EXHIBIT 10.2
EXECUTION COPY
AGREEMENT AND PLAN OF MERGER
dated as of August 4, 1998
by and among
LANDCARE USA, INC.,
LW ACQUISITION CORP.,
LANDSCAPE WEST, INC.
and
Xxxxx Xxxxxx
TABLE OF CONTENTS
Page
1. THE MERGER.............................................................1
1.1 THE MERGER.......................................................1
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1.2 EFFECTIVE TIME...................................................1
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1.3 ARTICLES OF INCORPORATION, BY-LAWS, DIRECTORS AND OFFICERS
OF SURVIVING CORPORATION.........................................2
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1.4 EFFECT OF MERGER.................................................2
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1.5 MANNER OF CONVERSION.............................................3
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1.6 DELIVERY OF CERTIFICATES.........................................3
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1.7 CLOSING..........................................................3
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2. REPRESENTATIONS AND WARRANTIES OF THE STOCKHOLDER......................4
2.1 DUE ORGANIZATION.................................................4
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2.2 AUTHORIZATION....................................................4
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2.3 CAPITAL STOCK OF THE COMPANY.....................................4
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2.4 SUBSIDIARIES.....................................................4
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2.5 FINANCIAL STATEMENTS.............................................5
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2.6 LIABILITIES AND OBLIGATIONS......................................5
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2.7 ACCOUNTS AND NOTES RECEIVABLE....................................6
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2.8 PERMITS AND INTANGIBLES..........................................6
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2.9 ENVIRONMENTAL MATTERS............................................6
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2.10 PERSONAL PROPERTY................................................7
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2.11 SIGNIFICANT CUSTOMERS; MATERIAL CONTRACTS AND COMMITMENTS........8
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2.12 REAL PROPERTY....................................................8
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2.13 INSURANCE........................................................9
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2.14 COMPENSATION; EMPLOYMENT AGREEMENTS; ORGANIZED LABOR MATTERS.....9
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2.15 EMPLOYEE BENEFIT PLANS...........................................9
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2.16 CONFORMITY WITH LAW; LITIGATION.................................11
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2.17 TAXES...........................................................11
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2.18 NO VIOLATIONS; ALL REQUIRED CONSENTS OBTAINED...................13
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2.19 ABSENCE OF CHANGES..............................................13
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2.20 POWERS OF ATTORNEY..............................................15
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2.21 COMPETING LINES OF BUSINESS; RELATED-PARTY TRANSACTIONS.........15
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2.22 DISCLOSURE......................................................15
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2.23 CERTAIN BUSINESS PRACTICES......................................15
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2.24 NOTICE TO BARGAINING AGENTS.....................................15
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2.25 NOTICES AND CONSENTS............................................16
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2.26 INVENTORY; WORKING CAPITAL; OTHER FINANCIAL MATTERS.............16
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2.27 YEAR 2000 COMPLIANCE............................................16
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2.28 RELIANCE UPON ORAL REPRESENTATIONS..............................16
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3. REPRESENTATIONS OF LANDCARE...........................................16
3.1 DUE ORGANIZATION................................................16
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3.2 AUTHORIZATION...................................................16
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3.3 NO VIOLATIONS...................................................17
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3.4 VALIDITY OF OBLIGATIONS.........................................17
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3.5 PROSPECTUS......................................................17
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3.6 REGISTRATION....................................................17
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4. DELIVERIES............................................................17
4.1 INSTRUMENTS OF TRANSFER.........................................17
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4.2 CERTIFICATE OF MERGER...........................................17
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4.3 EMPLOYMENT AGREEMENT............................................17
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4.4 OPINION OF COUNSEL..............................................17
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4.5 GOOD STANDING CERTIFICATES......................................18
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4.6 LEASE...........................................................18
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4.7 INDEBTEDNESS TO COMPANY.........................................18
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4.8 CONSENTS........................................................18
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4.9 RESIGNATIONS OF DIRECTORS AND OFFICERS..........................18
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4.10 CERTAIN INDEBTEDNESS............................................18
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4.11 INDEMNIFICATION AGREEMENT.......................................18
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5. POST-CLOSING COVENANTS................................................18
5.1 FUTURE COOPERATION; FURTHER ASSURANCES..........................18
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5.2 EXPENSES........................................................19
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5.3 CERTAIN AGREEMENTS..............................................19
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5.4 PREPARATION AND FILING OF TAX RETURNS...........................19
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5.5 ADDITIONAL AGREEMENTS...........................................20
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6. INDEMNIFICATION.......................................................20
6.1 SURVIVAL OF STOCKHOLDER'S REPRESENTATIONS AND WARRANTIES. .....20
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6.2 GENERAL INDEMNIFICATION BY THE STOCKHOLDER......................20
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6.3 INDEMNIFICATION BY LANDCARE.....................................21
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6.4 THIRD PERSON CLAIMS.............................................21
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6.5 METHOD OF PAYMENT...............................................21
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7. NONCOMPETITION........................................................21
7.1 PROHIBITED ACTIVITIES...........................................21
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7.2 EQUITABLE RELIEF................................................22
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7.3 REASONABLE RESTRAINT............................................22
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7.4 SEVERABILITY; REFORMATION.......................................22
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7.5 INDEPENDENT COVENANT............................................23
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8. NONDISCLOSURE OF CONFIDENTIAL INFORMATION.............................23
8.1 GENERAL.........................................................23
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8.2 EQUITABLE RELIEF................................................24
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8.3 SURVIVAL........................................................24
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9 INTENDED TAX TREATMENT................................................24
9.1 TAX-FREE REORGANIZATION.........................................24
9.2 RESTRICTIONS ON RESALE..........................................24
10 SECURITIES LAW MATTERS................................................25
10.1 ECONOMIC RISK; SOPHISTICATION...................................25
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10.2 COMPLIANCE WITH LAW.............................................25
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11. GENERAL...............................................................25
11.1 SUCCESSORS AND ASSIGNS..........................................25
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11.2 ENTIRE AGREEMENT................................................25
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11.3 COUNTERPARTS....................................................26
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11.4 BROKERS AND AGENTS..............................................26
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11.5 NOTICES.........................................................26
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11.6 GOVERNING LAW...................................................26
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11.7 SURVIVAL OF REPRESENTATIONS AND WARRANTIES......................26
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11.8 EFFECT OF INVESTIGATION.........................................27
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11.9 EXERCISE OF RIGHTS AND REMEDIES.................................27
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11.10 TIME............................................................27
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11.11 REFORMATION AND SEVERABILITY....................................27
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11.12 REMEDIES CUMULATIVE.............................................27
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11.13 CAPTIONS........................................................27
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11.14 PRESS RELEASES AND PUBLIC ANNOUNCEMENTS.........................27
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11.15 NO THIRD-PARTY BENEFICIARIES....................................28
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SCHEDULES
SCHEDULE 2.1. Due Organization
SCHEDULE 2.4. Subsidiaries
SCHEDULE 2.5. Financial Statements
SCHEDULE 2.6. Liabilities and Obligations
SCHEDULE 2.7. Accounts and Notes Receivable
SCHEDULE 2.8. Permits and Intangibles
SCHEDULE 2.9. Environmental Matters
SCHEDULE 2.10. Personal Property
SCHEDULE 2.11. Significant Customers; Material Contracts and Commitments
SCHEDULE 2.12. Real Property
SCHEDULE 2.13. Insurance
SCHEDULE 2.14. Compensation; Employment Agreements; Organized Labor Matters
SCHEDULE 2.15. Employee Benefit Plans
SCHEDULE 2.16. Conformity with Law; Litigation
SCHEDULE 2.18. No Violations; No Consents Required
SCHEDULE 2.19. Absence of Changes
SCHEDULE 2.20. Powers of Attorney
SCHEDULE 2.21. Competing Lines of Business; Related Party Transactions
SCHEDULE 4.3 Persons Entering into Employment Agreements
SCHEDULE 4.5. Leases
SCHEDULE 4.10. Certain Indebtedness
ANNEXES
Annex I - Form of Employment Agreement
Annex II - Form of Opinion of Counsel to Company and
Stockholder
Annex III - Form of Lease
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AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (this "Agreement") is made and entered
into as of August 4, 1998 by and among LandCARE USA, Inc., a Delaware
corporation ("LandCARE"), LW Acquisition Corp., a Delaware corporation and
wholly owned subsidiary of LandCARE ("Newco"), Landscape West, Inc., a
California corporation (the "Company"), and Xxxxx Xxxxxx (the "Stockholder").
The Stockholder is the only holder of capital stock of the Company.
WHEREAS, the respective Boards of Directors of Newco and the Company
(collectively called the "Constituent Corporations") deem it advisable and in
the best interests of the Constituent Corporations and their respective
stockholders that the Company merge with and into Newco pursuant to this
Agreement and the applicable provisions of the laws of the State of California
(the "State of Incorporation") and of the State of Delaware; and
WHEREAS, the Boards of Directors of the Constituent Corporations have
approved and adopted this Agreement as a plan of reorganization under Section
368 of the Internal Revenue Code of 1986, as amended (the "Code"); and
WHEREAS, on the date hereof the parties are consummating the transactions
described herein;
NOW, THEREFORE, in consideration of the premises and of the mutual
agreements contained herein, the parties hereto, intending to be legally bound,
agree as follows:
1. THE MERGER
1.1 THE MERGER. On the terms and subject to the conditions of this
Agreement, at the Effective Time (as defined below), the Company shall be merged
with and into Newco (the "Merger") and the separate existence of the Company
shall cease, all in accordance with the provisions of the laws of the State of
Incorporation and of the State of Delaware. Newco 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 form appropriate for filing, is
filed with the Secretary of State (or other appropriate authority) of the State
of Delaware (the "Merger Filing"). The Merger Filing shall be made
simultaneously with or as soon as practicable after the execution and delivery
of this
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Agreement. A copy of the Merger Filing, together with such other documents as
may be necessary or appropriate, shall be filed with the appropriate authorities
of the State of California promptly, and in any case within six months, after
the Closing.
1.3 ARTICLES OF INCORPORATION, BY-LAWS, DIRECTORS AND OFFICERS OF
SURVIVING CORPORATION. At the Effective Time, the Articles of Incorporation of
Newco then in effect shall be the Articles of Incorporation of the Surviving
Corporation, and the By-laws of Newco then in effect shall be By-laws of the
Surviving Corporation. As part of the Merger Filing, or at any time thereafter,
the Surviving Corporation shall have the right to change its name to "Landscape
West, Inc." The directors and officers of Newco immediately prior to the
Effective Time shall be the directors and officers of the Surviving Corporation.
1.4 EFFECT OF MERGER. At the Effective Time, the effect of the Merger
shall be as provided in the law of the State of Incorporation and the State of
California. Except as herein specifically set forth, the identity, existence,
purposes, powers, objects, franchises, privileges, rights and immunities of
Newco shall continue unaffected and unimpaired by the Merger and the corporate
franchises, existence and rights of the Company shall be merged with and into
Newco, and Newco, as the Surviving Corporation, shall be fully vested therewith.
At the Effective Time, the separate existence of the Company shall cease and, in
accordance with the terms of this Agreement, the Surviving Corporation shall
possess all the rights, privileges, immunities and franchises, of a public, as
well as of a private, nature, and all property, real, personal and mixed, and
all debts due on whatever account, including subscriptions to shares, and all
taxes, including those due and owing and those accrued, and all other choses in
action, and all and every other interest of or belonging to or due to the
Company and 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 or
otherwise 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.
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1.5 MANNER OF CONVERSION. The manner of converting the outstanding shares
of capital stock of the Company ("Company Stock") and the outstanding shares of
capital stock of Newco ("Newco Stock") shall be as follows:
As of the Effective Time:
1. The Company Stock issued and outstanding immediately prior
to the Effective Time, by virtue of the Merger and without any action on the
part of the holder thereof, automatically shall be converted into the right to
receive, in the aggregate, (i) 456,683 shares of common stock, par value $.01
per share, of LandCARE ("LandCARE Stock") (such number being equal to $4,250,000
divided by the average of the closing prices of LandCARE Stock on the New York
Stock Exchange for the ten consecutive business days beginning on the fifteenth
business day prior to the date hereof) and (ii) an aggregate of $4,125,000 (such
number being equal to $4,425,000 less $300,000 of Accumulated Adjustment Account
("AAA") distributions made by the Company to the Stockholder) in cash paid by
wire transfer.
2. All shares of Company Stock, if any, that are held by the
Company as treasury stock shall be canceled and retired, and no shares of
LandCARE Stock or other consideration shall be delivered or paid in exchange
therefor; and
3. As of the Effective Time, each outstanding share of Newco
Stock shall remain outstanding and unchanged.
1.6 DELIVERY OF CERTIFICATES. At the Closing, (i) the Stockholder shall
deliver to LandCARE the certificates representing the Company Stock, duly
endorsed in blank by the Stockholder or accompanied by a stock transfer
endorsement separate from certificate together with an Affidavit of Lost
Certificate and Indemnification Agreement satisfactory to LandCare, and with all
necessary transfer tax and other revenue stamps, acquired at the Stockholder's
expense, affixed and canceled, and (ii) LandCARE shall cause its stock transfer
agent to deliver to the Stockholder certificates representing the LandCARE Stock
as described above (or shall deliver to the Stockholder a copy of an irrevocable
authorization to such transfer agent authorizing the issuance of such
certificates to the Stockholder). The Stockholder agrees promptly to cure any
deficiencies with respect to the endorsement of the stock certificates or other
documents of conveyance with respect to such Company Stock or with respect to
the stock powers accompanying any Company Stock.
1.7 CLOSING. The transactions contemplated by this Agreement are being
consummated on the date hereof, and the date hereof is sometimes herein called
the "Closing Date."
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2. REPRESENTATIONS AND WARRANTIES OF THE STOCKHOLDER
The Stockholder hereby represents and warrants to LandCARE as follows.
2.1 DUE ORGANIZATION. The Company is a corporation duly organized, validly
existing and in good standing under the laws of the State of Incorporation, and
has all requisite power and authority to carry on its business as it is now
being conducted. The Company is duly qualified to do business and is in good
standing in each jurisdiction in which the nature of its business or the
ownership or leasing of its properties makes such qualification necessary,
except where the failure to be so authorized or qualified would not have a
material adverse effect on the business, assets, operations or condition
(financial or otherwise) of the Company (as used herein with respect to the
Company, or with respect to any other person, a "Material Adverse Effect").
SCHEDULE 2.1 sets forth a list of all states 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. All records of all proceedings of
the Board of Directors and stockholders of the Company have been made available
to LandCARE.
2.2 AUTHORIZATION. (i) The representative of the Company executing this
Agreement has the authority to enter into and bind the Company to the terms of
this Agreement and (ii) the Company has the full legal right, power and
authority to enter into this Agreement and the transactions contemplated hereby,
all of which have been approved by the Stockholder and the Board of Directors of
the Company. This Agreement has been validly executed and delivered by the
Company and the Stockholder and constitutes the legal, valid and binding
obligation of each of them, enforceable in accordance with its terms.
2.3 CAPITAL STOCK OF THE COMPANY. The authorized capital stock of the
Company consists solely of 750 shares of common stock, par value $ 100.00 per
share, of which 30 shares are issued and outstanding and constitute all of the
issued and outstanding shares of Company Stock (the "Shares"). All of the Shares
are owned of record and beneficially by the Stockholder and are owned free and
clear of all liens, security interests, pledges, charges, voting trusts,
restrictions, encumbrances and claims of every kind. All of the Shares have been
duly authorized and validly issued, are fully paid and nonassessable, and were
offered, issued, sold and delivered by the Company in compliance with all
applicable state and federal laws governing the issuance of securities. None of
the Shares were issued in violation of any preemptive rights or similar rights
of any person. No option, warrant, call, conversion right or commitment of any
kind exists which obligates the Company to issue any additional shares of its
capital stock or obligates the Stockholder to transfer any of the Shares to any
person except pursuant to this Agreement.
2.4 SUBSIDIARIES. Except as set forth on SCHEDULE 2.4, the Company has no
subsidiaries or d/b/a names and has not conducted business under any other name
except its legal name as set
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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. Prior to the Closing, the Company
distributed to the Stockholder for no additional consideration all shares of
Oakwood Insurance Co., LTD. held by the Company immediately prior to such
distribution.
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 May 31, 1998 and the related statements of operations for the
five-month period then ended (the "Interim Financial Statements"). (The
Year-end Financial Statements and the Interim Financial Statements are
herein collectively called the "Financial Statements".)
The Financial Statements have been prepared from the books and records of
the Company in conformity with generally accepted accounting principles applied
on a basis consistent with preceding years and throughout the periods involved
("GAAP") and present fairly 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 the ordinary course of business, the transactions entered therein
represent bona fide transactions, and the revenues, expenses, assets and
liabilities of the Company have been properly recorded therein in all material
respects.
2.6 LIABILITIES AND OBLIGATIONS. Except as and to the extent disclosed and
adequately provided for in the Financial Statements or on SCHEDULE 2.6 hereto,
the Company has no material liabilities or obligations of any kind, whether
accrued, absolute, secured or unsecured, contingent or otherwise. Except and to
the extent disclosed on SCHEDULE 2.6, there are no material claims, liabilities
or obligations, nor any reasonable basis for assertion against the Company, of
any material claim, liability or obligation, of any nature whatsoever. Except as
expressly set forth on SCHEDULE 2.6, all of the contingent liabilities of the
Company listed on SCHEDULE 2.6 are covered by the Company's insurance policies,
and no such liability will exceed the policy limits of such insurance policies.
SCHEDULE 2.6 contains a reasonable estimate of the maximum amount which may be
payable with respect to known liabilities which are not fixed. For each such
known liability for
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which the amount is not fixed, SCHEDULE 2.6 includes a summary description of
each known liability, together with copies of all relevant documentation
relating thereto. The Company's total debt as of the Closing Date does not
exceed $2,500,000. As of the Closing Date the Company's tangible net worth is at
least $1,500,000.
2.7 ACCOUNTS AND NOTES RECEIVABLE. SCHEDULE 2.7 sets forth an accurate
list of the accounts and notes receivable of the Company, as of the most recent
date practicable (which date is set forth thereon), showing amounts due in
30-day aging categories. Except to the extent reflected on SCHEDULE 2.7, all
such accounts, notes and other receivables were incurred in the ordinary course
of business, are stated in accordance with GAAP and are collectible in the
amounts shown on SCHEDULE 2.7, net of reserves reflected in the balance sheet as
of the Balance Sheet Date.
2.8 PERMITS AND INTANGIBLES. The Company holds all material licenses,
franchises, permits and other governmental authorizations required or necessary
in connection with the conduct of the Company's business. SCHEDULE 2.8 sets
forth an accurate list and summary description of all such material 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
material 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 or in SECTION 2.18, the
transactions contemplated by this Agreement will not result in a default under
or a breach or violation of, or adversely affect the rights and benefits
afforded to the Company by, any such Intangible Assets or other governmental
authorizations. Any interest of the Company with respect to the trade name and
xxxx "Landscape West" may be limited to the extent provided by California law.
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
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petroleum products) (as such terms are defined in any applicable Environmental
Law) except to the extent that noncompliance with any Environmental Laws, either
singly or in the aggregate, has not had and will not have a Material Adverse
Effect on the Company or any of its operations. The Company has obtained and
adhered to all necessary permits and other approvals necessary to treat,
transport, store, dispose of and otherwise handle Hazardous Wastes, Hazardous
Materials and Hazardous Substances, a list of all of which permits and approvals
is set forth on SCHEDULE 2.9, and have reported to the appropriate authorities,
to the extent required by all Environmental Laws, all past and present sites
owned and operated by the Company where Hazardous Wastes, Hazardous Materials or
Hazardous Substances have been treated, stored, disposed of or otherwise
handled. There have been no releases or threats of releases (as defined in
Environmental Laws) at, from, in, under or on any property owned or operated by
the Company except as permitted by Environmental Laws. There is no on-site or
off-site location to which the Company has transported or disposed of Hazardous
Wastes, Hazardous Materials or Hazardous Substances or arranged for the
transportation of Hazardous Wastes, Hazardous Materials or Hazardous Substances
which is the subject of any federal, state, local or foreign enforcement action
or any other investigation which could lead to any claim against the Company or
LandCARE for any clean-up cost, remedial work, damage to natural resources,
property damage or personal injury, including, but not limited to, any claim
under (i) the Comprehensive Environmental Response, Compensation and Liability
Act of 1980, as amended, (ii) the Resource Conservation and Recovery Act, as
amended, (iii) the Hazardous Materials Transportation Act, as amended, or (iv)
comparable state or local statutes and regulations. The Company has no
contingent liability in connection with any release of any Hazardous Waste,
Hazardous Material or Hazardous Substance into the environment.
2.10 PERSONAL PROPERTY. SCHEDULE 2.10 sets forth an accurate list of (a)
all personal property included in "plant, property and equipment" or any similar
category on the balance sheet of the Company, (b) all other personal property
owned by the Company with a fair market value in excess of $5,000, and (c) all
leases and agreements with respect to personal property, copies of which have
been delivered to LandCARE. 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 or as disclosed in the Financial Statements of the Company, 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 representing 1% or more of the
Company's revenues in its last full fiscal year ("Significant Customers"), and
(ii) all material contracts, commitments and similar agreements to which the
Company is a party or by which it or any of its properties are bound (including,
but not limited to, contracts with Significant Customers, joint venture or
partnership agreements, contracts with any labor organizations, strategic
alliances and options to purchase land). True, complete and correct copies of
such agreements have been delivered to LandCARE. Except as described on SCHEDULE
2.11, (i) none of the Significant Customers have canceled or substantially
reduced or, to the knowledge of the Company, are currently attempting or
threatening to cancel a contract or substantially reduce utilization of the
services provided by the Company, and (ii) the Company has complied with all
commitments and obligations pertaining to it, and is not in default under any
contracts or agreements listed on SCHEDULE 2.11 and no notice of default under
any such contract or agreement has been received. Except as described on
SCHEDULE 2.11, the transactions contemplated by this Agreement will not result
in a default under or a breach or violation of, or adversely affect the rights
and benefits afforded to the Company by, any such contracts or agreements.
SCHEDULE 2.11 also includes a summary description of all plans or projects
relating to the Company's business involving the opening of new operations,
expansion of existing operations, the acquisition of any property, business or
assets requiring, in any event, the payment of more than $50,000 in the
aggregate.
2.12 REAL PROPERTY. SCHEDULE 2.12 includes a list of all real property
owned or leased by the Company at the date hereof (the "Real Property"), and all
other real property, if any, used by the Company in the conduct of its business.
True, complete and correct copies of all leases and agreements with respect to
Real Property leased by the Company have been delivered to LandCARE, and an
indication as to which such properties, if any, are currently owned, or were
formerly owned, by the Stockholder or any affiliates of the Company or the
Stockholder is included in SCHEDULE 2.12. All leases relating to Real Property
leased by the Company from the Stockholder or any affiliate of the Stockholder
has been terminated. Except as set forth on SCHEDULE 2.12, all of such leases
included on SCHEDULE 2.12 are in full force and effect and constitute valid and
binding agreements of the parties (and their successors) thereto in accordance
with their respective terms. There are no leases, tenancy agreements, easements,
covenants, restrictions or any other instruments, agreements or arrangements
which create in or confer on any party, other than the Company, the right to
occupy or possess all or any portion of the Real Property or create in or confer
on any such party any right, title or interest in or to the Real Property or any
portion thereof or any interest therein; no party other than the Company
occupies or possesses the Real Property or any portion thereof; there is legal
and adequate ingress and egress between each tract of Real Property and an
adjacent (or, if none, the closest) public roadway; the Real Property is
properly zoned in order to allow its current use in the Company's businesses;
and there are no claims or demands pending or threatened by any party against
the Real Property which, if valid, would create in, or confer on, any party
other than the Company, any right, title or interest in or to the Real Property
or any portion thereof. None of the
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buildings, structures or improvements described on SCHEDULE 2.12, or the
operation or maintenance thereof as now operated or maintained, contravenes any
zoning ordinance or other administrative regulation or violates any restrictive
covenant or any provision of law, the effect of which would materially interfere
with or prevent their continued use for the purposes for which they are now
being used or would adversely affect the value thereof or the interest of the
Company therein. The Stockholder has furnished to LandCARE a true and correct
copy of all owner's policies of title insurance and surveys pertaining to the
real property owned by the Company.
2.13 INSURANCE. SCHEDULE 2.13 sets forth an accurate list as of the date
hereof of all insurance policies now carried by the Company and an accurate list
of all insurance loss runs and workers compensation claims received for the past
three policy years. True, complete and correct copies of all insurance policies
currently in effect have been delivered to LandCARE. Such insurance policies
evidence all of the insurance that the Company is required to carry pursuant to
all of its contracts and other agreements and pursuant to all applicable laws,
and provide adequate coverage against the risks involved in the Company's
business. Except as set forth on SCHEDULE 2.13, none of such policies is a
"claims made" policy.
2.14 COMPENSATION; EMPLOYMENT AGREEMENTS; ORGANIZED LABOR MATTERS.
SCHEDULE 2.14 sets forth an accurate list showing all officers, directors and
key employees of the Company, listing all employment agreements with such
officers, directors and key employees and the rate of compensation (and the
portions thereof attributable to salary, bonus and other compensation,
respectively) of each of such persons as of the Balance Sheet Date. Except as
set forth on SCHEDULE 2.14, since the Balance Sheet Date, there have been no
increases in the base compensation payable or any special bonuses to any
officer, director, key employee or other employee.
Except as set forth on SCHEDULE 2.14, (i) the Company is not bound by or
subject to (and none of its respective assets or properties is bound by or
subject to) any arrangement with any labor union, (ii) no employees of the
Company are represented by any labor union or covered by any collective
bargaining agreement, (iii) to the knowledge of the Company, no campaign to
establish such representation is in progress and (iv) there is no pending or, to
the best of the Company's knowledge, threatened, labor dispute involving the
Company and any group of its employees. The Company has not experienced any
labor interruptions over the past five years.
2.15 EMPLOYEE BENEFIT PLANS. SCHEDULE 2.15 sets forth an accurate schedule
showing all employee benefit plans of Company, including all agreements or
arrangements (other than agreements or arrangements set forth on SCHEDULE 2.14)
containing "golden parachute" or other similar provisions, and deferred
compensation agreements, together with true, complete and correct copies of such
plans, agreements and any trusts related thereto, and classifications of
employees covered thereby as of the Balance Sheet Date. Except for the employee
benefit plans, if any, described on SCHEDULE 2.15, the Company does not sponsor,
maintain or contribute to any plan,
-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, and the most recent copies thereof are
included as part of SCHEDULE 2.15. Neither the Stockholder, nor any plan listed
in SCHEDULE 2.15 nor the Company has engaged in any transaction prohibited under
the provisions of Section 4975 of the Code or Section 406 of ERISA. No plan
listed on SCHEDULE 2.15 has incurred an accumulated funding deficiency, as
defined in Section 412(a) of the Code and Section 302(1) of ERISA; and the
Company has not incurred any liability for excise tax or penalty due to the
Internal Revenue Service or any liability to the PBGC. There have been no
terminations, partial terminations or discontinuance of contributions to any
such Qualified Plan intended to qualify under Section 401(a) of the Code without
notice to and approval by the Internal Revenue Service; no plan listed on
SCHEDULE 2.15 subject to the provisions of Title IV of ERISA has been
terminated; there have been no "reportable events" (as that phrase is defined in
Section 4043 of ERISA) with respect to any such plan listed on SCHEDULE 2.15;
the Company has not incurred liability under Section 4062 of ERISA; and no
circumstances exist pursuant to which the Company could have any direct or
indirect liability whatsoever (including, but not limited to, any liability to
any multi employer plan or the PBGC under Title IV of ERISA or to the Internal
Revenue Service
-10-
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.
The Company has distributed to the Stockholder for no separate
consideration the Minnesota Mutual life insurance benefit plan and policy
insuring the life of the Stockholder, including the cash surrender value from
invested premiums.
2.16 CONFORMITY WITH LAW; LITIGATION. Except as set forth on SCHEDULE
2.16, there are no claims, actions, suits or proceedings pending or, to the best
knowledge of the Stockholder, threatened, against or affecting the Company (as
any of its officers and directors in their capacities as such), at law or in
equity, or before or by any federal, state, municipal or other governmental
department, commission, board, bureau, agency or instrumentality having
jurisdiction over the Company. Except as set forth on SCHEDULE 2.16, no notice
of any material unresolved claim, action, suit or proceeding, whether pending or
threatened, has been received by the Company during the last five years and, to
the best knowledge of the Stockholder, there is no basis therefor. Except as set
forth on SCHEDULE 2.16, there are no outstanding judgments, orders, writs,
injunctions or decrees against the Company. Except as set forth on SCHEDULE
2.16, the Company has conducted and now conducts its business in material
compliance with all laws, regulations, writs, injunctions, decrees and orders
applicable to the Company or its assets. The Company is not in 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.
-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, and adequate reserves have been established on the consolidated books
of the Company and the Company Subsidiaries for all Taxes for which any of the
Company and the Company subsidiaries is liable, but the payment of which is not
yet due. Neither the Company nor any Company Subsidiary is, or ever has been,
liable for any Tax payable by reason of the income or property of a person or
entity other than the Company or a Company Subsidiary. Each of the Company and
the Company Subsidiaries has timely filed true, correct and complete
declarations of estimated Tax in each jurisdiction in which any such declaration
is required to be filed by it. No Liens for Taxes exist upon the assets of the
Company or any Company Subsidiary except Liens for Taxes which are not yet due.
Neither the Company nor any Company Subsidiary is, or ever has been, subject to
Tax in any jurisdiction outside the United States. No litigation with respect to
any Tax for which the Company or any Company Subsidiary is asserted to be liable
is pending or, to the knowledge of the Company or the Stockholder, threatened,
and no basis which the Company or any Stockholder believes to be valid exists on
which any claim for any such Tax can be asserted against the Company or any
Company Subsidiary. There are no requests for rulings or determinations in
respect of any Taxes pending between the Company or any Company Subsidiary and
any Taxing Authority. No extension of any period during which any Tax may be
assessed or collected and for which the Company or any Company Subsidiary is or
may be liable has been granted to any Taxing Authority. Neither the Company nor
any Company Subsidiary is or has been party to any tax allocation or sharing
agreement. All amounts required to be withheld by any of the Company and the
Company Subsidiaries and paid to governmental agencies for income, social
security, unemployment insurance, sales, excise, use and other Taxes have been
collected or withheld and paid to the proper Taxing Authority. The Company and
each Company Subsidiary have made all deposits required by law to be made with
respect to employees' withholding and other employment Taxes. Neither the
Company nor the Stockholder is a "foreign person," as that term is referred to
in Section 1445(f)(3) of the Code. The Company has not filed a consent pursuant
to Section 341 (f) of the Code or any comparable provision of any other tax
statute and has not agreed to have Section 341 (f)(2) of the 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
disclosed to LandCare, no accounting method changes of the Company or of any
Company Subsidiary exist or are proposed or threatened which could give rise to
an adjustment under Section 481 of the Code. The Company uses the 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
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an investment company as defined in Section 351(e)(1) of the Code. The Company
has a taxable year ended December 31 and has not made an election to retain a
fiscal year other than December 31 under Code Section 444. The Company is not a
party to any joint venture, partnership, or other arrangement that is treated as
a partnership for federal income tax purposes
The Stockholder made a valid election under the provisions of Subchapter S
of the Code, and the Company has not, since its formation, been subject to
taxation under the provisions of Subchapter C of the Code or under Section 11 or
Section 1374 of the Code. Neither the Stockholder 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 Stockholder, any other party thereto is in material default
under any lease, instrument, license, permit or material agreement to which the
Company is a party or by which its properties are bound (the "Material
Documents"). Except as set forth on SCHEDULE 2.18, (a) the execution of this
Agreement by the Company and the Stockholder and the performance by the Company
and the Stockholder of their obligations hereunder and the consummation of the
transactions contemplated hereby will not result in any violation or breach or
constitute a default under any of the terms or provisions of the Material
Documents or the Charter Documents, and (b) at and after the Closing Date the
Surviving Corporation will be entitled to the rights and benefits under the
Material Documents to which the Company is entitled immediately prior to the
Closing. Except as set forth on SCHEDULE 2.18 (and except for consents already
obtained), none of the Material Documents requires notice to, or the consent or
approval of, any governmental agency or other third party with respect to any of
the transactions contemplated hereby in order to remain in full force and
effect, and consummation of the transactions contemplated hereby will not give
rise to any right to termination, cancellation or acceleration or loss of any
right or benefit. Except as set forth on SCHEDULE 2.18, none of the Material
Documents prohibits the use or publication of the name of any other party to
such Material Document, and none of the Material Documents prohibits or
restricts the Surviving Corporation or will prevent or restrict the Company or
LandCARE from freely providing services to any person.
2.19 ABSENCE OF CHANGES. Since the Balance Sheet Date, the Company has
conducted its operations in the ordinary course of business and, except as set
forth on SCHEDULE 2.19, there has not been:
(i) any change in the business, assets, liabilities or financial
condition of the Company which would have a Material Adverse Effect;
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(ii) any damage, destruction or loss (whether or not covered by
insurance) affecting any of the material assets of the Company or the
business of the Company which would have a Material Adverse Effect;
(iii) any change in the authorized capital of the Company or its
outstanding securities or any change in its ownership interests or any
grant of any options, warrants, calls, conversion rights or commitments;
(iv) any declaration or payment of any dividend or distribution with
respect to the capital stock or any direct or indirect redemption,
purchase or other acquisition of any of the capital stock of the Company
(except for distributions in an amount equal to the income taxes payable
by the Stockholder based solely on the Company's S corporation earnings
during the period from the Balance Sheet Date to the date hereof and
except for AAA distributions of which the Stockholder has provided notice
to LandCARE);
(v) any increase or commitment to increase the compensation, bonus,
sales commissions or fee arrangement payable or to become payable by the
Company to any of its officers, directors, stockholders, employees,
consultants or agents;
(vi) any work interruptions, labor grievances or claims filed, or
any event or condition of any character, materially adversely affecting
the business of the Company;
(vii) any sale or transfer, or any agreement to sell or transfer,
any material assets, property or rights of the Company to any person;
(viii)any cancellation, or agreement to cancel, any indebtedness or
other obligation owing to the Company;
(ix) any plan, agreement or arrangement granting any preferential
rights to purchase or acquire any interest in any of the assets, property
or rights of the Company or requiring consent of any party to the transfer
and assignment of any such assets, property or rights;
(x) any purchase or acquisition of, or agreement, plan or
arrangement to purchase or acquire, any property, rights or assets outside
of the ordinary course of the Company's business;
(xi) any waiver of any material rights or claims of the Company;
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(xii) any amendment or termination of any contract, agreement,
license, permit or other right to which the Company is a party which would
have a Material Adverse Effect;
(xiii)any contract, commitment or liability entered into or incurred
or any capital expenditures made except in the normal course of business
consistent with past practice in an individual amount not in excess of
$10,000 and in an aggregate amount not in excess of $50,000; or
(xiv) any transaction by the Company outside the ordinary course of
its business.
2.20 POWERS OF ATTORNEY. SCHEDULE 2.20 sets forth a schedule as of the
date of this Agreement of the name of each person, corporation, firm or other
entity holding any general or special power of attorney from the Company and a
description of the terms of each such power.
2.21 COMPETING LINES OF BUSINESS; RELATED-PARTY TRANSACTIONS. Except as
set forth on SCHEDULE 2.21, neither the Stockholder nor any other affiliate of
the Company owns, directly or indirectly, any interest in, or is an officer,
director, employee or consultant of or otherwise receives remuneration from, any
business which is a competitor, lessor, lessee, customer or supplier of the
Company. Except as set forth on SCHEDULE 2.21, no officer, director or
stockholder of the Company has, nor during the period beginning January 1, 1995
through the date hereof had, any interest in any property, real or personal,
tangible or intangible, used in or pertaining to the Company's business.
2.22 DISCLOSURE. The Stockholder has provided LandCARE with all the
information that LandCARE has requested in analyzing whether to consummate the
transactions contemplated hereby. There is no fact known to the Stockholder on
the date hereof which has specific application to the Company or its business or
assets (other than general economic or industry conditions) which would have a
Material Adverse Effect on the Company or its business or assets, or the
condition (financial or otherwise), results of operations or prospects of the
Company, which has not been described in the Schedules hereto.
2.23 CERTAIN BUSINESS PRACTICES. Neither the Company nor any person acting
on behalf of the Company has given or offered anything of value to any
governmental official, political party or candidate for government office nor
has it or any of them otherwise taken any action which would cause the Company
to be in violation of the Foreign Corrupt Practices Act of 1977, as amended, or
any law of similar effect.
2.24 NOTICE TO BARGAINING AGENTS. The Company has satisfied any
requirement for notice of the transactions contemplated by this Agreement under
applicable collective bargaining agreements.
-15-
2.25 NOTICES AND CONSENTS. Except as set forth on SCHEDULE 2.11 or
SCHEDULE 2.18, the Company has given any notices to third parties and has
obtained any third party consents that may be necessary to consummate the
transactions contemplated hereby.
2.26 INVENTORY; WORKING CAPITAL; OTHER FINANCIAL MATTERS. The Company's
inventory and working capital levels (including financing in the ordinary course
of business) are adequate to successfully operate the business, and there has
been no unusual build-up of cash needs at the date hereof.
2.27 YEAR 2000 COMPLIANCE. The properties and assets of the Company,
including, but not limited to, computer hardware, microprocessor driven
equipment, software and data, owned or used by the Company will accurately
process date and time data after December 31, 1999, and the Company will suffer
no loss of functional ability when processing dates and related data outside the
1900-1999 year range.
2.28 RELIANCE UPON ORAL REPRESENTATIONS. The Company and the Stockholder
each represent and warrant: (a) that each has been fully informed by his or its
legal counsel and by his or its own independent judgment of the terms,
conditions and effects of this Agreement; (b) that each has been represented by
independent legal counsel of his or its choice throughout all negotiations
preceding the execution of this Agreement and has received the advice of his or
its attorney in entering into this Agreement; (c) that each, both personally and
through his or its independently- retained attorneys, is fully satisfied with
the terms and effects of this Agreement; (d) that no promise or inducement has
been offered or made to him or it except as expressly stated in this Agreement;
and (e) that this Agreement is executed without reliance on any oral statement
or oral representation by any other party or any other party's agent or
attorney.
3. REPRESENTATIONS OF LANDCARE
LandCARE represents and warrants as follows:
3.1 DUE ORGANIZATION. LandCARE is duly incorporated, validly existing and
in good standing under the laws of the state of Delaware, and has the requisite
power and authority to carry on its business as it is now being conducted.
LandCARE is qualified to do business and is in good standing in each
jurisdiction in which the nature of its business makes such qualification
necessary, except where the failure to be so authorized or qualified would not
have a Material Adverse Effect.
3.2 AUTHORIZATION. (i) The representative of LandCARE executing this
Agreement has the authority to enter into and bind LandCARE to the terms of this
Agreement and (ii) LandCARE has
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the full legal right, power and authority to enter into this Agreement and to
consummate the transactions contemplated hereby.
3.3 NO VIOLATIONS. The execution of this Agreement and the performance of
the obligations hereunder and the consummation of the transactions contemplated
hereby will not result in any violation or breach or constitute a default under
any of the terms or provisions of the Restated Certificate of Incorporation, as
amended, or Bylaws, as amended, of LandCARE.
3.4 VALIDITY OF OBLIGATIONS. The execution and delivery of this Agreement
by LandCARE and the performance of the transactions contemplated hereby have
been duly and validly authorized by the Board of Directors of LandCARE and this
Agreement has been duly and validly authorized by all necessary corporate action
and is a legal, valid and binding obligation of LandCARE.
3.5 PROSPECTUS. LandCare's Prospectus dated July 14, 1998, a copy of which
have been delivered to the Stockholder, does not contain an untrue statement of
a material fact or omit to state a material fact necessary to make the
statements made therein, in light of the circumstances under which they were
made, not misleading, and may be relied upon by the Stockholder in connection
with the transactions contemplated by this Agreement.
3.6 REGISTRATION. The offer and sale of the shares of LandCare Stock being
issued to the Stockholder pursuant to this Agreement have been duly registered
under the Securities Act of 1933, as amended, and except as provided in Section
9.2 of this Agreement or as otherwise provided by law, the subsequent reoffer
and resale of such shares is not restricted.
4. DELIVERIES
4.1 INSTRUMENTS OF TRANSFER. The Stockholder is delivering to LandCARE
certificates representing all of the Shares, duly endorsed (or accompanied by
duly executed stock powers).
4.2 CERTIFICATE OF MERGER. The appropriate parties hereto are executing
and delivering for filing with the appropriate authorities certificates of
merger or similar documents for purposes of effecting the Merger.
4.3 EMPLOYMENT AGREEMENT. The Surviving Corporation and the persons
identified in SCHEDULE 4.3 are entering into Employment Agreements in the form
of Annex I.
4.4 OPINION OF COUNSEL. Counsel to the Company and the Stockholder is
delivering an opinion to LandCARE dated the date hereof in the form attached
hereto as Annex II.
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4.5 GOOD STANDING CERTIFICATES. The Stockholder is delivering to LandCARE
certificates, dated as of a date no earlier than ten days prior to the date
hereof, duly issued by the appropriate governmental authority in the State of
Incorporation and in each state in which the Company is authorized to do
business, showing the Company to be in good standing and authorized to do
business therein.
4.6 LEASE. The Surviving Corporation is entering into leases of the
properties identified on SCHEDULE 4.5 in the form attached hereto as Annex III,
and the Stockholder is delivering to LandCARE evidence of the termination of all
leases relating to such properties. The Company is delivering to LandCare
consents to the Merger of the lessors of the other properties leased by the
Company.
4.7 INDEBTEDNESS TO COMPANY. The Stockholder and its Affiliates are
repaying any outstanding indebtedness they may have to the Company.
4.8 CONSENTS. The Stockholder is delivering to LandCARE copies of any
third party consents required in connection with the consummation of the
transactions contemplated hereby.
4.9 RESIGNATIONS OF DIRECTORS AND OFFICERS. The Stockholder is delivering
to LandCARE the resignations of such directors and officers of the Company as
have been requested by LandCARE.
4.10 CERTAIN INDEBTEDNESS. LandCare or the Surviving Corporation is
refinancing or agreeing to refinance promptly after the Closing the Company debt
listed on SCHEDULE 4.10 and is agreeing to secure full and unconditional
releases of the Stockholder from his personal guaranties of the Company debts
identified on SCHEDULE 4.10 as being guaranteed by the Stockholder. Such debts
are being refinanced or paid and such releases of such guaranties are being
secured concurrently with the Closing to the extent practicable, and to the
extent not paid or secured concurrently with the Closing, shall be refinanced,
paid or secured, as appropriate, promptly after the Closing, and within two
weeks in any case.
4.11 INDEMNIFICATION AGREEMENT. The stockholder is delivering to LandCare
and the surviving corporation an Indemnification Agreement in form and substance
satisfactory 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 Surviving
Corporation and LandCARE shall each deliver or cause to be delivered to the
other following the date hereof such additional instruments as the other may
reasonably request for the purpose of effecting
-18-
the Merger and fully carrying out the intent of this Agreement. LandCARE shall
provide the Stockholder reasonable access to the books and records of the
Surviving Corporation after the Closing Date for purposes of tax compliance and
any other reasonable purpose.
5.2 EXPENSES. LandCARE will pay the fees, expenses and disbursements of
LandCARE and its agents, representatives, financial advisors, accountants and
counsel incurred in connection with the execution, delivery and performance of
this Agreement. The Stockholder will pay the fees, expenses and disbursements of
the Stockholder and its agents, representatives, financial advisors, accountants
and counsel incurred in connection with the execution, delivery and performance
of this Agreement. The Stockholder shall pay any sales, use, transfer, real
property transfer, recording, gains, stock transfer and other similar taxes and
fees ("Transfer Taxes") imposed in connection with the Merger. The Stockholder
shall file all necessary documentation and returns with respect to such Transfer
Taxes. In addition, the Stockholder acknowledges that the Stockholder, and not
the Surviving Corporation or LandCARE, will pay all taxes (income or otherwise),
if any, due upon receipt of the consideration payable pursuant to this
Agreement.
5.3 CERTAIN AGREEMENTS. Upon the request of LandCARE at any time after the
Closing, the Stockholder and the Surviving Corporation shall terminate any
existing agreements to which the Company and the Stockholder 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. The
Stockholder 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) Each party hereto shall, and shall cause its subsidiaries and
affiliates to, provide to each of the other parties hereto such cooperation and
information as any of them reasonably may request in filing any Tax Returns,
amended Tax Returns or claim for refund, determining a liability for Taxes or a
right to refund of Taxes or in conducting any audit or other proceeding with
respect to Taxes. Such cooperation and information shall include providing
copies of all relevant portions of relevant Tax Returns, together with relevant
accompanying schedules and relevant work papers, relevant documents relating to
rulings or other determinations by Taxing Authorities and relevant records
concerning the ownership and Tax basis of property, which such party may
possess. Each party shall make its employees reasonably available on a mutually
convenient basis at its cost to provide explanation of any documents or
information so provided.
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Subject to the preceding sentence, each party required to file tax returns
pursuant to this Agreement shall bear all costs of filing such tax returns.
5.5 ADDITIONAL AGREEMENTS. The Stockholder shall take the actions set
forth in the letter agreement dated the date hereof between the Stockholder and
LandCare.
6. INDEMNIFICATION
The Stockholder and LandCARE each make the following covenants that are
applicable to them, respectively:
6.1 SURVIVAL OF STOCKHOLDER'S REPRESENTATIONS AND WARRANTIES.
(a) The representations and warranties of the Stockholder made in
this Agreement herewith shall survive the Closing until the expiration of the
periods prescribed by the applicable statutes of limitations (including any
extensions thereof) relating thereto; provided, however, that representations
and warranties and indemnification provisions with respect to which a claim is
made within the survival period shall survive until such claim is finally
determined and paid.
(b) The representations and warranties of LandCARE made in this
Agreement shall survive the Closing for a period of one year following the
Closing Date; provided, however, that representations and warranties with
respect to which a claim is made within such one-year period shall survive until
such claim is finally determined and paid.
(c) The date on which a representation or warranty expires as
provided herein is herein called the "Expiration Date." No claim for
indemnification may be made with respect to a representation or warranty after
the Expiration Date, other than claims based on fraud.
6.2 GENERAL INDEMNIFICATION BY THE STOCKHOLDER. The Stockholder covenants
and agrees that it will indemnify, defend, protect, and hold harmless the
Surviving Corporation, LandCARE and its subsidiaries and all of their officers,
directors, employees, stockholders, agents, representatives and affiliates at
all times from and after the date of this Agreement until the Expiration Date
from and against all claims, damages actions, suits, proceedings, demands,
assessments, adjustments, costs and expenses (including specifically, but
without limitation, reasonable attorneys' fees and expenses of investigation)
(collectively "Damages") incurred by such indemnified person as a result of or
incident to (i) any breach of any representation or warranty of the Stockholder
set forth herein, and (ii) any breach or nonfulfillment of any covenant or
agreement by the Company or the Stockholder under this Agreement.
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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 under this Agreement.
6.4 THIRD PERSON CLAIMS. Promptly after any party hereto (the "Indemnified
Party") has received notice of or has knowledge of any claim by a person not a
party to this Agreement ("Third Person") or the commencement of any action or
proceeding by a Third Person that may give rise to a right of indemnification
hereunder, such Indemnified Party shall give to the party obligated to provide
indemnification hereunder (an "Indemnifying Party") written notice of such claim
or the commencement of such action or proceeding; provided, however, that the
failure to give such notice will not relieve such Indemnifying Party from
liability under this Section with respect to such claim, action or proceeding,
except to the extent that the Indemnifying Party has been actually prejudiced as
a result of such failure. The Indemnifying Party (at its own expense) shall have
the right and shall be given the opportunity to associate with the Indemnified
Party in the defense of such claim, suit or proceedings, and may select counsel
for the Indemnified Party, such counsel to be reasonably satisfactory to the
Indemnified Party. The Indemnified Party shall not, except at its own cost, make
any settlement with respect to any such claim, suit or proceeding without the
prior consent of the Indemnifying Party, which consent shall not be unreasonably
withheld or delayed. It is understood and agreed that in situations where
failure of the Indemnifying Party to settle a claim expeditiously could have an
adverse effect on the Indemnified Party, the failure of the Indemnifying Party
to act upon the Indemnified Party's request for consent to such settlement
within five business days of the Indemnifying Party's receipt of notice thereof
from the Indemnified Party shall be deemed to constitute consent by the
Indemnifying Party of such settlement for purposes of this Section.
6.5 METHOD OF PAYMENT. All claims for indemnification shall be paid in
cash.
7. NONCOMPETITION
7.1 PROHIBITED ACTIVITIES. As partial consideration for the execution,
delivery and performance of this Agreement by LandCARE, the Stockholder will
not, for a period of five years following the Closing Date, for any reason
whatsoever, directly or indirectly, for himself or on behalf of or in
conjunction with any other person, persons, company, partnership, corporation or
business of whatever nature:
(i) own, manage, operate, join, control, consult or advise (whether
or not compensated for such consultation or advice), or participate in, or
render assistance to, or derive any benefit whatever from, any business
offering services or products in direct
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competition with the Surviving Corporation within 200 miles of where the
Company conducted business at any time within one year prior to the
Closing Date (the "Territory");
(ii) engage, as an officer, director, shareholder, owner, partner,
joint venturer, or in a sales or managerial capacity, whether as an
employee, independent contractor, consultant or advisor, or as a sales
representative, in any business offering services or products in direct
competition with the Surviving Corporation or LandCARE within the
Territory;
(iii) call upon any person who is, at that time, an employee of
LandCARE or any of its subsidiaries (including the Surviving Corporation)
for the purpose or with the intent of enticing such employee away from or
out of the employ of LandCARE or any of its subsidiaries (including the
Surviving Corporation);
(iv) call upon any person or entity which is, at that time, or which
has been, within one year prior to the Closing Date, a customer of
LandCARE, the Company or any of LandCARE's subsidiaries (including the
Surviving Corporation) for the purpose of soliciting or selling products
or services in direct competition with LandCARE or any of its subsidiaries
(including the Company) within the Territory.
Notwithstanding the above, the foregoing covenants shall not be deemed to
prohibit the Stockholder from (i) acquiring as a passive investor with no
involvement in the operations or management of the business, not more than one
percent (1%) of the capital stock of a competing business whose stock is
publicly traded on a national securities exchange or over-the-counter market.
The provisions of this Section are independent of the noncompetition
provisions contained in any consulting or employment agreement to which the
Stockholder may be or may become a party in connection with the transactions
contemplated hereby. All such provisions are intended to be observed and
enforced in accordance with their terms.
7.2 EQUITABLE RELIEF. Because of the difficulty of measuring economic
losses to LandCARE as a result of a breach of the foregoing covenant, and
because of the immediate and irreparable damage that could be caused to LandCARE
for which it would have no other adequate remedy, the Stockholder agrees that
the foregoing covenant may be enforced by LandCARE in the event of breach by the
Stockholder, by injunctions, restraining orders and other equitable actions.
7.3 REASONABLE RESTRAINT. It is agreed by the parties hereto that the
foregoing covenants in this Section impose a reasonable restraint on the
Stockholder.
7.4 SEVERABILITY; REFORMATION. The covenants in this Section are severable
and separate, and the unenforceability of any specific covenant shall not affect
the provisions of any
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other covenant. Moreover, in the event any court of competent jurisdiction shall
determine that the scope, time or territorial restrictions set forth are
unreasonable, then it is the intention of the parties that such restrictions be
enforced to the fullest extent which the court deems reasonable, and the
Agreement shall thereby be reformed.
7.5 INDEPENDENT COVENANT. The Stockholder acknowledges that his covenants
set forth in this Section are material conditions to LandCARE's willingness to
execute and deliver this Agreement and to consummate the transactions
contemplated hereby. All of the covenants in this Section shall be construed as
an agreement independent of any other provision in this Agreement, and the
existence of any claim or cause of action of the Stockholder against LandCARE or
any subsidiary thereof, whether predicated on this Agreement or otherwise, shall
not constitute a defense to the enforcement by LandCARE of such covenants. It is
specifically agreed that the period of five years stated at the beginning of
this Section, during which the agreements and covenants of the Stockholder made
in this Section shall be effective, shall be computed by excluding from such
computation any time during which the Stockholder is in violation of any
provision of this Section. The covenants contained in Section shall not be
affected by any breach of any other provision hereof by any party hereto.
8. NONDISCLOSURE OF CONFIDENTIAL INFORMATION
8.1 GENERAL. The Stockholder recognizes and acknowledges that he has had
access to certain customer lists, confidential information of the Company, such
as operational policies, pricing and cost policies, and other information, that
will be valuable, special and unique assets of the Surviving Corporation and
LandCARE after the Closing Date. The Stockholder agrees that he will not
disclose such confidential information, or any confidential information of the
Surviving Corporation or LandCARE to which they may have access in the future,
to any person, firm, corporation, association or other entity for any purpose or
reason whatsoever, except (a) to authorized representatives of LandCARE, (b)
following the Closing, such information may be disclosed by the Stockholder as
may be required in the course of performing his duties for the Surviving
Corporation and (c) to counsel and other advisers, provided that such advisers
(other than counsel) agree to the confidentiality provisions of this Section,
unless (i) such information becomes known to the public generally through no
fault of the Stockholder, or (ii) disclosure is required by law or the order of
any governmental authority, provided, that prior to disclosing any information
pursuant to this clause (ii), the Stockholder shall give prior written notice
thereof to LandCARE and provide LandCARE with the opportunity to contest such
disclosure. In the event of a breach or threatened breach by the Stockholder of
the provisions of this Section, LandCARE shall be entitled to injunctive or
other equitable relief restraining the Stockholder from disclosing, in whole or
in part, such confidential information. Nothing herein shall be construed as
prohibiting LandCARE from pursuing any other available remedy for such breach or
threatened breach, including the recovery of damages.
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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 him by injunctions, restraining orders and
other appropriate equitable relief.
8.3 SURVIVAL. The obligations of the parties under this Section shall
survive the termination of this Agreement for an unlimited time with respect to
proprietary information and a period of five years with respect to
non-proprietary information.
9 INTENDED TAX TREATMENT
9.1 TAX-FREE REORGANIZATION. The parties are entering into this Agreement
with the intention that the Merger qualify as a tax-free reorganization for
federal income tax purposes, except to the extent of any "boot" received, and
the Stockholder will not take any actions that disqualify the Merger for such
treatment. The Stockholder represents, warrants and covenants that:
(i) the Company operates at least one historic business line, or
owns at least a significant portion of its historic business assets, in each
case within the meaning of Reg. 1.368-1(d) under the Code; and
(ii) 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
Effective Time, 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 Effective Time.) 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 Effective
Time, pursuant to this Agreement or otherwise as part of the plan of Merger
provided for herein, will be included as assets of the Company held immediately
prior to the Merger."
9.2 RESTRICTIONS ON RESALE. The Stockholder agrees that he will not sell,
offer to sell, or otherwise transfer or dispose of, any shares of the LandCARE
Stock received by the Stockholder, engage in put, call, short-sale, straddle or
similar transactions, or in any other way reduce the Stockholder's risk of
owning shares of LandCARE Stock prior to the date two years after the Closing
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Date except as set forth below, and agrees that the certificates evidencing the
LandCARE Stock to be received by the Stockholder will bear a legend evidencing
this restriction. After the date one year after the Closing Date the Stockholder
may sell such shares pursuant to the LandCARE Liquidity Plan. After the date two
years after the Closing Date, neither the restrictions set forth herein nor the
provisions of the LandCare Liquidity Plan shall restrict the Stockholder from
selling or otherwsie disposing of any of such shares of LandCare Stock.
10 SECURITIES LAW MATTERS
10.1 ECONOMIC RISK; SOPHISTICATION. The Stockholder acknowledges and
confirms that he has received and reviewed a Prospectus from LandCARE relating
to his acquisition of shares of LandCARE Stock hereunder. The Stockholder (A)
has such knowledge, sophistication and experience in business and financial
matters that he is capable of evaluating the merits and risks of an investment
in the shares of LandCARE Stock, (B) fully understands the nature, scope and
duration of any limitations on transfer of LandCARE Stock described in this
Agreement and (C) can bear the economic risk of an investment in the shares of
LandCARE Stock.
10.2 COMPLIANCE WITH LAW. The Stockholder covenants that none of the
LandCARE Stock acquired by the Stockholder hereunder will be offered, sold,
assigned, hypothecated, transferred or otherwise disposed of by the Stockholder
except in full compliance with all applicable securities laws.
11. GENERAL
11.1 SUCCESSORS AND ASSIGNS. This Agreement and the rights of the parties
hereunder may not be assigned (except by operation of law) and shall be binding
upon and shall inure to the benefit of the parties hereto, the successors of
LandCARE, and the heirs and legal representatives of the Stockholder.
11.2 ENTIRE AGREEMENT. This Agreement (including the schedules, exhibits
and annexes attached hereto) and the documents delivered pursuant hereto
(including the letter agreement dated the date hereof between the Stockholder
and LandCare) 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.
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11.3 COUNTERPARTS. This Agreement may be executed simultaneously in two or
more counterparts, each of which shall be deemed an original and all of which
together shall constitute but one and the same instrument. The signatures to
this Agreement need not all be on a single copy of this Agreement, and may be
facsimiles rather than originals, and shall be fully as effective as though all
signatures were originals on the same copy.
11.4 BROKERS AND AGENTS. Each party represents and warrants that it
employed no broker or agent in connection with this transaction and agrees to
indemnify the other parties hereto against all loss, cost, damages or expense
arising out of claims for fees or commission of brokers employed or alleged to
have been employed by such indemnifying party.
11.5 NOTICES. All notices and communications required or permitted
hereunder shall be in writing and may be given by depositing the same in United
States mail, addressed to the party to be notified, postage prepaid and
registered or certified with return receipt requested, or by delivering the same
in person to an officer or agent of such party, or by facsimile, as follows:
If to LandCARE, addressed to it at:
LandCARE USA, Inc.
0000 Xxx Xxxxxx, Xxxxx 000
Xxxxxxx, Xxxxx 00000
Attn: General Counsel
Facsimile No. (000) 000-0000
If to the Company, addressed to it at:
Landscape West
000 Xxxxx Xxxxxx Xxxxxx
Xxxxxxx, Xxxxxxxxxx 00000
If to the Stockholder, addressed to him at the Company's address,
or to such other address as any party hereto shall specify pursuant to this
Section from time to time.
11.6 GOVERNING LAW. This Agreement shall be construed in accordance with
the laws of the State of California 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
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delivered pursuant to the provisions of this Agreement shall survive the
consummation of the transactions contemplated hereby and any examination on
behalf of the parties.
11.8 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.
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 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.
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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.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
day and year first above written.
LANDCARE USA, INC.
By: /s/ XXXXXXX X. XXXXXXX
Name: XXXXXXX X. XXXXXXX
Title: Sr. Vice President
LW ACQUISITION CORP.
By: /s/ XXXXXXX X. XXXXXXX
Name: XXXXXXX X. XXXXXXX
Title: President
LANDSCAPE WEST
By: /s/ XXXXX X. XXXXXX
Name: XXXXX X. XXXXXX
Title: President
/s/ XXXXX XXXXXX
Xxxxx Xxxxxx
_______________ (spouse of Xxxxx Xxxxxx)
