EXHIBIT 10.8
AGREEMENT AND PLAN OF ORGANIZATION
dated as of March 17, 1998
by and among
LANDCARE USA, INC.
SOUTHERN TREE ACQUISITION CORP.
(a subsidiary of LandCARE USA, Inc.)
SOUTHERN TREE & LANDSCAPE CO., INC.
and
the STOCKHOLDERS named herein
TABLE OF CONTENTS
Page
RECITALS.....................................................................1
1. THE MERGER.............................................................5
1.1 Delivery and Filing of Articles of Merger........................5
1.2 Effective Time of the Merger.....................................5
1.3 Certificate of Incorporation, By-laws; Board of Directors and
Officers of Surviving Corporation................................5
1.4 Certain Information With Respect to the Capital Stock of the
Company, LandCARE and Newco......................................6
1.5 Effect of Merger.................................................6
2. CONVERSION OF STOCK....................................................7
2.1 Manner of Conversion.............................................7
3. DELIVERY OF MERGER CONSIDERATION.......................................8
4. CLOSING................................................................8
5. REPRESENTATIONS AND WARRANTIES OF THE STOCKHOLDERS.....................9
5.1 Due Organization.................................................9
5.2 Authorization...................................................10
5.3 Capital Stock of the Company....................................10
5.4 Transactions in Capital Stock, Organization Accounting..........10
5.5 No Bonus Shares.................................................10
5.6 Subsidiaries....................................................10
5.7 Predecessor Status; etc.........................................10
5.8 Spin-off by the Company.........................................11
5.9 Financial Statements............................................11
5.10 Liabilities and Obligations.....................................11
5.11 Accounts and Notes Receivable...................................11
5.12 Permits and Intangibles.........................................12
5.13 Environmental Matters...........................................12
5.14 Personal Property...............................................13
5.15 Significant Customers; Material Contracts and Commitments.......13
5.16 Real Property...................................................14
5.17 Insurance.......................................................14
5.18 Compensation; Employment Agreements; Organized Labor Matters....15
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5.19 Employee Plans..................................................15
5.20 Compliance with ERISA...........................................16
5.21 Conformity with Law; Litigation.................................17
5.22 Taxes...........................................................17
5.23 No Violations; No Consents Required, Etc.......................18
5.24 Absence of Changes..............................................18
5.25 Deposit Accounts; Powers of Attorney............................20
5.26 Validity of Obligations.........................................20
5.27 Relations with Governments......................................20
5.28 Disclosure......................................................20
5.29 [Intentionally Omitted].........................................21
5.30 No Interests In Other Businesses................................21
5.31 Authority; Ownership............................................21
5.32 Preemptive Rights...............................................21
5.33 No Intention to Dispose of LandCARE Stock.......................21
6. REPRESENTATIONS OF LANDCARE AND NEWCO.................................21
6.1 Due Organization................................................22
6.2 Authorization...................................................22
6.3 Capital Stock of LandCARE and Newco.............................22
6.4 Transactions in Capital Stock, Organization Accounting..........22
6.5 Subsidiaries....................................................22
6.6 Financial Statements............................................23
6.7 Liabilities and Obligations.....................................23
6.8 Conformity with Law; Litigation.................................23
6.9 No Violations...................................................23
6.10 Validity of Obligations.........................................24
6.11 LandCARE Stock..................................................24
6.12 Other Agreements; No Side Agreements............................24
6.13 Business; Real Property; Material Agreements....................25
6.14 Taxes...........................................................25
6.15 Absence of Changes..............................................25
6.16 Disclosure......................................................26
7. COVENANTS PRIOR TO CLOSING............................................27
7.1 Access and Cooperation; Due Diligence...........................27
7.2 Conduct of Business Pending Closing.............................27
7.3 Prohibited Activities...........................................28
7.4 No Shop.........................................................29
7.5 Notice to Bargaining Agents.....................................30
7.6 Agreements......................................................30
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7.7 Notification of Certain Matters.................................30
7.8 Amendment of Schedules..........................................30
7.9 Cooperation in Preparation of Registration Statement............31
7.10 Final Financial Statements......................................32
7.11 Further Assurances..............................................32
7.12 Authorized Capital..............................................32
7.13 Compliance with the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements
Act of 1976 (the "▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Act").......................32
7.14 Stockholders of LandCARE........................................33
8. CONDITIONS PRECEDENT TO OBLIGATIONS OF STOCKHOLDERS AND COMPANY.......33
8.1 Representations and Warranties; Performance of Obligations......33
8.2 Satisfaction....................................................33
8.3 No Litigation...................................................34
8.4 Opinion of Counsel..............................................34
8.5 Registration Statement..........................................34
8.6 Consents and Approvals..........................................34
8.7 Good Standing Certificates......................................34
8.8 No Material Adverse Change......................................34
8.9 Closing of IPO..................................................34
8.10 Secretary's Certificate.........................................34
8.11 Employment Agreements...........................................35
8.12 Tax Matters.....................................................35
9. CONDITIONS PRECEDENT TO OBLIGATIONS OF LANDCARE AND NEWCO.............35
9.1 Representations and Warranties; Performance of Obligations......35
9.2 No Litigation...................................................36
9.3 Secretary's Certificate.........................................36
9.4 No Material Adverse Effect......................................36
9.5 Stockholders' Release...........................................36
9.6 Satisfaction....................................................36
9.7 Termination of Related Party Agreements.........................36
9.8 Opinion of Counsel..............................................36
9.9 Consents and Approvals..........................................37
9.10 Good Standing Certificates......................................37
9.11 Registration Statement..........................................37
9.12 Employment Agreements...........................................37
9.13 Closing of IPO..................................................37
9.14 FIRPTA Certificate..............................................37
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9.15 Environmental Reviews...........................................37
9.16 Certain Indebtedness............................................37
10. COVENANTS OF LANDCARE AND THE STOCKHOLDERS AFTER CLOSING..............37
10.1 Release From Guarantees; Repayment of Certain Obligations.......37
10.2 Preservation of Tax and Accounting Treatment....................38
10.3 Preparation and Filing of Tax Returns...........................38
10.4 Directors.......................................................39
11. INDEMNIFICATION.......................................................39
11.1 General Indemnification by the Stockholders.....................39
11.2 Indemnification by LandCARE.....................................40
11.3 Third Person Claims.............................................41
11.4 Exclusive Remedy................................................42
11.5 Limitations on Indemnification..................................42
12. TERMINATION OF AGREEMENT..............................................43
12.1 Termination.....................................................43
12.2 Liabilities in Event of Termination.............................44
13. NONCOMPETITION........................................................44
13.1 Prohibited Activities...........................................44
13.2 Damages.........................................................45
13.3 Reasonable Restraint............................................45
13.4 Severability; Reformation.......................................45
13.5 Independent Covenant............................................45
13.6 Materiality.....................................................45
14. NONDISCLOSURE OF CONFIDENTIAL INFORMATION.............................45
14.1 Stockholders....................................................45
14.2 LandCARE and Newco..............................................46
14.3 Damages.........................................................47
14.4 Survival........................................................47
15. TRANSFER RESTRICTIONS.................................................47
15.1 Transfer Restrictions...........................................47
16. FEDERAL SECURITIES ACT REPRESENTATIONS................................48
16.1 Compliance with Law.............................................48
16.2 Economic Risk; Sophistication...................................48
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17. REGISTRATION RIGHTS...................................................49
17.1 Piggyback Registration Rights...................................49
17.2 Demand Registration Rights......................................49
17.3 Registration Procedures.........................................50
17.4 Indemnification.................................................51
17.5 Underwriting Agreement..........................................52
17.6 Rule 144 Reporting..............................................53
18. GENERAL...............................................................53
18.1 Cooperation.....................................................53
18.2 Successors and Assigns..........................................53
18.3 Entire Agreement................................................54
18.4 Counterparts....................................................54
18.5 Brokers and Agents..............................................54
18.6 Expenses........................................................54
18.7 Notices.........................................................55
18.8 Governing Law...................................................56
18.9 Survival of Representations and Warranties......................56
18.10 Exercise of Rights and Remedies.................................56
18.11 Time............................................................56
18.12 Reformation and Severability....................................56
18.13 Remedies Cumulative.............................................56
18.14 Captions........................................................56
18.15 Amendments and Waivers..........................................56
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ANNEXES
Annex I - Consideration to Be Paid to Stockholders
Annex II - Stockholders and Stock Ownership of the Company
Annex III - Form of Opinion of ▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇, L.L.P.
Annex IV - Form of Opinion of Counsel to the Company and Stockholders
Annex V - Form of Founder's Employment Agreement
Annex VI - Form of Lease Agreement
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SCHEDULES
5.1 Due Organization
5.2 Authorization
5.4 Transactions in Capital Stock, Organization Accounting
5.5 No Bonus Shares
5.6 Subsidiaries
5.7 Predecessor Status; etc
5.8 Spin-off by the Company
5.9 Financial Statements
5.10 Liabilities and Obligations
5.11 Accounts and Notes Receivable
5.12 Permits and Intangibles
5.13 Environmental Matters
5.14 Personal Property
5.15 Significant Customers; Material Contracts and Commitments
5.16 Real Property
5.17 Insurance
5.18 Compensation; Employment Agreements; Organized Labor Matters
5.19 Employee Benefit Plans (the Benefit Plans Schedule)
5.21 Conformity with Law; Litigation
5.22 Taxes
5.23 No Violations, No Consents Required, etc.
5.24 Absence of Changes
5.25 Deposit Accounts; Powers of Attorney
5.30 No Interests in Other Businesses
5.31 Authority; Ownership
6.4 Capital Stock etc.
6.5 Subsidiaries
6.7 Liabilities
6.8 Conformity with Law; Litigation
6.9 No Violations
6.12 OtherAgreements; No Side Agreements
6.15 Absence of Changes
7.2 Conduct of Business Pending Closing
7.3 Prohibited Activities
7.5 Notice to Bargaining Agents
9.12 Employment Agreements
10.1 Guaranties
13.1 Activities Excluded from Noncompete
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AGREEMENT AND PLAN OF ORGANIZATION
THIS AGREEMENT AND PLAN OF ORGANIZATION (the "Agreement") is made as of
March 17, 1998, by and among LandCARE USA, Inc., a Delaware corporation
("LandCARE"), Southern Tree Acquisition Corp., a Delaware corporation ("Newco"),
Southern Tree & Landscape Co., Inc., a North Carolina corporation (the
"Company"), and the stockholders identified on the signature pages hereof (the
"Stockholders"). The Stockholders are all the stockholders of the Company.
RECITALS
WHEREAS, Newco is a corporation duly organized and existing under
the laws of the State of Delaware, having been incorporated on or about
March 6, 1998 solely for the purpose of completing the transactions set
forth herein, and is a wholly-owned subsidiary of LandCARE, a corporation
organized and existing under the laws of the State of Delaware;
WHEREAS, the respective Boards of Directors of Newco and the Company
(which together are hereinafter collectively referred to as "Constituent
Corporations") deem it advisable and in the best interests of the
Constituent Corporations and their respective Stockholders that Newco
merge with and into the Company pursuant to this Agreement and the
applicable provisions of the laws of the States of Delaware and the State
of Incorporation (as defined below);
WHEREAS, LandCARE is entering into other separate agreements
substantially similar to this Agreement (the "Other Agreements"), each of
which is entitled "Agreement and Plan of Organization," with each of the
Other Founding Companies (as defined herein) and their respective
stockholders in order to acquire additional landscaping and related
services businesses;
WHEREAS, this Agreement, the Other Agreements and the IPO (as
defined herein) constitute the "LandCARE Plan of Organization;"
WHEREAS, the Stockholders and the Boards of Directors and the
stockholders of LandCARE, each of the Other Founding Companies and each of
the subsidiaries of LandCARE that are parties to the Other Agreements have
approved and adopted the LandCARE Plan of Organization as an integrated
plan pursuant to which the Stockholders and the stockholders of each of
the Other Founding Companies will transfer the capital stock of each of
the Founding Companies (as defined herein) to LandCARE and the
stockholders of each of the Other Founding Companies will acquire the
stock of LandCARE (but not cash or other property) as a tax-free transfer
of property under Section 351 of the Code;
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WHEREAS, in consideration of the agreements of the Other Founding
Companies pursuant to the Other Agreements, the Board of Directors of the
Company has approved this Agreement (which is subject to the terms and
conditions herein set forth), as part of the LandCARE Plan of Organization
in order to transfer the capital stock of the Company to LandCARE;
WHEREAS, unless the context otherwise requires, capitalized terms
used in this Agreement or in any schedule attached hereto and not
otherwise defined shall have the following meanings for all purposes of
this Agreement:
"1933 Act" means the Securities Act of 1933, as amended.
"1934 Act" means the Securities Exchange Act of 1934, as amended.
"Acquired Party" means the Company, any Subsidiary of the Company and any
member of a Relevant Group.
"Acquisition Companies" means Newco and each of the other Delaware
companies created for purposes of effecting the acquisitions of some or all of
the Other Founding Companies and wholly-owned by LandCARE prior to the Funding
and Consummation Date.
"Affiliate" means, with respect to any Person, any Person that directly,
or indirectly through one or more intermediaries, controls, is controlled by, or
is under common control with, such Person.
"Articles of Merger" shall mean those Articles or Certificates of Merger
with respect to the Merger in such forms as may be required by the laws of the
State of Delaware and the State of Incorporation.
"Balance Sheet Date" shall mean December 31, 1997.
"Closing" has the meaning set forth in Section 4.
"Closing Date" has the meaning set forth in Section 4.
"Code" means the Internal Revenue Code of 1986, as amended.
"Company" has the meaning set forth in the first paragraph of this
Agreement.
"Company Stock" has the meaning set forth in Section 2.1.
"Constituent Corporations" has the meaning set forth in the second recital
of this Agreement.
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"Draft Registration Statement" means the March 12, 1998 draft of the
Registration Statement, and any corrections thereto and supplemental information
delivered by LandCARE to the Company for delivery to the Stockholders prior to
the time this Agreement is delivered to LandCARE.
"Effective Time of the Merger" shall mean the time as of which the Merger
becomes effective, which shall occur on the Funding and Consummation Date.
"Environmental Laws" has the meaning set forth in Section 5.13.
"Expiration Date" has the meaning set forth in Section 5(A).
"Founding Companies" means:
(a) Arteka Corporation, a Minnesota corporation, as well as its
affiliates Arteka Natural Green Corporation, a Minnesota corporation and
Arteka Nurseries, Inc., a Minnesota corporation;
(b) D. R. Church Landscape Co., Inc., an Illinois corporation;
(c) Desert Care Landscaping, Inc., an Arizona corporation;
(d) Four Seasons Landscape and Maintenance, Inc., a California
corporation;
(e) Ground Control Landscaping, Inc., a Florida corporation;
(f) Southern Tree & Landscape Co., Inc., a North Carolina
corporation; and
(g) Trees, Inc., a Nevada corporation.
"Funding and Consummation Date" has the meaning set forth in Section 4.
"IPO" means the initial public offering of LandCARE Stock pursuant to the
Registration Statement described herein.
"Material Adverse Effect" has the meaning set forth in Section 5.1.
"Material Documents" has the meaning set forth in Section 5.23.
"Merger" means the merger of Newco with and into the Company pursuant to
this Agreement and the applicable provisions of the laws of the State of
Delaware and the laws of the State of Incorporation.
"LandCARE" has the meaning set forth in the first paragraph of this
Agreement.
"LandCARE Charter Documents" has the meaning set forth in Section 6.1.
"LandCARE Stock" means the common stock, par value $.01 per share, of
LandCARE.
"Newco" has the meaning set forth in the first paragraph of this
Agreement.
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"Newco Stock" means the common stock, par value $.01 per share, of Newco.
"Other Founding Companies" means all of the Founding Companies other than
the Company.
"Person" means an individual or a corporation, limited partnership,
general partnership, limited liability company, trust, unincorporated
association, joint venture, association, or government or any agency,
instrumentality, or political subdivision thereof, or other entity.
"Pricing" means the date of determination by LandCARE and the Underwriters
of the public offering price of the shares of LandCARE Stock in the IPO; the
parties hereto contemplate that the Pricing shall take place on the Closing
Date.
"Qualified Plans" has the meaning set forth in Section 5.20.
"Registration Statement" means that certain registration statement on Form
S-1 to be filed with the SEC covering the shares of LandCARE Stock to be issued
in the IPO and all amendments thereto.
"Relevant Group" means the Company and any Affiliated, combined,
consolidated, unitary or similar group of which the Company is or was a member
for Tax reporting purposes.
"Returns" means any returns, reports or statements (including any
information returns) required to be filed for purposes of a particular Tax.
"Schedule" means each Schedule attached hereto (as the same may from time
to time be amended), which shall reference the relevant sections of this
Agreement, on which parties hereto disclose information as part of their
respective representations, warranties and covenants.
"SEC" means the United States Securities and Exchange Commission.
"State of Incorporation" means the State of North Carolina.
"Stockholders" has the meaning set forth in the first paragraph of this
Agreement.
"Subsidiary" means, as to any Person, any corporation or entity, 50% or
more of the shares of voting stock (or in the case of an entity which is not a
corporation, 50% or more of the equity interests that provide the power to
manage or direct the management of such entity) of which is at the time any
determination is being made, owned, directly or indirectly, by such Person and
its wholly owned Subsidiaries.
"Surviving Corporation" shall mean the Company as the surviving party in
the Merger.
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"Tax" or "Taxes" means all federal, state, local or foreign net or gross
income, gross receipts, net proceeds, sales, use, ad valorem, value added,
franchise, withholding, employment, excise, property, deed, stamp, alternative
or add on minimum, or other taxes, assessments, duties, fees, levies or other
governmental charges, whether disputed or not, together with any interest,
penalties, additions to tax or additional amounts with respect thereto.
"Underwriters" means the prospective underwriters identified in the Draft
Registration Statement.
NOW, THEREFORE, in consideration of the premises and of the mutual
agreements, representations, warranties, provisions and covenants herein
contained, the parties hereto hereby agree as follows:
1. THE MERGER
1.1 DELIVERY AND FILING OF ARTICLES OF MERGER. The Constituent
Corporations will cause the Articles of Merger to be signed, verified and
delivered to LandCARE at the Closing to be held for filing with the Secretary of
State of the State of Delaware and the Secretary of State (or other appropriate
authority) of the State of Incorporation on or effective as of the Funding and
Consummation Date.
1.2 EFFECTIVE TIME OF THE MERGER. At the Effective Time of the Merger,
Newco shall be merged with and into the Company in accordance with the Articles
of Merger, the separate existence of Newco shall cease, the Company shall be the
surviving party in the Merger and the Company is sometimes hereinafter referred
to as the Surviving Corporation. The Merger will be effected in a single
transaction.
1.3 CERTIFICATE OF INCORPORATION, BY-LAWS; BOARD OF DIRECTORS AND OFFICERS
OF SURVIVING CORPORATION. At the Effective Time of the Merger:
(i) the Certificate of Incorporation of the Company then in effect
shall be the Certificate of Incorporation of the Surviving Corporation until
changed as provided by law;
(ii) the By-laws of Newco then in effect shall become the By-laws of
the Surviving Corporation; and subsequent to the Effective Time of the Merger,
such By-laws shall be the By-laws of the Surviving Corporation until they shall
thereafter be duly amended (and such Bylaws shall be amended from time to time,
if necessary, to comply with applicable state law);
(iii) the Board of Directors of the Surviving Corporation shall
consist of the persons who are on the Board of Directors of the Company
immediately prior to the Effective Time of the Merger, provided that ▇▇▇▇▇▇▇
▇▇▇▇▇ or another officer of LandCARE shall become an additional director of the
Surviving Corporation effective as of the Effective Time of the Merger, and the
number of directors constituting the entire Board of Directors of the Company
shall be
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increased, if necessary, to accommodate the addition of such additional
director; the Board of Directors of the Surviving Corporation shall hold office
subject to the provisions of the laws of the State of Incorporation and of the
Certificate of Incorporation and By-laws of the Surviving Corporation; and
(iv) the officers of the Company immediately prior to the Effective
Time of the Merger shall continue as the officers of the Surviving Corporation
in the same capacity or capacities, and effective upon the Effective Time of the
Merger ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ and another officer of LandCARE shall each become an
additional Vice President and Assistant Secretary of the Surviving Corporation,
such officers to serve, subject to the provisions of the Certificate of
Incorporation and By-laws of the Surviving Corporation, until their respective
successors are duly elected and qualified.
1.4 CERTAIN INFORMATION WITH RESPECT TO THE CAPITAL STOCK OF THE COMPANY,
LANDCARE AND NEWCO. The respective designations and numbers of outstanding
shares and voting rights of each class of outstanding capital stock of the
Company, LandCARE and Newco as of the date of this Agreement are as follows:
(i) as of the date of this Agreement, the authorized and outstanding
capital stock of the Company is as set forth on Annex II hereto;
(ii) immediately prior to the Closing Date and the Funding and
Consummation Date, except for changes permitted by Section 7.12 hereof, the
authorized capital stock of LandCARE will consist of 100,000,000 shares of
LandCARE Stock, of which the number of issued and outstanding shares will be set
forth in the Registration Statement, 5,000,000 shares of preferred stock, $.01
par value, of which no shares will be issued and outstanding, and 3,000,000
shares of Restricted Voting Common Stock, $.01 par value (the "Restricted Common
Stock"), all of which will be issued and outstanding except as otherwise set
forth in the Registration Statement; and
(iii) as of the date of this Agreement, the authorized capital stock
of Newco consists of 1,000 shares of Newco Stock, of which one hundred (100)
shares are issued and outstanding.
1.5 EFFECT OF MERGER. At the Effective Time of the Merger, the effect of
the Merger shall be as provided in the applicable provisions of the General
Corporation Law of the State of Delaware (the "Delaware GCL") and the law of the
State of Incorporation. Except as herein specifically set forth, the identity,
existence, purposes, powers, franchises, privileges, rights and immunities of
the Company shall continue unaffected and unimpaired by the Merger and the
corporate franchises, existence and rights of Newco shall be merged with and
into the Company, and the Company, as the Surviving Corporation, shall be fully
vested therewith. At the Effective Time of the Merger, the separate existence of
Newco shall cease and, in accordance with the terms of this Agreement, the
Surviving Corporation shall possess all the rights, privileges, immunities and
franchises, of a public, as well as of a private, nature, and all property,
real, personal and mixed, and all debts due on
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whatever account, including subscriptions to shares, and all taxes, including
those due and owing and those accrued, and all other choses in action, and all
and every other interest of or belonging to or due to the Company and Newco
shall be transferred to, and vested in, the Surviving Corporation without
further act or deed; and all property, rights and privileges, powers and
franchises and all and every other interest shall be thereafter as effectually
the property of the Surviving Corporation as they were of the Company and Newco;
and the title to any real estate, or interest therein, whether by deed or
otherwise, under the laws of the State of Incorporation vested in the Company
and Newco, shall not revert or be in any way impaired by reason of the Merger.
Except as otherwise provided herein, the Surviving Corporation shall thenceforth
be responsible and liable for all the liabilities and obligations of the Company
and Newco and any claim existing, or action or proceeding pending, by or against
the Company or Newco may be prosecuted as if the Merger had not taken place, or
the Surviving Corporation may be substituted in their place. Neither the rights
of creditors nor any liens upon the property of the Company or Newco shall be
impaired by the Merger, and all debts, liabilities and duties of the Company and
Newco shall attach to the Surviving Corporation, and may be enforced against
such Surviving Corporation to the same extent as if said debts, liabilities and
duties had been incurred or contracted by such Surviving Corporation.
2. CONVERSION OF STOCK
2.1 MANNER OF CONVERSION. The manner of converting the shares of (i)
outstanding capital stock of the Company ("Company Stock") and (ii) Newco Stock,
issued and outstanding immediately prior to the Effective Time of the Merger,
respectively, into shares of (x) LandCARE Stock and cash and (y) common stock of
the Surviving Corporation, respectively, shall be as follows:
As of the Effective Time of the Merger:
(i) all of the shares of Company Stock issued and outstanding
immediately prior to the Effective Time of the Merger, by virtue of the Merger
and without any action on the part of the holder thereof, automatically shall be
deemed to represent (1) the right to receive the number of shares of LandCARE
Stock set forth on Annex I hereto with respect to such holder and (2) the right
to receive the amount of cash set forth on Annex I hereto with respect to such
holder;
(ii) all shares of Company Stock that are held by the Company as
treasury stock shall be canceled and retired and no shares of LandCARE Stock or
other consideration shall be delivered or paid in exchange therefor; and
(iii) each share of Newco Stock issued and outstanding immediately
prior to the Effective Time of the Merger, shall, by virtue of the Merger and
without any action on the part of LandCARE, automatically be converted into one
fully paid and non-assessable share of common stock of the Surviving Corporation
which shall constitute all of the issued and outstanding shares of common stock
of the Surviving Corporation immediately after the Effective Time of the Merger.
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All LandCARE Stock received by the Stockholders pursuant to this Agreement
shall, except for restrictions on resale or transfer described in Sections 15
and 16 hereof, have the same rights as all the other shares of outstanding
LandCARE Stock by reason of the provisions of the Certificate of Incorporation
of LandCARE or as otherwise provided by the Delaware GCL. All LandCARE Stock
received by the Stockholders shall be issued and delivered to the Stockholders
free and clear of any liens, claims or encumbrances of any kind or nature. All
voting rights of such LandCARE Stock received by the Stockholders shall be fully
exercisable by the Stockholders and the Stockholders shall not be deprived nor
restricted in exercising those rights. At the Effective Time of the Merger,
LandCARE shall have no class of capital stock issued and outstanding other than
the LandCARE Stock and the Restricted Voting Common Stock.
3. DELIVERY OF MERGER CONSIDERATION
3.1 On the Funding and Consummation Date the Stockholders, who are the
holders of all of the outstanding capital stock of the Company, shall, upon
surrender of certificates representing such shares, receive the respective
numbers of shares of LandCARE Stock and the amounts of cash described on Annex I
hereto, said cash to be payable by certified check or wire transfer.
3.2 The Stockholders shall deliver to LandCARE at the Closing the
certificates representing Company Stock, duly endorsed in blank by the
Stockholders, or accompanied by blank stock powers, and with all necessary
transfer tax and other revenue stamps, acquired at the Stockholders' expense,
affixed and canceled. 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 Company Stock or with respect to the stock
powers accompanying any Company Stock.
4. CLOSING
At or prior to the Pricing, the parties shall take all actions necessary
to prepare to (i) effect the Merger (including the execution of the Articles of
Merger which shall be delivered to LandCARE for filing with the appropriate
authorities effective on the Funding and Consummation Date) and (ii) effect the
conversion and delivery of shares referred to in Section 3 hereof; provided,
that such actions shall not include the actual completion of the Merger or the
conversion and delivery of the shares and funds referred to in Section 3 hereof,
each of which actions shall only be taken upon the Funding and Consummation Date
as herein provided. In the event that there is no Funding and Consummation Date
and this Agreement automatically terminates as provided in this Section 4, the
Articles of Merger shall not be filed and shall be returned to the Stockholders.
The taking of the actions described in clauses (i) and (ii) above (the
"Closing") shall take place on the closing date (the "Closing Date") at the
offices of Bracewell & ▇▇▇▇▇▇▇▇▇, L.L.P., South Tower Pennzoil Place, ▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇. On the Funding and Consummation
Date (x) the Articles of Merger shall be filed with the appropriate state
authorities so that they shall be, as early as practicable on the Funding and
Consummation Date, effective and the Merger shall thereby be effected, (y) all
transactions contemplated by this Agreement, including the conversion and
delivery of shares and the delivery of funds in the amount and in the manner
provided in Section 3 hereof and
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(z) the closing with respect to the IPO shall occur and be completed. The date
on which the actions described in the preceding clauses (x), (y) and (z) occurs
shall be referred to as the "Funding and Consummation Date." During the period
from the Closing Date to the Funding and Consummation Date, this Agreement may
only be terminated by the parties if (a) the underwriting agreement in respect
of the IPO is terminated pursuant to the terms of such underwriting agreement,
or (b) the conditions set forth in Sections 8.5 and 8.9 hereof are not being
satisfied as of the Funding and Consummation Date. This Agreement shall also in
any event automatically terminate if the Funding and Consummation Date has not
occurred within 15 business days following the Closing Date.
Time is of the essence.
5. REPRESENTATIONS AND WARRANTIES OF THE STOCKHOLDERS
Each of the Stockholders jointly and severally represents and warrants
that all of the representations and warranties in this Section 5 are true at the
date of this Agreement and, subject to Section 7.8 hereof, shall be true at the
time of Closing and the Funding and Consummation Date, and agrees that such
representations and warranties shall survive the Funding and Consummation Date
for a period of twelve months (the last day of such period being the "Expiration
Date"), except that the representations and warranties set forth in Section 5.22
hereof shall survive until such time as the limitations period has run for all
tax periods ended on or prior to the Funding and Consummation Date, which shall
be deemed to be the Expiration Date for Section 5.22, and the representations
and warranties set forth in Section 5.31 hereof shall survive perpetually. For
purposes of this Section 5, the term "Company" shall mean and refer to the
Company and all of its Subsidiaries, if any. For purposes of this Section 5, the
phrase "knowledge of the Stockholders" shall mean the actual knowledge of the
Stockholders after due inquiry of the appropriate management personnel employed
by the Company.
5.1 DUE ORGANIZATION. The Company is a corporation duly incorporated and
organized, validly existing and in good standing under the laws of the State of
Incorporation, and has the 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 (i) as set forth on Schedule 5.1 or (ii) where the failure to
be so authorized or qualified would not have a material adverse effect on the
business, operations, properties, assets or condition (financial or otherwise),
of the Company taken as a whole (as used herein with respect to the Company, or
with respect to any other Person, a "Material Adverse Effect"). Schedule 5.1
sets forth a list of all jurisdictions in which the Company is authorized or
qualified to do business. True, complete and correct copies of (i) the
Certificate of Incorporation and By-laws, each as amended, of the Company (the
"Charter Documents"), and (ii) the stock records of the Company, are all
attached to Schedule 5.1. The Company has delivered complete and correct copies
of all minutes of meetings, written consents and other evidence, if any, of
deliberations of or actions taken by the Company's Board of Directors and
stockholders during the last five years.
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5.2 AUTHORIZATION. (i) The representatives of the Company executing this
Agreement have 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 Merger. The most recent
resolutions adopted by the Board of Directors of the Company and the most recent
resolutions adopted by the Stockholders approve this Agreement and the
transactions contemplated hereby in all respects, and copies of all such
resolutions, certified by the Secretary or an Assistant Secretary of the Company
as being in full force and effect on the date hereof, are attached hereto as
Schedule 5.2.
5.3 CAPITAL STOCK OF THE COMPANY. The authorized capital stock of the
Company is as set forth on Annex II, and all of the issued and outstanding
shares of the capital stock of the Company are owned by the Stockholders in the
amounts set forth in Annex II. All of the issued and outstanding shares of the
capital stock of the Company have been duly authorized and validly issued, are
fully paid and nonassessable, are owned of record and beneficially by the
Stockholders and further, such shares were offered, issued, sold and delivered
by the Company in compliance with all applicable state and Federal laws
concerning the issuance of securities. Further, none of such shares were issued
in violation of any preemptive rights of any past or present stockholder.
5.4 TRANSACTIONS IN CAPITAL STOCK, ORGANIZATION ACCOUNTING. Except as set
forth on Schedule 5.4, the Company has not acquired any Company Stock since
January 1, 1995. Except as set forth on Schedule 5.4, (i) no option, warrant,
call, conversion right or commitment of any kind exists which obligates the
Company to issue any of its authorized but unissued capital stock; (ii) the
Company has no obligation (contingent or otherwise) to purchase, redeem or
otherwise acquire any of its equity securities or any interests therein or to
pay any dividend or make any distribution in respect thereof; and (iii) neither
the voting stock structure of the Company nor the relative ownership of shares
among any of its respective Stockholders has been altered or changed in
contemplation of the Merger and/or the LandCARE Plan of Organization.
5.5 NO BONUS SHARES. Except as set forth on Schedule 5.5, none of the
shares of Company Stock was issued pursuant to awards, grants or bonuses in
contemplation of the Merger or the LandCARE Plan of Organization.
5.6 SUBSIDIARIES. Except as set forth on Schedule 5.6, the Company has no
Subsidiaries. Except as set forth in Schedule 5.6, the Company does not
presently 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 business entity nor is the Company,
directly or indirectly, a participant in any joint venture, partnership or other
non-corporate entity.
5.7 PREDECESSOR STATUS; ETC. Set forth on Schedule 5.7 is a listing of all
names of all predecessor companies of the Company, including the names of any
entities acquired by the Company (by stock purchase, merger or otherwise) or
owned by the Company or from whom the Company previously acquired all or
substantially all of any such entity's assets (or all or substantially all of
the assets used by any such entity in a line of business), in any case, from the
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earliest date upon which any Stockholder acquired his or her stock in any
Company. Except as disclosed on Schedule 5.7, the Company has not been, within
such period of time, a subsidiary or division of another corporation or a part
of an acquisition which was later rescinded.
5.8 SPIN-OFF BY THE COMPANY. Except as set forth on Schedule 5.8, there
has not been any sale, spin-off or split-up of material assets of either the
Company or any Affiliate since January 1, 1995.
5.9 FINANCIAL STATEMENTS. Schedule 5.9 sets forth complete and correct
copies of the balance sheets of the Company as of the dates shown thereon and
the related statements of operations, stockholder's equity and cash flows for
the periods shown thereon, together with the related notes and schedules (such
balance sheets, the related statements of operations, stockholder's equity and
cash flows and the related notes and schedules being referred to herein as the
"Financial Statements"). The Financial Statements have been prepared from the
books and records of the Company as of the dates 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 recorded therein represent bona
fide transactions, and the revenues, expenses, assets and liabilities of the
Company have been properly recorded therein all material respects.
5.10 LIABILITIES AND OBLIGATIONS. Schedule 5.10 sets forth an accurate
list as of the Balance Sheet Date of (i) all material liabilities of the Company
of a nature that they are required in accordance with GAAP to be reflected on a
balance sheet and which are not reflected on the balance sheet of the Company at
the Balance Sheet Date or otherwise reflected in the Company Financial
Statements at the Balance Sheet Date and which are not disclosed on any of the
other Schedules to this Agreement, and (ii) all loan agreements, indemnity or
guaranty agreements, bonds, mortgages, pledges and material security agreements
to which the Company is a party or by which its properties may be bound. To the
knowledge of the Stockholders, except as set forth on Schedule 5.10, since the
Balance Sheet Date the Company has not incurred any material liabilities of any
kind, character or description, whether accrued, absolute, secured or unsecured,
contingent or otherwise, other than liabilities incurred in the ordinary course
of business. The Company has also delivered to LandCARE on Schedule 5.10, in the
case of those contingent liabilities related to pending or threatened
litigation, or other liabilities which are not fixed, a good faith and
reasonable estimate of the maximum amount which the Company reasonably expects
will be payable and the amount, if any, accrued or reserved for each such
potential liability on the Company's Financial Statements; in the case of any
such liability for which no estimate has been provided, the estimate for
purposes of this Agreement shall be deemed to be zero.
5.11 ACCOUNTS AND NOTES RECEIVABLE. Schedule 5.11 sets forth an accurate
list of the accounts and notes receivable of the Company, as of the Balance
Sheet Date, including any such amounts which are not reflected in the balance
sheet as of the Balance Sheet Date, and including receivables from and advances
to employees and the Stockholders, which are identified as such. Except to the
extent reflected on Schedule 5.11, such accounts, notes and other receivables
are
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collectible in the amounts shown on Schedule 5.11, net of reserves reflected in
the balance sheet as of the Balance Sheet Date.
5.12 PERMITS AND INTANGIBLES. The Company holds all licenses, franchises,
permits and other governmental authorizations ("Licenses") the absence of any of
which could have a Material Adverse Effect on the Company's business, and the
Company has delivered to LandCARE an accurate list and summary description
(which is set forth on Schedule 5.12) of all such Licenses, and of any
trademarks, trade names, patents, patent applications and copyrights owned or
held by the Company or by any of its employees if used or held for use by the
Company in the conduct of its business (including interests in software or other
technology systems, programs and intellectual property) (it being understood and
agreed that a list of environmental permits and other environmental approvals is
set forth on Schedule 5.13). At or prior to the Closing, all such trademarks,
trade names, patents, patent applications, copyrights and other intellectual
property owned by any employees of the Company will be assigned or licensed to
the Company for no additional consideration. To the knowledge of the
Stockholders, the Licenses and other rights listed on Schedules 5.12 and 5.13
are valid, and the Company has not received any notice that any Person intends
to cancel, terminate or not renew any such License or other right. The Company
has conducted and is conducting its business in compliance with the
requirements, standards, criteria and conditions set forth in the Licenses and
other rights listed on Schedules 5.12 and 5.13 and is not in violation of any of
the foregoing except where such non-compliance or violation would not have a
Material Adverse Effect on the Company. Except as specifically provided in
Schedule 5.12, 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 Licenses or other rights.
5.13 ENVIRONMENTAL MATTERS. Except as set forth on Schedule 5.13, and
except where any failure to comply, either singly or in the aggregate, has not
had and will not have a Material Adverse Effect on the Company or its business,
(i) the Company has complied with and is in compliance with all Federal, state,
local and foreign statutes (civil and criminal), laws, ordinances, regulations,
rules, permits, judgments, orders and decrees applicable to it or any of its
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 (as such terms are defined in any
applicable Environmental Law), as well as petroleum and petroleum products
(collectively "Hazardous Materials"), (ii) the Company has obtained and adhered
to all necessary permits and other approvals necessary to treat, transport,
store, dispose of and otherwise handle Hazardous Materials, a list of all of
which permits and approvals is set forth on Schedule 5.13, and 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
Materials have been treated, stored, disposed of or otherwise handled, (iii) to
the knowledge of the Stockholders, there have been no releases or threats of
releases (as these terms are defined in Environmental Laws) of any Hazardous
Materials at, from, in or on any property owned or operated by the Company
except as permitted by Environmental Laws, and (iv) to the knowledge of the
Stockholders, there is no on-site or off-site location to which
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the Company has transported or disposed of Hazardous Materials or arranged for
the transportation of Hazardous Materials which is the subject of any Federal,
state, local or foreign enforcement action or any other investigation which
could reasonably be expected to lead to any claim against the Company, LandCARE
or Newco for any clean-up cost, remedial work, damage to natural resources,
property damage or personal injury, including, but not limited to, any claim
under the Comprehensive Environmental Response, Compensation and Liability Act
of 1980, as amended, the Resource Conservation and Recovery Act, the Hazardous
Materials Transportation Act or comparable state or local statutes or
regulations.
5.14 PERSONAL PROPERTY. The Company has delivered to LandCARE an accurate
list (which is set forth on Schedule 5.14) of (x) all personal property material
to the operations of the Company included in "property" or "plant, property and
equipment" or any similar category on the balance sheet of the Company as of the
Balance Sheet Date, (y) all other tangible personal property owned by the
Company with an individual fair market value (in the reasonable judgment of the
Stockholders; it being understood that the Stockholders are not obtaining
appraisals of any such property in connection with the preparation of Schedule
5.14) in excess of $25,000 (i) as of the Balance Sheet Date and (ii) acquired
since the Balance Sheet Date and (z) all material leases and agreements in
respect of personal property, including, in the case of each of (x), (y) and
(z), (1) true, complete and correct copies of all such leases and (2) an
indication as to which assets are currently owned, or were formerly owned, by
Stockholders, relatives of Stockholders, or Affiliates of the Company. Except as
set forth on Schedule 5.14, (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 5.14, (ii) all of the personal property
listed on Schedule 5.14 is in good working order and condition, ordinary wear
and tear excepted and (iii) all leases and agreements included on Schedule 5.14
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.
5.15 SIGNIFICANT CUSTOMERS; MATERIAL CONTRACTS AND COMMITMENTS. The
Company has delivered to LandCARE an accurate list (which is set forth on
Schedule 5.15) of all customers (persons or entities) representing 1% or more of
the Company's annual revenues for the year ended December 31, 1997; provided,
however, that Schedule 5.15 need not set forth more than the Company's 25
largest customers during such period. Except to the extent set forth on Schedule
5.15, none of such customers have canceled or substantially reduced or, to the
knowledge of the Stockholders, are currently attempting or threatening to cancel
a contract or substantially reduce utilization of the services provided by the
Company.
The Company has listed on Schedule 5.15 all Material Contracts (as defined
below) to which the Company is a party or by which it or any of its properties
are bound, other than agreements listed on Schedules 5.10, 5.14 or 5.16, (a) in
existence as of the Balance Sheet Date and (b) entered into since the Balance
Sheet Date, and in each case has delivered true, complete and correct copies of
such agreements to LandCARE. For purposes of this Agreement, the term "Material
Contracts" includes contracts between the Company and significant customers (as
described above), joint venture or partnership agreements, contracts with any
labor organization, strategic alliances, options
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to purchase land and other contracts which are not terminable on sixty days or
less notice and involve payments by the Company in any twelve-month period in
excess of $25,000. The Company has also indicated on Schedule 5.15 a summary
description of all plans or projects involving the opening of new operations,
expansion of existing operations, the acquisition of any personal property,
business or assets requiring, in any event, the payment of more than $25,000 by
the Company during any 12-month period. All of the Material Contracts 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.
5.16 REAL PROPERTY. Schedule 5.16 includes a list of all real property
owned or leased by the Company at the date hereof and all other real property,
if any, used by the Company in the conduct of its business. Except as set forth
on Schedule 5.16, any such real property owned by the Company will be sold or
distributed by the Company on the terms set forth on Schedule 5.16 and leased
back by the Company on the terms set forth on Schedule 5.16 pursuant to a lease
in substantially the form of Annex VI hereto (or with terms substantially
similar to those of Annex VI) at or prior to the Closing Date. Except as set
forth on Schedule 5.16, the lease relating to any such real property leased by
the Company from any of the Stockholders or any Affilliate of any of the
Stockholders will be terminated as of the Closing Date and a new lease in
substantially the form of Annex VI hereto (or with terms substantially similar
to those of Annex VI) will be entered into as of the Closing Date on the terms
set forth on Schedule 5.16. The Company has good and insurable title to any real
property owned by it that is not shown on Schedule 5.16 as property intended to
be sold or distributed prior to the Closing Date, subject to no mortgage,
pledge, lien, conditional sales agreement, encumbrance or charge, except for:
(i) liens reflected on Schedules 5.10 or 5.16 as securing specified
liabilities (with respect to which no material default exists);
(ii) liens for current taxes not yet payable and assessments not in
default;
(iii) easements for utilities serving the property only; and
(iv) easements, covenants and restrictions and other exceptions to
title which do not adversely affect the current use of the property.
True, complete and correct copies of all leases and agreements in respect
of such real property leased by the Company are attached to Schedule 5.16, and
an indication as to which such properties, if any, are currently owned, or were
formerly owned, by Stockholders or Affiliates of the Company or Stockholders is
included in Schedule 5.16. Except as set forth on Schedule 5.16, all of such
leases included on Schedule 5.16 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.
5.17 INSURANCE. The Company has delivered to LandCARE (i) an accurate list
as of the Balance Sheet Date of all insurance policies carried by the Company,
(ii) an accurate list of all
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insurance loss runs or workers compensation claims received for the past three
policy years and (iii) true, complete and correct copies of all insurance
policies currently in effect. 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 to the knowledge
of the Stockholders provide adequate coverage against the risks involved in the
Company's business. All of such insurance policies are currently in full force
and effect. Since January 1, 1995, no insurance carried by the Company has been
canceled by the insurer and the Company has not been denied coverage.
5.18 COMPENSATION; EMPLOYMENT AGREEMENTS; ORGANIZED LABOR MATTERS. The
Company has delivered to LandCARE an accurate list (which is set forth on
Schedule 5.18) 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 (i) the Balance Sheet Date and (ii) the date hereof. The Company has provided
to LandCARE true, complete and correct copies of any employment agreements for
persons listed on Schedule 5.18. Since the Balance Sheet Date, there have been
no material increases in the compensation payable or any special bonuses to any
officer, director, key employee or other employee, except ordinary salary
increases implemented and bonuses paid on a basis consistent with past
practices.
Except as set forth on Schedule 5.18, (i) the Company is not 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, no campaign to
establish such representation is in progress and (iv) there is no pending or, to
the knowledge of the Stockholders, threatened labor dispute involving the
Company and any group of its employees nor has the Company experienced any labor
interruptions over the past three years. The Company believes its relationship
with employees to be good.
5.19 EMPLOYEE PLANS. The Stockholders have delivered to LandCARE an
accurate schedule (Schedule 5.19) (the "Benefit Plans Schedule") showing all
employee benefit plans of the Company, including all employment agreements and
other agreements or arrangements 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 the Benefit Plans
Schedule, the Company does not sponsor, maintain or contribute to any plan,
program, fund or arrangement that constitutes an "employee pension benefit
plan", and the Company has no 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
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Company has not sponsored, maintained or contributed to any employee pension
benefit plan other than the plans set forth on the Benefit Plans Schedule.
Except as set forth on the Benefit Plans Schedule, the Company 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 or any Subsidiary's employees.
Except as set forth on the Benefit Plans Schedule, the Company is not now,
or will not as a result of its past activities become, liable to the Pension
Benefit Guaranty Corporation or to any multiemployer employee pension benefit
plan under the provisions of Title IV of ERISA.
All employee benefit plans listed on the Benefit Plans Schedule and the
administration thereof are in compliance in all material respects 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 the Benefit Plans Schedule have either been fulfilled in their
entirety or are fully reflected on the balance sheet of the Company as of the
Balance Sheet Date.
5.20 COMPLIANCE WITH ERISA. All plans listed on the Benefit Plans Schedule
that are intended to qualify (the "Qualified Plans") under Section 401(a) of the
Code have been determined by the Internal Revenue Service to be so qualified,
and copies of the determination letters relating thereto are attached to the
Benefit Plans Schedule. Except as disclosed on the Benefit Plans Schedule, all
reports and other documents required to be filed with any governmental agency or
distributed to plan participants or beneficiaries (including, but not limited
to, actuarial reports, audits or tax returns) have been timely filed or
distributed, and copies thereof for the past two years are included as part of
the Benefit Plans Schedule. None of (i) the Stockholders, (ii) the Company, or
(iii) to the knowledge of the Stockholders, any other person, has engaged in any
transaction with any plan listed in the Benefit Plans Schedule prohibited under
the provisions of Section 4975 of the Code or Section 406 of ERISA. No plan
listed in the Benefit Plans Schedule 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 nor any liability to the Pension Benefit
Guaranty Corporation. Except as set forth on the Benefit Plans Schedule:
(i) there have been no terminations, partial terminations or
discontinuations of contributions to any Qualified Plan without notice to and
approval by the Internal Revenue Service;
(ii) no plan listed in the Benefit Plans Schedule subject to the
provisions of Title IV of ERISA has been terminated;
(iii) there have been no "reportable events" (as that phrase is
defined in Section 4043 of ERISA) with respect to any such plan listed in the
Benefit Plans Schedule; and
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(iv) 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 multiemployer 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.
5.21 CONFORMITY WITH LAW; LITIGATION. Except to the extent set forth on
Schedule 5.21 or 5.13, and except for violations which, either singly or in the
aggregate, have not had and will not have any Material Adverse Effect, the
Company is not in violation of any 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 it; and except
to the extent set forth on Schedule 5.10 or 5.13, there are no material claims,
actions, suits or proceedings, pending or, to the knowledge of the Stockholders,
threatened against or affecting, the Company, 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 it and no
notice of any claim, action, suit or proceeding, whether pending or threatened,
has been received by the Company, and, to the knowledge of the Stockholders,
there is no basis for any such claim, action, suit or proceeding. The Company
has conducted and is now conducting its business in compliance with the
requirements, standards, criteria and conditions set forth in applicable
federal, state and local statutes, ordinances, orders, approvals, variances,
rules and regulations, including all such orders and other governmental
approvals set forth on Schedules 5.12 and 5.13, except where any such
noncompliance, individually or in the aggregate, would not have a Material
Adverse Effect.
5.22 TAXES. The Company has timely filed all requisite Federal, state and
other tax returns or extension requests for all fiscal periods ended on or
before the Balance Sheet Date; and except as set forth on Schedule 5.22, there
are no examinations in progress or claims pending against it for federal, state
and other Taxes (including penalties and interest) for any period or periods
prior to and including the Balance Sheet Date and no notice of any claim for
Taxes, whether pending or threatened, has been received. All Tax due from the
Company for any period ended before the date hereof, including interest and
penalties (whether or not shown on any Return) has been paid. The amounts shown
as accruals for taxes on the Company Financial Statements are sufficient for the
payment of all Taxes (including penalties and interest) for all periods ended on
or before that date. Copies of (i) any tax examinations, (ii) extensions of
statutory limitations and (iii) the federal and local income tax returns and
franchise tax returns of the Company for their last three (3) fiscal years, or
such shorter period of time as any of them shall have existed, are attached
hereto as Schedule 5.22 or have otherwise been delivered to LandCARE. The
Company has disclosed to LandCARE when its taxable year ends. The Company uses
the accrual method of accounting for income tax purposes, and the Company's
methods of accounting have not changed in the past five years. The Company is
not an investment company as defined in Section 351(e)(1) of the Code. The
Company is not and has not during the last five years been a party to any tax
sharing agreement or agreement of similar effect. The Company is not and has not
during the last five years been a member of any consolidated
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group. Except as described on Schedule 5.22, the Company has not received, been
denied, or applied for any private letter ruling during the last five years.
5.23 NO VIOLATIONS; NO CONSENTS REQUIRED, ETC. The Company is not in
violation of any Charter Document. Neither the Company nor, to the knowledge of
the Stockholders, any other party thereto, is in default under any lease,
instrument, agreement, license, or permit set forth on Schedule 5.12, 5.13,
5.14, 5.15 or 5.16 (the "Material Documents") in any manner that could result in
a Material Adverse Effect; and, except as set forth in Schedule 5.23, (a) the
rights and benefits of the Company under the Material Documents will not be
materially adversely affected by the transactions contemplated hereby and (b)
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 material violation or breach of or constitute a default under, any of the
terms or provisions of the Material Documents or the Charter Documents. Except
as set forth on Schedule 5.23, 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 material right or benefit. Except as set forth on
Schedule 5.23, none of the Material Documents prohibits the use or publication
by the Company, LandCARE or Newco of the name of any other party to such
Material Document, and none of the Material Documents prohibits or restricts the
Company from freely providing services to any other customer or potential
customer of the Company, LandCARE, Newco or any Other Founding Company.
5.24 ABSENCE OF CHANGES. Since the Balance Sheet Date, except as set forth
on Schedule 5.24 or as otherwise contemplated hereby, there has not been:
(i) any material adverse change in the financial condition, assets,
liabilities (contingent or otherwise) or business of the Company;
(ii) any damage, destruction or casualty loss (whether or not
covered by insurance) materially adversely affecting the properties or business
of the Company;
(iii) any change in the authorized capital of the Company or its
outstanding securities or any change in its ownership interests or any grant by
the Company of any options, warrants, calls, conversion rights or commitments;
(iv) any declaration or payment of any dividend or distribution in
respect of 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 in the compensation, bonus, sales commissions or
fee arrangement payable or to become payable by the Company to any of its
officers, directors,
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Stockholders, employees, consultants or agents, except for ordinary and
customary bonuses and salary increases for employees in accordance with past
practice;
(vi) any sale or transfer, or any agreement to sell or transfer, any
material assets, property or rights of Company to any person, including, without
limitation, the Stockholders and their Affiliates;
(vii) any cancellation, or agreement to cancel, any indebtedness or
other obligation owing to the Company, including without limitation any
indebtedness or obligation of any Stockholders or any Affiliate thereof;
(viii)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;
(ix) 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;
(x) any waiver of any material rights or claims of the Company;
(xi) any amendment, cancellation or termination of any material
contract, agreement, license, permit or other right to which the Company is a
party;
(xii) any change in the Company's Charter Documents;
(xiii)any contract entered into or commitment incurred involving any
liability or commitment to make any capital expenditures, except in the normal
course of business (consistent with past practice) or involving an amount not in
excess of $25,000;
(xiv) any mortgage, pledge or other lien or encumbrance upon any
assets or properties of the Company (whether now owned or hereafter acquired)
created, assumed or permitted to exist, except (1) purchase money liens incurred
in connection with the acquisition of equipment with an aggregate cost not in
excess of $25,000 necessary or desirable for the conduct of the businesses of
the Company, (2) (A) liens for taxes either not yet due or being contested in
good faith and by appropriate proceedings (and for which contested taxes
adequate reserves have been established and are being maintained) or (B)
materialmen's, mechanics', workers', repairmen's, employees' or other like liens
arising in the ordinary course of business, or (3) liens set forth on Schedule
5.10 and/or 5.15 hereto; or
(xv) any transaction by the Company outside the ordinary course of
its business.
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5.25 DEPOSIT ACCOUNTS; POWERS OF ATTORNEY. The Company has delivered to
LandCARE an accurate schedule (which is set forth on Schedule 5.25) as of the
date of this Agreement of:
(i) the name of each financial institution in which the Company has
accounts or safe deposit boxes;
(ii) the names in which the accounts or boxes are held;
(iii) the type of account and account number; and
(iv) the name of each person authorized to draw thereon or have
access thereto.
Schedule 5.25 also sets forth the name of each person, corporation, firm or
other entity holding a general or special power of attorney from the Company and
a description of the terms of such power.
5.26 VALIDITY OF OBLIGATIONS. The execution and delivery of this Agreement
by the Company and the performance of the transactions contemplated herein have
been duly and validly authorized by the Board of Directors of the Company and
this Agreement has been duly and validly authorized by all necessary corporate
action and is a legal, valid and binding obligation of the Company.
5.27 RELATIONS WITH GOVERNMENTS. Except for political contributions made
in compliance with applicable laws, neither the Company nor any Affiliate of the
Company acting on behalf of the Company has given or offered anything of value
to any governmental official, political party or candidate for government
office. None of such Persons has 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.
5.28 DISCLOSURE. (a) The representations and warranties of the
Stockholders set forth in this Agreement, including the relevant Annexes and
Schedules hereto, do not contain an untrue statement of a material fact or omit
to state a material fact necessary to make the statements herein and therein, in
light of the circumstances under which they were made, not misleading. If, prior
to the 25th day after the date of the final prospectus of LandCARE utilized in
connection with the IPO, the Stockholders become aware of any fact or
circumstance which would affect the accuracy of a representation or warranty of
the Stockholders in this Agreement in any material respect, the Stockholders
shall immediately give notice of such fact or circumstance to LandCARE. Subject
to the provisions of Section 7.8, such notification shall not relieve either the
Company or the Stockholders of their respective obligations under this
Agreement.
(b) The Stockholders acknowledge and agree (i) that there exists no firm
commitment, binding agreement, or promise or other assurance of any kind,
whether express or implied, oral or written, that the Registration Statement
will become effective or that the IPO pursuant thereto will occur at a
particular price or within a particular range of prices or occur at all; (ii)
that neither
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LandCARE or any of its officers, directors, agents or representatives nor any
Underwriter shall have any liability to the Company, the Stockholders or any
other person affiliated or associated with the Company for any failure of the
Registration Statement to become effective, the IPO to occur at a particular
price or to occur at all; and (iii) that the decision of Stockholders to enter
into this Agreement, or to vote in favor of or consent to the proposed Merger,
has been or will be made independent of, and without reliance upon, any
statements, opinions or other communications, or due diligence investigations
which have been or will be made or performed by any prospective Underwriter,
relative to LandCARE or the prospective IPO. Notwithstanding the foregoing,
LandCARE has agreed and herein acknowledges its agreement to use its reasonable
efforts to consummate the LandCARE Plan of Organization and IPO as contemplated
hereby.
5.29 [INTENTIONALLY OMITTED]
5.30 NO INTERESTS IN OTHER BUSINESSES. Except as disclosed on Schedule
5.30, neither the Company nor any Stockholder, nor any Affiliate of any of them,
has any ownership or similar interest in any business that offers or sells
services or products of any nature whatsoever to the Company or to any customers
of the Company in connection with or as a direct or indirect result of the
Company's provision of services or products to its customers.
5.31 AUTHORITY; OWNERSHIP. Such Stockholder has the full legal right,
power and authority to enter into this Agreement. Such Stockholder owns
beneficially and of record all of the shares of the Company Stock identified on
Annex II as being owned by such Stockholder, and, except as set forth on
Schedule 5.31, such Company Stock is owned free and clear of all liens, security
interests, pledges, voting agreements, voting trusts, contractual restrictions
on transfer, encumbrances and claims of every kind.
5.32 PREEMPTIVE RIGHTS. Such Stockholder does not have, or hereby waives,
any preemptive or other right to acquire shares of Company Stock that such
Stockholder has or may have had.
5.33 NO INTENTION TO DISPOSE OF LANDCARE STOCK. No Stockholder is under
any binding commitment or contract to sell, exchange or otherwise dispose of
shares of LandCARE Stock to be received as described in Section 3.1 of this
Agreement.
6. REPRESENTATIONS OF LANDCARE AND NEWCO
LandCARE and Newco jointly and severally represent and warrant that all of
the following representations and warranties in this Section 6 are true at the
date of this Agreement and, subject to Section 7.8 hereof, shall be true at the
time of Closing and the Funding and Consummation Date, and that such
representations and warranties shall survive the Funding and Consummation Date
for a period of twelve months (the last day of such period being the "Expiration
Date"), except that the warranties and representations set forth in Section 6.14
hereof shall survive until such time as the
-21-
limitations period has run for all tax periods ended on or prior to the Funding
and Consummation Date, which shall be deemed to be the Expiration Date for
Section 6.14.
6.1 DUE ORGANIZATION. LandCARE and Newco are each corporations duly
incorporated and organized, validly existing and in good standing under the laws
of the State of Delaware, and each has the requisite power and authority to
carry on its business as it is now being conducted. LandCARE and Newco are each
qualified to do business and are each 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. True, complete and correct copies of the Certificate of
Incorporation and By-laws of LandCARE (the "LandCARE Charter Documents") have
been or will be filed as exhibits to the Registration Statement, and copies
thereof and copies of the Certificate of Incorporation and Bylaws of Newco will
be provided to the Stockholders promptly upon request.
6.2 AUTHORIZATION. (i) The respective representatives of LandCARE and
Newco executing this Agreement have the authority to enter into and bind
LandCARE and Newco to the terms of this Agreement and (ii) LandCARE and Newco
have the full legal right, power and authority to enter into this Agreement and
consummate the Merger. All corporate acts and other proceedings required to have
been taken by LandCARE and Newco to authorize the execution, delivery and
performance of this Agreement and the consummation of the Merger have been duly
and properly taken.
6.3 CAPITAL STOCK OF LANDCARE AND NEWCO. The authorized capital stock of
LandCARE and Newco is as set forth in Sections 1.4(ii) and (iii), respectively.
All of the issued and outstanding shares of the capital stock of Newco are owned
by LandCARE. All of the issued and outstanding shares of the capital stock of
LandCARE and Newco have been duly authorized and validly issued, are fully paid
and nonassessable, and further, such shares were offered, issued, sold and
delivered by LandCARE and Newco in compliance with all applicable state and
federal laws concerning the issuance of securities. Further, none of such shares
were issued in violation of the preemptive rights of any past or present
stockholder of LandCARE or Newco.
6.4 TRANSACTIONS IN CAPITAL STOCK, ORGANIZATION ACCOUNTING. Except for the
Other Agreements and except as set forth in or contemplated by the Draft
Registration Statement or set forth on Schedule 6.4 hereto, (i) no option,
warrant, call, conversion right or commitment of any kind exists which obligates
LandCARE or Newco to issue any of their respective authorized but unissued
capital stock; and (ii) neither LandCARE nor Newco has any obligation
(contingent or otherwise) to purchase, redeem or otherwise acquire any of its
equity securities or any interests therein or to pay any dividend or make any
distribution in respect thereof. Complete and accurate copies of all stock
option or stock purchase plans and a list of all outstanding options, warrants
or other rights to acquire shares of the stock of LandCARE will be provided to
the Stockholders promptly upon request.
6.5 SUBSIDIARIES. Newco has no Subsidiaries. LandCARE has no Subsidiaries
except for Newco and each of the companies identified as "Newco" in each of the
Other Agreements and other
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newly incorporated Subsidiaries that have conducted no business and have been
created solely to effectuate the business of LandCARE. Except as set forth in
the preceding sentence or set forth on Schedule 6.5 hereto, neither LandCARE nor
any Subsidiary of LandCARE presently owns, of record or beneficially, or
controls, directly or indirectly, any capital stock, securities convertible into
capital stock or any other equity interest in any corporation, association or
business entity, and neither LandCARE nor Newco, directly or indirectly, is a
participant in any joint venture, partnership or other non-corporate entity.
6.6 FINANCIAL STATEMENTS. The historical financial statements of LandCARE
included in the Draft Registration Statement (the "LandCARE Financial
Statements") have been prepared in accordance with generally accepted accounting
principles applied on a consistent basis throughout the period indicated (except
as noted thereon), and present fairly in all material respects the financial
position of LandCARE as of the date and for the period indicated.
6.7 LIABILITIES AND OBLIGATIONS. Except as set forth in the Draft
Registration Statement or on Schedule 6.7 hereto, neither LandCARE nor any
Subsidiary of LandCARE has any material liabilities, contingent or otherwise,
except as set forth in or contemplated by this Agreement and the Other
Agreements and except for fees incurred in connection with the transactions
contemplated hereby and thereby.
6.8 CONFORMITY WITH LAW; LITIGATION. Except to the extent set forth in the
Draft Registration Statement or on Schedule 6.8 hereto, (a) neither LandCARE nor
any Subsidiary of LandCARE is in violation of any 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 which would have a Material Adverse Effect, (b) there are no
material claims, actions, suits or proceedings, pending or, to the knowledge of
LandCARE or Newco, threatened against or affecting, LandCARE or any Subsidiary
of LandCARE, 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 any of them, and (c) no notice of any
claim, action, suit or proceeding, whether pending or threatened, has been
received by LandCARE or Newco. LandCARE and its Subsidiaries have conducted and
are conducting their respective businesses 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 and are not in violation of any of
the foregoing which would have a Material Adverse Effect.
6.9 NO VIOLATIONS. LandCARE is not in violation of any LandCARE Charter
Document, and no Subsidiary of LandCARE is in violation of its Certificate of
Incorporation or Bylaws. None of LandCARE, Newco, or, to the knowledge of
LandCARE and Newco, any other party thereto, is in default under any lease,
instrument, agreement, license, or permit to which LandCARE or any Subsidiary of
LandCARE is a party, or by which LandCARE or any Subsidiary of LandCARE, or any
of their respective properties, are bound (collectively, the "LandCARE
Documents"); and (a) the rights and benefits of LandCARE and any Subsidiary of
LandCARE under the LandCARE Documents will not
-23-
be adversely affected by the transactions contemplated hereby and (b) the
execution and delivery of this Agreement by LandCARE and Newco and the
performance of their obligations hereunder do not, and the consummation of the
transactions contemplated hereby and compliance with the terms hereof will not,
conflict with, or result in any violation or default (with or without notice or
lapse of time, or both), under or give rise to a right of termination,
cancellation, or acceleration of any obligation or to loss of a material benefit
under, or result in the creation of any lien upon any of the assets of LandCARE
or any Subsidiary of LandCARE under, any provision of (i) the Certificate of
Incorporation or Bylaws of LandCARE or the comparable governing instruments of
any Subsidiary of LandCARE, (ii) any note, bond, mortgage, indenture or deed of
trust or any license, lease, contract, commitment, agreement or arrangement to
which LandCARE and any Subsidiary of LandCARE is a party or by which any of
their respective properties or assets are bound or (iii) any judgment, order,
decree or law, ordinance, rule or regulation, applicable to LandCARE or any
Subsidiary of LandCARE or their respective properties or assets. The execution
of this Agreement and the Other Agreements and the performance of the
obligations hereunder and thereunder and the consummation of the transactions
contemplated by the LandCARE Plan of Organization will not result in any
material violation or breach or constitute a default under, any of the terms or
provisions of the LandCARE Documents or the LandCARE Charter Documents. Except
as contemplated hereby or described in the Registration Statement or on Schedule
6.9 hereto, none of the LandCARE 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 by the LandCARE Plan of Organization in order to
remain in full force and effect and consummation of the transactions
contemplated thereby will not give rise to any right to termination,
cancellation or acceleration or loss of any right or benefit.
6.10 VALIDITY OF OBLIGATIONS. The execution and delivery of this Agreement
by LandCARE and Newco and the performance of the transactions contemplated
herein have been duly and validly authorized by the respective Boards of
Directors of LandCARE and Newco and this Agreement has been duly and validly
authorized by all necessary corporate action and is a legal, valid and binding
obligation of LandCARE and Newco.
6.11 LANDCARE STOCK. At the time of issuance thereof and delivery to the
Stockholders, the LandCARE Stock to be delivered to the Stockholders pursuant to
this Agreement will constitute valid and legally issued shares of LandCARE,
fully paid and nonassessable, and with the exception of restrictions upon resale
set forth in Sections 15 and 16 hereof, will be identical in all substantive
respects (which do not include the form of certificate upon which it is printed
or the presence or absence of a CUSIP number on any such certificate) to the
LandCARE Stock issued and outstanding as of the date hereof by reason of the
provisions of the Delaware GCL. Except as set forth above, the LandCARE Stock
issued and delivered to the Stockholders shall at the time of such issuance and
delivery be free and clear of any liens, security interests, claims or
encumbrances of any kind or character. The shares of LandCARE Stock to be issued
to the Stockholders pursuant to this Agreement will not be registered under the
1933 Act except as provided in Section 17 hereof.
6.12 OTHER AGREEMENTS; NO SIDE AGREEMENTS. Except as described on Schedule
6.12 hereto, each of the Other Agreements is substantially similar to this
Agreement. Neither LandCARE
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nor Newco has entered or will enter into any agreement with any of the Other
Founding Companies or any of the stockholders of the Other Founding Companies
other than the Other Agreements and the agreements contemplated by each of the
Other Agreements, including the employment agreements and leases referred to
herein or entered into in connection with the transactions contemplated hereby
and thereby.
6.13 BUSINESS; REAL PROPERTY; MATERIAL AGREEMENTS. LandCARE was formed in
October 1997 and has conducted only limited operations since that time. Neither
LandCARE nor any Subsidiary thereof has conducted any material business since
the date of its inception, except in connection with this Agreement, the Other
Agreements and the IPO. Except as described in the Draft Registration Statement,
neither LandCARE nor any Subsidiary of LandCARE owns or has at any time owned
any real property or any material personal property or is a party to any other
agreement other than the Other Agreements and the agreements contemplated
thereby and to such agreements as will be filed as Exhibits to the Registration
Statement.
6.14 TAXES.LandCARE and each Subsidiary thereof have timely filed all
requisite federal, state and other Returns or extension requests for all fiscal
periods ended prior to the date hereof for which such Returns are due; and there
are no examinations in progress or claims against LandCARE or any Subsidiary
thereof for federal, state and other Taxes (including penalties and interest)
for any such period and no notice of any claim for Taxes, whether pending or
threatened, has been received. All Taxes which LandCARE or any Subsidiary of
LandCARE has been required to collect or withhold have been duly and timely
collected and withheld and have been set aside in accounts for such purposes, or
have been duly and timely paid to the proper governmental authority. All Tax,
including interest and penalties (whether or not shown on any tax return) owed
by LandCARE, any member of an affiliated or consolidated group which includes or
included LandCARE, or with respect to any payment made or deemed made by
LandCARE herein has been paid. The amounts shown as accruals for taxes on
LandCARE Financial Statements are sufficient for the payment of all taxes of the
kinds indicated (including penalties and interest) for all fiscal periods ended
on or before that date. Neither LandCARE nor any Subsidiary thereof has entered
into any tax sharing agreement or similar arrangement. Neither LandCARE nor any
Subsidiary thereof is an investment company as defined in Section 351(e)(1) of
the Code.
6.15 ABSENCE OF CHANGES. Since the Balance Sheet Date, except as set forth
in the Draft Registration Statement delivered to the Stockholders, and except as
contemplated by this Agreement and the Other Agreements or as set forth on
Schedule 6.15 hereto, there has not been:
(i) any material adverse change in the financial condition, assets,
liabilities (contingent or otherwise) or business of LandCARE or Newco;
(ii) any damage, destruction or loss (whether or not covered by
insurance) materially adversely affecting the properties or business of LandCARE
or Newco;
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(iii) any change in the authorized capital of LandCARE or Newco or
their outstanding securities or any change in their ownership interests or any
grant of any options, warrants, calls, conversion rights or commitments;
(iv) any declaration or payment of any dividend or distribution in
respect of the capital stock or any direct or indirect redemption, purchase or
other acquisition of any of the capital stock of LandCARE or Newco;
(v) any sale or transfer, or any agreement to sell or transfer, any
material assets, property or rights of LandCARE or any Subsidiary thereof to any
person;
(vi) any cancellation, or agreement to cancel, any indebtedness or
other obligation owing to LandCARE or any Subsidiary thereof;
(vii) any plan, agreement or arrangement granting any preferential
rights to purchase or acquire any interest in any of the assets, property or
rights of LandCARE or any Subsidiary thereof or requiring consent of any party
to the transfer and assignment of any such assets, property or rights;
(viii) any waiver of any material rights or claims of LandCARE or
any Subsidiary of LandCARE;
(ix) any amendment or termination of any material contract,
agreement, license, permit or other right to which LandCARE or any Subsidiary of
LandCARE is a party;
(x) any transaction by LandCARE or any Subsidiary of LandCARE
outside the ordinary course of its business;
(xi) any other distribution of property or assets by LandCARE or any
Subsidiary of LandCARE other than in the ordinary course of business.
6.16 DISCLOSURE. The Draft Registration Statement delivered to the Company
and the Stockholders, together with the representations and warranties of
LandCARE and Newco set forth in this Agreement, does not contain an untrue
statement of a material fact or omit to state a material fact necessary to make
the statements herein and therein, in light of the circumstances under which
they were made, not misleading; provided, however, that the foregoing does not
apply to statements contained in or omitted from any of such documents made or
omitted in reliance upon information furnished by the Company or the
Stockholders or the Other Founding Companies or the stockholders thereof.
(b) Based on and assuming the accuracy of certain information furnished to
LandCARE by the Stockholders, the offering and issuance of shares of LandCARE
Stock to the Stockholders and
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to the stockholders of the Other Founding Companies pursuant to this Agreement
and to the Other Agreements have been made in compliance with all applicable
federal and state securities laws.
7. COVENANTS PRIOR TO CLOSING
7.1 ACCESS AND COOPERATION; DUE DILIGENCE. (a) Between the date of this
Agreement and the Funding and Consummation Date, the Company will afford to the
officers and authorized representatives of LandCARE access to all of the
Company's sites, properties, books and records and will furnish LandCARE with
such additional financial and operating data and other information as to the
business and properties of the Company as LandCARE may from time to time
reasonably request. The Company will cooperate with LandCARE and its
representatives, auditors and counsel in the preparation of any documents or
other materials which may be required in connection with any documents or
materials required by this Agreement. LandCARE, Newco, the Stockholders and the
Company will treat all information obtained in connection with the negotiation
and performance of this Agreement or the due diligence investigations conducted
with respect to the Other Founding Companies as confidential in accordance with
the provisions of Section 14 hereof. In addition, LandCARE will cause each of
the Other Founding Companies to enter into a provision similar to this Section
7.1.
(b) Between the date of this Agreement and the Funding and Consummation
Date, LandCARE will afford to the officers and authorized representatives of the
Company access to all of LandCARE's and Newco's sites, properties, books and
records and will furnish the Company with such additional financial and
operating data and other information as to the business and properties of
LandCARE and Newco as the Company may from time to time reasonably request.
LandCARE and Newco will cooperate with the Company, its representatives,
auditors and counsel in the preparation of any documents or other material which
may be required in connection with any documents or materials required by this
Agreement. The Company will cause all information obtained in connection with
the negotiation and performance of this Agreement to be treated as confidential
in accordance with the provisions of Section 14 hereof.
7.2 CONDUCT OF BUSINESS PENDING CLOSING. Between the date of this
Agreement and the Funding and Consummation Date, the Company will, except as set
forth on Schedule 7.2:
(i) carry on its business in substantially the same manner as it has
heretofore and not introduce any material new method of management, operation or
accounting;
(ii) use its reasonable efforts to maintain its properties and
facilities, including those held under leases, in as good working order and
condition as at present, ordinary wear and tear excepted;
(iii) perform in all material respects all of its obligations under
agreements relating to or affecting its respective assets, properties or rights;
-27-
(iv) use its reasonable efforts to keep in full force and effect
present insurance policies or other comparable insurance coverage;
(v) use its reasonable efforts to maintain and preserve its business
organization intact, retain its respective present key employees and maintain
its relationships with suppliers, customers and others having business relations
with the Company;
(vi) use its reasonable efforts to maintain compliance with all
material permits, laws, rules and regulations, consent orders, and all other
orders of applicable courts, regulatory agencies and similar governmental
authorities applicable to it;
(vii) maintain present debt and lease instruments and not enter into
new or amended debt or lease instruments without the knowledge and consent of
LandCARE (which consent shall not be unreasonably withheld), provided that debt
and/or lease instruments may be replaced without the consent of LandCARE if such
replacement instruments are on terms at least as favorable to the Company as the
instruments being replaced; and
(viii) maintain or reduce present salaries and commission levels for
all officers, directors, employees and agents except for ordinary and customary
bonus and salary increases for employees in accordance with past practices.
7.3 PROHIBITED ACTIVITIES. Except as disclosed on Schedule 7.3, between
the date hereof and the Funding and Consummation Date, the Company will not,
without prior written consent of LandCARE, which consent will not be
unreasonably withheld:
(i) make any change in its Articles of Incorporation or By-laws;
(ii) issue any securities, options, warrants, calls, conversion
rights or commitments relating to its securities of any kind other than in
connection with the exercise of options or warrants listed in Schedule 5.4;
(iii) declare or pay any dividend, or make any distribution in
respect of its stock whether now or hereafter outstanding, or purchase, redeem
or otherwise acquire or retire for value any shares of its stock;
(iv) enter into any contract or commitment or incur or agree to
incur any liability or make any capital expenditures, except in the normal
course of business (consistent with past practice) or involving an amount not in
excess of $25,000;
(v) create, assume or permit to exist any mortgage, pledge or other
lien or encumbrance upon any assets or properties whether now owned or hereafter
acquired, except (1) with respect to purchase money liens incurred in connection
with the acquisition of equipment with an aggregate cost not in excess of
$25,000 necessary or desirable for the conduct of the businesses
-28-
of the Company, (2) (A) liens for taxes either not yet due or being contested in
good faith and by appropriate proceedings (and for which contested taxes
adequate reserves have been established and are being maintained) or (B)
materialmen's, mechanics', workers', repairmen's, employees' or other like liens
arising in the ordinary course of business (the liens set forth in clause (2)
being referred to herein as "Statutory Liens"), or (3) liens set forth on
Schedule 5.10 and/or 5.15 hereto;
(vi) sell, assign, lease or otherwise transfer or dispose of any
property or equipment except in the normal course of business and other than
distributions of real estate and other assets as permitted in this Agreement
(including the Schedules hereto);
(vii) negotiate for the acquisition of any business or the start-up
of any new business;
(viii) merge or consolidate or agree to merge or consolidate with or
into any other corporation;
(ix) waive any material rights or claims of the Company, provided
that the Company may negotiate and adjust bills and accounts in the course of
good faith disputes with customers in a manner consistent with past practice,
provided, further, that such adjustments shall not be deemed to be included in
Schedule 5.11 unless specifically listed thereon;
(x) amend or terminate any material agreement, permit, license or
other right of the Company; or
(xi) enter into any other transaction outside the ordinary course of
its business or prohibited hereunder.
7.4 NO SHOP. None of the Stockholders, the Company, nor any agent,
officer, director, trustee or any representative of any of the foregoing will,
during the period commencing on the date of this Agreement and ending with the
earlier to occur of the Funding and Consummation Date or the termination of this
Agreement in accordance with its terms, directly or indirectly:
(i) solicit or initiate the submission of proposals or offers from
any person for,
(ii) participate in any discussions pertaining to, or
(iii) furnish any information to any person other than LandCARE, the
Other Founding Companies (to the extent necessary or appropriate in connection
with the transactions contemplated hereby) or their respective authorized agents
relating to, any acquisition or purchase of all or a material amount of the
assets of, or any equity interest in, the Company or a merger, consolidation or
business combination of the Company.
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7.5 NOTICE TO BARGAINING AGENTS. Prior to the Closing Date, the Company
shall satisfy any requirement for notice of the transactions contemplated by
this Agreement under applicable collective bargaining agreements, and shall
provide LandCARE on Schedule 7.5 with proof that any required notice has been
sent.
7.6 AGREEMENTS. The Stockholders and the Company shall (except as
otherwise agreed to by LandCARE or reflected in Schedule 7.6) terminate (i) any
stockholders agreements, voting agreements, voting trusts, options, warrants and
employment agreements between the Company and any employee listed on Schedule
9.12 hereto and (ii) any existing agreement between the Company and any
Stockholder, on or prior to the Funding and Consummation Date provided that
nothing herein shall prohibit or prevent the Company from paying (either prior
to or on the Closing Date) notes or other obligations from the Company to the
Stockholders in accordance with the terms thereof, which terms have been
disclosed to LandCARE. Such termination agreements are listed on Schedule 7.6
and copies thereof shall be attached thereto.
7.7 NOTIFICATION OF CERTAIN MATTERS. The Stockholders and the Company
shall give prompt notice to LandCARE of (i) the occurrence or non-occurrence of
any event the occurrence or non-occurrence of which would be likely to cause any
representation or warranty of the Company or the Stockholders contained herein
to be untrue or inaccurate in any material respect at or prior to the Closing
and (ii) any failure of any Stockholder or the Company to comply with or satisfy
any material covenant, condition or agreement to be complied with or satisfied
by such person hereunder. LandCARE and Newco shall give prompt notice to the
Company of (i) the occurrence or non-occurrence of any event the occurrence or
non-occurrence of which would be likely to cause any representation or warranty
of LandCARE or Newco contained herein to be untrue or inaccurate in any material
respect at or prior to the Closing and (ii) any failure of LandCARE or Newco to
comply with or satisfy any material covenant, condition or agreement to be
complied with or satisfied by it hereunder. The delivery of any notice pursuant
to this Section 7.7 shall not be deemed to (i) modify the representations or
warranties hereunder of the party delivering such notice, which modification may
only be made pursuant to Section 7.8, (ii) modify the conditions set forth in
Sections 8 and 9, or (iii) limit or otherwise affect the remedies available
hereunder to the party receiving such notice.
7.8 AMENDMENT OF SCHEDULES. Each party hereto agrees that, with respect to
the representations and warranties of such party contained in this Agreement,
such party shall have the continuing obligation until 24 hours prior to the
anticipated effectiveness of the Registration Statement to supplement or amend
promptly the Schedules hereto with respect to any matter hereafter arising or
discovered which, if existing or known at the date of this Agreement, would have
been required to be set forth or described in the Schedules, provided however,
that supplements and amendments to Schedules 5.10, 5.11, 5.14 and 5.15 shall
only have to be delivered at the Closing Date, unless such Schedule is to be
amended to reflect an event occurring other than in the ordinary course of
business. Notwithstanding the foregoing sentence, no amendment or supplement to
a Schedule prepared by the Company that constitutes or reflects an event or
occurrence that would
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have a Material Adverse Effect may be made unless LandCARE and a majority of the
Founding Companies other than the Company consent to such amendment or
supplement; and provided further, that no amendment or supplement to a Schedule
prepared by LandCARE or Newco that constitutes or reflects an event or
occurrence that would have a Material Adverse Effect may be made unless a
majority of the Founding Companies consent to such amendment or supplement. For
all purposes of this Agreement, including without limitation for purposes of
determining whether the conditions set forth in Sections 8.1 and 9.1 have been
fulfilled, the Schedules hereto shall be deemed to be the Schedules as amended
or supplemented pursuant to this Section 7.8. In the event that one of the Other
Founding Companies seeks to amend or supplement a Schedule pursuant to Section
7.8 of one of the Other Agreements, and such amendment or supplement constitutes
or reflects an event or occurrence that would have a Material Adverse Effect on
such Other Founding Company, LandCARE shall give the Company notice promptly
after it has knowledge thereof. If LandCARE and a majority of the Founding
Companies (other than the Founding Company seeking to amend or supplement a
Schedule) consent to such amendment or supplement, which consent shall have been
deemed given by LandCARE or any Founding Company if no response is received
within 24 hours following receipt of notice of such amendment or supplement (or
sooner if required by the circumstances under which such consent is requested),
but the Company does not give its consent, the Company may terminate this
Agreement pursuant to Section 12.1(iv) hereof. In the event that the Company
seeks to amend or supplement a Schedule pursuant to this Section 7.8, and
LandCARE and a majority of the Other Founding Companies do not consent to such
amendment or supplement, this Agreement shall be deemed terminated by mutual
consent as set forth in Section 12.1(i) hereof. In the event that LandCARE or
Newco seeks to amend or supplement a Schedule pursuant to this Section 7.8 and a
majority of the Founding Companies do not consent to such amendment or
supplement, this Agreement shall be deemed terminated by mutual consent as set
forth in Section 12.1(i) hereof. No party to this Agreement shall be liable to
any other party if this Agreement shall be terminated pursuant to the provisions
of this Section 7.8. No amendment of or supplement to a Schedule shall be made
later than 24 hours prior to the anticipated effectiveness of the Registration
Statement.
7.9 COOPERATION IN PREPARATION OF REGISTRATION STATEMENT. The Company and
Stockholders shall furnish or cause to be furnished to LandCARE and the
Underwriters all of the information concerning the Company and the Stockholders
reasonably requested by LandCARE or the Underwriters for inclusion in, and will
cooperate with LandCARE and the Underwriters in the preparation of, the
Registration Statement and the prospectus included therein (including audited
and unaudited financial statements of the Company, prepared in accordance with
generally accepted accounting principles, in form suitable for inclusion in the
Registration Statement). The Company and the Stockholders agree promptly to
advise LandCARE if at any time during the period in which a prospectus relating
to the IPO is required to be delivered under the Securities Act, any information
contained in the prospectus concerning the Company or the Stockholders becomes
incorrect or incomplete in any material respect, and to provide the information
needed to correct such inaccuracy. Insofar as the information relates solely to
the Company or the Stockholders, the Company
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represents and warrants as to such information with respect to itself, and each
Stockholder represents and warrants, as to such information with respect to the
Company and himself or herself, that the Registration Statement will not include
an untrue statement of a material fact or omit to state a material fact required
to be stated therein or necessary to make the statements therein, in light of
the circumstances under which they were made, not misleading.
7.10 FINAL FINANCIAL STATEMENTS. The Company shall provide prior to the
Funding and Consummation Date, and LandCARE shall have had sufficient time to
review, the unaudited consolidated balance sheets of the Company as of the end
of all fiscal quarters following the Balance Sheet Date and ending not later
than 15 days prior to the Funding and Consummation Date, and the unaudited
consolidated statement of income, cash flows and retained earnings of the
Company for all such fiscal quarters, disclosing no material adverse change in
the financial condition of the Company or the results of its operations from the
financial statements as of the Balance Sheet Date. Such financial statements
shall have been prepared in accordance with generally accepted accounting
principles applied on a consistent basis throughout the periods indicated
(except as noted therein). Except as noted in such financial statements, all of
such financial statements will present fairly the results of operations of the
Company for the periods indicated therein.
7.11 FURTHER ASSURANCES. The parties hereto agree to execute and deliver,
or cause to be executed and delivered, such further instruments or documents or
take such other action as may be reasonably necessary or convenient to carry out
the transactions contemplated hereby.
7.12 AUTHORIZED CAPITAL. Prior to the Funding and Consummation Date,
LandCARE shall maintain its authorized capital stock as set forth in the
Registration Statement filed with the SEC except for such changes in authorized
capital stock as are made to respond to comments made by the SEC or requirements
of any exchange or automated trading system for which application is made to
register the LandCARE Stock and any changes necessary or advisable in order to
permit the delivery of the opinion contemplated by Section 8.12 hereof.
7.13 COMPLIANCE WITH THE ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ ANTITRUST IMPROVEMENTS ACT OF
1976 (THE "▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ ACT"). All parties to this Agreement hereby
recognize that one or more filings under the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Act may be
required in connection with the transactions contemplated herein. If it is
determined by the parties to this Agreement that filings under the
▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Act are required, then: (i) each of the parties hereto agrees
to cooperate and use its best efforts to comply with the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Act,
and (ii) such compliance by the Stockholders and the Company shall be deemed a
condition precedent in addition to the conditions precedent set forth in Section
9 of this Agreement, and such compliance by LandCARE and Newco shall be deemed a
condition precedent in addition to the conditions precedent set forth in Section
8 of this Agreement. If filings under the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Act are required,
the costs and expenses thereof (including legal fees and costs and filing fees)
shall be borne by LandCARE. The obligation of each party to consummate the
transactions contemplated by this Agreement is subject to the expiration or
termination of the waiting period under the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Act, if
applicable.
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7.14 STOCKHOLDERS OF LANDCARE. Promptly after a request by the Company,
LandCARE will deliver to the Company a list of the stockholders of LandCARE as
of the date of this Agreement.
8. CONDITIONS PRECEDENT TO OBLIGATIONS OF STOCKHOLDERS AND COMPANY
The obligations of the Stockholders and the Company with respect to
actions to be taken on the Closing Date are subject to the satisfaction or
waiver on or prior to the Closing Date of all of the following conditions.
Subject to Section 12 hereof, the obligations of the Stockholders and the
Company with respect to actions to be taken on the Funding and Consummation Date
are subject to the satisfaction or waiver on or prior to the Funding and
Consummation Date of the conditions set forth in Sections 8.1, 8.5, 8.8, 8.9 and
8.12. As of the Closing Date or subject to Section 12 hereof, with respect to
the conditions set forth in Sections 8.1, 8.5, 8.8, 8.9 and 8.12, as of the
Funding and Consummation Date, if any such conditions have not been satisfied,
the Stockholders (acting in unison) shall have the right to terminate this
Agreement, or in the alternative, waive any condition not so satisfied. Any act
or action of the Stockholders in consummating the Closing or delivering
certificates representing Company Stock as of the Funding and Consummation Date
shall constitute a waiver of any conditions not so satisfied. However, no such
waiver shall be deemed to affect the survival of the representations and
warranties of LandCARE and Newco contained in Section 6 hereof.
8.1 REPRESENTATIONS AND WARRANTIES; PERFORMANCE OF OBLIGATIONS. All
representations and warranties of LandCARE and Newco contained in Section 6, as
amended or supplemented in accordance with Section 7.8, shall be true and
correct in all material respects as of the Closing Date and the Funding and
Consummation Date as though such representations and warranties had been made as
of that time; all of the terms, covenants and conditions of this Agreement to be
complied with and performed by LandCARE and Newco on or before the Closing Date
and the Funding and Consummation Date shall have been duly complied with and
performed in all material respects; and certificates to the foregoing effect
dated the Closing Date and the Funding and Consummation Date, respectively, and
signed by the President or any Vice President of LandCARE shall have been
delivered to the Stockholders.
8.2 SATISFACTION. All actions, proceedings, instruments and documents
required to carry out this Agreement or incidental hereto and all other related
legal matters shall be reasonably satisfactory to the Company and its counsel.
The Stockholders and the Company shall be satisfied that the Registration
Statement and the prospectus forming a part thereof, including any amendments
thereof or supplements thereto, shall not contain any untrue statement of a
material fact, or omit to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, provided
that the condition contained in this sentence shall (for purposes of this
Section 8.2) be deemed satisfied if the Company or Stockholders shall have
failed to inform
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LandCARE in writing prior to the effectiveness of the Registration Statement of
the existence of an untrue statement of a material fact or the omission of such
a statement of a material fact.
8.3 NO LITIGATION. No action or proceeding before a court or any other
governmental agency or body shall have been instituted or threatened to restrain
or prohibit the Merger or the IPO and no governmental agency or body shall have
taken any other action or made any request of the Company as a result of which
the management of the Company deems it inadvisable to proceed with the
transactions hereunder.
8.4 OPINION OF COUNSEL. The Company shall have received an opinion from
counsel for LandCARE, dated the Closing Date, in the form annexed hereto as
Annex III.
8.5 REGISTRATION STATEMENT. The Registration Statement shall have been
declared effective by the SEC and the underwriters named therein shall have
agreed to acquire on a firm commitment basis, subject to the conditions set
forth in the underwriting agreement, on terms such that the aggregate value of
the cash and the number of shares of LandCARE Stock to be received by the
Stockholders is not less than the Minimum Value set forth on Annex I.
8.6 CONSENTS AND APPROVALS. All necessary consents of and filings with any
governmental authority or agency relating to the consummation of the
transactions contemplated herein shall have been obtained and made and no action
or proceeding shall have been instituted or threatened to restrain or prohibit
the Merger and no governmental agency or body shall have taken any other action
or made any request of the Company as a result of which the Company deems it
inadvisable to proceed with the transactions hereunder.
8.7 GOOD STANDING CERTIFICATES. LandCARE and Newco each shall have
delivered to the Company a certificate, dated as of a date no later than ten
days prior to the Closing Date, duly issued by the Delaware Secretary of State
and in each state in which LandCARE or Newco is authorized to do business,
showing that each of LandCARE and Newco is in good standing and authorized to do
business and that all state franchise and/or income tax returns and taxes for
LandCARE and Newco, respectively, for all periods prior to the Closing have been
filed and paid.
8.8 NO MATERIAL ADVERSE CHANGE. No event or circumstance shall have
occurred with respect to LandCARE or Newco which has had or is reasonably likely
to have a Material Adverse Effect.
8.9 CLOSING OF IPO. The closing of the sale of the LandCARE Stock to the
Underwriters in the IPO shall have occurred simultaneously with the Funding and
Consummation Date hereunder.
8.10 SECRETARY'S CERTIFICATE. The Company shall have received a
certificate or certificates, dated the Closing Date and signed by the secretary
of LandCARE and of Newco,
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certifying the truth and correctness of attached copies of the LandCARE's and
Newco's respective Certificates of Incorporation (including amendments thereto),
By-Laws (including amendments thereto), and resolutions of the boards of
directors and, if required, the Stockholders of LandCARE and Newco approving
LandCARE's and Newco's entering into this Agreement and the consummation of the
transactions contemplated hereby.
8.11 EMPLOYMENT AGREEMENTS. The person or persons listed on Schedule 9.12
under the caption relating to the Company shall have been afforded the
opportunity to enter into an Employment Agreement substantially in the form of
Annex V hereto.
8.12 TAX MATTERS. The Stockholders shall have received an opinion of
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP or other tax advisor reasonably acceptable to the
Stockholders that the LandCARE Plan of Organization will qualify as a tax-free
transfer of property under Section 351 of the Code and that the Stockholders
will not recognize gain to the extent the Stockholders exchange stock of the
Company for LandCARE Stock (but not cash or other property) pursuant to the
LandCARE Plan of Organization.
9. CONDITIONS PRECEDENT TO OBLIGATIONS OF LANDCARE AND NEWCO
The obligations of LandCARE and Newco with respect to actions to be taken
on the Closing Date are subject to the satisfaction or waiver on or prior to the
Closing Date of all of the following conditions. The obligations of LandCARE and
Newco with respect to actions to be taken on the Funding and Consummation Date
are subject to the satisfaction or waiver on or prior to the Funding and
Consummation Date of the conditions set forth in Sections 9.1, 9.4 and 9.13. As
of the Closing Date or, with respect to the conditions set forth in Sections
9.1, 9.4 and 9.13, as of the Funding and Consummation Date, if any such
conditions have not been satisfied, LandCARE and Newco shall have the right to
terminate this Agreement, or waive any such condition, but no such waiver shall
be deemed to affect the survival of the representations and warranties contained
in Section 5 hereof.
9.1 REPRESENTATIONS AND WARRANTIES; PERFORMANCE OF OBLIGATIONS. All the
representations and warranties of the Stockholders and the Company contained in
this Agreement, as amended or supplemented in accordance with Section 7.8, shall
be true and correct in all material respects as of the Closing Date and the
Funding and Consummation Date with the same effect as though such
representations and warranties had been made on and as of such date; all of the
terms, covenants and conditions of this Agreement to be complied with or
performed by the Stockholders and the Company on or before the Closing Date or
the Funding and Consummation Date, as the case may be, shall have been duly
performed or complied with in all material respects; and the Stockholders shall
have delivered to LandCARE certificates dated the Closing Date and the Funding
and Consummation Date, respectively, and signed by them to such effect.
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9.2 NO LITIGATION. No action or proceeding before a court or any other
governmental agency or body shall have been instituted or threatened to restrain
or prohibit the Merger or the IPO and no governmental agency or body shall have
taken any other action or made any request of LandCARE as a result of which the
management of LandCARE (acting in good faith) deems it inadvisable to proceed
with the transactions hereunder.
9.3 SECRETARY'S CERTIFICATE. LandCARE shall have received a certificate,
dated the Closing Date and signed by the secretary of the Company, certifying
the truth and correctness of attached copies of the Company's Certificate of
Incorporation (including amendments thereto), ByLaws (including amendments
thereto), and resolutions of the board of directors and the Stockholders
approving the Company's entering into this Agreement and the consummation of the
transactions contemplated hereby.
9.4 NO MATERIAL ADVERSE EFFECT. No event or circumstance shall have
occurred with respect to the Company which has had or is reasonably likely to
have a Material Adverse Effect.
9.5 STOCKHOLDERS' RELEASE. The Stockholders shall have delivered to
LandCARE an instrument dated the Closing Date which shall be effective only upon
the occurrence of the Funding and Consummation Date releasing the Company from
(i) any and all claims of the Stockholders against the Company and (ii)
obligations of the Company to the Stockholders, except for (x) items
specifically identified on Schedules 5.10 and 5.15 as being claims of or
obligations to the Stockholders, and (y) continuing obligations to Stockholders
relating to their employment by the Company. In the event that the Funding and
Consummation Date does not occur, then the release instrument referenced herein
shall be void and of no further force or effect.
9.6 SATISFACTION. All actions, proceedings, instruments and documents
required to carry out the transactions contemplated by this Agreement or
incidental hereto and all other related legal matters shall have been approved
by counsel to LandCARE.
9.7 TERMINATION OF RELATED PARTY AGREEMENTS. Except as set forth on
Schedule 9.7 or otherwise approved by LandCARE, all existing agreements between
the Company and the Stockholders (and entities controlled by the Stockholders)
other than real property leases shall have been canceled effective prior to or
as of the Closing Date, and all real property leases between the Company and the
Stockholders (and any entity controlled by the Stockholders) shall have been
amended as described in Section 5.16.
9.8 OPINION OF COUNSEL. LandCARE shall have received an opinion from
Counsel to the Company and the Stockholders, dated the Closing Date,
substantially in the form annexed hereto as Annex IV.
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9.9 CONSENTS AND APPROVALS. All necessary consents of and filings with any
governmental authority or agency relating to the consummation of the
transactions contemplated herein shall have been obtained and made; all consents
and approvals of third parties listed on Schedule 5.23 shall have been obtained.
9.10 GOOD STANDING CERTIFICATES. The Company shall have delivered to
LandCARE a certificate, dated as of a date no earlier than ten days prior to the
Closing Date, duly issued by the appropriate governmental authority in the
Company's state of incorporation and, unless waived by LandCARE, in each state
in which the Company is authorized to do business, showing the Company is in
good standing and authorized to do business and that all state franchise and/or
income tax returns and taxes for the Company for all periods prior to the
Closing have been filed and paid.
9.11 REGISTRATION STATEMENT. The Registration Statement shall have been
declared effective by the SEC.
9.12 EMPLOYMENT AGREEMENTS. The person or persons listed on Schedule 9.12
each shall enter into an employment agreement substantially in the form of Annex
V hereto.
9.13 CLOSING OF IPO. The closing of the sale of the LandCARE Stock to the
Underwriters in the IPO shall have occurred simultaneously with the Funding and
Consummation Date hereunder.
9.14 FIRPTA CERTIFICATE. Each Stockholder shall have delivered to LandCARE
a certificate to the effect that he is not a foreign person pursuant to Section
1.1445-2(b) of the Treasury regulations.
9.15 ENVIRONMENTAL REVIEWS. LandCARE shall have received a report from an
independent environmental consultant retained by LandCARE at its expense to
conduct an environmental review of the Company's owned and leased sites, and
such report shall not disclose any environmental condition that, in LandCARE's
reasonable judgment, either (i) could be expected to have a Material Adverse
Effect on the Company, or (ii) poses any risk of a substantial liability to the
Company.
9.16 CERTAIN INDEBTEDNESS. The Company shall have obtained a release
reasonably satisfactory to LandCARE from the lender or lenders to any affiliates
of the Company of any guarantees by the Company of indebtedness of such
affiliates.
10. COVENANTS OF LANDCARE AND THE STOCKHOLDERS AFTER CLOSING
10.1 RELEASE FROM GUARANTEES; REPAYMENT OF CERTAIN OBLIGATIONS. LandCARE
shall use reasonable efforts, including offering its own guarantee, to have the
Stockholders and their
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spouses and ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ released from any and all guarantees of the
Company's indebtedness identified on Schedule 10.1. In the event that LandCARE
cannot obtain such releases from the lenders of any such guaranteed indebtedness
identified on Schedule 10.1 on or prior to 120 days subsequent to the Funding
and Consummation Date, LandCARE shall promptly pay off or otherwise refinance or
retire such indebtedness. LandCARE shall indemnify the Stockholders and ▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇▇ against, and shall promptly reimburse the Stockholders and ▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇▇ for, any amounts which the Stockholders or ▇▇. ▇▇▇▇▇▇▇▇ are obligated
to pay under any such guarantees listed on Schedule 10.1, and shall be
subrogated to any rights of the Stockholders or ▇▇. ▇▇▇▇▇▇▇▇ accruing as a
result of any such payments by the Stockholders or ▇▇. ▇▇▇▇▇▇▇▇.
10.2 PRESERVATION OF TAX AND ACCOUNTING TREATMENT. Except as contemplated
by this Agreement or the Registration Statement, after the Funding and
Consummation Date, LandCARE shall not and shall not permit any of its
subsidiaries to undertake any act that would jeopardize the tax-free status of
the organization, including without limitation:
(a) the retirement or reacquisition, directly or indirectly, of all
or part of the LandCARE Stock issued in connection with the transactions
contemplated hereby; or
(b) the entering into of financial arrangements for the benefit of
the Stockholders.
10.3 PREPARATION AND FILING OF TAX RETURNS.
(i) The Company, if possible, or otherwise the Stockholders shall
file or cause to be filed all income Tax Returns (federal, state, local or
otherwise) of any Acquired Party for all taxable periods that end on or before
the Funding and Consummation Date, and shall permit LandCARE to review all such
Tax Returns prior to such filings. Unless the Company is a C corporation, the
Stockholders shall pay or cause to be paid all Tax liabilities (in excess of all
amounts already paid with respect thereto or properly accrued or reserved with
respect thereto on the Company Financial Statements) shown by such Returns to be
due.
(ii) LandCARE shall file or cause to be filed all separate Returns
of, or that include, any Acquired Party for all taxable periods ending after the
Funding and Consummation Date, and shall permit the Stockholders a reasonable
opportunity to review all such Returns for periods including the Funding and
Consummation Date prior to the filing thereof.
(iii) 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 Return, amended
Return or claim for refund, determining a liability for Taxes or a right to
refund of Taxes or in conducting any audit or other proceeding in respect of
Taxes. Such cooperation and information shall include providing copies of all
relevant portions of relevant Returns, together with relevant accompanying
schedules and relevant work
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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 Returns pursuant to this
Agreement shall bear all costs of filing such Returns.
(iv) Each of the Company, Newco, LandCARE and each Stockholder shall
comply with the Tax reporting requirements of Section 1.351-3 of the Treasury
Regulations promulgated under the Code, and treat the transaction as a tax-free
contribution under Section 351(a) of the Code subject to gain, if any,
recognized on the receipt of cash or other property under Section 351(b) of the
Code.
10.4 DIRECTORS. The persons named in the Draft Registration Statement
shall be appointed as directors and elected as officers of LandCARE, as and to
the extent set forth in the Draft Registration Statement, promptly following the
Funding and Consummation Date.
11. INDEMNIFICATION
The Stockholders, LandCARE and Newco each make the following covenants
that are applicable to them, respectively:
11.1 GENERAL INDEMNIFICATION BY THE STOCKHOLDERS. Subject to Section 11.5,
the Stockholders covenant and agree that they jointly and severally will
indemnify, defend, protect and hold harmless LandCARE, Newco, and, subsequent to
the Funding and Consummation Date, the Company and the Surviving Corporation at
all times, from and after the date of this Agreement until the Expiration Date
(provided that for purposes of Section 11.1(iii) below, the Expiration Date
shall be the date on which the applicable statute of limitations expires), 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)
incurred by LandCARE, Newco, the Company or the Surviving Corporation as a
result of or arising from (i) any breach of the representations and warranties
of the Stockholders or the Company set forth herein or on the schedules or
certificates delivered in connection herewith, (ii) any breach of any agreement
on the part of the Stockholders or the Company under this Agreement, or (iii)
any liability under the 1933 Act, the 1934 Act or other Federal or state law or
regulation, at common law or otherwise, arising out of or based upon any untrue
statement of a material fact relating to the Company or the Stockholders, and
provided to LandCARE or its counsel by the Company or the Stockholders (but in
the case of the Stockholders, only if such statement was provided in writing)
which is contained in the Registration Statement or any prospectus forming a
part thereof, or any amendment thereof or supplement thereto, or arising out of
or based upon any omission or alleged omission to state therein a material fact
relating to the Company or the
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Stockholders required to be stated therein or necessary to make the statements
therein not misleading, provided, however, that such indemnity shall not inure
to the benefit of LandCARE, Newco, the Company or the Surviving Corporation to
the extent that such untrue statement (or alleged untrue statement) was made in,
or omission (or alleged omission) occurred in, any preliminary prospectus and
the Company or the Stockholders provided, in writing, corrected information to
LandCARE for inclusion in the final prospectus, and such information was not so
included or the final prospectus was not properly delivered, and provided
further, that no Stockholder shall be liable for any indemnification obligation
pursuant to this Section 11.1 to the extent attributable to a breach of any
representation, warranty or agreement made herein individually by any other
Stockholder.
LandCARE and Newco acknowledge and agree that other than the
representations and warranties of the Company or the Stockholders specifically
contained in this Agreement, there are no representations or warranties of the
Company or the Stockholders, either express or implied, with respect to the
transactions contemplated by this Agreement, the Company or its assets,
liabilities and business.
LandCARE and Newco further acknowledge and agree that, should the Funding
and Consummation Date occur, their sole and exclusive remedy with respect to any
and all claims relating to this Agreement and the transactions contemplated in
this Agreement, shall be pursuant to the indemnification provisions set forth in
this Section 11. LandCARE and Newco hereby waive, from and after the Funding and
Consummation Date, to the fullest extent permitted under applicable law, any and
all rights, claims and causes of action they or any indemnified person may have
against any Stockholder relating to this Agreement or the transactions arising
under or based upon any federal, state, local or foreign statute, law, rule,
regulation or otherwise except their rights under this Section 11.
11.2 INDEMNIFICATION BY LANDCARE. LandCARE covenants and agrees that it
will indemnify, defend, protect and hold harmless the Stockholders and, prior to
the Funding and Consummation Date, the Company, at all times from and after the
date of this Agreement until the Expiration Date (provided that for purposes of
Section 11.2(iv) below, the Expiration Date shall be the date on which the
applicable statute of limitations expires), 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) incurred by the Stockholders or
the Company as a result of or arising from (i) any breach by LandCARE or Newco
of their representations and warranties set forth herein or on the schedules or
certificates attached hereto, (ii) any breach of any agreement on the part of
LandCARE or Newco under this Agreement, (iii) any liabilities which the
Stockholders may incur due to LandCARE's or Newco's failure to be responsible
for the liabilities and obligations of the Company as provided in Section 1
hereof (except to the extent that LandCARE or Newco has claims against the
Stockholders by reason of such liabilities); or (iv) any liability under the
1933 Act, the 1934 Act or other Federal or state law
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or regulation, at common law or otherwise, arising out of or based upon any
untrue statement or alleged untrue statement of a material fact relating to
LandCARE, Newco or any of the Other Founding Companies contained in any
preliminary prospectus, the Registration Statement or any prospectus forming a
part thereof, or any amendment thereof or supplement thereto, or arising out of
or based upon any omission or alleged omission to state therein a material fact
relating to LandCARE or Newco or any of the Other Founding Companies required to
be stated therein or necessary to make the statements therein not misleading.
11.3 THIRD PERSON CLAIMS. Promptly after any party hereto (hereinafter 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, the Indemnified Party shall, as a
condition precedent to a claim with respect thereto being made against any party
obligated to provide indemnification pursuant to Section 11.1 or 11.2 hereof
(hereinafter the "Indemnifying Party"), give the Indemnifying Party written
notice of such claim or the commencement of such action or proceeding. Such
notice shall state the nature and the basis of such claim and a reasonable
estimate of the amount thereof. The Indemnifying Party shall have the right to
defend and settle, at its own expense and by its own counsel, any such matter so
long as the Indemnifying Party pursues the same in good faith and diligently,
provided that the Indemnifying Party shall not settle any proceeding without the
written consent of the Indemnified Party, which consent shall not be
unreasonably withheld or delayed. If the Indemnifying Party undertakes to defend
or settle, it shall promptly notify the Indemnified Party of its intention to do
so, and the Indemnified Party shall cooperate with the Indemnifying Party and
its counsel in the defense thereof and in any settlement thereof. Such
cooperation shall include, but shall not be limited to, furnishing the
Indemnifying Party with any books, records or information reasonably requested
by the Indemnifying Party that are in the Indemnified Party's possession or
control. All Indemnified Parties shall use the same counsel, which shall be the
counsel selected by Indemnifying Party, provided that if counsel to the
Indemnifying Party shall have a conflict of interest that prevents counsel for
the Indemnifying Party from representing the Indemnified Party, the Indemnified
Party shall have the right to participate in such matter through counsel of its
own choosing and the Indemnifying Party will reimburse the Indemnified Party for
the reasonable expenses of its counsel. After the Indemnifying Party has
notified the Indemnified Party of its intention to undertake to defend or settle
any such asserted liability, and for so long as the Indemnifying Party
diligently pursues such defense, the Indemnifying Party shall not be liable for
any additional legal expenses incurred by the Indemnified Party in connection
with any defense or settlement of such asserted liability, except (i) as set
forth in the preceding sentence and (ii) to the extent such participation is
requested by the Indemnifying Party, in which event the Indemnified Party shall
be reimbursed by the Indemnifying Party for reasonable additional legal expenses
and out-of-pocket expenses. If the Indemnifying Party desires to accept a final
and complete settlement of any such Third Person claim and the Indemnified Party
refuses to consent to such settlement, then the Indemnifying Party's liability
under this Section with respect to such Third Person claim shall be limited to
the amount so offered in settlement by said Third Person. Upon agreement as to
such settlement between said Third Person and the
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Indemnifying Party, the Indemnifying Party shall, in exchange for a complete
release from the Indemnified Party, promptly pay to the Indemnified Party the
amount agreed to in such settlement and the Indemnified Party shall, from that
moment on, bear full responsibility for any additional costs of defense which it
subsequently incurs with respect to such claim and all additional costs of
settlement or judgment. If the Indemnifying Party does not undertake to defend
such matter to which the Indemnified Party is entitled to indemnification
hereunder, or fails diligently to pursue such defense, the Indemnified Party may
undertake such defense through counsel of its choice, at the cost and expense of
the Indemnifying Party, and the Indemnified Party may settle such matter, and
the Indemnifying Party shall reimburse the Indemnified Party for the amount paid
in such settlement and any other liabilities or expenses incurred by the
Indemnified Party in connection therewith, provided, however, that under no
circumstances shall the Indemnified Party settle any Third Person claim without
the written consent of the Indemnifying Party, which consent shall not be
unreasonably withheld or delayed. All settlements hereunder shall effect a
complete release of the Indemnified Party, unless the Indemnified Party
otherwise agrees in writing. The parties hereto will make appropriate
adjustments for insurance proceeds in determining the amount of any
indemnification obligation under this Section.
11.4 EXCLUSIVE REMEDY. The indemnification provided for in this Section 11
shall be the exclusive remedy in any action seeking damages or any other form of
monetary relief brought by any party to this Agreement against another party
with respect to the matters set forth herein, provided that, nothing herein
shall be construed to limit the right of a party, in a proper case, to seek
injunctive relief for a breach of this Agreement. Any indemnity payment under
this Section 11 shall be treated as an adjustment to the exchange consideration
for tax purposes unless a final determination (which shall include the execution
of a Form 870-AD or successor form) with respect to the indemnified party or any
of its Affiliates causes any such payment not to be treated as an adjustment to
the exchange consideration for U.S. Federal Income Tax purposes.
11.5 LIMITATIONS ON INDEMNIFICATION. LandCARE, Newco, the Surviving
Corporation and the other persons or entities indemnified pursuant to Section
11.1 shall not assert any claim for indemnification hereunder against the
Stockholders until such time as, and solely to the extent that, the aggregate of
all claims which such persons may have against such the Stockholders shall
exceed the greater of (a) 1.0% of the sum of (i) the cash paid to Stockholders
plus (ii) the value of the LandCARE Stock delivered to Stockholders (calculated
as provided in this Section 11.5) or (b) $50,000 (the "Indemnification
Threshold").
No person shall be entitled to indemnification under this Section 11 if
and to the extent that such person's claim for indemnification is directly or
indirectly related to a breach by such person of any representation, warranty,
covenant or other agreement set forth in this Agreement.
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Notwithstanding any other term of this Agreement, no Stockholder shall be
liable under this Section 11 for an amount which exceeds the amount of proceeds
received by such Stockholder in connection with the Merger. For purposes of
calculating the value of the LandCARE Stock received by a Stockholder, LandCARE
Stock shall be valued at its initial public offering price as set forth in the
Registration Statement. It is hereby agreed that a Stockholder shall have the
right to satisfy an indemnification obligation through payment of a combination
of stock and cash in proportion equal to the proportion of stock and cash
received by such Stockholder in connection with the Merger, valued as described
immediately above, but shall also have the right to satisfy any such obligation
in cash.
12. TERMINATION OF AGREEMENT
12.1 TERMINATION.This Agreement may be terminated at any time prior to the
Funding and Consummation Date solely:
(i) by mutual consent of the boards of directors of LandCARE and
the Company;
(ii) by the Company or by LandCARE if the transactions contemplated
by this Agreement to take place at the Closing shall not have been consummated
by September 30, 1998, unless the failure of such transactions to be consummated
is due to the willful failure of the party (including, in the case of the
Company, any such failure of the Stockholders) seeking to terminate this
Agreement to perform any of its obligations under this Agreement to the extent
required to be performed by it prior to or on the Closing Date;
(iii) by the Company or by LandCARE if a material breach or default
shall be made by the other party (including, in the case of LandCARE's right to
terminate, any such material breach or default by the Stockholders) in the
observance or in the due and timely performance of any of the covenants or
agreements contained herein, and the curing of such default shall not have been
made on or before the Funding and Consummation Date, or by the Company, if the
conditions set forth in Section 8 hereof have not been satisfied or waived as of
the Closing Date or the Funding and Consummation Date, as applicable, or by
LandCARE, if the conditions set forth in Section 9 hereof have not been
satisfied or waived as of the Closing Date or the Funding and Consummation Date,
as applicable;
(iv) pursuant to Section 7.8 hereof; or
(v) pursuant to Section 4 hereof;
provided, however, that (except as provided in Section 4 hereof) during the
period from the Closing Date to the Funding and Consummation Date, this
Agreement may be terminated only if (a) the underwriting agreement relating to
the IPO is terminated in accordance with its terms, or (b) the
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conditions set forth in Sections 8.5 and 8.9 hereof are not being satisfied as
of the Funding and Consummation Date.
12.2 LIABILITIES IN EVENT OF TERMINATION. Except as provided in Section
7.8 hereof, the termination of this Agreement will in no way limit any
obligation or liability of any party based on or arising from a breach or
default by such party with respect to any of its representations, warranties,
covenants or agreements contained in this Agreement including, but not limited
to, legal and audit costs and out of pocket expenses.
13. NONCOMPETITION
13.1 PROHIBITED ACTIVITIES. Except as and solely to the extent set forth
on Schedule 13.1 hereto, the Stockholders will not, for a period of five (5)
years following the Funding and Consummation Date, for any reason whatsoever,
directly or indirectly, for themselves or on behalf of or in conjunction with
any other Person or Persons:
(i) engage, as an officer, director, shareholder, owner, partner,
joint venturer, or in a managerial capacity, whether as an employee, independent
contractor, consultant or advisor, or as a sales representative, in any
landscaping business or operation or related services business in direct
competition with LandCARE or any of the Subsidiaries thereof, within 100 miles
of where the Company conducted business prior to the Funding and Consummation
Date or within the one-year period prior to the Funding and Consummation Date
(the "Territory");
(ii) call upon any individual who is, at that time, within the
Territory, an employee of LandCARE or any Subsidiary thereof for the purpose or
with the intent of enticing such employee away from or out of the employ of
LandCARE or any Subsidiary thereof;
(iii) call upon any Person which is, at that time, or which has
been, within one-year prior to the Funding and Consummation Date, a customer of
LandCARE or any Subsidiary thereof, of the Company or of any of the Other
Founding Companies within the Territory for the purpose of soliciting or selling
products or services in direct competition with LandCARE within the Territory;
(iv) call upon any prospective acquisition candidate, on any
Stockholder's own behalf or on behalf of any competitor in the landscaping
business or any related services business, which candidate, to the actual
knowledge of such Stockholder after due inquiry, was called upon by LandCARE or
any Subsidiary thereof or for which, to the actual knowledge of such Stockholder
after due inquiry, LandCARE or any Subsidiary thereof made an acquisition
analysis, for the purpose of acquiring such entity; or
(v) except on behalf of LandCARE or any Subsidiary, disclose
customers, whether in existence or proposed, of the Company to any Person, for
any reason or purpose whatsoever
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except to the extent that the Company has in the past disclosed such information
to the public for valid business reasons.
Notwithstanding the above, the foregoing covenant shall not be deemed to
prohibit any Stockholder from acquiring as a passive investment not more than
two percent (2%) of the capital stock of a competing business whose stock is
traded on a national securities exchange or over-the-counter.
13.2 DAMAGES. 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, each Stockholder agrees that the foregoing
covenant may be enforced by LandCARE in the event of breach by such Stockholder,
by injunctions and restraining orders.
13.3 REASONABLE RESTRAINT. It is agreed by the parties hereto that the
foregoing covenants in this Section 13 impose a reasonable restraint on the
Stockholders in light of the activities and business of LandCARE and the
Subsidiaries thereof on the date of the execution of this Agreement and the
current plans of LandCARE and its Subsidiaries.
13.4 SEVERABILITY; REFORMATION. The covenants in this Section 13 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.
13.5 INDEPENDENT COVENANT. All of the covenants in this Section 13 shall
be construed as an agreement independent of any other provision in this
Agreement, and the existence of any claim or cause of action of any Stockholder
against LandCARE or any subsidiary thereof, whether predicated on this Agreement
or otherwise, shall not constitute a defense to the enforcement by LandCARE of
such covenants. The covenants contained in Section 13 shall not be affected by
any breach of any other provision hereof by any party hereto and shall have no
effect if the transactions contemplated by this Agreement are not consummated.
13.6 MATERIALITY. The Company and the Stockholders hereby agree that this
covenant is a material and substantial part of this transaction.
14. NONDISCLOSURE OF CONFIDENTIAL INFORMATION
14.1 STOCKHOLDERS. The Stockholders recognize and acknowledge that they
had in the past, currently have, and in the future may possibly have, access to
certain confidential information of the
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Company, the Other Founding Companies, and/or LandCARE, such as operational
policies, and pricing and cost policies that are valuable, special and unique
assets of the Company's, the Other Founding Companies' and/or LandCARE's
respective businesses. The Stockholders agree that they will not disclose such
confidential information 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 is required in the course of performing their
duties for LandCARE or 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 14.1, unless (i) such information
becomes known to the public generally through no fault of the Stockholders, (ii)
disclosure is required by law or the order of any governmental authority under
color of law, provided, that prior to disclosing any information pursuant to
this clause (ii), the Stockholders shall, if possible, give prior written notice
thereof to LandCARE and provide LandCARE with the opportunity to contest such
disclosure, or (iii) the disclosing party reasonably believes that such
disclosure is required in connection with the defense of a lawsuit against the
disclosing party. In the event of a breach or threatened breach by any of the
Stockholders of the provisions of this Section 14.1, LandCARE shall be entitled
to an injunction restraining such 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. In the event the
transactions contemplated by this Agreement are not consummated, Stockholders
shall have none of the above-mentioned restrictions on their ability to
disseminate confidential information with respect to the Company. Each
Stockholder further agrees that in the event the transactions contemplated
herein are not consummated (i) neither the Company nor any Stockholder can
thereafter use any confidential information of the Other Founding Companies for
any purpose and (ii) upon written request of any Other Founding Company to the
Company, the Company and Stockholders will return all confidential information
pertaining to such Other Founding Company to such Other Founding Company.
14.2 LANDCARE AND NEWCO. LandCARE and Newco recognize and acknowledge that
they had in the past and currently have access to certain confidential
information of the Company, such as operational policies, and pricing and cost
policies that are valuable, special and unique assets of the Company's business.
LandCARE and Newco agree that, prior to the Closing, or if the Transactions
contemplated by this Agreement are not consummated, they will not disclose such
confidential information to any Person for any purpose or reason whatsoever,
except (a) to authorized representatives of the Company, (b) to counsel and
other advisers, provided that such advisers (other than counsel) agree to the
confidentiality provisions of this Section 14.2, (c) to the Other Founding
Companies and their representatives pursuant to Section 7.1(a), unless (i) such
information is or becomes known to the public generally through no fault of
LandCARE or Newco, (ii) disclosure is required by law or the order of any
governmental authority under color of law, provided, that prior to disclosing
any information pursuant to this clause (ii), LandCARE and Newco shall, if
possible, give prior written notice thereof to the Company and the Stockholders
and provide the Company and
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the Stockholders with the opportunity to contest such disclosure, or (iii) the
disclosing party reasonably believes that such disclosure is required in
connection with the defense of a lawsuit against the disclosing party, and (d)
to the public to the extent necessary or advisable in connection with the filing
of the Registration Statement and the IPO and the securities laws applicable
thereto and to the operation of LandCARE as a publicly held entity after the
IPO. In the event of a breach or threatened breach by LandCARE or Newco of the
provisions of this Section 14.2, the Company and the Stockholders shall be
entitled to an injunction restraining LandCARE and Newco from disclosing, in
whole or in part, such confidential information. Nothing herein shall be
construed as prohibiting the Company and the Stockholders from pursuing any
other available remedy for such breach or threatened breach, including the
recovery of damages.
14.3 DAMAGES. Because of the difficulty of measuring economic losses as a
result of the breach of the foregoing covenants in Section 14.1 and 14.2, and
because of the immediate and irreparable damage that would be caused for which
they would have no other adequate remedy, the parties hereto agree that, in the
event of a breach by any of them of the foregoing covenants, the covenant may be
enforced by the other parties by injunctions and restraining orders.
14.4 SURVIVAL. The obligations of the parties under this Article 14 shall
survive the termination of this Agreement for a period of five years from the
Funding and Consummation Date.
15. TRANSFER RESTRICTIONS
15.1 TRANSFER RESTRICTIONS. Unless otherwise agreed by LandCARE, except
for transfers to immediate family members who agree to be bound by the
restrictions set forth in this Section 15.1 (or trusts for the benefit of the
Stockholders or family members, the trustees of which so agree), for a period of
two years from the Funding and Consummation Date, except pursuant to Section 17
hereof, none of the Stockholders shall sell, assign, exchange, transfer,
encumber, pledge, distribute, appoint, or otherwise dispose of any shares of
LandCARE Stock received by the Stockholders in the Merger. The certificates
evidencing the LandCARE Stock delivered to the Stockholders pursuant to Section
3 of this Agreement will bear a legend substantially in the form set forth below
and containing such other information as LandCARE may deem necessary or
appropriate:
THE SHARES REPRESENTED BY THIS CERTIFICATE MAY NOT BE SOLD, ASSIGNED, EXCHANGED,
TRANSFERRED, ENCUMBERED, PLEDGED, DISTRIBUTED, APPOINTED OR OTHERWISE DISPOSED
OF, AND THE ISSUER SHALL NOT BE REQUIRED TO GIVE EFFECT TO ANY ATTEMPTED SALE,
ASSIGNMENT, EXCHANGE, TRANSFER, ENCUMBRANCE, PLEDGE, DISTRIBUTION, APPOINTMENT
OR OTHER DISPOSITION PRIOR TO [SECOND ANNIVERSARY OF FUNDING AND CONSUMMATION
DATE]. UPON THE WRITTEN REQUEST OF THE HOLDER OF THIS CERTIFICATE, THE ISSUER
AGREES TO REMOVE THIS
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RESTRICTIVE LEGEND (AND ANY STOP ORDER PLACED WITH THE TRANSFER AGENT) AFTER THE
DATE SPECIFIED ABOVE.
LandCARE agrees, however, to use reasonable efforts to implement an arrangement
with a nationally recognized investment banking firm pursuant to which such firm
will facilitate sales by the Stockholders beginning after the date one year
after the Funding and Consummation Date; and in the event such an arrangement is
implemented on terms reasonably satisfactory to LandCARE, LandCARE will waive
the foregoing restriction to the extent reasonably necessary to permit the
Stockholders to participate in such arrangement.
16. FEDERAL SECURITIES ACT REPRESENTATIONS
16.1 COMPLIANCE WITH LAW. The Stockholders acknowledge that the shares of
LandCARE Stock to be delivered to the Stockholders pursuant to this Agreement
have not been and will not be registered under the 1933 Act (except as provided
in Section 17 hereof) and therefore may not be resold without compliance with
the 1933 Act. The LandCARE Stock to be acquired by such Stockholders pursuant to
this Agreement is being acquired solely for their own respective accounts, for
investment purposes only, and with no present intention of distributing, selling
or otherwise disposing of it in connection with a distribution. The Stockholders
covenant, warrant and represent that none of the shares of LandCARE Stock issued
to such Stockholders will be offered, sold, assigned, pledged, hypothecated,
transferred or otherwise disposed of except after full compliance with all of
the applicable provisions of the 1933 Act and the rules and regulations of the
SEC. All the LandCARE Stock shall bear the following legend in addition to the
legend required under Section 15 of this Agreement:
THE SHARES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933 (THE "ACT") AND MAY ONLY BE SOLD OR OTHERWISE TRANSFERRED IF THE HOLDER
HEREOF COMPLIES WITH THE ACT AND APPLICABLE SECURITIES LAW.
16.2 ECONOMIC RISK; SOPHISTICATION. The Stockholders are able to bear the
economic risk of an investment in the LandCARE Stock to be acquired pursuant to
this Agreement and can afford to sustain a total loss of such investment and
have such knowledge and experience in financial and business matters that they
are capable of evaluating the merits and risks of the proposed investment in the
LandCARE Stock. The Stockholders party hereto have had an adequate opportunity
to ask questions and receive answers from the officers of LandCARE concerning
any and all matters relating to the transactions described herein including,
without limitation, the background and experience of the current and proposed
officers and directors of LandCARE, the plans for the operations of the business
of LandCARE, the business, operations and financial condition of the Founding
Companies other than the Company, and any plans for additional acquisitions and
the like.
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The Stockholders have asked any and all questions in the nature described in the
preceding sentence and all questions have been answered to their satisfaction.
17. REGISTRATION RIGHTS
17.1 PIGGYBACK REGISTRATION RIGHTS. At any time following the Funding and
Consummation Date, whenever LandCARE proposes to register any LandCARE Stock for
its own or others account under the 1933 Act for a public offering, other than
(i) any shelf or other registration of shares to be used as consideration for
acquisitions of additional businesses by LandCARE (including any registration of
resales of such shares by the holders thereof) and (ii) registrations relating
to employee stock options or other benefit plans, LandCARE shall give each of
the Stockholders prompt written notice of its intent to do so. Upon the written
request of any of the Stockholders given within 30 days after receipt of such
notice, LandCARE shall cause to be included in such registration all of the
LandCARE Stock issued to the Stockholders pursuant to this Agreement (including
any stock issued as (or issuable upon the conversion or exchange of any
convertible security, warrant, right or other security which is issued by
LandCARE as) a dividend or other distribution with respect to, or in exchange
for, or in replacement of such LandCARE Stock) which any such Stockholder
requests, provided that LandCARE shall have the right to reduce the number of
shares included in such registration to the extent that inclusion of such shares
could, in the written opinion of tax counsel to LandCARE or its independent
auditors, jeopardize the status of the transactions contemplated hereby and by
the Registration Statement as a tax-free organization under Section 351 of the
Code. In addition, if LandCARE is advised in writing in good faith by any
managing underwriter of an underwritten offering of the securities being offered
pursuant to any registration statement under this Section 17.1 that the number
of shares to be sold by persons other than LandCARE is greater than the number
of such shares which can be offered without adversely affecting the offering,
LandCARE may reduce pro rata the number of shares offered for the accounts of
such persons (based upon the number of shares proposed to be sold by each such
person) to a number deemed satisfactory by such managing underwriter, provided,
that, for each such offering made by LandCARE after the IPO, such reduction
shall be made first by reducing the number of shares to be sold by persons other
than LandCARE, the Stockholders and the stockholders of the Other Founding
Companies (collectively, the Stockholders and the stockholders of the other
Founding Companies being referred to herein as the "Founding Stockholders"), and
thereafter, if a further reduction is required, by reducing the number of shares
to be sold by the Founding Stockholders.
17.2 DEMAND REGISTRATION RIGHTS. At any time after the date two years
after the Funding and Consummation Date and prior to the date three years after
the Funding and Consummation Date, the holders of a majority of the shares of
LandCARE Stock issued to the Founding Stockholders pursuant to this Agreement
and the Other Agreements which have not been previously registered or sold and
which are not entitled to be sold under Rule 144(k) (or any similar or successor
provision) promulgated under the 1933 Act may request in writing that LandCARE
file a registration statement under the 1933 Act covering the registration of
the shares of LandCARE Stock issued to the
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Stockholders pursuant to this Agreement and the Other Agreements (including any
stock issued as (or issuable upon the conversion or exchange of any convertible
security, warrant, right or other security which is issued by LandCARE as) a
dividend or other distribution with respect to, or in exchange for, or in
replacement of such LandCARE Stock) then held by such Founding Stockholders (a
"Demand Registration"). Within ten (10) days of the receipt of such request,
LandCARE shall give written notice of such request to all other Founding
Stockholders and shall, as soon as practicable but in no event later than 45
days after notice from any Stockholder, file and use its best efforts to cause
to become effective a registration statement covering all such shares. LandCARE
shall be obligated to effect only one Demand Registration for all Founding
Stockholders and will keep the registration statement relating to such Demand
Registration current and effective for not less than 120 days (or such shorter
period as is required to sell all of the shares registered thereby).
Notwithstanding the foregoing paragraph, following any such a demand, a
majority of LandCARE's disinterested directors (i.e. directors who have not
demanded or elected to sell shares in any such public offering) may defer the
filing of the registration statement for up to a 60 day period after the date on
which LandCARE would otherwise be required to make such filing pursuant to the
foregoing paragraph if such directors determine in good faith that the filing of
such a registration statement or the making of any required disclosure in
connection therewith would have a material adverse effect on LandCARE or
interfere with a transaction in which LandCARE is then engaged or is then
pursuing.
If at the time of any request by the Founding Stockholders for a Demand
Registration LandCARE has fixed plans to file within 60 days after such request
a registration statement covering the sale of any of its securities in a public
offering under the 1933 Act, no registration of the Founding Stockholders'
LandCARE Stock shall be initiated under this Section 17.2 until 90 days after
the effective date of such registration unless LandCARE is no longer proceeding
diligently to effect such registration; provided that LandCARE shall provide the
Founding Stockholders the right to participate in such public offering pursuant
to, and subject to, Section 17.1 hereof.
In the event that the Founding Stockholders make a demand registration
request pursuant to this Section 17.2 and such registration is delayed by
LandCARE as a consequence of the exercise of its rights under this Section 17.2,
then the period during which such demand registration may be requested by the
Founding Stockholders shall be extended for an equal number of days.
17.3 REGISTRATION PROCEDURES. Whenever LandCARE is required to register
shares of LandCARE Stock pursuant to Sections 17.1 and 17.2, LandCARE will, as
expeditiously as possible:
a. Prepare and file with the SEC a registration statement with respect to
such shares and use its best efforts to cause such registration statement to
become effective (provided that before filing a registration statement or
prospectus or any amendments or supplements or term sheets
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thereto, LandCARE will furnish a representative of the Stockholders with copies
of all such documents proposed to be filed) as promptly as practical;
b. Prepare and file with the SEC such amendments and supplements to such
registration statement and the prospectus used in connection therewith as may be
necessary to keep such registration statement effective for a period of not less
than 120 days;
c. Furnish to each Stockholder who so requests such number of copies of
such registration statement, each amendment and supplement thereto and the
prospectus included in such registration statement (including each preliminary
prospectus and any term sheet associated therewith), and such other documents as
such Stockholder may reasonably request in order to facilitate the disposition
of the relevant shares;
d. Use its best efforts to register or qualify the securities covered by
such registration statement under such other securities or Blue Sky laws of such
jurisdictions as shall be reasonably requested by the Stockholders, and to keep
such registration or qualification effective during the period such registration
statement is to be kept effective, provided that LandCARE shall not be required
to become subject to taxation, to qualify to do business or to file a general
consent to service of process in any such states or jurisdictions;
e. Cause all such shares of LandCARE Stock to be listed or included on any
securities exchanges or trading systems on which similar securities issued by
LandCARE are then listed or included;
f. Notify each Stockholder at any time when a prospectus relating thereto
is required to be delivered under the 1933 Act within the period that LandCARE
is required to keep the registration statement effective of the happening of any
event as a result of which the prospectus included in such registration
statement, together with any associated term sheet, contains an untrue statement
of a material fact or omits any fact necessary to make the statement therein not
misleading, and, at the request of such Stockholder, LandCARE will prepare a
supplement or amendment to such prospectus so that, as thereafter delivered to
the purchasers of the covered shares, such prospectus will not contain an untrue
statement of material fact or omit to state any fact necessary to make the
statements therein not misleading.
All expenses incurred in connection with the registration under this
Article 17 (including all registration, filing, qualification, legal, printer
and accounting fees, but excluding underwriting commissions and discounts),
shall be borne by LandCARE.
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17.4 INDEMNIFICATION.
(a) In connection with any demand or piggyback registration, LandCARE
shall indemnify, to the extent permitted by law, each Stockholder and each
Person who controls such Stockholder (an "Indemnified Party") against all
losses, claims, damages, liabilities and expenses (including reasonable
attorneys' fees and expenses of investigation) arising out of or resulting from
any untrue or alleged untrue statement of material fact contained in any
registration statement, prospectus or preliminary prospectus or associated term
sheet or any omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading except insofar as the same are caused by or contained in or omitted
from any information furnished in writing to LandCARE by such Indemnified Party
expressly for use therein or by such Indemnified Party's failure to deliver a
copy of the registration statement or prospectus or any amendment or supplements
thereto after LandCARE has furnished such Indemnified Party with a sufficient
number of copies of the same.
(b) In connection with any demand or piggyback registration, each
Stockholder shall furnish to LandCARE in writing such information as is
reasonably requested by LandCARE for use in any such registration statement or
prospectus and will indemnify, to the extent permitted by law, LandCARE, its
directors and officers and each person who controls LandCARE (within the meaning
of the ▇▇▇▇ ▇▇▇) against any losses, claims, damages, liabilities and expenses
(including reasonable attorneys' fees and expenses of investigation) resulting
from any untrue or alleged untrue statement of a material fact or any omission
or alleged omission of a material fact required to be stated in the registration
statement or prospectus or any amendment thereof or supplement thereto necessary
to make the statements therein not misleading, but only to the extent that such
untrue statement or omission is contained in information so furnished in writing
by such Stockholder specifically for use in preparing the registration
statement. Notwithstanding the foregoing, the liability of a Stockholder under
this Section 17.4 shall be limited to an amount equal to the net proceeds
actually received by such Stockholder from the sale of the relevant shares
covered by the registration statement.
(c) Any person entitled to indemnification hereunder will (i) give prompt
notice to the indemnifying party of any claim with respect to which it seeks
indemnification and (ii) unless in such indemnified party's reasonable judgment,
a conflict of interest between such indemnified and indemnifying parties may
exist with respect to such claim, permit such indemnifying party to assume the
defense of such claim with counsel reasonably satisfactory to the indemnified
party. Any failure to give prompt notice shall deprive a party of its right to
indemnification hereunder only to the extent that such failure shall have
adversely affected the indemnifying party. If the defense of any claim is
assumed, the indemnified party will not be subject to any liability for any
settlement made without its consent (but such consent shall not be unreasonably
withheld). An indemnifying party who is not entitled or elects not to assume the
defense of a claim will not be obligated to pay the fees and expenses of more
than one counsel for all parties indemnified by such indemnifying party with
respect to such claim, unless in the reasonable judgment of any indemnified
party, a conflict of
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interest may exist between such indemnified party and any other of such
indemnified parties with respect to such claim.
17.5 UNDERWRITING AGREEMENT. In connection with each registration pursuant
to Sections 17.1 and 17.2 covering an underwritten registered offering, LandCARE
and each participating holder agree to enter into a written agreement with the
managing underwriters (which in the case of a Demand Registration under Section
17.2 will be reasonably satisfactory to the holders of a majority of the shares
of the Founding Stockholders participating in the Demand Registration), in such
form and containing such provisions as are customary in the securities business
for such an arrangement between such managing underwriters and companies of
LandCARE's size and investment stature, including indemnification provisions.
17.6 RULE 144 REPORTING. With a view to making available the benefits of
certain rules and regulations of the SEC that may permit the sale of LandCARE
stock to the public without registration, LandCARE agrees to use its reasonable
efforts to:
(i) make and keep public information regarding LandCARE available as
those terms are used in Rule 144 under the 1933 Act for a period of four years
beginning 90 days following the effective date of the Registration Statement;
(ii) file with the SEC in a timely manner all reports and other
documents required of LandCARE under the 1933 Act and the 1934 Act at any time
after it has become subject to such reporting requirements; and
(iii) so long as a Stockholder owns any restricted LandCARE Common
Stock, furnish to each Stockholder forthwith upon written request a written
statement by LandCARE as to its compliance with the reporting requirements of
Rule 144 (at any time from and after 90 days following the effective date of the
Registration Statement), and of the 1933 Act and the 1934 Act (any time after it
has become subject to such reporting requirements), a copy of the most recent
annual or quarterly report of LandCARE, and such other reports and documents so
filed as a Stockholder may reasonably request in availing itself of any rule or
regulation of the SEC allowing a Stockholder to sell any such shares without
registration.
18. GENERAL
18.1 COOPERATION. The Company, the Stockholders, LandCARE and Newco shall
each deliver or cause to be delivered to the other on the Funding and
Consummation Date, and at such other times and places as shall be reasonably
agreed to, such additional instruments as the other may reasonably request for
the purpose of carrying out this Agreement. The Company will cooperate and use
its reasonable efforts to have the present officers, directors and employees of
the Company cooperate with LandCARE on and after the Funding and Consummation
Date in furnishing
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information, evidence, testimony and other assistance in connection with any tax
return filing obligations, actions, proceedings, arrangements or disputes of any
nature with respect to matters pertaining to all periods prior to the Funding
and Consummation Date.
18.2 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.
18.3 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, Newco 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 Stockholders, the Company, Newco and
LandCARE, acting through their respective officers or trustees, duly authorized
by their respective Boards of Directors. Any disclosure made on any Schedule
delivered pursuant hereto shall be deemed to have been disclosed for purposes of
any other Schedule required hereby, provided that the Company shall make a good
faith effort to cross reference disclosure, as necessary or advisable, between
related Schedules.
18.4 COUNTERPARTS. This Agreement may be executed simultaneously in two
(2) or more counterparts, each of which shall be deemed an original and all of
which together shall constitute but one and the same instrument.
18.5 BROKERS AND AGENTS. Except as disclosed on Schedule 18.5, 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.
18.6 EXPENSES. (a) Whether or not the transactions herein contemplated
shall be consummated, LandCARE will pay the fees, expenses and disbursements of
LandCARE and its agents, representatives, accountants and counsel incurred in
connection with the subject matter of this Agreement and any amendments thereto,
including all costs and expenses incurred in the performance and compliance with
all conditions to be performed by LandCARE under this Agreement, including the
fees and expenses of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, LLP, ▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇, L.L.P., and
any other person or entity retained by LandCARE or by Notre Capital Ventures II,
L.L.C., and the costs of preparing and filing the Registration Statement. Each
Stockholder shall pay all sales, use, transfer, real property transfer,
recording, gains, stock transfer and other similar taxes and fees ("Transfer
Taxes") imposed in connection with the Merger, other than Transfer Taxes, if
any,
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imposed by the State of Delaware. Each Stockholder shall file all necessary
documentation and Returns with respect to such Transfer Taxes. In addition, each
Stockholder acknowledges that he, and not the Company or LandCARE, will pay all
taxes due upon receipt of the consideration payable pursuant to Section 3
hereof. The Stockholders acknowledge that the risks of the transactions
contemplated hereby include tax risks, with respect to which the Stockholders
are relying solely on the opinion contemplated by Section 8.12 hereof.
18.7 NOTICES. All notices of communication 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.
(a) If to LandCARE, or Newco, addressed to them at:
LandCARE USA, Inc.
▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attn: President
with copies to:
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇, L.L.P.
South Tower Pennzoil Place
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
(b) If to the Stockholders, addressed to them at their addresses set
forth on Annex II or to the address of the Company set forth below, with copies
to:
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇
Two ▇. ▇▇▇▇▇▇▇ Street, 22nd Floor
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
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(c) If to the Company, addressed to it at:
Southern Tree & Landscape Co., Inc.
▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇.
▇▇▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇
Attention: N. ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
or to such other address or counsel as any party hereto shall specify pursuant
to this Section 18.7 from time to time.
18.8 GOVERNING LAW. This Agreement shall be construed in accordance with
the laws of the State of Texas.
18.9 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 until the Expiration Date.
18.10 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.
18.11 TIME. Time is of the essence with respect to this Agreement.
18.12 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.
18.13 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.
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18.14 CAPTIONS. The headings of this Agreement are inserted for
convenience only, shall not constitute a part of this Agreement or be used to
construe or interpret any provision hereof.
18.15 AMENDMENTS AND WAIVERS. Any term of this Agreement may be amended
and the observance of any term of this Agreement may be waived only with the
written consent of LandCARE, Newco, the Company and Stockholders who hold or who
will hold at least 50% of the LandCARE Stock issued or to be issued upon
consummation of the Merger. Any amendment or waiver effected in accordance with
this Section 18.15 shall be binding upon each of the parties hereto, any other
person receiving LandCARE Stock in connection with the Merger and each future
holder of such LandCARE Stock.
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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:___________________________
▇▇▇▇▇▇▇ ▇▇▇▇▇
Chief Executive Officer
SOUTHERN TREE ACQUISITION CORP.
By:___________________________
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Vice President
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SOUTHERN TREE & LANDSCAPE CO., INC.
By:
Name:
Title:
STOCKHOLDERS:
_____________________________________
Southern Shade Tree Co.
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, President
_____________________________________
N. ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
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SCHEDULE 6.4
None.
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SCHEDULE 6.5
None.
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SCHEDULE 6.7
None.
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SCHEDULE 6.8
None.
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SCHEDULE 6.9
None.
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SCHEDULE 6.12
1. The Agreement with D.R. Church is structured as an exchange agreement rather
than as a merger agreement.
2. The Agreements with Desert Care and Arteka Nurseries provide for S
corporation distributions.
3. The Agreements with Four Seasons and D. R. Church exclude a charitable
remainder trust and an ESOP, respectively, from the normal indemnity provisions.
4. The Agreement with Southern Tree provides for the release from individual
guaranties of a non-stockholder who has guaranteed company debt, and requires
Southern to separate a credit facility now cross guaranteed by Southern and an
affiliate.
5. TheAgreement with Desert Care notes that Desert Care has done its accounting
and taxes on a cash basis and provides that LandCARE will indemnify the
Stockholder against up to $450,000 in deferred taxes resulting from Desert
Care's termination of its S corporation election, and provides that the
Stockholder will indemnify Desert Care and LandCARE against deferred income tax
liabilities to the extent they exceed $450,000.
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SCHEDULE 6.15
None.
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SCHEDULE 9.12
D. R. Church Landscape Co., Inc. - ▇▇▇▇▇ ▇. Church
Desert Care Landscaping, Inc. - ▇▇▇▇ ▇. ▇▇▇▇▇
Ground Control Landscaping, Inc. - ▇▇▇▇ ▇. ▇▇▇▇
Four Seasons Landscape & Maintenance - ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Trees, Inc. - ▇▇▇▇▇ ▇▇▇▇▇
Southern Tree and Landscape Companies - ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Arteka Corporation - ▇▇▇▇▇ ▇▇▇▇
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