EXHIBIT 10.18
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
GROUP MAINTENANCE AMERICA CORP.,
XXXXX ACQUISITION CORP.,
XXXXX SERVICES, INC.,
AND
THE HOLDER OF THE
OUTSTANDING CAPITAL STOCK
OF
XXXXX SERVICES, INC.
DATED AS OF
August 18, 1997
TABLE OF CONTENTS
PAGE
1. THE MERGER.............................................................. 5
1.1 The Merger....................................................... 5
1.2 Effective Time of the Merger..................................... 5
1.3 Closing.......................................................... 5
1.4 Effects of the Merger............................................ 6
1.4.1 At the Effective Time..................................... 6
1.4.2 Effects on the Surviving Corporation...................... 6
1.5 Written Consents and Other Actions............................... 6
1.5.1 Written Consent of the Shareholder; Other Matters......... 6
1.5.2 Written Consent of the Sole Shareholder of Merger Sub..... 6
1.5.3 All Other Necessary Actions............................... 6
1.6 Conversion of Stock.............................................. 7
1.6.1 Merger Sub Capital Stock.................................. 7
1.6.2 Cancellation of the Company Treasury Stock................ 7
1.6.3 Merger Consideration...................................... 7
1.7 Exchange of and Payment for Stock................................ 7
1.7.1 Delivery of Company Common Stock and
Closing Merger Consideration............................ 7
1.7.2 Assignments............................................... 7
1.7.3 Payment In Full Satisfaction of All Rights................ 7
1.8 Determination of Closing Merger Consideration.................... 7
1.8.1 Delivery of IPO Price to Public; Statement................ 7
1.9 Post-Closing Determination of Final Merger Consideration......... 8
1.9.1 Statement................................................. 8
1.9.2 Review.................................................... 8
1.9.3 Disputes.................................................. 8
1.9.4 Resolution by Parties..................................... 8
1.9.5 Final Determination....................................... 9
1.9.6 Expenses.................................................. 9
2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND THE SHAREHOLDER....... 9
2.1 Exhibit 2........................................................ 9
2.2 Stock Ownership.................................................. 9
2.3 Authority........................................................ 9
2.4 Consents......................................................... 9
3. REPRESENTATIONS AND WARRANTIES OF THE PARENT AND MERGER SUB............. 10
3.1 Representations and Warranties................................... 10
3.1.1 Organization.............................................. 10
3.1.2 Capitalization of the Parent.............................. 10
3.1.3 Authority................................................. 10
3.1.4 Consents.................................................. 10
3.1.5 Defaults.................................................. 10
3.1.6 Investment Company........................................ 11
3.1.7 Financial Statements...................................... 11
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3.1.8 Taxes.................................................... 11
3.1.9 Full Authority........................................... 11
3.1.10 Access.................................................. 11
3.1.11 Disclosure.............................................. 11
3.1.12 Parent Material Adverse Effect.......................... 12
3.1.13 Tax-Free Reorganization................................. 12
3.2 Representations and Warranties Concerning the Merger Sub........ 12
3.2.1 Organization and Standing................................ 12
3.2.2 Capital Structure........................................ 13
3.2.3 Authority................................................ 13
4. CERTAIN COVENANTS, AGREEMENTS AND PRE-CLOSING MATTERS................... 13
4.1 Agreements of Shareholder to be Effective Upon Closing.......... 13
4.1.1 Covenant Not to Compete.................................. 13
4.1.2 Release.................................................. 13
4.2 Elimination of Expense.......................................... 14
4.3 Repayment of Shareholder Indebtedness........................... 14
4.4 Audit........................................................... 14
4.5 Acquisition of Leased Equipment................................. 14
4.6 Pre-Closing Covenants and Agreements............................ 14
4.7 Confidentiality................................................. 14
4.8 Tax-Free Reorganization......................................... 14
4.9 Exclusivity..................................................... 15
4.10 Bonus Compensation Agreement.................................... 15
5. CONDITIONS PRECEDENT; CLOSING DELIVERIES................................ 15
5.1 Conditions Precedent to the Obligations of the
Parent and Merger Sub......................................... 15
5.1.1 Accuracy of Representations and Warranties............... 15
5.1.2 Performance of Covenants................................. 15
5.1.3 Legal Actions or Proceedings............................. 15
5.1.4 Approvals................................................ 15
5.1.5 Closing Deliveries....................................... 15
5.1.6 No Casualty, Loss or Damage.............................. 16
5.1.7 Licenses, etc............................................ 16
5.1.8 No Material Adverse Change............................... 16
5.1.9 IPO...................................................... 16
5.1.10 Certain Corporate Actions................................ 16
5.2 Conditions Precedent to the Obligations of the
Shareholder and the Company................................... 16
5.2.1 Accuracy of Representations and Warranties............... 16
5.2.2 Performance of Covenants................................. 16
5.2.3 Approvals................................................ 16
5.2.4 Closing Deliveries....................................... 16
5.3 Deliveries by the Shareholder at the Closing.................... 16
5.3.1 Closing Certificates..................................... 16
5.3.2 Stock Transfer Restriction Agreement..................... 17
5.3.3 Employment Agreement..................................... 17
5.3.4 Registration Rights Agreement............................ 17
5.3.5 Opinion of Counsel for the Shareholder and the Company... 17
5.3.6 Documents, Stock Certificates............................ 17
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5.4 Deliveries by the Parent at the Closing......................... 17
5.4.1 Closing Certificates..................................... 17
5.4.2 Registration Rights Agreement............................ 17
5.4.3 Opinion of Counsel for the Parent and Merger Sub......... 18
5.4.4 Closing Merger Consideration............................. 18
6. SURVIVAL, INDEMNIFICATIONS............................................... 18
6.1 Survival........................................................ 18
6.2 Indemnification................................................. 18
6.2.1 Parent Indemnified Parties............................... 18
6.2.2 Parent Indemnity......................................... 19
6.3 Limitations..................................................... 19
6.4 Procedures for Indemnification.................................. 19
6.4.1 Notice................................................... 20
6.4.2 Legal Defense............................................ 20
6.4.3 Settlement............................................... 20
6.4.4 Cooperation.............................................. 20
6.5 Subrogation..................................................... 20
7. TERMINATION............................................................. 21
7.1 Grounds for Termination......................................... 21
7.1.1 Mutual Consent........................................... 21
7.1.2 Optional by the Company.................................. 21
7.1.3 Optional by the Parent................................... 21
7.1.4 Breach by the Parent or Merger Sub....................... 21
7.1.5 Breach by the Company or the Shareholder................. 21
7.2 Effect of Termination........................................... 21
8. MISCELLANEOUS........................................................... 21
8.1 Notice.......................................................... 21
8.2 Further Documents............................................... 22
8.3 Assignability................................................... 22
8.4 Exhibits and Schedules.......................................... 22
8.5 Sections and Articles........................................... 22
8.6 Entire Agreement................................................ 22
8.7 Headings........................................................ 23
8.8 CONTROLLING LAW................................................. 23
8.9 Public Announcements............................................ 23
8.10 No Third Party Beneficiaries.................................... 23
8.11 Amendments and Waivers.......................................... 23
8.12 No Employee Rights.............................................. 23
8.13 Non-Recourse.................................................... 23
8.14 When Effective.................................................. 23
8.15 Takeover Statutes............................................... 24
8.16 Number and Gender of Words...................................... 24
8.17 Invalid Provisions.............................................. 24
8.18 Multiple Counterparts........................................... 24
8.19 No Rule of Construction......................................... 24
8.20 Expenses........................................................ 24
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EXHIBITS:
Exhibit 1
Exhibit 1.5.1 - Written Consent of the Shareholder
Exhibit 1.5.2 - Written Consent of the Sole Shareholder of Merger Sub
Exhibit 1.7 - Letter of Transmittal; Delivery of Company Common Stock
Exhibit 2
Exhibit 2.2 - Stock Ownership
Exhibit 4 - Elimination of Expenses
Exhibit 4 - Pre-Closing Covenants and Agreements
Exhibit 5.3.2 - Stock Transfer Restriction Agreement
Exhibit 5.3.3A - Employment Agreement
Exhibit 5.3.3B - Employment Agreement
Exhibit 5.3.4 - Registration Rights Agreement
Exhibit 5.3.5 - Opinion of Counsel for the Shareholder and the Company
Exhibit 5.4.3 - Opinion of Counsel for the Parent and Merger Sub
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AGREEMENT AND PLAN OF MERGER
This AGREEMENT AND PLAN OF MERGER (this "Agreement") made effective as of
August ___, 1997, by and among GROUP MAINTENANCE AMERICA CORP., a Texas
corporation (the "Parent"), XXXXX ACQUISITION CORP., an Alabama corporation
("Merger Sub"), XXXXX SERVICES, INC., an Alabama corporation (the "Company"),
and THE UNDERSIGNED HOLDER OF ALL OF THE OUTSTANDING CAPITAL STOCK OF THE
COMPANY (the "Shareholder").
WHEREAS, the respective Boards of Directors of the Parent, Merger Sub and
the Company have each approved the merger of the Company with and into Merger
Sub (the "Merger") pursuant to this Agreement and the applicable statutes of the
States of Alabama and Texas, and pursuant to the Merger each issued and
outstanding share of Common Stock, $10.00 par value per share, of the Company
("Company Common Stock") will be converted into the right to receive certain
shares of common stock, $.001 par value per share, of the Parent ("Parent Common
Stock"), and certain cash consideration, all as provided herein;
WHEREAS, the Merger has been approved, as required by applicable law, by
the Parent, acting as sole shareholder of Merger Sub, and by the Shareholder, as
the holder of all of the outstanding capital stock of the Company;
WHEREAS, for federal income tax purposes, it is intended that the Merger
shall qualify as a reorganization within the meaning of Section 368(a) of the
Internal Revenue Code of 1986, as amended (the "Code").
NOW, THEREFORE, in consideration of the premises and the representations,
warranties and agreements herein contained, the parties hereto agree as follows:
1. THE MERGER
1.1 The Merger. Subject to the terms and conditions hereof, and in
accordance with the Alabama Business Corporation Act (the "Applicable Corporate
Law") upon the Effective Time (as defined in Section 1.2), the Company shall be
merged with and into Merger Sub. Merger Sub, as the surviving entity following
the Merger, is sometimes referred to in this Agreement as the "Surviving
Corporation."
1.2 Effective Time of the Merger. In accordance with the requirements of
applicable law, appropriate Articles of Merger under the Applicable Corporate
Law shall be prepared, executed and submitted for filing with the Secretary of
State of the State of Alabama as soon as practicable following the Closing (as
defined below). The date of such filing is referred to in this Agreement as the
"Effective Time."
1.3 Closing. The closing of the Merger ("Closing") will take place at
10:00 a.m. at the offices of Chamberlain, Hrdlicka, White, Xxxxxxxx & Xxxxxx in
Houston, Texas on a date that is not more than 10 business days after the
Closing of the Parent's IPO (as defined below), but in no event later than
December 31, 1997 ("Closing Date"); provided that each of the conditions
precedent to the obligations of the parties to effect the Merger set forth in
Article 5 of this Agreement are then satisfied or waived by the applicable
party. The parties may agree in writing on another date, time or place for the
Closing. At the Closing, the parties will deliver or cause to be delivered the
documents described in Sections 5.3 and 5.4 below. The term "IPO" means any
underwritten public offering of Parent Common Stock resulting in net cash
proceeds to the Parent of at least $20,000,000 (other than any offering pursuant
to any registration statement (i) relating to any capital stock of Parent or
options, warrants or other rights to acquire any such capital stock issued or to
be issued primarily to
directors, officers or employees of the Parent or any of its subsidiaries, (ii)
relating to any employee benefit plan or interest therein, (iii) relating
principally to any preferred stock or debt securities of the Parent, or (iv)
filed pursuant to Rule 145 under the Securities Act of 1933, as amended
("Securities Act"), or any successor or similar provision).
1.4 Effects of the Merger.
1.4.1 At the Effective Time. At the Effective Time, (i) the Company
shall merge with and into Merger Sub and as a result thereof, the separate
existence of the Company shall cease, (ii) the Articles of Incorporation of
Merger Sub, as in effect immediately prior to the Effective Time, shall be the
Articles of Incorporation of the Surviving Corporation, except that the Articles
of Incorporation of Merger Sub shall be amended to provide that the name of the
Surviving Corporation shall be changed to "Xxxxx Services, Inc.," (iii) the
Bylaws of Merger Sub as in effect immediately prior to the Effective Time shall
be the Bylaws of the Surviving Corporation, and (iv) the directors and officers
of Merger Sub immediately prior to the Effective Time shall become the directors
and officers of the Surviving Corporation, until the earlier of their
resignation or removal or until their respective successors are duly elected or
appointed, as the case may be.
1.4.2 Effects on the Surviving Corporation. As of and after the
Effective Time, the Surviving Corporation shall possess all the rights,
privileges, immunities and franchises of a public as well as of a private nature
previously belonging to the Company and Merger Sub; and all property (real,
personal and mixed), and all debts due on whatever account, including
subscriptions to shares, and all other choses in action, and all and every other
interest of or belonging to or due to each of the Company and Merger Sub shall
be transferred to, and vested in, the Surviving Corporation without further act
or deed; and all such property, rights and privileges, powers and franchises and
all and every other interest shall be thereafter the property of the Surviving
Corporation as they were of the Company and Merger Sub; and the title to any
real estate, or interest therein, whether by deed or otherwise, shall not revert
or be in any way impaired by reason of the Merger. The Surviving Corporation
shall be responsible and liable for all the liabilities and obligations of the
Company and Merger Sub, and any claim existing, or action or proceeding pending,
by or against the Company or Merger Sub may be prosecuted against the Surviving
Corporation. Neither the rights of creditors nor any liens upon the property of
the Company or Merger Sub shall be impaired by the Merger, and all debts,
liabilities and duties of each of the Company and Merger Sub shall attach to the
Surviving Corporation, and may be enforced against it to the same extent as if
such debts, liabilities and duties had been incurred or contracted by it, all in
accordance with Section 10-2B-11.01 et seq., of the Applicable Corporate Law and
the terms of this Agreement.
1.5 Written Consents and Other Actions.
1.5.1 Written Consent of the Shareholder; Other Matters.
Contemporaneously with the execution hereof, the Shareholder (i) is executing
and delivering to the Company a Written Consent in substantially the form of
Exhibit 1.5.1 attached hereto, and (ii) hereby acknowledges that he is aware of
his dissenter's or appraisal rights with respect to the Merger and his receipt
of a copy of the provisions of Section 10-2B-13.22 of the Applicable Corporate
Law and has elected not to exercise such rights.
1.5.2 Written Consent of the Sole Shareholder of Merger Sub.
Contemporaneously with the execution hereof, the Parent is executing and
delivering to Merger Sub a written consent of the sole shareholder of Merger
Sub, in the form of Exhibit 1.5.2 attached hereto, pursuant to the applicable
provisions of the Applicable Corporate Law, adopting this Agreement.
1.5.3 All Other Necessary Actions. In addition to the actions set
forth in Sections 1.5.1 and 1.5.2, the Parent, Merger Sub and the Company will
take all actions necessary in accordance with the Applicable
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Corporate Law and their respective articles of incorporation and bylaws to cause
the Merger to be consummated on, and subject to, the terms set forth in this
Agreement and the Applicable Corporate Law.
1.6 Conversion of Stock. As of the Effective Time, by virtue of the
Merger and without further action on the part of any holder of shares of Company
Common Stock or any holder of shares of capital stock of Merger Sub:
1.6.1 Merger Sub Capital Stock. Each share of capital stock of
Merger Sub issued and outstanding at the Effective Time shall remain outstanding
and shall be unchanged at and after the Merger and immediately following the
Effective Time shall constitute all of the issued and outstanding capital stock
of the Surviving Corporation.
1.6.2 Cancellation of the Company Treasury Stock. All shares of
Company Common Stock that are owned by the Company or any of its subsidiaries as
treasury stock shall be canceled and retired and shall cease to exist and no
stock of the Parent or other consideration shall be delivered in exchange
therefor.
1.6.3 Merger Consideration. The issued and outstanding shares of
Company Common Stock (other than shares to be canceled in accordance with
Section 1.6.2) shall be converted into the right to receive the Final Merger
Consideration (as determined in accordance with Exhibit 1 attached hereto)
consisting of the number of shares of Parent Common Stock having a value of
$1,420,131 and cash in the amount of approximately $1,161,925, as such number of
shares and amount of cash are finally determined and adjusted in accordance with
Exhibit 1 attached hereto. The shares of Company Common Stock so converted into
the right to receive the Final Merger Consideration (a "Converted Share") shall,
by virtue of the Merger and without any action on the part of the holder
thereof, at the Effective Time no longer be outstanding and shall at such time
be canceled and retired and shall cease at such time to exist, and each holder
of a certificate which prior to the Effective Time validly evidenced any such
Converted Share (a "Stock Certificate") shall thereafter cease to have any
rights with respect to such Converted Share, except, upon the surrender of the
Stock Certificate and a duly executed and completed letter of transmittal in
accordance with Section 1.7, the right to receive such cash and Parent Common
Stock at the times and in the manner set forth herein.
1.7 Exchange of and Payment for Stock.
1.7.1 Delivery of Company Common Stock and Closing Merger
Consideration. Prior to the Closing, the Parent will deliver to the
Shareholder a letter of transmittal, in substantially the form attached hereto
as Exhibit 1.7, to be used for the purpose of surrendering to the Parent Stock
Certificates in exchange for the right to receive the Final Merger
Consideration. All of the Company Common Stock held by the Shareholder will be
surrendered by the Shareholder to the Parent together with properly completed
and executed letter of transmittal (with such signature guaranteed by a
commercial bank or notarized by a notary public or similar official reasonably
satisfactory to the Parent), and the Parent shall cause to be delivered to the
Shareholder at the Closing, the Closing Merger Consideration (as determined in
accordance with Exhibit 1 attached hereto).
1.7.2 Assignments. The assignment, transfer or other disposition of
record or beneficial ownership of any shares of Company Common Stock may not be
made on or after the date hereof.
1.7.3 Payment In Full Satisfaction of All Rights. The delivery of
the Closing Merger Consideration to the Shareholder with respect to his
Converted Shares shall be deemed to be payment in full satisfaction of all
rights pertaining to the outstanding Converted Shares except for the right to
receive additional cash pursuant to Section 1.9.
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1.8 Determination of Closing Merger Consideration.
1.8.1 Delivery of IPO Price to Public; Statement. Within five
business days after the Parent and its underwriters agree on the initial price
to the public for a share of Parent Common Stock offered in the IPO, as set
forth in an executed underwriting agreement, the Parent shall deliver to the
Shareholder a written notice (the "Price Notice") setting forth such initial
price to the public and a statement setting forth a calculation, reviewed by
KPMG Peat Marwick LLP, of the Closing Outstanding Common Stock Number (as
determined in accordance with Exhibit 1 attached hereto), the Closing Per Share
Cash Amount (as determined in accordance with Exhibit 1 attached hereto), the
Closing Per Share Common Stock Amount (as determined in accordance with Exhibit
1 attached hereto), and the Closing Merger Consideration, payable to the
Shareholder at Closing (the "Statement of Closing Consideration"). The initial
price to the public of a share of Parent Common Stock, as set forth in the Price
Notice, the Closing Outstanding Common Stock Number, the Closing Per Share Cash
Amount, the Closing Per Share Common Stock Amount and the Closing Merger
Consideration as set forth in the Statement of Closing Consideration shall be
final, conclusive and binding for purposes of this Agreement.
1.9 Post-Closing Determination of Final Merger Consideration.
1.9.1 Statement. No later than 60 days after the Closing, the
Parent shall deliver to the Shareholder a statement showing the Final
Outstanding Common Stock Number (as determined in accordance with Exhibit 1
attached hereto), the Final Per Share Cash Amount (as determined in accordance
with Exhibit 1 attached hereto), the Final Per Share Common Stock Amount (as
determined in accordance with Exhibit 1 attached hereto) and the Final Merger
Consideration (the "Statement of Final Per Share Amounts").
1.9.2 Review. After delivery to the Shareholder of the Statement of
Final Per Share Amounts, the Shareholder and his representatives shall be
afforded the opportunity to review and inspect all of the financial records,
work papers, schedules and other supporting papers relating to the preparation
of the Statement of Final Per Share Amounts, and to consult with the Parent and
its representatives regarding the methods used in the preparation of the
Statement of Final Per Share Amounts.
1.9.3 Disputes. The Final Outstanding Common Stock Number, the
Final Per Share Cash Amount, the Final Per Share Common Stock Amount and the
Final Merger Consideration as shown on the Statement of Final Per Share Amounts
shall be final, conclusive and binding for purposes of this Agreement, unless
the Shareholder shall deliver to the Parent a written notice of disagreement
("Notice of Dispute") with any item or items in the Statement of Final Per Share
Amounts within 30 business days following receipt of the Statement of Final Per
Share Amounts, specifying in reasonable detail the nature and extent of such
disagreement; provided, however, that no Notice of Dispute may be given with
respect to any items unless such item involves an amount of $10,000 or more. If
a Notice of Dispute is not properly given within such time, the Final
Outstanding Common Stock Number, the Final Per Share Cash Amount, the Final Per
Share Common Stock Amount and the Final Merger Consideration as set forth in the
Statement of Final Per Share Amounts shall be final, conclusive and binding for
purposes of this Agreement.
1.9.4 Resolution by Parties. If a Notice of Dispute is properly
given, the Parent and the Shareholder agree to negotiate in good faith and use
their best efforts to resolve any disagreement with respect to the Statement of
Final Per Share Amounts. If the Parent and the Shareholder shall not reach such
resolution within 30 days following receipt by the Parent of a properly given
Notice of Dispute, the dispute shall be referred to Ernst & Young
("Accountants"), who shall resolve such dispute within 30 days after its
submission to them. The Parent and the Shareholder (if the dispute is resolved
by them or the Statement of Final Per Share Amounts otherwise becomes final
pursuant hereto without referral to the Accountants) or the Accountants (if a
dispute is resolved by them) shall set forth such resolution in writing and such
writing shall (i) set forth the Final
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Outstanding Common Stock Number, the Final Per Share Cash Amount, the Final Per
Share Common Stock Amount and the Final Merger Consideration and (ii) be final,
conclusive and binding for purposes of this Agreement.
1.9.5 Final Determination. Within 10 business days following the
final determination of the Final Outstanding Common Stock Number and the Final
Merger Consideration as provided in this Section 1.9 (i) the Parent shall
deliver to the Shareholder the cash amount, if any, by which the aggregate of
the cash amount included in the Final Merger Consideration payable to such
Shareholder, as finally determined pursuant hereto, exceeds the aggregate of the
cash amount included in the Closing Merger Consideration paid to such
Shareholder at the Closing; or (ii) the Shareholder shall deliver to the Parent
the cash amount, if any, by which the aggregate of the cash amount included in
the Closing Merger Consideration paid to the Shareholder at the Closing exceeds
the aggregate of the cash amount included in the Final Merger Consideration
payable to the Shareholder as finally determined pursuant hereto.
Notwithstanding anything in this Section 1.9 to the contrary, in the event that
the Parent concludes, in its sole discretion, that the foregoing cash payments
would jeopardize the qualification of the Merger as a reorganization within the
meaning of Section 368(a) of the Code, the parties agree to reallocate the
amount of cash and the number of shares of Parent Common Stock payable to
Shareholder pursuant to this Agreement such that the Final Merger Consideration
received by the Shareholder satisfies the requirements for a tax-deferred
reorganization pursuant to such Code section, and the parties agree to amend the
provisions of this Section 1.9 as necessary to cause the Merger to comply with
the provisions of Section 368(a).
1.9.6 Expenses. The Parent and the Shareholder shall each pay their
own costs incurred in connection with this Section 1.9, including the fees and
expenses of their respective attorneys and accountants, if any, provided,
however, that the Parent and the Shareholder shall share equally the costs
incurred and payable to the Accountants in connection with the resolution of
disputes pursuant to Section 1.9.4.
2. REPRESENTATIONS AND WARRANTIES
OF THE COMPANY AND THE SHAREHOLDER
The Company and the Shareholder, jointly and severally, hereby represent
and warrant to the Parent and Merger Sub as follows:
2.1 Exhibit 2. The statements in Exhibit 2 attached hereto are true and
correct.
2.2 Stock Ownership. The Shareholder owns, beneficially and of record,
with full power to vote, the number of shares of Company Common Stock set forth
beside the Shareholder's name on Exhibit 2.2 and such shares are so held by the
Shareholder free and clear of all liens, encumbrances and adverse claims
whatsoever.
2.3 Authority. The Shareholder has full right, power, legal capacity
and authority to (i) execute, deliver and perform this Agreement, and all other
documents and instruments referred to herein or contemplated hereby to be
executed, delivered and performed by the Shareholder (each a "Shareholder
Related Document") and (ii) consummate the transactions contemplated herein and
thereby. This Agreement has been duly executed and delivered by the Shareholder
and constitutes, and each Shareholder Related Document, when duly executed and
delivered by the Shareholder who is a party thereto will constitute, legal,
valid and binding obligations of the Shareholder enforceable against the
Shareholder in accordance with their respective terms and conditions, except as
such enforcement may be limited by bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting the enforcement of creditors' rights
generally and by general principles of equity (whether applied in a proceeding
at law or in equity).
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2.4 Consents. No approval, consent, order or action of or filing with
any court, administrative agency, governmental authority or other third party is
required for the execution, delivery or performance by the Shareholder of this
Agreement or any Shareholder Related Document. The execution, delivery and
performance by the Shareholder of this Agreement and the Shareholder Related
Documents do not violate any mortgage, indenture, contract, agreement, lease or
commitment or other instrument of any kind to which the Shareholder is a party
or by which the Shareholder or the Shareholder's assets or properties may be
bound or affected or any law, rule or regulation applicable to the Shareholder
or any court injunction, order or decree or any valid and enforceable order of
any governmental agency in effect as of the date hereof having jurisdiction over
the Shareholder.
3. REPRESENTATIONS AND WARRANTIES
OF THE PARENT AND MERGER SUB
3.1 Representations and Warranties. The Parent hereby represents and
warrants to the Shareholder and the Company as follows:
3.1.1 Organization. The Parent is a corporation duly organized,
validly existing and in good standing under the laws of the State of Texas. The
Parent is duly qualified or licensed as a foreign corporation authorized to do
business in all states in which any of its assets or properties may be situated
or where its business is conducted except where the failure to obtain such
qualification or license would not have a Parent Material Adverse Effect (as
defined below).
3.1.2 Capitalization of the Parent. As of the execution date of
this Agreement, the total authorized capital stock of the Parent is 100,000,000
shares of Parent Common Stock, of which 16,424,446 shares are issued and
outstanding and of which [ 0 ] are held in the treasury of the Parent, and,
50,000,000 shares of Preferred Stock, $.001 par value ("Parent Preferred
Stock"), divided into 5,000,000 shares of Series A Preferred Stock, of which
45,137 shares are issued and outstanding, 678,920 shares of Series B Preferred
Stock, of which 678,920 shares are issued and outstanding, 130,000 shares of
Series C Preferred Stock, of which 100,000 shares are issued and outstanding,
1,800,000 shares of Series D Preferred Stock, of which [0] shares are issued and
outstanding, 600,000 shares of Series E Preferred Stock, of which [0] shares are
issued and outstanding, and 800,000 shares of Series F Preferred Stock, of which
[0] shares are issued and outstanding. The outstanding shares of Parent Common
Stock and Parent Preferred Stock have been duly and validly issued and are fully
paid and non-assessable.
3.1.3 Authority. The Parent has the requisite, power and
authority to execute, deliver and perform this Agreement and all documents and
instruments referred to herein or contemplated hereby (the "Parent Related
Documents") and to consummate the transactions contemplated herein and thereby.
This Agreement has been duly executed and delivered by the Parent and
constitutes, and all the Parent Related Documents, when executed and delivered
by the Parent will constitute, legal, valid and binding obligations of the
Parent, enforceable in accordance with their respective terms and conditions
except as such enforcement may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting the enforcement of
creditors' rights generally and by general principles of equity (whether applied
in a proceeding at law or in equity).
3.1.4 Consents. No approval, consent, order or action of or
filing with any court, administrative agency, governmental authority or other
third party is required for the execution, delivery or performance by the Parent
of this Agreement or the Parent Related Documents or the consummation by the
Parent of the transactions contemplated hereby, except for (i) the filing of the
Parent's registration statement with respect to the IPO ("Registration
Statement") with the U.S. Securities and Exchange Commission ("SEC") pursuant to
the Securities Act and the SEC's declaration of effectiveness of such
Registration Statement and the completion
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of all necessary filings required under, and the obtaining of all necessary
consents and approvals required pursuant to, state securities or "blue sky" laws
in connection with the IPO, and (ii) the filing of the Articles of Merger with
the Secretary of State of Alabama.
3.1.5 Defaults. The Parent is not in default under or in
violation of, and the execution, delivery and performance of this Agreement and
the Parent Related Documents and the consummation by the Parent of the
transactions contemplated hereby and thereby will not result in a default under
or in violation of (i) any mortgage, indenture, charter or bylaw provision,
contract, agreement, lease, commitment or other instrument of any kind to which
the Parent is a party or by which the Parent or any of its properties or assets
may be bound or affected or (ii) any law, rule or regulation applicable to the
Parent or any court injunction, order or decree, or any valid and enforceable
order of any governmental agency in effect as of the date hereof having
jurisdiction over the Parent, which default or violation prevents the Parent
from consummating the transactions contemplated hereby or is reasonably likely
to have a Parent Material Adverse Effect.
3.1.6 Investment Company. The Parent is not an "investment
company" or a company "controlled" by an "investment company" within the meaning
of the Investment Company Act of 1940, as amended, or a "holding company," a
"subsidiary company" of a "holding company" or an "affiliate" of a "holding
company" or a "public utility" within the meaning of the Public Utility Holding
Company Act of 1935, as amended.
3.1.7 Financial Statements. The Parent has provided certain
financial statements to the Shareholder ("Parent Financial Statements") and such
Parent Financial Statements have been prepared in accordance with GAAP and
fairly present the consolidated financial position, results of operations and
cash flows of the Parent and its then existing consolidated subsidiaries as of
the dates and for the periods indicated, subject to normal year-end adjustments
and any other adjustments described therein or in the notes or schedules
thereto. The books and records of the Parent have been kept in reasonable
detail and accurately and fairly reflect the transactions of the Parent.
3.1.8 Taxes. The Parent has either accrued, discharged or caused
to be discharged, as the same have become due, or the Parent Financial
Statements contain adequate accruals and reserves for, all taxes, interest
thereon, fines and penalties of every kind and character, attributable or
relating to the properties and business of the Parent for the periods ended as
stated in the Parent Financial Statements.
3.1.9 Full Authority. The Parent has the corporate power and
authority and has obtained all licenses, permits, qualifications, and other
documentation (including permits required under applicable Environmental Law, as
defined in Exhibit 2) necessary to own and/or operate its businesses, properties
and assets and to carry on its businesses as being conducted on the date of this
Agreement, except such licenses, permits, qualifications or other documentation,
the failure to obtain which is not reasonably likely to result in a Parent
Material Adverse Effect, and such businesses are now being conducted and such
assets and properties are being owned and/or operated in compliance with all
applicable laws (including Environmental Law), ordinances, rules and regulations
of any governmental agency of the United States, any state or political
subdivision thereof, or any foreign jurisdiction, all applicable court or
administrative agency decrees, awards and orders and all such licenses, permits,
qualifications and other documentation, except where the failure to comply will
not have a Parent Material Adverse Effect, and there is no existing condition or
state of facts that would give rise to a violation thereof or a liability or
default thereunder that is reasonably likely to have a Parent Material Adverse
Effect.
3.1.10 Access. The Parent has cooperated fully in permitting the
Shareholder and his representatives to make a full investigation of the
properties, operations and financial condition of the Parent and has afforded
the Shareholder and his representatives reasonable access to the offices,
buildings, real properties,
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machinery and equipment, inventory and supplies, records, files, books of
account, tax returns, agreements and commitments and personnel of Parent.
3.1.11 Disclosure. No representation or warranty by the Parent in
this Agreement, and no statement contained in any certificate delivered by the
Parent to the Shareholder pursuant to this Agreement, contains any untrue
statement of a material fact or omits any material fact necessary in order to
make the statements herein or therein, in light of the circumstances under which
they are or were made, not misleading.
3.1.12 Parent Material Adverse Effect. The term "Parent Material
Adverse Effect" shall mean an adverse effect on the properties, assets,
financial position, results of operations, long-term debt, other indebtedness,
cash flows or contingent liabilities of the Parent and its consolidated
subsidiaries, taken as a whole in an amount of $50,000 or more.
3.1.13 Tax-Free Reorganization. With respect to the qualification
of the Merger as a reorganization within the meaning of Section 368(a) of the
Code:
(i) The Parent has no plan or intention to sell, exchange or
otherwise dispose or liquidate the Surviving Corporation, to merge the
Surviving Corporation with or into any other corporation, to sell or
otherwise dispose of its Surviving Corporation Common Stock except for
transfers of Surviving Corporation Common Stock to corporations of which
the Parent has control (within the meaning of Section 368(a) of the Code)
at the time of such transfer, or to cause the Surviving Corporation to sell
or otherwise dispose of any of its assets or of any assets acquired in the
Merger, except for dispositions made in the ordinary course of business or
transfers of assets to a corporation of which the Surviving Corporation has
control (within the meaning of Section 368(a) of the Code) at the time of
such transfer.
(ii) The Parent has no plan or intention to cause the Surviving
Corporation, after the Merger, to issue additional shares of its stock that
would result in the Parent losing control of the Surviving Corporation
within the meaning of Section 368(c) of the Code.
(iii) Following the Merger, the Surviving Corporation will continue
the Company's historic business or use a significant portion of its
historic business assets in a business.
(iv) Except as provided in Section 8.20 below, if the Merger is
effected, the Parent and Merger Sub will each pay their respective
expenses, if any, incurred in connection with the Merger.
(v) The Parent Common Stock that will be issued in connection with
the Merger is voting stock within the meaning of Section 368(c) of the
Code.
(vi) At the Effective Time, neither the Parent nor Merger Sub will
have any outstanding warrants, options, convertible securities, or any
other right pursuant to which any person could acquire stock in the Parent
or Merger Sub which, if exercised or converted, would affect the Parent's
acquisition or retention of control of the Surviving Corporation.
(vii) Neither the Parent nor Merger Sub is an investment company as
defined in Section 368(a)(2)(F) of the Code.
(viii) None of the Parent Common Stock received by the Shareholder as
a part of the Merger Consideration will be separate consideration for, or
allocable to, any employment agreement.
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(ix) Neither the Parent nor Merger Sub is under the jurisdiction of
a court in a case under Title 11 of the United States Code, or a
receivership, foreclosure, or similar proceeding in a federal or state
court.
3.2 Representations and Warranties Concerning the Merger Sub. The Parent
and Merger Sub, jointly and severally, hereby represent and warrant to the
Shareholder and the Company as follows:
3.2.1 Organization and Standing. Merger Sub is a corporation duly
incorporated, validly existing and in good standing under the laws of the State
of Alabama.
3.2.2 Capital Structure. The authorized capital stock of Merger
Sub consists of 5,000 shares of common stock, par value $.01 per share, 1,000 of
which are validly issued and outstanding, fully paid and nonassessable and are
owned by the Parent free and clear of all liens, encumbrances and adverse
claims.
3.2.3 Authority. Merger Sub has the corporate power and authority
to execute, deliver and perform this Agreement and to consummate the
transactions contemplated hereby. The execution and delivery of this Agreement,
the performance by Merger Sub of its obligations hereunder and the consummation
of the transactions contemplated hereby have been duly authorized by its Board
of Directors and the Parent as its sole shareholder, and, except for the
corporate filings required by state law, no other corporate proceedings on the
part of Merger Sub are necessary to authorize this Agreement and the transaction
contemplated hereby. This Agreement has been duly and validly executed and
delivered by Merger Sub and (assuming the due authorization, execution and
delivery hereof by the Company) constitutes a valid and binding obligation of
Merger Sub enforceable against Merger Sub in accordance with its terms, except
as such enforcement may be limited by bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting the enforcement of creditors' rights
generally and by general principles of equity (whether applied in a proceeding
at law or in equity).
4. CERTAIN COVENANTS, AGREEMENTS AND PRE-CLOSING MATTERS
4.1 Agreements of Shareholder to be Effective Upon Closing. Effective
upon Closing, and without further action on the part of any party or other
person, the Shareholder covenants and agrees as follows:
4.1.1 Covenant Not to Compete.
(i) For the considerations specified in this Agreement and in
recognition that the covenants by the Shareholder in this Section are a
material inducement to the Parent to enter into and perform this Agreement,
the Shareholder agrees that for the period from the Closing Date to the
later to occur of (a) the date which is five years after the Closing Date
or (b) the date which is two years following any termination of the
Shareholder's employment by the Company, the Shareholder will not
represent, engage in, carry on, or have a financial interest in, directly
or indirectly, individually, as a member of a partnership or limited
liability company, equity owner, shareholder (other than as a shareholder
of less than one percent of the issued and outstanding stock of a publicly-
held company whose gross assets exceed $100 million), investor, officer,
director, trustee, manager, employee, agent, associate or consultant, any
business that involves indoor air quality, heating, ventilation and air
conditioning, plumbing or electrical contracting services within a 100 mile
radius of Birmingham, Alabama.
(ii) The Shareholder agrees that the limitations set forth herein on
the Shareholder's rights to compete with the Parent and its affiliates as
set forth in clause (i) are reasonable and necessary for the protection of
Parent and its affiliates. In this regard, the Shareholder specifically
agrees that the limitations as to period of time and geographic area, as
well as all other restrictions on the Shareholder's
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activities specified herein, are reasonable and necessary for the
protection of the Parent and its affiliates. The Shareholder agrees that,
in the event that the provisions of this Section should ever be deemed to
exceed the scope of business, time or geographic limitations permitted by
applicable law, such provisions shall be and are hereby reformed to the
maximum scope of business, time or geographic limitations permitted by
applicable law.
(iii) The Shareholder agrees that the remedy at law for any breach by
the Shareholder of this Section 4.1.1 will be inadequate and that the
Parent shall be entitled to injunctive relief.
4.1.2 Release. Effective as of the Effective Time and upon the
receipt of the Final Merger Consideration, the Shareholder does hereby (i)
release, acquit and forever discharge the Surviving Corporation from any and all
liabilities, obligations, claims, demands, actions or causes of action arising
from or relating to any event, occurrence, act, omission or condition occurring
or existing on or prior to the Effective Time, including, without limitation,
any claim for indemnity or contribution from the Surviving Corporation in
connection with the obligations or liabilities of the Shareholder hereunder,
except for salary and benefits payable to the Shareholder as an employee in the
ordinary course of business; (ii) waive all breaches, defaults or violations of
any agreement applicable to the Company Common Stock and agree that any and all
such agreements are terminated as of the Effective Time, and (iii) waive any and
all preemptive or other rights to acquire any shares of capital stock of the
Company and release any and all claims arising in connection with any prior
default, violation or failure to comply with or satisfy any such preemptive or
other rights.
4.2 Elimination of Expense. Prior to Closing, the Shareholder will
produce evidence to the satisfaction of the Parent and its lenders that the
expenses of the Company as described on Exhibit 4.2 hereto have been eliminated
as expenses of the Company as of and following the Closing Date.
4.3 Repayment of Shareholder Indebtedness. Prior to Closing, the
Shareholder will produce evidence to the satisfaction of the Parent and its
lenders that all receivables, notes or advances to the Shareholder on the books
of the Company have been paid or otherwise satisfied in full on or before the
Closing Date.
4.4 Audit. Prior to Closing, KPMG Peat Marwick LLP shall complete an
audit of the Company through April 30, 1997 (if an audit is deemed necessary by
KPMG Peat Marwick LLP) and such additional review work as may be requested by
the Parent through and including the Closing Date (or other periods subsequent
to April 30, 1997), and provide its report to the Parent and the Shareholder.
4.5 Acquisition of Leased Equipment. Prior to Closing, the Company shall
acquire ownership of the equipment currently being leased from the entity known
as the "Child's Trust" and the Shareholder shall provide to the Parent evidence
of same satisfactory to the Parent.
4.6 Pre-Closing Covenants and Agreements. The Shareholder and the
Company jointly and severally agree as set forth in Exhibit 4.6 attached hereto.
4.7 Confidentiality. Prior to the Effective Time, none of the Parent,
Merger Sub, the Company or the Shareholder will disclose the terms of this
Agreement or the Merger to any person other than their respective directors,
officers, agents or representatives, except as otherwise provided herein or
unless required by law. The Company may make appropriate disclosures of the
general nature of the Merger to its employees, vendors and customers to protect
the Company's goodwill and to facilitate the Closing. The Parent and Merger Sub
may disclose pertinent information regarding the Merger to its existing and
prospective investors, lenders, or investment bankers or financial advisors for
the purpose of obtaining financing, including, without limitation, financing
related to the IPO or other offerings of its securities may describe this
Agreement and the transactions
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contemplated hereby in any registration statement filed by the Parent under the
Securities Act and in reports filed by the Parent under the Securities Exchange
Act of 1934, and may file this Agreement as an exhibit to any thereof. The
Parent may also make appropriate disclosures of the general nature of the Merger
and the identity, nature and scope of the Company's operations to prospective
acquisition candidates in connection with the Parent's efforts to effect
additional acquisitions. Each party will have mutual approval rights with
respect to written employee presentations concerning the prospective merger.
4.8 Tax-Free Reorganization. Unless the other parties shall otherwise
agree in writing, none of the Shareholder, the Parent, Merger Sub, the Company
or the Surviving Corporation shall knowingly take or fail to take any action,
which action or failure to act would jeopardize the qualification of the Merger
as a reorganization withing the meaning of Section 368(a) of the Code.
4.9 Exclusivity. Prior to Closing, Parent shall not solicit, initiate
or encourage the submission of any proposal or offer from any person or entity
relating to the acquisition of any capital stock or other voting securities, or
any substantial position of the assets (including any acquisition structured as
a merger, consolidation or share exchange) of any company engaged in operations
substantially similar to those presently concluded by the Company within a 100-
mile radius of Birmingham, Alabama.
4.10 Bonus Compensation Agreement. The parties acknowledge and agree
that prior to the Closing Date, the Company will enter into an agreement with
Xx. Xxxxxxx Xxxxxxxxx (the "Bonus Agreement") pursuant to which the Company will
agree to pay bonus compensation in the amount of $150,000 according to the terms
and conditions set forth therein. The Parent agrees that the Company's
liabilities under the Bonus Agreement shall be assumed by Surviving Corporation
incident to the Merger; provided, however, that the Parent shall be entitled to
approve the form of the Bonus Agreement prior to its execution.
5. CONDITIONS PRECEDENT; CLOSING DELIVERIES
5.1 Conditions Precedent to the Obligations of the Parent and Merger Sub.
The obligations of the Parent and Merger Sub to effect the Merger under this
Agreement are subject to the satisfaction of each of the following conditions,
unless waived by the Parent in writing to the extent permitted by applicable
law:
5.1.1 Accuracy of Representations and Warranties. The
representations and warranties of the Shareholder and the Company contained in
this Agreement, in Exhibit 2 and the Disclosure Schedule referred to therein and
the other Exhibits provided by the Shareholder or the Company pursuant to this
Agreement or in any closing certificate or document delivered to the Parent
pursuant hereto shall be true and correct at and as of the Closing Date as
though made at and as of that time other than such representations and
warranties as are specifically made as of another date, and the Shareholder and
the Company shall each have delivered to the Parent and Merger Sub a certificate
to that effect.
5.1.2 Performance of Covenants. The Shareholder and the Company
shall have performed and complied with all covenants of this Agreement to be
performed or complied with by them at or prior to the Closing Date, and the
Shareholder and the Company shall each have delivered to the Parent and Merger
Sub a certificate to that effect.
5.1.3 Legal Actions or Proceedings. No legal action or proceeding
shall have been instituted after the date hereof against the Company or against
the Parent or Merger Sub arising by reason of the acquisition of the Company
pursuant to this Agreement, which is reasonably likely (i) to restrain, prohibit
or invalidate the consummation of the transactions contemplated by this
Agreement, (ii) to have a Company Material Adverse Effect or (iii) to have a
Parent Material Adverse Effect after giving effect to the consummation of the
transactions
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contemplated by this Agreement, and the Shareholder and the Company shall each
have delivered to the Parent and Merger Sub a certificate to that effect.
5.1.4 Approvals. The Company and the Shareholder shall have
procured all of the consents, approvals and waivers of third parties or any
regulatory body or authority, whether required contractually or by applicable
law or otherwise necessary for the execution, delivery and performance of this
Agreement (including the Company Related Documents and the Shareholder Related
Documents) by the Company and the Shareholder prior to the Closing Date, and
Shareholder and the Company shall each have delivered to the Parent and the
Merger Sub a certificate to that effect.
5.1.5 Closing Deliveries. All documents required to be executed
or delivered at Closing by the Shareholder pursuant to Section 5.3 of this
Agreement shall have been so executed and delivered.
5.1.6 No Casualty, Loss or Damage. No casualty, loss or damage
shall have occurred on or prior to the Effective Time to any of the properties
or assets of the Company.
5.1.7 Licenses, etc. The Company shall have obtained all such
licenses and permits as are legally required for the continued operation of the
business after the Effective Time, except such licenses and permits, the absence
of which will not have a Company Material Adverse Effect.
5.1.8 No Material Adverse Change. Since March 31, 1997, there shall
not have been any event that in the reasonable judgment of the Parent adversely
affects the properties, assets, financial condition, results of operations, cash
flows, businesses or prospects of the Company.
5.1.9 IPO. The Parent shall have completed the IPO on terms
acceptable to it, and the net proceeds thereof shall have been received by the
Parent.
5.1.10 Certain Corporate Actions. All necessary director and
shareholder resolutions, waivers and consents required to consummate the
transactions contemplated hereunder shall have been executed and delivered.
5.2 Conditions Precedent to the Obligations of the Shareholder and the
Company. The obligations of the Shareholder and the Company under this
Agreement are subject to the satisfaction of each of the following conditions,
unless waived by the Shareholder and the Company in writing:
5.2.1 Accuracy of Representations and Warranties. The
representations and warranties of the Parent and Merger Sub contained in this
Agreement or in any closing certificate or document delivered to the Shareholder
or the Company pursuant hereto shall be true and correct on and as of the
Closing Date as though made at and as of that date other than such
representations and warranties as are specifically made as of another date, and
the Parent and Merger Sub shall have delivered to the Shareholder and the
Company a certificate to that effect.
5.2.2 Performance of Covenants. The Parent and Merger Sub shall
have performed and complied with all covenants of this Agreement to be performed
or complied with by them at or prior to the Closing Date and the Parent and
Merger Sub shall have delivered to the Shareholder and the Company a certificate
to such effect.
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5.2.3 Approvals. The Parent shall have procured all of the
consents, approvals and waivers specified in Section 3.1.4 prior to the Closing
Date, and the Parent shall deliver to the Shareholder and the Company a
certificate to that effect.
5.2.4 Closing Deliveries. All documents required to be executed
or delivered at Closing by the Parent pursuant to Section 5.4 of this Agreement
shall have been so executed and delivered.
5.3 Deliveries by the Shareholder at the Closing. At the Closing,
simultaneously with the deliveries by the Parent specified in Section 5.4
below, and in addition to any deliveries required to be made by the Shareholder
and the Company pursuant to any other transaction document at the Closing, the
Shareholder shall deliver or cause to be delivered to the Parent the following:
5.3.1 Closing Certificates. The Shareholder and the Company shall
deliver the certificates required pursuant to Sections 5.1.1, 5.1.2, 5.1.3,
5.1.4 and 5.1.5.
5.3.2 Stock Transfer Restriction Agreement. The Shareholder shall
execute and deliver a Stock Transfer Restriction Agreement on the Closing Date,
effective as of the Effective Time, substantially in the form set forth in
Exhibit 5.3.2.
5.3.3 Employment Agreement. The Shareholder and certain other
employees of the Company specified on Exhibit 5.3.3 shall execute and deliver an
Employment Agreement with the Company on the Closing Date, effective as of the
Effective Time, substantially in the form set forth in Exhibits 5.3.3A or
5.3.3B.
5.3.4 Registration Rights Agreement. The Shareholder shall
execute and deliver a Registration Rights Agreement at the Closing, effective as
of the Effective Time, substantially in the form set forth in Exhibit 5.3.4
attached hereto, as applicable.
5.3.5 Opinion of Counsel for the Shareholder and the Company. The
Shareholder shall deliver the favorable opinion of Xxxxxx Denaburg, P.C.,
counsel to the Shareholder and the Company, dated the Effective Time,
substantially in the form and to the effect set forth in Exhibit 5.3.5 attached
hereto.
5.3.6 Documents, Stock Certificates. The Shareholder shall execute
and deliver, and shall cause the Company to execute and deliver, the documents,
certificates, opinions, instruments and agreements required to be executed and
delivered by the Company or its officers or directors or the Shareholder at the
Closing as contemplated hereby or as may be reasonably requested by the Parent
and shall deliver or cause to be delivered the documents and evidence required
under Section 4. Stock Certificates representing all of the outstanding Company
Common Stock and a properly executed and completed letter of transmittal shall
be delivered by the Shareholder to the Parent.
The consummation of the Closing shall not be deemed to be a waiver by
the Parent or the Surviving Corporation of any of their rights or remedies
against the Shareholder hereunder for any breach of warranty, covenant or
agreement by the Company or the Shareholder herein irrespective of any knowledge
of or investigation made by or on behalf of the Parent or Merger Sub; provided,
however, that if the Company shall disclose in writing to the Parent prior to
the Closing Date a specified breach of a specifically identified representation,
warranty, covenant or agreement of the Company or the Shareholder herein by the
Company or the Shareholder, and requests a waiver thereof by the Parent, and the
Parent shall waive any such specifically identified breach in writing prior to
the Closing Date, the Parent and the Surviving Corporation, for themselves and
for each Parent Indemnified Party (as defined below) shall be deemed to have
waived their respective rights
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and remedies hereunder for, and the Shareholder shall have no liability with
respect to, any such specifically identified breach, to the extent so identified
by the Company and so waived by the Parent.
5.4 Deliveries by the Parent at the Closing. At the Closing,
simultaneously with the deliveries by the Shareholder specified in Section 5.3
above, and in addition to any other deliveries to be made by the Parent and
Merger Sub pursuant to any other transaction document at the Closing, the Parent
shall deliver or cause to be delivered to the Shareholder the following:
5.4.1 Closing Certificates. The Parent and Merger Sub shall
deliver the certificates required pursuant to Sections 5.2.1, 5.2.2, 5.2.3,
and 5.2.4.
5.4.2 Registration Rights Agreement. The Parent shall execute and
deliver to the Shareholder a Registration Rights Agreement at the Closing,
effective as of the Effective Time, substantially in the form set forth in
Exhibit 5.3.4.
5.4.3 Opinion of Counsel for the Parent and Merger Sub. The
Parent shall deliver the favorable opinion of its legal counsel dated the
Effective Time, substantially in the form and to the effect set forth in
Exhibit 5.4.3.
5.4.4 Closing Merger Consideration. The Parent shall deliver the
Closing Merger Consideration to the Shareholder.
The consummation of the Closing shall not be deemed to be a waiver by
the Shareholder of any of his rights or remedies hereunder for breach of any
warranty, covenant or agreement herein by the Parent or Merger Sub irrespective
of any knowledge of or investigation with respect thereto made by or on behalf
of the Shareholder; provided, however, that if the Parent shall disclose in
writing to the Shareholder prior to the Closing a specified breach of a
specifically identified representation, warranty, covenant or agreement of the
Parent or Merger Sub contained herein by the Parent or Merger Sub, and requests
a waiver thereof by the Company and the Shareholder, and the Company and the
Shareholder shall waive any such specifically identified breach in writing prior
to the Closing, the Company and the Shareholder shall be deemed to have waived
their rights and remedies hereunder for, and the Parent and Merger Sub shall
have no liability or obligation to the Shareholder or the Company with respect
to, any such specifically identified breach, to the extent so identified by the
Parent and waived by the Company and the Shareholder.
6. SURVIVAL, INDEMNIFICATIONS
6.1 Survival. The representations and warranties set forth in this
Agreement and the other documents, instruments and agreements contemplated
hereby shall survive after the date hereof to the extent provided herein. The
representations and warranties of the Shareholder and the Company herein and in
the Shareholder Related Documents and the Company Related Documents (as defined
in Exhibit 2) other than those of the Shareholder and the Company in Sections
2.2, 2.3, 2.4 and in Sections 2 and 3 of Exhibit 2 shall survive for a period of
36 months after the date hereof and the representations and warranties of the
Shareholder and the Company contained in Sections 2.2, 2.3, 2.4 and in Sections
2 and 3 of Exhibit 2 shall survive for the maximum period permitted by
applicable law. The representations and warranties of the Parent herein and in
the Parent Related Documents, other than those in Sections 3.1.3 and 3.1.4,
shall survive for a period of 36 months after the date hereof and the
representations and warranties of the Parent contained in Sections 3.1.3 and
3.1.4 shall survive for the maximum period permitted by applicable law. The
periods of survival of the representations and warranties as stated above in
this Section 6.1 are referred to herein as the "Survival Period." The
liabilities of the parties under their respective representations and warranties
shall expire as of the expiration of the applicable
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Survival Period and no claim for indemnification may be made with respect to any
breach of any representation or warranty, the applicable Survival Period of
which shall have expired, except to the extent that written notice of such
breach shall have been given to the party against which such claim is asserted
on or before the date of such expiration. The covenants and agreements of the
parties herein (including but not limited to Exhibit 4.6) and in other documents
and instruments executed and delivered in connection with the closing of the
transactions contemplated hereby shall survive for the maximum period permitted
by law.
6.2 Indemnification.
6.2.1 Parent Indemnified Parties. Subject to the provisions of
Sections 6.1 and 6.3 hereof, the Shareholder shall indemnify, save and hold
harmless the Parent, the Surviving Corporation, Merger Sub and any of their
assignees (including lenders) and all of their respective officers, directors,
employees, representatives, agents, advisors and consultants and all of their
respective heirs, legal representatives, successors and assigns (collectively
the "Parent Indemnified Parties") from and against any and all damages,
liabilities, losses, loss of value (including the value of adverse effects on
cash flow or earnings), claims, deficiencies, penalties, interest, expenses,
fines, assessments, charges and costs, including reasonable attorneys' fees and
court costs (collectively "Losses") arising from, out of or in any manner
connected with or based on:
(i) the breach of any covenant of the Shareholder or the Company or
the failure by any Shareholder or the Company to perform any obligation of
any Shareholder or the Company contained herein or in any Company Related
Document or Shareholder Related Document;
(ii) any inaccuracy in or breach of any representation or warranty
of any Shareholder contained herein or in any Shareholder Related Document;
(iii) any inaccuracy in or breach of any representation or warranty
of the Company contained herein or in any Company Related Document;
(iv) indemnification payments made by the Company or the Surviving
Corporation to the Company's present or former officers, directors,
employees, agents, consultants, advisors or representatives in respect of
actions taken or omitted to be taken prior to the Closing; and
(v) any act, omission, occurrence, event, condition or circumstance
occurring or existing at any time on or before the Effective Time and
involving or related to the assets, properties, business or operations now
or previously owned or operated by the Company and not (a) disclosed in the
Disclosure Schedule or (b) disclosed in the Company Financial Statements
(as defined in Exhibit 2).
6.2.2 Parent Indemnity. Subject to the provisions of Sections 6.1
and 6.3, the Parent shall indemnify, save and hold harmless the Shareholder and
the Shareholder's heirs, legal representatives, successors and assigns from and
against all Losses arising from, out of or in any manner connected with or based
on:
(i) any breach of any covenant of the Parent or Merger Sub or the
failure by the Parent or Merger Sub to perform any of its obligations
contained herein or in the Parent Related Documents;
(ii) any inaccuracy in or breach of any representation or warranty
of the Parent or Merger Sub contained herein or in the Parent Related
Documents; and
(iii) any act, omission, event, condition or circumstance occurring or
existing at any time after (but not on or before) the Effective Time and
involving or relating to the assets, properties,
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businesses or operations of the Company; provided, however, that this
clause (iii) shall not apply to any Losses to the extent that such Losses
result from any Shareholder's acts or omissions after the Effective Time as
an officer, director and/or employee of the Parent, the Surviving
Corporation and/or any other affiliate of the Parent.
The foregoing indemnities shall not limit or otherwise adversely affect the
Parent Indemnified Parties' rights of indemnity for Losses under Section 6.2.1.
6.3 Limitations. The Shareholder shall have no liability under Section
6.2.1 until the total of all Losses with respect to such matters exceeds
$25,000; provided, however, that the aggregate liability of the Shareholder
under Section 6.2.1 shall not exceed $2,582,056. The Parent shall have no
liability under Section 6.2.2 until the total of all Losses with respect to such
matters exceeds $25,000; provided, however, that the aggregate liability of the
Parent under Section 6.2.2 shall not exceed $2,582,056.
6.4 Procedures for Indemnification.
6.4.1 Notice. The party (the "Indemnified Party") that may be
entitled to indemnity hereunder shall give notice to the party obligated to give
indemnity hereunder (the "Indemnifying Party") within 30 days after the
Indemnified Party obtains actual knowledge of the assertion of any claim, or the
commencement of any suit, action or proceeding in respect of which indemnity may
be sought hereunder. Any failure on the part of any Indemnified Party to give
the notice described in this Section 6.4.1 shall relieve the Indemnifying Party
of its obligations under this Article 6 only to the extent that such
Indemnifying Party has been prejudiced by the lack of timely and adequate notice
(except that the Indemnifying Party shall not be liable for any expenses
incurred by the Indemnified Party during the period in which the Indemnified
Party failed to give such notice). Thereafter, the Indemnified Party shall
deliver to the Indemnifying Party, promptly (and in any event within 30 days
thereof) after the Indemnified Party's receipt thereof, copies of all notices
and documents (including court papers) received by the Indemnified Party
relating to such claim, action, suit or proceeding.
6.4.2 Legal Defense. The Parent shall have the obligation to assume
the defense or settlement of any third-party claim, suit, action or proceeding
in respect of which indemnity may be sought hereunder, provided that (i) the
Shareholder shall at all times have the right, at his option, to participate
fully therein, and (ii) if the Parent does not proceed diligently to defend the
third-party claim, suit, action or proceeding within 10 days after receipt of
notice of such third-party claim, suit, action or proceeding, the Shareholder
shall have the right, but not the obligation, to undertake the defense of any
such third-party claim, suit, action or proceeding.
6.4.3 Settlement. The Indemnifying Party shall not be required to
indemnify the Indemnified Party with respect to any amounts paid in settlement
of any third-party suit, action, proceeding or investigation entered into
without the written consent of the Indemnifying Party; provided, however, that
if the Indemnified Party is a Parent Indemnified Party, such third-party suit,
action, proceeding or investigation may be settled without the consent of the
Indemnifying Party on 20 days' prior written notice to the Indemnifying Party if
such third-party suit, action, proceeding or investigation is then unreasonably
interfering with the business or operations of the Company or the Surviving
Corporation and the settlement is commercially reasonable under the
circumstances; and provided further, that if the Indemnifying Party gives 10
days' prior written notice to the Indemnified Party of a settlement offer which
the Indemnifying Party desires to accept and to pay all Losses with respect
thereto ("Settlement Notice") and the Indemnified Party fails or refuses to
consent to such settlement within 10 days after delivery of the Settlement
Notice to the Indemnified Party, and such settlement otherwise complies with the
provisions of this Section 6.4, the Indemnifying Party shall not be liable for
Losses arising from such third-party suit, action, proceeding or investigation
in excess of the amount proposed in such settlement offer. Notwithstanding the
foregoing, no Indemnifying Party will consent to the entry of any judgment or
enter
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into any settlement without the consent of the Indemnified Party, if such
judgment or settlement imposes any obligation or liability upon the Indemnified
Party other than the execution, delivery or approval thereof and customary
releases of claims with respect to the subject matter thereof.
6.4.4 Cooperation. The parties shall cooperate in defending any
such third-party suit, action, proceeding or investigation, and the defending
party shall have reasonable access to the books and records, and personnel in
the possession or control of the Indemnified Party that are pertinent to the
defense. The Indemnified Party may join the Indemnifying Party in any suit,
action, claim or proceeding brought by a third party, as to which any right of
indemnity created by this Agreement would or might apply, for the purpose of
enforcing any right of the indemnity granted to such Indemnified Party pursuant
to this Agreement.
6.5 Subrogation. Each Indemnifying Party hereby waives for itself and
its affiliates (as defined in Exhibit 2) any rights to subrogation against any
Indemnified Party or its insurers for Losses arising from any third-party claims
for which it is liable or against which it indemnifies any Indemnified Party
and, if necessary, each Indemnifying Party shall obtain waivers of such
subrogation from its, his or her insurers.
7. TERMINATION
7.1 Grounds for Termination. This Agreement may be terminated at any
time prior to the Closing Date:
7.1.1 Mutual Consent. By the written agreement of the Company and
the Parent; or
7.1.2 Optional by the Company. By the Company by written notice to
the Parent, if the Closing shall have failed to occur by 5:00 p.m. Houston,
Texas time on December 31, 1997, but only if neither the Company nor any
Shareholder has breached this Agreement or has failed to perform any of its, his
or her obligations under this Agreement;
7.1.3 Optional by the Parent. By the Parent, by written notice to
the Company, if the Closing shall have failed to occur by 5:00 p.m. Houston,
Texas time on December 31, 1997, but only if neither the Parent nor Merger Sub
has breached this Agreement or has failed to perform any of its obligations
under this Agreement;
7.1.4 Breach by the Parent or Merger Sub. By the Company, by
written notice to the Parent, if either the Parent or Merger Sub has breached
this Agreement or failed to perform any of its obligations under this Agreement;
or
7.1.5 Breach by the Company or the Shareholder. By the Parent, by
written notice to the Company, if either the Company or any Shareholder has
breached this Agreement or has failed to perform any of its, his or her
obligations under this Agreement.
7.2 Effect of Termination. If this Agreement is terminated as permitted
under Section 7.1, such termination shall be without liability of any party to
any other party, except that such termination shall be without prejudice to any
and all remedies the parties may have against each other for breach of this
Agreement.
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8. MISCELLANEOUS
8.1 Notice. Any notice, delivery or communication required or permitted
to be given under this Agreement shall be in writing, and shall be mailed,
postage prepaid, or delivered, to the addresses given below, or sent by telecopy
to the telecopy numbers set forth below, as follows:
To the Shareholder:
Mr. L. Xxxx Xxxxxx, III
Xxxxx Services, Inc.
0000 Xxxxxxxxxx Xx.
Xxxxxxxxxx, Xxxxxxx 00000
Telecopy: (000) 000-0000
With copies to:
Xx. Xxxxxxx Xxxxxxxx Xx. Xxxxxx X. Xxxxxxxx
Xxxxxx Xxxxxxxx, P.C. Christian & Denaburg, P.C.
0000 Xxxxxx Xxxxxx X.X. Xxx 00000
Xxxxxxxxxx, Xxxxxxx 00000 0000 Xxxxxx Xxxxx Xxxx, Xxxxx 000
Telecopy: (000) 000-0000 Xxxxxxxxxx, Xxxxxxx 00000
Telecopy: (000) 000-0000
To the Parent:
Group Maintenance America Corp.
0000 Xxxx Xxxx Xxxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000
Attn: President
Telecopy: (000) 000-0000
or other such address as shall be furnished in writing by any such party to the
other party, and such notice shall be effective and be deemed to have been given
as of the date actually received.
To the extent any notice provision in any other agreement, instrument or
document required to be executed or executed by the parties in connection with
the transactions contemplated herein contains a notice provision which is
different from the notice provision contained in this Section 8.1 with respect
to matters arising under such other agreement, instrument or document, the
notice provision in such other agreement, instrument or document shall control.
8.2 Further Documents. The Shareholder shall, at any time and from
time to time after the date hereof, upon request by the Parent and without
further consideration, execute and deliver such instruments or other documents
and take such further action as may be reasonably required in order to perfect
any other undertaking made by the Shareholder hereunder.
8.3 Assignability. The Shareholder shall not assign this Agreement in
whole or in part without the prior written consent of the Parent, except by the
operation of law. The Parent may assign its rights under this Agreement, the
Company Related Documents and the Shareholder Related Documents without the
consent of either the Shareholder or the Company. After the Effective Time, the
Surviving Corporation may assign its rights
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under this Agreement, the Company Related Documents and the Shareholder Related
Documents without the consent of any of the Shareholder.
8.4 Exhibits and Schedules. The Exhibits and Schedules (and any
appendices thereto) referred to in this Agreement are and shall be incorporated
herein and made a part hereof.
8.5 Sections and Articles. Unless the context otherwise requires, all
Sections, Articles and Exhibits referred to herein are, respectively, sections
and articles of, and exhibits to, this Agreement and all Schedules referred to
herein are schedules constituting a part of the Disclosure Schedule.
8.6 Entire Agreement. This Agreement constitutes the full
understanding of the parties, a complete allocation of risks between them and a
complete and exclusive statement of the terms and conditions of their agreement
relating to the subject matter hereof and supersedes any and all prior
agreements, whether written or oral, that may exist between the parties with
respect thereto. Except as otherwise specifically provided in this Agreement,
no conditions, usage of trade, course of dealing or performance, understanding
or agreement purporting to modify, vary, explain or supplement the terms or
conditions of this Agreement shall be binding unless hereafter made in writing
and signed by the party to be bound, and no modification shall be effected by
the acknowledgment or acceptance of documents containing terms or conditions at
variance with or in addition to those set forth in this Agreement. No waiver by
any party with respect to any breach or default or of any right or remedy and no
course of dealing shall be deemed to constitute a continuing waiver of any other
breach or default or of any other right or remedy, unless such waiver be
expressed in writing signed by the party to be bound. Failure of a party to
exercise any right shall not be deemed a waiver of such right or rights in the
future.
8.7 Headings. Headings as to the contents of particular articles and
sections are for convenience only and are in no way to be construed as part of
this Agreement or as a limitation of the scope of the particular articles or
sections to which they refer.
8.8 CONTROLLING LAW. THE VALIDITY, INTERPRETATION AND PERFORMANCE OF
THIS AGREEMENT AND ANY DISPUTE CONNECTED HEREWITH SHALL BE GOVERNED AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF ALABAMA EXCEPT TO THE
EXTENT THE APPLICABLE CORPORATE LAW MANDATORILY APPLIES WITH RESPECT THERETO.
8.9 Public Announcements. After the Effective Time, the Shareholder
shall not make any press release, public announcement, or public confirmation or
disclose any other information regarding this Agreement or the contents hereof.
8.10 No Third Party Beneficiaries. Except as set forth in Article 6, no
person or entity not a party to this Agreement shall have rights under this
Agreement as a third party beneficiary or otherwise.
8.11 Amendments and Waivers. This Agreement may be amended by the Parent,
Merger Sub and the Company, by action taken by their Boards of Directors to the
extent permitted by applicable law; provided, however, that no such amendment
shall (i) alter or change any provision of this Agreement, the alteration or
change of which must be adopted by the holders of capital stock of the Company
under the certificate or articles of incorporation of the Company or the
Applicable Corporate Law, or (ii) alter or change this Section 8.11, unless each
such alteration or change is adopted by the holders of shares of capital stock
of the Company as may be required by the certificate or articles of
incorporation of the Company or the Applicable Corporate Law. Prior to the
Effective Time, all amendments to this Agreement must be by an instrument in
writing signed on behalf of the Parent, Merger Sub, the Company and the
Shareholder. After the Effective Time, all amendments to this
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Agreement must be by an instrument in writing signed on behalf of the Parent and
the Shareholder. Any term or provision of this Agreement (other than the
requirements for shareholder approvals) may be waived in writing at any time by
the party which is, or whose shareholders are, entitled to the benefits thereof.
8.12 No Employee Rights. Nothing herein expressed or implied shall
confer upon any employee of the Company, any other employee or legal
representatives or beneficiaries of any thereof any rights or remedies,
including any right to employment or continued employment for any specified
period, of any nature or kind whatsoever under or by reason of this Agreement,
or shall cause the employment status of any employee to be other than terminable
at will.
8.13 Non-Recourse. Except to the extent that any claim is based upon
fraud or deliberate misrepresentation, no recourse for the payment of any
amounts due hereunder or for any claim based on this Agreement or the
transactions contemplated hereby or otherwise in respect thereof, and no
recourse under or upon any obligation, covenant or agreement of the Parent in
this Agreement shall be had against any incorporator, organizer, promoter,
shareholder, officer, director, employee or representative as such (other than
the Shareholder as set forth herein), past, present or future, of the Parent or
of any successor corporation, whether by virtue of any constitution, statute or
rule of law, or by enforcement of any assessment or penalty or otherwise; it
being expressly understood that all such liability is hereby expressly waived
and released as a condition of, and as a consideration for, the execution of
this Agreement.
8.14 When Effective. This Agreement shall become effective only upon
the execution and delivery of one or more counterparts of this Agreement by each
of the Parent, Merger Sub, the Company and the Shareholder.
8.15 Takeover Statutes. If any "fair price," "moratorium," "control
share acquisition" or other form of anti-takeover statute or regulation shall
become applicable to the transactions contemplated hereby, Parent and the
Company and their respective members of their Boards of Directors shall grant
such approvals and take such actions as are necessary so that the transactions
contemplated by this Agreement may be consummated as promptly as practicable on
the terms contemplated herein and otherwise act to eliminate or minimize the
effects of such statute or regulation on the transactions contemplated herein.
8.16 Number and Gender of Words. Whenever herein the singular number is
used, the same shall include the plural where appropriate and words of any
gender shall include each other gender where appropriate.
8.17 Invalid Provisions. If any provision of this Agreement is held to
be illegal, invalid, or unenforceable under present or future laws, such
provisions shall be fully severable as if such invalid or unenforceable
provisions had never comprised a part of the Agreement; and the remaining
provisions of the Agreement shall remain in full force and effect and shall not
be affected by the illegal, invalid or unenforceable provision or by its
severance from this Agreement. Furthermore, in lieu of such illegal, invalid or
unenforceable provision, there shall be automatically as a part of this
Agreement, a provision as similar in terms to such illegal, invalid or
unenforceable provision as may be possible and be legal, valid and enforceable.
8.18 Multiple Counterparts. This Agreement may be executed in a number
of identical counterparts. If so executed, each of such counterparts is to be
deemed an original for all purposes and all such counterparts shall,
collectively, constitute one agreement, but, in making proof of this Agreement,
it shall not be necessary to produce or account for more than one such
counterpart.
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8.19 No Rule of Construction. All of the parties hereto have been
represented by counsel in the negotiations and preparation of this Agreement;
therefore, this Agreement will be deemed to be drafted by each of the parties
hereto, and no rule of construction will be invoked respecting the authorship of
this Agreement.
8.20 Expenses. Each of the parties shall bear all of their own expenses
in connection with the negotiation and closing of this Agreement and the
transactions contemplated hereby; provided that the Company shall pay the costs
of any broker or finder engaged by the Shareholder and the accounting and
auditing fees and expenses of KPMG Peat Marwick LLP (up to a maximum of $10,000
in auditing fees and expenses); provided further that all fees, costs and
expenses incurred or payable by the Company (other than such accounting and
auditing fees and expenses) in connection with the negotiation and closing of
this Agreement and the transactions contemplated hereby and the costs of any
such broker or finder shall not be included in current liabilities for purposes
of determining Working Capital; and provided further that in the event the
Parent decides not to close the Merger notwithstanding the fact that (i) the
representations and warranties of the Company and the Shareholder contained
herein are true and correct in all material respects, and (ii) the Company and
the Shareholder have performed or have agreed to perform all of their respective
agreements and covenants contained herein, the Parent shall pay the accounting
and auditing costs (up to a maximum of $10,000) incurred by the Company.
IN WITNESS WHEREOF, this Agreement has been duly executed and delivered on
the date first hereinabove written.
PARENT:
GROUP MAINTENANCE AMERICA CORP.
By:___________________________________
J. Xxxxxxx Xxxxxxxx, Xx., President
MERGER SUB:
XXXXX ACQUISITION CORP.
By:___________________________________
J. Xxxxxxx Xxxxxxxx, Xx., President
SHAREHOLDER:
/s/ L. Xxxx Xxxxxx, III
______________________________________
L. Xxxx Xxxxxx, III, as Shareholder
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COMPANY:
XXXXX SERVICES, INC.
/s/ L. Xxxx Xxxxxx, III
By:___________________________________
L. Xxxx Xxxxxx, III, President
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