SUBSCRIPTION AGREEMENT
MAINTENANCE SPECIALISTS OF AMERICA, INC.
(A TEXAS CORPORATION)
Maintenance Specialists of America, Inc.
0000 Xxxxx Xxxx Xxxx, Xxxxx 000
Xxxxxxx, Xxxxx 00000
Gentlemen:
This subscription agreement (this "Agreement") is intended to set forth
certain representations, covenants and agreements of the undersigned and
Maintenance Specialists of America, Inc., a Texas corporation (the "Company")
with respect to the offering for sale by the Company of 6,500,000 shares of
Common Stock, par value $.001 per share.
1. SUBSCRIPTION. Subject to the terms and conditions hereof, the
undersigned hereby irrevocably subscribes for 6,500,000 shares of Common Stock,
par value $.001 per share of the Company (collectively, the "Securities") at a
purchase price of $1.231 per share.
(a) The subscription shall be made in installments in the amount
designated in the Installment Notice (defined below) or in this Agreement.
The first installment for 500,000 shares shall be due and payable within
five (5) days after the date of this Agreement. Thereafter, as needed to
meet the capital requirements of the Company, the Company may from time to
time provide written notice (each an, "Installment Notice") that an
additional installment is due within thirty (30) days after the date of the
Installment Notice; provided that in any event, subject to the provisions
in Section 1.(b), all outstanding installments for which no Installment
Notice has been given will be due and payable on the date two (2) years
after the date hereof. In the event any such day should not be a business
day (which for purposes hereof shall be a Saturday, Sunday or legal holiday
recognized as such by the government of the United States or the State of
Texas) such installment's purchase shall take place on the next succeeding
business day.
(b) The undersigned, at his option, may cease payments of outstanding
installments in the event either (i) the Company has failed to close by
June 30, 1997, acquisitions of plumbing, indoor air quality or heating,
ventilation and air conditioning ("HVAC") or other service businesses
having among them aggregate annual gross revenues of at least $20,000,000
based upon the most recent available financial information, or (ii) the
Company has failed to close by December 31, 1997, acquisitions of plumbing,
indoor air quality, HVAC or other service businesses having among them
aggregate annual gross revenues of at least $40,000,000 based upon the most
recent available financial information.
In addition, if any of the foregoing events shall occur, the undersigned
shall have the right to compel the Company to sell previously acquired
businesses and apply the net proceeds of such sales, after the satisfaction
of all debts and commitments of the Company, to repay all amounts invested
in the Company by the undersigned pursuant to this Agreement. If the
undersigned elects to cease his installment payments as provided above, the
undersigned shall be obligated for payment of (x) the Company's accrued
expenses incurred prior to the date such election is made and (y) a minimum
of three months severance for the individuals employed by the Company at
that time.
(c) In the event the undersigned should fail to timely fund any
installment purchase hereunder (i) the Company may exercise all rights and
remedies available to it, in law and in equity, to enforce that obligation
or receive damages as consequence of such breach by the undersigned and
(ii) the Company may, by written notice to the undersigned, deem the right
of the undersigned to purchase shares to be forfeited. Notwithstanding
anything to the contrary in this Agreement, the undersigned may, at his
option and from time to time, elect at any time to purchase all or any
outstanding installments by providing written notice to the Company of such
election together with the required payment.
2. ACCEPTANCE OF SUBSCRIPTION; DELIVERY OF SECURITIES. The undersigned
understands and agrees that this subscription is made subject to the following
terms and conditions:
(a) The Company shall have the right to reject this subscription in
whole, but not in part, so that once accepted by the Company, the Company
irrevocably agrees to sell the Securities to the undersigned in accordance
with the terms and conditions of this Subscription Agreement;
(b) The subscription for Securities shall be deemed to be accepted
only when this Subscription Agreement has been accepted in writing by the
Company;
(c) The Securities to be issued and delivered on account of this
subscription will only be issued in the name of, and delivered to, the
undersigned, and the undersigned agrees to comply with the terms of this
Agreement; and
(d) The representations and warranties of the Company set forth herein
shall be true and correct as of the date that the Company accepts this
subscription.
3. REPRESENTATIONS AND WARRANTIES OF THE UNDERSIGNED. The undersigned
hereby represents and warrants to the Company as follows:
(i) The undersigned is acquiring the Securities for its own
account, for investment and not with a view to, or for resale in
connection with, any distribution
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or public offering thereof within the meaning of the Securities Act of
1933, as amended (the "Act"), and applicable state securities laws.
(ii) The undersigned understands that (A) the Securities (1) have
not been registered under the Act or any state securities laws, (2)
will be issued in reliance upon an exemption from the registration and
prospectus delivery requirements of the Act pursuant to Section 4(2)
and/or Regulation D thereof, (3) will be issued in reliance upon
exemptions from the registration and prospectus delivery requirements
of state securities laws which relate to private offerings and (4)
must be held by the undersigned indefinitely, and (B) the undersigned
must therefore bear the economic risk of such investment indefinitely
unless a subsequent disposition thereof is registered under the Act
and applicable state securities laws or is exempt therefrom. The
undersigned further understands that such exemptions depend upon,
among other things, the bona fide nature of the investment intent of
the undersigned expressed herein. Pursuant to the foregoing, the
undersigned acknowledges that the certificate representing the
Securities acquired by the undersigned shall bear a restrictive legend
substantially as follows:
"The Securities represented by this certificate are subject to
restrictions on transfer under the Securities Act of 1933, as
amended, and state securities laws, and may not be offered for
sale, sold, assigned, transferred, pledged or otherwise disposed
of unless registered under the applicable securities laws or
until the Company has received advice of its counsel that the
Securities may be transferred without such registration."
(iii) The undersigned has knowledge, skill and experience in
financial, business and investment matters relating to an investment
of this type and is capable of evaluating the merits and risks of such
investment and protecting the undersigned's interest in connection
with the acquisition of the Securities. The undersigned understands
that the acquisition of the Securities is a speculative investment and
involves substantial risks and that the undersigned could lose its
entire investment in the Securities. To the extent deemed necessary
by the undersigned, the undersigned has retained, at its own expense,
and relied upon, appropriate professional advice regarding the
investment, tax and legal merits and consequences of purchasing and
owning the Securities. The undersigned has the ability to bear the
economic risks of his investment in the Company, including a complete
loss of the investment, and the undersigned has no need for liquidity
in such investment.
(iv) The undersigned has been furnished by the Company all
information (or provided access to all information) regarding the
business and financial condition of the Company, its expected plans
for future business activities, the attributes of the
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Securities and the merits and risks of an investment in the Securities
which the undersigned has requested or which is otherwise required to
provide full disclosure of material facts regarding an investment in
the Securities.
(v) In making the proposed investment decision, the undersigned
is relying solely on investigations made by the undersigned and the
undersigned's representatives. The offer to sell the Securities was
communicated to the undersigned in such a manner that the undersigned
was able to ask questions of and receive answers from the management
of the Company concerning the terms and conditions of the proposed
transaction and that at no time was the undersigned presented with or
solicited by or through any leaflet, public promotional meeting,
television advertisement or any other form of general or public
advertising or solicitation.
(vi) The undersigned acknowledges that the undersigned has been
advised that:
THE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY
STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY
OF ANY REPRESENTATIONS BY THE COMPANY. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
IN MAKING AN INVESTMENT DECISION THE UNDERSIGNED MUST RELY
ON HIS OWN EXAMINATION OF THE COMPANY AND THE TERMS OF THE
OFFERING, INCLUDING THE MERITS AND RISKS INVOLVED. THE
SECURITIES HAVE NOT BEEN RECOMMENDED BY ANY FEDERAL OR STATE
SECURITIES COMMISSION OR REGULATORY AUTHORITY. FURTHERMORE, THE
FOREGOING AUTHORITIES HAVE NOT CONFIRMED THE ACCURACY OR
DETERMINED THE ADEQUACY OF ANY REPRESENTATION. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
THE SECURITIES ARE SUBJECT TO RESTRICTIONS ON
TRANSFERABILITY AND RESALE AND MAY NOT BE TRANSFERRED OR RESOLD
EXCEPT AS PERMITTED UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
AND APPLICABLE STATE SECURITIES LAWS, PURSUANT TO REGISTRATION OR
EXEMPTION THEREFROM. THE UNDERSIGNED IS AWARE THAT
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HE MAY BE REQUIRED TO BEAR THE FINANCIAL RISKS OF THIS INVESTMENT
FOR AN INDEFINITE PERIOD OF TIME.
(vii) The undersigned acknowledges and is aware that there has
never been any representation, guarantee or warranty made by the
Company or any officer, director, employee or agent or representative
of the Company, expressly or by implication, as to (i) the approximate
or exact length of time that the undersigned will be required to
remain an owner of the Securities; (ii) the percentage of profit
and/or amount of or type of consideration, profit or loss to be
realized, if any, as a result of this investment; or (iii) that the
limited past performance or experience on the part of the Company, or
any future expectations will in any way indicate predictable results
of the ownership of Securities or of the overall financial performance
of the Company.
(viii) The undersigned agrees to furnish the Company such other
information as the Company may reasonably request in order to verify
the accuracy of the information contained herein and agrees to notify
the Company immediately of any material change in the information
provided herein that occurs prior to the Company's acceptance of this
subscription.
The foregoing representations and warranties and undertakings are made by
the undersigned and on behalf of the undersigned with the intent that they be
relied upon in determining its suitability as an investor and the undersigned
hereby agrees that such representations and warranties shall survive its
purchase of the Securities.
4. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company hereby
represents and warrants to the undersigned as follows:
(a) The Company is duly incorporated, validly existing and in good
standing under the laws of its state of incorporation, and is duly
qualified to do business as a foreign corporation in all jurisdictions in
which the failure to be so qualified would materially and adversely affect
the business or financial condition, properties or operations of the
Company. The Company has all requisite corporate power and authority (i) to
own and lease the properties and assets it currently owns and leases and it
contemplates owning and leasing and (ii) to conduct its activities as such
activities are currently conducted and as currently contemplated to be
conducted.
(b) The Company has duly authorized the issuance and sale of the
Securities in accordance with the terms of this Agreement (as described
herein) by all requisite corporate action, including the authorization of
the Company's Board of Directors of the issuance and sale of the Securities
in accordance herewith, and the execution, delivery and performance of any
other agreements and instruments executed in connection herewith.
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(c) The Securities, when issued and paid for in accordance with this
Agreement, will represent duly authorized, validly issued and fully paid
and nonassessable shares of Common Stock of the Company, and the issuance
thereof will not conflict with the articles of incorporation or bylaws of
the Company and will be in full compliance with all federal and state
securities laws applicable to such issuance and sale.
(d) There is no litigation or governmental proceeding pending or
threatened against the Company which would materially and adversely affect
the business or financial condition, properties or operations of the
Company. The Company has complied with all laws, rules, regulations and
orders applicable to its business, operations, properties, assets, products
and services, and the Company has all necessary permits, licenses and other
authorizations required to conduct its business as conducted, except in all
cases for those laws, rules, regulations and orders and those permits,
licenses and authorizations the failure to comply with or the failure to
hold or obtain would not have a material adverse effect on the business or
financial condition, properties or operations of the Company.
(e) The Company is not in default in the performance of any
obligation, agreement or condition contained in any agreement of the
Company or in any agreement by which the Company or any of its property is
bound, except for those defaults which would not have a material adverse
effect on the business or financial condition, properties or operations of
the Company.
(f) The execution and delivery of this Agreement, the fulfillment of
the terms set forth herein and the consummation of the transactions
contemplated hereby will not conflict with, or constitute a breach of or
default under, any agreement, indenture or instrument by which the Company
is bound or any law, administrative rule, regulation or decree of any court
or any governmental body or administrative agency applicable to the
Company.
(g) This Agreement and the information provided pursuant hereto do not
contain, as of the date hereof, an untrue statement of a material fact and
do not omit a material fact necessary to make the statements contained
therein not misleading. There is no fact which the Company has not
disclosed to the undersigned and of which the Company is aware which
materially and adversely affects or could, in the Company's reasonable
opinion, materially and adversely affect the business, prospects, financial
condition, operations, property or affairs of the Company.
5. MISCELLANEOUS.
(a) This Agreement shall be governed by and construed in accordance
with the laws of Texas, notwithstanding principles of conflicts of laws.
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(b) This Agreement constitutes the entire agreement among the parties
hereto with respect to the subject matter hereof, and may be amended only
by a writing executed by all parties hereto.
(c) This Agreement and the representations and warranties contained
herein shall be binding upon the heirs, executors, legal representatives,
administrators, successors and permitted assigns of the undersigned.
IN WITNESS WHEREOF, the undersigned has executed this Agreement as of
October __, 1996.
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XXXXXX X. XXXX
The Company hereby accepts the foregoing subscription subject to the terms and
conditions hereof as of October __, 1996.
MAINTENANCE SPECIALISTS OF
AMERICA, INC.
By:
-----------------------------------
J. Xxxxxxx Xxxxxxxx, Xx., President
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