EXHIBIT 10.13
STOCK PURCHASE AGREEMENT
dated as of September 4, 1998
by and among
LANDCARE USA, INC.,
PACIFIC ENVIRONMENTAL LANDSCAPE MAINTENANCE, INC.
and
the Stockholders named herein
TABLE OF CONTENTS
Page
1. PURCHASE AND SALE
1.1 PURCHASE AND SALE.
1.2 PURCHASE PRICE...................................................2
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2.1 DUE ORGANIZATION.................................................2
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2.2 AUTHORIZATION....................................................2
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2.3 CAPITAL STOCK OF THE COMPANY.....................................3
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2.4 SUBSIDIARIES.....................................................3
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2.5 FINANCIAL STATEMENTS.............................................3
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2.6 LIABILITIES AND OBLIGATIONS......................................4
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2.7 ACCOUNTS AND NOTES RECEIVABLE....................................4
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2.8 PERMITS AND INTANGIBLES..........................................4
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2.9 ENVIRONMENTAL MATTERS............................................5
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2.10 PERSONAL PROPERTY................................................6
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2.11 SIGNIFICANT CUSTOMERS; MATERIAL CONTRACTS AND COMMITMENTS........6
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2.12 REAL PROPERTY....................................................6
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2.13 INSURANCE........................................................7
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2.14 COMPENSATION; EMPLOYMENT AGREEMENTS; ORGANIZED LABOR MATTERS.....7
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2.15 EMPLOYEE BENEFIT PLANS...........................................8
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2.16 CONFORMITY WITH LAW; LITIGATION..................................9
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2.17 TAXES...........................................................10
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2.18 NO VIOLATIONS; ALL REQUIRED CONSENTS OBTAINED...................11
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2.19 ABSENCE OF CHANGES..............................................11
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2.20 POWERS OF ATTORNEY..............................................13
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2.21 COMPETING LINES OF BUSINESS; RELATED-PARTY TRANSACTIONS.........13
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2.22 DISCLOSURE......................................................13
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2.23 CERTAIN BUSINESS PRACTICES......................................13
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2.24 NOTICE TO BARGAINING AGENTS.....................................14
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2.25 NOTICES AND CONSENTS............................................14
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2.26 INVENTORY; WORKING CAPITAL; OTHER FINANCIAL MATTERS.............14
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2.27 YEAR 2000 COMPLIANCE............................................14
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2.28 RELIANCE UPON ORAL REPRESENTATIONS..............................14
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3. REPRESENTATIONS OF LANDCARE...........................................14
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3.1 DUE ORGANIZATION................................................14
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3.2 AUTHORIZATION...................................................15
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3.3 NO VIOLATIONS...................................................15
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3.4 VALIDITY OF OBLIGATIONS.........................................15
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4. DELIVERIES............................................................15
4.1 INSTRUMENTS OF TRANSFER.........................................15
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4.2 EMPLOYMENT AGREEMENT............................................15
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4.3 OPINION OF COUNSEL..............................................15
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4.4 GOOD STANDING CERTIFICATES......................................15
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4.5 INDEBTEDNESS TO COMPANY.........................................15
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4.6 CONSENTS........................................................15
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4.7 RESIGNATIONS OF DIRECTORS AND OFFICERS..........................16
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5. POST-CLOSING COVENANTS................................................16
5.1 FUTURE COOPERATION; FURTHER ASSURANCES..........................16
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5.2 EXPENSES........................................................16
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5.3 CERTAIN AGREEMENTS..............................................16
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5.4 PREPARATION AND FILING OF TAX RETURNS...........................16
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5.5 LEASE...........................................................17
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6. INDEMNIFICATION.......................................................17
6.1 SURVIVAL OF STOCKHOLDERS' REPRESENTATIONS AND WARRANTIES. .....17
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6.2 GENERAL INDEMNIFICATION BY THE STOCKHOLDERS.....................18
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6.3 SPECIFIC INDEMNIFICATION BY THE STOCKHOLDERS....................18
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6.4 INDEMNIFICATION BY LANDCARE.....................................18
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6.5 THIRD PERSON CLAIMS.............................................18
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6.6 METHOD OF PAYMENT...............................................19
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7. NONCOMPETITION........................................................19
7.1 PROHIBITED ACTIVITIES...........................................19
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7.2 EQUITABLE RELIEF................................................20
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7.3 REASONABLE RESTRAINT............................................20
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7.4 SEVERABILITY; REFORMATION.......................................20
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7.5 INDEPENDENT COVENANT............................................21
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8. NONDISCLOSURE OF CONFIDENTIAL INFORMATION.............................21
8.1 GENERAL.........................................................21
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8.2 EQUITABLE RELIEF................................................22
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8.3 SURVIVAL........................................................22
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9. GENERAL...............................................................22
9.1 SUCCESSORS AND ASSIGNS..........................................22
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9.2 ENTIRE AGREEMENT................................................22
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9.3 COUNTERPARTS....................................................22
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9.4 BROKERS AND AGENTS..............................................22
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9.5 NOTICES.........................................................22
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9.6 GOVERNING LAW...................................................23
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9.7 SURVIVAL OF REPRESENTATIONS AND WARRANTIES......................23
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9.8 EFFECT OF INVESTIGATION.........................................23
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9.9 EXERCISE OF RIGHTS AND REMEDIES.................................24
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9.10 TIME............................................................24
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9.11 REFORMATION AND SEVERABILITY....................................24
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9.12 REMEDIES CUMULATIVE.............................................24
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9.13 CAPTIONS........................................................24
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9.14 PRESS RELEASES AND PUBLIC ANNOUNCEMENTS.........................24
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9.15 NO THIRD-PARTY BENEFICIARIES....................................24
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SCHEDULES
SCHEDULE 2.1. Due Organization
SCHEDULE 2.4. Subsidiaries
SCHEDULE 2.5. Financial Statements
SCHEDULE 2.6. Liabilities and Obligations
SCHEDULE 2.7. Accounts and Notes Receivable
SCHEDULE 2.8. Permits and Intangibles
SCHEDULE 2.9. Environmental Matters
SCHEDULE 2.10. Personal Property
SCHEDULE 2.11. Significant Customers; Material Contracts and Commitments
SCHEDULE 2.12. Real Property
SCHEDULE 2.13. Insurance
SCHEDULE 2.14. Compensation; Employment Agreements; Organized Labor Matters
SCHEDULE 2.15. Employee Benefit Plans
SCHEDULE 2.16. Conformity with Law; Litigation
SCHEDULE 2.18. No Violations; No Consents Required
SCHEDULE 2.19. Absence of Changes
SCHEDULE 2.20. Powers of Attorney
SCHEDULE 2.21. Competing Lines of Business; Related Party Transactions
SCHEDULE 4.3. Persons Entering into Employment Agreements
SCHEDULE 5.5. Leases
ANNEXES
Annex I - Form of Convertible Subordinated Note
Annex II - Form of Employment Agreement
Annex III - Form of Opinion of Counsel to Company and
Stockholders
Annex IV - Form of Lease
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STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT (this "Agreement") is made and entered into
as of September 4, 1998 by and among LandCARE USA, Inc., a Delaware corporation
("LandCARE"), Pacific Environmental Landscape Maintenance, Inc., a California
corporation (the "Company"), and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ and ▇▇▇▇ ▇▇▇▇▇▇▇ (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, 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:
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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 consists of (i) one or more convertible subordinated promissory
notes issed by LandCare in the form of Annex I hereto in the aggregate principal
amount of One Million Dollars ($1,000,000) and (ii) Three Million Five Hundred
Thirty-Three Thousand Two Hundred Dollars ($3,533,200) 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 its pro rata interest in the Purchase Price as set forth on SCHEDULE
1.2 hereto.
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 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 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 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
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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 100,000 shares of common stock, no par value per
share, of which 7,104 shares are issued and outstanding and constitute all of
the issued and outstanding shares of Company Stock (the "Shares"). All of the
Shares are owned of record and beneficially by the 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.
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 June 30, 1998 (the
"Balance Sheet Date") and any related statements of operations,
stockholders' 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
one-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. 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. The
Company regularly writes off uncollectible bad debts, and the debts not so
written off are believed to be fully collectible.
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. The Company's total debt as of the
Closing Date does not exceed $750,000. As of the Closing Date the Company's
tangible net worth is at least $880,000.
2.7 ACCOUNTS AND NOTES RECEIVABLE. SCHEDULE 2.7 sets forth an accurate
list of the accounts and notes receivable of the Company, as of the most recent
date practicable (which date is set forth thereon), showing amounts due in
30-day aging categories. Except to the extent reflected on SCHEDULE 2.7, all
such accounts, notes and other receivables were incurred in the ordinary course
of business, are stated in accordance with GAAP and are collectible in the
amounts shown on SCHEDULE 2.7, net of reserves reflected in the balance sheet as
of the Balance Sheet Date.
2.8 PERMITS AND INTANGIBLES. The Company holds all licenses, franchises,
permits and other governmental authorizations required or necessary in
connection with the conduct of the Company's business. SCHEDULE 2.8 sets forth
an accurate list and summary description of all such licenses, franchises,
permits and other governmental authorizations, including permits, titles
(including licenses, franchises, certificates, trademarks, trade names, patents,
patent applications and copyrights owned or held by the Company or any of its
employees (including interests in software or other technology systems, programs
and intellectual property) (collectively, the "Intangible Assets") (it being
understood and agreed that a list of all environmental permits and other
environmental approvals is set forth on SCHEDULE 2.9). The Intangible Assets and
other
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governmental authorizations listed on SCHEDULES 2.8 and 2.9 are valid, and the
Company has not received any notice that any person intends to cancel, terminate
or not renew any such Intangible Assets or other governmental authorization. The
Company has conducted and is conducting its business in compliance with the
requirements, standards, criteria and conditions set forth in the Intangible
Assets and other governmental authorizations listed on SCHEDULES 2.8 and 2.9 and
is not in violation of any of the foregoing. Except as specifically set forth on
SCHEDULE 2.8 or 2.9, the transactions contemplated by this Agreement will not
result in a default under or a breach or violation of, or adversely affect the
rights and benefits afforded to the Company by, any such Intangible Assets or
other governmental authorizations.
2.9 ENVIRONMENTAL MATTERS. The Company has complied with and is in
compliance with all federal, state, local and foreign statutes (civil and
criminal), laws, ordinances, regulations, rules, notices, permits, judgments,
orders and decrees applicable to any of them or any of their respective
properties, assets, operations and businesses relating to environmental
protection (collectively "Environmental Laws"), including, without limitation,
Environmental Laws relating to air, water, land and the generation, storage,
use, handling, transportation, treatment or disposal of Hazardous Wastes,
Hazardous Materials and Hazardous Substances (including petroleum and petroleum
products) (as such terms are defined in any applicable Environmental Law) except
to the extent that noncompliance with any Environmental Laws, either singly or
in the aggregate, has not had and will not have a Material Adverse Effect on the
Company or any of its operations. The Company has obtained and adhered to all
necessary permits and other approvals required pursuant to any applicable
Environmental Laws including, without limitation, such permits or approvals as
are necessary to treat, transport, store, dispose of and otherwise handle
Hazardous Wastes, Hazardous Materials and Hazardous Substances, a list of all of
which permits and approvals is set forth on SCHEDULE 2.9. The Company has
reported to the appropriate authorities, to the extent required by all
Environmental Laws, all past and present sites owned and operated by the Company
where Hazardous Wastes, Hazardous Materials or Hazardous Substances have been
treated, stored, disposed of or otherwise handled. There have been no releases
or threats of releases (as defined in Environmental Laws) at, from, in, under or
on any property owned or operated by the Company except as permitted by
Environmental Laws. 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
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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. Except as set forth on SCHEDULE 2.10, (i) all
material personal property used by the Company in its business is either owned
by the Company or leased by the Company pursuant to a lease included on SCHEDULE
2.10, (ii) all of the personal property listed on SCHEDULE 2.10 is in good
working order and condition, ordinary wear and tear excepted and (iii) all
leases and agreements included on SCHEDULE 2.10 are in full force and effect and
constitute valid and binding agreements of the parties (and their successors)
thereto in accordance with their respective terms. Except as set forth on
SCHEDULE 2.10, the Company has good and marketable title to the tangible and
intangible personal property it purports to own, subject to no security
interest, pledge, lien, claim, conditional sales agreement, encumbrance, charge
or restriction on transfer.
2.11 SIGNIFICANT CUSTOMERS; MATERIAL CONTRACTS AND COMMITMENTS. SCHEDULE
2.11 sets forth a list of (i) all customers representing 1% or more of the
Company's revenues in its last full fiscal year ("Significant Customers"), and
(ii) all material contracts, commitments and similar agreements to which the
Company is a party or by which it or any of its properties are bound (including,
but not limited to, contracts with Significant Customers, joint venture or
partnership agreements, contracts with any labor organizations, strategic
alliances and options to purchase land). True, complete and correct copies of
such agreements have been delivered to LandCARE. Except as described on SCHEDULE
2.11, (i) none of the Significant Customers have canceled or substantially
reduced or, to the knowledge of the Company, are currently attempting or
threatening to cancel a contract or substantially reduce utilization of the
services provided by the Company, 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
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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 has been terminated. Except as set forth on
SCHEDULE 2.12, all of such leases included on SCHEDULE 2.12 are in full force
and effect and constitute valid and binding agreements of the parties (and their
successors) thereto in accordance with their respective terms. There are no
leases, tenancy agreements, easements, covenants, restrictions or any other
instruments, agreements or arrangements which create in or confer on any party,
other than the Company, the right to occupy or possess all or any portion of the
Real Property or create in or confer on any such party any right, title or
interest in or to the Real Property or any portion thereof or any interest
therein; no party other than the Company occupies or possesses the Real Property
or any portion thereof; there is legal and adequate ingress and egress between
each tract of Real Property and an adjacent (or, if none, the closest) public
roadway; the Real Property is properly zoned in order to allow its current use
in the Company's businesses; and there are no claims or demands pending or
threatened by any party against the Real Property which, if valid, would create
in, or confer on, any party other than the Company, any right, title or interest
in or to the Real Property or any portion thereof. None of the buildings,
structures or improvements described on SCHEDULE 2.12, or the operation or
maintenance thereof as now operated or maintained, contravenes any zoning
ordinance or other administrative regulation or violates any restrictive
covenant or any provision of law, the effect of which would materially interfere
with or prevent their continued use for the purposes for which they are now
being used or would adversely affect the value thereof or the interest of the
Company therein. The 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,
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respectively) of each of such persons as of the Balance Sheet Date. Except as
set forth on SCHEDULE 2.14, since the Balance Sheet Date, there have been no
increases in the base compensation payable or any special bonuses to any
officer, director, key employee or other employee.
Except as set forth on SCHEDULE 2.14, (i) the Company is not bound by or
subject to (and none of its respective assets or properties is bound by or
subject to) any arrangement with any labor union, (ii) no employees of the
Company are represented by any labor union or covered by any collective
bargaining agreement, (iii) to the knowledge of the Company, no campaign to
establish such representation is in progress and (iv) there is no pending or, to
the best of the Company's knowledge, threatened, labor dispute involving the
Company and any group of its employees. The Company has not experienced any
labor interruptions over the past five years.
2.15 EMPLOYEE BENEFIT PLANS. SCHEDULE 2.15 sets forth an accurate schedule
showing all employee benefit plans of Company, including all agreements or
arrangements (other than agreements or arrangements set forth on SCHEDULE 2.14)
containing "golden parachute" or other similar provisions, and deferred
compensation agreements, together with true, complete and correct copies of such
plans, agreements and any trusts related thereto, and classifications of
employees covered thereby as of the Balance Sheet Date. Except for the employee
benefit plans, if any, described on SCHEDULE 2.15, the Company does not sponsor,
maintain or contribute to any plan, program, fund or arrangement that
constitutes an "employee pension benefit plan," nor does the Company have any
obligation to contribute to or accrue or pay any benefits under any deferred
compensation or retirement funding arrangement on behalf of any employee or
employees (such as, for example, and without limitation, any individual
retirement account or annuity, any "excess benefit plan" (within the meaning of
Section 3(36) of the Employee Retirement Income Security Act of 1974, as amended
("ERISA")), or any non-qualified deferred compensation arrangement). For the
purposes of this Agreement, the term "employee pension benefit plan" shall have
the same meaning as is given that term in Section 3(2) of ERISA. The Company has
not sponsored, maintained or contributed to any employee pension benefit plan
and is not required to contribute to any retirement plan pursuant to the
provisions of any collective bargaining agreement establishing the terms and
conditions of employment of any of the Company's employees other than the plans
set forth on SCHEDULE 2.15.
The Company is not now, and will not as a result of its past activities
become, liable to the Pension Benefit Guaranty Corporation (the "PBGC") or to
any multi employer employee pension benefit plan under the provisions of Title
IV of ERISA. All employee benefit plans listed on SCHEDULE 2.15 and the
administration thereof are in substantial compliance with their terms and all
applicable provisions of ERISA and the regulations issued thereunder, as well as
with all other applicable federal, state and local statutes, ordinances and
regulations. All accrued contribution obligations of the Company with respect to
any plan listed on SCHEDULE 2.15 have either been fulfilled in their entirety or
are fully reflected on the balance sheet of the Company as of the Balance
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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 have 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 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 the Company. Except as set forth on SCHEDULE 2.16, the
Company has conducted and now conducts its business in material compliance with
all laws, regulations, writs, injunctions, decrees and orders applicable to the
Company or its assets. The Company is not in violation of any material law or
regulation or any order of any court or federal, state, municipal or other
governmental department, commission, board, bureau, agency or instrumentality
having jurisdiction over any of them. The Company has conducted and is
conducting its business in substantial compliance with the requirements,
standards, criteria and conditions set forth in applicable federal, state and
local
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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 the Stockholders, threatened,
and no basis which the Company or any Stockholders believe to be valid exists on
which any claim for any such Tax can be asserted against the Company or any
Company Subsidiary. There are no requests for rulings or determinations in
respect of any Taxes pending between the Company or any Company Subsidiary and
any Taxing Authority. No extension of any period during which any Tax may be
assessed or collected and for which the Company or any Company Subsidiary is or
may be liable has been granted to any Taxing Authority. Neither the Company nor
any Company Subsidiary is or has been party to any tax allocation or sharing
agreement. All amounts required to be withheld by any of the Company and the
Company Subsidiaries and paid to governmental agencies for income, social
security, unemployment insurance, sales, excise, use and other Taxes have been
collected or withheld and
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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
are 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.
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
Surviving Corporation will be entitled to the rights and benefits under the
Material Documents to which the Company is entitled immediately prior to the
Closing. Except as set forth on SCHEDULE 2.18 (and except for consents already
obtained), none of the Material Documents requires notice to, or the consent or
approval of, any governmental agency or other third party with respect to any of
the transactions contemplated hereby in order to remain in full force and
effect, and consummation of the transactions contemplated hereby will not give
rise to any right to termination, cancellation or acceleration or loss of any
right or benefit. Except as set forth on SCHEDULE 2.18, none of the Material
Documents prohibits the use or publication of the name of any other party to
such Material Document, and none of the Material Documents prohibits or
restricts the Surviving Corporation or will prevent or restrict the Company or
LandCARE from freely providing services to any person.
2.19 ABSENCE OF CHANGES. Since the Balance Sheet Date, the Company has
conducted its operations in the ordinary course of business and, except as set
forth on SCHEDULE 2.19, there has not been:
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(i) any change in the business, assets, liabilities or financial
condition of the Company which would have a Material Adverse Effect;
(ii) any damage, destruction or loss (whether or not covered by
insurance) affecting any of the material assets of the Company or the
business of the Company which would have a Material Adverse Effect;
(iii) any change in the authorized capital of the Company or its
outstanding securities or any change in its ownership interests or any
grant of any options, warrants, calls, conversion rights or commitments;
(iv) any declaration or payment of any dividend or distribution with
respect to the capital stock or any direct or indirect redemption,
purchase or other acquisition of any of the capital stock of the Company;
(v) any increase or commitment to increase the compensation, bonus,
sales commissions or fee arrangement payable or to become payable by the
Company to any of its officers, directors, stockholders, employees,
consultants or agents;
(vi) any work interruptions, labor grievances or claims filed, or
any event or condition of any character, materially adversely affecting
the business of the Company;
(vii) any sale or transfer, or any agreement to sell or transfer,
any material assets, property or rights of the Company to any person;
(viii)any cancellation, or agreement to cancel, any indebtedness or
other obligation owing to the Company;
(ix) any plan, agreement or arrangement granting any preferential
rights to purchase or acquire any interest in any of the assets, property
or rights of the Company or requiring consent of any party to the transfer
and assignment of any such assets, property or rights;
(x) any purchase or acquisition of, or agreement, plan or
arrangement to purchase or acquire, any property, rights or assets outside
of the ordinary course of the Company's business;
(xi) any waiver of any material rights or claims of the Company;
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(xii) any amendment or termination of any contract, agreement,
license, permit or other right to which the Company is a party which would
have a Material Adverse Effect;
(xiii)any contract, commitment or liability entered into or incurred
or any capital expenditures made except in the normal course of business
consistent with past practice in an individual amount not in excess of
$10,000 and in an aggregate amount not in excess of $50,000; or
(xiv) any transaction by the Company outside the ordinary course of
its business.
2.20 POWERS OF ATTORNEY. SCHEDULE 2.20 sets forth a schedule as of the
date of this Agreement of the name of each person, corporation, firm or other
entity holding any general or special power of attorney from the Company and a
description of the terms of each such power.
2.21 COMPETING LINES OF BUSINESS; RELATED-PARTY TRANSACTIONS. Except as
set forth on SCHEDULE 2.21, neither the Stockholder nor any other affiliate of
the Company owns, directly or indirectly, any interest in, or is an officer,
director, employee or consultant of or otherwise receives remuneration from, any
business which is a competitor, lessor, lessee, customer or supplier of the
Company. Except as set forth on SCHEDULE 2.21, no officer, director or
stockholder of the Company has, nor during the period beginning January 1, 1995
through the date hereof had, any interest in any property, real or personal,
tangible or intangible, used in or pertaining to the Company's business.
2.22 DISCLOSURE. The 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 INVENTORY; WORKING CAPITAL; OTHER FINANCIAL MATTERS. The Company's
inventory and working capital levels are adequate to successfully operate the
business, and there has been no unusual build-up of cash needs at the date
hereof.
2.27 YEAR 2000 COMPLIANCE. The properties and assets of the Company,
including, but not limited to, computer hardware, microprocessor driven
equipment, software and data, owned or used by the Company will accurately
process date and time data after December 31, 1999, and the Company will suffer
no loss of functional ability when processing dates and related data outside the
1900-1999 year range.
2.28 RELIANCE UPON ORAL REPRESENTATIONS. The Company and the 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:
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.
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3.2 AUTHORIZATION. (i) The representative of LandCARE executing this
Agreement has the authority to enter into and bind LandCARE to the terms of this
Agreement and (ii) LandCARE has the full legal right, power and authority to
enter into this Agreement and to consummate the transactions contemplated
hereby.
3.3 NO VIOLATIONS. The execution of this Agreement and the performance of
the obligations hereunder and the consummation of the transactions contemplated
hereby will not result in any violation or breach or constitute a default under
any of the terms or provisions of the Restated Certificate of Incorporation, as
amended, or Bylaws, as amended, of LandCARE.
3.4 VALIDITY OF OBLIGATIONS. The execution and delivery of this Agreement
by LandCARE and the performance of the transactions contemplated hereby have
been duly and validly authorized by the Board of Directors of LandCARE and this
Agreement has been duly and validly authorized by all necessary corporate action
and is a legal, valid and binding obligation of LandCARE.
4. DELIVERIES
4.1 INSTRUMENTS OF TRANSFER. The Stockholders are delivering to LandCARE
certificates representing all of the Shares, duly endorsed (or accompanied by
duly executed stock powers).
4.2 EMPLOYMENT AGREEMENT. Newco 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.
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.
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.
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4.7 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.
5. POST-CLOSING COVENANTS
The parties to this Agreement further covenant and agree as follows:
5.1 FUTURE COOPERATION; FURTHER ASSURANCES. The Stockholders, the
Surviving Corporation and LandCARE shall each deliver or cause to be delivered
to the other following the date hereof such additional instruments as the other
may reasonably request for the purpose of effecting 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 Surviving Corporation after the Closing Date for purposes of tax
compliance and any other reasonable purpose.
5.2 EXPENSES. LandCARE will pay the fees, expenses and disbursements of
LandCARE and its agents, representatives, financial advisors, accountants and
counsel incurred in connection with the execution, delivery and performance of
this Agreement. The Stockholders will pay 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. 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 Surviving
Corporation or LandCARE, will pay all taxes (income or otherwise), if any, due
upon receipt of the consideration payable pursuant to this Agreement.
5.3 CERTAIN AGREEMENTS. Upon the request of LandCARE at any time after the
Closing, the Stockholders and the Surviving Corporation shall terminate any
existing agreements to which the Company and any Stockholder 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. The
Stockholders shall pay all Tax liabilities for all periods ending on or prior to
the Closing Date.
(b) LandCARE shall file or cause to be filed all Tax Returns for all
taxable periods ending after the Closing Date.
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(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 LEASE. The Company shall enter into leases of the properties
identified on Schedule 5.5 in the form attached hereto as Annex IV. The
Stockholders shall deliver to LandCARE evidence of the termination of all leases
relating to Real Property leases by the Company from any of the Stockholders or
any affiliate of any of the Stockholders.
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
this Agreement herewith shall survive the Closing until the expiration of the
periods prescribed by the applicable statutes of limitations (including any
extensions thereof) relating thereto; provided, however, that representations
and warranties and indemnification provisions with respect to which a claim is
made within the survival period shall survive until such claim is finally
determined and paid.
(b) The representations and warranties of LandCARE made in this
Agreement shall survive the Closing for a period of one year following the
Closing Date; provided, however, that representations and warranties with
respect to which a claim is made within such one-year period shall survive until
such claim is finally determined and paid.
(c) The date on which a representation or warranty expires as
provided herein is herein called the "Expiration Date." No claim for
indemnification may be made with respect to a representation or warranty after
the Expiration Date, other than claims based on fraud.
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6.2 GENERAL INDEMNIFICATION BY THE STOCKHOLDERS. The Stockholders jointly
and severally 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.
6.3 SPECIFIC INDEMNIFICATION BY THE STOCKHOLDERS. In addition to the
indemnification provided for in Section 6.2, the Stockholders jointly and
severally covenant and agree that 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 Stockholder as a result of (i) any breach of
any representation or warranty of LandCARE set forth herein; and (ii) any breach
or nonfulfillment of any covenant or agreement by LandCARE under this Agreement.
6.5 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
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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. If LandCARE reasonably believes that it or any other Indemnified Party has
suffered, or will suffer, Damages for which it or any other Indemnified Party
would be entitled to indemnification pursuant to this Agreement, LandCARE may,
at its sole option and by notice in writing to the Stockholders, elect to
withhold payment of an amount equal to the amount of such Damages from any
amounts owing by LandCARE to the Stockholders.
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 Surviving
Corporation within 100 miles of where the Company conducted business at
any time within one year prior to the Closing Date (the "Territory");
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(ii) engage, as an officer, director, shareholder, owner, partner,
joint venturer, or in a sales or managerial capacity, whether as an
employee, independent contractor, consultant or advisor, or as a sales
representative, in any business offering services or products in direct
competition with the Surviving Corporation or LandCARE within the
Territory;
(iii) call upon any person who is, at that time, an employee of
LandCARE or any of its subsidiaries (including the Surviving Corporation)
for the purpose or with the intent of enticing such employee away from or
out of the employ of LandCARE or any of its subsidiaries (including the
Surviving Corporation);
(iv) call upon any person or entity which is, at that time, or which
has been, within one year prior to the Closing Date, a customer of
LandCARE, the Company or any of LandCARE's subsidiaries (including the
Surviving Corporation) for the purpose of soliciting or selling products
or services in direct competition with LandCARE or any of its subsidiaries
(including the Company) within the Territory.
Notwithstanding the above, the foregoing covenants shall not be deemed to
prohibit the Stockholders from acquiring as a passive investor with no
involvement in the operations or management of the business, not more than one
percent (1%) of the capital stock of a competing business whose stock is
publicly traded on a national securities exchange or over-the-counter market.
The provisions of this Section are independent of the noncompetition
provisions contained in any consulting or employment agreement to which 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 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 any
Stockholder, by injunctions, restraining orders and other equitable actions.
7.3 REASONABLE RESTRAINT. It is agreed by the parties hereto that the
foregoing covenants in this Section impose a reasonable restraint on the
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
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that such restrictions be enforced to the fullest extent which the court deems
reasonable, and the Agreement shall thereby be reformed.
7.5 INDEPENDENT COVENANT. The 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 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 any 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 Surviving Corporation and
LandCARE after the Closing Date. The Stockholders agree that they will not
disclose such confidential information, or any confidential information of the
Surviving Corporation or LandCARE to which they may have access in the future,
to any person, firm, corporation, association or other entity for any purpose or
reason whatsoever, except (a) to authorized representatives of LandCARE, (b)
following the Closing, such information may be disclosed by the Stockholders as
may be required in the course of performing his duties for the Surviving
Corporation and (c) to counsel and other advisers, provided that such advisers
(other than counsel) agree to the confidentiality provisions of this Section,
unless (i) such information becomes known to the public generally through no
fault of the 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.
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8.2 EQUITABLE RELIEF. Because of the difficulty of measuring economic
losses as a result of the breach of the foregoing covenants, and because of the
immediate and irreparable damage that would be caused for which LandCARE would
have no other adequate remedy, the Stockholders agrees that the foregoing
covenants may be enforced against him by injunctions, restraining orders and
other appropriate equitable relief.
8.3 SURVIVAL. The obligations of the parties under this Section shall
survive the termination of this Agreement for an unlimited time with respect to
proprietary information and a period of five years with respect to
non-proprietary information.
9. 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.
▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attn: General Counsel
Facsimile No. (▇▇▇) ▇▇▇-▇▇▇▇
If to the Company, addressed to it at:
Pacific Environmental, Inc.
▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
If to ▇▇. ▇▇▇▇▇▇▇, addressed to him at:
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
If to ▇▇. ▇▇▇▇▇▇▇, addressed to him at such address as may be
provided by him to LandCare; or to such other address as any party hereto shall
specify pursuant to this Section from time to time.
9.6 GOVERNING LAW. This Agreement shall be construed in accordance with
the laws of the State of California without regard to its principles governing
conflicts of laws.
9.7 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The representations,
warranties, covenants and agreements of the parties made herein and at the time
of the Closing or in writing delivered pursuant to the provisions of this
Agreement shall survive the consummation of the transactions contemplated hereby
and any examination on behalf of the parties.
9.8 EFFECT OF INVESTIGATION. No investigation by the parties hereto in
connection with this Agreement or otherwise shall affect the representations and
warranties of the parties contained herein or in any certificate or other
document delivered in connection herewith and each such representation and
warranty shall survive such investigation.
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9.9 EXERCISE OF RIGHTS AND REMEDIES. Except as otherwise provided herein,
no delay of or omission in the exercise of any right, power or remedy accruing
to any party as a result of any breach or default by any other party under this
Agreement shall impair any such right, power or remedy, nor shall it be
construed as a waiver of or acquiescence in any such breach or default, or of
any similar breach or default occurring later; nor shall any waiver of any
single breach or default be deemed a waiver of any other breach or default
occurring before or after that waiver.
9.10 TIME. Time is of the essence with respect to this Agreement.
9.11 REFORMATION AND SEVERABILITY. In case any provision of this Agreement
shall be invalid, illegal or unenforceable, it shall, to the extent possible, be
modified in such manner as to be valid, legal and enforceable but so as to most
nearly retain the intent of the parties, and if such modification is not
possible, such provision shall be severed from this Agreement, and in either
case the validity, legality and enforceability of the remaining provisions of
this Agreement shall not in any way be affected or impaired thereby.
9.12 REMEDIES CUMULATIVE. No right, remedy or election given by any term
of this Agreement shall be deemed exclusive but each shall be cumulative with
all other rights, remedies and elections available at law or in equity.
9.13 CAPTIONS. The headings of this Agreement are inserted for convenience
only, and shall not constitute a part of this Agreement or be used to construe
or interpret any provision hereof.
9.14 PRESS RELEASES AND PUBLIC ANNOUNCEMENTS. No party shall issue any
press release or make any public announcement relating to the subject matter of
this Agreement without the prior written approval of the other party; provided,
however, that LandCARE may issue a press release in accordance with its
customary practices without such approval and any party may make any public
disclosure it believes in good faith is required by applicable law or any
listing or trading agreement concerning its publicly-traded securities.
9.15 NO THIRD-PARTY BENEFICIARIES. This Agreement shall not confer any
rights or remedies upon any person other than the parties and their respective
successors and permitted assigns.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
day and year first above written.
LANDCARE USA, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Sr. Vice President
PACIFIC ENVIRONMENTAL LANDSCAPE
MAINTENANCE, INC.
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Title: President
/s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
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_______________(spouse of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇)
/s/ ▇▇▇▇ ▇▇▇▇▇▇▇
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▇▇▇▇ ▇▇▇▇▇▇▇
_______________ (spouse of ▇▇▇▇ ▇▇▇▇▇▇▇)