EXHIBIT 10.5
EXECUTION COPY
AGREEMENT AND PLAN OF MERGER
dated as of August 5, 1998
by and among
LANDCARE USA, INC.,
HI ACQUISITION CORP.,
HORTICULTURE INDUSTRIES, INC.,
and
Xxxxxxx X. Xxxxxx
TABLE OF CONTENTS
Page
1. THE MERGER.............................................................1
1.1 THE MERGER.......................................................1
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1.2 EFFECTIVE TIME...................................................1
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1.3 ARTICLES OF INCORPORATION AND BY-LAWS OF SURVIVING CORPORATION...2
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1.4 EFFECT OF MERGER.................................................2
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1.5 MANNER OF CONVERSION.............................................2
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1.6 DELIVERY OF CERTIFICATES.........................................3
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1.7 CLOSING..........................................................3
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2. REPRESENTATIONS AND WARRANTIES OF THE STOCKHOLDER......................3
2.1 DUE ORGANIZATION.................................................3
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2.2 AUTHORIZATION....................................................4
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2.3 CAPITAL STOCK OF THE COMPANY.....................................4
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2.4 SUBSIDIARIES.....................................................4
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2.5 FINANCIAL STATEMENTS.............................................4
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2.6 LIABILITIES AND OBLIGATIONS......................................5
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2.7 ACCOUNTS AND NOTES RECEIVABLE....................................5
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2.8 PERMITS AND INTANGIBLES..........................................6
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2.9 ENVIRONMENTAL MATTERS............................................6
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2.10 PERSONAL PROPERTY................................................7
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2.11 SIGNIFICANT CUSTOMERS; MATERIAL CONTRACTS AND COMMITMENTS........7
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2.12 REAL PROPERTY....................................................8
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2.13 INSURANCE........................................................9
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2.14 COMPENSATION; EMPLOYMENT AGREEMENTS; ORGANIZED LABOR MATTERS.....9
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2.15 EMPLOYEE BENEFIT PLANS...........................................9
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2.16 CONFORMITY WITH LAW; LITIGATION.................................10
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2.17 TAXES...........................................................11
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2.18 NO VIOLATIONS; ALL REQUIRED CONSENTS OBTAINED...................12
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2.19 ABSENCE OF CHANGES..............................................13
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2.20 POWERS OF ATTORNEY..............................................14
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2.21 COMPETING LINES OF BUSINESS; RELATED-PARTY TRANSACTIONS.........14
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2.22 DISCLOSURE......................................................14
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2.23 CERTAIN BUSINESS PRACTICES......................................15
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2.24 NOTICE TO BARGAINING AGENTS.....................................15
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2.25 NOTICES AND CONSENTS............................................15
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2.26 INVENTORY; WORKING CAPITAL; OTHER FINANCIAL MATTERS.............15
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2.27 YEAR 2000 COMPLIANCE............................................15
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2.28 RELIANCE UPON ORAL REPRESENTATIONS..............................15
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3. REPRESENTATIONS OF LANDCARE...........................................16
3.1 DUE ORGANIZATION................................................16
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3.2 AUTHORIZATION...................................................16
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3.3 NO VIOLATIONS...................................................16
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3.4 VALIDITY OF OBLIGATIONS.........................................16
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3.5 REGISTRATION STATEMENT..........................................16
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4. DELIVERIES............................................................16
4.1 INSTRUMENTS OF TRANSFER.........................................16
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4.2 CERTIFICATE OF MERGER...........................................16
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4.3 EMPLOYMENT AGREEMENT............................................17
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4.4 OPINION OF COUNSEL..............................................17
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4.5 GOOD STANDING CERTIFICATES......................................17
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4.6 LEASE...........................................................17
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4.7 INDEBTEDNESS TO COMPANY.........................................17
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4.8 CONSENTS........................................................17
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4.9 RESIGNATIONS OF DIRECTORS AND OFFICERS..........................17
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4.10 SATISFACTION OF CERTAIN DEBTS...................................17
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4.11 ENVIRONMENTAL INDEMNITY AGREEMENT...............................17
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5. POST-CLOSING COVENANTS................................................17
5.1 FUTURE COOPERATION; FURTHER ASSURANCES..........................17
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5.2 EXPENSES........................................................18
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5.3 CERTAIN AGREEMENTS..............................................18
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5.4 PREPARATION AND FILING OF TAX RETURNS...........................18
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5.5 STOCK OPTIONS...................................................19
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6. INDEMNIFICATION.......................................................19
6.1 SURVIVAL OF STOCKHOLDER'S REPRESENTATIONS AND WARRANTIES. .....19
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6.2 GENERAL INDEMNIFICATION BY THE STOCKHOLDER......................19
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6.3 SPECIFIC INDEMNIFICATION BY THE STOCKHOLDER.....................20
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6.4 INDEMNIFICATION BY LANDCARE.....................................20
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6.5 THIRD PERSON CLAIMS.............................................20
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6.6 METHOD OF PAYMENT...............................................21
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7. NONCOMPETITION........................................................21
7.1 PROHIBITED ACTIVITIES...........................................21
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7.2 EQUITABLE RELIEF................................................22
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7.3 REASONABLE RESTRAINT............................................22
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7.4 SEVERABILITY; REFORMATION.......................................22
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7.5 INDEPENDENT COVENANT............................................22
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8. NONDISCLOSURE OF CONFIDENTIAL INFORMATION.............................23
8.1 GENERAL.........................................................23
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8.2 EQUITABLE RELIEF................................................23
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8.3 SURVIVAL........................................................24
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9 INTENDED TAX TREATMENT
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9.1 TAX-FREE REORGANIZATION.........................................24
9.2 RESTRICTIONS ON RESALE..........................................24
10 SECURITIES LAW MATTERS................................................24
10.1 ECONOMIC RISK; SOPHISTICATION...................................24
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10.2 COMPLIANCE WITH LAW.............................................25
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11. GENERAL...............................................................25
11.1 SUCCESSORS AND ASSIGNS..........................................25
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11.2 ENTIRE AGREEMENT................................................25
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11.3 COUNTERPARTS....................................................25
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11.4 BROKERS AND AGENTS..............................................25
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11.5 NOTICES.........................................................25
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11.6 GOVERNING LAW...................................................26
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11.7 SURVIVAL OF REPRESENTATIONS AND WARRANTIES......................26
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11.8 EXERCISE OF RIGHTS AND REMEDIES.................................26
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11.9 TIME............................................................26
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11.10 REFORMATION AND SEVERABILITY....................................27
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11.11 REMEDIES CUMULATIVE.............................................27
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11.12 CAPTIONS........................................................27
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11.13 PRESS RELEASES AND PUBLIC ANNOUNCEMENTS.........................27
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11.14 NO THIRD-PARTY BENEFICIARIES....................................27
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SCHEDULES
SCHEDULE 2.1. Due Organization
SCHEDULE 2.4. Subsidiaries
SCHEDULE 2.5. Financial Statements
SCHEDULE 2.6. Liabilities and Obligations
SCHEDULE 2.7. Accounts and Notes Receivable
SCHEDULE 2.8. Permits and Intangibles
SCHEDULE 2.9. Environmental Matters
SCHEDULE 2.10. Personal Property
SCHEDULE 2.11. Significant Customers; Material Contracts and Commitments
SCHEDULE 2.12. Real Property
SCHEDULE 2.13. Insurance
SCHEDULE 2.14. Compensation; Employment Agreements; Organized Labor Matters
SCHEDULE 2.15. Employee Benefit Plans
SCHEDULE 2.16. Conformity with Law; Litigation
SCHEDULE 2.18. No Violations; No Consents Required
SCHEDULE 2.19. Absence of Changes
SCHEDULE 2.20. Powers of Attorney
SCHEDULE 2.21. Competing Lines of Business; Related Party Transactions
SCHEDULE 4.3. Persons Entering into Employment Agreements
SCHEDULE 4.5. Leases
SCHEDULE 6.3. Specific Indemnification
ANNEXES
Annex I - Form of Employment Agreement
Annex II - Form of Opinion of Counsel to Company and
Stockholder
Annex III - Form of Lease
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AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (this "Agreement") is made and entered
into as of August 5, 1998 by and among LandCARE USA, Inc., a Delaware
corporation ("LandCARE"), HI Acquisition Corp., a Florida corporation and wholly
owned subsidiary of LandCARE ("Newco"), Horticulture Industries, Inc., a Florida
corporation (the "Company"), and Xxxxxxx X. Xxxxxx (the "Stockholder"). The
Stockholder is the only holder of capital stock of the Company.
WHEREAS, the respective Boards of Directors of Newco and the Company
(collectively called the "Constituent Corporations") deem it advisable and in
the best interests of the Constituent Corporations and their respective
stockholders that Newco merge with and into the Company pursuant to this
Agreement and the applicable provisions of the laws of the State of Florida (the
"State of Incorporation"); and
WHEREAS, the Boards of Directors of the Constituent Corporations have
approved and adopted this Agreement as a plan of reorganization under Section
368 of the Internal Revenue Code of 1986, as amended (the "Code"); and
WHEREAS, on the date hereof the parties are consummating the transactions
described herein;
NOW, THEREFORE, in consideration of the premises and of the mutual
agreements contained herein, the parties hereto, intending to be legally bound,
agree as follows:
1. THE MERGER
1.1 THE MERGER. On the terms and subject to the conditions of this
Agreement, at the Effective Time (as defined below), Newco shall be merged with
and into the Company (the "Merger") and the separate existence of Newco shall
cease, all in accordance with the provisions of the law of the State of
Incorporation. The Company shall be the surviving corporation in the Merger and
is sometimes hereinafter called the "Surviving Corporation."
1.2 EFFECTIVE TIME. The Merger shall become effective at such time (the
"Effective Time") as a certificate of merger, in a form appropriate for filing,
is filed with the Secretary of State (or other appropriate authority) of the
State of Incorporation (the "Merger Filing"). The Merger Filing shall be made
simultaneously with or as soon as practicable after the execution and delivery
of this Agreement.
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1.3 ARTICLES OF INCORPORATION AND BY-LAWS OF SURVIVING CORPORATION. At the
Effective Time, the Articles of Incorporation of Newco then in effect shall be
the Articles of Incorporation of the Surviving Corporation, and the By-laws of
Newco then in effect shall be By-laws of the Surviving Corporation.
1.4 EFFECT OF MERGER. At the Effective Time, the effect of the Merger
shall be as provided in the law of the State of Incorporation. Except as herein
specifically set forth, the identity, existence, purposes, powers, objects,
franchises, privileges, rights and immunities of the Company shall continue
unaffected and unimpaired by the Merger and the corporate franchises, existence
and rights of Newco shall be merged with and into the Company, and the Company,
as the Surviving Corporation, shall be fully vested therewith. At the Effective
Time, the separate existence of Newco shall cease and, in accordance with the
terms of this Agreement, the Surviving Corporation shall possess all the rights,
privileges, immunities and franchises, of a public, as well as of a private,
nature, and all property, real, personal and mixed, and all debts due on
whatever account, including subscriptions to shares, and all taxes, including
those due and owing and those accrued, and all other choses in action, and all
and every other interest of or belonging to or due to the Company and Newco
shall be taken and deemed to be transferred to, and vested in, the Surviving
Corporation without further act or deed; and all property, rights and
privileges, powers and franchises and all and every other interest shall be
thereafter as effectually the property of the Surviving Corporation as they were
of the Company and Newco; and the title to any real estate, or interest therein,
whether by deed or otherwise, under the laws of the State of Incorporation
vested in the Company and Newco, shall not revert or be in any way impaired by
reason of the Merger. Except as otherwise provided herein, the Surviving
Corporation shall thenceforth be responsible and liable for all the liabilities
and obligations of the Company and Newco and any claim existing, or action or
proceeding pending, by or against the Company or Newco may be prosecuted as if
the Merger had not taken place, or the Surviving Corporation may be substituted
in their place. Neither the rights of creditors nor any liens upon the property
of the Company or Newco shall be impaired by the Merger, and all debts,
liabilities and duties of the Company and Newco shall attach to the Surviving
Corporation, and may be enforced against the Surviving Corporation to the same
extent as if said debts, liabilities and duties had been incurred or contracted
by such Surviving Corporation.
1.5 MANNER OF CONVERSION. The manner of converting the outstanding shares
of capital stock of the Company ("Company Stock") and the outstanding shares of
capital stock of Newco ("Newco Stock") shall be as follows:
As of the Effective Time:
1. The Company Stock issued and outstanding immediately prior
to the Effective Time, by virtue of the Merger and without any action on the
part of the holder thereof, automatically shall be converted into the right to
receive, in the aggregate, (i) 333,333 shares of
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common stock, par value $.01 per share, of LandCARE ("LandCARE Stock"), valued
at $9.00 per share, and (ii) an aggregate of $750,000 in cash paid by wire
transfer (it being agreed that a portion of such shares of LandCare Stock shall
not be delivered at the Cosing and shall be held by LandCare as described in
Section 6.6 hereof).
2. All shares of Company Stock, if any, that are held by the
Company as treasury stock shall be canceled and retired, and no shares of
LandCARE Stock or other consideration shall be delivered or paid in exchange
therefor; and
3. Each outstanding share of Newco Stock shall, by virtue of
the Merger and without any action on the part of LandCARE, automatically be
converted into one fully paid and non-assessable share of Common Stock of the
Surviving Corporation, which shall constitute all of the issued and outstanding
shares of common stock of the Surviving Corporation, and shall be owned by
LandCARE, immediately after the Effective Time.
1.6 DELIVERY OF CERTIFICATES. At the Closing, (i) the Stockholder shall
deliver to LandCARE the certificates representing the Company Stock, duly
endorsed in blank by the Stockholder, or accompanied by blank stock powers, and
with all necessary transfer tax and other revenue stamps, acquired at the
Stockholder's expense, affixed and canceled, and (ii) LandCARE shall cause its
stock transfer agent to deliver to the Stockholder certificates representing the
LandCARE Stock as described above. The Stockholder agrees promptly to cure any
deficiencies with respect to the endorsement of the stock certificates or other
documents of conveyance with respect to such Company Stock or with respect to
the stock powers accompanying any Company Stock.
1.7 CLOSING. The transactions contemplated by this Agreement are being
consummated on the date hereof, and the date hereof is sometimes herein called
the "Closing Date."
2. REPRESENTATIONS AND WARRANTIES OF THE STOCKHOLDER
The Stockholder hereby represents and warrants to LandCARE as follows.
2.1 DUE ORGANIZATION. The Company is a corporation duly organized, validly
existing and in good standing under the laws of the State of Incorporation, and
has all requisite power and authority to carry on its business as it is now
being conducted. Except as set forth on SCHEDULE 2.1, the Company is duly
qualified to do business and is in good standing in each jurisdiction in which
the nature of its business or the ownership or leasing of its properties makes
such qualification necessary, except where the failure to be so authorized or
qualified would not have a material adverse effect on the business, assets,
operations or condition (financial or otherwise) of the Company (as used herein
with respect to the Company, or with respect to any other person, a "Material
Adverse Effect"). SCHEDULE 2.1 sets forth a list of all jurisdictions in which
the Company
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is authorized or qualified to do business. True, complete and correct copies of
the Articles of Incorp oration and By-laws, each as amended, of the Company (the
"Charter Documents") are all attached to SCHEDULE 2.1. The stock records of the
Company, copies of which have previously been delivered to LandCare, are correct
and complete in all material respects. All records of all proceedings of the
Board of Directors and stockholders of the Company have been made available to
LandCARE.
2.2 AUTHORIZATION. (i) The representative of the Company executing this
Agreement has the authority to enter into and bind the Company to the terms of
this Agreement and (ii) the Company has the full legal right, power and
authority to enter into this Agreement and the transactions contemplated hereby,
all of which have been approved by the Stockholder and the Board of Directors of
the Company. This Agreement has been validly executed and delivered by the
Company and the Stockholder and constitutes the legal, valid and binding
obligation of each of them, enforceable in accordance with its terms.
2.3 CAPITAL STOCK OF THE COMPANY. The authorized capital stock of the
Company consists solely of 100 shares of common stock, par value $0.01 per
share, of which 40 shares are issued and outstanding and constitute all of the
issued and outstanding shares of Company Stock (the "Shares"). All of the Shares
are owned of record and beneficially by the Stockholder and are owned free and
clear of all liens, security interests, pledges, charges, voting trusts,
restrictions, encumbrances and claims of every kind. All of the Shares have been
duly authorized and validly issued, are fully paid and nonassessable, and were
offered, issued, sold and delivered by the Company in compliance with all
applicable state and federal laws governing the issuance of securities. None of
the Shares were issued in violation of any preemptive rights or similar rights
of any person. No option, warrant, call, conversion right or commitment of any
kind exists which obligates the Company to issue any additional shares of its
capital stock or obligates the Stockholder to transfer any of the Shares to any
person except pursuant to this Agreement.
2.4 SUBSIDIARIES. Except as set forth on SCHEDULE 2.4, the Company has no
subsidiaries or d/b/a names and has not conducted business under any other name
except its legal name as set forth in its Charter Documents. Except as set forth
in SCHEDULE 2.4, the Company does not own, of record or beneficially, or
control, directly or indirectly, any capital stock, securities convertible into
capital stock or any other equity interest in any corporation, association or
other business entity, and the Company is not, directly or indirectly, a
participant in any joint venture, partnership or other non-corporate entity.
2.5 FINANCIAL STATEMENTS. Complete and correct copies of the following
financial statements are attached as SCHEDULE 2.5:
(i) The balance sheets of the Company as of December 31, 1997 (the
"Balance Sheet Date") and any related statements of operations,
stockholder's equity and cash flows
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for the three-year period then ended, together with any related notes and
schedules (the "Year-end Financial Statements"); and
(ii) The balance sheet attached hereto (the "Interim Balance Sheet")
of the Company as of June 30, 1998 and the related audited statements of
operations for the six-month period then ended (the "Interim Financial
Statements"). (The Year-end Financial Statements and the Interim Financial
Statements are herein collectively called the "Financial Statements".)
The Financial Statements have been prepared from the books and records of
the Company. The Year-end Financial Statements have been prepared in conformity
with generally accepted accounting principles applied on a basis consistent with
preceding years and throughout the periods involved ("GAAP") and present fairly
the financial position and results of operations of the Company as of the dates
of such statements and for the periods covered thereby. The Interim Financial
Statements have not been prepared in conformity with GAAP, but do present fairly
the financial position and results of operations of the Company as of the dates
of such statements and for the periods covered thereby. The books of account of
the Company have been kept accurately in the ordinary course of business, the
transactions entered therein represent bona fide transactions, and the revenues,
expenses, assets and liabilities of the Company have been properly recorded
therein in all material respects.
2.6 LIABILITIES AND OBLIGATIONS. Except as and to the extent disclosed and
adequately provided for in the Financial Statements or on SCHEDULE 2.6 hereto,
the Company has no liabilities or obligations of any kind, whether accrued,
absolute, secured or unsecured, contingent or otherwise. Except and to the
extent disclosed on SCHEDULE 2.6, there are no claims, liabilities or
obligations, nor any reasonable basis for assertion against the Company, of any
claim, liability or obligation, of any nature whatsoever. SCHEDULE 2.6 contains
a reasonable estimate of the maximum amount which may be payable with respect to
known liabilities which are not fixed. For each such known liability for which
the amount is not fixed, SCHEDULE 2.6 includes a summary description of each
known liability, together with copies of all relevant documentation relating
thereto. The Company's total debt (not including leases or contingent
liabilities identified on SCHEDULE 2.6) as of the Closing Date does not exceed
$6,700,000. As of the Closing Date the Company's tangible net worth is at least
$1,300,000.
2.7 ACCOUNTS AND NOTES RECEIVABLE. SCHEDULE 2.7 sets forth an accurate
list of the accounts and notes receivable of the Company, as of the most recent
date practicable (which date is set forth thereon), showing amounts due in
30-day aging categories. Except to the extent reflected on SCHEDULE 2.7, all
such accounts, notes and other receivables were incurred in the ordinary course
of business, are stated in accordance with GAAP and are collectible in the
amounts shown on SCHEDULE 2.7, net of reserves reflected in the balance sheet as
of the Balance Sheet Date.
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2.8 PERMITS AND INTANGIBLES. The Company, or its employees, as
appropriate, hold all material licenses, franchises, permits and other
governmental authorizations required or necessary in connection with the conduct
of the Company's business. SCHEDULE 2.8 sets forth an accurate list and summary
description of all such licenses, franchises, permits and other governmental
authorizations, including permits, titles (including licenses, franchises,
certificates, trademarks, trade names, patents, patent applications and
copyrights owned or held by the Company or any of its employees (including
interests in software or other technology systems, programs and intellectual
property; provided, however, that SCHEDULE 2.8 need not individually list each
of the individual software licenses for wordprocessing and similar software
loaded on the Company's personal computers, it being understood that the Company
holds licenses for such software) (collectively, the "Intangible Assets") (it
being understood and agreed that a list of all environmental permits and other
environmental approvals is set forth on SCHEDULE 2.9). The Intangible Assets and
other governmental authorizations listed on SCHEDULES 2.8 and 2.9 are valid, and
the Company has not received any notice that any person intends to cancel,
terminate or not renew any such Intangible Assets or other governmental
authorization. The Company has conducted and is conducting its business in
compliance with the requirements, standards, criteria and conditions set forth
in the Intangible Assets and other governmental authorizations listed on
SCHEDULES 2.8 and 2.9 and is not in violation of any of the foregoing. Except as
specifically set forth on SCHEDULE 2.8 or 2.9, the transactions contemplated by
this Agreement will not result in a default under or a breach or violation of,
or adversely affect the rights and benefits afforded to the Company by, any such
Intangible Assets or other governmental authorizations.
2.9 ENVIRONMENTAL MATTERS. Except to the extent that noncompliance with
any Environmental Laws, either singly or in the aggregate, has not had and will
not have a Material Adverse Effect on the Company or any of its operations and
will not necessitate any material expenditure by the Company in the future:
(i) the Company has complied with and is in compliance with all federal,
state, local and foreign statutes (civil and criminal), laws, ordinances,
regulations, rules, notices, permits, judgments, orders and decrees applicable
to any of them or any of their respective properties, assets, operations and
businesses relating to environmental protection (collectively "Environmental
Laws"), including, without limitation, Environmental Laws relating to air,
water, land and the generation, storage, use, handling, transportation,
treatment or disposal of Hazardous Wastes, Hazardous Materials and Hazardous
Substances (including petroleum and petroleum products) (as such terms are
defined in any applicable Environmental Law);
(ii) the Company has obtained and adhered to all necessary permits and
other approvals necessary to treat, transport, store, dispose of and otherwise
handle Hazardous Wastes, Hazardous Materials and Hazardous Substances, a list of
all of which permits and approvals is set forth on SCHEDULE 2.9, and have
reported to the appropriate authorities, to the extent required by all
Environmental Laws, all past and present sites owned and operated by the Company
where
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Hazardous Wastes, Hazardous Materials or Hazardous Substances have been treated,
stored, disposed of or otherwise handled;
(iii) there have been no releases or threats of releases (as defined in
Environmental Laws) at, from, in, under or on any property owned or operated by
the Company except as permitted by Environmental Laws;
(iv) there is no on-site or, to the knowledge of the Stockholder, off-site
location to which the Company has transported or disposed of Hazardous Wastes,
Hazardous Materials or Hazardous Substances or arranged for the transportation
of Hazardous Wastes, Hazardous Materials or Hazardous Substances which is the
subject of any federal, state, local or foreign enforcement action or any other
investigation which could lead to any claim against the Company or LandCARE for
any clean-up cost, remedial work, damage to natural resources, property damage
or personal injury, including, but not limited to, any claim under (a) the
Comprehensive Environmental Response, Compensation and Liability Act of 1980, as
amended, (b) the Resource Conservation and Recovery Act, as amended, (c) the
Hazardous Materials Transportation Act, as amended, or (d) comparable state or
local statutes and regulations; and
(v) to the knowledge of the Stockholder, the Company has no contingent
liability in connection with any release of any Hazardous Waste, Hazardous
Material or Hazardous Substance into the environment.
2.10 PERSONAL PROPERTY. SCHEDULE 2.10 sets forth an accurate list of (a)
all personal property included in "plant, property and equipment" or any similar
category on the balance sheet of the Company, (b) all other personal property
owned by the Company with a fair market value in excess of $5,000, and (c) all
leases and agreements with respect to personal property, copies of which have
been delivered to LandCARE. SCHEDULE 2.10 indicates which assets are currently
owned, or were formerly owned, by the Stockholder or any affiliate of the
Company or the Stockholder. Except as set forth on SCHEDULE 2.10, (i) all
material personal property used by the Company in its business is either owned
by the Company or leased by the Company pursuant to a lease included on SCHEDULE
2.10, (ii) all of the personal property listed on SCHEDULE 2.10 is in good
working order and condition, ordinary wear and tear excepted and (iii) all
leases and agreements included on SCHEDULE 2.10 are in full force and effect and
constitute valid and binding agreements of the parties (and their successors)
thereto in accordance with their respective terms. Except as set forth on
SCHEDULE 2.10, the Company has good and marketable title to the tangible and
intangible personal property it purports to own, subject to no security
interest, pledge, lien, claim, conditional sales agreement, encumbrance, charge
or restriction on transfer.
2.11 SIGNIFICANT CUSTOMERS; MATERIAL CONTRACTS AND COMMITMENTS. SCHEDULE
2.11 sets forth a list of (i) all customers representing 1% or more of the
Company's revenues in its last full fiscal year ("Significant Customers"), and
(ii) all material contracts, commitments and similar agreements to which the
Company is a party or by which it or any of its properties are bound (including,
but not limited to, contracts with Significant Customers, joint venture or
partnership
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agreements, contracts with any labor organizations, strategic alliances and
options to purchase land). True, complete and correct copies of such agreements
have been made available to LandCARE. Except as described on SCHEDULE 2.11, (i)
none of the Significant Customers have canceled or substantially reduced or, to
the knowledge of the Company, are currently attempting or threatening to cancel
a contract or substantially reduce utilization of the services provided by the
Company, and (ii) the Company has complied with all commitments and obligations
pertaining to it, and is not in material default under any contracts or
agreements listed on SCHEDULE 2.11 and no notice of default under any such
contract or agreement has been received. The transactions contemplated by this
Agreement will not result in a default under or a breach or violation of, or
adversely affect the rights and benefits afforded to the Company by, any such
contracts or agreements. SCHEDULE 2.11 also includes a summary description of
all plans or projects relating to the Company's business involving the opening
of new operations, expansion of existing operations, the acquisition of any
property, business or assets requiring, in any event, the payment of more than
$50,000 in the aggregate.
2.12 REAL PROPERTY. SCHEDULE 2.12 includes a list of all real property
leased by the Company at the date hereof (the "Real Property"), and all other
real property, if any, used by the Company in the conduct of its business. The
Company owns no real property. True, complete and correct copies of all leases
and agreements with respect to Real Property leased by the Company have been
delivered to LandCARE, and an indication as to which such properties, if any,
were formerly owned, by the Stockholder or any affiliates of the Company or the
Stockholder is included in SCHEDULE 2.12. All leases relating to Real Property
leased by the Company from the Stockholder or any affiliate of the Stockholder
have been terminated. Except as set forth on SCHEDULE 2.12, all of such leases
included on SCHEDULE 2.12 are in full force and effect and constitute valid and
binding agreements of the parties (and their successors) thereto in accordance
with their respective terms. There are no leases, tenancy agreements, easements,
covenants, restrictions or any other instruments, agreements or arrangements
which create in or confer on any party, other than the Company, the right to
occupy or possess all or any portion of the Real Property or create in or confer
on any such party any right, title or interest in or to the Real Property or any
portion thereof or any interest therein; no party other than the Company
occupies or possesses the Real Property or any portion thereof; there is legal
and adequate ingress and egress between each tract of Real Property and an
adjacent (or, if none, the closest) public roadway; the Real Property is
properly zoned in order to allow its current use in the Company's businesses;
and there are no claims or demands pending or threatened by any party against
the Real Property which, if valid, would create in, or confer on, any party
other than the Company, any right, title or interest in or to the Real Property
or any portion thereof. None of the buildings, structures or improvements
described on SCHEDULE 2.12, or the operation or maintenance thereof as now
operated or maintained, contravenes any zoning ordinance or other administrative
regulation or violates any restrictive covenant or any provision of law, the
effect of which would materially interfere with or prevent their continued use
for the purposes for which they are now being used or would adversely affect the
value thereof or the interest of the Company therein.
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2.13 INSURANCE. SCHEDULE 2.13 sets forth an accurate list as of the date
hereof of all insurance policies now carried by the Company and an accurate list
of all insurance loss runs and workers compensation claims received for the past
three policy years. Such insurance policies evidence all of the insurance that
the Company is required to carry pursuant to all of its contracts and other
agreements and pursuant to all applicable laws, and, to the knowledge of the
Stockholder, provide adequate coverage against the risks involved in the
Company's business. Except as set forth on SCHEDULE 2.13, none of such policies
is a "claims made" policy.
2.14 COMPENSATION; EMPLOYMENT AGREEMENTS; ORGANIZED LABOR MATTERS.
SCHEDULE 2.14 sets forth an accurate list showing all officers, directors and
key employees of the Company, listing all employment agreements with such
officers, directors and key employees and the rate of compensation (and the
portions thereof attributable to salary, bonus and other compensation,
respectively) of each of such persons as of the Balance Sheet Date. Except as
set forth on SCHEDULE 2.14, since the Balance Sheet Date, there have been no
increases in the base compensation payable or any special bonuses to any
officer, director, key employee or other employee.
Except as set forth on SCHEDULE 2.14, (i) the Company is not bound by or
subject to (and none of its respective assets or properties is bound by or
subject to) any arrangement with any labor union, (ii) no employees of the
Company are represented by any labor union or covered by any collective
bargaining agreement, (iii) to the knowledge of the Company, no campaign to
establish such representation is in progress and (iv) there is no pending or, to
the best of the Company's knowledge, threatened, labor dispute involving the
Company and any group of its employees. The Company has not experienced any
labor interruptions over the past five years.
2.15 EMPLOYEE BENEFIT PLANS. SCHEDULE 2.15 sets forth an accurate schedule
showing all employee benefit plans of Company, including all agreements or
arrangements (other than agreements or arrangements set forth on SCHEDULE 2.14)
containing "golden parachute" or other similar provisions, and deferred
compensation agreements, together with true, complete and correct copies of such
plans, agreements and any trusts related thereto, and classifications of
employees covered thereby as of the Balance Sheet Date. Except for the employee
benefit plans, if any, described on SCHEDULE 2.15, the Company does not sponsor,
maintain or contribute to any plan, program, fund or arrangement that
constitutes an "employee pension benefit plan," nor does the Company have any
obligation to contribute to or accrue or pay any benefits under any deferred
compensation or retirement funding arrangement on behalf of any employee or
employees (such as, for example, and without limitation, any individual
retirement account or annuity, any "excess benefit plan" (within the meaning of
Section 3(36) of the Employee Retirement Income Security Act of 1974, as amended
("ERISA")), or any non-qualified deferred compensation arrangement). For the
purposes of this Agreement, the term "employee pension benefit plan" shall have
the same meaning as is given that term in Section 3(2) of ERISA. The Company has
not sponsored, maintained or contributed to any employee pension benefit plan
and is not required to contribute to
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any retirement plan pursuant to the provisions of any collective bargaining
agreement establishing the terms and conditions of employment of any of the
Company's employees other than the plans set forth on SCHEDULE 2.15.
The Company is not now, and will not as a result of its past activities
become, liable to the Pension Benefit Guaranty Corporation (the "PBGC") or to
any multi employer employee pension benefit plan under the provisions of Title
IV of ERISA. All employee benefit plans listed on SCHEDULE 2.15 and the
administration thereof are in substantial compliance with their terms and all
applicable provisions of ERISA and the regulations issued thereunder, as well as
with all other applicable federal, state and local statutes, ordinances and
regulations. All accrued contribution obligations of the Company with respect to
any plan listed on SCHEDULE 2.15 have either been fulfilled in their entirety or
are fully reflected on the balance sheet of the Company as of the Balance Sheet
Date. The Company has no plans that are intended to qualify under Section 401(a)
of the Internal Revenue Code of 1986, as amended (the "Code"), and has never
been required to file reports or other documents with any governmental agency or
required to distribute reports or plans to plan participants or beneficiaries.
Neither the Stockholder, nor any plan listed in SCHEDULE 2.15 nor the Company
has engaged in any transaction prohibited under the provisions of Section 4975
of the Code or Section 406 of ERISA. No plan listed on SCHEDULE 2.15 has
incurred an accumulated funding deficiency, as defined in Section 412(a) of the
Code and Section 302(1) of ERISA; and the Company has not incurred any liability
for excise tax or penalty due to the Internal Revenue Service or any liability
to the PBGC. No plan listed on SCHEDULE 2.15 subject to the provisions of Title
IV of ERISA has been terminated; there have been no "reportable events" (as that
phrase is defined in Section 4043 of ERISA) with respect to any such plan listed
on SCHEDULE 2.15; the Company has not incurred liability under Section 4062 of
ERISA; and no circumstances exist pursuant to which the Company could have any
direct or indirect liability whatsoever (including, but not limited to, any
liability to any multi employer plan or the PBGC under Title IV of ERISA or to
the Internal Revenue Service for any excise tax or penalty, or being subject to
any statutory lien to secure payment of any such liability) with respect to any
plan now or heretofore maintained or contributed to by any entity other than the
Company that is, or at any time was, a member of a "controlled group" (as
defined in Section 412(n)(6)(B) of the Code) that includes the Company.
2.16 CONFORMITY WITH LAW; LITIGATION. Except as set forth on SCHEDULE
2.16, there are no claims, actions, suits or proceedings pending or, to the best
knowledge of the Stockholder, threatened, against or affecting the Company (as
any of its officers and directors in their capacities as such), at law or in
equity, or before or by any federal, state, municipal or other governmental
department, commission, board, bureau, agency or instrumentality having
jurisdiction over the Company. Except as set forth on SCHEDULE 2.16, no
unresolved notice of any claim, action, suit or proceeding, whether pending or
threatened, has been received by the Company during the last five years and, to
the best knowledge of the Stockholder, there is no basis therefor. Except as set
forth on SCHEDULE 2.16, there are no outstanding judgments, orders, writs,
injunctions or decrees against
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the Company. Except as set forth on SCHEDULE 2.16, the Company has conducted and
now conducts its business in material compliance with all laws, regulations,
writs, injunctions, decrees and orders applicable to the Company or its assets.
The Company is not in violation of any material law or regulation or any order
of any court or federal, state, municipal or other governmental department,
commission, board, bureau, agency or instrumentality having jurisdiction over
any of them. The Company has conducted and is conducting its business in
substantial compliance with the requirements, standards, criteria and conditions
set forth in applicable federal, state and local statutes, ordinances, permits,
licenses, orders, approvals, variances, rules and regulations, including all
such permits, licenses, orders and other governmental approvals set forth on
SCHEDULES 2.1, 2.8 and 2.9.
2.17 TAXES. For purposes of this Agreement, the term "Taxes" shall mean
all taxes, charges, fees, levies or other assessments, including, without
limitation, income, gross receipts, excise, property, sales, withholding, social
security, unemployment, occupation, use, service, license, payroll, franchise,
transfer and recording taxes, fees and charges, imposed by the United States or
any state, local or foreign government or subdivision or agency thereof ("Taxing
Authority"), whether computed on a separate, consolidated, unitary, combined or
any other basis; and such term shall include any interest, fines, penalties or
additional amounts attributable to or imposed with respect to any such taxes,
charges, fees, levies or other assessments. As used herein, the term "Company
Subsidiaries" means the subsidiaries, if any, of the Company; it being
understood that there may be no such subsidiaries.
Except as set forth on SCHEDULE 2.17, all Tax returns ("Returns") required
to be filed with respect to any Tax for which any of the Company and the Company
Subsidiaries (if any) is liable have been duly and timely filed with the
appropriate Taxing Authority, each Tax shown to be payable on each such Return
has been paid, each Tax payable by the Company or a Company Subsidiary by
assessment has been timely paid in the amount assessed, and adequate reserves
have been established on the consolidated books of the Company and the Company
Subsidiaries for all Taxes for which any of the Company and the Company
subsidiaries is liable, but the payment of which is not yet due. Neither the
Company nor any Company Subsidiary is, or ever has been, liable for any Tax
payable by reason of the income or property of a person or entity other than the
Company or a Company Subsidiary. Each of the Company and the Company
Subsidiaries has timely filed true, correct and complete declarations of
estimated Tax in each jurisdiction in which any such declaration is required to
be filed by it. No Liens for Taxes exist upon the assets of the Company or any
Company Subsidiary except Liens for Taxes which are not yet due. Neither the
Company nor any Company Subsidiary is, or ever has been, subject to Tax in any
jurisdiction outside the United States. No litigation with respect to any Tax
for which the Company or any Company Subsidiary is asserted to be liable is
pending or, to the knowledge of the Company or the Stockholder, threatened, and
no basis which the Company or any Stockholder believes to be valid exists on
which any claim for any such Tax can be asserted against the Company or any
Company
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Subsidiary. There are no requests for rulings or determinations in respect of
any Taxes pending between the Company or any Company Subsidiary and any Taxing
Authority. No extension of any period during which any Tax may be assessed or
collected and for which the Company or any Company Subsidiary is or may be
liable has been granted to any Taxing Authority. Neither the Company nor any
Company Subsidiary is or has been party to any tax allocation or sharing
agreement. All amounts required to be withheld by any of the Company and the
Company Subsidiaries and paid to governmental agencies for income, social
security, unemployment insurance, sales, excise, use and other Taxes have been
collected or withheld and paid to the proper Taxing Authority. The Company and
each Company Subsidiary have made all deposits required by law to be made with
respect to employees' withholding and other employment Taxes. Neither the
Company nor the Stockholder is a "foreign person," as that term is referred to
in Section 1445(f)(3) of the Code. The Company has not filed a consent pursuant
to Section 341 (f) of the Code or any comparable provision of any other tax
statute and has not agreed to have Section 341 (f)(2) of the Code or any
comparable provision of any other Tax statute apply to any disposition of an
asset. The Company has not made, is not obligated to make and is not a party to
any agreement that could require it to make any payment that is not deductible
under Section 280G of the Code. No asset of the Company or of any Company
Subsidiary is subject to any provision of applicable law which eliminates or
reduces the allowance for depreciation or amortization with respect to that
asset below the allowance generally available to an asset of its type. The
Company uses the accrual method of accounting for income tax purposes, and the
Company's methods of accounting have not changed in the past five years. The
Company is not an investment company as defined in Section 351(e)(1) of the
Code. The Company has a taxable year ended December 31 and has not made an
election to retain a fiscal year other than December 31 under Code Section 444.
The Company is not party to any joint venture, partnership, or other arrangement
that is treated as a partnership for federal income tax purposes.
2.18 NO VIOLATIONS; ALL REQUIRED CONSENTS OBTAINED. The Company is not in
violation of any of its Charter Documents. Neither the Company nor, to the
knowledge of the Stockholder, any other party thereto is in material default
under any lease, instrument, license, permit or material agreement to which the
Company is a party or by which its properties are bound (the "Material
Documents"). Except as set forth on SCHEDULE 2.18, (a) the execution of this
Agreement by the Company and the Stockholder and the performance by the Company
and the Stockholder of their obligations hereunder and the consummation of the
transactions contemplated hereby will not result in any violation or breach or
constitute a default under any of the terms or provisions of the Material
Documents or the Charter Documents, and (b) at and after the Closing Date the
Surviving Corporation will be entitled to the rights and benefits under the
Material Documents to which the Company is entitled immediately prior to the
Closing. Except as set forth on SCHEDULE 2.18 (and except for consents already
obtained), none of the Material Documents requires notice to, or the consent or
approval of, any governmental agency or other third party with respect to any of
the transactions contemplated hereby in order to remain in full force and
effect, and consummation of
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the transactions contemplated hereby will not give rise to any right to
termination, cancellation or acceleration or loss of any right or benefit.
Except as set forth on SCHEDULE 2.18, none of the Material Documents prohibits
the use or publication of the name of any other party to such Material Document,
and none of the Material Documents prohibits or restricts the Company or will
prevent or restrict the Company or LandCARE from freely providing services to
any person.
2.19 ABSENCE OF CHANGES. Since the Balance Sheet Date, the Company has
conducted its operations in the ordinary course of business and, except as set
forth on SCHEDULE 2.19, there has not been:
(i) any change in the business, assets, liabilities or financial
condition of the Company which would have a Material Adverse Effect;
(ii) any damage, destruction or loss (whether or not covered by
insurance) affecting any of the material assets of the Company or the
business of the Company which would have a Material Adverse Effect;
(iii) any change in the authorized capital of the Company or its
outstanding securities or any change in its ownership interests or any
grant of any options, warrants, calls, conversion rights or commitments;
(iv) any declaration or payment of any dividend or distribution with
respect to the capital stock or any direct or indirect redemption,
purchase or other acquisition of any of the capital stock of the Company;
(v) any increase or commitment to increase the compensation, bonus,
sales commissions or fee arrangement payable or to become payable by the
Company to any of its officers, directors, stockholders, employees,
consultants or agents;
(vi) any work interruptions, labor grievances or claims filed, or
any event or condition of any character, materially adversely affecting
the business of the Company;
(vii) any sale or transfer, or any agreement to sell or transfer,
any material assets, property or rights of the Company to any person;
(viii)any cancellation, or agreement to cancel, any indebtedness or
other obligation owing to the Company;
(ix) any plan, agreement or arrangement granting any preferential
rights to purchase or acquire any interest in any of the assets, property
or rights of the Company or
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requiring consent of any party to the transfer and assignment of any such
assets, property or rights;
(x) any purchase or acquisition of, or agreement, plan or
arrangement to purchase or acquire, any property, rights or assets outside
of the ordinary course of the Company's business;
(xi) any waiver of any material rights or claims of the Company;
(xii) any amendment or termination of any contract, agreement,
license, permit or other right to which the Company is a party which would
have a Material Adverse Effect;
(xiii)any contract, commitment or liability entered into or incurred
or any capital expenditures made except in the normal course of business
consistent with past practice in an individual amount not in excess of
$10,000 and in an aggregate amount not in excess of $50,000; or
(xiv) any transaction by the Company outside the ordinary course of
its business.
2.20 POWERS OF ATTORNEY. SCHEDULE 2.20 sets forth a schedule as of the
date of this Agreement of the name of each person, corporation, firm or other
entity holding any general or special power of attorney from the Company and a
description of the terms of each such power.
2.21 COMPETING LINES OF BUSINESS; RELATED-PARTY TRANSACTIONS. Except as
set forth on SCHEDULE 2.21, neither the Stockholder nor any other affiliate of
the Company owns, directly or indirectly, any interest in, or is an officer,
director, employee or consultant of or otherwise receives remuneration from, any
business which is a competitor, lessor, lessee, customer or supplier of the
Company. Except as set forth on SCHEDULE 2.21, no officer, director or
stockholder of the Company has, nor during the period beginning January 1, 1995
through the date hereof had, any interest in any property, real or personal,
tangible or intangible, used in or pertaining to the Company's business.
2.22 DISCLOSURE. To the knowledge of the Stockholder, except as set forth
on SCHEDULE 2.22, the Stockholder has provided LandCARE with all the information
that LandCARE has requested in analyzing whether to consummate the transactions
contemplated hereby. None of the information so provided nor any representation
or warranty of the Stockholder contained in this Agreement contains any untrue
statement of a material fact or omits to state a material fact necessary in
order to make the statements herein or therein, in light of the circumstances
under which they were made, not misleading. There is no fact known to the
Stockholder which has specific application to the Company or its business or
assets (other than general economic or industry conditions) which would have a
Material Adverse Effect or, so far as the Stockholder can reasonably foresee,
threatens to have
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a Material Adverse Effect, on the Company or its business or assets, or the
condition (financial or otherwise), results of operations or prospects of the
Company, which has not been described in the Schedules hereto.
2.23 CERTAIN BUSINESS PRACTICES. Neither the Company nor any person acting
on behalf of the Company has given or offered anything of value to any
governmental official, political party or candidate for government office nor
has it or any of them otherwise taken any action which would cause the Company
to be in violation of the Foreign Corrupt Practices Act of 1977, as amended, or
any law of similar effect.
2.24 NOTICE TO BARGAINING AGENTS. The Company has satisfied any
requirement for notice of the transactions contemplated by this Agreement under
applicable collective bargaining agreements.
2.25 NOTICES AND CONSENTS. The Company has given any notices to third
parties and has obtained any third party consents that may be necessary to
consummate the transactions contemplated hereby.
2.26 INVENTORY; WORKING CAPITAL; OTHER FINANCIAL MATTERS. The Company's
inventory and working capital levels are adequate to successfully operate the
business, and there has been no unusual build-up of cash needs at the date
hereof.
2.27 YEAR 2000 COMPLIANCE. Except as set forth on SCHEDULE 2.27, the
properties and assets of the Company, including, but not limited to, computer
hardware, microprocessor driven equipment, software and data, owned or used by
the Company will accurately process date and time data after December 31, 1999,
and the Company will suffer no loss of functional ability when processing dates
and related data outside the 1900-1999 year range.
2.28 RELIANCE UPON ORAL REPRESENTATIONS. The Company and the Stockholder
each represent and warrant: (a) that each has been fully informed by his or its
legal counsel and by his or its own independent judgment of the terms,
conditions and effects of this Agreement; (b) that each has been represented by
independent legal counsel of his or its choice throughout all negotiations
preceding the execution of this Agreement and has received the advice of his or
its attorney in entering into this Agreement; (c) that no promise or inducement
has been offered or made to him or it except as expressly stated in this
Agreement or in any Employment Agreement and other written agreements entered
into pursuant to this Agreement; and (d) that this Agreement is executed without
reliance on any oral statement or oral representation by any other party or any
other party's agent or attorney.
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3. REPRESENTATIONS OF LANDCARE
LandCARE represents and warrants as follows:
3.1 DUE ORGANIZATION. LandCARE is duly incorporated, validly existing and
in good standing under the laws of the state of Delaware, and has the requisite
power and authority to carry on its business as it is now being conducted.
LandCARE is qualified to do business and is in good standing in each
jurisdiction in which the nature of its business makes such qualification
necessary, except where the failure to be so authorized or qualified would not
have a Material Adverse Effect.
3.2 AUTHORIZATION. (i) The representative of LandCARE executing this
Agreement has the authority to enter into and bind LandCARE to the terms of this
Agreement and (ii) LandCARE has the full legal right, power and authority to
enter into this Agreement and to consummate the transactions contemplated
hereby.
3.3 NO VIOLATIONS. The execution of this Agreement and the performance of
the obligations hereunder and the consummation of the transactions contemplated
hereby will not result in any violation or breach or constitute a default under
any of the terms or provisions of the Restated Certificate of Incorporation, as
amended, or Bylaws, as amended, of LandCARE.
3.4 VALIDITY OF OBLIGATIONS. The execution and delivery of this Agreement
by LandCARE and the performance of the transactions contemplated hereby have
been duly and validly authorized by the Board of Directors of LandCARE and this
Agreement has been duly and validly authorized by all necessary corporate action
and is a legal, valid and binding obligation of LandCARE.
3.5 REGISTRATION STATEMENT. The Prospectus dated July 14, 1998 delivered
to the Stockholder, receipt of which is hereby acknowledged by the Stockholder,
and a copy of which is attached hereto, does not contain a misrepresentation of
a material fact or omit to state a material fact necessary to make statements
made therein, in light of the circumstances under which they were made, not
misleading.
4. DELIVERIES
4.1 INSTRUMENTS OF TRANSFER. The Stockholder is delivering to LandCARE
certificates representing all of the Shares, duly endorsed (or accompanied by
duly executed stock powers).
4.2 CERTIFICATE OF MERGER. The appropriate parties hereto are executing
and delivering for filing with the appropriate authorities a certificate of
merger or similar document for purposes of effecting the Merger.
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4.3 EMPLOYMENT AGREEMENT. The Company and the persons identified in
SCHEDULE 4.3 are entering into Employment Agreements in the form of Annex I.
4.4 OPINION OF COUNSEL. Counsel to the Company and the Stockholder is
delivering an opinion to LandCARE dated the date hereof in the form attached
hereto as Annex II.
4.5 GOOD STANDING CERTIFICATES. The Stockholder is delivering to LandCARE
certificates, dated as of a date no earlier than ten days prior to the date
hereof, duly issued by the appropriate governmental authority in the State of
Incorporation and in each state in which the Company is authorized to do
business, showing the Company to be in good standing and authorized to do
business therein.
4.6 LEASE. The Company is entering into leases of the properties
identified on SCHEDULE 4.6 in the form attached hereto as Annex III. The
Stockholder is delivering to LandCARE evidence of the termination of all leases
relating to Real Property leases by the Company from the Stockholder or any
affiliate of the Stockholder.
4.7 INDEBTEDNESS TO COMPANY. The Stockholder and its Affiliates are
repaying any outstanding indebtedness they may have to the Company.
4.8 CONSENTS. The Stockholder is delivering to LandCARE copies of any
third party consents required in connection with the consummation of the
transactions contemplated hereby.
4.9 RESIGNATIONS OF DIRECTORS AND OFFICERS. The Stockholder is delivering
to LandCARE the resignations of such directors and officers of the Company as
have been requested by LandCARE.
4.10 SATISFACTION OF CERTAIN DEBTS. At the Closing, LandCare shall cause
the Surviving Corporation to satisfy in full the obligations of the Company set
forth on SCHEDULE 4.10.
4.11 ENVIRONMENTAL INDEMNITY AGREEMENT. The Stockholder and LandCare are
entering into an Environmental Indemnity Agreement dated the date hereof.
5. POST-CLOSING COVENANTS
The parties to this Agreement further covenant and agree as follows:
5.1 FUTURE COOPERATION; FURTHER ASSURANCES. The Stockholder, the Surviving
Corporation and LandCARE shall each deliver or cause to be delivered to the
other following the date hereof such additional instruments as the other may
reasonably request for the purpose of effecting
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the Merger and fully carrying out the intent of this Agreement. LandCARE shall
provide the Stockholder reasonable access to the books and records of the
Surviving Corporation after the Closing Date for purposes of tax compliance and
any other reasonable purpose.
5.2 EXPENSES. LandCARE will pay the fees, expenses and disbursements of
LandCARE and its agents, representatives, financial advisors, accountants and
counsel incurred in connection with the execution, delivery and performance of
this Agreement. The Stockholder will pay the fees, expenses and disbursements of
the Stockholder and its agents, representatives, financial advisors, accountants
and counsel incurred in connection with the execution, delivery and performance
of this Agreement. The Stockholder shall pay any sales, use, transfer, real
property transfer, recording, gains, stock transfer and other similar taxes and
fees ("Transfer Taxes") imposed in connection with the Merger. The Stockholder
shall file all necessary documentation and returns with respect to such Transfer
Taxes. In addition, the Stockholder acknowledges that the Stockholder, and not
the Surviving Corporation or LandCARE, will pay all taxes (income or otherwise),
if any, due upon receipt of the consideration payable pursuant to this
Agreement.
5.3 CERTAIN AGREEMENTS. Upon the request of LandCARE at any time after the
Closing, the Stockholder and the Surviving Corporation shall terminate any
existing agreements to which the Company and the Stockholder or any affiliates
of the Stockholder are parties, except the agreements set forth on SCHEDULE 5.3.
5.4 PREPARATION AND FILING OF TAX RETURNS.
(a) The Stockholder shall file or cause to be filed all Tax Returns
for all taxable periods that end on or before the Closing Date, but in each case
only after LandCARE has reviewed such filings and consented thereto.
(b) LandCARE shall file or cause to be filed all Tax Returns for all
taxable periods ending after the Closing Date.
(c) Each party hereto shall, and shall cause its subsidiaries and
affiliates to, provide to each of the other parties hereto such cooperation and
information as any of them reasonably may request in filing any Tax Returns,
amended Tax Returns or claim for refund, determining a liability for Taxes or a
right to refund of Taxes or in conducting any audit or other proceeding with
respect to Taxes. Such cooperation and information shall include providing
copies of all relevant portions of relevant Tax Returns, together with relevant
accompanying schedules and relevant work papers, relevant documents relating to
rulings or other determinations by Taxing Authorities and relevant records
concerning the ownership and Tax basis of property, which such party may
possess. Each party shall make its employees reasonably available on a mutually
convenient basis at its cost to provide explanation of any documents or
information so provided.
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Subject to the preceding sentence, each party required to file tax returns
pursuant to this Agreement shall bear all costs of filing such tax returns.
5.5 STOCK OPTIONS. As promptly as practicable after the Closing, LandCare
shall cause its Compensation Committee to grant options to acquire an aggregate
of 33,334 shares of LandCare Stock to key employees of the Company designated by
the Stockholder. Such options shall be granted pursuant to and in accordance
with the LandCare 1998 Long-Term Incentive Plan, and shall have exercise prices
equal to the closing price of LandCare shares on the New York Stock Exchange on
the Closing Date (as reported in the Wall Street Journal).
6. INDEMNIFICATION
The Stockholder and LandCARE each make the following covenants that are
applicable to them, respectively:
6.1 SURVIVAL OF STOCKHOLDER'S REPRESENTATIONS AND WARRANTIES.
(a) The representations and warranties of the Stockholder made in
Sections 2.1 (Due Organization), 2.2 (Authorization), 2.3 (Capital Stock of the
Company) and 2.17 (Taxes) of this Agreement shall survive the Closing until the
expiration of the periods prescribed by the applicable statutes of limitations
(including any extensions thereof) relating thereto; the representations and
warranties of the Stockholder made in Section 2.9 (Environmental Matters) shall
survive the Closing for a period of five years after the Closing Date; and the
other representations and warranties of the Stockholder made herein shall
survive the Closing for a period of one year after the Closing Date; provided,
however, that representations and warranties and indemnification provisions with
respect to which a claim is made within the survival period shall survive until
such claim is finally determined and paid.
(b) The representations and warranties of LandCARE made in this
Agreement shall survive the Closing for a period of one year following the
Closing Date; provided, however, that representations and warranties with
respect to which a claim is made within such one-year period shall survive until
such claim is finally determined and paid.
(c) The date on which a representation or warranty expires as
provided herein is herein called the "Expiration Date." No claim for
indemnification may be made with respect to a representation or warranty after
the Expiration Date, other than claims based on fraud.
6.2 GENERAL INDEMNIFICATION BY THE STOCKHOLDER. The Stockholder covenants
and agrees that it will indemnify, defend, protect, and hold harmless the
Surviving Corporation,
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LandCARE and its subsidiaries and all of their officers, directors, employees,
stockholders, agents, representatives and affiliates at all times from and after
the date of this Agreement until the Expiration Date from and against all
claims, damages actions, suits, proceedings, demands, assessments, adjustments,
costs and expenses (including specifically, but without limitation, reasonable
attorneys' fees and expenses of investigation) (collectively "Damages") incurred
by such indemnified person as a result of or incident to (i) any breach of any
representation or warranty of the Stockholder set forth herein, and (ii) any
breach or nonfulfillment of any covenant or agreement by the Company or the
Stockholder under this Agreement.
6.3 SPECIFIC INDEMNIFICATION BY THE STOCKHOLDER. The Stockholder covenants
and agrees that he will indemnify, defend, protect, and hold harmless the
Surviving Corporation, LandCARE and its subsidiaries and all of their officers,
directors, employees, stockholders, agents, representatives and affiliates at
all times from and after the date of this Agreement until the Expiration Date
from and against any taxes due and penalties, interest, assessments,
adjustments, costs, and expenses arising out of any matter described on SCHEDULE
6.3.
6.4 INDEMNIFICATION BY LANDCARE. LandCARE covenants and agrees that it
will indemnify, defend, protect and hold harmless the Stockholder at all times
from and after the date of this Agreement until the Expiration Date from and
against all Damages incurred by the Stockholder as a result of (i) any breach of
any representation or warranty of LandCARE set forth herein; and (ii) any breach
or nonfulfillment of any covenant or agreement by LandCARE under this Agreement.
6.5 THIRD PERSON CLAIMS. Promptly after any party hereto (the "Indemnified
Party") has received notice of or has knowledge of any claim by a person not a
party to this Agreement ("Third Person") or the commencement of any action or
proceeding by a Third Person that may give rise to a right of indemnification
hereunder, such Indemnified Party shall give to the party obligated to provide
indemnification hereunder (an "Indemnifying Party") written notice of such claim
or the commencement of such action or proceeding; provided, however, that the
failure to give such notice will not relieve such Indemnifying Party from
liability under this Section with respect to such claim, action or proceeding,
except to the extent that the Indemnifying Party has been actually prejudiced as
a result of such failure. The Indemnifying Party (at its own expense) shall have
the right and shall be given the opportunity to associate with the Indemnified
Party in the defense of such claim, suit or proceedings, and may select counsel
for the Indemnified Party, such counsel to be reasonably satisfactory to the
Indemnified Party. The Indemnified Party shall not, except at its own cost, make
any settlement with respect to any such claim, suit or proceeding without the
prior consent of the Indemnifying Party, which consent shall not be unreasonably
withheld or delayed. It is understood and agreed that in situations where
failure of the Indemnifying Party to settle a claim expeditiously could have an
adverse effect on the Indemnified Party, the failure of the Indemnifying Party
to act upon the Indemnified Party's request for consent to such settlement
within five business days of the
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Indemnifying Party's receipt of notice thereof from the Indemnified Party shall
be deemed to constitute consent by the Indemnifying Party of such settlement for
purposes of this Section.
6.6 METHOD OF PAYMENT. Claims for indemnification may be paid in cash or
shares of LandCare Stock. The Stockholder hereby authorizes LandCare to withhold
delivery of an aggregate of One Hundred Eleven Thousand, One Hundred and Eleven
(111,111) shares of LandCare Stock otherwise deliverable to the Stockholder
pursuant to this Agreement for a period of one year following the Closing Date,
which shares shall be used to satisfy any indemnification obligation the
Stockholder may have to LandCare, unless the Stockholder elects to pay any such
amount in cash. In the event any such claim is paid by the delivery of any of
such shares, such shares shall be valued based on the closing prices of LandCare
shares on the New York Stock Exchange for the 60 trading days ending ten days
prior to the date any such payment is to be made unless the parties otherwise
agree. In the event that the Stockholder becomes liable to LandCare for a claim
for indemnification pursuant to this Agreement that cannot be satisfied by the
delivery of such shares, the Stockholder shall be permitted to sell any or all
of the shares of LandCare Stock received pursuant to this Agreement without
restriction, including the restrictions set forth in Section 9.2, beginning on
the date one year after the Closing Date.
7. NONCOMPETITION
7.1 PROHIBITED ACTIVITIES. As partial consideration for the execution,
delivery and performance of this Agreement by LandCARE, the Stockholder will
not, for a period of five years following the Closing Date, for any reason
whatsoever, directly or indirectly, for himself or on behalf of or in
conjunction with any other person, persons, company, partnership, corporation or
business of whatever nature:
(i) own, manage, operate, join, control, consult or advise (whether
or not compensated for such consultation or advice), or participate in, or
render assistance to, or derive any benefit whatever from, any business
offering services or products in direct competition with the Surviving
Corporation at the date hereof (the "Business") within 100 miles of where
the Company conducted business at any time within one year prior to the
Closing Date (the "Territory");
(ii) engage, as an officer, director, shareholder, owner, partner,
joint venturer, or in a sales or managerial capacity, whether as an
employee, independent contractor, consultant or advisor, or as a sales
representative, in any business offering services or products in direct
competition with the Surviving Corporation or LandCARE within the
Territory; provided that such restriction shall apply only to the Business
and any incidental expansions thereto;
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(iii) call upon any person who is, at that time, an employee of
LandCARE or any of its subsidiaries (including the Surviving Corporation)
for the purpose or with the intent of enticing such employee away from or
out of the employ of LandCARE or any of its subsidiaries (including the
Surviving Corporation);
(iv) call upon any person or entity which is, at that time, or which
has been, within one year prior to the Closing Date, a customer of
LandCARE, the Company or any of LandCARE's subsidiaries (including the
Surviving Corporation) for the purpose of soliciting or selling products
or services in direct competition with LandCARE or any of its subsidiaries
(including the Company) within the Territory.
Notwithstanding the above, the foregoing covenants shall not be deemed to
prohibit the Stockholder from acquiring as a passive investor with no
involvement in the operations or management of the business, not more than two
percent (2%) of the capital stock of a competing business whose stock is
publicly traded on a national securities exchange or over-the-counter market.
The provisions of this Section are independent of the noncompetition
provisions contained in any consulting or employment agreement to which the
Stockholder may be or may become a party in connection with the transactions
contemplated hereby. All such provisions are intended to be observed and
enforced in accordance with their terms.
7.2 EQUITABLE RELIEF. Because of the difficulty of measuring economic
losses to LandCARE as a result of a breach of the foregoing covenant, and
because of the immediate and irreparable damage that could be caused to LandCARE
for which it would have no other adequate remedy, the Stockholder agrees that
the foregoing covenant may be enforced by LandCARE in the event of breach by the
Stockholder, by injunctions, restraining orders and other equitable actions.
7.3 REASONABLE RESTRAINT. It is agreed by the parties hereto that the
foregoing covenants in this Section impose a reasonable restraint on the
Stockholder.
7.4 SEVERABILITY; REFORMATION. The covenants in this Section are severable
and separate, and the unenforceability of any specific covenant shall not affect
the provisions of any other covenant. Moreover, in the event any court of
competent jurisdiction shall determine that the scope, time or territorial
restrictions set forth are unreasonable, then it is the intention of the parties
that such restrictions be enforced to the fullest extent which the court deems
reasonable, and the Agreement shall thereby be reformed.
7.5 INDEPENDENT COVENANT. The Stockholder acknowledges that his covenants
set forth in this Section are material conditions to LandCARE's willingness to
execute and deliver this Agreement and to consummate the transactions
contemplated hereby. All of the covenants in this
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Section shall be construed as an agreement independent of any other provision in
this Agreement, and the existence of any claim or cause of action of the
Stockholder against LandCARE or any subsidiary thereof, whether predicated on
this Agreement or otherwise, shall not constitute a defense to the enforcement
by LandCARE of such covenants. It is specifically agreed that the period of five
years stated at the beginning of this Section, during which the agreements and
covenants of the Stockholder made in this Section shall be effective, shall be
computed by excluding from such computation any time during which the
Stockholder is in violation of any provision of this Section. The covenants
contained in Section shall not be affected by any breach of any other provision
hereof by any party hereto. Not withstanding any other provision hereof, no
action shall be initiated for breach of Section 7.1 after the date five years
after the Closing Date.
8. NONDISCLOSURE OF CONFIDENTIAL INFORMATION
8.1 GENERAL. The Stockholder recognizes and acknowledges that he has had
access to certain customer lists, confidential information of the Company, such
as operational policies, pricing and cost policies, and other information, that
will be valuable, special and unique assets of the Surviving Corporation and
LandCARE after the Closing Date. The Stockholder agrees that he will not
disclose such confidential information, or any confidential information of the
Surviving Corporation or LandCARE to which they may have access in the future,
to any person, firm, corporation, association or other entity for any purpose or
reason whatsoever, except (a) to authorized representatives of LandCARE, (b)
following the Closing, such information may be disclosed by the Stockholder as
may be required in the course of performing his duties for the Surviving
Corporation and (c) to counsel and other advisers, provided that such advisers
(other than counsel) agree to the confidentiality provisions of this Section,
unless (i) such information becomes known to the public generally through no
fault of the Stockholder, or (ii) disclosure is required by law or the order of
any governmental authority, provided, that prior to disclosing any information
pursuant to this clause (ii), the Stockholder shall give prior written notice
thereof to LandCARE and provide LandCARE with the opportunity to contest such
disclosure. In the event of a breach or threatened breach by the Stockholder of
the provisions of this Section, LandCARE shall be entitled to injunctive or
other equitable relief restraining the Stockholder from disclosing, in whole or
in part, such confidential information. Nothing herein shall be construed as
prohibiting LandCARE from pursuing any other available remedy for such breach or
threatened breach, including the recovery of damages.
8.2 EQUITABLE RELIEF. Because of the difficulty of measuring economic
losses as a result of the breach of the foregoing covenants, and because of the
immediate and irreparable damage that would be caused for which LandCARE would
have no other adequate remedy, the Stockholder agrees that the foregoing
covenants may be enforced against him by injunctions, restraining orders and
other appropriate equitable relief.
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8.3 SURVIVAL. The obligations of the parties under this Section shall
survive the termination of this Agreement for an unlimited time with respect to
proprietary information and a period of five years with respect to
non-proprietary information.
9 INTENDED TAX TREATMENT
9.1 TAX-FREE REORGANIZATION. The parties are entering into this Agreement
with the intention that the Merger qualify as a tax-free reorganization for
federal income tax purposes, except to the extent of any "boot" received, and
the Stockholder will not take any actions that disqualify the Merger for such
treatment. The Stockholder represents, warrants and covenants that:
(i) the Company operates at least one historic business line, or
owns at least a significant portion of its historic business assets, in each
case within the meaning of Reg. 1.368-1(d) under the Code; and
(ii) immediately after the Merger, the Company will hold
"substantially all of its properties" within the meaning of Section 368(a)(2)(E)
of the Code (that is, after the Merger, the Company will hold at least 90% of
the fair market value of the net assets, and at least 70% of the gross assets,
held by the Company immediately prior to the Merger.) For purposes of the
preceding sentence, amounts paid by the Company to dissenters, amounts paid by
the Company to shareholders who receive cash or other property and Company
assets used to pay reorganization expenses and all redemptions and distributions
(except for normal dividends) made by the Company immediately preceding the
Effective Time, pursuant to this Agreement or otherwise as part of the plan of
Merger provided for herein, will be included as assets of the Company held
immediately prior to the Merger.
9.2 RESTRICTIONS ON RESALE. The Stockholder agrees that he will not sell,
offer to sell, or otherwise transfer or dispose of, any shares of the LandCARE
Stock received by the Stockholder, engage in put, call, short-sale, straddle or
similar transactions, or in any other way reduce the Stockholder's risk of
owning shares of LandCARE Stock prior to the date two years after the Closing
Date except as set forth below, and agrees that the certificates evidencing the
LandCARE Stock to be received by the Stockholder will bear a legend evidencing
this restriction. Beginning on the date one year after the Closing Date, the
Stockholder may sell shares of LandCARE Stock received pursuant to this
Agreement pursuant to the LandCARE Liquidity Plan, a summary of which is
attached hereto as SCHEDULE 9.2.
10 SECURITIES LAW MATTERS
10.1 ECONOMIC RISK; SOPHISTICATION. The Stockholder acknowledges and
confirms that he has received and reviewed a Prospectus from LandCARE relating
to his acquisition of shares of LandCARE Stock hereunder. The Stockholder (A)
has such knowledge, sophistication and experience
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in business and financial matters that he is capable of evaluating the merits
and risks of an investment in the shares of LandCARE Stock, (B) fully
understands the nature, scope and duration of any limitations on transfer of
LandCARE Stock described in this Agreement and (C) can bear the economic risk of
an investment in the shares of LandCARE Stock.
10.2 COMPLIANCE WITH LAW. The Stockholder covenants that none of the
LandCARE Stock acquired by the Stockholder hereunder will be offered, sold,
assigned, hypothecated, transferred or otherwise disposed of by the Stockholder
except in full compliance with all applicable securities laws.
11. GENERAL
11.1 SUCCESSORS AND ASSIGNS. This Agreement and the rights of the parties
hereunder may not be assigned (except by operation of law) and shall be binding
upon and shall inure to the benefit of the parties hereto, the successors of
LandCARE, and the heirs and legal representatives of the Stockholder.
11.2 ENTIRE AGREEMENT. This Agreement (including the schedules, exhibits
and annexes attached hereto) and the documents delivered pursuant hereto
constitute the entire agreement and understanding among the Stockholder, the
Company and LandCARE, and supersede any prior agreement and understanding
relating to the subject matter of this Agreement. This Agreement, upon
execution, constitutes a valid and binding agreement of the parties hereto,
enforceable in accordance with its terms, and may be modified or amended only by
a written instrument executed by the parties hereto.
11.3 COUNTERPARTS. This Agreement may be executed simultaneously in two or
more counterparts, each of which shall be deemed an original and all of which
together shall constitute but one and the same instrument. The signatures to
this Agreement need not all be on a single copy of this Agreement, and may be
facsimiles rather than originals, and shall be fully as effective as though all
signatures were originals on the same copy.
11.4 BROKERS AND AGENTS. Each party represents and warrants that it
employed no broker or agent in connection with this transaction and agrees to
indemnify the other parties hereto against all loss, cost, damages or expense
arising out of claims for fees or commission of brokers employed or alleged to
have been employed by such indemnifying party.
11.5 NOTICES. All notices and communications required or permitted
hereunder shall be in writing and may be given by depositing the same in United
States mail, addressed to the party to
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be notified, postage prepaid and registered or certified with return receipt
requested, or by delivering the same in person to an officer or agent of such
party, or by facsimile, as follows:
If to LandCARE, addressed to it at:
LandCARE USA, Inc.
0000 Xxx Xxxxxx, Xxxxx 000
Xxxxxxx, Xxxxx 00000
Attn: General Counsel
Facsimile No. (000) 000-0000
If to the Company, addressed to it at:
Horticulture Industries, Inc.
0000 Xxxxxx Xxxx
Xxxxxxxx, Xxxxxxx 00000
If to the Stockholder, addressed to him at the Company's address,
or to such other address as any party hereto shall specify pursuant to this
Section from time to time.
11.6 GOVERNING LAW. This Agreement shall be construed in accordance with
the laws of the State of Florida without regard to its principles governing
conflicts of laws.
11.7 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The representations,
warranties, covenants and agreements of the parties made herein and at the time
of the Closing or in writing delivered pursuant to the provisions of this
Agreement shall survive the consummation of the transactions contemplated hereby
and any examination on behalf of the parties until the applicable Expiration
Date or as otherwise provided herein.
11.8 EXERCISE OF RIGHTS AND REMEDIES. Except as otherwise provided herein,
no delay of or omission in the exercise of any right, power or remedy accruing
to any party as a result of any breach or default by any other party under this
Agreement shall impair any such right, power or remedy, nor shall it be
construed as a waiver of or acquiescence in any such breach or default, or of
any similar breach or default occurring later; nor shall any waiver of any
single breach or default be deemed a waiver of any other breach or default
occurring before or after that waiver.
11.9 TIME. Time is of the essence with respect to this Agreement.
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11.10 REFORMATION AND SEVERABILITY. In case any provision of this
Agreement shall be invalid, illegal or unenforceable, it shall, to the extent
possible, be modified in such manner as to be valid, legal and enforceable but
so as to most nearly retain the intent of the parties, and if such modification
is not possible, such provision shall be severed from this Agreement, and in
either case the validity, legality and enforceability of the remaining
provisions of this Agreement shall not in any way be affected or impaired
thereby.
11.11 REMEDIES CUMULATIVE. No right, remedy or election given by any term
of this Agreement shall be deemed exclusive but each shall be cumulative with
all other rights, remedies and elections available at law or in equity.
11.12 CAPTIONS. The headings of this Agreement are inserted for
convenience only, and shall not constitute a part of this Agreement or be used
to construe or interpret any provision hereof.
11.13 PRESS RELEASES AND PUBLIC ANNOUNCEMENTS. No party shall issue any
press release or make any public announcement relating to the subject matter of
this Agreement without the prior written approval of the other party; provided,
however, that LandCARE may issue a press release in accordance with its
customary practices without such approval and any party may make any public
disclosure it believes in good faith is required by applicable law or any
listing or trading agreement concerning its publicly-traded securities.
11.14 NO THIRD-PARTY BENEFICIARIES. This Agreement shall not confer any
rights or remedies upon any person other than the parties and their respective
successors and permitted assigns.
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N 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
Name: XXXXXXX X. XXXXXXX
Title: Sr. Vice President
HI ACQUISITION CORP.
By: /s/ XXXXXXX X. XXXXXXX
Name: XXXXXXX X. XXXXXXX
Title: President
HORTICULTURE INDUSTRIES, INC.
By: /s/ XXXXXXX X. XXXXXX
Name: XXXXXXX X. XXXXXX
Title: President
/s/ XXXXXXX X. XXXXXX
Xxxxxxx X. Xxxxxx
