EXHIBIT 2.1
EXECUTION COPY
AGREEMENT AND PLAN OF MERGER
dated as of August 3, 1998
by and among
LANDCARE USA, INC.,
DESERT CARE LANDSCAPING, INC.,
CONTINENTAL LANDSCAPE MANAGEMENT, INC.
and
Xxxxx Xxxxxx
TABLE OF CONTENTS
Page
1. THE MERGER.............................................................1
1.1 The Merger.......................................................1
1.2 Effective Time...................................................1
1.3 Articles of Incorporation, By-laws, Directors
and Officers of Surviving Corporation...........................2
1.4 Effect of Merger.................................................2
1.5 Manner of Conversion.............................................3
1.6 Delivery of Certificates.........................................3
1.7 Closing..........................................................3
2. REPRESENTATIONS AND WARRANTIES OF THE STOCKHOLDER......................4
2.1 Due Organization.................................................4
2.2 Authorization....................................................4
2.3 Capital Stock of the Company.....................................4
2.4 Subsidiaries.....................................................5
2.5 Financial Statements.............................................5
2.6 Liabilities and Obligations......................................5
2.7 Accounts and Notes Receivable....................................6
2.8 Permits and Intangibles..........................................6
2.9 Environmental Matters............................................6
2.10 Personal Property................................................7
2.11 Significant Customers; Material Contracts and Commitments........8
2.12 Real Property....................................................8
2.13 Insurance........................................................9
2.14 Compensation; Employment Agreements; Organized Labor Matters.....9
2.15 Employee Benefit Plans..........................................10
2.16 Conformity with Law; Litigation.................................11
2.17 Taxes...........................................................11
2.18 No Violations; All Required Consents Obtained...................13
2.19 Absence of Changes..............................................13
2.20 Powers of Attorney..............................................15
2.21 Competing Lines of Business; Related-party Transactions.........15
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2.22 Disclosure......................................................15
2.23 Certain Business Practices......................................15
2.24 Notice to Bargaining Agents.....................................16
2.25 Notices and Consents............................................16
2.26 Inventory; Working Capital; Other Financial Matters.............16
2.27 Reliance Upon Oral Representations..............................16
3. REPRESENTATIONS OF LANDCARE...........................................16
3.1 Due Organization................................................16
3.2 Authorization...................................................16
3.3 No Violations...................................................17
3.4 Validity of Obligations.........................................17
3.5 Reliance upon Oral Representations..............................17
4. DELIVERIES............................................................17
4.1 Instruments of Transfer.........................................17
4.2 Certificate of Merger...........................................17
4.3 Employment Agreement............................................17
4.4 Opinion of Counsel..............................................17
4.5 Good Standing Certificates......................................17
4.6 Lease...........................................................17
4.7 Indebtedness to Company.........................................18
4.8 Consents........................................................18
4.9 Resignations of Directors and Officers..........................18
4.10 Deliveries by LandCare..........................................18
4.11 Environmental Indemnity.........................................18
4.12 Agreement Regarding SBA Loan....................................18
5. POST-CLOSING COVENANTS................................................18
5.1 Future Cooperation; Further Assurances..........................19
5.2 Expenses........................................................19
5.3 Certain Agreements..............................................19
5.4 Preparation and Filing of Tax Returns...........................19
6. INDEMNIFICATION.......................................................20
6.1 Survival of Stockholder's Representations and Warranties. .....20
6.2 General Indemnification by the Stockholder......................21
6.3 Indemnification by LandCARE.....................................21
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6.4 Third Person Claims.............................................21
6.5 Method of Payment...............................................22
6.6 Limitations on Indemnification..................................22
6.7 Insurance.......................................................22
7. NONCOMPETITION........................................................22
7.1 Prohibited Activities...........................................22
7.2 Equitable Relief................................................23
7.3 Reasonable Restraint............................................23
7.4 Severability; Reformation.......................................24
7.5 Independent Covenant............................................24
8. NONDISCLOSURE OF CONFIDENTIAL INFORMATION.............................24
8.1 General.........................................................24
8.2 Equitable Relief................................................25
8.3 Survival........................................................25
9 INTENDED TAX TREATMENT
.....................................................................25
9.1 Tax-Free Reorganization.........................................25
9.2 Restrictions on Resale..........................................26
10 SECURITIES LAW MATTERS................................................26
10.1 Economic Risk; Sophistication...................................26
10.2 Compliance with Law.............................................26
11. GENERAL...............................................................26
11.1 Successors and Assigns..........................................26
11.2 Entire Agreement................................................26
11.3 Counterparts....................................................27
11.4 Brokers and Agents..............................................27
11.5 Notices.........................................................27
11.6 Governing Law...................................................28
11.7 Survival of Representations and Warranties......................28
11.8 Exercise of Rights and Remedies.................................28
11.9 Time............................................................28
11.10 Reformation and Severability....................................28
11.11 Remedies Cumulative.............................................28
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11.12 Schedules & Captions............................................28
11.13 Press Releases and Public Announcements.........................28
11.14 No Third-Party Beneficiaries....................................29
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SCHEDULES
SCHEDULE 2.1. Due Organization
SCHEDULE 2.4. Subsidiaries
SCHEDULE 2.5. Financial Statements
SCHEDULE 2.6. Liabilities and Obligations
SCHEDULE 2.6A. Tangible Net Worth Adjustments
SCHEDULE 2.7. Accounts and Notes Receivable
SCHEDULE 2.8. Permits and Intangibles
SCHEDULE 2.9. Environmental Matters
SCHEDULE 2.10. Personal Property
SCHEDULE 2.11. Significant Customers; Material Contracts and
Commitments
SCHEDULE 2.12. Real Property
SCHEDULE 2.13. Insurance
SCHEDULE 2.14. Compensation; Employment Agreements; Organized
Labor Matters
SCHEDULE 2.15. Employee Benefit Plans
SCHEDULE 2.16. Conformity with Law; Litigation
SCHEDULE 2.17 Taxes
SCHEDULE 2.18. No Violations; No Consents Required
SCHEDULE 2.19. Absence of Changes
SCHEDULE 2.20. Powers of Attorney
SCHEDULE 2.21. Competing Lines of Business; Related Party Transactions
SCHEDULE 4.5. Leases
SCHEDULE 6.3. Guaranteed Indebtedness
SCHEDULE 9.2. Summary of Liquidity Plan
ANNEXES
Annex I - Form of Employment Agreement
Annex II - Form of Opinion of Counsel to Company and
Stockholder
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AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (this "Agreement") is made and entered
into as of August 3, 1998 by and among LandCARE USA, Inc., a Delaware
corporation ("LandCARE"), Desert Care Landscaping, Inc., an Arizona corporation
and wholly owned subsidiary of LandCARE ("Desert Care"), Continental Landscape
Management, Inc., an Arizona corporation (the "Company" or "CLM"), and Xxxxx
Xxxxxx (the "Stockholder"). The Stockholder is the only holder of capital stock
of the Company.
WHEREAS, the respective Boards of Directors of Desert Care and the Company
(collectively called the "Constituent Corporations") deem it advisable and in
the best interests of the Constituent Corporations and their respective
stockholders that the Company merge with and into Desert Care pursuant to this
Agreement and the applicable provisions of the laws of the State of Arizona (the
"State of Incorporation"); and
WHEREAS, the Boards of Directors of the Constituent Corporations have
approved and adopted this Agreement as a plan of reorganization under Section
368 of the Internal Revenue Code of 1986, as amended (the "Code"); and
WHEREAS, on the date hereof the parties are consummating the transactions
described herein;
NOW, THEREFORE, in consideration of the premises and of the mutual
agreements contained herein, the parties hereto, intending to be legally bound,
agree as follows:
1. THE MERGER
1.1 THE MERGER. On the terms and subject to the conditions of this
Agreement, at the Effective Time (as defined below), the Company shall be merged
with and into Desert Care (the "Merger") and the separate existence of the
Company shall cease, all in accordance with the provisions of the law of the
State of Incorporation. Desert Care shall be the surviving corporation in the
Merger and is sometimes hereinafter called the "Surviving Corporation."
1.2 EFFECTIVE TIME. The Merger shall become effective at such time (the
"Effective Time") as articles of merger, in a form appropriate for filing, are
filed with the Arizona Corporation
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Commission (the "Merger Filing"). The Merger Filing shall be made simultaneously
with or as soon as practicable after the execution and delivery of this
Agreement.
1.3 ARTICLES OF INCORPORATION, BY-LAWS, DIRECTORS AND OFFICERS OF
SURVIVING CORPORATION. At the Effective Time, the Articles of Incorporation of
Desert Care then in effect shall be the Articles of Incorporation of the
Surviving Corporation, and the By-laws of Desert Care then in effect shall be
By-laws of the Surviving Corporation. The directors and officers of Desert Care
immediately prior to the Effective Time shall be the directors and officers of
the Surviving Corporation.
1.4 EFFECT OF MERGER. At the Effective Time, the effect of the Merger
shall be as provided in the law of the State of Incorporation. Except as herein
specifically set forth, the identity, existence, purposes, powers, objects,
franchises, privileges, rights and immunities of Desert Care shall continue
unaffected and unimpaired by the Merger and the corporate franchises, existence
and rights of the Company shall be merged with and into Desert Care, and Desert
Care, as the Surviving Corporation, shall be fully vested therewith. At the
Effective Time, the separate existence of the Company shall cease and, in
accordance with the terms of this Agreement, the Surviving Corporation shall
possess all the rights, privileges, immunities and franchises, of a public, as
well as of a private, nature, and all property, real, personal and mixed, and
all debts due on whatever account, including subscriptions to shares, and all
taxes, including those due and owing and those accrued, and all other choses in
action, and all and every other interest of or belonging to or due to the
Company and Desert Care shall be taken and deemed to be transferred to, and
vested in, the Surviving Corporation without further act or deed; and all
property, rights and privileges, powers and franchises and all and every other
interest shall be thereafter as effectually the property of the Surviving
Corporation as they were of the Company and Desert Care; and the title to any
real estate, or interest therein, whether by deed or otherwise, under the laws
of the State of Incorporation vested in the Company and Desert Care, shall not
revert or be in any way impaired by reason of the Merger. Except as otherwise
provided herein, the Surviving Corporation shall thenceforth be responsible and
liable for all the liabilities and obligations of the Company and Desert Care
and any claim existing, or action or proceeding pending, by or against the
Company or Desert Care may be prosecuted as if the Merger had not taken place,
or the Surviving Corporation may be substituted in their place. Neither the
rights of creditors nor any liens upon the property of the Company or Desert
Care shall be impaired by the Merger, and all debts, liabilities and duties of
the Company and Desert Care shall attach to the Surviving Corporation, and may
be enforced against the Surviving Corporation to the same extent as if said
debts, liabilities and duties had been incurred or contracted by such Surviving
Corporation.
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1.5 MANNER OF CONVERSION. The manner of converting the outstanding shares
of capital stock of the Company ("Company Stock") and the outstanding shares of
capital stock of Desert Care ("Desert Care Stock") shall be as follows:
As of the Effective Time:
1. The Company Stock issued and outstanding immediately prior
to the Effective Time, by virtue of the Merger and without any action on the
part of the holder thereof, automatically shall be converted into the right to
receive at Closing, in the aggregate, (i) 103,704 shares of common stock, par
value $.01 per share, of LandCARE ("LandCARE Stock") (such number being equal to
$962,500 divided by the average of the closing prices of LandCARE Stock on the
New York Stock Exchange for the ten consecutive business days beginning on the
fifteenth business day prior to the date hereof) and (ii) an aggregate of
$962,500 in cash (the "Cash Consideration"), less an aggregate of $167,157.22 to
be withhold by LandCare, with the balance of $795,342.78 being paid by wire
transfer.
2. All shares of Company Stock, if any, that are held by the
Company as treasury stock shall be canceled and retired, and no shares of
LandCARE Stock or other consideration shall be delivered or paid in exchange
therefor; and
3. As of the Effective Time, each outstanding share of Desert
Care Stock shall remain outstanding and unchanged.
1.6 DELIVERY OF CERTIFICATES. At the Closing, (i) the Stockholder shall
deliver to LandCARE the certificates representing the Company Stock, duly
endorsed in blank by the Stockholder, or accompanied by blank stock powers, and
with all necessary transfer tax and other revenue stamps, acquired at the
Stockholder's expense, affixed and canceled, and (ii) LandCARE shall cause its
stock transfer agent to deliver to the Stockholder certificates representing the
LandCARE Stock as described above. The Stockholder agrees promptly to cure any
deficiencies with respect to the endorsement of the stock certificates or other
documents of conveyance with respect to such Company Stock or with respect to
the stock powers accompanying any Company Stock.
1.7 CLOSING. The transactions contemplated by this Agreement are being
consummated on the date hereof, and the date hereof is sometimes herein called
the "Closing Date."
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2. REPRESENTATIONS AND WARRANTIES OF THE STOCKHOLDER
The Stockholder hereby represents and warrants to LandCARE as follows.
2.1 DUE ORGANIZATION. The Company is a corporation duly organized, validly
existing and in good standing under the laws of the State of Incorporation, and
has all requisite power and authority to carry on its business as it is now
being conducted. The Company is duly qualified to do business and is in good
standing in each jurisdiction in which the nature of its business or the
ownership or leasing of its properties makes such qualification necessary,
except where the failure to be so authorized or qualified would not have a
material adverse effect on the business, assets, operations or condition
(financial or otherwise) of the Company (as used herein with respect to the
Company, or with respect to any other person, a "Material Adverse Effect").
SCHEDULE 2.1 sets forth a list of all jurisdictions in which the Company is
authorized or qualified to do business. True, complete and correct copies of the
Articles of Incorporation and By-laws, each as amended, of the Company (the
"Charter Documents") are all attached to SCHEDULE 2.1. The stock records of the
Company, a copy of which is attached to SCHEDULE 2.1, are correct and complete
in all material respects. All records of all proceedings of the Board of
Directors and stockholders of the Company have been made available to LandCARE.
2.2 AUTHORIZATION. (i) The representative of the Company executing this
Agreement has the authority to enter into and bind the Company to the terms of
this Agreement and (ii) the Company has the full legal right, power and
authority to enter into this Agreement and the transactions contemplated hereby,
all of which have been approved by the Stockholder and the Board of Directors of
the Company. This Agreement has been validly executed and delivered by the
Company and the Stockholder and constitutes the legal, valid and binding
obligation of each of them, enforceable in accordance with its terms.
2.3 CAPITAL STOCK OF THE COMPANY. The authorized capital stock of the
Company consists solely of 100,000 shares of common stock, par value $ 1.00 per
share, of which 100 shares are issued and outstanding and constitute all of the
issued and outstanding shares of Company Stock (the "Shares"). All of the Shares
are owned of record and beneficially by the Stockholder and are owned free and
clear of all liens, security interests, pledges, charges, voting trusts,
restrictions, encumbrances and claims of every kind. All of the Shares have been
duly authorized and validly issued, are fully paid and nonassessable, and were
offered, issued, sold and delivered by the Company in compliance with all
applicable state and federal laws governing the issuance of securities. None of
the Shares were issued in violation of any preemptive rights or similar rights
of any person. No option, warrant, call, conversion right or commitment of any
kind exists which
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obligates the Company to issue any additional shares of its capital stock or
obligates the Stockholder to transfer any of the Shares to any person except
pursuant to this Agreement.
2.4 SUBSIDIARIES. Except as set forth on SCHEDULE 2.4, the Company has no
subsidiaries or d/b/a names and has not conducted business under any other name
except its legal name as set forth in its Charter Documents. Except as set forth
in SCHEDULE 2.4, the Company does not own, of record or beneficially, or
control, directly or indirectly, any capital stock, securities convertible into
capital stock or any other equity interest in any corporation, association or
other business entity, and the Company is not, directly or indirectly, a
participant in any joint venture, partnership or other non-corporate entity.
2.5 FINANCIAL STATEMENTS. Complete and correct copies of the following
financial statements are attached as SCHEDULE 2.5:
(i) The balance sheets of the Company as of January 31, 1998 (the
"Balance Sheet Date") and any related statements of operations,
stockholder's equity and cash flows for the three-year period then ended,
together with any related notes and schedules (the "Year-end Financial
Statements"); and
(ii) The balance sheet (the "Interim Balance Sheet") of the Company
as of May 31, 1998 and the related statements of operations for the
four-month period then ended (the "Interim Financial Statements"). (The
Year-end Financial Statements and the Interim Financial Statements are
herein collectively called the "Financial Statements".)
The Financial Statements have been prepared from the books and records of
the Company and present fairly in all material respects the financial position
and results of operations of the Company as of the dates of such statements and
for the periods covered thereby. Said Financial Statements are in the form of
Accountants' Compilation Reports. The books of account of the Company have been
kept accurately in all material respects in the ordinary course of business, the
transactions entered therein represent bona fide transactions, and the revenues,
expenses, assets and liabilities of the Company have been properly recorded
therein in all material respects.
2.6 LIABILITIES AND OBLIGATIONS. Except as and to the extent disclosed and
adequately provided for in the Financial Statements or on SCHEDULE 2.6 hereto,
the Company has no liabilities or obligations of any kind, whether accrued,
absolute, secured or unsecured, contingent or otherwise. Except and to the
extent disclosed on SCHEDULE 2.6, there are no claims, liabilities or
obligations, nor any reasonable basis for assertion against the Company, of any
claim, liability or obligation, of any nature whatsoever. Except as expressly
set forth on SCHEDULE 2.6, all of the contingent liabilities of
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the Company listed on SCHEDULE 2.6 are covered by the Company's insurance
policies, and no such liability will exceed the policy limits of such insurance
policies. SCHEDULE 2.6 contains a reasonable estimate of the maximum amount
which may be payable with respect to known liabilities which are not fixed. For
each such known liability for which the amount is not fixed, SCHEDULE 2.6
includes a summary description of each known liability, together with copies of
all relevant documentation relating thereto. The Company's total
interest-bearing debt as of the Closing Date, calculated using the
average-month-end balance for August 1997-July 1998 for the Company's line of
credit, does not exceed $210,000.
2.7 ACCOUNTS AND NOTES RECEIVABLE. SCHEDULE 2.7 sets forth an accurate
list of the accounts and notes receivable of the Company, as of the most recent
date practicable (which date is set forth thereon), showing accounts receivable
amounts due in 30-day aging categories. Except to the extent reflected on
SCHEDULE 2.7, all such accounts receivable were incurred in the ordinary course
of business and are collectible in the amounts shown on SCHEDULE 2.7, net of
reserves reflected in (a) the balance sheet as of the Balance Sheet Date and/or
(b) on Schedule 2.6.
2.8 PERMITS AND INTANGIBLES. The Company holds all licenses, franchises,
permits and other governmental authorizations required or necessary in
connection with the conduct of the Company's business. SCHEDULE 2.8 sets forth
an accurate list of all such licenses, franchises, permits and other
governmental authorizations. The Company holds no patents, patent applications
or copyrights. The software utilized by the Company is believed to be licensed
to it by various licensors. It is agreed that a list of all environmental
permits and other environmental approvals is set forth on SCHEDULE 2.9). The
governmental authorizations listed on SCHEDULES 2.8 and 2.9 are valid except as
otherwise stated in said Schedules, and the Company has not received any notice
that any person intends to cancel, terminate or not renew any such governmental
authorization. The Company has conducted and is conducting its business in
compliance with the requirements, standards, criteria and conditions set forth
in the governmental authorizations listed on SCHEDULES 2.8 and 2.9 and is not,
to the best of Stockholder's knowledge, in violation of any of the foregoing.
Except as specifically set forth on SCHEDULE 2.8 or 2.9, the transactions
contemplated by this Agreement will not, to the best of Stockholder's knowledge,
result in a default under or a breach or violation of, or adversely affect the
rights and benefits afforded to the Company by, any such governmental
authorizations.
2.9 ENVIRONMENTAL MATTERS. The Company has complied with and is in
compliance with all federal, state, local and foreign statutes (civil and
criminal), laws, ordinances, regulations, rules, notices, permits, judgments,
orders and decrees applicable to any of them or any of their respective
properties, assets, operations and businesses relating to environmental
protection (collectively "Environmental Laws"), including, without limitation,
Environmental Laws relating
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to air, water, land and the generation, storage, use, handling, transportation,
treatment or disposal of Hazardous Wastes, Hazardous Materials and Hazardous
Substances (including petroleum and petroleum products) (as such terms are
defined in any applicable Environmental Law) except to the extent that
noncompliance with any Environmental Laws, either singly or in the aggregate,
has not had and will not have a Material Adverse Effect on the Company or any of
its operations. The Company has obtained and adhered to all necessary permits
and other approvals necessary to treat, transport, store, dispose of and
otherwise handle Hazardous Wastes, Hazardous Materials and Hazardous Substances,
a list of all of which permits and approvals is set forth on SCHEDULE 2.9, and
have reported to the appropriate authorities, to the extent required by all
Environmental Laws, all past and present sites owned and operated by the Company
where Hazardous Wastes, Hazardous Materials or Hazardous Substances have been
treated, stored, disposed of or otherwise handled. There have been no releases
or threats of releases (as defined in Environmental Laws) at, from, in, under or
on any property owned or operated by the Company except as permitted by
Environmental Laws. There is no on-site or off-site location to which the
Company has transported or disposed of Hazardous Wastes, Hazardous Materials or
Hazardous Substances or arranged for the transportation of Hazardous Wastes,
Hazardous Materials or Hazardous Substances which is the subject of any federal,
state, local or foreign enforcement action or any other investigation which
could lead to any claim against the Company or LandCARE for any clean-up cost,
remedial work, damage to natural resources, property damage or personal injury,
including, but not limited to, any claim under (i) the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as amended, (ii)
the Resource Conservation and Recovery Act, as amended, (iii) the Hazardous
Materials Transportation Act, as amended, or (iv) comparable state or local
statutes and regulations. The Company has no contingent liability in connection
with any release of any Hazardous Waste, Hazardous Material or Hazardous
Substance into the environment.
2.10 PERSONAL PROPERTY. SCHEDULE 2.10 sets forth an accurate list of (a)
all personal property included in "plant, property and equipment" or any similar
category on the balance sheet of the Company, (b) all other personal property
owned by the Company with a fair market value in excess of $5,000, and (c) all
leases and agreements with respect to personal property, copies of which have
been delivered to LandCARE. None of said assets is currently owned, or was
formerly owned, by the Stockholder or any affiliate of the Company or the
Stockholder. Except as set forth on SCHEDULE 2.10, (i) all material personal
property used by the Company in its business is either owned by the Company or
leased by the Company pursuant to a lease included on SCHEDULE 2.10, (ii) the
personal property listed on SCHEDULE 2.10 is generally in good working order and
condition, ordinary wear and tear excepted and (iii) all leases and agreements
included on SCHEDULE 2.10 are (subject to bankruptcy, insolvency,
reorganization, moratorium and other similar laws now or hereafter in effect
relating to creditors' rights; and the availability of equitable remedies,
including specific performance and injunctive relief, is subject to the
discretion of the court before which any
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proceeding therefor may be brought) in full force and effect and constitute
valid and binding agreements of the parties (and their successors) thereto in
accordance with their respective terms. Except as set forth on SCHEDULE 2.10,
the Company has good and marketable title to the tangible and intangible
personal property it purports to own, subject to no security interest, pledge,
lien, claim, conditional sales agreement, encumbrance, charge or restriction on
transfer.
2.11 SIGNIFICANT CUSTOMERS; MATERIAL CONTRACTS AND COMMITMENTS. SCHEDULE
2.11 sets forth a list of (i) all customers representing 1% or more of the
Company's revenues in its last full fiscal year ("Significant Customers"), and
(ii) all material contracts, commitments and similar agreements to which the
Company is a party or by which it or any of its properties are bound (including,
but not limited to, contracts with Significant Customers, joint venture or
partnership agreements, contracts with any labor organizations, strategic
alliances and options to purchase land). Except as described in Schedule 2.11,
true, complete and correct copies of such agreements have been delivered to
LandCARE. Except as described on SCHEDULE 2.11, (i) none of the Significant
Customers have canceled or substantially reduced or, to the knowledge of the
Company, are currently attempting or threatening to cancel a contract or
substantially reduce utilization of the services provided by the Company, and
(ii) the Company has complied with all commitments and obligations pertaining to
it, and is not in default under any contracts or agreements listed on SCHEDULE
2.11 and no notice of default under any such contract or agreement has been
received. The transactions contemplated by this Agreement will not result in a
default under or a breach or violation of, or adversely affect the rights and
benefits afforded to the Company by, any such contracts or agreements. There are
no plans or projects relating to the Company's business involving the opening of
new operations, expansion of existing operations, the acquisition of any
property, business or assets requiring, in any event, the payment of more than $
5,000 in the aggregate.
2.12 REAL PROPERTY. SCHEDULE 2.12 includes a list of all real property
owned or leased by the Company at the date hereof (the "Real Property"), and all
other real property, if any, used by the Company in the conduct of its business.
True, complete and correct copies of all leases and agreements with respect to
Real Property leased by the Company have been delivered to LandCARE, and an
indication as to which such properties, if any, are currently owned, or were
formerly owned, by the Stockholder or any affiliates of the Company or the
Stockholder is included in SCHEDULE 2.12. All leases relating to Real Property
leased by the Company from the Stockholder or any affiliate of the Stockholder
has been terminated. Except as set forth on SCHEDULE 2.12, all of such leases
included on SCHEDULE 2.12 are in full force and effect and constitute valid and
binding agreements of the parties (and their successors) thereto in accordance
with their respective terms. There are no leases, tenancy agreements, easements,
covenants, restrictions or any other instruments, agreements or arrangements
which create in or confer on any party, other than the Company, the right to
occupy or possess all or any portion of the Real Property or create in or confer
on any such party any right,
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title or interest in or to the Real Property or any portion thereof or any
interest therein; no party other than the Company occupies or possesses the Real
Property or any portion thereof; there is legal and adequate ingress and egress
between each tract of Real Property and an adjacent (or, if none, the closest)
public roadway; the Real Property is properly zoned in order to allow its
current use in the Company's businesses; and there are no claims or demands
pending or threatened by any party against the Real Property which, if valid,
would create in, or confer on, any party other than the Company, any right,
title or interest in or to the Real Property or any portion thereof. None of the
buildings, structures or improvements described on SCHEDULE 2.12, or the
operation or maintenance thereof as now operated or maintained, contravenes any
zoning ordinance or other administrative regulation or violates any restrictive
covenant or any provision of law, the effect of which would materially interfere
with or prevent their continued use for the purposes for which they are now
being used or would adversely affect the value thereof or the interest of the
Company therein. The Stockholder has furnished to LandCARE a true and correct
copy of all owner's policies of title insurance and surveys pertaining to the
real property owned by the Company.
2.13 INSURANCE. SCHEDULE 2.13 sets forth an accurate list as of the date
hereof of all insurance policies now carried by the Company. True, complete and
correct copies of all insurance policies currently in effect have been delivered
to LandCARE. Such insurance policies evidence all of the insurance that the
Company is required to carry pursuant to all of its contracts and other
agreements and pursuant to all applicable laws. Except as set forth on SCHEDULE
2.13, none of such policies is a "claims made" policy.
2.14 COMPENSATION; EMPLOYMENT AGREEMENTS; ORGANIZED LABOR MATTERS.
SCHEDULE 2.14 sets forth an accurate list showing all officers, directors and
key employees of the Company, listing all employment agreements with such
officers, directors and key employees and the rate of compensation (and the
portions thereof attributable to salary, bonus and other non-Schedule 2.15
compensation, respectively) of each of such persons as of May 31, 1998. Except
as set forth on SCHEDULE 2.14, since May 31, 1998, there have been no increases
in the base compensation payable or any special bonuses to any officer,
director, key employee or other employee.
Except as set forth on SCHEDULE 2.14, (i) the Company is not bound by or
subject to (and none of its respective assets or properties is bound by or
subject to) any arrangement with any labor union, (ii) no employees of the
Company are represented by any labor union or covered by any collective
bargaining agreement, (iii) to the knowledge of the Company, no campaign to
establish such representation is in progress and (iv) there is no pending or, to
the best of the Company's knowledge, threatened, labor dispute involving the
Company and any group of its employees. The Company has not experienced any
labor interruptions over the past five years.
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2.15 EMPLOYEE BENEFIT PLANS. SCHEDULE 2.15 sets forth an accurate schedule
showing all employee benefit plans of Company, including all agreements or
arrangements (other than agreements or arrangements set forth on SCHEDULE 2.14)
containing "golden parachute" or other similar provisions, and deferred
compensation agreements, together with true, complete and correct copies of such
plans, agreements and any trusts related thereto as of May 31, 1998. Except for
the employee benefit plans, if any, described on SCHEDULE 2.15, the Company does
not sponsor, maintain or contribute to any plan, program, fund or arrangement
that constitutes an "employee pension benefit plan," nor does the Company have
any obligation to contribute to or accrue or pay any benefits under any deferred
compensation or retirement funding arrangement on behalf of any employee or
employees (such as, for example, and without limitation, any individual
retirement account or annuity, any "excess benefit plan" (within the meaning of
Section 3(36) of the Employee Retirement Income Security Act of 1974, as amended
("ERISA")), or any non-qualified deferred compensation arrangement). For the
purposes of this Agreement, the term "employee pension benefit plan" shall have
the same meaning as is given that term in Section 3(2) of ERISA. The Company has
not sponsored, maintained or contributed to any employee pension benefit plan
and is not required to contribute to any retirement plan pursuant to the
provisions of any collective bargaining agreement establishing the terms and
conditions of employment of any of the Company's employees other than the plans
set forth on SCHEDULE 2.15.
The Company is not now, and will not as a result of its past activities
become, liable to the Pension Benefit Guaranty Corporation (the "PBGC") or to
any multi employer employee pension benefit plan under the provisions of Title
IV of ERISA. All employee benefit plans listed on SCHEDULE 2.15 and the
administration thereof are, except as otherwise set forth on SCHEDULE 2.15, in
substantial compliance with their terms and all applicable provisions of ERISA
and the regulations issued thereunder, as well as with all other applicable
federal, state and local statutes, ordinances and regulations. All accrued
contribution obligations of the Company with respect to any plan listed on
SCHEDULE 2.15 have either been fulfilled in their entirety or are fully
reflected on the balance sheet of the Company as of the Balance Sheet Date. All
plans listed on SCHEDULE 2.15 that are intended to qualify (the "Qualified
Plans") under Section 401(a) of the Internal Revenue Code of 1986, as amended
(the "Code"), are, and have been, so qualified and have been determined by the
Internal Revenue Service to be so qualified. Except as disclosed on SCHEDULE
2.15, all reports and other documents required to be filed with any governmental
agency or distributed to plan participants or beneficiaries have been timely
filed or distributed, and the most recent copies thereof, if any, are included
as part of SCHEDULE 2.15. Neither the Stockholder, nor any plan listed in
SCHEDULE 2.15 nor the Company has engaged in any transaction prohibited under
the provisions of Section 4975 of the Code or Section 406 of ERISA. No plan
listed on SCHEDULE 2.15 has incurred an accumulated funding deficiency, as
defined in Section 412(a) of the Code and Section 302(1) of ERISA; and the
Company has not incurred any liability for excise tax or penalty due to the
Internal Revenue Service
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or any liability to the PBGC. There have been no terminations, partial
terminations or discontinuance of contributions to any such Qualified Plan
intended to qualify under Section 401(a) of the Code without notice to and
approval by the Internal Revenue Service; no plan listed on SCHEDULE 2.15
subject to the provisions of Title IV of ERISA has been terminated; there have
been no "reportable events" (as that phrase is defined in Section 4043 of ERISA)
with respect to any such plan listed on SCHEDULE 2.15; the Company has not
incurred liability under Section 4062 of ERISA; and no circumstances exist
pursuant to which the Company could have any direct or indirect liability
whatsoever (including, but not limited to, any liability to any multi employer
plan or the PBGC under Title IV of ERISA or to the Internal Revenue Service for
any excise tax or penalty, or being subject to any statutory lien to secure
payment of any such liability) with respect to any plan now or heretofore
maintained or contributed to by any entity other than the Company that is, or at
any time was, a member of a "controlled group" (as defined in Section
412(n)(6)(B) of the Code) that includes the Company.
2.16 CONFORMITY WITH LAW; LITIGATION. Except as set forth on SCHEDULE
2.16, there are no claims, actions, suits or proceedings pending or, to the best
knowledge of the Stockholder, threatened, against or affecting the Company (as
any of its officers and directors in their capacities as such), at law or in
equity, or before or by any federal, state, municipal or other governmental
department, commission, board, bureau, agency or instrumentality having
jurisdiction over the Company. Except as set forth on SCHEDULE 2.16, no notice
of any unresolved claim, action, suit or proceeding, whether pending or
threatened, has been received by the Company during the last five years and, to
the best knowledge of the Stockholder, there is no basis therefor. Except as set
forth on SCHEDULE 2.16, there are no outstanding judgments, orders, writs,
injunctions or decrees against the Company. Except as set forth on SCHEDULE
2.16, the Company has conducted and now conducts its business in material
compliance with all laws, regulations, writs, injunctions, decrees and orders
applicable to the Company or its assets. The Company is not in material
violation of any law or regulation or any order of any court or federal, state,
municipal or other governmental department, commission, board, bureau, agency or
instrumentality having jurisdiction over any of them. The Company has conducted
and is conducting its business in substantial compliance with the requirements,
standards, criteria and conditions set forth in applicable federal, state and
local statutes, ordinances, permits, licenses, orders, approvals, variances,
rules and regulations, including all such permits, licenses, orders and other
governmental approvals set forth on SCHEDULES 2.8 and 2.9.
2.17 TAXES. For purposes of this Agreement, the term "Taxes" shall mean
all taxes, charges, fees, levies or other assessments, including, without
limitation, income, gross receipts, excise, property, sales, withholding, social
security, unemployment, occupation, use, service, license, payroll, franchise,
transfer and recording taxes, fees and charges, imposed by the United States or
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any state, local or foreign government or subdivision or agency thereof ("Taxing
Authority"), whether computed on a separate, consolidated, unitary, combined or
any other basis; and such term shall include any interest, fines, penalties or
additional amounts attributable to or imposed with respect to any such taxes,
charges, fees, levies or other assessments. As used herein, the term "Company
Subsidiaries" means the subsidiaries, if any, of the Company; it being
understood that there may be no such subsidiaries.
Except as set forth on SCHEDULE 2.17, all Tax returns ("Returns") required
to be filed with respect to any Tax for which any of the Company and the Company
Subsidiaries (if any) is liable have been duly and timely filed with the
appropriate Taxing Authority, each Tax shown to be payable on each such Return
has been paid, each Tax payable by the Company or a Company Subsidiary by
assessment has been timely paid in the amount assessed, and adequate reserves
have been established on the consolidated books of the Company and the Company
Subsidiaries for all Taxes for which any of the Company and the Company
subsidiaries is liable, but the payment of which is not yet due. Neither the
Company nor any Company Subsidiary is, or ever has been, liable for any Tax
payable by reason of the income or property of a person or entity other than the
Company or a Company Subsidiary. Each of the Company and the Company
Subsidiaries has timely filed true, correct and complete declarations of
estimated Tax in each jurisdiction in which any such declaration is required to
be filed by it. No Liens for Taxes exist upon the assets of the Company or any
Company Subsidiary except Liens for Taxes which are not yet due. Neither the
Company nor any Company Subsidiary is, or ever has been, subject to Tax in any
jurisdiction outside the United States. No litigation with respect to any Tax
for which the Company or any Company Subsidiary is asserted to be liable is
pending or, to the knowledge of the Company or the Stockholder, threatened, and
no basis which the Company or any Stockholder believes to be valid exists on
which any claim for any such Tax can be asserted against the Company or any
Company Subsidiary. There are no requests for rulings or determinations in
respect of any Taxes pending between the Company or any Company Subsidiary and
any Taxing Authority. No extension of any period during which any Tax may be
assessed or collected and for which the Company or any Company Subsidiary is or
may be liable has been granted to any Taxing Authority. Neither the Company nor
any Company Subsidiary is or has been party to any tax allocation or sharing
agreement. All amounts required to be withheld by any of the Company and the
Company Subsidiaries and paid to governmental agencies for income, social
security, unemployment insurance, sales, excise, use and other Taxes have been
collected or withheld and paid to the proper Taxing Authority. The Company and
each Company Subsidiary have made all deposits required by law to be made with
respect to employees' withholding and other employment Taxes. Neither the
Company nor the Stockholder is a "foreign person," as that term is referred to
in Section 1445(f)(3) of the Code. The Company has not filed a consent pursuant
to Section 341 (f) of the Code or any comparable provision of any other tax
statute and has not agreed to have Section 341 (f)(2) of the
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Code or any comparable provision of any other Tax statute apply to any
disposition of an asset. The Company has not made, is not obligated to make and
is not a party to any agreement that could require it to make any payment that
is not deductible under Section 280G of the Code. Except as otherwise disclosed
to LandCARE, no accounting method changes of the Company or of any Company
Subsidiary exist or are proposed or threatened which could give rise to an
adjustment under Section 481 of the Code. The Company uses the cash method of
accounting for income tax purposes, and the Company's methods of accounting have
not changed in the past five years. The Company is not an investment company as
defined in Section 351(e)(1) of the Code. The Company has a taxable year ended
January 31. The Company is not party to any joint venture, partnership, or other
arrangement that is treated as a partnership for federal income tax purposes.
2.18 NO VIOLATIONS; ALL REQUIRED CONSENTS OBTAINED. The Company is not in
violation of any of its Charter Documents. Neither the Company nor, to the
knowledge of the Stockholder, any other party thereto is in material default
under any lease, instrument, license, permit or material agreement to which the
Company is a party or by which its properties are bound (the "Material
Documents"). Except as set forth on SCHEDULE 2.18, (a) the execution of this
Agreement by the Company and the Stockholder and the performance by the Company
and the Stockholder of their obligations hereunder and the consummation of the
transactions contemplated hereby will not result in any violation or breach or
constitute a default under any of the terms or provisions of the Material
Documents or the Charter Documents, and (b) at and after the Closing Date the
Surviving Corporation will be entitled to the rights and benefits under the
Material Documents to which the Company is entitled immediately prior to the
Closing. Except as set forth on SCHEDULE 2.18 (and except for consents already
obtained), none of the Material Documents requires notice to, or the consent or
approval of, any governmental agency or other third party with respect to any of
the transactions contemplated hereby in order to remain in full force and
effect, and consummation of the transactions contemplated hereby will not give
rise to any right to termination, cancellation or acceleration or loss of any
right or benefit. Except as set forth on SCHEDULE 2.18, none of the Material
Documents prohibits the use or publication of the name of any other party to
such Material Document, and none of the Material Documents prohibits or
restricts the Surviving Corporation or will prevent or restrict the Company or
LandCARE from freely providing services to any person.
2.19 ABSENCE OF CHANGES. Since the Balance Sheet Date, the Company has
conducted its operations in the ordinary course of business and, except as set
forth on SCHEDULE 2.19, there has not been:
(i) any change in the business, assets, liabilities or financial
condition of the Company which would have a Material Adverse Effect;
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(ii) any damage, destruction or loss (whether or not covered by
insurance) affecting any of the material assets of the Company or the
business of the Company which would have a Material Adverse Effect;
(iii) any change in the authorized capital of the Company or its
outstanding securities or any change in its ownership interests or any
grant of any options, warrants, calls, conversion rights or commitments;
(iv) any declaration or payment of any dividend or distribution with
respect to the capital stock or any direct or indirect redemption,
purchase or other acquisition of any of the capital stock of the Company;
(v) since May 31, 1998, any increase or commitment to increase the
compensation, bonus, sales commissions or fee arrangement payable or to
become payable by the Company to any of its officers, directors,
stockholders, employees, consultants or agents;
(vi) any work interruptions, labor grievances or claims filed, or
any event or condition of any character, materially adversely affecting
the business of the Company;
(vii) any sale or transfer, or any agreement to sell or transfer,
any material assets, property or rights of the Company to any person;
(viii) any cancellation, or agreement to cancel, any indebtedness or
other obligation owing to the Company;
(ix) any plan, agreement or arrangement granting any preferential
rights to purchase or acquire any interest in any of the assets, property
or rights of the Company or requiring consent of any party to the transfer
and assignment of any such assets, property or rights;
(x) any purchase or acquisition of, or agreement, plan or
arrangement to purchase or acquire, any property, rights or assets outside
of the ordinary course of the Company's business;
(xi) any waiver of any material rights or claims of the Company;
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(xii) any amendment or termination of any contract, agreement,
license, permit or other right to which the Company is a party which would
have a Material Adverse Effect;
(xiii)any contract, commitment or liability entered into or incurred
or any capital expenditures made except in the normal course of business
consistent with past practice in an individual amount not in excess of $
1,000.00 and in an aggregate amount not in excess of $ 5,000.00; or
(xiv) any transaction by the Company outside the ordinary course of
its business.
2.20 POWERS OF ATTORNEY. SCHEDULE 2.20 sets forth a schedule as of the
date of this Agreement of the name of each person, corporation, firm or other
entity holding any general or special power of attorney from the Company and a
description of the terms of each such power.
2.21 COMPETING LINES OF BUSINESS; RELATED-PARTY TRANSACTIONS. Except as
set forth on SCHEDULE 2.21, neither the Stockholder nor any other affiliate of
the Company owns, directly or indirectly, any interest in, or is an officer,
director, employee or consultant of or otherwise receives remuneration from, any
business which is a competitor, lessor, lessee, customer or supplier of the
Company. Except as set forth on SCHEDULE 2.21, no officer, director or
stockholder of the Company has, nor during the period beginning January 1, 1995
through the date hereof had, any interest in any property, real or personal,
tangible or intangible, used in or pertaining to the Company's business.
2.22 DISCLOSURE. No representation or warranty of the Stockholder
contained in this Agreement contains any untrue statement or omits to state a
material fact necessary in order to make the statements herein or therein, in
light of the circumstances under which they were made, not misleading. There is
no fact which has specific application to the Company or its business or assets
(other than general economic or industry conditions) which would have a Material
Adverse Effect or, so far as the Stockholder can reasonably foresee, threatens
to have a Material Adverse Effect, on the Company or its business or assets, or
the condition (financial or otherwise), results of operations or prospects of
the Company, which has not been described in the Schedules hereto.
2.23 CERTAIN BUSINESS PRACTICES. Neither the Company nor any person acting
on behalf of the Company has given or offered anything of value to any
governmental official, political party or candidate for government office nor
has it or any of them otherwise taken any action which would cause the Company
to be in violation of the Foreign Corrupt Practices Act of 1977, as amended, or
any law of similar effect.
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2.24 NOTICE TO BARGAINING AGENTS. The Company has satisfied any
requirement for notice of the transactions contemplated by this Agreement under
applicable collective bargaining agreements.
2.25 NOTICES AND CONSENTS. Except as set forth in Schedule 2.18, the
Company has given any notices to third parties and has obtained any third party
consents that may be necessary to consummate the transactions contemplated
hereby.
2.26 INVENTORY; WORKING CAPITAL; OTHER FINANCIAL MATTERS. The Company's
inventory and working capital levels are adequate to successfully operate the
business, and there has been no unusual build-up of cash needs at the date
hereof.
2.27 RELIANCE UPON ORAL REPRESENTATIONS. The Company and the Stockholder
each represent and warrant: (a) that each has been fully informed by his or its
legal counsel and by his or its own independent judgment of the terms,
conditions and effects of this Agreement; (b) that each has been represented by
independent legal counsel of his or its choice throughout all negotiations
preceding the execution of this Agreement and has received the advice of his or
its attorney in entering into this Agreement; (c) that each, both personally and
through his or its independently- retained attorneys, is fully satisfied with
the terms and effects of this Agreement; (d) that no promise or inducement has
been offered or made to him or it except as expressly stated in this Agreement;
and (e) that this Agreement is executed without reliance on any oral statement
or oral representation by any other party or any other party's agent or
attorney.
3. REPRESENTATIONS OF LANDCARE
LandCARE represents and warrants as follows:
3.1 DUE ORGANIZATION. LandCARE is duly incorporated, validly existing and
in good standing under the laws of the state of Delaware, and has the requisite
power and authority to carry on its business as it is now being conducted.
LandCARE is qualified to do business and is in good standing in each
jurisdiction in which the nature of its business makes such qualification
necessary, except where the failure to be so authorized or qualified would not
have a Material Adverse Effect.
3.2 AUTHORIZATION. (i) The representative of LandCARE executing this
Agreement has the authority to enter into and bind LandCARE to the terms of this
Agreement and (ii) LandCARE has the full legal right, power and authority to
enter into this Agreement and to consummate the transactions contemplated
hereby.
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3.3 NO VIOLATIONS. The execution of this Agreement and the performance of
the obligations hereunder and the consummation of the transactions contemplated
hereby will not result in any violation or breach or constitute a default under
any of the terms or provisions of the Restated Certificate of Incorporation, as
amended, or Bylaws, as amended, of LandCARE.
3.4 VALIDITY OF OBLIGATIONS. The execution and delivery of this Agreement
by LandCARE and the performance of the transactions contemplated hereby have
been duly and validly authorized by the Board of Directors of LandCARE and this
Agreement has been duly and validly authorized by all necessary corporate action
and is a legal, valid and binding obligation of LandCARE.
3.5 RELIANCE UPON ORAL REPRESENTATIONS. This Agreement is executed without
reliance on any oral statement or oral representation by any other party or any
other party's agent or attorney. No promise or inducement has been made or
offered to LandCARE except as expressly stated in this Agreement.
4. DELIVERIES
4.1 INSTRUMENTS OF TRANSFER. The Stockholder is delivering to LandCARE
certificates representing all of the Shares, duly endorsed (or accompanied by
duly executed stock powers).
4.2 CERTIFICATE OF MERGER. The appropriate parties hereto are executing
and delivering for filing with the appropriate authorities Articles of Merger
for purposes of effecting the Merger.
4.3 EMPLOYMENT AGREEMENT. Desert Care and Xx. Xxxxx Xxxxxx are entering
into an Employment Agreement in the form of Annex I.
4.4 OPINION OF COUNSEL. Counsel to the Company and the Stockholder is
delivering an opinion to LandCARE dated the date hereof in the form attached
hereto as Annex II.
4.5 GOOD STANDING CERTIFICATES. The Stockholder is delivering to LandCARE
certificates, dated as of a date no earlier than ten days prior to the date
hereof, duly issued by the appropriate governmental authority in the State of
Incorporation and in each state in which the Company is authorized to do
business, showing the Company to be in good standing and authorized to do
business therein.
4.6 LEASE. The Stockholder, in his capacity as the lessor under the lease
of the property utilized by the Company, hereby consents to the Merger and
agrees that such lease shall be terminated effective upon the later of (a)
LandCARE having delivered, on behalf of the Stockholder,
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to the entit(ies) entitled thereto the portion of the cash funds otherwise
payable to, and withheld from, Stockholder at Closing that are necessary to pay
off the "Loan" described in Schedule 2.12 and (b) Desert Care having fully
vacated the premises that served as the principal collateral securing repayment
of said Loan.
4.7 INDEBTEDNESS TO COMPANY. The Stockholder is repaying any outstanding
indebtedness he has to the Company, said repayment to take the form of
LandCARE's withholding $90,557.22 at the Closing from the Cash Consideration and
then immediately remitting same, on behalf of the Stockholder, to the Company.
4.8 CONSENTS. The Stockholder is, subject to Schedule 2.18, delivering to
LandCARE copies of any third party consents required in connection with the
consummation of the transactions contemplated hereby.
4.9 RESIGNATIONS OF DIRECTORS AND OFFICERS. The Stockholder is delivering
to LandCARE the resignations of such directors and officers of the Company as
have been requested by LandCARE.
4.10 DELIVERIES BY LANDCARE. LandCare is delivering to the Stockholder the
Cash Consideration (less amounts being paid on behalf of the Stockholder as
described elsewhere herein) and stock certificates representing the shares of
LandCare Stock being issued to the Stockholder pursuant to this Agreement (or,
if such certificates are not available on the Closing Date, a copy of an
irrevocable letter to LandCare's stock transfer agent authorizing and directing
the issuance of such certificates to the Stockholder), which shares of LandCare
Stock are free and clear of all liens, restrictions and encumbrances except as
otherwise provided herein or as may be imposed by law.
4.11 ENVIRONMENTAL INDEMNITY. The Stockholder is delivering to LandCare an
Environmental Indemnification Agreement in form and substance reasonably
satisfactory to LandCare and the Stockholder.
4.12 AGREEMENT REGARDING SBA LOAN. The Stockholder and the Company are
executing and delivering an Agreement relating to the repayment of the
Stockholder's SBA loan.
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5. POST-CLOSING COVENANTS
The parties to this Agreement further covenant and agree as follows:
5.1 FUTURE COOPERATION; FURTHER ASSURANCES. The Stockholder, the Surviving
Corporation and LandCARE shall each deliver or cause to be delivered to the
other following the date hereof such additional instruments as the other may
reasonably request for the purpose of effecting the Merger and fully carrying
out the intent of this Agreement. LandCARE shall provide the Stockholder
reasonable access to the books and records of the Surviving Corporation after
the Closing Date for purposes of tax compliance and any other reasonable
purpose.
5.2 EXPENSES. LandCARE will pay the fees, expenses and disbursements of
LandCARE and its agents, representatives, financial advisors, accountants and
counsel incurred in connection with the execution, delivery and performance of
this Agreement. The Stockholder will pay the fees, expenses and disbursements of
the Stockholder and its agents, representatives, financial advisors, accountants
and counsel incurred in connection with the execution, delivery and performance
of this Agreement. The Stockholder shall pay any sales, use, transfer, real
property transfer, recording, gains, stock transfer and other similar taxes and
fees ("Transfer Taxes") imposed in connection with the Merger except to the
extent any such Transfer Tax is imposed solely as a result of the Closing being
deemed to have occurred, in part, in the State of Texas. The Stockholder shall
file all necessary documentation and returns with respect to such Transfer
Taxes. In addition, the Stockholder acknowledges that the Stockholder, and not
the Surviving Corporation or LandCARE, will pay all taxes (income or otherwise,
but excluding any Transfer Taxes imposed by the State of Texas, as described
above), if any, due upon the Stockholder's receipt of the consideration payable
pursuant to this Agreement.
5.3 CERTAIN AGREEMENTS. Upon the request of LandCARE at any time after the
Closing, the Stockholder and the Surviving Corporation shall terminate any
existing agreements to which the Company and the Stockholder are parties.
5.4 PREPARATION AND FILING OF TAX RETURNS.
(a) The Stockholder shall file or cause to be filed all Tax Returns
for all taxable periods that end on or before the Closing Date, but in each case
only after LandCARE has reviewed such filings and consented thereto. Such
consent shall not be unreasonably delayed or withheld.
(b) LandCARE shall file or cause to be filed all Tax Returns for all
taxable periods ending after the Closing Date.
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(c) Each party hereto shall, and shall cause its subsidiaries and
affiliates to, provide to each of the other parties hereto such cooperation and
information as any of them reasonably may request in filing any Tax Returns,
amended Tax Returns or claim for refund, determining a liability for Taxes or a
right to refund of Taxes or in conducting any audit or other proceeding with
respect to Taxes. Such cooperation and information shall include providing
copies of all relevant portions of relevant Tax Returns, together with relevant
accompanying schedules and relevant work papers, relevant documents relating to
rulings or other determinations by Taxing Authorities and relevant records
concerning the ownership and Tax basis of property, which such party may
possess. Each party shall make its employees reasonably available on a mutually
convenient basis at its cost to provide explanation of any documents or
information so provided.
6. INDEMNIFICATION
The Stockholder and LandCARE each make the following covenants that are
applicable to them, respectively:
6.1 SURVIVAL OF STOCKHOLDER'S REPRESENTATIONS AND WARRANTIES.
(a) The representations and warranties of the Stockholder made in
Sections 2.1 (Due Organization), 2.2 (Authorization), 2.3 (Capital Stock of the
Company) and 2.17 (Taxes) of this Agreement shall survive the Closing until the
expiration of the periods prescribed by the applicable statutes of limitations
(including any extensions thereof) relating thereto; the representations and
warranties of the Stockholder made in Section 2.9 (Environmental Matters) of
this Agreement shall survive the Closing for a period of five years after the
Closing Date; and all other representations and warranties of the Stockholder
made in this Agreement shall survive the Closing for a period of one year
following the Closing Date; provided, however, that representations and
warranties and indemnification provisions with respect to which a claim is made
within the survival period shall survive until such claim is finally determined
and paid.
(b) The representations and warranties of LandCARE made in this
Agreement shall survive the Closing for a period of one year following the
Closing Date; provided, however, that representations and warranties with
respect to which a claim is made within such one-year period shall survive until
such claim is finally determined and paid.
(c) The date on which a representation or warranty expires as
provided herein is herein called the "Expiration Date." No claim for
indemnification may be made with respect to a representation or warranty after
the Expiration Date, other than claims based on fraud.
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6.2 GENERAL INDEMNIFICATION BY THE STOCKHOLDER. The Stockholder covenants
and agrees that it will indemnify, defend, protect, and hold harmless the
Surviving Corporation, LandCARE and its subsidiaries and all of their officers,
directors, employees, stockholders, agents, representatives and affiliates at
all times from and after the date of this Agreement until the Expiration Date
from and against all claims, damages actions, suits, proceedings, demands,
assessments, adjustments, costs and expenses (including specifically, but
without limitation, reasonable attorneys' fees and expenses of investigation)
(collectively "Damages") incurred by such indemnified person as a result of or
incident to (i) any breach of any representation or warranty of the Stockholder
set forth herein, and (ii) any breach or nonfulfillment of any covenant or
agreement by the Company or the Stockholder under this Agreement and/or any
instrument delivered by Stockholder as a part of the Closing.
6.3 INDEMNIFICATION BY LANDCARE. LandCARE covenants and agrees that it
will indemnify, defend, protect and hold harmless the Stockholder at all times
from and after the date of this Agreement until (a) the Expiration Date from and
against all Damages incurred by the Stockholder as a result of (i) any breach of
any representation or warranty of LandCARE set forth herein; and (ii) any breach
or nonfulfillment of any covenant or agreement by LandCARE under this Agreement
and/or any instrument delivered by LandCARE as a part of the Closing and/or (b)
the Surviving Corporation's failure to timely perform any duty or obligation
identified on SCHEDULE 6.3 hereto (for which Stockholder has previously given
any third party a Guaranty, whether styled as such or as a co-lessee).
6.4 THIRD PERSON CLAIMS. Promptly after any party hereto (the "Indemnified
Party") has received notice of or has knowledge of any claim by a person not a
party to this Agreement ("Third Person") or the commencement of any action or
proceeding by a Third Person that may give rise to a right of indemnification
hereunder, such Indemnified Party shall give to the party obligated to provide
indemnification hereunder (an "Indemnifying Party") written notice of such claim
or the commencement of such action or proceeding; provided, however, that the
failure to give such notice will not relieve such Indemnifying Party from
liability under this Section with respect to such claim, action or proceeding,
except to the extent that the Indemnifying Party has been actually prejudiced as
a result of such failure. The Indemnifying Party (at its own expense) shall have
the right and shall be given the opportunity to associate with the Indemnified
Party in the defense of such claim, suit or proceedings, and may select counsel
for the Indemnified Party, such counsel to be reasonably satisfactory to the
Indemnified Party. The Indemnified Party shall not, except at its own cost, make
any settlement with respect to any such claim, suit or proceeding without the
prior consent of the Indemnifying Party, which consent shall not be unreasonably
withheld or delayed. It is understood and agreed that in situations where
failure of the Indemnifying Party to settle a claim expeditiously could have an
adverse effect on the Indemnified Party, the failure of the Indemnifying Party
to act
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upon the Indemnified Party's request for consent to such settlement (which
request shall include a statement as to why expeditious settlement is desirable,
if such be the case) within five business days of the Indemnifying Party's
receipt of notice thereof from the Indemnified Party shall be deemed to
constitute consent by the Indemnifying Party of such settlement for purposes of
this Section.
6.5 METHOD OF PAYMENT. All claims for indemnification shall be paid in
cash.
6.6 LIMITATIONS ON INDEMNIFICATION. LandCARE and the other persons
indemnified pursuant to this Section shall not assert any claim for
indemnification hereunder against the Stockholder until such time as, the
aggregate of all uninsured potential Damages resulting from claims such persons
may have against the Stockholder shall exceed $50,000 (the "Indemnification
Threshold") and then only to the extent that such amounts exceed the
Indemnification Threshold. The Stockholder shall not assert any claim for
indemnification hereunder until such time as the aggregate of all claims the
Stockholder may have hereunder shall exceed the Indemnification Threshold, and
then only to the extent that such claims exceed the Indemnification Threshold.
The aggregate liability of the Stockholder hereunder shall not exceed
$1,000,000. The aggregate liability of LandCARE hereunder shall not exceed
$1,000,000.
6.7 INSURANCE. To the extent that, prior to the Merger, the Company has
paid premiums for insurance coverage that may give the Company a claim for
matters as to which the Stockholder may be obligated to provide indemnification
under this Agreement, (a) the Company agrees to use reasonable good faith
efforts and diligence to pursue any such claim it may have under any such
insurance policy or policies corresponding with such premiums, and (b) the
amount of each such insurance recovery (net of the related direct cost to the
Company of advancing the claim), if any, shall be applied toward satisfaction of
Stockholder's indemnity obligations hereunder. The parties acknowlege that the
Company shall have no such obligation with respect to insurance policies, if
any, implemented after the Closing Date.
7. NONCOMPETITION
7.1 PROHIBITED ACTIVITIES. As partial consideration for the execution,
delivery and performance of this Agreement by LandCARE, the Stockholder will
not, for a period of five years following the Closing Date, for any reason
whatsoever, directly or indirectly, for himself or on behalf of or in
conjunction with any other person, persons, company, partnership, corporation or
business of whatever nature:
(i) own, manage, operate, join, control, consult or advise (whether
or not compensated for such consultation or advice), or participate in, or
render assistance to, or
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derive any benefit whatever from, any business offering services or
products in direct competition with the Surviving Corporation within 100
miles of where the Company conducted business at any time within one year
prior to the Closing Date (the "Territory");
(ii) engage, as an officer, director, shareholder, owner, partner,
joint venturer, or in a sales or managerial capacity, whether as an
employee, independent contractor, consultant or advisor, or as a sales
representative, in any business offering services or products in direct
competition with the Surviving Corporation or LandCARE within the
Territory;
(iii) call upon any person who is, at that time, an employee of
LandCARE or any of its subsidiaries (including the Surviving Corporation)
for the purpose or with the intent of enticing such employee away from or
out of the employ of LandCARE or any of its subsidiaries (including the
Surviving Corporation);
(iv) call upon any person or entity which is known by the
Stockholder to be, at that time or within one year prior to the Closing
Date, a customer of LandCARE, the Company or any of LandCARE's
subsidiaries (including the Surviving Corporation) for the purpose of
soliciting or selling products or services in direct competition with
LandCARE or any of its subsidiaries (including the Company) within the
Territory.
Notwithstanding the above, the foregoing covenants shall not be deemed to
prohibit the Stockholder from acquiring as a passive investor with no
involvement in the operations or management of the business, not more than two
percent (2%) of the capital stock of a competing business whose stock is
publicly traded on a national securities exchange or over-the-counter market.
The provisions of this Section are independent of the noncompetition
provisions contained in any consulting or employment agreement to which the
Stockholder may be or may become a party in connection with the transactions
contemplated hereby. All such provisions are intended to be observed and
enforced in accordance with their terms.
7.2 EQUITABLE RELIEF. Because of the difficulty of measuring economic
losses to LandCARE as a result of a breach of the foregoing covenant, and
because of the immediate and irreparable damage that could be caused to LandCARE
for which it would have no other adequate remedy, the Stockholder agrees that
the foregoing covenant may be enforced by LandCARE in the event of breach by the
Stockholder, by injunctions, restraining orders and other equitable actions.
7.3 REASONABLE RESTRAINT. It is agreed by the parties hereto that the
foregoing covenants in this Section impose a reasonable restraint on the
Stockholder.
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7.4 SEVERABILITY; REFORMATION. The covenants in this Section are severable
and separate, and the unenforceability of any specific covenant shall not affect
the provisions of any other covenant. Moreover, in the event any court of
competent jurisdiction shall determine that the scope, time or territorial
restrictions set forth are unreasonable, then it is the intention of the parties
that such restrictions be enforced to the fullest extent which the court deems
reasonable, and the Agreement shall thereby be reformed.
7.5 INDEPENDENT COVENANT. The Stockholder acknowledges that his covenants
set forth in this Section are material conditions to LandCARE's willingness to
execute and deliver this Agreement and to consummate the transactions
contemplated hereby. All of the covenants in this Section shall be construed as
an agreement independent of any other provision in this Agreement, and the
existence of any claim or cause of action of the Stockholder against LandCARE or
any subsidiary thereof, whether predicated on this Agreement or otherwise, shall
not constitute a defense to the enforcement by LandCARE of such covenants. It is
specifically agreed that the period of five years stated at the beginning of
this Section, during which the agreements and covenants of the Stockholder made
in this Section shall be effective, shall be computed by excluding from such
computation any time during which the Stockholder is in violation of any
provision of this Section. The covenants contained in Section shall not be
affected by any breach of any other provision hereof by any party hereto.
8. NONDISCLOSURE OF CONFIDENTIAL INFORMATION
8.1 GENERAL. The Stockholder recognizes and acknowledges that he has had
access to certain customer lists, confidential information of the Company, such
as operational policies, pricing and cost policies, and other information, that
will be valuable, special and unique assets of the Surviving Corporation and
LandCARE after the Closing Date. The Stockholder agrees that he will not
disclose such confidential information, or any confidential information of the
Surviving Corporation or LandCARE to which they may have access in the future,
to any person, firm, corporation, association or other entity for any purpose or
reason whatsoever, except (a) to authorized representatives of LandCARE, (b)
following the Closing, such information may be disclosed by the Stockholder as
may be required in the course of performing his duties for the Surviving
Corporation and (c) to counsel and other advisers, provided that such advisers
(other than counsel) agree to the confidentiality provisions of this Section,
unless (i) such information becomes known to the public generally through no
fault of the Stockholder, or (ii) disclosure is required by law or the order of
any governmental authority, provided, that prior to disclosing any information
pursuant to this clause (ii), the Stockholder shall give prior written notice
thereof to LandCARE and provide LandCARE with the opportunity to contest such
disclosure. In the event of a breach or threatened breach by the Stockholder of
the provisions of this Section, LandCARE shall be entitled
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to injunctive or other equitable relief restraining the Stockholder from
disclosing, in whole or in part, such confidential information. Nothing herein
shall be construed as prohibiting LandCARE from pursuing any other available
remedy for such breach or threatened breach, including the recovery of damages.
8.2 EQUITABLE RELIEF. Because of the difficulty of measuring economic
losses as a result of the breach of the foregoing covenants, and because of the
immediate and irreparable damage that would be caused for which LandCARE would
have no other adequate remedy, the Stockholder agrees that the foregoing
covenants may be enforced against him by injunctions, restraining orders and
other appropriate equitable relief.
8.3 SURVIVAL. The obligations of the parties under this Section shall
survive the termination of this Agreement for an unlimited time with respect to
proprietary information and a period of two years with respect to
non-proprietary information.
9 INTENDED TAX TREATMENT
9.1 TAX-FREE REORGANIZATION. The parties are entering into this Agreement
with the intention that the Merger qualify as a tax-free reorganization for
federal income tax purposes, except to the extent of any "boot" received, and
the Stockholder and LandCare will not take any actions that disqualify the
Merger for such treatment. The Stockholder represents, warrants and covenants
that:
(i) the Company operates at least one historic business line, or
owns at least a significant portion of its historic business assets, in each
case within the meaning of Reg. 1.368-1(d) under the Code; and
(ii) immediately after the Merger, the Surviving Corporation will
hold "substantially all of its properties" within the meaning of Section
368(a)(2)(D) of the Code (that is, immediately after the Effective Time, the
Surviving Corporation will hold at least 90% of the fair market value of the net
assets, and at least 70% of the gross assets, held by the Company immediately
prior to the Effective Time). For purposes of the preceding sentence, amounts
paid by the Company to shareholders who receive cash or other property and the
Company assets used to pay reorganization expenses and all stock redemptions and
distributions (except for normal dividends) made by the Company immediately
preceding the Effective Time, pursuant to this Agreement or otherwise as part of
the plan of Merger provided for herein, will be considered assets of the Company
held immediately prior to the Effective Time.
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9.2 RESTRICTIONS ON RESALE. The Stockholder agrees that he will not sell,
offer to sell, or otherwise transfer or dispose of, any shares of the LandCARE
Stock received by the Stockholder, engage in put, call, short-sale, straddle or
similar transactions, or in any other way reduce the Stockholder's risk of
owning shares of LandCARE Stock prior to the date two years after the Closing
Date except as set forth below, and agrees that the certificates evidencing the
LandCARE Stock to be received by the Stockholder will bear a legend evidencing
this restriction. Beginning one year after the Closing Date, the Stockholder
shall be permitted to sell shares of such LandCARE Stock pursuant to the
LandCARE Liquidity Plan, a summary of which is attached hereto as SCHEDULE 9.2.
LandCare represents and warrants to the Stockholder that the LandCare Liquidity
Plan, as implemented, comports with all applicable securities laws.
10 SECURITIES LAW MATTERS
10.1 ECONOMIC RISK; SOPHISTICATION. The Stockholder acknowledges and
confirms that he has received and reviewed a Prospectus from LandCARE relating
to his acquisition of shares of LandCARE Stock hereunder. The Stockholder (A)
has such knowledge, sophistication and experience in business and financial
matters that he is capable of evaluating the merits and risks of an investment
in the shares of LandCARE Stock, (B) fully understands the nature, scope and
duration of any limitations on transfer of LandCARE Stock described in this
Agreement and (C) can bear the economic risk of an investment in the shares of
LandCARE Stock.
10.2 COMPLIANCE WITH LAW. The Stockholder covenants that none of the
LandCARE Stock acquired by the Stockholder hereunder will be offered, sold,
assigned, hypothecated, transferred or otherwise disposed of by the Stockholder
except in full compliance with all applicable securities laws.
11. GENERAL
11.1 SUCCESSORS AND ASSIGNS. This Agreement and the rights of the parties
hereunder may not be assigned (except by operation of law) and shall be binding
upon and shall inure to the benefit of the parties hereto, the successors of
LandCARE, and the heirs and legal representatives of the Stockholder.
11.2 ENTIRE AGREEMENT. This Agreement (including the schedules, exhibits
and annexes attached hereto) and the documents delivered pursuant hereto
constitute the entire agreement and understanding among the Stockholder, the
Company, Desert Care and LandCARE, and supersede any
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prior or contemporaneous agreement and understanding relating to the subject
matter of this Agreement. This Agreement, upon execution, constitutes a valid
and binding agreement of the parties hereto, enforceable in accordance with its
terms, and may be modified or amended only by a written instrument executed by
the parties hereto.
11.3 COUNTERPARTS. This Agreement may be executed simultaneously in two or
more counterparts, each of which shall be deemed an original and all of which
together shall constitute but one and the same instrument. The signatures to
this Agreement need not all be on a single copy of this Agreement, and may be
facsimiles rather than originals, and shall be fully as effective as though all
signatures were originals on the same copy.
11.4 BROKERS AND AGENTS. Each party represents and warrants that it
employed no broker or agent in connection with this transaction and agrees to
indemnify the other parties hereto against all loss, cost, damages or expense
arising out of claims for fees or commission of brokers employed or alleged to
have been employed by such indemnifying party.
11.5 NOTICES. All notices and communications required or permitted
hereunder shall be in writing and may be given by depositing the same in United
States mail, addressed to the party to be notified, postage prepaid and
registered or certified with return receipt requested, or by delivering the same
in person to an officer or agent of such party, or by facsimile, as follows:
If to LandCARE, addressed to it at:
LandCARE USA, Inc.
0000 Xxx Xxxxxx, Xxxxx 000
Xxxxxxx, Xxxxx 00000
Attn: General Counsel
Facsimile No. (000) 000-0000
If to the Company, addressed to it at:
Continental Landscape Management
Attn: Xxxxx X. Xxxxxx, President
000 Xxxx Xxxxxxx
Xxxxxxx, Xxxxxxx 00000
Facsimile No. (000) 000-0000
If to the Stockholder, addressed to him at the Company's address,
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or to such other address as any party hereto shall specify pursuant to this
Section from time to time.
11.6 GOVERNING LAW. This Agreement shall be construed in accordance with
the laws of the State of Arizona without regard to its principles governing
conflicts of laws.
11.7 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The representations,
warranties, covenants and agreements of the parties made herein and at the time
of the Closing or in writing delivered pursuant to the provisions of this
Agreement shall survive the consummation of the transactions contemplated hereby
and any examination on behalf of the parties.
11.8 EXERCISE OF RIGHTS AND REMEDIES. Except as otherwise provided herein,
no delay of or omission in the exercise of any right, power or remedy accruing
to any party as a result of any breach or default by any other party under this
Agreement shall impair any such right, power or remedy, nor shall it be
construed as a waiver of or acquiescence in any such breach or default, or of
any similar breach or default occurring later; nor shall any waiver of any
single breach or default be deemed a waiver of any other breach or default
occurring before or after that waiver.
11.9 TIME. Time is of the essence with respect to this Agreement.
11.10 REFORMATION AND SEVERABILITY. In case any provision of this
Agreement shall be invalid, illegal or unenforceable, it shall, to the extent
possible, be modified in such manner as to be valid, legal and enforceable but
so as to most nearly retain the intent of the parties, and if such modification
is not possible, such provision shall be severed from this Agreement, and in
either case the validity, legality and enforceability of the remaining
provisions of this Agreement shall not in any way be affected or impaired
thereby.
11.11 REMEDIES CUMULATIVE. No right, remedy or election given by any term
of this Agreement shall be deemed exclusive but each shall be cumulative with
all other rights, remedies and elections available at law or in equity.
11.12 SCHEDULES & CAPTIONS. The headings of this Agreement are inserted
for convenience only, and shall not constitute a part of this Agreement or be
used to construe or interpret any provision hereof. Any liability or obligation
disclosed on any Schedule to this Agreement shall be deemed to have been
disclosed on all other Schedules to this Agreement requiring disclosure of such
liability or obligation.
11.13 PRESS RELEASES AND PUBLIC ANNOUNCEMENTS. No party shall issue any
press release or make any public announcement relating to the subject matter of
this Agreement without the prior
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written approval of the other party; provided, however, that LandCARE may issue
a press release in accordance with its customary practices without such approval
and any party may make any public disclosure it believes in good faith is
required by applicable law or any listing or trading agreement concerning its
publicly-traded securities.
11.14 NO THIRD-PARTY BENEFICIARIES. This Agreement shall not confer any
rights or remedies upon any person other than the parties and their respective
successors and permitted assigns.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
day and year first above written.
LANDCARE USA, INC.
By:________________________________
Name:___________________________
Title:__________________________
DESERT CARE LANDSCAPING, INC.
By: _______________________________
Name: _________________________
Title: ________________________
CONTINENTAL LANDSCAPE MANAGEMENT, INC.
By: _______________________________
Name: _________________________
Title: ________________________
___________________________________
Xxxxx Xxxxxx
