EXHIBIT 10.16
EXECUTION COPY
STOCK PURCHASE AGREEMENT
dated as of October 25, 1998
by and among
LANDCARE USA, INC.,
LANDTRENDS, INC.
and
the Stockholders named herein
TABLE OF CONTENTS
Page
1. PURCHASE AND SALE......................................................1
1.1 Purchase and Sale................................................1
1.2 Purchase Price...................................................1
1.3 Delivery of Certificates.........................................1
1.4 Closing..........................................................2
2. REPRESENTATIONS AND WARRANTIES OF THE STOCKHOLDER......................2
2.1 Due Organization.................................................2
2.2 Authorization....................................................3
2.3 Capital Stock of the Company.....................................3
2.4 Subsidiaries.....................................................3
2.5 Financial Statements.............................................4
2.6 Liabilities and Obligations......................................4
2.7 Accounts and Notes Receivable....................................4
2.8 Permits and Intangibles..........................................4
2.9 Environmental Matters............................................5
2.10 Personal Property................................................6
2.11 Significant Customers; Material Contracts and Commitments........6
2.12 Real Property....................................................7
2.13 Insurance........................................................7
2.14 Compensation; Employment Agreements; Organized Labor Matters.....8
2.15 Employee Benefit Plans...........................................8
2.16 Conformity with Law; Litigation..................................9
2.17 Taxes...........................................................10
2.18 No Violations; All Required Consents Obtained...................11
2.19 Absence of Changes..............................................12
2.20 Powers of Attorney..............................................13
2.21 Competing Lines of Business; Related-party Transactions.........13
2.22 Disclosure......................................................13
2.23 Certain Business Practices......................................14
2.24 Notice to Bargaining Agents.....................................14
2.25 Notices and Consents............................................14
2.26 Inventory; Working Capital; Other Financial Matters.............14
2.27 Year 2000 Compliance............................................14
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2.28 Reliance Upon Oral Representations..............................14
3. REPRESENTATIONS OF LANDCARE...........................................15
3.1 Due Organization................................................15
3.2 Authorization...................................................15
3.3 No Violations...................................................15
3.4 Validity of Obligations.........................................15
4. DELIVERIES............................................................15
4.1 Instruments of Transfer.........................................15
4.2 Employment Agreement............................................15
4.3 Opinion of Counsel..............................................15
4.4 Good Standing Certificates......................................15
4.5 Indebtedness to Company.........................................16
4.6 Tax Matters.....................................................16
4.7 Consents........................................................16
4.8 Resignations of Directors and Officers..........................16
4.9 Cash............................................................16
5. POST-CLOSING COVENANTS................................................16
5.1 Future Cooperation; Further Assurances..........................16
5.2 Expenses........................................................16
5.3 Certain Agreements..............................................17
5.4 Preparation and Filing of Tax Returns...........................17
5.5 Guaranties......................................................17
5.6 Other Financial Matters.........................................17
5.7 Department of Navy Lease .......................................18
5.8 Licenses........................................................18
6. INDEMNIFICATION.......................................................18
6.1 Survival of Stockholder's Representations and Warranties. .....18
6.2 General Indemnification by the Stockholder......................19
6.3 Specific Environmental Indemnification by the Stockholder......19
6.4 Specific Tax Indemnification by the Stockholder.................20
6.5 Indemnification by LandCARE.....................................20
6.6 Third Person Claims.............................................20
6.7 Limitations on Indemnification..................................21
6.8 Method of Payment...............................................21
7. NONCOMPETITION........................................................21
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7.1 Prohibited Activities...........................................21
7.2 Equitable Relief................................................22
7.3 Reasonable Restraint............................................22
7.4 Severability; Reformation.......................................22
7.5 Independent Covenant............................................22
8. NONDISCLOSURE OF CONFIDENTIAL INFORMATION.............................23
8.1 General.........................................................23
8.2 Equitable Relief................................................23
8.3 Survival........................................................24
9. GENERAL...............................................................24
9.1 Successors and Assigns..........................................24
9.2 Entire Agreement................................................24
9.3 Counterparts....................................................24
9.4 Brokers and Agents..............................................24
9.5 Notices.........................................................24
9.6 Governing Law...................................................25
9.7 Survival of Representations and Warranties......................25
9.8 Effect of Investigation.........................................25
9.9 Exercise of Rights and Remedies.................................25
9.10 Time............................................................25
9.11 Reformation and Severability....................................25
9.12 Remedies Cumulative.............................................26
9.13 Captions........................................................26
9.14 Press Releases and Public Announcements.........................26
9.15 No Third-Party Beneficiaries....................................26
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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 4.2. Persons Entering into Employment Agreements
SCHEDULE 5.8. Licenses
ANNEXES
Annex I - Form of Employment Agreement
Annex II - Form of Opinion of Counsel to Company and
Stockholder
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STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT (this "Agreement") is made and entered into
as of October 25, 1998 by and among LandCARE USA, Inc., a Delaware corporation
("LandCARE"), Landtrends, Inc., a California corporation (the "Company"), the
Xxxxx Inter Vivos Trust dated March 25, 1997, and Xxx X. Xxxxx.
WHEREAS, the Xxxxx Inter Vivos Trust is hereinafter referred to as the
Stockholder and Xxx X. Xxxxx is hereinafter referred to as Xx. Xxxxx.
WHEREAS, the Stockholder is the only holder of capital stock of the
Company, which owns 10,250 shares of common stock of Miramar Wholesale
Nurseries, Inc., a California corporation (the "Subsidiary"); and
WHEREAS, the Stockholder desires to sell, and LandCARE desires to
purchase, all of the outstanding capital stock of the Company (the "Shares") on
the terms set forth in this Agreement; and
WHEREAS, on the date hereof the parties are consummating the transactions
described herein;
NOW, THEREFORE, in consideration of the premises and of the mutual
agreements contained herein, the parties hereto, intending to be legally bound,
agree as follows:
1. PURCHASE AND SALE
1.1 PURCHASE AND SALE.On the terms set forth in this Agreement, the
Stockholder hereby sells, conveys, transfers, assigns and delivers to LandCARE,
and LandCARE hereby purchases from the Stockholder, all of the Shares.
1.2 PURCHASE PRICE. The aggregate purchase price (the "Purchase Price")
for the Shares is $9,081,770, consisting of $8,843,398 in cash at Closing, which
amount is being paid by wire transfer of immediately available funds in
accordance with wiring instructions provided by the Stockholder; and (ii)
$238,372 in cash or in immediately available funds (the "Holdback"), which
amount is being withheld by LandCARE and which shall be distributed as set forth
in Section 5.7 hereof.
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1.3 DELIVERY OF CERTIFICATES. Concurrently with the execution and delivery
of this Agreement and consummation of the transactions described herein (the
"Closing"), (i) the Stockholder is delivering to LandCARE the certificates
representing the Shares, 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 Stockholders' expense, affixed and canceled, and (ii) LandCARE
is causing its stock transfer agent to deliver to the Stockholder certificates
representing the LandCARE Stock as described above (or is delivering 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 Shares or with respect to the stock powers accompanying any
Shares.
1.4 CLOSING. The transactions contemplated by this Agreement are being
consummated on the date hereof, and the date hereof is sometimes herein called
the "Closing Date."
2. REPRESENTATIONS AND WARRANTIES OF THE STOCKHOLDER
The Stockholder and Xx. Xxxxx hereby represent and warrant to LandCARE
that all of the following representations and warranties are true and correct in
all material respects at the date of this Agreement. Except as the context
otherwise requires, the term "Company" includes Landtrends, Inc., the
Subsidiary, and any other direct or indirect subsidiary of Landtrends, Inc. As
used in the following representations, the term "material" or any variation
thereof shall mean any matter having an effect of $7,500 or more within any
twelve-month period on the revenues, expenses, assets, and liabilities of
Company.
2.1 DUE ORGANIZATION. The Company is a corporation duly organized, validly
existing and in good standing under the laws of California, and has all
requisite power and authority to carry on its business as it is now being
conducted. The Company is duly qualified to do business and is in good standing
in each jurisdiction in which the nature of its business or the ownership or
leasing of its properties makes such qualification necessary, except where the
failure to be so authorized or qualified would not have a material adverse
effect on the business, assets, operations or condition (financial or otherwise)
of the Company (as used herein with respect to the Company, or with respect to
any other person, a "Material Adverse Effect"). SCHEDULE 2.1 sets forth a list
of all jurisdictions in which the Company is authorized or qualified to do
business. True, complete and correct copies of the Articles of Incorporation and
By-laws, each as amended, of the Company (the "Charter Documents") are all
attached to SCHEDULE 2.1. The stock records of the Company, a copy of which is
attached to SCHEDULE 2.1, are correct and complete in all material respects. All
records of all
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proceedings of the Board of Directors and stockholder 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. (a) The authorized capital stock of the
Landtrends, Inc. consists solely of 20,000 shares of common stock of which 1,000
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.
(b) The authorized capital stock of the Subsidiary consists solely
of 1,000,000 shares of common stock of which 21,500 shares are issued and
outstanding and constitute all of the issued and outstanding shares of
Subsidiary stock. 10,250 shares of the Subsidiary (the "Subsidiary Shares") are
owned of record and beneficially by the Landtrends, Inc. 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 Subsidiary
Shares have been duly authorized and validly issued, are fully paid and
nonassessable, and were offered, issued, sold and delivered by the Subsidiary in
compliance with all applicable state and federal laws governing the issuance of
securities. None of the Subsidiary 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 Subsidiary
to issue any additional shares of its capital stock or obligates the Stockholder
to transfer any of the Subsidiary Shares to any person except pursuant to this
Agreement.
2.4 SUBSIDIARIES. Except for the Subsidiary and as set forth on SCHEDULE
2.4, the Company has no subsidiaries or d/b/a names and has not conducted
business under any other name except its legal name as set forth in its Charter
Documents. Except as set forth in SCHEDULE 2.4, the Company does not own, of
record or beneficially, or control, directly or indirectly, any capital stock,
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securities convertible into capital stock or any other equity interest in any
corporation, association or other business entity, and the Company is not,
directly or indirectly, a participant in any joint venture, partnership or other
non-corporate entity.
2.5 FINANCIAL STATEMENTS. Complete and correct copies of the following
financial statements are attached as SCHEDULE 2.5: the balance sheets of the
Company as of June 30, 1998 (the "Balance Sheet Date") and any related
statements of operations, stockholder's equity and cash flows for the three-year
period then ended, together with any related notes and schedules (the "Year-end
Financial Statements"); and
Except as set forth on SCHEDULE 2.5, the Financial Statements have been
prepared from the books and records of the Company in conformity with generally
accepted accounting principles applied on a basis consistent with preceding
years and throughout the periods involved ("GAAP") and present fairly the
financial position and results of operations of the Company as of the dates of
such statements and for the periods covered thereby. The 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 which the amount is not fixed, SCHEDULE 2.6 includes a
summary description of each known liability, together with copies of all
relevant documentation relating thereto.
2.7 ACCOUNTS AND NOTES RECEIVABLE. SCHEDULE 2.7 sets forth an accurate
list of the accounts and notes receivable of the Company, as of the most recent
date practicable (which date is set forth thereon), showing amounts due in
30-day aging categories. Except to the extent reflected on SCHEDULE 2.7, all
such accounts, notes and other receivables were incurred in the ordinary course
of business, are stated in accordance with GAAP and are collectible in the
amounts shown on SCHEDULE 2.7, net of reserves reflected in the balance sheet as
of the Balance Sheet Date.
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2.8 PERMITS AND INTANGIBLES. The Company holds all licenses, franchises,
permits and other governmental authorizations required or necessary in
connection with the conduct of the Company's business. SCHEDULE 2.8 sets forth
an accurate list and summary description of all such licenses, franchises,
permits and other governmental authorizations, including permits, titles
(including licenses, franchises, certificates, trademarks, trade names, patents,
patent applications and copyrights owned or held by the Company or any of its
employees (including interests in software or other technology systems, programs
and intellectual property) (collectively, the "Intangible Assets") (it being
understood and agreed that a list of all environmental permits and other
environmental approvals is set forth on SCHEDULE 2.9). The Intangible Assets and
other governmental authorizations listed on SCHEDULES 2.8 and 2.9 are valid, and
the Company has not received any notice that any person intends to cancel,
terminate or not renew any such Intangible Assets or other governmental
authorization. The Company has conducted and is conducting its business in
compliance with the requirements, standards, criteria and conditions set forth
in the Intangible Assets and other governmental authorizations listed on
SCHEDULES 2.8 and 2.9 and is not in violation of any of the foregoing. Except as
specifically set forth on SCHEDULE 2.8 or 2.9, the transactions contemplated by
this Agreement will not result in a default under or a breach or violation of,
or adversely affect the rights and benefits afforded to the Company by, any such
Intangible Assets or other governmental authorizations.
2.9 ENVIRONMENTAL MATTERS. The Company has complied with and is in
compliance with all federal, state, local and foreign statutes (civil and
criminal), laws, ordinances, regulations, rules, notices, permits, judgments,
orders and decrees applicable to any of them or any of their respective
properties, assets, operations and businesses relating to environmental
protection (collectively "Environmental Laws"), including, without limitation,
Environmental Laws relating to air, water, land and the generation, storage,
use, handling, transportation, treatment or disposal of Hazardous Wastes,
Hazardous Materials and Hazardous Substances (including petroleum and petroleum
products) (as such terms are defined in any applicable Environmental Law) except
to the extent that noncompliance with any Environmental Laws, either singly or
in the aggregate, has not had and will not have a Material Adverse Effect on the
Company or any of its operations. The Company has obtained and adhered to all
necessary permits and other approvals required pursuant to any applicable
Environmental Laws including, without limitation, such permits or approvals as
are 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. The Company has
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. The Company does not have any knowledge that any on-site or
off-site location to which the Company has transported or disposed of Hazardous
Wastes,
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Hazardous Materials or Hazardous Substances or arranged for the transportation
of Hazardous Wastes, Hazardous Materials or Hazardous Substances 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, the Company has good and marketable title to the tangible and
intangible personal property it purports to own, subject to no security
interest, pledge, lien, claim, conditional sales agreement, encumbrance, charge
or restriction on transfer.
2.11 SIGNIFICANT CUSTOMERS; MATERIAL CONTRACTS AND COMMITMENTS. SCHEDULE
2.11 sets forth a list of (i) all customers representing 1% or more of the
Company's revenues in its last full fiscal year ("Significant Customers"), and
(ii) all material contracts, commitments and similar agreements to which the
Company is a party or by which it or any of its properties are bound (including,
but not limited to, contracts with Significant Customers, joint venture or
partnership agreements, contracts with any labor organizations, strategic
alliances and options to purchase land). 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, other than as specified in such agreement or
contract and (ii) the Company has complied with all commitments and obligations
pertaining to it, and is not in default under any contracts or agreements listed
on SCHEDULE 2.11 and no notice of default under any such contract or agreement
has been received. The
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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 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
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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.
SCHEDULE 2.14 sets forth an accurate schedule showing all bonus and other
incentive plans, agreements and arrangements of Company, written or unwritten
(the "Incentive Plans"), together with true, complete and correct copies of such
Incentive Plans (or in the event that the Incentive Plans are not in writing, a
true and complete summary of such Incentive Plans), and classifications of
employees covered thereby as of the Closing Date.
2.15 EMPLOYEE BENEFIT PLANS. SCHEDULE 2.15 sets forth an accurate schedule
showing all employee benefit plans of Company, including all agreements or
arrangements (other than agreements or arrangements set forth on SCHEDULE 2.14)
containing "golden parachute" or other similar provisions, and deferred
compensation agreements, together with true, complete and correct copies of such
plans, agreements and any trusts related thereto, and classifications of
employees covered thereby as of the Balance Sheet Date. Except for the employee
benefit plans, if any, described on SCHEDULE 2.15, the Company does not sponsor,
maintain or contribute to any plan, program, fund or arrangement that
constitutes an "employee pension benefit plan," nor does the Company have any
obligation to contribute to or accrue or pay any benefits under any deferred
compensation or retirement funding arrangement on behalf of any employee or
employees (such as, for example, and without limitation, any individual
retirement account or annuity, any "excess benefit plan" (within the meaning of
Section 3(36) of the Employee Retirement Income Security Act of 1974, as amended
("ERISA")), or any non-qualified deferred compensation arrangement). For the
purposes of this Agreement, the term "employee pension benefit plan" shall have
the same
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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 for any excise tax or penalty, or being subject to any statutory
lien to secure payment of any such liability) with respect to any plan now or
heretofore maintained or contributed to by any entity other than the Company
that is, or at any time was, a member of a "controlled group" (as defined in
Section 412(n)(6)(B) of the Code) that includes the Company.
2.16 CONFORMITY WITH LAW; LITIGATION. Except as set forth on SCHEDULE
2.16, there are no claims, actions, suits or proceedings pending or, to the best
knowledge of the Stockholder,
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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 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.
All Tax returns ("Tax 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 Tax 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. 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
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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. No
accounting method changes of the Company or of any Company Subsidiary exist or
are proposed or threatened which could give rise to an adjustment under Section
481 of the Code. The Company uses the cash method of accounting for income tax
purposes, and the Company's methods of accounting have not changed in the past
five years. The Company is not an investment company as defined in Section
351(e)(1) of the Code.
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
Company will be entitled to the rights and benefits under the Material Documents
to which the Company is entitled immediately prior to the Closing. Except as set
forth on SCHEDULE 2.18 (and except for consents already obtained), none of the
Material Documents requires notice to, or the consent or approval of,
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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 Company
or will prevent or restrict the Company or LandCARE from freely providing
services to any person.
2.19 ABSENCE OF CHANGES. Since the Balance Sheet Date, the Company has
conducted its operations in the ordinary course of business and, except as set
forth on SCHEDULE 2.19, there has not been:
(i) any change in the business, assets, liabilities or financial
condition of the Company which would have a Material Adverse Effect;
(ii) any damage, destruction or loss (whether or not covered by
insurance) affecting any of the material assets of the Company or the
business of the Company which would have a Material Adverse Effect;
(iii) any change in the authorized capital of the Company or its
outstanding securities or any change in its ownership interests or any
grant of any options, warrants, calls, conversion rights or commitments;
(iv) any declaration or payment of any dividend or distribution with
respect to the capital stock or any direct or indirect redemption,
purchase or other acquisition of any of the capital stock of the Company;
(v) any increase or commitment to increase the compensation, bonus,
sales commissions or fee arrangement payable or to become payable by the
Company to any of its officers, directors, stockholders, employees,
consultants or agents;
(vi) any work interruptions, labor grievances or claims filed, or
any event or condition of any character, materially adversely affecting
the business of the Company;
(vii) any sale or transfer, or any agreement to sell or transfer,
any material assets, property or rights of the Company to any person;
(viii) any cancellation, or agreement to cancel, any indebtedness or
other obligation owing to the Company;
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(ix) any plan, agreement or arrangement granting any preferential
rights to purchase or acquire any interest in any of the assets, property
or rights of the Company or requiring consent of any party to the transfer
and assignment of any such assets, property or rights;
(x) any purchase or acquisition of, or agreement, plan or
arrangement to purchase or acquire, any property, rights or assets outside
of the ordinary course of the Company's business;
(xi) any waiver of any material rights or claims of the Company;
(xii) any amendment or termination of any contract, agreement,
license, permit or other right to which the Company is a party which would
have a Material Adverse Effect; or
(xiii)any contract, commitment or liability entered into or incurred
or any capital expenditures made except in the ordinary 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.
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. None of the information so provided nor any
representation or warranty of the Stockholder contained in this Agreement
contains any untrue statement or omits to state a material fact necessary in
order to make the statements herein or therein, in light of the circumstances
under which they were made, not misleading. There is no fact which has specific
application to the Company or its business or assets (other than general
economic or industry conditions) which would have a Material Adverse Effect or,
so far as the Stockholder can reasonably foresee, threatens to have a Material
Adverse
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Effect, on the Company or its business or assets, or the condition (financial or
otherwise), results of operations or prospects of the Company, which has not
been described in the Schedules hereto.
2.23 CERTAIN BUSINESS PRACTICES. Neither the Company nor any person acting
on behalf of the Company has given or offered anything of value to any
governmental official, political party or candidate for government office nor
has it or any of them otherwise taken any action which would cause the Company
to be in violation of the Foreign Corrupt Practices Act of 1977, as amended, or
any law of similar effect.
2.24 NOTICE TO BARGAINING AGENTS. The Company has satisfied any
requirement for notice of the transactions contemplated by this Agreement under
applicable collective bargaining agreements.
2.25 NOTICES AND CONSENTS. The Company has given any notices to third
parties and has obtained any third party consents that may be necessary to
consummate the transactions contemplated hereby.
2.26 INVENTORY; WORKING CAPITAL; OTHER FINANCIAL MATTERS. The Company's
inventory and working capital levels are adequate to successfully operate the
business, and there has been no unusual build-up of cash needs at the date
hereof. Landtrends, Inc.'s total indebtedness on a pro forma basis as of the
date hereof does not exceed $750,000. Landtrends, Inc.'s pro forma net revenues
for the 12-month period ended June 30, 1998 were at least $10,000,000.
Landtrends, Inc.'s pro forma pre-tax earnings for the 12-month period ended June
30, 1998 were at least $900,000. Landtrends, Inc.'s tangible net worth as of the
date hereof is at least $1,550,000.
2.27 YEAR 2000 COMPLIANCE. The primary 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 material 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 represents and warrants: (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;
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and (e) that this Agreement is executed without reliance on any oral statement
or oral representation by any other party or any other party's agent or
attorney.
3. REPRESENTATIONS OF LANDCARE
LandCARE represents and warrants as follows:
3.1 DUE ORGANIZATION. LandCARE is duly incorporated, validly existing and
in good standing under the laws of the state of Delaware, and has the requisite
power and authority to carry on its business as it is now being conducted.
LandCARE is qualified to do business and is in good standing in each
jurisdiction in which the nature of its business makes such qualification
necessary, except where the failure to be so authorized or qualified would not
have a Material Adverse Effect.
3.2 AUTHORIZATION. (i) The representative of LandCARE executing this
Agreement has the authority to enter into and bind LandCARE to the terms of this
Agreement and (ii) LandCARE has the full legal right, power and authority to
enter into this Agreement and to consummate the transactions contemplated
hereby.
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.
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 EMPLOYMENT AGREEMENT. The Company and the persons identified in
SCHEDULE 4.2 are entering into Employment Agreements in the form of Annex I.
4.3 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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4.4 GOOD STANDING CERTIFICATES. The Stockholder is delivering to LandCARE
certificates, dated as of a date no earlier than thirty 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.
4.5 INDEBTEDNESS TO COMPANY. The Stockholder and its Affiliates are
repaying any outstanding indebtedness they may have to the Company.
4.6 TAX MATTERS. Tax advisors to the Stockholder are delivering an opinion
to the Stockholder satisfactory to the Stockholder regarding the tax
consequences of the transactions contemplated hereby.
4.7 CONSENTS. The Stockholder is delivering to LandCARE copies of any
third party consents required in connection with the consummation of the
transactions contemplated hereby.
4.8 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.
4.9 CASH. LandCARE is delivering to the Stockholder the cash set forth in
Section 1.2 herein.
5. POST-CLOSING COVENANTS
The parties to this Agreement further covenant and agree as follows:
5.1 FUTURE COOPERATION; FURTHER ASSURANCES. The Stockholder, the Company
and LandCARE shall each deliver or cause to be delivered to the other following
the date hereof such additional instruments as the other may reasonably request
for the purpose of effecting the transactions contemplated hereby and fully
carrying out the intent of this Agreement. LandCARE shall provide the
Stockholder reasonable access to the books and records of the Company after the
Closing Date for purposes of tax compliance and any other reasonable purpose.
5.2 EXPENSES. LandCARE will pay the fees, expenses and disbursements of
LandCARE and its agents, representatives, financial advisors, accountants and
counsel incurred in connection with the execution, delivery and performance of
this Agreement. The Stockholder will pay the fees, expenses and disbursements of
the Stockholder and 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
-16-
the transactions contemplated hereby. 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 Company 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 Company 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. 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 GUARANTIES. As soon as practicable but in no event later than 30 days
after the Closing, LandCARE shall cause the release of the Stockholder's or Xx.
Xxxxx'x guaranties of interest-bearing indebtedness of the Company, including
but not limited to those guaranties listed on SCHEDULE 5.5. LandCare shall
cooperate with the Stockholder and Xx. Xxxxx to release the Stockholder and Xx.
Xxxxx from guaranties of vendor accounts as specifically identified by the
Stockholder and Xx. Xxxxx on a case-by-case basis.
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5.6 OTHER FINANCIAL MATTERS. If the Company's total indebtedness on a pro
forma basis exceeds $750,000 at Closing, the Purchase Price shall be reduced on
a dollar-for-dollar basis, and, within 30 days of the date hereof, the
Stockholder shall remit such amount to LandCARE by wire transfer.
5.7 DEPARTMENT OF NAVY LEASE . The Subsidiary, following the Closing,
shall endeavor to obtain the right to continue to use that property subject to
that certain Lease for Agricultural or Grazing Purposes entered into between
Department of the Navy and Springtime Growers, Inc. on or about October 1, 1987
and assigned to the Subsidiary on August 2, 1992 (the "Navy Lease") by a written
renewal or extension or new lease agreement, upon such terms and conditions as
are commercially reasonable. The Subsidiary and LandCARE agree that Xx. Xxxxx,
in consultation with other Subsidiary representatives, including legal counsel,
shall be the sole representatives of the Subsidiary in the communications and
negotiations with the Department of Navy, including the Subsidiary's efforts to
obtain such extensions of time and usage, and the Subsidiary and LandCARE agree
that they shall not directly nor indirectly, through any action or lack of
action, in any manner: (i) interfere with any action reasonably taken or
proposed by Xx. Xxxxx or other Subsidiary representatives in the negotiations
and communications on behalf of the Subsidiary with the Department of Navy in
obtaining such extensions, or (ii) otherwise hinder, restrict or limit the
Subsidiary's lawful performance of any obligations of, or required to be taken
by the Subsidiary under the Navy Lease which would interfere with the obtaining
of such extensions. Upon the Subsidiary obtaining the right to continue to use
the property subject to the Navy Lease through at least March 31, 2001, LandCARE
shall release one-half of the Holdback, together with interest thereon at the
rate of 5.7% per annum, to the Stockholder within fifteen business days of
notification to LandCARE of satisfaction of such extension. Upon the Subsidiary
obtaining the right to continue to use the property subject to the Navy Lease
through at least March 31, 2002, LandCARE shall release the remaining one half
of the Holdback, together with interest thereon at the rate of 5.7% per annum,
to the Stockholder within fifteen business days of notification to LandCARE of
satisfaction of such extension.
5.8 LICENSES. LandCARE understands that, pursuant to applicable laws, the
licenses set forth on SCHEDULE 5.8 are held in the name of certain individual
employees of the Company, and not in the name of the Company itself. Such
employees shall not be required as a condition to their continued employment
with the Company subsequent to the Closing Date to continue to hold such
licenses on behalf of the Company.
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6. INDEMNIFICATION
The Stockholder and LandCARE each make the following covenants that are
applicable to them, respectively:
6.1 SURVIVAL OF STOCKHOLDER'S REPRESENTATIONS AND WARRANTIES.
(a) The representations and warranties of the Stockholder made in
Sections 2.1 (Due Organization), 2.2 (Authorization), 2.3 (Capital Stock of the
Company and Related Matters) and 2.17 (Taxes) of this Agreement shall survive
the Closing until the expiration of the periods prescribed by the applicable
statutes of limitations (including any extensions thereof) relating thereto; the
representations and warranties of the Stockholder made in Section 2.9
(Environmental Matters) shall survive the Closing for a period of four years
after the Closing Date; and the other representations and warranties of the
Stockholder made herein shall survive the Closing for a period of two years
after the Closing Date; provided, however, that representations and warranties
and indemnification provisions with respect to which a claim is made within the
survival period shall survive until such claim is finally determined and paid.
The limitation periods referred to in this subparagraph (a) are not intended to
limit any of the remedies available to LandCARE for causes of action arising out
of fraud by the Stockholder.
(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 he will indemnify, defend, protect, and hold harmless the
Company, 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 SPECIFIC ENVIRONMENTAL INDEMNIFICATION BY THE STOCKHOLDER. In addition
to the indemnification provided for in Section 6.2, the Stockholder covenants
and agrees that, for a period of four years after the Closing Date, he will
indemnify, defend, protect and hold harmless the Company and LandCARE and each
of their respective subsidiaries, officers, directors, employees, stockholders,
agents, representatives and affiliates from and against all Damages incurred by
any of them in connection with: (a) violations or alleged violations of any
applicable federal, state, local, or other laws, regulations, ordinances, or
orders of any governmental entity which govern the protection of the environment
or human health and safety ("Environmental Laws") relating in any way to any
action or omission of the Company or any predecessor of the Company to the
extent the facts, events, or conditions giving rise to such violation or alleged
violation occurred or existed on or before the Effective Date; (b) the actual or
alleged presence, emanation, migration, disposal, release, or threatened release
(collectively, "Releases") of any oil, petroleum product, hazardous material, or
hazardous substance as such terms are defined by Environmental Laws
(collectively, "Hazardous Substances") at, under, to, or from any property or
facility which presently is or previously was owned, leased, operated, or
otherwise used by the Company or any predecessor of the Company to the extent
that said actual or alleged Release occurred or is alleged to have occurred on
or before the Effective Date; and (c) the actual or alleged Release of any
Hazardous Substances at any location or facility whatsoever to the extent such
Hazardous Substances were generated by, or were arranged for disposal at such
location or facility by, the Company or any predecessor of the Company on or
before the Effective Date.
6.4 SPECIFIC TAX INDEMNIFICATION BY THE STOCKHOLDER. In addition to the
indemnification provided for in Section 6.2, the Stockholder covenants and
agrees that, for the periods prescribed by the applicable statute of
limitations, he will indemnify, defend, protect and hold harmless the Company
and LandCARE and each of their respective subsidiaries, officers, directors,
employees, stockholders, agents, representatives and affiliates from and against
all Damages, including but not limited to taxes, penalties and interest,
incurred by any of them in connection with the failure of the Company to timely
and accurately file the Tax Returns and remit the Taxes to any applicable taxing
authorities.
6.5 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.
6.6 THIRD PERSON CLAIMS. Promptly after any party hereto (the "Indemnified
Party") has received a written communication 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
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provide indemnification hereunder (an "Indemnifying Party") written notice of
such claim or the commencement of such action or proceeding; provided, however,
that if the Indemnified Party is either LandCARE or the Company, such
Indemnified Party shall give the Indemnifying Party written notice of such claim
or the commencement of such action or proceeding promptly after an individual in
a senior management position at such Indemnified Party has received a written
communication of any claim by a Third Person or the commencement of any action
or proceeding by a Third Person that may give rise to a right of indemnification
hereunder. 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 ten 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.
6.7 LIMITATIONS ON INDEMNIFICATION. LandCARE and the other persons or
entities indemnified pursuant to this Section shall not assert any claim for
indemnification hereunder against the Stockholder until such time as the
aggregate of all claims which such persons may have against such the Stockholder
shall exceed $60,000 (the "Indemnification Threshold") and then only to the
extent that such claims exceed the Indemnification Threshold. The Stockholder
shall not assert any claim for indemnification hereunder against LandCARE until
such time as the aggregate of all claims which the Stockholder may have against
LandCARE shall exceed the Indemnification Threshold and then only to the extent
that such claims exceed the Indemnification Threshold. The aggregate liability
of the Stockholder under this Article 6 shall not exceed $1,500,000 (the
"Liability Limit"); the aggregate liability of LandCARE hereunder shall not
exceed the Liability Limit. It is agreed that the exclusive remedy of the
parties to this Agreement shall be pursuant to Section 6 hereof.
6.8 METHOD OF PAYMENT. All claims for indemnification shall be paid in
cash or such other form as mutually agreeable to the parties.
7. NONCOMPETITION
7.1 PROHIBITED ACTIVITIES. As partial consideration for the execution,
delivery and performance of this Agreement by LandCARE, the Xx. Xxxxx 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
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business of whatever nature:
(i) own, manage, operate, join, control, consult or advise (whether
or not compensated for such consultation or advice), or participate in, or
render assistance to, or derive any benefit whatever from, any business
offering services or products in direct competition with the Company
within 75 miles of where the Company conducted business at any time within
one year prior to the Closing Date (the "Territory");
(ii) engage, as an officer, director, shareholder, owner, partner,
joint venturer, or in a sales or managerial capacity, whether as an
employee, independent contractor, consultant or advisor, or as a sales
representative, in any business offering services or products in direct
competition with the Company or LandCARE within the Territory;
(iii) call upon any person who is, at that time, an employee of
LandCARE or any of its subsidiaries (including the Company) for the
purpose or with the intent of enticing such employee away from or out of
the employ of LandCARE or any of its subsidiaries (including the Company);
(iv) call upon any person or entity which is, at that time, or which
has been, within one year prior to the Closing Date, a customer of
LandCARE, the Company or any of LandCARE's subsidiaries (including the
Company) for the purpose of soliciting or selling products or services in
direct competition with LandCARE or any of its subsidiaries (including the
Company) within the Territory.
Notwithstanding the above, the foregoing covenants shall not be deemed to
prohibit Xx. Xxxxx from 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 Xx.
Xxxxx 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, Xx. Xxxxx agrees that the
foregoing covenant may be enforced by LandCARE in the event of breach by Xx.
Xxxxx, by injunctions, restraining orders and other equitable actions.
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7.3 REASONABLE RESTRAINT. It is agreed by the parties hereto that the
foregoing covenants in this Section impose a reasonable restraint on Xx. Xxxxx.
7.4 SEVERABILITY; REFORMATION. The covenants in this Section are severable
and separate, and the unenforceability of any specific covenant shall not affect
the provisions of any other covenant. Moreover, in the event any court of
competent jurisdiction shall determine that the scope, time or territorial
restrictions set forth are unreasonable, then it is the intention of the parties
that such restrictions be enforced to the fullest extent which the court deems
reasonable, and the Agreement shall thereby be reformed.
7.5 INDEPENDENT COVENANT. Xx. Xxxxx acknowledges that the 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 Xx. Xxxxx 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 Xx. Xxxxx made in
this Section shall be effective, shall be computed by excluding from such
computation any time during which Xx. Xxxxx 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 and Xx. Xxxxx recognize and acknowledge that
they have had access to certain customer lists, confidential information of the
Company, such as operational policies, pricing and cost policies, and other
information, that will be valuable, special and unique assets of the Company and
LandCARE after the Closing Date. The Stockholder and Xx. Xxxxx agree that they
will not disclose such confidential information, or any confidential information
of the Company or LandCARE to which they may have access in the future, to any
person, firm, corporation, association or other entity for any purpose or reason
whatsoever, except (a) to authorized representatives of LandCARE, (b) following
the Closing, such information may be disclosed by the Stockholder or Xx. Xxxxx
as may be required in the course of performing his duties for the Company and
(c) to counsel and other advisers, provided that such advisers (other than
counsel) agree to the confidentiality provisions of this Section, unless (i)
such information becomes known to the public generally through no fault of the
Stockholder or Xx. Xxxxx, 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 and Xx. Xxxxx 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 or Xx. Xxxxx of the provisions of this
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Section, LandCARE shall be entitled to injunctive or other equitable relief
restraining the Stockholder and Xx. Xxxxx from disclosing, in whole or in part,
such confidential information. Nothing herein shall be construed as prohibiting
LandCARE from pursuing any other available remedy for such breach or threatened
breach, including the recovery of damages.
8.2 EQUITABLE RELIEF. Because of the difficulty of measuring economic
losses as a result of the breach of the foregoing covenants, and because of the
immediate and irreparable damage that would be caused for which LandCARE would
have no other adequate remedy, the Stockholder and Xx. Xxxxx agree 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. GENERAL
9.1 SUCCESSORS AND ASSIGNS. This Agreement and the rights of the parties
hereunder may not be assigned (except by operation of law) and shall be binding
upon and shall inure to the benefit of the parties hereto, the successors of
LandCARE, and the heirs and legal representatives of the Stockholder.
9.2 ENTIRE AGREEMENT. Except for the letter from LandCARe to the
Stockholder and Xx. Xxxxx dated as of the date hereof, this Agreement (including
the schedules, exhibits and annexes attached hereto) and the documents delivered
pursuant hereto constitute the entire agreement and understanding among the
Stockholder, the Company and LandCARE, and supersede any prior agreement and
understanding relating to the subject matter of this Agreement. This Agreement,
upon execution, constitutes a valid and binding agreement of the parties hereto,
enforceable in accordance with its terms, and may be modified or amended only by
a written instrument executed by the parties hereto.
9.3 COUNTERPARTS. This Agreement may be executed simultaneously in two or
more counterparts, each of which shall be deemed an original and all of which
together shall constitute but one and the same instrument. The signatures to
this Agreement need not all be on a single copy of this Agreement, and may be
facsimiles rather than originals, and shall be fully as effective as though all
signatures were originals on the same copy.
9.4 BROKERS AND AGENTS. Each party represents and warrants that it
employed no broker or agent in connection with this transaction and agrees to
indemnify the other parties hereto against
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all loss, cost, damages or expense arising out of claims for fees or commission
of brokers employed or alleged to have been employed by such indemnifying party.
9.5 NOTICES. All notices and communications required or permitted
hereunder shall be in writing and may be given by depositing the same in United
States mail, addressed to the party to 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
If to the Company, addressed to it at:
Landtrends, Inc.
0000 Xxxxxxxx Xxxxx
Xxx Xxxxx, 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.
9.6 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.
9.7 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The representations,
warranties, covenants and agreements of the parties made herein and at the time
of the Closing or in writing delivered pursuant to the provisions of this
Agreement shall survive the consummation of the transactions contemplated hereby
and any examination on behalf of the parties.
9.8 EFFECT OF INVESTIGATION. No investigation by the parties hereto in
connection with this Agreement or otherwise shall affect the representations and
warranties of the parties contained herein or in any certificate or other
document delivered in connection herewith and each such representation and
warranty shall survive such investigation.
9.9 EXERCISE OF RIGHTS AND REMEDIES. Except as otherwise provided herein,
no delay of or omission in the exercise of any right, power or remedy accruing
to any party as a result of any breach or default by any other party under this
Agreement shall impair any such right, power or
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remedy, nor shall it be construed as a waiver of or acquiescence in any such
breach or default, or of any similar breach or default occurring later; nor
shall any waiver of any single breach or default be deemed a waiver of any other
breach or default occurring before or after that waiver.
9.10 TIME. Time is of the essence with respect to this Agreement.
9.11 REFORMATION AND SEVERABILITY. In case any provision of this Agreement
shall be invalid, illegal or unenforceable, it shall, to the extent possible, be
modified in such manner as to be valid, legal and enforceable but so as to most
nearly retain the intent of the parties, and if such modification is not
possible, such provision shall be severed from this Agreement, and in either
case the validity, legality and enforceability of the remaining provisions of
this Agreement shall not in any way be affected or impaired thereby.
9.12 REMEDIES CUMULATIVE. No right, remedy or election given by any term
of this Agreement shall be deemed exclusive but each shall be cumulative with
all other rights, remedies and elections available at law or in equity.
9.13 CAPTIONS. The headings of this Agreement are inserted for convenience
only, and shall not constitute a part of this Agreement or be used to construe
or interpret any provision hereof.
9.14 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.
9.15 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
Xxxxxxx X. Xxxxxxx
Senior Vice President and General Counsel
LANDTRENDS, INC.
By: /s/ XXXX X. XXXXX
Xxxx X. Xxxxx
President
/s/ XXXX X. XXXXX
------------------------------------------
Xxx X. Xxxxx as Trustee of the Xxxxx Inter
Vivos Trust dated March 25, 1997
/s/ XXXX X. XXXXX
------------------------------------------
Xxxx X. Xxxxx as Trustee of the Xxxxx Inter
Vivos Trust dated March 25, 1997
/s/ XXXX X. XXXXX
------------------------------------------
Xxx X. Xxxxx, individually
