Exhibit 10.1

 

EXECUTION VERSION

 

 

ASSET PURCHASE AND CONTRIBUTION AGREEMENT

 

by and among

 

Potter’s Professional Lawn Care, LLC,

 

Potter’s professional lawn care, Inc.,

 

nina Potter fernandez,

 

AND

 

Grant Potter

 

 

Dated February 3, 2020

 

 

 

 

Table of Contents

 

    Page       Article I. THE TRANSACTION 1       1.1. Purchase and Sale of
Acquired Assets; Assumed Liabilities 1       1.2. Purchase Price; Payment 6    
  1.3. Closing Statement; Adjustment 7       Article II. CLOSING 9       2.1.
Closing Date 9       2.2. Closing Deliveries 9       Article III.
REPRESENTATIONS AND WARRANTIES OF  SELLER AND the Shareholders 11       3.1.
Organization 11       3.2. Authority 11       3.3. No Conflict 12       3.4.
Capitalization 12       3.5. Subsidiaries 12       3.6. Financial Statements;
Undisclosed Liabilities 12       3.7. Absence of Certain Changes or Events 13  
    3.8. Title; Condition and Sufficiency of Acquired Assets 14       3.9. Real
Property 14       3.10. Accounts Receivable 16       3.11. Inventory 16      
3.12. Intellectual Property 17       3.13. Material Contracts 18       3.14.
Litigation 19       3.15. Compliance with Laws; Permits 19       3.16.
Environmental Matters 19       3.17. Employee Benefit Matters 21       3.18.
Taxes 23       3.19. Consents 23       3.20. Employee Relations 24       3.21.
Transactions with Related Parties 25

 

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Table of Contents

(continued)

 

    Page       3.22. Insurance 25       3.23. Brokers 26       3.24.
Relationship with Significant Customers 26       3.25. Relationship with
Significant Suppliers 26       3.26. Product Liability; Warranty 26       3.27.
Powers of Attorney 27       Article IV. REPRESENTATIONS AND WARRANTIES OF BUYER
27       4.1. Organization 27       4.2. Authority 27       Article V. COVENANTS
27       5.1. Confidentiality 27       5.2. Non-Compete 28       5.3.
Nondisparagement 29       5.4. Further Assurances 29       5.5. Employee Matters
30       5.6. Use of Name 31       5.7. Truck Title 31       Article VI. TAX
MATTERS 31       6.1. Allocation 31       6.2. Transfer Taxes 31       6.3. Wage
Reporting 32       6.4. Cooperation on Tax Matters 32       Article VII.
SURVIVAL AND INDEMNIFICATION 32       7.1. Survival 32       7.2. General
Indemnification 33       7.3. Process for Indemnification 34       7.4.
Mitigation 36       7.5. Holdback 36       7.6. Right of Surrender 36       7.7.
Remedies Exclusive 36

 

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Table of Contents

(continued)

 

    Page       7.8. Tax Treatment 37       Article VIII. MISCELLANEOUS 37      
8.1. Interpretive Provisions 37       8.2. Entire Agreement 37       8.3.
Successors and Assigns 37       8.4. Headings 37       8.5. Modification and
Waiver 37       8.6. Expenses 38       8.7. Notices 38       8.8. Governing Law;
Consent to Jurisdiction 39       8.9. Public Announcements 39       8.10. No
Third Party Beneficiaries 40       8.11. Counterparts 40       8.12. Delivery by
Facsimile and Email 40       Article IX. CERTAIN DEFINITIONS 40

 

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ASSET PURCHASE AND CONTRIBUTION AGREEMENT

 

THIS ASSET PURCHASE AND CONTRIBUTION AGREEMENT (this “Agreement”) is made and
entered into as of February 3, 2020, by and among Potter’s Professional Lawn
Care, LLC, a Delaware limited liability company (“Buyer”), Potter’s Professional
Lawn Care, Inc., a Florida corporation (“Seller”) and the Shareholders (defined
below).

 

RECITALS

 

A. Seller is engaged in the business of commercial and residential
fully-integrated lawn maintenance and landscape services including lawn care,
new landscape design and installation, pest control, irrigation, and arbor care
(the “Business”).

 

B. The Shareholders collectively own 100% of the issued and outstanding capital
stock of Seller.

 

C. Upon the terms and subject to the conditions set forth herein, Seller
proposes to sell, transfer and contribute, and Buyer and ANC Potter’s propose to
buy, substantially all of the assets and assume solely certain specified
liabilities of Seller.

 

AGREEMENTS

 

NOW, THEREFORE, in consideration of the mutual representations, warranties,
covenants and agreements contained herein and for other good and valuable
consideration, the receipt and adequacy of which are hereby acknowledged, and
upon the terms and subject to the conditions hereinafter set forth, the parties
hereto, intending to be legally bound hereby, agree as follows:

 

Article I.
THE TRANSACTION

 

1.1. Purchase and Sale of Acquired Assets; Assumed Liabilities.

 

(a) Purchase and Sale of Cash-Purchased Assets. Subject to the terms and
conditions hereof, at the Closing, Seller shall sell, convey, transfer, assign
and deliver to Buyer, and Buyer shall purchase from Seller, an undivided 60%
interest (the “Cash-Purchased Assets”) in all of Seller’s right, title and
interest in and to all of Seller’s property and assets, real, personal or mixed,
tangible and intangible, of every kind and description, wherever located and
whether or not any of such assets have any value for accounting purposes or are
carried or reflected on or specifically referred to in Seller’s books of account
or financial statements, excluding only the Excluded Assets (the foregoing
collectively, the “Acquired Assets”), free and clear of any and all Encumbrances
other than Permitted Encumbrances, including all of the following:

 

(i) all Restricted Cash;

 

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(ii) all trade and other notes and accounts receivable, advance payments,
deposits (including customer deposits), prepaid items and expenses, deferred
charges, rights of offset and credits and claims for refund;

 

(iii) all inventory of raw materials, work in process, parts, subassemblies and
finished goods, wherever located and whether or not obsolete or carried on
Seller’s books of account, in each case with any transferable warranty and
service rights of Seller with respect to such Acquired Assets;

 

(iv) all personal property and interests therein, wherever located, including
the personal property set forth on Schedule 1.1(a)(iv) and all vehicles
(including, but not limited to, the Business Vehicles), tools, parts and
supplies, fuel, machinery, equipment, tooling, furniture, furnishings,
appliances, fixtures, office equipment and supplies, owned and licensed computer
hardware and software and related documentation (including any source code or
systems documentation associated therewith), stored data, communication
equipment, trade fixtures and leasehold improvements, in each case with any
transferable warranty and service rights of Seller with respect to such Acquired
Assets;

 

(v) all rights under all Contracts, including the Contracts set forth on
Schedule 1.1(a)(v) (the “Assumed Contracts”);

 

(vi) telephone and fax numbers, websites and social media accounts, including
the ones identified on Schedule 1.1(a)(vi);

 

(vii) all Books and Records, except as specifically provided by Section
1.1(c)(iv);

 

(viii) all Benefit Plans (including all insurance policies, plan sponsor rights
in trusts, and administration service Contracts related thereto), and all assets
held by Seller in respect of any Benefit Plan;

 

(ix) all Tax Returns to the extent of, or to the extent maintained for, the
Acquired Assets, but excluding any such items if (A) they are included in, or to
the extent related to, any Excluded Assets or Retained Liabilities or (B) any
Law prohibits their transfer;

 

(x) any claims or causes of action of Seller (except those claims or causes of
action that are exclusively related to and arise in connection with the Retained
Liabilities or Excluded Assets) against any third party relating to the Business
or the Acquired Assets, whether choate or inchoate, known or unknown, contingent
or non-contingent;

 

(xi) all trademarks, service marks and trade names of Seller (including the
trademarks and trade names “Potter’s Lawn & Landscaping”) and any logos,
designs, symbols, trade dress or other source indicators associated therewith,
any fictitious names, d/b/a’s or similar filings related thereto, or any variant
of any of them, all business goodwill associated therewith and any applications
therefor or registrations thereof, and any other forms of technology,
intangibles, know-how, Intellectual Property or industrial property rights,
including any patents, trade secrets, proprietary manufacturing processes,
copyrights, rights of publicity, and any licenses, consents or other agreements
relating thereto;

 

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(xii) any Permits to the extent their transfer is permitted by applicable Law;

 

(xiii) all of Seller’s intangible assets related to the Business, including
Seller’s goodwill related to the Business;

 

(xiv) all lists, documents, records and information, in all formats (tangible
and intangible) used by Seller and its Affiliates in connection with or
otherwise related to the Business, concerning past, present or prospective
clients, customers, suppliers, vendors or other business relations of the
Business; and

 

(xv) all insurance benefits of Seller (except those insurance benefits that are
exclusively related to and arise in connection with the Retained Liabilities or
the Excluded Assets), including rights to make claims and proceeds, arising from
or relating to the Business, the Acquired Assets or the Assumed Liabilities
prior to the Closing.

 

Without limiting the generality of the foregoing, the Acquired Assets shall
include all of the assets of Seller reflected on the Interim Balance Sheet and
all assets acquired by Seller since the Interim Balance Sheet Date, except to
the extent disposed of in the Ordinary Course of Business since the Interim
Balance Sheet Date or except to the extent specifically identified herein as an
Excluded Asset.

 

(b) Contributed Interest. Subject to the terms and conditions of that certain
Rollover Contribution Agreement by and between Seller and ANC Green Solutions -
Potter’s, LLC (“ANC Potter’s”) in the form attached hereto as Exhibit A (the
“Contribution Agreement”), at the Closing, Seller shall convey, transfer, assign
and deliver to ANC Potter’s, and ANC Potter’s shall receive from Seller, an
undivided 40% interest (the “Contributed Assets”) in the Acquired Assets, free
and clear of any and all Encumbrances other than Permitted Encumbrances, in
exchange for equity securities of ANC Potter’s in a transaction intended to
qualify as a tax free transaction under Section 721 of the Code, as more
specifically described in the Contribution Agreement.

 

(c) Excluded Assets. Notwithstanding anything herein to the contrary, from and
after the Closing, Seller shall retain all of its right, title and interest in
and to, and there shall be excluded from the sale, conveyance, assignment or
transfer to Buyer hereunder and to ANC Potter’s under the Contribution
Agreement, and the Acquired Assets shall not include, solely the following
assets and properties (such retained assets and properties being the “Excluded
Assets”):

 

(i) all rights under this Agreement and any Ancillary Agreement;

 

(ii) all of the equity interests in Seller;

 

(iii) the records pertaining to the organization and existence of Seller;

 

(iv) any Books and Records which Seller is required by applicable Law to retain;
provided, however, that Seller shall provide Buyer with copies of all such Books
and Records at or prior to the Closing; and

 

(v) the assets specifically set forth on Schedule 1.1(c)(v).

 

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(d) Assumed Liabilities. Subject to the terms and conditions hereof, at the
Closing, Buyer shall, pursuant to a Bill of Sale, Assignment and Assumption
Agreement attached hereto as Exhibit B (the “Bill of Sale”), assume and agree to
fully pay, discharge, satisfy and perform, the following Liabilities of Seller,
except in each case to the extent any such Liabilities would have been
performed, paid or otherwise discharged on or prior to the Closing Date, but for
a breach or default by Seller or the Shareholders (the “Assumed Liabilities”):

 

(i) those working capital liabilities of Seller that were incurred in the
Ordinary Course of Business, but only to the extent reflected as current
liabilities in the calculation of Final Working Capital;

 

(ii) the Liabilities of Seller arising under or relating to any Assumed Contract
to the extent such Liabilities relate to events or occurrences following the
Closing Date, were incurred in the Ordinary Course of Business and do not relate
to any failure to perform, improper performance, breach of warranty or other
breach, default or violation by Seller on or prior to the Closing; and

 

(iii) Liabilities of the Seller in connection with the Contracts set forth on
Schedule 1.1(d)(iii) (the “Equipment Financing”) in the amounts not to exceed
the aggregate amount of the Equipment Financing set forth in such schedule.

 

(e) Retained Liabilities. Notwithstanding anything contained herein to the
contrary, the Retained Liabilities shall not be assumed by Buyer or ANC
Potter’s, but instead shall be retained, performed, paid and discharged by
Seller and the Shareholders. The term “Retained Liabilities” means all
Liabilities of Seller or any of its Affiliates including, without limitation,
all Liabilities arising out of the use, ownership, possession or operation of
the Acquired Assets or the conduct of the Business prior to the Closing Date,
excepting only the Assumed Liabilities; provided however that without limiting
the foregoing, the Retained Liabilities shall include the following:

 

(i) any Liability for Taxes incurred by Seller, including Seller’s portion of
the Transfer Taxes as set forth in Section 6.2, and any Liability of Seller for
the Taxes of another Person under a contractual indemnity or covenant, as a
transferee or otherwise under applicable Tax Laws, regulations or administrative
rules;

 

(ii) any claim or Liability in connection with or arising from or relating to
any Excluded Asset, including any Taxes associated therewith;

 

(iii) any Indebtedness and Transaction Expenses;

 

(iv) any and all fees, costs and expenses (including legal fees and accounting
fees) that have been incurred or that are incurred by Seller or the Shareholders
in connection with the transactions contemplated by this Agreement, including
all fees, costs and expenses incurred in connection with or by virtue of (a) the
negotiation, preparation and review of this Agreement (including the exhibits
and Schedules hereto) and all Ancillary Agreements, (b) the preparation and
submission of any filing or notice required to be made or given in connection
with any of the transactions contemplated by this Agreement, and the obtaining
of any consent required to be obtained in connection with any of such
transactions, and (c) the consummation of the transactions contemplated by this
Agreement and the Ancillary Agreements, including any retention bonuses,
“success” fees, change of control payments and any other payment obligations
payable as a result of or in connection with the consummation of the
transactions contemplated by this Agreement and the Ancillary Agreements;

 

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(v) any Liability of Seller to the Shareholders respecting dividends,
distributions in liquidation, redemptions of interests, option payments or
otherwise, and any Liability of Seller pursuant to the agreements and
arrangements set forth on Schedule 3.21;

 

(vi) any Liability of Seller arising out of this Agreement and any Ancillary
Agreement;

 

(vii) any Liability arising out of or relating to any business or property
formerly owned or operated by Seller, any Affiliate or predecessor thereof, or
by the Shareholders, but not presently owned and operated by Seller or the
Shareholders;

 

(viii) any Liability under or related to the Benefit Plans;

 

(ix) any Liability of Seller or its predecessors arising out of any Contract,
Permit, franchise or claim that is not transferred to Buyer as part of the
Acquired Assets or, subject to Section 1.1(f), is not transferred to Buyer
because of any failure to obtain any third-party or governmental consent
required for such transfer;

 

(x) any Liability with respect to compensation, severance or benefits of any
nature owed to any current or former employee, officer, director, manager,
member, partner or independent contractor of Seller or any ERISA Affiliate (or
any beneficiary or dependent of any such individual), whether or not employed by
Buyer or any of its Affiliates after the Closing, that arises out of or relates
to (A) the employment, service provider or other relationship between Seller or
ERISA Affiliate and any such individual, including the termination of such
relationship, or (B) any Benefit Plan or related events or conditions occurring
on or before the Closing Date;

 

(xi) any product liability or similar claim for injury to person or property
which arises out of or is based upon any express or implied representation,
warranty, agreement or guarantee made by Seller or its Affiliates or alleged to
have been made by Seller or its Affiliates or which arises out of or is based
upon a theory of strict liability under Section 402A of the Restatement (2nd) of
Torts or any similar or analogous provision of statutory or common law or which
is imposed or asserted to be imposed by operation of law, in connection with any
service performed or product manufactured, sold or leased by or on behalf of
Seller or its Affiliates, including any claim relating to any product delivered
in connection with the performance of such service and any claim seeking
recovery for consequential damages, lost revenue or income;

 

(xii) any general warranty claims against Seller or its Affiliates;

 

(xiii) any Environmental Liability; and

 

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(xiv) any Liabilities of or relating to the Business (or the operation thereof
prior to Closing), ownership or use of the Acquired Assets prior to the Closing.

 

(f) Nonassignable Assets. Nothing in this Agreement shall be construed as an
attempt to assign, and Buyer shall not assume any Liabilities with respect to,
any Contract or Permit intended to be included in the Acquired Assets that by
applicable Law is non-assignable, or that by its terms is non-assignable without
the consent of the other party or parties thereto to the extent such party’s or
parties’ consent was not so obtained, or as to which all the remedies for the
enforcement thereof enjoyed by Seller would not, as a matter of law, pass to
Buyer as an incident of the assignments provided for by this Agreement. Seller
and the Shareholders shall, at the request and under the direction of Buyer and
in the name of Seller or otherwise (as Buyer shall specify), take all reasonable
actions and do or cause to be done all such things as shall in the reasonable
judgment of Buyer be necessary or proper (a) to assure that the rights and
benefits of Seller under such Contracts or Permits shall be preserved for the
benefit of Buyer and (b) to facilitate receipt of the consideration to be
received by Seller in and under every such Contract or Permit, which
consideration shall be held for the benefit of, and shall be delivered to,
Buyer.

 

1.2. Purchase Price; Payment.

 

(a) Estimate. Prior to the Closing Date, Seller shall deliver to Buyer an
estimated balance sheet of Seller as of the Effective Time prepared in good
faith in accordance with GAAP applied on a basis consistent with the accounting
principles and policies used in the preparation of the Interim Balance Sheet and
a written statement (collectively, the “Estimated Closing Statement”) in form
and substance reasonably satisfactory to Buyer, setting forth Seller’s good
faith estimate as of the Effective Time of, and the components and calculation
of, Estimated Working Capital, Estimated Indebtedness (including the intended
beneficiaries of such Indebtedness to be paid at the Closing and each component
thereof), and Estimated Transaction Expenses (including the intended
beneficiaries of such Estimated Transaction Expenses to be paid at the Closing
and each component thereof), with the components thereof prepared in accordance
with GAAP.

 

(b) Payments at Closing. In full consideration of the purchase of the
Cash-Purchased Assets (the “Closing Consideration”), at Closing Buyer shall:

 

(i) assume all of the Assumed Liabilities;

 

(ii) pay and deliver an amount equal to the Estimated Closing Consideration
minus the Holdback Amount to Seller by wire transfer of immediately available
funds to the accounts designated by Seller in the Estimated Closing Statement;

 

(iii) retain from the Estimated Closing Consideration, an amount equal to the
Holdback Amount;

 

(iv) pay and deliver an amount equal to the Estimated Indebtedness by wire
transfer of immediately available funds to the accounts designated by Seller in
the Estimated Closing Statement; and

 

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(v) pay and deliver an amount equal to the Estimated Transaction Expenses by
wire transfer of immediately available funds to the accounts designated by
Seller in the Estimated Closing Statement.

 

Seller acknowledges and agrees that Buyer shall be entitled to reduce any cash
payments to Seller by all applicable deductions and tax withholdings in respect
of the payments pursuant to this Section 1.2(b).

 

1.3. Closing Statement; Adjustment.

 

(a) Delivery of Closing Statement. Within 90 days after the Closing Date, Buyer
shall cause to be prepared and shall deliver to Seller a balance sheet of Seller
as of the Effective Time prepared in good faith in accordance with GAAP applied
on a basis consistent with the accounting principles and policies used in the
preparation of the Interim Balance Sheet and a statement (collectively, the
“Closing Statement”) setting forth in reasonable detail Closing Working Capital,
Closing Indebtedness, and Closing Transaction Expenses, with the components
thereof prepared in accordance with GAAP.

 

(b) Cooperation. Each of Seller and Buyer agrees that it will, and it will use
reasonable efforts to cause its respective Affiliates, agents and
representatives to, cooperate and assist in the preparation of the Closing
Statement and the calculation of Closing Working Capital, Closing Indebtedness,
and Closing Transaction Expenses and in the conduct of the reviews and dispute
resolution process referred to in this Section 1.3.

 

(c) Review Period. During the 30-day period following Seller’s receipt of the
Closing Statement, Seller shall be permitted to review the working papers of
Buyer relating to the Closing Statement. The Closing Statement and the
calculation of Closing Working Capital, Closing Indebtedness, and Closing
Transaction Expenses shall become final and binding upon the parties on the 30th
day following delivery thereof, unless Seller gives written notice of its
disagreement with the Closing Statement (“Notice of Disagreement”) to Buyer
prior to such date, which notice, to be valid, must comply with this Section
1.3. Any Notice of Disagreement shall (i) specify in reasonable detail the
nature of any disagreement so asserted, and include all supporting schedules,
analyses, working papers and other documentation, (ii) include only
disagreements based on Closing Working Capital, Closing Indebtedness, or Closing
Transaction Expenses not being calculated in accordance with Section 1.3, (iii)
specify the line item or items in the calculation of Closing Working Capital,
Closing Indebtedness, or Closing Transaction Expenses with which Seller
disagrees and the amount of each such line item or items as calculated by
Seller, and (iv) include Seller’s calculation of Closing Working Capital,
Closing Indebtedness, or Closing Transaction Expenses. Seller shall be deemed to
have agreed with all items and amounts included in the calculation of the
Closing Working Capital, Closing Indebtedness, and Closing Transaction Expenses
delivered pursuant to Section 1.3(a) except such items that are specifically
disputed in the Notice of Disagreement.

 

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(d) Resolution of Disputes. If Seller delivers, in a timely manner, a Notice of
Disagreement pursuant to Section 1.3(c), then the Closing Statement (as revised
in accordance with this Section 1.3(d)), and the resulting calculation of
Closing Working Capital, Closing Indebtedness, and Closing Transaction Expenses
resulting therefrom, shall become final and binding upon the parties on the
earlier of (a) the date any and all matters specified in the Notice of
Disagreement are finally resolved in writing by Seller and Buyer and (b) the
date any and all matters specified in the Notice of Disagreement not resolved by
Seller and Buyer are finally resolved in writing by the Arbiter. The Closing
Statement shall be revised to the extent necessary to reflect any resolution by
Seller and Buyer and any final resolution made by the Arbiter in accordance with
this Section 1.3(d). During the 30-day period following the delivery of a timely
Notice of Disagreement or such longer period as Seller and Buyer shall mutually
agree, Seller and Buyer shall seek in good faith to resolve in writing any
differences that they may have with respect to the matters specified in the
Notice of Disagreement. If, at the end of such 30-day period (or such longer
period as mutually agreed by Seller and Buyer), Seller and Buyer have not so
resolved such differences, Seller and Buyer shall submit the dispute for
resolution to an independent accounting or valuation firm (the “Arbiter”) for
review and resolution of any and all matters which remain in dispute and which
were included in the Notice of Disagreement in accordance with this Section 1.3.
The Arbiter shall be a mutually acceptable nationally or regionally recognized
independent public accounting or valuation firm agreed upon by Seller and Buyer
in writing; provided, that in the event the parties are not able to mutually
agree on an accounting or valuation firm, the Arbiter shall be BDO USA, LLP.
Seller and Buyer shall use reasonable efforts to cause the Arbiter to render a
decision resolving the matters in dispute within 30 days following the
submission of such matters to the Arbiter, or such longer period as Seller and
Buyer shall mutually agree. Seller and Buyer agree that the determination of the
Arbiter shall be final and binding upon the parties and that judgment may be
entered upon the determination of the Arbiter in any court having jurisdiction
over the party against which such determination is to be enforced; provided,
that the scope of the disputes to be resolved by the Arbiter is limited to only
such items included in the Closing Statement that Seller has properly disputed
in the Notice of Disagreement based upon Closing Working Capital, Closing
Indebtedness, or Closing Transaction Expenses not having been calculated in
accordance with this Section 1.3. The Arbiter shall determine, based solely on
presentations by Buyer and Seller and their respective representatives, and not
by independent review, only those issues in dispute specifically set forth on
the Notice of Disagreement and shall render a written report as to the dispute
and the resulting calculation of Closing Working Capital, Closing Indebtedness,
and Closing Transaction Expenses which shall be conclusive and binding upon the
parties. In resolving any disputed item, the Arbiter: (i) shall be bound by the
principles set forth in this Section 1.3, (ii) shall limit its review to the
line items and items specifically set forth in and properly raised in the Notice
of Disagreement and (iii) shall not assign a value to any line item or items
greater than the greatest value for such item claimed by either party or less
than the smallest value for such item claimed by either party. The fees, costs,
and expenses of the Arbiter (i) shall be borne by Seller in the proportion that
the aggregate dollar amount of such disputed items so submitted that are
unsuccessfully disputed by Seller (as finally determined by the Arbiter) bears
to the aggregate dollar amount of such items so submitted and (ii) shall be
borne by Buyer in the proportion that the aggregate dollar amount of such
disputed items so submitted that are successfully disputed by Seller (as finally
determined by the Arbiter) bears to the aggregate dollar amount of such items so
submitted. The fees, costs and expenses of Buyer’s independent accountants
incurred in connection with the preparation of the Closing Statement and review
of any Notice of Disagreement shall be borne by Buyer, and the fees, costs and
expenses of Seller’s independent accountants incurred in connection with their
review of the Closing Statement and preparation of any Notice of Disagreement
shall be borne by Seller.

 

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(e) Closing Consideration Adjustment.

 

(i) If the Final Closing Consideration is greater than the Estimated Closing
Consideration, then (x) within five Business Days of the determination of all of
Final Working Capital, Final Indebtedness and Final Transaction Expenses, Buyer
shall pay Seller an amount equal to such excess by wire transfer of immediately
available funds to an account or accounts designated by Seller prior to the date
when such payment is due and (y) the Purchase Price Adjustment Holdback Amount
shall be paid to Seller.

 

(ii) If the Final Closing Consideration is less than the Estimated Closing
Consideration, then Seller and the Shareholders, jointly and severally shall pay
or cause to be paid to Buyer an amount equal to such deficiency. Such payment
shall be first made to Buyer by reducing the Purchase Price Adjustment Holdback
Amount. If the Purchase Price Adjustment Holdback Amount is less than the
payment required under this clause, any deficiency shall be paid by Seller and
the Shareholders, on a joint and several basis, within five (5) Business Days
following the determination of all of Final Working Capital, Final Indebtedness
and Final Transaction Expenses.

 

(f) Purchase Price Adjustment Holdback Amount. At the Closing, Buyer shall
withhold from the Estimated Closing Consideration the Purchase Price Adjustment
Holdback Amount. The Purchase Price Adjustment Holdback Amount, which amount may
be adjusted as set forth in this Agreement, shall be paid to Seller within five
(5) Business Days following the determination of all of Final Working Capital,
Final Indebtedness and Final Transaction Expenses.

 

Article II.
CLOSING

 

2.1. Closing Date. The closing of the transactions contemplated hereby (the
“Closing”) shall take place at the offices of Harter Secrest & Emery LLP in
Rochester, New York (or at such other place as is agreed in writing by Buyer and
Seller), or via electronic transmittal of documents, on the date hereof (the
“Closing Date”). For financial accounting and tax purposes, to the extent
permitted by Law, the Closing shall be deemed to have become effective as of
11:59 p.m. on the Closing Date (the “Effective Time”).

 

2.2. Closing Deliveries.

 

(a) Deliveries by Buyer. At the Closing, Buyer shall deliver or cause to be
delivered the following to Seller or other Persons as specified below:

 

(i) the amounts set forth in Section 1.2(b) in accordance therewith;

 

(ii) the Bill of Sale, duly executed by Buyer;

 

(iii) the employment agreement with Nina Potter Fernandez (“Nina”) in the form
attached hereto as Exhibit C (the “Nina Employment Agreement”), duly executed by
Buyer;

 

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(iv) the employment agreement with Grant Potter (“Grant”) in the form attached
hereto as Exhibit D (the “Grant Employment Agreement”), duly executed by Buyer;

 

(v) the Contribution Agreement, duly executed by ANC Potter’s; and

 

(vi) lease agreements with respect to the Leased Real Property in the forms
attached hereto as Exhibit E-1 and Exhibit E-2, duly executed by Buyer (the
“Lease Agreements”).

 

(b) Deliveries by Seller. At the Closing, Seller shall deliver or cause to be
delivered the following to Buyer:

 

(i) the Bill of Sale, duly executed by Seller;

 

(ii) the Contribution Agreement, duly executed by Seller;

 

(iii) the Lease Agreements, duly executed by Affiliates of the Seller;

 

(iv) the assignment of all domain names listed in Schedule 2.2(b)(iii) to Buyer;

 

(v) title certificates to any motor vehicles included in the Acquired Assets
(including the Business Vehicles), duly executed by Seller (together with any
other transfer forms necessary to transfer title to such vehicles);

 

(vi) a certificate of the managers of Seller certifying that attached thereto
are true and complete copies of (A) the article of incorporation of Seller, and
all amendments thereto, as certified by the Secretary of State of Florida; (B)
the bylaws of Seller, and all amendments thereto; and (C) all resolutions
adopted by the board of directors of Seller and the Shareholders authorizing the
execution, delivery and performance of this Agreement and the other Ancillary
Agreements and the consummation of the transactions contemplated hereby and
thereby;

 

(vii) a certificate of good standing dated not more than five (5) days prior to
the Closing Date from (i) the Secretary of State of the State of Florida,
attesting to the good standing in Florida of Seller;

 

(viii) all Books and Records of Seller in possession of Seller (it being
understood and agreed that delivery of such Books and Records to Seller’s
principal place of business shall be sufficient delivery);

 

(ix) an affidavit duly executed and notarized by the father of Nina and Grant,
attesting that he no longer holds any capital stock of the Seller;

 

(x) any other transfer documents, as may reasonably be requested by Buyer;

 

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(xi) the consents from Authorities or other Persons, if any, set forth on
Schedule 3.3 and any other material consents in forms reasonably acceptable to
Buyer;

 

(xii) such lien releases or other written evidence reasonably satisfactory to
Buyer, evidencing the release of all Encumbrances on the Acquired Assets that
are not Permitted Encumbrances, including but not limited to those set forth on
Schedule 2.2(b)(xii);

 

(xiii) payoff letters or similar letters or other written evidence reasonably
satisfactory to Buyer evidencing that the Closing Indebtedness identified on
Schedule 2.2(b)(xiii) has been paid in full; and

 

(xiv) such other agreements, certificates and documents as may be reasonably
requested by Buyer to effectuate or evidence the transactions contemplated
hereby.

 

(c) Deliveries by Shareholders. At the Closing, the following shall be delivered
or caused to be delivered as follows:

 

(i) the Nina Employment Agreement, duly executed by Nina; and

 

(ii) the Grant Employment Agreement, duly executed by Grant.

 

Article III.
REPRESENTATIONS AND WARRANTIES OF
SELLER AND the Shareholders

 

Seller and the Shareholders, jointly and severally, represent and warrant to
Buyer as follows:

 

3.1. Organization. Seller is a corporation duly organized, validly existing, and
in good standing under the laws of the State of Florida. Seller has all
requisite corporate power and authority to carry on its business as it now is
being conducted and to execute, deliver and perform this Agreement and the
Ancillary Agreements to which it is a party and to consummate the transactions
contemplated hereby and thereby. Seller is duly qualified to do business and in
good standing as a foreign entities in all jurisdictions listed on Schedule 3.1,
which are the only jurisdictions where the nature of the property owned or
leased by them or the nature of the business conducted by them makes such
qualification necessary, except where the failure to be so qualified can be
cured without material expense and will not render material Contracts of Seller
unenforceable. True and complete copies of the articles of incorporation, bylaws
or other organizational or governance documents of Seller, all as amended to
date, have been previously delivered to Buyer.

 

3.2. Authority. The execution, delivery and performance by Seller of this
Agreement and the Ancillary Agreements to which Seller is a party and the
consummation by Seller of the transactions contemplated hereby and thereby have
been duly authorized by all necessary company action on the part of Seller. This
Agreement and each Ancillary Agreement to which Seller is a party has been duly
and validly executed and delivered by Seller, and constitutes the valid and
binding obligation of Seller, enforceable against Seller in accordance with its
respective terms, except as such enforcement shall be limited by bankruptcy,
insolvency, moratorium or similar law affecting creditors’ rights generally and
subject to general principles of equity. This Agreement and each Ancillary
Agreement to which a Shareholder is a party has been duly and validly executed
and delivered by such Shareholder, to the extent a party thereto, and
constitutes the valid and binding obligation of such Shareholder, enforceable
against such Shareholder in accordance with its respective terms, except as such
enforcement shall be limited by bankruptcy, insolvency, moratorium or similar
law affecting creditors’ rights generally and subject to general principles of
equity.

 

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3.3. No Conflict. The execution, delivery and performance by Seller and each
Shareholder of this Agreement and the Ancillary Agreements to which Seller or a
Shareholder is a party, and the consummation by Seller and each Shareholder of
the transactions contemplated hereby and thereby does not and will not, with or
without the giving of notice or the lapse of time, or both, (x) violate any
provision of any Law to which Seller or any Shareholder is subject, (y) violate
any provision of the articles of organization, limited liability company
operating agreement or other organizational or governance documents of Seller,
or (z) except as disclosed on Schedule 3.3, violate or result in a breach of or
constitute a default (or an event which might, with the passage of time or the
giving of notice, or both, constitute a default) under, or require the consent
of any third party under, or result in or permit the termination or amendment of
any provision of, or result in or permit the acceleration of the maturity or
cancellation of performance of any obligation under, or result in the creation
or imposition of any Encumbrance of any nature whatsoever upon any assets or
property or give to others any interests or rights therein under, any indenture,
deed of trust, mortgage, loan or credit agreement, license, Permit, Contract,
lease, or other instrument or commitment to which Seller or any Shareholder is a
party or by which Seller or any Shareholder may be bound or affected.

 

3.4. Capitalization. The Shareholders collectively own all of the issued and
outstanding capital stock of Seller. There are outstanding no securities
convertible into, exchangeable for or carrying the right to acquire equity
securities of Seller, or subscriptions, warrants, options, phantom equity
interests, rights (including preemptive rights or equity appreciation rights),
or other arrangements or commitments obligating Seller to issue or dispose of
any of its equity securities or any ownership interest therein.

 

3.5. Subsidiaries. Seller does not (i) directly or indirectly own any stock of,
equity interest in, or other investment in any other corporation, joint venture,
partnership, trust or other Person or (ii) have any subsidiaries or any
predecessors in interest by merger, liquidation, reorganization, acquisition or
similar transaction.

 

3.6. Financial Statements; Undisclosed Liabilities. The books of account and
related records of Seller fairly reflect in all material respects Seller’s
assets, Liabilities and transactions in accordance with GAAP. Schedule 3.6(a)
sets forth the following financial statements (the “Financial Statements”): (x)
the balance sheet of Seller as of December 31, 2017, December 31, 2018, and
December 31, 2019 (the “Interim Balance Sheet”) (the “Interim Balance Sheet
Date”) and the related statements of income for the years ended December 31,
2017, December 31, 2018, and December 31, 2019 (collectively, the “Interim
Financial Statements”). The Financial Statements fairly present, in all material
respects, the financial position of Seller and the results of its operations and
cash flows as of the respective dates and for the respective periods indicated
therein and have been prepared in accordance with GAAP, except that the Interim
Financial Statements may not contain all footnotes in accordance with GAAP and
are subject to normal year-end adjustments, none of which are expected be
material in amount or nature. The Financial Statements have been prepared from
and are in accordance with the books and records of Seller. Seller does not have
any Liabilities, except (a) to the extent reflected as a Liability on the
Interim Balance Sheet, (b) Liabilities incurred in the Ordinary Course of
Business after the Interim Balance Sheet Date (none of which results from,
arises out of, or relates to any material breach or violation of, or default
under, a contractual obligation or requirement of Law), and (c) Liabilities
disclosed on Schedule 3.6(b).

 

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3.7. Absence of Certain Changes or Events. Except as set forth on Schedule 3.7,
since the Balance Sheet Date, Seller has conducted the Business only in the
Ordinary Course of Business and there has not been a Material Adverse Effect.
Without limiting the foregoing, except as set forth on Schedule 3.7, since the
Balance Sheet Date, Seller has not (a) purchased or redeemed any of its equity
other than for cash, or granted or issued any option, warrant or other right to
purchase or acquire any such equity, (b) incurred any Liabilities or
Indebtedness, except Liabilities and Indebtedness incurred in the Ordinary
Course of Business, or discharged or prepaid, in whole or in part, any
Liabilities or Indebtedness, (c) encumbered any of its properties or assets,
tangible or intangible, except for Encumbrances incurred in the Ordinary Course
of Business, (d) (i) granted any increase in the salaries (other than normal
increases for employees averaging not in excess of five percent per annum made
in the Ordinary Course of Business) or other compensation or benefits payable or
to become payable to, or any advance (excluding advances for ordinary business
expenses consistent with past practice) or loan to, any officer, director,
shareholder, manager, member, partner, employee or independent contractor of
Seller, (ii) made any payments to any pension, retirement, profit-sharing, bonus
or similar plan, (iii) granted or made any other payment of any kind to or on
behalf of any officer, director, manager, member, partner, shareholder, employee
or independent contractor, or any of their respective Affiliates, other than
payment of base compensation and reimbursement for reasonable expenses in the
Ordinary Course of Business or (iv) adopted, amended or terminated any employee
benefit plan (including any Benefit Plan) or any stay bonus, retention bonus,
transaction bonus or change in control bonus plan or arrangement, other than, in
any case, amendments required by applicable Law, (e) suffered any change or, to
the knowledge of Seller, received any threat of any change in any of its
relations with, or any loss or, to the knowledge of Seller, threat of loss of,
any of the suppliers, clients, distributors, customers or employees that are
material to the Business, including any loss or change which may result from the
transactions contemplated by this Agreement, (f) disposed of or has failed to
keep in effect any rights in, to or for the use of any Permit material to the
Business, (g) changed any method of keeping of their respective books of account
or accounting practices, (h) disposed of or failed to keep in effect any rights
in, to or for the use of any of the Intellectual Property material to the
Business, (i) sold, transferred or otherwise disposed of any assets, properties
or rights of the Business, except inventory sold in the Ordinary Course of
Business, (j) entered into any transaction, Contract or event outside the
Ordinary Course of Business or with any partner, shareholder, member, officer,
director, manager or other Affiliate of Seller or of any Shareholder, (k) made
nor authorized any capital expenditure, (l) changed or modified in any manner
its existing credit, collection and payment policies, procedures and practices
with respect to accounts receivable and accounts payable, respectively,
including acceleration of collections of receivables, failure to make or delay
in making collections of receivables (whether or not past due), acceleration of
payment of payables or failure to pay or delay in payment of payables, (m)
incurred any material damage, destruction, theft, loss or business interruption,
(n) made any declaration, payment or setting aside for payment of any
distribution (whether in equity or property) with respect to any securities or
interests of Seller, (o) made (except as consistent with past practice) or
revoked any Tax election or settled or compromised any material Liability for
Taxes with any Taxing Authority, or (p) waived or released any material right or
claim of Seller or incurred any modifications, amendments or terminations of any
Contracts which are in the aggregate materially adverse to Seller or its
Business.

 

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3.8. Title; Condition and Sufficiency of Acquired Assets.

 

(a) Seller has good and valid title to all of the assets it purports to own
(including the Acquired Assets and those reflected on the Interim Balance Sheet,
but excluding any such assets and properties sold, consumed, or otherwise
disposed of in the Ordinary Course of Business since the Balance Sheet Date)
free and clear of all Encumbrances, except for Permitted Encumbrances. At the
Closing, Seller will convey (i) the Cash-Purchased Assets to Buyer free and
clear of any and all Encumbrances other than Permitted Encumbrances, and (ii)
the Contributed Assets to ANC Potter’s free and clear of any and all
Encumbrances other than the Permitted Encumbrances.

 

(b) The Acquired Assets are in good operating condition and repair (except for
ordinary wear and tear and routine maintenance in the Ordinary Course of
Business), are adequate for the purposes for which they are presently used in
the conduct of the Business and are usable in a manner consistent with their
current use, and comply with applicable Laws. Except for the Excluded Assets,
the Acquired Assets constitute all of the assets, properties and rights
necessary for the operation of the Business after the Closing in the same manner
as the Business was conducted prior to the Closing by Seller. Other than Seller,
no Person (including any Shareholder) owns any assets, properties or rights used
in the Business, except for (i) Excluded Assets, (ii) the real property used in
the Business owned by Affiliates of the Seller and set forth on Schedule 3.8(b),
and (iii) assets owned by third parties and used in the Business pursuant to an
Assumed Contract.

 

(c) A list of all of the motor vehicles used in connection with the Business is
set forth on Schedule 3.8(c) (the “Business Vehicles”). Seller has made
available to Buyer copies of titles to all of the Business Vehicles.

 

3.9. Real Property.

 

(a) Seller does not own any real property.

 

(b) Schedule 3.9(b) sets forth a true, correct and complete description of all
written or oral leases, subleases, or other occupancies of real property used by
Seller (collectively, the “Leases”) to which Seller is a party (as lessee,
sublessee, licensee or otherwise) (collectively, the “Leased Real Property”)
with a brief description of such lease or sublease including, without
limitation, the parties to the lease, the term of the lease, the current
expiration date of the lease, the renewal options, the basic rent, and any
monthly payments of additional rent. Seller does not operate its Business at any
location other than the Leased Real Property. Seller has delivered to Buyer a
true, correct and complete copy of the Leases and all amendments, modifications
and supplemental agreements thereto. Each of the Leases is in full force and
effect and is binding and enforceable against Seller and each of the other
parties thereto, in accordance with its terms and has not been modified or
amended since the date of delivery to Buyer.

 

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(c) There are no Encumbrances affecting the Leased Real Property, other than
Permitted Encumbrances. No party to any Lease has sent written notice to the
other claiming that such party is in default thereunder. There has not occurred
any event which would constitute a breach of or default in the performance of
any covenant, agreement or condition contained in any Lease, nor has there
occurred any event which with the passage of time or the giving of notice or
both would constitute such a breach or default. There is no current or pending
event or circumstance that would permit the termination of any Lease or the
increase of any liabilities or restrictions of Seller under any Lease. Neither
Shareholders nor Seller has received any written notice from the other party to
any Lease of the termination or proposed termination thereof. No construction,
alteration or other leasehold improvement work with respect to any Lease remains
to be paid for or to be performed by Seller. Seller does not have any
obligations to provide deposits, letters of credit or other credit enhancements
to retain its rights under any Lease or otherwise operate the Business at the
Leased Real Property.

 

(d) Seller presently enjoys peaceful and undisturbed possession of the Leased
Real Property. Except as set forth on Schedule 3.9(d), no Person other than
Seller has any right to use, occupy, or lease any of the Leased Real Property.
Neither Shareholders nor Seller has received written notice of any eminent
domain, condemnation or other similar proceedings pending or threatened against
Seller with respect to, or otherwise affecting any portion of, the Leased Real
Property. The current use of the Leased Real Property in the conduct of the
Business does not violate any Lease in any respect. There is no violation of any
covenant, condition, restriction, easement or order of any Authority having
jurisdiction over the Leased Real Property or the use or occupancy thereof. The
Leased Real Property is in compliance in all respects with all applicable
building, zoning, subdivision, health and safety and other land use and similar
applicable Laws, rules and regulations, permits, licenses and certificates of
occupancy affecting the Leased Real Property, and neither Shareholders nor
Seller has received any notice of any violation or claimed violation of any such
Laws, rules and regulations with respect to the Leased Real Property which have
not been resolved or for which any obligation of Seller remains to be fulfilled,
including but not limited to payments of monetary damages, fines or penalties,
or completion of any remedial or corrective measures. The Leased Real Property
is adequately served by proper utilities, sufficient parking and other building
services necessary for its current use and for compliance with all applicable
Laws, rules, regulations, permits, licenses and certificates of occupancy.

 

(e) Each use of the Leased Real Property by Seller is and has been valid,
permitted and conforming uses in accordance with the current zoning
classification of the Leased Real Property, and there are no outstanding
variances or special use permits affecting the Leased Real Property or their
uses.

 

(f) Except as set forth on Schedule 3.9(f) attached hereto, the transaction
contemplated by this Agreement does not require the consent of any Person under
any Lease.

 

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(g) The Leased Real Property is in good repair, ordinary wear and tear excepted,
and fit for the purposes for which it is presently used. Seller has rights of
egress and ingress with respect to the Leased Real Property that are sufficient
for it to conduct its Business as presently conducted consistent with past
practice.

 

3.10. Accounts Receivable.

 

(a) Except as set forth on Schedule 3.10, all of Seller’s accounts and notes
receivable represent amounts receivable for products actually delivered or
services actually provided (or, in the case of non-trade accounts or notes
represent amounts receivable in respect of other bona-fide business
transactions), have arisen in the Ordinary Course of Business and have been or
will be billed and are generally due within 30 days after such billing. Except
as set forth on Schedule 3.10, all such accounts and notes receivable included
in the Acquired Assets (the “Acquired Receivables”) are and will be fully
collectible within 30 days after billing, net of the reserves shown on the
Interim Balance Sheet (or in the books of Seller if such Acquired Receivables
were created after the Interim Balance Sheet Date). The reserve for bad debts
shown on the Interim Balance Sheet or, with respect to Acquired Receivable
arising after the Interim Balance Sheet Date, in the books of Seller, have been
determined in accordance with GAAP, consistently applied, subject to normal
year-end adjustments and the absence of disclosures normally made in footnotes.
To the knowledge of Seller, there is no contest, claim, or right of set-off
under any Contract with any obligor of a material Acquired Receivable relating
to the amount or validity of such Acquired Receivable.

 

(b) Since the Balance Sheet Date, there have not been any write-offs as
uncollectible of Seller’s accounts receivable, except for write-offs in the
Ordinary Course of Business and not in excess of $5,000 in the aggregate.

 

3.11. Inventory. All of the inventories of Seller, including those reflected in
the Interim Balance Sheet, are valued at cost, the cost thereof being determined
on a consistent basis since December 31, 2015, except as disclosed in the
Interim Balance Sheet. All of the inventories of Seller reflected in the Interim
Balance Sheet and all inventories acquired since the Interim Balance Sheet Date
consist of items or materials that are marketable and fit for their particular
use, are not defective and are of a quality and quantity usable and saleable in
the Ordinary Course of Business within a reasonable period of time and at normal
profit margins, and all of the raw materials and work in process inventory of
Seller reflected on the Interim Balance Sheet and all such inventories acquired
since the Interim Balance Sheet Date can reasonably be expected to be consumed
or sold in the Ordinary Course of Business within a reasonable period of time.
None of the inventory of Seller is obsolete. Since the Balance Sheet Date, the
inventories of Seller have been purchased in the Ordinary Course of Business and
consistent with reasonably anticipated requirements of Seller and the customers
of Seller.

 

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3.12. Intellectual Property.

 

(a) Except for the trade name, “Potter’s Lawn & Landscaping” and the domain name
“potterslawn.com” and “pottersprofessional.com”, there are no patents, patent
applications (including any provisional applications, divisions, continuations
or continuations in part), material unregistered trademarks, registered
trademarks and applications for registration for trademarks, copyright
registrations and applications for registration of copyrights, software, or
domain name registrations in each case owned by or held in the name of Seller
(the “Material Owned Intellectual Property”). The Material Owned Intellectual
Property is valid and in full force and effect and is owned by Seller free and
clear of all Encumbrances and other claims, including any claims of joint
ownership, and none of the Material Owned Intellectual Property is the subject
of any proceeding contesting its validity, enforceability or Seller’s ownership
thereof. Schedule 3.12(a)(i) sets forth a true and complete list of all
Intellectual Property licensed to Seller and the license or agreement pursuant
to which Seller obtained a license to such Intellectual Property. Except as set
forth on Schedule 3.12(a)(ii): (u) Seller owns or possesses adequate licenses or
other valid rights to use all patents, patent applications (including any
provisional applications, divisions, continuations or continuations in part),
trademarks, service marks, trade dress, logos, registered trademarks and
applications for registration for trademarks, and all goodwill in the foregoing,
copyrights, copyrightable works, works of authorship, industrial designs,
software, databases, data compilations, domain names, know-how, trade secrets,
product formulas, inventions, rights-to-use and other industrial and
intellectual property rights (collectively, “Intellectual Property”) used in the
conduct of the Business, (v) the conduct of the Business of Seller does not
infringe, misappropriate, dilute or conflict with, and has not conflicted with
any Intellectual Property of any other Person, (w) none of Seller or any
Shareholder has received any notices alleging that the conduct of the Business,
including the marketing, sale and distribution of the products and services of
the Business, infringes, dilutes, misappropriates or otherwise violates any
Person’s Intellectual Property (including, for the avoidance of doubt, any cease
and desist letter or offer of license), (x) no current or former employee of
Seller and no other Person owns or has any proprietary, financial or other
interest, direct or indirect, in whole or in part, and including any rights to
royalties or other compensation, in any of Intellectual Property owned or
purported to be owned by Seller, (y) there is no agreement or other contractual
restriction affecting the use by Seller of any of the Intellectual Property
owned or purported to be owned by Seller, and (z) Seller is not aware of any
present infringement, dilution, misappropriation or other violation of any of
the Intellectual Property owned or purported to be owned by Seller by any
Person, and Seller has not asserted or threatened any claim or objection against
any Person for any such infringement or misappropriation nor is there any basis
in fact for any such objection or claim.

 

(b) Except as set forth on Schedule 3.12(b), the information technology systems
owned, leased, licensed or otherwise used in the conduct of the Business,
including all computer software, hardware, firmware, process automation systems
and telecommunications systems used in the Business (the “IT Systems”) perform
reliably and in material conformance with the documentation and specifications
for such systems. The IT Systems are adequate for the operation of the Business.
Seller has taken commercially reasonable steps to ensure that the IT Systems do
not contain any viruses, “worms,” disabling or malicious code, or other
anomalies that would materially impair the functionality of the IT Systems.
Seller has taken commercially reasonable steps to provide for the backup,
archival and recovery of the critical business data of Seller. Seller has taken
commercially reasonable measure to maintain the confidentiality and value of all
trade secrets. Neither the Seller’s trade secrets nor any other confidential
information of Seller has been disclosed by Seller to, or, to the knowledge of
Seller, discovered by, any other Person except pursuant to non-disclosure
agreements or to Persons entitled to receive such trade secrets or other
confidential information that are legally obligated to maintain their
confidentiality. Seller has not received notice that, or otherwise have
knowledge that, any employee, consultant or agent of Seller is in default or
breach of any employment agreement, non-disclosure agreement, assignment of
invention agreement or similar agreement relating to the protection, ownership,
development, use or transfer of Intellectual Property owned by Seller. Each item
of Intellectual Property owned or licensed by Seller will be owned or available
for use by Buyer immediately following the Closing on substantially identical
terms and conditions as it was immediately prior to the Closing.

 

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3.13. Material Contracts.

 

(a) Schedule 3.13(a) contains a complete and accurate list of all Material
Contracts (classified (i) through (xv), as applicable, based on the definition
of Material Contracts). As used in this Agreement, “Material Contracts” means
all Contracts of the following types to which Seller is a party or by which
Seller or any of its properties or assets is bound: (i) any real property
leases; (ii) any labor or employment-related agreements, including employee
leasing or professional employer organization agreements; (iii) any joint
venture and limited partnership agreements; (iv) mortgages, indentures, loan or
credit agreements, security agreements and other agreements and instruments
relating to the borrowing of money or extension of credit; (v) agreements for
the sale of goods or products or performance of services by or with any vendor
or customer (or any group of related vendors or customers); (vi) lease
agreements for machinery and equipment, motor vehicles, or furniture and office
equipment or other personal property by or with any vendor (or any group of
related vendors); (vii) agreements restricting in any manner the right of Seller
to compete with any other Person, or restricting the right of Seller to sell to
or purchase from any other Person; (viii) agreements between Seller and any of
its Affiliates; (ix) guaranties, performance, bid or completion bonds, surety
and appeal bonds, return of money bonds, and surety or indemnification
agreements; (x) custom bonds and standby letters of credit; (xi) any license
agreement or other agreements to which Seller is a party regarding any
Intellectual Property of others; (xii) other agreements, contracts and
commitments which cannot be terminated by Seller on notice of 30 days or less
and without payment by Seller of less than $25,000 upon such termination; (xiii)
powers of attorney; (xiv) any agreements or arrangements with any sales
representatives, consultants, agents or other representatives of Seller
(including sales commission agreements or arrangements); (xv) documents
controlling the terms of any Benefit Plan; and (xvi) each other agreement or
contract to which Seller is a party or by which it or its assets are otherwise
bound which is material to its Business, operation, financial condition or
prospects.

 

(b) Each Material Contract is valid, binding and enforceable against Seller and
the other parties thereto in accordance with its terms and is in full force and
effect. Seller and, to the knowledge of Seller, each of the other parties
thereto, have performed in all material respects all obligations required to be
performed by them under, and are not in material default under, any of such
Contracts and no event has occurred which, with notice or lapse of time, or
both, would constitute such a default. Seller has not received any written claim
from any other party to any Contract that Seller has breached any obligations to
be performed by it thereunder, or is otherwise in default or delinquent in
performance thereunder. Seller has furnished to Buyer a true and complete copy
of each Material Contract required to be disclosed on Schedule 3.13(a).

 

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3.14. Litigation. Except as set forth on Schedule 3.14(a), there is no, and
during the last three (3) years there has not been any, dispute, claim, action,
suit, proceeding, review, arbitration or investigation before any Authority
(“Litigation”) pending or, to the knowledge of Seller, threatened against
Seller, any of its properties or assets or (to the extent Seller may have an
obligation to provide indemnification or may otherwise become liable) any of its
Shareholders, officers, managers or employees. Seller is not a party to or bound
by any outstanding orders, rulings, judgments, settlements, arbitration awards
or decrees (or agreement entered into or any administrative, judicial or
arbitration award with any Authority) with respect to or affecting the
properties, assets, personnel or Business of Seller.

 

3.15. Compliance with Laws; Permits. Seller has been and is in compliance in all
material respects with all applicable Laws. Set forth on Schedule 3.15 are all
governmental or other industry permits, registrations, certificates,
certifications, exemptions, licenses, franchises, consents, approvals and
authorizations (“Permits”) necessary for the conduct of the Business as
presently conducted, each of which Seller validly possesses and is in full force
and effect. Except as set forth on Schedule 3.15, each of the Permits listed on
Schedule 3.15 is and will be included in the Acquired Assets and validly
transferred to Buyer at the Closing so as to allow Buyer after the Closing Date
to continue to operate, without interruption, the Business operated by Seller
immediately prior to the Closing. Except as set forth in Schedule 3.15, no
notice, citation, summons or order has been issued, no complaint has been filed
and served, no penalty has been assessed and notice thereof given, and no
investigation or review is pending or, to the knowledge of Seller, threatened
with respect to Seller, by any Authority with respect to any alleged (a)
violation in any material respect by Seller of any Law, or (b) failure by Seller
to have any Permit required in connection with the conduct of the Business.
Without limiting the foregoing, Seller is in material compliance with all
applicable Data Security Requirements. No written notices, claims, charges or
complains have been received by Seller since December 31, 2015 from any
governmental authority or other Person relating to or alleging any actual or
alleged violation by Seller of, or actual or alleged liability or misconduct
under, any Data Security Requirements. Since December 31, 2015, there has not
been, to Seller’s knowledge any actual or alleged incidents of data security
breaches concerning any IT Systems, any unauthorized access to, use or
encryption of Personal Information, Business Data or any IT Systems, or any
unauthorized acquisition, destruction, damage, disclosure, loss, corruption,
alteration or use of such Personal Information or Business Data.

 

3.16. Environmental Matters.

 

(a) Seller has conducted, and is conducting the Business, has owned and operated
the Acquired Assets, and has occupied and operated the Leased Real Property in
compliance in all material respects with all Environmental Laws. Seller holds
and has been and is in compliance in all material respects with all permits,
certificates, licenses, approvals, registrations and authorizations required
under Environmental Laws for the conduct of the Business as previously and
currently conducted or for the ownership and operation of the Acquired Assets or
the occupancy and operation of the Leased Real Property (“Environmental
Permits”), and all such Environmental Permits are in full force and effect.
Schedule 3.15 lists all Environmental Permits. Except as set forth on Schedule
3.16, each of the Environmental Permits listed on Schedule 3.15 is and will be
included in the Acquired Assets and will be validly transferred to Buyer at the
Closing so as to allow Buyer after the Closing Date to continue to operate,
without interruption, the Business as operated by Seller immediately prior to
the Closing and to own and operate the Acquired Assets and to occupy and operate
the Leased Real Property in compliance with such Environmental Permits and any
applicable Environmental Laws.

 

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(b) Seller has not received any notice, citation, summons, order or complaint,
no penalty has been assessed or is pending or, to the knowledge of the Seller,
threatened by any third party (including any Authority) with respect to the
Business, the Acquired Assets, the Leased Real Property or any other real
property and relating to or arising from, (i) the use, possession, generation,
treatment, manufacture, processing, management, handling, storage, recycling,
transport, discharge, disposal, release or threatened release of, and/or
exposure to, Hazardous Substances, (ii) any non-compliance with Environmental
Laws or Environmental Permits or (iii) failure to hold any Environmental
Permits. Seller has not received any request for information, notice of claims,
demand or other notification that Seller has or may have any Liability under
Environmental Laws.

 

(c) None of the Leased Real Property nor any property formerly owned, operated,
occupied, leased or otherwise used by Seller in connection with the Business or
the Acquired Assets is listed or proposed for listing on any list maintained by
any Authority of contaminated or potentially contaminated sites, and no
Hazardous Substances generated, disposed, released or otherwise handled by or on
behalf of Seller has come to be located at any site identified on any such list
or has otherwise resulted in or could result in liability under Environmental
Laws.

 

(d) There are no underground storage tanks, above ground storage tanks, asbestos
containing materials or PCB-containing equipment located at, on or under the
Leased Real Property or any property formerly owned, operated, occupied, leased
or otherwise used by Seller in connection with the Business or the Acquired
Assets. Any underground storage tanks, above ground storage tanks or wastewater
treatment systems at the Leased Real Property or any property formerly owned,
operated, occupied, leased or otherwise used by Seller in connection with the
Business or the Acquired Assets that have been removed or closed have been
removed or closed in compliance in all material respects with all applicable
Environmental Laws and Environmental Permits, and there are no outstanding or
contingent Liabilities under Environmental Laws with respect to any such tanks
or wastewater treatment systems.

 

(e) No Hazardous Substances have been released, spilled, leaked, discharged,
disposed of, pumped, poured, emitted, emptied, injected, leached, dumped or
allowed to escape and there are no Hazardous Substances in an uncontained state
or in a condition representing a threat of a release at, on, about, under or
from the Leased Real Property or any property formerly owned, operated,
occupied, leased or otherwise used by Seller in connection with the Business or
the Acquired Assets.

 

(f) All environmental reports, inspections, investigations, studies, audits,
tests, reviews or other analysis, evaluations, assessments, sample results, and
all correspondence or other documentation related to any of the foregoing
(“Environmental Documents”) pertaining to the Business, the Acquired Assets, the
Leased Real Property or any property formerly owned, operated, leased or
otherwise used by Seller in connection with the Business or the Acquired Assets
in the possession or control of Seller have been provided or made available to
Buyer.

 

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(g) Seller does not know of or have any reason to know of any facts or
circumstances related to environmental matters concerning the Business, the
Acquired Assets, Leased Real Property or any property formerly owned, operated,
leased or otherwise used by Seller in connection with the Business or the
Acquired Assets that could result in any Liabilities or responsibilities for
Buyer pursuant to Environmental Laws, and Seller has not assumed, by Contract,
law or otherwise, any Liability or responsibility pursuant to Environmental Laws
for any environmental conditions, including, but not limited to, conditions or
contamination related to any disposal, discharge or release of, or exposure to,
any Hazardous Substances.

 

3.17. Employee Benefit Matters.

 

(a) Schedule 3.17(a) lists all “employee benefit plans,” as defined in Section
3(3) of the Employee Retirement Income Security Act of 1974, as amended
(“ERISA”) and all other retirement, pension, profit sharing, bonus, stock,
restricted stock, stock option, stock purchase, equity-based, profits interest,
phantom equity, employment, service, retainer, compensation, consulting, change
in control, welfare, health, life, disability, group insurance, savings,
deferred compensation, incentive compensation, paid time off, severance, salary
continuation, retention, indemnification and fringe benefit agreements,
arrangements, plans, programs, Contracts, policies, or practices maintained,
contributed to, or required to be contributed to by Seller or any ERISA
Affiliate for the benefit of any current or former employee, officer, manager,
member, partner or independent contractor of Seller or with respect to which
Seller or any ERISA Affiliate may have any Liability (the “Benefit Plans”). In
the case of each “employee welfare benefit plan” as defined in Section 3(1) of
ERISA, Schedule 3.17(a) discloses whether such plan is (i) unfunded, (ii) funded
through a “welfare benefit fund,” as such term is defined in Code Section
419(e), or other funding mechanism or (iii) insured.

 

(b) As applicable, with respect to each Benefit Plan, Seller has delivered or
made available to Buyer true and complete copies of (i) all plan documents
(including all amendments and modifications thereof) and in the case of an
unwritten Benefit Plan, a written description thereof, (ii) the current summary
plan description and each summary of material modifications thereto, (iii) the
most recent Internal Revenue Service (“IRS”) determination, advisory or opinion
letter and (iv) all communications, records, notices and filings received from
or sent to the IRS, Department of Labor or Pension Benefit Guaranty Corporation.

 

(c) Seller and each ERISA Affiliate are each in compliance in all material
respects with the provisions of ERISA, the Code and all other Laws applicable to
the Benefit Plans. Each Benefit Plan has been maintained, operated and
administered in compliance in all material respects with its terms and any
related documents or agreements and the applicable provisions of ERISA, the Code
and all other Laws. Seller and each ERISA Affiliate has timely and accurately
satisfied its reporting obligations under Sections 6055 and 6056 of the Code.
None of the Seller, any ERISA Affiliate, nor any Employee Benefit Plan fiduciary
has, with respect to the Employee Benefit Plans, engaged in a breach of
fiduciary duty or a non-exempt “prohibited transaction,” as such term is defined
in Section 4975 of the Code or Section 406 of ERISA. No Benefit Plan provides
for or continues medical or health benefits, or life insurance or other welfare
benefits (through insurance or otherwise) for any Person or any dependent or
beneficiary of any Person beyond termination of service or retirement other than
coverage mandated by Law, and neither Seller nor any ERISA Affiliate has made a
written or oral promise, or communication that could reasonably be expected to
promise, to any Person to provide any such benefits.

 

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(d) All contributions (including all employer contributions and employee salary
reduction contributions) and premium payments which are or have been due have
been paid to or with respect to each Benefit Plan within the time required by
law. All required or discretionary (in accordance with historical practices)
payments, premiums, contributions, reimbursements, or accruals for all periods
ending prior to or as of the Closing Date shall have been made or properly
accrued on the Interim Balance Sheet or will be properly accrued on the books
and records of Seller and each ERISA Affiliate as of the Closing Date. None of
the Benefit Plans has any unfunded liabilities which are not reflected on the
Interim Balance Sheet or the books and records of Seller and each ERISA
Affiliate. None of Seller nor any ERISA Affiliate has any assets subject to (or
expected to be subject to) a lien for unpaid contributions to any Benefit Plan.

 

(e) No Benefit Plan is (or at any time has been) subject to Part 3, Subtitle B
of Title I of ERISA, Title IV of ERISA or Code Section 412. Neither Seller nor
any ERISA Affiliate (i) has ever contributed to, or been required to contribute
to any “multiemployer plan” (as defined in Section 3(37) of ERISA) and (ii) has
ever had any Liability (contingent or otherwise) relating to a multiemployer
plan.

 

(f) None of the Benefit Plans, nor any trust created thereunder, now holds or
has heretofore held as assets any stock or securities issued by the Seller or
any ERISA Affiliate.

 

(g) All Benefit Plans which are “employee pension benefit plans” within the
meaning of Section 3(2) of ERISA and which are intended to meet the
qualification requirements of Code Section 401(a) now meet, and at all times
since their inception have met, the requirements for such qualification, and the
related trusts are now, and at all times since their inception have been, exempt
from taxation under Code Section 501(a). Each Benefit Plan that is intended to
be qualified under Code Section 401(a) has received a favorable determination
letter (or an opinion or advisory letter on which it is entitled to rely) from
the IRS that such Benefit Plan is qualified under Code Section 401(a). No event
has occurred that will or could give rise to the revocation of any applicable
determination letter or the loss of the right to rely on any applicable opinion
or advisory letter, or the disqualification or loss of tax-exempt status of any
such Benefit Plan or trust under Code Sections 401(a) or 501(a).

 

(h) Seller’s and each Shareholder’s execution of, and performance of the
transactions contemplated by, this Agreement will not (either alone or upon the
occurrence of any additional or subsequent events) result in any payment,
acceleration, vesting or increase in benefits with respect to any Person. No
payment which is or may be made with respect to any Person, either alone or in
conjunction with any other payment, event or occurrence will or could properly
be characterized as an “excess parachute payment” under Code Section 280G. No
Assumed Liability is an obligation to make a payment that is not deductible
under Code Section 280G. No Person is entitled to receive any additional payment
(including any tax gross-up or other payment) as a result of the imposition of
the excise taxes required by Code Section 4999.

 

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(i) Each Benefit Plan that constitutes a “non-qualified deferred compensation
plan” within the meaning of Code Section 409A, complies (and has at all relevant
times complied) in both form and operation with the requirements of Code Section
409A so that no amounts paid pursuant to any such Benefit Plan is subject to tax
under Code Section 409A; and neither Seller nor any ERISA Affiliate is or has
been required to report any Taxes due as a result of a failure of a Benefit Plan
to comply with Code Section 409A. With respect to each Benefit Plan, neither
Seller nor any ERISA Affiliate has any indemnity obligation for any Taxes or
interest imposed or accelerated under Code Section 409A.

 

(j) Seller and each ERISA Affiliate has, for each month in which it has been an
“applicable large employer member” under Section 4980H of the Code, offered
“minimum essential coverage” (as defined in Section 5000A of the Code) which
satisfies the affordability and minimum value standards under Section 4980H of
the Code to: (i) all common law employees who must be treated as “full-time
employees” under Section 4980H of the Code; and (ii) the dependents of such
employees. Neither Seller nor any ERISA Affiliate have been assessed a penalty
under Section 4980H of the Code and no such penalty is pending, threatened,
anticipated, or should reasonably be anticipated. Seller and each ERISA
Affiliate have timely satisfied their obligations under Sections 6055 and 6056
of the Code.

 

3.18. Taxes.

 

(a) (i) Seller has timely filed or caused to be filed with the appropriate
federal, state, local, and foreign governmental entity or other authority
(individually or collectively, “Taxing Authority”) all Tax Returns required to
be filed with respect to Seller and has timely paid or remitted in full or
caused to be paid or remitted in full all Taxes required to be paid with respect
to Seller (whether or not shown due on any Tax Return); (ii) all Tax Returns are
true, correct and complete in all material respects; and (iii) there are no
liens for Taxes upon Seller or its assets, except liens for current Taxes not
yet due and payable. Seller has not granted any waiver of any statute of
limitations with respect to, or any extension of a period for the assessment of,
any Taxes.

 

(b) Seller has withheld and paid to the proper Taxing Authority all Taxes that
it was required to withhold and pay, and has timely filed all information
returns or reports, including IRS Forms 1099 and W-2, that are required to be
filed and has accurately reported all information required to be included on
such returns or reports.

 

(c) No governmental authority is conducting or has proposed or threatened in
writing to conduct an audit for any taxable year for which the statute of
limitations has not yet expired, and there is no administrative or judicial
proceeding currently pending with respect to Taxes of Seller.

 

(d) Seller has collected all sales tax in the Ordinary Course of Business and
remitted such sales tax amount to the applicable Authority, or has collected
sales tax exemption certificates from all entities from which Seller does not
collect sales tax.

 

3.19. Consents. Except as set forth on Schedule 3.19, no consent, approval, or
authorization of, or exemption by, or filing with, any Authority or other Person
is required to be obtained or made by Seller in connection with the execution,
delivery, and performance by Seller or any Shareholder of this Agreement, or any
Ancillary Agreement to which Seller or any Shareholder or any Affiliate thereof
is a party or the taking by Seller of any other action contemplated hereby or
thereby or the continuation by Buyer after the Closing of the Business of Seller
conducted prior to the Closing.

 

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3.20. Employee Relations.

 

(a) The Seller is not party to any management, employment, consulting or other
agreements or understandings with any individual providing for employment for a
defined period of time or on an other than “at-will” basis or for termination or
severance benefits.

 

(b) Seller is not: (i) a party to or otherwise bound by any collective
bargaining or other type of union agreement, (ii) a party to, involved in or, to
the knowledge of Seller, threatened by, any material labor dispute or material
unfair labor practice charge, or (iii) currently negotiating any collective
bargaining agreement, and Seller has not experienced any work stoppage during
the last three years. To the knowledge of Seller, no organizational effort is
presently being made or is currently threatened by or on behalf of any labor
union with respect to any group of employees of the Seller.

 

(c) Seller has been and is in compliance in all material respects with all
applicable Laws respecting employment and employment practices, terms and
conditions of employment and wages and hours, unemployment insurance, worker’s
compensation, equal employment opportunity, employment discrimination and
immigration control. There are no outstanding claims against Seller (whether
under Law, regulation, Contract, policy or otherwise) asserted by or on behalf
of any present or former employee or job applicant of Seller on account of or
for (i) overtime pay, other than overtime pay for work done in the current
payroll period, (ii) wages or salary for a period other than the current payroll
period, (iii) any amount of vacation pay (including paid time off) or pay in
lieu of vacation time off (including paid time off), other than vacation time
off or pay (including paid time off) in lieu thereof earned in or in respect of
the current fiscal year, (iv) any amount of severance pay or similar benefits,
(v) unemployment insurance benefits, (vi) workers’ compensation or disability
benefits, (vii) any violation of any statute, ordinance, order, rule or
regulation relating to employment terminations, layoffs, or discipline (viii)
any violation of any statute, ordinance, order, rule or regulation relating to
employee “whistleblower” or “right-to-know” rights and protections, (ix) any
violation of any statute, ordinance, order, rule or regulations relating to the
employment obligations of federal contractors or subcontractors (x) any
violation of any regulation relating to minimum wages or maximum hours of work
or (xi) unfair labor practices, and Seller is not aware of any such claims which
have not been asserted. No Person (including any Authority) has asserted or
threatened any claims against Seller or any of its predecessors under or arising
out of any regulation relating to equal opportunity employment, discrimination,
harassment or occupational safety in employment or employment practices.

 

(d) Seller has properly classified all employees (including those individuals
co-employed by a professional employer organization), leased employees,
consultants, independent contractors and all other Persons providing services to
Seller for all purposes (including, without limitation, for all Tax purposes and
for purposes related to eligibility to participate in or accrue a benefit under
the Benefit Plans), and has withheld and paid all applicable Taxes and made all
appropriate filings in connection with services provided by such Persons to
Seller. Seller has properly classified all employees as “exempt” or “non-exempt”
under the Fair Labor Standards Act and similar state or local Law.

 

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(e) All individuals who have provided services to Seller as independent
contractors have been properly classified as independent contractors under
applicable legal tests, rather than as employees of Seller, and Seller has no
material liability with respect to the misclassification of any such individuals
since December 31, 2015. Seller does not owe to any current or former
independent contractors of Seller any amounts for any period other than the
current payment period.

 

(f) Seller has not conducted any mass layoffs or plant closings as defined by
the Worker Adjustment and Retraining Notification Act of 1988, as amended, or
any similar state or local Law

 

3.21. Transactions with Related Parties. Except as described in Schedule 3.21,
no Shareholder, director, or officer of Seller, nor any Affiliate of any such
Person or of Seller, has or had:

 

(a) any contractual or other claims, express or implied, of any kind whatsoever
against Seller;

 

(b) any interest in any property or assets used by Seller;

 

(c) any direct or indirect ownership or other interest in any competitor of
Seller; or

 

(d) engaged in any other material transaction with Seller (other than employment
relationships at the salaries disclosed in the Schedules).

 

Except as described in Schedule 3.21, no Shareholder, director, or officer of
Seller, nor any Affiliate of such Person, has outstanding any loan, guarantee or
other obligation of borrowed money made to or from Seller.

 

3.22. Insurance.

 

(a) Seller maintains, with financially sound and reputable insurers, insurance
with respect to its properties and Business against loss or damages of the kinds
customarily insured against by companies of established reputation engaged in
the same or similar businesses as Seller (including potential losses or damages
resulting from the use of Seller’s products in the transportation of Hazardous
Substances), in such amounts that are commercially reasonable and customarily
carried under similar circumstances by such other companies.

 

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(b) Schedule 3.22(b)(i) contains a complete and correct list of all policies for
insurance (including coverage amounts and expiration dates) of which Seller is
the owner, insured or beneficiary, or covering Seller’s properties or assets.
All such policies are outstanding and in full force and effect. Seller is not in
default with respect to any provision contained in any such policy, nor has
Seller failed to give any notice or present any claim under any such policy in a
timely fashion or in the manner or detail required by the policy. Except as set
forth on Schedule 3.22(b)(ii): (a) all of such coverages are provided on an
“claims made” (as opposed to “occurrence”) basis; (b) there are no outstanding
claims under such policies; (c) there are no premiums or claims due under such
policies which remain unpaid; (d) no notice of cancellation or non-renewal with
respect to, or disallowance (other than reservation of rights by the insurer) of
any material claim under, any such policy has been received; and (e) Seller has
not been refused any insurance, nor have any of its coverages been limited by
any insurance carrier to which it has applied for insurance or with which has
carried insurance.

 

3.23. Brokers. Except as set forth on Schedule 3.23, Seller has not retained any
broker, finder or investment banking firm to act on their behalf in connection
with the transactions contemplated by this Agreement or the Ancillary Agreements
and, to the knowledge of Seller, no other Person is entitled to receive any
brokerage commission, finder’s fee or other similar compensation in connection
with the transactions contemplated by this Agreement and the Ancillary
Agreements.

 

3.24. Relationship with Significant Customers. Seller has not received any
written or oral communication or notice from any Significant Customer stating
that, or otherwise has any reason to believe that, any Significant Customer (a)
has ceased, or will cease, to use the products or services of Seller or, after
the Closing, Buyer, (b) has substantially reduced, or will substantially reduce,
the use of such products or services at any time, or (c) will otherwise
materially and adversely modify its business relationship with Seller or, after
the Closing, Buyer. “Significant Customer” means each customer of the Business,
as conducted by Seller, that generated ten percent (10%) or more of the dollar
volume of sales of Seller during the first eleven months of 2019 and for each of
the fiscal years ended December 31, 2018 and December 31, 2017, as set forth on
Schedule 3.24.

 

3.25. Relationship with Significant Suppliers. Seller has not received any
written or oral communication or notice from any Significant Supplier stating
that, or otherwise has any reason to believe that, any Significant Supplier, (a)
will stop, materially decrease the rate of, or materially and adversely change
the terms (whether related to payment, price or otherwise) with respect to,
supplying materials, products or services to Seller or, after the Closing, Buyer
(whether as a result of the consummation of the transactions contemplated hereby
or otherwise) or (b) will otherwise materially and adversely modify its business
relationship with Seller or, after the Closing, Buyer. “Significant Supplier”
means the top 10 suppliers to the Business of Seller or its predecessors, by
dollar volume of purchase, for the first eleven months of 2019 and for each of
the fiscal years ended December 31, 2018 and December 31, 2017, as set forth on
Schedule 3.25.

 

3.26. Product Liability; Warranty. Neither Seller nor any other Person has
agreed to become or otherwise be responsible for consequential damages or,
except as disclosed in Schedule 3.26, made any express warranties to third
parties with respect to any products created, manufactured, sold, distributed or
licensed, or any services rendered, by Seller since December 31, 2015. There are
no design, manufacturing or other defects, latent or otherwise, with respect to
any such products. A copy of each standard warranty of Seller is included in
Schedule 3.26. Seller has not modified or expanded its warranty obligation to
any customer beyond that set forth in such standard warranties. Except as
disclosed in Schedule 3.26, there are no and since December 31, 2015 there have
not been any material disputes or controversies involving any customer,
distributor, supplier or any other Person regarding the quality, merchantability
or safety of or defect in, or involving a claim of breach of warranty which has
not been fully resolved with respect to, or involving a claim for product
liability damages (including damages resulting from pollution) directly or
indirectly cause by, any product purchased, manufactured or sold by Seller.

 

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3.27. Powers of Attorney. There are no written powers of attorney in force given
by Seller. No Person, as employee or agent of Seller or otherwise, holds powers
of attorney to act with respect to Seller or any of its assets.

 

Article IV.
REPRESENTATIONS AND WARRANTIES OF BUYER

 

Buyer hereby represents and warrants to Seller as follows:

 

4.1. Organization. Buyer is a limited liability company duly organized, validly
existing, and in good standing under the laws of the State of Delaware, and has
all requisite power and authority to carry on its business as it is now being
conducted, and to execute, deliver, and perform this Agreement and each
Ancillary Agreement to which it is a party, and to consummate the transactions
contemplated hereby and thereby.

 

4.2. Authority. The execution, delivery, and performance by Buyer of this
Agreement, and each Ancillary Agreement to which Buyer is a party, and the
consummation by Buyer of the transactions contemplated hereby and thereby have
been duly authorized by all necessary corporate action on the part of Buyer.
This Agreement has been, and each Ancillary Agreement to which Buyer is a party
will be at Closing, duly and validly executed and delivered by Buyer and
constitutes, or will constitute, the valid and binding obligation of Buyer,
enforceable against Buyer in accordance with its respective terms, except as
such enforcement shall be limited by bankruptcy, insolvency, moratorium or
similar law affecting creditors’ rights generally and subject to general
principles of equity.

 

Article V.
COVENANTS

 

5.1. Confidentiality. Each party shall, and shall cause its respective
Affiliates and representatives to, keep confidential and not disclose to any
other Person or use for its or his own benefit or the benefit of any other
Person any confidential proprietary information, technology, know-how, trade
secrets (including all customer lists), product formulas, industrial designs,
franchises, inventions or other intellectual property regarding Buyer, Seller,
their respective Affiliates, or any of their respective businesses and
operations (“Confidential Information”) in its or his possession or control. The
obligations of the parties under this Section 5.1 shall not apply to
Confidential Information which (i) is or becomes generally available to the
public without breach of the commitment provided for in this Section; or (ii) is
required to be disclosed by Law; provided, however, that, in any such case, the
receiving party, as applicable, shall notify the disclosing party as early as
reasonably practicable prior to disclosure to allow the disclosing party to take
appropriate measures to preserve the confidentiality of such Confidential
Information.

 

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5.2. Non-Compete.

 

(a) Other than engaging in Competitive Activities on behalf of Buyer and its
Affiliates, during the period beginning on the Closing Date and ending on the
fifth (5th) anniversary of the Closing Date (the “Non-Compete Period”), Seller
and each Shareholder covenant and agree not to, and shall cause their respective
Affiliates not to, directly or indirectly and anywhere in the Restricted
Territory, conduct, manage, operate, engage in, or have an ownership interest in
any business or enterprise engaged in (i) the Business, (ii) any business that
uses any trademark, trade names or slogans similar to the “Potter’s Lawn &
Landscaping” trademarks (including any associated logos, designs or trade
dress), trade names or slogans, or (iii) any activities that are otherwise
similar to, or competitive with, the Business (collectively, “Competitive
Activities”). Competitive Activities are deemed to exclude (i) the operation of
that certain yard for waste and tree nursery owned and operated by Parklane
Trees, Inc. located at parcel 00-41-45-01-00-000-7440 in the county of Palm
Beach, Florida; (ii) the operation of that certain 3 acre property (with Grant’s
house and nursery for agricultural use located thereon) owned and operated by
Parkland Plants & Palms, Inc., located at 7360 NW 84 Avenue, Parkland, Florida
33067, in manner consistent with the operation as of the date hereof; and (iii)
the ownership of stock in any enterprise competitive with the Company or its
Affiliates if the stock is publicly traded and the amount of stock held is less
than one percent (1%) of the outstanding capital stock of such competitive
enterprise.

 

(b) Other than the Shareholders engaging in Solicitation Activities on behalf of
Buyer and its Affiliates, during the Non-Compete Period, Seller and each
Shareholder shall not, and shall cause their respective Affiliates not to,
directly or indirectly, call-on, solicit or induce, or attempt to solicit or
induce, any past, present or prospective customer or other business relation of
Buyer or Seller for the provision of products or services related to the
Business or in any other manner that would otherwise interfere with business
relationships between Buyer and its customers and other business relations
(collectively, “Solicitation Activities”).

 

(c) Other than the Shareholders engaging in Employee Solicitation on behalf of
Buyer and its Affiliates, during the Non-Compete Period, Seller and each
Shareholder shall not, and shall cause their respective Affiliates not to,
directly or indirectly, call-on, solicit or induce, or attempt to solicit or
induce, any employee or staff of Buyer to leave the employ of Buyer for any
reason whatsoever, nor shall Seller or any Shareholder offer or provide
employment (whether such employment is for Seller or any other Person), either
on a full-time basis or part-time or consulting basis, to any Person who then
currently is, or who within six months immediately prior thereto was, an
employee of or staffed with Buyer or Seller (collectively, “Employee
Solicitation”).

 

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(d) Seller and each Shareholder acknowledge and agree that the provisions of
this Section 5.2 are reasonable and necessary to protect the legitimate business
interests of Buyer and its investment in the Acquired Assets. Neither Seller nor
any Shareholder shall contest that Buyer’s remedies at law for any breach or
threat of breach by Seller or any Shareholder or any of their Affiliates of the
provisions of this Section 5.2 will be inadequate, and that Buyer shall be
entitled to an injunction or injunctions to prevent breaches of the provisions
of this Section 5.2 and to enforce specifically such terms and provisions, in
addition to any other remedy to which Buyer may be entitled at law or equity.
The restrictive covenants contained in this Section 5.2 are covenants
independent of any other provision of this Agreement or any other agreement
between the parties hereunder and the existence of any claim which Seller or any
may allege against Buyer under any other provision of the Agreement or any other
agreement will not prevent the enforcement of these covenants.

 

(e) If any of the provisions contained in this Section 5.2 shall for any reason
be held to be excessively broad as to duration, scope, activity or subject, then
such provision shall be construed by limiting and reducing it, so as to be valid
and enforceable to the extent compatible with the applicable Law or the
determination by a court of competent jurisdiction.

 

5.3. Nondisparagement. Each party agrees that it shall not, and shall cause each
of its Affiliates not to, at any time, in any written or oral communications
with the press or other media, any customer, client, stakeholder, investor or
supplier of the other parties, or their Affiliates, or any other Person,
criticize, ridicule, or make or encourage any other Person to make any statement
that disparages, is derogatory of, or is negative toward the personal or
business reputation, conduct or practices of the other parties, any of their
Affiliates, or any of their then current or former respective officers,
managers, employees, representatives, agents or attorneys.

 

5.4. Further Assurances.

 

(a) From time to time after the Closing, Buyer shall, at the request of Seller,
execute and deliver any further instruments or documents and take all such
further action as Seller may reasonably request in order to evidence the
consummation of the transactions contemplated hereby. From time to time after
the Closing, Seller and each Shareholder shall, at the request of Buyer, execute
and deliver any further instruments or documents and take all such further
action as Buyer may reasonably request in order to evidence the consummation of
the transactions contemplated hereby, including, but not limited to, assisting
Buyer with obtaining consent to assignment of any Contract purchased from Seller
pursuant to this Agreement (including the Agreement for Landscape Maintenance
Services RFP No. 09-04-19-09 between the City of Coconut Creek and Seller, dated
October 24, 2019, and the Client Service Agreement between Seller and
MatrixOneSource, dated August 8, 2019.), and obtaining assignment of, or its own
version of, any Permit.

 

(b) After the Closing, Seller and each Shareholder shall promptly transfer or
deliver to Buyer cash, checks (which shall be properly endorsed) or other
property that Seller or any Shareholder may receive in respect of any (i)
deposit, prepaid expense, receivable or other item that constitutes part of the
Acquired Assets or relates to the Assumed Liabilities, and (ii) refunds for
prepaid insurance premiums related to the Acquired Assets or the Assumed
Liabilities. After the Closing, Buyer shall promptly transfer or deliver to
Seller cash, checks (which shall be properly endorsed) or other property that
Buyer may receive in respect of any item that is an Excluded Asset or relates to
the Retained Liabilities.

 

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5.5. Employee Matters.

 

(a) Effective as of immediately before the Closing, Seller shall terminate all
employees of the Business who are actively at work on the Closing Date. Buyer or
its Affiliates shall offer employment, on an “at will” basis, to any or all of
such employees. Consistent with applicable Law, Seller shall provide Buyer
access to the personnel records and personnel files of such employees, and shall
provide such other information regarding their employees as Buyer may reasonably
request. All such employees of Seller who accept such offers of employment with
Buyer or its Affiliates are hereinafter referred to as the “Transferred
Employees” and such acceptance of offers shall be effective immediately after
the Closing. Each Transferred Employee shall be entitled to participate in all
of Buyer’s employee benefit plans in accordance with the terms of those plans,
to the same extent and in the same manner as new employees of Buyer.

 

(b) With respect to any benefit plans, programs, and arrangements of Buyer in
which Transferred Employees participate after the Closing, Buyer shall use
commercially reasonable efforts to: (i) waive all limitations as to pre-existing
conditions, exclusions and waiting periods with respect to participation and
coverage requirements applicable to Transferred Employees under Buyer’s health
and welfare plans to the extent such limitations were waived or otherwise
satisfied under the comparable Benefit Plans, (ii) recognize all service of
Transferred Employees with Seller for purposes of eligibility to participate
(but not benefit accruals), but only to the extent such service would be taken
into account under a comparable Benefit Plan immediately prior to the Closing
and (iii) provide that, with respect to the year in which the Closing occurs,
any year-to-date covered expenses incurred on or before the Closing by a
Transferred Employee or a Transferred Employee’s covered dependent shall be
taken into account for purposes of satisfying applicable deductible, coinsurance
and maximum out-of-pocket provisions after the Closing under Buyer’s health and
welfare plans.

 

(c) Seller shall be solely responsible for any Liability, claim or expense with
respect to employment, termination of employment, compensation or employee
benefits of any nature owed to any current or former employee, officer, manager,
member, partner or independent contractor of Seller or any ERISA Affiliate (or
the beneficiary of any such individual) whether or not such individual becomes a
Transferred Employee, that arises out of or relates to the provision of services
to or on behalf of, or the employment relationship between, Seller or any ERISA
Affiliate and any such individual or the termination of such relationship or
provision of services on or before the Closing Date. Without limiting the
foregoing, (i) Seller shall be responsible for the payment of any severance
payment or benefits that become due to any current or former employee, officer,
manager, member, partner or independent contractor as a result of the
termination of such individual by Seller or any ERISA Affiliate and (ii)
notwithstanding any other provision in this Agreement or in an Assumed Contract,
Seller shall be responsible for all legally mandated health care continuation
coverage for their, and their ERISA Affiliates’, current and former employees
(and their qualified beneficiaries) who had or have a loss of coverage due to a
“qualifying event” (within the meaning of Section 603 of ERISA) which occurred
or occurs on or prior to the Closing Date including, without limitation, any
loss of coverage that results directly or indirectly from the transactions
contemplated by this Agreement.

 

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(d) The provisions of this Section 5.5 are for the benefit of the parties to
this Agreement only and shall not be construed to grant any rights, as a third
party beneficiary or otherwise, to any Person who is not a party to this
Agreement, nor shall any provision of this Agreement be deemed to be the
adoption of, or an amendment to, any employee benefit plan, as that term is
defined in Section 3(3) of ERISA, or otherwise to limit the right of Buyer or
Seller to amend, modify or terminate any such employee benefit plan. In
addition, nothing contained herein shall be construed to (i) prohibit any
amendments to or termination of any employee benefit plans or (ii) prohibit the
termination or change in terms of employment of any employee (including any
Transferred Employee). Nothing herein, expressed or implied, shall confer upon
any employee (including any Transferred Employee) any rights or remedies
(including, without limitation, any right to employment or continued employment
for any specified period) of any nature or kind whatsoever, under or by reason
of this Agreement.

 

5.6. Use of Name. In furtherance of the purchase and sale of the Acquired Assets
hereunder, promptly following Closing (and in no event later than 30 days after
the Closing Date) the Shareholders shall cause Seller (and, upon the request of
Buyer, any Affiliate of Seller) to change its legal name to a name completely
dissimilar to “Potter’s Professional Lawn Care” and “Potter’s Lawn &
Landscaping”, and thereafter Seller and its Affiliates shall not adopt, use,
cause to be used, or approve or sanction the use of such names, or any name so
similar as to cause confusion therewith. After the Closing, upon the request of
Buyer, Seller and its Affiliates shall file such other documents as may be
necessary to terminate Seller’s or its Affiliate’s use of any related trade name
or assumed name and to permit Buyer to use such names or variations thereof.

 

5.7. Truck Title. In furtherance of the purchase and sale of the Acquired Assets
hereunder, promptly following Closing (and in no event later than 30 days after
the Closing Date) Grant shall transfer title to the certain Ford F-150 truck
used in the operation of the Seller’s Business.

 

Article VI.
TAX MATTERS

 

6.1. Allocation. Within 90 days after the Closing, Buyer shall prepare and
deliver to Seller the allocation (“Allocation”) of the Closing Consideration
among the Acquired Assets sold by Seller (and the non-competition agreement
described in Section 5.2) in a manner that is consistent with the principles set
forth on Schedule 6.1, which Allocation shall be available for Seller’s review
and comment for thirty (30) days. Buyer, Seller and each Shareholder agree to
report, as and when required, the Allocation among the Acquired Assets in a
manner consistent with such Allocation in the preparation and filing of all Tax
Returns (including IRS Form 8594). The Allocation shall be adjusted to reflect
any debits made to the Holdback Balance pursuant to Section 7.5, as applicable,
in accordance with the applicable provisions of Section 1060 of the Code (and
any similar provision of state, local or foreign Law, as appropriate), as
determined by the mutual written consent of Buyer and Seller.

 

6.2. Transfer Taxes. Sales taxes, transfer taxes, stamp taxes, conveyance taxes,
intangible taxes, documentary recording taxes, license and registration fees,
recording fees and any similar taxes or fees imposed by any Authority, if any,
imposed upon the transfer of the Acquired Assets hereunder and the cost of
preparing and filing of any instruments (the “Transfer Taxes”) shall be split
between Buyer and Seller with 60% being paid by Buyer and the remaining 40%
being paid by Seller. Buyer shall be responsible for the actual filing of any
Tax Returns required to be filed. Buyer and Seller shall cooperate with each
other in any mutually agreeable, reasonable and lawful arrangement designed to
minimize any applicable Transfer Taxes.

 

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6.3. Wage Reporting. Buyer and Seller agree to utilize the standard procedure
set forth in Revenue Procedure 2004-53 with respect to wage reporting.

 

6.4. Cooperation on Tax Matters. Buyer, Seller, and each Shareholder agree to
furnish or cause to be furnished to each other, upon request, as promptly as is
practicable, such information and assistance relating to Seller and the Acquired
Assets (including without limitation access to books and records) as is
reasonably necessary for the filing of all Tax Returns, the making of any
election relating to Taxes, the preparation for any audit by any Taxing
Authority, and the prosecution or defense of any claim, suit or proceeding
relating to any Tax. Buyer and Seller shall retain all books and records with
respect to Taxes for any period up to and including the Closing Date, pertaining
to Seller and the Acquired Assets, for at least seven years following the
Closing Date. At the end of such period, each party shall provide the others
with at least 30 days’ prior written notice before destroying such books and
records, during which period the party receiving such notice can elect to take
possession, at its own expense, of such books and records.

 

Article VII.
SURVIVAL AND INDEMNIFICATION

 

7.1. Survival. The covenants and agreements in this Agreement or in any
Ancillary Agreement shall survive the Closing. The representations and
warranties under this Agreement or in any Ancillary Agreement shall survive
until the second anniversary of the Closing Date; provided, however, that (i)
the representations and warranties set forth in Section 3.1 (Organization),
Section 3.2 (Authority), Section 3.4 (Capitalization), Section 3.5
(Subsidiaries), Section 3.8(a) (Title, Condition and Sufficiency of Assets),
Section 3.18 (Taxes), Section 3.23 (Brokers), Section 4.1 (Organization) and
Section 4.2 (Authority) (collectively, the “Fundamental Representations”), shall
survive the Closing without limitation; and (ii) the representations and
warranties set forth in Section 3.16 (Environmental Matters) and Section 3.17
(Employee Benefit Matters), shall survive the Closing for the full period of all
applicable statutes of limitations (giving effect to any waiver, mitigation or
extension thereof) plus 60 days. No action or claim for Losses resulting from
any misrepresentation or breach of warranty shall be brought or made after the
expiration of the survival period applicable to such representation or warranty
(as provided in this Section), except that such time limitation shall not apply
to claims which have been asserted and which are the subject of a written notice
from Seller to Buyer or from Buyer to Seller, as may be applicable, prior to the
expiration of such survival period. Any reference to the “applicable statute of
limitations” means the longer of (i) the statute of limitations governing any
claims or potential claims by a Person related to the subject matter of a
specific representation and warranty and (ii) the statute of limitations
applicable to a claim for breach of contract in the making of any such
representation or warranty.

 

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7.2. General Indemnification.

 

(a) Subject to the limitations in Section 7.2(c), Seller and each Shareholder
shall, jointly and severally, indemnify, defend and hold harmless Buyer and its
members, managers, stockholders, directors, officers, Affiliates, employees,
agents and representatives (collectively, the “Buyer Indemnified Parties”), from
and against all Losses that are incurred or suffered by any of them in
connection with or resulting from each of the following:

 

(i) any misrepresentation or breach of, or inaccuracy in, any representation or
warranty made by Seller or the Shareholders in this Agreement or any Ancillary
Agreement;

 

(ii) any breach of any covenant made by Seller or the Shareholders in this
Agreement or any Ancillary Agreement;

 

(iii) the Retained Liabilities;

 

(iv) any matters identified on Schedule 7.2(a)(iv); or

 

(v) the enforcement by Buyer Indemnified Parties of any indemnification rights
under this Agreement.

 

(b) Subject to the limitations in Section 7.2(c), Buyer shall indemnify, defend
and hold harmless Seller, each Shareholder, and their respective agents and
representatives (collectively, the “Seller Indemnified Parties”) from and
against all Losses that are incurred or suffered by any of them in connection
with or resulting from each of the following:

 

(i) any misrepresentation or breach of any representation or warranty made by
Buyer in this Agreement or any Ancillary Agreement;

 

(ii) any breach of any covenant made by Buyer in this Agreement or any Ancillary
Agreement;

 

(iii) any Assumed Liability; provided that there shall be no indemnification
under this Section 7.2(b) for any Losses for which Buyer is entitled to
indemnification pursuant to Section 7.2(a); or

 

(iv) the enforcement by Seller Indemnified Parties of their indemnification
rights under this Agreement.

 

(c) Notwithstanding the foregoing and subject to the proviso at the end of this
paragraph and the terms of this Article VII, (i) Seller and the Shareholders
shall not be obligated to provide any indemnification for Losses pursuant to
claims (other than Third Party Claims) for breaches of representations and
warranties (other than Fundamental Representations) under Section 7.2(a)(i)
unless the aggregate amount of Losses incurred by Buyer Indemnified Parties with
respect to such breaches of representations and warranties exceeds $13,700 (the
“Threshold”), in which case Seller and the Shareholders will be liable for all
Losses without regard to the Threshold, and (ii) Buyer shall not be obligated to
provide any such indemnification for Losses pursuant to claims (other than Third
Party Claims) for breaches of representations and warranties (other than
Fundamental Representations) under Section 7.2(b)(i), unless the aggregate
amount of Losses incurred by Seller Indemnified Parties with respect to such
breaches of representations and warranties exceeds the Threshold, in which case
Buyer will be liable for all Losses without regard to the Threshold. The maximum
aggregate obligation of (i) Seller and Shareholders for Losses pursuant to
claims for breaches of representations and warranties (other than Fundamental
Representations) under Section 7.2(a)(i) shall not exceed $478,000 (the “Cap”),
and (ii) Buyer for Losses pursuant to claims for breaches of representations and
warranties (other than Fundamental Representations) under Section 7.2(b)(i),
shall not exceed the Cap. Neither the Threshold nor the Cap shall apply to
Losses arising in respect of claims for misrepresentations and breach of the
Fundamental Representations.

 

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(d) In no event shall the limitations set forth in Section 7.2(c) apply to
Losses suffered or incurred by any Indemnified Party as a result of, or arising
out of, (A) the matters set forth in Sections 7.2(a)(ii) through 7.2(a)(v), or
7.2(b)(ii) through (iv), or (B) any fraud or intentional misrepresentation by a
party.

 

(e) The representations and warranties in this Agreement and the Ancillary
Agreements shall not be affected or diminished by, and no right of
indemnification hereunder shall be limited by reason of any investigation or
audit conducted before or after the Closing or the knowledge of any party of any
breach of a representation, warranty, covenant or agreement by the other party
at any time, or the decision of any party to complete the Closing.

 

(f) For purposes of determining the existence of any misrepresentation or breach
of warranty, and calculating the amount of any Losses incurred in connection
with any such misrepresentation or breach of warranty, any and all references to
material or Material Adverse Effect (or other correlative terms) shall be
disregarded.

 

7.3. Process for Indemnification.

 

(a) A party entitled to indemnification hereunder shall herein be referred to as
an “Indemnified Party.” A party obligated to indemnify an Indemnified Party
hereunder shall herein be referred to as an “Indemnifying Party.” As soon as is
reasonable after an Indemnified Party either (i) receives notice of any claim or
the commencement of any action by any third party which such Indemnified Party
reasonably believes may give rise to a claim for indemnification from an
Indemnifying Party hereunder (a “Third Party Claim”) or (ii) sustains any Loss
not involving a Third Party Claim or action which such Indemnified Party
reasonably believes may give rise to a claim for indemnification from an
Indemnifying Party hereunder, such Indemnified Party shall, if a claim in
respect thereof is to be made against an Indemnifying Party under this Article
VII, notify such Indemnifying Party in writing of such claim, action or Loss, as
the case may be; provided, however, that failure to notify Indemnifying Party
shall not relieve Indemnifying Party of its indemnity obligation, except to the
extent Indemnifying Party is actually prejudiced in its defense of the action by
such failure. Any such notification must be in writing and must state in
reasonable detail the nature and basis of the claim, action or Loss, to the
extent known. Except as provided in this Section 7.3, Indemnifying Party shall,
at its sole expense, have the right to retain counsel acceptable to the
Indemnified Party, to contest, defend, litigate or settle any such Third Party
Claim which involves (and continues to involve) solely monetary damages;
provided that the Indemnifying Party shall have notified the Indemnified Party
in writing of its intention to do so within 15 days of the Indemnified Party
having given notice of the Third Party Claim to the Indemnifying Party;
provided, further, that (1) the Indemnifying Party expressly agrees in such
notice to the Indemnified Party that, as between the Indemnifying Party and the
Indemnified Party, the Indemnifying Party shall be solely obligated to fully
satisfy and discharge the Third Party Claim subject to the limitations with
respect to indemnification included in this Agreement; (2) the Third Party Claim
is not, in the reasonable judgment of the Indemnified Party, likely to result in
Losses that will exceed the Cap; (3) if reasonably requested to do so by the
Indemnified Party, the Indemnifying Party shall have made reasonably adequate
provision to ensure the Indemnified Party of the financial ability of the
Indemnifying Party to satisfy the full amount of any adverse monetary judgment
that may result from such Third Party Claim; (4) assumption by the Indemnifying
Party of such Third Party Claim could not reasonably be expected to cause a
material adverse effect on the Indemnified Party’s business , and (5) the
Indemnifying Party shall diligently contest the Third Party Claim (the
conditions set forth in clauses (1), (2), (3), (4) and (5) being collectively
referred to as the “Litigation Conditions”). The Indemnified Party shall have
the right to participate in, and to be represented by counsel (at its own
expense) in any such contest, defense, litigation or settlement conducted by the
Indemnifying Party; provided, that the Indemnified Party shall be entitled to
reimbursement therefor if the Indemnifying Party shall lose its right to
contest, defend, litigate and settle the Third Party Claim or if representation
of the Indemnifying Party and the Indemnified Party by the same counsel would,
in the reasonable opinion of such counsel, constitute a non-waivable conflict of
interest under applicable standards of professional conduct. The Indemnifying
Party shall not be entitled, or shall lose its right, to contest, defend,
litigate and settle the Third Party Claim if the Indemnified Party shall give
written notice to the Indemnifying Party of any objection thereto based upon the
Litigation Conditions.

 

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(b) The Indemnifying Party, if it shall have assumed the defense of any Third
Party Claim as provided in this Agreement, shall not consent to a settlement of,
or the entry of any judgment arising from, any such Third Party Claim without
the prior written consent of the Indemnified Party (which consent shall not be
unreasonably withheld or delayed). The Indemnifying Party shall not, without the
prior written consent of the Indemnified Party, enter into any compromise or
settlement which commits the Indemnified Party to take, or to forbear to take,
any action or which does not provide for a complete release by such third party
of the Indemnified Party. The Indemnified Party shall have the sole and
exclusive right to settle any Third Party Claim, on such terms and conditions as
it deems reasonably appropriate, to the extent such Third Party Claim involves
equitable or other non-monetary relief. All expenses (including attorneys’ fees)
incurred by the Indemnifying Party directly related to the foregoing shall be
paid by the Indemnifying Party. No failure by an Indemnifying Party to
acknowledge in writing its indemnification obligations under this Article VII
shall relieve it of such obligations to the extent such obligations exist.

 

(c) If an Indemnified Party is entitled to indemnification against a Third Party
Claim, and the Indemnifying Party fails to accept a tender of, or assume the
defense of, a Third Party Claim pursuant to this Section 7.3, the Indemnifying
Party shall not be entitled, and shall lose its right, to contest, defend,
litigate and settle such a Third Party Claim, and the Indemnified Party shall
have the right, without prejudice to its right of indemnification hereunder, in
its discretion exercised in good faith, to contest, defend and litigate such
Third Party Claim, and may settle such Third Party Claim either before or after
the initiation of litigation, at such time and upon such terms as the
Indemnified Party deems fair and reasonable, provided that at least ten (10)
days prior to any such settlement, written notice of its intention to settle is
given to the Indemnifying Party. If, pursuant to this Section 7.3, the
Indemnified Party so contests, defends, litigates or settles a Third Party Claim
for which it is entitled to indemnification hereunder, the Indemnified Party
shall be reimbursed on a monthly basis by the Indemnifying Party for the
reasonable attorneys’ fees and other expenses of contesting, defending,
litigating and/or settling the Third Party Claim which are incurred from time to
time.

 

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7.4. Mitigation; Insurance.

 

(a) Any Indemnified Party shall mitigate Losses relating to a claim under this
Article VII to the extent required by Law.

 

(b) All Losses sought by Indemnified Party hereunder shall be net of any
insurance proceeds actually received by Indemnified Party with respect to such
indemnification claim (net of any increase or retroactive premiums and costs of
recovery). If any such proceeds are received by an Indemnified Party (or any of
its Affiliates) with respect to any Losses after an Indemnifying Party has made
a payment to the Indemnified Party with respect thereto, the Indemnified Party
(or such Affiliate) shall promptly pay to the Indemnifying Party the amount of
such proceeds, benefits or recoveries (up to the amount of the Indemnifying
Party’s payment).

 

7.5. Holdback.

 

(a) If Seller or a Shareholder becomes obligated to make any payment to any
Buyer Indemnified Party pursuant to this Article VII prior to the date that is
twenty-four (24) months after the Closing Date (the “Holdback Release Date”) and
when the Holdback Balance is greater than zero (0), such payment shall first be
debited to the Holdback Balance until the Holdback Balance equals zero (0);
provided, however, that the terms of this Section 7.5 shall not apply to limit
any amounts owned in excess of the Holdback Balance or after the Holdback
Release Date.

 

(b) On the Holdback Release Date, Buyer shall release and pay to Seller the
Holdback Balance, subject to retention of any amount equal to the amount of any
indemnification claim made by any Buyer Indemnified Party that is unresolved as
of the Holdback Release Date (which retained amount shall be released and paid
to the applicable party upon final resolution of all such unresolved claims).

 

7.6. Right of Surrender. Without limiting any other remedies available at law or
in equity, any amounts owing from Seller or a Shareholder pursuant to this
Article VII may, at the election of Buyer, be paid by causing Seller or a
Shareholder, to the extent a Shareholder is holder of such securities at such
time, to surrender that number of securities of ANC Potter’s issued to Seller in
exchange for the Contributed Assets pursuant to the Contribution Agreement, with
each such security valued at fair market value, as reasonably determined by the
Board of Managers of ANC Potter’s acting in good faith.

 

7.7. Remedies Exclusive. The remedies provided in this Article VII shall be the
sole and exclusive remedies of any Indemnified Party related to any and all
Losses incurred because of or resulting from or arising out of this Agreement
and any Ancillary Agreements; provided, however, that nothing contained in this
Article VII shall be deemed to limit or restrict in any manner (a) any rights or
remedies which any Indemnified Party has, or might have, at law or in equity
based on fraud or intentional misrepresentation, or (b) any Person’s right to
seek and obtain any equitable relief to which any Person shall be entitled.

 

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7.8. Tax Treatment. Any indemnification payments under this Article VII and all
debits to the Holdback Balance pursuant to Section 7.5 shall be treated for Tax
purposes as adjustments to the Final Closing Consideration to the extent
permitted by applicable Law.

 

Article VIII.
MISCELLANEOUS

 

8.1. Interpretive Provisions.

 

(a) Whenever used in this Agreement, (i) “including” (or any variation thereof)
means including without limitation and (ii) any reference to gender shall
include all genders.

 

(b) The parties acknowledge and agree that (i) each party and its counsel have
reviewed the terms and provisions of this Agreement and have contributed to its
drafting, (ii) the normal rule of construction, to the effect that any
ambiguities are resolved against the drafting party, shall not be employed in
the interpretation of it, and (iii) the terms and provisions of this Agreement
shall be construed fairly as to all parties hereto and not in favor of or
against any party, regardless of which party was generally responsible for the
preparation of this Agreement.

 

8.2. Entire Agreement. This Agreement (including the Schedules and the exhibits
attached hereto) together with the Ancillary Agreements constitute the sole
understanding and agreement of the parties with respect to the subject matter
hereof. The parties agree and acknowledge that as of the Closing Date, the
letter of intent dated August 28, 2019 by and between Andover National
Corporation and Seller is terminated.

 

8.3. Successors and Assigns. The terms and conditions of this Agreement shall
inure to the benefit of and be binding upon the respective successors and
assigns of the parties hereto; provided however, that this Agreement may not be
assigned by Seller or any Shareholder without the prior written consent of
Buyer, and any sale by either Shareholder of an equity interest in Seller shall
be deemed an assignment for the purposes of this Agreement.

 

8.4. Headings. The headings of the Articles, Sections, and paragraphs of this
Agreement are inserted for convenience only and shall not be deemed to
constitute part of this Agreement or to affect the construction hereof.

 

8.5. Modification and Waiver. No amendment, modification, or alteration of the
terms or provisions of this Agreement shall be binding unless the same shall be
in writing and duly executed by the parties hereto, except that any of the terms
or provisions of this Agreement may be waived in writing at any time by the
party that is entitled to the benefits of such waived terms or provisions. No
single waiver of any of the provisions of this Agreement shall be deemed to or
shall constitute, absent an express statement otherwise, a continuous waiver of
such provision or a waiver of any other provision hereof (whether or not
similar). No delay on the part of any party in exercising any right, power, or
privilege hereunder shall operate as a waiver thereof.

 

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8.6. Expenses. Except as otherwise expressly provided herein, each of the
parties hereto shall bear the expenses incurred by that party incident to this
Agreement and the transactions contemplated hereby, including all fees and
disbursements of counsel and accountants retained by such party, whether or not
the transactions contemplated hereby shall be consummated.

 

8.7. Notices. Any notice, request, instruction, or other document to be given
hereunder by any party hereto to any other party shall be in writing and shall
be given by delivery in person, by electronic mail, by electronic facsimile
transmission, by overnight courier or by registered or certified mail, postage
prepaid (and shall be deemed given when delivered if delivered by hand, when
transmission confirmation is received if delivered by facsimile during normal
business hours, when delivered if delivered by electronic mail, one Business Day
after deposited with an overnight courier service if delivered by overnight
courier and three days after mailing if mailed), as follows:

 

to Seller, to:

 

Potter’s Professional Lawn Care, Inc.

1270 SW 8th Street

Boca Raton, FL 33486

Email: nina@potterslawn.com

 

with a copy to:

 

Brinkley Morgan

100 Southeast Third Ave

23rd Floor

Fort Lauderdale, Florida 33394

Attn: Mark Levy, Esq.

Email: mark.levy@brinkleymorgan.com

 

to a Shareholder, as applicable, to:

 

Nina Potter Fernandez
1270 SW 8th Street

Boca Raton, FL 33486

Email: nina@potterslawn.com

 

Grant Potter

7860 NW 84th Avenue

Parkland, FL 33067

Email: trainingwithpotter@gmail.com

 

38

 

 

to Buyer to:

 

Potter’s Professional Lawn Care, LLC

c/o Andover National Corporation

333 Avenue of the Americas

Suite 2000,

Miami, FL 33131-2185

Attn: Jeffrey C. Piermont, Vice President

Email: jcp@andovernational.com

 

with a copy to:

 

Harter Secrest & Emery LLP

1600 Bausch & Lomb Place

Rochester, NY 14604

Attention: Mario Fallone, Esq.

Email: mfallone@hselaw.com

 

or at such other address for a party as shall be specified by like notice.

 

8.8. Governing Law; Consent to Jurisdiction. This Agreement shall be construed
in accordance with and governed by the laws of the State of Delaware applicable
to agreements made and to be performed wholly within that jurisdiction. Each
party hereto, for itself and its successors and assigns, irrevocably agrees that
any suit, action or proceeding arising out of or relating to this Agreement may
be instituted only in the United States District Court located in Wilmington,
Delaware or in the absence of jurisdiction, the state courts located in the
Wilmington, Delaware, and generally and unconditionally accepts and irrevocably
submits to the exclusive jurisdiction of the aforesaid courts and irrevocably
agrees to be bound by any final judgment rendered thereby from which no appeal
has been taken or is available in connection with this Agreement. Each party,
for itself and its successors and assigns, irrevocably waives any objection it
may have now or hereafter to the laying of the venue of any such suit, action or
proceeding, including any objection based on the grounds of forum non
conveniens, in the aforesaid courts. Each of the parties, for itself and its
successors and assigns, irrevocably agrees that all process in any such
proceedings in any such court may be effected by mailing a copy thereof by
registered or certified mail (or any substantially similar form of mail),
postage prepaid, to it at its address set forth in Section 8.7 or at such other
address of which the other parties shall have been notified in accordance with
the provisions of Section 8.7, such service being hereby acknowledged by the
parties to be effective and binding service in every respect. Nothing herein
shall affect the right to serve process in any other manner permitted by law.

 

8.9. Public Announcements. None of Seller or any Shareholder shall make any
public statements, including any press releases, with respect to this Agreement
and the transactions contemplated hereby without the prior written consent of
Buyer (which consent shall not be unreasonably withheld) except as may be
required by law. If a public statement is required to be made by law, the
parties shall consult with each other in advance as to the contents and timing
thereof.

 

39

 

 

8.10. No Third Party Beneficiaries. This Agreement is intended and agreed to be
solely for the benefit of the parties hereto and their permitted successors and
assigns, and no other party shall be entitled to rely on this Agreement or
accrue any benefit, claim, or right of any kind whatsoever pursuant to, under,
by, or through this Agreement.

 

8.11. Counterparts. This Agreement may be executed in one or more counterparts,
each of which shall for all purposes be deemed to be an original and all of
which shall constitute the same instrument.

 

8.12. Delivery by Facsimile and Email. This Agreement and any amendments hereto,
to the extent signed and delivered by means of a facsimile machine or by
electronic mail, shall be considered to have the same binding legal effect as if
it were the original signed version thereof delivered in person. No party hereto
shall raise the use of a facsimile machine or electronic mail to deliver a
signature or the fact that any signature or agreement or instrument was
transmitted or communicated through the use of a facsimile machine or electronic
mail as a defense to the formation or enforceability of this Agreement and each
such party forever waives any such defense.

 

Article IX.
CERTAIN DEFINITIONS

 

9.1. The following terms shall have the following meanings:

 

“Accounting Methods” means GAAP, applied in a manner consistent with Seller’s
historical accounting methods, principles and practices, including with respect
to the preparation of the Financial Statements.

 

“Affiliate” means, with respect to any Person, any other Person that directly,
or indirectly through one or more intermediaries, controls, is controlled by, or
is under common control with, such first Person.

 

“ANC Solutions” means Andover Environmental Solutions, LLC, a Delaware limited
liability company.

 

“Ancillary Agreement” means any agreement, exhibit, schedule, statement,
document or certificate executed or delivered in accordance with, in connection
with or required by this Agreement, and any other agreement or certificate
specifically identified as an Ancillary Agreement for purposes of this
Agreement.

 

“Authority” means the United States of America or any other nation, any state or
other political subdivision thereof, or any entity, agency, court or authority
(foreign, federal, state or local) exercising executive, legislative, judicial,
regulatory or administrative functions of government or any arbitrator or
mediator.

 

“Balance Sheet Date” means December 31, 2018.

 

“Base Amount” means $1,680,000.

 

40

 

 

“Books and Records” means all of the books and records, in all formats (both
tangible and intangible), used or maintained by or on behalf of Seller in
connection with or otherwise related to the Business, including (a) executed
copies of all of the written Assumed Contracts, if any, and written descriptions
of any oral Assumed Contracts, if any, (b) copies of all Contracts relating to
the engagement of or the performance of services by the clients and customers of
the Business, (c) all equipment, product and other warranties pertaining to the
Acquired Assets, (d) all technical information and any data, maps, computer
files, diagrams, blueprints and schematics, (e) all filings made with or records
required to be kept by any Governmental Authority (including all backup
information on which such filings are based) including Tax Returns that relate
to the Business, (f) all research and development reports, (g) all equipment and
operating logs, (h) all financial and accounting records, (i) all employment
records, and (j) all creative, promotional or advertising materials

 

“Business Data” means all business information and personally identifying
information and data (whether of employees, contractors, consultants, customers,
clients, consumer or other Persons and whether in electronic or any other form
or medium) that is accessed, collected, used, processed, stored, shared,
distributed, transferred, disclosed, destroyed, or disposed of by Seller.

 

“Business Day” means any day other than a day on which banks in the State of New
York are required or authorized to be closed.

 

“Cash” means, as of any applicable time of determination, Seller’s actual cash
(bank) balances, cash equivalents (including cash on hand and deposits in
transit), which shall be reduced by any Restricted Cash, and marketable
securities (net of any breakage costs that would be incurred in connection with
the liquidation thereof), in each case, determined in accordance with GAAP
applied on a basis consistent with the accounting principles and policies used
in the preparation of the Interim Balance Sheet.

 

“Closing Indebtedness” means the Indebtedness as set forth on the Closing
Statement.

 

“Closing Transaction Expenses” means the Transaction Expenses as set forth on
the Closing Statement.

 

“Closing Working Capital” means the Working Capital of Seller as set forth on
the Closing Statement.

 

“Code” means the Internal Revenue Code of 1986, as amended.

 

“Contract” means any written or oral contract, lease, license, loan or credit
agreement, bond, debenture, note, mortgage, indenture, supply agreement, sale or
purchase order, or any other binding agreement, commitment, arrangement or
understanding.

 

“control” (including the terms “controlled by” and “under common control with”)
means the possession, directly or indirectly or as trustee or executor, of the
power to direct or cause the direction of the management or policies of a
Person, whether through the ownership of stock, as trustee or executor, by
contract or credit arrangement or otherwise;

 

41

 

 

“Data Security Requirements” means, collectively, all of the following to the
extent relating to Data Treatment or otherwise relating to privacy, security or
security breach notification requirements and applicable to Seller, any IT
Systems or any Personal Information: (i) Seller’s own rules, policies, and
procedures; (ii) all Laws applicable to Seller; (iii) industry standards
applicable to the industry in which Seller operates; and (iv) Contracts to which
Seller is a party or otherwise subject.

 

“Data Treatment” means the access, collection, use, processing, storage,
sharing, distribution, transfer, disclosure, security, destruction or disposal
of Personal Information.

 

“Encumbrances” means all liens, charges, mortgages, pledges, security interests
or other encumbrances of any kind.

 

“Environmental Laws” means all foreign, federal, state and local laws, rules,
regulations, ordinances, codes, common law, judgments, orders, consent
agreements, legally-binding requirements, work practices, standards and norms
relating to (i) the protection of the environment (including air, surface and
subsurface water, drinking water supplies, surface and subsurface land, the
interior of any building or building component, soil and natural resources) or
human health (including without limitation occupational health and safety) or
(ii) Hazardous Substances.

 

“Environmental Liabilities” means any and all losses, claims, demands,
Liabilities, causes of action, damages, costs and expenses, fines or penalties
(including without limitation attorney fees and other defense costs), known or
unknown, foreseen or unforeseen, whether contingent or otherwise, fixed or
absolute, present or future asserted against or incurred by Buyer arising out of
or related to (a) any environmental condition first existing or occurring on or
prior to the Closing Date or resulting from facts, circumstances or events first
existing or occurring on or prior to the Closing Date, including without
limitation, (i) the presence, disposal, discharge, release or other handling or
management of, or exposure to, Hazardous Substances at, on, in or under any the
Leased Real Property or property now or previously owned, operated, leased or
otherwise used by Seller in connection with the Business or the Acquired Assets
(including, for the avoidance of doubt, any post-Closing migration, movement or
continuing discharge, disposal or release of, or exposure to, any Hazardous
Substances first present, discharged, disposed or released on or prior to the
Closing Date), or (ii) the off-site or on-site transportation, storage,
treatment, recycling, other handling, discharge, disposal or release of
Hazardous Substances by or on behalf of Seller or any Person under their control
in connection with the Business or the Acquired Assets; (b) any violation of, or
Liability under, any Environmental Law or any Environmental Permit first
existing or occurring prior to the Closing Date (including without limitation
costs and expenses incurred or required to bring the Leased Real Property,
Business or Acquired Assets into compliance with all applicable Environmental
Laws and Environmental Permits and any fines, penalties and defense costs
incurred by Buyer) with respect to the Business, the Acquired Assets, the Leased
Real Property or any property now or previously owned, operated, leased or
otherwise used by Seller in connection with the Business or the Acquired Assets;
or (c) any environmental condition or any violation of, or liability under,
Environmental Laws or Environmental Permits with respect to the Leased Real
Property that arise out of, relate to, or result from (i) any acts or omissions
of Seller or its Affiliate or any other Person under their control after the
Closing Date or (ii) the ownership of the Leased Real Property after the Closing
Date.

 

42

 

 

“ERISA Affiliate” means any Person, trade or business (whether or not
incorporated) that is treated as a single employer with Seller under Section 414
of the Code.

 

“Estimated Closing Consideration” means an amount equal to the total of (a) the
Base Amount, minus (b) the amount, if any, by which Estimated Working Capital is
less than Target Working Capital, plus (c) the amount, if any, by which
Estimated Working Capital is greater than Target Working Capital, minus (d) the
Estimated Indebtedness, minus (e) the Estimated Transaction Expenses.

 

“Estimated Indebtedness” means the Indebtedness as set forth on the Estimated
Closing Statement.

 

“Estimated Transaction Expenses” means the Transaction Expenses as set forth on
the Estimated Closing Statement.

 

“Estimated Working Capital” means the Working Capital of Seller as set forth on
the Estimated Closing Statement.

 

“Final Closing Consideration” means an amount equal to the total of (a) the Base
Amount, minus (b) the amount, if any, by which Final Working Capital is less
than Target Working Capital, plus (c) the amount, if any, by which Final Working
Capital is greater than Target Working Capital, minus (d) the Final Indebtedness
minus (e) the Final Transaction Expenses.

 

“Final Indebtedness” means the Closing Indebtedness, (x) as shown in the Closing
Statement if no Notice of Disagreement with respect thereto is duly and timely
delivered pursuant to Section 1.3 or (y) if such a Notice of Disagreement is so
delivered, as agreed by Seller and Buyer pursuant to Section 1.3 or (z) if such
Notice of Disagreement is so delivered and in the absence of such agreement, as
shown in the Arbiter’s calculation delivered pursuant to Section 1.3.

 

“Final Working Capital” means the Closing Working Capital, (x) as shown in the
Closing Statement if no Notice of Disagreement with respect thereto is duly and
timely delivered pursuant to Section 1.3 or (y) if such a Notice of Disagreement
is so delivered, as agreed by Seller and Buyer pursuant to Section 1.3 or (z) if
such Notice of Disagreement is so delivered and in the absence of such
agreement, as shown in the Arbiter’s calculation delivered pursuant to Section
1.3.

 

“Final Transaction Expenses” means the Closing Transaction Expenses, (x) as
shown in the Closing Statement if no Notice of Disagreement with respect thereto
is duly and timely delivered pursuant to Section 1.3 or (y) if such a Notice of
Disagreement is so delivered, as agreed by Seller and Buyer pursuant to Section
1.3 or (z) if such Notice of Disagreement is so delivered and in the absence of
such agreement, as shown in the Arbiter’s calculation delivered pursuant to
Section 1.3.

 

43

 

 

“GAAP” means United States generally accepted accounting principles consistently
applied throughout the relevant periods.

 

“Hazardous Substances” means any and all hazardous or toxic substances,
materials, and wastes, solid wastes, industrial wastes, pollutants,
contaminants, polychlorinated biphenyls, asbestos, volatile and semi-volatile
organic compounds, oil, petroleum products and fractions thereof, radioactive
materials and wastes, and any and all other chemicals, substances, materials and
wastes regulated under Environmental Laws.

 

“Holdback Amount” means $137,000 plus the Purchase Price Adjustment Holdback
Amount.

 

“Holdback Balance” means, as of any date, the Holdback Amount, minus (x) the
amount of any Third Party Claims (or portion thereof) satisfied by a debit
against the Holdback Balance according to Section 7.5(a) minus (y) all amounts
previously released from the Holdback Balance according to Section 1.3.

 

“Indebtedness” means all principal, interest, premiums, penalties or other
Liabilities related to (a) all indebtedness of Seller for borrowed money,
including shareholder loans, (b) all obligations (contingent or otherwise) of
Seller for the deferred purchase price of property or services (other than trade
accounts payable in the Ordinary Course of Business) (including notes payable to
the sellers of such property or services), (c) all other obligations of Seller
evidenced by notes, bonds, debentures or other similar instruments, (d) all
indebtedness created or arising under any conditional sale or other title
retention agreement with respect to property acquired by Seller, (e) all
obligations of Seller as lessee or lessees under leases that have been or should
be, in accordance with GAAP, recorded as capital leases, (f) all obligations,
contingent or otherwise, of Seller under acceptance, letter of credit or similar
facilities, (g) all obligations owing pursuant to factoring agreements for
accounts receivable, (h) all obligations in respect of unfunded pensions, (i)
all Indebtedness of the type referred to in clauses (a) through (h) above
guaranteed directly or indirectly in any manner by Seller , or in effect
guaranteed directly or indirectly by Seller through an agreement (w) to pay or
purchase such Indebtedness or to advance or supply funds for the payment or
purchase of such Indebtedness, (x) to purchase, sell or lease (as lessee or
lessor) property, or to purchase or sell services, primarily for the purpose of
enabling the debtor to make payment of such Indebtedness or to assure the holder
of such Indebtedness against loss, (y) to supply funds to or in any other manner
invest in the debtor (including any agreement to pay for property or services
irrespective of whether such property is received or such services are rendered)
or (z) otherwise to assure a creditor against loss; provided, that such
Indebtedness referred under this clause (i) is of the type that would be
reflected as debt on a balance sheet prepared in accordance with GAAP, (j) all
Indebtedness of the type referred to in clauses (a) through (i) above secured by
(or for which the holder of such Indebtedness has an existing right, contingent
or otherwise, to be secured by) any lien on property (including accounts and
Contract rights) owned by Seller, even though such Person has not assumed,
become liable for or guaranteed the payment of such Indebtedness, (k) all
liabilities of the Seller under or in connection with any accrued bonuses,
deferred compensation bonuses and accrued paid-time off that have been or should
be accrued, in accordance with GAAP, (including all related Taxes, including the
employer’s share of any payroll Taxes attributable to such amounts and any
amounts payable pursuant to Section 280G of the Code (or any corresponding
provision of Law) or to offset or gross-up any Person for any excise Taxes,
income Taxes or other Taxes related to such amounts), (l) any unfunded capital
expenditures committed to by Seller or any deferred capital expenditures, (m)
all accrued but unpaid interest (or interest equivalent) to the date of
determination, and all prepayment premiums or penalties payable upon repayment
of any items of Indebtedness of the type referred to in clauses (a) through (j)
above. Notwithstanding the preceding sentence, Indebtedness shall not include
the Equipment Financing.

 

44

 

 

“knowledge”, “to the knowledge” or “known” and words of similar import means the
actual knowledge of a natural person or, with respect to a Person that is not a
natural person, the actual knowledge of the shareholders, directors, officers
and management of such Person, after due inquiry.

 

“Laws” means any federal, state or local law (including, without limitation,
principles of common law), statute, ordinance, regulation, Permit, certificate,
judgment, order, award or other determination, decision or requirement of any
Authority.

 

“Liability(ies)” means liabilities, obligations or commitments of any nature
whatsoever, asserted or unasserted, known or unknown, absolute or contingent,
accrued or unaccrued, matured or unmatured or otherwise.

 

“Losses” means any and all losses, Liabilities, damages (including punitive
damages), diminution in value, penalties, obligations, awards, fines,
deficiencies, demands, interest, claims (including third party claims whether or
not meritorious), costs and expenses whatsoever (including reasonable
attorneys’, consultants’ and other professional fees and disbursements of every
kind, nature and description) resulting from, arising out of or incident to any
matter for which indemnification is provided under this Agreement; provided,
that Losses shall not include punitive damages unless payable to third parties.

 

“Material Adverse Effect” means any circumstance or event which, individually or
in the aggregate with any other circumstance or event, is or could be reasonably
expected to be material and adverse to the business, properties, operations,
condition (financial or otherwise), or results of operations of Seller taken as
a whole. For purposes of this definition of Material Adverse Effect, the effect
of any matter as to any past period shall be determined based on its actual
effect, and its effect as to any future period shall be determined based on the
effect that such matter is reasonably likely to have.

 

“Ordinary Course of Business” means, with respect to Seller, the ordinary course
of business consistent with Seller’s past custom and practice (including with
respect to quantity and frequency).

 

“Permitted Encumbrances” means (i) statutory liens for Taxes not yet due and
payable or the validity or amount of which is being contested in good faith by
appropriate proceedings and for which adequate reserves have been established on
the Interim Financial Statements in accordance with GAAP; and (ii) mechanics’,
carriers’, workers’, repairers’ and other similar liens arising or incurred in
the ordinary course of business and securing sums that are not yet due and
payable or the validity or amount of which is being contested in good faith by
appropriate proceedings, and for which adequate reserves have been established
on the Interim Financial Statements in accordance with GAAP and do not otherwise
constitute a breach of or an event of default under any Lease.

 

45

 

 

“Person” means an individual, corporation, partnership, association, limited
liability company, trust, unincorporated organization, other entity or group (as
group is defined in Section 13(d)(3) of the Securities Exchange Act of 1934).

 

“Personal Information” means such term or like terms set forth in any Law that
describes, covers or defines data that identifies or can be used to identify
individuals or that is otherwise regulated, protected or covered by any Law.

 

“Purchase Price Adjustment Holdback Amount” means $9,884.

 

“Restricted Cash” means cash deposits, cash in reserve accounts, cash escrow
accounts, custodial cash and cash otherwise subject to any legal or contractual
restriction on the ability to freely transfer or use such cash for any lawful
purpose, in each case, determined in accordance with GAAP applied on a basis
consistent with the accounting principles and policies used in the preparation
of the Interim Balance Sheet.

 

“Restricted Territory” means any territory within a 200-mile radius of any of
the facilities of ANC Solutions and its Affiliates set forth on Schedule 9.1(a)
hereto.

 

“Schedule(s)” means the disclosure schedules attached hereto and made a part
hereof.

 

“Seller Product” means all products and services (including products and
services under development) made commercially available, distributed, sold or
licensed out by or on behalf of Seller.

 

“Shareholder” means each of Nina and Grant.

 

“Target Working Capital” means $98,839.

 

“Tax” means (i) all federal, state, local or non-U.S. income taxes (including
any tax on or based upon net income, or gross income, or income as specially
defined, or earnings, or profits, or selected items of income, earnings, or
profits) and all gross receipts, estimated, sales, use, ad valorem, transfer,
registration, value added, franchise, license, social security, unemployment,
disability, withholding, payroll, employment, excise, severance, stamp,
occupation, premium, real property, windfall profit , personal property,
environmental, alternative or add-on minimum, custom duties, estimated or any
other taxes, fees, assessments, or charges of any kind whatsoever, whether
computed on a separate or consolidate, unitary or combined basis or in any other
manner, together with any interest and any penalties, additions to tax or
additional amounts and (ii) any obligation to indemnify or otherwise assume or
succeed to any Liability described in clause (i) hereof of any other Person
whether by Contract or under common law doctrine of de facto merger and
successor liability or otherwise.

 

46

 

 

“Tax Return” means any return, report, information return or other document
(including any related or supporting information or any amended return) filed or
required to be filed with any Taxing Authority or other authority in connection
with the determination, assessment, or collection of any Tax paid or payable or
the administration of any laws, regulations, or administrative requirements
relating to any such Tax.

 

“Transaction Expenses” means (without duplication), the collective amount
payable by, or liabilities of Seller or any Shareholder that were incurred by
Seller or such Shareholder (if any) to outside legal counsel, accountants,
advisors, brokers and other Persons in connection with the transactions
contemplated by this Agreement or otherwise arising by consummation of the
transactions contemplated hereby, including one hundred percent (100%) of the
costs and expenses of obtaining any third party consents (including customer
consents), forty percent (40%) of the Transfer Taxes and other taxes, fees and
charges described in Section 6.2, and one hundred percent (100%) of the filing
fees incurred by Seller in connection with any filing by Seller with a
Governmental Authority.

 

“Working Capital” means the excess of (i) the sum of Seller’s current  assets
(including Cash) determined in accordance with the Accounting Methods applied on
a basis consistent with the accounting principles and policies used in the
preparation of the Interim Balance Sheet, over (ii) the sum of Seller’s current
liabilities determined in accordance with the Accounting Methods applied on a
basis consistent with the accounting principles and policies used in the
preparation of the Interim Balance Sheet. A sample calculation of Working
Capital is set forth on Schedule 9.1(b) and Working Capital shall be calculated
in a manner consistent therewith.

 

9.2. Other Definitions. Each of the following terms is defined in the Section
set forth opposite such term:

 

“Acquired Assets” 1.1(a) “Acquired Receivables” 3.10(a) “Agreement” Preamble
“Allocation” 6.1 “ANC Potter’s” 1.1(b) “Arbiter” 1.3(d) “Assumed Contracts”
1.1(a)(v) “Assumed Liabilities” 1.1(d) “Benefit Plan” 3.17(a) “Bill of Sale”
1.1(d) “Business” Recitals “Business Vehicles” 3.8(c) “Buyer” Preamble “Buyer
Indemnified Parties” 7.2(a) “Cash-Purchased Assets” 1.1(a) “Cap” 7.2(c)
“Closing” 2.1 “Closing Consideration” 1.2(b) “Closing Date” 2.1

 

47

 

 

“Closing Statement” 1.3(a) “Competitive Activities” 5.2(a) “Confidential
Information” 5.1 “Contribution Agreement” 1.1(b) “Contributed Assets” 1.1(b)
“Effective Time” 2.1 “Employee Solicitation” 5.2(c) “Environmental Documents”
3.16(f) “Environmental Permits” 3.16(a) “Equipment Financing” 1.1(d)(iii)
“ERISA” 3.17(a) “Estimated Closing Statement” 1.2(a) “Excluded Assets” 1.1(c)
“Financial Statements” 3.6 “Fundamental Representations” 7.1 “Grant” 2.2(a)(v)
“Grant Employment Agreement” 2.2(a)(iv) “Holdback Release Date” 7.5(a)
“Indemnified Party” 7.3(a) “Indemnifying Party” 7.3(a) “Intellectual Property”
3.12(a) “Interim Balance Sheet” 3.6 “Interim Balance Sheet Date” 3.6 “Interim
Financial Statements” 3.6 “IRS” 3.17(b) “IT Systems” 3.12(b) “Lease Agreements”
2.2(a)(vi) “Leases” 3.9(b) “Leased Real Property” 3.9(b) “Litigation” 3.14
“Litigation Conditions” 7.3(a) “Material Contracts” 3.13(a) “Material Owned
Intellectual Property” 3.12(a) “Nina” 2.2(a)(iii) “Nina Employment Agreement”
2.2(a)(iii) “Non-Compete Period” 5.2(a) “Notice of Disagreement” 1.3(c)
“Permits” 3.15 “Retained Liabilities” 1.1(e) “Seller” Preamble “Seller
Indemnified Parties” 7.2(b) “Shareholder(s)” Recitals “Significant Customer”
3.24 “Significant Supplier” 3.25 “Solicitation Activities” 5.2(b) “Taxing
Authority” 3.18(a) “Third Party Claim” 7.3(a) “Threshold” 7.2(c) “Transferred
Employees” 5.5(a) “Transfer Taxes” 6.2

 

[Signature page follows.]

 

48

 

 

IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to be
executed on its behalf as of the date first above written.

 

  POTTER’S PROFESSIONAL LAWN CARE, LLC         By: /s/ Jeffrey C. Piermont  
Name: Jeffrey C. Piermont   Title: Vice President       POTTER’S PROFESSIONAL
LAWN CARE, INC.         By: /s/ Nina Potter Fernandez   Name: Nina Potter
Fernandez   Title: President       /s/ Nina Potter Fernandez   Nina Potter
Fernandez, individually       /s/ Grant Potter   Grant Potter, individually

 

[Signature Page to Asset Purchase and Contribution Agreement]

 

49

 

 

EXHIBIT A

 

Contribution Agreement

 

 

 

 

 

EXHIBIT B

 

Bill of Sale

 

 

 

 

 

EXHIBIT C

 

Nina Employment Agreement

 

 

 

 

 

EXHIBIT D

 

Grant Employment Agreement

 

 

 

 

 

EXHIBIT E-1

 

Lease Agreement for 366 SW 14 Ave, Pompano Beach, FL 33069

 

 

 

 

 

EXHIBIT E-2

 

Lease Agreement for 377 SW 14 Ave, Pompano Beach, FL 33069