EXHIBIT 2.4
EXECUTION COPY
AGREEMENT AND PLAN OF MERGER
dated as of August 5, 1998
by and among
LANDCARE USA, INC.
CCI ACQUISITION CORP.
CLEAN CUT, INC.
and
the Stockholders named herein
TABLE OF CONTENTS
Page
1. THE MERGER.............................................................1
1.1 The Merger.......................................................1
1.2 Effective Time...................................................1
1.3 Articles of Incorporation and By-laws of Surviving Corporation...2
1.4 Effect of Merger.................................................2
1.5 Manner of Conversion.............................................2
1.6 Delivery of Certificates.........................................3
1.7 Closing..........................................................3
2. REPRESENTATIONS AND WARRANTIES OF THE STOCKHOLDERS.....................3
2.1 Due Organization.................................................4
2.2 Authorization....................................................4
2.3 Capital Stock of the Company.....................................4
2.4 Subsidiaries.....................................................5
2.5 Financial Statements.............................................5
2.6 Liabilities and Obligations......................................6
2.7 Accounts and Notes Receivable....................................6
2.8 Permits and Intangibles..........................................6
2.9 Environmental Matters............................................7
2.10 Personal Property................................................7
2.11 Significant Customers; Material Contracts and Commitments........8
2.12 Real Property....................................................8
2.13 Insurance.......................................................10
2.14 Compensation; Employment Agreements; Organized Labor Matters....10
2.15 Employee Benefit Plans..........................................10
2.16 Conformity with Law; Litigation.................................12
2.17 Taxes...........................................................12
2.18 No Violations; All Required Consents Obtained...................14
2.19 Absence of Changes..............................................14
2.20 Powers of Attorney..............................................16
2.21 Competing Lines of Business; Related-party Transactions.........16
2.22 Disclosure......................................................16
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2.23 Certain Business Practices......................................16
2.24 No Notice to Bargaining Agents..................................16
2.25 Notices and Consents............................................16
2.26 Year 2000 Compliance............................................17
2.27 Reliance Upon Oral Representations..............................17
2.28 Software........................................................17
3. REPRESENTATIONS OF LANDCARE AND NEWCO.................................17
3.1 Due Organization................................................17
3.2 Authorization...................................................18
3.3 Capital Stock of LandCARE and Newco.............................18
3.5 Reports; Financial Statements...................................20
3.6 Absence of Certain Changes or Events............................20
3.7 Absence of Litigation...........................................20
3.8 Tax Matters; Pooling............................................21
3.9 Vote Required...................................................21
3.10 Newco...........................................................21
4. DELIVERIES............................................................21
4.1 Instruments of Transfer.........................................21
4.2 Certificate of Merger...........................................21
4.3 Employment Agreement............................................21
4.4 Opinion of Counsel..............................................21
4.5 Good Standing Certificates......................................21
4.6 Indebtedness to Company.........................................22
4.7 Consents........................................................22
4.8 Resignations of Directors and Officers..........................22
4.9 Accounting Treatment............................................22
5. POST-CLOSING COVENANTS................................................22
5.1 Future Cooperation; Further Assurances..........................22
5.2 Expenses........................................................22
5.3 Certain Agreements..............................................23
5.4 Preparation and Filing of Tax Returns...........................23
5.5 Stock Options...................................................24
5.6 Stockholder Guarantees..........................................24
5.7 Bank Indebtedness...............................................24
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6. INDEMNIFICATION.......................................................25
6.1 Survival of Stockholders' Representations and Warranties. .....25
6.2 General Indemnification by the Stockholders.....................25
6.3 Indemnification by LandCARE.....................................26
6.4 Third Person Claims.............................................26
6.5 Method of Payment...............................................26
6.6 Limitations on Indemnification..................................27
6.7 Exclusive Remedy................................................27
7. NONCOMPETITION........................................................27
7.1 Prohibited Activities...........................................27
7.2 Equitable Relief................................................28
7.3 Reasonable Restraint............................................28
7.4 Severability; Reformation.......................................28
7.5 Independent Covenant............................................28
8. NONDISCLOSURE OF CONFIDENTIAL INFORMATION.............................29
8.1 General.........................................................29
8.2 Equitable Relief................................................29
8.3 Survival........................................................29
9 INTENDED TAX AND ACCOUNTING TREATMENT
.....................................................................29
9.1 Tax-Free Reorganization.........................................30
9.2 Restrictions on Resale..........................................30
10 SECURITIES LAW MATTERS................................................31
10.1 Economic Risk; Sophistication...................................31
10.2 Compliance with Law.............................................31
11. GENERAL...............................................................31
11.1 Successors and Assigns..........................................31
11.2 Entire Agreement................................................31
11.3 Counterparts....................................................31
11.4 Brokers and Agents..............................................32
11.5 Notices.........................................................32
11.6 Governing Law...................................................33
11.7 Survival of Representations and Warranties......................33
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11.8 Effect of Investigation.........................................33
11.9 Exercise of Rights and Remedies.................................33
11.10 Time............................................................33
11.11 Reformation and Severability....................................33
11.12 Remedies Cumulative.............................................33
11.13 Captions........................................................34
11.14 Press Releases and Public Announcements.........................34
11.15 No Third-Party Beneficiaries....................................34
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SCHEDULES
SCHEDULE 2.1. Due Organization
SCHEDULE 2.4. Subsidiaries
SCHEDULE 2.5. Financial Statements
SCHEDULE 2.6. Liabilities and Obligations
SCHEDULE 2.7. Accounts and Notes Receivable
SCHEDULE 2.8. Permits and Intangibles
SCHEDULE 2.9. Environmental Matters
SCHEDULE 2.10. Personal Property
SCHEDULE 2.11. Significant Customers; Material Contracts and Commitments
SCHEDULE 2.12. Real Property
SCHEDULE 2.13. Insurance
SCHEDULE 2.14. Compensation; Employment Agreements; Organized Labor Matters
SCHEDULE 2.15. Employee Benefit Plans
SCHEDULE 2.16. Conformity with Law; Litigation
SCHEDULE 2.18. No Violations; No Consents Required
SCHEDULE 2.19. Absence of Changes
SCHEDULE 2.20. Powers of Attorney
SCHEDULE 2.21. Competing Lines of Business; Related Party Transactions
SCHEDULE 2.25. Notices and Consents
SCHEDULE 2.26. Pro Forma Adjustments
SCHEDULE 4.3 Persons Entering into Employment Agreements
SCHEDULE 4.5. Leases
SCHEDULE 5.3. Certain Agreements
ANNEXES
Annex I - Certificate of Merger
Annex II - Form of Employment Agreement
Annex III - Form of Opinion of Counsel to Company and
Stockholders
Annex IV - Form of Opinion of Counsel to LandCARE
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AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (this "Agreement") is made and entered
into as of August 5, 1998 by and among LandCARE USA, Inc., a Delaware
corporation ("LandCARE"), CCI Acquisition Corp., a Texas corporation ("Newco"),
Clean Cut, Inc., a Texas corporation (the "Company"), and the persons listed on
the signature pages of this Agreement as the stockholders of the Company (the
"Stockholders"). The Stockholders are the only holders of capital stock of the
Company.
WHEREAS, the respective Boards of Directors of Newco and the Company
(collectively called the "Constituent Corporations") deem it advisable and in
the best interests of the Constituent Corporations and their respective
stockholders that Newco merge with and into the Company pursuant to this
Agreement and the applicable provisions of the laws of the State of Texas (the
"State of Incorporation"); and
WHEREAS, the Boards of Directors of the Constituent Corporations have
approved and adopted this Agreement as a plan of reorganization under Section
368 of the Internal Revenue Code of 1986, as amended (the "Code"); and
WHEREAS, on the date hereof the parties are consummating the transactions
described herein;
NOW, THEREFORE, in consideration of the premises and of the mutual
agreements contained herein, the parties hereto, intending to be legally bound,
agree as follows:
1. THE MERGER
1.1 THE MERGER. On the terms and subject to the conditions of this
Agreement, at the Effective Time (as defined below), Newco shall be merged with
and into the Company (the "Merger") and the separate existence of Newco shall
cease, all in accordance with the provisions of the law of the State of
Incorporation. The Company shall be the surviving corporation in the Merger and
is sometimes hereinafter called the "Surviving Corporation."
1.2 EFFECTIVE TIME. The Merger shall become effective at such time (the
"Effective Time") as a certificate of merger, in a form appropriate for filing,
is filed with the Secretary of State
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(or other appropriate authority) of the State of Incorporation (the "Merger
Filing"). The Merger Filing shall be made simultaneously with or as soon as
practicable after the execution and delivery of this Agreement.
1.3 ARTICLES OF INCORPORATION AND BY-LAWS OF SURVIVING CORPORATION. At the
Effective Time, the Articles of Incorporation of the Company then in effect
shall be the Articles of Incorporation of the Surviving Corporation, and the
By-laws of Newco then in effect shall become the By-laws of the Surviving
Corporation.
1.4 EFFECT OF MERGER. At the Effective Time, the effect of the Merger
shall be as provided in the law of the State of Incorporation. Except as herein
specifically set forth, the identity, existence, purposes, powers, objects,
franchises, privileges, rights and immunities of the Company shall continue
unaffected and unimpaired by the Merger and the corporate franchises, existence
and rights of Newco shall be merged with and into the Company, and the Company,
as the Surviving Corporation, shall be fully vested therewith. At the Effective
Time, the separate existence of Newco shall cease and, in accordance with the
terms of this Agreement, the Surviving Corporation shall possess all the rights,
privileges, immunities and franchises, of a public, as well as of a private,
nature, and all property, real, personal and mixed, and all debts due on
whatever account, including subscriptions to shares, and all taxes, including
those due and owing and those accrued, and all other choses in action, and all
and every other interest of or belonging to or due to the Company and Newco
shall be taken and deemed to be transferred to, and vested in, the Surviving
Corporation without further act or deed; and all property, rights and
privileges, powers and franchises and all and every other interest shall be
thereafter as effectually the property of the Surviving Corporation as they were
of the Company and Newco; and the title to any real estate, or interest therein,
whether by deed or otherwise, under the laws of the State of Incorporation
vested in the Company and Newco, shall not revert or be in any way impaired by
reason of the Merger. Except as otherwise provided herein, the Surviving
Corporation shall thenceforth be responsible and liable for all the liabilities
and obligations of the Company and Newco and any claim existing, or action or
proceeding pending, by or against the Company or Newco may be prosecuted as if
the Merger had not taken place, or the Surviving Corporation may be substituted
in their place. Neither the rights of creditors nor any liens upon the property
of the Company or Newco shall be impaired by the Merger, and all debts,
liabilities and duties of the Company and Newco shall attach to the Surviving
Corporation, and may be enforced against the Surviving Corporation to the same
extent as if said debts, liabilities and duties had been incurred or contracted
by such Surviving Corporation.
1.5 MANNER OF CONVERSION. The manner of converting the shares of (i)
outstanding capital stock of the Company ("Company Stock") and (ii) issued and
outstanding capital stock of Newco ("Newco Stock") immediately prior to the
Effective Time, respectively, into shares of (x)
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LandCARE Stock (as defined below) and (y) common stock of the Surviving
Corporation, respectively, shall be as follows:
As of the Effective Time:
1. Each share of Company Stock issued and outstanding
immediately prior to the Effective Time, by virtue of the Merger and without any
action on the part of the holder thereof, automatically shall be converted into
the right to receive its pro rata interest in the aggregate consideration
payable to all holders of Company Stock, which consideration shall consist
solely of an aggregate of One Million Six Hundred Eighty-Eight Thousand Five
Hundred Twenty-Seven (1,688,527) shares of common stock, par value $.01 per
share, of LandCARE ("LandCARE Stock");
2. All shares of Company Stock, if any, that are held by the
Company as treasury stock shall be canceled and retired, and no shares of
LandCARE Stock or other consideration shall be delivered or paid in exchange
therefor; and
3. Each share of Newco Stock issued and outstanding
immediately prior to the Effective Time, shall, by virtue of the Merger and
without any action on the part of LandCARE, automatically be converted into one
fully paid and non-assessable share of common stock of the Surviving
Corporation, which shall constitute all of the issued and outstanding shares of
common stock of the Surviving Corporation, and shall be owned by LandCARE,
immediately after the Effective Time.
1.6 DELIVERY OF CERTIFICATES. At the Closing, (i) the Stockholders shall
deliver to LandCARE the certificates representing the Company Stock, duly
endorsed in blank by the Stockholders, or accompanied by blank stock powers, and
with all necessary transfer tax and other revenue stamps, acquired at the
Stockholders' expense, affixed and canceled, and (ii) LandCARE shall cause its
stock transfer agent to deliver to the Stockholders certificates representing
the LandCARE Stock as described above. The Stockholders agree promptly to cure
any deficiencies with respect to the endorsement of the stock certificates or
other documents of conveyance with respect to such Company Stock or with respect
to the stock powers accompanying any Company Stock.
1.7 CLOSING. The transactions contemplated by this Agreement are being
consummated on the date hereof, and the date hereof is sometimes herein called
the "Closing Date."
2. REPRESENTATIONS AND WARRANTIES OF THE STOCKHOLDERS
The Stockholders jointly and severally hereby represent and warrant to
LandCARE as follows:
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2.1 DUE ORGANIZATION. The Company is a corporation duly organized, validly
existing and in good standing under the laws of the State of Incorporation, and
has all requisite power and authority to carry on its business as it is now
being conducted. The Company is duly qualified to do business and is in good
standing in each jurisdiction in which the nature of its business or the
ownership or leasing of its properties makes such qualification necessary,
except where the failure to be so authorized or qualified would not have a
material adverse effect on the business, assets, operations or condition
(financial or otherwise) of the Company (as used herein with respect to the
Company, or with respect to any other person, a "Material Adverse Effect").
SCHEDULE 2.1 sets forth a list of all jurisdictions in which the Company is
authorized or qualified to do business. True, complete and correct copies of the
Articles of Incorporation and By-laws, each as amended, of the Company (the
"Charter Documents") are all attached to SCHEDULE 2.1. The stock records of the
Company, a copy of which is attached to SCHEDULE 2.1, are correct and complete
in all material respects. All records of all proceedings of the Board of
Directors and stockholders of the Company have been made available to LandCARE.
2.2 AUTHORIZATION. (i) The representative of the Company executing this
Agreement has the authority to enter into and bind the Company to the terms of
this Agreement and (ii) the Company has the full legal right, power and
authority to enter into this Agreement and the transactions contemplated hereby,
all of which have been approved by the Stockholders and the Board of Directors
of the Company. This Agreement has been validly executed and delivered by the
Company and the Stockholders and constitutes the legal, valid and binding
obligation of each of them, enforceable in accordance with its terms.
2.3 CAPITAL STOCK OF THE COMPANY. The authorized capital stock of the
Company consists solely of 100,000 shares of common stock, par value $1.00 per
share, of which 90 shares are issued and outstanding and constitute all of the
issued and outstanding shares of Company Stock (the "Shares"). All of the Shares
are owned of record and beneficially by the Stockholders and, except as set
forth on SCHEDULE 2.3, are owned free and clear of all liens, security
interests, pledges, charges, voting trusts, restrictions, encumbrances and
claims of every kind. All of the Shares have been duly authorized and validly
issued, are fully paid and nonassessable, and were offered, issued, sold and
delivered by the Company in compliance with all applicable state and federal
laws governing the issuance of securities. None of the Shares were issued in
violation of any preemptive rights or similar rights of any person. No option,
warrant, call, conversion right or commitment of any kind exists which obligates
the Company to issue any additional shares of its capital stock or obligates the
Stockholders to transfer any of the Shares to any person except pursuant to this
Agreement.
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2.4 SUBSIDIARIES. Except as set forth on SCHEDULE 2.4, the Company has no
subsidiaries or d/b/a names and has not conducted business under any other name
except its legal name as set forth in its Charter Documents. Except as set forth
in SCHEDULE 2.4, the Company does not own, of record or beneficially, or
control, directly or indirectly, any capital stock, securities convertible into
capital stock or any other equity interest in any corporation, association or
other business entity, and the Company is not, directly or indirectly, a
participant in any joint venture, partnership or other non-corporate entity.
2.5 FINANCIAL STATEMENTS. Complete and correct copies of the following
financial statements are attached as SCHEDULE 2.5:
(i) The balance sheets of the Company as of December 31, 1997 (the
"Balance Sheet Date") and any related statements of operations,
stockholder's equity and cash flows for the three-year period then ended,
together with any related notes and schedules (the "Year-end Financial
Statements"); and
(ii) The balance sheet (the "Interim Balance Sheet") of the Company
as of June 30, 1998 and the related statements of operations for the
six-month period then ended (the "Interim Financial Statements"). (The
Year-end Financial Statements and the Interim Financial Statements are
herein collectively called the "Financial Statements".)
Except as set forth on SCHEDULE 2.5, the Year-end Financial Statements
have been prepared from the books and records of the Company in conformity with
generally accepted accounting principles applied on a basis consistent with
preceding years and throughout the periods involved ("GAAP"), and present fairly
in all material respects the financial position and results of operations of the
Company as of the dates of such statements and for the periods covered thereby.
The books of account of the Company have been kept accurately in all material
respects in the ordinary course of business, the transactions entered therein
represent bona fide transactions, and the revenues, expenses, assets and
liabilities of the Company have been properly recorded therein in all material
respects.
Except as set forth on SCHEDULE 2.5, to the best knowledge of the
Stockholders, the Interim Financial Statements have been prepared from the books
and records of the Company in conformity with GAAP, subject to changes resulting
from normal period-end adjustments for recurring accruals (which will not be
material individually or in the aggregate) and to the absence of footnote
disclosure and other presentation items, and present fairly in all material
respects the financial position and results of operations of the Company as of
the dates of such statements and for the periods covered thereby. The
Stockholders do not represent or warrant, and the foregoing representation shall
not
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be deemed to constitute a representation or warranty, that any one or more of
the accruals, reserves or other adjustments to the Interim Financial Statements
made in connection with the recent review thereof are correct or appropriate;
however, to the best knowledge of the Stockholders, such accruals, reserves and
other adjustments, in the aggregate, are not inaccurate or inappropriate.
2.6 LIABILITIES AND OBLIGATIONS. Except as and to the extent disclosed and
adequately provided for in the Financial Statements or on SCHEDULE 2.6 hereto,
the Company has no material liabilities or obligations of any kind, whether
accrued, absolute, secured or unsecured, contingent or otherwise.
2.7 ACCOUNTS AND NOTES RECEIVABLE. SCHEDULE 2.7 sets forth an accurate
list of the accounts and notes receivable of the Company, as of the most recent
date practicable (which date is set forth thereon), showing amounts due in
30-day aging categories. Except to the extent reflected on SCHEDULE 2.7, all
such accounts, notes and other receivables were incurred in the ordinary course
of business and are collectible in the amounts shown on SCHEDULE 2.7, net of
reserves reflected in the balance sheet as of the Balance Sheet Date.
2.8 PERMITS AND INTANGIBLES. The Company holds all licenses, franchises,
permits and other governmental authorizations required or necessary in
connection with the conduct of the Company's business, except where the failure
to hold such would not have a Material Adverse Effect on the Company. SCHEDULE
2.8 sets forth an accurate list and summary description of all such licenses,
franchises, permits and other governmental authorizations, including permits,
titles (including licenses, franchises, certificates, trademarks, trade names,
patents, patent applications and copyrights owned or held by the Company or any
of its employees (including interests in software or other technology systems,
programs and intellectual property) (collectively, the "Intangible Assets") (it
being understood and agreed that a list of all environmental permits and other
environmental approvals is set forth on SCHEDULE 2.9). The Intangible Assets and
other governmental authorizations listed on SCHEDULES 2.8 and 2.9 are valid, and
the Company has not received any notice that any person intends to cancel,
terminate or not renew any such Intangible Assets or other governmental
authorization. The Company has conducted and is conducting its business in
compliance in all material respects with the requirements, standards, criteria
and conditions set forth in the Intangible Assets and other governmental
authorizations listed on SCHEDULES 2.8 and 2.9 and is not in violation of any of
the foregoing. Except as specifically set forth on SCHEDULE 2.8 or 2.9, the
transactions contemplated by this Agreement will not result in a material
default under or a material breach or material violation of, or adversely affect
the rights and benefits afforded to the Company by, any such Intangible Assets
or other governmental authorizations.
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2.9 ENVIRONMENTAL MATTERS. The Company has complied with and is in
compliance with all federal, state, local and foreign statutes (civil and
criminal), laws, ordinances, regulations, rules, notices, permits, judgments,
orders and decrees applicable to any of them or any of their respective
properties, assets, operations and businesses relating to environmental
protection (collectively "Environmental Laws"), including, without limitation,
Environmental Laws relating to air, water, land and the generation, storage,
use, handling, transportation, treatment or disposal of Hazardous Wastes,
Hazardous Materials and Hazardous Substances (including petroleum and petroleum
products) (as such terms are defined in any applicable Environmental Law) except
to the extent that noncompliance with any Environmental Laws, either singly or
in the aggregate, has not had and will not have a Material Adverse Effect on the
Company or any of its operations. The Company has obtained and adhered to in all
material respects all necessary permits and other approvals necessary to treat,
transport, store, dispose of and otherwise handle Hazardous Wastes, Hazardous
Materials and Hazardous Substances, a list of all of which permits and approvals
is set forth on SCHEDULE 2.9, and have reported to the appropriate authorities,
to the extent required by all Environmental Laws, all past and present sites
owned and operated by the Company where Hazardous Wastes, Hazardous Materials or
Hazardous Substances have been treated, stored, disposed of or otherwise
handled. There have been no releases or threats of releases (as defined in
Environmental Laws) by the Company and, to the knowledge of the Stockholders, by
other parties, at, from, in, under or on any property owned or operated by the
Company except as permitted by Environmental Laws. There is no on-site or, to
the knowledge of the Stockholders, off-site location to which the Company has
transported or disposed of Hazardous Wastes, Hazardous Materials or Hazardous
Substances or arranged for the transportation of Hazardous Wastes, Hazardous
Materials or Hazardous Substances which is the subject of any federal, state,
local or foreign enforcement action or any other investigation which could lead
to any claim against the Company or LandCARE for any clean-up cost, remedial
work, damage to natural resources, property damage or personal injury,
including, but not limited to, any claim under (i) the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as amended, (ii)
the Resource Conservation and Recovery Act, as amended, (iii) the Hazardous
Materials Transportation Act, as amended, or (iv) comparable state or local
statutes and regulations.
2.10 PERSONAL PROPERTY. SCHEDULE 2.10 sets forth an accurate list of (a)
all personal property included in "plant, property and equipment" or any similar
category on the balance sheet of the Company, (b) all other personal property
owned by the Company with a fair market value in excess of $10,000, and (c) all
leases and material agreements with respect to personal property, copies of
which have been delivered to LandCARE. SCHEDULE 2.10 indicates which assets are
currently owned, or were formerly owned, by the Stockholders or any affiliate of
the Company or the Stockholders. Except as set forth on SCHEDULE 2.10, (i) all
material personal property used by the Company in its business is either owned
by the Company or leased by the Company pursuant
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to a lease included on SCHEDULE 2.10, (ii) all of the personal property listed
on SCHEDULE 2.10 is in good working order and condition, ordinary wear and tear
excepted and (iii) all leases and agreements included on SCHEDULE 2.10 are in
full force and effect and constitute valid and binding agreements of the Company
and, to the knowledge of the Stockholders, of the other parties thereto (and
their successors) in accordance with their respective terms. Except as set forth
on SCHEDULE 2.10, the Company has good and marketable title to the tangible and
intangible personal property it purports to own, subject to no security
interest, pledge, lien, claim, conditional sales agreement, encumbrance, charge
or restriction on transfer that would have a Material Adverse Effect on the
Company.
2.11 SIGNIFICANT CUSTOMERS; MATERIAL CONTRACTS AND COMMITMENTS. SCHEDULE
2.11 sets forth a list of (i) all customers representing 5% or more of the
Company's revenues in its last full fiscal year ("Significant Customers"), and
(ii) all Material Contracts (as defined below) to which the Company is a party
or by which it or any of its properties are bound. For purposes of this
Agreement, the term "Material Contracts" mean any contracts between the Company
and its Significant Customers, joint venture or partnership agreements,
contracts with labor organizations, strategic alliances, options to purchase
land and other contracts which are not terminable on 60 days or less notice and
involve payments by the Company in any 12-month period in excess of $25,000.
True, complete and correct copies of such agreements have been delivered to
LandCARE. Except as described on SCHEDULE 2.11, (i) none of the Significant
Customers have canceled or substantially reduced or, to the knowledge of the
Stockholders, are currently attempting or threatening to cancel a contract or
substantially reduce utilization of the services provided by the Company, and
(ii) the Company has complied in all material respects with all commitments and
obligations pertaining to it, and is not in material default under any contracts
or agreements listed on SCHEDULE 2.11 and no notice of default under any such
contract or agreement has been received. The transactions contemplated by this
Agreement will not result in a material default under or a material breach or
material violation of, or materially adversely affect the rights and benefits
afforded to the Company by, any such contracts or agreements. SCHEDULE 2.11 also
includes a summary description of all plans or projects relating to the
Company's business involving the opening of new operations, expansion of
existing operations, the acquisition of any property, business or assets
requiring, in any event, the payment of more than $50,000 in the aggregate.
2.12 REAL PROPERTY. SCHEDULE 2.12 includes a list of all real property
owned or leased by the Company at the date hereof (the "Real Property"), and all
other real property, if any, used by the Company in the conduct of its business.
True, complete and correct copies of all leases and agreements with respect to
Real Property leased by the Company have been delivered to LandCARE, and an
indication as to which such properties, if any, are currently owned, or were
formerly owned, by the Stockholders or any affiliates of the Company or the
Stockholders is included in SCHEDULE
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2.12. The Company has good, marketable, and indefeasible title in fee simple to
the Real Property it purports to own, free and clear of all liens (except those
liens that will be released at or before the Closing Date, and except for (i)
liens for current taxes not yet payable and assessments not in default, (ii)
easements for utilities serving the Real Property, and (iii) easements,
covenants and restrictions and other exceptions to title that do not materially
and adversely affect the current use of the Real Property), and no party, except
as herein set forth, has or shall have any rights in, or to acquire, the Real
Property. All leases relating to Real Property leased by the Company from any of
the Stockholders or any affiliate of any of the Stockholders has been
terminated. Except as set forth on SCHEDULE 2.12, all of such leases included on
SCHEDULE 2.12 are in full force and effect and constitute valid and binding
agreements of the Company and, to the knowledge of the Stockholders, of the
parties (and their successors) thereto in accordance with their respective
terms. There are no leases, tenancy agreements, easements, covenants,
restrictions or any other instruments, agreements or arrangements which create
in or confer on any party, other than the Company, the right to occupy or
possess all or any portion of the Real Property or create in or confer on any
such party any right, title or interest in or to the Real Property or any
portion thereof or any interest therein except where such would not have a
Material Adverse Effect on the Company's use of such Real Property; no party
other than the Company occupies or possesses the Real Property or any portion
thereof; there is legal and adequate ingress and egress between each tract of
Real Property and an adjacent (or, if none, the closest) public roadway; the
Real Property is properly zoned in order to allow its current use in the
Company's businesses; and there are no claims or demands pending or, to the
knowledge of the Stockholders, threatened by any party against the Real Property
which, if valid, would create in, or confer on, any party other than the
Company, any material right, title or interest in or to the Real Property or any
portion thereof. None of the buildings, structures or improvements described on
SCHEDULE 2.12, or the operation or maintenance thereof as now operated or
maintained, contravenes, in any material respect, any zoning ordinance or other
administrative regulation or violates any restrictive covenant or any provision
of law, the effect of which would materially interfere with or prevent their
continued use for the purposes for which they are now being used or would
adversely affect the value thereof or the interest of the Company therein. The
buildings, structures, and improvements (i) have been constructed in a good and
workmanlike manner, free from material defects in workmanship and material and,
to the Stockholders' knowledge, do not require any repair or replacement other
than minor, routine maintenance; and (ii) have been constructed and are being
occupied, maintained, and operated in compliance in all material respects with
all applicable laws, regulations, insurance requirements, contracts, leases,
permits, licenses, ordinances, restrictions, building setback lines, covenants,
reservations, and easements, and the Company has received no notice, written or
oral, claiming any violation of any of the same or requesting or requiring the
performance of any repairs, alterations, or other work in order to so comply. A
certificate of occupancy has been duly issued to the Company (or to the
partnership from which the Company acquired the Real Property, in which case
such certificate of occupancy shall
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be transferred to the Company as promptly as may be practicable) with regard to
the improvements owned or occupied by the Company. The Stockholders have
furnished to LandCARE a true and correct copy of all owner's policies of title
insurance and surveys pertaining to the real property owned by the Company to
the extent such exist.
2.13 INSURANCE. SCHEDULE 2.13 sets forth an accurate list as of the date
hereof of all insurance policies now carried by the Company and an accurate list
of all insurance loss runs and workers compensation claims received for the past
three policy years. True, complete and correct copies of all insurance policies
currently in effect have been delivered to LandCARE. Such insurance policies
evidence all of the insurance that the Company is required to carry pursuant to
all of its contracts and other agreements and pursuant to all applicable laws.
Except as set forth on SCHEDULE 2.13, none of such policies is a "claims made"
policy.
2.14 COMPENSATION; EMPLOYMENT AGREEMENTS; ORGANIZED LABOR MATTERS.
SCHEDULE 2.14 sets forth an accurate list showing all officers, directors and
key employees of the Company, listing all employment agreements with such
officers, directors and key employees and the rate of compensation (and the
portions thereof attributable to salary, bonus and other compensation,
respectively) of each of such persons as of the Balance Sheet Date. Except as
set forth on SCHEDULE 2.14, since the Balance Sheet Date, there have been no
increases in the base compensation payable or any special bonuses to any
officer, director, key employee or other employee.
Except as set forth on SCHEDULE 2.14, (i) the Company is not bound by or
subject to (and none of its respective assets or properties is bound by or
subject to) any arrangement with any labor union, (ii) no employees of the
Company are represented by any labor union or covered by any collective
bargaining agreement, (iii) to the knowledge of the Stockholders, no campaign to
establish such representation is in progress and (iv) there is no pending or, to
any Stockholder's knowledge, threatened, labor dispute involving the Company and
any group of its employees. The Company has not experienced any labor
interruptions over the past five years that have had a Material Adverse Effect
on the Company.
2.15 EMPLOYEE BENEFIT PLANS. SCHEDULE 2.15 sets forth an accurate schedule
showing all "employee benefit plans" (as defined in Section 3(3) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA")) of Company,
including all agreements or arrangements (other than agreements or arrangements
set forth on SCHEDULE 2.14) containing "golden parachute" or other similar
provisions, and deferred compensation agreements. With respect to each employee
benefit plan, the Company has furnished to LandCARE true, complete and correct
copies of such plans, agreements and any trusts related thereto, and
classifications of employees covered thereby as of the Balance Sheet Date.
Except for the employee benefit plans, if any, described on SCHEDULE 2.15, the
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Company does not sponsor, maintain or contribute to any plan, program, fund or
arrangement that constitutes an "employee pension benefit plan," as such term is
defined in Section 3(2) of ERISA, a defined benefit plan (as defined in section
3(35) of ERISA), a multiemployer plan (as defined in section 3(37)(A) of ERISA),
nor does the Company have any obligation to contribute to or accrue or pay any
benefits under any deferred compensation or retirement funding arrangement on
behalf of any employee or employees (such as, for example, and without
limitation, any individual retirement account or annuity, any "excess benefit
plan" (within the meaning of Section 3(36) of ERISA), or any non-qualified
deferred compensation arrangement). The Company has not sponsored, maintained or
contributed to any employee pension benefit plan and is not required to
contribute to any retirement plan pursuant to the provisions of any collective
bargaining agreement establishing the terms and conditions of employment of any
of the Company's employees other than the plans set forth on SCHEDULE 2.15.
The Company is not now, and will not as a result of its past activities
become, liable to the Pension Benefit Guaranty Corporation (the "PBGC") or to
any multi employer employee pension benefit plan under the provisions of Title
IV of ERISA. All employee benefit plans listed on SCHEDULE 2.15 and the
administration thereof are in substantial compliance with their terms and all
applicable provisions of ERISA and the regulations issued thereunder, as well as
with all other applicable federal, state and local statutes, ordinances and
regulations. All accrued contribution obligations of the Company with respect to
any plan listed on SCHEDULE 2.15 have either been fulfilled in their entirety or
are fully reflected on the balance sheet of the Company as of the Balance Sheet
Date. All plans listed on SCHEDULE 2.15 that are intended to qualify (the
"Qualified Plans") under Section 401(a) of the Code, are, and have been, so
qualified and have been determined by the Internal Revenue Service to be so
qualified. Except as disclosed on SCHEDULE 2.15, all reports and other documents
required to be filed with any governmental agency or distributed to plan
participants or beneficiaries have been timely filed or distributed, and the
most recent copies thereof are included as part of SCHEDULE 2.15. Neither the
Stockholders, nor any plan listed in SCHEDULE 2.15 nor the Company has engaged
in any transaction prohibited under the provisions of Section 4975 of the Code
or Section 406 of ERISA. No plan listed on SCHEDULE 2.15 has incurred an
accumulated funding deficiency, as defined in Section 412(a) of the Code and
Section 302(1) of ERISA; and the Company has not incurred any liability for
excise tax or penalty due to the Internal Revenue Service or any liability to
the PBGC. There have been no terminations, partial terminations or
discontinuance of contributions to any such Qualified Plan intended to qualify
under Section 401(a) of the Code without notice to and approval by the Internal
Revenue Service; no plan listed on SCHEDULE 2.15 subject to the provisions of
Title IV of ERISA has been terminated; there have been no "reportable events"
(as that phrase is defined in Section 4043 of ERISA) with respect to any such
plan listed on SCHEDULE 2.15; the Company has not incurred liability under
Section 4062 of ERISA; and no circumstances exist pursuant to which the Company
could have any direct or indirect liability
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whatsoever (including, but not limited to, any liability to any multi employer
plan or the PBGC under Title IV of ERISA or to the Internal Revenue Service for
any excise tax or penalty, or being subject to any statutory lien to secure
payment of any such liability) with respect to any plan now or heretofore
maintained or contributed to by any entity other than the Company that is, or at
any time was, a member of a "controlled group" (as defined in Section
412(n)(6)(B) of the Code) that includes the Company.
2.16 CONFORMITY WITH LAW; LITIGATION. Except as set forth on SCHEDULE
2.16, there are no claims, actions, suits or proceedings pending or, to the
knowledge of the Stockholders, threatened, against or affecting the Company (as
any of its officers and directors in their capacities as such), at law or in
equity, or before or by any federal, state, municipal or other governmental
department, commission, board, bureau, agency or instrumentality having
jurisdiction over the Company. Except as set forth on SCHEDULE 2.16, no notice
of any unresolved claim, action, suit or proceeding, whether pending or
threatened, has been received by the Company during the last five years and, to
the knowledge of the Stockholders, there is no basis for any such claim, action,
suit or proceeding that would have a Material Adverse Effect on the Company.
Except as set forth on SCHEDULE 2.16, there are no outstanding judgments,
orders, writs, injunctions or decrees against the Company. Except as set forth
on SCHEDULE 2.16, the Company has conducted and now conducts its business in
material compliance with all laws, regulations, writs, injunctions, decrees and
orders applicable to the Company or its assets. The Company is not in violation
of any material law or regulation or any order of any court or federal, state,
municipal or other governmental department, commission, board, bureau, agency or
instrumentality having jurisdiction over any of them. The Company has conducted
and is conducting its business in substantial compliance with the requirements,
standards, criteria and conditions set forth in applicable federal, state and
local statutes, ordinances, permits, licenses, orders, approvals, variances,
rules and regulations, including all such permits, licenses, orders and other
governmental approvals set forth on SCHEDULES 2.8 and 2.9.
2.17 TAXES. For purposes of this Agreement, the term "Taxes" shall mean
all taxes, charges, fees, levies or other assessments, including, without
limitation, income, gross receipts, excise, property, sales, withholding, social
security, unemployment, occupation, use, service, license, payroll, franchise,
transfer and recording taxes, fees and charges, imposed by the United States or
any state, local or foreign government or subdivision or agency thereof ("Taxing
Authority"), whether computed on a separate, consolidated, unitary, combined or
any other basis; and such term shall include any interest, fines, penalties or
additional amounts attributable to or imposed with respect to any such taxes,
charges, fees, levies or other assessments. As used herein, the term "Company
Subsidiaries" means the subsidiaries, if any, of the Company; it being
understood that there may be no such subsidiaries.
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All Tax returns ("Returns") required to be filed with respect to any Tax
for which any of the Company and the Company Subsidiaries (if any) is liable
have been duly and timely filed with the appropriate Taxing Authority, each Tax
shown to be payable on each such Return has been paid, each Tax payable by the
Company or a Company Subsidiary by assessment has been timely paid in the amount
assessed, and adequate reserves have been established on the consolidated books
of the Company and the Company Subsidiaries for all Taxes for which any of the
Company and the Company subsidiaries is liable, but the payment of which is not
yet due. Neither the Company nor any Company Subsidiary is, or ever has been,
liable for any Tax payable by reason of the income or property of a person or
entity other than the Company or a Company Subsidiary. Each of the Company and
the Company Subsidiaries has timely filed true, correct and complete
declarations of estimated Tax in each jurisdiction in which any such declaration
is required to be filed by it. No Liens for Taxes exist upon the assets of the
Company or any Company Subsidiary except Liens for Taxes which are not yet due.
Neither the Company nor any Company Subsidiary is, or ever has been, subject to
Tax in any jurisdiction outside the United States. Except as set forth on
SCHEDULE 2.17, no litigation with respect to any Tax for which the Company or
any Company Subsidiary is asserted to be liable is pending or, to the knowledge
of the Company or any Stockholder, threatened, and no basis which the Company or
any Stockholder believes to be valid exists on which any claim for any such Tax
can be asserted against the Company or any Company Subsidiary. There are no
requests for rulings or determinations in respect of any Taxes pending between
the Company or any Company Subsidiary and any Taxing Authority. No extension of
any period during which any Tax may be assessed or collected and for which the
Company or any Company Subsidiary is or may be liable has been granted to any
Taxing Authority. Neither the Company nor any Company Subsidiary is or has been
party to any tax allocation or sharing agreement. All amounts required to be
withheld by any of the Company and the Company Subsidiaries and paid to
governmental agencies for income, social security, unemployment insurance,
sales, excise, use and other Taxes have been collected or withheld and paid to
the proper Taxing Authority. The Company and each Company Subsidiary have made
all deposits required by law to be made with respect to employees' withholding
and other employment Taxes. Neither the Company nor any Stockholder is a
"foreign person," as that term is referred to in Section 1445(f)(3) of the Code.
The Company has not filed a consent pursuant to Section 341 (f) of the Code or
any comparable provision of any other tax statute and has not agreed to have
Section 341 (f)(2) of the Code or any comparable provision of any other Tax
statute apply to any disposition of an asset. The Company has not made, is not
obligated to make and is not a party to any agreement that could require it to
make any payment that is not deductible under Section 280G of the Code. No asset
of the Company or of any Company Subsidiary is subject to any provision of
applicable law which eliminates or reduces the allowance for depreciation or
amortization with respect to that asset below the allowance generally available
to an asset of its type. Except as previously disclosed to LandCARE, no
accounting method changes of the Company or of any Company Subsidiary exist or
are proposed or threatened which could give
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rise to an adjustment under Section 481 of the Code. The Company uses the cash
method of accounting for income tax purposes, and the Company's methods of
accounting have not changed in the past five years. The Company is not an
investment company as defined in Section 351(e)(1) of the Code. The Company has
a taxable year ended December 31 and has not made an election to retain a fiscal
year other than December 31 under Section 444 of the Code. The Company is not
party to any joint venture, partnership, or other arrangement that is treated as
a partnership for federal income tax purposes.
The Stockholders made a valid election under the provisions of Subchapter
S of the Code, and the Company has not, since its formation, been subject to
taxation under the provisions of Subchapter C of the Code or under Section 11 or
Section 1374 of the Code. Neither any of the Stockholders nor the Company has
taken any action that terminated the Subchapter S election, which remains in
effect on the date hereof.
2.18 NO VIOLATIONS; ALL REQUIRED CONSENTS OBTAINED. The Company is not in
violation of any of its Charter Documents. Neither the Company nor, to the
knowledge of the Stockholders, any other party thereto is in material default
under any material lease, instrument, license, permit or agreement to which the
Company is a party or by which its properties are bound (the "Material
Documents"). Except as set forth on SCHEDULE 2.18, (a) the execution of this
Agreement by the Company and the Stockholders and the performance by the Company
and the Stockholders of their obligations hereunder and the consummation of the
transactions contemplated hereby will not result in any violation or breach or
constitute a default under any of the terms or provisions of the Material
Documents or the Charter Documents, and (b) at and after the Closing Date the
Company will be entitled to the rights and benefits under the Material Documents
to which the Company is entitled immediately prior to the Closing. Except as set
forth on SCHEDULE 2.18 (and except for consents already obtained), none of the
Material Documents requires notice to, or the consent or approval of, any
governmental agency or other third party with respect to any of the transactions
contemplated hereby in order to remain in full force and effect, and
consummation of the transactions contemplated hereby will not give rise to any
right to termination, cancellation or acceleration or loss of any right or
benefit. Except as set forth on SCHEDULE 2.18, none of the Material Documents
prohibits or restricts the Company or will prevent or restrict the Company or
LandCARE from freely providing services to any person.
2.19 ABSENCE OF CHANGES. Since the Balance Sheet Date, the Company has
conducted its operations in the ordinary course of business and, except as set
forth on SCHEDULE 2.19, there has not been:
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(i) any change in the business, assets, liabilities or financial
condition of the Company which would have a Material Adverse Effect;
(ii) any damage, destruction or loss (whether or not covered by
insurance) affecting any of the material assets of the Company or the
business of the Company which would have a Material Adverse Effect;
(iii) any change in the authorized capital of the Company or its
outstanding securities or any change in its ownership interests or any
grant of any options, warrants, calls, conversion rights or commitments;
(iv) any declaration or payment of any dividend or distribution with
respect to the capital stock or any direct or indirect redemption,
purchase or other acquisition of any of the capital stock of the Company;
(v) any increase or commitment to increase the compensation, bonus,
sales commissions or fee arrangement payable or to become payable by the
Company to any of its officers, directors, stockholders, employees,
consultants or agents;
(vi) any work interruptions, labor grievances or claims filed, or
any event or condition of any character, that would have a Material
Adverse Effect on the business of the Company;
(vii) any sale or transfer, or any agreement to sell or transfer,
any material assets, property or rights of the Company to any person;
(viii)any cancellation, or agreement to cancel, any material
indebtedness or other material obligation owing to the Company;
(ix) any plan, agreement or arrangement granting any preferential
rights to purchase or acquire any interest in any of the assets, property
or rights of the Company or requiring consent of any party to the transfer
and assignment of any such assets, property or rights;
(x) any purchase or acquisition of, or agreement, plan or
arrangement to purchase or acquire, any property, rights or assets outside
of the ordinary course of the Company's business;
(xi) any waiver of any material rights or claims of the Company;
(xii) any amendment or termination of any contract, agreement,
license, permit or
other right to which the Company is a party which would have a Material
Adverse Effect; (xiii)any contract, commitment or liability entered
into or incurred or any capital
expenditures made except in the normal course of business consistent with
past practice in an aggregate amount not in excess of $100,000; or
(xiv) any transaction by the Company outside the ordinary course of
its business.
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2.20 POWERS OF ATTORNEY. SCHEDULE 2.20 sets forth a schedule as of the
date of this Agreement of the name of each person, corporation, firm or other
entity holding any general or special power of attorney from the Company and a
description of the terms of each such power.
2.21 COMPETING LINES OF BUSINESS; RELATED-PARTY TRANSACTIONS. Except as
set forth on SCHEDULE 2.21, neither the Stockholders nor any other Affiliate of
the Company owns, directly or indirectly, any interest in, or is an officer,
director, employee or consultant of or otherwise receives remuneration from, any
business which is a competitor, lessor, lessee, customer or supplier of the
Company. Except as set forth on SCHEDULE 2.21, no officer, director or
stockholder of the Company has, nor during the period beginning January 1, 1995
through the date hereof had, any interest in any property, real or personal,
tangible or intangible, used in or pertaining to the Company's business.
2.22 DISCLOSURE. The Stockholders have provided LandCARE with all the
information that LandCARE has requested in analyzing whether to consummate the
transactions contemplated hereby. None of the information so provided nor any
representation or warranty of the Stockholders contained in this Agreement
contains any untrue statement or omits to state a material fact necessary in
order to make the statements herein or therein, in light of the circumstances
under which they were made, not misleading. There is no fact known to the
Stockholders at the date hereof which has specific application to the Company or
its business or assets (other than general economic or industry conditions)
which, within one year after the Closing Date, would have a Material Adverse
Effect on the Company or its business or assets, or the condition (financial or
otherwise) or results of operations of the Company, which has not been described
in the Schedules hereto.
2.23 CERTAIN BUSINESS PRACTICES. Neither the Company nor any person acting
on behalf of the Company has given or offered anything of value to any
governmental official, political party or candidate for government office nor
has it or any of them otherwise taken any action which would cause the Company
to be in violation of the Foreign Corrupt Practices Act of 1977, as amended, or
any law of similar effect.
2.24 NO NOTICE TO BARGAINING AGENTS. The Company has no collective
bargaining agreements.
2.25 NOTICES AND CONSENTS. Except as set forth on SCHEDULE 2.25, no
material agreement to which the Company is a party requires the Company to
either give notices to third parties or obtain any third party consents in order
to consummate the transactions contemplated hereby.
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2.26 YEAR 2000 COMPLIANCE. The properties and assets of the Company,
including, but not limited to, computer hardware, microprocessor driven
equipment, software and data, owned or used by the Company will accurately
process in all material respects date and time data after December 31, 1999, and
the Company will suffer no material loss of functional ability when processing
dates and related data outside the 1900-1999 year range.
2.27 RELIANCE UPON ORAL REPRESENTATIONS. The Company and the Stockholders
each represent and warrant: (a) that each has been fully informed by his or its
legal counsel and by his or its own independent judgment of the terms,
conditions and effects of this Agreement; (b) that each has been represented by
independent legal counsel of his or its choice throughout all negotiations
preceding the execution of this Agreement and has received the advice of his or
its attorney in entering into this Agreement; (c) that each, both personally and
through his or its independently- retained attorneys, is fully satisfied with
the terms and effects of this Agreement; (d) that no promise or inducement has
been offered or made to him or it except as expressly stated in this Agreement;
and (e) that this Agreement is executed without reliance on any oral statement
or oral representation by any other party or any other party's agent or
attorney.
2.28 SOFTWARE. The Stockholders have delivered to the Company all right,
title and interest in the software owned by the Stockholders or an affiliate of
the Stockholders so that the Company shall be entitled to use such software
perpetually at no cost whatsoever. LandCare and the Company understand that
vendors may offer upgrades to such software from time to time, and that the
Company may elect to acquire such upgrades at the Company's expense.
3. REPRESENTATIONS OF LANDCARE AND NEWCO
Each of LandCARE and Newco represents and warrants as follows:
3.1 DUE ORGANIZATION. Each of LandCARE and Newco is a corporation duly
organized, validly existing and in good standing under the laws of Delaware and
the State of Incorporation, respectively, and has all requisite corporate power
and authority to carry on its business as it is now being conducted. Each of
LandCARE and Newco is duly qualified and is in good standing to do business in
each jurisdiction in which the nature of its business or the ownership or
leasing of its properties makes such qualification necessary, except where the
failure to be so authorized or qualified would not have a Material Adverse
Effect on LandCARE.
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3.2 AUTHORIZATION. (i) The representatives of each of LandCARE and Newco
executing this Agreement has the authority to enter into and bind each of
LandCARE and Newco, respectively, to the terms of this Agreement and (ii) each
of LandCARE and Newco has the full legal right, power and authority to enter
into this Agreement and the transactions contemplated hereby, all of which have
been duly authorized by all necessary corporate action and no other corporate
proceedings on the part of either of LandCARE or Newco is necessary to authorize
this Agreement or to consummate the transactions contemplated hereby. This
Agreement has been validly executed and delivered by each of LandCARE and Newco
and constitutes the legal, valid and binding obligation of each of the them,
enforceable in accordance with its terms.
3.3 CAPITAL STOCK OF LANDCARE AND NEWCO.
(a) The authorized capital stock of LANDCARE consists solely of
107,000,000 shares of capital stock, including (i) 100,000,000 shares of
LandCARE Stock, of which, as of July 14, 1998, 13,381,943 shares were issued and
outstanding and constituted all of the issued and outstanding shares of LandCARE
Common Stock; (ii) 2,000,000 shares of Restricted Voting Common Stock, of which,
as of July 14, 1998, 1,296,408 shares were issued and outstanding and are
included in the 13,381,943 figure set forth above, and (iii) 5,000,000 shares of
preferred stock, par value $0.01 per share, of which no shares are issued and
outstanding. The outstanding shares of capital stock of LandCARE are duly
authorized and validly issued, are fully paid and nonassessable, and have not
been issued in violation of (nor are any of the authorized shares of capital
stock of LandCARE subject to) any preemptive or similar rights created by
statute, the charter or bylaws of LandCARE, or any agreement to which LandCARE
is a party or bound. LandCARE owns all the outstanding capital stock of Newco
and all of the outstanding capital stock of each of its subsidiaries, free and
clear of all security interests, liens, claims, pledges, agreements, charges or
other encumbrances of any nature whatsoever.
(b) Except pursuant to the LandCARE Option Plans (collectively, the
"LandCARE Option Plans"), or as set forth in or contemplated by the SEC Reports
(as defined below), as of July 31, 1998 there are no options, warrants or other
rights, agreements, arrangements or commitments of any character to which
LandCARE is a party relating to the issued or unissued capital stock of LandCARE
or obligating LandCARE to grant, issue or sell any shares of its capital stock,
by sale, lease, license or otherwise. As contemplated by the SEC Reports,
LandCare is a party to a number of letters of intent relating to potential
transactions involving potential issuances of capital stock of LandCare, and may
be a party to one or more definitive agreements relating to such potential
transactions, any or all of which may involve LandCare's intention, whether or
not reduced to binding commitments, to issue shares of capital stock of LandCare
or to grant options to acquire shares of capital stock of
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LandCare. Except as set forth in the SEC Reports (as defined below), there are
no obligations, contingent or otherwise, of LandCARE to repurchase, redeem or
otherwise acquire any of either of their shares of stock. There are no voting
trusts, proxies or other agreements or understandings to which LandCARE is a
party or by which LandCARE is bound with respect to the voting of any shares of
its capital stock.
(c) The shares of LandCARE Stock to be issued pursuant to the Merger
will be duly authorized, validly issued, fully paid and nonassessable and not
subject to preemptive rights created by statute, LandCARE's charter or bylaws or
any agreement to which LandCARE is a party or is bound.
(d) The shares of LandCARE Stock to be issued in the Merger will be
at the Effective Time, approved for listing on the New York Stock Exchange
("NYSE") and duly registered or qualified under federal and applicable state
securities laws.
3.4 NO CONFLICT; REQUIRED FILINGS AND CONSENTS.
(a) The execution and delivery of this Agreement by each of LandCARE
and Newco does not, and the consummation by LandCARE and Newco of the
transactions contemplated hereby will not (i) conflict with or violate the
charter or bylaws, in each case as amended or restated, of LandCARE or any of
LandCARE's subsidiaries, (ii) conflict with or violate any laws, regulations, or
any order of any court or federal, state, municipal or other governmental
department, commission, board, bureau, agency or instrumentality having
jurisdiction over and applicable to LandCARE or any of LandCARE's subsidiaries
or by which any of their properties is bound or subject, or (iii) result in any
breach of or constitute a default (or an event that with notice or lapse of time
or both would become a default) under, or give to others any rights of
termination, amendment, acceleration or cancellation of, or result in the
creation of a lien or encumbrance on any of the properties or assets of LandCARE
or any of LandCARE's subsidiaries pursuant to, any note, bond, mortgage,
indenture, contract, agreement, lease, license, permit, franchise or other
instrument or obligation to which LandCARE or any of LandCARE's subsidiaries is
a party or by or to which LandCARE or any of LandCARE's subsidiaries or any of
their respective properties is bound or subject, except in the case of clauses
(ii) and (iii) above, any conflict, violation, breach, default, lien or
encumbrance that would not have a Material Adverse Effect on LandCARE or any of
its operations.
(b) The execution and delivery of this Agreement by each of LandCARE
and Newco does not, and the consummation of the transactions contemplated hereby
will not, require LandCARE or any of its subsidiaries to obtain any consent,
license, permit, approval, waiver,
-19-
authorization or order of, or to make any filing with or notification to, any
federal, state, municipal or other governmental entity, except for the filing
and recordation of appropriate merger documents as required by the State of
Texas, any filings that may be required as a result of the legal or regulatory
status of LandCARE or Newco, consents already obtained, and any consent,
license, permit, approval, authorization, order, filing or notification that if
not obtained or made would not have a Material Adverse Effect.
3.5 REPORTS; FINANCIAL STATEMENTS. LandCARE and its subsidiaries have
filed all forms, reports, statements and other documents required to be filed
with the Securities and Exchange Commission ("SEC") pursuant to the Securities
Act of 1933, as amended, and the Securities Exchange Act of 1934, as amended,
including, without limitation, (i) all filings made in connection with its
initial public offering, the Registration Statement No. 333-58487 on Form S-1
(the "Shelf S-1"), or otherwise, (ii) all Annual Reports on Form l0-K, (iii) all
Quarterly Reports on Form 10-Q, (iv) all proxy statements relating to meetings
of stockholders (whether annual or special), and (v) all Current Reports on Form
8-K (collectively, the "SEC Reports"). LandCARE has made available to the
Company complete and correct copies of all SEC Reports filed by LandCARE. The
SEC Reports, (x) were prepared, as of the time they were filed, in all material
respects in accordance with the requirements of applicable laws and regulations
and (y) did not at the time they were filed, contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
3.6 ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as disclosed in the SEC
Reports or as contemplated by this Agreement, (a) neither LandCARE nor any of
its subsidiaries has any liabilities or obligations of any kind which would have
a Material Adverse Effect on LandCARE or any of its operations and (b) since May
6, 1998, there has not been any Material Adverse Effect on LandCARE or any of
its operations.
3.7 ABSENCE OF LITIGATION. Except as set forth in the SEC Reports, there
are no claims, actions, suits, or proceedings pending, or, to the knowledge of
LandCARE, threatened, against or affecting LandCARE (or any of its officers or
directors in their capacities as such), at law or in equity, or before or by any
federal, state, municipal or other governmental department, commission, board,
bureau, agency or instrumentality having jurisdiction over LandCARE that would
have a Material Adverse Effect on LandCARE or any of its operations.
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3.8 TAX MATTERS; POOLING. None of LandCARE nor any of its subsidiaries has
knowingly taken or agreed to take any action that would prevent the Merger (a)
from constituting a reorganization qualifying under the provisions of section
368(a) of the Code or (b) from being treated as a pooling transaction for
financial accounting purposes.
3.9 VOTE REQUIRED. No vote of the holders of any class or series of
LandCARE capital stock is required to approve the Merger and adopt this
Agreement. LandCARE, as the sole stockholder of Newco, has approved the Merger
and adopted this Agreement.
3.10 NEWCO. Except for liabilities incurred in connection with its
organization, the Merger and the negotiation and consummation of the
transactions contemplated by this Agreement, Newco has not incurred any
liabilities or obligations of any kind nor engaged in any material business
activities or entered into any material agreement or arrangements.
4. DELIVERIES
4.1 INSTRUMENTS OF TRANSFER. The Stockholders are delivering to LandCARE
certificates representing all of the Shares, duly endorsed (or accompanied by
duly executed stock powers).
4.2 CERTIFICATE OF MERGER. The appropriate parties hereto are executing
and delivering for filing with the appropriate authorities a certificate of
merger for purposes of effecting the Merger in the form of Annex I.
4.3 EMPLOYMENT AGREEMENT. The Company and the persons identified in
SCHEDULE 4.3 are entering into Employment Agreements in the form of Annex II.
4.4 OPINION OF COUNSEL. Counsel to the Company and the Stockholders is
delivering an opinion to LandCARE dated the date hereof in the form attached
hereto as Annex III. Counsel to LandCARE is delivering an opinion to the
Stockholders dated the date hereof in the form attached hereto as Annex IV.
4.5 GOOD STANDING CERTIFICATES. The Stockholders are delivering to
LandCARE certificates, dated as of a date no earlier than ten days prior to the
date hereof, duly issued by the appropriate governmental authority in the State
of Incorporation and in each state in which the Company is authorized to do
business, showing the Company to be in good standing and authorized to do
business therein.
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4.6 INDEBTEDNESS TO COMPANY. The Stockholders and their Affiliates are
repaying any outstanding indebtedness they may have to the Company.
4.7 CONSENTS. The Stockholders are delivering to LandCARE copies of any
third party consents required in connection with the consummation of the
transactions contemplated hereby.
4.8 RESIGNATIONS OF DIRECTORS AND OFFICERS. The Stockholders are
delivering to LandCARE the resignations of such directors and officers of the
Company as have been requested by LandCARE.
4.9 ACCOUNTING TREATMENT. LandCARE is receiving advice from its
independent accountants that the transactions contemplated hereby may be
accounted for by LandCARE as a pooling of interests.
5. POST-CLOSING COVENANTS
The parties to this Agreement further covenant and agree as follows:
5.1 FUTURE COOPERATION; FURTHER ASSURANCES. The Stockholders, the Company
and LandCARE shall each deliver or cause to be delivered to the other following
the date hereof such additional instruments as the other may reasonably request
for the purpose of effecting the Merger and fully carrying out the intent of
this Agreement. LandCARE shall provide the Stockholders reasonable access to the
books and records of the Company after the Closing Date for purposes of tax
compliance and any other reasonable purpose.
5.2 EXPENSES. LandCARE will pay the fees, expenses and disbursements of
LandCARE and its agents, representatives, financial advisors, accountants and
counsel incurred in connection with the execution, delivery and performance of
this Agreement. The Company will pay the fees, expenses and disbursements of the
Stockholders and their agents, representatives, financial advisors, accountants
and counsel incurred in connection with the execution, delivery and performance
of this Agreement. The Stockholders shall pay any sales, use, transfer, real
property transfer, recording, gains, stock transfer and other similar taxes and
fees ("Transfer Taxes") imposed in connection with the Merger. The Stockholders
shall file all necessary documentation and returns with respect to such Transfer
Taxes. In addition, the Stockholders acknowledge that the Stockholders, and not
the Company or LandCARE, will pay all taxes (income or otherwise), if any, due
upon receipt of the consideration payable pursuant to this Agreement.
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5.3 CERTAIN AGREEMENTS. Upon the request of LandCARE at any time after the
Closing, the Stockholders and the Company shall terminate any existing
agreements to which the Company and any of the Stockholders or any of their
affiliates are parties, except for this Agreement and the agreements set forth
on SCHEDULE 5.3.
5.4 PREPARATION AND FILING OF TAX RETURNS.
(a) The Stockholders shall file or cause to be filed all Tax Returns
for all taxable periods that end on or before the Closing Date, but in each case
only after LandCARE has reviewed such filings and consented thereto. The
Stockholders shall pay all Tax liabilities for all periods ending on or prior to
the Closing Date.
(b) LandCARE shall file or cause to be filed all Tax Returns for all
taxable periods ending after the Closing Date.
(c) LandCARE will prepare or cause to be prepared and file or cause
to be filed any Tax Returns of the Company for taxable periods which begin
before the Closing Date and end after the Closing Date. The Stockholders will
pay to the Company within 15 days of the date on which Taxes are paid with
respect to such periods an amount equal to the portion of such Taxes which
relates to the portion of such taxable period ending on the Closing Date. For
purposes of this section, in the case of any Taxes that are imposed on a
periodic basis and are payable for a taxable period that includes (but does not
end on) the Closing Date, the portion of such Tax which relates to the portion
of such taxable period ending on the Closing Date will (x) in the case of any
Taxes other than Taxes measured with respect to income (whether or not
denominated income taxes), be deemed to be the amount of such Tax for the entire
taxable period multiplied by a fraction the numerator of which is the number of
days in the taxable period ending on the Closing Date and the denominator of
which is the number of days in the entire taxable period, and (y) in the case of
any Tax measured with respect to income (whether or not denominated an income
tax), be deemed equal to the amount which would be payable if the relevant
taxable period ended on the Closing Date. For purposes of this section, in the
case of any Tax credit relating to a taxable period that begins before and ends
after the Closing Date, the portion of such Tax credit which relates to the
portion of such taxable period ending on the Closing Date will be the amount
which bears the same relationship to the total amount of such Tax credit as the
amount of Taxes described in (y) above bears to the total amount of Taxes for
such taxable period. All determinations necessary to give effect to the
foregoing allocations will be made in a manner consistent with prior practice of
the Company.
(d) Any Tax refunds that are received by LandCARE or the Company
relating to any Tax period of the Company ending on or prior to the Closing Date
will belong to the Stockholders. The LandCARE and the Company agree to promptly
pay the Stockholders any refunds received by LandCARE or the Company that belong
to the Stockholders pursuant to the preceding sentence.
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(e) Each party hereto shall, and shall cause its subsidiaries and
affiliates to, provide to each of the other parties hereto such cooperation and
information as any of them reasonably may request in filing any Tax Returns,
amended Tax Returns or claim for refund, determining a liability for Taxes or a
right to refund of Taxes or in conducting any audit or other proceeding with
respect to Taxes. Such cooperation and information shall include providing
copies of all relevant portions of relevant Tax Returns, together with relevant
accompanying schedules and relevant work papers, relevant documents relating to
rulings or other determinations by Taxing Authorities and relevant records
concerning the ownership and Tax basis of property, which such party may
possess. Each party shall make its employees reasonably available on a mutually
convenient basis at its cost to provide explanation of any documents or
information so provided. Subject to the preceding sentence, each party required
to file tax returns pursuant to this Agreement shall bear all costs of filing
such tax returns.
5.5 STOCK OPTIONS. The Compensation Committee of the Board of Directors of
LandCARE has approved the grant of a pool of stock options to purchase an
aggregate of 168,852 shares of LandCARE Stock, which stock options are to be
granted to certain key management and supervisory employees of the Company in
increments of not less than 500 shares. The Stockholder hereby covenants and
agrees to provide to LandCARE the allocation of such options among such key
management and supervisory employees of the Company as soon as reasonably
practicable after the Closing, and LandCARE hereby covenants and agrees to
recommend the approval of the specific allocated stock option grants to the
Compensation Committee of its Board of Directors. The options shall be issued
pursuant to the LandCare 1998 Long-Term Incentive Plan; the date of grant shall
be the date hereof; and the options shall have exercise prices per share of
LandCare common stock covered thereby equal to the fair market value of such
shares at the date of grant. LandCare has filed or will file a Registration
Statement on Form S-8 relating to such options.
5.6 STOCKHOLDER GUARANTEES Notwithstanding anything else herein, LandCARE
agrees to hold harmless and to indemnify each of the Stockholders or their
affiliates from any loss, damage, claim, liability or obligation arising from
any guarantee (personal or otherwise) by either of the Stockholders of any
liability or obligation of the Company (contingent or otherwise), and agrees to
cause the unconditional release of the Stockholders and their affiliates from
such guarantees and all the obligations thereunder within ninety (90) days after
the Effective Time. The obligations of LandCare under this Section 5.6 shall not
be subject to the limitations set forth in Section 6.6 of this Agreement, and
shall survive the consummation of the transactions contemplated hereby.
5.7 BANK INDEBTEDNESS. The Stockholders hereby represent to LandCare that
the aggregate outstanding balance of the Company's indebtedness to NationsBank
as of July 31, 1998 was not more than $1,678,000 (the "NationsBank Debt"). As
promptly as practicable after the
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Closing, and in any case within three business days after Closing, LandCare
shall cause the Company to repay the NationsBank Debt, plus any and all costs,
expenses and fees associated with the termination of such credit facility, and
shall cause the prompt release of any and all liens and guaranties securing such
debt.
6. INDEMNIFICATION
The Stockholders and LandCARE each make the following covenants that are
applicable to them, respectively:
6.1 SURVIVAL OF STOCKHOLDERS' REPRESENTATIONS AND WARRANTIES.
(a) The representations and warranties of the Stockholders made in
this Agreement shall survive the Closing for a period of one year following the
Closing Date; provided, however, that representations and warranties and
indemnification provisions with respect to which a claim is made within the
applicable survival period shall survive until such claim is finally determined
and paid or resolved.
(b) The representations and warranties of LandCARE made in this
Agreement shall survive the Closing for a period of one year following the
Closing Date; provided, however, that representations and warranties with
respect to which a claim is made within such one-year period shall survive until
such claim is finally determined and paid or resolved.
(c) The date on which a representation or warranty expires as
provided herein is herein called the "Expiration Date." No claim for
indemnification may be made with respect to a representation or warranty after
the Expiration Date, other than claims based on actual fraud.
6.2 GENERAL INDEMNIFICATION BY THE STOCKHOLDERS. The Stockholders covenant
and agree that they will indemnify, defend, protect, and hold harmless the
Surviving Corporation, LandCARE and its subsidiaries and all of their officers,
directors, employees, stockholders, agents, representatives and affiliates at
all times from and after the date of this Agreement until the Expiration Date
from and against all claims, damages actions, suits, proceedings, demands,
assessments, adjustments, costs and expenses (including specifically, but
without limitation, reasonable attorneys' fees and expenses of investigation)
(collectively "Damages") incurred by such indemnified person as a result of or
incident to (i) any breach of any representation or warranty of the Stockholders
set forth herein, and (ii) any breach or nonfulfillment of any covenant or
agreement by the Company or the Stockholders under this Agreement.
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LandCARE and Newco acknowledge and agree that other than the
representations and warranties of the Stockholders specifically contained in
this Agreement, there are no representations or warranties of the Stockholders,
either express or implied, with respect to the transactions contemplated by this
Agreement, the Company or its assets, liabilities and business.
6.3 INDEMNIFICATION BY LANDCARE. LandCARE covenants and agrees that it
will indemnify, defend, protect and hold harmless the Stockholders and all of
their agents, representatives and affiliates at all times from and after the
date of this Agreement until the Expiration Date from and against all Damages
incurred by such indemnified person as a result of or incidental to (i) any
breach of any representation or warranty of LandCARE set forth herein; and (ii)
any breach or nonfulfillment of any covenant or agreement by LandCARE under this
Agreement.
6.4 THIRD PERSON CLAIMS. Promptly after any party hereto (the "Indemnified
Party") has received written notice of or has actual knowledge of any claim by a
person not a party to this Agreement ("Third Person") or the commencement of any
action or proceeding by a Third Person that may give rise to a right of
indemnification hereunder, such Indemnified Party shall give to the party
obligated to provide indemnification hereunder (an "Indemnifying Party") written
notice of such claim or the commencement of such action or proceeding; provided,
however, that the failure to give such notice will not relieve such Indemnifying
Party from liability under this Section with respect to such claim, action or
proceeding, except to the extent that the Indemnifying Party has been actually
prejudiced as a result of such failure. The Indemnifying Party (at its own
expense) shall have the right and shall be given the opportunity to associate
with the Indemnified Party in the defense of such claim, suit or proceedings,
and may select counsel for the Indemnified Party, such counsel to be reasonably
satisfactory to the Indemnified Party. The Indemnified Party shall not, except
at its own cost, make any settlement with respect to any such claim, suit or
proceeding without the prior consent of the Indemnifying Party, which consent
shall not be unreasonably withheld or delayed. All settlements hereunder shall
effect a complete release of the Indemnified Party, unless the Indemnified Party
otherwise agrees in writing. The parties hereto will make appropriate
adjustments for insurance proceeds and tax benefits in determining the amount of
any Damages.
6.5 METHOD OF PAYMENT. Any indemnity obligation LandCare is required to
make hereunder shall be paid in LandCARE Stock valued at $9.00 per share. Any
indemnity obligation the Stockholders are required to make hereunder may be paid
either in cash or in shares of LandCare Stock. In the event the Stockholders are
required to make any such indemnification payment, and elect to make such
payment in LandCare Stock, such LandCare Stock shall be valued based on the
average of the closing prices of LandCare Stock on the New York Stock Exchange
for the 60 trading days ending ten days prior to the date such payment is to be
made, unless the parties otherwise agree.
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6.6 LIMITATIONS ON INDEMNIFICATION. LandCARE and the other persons or
entities indemnified pursuant to this Section shall not assert any claim for
indemnification hereunder against the Stockholders until such time as the
aggregate of all claims which such persons may have against such the
Stockholders shall exceed $150,000 (the "Indemnification Threshold") and then
only to the extent that such claims exceed the Indemnification Threshold. The
Stockholders shall not assert any claim for indemnification hereunder against
LandCARE until such time as the aggregate of all claims which the Stockholders
may have against LandCARE shall exceed the Indemnification Threshold and then
only to the extent that such claims exceed the Indemnification Threshold. The
aggregate liability of the Stockholders under this Article 6 shall not exceed
$1,500,000 (the "Liability Limit"); the aggregate liability of LANDCARE
hereunder shall not exceed the Liability Limit.
6.7 EXCLUSIVE REMEDY. The indemnification provided for in this Section 6
shall be the exclusive remedy in any action seeking damages or any other form of
monetary relief brought by any party to this Agreement against another party
with respect to the matters set forth herein except in cases of actual fraud.
7. NONCOMPETITION
7.1 PROHIBITED ACTIVITIES. (a) Except on behalf of LandCARE or its
affiliates (including the Company), the Stockholders will not, for a period of
five years following the Closing Date, for any reason whatsoever, directly or
indirectly, for themselves or on behalf of or in conjunction with any other
person, persons, company, partnership, corporation or business of whatever
nature:
(i) own, manage, operate, join, control, consult or advise (whether
or not compensated for such consultation or advice), or participate in, or
render assistance to, or derive any benefit whatever from, any business
offering services or products in direct competition with the Company
within 100 miles of where the Company conducted business at any time
within one year prior to the Closing Date (the "Territory");
(ii) engage, as an officer, director, shareholder, owner, partner,
joint venturer, or in a sales or managerial capacity, whether as an
employee, independent contractor, consultant or advisor, or as a sales
representative, in any business offering services or products in direct
competition with the Company or LandCARE within the Territory;
(iii) call upon any person who is, at that time, an employee of
LandCARE or any of its subsidiaries (including the Company) for the
purpose or with the intent of enticing such employee away from or out of
the employ of LandCARE or any of its subsidiaries (including the Company);
(iv) call upon any person or entity which is, at that time, or which
has been, within one year prior to the Closing Date, a customer of
LandCARE or any of its subsidiaries
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(including the Company) for the purpose of soliciting or selling products
or services in direct competition with LandCARE or any of its subsidiaries
(including the Company) within the Territory.
Notwithstanding the above, the foregoing covenants shall not be deemed to
prohibit any Stockholder from acquiring as a passive investor with no
involvement in the operations or management of the business, not more than one
percent (2%) of the capital stock of a competing business whose stock is
publicly traded on a national securities exchange or over-the-counter market.
The provisions of this Section are independent of the noncompetition
provisions contained in any consulting or employment agreement to which any
Stockholder may be or may become a party in connection with the transactions
contemplated hereby. All such provisions are intended to be observed and
enforced in accordance with their terms.
7.2 EQUITABLE RELIEF. Because of the difficulty of measuring economic
losses to LandCARE as a result of a breach of the foregoing covenant, and
because of the immediate and irreparable damage that could be caused to LandCARE
for which it would have no other adequate remedy, the Stockholders agree that
the foregoing covenant may be enforced by LandCARE in the event of breach by
such Stockholders, by injunctions, restraining orders and other equitable
actions.
7.3 REASONABLE RESTRAINT. It is agreed by the parties hereto that the
foregoing covenants in this Section impose a reasonable restraint on the
Stockholders.
7.4 SEVERABILITY; REFORMATION. The covenants in this Section are severable
and separate, and the unenforceability of any specific covenant shall not affect
the provisions of any other covenant. Moreover, in the event any court of
competent jurisdiction shall determine that the scope, time or territorial
restrictions set forth are unreasonable, then it is the intention of the parties
that such restrictions be enforced to the fullest extent which the court deems
reasonable, and the Agreement shall thereby be reformed.
7.5 INDEPENDENT COVENANT. The Stockholders acknowledge that their
covenants set forth in this Section are material conditions to LandCARE's
willingness to execute and deliver this Agreement and to consummate the
transactions contemplated hereby. All of the covenants in this Section shall be
construed as an agreement independent of any other provision in this Agreement,
and the existence of any claim or cause of action of any Stockholder against
LandCARE or any subsidiary thereof, whether predicated on this Agreement or
otherwise, shall not constitute a defense to the enforcement by LandCARE of such
covenants. It is specifically agreed that the period of five years stated at the
beginning of this Section, during which the agreements and covenants of the
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Stockholders made in this Section shall be effective, shall be computed by
excluding from such computation any time during which any such Stockholder is in
violation of any provision of this Section. The covenants contained in Section
shall not be affected by any breach of any other provision hereof by any party
hereto.
8. NONDISCLOSURE OF CONFIDENTIAL INFORMATION
8.1 GENERAL. The Stockholders recognize and acknowledge that they have had
access to certain customer lists, confidential information of the Company, such
as operational policies, pricing and cost policies, and other information, that
will be valuable, special and unique assets of the Company and LandCARE after
the Closing Date. The Stockholders agree that they will not disclose such
confidential information, or any confidential information of the Company or
LandCARE to which they may have access in the future, to any person, firm,
corporation, association or other entity for any purpose or reason whatsoever,
except (a) to authorized representatives of LandCARE, (b) following the Closing,
such information may be disclosed by any Stockholder as may be required in the
course of performing his duties for the Company and (c) to counsel and other
advisers, provided that such advisers (other than counsel) agree to the
confidentiality provisions of this Section, unless (i) such information becomes
known to the public generally through no fault of the Stockholder, or (ii)
disclosure is required by law or the order of any governmental authority,
provided, that prior to disclosing any information pursuant to this clause (ii),
the Stockholders shall give prior written notice thereof to LandCARE and provide
LandCARE with reasonable opportunity to contest such disclosure. In the event of
a breach or threatened breach by any Stockholder of the provisions of this
Section, LandCARE shall be entitled to injunctive or other equitable relief
restraining such Stockholder from disclosing, in whole or in part, such
confidential information. Nothing herein shall be construed as prohibiting
LandCARE from pursuing any other available remedy for such breach or threatened
breach, including the recovery of damages.
8.2 EQUITABLE RELIEF. Because of the difficulty of measuring economic
losses as a result of the breach of the foregoing covenants, and because of the
immediate and irreparable damage that would be caused for which LandCARE would
have no other adequate remedy, the Stockholders agree that the foregoing
covenants may be enforced against them by injunctions, restraining orders and
other appropriate equitable relief.
8.3 SURVIVAL. The obligations of the parties under this Section shall
survive the termination of this Agreement.
9 INTENDED TAX AND ACCOUNTING TREATMENT
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9.1 TAX-FREE REORGANIZATION. The parties are entering into this Agreement
with the intention that the Merger qualify as a tax-free reorganization for
federal income tax purposes, except to the extent of any "boot" received, and
the Stockholders will not take any actions that disqualify the Merger for such
treatment. The Stockholders represent, warrant and covenant that:
(i) the Company operates at least one historic business line, or
owns at least a significant portion of its historic business assets, in each
case within the meaning of Reg. 1.368-1(d) under the Code; and
(ii) the Company will hold "substantially all of its properties"
within the meaning of Section 368(a)(2)(D) of the Code (that is, after the
Closing, the Company will hold at least 90% of the fair market value of the net
assets and at least 70% of the gross assets held by the Company immediately
prior to the Closing). For purposes of the preceding sentence, amounts paid by
the Company to dissenters, amounts paid by the Company to shareholders who
receive cash or other property and the Company assets used to pay its
reorganization expenses and all redemptions and distributions (except for normal
dividends) made by the Company immediately preceding the Closing, pursuant to
this Agreement or otherwise as part of the plan of Merger provided for herein,
will be included as assets of the Company held immediately prior to the Merger.
9.2 RESTRICTIONS ON RESALE. (a) LandCARE has informed the Stockholders
that it intends to account for the transactions contemplated by this Agreement
as a pooling of interests. LandCARE has also informed the Stockholders that its
ability to account for the transactions contemplated hereby as a pooling of
interests was a material factor considered by LandCARE in its decision to enter
into this Agreement. Therefore, pursuant to the rules of the Securities and
Exchange Commission relating to pooling of interests transactions, prior to the
publication and dissemination by LandCARE of consolidated financial results
which include results of the combined operations of the Company and LandCARE for
at least thirty days on a consolidated basis following the Effective Time (the
"Publication"), the Stockholders shall not sell, offer to sell or otherwise
transfer or dispose of, any shares of the LandCARE Stock received by
Stockholders, engage in put, call, short-sale, straddle or similar transactions,
or in any other way reduce the Stockholders' risk of owning shares of LandCARE
Stock; provided, however, that this restriction shall not prohibit the
Stockholders from pledging any such shares to secure full-recourse indebtedness.
The certificates evidencing the LandCARE Stock to be received by the
Stockholders will bear a legend stating:
THE SHARES REPRESENTED BY THIS CERTIFICATE MAY NOT BE SOLD, TRANSFERRED OR
ASSIGNED, AND THE ISSUER SHALL NOT BE REQUIRED TO GIVE EFFECT TO ANY
ATTEMPTED SALE, TRANSFER OR ASSIGNMENT, PRIOR TO THE PUBLICATION AND
DISSEMINATION OF FINANCIAL STATEMENTS BY THE ISSUER WHICH INCLUDE THE
RESULTS OF AT LEAST THIRTY (30) DAYS OF COMBINED OPERATIONS OF THE ISSUER
AND THE COMPANY ACQUIRED BY THE
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ISSUER IN THE TRANSACTION IN WHICH THE SHARES REPRESENTED HEREBY WERE
ISSUED. THE FOREGOING RESTRICTION SHALL NOT PREVENT OR RESTRICT THE HOLDER
HEREOF FROM PLEDGING THE SHARES REPRESENTED HEREBY TO SECURE FULL-RECOURSE
INDEBTEDNESS OF THE HOLDER HEREOF.
(b) LandCARE shall cause the Publication to occur no later than November
14, 1998.
10 SECURITIES LAW MATTERS
10.1 ECONOMIC RISK; SOPHISTICATION. Each Stockholder acknowledges and
confirms that he or she has received and reviewed a Shelf S-1 from LandCARE
relating to his or her acquisition of shares of LandCARE Stock hereunder.
10.2 COMPLIANCE WITH LAW. Each Stockholder covenants that none of the
LandCARE Stock acquired by such Stockholder hereunder will be offered, sold,
assigned, hypothecated, transferred or otherwise disposed of by such Stockholder
except in full compliance with all applicable securities laws.
11. GENERAL
11.1 SUCCESSORS AND ASSIGNS. This Agreement and the rights of the parties
hereunder may not be assigned (except by operation of law) and shall be binding
upon and shall inure to the benefit of the parties hereto, the successors of
LandCARE, and the heirs and legal representatives of the Stockholders.
11.2 ENTIRE AGREEMENT. This Agreement (including the schedules, exhibits
and annexes attached hereto) and the documents delivered pursuant hereto
constitute the entire agreement and understanding among the Stockholders, the
Company and LandCARE, and supersede any prior agreement and understanding
relating to the subject matter of this Agreement. This Agreement, upon
execution, constitutes a valid and binding agreement of the parties hereto,
enforceable in accordance with its terms, and may be modified or amended only by
a written instrument executed by the parties hereto.
11.3 COUNTERPARTS. This Agreement may be executed simultaneously in two or
more counterparts, each of which shall be deemed an original and all of which
together shall constitute but one and the same instrument. The signatures to
this Agreement need not all be on a single copy
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of this Agreement, and may be facsimiles rather than originals, and shall be
fully as effective as though all signatures were originals on the same copy.
11.4 BROKERS AND AGENTS. Each party represents and warrants that it
employed no broker or agent in connection with this transaction and agrees to
indemnify the other parties hereto against all loss, cost, damages or expense
arising out of claims for fees or commission of brokers employed or alleged to
have been employed by such indemnifying party.
11.5 NOTICES. All notices and communications required or permitted
hereunder shall be in writing and may be given by depositing the same in United
States mail, addressed to the party to be notified, postage prepaid and
registered or certified with return receipt requested, or by delivering the same
in person to an officer or agent of such party, or by facsimile, as follows:
If to LandCARE, addressed to it at:
LandCARE USA, Inc.
0000 Xxx Xxxxxx, Xxxxx 000
Xxxxxxx, Xxxxx 00000
Attn: General Counsel
Facsimile No. (000) 000-0000
If to the Company, addressed to it at:
Clean Cut, Inc.
0000 Xxxxxxx Xxxx, Xxxxx X00
Xxxxxx, Xxxxx 00000
Facsimile No. 000-000-0000
Attention: President
With a copy to:
Xxxxxx & Xxxx, L.L.P.
0000 Xxxx Xxxxxx
Xxxxx 0000
Xxxxxx, Xxxxx 00000
Attention: Xxxxx X. Xxxxxx, III
Facsimile No. 000-000-0000
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If to the Stockholders, addressed to them at the Company's address,
or to such other address as any party hereto shall specify pursuant to this
Section from time to time.
11.6 GOVERNING LAW. This Agreement shall be construed in accordance with
the laws of the State of Texas without regard to its principles governing
conflicts of laws.
11.7 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The representations,
warranties, covenants and agreements of the parties made herein and at the time
of the Closing or in writing delivered pursuant to the provisions of this
Agreement shall survive the consummation of the transactions contemplated hereby
and any examination on behalf of the parties until the Expiration Date or as
otherwise provided herein.
11.8 EFFECT OF INVESTIGATION. No investigation by the parties hereto in
connection with this Agreement or otherwise shall affect the representations and
warranties of the parties contained herein or in any certificate or other
document delivered in connection herewith and each such representation and
warranty shall survive such investigation.
11.9 EXERCISE OF RIGHTS AND REMEDIES. Except as otherwise provided herein,
no delay of or omission in the exercise of any right, power or remedy accruing
to any party as a result of any breach or default by any other party under this
Agreement shall impair any such right, power or remedy, nor shall it be
construed as a waiver of or acquiescence in any such breach or default, or of
any similar breach or default occurring later; nor shall any waiver of any
single breach or default be deemed a waiver of any other breach or default
occurring before or after that waiver.
11.10 TIME. Time is of the essence with respect to this Agreement.
11.11 REFORMATION AND SEVERABILITY. In case any provision of this
Agreement shall be invalid, illegal or unenforceable, it shall, to the extent
possible, be modified in such manner as to be valid, legal and enforceable but
so as to most nearly retain the intent of the parties, and if such modification
is not possible, such provision shall be severed from this Agreement, and in
either case the validity, legality and enforceability of the remaining
provisions of this Agreement shall not in any way be affected or impaired
thereby.
11.12 REMEDIES CUMULATIVE. No right, remedy or election given by any term
of this Agreement shall be deemed exclusive but each shall be cumulative with
all other rights, remedies and elections available at law or in equity.
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11.13 CAPTIONS. The headings of this Agreement are inserted for
convenience only, and shall not constitute a part of this Agreement or be used
to construe or interpret any provision hereof.
11.14 PRESS RELEASES AND PUBLIC ANNOUNCEMENTS. No party shall issue any
press release or make any public announcement relating to the subject matter of
this Agreement without the prior written approval of the other party; provided,
however, that any party may make any public disclosure it believes in good faith
is required by applicable law or any listing or trading agreement concerning its
publicly-traded securities.
11.15 NO THIRD-PARTY BENEFICIARIES. This Agreement shall not confer any
rights or remedies upon any person other than the parties and their respective
successors and permitted assigns, except as set forth in Section 6 of this
Agreement. The Stockholders are hereby authorized to institute and maintain any
legal action or proceeding they deem necessary in the event LandCare fails to
grant the stock options contemplated by Section 5.5 hereof.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
day and year first above written.
LANDCARE USA, INC.
By:________________________________
Name:___________________________
Title:__________________________
CCI ACQUISITION CORP.
By: _______________________________
Name: __________________________
Title: ________________________
CLEAN CUT, INC.
By: _______________________________
Name: __________________________
Title: ________________________
Stockholders and Spouses:
Spouse, if applicable:
_______________________ ___________________________
Xxxxxx Xxxxxx
_______________________ ___________________________
Xxx Xxxx
