EXHIBIT 10.12
STOCK PURCHASE AGREEMENT
dated as of September 3, 1998
by and among
LANDCARE USA, INC.
MEMPHIS LANDSCAPE MANAGEMENT, LLC
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 The Closing......................................................2
2. REPRESENTATIONS AND WARRANTIES OF THE STOCKHOLDERS.....................2
2.1 Due Organization.................................................2
2.2 Authorization....................................................2
2.3 Capital Stock of the Company.....................................2
2.4 Subsidiaries.....................................................3
2.5 Financial Statements.............................................3
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................................................5
2.11 Significant Customers; Material Contracts and Commitments........6
2.12 Real Property....................................................6
2.13 Insurance........................................................7
2.14 Compensation; Employment Agreements; Organized Labor Matters.....7
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......................................13
2.24 Notice to Bargaining Agents.....................................14
2.25 Notices and Consents............................................14
2.26 Reliance Upon Oral Representations..............................14
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3. REPRESENTATIONS OF LANDCARE...........................................14
3.1 Due Organization................................................14
3.2 Authorization...................................................14
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.........................................15
4.6 Consents........................................................15
5. POST-CLOSING COVENANTS................................................16
5.1 Future Cooperation; Further Assurances..........................16
5.2 Expenses........................................................16
5.3 Certain Agreements..............................................16
5.4 Preparation and Filing of Tax Returns...........................16
5.5 Preparation and Filing of Tax Returns...........................17
5.6 Guaranties......................................................17
6. INDEMNIFICATION.......................................................18
6.1 Survival of Stockholders' Representations and Warranties. .....18
6.2 General Indemnification by the Stockholders.....................18
6.3 Indemnification by LandCare.....................................19
6.4 Third Person Claims.............................................19
6.5 Method of Payment...............................................19
7. NONCOMPETITION........................................................19
7.1 Prohibited Activities...........................................19
7.2 Equitable Relief................................................20
7.3 Reasonable Restraint............................................21
7.4 Severability; Reformation.......................................21
7.5 Independent Covenant............................................21
8. NONDISCLOSURE OF CONFIDENTIAL INFORMATION.............................21
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8.1 General.........................................................21
8.2 Equitable Relief................................................22
8.3 Survival........................................................22
9. GENERAL...............................................................22
9.1 Successors and Assigns..........................................22
9.2 Entire Agreement................................................22
9.3 Counterparts....................................................22
9.4 Brokers and Agents..............................................23
9.5 Notices.........................................................23
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
9.16 Dispute Resolution..............................................26
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SCHEDULES
SCHEDULE 1.2. Consideration
SCHEDULE 2.1. Due Organization
SCHEDULE 2.4. Subsidiaries
SCHEDULE 2.5. Financial Statements
SCHEDULE 2.6. Liabilities and Obligations
SCHEDULE 2.7. Accounts and Notes Receivable
SCHEDULE 2.8. Permits and Intangibles
SCHEDULE 2.9. Environmental Matters
SCHEDULE 2.10. Personal Property
SCHEDULE 2.11. Significant Customers; Material Contracts and Commitments
SCHEDULE 2.12. Real Property
SCHEDULE 2.13. Insurance
SCHEDULE 2.14. Compensation; Employment Agreements; Organized Labor Matters
SCHEDULE 2.15. Employee Benefit Plans
SCHEDULE 2.16. Conformity with Law; Litigation
SCHEDULE 2.18. 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
ANNEXES
Annex I - Form of Employment Agreement
Annex II - Form of Opinion of Counsel to Company and
Stockholders
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STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT (this "Agreement") is made and entered into
as of September 3, 1998 by and among LandCare USA, Inc., a Delaware corporation
("LandCare"), Memphis Landscape Management, LLC, a Georgia limited liability
company (the "Company"), and the persons listed on the signature pages of this
Agreement as the stockholders of the Company (the "Stockholders"). The
Stockholders are the only holders of capital stock of the Company.
WHEREAS, the Stockholders desire to sell, and LandCare desires to
purchase, all of the issued and outstanding capital stock of the Company (the
"Shares") on the terms and conditions set forth in this Agreement; and
WHEREAS, concurrently with the execution and delivery of this Agreement,
the owners of all of the outstanding shares of capital stock of each of Carolina
Landscape Management, Inc., a Georgia corporation ("Carolina"), Greentree
Incorporated of Georgia, a Georgia corporation ("Greentree"), and Nashville
Landscape Management, LLC, a Georgia limited liability company ("Memphis"), are
selling all of such shares of capital stock to LandCare pursuant to stock
purchase agreements substantially similar to this Agreement;
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 and subject to the conditions of this
Agreement, the Stockholders hereby sell, convey, transfer, assign and deliver to
LandCare, and LandCare hereby purchases from the Stockholders, all of the
Shares.
1.2 PURCHASE PRICE. The aggregate purchase price (the "Purchase Price")
for the Shares is $1,000, which amount is being paid by wire transfer of
immediately available funds in accordance with wiring instructions provided by
the Stockholders. Each of the Stockholders is receiving its pro rata interest in
the Purchase Price as set forth on SCHEDULE 1.2 hereto.
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1.3 THE CLOSING. The closing of the transactions contemplated by this
Agreement (the "Closing") is taking place concurrently with the execution and
delivery of this Agreement, and the date hereof is sometimes herein called the
"Closing Date".
2. REPRESENTATIONS AND WARRANTIES OF THE STOCKHOLDERS
The Stockholders hereby jointly and severally represent and warrant 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 Georgia (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 Company (it being agreed that a "Material
Adverse Effect" means an adverse effect (over time or otherwise) of more than 1%
of the Purchase Price on the business, assets, operations or condition
(financial or otherwise), of the Company). Schedule 2.1 sets forth a list of all
jurisdictions in which the Company is authorized or qualified to do business.
True, complete and correct copies of the Articles of Incorporation and By-laws,
each as amended, of the Company (the "Charter Documents") are all attached to
Schedule 2.1. The stock records of the Company, a copy of which is attached to
Schedule 2.1, are correct and complete in all material respects. All records of
all proceedings of the Board of Directors and stockholders of the Company have
been made available to LandCare.
2.2 AUTHORIZATION. (i) The representative of the Company executing this
Agreement has the authority to enter into and bind the Company to the terms of
this Agreement and (ii) the Company has the full legal right, power and
authority to enter into this Agreement and the transactions contemplated hereby,
all of which have been approved by the Stockholders and the Board of Directors
of the Company. This Agreement has been validly executed and delivered by the
Company and the Stockholders and constitutes the legal, valid and binding
obligation of each of them enforceable in accordance with its terms.
2.3 CAPITAL STOCK OF THE COMPANY. The authorized capital stock of the
Company consists solely of 10,000 shares of common stock, no par value per
share, of which 100 shares are issued and outstanding and constitute all of the
Shares. All of the Shares are owned of record and beneficially by the
Stockholders 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,
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sold and delivered by the Company in compliance with all applicable state and
federal laws governing the issuance of securities. None of the Shares were
issued in violation of any preemptive rights or similar rights of any person. No
option, warrant, call, conversion right or commitment of any kind exists which
obligates the Company to issue any additional shares of its capital stock or
obligates the Stockholders to transfer any of the Shares to any person except
pursuant to this Agreement.
2.4 SUBSIDIARIES. Except as set forth on Schedule 2.4, the Company has no
subsidiaries or d/b/a names and has not conducted business under any other name
except its legal name as set forth in its Charter Documents. Except as set forth
in Schedule 2.4, the Company does not own, of record or beneficially, or
control, directly or indirectly, any capital stock, securities convertible into
capital stock or any other equity interest in any corporation, association or
other business entity, and the Company is not, directly or indirectly, a
participant in any joint venture, partnership or other non-corporate entity.
2.5 FINANCIAL STATEMENTS. Complete and correct copies of the following
financial statements are attached as Schedule 2.5:
(i) The balance sheets of the Company as of December 31, 1997 (the
"Balance Sheet Date") and any related statements of operations,
stockholder's equity and cash flows for the three-year period then ended,
together with any related notes and schedules (the "Year-end Financial
Statements"); and
(ii) The balance sheet (the "Interim Balance Sheet") of the Company
as of June 30, 1998, 1998 and the related statements of operations for the
six-month period then ended (the "Interim Financial Statements"). (The
Year-end Financial Statements and the Interim Financial Statements are
herein collectively called the "Financial Statements".)
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.
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2.6 LIABILITIES AND OBLIGATIONS. Except as and to the extent disclosed and
adequately provided for in the Financial Statements or on Schedule 2.6 hereto,
the Company has no liabilities or obligations of any kind, whether accrued,
absolute, secured or unsecured, contingent or otherwise. Except and to the
extent disclosed on Schedule 2.6, there are no claims, liabilities or
obligations, nor any reasonable basis for assertion against the Company, of any
claim, liability or obligation, of any nature whatsoever. 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.
2.8 PERMITS AND INTANGIBLES. Except as set forth on Schedule 2.8, the
Company holds all licenses, franchises, permits and other governmental
authorizations required in connection with the conduct of the Company's
business. Schedule 2.8 sets forth an accurate list and summary description of
all such licenses, franchises, permits and other governmental authorizations,
including permits, titles (including licenses, franchises, certificates,
trademarks, trade names, patents, patent applications and copyrights owned or
held by the Company or any of its employees (including interests in software or
other technology systems, programs and intellectual property) (collectively, the
"Intangible Assets") (it being understood and agreed that a list of all
environmental permits and other environmental approvals is set forth on Schedule
2.9). 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.
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2.9 ENVIRONMENTAL MATTERS. The Company has complied with and is in
compliance with all federal, state, local and foreign statutes (civil and
criminal), laws, ordinances, regulations, rules, notices, permits, judgments,
orders and decrees applicable to any of them or any of their respective
properties, assets, operations and businesses relating to environmental
protection (collectively "Environmental Laws") including, without limitation,
Environmental Laws relating to air, water, land and the generation, storage,
use, handling, transportation, treatment or disposal of Hazardous Wastes,
Hazardous Materials and Hazardous Substances (including petroleum and petroleum
products) (as such terms are defined in any applicable Environmental Law) except
to the extent that noncompliance with any Environmental Laws, either singly or
in the aggregate, has not had and will not have a Material Adverse Effect on the
Company or any of its operations. The Company has obtained and adhered to all
necessary permits and other approvals required by any applicable Environmental
Laws, including, without limitation, such permits and approvals as may be
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 Stockholders or any affiliate of the
Company or the Stockholders.
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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.
Schedule 2.10(a) lists items of personal property that are owned by one or more
of the Stockholders or will be transferred from the Company to one or more of
the Stockholders prior to the Closing.
2.11 SIGNIFICANT CUSTOMERS; MATERIAL CONTRACTS AND COMMITMENTS. Schedule
2.11 sets forth a list of (i) all (but not more than 25) 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. 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 Stockholders or any affiliates of the Company or the
Stockholders is included in Schedule
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2.12. All leases relating to Real Property leased by the Company from any of the
Stockholders or any affiliate of any of the Stockholders has been terminated.
Except as set forth on Schedule 2.12, all of such leases included on Schedule
2.12 are in full force and effect and constitute valid and binding agreements of
the 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 business; and
there are no claims or demands pending or, to the knowledge of the Stockholders,
threatened, by any party against the Real Property which, if valid, would create
in, or confer on, any party other than the Company, any 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 Stockholders have furnished to LandCARE a true and correct
copy of all owner's policies of title insurance and surveys pertaining to the
real property owned by the Company.
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
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2.14, since the Balance Sheet Date, there have been no increases in the base
compensation payable or any special bonuses to any officer, director, key
employee or other employee.
Except as set forth on Schedule 2.14, (i) the Company is not bound by or
subject to (and none of its respective assets or properties is bound by or
subject to) any arrangement with any labor union, (ii) no employees of the
Company are represented by any labor union or covered by any collective
bargaining agreement, (iii) to the knowledge of the Company, no campaign to
establish such representation is in progress and (iv) there is no pending or, to
the best of the Company's knowledge, threatened, labor dispute involving the
Company and any group of its employees. The Company has not experienced any
labor interruptions over the past five years.
2.15 EMPLOYEE BENEFIT PLANS. Schedule 2.15 sets forth an accurate schedule
showing all employee benefit plans of Company, including all agreements or
arrangements (other than agreements or arrangements set forth on Schedule 2.14)
containing "golden parachute" or other similar provisions, and deferred
compensation agreements, together with true, complete and correct copies of such
plans, agreements and any trusts related thereto, and classifications of
employees covered thereby as of the Balance Sheet Date. Except for the employee
benefit plans, if any, described on Schedule 2.15, the Company does not sponsor,
maintain or contribute to any plan program, fund or arrangement that constitutes
an "employee pension benefit plan," nor does the Company have any obligation to
contribute to or accrue or pay any benefits under any deferred compensation or
retirement funding arrangement on behalf of any employee or employees (such as,
for example, and without limitation, any individual retirement account or
annuity, any "excess benefit plan" (within the meaning of Section 3(36) of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA")) or any
non-qualified deferred compensation arrangement). For the purposes of this
Agreement, the term "employee pension benefit plan" shall have the same meaning
as is given that term in Section 3(2) of ERISA. The Company has not sponsored,
maintained or contributed to any employee pension benefit plan and is not
required to contribute to 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
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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 Stockholders, nor any
plan listed in Schedule 2.15, nor the Company has engaged in any transaction
prohibited under the provisions of Section 4975 of the Code or Section 406 of
ERISA. No plan listed on Schedule 2.15 has incurred an accumulated funding
deficiency, as defined in Section 412(a) of the Code and Section 302(1) of
ERISA; and the Company has not incurred any liability for excise tax or penalty
due to the Internal Revenue Service or any liability to the PBGC. There have
been no terminations, partial terminations or discontinuance of contributions to
any such Qualified Plan intended to qualify under Section 401(a) of the Code
without notice to and approval by the Internal Revenue Service; no plan listed
on Schedule 2.15 subject to the provisions of Title IV of ERISA has been
terminated; there have been no "reportable events" (as that phrase is defined in
Section 4043 of ERISA) with respect to any such plan listed in 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 Stockholders, threatened, against or affecting the Company
(or any of its officers or directors in their capacities as such), at law or in
equity, or before or by any federal, state, municipal or other governmental
department, commission, board, bureau, agency or instrumentality having
jurisdiction over the Company. Except as set forth on SCHEDULE 2.16, no 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 Stockholders, there is no basis therefor. Except as set forth
on Schedule 2.16, there are no outstanding judgments, orders, writs, injunctions
or decrees against or affecting the Company or its assets. Except as set forth
on SCHEDULE 2.16, 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
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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 ("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 any Stockholder, threatened,
and no basis which the Company or any Stockholder believes to be valid exists on
which any claim for any such Tax can be asserted against the Company or any
Company Subsidiary. There are no requests for rulings or determinations in
respect of any Taxes pending between the Company or any Company Subsidiary and
any Taxing Authority. No extension of any period during which any Tax may be
assessed or collected and for
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which the Company or any Company Subsidiary is or may be liable has been granted
to any Taxing Authority. Neither the Company nor any Company Subsidiary is or
has been party to any tax allocation or sharing agreement. All amounts required
to be withheld by any of the Company and the Company Subsidiaries and paid to
governmental agencies for income, social security, unemployment insurance,
sales, excise, use and other Taxes have been collected or withheld and paid to
the proper Taxing Authority. The Company and each Company Subsidiary have made
all deposits required by law to be made with respect to employees' withholding
and other employment Taxes. Neither the Company nor any Stockholder is a
"foreign person," as that term is referred to in Section 1445(f)(3) of the Code.
The Company has not filed a consent pursuant to Section 341 (f) of the Code or
any comparable provision of any other tax statute and has not agreed to have
Section 341 (f)(2) of the Code or any comparable provision of any other Tax
statute apply to any disposition of an asset. The Company has not made, is not
obligated to make and is not a party to any agreement that could require it to
make any payment that is not deductible under Section 280G of the Code. No asset
of the Company or of any Company Subsidiary is subject to any provision of
applicable law which eliminates or reduces the allowance for depreciation or
amortization with respect to that asset below the allowance generally available
to an asset of its type. The Company uses the accrual method of accounting for
income tax purposes, and the Company's methods of accounting have not changed in
the past five years. The Company is not an investment company as defined in
Section 351(e)(1) of the Code. The Company has a taxable year ended December 31
and has not made an election to retain a fiscal year other than December 31
under IRC Section 444. The Company is not party to any joint venture,
partnership, or other arrangement that is treated as a partnership for federal
income tax purposes.
2.18 NO VIOLATIONS; ALL REQUIRED CONSENTS OBTAINED. The Company is not in
violation of any of its Charter Documents. Neither the Company nor, to the
knowledge of the Stockholders, 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 Stockholders and the performance by the Company
and the Stockholders of their obligations hereunder and the consummation of the
transactions contemplated hereby will not result in any violation or breach or
constitute a default under, any of the terms or provisions of the Material
Documents or the Charter Documents, and (b) at and after the Closing Date the
Company will be entitled to the rights and benefits the 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
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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 the 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 excess of $50,000 in the business, assets,
liabilities or financial condition of the Company;
(ii) any damage, destruction or loss (whether or not covered by
insurance) affecting any of the material assets of the Company or the
business of the Company which would have a Material Adverse Effect;
(iii) any change in the authorized capital of the Company or its
outstanding securities or any change in its ownership interests or any
grant of any options, warrants, calls, conversion rights or commitments;
(iv) any declaration or payment of any dividend or distribution with
respect to the capital stock or any direct or indirect redemption,
purchase or other acquisition of any of the capital stock of the Company;
(v) any increase or commitment to increase the compensation, bonus,
sales commissions or fee arrangement payable or to become payable by the
Company to any of its officers, directors, stockholders, employees,
consultants or agents;
(vi) any work interruptions, labor grievances or claims filed, or
any event or condition of any character, materially adversely affecting
the business of the Company;
(vii) any sale or transfer, or any agreement to sell or transfer,
any material assets, property or rights of the Company to any person;
(viii)any cancellation, or agreement to cancel, any indebtedness or
other obligation owing to the Company;
(ix) any plan, agreement or arrangement granting any preferential
rights to purchase or acquire any interest in any of the assets, property
or rights of the Company or 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 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 Stockholders nor any other affiliate of
the Company owns, directly or indirectly, any interest in, or is an officer,
director, employee or consultant of or otherwise receives remuneration from, any
business which is a competitor, lessor, lessee, customer or supplier of the
Company. Except as set forth on Schedule 2.21, no officer, director or
stockholder of the Company has, nor during the period beginning January 1, 1995
through the date hereof had, any interest in any property, real or personal,
tangible or intangible, used in or pertaining to the Company's business.
2.22 DISCLOSURE. The Stockholders have provided LandCare with all the
information that LandCare has requested in analyzing whether to consummate the
transactions contemplated hereby. None of the information so provided nor any
representation or warranty of the Stockholders contained in this Agreement
contains any untrue statement or omits to state a material fact necessary in
order to make the statements herein or therein, in light of the circumstances
under which they were made, not misleading. There is no fact 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 Stockholders can reasonably foresee, threatens to 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.
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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 RELIANCE UPON ORAL REPRESENTATIONS. The Company and the Stockholders
each represent and warrant: (a) that each has been fully informed by his or its
legal counsel (except to the extent any such Stockholder has elected not to
retain 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, or has made his or her own
decision not to retain legal counsel; (c) that each, personally or 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 or any other
written agreement entered into in connection herewith; 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.
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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 Stockholders are 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 on
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 Stockholders is
delivering an opinion to LandCare dated the date hereof in the form attached
hereto as Annex II.
4.4 GOOD STANDING CERTIFICATES. The Stockholders are delivering to
LandCare certificates, dated as of a date no earlier than twenty 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 Stockholders and their Affiliates are
repaying any outstanding indebtedness they may have to the Company.
4.6 CONSENTS. The Stockholders are delivering to LandCare copies of any
third party consents required in connection with the consummation of the
transactions contemplated hereby.
4.7 RESIGNATION OF DIRECTORS AND OFFICERS. The Stockholders are delivering
to LandCARE the resignations of such directors and officers of the Company as
have been requested by LandCARE.
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4.8 CERTAIN LOANS. The Company is repaying to the Stockholders the loans
identified on SCHEDULE 4.10.
5. POST-CLOSING COVENANTS
The parties to this Agreement further covenant and agree as follows:
5.1 FUTURE COOPERATION; FURTHER ASSURANCES. The Stockholders, the Company
and LandCare shall each deliver or cause to be delivered to the other following
the date hereof such additional instruments as the other may reasonably request
for the purpose of effecting the Merger and fully carrying out the intent of
this Agreement. LandCare shall provide the Stockholders reasonable access to the
books and records of the Company after the Closing Date for purposes of tax
compliance and any other reasonable purpose.
5.2 EXPENSES. LandCare will pay the fees, expenses and disbursements of
LandCare and its agents, representatives, financial advisors, accountants and
counsel incurred in connection with the execution, delivery and performance of
this Agreement. The Company has paid the fees, expenses and disbursements of the
Stockholders and their agents, representatives, financial advisors, accountants
and counsel incurred in connection with the execution, delivery and performance
of this Agreement. LandCare shall pay any sales, use, transfer, real property
transfer, recording, gains, stock transfer and other similar taxes and fees
("Transfer Taxes") imposed by the State of Texas in connection with the
transactions contemplated hereby, and the Stockholders shall pay any Transfer
Taxes imposed by the State of Georgia in connection with the transactions
contemplated hereby. In addition, the Stockholders acknowledge that the
Stockholders, and not the Company or LandCare, will pay all taxes (income or
otherwise), if any, due upon receipt of the consideration payable pursuant to
this Agreement.
5.3 CERTAIN AGREEMENTS. Upon the request of LandCare at any time after the
Closing, the Stockholders and the Company shall terminate any existing
agreements to which the Company and any of the Stockholders are parties.
5.4 PREPARATION AND FILING OF TAX RETURNS.
(a) The Stockholders shall file or cause to be filed all tax returns
for all taxable periods that end on or before the Closing Date, but in each case
only after LandCare has reviewed such filings and consented thereto. If the
Company is an S corporation, the Stockholders shall pay all Tax liabilities for
all periods ending on or prior to the Closing Date, and, pursuant to Section
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1377 of the Code, the Stockholders and LandCare shall elect to terminate the
Company's tax year at the Closing Date and to end the Company's following tax
year on the last day of the Company's regular tax year. Such two years
(including the short year) shall be treated as separate years for purposes of
allocating the Company's income, gain, loss, deduction and credit. The
Stockholder shall file the final S corporation return by its due date, which
will be 2 1/2 months after 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 PREPARATION AND FILING OF TAX RETURNS. The Stockholders will join with
Purchaser in making an election under Section 338(h)(10) of the Code (and any
corresponding elections under state, local or foreign tax law) (collectively a
"Section 338(h)(10) Election") with respect to the purchase and sale of the
Shares. LandCare or the Company will pay (or reimburse the Stockholders for, as
such tax becomes due and payable, as requested by the Stockholders in writing)
any tax (including any state, local or foreign tax) attributable to the making
of the Section 338(h)(10) Election (or an election under state, local or foreign
law similar to the Section 338(h)(10) Election) and will indemnify the
Stockholders against any tax liabilities resulting therefrom. As a result of the
Section 338(h)(10) Election, the parties agree that the Purchase Price and the
liabilities of the Company (plus other relevant items) will be allocated to the
assets of the Company for all purposes (including tax and financial accounting
purposes) as shown on SCHEDULE 5.5. Purchaser and the Company and the
Stockholders will file all tax returns (including amended returns and claims for
refund) and information reports in a manner consistent with such allocation.
5.6 GUARANTIES. As promptly as may be practicable after the Closing,
LandCare shall cause the release of the Stockholders' guaranties of indebtedness
of the Company, including but not limited to those guaranties listed on SCHEDULE
5.6.
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6. INDEMNIFICATION
The Stockholders and LandCare each make the following covenants that are
applicable to them, respectively:
6.1 SURVIVAL OF STOCKHOLDERS' REPRESENTATIONS AND WARRANTIES.
(a) The representations and warranties of the Stockholders made in
Sections 2.1 (Due Organization), 2.2 (Authorization), 2.3 (Capital Stock of the
Company) and 2.17 (Taxes) of this Agreement shall survive the Closing until the
expiration of the periods prescribed by the applicable statutes of limitations
(including any extensions thereof) relating thereto (whether three years, six
years or otherwise); the representations and warranties of the Stockholders made
in Section 2.9 (Environmental Matters) of this Agreement shall survive the
Closing for a period of five years after the Closing Date; and all other
representations and warranties of the Stockholders made in this Agreement shall
survive the Closing for a period of one year following the Closing Date;
provided, however, that representations and warranties and indemnification
provisions with respect to which a claim is made within the 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 STOCKHOLDERS. The Stockholders covenant
and agree that they will indemnify, defend, protect, and hold harmless the
Surviving Corporation, LandCare and its subsidiaries and all of their officers,
directors, employees, stockholders, agents, representatives and affiliates at
all times from and after the date of this Agreement until the Expiration Date
from and against all claims, damages actions, suits, proceedings, demands,
assessments, adjustments, costs and expenses (including specifically, but
without limitation, reasonable attorneys' fees and expenses of investigation)
(collectively "Damages") incurred by such indemnified person as a result of or
incident to (i) any breach of any representation or warranty of the Stockholders
set forth herein, and (ii) any breach or nonfulfillment of any covenant or
agreement by the Company or the Stockholders under this Agreement.
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6.3 SPECIFIC INDEMNIFICATION BY THE STOCKHOLDERS. In addition to the
indemnification provided for in Section 6.2, the Stockholders covenant and agree
that, for a period of five years after the Closing Date, they 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. LandCARE and the other persons or entities
indemnified pursuant to this Section 6.3 shall not assert any claim for
indemnification hereunder against the Stockholders until such time as the
aggregate of all claims which such persons may have against such the
Stockholders shall exceed $50,000 (the "Indemnification Threshold"), and then
only to the extent that such claims exceed the Indemnification Threshold. The
aggregate liability of the Stockholders under this Section 6.3 and the aggregate
liability of the Stockholders of Carolina, Nashville and Greentree under Section
6.3 of the Stock Purchase Agreements relating to such companies dated the date
hereof, in the aggregate, shall not exceed $500,000.
6.4 INDEMNIFICATION BY LANDCARE. LandCare covenants and agrees that it
will indemnify, defend, protect and hold harmless the Stockholders at all times
from and after the date of this Agreement until the Expiration Date from and
against all Damages incurred by the Stockholders as a result of (i) any breach
of any representation or warranty of LandCare set forth herein; and (ii) any
breach or nonfulfillment of any covenant or agreement by LandCare under this
Agreement.
6.5 THIRD PERSON CLAIMS. Promptly after any party hereto (the "Indemnified
Party") has received notice of or has knowledge of any claim by a person not a
party to this Agreement ("Third Person") or the commencement of any action or
proceeding by a Third Person that may give rise to
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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.
6.6 METHOD OF PAYMENT. All claims for indemnification shall be paid in
cash.
7. NONCOMPETITION
7.1 PROHIBITED ACTIVITIES. (a) As partial consideration for the execution,
delivery and performance of this Agreement by LandCARE, the Stockholders will
not, for a period of five years following the Closing Date, for any reason
whatsoever, directly or indirectly, for themselves or on behalf of or in
conjunction with any other person, persons, company, partnership, corporation or
business of whatever nature:
(i) own, manage, operate, join, control, consult or advise (whether
or not compensated for such consultation or advice), or participate in, or
render assistance to, or derive any benefit whatever from, any business
offering services or products in direct competition with the Company
within 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 Company or LandCare within the Territory;
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(iii) call upon any person who is, at that time, an employee of
LandCare or any of its subsidiaries (including the Company) for the
purpose or with the intent of enticing such employee away from or out of
the employ of LandCare or any of its subsidiaries (including the Company);
(iv) call upon any person or entity which is, at that time, or which
has been, within one year prior to the Closing Date, a customer of
LandCare or any of its subsidiaries (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 (a) Xxxxx Xxxxx from continuing his current ownership of and
involvement with Greentree Termite & Pest Control, Inc., or (b) any Stockholder
from acquiring as a passive investor with no involvement in the operations or
management of the business, not more than two percent (2%) of the capital stock
of a competing business whose stock is publicly traded on a national securities
exchange or over-the-counter market.
The provisions of this Section are independent of the noncompetition
provisions contained in any consulting or employment agreement to which any
Stockholder may be or may become a party in connection with the transactions
contemplated hereby. All such provisions are intended to be observed and
enforced in accordance with their terms.
7.2 EQUITABLE RELIEF. Because of the difficulty of measuring economic
losses to LandCare as a result of a breach of the foregoing covenant, and
because of the immediate and irreparable damage that could be caused to LandCare
for which it would have no other adequate remedy, the Stockholders agree that
the foregoing covenant may be enforced by LandCare in the event of breach by
such Stockholders, by injunctions, restraining orders and other equitable
actions.
7.3 REASONABLE RESTRAINT. It is agreed by the parties hereto that the
foregoing covenants in this Section impose a reasonable restraint on the
Stockholders.
7.4 SEVERABILITY; REFORMATION. The covenants in this Section are severable
and separate, and the unenforceability of any specific covenant shall not affect
the provisions of any other covenant. Moreover, in the event any court of
competent jurisdiction shall determine that the scope, time or territorial
restrictions set forth are unreasonable, then it is the intention of the parties
that such restrictions be enforced to the fullest extent which the court deems
reasonable, and the Agreement shall thereby be reformed.
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7.5 INDEPENDENT COVENANT. The Stockholders acknowledge that their
covenants set forth in this Section are material conditions to LandCare's
willingness to execute and deliver this Agreement and to consummate the
transactions contemplated hereby. All of the covenants in this Section shall be
construed as an agreement independent of any other provision in this Agreement,
and the existence of any claim or cause of action of any Stockholder against
LandCare or any subsidiary thereof, whether predicated on this Agreement or
otherwise, shall not constitute a defense to the enforcement by LandCare of such
covenants. It is specifically agreed that the period of five years stated at the
beginning of this Section, during which the agreements and covenants of the
Stockholders made in this Section shall be effective, shall be computed by
excluding from such computation any time during which any such Stockholder is in
violation of any provision of this Section. The covenants contained in Section
shall not be affected by any breach of any other provision hereof by any party
hereto.
8. NONDISCLOSURE OF CONFIDENTIAL INFORMATION
8.1 GENERAL. The Stockholders recognize and acknowledge that they have had
access to certain customer lists, confidential information of the Company, such
as operational policies, pricing and cost policies, and other information, that
will be valuable, special and unique assets of the Company and LandCare after
the Closing Date. The Stockholders agree that they will not disclose such
confidential information, or any confidential information of the Company or
LandCare to which they may have access in the future, to any person, firm,
corporation, association or other entity for any purpose or reason whatsoever,
except (a) to authorized representatives of LandCare, (b) following the Closing,
such information may be disclosed by any Stockholder as may be required in the
course of performing his duties for the Company and (c) to counsel and other
advisers, provided that such advisers (other than counsel) agree to the
confidentiality provisions of this Section, unless (i) such information becomes
known to the public generally through no fault of the Stockholder, or (ii)
disclosure is required by law or the order of any governmental authority or by
any taxing authority or in any tax litigation, provided, that prior to
disclosing any information pursuant to this clause (ii), the Stockholder shall
give prior written notice thereof to LandCare and provide LandCare with the
opportunity to contest such disclosure. In the event of a breach or threatened
breach by any Stockholder of the provisions of this Section, LandCare shall be
entitled to injunctive or other equitable relief restraining such Stockholder
from disclosing, in whole or in part, such confidential information. Nothing
herein shall be construed as prohibiting LandCare from pursuing any other
available remedy for such breach or threatened breach, including the recovery of
damages.
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
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would be caused for which LandCare would have no other adequate remedy, the
Stockholders agree that the foregoing covenants may be enforced against them by
injunctions, restraining orders and other appropriate equitable relief.
8.3 SURVIVAL. The obligations of the parties under this Section shall
survive the termination of this Agreement 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 Stockholders.
9.2 ENTIRE AGREEMENT. This Agreement (including the schedules, exhibits
and annexes attached hereto) and the documents delivered pursuant hereto
constitute the entire agreement and understanding among the Stockholders, the
Company and LandCare, and supersede any prior agreement and understanding
relating to the subject matter of this Agreement. This Agreement, upon
execution, constitutes a valid and binding agreement of the parties hereto
enforceable in accordance with its terms, and may be modified or amended only by
a written instrument executed by the parties hereto.
9.3 COUNTERPARTS. This Agreement may be executed simultaneously in two or
more counterparts, each of which shall be deemed an original and all of which
together shall constitute but one and the same instrument. The signatures to
this Agreement need not all be on a single copy of this Agreement, and may be
facsimiles rather than originals, and shall be fully as effective as though all
signatures were originals on the same copy.
9.4 BROKERS AND AGENTS. Each party represents and warrants that it
employed no broker or agent in connection with this transaction and agrees to
indemnify the other parties hereto against all loss, cost, damages or expense
arising out of claims for fees or commission of brokers employed or alleged to
have been employed by such indemnifying party.
9.5 NOTICES. All notices and communications required or permitted
hereunder shall be in writing and may be given by depositing the same in United
States mail, addressed to the party to 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:
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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:
Memphis Landscape Management, LLC
000 Xxxxx Xxxxx
Xxxxxxx, XX 00000
If to the Stockholders, addressed to them at the Company's address,
or to such other address as any party hereto shall specify pursuant to this
Section from time to time.
9.6 GOVERNING LAW. This Agreement shall be construed in accordance with
the laws of the State of Georgia without regard to its principles governing
conflicts of laws.
9.7 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. As set forth in Section
6.1 hereof, 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 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.
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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.
9.16 DISPUTE RESOLUTION. Any dispute or controversy arising under this
Agreement shall be determined and settled by binding arbitration in Atlanta,
Georgia by an independent disinterested person agreed upon by the parties to the
dispute or controversy. If the parties to the dispute cannot agree (within 30
days after any party notifies the others in writing of that party's intention to
invoke this arbitration provision) upon an independent disinterested arbitrator,
each shall, within 30 days after the end of such first 30-day period, appoint
one independent disinterested person as an arbitrator, and the two arbitrators
so selected shall, within 30 days, appoint a third independent disinterested
person as a third arbitrator. In the event that the two arbitrators are unable
to agree upon a third arbitrator within such time period, the parties shall
cause the American Arbitration Association to appoint a third arbitrator. The
three arbitrators so selected shall resolve the dispute by majority vote. The
expenses of arbitration shall be shared equally by the parties thereto, but each
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party shall bear the expenses of its legal counsel. The parties hereto hereby
agree to be bound by the results of any such arbitration.
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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
MEMPHIS LANDSCAPE MANAGEMENT, LLC
By:/s/ XXXXXXX XXXXX
Xxxxxxx Xxxxx
Title: President
STOCKHOLDERS:
By:/s/ XXXXX XXXXX
Xxxxx Xxxxx
By:/s/ XXXXXXX X. XXXXX
Xxxxxxx X. Xxxxx
