<PAGE>
FORM 8-K/A-1
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
DATE OF REPORT (Date of earliest event reported): November 30, 1996
CANTERBURY CORPORATE SERVICES, INC.
(Exact name of registrant as specified in its charter)
Pennsylvania 0-1558 23-2170505
(State or other juris- (Commission IRS Employer
diction of incorporation) File Number) Identification No.)
1600 Medford Plaza
Route 70 & Hartford Road
Medford, New Jersey 08055
(Address of Principal Executive Offices)
Registrant's telephone number: (609) 953-0044
<PAGE>
FORM 8-K/A-1
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
A. Financial Statements
None.
B. Exhibits
1. Stock Purchase Agreement by and among
Shareholder, Canterbury Corporate Services, Inc. and Buyer,
Landscape Companies, Inc. dated November 30, 1996.
2. Management Agreement between Landscape
Companies, Inc. and Canterbury Corporate Services, Inc. dated
November 30, 1996.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned hereunto duly authorized.
CANTERBURY CORPORATE SERVICES, INC.
BY: /s/Stanton M. Pikus
------------------------------
STANTON M. PIKUS, President
Dated: January 16, 1997
12-16-96.8K
STOCK
PURCHASE
AGREEMENT
BY
AND
AMONG
SHAREHOLDER, CANTERBURY CORPORATE
SERVICES, INC.
AND
BUYER, LANDSCAPE COMPANIES, INC.
TABLE OF CONTENTS
1. Definitions.. . . . . . . . . . . . . . . . . . . . . . . . .1
2. Purchase and Sale of Target Shares. . . . . . . . . . . . .5
(a) Basic Transaction.. . . . . . . . . . . . . . . . . . . . .5
(b) Purchase Price. . . . . . . . . . . . . . . . . . . . . . .5
(c) The Closing.. . . . . . . . . . . . . . . . . . . . . . . .5
(d) Deliveries at the Closing.. . . . . . . . . . . . . . . . .5
3. Representations and Warranties Concerning the Transaction..5
(a) Representations and Warranties of CCS.. . . . . . . . . . .5
(b) Representations and Warranties of LCI.. . . . . . . . . . .6
4. Representations and Warranties Concerning LMS.. . . . . . .7
(a) Organization, Qualification and Corporate Power.. . . . . .7
(b) Capitalization. . . . . . . . . . . . . . . . . . . . . . .7
(c) Noncontravention. . . . . . . . . . . . . . . . . . . . . .8
(d) Brokers' Fees.. . . . . . . . . . . . . . . . . . . . . . .8
(e) Title to Assets.. . . . . . . . . . . . . . . . . . . . . .8
(f) Subsidiaries. . . . . . . . . . . . . . . . . . . . . . . .8
(g) Financial Statements. . . . . . . . . . . . . . . . . . . .8
(h) Intentionally left blank. . . . . . . . . . . . . . . . . .9
(I) Undisclosed Liabilities.. . . . . . . . . . . . . . . . . .9
(j) Legal Compliance. . . . . . . . . . . . . . . . . . . . . .9
(k) Tax Matters.. . . . . . . . . . . . . . . . . . . . . . . .9
(l) Real Property. . . . . . . . . . . . . . . . . . . . . . .9
(m) Intellectual Property.. . . . . . . . . . . . . . . . . . .9
(n) Tangible Assets.. . . . . . . . . . . . . . . . . . . . . 10
(o) Inventory.. . . . . . . . . . . . . . . . . . . . . . . . 10
(p) Contracts.. . . . . . . . . . . . . . . . . . . . . . . . 10
(q) Notes and Accounts Receivable.. . . . . . . . . . . . . . 11
(r) Powers of Attorney. . . . . . . . . . . . . . . . . . . . 11
(s) Insurance.. . . . . . . . . . . . . . . . . . . . . . . . 11
(t) Litigation. . . . . . . . . . . . . . . . . . . . . . . . 12
(u) Employee Benefits.. . . . . . . . . . . . . . . . . . . . 12
(v) Guaranties. . . . . . . . . . . . . . . . . . . . . . . . 12
(w) Environment, Health, and Safety.. . . . . . . . . . . . . 12
(x) Disclosure. . . . . . . . . . . . . . . . . . . . . . . . 13
5. Intentionally left blank. . . . . . . . . . . . . . . . . 13
6. Post-Closing Covenants. . . . . . . . . . . . . . . . . . 13
(a) General.. . . . . . . . . . . . . . . . . . . . . . . . . 13
(b) Litigation Support. . . . . . . . . . . . . . . . . . . . 13
(c) Transition. . . . . . . . . . . . . . . . . . . . . . . . 13
(d) Confidentiality.. . . . . . . . . . . . . . . . . . . . . 13
(e) Covenant Not to Compete.. . . . . . . . . . . . . . . . . 14
7. Conditions to Obligation to Close.. . . . . . . . . . . . 14
(a) Conditions to Obligation of LCI.. . . . . . . . . . . . . 14
(b) Conditions to Obligation of CCS.. . . . . . . . . . . . . 15
8. Remedies for Breaches of This Agreement.. . . . . . . . . 15
(a) Survival of Representations and Warranties. . . . . . . . 15
(b) Indemnification Provisions for Benefit of LCI.. . . . . . 15
(c) Indemnification Provisions for Benefit of CCS.. . . . . . 16
(d) Matters Involving Third Parties.. . . . . . . . . . . . . 16
(e) Determination of Adverse Consequences.. . . . . . . . . . 17
(f) Other Indemnification Provisions. . . . . . . . . . . . . 17
9. Intentionally left blank. . . . . . . . . . . . . . . . . 18
10. Miscellaneous.. . . . . . . . . . . . . . . . . . . . . . 18
(a) Nature of Certain Obligations.. . . . . . . . . . . . . . 18
(b) No Third-Party Beneficiaries. . . . . . . . . . . . . . . 18
(c) Entire Agreement. . . . . . . . . . . . . . . . . . . . . 18
(d) Succession and Assignment.. . . . . . . . . . . . . . . . 18
(e) Counterparts. . . . . . . . . . . . . . . . . . . . . . . 18
(f) Headings. . . . . . . . . . . . . . . . . . . . . . . . . 19
(g) Notices.. . . . . . . . . . . . . . . . . . . . . . . . . 19
(h) Governing Law.. . . . . . . . . . . . . . . . . . . . . . 19
(i) Amendments and Waivers. . . . . . . . . . . . . . . . . . 19
(j) Severability. . . . . . . . . . . . . . . . . . . . . . . 20
(k) Expenses. . . . . . . . . . . . . . . . . . . . . . . . . 20
(l) Construction. . . . . . . . . . . . . . . . . . . . . . . 20
(m) Incorporation of Exhibits and Schedules.. . . . . . . . . 20
(n) Specific Performance. . . . . . . . . . . . . . . . . . . 20
(o) Submission to jurisdiction. . . . . . . . . . . . . . . . 20
(p) Potential Conflict of Interest. . . . . . . . . . . . . . 21
STOCK PURCHASE AGREEMENT
Agreement entered into on November 30, 1996 , by and between
LANDSCAPE COMPANIES, INC., a New Jersey corporation (the "Buyer" and/or
"LCI"), CANTERBURY CORPORATE SERVICES, INC., a Pennsylvania corporation
(the "Seller" and/or "CCS"), and LANDSCAPE MAINTENANCE SERVICES, INC.,
a New Jersey corporation (the "Target" and/or "LMS"). LCI, CCS and LMS
are referred to collectively herein as the "Parties."
CCS owns all of the outstanding capital stock of LMS.
This Agreement contemplates a transaction in which LCI will purchase
from CCS, and CCS will sell to LCI, all of the outstanding capital stock
of LMS in return for cash, LCI Notes and stock.
Now, therefore, in consideration of the premises and the mutual
promises herein made, and in consideration of the representations,
warranties, and covenants herein contained, the Parties agree as follows.
1. Definitions.
"Accredited Investor" has the meaning set forth in Regulation D
promulgated under the Securities Act.
"Adverse Consequences" means all actions, suits, proceedings,
hearings, investigations, charges, complaints, claims, demands,
injunctions, judgments, orders, decrees, rulings, damages, dues,
penalties, fines, costs, amounts paid in settlement, Liabilities,
obligations, Taxes, liens, losses, expenses, and fees, including court
costs and reasonable attorneys' fees and expenses.
"Affiliate" has the meaning set forth in Rule 12b-2 of the
regulations promulgated under the Securities Exchange Act.
"Affiliated Group" means any affiliated group within the meaning of
Code Sec. 1504(a) [or any similar group defined under a similar provision
of state, local, or foreign law].
"Applicable Rate" means 8% interest rate per annum.
"Basis" means any past or present fact, situation, circumstance,
status, condition, activity, practice, plan, occurrence, event, incident,
action, failure to act, or transaction that forms or could form the basis
for any specified consequence.
"Buyer" has the meaning set forth in the preface above.
"Buyer Notes" has the meaning set forth in Sec. 2(c) below.
"Closing" has the meaning set forth in Sec. 2(d) below.
"Closing Date " has the meaning set forth in Sec. 2(d) below.
"Code" means the Internal Revenue Code of 1986, as amended.
"Confidential Information" means any information concerning the
business and affairs of LMS and its Subsidiaries that is not already
generally available to the public.
"Controlled Group of Corporations"has the meaning set forth in Code
Sec. 1563.
"Deferred Intercompany Transaction" has the meaning set forth in
Treas. Reg. Sec. 1. 1502-13.
"Disclosure Schedule" has the meaning set forth in Sec. 3 below.
"Employee Benefit Plan "means any (a) nonqualified deferred
compensation or retirement plan or arrangement which is an Employee
Pension Benefit Plan, (b) qualified defined contribution retirement plan
or arrangement which is an Employee Pension Benefit Plan, (c) qualified
defined benefit retirement plan or arrangement which is an Employee
Pension Benefit Plan (including any Multiemployer Plan), or (d) Employee
Welfare Benefit Plan or material fringe benefit plan or program.
"Employee Pension Benefit Plan "has the meaning set forth in ERISA
Sec. 3(2).
"Employee Welfare Benefit Plan "has the meaning set forth in ERISA
Sec. 3(l).
"Environmental, Health, and Safety Laws" means the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, the
Resource Conservation and Recovery Act of 1976, and the Occupational
Safety and Health Act of 1970, each as amended, together with all other
laws (including rules, regulations, codes, plans, injunctions, judgments,
orders, decrees, rulings, and charges thereunder) of federal, state,
local, and foreign governments (and all agencies thereof) concerning
pollution or protection of the environment, public health and safety, or
employee health and safety, including laws relating to emissions,
discharges, releases, or threatened releases of pollutants, contaminants,
or chemical, industrial, hazardous, or toxic materials or wastes into
ambient air, surface water, ground water, or lands or otherwise relating
to the manufacture, processing, distribution, use, treatment, storage,
disposal, transport, or handling of pollutants, contaminants, or
chemical, industrial, hazardous, or toxic materials or wastes.
"ERISA "means the Employee Retirement Income Security Act of 1974,
as amended.
"Excess Loss Account" has the meaning set forth in Treas. Reg.
Sec. 1.1502-19.
"Extremely Hazardous Substance" has the meaning set forth in Sec.
302 of the Emergency Planning and Community Right-to-Know Act of 1986,
as amended.
"Fiduciary" has the meaning set forth in ERISA Sec. 3(21).
"Financial Statement" has the meaning set forth in Sec. 3(g) below.
"GAAP" means United States generally accepted accounting principles
as in effect from time to time.
"Indemnified Party" has the meaning set forth in Sec. 8(d) below.
"Indemnifying Party" has the meaning set forth in Sec. 8(d) below.
"Intellectual Property" means (a) all inventions (whether patentable
or unpatentable and whether or not reduced to practice), all improvements
thereto, and all patents, patent applications, and patent disclosures,
together with all reissuances, continuations, continuations-in-part,
revisions, extensions, and reexaminations thereof, (b) all trademarks,
service marks, trade dress, logos, trade names, and corporate names,
together with all translations, adaptations, derivations, and
combinations thereof and including all goodwill associated therewith, and
all applications, registrations, and renewals in connection therewith,
(e) all copyrightable works, all copyrights, and all applications,
registrations, and renewals in connection therewith, (d) all mask works
and all applications, registrations, and renewals in connection
therewith, (e) all trade secrets and confidential business information
(including ideas, research and development, know-how, formulas,
compositions, manufacturing and production processes and techniques,
technical data, designs, drawings, specifications, customer and supplier
lists, pricing and cost information, and business and marketing plans and
proposals), (f) all computer software (including data and related
documentation), (g) all other proprietary rights, and (h) all copies and
tangible embodiments thereof (in whatever form or medium).
"Knowledge" means actual knowledge after reasonable investigation.
"Liability" means any liability (whether known or unknown, whether
asserted or unasserted, whether absolute or contingent, whether accrued
or unaccrued, whether liquidated or unliquidated, and whether due or to
become due), including any liability for Taxes.
"Most Recent Balance Sheet" means the balance sheet contained within
the Most Recent Financial Statements.
"Most Recent Financial Statements" has the meaning set forth in
Sec. 3(g) below.
"Most Recent Fiscal Month End" has the meaning set forth in Sec. 3(g)
below.
"Most Recent Fiscal Year End" has the meaning set forth in Sec. 3(g)
below.
"Multiemployer Plan" has the meaning set forth in ERISA Sec. 3(37).
"Ordinary Course of Business" means the ordinary course of business
consistent with past custom and practice (including with respect to
quantity and frequency).
"Party" has the meaning set forth in the preface above.
"PBGC" means the Pension Benefit Guaranty Corporation.
"Person" means an individual, a partnership, a corporation, an
association, a joint stock company, a trust, a joint venture, an
unincorporated organization, or a governmental entity (or any department,
agency, or political subdivision thereof.
"Process Agent" has the meaning set forth in Sec. 8(p) below.
"Prohibited Transaction" has the meaning set forth in ERISA Sec. 406
and Code Sec. 4975.
"Purchase Price" has the meaning set forth in Sec. 2(c) below.
"Reportable Event" has the meaning set forth in ERISA Sec. 4043.
"Requisite Sellers" means Canterbury Corporate Services, Inc., the
Seller which holds 100% of LMS Shares.
"Securities Act" means the Securities Act of 1933, as amended.
"Securities Exchange Act"means the Securities Exchange Act of 1934,
as amended.
"Security Interest" means any mortgage, pledge, lien, encumbrance,
charge, or other security interest, other than (a) mechanic's,
materialmen's, and similar liens, (b) liens for Taxes not yet due and
payable [or for Taxes that the taxpayer is contesting in good faith
through appropriate proceedings], (c) purchase money liens and liens
securing rental payments under capital lease arrangements, and (d) other
liens arising in the Ordinary Course of Business and not incurred in
connection with the borrowing of money.
"Subsidiary" means any corporation with respect to which a specified
Person (or a Subsidiary thereof owns a majority of the common stock or.
has the power to vote or direct the voting of sufficient securities to
elect a majority of the directors.
"Subsidiary" means any corporation with respect to which a specified
Person (or a Subsidiary thereof) owns a majority of the common stock or
has the power to vote or direct the voting of sufficient securities to
elect a majority of the directors.
"Survey" has the meaning set forth in Sec. 5(I) below.
"Target" has the meaning set forth in the preface above.
"Target Share" means any share of the Common Stock, no par value,
of LMS.
"Tax" means any federal, state, local, or foreign income, gross
receipts, license, payroll, employment, excise, severance, stamp,
occupation, premium, windfall profits, environmental (including taxes
under Code Sec. 59A), customs duties, capital stock, franchise, profits,
withholding, social security (or similar), unemployment, disability, real
property, personal property, sales, use, transfer, registration, value
added, alternative or add-on minimum, estimated, or other tax of any kind
whatsoever, including any interest, penalty, or addition thereto, whether
disputed or not.
"Tax Return" means any return, declaration, report, claim for
refund, or information return or statement relating to Taxes, including
any schedule or attachment thereto, and including any amendment thereof.
"Third Party Claim" has the meaning set forth in Sec. 8(d) below.
2. Purchase and Sale of Target Shares.
(a) Basic Transaction. On and subject to the terms and conditions
of this Agreement, LCI agrees to purchase from LMS, and LMS agrees to
sell to LCI, all of its Target Shares for the consideration specified
below in this Sec. 2.
(b) Purchase Price. LCI agrees to pay to LMS at the Closing
$4,500,000 (the "Purchase Price") by delivery of (I) its promissory note
in the form of Exhibit A-1 attached hereto in the aggregate principal
amount of $4,050,000 at 8% per annum interest and (ii) its promissory
note in the form of Exhibit A-2 attached hereto in the aggregate
principal amount of $200,000 due January 15, 1997 with no interest and
(the "Buyer Notes") (iii) cash for the balance of the Purchase Price
payable by wire transfer or delivery of other immediately available
funds. As additional consideration, LCI will issue 60,000 shares of
Landscape Companies, Inc. Common stock to CCS (currently 5.2% of the
common stock of Landscape Companies, Inc.).
(c) The Closing. The closing of the transactions contemplated by
this Agreement (the "Closing") shall take place at the offices of Levy
& Levy, P.A., commencing at 9:00 a.m., local time on November 30, 1996,
following the satisfaction or waiver of all conditions to the obligations
of the Parties consummate the transactions contemplated hereby (other
than conditions with respect to actions the respective Parties will take,
at the closing itself) or such other date as the Parties may mutually
determine (the "Closing Date").
(d) Deliveries at the Closing. At the Closing, (I) LMS will
deliver to LCI the various certificates instruments, and documents
referred to in Sec. 7(a) below; (ii) LCI will deliver to LMS the various
certificates, instruments, and documents referred to in Sec. 7(b) below;
(iii) CCS will deliver to LCI stock certificates representing all of his
or its Target Shares, endorsed in blank or accompanies by duly executed
assignment documents, and (iv) LCI will deliver to LMS the consideration
specified in Sec. 2(b) above; provided, however, that the parties agree to
deliver any or all of the above during reasonable time after Closing.
3. Representations and Warranties Concerning the Transaction.
(a) Representations and Warranties of CCS. CCS represents and
warrants to LCI that the statements contained in this Sec. 3(a) are correct
and complete as of the date of this Agreement and will be correct and
complete as of the Closing Date except as set forth in Annex I attached
hereto.
(i) Organization of Seller. The Seller is a corporation duly
organized, validly existing, and in good standing under the laws of the
jurisdiction of the Commonwealth of Pennsylvania.
(ii) Authorization of Transaction. The Seller has full power
and authority, (including full corporate power and authority) to execute
and deliver this Agreement and to perform his or its obligations
hereunder. This Agreement constitutes the valid and legally binding
obligation of CCS and LMS, enforceable in accordance with its terms and
conditions. The Seller need not give any notice to, make any filing
with, or obtain any authorization, consent, or approval of any government
or governmental agency in order to consummate the transactions
contemplated by this Agreement.
(iii) Noncontravention. Neither the execution and the
delivery of this Agreement, nor the consummation of the transactions
contemplated hereby will (A) violate any constitution, statute,
regulation, rule, injunction, judgment, order, decree, ruling, charge,
or other restriction of any government, governmental agency, or court to
which any of the Seller is subject, or, if the Seller is a corporation,
any provision of the charter or bylaws; or (ii) conflict with, result
in a breach of, constitute a default under, result in the acceleration
of, create in any party the right to accelerate, terminate, modify, or
cancel, or require any notice under any agreement, contract, lease,
license, instrument, or other arrangement to which the Seller is a party
or by which it is bound or to which any of its assets is subject.
(iv) Brokers' Fees. The Seller has no Liability or obligation
to pay any fees or commissions to any broker, finder, or agent with
respect to the transactions contemplated by this Agreement for which LCI
could become liable or obligated.
(v) Investment. The Seller (A) understands that LCI Notes have
not been, and will not be, registered under the Securities Act, or under
any state securities laws, and are being offered and sold in reliance
upon federal and state exemptions for transactions not involving any
public offering, (B) is acquiring LCI Notes solely for its own account
for investment purposes, and not with a view to the distribution thereof,
(C) is a sophisticated investor with knowledge and experience in business
and financial matters, (D) has received certain information concerning
LCI and has had the opportunity to obtain additional information as
desired in order to evaluate the merits and the risks inherent in holding
LCI Notes, (E) is able to bear the economic risk and lack of liquidity
inherent in holding LCI Notes, and (F) is an Accredited Investor for the
reasons set forth on Annex I.
(vi) Target Shares. The Seller holds of record and owns 100%
of the Target Shares, free and clear of any restrictions on transfer
(other than any restrictions under the Securities Act and state
securities laws), Taxes, Security Interests options, warrants, purchase
rights, contracts, commitments, equities, claims and demands. The Seller
is not a party to any option, warrant, purchase right, or other contract
or commitment that could require the Seller to sell, transfer, or
otherwise dispose of any capital stock of LMS (other than this
Agreement). The Seller is not a party to any voting trust, proxy, or
other agreement or understanding with respect to the voting of any
capital stock of LMS.
(b) Representations and Warranties of LCI. LCI represents and
warrants to the Seller that the statements contained in this Sec. 3(b) are
correct and complete as of the date of this Agreement and will be correct
and complete as of the Closing Date (as though made then and as though
the Closing Date were substituted for the date of this Agreement
throughout this Sec. 3(b), except as set forth in Annex II attached hereto.
(i) Organization of LCI. LCI is a corporation duly
organized, validly existing, and in good standing under the laws of the
State of New Jersey.
(ii) Authorization of Transaction. LCI has full power and
authority, (including full corporate power and authority) to execute and
deliver this Agreement and to perform his or its obligations hereunder.
This Agreement constitutes the valid and legally binding obligation of
LCI, enforceable in accordance with its terms and conditions. LCI need
not give any notice to, make any filing with, or obtain any
authorization, consent, or approval of any government or governmental
agency in order to consummate the transactions contemplated by this
Agreement.
(iii) Noncontravention. Neither the execution and the
delivery of this Agreement, nor the consummation of the transactions
contemplated hereby will (A) violate any constitution, statute,
regulation, rule, injunction, judgment, order, decree, ruling, charge,
or other restriction of any government, governmental agency, or court to
which any of LCI is subject, or any provision of the charter or bylaws;
or (ii) conflict with, result in a breach of, constitute a default
under, result in the acceleration of, create in any party the right to
accelerate, terminate, modify, or cancel, or require any notice under any
agreement, contract, lease, license, instrument, or other arrangement to
which LCI is a party or by which it is bound or to which any of its
assets is subject.
(iv) Brokers' Fees. LCI has no Liability or obligation to pay
any fees or commissions to any broker, finder, or agent with respect to
the transactions contemplated by this Agreement for which the Seller
could become liable or obligated.
(v) Investment. LCI is not acquiring LMS Shares with a view to
or for sale in connection with any distribution thereof within the
meaning of the Securities Act.
4. Representations and Warranties Concerning LMS. CCS represents and
warrants to LCI that the statements contained in this Sec. 4 are correct
and complete as of the date of this Agreement and will be correct and
complete as of the Closing Date (as though made then and as though the
Closing Date were substituted for the date of this Agreement throughout
this Sec. 4), except as set forth in the disclosure schedule delivered by CCS
to LCI on the date hereof and initialed by the Parties (the "Disclosure
Schedule"). Nothing in the Disclosure Schedule shall be deemed adequate
to disclose an exception to a representation or warranty made herein,
however, unless the Disclosure Schedule identifies the exception with
[reasonable] particularity and describes the relevant facts in
[reasonable] detail. Without limiting the generality of the foregoing,
the mere listing (or inclusion of a copy) of a document or other item
shall not be deemed adequate to disclose an exception to a representation
or warranty made herein (unless the representation or warranty has to do
with the existence of the document or other item itself). The Disclosure
Schedule will be arranged in paragraphs corresponding to the lettered and
numbered paragraphs contained in this Sec. 4.
(a) Organization, Qualification and Corporate Power. LMS is a
corporation duly organized, validly existing and in good standing under
the laws of the state of New Jersey. LMS is duly authorized to conduct
business and is in good standing under the laws of each jurisdiction
where such qualification is required. LMS has full corporate power and
authority and all licenses, permits, and authorizations necessary to
carry on the businesses in which it is engaged [and in which it presently
proposes to engage] and to own and use the properties owned and used by
it. Sec. 4(a) of the Disclosure Schedule lists the directors and officers
of LMS. CCS has delivered to LCI correct and complete copies of the
charter and bylaws of LMS (as amended to date). The minute books
(containing the records of meetings of the stockholders, the board of
directors, and any committees of the board of directors), the stock
certificate books, and the stock record books of LMS are correct and
complete. LMS is not in default under or in violation of any provision
of its charter or bylaws.
(b) Capitalization. The entire authorized capital stock of LMS
consists of 1,000 Target Shares , of which 1,000 Target Shares are issued
and outstanding. All of the issued and outstanding Target Shares have
been duly authorized, are validly issued, fully paid, and nonassessable,
and are held of record by the Seller . There are no outstanding or
authorized options, warrants, purchase rights, subscription rights,
conversion rights, exchange rights, or other contracts or commitments
that could require LMS to issue, sell, or otherwise to cause to become
outstanding any of its capital stock. There are no outstanding or
authorized stock appreciation, phantom stock, profit participation, or
similar rights with respect to LMS. There are no voting trusts, proxies,
or other agreements or understandings with respect to the voting of the
capital stock of Target.
(c) Noncontravention. Neither the execution and the delivery of
this Agreement, nor the consummation of the transactions contemplated
hereby will (A) violate any constitution, statute, regulation, rule,
injunction, judgment, order, decree, ruling, charge, or other restriction
of any government, governmental agency, or court to which LMS is subject,
or any provision of the charter or bylaws of LMS; or (ii) conflict with,
result in a breach of, constitute a default under, result in the
acceleration of, create in any party the right to accelerate, terminate,
modify, or cancel, or require any notice under any agreement, contract,
lease, license, instrument, or other arrangement to which LMS is a party
or by which it is bound or to which any of its assets is subject (or
result in the imposition of any Security Interest upon any of its
assets). LMS does not need to give any notice to, make any filing with,
or obtain any authorization, consent or approval of any government or
governmental agency in order for the Parties to consummate the
transactions contemplated by this Agreement.
(d) Brokers' Fees. LMS does not have any Liability or obligation
to pay any fees or commissions to any broker, finder, or agent with
respect to the transactions contemplated by this Agreement.
(e) Title to Assets. LMS has good and marketable title to, or a
valid leasehold interest in, the properties and assets used by them,
located on their premises, or shown on the Most Recent Balance Sheet or
acquired after the date thereof, free and clear of all Security
Interests, except for properties and assets disposed of in the Ordinary
Course of Business since the date of the Most Recent Balance Sheet. CCS
has hereby disclosed to LCI, the Buyer, that as of the date of Closing,
Chase Manhattan Bank has a blanket lien on all of the assets including
accounts receivable of LMS as part of a CCS term loan and revolving
credit line of approximately $3,600,000 and $2,774,000, respectively.
CCS is in the process of negotiating with Chase Manhattan Bank to have
them remove all liens and loan guarantees with respect to LMS. Pending
such release, CCS hereby indemnifies LCI and its shareholders from any
and all loss or damages that occur because of said liens in accordance
with the terms and conditions of this Agreement. In the unlikely event
that CCS is unable to remove such liens by December 1, 1997, CCS agrees
to settle such damages within 30 days thereafter.
(f) Subsidiaries. None.
(g) Financial Statements. Attached hereto as Exhibit B are the
following financial statements (collectively the "Financial Statements" ):
(i) unaudited consolidated balance sheets and statements of income
as of and for the fiscal years ended November 30, 1994, 1995 and 1996 (to
be delivered as soon as possible) (the "Most Recent Fiscal Year Ends and
Financial Statements") for LMS and (ii) Pro-Forma Balance Sheet on
November 30, 1996. Auditable Financial Information for Audited Financial
Statements for the fiscal years ended November 30, 1995 and 1996 are
available upon payment to the auditors for such opinions. The Financial
Statements (including the Notes thereto) have been prepared in accordance
with GAAP applied on a consistent basis throughout the periods covered
thereby, present fairly the financial condition of LMS as of such dates
and the results of operations of LMS for such periods, are correct and
complete, and are consistent with the books and records of LMS (which
books and records are correct and complete); provided, however, that the
Most Recent Financial Statements are subject to normal year-end
adjustments (which will not be material individually or in the aggregate)
and lack footnotes and other presentation items.
(h) Intentionally left blank.
(i) Undisclosed Liabilities. LMS does not have any Liability (and
there is no Basis for any present or future action, suit, proceeding,
hearing, investigation, charge, complaint, claim, or demand against any
of them giving rise to any Liability), except for (i) Liabilities set
forth on the face of the Most Recent Balance Sheet (rather than in any
notes thereto) and (ii) Liabilities which have arisen in the Ordinary
Course of Business (none of which results from, arises out of, relates
to, is in the nature of, or was caused by any breach of contract, breach
of warranty, tort, infringement, or violation of law).
(j) Legal Compliance. LMS and its respective predecessors and
Affiliates has complied with all applicable laws (including rules,
regulations, codes, plans, injunctions, judgments, orders, decrees,
rulings, and charges thereunder) of federal, state, local, and foreign
governments (and all agencies thereof, and no action, suit, proceeding,
hearing, investigation, charge, complaint, claim, demand, or notice has
been filed or commenced against any of them alleging any failure so to
comply.
(k) Tax Matters.
(i) LMS has filed all Tax Returns that it was required to file.
All such Tax Returns were correct and complete in all respects. All
Taxes owed by any of LMS and its Subsidiaries (whether or not shown
on any Tax Return) have been paid except as set forth on Acquisition
Balance Sheet. No claim has ever been made by an authority in a
jurisdiction where LMS does not file Tax Returns that it is or may
be subject to taxation by that jurisdiction. There are no Security
Interests on any of the assets of any of LMS that arose in
connection with any failure (or alleged failure) to pay any Tax.
(ii) LMS has withheld and/or paid all Taxes required to have been
withheld and paid in connection with amounts paid or owing to any
employee, independent contractor, creditor, stockholder, or other
third party.
(iii) LMS does not expect any authority to assess any
additional Taxes for any period for which Tax Returns have been
filed. There is no dispute or claim concerning any Tax Liability
of LMS either (A) claimed or raised by any authority in writing or
(B) as to which any of LMS Stockholders and the directors and
officers (and employees responsible for Tax matters) of LMS and its
Subsidiaries has Knowledge based upon personal contact with any
agent of such authority. LMS has delivered to LCI correct and
complete copies of all federal income Tax Returns, examination
reports, and statements of deficiencies assessed against or agreed
to by LMS for 1994 and 1995.
(iv) LMS has not waived any statute of limitations in respect of
Taxes or agreed to any extension of time with respect to a Tax
assessment or deficiency.
(l) Real Property. None.
(m) Intellectual Property. None.
(n) Tangible Assets. LMS owns or leases all buildings, machinery,
equipment, and other tangible assets necessary for the conduct of their
businesses as presently conducted [and as presently proposed to be
conducted]. Each such tangible asset is free from defects (patent and
latent), has been maintained in accordance with normal industry practice,
is in good operating condition and repair (subject to normal wear and
tear), and is suitable for the purposes for which it presently is used
[and presently is proposed to be used].
(o) Inventory. The inventory of LMS consists of raw materials and
supplies, manufactured and purchased parts, goods in process, and
finished goods, all of which is merchantable and fit for the purpose for
which it was procured or manufactured, and none of which is slow-moving,
obsolete, damaged, or defective, subject only to the reserve for
inventory writedown set forth on the face of the Most Recent Balance
Sheet (rather than in any notes thereto) as adjusted for the passage of
time through the Closing Date in accordance with the past custom and
practice of LMS . A list of said inventory is set forth on Exhibit C.
(p) Contracts. Sec. 4(p) of the Disclosure Schedule lists the
following contracts and other agreements to which LMS is a party:
(i) any agreement (or group of related agreements) for the
lease of personal property to or from any Person providing for
lease payments in excess of $50,000 per annum;
(ii) any agreement (or group of related agreements) for the
purchase or sale of raw materials, commodities, supplies,
products, or other personal property, or for the furnishing or
receipt of services, the performance of which will extend over
a period of more than one year, result in a [material] loss to
LMS or involve consideration in excess of $50,000.
(iii) any agreement concerning a partnership or joint
venture;
(iv) any agreement (or group of related agreements) under
which it has created, incurred, assumed, or, guaranteed any
indebtedness for borrowed money, or any capitalized lease
obligation, in excess of $50,000 or under which it has imposed
a Security Interest on any of its assets, tangible or
intangible;
(v) any agreement concerning confidentiality or
noncompetition;
(vi) any agreement for the employment of any individual on a
full-time, part-time, consulting, or other basis providing
annual compensation in excess of $50,000 or providing
severance benefits;
(vii) any agreement under which it has advanced or loaned any
amount to any of its directors, officers, and employees
outside the Ordinary Course of Business;
(viii) any agreement under which the consequences of a
default or termination could have a [material] adverse effect
on the business, financial condition, operations, results of
operations, or future prospects of any of LMS and its
Subsidiaries; or
(ix) any other agreement (or group of related agreements) the
performance of which involves consideration in excess of
$50,000.
LMS has delivered to LCI a correct and complete copy of each written
agreement listed in Sec. 4(p) of the Disclosure Schedule (as amended to
date) and a written summary setting forth the terms and conditions of
each oral agreement referred to in Sec. 4(p) of the Disclosure Schedule.
With respect to each such agreement: (A) the agreement is legal, valid,
binding, enforceable, and in full force and effect; (B) the agreement
will continue to be legal, valid, binding, enforceable, and in full force
and effect on identical terms following the consummation of the
transactions contemplated hereby (including the assignments and
assumptions referred to in Sec. 2 above); (C) no party is in breach or
default, and no event has occurred which with notice or lapse of time
would constitute a breach or default, or permit termination,
modification, or acceleration, under the agreement; and (D) no party has
repudiated any provision of the agreement.
(q) Notes and Accounts Receivable. All notes and accounts
receivable of LMS are reflected properly on their books and records, are
valid receivables subject to no setoffs or counterclaims, are current and
collectible, and will be collected in accordance with their terms at
their recorded amounts, subject only to the reserve for bad debts and
Chase Manhattan Bank liens set forth on the face of the Most Recent
(Acquisition) Balance Sheet (rather than in any notes thereto) as
adjusted for the passage of time through the Closing Date in accordance
with the past custom and practice of LMS.
(r) Powers of Attorney. There are no outstanding powers of
attorney executed on behalf of any of LMS.
(s) Insurance. Sec. 4(s) of the Disclosure Schedule sets forth the
following information with respect to each insurance policy (including
policies providing property, casualty, liability, and workers'
compensation coverage and bond and surety arrangements) to which LMS is
a party, a named insured, or otherwise the beneficiary of coverage:
(i) the name, address, and telephone number of the agent;
(ii) the name of the insurer, the name of the policyholder,
and the name of each covered insured;
(iii) the policy number and the period of coverage; the scope
(including an indication of whether the coverage was on a
claims made, occurrence, or other basis) and amount (including
a description of how deductibles and ceilings are calculated
and operate) of coverage; and
(iv) a description of any retroactive premium adjustments or
other loss-sharing arrangements.
With respect to each such insurance policy: (A) the policy is legal,
valid, binding, enforceable, and in full force and effect; (B) the policy
will continue to be legal, valid, binding, enforceable, and in full force
and effect on identical terms following the consummation of the
transactions contemplated hereby (including the assignments and
assumptions referred to in Sec. 2 above); (C) LMS nor any other party to the
policy is in breach or default (including with respect to the payment of
premiums or the giving of notices), and no event has occurred which, with
notice or the lapse of time, would constitute such a breach or default,
or permit termination, modification, or acceleration, under the policy;
and (D) no party to the policy has repudiated any provision thereof. LMS
has been covered at least during the past 3 years by insurance in scope
and amount customary and reasonable for the businesses in which it has
engaged during the aforementioned period.
(t) Litigation. Sec. 4(t) of the Disclosure Schedule sets forth each
material instance in which LMS (i) is subject to any outstanding
injunction, judgment, order, decree, ruling, or charge or (ii) is a party
of LMS is threatened to be made a party to any action, suit, proceeding,
hearing, or investigation of, in, or before any court or quasi-judicial
or administrative agency of any federal, state, local, or foreign
jurisdiction or before any arbitrator. None of the actions, suits,
proceedings, hearings' and investigations set forth in Sec. 4(t) of the
Disclosure Schedule could result in any material adverse change in the
business, financial condition, operations, results of operations, or
future prospects of LMS.
(u) Employee Benefits.
(i) Sec. 4(x) of the Disclosure Schedule lists each Employee
Benefit Plan that any of LMS and its Subsidiaries maintains or
to which any of LMS and its Subsidiaries contributes.
(v) Guaranties. LMS is not a guarantor or otherwise is liable for
any Liability or obligation (including indebtedness) of any other Person,
except for the Chase Manhattan Bank debt as set forth in Paragraph 4(e)
herein..
(w) Environment, Health, and Safety.
(i) LMS and its respective predecessors and Affiliates has
complied with all Environmental, Health, and Safety Laws, and
no action, suit, proceeding, hearing, investigation, charge,
complaint, claim, demand, or notice has been filed or
commenced against any of them alleging any failure so to
comply. Without limiting the generality of the preceding
sentence, each of LMS, its Subsidiaries, and their respective
predecessors and Affiliates has obtained and been in
compliance with all of the terms and conditions of all
permits, licenses, and other authorizations which are required
under, and has complied with all other limitations,
restrictions, conditions, standards, prohibitions,
requirements, obligations, schedules, and timetables which are
contained in, all Environmental, Health, and Safety Laws.
(ii) LMS does not have any Liability (and LMS and its
respective predecessors and Affiliates has handled or disposed
of any substance, arranged for the disposal of any substance,
exposed any employee or other individual to and, substance or
condition, or owned or operated any property or facility in
any manner that could form the Basis for any present or future
action, suit, proceeding, hearing, investigation, charge,
complaint, claim, or demand against LMS giving rise to any
Liability) for damage to any site, location, or body of water
(surface or subsurface), for any illness of or personal injury
to any employee or other individual, or for an), reason under
any Environmental, Health, and Safety Law.
(iii) All properties and equipment used in the business of
LMS and their respective predecessors and Affiliates have been
free of asbestos, PCB'S, methylene chloride,
trichloroethylene, 1,2-transdichloroethylene, dioxins,
dibenzofurans, and Extremely Hazardous Substances.
(x) Disclosure. The representations and warranties contained
in this Sec. 4 do not contain any untrue statement of a material fact or
omit to state any material fact necessary in order to make the statements
and information contained in this Sec. 4 not misleading.
5. Intentionally left blank.
6. Post-Closing Covenants. The Parties agree as follows with respect
to the period following the Closing:
(a) General. In case at any time after the Closing any further
action is necessary or desirable to carry out the purposes of this
Agreement, each of the Parties will take such further action (including
the execution and delivery of such further instruments and documents) as
any other Party reasonably may request, all at the sole cost and expense
of the requesting Party (unless the requesting Party is entitled to
indemnification under Sec.8 below). The Seller acknowledges and agrees that
from and after the Closing LCI will be entitled to possession of all
documents, books, records (including Tax records), agreements, and
financial data of any sort relating to LMS.
(b) Litigation Support. In the event and for so long as any Party
actively is contesting or defending against any action, suit, proceeding,
hearing, investigation, charge, complaint, claim, or demand in connection
with (i) any transaction contemplated under this Agreement or (ii) any
fact, situation, circumstance, status, condition, activity, practice,
plan, occurrence, event, incident, action, failure to act, or transaction
on or prior to the Closing Date involving LMS, each of the other Parties
will cooperate with him or it and his or its counsel in the contest or
defense, make available their personnel, and provide such testimony and
access to their books and records as shall be necessary in connection
with the contest or defense, all at the sole cost and expense of the
contesting or defending Party (unless the contesting or defending Party
is entitled to indemnification therefor under Sec.8 below).
(c) Transition. CCS will not take any action that is designed or
intended to have the effect of discouraging any lessor, incensor,
customer, supplier, or other business associates of LMS from maintaining
the same business relationships with LMS after the Closing as it
maintained with LMS and its Subsidiaries prior to the Closing. Each of
CCS will refer all customer inquiries relating to the business of LMS and
its Subsidiaries to LCI from and after Closing.
(d) Confidentiality. CCS will treat and hold as such all of the
Confidential Information, refrain from using any of the Confidential
Information except in connection with this Agreement, and deliver
promptly to LCI or destroy, at the request and option of Buyer, all
tangible embodiments (and all copies) of the Confidential Information
which are in his or its possession. In the event that CCS is requested
or required (by oral question or request for information or documents in
any legal proceeding, interrogatory, subpoena, civil investigative
demand, or similar process) to disclose any Confidential Information,
that Seller will notify LCI promptly of the request or requirement so
that LCI may seek an appropriate protective order or waive compliance
with the provisions of this Sec.6(d). If, in the absence of a protective
order or the receipt of a waiver hereunder, any of CCS is, on the advice
of counsel, compelled to disclose any Confidential Information to any
tribunal or else stand liable for contempt, that Seller may disclose the
Confidential Information to the tribunal; provided, however, that the
disclosing Seller shall use his or its best efforts to obtain, at the
request of LCI, an order or other assurance that confidential treatment
will be accorded to such portion of the Confidential Information required
to be disclosed as LCI shall designate. The foregoing provisions shall
not apply to any Confidential Information which is generally available
to the public immediately prior to the time of disclosure.
(e) Covenant Not to Compete. For a period of the term of the
Promissory Notes from and after the Closing Date, CCS will not engage
directly or indirectly in any business that LMS conducts as of the
Closing Date; provided, however, that no owner of less than 1% of the
outstanding stock of any publicly traded corporation shall be deemed to
engage solely by reason thereof in any of its businesses. If the final
judgment of a court of competent jurisdiction declares that any term or
provision of this Sec.6(e) is invalid or unenforceable, the Parties agree
that the court making the determination of invalidity or unenforceability
shall have the power to reduce the scope, duration or area of the term
or provision, to delete specific words or phrases, or to replace any
invalid or unenforceable term or provision with a term or provision that
is valid and enforceable and that comes closest to expressing the
intention of the invalid or unenforceable term or provision, and this
Agreement shall be enforceable as so modified after the expiration of the
time within which the judgment may be appealed.
7. Conditions to Obligation to Close.
(a) Conditions to Obligation of LCI. The obligation of LCI to
consummate the transactions to be performed by it in connection with the
Closing is subject to satisfaction of the following conditions:
(i) the representations and warranties set forth in Sec. 3(a) and
Sec. 4 above shall be true and correct in all material respects at and as
of the Closing Date;
(ii) CCS shall have performed and complied with all of its
covenants hereunder in all material respects through the Closing;
(iii) LMS shall have procured all of the insurance commitments,
policies, and riders specified in Sec. 5(h) above;
(iv) no action, suit, or proceeding shall be pending before any
court or quasi-judicial or administrative agency of any federal,
state, local, or foreign jurisdiction wherein an unfavorable
injunction, judgment, order, decree, ruling, or charge would (A)
prevent consummation of any of the transactions contemplated by this
Agreement, (B) cause any of the transactions contemplated by this
Agreement to be rescinded following consummation, (C) affect
adversely the right of LCI to own the Acquired Assets, to operate
the former businesses of LMS;
(v) LCI shall have received the resignations, effective as of the
Closing, of each director and officer of LMS other than those whom
LCI shall have specified in writing prior to the Closing;
(vi) LCI shall have obtained on terms and conditions reasonably
satisfactory to it all of the financing it needs in order to
consummate the transactions contemplated hereby and fund the working
capital requirements of LMS and its Subsidiaries after the Closing;
and
(vii) all actions to be taken by CCS in connection with
consummation of the transactions contemplated hereby and all
certificates, opinions, instruments, and other documents required
to effect the transactions contemplated hereby will be reasonably
satisfactory in form and substance to LCI.
LCI may waive any condition specified in this Sec. 7(a) if it executes a
writing so stating at or prior to the Closing.
(b) Conditions to Obligation of CCS. The obligation of CCS to
consummate the transactions to be performed by it in connection with the
Closing is subject to satisfaction of the following conditions:
(i) the representations and warranties set forth in Sec. 3(b) above
shall be true and correct in all material respects at and as of the
Closing Date;
(ii) LCI shall have performed and complied with all of its
covenants hereunder in all material respects through the Closing;
(iii) no action, suit, or proceeding shall be pending [or
threatened] before any court or quasi-judicial or administrative
agency of any federal, state, local, or foreign jurisdiction [or
before any arbitrator] wherein an unfavorable injunction, judgment,
order, decree, ruling, or charge would (A) prevent consummation of
any of the transactions contemplated by this Agreement or (B) cause
any of the transactions contemplated by this Agreement to be
rescinded following consummation (and no such injunction, judgment,
order, decree, ruling, or charge shall be in effect);
(iv) all actions to be taken by LCI in connection with consummation
of the transactions contemplated hereby and all certificates,
opinions, instruments, and other documents required to effect the
transactions contemplated hereby will be reasonably satisfactory in
form and substance to CCS.
The Requisite Seller may waive any condition specified in this Sec. 7(b) if
it executes a writing so stating at or prior to the Closing.
8. Remedies for Breaches of This Agreement.
(a) Survival of Representations and Warranties.
All of the representations and warranties of the Parties contained
in this Agreement shall survive Closing hereunder (even if the damaged
Party knew or had reason to know of any misrepresentation or breach of
warranty at the time of Closing) and continue in full force and effect
forever thereafter (subject to any applicable statutes of limitations).
(b) Indemnification Provisions for Benefit of LCI.
(i) In the event any of CCS breaches (or in the event any
third party alleges fact that, if true, would mean any of CCS has
breached) any of their representations, warranties and covenants
contained herein (other than the covenants in Sec.2(a) above and the
representations and warranties in Sec.3(a) above), and, if there is an
applicable survival period pursuant to Sec.8(a) above, provided that
LCI makes a written claim for indemnification against any of CCS
pursuant to Sec.10(h) below within such survival period, then each of
CCS agrees to indemnify LCI from and against the entirety of any
Adverse Consequences LCI may suffer through and after the date of
the claim for indemnification (including any Adverse Consequences
the nature of, or caused by, the breach (or the alleged breach)
provided, however, that CCS shall not have any obligation to
indemnify LCI from and against any Adverse Consequences resulting
from, arising out of, relating to, in the nature of, or caused by
the breach (or alleged breach) of any representation or warranty of
CCS contained in Sec.4(a)-(j) and Sec.4(l)-(ab) above until LCI has
suffered Adverse Consequences by reason of all such breaches (or
alleged breaches) in excess of a $10,000 aggregate threshold (at
which point CCS will be obligated to indemnify LCI from and against
all such Adverse Consequences relating back to the first dollar).
(ii) In the event any of CCS breaches (or in the event any
third party alleges facts that, if true, would mean any of CCS has
breached) any of his or its covenants in Sec.2(a) above or any of his
or its representations in Sec.3(a) above, and if there is an applicable
survival period pursuant to Sec.8(a) above, provided that LCI makes a
written claim for indemnification against the Seller pursuant to
Sec.10(h) below within such survival period, then the Seller agrees to
indemnify LCI from and against the entirety of any Adverse
Consequences LCI may suffer through and after the date of the claim
for indemnification (including any Adverse Consequences LCI may
suffer after the end of any applicable survival period) resulting
from, arising out of, relating to, in the nature of, or caused by
the breach (or the alleged breach).
(iii) Each of CCS agrees to indemnify LCI from and against the
entirety of any Adverse Consequences LCI may suffer resulting from,
arising out of, relating to, in the nature of, or caused by any
Liability of LMS for the unpaid Taxes of any Person (other than any
of LMS under the Treas. Reg. Sec.1.1502-6 (or any similar provision of
state, local or foreign law), as a transferee or successor, by
contract or otherwise.
(iv) Each of CCS agrees to indemnify LCI from and against the
entirety of any Adverse Consequences LCI may suffer resulting from,
arising out of, relating to, in the nature of, or caused by [any
adverse matter which CCS may disclose in the Disclosure Schedule].
(c) Indemnification Provisions for Benefit of CCS. In the event
LCI breaches (or in the event any third party alleges facts that, if
true, would mean LCI has breached) any of its representations,
warranties and covenants contained herein, and if there is an applicable
survival period pursuant to Sec.8(a) above, provided that any of CCS makes
a written claim for indemnification against LCI pursuant to Sec.10(h) below
within such survival period, then Buyer agrees to indemnify each of CCS
from and against the entirety of any Adverse Consequences the Seller may
suffer through and after the date of the claim for indemnification
(including any Adverse Consequences the Seller may suffer after the end
of any applicable survival period) resulting from, arising out of,
relating to, in the nature of, or caused by the breach (or the alleged
breach).
(d) Matters Involving Third Parties.
(i) If any third party shall notify any Party (the "Indemnified
Party") with respect to any matter (a "Third Party Claim") which may
give rise to a claim for indemnification against any other Party
(the "Indemnifying Party") under this Sec.8, then the Indemnified Party
shall promptly notify each Indemnifying Party thereof in writing;
provided, however, that no delay on the part of the Indemnified
Party in notifying any Indemnifying Party shall relieve the
Indemnifying Party from any obligation hereunder unless (and then
solely to the extent) the Indemnifying Party thereby is prejudiced.
(ii) Any indemnifying Party will have the right to defend the
Indemnified Party against the Third Part Claim with counsel of its
choice reasonably satisfactory to the Indemnified Party so long as
(A) the Indemnifying Party notifies the Indemnified Party in writing
within 15 days after the Indemnified Party has given notice of the
Third Party Claim that the Indemnifying Party will indemnify the
Indemnified Party from and against the entirety of any Adverse
Consequences the Indemnified Party may suffer resulting from,
arising out of, relating to, in the nature of, or caused by the
Third Party Claim, (B) the Indemnifying Party provides the
Indemnified Party with evidence reasonably acceptable to the
Indemnified Party that the Indemnifying Party will have the
financial resources to defend against the Third Party Claim and
fulfill its indemnification obligations hereunder; (C) the Third
Party Claim involves only money damages and does not seek an
injunction or other equitable relief, (D) settlement of, or an
adverse judgment with respect to, the Third Party Claim is not, in
the good faith judgment of the Indemnified Party, likely to
establish a precedential custom or practice materially adverse to
the continuing of business interests of the Indemnified Party,
likely to establish a precedential custom or practice materially
adverse to the continuing of business interests of the Indemnified
Party, and (E) the Indemnifying Party conducts the defense of the
Third Party Claim actively and diligently.
(iii) So long as the Indemnifying Party is conducting the defense
of the Third Party Claim in accordance with Sec.8(d)(ii) above, (A) the
Indemnified Party may retain separate co-counsel at its sole cost
and expense and participate in the defense of the Third Party Claim;
(B) the Indemnified Party will not consent to the entry of any
judgment or enter into any settlement with respect to the Third
Party Claim without the prior written consent of the Indemnifying
Party (not to be unreasonably withheld), and (C) the Indemnifying
Party will not consent to the entry of any judgment or enter into
any settlement with respect to the Third Party Claim without the
prior written consent of the Indemnified Party (not to be
unreasonably withheld).
(iv) In the event any of the conditions in Sec.8(d)(ii) above is or
becomes unsatisfied, however, (A) the Indemnified Party may defend
against, and consent to the entry of any judgment or enter into any
settlement with respect to, the Third Party Claim in any manner it
reasonably may deem appropriate (and the Indemnified Party need not
consult with, or obtain any consent from, any Indemnifying Party in
connection therewith), (B) the Indemnifying Parties will reimburse
the Indemnified Party promptly and periodically for the costs of
defending against the Third Party Claim (including reasonable
attorneys' fees and expenses), and (C) the Indemnifying Parties will
remain responsible for any Adverse Consequences the Indemnified
Party may suffer resulting from, arising out of, relating to, in the
nature of, or caused by the Third Party Claim to the fullest extent
provided in this Sec.8.
(e) Determination of Adverse Consequences. All indemnification
payments under this Sec.8 shall be deemed adjustments to the Purchase Price.
(f) Other Indemnification Provisions. The foregoing
indemnification provisions are in addition to, and not in derogation of,
any statutory, equitable, or common law remedy any Party may have for
breach of representation, warranty or covenant. Each of CCS hereby
agrees that he or it will not make any claim for indemnification against
any of LMS and its Subsidiaries by reason of the fact that he or it was
a director, officer, employee, or agent of any such entity or was serving
at the request of any such entity as a partner, trustee, director,
officer, employee or agent of another entity (whether such claim is for
judgments, damages, penalties, fines, costs, amounts paid in settlement,
losses, expenses, or otherwise and whether such claim is pursuant to any
statute, charter, document, bylaw, agreement, or otherwise) with respect
to any action, suit, proceeding, complaint, claim or demand brought by
LCI against such Seller (whether such action, suit, proceeding,
complaint, claim or demand is pursuant to this Agreement, applicable law,
or otherwise).
9. Intentionally left blank.
10. Miscellaneous.
(a) Nature of Certain Obligations.
(i) The covenants of each of CCS in Sec.2(a) above concerning the
sale of his or its Target Shares to LCI and the representations and
warranties of each of CCS in Sec.3(a) above concerning the transaction
are several obligations, This means that the particular Seller
making the representation, warranty or covenant will be solely
responsible to the extent provided in Sec.8 above for any Adverse
Consequences LCI may suffer as a result of any breach thereof.
(ii) The remainder of the representations, warranties, and
covenants in this Agreement are joint and several obligations. This
means that each Seller will be responsible to the extent provided
in Sec.8 above for the entirety of any Adverse Consequences LCI may
suffer as a result of any breach thereof.
(b) 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.
(c) Entire Agreement. This Agreement (including the documents
referred to herein) constitutes the entire agreement between the Parties
and supersedes any prior understandings, agreements, or representations
by or between the Parties, written or oral, to the extent they related
in any way to the subject matter hereof.
(d) Succession and Assignment. This Agreement shall be binding
upon and inure to the benefit of the Parties named herein and their
respective successors and permitted assigns. No Party may assign either
this Agreement or any of its rights, interests, or obligations hereunder
without the prior written approval of the other Party; provided, however,
that LCI may (i) assign any or all of its rights and interests hereunder
to one or more of its Affiliates and (ii) designate one or more of its
Affiliates to perform its obligations hereunder (in any or all of which
cases LCI nonetheless shall remain responsible for the performance of all
of its obligations hereunder).
(e) Counterparts. This Agreement may be executed in any number of
counterparts, including counterparts transmitted by telecopier or FAX,
any one of which shall constitute an original of this Agreement. When
counterparts of facsimile copies have been executed by all parties, they
shall have the same effect as if the signatures to each counterpart or
copy were upon the same document and copies of such documents shall be
deemed valid as originals. The parties agree that all such signatures
may be transferred to a single document upon the request of any party.
(f) Headings. The section headings contained in this Agreement
are inserted for convenience only and shall not affect in any way the
meaning or interpretation of this Agreement.
(g) Notices. All notices, requests, demands, claims, and other
communications hereunder will be in writing. Any notice, request,
demand, claim, or other communication hereunder shall be deemed duly
given if (and then two business days after) it is sent by registered or
certified mail, return receipt requested, postage prepaid, and addressed
to the intended recipient as set forth below:
If to CCS: Stanton Pikus, President
Canterbury Corporate Services, Inc.
1600 Medford Plaza
Route 70 & Hartford Road
Medford, New Jersey 08055
Copy to: Howard Sobel, Esq.
Plaza 1000, Suite 308
Voorhees, New Jersey 08043
If to LCI: Thomas DiDario, President
666 Plainsboro Road, Suite 525
Plainsboro, New Jersey 08536
Copy to: William N. Levy, Esq.
Plaza 1000, Suite 309
Voorhees, New Jersey 08043
Any Party may send any notice, request, demand, claim, or other
communication hereunder to the recipient at the address set forth above
using any other means (including personal delivery, expedite messenger
service, telecopy, telex, ordinary mail, or electronic mail), but no such
notice, request, demand other communication shall be deemed to have been
duly given unless and until it actually is received by its intended
recipient. Any Party may change the address to which notices, requests,
demands, claims, and other' communications hereunder are to be delivered
by giving the other Party notice in the manner herein set forth.
(h) Governing Law. This Agreement shall be governed by and
construed in accordance with the domestic laws of the State of New Jersey
without giving effect to any choice or conflict of law provision or rule
(whether of the State of New Jersey, or any other jurisdiction) that
would cause the application of the laws of any jurisdiction other than
the State of New Jersey.
(i) Amendments and Waivers. No amendment of any provision of this
Agreement shall be valid unless the same shall be in writing and signed
by LCI and LMS. LMS may consent to any such amendment at any time prior
to the Closing with the prior authorization of its board of directors.
No waiver by any Party of any default, misrepresentation, or breach of
warranty or covenant hereunder, whether intentional or not, shall be
deemed to extend to any prior or subsequent default, misrepresentation,
or breach of warranty or covenant hereunder or affect in any way any
rights arising by virtue of any prior or subsequent such occurrence.
(j) Severability. Any term or provision of this Agreement that is
invalid or unenforceable in any situation in any jurisdiction shall not
affect the validity or enforceability of the remaining terms and
provisions hereof or the validity or enforceability of the offending term
or provision in any other situation or in any other jurisdiction.
(k) Expenses. Each of LCI, LMS, and LMS Stockholders will bear
his or its expenses for the transactions contemplated hereby. LMS also
agrees that it has not paid any amount to any third party, and will not
pay any amount to any third party until after the Closing, with respect
to any of the costs and expenses of LMS and LMS Stockholders (including
any of their legal fees and expenses) in connection with this Agreement
or any of the transactions contemplated hereby.
(l) Construction. The Parties have participated jointly in the
negotiation and drafting of this Agreement. In the event an ambiguity
or question of intent or interpretation arises, this Agreement shall be
construed as if drafted jointly by the Parties and no presumption or
burden of proof shall arise favoring or disfavoring any Party by virtue
of the authorship of any of the provisions of this Agreement. Any
reference to any federal, state, local, or foreign statute or law shall
be deemed also to refer to all rules and regulations promulgated
thereunder, unless the context requires otherwise. The word "including"
shall mean including without limitation. Nothing in the Disclosure
Schedule shall be deemed adequate to disclose an exception to a
representation or warranty made herein unless the Disclosure Schedule
identifies the exception with reasonable particularity and describes the
relevant facts in reasonable detail. Without limiting the generality of
the foregoing, the mere listing (or inclusion of a copy) of a document
or other item shall not be deemed adequate to disclose an exception to
a representation or warranty made herein (unless the representation or
warranty has to do with the existence of the document or other item
itself). The Parties intend that each representation, warranty, and
covenant contained herein shall have independent significance. If any
Party has breached any representation, warranty, or covenant contained
herein in any respect, the fact that there exists another representation,
warranty, or covenant relating to the same subject matter (regardless of
the relative levels of specificity) which the Party has not breached
shall not detract from or mitigate the fact that tile Party is in breach
of the first representation, warranty, or covenant.
(m) Incorporation of Exhibits and Schedules. The Exhibits and
Schedules identified in this Agreement are incorporated herein by
reference and made a part hereof.
(n) Specific Performance. Each of the Parties acknowledges and
agrees that the other Party would be damaged irreparably in the event any
of the provisions of this Agreement are not performed in accordance with
their specific terms or otherwise are breached. Accordingly, each of the
Parties agrees that the other Party, shall be entitled to an injunction
or injunctions to prevent breaches of the provisions of this Agreement
and to enforce specifically this Agreement and the terms and provisions
hereof in any action instituted in any court of the United States or any
state thereof having jurisdiction over the Parties and the matter
(subject to the provisions set forth in Sec. 8(p) below), in addition to any
other remedy to which it may be entitled, at law or in equity.
(o) Submission to jurisdiction. Each of the Parties submits to
the jurisdiction of any state or federal court sitting in Burlington
County, New Jersey, in any action or proceeding arising out of or
relating to this Agreement and agrees that all claims in respect of the
action or proceeding may be heard and determined in any such court. Each
party also agrees not to bring any action or proceeding arising out of
or relating to this Agreement in any other court. Each of the Parties
waives any defense of inconvenient forum to the maintenance of any action
or proceeding so brought and waives any bond, surety, or other security
that might be required of any other Party with respect thereto. Each
Party appoints (the "Process Agent') as its agent to receive on its
behalf service of copies of the summons and complaint and any other
process that might be served in the action or proceeding. Any Party may
make service on the other Party by sending or delivering a copy of the
process (i) to the Party to be served at the address and in the manner
provided for the giving of notices in Sec. 8(h) above or (ii) to the Party
to be served in care of the Process Agent at the address and in the
manner provided for the giving of notices in Sec. 8(h) above. Nothing in
this Sec. 8(p), however, shall affect the right of any Party to bring any
action or proceeding arising out of or relating to this Agreement in any
other court or to serve legal process in any other manner permitted by
law or in equity. Each Party agrees that a final judgment in any action
or proceeding so brought shall be conclusive and may be enforced by suit
on the judgment or in any other manner provided by law or in equity.
(p) Potential Conflict of Interest. William N. Levy, Esq., of
Levy & Levy, P.A. has acted as attorney for CCS and/or LMS in the past.
Both parties hereby waive any conflict. CCS has retained Howard Sobel,
Esq. to represent CCS in this transaction and acknowledges that Mr. Levy
is representing LCI, the Buyer, in this transaction. Mr. Levy owns as
equity interest in CCS and a substantial equity interest in LCI.
IN WITNESS WHEREOF, the Parties hereto have executed this Agreement
on [as of] the date first above written.
CANTERBURY CORPORATE SERVICES, INC.
/s/Stanton M. Pikus, President
_________________________________
BY: Stanton M. Pikus, President
LANDSCAPE COMPANIES, INC.
/s/Ernest Micciche
__________________________________
BY: Ernest Micciche, Vice President-Finance/Treasurer
<PAGE>
PROMISSORY NOTE
$4,050,000.00 Plainsboro, New Jersey November 30, 1996
For value received, LANDSCAPE COMPANIES, INC., a New Jersey Corporation,
with offices located at 666 Plainsboro Road, Plainsboro, New Jersey 08536,
promises to pay to the order of CANTERBURY CORPORATE SERVICES, INC., a
Pennsylvania Corporation, with offices located at 1600 Medford Plaza,
Route 70 & Hartford Road, Medford, New Jersey 08055, the sum of Four
Million Fifty Thousand and 00/100 Dollars ($4,050,000.00), together with
interest from the date hereof at the rate of eight percent (8%) per annum,
in accordance with the fifteen (15) year amortization schedule attached
hereto. The Note shall be payable in one hundred nineteen (119)
consecutive and equal monthly payments of Thirty Eight Thousand Nine
Hundred Sixty One and 94/100 Dollars ($38,961.94) each, beginning on
January 31, 1997, and continuing on the last day of each month thereafter,
with a final payment of One Million Nine Hundred Sixty Thousand Five
Hundred Two and 68/100 Dollars ($1,960,502.68) payable on December 31,
2006.
Upon default in the payment of any installment of interest or principal when
due, which default continues for a period of more than ten (10) days, the
whole of the principal then remaining unpaid and all interest accrued
hereunder, shall, at the option of the holder of this Note, become immediately
due and payable, without further demand or notice. In the event this note is
placed into the hands of an attorney for collection after maturity or default,
the undersigned agrees to pay for costs of such collection, the amount of such
costs shall be liquidated at fifteen percent (15%) of the principal and
interest then remaining, plus all court costs and costs of service of process
incurred therewith.
In addition to the aforesaid, upon the occurrence of any of the following,
with respect to any maker or any endorser or guarantor hereof, this Promissory
Note shall immediately become due and payable for the full remaining balance
and interest, without notice or demand: The commencement by or against any of
them of any proceeding, suit or action (at law or in equity) for
reorganization, dissolution or liquidation; suspension or liquidation by any
of them of their usual business; proceedings instituted by or against any of
them under any of the provisions of the Bankruptcy Act or amendments thereto;
dissolution (if any of the parties be a partnership or a corporation);
application for, or appointment of, a receiver of any of them or their
property; death; issuance of a writ of attachment; entry of judgment;
admission in writing by any of them of inability to pay his or her debts
generally as they become due; calling of a meeting of creditors; appointment
of a committee of creditors or liquidating agent; or offering a composition
or extension to creditors. The undersigned, if more than one, shall be
jointly and severally bound and liable hereunder, and if any of the
undersigned is a partnership, also the members thereof individually.
THE UNDERSIGNED ACKNOWLEDGES RECEIPT OF A COPY OF THIS NOTE ON THE
DATE ABOVE.
LANDSCAPE COMPANIES, INC.
By:/s/Ernest Micciche
_______________________________________
ERNEST MICCICHE, Vice President-Finance/Treasurer
ccs\landscape.nt1
<PAGE>
<TABLE>
<CAPTION>
LANDSCAPE MAINTENANCE SERVICES, INC.
BALANCE SHEET
NOVEMBER 30, 1996
11/30/96
--------
<S> <C>
CASH $146,788
ACCOUNTS RECEIVABLE 1,946,308
PREPAID & OTHER ASSETS 191,246
-----------
TOTAL CURRENT ASSETS 2,284,342
MACHINERY 4,603,322
ACCUM DEPN - MACHINERY (3,934,750)
OFFICE EQUIPMENT 69,876
ACCUM DEPN - EQUIPMENT (58,086)
LEASEHOLDS 80,598
ACCUM AMORT. - LEASEHOLDS (34,803)
TRANSPORTATION EQUIPMENT 316,299
ACCUM DEPN - TRANSPORTATION EQUIP. (100,681)
SECURITY DEPOSITS 30,984
-----------
TOTAL ASSETS 3,257,100
ACCOUNTS PAYABLE 737,458
SALES TAX PAYABLE 45,296
ACCRUED PAYROLL TAXES 88,420
ACCRUED EXPENSES 153,886
ACCRUED PAYROLL 91,451
CAP. LEASE OBLIGATION 83,862
------------
TOTAL CURRENT LIABILITIES 1,200,373
LOANS PAYABLE 1,360,000
CAP. LEASE OBLIGATION 79,954
------------
TOTAL LIABILITIES 2,640,327
NET WORTH 616,773
============
</TABLE>
MANAGEMENT AGREEMENT
THIS AGREEMENT is made on November 30, 1996 between
Landscape Companies, Inc.("Owner") and Canterbury Corporate Services, Inc.
("Manager").
Consideration
1. This Agreement is made in consideration of the services to be
rendered under this Agreement by the Manager and the compensation that the
Owner agrees to pay the Manager for these services.
Appointment and Acceptance
2. The owner appoints the Manager as exclusive agent for the
management of the landscape business and performing services described in
Paragraph 3 of this Agreement, and the Manager accepts the appointment,
subject to the terms and conditions set forth in this Agreement.
Description of Services
3. See Schedule "A" attached hereto for a list of services to be
performed by Manager for Owner.
Professional Management Standards
4. The Manager agrees to exert his best efforts in managing the
landscape business, to personally supervise the employees to whom duties
under this Agreement may be delegated, and to exercise the highest decree
of professional skill and competence in order to provide the Owner with the
maximum economic return consistent with proper management.
Maintenance and Inspection of Account Books
5. The Manager will maintain accurate, complete and separate records
in accordance with generally accepted accounting standards and procedures.
These records will show income and expenditures relating to the operation of
the landscape business, accounts payable and accounts receivable, available
cash, and other assets and liabilities pertaining to the landscape business.
The Owner may, at any reasonable time, inspect the records kept by the Manager,
either in person or through an attorney, accountant, or other representative.
The Owner may have an audit made of all account books and records pertaining to
the management of the landscape business.
In addition to the other requirements specified in this Agreement,
the Manager has the following responsibilities with respect to records and
reports:
A. With respect to each fiscal year ending during the term
of this Agreement, and if economically feasible, the Manager will cause an
annual financial report to be prepared by a Certified Public Accountant, or
other person acceptable to the Owner, based on the preparer's examination of
the books and records of the Owner and the Manager. The report will be
certified by the preparer and the Manager, and will be submitted to the Owner
within sixty (60) days after the end of the fiscal year.
B. The Manager will furnish this information as may be
requested by the Owner from time to time with respect to the financial,
physical or operational condition of the landscape business..
Monthly Receipts and Disbursements Statement
6. The Manager will provide the Owner with a detailed monthly statement
of all receipts and disbursements, to be furnished on or before the 10th day
of each month for the preceding month. This statement will show the status
of collections and will be supported by canceled checks, vouchers, duplicate
invoices, and similar documentation covering all items of income and expense.
This documentation will be kept in the Manager's office and be available for
inspection by the Owner's representatives at all reasonable times. The
Manager will also furnish a quarterly operating statement showing the income
and expense for the month and year to date and for the same portion of the
preceding year. The Manager will be under no obligation to advance funds on
behalf of the Owner, but in the event disbursements are made, the Owner agrees
to pay the disbursements on demand.
Insurance Coverage
7. The Manager shall obtain recommendations and premium costs from at
least three different insurance companies on all forms of insurance needed to
protect the Owner and the landscape business.. This insurance coverage shall
include liability, contents, burglary and theft and any other insurance
required by law, as well as a minimum of the same amount of insurance that
already exists on Landscape Maintenance, Inc. The Owner shall designate the
insurance company or companies whose bids have been accepted by the Owner and
the Manager shall secure insurance in the amounts and with the beneficial
interests acceptable to the Owner. The following is also agreed between Owner
and Manager:
a. Proof of all insurance will be delivered to the Owner in a form
acceptable to the Owner.
b. The Manager will promptly investigate and make a full written
report on all accidents, claims, and potential claims for damages relating to
the ownership, operation, and maintenance of the Premises, including any
damage to or destruction of the Premises and the estimated cost of repair.
The Manager will meet and fulfill all requirements applicable to the loss or
claim imposed under the insurance policy or policies covering the loss or
claim.
Legal and Accounting Services
8. The Manager will refer matters requiring legal or accounting
services to qualified professionals approved by the Owner, and will charge
the fees for these services as an operating expense of the landscape business.
Compensation for Managerial Services
9. In consideration for the services to be rendered to the Owner by the
Manager under this Agreement, the Owner agrees to pay the Manager $65,000 per
annum.
Termination
10. The Owner at its option, may terminate whenever the Promissory Note
of $4,050,000 has been paid in full.
Mailing and Notice Requirements
11. All notices required under this Agreement must be in writing, and
all notices and periodic statements must be either (1) delivered by registered
or certified mail, postage prepaid, and return receipt requested; or (2)
delivered in person. Notice and periodic statement to the Manager shall be
addressed as follows:
Canterbury Corporate Services, Inc.
1600 Medford Plaza
Route 70 & Hartford Road
Medford, New Jersey 08055
Notices to the Owner will be addressed as follows:
William N. Levy, Esquire
Plaza 1000, Main Street, Suite 309
Voorhees, New Jersey 08043
Parties Bound
12. This Agreement constitutes a binding obligation on the parties and
their respective successors and assigns.
Counterparts
13. This Agreement may be executed in any number of counterparts,
including counterparts transmitted by telecopier or FAX, any one of which
shall constitute an original of this Agreement. When counterparts of
facsimile copies have been executed by all parties, they shall have the same
effect as if the signature to each counterpart or copy were upon the same
document and copies of such documents shall be deemed valid as originals. The
parties agree that all such signatures may be transferred to a single document
upon the request of any party.
Applicable Law
14. This contract shall be governed by and construed in accordance with
the laws of the State of New Jersey.
Executed by the parties on the date written above at New Jersey.
LANDSCAPE COMPANIES, INC.
By:/s/Ernie Micciche
________________________________
Ernie Micciche, Vice President
CANTERBURY CORPORATE SERVICES, INC.
By:/s/Stanton M. Pikus
_______________________________
Stanton M. Pikus, President
CCS\LMSMANAGE.AGR
Schedule A
CCS MANAGEMENT CONTRACT FOR LMS
1. Establish and overview annual budgets
a. Provide departmental detail
b. Capital budgeting
2. Perform day-to-day accounting overview
3. Prepare monthly financial statements
a. Comparison to departmental budget
b. Variation explanation
4. Process payroll
a. Generate by-weekly payroll checks
b. Coordinate payroll deposits
c. File all payroll taxes on a timely basis
d. Overview and process unemployment claims
5. Facilitate monthly business review meetings with LMS management staff
6. Assist in obtaining equipment financing
7. Interface with lending institutions
8. Provide daily cash management services
