EXHIBIT 2.6
EXECUTION COPY
STOCK PURCHASE AGREEMENT
dated as of August 10, 1998
by and among
LANDCARE USA, INC.
LANDSCAPE RESOURCES, INC.
and
Xxxxxxx X. Xxxxxx
and
the other parties hereto
TABLE OF CONTENTS
Page
1. PURCHASE AND SALE......................................................1
1.1 PURCHASE AND SALE................................................2
1.2 PURCHASE PRICE...................................................2
1.3 THE CLOSING......................................................2
2. REPRESENTATIONS AND WARRANTIES OF XXXXXXX X. XXXXXX....................2
2.1 DUE ORGANIZATION.................................................2
2.2 AUTHORIZATION....................................................3
2.3 CAPITAL STOCK OF THE COMPANY AND RELATED MATTERS.................3
2.4 SUBSIDIARIES; AFFILIATES.........................................4
2.5 FINANCIAL STATEMENTS.............................................4
2.6 LIABILITIES AND OBLIGATIONS......................................5
2.7 ACCOUNTS AND NOTES RECEIVABLE....................................6
2.8 PERMITS AND INTANGIBLES..........................................6
2.9 ENVIRONMENTAL MATTERS............................................6
2.10 PERSONAL PROPERTY................................................7
2.11 SIGNIFICANT CUSTOMERS; MATERIAL CONTRACTS AND COMMITMENTS........8
2.12 REAL PROPERTY....................................................8
2.13 INSURANCE........................................................9
2.14 COMPENSATION; EMPLOYMENT AGREEMENTS; ORGANIZED LABOR MATTERS.....9
2.15 EMPLOYEE BENEFIT PLANS...........................................9
2.16 CONFORMITY WITH LAW; LITIGATION.................................11
2.17 TAXES...........................................................11
2.18 NO VIOLATIONS; ALL REQUIRED CONSENTS OBTAINED.......13
2.19 ABSENCE OF CHANGES..............................................13
2.20 POWERS OF ATTORNEY..............................................14
2.21 COMPETING LINES OF BUSINESS; RELATED-PARTY TRANSACTIONS.........14
2.22 DISCLOSURE......................................................15
2.23 CERTAIN BUSINESS PRACTICES......................................15
2.24 NOTICE TO BARGAINING AGENTS.....................................15
2.25 RELIANCE UPON ORAL REPRESENTATIONS..............................15
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2.26 NO FEDERAL CONTRACTS............................................15
3. REPRESENTATIONS OF LANDCARE...........................................16
3.1 DUE ORGANIZATION................................................16
3.2 AUTHORIZATION...................................................16
3.3 NO VIOLATIONS...................................................16
3.4 VALIDITY OF OBLIGATIONS.........................................16
3.5 DISCLOSURE......................................................16
3.6 RELIANCE UPON ORAL REPRESENTATIONS..............................17
4. DELIVERIES............................................................17
4.1 INSTRUMENTS OF TRANSFER.........................................17
4.2 EMPLOYMENT AGREEMENT............................................17
4.3 OPINION OF COUNSEL..............................................17
4.4 GOOD STANDING CERTIFICATES......................................17
4.5 SUBLEASE........................................................18
4.6 INDEBTEDNESS TO COMPANY.........................................18
4.7 CONSENTS........................................................18
5. POST-CLOSING COVENANTS................................................18
5.1 FUTURE COOPERATION; FURTHER ASSURANCES..........................18
5.2 EXPENSES........................................................18
5.3 CERTAIN AGREEMENTS..............................................19
5.4 PREPARATION AND FILING OF TAX RETURNS...........................19
6. INDEMNIFICATION.......................................................20
6.1 SURVIVAL OF STOCKHOLDER'S AND LANDCARE'S REPRESENTATIONS AND
WARRANTIES......................................................20
6.2 GENERAL INDEMNIFICATION BY XXXXXXX X. XXXXXX ...................21
6.3 INDEMNIFICATION BY LANDCARE.....................................21
6.4 CLAIMS..........................................................21
6.5 THIRD PERSON CLAIMS.............................................21
6.6 METHOD OF PAYMENT...............................................22
6.7 LIMITATIONS ON INDEMNIFICATION..................................22
7. NONCOMPETITION........................................................22
7.1 PROHIBITED ACTIVITIES...........................................22
7.2 EQUITABLE RELIEF................................................23
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7.3 REASONABLE RESTRAINT............................................23
7.4 SEVERABILITY; REFORMATION.......................................23
7.5 INDEPENDENT COVENANT............................................24
8. NONDISCLOSURE OF CONFIDENTIAL INFORMATION.............................24
8.1 GENERAL.........................................................24
8.2 EQUITABLE RELIEF................................................25
8.3 SURVIVAL........................................................25
9. GENERAL...............................................................25
9.1 SUCCESSORS AND ASSIGNS..........................................25
9.2 ENTIRE AGREEMENT................................................25
9.3 COUNTERPARTS....................................................25
9.4 BROKERS AND AGENTS..............................................25
9.5 NOTICES.........................................................25
9.6 GOVERNING LAW...................................................26
9.7 SURVIVAL OF REPRESENTATIONS AND WARRANTIES......................26
9.8 EFFECT OF INVESTIGATION.........................................27
9.9 EXERCISE OF RIGHTS AND REMEDIES.................................27
9.10 TIME............................................................27
9.11 REFORMATION AND SEVERABILITY....................................27
9.12 REMEDIES CUMULATIVE.............................................27
9.13 ARBITRATION.....................................................27
9.14 CAPTIONS........................................................28
9.15 PRESS RELEASES AND PUBLIC ANNOUNCEMENTS.........................28
9.16 NO THIRD-PARTY BENEFICIARIES....................................28
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SCHEDULES
SCHEDULE 2.1 Allocation of Consideration
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 2.17. Accounting Methods
SCHEDULE 2.18. No Violations; No Consents Required
SCHEDULE 2.19. Absence of Changes
SCHEDULE 2.20. Powers of Attorney
SCHEDULE 2.21. Competing Lines of Business; Related Party Transactions
SCHEDULE 4.5. Sublease
SCHEDULE 4.7. Consents
ANNEXES
Annex - Form of Employment Agreement
Annex II - Form of Opinion of Counsel to Company and Stockholder
Annex III - Form of Opinion of Counsel to LandCARE
Annex IV - Form of SubLease
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STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT (this "Agreement") is made and entered into
as of August 10, 1998 by and among LandCARE USA, Inc., a Delaware corporation
("LandCARE"), Landscape Resources, Inc., a Texas corporation (the "Company"),
Xxxxxxx X. Xxxxxx (sometimes referred to herein as the "Stockholder"), Xxxxx X.
Xxxxxxx ("Xxxxxxx") and Xxxxx X. Xxxxxx ("Xxxxx Xxxxxx") . Xxxxxxx X. Xxxxxx is
the only holder of capital stock of the Company.
WHEREAS, the Stockholder desire to sell, and LandCARE desires to purchase,
all of the issued and outstanding capital stock of the Company (the "Shares") on
the terms and conditions set forth in this Agreement; and
WHEREAS, the Company owns a 51% membership interest in Select Landscape
L.L.C., a Texas limited liability company ("Select Landscape"), and Xxxxxxx owns
the remaining 49% membership interest in Select Landcape; and
WHEREAS, Xxxxxxx desires to sell and assign all of his interest in Select
Landscape to the Company, and Xxxxxxx and the Company desire to substitute the
Company for Xxxxxxx as a member of Select Landscape, so that after such transfer
and assignment the Company shall be the sole member of Select Landscape; and
WHEREAS, Xxxxxxx X. Xxxxxx owns a 99% membership interest in Southwest
Irrigation L.L.C., a Texas limited liability company ("Southwest Irrigation"),
and Xxxxx Xxxxxx owns the remaining 1% membership interest in Southwest
Irrigation; and
WHEREAS, Xxxxxxx X. Xxxxxx and Xxxxx Xxxxxx each desires to sell and assign
all of his or her interest in Southwest Irrigation to the Company, and each
desires to substitute the Company as the sole member of Southwest Irrigation;
and
WHEREAS, on the date hereof the parties are consummating the transactions
described herein;
NOW, THEREFORE, in consideration of the premises and of the mutual
agreements contained herein, the parties hereto, intending to be legally bound,
agree as follows:
1. PURCHASE AND SALE
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1.1 PURCHASE AND SALE. On the terms set forth in this Agreement:
(a) the Stockholder hereby sells, conveys, transfers, assigns and delivers
to LandCARE, and LandCARE hereby purchases from the Stockholder, all of the
Shares;
(b) Xxxxxxx hereby sells and assigns all of his interest in Select
Landscape to the Company, and Xxxxxxx and the Company hereby agree that the
Company is hereby substituted for Xxxxxxx as a member of Select Landscape, and
is now therefore the sole member of Select Landscape;
(c) Xxxxxxx X. Xxxxxx and Xxxxx Xxxxxx each hereby sells and assigns all
of his or her interest in Southwest Irrigation to the Company, and each hereby
agrees that the Company is hereby substituted for such persons as the sole
member of Southwest Irrigation.
1.2 PURCHASE PRICE. The aggregate purchase price (the "Purchase Price")
payable by LandCare for the Shares and as consideration to Xxxxxxx and Xxxxxxx
X. Xxxxxx and Xxxxx Xxxxxx for the transfers to the Company of the interests in
Select Landscape and Southwest Irrigation made pursuant to this Agreement is
$6,250,000 in cash, which amount is being paid at Closing as set forth on
SCHEDULE 1.2 hereto by wire transfer of immediately available funds in
accordance with wiring instructions provided by the Stockholder, Xxxxxxx and
Xxxxx Xxxxxx.
1.3 THE CLOSING. The closing of the transactions contemplated by this
Agreement (the "Closing") is taking place concurrently with the execution and
delivery of this Agreement, and the date hereof is sometimes herein called the
"Closing Date".
2. REPRESENTATIONS AND WARRANTIES OF XXXXXXX X. XXXXXX
Xxxxxxx X. Xxxxxx hereby represents and warrants to LandCARE as follows.
2.1 DUE ORGANIZATION. (a) The Company is a corporation duly organized,
validly existing and in good standing under the laws of the State of Texas (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
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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 proceedings of the Board of Directors
and Stockholder of the Company have been made available to LandCARE.
(b) Each of Select Landscape and Southwest Irrigation (which are herein
sometimes collectively called the "LLCs") is a limited liability company duly
formed, validly existing and in good standing under the laws of the State of
Texas, and each has all requisite power and authority to carry on its business
as it is now being conducted. Each of the LLCs 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. Schedule 2.1 sets forth a list of all
jurisdictions in which either of the LLCs is authorized or qualified to do
business. True, complete and correct copies of the Articles of Organization,
Regulations or other charter documents, each as amended, of each of the LLCs
(the "LLC Charter Documents") are all attached to Schedule 2.1. All records of
proceedings of the members and managers of each of the LLCs have been made
available to LandCARE.
2.2 AUTHORIZATION. (i) Each of the persons and entities other than
LandCare (collectively, the "Barley Parties") executing this Agreement has the
authority to enter into and bind such person or entity to the terms of this
Agreement and (ii) each of the Barley Parties 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 each of the Barley Parties and the
Board of Directors of the Company. This Agreement has been validly executed and
delivered by each of the Barley Parties 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 AND RELATED MATTERS. (a) The authorized
capital stock of the Company consists solely of 10,000 shares of common stock,
par value $ .01 per share, of which 800 shares are issued and outstanding and
constitute all of the Shares. All of the Shares are owned of record and
beneficially by Xxxxxxx X. Xxxxxx and are owned free and clear of all liens,
security interests, pledges, charges, voting trusts, restrictions, encumbrances
and claims of every kind. All of the Shares have been duly authorized and
validly issued, are fully paid and nonassessable, and were offered, issued, sold
and delivered by the Company in compliance with all applicable state and federal
laws governing the issuance of securities. None of the Shares were issued in
violation of any preemptive rights or similar rights of any person. No option,
warrant, call, conversion right or commitment of any kind exists which obligates
the Company to issue any
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additional shares of its capital stock or obligates the Stockholder to transfer
any of the Shares to any person except pursuant to this Agreement.
(b) The membership interest owned by Xxxxxxx (the "Xxxxxxx Interest") is
the only equity interest of any nature whatsoever in Select Landscape other than
the membership interest owned by the Company. The membership interests owned by
Xxxxxxx X. Xxxxxx and Xxxxx Xxxxxx (collectively, the "Barley Interest") are the
only equity interests of any nature whatsoever in Southwest Irrigation. The
Xxxxxxx Interest is owned of record and beneficially by Xxxxxxx, and the Barley
Interest is owned by Xxxxxxx X. Xxxxxx and Xxxxx Xxxxxx as described above, and
the Xxxxxxx Interest and the Barley Interest (collectively, the "Interests") are
owned free and clear of all liens, security interests, pledges, charges, voting
trusts, restrictions, encumbrances and claims of every kind. All of the
Interests 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 Interests 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 either of the LLCs to admit any
person as a member of permits any person to acquire any interest therein except
pursuant to this Agreement.
2.4 SUBSIDIARIES; AFFILIATES. Except as set forth on Schedule 2.4, and
except for Select Landscape, the Company and the LLCs have no subsidiaries,
affiliates or d/b/a names and have not conducted business under any other name
except their legal name as set forth in the Charter Documents or LLC Charter
Documents, as appropriate. Except as set forth in Schedule 2.4, the Company and
the LLCs do 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 except for Select Landscape, none of them is, 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 "CompanyYear-end
Financial Statements");
(ii) The balance sheet (the "Interim Balance Sheet") of the Company
as of May 31, 1998 and the income statement for the five-month period then
ended (the "Company Interim Financial Statements").
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(iii) The balance sheets of Select Landscape as of 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 "Select Landscape Year-end Financial
Statements");
(iv) The balance sheet of Select Landscape as of May 31, 1998 and
the income statement for the five-month period then ended (the "Select
Landscape Interim Financial Statements").
(v) The balance sheets of Southwest Irrigation as of 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 "Southwest Irrigation Year-end Financial
Statements");
(vi) The balance sheet of Southwest Irrigation as of May 31, 1998
and the income statement for the five-month period then ended (the
"Southwest Irrigation Interim Financial Statements").
All of the financial statements described above are herein collectively called
the "Financial Statements". References in the remainder of this Section 2 to
"the Company" refer to Landscape Resources, Inc., Select Landscape and Southwest
Irrigation collectively or individually, as appropriate, mutatis mutandis,
except as the context otherwise requires.
The Financial Statements have been prepared from the books and records of
the Company in conformity with generally accepted accounting principles applied
on a basis consistent with preceding years and throughout the periods involved
("GAAP") and present fairly the financial position and results of operations of
the Company as of the dates of such statements and for the periods covered
thereby. The Financial Statements as of May 31, 1998 are subject to normal
period- end adjustments, which in the aggregate will not be material. The books
of account of the Company have been kept accurately in all material respects and
in the ordinary course of business, the transactions entered therein represent
bona fide transactions, and the revenues, expenses, assets and liabilities of
the Company have been properly recorded therein in all material respects.
2.6 LIABILITIES AND OBLIGATIONS. Except as and to the extent disclosed and
adequately provided for in the Financial Statements, on Schedule 2.6 hereto or
the other Schedules hereto, the Company has no material liabilities or material
obligations of any kind, whether accrued, absolute, secured or unsecured,
contingent or otherwise. Schedule 2.6 contains a reasonable estimate of the
maximum amount which may be payable with respect to known liabilities which are
not fixed. For
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each such known liability for which the amount is not fixed, Schedule 2.6
includes a summary description of each known liability together with copies of
all relevant documentation relating thereto.
2.7 ACCOUNTS AND NOTES RECEIVABLE. Schedule 2.7 sets forth an accurate
list of the accounts and notes receivable of the Company, as of the date of the
Interim Balance Sheet, showing amounts due in 30-day aging categories. Except to
the extent reflected on Schedule 2.7, all such accounts, notes and other
receivables were incurred in the ordinary course of business, are stated in
accordance with GAAP and are collectible in the amounts shown on Schedule 2.7,
less $35,000 (in lieu of a reserve in the May 31, 1998 balance sheet).
2.8 PERMITS AND INTANGIBLES. The Company holds all licenses, franchises,
permits and other governmental authorizations required in connection with the
conduct of the Company's business. Schedule 2.8 sets forth an accurate list and
summary description of all such licenses, franchises, permits and other
governmental authorizations, including permits, titles (including licenses,
franchises, certificates, trademarks, trade names, patents, patent applications
and copyrights owned or held by the Company or any of its employees (including
interests in software or other technology systems, programs and intellectual
property) (collectively, the "Intangible Assets") (it being understood and
agreed that a list of all environmental permits and other environmental
approvals is set forth on Schedule 2.9). To Xxxxxxx X. Xxxxxx'x actual
knowledge, 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. To Xxxxxxx X. Xxxxxx'x actual
knowledge, the Company has conducted and is conducting its business in
compliance with the requirements, standards, criteria and conditions set forth
in the Intangible Assets and other governmental authorizations listed on
Schedules 2.8 and 2.9 and is not in violation of any of the foregoing. Except as
specifically set forth on Schedule 2.8 or 2.9, the transactions contemplated by
this Agreement will not result in a default, breach or violation of any rights
of the Company in such Intangible Assets which singly or in the aggregate will
have a material adverse effect on the operations of the Company.
2.9 ENVIRONMENTAL MATTERS. To Xxxxxxx X. Xxxxxx'x actual knowledge, 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
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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. To Xxxxxxx X. Xxxxxx'x actual knowledge, the Company has
obtained and adhered to all necessary permits and other approvals necessary to
treat, transport, store, dispose of and otherwise handle Hazardous Wastes,
Hazardous Materials and Hazardous Substances, a list of all of which permits and
approvals is set forth on Schedule 2.9, and have reported to the appropriate
authorities, to the extent required by all Environmental Laws, all past and
present sites owned and operated by the Company where Hazardous Wastes,
Hazardous Materials or Hazardous Substances have been treated, stored, disposed
of or otherwise handled. Except as set forth on Schedule 2.9, to Xxxxxxx X.
Xxxxxx'x actual knowledge, there have been no releases or threats of releases
(as defined in Environmental Laws) at, from, in, under or on any property owned
or operated by the Company except as permitted by Environmental Laws. To Xxxxxxx
X. Xxxxxx'x actual knowledge, there is no on-site or off-site location to which
the Company has transported or disposed of Hazardous Wastes, Hazardous Materials
or Hazardous Substances or arranged for the transportation of Hazardous Wastes,
Hazardous Materials or Hazardous Substances which is the subject of any federal,
state, local or foreign enforcement action or any other investigation which
could lead to any claim against the Company or LandCARE for any clean-up cost,
remedial work, damage to natural resources, property damage or personal injury,
including, but not limited to, any claim under (i) the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as amended, (ii)
the Resource Conservation and Recovery Act, as amended, (iii) the Hazardous
Materials Transportation Act, as amended, or (iv) comparable state or local
statutes and regulations.
2.10 PERSONAL PROPERTY. Schedule 2.10 sets forth an accurate list of (a)
all personal property included in "plant, property and equipment" or any similar
category on the balance sheet of the Company, (b) all other personal property
owned by the Company with a fair market value in excess of $5,000, and (c) all
leases and agreements with respect to personal property, copies of which have
been delivered to LandCARE. Schedule 2.10 indicates which assets are currently
owned, or were formerly owned, by the Stockholder or any affiliate of the
Company or the Stockholder. Except as set forth on Schedule 2.10, (i) all
material personal property used by the Company in its business is either owned
by the Company or leased by the Company pursuant to a lease included on Schedule
2.10, (ii) all of the personal property listed on Schedule 2.10 is in good
working order and condition, ordinary wear and tear excepted and (iii) all
leases and agreements included on Schedule 2.10 are in full force and effect and
constitute valid and binding agreements of the parties (and their successors)
thereto in accordance with their respective terms. Except as set forth on
Schedule 2.10, the Company has good and marketable title to the tangible and
intangible personal property it purports to own, subject to no security
interest, pledge, lien, claim, conditional sales agreement, encumbrance, charge
or restriction on transfer.
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2.11 SIGNIFICANT CUSTOMERS; MATERIAL CONTRACTS AND COMMITMENTS. Schedule
2.11 sets forth a list of (i) all customers of the Company as of the date hereof
or the most recent date practicable or such other recent date as may be set
forth on such list that represent (or are expected to represent) one percent
(1%) or more of the Company's revenues for the current year ("Significant
Customers"), and (ii) all material contracts (including, but not limited to,
construction-related agreements involving payments in excess of $50,000,
maintenance contracts involving $25,000 or more, and any other agreements
involving $25,000 or more), commitments and similar agreements to which the
Company is a party or by which it or any of its properties are bound (including,
but not limited to, contracts with Significant Customers, joint venture or
partnership agreements, contracts with any labor organizations, strategic
alliances and options to purchase land). True, complete and correct copies of
such agreements have been delivered to LandCARE. Except as described on Schedule
2.11, (i) to Xxxxxxx X. Xxxxxx'x actual knowledge, none of the Significant
Customers have canceled or substantially reduced or, to the knowledge of Xxxxxxx
X. Xxxxxx, 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, to Xxxxxxx X. Xxxxxx'x actual knowledge, is
not in default under any contracts or agreements listed on Schedule 2.11 and no
notice of default under any such contract or agreement has been received. Except
as listed in Schedule 2.11, the transactions contemplated by this Agreement will
not result in a default under or a breach or violation of any such contracts or
agreements which singly or in the aggregate will have a material adverse effect
on the operations of the Company. Schedule 2.11 also includes a summary
description of all plans or projects relating to the Company's business
involving the opening of new operations, expansion of existing operations, the
acquisition of any property, business or assets requiring, in any event, the
payment of more than $50,000 in the aggregate.
2.12 REAL PROPERTY. Schedule 2.12 includes a list of all real property
leased by the Company at the date hereof (the "Real Property"), and all other
real property, if any, used by the Company in the conduct of its business. True,
complete and correct copies of all leases and agreements with respect to Real
Property leased by the Company have been delivered to LandCARE, and an
indication as to which such properties, if any, are currently owned, or were
formerly owned, by the Stockholder or any affiliates of the Company or the
Stockholder is included in Schedule 2.12. All leases relating to Real Property
leased by the Company from the Stockholder or any affiliate of any of the
Stockholder has been terminated. Except as set forth on Schedule 2.12, all of
such leases included on Schedule 2.12 are in full force and effect and
constitute valid and binding agreements of the parties (and their successors)
thereto in accordance with their respective terms. To Xxxxxxx X. Xxxxxx'x actual
knowledge, except as provided in the leases (or Subleases described under this
Agreement) applicable to the Real Property, there are no other leases, tenancy
agreements, covenants, restrictions or any other instruments or agreements which
create in or confer on any party,
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other than the Company, the right to occupy or possess all or any portion of the
Real Property; no party other than the Company occupies or possesses the Real
Property or any portion thereof; there is legal 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 business.
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.
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, or employee, except for regular compensation increases
consistent with the Company's historical compensation practices, which increases
are described generally on Schedule 2.14.
Except as set forth on Schedule 2.14, (i) the Company is not bound by or
subject to (and none of its respective assets or properties is bound by or
subject to) any arrangement with any labor union, (ii) no employees of the
Company are represented by any labor union or covered by any collective
bargaining agreement, (iii) to the knowledge of the Company, no campaign to
establish such representation is in progress and (iv) there is no pending or, to
the best of the Company's knowledge, threatened, labor dispute involving the
Company and any organized group of its employees. The Company has not
experienced any labor interruptions over the past five years.
2.15 EMPLOYEE BENEFIT PLANS. Schedule 2.15 sets forth an accurate schedule
showing all employee benefit plans of Company, including all agreements or
arrangements (other than agreements or arrangements set forth on Schedule 2.14)
containing "golden parachute" or other similar provisions, and deferred
compensation agreements, together with true, complete and correct copies of such
plans, agreements and any trusts related thereto, and classifications of
employees covered thereby as of the Balance Sheet Date. Except for the employee
benefit plans, if any, described on Schedule 2.15, the Company does not sponsor,
maintain or contribute to any plan
-9-
program, fund or arrangement that constitutes an "employee pension benefit
plan," nor does the Company have any obligation to contribute to or accrue or
pay any benefits under any deferred compensation or retirement funding
arrangement on behalf of any employee or employees (such as, for example, and
without limitation, any individual retirement account or annuity, any "excess
benefit plan" (within the meaning of Section 3(36) of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA")) or any non-qualified deferred
compensation arrangement). For the purposes of this Agreement, the term
"employee pension benefit plan" shall have the same meaning as is given that
term in Section 3(2) of ERISA. The Company has not sponsored, maintained or
contributed to any employee pension benefit plan and is not required to
contribute to any retirement plan pursuant to the provisions of any collective
bargaining agreement establishing the terms and conditions of employment of any
of the Company's employees other than the plans set forth on Schedule 2.15.
The Company is not now, and will not as a result of its past activities
become, liable to the Pension Benefit Guaranty Corporation (the "PBGC") or to
any multi employer employee pension benefit plan under the provisions of Title
IV of ERISA. All employee benefit plans listed on Schedule 2.15 and the
administration thereof are in substantial compliance with their terms and all
applicable provisions of ERISA and the regulations issued thereunder, as well as
with all other applicable federal, state and local statutes, ordinances and
regulations. All accrued contribution obligations of the Company with respect to
any plan listed on Schedule 2.15 have either been fulfilled in their entirety or
are fully reflected on the balance sheet of the Company as of the Balance Sheet
Date. All plans listed on Schedule 2.15 that are intended to qualify (the
"Qualified Plans") under Section 401(a) of the Internal Revenue Code of 1986, as
amended (the "Code") are, and have been, so qualified and have been determined
by the Internal Revenue Service to be so qualified. Except as disclosed on
Schedule 2.15, all reports and other documents required to be filed with any
governmental agency or distributed to plan participants or beneficiaries have
been timely filed or distributed. Neither the Stockholder, nor any plan listed
in Schedule 2.15, nor the Company has engaged in any transaction prohibited
under the provisions of Section 4975 of the Code or Section 406 of ERISA. No
plan listed on Schedule 2.15 has incurred an accumulated funding deficiency, as
defined in Section 412(a) of the Code and Section 302(1) of ERISA; and the
Company has not incurred any liability for excise tax or penalty due to the
Internal Revenue Service or any liability to the PBGC. 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 in Schedule 2.15;
the Company has not incurred liability under Section 4062 of ERISA; and, to
Xxxxxxx X. Xxxxxx'x actual knowledge, no circumstances exist pursuant to which
the Company
-10-
could have any direct or indirect material liability whatsoever (including, but
not limited to, any liability to any multi employer plan or the PBGC under Title
IV of ERISA or to the Internal Revenue Service for any excise tax or penalty, or
being subject to any statutory lien to secure payment of any such liability)
with respect to any plan now or heretofore maintained or contributed to by any
entity other than the Company that is, or at any time was, a member of a
"controlled group" (as defined in Section 412(n)(6)(B) of the Code) that
includes the Company.
2.16 CONFORMITY WITH LAW; LITIGATION. Except as set forth on Schedule
2.16, there are no claims, actions, suits or proceedings, pending or, to Xxxxxxx
X. Xxxxxx'x actual knowledge, threatened, against or affecting the Company (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 the Company. Except as set forth on SCHEDULE 2.16, no
unresolved notice of any claim, action, suit or proceeding, whether pending or
threatened, has been received by the Company during the last five years and, to
the actual knowledge of Xxxxxxx X. Xxxxxx, there is no basis therefor. Except as
set forth on Schedule 2.16, there are no outstanding judgments, orders, writs,
injunctions or decrees against or affecting the Company or its assets. Except as
set forth on SCHEDULE 2.16, after due inquiry, to Xxxxxxx X. Xxxxxx'x actual
knowledge, 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 in substantial
compliance with 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 and 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.
-11-
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. Each of the Company and the Company Subsidiaries has timely filed
true, correct and complete declarations of estimated Tax in each jurisdiction in
which any such declaration is required to be filed by it. No Liens for Taxes
exist upon the assets of the Company or any Company Subsidiary except Liens for
Taxes which are not yet due. Neither the Company nor any Company Subsidiary is,
or ever has been, subject to Tax in any jurisdiction outside the United States.
No litigation with respect to any Tax for which the Company or any Company
Subsidiary is asserted to be liable is pending or, after due inquiry, to the
actual knowledge of Xxxxxxx X. Xxxxxx, threatened. Xxxxxxx X. Xxxxxx knows of no
basis 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. To the
actual knowledge of Xxxxxxx X. Xxxxxx, no accounting method changes of the
Company or of any Company Subsidiary exist which could give rise to an
adjustment under Section 481 of the Code. Except as provided in Schedule 2.17,
the Company uses the accrual method of accounting for income tax purposes, and
the Company's methods of accounting have not changed in the past five years. The
Company is not an investment company as defined in Section 351(e)(1) of the
Code.
-12-
The Stockholder made a valid election under the provisions of Subchapter S
of the Code effective 1/1/98. Neither the sole stockholder nor the Company has
taken any action that terminated the Subchapter S election, which remains in
effect on the date hereof but will terminate on the Closing Date.
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 Xxxxxxx X. Xxxxxx, any other party thereto, is in material default
under any lease, instrument, license, permit or material agreement to which the
Company is a party or by which its properties are bound (the "Material
Documents"). Except as set forth on Schedule 2.18, the execution of this
Agreement by the Company and the Stockholder and the performance by the Company
and the Stockholder of their obligations hereunder and the consummation of the
transactions contemplated hereby will not result in any material violation or
material breach or constitute a material default under, any of the terms or
provisions of the Material Documents or the Charter Documents which singly or in
the aggregate will have a material adverse effect on the operations of the
Company. 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. Except as set forth on Schedule 2.18, none of the Material Documents
prohibits the use or publication of the name of any other party to such Material
Document, and none of the Material Documents prohibits or restricts the Company
or will prevent or restrict the Company or the LandCARE from freely providing
services to any person.
2.19 ABSENCE OF CHANGES. Since June 30, 1998, the Company has conducted
its operations in the ordinary course of business and, except as set forth on
Schedule 2.19, there has not been:
(i) any change in the business, assets, liabilities or financial
condition of the Company which would have a Material Adverse Effect;
(ii) any damage, destruction or loss (whether or not covered by
insurance) affecting any of the material assets of the Company or the
business of the Company which would have a Material Adverse Effect;
(iii) any change in the authorized capital of the Company or its
outstanding securities or any change in its ownership interests or any
grant of any options, warrants, calls, conversion rights or commitments;
(iv) any declaration or payment of any dividend or distribution with
respect to the capital stock (except for distributions in an amount equal
to the income taxes payable to the Stockholder based solely on the
Company's S corporation earnings during the period from
-13-
June 30, 1998 to the date hereof and the distribution of all of the
membership interest in Grassroots Floral, L.L.C. as contemplated by this
Agreement) 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 other similar
material claims filed; (vii) any sale or transfer, or any agreement
to sell or transfer, any material assets,
property or rights of the Company to any person which would have a
material adverse effect on the Company;
(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 individual amount not in excess of $10,000 and in an
aggregate amount not in excess of $50,000; or
(xiv) any transaction by the Company outside the ordinary course of
its business (excluding the transactions of the Company involving
Grassroots Floral L.L.C.).
(xv) any material transaction by the Company outside the ordinary
course of its business.
2.20 POWERS OF ATTORNEY. Schedule 2.20 sets forth a schedule as of the
date of this Agreement of the name of each person, corporation, firm or other
entity holding any general or special power of attorney from the Company and a
description of the terms of each such power.
2.21 COMPETING LINES OF BUSINESS; RELATED-PARTY TRANSACTIONS. Except as
set forth on Schedule 2.21, neither Xxxxxxx X. Xxxxxx 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
-14-
receives remuneration from, any business which is a competitor, lessor, lessee,
customer or supplier of the Company. Except as set forth on Schedule 2.21, no
officer, director or stockholder of the Company has, nor during the period
beginning January 1, 1995 through the date hereof had, any interest in any
property, real or personal, tangible or intangible, used in or pertaining to the
Company's business.
2.22 DISCLOSURE. No representation or warranty of the Stockholder
contained in this Agreement contains any material untrue statement of fact or
omits to state a material fact necessary in order to make the statements herein
or therein, in light of the circumstances under which they were made, not
misleading.
2.23 CERTAIN BUSINESS PRACTICES. To the actual knowledge of Xxxxxxx X.
Xxxxxx, neither the Company nor any person acting on behalf of the Company has
given or offered anything of value to any governmental official, political party
or candidate for government office nor has it or any of them otherwise taken any
action which would cause the Company to be in violation of the Foreign Corrupt
Practices Act of 1977, as amended, or any law of similar effect.
2.24 NOTICE TO BARGAINING AGENTS. The Company has no collective bargaining
agreements.
2.25 RELIANCE UPON ORAL REPRESENTATIONS. Xxxxxxx X. Xxxxxx represents and
warrants: (a) that he has been fully informed by his legal counsel and by his
own independent judgment of the terms, conditions and effects of this Agreement;
(b) that he 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 he is fully satisfied with the terms of this Agreement; (d) that no
promise or inducement has been offered or made to him except as expressly stated
in this Agreement and the agreements to be entered into connection with this
Agreement, including without limitation the Employment Agreement, stock options
and the Sublease described in Article 4 below; 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.
2.26 NO FEDERAL CONTRACTS. None of the Company, Select Landscape or
Southwest Irrigation is a party to any federal contract awarded pursuant to any
small business or other set aside program. The Company, Select Landscape and
Southwest Irrigation, and the affiliates of each, are each in full compliance
with all applicable laws, rules and regulations relating to federal contracts to
the extent applicable to any of them.
-15-
3. REPRESENTATIONS OF LANDCARE
LandCARE represents and warrants as follows:
3.1 DUE ORGANIZATION. LandCARE is duly incorporated, validly existing and
in good standing under the laws of the state of Delaware, and has the requisite
power and authority to carry on its business as it is now being conducted.
LandCARE is qualified to do business and is in good standing in each
jurisdiction in which the nature of its business makes such qualification
necessary, except where the failure to be so authorized or qualified would not
have a Material Adverse Effect.
3.2 AUTHORIZATION. (i) The representative of LandCARE executing this
Agreement has the authority to enter into and bind LandCARE to the terms of this
Agreement and (ii) LandCARE has the full legal right, power and authority to
enter into this Agreement and to consummate the transactions contemplated
hereby, including, without limitation, all other agreements to be executed by
LandCARE hereunder.
3.3 NO VIOLATIONS. The execution of this Agreement and the performance of
the obligations hereunder and the consummation of the transactions contemplated
hereby, including, without limitation, all other agreements to be executed by
LandCARE hereunder, will not result in any violation or breach or constitute a
default under any of the terms or provisions of the Restated Certificate of
Incorporation, as amended, or Bylaws, as amended, of LandCARE or any other
contract, agreement, restriction, regulation, note or judgment affecting or
binding LandCARE. There are no outstanding orders, writs, judgments, decrees,
proceedings or investigations of any court, governmental agency or arbitration
tribunal against, involving or affecting LandCARE or its ability to enter into
this Agreement or carry out the transactions contemplated hereby, and LandCARE
has no knowledge that any of such actions is threatened.
3.4 VALIDITY OF OBLIGATIONS. The execution and delivery of this Agreement
by LandCARE and the performance of the transactions contemplated hereby,
including, without limitation, all other agreements to be executed by LandCARE
hereunder, have been duly and validly authorized by the Board of Directors of
LandCARE and this Agreement has been duly and validly authorized by all
necessary corporate action and is a legal, valid and binding obligation of
LandCARE, enforceable in accordance with its terms.
3.5 DISCLOSURE. No representation or warranty of LandCare contained in
this Agreement contains any materially untrue statement of fact or omits to
state a material fact necessary in order to make the statements herein or
therein, in light of the circumstances under which they were made, not
misleading.
-16-
3.6 RELIANCE UPON ORAL REPRESENTATIONS. LandCare represents and warrants:
(a) that it has been fully informed by its legal counsel and by its own
independent judgment of the terms, conditions and effects of this Agreement; (b)
that it has been represented by independent legal counsel of its choice
throughout all negotiations preceding the execution of this Agreement and has
received the advice of its attorney in entering into this Agreement; (c) that it
is fully satisfied with the terms of this Agreement; (d) that no promise or
inducement has been offered or made to it except as expressly stated in this
Agreement and the agreements to be entered into connection with this Agreement,
including without limitation the Employment Agreement and the Sublease described
in Article 4 below; 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.
4. DELIVERIES
In addition to the cash delivered by LandCare pursuant to Section 1.2, the
following deliveries are being made at Closing.
4.1 INSTRUMENTS OF TRANSFER . The Stockholder is delivering to LandCARE
certificates representing all of the Shares, duly endorsed (or accompanied by
duly executed stock powers). The parties hereto are also executing and
delivering instruments effecting the transfers of the LLC Interests as described
herein, and agree to execute and deliver such further instruments and other
documents as may be reasonably necessary to effectuate the transactions
described herein.
4.2 EMPLOYMENT AGREEMENT. The Company and Xxxxxxx X. Xxxxxx are entering
into an Employment Agreement in the form of Annex I.
4.3 OPINION OF COUNSEL. Counsel to the Company and Xxxxxxx X. Xxxxxx is
delivering an opinion to LandCARE dated the date hereof in the form attached
hereto as Annex II. Counsel to LandCARE is delivering an opinion to the
Stockholder dated the date hereof in the form attached hereto as Annex III.
4.4 GOOD STANDING CERTIFICATES. The Stockholder is delivering to LandCARE
certificates, dated as of a date no earlier than ten days prior to the date
hereof, duly issued by the appropriate governmental authority in the State of
Incorporation and in each state in which the Company is authorized to do
business, showing the Company to be in good standing and authorized to do
business therein.
-17-
4.5 SUBLEASE. The Company is entering into a sublease of the property
identified on Schedule 4.5 in the form attached hereto as Annex IV.
4.6 INDEBTEDNESS TO COMPANY. The Stockholder and his Affiliates (excluding
Select Landscape and Southwest Irrigation) are repaying any outstanding
indebtedness they may have to the Company.
4.7 CONSENTS. Except as set forth on Schedule 4.7, Xxxxxxx X. Xxxxxx is
delivering to LandCARE copies of any third party consents required in connection
with the consummation of the transactions contemplated hereby.
4.8 RESIGNATION OF DIRECTORS AND OFFICERS. Xxxxxxx X. Xxxxxx is delivering
to LandCARE the resignations of such directors and officers of the Company as
have been requested by LandCARE.
4.9 DIVESTITURE OF CERTAIN ASSETS. The Company is delivering to LandCARE
evidence of its divestiture (concurrently with or immediately prior to the
Closing) of all of its interest in its "Grass Roots" and greenhouse operations
on terms reasonably acceptable to LandCARE.
5. POST-CLOSING COVENANTS
The parties to this Agreement further covenant and agree as follows:
5.1 FUTURE COOPERATION; FURTHER ASSURANCES. The Stockholder, 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 transactions contemplated hereby and fully
carrying out the intent of this Agreement. LandCARE shall provide the
Stockholder 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 Stockholder will pay the fees, expenses and disbursements of
the Stockholder and his agents, representatives, financial advisors, accountants
and counsel incurred following the date of the letter of intent with LandCare in
connection with the execution, delivery and performance of this Agreement. The
Stockholder, 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.
-18-
5.3 CERTAIN AGREEMENTS. Except for any agreements to be entered into in
connection with the transactions contemplated hereunder (including the
Employment Agreement described in Section 4.2), upon the request of LandCARE at
any time after the Closing, the Stockholder and the Company shall terminate any
existing agreements to which the Company and any of the Stockholder are parties.
5.4 PREPARATION AND FILING OF TAX RETURNS.
(a) The Stockholder shall file or cause to be filed all tax returns
for all taxable periods that end on or before the Closing Date, but in each case
only after LandCARE has reviewed such filings and consented thereto. Xxxxxxx X.
Xxxxxx shall pay, and Xxxxxxx X. Xxxxxx hereby indemnifies the Company and
LandCARE against any and all liability for, 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. LandCARE shall not file or amend
any Tax Return, or apply for any refund or take any other action relating to the
Company's Tax Return for the Company's "short period" for the period from
January 1, 1998 through the Closing Date without the consent of Xx. Xxxxxx,
which consent shall not be unreasonably withheld. No Section 338(h)(10) election
shall be made. Further, without Xxxxxxx X. Xxxxxx'x consent, LandCARE shall
request no audits, and shall file no amended Tax Returns or claims for refund,
or take any other action relating to the Company's Tax Returns for tax years or
periods prior to (or including) the Company's short period beginning January 1,
1998 which would, or could reasonably be expected to result in tax adjustments,
claims, penalties, interest or related costs, which would subject Xxxxxxx X.
Xxxxxx to indemnity claims hereunder.
(c) Each party hereto shall, and shall cause its subsidiaries and
affiliates to, provide to each of the other parties hereto such cooperation and
information as any of them reasonably may request in filing any Tax Returns,
amended Tax Returns or claim for refund, determining a liability for Taxes or a
right to refund of Taxes or in conducting any audit or other proceeding with
respect to Taxes. Such cooperation and information shall include providing
copies of all relevant portions of relevant Tax Returns, together with relevant
accompanying schedules and relevant work papers, relevant documents relating to
rulings or other determinations by Taxing Authorities and relevant records
concerning the ownership and Tax basis of property, which such party may
possess. Each party shall make its employees reasonably available on a mutually
convenient basis at its cost to provide explanation of any documents or
information so provided. 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.
-19-
5.5 STOCK OPTIONS. Within 30 days after Closing, LandCARE shall issue
options to purchase an aggregate of 30,000 shares of LandCARE common stock to
key employees of the Company to be identified by Xx. Xxxxxx at his sole
discretion. Such options shall have an exercise price per share of LandCARE
common stock equal to the closing price of LandCARE common stock on the New York
Stock Exchange on the Closing Date, and shall be issued pursuant to and in
accordance with the LandCARE USA, Inc. 1998 Long-Term Incentive Plan.
6. INDEMNIFICATION
Xxxxxxx X. Xxxxxx and LandCARE each make the following covenants that are
applicable to them, respectively:
6.1 SURVIVAL OF STOCKHOLDER'S AND LANDCARE'S REPRESENTATIONS AND
WARRANTIES.
(a) The representations and warranties of the Stockholder made in
Sections 2.1 (Due Organization), 2.2 (Authorization), 2.3 (Capital Stock of the
Company and Related Matters) and 2.17 (Taxes) of this Agreement shall survive
the Closing until the expiration of the periods prescribed by the applicable
statutes of limitations (including any extensions thereof) relating thereto; the
representations and warranties of the Stockholder made in Section 2.9
(Environmental Matters) shall survive the Closing for a period of three years
after the Closing Date; and the other representations and warranties of the
Stockholder made herein shall survive the Closing for a period of two years
after the Closing Date; provided, however, that representations and warranties
and indemnification provisions with respect to which a claim is made within the
survival period shall survive until such claim is finally determined and paid.
(b) The representations and warranties of LandCARE made in Sections
3.1 and 3.2 of this Agreement shall survive the Closing until the expiration of
the periods prescribed by the applicable statutes of limitation (including any
extensions thereof) relating thereto; the other representations and warranties
of LandCare made herein shall survive the Closing for a period of two years
following the Closing Date; provided, however, that representations and
warranties with respect to which a claim is made within such one-year period
shall survive until such claim is finally determined and paid.
(c) The date on which a representation or warranty expires as
provided herein is herein called the "Expiration Date." No claim for
indemnification may be made with respect to a representation or warranty after
the Expiration Date, other than claims based on fraud.
-20-
6.2 GENERAL INDEMNIFICATION BY XXXXXXX X. XXXXXX . Xxxxxxx X. Xxxxxx
covenants and agrees that he will indemnify, defend, protect, and hold harmless
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 Xxxxxxx X. Xxxxxx set forth herein, and (ii) any
breach or nonfulfillment of any covenant or agreement by Xxxxxxx X. Xxxxxx under
this Agreement.
6.3 INDEMNIFICATION BY LANDCARE. LandCARE covenants and agrees that it
will indemnify, defend, protect and hold harmless the Stockholder at all times
from and after the date of this Agreement until the Expiration Date from and
against all Damages incurred by the Stockholder as a result of (i) any breach of
any representation or warranty of LandCARE set forth herein; and (ii) any breach
or nonfulfillment of any covenant or agreement by LandCARE or the Company
following Closing under this Agreement. LandCARE covenants and agrees (and
agrees to cause the Company after the Closing) to indemnify the Owners for any
claims arising out of or in connection with the operation of the Company or its
business after Closing.
6.4 CLAIMS. In the event a party hereto proposes to make any indemnity
claim hereunder (other than based on a third-party claim addressed in Section
6.5 below), such party shall deliver a notice to the other party stating the
nature of such claim and the amount claimed, if known. The parties shall have 30
days from the reciept of such notice to determine whether a dispute exists as to
liability hereunder with respect to such claim. The liability for
indemnification shall be determined by the mutual agreement of the parties; but
if no such agreement can be reached within such 30-day period, by arbitration as
hereinafter provided.
6.5 THIRD PERSON CLAIMS. Promptly after any party hereto (the "Indemnified
Party") has received notice of or has knowledge of any claim by a person not a
party to this Agreement ("Third Person") or the commencement of any action or
proceeding by a Third Person that may give rise to a right of indemnification
hereunder, such Indemnified Party shall give to the party obligated to provide
indemnification hereunder (an "Indemnifying Party") written notice of such claim
or the commencement of such action or proceeding; provided, however, that the
failure to give such notice will not relieve such Indemnifying Party from
liability under this Section with respect to such claim, action or proceeding,
except to the extent that the Indemnifying Party has been actually prejudiced as
a result of such failure. The Indemnifying Party (at its own expense) shall have
the right and shall
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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.
6.6 METHOD OF PAYMENT. All claims for indemnification shall be paid in
cash.
6.7 LIMITATIONS ON INDEMNIFICATION. LandCARE and the other persons or
entities indemnified by Xxxxxxx X. Xxxxxx pursuant to this Agreement shall not
assert any claim for indemnification hereunder against Xxxxxxx X. Xxxxxx until
such time as the aggregate of all claims which such persons may have against
Xxxxxxx X. Xxxxxx exceed $100,000 (the "Indemnification Threshold") and then
only to the extent that such claims exceed the Indemnification Threshold. The
aggregate liability of the Stockholder under this Article 6 shall not exceed $
2,000,000 (the "Liability Limit"). The aggregate liability of LandCARE hereunder
shall not exceed the Liability Limit, except such Liability Limit shall not
apply to claims described in the last sentence of Section 6.3 above.
7. NONCOMPETITION
7.1 PROHIBITED ACTIVITIES. (a) As partial consideration for the execution,
delivery and performance of this Agreement by LandCARE, Xxxxxxx X. Xxxxxx hereby
agrees that he will not, for a period of five years following the Closing Date,
for any reason whatsoever, directly or indirectly, for himself or on behalf of
or in conjunction with any other person, persons, company, partnership,
corporation or business of whatever nature:
(i) own, manage, operate, join, control, consult or advise (whether
or not compensated for such consultation or advice), or participate in, or
render assistance to, or derive any benefit whatever from, any business
offering landscape or interior plant services or products in direct
competition with the Company anywhere within the Texas counties of Dallas,
Xxxxxxx, Xxxxxx, Denton, Parker or Xxxxxxx (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);
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(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 (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, (a) the foregoing covenants of subparagraphs
(i), (ii) and (iv) shall not be deemed to prohibit or to apply to the following
activities (the "Excluded Activities"): (x) work or consulting services Xxxxxxx
X. Xxxxxx may perform for or render to golf courses (including the club house
and grounds associated with any such golf course; (y) sod production and sales;
and (zi) consulting relationships with and/or employment by developers, owners
or managers for the management of landscape projects, including administering
construction bids, contracts, renovations and designs; and (b) all of the
foregoing covenants shall not prohibit the Stockholder from acquiring as a
passive investor with no involvement in the operations or management of the
business, not more than two percent (2%) of the capital stock of a competing
business whose stock is publicly traded on a national securities exchange or
over-the-counter market.
The provisions of this Section are independent of the noncompetition
provisions contained in any consulting or employment agreement to which 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, Xxxxxxx X. Xxxxxx agrees that
the foregoing covenant may be enforced by LandCARE in the event of breach by
Xxxxxxx X. Xxxxxx 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 Xxxxxxx X.
Xxxxxx.
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.
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7.5 INDEPENDENT COVENANT. Xxxxxxx X. Xxxxxx acknowledges that his
covenants set forth in this Section are material conditions to LandCARE's
willingness to execute and deliver this Agreement and to consummate the
transactions contemplated hereby. All of the covenants in this Section shall be
construed as an agreement independent of any other provision in this Agreement,
and the existence of any claim or cause of action of 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
Stockholder 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. Xxxxxxx X. Xxxxxx recognizes and acknowledges that he has had
access to certain customer lists, confidential information of the Company, such
as operational policies, pricing and cost policies, and other information, that
will be valuable, special and unique assets of the Company and LandCARE after
the Closing Date. Xxxxxxx X. Xxxxxx agrees that he 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 court or governmental
authority, provided, that prior to disclosing any information pursuant to this
clause (ii), the Stockholder shall give prior written notice thereof to LandCARE
and provide LandCARE with the opportunity to contest such disclosure. In the
event of a breach or threatened breach by 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. Notwithstanding the foregoing,
information, including customer names, customary practices and pricing methods,
that is known generally by persons in management in other companies in the
business or industry of the Company shall not be deemed confidential
information.
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8.2 EQUITABLE RELIEF. Because of the difficulty of measuring economic
losses as a result of the breach of the foregoing covenants, and because of the
immediate and irreparable damage that would be caused for which LandCARE would
have no other adequate remedy, the Stockholder agrees that the foregoing
covenants may be enforced against 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 for five years.
9. GENERAL
9.1 SUCCESSORS AND ASSIGNS. This Agreement and the rights of the parties
hereunder may not be assigned (except by operation of law) and shall be binding
upon and shall inure to the benefit of the parties hereto, the successors of
LandCARE, and the heirs and legal representatives of the Stockholder.
9.2 ENTIRE AGREEMENT. This Agreement (including the schedules, exhibits
and annexes attached hereto) and the documents delivered pursuant hereto
constitute the entire agreement and understanding among the Stockholder, the
Company and LandCARE, and supersede any prior agreement and understanding
relating to the subject matter of this Agreement. This Agreement, upon
execution, constitutes a valid and binding agreement of the parties hereto
enforceable in accordance with its terms, and may be modified or amended only by
a written instrument executed by the parties hereto.
9.3 COUNTERPARTS. This Agreement may be executed simultaneously in two or
more counterparts, each of which shall be deemed an original and all of which
together shall constitute but one and the same instrument. The signatures to
this Agreement need not all be on a single copy of this Agreement, and may be
facsimiles rather than originals, and shall be fully as effective as though all
signatures were originals on the same copy.
9.4 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.
9.5 NOTICES. All notices and communications required or permitted
hereunder shall be in writing and may be given by depositing the same in United
States mail, addressed to the party to
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be notified, postage prepaid and registered or certified with return receipt
requested, or by delivering the same in person to an officer or agent of such
party, or by facsimile, as follows:
If to LandCARE, addressed to it at:
LandCARE USA, Inc.
0000 Xxx Xxxxxx, Xxxxx 000
Xxxxxxx, Xxxxx 00000
Attn: General Counsel
Facsimile No. (000) 000-0000
If to the Company, addressed to it at:
Landscape Resources, Inc.
0000 Xxxxx Xxxxx, Xxxxx 0000
Xxxxxxx Xxxxxx, Xxxxx 00000
Facsimile No. 000-000-0000
If to Xxxxxxx X. Xxxxxx, addressed to him at the Company's address,
with copies to:
Xx. Xxxxx Xxxxxx, Esq.
Kroney Xxxxxxxxx Xxxxxx, Inc.
0000 Xxxxx Xxxxxx Xxxxx
00000 Xxxxx Xxxxx
Xxxxxx, Xxxxx 00000
Facsimile No. 000-000-0000
or to such other address as any party hereto shall specify pursuant to this
Section from time to time.
9.6 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.
9.7 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
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transactions contemplated hereby (subject to the applicable time limitations)
and any examination on behalf of the parties.
9.8 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 (subject to the applicable time
limitations).
9.9 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.
9.10 TIME. Time is of the essence with respect to this Agreement.
9.11 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.
9.12 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.
9.13 ARBITRATION. Any unresolved dispute or controversy arising under or
in connection with this Agreement shall be settled exclusively by arbitration,
conducted before a panel of three (3) arbitrators in either of Houston or
Dallas, Texas in acordance with rules of the American Arbitration Association
except to the extent the parties otherwise agree. The arbitrators shall not have
the authority to add to, detract from, or modify any provision hereof not to
award punitive damages to any injured party. A decision by a majority of the
arbitration panel shall be final and binding. Judgment may be entered on the
arbitrator's award in any court having jurisdiction. The direct expense of any
arbitration proceeding shall be borne by the Company.
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9.14 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.
9.15 PRESS RELEASES AND PUBLIC ANNOUNCEMENTS. No party shall issue any
press release or make any public announcement relating to the subject matter of
this Agreement without the prior written approval of the other party; provided,
however, that LandCARE may issue a press release in accordance with its
customary practices without such approval and any party may make any public
disclosure it believes in good faith is required by applicable law or any
listing or trading agreement concerning its publicly-traded securities.
9.16 NO THIRD-PARTY BENEFICIARIES. This Agreement shall not confer any
rights or remedies upon any person other than the parties and their respective
successors and permitted assigns.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
day and year first above written.
LANDCARE USA, INC.
By:_________________________________________
Name:____________________________________
Title:___________________________________
LANDSCAPE RESOURCES, INC.
By:_________________________________________
Name:____________________________________
Title:___________________________________
____________________________________________
Xxxxxxx X. Xxxxxx
____________________________________________
Xxxxx X. Xxxxxx
____________________________________________
Xxxxx X. Xxxxxxx
