect to the
Company, or with respect to any other person, a "Material Adverse Effect").
SCHEDULE 2.1 sets forth a list of all states in which the Company is authorized
or qualified to do business. True, complete and correct copies of the Articles
of Incorporation and By-laws, each as amended, of the Company (the "Charter
Documents") are all attached to SCHEDULE 2.1. All records of all proceedings of
the Board of Directors and stockholders of the Company have been made available
to LandCARE.
2.2 AUTHORIZATION. (i) The representative of the Company executing this
Agreement has the authority to enter into and bind the Company to the terms of
this Agreement and (ii) the Company has the full legal right, power and
authority to enter into this Agreement and the transactions contemplated hereby,
all of which have been approved by the Stockholder and the Board of Directors of
the Company. This Agreement has been validly executed and delivered by the
Company and the Stockholder and constitutes the legal, valid and binding
obligation of each of them, enforceable in accordance with its terms.
2.3 CAPITAL STOCK OF THE COMPANY. The authorized capital stock of the
Company consists solely of 750 shares of common stock, par value $ 100.00 per
share, of which 30 shares are issued and outstanding and constitute all of the
issued and outstanding shares of Company Stock (the "Shares"). All of the Shares
are owned of record and beneficially by the Stockholder and are owned free and
clear of all liens, security interests, pledges, charges, voting trusts,
restrictions, encumbrances and claims of every kind. All of the Shares have been
duly authorized and validly issued, are fully paid and nonassessable, and were
offered, issued, sold and delivered by the Company in compliance with all
applicable state and federal laws governing the issuance of securities. None of
the Shares were issued in violation of any preemptive rights or similar rights
of any person. No option, warrant, call, conversion right or commitment of any
kind exists which obligates the Company to issue any additional shares of its
capital stock or obligates the Stockholder to transfer any of the Shares to any
person except pursuant to this Agreement.
2.4 SUBSIDIARIES. Except as set forth on SCHEDULE 2.4, the Company has no
subsidiaries or d/b/a names and has not conducted business under any other name
except its legal name as set
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forth in its Charter Documents. Except as set forth in SCHEDULE 2.4, the Company
does not own, of record or beneficially, or control, directly or indirectly, any
capital stock, securities convertible into capital stock or any other equity
interest in any corporation, association or other business entity, and the
Company is not, directly or indirectly, a participant in any joint venture,
partnership or other non-corporate entity. Prior to the Closing, the Company
distributed to the Stockholder for no additional consideration all shares of
Oakwood Insurance Co., LTD. held by the Company immediately prior to such
distribution.
2.5 FINANCIAL STATEMENTS. Complete and correct copies of the following
financial statements are attached as SCHEDULE 2.5:
(i) The balance sheets of the Company as of December 31, 1997 (the
"Balance Sheet Date") and any related statements of operations,
stockholder's equity and cash flows for the three-year period then ended,
together with any related notes and schedules (the "Year-end Financial
Statements"); and
(ii) The balance sheet (the "Interim Balance Sheet") of the Company
as of May 31, 1998 and the related statements of operations for the
five-month period then ended (the "Interim Financial Statements"). (The
Year-end Financial Statements and the Interim Financial Statements are
herein collectively called the "Financial Statements".)
The Financial Statements have been prepared from the books and records of
the Company in conformity with generally accepted accounting principles applied
on a basis consistent with preceding years and throughout the periods involved
("GAAP") and present fairly in all material respects the financial position and
results of operations of the Company as of the dates of such statements and for
the periods covered thereby. The books of account of the Company have been kept
accurately in the ordinary course of business, the transactions entered therein
represent bona fide transactions, and the revenues, expenses, assets and
liabilities of the Company have been properly recorded therein in all material
respects.
2.6 LIABILITIES AND OBLIGATIONS. Except as and to the extent disclosed and
adequately provided for in the Financial Statements or on SCHEDULE 2.6 hereto,
the Company has no material liabilities or obligations of any kind, whether
accrued, absolute, secured or unsecured, contingent or otherwise. Except and to
the extent disclosed on SCHEDULE 2.6, there are no material claims, liabilities
or obligations, nor any reasonable basis for assertion against the Company, of
any material claim, liability or obligation, of any nature whatsoever. Except as
expressly set forth on SCHEDULE 2.6, all of the contingent liabilities of the
Company listed on SCHEDULE 2.6 are covered by the Company's insurance policies,
and no such liability will exceed the policy limits of such insurance policies.
SCHEDULE 2.6 contains a reasonable estimate of the maximum amount which may be
payable with respect to known liabilities which are not fixed. For each such
known liability for
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which the amount is not fixed, SCHEDULE 2.6 includes a summary description of
each known liability, together with copies of all relevant documentation
relating thereto. The Company's total debt as of the Closing Date does not
exceed $2,500,000. As of the Closing Date the Company's tangible net worth is at
least $1,500,000.
2.7 ACCOUNTS AND NOTES RECEIVABLE. SCHEDULE 2.7 sets forth an accurate
list of the accounts and notes receivable of the Company, as of the most recent
date practicable (which date is set forth thereon), showing amounts due in
30-day aging categories. Except to the extent reflected on SCHEDULE 2.7, all
such accounts, notes and other receivables were incurred in the ordinary course
of business, are stated in accordance with GAAP and are collectible in the
amounts shown on SCHEDULE 2.7, net of reserves reflected in the balance sheet as
of the Balance Sheet Date.
2.8 PERMITS AND INTANGIBLES. The Company holds all material licenses,
franchises, permits and other governmental authorizations required or necessary
in connection with the conduct of the Company's business. SCHEDULE 2.8 sets
forth an accurate list and summary description of all such material licenses,
franchises, permits and other governmental authorizations, including permits,
titles (including licenses, franchises, certificates, trademarks, trade names,
patents, patent applications and copyrights owned or held by the Company or any
of its employees (including interests in software or other technology systems,
programs and intellectual property) (collectively, the "Intangible Assets") (it
being understood and agreed that a list of all environmental permits and other
environmental approvals is set forth on SCHEDULE 2.9). The Intangible Assets and
other governmental authorizations listed on SCHEDULES 2.8 and 2.9 are valid, and
the Company has not received any notice that any person intends to cancel,
terminate or not renew any such Intangible Assets or other governmental
authorization. The Company has conducted and is conducting its business in
material compliance with the requirements, standards, criteria and conditions
set forth in the Intangible Assets and other governmental authorizations listed
on SCHEDULES 2.8 and 2.9 and is not in violation of any of the foregoing. Except
as specifically set forth on SCHEDULE 2.8 or 2.9 or in SECTION 2.18, the
transactions contemplated by this Agreement will not result in a default under
or a breach or violation of, or adversely affect the rights and benefits
afforded to the Company by, any such Intangible Assets or other governmental
authorizations. Any interest of the Company with respect to the trade name and
mark "Landscape West" may be limited to the extent provided by California law.
2.9 ENVIRONMENTAL MATTERS. The Company has complied with and is in
compliance with all federal, state, local and foreign statutes (civil and
criminal), laws, ordinances, regulations, rules, notices, permits, judgments,
orders and decrees applicable to any of them or any of their respective
properties, assets, operations and businesses relating to environmental
protection (collectively "Environmental Laws"), including, without limitation,
Environmental Laws relating to air, water, land and the generation, storage,
use, handling, transportation, treatment or disposal of Hazardous Wastes,
Hazardous Materials and Hazardous Substances (including petroleum and
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petroleum products) (as such terms are defined in any applicable Environmental
Law) except to the extent that noncompliance with any Environmental Laws, either
singly or in the aggregate, has not had and will not have a Material Adverse
Effect on the Company or any of its operations. The Company has obtained and
adhered to all necessary permits and other approvals necessary to treat,
transport, store, dispose of and otherwise handle Hazardous Wastes, Hazardous
Materials and Hazardous Substances, a list of all of which permits and approvals
is set forth on SCHEDULE 2.9, and have reported to the appropriate authorities,
to the extent required by all Environmental Laws, all past and present sites
owned and operated by the Company where Hazardous Wastes, Hazardous Materials or
Hazardous Substances have been treated, stored, disposed of or otherwise
handled. There have been no releases or threats of releases (as defined in
Environmental Laws) at, from, in, under or on any property owned or operated by
the Company except as permitted by Environmental Laws. There is no on-site or
off-site location to which the Company has transported or disposed of Hazardous
Wastes, Hazardous Materials or Hazardous Substances or arranged for the
transportation of Hazardous Wastes, Hazardous Materials or Hazardous Substances
which is the subject of any federal, state, local or foreign enforcement action
or any other investigation which could lead to any claim against the Company or
LandCARE for any clean-up cost, remedial work, damage to natural resources,
property damage or personal injury, including, but not limited to, any claim
under (i) the Comprehensive Environmental Response, Compensation and Liability
Act of 1980, as amended, (ii) the Resource Conservation and Recovery Act, as
amended, (iii) the Hazardous Materials Transportation Act, as amended, or (iv)
comparable state or local statutes and regulations. The Company has no
contingent liability in connection with any release of any Hazardous Waste,
Hazardous Material or Hazardous Substance into the environment.
2.10 PERSONAL PROPERTY. SCHEDULE 2.10 sets forth an accurate list of (a)
all personal property included in "plant, property and equipment" or any similar
category on the balance sheet of the Company, (b) all other personal property
owned by the Company with a fair market value in excess of $5,000, and (c) all
leases and agreements with respect to personal property, copies of which have
been delivered to LandCARE. SCHEDULE 2.10 indicates which assets are currently
owned, or were formerly owned, by the Stockholder or any affiliate of the
Company or the Stockholder. Except as set forth on SCHEDULE 2.10, (i) all
material personal property used by the Company in its business is either owned
by the Company or leased by the Company pursuant to a lease included on SCHEDULE
2.10, (ii) all of the personal property listed on SCHEDULE 2.10 is in good
working order and condition, ordinary wear and tear excepted and (iii) all
leases and agreements included on SCHEDULE 2.10 are in full force and effect and
constitute valid and binding agreements of the parties (and their successors)
thereto in accordance with their respective terms. Except as set forth on
SCHEDULE 2.10 or as disclosed in the Financial Statements of the Company, the
Company has good and marketable title to the tangible and intangible personal
property it purports to own, subject to no security interest, pledge, lien,
claim, conditional sales agreement, encumbrance, charge or restriction on
transfer.
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2.11 SIGNIFICANT CUSTOMERS; MATERIAL CONTRACTS AND COMMITMENTS. SCHEDULE
2.11 sets forth a list of (i) all customers representing 1% or more of the
Company's revenues in its last full fiscal year ("Significant Customers"), and
(ii) all material contracts, commitments and similar agreements to which the
Company is a party or by which it or any of its properties are bound (including,
but not limited to, contracts with Significant Customers, joint venture or
partnership agreements, contracts with any labor organizations, strategic
alliances and options to purchase land). True, complete and correct copies of
such agreements have been delivered to LandCARE. Except as described on SCHEDULE
2.11, (i) none of the Significant Customers have canceled or substantially
reduced or, to the knowledge of the Company, are currently attempting or
threatening to cancel a contract or substantially reduce utilization of the
services provided by the Company, and (ii) the Company has complied with all
commitments and obligations pertaining to it, and is not in default under any
contracts or agreements listed on SCHEDULE 2.11 and no notice of default under
any such contract or agreement has been received. Except as described on
SCHEDULE 2.11, the transactions contemplated by this Agreement will not result
in a default under or a breach or violation of, or adversely affect the rights
and benefits afforded to the Company by, any such contracts or agreements.
SCHEDULE 2.11 also includes a summary description of all plans or projects
relating to the Company's business involving the opening of new operations,
expansion of existing operations, the acquisition of any property, business or
assets requiring, in any event, the payment of more than $50,000 in the
aggregate.
2.12 REAL PROPERTY. SCHEDULE 2.12 includes a list of all real property
owned or leased by the Company at the date hereof (the "Real Property"), and all
other real property, if any, used by the Company in the conduct of its business.
True, complete and correct copies of all leases and agreements with respect to
Real Property leased by the Company have been delivered to LandCARE, and an
indication as to which such properties, if any, are currently owned, or were
formerly owned, by the Stockholder or any affiliates of the Company or the
Stockholder is included in SCHEDULE 2.12. All leases relating to Real Property
leased by the Company from the Stockholder or any affiliate of the Stockholder
has been terminated. Except as set forth on SCHEDULE 2.12, all of such leases
included on SCHEDULE 2.12 are in full force and effect and constitute valid and
binding agreements of the parties (and their successors) thereto in accordance
with their respective terms. There are no leases, tenancy agreements, easements,
covenants, restrictions or any other instruments, agreements or arrangements
which create in or confer on any party, other than the Company, the right to
occupy or possess all or any portion of the Real Property or create in or confer
on any such party any right, title or interest in or to the Real Property or any
portion thereof or any interest therein; no party other than the Company
occupies or possesses the Real Property or any portion thereof; there is legal
and adequate ingress and egress between each tract of Real Property and an
adjacent (or, if none, the closest) public roadway; the Real Property is
properly zoned in order to allow its current use in the Company's businesses;
and there are no claims or demands pending or threatened by any party against
the Real Property which, if valid, would create in, or confer on, any party
other than the Company, any right, title or interest in or to the Real Property
or any portion thereof. None of the
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buildings, structures or improvements described on SCHEDULE 2.12, or the
operation or maintenance thereof as now operated or maintained, contravenes any
zoning ordinance or other administrative regulation or violates any restrictive
covenant or any provision of law, the effect of which would materially interfere
with or prevent their continued use for the purposes for which they are now
being used or would adversely affect the value thereof or the interest of the
Company therein. The Stockholder has furnished to LandCARE a true and correct
copy of all owner's policies of title insurance and surveys pertaining to the
real property owned by the Company.
2.13 INSURANCE. SCHEDULE 2.13 sets forth an accurate list as of the date
hereof of all insurance policies now carried by the Company and an accurate list
of all insurance loss runs and workers compensation claims received for the past
three policy years. True, complete and correct copies of all insurance policies
currently in effect have been delivered to LandCARE. Such insurance policies
evidence all of the insurance that the Company is required to carry pursuant to
all of its contracts and other agreements and pursuant to all applicable laws,
and provide adequate coverage against the risks involved in the Company's
business. Except as set forth on SCHEDULE 2.13, none of such policies is a
"claims made" policy.
2.14 COMPENSATION; EMPLOYMENT AGREEMENTS; ORGANIZED LABOR MATTERS.
SCHEDULE 2.14 sets forth an accurate list showing all officers, directors and
key employees of the Company, listing all employment agreements with such
officers, directors and key employees and the rate of compensation (and the
portions thereof attributable to salary, bonus and other compensation,
respectively) of each of such persons as of the Balance Sheet Date. Except as
set forth on SCHEDULE 2.14, since the Balance Sheet Date, there have been no
increases in the base compensation payable or any special bonuses to any
officer, director, key employee or other employee.
Except as set forth on SCHEDULE 2.14, (i) the Company is not bound by or
subject to (and none of its respective assets or properties is bound by or
subject to) any arrangement with any labor union, (ii) no employees of the
Company are represented by any labor union or covered by any collective
bargaining agreement, (iii) to the knowledge of the Company, no campaign to
establish such representation is in progress and (iv) there is no pending or, to
the best of the Company's knowledge, threatened, labor dispute involving the
Company and any group of its employees. The Company has not experienced any
labor interruptions over the past five years.
2.15 EMPLOYEE BENEFIT PLANS. SCHEDULE 2.15 sets forth an accurate schedule
showing all employee benefit plans of Company, including all agreements or
arrangements (other than agreements or arrangements set forth on SCHEDULE 2.14)
containing "golden parachute" or other similar provisions, and deferred
compensation agreements, together with true, complete and correct copies of such
plans, agreements and any trusts related thereto, and classifications of
employees covered thereby as of the Balance Sheet Date. Except for the employee
benefit plans, if any, described on SCHEDULE 2.15, the Company does not sponsor,
maintain or contribute to any plan,
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program, fund or arrangement that constitutes an "employee pension benefit
plan," nor does the Company have any obligation to contribute to or accrue or
pay any benefits under any deferred compensation or retirement funding
arrangement on behalf of any employee or employees (such as, for example, and
without limitation, any individual retirement account or annuity, any "excess
benefit plan" (within the meaning of Section 3(36) of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA")), or any non-qualified
deferred compensation arrangement). For the purposes of this Agreement, the term
"employee pension benefit plan" shall have the same meaning as is given that
term in Section 3(2) of ERISA. The Company has not sponsored, maintained or
contributed to any employee pension benefit plan and is not required to
contribute to any retirement plan pursuant to the provisions of any collective
bargaining agreement establishing the terms and conditions of employment of any
of the Company's employees other than the plans set forth on SCHEDULE 2.15.
The Company is not now, and will not as a result of its past activities
become, liable to the Pension Benefit Guaranty Corporation (the "PBGC") or to
any multi employer employee pension benefit plan under the provisions of Title
IV of ERISA. All employee benefit plans listed on SCHEDULE 2.15 and the
administration thereof are in substantial compliance with their terms and all
applicable provisions of ERISA and the regulations issued thereunder, as well as
with all other applicable federal, state and local statutes, ordinances and
regulations. All accrued contribution obligations of the Company with respect to
any plan listed on SCHEDULE 2.15 have either been fulfilled in their entirety or
are fully reflected on the balance sheet of the Company as of the Balance Sheet
Date. All plans listed on SCHEDULE 2.15 that are intended to qualify (the
"Qualified Plans") under Section 401(a) of the Internal Revenue Code of 1986, as
amended (the "Code"), are, and have been, so qualified and have been determined
by the Internal Revenue Service to be so qualified. Except as disclosed on
SCHEDULE 2.15, all reports and other documents required to be filed with any
governmental agency or distributed to plan participants or beneficiaries have
been timely filed or distributed, and the most recent copies thereof are
included as part of SCHEDULE 2.15. Neither the Stockholder, nor any plan listed
in SCHEDULE 2.15 nor the Company has engaged in any transaction prohibited under
the provisions of Section 4975 of the Code or Section 406 of ERISA. No plan
listed on SCHEDULE 2.15 has incurred an accumulated funding deficiency, as
defined in Section 412(a) of the Code and Section 302(1) of ERISA; and the
Company has not incurred any liability for excise tax or penalty due to the
Internal Revenue Service or any liability to the PBGC. There have been no
terminations, partial terminations or discontinuance of contributions to any
such Qualified Plan intended to qualify under Section 401(a) of the Code without
notice to and approval by the Internal Revenue Service; no plan listed on
SCHEDULE 2.15 subject to the provisions of Title IV of ERISA has been
terminated; there have been no "reportable events" (as that phrase is defined in
Section 4043 of ERISA) with respect to any such plan listed on SCHEDULE 2.15;
the Company has not incurred liability under Section 4062 of ERISA; and no
circumstances exist pursuant to which the Company could have any direct or
indirect liability whatsoever (including, but not limited to, any liability to
any multi employer plan or the PBGC under Title IV of ERISA or to the Internal
Revenue Service
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for any excise tax or penalty, or being subject to any statutory lien to secure
payment of any such liability) with respect to any plan now or heretofore
maintained or contributed to by any entity other than the Company that is, or at
any time was, a member of a "controlled group" (as defined in Section
412(n)(6)(B) of the Code) that includes the Company.
The Company has distributed to the Stockholder for no separate
consideration the Minnesota Mutual life insurance benefit plan and policy
insuring the life of the Stockholder, including the cash surrender value from
invested premiums.
2.16 CONFORMITY WITH LAW; LITIGATION. Except as set forth on SCHEDULE
2.16, there are no claims, actions, suits or proceedings pending or, to the best
knowledge of the Stockholder, threatened, against or affecting the Company (as
any of its officers and directors in their capacities as such), at law or in
equity, or before or by any federal, state, municipal or other governmental
department, commission, board, bureau, agency or instrumentality having
jurisdiction over the Company. Except as set forth on SCHEDULE 2.16, no notice
of any material unresolved claim, action, suit or proceeding, whether pending or
threatened, has been received by the Company during the last five years and, to
the best knowledge of the Stockholder, there is no basis therefor. Except as set
forth on SCHEDULE 2.16, there are no outstanding judgments, orders, writs,
injunctions or decrees against the Company. Except as set forth on SCHEDULE
2.16, the Company has conducted and now conducts its business in material
compliance with all laws, regulations, writs, injunctions, decrees and orders
applicable to the Company or its assets. The Company is not in violation of any
material law or regulation or any order of any court or federal, state,
municipal or other governmental department, commission, board, bureau, agency or
instrumentality having jurisdiction over any of them. The Company has conducted
and is conducting its business in substantial compliance with the requirements,
standards, criteria and conditions set forth in applicable federal, state and
local statutes, ordinances, permits, licenses, orders, approvals, variances,
rules and regulations, including all such permits, licenses, orders and other
governmental approvals set forth on SCHEDULES 2.8 and 2.9.
2.17 TAXES. For purposes of this Agreement, the term "Taxes" shall mean
all taxes, charges, fees, levies or other assessments, including, without
limitation, income, gross receipts, excise, property, sales, withholding, social
security, unemployment, occupation, use, service, license, payroll, franchise,
transfer and recording taxes, fees and charges, imposed by the United States or
any state, local or foreign government or subdivision or agency thereof ("Taxing
Authority"), whether computed on a separate, consolidated, unitary, combined or
any other basis; and such term shall include any interest, fines, penalties or
additional amounts attributable to or imposed with respect to any such taxes,
charges, fees, levies or other assessments. As used herein, the term "Company
Subsidiaries" means the subsidiaries, if any, of the Company; it being
understood that there may be no such subsidiaries.
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All Tax returns ("Returns") required to be filed with respect to any Tax
for which any of the Company and the Company Subsidiaries (if any) is liable
have been duly and timely filed with the appropriate Taxing Authority, each Tax
shown to be payable on each such Return has been paid, each Tax payable by the
Company or a Company Subsidiary by assessment has been timely paid in the amount
assessed, and adequate reserves have been established on the consolidated books
of the Company and the Company Subsidiaries for all Taxes for which any of the
Company and the Company subsidiaries is liable, but the payment of which is not
yet due. Neither the Company nor any Company Subsidiary is, or ever has been,
liable for any Tax payable by reason of the income or property of a person or
entity other than the Company or a Company Subsidiary. Each of the Company and
the Company Subsidiaries has timely filed true, correct and complete
declarations of estimated Tax in each jurisdiction in which any such declaration
is required to be filed by it. No Liens for Taxes exist upon the assets of the
Company or any Company Subsidiary except Liens for Taxes which are not yet due.
Neither the Company nor any Company Subsidiary is, or ever has been, subject to
Tax in any jurisdiction outside the United States. No litigation with respect to
any Tax for which the Company or any Company Subsidiary is asserted to be liable
is pending or, to the knowledge of the Company or the Stockholder, threatened,
and no basis which the Company or any Stockholder believes to be valid exists on
which any claim for any such Tax can be asserted against the Company or any
Company Subsidiary. There are no requests for rulings or determinations in
respect of any Taxes pending between the Company or any Company Subsidiary and
any Taxing Authority. No extension of any period during which any Tax may be
assessed or collected and for which the Company or any Company Subsidiary is or
may be liable has been granted to any Taxing Authority. Neither the Company nor
any Company Subsidiary is or has been party to any tax allocation or sharing
agreement. All amounts required to be withheld by any of the Company and the
Company Subsidiaries and paid to governmental agencies for income, social
security, unemployment insurance, sales, excise, use and other Taxes have been
collected or withheld and paid to the proper Taxing Authority. The Company and
each Company Subsidiary have made all deposits required by law to be made with
respect to employees' withholding and other employment Taxes. Neither the
Company nor the Stockholder is a "foreign person," as that term is referred to
in Section 1445(f)(3) of the Code. The Company has not filed a consent pursuant
to Section 341 (f) of the Code or any comparable provision of any other tax
statute and has not agreed to have Section 341 (f)(2) of the Code or any
comparable provision of any other Tax statute apply to any disposition of an
asset. The Company has not made, is not obligated to make and is not a party to
any agreement that could require it to make any payment that is not deductible
under Section 280G of the Code. No asset of the Company or of any Company
Subsidiary is subject to any provision of applicable law which eliminates or
reduces the allowance for depreciation or amortization with respect to that
asset below the allowance generally available to an asset of its type. Except as
disclosed to LandCare, no accounting method changes of the Company or of any
Company Subsidiary exist or are proposed or threatened which could give rise to
an adjustment under Section 481 of the Code. The Company uses the accrual method
of accounting for income tax purposes, and the Company's methods of accounting
have not changed in the past five years. The Company is not
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an investment company as defined in Section 351(e)(1) of the Code. The Company
has a taxable year ended December 31 and has not made an election to retain a
fiscal year other than December 31 under Code Section 444. The Company is not a
party to any joint venture, partnership, or other arrangement that is treated as
a partnership for federal income tax purposes
The Stockholder made a valid election under the provisions of Subchapter S
of the Code, and the Company has not, since its formation, been subject to
taxation under the provisions of Subchapter C of the Code or under Section 11 or
Section 1374 of the Code. Neither the Stockholder nor the Company has taken any
action that terminated the Subchapter S election, which remains in effect on the
date hereof.
2.18 NO VIOLATIONS; ALL REQUIRED CONSENTS OBTAINED. The Company is not in
violation of any of its Charter Documents. Neither the Company nor, to the
knowledge of the Stockholder, any other party thereto is in material default
under any lease, instrument, license, permit or material agreement to which the
Company is a party or by which its properties are bound (the "Material
Documents"). Except as set forth on SCHEDULE 2.18, (a) the execution of this
Agreement by the Company and the Stockholder and the performance by the Company
and the Stockholder of their obligations hereunder and the consummation of the
transactions contemplated hereby will not result in any violation or breach or
constitute a default under any of the terms or provisions of the Material
Documents or the Charter Documents, and (b) at and after the Closing Date the
Surviving Corporation will be entitled to the rights and benefits under the
Material Documents to which the Company is entitled immediately prior to the
Closing. Except as set forth on SCHEDULE 2.18 (and except for consents already
obtained), none of the Material Documents requires notice to, or the consent or
approval of, any governmental agency or other third party with respect to any of
the transactions contemplated hereby in order to remain in full force and
effect, and consummation of the transactions contemplated hereby will not give
rise to any right to termination, cancellation or acceleration or loss of any
right or benefit. Except as set forth on SCHEDULE 2.18, none of the Material
Documents prohibits the use or publication of the name of any other party to
such Material Document, and none of the Material Documents prohibits or
restricts the Surviving Corporation or will prevent or restrict the Company or
LandCARE from freely providing services to any person.
2.19 ABSENCE OF CHANGES. Since the Balance Sheet Date, the Company has
conducted its operations in the ordinary course of business and, except as set
forth on SCHEDULE 2.19, there has not been:
(i) any change in the business, assets, liabilities or financial
condition of the Company which would have a Material Adverse Effect;
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(ii) any damage, destruction or loss (whether or not covered by
insurance) affecting any of the material assets of the Company or the
business of the Company which would have a Material Adverse Effect;
(iii) any change in the authorized capital of the Company or its
outstanding securities or any change in its ownership interests or any
grant of any options, warrants, calls, conversion rights or commitments;
(iv) any declaration or payment of any dividend or distribution with
respect to the capital stock or any direct or indirect redemption,
purchase or other acquisition of any of the capital stock of the Company
(except for distributions in an amount equal to the income taxes payable
by the Stockholder based solely on the Company's S corporation earnings
during the period from the Balance Sheet Date to the date hereof and
except for AAA distributions of which the Stockholder has provided notice
to LandCARE);
(v) any increase or commitment to increase the compensation, bonus,
sales commissions or fee arrangement payable or to become payable by the
Company to any of its officers, directors, stockholders, employees,
consultants or agents;
(vi) any work interruptions, labor grievances or claims filed, or
any event or condition of any character, materially adversely affecting
the business of the Company;
(vii) any sale or transfer, or any agreement to sell or transfer,
any material assets, property or rights of the Company to any person;
(viii)any cancellation, or agreement to cancel, any indebtedness or
other obligation owing to the Company;
(ix) any plan, agreement or arrangement granting any preferential
rights to purchase or acquire any interest in any of the assets, property
or rights of the Company or requiring consent of any party to the transfer
and assignment of any such assets, property or rights;
(x) any purchase or acquisition of, or agreement, plan or
arrangement to purchase or acquire, any property, rights or assets outside
of the ordinary course of the Company's business;
(xi) any waiver of any material rights or claims of the Company;
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(xii) any amendment or termination of any contract, agreement,
license, permit or other right to which the Company is a party which would
have a Material Adverse Effect;
(xiii)any contract, commitment or liability entered into or incurred
or any capital expenditures made except in the normal course of business
consistent with past practice in an individual amount not in excess of
$10,000 and in an aggregate amount not in excess of $50,000; or
(xiv) any transaction by the Company outside the ordinary course of
its business.
2.20 POWERS OF ATTORNEY. SCHEDULE 2.20 sets forth a schedule as of the
date of this Agreement of the name of each person, corporation, firm or other
entity holding any general or special power of attorney from the Company and a
description of the terms of each such power.
2.21 COMPETING LINES OF BUSINESS; RELATED-PARTY TRANSACTIONS. Except as
set forth on SCHEDULE 2.21, neither the Stockholder nor any other affiliate of
the Company owns, directly or indirectly, any interest in, or is an officer,
director, employee or consultant of or otherwise receives remuneration from, any
business which is a competitor, lessor, lessee, customer or supplier of the
Company. Except as set forth on SCHEDULE 2.21, no officer, director or
stockholder of the Company has, nor during the period beginning January 1, 1995
through the date hereof had, any interest in any property, real or personal,
tangible or intangible, used in or pertaining to the Company's business.
2.22 DISCLOSURE. The Stockholder has provided LandCARE with all the
information that LandCARE has requested in analyzing whether to consummate the
transactions contemplated hereby. There is no fact known to the Stockholder on
the date hereof which has specific application to the Company or its business or
assets (other than general economic or industry conditions) which would have a
Material Adverse Effect on the Company or its business or assets, or the
condition (financial or otherwise), results of operations or prospects of the
Company, which has not been described in the Schedules hereto.
2.23 CERTAIN BUSINESS PRACTICES. Neither the Company nor any person acting
on behalf of the Company has given or offered anything of value to any
governmental official, political party or candidate for government office nor
has it or any of them otherwise taken any action which would cause the Company
to be in violation of the Foreign Corrupt Practices Act of 1977, as amended, or
any law of similar effect.
2.24 NOTICE TO BARGAINING AGENTS. The Company has satisfied any
requirement for notice of the transactions contemplated by this Agreement under
applicable collective bargaining agreements.
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2.25 NOTICES AND CONSENTS. Except as set forth on SCHEDULE 2.11 or
SCHEDULE 2.18, the Company has given any notices to third parties and has
obtained any third party consents that may be necessary to consummate the
transactions contemplated hereby.
2.26 INVENTORY; WORKING CAPITAL; OTHER FINANCIAL MATTERS. The Company's
inventory and working capital levels (including financing in the ordinary course
of business) are adequate to successfully operate the business, and there has
been no unusual build-up of cash needs at the date hereof.
2.27 YEAR 2000 COMPLIANCE. The properties and assets of the Company,
including, but not limited to, computer hardware, microprocessor driven
equipment, software and data, owned or used by the Company will accurately
process date and time data after December 31, 1999, and the Company will suffer
no loss of functional ability when processing dates and related data outside the
1900-1999 year range.
2.28 RELIANCE UPON ORAL REPRESENTATIONS. The Company and the Stockholder
each represent and warrant: (a) that each has been fully informed by his or its
legal counsel and by his or its own independent judgment of the terms,
conditions and effects of this Agreement; (b) that each has been represented by
independent legal counsel of his or its choice throughout all negotiations
preceding the execution of this Agreement and has received the advice of his or
its attorney in entering into this Agreement; (c) that each, both personally and
through his or its independently- retained attorneys, is fully satisfied with
the terms and effects of this Agreement; (d) that no promise or inducement has
been offered or made to him or it except as expressly stated in this Agreement;
and (e) that this Agreement is executed without reliance on any oral statement
or oral representation by any other party or any other party's agent or
attorney.
3. REPRESENTATIONS OF LANDCARE
LandCARE represents and warrants as follows:
3.1 DUE ORGANIZATION. LandCARE is duly incorporated, validly existing and
in good standing under the laws of the state of Delaware, and has the requisite
power and authority to carry on its business as it is now being conducted.
LandCARE is qualified to do business and is in good standing in each
jurisdiction in which the nature of its business makes such qualification
necessary, except where the failure to be so authorized or qualified would not
have a Material Adverse Effect.
3.2 AUTHORIZATION. (i) The representative of LandCARE executing this
Agreement has the authority to enter into and bind LandCARE to the terms of this
Agreement and (ii) LandCARE has
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the full legal right, power and authority to enter into this Agreement and to
consummate the transactions contemplated hereby.
3.3 NO VIOLATIONS. The execution of this Agreement and the performance of
the obligations hereunder and the consummation of the transactions contemplated
hereby will not result in any violation or breach or constitute a default under
any of the terms or provisions of the Restated Certificate of Incorporation, as
amended, or Bylaws, as amended, of LandCARE.
3.4 VALIDITY OF OBLIGATIONS. The execution and delivery of this Agreement
by LandCARE and the performance of the transactions contemplated hereby have
been duly and validly authorized by the Board of Directors of LandCARE and this
Agreement has been duly and validly authorized by all necessary corporate action
and is a legal, valid and binding obligation of LandCARE.
3.5 PROSPECTUS. LandCare's Prospectus dated July 14, 1998, a copy of which
have been delivered to the Stockholder, does not contain an untrue statement of
a material fact or omit to state a material fact necessary to make the
statements made therein, in light of the circumstances under which they were
made, not misleading, and may be relied upon by the Stockholder in connection
with the transactions contemplated by this Agreement.
3.6 REGISTRATION. The offer and sale of the shares of LandCare Stock being
issued to the Stockholder pursuant to this Agreement have been duly registered
under the Securities Act of 1933, as amended, and except as provided in Section
9.2 of this Agreement or as otherwise provided by law, the subsequent reoffer
and resale of such shares is not restricted.
4. DELIVERIES
4.1 INSTRUMENTS OF TRANSFER. The Stockholder is delivering to LandCARE
certificates representing all of the Shares, duly endorsed (or accompanied by
duly executed stock powers).
4.2 CERTIFICATE OF MERGER. The appropriate parties hereto are executing
and delivering for filing with the appropriate authorities certificates of
merger or similar documents for purposes of effecting the Merger.
4.3 EMPLOYMENT AGREEMENT. The Surviving Corporation and the persons
identified in SCHEDULE 4.3 are entering into Employment Agreements in the form
of Annex I.
4.4 OPINION OF COUNSEL. Counsel to the Company and the Stockholder is
delivering an opinion to LandCARE dated the date hereof in the form attached
hereto as Annex II.
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4.5 GOOD STANDING CERTIFICATES. The Stockholder is delivering to LandCARE
certificates, dated as of a date no earlier than ten days prior to the date
hereof, duly issued by the appropriate governmental authority in the State of
Incorporation and in each state in which the Company is authorized to do
business, showing the Company to be in good standing and authorized to do
business therein.
4.6 LEASE. The Surviving Corporation is entering into leases of the
properties identified on SCHEDULE 4.5 in the form attached hereto as Annex III,
and the Stockholder is delivering to LandCARE evidence of the termination of all
leases relating to such properties. The Company is delivering to LandCare
consents to the Merger of the lessors of the other properties leased by the
Company.
4.7 INDEBTEDNESS TO COMPANY. The Stockholder and its Affiliates are
repaying any outstanding indebtedness they may have to the Company.
4.8 CONSENTS. The Stockholder is delivering to LandCARE copies of any
third party consents required in connection with the consummation of the
transactions contemplated hereby.
4.9 RESIGNATIONS OF DIRECTORS AND OFFICERS. The Stockholder is delivering
to LandCARE the resignations of such directors and officers of the Company as
have been requested by LandCARE.
4.10 CERTAIN INDEBTEDNESS. LandCare or the Surviving Corporation is
refinancing or agreeing to refinance promptly after the Closing the Company debt
listed on SCHEDULE 4.10 and is agreeing to secure full and unconditional
releases of the Stockholder from his personal guaranties of the Company debts
identified on SCHEDULE 4.10 as being guaranteed by the Stockholder. Such debts
are being refinanced or paid and such releases of such guaranties are being
secured concurrently with the Closing to the extent practicable, and to the
extent not paid or secured concurrently with the Closing, shall be refinanced,
paid or secured, as appropriate, promptly after the Closing, and within two
weeks in any case.
4.11 INDEMNIFICATION AGREEMENT. The stockholder is delivering to LandCare
and the surviving corporation an Indemnification Agreement in form and substance
satisfactory to LandCare.
5. POST-CLOSING COVENANTS
The parties to this Agreement further covenant and agree as follows:
5.1 FUTURE COOPERATION; FURTHER ASSURANCES. The Stockholder, the Surviving
Corporation and LandCARE shall each deliver or cause to be delivered to the
other following the date hereof such additional instruments as the other may
reasonably request for the purpose of effecting
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the Merger and fully carrying out the intent of this Agreement. LandCARE shall
provide the Stockholder reasonable access to the books and records of the
Surviving Corporation after the Closing Date for purposes of tax compliance and
any other reasonable purpose.
5.2 EXPENSES. LandCARE will pay the fees, expenses and disbursements of
LandCARE and its agents, representatives, financial advisors, accountants and
counsel incurred in connection with the execution, delivery and performance of
this Agreement. The Stockholder will pay the fees, expenses and disbursements of
the Stockholder and its agents, representatives, financial advisors, accountants
and counsel incurred in connection with the execution, delivery and performance
of this Agreement. The Stockholder shall pay any sales, use, transfer, real
property transfer, recording, gains, stock transfer and other similar taxes and
fees ("Transfer Taxes") imposed in connection with the Merger. The Stockholder
shall file all necessary documentation and returns with respect to such Transfer
Taxes. In addition, the Stockholder acknowledges that the Stockholder, and not
the Surviving Corporation or LandCARE, will pay all taxes (income or otherwise),
if any, due upon receipt of the consideration payable pursuant to this
Agreement.
5.3 CERTAIN AGREEMENTS. Upon the request of LandCARE at any time after the
Closing, the Stockholder and the Surviving Corporation shall terminate any
existing agreements to which the Company and the Stockholder are parties.
5.4 PREPARATION AND FILING OF TAX RETURNS.
(a) The Stockholder shall file or cause to be filed all Tax Returns
for all taxable periods that end on or before the Closing Date, but in each case
only after LandCARE has reviewed such filings and consented thereto. The
Stockholder shall pay all Tax liabilities for all periods ending on or prior to
the Closing Date.
(b) LandCARE shall file or cause to be filed all Tax Returns for all
taxable periods ending after the Closing Date.
(c) Each party hereto shall, and shall cause its subsidiaries and
affiliates to, provide to each of the other parties hereto such cooperation and
information as any of them reasonably may request in filing any Tax Returns,
amended Tax Returns or claim for refund, determining a liability for Taxes or a
right to refund of Taxes or in conducting any audit or other proceeding with
respect to Taxes. Such cooperation and information shall include providing
copies of all relevant portions of relevant Tax Returns, together with relevant
accompanying schedules and relevant work papers, relevant documents relating to
rulings or other determinations by Taxing Authorities and relevant records
concerning the ownership and Tax basis of property, which such party may
possess. Each party shall make its employees reasonably available on a mutually
convenient basis at its cost to provide explanation of any documents or
information so provided.
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Subject to the preceding sentence, each party required to file tax returns
pursuant to this Agreement shall bear all costs of filing such tax returns.
5.5 ADDITIONAL AGREEMENTS. The Stockholder shall take the actions set
forth in the letter agreement dated the date hereof between the Stockholder and
LandCare.
6. INDEMNIFICATION
The Stockholder and LandCARE each make the following covenants that are
applicable to them, respectively:
6.1 SURVIVAL OF STOCKHOLDER'S REPRESENTATIONS AND WARRANTIES.
(a) The representations and warranties of the Stockholder made in
this Agreement herewith shall survive the Closing until the expiration of the
periods prescribed by the applicable statutes of limitations (including any
extensions thereof) relating thereto; provided, however, that representations
and warranties and indemnification provisions with respect to which a claim is
made within the survival period shall survive until such claim is finally
determined and paid.
(b) The representations and warranties of LandCARE made in this
Agreement shall survive the Closing for a period of one year following the
Closing Date; provided, however, that representations and warranties with
respect to which a claim is made within such one-year period shall survive until
such claim is finally determined and paid.
(c) The date on which a representation or warranty expires as
provided herein is herein called the "Expiration Date." No claim for
indemnification may be made with respect to a representation or warranty after
the Expiration Date, other than claims based on fraud.
6.2 GENERAL INDEMNIFICATION BY THE STOCKHOLDER. The Stockholder covenants
and agrees that it will indemnify, defend, protect, and hold harmless the
Surviving Corporation, LandCARE and its subsidiaries and all of their officers,
directors, employees, stockholders, agents, representatives and affiliates at
all times from and after the date of this Agreement until the Expiration Date
from and against all claims, damages actions, suits, proceedings, demands,
assessments, adjustments, costs and expenses (including specifically, but
without limitation, reasonable attorneys' fees and expenses of investigation)
(collectively "Damages") incurred by such indemnified person as a result of or
incident to (i) any breach of any representation or warranty of the Stockholder
set forth herein, and (ii) any breach or nonfulfillment of any covenant or
agreement by the Company or the Stockholder under this Agreement.
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6.3 INDEMNIFICATION BY LANDCARE. LandCARE covenants and agrees that it
will indemnify, defend, protect and hold harmless the Stockholder at all times
from and after the date of this Agreement until the Expiration Date from and
against all Damages incurred by the Stockholder as a result of (i) any breach of
any representation or warranty of LandCARE set forth herein; and (ii) any breach
or nonfulfillment of any covenant or agreement by LandCARE under this Agreement.
6.4 THIRD PERSON CLAIMS. Promptly after any party hereto (the "Indemnified
Party") has received notice of or has knowledge of any claim by a person not a
party to this Agreement ("Third Person") or the commencement of any action or
proceeding by a Third Person that may give rise to a right of indemnification
hereunder, such Indemnified Party shall give to the party obligated to provide
indemnification hereunder (an "Indemnifying Party") written notice of such claim
or the commencement of such action or proceeding; provided, however, that the
failure to give such notice will not relieve such Indemnifying Party from
liability under this Section with respect to such claim, action or proceeding,
except to the extent that the Indemnifying Party has been actually prejudiced as
a result of such failure. The Indemnifying Party (at its own expense) shall have
the right and shall be given the opportunity to associate with the Indemnified
Party in the defense of such claim, suit or proceedings, and may select counsel
for the Indemnified Party, such counsel to be reasonably satisfactory to the
Indemnified Party. The Indemnified Party shall not, except at its own cost, make
any settlement with respect to any such claim, suit or proceeding without the
prior consent of the Indemnifying Party, which consent shall not be unreasonably
withheld or delayed. It is understood and agreed that in situations where
failure of the Indemnifying Party to settle a claim expeditiously could have an
adverse effect on the Indemnified Party, the failure of the Indemnifying Party
to act upon the Indemnified Party's request for consent to such settlement
within five business days of the Indemnifying Party's receipt of notice thereof
from the Indemnified Party shall be deemed to constitute consent by the
Indemnifying Party of such settlement for purposes of this Section.
6.5 METHOD OF PAYMENT. All claims for indemnification shall be paid in
cash.
7. NONCOMPETITION
7.1 PROHIBITED ACTIVITIES. As partial consideration for the execution,
delivery and performance of this Agreement by LandCARE, the Stockholder will
not, for a period of five years following the Closing Date, for any reason
whatsoever, directly or indirectly, for himself or on behalf of or in
conjunction with any other person, persons, company, partnership, corporation or
business of whatever nature:
(i) own, manage, operate, join, control, consult or advise (whether
or not compensated for such consultation or advice), or participate in, or
render assistance to, or derive any benefit whatever from, any business
offering services or products in direct
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competition with the Surviving Corporation within 200 miles of where the
Company conducted business at any time within one year prior to the
Closing Date (the "Territory");
(ii) engage, as an officer, director, shareholder, owner, partner,
joint venturer, or in a sales or managerial capacity, whether as an
employee, independent contractor, consultant or advisor, or as a sales
representative, in any business offering services or products in direct
competition with the Surviving Corporation or LandCARE within the
Territory;
(iii) call upon any person who is, at that time, an employee of
LandCARE or any of its subsidiaries (including the Surviving Corporation)
for the purpose or with the intent of enticing such employee away from or
out of the employ of LandCARE or any of its subsidiaries (including the
Surviving Corporation);
(iv) call upon any person or entity which is, at that time, or which
has been, within one year prior to the Closing Date, a customer of
LandCARE, the Company or any of LandCARE's subsidiaries (including the
Surviving Corporation) for the purpose of soliciting or selling products
or services in direct competition with LandCARE or any of its subsidiaries
(including the Company) within the Territory.
Notwithstanding the above, the foregoing covenants shall not be deemed to
prohibit the Stockholder from (i) acquiring as a passive investor with no
involvement in the operations or management of the business, not more than one
percent (1%) of the capital stock of a competing business whose stock is
publicly traded on a national securities exchange or over-the-counter market.
The provisions of this Section are independent of the noncompetition
provisions contained in any consulting or employment agreement to which the
Stockholder may be or may become a party in connection with the transactions
contemplated hereby. All such provisions are intended to be observed and
enforced in accordance with their terms.
7.2 EQUITABLE RELIEF. Because of the difficulty of measuring economic
losses to LandCARE as a result of a breach of the foregoing covenant, and
because of the immediate and irreparable damage that could be caused to LandCARE
for which it would have no other adequate remedy, the Stockholder agrees that
the foregoing covenant may be enforced by LandCARE in the event of breach by the
Stockholder, by injunctions, restraining orders and other equitable actions.
7.3 REASONABLE RESTRAINT. It is agreed by the parties hereto that the
foregoing covenants in this Section impose a reasonable restraint on the
Stockholder.
7.4 SEVERABILITY; REFORMATION. The covenants in this Section are severable
and separate, and the unenforceability of any specific covenant shall not affect
the provisions of any
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other covenant. Moreover, in the event any court of competent jurisdiction shall
determine that the scope, time or territorial restrictions set forth are
unreasonable, then it is the intention of the parties that such restrictions be
enforced to the fullest extent which the court deems reasonable, and the
Agreement shall thereby be reformed.
7.5 INDEPENDENT COVENANT. The Stockholder acknowledges that his covenants
set forth in this Section are material conditions to LandCARE's willingness to
execute and deliver this Agreement and to consummate the transactions
contemplated hereby. All of the covenants in this Section shall be construed as
an agreement independent of any other provision in this Agreement, and the
existence of any claim or cause of action of the Stockholder against LandCARE or
any subsidiary thereof, whether predicated on this Agreement or otherwise, shall
not constitute a defense to the enforcement by LandCARE of such covenants. It is
specifically agreed that the period of five years stated at the beginning of
this Section, during which the agreements and covenants of the Stockholder made
in this Section shall be effective, shall be computed by excluding from such
computation any time during which the Stockholder is in violation of any
provision of this Section. The covenants contained in Section shall not be
affected by any breach of any other provision hereof by any party hereto.
8. NONDISCLOSURE OF CONFIDENTIAL INFORMATION
8.1 GENERAL. The Stockholder recognizes and acknowledges that he has had
access to certain customer lists, confidential information of the Company, such
as operational policies, pricing and cost policies, and other information, that
will be valuable, special and unique assets of the Surviving Corporation and
LandCARE after the Closing Date. The Stockholder agrees that he will not
disclose such confidential information, or any confidential information of the
Surviving Corporation or LandCARE to which they may have access in the future,
to any person, firm, corporation, association or other entity for any purpose or
reason whatsoever, except (a) to authorized representatives of LandCARE, (b)
following the Closing, such information may be disclosed by the Stockholder as
may be required in the course of performing his duties for the Surviving
Corporation and (c) to counsel and other advisers, provided that such advisers
(other than counsel) agree to the confidentiality provisions of this Section,
unless (i) such information becomes known to the public generally through no
fault of the Stockholder, or (ii) disclosure is required by law or the order of
any governmental authority, provided, that prior to disclosing any information
pursuant to this clause (ii), the Stockholder shall give prior written notice
thereof to LandCARE and provide LandCARE with the opportunity to contest such
disclosure. In the event of a breach or threatened breach by the Stockholder of
the provisions of this Section, LandCARE shall be entitled to injunctive or
other equitable relief restraining the Stockholder from disclosing, in whole or
in part, such confidential information. Nothing herein shall be construed as
prohibiting LandCARE from pursuing any other available remedy for such breach or
threatened breach, including the recovery of damages.
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8.2 EQUITABLE RELIEF. Because of the difficulty of measuring economic
losses as a result of the breach of the foregoing covenants, and because of the
immediate and irreparable damage that would be caused for which LandCARE would
have no other adequate remedy, the Stockholder agrees that the foregoing
covenants may be enforced against him by injunctions, restraining orders and
other appropriate equitable relief.
8.3 SURVIVAL. The obligations of the parties under this Section shall
survive the termination of this Agreement for an unlimited time with respect to
proprietary information and a period of five years with respect to
non-proprietary information.
9 INTENDED TAX TREATMENT
9.1 TAX-FREE REORGANIZATION. The parties are entering into this Agreement
with the intention that the Merger qualify as a tax-free reorganization for
federal income tax purposes, except to the extent of any "boot" received, and
the Stockholder will not take any actions that disqualify the Merger for such
treatment. The Stockholder represents, warrants and covenants that:
(i) the Company operates at least one historic business line, or
owns at least a significant portion of its historic business assets, in each
case within the meaning of Reg. 1.368-1(d) under the Code; and
(ii) the Company will hold "substantially all of its properties"
within the meaning of Section 368(a)(2)(D) of the Code (that is, after the
Effective Time, the Company will hold at least 90% of the fair market value of
the net assets and at least 70% of the gross assets held by the Company
immediately prior to the Effective Time.) For purposes of the preceding
sentence, amounts paid by the Company to dissenters, amounts paid by the Company
to shareholders who receive cash or other property and the Company assets used
to pay its reorganization expenses and all redemptions and distributions (except
for normal dividends) made by the Company immediately preceding the Effective
Time, pursuant to this Agreement or otherwise as part of the plan of Merger
provided for herein, will be included as assets of the Company held immediately
prior to the Merger."
9.2 RESTRICTIONS ON RESALE. The Stockholder agrees that he will not sell,
offer to sell, or otherwise transfer or dispose of, any shares of the LandCARE
Stock received by the Stockholder, engage in put, call, short-sale, straddle or
similar transactions, or in any other way reduce the Stockholder's risk of
owning shares of LandCARE Stock prior to the date two years after the Closing
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Date except as set forth below, and agrees that the certificates evidencing the
LandCARE Stock to be received by the Stockholder will bear a legend evidencing
this restriction. After the date one year after the Closing Date the Stockholder
may sell such shares pursuant to the LandCARE Liquidity Plan. After the date two
years after the Closing Date, neither the restrictions set forth herein nor the
provisions of the LandCare Liquidity Plan shall restrict the Stockholder from
selling or otherwsie disposing of any of such shares of LandCare Stock.
10 SECURITIES LAW MATTERS
10.1 ECONOMIC RISK; SOPHISTICATION. The Stockholder acknowledges and
confirms that he has received and reviewed a Prospectus from LandCARE relating
to his acquisition of shares of LandCARE Stock hereunder. The Stockholder (A)
has such knowledge, sophistication and experience in business and financial
matters that he is capable of evaluating the merits and risks of an investment
in the shares of LandCARE Stock, (B) fully understands the nature, scope and
duration of any limitations on transfer of LandCARE Stock described in this
Agreement and (C) can bear the economic risk of an investment in the shares of
LandCARE Stock.
10.2 COMPLIANCE WITH LAW. The Stockholder covenants that none of the
LandCARE Stock acquired by the Stockholder hereunder will be offered, sold,
assigned, hypothecated, transferred or otherwise disposed of by the Stockholder
except in full compliance with all applicable securities laws.
11. GENERAL
11.1 SUCCESSORS AND ASSIGNS. This Agreement and the rights of the parties
hereunder may not be assigned (except by operation of law) and shall be binding
upon and shall inure to the benefit of the parties hereto, the successors of
LandCARE, and the heirs and legal representatives of the Stockholder.
11.2 ENTIRE AGREEMENT. This Agreement (including the schedules, exhibits
and annexes attached hereto) and the documents delivered pursuant hereto
(including the letter agreement dated the date hereof between the Stockholder
and LandCare) constitute the entire agreement and understanding among the
Stockholder, the Company and LandCARE, and supersede any prior agreement and
understanding relating to the subject matter of this Agreement. This Agreement,
upon execution, constitutes a valid and binding agreement of the parties hereto,
enforceable in accordance with its terms, and may be modified or amended only by
a written instrument executed by the parties hereto.
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11.3 COUNTERPARTS. This Agreement may be executed simultaneously in two or
more counterparts, each of which shall be deemed an original and all of which
together shall constitute but one and the same instrument. The signatures to
this Agreement need not all be on a single copy of this Agreement, and may be
facsimiles rather than originals, and shall be fully as effective as though all
signatures were originals on the same copy.
11.4 BROKERS AND AGENTS. Each party represents and warrants that it
employed no broker or agent in connection with this transaction and agrees to
indemnify the other parties hereto against all loss, cost, damages or expense
arising out of claims for fees or commission of brokers employed or alleged to
have been employed by such indemnifying party.
11.5 NOTICES. All notices and communications required or permitted
hereunder shall be in writing and may be given by depositing the same in United
States mail, addressed to the party to be notified, postage prepaid and
registered or certified with return receipt requested, or by delivering the same
in person to an officer or agent of such party, or by facsimile, as follows:
If to LandCARE, addressed to it at:
LandCARE USA, Inc.
5850 San Felipe, Suite 500
Houston, Texas 77057
Attn: General Counsel
Facsimile No. (713) 965-0343
If to the Company, addressed to it at:
Landscape West
950 North Tustin Avenue
Anaheim, California 92807
If to the Stockholder, addressed to him at the Company's address,
or to such other address as any party hereto shall specify pursuant to this
Section from time to time.
11.6 GOVERNING LAW. This Agreement shall be construed in accordance with
the laws of the State of California without regard to its principles governing
conflicts of laws.
11.7 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The representations,
warranties, covenants and agreements of the parties made herein and at the time
of the Closing or in writing
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delivered pursuant to the provisions of this Agreement shall survive the
consummation of the transactions contemplated hereby and any examination on
behalf of the parties.
11.8 EFFECT OF INVESTIGATION. No investigation by the parties hereto in
connection with this Agreement or otherwise shall affect the representations and
warranties of the parties contained herein or in any certificate or other
document delivered in connection herewith and each such representation and
warranty shall survive such investigation.
11.9 EXERCISE OF RIGHTS AND REMEDIES. Except as otherwise provided herein,
no delay of or omission in the exercise of any right, power or remedy accruing
to any party as a result of any breach or default by any other party under this
Agreement shall impair any such right, power or remedy, nor shall it be
construed as a waiver of or acquiescence in any such breach or default, or of
any similar breach or default occurring later; nor shall any waiver of any
single breach or default be deemed a waiver of any other breach or default
occurring before or after that waiver.
11.10 TIME. Time is of the essence with respect to this Agreement.
11.11 REFORMATION AND SEVERABILITY. In case any provision of this
Agreement shall be invalid, illegal or unenforceable, it shall, to the extent
possible, be modified in such manner as to be valid, legal and enforceable but
so as to most nearly retain the intent of the parties, and if such modification
is not possible, such provision shall be severed from this Agreement, and in
either case the validity, legality and enforceability of the remaining
provisions of this Agreement shall not in any way be affected or impaired
thereby.
11.12 REMEDIES CUMULATIVE. No right, remedy or election given by any term
of this Agreement shall be deemed exclusive but each shall be cumulative with
all other rights, remedies and elections available at law or in equity.
11.13 CAPTIONS. The headings of this Agreement are inserted for
convenience only, and shall not constitute a part of this Agreement or be used
to construe or interpret any provision hereof.
11.14 PRESS RELEASES AND PUBLIC ANNOUNCEMENTS. No party shall issue any
press release or make any public announcement relating to the subject matter of
this Agreement without the prior written approval of the other party; provided,
however, that LandCARE may issue a press release in accordance with its
customary practices without such approval and any party may make any public
disclosure it believes in good faith is required by applicable law or any
listing or trading agreement concerning its publicly-traded securities.
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11.15 NO THIRD-PARTY BENEFICIARIES. This Agreement shall not confer any
rights or remedies upon any person other than the parties and their respective
successors and permitted assigns.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
day and year first above written.
LANDCARE USA, INC.
By:_______________________________
Name:__________________________
Title:_________________________
LW ACQUISITION CORP.
By: ______________________________
Name: _________________________
Title: _______________________
LANDSCAPE WEST
By: ______________________________
Name: _________________________
Title: _______________________
__________________________________
Barry Konier
__________________________________
_______ (spouse of Barry Konier)
<PAGE>
EXHIBIT 2.4
EXECUTION COPY
AGREEMENT AND PLAN OF MERGER
dated as of August 5, 1998
by and among
LANDCARE USA, INC.
CCI ACQUISITION CORP.
CLEAN CUT, INC.
and
the Stockholders named herein
<PAGE>
TABLE OF CONTENTS
Page
1. THE MERGER.............................................................1
1.1 The Merger.......................................................1
1.2 Effective Time...................................................1
1.3 Articles of Incorporation and By-laws of Surviving Corporation...2
1.4 Effect of Merger.................................................2
1.5 Manner of Conversion.............................................2
1.6 Delivery of Certificates.........................................3
1.7 Closing..........................................................3
2. REPRESENTATIONS AND WARRANTIES OF THE STOCKHOLDERS.....................3
2.1 Due Organization.................................................4
2.2 Authorization....................................................4
2.3 Capital Stock of the Company.....................................4
2.4 Subsidiaries.....................................................5
2.5 Financial Statements.............................................5
2.6 Liabilities and Obligations......................................6
2.7 Accounts and Notes Receivable....................................6
2.8 Permits and Intangibles..........................................6
2.9 Environmental Matters............................................7
2.10 Personal Property................................................7
2.11 Significant Customers; Material Contracts and Commitments........8
2.12 Real Property....................................................8
2.13 Insurance.......................................................10
2.14 Compensation; Employment Agreements; Organized Labor Matters....10
2.15 Employee Benefit Plans..........................................10
2.16 Conformity with Law; Litigation.................................12
2.17 Taxes...........................................................12
2.18 No Violations; All Required Consents Obtained...................14
2.19 Absence of Changes..............................................14
2.20 Powers of Attorney..............................................16
2.21 Competing Lines of Business; Related-party Transactions.........16
2.22 Disclosure......................................................16
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2.23 Certain Business Practices......................................16
2.24 No Notice to Bargaining Agents..................................16
2.25 Notices and Consents............................................16
2.26 Year 2000 Compliance............................................17
2.27 Reliance Upon Oral Representations..............................17
2.28 Software........................................................17
3. REPRESENTATIONS OF LANDCARE AND NEWCO.................................17
3.1 Due Organization................................................17
3.2 Authorization...................................................18
3.3 Capital Stock of LandCARE and Newco.............................18
3.5 Reports; Financial Statements...................................20
3.6 Absence of Certain Changes or Events............................20
3.7 Absence of Litigation...........................................20
3.8 Tax Matters; Pooling............................................21
3.9 Vote Required...................................................21
3.10 Newco...........................................................21
4. DELIVERIES............................................................21
4.1 Instruments of Transfer.........................................21
4.2 Certificate of Merger...........................................21
4.3 Employment Agreement............................................21
4.4 Opinion of Counsel..............................................21
4.5 Good Standing Certificates......................................21
4.6 Indebtedness to Company.........................................22
4.7 Consents........................................................22
4.8 Resignations of Directors and Officers..........................22
4.9 Accounting Treatment............................................22
5. POST-CLOSING COVENANTS................................................22
5.1 Future Cooperation; Further Assurances..........................22
5.2 Expenses........................................................22
5.3 Certain Agreements..............................................23
5.4 Preparation and Filing of Tax Returns...........................23
5.5 Stock Options...................................................24
5.6 Stockholder Guarantees..........................................24
5.7 Bank Indebtedness...............................................24
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6. INDEMNIFICATION.......................................................25
6.1 Survival of Stockholders' Representations and Warranties. .....25
6.2 General Indemnification by the Stockholders.....................25
6.3 Indemnification by LandCARE.....................................26
6.4 Third Person Claims.............................................26
6.5 Method of Payment...............................................26
6.6 Limitations on Indemnification..................................27
6.7 Exclusive Remedy................................................27
7. NONCOMPETITION........................................................27
7.1 Prohibited Activities...........................................27
7.2 Equitable Relief................................................28
7.3 Reasonable Restraint............................................28
7.4 Severability; Reformation.......................................28
7.5 Independent Covenant............................................28
8. NONDISCLOSURE OF CONFIDENTIAL INFORMATION.............................29
8.1 General.........................................................29
8.2 Equitable Relief................................................29
8.3 Survival........................................................29
9 INTENDED TAX AND ACCOUNTING TREATMENT
.....................................................................29
9.1 Tax-Free Reorganization.........................................30
9.2 Restrictions on Resale..........................................30
10 SECURITIES LAW MATTERS................................................31
10.1 Economic Risk; Sophistication...................................31
10.2 Compliance with Law.............................................31
11. GENERAL...............................................................31
11.1 Successors and Assigns..........................................31
11.2 Entire Agreement................................................31
11.3 Counterparts....................................................31
11.4 Brokers and Agents..............................................32
11.5 Notices.........................................................32
11.6 Governing Law...................................................33
11.7 Survival of Representations and Warranties......................33
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11.8 Effect of Investigation.........................................33
11.9 Exercise of Rights and Remedies.................................33
11.10 Time............................................................33
11.11 Reformation and Severability....................................33
11.12 Remedies Cumulative.............................................33
11.13 Captions........................................................34
11.14 Press Releases and Public Announcements.........................34
11.15 No Third-Party Beneficiaries....................................34
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<PAGE>
SCHEDULES
SCHEDULE 2.1. Due Organization
SCHEDULE 2.4. Subsidiaries
SCHEDULE 2.5. Financial Statements
SCHEDULE 2.6. Liabilities and Obligations
SCHEDULE 2.7. Accounts and Notes Receivable
SCHEDULE 2.8. Permits and Intangibles
SCHEDULE 2.9. Environmental Matters
SCHEDULE 2.10. Personal Property
SCHEDULE 2.11. Significant Customers; Material Contracts and Commitments
SCHEDULE 2.12. Real Property
SCHEDULE 2.13. Insurance
SCHEDULE 2.14. Compensation; Employment Agreements; Organized Labor Matters
SCHEDULE 2.15. Employee Benefit Plans
SCHEDULE 2.16. Conformity with Law; Litigation
SCHEDULE 2.18. No Violations; No Consents Required
SCHEDULE 2.19. Absence of Changes
SCHEDULE 2.20. Powers of Attorney
SCHEDULE 2.21. Competing Lines of Business; Related Party Transactions
SCHEDULE 2.25. Notices and Consents
SCHEDULE 2.26. Pro Forma Adjustments
SCHEDULE 4.3 Persons Entering into Employment Agreements
SCHEDULE 4.5. Leases
SCHEDULE 5.3. Certain Agreements
ANNEXES
Annex I - Certificate of Merger
Annex II - Form of Employment Agreement
Annex III - Form of Opinion of Counsel to Company and
Stockholders
Annex IV - Form of Opinion of Counsel to LandCARE
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<PAGE>
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (this "Agreement") is made and entered
into as of August 5, 1998 by and among LandCARE USA, Inc., a Delaware
corporation ("LandCARE"), CCI Acquisition Corp., a Texas corporation ("Newco"),
Clean Cut, Inc., a Texas corporation (the "Company"), and the persons listed on
the signature pages of this Agreement as the stockholders of the Company (the
"Stockholders"). The Stockholders are the only holders of capital stock of the
Company.
WHEREAS, the respective Boards of Directors of Newco and the Company
(collectively called the "Constituent Corporations") deem it advisable and in
the best interests of the Constituent Corporations and their respective
stockholders that Newco merge with and into the Company pursuant to this
Agreement and the applicable provisions of the laws of the State of Texas (the
"State of Incorporation"); and
WHEREAS, the Boards of Directors of the Constituent Corporations have
approved and adopted this Agreement as a plan of reorganization under Section
368 of the Internal Revenue Code of 1986, as amended (the "Code"); and
WHEREAS, on the date hereof the parties are consummating the transactions
described herein;
NOW, THEREFORE, in consideration of the premises and of the mutual
agreements contained herein, the parties hereto, intending to be legally bound,
agree as follows:
1. THE MERGER
1.1 THE MERGER. On the terms and subject to the conditions of this
Agreement, at the Effective Time (as defined below), Newco shall be merged with
and into the Company (the "Merger") and the separate existence of Newco shall
cease, all in accordance with the provisions of the law of the State of
Incorporation. The Company shall be the surviving corporation in the Merger and
is sometimes hereinafter called the "Surviving Corporation."
1.2 EFFECTIVE TIME. The Merger shall become effective at such time (the
"Effective Time") as a certificate of merger, in a form appropriate for filing,
is filed with the Secretary of State
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(or other appropriate authority) of the State of Incorporation (the "Merger
Filing"). The Merger Filing shall be made simultaneously with or as soon as
practicable after the execution and delivery of this Agreement.
1.3 ARTICLES OF INCORPORATION AND BY-LAWS OF SURVIVING CORPORATION. At the
Effective Time, the Articles of Incorporation of the Company then in effect
shall be the Articles of Incorporation of the Surviving Corporation, and the
By-laws of Newco then in effect shall become the By-laws of the Surviving
Corporation.
1.4 EFFECT OF MERGER. At the Effective Time, the effect of the Merger
shall be as provided in the law of the State of Incorporation. Except as herein
specifically set forth, the identity, existence, purposes, powers, objects,
franchises, privileges, rights and immunities of the Company shall continue
unaffected and unimpaired by the Merger and the corporate franchises, existence
and rights of Newco shall be merged with and into the Company, and the Company,
as the Surviving Corporation, shall be fully vested therewith. At the Effective
Time, the separate existence of Newco shall cease and, in accordance with the
terms of this Agreement, the Surviving Corporation shall possess all the rights,
privileges, immunities and franchises, of a public, as well as of a private,
nature, and all property, real, personal and mixed, and all debts due on
whatever account, including subscriptions to shares, and all taxes, including
those due and owing and those accrued, and all other choses in action, and all
and every other interest of or belonging to or due to the Company and Newco
shall be taken and deemed to be transferred to, and vested in, the Surviving
Corporation without further act or deed; and all property, rights and
privileges, powers and franchises and all and every other interest shall be
thereafter as effectually the property of the Surviving Corporation as they were
of the Company and Newco; and the title to any real estate, or interest therein,
whether by deed or otherwise, under the laws of the State of Incorporation
vested in the Company and Newco, shall not revert or be in any way impaired by
reason of the Merger. Except as otherwise provided herein, the Surviving
Corporation shall thenceforth be responsible and liable for all the liabilities
and obligations of the Company and Newco and any claim existing, or action or
proceeding pending, by or against the Company or Newco may be prosecuted as if
the Merger had not taken place, or the Surviving Corporation may be substituted
in their place. Neither the rights of creditors nor any liens upon the property
of the Company or Newco shall be impaired by the Merger, and all debts,
liabilities and duties of the Company and Newco shall attach to the Surviving
Corporation, and may be enforced against the Surviving Corporation to the same
extent as if said debts, liabilities and duties had been incurred or contracted
by such Surviving Corporation.
1.5 MANNER OF CONVERSION. The manner of converting the shares of (i)
outstanding capital stock of the Company ("Company Stock") and (ii) issued and
outstanding capital stock of Newco ("Newco Stock") immediately prior to the
Effective Time, respectively, into shares of (x)
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LandCARE Stock (as defined below) and (y) common stock of the Surviving
Corporation, respectively, shall be as follows:
As of the Effective Time:
1. Each share of Company Stock issued and outstanding
immediately prior to the Effective Time, by virtue of the Merger and without any
action on the part of the holder thereof, automatically shall be converted into
the right to receive its pro rata interest in the aggregate consideration
payable to all holders of Company Stock, which consideration shall consist
solely of an aggregate of One Million Six Hundred Eighty-Eight Thousand Five
Hundred Twenty-Seven (1,688,527) shares of common stock, par value $.01 per
share, of LandCARE ("LandCARE Stock");
2. All shares of Company Stock, if any, that are held by the
Company as treasury stock shall be canceled and retired, and no shares of
LandCARE Stock or other consideration shall be delivered or paid in exchange
therefor; and
3. Each share of Newco Stock issued and outstanding
immediately prior to the Effective Time, shall, by virtue of the Merger and
without any action on the part of LandCARE, automatically be converted into one
fully paid and non-assessable share of common stock of the Surviving
Corporation, which shall constitute all of the issued and outstanding shares of
common stock of the Surviving Corporation, and shall be owned by LandCARE,
immediately after the Effective Time.
1.6 DELIVERY OF CERTIFICATES. At the Closing, (i) the Stockholders shall
deliver to LandCARE the certificates representing the Company Stock, duly
endorsed in blank by the Stockholders, or accompanied by blank stock powers, and
with all necessary transfer tax and other revenue stamps, acquired at the
Stockholders' expense, affixed and canceled, and (ii) LandCARE shall cause its
stock transfer agent to deliver to the Stockholders certificates representing
the LandCARE Stock as described above. The Stockholders agree promptly to cure
any deficiencies with respect to the endorsement of the stock certificates or
other documents of conveyance with respect to such Company Stock or with respect
to the stock powers accompanying any Company Stock.
1.7 CLOSING. The transactions contemplated by this Agreement are being
consummated on the date hereof, and the date hereof is sometimes herein called
the "Closing Date."
2. REPRESENTATIONS AND WARRANTIES OF THE STOCKHOLDERS
The Stockholders jointly and severally hereby represent and warrant to
LandCARE as follows:
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<PAGE>
2.1 DUE ORGANIZATION. The Company is a corporation duly organized, validly
existing and in good standing under the laws of the State of Incorporation, and
has all requisite power and authority to carry on its business as it is now
being conducted. The Company is duly qualified to do business and is in good
standing in each jurisdiction in which the nature of its business or the
ownership or leasing of its properties makes such qualification necessary,
except where the failure to be so authorized or qualified would not have a
material adverse effect on the business, assets, operations or condition
(financial or otherwise) of the Company (as used herein with respect to the
Company, or with respect to any other person, a "Material Adverse Effect").
SCHEDULE 2.1 sets forth a list of all jurisdictions in which the Company is
authorized or qualified to do business. True, complete and correct copies of the
Articles of Incorporation and By-laws, each as amended, of the Company (the
"Charter Documents") are all attached to SCHEDULE 2.1. The stock records of the
Company, a copy of which is attached to SCHEDULE 2.1, are correct and complete
in all material respects. All records of all proceedings of the Board of
Directors and stockholders of the Company have been made available to LandCARE.
2.2 AUTHORIZATION. (i) The representative of the Company executing this
Agreement has the authority to enter into and bind the Company to the terms of
this Agreement and (ii) the Company has the full legal right, power and
authority to enter into this Agreement and the transactions contemplated hereby,
all of which have been approved by the Stockholders and the Board of Directors
of the Company. This Agreement has been validly executed and delivered by the
Company and the Stockholders and constitutes the legal, valid and binding
obligation of each of them, enforceable in accordance with its terms.
2.3 CAPITAL STOCK OF THE COMPANY. The authorized capital stock of the
Company consists solely of 100,000 shares of common stock, par value $1.00 per
share, of which 90 shares are issued and outstanding and constitute all of the
issued and outstanding shares of Company Stock (the "Shares"). All of the Shares
are owned of record and beneficially by the Stockholders and, except as set
forth on SCHEDULE 2.3, are owned free and clear of all liens, security
interests, pledges, charges, voting trusts, restrictions, encumbrances and
claims of every kind. All of the Shares have been duly authorized and validly
issued, are fully paid and nonassessable, and were offered, issued, sold and
delivered by the Company in compliance with all applicable state and federal
laws governing the issuance of securities. None of the Shares were issued in
violation of any preemptive rights or similar rights of any person. No option,
warrant, call, conversion right or commitment of any kind exists which obligates
the Company to issue any additional shares of its capital stock or obligates the
Stockholders to transfer any of the Shares to any person except pursuant to this
Agreement.
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<PAGE>
2.4 SUBSIDIARIES. Except as set forth on SCHEDULE 2.4, the Company has no
subsidiaries or d/b/a names and has not conducted business under any other name
except its legal name as set forth in its Charter Documents. Except as set forth
in SCHEDULE 2.4, the Company does not own, of record or beneficially, or
control, directly or indirectly, any capital stock, securities convertible into
capital stock or any other equity interest in any corporation, association or
other business entity, and the Company is not, directly or indirectly, a
participant in any joint venture, partnership or other non-corporate entity.
2.5 FINANCIAL STATEMENTS. Complete and correct copies of the following
financial statements are attached as SCHEDULE 2.5:
(i) The balance sheets of the Company as of December 31, 1997 (the
"Balance Sheet Date") and any related statements of operations,
stockholder's equity and cash flows for the three-year period then ended,
together with any related notes and schedules (the "Year-end Financial
Statements"); and
(ii) The balance sheet (the "Interim Balance Sheet") of the Company
as of June 30, 1998 and the related statements of operations for the
six-month period then ended (the "Interim Financial Statements"). (The
Year-end Financial Statements and the Interim Financial Statements are
herein collectively called the "Financial Statements".)
Except as set forth on SCHEDULE 2.5, the Year-end Financial Statements
have been prepared from the books and records of the Company in conformity with
generally accepted accounting principles applied on a basis consistent with
preceding years and throughout the periods involved ("GAAP"), and present fairly
in all material respects the financial position and results of operations of the
Company as of the dates of such statements and for the periods covered thereby.
The books of account of the Company have been kept accurately in all material
respects in the ordinary course of business, the transactions entered therein
represent bona fide transactions, and the revenues, expenses, assets and
liabilities of the Company have been properly recorded therein in all material
respects.
Except as set forth on SCHEDULE 2.5, to the best knowledge of the
Stockholders, the Interim Financial Statements have been prepared from the books
and records of the Company in conformity with GAAP, subject to changes resulting
from normal period-end adjustments for recurring accruals (which will not be
material individually or in the aggregate) and to the absence of footnote
disclosure and other presentation items, and present fairly in all material
respects the financial position and results of operations of the Company as of
the dates of such statements and for the periods covered thereby. The
Stockholders do not represent or warrant, and the foregoing representation shall
not
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be deemed to constitute a representation or warranty, that any one or more of
the accruals, reserves or other adjustments to the Interim Financial Statements
made in connection with the recent review thereof are correct or appropriate;
however, to the best knowledge of the Stockholders, such accruals, reserves and
other adjustments, in the aggregate, are not inaccurate or inappropriate.
2.6 LIABILITIES AND OBLIGATIONS. Except as and to the extent disclosed and
adequately provided for in the Financial Statements or on SCHEDULE 2.6 hereto,
the Company has no material liabilities or obligations of any kind, whether
accrued, absolute, secured or unsecured, contingent or otherwise.
2.7 ACCOUNTS AND NOTES RECEIVABLE. SCHEDULE 2.7 sets forth an accurate
list of the accounts and notes receivable of the Company, as of the most recent
date practicable (which date is set forth thereon), showing amounts due in
30-day aging categories. Except to the extent reflected on SCHEDULE 2.7, all
such accounts, notes and other receivables were incurred in the ordinary course
of business and are collectible in the amounts shown on SCHEDULE 2.7, net of
reserves reflected in the balance sheet as of the Balance Sheet Date.
2.8 PERMITS AND INTANGIBLES. The Company holds all licenses, franchises,
permits and other governmental authorizations required or necessary in
connection with the conduct of the Company's business, except where the failure
to hold such would not have a Material Adverse Effect on the Company. SCHEDULE
2.8 sets forth an accurate list and summary description of all such licenses,
franchises, permits and other governmental authorizations, including permits,
titles (including licenses, franchises, certificates, trademarks, trade names,
patents, patent applications and copyrights owned or held by the Company or any
of its employees (including interests in software or other technology systems,
programs and intellectual property) (collectively, the "Intangible Assets") (it
being understood and agreed that a list of all environmental permits and other
environmental approvals is set forth on SCHEDULE 2.9). The Intangible Assets and
other governmental authorizations listed on SCHEDULES 2.8 and 2.9 are valid, and
the Company has not received any notice that any person intends to cancel,
terminate or not renew any such Intangible Assets or other governmental
authorization. The Company has conducted and is conducting its business in
compliance in all material respects with the requirements, standards, criteria
and conditions set forth in the Intangible Assets and other governmental
authorizations listed on SCHEDULES 2.8 and 2.9 and is not in violation of any of
the foregoing. Except as specifically set forth on SCHEDULE 2.8 or 2.9, the
transactions contemplated by this Agreement will not result in a material
default under or a material breach or material violation of, or adversely affect
the rights and benefits afforded to the Company by, any such Intangible Assets
or other governmental authorizations.
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<PAGE>
2.9 ENVIRONMENTAL MATTERS. The Company has complied with and is in
compliance with all federal, state, local and foreign statutes (civil and
criminal), laws, ordinances, regulations, rules, notices, permits, judgments,
orders and decrees applicable to any of them or any of their respective
properties, assets, operations and businesses relating to environmental
protection (collectively "Environmental Laws"), including, without limitation,
Environmental Laws relating to air, water, land and the generation, storage,
use, handling, transportation, treatment or disposal of Hazardous Wastes,
Hazardous Materials and Hazardous Substances (including petroleum and petroleum
products) (as such terms are defined in any applicable Environmental Law) except
to the extent that noncompliance with any Environmental Laws, either singly or
in the aggregate, has not had and will not have a Material Adverse Effect on the
Company or any of its operations. The Company has obtained and adhered to in all
material respects all necessary permits and other approvals necessary to treat,
transport, store, dispose of and otherwise handle Hazardous Wastes, Hazardous
Materials and Hazardous Substances, a list of all of which permits and approvals
is set forth on SCHEDULE 2.9, and have reported to the appropriate authorities,
to the extent required by all Environmental Laws, all past and present sites
owned and operated by the Company where Hazardous Wastes, Hazardous Materials or
Hazardous Substances have been treated, stored, disposed of or otherwise
handled. There have been no releases or threats of releases (as defined in
Environmental Laws) by the Company and, to the knowledge of the Stockholders, by
other parties, at, from, in, under or on any property owned or operated by the
Company except as permitted by Environmental Laws. There is no on-site or, to
the knowledge of the Stockholders, off-site location to which the Company has
transported or disposed of Hazardous Wastes, Hazardous Materials or Hazardous
Substances or arranged for the transportation of Hazardous Wastes, Hazardous
Materials or Hazardous Substances which is the subject of any federal, state,
local or foreign enforcement action or any other investigation which could lead
to any claim against the Company or LandCARE for any clean-up cost, remedial
work, damage to natural resources, property damage or personal injury,
including, but not limited to, any claim under (i) the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as amended, (ii)
the Resource Conservation and Recovery Act, as amended, (iii) the Hazardous
Materials Transportation Act, as amended, or (iv) comparable state or local
statutes and regulations.
2.10 PERSONAL PROPERTY. SCHEDULE 2.10 sets forth an accurate list of (a)
all personal property included in "plant, property and equipment" or any similar
category on the balance sheet of the Company, (b) all other personal property
owned by the Company with a fair market value in excess of $10,000, and (c) all
leases and material agreements with respect to personal property, copies of
which have been delivered to LandCARE. SCHEDULE 2.10 indicates which assets are
currently owned, or were formerly owned, by the Stockholders or any affiliate of
the Company or the Stockholders. Except as set forth on SCHEDULE 2.10, (i) all
material personal property used by the Company in its business is either owned
by the Company or leased by the Company pursuant
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to a lease included on SCHEDULE 2.10, (ii) all of the personal property listed
on SCHEDULE 2.10 is in good working order and condition, ordinary wear and tear
excepted and (iii) all leases and agreements included on SCHEDULE 2.10 are in
full force and effect and constitute valid and binding agreements of the Company
and, to the knowledge of the Stockholders, of the other parties thereto (and
their successors) in accordance with their respective terms. Except as set forth
on SCHEDULE 2.10, the Company has good and marketable title to the tangible and
intangible personal property it purports to own, subject to no security
interest, pledge, lien, claim, conditional sales agreement, encumbrance, charge
or restriction on transfer that would have a Material Adverse Effect on the
Company.
2.11 SIGNIFICANT CUSTOMERS; MATERIAL CONTRACTS AND COMMITMENTS. SCHEDULE
2.11 sets forth a list of (i) all customers representing 5% or more of the
Company's revenues in its last full fiscal year ("Significant Customers"), and
(ii) all Material Contracts (as defined below) to which the Company is a party
or by which it or any of its properties are bound. For purposes of this
Agreement, the term "Material Contracts" mean any contracts between the Company
and its Significant Customers, joint venture or partnership agreements,
contracts with labor organizations, strategic alliances, options to purchase
land and other contracts which are not terminable on 60 days or less notice and
involve payments by the Company in any 12-month period in excess of $25,000.
True, complete and correct copies of such agreements have been delivered to
LandCARE. Except as described on SCHEDULE 2.11, (i) none of the Significant
Customers have canceled or substantially reduced or, to the knowledge of the
Stockholders, are currently attempting or threatening to cancel a contract or
substantially reduce utilization of the services provided by the Company, and
(ii) the Company has complied in all material respects with all commitments and
obligations pertaining to it, and is not in material default under any contracts
or agreements listed on SCHEDULE 2.11 and no notice of default under any such
contract or agreement has been received. The transactions contemplated by this
Agreement will not result in a material default under or a material breach or
material violation of, or materially adversely affect the rights and benefits
afforded to the Company by, any such contracts or agreements. SCHEDULE 2.11 also
includes a summary description of all plans or projects relating to the
Company's business involving the opening of new operations, expansion of
existing operations, the acquisition of any property, business or assets
requiring, in any event, the payment of more than $50,000 in the aggregate.
2.12 REAL PROPERTY. SCHEDULE 2.12 includes a list of all real property
owned or leased by the Company at the date hereof (the "Real Property"), and all
other real property, if any, used by the Company in the conduct of its business.
True, complete and correct copies of all leases and agreements with respect to
Real Property leased by the Company have been delivered to LandCARE, and an
indication as to which such properties, if any, are currently owned, or were
formerly owned, by the Stockholders or any affiliates of the Company or the
Stockholders is included in SCHEDULE
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2.12. The Company has good, marketable, and indefeasible title in fee simple to
the Real Property it purports to own, free and clear of all liens (except those
liens that will be released at or before the Closing Date, and except for (i)
liens for current taxes not yet payable and assessments not in default, (ii)
easements for utilities serving the Real Property, and (iii) easements,
covenants and restrictions and other exceptions to title that do not materially
and adversely affect the current use of the Real Property), and no party, except
as herein set forth, has or shall have any rights in, or to acquire, the Real
Property. All leases relating to Real Property leased by the Company from any of
the Stockholders or any affiliate of any of the Stockholders has been
terminated. Except as set forth on SCHEDULE 2.12, all of such leases included on
SCHEDULE 2.12 are in full force and effect and constitute valid and binding
agreements of the Company and, to the knowledge of the Stockholders, of the
parties (and their successors) thereto in accordance with their respective
terms. There are no leases, tenancy agreements, easements, covenants,
restrictions or any other instruments, agreements or arrangements which create
in or confer on any party, other than the Company, the right to occupy or
possess all or any portion of the Real Property or create in or confer on any
such party any right, title or interest in or to the Real Property or any
portion thereof or any interest therein except where such would not have a
Material Adverse Effect on the Company's use of such Real Property; no party
other than the Company occupies or possesses the Real Property or any portion
thereof; there is legal and adequate ingress and egress between each tract of
Real Property and an adjacent (or, if none, the closest) public roadway; the
Real Property is properly zoned in order to allow its current use in the
Company's businesses; and there are no claims or demands pending or, to the
knowledge of the Stockholders, threatened by any party against the Real Property
which, if valid, would create in, or confer on, any party other than the
Company, any material right, title or interest in or to the Real Property or any
portion thereof. None of the buildings, structures or improvements described on
SCHEDULE 2.12, or the operation or maintenance thereof as now operated or
maintained, contravenes, in any material respect, any zoning ordinance or other
administrative regulation or violates any restrictive covenant or any provision
of law, the effect of which would materially interfere with or prevent their
continued use for the purposes for which they are now being used or would
adversely affect the value thereof or the interest of the Company therein. The
buildings, structures, and improvements (i) have been constructed in a good and
workmanlike manner, free from material defects in workmanship and material and,
to the Stockholders' knowledge, do not require any repair or replacement other
than minor, routine maintenance; and (ii) have been constructed and are being
occupied, maintained, and operated in compliance in all material respects with
all applicable laws, regulations, insurance requirements, contracts, leases,
permits, licenses, ordinances, restrictions, building setback lines, covenants,
reservations, and easements, and the Company has received no notice, written or
oral, claiming any violation of any of the same or requesting or requiring the
performance of any repairs, alterations, or other work in order to so comply. A
certificate of occupancy has been duly issued to the Company (or to the
partnership from which the Company acquired the Real Property, in which case
such certificate of occupancy shall
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be transferred to the Company as promptly as may be practicable) with regard to
the improvements owned or occupied by the Company. The Stockholders have
furnished to LandCARE a true and correct copy of all owner's policies of title
insurance and surveys pertaining to the real property owned by the Company to
the extent such exist.
2.13 INSURANCE. SCHEDULE 2.13 sets forth an accurate list as of the date
hereof of all insurance policies now carried by the Company and an accurate list
of all insurance loss runs and workers compensation claims received for the past
three policy years. True, complete and correct copies of all insurance policies
currently in effect have been delivered to LandCARE. Such insurance policies
evidence all of the insurance that the Company is required to carry pursuant to
all of its contracts and other agreements and pursuant to all applicable laws.
Except as set forth on SCHEDULE 2.13, none of such policies is a "claims made"
policy.
2.14 COMPENSATION; EMPLOYMENT AGREEMENTS; ORGANIZED LABOR MATTERS.
SCHEDULE 2.14 sets forth an accurate list showing all officers, directors and
key employees of the Company, listing all employment agreements with such
officers, directors and key employees and the rate of compensation (and the
portions thereof attributable to salary, bonus and other compensation,
respectively) of each of such persons as of the Balance Sheet Date. Except as
set forth on SCHEDULE 2.14, since the Balance Sheet Date, there have been no
increases in the base compensation payable or any special bonuses to any
officer, director, key employee or other employee.
Except as set forth on SCHEDULE 2.14, (i) the Company is not bound by or
subject to (and none of its respective assets or properties is bound by or
subject to) any arrangement with any labor union, (ii) no employees of the
Company are represented by any labor union or covered by any collective
bargaining agreement, (iii) to the knowledge of the Stockholders, no campaign to
establish such representation is in progress and (iv) there is no pending or, to
any Stockholder's knowledge, threatened, labor dispute involving the Company and
any group of its employees. The Company has not experienced any labor
interruptions over the past five years that have had a Material Adverse Effect
on the Company.
2.15 EMPLOYEE BENEFIT PLANS. SCHEDULE 2.15 sets forth an accurate schedule
showing all "employee benefit plans" (as defined in Section 3(3) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA")) of Company,
including all agreements or arrangements (other than agreements or arrangements
set forth on SCHEDULE 2.14) containing "golden parachute" or other similar
provisions, and deferred compensation agreements. With respect to each employee
benefit plan, the Company has furnished to LandCARE true, complete and correct
copies of such plans, agreements and any trusts related thereto, and
classifications of employees covered thereby as of the Balance Sheet Date.
Except for the employee benefit plans, if any, described on SCHEDULE 2.15, the
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Company does not sponsor, maintain or contribute to any plan, program, fund or
arrangement that constitutes an "employee pension benefit plan," as such term is
defined in Section 3(2) of ERISA, a defined benefit plan (as defined in section
3(35) of ERISA), a multiemployer plan (as defined in section 3(37)(A) of ERISA),
nor does the Company have any obligation to contribute to or accrue or pay any
benefits under any deferred compensation or retirement funding arrangement on
behalf of any employee or employees (such as, for example, and without
limitation, any individual retirement account or annuity, any "excess benefit
plan" (within the meaning of Section 3(36) of ERISA), or any non-qualified
deferred compensation arrangement). The Company has not sponsored, maintained or
contributed to any employee pension benefit plan and is not required to
contribute to any retirement plan pursuant to the provisions of any collective
bargaining agreement establishing the terms and conditions of employment of any
of the Company's employees other than the plans set forth on SCHEDULE 2.15.
The Company is not now, and will not as a result of its past activities
become, liable to the Pension Benefit Guaranty Corporation (the "PBGC") or to
any multi employer employee pension benefit plan under the provisions of Title
IV of ERISA. All employee benefit plans listed on SCHEDULE 2.15 and the
administration thereof are in substantial compliance with their terms and all
applicable provisions of ERISA and the regulations issued thereunder, as well as
with all other applicable federal, state and local statutes, ordinances and
regulations. All accrued contribution obligations of the Company with respect to
any plan listed on SCHEDULE 2.15 have either been fulfilled in their entirety or
are fully reflected on the balance sheet of the Company as of the Balance Sheet
Date. All plans listed on SCHEDULE 2.15 that are intended to qualify (the
"Qualified Plans") under Section 401(a) of the Code, are, and have been, so
qualified and have been determined by the Internal Revenue Service to be so
qualified. Except as disclosed on SCHEDULE 2.15, all reports and other documents
required to be filed with any governmental agency or distributed to plan
participants or beneficiaries have been timely filed or distributed, and the
most recent copies thereof are included as part of SCHEDULE 2.15. Neither the
Stockholders, nor any plan listed in SCHEDULE 2.15 nor the Company has engaged
in any transaction prohibited under the provisions of Section 4975 of the Code
or Section 406 of ERISA. No plan listed on SCHEDULE 2.15 has incurred an
accumulated funding deficiency, as defined in Section 412(a) of the Code and
Section 302(1) of ERISA; and the Company has not incurred any liability for
excise tax or penalty due to the Internal Revenue Service or any liability to
the PBGC. There have been no terminations, partial terminations or
discontinuance of contributions to any such Qualified Plan intended to qualify
under Section 401(a) of the Code without notice to and approval by the Internal
Revenue Service; no plan listed on SCHEDULE 2.15 subject to the provisions of
Title IV of ERISA has been terminated; there have been no "reportable events"
(as that phrase is defined in Section 4043 of ERISA) with respect to any such
plan listed on SCHEDULE 2.15; the Company has not incurred liability under
Section 4062 of ERISA; and no circumstances exist pursuant to which the Company
could have any direct or indirect liability
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whatsoever (including, but not limited to, any liability to any multi employer
plan or the PBGC under Title IV of ERISA or to the Internal Revenue Service for
any excise tax or penalty, or being subject to any statutory lien to secure
payment of any such liability) with respect to any plan now or heretofore
maintained or contributed to by any entity other than the Company that is, or at
any time was, a member of a "controlled group" (as defined in Section
412(n)(6)(B) of the Code) that includes the Company.
2.16 CONFORMITY WITH LAW; LITIGATION. Except as set forth on SCHEDULE
2.16, there are no claims, actions, suits or proceedings pending or, to the
knowledge of the Stockholders, threatened, against or affecting the Company (as
any of its officers and directors in their capacities as such), at law or in
equity, or before or by any federal, state, municipal or other governmental
department, commission, board, bureau, agency or instrumentality having
jurisdiction over the Company. Except as set forth on SCHEDULE 2.16, no notice
of any unresolved claim, action, suit or proceeding, whether pending or
threatened, has been received by the Company during the last five years and, to
the knowledge of the Stockholders, there is no basis for any such claim, action,
suit or proceeding that would have a Material Adverse Effect on the Company.
Except as set forth on SCHEDULE 2.16, there are no outstanding judgments,
orders, writs, injunctions or decrees against the Company. Except as set forth
on SCHEDULE 2.16, the Company has conducted and now conducts its business in
material compliance with all laws, regulations, writs, injunctions, decrees and
orders applicable to the Company or its assets. The Company is not in violation
of any material law or regulation or any order of any court or federal, state,
municipal or other governmental department, commission, board, bureau, agency or
instrumentality having jurisdiction over any of them. The Company has conducted
and is conducting its business in substantial compliance with the requirements,
standards, criteria and conditions set forth in applicable federal, state and
local statutes, ordinances, permits, licenses, orders, approvals, variances,
rules and regulations, including all such permits, licenses, orders and other
governmental approvals set forth on SCHEDULES 2.8 and 2.9.
2.17 TAXES. For purposes of this Agreement, the term "Taxes" shall mean
all taxes, charges, fees, levies or other assessments, including, without
limitation, income, gross receipts, excise, property, sales, withholding, social
security, unemployment, occupation, use, service, license, payroll, franchise,
transfer and recording taxes, fees and charges, imposed by the United States or
any state, local or foreign government or subdivision or agency thereof ("Taxing
Authority"), whether computed on a separate, consolidated, unitary, combined or
any other basis; and such term shall include any interest, fines, penalties or
additional amounts attributable to or imposed with respect to any such taxes,
charges, fees, levies or other assessments. As used herein, the term "Company
Subsidiaries" means the subsidiaries, if any, of the Company; it being
understood that there may be no such subsidiaries.
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All Tax returns ("Returns") required to be filed with respect to any Tax
for which any of the Company and the Company Subsidiaries (if any) is liable
have been duly and timely filed with the appropriate Taxing Authority, each Tax
shown to be payable on each such Return has been paid, each Tax payable by the
Company or a Company Subsidiary by assessment has been timely paid in the amount
assessed, and adequate reserves have been established on the consolidated books
of the Company and the Company Subsidiaries for all Taxes for which any of the
Company and the Company subsidiaries is liable, but the payment of which is not
yet due. Neither the Company nor any Company Subsidiary is, or ever has been,
liable for any Tax payable by reason of the income or property of a person or
entity other than the Company or a Company Subsidiary. Each of the Company and
the Company Subsidiaries has timely filed true, correct and complete
declarations of estimated Tax in each jurisdiction in which any such declaration
is required to be filed by it. No Liens for Taxes exist upon the assets of the
Company or any Company Subsidiary except Liens for Taxes which are not yet due.
Neither the Company nor any Company Subsidiary is, or ever has been, subject to
Tax in any jurisdiction outside the United States. Except as set forth on
SCHEDULE 2.17, no litigation with respect to any Tax for which the Company or
any Company Subsidiary is asserted to be liable is pending or, to the knowledge
of the Company or any Stockholder, threatened, and no basis which the Company or
any Stockholder believes to be valid exists on which any claim for any such Tax
can be asserted against the Company or any Company Subsidiary. There are no
requests for rulings or determinations in respect of any Taxes pending between
the Company or any Company Subsidiary and any Taxing Authority. No extension of
any period during which any Tax may be assessed or collected and for which the
Company or any Company Subsidiary is or may be liable has been granted to any
Taxing Authority. Neither the Company nor any Company Subsidiary is or has been
party to any tax allocation or sharing agreement. All amounts required to be
withheld by any of the Company and the Company Subsidiaries and paid to
governmental agencies for income, social security, unemployment insurance,
sales, excise, use and other Taxes have been collected or withheld and paid to
the proper Taxing Authority. The Company and each Company Subsidiary have made
all deposits required by law to be made with respect to employees' withholding
and other employment Taxes. Neither the Company nor any Stockholder is a
"foreign person," as that term is referred to in Section 1445(f)(3) of the Code.
The Company has not filed a consent pursuant to Section 341 (f) of the Code or
any comparable provision of any other tax statute and has not agreed to have
Section 341 (f)(2) of the Code or any comparable provision of any other Tax
statute apply to any disposition of an asset. The Company has not made, is not
obligated to make and is not a party to any agreement that could require it to
make any payment that is not deductible under Section 280G of the Code. No asset
of the Company or of any Company Subsidiary is subject to any provision of
applicable law which eliminates or reduces the allowance for depreciation or
amortization with respect to that asset below the allowance generally available
to an asset of its type. Except as previously disclosed to LandCARE, no
accounting method changes of the Company or of any Company Subsidiary exist or
are proposed or threatened which could give
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rise to an adjustment under Section 481 of the Code. The Company uses the cash
method of accounting for income tax purposes, and the Company's methods of
accounting have not changed in the past five years. The Company is not an
investment company as defined in Section 351(e)(1) of the Code. The Company has
a taxable year ended December 31 and has not made an election to retain a fiscal
year other than December 31 under Section 444 of the Code. The Company is not
party to any joint venture, partnership, or other arrangement that is treated as
a partnership for federal income tax purposes.
The Stockholders made a valid election under the provisions of Subchapter
S of the Code, and the Company has not, since its formation, been subject to
taxation under the provisions of Subchapter C of the Code or under Section 11 or
Section 1374 of the Code. Neither any of the Stockholders nor the Company has
taken any action that terminated the Subchapter S election, which remains in
effect on the date hereof.
2.18 NO VIOLATIONS; ALL REQUIRED CONSENTS OBTAINED. The Company is not in
violation of any of its Charter Documents. Neither the Company nor, to the
knowledge of the Stockholders, any other party thereto is in material default
under any material lease, instrument, license, permit or agreement to which the
Company is a party or by which its properties are bound (the "Material
Documents"). Except as set forth on SCHEDULE 2.18, (a) the execution of this
Agreement by the Company and the Stockholders and the performance by the Company
and the Stockholders of their obligations hereunder and the consummation of the
transactions contemplated hereby will not result in any violation or breach or
constitute a default under any of the terms or provisions of the Material
Documents or the Charter Documents, and (b) at and after the Closing Date the
Company will be entitled to the rights and benefits under the Material Documents
to which the Company is entitled immediately prior to the Closing. Except as set
forth on SCHEDULE 2.18 (and except for consents already obtained), none of the
Material Documents requires notice to, or the consent or approval of, any
governmental agency or other third party with respect to any of the transactions
contemplated hereby in order to remain in full force and effect, and
consummation of the transactions contemplated hereby will not give rise to any
right to termination, cancellation or acceleration or loss of any right or
benefit. Except as set forth on SCHEDULE 2.18, none of the Material Documents
prohibits or restricts the Company or will prevent or restrict the Company or
LandCARE from freely providing services to any person.
2.19 ABSENCE OF CHANGES. Since the Balance Sheet Date, the Company has
conducted its operations in the ordinary course of business and, except as set
forth on SCHEDULE 2.19, there has not been:
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(i) any change in the business, assets, liabilities or financial
condition of the Company which would have a Material Adverse Effect;
(ii) any damage, destruction or loss (whether or not covered by
insurance) affecting any of the material assets of the Company or the
business of the Company which would have a Material Adverse Effect;
(iii) any change in the authorized capital of the Company or its
outstanding securities or any change in its ownership interests or any
grant of any options, warrants, calls, conversion rights or commitments;
(iv) any declaration or payment of any dividend or distribution with
respect to the capital stock or any direct or indirect redemption,
purchase or other acquisition of any of the capital stock of the Company;
(v) any increase or commitment to increase the compensation, bonus,
sales commissions or fee arrangement payable or to become payable by the
Company to any of its officers, directors, stockholders, employees,
consultants or agents;
(vi) any work interruptions, labor grievances or claims filed, or
any event or condition of any character, that would have a Material
Adverse Effect on the business of the Company;
(vii) any sale or transfer, or any agreement to sell or transfer,
any material assets, property or rights of the Company to any person;
(viii)any cancellation, or agreement to cancel, any material
indebtedness or other material obligation owing to the Company;
(ix) any plan, agreement or arrangement granting any preferential
rights to purchase or acquire any interest in any of the assets, property
or rights of the Company or requiring consent of any party to the transfer
and assignment of any such assets, property or rights;
(x) any purchase or acquisition of, or agreement, plan or
arrangement to purchase or acquire, any property, rights or assets outside
of the ordinary course of the Company's business;
(xi) any waiver of any material rights or claims of the Company;
(xii) any amendment or termination of any contract, agreement,
license, permit or
other right to which the Company is a party which would have a Material
Adverse Effect; (xiii)any contract, commitment or liability entered
into or incurred or any capital
expenditures made except in the normal course of business consistent with
past practice in an aggregate amount not in excess of $100,000; or
(xiv) any transaction by the Company outside the ordinary course of
its business.
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2.20 POWERS OF ATTORNEY. SCHEDULE 2.20 sets forth a schedule as of the
date of this Agreement of the name of each person, corporation, firm or other
entity holding any general or special power of attorney from the Company and a
description of the terms of each such power.
2.21 COMPETING LINES OF BUSINESS; RELATED-PARTY TRANSACTIONS. Except as
set forth on SCHEDULE 2.21, neither the Stockholders nor any other Affiliate of
the Company owns, directly or indirectly, any interest in, or is an officer,
director, employee or consultant of or otherwise receives remuneration from, any
business which is a competitor, lessor, lessee, customer or supplier of the
Company. Except as set forth on SCHEDULE 2.21, no officer, director or
stockholder of the Company has, nor during the period beginning January 1, 1995
through the date hereof had, any interest in any property, real or personal,
tangible or intangible, used in or pertaining to the Company's business.
2.22 DISCLOSURE. The Stockholders have provided LandCARE with all the
information that LandCARE has requested in analyzing whether to consummate the
transactions contemplated hereby. None of the information so provided nor any
representation or warranty of the Stockholders contained in this Agreement
contains any untrue statement or omits to state a material fact necessary in
order to make the statements herein or therein, in light of the circumstances
under which they were made, not misleading. There is no fact known to the
Stockholders at the date hereof which has specific application to the Company or
its business or assets (other than general economic or industry conditions)
which, within one year after the Closing Date, would have a Material Adverse
Effect on the Company or its business or assets, or the condition (financial or
otherwise) or results of operations of the Company, which has not been described
in the Schedules hereto.
2.23 CERTAIN BUSINESS PRACTICES. Neither the Company nor any person acting
on behalf of the Company has given or offered anything of value to any
governmental official, political party or candidate for government office nor
has it or any of them otherwise taken any action which would cause the Company
to be in violation of the Foreign Corrupt Practices Act of 1977, as amended, or
any law of similar effect.
2.24 NO NOTICE TO BARGAINING AGENTS. The Company has no collective
bargaining agreements.
2.25 NOTICES AND CONSENTS. Except as set forth on SCHEDULE 2.25, no
material agreement to which the Company is a party requires the Company to
either give notices to third parties or obtain any third party consents in order
to consummate the transactions contemplated hereby.
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2.26 YEAR 2000 COMPLIANCE. The properties and assets of the Company,
including, but not limited to, computer hardware, microprocessor driven
equipment, software and data, owned or used by the Company will accurately
process in all material respects date and time data after December 31, 1999, and
the Company will suffer no material loss of functional ability when processing
dates and related data outside the 1900-1999 year range.
2.27 RELIANCE UPON ORAL REPRESENTATIONS. The Company and the Stockholders
each represent and warrant: (a) that each has been fully informed by his or its
legal counsel and by his or its own independent judgment of the terms,
conditions and effects of this Agreement; (b) that each has been represented by
independent legal counsel of his or its choice throughout all negotiations
preceding the execution of this Agreement and has received the advice of his or
its attorney in entering into this Agreement; (c) that each, both personally and
through his or its independently- retained attorneys, is fully satisfied with
the terms and effects of this Agreement; (d) that no promise or inducement has
been offered or made to him or it except as expressly stated in this Agreement;
and (e) that this Agreement is executed without reliance on any oral statement
or oral representation by any other party or any other party's agent or
attorney.
2.28 SOFTWARE. The Stockholders have delivered to the Company all right,
title and interest in the software owned by the Stockholders or an affiliate of
the Stockholders so that the Company shall be entitled to use such software
perpetually at no cost whatsoever. LandCare and the Company understand that
vendors may offer upgrades to such software from time to time, and that the
Company may elect to acquire such upgrades at the Company's expense.
3. REPRESENTATIONS OF LANDCARE AND NEWCO
Each of LandCARE and Newco represents and warrants as follows:
3.1 DUE ORGANIZATION. Each of LandCARE and Newco is a corporation duly
organized, validly existing and in good standing under the laws of Delaware and
the State of Incorporation, respectively, and has all requisite corporate power
and authority to carry on its business as it is now being conducted. Each of
LandCARE and Newco is duly qualified and is in good standing to do business in
each jurisdiction in which the nature of its business or the ownership or
leasing of its properties makes such qualification necessary, except where the
failure to be so authorized or qualified would not have a Material Adverse
Effect on LandCARE.
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3.2 AUTHORIZATION. (i) The representatives of each of LandCARE and Newco
executing this Agreement has the authority to enter into and bind each of
LandCARE and Newco, respectively, to the terms of this Agreement and (ii) each
of LandCARE and Newco has the full legal right, power and authority to enter
into this Agreement and the transactions contemplated hereby, all of which have
been duly authorized by all necessary corporate action and no other corporate
proceedings on the part of either of LandCARE or Newco is necessary to authorize
this Agreement or to consummate the transactions contemplated hereby. This
Agreement has been validly executed and delivered by each of LandCARE and Newco
and constitutes the legal, valid and binding obligation of each of the them,
enforceable in accordance with its terms.
3.3 CAPITAL STOCK OF LANDCARE AND NEWCO.
(a) The authorized capital stock of LANDCARE consists solely of
107,000,000 shares of capital stock, including (i) 100,000,000 shares of
LandCARE Stock, of which, as of July 14, 1998, 13,381,943 shares were issued and
outstanding and constituted all of the issued and outstanding shares of LandCARE
Common Stock; (ii) 2,000,000 shares of Restricted Voting Common Stock, of which,
as of July 14, 1998, 1,296,408 shares were issued and outstanding and are
included in the 13,381,943 figure set forth above, and (iii) 5,000,000 shares of
preferred stock, par value $0.01 per share, of which no shares are issued and
outstanding. The outstanding shares of capital stock of LandCARE are duly
authorized and validly issued, are fully paid and nonassessable, and have not
been issued in violation of (nor are any of the authorized shares of capital
stock of LandCARE subject to) any preemptive or similar rights created by
statute, the charter or bylaws of LandCARE, or any agreement to which LandCARE
is a party or bound. LandCARE owns all the outstanding capital stock of Newco
and all of the outstanding capital stock of each of its subsidiaries, free and
clear of all security interests, liens, claims, pledges, agreements, charges or
other encumbrances of any nature whatsoever.
(b) Except pursuant to the LandCARE Option Plans (collectively, the
"LandCARE Option Plans"), or as set forth in or contemplated by the SEC Reports
(as defined below), as of July 31, 1998 there are no options, warrants or other
rights, agreements, arrangements or commitments of any character to which
LandCARE is a party relating to the issued or unissued capital stock of LandCARE
or obligating LandCARE to grant, issue or sell any shares of its capital stock,
by sale, lease, license or otherwise. As contemplated by the SEC Reports,
LandCare is a party to a number of letters of intent relating to potential
transactions involving potential issuances of capital stock of LandCare, and may
be a party to one or more definitive agreements relating to such potential
transactions, any or all of which may involve LandCare's intention, whether or
not reduced to binding commitments, to issue shares of capital stock of LandCare
or to grant options to acquire shares of capital stock of
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LandCare. Except as set forth in the SEC Reports (as defined below), there are
no obligations, contingent or otherwise, of LandCARE to repurchase, redeem or
otherwise acquire any of either of their shares of stock. There are no voting
trusts, proxies or other agreements or understandings to which LandCARE is a
party or by which LandCARE is bound with respect to the voting of any shares of
its capital stock.
(c) The shares of LandCARE Stock to be issued pursuant to the Merger
will be duly authorized, validly issued, fully paid and nonassessable and not
subject to preemptive rights created by statute, LandCARE's charter or bylaws or
any agreement to which LandCARE is a party or is bound.
(d) The shares of LandCARE Stock to be issued in the Merger will be
at the Effective Time, approved for listing on the New York Stock Exchange
("NYSE") and duly registered or qualified under federal and applicable state
securities laws.
3.4 NO CONFLICT; REQUIRED FILINGS AND CONSENTS.
(a) The execution and delivery of this Agreement by each of LandCARE
and Newco does not, and the consummation by LandCARE and Newco of the
transactions contemplated hereby will not (i) conflict with or violate the
charter or bylaws, in each case as amended or restated, of LandCARE or any of
LandCARE's subsidiaries, (ii) conflict with or violate any laws, regulations, or
any order of any court or federal, state, municipal or other governmental
department, commission, board, bureau, agency or instrumentality having
jurisdiction over and applicable to LandCARE or any of LandCARE's subsidiaries
or by which any of their properties is bound or subject, or (iii) result in any
breach of or constitute a default (or an event that with notice or lapse of time
or both would become a default) under, or give to others any rights of
termination, amendment, acceleration or cancellation of, or result in the
creation of a lien or encumbrance on any of the properties or assets of LandCARE
or any of LandCARE's subsidiaries pursuant to, any note, bond, mortgage,
indenture, contract, agreement, lease, license, permit, franchise or other
instrument or obligation to which LandCARE or any of LandCARE's subsidiaries is
a party or by or to which LandCARE or any of LandCARE's subsidiaries or any of
their respective properties is bound or subject, except in the case of clauses
(ii) and (iii) above, any conflict, violation, breach, default, lien or
encumbrance that would not have a Material Adverse Effect on LandCARE or any of
its operations.
(b) The execution and delivery of this Agreement by each of LandCARE
and Newco does not, and the consummation of the transactions contemplated hereby
will not, require LandCARE or any of its subsidiaries to obtain any consent,
license, permit, approval, waiver,
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authorization or order of, or to make any filing with or notification to, any
federal, state, municipal or other governmental entity, except for the filing
and recordation of appropriate merger documents as required by the State of
Texas, any filings that may be required as a result of the legal or regulatory
status of LandCARE or Newco, consents already obtained, and any consent,
license, permit, approval, authorization, order, filing or notification that if
not obtained or made would not have a Material Adverse Effect.
3.5 REPORTS; FINANCIAL STATEMENTS. LandCARE and its subsidiaries have
filed all forms, reports, statements and other documents required to be filed
with the Securities and Exchange Commission ("SEC") pursuant to the Securities
Act of 1933, as amended, and the Securities Exchange Act of 1934, as amended,
including, without limitation, (i) all filings made in connection with its
initial public offering, the Registration Statement No. 333-58487 on Form S-1
(the "Shelf S-1"), or otherwise, (ii) all Annual Reports on Form l0-K, (iii) all
Quarterly Reports on Form 10-Q, (iv) all proxy statements relating to meetings
of stockholders (whether annual or special), and (v) all Current Reports on Form
8-K (collectively, the "SEC Reports"). LandCARE has made available to the
Company complete and correct copies of all SEC Reports filed by LandCARE. The
SEC Reports, (x) were prepared, as of the time they were filed, in all material
respects in accordance with the requirements of applicable laws and regulations
and (y) did not at the time they were filed, contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
3.6 ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as disclosed in the SEC
Reports or as contemplated by this Agreement, (a) neither LandCARE nor any of
its subsidiaries has any liabilities or obligations of any kind which would have
a Material Adverse Effect on LandCARE or any of its operations and (b) since May
6, 1998, there has not been any Material Adverse Effect on LandCARE or any of
its operations.
3.7 ABSENCE OF LITIGATION. Except as set forth in the SEC Reports, there
are no claims, actions, suits, or proceedings pending, or, to the knowledge of
LandCARE, threatened, against or affecting LandCARE (or any of its officers or
directors in their capacities as such), at law or in equity, or before or by any
federal, state, municipal or other governmental department, commission, board,
bureau, agency or instrumentality having jurisdiction over LandCARE that would
have a Material Adverse Effect on LandCARE or any of its operations.
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3.8 TAX MATTERS; POOLING. None of LandCARE nor any of its subsidiaries has
knowingly taken or agreed to take any action that would prevent the Merger (a)
from constituting a reorganization qualifying under the provisions of section
368(a) of the Code or (b) from being treated as a pooling transaction for
financial accounting purposes.
3.9 VOTE REQUIRED. No vote of the holders of any class or series of
LandCARE capital stock is required to approve the Merger and adopt this
Agreement. LandCARE, as the sole stockholder of Newco, has approved the Merger
and adopted this Agreement.
3.10 NEWCO. Except for liabilities incurred in connection with its
organization, the Merger and the negotiation and consummation of the
transactions contemplated by this Agreement, Newco has not incurred any
liabilities or obligations of any kind nor engaged in any material business
activities or entered into any material agreement or arrangements.
4. DELIVERIES
4.1 INSTRUMENTS OF TRANSFER. The Stockholders are delivering to LandCARE
certificates representing all of the Shares, duly endorsed (or accompanied by
duly executed stock powers).
4.2 CERTIFICATE OF MERGER. The appropriate parties hereto are executing
and delivering for filing with the appropriate authorities a certificate of
merger for purposes of effecting the Merger in the form of Annex I.
4.3 EMPLOYMENT AGREEMENT. The Company and the persons identified in
SCHEDULE 4.3 are entering into Employment Agreements in the form of Annex II.
4.4 OPINION OF COUNSEL. Counsel to the Company and the Stockholders is
delivering an opinion to LandCARE dated the date hereof in the form attached
hereto as Annex III. Counsel to LandCARE is delivering an opinion to the
Stockholders dated the date hereof in the form attached hereto as Annex IV.
4.5 GOOD STANDING CERTIFICATES. The Stockholders are delivering to
LandCARE certificates, dated as of a date no earlier than ten days prior to the
date hereof, duly issued by the appropriate governmental authority in the State
of Incorporation and in each state in which the Company is authorized to do
business, showing the Company to be in good standing and authorized to do
business therein.
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4.6 INDEBTEDNESS TO COMPANY. The Stockholders and their Affiliates are
repaying any outstanding indebtedness they may have to the Company.
4.7 CONSENTS. The Stockholders are delivering to LandCARE copies of any
third party consents required in connection with the consummation of the
transactions contemplated hereby.
4.8 RESIGNATIONS OF DIRECTORS AND OFFICERS. The Stockholders are
delivering to LandCARE the resignations of such directors and officers of the
Company as have been requested by LandCARE.
4.9 ACCOUNTING TREATMENT. LandCARE is receiving advice from its
independent accountants that the transactions contemplated hereby may be
accounted for by LandCARE as a pooling of interests.
5. POST-CLOSING COVENANTS
The parties to this Agreement further covenant and agree as follows:
5.1 FUTURE COOPERATION; FURTHER ASSURANCES. The Stockholders, the Company
and LandCARE shall each deliver or cause to be delivered to the other following
the date hereof such additional instruments as the other may reasonably request
for the purpose of effecting the Merger and fully carrying out the intent of
this Agreement. LandCARE shall provide the Stockholders reasonable access to the
books and records of the Company after the Closing Date for purposes of tax
compliance and any other reasonable purpose.
5.2 EXPENSES. LandCARE will pay the fees, expenses and disbursements of
LandCARE and its agents, representatives, financial advisors, accountants and
counsel incurred in connection with the execution, delivery and performance of
this Agreement. The Company will pay the fees, expenses and disbursements of the
Stockholders and their agents, representatives, financial advisors, accountants
and counsel incurred in connection with the execution, delivery and performance
of this Agreement. The Stockholders shall pay any sales, use, transfer, real
property transfer, recording, gains, stock transfer and other similar taxes and
fees ("Transfer Taxes") imposed in connection with the Merger. The Stockholders
shall file all necessary documentation and returns with respect to such Transfer
Taxes. In addition, the Stockholders acknowledge that the Stockholders, and not
the Company or LandCARE, will pay all taxes (income or otherwise), if any, due
upon receipt of the consideration payable pursuant to this Agreement.
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5.3 CERTAIN AGREEMENTS. Upon the request of LandCARE at any time after the
Closing, the Stockholders and the Company shall terminate any existing
agreements to which the Company and any of the Stockholders or any of their
affiliates are parties, except for this Agreement and the agreements set forth
on SCHEDULE 5.3.
5.4 PREPARATION AND FILING OF TAX RETURNS.
(a) The Stockholders shall file or cause to be filed all Tax Returns
for all taxable periods that end on or before the Closing Date, but in each case
only after LandCARE has reviewed such filings and consented thereto. The
Stockholders shall pay all Tax liabilities for all periods ending on or prior to
the Closing Date.
(b) LandCARE shall file or cause to be filed all Tax Returns for all
taxable periods ending after the Closing Date.
(c) LandCARE will prepare or cause to be prepared and file or cause
to be filed any Tax Returns of the Company for taxable periods which begin
before the Closing Date and end after the Closing Date. The Stockholders will
pay to the Company within 15 days of the date on which Taxes are paid with
respect to such periods an amount equal to the portion of such Taxes which
relates to the portion of such taxable period ending on the Closing Date. For
purposes of this section, in the case of any Taxes that are imposed on a
periodic basis and are payable for a taxable period that includes (but does not
end on) the Closing Date, the portion of such Tax which relates to the portion
of such taxable period ending on the Closing Date will (x) in the case of any
Taxes other than Taxes measured with respect to income (whether or not
denominated income taxes), be deemed to be the amount of such Tax for the entire
taxable period multiplied by a fraction the numerator of which is the number of
days in the taxable period ending on the Closing Date and the denominator of
which is the number of days in the entire taxable period, and (y) in the case of
any Tax measured with respect to income (whether or not denominated an income
tax), be deemed equal to the amount which would be payable if the relevant
taxable period ended on the Closing Date. For purposes of this section, in the
case of any Tax credit relating to a taxable period that begins before and ends
after the Closing Date, the portion of such Tax credit which relates to the
portion of such taxable period ending on the Closing Date will be the amount
which bears the same relationship to the total amount of such Tax credit as the
amount of Taxes described in (y) above bears to the total amount of Taxes for
such taxable period. All determinations necessary to give effect to the
foregoing allocations will be made in a manner consistent with prior practice of
the Company.
(d) Any Tax refunds that are received by LandCARE or the Company
relating to any Tax period of the Company ending on or prior to the Closing Date
will belong to the Stockholders. The LandCARE and the Company agree to promptly
pay the Stockholders any refunds received by LandCARE or the Company that belong
to the Stockholders pursuant to the preceding sentence.
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(e) Each party hereto shall, and shall cause its subsidiaries and
affiliates to, provide to each of the other parties hereto such cooperation and
information as any of them reasonably may request in filing any Tax Returns,
amended Tax Returns or claim for refund, determining a liability for Taxes or a
right to refund of Taxes or in conducting any audit or other proceeding with
respect to Taxes. Such cooperation and information shall include providing
copies of all relevant portions of relevant Tax Returns, together with relevant
accompanying schedules and relevant work papers, relevant documents relating to
rulings or other determinations by Taxing Authorities and relevant records
concerning the ownership and Tax basis of property, which such party may
possess. Each party shall make its employees reasonably available on a mutually
convenient basis at its cost to provide explanation of any documents or
information so provided. Subject to the preceding sentence, each party required
to file tax returns pursuant to this Agreement shall bear all costs of filing
such tax returns.
5.5 STOCK OPTIONS. The Compensation Committee of the Board of Directors of
LandCARE has approved the grant of a pool of stock options to purchase an
aggregate of 168,852 shares of LandCARE Stock, which stock options are to be
granted to certain key management and supervisory employees of the Company in
increments of not less than 500 shares. The Stockholder hereby covenants and
agrees to provide to LandCARE the allocation of such options among such key
management and supervisory employees of the Company as soon as reasonably
practicable after the Closing, and LandCARE hereby covenants and agrees to
recommend the approval of the specific allocated stock option grants to the
Compensation Committee of its Board of Directors. The options shall be issued
pursuant to the LandCare 1998 Long-Term Incentive Plan; the date of grant shall
be the date hereof; and the options shall have exercise prices per share of
LandCare common stock covered thereby equal to the fair market value of such
shares at the date of grant. LandCare has filed or will file a Registration
Statement on Form S-8 relating to such options.
5.6 STOCKHOLDER GUARANTEES Notwithstanding anything else herein, LandCARE
agrees to hold harmless and to indemnify each of the Stockholders or their
affiliates from any loss, damage, claim, liability or obligation arising from
any guarantee (personal or otherwise) by either of the Stockholders of any
liability or obligation of the Company (contingent or otherwise), and agrees to
cause the unconditional release of the Stockholders and their affiliates from
such guarantees and all the obligations thereunder within ninety (90) days after
the Effective Time. The obligations of LandCare under this Section 5.6 shall not
be subject to the limitations set forth in Section 6.6 of this Agreement, and
shall survive the consummation of the transactions contemplated hereby.
5.7 BANK INDEBTEDNESS. The Stockholders hereby represent to LandCare that
the aggregate outstanding balance of the Company's indebtedness to NationsBank
as of July 31, 1998 was not more than $1,678,000 (the "NationsBank Debt"). As
promptly as practicable after the
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Closing, and in any case within three business days after Closing, LandCare
shall cause the Company to repay the NationsBank Debt, plus any and all costs,
expenses and fees associated with the termination of such credit facility, and
shall cause the prompt release of any and all liens and guaranties securing such
debt.
6. INDEMNIFICATION
The Stockholders and LandCARE each make the following covenants that are
applicable to them, respectively:
6.1 SURVIVAL OF STOCKHOLDERS' REPRESENTATIONS AND WARRANTIES.
(a) The representations and warranties of the Stockholders made in
this Agreement shall survive the Closing for a period of one year following the
Closing Date; provided, however, that representations and warranties and
indemnification provisions with respect to which a claim is made within the
applicable survival period shall survive until such claim is finally determined
and paid or resolved.
(b) The representations and warranties of LandCARE made in this
Agreement shall survive the Closing for a period of one year following the
Closing Date; provided, however, that representations and warranties with
respect to which a claim is made within such one-year period shall survive until
such claim is finally determined and paid or resolved.
(c) The date on which a representation or warranty expires as
provided herein is herein called the "Expiration Date." No claim for
indemnification may be made with respect to a representation or warranty after
the Expiration Date, other than claims based on actual fraud.
6.2 GENERAL INDEMNIFICATION BY THE STOCKHOLDERS. The Stockholders covenant
and agree that they will indemnify, defend, protect, and hold harmless the
Surviving Corporation, LandCARE and its subsidiaries and all of their officers,
directors, employees, stockholders, agents, representatives and affiliates at
all times from and after the date of this Agreement until the Expiration Date
from and against all claims, damages actions, suits, proceedings, demands,
assessments, adjustments, costs and expenses (including specifically, but
without limitation, reasonable attorneys' fees and expenses of investigation)
(collectively "Damages") incurred by such indemnified person as a result of or
incident to (i) any breach of any representation or warranty of the Stockholders
set forth herein, and (ii) any breach or nonfulfillment of any covenant or
agreement by the Company or the Stockholders under this Agreement.
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LandCARE and Newco acknowledge and agree that other than the
representations and warranties of the Stockholders specifically contained in
this Agreement, there are no representations or warranties of the Stockholders,
either express or implied, with respect to the transactions contemplated by this
Agreement, the Company or its assets, liabilities and business.
6.3 INDEMNIFICATION BY LANDCARE. LandCARE covenants and agrees that it
will indemnify, defend, protect and hold harmless the Stockholders and all of
their agents, representatives and affiliates at all times from and after the
date of this Agreement until the Expiration Date from and against all Damages
incurred by such indemnified person as a result of or incidental to (i) any
breach of any representation or warranty of LandCARE set forth herein; and (ii)
any breach or nonfulfillment of any covenant or agreement by LandCARE under this
Agreement.
6.4 THIRD PERSON CLAIMS. Promptly after any party hereto (the "Indemnified
Party") has received written notice of or has actual knowledge of any claim by a
person not a party to this Agreement ("Third Person") or the commencement of any
action or proceeding by a Third Person that may give rise to a right of
indemnification hereunder, such Indemnified Party shall give to the party
obligated to provide indemnification hereunder (an "Indemnifying Party") written
notice of such claim or the commencement of such action or proceeding; provided,
however, that the failure to give such notice will not relieve such Indemnifying
Party from liability under this Section with respect to such claim, action or
proceeding, except to the extent that the Indemnifying Party has been actually
prejudiced as a result of such failure. The Indemnifying Party (at its own
expense) shall have the right and shall be given the opportunity to associate
with the Indemnified Party in the defense of such claim, suit or proceedings,
and may select counsel for the Indemnified Party, such counsel to be reasonably
satisfactory to the Indemnified Party. The Indemnified Party shall not, except
at its own cost, make any settlement with respect to any such claim, suit or
proceeding without the prior consent of the Indemnifying Party, which consent
shall not be unreasonably withheld or delayed. All settlements hereunder shall
effect a complete release of the Indemnified Party, unless the Indemnified Party
otherwise agrees in writing. The parties hereto will make appropriate
adjustments for insurance proceeds and tax benefits in determining the amount of
any Damages.
6.5 METHOD OF PAYMENT. Any indemnity obligation LandCare is required to
make hereunder shall be paid in LandCARE Stock valued at $9.00 per share. Any
indemnity obligation the Stockholders are required to make hereunder may be paid
either in cash or in shares of LandCare Stock. In the event the Stockholders are
required to make any such indemnification payment, and elect to make such
payment in LandCare Stock, such LandCare Stock shall be valued based on the
average of the closing prices of LandCare Stock on the New York Stock Exchange
for the 60 trading days ending ten days prior to the date such payment is to be
made, unless the parties otherwise agree.
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6.6 LIMITATIONS ON INDEMNIFICATION. LandCARE and the other persons or
entities indemnified pursuant to this Section shall not assert any claim for
indemnification hereunder against the Stockholders until such time as the
aggregate of all claims which such persons may have against such the
Stockholders shall exceed $150,000 (the "Indemnification Threshold") and then
only to the extent that such claims exceed the Indemnification Threshold. The
Stockholders shall not assert any claim for indemnification hereunder against
LandCARE until such time as the aggregate of all claims which the Stockholders
may have against LandCARE shall exceed the Indemnification Threshold and then
only to the extent that such claims exceed the Indemnification Threshold. The
aggregate liability of the Stockholders under this Article 6 shall not exceed
$1,500,000 (the "Liability Limit"); the aggregate liability of LANDCARE
hereunder shall not exceed the Liability Limit.
6.7 EXCLUSIVE REMEDY. The indemnification provided for in this Section 6
shall be the exclusive remedy in any action seeking damages or any other form of
monetary relief brought by any party to this Agreement against another party
with respect to the matters set forth herein except in cases of actual fraud.
7. NONCOMPETITION
7.1 PROHIBITED ACTIVITIES. (a) Except on behalf of LandCARE or its
affiliates (including the Company), the Stockholders will not, for a period of
five years following the Closing Date, for any reason whatsoever, directly or
indirectly, for themselves or on behalf of or in conjunction with any other
person, persons, company, partnership, corporation or business of whatever
nature:
(i) own, manage, operate, join, control, consult or advise (whether
or not compensated for such consultation or advice), or participate in, or
render assistance to, or derive any benefit whatever from, any business
offering services or products in direct competition with the Company
within 100 miles of where the Company conducted business at any time
within one year prior to the Closing Date (the "Territory");
(ii) engage, as an officer, director, shareholder, owner, partner,
joint venturer, or in a sales or managerial capacity, whether as an
employee, independent contractor, consultant or advisor, or as a sales
representative, in any business offering services or products in direct
competition with the Company or LandCARE within the Territory;
(iii) call upon any person who is, at that time, an employee of
LandCARE or any of its subsidiaries (including the Company) for the
purpose or with the intent of enticing such employee away from or out of
the employ of LandCARE or any of its subsidiaries (including the Company);
(iv) call upon any person or entity which is, at that time, or which
has been, within one year prior to the Closing Date, a customer of
LandCARE or any of its subsidiaries
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(including the Company) for the purpose of soliciting or selling products
or services in direct competition with LandCARE or any of its subsidiaries
(including the Company) within the Territory.
Notwithstanding the above, the foregoing covenants shall not be deemed to
prohibit any Stockholder from acquiring as a passive investor with no
involvement in the operations or management of the business, not more than one
percent (2%) of the capital stock of a competing business whose stock is
publicly traded on a national securities exchange or over-the-counter market.
The provisions of this Section are independent of the noncompetition
provisions contained in any consulting or employment agreement to which any
Stockholder may be or may become a party in connection with the transactions
contemplated hereby. All such provisions are intended to be observed and
enforced in accordance with their terms.
7.2 EQUITABLE RELIEF. Because of the difficulty of measuring economic
losses to LandCARE as a result of a breach of the foregoing covenant, and
because of the immediate and irreparable damage that could be caused to LandCARE
for which it would have no other adequate remedy, the Stockholders agree that
the foregoing covenant may be enforced by LandCARE in the event of breach by
such Stockholders, by injunctions, restraining orders and other equitable
actions.
7.3 REASONABLE RESTRAINT. It is agreed by the parties hereto that the
foregoing covenants in this Section impose a reasonable restraint on the
Stockholders.
7.4 SEVERABILITY; REFORMATION. The covenants in this Section are severable
and separate, and the unenforceability of any specific covenant shall not affect
the provisions of any other covenant. Moreover, in the event any court of
competent jurisdiction shall determine that the scope, time or territorial
restrictions set forth are unreasonable, then it is the intention of the parties
that such restrictions be enforced to the fullest extent which the court deems
reasonable, and the Agreement shall thereby be reformed.
7.5 INDEPENDENT COVENANT. The Stockholders acknowledge that their
covenants set forth in this Section are material conditions to LandCARE's
willingness to execute and deliver this Agreement and to consummate the
transactions contemplated hereby. All of the covenants in this Section shall be
construed as an agreement independent of any other provision in this Agreement,
and the existence of any claim or cause of action of any Stockholder against
LandCARE or any subsidiary thereof, whether predicated on this Agreement or
otherwise, shall not constitute a defense to the enforcement by LandCARE of such
covenants. It is specifically agreed that the period of five years stated at the
beginning of this Section, during which the agreements and covenants of the
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Stockholders made in this Section shall be effective, shall be computed by
excluding from such computation any time during which any such Stockholder is in
violation of any provision of this Section. The covenants contained in Section
shall not be affected by any breach of any other provision hereof by any party
hereto.
8. NONDISCLOSURE OF CONFIDENTIAL INFORMATION
8.1 GENERAL. The Stockholders recognize and acknowledge that they have had
access to certain customer lists, confidential information of the Company, such
as operational policies, pricing and cost policies, and other information, that
will be valuable, special and unique assets of the Company and LandCARE after
the Closing Date. The Stockholders agree that they will not disclose such
confidential information, or any confidential information of the Company or
LandCARE to which they may have access in the future, to any person, firm,
corporation, association or other entity for any purpose or reason whatsoever,
except (a) to authorized representatives of LandCARE, (b) following the Closing,
such information may be disclosed by any Stockholder as may be required in the
course of performing his duties for the Company and (c) to counsel and other
advisers, provided that such advisers (other than counsel) agree to the
confidentiality provisions of this Section, unless (i) such information becomes
known to the public generally through no fault of the Stockholder, or (ii)
disclosure is required by law or the order of any governmental authority,
provided, that prior to disclosing any information pursuant to this clause (ii),
the Stockholders shall give prior written notice thereof to LandCARE and provide
LandCARE with reasonable opportunity to contest such disclosure. In the event of
a breach or threatened breach by any Stockholder of the provisions of this
Section, LandCARE shall be entitled to injunctive or other equitable relief
restraining such Stockholder from disclosing, in whole or in part, such
confidential information. Nothing herein shall be construed as prohibiting
LandCARE from pursuing any other available remedy for such breach or threatened
breach, including the recovery of damages.
8.2 EQUITABLE RELIEF. Because of the difficulty of measuring economic
losses as a result of the breach of the foregoing covenants, and because of the
immediate and irreparable damage that would be caused for which LandCARE would
have no other adequate remedy, the Stockholders agree that the foregoing
covenants may be enforced against them by injunctions, restraining orders and
other appropriate equitable relief.
8.3 SURVIVAL. The obligations of the parties under this Section shall
survive the termination of this Agreement.
9 INTENDED TAX AND ACCOUNTING TREATMENT
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9.1 TAX-FREE REORGANIZATION. The parties are entering into this Agreement
with the intention that the Merger qualify as a tax-free reorganization for
federal income tax purposes, except to the extent of any "boot" received, and
the Stockholders will not take any actions that disqualify the Merger for such
treatment. The Stockholders represent, warrant and covenant that:
(i) the Company operates at least one historic business line, or
owns at least a significant portion of its historic business assets, in each
case within the meaning of Reg. 1.368-1(d) under the Code; and
(ii) the Company will hold "substantially all of its properties"
within the meaning of Section 368(a)(2)(D) of the Code (that is, after the
Closing, the Company will hold at least 90% of the fair market value of the net
assets and at least 70% of the gross assets held by the Company immediately
prior to the Closing). For purposes of the preceding sentence, amounts paid by
the Company to dissenters, amounts paid by the Company to shareholders who
receive cash or other property and the Company assets used to pay its
reorganization expenses and all redemptions and distributions (except for normal
dividends) made by the Company immediately preceding the Closing, pursuant to
this Agreement or otherwise as part of the plan of Merger provided for herein,
will be included as assets of the Company held immediately prior to the Merger.
9.2 RESTRICTIONS ON RESALE. (a) LandCARE has informed the Stockholders
that it intends to account for the transactions contemplated by this Agreement
as a pooling of interests. LandCARE has also informed the Stockholders that its
ability to account for the transactions contemplated hereby as a pooling of
interests was a material factor considered by LandCARE in its decision to enter
into this Agreement. Therefore, pursuant to the rules of the Securities and
Exchange Commission relating to pooling of interests transactions, prior to the
publication and dissemination by LandCARE of consolidated financial results
which include results of the combined operations of the Company and LandCARE for
at least thirty days on a consolidated basis following the Effective Time (the
"Publication"), the Stockholders shall not sell, offer to sell or otherwise
transfer or dispose of, any shares of the LandCARE Stock received by
Stockholders, engage in put, call, short-sale, straddle or similar transactions,
or in any other way reduce the Stockholders' risk of owning shares of LandCARE
Stock; provided, however, that this restriction shall not prohibit the
Stockholders from pledging any such shares to secure full-recourse indebtedness.
The certificates evidencing the LandCARE Stock to be received by the
Stockholders will bear a legend stating:
THE SHARES REPRESENTED BY THIS CERTIFICATE MAY NOT BE SOLD, TRANSFERRED OR
ASSIGNED, AND THE ISSUER SHALL NOT BE REQUIRED TO GIVE EFFECT TO ANY
ATTEMPTED SALE, TRANSFER OR ASSIGNMENT, PRIOR TO THE PUBLICATION AND
DISSEMINATION OF FINANCIAL STATEMENTS BY THE ISSUER WHICH INCLUDE THE
RESULTS OF AT LEAST THIRTY (30) DAYS OF COMBINED OPERATIONS OF THE ISSUER
AND THE COMPANY ACQUIRED BY THE
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ISSUER IN THE TRANSACTION IN WHICH THE SHARES REPRESENTED HEREBY WERE
ISSUED. THE FOREGOING RESTRICTION SHALL NOT PREVENT OR RESTRICT THE HOLDER
HEREOF FROM PLEDGING THE SHARES REPRESENTED HEREBY TO SECURE FULL-RECOURSE
INDEBTEDNESS OF THE HOLDER HEREOF.
(b) LandCARE shall cause the Publication to occur no later than November
14, 1998.
10 SECURITIES LAW MATTERS
10.1 ECONOMIC RISK; SOPHISTICATION. Each Stockholder acknowledges and
confirms that he or she has received and reviewed a Shelf S-1 from LandCARE
relating to his or her acquisition of shares of LandCARE Stock hereunder.
10.2 COMPLIANCE WITH LAW. Each Stockholder covenants that none of the
LandCARE Stock acquired by such Stockholder hereunder will be offered, sold,
assigned, hypothecated, transferred or otherwise disposed of by such Stockholder
except in full compliance with all applicable securities laws.
11. GENERAL
11.1 SUCCESSORS AND ASSIGNS. This Agreement and the rights of the parties
hereunder may not be assigned (except by operation of law) and shall be binding
upon and shall inure to the benefit of the parties hereto, the successors of
LandCARE, and the heirs and legal representatives of the Stockholders.
11.2 ENTIRE AGREEMENT. This Agreement (including the schedules, exhibits
and annexes attached hereto) and the documents delivered pursuant hereto
constitute the entire agreement and understanding among the Stockholders, the
Company and LandCARE, and supersede any prior agreement and understanding
relating to the subject matter of this Agreement. This Agreement, upon
execution, constitutes a valid and binding agreement of the parties hereto,
enforceable in accordance with its terms, and may be modified or amended only by
a written instrument executed by the parties hereto.
11.3 COUNTERPARTS. This Agreement may be executed simultaneously in two or
more counterparts, each of which shall be deemed an original and all of which
together shall constitute but one and the same instrument. The signatures to
this Agreement need not all be on a single copy
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of this Agreement, and may be facsimiles rather than originals, and shall be
fully as effective as though all signatures were originals on the same copy.
11.4 BROKERS AND AGENTS. Each party represents and warrants that it
employed no broker or agent in connection with this transaction and agrees to
indemnify the other parties hereto against all loss, cost, damages or expense
arising out of claims for fees or commission of brokers employed or alleged to
have been employed by such indemnifying party.
11.5 NOTICES. All notices and communications required or permitted
hereunder shall be in writing and may be given by depositing the same in United
States mail, addressed to the party to be notified, postage prepaid and
registered or certified with return receipt requested, or by delivering the same
in person to an officer or agent of such party, or by facsimile, as follows:
If to LandCARE, addressed to it at:
LandCARE USA, Inc.
5850 San Felipe, Suite 500
Houston, Texas 77057
Attn: General Counsel
Facsimile No. (713) 965-0343
If to the Company, addressed to it at:
Clean Cut, Inc.
8711 Burnett Road, Suite F73
Austin, Texas 78757
Facsimile No. 512-452-2378
Attention: President
With a copy to:
Hughes & Luce, L.L.P.
1717 Main Street
Suite 2800
Dallas, Texas 75201
Attention: James E. Cahill, III
Facsimile No. 214-939-5849
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If to the Stockholders, addressed to them at the Company's address,
or to such other address as any party hereto shall specify pursuant to this
Section from time to time.
11.6 GOVERNING LAW. This Agreement shall be construed in accordance with
the laws of the State of Texas without regard to its principles governing
conflicts of laws.
11.7 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The representations,
warranties, covenants and agreements of the parties made herein and at the time
of the Closing or in writing delivered pursuant to the provisions of this
Agreement shall survive the consummation of the transactions contemplated hereby
and any examination on behalf of the parties until the Expiration Date or as
otherwise provided herein.
11.8 EFFECT OF INVESTIGATION. No investigation by the parties hereto in
connection with this Agreement or otherwise shall affect the representations and
warranties of the parties contained herein or in any certificate or other
document delivered in connection herewith and each such representation and
warranty shall survive such investigation.
11.9 EXERCISE OF RIGHTS AND REMEDIES. Except as otherwise provided herein,
no delay of or omission in the exercise of any right, power or remedy accruing
to any party as a result of any breach or default by any other party under this
Agreement shall impair any such right, power or remedy, nor shall it be
construed as a waiver of or acquiescence in any such breach or default, or of
any similar breach or default occurring later; nor shall any waiver of any
single breach or default be deemed a waiver of any other breach or default
occurring before or after that waiver.
11.10 TIME. Time is of the essence with respect to this Agreement.
11.11 REFORMATION AND SEVERABILITY. In case any provision of this
Agreement shall be invalid, illegal or unenforceable, it shall, to the extent
possible, be modified in such manner as to be valid, legal and enforceable but
so as to most nearly retain the intent of the parties, and if such modification
is not possible, such provision shall be severed from this Agreement, and in
either case the validity, legality and enforceability of the remaining
provisions of this Agreement shall not in any way be affected or impaired
thereby.
11.12 REMEDIES CUMULATIVE. No right, remedy or election given by any term
of this Agreement shall be deemed exclusive but each shall be cumulative with
all other rights, remedies and elections available at law or in equity.
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11.13 CAPTIONS. The headings of this Agreement are inserted for
convenience only, and shall not constitute a part of this Agreement or be used
to construe or interpret any provision hereof.
11.14 PRESS RELEASES AND PUBLIC ANNOUNCEMENTS. No party shall issue any
press release or make any public announcement relating to the subject matter of
this Agreement without the prior written approval of the other party; provided,
however, that any party may make any public disclosure it believes in good faith
is required by applicable law or any listing or trading agreement concerning its
publicly-traded securities.
11.15 NO THIRD-PARTY BENEFICIARIES. This Agreement shall not confer any
rights or remedies upon any person other than the parties and their respective
successors and permitted assigns, except as set forth in Section 6 of this
Agreement. The Stockholders are hereby authorized to institute and maintain any
legal action or proceeding they deem necessary in the event LandCare fails to
grant the stock options contemplated by Section 5.5 hereof.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
day and year first above written.
LANDCARE USA, INC.
By:________________________________
Name:___________________________
Title:__________________________
CCI ACQUISITION CORP.
By: _______________________________
Name: __________________________
Title: ________________________
CLEAN CUT, INC.
By: _______________________________
Name: __________________________
Title: ________________________
<PAGE>
Stockholders and Spouses:
Spouse, if applicable:
_______________________ ___________________________
Dennis Dautel
_______________________ ___________________________
Rex Gore
<PAGE>
EXHIBIT 2.5
EXECUTION COPY
AGREEMENT AND PLAN OF MERGER
dated as of August 5, 1998
by and among
LANDCARE USA, INC.,
HI ACQUISITION CORP.,
HORTICULTURE INDUSTRIES, INC.,
and
William H. Davoli
<PAGE>
TABLE OF CONTENTS
Page
1. THE MERGER.............................................................1
1.1 THE MERGER.......................................................1
1.2 EFFECTIVE TIME...................................................1
1.3 ARTICLES OF INCORPORATION AND BY-LAWS OF SURVIVING CORPORATION...2
1.4 EFFECT OF MERGER.................................................2
1.5 MANNER OF CONVERSION.............................................2
1.6 DELIVERY OF CERTIFICATES.........................................3
1.7 CLOSING..........................................................3
2. REPRESENTATIONS AND WARRANTIES OF THE STOCKHOLDER......................3
2.1 DUE ORGANIZATION.................................................3
2.2 AUTHORIZATION....................................................4
2.3 CAPITAL STOCK OF THE COMPANY.....................................4
2.4 SUBSIDIARIES.....................................................4
2.5 FINANCIAL STATEMENTS.............................................4
2.6 LIABILITIES AND OBLIGATIONS......................................5
2.7 ACCOUNTS AND NOTES RECEIVABLE....................................5
2.8 PERMITS AND INTANGIBLES..........................................6
2.9 ENVIRONMENTAL MATTERS............................................6
2.10 PERSONAL PROPERTY................................................7
2.11 SIGNIFICANT CUSTOMERS; MATERIAL CONTRACTS AND COMMITMENTS........7
2.12 REAL PROPERTY....................................................8
2.13 INSURANCE........................................................9
2.14 COMPENSATION; EMPLOYMENT AGREEMENTS; ORGANIZED LABOR MATTERS.....9
2.15 EMPLOYEE BENEFIT PLANS...........................................9
2.16 CONFORMITY WITH LAW; LITIGATION.................................10
2.17 TAXES...........................................................11
2.18 NO VIOLATIONS; ALL REQUIRED CONSENTS OBTAINED...................12
2.19 ABSENCE OF CHANGES..............................................13
2.20 POWERS OF ATTORNEY..............................................14
2.21 COMPETING LINES OF BUSINESS; RELATED-PARTY TRANSACTIONS.........14
2.22 DISCLOSURE......................................................14
2.23 CERTAIN BUSINESS PRACTICES......................................15
2.24 NOTICE TO BARGAINING AGENTS.....................................15
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2.25 NOTICES AND CONSENTS............................................15
2.26 INVENTORY; WORKING CAPITAL; OTHER FINANCIAL MATTERS.............15
2.27 YEAR 2000 COMPLIANCE............................................15
2.28 RELIANCE UPON ORAL REPRESENTATIONS..............................15
3. REPRESENTATIONS OF LANDCARE...........................................16
3.1 DUE ORGANIZATION................................................16
3.2 AUTHORIZATION...................................................16
3.3 NO VIOLATIONS...................................................16
3.4 VALIDITY OF OBLIGATIONS.........................................16
3.5 REGISTRATION STATEMENT..........................................16
4. DELIVERIES............................................................16
4.1 INSTRUMENTS OF TRANSFER.........................................16
4.2 CERTIFICATE OF MERGER...........................................16
4.3 EMPLOYMENT AGREEMENT............................................17
4.4 OPINION OF COUNSEL..............................................17
4.5 GOOD STANDING CERTIFICATES......................................17
4.6 LEASE...........................................................17
4.7 INDEBTEDNESS TO COMPANY.........................................17
4.8 CONSENTS........................................................17
4.9 RESIGNATIONS OF DIRECTORS AND OFFICERS..........................17
4.10 SATISFACTION OF CERTAIN DEBTS...................................17
4.11 ENVIRONMENTAL INDEMNITY AGREEMENT...............................17
5. POST-CLOSING COVENANTS................................................17
5.1 FUTURE COOPERATION; FURTHER ASSURANCES..........................17
5.2 EXPENSES........................................................18
5.3 CERTAIN AGREEMENTS..............................................18
5.4 PREPARATION AND FILING OF TAX RETURNS...........................18
5.5 STOCK OPTIONS...................................................19
6. INDEMNIFICATION.......................................................19
6.1 SURVIVAL OF STOCKHOLDER'S REPRESENTATIONS AND WARRANTIES. .....19
6.2 GENERAL INDEMNIFICATION BY THE STOCKHOLDER......................19
6.3 SPECIFIC INDEMNIFICATION BY THE STOCKHOLDER.....................20
6.4 INDEMNIFICATION BY LANDCARE.....................................20
6.5 THIRD PERSON CLAIMS.............................................20
6.6 METHOD OF PAYMENT...............................................21
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7. NONCOMPETITION........................................................21
7.1 PROHIBITED ACTIVITIES...........................................21
7.2 EQUITABLE RELIEF................................................22
7.3 REASONABLE RESTRAINT............................................22
7.4 SEVERABILITY; REFORMATION.......................................22
7.5 INDEPENDENT COVENANT............................................22
8. NONDISCLOSURE OF CONFIDENTIAL INFORMATION.............................23
8.1 GENERAL.........................................................23
8.2 EQUITABLE RELIEF................................................23
8.3 SURVIVAL........................................................24
9 INTENDED TAX TREATMENT
.....................................................................24
9.1 TAX-FREE REORGANIZATION.........................................24
9.2 RESTRICTIONS ON RESALE..........................................24
10 SECURITIES LAW MATTERS................................................24
10.1 ECONOMIC RISK; SOPHISTICATION...................................24
10.2 COMPLIANCE WITH LAW.............................................25
11. GENERAL...............................................................25
11.1 SUCCESSORS AND ASSIGNS..........................................25
11.2 ENTIRE AGREEMENT................................................25
11.3 COUNTERPARTS....................................................25
11.4 BROKERS AND AGENTS..............................................25
11.5 NOTICES.........................................................25
11.6 GOVERNING LAW...................................................26
11.7 SURVIVAL OF REPRESENTATIONS AND WARRANTIES......................26
11.8 EXERCISE OF RIGHTS AND REMEDIES.................................26
11.9 TIME............................................................26
11.10 REFORMATION AND SEVERABILITY....................................27
11.11 REMEDIES CUMULATIVE.............................................27
11.12 CAPTIONS........................................................27
11.13 PRESS RELEASES AND PUBLIC ANNOUNCEMENTS.........................27
11.14 NO THIRD-PARTY BENEFICIARIES....................................27
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SCHEDULES
SCHEDULE 2.1. Due Organization
SCHEDULE 2.4. Subsidiaries
SCHEDULE 2.5. Financial Statements
SCHEDULE 2.6. Liabilities and Obligations
SCHEDULE 2.7. Accounts and Notes Receivable
SCHEDULE 2.8. Permits and Intangibles
SCHEDULE 2.9. Environmental Matters
SCHEDULE 2.10. Personal Property
SCHEDULE 2.11. Significant Customers; Material Contracts and
Commitments
SCHEDULE 2.12. Real Property
SCHEDULE 2.13. Insurance
SCHEDULE 2.14. Compensation; Employment Agreements; Organized Labor
Matters
SCHEDULE 2.15. Employee Benefit Plans
SCHEDULE 2.16. Conformity with Law; Litigation
SCHEDULE 2.18. No Violations; No Consents Required
SCHEDULE 2.19. Absence of Changes
SCHEDULE 2.20. Powers of Attorney
SCHEDULE 2.21. Competing Lines of Business; Related Party Transactions
SCHEDULE 4.3 Persons Entering into Employment Agreements
SCHEDULE 4.5. Leases
SCHEDULE 6.3. Specific Indemnification
ANNEXES
Annex - Form of Employment Agreement
Annex II - Form of Opinion of Counsel to Company and
Stockholder
Annex III - Form of Lease
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AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (this "Agreement") is made and entered
into as of August 5, 1998 by and among LandCARE USA, Inc., a Delaware
corporation ("LandCARE"), HI Acquisition Corp., a Florida corporation and wholly
owned subsidiary of LandCARE ("Newco"), Horticulture Industries, Inc., a Florida
corporation (the "Company"), and William H. Davoli (the "Stockholder"). The
Stockholder is the only holder of capital stock of the Company.
WHEREAS, the respective Boards of Directors of Newco and the Company
(collectively called the "Constituent Corporations") deem it advisable and in
the best interests of the Constituent Corporations and their respective
stockholders that Newco merge with and into the Company pursuant to this
Agreement and the applicable provisions of the laws of the State of Florida (the
"State of Incorporation"); and
WHEREAS, the Boards of Directors of the Constituent Corporations have
approved and adopted this Agreement as a plan of reorganization under Section
368 of the Internal Revenue Code of 1986, as amended (the "Code"); and
WHEREAS, on the date hereof the parties are consummating the transactions
described herein;
NOW, THEREFORE, in consideration of the premises and of the mutual
agreements contained herein, the parties hereto, intending to be legally bound,
agree as follows:
1. THE MERGER
1.1 THE MERGER. On the terms and subject to the conditions of this
Agreement, at the Effective Time (as defined below), Newco shall be merged with
and into the Company (the "Merger") and the separate existence of Newco shall
cease, all in accordance with the provisions of the law of the State of
Incorporation. The Company shall be the surviving corporation in the Merger and
is sometimes hereinafter called the "Surviving Corporation."
1.2 EFFECTIVE TIME. The Merger shall become effective at such time (the
"Effective Time") as a certificate of merger, in a form appropriate for filing,
is filed with the Secretary of State (or other appropriate authority) of the
State of Incorporation (the "Merger Filing"). The Merger Filing shall be made
simultaneously with or as soon as practicable after the execution and delivery
of this Agreement.
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1.3 ARTICLES OF INCORPORATION AND BY-LAWS OF SURVIVING CORPORATION. At the
Effective Time, the Articles of Incorporation of Newco then in effect shall be
the Articles of Incorporation of the Surviving Corporation, and the By-laws of
Newco then in effect shall be By-laws of the Surviving Corporation.
1.4 EFFECT OF MERGER. At the Effective Time, the effect of the Merger
shall be as provided in the law of the State of Incorporation. Except as herein
specifically set forth, the identity, existence, purposes, powers, objects,
franchises, privileges, rights and immunities of the Company shall continue
unaffected and unimpaired by the Merger and the corporate franchises, existence
and rights of Newco shall be merged with and into the Company, and the Company,
as the Surviving Corporation, shall be fully vested therewith. At the Effective
Time, the separate existence of Newco shall cease and, in accordance with the
terms of this Agreement, the Surviving Corporation shall possess all the rights,
privileges, immunities and franchises, of a public, as well as of a private,
nature, and all property, real, personal and mixed, and all debts due on
whatever account, including subscriptions to shares, and all taxes, including
those due and owing and those accrued, and all other choses in action, and all
and every other interest of or belonging to or due to the Company and Newco
shall be taken and deemed to be transferred to, and vested in, the Surviving
Corporation without further act or deed; and all property, rights and
privileges, powers and franchises and all and every other interest shall be
thereafter as effectually the property of the Surviving Corporation as they were
of the Company and Newco; and the title to any real estate, or interest therein,
whether by deed or otherwise, under the laws of the State of Incorporation
vested in the Company and Newco, shall not revert or be in any way impaired by
reason of the Merger. Except as otherwise provided herein, the Surviving
Corporation shall thenceforth be responsible and liable for all the liabilities
and obligations of the Company and Newco and any claim existing, or action or
proceeding pending, by or against the Company or Newco may be prosecuted as if
the Merger had not taken place, or the Surviving Corporation may be substituted
in their place. Neither the rights of creditors nor any liens upon the property
of the Company or Newco shall be impaired by the Merger, and all debts,
liabilities and duties of the Company and Newco shall attach to the Surviving
Corporation, and may be enforced against the Surviving Corporation to the same
extent as if said debts, liabilities and duties had been incurred or contracted
by such Surviving Corporation.
1.5 MANNER OF CONVERSION. The manner of converting the outstanding shares
of capital stock of the Company ("Company Stock") and the outstanding shares of
capital stock of Newco ("Newco Stock") shall be as follows:
As of the Effective Time:
1. The Company Stock issued and outstanding immediately prior
to the Effective Time, by virtue of the Merger and without any action on the
part of the holder thereof, automatically shall be converted into the right to
receive, in the aggregate, (i) 333,333 shares of
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common stock, par value $.01 per share, of LandCARE ("LandCARE Stock"), valued
at $9.00 per share, and (ii) an aggregate of $750,000 in cash paid by wire
transfer (it being agreed that a portion of such shares of LandCare Stock shall
not be delivered at the Cosing and shall be held by LandCare as described in
Section 6.6 hereof).
2. All shares of Company Stock, if any, that are held by the
Company as treasury stock shall be canceled and retired, and no shares of
LandCARE Stock or other consideration shall be delivered or paid in exchange
therefor; and
3. Each outstanding share of Newco Stock shall, by virtue of
the Merger and without any action on the part of LandCARE, automatically be
converted into one fully paid and non-assessable share of Common Stock of the
Surviving Corporation, which shall constitute all of the issued and outstanding
shares of common stock of the Surviving Corporation, and shall be owned by
LandCARE, immediately after the Effective Time.
1.6 DELIVERY OF CERTIFICATES. At the Closing, (i) the Stockholder shall
deliver to LandCARE the certificates representing the Company Stock, duly
endorsed in blank by the Stockholder, or accompanied by blank stock powers, and
with all necessary transfer tax and other revenue stamps, acquired at the
Stockholder's expense, affixed and canceled, and (ii) LandCARE shall cause its
stock transfer agent to deliver to the Stockholder certificates representing the
LandCARE Stock as described above. The Stockholder agrees promptly to cure any
deficiencies with respect to the endorsement of the stock certificates or other
documents of conveyance with respect to such Company Stock or with respect to
the stock powers accompanying any Company Stock.
1.7 CLOSING. The transactions contemplated by this Agreement are being
consummated on the date hereof, and the date hereof is sometimes herein called
the "Closing Date."
2. REPRESENTATIONS AND WARRANTIES OF THE STOCKHOLDER
The Stockholder hereby represents and warrants to LandCARE as follows.
2.1 DUE ORGANIZATION. The Company is a corporation duly organized, validly
existing and in good standing under the laws of the State of Incorporation, and
has all requisite power and authority to carry on its business as it is now
being conducted. Except as set forth on SCHEDULE 2.1, the Company is duly
qualified to do business and is in good standing in each jurisdiction in which
the nature of its business or the ownership or leasing of its properties makes
such qualification necessary, except where the failure to be so authorized or
qualified would not have a material adverse effect on the business, assets,
operations or condition (financial or otherwise) of the Company (as used herein
with respect to the Company, or with respect to any other person, a "Material
Adverse Effect"). SCHEDULE 2.1 sets forth a list of all jurisdictions in which
the Company
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<PAGE>
is authorized or qualified to do business. True, complete and correct copies of
the Articles of Incorp oration and By-laws, each as amended, of the Company (the
"Charter Documents") are all attached to SCHEDULE 2.1. The stock records of the
Company, copies of which have previously been delivered to LandCare, are correct
and complete in all material respects. All records of all proceedings of the
Board of Directors and stockholders of the Company have been made available to
LandCARE.
2.2 AUTHORIZATION. (i) The representative of the Company executing this
Agreement has the authority to enter into and bind the Company to the terms of
this Agreement and (ii) the Company has the full legal right, power and
authority to enter into this Agreement and the transactions contemplated hereby,
all of which have been approved by the Stockholder and the Board of Directors of
the Company. This Agreement has been validly executed and delivered by the
Company and the Stockholder and constitutes the legal, valid and binding
obligation of each of them, enforceable in accordance with its terms.
2.3 CAPITAL STOCK OF THE COMPANY. The authorized capital stock of the
Company consists solely of 100 shares of common stock, par value $0.01 per
share, of which 40 shares are issued and outstanding and constitute all of the
issued and outstanding shares of Company Stock (the "Shares"). All of the Shares
are owned of record and beneficially by the Stockholder and are owned free and
clear of all liens, security interests, pledges, charges, voting trusts,
restrictions, encumbrances and claims of every kind. All of the Shares have been
duly authorized and validly issued, are fully paid and nonassessable, and were
offered, issued, sold and delivered by the Company in compliance with all
applicable state and federal laws governing the issuance of securities. None of
the Shares were issued in violation of any preemptive rights or similar rights
of any person. No option, warrant, call, conversion right or commitment of any
kind exists which obligates the Company to issue any additional shares of its
capital stock or obligates the Stockholder to transfer any of the Shares to any
person except pursuant to this Agreement.
2.4 SUBSIDIARIES. Except as set forth on SCHEDULE 2.4, the Company has no
subsidiaries or d/b/a names and has not conducted business under any other name
except its legal name as set forth in its Charter Documents. Except as set forth
in SCHEDULE 2.4, the Company does not own, of record or beneficially, or
control, directly or indirectly, any capital stock, securities convertible into
capital stock or any other equity interest in any corporation, association or
other business entity, and the Company is not, directly or indirectly, a
participant in any joint venture, partnership or other non-corporate entity.
2.5 FINANCIAL STATEMENTS. Complete and correct copies of the following
financial statements are attached as SCHEDULE 2.5:
(i) The balance sheets of the Company as of December 31, 1997 (the
"Balance Sheet Date") and any related statements of operations,
stockholder's equity and cash flows
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for the three-year period then ended, together with any related notes and
schedules (the "Year-end Financial Statements"); and
(ii) The balance sheet attached hereto (the "Interim Balance Sheet")
of the Company as of June 30, 1998 and the related audited statements of
operations for the six-month period then ended (the "Interim Financial
Statements"). (The Year-end Financial Statements and the Interim Financial
Statements are herein collectively called the "Financial Statements".)
The Financial Statements have been prepared from the books and records of
the Company. The Year-end Financial Statements have been prepared in conformity
with generally accepted accounting principles applied on a basis consistent with
preceding years and throughout the periods involved ("GAAP") and present fairly
the financial position and results of operations of the Company as of the dates
of such statements and for the periods covered thereby. The Interim Financial
Statements have not been prepared in conformity with GAAP, but do present fairly
the financial position and results of operations of the Company as of the dates
of such statements and for the periods covered thereby. The books of account of
the Company have been kept accurately in the ordinary course of business, the
transactions entered therein represent bona fide transactions, and the revenues,
expenses, assets and liabilities of the Company have been properly recorded
therein in all material respects.
2.6 LIABILITIES AND OBLIGATIONS. Except as and to the extent disclosed and
adequately provided for in the Financial Statements or on SCHEDULE 2.6 hereto,
the Company has no liabilities or obligations of any kind, whether accrued,
absolute, secured or unsecured, contingent or otherwise. Except and to the
extent disclosed on SCHEDULE 2.6, there are no claims, liabilities or
obligations, nor any reasonable basis for assertion against the Company, of any
claim, liability or obligation, of any nature whatsoever. SCHEDULE 2.6 contains
a reasonable estimate of the maximum amount which may be payable with respect to
known liabilities which are not fixed. For each such known liability for which
the amount is not fixed, SCHEDULE 2.6 includes a summary description of each
known liability, together with copies of all relevant documentation relating
thereto. The Company's total debt (not including leases or contingent
liabilities identified on SCHEDULE 2.6) as of the Closing Date does not exceed
$6,700,000. As of the Closing Date the Company's tangible net worth is at least
$1,300,000.
2.7 ACCOUNTS AND NOTES RECEIVABLE. SCHEDULE 2.7 sets forth an accurate
list of the accounts and notes receivable of the Company, as of the most recent
date practicable (which date is set forth thereon), showing amounts due in
30-day aging categories. Except to the extent reflected on SCHEDULE 2.7, all
such accounts, notes and other receivables were incurred in the ordinary course
of business, are stated in accordance with GAAP and are collectible in the
amounts shown on SCHEDULE 2.7, net of reserves reflected in the balance sheet as
of the Balance Sheet Date.
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2.8 PERMITS AND INTANGIBLES. The Company, or its employees, as
appropriate, hold all material licenses, franchises, permits and other
governmental authorizations required or necessary in connection with the conduct
of the Company's business. SCHEDULE 2.8 sets forth an accurate list and summary
description of all such licenses, franchises, permits and other governmental
authorizations, including permits, titles (including licenses, franchises,
certificates, trademarks, trade names, patents, patent applications and
copyrights owned or held by the Company or any of its employees (including
interests in software or other technology systems, programs and intellectual
property; provided, however, that SCHEDULE 2.8 need not individually list each
of the individual software licenses for wordprocessing and similar software
loaded on the Company's personal computers, it being understood that the Company
holds licenses for such software) (collectively, the "Intangible Assets") (it
being understood and agreed that a list of all environmental permits and other
environmental approvals is set forth on SCHEDULE 2.9). The Intangible Assets and
other governmental authorizations listed on SCHEDULES 2.8 and 2.9 are valid, and
the Company has not received any notice that any person intends to cancel,
terminate or not renew any such Intangible Assets or other governmental
authorization. The Company has conducted and is conducting its business in
compliance with the requirements, standards, criteria and conditions set forth
in the Intangible Assets and other governmental authorizations listed on
SCHEDULES 2.8 and 2.9 and is not in violation of any of the foregoing. Except as
specifically set forth on SCHEDULE 2.8 or 2.9, the transactions contemplated by
this Agreement will not result in a default under or a breach or violation of,
or adversely affect the rights and benefits afforded to the Company by, any such
Intangible Assets or other governmental authorizations.
2.9 ENVIRONMENTAL MATTERS. Except to the extent that noncompliance with
any Environmental Laws, either singly or in the aggregate, has not had and will
not have a Material Adverse Effect on the Company or any of its operations and
will not necessitate any material expenditure by the Company in the future:
(i) the Company has complied with and is in compliance with all federal,
state, local and foreign statutes (civil and criminal), laws, ordinances,
regulations, rules, notices, permits, judgments, orders and decrees applicable
to any of them or any of their respective properties, assets, operations and
businesses relating to environmental protection (collectively "Environmental
Laws"), including, without limitation, Environmental Laws relating to air,
water, land and the generation, storage, use, handling, transportation,
treatment or disposal of Hazardous Wastes, Hazardous Materials and Hazardous
Substances (including petroleum and petroleum products) (as such terms are
defined in any applicable Environmental Law);
(ii) the Company has obtained and adhered to all necessary permits and
other approvals necessary to treat, transport, store, dispose of and otherwise
handle Hazardous Wastes, Hazardous Materials and Hazardous Substances, a list of
all of which permits and approvals is set forth on SCHEDULE 2.9, and have
reported to the appropriate authorities, to the extent required by all
Environmental Laws, all past and present sites owned and operated by the Company
where
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Hazardous Wastes, Hazardous Materials or Hazardous Substances have been treated,
stored, disposed of or otherwise handled;
(iii) there have been no releases or threats of releases (as defined in
Environmental Laws) at, from, in, under or on any property owned or operated by
the Company except as permitted by Environmental Laws;
(iv) there is no on-site or, to the knowledge of the Stockholder, off-site
location to which the Company has transported or disposed of Hazardous Wastes,
Hazardous Materials or Hazardous Substances or arranged for the transportation
of Hazardous Wastes, Hazardous Materials or Hazardous Substances which is the
subject of any federal, state, local or foreign enforcement action or any other
investigation which could lead to any claim against the Company or LandCARE for
any clean-up cost, remedial work, damage to natural resources, property damage
or personal injury, including, but not limited to, any claim under (a) the
Comprehensive Environmental Response, Compensation and Liability Act of 1980, as
amended, (b) the Resource Conservation and Recovery Act, as amended, (c) the
Hazardous Materials Transportation Act, as amended, or (d) comparable state or
local statutes and regulations; and
(v) to the knowledge of the Stockholder, the Company has no contingent
liability in connection with any release of any Hazardous Waste, Hazardous
Material or Hazardous Substance into the environment.
2.10 PERSONAL PROPERTY. SCHEDULE 2.10 sets forth an accurate list of (a)
all personal property included in "plant, property and equipment" or any similar
category on the balance sheet of the Company, (b) all other personal property
owned by the Company with a fair market value in excess of $5,000, and (c) all
leases and agreements with respect to personal property, copies of which have
been delivered to LandCARE. SCHEDULE 2.10 indicates which assets are currently
owned, or were formerly owned, by the Stockholder or any affiliate of the
Company or the Stockholder. Except as set forth on SCHEDULE 2.10, (i) all
material personal property used by the Company in its business is either owned
by the Company or leased by the Company pursuant to a lease included on SCHEDULE
2.10, (ii) all of the personal property listed on SCHEDULE 2.10 is in good
working order and condition, ordinary wear and tear excepted and (iii) all
leases and agreements included on SCHEDULE 2.10 are in full force and effect and
constitute valid and binding agreements of the parties (and their successors)
thereto in accordance with their respective terms. Except as set forth on
SCHEDULE 2.10, the Company has good and marketable title to the tangible and
intangible personal property it purports to own, subject to no security
interest, pledge, lien, claim, conditional sales agreement, encumbrance, charge
or restriction on transfer.
2.11 SIGNIFICANT CUSTOMERS; MATERIAL CONTRACTS AND COMMITMENTS. SCHEDULE
2.11 sets forth a list of (i) all customers representing 1% or more of the
Company's revenues in its last full fiscal year ("Significant Customers"), and
(ii) all material contracts, commitments and similar agreements to which the
Company is a party or by which it or any of its properties are bound (including,
but not limited to, contracts with Significant Customers, joint venture or
partnership
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agreements, contracts with any labor organizations, strategic alliances and
options to purchase land). True, complete and correct copies of such agreements
have been made available to LandCARE. Except as described on SCHEDULE 2.11, (i)
none of the Significant Customers have canceled or substantially reduced or, to
the knowledge of the Company, are currently attempting or threatening to cancel
a contract or substantially reduce utilization of the services provided by the
Company, and (ii) the Company has complied with all commitments and obligations
pertaining to it, and is not in material default under any contracts or
agreements listed on SCHEDULE 2.11 and no notice of default under any such
contract or agreement has been received. The transactions contemplated by this
Agreement will not result in a default under or a breach or violation of, or
adversely affect the rights and benefits afforded to the Company by, any such
contracts or agreements. SCHEDULE 2.11 also includes a summary description of
all plans or projects relating to the Company's business involving the opening
of new operations, expansion of existing operations, the acquisition of any
property, business or assets requiring, in any event, the payment of more than
$50,000 in the aggregate.
2.12 REAL PROPERTY. SCHEDULE 2.12 includes a list of all real property
leased by the Company at the date hereof (the "Real Property"), and all other
real property, if any, used by the Company in the conduct of its business. The
Company owns no real property. True, complete and correct copies of all leases
and agreements with respect to Real Property leased by the Company have been
delivered to LandCARE, and an indication as to which such properties, if any,
were formerly owned, by the Stockholder or any affiliates of the Company or the
Stockholder is included in SCHEDULE 2.12. All leases relating to Real Property
leased by the Company from the Stockholder or any affiliate of the Stockholder
have been terminated. Except as set forth on SCHEDULE 2.12, all of such leases
included on SCHEDULE 2.12 are in full force and effect and constitute valid and
binding agreements of the parties (and their successors) thereto in accordance
with their respective terms. There are no leases, tenancy agreements, easements,
covenants, restrictions or any other instruments, agreements or arrangements
which create in or confer on any party, other than the Company, the right to
occupy or possess all or any portion of the Real Property or create in or confer
on any such party any right, title or interest in or to the Real Property or any
portion thereof or any interest therein; no party other than the Company
occupies or possesses the Real Property or any portion thereof; there is legal
and adequate ingress and egress between each tract of Real Property and an
adjacent (or, if none, the closest) public roadway; the Real Property is
properly zoned in order to allow its current use in the Company's businesses;
and there are no claims or demands pending or threatened by any party against
the Real Property which, if valid, would create in, or confer on, any party
other than the Company, any right, title or interest in or to the Real Property
or any portion thereof. None of the buildings, structures or improvements
described on SCHEDULE 2.12, or the operation or maintenance thereof as now
operated or maintained, contravenes any zoning ordinance or other administrative
regulation or violates any restrictive covenant or any provision of law, the
effect of which would materially interfere with or prevent their continued use
for the purposes for which they are now being used or would adversely affect the
value thereof or the interest of the Company therein.
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2.13 INSURANCE. SCHEDULE 2.13 sets forth an accurate list as of the date
hereof of all insurance policies now carried by the Company and an accurate list
of all insurance loss runs and workers compensation claims received for the past
three policy years. Such insurance policies evidence all of the insurance that
the Company is required to carry pursuant to all of its contracts and other
agreements and pursuant to all applicable laws, and, to the knowledge of the
Stockholder, provide adequate coverage against the risks involved in the
Company's business. Except as set forth on SCHEDULE 2.13, none of such policies
is a "claims made" policy.
2.14 COMPENSATION; EMPLOYMENT AGREEMENTS; ORGANIZED LABOR MATTERS.
SCHEDULE 2.14 sets forth an accurate list showing all officers, directors and
key employees of the Company, listing all employment agreements with such
officers, directors and key employees and the rate of compensation (and the
portions thereof attributable to salary, bonus and other compensation,
respectively) of each of such persons as of the Balance Sheet Date. Except as
set forth on SCHEDULE 2.14, since the Balance Sheet Date, there have been no
increases in the base compensation payable or any special bonuses to any
officer, director, key employee or other employee.
Except as set forth on SCHEDULE 2.14, (i) the Company is not bound by or
subject to (and none of its respective assets or properties is bound by or
subject to) any arrangement with any labor union, (ii) no employees of the
Company are represented by any labor union or covered by any collective
bargaining agreement, (iii) to the knowledge of the Company, no campaign to
establish such representation is in progress and (iv) there is no pending or, to
the best of the Company's knowledge, threatened, labor dispute involving the
Company and any group of its employees. The Company has not experienced any
labor interruptions over the past five years.
2.15 EMPLOYEE BENEFIT PLANS. SCHEDULE 2.15 sets forth an accurate schedule
showing all employee benefit plans of Company, including all agreements or
arrangements (other than agreements or arrangements set forth on SCHEDULE 2.14)
containing "golden parachute" or other similar provisions, and deferred
compensation agreements, together with true, complete and correct copies of such
plans, agreements and any trusts related thereto, and classifications of
employees covered thereby as of the Balance Sheet Date. Except for the employee
benefit plans, if any, described on SCHEDULE 2.15, the Company does not sponsor,
maintain or contribute to any plan, program, fund or arrangement that
constitutes an "employee pension benefit plan," nor does the Company have any
obligation to contribute to or accrue or pay any benefits under any deferred
compensation or retirement funding arrangement on behalf of any employee or
employees (such as, for example, and without limitation, any individual
retirement account or annuity, any "excess benefit plan" (within the meaning of
Section 3(36) of the Employee Retirement Income Security Act of 1974, as amended
("ERISA")), or any non-qualified deferred compensation arrangement). For the
purposes of this Agreement, the term "employee pension benefit plan" shall have
the same meaning as is given that term in Section 3(2) of ERISA. The Company has
not sponsored, maintained or contributed to any employee pension benefit plan
and is not required to contribute to
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any retirement plan pursuant to the provisions of any collective bargaining
agreement establishing the terms and conditions of employment of any of the
Company's employees other than the plans set forth on SCHEDULE 2.15.
The Company is not now, and will not as a result of its past activities
become, liable to the Pension Benefit Guaranty Corporation (the "PBGC") or to
any multi employer employee pension benefit plan under the provisions of Title
IV of ERISA. All employee benefit plans listed on SCHEDULE 2.15 and the
administration thereof are in substantial compliance with their terms and all
applicable provisions of ERISA and the regulations issued thereunder, as well as
with all other applicable federal, state and local statutes, ordinances and
regulations. All accrued contribution obligations of the Company with respect to
any plan listed on SCHEDULE 2.15 have either been fulfilled in their entirety or
are fully reflected on the balance sheet of the Company as of the Balance Sheet
Date. The Company has no plans that are intended to qualify under Section 401(a)
of the Internal Revenue Code of 1986, as amended (the "Code"), and has never
been required to file reports or other documents with any governmental agency or
required to distribute reports or plans to plan participants or beneficiaries.
Neither the Stockholder, nor any plan listed in SCHEDULE 2.15 nor the Company
has engaged in any transaction prohibited under the provisions of Section 4975
of the Code or Section 406 of ERISA. No plan listed on SCHEDULE 2.15 has
incurred an accumulated funding deficiency, as defined in Section 412(a) of the
Code and Section 302(1) of ERISA; and the Company has not incurred any liability
for excise tax or penalty due to the Internal Revenue Service or any liability
to the PBGC. No plan listed on SCHEDULE 2.15 subject to the provisions of Title
IV of ERISA has been terminated; there have been no "reportable events" (as that
phrase is defined in Section 4043 of ERISA) with respect to any such plan listed
on SCHEDULE 2.15; the Company has not incurred liability under Section 4062 of
ERISA; and no circumstances exist pursuant to which the Company could have any
direct or indirect liability whatsoever (including, but not limited to, any
liability to any multi employer plan or the PBGC under Title IV of ERISA or to
the Internal Revenue Service for any excise tax or penalty, or being subject to
any statutory lien to secure payment of any such liability) with respect to any
plan now or heretofore maintained or contributed to by any entity other than the
Company that is, or at any time was, a member of a "controlled group" (as
defined in Section 412(n)(6)(B) of the Code) that includes the Company.
2.16 CONFORMITY WITH LAW; LITIGATION. Except as set forth on SCHEDULE
2.16, there are no claims, actions, suits or proceedings pending or, to the best
knowledge of the Stockholder, threatened, against or affecting the Company (as
any of its officers and directors in their capacities as such), at law or in
equity, or before or by any federal, state, municipal or other governmental
department, commission, board, bureau, agency or instrumentality having
jurisdiction over the Company. Except as set forth on SCHEDULE 2.16, no
unresolved notice of any claim, action, suit or proceeding, whether pending or
threatened, has been received by the Company during the last five years and, to
the best knowledge of the Stockholder, there is no basis therefor. Except as set
forth on SCHEDULE 2.16, there are no outstanding judgments, orders, writs,
injunctions or decrees against
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the Company. Except as set forth on SCHEDULE 2.16, the Company has conducted and
now conducts its business in material compliance with all laws, regulations,
writs, injunctions, decrees and orders applicable to the Company or its assets.
The Company is not in violation of any material law or regulation or any order
of any court or federal, state, municipal or other governmental department,
commission, board, bureau, agency or instrumentality having jurisdiction over
any of them. The Company has conducted and is conducting its business in
substantial compliance with the requirements, standards, criteria and conditions
set forth in applicable federal, state and local statutes, ordinances, permits,
licenses, orders, approvals, variances, rules and regulations, including all
such permits, licenses, orders and other governmental approvals set forth on
SCHEDULES 2.1, 2.8 and 2.9.
2.17 TAXES. For purposes of this Agreement, the term "Taxes" shall mean
all taxes, charges, fees, levies or other assessments, including, without
limitation, income, gross receipts, excise, property, sales, withholding, social
security, unemployment, occupation, use, service, license, payroll, franchise,
transfer and recording taxes, fees and charges, imposed by the United States or
any state, local or foreign government or subdivision or agency thereof ("Taxing
Authority"), whether computed on a separate, consolidated, unitary, combined or
any other basis; and such term shall include any interest, fines, penalties or
additional amounts attributable to or imposed with respect to any such taxes,
charges, fees, levies or other assessments. As used herein, the term "Company
Subsidiaries" means the subsidiaries, if any, of the Company; it being
understood that there may be no such subsidiaries.
Except as set forth on SCHEDULE 2.17, all Tax returns ("Returns") required
to be filed with respect to any Tax for which any of the Company and the Company
Subsidiaries (if any) is liable have been duly and timely filed with the
appropriate Taxing Authority, each Tax shown to be payable on each such Return
has been paid, each Tax payable by the Company or a Company Subsidiary by
assessment has been timely paid in the amount assessed, and adequate reserves
have been established on the consolidated books of the Company and the Company
Subsidiaries for all Taxes for which any of the Company and the Company
subsidiaries is liable, but the payment of which is not yet due. Neither the
Company nor any Company Subsidiary is, or ever has been, liable for any Tax
payable by reason of the income or property of a person or entity other than the
Company or a Company Subsidiary. Each of the Company and the Company
Subsidiaries has timely filed true, correct and complete declarations of
estimated Tax in each jurisdiction in which any such declaration is required to
be filed by it. No Liens for Taxes exist upon the assets of the Company or any
Company Subsidiary except Liens for Taxes which are not yet due. Neither the
Company nor any Company Subsidiary is, or ever has been, subject to Tax in any
jurisdiction outside the United States. No litigation with respect to any Tax
for which the Company or any Company Subsidiary is asserted to be liable is
pending or, to the knowledge of the Company or the Stockholder, threatened, and
no basis which the Company or any Stockholder believes to be valid exists on
which any claim for any such Tax can be asserted against the Company or any
Company
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Subsidiary. There are no requests for rulings or determinations in respect of
any Taxes pending between the Company or any Company Subsidiary and any Taxing
Authority. No extension of any period during which any Tax may be assessed or
collected and for which the Company or any Company Subsidiary is or may be
liable has been granted to any Taxing Authority. Neither the Company nor any
Company Subsidiary is or has been party to any tax allocation or sharing
agreement. All amounts required to be withheld by any of the Company and the
Company Subsidiaries and paid to governmental agencies for income, social
security, unemployment insurance, sales, excise, use and other Taxes have been
collected or withheld and paid to the proper Taxing Authority. The Company and
each Company Subsidiary have made all deposits required by law to be made with
respect to employees' withholding and other employment Taxes. Neither the
Company nor the Stockholder is a "foreign person," as that term is referred to
in Section 1445(f)(3) of the Code. The Company has not filed a consent pursuant
to Section 341 (f) of the Code or any comparable provision of any other tax
statute and has not agreed to have Section 341 (f)(2) of the Code or any
comparable provision of any other Tax statute apply to any disposition of an
asset. The Company has not made, is not obligated to make and is not a party to
any agreement that could require it to make any payment that is not deductible
under Section 280G of the Code. No asset of the Company or of any Company
Subsidiary is subject to any provision of applicable law which eliminates or
reduces the allowance for depreciation or amortization with respect to that
asset below the allowance generally available to an asset of its type. The
Company uses the accrual method of accounting for income tax purposes, and the
Company's methods of accounting have not changed in the past five years. The
Company is not an investment company as defined in Section 351(e)(1) of the
Code. The Company has a taxable year ended December 31 and has not made an
election to retain a fiscal year other than December 31 under Code Section 444.
The Company is not party to any joint venture, partnership, or other arrangement
that is treated as a partnership for federal income tax purposes.
2.18 NO VIOLATIONS; ALL REQUIRED CONSENTS OBTAINED. The Company is not in
violation of any of its Charter Documents. Neither the Company nor, to the
knowledge of the Stockholder, any other party thereto is in material default
under any lease, instrument, license, permit or material agreement to which the
Company is a party or by which its properties are bound (the "Material
Documents"). Except as set forth on SCHEDULE 2.18, (a) the execution of this
Agreement by the Company and the Stockholder and the performance by the Company
and the Stockholder of their obligations hereunder and the consummation of the
transactions contemplated hereby will not result in any violation or breach or
constitute a default under any of the terms or provisions of the Material
Documents or the Charter Documents, and (b) at and after the Closing Date the
Surviving Corporation will be entitled to the rights and benefits under the
Material Documents to which the Company is entitled immediately prior to the
Closing. Except as set forth on SCHEDULE 2.18 (and except for consents already
obtained), none of the Material Documents requires notice to, or the consent or
approval of, any governmental agency or other third party with respect to any of
the transactions contemplated hereby in order to remain in full force and
effect, and consummation of
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the transactions contemplated hereby will not give rise to any right to
termination, cancellation or acceleration or loss of any right or benefit.
Except as set forth on SCHEDULE 2.18, none of the Material Documents prohibits
the use or publication of the name of any other party to such Material Document,
and none of the Material Documents prohibits or restricts the Company or will
prevent or restrict the Company or LandCARE from freely providing services to
any person.
2.19 ABSENCE OF CHANGES. Since the Balance Sheet Date, the Company has
conducted its operations in the ordinary course of business and, except as set
forth on SCHEDULE 2.19, there has not been:
(i) any change in the business, assets, liabilities or financial
condition of the Company which would have a Material Adverse Effect;
(ii) any damage, destruction or loss (whether or not covered by
insurance) affecting any of the material assets of the Company or the
business of the Company which would have a Material Adverse Effect;
(iii) any change in the authorized capital of the Company or its
outstanding securities or any change in its ownership interests or any
grant of any options, warrants, calls, conversion rights or commitments;
(iv) any declaration or payment of any dividend or distribution with
respect to the capital stock or any direct or indirect redemption,
purchase or other acquisition of any of the capital stock of the Company;
(v) any increase or commitment to increase the compensation, bonus,
sales commissions or fee arrangement payable or to become payable by the
Company to any of its officers, directors, stockholders, employees,
consultants or agents;
(vi) any work interruptions, labor grievances or claims filed, or
any event or condition of any character, materially adversely affecting
the business of the Company;
(vii) any sale or transfer, or any agreement to sell or transfer,
any material assets, property or rights of the Company to any person;
(viii)any cancellation, or agreement to cancel, any indebtedness or
other obligation owing to the Company;
(ix) any plan, agreement or arrangement granting any preferential
rights to purchase or acquire any interest in any of the assets, property
or rights of the Company or
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requiring consent of any party to the transfer and assignment of any such
assets, property or rights;
(x) any purchase or acquisition of, or agreement, plan or
arrangement to purchase or acquire, any property, rights or assets outside
of the ordinary course of the Company's business;
(xi) any waiver of any material rights or claims of the Company;
(xii) any amendment or termination of any contract, agreement,
license, permit or other right to which the Company is a party which would
have a Material Adverse Effect;
(xiii)any contract, commitment or liability entered into or incurred
or any capital expenditures made except in the normal course of business
consistent with past practice in an individual amount not in excess of
$10,000 and in an aggregate amount not in excess of $50,000; or
(xiv) any transaction by the Company outside the ordinary course of
its business.
2.20 POWERS OF ATTORNEY. SCHEDULE 2.20 sets forth a schedule as of the
date of this Agreement of the name of each person, corporation, firm or other
entity holding any general or special power of attorney from the Company and a
description of the terms of each such power.
2.21 COMPETING LINES OF BUSINESS; RELATED-PARTY TRANSACTIONS. Except as
set forth on SCHEDULE 2.21, neither the Stockholder nor any other affiliate of
the Company owns, directly or indirectly, any interest in, or is an officer,
director, employee or consultant of or otherwise receives remuneration from, any
business which is a competitor, lessor, lessee, customer or supplier of the
Company. Except as set forth on SCHEDULE 2.21, no officer, director or
stockholder of the Company has, nor during the period beginning January 1, 1995
through the date hereof had, any interest in any property, real or personal,
tangible or intangible, used in or pertaining to the Company's business.
2.22 DISCLOSURE. To the knowledge of the Stockholder, except as set forth
on SCHEDULE 2.22, the Stockholder has provided LandCARE with all the information
that LandCARE has requested in analyzing whether to consummate the transactions
contemplated hereby. None of the information so provided nor any representation
or warranty of the Stockholder contained in this Agreement contains any untrue
statement of a material fact or omits to state a material fact necessary in
order to make the statements herein or therein, in light of the circumstances
under which they were made, not misleading. There is no fact known to the
Stockholder which has specific application to the Company or its business or
assets (other than general economic or industry conditions) which would have a
Material Adverse Effect or, so far as the Stockholder can reasonably foresee,
threatens to have
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a Material Adverse Effect, on the Company or its business or assets, or the
condition (financial or otherwise), results of operations or prospects of the
Company, which has not been described in the Schedules hereto.
2.23 CERTAIN BUSINESS PRACTICES. Neither the Company nor any person acting
on behalf of the Company has given or offered anything of value to any
governmental official, political party or candidate for government office nor
has it or any of them otherwise taken any action which would cause the Company
to be in violation of the Foreign Corrupt Practices Act of 1977, as amended, or
any law of similar effect.
2.24 NOTICE TO BARGAINING AGENTS. The Company has satisfied any
requirement for notice of the transactions contemplated by this Agreement under
applicable collective bargaining agreements.
2.25 NOTICES AND CONSENTS. The Company has given any notices to third
parties and has obtained any third party consents that may be necessary to
consummate the transactions contemplated hereby.
2.26 INVENTORY; WORKING CAPITAL; OTHER FINANCIAL MATTERS. The Company's
inventory and working capital levels are adequate to successfully operate the
business, and there has been no unusual build-up of cash needs at the date
hereof.
2.27 YEAR 2000 COMPLIANCE. Except as set forth on SCHEDULE 2.27, the
properties and assets of the Company, including, but not limited to, computer
hardware, microprocessor driven equipment, software and data, owned or used by
the Company will accurately process date and time data after December 31, 1999,
and the Company will suffer no loss of functional ability when processing dates
and related data outside the 1900-1999 year range.
2.28 RELIANCE UPON ORAL REPRESENTATIONS. The Company and the Stockholder
each represent and warrant: (a) that each has been fully informed by his or its
legal counsel and by his or its own independent judgment of the terms,
conditions and effects of this Agreement; (b) that each has been represented by
independent legal counsel of his or its choice throughout all negotiations
preceding the execution of this Agreement and has received the advice of his or
its attorney in entering into this Agreement; (c) that no promise or inducement
has been offered or made to him or it except as expressly stated in this
Agreement or in any Employment Agreement and other written agreements entered
into pursuant to this Agreement; and (d) that this Agreement is executed without
reliance on any oral statement or oral representation by any other party or any
other party's agent or attorney.
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3. REPRESENTATIONS OF LANDCARE
LandCARE represents and warrants as follows:
3.1 DUE ORGANIZATION. LandCARE is duly incorporated, validly existing and
in good standing under the laws of the state of Delaware, and has the requisite
power and authority to carry on its business as it is now being conducted.
LandCARE is qualified to do business and is in good standing in each
jurisdiction in which the nature of its business makes such qualification
necessary, except where the failure to be so authorized or qualified would not
have a Material Adverse Effect.
3.2 AUTHORIZATION. (i) The representative of LandCARE executing this
Agreement has the authority to enter into and bind LandCARE to the terms of this
Agreement and (ii) LandCARE has the full legal right, power and authority to
enter into this Agreement and to consummate the transactions contemplated
hereby.
3.3 NO VIOLATIONS. The execution of this Agreement and the performance of
the obligations hereunder and the consummation of the transactions contemplated
hereby will not result in any violation or breach or constitute a default under
any of the terms or provisions of the Restated Certificate of Incorporation, as
amended, or Bylaws, as amended, of LandCARE.
3.4 VALIDITY OF OBLIGATIONS. The execution and delivery of this Agreement
by LandCARE and the performance of the transactions contemplated hereby have
been duly and validly authorized by the Board of Directors of LandCARE and this
Agreement has been duly and validly authorized by all necessary corporate action
and is a legal, valid and binding obligation of LandCARE.
3.5 REGISTRATION STATEMENT. The Prospectus dated July 14, 1998 delivered
to the Stockholder, receipt of which is hereby acknowledged by the Stockholder,
and a copy of which is attached hereto, does not contain a misrepresentation of
a material fact or omit to state a material fact necessary to make statements
made therein, in light of the circumstances under which they were made, not
misleading.
4. DELIVERIES
4.1 INSTRUMENTS OF TRANSFER. The Stockholder is delivering to LandCARE
certificates representing all of the Shares, duly endorsed (or accompanied by
duly executed stock powers).
4.2 CERTIFICATE OF MERGER. The appropriate parties hereto are executing
and delivering for filing with the appropriate authorities a certificate of
merger or similar document for purposes of effecting the Merger.
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4.3 EMPLOYMENT AGREEMENT. The Company and the persons identified in
SCHEDULE 4.3 are entering into Employment Agreements in the form of Annex I.
4.4 OPINION OF COUNSEL. Counsel to the Company and the Stockholder is
delivering an opinion to LandCARE dated the date hereof in the form attached
hereto as Annex II.
4.5 GOOD STANDING CERTIFICATES. The Stockholder is delivering to LandCARE
certificates, dated as of a date no earlier than ten days prior to the date
hereof, duly issued by the appropriate governmental authority in the State of
Incorporation and in each state in which the Company is authorized to do
business, showing the Company to be in good standing and authorized to do
business therein.
4.6 LEASE. The Company is entering into leases of the properties
identified on SCHEDULE 4.6 in the form attached hereto as Annex III. The
Stockholder is delivering to LandCARE evidence of the termination of all leases
relating to Real Property leases by the Company from the Stockholder or any
affiliate of the Stockholder.
4.7 INDEBTEDNESS TO COMPANY. The Stockholder and its Affiliates are
repaying any outstanding indebtedness they may have to the Company.
4.8 CONSENTS. The Stockholder is delivering to LandCARE copies of any
third party consents required in connection with the consummation of the
transactions contemplated hereby.
4.9 RESIGNATIONS OF DIRECTORS AND OFFICERS. The Stockholder is delivering
to LandCARE the resignations of such directors and officers of the Company as
have been requested by LandCARE.
4.10 SATISFACTION OF CERTAIN DEBTS. At the Closing, LandCare shall cause
the Surviving Corporation to satisfy in full the obligations of the Company set
forth on SCHEDULE 4.10.
4.11 ENVIRONMENTAL INDEMNITY AGREEMENT. The Stockholder and LandCare are
entering into an Environmental Indemnity Agreement dated the date hereof.
5. POST-CLOSING COVENANTS
The parties to this Agreement further covenant and agree as follows:
5.1 FUTURE COOPERATION; FURTHER ASSURANCES. The Stockholder, the Surviving
Corporation and LandCARE shall each deliver or cause to be delivered to the
other following the date hereof such additional instruments as the other may
reasonably request for the purpose of effecting
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the Merger and fully carrying out the intent of this Agreement. LandCARE shall
provide the Stockholder reasonable access to the books and records of the
Surviving Corporation after the Closing Date for purposes of tax compliance and
any other reasonable purpose.
5.2 EXPENSES. LandCARE will pay the fees, expenses and disbursements of
LandCARE and its agents, representatives, financial advisors, accountants and
counsel incurred in connection with the execution, delivery and performance of
this Agreement. The Stockholder will pay the fees, expenses and disbursements of
the Stockholder and its agents, representatives, financial advisors, accountants
and counsel incurred in connection with the execution, delivery and performance
of this Agreement. The Stockholder shall pay any sales, use, transfer, real
property transfer, recording, gains, stock transfer and other similar taxes and
fees ("Transfer Taxes") imposed in connection with the Merger. The Stockholder
shall file all necessary documentation and returns with respect to such Transfer
Taxes. In addition, the Stockholder acknowledges that the Stockholder, and not
the Surviving Corporation or LandCARE, will pay all taxes (income or otherwise),
if any, due upon receipt of the consideration payable pursuant to this
Agreement.
5.3 CERTAIN AGREEMENTS. Upon the request of LandCARE at any time after the
Closing, the Stockholder and the Surviving Corporation shall terminate any
existing agreements to which the Company and the Stockholder or any affiliates
of the Stockholder are parties, except the agreements set forth on SCHEDULE 5.3.
5.4 PREPARATION AND FILING OF TAX RETURNS.
(a) The Stockholder shall file or cause to be filed all Tax Returns
for all taxable periods that end on or before the Closing Date, but in each case
only after LandCARE has reviewed such filings and consented thereto.
(b) LandCARE shall file or cause to be filed all Tax Returns for all
taxable periods ending after the Closing Date.
(c) Each party hereto shall, and shall cause its subsidiaries and
affiliates to, provide to each of the other parties hereto such cooperation and
information as any of them reasonably may request in filing any Tax Returns,
amended Tax Returns or claim for refund, determining a liability for Taxes or a
right to refund of Taxes or in conducting any audit or other proceeding with
respect to Taxes. Such cooperation and information shall include providing
copies of all relevant portions of relevant Tax Returns, together with relevant
accompanying schedules and relevant work papers, relevant documents relating to
rulings or other determinations by Taxing Authorities and relevant records
concerning the ownership and Tax basis of property, which such party may
possess. Each party shall make its employees reasonably available on a mutually
convenient basis at its cost to provide explanation of any documents or
information so provided.
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Subject to the preceding sentence, each party required to file tax returns
pursuant to this Agreement shall bear all costs of filing such tax returns.
5.5 STOCK OPTIONS. As promptly as practicable after the Closing, LandCare
shall cause its Compensation Committee to grant options to acquire an aggregate
of 33,334 shares of LandCare Stock to key employees of the Company designated by
the Stockholder. Such options shall be granted pursuant to and in accordance
with the LandCare 1998 Long-Term Incentive Plan, and shall have exercise prices
equal to the closing price of LandCare shares on the New York Stock Exchange on
the Closing Date (as reported in the Wall Street Journal).
6. INDEMNIFICATION
The Stockholder and LandCARE each make the following covenants that are
applicable to them, respectively:
6.1 SURVIVAL OF STOCKHOLDER'S REPRESENTATIONS AND WARRANTIES.
(a) The representations and warranties of the Stockholder made in
Sections 2.1 (Due Organization), 2.2 (Authorization), 2.3 (Capital Stock of the
Company) and 2.17 (Taxes) of this Agreement shall survive the Closing until the
expiration of the periods prescribed by the applicable statutes of limitations
(including any extensions thereof) relating thereto; the representations and
warranties of the Stockholder made in Section 2.9 (Environmental Matters) shall
survive the Closing for a period of five years after the Closing Date; and the
other representations and warranties of the Stockholder made herein shall
survive the Closing for a period of one year after the Closing Date; provided,
however, that representations and warranties and indemnification provisions with
respect to which a claim is made within the survival period shall survive until
such claim is finally determined and paid.
(b) The representations and warranties of LandCARE made in this
Agreement shall survive the Closing for a period of one year following the
Closing Date; provided, however, that representations and warranties with
respect to which a claim is made within such one-year period shall survive until
such claim is finally determined and paid.
(c) The date on which a representation or warranty expires as
provided herein is herein called the "Expiration Date." No claim for
indemnification may be made with respect to a representation or warranty after
the Expiration Date, other than claims based on fraud.
6.2 GENERAL INDEMNIFICATION BY THE STOCKHOLDER. The Stockholder covenants
and agrees that it will indemnify, defend, protect, and hold harmless the
Surviving Corporation,
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LandCARE and its subsidiaries and all of their officers, directors, employees,
stockholders, agents, representatives and affiliates at all times from and after
the date of this Agreement until the Expiration Date from and against all
claims, damages actions, suits, proceedings, demands, assessments, adjustments,
costs and expenses (including specifically, but without limitation, reasonable
attorneys' fees and expenses of investigation) (collectively "Damages") incurred
by such indemnified person as a result of or incident to (i) any breach of any
representation or warranty of the Stockholder set forth herein, and (ii) any
breach or nonfulfillment of any covenant or agreement by the Company or the
Stockholder under this Agreement.
6.3 SPECIFIC INDEMNIFICATION BY THE STOCKHOLDER. The Stockholder covenants
and agrees that he will indemnify, defend, protect, and hold harmless the
Surviving Corporation, LandCARE and its subsidiaries and all of their officers,
directors, employees, stockholders, agents, representatives and affiliates at
all times from and after the date of this Agreement until the Expiration Date
from and against any taxes due and penalties, interest, assessments,
adjustments, costs, and expenses arising out of any matter described on SCHEDULE
6.3.
6.4 INDEMNIFICATION BY LANDCARE. LandCARE covenants and agrees that it
will indemnify, defend, protect and hold harmless the Stockholder at all times
from and after the date of this Agreement until the Expiration Date from and
against all Damages incurred by the Stockholder as a result of (i) any breach of
any representation or warranty of LandCARE set forth herein; and (ii) any breach
or nonfulfillment of any covenant or agreement by LandCARE under this Agreement.
6.5 THIRD PERSON CLAIMS. Promptly after any party hereto (the "Indemnified
Party") has received notice of or has knowledge of any claim by a person not a
party to this Agreement ("Third Person") or the commencement of any action or
proceeding by a Third Person that may give rise to a right of indemnification
hereunder, such Indemnified Party shall give to the party obligated to provide
indemnification hereunder (an "Indemnifying Party") written notice of such claim
or the commencement of such action or proceeding; provided, however, that the
failure to give such notice will not relieve such Indemnifying Party from
liability under this Section with respect to such claim, action or proceeding,
except to the extent that the Indemnifying Party has been actually prejudiced as
a result of such failure. The Indemnifying Party (at its own expense) shall have
the right and shall be given the opportunity to associate with the Indemnified
Party in the defense of such claim, suit or proceedings, and may select counsel
for the Indemnified Party, such counsel to be reasonably satisfactory to the
Indemnified Party. The Indemnified Party shall not, except at its own cost, make
any settlement with respect to any such claim, suit or proceeding without the
prior consent of the Indemnifying Party, which consent shall not be unreasonably
withheld or delayed. It is understood and agreed that in situations where
failure of the Indemnifying Party to settle a claim expeditiously could have an
adverse effect on the Indemnified Party, the failure of the Indemnifying Party
to act upon the Indemnified Party's request for consent to such settlement
within five business days of the
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Indemnifying Party's receipt of notice thereof from the Indemnified Party shall
be deemed to constitute consent by the Indemnifying Party of such settlement for
purposes of this Section.
6.6 METHOD OF PAYMENT. Claims for indemnification may be paid in cash or
shares of LandCare Stock. The Stockholder hereby authorizes LandCare to withhold
delivery of an aggregate of One Hundred Eleven Thousand, One Hundred and Eleven
(111,111) shares of LandCare Stock otherwise deliverable to the Stockholder
pursuant to this Agreement for a period of one year following the Closing Date,
which shares shall be used to satisfy any indemnification obligation the
Stockholder may have to LandCare, unless the Stockholder elects to pay any such
amount in cash. In the event any such claim is paid by the delivery of any of
such shares, such shares shall be valued based on the closing prices of LandCare
shares on the New York Stock Exchange for the 60 trading days ending ten days
prior to the date any such payment is to be made unless the parties otherwise
agree. In the event that the Stockholder becomes liable to LandCare for a claim
for indemnification pursuant to this Agreement that cannot be satisfied by the
delivery of such shares, the Stockholder shall be permitted to sell any or all
of the shares of LandCare Stock received pursuant to this Agreement without
restriction, including the restrictions set forth in Section 9.2, beginning on
the date one year after the Closing Date.
7. NONCOMPETITION
7.1 PROHIBITED ACTIVITIES. As partial consideration for the execution,
delivery and performance of this Agreement by LandCARE, the Stockholder will
not, for a period of five years following the Closing Date, for any reason
whatsoever, directly or indirectly, for himself or on behalf of or in
conjunction with any other person, persons, company, partnership, corporation or
business of whatever nature:
(i) own, manage, operate, join, control, consult or advise (whether
or not compensated for such consultation or advice), or participate in, or
render assistance to, or derive any benefit whatever from, any business
offering services or products in direct competition with the Surviving
Corporation at the date hereof (the "Business") within 100 miles of where
the Company conducted business at any time within one year prior to the
Closing Date (the "Territory");
(ii) engage, as an officer, director, shareholder, owner, partner,
joint venturer, or in a sales or managerial capacity, whether as an
employee, independent contractor, consultant or advisor, or as a sales
representative, in any business offering services or products in direct
competition with the Surviving Corporation or LandCARE within the
Territory; provided that such restriction shall apply only to the Business
and any incidental expansions thereto;
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(iii) call upon any person who is, at that time, an employee of
LandCARE or any of its subsidiaries (including the Surviving Corporation)
for the purpose or with the intent of enticing such employee away from or
out of the employ of LandCARE or any of its subsidiaries (including the
Surviving Corporation);
(iv) call upon any person or entity which is, at that time, or which
has been, within one year prior to the Closing Date, a customer of
LandCARE, the Company or any of LandCARE's subsidiaries (including the
Surviving Corporation) for the purpose of soliciting or selling products
or services in direct competition with LandCARE or any of its subsidiaries
(including the Company) within the Territory.
Notwithstanding the above, the foregoing covenants shall not be deemed to
prohibit the Stockholder from acquiring as a passive investor with no
involvement in the operations or management of the business, not more than two
percent (2%) of the capital stock of a competing business whose stock is
publicly traded on a national securities exchange or over-the-counter market.
The provisions of this Section are independent of the noncompetition
provisions contained in any consulting or employment agreement to which the
Stockholder may be or may become a party in connection with the transactions
contemplated hereby. All such provisions are intended to be observed and
enforced in accordance with their terms.
7.2 EQUITABLE RELIEF. Because of the difficulty of measuring economic
losses to LandCARE as a result of a breach of the foregoing covenant, and
because of the immediate and irreparable damage that could be caused to LandCARE
for which it would have no other adequate remedy, the Stockholder agrees that
the foregoing covenant may be enforced by LandCARE in the event of breach by the
Stockholder, by injunctions, restraining orders and other equitable actions.
7.3 REASONABLE RESTRAINT. It is agreed by the parties hereto that the
foregoing covenants in this Section impose a reasonable restraint on the
Stockholder.
7.4 SEVERABILITY; REFORMATION. The covenants in this Section are severable
and separate, and the unenforceability of any specific covenant shall not affect
the provisions of any other covenant. Moreover, in the event any court of
competent jurisdiction shall determine that the scope, time or territorial
restrictions set forth are unreasonable, then it is the intention of the parties
that such restrictions be enforced to the fullest extent which the court deems
reasonable, and the Agreement shall thereby be reformed.
7.5 INDEPENDENT COVENANT. The Stockholder acknowledges that his covenants
set forth in this Section are material conditions to LandCARE's willingness to
execute and deliver this Agreement and to consummate the transactions
contemplated hereby. All of the covenants in this
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Section shall be construed as an agreement independent of any other provision in
this Agreement, and the existence of any claim or cause of action of the
Stockholder against LandCARE or any subsidiary thereof, whether predicated on
this Agreement or otherwise, shall not constitute a defense to the enforcement
by LandCARE of such covenants. It is specifically agreed that the period of five
years stated at the beginning of this Section, during which the agreements and
covenants of the Stockholder made in this Section shall be effective, shall be
computed by excluding from such computation any time during which the
Stockholder is in violation of any provision of this Section. The covenants
contained in Section shall not be affected by any breach of any other provision
hereof by any party hereto. Not withstanding any other provision hereof, no
action shall be initiated for breach of Section 7.1 after the date five years
after the Closing Date.
8. NONDISCLOSURE OF CONFIDENTIAL INFORMATION
8.1 GENERAL. The Stockholder recognizes and acknowledges that he has had
access to certain customer lists, confidential information of the Company, such
as operational policies, pricing and cost policies, and other information, that
will be valuable, special and unique assets of the Surviving Corporation and
LandCARE after the Closing Date. The Stockholder agrees that he will not
disclose such confidential information, or any confidential information of the
Surviving Corporation or LandCARE to which they may have access in the future,
to any person, firm, corporation, association or other entity for any purpose or
reason whatsoever, except (a) to authorized representatives of LandCARE, (b)
following the Closing, such information may be disclosed by the Stockholder as
may be required in the course of performing his duties for the Surviving
Corporation and (c) to counsel and other advisers, provided that such advisers
(other than counsel) agree to the confidentiality provisions of this Section,
unless (i) such information becomes known to the public generally through no
fault of the Stockholder, or (ii) disclosure is required by law or the order of
any governmental authority, provided, that prior to disclosing any information
pursuant to this clause (ii), the Stockholder shall give prior written notice
thereof to LandCARE and provide LandCARE with the opportunity to contest such
disclosure. In the event of a breach or threatened breach by the Stockholder of
the provisions of this Section, LandCARE shall be entitled to injunctive or
other equitable relief restraining the Stockholder from disclosing, in whole or
in part, such confidential information. Nothing herein shall be construed as
prohibiting LandCARE from pursuing any other available remedy for such breach or
threatened breach, including the recovery of damages.
8.2 EQUITABLE RELIEF. Because of the difficulty of measuring economic
losses as a result of the breach of the foregoing covenants, and because of the
immediate and irreparable damage that would be caused for which LandCARE would
have no other adequate remedy, the Stockholder agrees that the foregoing
covenants may be enforced against him by injunctions, restraining orders and
other appropriate equitable relief.
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8.3 SURVIVAL. The obligations of the parties under this Section shall
survive the termination of this Agreement for an unlimited time with respect to
proprietary information and a period of five years with respect to
non-proprietary information.
9 INTENDED TAX TREATMENT
9.1 TAX-FREE REORGANIZATION. The parties are entering into this Agreement
with the intention that the Merger qualify as a tax-free reorganization for
federal income tax purposes, except to the extent of any "boot" received, and
the Stockholder will not take any actions that disqualify the Merger for such
treatment. The Stockholder represents, warrants and covenants that:
(i) the Company operates at least one historic business line, or
owns at least a significant portion of its historic business assets, in each
case within the meaning of Reg. 1.368-1(d) under the Code; and
(ii) immediately after the Merger, the Company will hold
"substantially all of its properties" within the meaning of Section 368(a)(2)(E)
of the Code (that is, after the Merger, the Company will hold at least 90% of
the fair market value of the net assets, and at least 70% of the gross assets,
held by the Company immediately prior to the Merger.) For purposes of the
preceding sentence, amounts paid by the Company to dissenters, amounts paid by
the Company to shareholders who receive cash or other property and Company
assets used to pay reorganization expenses and all redemptions and distributions
(except for normal dividends) made by the Company immediately preceding the
Effective Time, pursuant to this Agreement or otherwise as part of the plan of
Merger provided for herein, will be included as assets of the Company held
immediately prior to the Merger.
9.2 RESTRICTIONS ON RESALE. The Stockholder agrees that he will not sell,
offer to sell, or otherwise transfer or dispose of, any shares of the LandCARE
Stock received by the Stockholder, engage in put, call, short-sale, straddle or
similar transactions, or in any other way reduce the Stockholder's risk of
owning shares of LandCARE Stock prior to the date two years after the Closing
Date except as set forth below, and agrees that the certificates evidencing the
LandCARE Stock to be received by the Stockholder will bear a legend evidencing
this restriction. Beginning on the date one year after the Closing Date, the
Stockholder may sell shares of LandCARE Stock received pursuant to this
Agreement pursuant to the LandCARE Liquidity Plan, a summary of which is
attached hereto as SCHEDULE 9.2.
10 SECURITIES LAW MATTERS
10.1 ECONOMIC RISK; SOPHISTICATION. The Stockholder acknowledges and
confirms that he has received and reviewed a Prospectus from LandCARE relating
to his acquisition of shares of LandCARE Stock hereunder. The Stockholder (A)
has such knowledge, sophistication and experience
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in business and financial matters that he is capable of evaluating the merits
and risks of an investment in the shares of LandCARE Stock, (B) fully
understands the nature, scope and duration of any limitations on transfer of
LandCARE Stock described in this Agreement and (C) can bear the economic risk of
an investment in the shares of LandCARE Stock.
10.2 COMPLIANCE WITH LAW. The Stockholder covenants that none of the
LandCARE Stock acquired by the Stockholder hereunder will be offered, sold,
assigned, hypothecated, transferred or otherwise disposed of by the Stockholder
except in full compliance with all applicable securities laws.
11. GENERAL
11.1 SUCCESSORS AND ASSIGNS. This Agreement and the rights of the parties
hereunder may not be assigned (except by operation of law) and shall be binding
upon and shall inure to the benefit of the parties hereto, the successors of
LandCARE, and the heirs and legal representatives of the Stockholder.
11.2 ENTIRE AGREEMENT. This Agreement (including the schedules, exhibits
and annexes attached hereto) and the documents delivered pursuant hereto
constitute the entire agreement and understanding among the Stockholder, the
Company and LandCARE, and supersede any prior agreement and understanding
relating to the subject matter of this Agreement. This Agreement, upon
execution, constitutes a valid and binding agreement of the parties hereto,
enforceable in accordance with its terms, and may be modified or amended only by
a written instrument executed by the parties hereto.
11.3 COUNTERPARTS. This Agreement may be executed simultaneously in two or
more counterparts, each of which shall be deemed an original and all of which
together shall constitute but one and the same instrument. The signatures to
this Agreement need not all be on a single copy of this Agreement, and may be
facsimiles rather than originals, and shall be fully as effective as though all
signatures were originals on the same copy.
11.4 BROKERS AND AGENTS. Each party represents and warrants that it
employed no broker or agent in connection with this transaction and agrees to
indemnify the other parties hereto against all loss, cost, damages or expense
arising out of claims for fees or commission of brokers employed or alleged to
have been employed by such indemnifying party.
11.5 NOTICES. All notices and communications required or permitted
hereunder shall be in writing and may be given by depositing the same in United
States mail, addressed to the party to
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be notified, postage prepaid and registered or certified with return receipt
requested, or by delivering the same in person to an officer or agent of such
party, or by facsimile, as follows:
If to LandCARE, addressed to it at:
LandCARE USA, Inc.
5850 San Felipe, Suite 500
Houston, Texas 77057
Attn: General Counsel
Facsimile No. (713) 965-0343
If to the Company, addressed to it at:
Horticulture Industries, Inc.
4824 Ashton Road
Sarasota, Florida 34233
If to the Stockholder, addressed to him at the Company's address,
or to such other address as any party hereto shall specify pursuant to this
Section from time to time.
11.6 GOVERNING LAW. This Agreement shall be construed in accordance with
the laws of the State of Florida without regard to its principles governing
conflicts of laws.
11.7 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The representations,
warranties, covenants and agreements of the parties made herein and at the time
of the Closing or in writing delivered pursuant to the provisions of this
Agreement shall survive the consummation of the transactions contemplated hereby
and any examination on behalf of the parties until the applicable Expiration
Date or as otherwise provided herein.
11.8 EXERCISE OF RIGHTS AND REMEDIES. Except as otherwise provided herein,
no delay of or omission in the exercise of any right, power or remedy accruing
to any party as a result of any breach or default by any other party under this
Agreement shall impair any such right, power or remedy, nor shall it be
construed as a waiver of or acquiescence in any such breach or default, or of
any similar breach or default occurring later; nor shall any waiver of any
single breach or default be deemed a waiver of any other breach or default
occurring before or after that waiver.
11.9 TIME. Time is of the essence with respect to this Agreement.
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11.10 REFORMATION AND SEVERABILITY. In case any provision of this
Agreement shall be invalid, illegal or unenforceable, it shall, to the extent
possible, be modified in such manner as to be valid, legal and enforceable but
so as to most nearly retain the intent of the parties, and if such modification
is not possible, such provision shall be severed from this Agreement, and in
either case the validity, legality and enforceability of the remaining
provisions of this Agreement shall not in any way be affected or impaired
thereby.
11.11 REMEDIES CUMULATIVE. No right, remedy or election given by any term
of this Agreement shall be deemed exclusive but each shall be cumulative with
all other rights, remedies and elections available at law or in equity.
11.12 CAPTIONS. The headings of this Agreement are inserted for
convenience only, and shall not constitute a part of this Agreement or be used
to construe or interpret any provision hereof.
11.13 PRESS RELEASES AND PUBLIC ANNOUNCEMENTS. No party shall issue any
press release or make any public announcement relating to the subject matter of
this Agreement without the prior written approval of the other party; provided,
however, that LandCARE may issue a press release in accordance with its
customary practices without such approval and any party may make any public
disclosure it believes in good faith is required by applicable law or any
listing or trading agreement concerning its publicly-traded securities.
11.14 NO THIRD-PARTY BENEFICIARIES. This Agreement shall not confer any
rights or remedies upon any person other than the parties and their respective
successors and permitted assigns.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
day and year first above written.
LANDCARE USA, INC.
By:_________________________________________
Name:____________________________________
Title:___________________________________
HI ACQUISITION CORP.
By: ________________________________________
Name: ___________________________________
Title: _________________________________
HORTICULTURE INDUSTRIES, INC.
By: ________________________________________
Name: ___________________________________
Title: _________________________________
_________________________________________
William H. Davoli
EXHIBIT 2.6
EXECUTION COPY
STOCK PURCHASE AGREEMENT
dated as of August 10, 1998
by and among
LANDCARE USA, INC.
LANDSCAPE RESOURCES, INC.
and
Stephen W. Barley
and
the other parties hereto
<PAGE>
TABLE OF CONTENTS
Page
1. PURCHASE AND SALE......................................................1
1.1 PURCHASE AND SALE................................................2
1.2 PURCHASE PRICE...................................................2
1.3 THE CLOSING......................................................2
2. REPRESENTATIONS AND WARRANTIES OF STEPHEN W. BARLEY....................2
2.1 DUE ORGANIZATION.................................................2
2.2 AUTHORIZATION....................................................3
2.3 CAPITAL STOCK OF THE COMPANY AND RELATED MATTERS.................3
2.4 SUBSIDIARIES; AFFILIATES.........................................4
2.5 FINANCIAL STATEMENTS.............................................4
2.6 LIABILITIES AND OBLIGATIONS......................................5
2.7 ACCOUNTS AND NOTES RECEIVABLE....................................6
2.8 PERMITS AND INTANGIBLES..........................................6
2.9 ENVIRONMENTAL MATTERS............................................6
2.10 PERSONAL PROPERTY................................................7
2.11 SIGNIFICANT CUSTOMERS; MATERIAL CONTRACTS AND COMMITMENTS........8
2.12 REAL PROPERTY....................................................8
2.13 INSURANCE........................................................9
2.14 COMPENSATION; EMPLOYMENT AGREEMENTS; ORGANIZED LABOR MATTERS.....9
2.15 EMPLOYEE BENEFIT PLANS...........................................9
2.16 CONFORMITY WITH LAW; LITIGATION.................................11
2.17 TAXES...........................................................11
2.18 NO VIOLATIONS; ALL REQUIRED CONSENTS OBTAINED.......13
2.19 ABSENCE OF CHANGES..............................................13
2.20 POWERS OF ATTORNEY..............................................14
2.21 COMPETING LINES OF BUSINESS; RELATED-PARTY TRANSACTIONS.........14
2.22 DISCLOSURE......................................................15
2.23 CERTAIN BUSINESS PRACTICES......................................15
2.24 NOTICE TO BARGAINING AGENTS.....................................15
2.25 RELIANCE UPON ORAL REPRESENTATIONS..............................15
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2.26 NO FEDERAL CONTRACTS............................................15
3. REPRESENTATIONS OF LANDCARE...........................................16
3.1 DUE ORGANIZATION................................................16
3.2 AUTHORIZATION...................................................16
3.3 NO VIOLATIONS...................................................16
3.4 VALIDITY OF OBLIGATIONS.........................................16
3.5 DISCLOSURE......................................................16
3.6 RELIANCE UPON ORAL REPRESENTATIONS..............................17
4. DELIVERIES............................................................17
4.1 INSTRUMENTS OF TRANSFER.........................................17
4.2 EMPLOYMENT AGREEMENT............................................17
4.3 OPINION OF COUNSEL..............................................17
4.4 GOOD STANDING CERTIFICATES......................................17
4.5 SUBLEASE........................................................18
4.6 INDEBTEDNESS TO COMPANY.........................................18
4.7 CONSENTS........................................................18
5. POST-CLOSING COVENANTS................................................18
5.1 FUTURE COOPERATION; FURTHER ASSURANCES..........................18
5.2 EXPENSES........................................................18
5.3 CERTAIN AGREEMENTS..............................................19
5.4 PREPARATION AND FILING OF TAX RETURNS...........................19
6. INDEMNIFICATION.......................................................20
6.1 SURVIVAL OF STOCKHOLDER'S AND LANDCARE'S REPRESENTATIONS AND
WARRANTIES......................................................20
6.2 GENERAL INDEMNIFICATION BY STEPHEN W. BARLEY ...................21
6.3 INDEMNIFICATION BY LANDCARE.....................................21
6.4 CLAIMS..........................................................21
6.5 THIRD PERSON CLAIMS.............................................21
6.6 METHOD OF PAYMENT...............................................22
6.7 LIMITATIONS ON INDEMNIFICATION..................................22
7. NONCOMPETITION........................................................22
7.1 PROHIBITED ACTIVITIES...........................................22
7.2 EQUITABLE RELIEF................................................23
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7.3 REASONABLE RESTRAINT............................................23
7.4 SEVERABILITY; REFORMATION.......................................23
7.5 INDEPENDENT COVENANT............................................24
8. NONDISCLOSURE OF CONFIDENTIAL INFORMATION.............................24
8.1 GENERAL.........................................................24
8.2 EQUITABLE RELIEF................................................25
8.3 SURVIVAL........................................................25
9. GENERAL...............................................................25
9.1 SUCCESSORS AND ASSIGNS..........................................25
9.2 ENTIRE AGREEMENT................................................25
9.3 COUNTERPARTS....................................................25
9.4 BROKERS AND AGENTS..............................................25
9.5 NOTICES.........................................................25
9.6 GOVERNING LAW...................................................26
9.7 SURVIVAL OF REPRESENTATIONS AND WARRANTIES......................26
9.8 EFFECT OF INVESTIGATION.........................................27
9.9 EXERCISE OF RIGHTS AND REMEDIES.................................27
9.10 TIME............................................................27
9.11 REFORMATION AND SEVERABILITY....................................27
9.12 REMEDIES CUMULATIVE.............................................27
9.13 ARBITRATION.....................................................27
9.14 CAPTIONS........................................................28
9.15 PRESS RELEASES AND PUBLIC ANNOUNCEMENTS.........................28
9.16 NO THIRD-PARTY BENEFICIARIES....................................28
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SCHEDULES
SCHEDULE 2.1 Allocation of Consideration
SCHEDULE 2.1. Due Organization
SCHEDULE 2.4. Subsidiaries
SCHEDULE 2.5. Financial Statements
SCHEDULE 2.6. Liabilities and Obligations
SCHEDULE 2.7. Accounts and Notes Receivable
SCHEDULE 2.8. Permits and Intangibles
SCHEDULE 2.9. Environmental Matters
SCHEDULE 2.10. Personal Property
SCHEDULE 2.11. Significant Customers; Material Contracts and
Commitments
SCHEDULE 2.12. Real Property
SCHEDULE 2.13. Insurance
SCHEDULE 2.14. Compensation; Employment Agreements; Organized Labor
Matters
SCHEDULE 2.15. Employee Benefit Plans
SCHEDULE 2.16. Conformity with Law; Litigation
SCHEDULE 2.17. Accounting Methods
SCHEDULE 2.18. No Violations; No Consents Required
SCHEDULE 2.19. Absence of Changes
SCHEDULE 2.20. Powers of Attorney
SCHEDULE 2.21. Competing Lines of Business; Related Party Transactions
SCHEDULE 4.5. Sublease
SCHEDULE 4.7. Consents
ANNEXES
Annex - Form of Employment Agreement
Annex II - Form of Opinion of Counsel to Company and Stockholder
Annex III - Form of Opinion of Counsel to LandCARE
Annex IV - Form of SubLease
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STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT (this "Agreement") is made and entered into
as of August 10, 1998 by and among LandCARE USA, Inc., a Delaware corporation
("LandCARE"), Landscape Resources, Inc., a Texas corporation (the "Company"),
Stephen W. Barley (sometimes referred to herein as the "Stockholder"), Bruce A.
Sifford ("Sifford") and Shaun L. Barley ("Shaun Barley") . Stephen W. Barley is
the only holder of capital stock of the Company.
WHEREAS, the Stockholder desire to sell, and LandCARE desires to purchase,
all of the issued and outstanding capital stock of the Company (the "Shares") on
the terms and conditions set forth in this Agreement; and
WHEREAS, the Company owns a 51% membership interest in Select Landscape
L.L.C., a Texas limited liability company ("Select Landscape"), and Sifford owns
the remaining 49% membership interest in Select Landcape; and
WHEREAS, Sifford desires to sell and assign all of his interest in Select
Landscape to the Company, and Sifford and the Company desire to substitute the
Company for Sifford as a member of Select Landscape, so that after such transfer
and assignment the Company shall be the sole member of Select Landscape; and
WHEREAS, Stephen W. Barley owns a 99% membership interest in Southwest
Irrigation L.L.C., a Texas limited liability company ("Southwest Irrigation"),
and Shaun Barley owns the remaining 1% membership interest in Southwest
Irrigation; and
WHEREAS, Stephen W. Barley and Shaun Barley each desires to sell and assign
all of his or her interest in Southwest Irrigation to the Company, and each
desires to substitute the Company as the sole member of Southwest Irrigation;
and
WHEREAS, on the date hereof the parties are consummating the transactions
described herein;
NOW, THEREFORE, in consideration of the premises and of the mutual
agreements contained herein, the parties hereto, intending to be legally bound,
agree as follows:
1. PURCHASE AND SALE
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1.1 PURCHASE AND SALE. On the terms set forth in this Agreement:
(a) the Stockholder hereby sells, conveys, transfers, assigns and delivers
to LandCARE, and LandCARE hereby purchases from the Stockholder, all of the
Shares;
(b) Sifford hereby sells and assigns all of his interest in Select
Landscape to the Company, and Sifford and the Company hereby agree that the
Company is hereby substituted for Sifford as a member of Select Landscape, and
is now therefore the sole member of Select Landscape;
(c) Stephen W. Barley and Shaun Barley each hereby sells and assigns all
of his or her interest in Southwest Irrigation to the Company, and each hereby
agrees that the Company is hereby substituted for such persons as the sole
member of Southwest Irrigation.
1.2 PURCHASE PRICE. The aggregate purchase price (the "Purchase Price")
payable by LandCare for the Shares and as consideration to Sifford and Stephen
W. Barley and Shaun Barley for the transfers to the Company of the interests in
Select Landscape and Southwest Irrigation made pursuant to this Agreement is
$6,250,000 in cash, which amount is being paid at Closing as set forth on
SCHEDULE 1.2 hereto by wire transfer of immediately available funds in
accordance with wiring instructions provided by the Stockholder, Sifford and
Shaun Barley.
1.3 THE CLOSING. The closing of the transactions contemplated by this
Agreement (the "Closing") is taking place concurrently with the execution and
delivery of this Agreement, and the date hereof is sometimes herein called the
"Closing Date".
2. REPRESENTATIONS AND WARRANTIES OF STEPHEN W. BARLEY
Stephen W. Barley hereby represents and warrants to LandCARE as follows.
2.1 DUE ORGANIZATION. (a) The Company is a corporation duly organized,
validly existing and in good standing under the laws of the State of Texas (the
"State of Incorporation") and has all requisite power and authority to carry on
its business as it is now being conducted. The Company is duly qualified to do
business and is in good standing in each jurisdiction in which the nature of its
business or the ownership or leasing of its properties makes such qualification
necessary, except where the failure to be so authorized or qualified would not
have a material adverse effect on the business, assets, operations or condition
(financial or otherwise), of the Company (as used herein with respect to the
Company, or with respect to any other person, a "Material Adverse Effect").
Schedule 2.1 sets forth a list of all jurisdictions in which the Company
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is authorized or qualified to do business. True, complete and correct copies of
the Articles of Incorporation and By-laws, each as amended, of the Company (the
"Charter Documents") are all attached to Schedule 2.1. The stock records of the
Company, a copy of which is attached to Schedule 2.1, are correct and complete
in all material respects. All records of proceedings of the Board of Directors
and Stockholder of the Company have been made available to LandCARE.
(b) Each of Select Landscape and Southwest Irrigation (which are herein
sometimes collectively called the "LLCs") is a limited liability company duly
formed, validly existing and in good standing under the laws of the State of
Texas, and each has all requisite power and authority to carry on its business
as it is now being conducted. Each of the LLCs is duly qualified to do business
and is in good standing in each jurisdiction in which the nature of its business
or the ownership or leasing of its properties makes such qualification
necessary, except where the failure to be so authorized or qualified would not
have a Material Adverse Effect. Schedule 2.1 sets forth a list of all
jurisdictions in which either of the LLCs is authorized or qualified to do
business. True, complete and correct copies of the Articles of Organization,
Regulations or other charter documents, each as amended, of each of the LLCs
(the "LLC Charter Documents") are all attached to Schedule 2.1. All records of
proceedings of the members and managers of each of the LLCs have been made
available to LandCARE.
2.2 AUTHORIZATION. (i) Each of the persons and entities other than
LandCare (collectively, the "Barley Parties") executing this Agreement has the
authority to enter into and bind such person or entity to the terms of this
Agreement and (ii) each of the Barley Parties has the full legal right, power
and authority to enter into this Agreement and the transactions contemplated
hereby, all of which have been approved by each of the Barley Parties and the
Board of Directors of the Company. This Agreement has been validly executed and
delivered by each of the Barley Parties and constitutes the legal, valid and
binding obligation of each of them enforceable in accordance with its terms.
2.3 CAPITAL STOCK OF THE COMPANY AND RELATED MATTERS. (a) The authorized
capital stock of the Company consists solely of 10,000 shares of common stock,
par value $ .01 per share, of which 800 shares are issued and outstanding and
constitute all of the Shares. All of the Shares are owned of record and
beneficially by Stephen W. Barley and are owned free and clear of all liens,
security interests, pledges, charges, voting trusts, restrictions, encumbrances
and claims of every kind. All of the Shares have been duly authorized and
validly issued, are fully paid and nonassessable, and were offered, issued, sold
and delivered by the Company in compliance with all applicable state and federal
laws governing the issuance of securities. None of the Shares were issued in
violation of any preemptive rights or similar rights of any person. No option,
warrant, call, conversion right or commitment of any kind exists which obligates
the Company to issue any
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additional shares of its capital stock or obligates the Stockholder to transfer
any of the Shares to any person except pursuant to this Agreement.
(b) The membership interest owned by Sifford (the "Sifford Interest") is
the only equity interest of any nature whatsoever in Select Landscape other than
the membership interest owned by the Company. The membership interests owned by
Stephen W. Barley and Shaun Barley (collectively, the "Barley Interest") are the
only equity interests of any nature whatsoever in Southwest Irrigation. The
Sifford Interest is owned of record and beneficially by Sifford, and the Barley
Interest is owned by Stephen W. Barley and Shaun Barley as described above, and
the Sifford Interest and the Barley Interest (collectively, the "Interests") are
owned free and clear of all liens, security interests, pledges, charges, voting
trusts, restrictions, encumbrances and claims of every kind. All of the
Interests were offered, issued, sold and delivered by the Company in compliance
with all applicable state and federal laws governing the issuance of securities.
None of the Interests were issued in violation of any preemptive rights or
similar rights of any person. No option, warrant, call, conversion right or
commitment of any kind exists which obligates either of the LLCs to admit any
person as a member of permits any person to acquire any interest therein except
pursuant to this Agreement.
2.4 SUBSIDIARIES; AFFILIATES. Except as set forth on Schedule 2.4, and
except for Select Landscape, the Company and the LLCs have no subsidiaries,
affiliates or d/b/a names and have not conducted business under any other name
except their legal name as set forth in the Charter Documents or LLC Charter
Documents, as appropriate. Except as set forth in Schedule 2.4, the Company and
the LLCs do not own, of record or beneficially, or control, directly or
indirectly, any capital stock, securities convertible into capital stock or any
other equity interest in any corporation, association or other business entity,
and except for Select Landscape, none of them is, directly or indirectly, a
participant in any joint venture, partnership or other non-corporate entity.
2.5 FINANCIAL STATEMENTS. Complete and correct copies of the following
financial statements are attached as Schedule 2.5:
(i) The balance sheets of the Company as of December 31, 1997 (the
"Balance Sheet Date") and any related statements of operations,
stockholder's equity and cash flows for the three-year period then ended,
together with any related notes and schedules (the "CompanyYear-end
Financial Statements");
(ii) The balance sheet (the "Interim Balance Sheet") of the Company
as of May 31, 1998 and the income statement for the five-month period then
ended (the "Company Interim Financial Statements").
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(iii) The balance sheets of Select Landscape as of the Balance Sheet
Date and any related statements of operations, stockholder's equity and
cash flows for the three-year period then ended, together with any related
notes and schedules (the "Select Landscape Year-end Financial
Statements");
(iv) The balance sheet of Select Landscape as of May 31, 1998 and
the income statement for the five-month period then ended (the "Select
Landscape Interim Financial Statements").
(v) The balance sheets of Southwest Irrigation as of the Balance
Sheet Date and any related statements of operations, stockholder's equity
and cash flows for the three-year period then ended, together with any
related notes and schedules (the "Southwest Irrigation Year-end Financial
Statements");
(vi) The balance sheet of Southwest Irrigation as of May 31, 1998
and the income statement for the five-month period then ended (the
"Southwest Irrigation Interim Financial Statements").
All of the financial statements described above are herein collectively called
the "Financial Statements". References in the remainder of this Section 2 to
"the Company" refer to Landscape Resources, Inc., Select Landscape and Southwest
Irrigation collectively or individually, as appropriate, mutatis mutandis,
except as the context otherwise requires.
The Financial Statements have been prepared from the books and records of
the Company in conformity with generally accepted accounting principles applied
on a basis consistent with preceding years and throughout the periods involved
("GAAP") and present fairly the financial position and results of operations of
the Company as of the dates of such statements and for the periods covered
thereby. The Financial Statements as of May 31, 1998 are subject to normal
period- end adjustments, which in the aggregate will not be material. The books
of account of the Company have been kept accurately in all material respects and
in the ordinary course of business, the transactions entered therein represent
bona fide transactions, and the revenues, expenses, assets and liabilities of
the Company have been properly recorded therein in all material respects.
2.6 LIABILITIES AND OBLIGATIONS. Except as and to the extent disclosed and
adequately provided for in the Financial Statements, on Schedule 2.6 hereto or
the other Schedules hereto, the Company has no material liabilities or material
obligations of any kind, whether accrued, absolute, secured or unsecured,
contingent or otherwise. Schedule 2.6 contains a reasonable estimate of the
maximum amount which may be payable with respect to known liabilities which are
not fixed. For
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each such known liability for which the amount is not fixed, Schedule 2.6
includes a summary description of each known liability together with copies of
all relevant documentation relating thereto.
2.7 ACCOUNTS AND NOTES RECEIVABLE. Schedule 2.7 sets forth an accurate
list of the accounts and notes receivable of the Company, as of the date of the
Interim Balance Sheet, showing amounts due in 30-day aging categories. Except to
the extent reflected on Schedule 2.7, all such accounts, notes and other
receivables were incurred in the ordinary course of business, are stated in
accordance with GAAP and are collectible in the amounts shown on Schedule 2.7,
less $35,000 (in lieu of a reserve in the May 31, 1998 balance sheet).
2.8 PERMITS AND INTANGIBLES. The Company holds all licenses, franchises,
permits and other governmental authorizations required in connection with the
conduct of the Company's business. Schedule 2.8 sets forth an accurate list and
summary description of all such licenses, franchises, permits and other
governmental authorizations, including permits, titles (including licenses,
franchises, certificates, trademarks, trade names, patents, patent applications
and copyrights owned or held by the Company or any of its employees (including
interests in software or other technology systems, programs and intellectual
property) (collectively, the "Intangible Assets") (it being understood and
agreed that a list of all environmental permits and other environmental
approvals is set forth on Schedule 2.9). To Stephen W. Barley's actual
knowledge, the Intangible Assets and other governmental authorizations listed on
Schedules 2.8 and 2.9 are valid, and the Company has not received any notice
that any person intends to cancel, terminate or not renew any such Intangible
Assets or other governmental authorization. To Stephen W. Barley's actual
knowledge, the Company has conducted and is conducting its business in
compliance with the requirements, standards, criteria and conditions set forth
in the Intangible Assets and other governmental authorizations listed on
Schedules 2.8 and 2.9 and is not in violation of any of the foregoing. Except as
specifically set forth on Schedule 2.8 or 2.9, the transactions contemplated by
this Agreement will not result in a default, breach or violation of any rights
of the Company in such Intangible Assets which singly or in the aggregate will
have a material adverse effect on the operations of the Company.
2.9 ENVIRONMENTAL MATTERS. To Stephen W. Barley's actual knowledge, the
Company has complied with and is in compliance with all federal, state, local
and foreign statutes (civil and criminal), laws, ordinances, regulations, rules,
notices, permits, judgments, orders and decrees applicable to any of them or any
of their respective properties, assets, operations and businesses relating to
environmental protection (collectively "Environmental Laws") including, without
limitation, Environmental Laws relating to air, water, land and the generation,
storage, use, handling, transportation, treatment or disposal of Hazardous
Wastes, Hazardous Materials and Hazardous
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Substances (including petroleum and petroleum products) (as such terms are
defined in any applicable Environmental Law) except to the extent that
noncompliance with any Environmental Laws, either singly or in the aggregate,
has not had and will not have a Material Adverse Effect on the Company or any of
its operations. To Stephen W. Barley's actual knowledge, the Company has
obtained and adhered to all necessary permits and other approvals necessary to
treat, transport, store, dispose of and otherwise handle Hazardous Wastes,
Hazardous Materials and Hazardous Substances, a list of all of which permits and
approvals is set forth on Schedule 2.9, and have reported to the appropriate
authorities, to the extent required by all Environmental Laws, all past and
present sites owned and operated by the Company where Hazardous Wastes,
Hazardous Materials or Hazardous Substances have been treated, stored, disposed
of or otherwise handled. Except as set forth on Schedule 2.9, to Stephen W.
Barley's actual knowledge, there have been no releases or threats of releases
(as defined in Environmental Laws) at, from, in, under or on any property owned
or operated by the Company except as permitted by Environmental Laws. To Stephen
W. Barley's actual knowledge, there is no on-site or off-site location to which
the Company has transported or disposed of Hazardous Wastes, Hazardous Materials
or Hazardous Substances or arranged for the transportation of Hazardous Wastes,
Hazardous Materials or Hazardous Substances which is the subject of any federal,
state, local or foreign enforcement action or any other investigation which
could lead to any claim against the Company or LandCARE for any clean-up cost,
remedial work, damage to natural resources, property damage or personal injury,
including, but not limited to, any claim under (i) the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as amended, (ii)
the Resource Conservation and Recovery Act, as amended, (iii) the Hazardous
Materials Transportation Act, as amended, or (iv) comparable state or local
statutes and regulations.
2.10 PERSONAL PROPERTY. Schedule 2.10 sets forth an accurate list of (a)
all personal property included in "plant, property and equipment" or any similar
category on the balance sheet of the Company, (b) all other personal property
owned by the Company with a fair market value in excess of $5,000, and (c) all
leases and agreements with respect to personal property, copies of which have
been delivered to LandCARE. Schedule 2.10 indicates which assets are currently
owned, or were formerly owned, by the Stockholder or any affiliate of the
Company or the Stockholder. Except as set forth on Schedule 2.10, (i) all
material personal property used by the Company in its business is either owned
by the Company or leased by the Company pursuant to a lease included on Schedule
2.10, (ii) all of the personal property listed on Schedule 2.10 is in good
working order and condition, ordinary wear and tear excepted and (iii) all
leases and agreements included on Schedule 2.10 are in full force and effect and
constitute valid and binding agreements of the parties (and their successors)
thereto in accordance with their respective terms. Except as set forth on
Schedule 2.10, the Company has good and marketable title to the tangible and
intangible personal property it purports to own, subject to no security
interest, pledge, lien, claim, conditional sales agreement, encumbrance, charge
or restriction on transfer.
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2.11 SIGNIFICANT CUSTOMERS; MATERIAL CONTRACTS AND COMMITMENTS. Schedule
2.11 sets forth a list of (i) all customers of the Company as of the date hereof
or the most recent date practicable or such other recent date as may be set
forth on such list that represent (or are expected to represent) one percent
(1%) or more of the Company's revenues for the current year ("Significant
Customers"), and (ii) all material contracts (including, but not limited to,
construction-related agreements involving payments in excess of $50,000,
maintenance contracts involving $25,000 or more, and any other agreements
involving $25,000 or more), commitments and similar agreements to which the
Company is a party or by which it or any of its properties are bound (including,
but not limited to, contracts with Significant Customers, joint venture or
partnership agreements, contracts with any labor organizations, strategic
alliances and options to purchase land). True, complete and correct copies of
such agreements have been delivered to LandCARE. Except as described on Schedule
2.11, (i) to Stephen W. Barley's actual knowledge, none of the Significant
Customers have canceled or substantially reduced or, to the knowledge of Stephen
W. Barley, are currently attempting or threatening to cancel a contract or
substantially reduce utilization of the services provided by the Company, and
(ii) the Company has complied in all material respects with all commitments and
obligations pertaining to it, and, to Stephen W. Barley's actual knowledge, is
not in default under any contracts or agreements listed on Schedule 2.11 and no
notice of default under any such contract or agreement has been received. Except
as listed in Schedule 2.11, the transactions contemplated by this Agreement will
not result in a default under or a breach or violation of any such contracts or
agreements which singly or in the aggregate will have a material adverse effect
on the operations of the Company. Schedule 2.11 also includes a summary
description of all plans or projects relating to the Company's business
involving the opening of new operations, expansion of existing operations, the
acquisition of any property, business or assets requiring, in any event, the
payment of more than $50,000 in the aggregate.
2.12 REAL PROPERTY. Schedule 2.12 includes a list of all real property
leased by the Company at the date hereof (the "Real Property"), and all other
real property, if any, used by the Company in the conduct of its business. True,
complete and correct copies of all leases and agreements with respect to Real
Property leased by the Company have been delivered to LandCARE, and an
indication as to which such properties, if any, are currently owned, or were
formerly owned, by the Stockholder or any affiliates of the Company or the
Stockholder is included in Schedule 2.12. All leases relating to Real Property
leased by the Company from the Stockholder or any affiliate of any of the
Stockholder has been terminated. Except as set forth on Schedule 2.12, all of
such leases included on Schedule 2.12 are in full force and effect and
constitute valid and binding agreements of the parties (and their successors)
thereto in accordance with their respective terms. To Stephen W. Barley's actual
knowledge, except as provided in the leases (or Subleases described under this
Agreement) applicable to the Real Property, there are no other leases, tenancy
agreements, covenants, restrictions or any other instruments or agreements which
create in or confer on any party,
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other than the Company, the right to occupy or possess all or any portion of the
Real Property; no party other than the Company occupies or possesses the Real
Property or any portion thereof; there is legal ingress and egress between each
tract of Real Property and an adjacent (or, if none, the closest) public
roadway; the Real Property is properly zoned in order to allow its current use
in the Company's business.
2.13 INSURANCE. Schedule 2.13 sets forth an accurate list as of the date
hereof of all insurance policies now carried by the Company and an accurate list
of all insurance loss runs and workers compensation claims received for the past
three policy years. True, complete and correct copies of all insurance policies
currently in effect have been delivered to LandCARE. Such insurance policies
evidence all of the insurance that the Company is required to carry pursuant to
all of its contracts and other agreements and pursuant to all applicable laws.
2.14 COMPENSATION; EMPLOYMENT AGREEMENTS; ORGANIZED LABOR MATTERS.
Schedule 2.14 sets forth an accurate list showing all officers, directors and
key employees of the Company, listing all employment agreements with such
officers, directors and key employees and the rate of compensation (and the
portions thereof attributable to salary, bonus and other compensation,
respectively) of each of such persons as of the Balance Sheet Date. Except as
set forth on Schedule 2.14, since the Balance Sheet Date, there have been no
increases in the base compensation payable or any special bonuses to any
officer, director, or employee, except for regular compensation increases
consistent with the Company's historical compensation practices, which increases
are described generally on Schedule 2.14.
Except as set forth on Schedule 2.14, (i) the Company is not bound by or
subject to (and none of its respective assets or properties is bound by or
subject to) any arrangement with any labor union, (ii) no employees of the
Company are represented by any labor union or covered by any collective
bargaining agreement, (iii) to the knowledge of the Company, no campaign to
establish such representation is in progress and (iv) there is no pending or, to
the best of the Company's knowledge, threatened, labor dispute involving the
Company and any organized group of its employees. The Company has not
experienced any labor interruptions over the past five years.
2.15 EMPLOYEE BENEFIT PLANS. Schedule 2.15 sets forth an accurate schedule
showing all employee benefit plans of Company, including all agreements or
arrangements (other than agreements or arrangements set forth on Schedule 2.14)
containing "golden parachute" or other similar provisions, and deferred
compensation agreements, together with true, complete and correct copies of such
plans, agreements and any trusts related thereto, and classifications of
employees covered thereby as of the Balance Sheet Date. Except for the employee
benefit plans, if any, described on Schedule 2.15, the Company does not sponsor,
maintain or contribute to any plan
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program, fund or arrangement that constitutes an "employee pension benefit
plan," nor does the Company have any obligation to contribute to or accrue or
pay any benefits under any deferred compensation or retirement funding
arrangement on behalf of any employee or employees (such as, for example, and
without limitation, any individual retirement account or annuity, any "excess
benefit plan" (within the meaning of Section 3(36) of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA")) or any non-qualified deferred
compensation arrangement). For the purposes of this Agreement, the term
"employee pension benefit plan" shall have the same meaning as is given that
term in Section 3(2) of ERISA. The Company has not sponsored, maintained or
contributed to any employee pension benefit plan and is not required to
contribute to any retirement plan pursuant to the provisions of any collective
bargaining agreement establishing the terms and conditions of employment of any
of the Company's employees other than the plans set forth on Schedule 2.15.
The Company is not now, and will not as a result of its past activities
become, liable to the Pension Benefit Guaranty Corporation (the "PBGC") or to
any multi employer employee pension benefit plan under the provisions of Title
IV of ERISA. All employee benefit plans listed on Schedule 2.15 and the
administration thereof are in substantial compliance with their terms and all
applicable provisions of ERISA and the regulations issued thereunder, as well as
with all other applicable federal, state and local statutes, ordinances and
regulations. All accrued contribution obligations of the Company with respect to
any plan listed on Schedule 2.15 have either been fulfilled in their entirety or
are fully reflected on the balance sheet of the Company as of the Balance Sheet
Date. All plans listed on Schedule 2.15 that are intended to qualify (the
"Qualified Plans") under Section 401(a) of the Internal Revenue Code of 1986, as
amended (the "Code") are, and have been, so qualified and have been determined
by the Internal Revenue Service to be so qualified. Except as disclosed on
Schedule 2.15, all reports and other documents required to be filed with any
governmental agency or distributed to plan participants or beneficiaries have
been timely filed or distributed. Neither the Stockholder, nor any plan listed
in Schedule 2.15, nor the Company has engaged in any transaction prohibited
under the provisions of Section 4975 of the Code or Section 406 of ERISA. No
plan listed on Schedule 2.15 has incurred an accumulated funding deficiency, as
defined in Section 412(a) of the Code and Section 302(1) of ERISA; and the
Company has not incurred any liability for excise tax or penalty due to the
Internal Revenue Service or any liability to the PBGC. There have been no
terminations, partial terminations or discontinuance of contributions to any
such Qualified Plan intended to qualify under Section 401(a) of the Code without
notice to and approval by the Internal Revenue Service; no plan listed on
Schedule 2.15 subject to the provisions of Title IV of ERISA has been
terminated; there have been no "reportable events" (as that phrase is defined in
Section 4043 of ERISA) with respect to any such plan listed in Schedule 2.15;
the Company has not incurred liability under Section 4062 of ERISA; and, to
Stephen W. Barley's actual knowledge, no circumstances exist pursuant to which
the Company
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could have any direct or indirect material liability whatsoever (including, but
not limited to, any liability to any multi employer plan or the PBGC under Title
IV of ERISA or to the Internal Revenue Service for any excise tax or penalty, or
being subject to any statutory lien to secure payment of any such liability)
with respect to any plan now or heretofore maintained or contributed to by any
entity other than the Company that is, or at any time was, a member of a
"controlled group" (as defined in Section 412(n)(6)(B) of the Code) that
includes the Company.
2.16 CONFORMITY WITH LAW; LITIGATION. Except as set forth on Schedule
2.16, there are no claims, actions, suits or proceedings, pending or, to Stephen
W. Barley's actual knowledge, threatened, against or affecting the Company (or
any of its officers or directors in their capacities as such), at law or in
equity, or before or by any federal, state, municipal or other governmental
department, commission, board, bureau, agency or instrumentality having
jurisdiction over the Company. Except as set forth on SCHEDULE 2.16, no
unresolved notice of any claim, action, suit or proceeding, whether pending or
threatened, has been received by the Company during the last five years and, to
the actual knowledge of Stephen W. Barley, there is no basis therefor. Except as
set forth on Schedule 2.16, there are no outstanding judgments, orders, writs,
injunctions or decrees against or affecting the Company or its assets. Except as
set forth on SCHEDULE 2.16, after due inquiry, to Stephen W. Barley's actual
knowledge, the Company has conducted and now conducts its business in material
compliance with all laws, regulations, writs, injunctions, decrees and orders
applicable to the Company or its assets. The Company is in substantial
compliance with any material law or regulation or any order of any court or
federal, state, municipal or other governmental department, commission, board,
bureau, agency or instrumentality having jurisdiction over any of them and has
conducted and is conducting its business in substantial compliance with the
requirements, standards, criteria and conditions set forth in applicable
federal, state and local statutes, ordinances, permits, licenses, orders,
approvals, variances, rules and regulations, including all such permits,
licenses, orders and other governmental approvals set forth on Schedules 2.8 and
2.9.
2.17 TAXES. For purposes of this Agreement, the term "Taxes" shall mean
all taxes, charges, fees, levies or other assessments including, without
limitation, income, gross receipts, excise, property, sales, withholding, social
security, unemployment, occupation, use, service, license, payroll, franchise,
transfer and recording taxes, fees and charges, imposed by the United States or
any state, local or foreign government or subdivision or agency thereof ("Taxing
Authority"), whether computed on a separate, consolidated, unitary, combined or
any other basis; and such term shall include any interest, fines, penalties or
additional amounts attributable to or imposed with respect to any such taxes,
charges, fees, levies or other assessments. As used herein, the term "Company
Subsidiaries" means the subsidiaries, if any, of the Company; it being
understood that there may be no such subsidiaries.
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All Tax returns ("Returns") required to be filed with respect to any Tax
for which any of the Company and the Company Subsidiaries (if any) is liable
have been duly and timely filed with the appropriate Taxing Authority, each Tax
shown to be payable on each such Return has been paid, each Tax payable by the
Company or a Company Subsidiary by assessment has been timely paid in the amount
assessed. Each of the Company and the Company Subsidiaries has timely filed
true, correct and complete declarations of estimated Tax in each jurisdiction in
which any such declaration is required to be filed by it. No Liens for Taxes
exist upon the assets of the Company or any Company Subsidiary except Liens for
Taxes which are not yet due. Neither the Company nor any Company Subsidiary is,
or ever has been, subject to Tax in any jurisdiction outside the United States.
No litigation with respect to any Tax for which the Company or any Company
Subsidiary is asserted to be liable is pending or, after due inquiry, to the
actual knowledge of Stephen W. Barley, threatened. Stephen W. Barley knows of no
basis on which any claim for any such Tax can be asserted against the Company or
any Company Subsidiary. There are no requests for rulings or determinations in
respect of any Taxes pending between the Company or any Company Subsidiary and
any Taxing Authority. No extension of any period during which any Tax may be
assessed or collected and for which the Company or any Company Subsidiary is or
may be liable has been granted to any Taxing Authority. Neither the Company nor
any Company Subsidiary is or has been party to any tax allocation or sharing
agreement. All amounts required to be withheld by any of the Company and the
Company Subsidiaries and paid to governmental agencies for income, social
security, unemployment insurance, sales, excise, use and other Taxes have been
collected or withheld and paid to the proper Taxing Authority. The Company and
each Company Subsidiary have made all deposits required by law to be made with
respect to employees' withholding and other employment Taxes. Neither the
Company nor any Stockholder is a "foreign person," as that term is referred to
in Section 1445(f)(3) of the Code. The Company has not filed a consent pursuant
to Section 341 (f) of the Code or any comparable provision of any other tax
statute and has not agreed to have Section 341 (f)(2) of the Code or any
comparable provision of any other Tax statute apply to any disposition of an
asset. The Company has not made, is not obligated to make and is not a party to
any agreement that could require it to make any payment that is not deductible
under Section 280G of the Code. No asset of the Company or of any Company
Subsidiary is subject to any provision of applicable law which eliminates or
reduces the allowance for depreciation or amortization with respect to that
asset below the allowance generally available to an asset of its type. To the
actual knowledge of Stephen W. Barley, no accounting method changes of the
Company or of any Company Subsidiary exist which could give rise to an
adjustment under Section 481 of the Code. Except as provided in Schedule 2.17,
the Company uses the accrual method of accounting for income tax purposes, and
the Company's methods of accounting have not changed in the past five years. The
Company is not an investment company as defined in Section 351(e)(1) of the
Code.
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The Stockholder made a valid election under the provisions of Subchapter S
of the Code effective 1/1/98. Neither the sole stockholder nor the Company has
taken any action that terminated the Subchapter S election, which remains in
effect on the date hereof but will terminate on the Closing Date.
2.18 NO VIOLATIONS; ALL REQUIRED CONSENTS OBTAINED. The Company is not in
violation of any of its Charter Documents. Neither the Company nor, to the
knowledge of Stephen W. Barley, any other party thereto, is in material default
under any lease, instrument, license, permit or material agreement to which the
Company is a party or by which its properties are bound (the "Material
Documents"). Except as set forth on Schedule 2.18, the execution of this
Agreement by the Company and the Stockholder and the performance by the Company
and the Stockholder of their obligations hereunder and the consummation of the
transactions contemplated hereby will not result in any material violation or
material breach or constitute a material default under, any of the terms or
provisions of the Material Documents or the Charter Documents which singly or in
the aggregate will have a material adverse effect on the operations of the
Company. Except as set forth on Schedule 2.18 (and except for consents already
obtained), none of the Material Documents requires notice to, or the consent or
approval of, any governmental agency or other third party with respect to any of
the transactions contemplated hereby in order to remain in full force and
effect. Except as set forth on Schedule 2.18, none of the Material Documents
prohibits the use or publication of the name of any other party to such Material
Document, and none of the Material Documents prohibits or restricts the Company
or will prevent or restrict the Company or the LandCARE from freely providing
services to any person.
2.19 ABSENCE OF CHANGES. Since June 30, 1998, the Company has conducted
its operations in the ordinary course of business and, except as set forth on
Schedule 2.19, there has not been:
(i) any change in the business, assets, liabilities or financial
condition of the Company which would have a Material Adverse Effect;
(ii) any damage, destruction or loss (whether or not covered by
insurance) affecting any of the material assets of the Company or the
business of the Company which would have a Material Adverse Effect;
(iii) any change in the authorized capital of the Company or its
outstanding securities or any change in its ownership interests or any
grant of any options, warrants, calls, conversion rights or commitments;
(iv) any declaration or payment of any dividend or distribution with
respect to the capital stock (except for distributions in an amount equal
to the income taxes payable to the Stockholder based solely on the
Company's S corporation earnings during the period from
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June 30, 1998 to the date hereof and the distribution of all of the
membership interest in Grassroots Floral, L.L.C. as contemplated by this
Agreement) or any direct or indirect redemption, purchase or other
acquisition of any of the capital stock of the Company;
(v) any increase or commitment to increase the compensation, bonus,
sales commissions or fee arrangement payable or to become payable by the
Company to any of its officers, directors, stockholders, employees,
consultants or agents;
(vi) any work interruptions, labor grievances or other similar
material claims filed; (vii) any sale or transfer, or any agreement
to sell or transfer, any material assets,
property or rights of the Company to any person which would have a
material adverse effect on the Company;
(viii)any cancellation, or agreement to cancel, any material
indebtedness or other material obligation owing to the Company;
(ix) any plan, agreement or arrangement granting any preferential
rights to purchase or acquire any interest in any of the assets, property
or rights of the Company or requiring consent of any party to the transfer
and assignment of any such assets, property or rights;
(x) any purchase or acquisition of, or agreement, plan or
arrangement to purchase or acquire, any property, rights or assets outside
of the ordinary course of the Company's business;
(xi) any waiver of any material rights or claims of the Company;
(xii) any amendment or termination of any contract, agreement,
license, permit or
other right to which the Company is a party which would have a Material
Adverse Effect; (xiii)any contract, commitment or liability entered
into or incurred or any capital
expenditures made except in the normal course of business consistent with
past practice in an individual amount not in excess of $10,000 and in an
aggregate amount not in excess of $50,000; or
(xiv) any transaction by the Company outside the ordinary course of
its business (excluding the transactions of the Company involving
Grassroots Floral L.L.C.).
(xv) any material transaction by the Company outside the ordinary
course of its business.
2.20 POWERS OF ATTORNEY. Schedule 2.20 sets forth a schedule as of the
date of this Agreement of the name of each person, corporation, firm or other
entity holding any general or special power of attorney from the Company and a
description of the terms of each such power.
2.21 COMPETING LINES OF BUSINESS; RELATED-PARTY TRANSACTIONS. Except as
set forth on Schedule 2.21, neither Stephen W. Barley nor any other affiliate of
the Company owns, directly or indirectly, any interest in, or is an officer,
director, employee or consultant of or otherwise
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receives remuneration from, any business which is a competitor, lessor, lessee,
customer or supplier of the Company. Except as set forth on Schedule 2.21, no
officer, director or stockholder of the Company has, nor during the period
beginning January 1, 1995 through the date hereof had, any interest in any
property, real or personal, tangible or intangible, used in or pertaining to the
Company's business.
2.22 DISCLOSURE. No representation or warranty of the Stockholder
contained in this Agreement contains any material untrue statement of fact or
omits to state a material fact necessary in order to make the statements herein
or therein, in light of the circumstances under which they were made, not
misleading.
2.23 CERTAIN BUSINESS PRACTICES. To the actual knowledge of Stephen W.
Barley, neither the Company nor any person acting on behalf of the Company has
given or offered anything of value to any governmental official, political party
or candidate for government office nor has it or any of them otherwise taken any
action which would cause the Company to be in violation of the Foreign Corrupt
Practices Act of 1977, as amended, or any law of similar effect.
2.24 NOTICE TO BARGAINING AGENTS. The Company has no collective bargaining
agreements.
2.25 RELIANCE UPON ORAL REPRESENTATIONS. Stephen W. Barley represents and
warrants: (a) that he has been fully informed by his legal counsel and by his
own independent judgment of the terms, conditions and effects of this Agreement;
(b) that he has been represented by independent legal counsel of his or its
choice throughout all negotiations preceding the execution of this Agreement and
has received the advice of his or its attorney in entering into this Agreement;
(c) that he is fully satisfied with the terms of this Agreement; (d) that no
promise or inducement has been offered or made to him except as expressly stated
in this Agreement and the agreements to be entered into connection with this
Agreement, including without limitation the Employment Agreement, stock options
and the Sublease described in Article 4 below; and (e) that this Agreement is
executed without reliance on any oral statement or oral representation by any
other party or any other party's agent or attorney.
2.26 NO FEDERAL CONTRACTS. None of the Company, Select Landscape or
Southwest Irrigation is a party to any federal contract awarded pursuant to any
small business or other set aside program. The Company, Select Landscape and
Southwest Irrigation, and the affiliates of each, are each in full compliance
with all applicable laws, rules and regulations relating to federal contracts to
the extent applicable to any of them.
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3. REPRESENTATIONS OF LANDCARE
LandCARE represents and warrants as follows:
3.1 DUE ORGANIZATION. LandCARE is duly incorporated, validly existing and
in good standing under the laws of the state of Delaware, and has the requisite
power and authority to carry on its business as it is now being conducted.
LandCARE is qualified to do business and is in good standing in each
jurisdiction in which the nature of its business makes such qualification
necessary, except where the failure to be so authorized or qualified would not
have a Material Adverse Effect.
3.2 AUTHORIZATION. (i) The representative of LandCARE executing this
Agreement has the authority to enter into and bind LandCARE to the terms of this
Agreement and (ii) LandCARE has the full legal right, power and authority to
enter into this Agreement and to consummate the transactions contemplated
hereby, including, without limitation, all other agreements to be executed by
LandCARE hereunder.
3.3 NO VIOLATIONS. The execution of this Agreement and the performance of
the obligations hereunder and the consummation of the transactions contemplated
hereby, including, without limitation, all other agreements to be executed by
LandCARE hereunder, will not result in any violation or breach or constitute a
default under any of the terms or provisions of the Restated Certificate of
Incorporation, as amended, or Bylaws, as amended, of LandCARE or any other
contract, agreement, restriction, regulation, note or judgment affecting or
binding LandCARE. There are no outstanding orders, writs, judgments, decrees,
proceedings or investigations of any court, governmental agency or arbitration
tribunal against, involving or affecting LandCARE or its ability to enter into
this Agreement or carry out the transactions contemplated hereby, and LandCARE
has no knowledge that any of such actions is threatened.
3.4 VALIDITY OF OBLIGATIONS. The execution and delivery of this Agreement
by LandCARE and the performance of the transactions contemplated hereby,
including, without limitation, all other agreements to be executed by LandCARE
hereunder, have been duly and validly authorized by the Board of Directors of
LandCARE and this Agreement has been duly and validly authorized by all
necessary corporate action and is a legal, valid and binding obligation of
LandCARE, enforceable in accordance with its terms.
3.5 DISCLOSURE. No representation or warranty of LandCare contained in
this Agreement contains any materially untrue statement of fact or omits to
state a material fact necessary in order to make the statements herein or
therein, in light of the circumstances under which they were made, not
misleading.
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3.6 RELIANCE UPON ORAL REPRESENTATIONS. LandCare represents and warrants:
(a) that it has been fully informed by its legal counsel and by its own
independent judgment of the terms, conditions and effects of this Agreement; (b)
that it has been represented by independent legal counsel of its choice
throughout all negotiations preceding the execution of this Agreement and has
received the advice of its attorney in entering into this Agreement; (c) that it
is fully satisfied with the terms of this Agreement; (d) that no promise or
inducement has been offered or made to it except as expressly stated in this
Agreement and the agreements to be entered into connection with this Agreement,
including without limitation the Employment Agreement and the Sublease described
in Article 4 below; and (e) that this Agreement is executed without reliance on
any oral statement or oral representation by any other party or any other
party's agent or attorney.
4. DELIVERIES
In addition to the cash delivered by LandCare pursuant to Section 1.2, the
following deliveries are being made at Closing.
4.1 INSTRUMENTS OF TRANSFER . The Stockholder is delivering to LandCARE
certificates representing all of the Shares, duly endorsed (or accompanied by
duly executed stock powers). The parties hereto are also executing and
delivering instruments effecting the transfers of the LLC Interests as described
herein, and agree to execute and deliver such further instruments and other
documents as may be reasonably necessary to effectuate the transactions
described herein.
4.2 EMPLOYMENT AGREEMENT. The Company and Stephen W. Barley are entering
into an Employment Agreement in the form of Annex I.
4.3 OPINION OF COUNSEL. Counsel to the Company and Stephen W. Barley is
delivering an opinion to LandCARE dated the date hereof in the form attached
hereto as Annex II. Counsel to LandCARE is delivering an opinion to the
Stockholder dated the date hereof in the form attached hereto as Annex III.
4.4 GOOD STANDING CERTIFICATES. The Stockholder is delivering to LandCARE
certificates, dated as of a date no earlier than ten days prior to the date
hereof, duly issued by the appropriate governmental authority in the State of
Incorporation and in each state in which the Company is authorized to do
business, showing the Company to be in good standing and authorized to do
business therein.
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4.5 SUBLEASE. The Company is entering into a sublease of the property
identified on Schedule 4.5 in the form attached hereto as Annex IV.
4.6 INDEBTEDNESS TO COMPANY. The Stockholder and his Affiliates (excluding
Select Landscape and Southwest Irrigation) are repaying any outstanding
indebtedness they may have to the Company.
4.7 CONSENTS. Except as set forth on Schedule 4.7, Stephen W. Barley is
delivering to LandCARE copies of any third party consents required in connection
with the consummation of the transactions contemplated hereby.
4.8 RESIGNATION OF DIRECTORS AND OFFICERS. Stephen W. Barley is delivering
to LandCARE the resignations of such directors and officers of the Company as
have been requested by LandCARE.
4.9 DIVESTITURE OF CERTAIN ASSETS. The Company is delivering to LandCARE
evidence of its divestiture (concurrently with or immediately prior to the
Closing) of all of its interest in its "Grass Roots" and greenhouse operations
on terms reasonably acceptable to LandCARE.
5. POST-CLOSING COVENANTS
The parties to this Agreement further covenant and agree as follows:
5.1 FUTURE COOPERATION; FURTHER ASSURANCES. The Stockholder, the Company
and LandCARE shall each deliver or cause to be delivered to the other following
the date hereof such additional instruments as the other may reasonably request
for the purpose of effecting the transactions contemplated hereby and fully
carrying out the intent of this Agreement. LandCARE shall provide the
Stockholder reasonable access to the books and records of the Company after the
Closing Date for purposes of tax compliance and any other reasonable purpose.
5.2 EXPENSES. LandCARE will pay the fees, expenses and disbursements of
LandCARE and its agents, representatives, financial advisors, accountants and
counsel incurred in connection with the execution, delivery and performance of
this Agreement. The Stockholder will pay the fees, expenses and disbursements of
the Stockholder and his agents, representatives, financial advisors, accountants
and counsel incurred following the date of the letter of intent with LandCare in
connection with the execution, delivery and performance of this Agreement. The
Stockholder, and not the Company or LandCARE, will pay all taxes (income or
otherwise), if any, due upon receipt of the consideration payable pursuant to
this Agreement.
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5.3 CERTAIN AGREEMENTS. Except for any agreements to be entered into in
connection with the transactions contemplated hereunder (including the
Employment Agreement described in Section 4.2), upon the request of LandCARE at
any time after the Closing, the Stockholder and the Company shall terminate any
existing agreements to which the Company and any of the Stockholder are parties.
5.4 PREPARATION AND FILING OF TAX RETURNS.
(a) The Stockholder shall file or cause to be filed all tax returns
for all taxable periods that end on or before the Closing Date, but in each case
only after LandCARE has reviewed such filings and consented thereto. Stephen W.
Barley shall pay, and Stephen W. Barley hereby indemnifies the Company and
LandCARE against any and all liability for, all Tax liabilities for all periods
ending on or prior to the Closing Date.
(b) LandCARE shall file or cause to be filed all Tax Returns for all
taxable periods ending after the Closing Date. LandCARE shall not file or amend
any Tax Return, or apply for any refund or take any other action relating to the
Company's Tax Return for the Company's "short period" for the period from
January 1, 1998 through the Closing Date without the consent of Mr. Barley,
which consent shall not be unreasonably withheld. No Section 338(h)(10) election
shall be made. Further, without Stephen W. Barley's consent, LandCARE shall
request no audits, and shall file no amended Tax Returns or claims for refund,
or take any other action relating to the Company's Tax Returns for tax years or
periods prior to (or including) the Company's short period beginning January 1,
1998 which would, or could reasonably be expected to result in tax adjustments,
claims, penalties, interest or related costs, which would subject Stephen W.
Barley to indemnity claims hereunder.
(c) Each party hereto shall, and shall cause its subsidiaries and
affiliates to, provide to each of the other parties hereto such cooperation and
information as any of them reasonably may request in filing any Tax Returns,
amended Tax Returns or claim for refund, determining a liability for Taxes or a
right to refund of Taxes or in conducting any audit or other proceeding with
respect to Taxes. Such cooperation and information shall include providing
copies of all relevant portions of relevant Tax Returns, together with relevant
accompanying schedules and relevant work papers, relevant documents relating to
rulings or other determinations by Taxing Authorities and relevant records
concerning the ownership and Tax basis of property, which such party may
possess. Each party shall make its employees reasonably available on a mutually
convenient basis at its cost to provide explanation of any documents or
information so provided. Subject to the preceding sentence, each party required
to file Tax Returns pursuant to this Agreement shall bear all costs of filing
such Tax Returns.
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5.5 STOCK OPTIONS. Within 30 days after Closing, LandCARE shall issue
options to purchase an aggregate of 30,000 shares of LandCARE common stock to
key employees of the Company to be identified by Mr. Barley at his sole
discretion. Such options shall have an exercise price per share of LandCARE
common stock equal to the closing price of LandCARE common stock on the New York
Stock Exchange on the Closing Date, and shall be issued pursuant to and in
accordance with the LandCARE USA, Inc. 1998 Long-Term Incentive Plan.
6. INDEMNIFICATION
Stephen W. Barley and LandCARE each make the following covenants that are
applicable to them, respectively:
6.1 SURVIVAL OF STOCKHOLDER'S AND LANDCARE'S REPRESENTATIONS AND
WARRANTIES.
(a) The representations and warranties of the Stockholder made in
Sections 2.1 (Due Organization), 2.2 (Authorization), 2.3 (Capital Stock of the
Company and Related Matters) and 2.17 (Taxes) of this Agreement shall survive
the Closing until the expiration of the periods prescribed by the applicable
statutes of limitations (including any extensions thereof) relating thereto; the
representations and warranties of the Stockholder made in Section 2.9
(Environmental Matters) shall survive the Closing for a period of three years
after the Closing Date; and the other representations and warranties of the
Stockholder made herein shall survive the Closing for a period of two years
after the Closing Date; provided, however, that representations and warranties
and indemnification provisions with respect to which a claim is made within the
survival period shall survive until such claim is finally determined and paid.
(b) The representations and warranties of LandCARE made in Sections
3.1 and 3.2 of this Agreement shall survive the Closing until the expiration of
the periods prescribed by the applicable statutes of limitation (including any
extensions thereof) relating thereto; the other representations and warranties
of LandCare made herein shall survive the Closing for a period of two years
following the Closing Date; provided, however, that representations and
warranties with respect to which a claim is made within such one-year period
shall survive until such claim is finally determined and paid.
(c) The date on which a representation or warranty expires as
provided herein is herein called the "Expiration Date." No claim for
indemnification may be made with respect to a representation or warranty after
the Expiration Date, other than claims based on fraud.
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6.2 GENERAL INDEMNIFICATION BY STEPHEN W. BARLEY . Stephen W. Barley
covenants and agrees that he will indemnify, defend, protect, and hold harmless
LandCARE and its subsidiaries and all of their officers, directors, employees,
stockholders, agents, representatives and affiliates at all times from and after
the date of this Agreement until the Expiration Date from and against all
claims, damages actions, suits, proceedings, demands, assessments, adjustments,
costs and expenses (including specifically, but without limitation, reasonable
attorneys' fees and expenses of investigation) (collectively "Damages") incurred
by such indemnified person as a result of or incident to (i) any breach of any
representation or warranty of Stephen W. Barley set forth herein, and (ii) any
breach or nonfulfillment of any covenant or agreement by Stephen W. Barley under
this Agreement.
6.3 INDEMNIFICATION BY LANDCARE. LandCARE covenants and agrees that it
will indemnify, defend, protect and hold harmless the Stockholder at all times
from and after the date of this Agreement until the Expiration Date from and
against all Damages incurred by the Stockholder as a result of (i) any breach of
any representation or warranty of LandCARE set forth herein; and (ii) any breach
or nonfulfillment of any covenant or agreement by LandCARE or the Company
following Closing under this Agreement. LandCARE covenants and agrees (and
agrees to cause the Company after the Closing) to indemnify the Owners for any
claims arising out of or in connection with the operation of the Company or its
business after Closing.
6.4 CLAIMS. In the event a party hereto proposes to make any indemnity
claim hereunder (other than based on a third-party claim addressed in Section
6.5 below), such party shall deliver a notice to the other party stating the
nature of such claim and the amount claimed, if known. The parties shall have 30
days from the reciept of such notice to determine whether a dispute exists as to
liability hereunder with respect to such claim. The liability for
indemnification shall be determined by the mutual agreement of the parties; but
if no such agreement can be reached within such 30-day period, by arbitration as
hereinafter provided.
6.5 THIRD PERSON CLAIMS. Promptly after any party hereto (the "Indemnified
Party") has received notice of or has knowledge of any claim by a person not a
party to this Agreement ("Third Person") or the commencement of any action or
proceeding by a Third Person that may give rise to a right of indemnification
hereunder, such Indemnified Party shall give to the party obligated to provide
indemnification hereunder (an "Indemnifying Party") written notice of such claim
or the commencement of such action or proceeding; provided, however, that the
failure to give such notice will not relieve such Indemnifying Party from
liability under this Section with respect to such claim, action or proceeding,
except to the extent that the Indemnifying Party has been actually prejudiced as
a result of such failure. The Indemnifying Party (at its own expense) shall have
the right and shall
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be given the opportunity to associate with the Indemnified Party in the defense
of such claim, suit or proceedings, and may select counsel for the Indemnified
Party, such counsel to be reasonably satisfactory to the Indemnified Party. The
Indemnified Party shall not, except at its own cost, make any settlement with
respect to any such claim, suit or proceeding without the prior consent of the
Indemnifying Party, which consent shall not be unreasonably withheld or delayed.
6.6 METHOD OF PAYMENT. All claims for indemnification shall be paid in
cash.
6.7 LIMITATIONS ON INDEMNIFICATION. LandCARE and the other persons or
entities indemnified by Stephen W. Barley pursuant to this Agreement shall not
assert any claim for indemnification hereunder against Stephen W. Barley until
such time as the aggregate of all claims which such persons may have against
Stephen W. Barley exceed $100,000 (the "Indemnification Threshold") and then
only to the extent that such claims exceed the Indemnification Threshold. The
aggregate liability of the Stockholder under this Article 6 shall not exceed $
2,000,000 (the "Liability Limit"). The aggregate liability of LandCARE hereunder
shall not exceed the Liability Limit, except such Liability Limit shall not
apply to claims described in the last sentence of Section 6.3 above.
7. NONCOMPETITION
7.1 PROHIBITED ACTIVITIES. (a) As partial consideration for the execution,
delivery and performance of this Agreement by LandCARE, Stephen W. Barley hereby
agrees that he will not, for a period of five years following the Closing Date,
for any reason whatsoever, directly or indirectly, for himself or on behalf of
or in conjunction with any other person, persons, company, partnership,
corporation or business of whatever nature:
(i) own, manage, operate, join, control, consult or advise (whether
or not compensated for such consultation or advice), or participate in, or
render assistance to, or derive any benefit whatever from, any business
offering landscape or interior plant services or products in direct
competition with the Company anywhere within the Texas counties of Dallas,
Tarrant, Collin, Denton, Parker or Kaufman (the "Territory").
(ii) engage, as an officer, director, shareholder, owner, partner,
joint venturer, or in a sales or managerial capacity, whether as an
employee, independent contractor, consultant or advisor, or as a sales
representative, in any business offering services or products in direct
competition with the Company or LandCARE within the Territory;
(iii) call upon any person who is, at that time, an employee of
LandCARE or any of its subsidiaries (including the Company) for the
purpose or with the intent of enticing such employee away from or out of
the employ of LandCARE or any of its subsidiaries (including the Company);
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(iv) call upon any person or entity which is, at that time, or which
has been, within one year prior to the Closing Date, a customer of
LandCARE or any of its subsidiaries (including the Company) for the
purpose of soliciting or selling products or services in direct
competition with LandCARE or any of its subsidiaries (including the
Company) within the Territory.
Notwithstanding the above, (a) the foregoing covenants of subparagraphs
(i), (ii) and (iv) shall not be deemed to prohibit or to apply to the following
activities (the "Excluded Activities"): (x) work or consulting services Stephen
W. Barley may perform for or render to golf courses (including the club house
and grounds associated with any such golf course; (y) sod production and sales;
and (zi) consulting relationships with and/or employment by developers, owners
or managers for the management of landscape projects, including administering
construction bids, contracts, renovations and designs; and (b) all of the
foregoing covenants shall not prohibit the Stockholder from acquiring as a
passive investor with no involvement in the operations or management of the
business, not more than two percent (2%) of the capital stock of a competing
business whose stock is publicly traded on a national securities exchange or
over-the-counter market.
The provisions of this Section are independent of the noncompetition
provisions contained in any consulting or employment agreement to which any
Stockholder may be or may become a party in connection with the transactions
contemplated hereby. All such provisions are intended to be observed and
enforced in accordance with their terms.
7.2 EQUITABLE RELIEF. Because of the difficulty of measuring economic
losses to LandCARE as a result of a breach of the foregoing covenant, and
because of the immediate and irreparable damage that could be caused to LandCARE
for which it would have no other adequate remedy, Stephen W. Barley agrees that
the foregoing covenant may be enforced by LandCARE in the event of breach by
Stephen W. Barley by injunctions, restraining orders and other equitable
actions.
7.3 REASONABLE RESTRAINT. It is agreed by the parties hereto that the
foregoing covenants in this Section impose a reasonable restraint on Stephen W.
Barley.
7.4 SEVERABILITY; REFORMATION. The covenants in this Section are severable
and separate, and the unenforceability of any specific covenant shall not affect
the provisions of any other covenant. Moreover, in the event any court of
competent jurisdiction shall determine that the scope, time or territorial
restrictions set forth are unreasonable, then it is the intention of the parties
that such restrictions be enforced to the fullest extent which the court deems
reasonable, and the Agreement shall thereby be reformed.
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7.5 INDEPENDENT COVENANT. Stephen W. Barley acknowledges that his
covenants set forth in this Section are material conditions to LandCARE's
willingness to execute and deliver this Agreement and to consummate the
transactions contemplated hereby. All of the covenants in this Section shall be
construed as an agreement independent of any other provision in this Agreement,
and the existence of any claim or cause of action of any Stockholder against
LandCARE or any subsidiary thereof, whether predicated on this Agreement or
otherwise, shall not constitute a defense to the enforcement by LandCARE of such
covenants. It is specifically agreed that the period of five years stated at the
beginning of this Section, during which the agreements and covenants of the
Stockholder made in this Section shall be effective, shall be computed by
excluding from such computation any time during which any such Stockholder is in
violation of any provision of this Section. The covenants contained in Section
shall not be affected by any breach of any other provision hereof by any party
hereto.
8. NONDISCLOSURE OF CONFIDENTIAL INFORMATION
8.1 GENERAL. Stephen W. Barley recognizes and acknowledges that he has had
access to certain customer lists, confidential information of the Company, such
as operational policies, pricing and cost policies, and other information, that
will be valuable, special and unique assets of the Company and LandCARE after
the Closing Date. Stephen W. Barley agrees that he will not disclose such
confidential information, or any confidential information of the Company or
LandCARE to which they may have access in the future, to any person, firm,
corporation, association or other entity for any purpose or reason whatsoever,
except (a) to authorized representatives of LandCARE, (b) following the Closing,
such information may be disclosed by any Stockholder as may be required in the
course of performing his duties for the Company and (c) to counsel and other
advisers, provided that such advisers (other than counsel) agree to the
confidentiality provisions of this Section, unless (i) such information becomes
known to the public generally through no fault of the Stockholder, or (ii)
disclosure is required by law or the order of any court or governmental
authority, provided, that prior to disclosing any information pursuant to this
clause (ii), the Stockholder shall give prior written notice thereof to LandCARE
and provide LandCARE with the opportunity to contest such disclosure. In the
event of a breach or threatened breach by any Stockholder of the provisions of
this Section, LandCARE shall be entitled to injunctive or other equitable relief
restraining such Stockholder from disclosing, in whole or in part, such
confidential information. Nothing herein shall be construed as prohibiting
LandCARE from pursuing any other available remedy for such breach or threatened
breach, including the recovery of damages. Notwithstanding the foregoing,
information, including customer names, customary practices and pricing methods,
that is known generally by persons in management in other companies in the
business or industry of the Company shall not be deemed confidential
information.
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8.2 EQUITABLE RELIEF. Because of the difficulty of measuring economic
losses as a result of the breach of the foregoing covenants, and because of the
immediate and irreparable damage that would be caused for which LandCARE would
have no other adequate remedy, the Stockholder agrees that the foregoing
covenants may be enforced against them by injunctions, restraining orders and
other appropriate equitable relief.
8.3 SURVIVAL. The obligations of the parties under this Section shall
survive the termination of this Agreement for five years.
9. GENERAL
9.1 SUCCESSORS AND ASSIGNS. This Agreement and the rights of the parties
hereunder may not be assigned (except by operation of law) and shall be binding
upon and shall inure to the benefit of the parties hereto, the successors of
LandCARE, and the heirs and legal representatives of the Stockholder.
9.2 ENTIRE AGREEMENT. This Agreement (including the schedules, exhibits
and annexes attached hereto) and the documents delivered pursuant hereto
constitute the entire agreement and understanding among the Stockholder, the
Company and LandCARE, and supersede any prior agreement and understanding
relating to the subject matter of this Agreement. This Agreement, upon
execution, constitutes a valid and binding agreement of the parties hereto
enforceable in accordance with its terms, and may be modified or amended only by
a written instrument executed by the parties hereto.
9.3 COUNTERPARTS. This Agreement may be executed simultaneously in two or
more counterparts, each of which shall be deemed an original and all of which
together shall constitute but one and the same instrument. The signatures to
this Agreement need not all be on a single copy of this Agreement, and may be
facsimiles rather than originals, and shall be fully as effective as though all
signatures were originals on the same copy.
9.4 BROKERS AND AGENTS. Each party represents and warrants that it
employed no broker or agent in connection with this transaction and agrees to
indemnify the other parties hereto against all loss, cost, damages or expense
arising out of claims for fees or commission of brokers employed or alleged to
have been employed by such indemnifying party.
9.5 NOTICES. All notices and communications required or permitted
hereunder shall be in writing and may be given by depositing the same in United
States mail, addressed to the party to
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be notified, postage prepaid and registered or certified with return receipt
requested, or by delivering the same in person to an officer or agent of such
party, or by facsimile, as follows:
If to LandCARE, addressed to it at:
LandCARE USA, Inc.
5850 San Felipe, Suite 500
Houston, Texas 77057
Attn: General Counsel
Facsimile No. (713) 965-0343
If to the Company, addressed to it at:
Landscape Resources, Inc.
1870 Crown Drive, Suite 1500
Farmers Branch, Texas 75234
Facsimile No. 972-869-4475
If to Stephen W. Barley, addressed to him at the Company's address,
with copies to:
Mr. James Mincey, Esq.
Kroney Silverman Mincey, Inc.
1210 Three Forest Plaza
12221 Merit Drive
Dallas, Texas 75251
Facsimile No. 972-701-0307
or to such other address as any party hereto shall specify pursuant to this
Section from time to time.
9.6 GOVERNING LAW. This Agreement shall be construed in accordance with
the laws of the State of Texas without regard to its principles governing
conflicts of laws.
9.7 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The representations,
warranties, covenants and agreements of the parties made herein and at the time
of the Closing or in writing delivered pursuant to the provisions of this
Agreement shall survive the consummation of the
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transactions contemplated hereby (subject to the applicable time limitations)
and any examination on behalf of the parties.
9.8 EFFECT OF INVESTIGATION. No investigation by the parties hereto in
connection with this Agreement or otherwise shall affect the representations and
warranties of the parties contained herein or in any certificate or other
document delivered in connection herewith and each such representation and
warranty shall survive such investigation (subject to the applicable time
limitations).
9.9 EXERCISE OF RIGHTS AND REMEDIES. Except as otherwise provided herein,
no delay of or omission in the exercise of any right, power or remedy accruing
to any party as a result of any breach or default by any other party under this
Agreement shall impair any such right, power or remedy, nor shall it be
construed as a waiver of or acquiescence in any such breach or default, or of
any similar breach or default occurring later; nor shall any waiver of any
single breach or default be deemed a waiver of any other breach or default
occurring before or after that waiver.
9.10 TIME. Time is of the essence with respect to this Agreement.
9.11 REFORMATION AND SEVERABILITY. In case any provision of this Agreement
shall be invalid, illegal or unenforceable, it shall, to the extent possible, be
modified in such manner as to be valid, legal and enforceable but so as to most
nearly retain the intent of the parties, and if such modification is not
possible, such provision shall be severed from this Agreement, and in either
case the validity, legality and enforceability of the remaining provisions of
this Agreement shall not in any way be affected or impaired thereby.
9.12 REMEDIES CUMULATIVE. No right, remedy or election given by any term
of this Agreement shall be deemed exclusive but each shall be cumulative with
all other rights, remedies and elections available at law or in equity.
9.13 ARBITRATION. Any unresolved dispute or controversy arising under or
in connection with this Agreement shall be settled exclusively by arbitration,
conducted before a panel of three (3) arbitrators in either of Houston or
Dallas, Texas in acordance with rules of the American Arbitration Association
except to the extent the parties otherwise agree. The arbitrators shall not have
the authority to add to, detract from, or modify any provision hereof not to
award punitive damages to any injured party. A decision by a majority of the
arbitration panel shall be final and binding. Judgment may be entered on the
arbitrator's award in any court having jurisdiction. The direct expense of any
arbitration proceeding shall be borne by the Company.
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9.14 CAPTIONS. The headings of this Agreement are inserted for convenience
only, and shall not constitute a part of this Agreement or be used to construe
or interpret any provision hereof.
9.15 PRESS RELEASES AND PUBLIC ANNOUNCEMENTS. No party shall issue any
press release or make any public announcement relating to the subject matter of
this Agreement without the prior written approval of the other party; provided,
however, that LandCARE may issue a press release in accordance with its
customary practices without such approval and any party may make any public
disclosure it believes in good faith is required by applicable law or any
listing or trading agreement concerning its publicly-traded securities.
9.16 NO THIRD-PARTY BENEFICIARIES. This Agreement shall not confer any
rights or remedies upon any person other than the parties and their respective
successors and permitted assigns.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
day and year first above written.
LANDCARE USA, INC.
By:_________________________________________
Name:____________________________________
Title:___________________________________
LANDSCAPE RESOURCES, INC.
By:_________________________________________
Name:____________________________________
Title:___________________________________
____________________________________________
Stephen W. Barley
____________________________________________
Shaun L. Barley
____________________________________________
Bruce A. Sifford
EXIHIBIT 2.7
EXECUTION COPY
AGREEMENT AND PLAN OF MERGER
dated as of August 14, 1998
by and among
LANDCARE USA, INC.,
RLC ACQUISITION CORP.,
R. L. COMPANY, INC.
and
Lebo Newman
<PAGE>
TABLE OF CONTENTS
Page
1. THE MERGER.............................................................1
1.1 THE MERGER.......................................................1
1.2 EFFECTIVE TIME...................................................1
1.3 ARTICLES OF INCORPORATION, BY-LAWS, DIRECTORS AND
OFFICERS OF SURVIVING CORPORATION................................2
1.4 EFFECT OF MERGER.................................................2
1.5 MANNER OF CONVERSION.............................................2
1.6 DELIVERY OF CERTIFICATES.........................................3
1.7 CLOSING..........................................................3
2. REPRESENTATIONS AND WARRANTIES OF THE STOCKHOLDER......................3
2.1 DUE ORGANIZATION.................................................3
2.2 AUTHORIZATION....................................................4
2.3 CAPITAL STOCK OF THE COMPANY.....................................4
2.4 SUBSIDIARIES.....................................................4
2.5 FINANCIAL STATEMENTS.............................................5
2.6 LIABILITIES AND OBLIGATIONS......................................5
2.7 ACCOUNTS AND NOTES RECEIVABLE....................................5
2.8 PERMITS AND INTANGIBLES..........................................6
2.9 ENVIRONMENTAL MATTERS............................................6
2.10 PERSONAL PROPERTY................................................7
2.11 SIGNIFICANT CUSTOMERS; MATERIAL CONTRACTS AND COMMITMENTS........7
2.12 REAL PROPERTY....................................................8
2.13 INSURANCE........................................................9
2.14 COMPENSATION; EMPLOYMENT AGREEMENTS; ORGANIZED LABOR MATTERS.....9
2.15 EMPLOYEE BENEFIT PLANS...........................................9
2.16 CONFORMITY WITH LAW; LITIGATION.................................11
2.17 TAXES...........................................................11
2.18 NO VIOLATIONS; ALL REQUIRED CONSENTS OBTAINED...................12
2.19 ABSENCE OF CHANGES..............................................13
2.20 POWERS OF ATTORNEY..............................................14
2.21 COMPETING LINES OF BUSINESS; RELATED-PARTY TRANSACTIONS.........14
2.22 DISCLOSURE......................................................15
2.23 CERTAIN BUSINESS PRACTICES......................................15
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2.24 NOTICE TO BARGAINING AGENTS.....................................15
2.25 NOTICES AND CONSENTS............................................15
2.26 INVENTORY; WORKING CAPITAL; OTHER FINANCIAL MATTERS.............15
2.27 YEAR 2000 COMPLIANCE............................................15
2.28 RELIANCE UPON ORAL REPRESENTATIONS..............................16
3. REPRESENTATIONS OF LANDCARE...........................................16
3.1 DUE ORGANIZATION................................................16
3.2 AUTHORIZATION...................................................16
3.3 NO VIOLATIONS...................................................16
3.4 VALIDITY OF OBLIGATIONS.........................................16
3.5 TAX REORGANIZATION REPRESENTATIONS.
(i) Prior to the Merger...........................17
3.7 INVESTIGATION OF THE COMPANY....................................18
3.8 DISCLOSURE......................................................18
4. DELIVERIES............................................................18
4.1 INSTRUMENTS OF TRANSFER.........................................18
4.2 CERTIFICATE OF MERGER...........................................18
4.3 EMPLOYMENT AGREEMENT............................................18
4.4 OPINION OF COUNSEL..............................................18
4.5 GOOD STANDING CERTIFICATES......................................18
4.6 INDEBTEDNESS TO COMPANY.........................................19
4.7 TAX MATTERS.....................................................19
4.8 CONSENTS........................................................19
4.9 RESIGNATIONS OF DIRECTORS AND OFFICERS..........................19
5. POST-CLOSING COVENANTS................................................19
5.1 FUTURE COOPERATION; FURTHER ASSURANCES..........................19
5.2 EXPENSES........................................................19
5.3 CERTAIN AGREEMENTS..............................................20
5.4 PREPARATION AND FILING OF TAX RETURNS...........................20
5.5 STOCK OPTIONS...................................................20
6. INDEMNIFICATION.......................................................21
6.1 SURVIVAL OF STOCKHOLDER'S REPRESENTATIONS AND WARRANTIES. .....21
6.2 GENERAL INDEMNIFICATION BY THE STOCKHOLDER......................21
6.3 INDEMNIFICATION BY LANDCARE.....................................22
6.4 THIRD PERSON CLAIMS.............................................22
6.5 METHOD OF PAYMENT...............................................23
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6.6 LIMITATIONS ON INDEMNIFICATION..................................23
7. NONCOMPETITION........................................................23
7.1 PROHIBITED ACTIVITIES...........................................23
7.2 EQUITABLE RELIEF................................................24
7.3 REASONABLE RESTRAINT............................................24
7.4 SEVERABILITY; REFORMATION.......................................24
7.5 INDEPENDENT COVENANT............................................25
8. NONDISCLOSURE OF CONFIDENTIAL INFORMATION.............................25
8.1 GENERAL.........................................................25
8.2 EQUITABLE RELIEF................................................25
8.3 SURVIVAL........................................................26
9 INTENDED TAX TREATMENT
.....................................................................26
9.1 TAX-FREE REORGANIZATION.........................................26
9.2 RESTRICTIONS ON RESALE..........................................26
10 SECURITIES LAW MATTERS................................................27
10.1 ECONOMIC RISK; SOPHISTICATION...................................27
10.2 COMPLIANCE WITH LAW.............................................27
11. GENERAL...............................................................27
11.1 SUCCESSORS AND ASSIGNS..........................................27
11.2 ENTIRE AGREEMENT................................................27
11.3 COUNTERPARTS....................................................27
11.4 BROKERS AND AGENTS..............................................27
11.5 NOTICES.........................................................28
11.6 GOVERNING LAW...................................................29
11.7 SURVIVAL OF REPRESENTATIONS AND WARRANTIES......................29
11.8 EFFECT OF INVESTIGATION.........................................29
11.9 EXERCISE OF RIGHTS AND REMEDIES.................................29
11.10 TIME............................................................29
11.11 REFORMATION AND SEVERABILITY....................................30
11.12 REMEDIES CUMULATIVE.............................................30
11.13 CAPTIONS........................................................30
11.14 PRESS RELEASES AND PUBLIC ANNOUNCEMENTS.........................30
11.15 NO THIRD-PARTY BENEFICIARIES....................................30
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SCHEDULES
SCHEDULE 2.1. Due Organization
SCHEDULE 2.4. Subsidiaries
SCHEDULE 2.5. Financial Statements
SCHEDULE 2.6. Liabilities and Obligations
SCHEDULE 2.7. Accounts and Notes Receivable
SCHEDULE 2.8. Permits and Intangibles
SCHEDULE 2.9. Environmental Matters
SCHEDULE 2.10. Personal Property
SCHEDULE 2.11. Significant Customers; Material Contracts and Commitments
SCHEDULE 2.12. Real Property
SCHEDULE 2.13. Insurance
SCHEDULE 2.14. Compensation; Employment Agreements; Organized Labor Matters
SCHEDULE 2.15. Employee Benefit Plans
SCHEDULE 2.16. Conformity with Law; Litigation
SCHEDULE 2.18. No Violations; No Consents Required
SCHEDULE 2.19. Absence of Changes
SCHEDULE 2.20. Powers of Attorney
SCHEDULE 2.21. Competing Lines of Business; Related Party Transactions
SCHEDULE 4.3 Persons Entering into Employment Agreements
SCHEDULE 4.5. Leases
ANNEXES
Annex - Form of Employment Agreement
Annex IA - Form of Employment Agreement (Key Employees)
Annex II - Form of Opinion of Counsel to Company and
Stockholder
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AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (this "Agreement") is made and entered
into as of August 14, 1998 by and among LandCARE USA, Inc., a Delaware
corporation ("LandCARE"), RLC Acquisition Corp., a Delaware corporation and
wholly owned subsidiary of LandCARE ("Newco"), R. L. Company, Inc., a California
corporation (the "Company"), and Lebo Newman (the "Stockholder"). The
Stockholder is the only holder of capital stock of the Company.
WHEREAS, the respective Boards of Directors of Newco and the Company
(collectively called the "Constituent Corporations") deem it advisable and in
the best interests of the Constituent Corporations and their respective
stockholders that the Company merge with and into Newco pursuant to this
Agreement and the applicable provisions of the laws of the State of California
(the "State of Incorporation") and of the State of Delaware; and
WHEREAS, the Boards of Directors of the Constituent Corporations have
approved and adopted this Agreement as a plan of reorganization under Section
368 of the Internal Revenue Code of 1986, as amended (the "Code"); and
WHEREAS, on the date hereof the parties are consummating the transactions
described herein;
NOW, THEREFORE, in consideration of the premises and of the mutual
agreements contained herein, the parties hereto, intending to be legally bound,
agree as follows:
1. THE MERGER
1.1 THE MERGER. On the terms and subject to the conditions of this
Agreement, at the Effective Time (as defined below), the Company shall be merged
with and into Newco (the "Merger") and the separate existence of the Company
shall cease, all in accordance with the provisions of the law of the State of
Incorporation and of the State of Delaware. Newco shall be the surviving
corporation in the Merger and is sometimes hereinafter called the "Surviving
Corporation."
1.2 EFFECTIVE TIME. The Merger shall become effective at such time (the
"Effective Time") as a certificate of merger, in a form appropriate for filing,
is filed with the Secretary of State (or other appropriate authority) of the
State of Delaware (the "Merger Filing"). The Merger Filing shall be made
simultaneously with or as soon as practicable after the execution and delivery
of this Agreement. A copy of the Merger Filing, together with such other
documents as may be appropriate
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or advisable, shall be filed with the Office of the Secretary of State of the
State of California as soon as may be practicable, and in any case within six
months, after the Closing.
1.3 ARTICLES OF INCORPORATION, BY-LAWS, DIRECTORS AND OFFICERS OF
SURVIVING CORPORATION. At the Effective Time, the Articles of Incorporation of
Newco then in effect shall be the Articles of Incorporation of the Surviving
Corporation, and the By-laws of Newco then in effect shall be By-laws of the
Surviving Corporation. The directors and officers of Newco immediately prior to
the Effective Time shall be the directors and officers of the Surviving
Corporation.
1.4 EFFECT OF MERGER. At the Effective Time, the effect of the Merger
shall be as provided in the law of the State of Incorporation and the law of the
State of Delaware. Except as herein specifically set forth, the identity,
existence, purposes, powers, objects, franchises, privileges, rights and
immunities of Newco shall continue unaffected and unimpaired by the Merger and
the corporate franchises, existence and rights of the Company shall be merged
with and into Newco, and Newco, as the Surviving Corporation, shall be fully
vested therewith. At the Effective Time, the separate existence of the Company
shall cease and, in accordance with the terms of this Agreement, the Surviving
Corporation shall possess all the rights, privileges, immunities and franchises,
of a public, as well as of a private, nature, and all property, real, personal
and mixed, and all debts due on whatever account, including subscriptions to
shares, and all taxes, including those due and owing and those accrued, and all
other choses in action, and all and every other interest of or belonging to or
due to the Company and Newco shall be taken and deemed to be transferred to, and
vested in, the Surviving Corporation without further act or deed; and all
property, rights and privileges, powers and franchises and all and every other
interest shall be thereafter as effectually the property of the Surviving
Corporation as they were of the Company and Newco; and the title to any real
estate, or interest therein, whether by deed or otherwise, under the laws of the
State of Incorporation vested in the Company and Newco, shall not revert or be
in any way impaired by reason of the Merger. Except as otherwise provided
herein, the Surviving Corporation shall thenceforth be responsible and liable
for all the liabilities and obligations of the Company and Newco and any claim
existing, or action or proceeding pending, by or against the Company or Newco
may be prosecuted as if the Merger had not taken place, or the Surviving
Corporation may be substituted in their place. Neither the rights of creditors
nor any liens upon the property of the Company or Newco shall be impaired by the
Merger, and all debts, liabilities and duties of the Company and Newco shall
attach to the Surviving Corporation, and may be enforced against the Surviving
Corporation to the same extent as if said debts, liabilities and duties had been
incurred or contracted by such Surviving Corporation.
1.5 MANNER OF CONVERSION. The manner of converting the outstanding shares
of capital stock of the Company ("Company Stock") and the outstanding shares of
capital stock of Newco ("Newco Stock") shall be as follows:
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As of the Effective Time:
1. The Company Stock issued and outstanding immediately prior
to the Effective Time, by virtue of the Merger and without any action on the
part of the holder thereof, automatically shall be converted into the right to
receive, in the aggregate, (i) 297,177 shares of common stock, par value $.01
per share, of LandCARE ("LandCARE Stock") (such number being equal to $2,500,000
divided by the average of the closing prices of LandCARE Stock on the New York
Stock Exchange for the ten consecutive business days beginning on the 15th
business day prior to the date hereof) and (ii) an aggregate of $2,500,000 in
cash paid by wire transfer. The offer and sale of such shares of LandCare Stock
have been registered under the Securities Act of 1933, as amended, and will be
listed on the New York Stock Exchange.
2. All shares of Company Stock, if any, that are held by the
Company as treasury stock shall be canceled and retired, and no shares of
LandCARE Stock or other consideration shall be delivered or paid in exchange
therefor; and
3. As of the Effective Time, each outstanding share of Newco
Stock shall remain outstanding and unchanged.
1.6 DELIVERY OF CERTIFICATES. At the Closing, (i) the Stockholder shall
deliver to LandCARE the certificates representing the Company Stock, duly
endorsed in blank by the Stockholder, or accompanied by blank stock powers, and
with all necessary transfer tax and other revenue stamps, acquired at the
Stockholder's expense, affixed and canceled, and (ii) LandCARE shall cause its
stock transfer agent to deliver to the Stockholder certificates representing the
LandCARE Stock as described above. The Stockholder agrees promptly to cure any
deficiencies with respect to the endorsement of the stock certificates or other
documents of conveyance with respect to such Company Stock or with respect to
the stock powers accompanying any Company Stock.
1.7 CLOSING. The transactions contemplated by this Agreement are being
consummated on the date hereof, and the date hereof is sometimes herein called
the "Closing Date."
2. REPRESENTATIONS AND WARRANTIES OF THE STOCKHOLDER
The Stockholder hereby represents and warrants to LandCARE as follows.
2.1 DUE ORGANIZATION. The Company is a corporation duly organized,
validly existing and in good standing under the laws of the State of
Incorporation, and has all requisite power and authority to carry on its
business as it is now being conducted. The Company is duly qualified to do
business and is in good standing in each jurisdiction in which the nature of its
business or the
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ownership or leasing of its properties makes such qualification necessary,
except where the failure to be so authorized or qualified would not have a
material adverse effect on the business, assets, operations or condition
(financial or otherwise) of the Company (as used herein with respect to the
Company, or with respect to any other person, a "Material Adverse Effect").
SCHEDULE 2.1 sets forth a list of all jurisdictions in which the Company is
authorized or qualified to do business. True, complete and correct copies of the
Articles of Incorporation and By-laws, each as amended, of the Company (the
"Charter Documents") are all attached to SCHEDULE 2.1. The stock records of the
Company, a copy of which is attached to SCHEDULE 2.1, are correct and complete
in all material respects. All records of all proceedings of the Board of
Directors and stockholders of the Company have been made available to LandCARE.
2.2 AUTHORIZATION. (i) The representative of the Company executing this
Agreement has the authority to enter into and bind the Company to the terms of
this Agreement and (ii) the Company has the full legal right, power and
authority to enter into this Agreement and the transactions contemplated hereby,
all of which have been approved by the Stockholder and the Board of Directors of
the Company. This Agreement has been validly executed and delivered by the
Company and the Stockholder and constitutes the legal, valid and binding
obligation of each of them, enforceable in accordance with its terms.
2.3 CAPITAL STOCK OF THE COMPANY. The authorized capital stock of the
Company consists solely of 7,500 shares of common stock, par value $10.00 per
share, of which 348 shares are issued and outstanding and constitute all of the
issued and outstanding shares of Company Stock (the "Shares"). All of the Shares
are owned of record and beneficially by the Stockholder and are owned free and
clear of all liens, security interests, pledges, charges, voting trusts,
restrictions, encumbrances and claims of every kind. All of the Shares have been
duly authorized and validly issued, are fully paid and nonassessable, and were
offered, issued, sold and delivered by the Company in compliance with all
applicable state and federal laws governing the issuance of securities. None of
the Shares were issued in violation of any preemptive rights or similar rights
of any person. No option, warrant, call, conversion right or commitment of any
kind exists which obligates the Company to issue any additional shares of its
capital stock or obligates the Stockholder to transfer any of the Shares to any
person except pursuant to this Agreement.
2.4 SUBSIDIARIES. Except as set forth on SCHEDULE 2.4, the Company has no
subsidiaries or d/b/a names and has not conducted business under any other name
except its legal name as set forth in its Charter Documents. Except as set forth
in SCHEDULE 2.4, the Company does not own, of record or beneficially, or
control, directly or indirectly, any capital stock, securities convertible into
capital stock or any other equity interest in any corporation, association or
other business entity, and the Company is not, directly or indirectly, a
participant in any joint venture, partnership or other non-corporate entity.
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2.5 FINANCIAL STATEMENTS. Complete and correct copies of the following
financial statements are attached as SCHEDULE 2.5:
(i) The balance sheets of the Company as of October 31, 1997 (the
"Balance Sheet Date") and any related statements of operations,
stockholder's equity and cash flows for the three-year period then ended,
together with any related notes and schedules (the "Year-end Financial
Statements"); and
(ii) The balance sheet (the "Interim Balance Sheet") of the Company
as of May 31, 1998 and the related statements of operations for the
seven-month period then ended (the "Interim Financial Statements"). (The
Year-end Financial Statements and the Interim Financial Statements are
herein collectively called the "Financial Statements".)
The Financial Statements have been prepared from the books and records of
the Company in conformity with generally accepted accounting principles as
currently applied by the Company on a basis consistent with preceding years and
throughout the periods involved ("GAAP") and present fairly the financial
position and results of operations of the Company as of the dates of such
statements and for the periods covered thereby. The books of account of the
Company have been kept accurately in the ordinary course of business, the
transactions entered therein represent bona fide transactions, and the revenues,
expenses, assets and liabilities of the Company have been properly recorded
therein in all material respects.
2.6 LIABILITIES AND OBLIGATIONS. Except as and to the extent disclosed and
adequately provided for in the Financial Statements or on SCHEDULE 2.6 hereto,
the Company has no liabilities or obligations of any kind, whether accrued,
absolute, secured or unsecured, contingent or otherwise. Except and to the
extent disclosed on SCHEDULE 2.6, there are no claims, liabilities or
obligations, nor any reasonable basis for assertion against the Company, of any
claim, liability or obligation, of any nature whatsoever. Except as expressly
set forth on SCHEDULE 2.6, all of the contingent liabilities of the Company
listed on SCHEDULE 2.6 are covered by the Company's insurance policies, and no
such liability will exceed the policy limits of such insurance policies.
SCHEDULE 2.6 contains a reasonable estimate of the maximum amount which may be
payable with respect to known liabilities which are not fixed. For each such
known liability for which the amount is not fixed, SCHEDULE 2.6 includes a
summary description of each known liability, together with copies of all
relevant documentation relating thereto. The Company has no interest-bearing
debt as of the Closing Date. As of the Closing Date, the Company's tangible net
worth is at least $1,300,000, and the Company's net working capital is at least
$570,000 including at least $150,000 in cash.
2.7 ACCOUNTS AND NOTES RECEIVABLE. SCHEDULE 2.7 sets forth an accurate
list of the accounts and notes receivable of the Company, as of the most recent
date practicable (which date
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is set forth thereon), showing amounts due in 30-day aging categories. Except to
the extent reflected on SCHEDULE 2.7, all such accounts, notes and other
receivables were incurred in the ordinary course of business, are stated in
accordance with GAAP and are collectible in the amounts shown on SCHEDULE 2.7,
net of reserves reflected in the balance sheet as of the Balance Sheet Date.
2.8 PERMITS AND INTANGIBLES. The Company holds all licenses, franchises,
permits and other governmental authorizations required or necessary in
connection with the conduct of the Company's business. SCHEDULE 2.8 sets forth
an accurate list and summary description of all such licenses, franchises,
permits and other governmental authorizations, including permits, titles
(including licenses, franchises, certificates, trademarks, trade names, patents,
patent applications and copyrights owned or held by the Company or any of its
employees (including interests in software or other technology systems, programs
and intellectual property) (collectively, the "Intangible Assets") (it being
understood and agreed that a list of all environmental permits and other
environmental approvals is set forth on SCHEDULE 2.9). The Intangible Assets and
other governmental authorizations listed on SCHEDULES 2.8 and 2.9 are valid, and
the Company has not received any notice that any person intends to cancel,
terminate or not renew any such Intangible Assets or other governmental
authorization. The Company has conducted and is conducting its business in
compliance with the requirements, standards, criteria and conditions set forth
in the Intangible Assets and other governmental authorizations listed on
SCHEDULES 2.8 and 2.9 and is not in violation of any of the foregoing. Except as
specifically set forth on SCHEDULE 2.8 or 2.9, the transactions contemplated by
this Agreement will not result in a default under or a breach or violation of,
or adversely affect the rights and benefits afforded to the Company by, any such
Intangible Assets or other governmental authorizations.
2.9 ENVIRONMENTAL MATTERS. The Company has complied with and is in
compliance with all federal, state, local and foreign statutes (civil and
criminal), laws, ordinances, regulations, rules, notices, permits, judgments,
orders and decrees applicable to any of them or any of their respective
properties, assets, operations and businesses relating to environmental
protection (collectively "Environmental Laws"), including, without limitation,
Environmental Laws relating to air, water, land and the generation, storage,
use, handling, transportation, treatment or disposal of Hazardous Wastes,
Hazardous Materials and Hazardous Substances (including petroleum and petroleum
products) (as such terms are defined in any applicable Environmental Law) except
to the extent that noncompliance with any Environmental Laws, either singly or
in the aggregate, has not had and will not have a Material Adverse Effect on the
Company or any of its operations. The Company has obtained and adhered to all
necessary permits and other approvals necessary to treat, transport, store,
dispose of and otherwise handle Hazardous Wastes, Hazardous Materials and
Hazardous Substances, a list of all of which permits and approvals is set forth
on SCHEDULE 2.9, and have reported to the appropriate authorities, to the extent
required by all Environmental Laws, all past and present sites owned and
operated by the Company where Hazardous Wastes, Hazardous
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Materials or Hazardous Substances have been treated, stored, disposed of or
otherwise handled. There have been no releases or threats of releases (as
defined in Environmental Laws) at, from, in, under or on any property owned or
operated by the Company except as permitted by Environmental Laws. There is no
on-site or off-site location to which the Company has transported or disposed of
Hazardous Wastes, Hazardous Materials or Hazardous Substances or arranged for
the transportation of Hazardous Wastes, Hazardous Materials or Hazardous
Substances which is the subject of any federal, state, local or foreign
enforcement action or any other investigation which could lead to any claim
against the Company or LandCARE for any clean-up cost, remedial work, damage to
natural resources, property damage or personal injury, including, but not
limited to, any claim under (i) the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended, (ii) the Resource
Conservation and Recovery Act, as amended, (iii) the Hazardous Materials
Transportation Act, as amended, or (iv) comparable state or local statutes and
regulations. The Company has no contingent liability in connection with any
release of any Hazardous Waste, Hazardous Material or Hazardous Substance into
the environment.
2.10 PERSONAL PROPERTY. SCHEDULE 2.10 sets forth an accurate list of (a)
all personal property with a fair market value in excess of $5,000 included in
"plant, property and equipment" or any similar category on the balance sheet of
the Company, (b) all other personal property owned by the Company with a fair
market value in excess of $5,000, and (c) all leases and agreements with respect
to personal property, copies of which have been delivered to LandCARE. SCHEDULE
2.10 indicates which assets are currently owned by the Stockholder or any
affiliate of the Company or the Stockholder. Except as set forth on SCHEDULE
2.10, (i) all material personal property used by the Company in its business is
either owned by the Company or leased by the Company pursuant to a lease
included on SCHEDULE 2.10, (ii) all of the personal property listed on SCHEDULE
2.10 is in good working order and condition, ordinary wear and tear excepted and
(iii) all leases and agreements included on SCHEDULE 2.10 are in full force and
effect and constitute valid and binding agreements of the parties (and their
successors) thereto in accordance with their respective terms. Except as set
forth on SCHEDULE 2.10, the Company has good and marketable title to the
tangible and intangible personal property it purports to own, subject to no
security interest, pledge, lien, claim, conditional sales agreement,
encumbrance, charge or restriction on transfer.
2.11 SIGNIFICANT CUSTOMERS; MATERIAL CONTRACTS AND COMMITMENTS. SCHEDULE
2.11 sets forth a list of (i) all customers representing 5% or more of the
Company's revenues in its last full fiscal year ("Significant Customers"), and
(ii) all material contracts, commitments and similar agreements to which the
Company is a party or by which it or any of its properties are bound (including,
but not limited to, contracts with Significant Customers, joint venture or
partnership agreements, contracts with any labor organizations, strategic
alliances and options to purchase land). True, complete and correct copies of
such agreements have been delivered to LandCARE. Except as described on SCHEDULE
2.11, (i) none of the Significant Customers have canceled or substantially
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reduced or, to the knowledge of the Company, are currently attempting or
threatening to cancel a contract or substantially reduce utilization of the
services provided by the Company, and (ii) the Company has complied with all
commitments and obligations pertaining to it, and is not in default under any
contracts or agreements listed on SCHEDULE 2.11 and no notice of default under
any such contract or agreement has been received. The transactions contemplated
by this Agreement will not result in a default under or a breach or violation
of, or adversely affect the rights and benefits afforded to the Company by, any
such contracts or agreements. SCHEDULE 2.11 also includes a summary description
of all plans or projects relating to the Company's business involving the
opening of new operations, expansion of existing operations, the acquisition of
any property, business or assets requiring, in any event, the payment of more
than $50,000 in the aggregate.
2.12 REAL PROPERTY. SCHEDULE 2.12 includes a list of all real property
owned or leased by the Company at the date hereof (the "Real Property"), and all
other real property, if any, used by the Company in the conduct of its business.
True, complete and correct copies of all leases and agreements with respect to
Real Property leased by the Company have been delivered to LandCARE, and an
indication as to which such properties, if any, are currently owned, or were
formerly owned, by the Stockholder or any affiliates of the Company or the
Stockholder is included in SCHEDULE 2.12. All leases relating to Real Property
leased by the Company from the Stockholder or any affiliate of the Stockholder
has been terminated. Except as set forth on SCHEDULE 2.12, all of such leases
included on SCHEDULE 2.12 are in full force and effect and constitute valid and
binding agreements of the parties (and their successors) thereto in accordance
with their respective terms. There are no leases, tenancy agreements, easements,
covenants, restrictions or any other instruments, agreements or arrangements
which create in or confer on any party, other than the Company, the right to
occupy or possess all or any portion of the Real Property or create in or confer
on any such party any right, title or interest in or to the Real Property or any
portion thereof or any interest therein; no party other than the Company
occupies or possesses the Real Property or any portion thereof; there is legal
and adequate ingress and egress between each tract of Real Property and an
adjacent (or, if none, the closest) public roadway; the Real Property is
properly zoned in order to allow its current use in the Company's businesses;
and there are no claims or demands pending or threatened by any party against
the Real Property which, if valid, would create in, or confer on, any party
other than the Company, any right, title or interest in or to the Real Property
or any portion thereof. None of the buildings, structures or improvements
described on SCHEDULE 2.12, or the operation or maintenance thereof as now
operated or maintained, contravenes any zoning ordinance or other administrative
regulation or violates any restrictive covenant or any provision of law, the
effect of which would materially interfere with or prevent their continued use
for the purposes for which they are now being used or would adversely affect the
value thereof or the interest of the Company therein. The Stockholder has
furnished to LandCARE a true and correct copy of all owner's policies of title
insurance and surveys pertaining to the real property owned by the Company.
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2.13 INSURANCE. SCHEDULE 2.13 sets forth an accurate list as of the date
hereof of all insurance policies now carried by the Company and an accurate list
of all insurance loss runs and workers compensation claims received for the past
three policy years. True, complete and correct copies of all insurance policies
currently in effect have been delivered to LandCARE. Such insurance policies
evidence all of the insurance that the Company is required to carry pursuant to
all of its contracts and other agreements and pursuant to all applicable laws,
and, to the knowledge of the Stockholder, provide adequate coverage against the
risks involved in the Company's business. Except as set forth on SCHEDULE 2.13,
none of such policies is a "claims made" policy.
2.14 COMPENSATION; EMPLOYMENT AGREEMENTS; ORGANIZED LABOR MATTERS.
SCHEDULE 2.14 sets forth an accurate list showing all officers, directors and
key employees of the Company, listing all employment agreements with such
officers, directors and key employees and the rate of compensation (and the
portions thereof attributable to salary, bonus and other compensation,
respectively) of each of such persons as of the Balance Sheet Date. Except as
set forth on SCHEDULE 2.14, since the Balance Sheet Date, there have been no
increases in the base compensation payable or any special bonuses to any
officer, director, key employee or other employee.
Except as set forth on SCHEDULE 2.14, (i) the Company is not bound by or
subject to (and none of its respective assets or properties is bound by or
subject to) any arrangement with any labor union, (ii) no employees of the
Company are represented by any labor union or covered by any collective
bargaining agreement, (iii) to the knowledge of the Stockholder after due
inquiry, no campaign to establish such representation is in progress and (iv)
there is no pending or, to the knowledge of the Stockholder after due inquiry,
threatened, labor dispute involving the Company and any group of its employees.
The Company has not experienced any labor interruptions over the past five
years.
2.15 EMPLOYEE BENEFIT PLANS. SCHEDULE 2.15 sets forth an accurate schedule
showing all employee benefit plans of Company, including all agreements or
arrangements (other than agreements or arrangements set forth on SCHEDULE 2.14)
containing "golden parachute" or other similar provisions, and deferred
compensation agreements, together with true, complete and correct copies of such
plans, agreements and any trusts related thereto, and classifications of
employees covered thereby as of the Balance Sheet Date. Except for the employee
benefit plans, if any, described on SCHEDULE 2.15, the Company does not sponsor,
maintain or contribute to any plan, program, fund or arrangement that
constitutes an "employee pension benefit plan," nor does the Company have any
obligation to contribute to or accrue or pay any benefits under any deferred
compensation or retirement funding arrangement on behalf of any employee or
employees (such as, for example, and without limitation, any individual
retirement account or annuity, any "excess benefit plan" (within the meaning of
Section 3(36) of the Employee Retirement Income Security Act of 1974, as amended
("ERISA")), or any non-qualified deferred compensation arrangement). For the
purposes of this Agreement, the term "employee pension benefit plan" shall have
the same
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meaning as is given that term in Section 3(2) of ERISA. The Company has not
sponsored, maintained or contributed to any employee pension benefit plan and is
not required to contribute to any retirement plan pursuant to the provisions of
any collective bargaining agreement establishing the terms and conditions of
employment of any of the Company's employees other than the plans set forth on
SCHEDULE 2.15.
The Company is not now, and will not as a result of its past activities
become, liable to the Pension Benefit Guaranty Corporation (the "PBGC") or to
any multi employer employee pension benefit plan under the provisions of Title
IV of ERISA. All employee benefit plans listed on SCHEDULE 2.15 and the
administration thereof are in substantial compliance with their terms and all
applicable provisions of ERISA and the regulations issued thereunder, as well as
with all other applicable federal, state and local statutes, ordinances and
regulations. All accrued contribution obligations of the Company with respect to
any plan listed on SCHEDULE 2.15 have either been fulfilled in their entirety or
are fully reflected on the balance sheet of the Company as of the Balance Sheet
Date. All plans listed on SCHEDULE 2.15 that are intended to qualify (the
"Qualified Plans") under Section 401(a) of the Internal Revenue Code of 1986, as
amended (the "Code"), are, and have been, so qualified and have been determined
by the Internal Revenue Service to be so qualified. Except as disclosed on
SCHEDULE 2.15, all reports and other documents required to be filed with any
governmental agency or distributed to plan participants or beneficiaries have
been timely filed or distributed, and the most recent copies thereof are
included as part of SCHEDULE 2.15. Neither the Stockholder, nor any plan listed
in SCHEDULE 2.15 nor the Company has engaged in any transaction prohibited under
the provisions of Section 4975 of the Code or Section 406 of ERISA. No plan
listed on SCHEDULE 2.15 has incurred an accumulated funding deficiency, as
defined in Section 412(a) of the Code and Section 302(1) of ERISA; and the
Company has not incurred any liability for excise tax or penalty due to the
Internal Revenue Service or any liability to the PBGC. There have been no
terminations, partial terminations or discontinuance of contributions to any
such Qualified Plan intended to qualify under Section 401(a) of the Code without
notice to and approval by the Internal Revenue Service; no plan listed on
SCHEDULE 2.15 subject to the provisions of Title IV of ERISA has been
terminated; there have been no "reportable events" (as that phrase is defined in
Section 4043 of ERISA) with respect to any such plan listed on SCHEDULE 2.15;
the Company has not incurred liability under Section 4062 of ERISA; and no
circumstances exist pursuant to which the Company could have any direct or
indirect liability whatsoever (including, but not limited to, any liability to
any multi employer plan or the PBGC under Title IV of ERISA or to the Internal
Revenue Service for any excise tax or penalty, or being subject to any statutory
lien to secure payment of any such liability) with respect to any plan now or
heretofore maintained or contributed to by any entity other than the Company
that is, or at any time was, a member of a "controlled group" (as defined in
Section 412(n)(6)(B) of the Code) that includes the Company.
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2.16 CONFORMITY WITH LAW; LITIGATION. Except as set forth on SCHEDULE
2.16, there are no claims, actions, suits or proceedings pending or, to the best
knowledge of the Stockholder, threatened, against or affecting the Company (as
any of its officers and directors in their capacities as such), at law or in
equity, or before or by any federal, state, municipal or other governmental
department, commission, board, bureau, agency or instrumentality having
jurisdiction over the Company. SCHEDULE 2.16 also indicates which of such
claims, actions, suits and proceedings are covered by insurance. Except as set
forth on SCHEDULE 2.16, no notice of any claim, action, suit or proceeding,
whether pending or threatened, has been received by the Company during the last
five years and, to the best knowledge of the Stockholder, there is no basis
therefor. Except as set forth on SCHEDULE 2.16, there are no outstanding
judgments, orders, writs, injunctions or decrees against the Company. Except as
set forth on SCHEDULE 2.16, the Company has conducted and now conducts its
business in material compliance with all laws, regulations, writs, injunctions,
decrees and orders applicable to the Company or its assets. The Company is not
in violation of any material law or regulation or any order of any court or
federal, state, municipal or other governmental department, commission, board,
bureau, agency or instrumentality having jurisdiction over any of them. The
Company has conducted and is conducting its business in substantial compliance
with the requirements, standards, criteria and conditions set forth in
applicable federal, state and local statutes, ordinances, permits, licenses,
orders, approvals, variances, rules and regulations, including all such permits,
licenses, orders and other governmental approvals set forth on SCHEDULES 2.8 and
2.9.
2.17 TAXES. For purposes of this Agreement, the term "Taxes" shall mean
all taxes, charges, fees, levies or other assessments, including, without
limitation, income, gross receipts, excise, property, sales, withholding, social
security, unemployment, occupation, use, service, license, payroll, franchise,
transfer and recording taxes, fees and charges, imposed by the United States or
any state, local or foreign government or subdivision or agency thereof ("Taxing
Authority"), whether computed on a separate, consolidated, unitary, combined or
any other basis; and such term shall include any interest, fines, penalties or
additional amounts attributable to or imposed with respect to any such taxes,
charges, fees, levies or other assessments. As used herein, the term "Company
Subsidiaries" means the subsidiaries, if any, of the Company; it being
understood that there may be no such subsidiaries.
All Tax returns ("Returns") required to be filed with respect to any Tax
for which any of the Company and the Company Subsidiaries (if any) is liable
have been duly and timely filed with the appropriate Taxing Authority, each Tax
shown to be payable on each such Return has been paid, each Tax payable by the
Company or a Company Subsidiary by assessment has been timely paid in the amount
assessed, and adequate reserves have been established on the consolidated books
of the Company and the Company Subsidiaries for all Taxes for which any of the
Company and the Company subsidiaries is liable, but the payment of which is not
yet due. Neither the Company nor
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any Company Subsidiary is, or ever has been, liable for any Tax payable by
reason of the income or property of a person or entity other than the Company or
a Company Subsidiary. Each of the Company and the Company Subsidiaries has
timely filed true, correct and complete declarations of estimated Tax in each
jurisdiction in which any such declaration is required to be filed by it. No
Liens for Taxes exist upon the assets of the Company or any Company Subsidiary
except Liens for Taxes which are not yet due. Neither the Company nor any
Company Subsidiary is, or ever has been, subject to Tax in any jurisdiction
outside the United States. No litigation with respect to any Tax for which the
Company or any Company Subsidiary is asserted to be liable is pending or, to the
knowledge of the Company or the Stockholder, threatened, and no basis which the
Company or any Stockholder believes to be valid exists on which any claim for
any such Tax can be asserted against the Company or any Company Subsidiary.
There are no requests for rulings or determinations in respect of any Taxes
pending between the Company or any Company Subsidiary and any Taxing Authority.
No extension of any period during which any Tax may be assessed or collected and
for which the Company or any Company Subsidiary is or may be liable has been
granted to any Taxing Authority. Neither the Company nor any Company Subsidiary
is or has been party to any tax allocation or sharing agreement. All amounts
required to be withheld by any of the Company and the Company Subsidiaries and
paid to governmental agencies for income, social security, unemployment
insurance, sales, excise, use and other Taxes have been collected or withheld
and paid to the proper Taxing Authority. The Company and each Company Subsidiary
have made all deposits required by law to be made with respect to employees'
withholding and other employment Taxes. Neither the Company nor the Stockholder
is a "foreign person," as that term is referred to in Section 1445(f)(3) of the
Code. The Company has not filed a consent pursuant to Section 341 (f) of the
Code or any comparable provision of any other tax statute and has not agreed to
have Section 341 (f)(2) of the Code or any comparable provision of any other Tax
statute apply to any disposition of an asset. The Company has not made, is not
obligated to make and is not a party to any agreement that could require it to
make any payment that is not deductible under Section 280G of the Code. No asset
of the Company or of any Company Subsidiary is subject to any provision of
applicable law which eliminates or reduces the allowance for depreciation or
amortization with respect to that asset below the allowance generally available
to an asset of its type. The Company uses the cash method of accounting for
income tax purposes and the accrual method of accounting for financial reporting
purposes, and the Company's methods of accounting have not changed in the past
five years. The Company is not an investment company as defined in Section
351(e)(1) of the Code.
2.18 NO VIOLATIONS; ALL REQUIRED CONSENTS OBTAINED. The Company is not in
violation of any of its Charter Documents. Neither the Company nor, to the
knowledge of the Stockholder, any other party thereto is in material default
under any lease, instrument, license, permit or material agreement to which the
Company is a party or by which its properties are bound (the "Material
Documents"). Except as set forth on SCHEDULE 2.18, (a) the execution of this
Agreement by the
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Company and the Stockholder and the performance by the Company and the
Stockholder of their obligations hereunder and the consummation of the
transactions contemplated hereby will not result in any violation or breach or
constitute a default under any of the terms or provisions of the Material
Documents or the Charter Documents, and (b) at and after the Closing Date the
Surviving Corporation will be entitled to the rights and benefits under the
Material Documents to which the Company is entitled immediately prior to the
Closing. Except as set forth on SCHEDULE 2.18 (and except for consents already
obtained), none of the Material Documents requires notice to, or the consent or
approval of, any governmental agency or other third party with respect to any of
the transactions contemplated hereby in order to remain in full force and
effect, and consummation of the transactions contemplated hereby will not give
rise to any right to termination, cancellation or acceleration or loss of any
right or benefit. Except as set forth on SCHEDULE 2.18, none of the Material
Documents prohibits the use or publication of the name of any other party to
such Material Document, and none of the Material Documents prohibits or
restricts the Surviving Corporation or will prevent or restrict the Company or
LandCARE from freely providing services to any person.
2.19 ABSENCE OF CHANGES. Since the Balance Sheet Date, the Company has
conducted its operations in the ordinary course of business and, except as set
forth on SCHEDULE 2.19, there has not been:
(i) any change in the business, assets, liabilities or financial
condition of the Company which would have a Material Adverse Effect;
(ii) any damage, destruction or loss (whether or not covered by
insurance) affecting any of the material assets of the Company or the
business of the Company which would have a Material Adverse Effect;
(iii) any change in the authorized capital of the Company or its
outstanding securities or any change in its ownership interests or any
grant of any options, warrants, calls, conversion rights or commitments;
(iv) any declaration or payment of any dividend or distribution with
respect to the capital stock or any direct or indirect redemption,
purchase or other acquisition of any of the capital stock of the Company;
(v) any increase or commitment to increase the compensation, bonus,
sales commissions or fee arrangement payable or to become payable by the
Company to any of its officers, directors, stockholders, employees,
consultants or agents;
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(vi) any work interruptions, labor grievances or claims filed, or
any event or condition of any character, materially adversely affecting
the business of the Company;
(vii) any sale or transfer, or any agreement to sell or transfer,
any material assets, property or rights of the Company to any person;
(viii)any cancellation, or agreement to cancel, any indebtedness or
other obligation owing to the Company;
(ix) any plan, agreement or arrangement granting any preferential
rights to purchase or acquire any interest in any of the assets, property
or rights of the Company or requiring consent of any party to the transfer
and assignment of any such assets, property or rights;
(x) any purchase or acquisition of, or agreement, plan or
arrangement to purchase or acquire, any property, rights or assets outside
of the ordinary course of the Company's business;
(xi) any waiver of any material rights or claims of the Company;
(xii) any amendment or termination of any contract, agreement,
license, permit or other right to which the Company is a party which would
have a Material Adverse Effect;
(xiii)any contract, commitment or liability entered into or incurred
or any capital expenditures made except in the normal course of business
consistent with past practice in an individual amount not in excess of
$25,000 and in an aggregate amount not in excess of $100,000; or
(xiv) any transaction by the Company outside the ordinary course of
its business.
2.20 POWERS OF ATTORNEY. SCHEDULE 2.20 sets forth a schedule as of the
date of this Agreement of the name of each person, corporation, firm or other
entity holding any general or special power of attorney from the Company and a
description of the terms of each such power.
2.21 COMPETING LINES OF BUSINESS; RELATED-PARTY TRANSACTIONS. Except as
set forth on SCHEDULE 2.21, neither the Stockholder nor any other affiliate of
the Company owns, directly or indirectly, any interest in, or is an officer,
director, employee or consultant of or otherwise receives remuneration from, any
business which is a competitor, lessor, lessee, customer or supplier of the
Company. Except as set forth on SCHEDULE 2.21, no officer, director or
stockholder of the Company
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has, nor during the period beginning January 1, 1995 through the date hereof
had, any interest in any property, real or personal, tangible or intangible,
used in or pertaining to the Company's business.
2.22 DISCLOSURE. The Stockholder has provided LandCARE with all the
information that LandCARE has requested in analyzing whether to consummate the
transactions contemplated hereby. None of the information so provided nor any
representation or warranty of the Stockholder contained in this Agreement
contains any untrue statement or omits to state a material fact necessary in
order to make the statements herein or therein, in light of the circumstances
under which they were made, not misleading. To the knowledge of the Stockholder,
there is no fact which has specific application to the Company or its business
or assets (other than general economic or industry conditions) which would have
a Material Adverse Effect or, so far as the Stockholder can reasonably foresee,
threatens to have a Material Adverse Effect, on the Company or its business or
assets, or the condition (financial or otherwise), results of operations or
prospects of the Company, which has not been described in the Schedules hereto.
2.23 CERTAIN BUSINESS PRACTICES. Neither the Company nor any person acting
on behalf of the Company has given or offered anything of value to any
governmental official, political party or candidate for government office nor
has it or any of them otherwise taken any action which would cause the Company
to be in violation of the Foreign Corrupt Practices Act of 1977, as amended, or
any law of similar effect.
2.24 NOTICE TO BARGAINING AGENTS. The Company has satisfied any
requirement for notice of the transactions contemplated by this Agreement under
applicable collective bargaining agreements.
2.25 NOTICES AND CONSENTS. The Company has given any notices to third
parties and has obtained any third party consents that may be necessary to
consummate the transactions contemplated hereby.
2.26 INVENTORY; WORKING CAPITAL; OTHER FINANCIAL MATTERS. The Company's
inventory and working capital levels are adequate to successfully operate the
business, and there has been no unusual build-up of cash needs at the date
hereof.
2.27 YEAR 2000 COMPLIANCE. The properties and assets of the Company,
including, but not limited to, computer hardware, microprocessor driven
equipment, software and data, owned or used by the Company will accurately
process date and time data after December 31, 1999, and the Company will suffer
no loss of functional ability when processing dates and related data outside the
1900-1999 year range.
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2.28 RELIANCE UPON ORAL REPRESENTATIONS. The Company and the Stockholder
each represent and warrant: (a) that each has been fully informed by his or its
legal counsel and by his or its own independent judgment of the terms,
conditions and effects of this Agreement; (b) that each has been represented by
independent legal counsel of his or its choice throughout all negotiations
preceding the execution of this Agreement and has received the advice of his or
its attorney in entering into this Agreement; (c) that each, both personally and
through his or its independently- retained attorneys, is fully satisfied with
the terms and effects of this Agreement; (d) that no promise or inducement has
been offered or made to him or it except as expressly stated in this Agreement;
and (e) that this Agreement is executed without reliance on any oral statement
or oral representation by any other party or any other party's agent or
attorney.
3. REPRESENTATIONS OF LANDCARE
LandCARE represents and warrants as follows:
3.1 DUE ORGANIZATION. LandCARE is duly incorporated, validly existing and
in good standing under the laws of the state of Delaware, and has the requisite
power and authority to carry on its business as it is now being conducted.
LandCARE is qualified to do business and is in good standing in each
jurisdiction in which the nature of its business makes such qualification
necessary, except where the failure to be so authorized or qualified would not
have a Material Adverse Effect.
3.2 AUTHORIZATION. (i) The representative of LandCARE executing this
Agreement has the authority to enter into and bind LandCARE to the terms of this
Agreement and (ii) LandCARE has the full legal right, power and authority to
enter into this Agreement and to consummate the transactions contemplated
hereby.
3.3 NO VIOLATIONS. The execution of this Agreement and the performance of
the obligations hereunder and the consummation of the transactions contemplated
hereby will not result in any violation or breach or constitute a default under
any of the terms or provisions of the Restated Certificate of Incorporation, as
amended, or Bylaws, as amended, of LandCARE.
3.4 VALIDITY OF OBLIGATIONS. The execution and delivery of this Agreement
by LandCARE and the performance of the transactions contemplated hereby have
been duly and validly authorized by the Board of Directors of LandCARE and this
Agreement has been duly and validly authorized by all necessary corporate action
and is a legal, valid and binding obligation of LandCARE.
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3.5 TAX REORGANIZATION REPRESENTATIONS.
(i) Prior to the Merger, LandCARE will be in control of Newco within
the meaning of Section 368(c) of the Code.
(ii) LandCARE has no plan or intention to cause the Surviving
Corporation to issue additional shares of its stock that would result in
LandCARE losing control of the Surviving Corporation within the meaning of
Section 368(c) of the Code.
(iii) LandCARE has no plan or intention to reacquire any of its
stock issued in the Merger.
(iv) LandCARE has no plan or intention to liquidate the Surviving
Corporation; to merge the Surviving Corporation with or into another
corporation; to sell or otherwise dispose of the stock of the Surviving
Corporation except for transfers of stock to another corporation
controlled by LandCARE; or to cause the Surviving Corporation to sell or
otherwise dispose of any of its assets, except for dispositions made in
the ordinary course of business or transfers of assets to a corporation
controlled by LandCARE.
(v) Following the Closing, LandCARE's intention is that the
Surviving Corporation will continue the historic business of the Company
or use a significant portion of the historic business assets of the
Company in a business, all as required to satisfy the "continuity of
business enterprise" requirement under Section 368 of the Code.
(vi) LandCARE does not own, nor has it owned during the past five
years, any shares of the stock of the Company.
(vii) Each of LandCARE and Newco is undertaking the Merger for a
bona fide business purpose and not merely for the avoidance of federal
income tax.
(viii)Neither LandCARE nor Newco is an investment company as defined
in Section 368(a)(2)(F)(iii) and (iv) of the Code.
(ix) As of the Closing Date, the fair market value of the assets of
Newco will exceed the sum of Newco's liabilities plus the amount of other
liabilities, if any, to which Newco's assets are subject.
3.6 SEC FILINGS; DISCLOSURE. LandCARE has filed with the Securities and
Exchange Commission ("SEC") all material forms, statements, reports and
documents required to be filed by
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it prior to the date hereof under each of the Securities Act of 1933, as amended
(the "1933 ACT"), the Securities Exchange Act of 1934, as amended (the "1934
ACT"), and the respective rules and regulations thereunder, (a) all of which, as
amended, if applicable, complied when filed in all material respects with all
applicable requirements of the appropriate Act and the rules and regulations
thereunder, and (b) none of which, as amended, if applicable, contains any
untrue statement of material fact or omits to state a material fact required to
be stated therein or necessary in order to make the statements made therein, in
the light of the circumstances under which they were made, not misleading.
3.7 INVESTIGATION OF THE COMPANY. LandCARE is entering into this Agreement
voluntarily based upon its own investigation, judgment, and evaluation and not
upon any representations of the Stockholder or the Company other than those
specifically set forth in this Agreement.
3.8 DISCLOSURE. LandCARE has fully provided the Stockholder or his
representatives with all the information that the Stockholder has requested in
analyzing whether to consummate the Merger. None of the information so provided
nor any representation or warranty of LandCARE contained in this Agreement
contains any untrue statement of a material fact or omits to state a material
fact necessary in order to make the statements herein or therein, in light of
the circumstances under which they were made, not misleading.
4. DELIVERIES
4.1 INSTRUMENTS OF TRANSFER. The Stockholder is delivering to LandCARE
certificates representing all of the Shares, duly endorsed (or accompanied by
duly executed stock powers).
4.2 CERTIFICATE OF MERGER. The appropriate parties hereto are executing
and delivering for filing with the appropriate authorities a certificate of
merger or similar document for purposes of effecting the Merger.
4.3 EMPLOYMENT AGREEMENT. Newco and the persons identified in SCHEDULE 4.3
are entering into Employment Agreements in the forms of Annexes I (Mr. Newman)
and IA (Key Employees).
4.4 OPINION OF COUNSEL. Counsel to the Company and the Stockholder is
delivering an opinion to LandCARE dated the date hereof in the form attached
hereto as Annex II.
4.5 GOOD STANDING CERTIFICATES. The Stockholder is delivering to LandCARE
certificates, dated as of a date no earlier than ten days prior to the date
hereof, duly issued by the appropriate
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governmental authority in the State of Incorporation and in each state in which
the Company is authorized to do business, showing the Company to be in good
standing and authorized to do business therein.
4.6 INDEBTEDNESS TO COMPANY. The Stockholder and its Affiliates are
repaying any outstanding indebtedness they may have to the Company.
4.7 TAX MATTERS. Unless waived by the Stockholder, tax advisors to the
Stockholder are delivering an opinion to the Stockholder satisfactory to the
Stockholder regarding the tax consequences of the transactions contemplated
hereby. The Stockholder understands that neither LandCare nor its advisors are
advising the Stockholder with respect to the tax consequences of the
transactions contemplated by this Agreement.
4.8 CONSENTS. The Stockholder is delivering to LandCARE copies of any
third party consents required in connection with the consummation of the
transactions contemplated hereby.
4.9 RESIGNATIONS OF DIRECTORS AND OFFICERS. The Stockholder is delivering
to LandCARE the resignations of such directors and officers of the Company as
have been requested by LandCARE.
5. POST-CLOSING COVENANTS
The parties to this Agreement further covenant and agree as follows:
5.1 FUTURE COOPERATION; FURTHER ASSURANCES. The Stockholder, the Surviving
Corporation and LandCARE shall each deliver or cause to be delivered to the
other following the date hereof such additional instruments as the other may
reasonably request for the purpose of effecting the Merger and fully carrying
out the intent of this Agreement. LandCARE shall provide the Stockholder
reasonable access to the books and records of the Surviving Corporation after
the Closing Date for purposes of tax compliance and any other reasonable
purpose.
5.2 EXPENSES. LandCARE will pay all SEC filing fees and the fees, expenses
and disbursements of LandCARE and its agents, representatives, financial
advisors, accountants and counsel incurred in connection with the execution,
delivery and performance of this Agreement. The Stockholder will pay the fees,
expenses and disbursements of the Stockholder and its agents, representatives,
financial advisors, accountants and counsel incurred in connection with the
execution, delivery and performance of this Agreement. The Stockholder shall pay
any sales, use, transfer, real property transfer, recording, gains, stock
transfer and other similar taxes and fees ("Transfer Taxes") imposed in
connection with the Merger. The Stockholder shall file all necessary
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documentation and returns with respect to such Transfer Taxes. In addition, the
Stockholder acknowledges that the Stockholder, and not the Surviving Corporation
or LandCARE, will pay all taxes (income or otherwise), if any, due upon receipt
of the consideration payable pursuant to this Agreement.
5.3 CERTAIN AGREEMENTS. Upon the request of LandCARE at any time after the
Closing, the Stockholder and the Surviving Corporation shall terminate any
existing agreements to which the Company and the Stockholder are parties.
5.4 PREPARATION AND FILING OF TAX RETURNS.
(a) The Stockholder shall file or cause to be filed all Tax Returns
for all taxable periods that end on or before the Closing Date, but in each case
only after LandCARE has reviewed such filings.
(b) LandCARE shall file or cause to be filed all Tax Returns for all
taxable periods ending after the Closing Date.
(c) Each party hereto shall, and shall cause its subsidiaries and
affiliates to, provide to each of the other parties hereto such cooperation and
information as any of them reasonably may request in filing any Tax Returns,
amended Tax Returns or claim for refund, determining a liability for Taxes or a
right to refund of Taxes or in conducting any audit or other proceeding with
respect to Taxes. Such cooperation and information shall include providing
copies of all relevant portions of relevant Tax Returns, together with relevant
accompanying schedules and relevant work papers, relevant documents relating to
rulings or other determinations by Taxing Authorities and relevant records
concerning the ownership and Tax basis of property, which such party may
possess. Each party shall make its employees reasonably available on a mutually
convenient basis at its cost to provide explanation of any documents or
information so provided. Subject to the preceding sentence, each party required
to file tax returns pursuant to this Agreement shall bear all costs of filing
such tax returns.
5.5 STOCK OPTIONS. The Compensation Committee of the Board of Directors of
LandCARE has approved the grant of a pool of stock options to purchase an
aggregate of 29,718 shares of LandCARE Stock (such number being equal to
$250,000 divided by the average of the closing prices of LandCARE Stock on the
New York Stock Exchange for the ten consecutive business days beginning on the
15th business day prior to the date hereof), which stock options are to be
granted to certain key management and supervisory employees of the Company in
increments of not less than 500 shares. The Stockholder hereby covenants and
agrees to provide to LandCARE the allocation of such options among such key
management and supervisory employees of the Company
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as soon as reasonably practicable after the Closing, and LandCARE hereby
covenants and agrees to recommend the approval of the specific allocated stock
option grants to the Compensation Committee of its Board of Directors. The
options shall be issued pursuant to the LandCARE 1998 Long-Term Incentive Plan;
the date of grant shall be the date hereof; and the options shall have exercise
prices per share of LandCARE common stock covered thereby equal to the fair
market value of such shares at the date of grant. LandCARE has filed or will
file a Registration Statement on Form S-8 relating to such options.
6. INDEMNIFICATION
The Stockholder and LandCARE each make the following covenants that are
applicable to them, respectively:
6.1 SURVIVAL OF STOCKHOLDER'S REPRESENTATIONS AND WARRANTIES.
(a) The representations and warranties of the Stockholder made in
Sections 2.1 (Due Organization), 2.2 (Authorization), 2.3 (Capital Stock of the
Company) and 2.17 (Taxes) of this Agreement herewith shall survive the Closing
until the expiration of the periods prescribed by the applicable statutes of
limitations (including any extensions thereof) relating thereto; the
representations and warranties of the Stockholder made in Section 2.9
(Environmental Matters) of this Agreement shall survive the Closing for a period
of five years after the Closing Date; and the other representations and
warranties of the Stockholder made herein shall survive the Closing for a period
of two years after the Closing Date; provided, however, that representations and
warranties and indemnification provisions with respect to which a claim is made
within the survival period shall survive until such claim is finally determined
and paid.
(b) The representations and warranties of LandCARE made in this
Agreement shall survive the Closing for a period of two years following the
Closing Date; provided, however, that representations and warranties with
respect to which a claim is made within such two-year period shall survive until
such claim is finally determined and paid.
(c) The date on which a representation or warranty expires as
provided herein is herein called the "Expiration Date." No claim for
indemnification may be made with respect to a representation or warranty after
the Expiration Date, other than claims based on fraud.
6.2 GENERAL INDEMNIFICATION BY THE STOCKHOLDER. The Stockholder covenants
and agrees that he will indemnify, defend, protect, and hold harmless the
Surviving Corporation, LandCARE and its subsidiaries and all of their officers,
directors, employees, stockholders, agents, representatives and affiliates at
all times from and after the date of this Agreement until the
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Expiration Date from and against all claims, damages actions, suits,
proceedings, demands, assessments, adjustments, costs and expenses (including
specifically, but without limitation, reasonable attorneys' fees and expenses of
investigation) (collectively "Damages") incurred by such indemnified person as a
result of or incident to (i) any breach of any representation or warranty of the
Stockholder set forth herein, and (ii) any breach or nonfulfillment of any
covenant or agreement by the Company or the Stockholder under this Agreement. In
addition to the foregoing, the Stockholder covenants and agrees that he will
indemnify, defend, protect, and hold harmless the Surviving Corporation,
LandCARE and such other persons from and against all Damages incurred by any
such indemnified person as a result of or incident to any of the matters
described on SCHEDULE 6.2 hereto, which indemnification shall not be subject to
the limitations set forth in Section 6.6 hereof, but only to the extent that the
aggregate Damages resulting from or incident to such matters exceed $10,000.
6.3 INDEMNIFICATION BY LANDCARE. LandCARE covenants and agrees that it
will indemnify, defend, protect and hold harmless the Stockholder at all times
from and after the date of this Agreement until the Expiration Date from and
against all Damages incurred by the Stockholder as a result of (i) any breach of
any representation or warranty of LandCARE set forth herein; and (ii) any breach
or nonfulfillment of any covenant or agreement by LandCARE under this Agreement.
LandCARE covenants and agrees that it will indemnify, defend, protect and hold
harmless the Stockholder at all times from and after the date of this Agreement
until the Expiration Date from and against all Damages incurred by the
activities or operations of the Surviving Corporation after Closing.
6.4 THIRD PERSON CLAIMS. Promptly after any party hereto (the "Indemnified
Party") has received notice of or has knowledge of any claim by a person not a
party to this Agreement ("Third Person") or the commencement of any action or
proceeding by a Third Person that may give rise to a right of indemnification
hereunder, such Indemnified Party shall give to the party obligated to provide
indemnification hereunder (an "Indemnifying Party") written notice of such claim
or the commencement of such action or proceeding; provided, however, that the
failure to give such notice will not relieve such Indemnifying Party from
liability under this Section with respect to such claim, action or proceeding,
except to the extent that the Indemnifying Party has been actually prejudiced as
a result of such failure. The Indemnifying Party (at its own expense) shall have
the right and shall be given the opportunity to associate with the Indemnified
Party in the defense of such claim, suit or proceedings, and may select counsel
for the Indemnified Party, such counsel to be reasonably satisfactory to the
Indemnified Party. The Indemnified Party shall not, except at its own cost, make
any settlement with respect to any such claim, suit or proceeding without the
prior consent of the Indemnifying Party, which consent shall not be unreasonably
withheld or delayed. It is understood and agreed that in situations where
failure of the Indemnifying Party to settle a claim expeditiously could have an
adverse effect on the Indemnified Party, the failure of the Indemnifying Party
to act
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upon the Indemnified Party's request for consent to such settlement within five
business days of the Indemnifying Party's receipt of notice thereof from the
Indemnified Party shall be deemed to constitute consent by the Indemnifying
Party of such settlement for purposes of this Section.
6.5 METHOD OF PAYMENT. All claims for indemnification shall be paid in
cash. If LandCARE reasonably believes that it or any other Indemnified Party has
suffered, or will suffer, Damages for which it or any other Indemnified Party
would be entitled to indemnification pursuant to this Agreement, LandCARE may,
at its sole option and by notice in writing to the Stockholder, elect to
withhold payment of an amount equal to the amount of such Damages from any
amounts owing by LandCARE to the Stockholder.
6.6 LIMITATIONS ON INDEMNIFICATION. LandCARE and the other persons or
entities indemnified pursuant to this Section shall not assert any claim for
indemnification hereunder against the Stockholder until such time as the
aggregate of all claims which such persons may have against such the Stockholder
shall exceed $50,000 (the "Indemnification Threshold") and then only to the
extent that such claims exceed the Indemnification Threshold. The Stockholder
shall not assert any claim for indemnification hereunder against LandCARE until
such time as the aggregate of all claims which the Stockholder may have against
LandCARE shall exceed the Indemnification Threshold and then only to the extent
that such claims exceed the Indemnification Threshold. The aggregate liability
of the Stockholder under this Article 6 shall not exceed $5,000,000 (the
"Liability Limit"); the aggregate liability of LANDCARE hereunder shall not
exceed the Liability Limit.
7. NONCOMPETITION
7.1 PROHIBITED ACTIVITIES. As partial consideration for the execution,
delivery and performance of this Agreement by LandCARE, the Stockholder will
not, for a period of five years following the Closing Date, for any reason
whatsoever, directly or indirectly, for himself or on behalf of or in
conjunction with any other person, persons, company, partnership, corporation or
business of whatever nature:
(i) own, manage, operate, join, control, consult or advise (whether
or not compensated for such consultation or advice), or participate in, or
render assistance to, or derive any benefit whatever from, any business
offering services or products in direct competition with the Surviving
Corporation in the counties of Sonoma, Marin, Napa, Solano, Contra Costa,
Sacramento, Yolo, San Francisco, San Mateo, Santa Clara and Alameda (the
"Territory");
(ii) engage, as an officer, director, shareholder, owner, partner,
joint venturer, or in a sales or managerial capacity, whether as an
employee, independent contractor, consultant
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or advisor, or as a sales representative, in any business offering
services or products in direct competition with the Surviving Corporation
within the Territory;
(iii) call upon any person who is, at that time, an employee of the
Surviving Corporation for the purpose or with the intent of enticing such
employee away from or out of the employ of the Surviving Corporation;
(iv) call upon any person or entity which is, at that time, or which
has been, within one year prior to the Closing Date, a customer of the
Company or the Surviving Corporation for the purpose of soliciting or
selling products or services in direct competition with the Company or the
Surviving Corporation within the Territory.
Notwithstanding the above, the foregoing covenants shall not be deemed to
prohibit the Stockholder from acquiring as a passive investor with no
involvement in the operations or management of the business, not more than one
percent (1%) of the capital stock of a competing business whose stock is
publicly traded on a national securities exchange or over-the-counter market.
The provisions of this Section are independent of the noncompetition
provisions contained in any consulting or employment agreement to which the
Stockholder may be or may become a party in connection with the transactions
contemplated hereby. All such provisions are intended to be observed and
enforced in accordance with their terms.
7.2 EQUITABLE RELIEF. Because of the difficulty of measuring economic
losses to LandCARE as a result of a breach of the foregoing covenant, and
because of the immediate and irreparable damage that could be caused to LandCARE
for which it would have no other adequate remedy, the Stockholder agrees that
the foregoing covenant may be enforced by LandCARE in the event of breach by the
Stockholder, by injunctions, restraining orders and other equitable actions.
7.3 REASONABLE RESTRAINT. It is agreed by the parties hereto that the
foregoing covenants in this Section impose a reasonable restraint on the
Stockholder.
7.4 SEVERABILITY; REFORMATION. The covenants in this Section are severable
and separate, and the unenforceability of any specific covenant shall not affect
the provisions of any other covenant. Moreover, in the event any court of
competent jurisdiction shall determine that the scope, time or territorial
restrictions set forth are unreasonable, then it is the intention of the parties
that such restrictions be enforced to the fullest extent which the court deems
reasonable, and the Agreement shall thereby be reformed.
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7.5 INDEPENDENT COVENANT. The Stockholder acknowledges that his covenants
set forth in this Section are material conditions to LandCARE's willingness to
execute and deliver this Agreement and to consummate the transactions
contemplated hereby. All of the covenants in this Section shall be construed as
an agreement independent of any other provision in this Agreement, and the
existence of any claim or cause of action of the Stockholder against LandCARE or
any subsidiary thereof, whether predicated on this Agreement or otherwise, shall
not constitute a defense to the enforcement by LandCARE of such covenants. It is
specifically agreed that the period of five years stated at the beginning of
this Section, during which the agreements and covenants of the Stockholder made
in this Section shall be effective, shall be computed by excluding from such
computation any time during which the Stockholder is in violation of any
provision of this Section. The covenants contained in Section shall not be
affected by any breach of any other provision hereof by any party hereto.
8. NONDISCLOSURE OF CONFIDENTIAL INFORMATION
8.1 GENERAL. The Stockholder recognizes and acknowledges that he has had
access to certain customer lists, confidential information of the Company, such
as operational policies, pricing and cost policies, and other information, that
will be valuable, special and unique assets of the Surviving Corporation and
LandCARE after the Closing Date. The Stockholder agrees that he will not
disclose such confidential information, or any confidential information of the
Surviving Corporation or LandCARE to which they may have access in the future,
to any person, firm, corporation, association or other entity for any purpose or
reason whatsoever, except (a) to authorized representatives of LandCARE, (b)
following the Closing, such information may be disclosed by the Stockholder as
may be required in the course of performing his duties for the Surviving
Corporation and (c) to counsel and other advisers, provided that such advisers
(other than counsel) agree to the confidentiality provisions of this Section,
unless (i) such information becomes known to the public generally through no
fault of the Stockholder, or (ii) disclosure is required by law or the order of
any governmental authority, provided, that prior to disclosing any information
pursuant to this clause (ii), the Stockholder shall give prior written notice
thereof to LandCARE and provide LandCARE with the opportunity to contest such
disclosure. In the event of a breach or threatened breach by the Stockholder of
the provisions of this Section, LandCARE shall be entitled to injunctive or
other equitable relief restraining the Stockholder from disclosing, in whole or
in part, such confidential information. Nothing herein shall be construed as
prohibiting LandCARE from pursuing any other available remedy for such breach or
threatened breach, including the recovery of damages.
8.2 EQUITABLE RELIEF. Because of the difficulty of measuring economic
losses as a result of the breach of the foregoing covenants, and because of the
immediate and irreparable damage that would be caused for which LandCARE would
have no other adequate remedy, the Stockholder agrees
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that the foregoing covenants may be enforced against him by injunctions,
restraining orders and other appropriate equitable relief.
8.3 SURVIVAL. The obligations of the parties under this Section shall
survive the termination of this Agreement for an unlimited time with respect to
proprietary information and a period of five years with respect to all other
information.
9 INTENDED TAX TREATMENT
9.1 TAX-FREE REORGANIZATION. The parties are entering into this Agreement
with the intention that the Merger qualify as a tax-free reorganization for
federal income tax purposes, except to the extent of any "boot" received, and
neither LandCare nor the Stockholder will not take any actions that disqualify
the Merger for such treatment. The Stockholder represents that:
(i) the Company operates at least one historic business line, or
owns at least a significant portion of its historic business assets, in each
case within the meaning of Reg. 1.368-1(d) under the Code; and
(ii) the Company will hold "substantially all of its properties"
within the meaning of Section 368(a)(2)(D) of the Code (that is, after the
Closing, the Company will hold at least 90% of the fair market value of the net
assets and at least 70% of the gross assets held by the Company immediately
prior to the Closing). For purposes of the preceding sentence, amounts paid by
the Company to dissenters, amounts paid by the Company to shareholders who
receive cash or other property and the Company assets used to pay its
reorganization expenses and all redemptions and distributions (except for normal
dividends) made by the Company immediately preceding the Closing, pursuant to
this Agreement or otherwise as part of the plan of Merger provided for herein,
will be included as assets of the Company held immediately prior to the Merger.
9.2 RESTRICTIONS ON RESALE. The Stockholder agrees that he will not sell,
offer to sell, or otherwise transfer or dispose of, any shares of the LandCARE
Stock received by the Stockholder, engage in put, call, short-sale, straddle or
similar transactions, or in any other way reduce the Stockholder's risk of
owning shares of LandCARE Stock prior to the date two years after the Closing
Date except as set forth below, and agrees that the certificates evidencing the
LandCARE Stock to be received by the Stockholder will bear a legend evidencing
this restriction. After the date one year after the Closing Date the Stockholder
may sell such shares pursuant to the LandCARE Liquidity Plan. After the date two
years after the Closing Date, neither the restrictions set forth herein nor the
provisions of the LandCARE Liquidity Plan shall restrict the Stockholder from
selling or otherwise disposing of any of such shares of LandCARE Stock.
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10 SECURITIES LAW MATTERS
10.1 ECONOMIC RISK; SOPHISTICATION. The Stockholder acknowledges and
confirms that he has received and reviewed a Prospectus from LandCARE relating
to his acquisition of shares of LandCARE Stock hereunder. The Stockholder (A)
has such knowledge, sophistication and experience in business and financial
matters that he is capable of evaluating the merits and risks of an investment
in the shares of LandCARE Stock, (B) fully understands the nature, scope and
duration of any limitations on transfer of LandCARE Stock described in this
Agreement and (C) can bear the economic risk of an investment in the shares of
LandCARE Stock.
10.2 COMPLIANCE WITH LAW. The Stockholder covenants that none of the
LandCARE Stock acquired by the Stockholder hereunder will be offered, sold,
assigned, hypothecated, transferred or otherwise disposed of by the Stockholder
except in full compliance with all applicable securities laws.
11. GENERAL
11.1 SUCCESSORS AND ASSIGNS. This Agreement and the rights of the parties
hereunder may not be assigned (except by operation of law) and shall be binding
upon and shall inure to the benefit of the parties hereto, the successors of
LandCARE, and the heirs and legal representatives of the Stockholder.
11.2 ENTIRE AGREEMENT. This Agreement (including the schedules, exhibits
and annexes attached hereto) and the documents delivered pursuant hereto
constitute the entire agreement and understanding among the Stockholder, the
Company and LandCARE, and supersede any prior agreement and understanding
relating to the subject matter of this Agreement. This Agreement, upon
execution, constitutes a valid and binding agreement of the parties hereto,
enforceable in accordance with its terms, and may be modified or amended only by
a written instrument executed by the parties hereto.
11.3 COUNTERPARTS. This Agreement may be executed simultaneously in two or
more counterparts, each of which shall be deemed an original and all of which
together shall constitute but one and the same instrument. The signatures to
this Agreement need not all be on a single copy of this Agreement, and may be
facsimiles rather than originals, and shall be fully as effective as though all
signatures were originals on the same copy.
11.4 BROKERS AND AGENTS. Each party agrees to indemnify the other parties
hereto against all loss, cost, damages or expense arising out of claims for fees
or commission of brokers employed
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or alleged to have been employed by such indemnifying party. The parties
acknowledge that the Stockholder has employed a broker (the "Broker"), all fees
and commissions of which shall be paid by the Stockholder. Broker is acting as
an intermediary only. Broker has not provided legal or accounting advice to any
party, since Broker is neither an attorney or an accountant. LandCARE and Newco
are entering into this Agreement and shall satisfy themselves as to the
viability of the business of the Company on the basis of (i) their independent
assessment of each such business and the assets of the Company, (ii) the
information provided by the Company, and (iii), their physical inspection of the
assets of the Companies. LandCARE and Newco acknowledge that Broker shall not
verify the accuracy of the Stockholder's representations and warranties.
LandCARE and Newco specifically understand and acknowledge that marketing
flyers, brochures and packages concerning a business contain opinions,
speculations and projections as to the potential of the Company and other
matters. LandCARE and Newco acknowledge that they are not entering into this
Agreement on the basis of any representations, warranties or guarantees of
Broker. If any representations and warranties of either LandCARE, Newco or the
Stockholder are untrue, LandCARE, Newco, and/or the Stockholder shall look
solely to each other for relief and shall release and hold Broker harmless from
any claims arising out of any such misrepresentation. The Merger has been
structured as such to meet the needs of the parties hereto and not as a result
of the recommendation of Broker.
11.5 NOTICES. All notices and communications required or permitted
hereunder shall be in writing and may be given by depositing the same in United
States mail, addressed to the party to be notified, postage prepaid and
registered or certified with return receipt requested, or by delivering the same
in person to an officer or agent of such party, or by facsimile, as follows:
If to LandCARE, addressed to it at:
LandCARE USA, Inc.
5850 San Felipe, Suite 500
Houston, Texas 77057
Attn: General Counsel
Facsimile No. (713) 965-0343
If to the Company, addressed to it at:
R. L. Company, Inc.
2917 Petaluma Hill Road
Santa Rosa, California 95404
Attn: Mr. Lebo Newman
Facsimile No.
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If to the Stockholder, addressed to him at:
Mr. Lebo Newman
7250 Lynch Road
Sebastopol, California 95472
With copy, which shall not constitute notice, to:
Mr. Kevin J. McCullough
Spaulding McCullough & Tansil, LLP
3550 Round Barn Boulevard, Suite 306
Santa Rosa, California 95402
or to such other address as any party hereto shall specify pursuant to this
Section from time to time.
11.6 GOVERNING LAW. This Agreement shall be construed in accordance with
the laws of the State of California without regard to its principles governing
conflicts of laws.
11.7 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The representations,
warranties, covenants and agreements of the parties made herein and at the time
of the Closing or in writing delivered pursuant to the provisions of this
Agreement shall survive the consummation of the transactions contemplated hereby
for the periods described in Section 6 of this Agreement and any examination on
behalf of the parties.
11.8 EFFECT OF INVESTIGATION. No investigation by the parties hereto in
connection with this Agreement or otherwise shall affect the representations and
warranties of the parties contained herein or in any certificate or other
document delivered in connection herewith and each such representation and
warranty shall survive such investigation.
11.9 EXERCISE OF RIGHTS AND REMEDIES. Except as otherwise provided herein,
no delay of or omission in the exercise of any right, power or remedy accruing
to any party as a result of any breach or default by any other party under this
Agreement shall impair any such right, power or remedy, nor shall it be
construed as a waiver of or acquiescence in any such breach or default, or of
any similar breach or default occurring later; nor shall any waiver of any
single breach or default be deemed a waiver of any other breach or default
occurring before or after that waiver.
11.10 TIME. Time is of the essence with respect to this Agreement.
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11.11 REFORMATION AND SEVERABILITY. In case any provision of this
Agreement shall be invalid, illegal or unenforceable, it shall, to the extent
possible, be modified in such manner as to be valid, legal and enforceable but
so as to most nearly retain the intent of the parties, and if such modification
is not possible, such provision shall be severed from this Agreement, and in
either case the validity, legality and enforceability of the remaining
provisions of this Agreement shall not in any way be affected or impaired
thereby.
11.12 REMEDIES CUMULATIVE. No right, remedy or election given by any term
of this Agreement shall be deemed exclusive but each shall be cumulative with
all other rights, remedies and elections available at law or in equity.
11.13 CAPTIONS. The headings of this Agreement are inserted for
convenience only, and shall not constitute a part of this Agreement or be used
to construe or interpret any provision hereof.
11.14 PRESS RELEASES AND PUBLIC ANNOUNCEMENTS. No party shall issue any
press release or make any public announcement relating to the subject matter of
this Agreement without the prior written approval of the other party; provided,
however, that LandCARE may issue a press release in accordance with its
customary practices without such approval and any party may make any public
disclosure it believes in good faith is required by applicable law or any
listing or trading agreement concerning its publicly-traded securities.
11.15 NO THIRD-PARTY BENEFICIARIES. This Agreement shall not confer any
rights or remedies upon any person other than the parties and their respective
successors and permitted assigns.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
day and year first above written.
LANDCARE USA, INC.
By:
Name:____________________________
Title:___________________________
RLC ACQUISITION CORP.
By: ________________________________
Name: ___________________________
Title: _________________________
R. L. COMPANY, INC.
By: ________________________________
Name: ___________________________
Title: _________________________
________________________________
Lebo Newman
Consent of Spouse: ________________________________
Merrill H. Newman
