Exhibit 10.1

 

Membership Interest Purchase Agreement

 

This Membership Interest Purchase Agreement (this “Agreement”), dated as of
October 4, 2019 (the “Execution Date”), is entered into by and among Andover
ENVIRONMENTAL Solutions LLC, a Delaware limited liability company (“Buyer”), and
Legg holdings, Inc., an Alabama corporation (“Seller”); and, for the purposes of
Section 2.01, Sections 6.06 – 6.11, Article VIII, and Article X hereof, Heath L.
Legg, an individual resident of the State of Alabama (individually, “Legg” and,
collectively with Seller, the “Seller Parties”).

 

WHEREAS, on the Execution Date, Legg owns all of the issued and outstanding
shares of stock of Legg Lawncare, Inc., an Alabama corporation (“Lawncare”), and
Legg SMS Franchising, Inc., an Alabama corporation (individually,
“Franchising”);

 

WHEREAS, Lawncare owns and operates a business that provides commercial and
residential lawncare, landscaping and hardscaping, irrigation, mosquito,
termite, and pest control services throughout Northern Alabama and other
neighboring localities (the “Lawncare Business”) and Franchising owns and
operates a business that is the master franchisor for outdoor insect control
service businesses operating independently throughout the United States (the
“Franchising Business” and, collectively with the Lawncare Business, the
“Business”);

 

WHEREAS, the Seller Parties, in contemplation of the transactions to be effected
pursuant to this Agreement, desire to effect a reorganization of Lawncare and
Franchising (collectively, the “Legg Entities”) in a series of related
transactions in accordance with the terms hereof (collectively, the
“Reorganization”), pursuant to which, inter alia, (i) Legg will contribute the
shares of Franchising to Lawncare; (ii) Franchising will dissolve and distribute
its assets to Lawncare; (iii) Legg will contribute the shares of Lawncare to
Seller; and (iv) Lawncare will merge with and into ANC Green Solutions I, LLC, a
newly formed Delaware limited liability company (the “Company”), and, as a
result thereof, the separate corporate existence of Lawncare will cease, the
Company will continue as the survivor, and Seller will own all of the issued and
outstanding membership interests of the Company (the “Membership Interests”);

 

WHEREAS, Seller desires to sell and assign to Buyer, and Buyer desires to
purchase and assume from Seller, following the consummation of the
Reorganization, sixty percent (60%) of the Membership Interests (the “Purchased
Interests”), on and subject to the terms and conditions set forth herein;

 

WHEREAS, Legg owns all of the issued and outstanding shares of stock of Seller
and desires to enter into this Agreement and accommodate the transactions
effected hereby as set forth herein;

 

NOW, THEREFORE, in consideration of the mutual covenants and agreements
hereinafter set forth and for other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:

 

Article I
Definitions and Interpretation

 

Section 1.01 Certain Definitions. Capitalized terms used but not defined in this
Agreement shall have the respective meanings ascribed to them in Annex I,
attached hereto.

 

 

 

 

Section 1.02 Interpretation. All references in this Agreement to Exhibits,
Annexes, Schedules, Articles, Sections, subsections, and other subdivisions
refer to the corresponding Exhibits, Annexes, Schedules, Articles, Sections,
subsections, and other subdivisions of or to this Agreement unless expressly
provided otherwise. Titles appearing at the beginning of any Articles, Sections,
subsections, and other subdivisions of this Agreement are for convenience only,
do not constitute any part of this Agreement, and shall be disregarded in
construing the language hereof. The words “this Agreement,” “herein,” “hereby,”
“hereunder,” and “hereof,” and words of similar import, refer to this Agreement
as a whole and not to any particular Article, Section, subsection, or other
subdivision unless expressly so limited. The words “this Article,” “this
Section,” and “this subsection,” and words of similar import, refer only to the
Article, Section, or subsection hereof in which such words occur. Wherever the
words “include,” “includes,” or “including” are used in this Agreement, they
shall be deemed to be followed by the words “without limiting the foregoing in
any respect.” All references to “$” or “dollars” shall be deemed references to
United States Dollars. Each accounting term not defined herein will have the
meaning given to it under GAAP as interpreted as of the Execution Date. Pronouns
in masculine, feminine or neuter genders shall be construed to state and include
any other gender, and words, terms, and titles (including terms defined herein)
in the singular form shall be construed to include the plural and vice versa,
unless the context otherwise requires. The Exhibits, Annexes, and Schedules
referred to herein are attached to and by this reference incorporated herein for
all purposes.

 

Article II
Reorganization; Purchase and Sale

 

Section 2.01 Reorganization. Subject to the terms and conditions set forth
herein, prior to the Closing, the Seller Parties shall, and shall cause the
Seller-Controlled Entities to, effect the Reorganization pursuant to, and in
strict accordance with, the agreements, instruments, filings, and other
documents executed and delivered in connection therewith, each in form and
substance satisfactory to Buyer (collectively, the “Reorganization Documents”).
For the avoidance of confusion, the parties acknowledge that, in anticipation of
the execution of this Agreement, Seller and Legg have begun the Reorganization
prior to the Execution Date, and therefore, statements regarding the status of
the Legg Entities on the Execution Date are deemed to refer to the status of
such entities immediately prior to commencement of the Reorganization.

 

Section 2.02 Purchase and Sale of Purchased Interests. Subject to the terms and
conditions set forth herein, at the Closing, Seller shall sell, assign,
transfer, convey, and deliver to Buyer, and Buyer shall purchase from Seller,
free and clear of any Encumbrances (other than Permitted Encumbrances), all
right, title, and interest in, to, and under the Purchased Interests for an
aggregate purchase price equal to Four Million Dollars ($4,000,000.00) (the
“Base Purchase Price”), subject to adjustment pursuant to Section 2.03 and
Section 8.08 (as so adjusted, the “Purchase Price”).

 

Section 2.03 Purchase Price Adjustment.

 

(a) Pre-Closing Statement. At least three (3) days prior to the Closing, Seller
shall deliver to Buyer a written statement satisfactory in form and substance to
Buyer (the “Pre-Closing Statement”) setting forth Seller’s good faith estimate
of the Closing Working Capital (the “Estimated Working Capital”), the Funded
Indebtedness (the “Estimated Funded Indebtedness”), and the Company Transaction
Expenses (the “Estimated Company Transaction Expenses”), and an estimated
balance sheet of the Company as of the Effective Time (without giving effect to
the Acquisition), along with a certification by Seller that such estimated
balance sheet and the calculation of the Estimated Working Capital, Estimated
Funded Indebtedness, and Estimated Company Transaction Expenses were prepared
using the same accounting methods, practices, principles, policies, and
procedures, with consistent classifications, judgments, and valuation and
estimation methodologies that were used in the preparation of the Financial
Statements for the most recent fiscal year end as if such Pre-Closing Statement
was being prepared and reviewed as of a fiscal year end. The Pre-Closing
Statement shall be accompanied by such records and documentation as is
reasonably necessary for Buyer to evaluate the contents thereof, and Buyer shall
have an opportunity to perform a reasonable review of such deliveries and full
access to the Books and Records and personnel of Seller and the Company in
relation to the same. Buyer and Seller shall cooperate and negotiate in good
faith to resolve any questions, objections, or other disputes regarding all or
any portion of the Pre-Closing Statement as soon as practical; provided,
however, that any failure of Buyer to dispute any item or aspect of the
Pre-Closing Statement will not preclude Buyer from exercising any other rights
with respect to any or all aspects of any adjustments under this Agreement. If
Buyer has any objections to the Pre-Closing Statement, or any portion thereof,
which Buyer and Seller are unable to resolve by mutual consent prior to the
Closing, then Buyer may elect in its sole discretion to (i) proceed with the
Closing based on the Pre-Closing Statement, revised to include any updates or
adjustments determined appropriate by the mutual consent of Buyer and Seller,
(ii) delay Closing until all objections are resolved, or (iii) terminate this
Agreement pursuant to Article IX.

 

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(b) Post-Closing Review. Following the Closing Seller shall cooperate with
Buyer’s review of the Pre-Closing Statement and, without limiting the generality
of the foregoing, shall provide Buyer with any and all Books and Records and
other information requested by Buyer or otherwise necessary therefor. If Buyer
has any objections or adjustments to the Pre-Closing Statement (or any
information or calculation therein) or believes there is any Post-Closing Cash
Shortfall, Buyer shall deliver to Seller a written statement describing its
objections and adjustments and its calculation of the Post-Closing Cash
Shortfall in reasonable detail within ninety (90) calendar days after the
Closing Date, and Buyer and Seller shall use their reasonable good faith efforts
to resolve all such disputed items and confirm the amount of any Post-Closing
Cash Shortfall within fifteen (15) calendar days thereof. If Buyer and Seller
cannot reach a final written resolution of all of the disputed items within such
period, then the unresolved disputed items will be submitted to the office of an
impartial nationally recognized firm of independent certified public
accountants, to be selected by mutual agreement of Buyer and Seller, for the
sole purpose of resolving the disputed items under this Section 2.03(a), who
will be required to render a determination regarding the disputed items within
thirty (30) calendar days after referral of the matter, which determination
shall be conclusive and binding upon all parties hereto absent manifest error.
The fees and expenses of the independent accountant will be borne in the same
proportion as the aggregate dollar amount of the disputed items that are
unsuccessfully disputed by each party (as finally determined by the independent
accountant) in relation to the aggregate dollar amount of all of the disputed
items submitted. The parties shall each cooperate with each other and the
independent accountant and make available at reasonable times their respective
Books and Records and other information pertaining to the Pre-Closing Statement
and the disputed items until the dispute process contained in this Section
2.03(b) is finally resolved. The Estimated Working Capital, Estimated Funded
Indebtedness, Estimated Company Transaction Expenses, and Post-Closing Cash
Shortfall, each as revised pursuant to this Section 2.03(b) (respectively, the
“Confirmed Working Capital,” the “Confirmed Funded Indebtedness,” the “Confirmed
Company Transaction Expenses,” and “Confirmed Cash Shortfall”), shall be final,
binding, and conclusive upon the parties hereto; provided, however, that the
resolution of any disputes in accordance with this Section 2.03(b) is for such
purpose only and will not waive or otherwise limit any representation, warranty,
covenant, or agreement herein, or in any other Acquisition Document, nor
preclude any remedy or other right herein, or in any other Acquisition Document,
for any breach of any representation, warranty, covenant, or agreement herein,
or in any other Acquisition Document.

 

(c) Post-Closing Adjustment. Following the final resolution of all objections
and adjustments pursuant to Section 2.03(b):

 

(i) if (x) the sum of the Confirmed Working Capital, the Confirmed Funded
Indebtedness, the Confirmed Company Transaction Expenses, and the Confirmed Cash
Shortfall exceeds (y) the sum of the Target Working Capital, the Estimated
Funded Indebtedness, and the Estimated Company Transaction Expenses, Buyer shall
pay to Seller an amount equal to such excess by wire transfer or delivery of
other immediately available funds within three (3) Business Days after the date
on which the Confirmed Working Capital, the Confirmed Funded Indebtedness, the
Confirmed Company Transaction Expenses, and the Confirmed Cash Shortfall are
finally determined pursuant to Section 2.03(b); and

 

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(ii) if (x) the sum of the Confirmed Working Capital, the Confirmed Funded
Indebtedness, the Confirmed Company Transaction Expenses, and the Confirmed Cash
Shortfall is less than (y) the sum of the Target Working Capital, the Estimated
Funded Indebtedness, and the Estimated Company Transaction Expenses, Seller
shall pay to Buyer an amount equal to such deficiency by wire transfer or
delivery of other immediately available funds within three (3) Business Days
after the date on which the Confirmed Working Capital, the Confirmed Funded
Indebtedness, the Confirmed Company Transaction Expenses, and the Confirmed Cash
Shortfall are finally determined pursuant to Section 2.03(b).

 

Section 2.04 Intended Tax Treatment and Allocation. The parties hereto agree (a)
to report the Acquisition for all Tax purposes in accordance with the principles
of Rev. Rul. 99-5, 1999-1 C.B. 434, involving (i) the purchase by Buyer from
Seller of the Purchased Interests as a purchase of a portion of each of the
assets of the Company, pursuant to §1060 of the Code, in exchange for an amount
equal to the Purchase Price and all other capitalizable costs given as
consideration for the Purchased Interests (collectively, the “Consideration”),
followed by the contribution by Buyer of the portion of the assets so purchased
to the Company in exchange for the Purchased Interests pursuant to § 721 of the
Code and (ii) the interest in the Company retained by Seller as a contribution
by Seller of the remaining portion of the assets of the Company to the Company
in exchange for its retained Membership Interest pursuant to § 721 of the Code;
and (b) to allocate the Consideration among the assets of the Company for all
purposes (including Tax and financial accounting) as provided on the allocation
schedule set forth on Exhibit A (the “Allocation Schedule”). The Consideration
and the Allocation Schedule shall be adjusted to reflect any payments made
pursuant to Section 2.03(b) and any debits to the Holdback Balance pursuant to
Section 8.08, as applicable, in accordance with the applicable provisions of
§1060 of the Code (and any similar provision of state, local, or foreign Tax
Law, as appropriate), as determined by the mutual written consent of Buyer and
Seller (the Allocation Schedule, as so adjusted, the “Final Allocation
Schedule”). The Final Allocation Schedule shall be binding on all parties hereto
for all income Tax purposes, and each shall report the Acquisition for all
income Tax purposes in a manner consistent with the Final Allocation Schedule,
in each case except to the extent otherwise required by applicable Law.

 

Article III
Closing

 

Section 3.01 Closing. Subject to the terms and conditions of this Agreement, the
sale and purchase of the Purchased Interests and the consummation of the other
transactions contemplated pursuant to this Agreement (excluding the
Reorganization) (the “Acquisition”) shall take place at a closing (the
“Closing”) to be held remotely via electronic exchange of the deliverables
required hereby on October 4, 2019, or, if on such day any condition set forth
in Article VII has not been satisfied (or, to the extent permitted, waived by
the parties entitled to the benefit thereof) and this Agreement is not
terminated pursuant to the terms of Article IX, as soon as practicable after all
the conditions set forth in Article VII have been satisfied (or, to the extent
permitted, waived by the parties entitled to the benefits thereof), or on such
other date, or at such other time or place, as shall be mutually agreed upon by
Buyer and Seller (the actual date on which the Closing takes place, the “Closing
Date”). Upon consummation of the Closing, all the Acquisition transactions to
occur on or as of the Closing or the Closing Date shall be deemed to have
occurred simultaneously and to be effective as of the Effective Time.

 

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Section 3.02 Payments at Closing. At the Closing, Buyer shall make (or cause to
be made) the following payments by wire transfer of immediately available funds
in accordance with the instructions provided by Seller:

 

(a) to Seller, an amount equal to (i) the Base Purchase Price, minus (ii) Five
Hundred Thousand Dollars ($500,000.00) (the “Holdback Amount”), minus (iii) the
Estimated Funded Indebtedness, minus (iv) the Estimated Company Transaction
Expenses;

 

(b) to the holders of obligations constituting Estimated Funded Indebtedness,
all such Estimated Funded Indebtedness that, by its terms, is required to be
paid off at or prior to the Closing by virtue of the consummation of the
Contemplated Transactions; and

 

(c) to the holders of obligations constituting Estimated Company Transaction
Expenses, all such Estimated Company Transaction Expenses.

 

Section 3.03 Closing Deliveries by Seller. At the Closing, Seller shall deliver
to Buyer the following:

 

(a) a counterpart to an agreement with respect to the Company’s lease of the
Leased Real Property effective as of the Closing and in form and substance
satisfactory to Buyer (the “Lease Agreement”), duly executed by the Company and
the owner of the Leased Real Property;

 

(b) counterparts to an agreement effecting the assignment to and assumption by
Buyer of the Purchased Interests and in form and substance satisfactory to Buyer
and Seller (the “Interest Assignment Agreement”), duly executed by Seller;

 

(c) a counterpart to an amended and restated limited liability company agreement
for the Company and in form and substance satisfactory to Buyer and Seller (the
“Company Agreement”), duly executed by Seller;

 

(d) a counterpart to an agreement with respect to the Company’s employment of
Legg effective as of the Closing and in form and substance satisfactory to Buyer
and Seller (the “Employment Agreement”), duly executed by the Company and Legg;

 

(e) a certificate of good standing or analogous status of each Seller-Controlled
Entity in its jurisdiction of organization and in each jurisdiction where it is
or should be qualified to do business as a foreign entity and a Tax clearance or
analogous certificate of each Seller-Controlled Entity in each jurisdiction in
which it conducts material business, each issued within fifteen (15) calendar
days before the Closing Date;

 

(f) a certificate of the Secretary or Assistant Secretary (or equivalent
officer) of Seller in form and substance satisfactory to Buyer certifying as to
(i) the resolutions of the board of directors (or other appropriate governing
body) of each Seller-Controlled Entity, duly adopted and in effect, which
authorize the execution, delivery, and performance of this Agreement, the other
Transaction Documents, and the Contemplated Transactions; (ii) the names and
signatures of the officers of each Seller-Controlled Entity authorized to sign
the Transaction Documents to which such Person is or will be a party; and (iii)
current copies of the articles of organization (or other formation) and
operating agreement (or other organizational documents) of each
Seller-Controlled Entity;

 

(g) a certificate of an officer of Seller, dated as of the Closing Date and in
form and substance satisfactory to Buyer, certifying that the Reorganization has
been consummated and that attached thereto are true, correct, and complete
copies of each of the Reorganization Documents; and

 

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(h) a certificate of an officer of Seller, dated as of the Closing Date and in
form and substance satisfactory to Buyer, certifying that the conditions set
forth in Section 7.01 have been fulfilled; and

 

(i) such other instruments of transfer or assumption, filings, or documents,
each in form and substance satisfactory to Buyer and duly executed, as
applicable, as may be required to give effect to this Agreement and the
Contemplated Transactions.

 

Section 3.04 Closing Deliveries by Buyer. At the Closing, Buyer shall deliver to
Seller the following:

 

(a) a counterpart to the Interest Assignment Agreement, duly executed by Buyer;

 

(b) counterparts to the Company Agreement, duly executed by the appropriate
Persons;

 

(c) a certificate of the Secretary or Assistant Secretary (or equivalent
officer) of Buyer in form and substance satisfactory to Seller certifying as to
(i) the resolutions of the members (or other appropriate governing body) of
Buyer, duly adopted and in effect, which authorize the execution, delivery and
performance of this Agreement and the other Transaction Documents and the
Contemplated Transactions; and (ii) the names and signatures of the officers of
Buyer authorized to sign this Agreement and the other Transaction Documents; and

 

(d) such other instruments of transfer or assumption, filings, or documents,
each in form and substance satisfactory to Seller and duly executed, as
applicable, as may be required to give effect to this Agreement and the
Contemplated Transactions.

 

Article IV
Representations and Warranties of Seller

 

Seller represents and warrants to Buyer that the statements contained in this
Article IV are true, correct, and complete as of the Execution Date and will be
true, correct, and complete as of the Closing Date (as though made then and as
though the Closing Date were substituted for the date of this Agreement
throughout this Article IV).

 

Section 4.01 Organization. As of the Execution Date each Legg Entity is, and at
all times following the execution hereof until dissolved or merged, as
applicable, as a part of the Reorganization shall be, a corporation duly
incorporated, validly existing, and in good standing under the Laws of the State
of Alabama and has and will have full power and authority to own, operate, or
lease the properties and assets then owned, operated, or leased by it and to
carry on the Business as currently conducted. At all times following its
formation until the Closing Seller shall be a corporation duly organized,
validly existing, and in good standing under the Laws of the State of Alabama
and will have full power to own, operate, or lease the properties and assets
then owned, operated, or leased by it and to carry on the Business as currently
conducted. At all times following its formation until the Closing the Company
shall be a limited liability company duly organized, validly existing, and in
good standing under the Laws of the State of Delaware and will have full power
and authority to own, operate, or lease the properties and assets then owned,
operated, or leased by it and to carry on the Business as currently conducted.
Each Seller-Controlled Entity is duly licensed or qualified to do business and
is in good standing in each jurisdiction in which the ownership or use of its
assets or the operation of the Business as currently conducted makes such
licensing or qualification necessary, which jurisdictions are set forth on
Schedule 4.01. Seller has delivered to Buyer true and correct copies of the
articles of incorporation or organization (or other formation), bylaws,
operating agreement, and other organizational documents of Seller and each Legg
Entity, as in effect as of the Execution Date and will deliver to Buyer prior to
the Closing true and correct copies of the articles of organization (or other
formation), operating agreement, and other organizational documents of the
Company, as in effect as of the Closing.

 

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Section 4.02 Authority and Enforceability. Each Seller-Controlled Entity has
full power and authority, and Legg has full legal capacity, to enter into this
Agreement and the other Transaction Documents to which such Person is a party,
to carry out such Person’s obligations hereunder and thereunder and to
consummate the Contemplated Transactions. The execution, delivery, and
performance by each Seller-Controlled Entity of this Agreement and the other
Transaction Documents and the consummation of the Contemplated Transactions have
been duly authorized by all requisite company action on the part of such Person.
This Agreement and the other Transaction Documents have been duly executed and
delivered by each Seller-Controlled Entity, and (assuming due authorization,
execution, and delivery by Buyer) each constitutes legal, valid, and binding
obligations of each Seller-Controlled Entity, enforceable against such Person in
accordance with their respective terms.

 

Section 4.03 Capitalization. Legg is the record owner of and has good and valid
title to one hundred percent (100%) of all issued and outstanding shares of
stock of the Seller and, prior to the Reorganization, each of the Legg Entities,
and at all times following the formation of the Company until the Effective
Time, Seller shall be the record owner of and have good and valid title to one
hundred percent (100%) of the Membership Interests, in each case free and clear
of all Encumbrances. The Membership Interests constitute all of the issued and
outstanding membership or other ownership interests of or in the Company and
have been duly authorized, and are validly issued, fully-paid, and
non-assessable. The Membership Interests were issued in compliance with
applicable Laws and not in violation of the organizational documents of the
Company or any other agreement, arrangement, or commitment to which any Seller
Party or the Company is a party and are not subject to or in violation of any
preemptive or similar rights of any Person. Upon consummation of the
Acquisition, Buyer shall own sixty percent (60%) of the Membership Interests,
free and clear of all Encumbrances, and Seller shall retain forty percent (40%)
of the Membership Interests. There are no outstanding or authorized options,
warrants, convertible securities, or other rights, agreements, arrangements, or
commitments of any character relating to any membership interests in the Company
or obligating Legg or any Seller-Controlled Entity to issue or sell any
membership interests (including the Membership Interests), or any other
interest, in the Company. Other than the organizational documents of the
Company, copies of which have been provided to Buyer, there are no voting
trusts, proxies, or other agreements or understandings in effect with respect to
the voting or transfer of any of the Membership Interests.

 

Section 4.04 Affiliate Transactions. Except as set forth on Schedule 4.04,
neither any Seller Party nor any Related Party of any Seller Party is a
creditor, debtor, customer, distributor, supplier or vendor of, or service
provider to, the Business, or is the counter-party to any Contract with any
Seller-Controlled Entity.

 

Section 4.05 No Conflicts; Consents.

 

(a) The execution, delivery, and performance by Legg and each Seller-Controlled
Entity of this Agreement and the other Transaction Documents to which such
Person will be a party, and the consummation of the Contemplated Transactions,
do not and will not: (i) violate or conflict with the articles of organization,
operating agreement, or other organizational documents of such Person, as
applicable, or (ii) violate or conflict with any Law applicable to such Person.

 

(b) Schedule 4.05 sets forth (i) each registration, filing, application, notice,
transfer, consent, approval, order, qualification, and waiver required under
applicable Law to be obtained by Legg or any Seller-Controlled Entity from any
Person (including any Governmental Authority) in connection with the execution
and delivery of this Agreement or any other Transaction Document, or the
consummation of the Contemplated Transactions (collectively, the “Required
Consents”), and (ii) each Contract with respect to which a consent of or waiver
by any other Person must be obtained in order to avoid the invalidity or
termination of such Contract or any transaction contemplated hereby (or the
giving rise to any right to terminate by another Person), a breach, default or
penalty thereunder (whether with notice, passage of time or both) or any other
change or modification to the terms thereof by virtue or as a result of the
execution and delivery of this Agreement or any other Transaction Document or
the consummation of the Contemplated Transactions.

 

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Section 4.06 Title to, and Condition and Sufficiency of, Assets.

 

(a) Each Legg Entity owns and has good and marketable title to, or a valid
leasehold interest in, the properties and assets used by it, located on its
premises, or shown on the Most Recent Balance Sheet or acquired after the date
thereof, free and clear of all Encumbrances (other than Permitted Encumbrances),
except for properties and assets disposed of in the Ordinary Course of Business
since such date. The Company shall own and have good and marketable title to, or
a valid leasehold interest in, all of such properties and assets immediately
following the Reorganization and as of the Effective Time.

 

(b) All buildings, Equipment, and other items of tangible personal property
owned or leased by the Seller-Controlled Entities are structurally sound, are in
good operating condition and repair, and are adequate for the uses to which they
are being put, and none of such items is in need of maintenance or repairs
except for ordinary, routine maintenance and repairs that are not material in
nature or cost. Such assets are sufficient for the continued conduct of the
Business by the Company after the Closing in substantially the same manner as
conducted prior to the Closing and as currently proposed to be conducted.

 

Section 4.07 Financial Statements. Seller has delivered to Buyer true, correct,
and complete copies of (a) the unaudited financial statements consisting of the
balance sheet of the Business as of December 31, 2016, December 31, 2017, and
December 31, 2018, and the related statements of income and retained earnings,
stockholders’ equity, and cash flow for the years then ended (the “Annual
Financial Statements”); (b) the unaudited financial statements consisting of the
balance sheet of the Business as of June 30, 2019 (respectively, the “Most
Recent Balance Sheet” and the “Most Recent Balance Sheet Date”), and the related
statements of income and retained earnings, stockholders’ equity, and cash flow
for the month then ended (collectively, the “Interim Financial Statements” and
together with the Annual Financial Statements, the “Financial Statements”); and
(c) the Books and Records. The Financial Statements (including the notes
thereto) (i) are true and correct; (ii) present fairly the financial condition
and the results of operations of the Legg Entities as of the dates and for the
periods therein indicated; (iii) were prepared using internal procedures for the
preparation of cash-based financial statements, consistently applied, throughout
the periods covered thereby; and (iv) are consistent with the Books and Records,
prepared in a consistent manner followed throughout the periods covered thereby
and in the Ordinary Course of Business. All Books and Records have been made
available to Buyer, have been maintained in accordance with commercially
reasonable business practices, consistently applied, and fairly and accurately
provide the basis for the financial position and results of operation set forth
in the Financial Statements.

 

Section 4.08 Absence of Certain Changes, Events, and Conditions. Since December
31, 2018, the Seller-Controlled Entities have conducted the Business solely in
the Ordinary Course of Business, Legg and the Seller-Controlled Entities have
used their reasonable best efforts to preserve the Business and the
Seller-Controlled Entities’ assets and properties, and except for the
transactions effected pursuant to the Reorganization or as set forth on Schedule
4.08, there has not been any event, occurrence, or development that has had, or
could reasonably be expected to have, individually or in the aggregate, a
Material Adverse Effect.

 

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Section 4.09 Accounts Receivable. The notes and accounts receivable of the
Seller-Controlled Entities and the Business reflected on the Financial
Statements or arising after the dates thereof (a) have arisen from bona fide
transactions entered into by the Seller-Controlled Entities involving the sale
of goods or the rendering of services in the Ordinary Course of Business; (b)
constitute only valid, undisputed claims of the Seller-Controlled Entities not
subject to claims of set-off or other defenses or counterclaims other than
normal cash discounts accrued in the Ordinary Course of Business or other
immaterial chargebacks; and (c) are and shall be collectible in full within
ninety (90) days after billing. The reserve for bad debts shown on the Financial
Statements or, with respect to notes and accounts receivable of the
Seller-Controlled Entities arising after the date thereof on the accounting
records of the Business, have been determined in accordance with GAAP,
consistently applied, subject to normal year-end adjustments and the absence of
disclosures normally made in footnotes.

 

Section 4.10 Liabilities. No Seller-Controlled Entity has any Liabilities of any
nature, whether absolute, contingent, or otherwise (and there is no basis for
any present or future Action giving rise to any Liability), other than (a)
Liabilities that are adequately reflected or reserved against in the Most Recent
Balance Sheet and (b) Liabilities incurred since the Most Recent Balance Sheet
Date in the Ordinary Course of Business, (i) which are not, individually or in
the aggregate, material and (ii) none of which relate to or arise out of any
gift certificates, coupons, or customer deductions issued or granted by any
Seller-Controlled Entity or the Business.

 

Section 4.11 Legal Compliance; Proceedings. Each Seller-Controlled Entity and
each of their respective predecessors and Affiliates has at all times complied,
and is now complying, with all Laws applicable to it, its properties or assets,
and/or the operation of the Business, including all Environmental Laws and Laws
concerning franchises and labor and employment, and no Action has been filed
against any of them alleging any failure so to comply. Except as set forth in
Schedule 4.11, there is no, nor at any time in the preceding five (5) years has
there been, any (a) Action of any nature, public or private, pending, or to
Seller’s Knowledge threatened, by or against Legg or any Seller-Controlled
Entity or the Business (i) relating to or affecting it, its properties or
assets, or the Business or (ii) challenging or seeking to, or which could
otherwise be reasonably expected to, prevent, enjoin, or otherwise delay the
Contemplated Transactions; or (b) Environmental Claims, or Governmental Orders
pursuant to applicable Environmental Laws or relating to any Environmental
Condition, relating to its properties or assets, the Leased Real Property, or
the Business.

 

Section 4.12 Contracts.

 

(a) Schedule 4.12 lists each Contract (i) by which any Seller-Controlled Entity
is a party or by which any Seller-Controlled Entity, the Business, or any of
their respective assets are bound or affected and (ii) which (A) involves
aggregate consideration in excess of $20,000 and cannot be cancelled without
penalty or without more than thirty (30) days’ notice; (B) provides for the
indemnification of any Person or the assumption of any Liability of any Person;
(C) limits or purports to limit the ability of any Seller-Controlled Entity to
compete in any line of business or with any Person or in any geographic area or
during any period of time; (D) involves franchising; or (E) is otherwise all
material to the assets of any Seller-Controlled Entity or the operation of the
Business.

 

(b) Seller has delivered to Buyer a true, correct, and complete copy of each
Contract listed (or required to be listed) on Schedule 4.12, and with respect to
each such Contract: (i) such Contract is legal, valid, binding, enforceable, and
in full force and effect; (ii) such Contract, and all rights thereunder, will
continue to be legal, valid, binding, enforceable, and in full force and effect
on identical terms following the consummation of the Contemplated Transactions;
and (iii) no party has repudiated any provision of or is in breach or default,
and no event has occurred that with notice or lapse of time would constitute a
breach or default, or permit termination, modification, or acceleration, under
such Contract.

 

  Page 9

 

 

Section 4.13 Tax Matters. Seller has provided to Buyer true and complete copies
of all Tax Returns filed by each Seller-Controlled Entity since December 31,
2015, and, except as set forth on Schedule 4.13:

 

(a) each Seller-Controlled Entity has timely filed, or has caused to be timely
filed on its behalf, all Tax Returns required to be filed by it in accordance
with all applicable Laws, all such Tax Returns are true, correct, and complete
in all material respects, all Taxes owed by each Seller-Controlled Entity
(whether or not shown on any Tax Return) have been timely paid in full; and no
equity holder and no director or officer (or employee responsible for Tax
matters) of any Seller-Controlled Entity expects any authority to assess any
additional Taxes for any period for which Tax Returns have been filed;

 

(b) the amount of each Legg Entity’s Liability for unpaid Taxes for all periods
ending on or before the Most Recent Balance Sheet Date does not, in the
aggregate, exceed the amount of accruals for Taxes (excluding reserves for
deferred Taxes) reflected on the Interim Financial Statements, and the amount of
the Company’s Liability for unpaid Taxes as of the Effective Time shall not, in
the aggregate, exceed the amount of accruals for Taxes (excluding reserves for
deferred Taxes) reflected on the Interim Financial Statements, as adjusted for
the passage of time in accordance with the Ordinary Course of Business (and
which accruals shall not exceed comparable amounts incurred in similar periods
in prior years);

 

(c) no Seller-Controlled Entity is currently the beneficiary of any extension of
time within which to file any Tax Return, no claim has ever been made by an
authority in a jurisdiction where any Seller-Controlled Entity does not file Tax
Returns that such Person is or may be subject to taxation by or required to file
Tax Returns in that jurisdiction, and, to Seller’s Knowledge, there is no basis
for any such claim to be made;

 

(d) there are no Encumbrances with respect to Taxes upon any of the assets or
properties of any Seller-Controlled Entity other than liens for current Taxes
not yet due and payable;

 

(e) each Seller-Controlled Entity (i) has deducted, withheld, and timely paid to
the appropriate Governmental Authority all Taxes required to be deducted,
withheld, and paid by it in connection with amounts paid or owing to any
employee, independent contractor, creditor, stockholder, or other third party;
(ii) has complied with all applicable reporting and recordkeeping requirements;
and (iii) has at all relevant times properly classified each provider of
services to it as an employee or independent contractor, as the case may be, for
Tax purposes and all Forms W-2 and 1099 (and corresponding state forms) required
with respect thereto have been properly completed and timely filed;

 

(f) there is no dispute, audit, investigation, proceeding, or claim concerning
any Tax Return or Tax Liability of any Seller-Controlled Entity pending, being
conducted, claimed, or raised by a Governmental Authority;

 

(g) no Seller-Controlled Entity (i) has waived any statute of limitations in
respect of Taxes or Tax items; (ii) has agreed to or is a beneficiary of any
extension of time with respect to any Tax deficiency, any Tax that may be
assessed or collected, or any adjustment to any Tax Return that may be made;
(iii) has executed any power of attorney with respect to any Tax, other than
powers of attorney that are no longer in force; (iv) is a party to or otherwise
subject to any closing agreements, private letter rulings, technical advice
memoranda, or similar agreements or rulings relating to Taxes; (v) has been a
member of an Affiliated Group (as defined in § 1504(a) of the Code) filing a
consolidated federal income Tax Return; (vi) is a party to any Tax allocation or
sharing agreement; (vii) has any Liability for the Taxes of any other Person
under Treasury Regulation § 1.1502-6 (or any similar provision of state, local,
or foreign Law), as a transferee or successor, by contract or otherwise; (vii)
is or has been a party to any agreement, contract, arrangement, or plan that has
resulted or could result, separately or in the aggregate, in the payment of an
“excess parachute payment” within the meaning of Code § 280G (or any
corresponding provision of state, local, or non-U.S. Tax Law) or deferred
compensation that is either not excluded from or not in compliance with the
provisions of Code § 409A; (viii) except as a part of the Reorganization,
acquired assets from another corporation in a transaction in which such
Seller-Controlled Entity’s Tax basis for the acquired assets was determined, in
whole or in part, by reference to the Tax basis of the acquired assets (or any
other property) in the hands of the transferor; or (ix) except as a part of the
Reorganization, acquired the stock of any corporation that is a “Qualified
Subchapter S Subsidiary”;

 

  Page 10

 

 

(h) each Seller-Controlled Entity (i) has timely reported all transactions
required to be reported under Treasury Regulation § 1.6011-4(b) (or any similar
provision of state, local, or foreign Law) and (ii) has disclosed on its federal
Tax Returns all positions taken therein that could give rise to a substantial
understatement of federal income Tax within the meaning of Code § 6662;

 

(i) each Legg Entity has been a validly electing S corporation within the
meaning of Code § 1361 and Code § 1362 (and all corresponding state Tax Law
provisions in those states in which such Legg Entity conducted business at any
time) at all times since its incorporation until altered as a part of the
Reorganization;

 

(j) the Company has been since formation, and will be until the Effective Time,
a disregarded entity, or branch, of Seller for U.S. federal and applicable state
and local Tax purposes;

 

(k) the unpaid Taxes of each Seller-Controlled Entity (i) did not, as of the
Most Recent Balance Sheet Date, exceed the reserve for Tax Liability (rather
than any reserve for deferred Taxes established to reflect timing differences
between book and tax income) set forth on the face of thereof (rather than in
the notes thereto) and (ii) do not exceed that reserve as adjusted for the
passage of time through the Closing Date in accordance with the past custom and
practice of the Seller-Controlled Entities in filing its Tax Returns;

 

(l) since the Most Recent Balance Sheet Date, (i) no Seller-Controlled Entity
has incurred any Liability for Taxes arising from extraordinary gains and
losses, as that term is used in GAAP, outside the Ordinary Course of Business;
(ii) there has not been, with respect to any Seller-Controlled Entity, any
action to make, change or rescind any Tax election, amend any Tax Return, take
any action, omit to take any action, or enter into any other transaction that
would have the effect of increasing the Tax liability or reducing any Tax asset
of the Company, except as a part of the Reorganization;

 

(m) no Seller Party is a “foreign person” as that term is used in Treasury
Regulations §1.1445-2 and is not, and has not been, a party to, or a promoter
of, a “reportable transaction” within the meaning of Code §6707A(c)(1) and
Treasury Regulations §1.6011-4(b); and

 

(n) the Company has no potential liability for any Tax under Code § 1374 and
shall not be subject to Tax under Code § 1374 in connection with the
Contemplated Transactions.

 

Section 4.14 Permits. Schedule 4.14 sets forth a true, correct, and complete
list of all the Permits held by each Seller-Controlled Entity or required to own
its assets and properties or operate the Business as presently conducted or
planned to be conducted, including all Permits required under Environmental
Laws. Except as specified on Schedule 4.14, (a) each such Permit is valid and in
full force and effect and will continue to be valid and in full force and
effect, on identical terms, following the consummation of the Contemplated
Transactions, without the consent of or payment to any Governmental Authority or
other third party or the assumption by the Company of any additional liabilities
as a result thereof or in connection therewith; (b) no event has occurred with
respect to any such Permit that, with or without notice or lapse of time or
both, would reasonably be expected to result in the revocation, suspension,
lapse, or limitation thereof; and (c) all fees and charges with respect to each
such Permit have been paid in full as of the Execution Date and will be paid in
full as of the Effective Time.

 

  Page 11

 

 

Section 4.15 Employment Matters.

 

(a) Schedule 4.15 sets forth (i) a list of all present employees of the
Seller-Controlled Entities (the “Business Employees”) and independent
contractors providing services to the Business; (ii) each Business Employee’s or
independent contractor’s current rate of compensation; (iii) each Business
Employee’s accrued vacation, sick leave, or personal leave, if applicable; and
(iv) a list of each Business Employee who is absent from work due to a
work-related injury, is receiving workers’ compensation, or is receiving
disability compensation.

 

(b) Except as set forth on Schedule 4.15, (i) there are no unpaid wages,
bonuses, or commissions owed to any Business Employee; (ii) all Business
Employees are employees at-will, terminable on one-month’s notice or less
without penalty; (iii) there are no outstanding agreements or arrangements with
respect to severance payments to current Business Employees or former employees
of any Seller-Controlled Entity; and (iv) no Seller-Controlled Entity has any
Liability, contingent or otherwise, under any Contract or other arrangement,
plan, or program. Neither any each Seller-Controlled Entity nor any their
respective employees are now or in the past five (5) years have been subject to
or involved in or, to Seller’s Knowledge threatened with, any union elections,
petitions therefor, or other organizational activities. There have been no
employee layoffs or terminations or other events that, individually or
collectively with the consummation of the Contemplated Transactions, could
implicate the WARN Act.

 

(c) Each Seller-Controlled Entity is and has been in compliance with all
applicable Laws pertaining to employment and employment practices, including all
Laws relating to labor relations, equal employment opportunities, fair
employment practices, employment discrimination, harassment, retaliation,
reasonable accommodation, disability rights or benefits, immigration, wages,
hours, overtime compensation, child labor, hiring, promotion and termination of
employees, working conditions, meal and break periods, privacy, health and
safety, workers’ compensation, leaves of absence, and unemployment insurance.
Each Seller-Controlled Entity has properly characterized and treated all Persons
as independent contractors or consultants or exempt employees under all
applicable Laws. There are no Actions against any Seller-Controlled Entity
pending, or to Seller’s Knowledge, threatened to be brought or filed, by or with
any Governmental Authority or arbitrator in connection with the employment of
any current or former applicant, employee, consultant, volunteer, intern, or
independent contractor of any Seller-Controlled Entity, including, without
limitation, any claim relating to unfair labor practices, employment
discrimination, harassment, retaliation, equal pay, wage and hours, or any other
employment related matter arising under applicable Laws.

 

Section 4.16 Employee Benefit Plans. Schedule 4.16 sets forth each Employee
Benefit Plan that is currently in effect or was maintained, sponsored, or
contributed to at any time within the last six (6) calendar years or that has
been approved before the Execution Date but is not yet effective, (a) for the
benefit of any Covered Employees or (b) with respect to which any each
Seller-Controlled Entity or any ERISA Affiliate thereof has or has had any
obligation on behalf of any Covered Employee. Each such Employee Benefit Plan
(and each related trust, insurance contract, or fund) has been maintained,
funded, and administered in accordance with the terms of such Employee Benefit
Plan and other applicable Contracts and the applicable requirements of ERISA,
the Code, and other applicable Laws. Seller has delivered to Buyer correct and
complete copies of all plan documents, determination letters, annual reports,
and related trust agreements, insurance contracts, and other funding
arrangements related to such Employee Benefit Plans. Nothing has occurred with
respect to any Employee Benefit Plan that has subjected or could reasonably be
expected to subject the Company or any of its ERISA Affiliates or, with respect
to any period on or after the Effective Time, Buyer or any of its Affiliates, to
a penalty under ERISA § 502 or to Tax or penalty under Code § 4975. Each
Employee Benefit Plan can be amended, terminated, or otherwise discontinued
after the Closing in accordance with its terms, without material liabilities to
Buyer, the Company or any of their Affiliates other than ordinary administrative
expenses typically incurred in a termination event, and no Seller-Controlled
Entity has any commitment or obligation and has not made any representations to
any employee, officer, manager, independent contractor, or consultant, whether
or not legally binding, to adopt, amend, modify, or terminate any Employee
Benefit Plan or any collective bargaining agreement, in connection with the
consummation of the Contemplated Transactions or otherwise. There is no pending
or, to Seller’s Knowledge, threatened Action relating to any Employee Benefit
Plan (other than routine claims for benefits), and no Employee Benefit Plan has
previously been the subject of an examination or audit by a Governmental
Authority or the subject of an application or filing under or is a participant
in, an amnesty, voluntary compliance, self-correction, or similar program
sponsored by any Governmental Authority. Neither the execution of this Agreement
nor any of the transactions contemplated by this Agreement will (either alone or
upon the occurrence of any additional or subsequent events): (i) entitle any
current or former manager, officer, employee, independent contractor, or
consultant of any Seller-Controlled Entity to severance pay or any other
payment; (ii) accelerate the time of payment, funding, or vesting, or increase
the amount of compensation due to any such individual; (iii) limit or restrict
the right of the Company to merge, amend, or terminate any Employee Benefit
Plan; (iv) increase the amount payable under or result in any other material
obligation pursuant to any Employee Benefit Plan; (v) result in “excess
parachute payments” within the meaning of Code § 280G(b); or (vi) require a
“gross-up” or other payment to any “disqualified individual” within the meaning
of Code § 280G(c).

 

  Page 12

 

 

Section 4.17 Intellectual Property. Neither any Seller-Controlled Entity nor the
Business as presently conducted and as presently proposed to be conducted has or
will interfere with, has or will infringe upon, has or will dilute, has or will
misappropriate, or otherwise has or will come into conflict with, any
Intellectual Property rights of any third party. To the Knowledge of Seller, no
third party has interfered with, infringed upon, diluted, misappropriated, or
otherwise come into conflict with, any Intellectual Property rights of any each
Seller-Controlled Entity. Schedule 4.17, sets forth a list identifying all
material Intellectual Property rights and obligations of each Seller-Controlled
Entity, including all registrations and licenses with respect thereto and domain
names owned or used by each Seller-Controlled Entity or the Business. Except as
described on Schedule 4.17, (a) the Seller-Controlled Entities own the entire
right, title, and interest in, to, and under, or have acquired an express
license to use all Intellectual Property owned, accessed, or used by the Company
or the Business immediately prior to the Closing; (b) the Seller Parties have
taken all necessary and desirable action to maintain and protect each item
thereof; (c) all such Intellectual Property will be owned or available for
access and use by the Company on identical terms and conditions immediately
subsequent to the Closing hereunder, without payment of any amount to any third
party; and (d) such Intellectual Property is sufficient for the unimpaired
continued operation of the Business by the Company following the Closing as
heretofore conducted and as currently proposed to be conducted by the
Seller-Controlled Entities.

 

Section 4.18 Customers and Suppliers.

 

(a) Set forth on Schedule 4.18(a) is a list identifying, for each of the three
(3) most recent calendar years immediately preceding the Closing Date, (i) each
customer who has paid aggregate consideration to the Seller-Controlled Entities
for goods or services rendered in an amount greater than or equal to $10,000;
and (ii) the amount of consideration paid by each such customer during such
periods. No Seller has received any notice or has reason to believe that any of
such customers has ceased, or intends to cease after the Closing, to use the
goods or services of the Business or to otherwise terminate or materially reduce
its relationship with the Business.

 

(b) Set forth on Schedule 4.18(b) is a list identifying, for each of the three
(3) most recent calendar years immediately preceding the Closing Date, (i) each
supplier to whom the Seller-Controlled Entities have paid consideration in an
amount greater than or equal to $10,000 or is otherwise material to the
Business; and (ii) the aggregate amount of purchases from each during such
period. No Seller has received any notice or has reason to believe that any of
such suppliers has ceased, or intends to cease, to supply goods or services to
the Business or to otherwise terminate or materially reduce its relationship
with the Business.

 

  Page 13

 

 

Section 4.19 Insurance. Seller has provided to Buyer (a) a true, correct, and
complete list of all current policies or binders of fire, liability, product
liability, umbrella liability, real and personal property, workers’
compensation, vehicular, fiduciary liability, and other casualty and property
insurance maintained by any Seller-Controlled Entity or their Affiliates and
relating to the Business or their respective assets (collectively, the
“Insurance Policies”); and (b) with respect to the Business and the assets and
liabilities of the Seller-Controlled Entities a list of all pending Claims and
the Claims history for the Seller-Controlled Entities in the two (2) years
immediately preceding the Execution Date. There are no Claims related to the
Business, any Seller-Controlled Entity, or their respective assets pending under
any of the Insurance Policies as to which coverage has been questioned, denied,
or disputed or in respect of which there is an outstanding reservation of
rights. The Insurance Policies are in full force and effect and shall remain in
full force and effect following the consummation of the Contemplated
Transactions, and no Seller Party has received any written notice of
cancellation of, premium increase with respect to, or alteration of coverage
under, any of the Insurance Policies. All premiums due on the Insurance Policies
are in full force and effect and enforceable in accordance with their terms, are
provided by carriers who are financially solvent, and have not been subject to
any lapse in coverage. No Seller Party is in default under, or has otherwise
failed to comply with, in any material respect, any provision contained in any
of the Insurance Policies.

 

Section 4.20 Real Property. The Leased Real Property comprises all of the real
property used, or intended to be used in, or otherwise related to, the Business
and is sufficient for the continued conduct of the Business after the Closing in
substantially the same manner as conducted prior to the Closing and as currently
proposed to be conducted. No Seller-Controlled Entity owns or has ever owned any
real property or is a party to any agreement or option to purchase any real
property or interest therein. All buildings, Equipment, and other improvements
included in the Leased Real Property are in good condition and repair, and there
are no defects or deficiencies to any portion thereof. There are no leases,
subleases, licenses, concessions, and other agreements (whether written or oral)
pursuant to which the Leased Real Property is bound. The current use and
occupancy of the Leased Real Property and operation of the Business thereon does
not violate any applicable Laws or any easement or other covenant or restriction
affecting such Leased Real Property. All utility services and systems for the
Leased Real Property and are operational and sufficient for the operation of the
Business as currently conducted thereon.

 

Section 4.21 Reorganization. The Reorganization shall have been effected in
accordance with the Reorganization Documents prior to the Effective Time. Seller
has provided Buyer prior to the Closing true, correct, and complete copies of
each of the Reorganization Documents, none of which have been amended or
otherwise modified. Other than the Reorganization Documents, no agreements or
arrangements have been entered into in connection with the Reorganization.

 

Section 4.22 Brokers. No Seller Party has incurred any Liability to any Person
for any brokerage fees, agent’s commissions, or finder’s fees in connection with
the execution or delivery of this Agreement or the consummation of the
Contemplated Transactions.

 

Section 4.23 Full Disclosure. No representation or warranty by any Seller Party
in this Agreement or the other Transaction Documents, and no statement contained
in the Schedules attached hereto or any certificate or other document furnished
or to be furnished to Buyer pursuant to this Agreement, contains any untrue
statement of a material fact, or omits to state a material fact necessary to
make the statements contained therein, in light of the circumstances in which
they are made, not misleading. To the Knowledge of Seller, there are no facts or
circumstances that has had or that would reasonably be expected to have a
Material Adverse Effect that have not been disclosed in this Agreement,
including the Schedules hereto.

 

  Page 14

 

 

Article V
Representations and Warranties of Buyer

 

Buyer represents and warrants to Seller that the statements contained in this
Article V are true, correct, and complete as of the Execution Date and will be
true, correct, and complete as of the Closing Date (as though made then and as
though the Closing Date were substituted for the date of this Agreement
throughout this Article V).

 

Section 5.01 Organization. Buyer is limited liability company duly organized,
validly existing, and in good standing under the Laws of the State of Delaware
and has full power and authority to enter into this Agreement and the other
Transaction Documents to which Buyer is a party, to carry out its obligations
hereunder, and to consummate the Contemplated Transactions.

 

Section 5.02 Authority and Enforceability. Buyer has full power and authority to
enter into this Agreement and the other Transaction Documents to which Buyer is
a party, to carry out its obligations hereunder and thereunder and to consummate
the Contemplated Transactions. The execution, delivery, and performance by Buyer
of this Agreement and the other Transaction Documents and the consummation of
the Contemplated Transactions have been duly authorized by all requisite company
action on the part of Buyer. This Agreement and the other Transaction Documents
have been duly executed and delivered by Buyer, and (assuming due authorization,
execution, and delivery by each of the other parties thereto) this Agreement and
the other Transaction Documents constitute legal, valid, and binding obligations
of Buyer enforceable against Buyer in accordance with their respective terms.

 

Section 5.03 No Conflicts; Consents. Buyer’s execution, delivery and performance
of this Agreement and the other Transaction Documents, and the consummation of
the Contemplated Transactions, do not and will not: (a) violate or conflict with
the articles of organization, operating agreement, or other organizational
documents of Buyer; or (b) violate or conflict with any Law applicable to Buyer.
No consent, approval, waiver, or authorization is required to be obtained by
Buyer from any Person in connection with the execution, delivery, and
performance by Buyer of this Agreement and the other Transaction Documents and
the consummation of the Contemplated Transactions.

 

Section 5.04 Brokers. Buyer has not incurred any Liability to any Person for any
brokerage fees, agent’s commissions, or finder’s fees in connection with the
execution or delivery of this Agreement or the consummation of the Contemplated
Transactions.

 

Article VI
Covenants

 

Section 6.01 General. Each of the parties hereto shall use his, her, or its best
efforts to take all actions and to do all things necessary, proper, or advisable
in order to consummate and make effective the Contemplated Transactions. Without
limiting the generality of the foregoing, from the Execution Date until the
Closing, each party hereto shall use reasonable best efforts to take such
actions as are necessary to expeditiously satisfy the Closing conditions set
forth in Article VII hereof.

 

Section 6.02 Tax Matters.

 

(a) Termination of Tax Sharing Agreements. Any and all Tax sharing agreements
(whether written or not) binding upon the Company shall be terminated as of the
Effective Time, and thereafter neither the Company, Seller, nor any of Seller’s
Affiliates and their respective Representatives shall have any further rights or
liabilities thereunder.

 

  Page 15

 

 

(b) Straddle Period. With respect to any taxable period that includes the
Effective Time (a “Straddle Period”), (i) the amount of any Taxes based on or
measured by income, receipts, or payroll of the Company for the Pre-Closing Tax
Period shall be determined based on an interim closing of the books as of the
close of business as of the Effective Time (and for such purpose, the taxable
period of any partnership or other pass-through entity in which the Company
holds a beneficial interest shall be deemed to terminate at such time) and (ii)
the amount of other Taxes of the Company for a Straddle Period that relates to
the Pre-Closing Tax Period shall be deemed to be the amount of such Tax for the
entire taxable period multiplied by a fraction, the numerator of which is the
number of days in the taxable period ending as of the Effective Time and the
denominator of which is the number of days in such Straddle Period.

 

(c) Payment of Taxes. Seller shall pay when due any and all (i) transfer,
documentary, sales, use, stamp, registration, value added, and other such Taxes
and fees incurred in connection with this Agreement, the other Transaction
Documents, and the consummation of the Contemplated Transactions; (ii) Taxes of
each of Seller-Controlled Entity (or any predecessor thereof) or relating to the
Business for all Pre-Closing Tax Periods, including without limitation Taxes of
the Company for any Straddle Period that ends as of the Effective Time close of
the Closing Date as determined under Section 6.02(b); (iii) Taxes imposed on the
Company under Code § 1374 for the Pre-Closing Tax Period; (iv) Taxes imposed on
the Company under Treasury Regulations § 1.1502-6 (or any comparable provision
of foreign, state, or local law) as a result of the Company’s (or any
predecessor’s) inclusion as a member of an affiliated, consolidated, combined,
or unitary group on or prior to the Effective Time, including an affiliated
group under Code § 1504; and (v) Taxes of any Person imposed on the Company as a
successor or transferee, otherwise by operation of law, or pursuant to a
contract, but only to the extent such Taxes relate to an event or transaction
occurring before the Effective Time. Seller shall pay any and all Taxes for
which it is responsible to pay under this Section 6.02(c) upon a determination
that such Tax is payable or on written demand, whichever is later.

 

(d) Tax Returns. Seller shall, at its own expense, prepare and timely file, or
cause to be prepared and timely filed, all Tax Returns of each Legg Entity and
the Company for taxable periods that end on or before the Effective Time, and
all such Tax Returns shall be prepared in a manner consistent with past practice
(unless otherwise required by Law) and without a change of any election or any
accounting method. Seller shall provide copies of such any Tax Return to Buyer
at least thirty (30) days prior to the due date thereof (including extensions)
for review and approval. The Company shall prepare and timely file, or cause to
be prepared and timely filed, all Tax Returns of the Company for any Straddle
Periods in accordance with the Company Agreement.

 

(e) Contests. Buyer and Seller will each promptly notify the other in writing
upon its receipt of any written notice of any pending or threatened audit or
other examination by any Governmental Authority, or any judicial or
administrative proceedings, relating to Taxes of the Company (each, a “Tax
Contest”); provided, however, that no failure or delay in delivering such notice
shall relieve any party of its obligations hereunder except to the extent that
such party is actually and materially prejudiced by such failure or delay. If
such Tax Contest relates solely to any Pre-Closing Tax Period (other than a
Straddle Period), Seller shall have the right (but not the obligation), to be
exercised within ten (10) Business Days following its receipt of the written
notice of such Tax Contest by delivering written notice to Buyer, to assume and
thereafter conduct and control the defense of such Tax Contest (with counsel of
Seller’s choice) and, for so long as Seller is conducting and controlling such
defense, Buyer shall have the right, but not the obligation, to participate in
such defense with separate counsel of its choosing at its sole cost and expense;
provided, however, that Seller shall not be permitted to consent to the entry of
any judgment or enter into any settlement of such Tax Contest which may
adversely impact Buyer, the Company, or the Tax attributes of the Company
without the prior written consent of Buyer (not to be unreasonably withheld,
conditioned, or delayed). Unless and until Seller assumes the defense of such
Tax Contest, Buyer may defend against such Tax Contest in any manner it may
reasonably deem appropriate (with counsel of Buyer’s choice), in which case
Seller (i) shall cooperate with Buyer in such defense and make available to
Buyer and its Representatives all witnesses, pertinent records, materials, and
information in or under their possession or control relating thereto as may be
reasonably requested by Buyer, and (ii) shall have the right, but not the
obligation, to participate in such defense with separate counsel of its choosing
at its sole cost and expense. The conduct of such defense by Buyer shall not be
construed to be a waiver of Buyer’s right to indemnification with respect to
such Tax Contest.

 

  Page 16

 

 

(f) Cooperation. The parties hereto shall, and shall cause the Company to,
provide each other with such cooperation and information as either of them
reasonably may request in connection with any Tax matters related to the
Company. Each party hereto shall retain all Tax Returns, schedules, and work
papers, records, and other documents in its possession relating to Tax matters
of the Company for any Pre-Closing Tax Period until the expiration of the
statute of limitations of the taxable periods to which such Tax Returns and
other documents relate, without regard to extensions except to the extent
notified by the other party in writing of such extensions for the respective Tax
periods. Prior to transferring, destroying, or discarding any Tax Returns,
schedules and work papers, records, and other documents in its possession
relating to Tax matters of the Company for any Pre-Closing Tax Period, each
party (as the case may be) shall provide the other party with reasonable written
notice and offer the other party the opportunity to take custody of such
materials.

 

(g) Tax Refunds. Any Tax refund, credit, or similar benefit (including any
interest paid or credited with respect thereto) relating to the Company for
Taxes paid for any Pre-Closing Tax Period shall be the property of Seller except
to the extent it was taken into account in calculating the Confirmed Working
Capital.

 

(h) Overlap. To the extent that any obligation or responsibility pursuant to
Article VIII may overlap or conflict with an obligation or responsibility
pursuant to this Section 6.02, the provisions of this Section 6.02 shall prevail
and govern.

 

Section 6.03 Operation of Business. From the Execution Date until the Closing,
except as otherwise provided in this Agreement or consented to in writing by
Buyer, Seller shall cause the Seller-Controlled Entities to conduct the Business
in the Ordinary Course of Business and use reasonable best efforts to maintain
and preserve intact its current Business, organization, operations, and assets
and to preserve the rights, franchises, goodwill, and relationships of its
employees, customers, lenders, suppliers, regulators, and others having
relationships with the Business.

 

Section 6.04 Full Access. From the Execution Date until the Closing, Seller
shall, and shall cause the Seller-Controlled Entities to, (a) afford Buyer and
its Representatives full and free access to and the right to inspect the Leased
Real Property and all of the other properties, assets, Books and Records,
documents and data related to the Business; (b) furnish Buyer and its
Representatives with such financial, operating and other data and information
related to the Business as Buyer or any of its Representatives may reasonably
request; and (c) instruct the Representatives of the Seller-Controlled Entities
to cooperate with the same. Any investigation pursuant to this Section 6.04
shall be conducted in such manner as not to interfere unreasonably with the
conduct of the Business. No investigation by Buyer or other information received
by Buyer shall operate as a waiver or otherwise affect any representation,
warranty, or agreement given or made by Seller in this Agreement.

 

  Page 17

 

 

Section 6.05 Notice of Developments. From the Execution Date until the Closing,
Seller shall promptly notify Buyer in writing of any fact, circumstance, event,
or action, the existence, occurrence, or taking of which (a) has had, or could
reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect; (b) has resulted in, or could reasonably be expected to result
in, any representation or warranty made by any party hereunder not being true
and correct; or (c) has resulted in, or could reasonably be expected to result
in, the failure of any of the conditions set forth in Article VII to be
satisfied. Buyer’s receipt of information pursuant to this Section 6.05 shall
not operate as a waiver or otherwise affect any representation, warranty, or
agreement given or made by Seller in this Agreement and shall not be deemed to
amend or supplement the Schedules or to prevent or cure any misrepresentation,
breach of warranty, or breach of covenant.

 

Section 6.06 Exclusivity. No Seller Party will (a) solicit, initiate, or
encourage the submission of any proposal or offer from any Person relating to
the acquisition of any equity of any Seller-Controlled Entity or any substantial
portion of their respective assets (whether by sale, lease, merger, or other
business combination) or (b) participate in any discussions or negotiations
regarding, furnish any information with respect to, assist or participate in, or
facilitate in any other manner any effort or attempt by any Person to do or seek
the foregoing. Seller shall notify Buyer immediately if any Person makes any
proposal, offer, inquiry, or contact with respect to any of the foregoing.

 

Section 6.07 Consents; Failure to Obtain Consents. After the Execution Date,
each Seller Party will use its reasonable best efforts to obtain or cause to be
obtained all Required Consents and any other consents otherwise requested by
Buyer, including those that have not been previously obtained prior to the
Closing. If any consent, approval, or authorization necessary to preserve any
right or benefit under any Contract to which the Company is a party (or to which
the Legg Entities were parties immediately prior to the Reorganization) is not
obtained prior to the Closing, Seller shall, subsequent to the Closing,
cooperate with Buyer and the Company in attempting to obtain such consent,
approval, or authorization and in any arrangement reasonably satisfactory to
Buyer designed to afford the Company the continued full benefits thereunder for
the term thereof.

 

Section 6.08 Public Announcements. Unless otherwise required by applicable Law,
no Seller Party or their respective Affiliates shall make any public
announcements regarding this Agreement or the Contemplated Transactions without
the prior written consent of Buyer.

 

Section 6.09 Confidentiality.

 

(a) From and after the Closing, no Seller Party shall, and each Seller Party
shall cause its Related Parties and Representatives not to, directly or
indirectly, use or disclose (other than to or on behalf of Buyer) any
Confidential Information of or relating to the Business or the Company.
Notwithstanding the foregoing, the obligations set forth in this Section 6.09
shall not apply to any information that Seller can demonstrate: (i) has become
generally available after the Closing Date to the public through no act or
omission of any Seller Party and without violation of this Agreement or any
other confidentiality obligation of any Seller Party or (ii) is required to be
disclosed by subpoena or other mandatory legal process, provided that Seller
shall promptly give Buyer notice of any request or demand for disclosure of such
Confidential Information upon receipt of such request or demand along with a
copy of any written correspondence, pleading or other communications concerning
the request or demand, and the Seller Parties use reasonable efforts to obtain,
and upon request, provide reasonable cooperation should Buyer seek to obtain, an
appropriate protective order.

 

(b) Nothing in this Section 6.09 shall be construed to limit or supersede (i)
the common law of torts or statutory or other protection of trade secrets where
such Law provides Buyer or the Company with greater or longer protection than
provided in this Section 6.09 or (ii) the terms and conditions set forth in any
other Transaction Document, including the Employment Agreement, or any other
covenants and agreements among the parties hereto. This Section 6.09 shall
survive the Closing and shall continue indefinitely; provided, however, that the
restrictions in this Section 6.09 shall terminate on the fifth anniversary of
the Closing with respect to any Confidential Information that does not then
constitute a trade secret under applicable Law.

 

  Page 18

 

 

Section 6.10 Non-Competition.

 

(a) For a period of one (1) year (or the maximum number of years for similar
restrictions allowed under applicable Law) commencing on the Closing Date (the
“Restricted Period”), the Seller Parties shall not, and shall not permit any of
their respective Affiliates to, directly or indirectly, (i) engage in or assist
others in engaging in any business similar to the Lawncare Business (the
“Restricted Lawncare Business”) anywhere within the following Counties in
Alabama: Colbert, Lauderdale, Limestone, Madison, Morgan and Tuscumbia (the
“Restricted Lawncare Territory”); (ii) engage in or assist others in engaging in
any business similar to the Franchising Business (the “Restricted Franchising
Business” and, collectively with the Restricted Lawncare Business, the
“Restricted Business”) anywhere within one hundred (100) miles of any
franchisee’s territory, as described in the applicable franchise documents in
effect on the Closing Date (the “Restricted Franchising Territory” and,
collectively with the Restricted Lawncare Territory, the “Restricted
Territory”); (iii) have an interest in any Person that engages directly or
indirectly in the Restricted Business in the Restricted Territory in any
capacity, including as a partner, shareholder, member, employee, principal,
agent, trustee, or consultant; or (iv) cause, induce, or encourage any material
actual or prospective client, customer, supplier, or licensor of the Business
(including any existing or former client or customer of any Seller Party and any
Person that becomes a client or customer of the Business after the Closing), or
any other Person who has a material business relationship with the Business, to
terminate or modify any such actual or prospective relationship. Notwithstanding
the foregoing, the Seller Parties and their respective Affiliates may own,
directly or indirectly, solely as an investment, securities of any Person traded
on any national securities exchange if Seller Party or such Affiliate is not a
controlling Person of, or a member of a group which controls, such Person and
does not, directly or indirectly, own five percent (5%) or more of any class of
securities of such Person. The parties acknowledge that the Restricted Territory
specifically includes, but is not limited to, those areas of the geographic
region where the Seller Parties’ products and services are currently marketed,
provided, and distributed by the Seller Parties. The Restricted Territory is
designed and agreed by the parties to include both the business locations of the
Seller Parties’ principal competitors and the geographic region from which the
substantial majority of the Seller Parties’ customers, distributors, purchases
of services or goods, and marketers of the Seller Parties are drawn. Each Seller
Party, by virtue of their signature on this document, further acknowledges that
they have carefully read and considered the provisions of this Section 6.10 and,
having done so, voluntarily agrees that the restrictions set forth in this
Section 6.10 (including the time period of restriction, the geographical areas
of restriction, and the scope of restricted activities) are fair and reasonable
and are reasonably required for the protection of the legitimate interests of
Buyer. Each Seller Party has been given and has had sufficient time to review
and consider this Section 6.10 and seek the advice of counsel, and agrees to it
voluntarily, without coercion or duress.

 

(b) During the Restricted Period, the Seller Parties shall not, and shall not
permit any of their respective Affiliates to, directly or indirectly, hire or
solicit any Business Employee or any other person who is or was employed in the
Business during the Restricted Period, or encourage any such person to leave
such employment or hire any such person who has left such employment, except
pursuant to a general solicitation which is not directed specifically to any
such employees; provided, however, that nothing in this Section 6.10 shall
prevent any Person from hiring (i) any employee whose employment has been
terminated by the Company or (ii) any employee whose employment has been
terminated by the employee more than one hundred and eighty (180) days prior to
the date of such hiring.

 

  Page 19

 

 

(c) Each Seller Party acknowledges that a breach or threatened breach of this
Section 6.10 would give rise to irreparable harm to Buyer, for which monetary
damages would not be an adequate remedy, and hereby agrees that in the event of
a breach or a threatened breach by any Seller Party or their respective
Affiliates of any such obligations, Buyer shall, in addition to any and all
other rights and remedies that may be available to it in respect of such breach,
be entitled to equitable relief, including a temporary restraining order, an
injunction, specific performance and any other relief that may be available from
a court of competent jurisdiction (without any requirement to post bond).

 

(d) Each Seller Party acknowledges that the restrictions contained in this
Section 6.10 are reasonable and necessary to protect the legitimate interests of
Buyer and constitute a material inducement to Buyer to enter into this Agreement
and consummate the transactions contemplated by this Agreement. In the event
that any covenant contained in this Section 6.10 should ever be adjudicated to
exceed the time, geographic, product, or service or other limitations permitted
by applicable Law in any jurisdiction, then any court is expressly empowered to
reform such covenant, and such covenant shall be deemed reformed, in such
jurisdiction to the maximum time, geographic, product, or service or other
limitations permitted by applicable Law. The covenants contained in this Section
6.10 and each provision hereof are severable and distinct covenants and
provisions. The invalidity or unenforceability of any such covenant or provision
as written shall not invalidate or render unenforceable the remaining covenants
or provisions hereof, and any such invalidity or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such covenant or
provision in any other jurisdiction. The covenants contained in this Section
6.10 shall not limit or abridge in any way any other covenants or restrictions
applicable to any Seller Party or their respective Affiliates, including but in
any of the other Transaction Documents or in any other agreement among the
parties hereto and their respective Affiliates.

 

Section 6.11 Further Assurances. Following the Closing, each of the parties
hereto shall execute and deliver such additional documents, instruments,
conveyances, and assurances and take such further actions as may be reasonably
required to carry out the provisions hereof and give effect to the Contemplated
Transactions. Without limiting the generality of the foregoing, if any Seller
Party or their respective Affiliates receives or collects any funds relating to
any notes and accounts receivable of the Company or the Business, they shall
remit such funds to the Company within five (5) Business Days after the receipt
thereof.

 

Article VII
Conditions to Closing

 

Section 7.01 Conditions to Buyer’s Obligation to Close. The obligation of Buyer
to consummate the transactions to be performed by it in connection with the
Closing is subject to the fulfillment, or waiver by Buyer, of each of the
following conditions:

 

(a) the representations and warranties of Seller set forth in this Agreement and
each of the other Transaction Documents shall be true and correct in all
respects on and as of the Closing Date, with the same force and effect as though
such representations and warranties had been made or given on and as of the
Closing Date (other than representations and warranties that refer to a
specified date, which need only be true and correct on and as of such specified
date);

 

(b) each of the Seller Parties shall have performed or complied with, in all
material respects, all obligations, agreements, and covenants contained in this
Agreement as to which performance or compliance by such Seller Party is required
prior to or at the Closing Date;

 

(c) the Reorganization shall have been consummated, effective prior to the
Closing;

 

(d) from the Execution Date, there shall not have occurred any Material Adverse
Effect, nor shall any event or events have occurred that, individually or in the
aggregate, with or without the lapse of time, could reasonably be expected to
result in a Material Adverse Effect;

 

  Page 20

 

 

(e) Seller shall have procured and provided Buyer with copies of all Required
Consents;

 

(f) Seller shall have delivered to Buyer written resignations, effective as of
the Effective Time, of any officers and employees of the Company requested by
Buyer;

 

(g) Buyer, in its sole and absolute discretion, shall be satisfied with the
results of its due diligence investigation of the Company and the Business; and

 

(h) Seller shall have delivered all the documents and items required under
Section 3.03.

 

Section 7.02 Conditions to Seller’s Obligation to Close. The obligation of
Seller to consummate the transactions to be performed by Seller in connection
with the Closing is subject to the fulfillment, or waiver by Seller, of each of
the following conditions:

 

(a) the representations and warranties of Buyer set forth in this Agreement and
each of the other Transaction Documents shall be true and correct in all
respects on and as of the Closing Date, with the same force and effect as though
such representations and warranties had been made or given on and as of the
Closing Date (other than representations and warranties that refer to a
specified date, which need only be true and correct on and as of such specified
date);

 

(b) Buyer shall have performed or complied with, in all material respects, all
obligations, agreements, and covenants contained in this Agreement as to which
performance or compliance by Buyer is required prior to or at the Closing Date;
and

 

(c) Buyer shall have delivered all the documents and items required under
Section 3.04.

 

Article VIII
Indemnification

 

Section 8.01 Survival. Subject to the limitations and other provisions of this
Agreement, all of the representations and warranties contained in this Agreement
and the other Acquisition Documents shall survive the Closing and the
consummation of the Contemplated Transactions and shall remain in full force and
effect until the date that is twenty-four (24) months from the Closing Date;
provided, however, that notwithstanding the foregoing or anything else to the
contrary, (a) the representations and warranties in Section 4.01, Section 4.02,
Section 4.03, Section 4.05(a), Section 4.06(a), Section 4.10, Section 4.11,
Section 4.13, Section 4.14, Section 4.15, Section 4.16, Section 4.21, and
Section 4.22 (collectively, the “Fundamental Representations and Warranties”)
shall survive the Closing and remain in full force and effect thereafter for the
full period of all applicable statutes of limitations (giving effect to any
waiver, mitigation, or extension thereof), plus sixty (60) days; and (b) any
claims asserted in good faith with reasonable specificity (to the extent known
at such time) and in writing by notice from the non-breaching party to the
breaching party prior to the expiration date of the applicable survival period
shall not thereafter be barred by the expiration of the relevant representation
or warranty and such claims shall survive until finally resolved. All covenants
and agreements of the parties contained in this Agreement and the other
Acquisition Documents shall survive the Closing indefinitely or for the period
explicitly specified herein.

 

  Page 21

 

 

Section 8.02 Indemnification by the Seller Parties. Each of the Seller Parties,
jointly and severally, shall defend, indemnify, and hold harmless Buyer, the
Company, their respective Affiliates, and their respective stockholders,
directors, officers, and employees (the “Buyer Indemnitees”) from and against,
and shall pay and reimburse each of them for, any and all Losses incurred or
sustained by, or imposed upon, the Buyer Indemnitees based upon, arising out of,
with respect to or by reason of:

 

(a) any inaccuracy in or breach of (or any allegation by any third party that,
if true, would constitute an inaccuracy in or breach of) any of the
representations or warranties of Seller contained in this Agreement or the other
Acquisition Documents;

 

(b) any breach or non-fulfillment of any covenant, agreement, or obligation to
be performed by Seller pursuant to this Agreement or the other Acquisition
Documents; or

 

(c) any Company Transaction Expenses or Funded Indebtedness outstanding as of
the Effective Time, to the extent not included in the determination of the
Confirmed Company Transaction Expenses or Confirmed Funded Indebtedness.

 

Section 8.03 Indemnification by Buyer. Buyer shall defend, indemnify, and hold
harmless the Seller Parties, their Affiliates, and their respective
stockholders, directors, officers and employees (the “Seller Indemnitees”) from
and against, and shall pay and reimburse each of them for, any and all Losses
incurred or sustained by, or imposed upon, the Seller Indemnitees based upon,
arising out of, with respect to or by reason of:

 

(a) any inaccuracy in or breach of (or any allegation by any third party that,
if true, would constitute an inaccuracy in or breach of) any of the
representations or warranties of Buyer contained in this Agreement or the other
Acquisition Documents; or

 

(b) any breach or non-fulfillment of any covenant, agreement, or obligation to
be performed by Buyer pursuant to this Agreement or the other Acquisition
Documents.

 

Section 8.04 Indemnification Procedures. To make a claim for indemnification
pursuant to this Article VIII, an Indemnified Party shall notify the
Indemnifying Party of its claim in writing as promptly as possible but in no
event later than ten (10) calendar days after the Indemnified Party becomes
aware of such claim. Such notice by the Indemnified Party shall describe the
claim in reasonable detail, including whether the claim relates to a Third Party
Claim, and shall include copies of all material written evidence thereof and
indicate the estimated amount, if reasonably practicable, of the Loss that has
been or may be sustained by the Indemnified Party. The failure to give such
prompt written notice shall not, however, relieve the Indemnifying Party of its
indemnification obligations, except and only to the extent that the Indemnifying
Party forfeits rights or defenses by reason of such failure. The Indemnifying
Party shall have the right to participate in, or by giving written notice to the
Indemnified Party, to assume the defense of any Third Party Claim at the
Indemnifying Party’s expense and by the Indemnifying Party’s own counsel, and
the Indemnified Party shall cooperate in good faith in such defense; provided,
however, the Seller Parties shall not have the right to defend or direct the
defense of any such Third Party Claim that (a) is asserted directly by or on
behalf of a Person that is a supplier or customer of the Business, or (b) seeks
an injunction or other equitable relief against the Indemnified Party. In the
event that the Indemnifying Party assumes the defense of any Third Party Claim,
it shall have the right to take such action as it deems necessary to avoid,
dispute, defend, appeal, or make counterclaims pertaining to any such Third
Party Claim in the name and on behalf of the Indemnified Party.

 

Section 8.05 Effect of Investigation. The representations, warranties, and
covenants of the Indemnifying Party, and the Indemnified Party’s right to
indemnification with respect thereto, shall not be affected or deemed waived by
reason of any investigation made by or on behalf of the Indemnified Party
(including by any of its Representatives) or by reason of the fact that the
Indemnified Party or any of its Representatives knew or should have known that
any such representation or warranty is, was or might be inaccurate or by reason
of the Indemnified Party’s waiver of any condition set forth in Section 7.01 or
Section 7.02, as the case may be.

 

  Page 22

 

 

Section 8.06 Materiality. Notwithstanding anything to the contrary, for purposes
of this Article VIII, any inaccuracy in or breach of any representation or
warranty, and the amount of Losses resulting therefrom, shall be determined
without regard to any materiality, Material Adverse Effect or other similar
qualification contained in or otherwise applicable to such representation or
warranty.

 

Section 8.07 Certain Limitations. If the Closing occurs, the Seller Parties will
have no Liability with respect to claims under this Article VIII (a) until the
aggregate of all Losses suffered by all Buyer Indemnitees with respect to such
claims exceeds Forty Thousand Dollars ($40,000.00), after which the Seller
Parties, jointly and severally, shall be required to pay or be liable for all
such Losses from the first dollar, or (b) to the extent the aggregate amount of
all such claims exceeds fifty percent (50%) of the Purchase Price; provided,
however, that the terms of this Section 8.07 shall not apply to limit Losses
arising from (i) any claim based on any fraudulent, criminal, or intentional
misconduct of any Seller Party or their respective Representatives; (ii) any
inaccuracy, misrepresentation, or breach of any of the Fundamental
Representations and Warranties; or (iii) any breach or violation of, or failure
to fully perform, any covenant, agreement, undertaking, or obligation in Section
6.02;

 

Section 8.08 Holdback.

 

(a) If the Closing occurs and any Seller Party becomes obligated to make any
payment to any Buyer Indemnitee pursuant to this Article VIII 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 8.08 shall not apply
to limit any amounts owed in excess of the Holdback Balance or after the
Holdback Release Date.

 

(b) On the date that is twelve (12) months after the Closing Date (the “Initial
Holdback Release Date”), in the event that there are have been no claims made
against any Seller Party pursuant to Section 8.02 hereof, Buyer shall release
and pay to Seller $200,000 from the Holdback Balance. On the Holdback Release
Date, Buyer shall release and pay to Seller the remaining Holdback Balance,
subject to retention of an amount equal to any Claimed Amount covering claims
(or expected claims) to indemnification under Section 8.02 that are unresolved
as of the Holdback Release Date (which retained amount shall be released and
paid to Seller upon final resolution of all such unresolved claims).

 

Section 8.09 Tax Treatment of Indemnification. All indemnification payments made
under this Agreement and all debits to the Holdback Balance pursuant to Section
8.08 shall be treated by the parties as an adjustment to the Consideration for
Tax purposes, unless otherwise required by Law.

 

Section 8.10 Exclusive Remedies. From and after the Closing, except as otherwise
provided in this Agreement (including but not limited to Section 6.10(c) and
Section 10.15), the rights and remedies provided in this Article VIII shall be
the exclusive remedy for the parties hereto with respect to any breach of
representations, warranties, and covenants by any of the other parties to this
Agreement, except for (a) claims or Losses based upon, arising out of, with
respect to, or by reason of any fraud, criminal activity, or willful misconduct
on the part of another party hereto in connection with the transactions
contemplated by this Agreement and (b) the rights of the parties hereto to seek
specific performance of covenants or an injunction to prevent a violation
thereof.

 

  Page 23

 

 

Article IX
Termination

 

Section 9.01 Termination. This Agreement may be terminated at any time prior to
the Closing:

 

(a) by the mutual written consent of Seller and Buyer;

 

(b) by Buyer by written notice to Seller if Buyer is not then in material breach
of any provision of this Agreement and (i) Buyer is dissatisfied for any reason
with the results of its due diligence investigation, or (ii) there has been a
breach, inaccuracy in, or failure to perform any representation, warranty,
covenant, or agreement made by any Seller Party pursuant to this Agreement that
would give rise to the failure of any of the conditions specified in Section
7.01 and such breach, inaccuracy or failure has not been cured by Seller within
ten (10) calendar days of Seller’s receipt of written notice of such breach from
Buyer; or

 

(c) by Seller by written notice to Buyer if Seller is not then in material
breach of any provision of this Agreement and there has been a breach,
inaccuracy in, or failure to perform any representation, warranty, covenant or
agreement made by Buyer pursuant to this Agreement that would give rise to the
failure of any of the conditions specified in Section 7.02 and such breach,
inaccuracy, or failure has not been cured by Buyer within ten (10) calendar days
of Buyer’s receipt of written notice of such breach from Seller.

 

Section 9.02 Effect of Termination. In the event of the termination of this
Agreement in accordance with this Article IX, this Agreement shall become void
and there shall be no liability on the part of any party hereto except as set
forth in this Article IX, Article X, and Section 6.09; provided, however, that
nothing herein shall relieve any party hereto from liability for any prior
breach of any provision hereof.

 

Article X
Miscellaneous

 

Section 10.01 Expenses. Except as otherwise expressly provided herein, all costs
and expenses, including fees and disbursements of counsel, financial advisors,
and accountants, incurred in connection with this Agreement and the Contemplated
Transactions shall be paid by the party incurring such costs and expenses,
whether or not the Closing shall have occurred.

 

Section 10.02 Notices. All notices, requests, consents, claims, demands,
waivers, and other communications hereunder shall be in writing and shall be
deemed to have been given (a) when delivered by hand (with written confirmation
of receipt); (b) when received by the addressee if sent by a nationally
recognized overnight courier (receipt requested); (c) on the date sent by
facsimile or e-mail of a PDF document (with confirmation of transmission) if
sent during normal business hours of the recipient, and on the next Business Day
if sent after normal business hours of the recipient; or (d) on the third
Business Day after the date mailed, by certified or registered mail, return
receipt requested, postage prepaid. Such communications must be sent to the
respective parties at the following addresses (or at such other address for a
party as shall be specified in a notice given in accordance with this Section
10.02):

 

If to any Seller Party:

Heath Legg

PO Box 193

Hartsell, AL 35640

E-mail: hlegg@superiorlawncare.com

Attention: Heath L. Legg

 

  Page 24

 

 

with a copy to:

Lanier Ford Shaver & Payne P.C.

Post Office Box 2087

Huntsville, AL 35804-2087

Facsimile: (256) 533-9322

E-mail: RJM@LanierFord.com

Attention: Richard J. Marsden

 

If to Buyer:

Andover Environmental Solutions LLC

333 Avenue of the Americas

Suite 2000

Miami, FL 33131-2185

E-mail:

Attention:

 

with a copy to:

Adams and Reese LLP

1901 6th Ave North, Suite 3000

Birmingham, AL 35203

Facsimile: (205) 488-8087

E-mail: david.bowsher@arlaw.com

Attention: David K. Bowsher

 

Section 10.03 Severability. If any term or provision of this Agreement is
invalid, illegal, or unenforceable in any jurisdiction, such invalidity,
illegality, or unenforceability shall not affect any other term or provision of
this Agreement or invalidate or render unenforceable such term or provision in
any other jurisdiction.

 

Section 10.04 Entire Agreement. This Agreement and the other Acquisition
Documents constitute the sole and entire agreement of the parties to this
Agreement with respect to the subject matter contained herein, and supersede all
prior and contemporaneous understandings and agreements, both written and oral,
with respect to such subject matter. In the event of any inconsistency between
the statements in the body of this Agreement and the documents to be delivered
hereunder, the Exhibits and Schedules (other than an exception expressly set
forth as such in the Schedules), the statements in the body of this Agreement
will control.

 

Section 10.05 Successors and Assigns. This Agreement shall be binding upon and
shall inure to the benefit of the parties hereto and their respective successors
and permitted assigns. No party may assign its rights or obligations hereunder
without the prior written consent of the other parties hereto, which consent
shall not be unreasonably withheld, delayed, or conditioned; provided, however,
that prior to the Closing Date, Buyer may, without the prior written consent of
any other party, assign all or any portion of its rights under this Agreement to
one (1) or more of its Affiliates. No assignment shall relieve the assigning
party of any of its obligations hereunder.

 

Section 10.06 No Third-Party Beneficiaries. This Agreement is for the sole
benefit of the parties hereto and their respective successors and permitted
assigns and nothing herein, express or implied, is intended to or shall confer
upon any other Person any legal or equitable right, benefit, or remedy of any
nature whatsoever under or by reason of this Agreement.

 

Section 10.07 Amendment and Modification. This Agreement may only be amended,
modified or supplemented by an agreement in writing signed by each party hereto.

 

  Page 25

 

 

Section 10.08 Waiver. No waiver by any party of any of the provisions hereof
shall be effective unless explicitly set forth in writing and signed by the
party so waiving. No waiver by any party shall operate or be construed as a
waiver in respect of any failure, breach or default not expressly identified by
such written waiver, whether of a similar or different character, and whether
occurring before or after that waiver. No failure to exercise, or delay in
exercising, any right, remedy, power, or privilege arising from this Agreement
shall operate or be construed as a waiver thereof; nor shall any single or
partial exercise of any right, remedy, power, or privilege hereunder preclude
any other or further exercise thereof or the exercise of any other right,
remedy, power, or privilege.

 

Section 10.09 Legg Authority. Legg shall have the authority to act as the agent
for, and to bind and/or execute any documents as attorney-in-fact for, Seller in
connection with this Agreement and each other Transaction Document. Such
authority shall include the sole and exclusive authority to (a) assert, pursue,
defend against, contest, and settle claims for indemnification hereunder; (b)
exercise any other rights and remedies that may be available to Seller
hereunder; (c) defend against, contest, and settle the assertion of any other
rights or remedies by Buyer hereunder; and (d) execute and deliver amendments,
consent, and waivers to and under this Agreement and each other Transaction
Document. Seller shall retain the authority to act on its own behalf with
respect to matter not covered by the preceding sentence and not otherwise
expressly required or permitted to be taken solely by Legg. Buyer and the
Company shall be entitled to rely on the authority granted pursuant to this
Section until Legg delivers written notice to Buyer of the appointment of a
successor to such authority approved in writing in advance by Buyer (such
approval not to be unreasonably withheld, conditioned, or delayed), in which
case, effective upon the date specified in such notice, Buyer and the Company
shall be entitled to rely on the authority of such successor, who shall be
deemed to have all of the authority delegated to Legg under this Section for all
purposes under this Agreement and each other Transaction Document. Any amounts
paid, property disbursed, or rights granted to Legg pursuant to this Agreement
or any other Transaction Document shall be deemed paid, disbursed, or granted to
Legg for the benefit of the applicable Seller Parties.

 

Section 10.10 Legal Representation. Each of the Seller Parties, on behalf of
itself, the Company, and their respective Affiliates, (a) acknowledges and
agrees that Adams and Reese LLP (“Counsel”) has acted as counsel for Buyer and
its Affiliates in connection with the Contemplated Transactions; (b)
acknowledges and agrees that Counsel may act as counsel for the Company and its
Affiliates and Representatives (collectively, the “Clients”) following the
Closing, which may include matters in which the interests of the Company and its
Affiliates and Representatives, on the one hand, and the Seller Parties, on the
other hand, are adverse (which may include any matter relating to the
Contemplated Transactions) (the “Client Engagement”), (c) waives any right to
assert (and covenants not to assert) any actual or potential conflict of
interest or other objection with respect to, and expressly consents to, the
Client Engagement, and (d) acknowledges and agrees that all attorney
work-product and other communications (whether written or oral) between any
Client and its counsel (which may include Counsel) constitute privileged
documentation and communications between such Client and such counsel, and
waives any right to seek (and covenants not to seek) to obtain the same via any
process.

 

Section 10.11 Release. Effective as of the Closing, each Seller Party,
individually and not severally or jointly, on behalf of itself and each of its
Affiliates (each such Person or Affiliate, a “Releasing Party”) hereby (a)
agrees that neither the Company nor any subsidiary thereof has or shall have any
obligation or Liability to such Releasing Party arising out of or relating to
the period up to and including the Effective Time; (b) unconditionally and
irrevocably releases, and covenants not to bring any Action against, the Company
and/or any of its subsidiaries (and their respective former, current, and future
Affiliates, and its and their former, current, and future Representatives and
the insurers of any of the foregoing Persons) from and with respect to any
Actions, obligations, or Liabilities, whether existing or hereafter discovered,
arising in equity or at law, that arise out of or relate to the ownership,
organization, management, or operation of the Business or of the Company or any
of its Affiliates, or the breach of any Contract entered into with such
Releasing Party, occurring at any time up to and including the Effective Time;
(c) represents and warrants that it has not assigned or otherwise transferred
any of its rights with respect to any obligations and Liabilities of the
Business, the Company, or any Company subsidiary, or any Actions, of the type
described in this Section, and covenants and agrees that it shall not assign or
otherwise transfer (or attempt to assign or otherwise transfer) any of such
rights; and (d) waives the benefits of, and any rights that it may have under,
any Law regarding the release of unknown claims in any jurisdiction in
connection with the matters covered in this Section; in each case within the
foregoing, subject to and excluding such Releasing Party’s rights expressly
provided for under this Agreement and the Transaction Documents.

 

  Page 26

 

 

Section 10.12 Governing Law. This Agreement shall be governed by and construed
in accordance with the internal Laws of the State of Delaware without giving
effect to any choice or conflict of law provision or rule (whether of the State
of Delaware or any other jurisdiction).

 

Section 10.13 Dispute Resolution. Any controversy or claim arising out of or
relating to this Agreement, or the breach thereof (a “Dispute”), shall be
resolved exclusively through arbitration conducted in accordance with the
then-current Commercial Arbitration Rules (the “Rules”) of the American
Arbitration Association (“AAA”). The administrator of the arbitration shall be
chosen by mutual agreement of the parties to the Dispute, and if the parties to
the Dispute are unable to so agree, then the arbitration shall be administered
by the AAA. The arbitration shall be held in Miami, Florida. The arbitration
panel shall consist of a single arbitrator selected by mutual agreement of the
parties to the Dispute, and if the parties to the Dispute are unable to so
agree, the arbitrator shall be selected as provided in the Rules. The
substantially prevailing party to the Dispute, as determined by the arbitrator,
shall be entitled to an award of costs and attorneys’ fees and the other party
to the Dispute shall be responsible for paying the fees and costs of the
arbitrator. The decision of the arbitrator pursuant to this Section 10.13 shall
be final, unappealable, and binding upon the parties to the arbitration, and
judgment thereon may be entered in any court having jurisdiction.
Notwithstanding the foregoing or anything else to the contrary, (i) an aggrieved
party may seek temporary or emergency injunctive relief in respect of threatened
or impending or actual breaches of this Agreement, including Section 6.09 and
Section 6.10, from a court of competent jurisdiction, provided that the ultimate
resolution of the Dispute shall be resolved as described in this Section 10.13.

 

Section 10.14 Waiver of Jury Trial. Each party acknowledges and agrees that any
controversy which may arise under this Agreement is likely to involve
complicated and difficult issues and, therefore, each such party irrevocably and
unconditionally waives any right it may have to a trial by jury in respect of
any legal action arising out of or relating to this Agreement or the
Contemplated Transactions.

 

Section 10.15 Specific Performance. The parties agree that irreparable damage
would occur if any provision of this Agreement were not performed in accordance
with the terms hereof and that the parties shall be entitled to specific
performance of the terms hereof, in addition to any other remedy to which they
are entitled at law or in equity.

 

Section 10.16 Counterparts. This Agreement may be executed in counterparts, each
of which shall be deemed an original, but all of which together shall be deemed
to be one and the same agreement. A signed copy of this Agreement delivered by
facsimile, e-mail or other means of electronic transmission shall be deemed to
have the same legal effect as delivery of an original signed copy of this
Agreement.

 

[Signature Page follows]

 

  Page 27

 

 

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
as of the Execution Date.

 

  BUYER:             ANDOVER ENVIRONMENTAL SOLUTIONS LLC             By:  /s/
Jeffrey C. Piermont       Name: Jeffrey C. Piermont       Its: President        
  SELLER:             LEGG HOLDINGS, INC.             By:  /s/ Heath L. Legg    
  Name: Heath L. Legg       Its: President           LEGG:             HEATH L.
LEGG             By:  /s/ Heath L. Legg       Heath L. Legg

 

 

 

 

Annex I

 

Definitions

 

For purposes of the Agreement, the following terms have the meanings specified
or referred to in this Annex I:

 

“AAA” has the meaning set forth in Section 10.13.

 

“Acquisition” has the meaning set forth in Section 3.01.

 

“Acquisition Documents” means this Agreement, the Interest Assignment Agreement,
the Employment Agreement, the Lease Agreement, and the other agreements,
instruments, and documents delivered or required to be delivered in connection
with the Acquisition pursuant hereto.

 

“Action” any claim, action, cause of action, demand, lawsuit, arbitration,
inquiry, hearing, audit, notice of violation, proceeding, litigation, citation,
summons, subpoena, charge, complaint, arbitration, or investigation of any
nature, civil, criminal, administrative, regulatory or otherwise, whether at law
or in equity.

 

“Affiliate” means, with respect to a specified Person, any other Person that
directly or indirectly through one (1) or more intermediaries, controls, is
controlled by, or is under common control with such specified Person. For the
purposes of this definition, “control” (including, with correlative meanings,
the terms “controls” and “controlled”) means the possession, directly or
indirectly, of the power to direct or cause the direction of the management and
policies of a Person, whether through ownership of voting securities, by
Contract, or otherwise.

 

“Agreement” has the meaning set forth in the introductory paragraph hereto.

 

“Allocation Schedule” has the meaning set forth in Section 2.04.

 

“Annual Financial Statements” has the meaning set forth in Section 4.07.

 

“Books and Records” means, collectively, all books and records relating to the
Business or the Company, including books of account, ledgers, and general,
financial, and accounting records, maintenance files, customer lists and
histories, price lists, distribution lists, records and data (including all
correspondence with any Governmental Authority), sales material and records,
strategic plans, and files.

 

“Business” has the meaning set forth in the recitals hereto.

 

“Business Day” means any day except Saturday, Sunday, or any other day on which
commercial banks located in New York, New York are authorized or required by Law
to be closed for business.

 

“Buyer” has the meaning set forth in the introductory paragraph hereto.

 

“Buyer Indemnitees” has the meaning set forth in Section 8.02.

 

“Claimed Amount” means the amount of any payment owed or reasonably expected to
be to any Buyer Indemnitee in connection with a claim for indemnification
pursuant to in Section 8.02.

 

“Claims” means claims, judgments, damages, Liabilities, settlements, Losses,
costs, and expenses, including attorneys’ fees and disbursements.

 

 

 

 

“Client Engagement” has the meaning set forth in Section 10.10.

 

“Clients” has the meaning set forth in Section 10.10.

 

“Closing” has the meaning set forth in Section 3.01.

 

“Closing Date” has the meaning set forth in Section 3.01.

 

“Closing Working Capital” means an amount equal to the cash in the Company’s
operating bank account, unrestricted and available for use by the Company to
meet its operating cash requirements in the Ordinary Course of Business for the
Business.

 

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

 

“Company” has the meaning set forth in the recitals hereto.

 

“Company Agreement” has the meaning set forth in Section 3.03(c).

 

“Company Transaction Expenses” means, without duplication, the aggregate amount
of (a) fees, costs, expenses, commissions, liabilities, and similar amounts
incurred by the Company (or by any other Person, to the extent the Company is
obligated to pay for or reimburse such Person for any such amounts) prior to or
at the Closing payable to brokers, finders, investment bankers, financial
advisors, attorneys, accountants, or other agents, advisors, consultants,
experts, or service providers (including counsel) in connection with the
Contemplated Transactions or the process of selling the Seller-Controlled
Entities or their assets; (b) transaction bonuses, change-of-control and success
payments, severance rights, deferred compensation payments, salary continuation,
retention payments, withdrawal liability under multiemployer plans, and other
transaction-related compensatory payments payable or that will become payable
(whether prior to, at, or following the Closing) by the Company to any current
or former director, manager, officer, employee, or independent contractor of the
Company, or any other Person, in each case, in connection with the Contemplated
Transactions; (c) all fees, costs, and expenses incurred by any of the Seller
Parties related to the Reorganization; (d) fees, costs, expenses, and other
amounts payable or that will become payable (whether prior to, at, or the
following the Closing) by the Company to third-parties in connection with any
Required Consents (whether or not ultimately obtained) under any Contracts of
the Company in connection with the Contemplated Transactions; and (e) the
employer portion of any applicable Federal Insurance Contributions Act, state,
local, or foreign payroll Taxes imposed on the Company in respect of any
payments made under any of the foregoing, in each case within the foregoing,
regardless of whether or not such fees, costs, expenses, commissions, bonuses,
or other payments have actually been billed or invoiced or accrued at or prior
to the Closing, but in each case excluding (i) fees, costs, expenses,
commissions, bonuses, or other payments (including related to any debt
financing) that are incurred, implemented, or become payable pursuant to actions
taken or arrangements implemented following the Closing; (ii) fees, costs,
expenses, commissions, bonuses, or other payments that are paid prior to the
Closing or that otherwise reduce the amount included in the cash included in the
Closing Working Capital; and (iii) any Liabilities included in the calculation
of Closing Working Capital or Funded Indebtedness.

 

“Confidential Information” means any and all technical, business, and other
information of or relating to the Company or the Business that derives value,
actual, potential, economic or otherwise, from not being generally known to
other Persons, including technical or non-technical data, compositions, devices,
methods, techniques, drawings, inventions, processes, financial data, financial
plans, product plans, lists of, or information relating to, actual or potential
customers or suppliers, acquisition and investment plans and strategies,
marketing plans, business plans or operations of the Business. Without limiting
the generality of the foregoing, “Confidential Information” includes (i)
information relating to the Company or the Business contained in any Books and
Records, the originals of which are retained by Seller pursuant hereto, to the
extent otherwise satisfying the definition of Confidential Information, and (ii)
information of third parties relating to the Business that Seller is obligated
to or does keep or treat as confidential.

 

 

 

 

“Confirmed Cash Shortfall” has the meaning set forth in Section 2.03(b).

 

“Confirmed Company Transaction Expenses” has the meaning set forth in Section
2.03(b).

 

“Confirmed Funded Indebtedness” has the meaning set forth in Section 2.03(b).

 

“Confirmed Working Capital” has the meaning set forth in Section 2.03(b).

 

“Consideration” has the meaning set forth in Section 2.04.

 

“Contemplated Transactions” means, collectively, the Reorganization and the
Acquisition.

 

“Contracts” means all contracts, leases, deeds, mortgages, licenses,
instruments, notes, commitments, undertakings, indentures, joint ventures and
all other agreements, commitments and legally binding arrangements, whether
written or oral.

 

“Counsel” has the meaning set forth in Section 10.10.

 

“Covered Employees” means (a) directors or employees of any Seller-Controlled
Entity, or any other Persons performing services for any Seller-Controlled
Entity, (b) former directors or employees of any Seller-Controlled Entity, or
any other Persons formerly performing services for any Seller-Controlled Entity,
and (c) beneficiaries of any of the foregoing.

 

“Current Liabilities” means accounts payable, accrued Taxes, and accrued
expenses, but excluding payables to any Seller Parties or their respective
Affiliates, directors, employees, officers or stockholders and any of their
respective Affiliates, deferred Tax liabilities and the current portion of long
term debt, determined using internal procedures for the preparation of
cash-based financial statements, and applied using the same accounting methods,
practices, principles, policies and procedures, with consistent classifications,
judgments and valuation and estimation methodologies that were used in the
preparation of the Financial Statements for the most recent fiscal year end as
if such accounts were being prepared and audited as of a fiscal year end.

 

“Dispute” has the meaning set forth in Section 10.13.

 

“Effective Time” means the open of business on the Closing Date.

 

“Employee Benefit Plans” means any pension, benefit, retirement, compensation,
employment, consulting, profit-sharing, deferred compensation, incentive, bonus,
performance award, phantom equity, stock or stock-based, change in control,
retention, severance, vacation, paid time off, welfare, fringe-benefit and other
similar agreement, plan, policy, program or arrangement (and any amendments
thereto), in each case whether or not reduced to writing and whether funded or
unfunded, including each “employee benefit plan” within the meaning of §3(3) of
ERISA, whether or not Tax-qualified and whether or not subject to ERISA, which
is or has been maintained, sponsored, contributed to, or required to be
contributed to by any Seller Party for the benefit of any current or former
employee, officer, director, retiree, independent contractor or consultant of
the Business or any spouse or dependent of such individual, or under which any
Seller Party or any of their respective ERISA Affiliates has or may have any
Liability, or with respect to which the Company, Buyer or any of their
respective Affiliates would reasonably be expected to have any Liability,
contingent or otherwise.

 

 

 

 

“Employment Agreement” has the meaning set forth in Section 3.03(d).

 

“Encumbrance” means any mortgage, pledge, lien, charge, security interest,
claim, or other encumbrance.

 

“Environmental Claim” means any Action, Governmental Order, Encumbrance, fine,
penalty, or, as to each, any settlement or judgment arising therefrom, by or
from any Person alleging liability of whatever kind or nature (including
Liability or responsibility for the costs of enforcement Actions,
investigations, cleanup, governmental response, removal or remediation, natural
resources damages, property damages, personal injuries, medical monitoring,
penalties, contribution, indemnification and injunctive relief) arising out of,
based on or resulting from: (a) the presence, Release of, or exposure to, any
Hazardous Materials; or (b) any actual or alleged non-compliance with any
Environmental Law or term or condition of any environmental Permit, letter,
clearance, consent, waiver, closure, exemption, decision or other action
required under or issued, granted, given, authorized by or made pursuant to
Environmental Law.

 

“Environmental Condition” means any condition with respect to the environment
(including the air, water, groundwater, surface water and land), whether or not
yet discovered, which could or does result in any damage, Loss, cost, expense,
claim, demand, order, or Liability to or against any Person by any third party
or Governmental Authority, including any condition resulting from the ownership
or operation of the Business or the Leased Real Property, or any activity or
operation formerly conducted by any Person on or off any Leased Real Property or
any other location Seller-Controlled Entity has operated.

 

“Environmental Law” means any applicable Law, and any Governmental Order or
binding agreement with any Governmental Authority: (a) relating to pollution (or
the cleanup thereof) or the protection of natural resources, endangered or
threatened species, human health or safety, or the environment (including
ambient air, soil, surface water or groundwater, or subsurface strata); or (b)
concerning the presence of, exposure to, or the management, manufacture, use,
containment, storage, recycling, reclamation, reuse, treatment, generation,
discharge, transportation, processing, production, disposal or remediation of
any Hazardous Materials. The term “Environmental Law” includes, without
limitation, the following (including their implementing regulations and any
state analogs): the Comprehensive Environmental Response, Compensation, and
Liability Act of 1980, as amended by the Superfund Amendments and
Reauthorization Act of 1986, 42 U.S.C. §§ 9601 et seq.; the Solid Waste Disposal
Act, as amended by the Resource Conservation and Recovery Act of 1976, as
amended by the Hazardous and Solid Waste Amendments of 1984, 42 U.S.C. §§ 6901
et seq.; the Federal Water Pollution Control Act of 1972, as amended by the
Clean Water Act of 1977, 33 U.S.C. §§ 1251 et seq.; the Toxic Substances Control
Act of 1976, as amended, 15 U.S.C. §§ 2601 et seq.; the Emergency Planning and
Community Right-to-Know Act of 1986, 42 U.S.C. §§ 11001 et seq.; the Clean Air
Act of 1966, as amended by the Clean Air Act Amendments of 1990, 42 U.S.C. §§
7401 et seq.; and the Occupational Safety and Health Act of 1970, as amended, 29
U.S.C. §§ 651 et seq.

 

“Equipment” means all vehicles, machinery, office and computer equipment,
furniture, fixtures, trade fixtures, rolling stock, molds, pallets and other
equipment, together with all parts, tools, accessories and related supplies.

 

“ERISA” means the Employee Retirement Income Security Act of 1974, as amended,
and the regulations promulgated thereunder.

 

“ERISA Affiliate” means all employers (whether or not incorporated) that would
be treated together with any Seller Party or any of their respective Affiliates
as a “single employer” within the meaning of § 414 of the Code.

 

 

 

 

“Estimated Company Transaction Expenses” has the meaning set forth in Section
2.03(a).

 

“Estimated Funded Indebtedness” has the meaning set forth in Section 2.03(a).

 

“Estimated Working Capital” has the meaning set forth in Section 2.03(a).

 

“Execution Date” has the meaning set forth in the introductory paragraph hereto.

 

“Final Allocation Schedule” has the meaning set forth in Section 2.04.

 

“Financial Statements” has the meaning set forth in Section 4.07.

 

“Franchising” has the meaning set forth in the recitals hereto.

 

“Franchising Business” has the meaning set forth in the recitals hereto.

 

“Fundamental Representations and Warranties” has the meaning set forth in
Section 8.01.

 

“Funded Indebtedness” means, without duplication, the aggregate amount
(including the current portions thereof) of Liabilities of the Company with
respect to (a) indebtedness for money borrowed or advanced and monetary
obligations evidenced by bonds, debentures, notes, or similar debt securities;
(b) obligations pursuant to a lease that is, or is required in accordance with
GAAP to be, classified as a capitalized lease obligation; (c) obligations in
respect of the deferred purchase price for property or services, including
purchase money indebtedness, conditional sale and other title retention
Contracts, earnouts, and other contingent purchase price adjustment obligations,
but excluding payables that are taken into account in determining Closing
Working Capital; (d) obligations in respect of letters of credit, acceptances,
surety bonds, or similar instruments; (e) obligations under interest rate cap or
swap Contracts, foreign currency exchange Contracts, or other hedging or similar
Contracts; (f) obligations under synthetic leases, tax retention operating
leases, off-balance sheet loans, or similar off-balance sheet financing
arrangements; (g) obligations under factoring Contracts; and (h) any obligations
of another Person that are guaranteed, or secured by any of the assets, of the
Company, in each case within the foregoing, of the Company, calculated on a
consolidated basis as of the Closing, including all interest, fees, expenses,
prepayment premiums, and breakage costs accrued as of the Closing with respect
to any such indebtedness or obligations (and including all interest, fees,
expenses, prepayment premiums, and breakage costs that would accrue or be
triggered if such indebtedness or obligations were paid off and terminated at
the Closing), but excluding (i) any such amounts owing to the Company and (ii)
any undrawn amounts under standby letters of credit or similar instruments.

 

“GAAP” means United States generally accepted accounting principles as in effect
from time to time, applied on a consistent basis.

 

“Governmental Authority” means any federal, state, local or foreign government
or political subdivision thereof, or any agency or instrumentality of such
government or political subdivision, or any self-regulated organization or other
non-governmental regulatory authority or quasi-governmental authority (to the
extent that the rules, regulations, or orders of such organization or authority
have the force of Law), or any arbitrator, court or tribunal of competent
jurisdiction.

 

“Governmental Order” means any order, writ, judgment, injunction, decree,
stipulation, determination or award entered by or with any Governmental
Authority.

 

“Hazardous Materials” means: (a) any material, substance, chemical, waste,
product, derivative, compound, mixture, solid, liquid, mineral or gas, in each
case, whether naturally occurring or manmade, that is hazardous, acutely
hazardous, toxic, or words of similar import or regulatory effect under
Environmental Laws; and (b) any petroleum or petroleum-derived products, radon,
radioactive materials or wastes, asbestos in any form, lead or lead-containing
materials, urea formaldehyde foam insulation and polychlorinated biphenyls.

 

 

 

 

“Holdback Amount” has the meaning set forth in Section 2.02.

 

“Holdback Balance” means, as of any date, the Holdback Amount, less (x) any
Claimed Amount (or portion thereof) satisfied by a debit against the Holdback
Balance according to Section 8.08(a) and (y) all amounts previously released
from the Holdback Balance according to Section 8.08(b).

 

“Holdback Release Date” has the meaning set forth in Section 8.08(a).

 

“Indemnified Party” means the party making a claim for indemnification under
Article VIII.

 

“Indemnifying Party” has the party against whom a claim for indemnification
under Article VIII is asserted.

 

“Initial Holdback Release Date” has the meaning set forth in Section 8.08(b).

 

“Insurance Policies” has the meaning set forth in Section 4.19.

 

“Intellectual Property” means any and all of the following in any jurisdiction
throughout the world: (a) trademarks and service marks, including all
applications and registrations and the goodwill connected with the use of and
symbolized by the foregoing; (b) copyrights, including all applications and
registrations related to the foregoing; (c) trade secrets and confidential
know-how; (d) patents and patent applications; (e) websites and internet domain
name registrations; and (f other intellectual property and related proprietary
rights, interests, and protections (including all rights to sue and recover and
retain damages, costs, and attorneys’ fees for past, present, and future
infringement and any other rights relating to any of the foregoing)).

 

“Interest Assignment Agreement” has the meaning set forth in Section 3.03(b).

 

“Interim Financial Statements” has the meaning set forth in Section 4.07.

 

“Knowledge of Seller” or “Seller’s Knowledge” or any other similar knowledge
qualification means the actual or constructive knowledge of Legg or any other
officer, director, or manager of any Seller-Controlled Entity, after due
inquiry.

 

“Law” means any statute, law, ordinance, regulation, rule, code, order,
constitution, treaty, common law, judgment, decree, other requirement or rule of
law of any Governmental Authority.

 

“Lawncare” has the meaning set forth in the recitals hereto.

 

“Lawncare Business” has the meaning set forth in the recitals hereto.

 

“Lease Agreement” has the meaning set forth in Section 3.03(a).

 

“Leased Real Property” means the real property and improvements located at 4601
Old Highway 31, Decatur, AL, 35603.

 

“Legg” has the meaning set forth in the introductory paragraph hereto.

 

 

 

 

“Legg Entities” has the meaning set forth in the recitals hereto.

 

“Liabilities” means the 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 losses, damages, Liabilities, deficiencies, Actions, judgments,
interest, awards, penalties, fines, costs or expenses of whatever kind,
including reasonable attorneys’ fees and the cost of enforcing any right to
indemnification hereunder and the cost of pursuing any insurance providers.

 

“Material Adverse Effect” means any event, occurrence, fact, condition or change
that is, or could reasonably be expected to become, individually or in the
aggregate, materially adverse to (a) the business, results of operations,
condition (financial or otherwise) or assets of the Company or the Business, or
the value thereof, or (b) the ability of any Seller Party to consummate the
Contemplated Transactions on a timely basis.

 

“Membership Interests” has the meaning set forth in the Recitals hereto.

 

“Most Recent Balance Sheet” has the meaning set forth in Section 4.07.

 

“Most Recent Balance Sheet Date” has the meaning set forth in Section 4.07.

 

“Normal Operations” means the timely payment in the Ordinary Course of Business
of all operating liabilities of the Company, with the collection in the Ordinary
Course of Business of all accounts receivable and other Current Liabilities of
the Company, in each case in accordance with the terms of all applicable
Contracts.

 

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

 

“Permits” means permits, licenses, franchises, approvals, authorizations,
registrations, certificates, variances and similar rights (including any
environmental permits) obtained from Governmental Authorities

 

“Permitted Encumbrance” means any (a) liens for Taxes not yet due and payable;
(b) mechanics’, carriers’, workmen’s, repairmen’s or other like liens arising or
incurred in the ordinary course of business consistent with past practice or
amounts that are not delinquent and which are not, individually or in the
aggregate, material to the Company or the Business; (c) easements, rights of
way, zoning ordinances and other similar Encumbrances affecting the Leased Real
Property which are not, individually or in the aggregate, material to the
Company or the Business, which do not prohibit or interfere with the current
operation of any Leased Real Property and which do not render title to any
Leased Real Property unmarketable; or (d) liens arising under original purchase
price conditional sales contracts and equipment leases with third parties
entered into in the ordinary course of business consistent with past practice
which are not, individually or in the aggregate, material to the Company or the
Business.

 

“Person” means an individual, corporation, partnership, joint venture, limited
liability company, Governmental Authority, unincorporated organization, trust,
association, or other entity.

 

“Post-Closing Cash Shortfall” means the amount of any additional cash, up to a
maximum of $75,000 in the aggregate, needed by the Company to maintain Normal
Operations during the first sixty (60) days after Closing.

 

“Pre-Closing Tax Period” means any taxable period ending on or before the
Effective Time and, with respect to any taxable period beginning before and
ending after the Effective Time, the portion of such taxable period ending on
the Effective Time.

 

 

 

 

“Purchased Interests” has the meaning set forth in the Recitals hereto.

 

“Related Party” means, with respect to any Person, (a) any Affiliate of such
Person, (b) any member, shareholder, partner, trustee, interest holder, legal
guardian, manager, director, officer or executive employee of such Person or any
of its Affiliates, or (c) any family member or Affiliate of any of the
foregoing.

 

“Release” means any actual or threatened release, spilling, leaking, pumping,
pouring, emitting, emptying, discharging, injecting, escaping, leaching,
dumping, abandonment, disposing or allowing to escape or migrate into or through
the environment (including ambient air (indoor or outdoor), surface water,
groundwater, land surface or subsurface strata or within any building,
structure, facility or fixture).

 

“Releasing Party” has the meaning set forth in Section 10.11.

 

“Reorganization” has the meaning set forth in the recitals hereto.

 

“Reorganization Documents” has the meaning set forth in Section 4.21.

 

“Representative” means, with respect to any Person, any and all directors,
officers, employees, consultants, financial advisors, counsel, accountants and
other agents of such Person.

 

“Required Consents” has the meaning set forth in Section 4.05.

 

“Restricted Business” has the meaning set forth in Section 6.10(a).

 

“Restricted Franchising Business” has the meaning set forth in Section 6.10(a).

 

“Restricted Franchising Territory” has the meaning set forth in Section 6.10(a).

 

“Restricted Lawncare Business” has the meaning set forth in Section 6.10(a).

 

“Restricted Lawncare Territory” has the meaning set forth in Section 6.10(a).

 

“Restricted Period” has the meaning set forth in Section 6.10(a).

 

“Restricted Territory” has the meaning set forth in Section 6.10(a).

 

“Rules” has the meaning set forth in Section 10.13.

 

“Seller” has the meaning set forth in the introductory paragraph hereto.

 

“Seller-Controlled Entities” means Seller, the Legg Entities, and, prior to the
Closing, the Company.

 

“Seller Indemnitees” has the meaning set forth in Section 8.03.

 

“Seller Parties” has the meaning set forth in the introductory paragraph hereto.

 

“Straddle Period” has the meaning set forth in Section 6.02(b).

 

 

 

 

“Target Working Capital” means $100,000.

 

“Tax” or “Taxes” means all federal, state, local, foreign and other income,
gross receipts, sales, use, production, ad valorem, transfer, documentary,
franchise, registration, profits, license, lease, service, service use,
withholding, payroll, employment, unemployment, estimated, excise, severance,
environmental, stamp, occupation, premium, property (real or personal), real
property gains, windfall profits, customs, duties or other taxes, fees,
assessments or charges of any kind whatsoever, together with any interest,
additions or penalties with respect thereto and any interest in respect of such
additions or penalties.

 

“Tax Contest” has the meaning set forth in Section 6.02(e).

 

“Tax Return” means any return, declaration, report, claim for refund,
information return or statement or other document relating to Taxes, including
any schedule or attachment thereto, and including any amendment thereof.

 

“Third Party Claim” means any Action made or brought by any Person who is not a
party to this Agreement or any of their respective Affiliates or
Representatives.

 

“Transaction Documents” means the Acquisition Documents and the Reorganization
Documents.

 

“Treasury Regulations” means the regulations promulgated under the Code, as
amended.

 

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