EXHIBIT 10.18
EXECUTION COPY
STOCK PURCHASE AGREEMENT
dated as of October 26, 1998
by and among
LANDCARE USA, INC.,
REAL PROPERTY MAINTENANCE, INC.
and
the Stockholders named herein
TABLE OF CONTENTS
Page
1. PURCHASE AND SALE......................................................1
1.1 Purchase and Sale................................................1
1.2 Purchase Price...................................................1
1.3 Delivery of Certificates.........................................1
1.4 Closing..........................................................2
2. REPRESENTATIONS AND WARRANTIES OF THE STOCKHOLDERS.....................2
2.1 Due Organization.................................................2
2.2 Authorization....................................................2
2.3 Capital Stock of the Company.....................................2
2.4 Subsidiaries.....................................................3
2.5 Financial Statements.............................................3
2.6 Liabilities and Obligations......................................4
2.7 Accounts and Notes Receivable....................................4
2.8 Permits and Intangibles..........................................4
2.9 Environmental Matters............................................5
2.10 Personal Property................................................5
2.11 Significant Customers; Material Contracts and Commitments........6
2.12 Real Property....................................................6
2.13 Insurance........................................................7
2.14 Compensation; Employment Agreements; Organized Labor Matters.....7
2.15 Employee Benefit Plans...........................................8
2.16 Conformity with Law; Litigation..................................9
2.17 Taxes...........................................................10
2.18 No Violations; All Required Consents Obtained...................11
2.19 Absence of Changes..............................................12
2.20 Powers of Attorney..............................................13
2.21 Competing Lines of Business; Related-party Transactions.........13
2.22 Disclosure......................................................13
2.23 Certain Business Practices......................................14
2.24 Notice to Bargaining Agents.....................................14
2.25 Notices and Consents............................................14
2.26 Inventory; Working Capital; Other Financial Matters.............14
2.27 Year 2000 Compliance............................................14
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2.28 Reliance Upon Oral Representations..............................14
3. REPRESENTATIONS OF LANDCARE...........................................15
3.1 Due Organization................................................15
3.2 Authorization...................................................15
3.3 Capital Stock of LandCARE.......................................15
3.4 No Violations...................................................15
3.5 Validity of Obligations.........................................15
3.6 Reports; Financial Statements...................................15
4. DELIVERIES............................................................16
4.1 Instruments of Transfer.........................................16
4.2 Employment Agreement............................................16
4.3 Opinion of Counsel..............................................16
4.4 Good Standing Certificates......................................16
4.5 [Intentionally Omitted.]........................................16
4.6 Indebtedness to Company.........................................16
4.7 Consents........................................................16
4.8 Resignations of Directors and Officers..........................16
5. POST-CLOSING COVENANTS................................................17
5.1 Future Cooperation; Further Assurances..........................17
5.2 Expenses........................................................17
5.3 Certain Agreements..............................................17
5.4 Preparation and Filing of Tax Returns...........................17
5.5 Other Financial Matters.........................................17
5.6 Stockholder Guarantees..........................................18
5.7 Best Efforts....................................................18
6. INDEMNIFICATION.......................................................18
6.1 Survival of Stockholder's Representations and Warranties. .....18
6.2 General Indemnification by the Stockholders.....................19
6.3 Specific Indemnification by the Stockholders....................19
6.4 Indemnification by LandCARE.....................................20
6.5 Third Person Claims.............................................20
6.6 Limitations on Indemnification..................................20
6.7 Method of Payment...............................................21
7. NONCOMPETITION........................................................21
7.1 Prohibited Activities...........................................21
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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........................................................23
9. SECURITIES LAW MATTERS................................................23
9.1 Economic Risk; Sophistication...................................23
9.2 Compliance with Law.............................................24
9.3 Restrictions on Resale..........................................24
10. GENERAL...............................................................25
10.1 Successors and Assigns..........................................25
10.2 Entire Agreement................................................25
10.3 Counterparts....................................................25
10.4 Brokers and Agents..............................................25
10.5 Notices.........................................................25
10.6 Governing Law...................................................26
10.7 Survival of Representations and Warranties......................26
10.8 Effect of Investigation.........................................26
10.9 Exercise of Rights and Remedies.................................26
10.10 Time............................................................26
10.11 Reformation and Severability....................................27
10.12 Remedies Cumulative.............................................27
10.13 Captions........................................................27
10.14 Press Releases and Public Announcements.........................27
10.15 No Third-Party Beneficiaries....................................27
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SCHEDULES
SCHEDULE 1.2 Purchase Price
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 5.6. Stockholder Guarantees
SCHEDULE 9.3. Restrictions on Resale
SCHEDULE 10.4. Brokers and Agents
ANNEXES
Annex I - Form of Employment Agreement
Annex II - Form of Opinion of Counsel to Company and
Stockholder
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STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT (this "Agreement") is made and entered into
as of October 26, 1998 by and among LandCARE USA, Inc., a Delaware corporation
("LandCARE"), Real Property Maintenance, Inc., a Colorado 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 Stockholders desire to sell, and LandCARE desires to
purchase, all of the outstanding capital stock of the Company (the "Shares") on
the terms set forth in this Agreement; 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
1.1 PURCHASE AND SALE.On the terms set forth in this Agreement, the
Stockholders hereby sell, convey, transfer, assign and deliver to LandCARE, and
LandCARE hereby purchases from the Stockholders, all of the Shares.
1.2 PURCHASE PRICE. The aggregate purchase price (the "Purchase Price")
for the Shares consists of (i) 250,000 shares of common stock, par value $.01
per share, of LandCARE ("LandCARE Stock") and (ii) an aggregate of $2,000,000 in
cash paid by wire transfer. Each of the Stockholders is receiving his pro rata
interest in the Purchase Price as set forth on SCHEDULE 1.2 hereto.
1.3 DELIVERY OF CERTIFICATES. Concurrently with the execution and delivery
of this Agreement and consummation of the transactions described herein (the
"Closing"), (i) the Stockholders are delivering to LandCARE the certificates
representing the Shares, duly endorsed in blank by the Stockholders 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 Stockholders' expense, affixed and canceled, and (ii) LandCARE
is causing its stock transfer agent to deliver to the Stockholders certificates
representing the LandCARE Stock as described above (or is delivering to the
Stockholders a copy of an irrevocable authorization to such transfer agent
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authorizing the issuance of such certificates to the Stockholders). 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 Shares or with respect to the stock powers accompanying any
Shares, and LandCARE agrees promptly to cure any deficiencies in the
certificates representing LandCARE Stock.
1.4 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 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 Colorado, 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 1,000 shares of common stock, no par value per share,
of which 125 shares are issued and outstanding and constitute all of the issued
and outstanding Shares. All of the Shares are owned of record and beneficially
by the Stockholders and are owned free and clear of all liens,
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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.
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 July 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 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 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.
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2.6 LIABILITIES AND OBLIGATIONS. Except as and to the extent disclosed and
adequately provided for in the Interim 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, to the knowledge of the Stockholders, 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, to the knowledge of the Stockholders, 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.
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 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. Except as set forth on SCHEDULE 2.9, 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
required pursuant to any applicable Environmental Laws including, without
limitation, such permits or approvals as are 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. The Company has 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 the knowledge of the Stockholders, 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) applicable,
comparable state or local statutes and regulations. To the knowledge of the
Stockholders, 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 Stockholders or any affiliate of the
Company or the Stockholders.
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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 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 in all
material respects 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.
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 the Stockholders or any affiliate of the Stockholders
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 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
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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, 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 right, title or interest in or to the Real
Property or any portion thereof. To the knowledge of the Stockholders, 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 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.
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 Stockholders, 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 Interim Balance Sheet Date.
Except as set forth on SCHEDULE 2.14, since the Interim 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,
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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.
SCHEDULE 2.14 sets forth an accurate schedule showing all bonus and other
incentive plans, agreements and arrangements of Company, written or unwritten
(the "Incentive Plans"), together with true, complete and correct copies of such
Incentive Plans (or in the event that the Incentive Plans are not in writing, a
true and complete summary of such Incentive Plans), and classifications of
employees covered thereby as of the Closing Date. SCHEDULE 2.14 shall also
include the maximum aggregate annual amount payable to covered employees under
the Incentive Plans for the current fiscal year, including, but not limited to,
discretionary amounts, if any.
2.15 EMPLOYEE BENEFIT PLANS. SCHEDULE 2.15 sets forth an accurate schedule
showing all material 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. 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 have been delivered to LandCARE.
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")
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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 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
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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 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 Stockholders, 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
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deposits required by law to be made with respect to employees' withholding and
other employment Taxes. Neither the Company nor the Stockholders 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. 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 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 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 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
Company will be entitled to the rights and benefits under the Material Documents
to which the Company is entitled immediately prior to the Closing to the extent
such documents do not terminate by their terms or, subsequent to the Closing,
the Company does not breach or otherwise take any action to terminate such
agreements. 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
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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 Interim 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 requiring consent of any party to the transfer
and assignment of any such assets, property or rights;
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(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 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. To the knowledge of the
Stockholders, 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. Notwithstanding the foregoing, the Stockholders have made no
representations regarding the future operations of the Company.
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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. The Company's total indebtedness as of the date hereof does not exceed
$975,000. The Company's pro forma net revenues for the 12-month period ended
July 31, 1998 were at least $6,900,000. The Company's pro forma EBITDA (earnings
before interest, taxes, depreciation and amortization) for the 12-month period
ended July 31, 1998 was at least $980,000. The Company's pro forma pre-tax
earnings for the 12-month period ended July 31, 1998 were at least $635,000. The
Company's tangible net worth as of the date hereof is at least $275,000.
2.27 YEAR 2000 COMPLIANCE. To the knowledge of the Stockholders, 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 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.
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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 CAPITAL STOCK OF LANDCARE. The shares of LandCARE Stock to be issued
pursuant to this Agreement 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. The Stockholders understand that the offer and sale of such shares will
have not been registered under the Securities Act of 1933, as amended (the
"Securities Act"), and will not be registered thereunder. Upon completion of the
transactions contemplated under this Agreement and provided that the
Stockholders comply with the obligations set forth herein, the Stockholders
shall be the beneficial owners on the date hereof of the LandCARe Stock.
3.4 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.
3.5 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.
3.6 REPORTS; FINANCIAL STATEMENTS. LandCARE has filed all forms, reports,
statements and other documents required to be filed with the New York Stock
Exchange and with the Securities and Exchange Commission ("SEC") pursuant to the
Securities Act, 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, or otherwise,
(ii) all Annual
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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"). 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.
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 EMPLOYMENT AGREEMENT. The Company and the persons identified in
SCHEDULE 4.2 are entering into Employment Agreements in the form of Annex I.
4.3 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.
4.4 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 Colorado 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.
4.5 [INTENTIONALLY OMITTED.]
4.6 INDEBTEDNESS TO COMPANY. The Stockholders and their affiliates are
repaying that outstanding indebtedness listed on SCHEDULE 4.6 which they may
have to the Company and such indebtedness is the only indebtedness to the
Company owed by the Stockholders or their affiliates.
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.
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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 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 Stockholders will pay the fees, expenses and disbursements
of the Stockholders and its 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.
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 the Stockholders are parties.
5.4 PREPARATION AND FILING OF TAX RETURNS. The Stockholders will join with
Purchaser in making an election under Section 338(h)(10) of the Code (and any
corresponding elections under state, local or foreign tax law) (collectively a
"Section 338(h)(10) Election") with respect to the purchase and sale of the
Shares. As a result of the Section 338(h)(10) Election, the parties agree that
the Purchase Price and the liabilities of the Company (plus other relevant
items) will be allocated to the assets of the Company for all purposes
(including tax and financial accounting purposes), and, within 45 days after the
date hereof, the parties shall work in good faith to reasonably optimize the tax
allocation for the benefit of the Stockholders. Purchaser and the Company and
the Stockholders will file all tax returns (including amended returns and claims
for refund) and information reports in a manner consistent with such allocation.
5.5 OTHER FINANCIAL MATTERS. If the Company's total indebtedness exceeds
$975,000 at Closing, the cash portion of the Purchase Price shall be reduced on
a dollar-for-dollar basis, and,
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within 30 days of the date hereof, the Stockholders shall remit such amount to
LandCARE by wire transfer.
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 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
Closing Date. LandCARE shall cooperate with the Stockholders to release the
Stockholders from guarantees of vendor accounts as specifically identified by
the Stockholders on a case-by-case basis. The guarantees and vendor accounts on
which LandCARE shall obtain releases is attached hereto as SCHEDULE 5.6.
5.7 BEST EFFORTS. With a view to making available the benefits of certain
rules and regulations of the Securities and Exchange Commission that may permit
the sale of LandCARE Stock to the public without registration, LandCARE agrees
that it will use its best efforts to (i) timely file all reports and other
documents required of LandCARE under the Securities Act and the Securities and
Exchange Act of 1934, as amended. LandCARE also agrees that it will use its best
efforts to maintain its listing with the New York Stock Exchange.
6. INDEMNIFICATION
The Stockholders 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 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 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.
The limitation periods referred to in this subparagraph (a) are not intended to
limit any of the remedies available to LandCARE for causes of action arising out
of fraud by the Stockholder.
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(b) The representations and warranties of LandCARE made in Section 3
of 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
Company, 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 SPECIFIC INDEMNIFICATION BY THE STOCKHOLDERS. In addition to the
indemnification provided for in Section 6.2, the Stockholders covenant and agree
that they will indemnify, defend, protect and hold harmless the Company and
LandCARE and each of their respective subsidiaries, officers, directors,
employees, stockholders, agents, representatives and affiliates from and against
all Damages incurred by any of them in connection with: (a) violations or
alleged violations of any applicable federal, state, local, or other laws,
regulations, ordinances, or orders of any governmental entity which govern the
protection of the environment or human health and safety ("Environmental Laws")
relating in any way to any action or omission of the Company or any predecessor
of the Company to the extent the facts, events, or conditions giving rise to
such violation or alleged violation occurred or existed on or before the Closing
Date; (b) the actual or alleged presence, emanation, migration, disposal,
release, or threatened release (collectively, "Releases") of any oil, petroleum
product, hazardous material, or hazardous substance as such terms are defined by
Environmental Laws (collectively, "Hazardous Substances") at, under, to, or from
any property or facility which presently is or previously was owned, leased,
operated, or otherwise used by the Company or any predecessor of the Company to
the extent that said actual or alleged Release occurred or is alleged to have
occurred on or before the Closing Date; (c) the actual or alleged Release of any
Hazardous Substances at any location or facility whatsoever to the extent such
Hazardous Substances were generated by, or were arranged for disposal at such
location or facility by, the Company or any predecessor of the Company on or
before the Closing Date; and (d) any and all liability to third parties,
including but not limited to any governmental entities, arising from the
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release of petroleum products at a site known as 00 Xxxxxxxxx Xxx Xxxx,
Xxxxxxxxx, Xxxxxxxx 00000 or Xxx 0, Xxxxx 0, Xxxxxx of the First Amended Plat of
Inverness Subdivision, Filing No. Two, a portion of Section 35, Township 5
South, Range 67 West of the 0xx Xxxxxxxxx Xxxxxxxx, Xxxxxx xx Xxxxxxxx, Xxxxx of
Colorado.
6.4 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 incurred by the Stockholders 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 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 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 $40,000 (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
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then only to the extent that such claims exceed the Indemnification Threshold.
It is agreed that the exclusive remedy of the parties to this Agreement shall be
pursuant to Section 6 hereof.
6.7 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 Stockholders, elect to
withhold payment of an amount equal to the amount of such Damages from any
amounts owing by LandCARE to the Stockholders.
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 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 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, the Company or any of LandCARE's 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.
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Notwithstanding the above, the foregoing covenants shall not be deemed to
prohibit the Stockholders 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
Stockholders 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 the
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 the 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 Stockholders 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 the Stockholders are 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.
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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 the Stockholders as may be required in the
course of performing their 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 Stockholders, 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 the opportunity to contest such disclosure. In the event of a
breach or threatened breach by the Stockholders of the provisions of this
Section, LandCARE shall be entitled to injunctive or other equitable relief
restraining the Stockholders 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 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. SECURITIES LAW MATTERS
9.1 ECONOMIC RISK; SOPHISTICATION. The Stockholders acknowledge and
confirm that they have received and reviewed a Prospectus from LandCARE relating
to their acquisition of shares of LandCARE Stock hereunder, but the Stockholders
understand that the shares of LandCARE Stock received by the Stockholders have
not been and will not be registered under the Securities Act. The Stockholders
(A) have such knowledge, sophistication and experience in business and financial
matters that they are capable of evaluating the merits and risks of an
investment in the shares of
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LandCARE Stock, (B) fully understand 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.
9.2 COMPLIANCE WITH LAW. The Stockholders covenant that none of the
LandCARE Stock acquired by the Stockholders hereunder will be offered, sold,
assigned, hypothecated, transferred or otherwise disposed of by the Stockholders
except in full compliance with all applicable securities laws.
9.3 RESTRICTIONS ON RESALE. The Stockholders agree that they will not
sell, offer to sell, or otherwise transfer or dispose of, any shares of the
LandCARE Stock received by the 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 prior to the date two years after the
Closing Date, and agree that the certificates evidencing the LandCARE Stock to
be received by the Stockholders will bear the following legend evidencing this
restriction:
THE SHARES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), AND MAY ONLY BE SOLD OR
OTHERWISE TRANSFERRED IF THE HOLDER HEREOF COMPLIES WITH THE ACT AND
APPLICABLE SECURITIES LAW.
THE SHARES REPRESENTED BY THIS CERTIFICATE MAY NOT BE SOLD, ASSIGNED,
EXCHANGED, TRANSFERRED, ENCUMBERED, PLEDGED, DISTRIBUTED, APPOINTED OR
OTHERWISE DISPOSED OF, AND THE ISSUER SHALL NOT BE REQUIRED TO GIVE EFFECT
TO ANY ATTEMPTED SALE, ASSIGNMENT, EXCHANGE, TRANSFER, ENCUMBRANCE,
PLEDGE, DISTRIBUTION, APPOINTMENT OR OTHER DISTRIBUTION PRIOR TO [SECOND
ANNIVERSARY OF THE CLOSING DATE]. UPON THE WRITTEN REQUEST OF THE HOLDER
OF THIS CERTIFICATE, THE ISSUER AGREES TO REMOVE THIS RESTRICTIVE LEGEND
(AND ANY STOP ORDER PLACED WITH THE TRANSFER AGENT) AFTER THE DATE
SPECIFIED ABOVE.
After the date one year after the Closing Date, the Stockholders may sell such
shares pursuant to the LandCARE Liquidity Plan, a copy of which is attached
hereto as SCHEDULE 9.3, and LandCARE shall remove the aforementioned legend to
the extent reasonably necessary to permit the Stockholders to participate in 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 Stockholders from selling or otherwise
disposing of any of such shares of LandCARe Stock.
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10. GENERAL
10.1 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.
10.2 ENTIRE AGREEMENT. Except for the letter from LandCARe to the
Stockholders dated as of the date hereof, 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.
10.3 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.
10.4 BROKERS AND AGENTS. Except as set forth on SCHEDULE 10.4, 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.
10.5 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.
0000 Xxx Xxxxxx, Xxxxx 000
Xxxxxxx, Xxxxx 00000
Attn: General Counsel
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If to the Company, addressed to it at:
Real Property Maintenance, Inc.
0000 Xxxx Xxxxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxx 00000
If to the Stockholders, addressed to them at:
Xxxxxxx X. Xxxxxx
0000 X. Xxxxxx
Xxxxxxxxx, Xxxxxxxx 00000
Xxxx Xxxxxxx
0000 X. Xxxx Xxxxx
Xxxxxxxxx, Xxxxxxxx 00000
or to such other address as any party hereto shall specify pursuant to this
Section from time to time.
10.6 GOVERNING LAW. This Agreement shall be construed in accordance with
the laws of the State of Colorado without regard to its principles governing
conflicts of laws.
10.7 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 and subject to Section 6 herein shall survive the consummation of the
transactions contemplated hereby and any examination on behalf of the parties.
10.8 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.
10.9 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.
10.10 TIME. Time is of the essence with respect to this Agreement.
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10.11 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.
10.12 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.
10.13 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.
10.14 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.
10.15 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:/s/ XXXXXXX X. XXXXXXX
Xxxxxxx X. Xxxxxxx
Senior Vice President and General Counsel
REAL PROPERTY MAINTENANCE, INC.
By: /s/ XXXX X. XXXXXXX
Name: XXXX X. XXXXXXX
Title: President
STOCKHOLDERS:
/s/ XXXXXXX X. XXXXXX
Xxxxxxx X. Xxxxxx
/s/ XXXX XXXXXXX
Xxxx Xxxxxxx
