EXHIBIT 2.1
PLAN OF REORGANIZATION AND AGREEMENT AND PLAN OF MERGER
DATED AS OF
NOVEMBER 1, 1998
BY AND AMONG
LANDCARE USA, INC.,
THE SERVICEMASTER COMPANY
AND
SVM ACQUISITION CORPORATION
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TABLE OF CONTENTS
PAGE
ARTICLE 1
THE MERGER...................................................................1
Section 1.1 The Merger.....................................1
Section 1.2 Conversion of Shares...........................2
Section 1.3 Surrender and Payment..........................4
Section 1.4 Stock Options..................................6
Section 1.5 Fractional Shares..............................7
Section 1.6 Adjustments....................................9
ARTICLE 2
THE SURVIVING CORPORATION....................................................9
Section 2.1 Certificate of Incorporation...................9
Section 2.2 Bylaws.........................................9
Section 2.3 Directors and Officers.........................9
ARTICLE 3
LANDCARE WARRANTIES.........................................................10
Section 3.1 Organization..................................10
Section 3.2 Corporate Authorization; Validity of Agreement;
Board Action..................................10
Section 3.3 Consents and Approvals; No Violations.........11
Section 3.4 Capitalization................................12
Section 3.5 Subsidiaries; Capitalization of Subsidiaries..13
Section 3.6 SEC Reports and Financial Statements..........13
Section 3.7 Disclosure Documents..........................14
Section 3.8 Absence of Certain Changes....................14
Section 3.9 No Undisclosed Liabilities....................16
Section 3.10 Employee Benefit Plans........................16
Section 3.11 Compliance with Law...........................19
Section 3.12 Litigation....................................19
Section 3.13 No Default....................................19
Section 3.14 Taxes.........................................19
Section 3.15 Contracts.....................................23
Section 3.16 Transactions with Affiliates..................23
Section 3.17 Environmental Matters.........................23
Section 3.18 Intellectual Property.........................25
Section 3.19 Opinion of Financial Advisor..................25
Section 3.20 Finders and Investment Bankers................25
Section 3.21 Takeover Statutes.............................26
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Section 3.22 Insurance.....................................26
Section 3.23 Supportive Stockholder Actions................26
ARTICLE 4
WARRANTIES OF SERVICEMASTER AND MERGER SUBSIDIARY...........................27
Section 4.1 Organization..................................27
Section 4.2 Corporate Authorization; Validity of Agreement;
Necessary Action..............................27
Section 4.3 Consents and Approvals; No Violations.........28
Section 4.4 Capitalization................................29
Section 4.5 SEC Reports and Financial Statements..........29
Section 4.6 Absence of Certain Changes....................29
Section 4.7 No Undisclosed Liabilities....................30
Section 4.8 Litigation. .................................30
Section 4.9 Compliance with Law...........................30
Section 4.10 No Default....................................30
Section 4.11 Disclosure Documents..........................30
Section 4.12 Opinion of Financial Advisor..................31
ARTICLE 5
COVENANTS OF LANDCARE.......................................................31
Section 5.1 Conduct of Business by LandCare Pending the
Merger........................................31
Section 5.2 LandCare Stockholders Meeting.................33
Section 5.3 Access to Information.........................34
Section 5.4 No Solicitation...............................34
Section 5.5 Corporate Organization........................35
Section 5.6 Pipeline Acquisitions.........................36
Section 5.7 Redemption of Convertible Notes...............39
ARTICLE 6
COVENANTS OF SERVICEMASTER..................................................40
Section 6.1 Obligations of Merger Subsidiary. ............40
Section 6.2 Indemnification...............................40
ARTICLE 7
COVENANTS OF SERVICEMASTER AND LANDCARE.....................................41
Section 7.1 Diligent Efforts..............................41
Section 7.2 Certain Filings...............................41
Section 7.3 Public Announcements..........................41
Section 7.4 Further Assurances............................41
Section 7.5 Notices of Certain Events.....................42
Section 7.6 Preparation of the Registration Statement and
the LandCare Proxy Statement..................42
Section 7.7 Letters of LandCare's Accountants.............43
Section 7.8 Affiliates....................................43
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Section 7.9 NYSE Listing..................................43
Section 7.10 Regulatory Matters and Approvals..............43
Section 7.11 Tax Treatment.................................44
Section 7.12 Representations...............................44
Section 7.13 Material Consents.............................44
ARTICLE 8
CONDITIONS TO THE MERGER....................................................44
Section 8.1 Conditions to the Obligations of Each Party...44
Section 8.2 Additional Conditions to the Obligations of
ServiceMaster and Merger Subsidiary...........45
Section 8.3 Additional Conditions to the Obligations of
LandCare......................................45
ARTICLE 9
TERMINATION.................................................................46
Section 9.1 Termination...................................46
Section 9.2 Waiver........................................47
Section 9.3 Closing.......................................47
Section 9.4 Effect of Termination; Termination Fee........48
ARTICLE 10
MISCELLANEOUS...............................................................49
Section 10.1 Notices.......................................50
Section 10.2 Survival of Representations and Warranties....50
Section 10.3 Amendments; No Waivers........................50
Section 10.4 Expenses......................................50
Section 10.5 Successors and Assigns........................50
Section 10.6 Governing Law.................................50
Section 10.7 Counterparts; Effectiveness...................50
Section 10.8 Headings......................................51
Section 10.9 No Third Party Beneficiaries..................51
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PLAN OF REORGANIZATION AND AGREEMENT AND PLAN OF MERGER
This Plan of Reorganization and Agreement and Plan of Merger (this
"AGREEMENT") has been made as of November 1, 1998 (the "DATE HEREOF") among
LandCare USA, Inc., a Delaware corporation ("LANDCARE"), The ServiceMaster
Company, a Delaware corporation ("SERVICEMASTER"), and SVM Acquisition
Corporation, a Delaware corporation and a wholly- owned subsidiary of
ServiceMaster ("MERGER SUBSIDIARY").
WHEREAS, the respective boards of directors of ServiceMaster, Merger
Subsidiary and LandCare have approved, and declared advisable and in the best
interests of their respective stockholders, this Agreement and the acquisition
of LandCare by ServiceMaster on the terms and conditions set forth herein.
WHEREAS, ServiceMaster has entered into Voting Agreements with
stockholders of LandCare who collectively own approximately 30% of LandCare's
Common Stock outstanding on the date hereof (the "Voting Agreements").
The parties hereto agree as follows:
ARTICLE 1
THE MERGER
Section 1.1 THE MERGER.
(a) Upon the terms and subject to the conditions set forth in this
Agreement, at the Effective Time (as hereinafter defined), Merger Subsidiary
shall be merged (the "MERGER") with and into LandCare in accordance with the
General Corporation Law of the State of Delaware ("DELAWARE LAW"), whereupon the
separate existence of Merger Subsidiary shall cease, and LandCare shall continue
as the surviving corporation (the "SURVIVING CORPORATION").
(b) As soon as practicable after satisfaction or, to the extent
permitted hereunder, waiver of all conditions to the Merger set forth herein,
LandCare and Merger Subsidiary will file a certificate of merger with the
Secretary of State of the State of Delaware and make all other filings or
recordings required by Delaware Law in connection with the Merger. The Merger
shall become effective at such time as the certificate of merger is duly filed
with the Secretary of State of the State of Delaware or at such later time as is
agreed by ServiceMaster and LandCare and specified in the certificate of merger
(the "EFFECTIVE TIME").
(c) The Merger shall have the effects set forth in Section 259 of
the Delaware Law.
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Section 1.2 CONVERSION OF SHARES.
(a) At the Effective Time:
(i) each share of common stock, par value $0.01 per share (the
"LANDCARE COMMON STOCK"), of LandCare (the "SHARES") held by
LandCare as treasury stock immediately prior to the Effective Time
shall be canceled, and no consideration shall be delivered in
exchange therefor;
(ii) each share of common stock of Merger Subsidiary
outstanding immediately prior to the Effective Time shall be
converted into and become one share of common stock of the Surviving
Corporation and shall constitute the only outstanding share of
capital stock of the Surviving Corporation; and
(iii) subject to Section 1.5, each Share outstanding
immediately prior to the Effective Time shall be converted into the
right to receive a fraction (herein called the "EXCHANGE RATIO") of
one share common stock, par value $0.01 per share, of ServiceMaster
("SERVICEMASTER COMMON STOCK"). The shares of ServiceMaster Common
Stock to be received as consideration pursuant hereto (together with
cash in lieu of fractional shares of ServiceMaster Common Stock as
specified below) are referred to herein as the "MERGER
CONSIDERATION."
(b) ADJUSTMENT OF EXCHANGE RATIO.
(i) The Exchange Ratio shall be 0.55 in the event that the
average of the closing prices (the "FINAL AVERAGE CLOSING PRICE") of
ServiceMaster Common Stock on the New York Stock Exchange (the
"NYSE") Composite Transaction Tape (as reported in THE WALL STREET
JOURNAL or, if not reported thereby, any other authoritative source)
on the 20 consecutive Trading Days (as hereinafter defined) ending
on the third Trading Day prior to the Scheduled Meeting Date is more
than $16.35 per share and not more than $20.00 per share. The term
"SCHEDULED MEETING DATE" means the date specified in the LandCare
Proxy Statement (as hereinafter defined) distributed to LandCare's
stockholders as the date on which the meeting at which LandCare's
stockholders will vote on the Merger is scheduled to occur; provided
that if such meeting shall actually be held on a later date, then if
ServiceMaster and LandCare shall both agree, the period during which
the Final Average Closing Price shall be determined may be changed
to a period of 20 consecutive Trading Days ending not more than
three Trading Days before the date on which such meeting shall
actually occur. "TRADING DAY" means any day on which the NYSE is
open for trading. "LANDCARE STOCKHOLDERS MEETING" means the meeting
at which the record holders of LandCare Common Stock shall actually
vote with respect to the Merger.
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(ii) In the event that the Final Average Closing Price is more
than $20.00, then the Exchange Ratio shall be the quotient derived
by dividing $11 by the Final Average Closing Price.
(iii) In the event the Final Average Closing Price is less
than $16.36, then unless ServiceMaster shall otherwise notify
LandCare in writing prior to the date immediately prior to the date
upon which the LandCare Stockholders Meeting is then scheduled to
occur (the "FREEZE DEADLINE"), the Exchange Ratio shall
automatically adjust to the smallest decimal which when multiplied
by the Final Average Closing Price will equal $9.00. If
ServiceMaster shall notify LandCare in writing prior to the Freeze
Deadline that ServiceMaster elects not to permit the adjustment
prescribed by the preceding sentence, then: (i) the Exchange Ratio
shall be 0.55 (or such greater number as ServiceMaster shall specify
in ServiceMaster's notice to LandCare), (ii) LandCare shall have the
right to reschedule the LandCare Stockholders Meeting up to ten days
later than the date upon which it otherwise would have been held
(provided that without the agreement of LandCare and ServiceMaster
such rescheduling shall not cause the period used to determine the
Final Average Closing Price to change), and (iii) LandCare shall
have the right to terminate this Agreement by giving written notice
to ServiceMaster.
(iv) If any adjustment is made to the Exchange Ratio pursuant
to this Section 1.2(b), then such adjusted Exchange Ratio shall be
rounded to four decimal places, rounding upward from 0.00005.
(v) LandCare shall set the date for the LandCare Stockholders
Meeting; provided that without ServiceMaster's consent, such date
shall not be earlier than February 15, 1999 and shall not be later
than the later of February 15, 1999 or the 45th day after the
Securities and Exchange Commission (the "SEC") shall have declared
the Registration Statement effective. The parties may by agreement
change the date on which the LandCare Stockholders Meeting will
occur.
(c) From and after the Effective Time, all Shares converted in
accordance with Section 1.2(a)(iii) shall no longer be outstanding and shall
automatically be canceled and shall cease to exist, and each holder of a
certificate representing any such Shares shall cease to have any rights with
respect thereto, except the right to receive the Merger Consideration and any
dividends payable pursuant to Section 1.3(f) upon surrender in accordance with
Section 1.3, without interest.
For purposes of this Agreement, "PERSON" or "person" means an individual,
a corporation, a limited liability company, a partnership, an association, a
trust or any other entity or
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organization, including a government or political subdivision or any agency or
instrumentality thereof. For purposes of this Agreement, the word "SUBSIDIARY"
when used with respect to any Person means any other corporation or other entity
of which a majority of the securities or other ownership interests having
ordinary voting power to elect a majority of the board of directors or other
persons performing similar functions are directly or indirectly owned by such
Person. For purposes of this Agreement, any reference to any event, change or
effect having a material adverse effect on or with respect to any entity (or
group of entities taken as a whole) means such event, change or effect, in the
aggregate with such other events, changes or effects, which is materially
adverse to the business, financial condition, operations, results of operations
or prospects of such entity (or group of entities taken as a whole).
Section 1.3 SURRENDER AND PAYMENT.
(a) Prior to the Effective Time, ServiceMaster shall appoint an
agent reasonably acceptable to LandCare (the "EXCHANGE AGENT") for the purpose
of exchanging certificates representing Shares for the Merger Consideration.
Immediately following the Effective Time, ServiceMaster shall deposit with the
Exchange Agent, for the benefit of the holders of certificates formerly
representing Shares, the Merger Consideration issuable pursuant to Section
1.2(a)(iii) in exchange for outstanding Shares. Promptly after the Effective
Time, ServiceMaster will send, or will cause the Exchange Agent to send, to each
holder of Shares at the Effective Time (i) a letter of transmittal for use in
such exchange (which shall specify that delivery of the Merger Consideration
shall be effected, and risk of loss and title to the certificates representing
ServiceMaster Common Stock and LandCare Common Stock shall pass, only upon
proper deliver of the certificates formerly representing Shares to the Exchange
Agent) and (ii) instructions for use in effecting the surrender of the
certificates formerly representing Shares in exchange for the Merger
Consideration.
(b) Each holder of Shares that have been converted into a right to
receive the Merger Consideration, upon surrender to the Exchange Agent of a
certificate or certificates formerly representing such Shares, together with a
properly completed and duly executed letter of transmittal covering such Shares
and such other documents as may reasonably be required by the Exchange Agent,
will be entitled to receive the Merger Consideration payable in respect of such
Shares and any dividends payable pursuant to Section 1.3(f). Until so
surrendered, each such certificate shall, after the Effective Time, represent
for all purposes only the right to receive the Merger Consideration and any
dividends payable pursuant to Section 1.3(f), without interest.
(c) If any portion of the Merger Consideration is to be paid to a
Person other than the registered holder of the Shares formerly represented by
the certificate or certificates surrendered in exchange therefor, it shall be a
condition to such payment that the certificate or certificates so surrendered
shall be properly endorsed or otherwise be in proper form for transfer and that
the Person requesting such payment shall pay to the Exchange Agent any transfer
or other taxes required as a result of such payment to a Person other than the
registered holder of
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such Shares represented by the certificate or certificates so surrendered or
establish to the satisfaction of the Exchange Agent that such tax has been paid
or is not applicable.
(d) After the Effective Time, there shall be no further registration
of transfers of Shares. If, after the Effective Time, certificates formerly
representing Shares are presented to the Surviving Corporation, they shall be
canceled and exchanged for the consideration provided for, and in accordance
with the procedures set forth, in this Article 1.
(e) Any portion of the Merger Consideration made available to the
Exchange Agent pursuant to Section 1.3(a) that remains unclaimed by the holders
of Shares one year after the Effective Time shall be returned to ServiceMaster,
upon demand, and any such holder who has not exchanged his Shares for the Merger
Consideration in accordance with this Section 1.3 prior to that time shall
thereafter look only to ServiceMaster for payment of the Merger Consideration
and any dividends payable pursuant to Section 1.3(f) in respect of his Shares.
Neither ServiceMaster, LandCare nor the Exchange Agent shall be liable to any
person in respect of any shares of ServiceMaster Common Stock, any dividends or
distributions with respect thereto or any cash in lieu of fractional shares of
ServiceMaster Common Stock, in each case, delivered to a public official
pursuant to any applicable abandoned property, escheat or similar law. If any
certificate representing Shares shall not have been surrendered prior to two
years after the Effective Time (or immediately prior to such earlier date on
which any Merger Consideration, any dividends or distributions payable to the
holder of such certificate or any cash payable to the holder of such certificate
formerly representing LandCare Common Stock pursuant to this Article 1, would
otherwise escheat to or become the property of any Governmental Entity (as
hereinafter defined)), any such Merger Consideration, dividends or distributions
in respect of such certificate or such cash shall, to the extent permitted by
applicable law, become the property of the Surviving Corporation, free and clear
of all claims or interest of any person previously entitled thereto.
(f) No dividends or other distributions with respect to
ServiceMaster Common Stock issued in connection with the Merger shall be paid to
the holder of any unsurrendered certificates formerly representing Shares until
such certificates are surrendered as provided in this Section 1.3. Subject to
the effect of applicable laws, following the surrender of such certificates,
there shall be paid, without interest, to the record holder of ServiceMaster
Common Stock issued in exchange therefor at the time of such surrender, the
amount of dividends or other distributions with a record date after the
Effective Time payable prior to or on the date of such surrender with respect to
such whole shares of ServiceMaster Common Stock and not previously paid, less
the amount of any withholding taxes which may be required thereon.
(g) The Exchange Agent shall invest any cash deposited with the
Exchange Agent, as directed by ServiceMaster, on a daily basis. Any interest and
other income resulting from such investments shall be paid to ServiceMaster.
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(h) If any certificate representing Shares shall have been lost,
stolen or destroyed, upon the making of an affidavit of that fact by the person
claiming such certificate to be lost, stolen or destroyed and, if required by
the Surviving Corporation, the posting by such person of a bond in such
reasonable amount as the Surviving Corporation may direct as indemnity against
any claim that may be made against it with respect to such certificate, the
Exchange Agent shall issue in exchange for such lost, stolen or destroyed
certificate the Merger Consideration and, if applicable, any unpaid dividends
and distributions on shares of ServiceMaster Common Stock deliverable in respect
thereof and any cash in lieu of fractional shares, in each case, due to such
person pursuant to this Agreement.
Section 1.4 STOCK OPTIONS.
(a) As soon as practicable following the date of this Agreement, the
Board of Directors of LandCare (and, if appropriate, any committee administering
its 1998 Long-Term Incentive Plan and 1998 Non-Employee Director's Stock Plan
(the "LANDCARE OPTION PLANS")) shall adopt such resolutions or take such other
actions as may be required to effect the following:
(i) adjust the terms of all outstanding LandCare Stock Options
(defined below) granted under the LandCare Option Plans and the
terms of the LandCare Option Plans, to provide that at the Effective
Time, each LandCare Stock Option outstanding immediately prior to
the Effective Time shall be deemed to constitute an option to
acquire, on the same terms and conditions as were applicable under
such LandCare Stock Option (subject to adjustments and lapsing of
restrictions, vesting or acceleration of exercisability of LandCare
Stock Options required by this Section 1.4), the same number of
shares of ServiceMaster Common Stock as the holder of such LandCare
Stock Option would have been entitled to receive pursuant to the
Merger had such holder exercised such LandCare Stock Option in full
immediately prior to the Effective Time, at a price per share equal
to the quotient derived by dividing the Exchange Ratio into the
exercise price per share at which the LandCare Common Stock shall
have been purchasable on exercise of such LandCare Stock Option
prior to the Effective Time; and
(ii) make such other changes to the LandCare Option Plans as
it deems appropriate to give effect to the Merger (subject to
approval of ServiceMaster, which shall not be unreasonably
withheld).
(b) At the Effective Time and subject to the last sentence to this
Section 1.4(b), all conditions and restrictions relating to all outstanding
LandCare Stock Options which have been granted pursuant to the LandCare Option
Plans (the "LANDCARE STOCK OPTIONS"), including limitations on exercisability,
risks of forfeiture and conditions and restrictions requiring continued
performance of services with respect to the exercisability or settlement of such
LandCare Stock Options, shall immediately lapse. LandCare shall use diligent
efforts to cause the individuals listed
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in Section 1.4(b) of the LandCare Disclosure Schedule (as hereinafter defined)
(hereinafter referred to as the "SENIOR OPTION HOLDERS") to waive the complete
lapsing of conditions and restrictions relating to exercisability of LandCare
Stock Options set forth above, and accept a modified vesting schedule whereby
one-half of each Senior Option Holder's LandCare Stock Options shall vest and
thereafter be exercisable as provided in the respective LandCare Option
Agreement on the date six months immediately following the Effective Time, and
the remaining one-half of such LandCare Stock Options shall vest and thereafter
be exercisable as provided in the respective LandCare Option Agreement on the
first anniversary of the Effective Time; provided, however, in the event a
Senior Option Holder's employment is terminated by LandCare without Cause (as
defined in the respective Senior Option Holder's employment agreement with
LandCare) or if the Senior Option Holder elects to terminate his employment with
LandCare for Good Reason (as defined in the respective Senior Option Holder's
employment agreement with LandCare) the unvested portion of such Senior Option
Holder's LandCare Stock Options shall immediately vest and be exercisable for a
period of three months following termination of employment.
(c) As soon as practicable after the Effective Time, ServiceMaster
shall deliver to the holders of LandCare Stock Options appropriate notices
setting forth such holders' rights pursuant to the respective LandCare Option
Plans and the agreements evidencing the grants of such LandCare Stock Options
shall continue in effect on the same terms and conditions (except as expressly
provided above).
(d) ServiceMaster shall take all corporate action necessary to
reserve for issuance a sufficient number of shares of ServiceMaster Common Stock
for delivery on exercise of the LandCare Stock Options assumed in accordance
with this Section 1.4. As soon as reasonably practicable after the Effective
Time, ServiceMaster shall file a registration statement on Form S-8 (or any
successor or other appropriate form) with respect to the shares of ServiceMaster
Common Stock subject to such LandCare Stock Options and shall use reasonable
efforts to maintain the effectiveness of such registration statement or
registration statements (and maintain the current status of the prospectus or
prospectuses contained therein) for so long as such LandCare Stock Options
remain outstanding.
Section 1.5 FRACTIONAL SHARES.
(a) No certificates or scrip representing fractional shares of
ServiceMaster Common Stock shall be issued upon the surrender for exchange of
certificates formerly representing Shares, no dividend or distribution of
ServiceMaster shall relate to such fractional share interests and such
fractional share interests will not entitle the owner thereof to vote or to any
rights of a stockholder of ServiceMaster.
(b) As promptly as practicable following the Effective Time,
ServiceMaster shall cause the Exchange Agent to determine the excess of (i) the
number of whole shares of ServiceMaster Common Stock delivered to the Exchange
Agent by ServiceMaster pursuant to
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Section 1.3(a) hereof over (ii) the aggregate number of whole shares of
ServiceMaster Common Stock to be distributed to former holders of Shares
pursuant to Section 1.3(b) hereof (such excess being herein called the "EXCESS
SHARES"). Following the Effective Time, the Exchange Agent shall, on behalf of
former holders of certificates representing Shares, sell the Excess Shares at
then-prevailing prices on the NYSE, all in the manner provided in this Section.
(c) The sale of the Excess Shares by the Exchange Agent shall be
executed on the NYSE through one or more member firms of the NYSE and shall be
executed in round lots to the extent practicable. ServiceMaster shall cause the
Exchange Agent to use reasonable efforts to complete the sale of the Excess
Shares as promptly following the Effective Time as, in the Exchange Agent's sole
judgment, is practicable consistent with obtaining the best execution of such
sales in light of prevailing market conditions. Until the net proceeds of such
sale or sales have been distributed to the holders of certificates formerly
representing Shares, the Exchange Agent shall hold such proceeds in trust for
such holders (the "COMMON STOCK TRUST"). The Surviving Corporation shall pay all
commissions, transfer taxes and other out-of-pocket transaction costs, including
the expenses and compensation of the Exchange Agent incurred in connection with
such sale of the Excess Shares. The Exchange Agent shall determine the portion
of the Common Stock Trust to which each former holder of Shares is entitled, if
any, by multiplying the amount of the aggregate net proceeds comprising the
Common Stock Trust by a fraction, the numerator of which is the amount of the
fractional share interest to which such former holder of Shares is entitled
(after taking into account all Shares held at the Effective Time by such holder)
and the denominator of which is the aggregate amount of fractional share
interests to which all former holders of Shares are entitled.
(d) Notwithstanding subsections (a), (b) and (c) above, the
Surviving Corporation may elect at its option, exercised prior to the Effective
Time, in lieu of the issuance and sale of Excess Shares and the making of the
payments herein above contemplated, to pay each former holder of Shares an
amount in cash equal to the product obtained by multiplying (i) the fractional
share interest to which such former holder (after taking into account all Shares
held at the Effective Time by such holder) would otherwise be entitled by (ii)
the closing price for a share of ServiceMaster Common Stock as reported on the
NYSE Composite Transaction Tape (as reported in THE WALL STREET JOURNAL, or, if
not reported thereby, any other authoritative source) on the Closing Date (as
hereinafter defined), and, in such case, all references herein to the cash
proceeds of the sale of the Excess Shares and similar references shall be deemed
to mean and refer to the payments calculated as set forth in this subsection
(d).
(e) As soon as practicable after the determination of the amount of
cash, if any, to be paid to holders of certificates formerly representing Shares
with respect to any fractional share interests, ServiceMaster shall cause the
Exchange Agent to make available such amounts to such holders of certificates
formerly representing Shares, subject to surrender of such certificates in
accordance with Section 1.3. For purposes of this Section 1.5, Shares of any
holder represented
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by two or more certificates may be aggregated, and in no event shall any holder
be paid an amount in cash in respect of more than one share of ServiceMaster
Common Stock.
Section 1.6 ADJUSTMENTS. In the event of any stock dividend in respect of
outstanding ServiceMaster Common Stock, or of any split, combination or
reclassification of the outstanding ServiceMaster Common Stock or of any
issuance of any other securities in exchange or in substitution for outstanding
shares of ServiceMaster Common Stock at any time during the period from the date
of this Agreement to the Effective Time, LandCare and ServiceMaster shall make
such adjustment to the Merger Consideration as LandCare and ServiceMaster shall
mutually agree so as to preserve the economic benefits that LandCare and
ServiceMaster each reasonably expected on the date of this Agreement to receive
as a result of the consummation of the Merger and the other transactions
contemplated by this Agreement.
ARTICLE 2
THE SURVIVING CORPORATION
Section 2.1 CERTIFICATE OF INCORPORATION. The certificate of incorporation
of Merger Subsidiary in effect at the Effective Time shall be the certificate of
incorporation of the Surviving Corporation until amended in accordance with
applicable law.
Section 2.2 BYLAWS. The bylaws of Merger Subsidiary in effect at the
Effective Time shall be the bylaws of the Surviving Corporation until amended in
accordance with applicable law.
Section 2.3 DIRECTORS AND OFFICERS. From and after the Effective Time,
until successors are duly elected or appointed and qualified in accordance with
the Delaware Law and the certificate of incorporation and bylaws of the
Surviving Corporation, the directors and officers of Merger Subsidiary at the
Effective Time shall be the directors and officers of the Surviving Corporation,
and the directors and officers of LandCare immediately prior to the Effective
Time shall cease to be directors and officers of LandCare at the Effective Time.
ARTICLE 3
LANDCARE WARRANTIES
References in this Agreement to the "LANDCARE DISCLOSURE SCHEDULE" mean
the document captioned "LandCare Disclosure Schedule" as constituted upon its
delivery to ServiceMaster prior to ServiceMaster's execution and delivery of
this Agreement. LandCare warrants to ServiceMaster and Merger Subsidiary,
subject in the case of the warranties in each particular section below to the
exceptions set forth in the corresponding section of the LandCare Disclosure
Schedule:
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Section 3.1 ORGANIZATION. Each of LandCare and its Subsidiaries is a
corporation duly organized, validly existing and in good standing under the laws
of the jurisdiction of its incorporation, and has all requisite corporate power
and authority and all necessary governmental approvals to own, lease and operate
its properties and to carry on its business as now being conducted, except where
the failure to be so organized, existing and in good standing or to have such
power, authority and governmental approvals would not have a material adverse
effect on LandCare and its Subsidiaries taken as a whole. Each of LandCare and
its Subsidiaries is duly qualified or licensed to do business and in good
standing in each jurisdiction in which the property owned, leased or operated by
it or the nature of the business conducted by it makes such qualification or
licensing necessary, except where the failure to be so duly qualified or
licensed and in good standing would not, in the aggregate, have a material
adverse effect on LandCare and its Subsidiaries taken as a whole.
Section 3.2 CORPORATE AUTHORIZATION; VALIDITY OF AGREEMENT; BOARD ACTION.
(a) LandCare has full corporate power and authority to execute and
deliver this Agreement and, subject to obtaining any necessary approval of its
stockholders as contemplated by Section 5.2 with respect to the adoption of this
Agreement, to consummate the transactions contemplated hereby. The execution,
delivery and performance by LandCare of this Agreement, and the consummation by
it of the transactions contemplated hereby, have been duly and validly
authorized by its board of directors and, except for obtaining the approval of
the stockholders of LandCare as contemplated by Section 5.2 with respect to the
adoption of this Agreement, no other corporate action or proceedings on the part
of LandCare is necessary to authorize the execution and delivery by LandCare of
this Agreement, and the consummation by it of the transactions contemplated
hereby. This Agreement has been duly executed and delivered by LandCare and,
assuming this Agreement constitutes a valid and binding obligation of
ServiceMaster and Merger Subsidiary, constitutes a valid and binding obligation
of LandCare, enforceable against LandCare in accordance with its terms, except
that (i) such enforcement may be subject to applicable bankruptcy, insolvency or
other similar laws, now or hereafter in effect, affecting creditors' rights
generally, and (ii) the remedy of specific performance and injunctive and other
forms of equitable relief may be subject to equitable defenses and to the
discretion of the court before which any proceeding therefor may be brought.
(b) The affirmative vote of the holders of a majority of the
LandCare Common Stock outstanding at the record date for the LandCare
Stockholders Meeting is the only vote of the holders of any class or series of
capital stock of LandCare necessary to adopt this Agreement, and thus to approve
of the transactions contemplated by this Agreement.
Section 3.3 CONSENTS AND APPROVALS; NO VIOLATIONS. Except for all filings,
permits, authorizations, consents and approvals as may be required under, and
other applicable requirements of, the Securities Exchange Act of 1934, as
amended (the "EXCHANGE ACT"), the Securities Act of 1933, as amended (the
"SECURITIES ACT"), the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of
MA111ECA.WPD - 10 -
1976, as amended (the "HSR ACT"), the state securities or "blue sky" laws, state
takeover laws, and except for the adoption of this Agreement by the stockholders
of LandCare and the filing of the certificate of merger as required by Delaware
Law, neither the execution, delivery or performance of this Agreement nor the
consummation by LandCare of the transactions contemplated hereby nor compliance
by LandCare with any of the provisions hereof will:
(a) conflict with or result in any breach of any provision of the
certificate of incorporation or bylaws or similar organizational documents of
LandCare or of any of its Subsidiaries;
(b) require any filing with, or permit, authorization, consent or
approval of, any court, arbitral tribunal, administrative agency or commission
or other governmental or other regulatory authority, commission or agency (a
"GOVERNMENTAL ENTITY"), except where the failure to obtain such permits,
authorizations, consents or approvals or to make such filings would not have a
material adverse effect on LandCare and its Subsidiaries taken as a whole and
would not, or would not be reasonably likely to, materially impair the ability
of LandCare, ServiceMaster or Merger Subsidiary to consummate the transactions
contemplated by this Agreement;
(c) result in a violation or breach of, or constitute (with or
without due notice or lapse of time or both) a default (or give rise to any
right of termination, amendment, cancellation or acceleration) under, any of the
terms, conditions or provisions of any note, bond, mortgage, indenture,
guarantee, other evidence of indebtedness (collectively, the "DEBT
INSTRUMENTS"), lease, license, contract, agreement or other instrument or
obligation to which LandCare or any of its Subsidiaries is a party or by which
any of them or any of their properties or assets may be bound (a "LANDCARE
AGREEMENT"), except for any violation, breach or default which would not have a
material adverse effect on LandCare and its Subsidiaries taken as a whole;
(d) violate any order, writ, injunction, decree, statute, rule or
regulation applicable to LandCare, any of its Subsidiaries or any of their
properties or assets, except for any violation which would not have a material
adverse effect on LandCare and its Subsidiaries taken as a whole; or
(e) result in the creation or imposition of any mortgage, lien,
pledge, charge, encumbrance or other security interest on any asset of LandCare
or any of its Subsidiaries, except for any such results which would not have a
material adverse effect on LandCare and its Subsidiaries taken as a whole.
Section 3.4 CAPITALIZATION.
(a) The authorized capital stock of LandCare consists of 102,000,000
shares of LandCare Common Stock (including shares of LandCare Common Stock
issued upon the conversion of LandCare's Restricted Voting Common Stock) and
5,000,000 shares of preferred
MA111ECA.WPD - 11 -
stock, par value $ .01 per share ("LANDCARE PREFERRED STOCK"). As of the close
of business on the date hereof, (i) 16,624,463 shares of LandCare Common Stock
were issued and outstanding and no shares of LandCare Common Stock were held in
treasury and (ii) no shares of LandCare Preferred Stock were issued and
outstanding or held in treasury. All outstanding shares of the capital stock of
LandCare are, and all shares which may be issued pursuant to the exercise of
LandCare Stock Options will be, when issued in accordance with the respective
terms thereof, duly authorized, validly issued, fully paid and non-assessable.
(b) As of the date hereof, options to acquire an aggregate of
2,185,673 shares of LandCare Common Stock are outstanding under the LandCare
Option Plans. Schedule 3.4(b) lists each holder of an option under the LandCare
Option Plans, the number of shares of LandCare Common Stock issuable with
respect to each such option (assuming full vesting) and the exercise price of
such option. No option issued by the LandCare is or purports to be an "incentive
stock option" within the meaning of Section 422 of the Code (as hereinafter
defined).
(c) There are no bonds, debentures, notes or other indebtedness
having voting rights (or convertible into securities having such rights)
("VOTING DEBT") of LandCare or any of its Subsidiaries issued and outstanding.
There are no shares of capital stock of LandCare authorized, issued or
outstanding and there are no existing options, warrants, calls, preemptive
rights, subscriptions or other rights, convertible securities, agreements,
arrangements or commitments of any character, relating to the issued or unissued
capital stock of LandCare or any of its Subsidiaries, obligating LandCare or any
of its Subsidiaries to issue, transfer or sell or cause to be issued,
transferred or sold any shares of capital stock or Voting Debt of, or other
equity interest in, LandCare or any of its Subsidiaries or securities
convertible into or exchangeable for such shares or equity interests or
obligations of LandCare or any of its Subsidiaries to grant, extend or enter
into any such option, warrant, call, subscription or other right, convertible
security, agreement, arrangement or commitment.
(d) There are no outstanding contractual obligations of LandCare or
any of its Subsidiaries to repurchase, redeem or otherwise acquire any capital
stock of LandCare or any Subsidiary or affiliate of LandCare or to provide funds
to make any investment (in the form of a loan, capital contribution or
otherwise) in any Subsidiary or any other entity. None of LandCare or its
Subsidiaries is required to redeem, repurchase or otherwise acquire shares of
capital stock of LandCare, or any of its Subsidiaries, respectively, as a result
of the transactions contemplated by this Agreement.
(e) Except for the Voting Agreements identified in the preamble to
this Agreement, there are no voting trusts or other agreements or understandings
to which LandCare or any of its Subsidiaries is a party with respect to the
voting of the capital stock of LandCare or any of the Subsidiaries.
MA111ECA.WPD - 12 -
Section 3.5 SUBSIDIARIES; CAPITALIZATION OF SUBSIDIARIES. Schedule 3.5
sets forth a complete and correct list of the direct and indirect Subsidiaries
of LandCare. All of the outstanding shares of capital stock of, or other
ownership interests in, each Subsidiary of LandCare, is owned by LandCare,
directly or indirectly, free and clear of any mortgage, lien, pledge, charge,
encumbrance or other security interest (including any restriction on the right
to vote, sell or otherwise dispose of such capital stock or other ownership
interests), and all such shares or other ownership interests have been validly
issued and are fully paid and nonassessable.
Section 3.6 SEC REPORTS AND FINANCIAL STATEMENTS.
(a) LandCare has filed with the SEC and has heretofore made
available to ServiceMaster true and complete copies of, all forms, reports,
schedules, statements and other documents required to be filed by it and its
Subsidiaries since the LandCare's inception under the Exchange Act and the
Securities Act (as such documents have been amended since the time of their
filing, collectively, the "LANDCARE SEC DOCUMENTS"). As of their respective
dates or, if amended, as of the date of the last such amendment, the LandCare
SEC Documents, including, without limitation, any financial statements and
schedules included therein, (i) did not contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary in order to make the statements therein, in light of the circumstances
under which they were made, not misleading and (ii) complied in all material
respects with the applicable requirements of the Exchange Act and the Securities
Act, as the case may be, and the applicable rules and regulations of the SEC
thereunder.
(b) Each of the consolidated financial statements included in
LandCare SEC Documents and the Third Quarter Financial Statements (as
hereinafter defined) has been prepared from, and is in accordance with, the
books and records of LandCare and/or its consolidated Subsidiaries, complies in
all material respects with applicable accounting requirements and with the
published rules and regulations of the SEC with respect thereto, has been
prepared in accordance with United States generally accepted accounting
principles ("GAAP") applied on a consistent basis during the periods involved
(except as may be indicated in the notes thereto) and fairly presents in all
material respects the consolidated financial position and the consolidated
results of operations (and changes in financial position, if any) of LandCare
and its consolidated Subsidiaries as at the dates thereof or for the periods
presented therein (subject, in the case of unaudited interim financial
statements, to normal year end adjustments and lack of footnote disclosures).
"THIRD QUARTER FINANCIAL STATEMENTS" means the unaudited consolidated and
consolidating balance sheets and statements of income and changes in
stockholders' equity of LandCare as of and for the three and nine months ended
September 30, 1998 attached hereto as Schedule 3.6.
Section 3.7 DISCLOSURE DOCUMENTS.
MA111ECA.WPD - 13 -
(a) None of the information supplied or to be supplied by LandCare
specifically for inclusion or incorporation by reference in (i) the registration
statement on Form S-4 to be filed with the SEC by ServiceMaster in connection
with the issuance of ServiceMaster Common Stock in connection with the Merger
(the "REGISTRATION STATEMENT") will, at the time the Registration Statement is
filed with the SEC, at any time it is amended or supplemented or at the time it
becomes effective under the Securities Act, contain any untrue statement of a
material fact or omit to state any 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 or (ii) the proxy statement of LandCare to
be filed by LandCare with the SEC in connection with the Merger (the "LANDCARE
PROXY STATEMENT") will, at the date it is first mailed to the stockholders of
LandCare or at the time of the LandCare Stockholders Meeting, contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading.
(b) The LandCare Proxy Statement will comply as to form in all
material respects with the requirements of the Exchange Act, except that no
representation or warranty is made by LandCare with respect to statements made
or incorporated by reference therein based on information supplied by
ServiceMaster specifically for inclusion or incorporation by reference in the
LandCare Proxy Statement.
(c) At the time of the filing of any disclosure document filed after
the date hereof pursuant to the Securities Act, the Exchange Act or any state
securities law (other than the LandCare Proxy Statement, each a "LANDCARE
DISCLOSURE DOCUMENT"), and at the time of distribution thereof and until the
Closing Date, each such LandCare Disclosure Document (as supplemented or
amended) will not contain any untrue statement of a material fact or omit to
state a material fact necessary in order to make the statements made therein, in
the light of the circumstances under which they were made, not misleading.
Section 3.8 ABSENCE OF CERTAIN CHANGES. Since June 30, 1998, LandCare and
its Subsidiaries have conducted their respective businesses and operations in
the ordinary course of business. Since June 30, 1998 there has not occurred:
(a) any events, changes or effects (including the incurrence of any
liabilities of any nature, whether or not accrued, contingent or otherwise)
having, or which would be reasonably likely to have, in the aggregate, a
material adverse effect on LandCare and its Subsidiaries taken as a whole;
(b) any declaration, setting aside or payment of any dividend or
other distribution (whether in cash, stock or property) with respect to the
equity interests of LandCare or of any of its Subsidiaries, other than dividends
paid by wholly-owned Subsidiaries;
MA111ECA.WPD - 14 -
(c) any change by LandCare or any of its Subsidiaries in accounting
principles or methods, except for any such change required by reason of a change
in GAAP;
(d) any amendment of any term of any outstanding security of
LandCare or any of its Subsidiaries that would materially increase the
obligations of LandCare or of such Subsidiary under such security;
(e) any incurrence or assumption by LandCare or any of its
Subsidiaries of any indebtedness for borrowed money other than (i) under
existing credit facilities (or any renewals, replacements or extensions that do
not increase the aggregate commitments thereunder), (ii) in the ordinary course
of business (it being understood that any indebtedness incurred prior to the
date hereof in respect of capital expenditures shall be considered to have been
in the ordinary course of business) or (iii) in connection with any acquisition
or capital expenditure permitted by Section 5.1 or the transactions contemplated
hereby;
(f) any guarantee, endorsement or other incurrence or assumption of
liability (whether directly, contingently or otherwise) by LandCare or any of
its Subsidiaries for the obligations of any other person (other than any
wholly-owned Subsidiary of LandCare), other than in the ordinary course of
business;
(g) any making of any loan, advance or capital contribution to or
investment in any person by LandCare or any of its Subsidiaries other than (i)
any acquisition permitted by Section 5.6, (ii) loans, advances or capital
contributions to or investments in wholly-owned Subsidiaries of LandCare or
(iii) loans or advances to employees of LandCare or any of its Subsidiaries made
in the ordinary course of business;
(h) any contract or agreement entered into by LandCare or any of its
Subsidiaries on or prior to the date hereof relating to any material acquisition
or disposition of any assets or business or any modification, amendment,
assignment, termination or relinquishment by LandCare or any of its Subsidiaries
of any contract, license or other right (including any insurance policy naming
it or any of its Subsidiaries as a beneficiary or a loss payable payee) that
would have a material adverse effect on LandCare and its Subsidiaries taken as a
whole, other than transactions, commitments, contracts or agreements in the
ordinary course of business and those contemplated by this Agreement; or
(i) any employment, deferred compensation, severance, retirement or
other similar agreement entered into with any director, officer or employee of
LandCare or any of its Subsidiaries (or any amendment to any such existing
agreement), grant of any severance or termination pay to any director, officer
or employee of LandCare or any of its Subsidiaries or change in compensation or
other benefits payable to any director, officer or employee of LandCare or any
of its Subsidiaries pursuant to any severance or retirement plans or policies
thereof, in each case other than in the ordinary course of business.
MA111ECA.WPD - 15 -
For purposes of this Agreement, "ordinary course of business" with respect
to LandCare and/or its Subsidiaries shall be determined by reference to the
period subsequent to the time LandCare became subject to the Exchange Act and
with respect to any particular Subsidiary, subsequent to the time that such
Subsidiary became a Subsidiary of LandCare .
Section 3.9 NO UNDISCLOSED LIABILITIES. Except (i) to the extent disclosed
in LandCare SEC Documents filed prior to the date of this Agreement and (ii) for
liabilities and obligations incurred since September 30, 1998 in the ordinary
course of business, neither LandCare nor any of its Subsidiaries has incurred
any liabilities or obligations of any nature, whether or not accrued, contingent
or otherwise, that have, or would be reasonably likely to have, individually or
in the aggregate, a material adverse effect on LandCare and its Subsidiaries
taken as a whole. Schedule 3.9 sets forth each instrument evidencing
indebtedness of LandCare and its Subsidiaries which will accelerate or become
due or payable, or result in a right of redemption or repurchase on the part of
the holder of such indebtedness, or with respect to which any other payment or
amount will become due or payable, in any such case with or without due notice
or lapse of time, as a result of this Agreement or the transactions contemplated
hereby.
Section 3.10 EMPLOYEE BENEFIT PLANS.
(a) Schedule 3.10(a) contains an accurate and complete list of (i)
each "employee benefit plan" (as such term is defined in Section 3(3) of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA"))
contributed to, maintained or sponsored by LandCare or any of its Subsidiaries,
or with respect to which LandCare or any of its Subsidiaries has any liability
or potential liability; and (ii) each other retirement, savings, thrift,
deferred compensation, severance, stock ownership, stock purchase, stock option,
performance, bonus, incentive, vacation or holiday pay, travel, fringe benefit,
hospitalization or other medical, disability, life or other insurance, and any
other welfare benefit policy, trust, understanding or arrangement of any kind,
whether written or oral, contributed to, maintained or sponsored by LandCare or
any of its Subsidiaries for the benefit of any present or former employee,
officer or director of LandCare or any of its Subsidiaries, or with respect to
which LandCare or any of its Subsidiaries has any liability or potential
liability. Each item listed on Schedule 3.10(a) is referred to herein as a
"BENEFIT PLAN."
(b) Schedule 3.10(b) contains an accurate and complete list of each
collective bargaining agreement and each other agreement, arrangement,
commitment, understanding, plan, or policy of any kind, whether written or oral,
with or for the benefit of any current or former employee, officer, director or
consultant of LandCare or any of its Subsidiaries (including, without
limitation, each employment, compensation, termination or consulting agreement
or arrangement). Each item listed on Schedule 3.10(b) is referred to herein as a
"COMPENSATION COMMITMENT."
MA111ECA.WPD - 16 -
(c) Each Benefit Plan that is intended to be qualified within the
meaning of Section 401(a) of the Internal Revenue Code of 1986, as amended (the
"CODE") and each trust which forms a part of any such Benefit Plan (i) has
received a determination from the Internal Revenue Service (the "IRS") that such
Benefit Plan is qualified under Section 401(a) of the Code and that such related
trust is exempt from taxation under Section 501(a) of the Code, and nothing has
occurred since the date of such determination that could adversely affect the
qualification of such Benefit Plan or the exemption from taxation of such
related trust; and (ii) is in compliance with the requirements of Sections
401(a)(4) and 410(b) of the Code for each plan year of such Benefit Plan
commencing on or before the Closing Date.
(d) Neither LandCare nor any of its Subsidiaries currently
contribute to, maintain, sponsor or have any liability with respect to any
"employee pension benefit plan" (as such term is defined in Section 3(2) of
ERISA) that is subject to Section 302 of ERISA or Section 412 of the Code, and
neither LandCare nor any of its Subsidiaries has contributed to, maintained or
sponsored or have any liability with respect to any such employee pension
benefit plan for any time preceding the Closing Date.
(e) None of the Benefit Plans or Compensation Commitments obligates
LandCare or any of its Subsidiaries to pay any separation, severance,
termination or similar benefit solely as a result of any transaction
contemplated by this Agreement or solely as a result of a change in control or
ownership within the meaning of Section 280G of the Code.
(f) (i) Each Benefit Plan and any related trust, insurance contract
or fund has been maintained, funded and administered in compliance with its
respective terms and the terms of any applicable collective bargaining
agreements and in compliance with all applicable laws and regulations,
including, but not limited to, ERISA and the Code; (ii) there has been no
application for or waiver of the minimum funding standards imposed by Section
412 of the Code with respect to any Benefit Plan, and neither LandCare nor any
of its Subsidiaries is aware of any facts or circumstances that would materially
change the funded status of any such Benefit Plan; (iii) no asset of LandCare or
any of its Subsidiaries that is to be acquired by ServiceMaster, directly or
indirectly, pursuant to this Agreement is subject to any lien under ERISA or the
Code; (iv) neither LandCare nor any of its Subsidiaries has incurred any
liability under Title IV of ERISA (other than for contributions not yet due) or
to the Pension Benefit Guaranty Corporation (other than for payment of premiums
not yet due); and (v) there are no pending or threatened actions, suits,
investigations or claims with respect to any Benefit Plan or Compensation
Commitment (other than routine claims for benefits) which could result in
liability to LandCare or any of its Subsidiaries (whether direct or indirect),
and neither LandCare nor any of its Subsidiaries has knowledge of any facts
which could give rise to (or be expected to give rise to) any such actions,
suits, investigations or claims.
(g) (i) LandCare and each of its Subsidiaries has complied with the
health care continuation requirements of Part 6 of Title I of ERISA; and (ii)
LandCare and its Subsidiaries
MA111ECA.WPD - 17 -
have no obligation under any Benefit Plan or otherwise to provide health
benefits to former employees of LandCare or any of its Subsidiaries or any other
person, except as specifically required by Part 6 of Title I of ERISA.
(h) (i) Neither LandCare nor any of its Subsidiaries has incurred
any liability on account of a "partial withdrawal" or a "complete withdrawal"
(within the meaning of Sections 4205 and 4203, respectively, of ERISA) from any
Benefit Plan subject to Title IV of ERISA which is a "multiemployer plan" (as
such term is defined in Section 3(37) of ERISA) (a "MULTIEMPLOYER PLAN"), no
such liability has been asserted, and there are no events or circumstances which
could result in any such partial or complete withdrawal; and (ii) neither
LandCare nor any of its Subsidiaries is bound by any contract or agreement or
has any obligation or liability described in Section 4204 of ERISA. To the best
knowledge of LandCare and each of its Subsidiaries, each Multiemployer Plan
complies in form and has been administered in accordance with the requirements
of ERISA and, where applicable, the Code; and each Multiemployer Plan is
qualified under Section 401(a) of the Code as amended to the date hereof.
(i) The actions contemplated by this Agreement will not give rise to
any liability with respect to any "employee welfare benefit plan" (as such term
is defined in Section 3(1) of ERISA) that is a "multiemployer plan" (as such
term is defined in Section 3(37) of ERISA).
(j) Neither LandCare nor any ERISA Affiliate has any liability or
potential liability with respect to any "employee benefit plan" (as defined in
Section 3(3) of ERISA) solely by reason of being treated as a single employer
under Section 414 of the Code with any trade, business or entity.
(k) Neither LandCare nor any of its Subsidiaries has, contributes
to, maintains or sponsors or has any liability with respect to any employee
benefit plan, agreement or arrangement applicable to employees of LandCare or
any of its Subsidiaries located outside the United States (the "FOREIGN PLANS").
(l) With respect to each Benefit Plan and each Compensation
Commitment, LandCare or the appropriate Subsidiary of LandCare has made
available to ServiceMaster true, complete and correct copies of (to the extent
applicable) (i) all documents pursuant to which the Benefit Plan or Compensation
Commitment is maintained, funded and administered, (ii) the most recent annual
report (Form 5500 series) filed with the IRS (with applicable attachments),
(iii) the most recent financial statement, (iv) the most recent actuarial
valuation of benefit obligations, and (v) the most recent determination letter
received from the IRS and the most recent application to the IRS for such
determination letter.
Section 3.11 COMPLIANCE WITH LAW. LandCare and its Subsidiaries have
complied with all laws, statutes, regulations, rules, ordinances and judgments,
decrees, orders, writs and
MA111ECA.WPD - 18 -
injunctions, of any court or Governmental Entity relating to any of the property
owned, leased or used by them, or applicable to their business, including, but
not limited to, equal employment opportunity, discrimination, occupational
safety and health, environmental, insurance regulatory, antitrust laws, ERISA
and laws relating to Taxes (as hereinafter defined), except to the extent that
any such non-compliance would not have a material adverse effect on LandCare and
its Subsidiaries taken as a whole.
Section 3.12 LITIGATION. There is no suit, claim, action, proceeding,
review or investigation pending or, to the knowledge of LandCare, threatened
against or affecting, LandCare or any of its Subsidiaries which, individually or
in the aggregate, is reasonably likely to have a material adverse effect on
LandCare and its Subsidiaries taken as a whole, or would, or would be reasonably
likely to, materially impair the ability of LandCare to consummate the
transactions contemplated by this Agreement.
Section 3.13 NO DEFAULT. The business of LandCare and each of its
Subsidiaries is not being conducted in default or violation of any term,
condition or provision of (a) its respective certificate of incorporation or
bylaws or similar organizational documents, or (b) any LandCare Agreement,
excluding from the foregoing clause (b) defaults or violations that would not
have a material adverse effect on LandCare and its Subsidiaries taken as a whole
and would not, or would not be reasonably likely to, materially impair the
ability of LandCare, ServiceMaster or Merger Subsidiary to consummate the
transactions contemplated by this Agreement.
Section 3.14 TAXES.
(a) DEFINITIONS. For purposes of all of Section 3.14:
(i) The term "LANDCARE" includes LandCare and each Subsidiary
of LandCare, including without limitation any corporation or other
entity that became or becomes a Subsidiary of the Company prior to
the Effective Time.
(ii) The term "TAX" means any federal, state, local or foreign
income, gross receipts, franchise, estimated, alternative minimum,
add-on minimum, sales, use, transfer, registration, value added,
excise, natural resources, severance, stamp, occupation, premium,
windfall profit, environmental, customs, duties, real property,
personal property, capital stock, social security, unemployment,
disability, payroll, license, employee or other withholding, or
other tax, of any kind whatsoever, including any interest, penalties
or additions to tax or additional amounts in respect of the
foregoing.
(iii) The term "RETURN" means any returns, declarations,
reports, claims for refund, amended returns, information returns or
other documents (including any related or supporting schedules,
statements or information) filed or required to be
MA111ECA.WPD - 19 -
filed in connection with the determination, assessment or collection
of any Tax, or the administration of any laws, regulations or
administrative requirements relating to any Tax.
(b) TAX FILINGS AND PAYMENTS.
(i) All Returns (as hereinafter defined) required to be filed
on or before the date hereof and the date of the Closing by or on
behalf of LandCare have been duly filed on a timely basis and such
Returns are true, correct and complete in all material respects,
except that such returns may contain inadvertent errors and
omissions which are not material.
(ii) LandCare has timely paid or made adequate provision for
all Taxes and, no other material Taxes are payable by LandCare with
respect to items or periods covered by such Returns (whether or not
shown on or reportable on such Returns).
(iii) LandCare has made or will make adequate provision for
all Taxes payable for any periods that end on or before the Closing
for which no Returns have yet been filed and for any periods that
begin before the Closing and end after the Closing to the extent
such Taxes are attributable to the portion of any such period ending
at the Closing.
(iv) The charges, accruals and reserves for current Taxes
(excluding reserves for deferred Taxes) reflected on the books of
LandCare are not materially less than the Tax liabilities accruing
or payable by LandCare in respect of periods prior to the date
hereof and such charges, accruals and reserves are reflected on
LandCare's most recent financial statements.
(v) LandCare is not delinquent in the payment of any Taxes or
has requested any extension of time within which to file or send any
Return, which Return has not since been filed or sent and which
Taxes have not been paid.
(vi) No deficiencies exist for any Taxes or any penalties,
interest or assessments nor have any been proposed, asserted, or
assessed against LandCare that are not adequately reserved for.
(vii) There is no dispute or claim concerning any material Tax
liability of LandCare either (A) claimed or raised by any authority
in writing or (B) as to which LandCare has knowledge based upon
personal contact with any agent of such authority.
MA111ECA.WPD - 20 -
(viii) There is no pending audit, examination, or, to
LandCare's knowledge, any investigation of any Return by any
authority nor has LandCare received any notice of such audit,
examination, or investigation.
(ix) LandCare has not waived any statute of limitations in
respect of Taxes or granted any extension of the limitations period
applicable to any claim of Taxes.
(x) LandCare is not subject to liability for Taxes of any
person (other than LandCare or any other member of the affiliated
group of corporations that files a consolidated federal income tax
return, of which LandCare is the common parent), including, without
limitation, liability arising from the application of U.S. Treasury
Regulation section 1.1502-6 or any analogous provision of state,
local or foreign law.
(xi) LandCare is not nor has it ever been a party to any tax
sharing agreement with any entity.
(xii) To LandCare's knowledge, no claim has ever been made by
an authority in a jurisdiction where LandCare does not file Returns
that it is or may be subject to taxation by that jurisdiction.
(xiii) There are no liens on any of the assets of LandCare
that arose in connection with any failure (or alleged failure) to
pay any Taxes.
(xiv) LandCare has withheld and paid over and complied with
all material information reporting and backup withholding
requirements, including, without limitation, maintenance of required
records with respect thereto, in connection with amounts paid or
owing to any employee, independent contractor, creditor,
stockholder, or other third party.
(xv) LandCare does not expect any authority to assess any
additional Taxes for any period for which Returns have been filed
except to an extent consistent with LandCare's past experience as
reflected in its publicly released financial statements.
(xvi) LandCare has delivered to ServiceMaster correct and
complete copies of all Returns, examination reports, and statements
of deficiencies assessed against or agreed to by LandCare.
MA111ECA.WPD - 21 -
(xvii) LandCare is not a party to any safe harbor lease within
the meaning of Section 168(f)(8) of the Code, as in effect prior to
the amendment by the Tax Equity and Fiscal Responsibility Act of
1982.
(xviii) All material net operating losses, credits and other
tax attributes utilized by LandCare during any taxable year ending
on or prior to the Closing were fully and properly available to
LandCare under all applicable tax laws, regulations and
administrative interpretations thereof.
(c) TAX CHARACTERISTICS OF LANDCARE.
(i) To LandCare's knowledge, no stockholder of LandCare who
owns more than 5% of LandCare's Common Stock is a "foreign person"
(as that term is defined in Section 1445(f)(3) of the Code).
(ii) LandCare is not a "consenting corporation" under Section
341(f) of the Code.
(iii) LandCare has not entered into any compensatory agreement
with respect to the performance of services which payment thereunder
would result in a nondeductible expense to LandCare pursuant to
Sections 162(m) or 280G of the Code or an excise tax to the
recipient of such payment pursuant to Section 4999 of the Code.
(iv) LandCare has not agreed, nor is it required to make, any
adjustment under Section 481(a) of the Code by reason of a change in
accounting method or otherwise.
(v) To LandCare's knowledge, LandCare will not be required as
a result of any "closing agreement" described in Section 7121 of the
Code (or any corresponding provision of state, local or foreign
income Tax law), to include any item of income in, or exclude any
item of deduction from, taxable income for any taxable period (or
portion thereof) ending after the Closing.
(vi) LandCare will not be required as a result of any deferred
intercompany gain described in Treasury Regulation Section 1.1502-13
or any excess loss account described in Treasury Regulation Section
1.1502-19 (or any corresponding or similar provision or
administrative rule of federal, state, local or foreign income tax
law), to include any item of income in taxable income for any period
(or portion thereof) ending after the Closing Date.
MA111ECA.WPD - 22 -
(vii) Not later than December 1, 1998, LandCare will supply a
schedule to ServiceMaster showing: (A) the amount of any net
operating loss, net capital loss, unused credits, unused foreign tax
or excess charitable contribution; and (B) the amount of any
deferred gain or loss arising out of any deferred intercompany
transaction.
Section 3.15 CONTRACTS. Each material LandCare Agreement is valid, binding
and enforceable and in full force and effect, except where failure to be valid,
binding and enforceable and in full force and effect would not have a material
adverse effect on LandCare and its Subsidiaries taken as a whole, and there are
no defaults thereunder, except those defaults that would not have a material
adverse effect on LandCare and its Subsidiaries taken as a whole. Neither
LandCare nor any of its Subsidiaries is a party to any agreement that expressly
and materially limits the ability of LandCare or any of its Subsidiaries to
compete in or conduct any line of business or compete with any person or in any
geographic area or during any period of time. All material contracts of LandCare
and its Subsidiaries will continue to be legal, valid, binding and enforceable,
and in full force and effect, on identical terms following the consummation of
the Merger.
Section 3.16 TRANSACTIONS WITH AFFILIATES. Except to the extent disclosed
in LandCare SEC Documents filed prior to the date of this Agreement, since June
30, 1998 there have been no material transactions, agreements, arrangements or
understandings between LandCare or its Subsidiaries, on the one hand, and the
affiliates of LandCare (other than wholly-owned Subsidiaries of LandCare) or
other Persons, on the other hand, that would be required to be disclosed under
Item 404 of Regulation S-K under the Securities Act.
Section 3.17 ENVIRONMENTAL MATTERS. Except as set forth in LandCare SEC
Documents filed prior the date hereof:
(a) For purposes of this Agreement, "ENVIRONMENTAL, HEALTH AND
SAFETY REQUIREMENTS" shall mean all federal, state, local and foreign statutes,
regulations, ordinances and other provisions having the force or effect of law,
all judicial and administrative orders and determinations, all contractual
obligations and all common law concerning public health and safety, worker
health and safety, and pollution or protection of the environment, including
without limitation all those relating to the presence, use, production,
generation, handling, transportation, treatment, storage, disposal,
distribution, labeling, testing, processing, discharge, release, threatened
release, control, or cleanup of any hazardous materials, substances or wastes,
chemical substances or mixtures, pesticides, pollutants, contaminants, toxic
chemicals, petroleum products or byproducts, asbestos, polychlorinated
biphenyls, noise or radiation, each as amended.
(b) Each of LandCare and its Subsidiaries has complied and is in
compliance with all Environmental, Health, and Safety Requirements, except for
any noncompliance that
MA111ECA.WPD - 23 -
would not, in the aggregate, have a material adverse effect on LandCare and its
Subsidiaries taken as a whole.
(c) Without limiting the generality of the foregoing, each of
LandCare and its Subsidiaries has obtained and complied with, and is in
compliance with, all permits, licenses and other authorizations that are
required pursuant to Environmental, Health and Safety Requirements
("ENVIRONMENTAL PERMITS") for the occupation of its facilities and the operation
of its business, except for any failure to maintain or comply with Environmental
Permits that would not, in the aggregate, have a material adverse effect on
LandCare and its Subsidiaries taken as a whole.
(d) Neither LandCare, nor any of its Subsidiaries has received any
written or oral notice, report or other information regarding any actual or
alleged violation of Environmental, Health and Safety Requirements, or any
liabilities or potential liabilities (whether accrued, absolute, contingent,
unliquidated or otherwise), including any investigatory, remedial or corrective
obligations, relating to any of them or its facilities arising under
Environmental, Health and Safety Requirements, except for such notices, reports
or other information, the subject of which would not, in the aggregate, have a
material adverse effect on LandCare and its Subsidiaries taken as a whole.
(e) None of LandCare or its Subsidiaries, or their respective
predecessors, has treated, stored, disposed of, arranged for or permitted the
disposal of, transported, handled or released any substance, including without
limitation any hazardous substance, or owned or operated any property or
facility (and no such property or facility is contaminated by any such
substance) in a manner that has given or would give rise to liabilities,
including any liability for response costs, corrective action costs, personal
injury, property damage, natural resources damages or attorney fees, pursuant to
the Comprehensive Environmental Response, Compensation and Liability Act of
1980, as amended ("CERCLA"), the Solid Waste Disposal Act, as amended ("SWDA"),
or any other Environmental, Health and Safety Requirements, except for such
liabilities that would not, in the aggregate, have a material adverse effect on
LandCare and its Subsidiaries taken as a whole.
(f) Neither this Agreement nor the consummation of the transaction
that is the subject of this Agreement will result in any obligations for site
investigation or cleanup, or notification to or consent of government agencies
or third parties, pursuant to any of the so-called "transaction-triggered" or
"responsible property transfer" Environmental, Health and Safety Requirements.
(g) Neither LandCare nor its Subsidiaries has, either expressly or
by operation of law, assumed, undertaken or otherwise become subject to any
liability, including without limitation any obligation for corrective or
remedial action, of any other person or entity relating to Environmental, Health
and Safety Requirements except that the Company acquires ownership of businesses
by merging the entity owning the business with a subsidiary of the Company and
MA111ECA.WPD - 24 -
in such acquisitions the resulting subsidiary would be subject to the
liabilities to which the merging entity was subject.
(h) No facts, events or conditions relating to the past or present
facilities, properties or operations of LandCare, its Subsidiaries or any of
their predecessors will prevent, hinder or limit continued compliance with
Environmental, Health and Safety Requirements, give rise to any investigatory,
remedial or corrective obligations pursuant to Environmental, Health and Safety
Requirements or give rise to any other liabilities (whether accrued, absolute,
contingent, unliquidated or otherwise) pursuant to Environmental, Health and
Safety Requirements, including without limitation any relating to onsite or
offsite releases or threatened releases of hazardous materials, substances or
wastes, personal injury, property damage or natural resources damage, except for
such liabilities which would not, in the aggregate, have a material adverse
effect on LandCare and its Subsidiaries taken as a whole.
Section 3.18 INTELLECTUAL PROPERTY. LandCare and its Subsidiaries own or
have a valid license to use all patents, trademarks, service marks, trade names,
copyrights, trade secrets and other intellectual property rights (collectively,
the "LANDCARE INTELLECTUAL PROPERTY") necessary to carry on their respective
business as currently conducted; and neither LandCare nor any of its
Subsidiaries has received any notice of infringements of or conflict with, and
to LandCare's knowledge, there are no infringements of or conflicts with, the
rights of others with respect to the use of any of LandCare Intellectual
Property that, in either such case, would have a material adverse effect on
LandCare.
Section 3.19 OPINION OF FINANCIAL ADVISOR. LandCare has received the
written opinion of BT Alex. ▇▇▇▇▇ Incorporated ("BT ALEX. ▇▇▇▇▇") to the effect
that, as of the date hereof, the Merger Consideration to be received by the
holders of Shares in connection with the Merger is fair to such holders from a
financial point of view. LandCare has delivered or made available to
ServiceMaster a copy of such opinion.
Section 3.20 FINDERS AND INVESTMENT BANKERS. No broker, finder or
investment banker is entitled to any brokerage, finder's or other fee or
commission, or to the reimbursement of any of its expenses, in connection with
the transactions contemplated by this Agreement or any similar transaction based
upon arrangements made by or on behalf of LandCare, except for the arrangements
between LandCare and BT Alex. ▇▇▇▇▇ under which the aggregate payments will not
exceed $1.2 million. LandCare shall supply ServiceMaster not later than November
5, 1998 with the engagement letter for BT Alex. ▇▇▇▇▇ and all other agreements
or understandings affecting the amount that may be payable by LandCare to BT
Alex. ▇▇▇▇▇.
Section 3.21 TAKEOVER STATUTES. To the best of LandCare's knowledge, no
"fair price," "moratorium," "control share acquisition" or other similar
antitakeover statute or regulation enacted under state or federal laws in the
United States (each, a "TAKEOVER STATUTE") applicable to
MA111ECA.WPD - 25 -
LandCare or any of its Subsidiaries is applicable to the Merger or the other
transactions contemplated by this Agreement.
Section 3.22 INSURANCE. The LandCare Disclosure Schedule lists the
insurance policies covering LandCare on the date hereof and on the date hereof
each such policy is in full force and effect. Neither LandCare nor any
Subsidiary of LandCare is in default with respect to its obligations under any
insurance policy maintained by it, and neither LandCare nor any LandCare
Subsidiary (since the time any such Subsidiary became a Subsidiary of LandCare)
has been denied insurance coverage at any time for any reason.
Section 3.23 SUPPORTIVE STOCKHOLDER ACTIONS.
(a) Every person listed in Section 3.23(a) of the LandCare
Disclosure Schedule has executed in the capacity of stockholder a Voting
Agreement in a form substantially identical to the Voting Agreement executed on
the date hereof between ServiceMaster and ▇▇▇▇▇ ▇. ▇▇▇▇▇. The persons listed in
Section 3.23(a) of the LandCare Disclosure Schedule collectively own and have
the right to vote approximately 30% shares of LandCare Common Stock outstanding
on the date hereof.
(b) LandCare has obtained Voting and Share Substitution Agreements
from each of the persons listed in Section 3.23(b) of the LandCare Disclosure
Schedule in substantially the form previously provided to ServiceMaster and each
such agreement is enforceable against the person listed in Section 3.23(b) of
the LandCare Disclosure Schedule who is a party to that Agreement in accordance
with its terms.
(c) Agreements complying with Section 1.4 (b) have been obtained
from the five individuals cited in Section 1.4(b) of the LandCare Disclosure
Schedule and each such Agreement is enforceable against the individual party to
it in accordance with its terms.
(d) LandCare will provide ServiceMaster with two original executed
copies of each such agreement cited in this Section 3.23 not later than November
5, 1998.
MA111ECA.WPD - 26 -
ARTICLE 4
WARRANTIES OF
SERVICEMASTER AND MERGER SUBSIDIARY
References in this Agreement to the "SERVICEMASTER DISCLOSURE SCHEDULE"
mean the document captioned "ServiceMaster Disclosure Schedule" as constituted
upon its delivery to LandCare prior to LandCare's execution and delivery of this
Agreement. ServiceMaster warrants to LandCare, subject in the case of the
warranties in each particular section below to the exceptions set forth in the
corresponding section of the ServiceMaster Disclosure Schedule:
Section 4.1 ORGANIZATION. ServiceMaster is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware.
Merger Subsidiary is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware. Each of ServiceMaster and its
Subsidiaries has all requisite corporate or other power and authority and all
necessary governmental approvals to own, lease and operate its properties and to
carry on its business as now being conducted, except where the failure to be so
organized, existing and in good standing or to have such power, authority and
governmental approvals would not have a material adverse effect on ServiceMaster
and its subsidiaries taken as a whole. ServiceMaster and each of its
Subsidiaries is duly qualified or licensed to do business and in good standing
in each jurisdiction in which the property owned, leased or operated by it or
the nature of the business conducted by it makes such qualification or licensing
necessary, except where the failure to be so duly qualified or licensed and in
good standing would not in the aggregate, have a material adverse effect on
ServiceMaster and its Subsidiaries taken as a whole. Merger Subsidiary has not
heretofore conducted any business other than in connection with this Agreement
and the transactions contemplated hereby.
Section 4.2 CORPORATE AUTHORIZATION; VALIDITY OF AGREEMENT; NECESSARY
ACTION. ServiceMaster and Merger Subsidiary have full corporate power and
authority to execute and deliver this Agreement and to consummate the
transactions contemplated hereby. The execution, delivery and performance by
ServiceMaster and Merger Subsidiary of this Agreement and the consummation by
ServiceMaster and Merger Subsidiary of the transactions contemplated hereby have
been duly and validly authorized by their respective boards of directors and no
other corporate action or proceedings on the part of ServiceMaster and Merger
Subsidiary are necessary to authorize the execution and delivery by
ServiceMaster and Merger Subsidiary of this Agreement, and the consummation by
ServiceMaster and Merger Subsidiary of the transactions contemplated hereby.
This Agreement has been duly executed and delivered by ServiceMaster and Merger
Subsidiary, and, assuming this Agreement constitutes a valid and binding
obligation of LandCare, constitutes a valid and binding obligation of each of
ServiceMaster and Merger Subsidiary, enforceable against each of them in
accordance with their terms, except that (i) such enforcement may be subject to
applicable bankruptcy, insolvency or other similar laws, now or hereafter in
effect, affecting creditors' rights generally, and (ii) the remedy of specific
performance
MA111ECA.WPD - 27 -
and injunctive and other forms of equitable relief may be subject to equitable
defenses and to the discretion of the court before which any proceeding therefor
may be brought. ServiceMaster Common Stock to be issued in connection with the
Merger will when issued be duly authorized, validly issued, fully paid and
nonassessable and not subject to preemptive rights. No vote of the holders of
ServiceMaster Common Stock is necessary for ServiceMaster to consummate the
Merger or to issue the shares of ServiceMaster Common Stock to be issued in
connection with the Merger or for Merger Subsidiary to consummate the Merger.
Section 4.3 CONSENTS AND APPROVALS; NO VIOLATIONS. Except for filings,
permits, authorizations, consents and approvals as may be required under, and
other applicable requirements of, the Exchange Act, the Securities Act, the HSR
Act, state Securities or "blue sky" laws and any applicable state takeover laws,
and the filing of the Certificate of Merger as required by Delaware Law, neither
the execution, delivery or performance of this Agreement by ServiceMaster and
Merger Subsidiary nor the consummation by ServiceMaster and Merger Subsidiary of
the transactions contemplated hereby nor compliance by ServiceMaster and Merger
Subsidiary with any of the provisions hereof will:
(a) conflict with or result in any breach of any provision of the
certificate of incorporation or bylaws of ServiceMaster or Merger Subsidiary or
any other Subsidiary of ServiceMaster;
(b) require any filing with, or permit, authorization, consent or
approval of, any Governmental Entity, except where the failure to obtain such
permits, authorizations, consents or approvals or to make such filings would not
have a material adverse effect on ServiceMaster and its Subsidiaries taken as a
whole and would not, or would not be reasonably likely to, materially impair the
ability of LandCare, ServiceMaster and Merger Subsidiary to consummate the
transactions contemplated by this Agreement;
(c) result in a violation or breach of, or constitute (with or
without due notice or lapse of time or both) a default (or give rise to any
right of termination, amendment, cancellation or acceleration) under, any of the
terms, conditions or provisions of any note, bond, mortgage, indenture,
guarantee, other evidence of indebtedness, lease, license, contract, agreement
or other instrument or obligation to which ServiceMaster or any of its
Subsidiaries is a party or by which any of them or any of their properties or
assets may be bound other than any violation, breach or default which would not
have a material adverse effect on ServiceMaster and its Subsidiaries taken as a
whole; or
(d) violate any order, writ, injunction, decree, statute, rule or
regulation applicable to ServiceMaster, any of its Subsidiaries or any of their
properties or assets, other than any violation which would not have a material
adverse effect on ServiceMaster and its Subsidiaries taken as a whole.
MA111ECA.WPD - 28 -
Section 4.4 CAPITALIZATION. The authorized capital stock of ServiceMaster
consists of 1,000,000,000 shares of ServiceMaster Common Stock and 11,000,000
shares of preferred stock, par value $0.01 per share (the "SERVICEMASTER
PREFERRED STOCK"). As of the close of business on October 23, 1998, (a)
296,104,099 shares of ServiceMaster Common Stock were issued and outstanding and
(b) no shares of ServiceMaster Preferred Stock were issued and outstanding. As
of the close of business on September 30, 1998, 1,552,369 shares of
ServiceMaster Common Stock were held in treasury. All of the issued and
outstanding shares of ServiceMaster Common Stock are duly authorized, validly
issued, fully paid and non-assessable.
Section 4.5 SEC REPORTS AND FINANCIAL STATEMENTS.
(a) ServiceMaster has filed with the SEC and has heretofore made
available to LandCare true and complete copies of, all forms, reports,
schedules, statements and other documents required to be filed by it since
December 31, 1996 under the Exchange Act and the Securities Act (as such
documents have been amended since the time of their filing, collectively, the
"SERVICEMASTER SEC DOCUMENTS"). As of their respective dates or, if amended, as
of the date of the last such amendment, ServiceMaster SEC Documents, including,
without limitation, any financial statements and schedules included therein (i)
did not contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading and (ii) complied in all material respects with the applicable
requirements of the Exchange Act and the Securities Act, as the case may be, and
the applicable rules and regulations of the SEC thereunder.
(b) Each of the consolidated financial statements included in
ServiceMaster SEC Documents complies in all material respects with applicable
accounting requirements and with the published rules and regulations of the SEC
with respect thereto, has been prepared in accordance with GAAP applied on a
consistent basis during the periods involved (except as may be indicated in the
notes thereto) and fairly presents in all material respects the consolidated
financial position and the consolidated results of operations and cash flows
(and changes in financial position, if any) of ServiceMaster and its
consolidated Subsidiaries as at the dates thereof or for the periods presented
therein (subject, in the case of unaudited interim financial statements, to
normal year end adjustments and lack of footnote disclosures).
Section 4.6 ABSENCE OF CERTAIN CHANGES. Except as disclosed in
ServiceMaster SEC Documents filed with the SEC prior to the date hereof, since
June 30, 1998, ServiceMaster and its Subsidiaries have conducted their
respective businesses and operations in the ordinary course of business
consistent with past practice. Since June 30, 1998, there has not occurred: (i)
any events, changes or effects (including the incurrence of any liabilities of
any nature, whether or not accrued, contingent or otherwise) having or, which
would be reasonably likely to have, in the aggregate, a material adverse effect
on ServiceMaster and its Subsidiaries taken as a whole; (ii) any declaration,
setting aside or payment of any distribution (whether in cash, shares or
MA111ECA.WPD - 29 -
property) with respect to the equity interests of ServiceMaster or of any of its
Subsidiaries, other than regular quarterly cash dividends or dividends paid by
wholly-owned Subsidiaries; or (iii) any change by ServiceMaster or any of its
Subsidiaries in accounting principles or methods, except for any such change
required by reason of a change in GAAP.
Section 4.7 NO UNDISCLOSED LIABILITIES. Except (i) to the extent disclosed
in ServiceMaster SEC Documents filed prior to the date of this Agreement and
(ii) for liabilities and obligations incurred in the ordinary course of business
consistent with past practice, since September 30, 1998, neither ServiceMaster
nor any of its Subsidiaries has incurred any liabilities or obligations of any
nature, whether or not accrued, contingent or otherwise, that have, or would be
reasonably likely to have, individually or in the aggregate, a material adverse
effect on ServiceMaster and its Subsidiaries taken as a whole.
Section 4.8 LITIGATION. There is no suit, claim, action, proceeding,
review or investigation pending or, to the knowledge of ServiceMaster,
threatened against or affecting, ServiceMaster or any of its Subsidiaries which,
individually or in the aggregate, is reasonably likely to have a material
adverse effect on ServiceMaster and its Subsidiaries taken as a whole, or would,
or would be reasonably likely to, materially impair the ability of ServiceMaster
to consummate the transactions contemplated by this Agreement.
Section 4.9 COMPLIANCE WITH LAW. ServiceMaster and its Subsidiaries have
complied with all laws, statutes, regulations, rules, ordinances and judgments,
decrees, orders, writs and injunctions, of any court or Governmental Entity
relating to any of the property owned, leased or used by them, or applicable to
their business, including, but not limited to, equal employment opportunity,
discrimination, occupational safety and health, environmental, insurance,
regulatory, antitrust laws, ERISA and laws relating to Taxes, except to the
extent that any such non-compliance would not have a material adverse effect on
ServiceMaster and its Subsidiaries taken as a whole.
Section 4.10 NO DEFAULT. The business of ServiceMaster and each of its
Subsidiaries is not being conducted in default or violation of any term,
condition or provision of (i) its respective certificate of incorporation or
bylaws or similar organizational documents, or (ii) agreements to which
ServiceMaster and its Subsidiaries are parties, excluding from the foregoing
clause (ii) defaults or violations that would not have a material adverse effect
on ServiceMaster and its Subsidiaries taken as a whole and would not, or would
not be reasonably likely to, materially impair the ability of ServiceMaster,
LandCare or Merger Subsidiary to consummate transactions contemplated by this
Agreement.
Section 4.11 DISCLOSURE DOCUMENTS. None of the information supplied or to
be supplied by ServiceMaster specifically for inclusion or incorporation by
reference in (i) the Registration Statement will, at the time the Registration
Statement is filed with the SEC, at any time it is amended or supplemented or at
the time it becomes effective under the Securities Act, contain any
MA111ECA.WPD - 30 -
untrue statement of a material fact or omit to state any 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 or (ii) the
LandCare Proxy Statement will, at the date it is first mailed to LandCare
stockholders or at the time of LandCare Stockholders Meeting, contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading. The Registration
Statement will comply as to form in all material respects with the requirements
of the Securities Act, except that no representation or warranty is made by
ServiceMaster with respect to statements made or incorporated by reference in
either the Registration Statement or the LandCare Proxy Statement based on
information supplied by LandCare specifically for inclusion or incorporation by
reference therein.
Section 4.12 OPINION OF FINANCIAL ADVISOR. ServiceMaster has received an
opinion from CS First Boston dated the date of this Agreement to the effect
that, as of such date, the consideration to be paid by ServiceMaster in the
Merger is fair to ServiceMaster from a financial point of view.
ARTICLE 5
COVENANTS OF LANDCARE
Section 5.1 CONDUCT OF BUSINESS BY LANDCARE PENDING THE MERGER. LandCare
covenants and agrees that prior to the Effective Time or the date, if any, on
which this Agreement is earlier terminated pursuant to Section 9.1 hereof,
unless ServiceMaster and Merger Subsidiary shall otherwise consent in writing or
except as otherwise contemplated by this Agreement:
(a) the businesses of LandCare and its Subsidiaries will be
conducted only in the ordinary and usual course; LandCare will use its
reasonable best efforts to preserve intact its business organization and
goodwill, keep available the services of its officers and employees and maintain
satisfactory relationships with customers and others having business
relationships with it and its Subsidiaries; and LandCare will promptly notify
ServiceMaster and Merger Subsidiary of any event or occurrence or emergency not
in the ordinary and usual course of the business of LandCare or any of its
Subsidiaries or material to the business of LandCare and its Subsidiaries, taken
as a whole;
(b) LandCare will not (i) amend its certificate of incorporation or
bylaws or (ii) split, combine or reclassify the outstanding Shares or declare,
set aside or pay any dividend payable in cash, stock or property with respect to
the Shares, other than dividends paid by any of its Subsidiaries to LandCare;
MA111ECA.WPD - 31 -
(c) neither LandCare nor any of its Subsidiaries will issue or agree
to issue any additional shares of, or rights of any kind to acquire shares of,
its capital stock of any class, other than (i) the issuance of shares of capital
stock of a Subsidiary of LandCare to LandCare, (ii) with respect to LandCare,
Shares issuable upon exercise of LandCare Stock Options outstanding on the date
hereof, (iii) options to purchase Shares issued to employees of enterprises
acquired in Additional Acquisitions closed after the date hereof provided that
the number of Shares subject to options issued with respect to any particular
Additional Acquisition shall not exceed 10% of the number of Shares issued in
that Acquisition and the exercise price for such Option shall not be lower than
$11 per Share; (iv) Shares issuable in connection with the conversion of any of
the notes set forth in the Section of LandCare Disclosure Schedule corresponding
to Section 3.4(c) and (v) the issuance of shares of capital stock as expressly
permitted under Section 5.6 of this Agreement.
(d) neither LandCare nor any of its Subsidiaries will enter into or
agree to enter into any new or amended contract or agreement with any labor
unions representing employees of LandCare or any of its Subsidiaries;
(e) except permitted by Section 5.4 or by Section 5.6, LandCare will
not authorize, recommend, propose or announce an intention to authorize,
recommend or propose, or enter into an agreement in principle or an agreement
with respect to any merger, consolidation or business combination (other than
the Merger), any acquisition or disposition of a material amount of assets or
securities (including, without limitation, the assets or securities of any of
its Subsidiaries) or any material change in its capitalization, or enter, other
than in the ordinary course of business, into a material contract;
(f) neither LandCare nor any of its Subsidiaries shall modify, amend
or terminate any of the material LandCare Agreements or waive, release or assign
any material rights or claims, except in the ordinary course of business;
(g) neither LandCare nor any of its Subsidiaries shall: (i) grant
any increase in the compensation payable or to become payable by LandCare or any
of its Subsidiaries to any officer or management employee other than scheduled
annual increases in the ordinary course of business; (ii) adopt any new, or
amend or otherwise increase, or accelerate the payment or vesting of the amounts
payable or to become payable under any existing, bonus, incentive compensation,
deferred compensation, severance, profit sharing, stock option, stock purchase,
insurance, pension, retirement or other employee benefit plan agreement or
arrangement; (iii) enter into any, or amend any existing, employment, consulting
or severance agreement with or, except in accordance with the existing written
policies of LandCare, grant any severance or termination pay to any officer,
director or employee of LandCare or any of its Subsidiaries; (iv) make any
additional contributions to any grantor trust created by LandCare to provide
funding for non-tax-qualified employee benefits or compensation; or (v) provide
any new severance program or rights;
MA111ECA.WPD - 32 -
(h) to the extent within their control, neither LandCare nor any of
its Subsidiaries shall permit any material insurance policy naming it as a
beneficiary or a loss payable payee to be canceled or terminated, except in the
ordinary course of business;
(i) except for increases in the aggregate principal amount of
LandCare's senior credit facility of up to $125 million, neither LandCare nor
any of its Subsidiaries shall: (i) incur or assume any debt except for
borrowings under existing credit facilities in the ordinary course of business;
(ii) assume, guarantee, endorse or otherwise become liable or responsible
(whether directly, contingently or otherwise) for the obligations of any other
person, except in the ordinary course of business; (iii) make any loans,
advances or capital contributions to, or investments in, any other person (other
than to wholly-owned Subsidiaries of LandCare, customary loans or advances to
employees in the ordinary course of business and short-term investments pursuant
to customary cash management systems of LandCare in the ordinary course of
business); or (iv) make or commit to make any material capital expenditure in an
amount or character that is not consistent with LandCare's past practices;
(j) neither LandCare nor any of its Subsidiaries shall change any of
the accounting principles used by it unless required by GAAP;
(k) except upon the prior written consent of ServiceMaster, LandCare
shall not make any Tax election; and
(l) neither LandCare nor any Subsidiary of LandCare shall agree in
writing or otherwise to take (i) any action that it is prohibited from taking by
this Section 5.1, or (ii) any action that would constitute or is likely to cause
or result in a breach of any covenant, agreement, representation or warranty set
forth herein.
Section 5.2 LANDCARE STOCKHOLDERS MEETING. The board of directors of
LandCare shall unanimously recommend to the stockholders of LandCare the
adoption of this Agreement and declare the approval of this Agreement advisable
and LandCare shall take all reasonably lawful action to solicit such adoption by
its stockholders. Notwithstanding the previous sentence, the board of directors
of LandCare may withdraw or modify its recommendation that stockholders approve
this Agreement and its finding that such approval is advisable if the board of
directors of LandCare, after having consulted with outside counsel, determines
that the refusal to do so would constitute a breach by the board of directors of
LandCare of their fiduciary duties under applicable laws; provided, the board of
directors of LandCare may not approve or recommend (and in connection therewith,
withdraw or modify its approval or recommendation with respect to this
Agreement) an Acquisition Transaction (as hereinafter defined) unless such
Acquisition Transaction is a bona fide unsolicited written proposal from a third
party that the board of directors of LandCare determines in good faith is more
favorable to the stockholders of LandCare than the Merger; provided, further,
that the board of directors shall continue to take all action necessary to
convene the LandCare Stockholders Meeting and shall submit for (or shall not
MA111ECA.WPD - 33 -
withdraw from) the consideration of the stockholders of LandCare the adoption of
this Agreement (even if the board of directors of LandCare is permitted to
withdraw or modify its approval with respect to this agreement or is permitted
to approve or recommend an Acquisition Transaction to its stockholders pursuant
to this sentence).
Section 5.3 ACCESS TO INFORMATION. LandCare will give ServiceMaster, its
counsel, financial advisors, auditors and other authorized representatives full
access throughout the period prior to the Effective Time to all of the offices,
properties, business and marketing plans, books, files and records of LandCare
and the Subsidiaries of LandCare, will furnish to ServiceMaster, its counsel,
financial advisors, auditors and other authorized representatives such financial
and operating data and other information as such persons may request and will
instruct LandCare's employees, counsel and financial advisors to cooperate with
ServiceMaster in its investigation of the business of LandCare and its
Subsidiaries and to promptly answer and respond to any questions and inquiries
of ServiceMaster. LandCare will furnish promptly to ServiceMaster and Merger
Subsidiary (a) a copy of each report, schedule and other document filed or
received by it pursuant to the requirements of Federal or state securities laws
and (b) all such other information concerning its business, properties and
personnel as ServiceMaster or Merger Subsidiary may reasonably request; provided
that no investigation pursuant to this Section 5.3 shall affect any
representation or warranty contained herein or the conditions to the obligations
of the parties to consummate the Merger.
Section 5.4 NO SOLICITATION.
(a) LandCare warrants to ServiceMaster that the board of directors
of LandCare has (i) made such assessments of LandCare's value and has taken such
other actions as to satisfy the fiduciary duties of its board of directors that
must be satisfied to enable LandCare to enter into this Agreement and to render
this Agreement binding upon LandCare in accordance with its terms and (ii) has
adopted a resolution approving this Agreement and declaring its advisability.
(b) LandCare agrees that, prior to the Effective Time, it shall not,
and shall not authorize or permit any of its Subsidiaries or any of its or its
Subsidiaries' directors, officers, employees, agents or representatives,
directly or indirectly, to solicit, initiate or knowingly encourage (including
by way of furnishing or disclosing non-public information) any inquiries or the
making of any proposal with respect to any merger, consolidation or other
business combination involving LandCare or the acquisition of all or any
material portion of the assets or capital stock of LandCare (an "ACQUISITION
TRANSACTION") or negotiate, explore or otherwise engage in substantive
discussions with any person (other than ServiceMaster, Merger Subsidiary or
their respective directors, officers, employees, agents and representatives), or
enter into any agreement, with respect to any Acquisition Transaction or enter
into any agreement, arrangement or understanding requiring it to abandon,
terminate or fail to consummate the Merger or any other transactions
contemplated by this Agreement.
MA111ECA.WPD - 34 -
(c) Notwithstanding subsection (b) above:
(i) LandCare may provide non-public information to and seek to
negotiate an Acquisition Transaction with a person (the
"COMPETITOR") provided that the Competitor shall make a bona fide
unsolicited written proposal to make an Acquisition Transaction for
all the capital stock or assets of LandCare on Superior Terms. For
purposes of this Agreement, terms will be deemed to be "SUPERIOR
TERMS" only if the proposal of such Competitor is more favorable
than the Merger to the stockholders of LandCare as determined in
good faith by the board of directors of LandCare. A proposal to
acquire LandCare on Superior Terms is herein called a "QUALIFIED
COMPETING PROPOSAL." LandCare shall prior to entering into an
agreement with respect to a Qualified Competing Proposal pay or
cause to be paid to ServiceMaster the amount specified in Section
9.4(b). Nothing contained in this Agreement shall prevent the board
of directors of LandCare from complying with Rule 14c-2 under the
Exchange Act with regard to an Acquisition Transaction.
(ii) If LandCare receives a Qualified Competing Proposal,
LandCare will nevertheless (i) permit its stockholders to vote on
the adoption of this Agreement and (ii) not take any action that
would preclude LandCare from consummating the Merger if this
Agreement is adopted by LandCare's stockholders or make the Merger
any less advantageous to ServiceMaster if this Agreement is adopted
by LandCare's stockholders. If this Agreement is adopted by
LandCare's stockholders (i) LandCare will consummate the Merger and
(ii) shall not consummate any Acquisition Transaction contemplated
by a Qualified Competing Proposal.
(d) Upon executing this Agreement, LandCare shall immediately advise
ServiceMaster in writing regarding (i) the identity of any other persons or
entities with whom LandCare has had direct or indirect contact since January 1,
1998 regarding a possible Acquisition Transaction and (ii) the status of any
discussions or negotiations regarding a possible Acquisition Transaction
involving any such person or entity. LandCare warrants that LandCare is not
bound by any contract or agreement that would require it to take any action
which would violate any restriction contained in Section 5.4(b). Hereafter,
LandCare shall advise ServiceMaster in writing of the receipt, directly or
indirectly, of any inquiries or proposals relating to an Acquisition Transaction
promptly upon such receipt and of its intention to enter into any agreement
relating to an Acquisition Transaction which is a Qualified Competing Proposal
at least 48 hours prior to executing any such agreement, and promptly advise
ServiceMaster in writing of any actions taken pursuant to Section 5.4(c) hereof
and furnish to ServiceMaster either a copy of such proposal or a written summary
of such proposal.
Section 5.5 CORPORATE ORGANIZATION. Notwithstanding anything to the
contrary contained in this Agreement or in the disclosure schedules hereto,
LandCare and each of its Subsidiaries
MA111ECA.WPD - 35 -
shall take all actions necessary in order to be duly qualified and in good
standing on the Effective Time with the Secretary of State in each jurisdiction
in which the character of its properties owned or held under lease or the nature
of its activities makes such qualification necessary.
Section 5.6 PIPELINE ACQUISITIONS.
(a) LandCare has delivered to ServiceMaster prior to the execution
of this Agreement a schedule captioned "PIPELINE SCHEDULE" which as constituted
when so delivered to ServiceMaster prior to execution of this Agreement is
herein called the "Pipeline Schedule." LandCare warrants to ServiceMaster that
the Pipeline Schedule shows: (i) every enterprise with which LandCare has
entered into a letter of intent or binding acquisition agreement contemplating
the acquisition of such enterprise by LandCare which is in existence on the date
hereof (except that the acquisition of Albuquerque Landscape identified in
Section 5.6(f) shall not be deemed to be part of the Pipeline Schedule); (ii)
the purchase price for such enterprise specified in such letter of intent or
acquisition agreement; and (iii) the annual revenues and proforma EBITDA that
LandCare estimates such enterprise generated in the trailing 12 months prior to
the execution of the letter of intent with respect to that enterprise.
(b) LandCare shall not enter into any letter of intent or agreement
to make any acquisition of any business enterprise or consummate any acquisition
of any business enterprise after the date hereof except that LandCare may enter
into purchase agreements for the enterprises shown on the Pipeline Schedule on
terms that comply with the requirements in Section 5.6(d) and may consummate
such acquisitions and except that LandCare shall have the right to make
additional acquisitions of enterprises not shown on the Pipeline Schedule that
comply with the requirements set forth in paragraphs (c) and (d) of this Section
5.6.
(c) LandCare may without ServiceMaster's consent acquire businesses
not shown on the Pipeline Schedule provided that the standards in Section 5.6(d)
and the following additional standards are met with respect to each such
acquisition:
(i) the purchase price payable for such business shall not
exceed .8 times trailing twelve month revenues or six times trailing
twelve month pro forma EBITDA for the business (both calculated in
the same manner used to calculate trailing 12 month revenues and pro
forma EBITDA for purposes of the Pipeline Schedule and for purposes
of this requirement all debt obligations to which the acquired
enterprise shall be subject (net of excess cash) shall count as part
of the purchase price);
(ii) such business shall have generated during the trailing 12
months and shall be likely to continue to generate pro forma EBITDA
margins of at least 10%; and
MA111ECA.WPD - 36 -
(iii) such business has a quality and potential comparable to
the businesses shown on the Pipeline Schedule on the date hereof.
(d) The following requirements shall apply to every acquisition made
by LandCare after the date hereof ("NEW ACQUISITIONS"):
(i) LandCare shall not use its LandCare Common Stock for any
New Acquisition unless that such stock shall be valued for purposes
of that acquisition at:
(A) not less than the actual average closing price for
LandCare Common Stock during a five Trading Day period ending
within two Trading Days prior to the closing of the New
Acquisition;
(B) not less than $9 per LandCare share; and
(C) not less than $1 per LandCare share issued in the
New Acquisition below the "Applicable ServiceMaster Deal
Price." For purposes of this Section 5.6, the "APPLICABLE
SERVICEMASTER DEAL PRICE" for purposes of any particular New
Acquisition shall be equal to the Applicable Exchange Ratio
times the average closing price per share for ServiceMaster
Common Stock for the period of 20 consecutive Trading Days
ending on the third Trading Day before the date on which the
particular New Acquisition closes. The "APPLICABLE EXCHANGE
RATIO" shall be the Exchange Ratio that would have been
applicable if the Scheduled Meeting Date coincided with the
date on which the New Acquisition shall close.
(ii) LandCare shall limit the shares of LandCare Common Stock
issuable in New Acquisitions so that in the aggregate the shares of
LandCare Common Stock issued in such transactions will result in
aggregate Deal Losses of not more than $1 million. For purposes of
this requirement, the Deal Loss in any particular New Acquisition
shall be the product derived by multiplying the number of shares of
LandCare Common Stock issued in that New Acquisition times the
amount by which the Applicable Service Master Deal Price shall
exceed the value per share for which shares of LandCare Common Stock
were valued for purposes of that New Acquisition.
(iii) LandCare shall not use LandCare Shares in any particular
New Acquisition unless the characteristics of the persons receiving
such stock and all other relevant considerations with respect to
that New Acquisition are such that the use of such stock will not
cause either LandCare or ServiceMaster to breach any of the
requirements of the federal securities laws.
MA111ECA.WPD - 37 -
(iv) The terms governing each New Acquisition will include (i)
warranties to LandCare and indemnifications from the sellers
comparable to the scope and value of the warranties usually obtained
by LandCare in acquisitions made after its acquisition of its
"founding companies" and prior to the date hereof and (ii) other
terms as favorable to LandCare as the comparable terms in
acquisitions made after its acquisition of its "founding companies"
and prior to the date hereof. The indemnification and other rights
that continue after the closing of a New Acquisition shall be on
terms such that LandCare's rights will not be impaired or diminished
in value by the consummation of the Merger. Without ServiceMaster's
consent, such terms shall not allow the sellers to use stock to
satisfy their indemnification obligations and shall prohibit the
sellers from transferring any interest in the shares of LandCare
Common Stock they receive in the deal (or in the ServiceMaster
shares issued in the Merger to replace those Shares) for a period of
one year after their New Acquisition closes.
(e) ServiceMaster shall have the right to terminate this Agreement
if by the Scheduled Meeting Date:
(A) LandCare shall not have completed and closed Qualified New
Acquisitions that meet the following criteria: (i) the aggregate
purchase price for the Qualified Pipeline Acquisitions shall not be
more than 5% in excess of the aggregate of the projected acquisition
prices projected on the Pipeline Schedule for New Acquisitions shown
on that Schedule and closed prior to the Scheduled Meeting Date; and
(ii) the aggregate purchase price for Qualified Post Pipeline
Acquisitions shall not exceed the maximum price permitted by clause
(i) in Section 5.6(c); and (iii) the trailing 12 month revenues for
the Qualified New Acquisitions (measured as of the time each such
New Acquisition closed) shall not be less than $46.6 million; and
(iv) the trailing 12 month EBITDA for the Qualified New Acquisitions
(measured as of the time each such New Acquisition closed) shall not
be less than $5.9 million; or
(B) LandCare shall have made any New Acquisitions after the date
hereof (other than Albuquerque Landscape) that are contrary to the
requirements in paragraphs (c) or (d) in this Section 5.6; or
(C) the aggregate trailing 12 month revenues of all businesses
acquired in New Acquisitions closed prior to the Scheduled Meeting
Date shall exceed $70 million.
For purposes of this Section 5(e):
MA111ECA.WPD - 38 -
(i) New Acquisitions shown on the Pipeline Schedule that in
ServiceMaster's reasonable judgment satisfy the requirements
paragraph (d) of this Section 5.6 are herein called "QUALIFIED
PIPELINE ACQUISITIONS."
(ii) New Acquisitions not listed on the Pipeline Schedule that
in ServiceMaster's reasonable judgment satisfy the requirements
paragraphs (c) and (d) of this Section 5.6 are herein called
"QUALIFIED POST PIPELINE ACQUISITIONS."
(iii) The term "QUALIFIED NEW ACQUISITIONS" means all
Qualified Pipeline Acquisitions and all Qualified Post Pipeline
Acquisitions that shall have closed prior to the Scheduled Meeting
Date.
(iv) In the event ServiceMaster or any ServiceMaster
subsidiary shall acquire any enterprise shown on the Pipeline
Schedule, then for purposes of this Section 5.6(e) LandCare shall be
deemed to have acquired such enterprise on the terms specified in
the Pipeline Schedule for that enterprise.
(f) In the event LandCare shall within the next two weeks close its
acquisition of Albuquerque Landscape on the terms provided in the definitive
agreements governing that acquisition in effect on the date hereof, then (i)
such acquisition shall not be required to meet any of the standards prescribed
by this Section 5.6 but (ii) such acquisition shall not be deemed a New
Acquisition and shall not be taken into account in determining whether
ServiceMaster shall have a termination right under the provisions in Section
5.6(e).
(g) LandCare shall supply ServiceMaster at such time as
ServiceMaster shall reasonably request in order to enable ServiceMaster to
prepare for the Closing and to determine whether applicable closing conditions
have been satisfied all information ServiceMaster shall reasonably request about
New Acquisitions.
Section 5.7 REDEMPTION OF CONVERTIBLE NOTES. LandCare shall use diligent
efforts to cause each of the convertible notes of LandCare described in the
section of LandCare Disclosure Schedule corresponding to Section 3.4(c) to be
redeemed and repaid in full for an amount less than the greater of (unless
otherwise agreed by ServiceMaster) (i) the outstanding principal amount of such
note plus accrued interest or (ii) the then market value of the LandCare shares
into which the notes would be convertible if the conversion were governed by the
conversion ratio applicable after a change in control.
MA111ECA.WPD - 39 -
ARTICLE 6
COVENANTS OF SERVICEMASTER
Section 6.1 OBLIGATIONS OF MERGER SUBSIDIARY. ServiceMaster will take all
action necessary to cause Merger Subsidiary to perform its obligations under
this Agreement and to consummate the Merger on the terms and conditions set
forth in this Agreement.
Section 6.2 INDEMNIFICATION.
(a) From and after the Effective Time, ServiceMaster and the
Surviving Corporation jointly and severally shall indemnify, to the full extent
permitted under Delaware Law, the present and former directors and officers of
LandCare and its Subsidiaries (the "INDEMNIFIED PARTIES") in respect of actions
taken prior to and including the Effective Time in connection with their duties
as directors or officers of LandCare or its Subsidiaries (including the
transactions contemplated hereby) for a period of not less than six years from
the Effective Time; provided that, in the event any claim or claims are asserted
or made within such six-year period, all rights to indemnification in respect of
any such claim or claims shall continue until final disposition of any and all
such claims. Without limitation of the foregoing, in the event any Indemnified
Party becomes involved in such capacity in any action, proceeding or
investigation in connection with any matter, including the transactions
contemplated hereby, occurring prior to and including the Effective Time, the
Surviving Corporation, to the extent permitted and on such conditions as may be
required by applicable law, will periodically advance expenses to such
Indemnified Party for his legal and other out-of-pocket expenses (including the
cost of any investigation and preparation) incurred in connection therewith.
(b) For not less than six years after the Effective Time,
ServiceMaster or the Surviving Corporation shall maintain in effect directors'
and officers' liability insurance covering the persons who are currently covered
by LandCare's existing directors' and officers' liability insurance with respect
to actions that shall have taken place prior to the Effective Time, on terms and
conditions no less favorable to such persons than those in effect on the date
hereof under LandCare's existing directors' and officers' liability insurance;
provided, however, that in no event shall ServiceMaster or the Surviving
Corporation be required to pay in any year an amount to maintain such insurance
covering the Indemnified Parties in excess of twice the amount paid by LandCare
as of the Closing Date for such coverage; provided further that if the annual
premiums of such insurance coverage exceed such amount, ServiceMaster shall be
obligated to obtain a policy with a premium equal to such amount.
MA111ECA.WPD - 40 -
ARTICLE 7
COVENANTS OF SERVICEMASTER AND LANDCARE
Section 7.1 DILIGENT EFFORTS. Subject to the terms and conditions of this
Agreement, each party will use its diligent efforts to take, or cause to be
taken, all action and to do, or cause to be done, all things necessary, proper
or advisable under applicable laws and regulations to consummate the
transactions contemplated by this Agreement; provided that nothing herein shall
require ServiceMaster to hold, manage or operate any assets separately or to
enter into any sale or divestiture of assets. LandCare, ServiceMaster and Merger
Subsidiary shall each furnish to one another and to one another's counsel all
such information as may be required in order to accomplish the foregoing
actions. In connection with and without limiting the foregoing, LandCare and
ServiceMaster shall (i) take all action necessary to ensure that no state
takeover statute or similar statute or regulation is or becomes applicable to
the Merger, this Agreement or any of the other transactions contemplated hereby
and (ii) if any state takeover statute or similar statute or regulation becomes
applicable to the Merger, this Agreement or any of the other transactions
contemplated hereby, take all action necessary to ensure that the Merger and the
other transactions contemplated hereby may be consummated as promptly as
practicable on the terms contemplated by this Agreement and otherwise to
minimize the effect of such statute or regulation on the Merger and the other
transactions contemplated by this Agreement.
Section 7.2 CERTAIN FILINGS. LandCare and ServiceMaster shall cooperate
with one another (i) in connection with the preparation of the Registration
Statement and the LandCare Proxy Statement, (ii) in determining whether any
other action by or in respect of, or filing with, any governmental body, agency
or official, or authority or any actions, consents, approvals or waivers are
required to be obtained from parties to any material contracts in connection
with the consummation of the transactions contemplated by this Agreement and
(iii) in seeking any such actions, consents, approvals or waivers or making any
such filings, furnishing information required in connection therewith or with
the Registration Statement and the LandCare Proxy Statement and seeking timely
to obtain any such actions, consents, approvals or waivers.
Section 7.3 PUBLIC ANNOUNCEMENTS. ServiceMaster and LandCare will consult
with each other before issuing any press release or making any public statement
with respect to this Agreement and the transactions contemplated hereby and,
except as may be required by applicable law or any listing agreement with any
national securities exchange, will not issue any such press release or make any
such public statement prior to such consultation.
Section 7.4 FURTHER ASSURANCES. At and after the Effective Time, the
officers and directors of the Surviving Corporation will be authorized to
execute and deliver, in the name and on behalf of LandCare or Merger Subsidiary,
any deeds, bills of sale, assignments or assurances and to take and do, in the
name and on behalf LandCare or Merger Subsidiary, any other actions and things
to vest, perfect or confirm of record or otherwise in the Surviving Corporation
any and
MA111ECA.WPD - 41 -
all right, title
and interest in, to and under any of the rights, properties or assets of
LandCare acquired or to be acquired by the Surviving Corporation as a result of,
or in connection with, the Merger.
Section 7.5 NOTICES OF CERTAIN EVENTS. LandCare and ServiceMaster shall
promptly notify the other of:
(a) any notice or other communication from any person alleging that
the consent of such person is or may be required in connection with the
transactions contemplated by this Agreement;
(b) any notice or other communication from any governmental or
regulatory agency or authority in connection with the transactions contemplated
by this Agreement;
(c) any actions, suits, claims, investigations or proceedings
commenced or, to the best of its knowledge threatened against, relating to or
involving or otherwise affecting LandCare or any of its Subsidiaries, on the one
hand, or ServiceMaster or Merger Subsidiary, on the other hand, which relate to
the consummation of the transactions contemplated by this Agreement; and
(d) any action, event or occurrence that would constitute a breach
of any representation, warranty, covenant or agreement of it set forth in this
Agreement.
Section 7.6 PREPARATION OF THE REGISTRATION STATEMENT AND THE LANDCARE
PROXY STATEMENT. As soon as practicable following the date of this Agreement,
LandCare and ServiceMaster shall jointly prepare and file with the SEC the
LandCare Proxy Statement and ServiceMaster shall prepare and file with the SEC
the Registration Statement, in which the LandCare Proxy Statement will be
included. Each of LandCare and ServiceMaster shall use best efforts to have the
Registration Statement declared effective under the Securities Act as promptly
as practicable after such filing. LandCare will use its reasonable best efforts
to cause the LandCare Proxy Statement to be mailed to the stockholders of
LandCare as promptly as practicable after the Registration Statement is declared
effective under the Securities Act. ServiceMaster shall also take any action
(other than qualifying to do business in any jurisdiction in which it is not now
so qualified or to file a general consent to service of process) required to be
taken under any applicable state securities laws in connection with the issuance
of ServiceMaster Common Stock in the Merger and LandCare shall furnish all
information concerning LandCare and the holders of the Shares as may be
reasonably requested in connection with any such action. No filing of, or
amendment or supplement to, the Registration Statement will be made by
ServiceMaster or to the LandCare Proxy Statement will be made by LandCare or
ServiceMaster without providing the other party the opportunity to review and
comment thereon. ServiceMaster will advise LandCare, promptly after it receives
notice thereof, of the time when the Registration Statement has become effective
or any supplement or amendment has been filed, the issuance of any stop order,
the suspension of the qualification of ServiceMaster
MA111ECA.WPD - 42 -
Common Stock issuable in connection with the Merger for offering or sale in any
jurisdiction, or any request by the SEC for amendment of the LandCare Proxy
Statement or the Registration Statement or comments thereon and responses
thereto or requests by the SEC for additional information. If at any time prior
to the Effective Time any information relating to LandCare or ServiceMaster, or
any of their respective affiliates, officers or directors, should be discovered
by LandCare or ServiceMaster which should be set forth in an amendment or
supplement to any of the Registration Statement or the LandCare Proxy Statement,
so that any of such documents would not include any misstatement of a material
fact or omit to state any material fact necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading, the party which discovers such information shall promptly notify the
other party hereto and an appropriate amendment or supplement describing such
information shall be promptly filed with the SEC and, to the extent required by
law, disseminated to the stockholders of LandCare.
Section 7.7 LETTERS OF LANDCARE'S ACCOUNTANTS. LandCare shall use its
reasonable best efforts to cause to be delivered to ServiceMaster two letters
from LandCare's independent accountants, one dated a date within two business
days before the date on which the Registration Statement shall become effective
and one dated a date within two business days before the Closing Date, each
addressed to ServiceMaster, in form and substance reasonably satisfactory to
ServiceMaster and customary in scope and substance for comfort letters delivered
by independent public accountants in connection with registration statements
similar to the Registration Statement.
Section 7.8 AFFILIATES. Not less than 30 days prior to the Effective Time,
LandCare shall deliver to ServiceMaster a list of names and addresses of each
person who, in the reasonable judgment of LandCare, is an affiliate of LandCare
within the meaning of Rule 145 of the rules and regulations promulgated under
the Securities Act (each such person, an "AFFILIATE"). Each person who shall
execute a Voting Agreement shall be deemed an affiliate of LandCare and shall be
so designated on the list contemplated in the preceding sentence. LandCare shall
provide ServiceMaster such information and documents as ServiceMaster shall
reasonably request for purposes of reviewing such list. ServiceMaster shall be
entitled to place Rule 145 legends on the certificates evidencing any shares of
ServiceMaster Common Stock to be received by the Affiliates in the Merger.
Section 7.9 NYSE LISTING. ServiceMaster shall use its reasonable best
efforts to cause the shares of ServiceMaster Common Stock to be issued in
connection with the Merger to be approved for listing on the New York Stock
Exchange, subject to official notice of issuance, as promptly as practicable
after the date hereof, and in any event prior to the Closing Date.
Section 7.10 REGULATORY MATTERS AND APPROVALS. Each of LandCare and
ServiceMaster shall (and ServiceMaster shall cause Merger Subsidiary to) give
any notices to, make any filings with and use its reasonable best efforts to
obtain any authorizations, consents and approvals of, Governmental Entities in
connection with the transactions contemplated by this Agreement. Without
limiting the generality of the foregoing, LandCare and ServiceMaster shall each
file any Notification and Report
MA111ECA.WPD - 43 -
Forms and related material that it may be required to file in connection with
the transactions contemplated by this Agreement with the Federal Trade
Commission and the Antitrust Division of the United States Department of Justice
under the HSR Act, shall each use its reasonable best efforts to obtain an early
termination of the applicable waiting period, and shall each make any further
filings pursuant thereto that may be necessary, proper or advisable.
Section 7.11 TAX TREATMENT. Each of ServiceMaster and LandCare shall use
reasonable best efforts to cause the Merger to qualify as a reorganization under
the provisions of Section 368(a) of the Code, including, without limitation,
forbearing from taking any action that would cause the Merger not to qualify as
a reorganization under the provisions of Section 368(a) of the Code.
Section 7.12 REPRESENTATIONS. Each of LandCare, on the one hand, and
ServiceMaster and Merger Subsidiary, on the other, (i) will use their reasonable
best efforts to take all action necessary to render true and correct as of the
Closing its representations and warranties contained in this Agreement, (ii)
will refrain from taking any action that would render any such representation or
warranty untrue or incorrect as of such time and (iii) will perform or cause to
be satisfied each agreement, covenant or condition to be performed or satisfied
by it.
Section 7.13 MATERIAL CONSENTS. Between the date of this Agreement and the
Closing Date, LandCare and ServiceMaster and each of their respective
Subsidiaries shall in good faith use their reasonable best efforts to obtain all
consents and approvals of all lenders, lessors, vendors, customers and other
persons necessary to permit the transactions contemplated by this Agreement to
be consummated without violating any loan agreement, lease or other material
contract to which LandCare, ServiceMaster or any of their respective
Subsidiaries is a party or by which LandCare, ServiceMaster or any of their
respective Subsidiaries is bound.
ARTICLE 8
CONDITIONS TO THE MERGER
Section 8.1 CONDITIONS TO THE OBLIGATIONS OF EACH PARTY. The obligations
of LandCare, ServiceMaster and Merger Subsidiary to consummate the Merger are
subject to the satisfaction of the following conditions:
(a) this Agreement shall have been adopted by the stockholders of
LandCare in accordance with Delaware Law;
(b) any applicable waiting period under the HSR Act relating to the
Merger shall have expired or been terminated;
MA111ECA.WPD - 44 -
(c) no judgment, injunction, order or decree shall prohibit the
consummation of the Merger;
(d) the Registration Statement shall have become effective under the
Securities Act and shall not be the subject of any stop order or proceedings
seeking a stop order;
(e) the shares of ServiceMaster Common Stock issuable to the
stockholders of LandCare in the Merger as contemplated by this Agreement shall
have been approved for listing on the New York Stock Exchange, subject to
official notice of issuance; and
(f) this Agreement shall not have been terminated in accordance with
its terms.
Section 8.2 ADDITIONAL CONDITIONS TO THE OBLIGATIONS OF SERVICEMASTER AND
MERGER SUBSIDIARY. The obligations of ServiceMaster and Merger Subsidiary to
consummate the Merger are subject to the satisfaction of the following
additional conditions: (i) the representations and warranties of LandCare as set
forth in this Agreement shall be true and correct in all material respects as if
made on and as of the Effective Time (other than those representations and
warranties which address matters only as of a certain date, which shall be true
and correct in all material respects as of such certain date), (ii) LandCare
shall have complied with or performed in all material respects all agreements
and covenants required to be complied with or performed by it under this
Agreement at or prior to the Closing Date, and (iii) ServiceMaster shall have
received from each person who is, immediately prior to the Effective Time, a
director or officer of LandCare or any of its Subsidiaries his written
resignation, effective as of the Effective Time, from each position as a
director of LandCare and each Subsidiary.
Section 8.3 ADDITIONAL CONDITIONS TO THE OBLIGATIONS OF LANDCARE. The
obligations of LandCare to consummate the Merger are subject to the satisfaction
of the following additional condition: the representations and warranties of
ServiceMaster and Merger Subsidiary as set forth in this Agreement shall be true
and correct in all material respects as if made on and as of the Effective Time
(other than those representations and warranties which address matters only as
of a certain date, which shall be true and correct in all material respects as
of such certain date) and ServiceMaster and Merger Subsidiary shall have
complied with or performed in all material respects all agreements and covenants
required to be complied with or performed by it under this Agreement at or prior
to the Closing Date.
MA111ECA.WPD - 45 -
ARTICLE 9
TERMINATION AND CLOSING
Section 9.1 TERMINATION. This Agreement may be terminated and the Merger
may be abandoned at any time prior to the Effective Time (notwithstanding any
approval of this Agreement by the stockholders of LandCare):
(a) by mutual written consent of LandCare, ServiceMaster and Merger
Subsidiary;
(b) by either LandCare or ServiceMaster, if the Merger has not been
consummated by May 1, 1999; provided that no party may terminate this Agreement
pursuant to this subsection if such party's failure to fulfill any of its
obligations under this Agreement shall have been the primary and but-for reason
that the Effective Time shall not have occurred on or before said date and
provided further that in no event shall ServiceMaster's failure to permit an
adjustment in the Exchange Ratio under Section 1.2(b)(iii) preclude or impair
ServiceMaster's right to terminate under this clause (b);
(c) by either LandCare or ServiceMaster, if there shall be any
judgment, injunction, order or decree enjoining ServiceMaster or LandCare from
consummating the transactions contemplated by this Agreement is entered and such
judgment, injunction, order or decree shall have become final and nonappealable;
(d) by either LandCare or ServiceMaster, if this Agreement shall not
have been adopted by the stockholders of LandCare at the LandCare Stockholders
Meeting;
(e) by ServiceMaster or Merger Subsidiary, if the board of directors
of LandCare shall (i) withdraw, modify or change its recommendation or approval
in respect of this Agreement in a manner adverse to ServiceMaster or (ii) have
recommended any proposal other than by ServiceMaster or Merger Subsidiary in
respect of an Acquisition Transaction; and
(f) by ServiceMaster or Merger Subsidiary, if any corporation,
partnership, person, other entity or group (as defined in Section 13(d)(3) of
the Exchange Act) other than ServiceMaster or Merger Subsidiary or any of their
respective Subsidiaries or affiliates shall have become the beneficial owner of
more than 40% of the outstanding LandCare Common Stock (either on a primary or a
fully diluted basis).
(g) by ServiceMaster, if LandCare shall have breached (regardless of
the knowledge of ServiceMaster of such breach at or subsequent to the date of
this Agreement) in any material respect any of its representations, warranties,
covenants or agreements contained herein ;
MA111ECA.WPD - 46 -
(h) by ServiceMaster if the Committee acting under the 1998
Long-Term Incentive Plan, LandCare's Board of Directors and all other necessary
persons shall not have taken all actions necessary to cause the conversions
prescribed by Section 1.4(a) to occur automatically upon consummation of the
Merger; or
(i) by LandCare, if a Qualified Competing Proposal is made to
LandCare, subject to the restrictions set forth in Section 5.4(c)(ii); provided
that the right to terminate described in this subsection shall not be effective
unless and until LandCare shall have paid to ServiceMaster the fee described in
Section 9.4(b); provided further that the right to terminate described in this
subsection shall immediately expire and be of no force or effect if LandCare's
stockholders approve the Merger; or
(j) by LandCare, if ServiceMaster or Merger Subsidiary shall have
breached (regardless of the knowledge of LandCare of such breach at or
subsequent to the date of this Agreement) in any material respect any of its
representations, warranties, covenants or agreements contained herein; or
(k) by LandCare if LandCare shall become entitled to terminate under
Section 1.2(b)(iii); or
(l) by ServiceMaster if the right to termination shall arise under
Section 5.6(e).
Such right of termination shall be exercised by written notice of termination
given by the terminating party to the other parties hereto in the manner
hereinafter provided. Any such right of termination shall not be an exclusive
remedy hereunder but shall be in addition to any other legal or equitable
remedies that may be available to any non-defaulting party hereto arising out of
any default hereunder by any other party hereto.
Section 9.2 WAIVER. At any time prior to the Effective Time, the parties
hereto, by action taken by or pursuant to resolutions of their respective boards
of directors, may (a) extend the time for the performance of any of the
obligations or other acts of the parties hereto, (b) waive any inaccuracies in
the representations and warranties contained herein or in any document delivered
pursuant hereto, and (c) except for adoption of this Agreement by the
stockholders of LandCare waive compliance with any of the agreements or
conditions contained herein. Any agreement on the part of a party hereto to any
such extension or waiver shall be valid if set forth in an instrument in writing
signed on behalf of such party.
Section 9.3 CLOSING. Subject to the satisfaction of the conditions
contained in Article 8 hereof, the closing of the Merger (the "CLOSING") shall
take place at the offices of ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇ in Chicago, Illinois as soon as
practicable after the satisfaction or waiver of all of the conditions to
MA111ECA.WPD - 47 -
the Merger or at such other time and place as LandCare, ServiceMaster, and
Merger Subsidiary shall agree (the "CLOSING DATE").
Section 9.4 EFFECT OF TERMINATION; TERMINATION FEE.
(a) If this Agreement is terminated pursuant to Section 9.1 hereof,
this Agreement shall become void and of no effect with no liability on the part
of any party hereto, except that the agreements contained in Sections 9.4(b),
9.4(c) and 10.4 hereof shall survive the termination hereof and except that no
such termination shall relieve any party from liability for breach of this
Agreement or failure by it to perform its obligations hereunder.
(b) If this Agreement shall be terminated pursuant to clause (d),
(e), (f), (g), (h), or (i) in Section 9.1, then LandCare shall promptly, but in
no event later than two business days after the date of such termination, pay
ServiceMaster a termination fee equal to the sum of (i) $7,577,045 plus (ii)
$0.44 multiplied by the aggregate number of shares of LandCare Common Stock
(other than any shares of LandCare Common Stock issued upon the exercise of
LandCare Stock Options) issued subsequent to the date hereof and on or prior to
the date of termination of this Agreement pursuant to Section 9.1. In no event
shall LandCare be required to pay more than one termination fee pursuant to this
Section 9.4(b).
(c) If this Agreement shall be terminated by ServiceMaster pursuant
to its termination rights in Section 5.6(e), then LandCare shall promptly, but
in no event later than two business days after the date of such termination, pay
ServiceMaster an amount, not to exceed $1,000,000, equal to the actual and
reasonably documented out-of-pocket expenses incurred by ServiceMaster directly
attributable to the proposed acquisition of LandCare and incurred since October
15, 1998, including negotiation and execution of this Agreement and the
attempted completion of the Merger, which fee and amount shall be payable in
cash in same day funds.
MA111ECA.WPD - 48 -
ARTICLE 10
MISCELLANEOUS
Section 10.1 NOTICES. All notices, requests and other communications to
any party hereunder shall be in writing (including facsimile, telex or similar
writing) and shall be given,
If to ServiceMaster or Merger Subsidiary, to:
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: General Counsel
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇▇▇▇ & ▇▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
If to LandCare, to:
▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: General Counsel
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇ L.L.P.
South Tower Pennzoil Place
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
or such other address, telecopy or telex number as such party may hereafter
specify for the purpose by notice to the other parties hereto. Each such notice,
request or other communication shall be
MA111ECA.WPD - 49 -
effective (a) if given by facsimile or telex, upon confirmation of receipt, or
(b) if given by any other means, when delivered at the address specified in this
Section 10.1.
Section 10.2 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The
representations and warranties contained herein shall not survive the Effective
Time.
Section 10.3 AMENDMENTS; NO WAIVERS.
(a) Any provision of this Agreement may be amended or waived prior
to the Effective Time if, and only if, such amendment or waiver is in writing
and signed, in the case of an amendment, by LandCare, ServiceMaster and Merger
Subsidiary or in the case of a waiver, by the party against whom the waiver is
to be effective; provided that after the adoption of this Agreement by the
stockholders of LandCare, no such amendment or waiver shall, without the further
approval of such stockholders, alter or change the amount or kind of
consideration to be received in exchange for the Shares (except as contemplated
by Section 1.02(b)).
(b) No failure or delay by any party in exercising any right, power
or privilege hereunder shall operate as a waiver thereof nor shall any single or
partial exercise thereof preclude any other or further exercise thereof or the
exercise of any other right, power or privilege. The rights and remedies herein
provided shall be cumulative and not exclusive of any rights or remedies
provided by law.
Section 10.4 EXPENSES. Except as provided in Section 9.4 hereof, each
party shall pay its own costs and expenses relating to this Agreement and the
transactions contemplated hereby, except that each of ServiceMaster and LandCare
shall bear and pay one-half of the costs and expenses incurred in connection
with the filing, printing and mailing of the Registration Statement and the
LandCare Proxy Statement (including SEC filing fees).
Section 10.5 SUCCESSORS AND ASSIGNS. The provisions of this Agreement
shall be binding upon and inure to the benefit of the parties hereto and their
respective successors and permitted assigns; provided that no party may assign,
delegate or otherwise transfer any of its rights or obligations under this
Agreement without the consent of the other parties hereto.
Section 10.6 GOVERNING LAW. This Agreement shall be construed in
accordance with and governed by the law of the State of Delaware, without giving
effect to any choice of law or conflict of law rules or provisions (whether of
the State of Delaware or any other jurisdiction) that would cause the
application of the laws of any jurisdiction other than the State of Delaware.
Section 10.7 COUNTERPARTS; EFFECTIVENESS. This Agreement may be signed in
any number of counterparts (including by means of telecopied signature pages),
each of which shall be an original, with the same effect as if the signatures
thereto and hereto were upon the same instrument.
MA111ECA.WPD - 50 -
This Agreement shall become effective when each party hereto shall have received
counterparts hereof signed by all of the other parties hereto.
Section 10.8 HEADINGS. Section headings used in this Agreement are for
convenience only and shall be ignored in the construction and interpretation
hereof.
Section 10.9 NO THIRD PARTY BENEFICIARIES. Except for Section 6.2 hereof,
no provision of this Agreement is intended to, or shall, confer any third party
beneficiary or other rights or remedies upon any person other than the parties
hereto.
* * * * *
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed by their respective authorized officers as of the day and year
first above written.
THE SERVICEMASTER COMPANY
By: _________________________________
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Vice Chairman
SVM ACQUISITION CORPORATION
By: _________________________________
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Vice President
LANDCARE USA, INC.
By: _________________________________
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Chief Executive Officer
MA111ECA.WPD - 52 -