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EXHIBIT 10.11
Execution Copy
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ACQUISITION AGREEMENT
dated as of the 11th day of February, 1999
by and among
AMERICAN PLUMBING & MECHANICAL, INC.
XXXXX'X RIVER CITY MECHANICAL, INC.
and
all of the STOCKHOLDERS of
XXXXX'X RIVER CITY MECHANICAL, INC.
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TABLE OF CONTENTS
Page
RECITALS .....................................................................................1
1. ACQUISITION OF STOCK.................................................................5
1.1 Acquisition.................................................................5
1.2 Consideration...............................................................5
1.3 Certain Information With Respect to the Capital Stock of the Company
and AmPaM...................................................................5
2. BOARD OF DIRECTORS AND OFFICERS OF THE COMPANY.......................................5
2.1 Board of Directors..........................................................5
2.2 Officers....................................................................5
3. DELIVERY OF CONSIDERATION............................................................6
3.1 Stockholders' Consideration.................................................6
3.2 Stockholders' Deliveries....................................................6
4. CLOSING..............................................................................6
5. REPRESENTATIONS AND WARRANTIES OF THE COMPANY........................................6
5.1 Due Organization............................................................7
5.2 Authorization...............................................................7
5.3 Capital Stock of the Company................................................7
5.4 Transactions in Capital Stock...............................................8
5.5 No Bonus Shares.............................................................8
5.6 Subsidiaries; Ownership in Other Entities...................................8
5.7 Predecessor Status; etc.....................................................8
5.8 Spin-off by the Company.....................................................8
5.9 Financial Statements........................................................8
5.10 Liabilities and Obligations.................................................9
5.11 Accounts and Notes Receivable..............................................10
5.12 Licenses; Intellectual Property............................................10
5.13 Environmental Matters......................................................11
5.14 Personal Property..........................................................13
5.15 Significant Customers; Material Contracts and Commitments..................13
5.16 Real Property..............................................................14
5.17 Insurance..................................................................14
5.18 Compensation; Employment Agreements; Labor Matters.........................15
5.19 Employee Plans.............................................................15
5.20 Compliance with ERISA......................................................16
5.21 Conformity with Law; Litigation............................................17
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5.22 Taxes......................................................................17
5.23 No Violations; No Consent Required, Etc....................................18
5.24 Government Contracts.......................................................19
5.25 Absence of Changes.........................................................19
5.26 Deposit Accounts; Powers of Attorney.......................................21
5.27 Validity of Obligations....................................................21
5.28 Relations with Governments.................................................21
5.29 Disclosure.................................................................21
5.30 No Warranties or Insurance.................................................21
5.31 Interest in Customers and Suppliers and Related Party Transactions.........22
5.32 Private Placement Memorandum...............................................22
5.33 Authority; Ownership.......................................................22
5.34 Preemptive Rights..........................................................23
5.35 No Commitment to Dispose of AmPaM Stock....................................23
5.36 Disclosure.................................................................23
6. REPRESENTATIONS OF AMPAM............................................................23
6.1 Due Organization...........................................................24
6.2 Authorization..............................................................24
6.3 Capital Stock of AmPaM.....................................................24
6.4 Transactions in Capital Stock..............................................24
6.5 Subsidiaries...............................................................25
6.6 Financial Statements.......................................................25
6.7 Liabilities and Obligations................................................25
6.8 Conformity with Law; Litigation............................................25
6.9 No Violations..............................................................26
6.10 Validity of Obligations....................................................27
6.11 AmPaM Stock................................................................27
6.12 AmPaM Notes................................................................28
6.13 No Side Agreements.........................................................28
6.14 Business; Real Property; Material Agreements...............................28
6.15 Relations with Governments.................................................28
6.16 Disclosure.................................................................29
6.17 Other Agreements...........................................................29
7. COVENANTS PRIOR TO CLOSING..........................................................29
7.1 Access and Cooperation; Due Diligence; Transfer of Real Estate.............29
7.2 Conduct of Business Pending Closing........................................30
7.3 Prohibited Activities......................................................31
7.4 No Shop....................................................................32
7.5 Agreements.................................................................32
7.6 Notification of Certain Matters............................................33
7.7 Amendment of Schedules.....................................................33
7.8 Further Assurances.........................................................33
7.9 Authorized Capital.........................................................34
7.10 Compliance with the Xxxx-Xxxxx Act.........................................34
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8. CONDITIONS PRECEDENT TO OBLIGATIONS OF STOCKHOLDERS
AND COMPANY.........................................................................34
8.1 Representations and Warranties; Performance of Obligations.................34
8.2 Satisfaction...............................................................34
8.3 No Litigation..............................................................34
8.4 Opinion of Counsel.........................................................35
8.5 Consents and Approvals.....................................................35
8.6 Good Standing Certificates.................................................35
8.7 No Material Adverse Change.................................................35
8.8 Secretary's Certificate....................................................35
8.9 Tax Matters................................................................35
8.10 Other Founding Companies...................................................35
8.11 Company Release of Stockholders............................................36
8.12 Sterling City Capital Transfer Restrictions................................36
8.13 Election of Chief Executive Officer........................................36
8.14 Funding Availability.......................................................36
9. CONDITIONS PRECEDENT TO OBLIGATIONS OF AMPAM........................................36
9.1 Representations and Warranties; Performance and Obligations................36
9.2 No Litigation..............................................................37
9.3 Secretary's Certificate....................................................37
9.4 No Material Adverse Effect.................................................37
9.5 Stockholders' Release......................................................37
9.6 Satisfaction...............................................................37
9.7 Termination of Related Party Agreements....................................37
9.8 Opinion of Counsel.........................................................38
9.9 Consents and Approvals.....................................................38
9.10 Good Standing Certificates.................................................38
9.11 Funding Availability.......................................................38
9.12 FIRPTA Certificate.........................................................38
9.13 Resignations of Directors and Officers.....................................38
10. COVENANTS OF AMPAM AND THE STOCKHOLDERS AFTER CLOSING...............................39
10.1 Release From Guarantees; Repayment of Certain Obligations..................39
10.2 Preservation of Tax and Accounting Treatment...............................39
10.3 Preparation and Filing of Tax Returns; Payment of Taxes....................39
10.4 Directors..................................................................40
10.5 Legal Opinions.............................................................40
11. INDEMNIFICATION.....................................................................40
11.1 General Indemnification by the Stockholders................................40
11.2 Indemnification by AmPaM...................................................42
11.3 Third Person Claims........................................................42
11.4 Exclusive Remedy...........................................................43
11.5 Limitations on Indemnification.............................................44
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12. TERMINATION OF AGREEMENT............................................................45
12.1 Termination................................................................45
12.2 Procedure and Effect of Termination........................................46
13. NONCOMPETITION......................................................................46
13.1 Prohibited Activities......................................................47
13.2 Damages....................................................................47
13.3 Reasonable Restraint.......................................................48
13.4 Severability; Reformation..................................................48
13.5 Independent Covenant.......................................................48
13.6 Materiality................................................................48
14. NONDISCLOSURE OF CONFIDENTIAL INFORMATION...........................................48
14.1 Stockholders...............................................................48
14.2 AmPaM......................................................................49
14.3 Damages....................................................................50
14.4 Survival...................................................................50
14.5 Return of Information......................................................50
15. TRANSFER RESTRICTIONS...............................................................50
15.1 Transfer Restrictions Relating to AmPaM Stock and AmPaM Notes..............50
15.2 Transfer Restrictions Relating to Additional Consideration.................51
16. FEDERAL SECURITIES ACT REPRESENTATIONS..............................................52
16.1 Compliance with Law........................................................52
16.2 Economic Risk; Sophistication..............................................52
16.3 Reliance by AmPaM..........................................................53
17. REGISTRATION RIGHTS.................................................................53
17.1 Piggyback Registration Rights..............................................53
17.2 Registration Procedures....................................................54
17.3 Indemnification............................................................56
17.4 Underwriting Agreement.....................................................57
17.5 Transfer of Rights.........................................................58
17.6 Rule 144 Reporting.........................................................58
18. REDEMPTION OF AMPAM STOCK...........................................................58
18.1 Redemption Trigger.........................................................58
18.2 Minimum Redemption; Limitations............................................59
18.3 Notice; Exercise...........................................................59
18.4 Additional Redemptions.....................................................59
18.5 Termination of Redemption Obligation.......................................59
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19. GENERAL.............................................................................60
19.1 Cooperation................................................................60
19.2 Successors and Assigns.....................................................60
19.3 Entire Agreement...........................................................60
19.4 Counterparts...............................................................60
19.5 Brokers and Agent..........................................................61
19.6 Expenses...................................................................61
19.7 Notices....................................................................62
19.8 Governing Law..............................................................63
19.9 Survival of Representations and Warranties.................................63
19.10 Exercise of Rights and Remedies............................................63
19.11 Time.......................................................................63
19.12 Reformation and Severability...............................................63
19.13 Remedies Cumulative........................................................63
19.14 Captions...................................................................63
19.15 Amendments and Waivers.....................................................64
19.16 Mediation and Arbitration..................................................64
19.17 Information Provided for Private Placement Memorandum......................64
19.18 Effective Date of Agreement................................................64
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ANNEXES
Annex I - Consideration to Be Paid to Stockholders
Annex II - Amended and Restated Certificate of Incorporation and
By-Laws of AmPaM
Annex III - Form of Opinion of Counsel to AmPaM
Annex IV - Form of Tax Opinion
Annex V - Form of Opinion of Counsel to Company and Stockholders
Annex VI-1 - Form of Employment Agreement
Annex VI-2 - Form of Employment Xxxxxxxxx
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XXXXXXXXX
2.1 Board of Directors
2.2 Officers
5.1 Due Organization
5.2 Authorization
5.3 Capital Stock of the Company
5.4 Transactions in Capital Stock; Organization Accounting
5.5 No Bonus Shares
5.6 Subsidiaries; Ownership in Other Entities
5.7 Predecessor Status; etc
5.8 Spin-off by the Company
5.9 Financial Statements
5.10 Liabilities and Obligations
5.11 Accounts and Notes Receivable
5.12 Licenses; Intellectual Property (Schedules 5.12(a)(1), 5.12(a)(2),
5.12(b)(1) and 5.12(b)(2))
5.13 Environmental Matters
5.14 Personal Property
5.15 Significant Customers; Material Contracts and Commitments
(Schedules 5.15(a), 5.15(b) and 5.15 (c))
5.16 Real Property
5.17 Insurance
5.18 Compensation; Employment Agreements; Labor Matters
5.19 Employee Plans
5.20 Compliance with ERISA
5.21 Conformity with Law; Litigation
5.22 Taxes (Schedules 5.22(a) and 5.22(b))
5.23 No Violations, No Consents Required, Etc.
(Schedules 5.23(a), 5.23(b), 5.23(c) and 5.23(e))
5.24 Government Contracts
5.25 Absence of Changes
5.26 Deposit Accounts; Powers of Attorney
5.30 No Warranties or Insurance
5.31 Interest in Customers and Suppliers and Related Party Transactions
5.33 Authority; Ownership (Schedules 5.33(a) and 5.33(b))
6.9 No Violations
7.1 Access and Cooperation; Due Diligence; Transfer of Real Estate
7.2 Conduct of Business Pending Closing
7.3 Prohibited Activities
7.5 Agreements
8.11 Employment Agreements
9.7 Termination of Related Party Agreements
10.1 Release From Guarantees; Repayment of Certain Obligations
16.2 Non-accredited Investors
18.5 Brokers and Agents
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ACQUISITION AGREEMENT
THIS ACQUISITION AGREEMENT (the "Agreement") is made as of the 11th day
of February, 1999 by and among AMERICAN PLUMBING & MECHANICAL, INC., a Delaware
corporation ("AmPaM"), XXXXX'X RIVER CITY MECHANICAL, INC., an Ohio corporation
(the "Company"), and the stockholders listed on the signature pages of this
Agreement (the "Stockholders"), which are all the stockholders of the Company.
RECITALS
WHEREAS, the Company is engaged in the plumbing and mechanical services
business;
WHEREAS, as of the date hereof, the Stockholders own, and as of the
Closing Date the Stockholders will own, all of the issued and outstanding
capital stock of the Company (the "Company Stock");
WHEREAS, AmPaM is entering into other separate agreements
simultaneously with this Agreement that are substantially the same as this
Agreement (the "Other Agreements"), each of which is entitled "Acquisition
Agreement," with each of the Other Founding Companies (as defined herein) and
their respective stockholders in order for AmPaM to acquire additional companies
engaged in the plumbing and mechanical services business;
WHEREAS, this Agreement and the Other Agreements constitute the "AmPaM
Plan of Organization;"
WHEREAS, the Stockholders and the boards of directors and the
stockholders of AmPaM, and each of the Other Founding Companies that are parties
to the Other Agreements, have approved and adopted the AmPaM Plan of
Organization as an integrated plan pursuant to which the Stockholders and the
stockholders of each of the other Founding Companies will contribute the capital
stock of each of the Founding Companies to AmPaM, and the Stockholders and the
stockholders of each of the other Founding Companies will acquire the stock of
AmPaM (but not cash or other property) as a tax-free transfer of property under
Section 351 of the Code;
WHEREAS, in consideration of the agreements of the Other Founding
Companies pursuant to the Other Agreements, the Stockholders have approved this
Agreement as part of the AmPaM Plan of Organization in order to transfer all of
the issued and outstanding capital stock of the Company to AmPaM; and
NOW, THEREFORE, in consideration of the premises and of the mutual
agreements, representations, warranties, provisions and covenants herein
contained, the parties hereto hereby agree as follows:
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Unless the context otherwise requires, capitalized terms used in this
Agreement or in any schedule attached hereto and not otherwise defined shall
have the following meanings for all purposes of this Agreement:
"1933 Act" means the Securities Act of 1933, as amended.
"Acquired Party" means the Company, any subsidiary of the Company and
any member of a Relevant Group.
"Affiliates" means with respect to any person or entity, any other
person or entity that directly or indirectly, controls, is controlled by, or is
under common control with such person or entity.
"AmPaM" has the meaning set forth in the first paragraph of this
Agreement.
"AmPaM Charter Documents" has the meaning set forth in Section 6.1.
"AmPaM Plan of Organization" has the meaning set forth in the recitals
of this Agreement.
"AmPaM Stock" means the common stock, par value $.01 per share, of
AmPaM.
"AmPaM Notes" means those notes issued by AmPaM to the Stockholders as
a portion of the consideration to be received hereunder and in substantially the
form to Annex I as Appendix A.
"Balance Sheet Date" has the meaning set forth in Section 5.9.
"Charter Documents" has the meaning set forth in Section 5.1.
"Closing" has the meaning set forth in Section 4.
"Closing Date" has the meaning set forth in Section 4.
"Code" means the Internal Revenue Code of 1986, as amended.
"Company" has the meaning set forth in the first paragraph of this
Agreement.
"Company Stock" has the meaning set forth in the recitals of this
Agreement.
"Delaware GCL" means the General Corporation Law of the State of
Delaware.
"Environmental Laws" has the meaning set forth in Section 5.13(b).
"Expiration Date" has the meaning set forth in Section 5(A) and Section
6, as applicable.
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"Founding Companies" means the following companies:
Xxxxxxxxxxxx Enterprises, Inc., a Texas corporation;
Xxxxxxxxxxxx Services, Inc., a Texas corporation;
GGR Leasing Corporation, a Texas corporation;
X.X. Xxxxxx Company of Florida, a Florida corporation;
X.X. Xxxxxx Company, an Ohio corporation;
Franklin Fire Sprinkler Company, an Ohio corporation;
Xxxxx Xxxxx Plumbing, Inc., an Arizona corporation;
Xxxxxx Mechanical Contractors, Inc., a Georgia corporation;
Xxxxxx Mechanical Contractors, Inc., a Florida corporation;
Power Plumbing Inc., a Delaware corporation;
R.C.R. Plumbing, Inc., a California corporation;
Sherwood Mechanical, Inc., a California corporation; and
Xxxxx'x River City Mechanical, Inc., an Ohio corporation.
"GAAP" means generally accepted accounting principles as consistently
applied in the United States.
"Xxxx-Xxxxx Act" means the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act
of 1976, as amended.
"Hazardous Substance" has the meaning set forth in Section 5.13(c).
"IPO" means a firm commitment underwritten initial public offering of
AmPaM Stock managed by one or more nationally recognized national investment
banking firms.
"known" or "knowledge," when used in reference to a statement regarding
the existence or absence of facts in this Agreement, is intended by the parties
to mean that the only information to be attributed to such person is information
actually known to (a) the person in the case of an individual, (b) in the case
of a corporation or other entity other than the Company, an officer or director
of such corporation or entity or (c) in the case of the Company and its
Subsidiaries, an officer of the Company listed on Schedule 2.2 hereto, except
for Xxxxx Xxxxxxx.
"Material Adverse Change" means a material adverse change in the
business, operations, properties, assets or condition (financial or otherwise),
of the subject entity and its subsidiaries taken as a whole.
"Material Adverse Effect" means a material adverse effect on the
business, operations, properties, assets or condition (financial or otherwise),
of the subject entity and its subsidiaries taken as a whole.
"Material Documents" has the meaning set forth in Section 5.23.
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"Ordinary Course of Business" means the ordinary course of business
consistent with past customs and practice (including with respect to quantity
and frequency).
"Other Agreements" has the meaning set forth in the recitals of this
Agreement.
"Other Founding Companies" means all of the Founding Companies other
than the Company.
"Plans" has the meaning set forth in Section 5.19.
"Private Placement Memorandum" means the Private Placement Memorandum,
dated as of February 11, 1999, provided to each Stockholder prior to the
execution and delivery of this Agreement which sets forth certain information
relating to the transactions contemplated by this Agreement and the Other
Agreements.
"Qualified Plans" has the meaning set forth in Section 5.20.
"Relevant Group" means the Company and any affiliated, combined,
consolidated, unitary or similar group of which the Company is or was a member.
"Restricted Common Stock" has the meaning set forth in Section 1.3(ii).
"Returns" means any returns, reports or statements (including any
information returns) required to be filed for purposes of a particular Tax.
"Schedule" means each Schedule attached hereto, which shall reference
the relevant sections of this Agreement, on which parties hereto disclose
information as part of their respective representations, warranties and
covenants.
"SEC" means the United States Securities and Exchange Commission.
"State of Incorporation" means the State of Ohio.
"Stockholders" has the meaning set forth in the first paragraph of this
Agreement.
"Subsidiaries" means with respect to a person or entity, any
corporation or other entity in which such person or entity owns a 5% or greater
ownership interest.
"Tax" or "Taxes" means all federal, state, local or foreign net or
gross income, gross receipts, net proceeds, sales, use, ad valorem, value added,
franchise, withholding, employment, excise, property, deed, stamp, alternative
or add-on minimum, or other taxes, assessments, duties, fees, levies or other
governmental charges, whether disputed or not, together with any interest,
penalties, additions to tax or additional amounts with respect thereto.
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1. ACQUISITION OF STOCK
1.1 ACQUISITION. Upon the terms and subject to the conditions contained
in this Agreement and in reliance upon the representations, warranties,
covenants and agreements contained in this Agreement, on the Closing Date, the
Stockholders shall convey and transfer to AmPaM all of the issued and
outstanding shares of Company Stock as set forth in Annex I hereto.
1.2 CONSIDERATION. The consideration for the Company Stock shall be as
set forth on Annex I to this Agreement.
1.3 CERTAIN INFORMATION WITH RESPECT TO THE CAPITAL STOCK OF THE
COMPANY AND AMPAM. The respective designations and numbers of outstanding shares
and voting rights of each class of outstanding capital stock of the Company and
AmPaM as of the date of this Agreement are as follows:
(i) as of the date of this Agreement, the authorized and
outstanding Company Stock is as set forth on Schedule 5.3 hereto; and
(ii) immediately prior to the Closing Date, the authorized
capital stock of AmPaM will consist of (A) 100,000,000 shares of AmPaM
Stock, of which the number of issued and outstanding shares will be set
forth in the Private Placement Memorandum, (B) 10,000,000 shares of
redeemable preferred stock, of which the number of issued and
outstanding shares will be set forth in the Private Placement
Memorandum, and (C) 5,000,000 shares of Restricted Voting Common Stock,
$.01 per value (the "Restricted Common Stock"), all of which will be
issued and outstanding except as otherwise set forth in the Private
Placement Memorandum.
2. BOARD OF DIRECTORS AND OFFICERS OF THE COMPANY
2.1 BOARD OF DIRECTORS. The Company and the Stockholders shall take
action, including solicitation of resignation of directors, necessary so that
the Board of Directors of the Company as of the Closing Date shall consist only
of the persons identified on Schedule 2.1 hereto.
2.2 OFFICERS. The Company and the Stockholders shall take action,
including solicitation of resignation of officers, necessary so that the
officers of the Company as of the Closing Date shall consist only of the persons
identified on Schedule 2.2 hereto.
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3. DELIVERY OF CONSIDERATION
3.1 STOCKHOLDERS' CONSIDERATION. On the Closing Date, the Stockholders
shall, upon surrender of certificates evidencing the Company Stock, receive from
AmPaM the respective number of shares of AmPaM Stock, the amount of cash and the
principal amount of AmPaM Notes described on Annex I hereto specified with
respect to each such Stockholder as payable on the Closing Date. All payments of
cash shall be made by certified check or wire transfer of immediately available
funds. Consideration consisting of AmPaM Notes shall be substantially in the
form of Appendix A to Annex I.
3.2 STOCKHOLDERS' DELIVERIES. The Stockholders shall deliver at the
Closing the certificates representing Company Stock, duly endorsed in blank by
the Stockholders, or accompanied by blank stock powers, and with all necessary
transfer tax and other revenue stamps, acquired at the Stockholders' expense,
affixed and canceled. The Stockholders agree promptly to cure any deficiencies
with respect to the endorsement of the stock certificates or other documents of
conveyance with respect to such Company Stock or with respect to the stock
powers accompanying any Company Stock.
4. CLOSING
The consummation of the transactions contemplated by Section 3 (the
"Closing") shall take place on March 31, 1999 or such date not later than May
31, 1999 as AmPaM shall determine by giving written notice of such other date as
provided in Section 18.7 (the "Closing Date") at the offices of Xxxxxxx & Xxxxx
L.L.P., 0000 Xxxxx Xxxxx, 000 Xxxxxx, Xxxxxxx, Xxxxx 00000.
5. REPRESENTATIONS AND WARRANTIES OF THE COMPANY
(A) REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
Except as set forth in the disclosure schedules attached hereto and
except as otherwise qualified below, the Company represents and warrants that
all of the following representations and warranties in this Section 5(A) are
true at the date of this Agreement and, subject to Section 7.7 hereto, shall be
true at the time of the Closing, and that such representations and warranties
shall survive the Closing Date for a period of eighteen months (the last day of
such period being the "Expiration Date"), except that the representations and
warranties set forth in Sections 5.3, 5.22 and 5.32 hereof shall survive until
such time as the applicable statute of limitations period has run, which shall
be deemed to be the Expiration Date for the representations and warranties set
forth in Sections 5.3, 5.22 and 5.32. For purposes of this Section 5, the term
"Company" shall mean and refer to the Company and all of its Subsidiaries, if
any, and any reference to a Material Adverse Effect on the Company or Material
Adverse Change with respect to the Company shall mean the Company and its
Subsidiaries, taken as a whole. Except as expressly set forth in this Agreement,
the Company expressly disclaims any representation or warranty (express, implied
or otherwise) relating to the
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Company and any Subsidiary thereof including, without limitation, any warranty
of merchantability or fitness for a particular purpose.
5.1 DUE ORGANIZATION. The Company is a corporation duly incorporated
and organized, validly existing and in good standing under the laws of the State
of Incorporation, and has the requisite power and authority to carry on its
business as it is now being conducted. The Company is duly qualified or
authorized to do business and is in good standing in each jurisdiction in which
the nature of its business or the ownership or leasing of its properties makes
such qualification or authorization necessary except where the failure to be so
qualified or authorized to do business would not have a Material Adverse Effect
on the Company. Schedule 5.1 sets forth a list of all states in which the
Company is authorized or qualified to do business, which list indicates which of
such entities is authorized or qualified to do business in such states. True,
complete and correct copies of the Certificate or Articles of Incorporation and
By-laws, each as amended, of the Company (the "Charter Documents") are all
attached to Schedule 5.1. The Company has delivered to AmPaM complete and
correct copies of (i) the stock records of the Company and (ii) all minutes of
meetings, written consents and other evidence, if any, of deliberations of or
actions taken by the Company's Board of Directors, any committees of the Board
of Directors and stockholders during the last five years.
5.2 AUTHORIZATION. (i) The officers or other representatives of the
Company executing this Agreement have the authority to enter into and bind the
Company to the terms of this Agreement and (ii) the Company has the full legal
right, power and authority to enter into this Agreement and consummate the
transactions contemplated hereby. Copies of the most recent resolutions adopted
by the Board of Directors of the Company and the most recent resolutions adopted
by the Stockholders, which approve this Agreement and the transactions
contemplated hereby in all respects, certified by the Secretary or an Assistant
Secretary of the Company as being in full force and effect on the date hereof,
are attached hereto as Schedule 5.2.
5.3 CAPITAL STOCK OF THE COMPANY. The authorized capital stock of the
Company and each of its Subsidiaries is as set forth on Schedule 5.3(a). All of
the issued and outstanding shares of the capital stock of the Company are owned
by the Stockholders in the amounts set forth in Schedule 5.3(a). Except as set
forth on Schedule 5.3(a), all of the issued and outstanding capital stock of
each Subsidiary is owned by the Company. All of the issued and outstanding
shares of the capital stock of the Company have been duly authorized and validly
issued, are fully paid and nonassessable, are owned of record by the
Stockholders and further, such shares were offered, issued, sold and delivered
by the Company in compliance with all applicable state and Federal laws
concerning the issuance of securities. Further, none of such shares were issued
in violation of any preemptive rights of any past or present stockholder.
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5.4 TRANSACTIONS IN CAPITAL STOCK. Except as set forth on Schedule
5.4(a), the Company has not acquired or redeemed any shares of capital stock of
the Company since January 1, 1996. Except as set forth on Schedule 5.4(b), (i)
no option, warrant, call, conversion right or commitment of any kind exists
which obligates the Company to issue any of its authorized but unissued capital
stock; (ii) the Company has no obligation (contingent or otherwise) to purchase,
redeem or otherwise acquire any of its equity securities or any interests
therein or to pay any dividend or make any distribution in respect thereof; and
(iii) neither the voting stock structure of the Company nor the relative
ownership of shares among any of its Stockholders has been altered or changed in
contemplation of the AmPaM Plan of Organization. There are no voting trusts,
proxies or other agreements or understandings to which the Company is a party or
is bound with respect to the voting of any shares of capital stock of the
Company.
5.5 NO BONUS SHARES. Except as set forth on Schedule 5.5, none of the
shares of Company Stock was issued pursuant to awards, grants or bonuses in
contemplation of the AmPaM Plan of Organization.
5.6 SUBSIDIARIES; OWNERSHIP IN OTHER ENTITIES. Except as set forth on
Schedule 5.6(a), the Company has no Subsidiaries. Except as set forth in
Schedule 5.6(b), the Company does not presently own, of record or beneficially,
or control, directly or indirectly, any capital stock, securities convertible
into capital stock or any other equity interest in any corporation, association
or business entity nor is the Company, directly or indirectly, a participant in
any joint venture, partnership or other non-corporate entity.
5.7 PREDECESSOR STATUS; ETC. Set forth on Schedule 5.7(a) is a list of
all predecessor companies of the Company, including the names of any entities
acquired by the Company (by stock purchase, merger or otherwise) or owned by the
Company or from whom the Company previously acquired material assets, in any
case, from the earliest date upon which any Stockholder acquired his or her
stock in any Company. Except as disclosed on Schedule 5.7(b), the Company has
not been, within such period of time, a subsidiary or division of another
corporation or a part of an acquisition which was later rescinded.
5.8 SPIN-OFF BY THE COMPANY. Except as set forth on Schedule 5.8, there
has not been any sale, spin-off or split-up of material assets of either the
Company or any other person or entity that is an Affiliate of the Company since
January 1, 1996.
5.9 FINANCIAL STATEMENTS. Attached hereto as Schedule 5.9 is a
copy of:
(i) the balance sheets of the Company as of December 31, 1996
and 1997 and the related statements of operations, stockholders' equity
and cash flows for the three-year period ended December 31, 1997,
together with the related notes and schedules (such balance sheets, the
related statements of operations, stockholders' equity and cash flows
and the related notes and schedules are referred to herein as the
"Year-end Financial Statements");
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(ii) the balance sheet of the Company as of June 30, 1998 and
the related statements of operations, stockholders' equity and cash
flows for the six-month periods ended June 30, 1997 and 1998, together
with the related notes and schedules (such balance sheets, the related
statements of operations, stockholders' equity and cash flows and the
related notes and schedules are referred to herein as the "Six-Month
Interim Financial Statements");
(iii) the balance sheet of the Company as of September 30,
1998 (the "Balance Sheet Date") and the related statements of
operations, stockholders' equity and cash flows for the nine-month
periods ended September 30, 1997 and 1998 (such balance sheets, the
related statements of operations, stockholders' equity and cash flows
are referred to herein as the "Nine-Month Interim Financial
Statements"); and
(iv) the income statement of the Company for the 12-month
period ended June 30, 1998 (the "Valuation Income Statement").
The Year-end Financial Statements, the Six-Month Interim Financial Statements,
the Nine-Month Interim Financial Statements and the Valuation Income Statement
are collectively called the "Financial Statements". The Financial Statements,
including those included in the Private Placement Memorandum, have been prepared
in accordance with GAAP applied on a consistent basis and fairly present the
financial position of the Company as of the dates thereof and the results of its
operations and changes in financial position for the periods then ended,
subject, in the case of the Six-Month Interim Financial Statements and the
Nine-Month Interim Financial Statements, to normal year-end audit adjustments
and any other adjustments described therein and the absence of certain footnote
disclosures.
5.10 LIABILITIES AND OBLIGATIONS. Schedule 5.10(a) sets forth an
accurate list as of the Balance Sheet Date of (i) all material liabilities of
the Company which are not reflected on the balance sheet of the Company at the
Balance Sheet Date or otherwise reflected in the Company Financial Statements at
the Balance Sheet Date which by their nature would be required in accordance
with GAAP to be reflected in the balance sheet, and (ii) all loan agreements,
indemnity or guaranty agreements, bonds, mortgages, pledges or other security
agreements to which the Company is a party or by which its properties may be
bound other than bid bonds and performance bonds made in the Ordinary Course of
Business. Except as set forth on Schedule 5.10(b), since the Balance Sheet Date,
the Company has not incurred any material liabilities or obligations of any
kind, character or description, whether accrued, absolute, secured or unsecured,
contingent or otherwise, other than liabilities incurred in the Ordinary Course
of Business. The Company has also delivered to AmPaM, on Schedule 5.10(c), a
list of contingent liabilities related to pending litigation or litigation that
has been threatened in writing, or other material liabilities which are not
fixed or otherwise accrued or reserved. For each such contingent liability of
the Company or liability of the Company for which the amount is not fixed or is
contested, the Company has provided to AmPaM the following information:
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(i) a summary description of the liability together with the
following:
(a) copies of all relevant documentation in the
possession of the Company or its directors, officers
or stockholders relating thereto;
(b) amounts claimed and any other action or relief
sought; and
(c) name of claimant and all other parties to the claim,
suit or proceeding;
(ii) the name of each court or agency before which such claim,
suit or proceeding is pending;
(iii) the date such claim, suit or proceeding was instituted;
and
(iv) a good faith estimate of the maximum amount, if any,
which the Company expects, based on information available, is likely to
become payable with respect to each such liability and the amount, if
any, accrued or reserved for each such potential liability on the
Financial Statements.
AmPaM acknowledges that all estimates referred to above and set forth on
Schedule 5.10(c) are only good faith estimates, and that the Company and the
Stockholders expressly do not represent or warrant that the actual amounts of
such liabilities will be equal to, or more or less than, the amounts of such
estimates.
5.11 ACCOUNTS AND NOTES RECEIVABLE. Schedule 5.11(a) sets forth an
accurate list, in all material respects, of the accounts and notes receivable of
the Company, as of the Balance Sheet Date, including any such amounts which are
not reflected in the balance sheet as of the Balance Sheet Date, and including
all receivables from and advances to employees and the Stockholders, which are
identified as such. Schedule 5.11(a) also sets forth a materially accurate aging
of all accounts and notes receivable as of the Balance Sheet Date showing
amounts due in 30-day aging categories. Except to the extent reflected on
Schedule 5.11(b), such accounts, notes and other receivables are collectible in
the amounts shown on Schedule 5.11(a), net of reserves reflected in the balance
sheet as of the Balance Sheet Date.
5.12 LICENSES; INTELLECTUAL PROPERTY. (a) The Company or its employees
hold all licenses, franchises, permits and other governmental authorizations
("Licenses") necessary to conduct the business of the Company, the absence of
which would cause a Material Adverse Effect on the Company, and the Company has
delivered to AmPaM a list that is accurate, in all material respects, and
summary description (which is set forth on Schedule 5.12(a)(1)) of all such
Licenses. At or prior to the Closing, all such Licenses owned or held by any
employee of the Company will be assigned or licensed to the Company for no
additional consideration. The Licenses listed on Schedule 5.12(a)(1) are valid,
and the Company has not received any notice that any person intends to cancel,
terminate or not renew any such License. The Company has conducted and is
conducting its business in compliance in all material respects with the
requirements, standards, criteria and
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conditions set forth in the Licenses listed on Schedule 5.12(a)(1) and is not in
violation of any of the foregoing in any material respect. Except as
specifically provided in Schedule 5.12(a)(2), the consummation by the Company of
the transactions contemplated by this Agreement will not result in a default
under or a breach or violation of, or adversely affect the rights and benefits
afforded to the Company by, any such Licenses.
(b) The Company owns or possesses adequate licenses or other rights to
use (without making any payment or granting rights to any person in exchange)
all patents, patent applications, trademarks, copyrights, service marks and
trade names (collectively, the "Intellectual Property") necessary to conduct its
business as currently conducted. A description of any Intellectual Property
licensed by the Company, including the material terms of any such license, is
described on Schedule 5.12(b)(1). Neither the validity of the Intellectual
Property nor the title thereto or use thereof by the Company is being questioned
in any pending litigation, and the conduct of the Company's business, as
currently conducted, does not conflict with licenses, copyrights, uncopyrighted
works, trade marks, service marks, trade names, trade name rights, patents,
patent rights, unpatented inventions or trade secrets of others. Neither the
validity of the Intellectual Property nor the title thereto or use thereof by
the Company is being questioned in any pending or, to the knowledge of the
Company, threatened infringement claims or litigation, and the conduct of the
Company's business, as now conducted, does not conflict with licenses,
copyrights, uncopyrighted works, trade marks, service marks, trade names, trade
name rights, patents, patent rights, unpatented inventions or trade secrets of
others. Except as specifically provided in Schedule 5.12(b)(2), the consummation
by the Company of the transactions contemplated by this Agreement will not
adversely affect the rights and benefits afforded to the Company by any such
Intellectual Property.
5.13 ENVIRONMENTAL MATTERS. (a) Except as set forth in Schedule 5.13
attached hereto, (i) the Company has conducted its businesses in compliance in
all material respects with all applicable Environmental Laws, including, without
limitation, having all environmental permits, licenses and other approvals and
authorizations necessary for the operation of its business as presently
conducted, except where the failure to have such permit, license, approval or
authorization would not have a Material Adverse Effect on the Company, (ii) none
of the properties owned by the Company contain any Hazardous Substance as a
result of any activity of the Company in amounts exceeding the levels permitted
by applicable Environmental Laws, except where amounts in excess of such levels
would not have a Material Adverse Effect on the Company, (iii) the Company has
not received any notices, demand letters or requests for information from any
Federal, state, local or foreign governmental entity or third party indicating
that the Company may be in violation of, or liable under, any Environmental Law
in connection with the ownership or operation of its business, (iv) there are no
civil, criminal or administrative actions, suits, demands, claims, hearings,
investigations or proceedings pending or, to the knowledge of the Company,
threatened, against the Company relating to any violation, or alleged violation,
of any Environmental Law, except where such violation would not have a Material
Adverse Effect on the Company, (v) no reports have been filed, or are required
to be filed, by the Company concerning the release of any Hazardous Substance or
the threatened or actual violation of any Environmental Law, (vi) no Hazardous
Substance has
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been disposed of, released or transported in violation of any applicable
Environmental Law from any properties owned by the Company as a result of any
activity of the Company during the time such properties were owned, leased or
operated by the Company, (vii) there have been no environmental investigations,
studies, audits, tests, reviews or other analyses regarding compliance or
non-compliance with any applicable Environmental Law conducted by or which are
in the possession of the Company relating to the activities of the Company which
are not listed on Schedule 5.13 attached hereto prior to the date hereof, (viii)
to the knowledge of the Company, (A) there are no underground storage tanks on,
in or under any properties owned by the Company and (B) no underground storage
tanks have been closed or removed from any of such properties during the time
such properties were owned, leased or operated by the Company which are not
listed on Schedule 5.13, (ix) to the knowledge of the Company, (A) there is no
asbestos or asbestos-containing material present in any material quantity in any
of the properties owned by the Company, and (B) no asbestos has been removed
from any of such properties during the time such properties were owned, leased
or operated by the Company, and (x) neither the Company nor any of its
properties are subject to any material liabilities or expenditures (fixed or
contingent) relating to any suit, settlement, court order, administrative order,
regulatory requirement, judgment or claim asserted or arising under any
Environmental Law.
(b) As used herein, "Environmental Law" means, as of the Closing Date,
any Federal, state, local or foreign law, statute, ordinance, rule, regulation,
code, license, permit, authorization, approval, consent, order, judgment,
decree, injunction or agreement with any governmental entity to which the
Company is a party or subject relating to (x) the protection, preservation or
restoration of the environment (including, without limitation, air, water vapor,
surface water, groundwater, drinking water supply, surface land, subsurface
land, plant and animal life or any other natural resource) or to human health or
safety or (y) the exposure to, or the use, storage, recycling, treatment,
generation, transportation, processing, handling, labeling, production, release
or disposal of Hazardous Substances, in each case as amended and as in effect on
the Closing Date. The term Environmental Law includes, without limitation, (i)
the Federal Comprehensive Environmental Response Compensation and Liability Act
of 1980, the Superfund Amendments and Reauthorization Act, the Federal Water
Pollution Control Act of 1972, the Federal Clean Air Act, the Federal Clean
Water Act, the Federal Resource Conservation and Recovery Act of 1976 (including
the Hazardous and Solid Waste Amendments thereto), the Federal Solid Waste
Disposal and the Federal Toxic Substances Control Act, the Federal Insecticide,
Fungicide and Rodenticide Act, the Federal Occupational Safety and Health Act of
1970, each as amended and as in effect on the Closing Date, and (ii) any common
law or equitable doctrine (including, without limitation, injunctive relief and
tort doctrines such as negligence, nuisance, trespass and strict liability) that
may impose liability or obligations for injuries or damages due to, or
threatened as a result of, the presence of, effects of or exposure to any
Hazardous Substance.
(c) As used herein, "Hazardous Substance" means any substance presently
listed, defined, designated or classified as hazardous, toxic, radioactive, or
dangerous, or otherwise regulated, under any Environmental Law. Hazardous
Substance includes any substance to which exposure is regulated by any
government authority or any Environmental Law including, without
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limitation, any toxic waste, pollutant, contaminant, hazardous substance, toxic
substance, hazardous waste, special waste, industrial substance or petroleum or
any derivative or by-product thereof, radon, radioactive material, asbestos or
asbestos-containing material, urea formaldehyde foam insulation, lead or
polychlorinated biphenyls.
5.14 PERSONAL PROPERTY. The Company has delivered to AmPaM an accurate
list (which is set forth on Schedule 5.14(a)) of (x) all personal property
material to the operations of the Company as of the Balance Sheet Date included
in "plant, property and equipment" on the balance sheet of the Company as of
such date, (y) all other items of personal property owned by the Company with an
individual value in excess of $15,000 (i) as of the Balance Sheet Date and (ii)
acquired since the Balance Sheet Date and (z) all material leases and agreements
in respect of personal property, including, in the case of each of (x), (y) and
(z), (1) true, complete and correct copies of all such leases and (2) an
indication as to which assets are currently owned, or were formerly owned, by
Stockholders, relatives of Stockholders, or Affiliates of the Company. Except as
set forth on Schedule 5.14(b), (i) all personal property material to, and used
by, the Company in its business is either owned by the Company or leased by the
Company pursuant to a lease included on Schedule 5.14(a), (ii) all of the
personal property listed on Schedule 5.14(a) or replacement property thereof is
in working order and condition, ordinary wear and tear excepted and (iii) all
leases and agreements included on Schedule 5.14(a) are in full force and effect
and constitute valid and binding agreements of the Company, in each case in
accordance with their respective terms.
5.15 SIGNIFICANT CUSTOMERS; MATERIAL CONTRACTS AND COMMITMENTS.
(a) The Company has delivered to AmPaM a materially accurate list
(which is set forth on Schedule 5.15(a)(1)) of all customers (persons or
entities) representing 5% or more of the Company's annual revenues for any
period covered by any of the Financial Statements. Except to the extent set
forth on Schedule 5.15(a)(2), none of such customers has canceled or, to the
knowledge of the Company, are currently threatening to cancel a currently
effective contract with the Company.
(b) The Company has listed on Schedule 5.15(b) all material contracts,
commitments and similar agreements to which the Company is a party or by which
it or any of its properties are bound (including, but not limited to, contracts
with customers listed on Schedule 5.15(a), joint venture or partnership
agreements, contracts with any labor organizations, strategic alliances and
options to purchase land), other than agreements listed on Schedules 5.10(a),
Schedule 5.14(a) or Schedule 5.16(a), (a) in existence as of the Balance Sheet
Date and (b) entered into since the Balance Sheet Date, and in each case has
delivered or made available to AmPaM true, complete and correct copies of such
agreements. For purposes of the preceding sentence, a contract, commitment or
similar agreement is "material" if it (i) has a term of more than one year
(other than contracts, commitments or agreements that are cancelable without
liability or penalty within 30 days of notice from the Company of cancellation
or that can be terminated by the Company without material penalty upon notice of
30 days or less) or (ii) requires the payment by or to the Company of more than
$100,000 during any 12-month period. Except for expenditures in the ordinary
course of
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business, the Company has also indicated on Schedule 5.15(b) a summary
description of all plans or projects involving the opening of new operations,
expansion of existing operations, or the acquisition of any personal property,
business or assets requiring, in any event, the payment of more than $50,000 by
the Company during any 12-month period.
(c) Except as set forth on Schedule 5.15(c), the Company is not
required to provide any bonding or other financial security arrangements in any
material amount in connection with any contract listed on Schedule 5.15(b).
5.16 REAL PROPERTY. Schedule 5.16(a) includes a list of all real
property owned or leased by the Company at the date hereof and all other real
property, if any, used by the Company in the conduct of its business. The
Company has good and insurable title to any real property owned by it that is
shown on Schedule 5.16(a), other than property intended to be sold or
distributed prior to the Closing Date as provided in Section 7.1(c) of this
Agreement, and all real property so owned is subject to no mortgage, pledge,
lien, conditional sales agreement, encumbrance, lease, possessory rights of
third parties or charge, except for:
(i) liens reflected on Schedule 5.10(a) or Schedule 5.16(b) as
securing specified liabilities (with respect to which no material
default by the Company exists);
(ii) liens for current taxes not yet payable and assessments
not in default;
(iii) easements for utilities serving the property; and
(iv) easements, covenants and restrictions and other
exceptions to title which do not adversely affect the current use of
the property.
Copies of all leases and agreements in respect of such real property
leased by the Company, which are true, complete and correct in all material
respects, are attached to Schedule 5.16(a), and an indication as to which such
properties, if any, are currently owned, or were formerly owned, by Stockholders
or Affiliates of the Company or Stockholders is included in Schedule 5.16(a).
Except as set forth on Schedule 5.16(b), all of such leases included on Schedule
5.16(a) are, as to the Company, in full force and effect and constitute valid
and binding agreements of the Company in accordance with their respective terms.
5.17 INSURANCE. The Company has delivered to AmPaM (i) an accurate list
as of the Balance Sheet Date of all insurance policies carried by the Company
and (ii) an accurate list of all insurance loss runs or workers compensation
claims received for the past three policy years (which lists are set forth on
Schedule 5.17). The Company has also delivered or made available to AmPaM true,
complete and correct copies of all insurance policies currently in effect that
are referred in Schedule 5.17. Such insurance policies evidence all of the
insurance the Company is required to carry pursuant to all of its contracts and
other agreements and pursuant to all applicable laws. All of such insurance
policies are currently in full force and effect except as stated in Schedule
5.17.
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Since January 1, 1996, no insurance carried by the Company has been canceled by
the insurer and the Company has not been denied coverage under any such policy.
5.18 COMPENSATION; EMPLOYMENT AGREEMENTS; LABOR MATTERS.
(a) The Company has delivered to AmPaM an accurate list (which is set
forth on Schedule 5.18(a)(1)) showing all officers, directors and key employees
of the Company, listing all employment agreements with such officers, directors
and key employees and the rate of compensation (and the portions thereof
attributable to salary, bonus and other compensation, respectively) of each of
such persons as of (i) the Balance Sheet Date and (ii) the date hereof. The
Company has provided to AmPaM true, complete and correct copies of any
employment agreements for persons listed on Schedule 5.18(a)(1). Since the
Balance Sheet Date, except as disclosed on Schedule 5.18(a)(2), there have been
no increases in the compensation payable or any bonuses to any officer,
director, key employee or other employee, except ordinary salary increases
implemented on a basis consistent with past practices and except for bonuses
paid on a basis consistent with past practices.
(b) Except as set forth on Schedule 5.18(b), (i) the Company is not
bound by or subject to (and none of its assets or properties is bound by or
subject to) any arrangement with any labor union, (ii) to the knowledge of the
Company, no campaign to establish such arrangement is in progress and (iii)
there is no pending or, to the Company's knowledge, threatened labor dispute
involving the Company and any group of its employees nor has the Company
experienced any labor interruptions over the past three years. The Company
believes its relationship with employees to be generally good.
(c) Except as set forth in Schedule 5.18(c) attached hereto, (i) there
are no claims, actions or proceedings pending or, to the knowledge of the
Company, threatened between the Company and any of its employees, (ii) the
Company has complied in all material respects with all laws relating to the
employment of labor, including, without limitation, any provisions thereof
relating to wages, hours, collective bargaining, and the payment of social
security and similar taxes, and (iii) the Company has not received written
notice from any person asserting that the Company is liable in any material
amount for any arrears of wages or any taxes or penalties for failure to comply
with any of the foregoing.
5.19 EMPLOYEE PLANS. The Company has delivered to AmPaM accurate
schedule (Schedule 5.19(a)) showing all employee benefit plans of the Company,
including all employment agreements and other agreements or arrangements
containing "golden parachute" or other similar provisions, and deferred
compensation agreements, together with true, complete and correct copies of such
plans, agreements and any trusts related thereto, and classifications of
employees covered thereby as of the Balance Sheet Date and as of the date of
this Agreement. Except for the employee benefit plans, if any, described on
Schedule 5.19(a), the Company does not sponsor, maintain or contribute to any
plan program, fund or arrangement that constitutes an "employee pension benefit
plan", and neither the Company nor any Subsidiary has any obligation to
contribute to or accrue or
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pay any benefits under any deferred compensation or retirement funding
arrangement on behalf of any employee or employees (such as, for example, and
without limitation, any individual retirement account or annuity, any "excess
benefit plan" (within the meaning of Section 3(36) of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA")) or any non-qualified deferred
compensation arrangement). For the purposes of this Agreement, the term
"employee pension benefit plan" shall have the same meaning as is given that
term in Section 3(2) of ERISA. The Company has not sponsored, maintained or
contributed to any employee pension benefit plan other than the plans set forth
on Schedule 5.19(a), and, except as described on Schedule 5.19(b), the Company
is not or could not be required to contribute to any retirement plan pursuant to
the provisions of any collective bargaining agreement establishing the terms and
conditions or employment of any of the Company's employees.
Except as set forth on Schedule 5.19(c), the Company is not now, or
will not as a result of its past activities become, liable to the Pension
Benefit Guaranty Corporation or to any multiemployer employee pension benefit
plan under the provisions of Title IV of ERISA.
All employee benefit plans listed on Schedule 5.19(a) and the
administration thereof are in compliance in all material respects with their
terms and all applicable provisions of ERISA and the regulations issued
thereunder, as well as with all other applicable federal, state and local
statutes, ordinances and regulations.
All accrued contribution obligations of the Company as of the Balance
Sheet Date with respect to any plan listed on Schedule 5.19(a) have either been
fulfilled in their entirety or are fully reflected on the balance sheet of the
Company as of the Balance Sheet Date.
5.20 COMPLIANCE WITH ERISA. All plans listed on Schedule 5.19(a) that
are intended to qualify under Section 401 (a) of the Code (the "Qualified
Plans") are, and have been so qualified and have been determined by the Internal
Revenue Service to be so qualified, and copies of such determination letters are
attached to Schedule 5.19(a). Except as disclosed on Schedule 5.20, all reports
and other documents required to be filed with any governmental agency or
distributed to plan participants or beneficiaries (including, but not limited
to, actuarial reports, audits or tax returns) since January 1, 1992 have been
timely filed or distributed, and copies thereof have been made available to
AmPaM. No such plan listed on Schedule 5.19(a) nor the Company has engaged in
any transaction prohibited under the provisions of Section 4975 of the Code or
Section 406 of ERISA. No such Plan listed on Schedule 5.19(a) has incurred an
accumulated funding deficiency, as defined in Section 412(a) of the Code and
Section 302(l) of ERISA; and the Company has not incurred any liability for
excise tax or penalty due to the Internal Revenue Service nor any liability to
the Pension Benefit Guaranty Corporation. The Company further represents that
except as set forth on Schedule 5.20 hereto:
(i) there have been no terminations, partial terminations or
discontinuations of contributions to any Qualified Plan intended to
qualify under Section 401(a) of the Code without notice to and approval
by the Internal Revenue Service;
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(ii) no plan listed on Schedule 5.19(a) subject to the
provisions of Title IV of ERISA has been terminated;
(iii) there have been no "reportable events" (as that phrase
is defined in Section 4043 of ERISA) with respect to any such plan
listed in Schedule 5.19(a);
(iv) the Company (including any Subsidiaries) has not incurred
liability under Section 4062 of ERISA; and
(v) no circumstances exist pursuant to which the Company could
have any direct or indirect liability whatsoever (including, but not
limited to, any liability to any multiemployer plan or the PBGC under
Title IV of ERISA or to the Internal Revenue Service for any excise tax
or penalty, or being subject to any statutory lien to secure payment of
any such liability) with respect to any plan now or heretofore
maintained or contributed to by any entity other than the Company that
is, or at any time was, a member of a "controlled group" (as defined in
Section 412(n)(6)(B) of the Code) that includes the Company.
5.21 CONFORMITY WITH LAW; LITIGATION. Except to the extent set forth on
Schedule 5.21 or Schedule 5.13, the Company has not violated within the five
years prior to the date of this Agreement and is not currently in violation of
any law or regulation or any order of any court or Federal, state, municipal or
other governmental department, commission, board, bureau, agency or
instrumentality having jurisdiction over it other than violations that would not
have a Material Adverse Effect on the Company; and except to the extent set
forth on Schedule 5.10(c) or Schedule 5.13, there are no claims, actions, suits
or proceedings, pending or, to the knowledge of the Company, threatened in
writing against the Company, at law or in equity, or before or by any Federal,
state, municipal or other governmental department, commission, board, bureau,
agency or instrumentality having jurisdiction over the Company and no written
notice of any claim, action, suit or proceeding, whether pending or threatened,
has been received by the Company, and to the knowledge of the Company there is
no valid basis for any such claim, action, suit or proceeding that could
reasonably be expected to have a Material Adverse Effect on the Company.
5.22 TAXES. The Company has timely filed all requisite Federal, state
and other Tax Returns or extension requests for all fiscal periods ended on or
before the Balance Sheet Date; and except as set forth on Schedule 5.22(a),
there are no examinations in progress or claims pending against the Company for
federal, state and other Taxes (including penalties and interest) for any period
or periods prior to and including the Balance Sheet Date and no notice of any
claim for Taxes, whether pending or threatened, has been received. All Tax,
including interest and penalties (whether or not shown on any Tax Return), due
by the Company has been paid. The amounts shown as accruals for Taxes on the
Financial Statements are sufficient for the payment of all Taxes of the kinds
indicated (including penalties and interest) for all fiscal periods ended on or
before the date of the respective Financial Statements. Copies of (i) any tax
examinations, (ii) extensions of statutory limitations and (iii) the federal and
local income Tax Returns and franchise Tax Returns of Company for their last
three (3) fiscal years, or such shorter period of time as any of them shall
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have existed, are attached hereto as Schedule 5.22(a) or have otherwise been
delivered to AmPaM. The Company has a taxable year ended December 31. Except as
set forth on Schedule 5.22(a), the Company uses the accrual method of accounting
for income tax purposes, and the Company's methods of accounting have not
changed in any material respect in the past five years (except as required to
conform to changes in GAAP). The Company is not an investment company as defined
in Section 351(e)(1) of the Code. The Company is not and has not during the last
five years been a party to any tax sharing agreement or agreement of similar
effect. Except as set forth on Schedule 5.22(a), the Company is not and has not
during the last five years been a member of any consolidated group for federal
tax purposes. The Company has not received, been denied, or applied for any
private letter ruling from the IRS during the last ten years.
5.23 NO VIOLATIONS; NO CONSENT REQUIRED, ETC.
(a) The Company is not in violation of any Charter Document. Except as
set forth on Schedule 5.23(a), the Company is not in default under any lease,
instrument, agreement, license, or permit set forth on Schedule 5.12(a),
Schedule 5.14(a), Schedule 5.15(b) or Schedule 5.16(a) (collectively, the
"Material Documents").
(b) Except as set forth on Schedule 5.23(b)(1), the execution and
delivery of this Agreement by each of the Company and the Stockholders do not
violate, conflict with or result in a breach of any provision of, or constitute
a default (or an event which, with notice or lapse of time or both, would
constitute a default) under, or result in the termination of, or accelerate the
performance required by, or result in a right of termination or acceleration
under, or result in the creation of any lien, security interest, charge or
encumbrance upon any of the properties or assets of the Company under any of the
terms, conditions or provisions of (i) the Charter Documents of the Company,
(ii) any statute, law, ordinance, rule, regulation, judgment, decree, order,
injunction, writ, permit or license of any court or governmental authority
applicable to the Company or any of its properties or assets, or (iii) any
Material Document to which the Company is now a party or by which the Company or
any of its properties or assets may be bound or affected. The consummation by
the Company and the Stockholders of the transactions contemplated hereby will
not result in any material violation, conflict, breach, right of termination or
acceleration or creation of liens under any of the terms, conditions or
provisions of the items described in clauses (i) through (iii) of the preceding
sentence, subject, in the case of the terms, conditions or provisions of the
items described in clause (iii) above, to obtaining (prior to the Effective
Time) such consents as may be required from commercial lenders, lessors or other
third parties as listed on Schedule 5.23(b)(2).
(c) Except as set forth on Schedule 5.23(c) and except for the
Xxxx-Xxxxx Act, none of the Material Documents requires notice to, or the
consent or approval of, any governmental agency or other third party with
respect to the consummation by the Company and the Stockholders of any of the
transactions contemplated hereby in order to remain in full force and effect,
and consummation by the Company and the Stockholders of the transactions
contemplated hereby will not give rise to any right to termination, cancellation
or acceleration or loss of any material right or benefit under any Material
Document.
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(d) Except for (i) any filings to be made with the SEC pursuant to the
1933 Act or with any state securities authorities in connection with the offer
and sale of AmPaM Stock and AmPaM Notes pursuant to this Agreement and (ii) any
filing required to be made under the Xxxx-Xxxxx Act in connection with the
transactions contemplated by this Agreement, no declaration, filing or
registration with, or notice to, or authorization, consent or approval of, any
governmental or regulatory body or authority is necessary for the execution and
delivery of this Agreement by the Company or the consummation by the Company of
the transactions contemplated hereby.
(e) Except as set forth on Schedule 5.23(e), none of the Material
Documents prohibits the disclosure or publication by the Company or AmPaM of the
name of any other party to such Material Document, and none of the Material
Documents prohibits or restricts the Company from freely providing services or
selling products to any other customer or potential customer of the Company,
AmPaM or any Other Founding Company.
5.24 GOVERNMENT CONTRACTS. Except as set forth on Schedule 5.24, the
Company is not now a party to any governmental contract subject to price
redetermination or renegotiation.
5.25 ABSENCE OF CHANGES. (a) Since the Balance Sheet Date, except as
set forth on Schedule 5.25 or as otherwise contemplated hereby, there has not
been:
(i) any Material Adverse Change in the Company;
(ii) any damage, destruction or casualty loss (whether or not
covered by insurance), alone or in the aggregate, which has caused a
Material Adverse Effect on the Company;
(iii) any change in the authorized capital of the Company or
its outstanding securities or any change in its ownership interests or
any grant of any options, warrants, calls, conversion rights or
commitments;
(iv) any declaration or payment of any dividend or
distribution in respect of the capital stock or any direct or indirect
redemption, purchase or other acquisition of any of the capital stock
of the Company except for distributions that would have been permitted
after the date hereof under Section 7.3(iii) hereof,
(v) any increase in the compensation, bonus, sales commissions
or fee arrangement payable or to become payable by the Company to any
of its officers, directors, Stockholders, employees, consultants or
agents, except for ordinary and customary bonuses except for salary
increases for employees in accordance with past practice and except for
the establishment of a deferred stock compensation plan for the benefit
of certain Company employees and the arrangements to contribute shares
of AmPaM Stock thereto as described in Annex I hereto;
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(vi) any work interruptions, labor grievances or claims filed,
or any event or condition of any character, which has caused a Material
Adverse Effect on the Company;
(vii) any sale or transfer, or any agreement to sell or
transfer, any material assets, property or rights of the Company to any
person, including, without limitation, the Stockholders and their
affiliates, except inventory sold or transferred in the Ordinary Course
of Business;
(viii) any cancellation, or agreement to cancel, any
indebtedness or other obligation owing to the Company, including
without limitation any indebtedness or obligation of any Stockholders
or any Affiliate thereof;
(ix) any plan, agreement or arrangement granting any
preferential rights to purchase or acquire any interest in any of the
material assets, property or rights of the Company or requiring consent
of any party to the transfer and assignment of any such assets,
property or rights;
(x) any purchase or acquisition of, or agreement, plan or
arrangement to purchase or acquire, any property, rights or assets
outside of the Ordinary Course of Business;
(xi) any waiver of any material rights or claims of the
Company;
(xii) any amendment or termination of any Material Document to
which the Company is a party except for the termination of a Material
Document in accordance with its terms without any action on the part of
the Company;
(xiii) any transaction by the Company outside the Ordinary
Course of Business;
(xiv) any cancellation or termination of a material contract
with a customer or client listed on Schedule 5.15(a) prior to the
scheduled termination date thereof; or
(xv) any other distribution of property or assets by the
Company other than in the Ordinary Course of Business, other than (a)
distributions of nonoperating assets specifically identified on
Schedule 5.25, (b) distributions of real estate required by Section
7.1(c) of this Agreement and (c) distributions of cash or promissory
notes permitted by Annex I hereto.
(b) Except as set forth on Schedule 5.25, the Company has not,
between the Balance Sheet Date and the date hereof, taken any of the actions set
forth in Section 7.3.
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5.26 DEPOSIT ACCOUNTS; POWERS OF ATTORNEY. The Company has delivered to
AmPaM an accurate schedule (which is set forth on Schedule 5.26) as of the date
of the Agreement of:
(i) the name of each financial institution in which the
Company has an account or safe deposit box;
(ii) the names in which the accounts or boxes are held;
(iii) the type of account and account number; and
(iv) the name of each person authorized to draw thereon or
have access thereto.
Schedule 5.26 also sets forth the name of each person, corporation, firm or
other entity holding a general or special power of attorney from the Company and
a description of the terms of such power.
5.27 VALIDITY OF OBLIGATIONS. The execution and delivery of this
Agreement by the Company and the performance of the transactions contemplated
herein have been duly and validly authorized by the Board of Directors of the
Company and this Agreement has been duly and validly authorized by all necessary
corporate action and is a legal, valid and binding obligation of the Company
enforceable against the Company in accordance with its terms.
5.28 RELATIONS WITH GOVERNMENTS. The Company has not, and to the
knowledge of the Company none of the Stockholders or any Affiliate of any of
them has, given or offered anything of value to any governmental official,
political party or candidate for government office or otherwise taken any action
which would cause the Company to be in violation of the Foreign Corrupt
Practices Act of 1977, as amended, or any law of similar effect.
5.29 DISCLOSURE. This Agreement, including the Annexes and Schedules
hereto, and the completed questionnaire related to the Xxxx-Xxxxx Act furnished
to AmPaM by the Company, do not contain an untrue statement of a material fact
concerning the Company or omit to state a material fact concerning the Company
necessary to make the statements herein and therein, in light of the
circumstances under which they were made, not misleading; provided, however,
that the foregoing does not apply to statements contained in or omitted from any
of such documents made or omitted in reliance upon information furnished in
writing by AmPaM.
5.30 NO WARRANTIES OR INSURANCE. Except for warranty liability under
applicable law and except for warranty liability under the warranties issued by
the Company of the types described on Schedule 5.30, the Company has no
liability to any person under any warranty and the Company does not offer or
sell insurance or consumer protection plans or other arrangements that could
result in the Company being required to make any payment to or perform any
service for any person.
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5.31 INTEREST IN CUSTOMERS AND SUPPLIERS AND RELATED PARTY
TRANSACTIONS. Except as described on Schedule 5.31 or in Section 8.11, no
Stockholder, officer, director or Affiliate of the Company (i) owns, directly or
indirectly, any financial interest in, or is a director, officer, employee or
affiliate of, any corporation, firm, association or business organization that
is a client, supplier, customer, lessor, lessee or competitor of the Company, or
(ii) is or will be a party to an agreement or relationship with the Company
other than through a customary "at will" employment relationship.
5.32 PRIVATE PLACEMENT MEMORANDUM. None of the information supplied or
to be supplied by the Company in writing specifically for inclusion in the
Private Placement Memorandum contained or, as of the Closing Date, will contain
any untrue statement of a material fact concerning the Company or omitted or
will omit to state any material fact required to be stated therein or necessary
in order to make the statements contained in such information supplied or to be
supplied by the Company concerning the Company, in light of the circumstances
under which they are made, not misleading.
(B) REPRESENTATIONS AND WARRANTIES OF STOCKHOLDERS.
Each Stockholder severally represents and warrants that the
representations and warranties set forth below are true as of the date of this
Agreement and, subject to Section 7.7 hereof, shall be true at the time of
Closing, and that the representations and warranties set forth in this Section
5(B) shall survive the Closing Date.
5.33 AUTHORITY; OWNERSHIP. Such Stockholder has the full legal right,
power and authority to enter into this Agreement, and this Agreement is a legal,
valid and binding obligation of such Stockholder, enforceable against the
Stockholder in accordance with its terms. Except as set forth on Schedule
5.33(a), the execution and delivery of this Agreement by such Stockholder does
not violate, conflict with or result in a breach of any provision of, or
constitute a default (or an event which, with notice or lapse of time or both,
would constitute a default) under, or result in the termination of, or
accelerate the performance required by, or result in a right of termination or
acceleration under, or result in the creation of any lien, security interest,
charge or encumbrance upon any of the properties or assets of such Stockholder
under any of the terms, conditions or provisions of (i) the Charter Documents of
the Company, (ii) any statute, law, ordinance, rule, regulation, judgment,
decree, order, injunction, writ, permit or license of any court or governmental
authority applicable to such Stockholder or any of such Stockholder's properties
or assets, or (iii) any lease, instrument, agreement, license or permit to which
such Stockholder is now a party or by which such Stockholder or any of such
Stockholder's properties or assets may be bound or affected. Except for (i) any
filings to be made with the SEC pursuant to the 1933 Act and any state
securities authorities in connection with the offer and sale of AmPaM Stock and
AmPaM Notes pursuant to this Agreement, (ii) any filing required to be made
under the Xxxx-Xxxxx Act in connection with the transactions contemplated by
this Agreement, no declaration, filing or registration with, or notice to, or
authorization, consent or approval of, any governmental or regulatory body or
authority is necessary for the execution and delivery of this Agreement by such
Stockholder or the consummation by such Stockholder of the transactions
contemplated hereby. Except as set forth on
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Schedule 5.33(b), such Stockholder owns beneficially and of record all of the
shares of the Company Stock identified on Annex I hereto as being owned by such
Stockholder, and, such Company Stock is owned free and clear of all liens,
security interests, pledges, charges, voting trusts, voting agreements,
restrictions, encumbrances and claims of every kind.
5.34 PREEMPTIVE RIGHTS. Such Stockholder does not have, or hereby
waives, any preemptive or other right to acquire shares of Company Stock or
AmPaM Stock that such Stockholder has or may have had. Nothing herein, however,
shall limit or restrict the rights of any Stockholder to acquire AmPaM Stock
pursuant to (i) this Agreement, (ii) any option granted or to be granted by
AmPaM to such Stockholder, (iii) a purchase through a broker in a regular stock
market transaction or (iv) a purchase from a stockholder of a Founding Company
(subject to compliance with any contractual restrictions or securities law
restrictions applicable thereto specified in Section 15 hereof).
5.35 NO COMMITMENT TO DISPOSE OF AMPAM STOCK. No Stockholder is under
any binding commitment or contract to sell, exchange or otherwise dispose of
shares of AmPaM Stock or AmPaM Notes received pursuant to this Agreement.
5.36 DISCLOSURE. The completed Director and Officer Questionnaires with
respect to such Stockholder (if any), the completed investor questionnaire
furnished to AmPaM by such Stockholder in connection with the proposed
acquisition by such Stockholder of AmPaM Stock and AmPaM Notes and any other
information provided to AmPaM in writing by such Stockholder relating
specifically to such Stockholder for inclusion in the Private Placement
Memorandum do not contain an untrue statement of a material fact concerning such
Stockholder or omit to state a material fact concerning such Stockholder
necessary to make the statements herein and therein, in light of the
circumstances under which they were made, not misleading.
6. REPRESENTATIONS OF AMPAM
Except as otherwise qualified below, AmPaM represents and warrants that
all of the following representations and warranties in this Section 6 are true
at the date of this Agreement and, subject to Section 7.7 hereof, shall be true
at the time of Closing, and that such representations and warranties shall
survive the Closing Date for a period of eighteen months (the last day of such
period being the "Expiration Date" for purposes of the representations and
warranties set forth in this Section 6), except that the representations and
warranties set forth in Section 6.3, 6.11 and 6.15 shall survive until such time
as the applicable statute of limitations period has run, which shall be deemed
to be the Expiration Date for the representations and warranties set forth in
Sections 6.3, 6.11 and 6.15.
AmPaM acknowledges that in purchasing the shares of Company Stock, it
is relying upon its own independent investigation as well as the representations
and warranties of the Company and the Stockholders as set forth in this
Agreement.
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6.1 DUE ORGANIZATION. AmPaM is a corporation duly incorporated and
organized, validly existing and in good standing under the laws of the State of
Delaware, and has the requisite power and authority to carry on its business as
it is now being conducted and as contemplated by the Private Placement
Memorandum. AmPaM is duly qualified or authorized to do business and is in good
standing in each jurisdiction in which the nature of its business or the
ownership or leasing of its properties makes such qualification or authorization
necessary, except where the failure to be so qualified or authorized to do
business would not have a Material Adverse Effect. True, complete and correct
copies of the Certificate of Incorporation and By-laws, each as proposed to be
amended and as such documents shall be in effect as of the Closing Date, of
AmPaM (the "AmPaM Charter Documents") are attached hereto as Annex II.
6.2 AUTHORIZATION. (i) The officers of AmPaM executing this Agreement
have the authority to enter into and bind AmPaM to the terms of this Agreement
and (ii) AmPaM has the full legal right, power and authority to enter into this
Agreement and consummate the transactions contemplated hereby. All corporate
acts and other proceedings required to have been taken by AmPaM to authorize the
execution, delivery and performance of this Agreement and the consummation of
the transactions contemplated hereby have been duly and properly taken.
6.3 CAPITAL STOCK OF AMPAM. The authorized capital stock of AmPaM is as
set forth in Section 1.3(ii). Immediately prior to the Closing Date, all of the
issued and outstanding shares of the capital stock of AmPaM will be as set forth
in the Private Placement Memorandum, free and clear of all liens, security
interests, pledges, charges, voting trusts, restrictions, encumbrances and
claims of every kind other than any restrictions described in the Private
Placement Memorandum. All of the issued and outstanding shares of the capital
stock of AmPaM have been duly authorized and validly issued, are fully paid and
nonassessable and such shares were offered, issued, sold and delivered by AmPaM
in compliance with all applicable state and Federal laws concerning the issuance
of securities. Further, none of such shares were issued in violation of the
preemptive rights of any past or present stockholder of AmPaM. Upon the Closing
Date, the authorized, issued and outstanding shares of capital stock of AmPaM
will be as set forth in the Private Placement Memorandum under the caption
"Capitalization." Upon the Closing Date, the aggregate number of shares of AmPaM
Stock issued and outstanding on the Closing Date that are owned by Sterling City
Capital, LLC, any Affiliates of Sterling City Capital, LLC and the officers and
directors of AmPaM will not be greater than the number of shares of AmPaM Stock
reflected in the Private Placement Memorandum as the aggregate number of shares
of AmPaM Stock to be issued and outstanding and owned by Sterling City Capital,
LLC, any Affiliates of Sterling City Capital, LLC and the officers and directors
of AmPaM.
6.4 TRANSACTIONS IN CAPITAL STOCK. Except for the Other Agreements,
except for the arrangements to contribute AmPaM Stock to a deferred stock
compensation plan for the benefit of certain employees as described in Annex I
hereto, and except as set forth in the Private Placement Memorandum, (i) no
option, warrant, call, conversion right or commitment of any kind exists as of
the date of this Agreement which obligates AmPaM to issue any of its authorized
but unissued capital stock; and (ii) AmPaM has no obligation (contingent or
otherwise) to purchase, redeem or
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otherwise acquire any of its equity securities or any interests therein or to
pay any dividend or make any distribution in respect thereof. The material terms
of any options, warrants or other rights to acquire shares of the stock of AmPaM
referred to in the preceding sentence will be as described in the Private
Placement Memorandum.
6.5 SUBSIDIARIES. As of the date of this Agreement, AmPaM has no
subsidiaries. As of the date of this Agreement, AmPaM does not own, of record or
beneficially, or control, directly or indirectly, any capital stock, securities
convertible into capital stock or any other equity interest in any corporation,
association or business entity, and AmPaM is not, directly or indirectly, a
participant in any joint venture, partnership or other non-corporate entity.
6.6 FINANCIAL STATEMENTS. The historical financial statements of AmPaM
included in the Private Placement Memorandum (the "AmPaM Financial Statements")
have been prepared in accordance with GAAP applied on a consistent basis
throughout the periods indicated (except as noted thereon), and the balance
sheet included therein presents fairly the financial position of AmPaM as of its
date. Management of AmPaM believes that the assumptions underlying the pro forma
adjustments utilized in the preparation of such pro forma financial statements
are reasonable, and such pro forma adjustments have been properly applied to the
historical financial amounts in the compilation of the pro forma financial
statements. Based on the representations in Section 5.9 of this Agreement and in
Section 5.9 of each of the Other Agreements, the pro forma financial information
of AmPaM fairly presents the pro forma financial position, results of operations
and other information purported to be shown therein at the respective dates and
for the respective periods specified.
6.7 LIABILITIES AND OBLIGATIONS. Except as set forth in the Private
Placement Memorandum, as of the date of this Agreement, AmPaM has no material
liabilities or obligations of any kind, character or description, whether
accrued, absolute, secured or unsecured, contingent or otherwise, other than
liabilities incurred in the ordinary course of business and consistent with past
practices, liabilities or obligations set forth in or contemplated by this
Agreement and the Other Agreements and except for fees incurred in connection
with the transactions contemplated hereby and thereby.
6.8 CONFORMITY WITH LAW; LITIGATION. Except to the extent set forth in
the Private Placement Memorandum, AmPaM is not in violation of any law or
regulation or any order of any court or Federal, state, municipal or other
governmental department, commission, board, bureau, agency or instrumentality
having jurisdiction over it and its stockholders and, there are no claims,
actions, suits or proceedings, pending or, to the knowledge of AmPaM, threatened
against or affecting, AmPaM, at law or in equity, or before or by any Federal,
state, municipal or other governmental department, commission, board, bureau,
agency or instrumentality having jurisdiction over it and no notice of any
claim, action, suit or proceeding, whether pending or threatened, has been
received. AmPaM has conducted and is conducting its businesses in compliance in
all material respects with the requirements, standards, criteria and conditions
set forth in applicable Federal, state
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and local statutes, ordinances, permits, licenses, orders, approvals, variances,
rules and regulations and is not in violation, in any material respect, of any
of the foregoing.
6.9 NO VIOLATIONS. (a) AmPaM is not in violation of any AmPaM Charter
Document. AmPaM is not in default under any lease, instrument, agreement,
license, or permit to which AmPaM is a party or by which AmPaM or any of its
properties are bound (collectively, the "AmPaM Documents").
(b) The execution and delivery of this Agreement by AmPaM do not
violate, conflict with or result in a breach of any provision of, or constitute
a default (or an event which, with notice or lapse of time or both, would
constitute a default) under, or result in the termination of, or accelerate the
performance required by, or result in a right of termination or acceleration
under, or result in the creation of any lien, security interest, charge or
encumbrance upon any of the properties or assets of AmPaM under any of the
terms, conditions or provisions of (i) the AmPaM Charter Documents, (ii) any
statute, law, ordinance, rule, regulation, judgment, decree, order, injunction,
writ, permit or license of any court or governmental authority applicable to
AmPaM or any of its properties or assets, or (iii) any AmPaM Document; provided
that the representations and warranties specified in clause (ii) of this
sentence (A) are based on information in the investor questionnaires and related
purchaser representative questionnaires executed and delivered by the
Stockholders of the Company and the stockholders of the Other Founding
Companies, the representations and warranties of the Stockholders set forth in
Section 16 hereof and the representations and warranties of the stockholders of
the Other Founding Companies set forth in Section 16 of the Other Agreements and
(B) are subject to the accuracy and completeness of the information contained in
such investor questionnaires and related purchaser representative questionnaires
and the truthfulness of such representations and warranties. The consummation by
AmPaM of the transactions contemplated hereby will not result in any material
violation, conflict, breach, right of termination or acceleration or creation of
liens under any of the terms, conditions or provisions of the items described in
clauses (i) through (iii) of the preceding sentence, subject, in the case of the
terms, conditions or provisions of the items described in clause (iii) above, to
obtaining (prior to the Closing Date) (x) such approvals, consents or orders
from the SEC, state blue sky authorities and authorities administering the
Xxxx-Xxxxx Act and (y) such other consents as may be required from commercial
lenders, lessors or other third parties which are listed on Schedule 6.9.
(c) Except for (i) any filings to be made with the SEC pursuant to the
1933 Act and filings with various state securities authorities in connection
with the transactions contemplated by this Agreement, and (ii) any filings
required to be made under the Xxxx-Xxxxx Act in connection with the transactions
contemplated by this Agreement, none of the AmPaM Documents requires notice to,
or the consent or approval of, any governmental agency or other third party with
respect to the consummation by AmPaM of any of the transactions contemplated
hereby in order to remain in full force and effect, and consummation by AmPaM of
the transactions contemplated hereby will not give rise to any right to
termination, cancellation or acceleration or loss of any material right or
benefit under the AmPaM Documents; provided that the representations and
warranties specified in clauses (i) and (ii) of this sentence (A) are based on
information in the investor questionnaires and
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related purchaser representative questionnaires executed and delivered by the
Stockholders of the Company and the stockholders of the Other Founding
Companies, the representations and warranties of the Stockholders set forth in
Section 16 hereof and the representations and warranties of the stockholders of
the Other Founding Companies set forth in Section 16 of the Other Agreements and
(B) are subject to the accuracy and completeness of the information contained in
such investor questionnaires and related purchaser representative questionnaires
and the truthfulness of such representations and warranties.
(d) Except for (i) any filings with the SEC pursuant to the 1933 Act
and filings with various state securities authorities in connection with the
transactions contemplated by this Agreement and (ii) any filings required under
the Xxxx-Xxxxx Act in connection with the transactions contemplated by this
Agreement, no declaration, filing or registration with, or notice to, or
authorization, consent or approval of, any governmental or regulatory body or
authority is necessary for the execution and delivery of this Agreement by AmPaM
or the consummation by AmPaM of the transactions contemplated hereby; provided
that the representations and warranties specified in clauses (i) and (ii) of
this sentence (A) are based on information in the investor questionnaires and
related purchaser representative questionnaires executed and delivered by the
Stockholders of the Company and the stockholders of the Other Founding
Companies, the representations and warranties of the Stockholders set forth in
Section 16 hereof and the representations and warranties of the stockholders of
the Other Founding Companies set forth in Section 16 of the Other Agreements and
(B) are subject to the accuracy and completeness of the information contained in
such investor questionnaires and related purchaser representative questionnaires
and the truthfulness of such representations and warranties.
6.10 VALIDITY OF OBLIGATIONS. The execution and delivery of this
Agreement by AmPaM and the performance of the transactions contemplated herein
have been duly and validly authorized by the Board of Directors of AmPaM and
this Agreement has been duly and validly authorized by all necessary corporate
action and is a legal, valid and binding obligation of AmPaM, enforceable
against AmPaM in accordance with its terms.
6.11 AMPAM STOCK. At the time of issuance thereof and delivery to the
Stockholders, the AmPaM Stock to be delivered to the Stockholders pursuant to
this Agreement will constitute valid, duly authorized and legally issued shares
of AmPaM, fully paid and nonassessable, and with the exception of restrictions
upon resale set forth in Sections 15 and 16 hereof, will be identical in all
substantive respects (which do not include the form of certificate upon which it
is printed or the presence or absence of a CUSIP number on any such certificate)
to the AmPaM Stock issued and outstanding as of the date hereof, other than the
Restricted Common Stock. The AmPaM Stock issued and delivered to the
Stockholders shall at the time of such issuance and delivery be free and clear
of any liens, claims or encumbrances of any kind or character. The offer and
sale of the shares of AmPaM Stock to be issued to the Stockholders pursuant to
this Agreement are not required to be registered under the 1933 Act; provided
that the representations and warranties specified in this sentence (A) are based
on information in the investor questionnaires and related purchaser
representative questionnaires executed and delivered by the Stockholders of the
Company and the
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stockholders of the Other Founding Companies, the representations and warranties
of the Stockholders set forth in Section 16 hereof and the representations and
warranties of the stockholders of the Other Founding Companies set forth in
Section 16 of the Other Agreements and (B) are subject to the accuracy and
completeness of the information contained in such investor questionnaires and
related purchaser representative questionnaires and the truthfulness of such
representations and warranties.
6.12 AMPAM NOTES. The AmPaM Notes have been duly authorized and, at the
Closing Date, will have been duly executed by AmPaM and, when authenticated,
issued and delivered, will constitute valid and binding obligations of AmPaM,
enforceable against AmPaM in accordance with their terms, except as the
enforcement thereof may be limited by bankruptcy, insolvency (including, without
limitation, all laws relating to fraudulent transfers) reorganization,
moratorium or similar laws affecting enforcement of creditors' rights generally
and except as enforcement thereof is subject to general principles of equity
(regardless of whether enforcement is considered in a proceeding in equity or at
law).
6.13 NO SIDE AGREEMENTS. AmPaM has not entered into any agreement with
any of the Founding Companies or any of the Stockholders of the Founding
Companies other than this Agreement, the Other Agreements, the agreements
referred to in this Agreement and in the Other Agreements and the Private
Placement Memorandum. AmPaM has not entered into any agreements providing for
rights to register shares of AmPaM Stock under the 1933 Act except as provided
in Section 17 of this Agreement, in Section 17 of the Other Agreements and in an
agreement with Sterling City Capital, LLC, its Affiliates and officers and
directors of AmPaM having terms substantially similar to those set forth in
Section 17 hereof.
6.14 BUSINESS; REAL PROPERTY; MATERIAL AGREEMENTS. AmPaM was formed in
June 1998 and has conducted no material business since the date of its inception
except for activities related to the transaction contemplated by this Agreement,
the Other Agreements and the Private Placement Memorandum. Except as described
in the Private Placement Memorandum, as of the date of this Agreement, AmPaM
does not own any real property or any material personal property and is not a
party to any other material agreement other than this Agreement, the Other
Agreements and the agreements contemplated hereby and thereby.
6.15 RELATIONS WITH GOVERNMENTS. Neither AmPaM nor any of its
directors, officers or Affiliates has given or offered anything of value to any
government official, political party or candidate for government office, nor has
AmPaM, any of its directors, officers or Affiliates of any of them otherwise
taken any action, which would cause AmPaM to be in violation of the Foreign
Corrupt Practices Act of 1977, as amended, or any law of similar effect.
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6.16 DISCLOSURE. The Private Placement Memorandum delivered to the
Company and the Stockholders does not as of the date hereof contain an untrue
statement of a material fact or omit to state a material fact necessary to make
the statements therein, in light of the circumstances under which they were
made, not misleading; provided, however, that the foregoing does not apply to
statements contained in or omitted from any of such documents made or omitted in
reliance upon, and in conformity with, information furnished to AmPaM by the
Company or the Stockholders in writing specifically for inclusion in the Private
Placement Memorandum.
6.17 OTHER AGREEMENTS. The Other Agreements have been duly authorized,
executed and delivered by AmPaM and constitute the legal, valid and binding
obligation of AmPaM enforceable against AmPaM in accordance with their
respective terms. The terms and conditions of the Other Agreements (excluding
the terms relating to the consideration payable by AmPaM thereunder) are
identical in all material respects to the terms and conditions in this
Agreement.
7. COVENANTS PRIOR TO CLOSING
7.1 ACCESS AND COOPERATION; DUE DILIGENCE; TRANSFER OF REAL ESTATE.
(a) Between the date of this Agreement and the Closing Date, the
Company will afford to the officers and authorized representatives of AmPaM
reasonable access during normal business hours to all of the Company's sites,
properties, books and records and will furnish AmPaM with such additional
financial and operating data and other information as to the business and
properties of the Company as AmPaM may from time to time reasonably request. The
Company will cooperate with AmPaM, its representatives, auditors and counsel in
the preparation of any documents or other material which may be required in
connection with any documents or materials required by this Agreement. AmPaM,
the Stockholders and the Company will treat all information obtained in
connection with the negotiation and performance of this Agreement or the due
diligence investigations conducted with respect to the Company as confidential
in accordance with the provisions of Section 14 hereof.
(b) Between the date of this Agreement and the Closing Date, AmPaM will
afford to the officers and authorized representatives of the Company access to
all of AmPaM's sites, properties, books and records and will furnish the Company
with such additional financial and operating data and other information as to
the business and properties of AmPaM and the Other Founding Companies as the
Company may from time to time reasonably request. AmPaM will cooperate with the
Company, its representatives, auditors and counsel in the preparation of any
documents or other material which may be required in connection with any
documents or materials required by this Agreement. The Company will cause all
information obtained pursuant to this Section 7.1(b) or obtained in connection
with the negotiation and performance of this Agreement to be treated as
confidential in accordance with the provisions of Section 14 hereof.
(c) Except as set forth on Schedule 7.1, any real property owned by the
Company will be sold or distributed by the Company on terms mutually acceptable
to AmPaM and the Company
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and leased back by the Company on terms no less favorable to the Company than
those available from an unaffiliated party and otherwise reasonably acceptable
to AmPaM at or prior to the Closing Date.
(d) Between the date of this Agreement and the Consummation Date, AmPaM
will use reasonable efforts to hold meetings in Houston, Texas, or such other
place or places as AmPaM shall reasonably determine, to which all of the
Founding Companies will be invited to attend, not less frequently than every 45
days at which the business and affairs of AmPaM and the Founding Companies may
be discussed.
7.2 CONDUCT OF BUSINESS PENDING CLOSING. Between the date of this
Agreement and the Closing Date, the Company will, except as set forth on
Schedule 7.2:
(i) carry on its businesses in the Ordinary Course of Business
and not introduce any material new method of management, operation or
accounting;
(ii) use all commercially reasonable efforts to maintain its
properties and facilities, including those held under leases, in as
good working order and condition as at present, ordinary wear and tear,
depreciation and insured losses excepted;
(iii) perform in all material respects all of its obligations
under all Material Documents relating to or affecting its respective
assets, properties or rights;
(iv) use its commercially reasonable efforts to keep in full
force and effect present insurance policies or other comparable
insurance coverage;
(v) use its commercially reasonable efforts to maintain and
preserve its business organization intact, retain its respective
present key employees and maintain its relationships with suppliers,
customers and others having business relations with the Company;
(vi) use its commercially reasonable efforts to maintain
compliance with all material permits, laws, rules and regulations,
consent orders, and all other orders of applicable courts, regulatory
agencies and similar governmental authorities;
(vii) maintain present debt and lease instruments in
accordance with their terms and not enter into new or amended debt or
lease instruments without the knowledge and consent of AmPaM (which
consent shall not be unreasonably withheld), provided that debt and/or
lease instruments may be replaced without the consent of AmPaM if such
replacement instruments are on terms at least as favorable to the
Company as the instruments being replaced;
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(viii) maintain or reduce present salaries and commission
levels for all officers, directors, employees and agents except for
ordinary and customary bonus and salary increases for employees in
accordance with past practices; and
(ix) use commercially reasonable efforts to cause its working
Capital to be at levels consistent with historical levels.
7.3 PROHIBITED ACTIVITIES. Except as disclosed on Schedule 7.3, between
the date hereof and the Closing Date, the Company will not, without prior
written consent of AmPaM:
(i) make any change in its Charter Documents;
(ii) issue any securities, options, warrants, calls,
conversion rights or commitments relating to its securities of any kind
other than in connection with the exercise of options or warrants
listed in Schedule 5.4;
(iii) except as permitted pursuant to the terms and conditions
for distributions described in Annex I, declare or pay any dividend, or
make any distribution in respect of its stock whether now or hereafter
outstanding, or purchase, redeem or otherwise acquire or retire for
value any shares of its stock;
(iv) enter into any contract or commitment or incur or agree
to incur any liability or make any capital expenditures, except if it
is in the Ordinary Course of Business or involves an amount not in
excess of three percent (3%) of the Company's gross revenues for fiscal
1997;
(v) create, assume or permit to exist any mortgage, pledge or
other lien or encumbrance upon any assets or properties whether now
owned or hereafter acquired, except (1) with respect to purchase money
liens incurred in connection with the acquisition of equipment with an
aggregate cost not in excess of three percent (3%) of the Company's
gross revenues for fiscal 1997 necessary or desirable for the conduct
of the businesses of the Company, (2) (A) liens for taxes either not
yet due or being contested in good faith and by appropriate proceedings
(and for which contested taxes adequate reserves have been established
and are being maintained) or (B) materialmen's, mechanics', workers',
repairmen's, employees' or other like liens arising in the Ordinary
Course of Business (the liens set forth in clause (2) being referred to
herein as "Statutory Liens"), or (3) liens set forth on Schedule 5.10
and/or Schedule 5.15 hereto;
(vi) sell, assign, lease or otherwise transfer or dispose of
any property or equipment except in the Ordinary Course of Business and
other than distributions of real estate and other assets as permitted
in this Agreement (including Annex I hereto);
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(vii) negotiate for the acquisition of any business or the
start-up of any new business;
(viii) merge or consolidate or agree to merge or consolidate
with or into any other corporation;
(ix) waive any material rights or claims of the Company,
provided that the Company may negotiate and adjust bills and accounts
in the course of good faith disputes with customers in a manner
consistent with past practice;
(x) amend or terminate any Material Document except for the
termination of a Material Document in accordance with its terms without
any action on the part of the Company; or
(xi) enter into any other material transaction outside the
Ordinary Course of Business or any transaction prohibited hereunder.
7.4 NO SHOP. None of the Stockholders, the Company, nor any agent,
officer, director, trustee or any representative of any of the foregoing will,
during the period commencing on the date of this Agreement and ending with the
earlier to occur of the Closing Date or the termination of this Agreement in
accordance with its terms, directly or indirectly:
(i) solicit or initiate the submission of proposals or offers
from any person for,
(ii) participate in any discussions pertaining to, or
(iii) furnish any information to any person other than AmPaM
or its authorized agents relating to, any acquisition or purchase of
all or a material amount of the assets of, or any equity interest in,
the Company or a merger, consolidation or business combination of the
Company.
7.5 AGREEMENTS. Except as disclosed on Schedule 7.5(a), the
Stockholders and the Company shall terminate (i) any stockholders agreements,
voting agreements, voting trusts, agreements providing for the grant by the
Company of any options, warrants and employment agreements between the Company
and any employee listed on Schedule 8.11 hereto and (ii) except as otherwise
provided in this Agreement, any existing agreement between the Company and any
Stockholder, on or prior to the Closing Date provided that nothing herein shall
prohibit or prevent the Company from paying (either prior to or on the Closing
Date) notes or other obligations from the Company to the Stockholders described
in Schedule 7.5(b) in accordance with the terms thereof.
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7.6 NOTIFICATION OF CERTAIN MATTERS. Each Stockholder and the Company
shall give prompt notice to AmPaM upon obtaining knowledge of (i) the occurrence
or non-occurrence of any event the occurrence or nonoccurrence of which would be
likely to cause any representation or warranty of the Company or such
Stockholder contained herein to be untrue or inaccurate in any material respect
at or prior to the Closing and (ii) any material failure of such Stockholder or
the Company to comply with or satisfy any covenant, condition or agreement to be
complied with or satisfied by such person hereunder. AmPaM shall give prompt
notice to the Company of (i) the occurrence or non-occurrence of any event the
occurrence or non-occurrence of which would be likely to cause any
representation or warranty of AmPaM contained herein to be untrue or inaccurate
in any material respect at or prior to the Closing, (ii) any material failure of
AmPaM to comply with or satisfy any covenant, condition or agreement to be
complied with or satisfied by it hereunder; (iii) any termination of any Other
Agreement for any reason; and (iv) the issuance by the SEC or any state
securities regulatory authority of any issuance of or threatened issuance of any
order challenging the availability of an exemption from registration or
suspending the qualification of any securities described in the Private
Placement Memorandum for sale in any jurisdiction. However, subject to the
provisions of Section 7.7, such notification shall not relieve either the
Company or such Stockholder of their respective obligations under this
Agreement. The delivery of any notice pursuant to this Section 7.6 shall not be
deemed to (i) modify the representations or warranties hereunder of the party
delivering such notice, which modification may only be made pursuant to Section
7.7, (ii) modify the conditions set forth in Sections 8 and 9, or (iii) limit or
otherwise affect the remedies available hereunder to the party receiving such
notice.
7.7 AMENDMENT OF SCHEDULES. Each party hereto agrees that, with respect
to the representations and warranties of such party contained in this Agreement,
such party shall have the continuing obligation until 24 hours prior to the
Closing Date to notify AmPaM with respect to any matter (i) hereafter arising or
discovered which, if existing or known at the date of this Agreement, would have
been required to be set forth or described in the Schedules or (ii) which may
have been omitted from the Schedules previously provided by such party.
Notwithstanding the foregoing sentence, no amendment or supplement to a Schedule
prepared by the Company may be made unless AmPaM consents to such amendment or
supplement; and provided further, that no amendment or supplement to a Schedule
prepared by AmPaM may be made unless the Stockholders consent to such amendment
or supplement. For all purposes of this Agreement, including without limitation
for purposes of determining whether the conditions set forth in Sections 8.1 and
9.1 have been fulfilled, the Schedules hereto, as amended or supplemented with
the consent of AmPaM or the Stockholders, as the case may be, as provided above,
shall be deemed to be the Schedules to this Agreement.
7.8 FURTHER ASSURANCES. The parties hereto agree to execute and
deliver, or cause to be executed and delivered, such further instruments or
documents or take such other action as may be reasonably necessary or
appropriate to carry out the transactions contemplated hereby and to cause the
conditions to the Closing Date to be satisfied as promptly as practicable.
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7.9 AUTHORIZED CAPITAL. Prior to the Closing Date, AmPaM shall maintain
its authorized capital stock as set forth in the Private Placement Memorandum.
7.10 COMPLIANCE WITH THE XXXX-XXXXX ACT. All parties to this Agreement
hereby recognize that one or more filings under the Xxxx-Xxxxx Act may be
required in connection with the transactions contemplated herein. If it is
determined by the parties to this Agreement that filings under the Xxxx-Xxxxx
Act are required, then: (i) each of the parties hereto agrees to cooperate and
use its best efforts to comply with the Xxxx-Xxxxx Act and (ii) such compliance
by the Stockholders and the parties agree to cooperate and use their best
efforts to cause all filings required under the Xxxx- Xxxxx Act to be made. If
filings under the Xxxx-Xxxxx Act are required, the costs and expenses thereof
(including filing fees) shall be borne by AmPaM.
8. CONDITIONS PRECEDENT TO OBLIGATIONS OF STOCKHOLDERS AND COMPANY
The obligations of the Stockholders and the Company with respect to
actions to be taken on the Closing Date are subject to the satisfaction or
waiver on or prior to the Closing Date of all of the following conditions. As of
the Closing Date, if any such applicable conditions have not been satisfied, any
one or more of the Stockholders who would be entitled to receive a majority of
the Aggregate Consideration (as defined herein) received by all Stockholders if
the transactions contemplated hereby were consummated shall have the right to
waive any condition not so satisfied. Any act or action of the Stockholders in
consummating the Closing or delivering the certificates representing Company
Stock as of the Closing Date shall constitute a waiver of any conditions not so
satisfied. However, no such waiver shall be deemed to affect the survival of the
representations and warranties of AmPaM contained in Section 6 hereof.
8.1 REPRESENTATIONS AND WARRANTIES; PERFORMANCE OF OBLIGATIONS. All
representations and warranties of AmPaM contained in Section 6 shall be true and
correct as of the Closing Date as though such representations and warranties had
been made as of that time; all of the terms, covenants and conditions of this
Agreement to be complied with and performed by AmPaM on or before the Closing
Date shall have been duly complied with and performed in all material respects;
and certificates to the foregoing effect dated the Closing Date and signed by
the President or any Vice President of AmPaM shall have been delivered to the
Stockholders.
8.2 SATISFACTION. All actions, proceedings, instruments and documents
that are not within the control of the Company or the Stockholders and that are
required to carry out this Agreement or incidental hereto shall be reasonably
satisfactory to the Company, the Stockholders and their counsel.
8.3 NO LITIGATION. No action or proceeding before a court or any other
governmental agency or body shall have been instituted or threatened to restrain
or prohibit the purchase and sale of the Company Stock.
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8.4 OPINION OF COUNSEL. The Company shall have received opinions from
counsel for AmPaM, dated the Closing Date, addressed to the Company and the
Stockholders in the form annexed hereto as Annex III.
8.5 CONSENTS AND APPROVALS. All necessary consents of and filings with
any governmental authority or agency relating to the consummation of the
transactions contemplated herein shall have been obtained and made; any waiting
periods under the Xxxx-Xxxxx Act, if applicable, shall have expired or been
terminated; all consents and approvals of third parties listed on Schedule 6.9
shall have been obtained; and no action or proceeding shall have been instituted
or threatened to restrain or prohibit the purchase and sale of the Company Stock
and no governmental agency or body shall have taken any other action or made any
request of Company as a result of which Company deems it inadvisable to proceed
with the transactions hereunder.
8.6 GOOD STANDING CERTIFICATES. AmPaM shall have delivered to the
Company a certificate, dated as of a date no later than ten days prior to the
Closing Date, duly issued by the Delaware Secretary of State and in each state
in which AmPaM is authorized to do business, showing that AmPaM is in good
standing and authorized to do business and that all state franchise and/or
income tax returns and taxes for AmPaM for all periods prior to the Closing have
been filed and paid.
8.7 NO MATERIAL ADVERSE CHANGE. No event or circumstance shall have
occurred which would constitute a Material Adverse Change with respect to AmPaM
from the date of the Private Placement Memorandum.
8.8 SECRETARY'S CERTIFICATE. The Company shall have received a
certificate or certificates, dated the Closing Date and signed by the secretary
of AmPaM, certifying the truth and correctness of attached copies of AmPaM's
Certificate of Incorporation (including amendments thereto), By-Laws (including
amendments thereto), and resolutions of the board of directors and, if required,
the stockholders of AmPaM approving AmPaM's entering into this Agreement and the
Other Agreements and the consummation of the transactions contemplated hereby
and thereby.
8.9 TAX MATTERS. The Stockholders shall have received an opinion of
Xxxxxxx & Xxxxx L.L.P., in substantially the form of Annex IV hereto, that the
AmPaM Plan of Organization will qualify as a tax-free transfer of property under
Section 351 of the Code and that the Stockholders will not recognize gain to the
extent the Stockholders exchange Company Stock for AmPaM Stock (but not cash or
other property) pursuant to this Agreement in connection with the AmPaM Plan of
Organization.
8.10 OTHER FOUNDING COMPANIES. The transactions contemplated by the
Other Agreements are consummated simultaneously with the consummation of the
transactions contemplated by this Agreement.
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8.11 COMPANY RELEASE OF STOCKHOLDERS. The Company shall have delivered
to the Stockholders an instrument dated the Closing Date, in form reasonably
satisfactory to AmPaM and the Stockholders, which shall be effective only upon
the occurrence of the Closing Date, releasing the Stockholders from (i) any and
all claims of the Company against the Stockholders, known and unknown, and (ii)
obligations of the Stockholders to the Company, except for (x) items
specifically identified on Schedule 5.10(a) and Schedule 5.15(b) as being claims
of or obligations to the Company and (y) continuing obligations to the Company
relating to their employment by the Company pursuant to any employment agreement
entered into pursuant to Section 8.11 hereof.
8.12 STERLING CITY CAPITAL TRANSFER RESTRICTIONS. Sterling City
Capital, LLC and each of its Affiliates which owns AmPaM Stock shall have
entered into an agreement with AmPaM containing substantially the same terms and
conditions as are contained in Section 15 and Section 17.
8.13 ELECTION OF CHIEF EXECUTIVE OFFICER. AmPaM shall have taken all
corporate action necessary to elect Xxxxxx X. Xxxxxxxxxxxx as Chief Executive
Officer of AmPaM effective immediately following the Closing Date.
8.14 FUNDING AVAILABILITY. AmPaM shall have entered into binding
agreements with financial institutions, lenders or investors that provide AmPaM
with sufficient funds to pay (i) the cash amounts specified in Annex I hereto as
payable to the Stockholders upon the Closing and (ii) the aggregate cash amounts
specified in Annex I to each of the Other Agreements as payable to the
stockholders of the Other Founding Companies upon the Closing; and all
conditions to the funding of the cash amounts necessary to make such payments
specified in the agreements related to such financing arrangements, other than
the closing of the transactions contemplated by this Agreement and the Other
Agreements, shall have been satisfied as of the Closing Date.
9. CONDITIONS PRECEDENT TO OBLIGATIONS OF AMPAM
The obligations of AmPaM with respect to actions to be taken on the
Closing Date are subject to the satisfaction or waiver on or prior to the
Closing Date of all of the following conditions. As of the Closing Date, if any
such conditions have not been satisfied, AmPaM shall have the right to terminate
this Agreement, or waive any such condition, but no such waiver shall be deemed
to affect the survival of the representations and warranties contained in
Section 5 hereof.
9.1 REPRESENTATIONS AND WARRANTIES; PERFORMANCE AND OBLIGATIONS. All
the representations and warranties of the Stockholders and the Company contained
in this Agreement shall be true and correct as of the Closing Date with the same
effect as though such representations and warranties had been made on and as of
such date; all of the terms, covenants and conditions of this Agreement to be
complied with or performed by the Stockholders and the Company on or before the
Closing Date shall have been duly performed or complied with in all material
respects; and the Stockholders shall have delivered to AmPaM certificates dated
the Closing Date and signed by them to such effect.
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9.2 NO LITIGATION. No action or proceeding before a court or any other
governmental agency or body shall have been instituted or threatened to restrain
or prohibit the purchase and sale of the Company Stock.
9.3 SECRETARY'S CERTIFICATE. AmPaM shall have received a certificate,
dated the Closing Date and signed by the secretary of the Company, certifying
the truth and correctness of attached copies of the Company's Articles or
Certificate of Incorporation (including amendments thereto), By-Laws (including
amendments thereto), and resolutions of the board of directors and the
Stockholders approving the execution and delivery of this Agreement by the
Company and the consummation by the Company of the transactions contemplated
hereby.
9.4 NO MATERIAL ADVERSE EFFECT. No event or circumstance shall have
occurred with respect to the Company which would constitute a Material Adverse
Effect, and the Company shall not have suffered any material loss or damages to
any of its properties or assets, whether or not covered by insurance, which
change, loss or damage materially affects or impairs the ability of the Company
to conduct its business.
9.5 STOCKHOLDERS' RELEASE. The Stockholders shall have delivered to
AmPaM an instrument dated the Closing Date which shall be effective only upon
the occurrence of the Closing releasing the Company and AmPaM from (i) any and
all claims of the Stockholders against the Company and AmPaM and (ii)
obligations of the Company and AmPaM to the Stockholders, except for (A) items
specifically identified on Schedule 5.31 as being claims of or obligations to
the Stockholders, (B) continuing obligations to Stockholders relating to their
employment by the Company pursuant to employment agreements entered into as
specified in Section 8.11 hereof, (C) obligations arising under this Agreement
or the transactions contemplated hereby and (D) claims of Stockholders against
the Company for unreimbursed business expenses incurred by the Stockholders on
behalf of the Company (other than expenses related to the transactions
contemplated by this Agreement) prior to the Closing Date or unreimbursed
medical expenses of the Stockholders incurred prior to the Closing Date which
are covered by the Company's existing health insurance coverage. In the event
that the Closing Date does not occur, then the release instrument referenced
herein shall be void and of no further force or effect.
9.6 SATISFACTION. All actions, proceedings, instruments and documents
that are not within the control of AmPaM and that are required to carry out the
transactions contemplated by this Agreement or incidental hereto shall have been
reasonably approved by counsel to AmPaM.
9.7 TERMINATION OF RELATED PARTY AGREEMENTS. Except as set forth on
Schedule 9.7, all existing agreements between the Company and the Stockholders
(and between the Company and entities controlled by the Stockholders) specified
on Schedule 5.31 shall have been terminated effective prior to or as of the
Closing Date without any payment being made by the Company other than payments
made for services rendered, materials provided or other benefits provided to the
Company prior to the Closing Date pursuant to the terms of such agreements as in
effect as of the date of this Agreement.
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9.8 OPINION OF COUNSEL. AmPaM shall have received opinions from counsel
to the Company and the Stockholders, dated the Closing Date, substantially in
the form annexed hereto as Annex V.
9.9 CONSENTS AND APPROVALS. All necessary consents of and filings with
any governmental authority or agency relating to the consummation of the
transactions contemplated herein shall have been obtained and made; any waiting
periods under the Xxxx-Xxxxx Act, if applicable, shall have expired or been
terminated; all consents and approvals of third parties listed on Schedule
5.23(b)(2) shall have been obtained; and no action or proceeding shall have been
instituted or threatened to restrain or prohibit the purchase and sale of the
Company Stock and no governmental agency or body shall have taken any other
action or made any request of AmPaM as a result of which AmPaM deems it
inadvisable to proceed with the transactions hereunder.
9.10 GOOD STANDING CERTIFICATES. The Company shall have delivered to
AmPaM a certificate, dated as of a date no earlier than ten days prior to the
Closing Date, duly issued by the appropriate governmental authority in the
Company's state of incorporation and, unless waived by AmPaM, in each state in
which the Company is authorized to do business, showing the Company is in good
standing and authorized to do business and that all state franchise and/or
income tax returns and taxes for the Company for all periods prior to the
Closing have been filed and paid.
9.11 FUNDING AVAILABILITY. AmPaM shall have entered into binding
agreements with financial institutions, lenders or investors that provide AmPaM
with sufficient funds to pay (i) the cash amounts specified in Annex I hereto as
payable to the Stockholders upon the Closing and (ii) the aggregate cash amounts
specified in Annex I to each of the Other Agreements as payable to the
stockholders of the Other Founding Companies upon the Closing; and all
conditions to the funding of the cash amounts necessary to make such payments
specified in the agreements related to such financing arrangements, other than
the closing of the transactions contemplated by this Agreement and the Other
Agreements, shall have been satisfied as of the Closing Date.
9.12 FIRPTA CERTIFICATE. Each Stockholder shall have delivered to AmPaM
a certificate to the effect that he is not a foreign person pursuant to Section
1.1445-2(b) of the Treasury regulations.
9.13 RESIGNATIONS OF DIRECTORS AND OFFICERS. Any directors of the
Company, other than those identified on Schedule 2.1, shall have resigned as
directors of the Company. Any officers of the Company, other than those
identified on Schedule 2.2, shall have resigned as officers of the Company.
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10. COVENANTS OF AMPAM AND THE STOCKHOLDERS AFTER CLOSING
10.1 RELEASE FROM GUARANTEES; REPAYMENT OF CERTAIN OBLIGATIONS. AmPaM
shall use reasonable efforts to have the Stockholders released from any and all
guarantees of the Company's indebtedness, including bond obligations, identified
on Schedule 10.1. Prior to obtaining the release of such guarantees, AmPaM shall
provide its guarantee of such indebtedness to the lenders thereof. In the event
that AmPaM cannot obtain such releases from the lenders of any such guaranteed
indebtedness identified on Schedule 10.1 on or prior to 90 days subsequent to
the Closing Date, AmPaM shall promptly pay off or otherwise refinance or retire
such indebtedness such that the Stockholders' personal liability shall be
released. AmPaM will indemnify the Stockholders against any loss or damage
suffered as a result of the personal guarantees.
10.2 PRESERVATION OF TAX AND ACCOUNTING TREATMENT. Except as
contemplated by this Agreement, after the Closing Date, AmPaM shall not and
shall not permit any of its Subsidiaries to undertake any act that would
jeopardize the tax-free status of the exchange of Company Stock for AmPaM Stock
(but not cash or other property), including without limitation:
(a) the retirement or reacquisition, directly or indirectly,
of all or part of the AmPaM Stock issued in connection with the transactions
contemplated hereby; or
(b) the entering into of financial arrangements for the
benefit of the Stockholders other than as described in the Private Placement
Memorandum or as described in this Agreement.
10.3 PREPARATION AND FILING OF TAX RETURNS; PAYMENT OF TAXES.
(a) The Company, if possible, or otherwise the Stockholders
shall file or cause to be filed all income Tax Returns (federal, state, local or
otherwise) of any Acquired Party for all taxable periods that end on or before
the Closing Date, and shall permit AmPaM to review all such Tax Returns prior to
such filings. Unless the Company is a C corporation, the Stockholders shall pay
or cause to be paid all income Tax liabilities (in excess of all amounts already
paid with respect thereto or properly accrued or reserved with respect thereto
on the Financial Statements) with respect to the Company's operations for all
periods through and including the Closing Date.
(b) AmPaM shall file or cause to be filed all separate Returns
of, or that include, any Acquired Party for all taxable periods ending after the
Closing Date.
(c) Unless required by applicable law, regulations or
government proceedings, AmPaM shall not take any action, including any amendment
of a Tax Return of any Acquired Party, if such action would result in additional
Tax liabilities payable by any of the Stockholders for periods ending on or
prior to the Closing Date.
(d) Each party hereto shall, and shall cause its subsidiaries
and Affiliates to, provide to each of the other parties hereto such cooperation
and information as any of them
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reasonably may request in filing any Return, amended Return or claim for refund,
determining a liability for Taxes or a right to refund of Taxes or in conducting
any audit or other proceeding in respect of Taxes. Such cooperation and
information shall include providing copies of all relevant portions of relevant
Returns, together with relevant accompanying schedules and relevant work papers,
relevant documents relating to rulings or other determinations by Taxing
Authorities and relevant records concerning the ownership and Tax basis of
property, which such party may possess. Each party shall make its employees
reasonably available on a mutually convenient basis at its cost to provide
explanation of any documents or information so provided. Subject to the
preceding sentence, each party required to file Returns pursuant to this
Agreement shall bear all costs of filing such Returns.
(e) Each of the Company, AmPaM and each Stockholder shall
comply with the tax reporting requirements of Section 1.351-3 of the Treasury
Regulations promulgated under the Code, and treat the transaction as a tax-free
contribution under Section 351(a) of the Code subject to gain, if any,
recognized on the receipt of cash or other property under Section 351(b) of the
Code.
10.4 DIRECTORS. The persons named in the Private Placement Memorandum
shall be appointed as directors and elected as officers of AmPaM, as and to the
extent set forth in the Private Placement Memorandum, promptly following the
Closing Date; provided, however, that the parties hereto acknowledge that if the
Company consummates an IPO, the persons who will serve as directors and
executive officers of AmPaM will be adjusted as appropriate for a publicly
traded entity, with any such changes being subject to the approval of the
majority of the Board of Directors of AmPaM.
10.5 LEGAL OPINIONS. If required by the lenders pursuant to the terms
of any agreements related to financing of the cash amounts referred to in
Section 9.11 hereof, the Company shall cause its counsel to deliver to such
lenders, at the Closing, an opinion of counsel in substantially the form
attached hereto as Annex V.
11. INDEMNIFICATION
The Stockholders and AmPaM each make the following covenants that are
applicable to them, respectively:
11.1 GENERAL INDEMNIFICATION BY THE STOCKHOLDERS.
(a) Each Stockholder covenants and agrees that such Stockholder will
indemnify, defend, protect and hold harmless AmPaM at all times, from and after
the date of this Agreement until the applicable Expiration Date (as defined in
the introductory paragraph to Section 5(A)), provided that for purposes of
clause (iii) below, the applicable Expiration Date shall be the date on which
the applicable statute of limitations expires), from and against all claims,
damages, actions, suits, proceedings, demands, assessments, adjustments, costs
and expenses (including specifically, but without limitation, reasonable
attorneys' fees and expenses of investigation) incurred by AmPaM
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as a result of or arising from (i) any breach of the representations and
warranties of the Company set forth herein or on the schedules attached hereto
or certificates delivered pursuant to this Agreement, (ii) any breach of any
covenant or agreement on the part of the Company under this Agreement, or (iii)
any liability under the 1933 Act or any Federal or state securities law or
regulation, at common law or otherwise, arising out of or based upon any untrue
statement or alleged untrue statement of a material fact relating solely to the
Company which was based upon information provided to AmPaM or its counsel in
writing by the Company specifically for inclusion in the Private Placement
Memorandum and is contained in the Private Placement Memorandum, or any
amendment thereof or supplement thereto, or arising out of or based upon any
omission or alleged omission to state therein a material fact relating to the
Company required to be stated therein or necessary to make the statements
therein not misleading; provided, however, that no Stockholder shall be liable
for any indemnification obligation pursuant to this Section 11.1 in excess of
such Stockholder's pro rata share thereof determined by reference to the
aggregate value of the Base Cash Amount (as defined in Annex I of this
Agreement), the principal amount of AmPaM Notes and the shares of AmPaM Stock
(valued at a price of $13.00 per share) received by such Stockholder pursuant to
Section I.A. of Annex I hereto (without giving effect to the adjustments
provided in Sections I.B. and I.C. thereof) (giving effect to the value of such
AmPaM Stock and without giving effect to such adjustments, collectively, the
"Aggregate Consideration") such Stockholder would receive pursuant to Section I
of Annex I of this Agreement if the transactions contemplated hereby were
consummated in relation to the total Aggregate Consideration all Stockholders
would receive pursuant to Section I of Annex I of this Agreement if the
transactions contemplated hereby were consummated.
(b) Each Stockholder covenants and agrees that such Stockholder will
indemnify, defend, protect and hold harmless AmPaM at all times, from and after
the date of this Agreement, from and against all claims, damages, actions,
suits, proceedings, demands, assessments, adjustments, costs and expenses
(including specifically, but without limitation, reasonable attorneys' fees and
expenses of investigation) incurred by AmPaM as a result of or arising from (i)
any breach of the representations and warranties of such Stockholder set forth
in Section 5(B) hereof, (ii) any breach of any covenant or agreement on the part
of such Stockholder under this Agreement, or (iii) any liability under the 1933
Act or any Federal or state securities law or regulation, at common law or
otherwise, arising out of or based upon any untrue statement or alleged untrue
statement of a material fact relating solely to such Stockholder which was based
upon information provided to AmPaM or its counsel in writing by such Stockholder
specifically for inclusion in the Private Placement Memorandum and is contained
in the Private Placement Memorandum, or any amendment thereof or supplement
thereto, or arising out of or based upon any omission or alleged omission to
state therein a material fact relating solely to such Stockholder required to be
stated therein or necessary to make the statements therein in light of the
circumstances in which such statements were made not misleading.
(c) AmPaM acknowledges and agrees that other than the representations
and warranties of the Company or the Stockholders specifically contained in this
Agreement, there are no representations or warranties of the Company or the
Stockholders, either express or implied, with
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respect to the transactions contemplated by this Agreement, the Company or its
assets, liabilities and business.
11.2 INDEMNIFICATION BY AMPAM. AmPaM covenants and agrees that it will
indemnify, defend, protect and hold harmless the Company and the Stockholders at
all times from and after the date of this Agreement until the applicable
Expiration Date (as defined in the introductory paragraph of Section 6, provided
that for purposes of clause (iii) below, the applicable Expiration Date shall be
the date on which the applicable statute of limitations expires), from and
against all claims, damages, actions, suits, proceedings, demands, assessments,
adjustments, costs and expenses (including specifically, but without limitation,
reasonable attorneys' fees and expenses of investigation) incurred by the
Company or the Stockholders as a result of or arising from (i) any breach by
AmPaM of its representations and warranties set forth herein or on the schedules
attached hereto or certificates delivered pursuant to this Agreement, (ii) any
breach of any agreement on the part of AmPaM under this Agreement; or (iii) any
liability under the 1933 Act or any Federal or state securities law or
regulation, at common law or otherwise, arising out of or based upon any untrue
statement or alleged untrue statement of a material fact contained in the
Private Placement Memorandum, or any amendment thereof or supplement thereto, or
arising out of or based upon any omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, except to the extent such is based upon an untrue
statement or alleged untrue statement, or omission or alleged omission, made
therein in reliance upon, and in conformity with, the representations and
warranties of the Company or the Stockholders specifically contained in this
Agreement or other information furnished to AmPaM by the Company or the
Stockholders in writing specifically for inclusion therein.
11.3 THIRD PERSON CLAIMS. Promptly after any party hereto (hereinafter
the "Indemnified Party") has received notice of or has knowledge of any claim by
a person not a party to this Agreement ("Third Person"), or the commencement of
any action or proceeding by a Third Person, the Indemnified Party shall, as a
condition precedent to a claim with respect thereto being made against any party
obligated to provide indemnification pursuant to Section 11.1 or 11.2 hereof
(hereinafter the "Indemnifying Party"), give the Indemnifying Party written
notice of such claim or the commencement of such action or proceeding. Such
notice shall state the nature and the basis of such claim and a reasonable
estimate of the amount thereof. The Indemnifying Party shall have the right to
defend and settle, at its own expense and by its own counsel reasonably
satisfactory to the Indemnified Party, any such matter so long as the
Indemnifying Party pursues the same in good faith and diligently, provided that
the Indemnifying Party shall not settle any criminal proceeding without the
written consent of the Indemnified Party. If the Indemnifying Party undertakes
to defend or settle, it shall promptly notify the Indemnified Party of its
intention to do so, and the Indemnified Party shall cooperate with the
Indemnifying Party and its counsel in the defense thereof and in any settlement
thereof. Such cooperation shall include, but shall not be limited to, furnishing
the Indemnifying Party with any books, records or information reasonably
requested by the Indemnifying Party that are in the Indemnified Party's
possession or control. All Indemnified Parties shall use the same counsel, which
shall be the counsel selected by Indemnifying Party, provided that if counsel to
the Indemnifying Party shall have a conflict of interest or a conflict of
interest is reasonably likely
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to arise that prevents counsel for the Indemnifying Party from representing such
Indemnified Party, Indemnified Party shall have the right to participate in such
matter through counsel of its own choosing and Indemnifying Party will reimburse
the Indemnified Party for the reasonable expenses of its counsel. After the
Indemnifying Party has notified the Indemnified Party of its intention to
undertake to defend or settle any such asserted liability, and for so long as
the Indemnifying Party diligently pursues such defense, the Indemnifying Party
shall not be liable for any additional legal expenses incurred by the
Indemnified Party in connection with any defense or settlement of such asserted
liability, except (i) as set forth in the preceding sentence and (ii) to the
extent such participation is requested by the Indemnifying Party, in which event
the Indemnified Party shall be reimbursed by the Indemnifying Party for
reasonable additional legal expenses and out-of-pocket expenses. If the
Indemnifying Party desires to accept a final and complete settlement of any such
Third Person claim and the Indemnified Party refuses to consent to such
settlement, then the Indemnifying Party's liability under this Section with
respect to such Third Person claim shall be limited to the amount so offered in
settlement by said Third Person. Upon agreement as to such settlement between
said Third Person and the Indemnifying Party, the Indemnifying Party shall, in
exchange for a complete release from the Indemnified Party, promptly pay to the
Indemnified Party the amount agreed to in such settlement. If the Indemnifying
Party does not undertake to defend such matter to which the Indemnified Party is
entitled to indemnification hereunder, or fails diligently to pursue such
defense, the Indemnified Party may undertake such defense through counsel of its
choice, at the cost and expense of the Indemnifying Party, and the Indemnified
Party may settle such matter, and the Indemnifying Party shall pay the
Indemnified Party for the settlement amount and any other liabilities or
expenses incurred by the Indemnified Party in connection therewith, provided,
however, that under no circumstances shall the Indemnified Party settle any
Third Person claim without the written consent of the Indemnifying Party, which
consent shall not be unreasonably withheld or delayed. All settlements hereunder
shall effect a complete release of the Indemnified Party, unless the Indemnified
Party otherwise agrees in writing. With respect to any account, note or other
receivable as to which the Stockholders have paid in full any indemnification
obligation pursuant to this Section 11 as a result of a breach of the
representation and warranty made pursuant to Section 5.11 or as to which a claim
in respect thereof has been asserted pursuant to this Section 11 that has been
applied against the Indemnification Threshold with respect to the Stockholders
as a result of a breach of the representation and warranty made pursuant to
Section 5.11, AmPaM shall cause the Company to assign such account, note or
other receivable to the Stockholders. The parties hereto will make appropriate
adjustments for insurance proceeds in determining the amount of any
indemnification obligation under this Section.
11.4 EXCLUSIVE REMEDY. The indemnification provided for in this Section
11 shall (except as prohibited by ERISA) be the exclusive remedy in any action
seeking damages or any other form of monetary relief brought by any party to
this Agreement against another party to this Agreement with respect to any
provision of this Agreement, provided that, nothing herein shall be construed to
limit the right of a party, in a proper case, to seek injunctive relief for a
breach of this Agreement. AmPaM hereby waives, to the fullest extent permitted
under applicable law, any and all other rights, claims and causes of action,
known or unknown, it or any indemnified person may have against the Company or
any Stockholder relating to this Agreement or the transactions pursuant to this
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Agreement arising under or based upon any Federal, state, local or foreign
statute, law, rule, regulation or otherwise. Any indemnity payment under this
Section 11 shall be treated as an adjustment to the exchange consideration for
Tax purposes unless a final determination (which shall include the execution of
a Form 870-AD or successor form) with respect to the Indemnified Party or any of
its Affiliate causes any such payment not to be treated as an adjustment to the
exchange consideration for U.S. Federal income Tax purposes.
11.5 LIMITATIONS ON INDEMNIFICATION. (a) AmPaM shall not assert any
claim for indemnification under this Section 11 against the Stockholders until
such time as, and solely to the extent that, the aggregate of all claims which
AmPaM may have against the Stockholders shall exceed the greater of (a) 3.0% of
the sum of (i) the cash paid to the Stockholders pursuant to Section 1.2 plus
(ii) the value of the AmPaM Stock delivered to the Stockholders pursuant to
Section 1.2 (calculated as provided in this Section 11.5) plus (iii) the
principal amount of the AmPaM Notes delivered to the Stockholders pursuant to
Section 1.2, or (b) $50,000 (the "Indemnification Threshold"). Stockholders
shall not assert any claim for indemnification hereunder against AmPaM until
such time as, and solely to the extent that, the aggregate of all claims which
Stockholders may have against AmPaM shall exceed $50,000; provided, however,
that this sentence shall not be applicable with respect of any failure by AmPaM
to (i) deliver the consideration specified in Annex I hereto on the Closing Date
upon the satisfaction, or waiver by AmPaM, of all conditions to the occurrence
of the Closing Date specified in Section 9 or (ii) comply with its obligations
pursuant to Section 10.1. After the $50,000 threshold for AmPaM (subject to the
proviso in the preceding sentence) or the Indemnification Threshold for a
Stockholder has been met, all claims must be made in $10,000 increments, which
claims may be cumulated in order to meet such $10,000 thresholds. For purposes
of this paragraph, the AmPaM Stock delivered to the Stockholders shall be valued
at $13.00 per share.
(b) No person shall be entitled to indemnification under this Section
11 if and to the extent that such person's claim for indemnification is directly
or indirectly related to a breach by such person of any representation,
warranty, covenant or other agreement set forth in this Agreement. No claim for
indemnification against the Stockholders shall limit, diminish or change any
obligation of AmPaM pursuant to Section 10.1 hereof.
(c) Notwithstanding any other term of this Agreement, no Stockholder
shall be liable under this Section 11 for an amount which exceeds eighty-five
percent (85%) of the amount of proceeds received by such Stockholder (valued as
of the Closing Date) in connection with the purchase and sale of the Company
Stock. For purposes of this paragraph, the AmPaM Stock shall be valued at $13.00
per share.
(d) A Stockholder may pay any indemnification obligation under Section
11 by means of the payment of cash or a combination of the payment of cash, the
forgiveness of amounts owed pursuant to the AmPaM Notes and the delivery to
AmPaM of shares of AmPaM Stock; provided that the percentage of the
indemnification obligation satisfied by means of the delivery of shares of AmPaM
Stock does not exceed the percentage of AmPaM Stock comprising the total
consideration
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paid to such Stockholder by AmPaM to such Stockholder pursuant to Annex I. For
the purpose of crediting Stockholders for payments made to AmPaM by means of
delivery of shares of AmPaM Stock, the AmPaM Stock shall be valued at $13.00 per
share.
(e) In determining the amount of any loss, liability or expense for
which any party is entitled to indemnification under this Agreement, the gross
amount thereof will be reduced by any correlative insurance proceeds or other
third party indemnity or reimbursement proceeds realized or to be realized by
such party (or, in the case of AmPaM, by AmPaM, the Company or any subsidiary of
AmPaM or the Company) and such correlative insurance proceeds or other third
party indemnity or reimbursement proceeds shall be net of any insurance premium
or other incremental cost or expense owed or payable to any third party which
becomes due as a result of such claim. AmPaM shall use commercially reasonable
efforts to pursue any available insurance coverage or other rights of indemnity
or reimbursement from third parties with respect to any such loss, liability or
expense.
12. TERMINATION OF AGREEMENT
12.1 TERMINATION. This Agreement may be terminated at any time prior to
the Closing Date solely:
(i) by mutual consent of AmPaM and the Stockholders;
(ii) by the Stockholders, if the transactions contemplated by
this Agreement to take place at the Closing Date shall not have been
consummated by June 30, 1999, unless the failure of such transactions
to be consummated is due to a breach of this Agreement by the Company
or the Stockholders prior to or on the Closing Date;
(iii) by AmPaM, if the transactions contemplated by this
Agreement to take place at the Closing Date shall not have been
consummated by June 30, 1999, unless the failure of such transactions
to be consummated is due to a breach of this Agreement by AmPaM prior
to or on the Closing Date;
(iv) by the Stockholders, if a material breach or default
shall be made by AmPaM in the observance or in the due and timely
performance of any of the covenants or agreements contained herein
relating to AmPaM, and the curing of such default shall not have been
made (or in the reasonable judgment of such Stockholders cannot be
made) on or before the Closing Date;
(v) by AmPaM, if a material breach or default shall be made by
the Company or the Stockholders in the observance or in the due and
timely performance of any of the covenants or agreements contained
herein relating to the Company or the Stockholders, and the curing of
such default shall not have been made (or in the reasonable judgment of
AmPaM cannot be made) on or before the Closing Date;
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(vi) by the Stockholders, if the conditions set forth in
Section 8 hereof have not been satisfied or waived as of the Closing
Date; or
(vii) by AmPaM, if the conditions set forth in Section 9
hereof have not been satisfied or waived as of the Closing Date.
12.2 PROCEDURE AND EFFECT OF TERMINATION. A determination to terminate
this Agreement by AmPaM pursuant to Section 12.1 shall be valid and effective
only if a written notice of termination, accompanied by a certified copy of
resolutions of the board of directors of AmPaM that evidence the authorization
of the officer of AmPaM to deliver a written notice of termination of this
Agreement pursuant to Section 12.1, is given to the Stockholders in the manner
specified for notices in this Agreement. A determination to terminate this
Agreement by the Stockholders pursuant to Section 12.1 shall be valid and
effective only if a written notice of termination, signed by Stockholders who
would be entitled to receive a majority of the shares of AmPaM Stock specified
in Section I of Annex I to this Agreement if the transactions contemplated
hereby were consummated, is given to AmPaM in the manner specified for notices
in this Agreement. Upon the giving of notice of termination of this Agreement
pursuant to Section 12.1 as specified in the preceding sentence, this Agreement
shall terminate, and the transactions contemplated hereby shall be abandoned,
without further action by any of the parties hereto. Immediately upon any such
termination, AmPaM shall deliver written notice of such termination to the Other
Founding Companies. If this Agreement is terminated as provided in this Section
12, no party hereto shall have any liability or further obligation hereunder to
any other party, except as provided in Section 14 and Section 18.6, provided,
that, the termination of this Agreement will in no way limit any obligation or
liability of any party based on or arising from a breach or default by such
party with respect to any of its representations, warranties, covenants or
agreements contained in this Agreement including, but not limited to, legal and
audit costs and out of pocket expenses that occurred prior to such termination.
13. NONCOMPETITION
13.1 PROHIBITED ACTIVITIES. The Stockholders will not, without the
prior written consent of AmPaM, for a period of two (2) years following the
Closing Date, for any reason whatsoever, directly or indirectly, for themselves
or on behalf of or in conjunction with any other person, persons, company,
partnership, corporation or business of whatever nature:
(i) engage, as an officer, director, shareholder, owner,
partner, joint venturer, or in a managerial capacity, whether as an
employee, independent contractor, consultant or advisor, or as a sales
representative, whether paid or unpaid, in any plumbing, piping,
mechanical, heating, ventilation or air conditioning contracting,
installation or services business or operation, whether for
residential, commercial, industrial or governmental customers, or any
ancillary contracting, installation or services business directly
related thereto (such business and operations referred to herein as the
"Plumbing and Mechanical
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Business"), within 100 miles of where the Company or any of its
subsidiaries conducted business within two (2) years prior to the
Closing Date (the "Territory");
(ii) call upon any person who is, at the Closing Date, within
the Territory, an employee of AmPaM or any subsidiary thereof for the
purpose or with the intent of enticing such employee away from or out
of the employ of AmPaM or any subsidiary thereof;
(iii) call upon any person or entity which is, at the Closing
Date, or which has been within three (3) years prior to the Closing
Date, a customer of AmPaM or any subsidiary thereof, of the Company or
of any of the Other Founding Companies for the purpose of soliciting
customers, orders or contracts for any Plumbing and Mechanical Business
in direct competition with AmPaM within the Territory;
(iv) call upon any prospective acquisition candidate, on any
Stockholder's own behalf or on behalf of any competitor in the Plumbing
and Mechanical Business, which candidate, to the actual knowledge of
such Stockholder after due inquiry, was called upon by AmPaM or any
subsidiary thereof or for which, to the actual knowledge of such
Stockholder after due inquiry, AmPaM or any subsidiary thereof made an
acquisition analysis, for the purpose of acquiring such entity; or
(v) disclose to any person, firm, partnership, corporation or
business the names or identities of any person, firm, partnership,
corporation or business which has been a customer of the Company or any
of its subsidiaries within the two (2) years prior to the Closing Date
for any reason or purpose whatsoever except to the extent that the
Company has in the past disclosed such information to the public for
valid business reasons; or
(vi) testify as an expert witness in matters related to the
Plumbing and Mechanical Business for an adverse party to AmPaM, the
Company or any Other Founding Companies in litigation.
Notwithstanding the above, the foregoing covenant shall not be deemed
to prohibit any Stockholder from acquiring as a passive investment (i) not more
than one percent (1%) of the capital stock of a competing business whose stock
is traded on a national securities exchange, the NASDAQ Stock Market or
over-the-counter, or (ii) not more than five percent (5%) of the capital stock
of a competing business whose stock is not publicly traded if the Board of
Directors of AmPaM consents to such acquisition.
13.2 DAMAGES. Because of the difficulty of measuring economic losses to
AmPaM as a result of a breach of the foregoing covenant, and because of the
immediate and irreparable damage that could be caused to AmPaM for which it
would have no other adequate remedy, each Stockholder agrees that the foregoing
covenant may be enforced by AmPaM in the event of breach by such Stockholder, by
injunctions and restraining orders.
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13.3 REASONABLE RESTRAINT. It is agreed by the parties hereto that the
foregoing covenants in this Section 13 impose a reasonable restraint on the
Stockholders in light of the activities and business of AmPaM and the
subsidiaries thereof on the date of the execution of this Agreement and the
current plans of AmPaM as described in the Private Placement Memorandum.
13.4 SEVERABILITY; REFORMATION. The covenants in this Section 13 are
severable and separate, and the unenforceability of any specific covenant shall
not affect the provisions of any other covenant. Moreover, in the event any
court of competent jurisdiction shall determine that the scope, time or
territorial restrictions set forth are unreasonable, then it is the intention of
the parties that such restrictions be enforced to the fullest extent which the
court deems reasonable, and the Agreement shall thereby be reformed.
13.5 INDEPENDENT COVENANT. All of the covenants in this Section 13
shall be construed as an agreement independent of any other provision in this
Agreement, and the existence of any claim or cause of action of any Stockholder
against AmPaM or any subsidiary thereof, whether predicated on this Agreement or
otherwise, shall not constitute a defense to the enforcement by AmPaM of such
covenants. It is specifically agreed that the period of two (2) years stated at
the beginning of this Section 13, during which the agreements and covenants of
each Stockholder made in this Section 13 shall be effective, shall be computed
by excluding from such computation any time during which such Stockholder is
found to be in violation of any provision of this Section 13 as determined by
any of (i) a written agreement to such effect executed and delivered by AmPaM
and such Stockholder, (ii) a determination by an arbitration panel pursuant to
an arbitration conducted pursuant to Section 18.16 hereof or (iii) a
non-appealable judgment of a court of competent jurisdiction. The covenants
contained in Section 13 shall not be affected by any breach of any other
provision hereof by any party hereto. The covenants contained in Section 13
shall have no effect if the transactions contemplated by this Agreement are not
consummated.
13.6 MATERIALITY. The Company and the Stockholders hereby agree that
the covenants contained in this Section 13 are a material and substantial part
of this transaction.
14. NONDISCLOSURE OF CONFIDENTIAL INFORMATION
14.1 STOCKHOLDERS. The Stockholders recognize and acknowledge that they
had in the past, currently have, and in the future may possibly have, access to
certain confidential information of the Company, the Other Founding Companies,
and/or AmPaM, such as operational policies, customer lists, and pricing and cost
policies that are valuable, special and unique assets of the Company's, the
Other Founding Companies' and/or AmPaM's respective businesses. The Stockholders
agree that they will not disclose such confidential information to any person,
firm, corporation, association or other entity for any purpose or reason
whatsoever, except (a) to authorized representatives of AmPaM, (b) following the
Closing, such information may be disclosed by the Stockholders as is required in
the course of performing their duties for AmPaM or the Company and (c) to its
counsel and other advisers, provided that such advisers (other than counsel)
agree to the confidentiality provisions of this Section 14.1; provided, however
that (i) the foregoing
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disclosure prohibition shall not apply in the event that (i) such information
becomes known to the public generally through no fault of the Stockholders, (ii)
disclosure is required by law or the order of any governmental authority under
color of law, provided, that prior to disclosing any information pursuant to
this clause (ii), the Stockholders shall, if possible, give prior written notice
thereof to AmPaM and provide AmPaM with the opportunity to contest such
disclosure, or (iii) the disclosing party reasonably believes that such
disclosure is required in connection with the defense of a lawsuit against the
disclosing party. In the event of a breach or threatened breach by any of the
Stockholders of the provisions of this Section, AmPaM shall be entitled to an
injunction restraining such Stockholders from disclosing, in whole or in part,
such confidential information. Nothing herein shall be construed as prohibiting
AmPaM from pursuing any other available remedy for such breach or threatened
breach, including the recovery of damages. In the event the transactions
contemplated by this Agreement are not consummated, Stockholders shall have none
of the above-mentioned restrictions on their ability to disseminate confidential
information with respect to the Company.
14.2 AMPAM. AmPaM recognizes and acknowledges that it had in the past
and currently has access to certain confidential information of the Company,
such as operational policies, customer lists, and pricing and cost policies that
are valuable, special and unique assets of the Company's business. AmPaM agrees
that, prior to the Closing, or if the transactions contemplated by this
Agreement are not consummated, it will not disclose such confidential
information to any person, firm, corporation, association or other entity for
any purpose or reason whatsoever, except (a) to authorized representatives of
the Company, (b) to its counsel and other advisers, provided that such advisers
(other than counsel) agree to the confidentiality provisions of this Section
14.2, (c) to the Other Founding Companies and their representatives pursuant to
Section 7.1(b) of the Other Agreements and (d) to potential purchasers of
securities of AmPaM to the extent necessary or advisable in connection with the
applicable securities laws; provided, however that the foregoing disclosure
prohibition shall not apply in the event that (A) such information becomes known
to the public generally through no fault of AmPaM, (B) disclosure is required by
law or the order of any governmental authority under color of law, provided,
that prior to disclosing any information pursuant to this clause (B), AmPaM
shall, if possible, give prior written notice thereof to the Company and the
Stockholders and provide the Company and the Stockholders with the opportunity
to contest such disclosure, or (C) the disclosing party reasonably believes that
such disclosure is required in connection with the defense of a lawsuit against
the disclosing party. In the event of a breach or threatened breach by AmPaM of
the provisions of this Section 14.2, the Company and the Stockholders shall be
entitled to an injunction restraining AmPaM from disclosing, in whole or in
part, such confidential information. Nothing herein shall be construed as
prohibiting the Company and the Stockholders from pursuing any other available
remedy for such breach or threatened breach, including the recovery of damages.
In the event the transactions contemplated by this Agreement are not consummated
for any reason, AmPaM shall nevertheless remain subject to this Section 14.2,
except that it shall not be permitted to make any disclosures otherwise than
pursuant to clause (A), (B) or (C) above.
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14.3 DAMAGES. Because of the difficulty of measuring economic losses as
a result of the breach of the foregoing covenants in Sections 14.1 and 14.2, and
because of the immediate and irreparable damage that would be caused for which
they would have no other adequate remedy, the parties hereto agree that, in the
event of a breach by any of them of the foregoing covenants, the covenant may be
enforced against the other parties by injunctions and restraining orders.
14.4 SURVIVAL. The obligations of the parties under this Article 14
shall survive the termination of this Agreement for a period of five years from
the Closing Date.
14.5 RETURN OF INFORMATION. If the transactions contemplated by this
Agreement are not consummated, AmPaM will return or destroy all confidential
information regarding the Company.
15. TRANSFER RESTRICTIONS
15.1 TRANSFER RESTRICTIONS RELATING TO AMPAM STOCK AND AMPAM NOTES. For
a period of two years from the Closing Date or, in the event that the Company
completes an IPO, for a period through the second anniversary of the date of the
closing of such IPO (the "Restricted Period"), no Stockholder shall (i) sell,
assign, exchange, transfer, pledge, or otherwise dispose of any shares of AmPaM
Stock or AmPaM Notes received by the Stockholders pursuant to this Agreement or
any securities convertible into, exchangeable or exercisable for any shares of
AmPaM Stock or AmPaM Notes received by such Stockholder pursuant to this
Agreement, (ii) grant any option to purchase, or otherwise enter into any
contract to sell, assign, transfer, pledge or otherwise dispose of, any shares
of AmPaM Stock or AmPaM Notes received by such Stockholder pursuant to this
Agreement, or (iii) enter into any swap or any other agreement or any
transaction that transfers, in whole or in part, directly or indirectly, the
economic consequence of ownership of the AmPaM Stock or AmPaM Notes, whether any
such swap or transaction is to be settled by delivery of shares of AmPaM Stock
or AmPaM Notes or other securities, by the delivery or payment of cash or
otherwise, except, in the case of clauses (i), (ii) or (iii) above, (A) as
otherwise agreed by AmPaM, (B) for the sale of shares of AmPaM Stock, and
entering into agreements relating to the sale of shares of AmPaM Stock, pursuant
to Section 17 hereof, (C) for transfers to (I) immediate family members of such
Stockholder who agree with AmPaM in writing to be bound by the restrictions set
forth in this Section 15.1, (II) trusts, limited partnerships or other estate
planning entities for the benefit of such Stockholder or family members of such
Stockholder which have agreed with AmPaM in writing, through action taken by the
trustees, partners or other persons having authority to bind the trust, limited
partnership or other estate planning entity, to be bound by the restrictions set
forth in this Section 15.1, (III) any charitable organization that qualifies for
receipt of charitable contributions under Section 170(c) of the Code which
agrees with AmPaM in writing to be bound by the restrictions set forth in this
Section 15.1, (D) for transfers of AmPaM Stock or AmPaM Notes to AmPaM pursuant
to Section 11.5(d), (E) for transfers to another Stockholder, to another person
or entity who receives shares of AmPaM Stock or AmPaM Notes or AmPaM Series A
Preferred Stock pursuant to the Other Agreements or to Sterling City Capital LLC
or any of its Affiliates provided that (1) such transaction is exempt from the
registration requirements of the 1933 Act as evidenced by the delivery to AmPaM
of an opinion of counsel in form and substance reasonably satisfactory to AmPaM
and
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(2) any such transferee agrees in writing to be bound by the restrictions set
forth in this Section 15.1, (F) transfers of shares of AmPaM Notes, shares of
AmPaM Stock, or grants of options to purchase shares of AmPaM Stock, by such
Stockholder to employees of the Company of up to an aggregate of 15% of the
shares of AmPaM Stock received by such Stockholder pursuant to this Agreement
provided that (1) any such transaction is exempt from the registration
requirements of the 1933 Act as evidenced by the delivery to AmPaM of an opinion
of counsel in form and substance reasonably satisfactory to AmPaM and (2) any
such employee agrees with AmPaM in writing to be bound by the restrictions set
forth in this Section 15.1 or (G) the sale by such Stockholder in an IPO of
shares of AmPaM Stock representing not more than 10% of the Aggregate
Consideration in cash; provided, however, that in no circumstance will a
Stockholder be entitled to sell shares of AmPaM Stock in an IPO to the extent
that the sale of such shares by such Stockholder would result in such
Stockholder receiving in excess of 45% of the Aggregate Consideration in cash;
and, provided further, if AmPaM is advised in writing in good faith by any
managing underwriter of an underwritten offering of the securities being offered
pursuant to any registration statement under Section 17.1 that the number of
shares to be sold by persons other than AmPaM is greater than the number of such
shares which can be offered without adversely affecting the success of the
offering, AmPaM may reduce pro rata (among the Stockholders and all other
selling security holders in the offering) the number of shares offered for the
accounts of such persons (based upon the number of shares held by such person)
to a number deemed satisfactory by such managing underwriter. During the
Restricted Period, the certificates evidencing the AmPaM Stock or AmPaM Notes
delivered to the Stockholders pursuant to Section 3 of this Agreement will bear
a legend substantially in the form set forth below:
THE [SHARES/NOTES] REPRESENTED BY THIS CERTIFICATE MAY NOT BE SOLD, ASSIGNED,
EXCHANGED, TRANSFERRED, PLEDGED OR OTHERWISE DISPOSED OF EXCEPT PURSUANT TO THE
TERMS OF THE ACQUISITION AGREEMENT PURSUANT TO WHICH SUCH SHARES WERE ISSUED,
AND THE ISSUER SHALL NOT BE REQUIRED TO GIVE EFFECT TO ANY ATTEMPTED SALE,
ASSIGNMENT, EXCHANGE, TRANSFER, PLEDGE OR OTHER DISPOSITION PRIOR TO EXPIRATION
OF THE RESTRICTED PERIOD REFERRED TO IN THE ACQUISITION AGREEMENT EXCEPT IN
ACCORDANCE WITH THE TERMS OF SUCH AGREEMENT. SUCH RESTRICTIONS ON TRANSFER ARE
SET FORTH IN AN ACQUISITION AGREEMENT, A COPY OF WHICH IS MAINTAINED AT THE
PRINCIPAL OFFICES OF THE ISSUER. UPON THE WRITTEN REQUEST OF THE HOLDER OF THIS
CERTIFICATE, THE ISSUER AGREES TO REMOVE THIS RESTRICTIVE LEGEND (AND ANY STOP
ORDER PLACED WITH THE TRANSFER AGENT) AFTER THE DATE SPECIFIED ABOVE.
15.2 TRANSFER RESTRICTIONS RELATING TO ADDITIONAL CONSIDERATION. No
Stockholder shall (i) sell, assign, exchange, transfer, pledge, or otherwise
dispose of any right to receive any consideration pursuant to Section II of
Annex I to this Agreement (the "Additional Consideration Right") or any
securities convertible into, exchangeable or exercisable for any Additional
Consideration Right, (ii) grant any option to purchase, or otherwise enter into
any contract to sell, assign, transfer, pledge or otherwise dispose of, any
Additional Consideration Right, or (iii) enter into any swap or any other
agreement or any transaction that transfers, in whole or in part, directly
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or indirectly, the economic consequence of ownership of any Additional
Consideration Right, whether any such swap or transaction is to be settled by
delivery of shares of AmPaM Stock or other securities, by the delivery or
payment of cash or otherwise.
16. FEDERAL SECURITIES ACT REPRESENTATIONS
16.1 COMPLIANCE WITH LAW. Each Stockholder acknowledges that the shares
of AmPaM Stock, the Additional Consideration Right and any AmPaM Notes to be
delivered to such Stockholder pursuant to this Agreement have not been and will
not be registered under the 1933 Act (except as provided in Section 17 hereof)
and therefore may not be sold, assigned, exchanged, transferred, pledged or
otherwise disposed of without compliance with the 1933 Act which, among other
matters, would require registration under the 1933 Act unless exemption from the
registration requirements is available for such transaction. The AmPaM Stock,
the Additional Consideration Right and any AmPaM Notes to be acquired by each
Stockholder pursuant to this Agreement is being acquired solely for such
Stockholder's own account, for investment purposes only, and with no present
intention of selling, assigning, exchanging, transferring, pledging, or
otherwise disposing of it. Each Stockholder covenants, warrants and represents
that neither the shares of AmPaM Stock, the Additional Consideration Right nor
any AmPaM Notes issued to such Stockholder will be offered, sold, assigned,
exchanged, pledged, transferred or otherwise disposed of except after full
compliance with all of the applicable provisions of the 1933 Act and the rules
and regulations of the SEC. All certificates representing the AmPaM Stock shall
bear the following legend in addition to the legend required under Section 15 of
this Agreement:
THE SHARES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933 (THE "ACT") AND MAY ONLY BE SOLD OR OTHERWISE TRANSFERRED IF THE HOLDER
HEREOF COMPLIES WITH THE ACT AND APPLICABLE FEDERAL AND STATE SECURITIES LAWS.
16.2 ECONOMIC RISK; SOPHISTICATION. Each Stockholder is able to bear
the economic risk of an investment in the AmPaM Stock and AmPaM Notes to be
acquired pursuant to this Agreement and can afford to sustain a total loss of
such investment. Each Stockholder has substantial knowledge and experience in
making investment decisions of this type (or is relying on qualified purchaser
representatives with such knowledge and experience in making this decision), and
is capable, either individually or with such purchaser representatives, of
evaluating the merits and risks of this investment. Each Stockholder has had an
adequate opportunity to ask questions and receive answers from the officers of
AmPaM concerning any and all matters relating to the transactions described
herein including, without limitation, the background and experience of the
current and proposed officers and directors of AmPaM, the plans for the
operations of the business of AmPaM, the business, operations and financial
condition of the Founding Companies other than the Company, and any plans for
additional acquisitions. Each Stockholder has asked any and all questions of the
nature described in the preceding sentence and all questions have been answered
to such Stockholder's satisfaction. Except as set forth on Schedule 16.2, each
Stockholder is an "accredited investor" as defined in Rule 501(a) of the 1933
Act. Neither the foregoing nor any investigation made by the Stockholders
referred to above shall in any way affect the representations, warranties,
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covenants and agreements of AmPaM made herein except to the extent that AmPaM is
relying upon the representations of the Stockholders in Section 16.1 and in this
Section 16.2 for purposes of AmPaM's representations and warranties in Sections
6.9, 6.11, 6.15 and 6.17 hereof as specified therein.
16.3 RELIANCE BY AMPAM. Each Stockholder acknowledges that AmPaM in
relying upon the representations and covenants of such Stockholder set forth in
Section 16.1 and Section 16.2 for purposes of compliance by AmPaM with Federal
and state securities laws related to the issuance of AmPaM Stock pursuant to
this Agreement and the Other Agreements.
17. REGISTRATION RIGHTS
17.1 PIGGYBACK REGISTRATION RIGHTS. Whenever AmPaM proposes to register
any AmPaM Stock for its own or other's account under the 1933 Act for a public
offering, other than (i) any shelf or other registration of shares to be used as
consideration for acquisitions of additional businesses by AmPaM and (ii)
registrations relating to employee benefit plans, AmPaM shall give each of the
Stockholders prompt written notice of its intent to do so. Upon the written
request of any of the Stockholders given within 15 calendar days after receipt
of such notice, notwithstanding the provisions of Section 15 (except as
specified below with respect to an IPO), AmPaM shall cause to be included in
such registration all of the AmPaM Stock issued to such Stockholders pursuant to
this Agreement (including any stock issued as or issuable upon the conversion or
exchange of any convertible security, warrant, right or other security which is
issued by AmPaM as a stock split, dividend or other distribution with respect
to, or in exchange for, or in replacement of such AmPaM Stock) which any such
Stockholder requests, other than shares of AmPaM Stock which may then be
immediately sold under Rule 144(k) (or any similar or successor provision)
promulgated under the 1933 Act, and other than shares of AmPaM Stock that have
been theretofore sold by the Stockholder in accordance with the 1933 Act,
provided that AmPaM shall have the right to reduce pro rata the number of shares
of each selling Stockholder included in such registration to the extent that
inclusion of such shares would, in the written opinion of tax counsel to AmPaM
or its independent auditors, jeopardize the status of the transactions
contemplated hereby and by the Private Placement Memorandum as a tax-free
organization under Section 351 of the Code; provided, however, that with respect
to a proposal by AmPaM to register AmPaM Stock under the 1933 Act in connection
with an IPO, no Stockholder shall be permitted pursuant to this Section 17.1 to
have included in such registration more shares of AmPaM Stock than permitted to
be sold by such Stockholder pursuant to Section 15.1. In addition, if AmPaM is
advised in writing in good faith by any managing underwriter of an underwritten
offering of the securities being offered pursuant to any registration statement
under this Section 17.1 that the number of shares to be sold by persons other
than AmPaM is greater than the number of such shares which can be offered
without adversely affecting the success of the offering, AmPaM may reduce pro
rata (among the Stockholders and all other selling security holders in the
offering) the number of shares offered for the accounts of such persons (based
upon the number of shares held by such person) to a number deemed satisfactory
by such managing underwriter. If any Stockholder disapproves of the terms of the
underwriting, that Stockholder may elect to withdraw therefrom by written notice
to AmPaM and the managing underwriter. That
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Stockholder's shares of AmPaM Stock so withdrawn shall also be withdrawn from
registration; provided, however, that, if by the withdrawal of such shares a
greater number of shares of AmPaM Stock held by other Stockholders may be
included in such registration, then AmPaM shall offer to all other Stockholders
of AmPaM the right to include additional shares in the same proportion used in
effecting the above limitations. AmPaM shall not, for a period of two years
following the Closing Date, grant to any other person any rights to cause AmPaM
to register any securities in priority over, or in precedent to, the rights
granted to the Stockholders hereunder and to the stockholders of the Other
Founding Companies pursuant to Section 17 of the Other Agreements.
17.2 REGISTRATION PROCEDURES. Whenever AmPaM is required to register
shares of AmPaM Stock pursuant to Section 17.1, AmPaM will, as expeditiously as
possible:
(i) Prepare and file with the SEC a registration statement
with respect to such shares and use its best efforts to cause such
registration statement to become effective (provided that before filing
a registration statement or prospectus or any amendments or supplements
or term sheets thereto, AmPaM will furnish a representative of the
Stockholders with copies of all such documents proposed to be filed) as
promptly as practical;
(ii) Notify the Stockholders of any stop order issued or
threatened by the SEC and take all reasonable actions required to
prevent the entry of such stop order or to remove it if entered;
(iii) Prepare and file with the SEC such amendments and
supplements to such registration statement and the prospectus used in
connection therewith as may be necessary to keep such registration
statement effective for a period of not less than 120 days, cause the
prospectus to be supplemented by any required prospectus supplement,
and as so supplemented to be filed pursuant to Rule 424 under the 1933
Act; and comply with the provisions of the 1933 Act applicable to it
with respect to the disposition of all securities covered by such
registration statement during the applicable period in accordance with
the intended methods of disposition by the sellers thereof set forth in
such registration statement or supplement to the prospectus;
(iv) Furnish to each Stockholder who so requests such number
of copies of such registration statement, each amendment and supplement
thereto and the prospectus included in such registration statement
(including each preliminary prospectus and any term sheet associated
therewith), and such other documents as such Stockholder may reasonably
request in order to facilitate the disposition of the relevant shares;
(v) Make "generally available to its security holders" (within
the meaning of Rule 158) an earnings statement satisfying the
provisions of Section 11(a) of the 1933 Act and Rule 158 thereunder no
later than 90 days after the end of the 12-month period beginning with
the first day of AmPaM's first fiscal quarter commencing after the
effective date of the registration statement;
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(vi) Make every reasonable effort to obtain the withdrawal of
any order suspending the effectiveness of the registration statement at
the earliest possible moment;
(vii) If requested by the managing underwriter or
underwriters, if any, or any participating Stockholder, promptly
incorporate in a prospectus supplement or post-effective amendment such
information as the managing underwriter or underwriters or any
participating Stockholder, as the case may be, reasonably requests to
be included therein, including, without limitation, information with
respect to the number of shares of AmPaM Stock being sold by
participating Stockholders to any underwriter or underwriters, the
purchase price being paid therefor by such underwriter or underwriters
and with respect to any other terms of an underwritten offering of the
shares of AmPaM Stock to be sold in such offering, and promptly make
all required filings of such prospectus by supplement or post-effective
amendment;
(viii) Make available for inspection by participating
Stockholders, any underwriter participating in any disposition pursuant
to such registration statement, and the counsel retained by the
participating Stockholders, counsel for the underwriters and any
accountant or other agent retained by participating Stockholders or any
such underwriter (collectively, the "Inspectors"), all financial and
other records, pertinent corporate documents and properties of AmPaM
(the "Records"), as shall be reasonably necessary to enable them to
exercise their due diligence responsibility, and cause AmPaM's
officers, directors and employees to supply all information reasonably
requested by any such Inspectors in connection with such registration
statement; provided, that records which AmPaM determines, in good
faith, to be confidential and which AmPaM notifies the Inspectors are
confidential shall not be disclosed by the Inspectors unless (i) the
disclosure of such Records is necessary to avoid or correct a
misstatement or omission in the registration statement or (ii) the
release of such Records is ordered pursuant to a subpoena or other
order from a court of competent jurisdiction after delivery of
sufficient notice to AmPaM to enable AmPaM to contest such subpoena or
order;
(ix) Take all other steps reasonably necessary to effect the
registration of the shares of AmPaM Stock contemplated hereby;
(x) Use its best efforts to register or qualify the securities
covered by such registration statement under such other securities or
blue sky laws of such jurisdictions as shall be reasonably requested by
the Stockholders, and to keep such registration or qualification
effective during the period such registration statement is required to
be kept effective, provided that AmPaM shall not be required to become
subject to taxation, to qualify generally to do business or to file a
general consent to service of process in any such states or
jurisdictions;
(xi) Cause all such shares of AmPaM Stock to be listed or
included not later than the date of the first sale of shares of AmPaM
Stock under such registration statement on any
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securities exchanges or trading systems on which similar securities
issued by AmPaM are then listed or included; and
(xii) Notify each Stockholder at any time when a prospectus
relating thereto is required to be delivered under the 1933 Act within
the period that AmPaM is required to keep the registration statement
effective of the happening of any event as a result of which the
prospectus included in such registration statement (as then in effect),
together with any associated term sheet, contains an untrue statement
of a material fact or omits to state any fact required to be stated
therein or necessary to make the statements therein (in the case of the
prospectus or any preliminary prospectus, in light of the circumstances
under which they were made) not misleading, and, at the request of such
Stockholder, AmPaM promptly will prepare a supplement or amendment to
such prospectus so that, as thereafter delivered to the purchasers of
the covered shares, such prospectus will not contain an untrue
statement of material fact or omit to state any fact required to be
stated therein or necessary to make the statements therein (in the case
of the prospectus or any preliminary prospectus, in light of the
circumstances under which they were made) not misleading.
All expenses incurred in connection with the registration under this
Article 17 and compliance with securities and blue sky laws (including all
registration, filing, listing, escrow agent, qualification, legal, printer and
accounting fees, but excluding underwriting commissions and discounts), shall be
borne by AmPaM.
17.3 INDEMNIFICATION.
(a) In connection with any registration under Section 17.1,
AmPaM shall indemnify, to the extent permitted by law, each selling Stockholder
(an "Indemnified Party") against all losses, claims, damages, liabilities and
expenses arising out of or resulting from any untrue or alleged untrue statement
of material fact contained or incorporated by reference in any registration
statement, prospectus or preliminary prospectus or associated term sheet or any
omission or alleged omission to state or incorporated by reference therein a
material fact required to be stated or incorporated by reference therein or
necessary to make the statements therein not misleading except insofar as the
same are caused by or contained in or omitted from any information furnished in
writing to AmPaM by such Indemnified Party expressly for use therein or by any
Indemnified Parties' failure to deliver a copy of the registration statement or
prospectus or any amendment or supplements thereto after AmPaM has furnished
such Indemnified Party with a sufficient number of copies of the same.
(b) In connection with any registration under Section 17.1,
each selling Stockholder shall furnish to AmPaM in writing such information
concerning the Stockholder and his or her proposed offering of shares as is
reasonably requested by AmPaM for use in any such registration statement or
prospectus and will indemnify, to the extent permitted by law, AmPaM, its
directors and officers and each person who controls AmPaM (within the meaning of
the 0000 Xxx) against any losses, claims, damages, liabilities and expenses
resulting from any untrue or alleged untrue statement of a material fact or any
omission or alleged omission to state therein a material fact required to be
stated in the registration statement or prospectus or any amendment thereof or
supplement thereto or necessary to make the statements therein not misleading,
but only to the extent that such untrue or alleged
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untrue statement or omission or alleged omission is contained in or omitted from
information so furnished in writing to AmPaM by such Stockholder expressly for
use in the registration statement. Notwithstanding the foregoing, the liability
of a Stockholder under this Section 17.3 shall be limited to an amount equal to
the net proceeds actually received by such Stockholder from the sale of the
relevant shares covered by the registration statement.
(c) Any person entitled to indemnification hereunder will (i)
give prompt notice to the indemnifying party of any claim with respect to which
it seeks indemnification and (ii) unless in such indemnified parties' reasonable
judgment, a conflict of interest between such indemnified and indemnifying
parties may exist with respect to such claim, permit such indemnifying party to
assume the defense of such claim with counsel reasonably satisfactory to the
indemnified party. Any failure to give prompt notice shall deprive a party of
its right to indemnification hereunder only to the extent that such failure
shall have adversely affected the indemnifying party. If the defense of any
claim is assumed, the indemnifying party will not be subject to any liability
for any settlement made without its consent (but such consent shall not be
unreasonably withheld). An indemnifying party that is not entitled or elects
not, to assume the defense of a claim, will not be obligated to pay the fees and
expenses of more than one counsel for all parties indemnified by such
indemnifying party with respect to such claim, unless in the reasonable judgment
of any indemnified party, a conflict of interest may exist between such
indemnified party and any other of such indemnified parties with respect to such
claim.
17.4 UNDERWRITING AGREEMENT. In connection with each registration
pursuant to Sections 17.1 covering an underwritten registered offering, (i) each
participating Stockholder shall execute and deliver to AmPaM a written power of
attorney instrument that (A) appoints an officer of AmPaM as such Stockholder's
attorney-in-fact for purposes of executing and delivering an underwriting
agreement among AmPaM, the underwriters named therein and such Stockholder
specifying the terms and conditions applicable to the sale of AmPaM Stock of
such Stockholder in such offering and (B) otherwise is in such form and
containing such provisions as are customary in the securities business for such
an arrangement in connection with an underwritten registered offering in which
one or more stockholders of the issuer are participants, including a provision
that authorizes the attorney-in-fact appointed by such Stockholder to execute
and deliver such an underwriting agreement in the event that the net price per
share to be received by such Stockholder from the sale of the shares of AmPaM
Stock to be sold in such offering is not less than a price specified in such
instrument and (iii) AmPaM and each participating Stockholder agree to enter
into a written agreement with the managing underwriters in such form and
containing such provisions as are customary in the securities business for such
an arrangement between such managing underwriters and companies of AmPaM's size
and investment stature, including indemnification; provided, however, that (A)
such Stockholder shall be exempt and excluded from any indemnification of the
managing underwriters other than with respect to information provided by such
Stockholder with respect to such Stockholder to AmPaM or the managing
underwriters
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specifically for inclusion in any such registration statement and (B) such
Stockholder shall not be obligated to enter into such an underwriting agreement
in the event that the net price per share to be received by such Stockholder
from the sale of shares of AmPaM Stock to be sold in such offering is less than
the floor price specified in the power of attorney instrument executed and
delivered to AmPaM pursuant to clause (i) above.
17.5 TRANSFER OF RIGHTS. The right to cause AmPaM to register shares of
AmPaM Stock under this Agreement may be assigned to a transferee or assignee of
any Stockholder to the extent that such transferee or assignee is a member of
the immediate family of a Stockholder, a trust, limited partnership or other
estate planning entity for the benefit of any such persons or a charitable
organization that qualifies for receipt of charitable contributions under
Section 170(c) of the Code.
17.6 RULE 144 REPORTING. With a view to making available the benefits
of certain rules and regulations of the SEC that may permit the sale of AmPaM
stock to the public without registration, following an IPO AmPaM agrees to use
its reasonable efforts, from and after the completion of an IPO, to:
(i) make and keep public information regarding AmPaM available
as those terms are understood and defined in Rule 144 under the 1933
Act beginning 90 days following the effective date of a registration
statement relating to an IPO;
(ii) file with the SEC in a timely manner all reports and
other documents required of AmPaM under the 1933 Act and the 1934 Act
at any time after it has become subject to such reporting requirements;
and
(iii) so long as a Stockholder owns any restricted AmPaM
Stock, furnish to each Stockholder forthwith upon written request a
written statement by AmPaM as to its compliance with the current public
information requirements of Rule 144 (at any time from and after 90
days following the effective date of a registration statement relating
to an IPO), and of the 1933 Act and the 1934 Act (any time after it has
become subject to such reporting requirements), a copy of the most
recent annual or quarterly report of AmPaM, and such other reports and
documents so filed as a Stockholder may reasonably request in availing
itself of any rule or regulation of the SEC allowing a Stockholder to
sell any such shares without registration.
18. REDEMPTION OF AMPAM STOCK
18.1 REDEMPTION TRIGGER. In the event that, within three years of the
Closing Date, (i) AmPaM has not consummated an IPO and (ii) any Stockholder has
not received cash (including proceeds from the public or private sale of AmPaM
Stock received as consideration hereunder and the receipt of principal payments,
if any, made with respect to AmPaM Notes held by such Stockholder) equal to or
exceeding 50% of the Aggregate Consideration on or prior to the third
anniversary of the Closing Date, such Stockholder shall have the right (the "Put
Right"), but not the
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obligation, commencing on the third anniversary date of the Closing Date to
require AmPaM to purchase a number of shares of AmPaM Stock then owned by such
Stockholder, subject to the limitations set forth in Section 18.2 below. The
purchase price for such redemption shall be $13.00 per share, such price to be
subject to appropriate adjustment to reflect any reclassification, stock
dividend, subdivision, split-up or combination of shares of AmPaM Stock after
the date hereof.
18.2 MINIMUM REDEMPTION; LIMITATIONS. If the events specified in
Section 18.1(i) and 18.1(ii), with Section 18.1(ii) being determined on an
individual Stockholder basis, have not occurred within the time specified, AmPaM
shall be obligated to purchase from each eligible Stockholder no less than 10%
of the AmPaM Stock held by such Stockholder annually; provided, however, that
the Stockholders shall not be entitled to exercise their Put Rights if and to
the extent the Company has not achieved the Target Net Income (as defined in
Annex I hereto) for the year preceding the year in which a Stockholder seeks to
exercise his Put Right. The redemptions will be funded by internal cash flows or
alternative financing arrangements but AmPaM's obligation to make any redemption
pursuant to this Section 18 will be subject to the covenants and restrictions
contained in AmPaM's then existing private or public debt or equity instruments.
18.3 NOTICE; EXERCISE. The Stockholders may exercise their Put Right by
giving written notice (the "Put Notice") to AmPaM within thirty (30) days of the
third anniversary of the execution hereof. If any Stockholder does not provide
AmPaM with a Put Notice within such thirty-day period, the Put Right applicable
to such Stockholder shall expire. The date for closing the sale of any shares of
AmPaM Stock pursuant to a proper exercise of a Put Right shall in no event be
earlier than 90 days after the date AmPaM receives the Put Notice. Any such
closing shall be at such time of day and place as shall be mutually agreed
between such holder and AmPaM. At such closing AmPaM shall make payment for the
AmPaM Stock to be repurchased by wire transfer of immediately available funds to
a bank account designated by such Stockholder for such purpose and such
Stockholder shall deliver to AmPaM certificates, duly endorsed for transfer,
representing the shares of AmPaM Stock to be purchased and sold pursuant to the
exercise of such Put Right.
18.4 ADDITIONAL REDEMPTIONS. In the event AmPaM has not consummated an
IPO and notwithstanding the foregoing, to the extent the Stockholders who have
received greater than 50% of their Aggregate Consideration in cash wish to
tender AmPaM Stock to AmPaM for purchase, AmPaM will use its commercially
reasonable efforts to continue to repurchase up to 10% of the AmPaM Stock held
by such Stockholder annually.
18.5 TERMINATION OF REDEMPTION OBLIGATION. Put Rights with respect to
any individual Stockholder will terminate upon receipt by such Stockholder of
50% of his Aggregate Consideration in cash; such termination will not, however,
limit such Stockholders ability to participate in the additional redemptions
provided in Section 18.4. Notwithstanding the foregoing, all of AmPaM's
redemption obligations contained in this Section 18 shall terminate on the
earlier to occur of (i) an IPO, (ii) any sale of all or substantially all of
AmPaM's assets in one transaction or series of transactions, (iii) any merger or
consolidation which involves AmPaM and in which AmPaM is not the surviving
entity or (iv) any transaction after which the shares of AmPaM Common Stock, if
any,
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which are then held by persons other than the holders of AmPaM Common Stock
as of the Closing Date constitute 50% or more of AmPaM Common Stock outstanding
as of the date of the consummation of such transaction.
19. GENERAL
19.1 COOPERATION. The Company, Stockholders and AmPaM shall each
deliver or cause to be delivered to the other on the Closing Date, and at such
other times and places as shall be reasonably agreed to, such additional
instruments as the other may reasonably request for the purpose of carrying out
this Agreement. The Company will cooperate and use its reasonable efforts to
have the present officers, directors and employees of the Company cooperate with
AmPaM on and after the Closing Date in furnishing information, evidence,
testimony and other assistance in connection with any tax return filing
obligations, actions, proceedings, arrangements or disputes of any nature with
respect to matters pertaining to all periods prior to the Closing Date.
19.2 SUCCESSORS AND ASSIGNS. This Agreement and the rights of the
parties hereunder may not be assigned (except by operation of law and except as
provided in Section 17.5) and shall be binding upon and shall inure to the
benefit of the parties hereto, the successors of AmPaM and the Company, and the
heirs, successors and legal representatives of the Stockholders.
19.3 ENTIRE AGREEMENT. This Agreement (including the schedules,
exhibits and annexes attached hereto) and the documents delivered pursuant
hereto constitute the entire agreement and understanding among the Stockholders,
the Company and AmPaM and supersede any prior agreement and understanding
relating to the subject matter of this Agreement. This Agreement, upon
execution, constitutes a valid and binding agreement of the parties hereto
enforceable in accordance with its terms and may be modified or amended only by
a written instrument executed by the Stockholders, the Company and AmPaM, acting
through their respective officers or trustees, duly authorized by their
respective Boards of Directors. Any disclosure made on any Schedule delivered
pursuant hereto shall be deemed to have been disclosed for purposes of any other
Schedule required hereby, provided that the Company shall make a good faith
effort to cross reference disclosure, as necessary or advisable, between related
Schedules.
19.4 COUNTERPARTS. This Agreement may be executed simultaneously in two
(2) or more counterparts, each of which shall be deemed an original and all of
which together shall constitute but one and the same instrument. A telecopied
facsimile of an executed counterpart of this Agreement shall be sufficient to
evidence the binding agreement of each party to the terms hereof. However, each
party agrees to return to the other parties an original, duly executed
counterpart of this Agreement promptly after delivery of a telecopied facsimile
thereof.
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19.5 BROKERS AND AGENT. Except as disclosed on Schedule 18.5, each
party hereto represents and warrants that it employed no broker or agent in
connection with this transaction and agrees to indemnify the other parties
hereto against all loss, cost, damages or expense arising out of claims for fees
or commission of brokers employed or alleged to have been employed by such
indemnifying party.
19.6 EXPENSES. Whether or not the transactions herein contemplated
shall be consummated, AmPaM will pay the reasonable fees, expenses and
disbursements of AmPaM and its agents, representatives, accountants and counsel
incurred in connection with the subject matter of this Agreement and any
amendments thereto, including all costs and expenses incurred in the performance
and compliance with all conditions to be performed by AmPaM under this
Agreement, including the fees and expenses of Xxxxxx Xxxxxxxx LLP, Xxxxxxx &
Xxxxx L.L.P., and any other person or entity retained by AmPaM, and the costs of
preparing the Private Placement Memorandum incurred in connection with the
subject matter of this Agreement and any amendments thereto. In addition,
whether or not the transactions contemplated herein shall be consummated, AmPaM
will pay the reasonable fees and expenses of Xxxxxxxxx & Xxxxxxxxx LLP incurred
on behalf of the Company and the Stockholders in connection with the subject
matter of this Agreement. Whether or not the transactions herein contemplated
shall be consummated, the Company will pay all of its costs and expenses
incurred on behalf of the Company and the Stockholders in connection with the
subject matter of this Agreement except that (i) the Company shall not be
required to pay any of the costs, fees and expenses specified above as to which
AmPaM is responsible for the payment thereof and (ii) neither the Company nor
the Stockholders shall be responsible for the payment of the costs, fees and
expenses incurred by or on behalf of AmPaM. Whether or not the transactions
herein contemplated shall be consummated, AmPaM shall reimburse Sterling City
Capital, LLC (or any person or entity which is an Affiliate thereof) for any of
the foregoing fees, expenses and disbursements paid by Sterling City Capital,
LLC (or any person or entity which is an Affiliate thereof) and shall repay
Sterling City Capital, LLC (or any person or entity which is an Affiliate
thereof) for any loans or advances made by Sterling City Capital, LLC (or any
person or entity which is an Affiliate thereof) for the purpose of providing
AmPaM funds to pay any such fees, expenses and disbursements, provided that such
reimbursement and loan repayment obligation shall be limited to the foregoing
fees, expenses, and disbursements which are out-of-pocket expenses of AmPaM,
Sterling City Capital, LLC or any person or entity which is an Affiliate
thereof. Sterling City Capital, LLC shall be reimbursed by AmPaM in the form of
AmPaM Notes. AmPaM retains the right, within a reasonable period following the
Closing Date, to conduct an audit of the expenses for which Sterling City
Capital, LLC is reimbursed. Each Stockholder shall pay all sales, use, transfer,
real property transfer, recording, gains, stock transfer and other similar taxes
and fees ("Transfer Taxes") imposed in connection with the purchase and sale of
the Company Stock, other than Transfer Taxes, if any, imposed by the State of
Delaware. Each Stockholder shall file all necessary documentation and Returns
with respect to such Transfer Taxes. In addition, each Stockholder acknowledges
that he, and not the Company or AmPaM, will pay all Taxes due by him upon
receipt of the consideration payable pursuant to Section 1 hereof. The
Stockholders acknowledge that the risks of the transactions contemplated hereby
include Tax risks, with respect to which the
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Stockholders are relying substantially on the opinion contemplated by Section
8.12 hereof and representations by AmPaM in this Agreement.
19.7 NOTICES. All notices of communication required or permitted
hereunder shall be in writing and may be given by depositing the same in United
States mail, addressed to the party to be notified, postage prepaid and
registered or certified with return receipt requested, or by delivering the same
in person or via a nationally recognized courier service to an officer or agent
of such party.
(a) If to AmPaM addressed to it at:
American Plumbing & Mechanical, Inc.
000 Xxxx Xxx Xxxx., Xxxxx 000
Xxxxxxx, Xxxxx 00000
Attention: Chief Executive Officer
with copies to:
Xxxxxx X. Xxxxx
Xxxxxxx & Xxxxx L.L.P.
0000 Xxxxx Xxxxx
Xxxxxxx, Xxxxx 00000
(b) If to the Stockholders, addressed to them at their addresses
set forth on the signature pages hereto, with copies to:
Xxxxxxxx X. Xxxx
Cohen, Todd, Kite & Stanford, LLC
16th Floor, 000 Xxxx Xxxxxx
Xxxxxxxxxx, Xxxx 00000-0000
(c) If to the Company, addressed to it at:
Xxxxx X. Xxxxx, Xx.
Xxxxx'x River City Mechanical, Inc.
0000 Xxxxxxxxx
Xxxxxxxxxx, Xxxx 00000
or to such other address or counsel as any party hereto shall specify pursuant
to this Section 18.7 from time to time.
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19.8 GOVERNING LAW. This Agreement shall be construed in accordance
with the laws of the State of Texas, excluding any conflicts of law, rule or
principle that might refer same to the laws of another jurisdiction.
19.9 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The representations,
warranties, covenants and agreements of the parties made herein and at the time
of the Closing or in writing delivered pursuant to the provisions of this
Agreement shall survive the consummation of the transactions contemplated hereby
and any examination on behalf of the parties until the respective Expiration
Dates referred to herein with respect thereto or, if no Expiration Date is
applicable with respect thereto, until the expiration of all applicable statute
of limitations periods.
19.10 EXERCISE OF RIGHTS AND REMEDIES. Except as otherwise provided
herein, no delay of or omission in the exercise of any right, power or remedy
accruing to any party as a result of any breach or default by any other party
under this Agreement shall impair any such right, power or remedy, nor shall it
be construed as a waiver of or acquiescence in any such breach or default, or of
any similar breach or default occurring later; nor shall any waiver of any
single breach or default be deemed a waiver of any other breach or default
occurring before or after that waiver.
19.11 TIME. Time is of the essence with respect to this Agreement.
19.12 REFORMATION AND SEVERABILITY. In case any provision of this
Agreement shall be invalid, illegal or unenforceable, it shall, to the extent
possible, be modified in such manner as to be valid, legal and enforceable but
so as to most nearly retain the intent of the parties, and if such modification
is not possible, such provision shall be severed from this Agreement, and in
either case the validity, legality and enforceability of the remaining
provisions of this Agreement shall not in any way be affected or impaired
thereby. No provision of this Agreement shall be interpreted or construed
against any party solely because that party or its legal representative drafted
such provision.
19.13 REMEDIES CUMULATIVE. No right, remedy or election given by any
term of this Agreement shall be deemed exclusive but each shall be cumulative
with all other rights, remedies and elections available at law or in equity.
19.14 CAPTIONS. The headings of this Agreement are inserted for
convenience only, shall not constitute a part of this Agreement or be used to
construe or interpret any provision hereof.
19.15 AMENDMENTS AND WAIVERS. Any term of this Agreement may be amended
and the observance of any term of this Agreement may be waived only with the
written consent of AmPaM, the Company and Stockholders who would receive a
majority of the Aggregate Consideration specified in Section I of Annex I to
this Agreement if the transactions contemplated hereby were consummated. Any
amendment or waiver effected in accordance with this Section 19.15 shall be
binding upon each of the parties hereto, any other person receiving AmPaM Stock
in connection with the purchase and sale of the Company Stock and each future
holder of such AmPaM Stock. Any consent of the Stockholders who would receive a
majority of the Aggregate Consideration pursuant
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to Section I of Annex I of this Agreement if the transactions contemplated
hereby were consummated shall be deemed to be the consent of the Stockholders
for purposes of provisions of this Agreement as to which a consent of the
Stockholders may be requested or required.
19.16 MEDIATION AND ARBITRATION. If a dispute arises out of or relates
to this Agreement, or the breach thereof, and if said dispute cannot be settled
through direct discussions, the parties agree to first endeavor to settle the
dispute in an amicable manner by mediation administered by the American
Arbitration Association under its then prevailing Commercial Mediation Rules,
before resorting to arbitration. Thereafter, any unresolved controversy or claim
arising out of or relating to this Agreement, or the breach thereof, shall be
settled by arbitration administered by the American Arbitration Association in
accordance with its then prevailing Commercial Arbitration Rules. The
enforcement, interpretation and procedural and substantive effect of the
obligation to arbitrate created by this Section 19.16 shall be governed by the
Federal Arbitration Act as amended from time to time, 9 U.S.C. Section 1 et seq.
The parties hereby disclaim any intention to have the substantive or procedural
law of any state or other jurisdiction, other than the law of the United States
as embodied in the Federal Arbitration Act, applied to such obligation. Any such
mediation or arbitration proceeding will be conducted in Houston, Texas.
19.17 INFORMATION PROVIDED FOR PRIVATE PLACEMENT MEMORANDUM. For
purposes of this Agreement, the information provided by the Company in writing
specifically for inclusion in the Private Placement Memorandum shall include
solely (i) the Financial Statements (in the form that they appear in the Private
Placement Memorandum), (ii) any financial statements provided to AmPaM pursuant
to Section 7.9, (iii) the description of the Company contained in the Private
Placement Memorandum under the caption "The Company", (iv) the description of
the Company's results of operations and its liquidity and capital resources, if
any, contained in the Private Placement Memorandum under the caption
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and (v) the description, if any, of matters related to the Company
contained in the Private Placement Memorandum under the caption "Certain
Transactions Transactions involving Certain Officers, Directors and
Stockholders". For purposes of this Agreement, the information provided by a
Stockholder in writing specifically for inclusion in the Private Placement
Memorandum shall include only (i) the description, if any, of matters related to
such Stockholder contained in the Private Placement Memorandum under the caption
"Certain Transactions - Transactions involving Certain Officers, Directors and
Stockholders" and (ii) the biographical description of such Stockholder, if any,
contained in the Private Placement Memorandum under the caption "Management."
19.18 EFFECTIVE DATE OF AGREEMENT. This Agreement shall become
effective upon (i) the execution and delivery of this Agreement by all of the
parties hereto and (ii) the delivery to AmPaM of each Employment Agreement
attached hereto as Annex VI-1 and Annex VI-2 executed by each of the Company,
the employees named therein and AmPaM.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
AMERICAN PLUMBING & MECHANICAL, INC.
By: /s/ XXXXX XXXXXXX
---------------------------------
Name: Xxxxx Xxxxxxx
-------------------------------
Title: Chief Financial Officer
------------------------------
XXXXX'X RIVER CITY MECHANICAL, INC.
By: /s/ XXXXXX X. XXXXX
---------------------------------
Xxxxxx X. Xxxxx
President
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STOCKHOLDERS: SPOUSES (WITHOUT PERSONAL LIABILITY AND
SOLELY TO ACKNOWLEDGE THE SALE OF THE
COMPANY STOCK BY THE STOCKHOLDER):
/s/ XXXXX X. XXXXX, XX. /s/ XXXXX X. XXXXX
-------------------------------- --------------------------------
Xxxxx X. Xxxxx, Xx. Xxxxx X. Xxxxx
0000 Xxxxxxxxxx Xx.
Xxxxxxxxxx, Xxxx 00000
/s/ XXXXXX X. XXXXX /s/ XXXXX XXXXX
-------------------------------- --------------------------------
Xxxxxx X. Xxxxx Xxxxx Xxxxx
0000 Xxxxxx Xxxx Xx.
Xxxx Xxxxxxx, Xxxx 00000
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