EXHIBIT 10.15
EXECUTION COPY
STOCK PURCHASE AGREEMENT
dated as of September 22, 1998
by and among
LANDCARE USA, INC.,
XXXXXXXXXX LANDSCAPING, 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 Noncompetition Consideration.....................................1
1.4 Delivery of Certificates.........................................2
1.5 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.....................................3
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................................................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.....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 Inventory; Working Capital; Other Financial Matters.............14
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2.27 Year 2000 Compliance............................................14
2.28 Reliance Upon Oral Representations..............................14
3. REPRESENTATIONS OF LANDCARE...........................................14
3.1 Due Organization................................................14
3.2 Authorization...................................................15
3.3 No Conflicts....................................................15
3.4 Validity of Obligations.........................................15
3.5 Prospectus; Absence of Certain Changes..........................15
3.6 Issuance of LandCARE Stock......................................15
3.7 Listing.........................................................16
3.8 Improper and Other Payments.....................................16
3.9 Litigation......................................................16
3.10 Disclosure......................................................16
3.11 Reliance Upon Oral Representation...............................16
4. DELIVERIES............................................................16
4.1 Instruments of Transfer.........................................17
4.2 Employment Agreement............................................17
4.3 Opinion of Counsel..............................................17
4.4 Good Standing Certificates......................................17
4.5 Consents........................................................17
4.6 Resignations of Directors and Officers..........................17
4.7 Cash and Convertible Notes......................................17
4.8 Indebtedness to Company.........................................17
4.9 Guaranties......................................................17
5. POST-CLOSING COVENANTS................................................18
5.1 Future Cooperation; Further Assurances..........................18
5.2 Expenses........................................................18
5.3 Certain Agreements..............................................18
5.4 Preparation and Filing of Tax Returns...........................18
5.5 Stock Options...................................................19
5.6 Guaranties......................................................19
6. INDEMNIFICATION.......................................................19
6.1 Survival of Stockholders' Representations and Warranties. .....19
6.2 General Indemnification by the Stockholders.....................20
6.3 Specific Indemnification by the Stockholders....................20
6.4 Indemnification by LandCARE.....................................20
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6.5 Third Person Claims.............................................21
6.6 Method of Payment...............................................21
6.7 Limitations on Indemnification..................................21
6.8 Insurance.......................................................22
7. NONCOMPETITION........................................................22
7.1 Prohibited Activities...........................................22
7.2 Event of Default................................................23
7.3 Equitable Relief................................................23
7.4 Reasonable Restraint............................................23
7.5 Severability; Reformation.......................................23
7.6 Independent Covenant............................................23
8. NONDISCLOSURE OF CONFIDENTIAL INFORMATION.............................24
8.1 General.........................................................24
8.2 Event of Default................................................24
8.3 Equitable Relief................................................24
8.4 Survival........................................................24
9 SECURITIES LAW MATTERS................................................25
9.1 Economic Risk; Sophistication...................................25
9.2 Compliance with Law.............................................25
9.3 Restrictions on Resale..........................................25
10. GENERAL...............................................................25
10.1 Successors and Assigns..........................................25
10.2 Entire Agreement................................................25
10.3 Counterparts....................................................25
10.4 Brokers and Agents..............................................26
10.5 Notices.........................................................26
10.6 Governing Law...................................................27
10.7 Survival of Representations and Warranties......................27
10.8 Effect of Investigation.........................................27
10.9 Exercise of Rights and Remedies.................................27
10.10 Reformation and Severability....................................28
10.11 Remedies Cumulative.............................................28
10.12 Captions........................................................28
10.13 Press Releases and Public Announcements.........................28
10.14 No Third-Party Beneficiaries....................................28
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SCHEDULES
SCHEDULE 1.2. Purchase Price
SCHEDULE 1.3. Noncompetition Consideration
SCHEDULE 2.1. Due Organization
SCHEDULE 2.3. Capital Stock of the Company
SCHEDULE 2.4. Subsidiaries
SCHEDULE 2.5. Financial Statements
SCHEDULE 2.6. Liabilities and Obligations
SCHEDULE 2.7. Accounts and Notes Receivable
SCHEDULE 2.8. Permits and Intangibles
SCHEDULE 2.9. Environmental Matters
SCHEDULE 2.10. Personal Property
SCHEDULE 2.11. Significant Customers; Material Contracts and Commitments
SCHEDULE 2.12. Real Property
SCHEDULE 2.13. Insurance
SCHEDULE 2.14. Compensation; Employment Agreements; Organized Labor Matters
SCHEDULE 2.15. Employee Benefit Plans
SCHEDULE 2.16. Conformity with Law; Litigation
SCHEDULE 2.18. No Violations; No Consents Required
SCHEDULE 2.19. Absence of Changes
SCHEDULE 2.20. Powers of Attorney
SCHEDULE 2.21. Competing Lines of Business; Related Party Transactions
SCHEDULE 2.27. Year 2000 Compliance
SCHEDULE 3.5. Prospectus; Absence of Certain Changes
SCHEDULE 4.2. Employment Agreement
SCHEDULE 4.8. Indebtedness to Company
SCHEDULE 4.9. Guaranties
SCHEDULE 5.2. Expenses
SCHEDULE 5.4. Preparation and Filing of Tax Returns
ANNEXES
Annex I - Form of Convertible Note
Annex II - Form of Employment Agreement
Annex III - Form of Opinion of Counsel to Company and Stockholder
Annex IV - Form of Opinion of Counsel to LandCARE
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STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT (this "Agreement") is made and entered into
as of September 22, 1998 by and among LandCARE USA, Inc., a Delaware corporation
("LandCARE"), Xxxxxxxxxx Landscaping, Inc., a Massachusetts corporation (the
"Company"), and the persons listed on the signature pages of this Agreement as
the stockholders of the Company (the "Stockholders"). The Stockholders are the
only holders of capital stock of the Company.
WHEREAS, the Stockholders desire 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
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 consists of (i) one or more convertible subordinated notes issued
by LandCARE (the "Convertible Notes") in the form of Annex I hereto in the
aggregate principal amount of $5,351,385 and (ii) $7,616,819 (such number being
equal to $8,507,063 less $890,244 of Accumulated Adjustment Account ("AAA")
distributions made by the Company to the Stockholders) in cash, 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 his pro rata interest in the Purchase Price as set forth on SCHEDULE
1.2 hereto.
1.3 NONCOMPETITION CONSIDERATION. In addition to the Purchase Price,
LandCARE shall pay an aggregate amount of $100,000 in cash paid for by wire
transfer as consideration for the noncompetition provisions set forth in Section
7 herein. Each of the Stockholders is receiving its pro rata interest in the
$100,000 as set forth on SCHEDULE 1.3 hereto.
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1.4 DELIVERY OF CERTIFICATES. Concurrently with the execution and delivery
of this Agreement and consummation of the transactions described herein (the
"Closing"), (i) the Stockholders are delivering to LandCARE the certificates
representing the Shares, duly endorsed in blank by the Stockholders 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 Stockholders certificates
representing the LandCARE Stock as described above (or is delivering to the
Stockholders a copy of an irrevocable authorization to such transfer agent
authorizing the issuance of such certificates to the Stockholders). The
Stockholders agree promptly to cure any deficiencies with respect to the
endorsement of the stock certificates or other documents of conveyance with
respect to such Shares or with respect to the stock powers accompanying any
Shares.
1.5 CLOSING. The transactions contemplated by this Agreement are being
consummated on the date hereof, and the date hereof is sometimes herein called
the "Closing Date."
2. REPRESENTATIONS AND WARRANTIES OF THE STOCKHOLDERS
The Stockholders hereby 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 Commonwealth of
Massachusetts (the "State of Incorporation"), and has all requisite power and
authority to carry on its business as it is now being conducted. The Company is
duly qualified to do business and is in good standing in each jurisdiction in
which the nature of its business or the ownership or leasing of its properties
makes such qualification necessary, except where the failure to be so authorized
or qualified would not have a material adverse effect on the business, assets,
operations or condition (financial or otherwise) of the Company (as used herein
with respect to the Company, or with respect to any other person, a "Material
Adverse Effect"). SCHEDULE 2.1 sets forth a list of all jurisdictions in which
the Company is authorized or qualified to do business. True, complete and
correct copies of the Articles of Organization and By-laws, each as amended, of
the Company (the "Charter Documents") are all attached to SCHEDULE 2.1. All
records of all proceedings of the Board of Directors and stockholders of the
Company have been made available to LandCARE, except as set forth on SCHEDULE
2.1.
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
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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 1,000 shares of common stock, no par value per share,
of which 100 shares are issued and outstanding and constitute all of the issued
and outstanding 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, 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. The stock records of the Company, a copy of which is attached to
SCHEDULE 2.3, are correct and complete in all material respects, except as set
forth on SCHEDULE 2.3.
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 July 31, 1998 and the related statements of operations for the
seven-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".)
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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, except that the Interim Balance Sheet is unaudited, contains no
footnotes and is subject to normal, immaterial year-end adustments. 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 material obligations of any kind,
whether accrued, absolute, secured or unsecured, contingent or otherwise in an
amount more than $5,000. 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
material 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
material liabilities which are not fixed. For each such known material 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. The Company's total debt as of the Closing Date does not
exceed $3,377,396. As of the Closing Date the Company's tangible net worth is at
least $1,966,000, excluding therefrom accrued bonuses to any employees of the
Company, as reflected on the Interim Balance Sheets.
2.7 ACCOUNTS AND NOTES RECEIVABLE. SCHEDULE 2.7 sets forth an accurate
list of the accounts and notes receivable of the Company, as of the most recent
date practicable (which date is set forth thereon), showing amounts due in
30-day aging categories. Except to the extent reflected on SCHEDULE 2.7, all
such accounts, notes and other receivables were incurred in the ordinary course
of business, are stated in accordance with GAAP and are collectible in the
amounts shown on SCHEDULE 2.7, net of reserves reflected in the balance sheet as
of the Balance Sheet Date.
2.8 PERMITS AND INTANGIBLES. The Company holds all 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
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or other technology systems, programs and intellectual property) (collectively,
the "Intangible Assets") (it being understood and agreed that a list of all
environmental permits and other environmental approvals is set forth on SCHEDULE
2.9). The Intangible Assets and other governmental authorizations listed on
SCHEDULES 2.8 and 2.9 are valid, and the Company has not received any notice
that any person intends to cancel, terminate or not renew any such Intangible
Assets or other governmental authorization. The Company has conducted and is
conducting its business in compliance in all material respects with the
requirements, standards, criteria and conditions set forth in the Intangible
Assets and other governmental authorizations listed on SCHEDULES 2.8 and 2.9 and
is not in violation of any of the foregoing. Except as specifically set forth on
SCHEDULE 2.8 or 2.9, the transactions contemplated by this Agreement will not
result in a 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. To the Stockholders' actual knowledge, the
Company has complied with and is in compliance with all federal, state, local
and foreign statutes (civil and criminal), laws, ordinances, regulations, rules,
notices, permits, judgments, orders and decrees applicable to any of them or any
of their respective properties, assets, operations and businesses relating to
environmental protection (collectively "Environmental Laws"), including, without
limitation, Environmental Laws relating to air, water, land and the generation,
storage, use, handling, transportation, treatment or disposal of Hazardous
Wastes, Hazardous Materials and Hazardous Substances (including petroleum and
petroleum products) (as such terms are defined in any applicable Environmental
Law) except to the extent that noncompliance with any Environmental Laws, either
singly or in the aggregate, has not had and will not have a Material Adverse
Effect on the Company or any of its operations. To the Stockholders' actual
knowledge, 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. To the Stockholders' actual knowledge,
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. To the Stockholders' actual knowledge, there is no on-site
or off-site location to which the Company has transported or disposed of
Hazardous Wastes, Hazardous Materials or Hazardous Substances or arranged for
the transportation of Hazardous Wastes, Hazardous Materials or Hazardous
Substances which is the subject of any federal, state, local or foreign
enforcement action or any other investigation which could lead to any claim
against the Company or LandCARE for any clean-up cost, remedial work, damage to
natural resources, property damage or personal injury, including, but not
limited to, any
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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 with a per item value of more than
$1,000, (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. 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 actual knowledge of the Company upon due inquiry, are
currently attempting or threatening to cancel a contract or substantially reduce
utilization of the services provided by the Company, and (ii) the Company has
complied in all material respects with all commitments and obligations
pertaining to it, and is not in 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 materially adversely
affect the rights and benefits afforded to the Company by, any such contracts or
agreements. SCHEDULE 2.11 also includes a summary description of all plans or
projects relating to the Company's business involving the opening of new
operations, expansion of
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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 2.12. All leases relating to Real Property
leased by the Company from the Stockholders or any affiliate of the Stockholders
have 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 except where such would not have a
Material Adverse Effect on the Company's use of such Real Property; no party
other than the Company occupies or possesses the Real Property or any portion
thereof; 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 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. True, complete and correct
copies of all insurance policies currently in effect have been delivered to
LandCARE. Such insurance policies evidence all of the insurance that the Company
is required to carry pursuant to all of its contracts and other agreements and
pursuant to all applicable laws. Except as set forth on SCHEDULE 2.13, none of
such policies is a "claims made" policy.
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2.14 COMPENSATION; EMPLOYMENT AGREEMENTS; ORGANIZED LABOR MATTERS.
SCHEDULE 2.14 sets forth an accurate list showing all officers, directors and
key employees of the Company, listing all employment agreements with such
officers, directors and key employees and the rate of compensation (and the
portions thereof attributable to salary, bonus and other compensation,
respectively) of each of such persons as of the Balance Sheet Date. Except as
set forth on SCHEDULE 2.14, since the Balance Sheet Date, there have been no
increases in the base compensation payable or any special bonuses to any
officer, director, key employee or other employee.
Except as set forth on SCHEDULE 2.14, (i) the Company is not bound by or
subject to (and none of its respective assets or properties is bound by or
subject to) any arrangement with any labor union, (ii) no employees of the
Company are represented by any labor union or covered by any collective
bargaining agreement, (iii) to the knowledge of the Stockholders upon due
inquiry, no campaign to establish such representation is in progress and (iv)
there is no pending or, to the knowledge of the Stockholders upon due inquiry,
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 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
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applicable federal, state and local statutes, ordinances and regulations. All
accrued contribution obligations of the Company as of the Balance Sheet Date
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 Stockholders, nor any
plan listed in SCHEDULE 2.15 nor the Company has engaged in any transaction
prohibited under the provisions of Section 4975 of the Code or Section 406 of
ERISA. No plan listed on SCHEDULE 2.15 has incurred an accumulated funding
deficiency, as defined in Section 412(a) of the Code and Section 302(1) of
ERISA; and the Company has not incurred any liability for excise tax or penalty
due to the Internal Revenue Service or any liability to the PBGC. There have
been no terminations, partial terminations or discontinuance of contributions to
any such Qualified Plan intended to qualify under Section 401(a) of the Code
without notice to and approval by the Internal Revenue Service; no plan listed
on SCHEDULE 2.15 subject to the provisions of Title IV of ERISA has been
terminated; there have been no "reportable events" (as that phrase is defined in
Section 4043 of ERISA) with respect to any such plan listed on SCHEDULE 2.15;
the Company has not incurred liability under Section 4062 of ERISA; and no
circumstances exist pursuant to which the Company could have any direct or
indirect liability 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 (as
any of its officers and directors in their capacities as such), at law or in
equity, or before or by any federal, state, municipal or other governmental
department, commission, board, bureau, agency or instrumentality having
jurisdiction over the Company. Except as set forth on SCHEDULE 2.16, no notice
of any unresolved claim, action, suit or proceeding, whether pending or
threatened, has been received by the Company during the last five years and, to
the best knowledge of the Stockholders, there is no reasonable 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
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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
as of the date hereof 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 books of the Company and the Company Subsidiaries for all
Taxes for which any of the Company and the Company subsidiaries is liable, but
the payment of which is not yet due. Neither the Company nor any Company
Subsidiary is, or ever has been, liable for any Tax payable by reason of the
income or property of a person or entity other than the Company or a Company
Subsidiary. Each of the Company and the Company Subsidiaries has timely filed
true, correct and complete declarations of estimated Tax in each jurisdiction in
which any such declaration is required to be filed by it. No Liens for Taxes
exist upon the assets of the Company or any Company Subsidiary except Liens for
Taxes which are not yet due. Neither the Company nor any Company Subsidiary is,
or ever has been, subject to Tax in any jurisdiction outside the United States.
No litigation with respect to any Tax for which the Company or any Company
Subsidiary is asserted to be liable is pending or, to the knowledge of the
Company or the Stockholders, 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
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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 Stockholders 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 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 Stockholders made a valid election under the provisions of Subchapter
S of the Code, and the Company has not, since the effective date of the
Subchapter S election, been subject to taxation under the provisions of
Subchapter C of the Code or under Section 11 or Section 1374 of the Code.
Neither the Stockholders nor the Company has taken any action that terminated
the Subchapter S election, and such election remains in effect on the date
hereof.
2.18 NO VIOLATIONS; ALL REQUIRED CONSENTS OBTAINED. The Company is not in
violation of any of its Charter Documents. Neither the Company nor, to the
actual 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 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
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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.
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 (except general economic or industry conditions) 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
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requiring consent of any party to the transfer and assignment of any such
assets, property or rights;
(x) any purchase or acquisition of, or agreement, plan or
arrangement to purchase or acquire, any property, rights or assets outside
of the ordinary course of the Company's business;
(xi) any waiver of any material rights or claims of the Company;
(xii) any amendment or termination of any contract, agreement,
license, permit or other right to which the Company is a party which would
have a Material Adverse Effect;
(xiii)any contract, commitment or liability entered into or incurred
or any capital expenditures made except in the normal course of business
consistent with past practice in an individual amount not in excess of
$20,000 and in an aggregate amount not in excess of $100,000; 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 representations, warranties, and statements of the
Stockholders in this Agreement and the Annexes and Schedules attached hereto do
not contain any untrue statement or omit to state a material fact necessary in
order to make the statements herein or therein, in light of the circumstances
under which they were made, not misleading.
2.23 CERTAIN BUSINESS PRACTICES. 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
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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. Based on the
Company's past business practices and without regard to general economic and
industry conditions, the Stockholders reasonably believe that 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.
2.27 YEAR 2000 COMPLIANCE. Except as set forth on SCHEDULE 2.27, the
properties and assets of the Company, including, but not limited to, computer
hardware, microprocessor driven equipment, software and data, owned or used by
the Company will accurately process date and time data after December 31, 1999,
and the Company will suffer no loss of functional ability when processing dates
and related data outside the 1900-1999 year range.
2.28 RELIANCE UPON ORAL REPRESENTATIONS. The Company and the Stockholders
each represent and warrant: (a) that each has been fully informed by his or its
legal counsel and by his or its own independent judgment of the terms,
conditions and effects of this Agreement; (b) that each has been represented by
independent legal counsel of his or its choice throughout all negotiations
preceding the execution of this Agreement and has received the advice of his or
its attorney in entering into this Agreement; (c) that each, both personally and
through his or its independently- retained attorneys, is fully satisfied with
the terms and effects of this Agreement; (d) that no promise or inducement has
been offered or made to him or it except as expressly stated in this Agreement;
and (e) that this Agreement is executed without reliance on any oral statement
or oral representation by any other party or any other party's agent or
attorney.
3. REPRESENTATIONS OF LANDCARE
LandCARE represents and warrants as follows:
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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 CONFLICTS. No consent, authorization, approval, order, license,
certificate, or permit of or forms, or declaration or filing with, any federal,
state, local, or other governmental authority or any court or other tribunal is
required by LandCARE for the execution, delivery, or performance of this
Agreement. No consent of any party to any material contract, agreement,
instrument lease, license arrangement, or understanding to which LandCARE is a
party, or to which any of its properties or assets are subject, is required for
the execution, delivery, and performance of this Agreement by LandCARE will not
violate, result in a breach of, conflict with, or (with or without the giving of
notice or the passage of time or both) entitle any party to terminate or call a
default under any material contract, agreement, instrument, lease, license,
arrangement, or understanding of LandCARE; or violate, result in a breach of, or
conflict with any law, rule, regulation, order, judgment, or decree binding on
LandCARE or to which any of its operations, business, properties or assets are
subject.
3.4 VALIDITY OF OBLIGATIONS. The execution and delivery of this Agreement
by LandCARE and the performance of the transactions contemplated hereby have
been duly and validly authorized by the Board of Directors of LandCARE, and this
Agreement has been duly and validly authorized by all necessary corporate action
and is a legal, valid and binding obligation of LandCARE.
3.5 PROSPECTUS; ABSENCE OF CERTAIN CHANGES. Attached as SCHEDULE 3.5
hereto is a copy of the Prospectus (the "Prospectus") LandCARE has delivered to
the Stockholders. The Prospectus delivered to the Stockholders, receipt of which
is hereby acknowledged, does not contain a misrepresentation of a material fact
or omit to state a material fact necessary to make statements made herein, in
light of the circumstances under which they were made, not misleading. There has
been no material adverse change in the business or affairs of LandCARE since the
date of the Prospectus.
3.6 ISSUANCE OF LANDCARE STOCK. The LandCARE Stock subject to be issued by
LandCARE to the Stockholders in accordance with the terms and subject to the
conditions set forth in this Agreement and the Convertible Notes, shall, upon
issuance and delivery, be duly authorized, validly
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issued, fully paid, nonassessable, and shall be free and clear of all liens,
encumbrances, charges, and restrictions of any kind except as described in the
Convertible Notes, this Agreement or as provided by law. The Stockholders
understand that the offer and sale of such shares will have not been registered
under the Securities Act of 1933, as amended (the "Securities Act"), and will
not be registered thereunder.
3.7 LISTING. The LandCARE Stock to be issued, subject to the terms and
conditions of the Convertible Notes, to the Stockholders has been approved for
listing on the New York Stock Exchange.
3.8 IMPROPER AND OTHER PAYMENTS. (a) Neither LandCARE, nor any director,
officer, employee thereof, nor to LandCARE's knowledge, any agent or
representative of LandCARE, nor any individual or entity acting on behalf of any
of them, has made, paid or received any unlawful bribes, kickbacks or other
similar payments to or from any person or authority; (b) no improper
contributions have been directly or indirectly made to a domestic or foreign
political party or candidate; (c) no improper foreign payment (as defined in the
Foreign Corrupt Practices Act) has been made; and (d) the internal accounting
controls of LandCARE are believed by LandCARE's management to be adequate to
detect any of the foregoing under current circumstances.
3.9 LITIGATION. No action, suit, claim, arbitration, proceedings or
investigation is pending or, to the knowledge of LandCARE, threatened which
questions or challenges the validity of this Agreement or any other agreement
identified herein or any action taken or to be taken in connection with the
transaction contemplated hereby or thereby.
3.10 DISCLOSURE. The representations, warranties and statements contained
in this Agreement and in the certificate, annexes and schedules delivered by
LandCARE to the Stockholders pursuant to this Agreement do not contain any
untrue statements of a material fact or omit any material facts the omission of
which would be misleading.
3.11 RELIANCE UPON ORAL REPRESENTATION. LandCARE represents and warrants:
(a) that it has been fully informed by its legal counsel and by its own
independent judgment of the terms, conditions and effects of this Agreement; (b)
that it has been represented by independent legal counsel of its choice
throughout all negotiations preceding the execution of this Agreement and has
received the advice of its attorney in entering into this Agreement; (c) that
it, through its independently-retained attorneys, has reviewed the terms and
effects of this Agreement; (d) that no promise or inducement has been offered or
made to it except as expressly stated in this Agreement and Employee Agreement;
and (e) that this Agreement is executed without reliance on any oral statement
or oral representation by any other party or any other party's agent or
attorney.
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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 in
SCHEDULE 4.2 are entering into Employment Agreements in the form of Annex II.
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 III. Counsel to LandCARE is delivering an opinion to the
Stockholders dated the date hereof in the form attached hereto as Annex IV.
4.4 GOOD STANDING CERTIFICATES. The Stockholders are delivering to
LandCARE certificates, dated as of a date no earlier than ten days prior to the
date hereof, duly issued by the appropriate governmental authority in the State
of Incorporation and in each state in which the Company is authorized to do
business, showing the Company to be in good standing and authorized to do
business therein. LandCARE is delivering to Stockholders certificates, dated as
a date no earlier than ten days prior to the date hereof, duly issued by the
appropriate governmental authority in the respective state of incorporation
4.5 CONSENTS. The Stockholders are delivering to LandCARE copies of any
third party consents required in connection with the consummation of the
transactions contemplated hereby.
4.6 RESIGNATIONS OF DIRECTORS AND OFFICERS. The Stockholders are
delivering to LandCARE the resignations of such directors and officers of the
Company as have been requested by LandCARE.
4.7 CASH AND CONVERTIBLE NOTES. LandCARE is delivering to the Stockholders
the cash and Convertible Notes set forth in Section 1.5 herein.
4.8 INDEBTEDNESS TO COMPANY. The Stockholders and their Affiliates are
repaying any outstanding indebtedness they may have to the Company, including
but not limited to those notes listed on SCHEDULE 4.8. The Stockholders are
delivering evidence of such repayment to LandCARE at the Closing.
4.9 GUARANTIES. As soon as practicable but in no event later than 30 days
after the Closing, the Stockholders shall cause the release, through payment or
otherwise, of the Company's guaranties of indebtedness of third parties and
Affiliates, including but not limited to those guaranties listed on SCHEDULE
4.9, and the Stockholders shall deliver evidence thereof to LandCARE.
-17-
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 transactions contemplated hereby 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. Except as specifically set forth on SCHEDULE 5.2, the
Stockholders will pay the fees, expenses and disbursements of the Stockholders
and its agents, representatives, financial advisors, accountants and counsel
incurred in connection with the execution, delivery and performance of this
Agreement. The Stockholders shall pay any sales, use, transfer, real property
transfer, recording, gains, stock transfer and other similar taxes and fees
("Transfer Taxes") imposed in connection with the transactions contemplated
hereby. The Stockholders shall file all necessary documentation and returns with
respect to such Transfer Taxes. In addition, the Stockholders acknowledge that
the Stockholders, and not the Company or LandCARE, will pay all taxes (income or
otherwise), if any, due upon receipt of the consideration payable pursuant to
this Agreement.
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 the Stockholders are parties.
5.4 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 5.4. Purchaser and the
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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.
5.5 STOCK OPTIONS. LandCARE hereby covenants and agrees to recommend to
the Compensation Committee of its Board of Directors the issuance of stock
options to purchase an aggregate of 66,893 shares of LandCARE Stock, which stock
options are to be granted to certain key management and supervisory employees of
the Company identified by the Stockholders. The options shall be issued pursuant
to the LandCARE 1998 Long-Term Incentive Plan.
5.6 GUARANTIES. As soon as practicable but in no event later than 30 days
after the Closing, LandCARE shall cause the release, through payment or
otherwise, of the Stockholders' guaranties of indebtedness of the Company,
including but not limited to those guaranties or other obligations, contingent
or otherwise, listed on SCHEDULE 5.6.
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 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 Stockholders made in Section 2.9
(Environmental Matters) shall survive the Closing for a period of three years
after the Closing Date; and the other representations and warranties of the
Stockholders 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 Stockholders.
(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. The one-year limitation referred to
in this subparagraph (b) is not intended to limit any of the statutory remedies
available to the Stockholder pursuant to applicable securities laws.
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(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
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 Stockholders set forth
herein, and (ii) any breach or nonfulfillment of any covenant or agreement by
the Company or the Stockholders under this Agreement.
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 three 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.
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
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herein; (ii) any breach or nonfulfillment of any covenant or agreement by
LandCARE under this Agreement; (ii) the operation of the Company from and after
the Closing Date, except to the extent any such Damages are attributable to the
actions of any of the Stockholders, in their capacities as such or otherwise;
and (iv) any debt or liability of the Company arising on or after the Closing
Date.
6.5 THIRD PERSON CLAIMS. Promptly after any party hereto (the "Indemnified
Party") has received notice of or has knowledge of any claim by a person not a
party to this Agreement ("Third Person") or the commencement of any action or
proceeding by a Third Person that may give rise to a right of indemnification
hereunder, such Indemnified Party shall give to the party obligated to provide
indemnification hereunder (an "Indemnifying Party") written notice of such claim
or the commencement of such action or proceeding; provided, however, that the
failure to give such notice will not relieve such Indemnifying Party from
liability under this Section with respect to such claim, action or proceeding,
except to the extent that the Indemnifying Party has been actually prejudiced as
a result of such failure. The Indemnifying Party (at its own expense) shall have
the right and shall 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.
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 Stockholders until such time as the
aggregate of all claims which such persons may have against such the
Stockholders shall exceed $150,000 (the "Indemnification Threshold") and then
only to the extent that such claims exceed the Indemnification Threshold. The
Stockholders shall not assert any claim for indemnification hereunder against
LandCARE until such time as the aggregate of all claims which the Stockholders
may have against LandCARE shall exceed the Indemnification Threshold and then
only to the extent that such claims exceed the Indemnification Threshold. The
aggregate liability of the Stockholders under this Article 6 shall not exceed
$2,500,000 (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.
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6.8 INSURANCE. To the extent that, prior to the Closing Date, the Company
has paid premiums for insurance coverage that may give the Company a claim for
matters as to which the Stockholders may be obligated to provide indemnification
under this Agreement, (i) LandCARE agrees to use reasonable good faith efforts
and diligence to pursue any such claim it may have under any such insurance
policy or policies corresponding with such premiums, and (b) the amount of each
such insurance recovery (net of the related direct cost of the Company of
advancing the claim), if any, shall be applied toward satisfaction of the
Stockholders' indemnity obligations hereunder.
7. NONCOMPETITION
7.1 PROHIBITED ACTIVITIES. 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 himself or on behalf of or in
conjunction with any other person, persons, company, partnership, corporation or
business of whatever nature:
(i) own, manage, operate, join, control, consult or advise (whether
or not compensated for such consultation or advice), or participate in, or
render assistance to, or derive any benefit whatever from, any business
offering services or products in direct competition with the Company
within 100 miles of where the Company conducted business at any time
within one year prior to the Closing Date (the "Territory");
(ii) engage, as an officer, director, shareholder, owner, partner,
joint venturer, or in a sales or managerial capacity, whether as an
employee, independent contractor, consultant or advisor, or as a sales
representative, in any business offering services or products in direct
competition with the Company or LandCARE within the Territory;
(iii) call upon any person who is, at that time, an employee of
LandCARE or any of its subsidiaries (including the Company ) for the
purpose or with the intent of enticing such employee away from or out of
the employ of LandCARE or any of its subsidiaries (including the Company
);
(iv) call upon any person or entity which is, at that time, or which
has been, within one year prior to the Closing Date, a customer of
LandCARE, 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 the Stockholders from acquiring as a passive investor with no
involvement in the operations or
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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 the
Stockholders 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 EVENT OF DEFAULT. On the occurrence of an Event of Default (as defined
in Annex I) where such Event of Default is not cured within ten days of such
occurrence, the terms of this Section 7 shall be null and void and without
effect.
7.3 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 the
Stockholders, by injunctions, restraining orders and other equitable actions.
7.4 REASONABLE RESTRAINT. It is agreed by the parties hereto that the
foregoing covenants in this Section impose a reasonable restraint on the
Stockholders.
7.5 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.
7.6 INDEPENDENT COVENANT. The Stockholders acknowledge 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 the Stockholders 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 the Stockholders are 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.
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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 the Stockholders as may be required in the
course of performing their 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 Stockholders, or (ii)
disclosure is required by law or the order of any governmental authority,
provided, that prior to disclosing any information pursuant to this clause (ii),
the Stockholders shall give prior written notice thereof to LandCARE and provide
LandCARE with the opportunity to contest such disclosure. In the event of a
breach or threatened breach by the Stockholders of the provisions of this
Section, LandCARE shall be entitled to injunctive or other equitable relief
restraining the Stockholders 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 EVENT OF DEFAULT. On the occurrence of an Event of Default (as defined
in Annex I) where such Event of Default is not cured within ten days of such
occurrence, the terms of this Section 8 shall be null and void and without
effect with respect to confidential information of the Company, but the
Stockholders agree that they will not disclose any confidential information of
LandCARE.
8.3 EQUITABLE RELIEF. Because of the difficulty of measuring economic
losses as a result of the breach of the foregoing covenants, and because of the
immediate and irreparable damage that would be caused for which LandCARE would
have no other adequate remedy, the Stockholders agree that the foregoing
covenants may be enforced against him by injunctions, restraining orders and
other appropriate equitable relief.
8.4 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.
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9 SECURITIES LAW MATTERS
9.1 ECONOMIC RISK; SOPHISTICATION. The Stockholders acknowledge and
confirm that they have received and reviewed a Prospectus from LandCARE relating
to their potential acquisition of shares of LandCARE Stock under the Convertible
Notes, but the Stockholders understand that the shares issuable on conversion of
the Convertible Notes have not been and will not be registered under the
Securities Act. The Stockholders (A) have such knowledge, sophistication and
experience in business and financial matters that they are capable of evaluating
the merits and risks of an investment in the Convertible Notes, (B) fully
understand the nature, scope and duration of any limitations on transfer of
LandCARE Stock described in this Agreement and (C) can bear the economic risk of
an investment in the shares of LandCARE Stock.
9.2 COMPLIANCE WITH LAW. The Stockholders covenant that none of the
LandCARE Stock acquired by the Stockholders under the Convertible Notes will be
offered, sold, assigned, hypothecated, transferred or otherwise disposed of by
the Stockholders except in full compliance with all applicable securities laws.
9.3 RESTRICTIONS ON RESALE. The Stockholders agree that they will not
sell, offer to sell, or otherwise transfer or dispose of, any shares of the
LandCARE Stock received by the Stockholders under the Convertible Notes, except
in accordance with the terms and conditions set forth in the Convertible Notes.
10. GENERAL
10.1 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.
10.2 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.
10.3 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
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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.
10.4 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.
10.5 NOTICES. All notices and communications required or permitted
hereunder shall be in writing and may be given by depositing the same in United
States mail, addressed to the party to be notified, postage prepaid and
registered or certified with return receipt requested, or by delivering the same
in person to an officer or agent of such party, or by facsimile, as follows:
If to LandCARE, addressed to it at:
LandCARE USA, Inc.
0000 Xxx Xxxxxx, Xxxxx 000
Xxxxxxx, Xxxxx 00000
Attn: General Counsel
Facsimile No. (000) 000-0000
If to the Company, addressed to it at:
Xxxxxxxxxx Landscaping, Inc.
00 Xxxxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
With a copy to:
Peabody & Xxxxxx LLP
00 Xxxxx Xxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attn: Xxxxxxx X. Xxxxx, Esq.
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If to the Stockholders, addressed to them at the Company's address,
with a copy to:
Peabody & Xxxxxx LLP
00 Xxxxx Xxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attn: Xxxxxxx X. Xxxxx, Esq.
and copies to:
Xxxx X. Xxxxxxxxxx
c/x Xxxxxxxxxx Landscaping, Inc.
00 Xxxxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Xxxxx X. XxXxxxxxxx
c/x Xxxxxxxxxx Landscaping, Inc.
00 Xxxxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
or to such other address as any party hereto shall specify pursuant to this
Section from time to time.
10.6 GOVERNING LAW. This Agreement shall be construed in accordance with
the laws of the Commonwealth of Massachusetts without regard to its principles
governing conflicts of laws.
10.7 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.
10.8 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.
10.9 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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10.10 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.
10.11 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.
10.12 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.
10.13 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.
10.14 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 XXXXXXX
Xxxxxxx X. Xxxxxxx
Senior Vice President and General Counsel
XXXXXXXXXX LANDSCAPING, INC.
By: /s/ XXXXX X. XXXXXXXXXX
Xxxxx X. XxXxxxxxxx
President
By:/s/ XXXX X. XXXXXXXXXX
Xxxx X. Xxxxxxxxxx
Treasurer
STOCKHOLDERS:
/s/ XXXX X. XXXXXXXXXX
Xxxx X. Xxxxxxxxxx
/s/ XXXXX X. XXXXXXXXXX
Xxxxx X. XxXxxxxxxx
