EXHIBIT 10.26
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
GROUP MAINTENANCE AMERICA CORP.
XXXXXX ACQUISITION CORP.
XXXXXX REFRIGERATION, AIR CONDITIONING & HEATING, INC.
AND
THE HOLDERS OF THE
OUTSTANDING CAPITAL STOCK
OF
XXXXXX REFRIGERATION, AIR CONDITIONING & HEATING, INC.
August 18, 1997
TABLE OF CONTENTS
Page
1. THE MERGER............................................................................. 1
1.1 The Merger....................................................................... 1
1.2 Effective Time of the Merger..................................................... 1
1.3 Closing.......................................................................... 1
1.4 Effects of the Merger............................................................ 2
1.4.1 At the Effective Time..................................................... 2
1.4.2 Effects on the Surviving Corporation...................................... 2
1.5 Written Consents and Other Actions............................................... 3
1.5.1 Unanimous Written Consent of the Shareholders; Other Matters.............. 3
1.5.2 Written Consent of the Sole Shareholder of Merger Sub..................... 3
1.5.3 All Other Necessary Actions............................................... 3
1.6 Conversion of Stock.............................................................. 3
1.6.1 Merger Sub Capital Stock.................................................. 3
1.6.2 Cancellation of the Company Treasury Stock................................ 3
1.6.3 Merger Consideration...................................................... 3
1.6.4 Election.................................................................. 4
1.7 Exchange of and Payment for Stock................................................ 4
1.7.1 Delivery of Company Common Stock and Closing Merger Consideration......... 4
1.7.2 Assignments............................................................... 4
1.7.3 Payment In Full Satisfaction of All Rights................................ 4
1.8 Determination of Closing Merger Consideration.................................... 4
1.8.1 Delivery of IPO Price to Public; Statement................................ 4
1.9 Post-Closing Determination of Final Merger Consideration......................... 5
1.9.1 Statement................................................................. 5
1.9.2 Review.................................................................... 5
1.9.3 Disputes.................................................................. 5
1.9.4 Resolution by Parties..................................................... 5
1.9.5 Final Determination....................................................... 6
1.9.6 Expenses.................................................................. 6
2. REPRESENTATIONS AND WARRANTIESOF THE COMPANY AND THE SHAREHOLDERS...................... 6
2.1 Exhibit 2........................................................................ 6
2.2 Stock Ownership.................................................................. 6
2.3 Authority........................................................................ 6
2.4 Consents......................................................................... 7
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3. REPRESENTATIONS AND WARRANTIESOF THE PARENTAND MERGER SUB.............................. 7
3.1 Representations and Warranties................................................... 7
3.1.1 Organization............................................................. 7
3.1.2 Capitalization of the Parent............................................. 7
3.1.3 Authority................................................................ 7
3.1.4 Consents................................................................. 7
3.1.5 Defaults................................................................. 8
3.1.6 Investment Company....................................................... 8
3.1.7 Financial Statements..................................................... 8
3.1.8 Taxes.................................................................... 8
3.1.9 Full Authority........................................................... 8
3.1.10 Access................................................................... 9
3.1.11 Disclosure............................................................... 9
3.1.12 Parent Material Adverse Effect........................................... 9
3.1.13 Tax-Free Reorganization.................................................. 9
3.2 Representations and Warranties Concerning the Merger Sub......................... 10
3.2.1 Organization and Standing................................................ 10
3.2.2 Capital Structure........................................................ 10
3.2.3 Authority................................................................ 10
4. CERTAIN COVENANTS, AGREEMENTS AND PRE-CLOSING MATTERS.................................. 11
4.1 Agreements of the Shareholders to be Effective Upon Closing...................... 11
4.1.1 Covenant Not to Compete.................................................. 11
4.1.2 Release.................................................................. 12
4.2 Certain Acquisitions; Consultation............................................... 12
4.3 Property Sale.................................................................... 13
4.4 Audit............................................................................ 13
4.5 Certain Payables and Receivables................................................. 13
4.6 Pre-Closing Covenants and Agreements............................................. 13
4.7 Confidentiality.................................................................. 13
4.8 Tax-Free Reorganization.......................................................... 13
4.9 Company Plans.................................................................... 13
4.10 Purchase of Certain Receivables................................................. 14
5. CONDITIONS PRECEDENT; CLOSING DELIVERIES 14
5.1 Conditions Precedent to the Obligations of the Parent and Merger Sub............. 14
5.1.1 Accuracy of Representations and Warranties............................... 14
5.1.2 Performance of Covenants................................................. 14
5.1.3 Legal Actions or Proceedings............................................. 15
5.1.4 Approvals................................................................ 15
5.1.5 Closing Deliveries....................................................... 15
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5.1.6 No Casualty, Loss or Damage.............................................. 15
5.1.7 Licenses, etc............................................................ 15
5.1.8 No Material Adverse Change............................................... 15
5.1.9 IPO...................................................................... 15
5.1.10 Certain Corporate Actions................................................ 15
5.2 Conditions Precedent to the Obligations of the Shareholders and the Company...... 15
5.2.1 Accuracy of Representations and Warranties............................... 15
5.2.2 Performance of Covenants................................................. 16
5.2.3 Approvals................................................................ 16
5.2.4 Closing Deliveries....................................................... 16
5.2.5 Legal Actions or Proceeding.............................................. 16
5.2.6 Certain Corporate Actions................................................ 16
5.2.7 IPO...................................................................... 16
5.3 Deliveries by the Shareholders at the Closing.................................... 16
5.3.1 Closing Certificates..................................................... 16
5.3.2 Stock Transfer Restriction Agreement..................................... 16
5.3.3 Employment Agreements.................................................... 17
5.3.4 Lease Agreement.......................................................... 17
5.3.5 Registration Rights Agreement............................................ 17
5.3.6 Opinion of Counsel for the Shareholders and the Company.................. 17
5.3.7 Documents, Stock Certificates............................................ 17
5.4 Deliveries by the Parent at the Closing.......................................... 17
5.4.1 Closing Certificates..................................................... 17
5.4.2 Registration Rights Agreement............................................ 18
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.................................................................. 19
6.2.1 Parent Indemnified Parties............................................... 19
6.2.2 Parent Indemnity......................................................... 19
6.3 Limitations...................................................................... 20
6.4 Procedures for Indemnification................................................... 20
6.4.1 Notice................................................................... 20
6.4.2 Legal Defense............................................................ 20
6.4.3 Settlement............................................................... 21
6.4.4 Cooperation.............................................................. 21
6.5 Subrogation...................................................................... 21
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7. TERMINATION............................................................................ 21
7.1 Grounds for Termination......................................................... 21
7.1.1 Mutual Consent........................................................... 21
7.1.2 Optional by the Company or Shareholders.................................. 22
7.1.3 Optional by the Parent................................................... 22
7.1.4 Breach by the Parent or Merger Sub....................................... 22
7.1.5 Breach by the Company or any Shareholder................................. 22
7.2 Effect of Termination........................................................... 22
8. MISCELLANEOUS.......................................................................... 22
8.1 Notice.......................................................................... 22
8.2 Further Documents............................................................... 23
8.3 Assignability................................................................... 23
8.4 Exhibits and Schedules.......................................................... 23
8.5 Sections and Articles........................................................... 23
8.6 Entire Agreement................................................................ 23
8.7 Headings........................................................................ 24
8.8 CONTROLLING LAW................................................................. 24
8.9 Public Announcements............................................................ 24
8.10 No Third Party Beneficiaries.................................................... 24
8.11 Amendments and Waivers.......................................................... 24
8.12 No Employee Rights.............................................................. 24
8.13 Non-Recourse.................................................................... 24
8.14 When Effective.................................................................. 25
8.15 Takeover Statutes............................................................... 25
8.16 Number and Gender of Words...................................................... 25
8.17 Invalid Provisions.............................................................. 25
8.18 Multiple Counterparts........................................................... 25
8.19 No Rule of Construction......................................................... 25
8.20 Expenses........................................................................ 25
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LIST OF EXHIBITS
Exhibit 1.......................................................Determination of Final Merger Consideration
Exhibit 1.5.1.........................Unanimous Written Consent of the Shareholders of Xxxxxx Refrigeration,
Heating and Air Conditioning, Inc.
Exhibit 1.5.2................................Written Consent of Sole Shareholder of Xxxxxx Acquisition Corp.
Exhibit 1.7............................................................................Letter of Transmittal
Exhibit 2.................................................................................Certain Statements
Exhibit 2.2................................................................Ownership of Company Common Stock
Exhibit 3.1.4.....................................................................Required Consents - Parent
Exhibit 4.3............................................Land and Building to be Purchased by Xxxxx X. Xxxxxxx
Exhibit 4.6................................................................................Certain Covenants
Exhibit 4.9................................................................Company Plans to Remain in Effect
Exhibit 5.3.2...........................................................Stock Transfer Restriction Agreement
Exhibit 5.3.3...........................................................................Employment Agreement
Exhibit 5.3.4................................................................................Lease Agreement
Exhibit 5.3.5..................................................................Registration Rights Agreement
Exhibit 5.3.6.........................................Opinion of Counsel to the Shareholders and the Company
Exhibit 5.4.3...............................................................Opinion of Counsel to the Parent
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INDEX OF DEFINED TERMS
Page
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Accountants......................................................... 13
Agreement........................................................... 1
Applicable Corporate Law............................................ 1
Balance Sheet Date.................................................. Exhibit 2
Bankruptcy Event.................................................... 11
Closing............................................................. 1
Closing Date........................................................ 1
Closing Merger Consideration........................................ Exhibit 1
Closing Outstanding Common Stock Number............................. Exhibit 1
Closing Per Share Cash Amount....................................... Exhibit 1
Closing Per Share Common Stock Amount............................... Exhibit 1
Code................................................................ 1
Company............................................................. 1
Company Common Stock................................................ 1
Company Material Adverse Effect..................................... Exhibit 2
Company Plans....................................................... Exhibit 2
Company Related Documents........................................... Exhibit 2
Converted Share..................................................... 3
Disclosure Schedule................................................. Exhibit 2
Effective Time...................................................... 1
Excess Expense Level Deduction...................................... Exhibit 1
Extraordinary Transactions Addition................................. Exhibit 1
Extraordinary Transactions Deduction................................ Exhibit 1
ERISA............................................................... Exhibit 2
Final Outstanding Common Stock Number............................... Exhibit 1
Final Per Share Cash Amount......................................... Exhibit 1
Final Per Share Common Stock Amount................................. Exhibit 1
GAAP................................................................ Exhibit 1
Indemnified Party................................................... 20
Indemnifying Party.................................................. 20
Investments......................................................... Exhibit 2
IPO................................................................. 2
IPO Price to the Public............................................. Exhibit 1
Life Insurance Policy............................................... Exhibit 4.6
Long-Term Debt...................................................... Exhibit 1
Losses.............................................................. 19
Xxxxxxx DCA......................................................... Exhibit 4.6
Measurement Month Date.............................................. Exhibit 1
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Merger.............................................................. 1
Merger Sub.......................................................... 1
Minimum Proceeds.................................................... 2
Monthly Balance Sheet............................................... Exhibit 4.6
Net After-Tax Income................................................ Exhibit 1
Neutral Accountants................................................. 5
Non-Compete Period.................................................. 11
Notice of Dispute................................................... 5
Operating EBITDA Amount............................................. Exhibit 1
Other Ownership Interests........................................... Exhibit 1
Parent.............................................................. 1
Parent Common Stock................................................. 1
Parent Financial Statements......................................... 8
Parent Indemnified Parties.......................................... 19
Parent Material Adverse Effect...................................... 9
Parent Related Documents............................................ 7
Permitted Exceptions................................................ Exhibit 4.6
Policy Distribution................................................. Exhibit 4.6
Policy Sale......................................................... Exhibit 4.6
Price Notice........................................................ 4
Property Sale....................................................... 13
Proprietary Rights.................................................. Exhibit 2
Real Property Bonus................................................. Exhibit 4.6
Registration Statement.............................................. 8
SEC................................................................. 8
Securities Act...................................................... 2
Settlement Notice................................................... 21
Shareholders........................................................ 1
Shareholder Related Document........................................ 6
Statement of Closing Consideration.................................. 4
Statement of Final Per Share Amounts................................ 5
Stock Bonus......................................................... Exhibit 4.6
Stock Certificate................................................... 3
Stock Distribution.................................................. Exhibit 4.6
Stock Sale.......................................................... Exhibit 4.6
Surveys............................................................. Exhibit 4.6
Survival Period..................................................... 18
Surviving Corporation............................................... 1
Tax Returns......................................................... Exhibit 2
Title Commitments................................................... Exhibit 4.6
Title Insurance Property............................................ Exhibit 4.6
Total Consideration................................................. Exhibit 1
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Working Capital...................................................... Exhibit 1
Working Capital Addition............................................. Exhibit 1
Working Capital Deduction............................................ Exhibit 1
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AGREEMENT AND PLAN OF MERGER
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This AGREEMENT AND PLAN OF MERGER (this "Agreement") made effective as of
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August __, 1997, by and among Group Maintenance America Corp., a Texas
corporation (the "Parent"), Willis Acquisition Corp., an Ohio corporation
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("Merger Sub"), Xxxxxx Refrigeration, Air Conditioning & Heating, Inc., an Ohio
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corporation (the "Company"), and the undersigned holders of all of the
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outstanding capital stock of the Company (the "Shareholders").
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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
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State of Ohio, and pursuant to the Merger each issued and outstanding share of
Common Stock, no par value per share, of the Company ("Company Common Stock")
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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
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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 Shareholders,
as the holders 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").
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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
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accordance with the Ohio Revised Code (the "Applicable Corporate Law") upon the
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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."
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1.2 Effective Time of the Merger. In accordance with the requirements of
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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 Ohio 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."
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1.3 Closing. The closing of the Merger ("Closing") will take place at the
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offices of Bracewell & Xxxxxxxxx, L.L.P. in Houston, Texas on a date that is
contemporaneous with 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
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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 time of day 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
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underwritten public offering of Parent Common Stock resulting in net cash
proceeds to the Parent of at least the Minimum Proceeds as defined below (other
than any offering pursuant to any registration statement (i) relating to any
capital stock of the 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
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successor or similar provision). The term "Minimum Proceeds" means the aggregate
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amount necessary to pay in full (i) all indebtedness of the Parent or any of its
subsidiaries outstanding at the closing of the IPO and incurred for purpose of
financing any acquisitions by the Parent or any of its subsidiaries, (ii) the
aggregate redemption prices for the redemption all of the Parent's preferred
stock outstanding at the closing of the IPO issued by the Parent in connection
with then completed acquisitions by the Parent or any of its subsidiaries, and
(iii) the aggregate cash payable by the Parent or any of its subsidiaries in
conection with all then pending acquisitions.
1.4 Effects of the Merger.
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1.4.1 At the Effective Time. At the Effective Time, (i) the Company
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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 "Xxxxxx Refrigeration, Air
Conditioning & Heating, 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
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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 the Applicable Corporate Law and the terms of this Agreement.
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1.5 Written Consents and Other Actions.
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1.5.1 Unanimous Written Consent of the Shareholders; Other Matters.
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Contemporaneously with the execution hereof, the Shareholders (i) are executing
and delivering to the Company a Unanimous Written Consent in substantially the
form of Exhibit 1.5.1 attached hereto, and (ii) hereby acknowledge that they are
aware of their dissenter's or appraisal rights with respect to the Merger and
their receipt of a copy of the provisions of Ohio Revised Code (S) 1701.84 and
have elected not to exercise such rights.
1.5.2 Written Consent of the Sole Shareholder of Merger Sub.
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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
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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 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
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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
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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
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Company Common Stock that are owned by the Company as treasury stock or by any
of its subsidiaries 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. Subject to Section 1.6.4 below, each
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share of Company Common Stock (other than shares to be canceled in accordance
with Section 1.6.2) (i) which, under the terms of Section 1.6.4 is to be
converted into Parent Common Stock, shall be converted into the right to receive
that number of shares of Parent Common Stock equal to the Final Per Share Common
Stock Amount (as defined in Exhibit 1 attached hereto), and (ii) which, under
the terms of Section 1.6.4 is to be converted into cash, shall be converted into
the right to receive cash equal to the Final Per Share Cash Amount (as defined
in Exhibit 1 attached hereto). Each share of Company Common Stock so converted
into the right to receive cash equal to the Final Per Share Cash Amount or
shares of Parent Common Stock equal to the Final Per Share Common Stock Amount
(a "Converted Share") shall, by virtue of the Merger and without any action on
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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
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thereafter cease to
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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 or Parent Common
Stock at the times and in the manner set forth herein.
1.6.4 Election. Each Shareholder, by such Shareholder's execution of
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this Agreement on the signature page(s) hereto, has made an election with
respect to each share of Company Common Stock owned by such Shareholder, that
such Shareholder's stock shall be converted into his right to receive either (i)
the Final Per Share Cash Amount, or (ii) the Final Per Share Common Stock
Amount; provided, however, that the number of shares of Parent Common Stock to
be issued in the Merger shall be at least that number of shares which satisfies
the continuity of interest requirements under applicable federal income tax
principles relating to reorganizations under Section 368(a) of the Code.
1.7 Exchange of and Payment for Stock.
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1.7.1 Delivery of Company Common Stock and Closing Merger
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Consideration. Prior to the Closing, the Parent will deliver to each
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Shareholder a letter of transmittal, in substantially the form attached hereto
as Exhibit 1.7, to be used for the purpose of surrendering Stock Certificates to
the Parent in exchange for the right to receive the Final Per Share Cash Amount
or the Final Per Share Common Stock Amount for each Converted Share evidenced by
such Stock Certificate. All of the Company Common Stock held by the
Shareholders will be surrendered by the Shareholders to the Parent together with
properly completed and executed letters of transmittal (with each 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 Shareholders at the Closing, the Closing Per Share Cash
Amount (as defined in Exhibit 1 attached hereto) and the Closing Per Share
Common Stock Amount (as defined in Exhibit 1 attached hereto) applicable to the
Converted Shares evidenced by the Stock Certificates properly surrendered (with
properly executed and completed letters of transmittal) by each Shareholder to
the Parent.
1.7.2 Assignments. The assignment, transfer or other disposition of
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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
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the Closing Per Share Cash Amount and the Closing Per Share Common Stock Amount
to the Shareholders with respect to their 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 shares of Parent
Common Stock and cash pursuant to Section 1.9.
1.8 Determination of Closing Merger Consideration.
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1.8.1 Delivery of IPO Price to Public; Statement. Prior to the
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Closing, the Parent shall deliver to the Shareholders a written notice (the
"Price Notice") setting forth the initial price to the public for a share of
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Parent Common Stock offered in the IPO, as set forth in an executed underwriting
agreement, and a statement setting forth a calculation of the Closing
Outstanding Common Stock Number (as defined in Exhibit 1 attached hereto), the
Closing Per Share Cash Amount, the Closing Per Share Common Stock Amount and the
Closing Merger Consideration (as defined in Exhibit 1 attached hereto), payable
to the Shareholders at Closing (the "Statement of Closing Consideration"). The
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initial price to the public of a share
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of Parent Common Stock, as set forth in the Price Notice, and 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.
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1.9.1 Statement. No later than 60 days after the Closing, the Parent
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shall deliver to the Shareholders a statement showing the Final Outstanding
Common Stock Number (as defined in Exhibit 1 attached hereto), the Final Per
Share Cash Amount, the Final Per Share Common Stock Amount and the Total Merger
Consideration (as defined in Exhibit 1 attached hereto) (the "Statement of Final
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Per Share Amounts"). For purposes of determining the Statement of Final Per
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Share Amounts, the Final Outstanding Common Stock Number, the Final Per Share
Cash Amount, the Final Per Share Common Stock Amount and the Total Consideration
shall be calculated or determined as of the last day of the month immediately
preceding the Closing Date, or as of the Closing Date if the Closing Date is the
last day of the month, and not as of the Measurement Month Date (as defined in
Exhibit 1).
1.9.2 Review. After delivery to the Shareholders of the Statement of
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Final Per Share Amounts, the Shareholders and their 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
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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
Shareholders 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
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Amounts within 10 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 $25,000 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
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given, the Parent and the Shareholders 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 Shareholders 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 Deloitte & Touche (the
"Neutral Accountants"), who shall resolve such dispute within 30 days after its
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submission to them. The Parent and the Shareholders (if the dispute is resolved
by them or the Statement of Final Per Share Amounts otherwise becomes final
pursuant hereto without referral to the Neutral Accountants) or the Neutral
Accountants (if a dispute is resolved by them) shall set forth such resolution
in writing and such writing shall (i) set forth the Final Outstanding Common
Stock Number, the
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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, the Final Per
Share Cash Amount, the Final Per Share Common Stock Amount and the Final Merger
Consideration as provided in this Section 1.9 (i) and based on each
Shareholder's election on the signature page(s) hereto, the Parent shall deliver
to each Shareholder (a) the cash amount, if any, by which the aggregate of the
Final Per Share Cash Amounts payable to such Shareholder, as finally determined
pursuant hereto, exceeds the aggregate of the Closing Per Share Cash Amounts
paid to such Shareholder at the Closing; and (b) the number of shares of Parent
Common Stock, if any, by which the aggregate of the Final Per Share Common Stock
Amounts deliverable to such Shareholder, as finally determined pursuant hereto,
exceeds the aggregate of the Closing Per Share Common Stock Amounts delivered to
such Shareholder at the Closing; or (ii) such Shareholder shall deliver to the
Parent (a) the cash amount, if any, by which the aggregate of the Closing Per
Share Cash Amounts paid to such Shareholder at the Closing exceeds the aggregate
of the Final Per Share Cash Amounts payable to such Shareholder as finally
determined pursuant hereto; and (b) the number of shares of Parent Common Stock,
if any, by which the aggregate of the Closing Per Share Common Stock Amounts
delivered to such Shareholder at the Closing exceeds the aggregate of the Final
Per Share Common Stock Amounts deliverable to such Shareholder as finally
determined pursuant hereto.
1.9.6 Expenses. The Parent and the Shareholders shall each pay their
--------
own costs incurred in connection with this Section 1.9, including the fees and
expenses of their respective attorneys and (except as otherwise provided in
Section 8.20) accountants, if any. The costs of the Neutral Accountants shall
be paid 50% by the Parent and 50% by the Shareholders.
2. REPRESENTATIONS AND WARRANTIES
OF THE COMPANY AND THE SHAREHOLDERS
The Company and the Shareholders, 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. Each Shareholder owns, beneficially and of record,
---------------
with full power to vote, the number of shares of Company Common Stock set forth
beside such Shareholder's name on Exhibit 2.2 and such shares are so held by
such Shareholder free and clear of all liens, encumbrances and adverse claims
whatsoever.
2.3 Authority. Each 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 such 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
Shareholders and constitutes, and the Shareholder Related Documents, when duly
executed and delivered by the Shareholders named as parties thereto will
constitute, legal, valid and binding obligations of such Shareholders
enforceable against such Shareholders in
-6-
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).
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 Shareholders of this
Agreement or any Shareholder Related Document. The execution, delivery and
performance by the Shareholders of this Agreement and any Shareholder Related
Documents do not violate any mortgage, indenture, contract, agreement, lease or
commitment or other instrument of any kind to which any Shareholder is a party
or by which any Shareholder or such Shareholder's assets or properties may be
bound or affected or any law, rule or regulation applicable to any 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
any Shareholder.
3. REPRESENTATIONS AND WARRANTIES
OF THE PARENT AND MERGER SUB
3.1 Representations and Warranties. The Parent hereby represents and
------------------------------
warrants to the Shareholders 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 as set forth in
the Confidential Information Statement of the Parent delivered to each of the
Shareholders by the Parent prior to the date hereof. The outstanding shares of
Parent Common Stock and Preferred Stock, $.001 par value, 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. Except as provided on Exhibit 3.1.4, no approval,
--------
consent, order or action of or filing with any court, administrative agency,
governmental authority or other third party is required for
-7-
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 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 Ohio.
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 Shareholders ("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 period covered by 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
-8-
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
------
Shareholders and their representatives to make a full investigation of the
properties, operations and financial condition of the Parent and has afforded
the Shareholders and their representatives reasonable access to the offices,
buildings, real properties, machinery and equipment, inventory and supplies,
records, files, books of account, tax returns, agreements and commitments and
personnel of the 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 Shareholders 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 $100,000 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 Shareholders
as a part of the Final Merger Consideration will be separate consideration
for, or allocable to, any employment agreement.
(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
Shareholders 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 Ohio.
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 Shareholders, 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).
-10-
4. CERTAIN COVENANTS, AGREEMENTS AND PRE-CLOSING MATTERS
4.1 Agreements of the Shareholders to be Effective Upon Closing.
-----------------------------------------------------------
Effective upon Closing, and without further action on the part of any party or
other person, the Shareholders covenant and agree 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 Shareholders in this Section are a
material inducement to the Parent to enter into and perform this Agreement,
each Shareholder agrees that during the Non-Compete Period (as defined
below) such 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, Shareholders
(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, in any business that involves indoor air quality,
heating, ventilation, air conditioning, plumbing, appliance, sewer
cleaning, mechanical construction or electrical contracting products or
services within a 100 mile radius of Cincinnati, Ohio. For purposes
hereof, the term "Non-Compete Period" means, with respect to each
------------------
Shareholder who is an employee of the Surviving Corporation or any of its
affiliates pursuant to the Employment Agreement between the Shareholder and
the Surviving Corporation referred to in Section 5.3.3:
(a) if a Shareholder initiates termination of such
Shareholder's employment with the Surviving Corporation or any of its
affiliates (as defined in Exhibit 2) by voluntary resignation or
otherwise, or such employment is terminated by the Surviving
Corporation or any of its affiliates for "Cause" (as defined in the
Employment Agreement between the Surviving Corporation and such
Shareholder referred to in Section 5.3.3), the period from the Closing
Date to the latest to occur of (i) the date which is four years after
the Closing Date; (ii) the date which is one year after such
termination of employment, or (iii) the date the Parent admits in
writing its inability to pay its debts generally as they become due,
files a petition in bankruptcy or a petition to take advantage of any
insolvency act or other act for the relief or aid of debtors, consents
to or acquiesces in the appointment of a receiver, liquidator, fiscal
agent or trustee of itself or of the whole or any substantial part of
its property and assets or files a petition or answer seeking for
itself, consenting to or acquiescing in any reorganization,
arrangement, composition, readjustment, liquidation, dissolution, or
similar relief under the federal Bankruptcy laws or any other
applicable law, or fails to deny the material allegations of or to
contest any such petition filed against it and to cause such
involuntary petition to be dismissed within 60 days of the filing
thereof (any of the foregoing being referred to as a "Bankruptcy
----------
Event"); or
-----
(b) if such Shareholder's employment with the Surviving
Corporation or any of its affiliates is terminated by the Surviving
Corporation or any of the affiliates other than for "Cause", the
period from the Closing Date to the earliest to occur of (i) the date
which is two years after the Closing Date, (ii) the date which is one
year after such termination of
-11-
employment, or (iii) the date of the occurrence of a Bankruptcy Event;
provided, however, that notwithstanding the application of the
foregoing items (b)(i) or (b)(ii) above, the Non-Compete Period shall
in no event be less than six (6) months from the date such termination
of employment occurs.
With respect to each Shareholder who is not an employee of the
Surviving Corporation or any of its affiliates pursuant to the Employment
Agreement referred to in Section 5.3.3, the term "Non-Compete Period" means
------------------
the earlier to occur of (a) the date which is four years after the Closing
Date, or (b) the date of the occurrence of a Bankruptcy Event.
(ii) Each Shareholder agrees that the limitations set forth herein
on such 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, each Shareholder specifically
agrees that the limitations as to period of time and geographic area, as
well as all other restrictions on such Shareholder's activities specified
herein, are reasonable and necessary for the protection of the Parent and
its affiliates. Each 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) Each Shareholder agrees that the remedy at law for any breach
by such 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, each 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 such
Shareholder hereunder, except for salary and benefits payable to such
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 Certain Acquisitions; Consultation. The Parent agrees that prior to
----------------------------------
the closing of the IPO it will not engage in substantial discussions or
negotiations with any third party respecting any potential acquisition by the
Parent or any of its subsidiaries of any corporation or other entity engaged in
the heating, air conditioning or ventilation business within a five mile radius
of the city limits of Cincinnati, Ohio. After the Effective Time, the Parent
will consult with senior management of the Surviving Corporation (including
Xxxxx X. Xxxxxxx so long as he is employed by the Surviving Corporation) and the
senior management of Airtron, Inc. (so long as it is a subsidiary of the Parent)
in connection with any proposed acquisition of any such corporation or other
entity.
-12-
4.3 Property Sale. On, prior to or within 30 days after the Closing Date,
-------------
Xxxxx X. Xxxxxxx will purchase from the Company (or the Surviving Corporation,
as the case may be) and the Company (or the Surviving Corporation, as the case
may be) shall sell to Xxxxx X. Xxxxxxx the land and buildings listed on Exhibit
4.3 attached hereto for the cash amount equal to the fair market value of such
land and buildings as set forth on Exhibit 4.3, pursuant to conveyance
instruments in form reasonably satisfactory to the Parent (the "Property Sale").
-------------
4.4 Audit. Prior to Closing, KPMG Peat Marwick LLP (the "Accountants")
----- -----------
shall complete an audit of the Company for the year ended December 31, 1996 and
for the six months ended June 30, 1997, and will perform and such additional
audit and/or review work as may be requested by the Parent through and including
the Closing Date and provide its report to the Parent and the Shareholders.
4.5 Certain Payables and Receivables. On or prior to Closing, the
--------------------------------
Shareholders shall pay in full in cash all accounts receivable, notes receivable
and advances payable by any Shareholder to the Company and the Company shall pay
in full in cash all accounts payable, notes payable and advances payable by the
Company to any Shareholder.
4.6 Pre-Closing Covenants and Agreements. The Shareholders 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 Shareholders 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, and may describe this
Agreement and the transactions 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 Shareholders, 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 Company Plans. Except as otherwise contemplated by this Agreement,
-------------
the Company Plans (as defined in Exhibit 2) described on Exhibit 4.9 of the
Company in effect at the date of this Agreement will remain in effect unless
otherwise determined by the Parent after the Effective Time.
-13-
4.10 Purchase of Certain Receivables. If any account receivable included
--------------------------------
in current assets of the Company for purposes of determining Working Capital (as
defined in Exhibit 1) remains unpaid in full for 120 days or more after the
Closing, the Shareholders shall, upon written request by the Surviving
Corporation made within 150 days after the Closing, purchase the same from the
Surviving Corporation without recourse, for the uncollected amount thereof.
Each Shareholder may, at such Shareholder's election make payment for such
accounts receivable (i) wholly in cash or (ii) in cash and Parent Common Stock
in the same ratio as cash and Parent Common Stock was received by such
Shareholder pursuant to Section 5.4.4 above, with the Parent Common Stock being
valued for such purpose at the IPO Price to the Public (as defined in Exhibit
1).
4.11 Certain Other Accounts Receivable. If any accounts receivable of the
---------------------------------
Company have been outstanding for more than 120 days as of the end of the
calendar month next preceding the date in which the Closing occurs and are not
included in current assets for purposes of determining Working Capital, the
Surviving Corporation shall distribute to the Shareholders (proportionately in
accordance with their ownership of Company Common Stock as set forth in Exhibit
2.2) any payments received by the Surviving Corporation on any such accounts
(net of any expenses incurred by the Surviving Corporation in connection
therewith); provided, however, that the Surviving Corporation shall not be
required to take any action to collect any of such accounts receivable. At the
Surviving Corporation's sole option, it may assign without recourse to the
Shareholders (proportionately, as set forth above) any such account receivable.
Any such payments or assignments to the Shareholders shall be treated as
additions to the Final Merger Consideration. Notwithstanding the foregoing, the
Surviving Corporation shall not distribute any such payments or accounts
receivable to the Shareholders if such distribution will jeopardize the
qualification of the Merger as a reorganization within the meaning of Section
368(a) of the Code.
4.12 Certain Acquisitions, Consultation.
----------------------------------
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 Shareholders and the Company contained in
this Agreement, in Exhibit 2 and the Disclosure Schedule referred to therein and
the other Exhibits provided by the Shareholders 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 Shareholders 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 Shareholders 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
Shareholders and the Company shall each have delivered to the Parent and Merger
Sub a certificate to that effect.
-14-
5.1.3 Legal Actions or Proceedings. No legal action or proceeding
----------------------------
shall have been instituted after the date hereof against the Company or any of
the Shareholders, 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 contemplated by this Agreement,
and the Shareholders and the Company shall each have delivered to the Parent and
Merger Sub a certificate to that effect as such legal actions or proceedings
relate to the Company and the Shareholders.
5.1.4 Approvals. The Company and the Shareholders 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 Shareholders prior to the Closing Date, and
the Shareholders and the Company shall each have delivered to the Parent and
Merger Sub a certificate to that effect.
5.1.5 Closing Deliveries. All documents required to be executed or
------------------
delivered at Closing by the Shareholders 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 December 31, 1996, 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
-------------------------
Shareholders 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 Shareholders and the
-------------------------------------------------------------------
Company. The obligations of the Shareholders and the Company under this
-------
Agreement are subject to the satisfaction of each of the following conditions,
unless waived by the Shareholders and the Company in writing to the extent
permitted by applicable law:
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
Shareholders or the Company pursuant hereto shall be true and correct on and as
of the Closing Date
-15-
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 Shareholders 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 Shareholders and the Company a certificate to
such effect.
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 have delivered to the Shareholders 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.
5.2.5 Legal Actions or Proceeding. No legal action or proceeding
---------------------------
shall have been instituted after the date hereof against the Company or any of
the Shareholders, or against the Parent or Merger Sub arising by reason of the
acquisition of the Company pursuant to this Agreement, which is reasonably
likely to restrain, prohibit or invalidate the consummation of the transactions
contemplated by this Agreement, and the Parent and the Merger Sub shall have
delivered to the Company and the Shareholders a certificate to that effect as
such legal action or proceeding relates to the Parent and the Merger Sub.
5.2.6 Certain Corporate Actions. All necessary director and
-------------------------
shareholder resolutions, waivers and consents of Parent and Merger Sub required
to consummate the transactions contemplated hereunder shall have been delivered.
5.2.7 IPO. The Parent shall have completed the IPO prior to 5:00
---
p.m., Houston, Texas time, December 31, 1997, and the net proceeds thereof shall
have been received by the Parent by such date and time.
5.3 Deliveries by the Shareholders 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 Shareholders and
the Company pursuant to any other transaction document at the Closing, the
Shareholders shall deliver or cause to be delivered to the Parent the following:
5.3.1 Closing Certificates. The Shareholders 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 Shareholders 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.
-16-
5.3.3 Employment Agreements. Xxxxx X. Xxxxxxx 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 Exhibit 5.3.3.
5.3.4 Lease Agreement. The Shareholders shall cause the owner of the
---------------
property located at 000 Xxxx Xxxx, Xxxxxxxxxx, Xxxx to execute and deliver a
lease agreement with the Company substantially in the form attached as Exhibit
5.3.4.
5.3.5 Registration Rights Agreement. The Shareholders 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 5.3.5 attached
hereto.
5.3.6 Opinion of Counsel for the Shareholders and the Company. The
-------------------------------------------------------
Shareholders shall deliver the favorable opinion of Robbins, Kelly, Xxxxxxxxx &
Xxxxxx, a Legal Professional Association, counsel to the Shareholders and the
Company, dated the Effective Time, substantially in the form and to the effect
set forth in Exhibit 5.3.6 attached hereto.
5.3.7 Documents, Stock Certificates. The Shareholders 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 Shareholders 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 properly executed and completed letters of transmittal shall be
delivered by the Shareholders 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 Shareholders hereunder for any breach of warranty, covenant or
agreement by the Company or the Shareholders 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 any
Shareholder herein by the Company or any 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 and
remedies hereunder for, and the Shareholders 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 Shareholders 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 Shareholders 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.
-17-
5.4.2 Registration Rights Agreement. The Parent shall execute and
-----------------------------
deliver to the Shareholders a Registration Rights Agreement at the Closing,
effective as of the Effective Time, substantially in the form set forth in
Exhibit 5.3.5.
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 Shareholders.
The consummation of the Closing shall not be deemed to be a waiver by
the Shareholders of any of their 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 any Shareholder; provided, however, that if the Parent shall disclose in
writing to the Shareholders 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 Shareholders, and the Company and the
Shareholders shall waive any such specifically identified breach in writing
prior to the Closing, the Company and the Shareholders 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 Shareholders 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 Shareholders.
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 Shareholders 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 Shareholders 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
24 months after the Closing Date (with respect to claims for intentional breach
thereof), or 12 months after the Closing Date (with respect to any other claim
for breach thereof) and the representations and warranties of the Shareholders
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 24 months after the Closing Date (for claims for intentional breach
thereof) or 12 months after the Closing Date (for other claims for breach
thereof) 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 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 whom such claim is asserted within thirty (30)
days after the date of such expiration. The covenants and agreements of the
parties herein
-18-
(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 Shareholders 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, net of insurance recoveries actually received in connection with
any of the foregoing (collectively "Losses") arising from, out of or in any
------
manner connected with or based on:
(i) the breach of any covenant of the Shareholders or the Company
or the failure by the Shareholders or the Company to perform any obligation
of the Shareholders 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 the Shareholders 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 with
reasonable specificity 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 Shareholders and
the Shareholders' 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;
-19-
(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, 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 aggregate liability of the Shareholders under
-----------
Section 6.2.1 (ii), (iii), (iv) and (v) shall not exceed the amount of the Final
Merger Consideration, with the Parent Common Stock being valued at the IPO Price
to the Public for such purpose. The aggregate liability of the Parent under
Section 6.2.2 (ii) and (iii) shall not exceed the amount of the Final Merger
Consideration, with the Parent Common Stock being valued at the IPO Price to the
Public for such purpose. The liability of each Shareholder for indemnification
for Losses under Section 6.2.1 shall be several and not joint and shall be
limited to an amount equal to the product obtained by multiplying the amount of
such Losses by a fraction, the numerator of which is the number of shares of
Company Common Stock held by such Shareholder as set forth on Exhibit 2.2, and
the denominator of which is the number of shares of Company Common Stock held by
all Shareholders as set forth on Exhibit 2.2. Each Shareholder may, at such
Shareholder's election, make such indemnification payments (i) wholly in cash,
or (ii) in cash and in Parent Common Stock in the same ratio as cash and Parent
Common Stock was received by such Shareholder pursuant to Section 5.4.4 above,
with the Parent Common Stock being valued at the IPO Price to the Public (as
defined in Exhibit 1).
6.4 Procedures for Indemnification.
------------------------------
6.4.1 Notice. The party (the "Indemnified Party") that may be
------ -----------------
entitled to indemnity hereunder shall give prompt notice to any party obligated
to give indemnity hereunder (the "Indemnifying Party") 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); provided, however, that in no
event may a notice be properly given more than thirty (30) days after the
expiration of the Survival Period to which a claim for indemnification is
applicable. Thereafter, the Indemnified Party shall deliver to the Indemnifying
Party, promptly (and in any event within 10 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
-20-
hereunder, provided that (i) the Shareholders shall at all times have the right,
at their 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 Shareholders 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 10 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 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 himself,
-----------
herself, or itself and such Indemnifying Party's affiliates (as defined in
Exhibit 2) any rights to subrogation against any Indemnified Party or such
Indemnified Party's insurers for Losses arising from any third-party claims for
which the Indemnifying Party is liable or against which the Indemnifying Party
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
-21-
7.1.2 Optional by the Company or Shareholders. By the Company or all
---------------------------------------
of the Shareholders by written notice to the Parent, (i) if the Closing shall
have failed to occur by 5:00 p.m. Houston, Texas time on December 31, 1997,
provided that neither the Company nor any of the Shareholders has breached this
Agreement or failed to perform any of their respective obligations under this
Agreement, or (ii) if the IPO shall not have been completed and the net proceeds
thereof received by the Parent prior to 5:00 p.m. Houston, Texas time, December
31, 1997;
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 materially breached
this Agreement or failed to perform any of its obligations under this Agreement;
or
7.1.5 Breach by the Company or any Shareholder. By the Parent, by
----------------------------------------
written notice to the Company, if the Company or any Shareholder has materially
breached this Agreement or has failed to perform any of their respective
material 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.
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 Company (prior to the Effective Time) or the Shareholders:
Xxxxxx Refrigeration, Air Conditioning & Heating, Inc.
000 Xxxx Xxxx
Xxxxxxxxxx, Xxxx 00000
Attention: Xx. Xxxxx X. Xxxxxxx, President
Telecopy: (000) 000-0000
-22-
To the Parent or Merger Sub or the Surviving Corporation:
Group Maintenance America Corp.
0000 Xxxx Xxxx Xxxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000
Attention: President
Telecopy: (000) 000-0000
or other such address as shall be furnished in writing by any such party to the
other parties, 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 Shareholders 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 Shareholders hereunder.
8.3 Assignability. The Shareholders 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 any Shareholder or the Company. After the Effective Time, the
Surviving Corporation may assign its rights under this Agreement, the Company
Related Documents and the Shareholder Related Documents without the consent of
any 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
-23-
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 TEXAS EXCEPT TO THE EXTENT THE
APPLICABLE CORPORATE LAW MANDATORILY APPLIES WITH RESPECT THERETO.
8.9 Public Announcements. After the Effective Time, no Shareholder shall
--------------------
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, the Shareholders 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
Shareholders. After the Effective Time, all amendments to this Agreement must
be by an instrument in writing signed on behalf of the Parent and the
Shareholders. Any term or provision of this Agreement (other than the
requirements for Shareholders 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. 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
-24-
against any incorporator, organizer, promoter, Shareholders, officer, director,
employee or representative as such (other than the Shareholders 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 Shareholders.
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, the 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.
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 may pay the costs of
any brokers, legal counsel, accountants or other advisors engaged by the
Shareholders and shall pay the reasonable accounting and auditing fees and
expenses of the Accountants (to the extent, and only to the extent, that any
such payment will not jeopardize the qualification of the Merger
-25-
as a reorganization within the meaning of Section 368(a) of the Code); and
provided further that all fees, costs and expenses incurred or payable by the
Company in connection with the negotiation and closing of this Agreement and the
transactions contemplated hereby shall be included in current liabilities for
purposes of determining Working Capital. Notwithstanding the foregoing, the
Parent shall pay all such accounting and auditing fees and expenses of the
Accountants if on or before December 31, 1997 the IPO has not closed and the
Parent or Merger Sub has not acquired the Company in the Merger or otherwise.
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:
XXXXXX ACQUISITION CORP.
By:_________________________________________
J. Xxxxxxx Xxxxxxxx, Xx., President
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NUMBER OF SHARES OF SHAREHOLDERS:
-------------------
COMPANY COMPANY STOCK
---------------------
TO BE CONVERTED INTO XXXXX X. XXXXXXX, XX. AND XXXXX X.
--------------------
RIGHT TO RECEIVE: XXXXXXX IRREVOCABLE TRUST UNDER
----------------
AGREEMENT DATED SEPTEMBER 2, 1991
(a) Final Per Share Cash Amount ___ By:
(b) Final Per Share Common Stock Amount ___ Name: Xxxxx X. Xxxxxxx, Trustee
(a) Final Per Share Cash Amount ___ __________________________________
(b) Final Per Share Common Stock Amount ___ Xxxxx X. Xxxxxxx
(a) Final Per Share Cash Amount ___ __________________________________
(b) Final Per Share Common Stock Amount ___ Xxxxx X. Xxxxxxx
COMPANY:
XXXXXX REFRIGERATION, HEATING,
AIR CONDITIONING, INC.
By:_______________________________
Name:_____________________________
Title:____________________________
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