EXHIBIT 10.14
ASSET PURCHASE AGREEMENT
AMONG
UNITED ACQUISITION CORP.
GROUP MAINTENANCE AMERICA CORP.,
UNITED SERVICE ALLIANCE, L.C.
AND
THE MEMBERS OF UNITED SERVICE ALLIANCE, L.C.
DATED JULY 31, 1997
Confidential information has been omitted from this document and has been filed
separately with the Securities and Exchange Commission. Each such omission has
been marked by "XXX".
TABLE OF CONTENTS
PAGE
ARTICLE I - CLOSING 1
Section 1.1 Closing 1
ARTICLE II - PURCHASE AND SALE 1
Section 2.1 Purchased Assets and Excluded Assets 1
Section 2.2 Purchase Price 3
Section 2.3 Portion of the Purchase Price Payable at Closing 4
Section 2.4 Post-Closing Adjustment and Delivery of Parent
Preferred Shares 4
Section 2.5 Allocation Reporting 5
Section 2.6 Mail Received After Closing 5
ARTICLE III - LIABILITIES AND OBLIGATIONS 5
Section 3.1 Obligations Assumed 5
Section 3.2 Liabilities and Obligations Not Assumed 6
Section 3.3 Warranty Performance 7
ARTICLE IV - REPRESENTATIONS AND WARRANTIES OF THE SELLER PARTIES 7
Section 4.1 Exhibit 4.1 7
Section 4.2 Ownership 7
Section 4.3 Authority 7
Section 4.4 Consents 8
ARTICLE V - REPRESENTATIONS AND WARRANTIES OF BUYER AND PARENT 8
Section 5.1 Representations and Warranties Concerning Buyer 8
a. Organization 8
b. Authority 8
c. Consents 9
d. Defaults 9
e. Investment Company 9
f. Full Authority 9
g. Disclosure 10
h. Buyer Material Adverse Effect 10
ii
i. Organization and Good Standing of Parent 10
Section 5.2 Representations and Warranties Concerning Parent 10
a. Organization 10
b. Capitalization of the Parent 10
c. Authority 11
d. Consents 11
e. Defaults 11
f. Investment Company 11
g. Financial Statements 12
h. Taxes 12
i. Full Authority 12
j. Access 12
k. Disclosure 13
l. Parent Material Adverse Effect 13
m. Delivery of Parent Common Stock and Parent
Preferred Stock 13
ARTICLE VI - CERTAIN COVENANTS AND AGREEMENTS 13
Section 6.1 Covenant Not to Compete 13
Section 6.2 Release 14
Section 6.3 Company Plans 15
Section 6.4 Purchase of Certain Receivables 15
Section 6.5 Assignment of Contracts 15
ARTICLE VII - CLOSING DELIVERIES 15
Section 7.1 Closing Deliveries by the Seller Parties 15
Section 7.2 Closing Deliveries by Buyer 18
ARTICLE VIII - SURVIVAL, INDEMNIFICATIONS 19
Section 8.1 Survival 19
Section 8.2 Indemnity by the Seller and the Members 19
Section 8.3 Indemnity by Parent 20
Section 8.4 Limitations 21
Section 8.5 Procedures for Indemnification 21
Section 8.6 Subrogation 23
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ARTICLE IX - MISCELLANEOUS 23
Section 9.1 Notice 23
Section 9.2 Further Documents 24
Section 9.3 Assignability 24
Section 9.4 Exhibits and Schedules 24
Section 9.5 Sections and Articles 24
Section 9.6 Entire Agreement 24
Section 9.7 Headings 25
Section 9.8 CONTROLLING LAW 25
Section 9.9 Public Announcements 25
Section 9.10 No Third Party Beneficiaries 25
Section 9.11 Amendments and Waivers 25
Section 9.12 No Employee Rights 26
Section 9.13 Non-Recourse 26
Section 9.14 When Effective 26
Section 9.15 Takeover Statutes 26
Section 9.16 Number and Gender of Words 26
Section 9.17 Invalid Provisions 26
Section 9.18 Multiple Counterparts 27
Section 9.19 No Rule of Construction 27
Section 9.20 Expenses 27
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EXHIBITS
NAME
Exhibit 2.1(b) Fixed Assets
Exhibit 2.1(c) Contracts
Exhibit 2.1(e)-1 Leases
Exhibit 2.1(h) Intellectual Property
Exhibit 3.1 Long-Term Indebtedness of Seller
Exhibit 3.3 Warranty Performance
Exhibit 4.1 Representations and Warranties of the Seller Parties
Exhibit 5.1(b) Parent Options, Subscriptions, etc.
Exhibit 5.2(d) Consents
Exhibit 6.3 Company Plans
Exhibit 7.1(b) Stock Transfer Restriction Agreement
Exhibit 7.1(c) List of Employees
Exhibit 7.1(c)-1 Form of Employment Agreement
Exhibit 7.1(d) Registration Rights Agreement
Exhibit 7.1(e) Seller Parties' Counsel Legal Opinion
Exhibit 7.1(f) Xxxx of Sale, General Assignment and Conveyance
Exhibit 7.1(h) Investment Representation Letter
Exhibit 7.1(i) Adoption Agreement
Exhibit 7.2(e) Buyer's Counsel Legal Opinion
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DEFINED TERMS
PAGE
Adoption Agreement 17
Agreement 1
Allocation Determination 5
Business 2
Buyer 1
Buyer Indemnified Parties 19
Buyer Material Adverse Effect 10
Buyer Related Documents 8
Cash Consideration 3
Closing 1
Closing Date 1
Contracts 2
Employment Agreements 17
Excluded Assets 3
Fixed Assets 2
Fixtures and Improvements 3
GAAP 4
HVAC 13
Indemnified Employee 21
Indemnified Party 21
Indemnifying Party 21
Independent Accountants 4
Intellectual Property 2
Inventory 2
IRS 5
Leased Property 3
Leases 3
Losses 19
Member 1
Member Related Document 7
Members 1
Membership Interests 7
Network 13
Other Current Assets 2
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Parent 1
Parent Common Shares 3
Parent Common Stock 3
Parent Financial Statements 12
Parent Material Adverse Effect 13
Parent Preferred Shares 3
Parent Preferred Stock 3
Parent Related Documents 11
Permits 2
Purchase Price 3
Purchased Assets 1
Receivables 2
Registration Rights Agreement 17
Seller 1
Seller Indemnified Parties 20
Seller Notice of Disagreement 4
Seller Parties 1
Settlement Notice 22
Statement 4
Stock Transfer Restriction Agreement 16
Survival Period 19
Threshold 21
Total Parent Preferred Stock 10
Working Capital 4
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ASSET PURCHASE AGREEMENT
This Asset Purchase Agreement ("Agreement") is made this 31st day of July,
1997 by and among United Acquisition, Corp., an Iowa corporation ("Buyer"),
Group Maintenance America Corp., a Texas corporation ("Parent"), United Service
Alliance, L.C., an Iowa limited liability company ("Seller"), and all of the
members of Seller listed on the signature page(s) hereto of Seller
(individually, a "Member" and collectively, the "Members"). The Members and
Seller are sometimes referred to herein as the "Seller Parties".
WHEREAS, Buyer wishes to purchase from Seller and Seller wishes to sell,
transfer, assign and deliver to Buyer substantially all of Seller's assets;
NOW, THEREFORE, in consideration of the premises and the representations,
warranties, covenants and agreements stated herein, the parties agree as
follows:
ARTICLE I
CLOSING
Section 1.1 Closing. The closing of the purchase and sale provided for
herein (the "Closing") is taking place on July 31, 1997 ("Closing Date") at the
offices of Bracewell & Xxxxxxxxx, L.L.P., Houston, Texas, concurrently with the
execution and delivery hereof.
ARTICLE II
PURCHASE AND SALE
Section 2.1 Purchased Assets and Excluded Assets. Subject to the terms
and conditions of this Agreement, and on the basis of the representations,
warranties and indemnities hereinafter set forth, at the Closing, Seller is
selling, transferring, conveying, assigning and delivering to Buyer, and Buyer
is purchasing from Seller, all of the assets, properties, business and rights of
Seller (collectively, the "Purchased Assets"), including without limitation, the
following assets, and excluding only the Excluded Assets referred to below.
(a) All inventories of finished products, work in process, raw
materials, supplies, spare parts and packing and shipping material owned or
maintained by or used in the business (the "Business") of Seller
(collectively, the "Inventory");
(b) All tools, equipment, machinery, dies, patterns, furniture,
fixtures, automobiles, trucks, trailers, vehicles, transportation
equipment, service equipment, computer equipment and leasehold improvements
(the "Fixed Assets"), including the assets listed on Exhibit 2.1(b);
(c) All contracts, agreements, leases and licenses of personal
property (including computer equipment and programs) of Seller, including
those listed on Exhibit 2.1(c) (the "Contracts");
(d) All rights of Seller under express or implied warranties, if any,
from the suppliers of Seller, manufacturers or others with respect to the
Purchased Assets or the Business;
(e) All of the accounts and notes receivable and advance payments
generated in connection with the Business (including allowances for
deductions from remittances, airline travel advances, employee advances,
rebates receivable, deposits on bids, other receivables and claims
receivables (the "Receivables");
(f) All cash, cash equivalents, prepaid and deferred items (including
prepaid rent and other prepaid expenses) or credits and deposits, rights of
offset and credits and claims for refund (other than tax refunds arising
from or pertaining to periods prior to the Closing Date) generated or
incurred by or in connection with the Business (the "Other Current
Assets");
(g) All governmental licenses, certificates, permits, franchises,
approvals, authorizations, exemptions, registrations, and rights of the
Business (the "Permits");
(h) All intellectual property rights used in the Business, including
patents, patent applications, trade names, service marks, service xxxx
applications, trademarks, trademark applications, copyrights, copyright
applications, trade secrets and confidential business information (whether
patentable or unpatentable) (collectively, the "Intellectual Property")
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and the goodwill associated therewith, including without limitation those
listed in Exhibit 2.1(h);
(i) All of the books, records, manuals, documents, books of account,
correspondence, sales and credit reports, supplier lists, customer lists,
distribution lists, bid and quote information, literature, catalogs,
brochures, advertising material and the like which are used in the
Business;
(j) The Leases and Leased Property. For purposes hereof, the term
List of Defined Terms "Fixtures and Improvements" means the buildings,
structures, fixtures and other fixed assets and personalty or a permanent
nature annexed, affixed or attached to the Leased Property, and the term
"Leased Property" means those certain parcels of real property leased by
Seller (as tenant) pursuant to the leases described on Exhibit 2.1(e)-1
(the "Leases"), together with (i) all of Seller's right, title and interest
in and to the Fixtures and Improvements located on such leased real
property, if any, (ii) all of Seller's right, title and interest in and to
all easements, rights, and privileges appurtenant thereto, if any, and
(iii) all options to renew or extend the term of such Leases or to purchase
all or any part of such leased real property;
(k) All computer equipment and all computer programs and documentation
used in the Business; and
(l) All other assets, tangible or intangible, owned or leased by
Seller and used or arising in connection with the Business, including
without limitation, claims, choices in action and rights against third
parties.
Notwithstanding the foregoing, the Purchased Assets shall not include, and Buyer
will not purchase, the following (the "Excluded Assets"): (a) any insurance
policies or insurance contracts, (b) minute books and membership transfer
records of Seller, or (c) tax refunds applicable to periods prior to the
Closing.
Section 2.2 Purchase Price. The purchase price ("Purchase Price") being
paid for the Purchased Assets is $435,779 in cash (the "Cash Consideration"),
435,771 shares of Series G Preferred Stock, $.001 par value ("Parent Preferred
Stock"), of Parent (such shares of Parent Preferred Stock being referred to as
the "Parent Preferred Shares"), and 124,509 shares of common stock, $.001 par
value ("Parent Common Stock"), of Parent (such shares of Parent Common Stock
being referred to herein as the "Parent Common Shares"). The Parent Preferred
Shares are subject
3
to post closing adjustment as set forth in Section 2.4 below. The Purchase Price
shall be payable in the manner and at the times set forth in Sections 2.3 and
2.4 below.
Section 2.3 Portion of the Purchase Price Payable at Closing. At the
Closing, Buyer shall deliver to Seller the Cash Consideration and a certificate
evidencing the Parent Common Shares.
Section 2.4 Post-Closing Adjustment and Delivery of Parent Preferred
Shares.
(a) As promptly as practicable, and in any event no later than
sixty (60) days after the date hereof, Buyer shall cause to be prepared and
delivered to Seller a statement (the "Statement") showing (a) a
calculation, based on the books and records of Buyer as of June 30, 1997,
of the Working Capital (as defined below) and (b) the Final Parent
Preferred Shares (as determined below). For purposes of the Agreement, the
term "Working Capital" shall mean the current assets of Seller as of June
30, 1997, minus XXX% of the current liabilities of Seller as of June 30,
1997, all as determined in accordance with U.S. generally accepted
accounting principles consistently applied ("GAAP"); provided, however,
that the current portion of all long term debt of Seller shall not be
included in the determination of current liabilities. The information set
forth in the Statement shall be final, conclusive and binding for purposes
of this Agreement, unless Seller shall deliver to Buyer a written notice of
disagreement ("Seller Notice of Disagreement") specifying the nature and
extent of such disagreement within 10 business days following the actual
receipt by Seller of the Statement. If within 10 business days following
receipt by Buyer of a Seller Notice of Disagreement, Seller and Buyer are
unable to resolve any disagreement with respect to the Statement, the
disagreement shall be submitted for resolution to Parent's firm of
independent certified public accountants (the "Independent Accountants")
who shall resolve the issues in dispute. The Independent Accountants shall
act as an arbitrator to determine and resolve only those issues in dispute.
The Independent Accountants' resolution shall (a) be made within 30 days of
the submission of the dispute to them (along with all supporting data or
access to Seller's books and records), (b) be in accordance with this
Agreement, (c) be set forth in a written statement delivered to Seller and
Buyer, and (d) be final, conclusive and binding for purposes of this
Agreement. The fees and expenses of the Independent Accountants in
connection with any resolution described in this Section 2.4 shall be
apportioned between Buyer and Seller by the Independent Accountants based
upon the inverse proportion of the disputed amounts resolved in favor of
each party (i.e., so that the prevailing party bears a lesser amount of
such fees and expenses). Otherwise, Buyer and
4
Confidential information has been omitted from this page and has been filed
separately with the Securities and Exchange Commission. Each such omission has
been marked by "XXX".
Seller shall each pay their own costs incurred in connection with this
Section 2.4, including the fees and expenses of their respective attorneys
and accountants, if any.
(b) To arrive at the Final Parent Preferred Shares, there shall
be deducted from 435,771 the amount, if any, by which Working Capital, as
shown on the Statement, is less than $(225,000). The resulting amount when
rounded to the nearest whole number shall be the Final Parent Preferred
Shares. Within ten (10) days after the final determination of the Final
Parent Preferred Shares, Buyer shall deliver to Seller a certificate
evidencing the Final Parent Preferred Shares.
Section 2.5 Allocation Reporting. Buyer and Seller agree to report the
allocation of the Purchase Price among the Purchased Assets as Buyer shall
determine. Buyer shall advise Seller of such determination on or before October
31, 1997 (the "Allocation Determination"). Each party to this Agreement agrees
to file all tax reports, returns and claims and other statements consistent with
the Allocation Determination (and in particular to report the information
required by Section 1060(b) of the Internal Revenue Code of 1986, as amended) in
a manner consistent with such allocation and shall not make any inconsistent
written statement or take any inconsistent position on any returns, in any
refund claim, during the course of any Internal Revenue Service ("IRS") or other
tax audit, for any financial or regulatory purpose, in any litigation or
investigation or otherwise, so long as there exists a reasonable basis in law to
maintain such position. Each party to this Agreement shall notify the other
party if it receives notice that the IRS proposes any allocation different from
the Allocation Determination.
Section 2.6 Mail Received After Closing. Following the Closing, Buyer
may receive and open all mail addressed to Seller and, to the extent that such
mail and the contents thereof relate to the Business or the Purchased Assets,
deal with the contents thereof at its discretion. Buyer shall notify Seller of
(and provide Seller complete copies of) any mail that on its face obliges any
Seller Party to take any action or indicates that action may be taken against
any of them and any mail applicable solely to Seller or the Excluded Assets.
ARTICLE III
LIABILITIES AND OBLIGATIONS
Section 3.1 Obligations Assumed. As part of the consideration for the
Purchased Assets, and subject to Section 3.2, Buyer shall assume Seller's
obligations that accrue after the Closing Date
5
under the Contracts, the Leases and the Permits if, but only if, they are
assigned or transferred to Buyer, or they are subject to the provisions of
Section 6.5, the current liabilities, determined in accordance with GAAP of
Seller as of the Closing Date and the long-term indebtedness of Seller described
in Exhibit 3.1 attached hereto.
Section 3.2 Liabilities and Obligations Not Assumed. Other than as
specifically set forth in Section 3.1 above, Buyer assumes no obligation
whatsoever of Seller under or in connection with any contract between Seller and
any third party or otherwise. Furthermore, except as specifically set forth in
Section 3.1 above, Buyer expressly disclaims the assumption of, and does not
assume, any liability of any type whatsoever of Seller or in connection with any
of Seller's assets or business operations, including without limitation (a) any
and all tax liabilities accruing on or before the Closing Date in connection
with any Purchased Asset, the Excluded Assets or otherwise, and any and all tax
liabilities accruing on or after the Closing Date in connection with the
ownership, operation or disposition of any Excluded Assets, (b) any and all
liabilities arising from or under any Environmental Laws, (c) any and all
liabilities in connection with any claim by any person, entity or agency
claiming to have suffered any environmental damage or harm of any type,
including any actual or alleged damage or harm to groundwater, surface water,
well water, ground, soil, or the atmosphere, (d) any and all employment or
personnel-related liabilities whatsoever of Seller arising out of any liability
under any employment contract, liability for wages or salary, liability for
bonuses or commissions, liability for severance (including without limitation as
a result of this transaction), OSHA liability, liability for disabled
individuals, workers' compensation liability, ERISA (as defined in Exhibit 4.1)
obligations or liability, WARN Act liability, sick pay, vacation accruals, or
similar matters, liability under any profit sharing plan, liability under any
pension plan or savings plan, liability under any welfare benefit plan, or
liability for any claims alleging illegal discrimination of any type, (e) any
account payable, indebtedness, letter of credit, guaranty, note or obligation of
Seller other than the obligations assumed under Section 3.1., (f) any liability
or obligation (contingent or otherwise) of Seller arising out of any claim,
litigation or proceeding threatened or pending on or before the Closing Date or
out of any claim, litigation or proceeding threatened or initiated after the
Closing Date to the extent based on or caused by any act or omission occurring,
or condition or circumstances existing, prior to the Closing Date with respect
to the Purchased Assets (or prior to, on or after the Closing Date with respect
to the Excluded Assets or any other business or operations of Seller or its
predecessors), or any condition caused by any act or omission occurring prior to
the Closing Date with respect to the Purchased Assets (or prior to, on or after
the Closing Date with respect to the Excluded Assets or any other business or
operations of Seller or its predecessors), or any product sold or manufactured
by Seller or a service provided by Seller (including all product liability and
warranty claims and product returns with respect thereto), and (g) any liability
or
6
obligation (contingent or otherwise) of Seller arising out of any claim,
litigation or proceeding threatened or pending on or before the Closing Date or
out of any claim, litigation or proceeding threatened or initiated after the
Closing Date to the extent based on or caused by any act or omission occurring,
or condition or circumstances existing, prior to the Closing Date with respect
to the assets, business or operations of Seller or its predecessors.
Section 3.3 Warranty Performance. For the period during which the
existing warranty obligations of Seller are in effect, as described on Exhibit
3.3 attached hereto, if any customer of Seller is entitled, pursuant to such
obligations to, and does, seek warranty work on any item sold or service
performed by Seller prior to Closing, Buyer shall have the right (but not the
obligation) to provide such warranty work for Seller's account. Seller shall
pay Buyer for such work an amount equal to Buyer's customary third-party charges
for such work.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE SELLER PARTIES
Section 4.1 Exhibit 4.1. The Seller hereby represents and warrants to
Buyer that the statements in Exhibit 4.1 attached hereto are true and correct.
Section 4.2 Ownership. Each Member represents and warrants that it
owns, beneficially and of record, with full power to vote, the outstanding
membership interests in Seller set forth opposite its name on Attachment A to
Exhibit 4.1, free and clear of all liens, encumbrances and adverse claims
whatsoever (collectively, the "Membership Interests"). Further, Seller
represents and warrants that the Membership Interests constitute all of the
outstanding membership interests in Seller.
Section 4.3 Authority. Each Member represents and warrants that it (a)
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
Member (each a "Member Related Document") and (ii) consummate the transactions
contemplated herein and thereby; and (b) this Agreement has been duly executed
and delivered by such Members and constitutes, and each Member Related Document,
when duly executed and delivered by such Members will constitute, legal, valid
and binding obligations of such Member, enforceable against such Member in
accordance with their respective terms and conditions,
7
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).
Section 4.4 Consents. Each Member represents and warrants that 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 such Member of this Agreement or any
Member Related Document. The execution, delivery and performance by such Member
of this Agreement and the Member Related Documents do not violate any mortgage,
indenture, contract, agreement, lease or commitment or other instrument of any
kind to which such Member is a party or by which such Member or its assets or
properties may be bound or affected or any law, rule or regulation applicable to
such Member 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 such Member.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF BUYER AND PARENT
Section 5.1 Representations and Warranties Concerning Buyer. Buyer and
Parent, jointly and severally, hereby represent and warrant to the Seller
Parties as follows:
a. Organization. Buyer is a corporation duly organized, validly existing
and in good standing under the laws of the State of Iowa. Buyer 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 Buyer Material Adverse Effect.
b. Authority. Buyer has the requisite power and authority to execute,
deliver and perform this Agreement and all documents and instruments referred to
herein or contemplated hereby to which it is a party (the "Buyer Related
Documents") and to consummate the transactions contemplated herein and thereby.
This Agreement has been duly executed and delivered by Buyer and constitutes,
and all the Buyer Related Documents, when executed and delivered by Buyer will
constitute, legal, valid and binding obligations of Buyer, enforceable against
Buyer in accordance with their respective terms and conditions except as such
enforcement may be limited by bankruptcy,
8
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).
c. Consents. Except as set forth in Exhibit 5.2(d), 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 Buyer of this Agreement or the Buyer Related
Documents or the consummation by Buyer of the transactions contemplated hereby.
d. Defaults. Buyer is not in default under or in violation of, and the
execution, delivery and performance of this Agreement and the Buyer Related
Documents and the consummation by Buyer of the transactions contemplated hereby
and thereby will not result in a default under or in violation of (a) any
mortgage, indenture, charter or bylaw provision, contract, agreement, lease,
commitment or other instrument of any kind to which Buyer is a party or by which
Buyer or any of its properties or assets may be bound or affected or (b) any
law, rule or regulation applicable to Buyer 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 Buyer, which default or violation
prevents Buyer from consummating the transactions contemplated hereby or is
reasonably likely to have a Buyer Material Adverse Effect.
e. Investment Company. Buyer 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" (as defined in Exhibit 4.1) of a
"holding company" or a "public utility" within the meaning of the Public Utility
Holding Company Act of 1935, as amended.
f. Full Authority. Buyer 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 4.1)) 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 Buyer
Material Adverse Effect, and such businesses are now being conducted and such
assets and properties are being owned and/or operated in compliance with all
applicable laws (including Environmental Law), ordinances, rules and regulations
of any governmental agency of the United States, any state or political
subdivision thereof, or any foreign jurisdiction, all applicable court or
administrative agency decrees, awards and orders and all such
9
licenses, permits, qualifications and other documentation, except where the
failure to comply is not reasonably likely to have a Buyer 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 Buyer Material Adverse Effect.
g. Disclosure. No representation or warranty by Buyer in this Agreement,
and no statement contained in any certificate delivered by Buyer to the Seller
Parties 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.
h. Buyer Material Adverse Effect. The term "Buyer Material Adverse
EffectList of Defined Terms " shall mean a material adverse effect on the
properties, assets, financial position, results of operations, long-term debt,
other indebtedness, cash flows or contingent liabilities of Parent and its
consolidated subsidiaries, taken as a whole.
i. Organization and Good Standing of Parent. Parent is a corporation
duly incorporated, validly existing and in good standing under the laws of the
State of Texas.
Section 5.2 Representations and Warranties Concerning Parent. The
Parent hereby represents and warrants to the Seller Parties as follows:
a. 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.
b. Capitalization of the Parent. As of the execution date of this
Agreement, the total authorized capital stock of the Parent is 100,000,000
shares of Parent Common Stock, of which 22,695,125 shares are issued and
outstanding and of which none are held in the treasury of the Parent and
50,000,000 shares of Preferred Stock, $.001 par value ("Total Parent Preferred
Stock"), of which 45,137 shares of Series A Preferred Stock are issued and
outstanding, 678,920 shares of Series B Preferred Stock are issued and
outstanding, 100,000 shares of Series C Preferred Stock are issued and
outstanding, 1,568,000 shares of D Preferred Stock are issued and outstanding,
580,000 shares of Series E Preferred Stock are issued and outstanding, 664,691
shares of Series F are issued and
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outstanding, zero shares of Series G are issued and outstanding, 500,000 shares
of Series H are issued and outstanding, and zero shares of Series I are issued
and outstanding. The outstanding shares of Parent Common Stock and Total Parent
Preferred Stock have been duly and validly issued and are fully paid and non-
assessable. Except as set forth on Exhibit 5.1(b), Parent has not granted any
option, warrant, subscription or similar right to any person or entity to
purchase or acquire any rights with respect to any shares of capital stock or
equity interests of Parent.
c. 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 to which it is a party (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).
d. Consents. Except as provided on Exhibit 5.2(d), no approval, consent,
order or action of or filing with any court, administrative agency, governmental
authority or other third party is required for the execution, delivery or
performance by the Parent of this Agreement or the Parent Related Documents or
the consummation by the Parent of the transactions contemplated hereby.
e. 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.
f. 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
11
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.
g. Financial Statements. The Parent has provided certain financial
statements to the Seller Parties ("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.
h. 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.
i. Full Authority. The Parent has the corporate power and authority and
has obtained all licenses, permits, qualifications, and other documentation
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, 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.
j. Access. The Parent has cooperated fully in permitting the Members and
their representatives to make a full investigation of the properties, operations
and financial condition of the Parent and has afforded the Members and their
representatives reasonable access to the offices, buildings, real properties,
machinery and equipment, inventory and supplies, records, files, books
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of account, tax returns (as defined in Exhibit 4.1), agreements and commitments
and personnel of Parent.
k. Disclosure. No representation or warranty by the Parent in this
Agreement, and no statement contained in any certificate delivered by the Parent
to the Members 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. None of the information supplied by Parent for
inclusion in the Confidential Information Statement dated June 12, 1997, or in
any supplement thereto, contained any untrue statement of a material fact or
omitted to state any material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under which
they were made, not misleading. Notwithstanding the foregoing, Parent makes no
representation with respect to statements made in the Confidential Information
Statement dated June 12, 1997, or in any supplement thereto, based on
information supplied by anyone other than Parent for inclusion therein.
l. 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.
m. Delivery of Parent Common Stock and Parent Preferred Stock. The
Parent Common Stock, if issued, and the Parent Preferred Stock, if issued, if
and when issued and delivered pursuant to the Agreement will be, when delivered,
validly authorized, duly issued, fully-paid and non-assessable.
ARTICLE VI
CERTAIN COVENANTS AND AGREEMENTS
Section 6.1 Covenant Not to Compete.
(a) The Business consists of providing training programs for
individuals working in the heating, ventilation and air conditioning
("HVAC") industry. Such training programs are designed to promote the sale
of HVAC service and maintenance agreements, train and motivate the
management of HVAC sales personnel and improve general HVAC
13
management skills. The Business also includes an informal network (the
"Network") of companies in the HVAC business that are available to provide
local HVAC services for national customers of Seller Parties. For the
considerations specified in this Agreement and in recognition that the
covenants by Seller Parties in this Section are a material inducement to
Buyer to enter into and perform this Agreement, each Seller Party agrees
that for the period from the Closing Date to the date which is five years
after the Closing Date, such Seller Party will not represent, engage in,
carry on, or have a financial interest in, directly or indirectly,
individually, as a member of a partnership or limited liability company,
equity owner, shareholder (other than as a shareholder of less than one
percent of the issued and outstanding stock of a publicly-held company
whose gross assets exceed $100 million), investor, officer, director,
trustee, manager, employee, agent, associate or consultant with respect to
any business whose business is substantially similar to the Business or the
Network; provided, however, notwithstanding anything to the contrary in
this Section 6.1(a), Air Comfort Corporation, a Delaware corporation, shall
not be bound or restricted by this Section 6.1(a). Except as expressly
provided above, nothing in this Agreement shall restrict the ability of any
Seller Party to provide indoor air quality, heating, ventilation, air
conditioning, plumbing or electrical contracting or other HVAC products and
services in any location.
(b) The Seller Parties agree that the limitations set forth
herein on the Seller Parties' rights to compete with Parent and its
affiliates as set forth in clause (a) are reasonable and necessary for the
protection of Parent and its affiliates. In this regard, each Seller Party
specifically agrees that the limitations as to period of time and
geographic area, as well as all other restrictions on such Seller Party's
activities specified herein, are reasonable and necessary for the
protection of Parent and its affiliates. Each Seller Party 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.
(c) Each Seller Party agrees that the remedy at law for any
breach by such Seller Party of this Section 6.1 will be inadequate and that
Buyer and Parent shall be entitled to injunctive relief.
Section 6.2 Release. Each Member does hereby release, acquit and
forever discharge Buyer from any and all liabilities, obligations, claims,
demands, actions or causes of action arising
14
from or relating to any event, occurrence, act, omission or condition occurring
or existing on or prior to the Closing Date, including, without limitation, any
claim for indemnity or contribution from Buyer in connection with the
obligations or liabilities of such Member hereunder.
Section 6.3 Company Plans. Except as otherwise contemplated by this
Agreement, the Company Plans (as defined in Exhibit 4.1) described on Exhibit
6.3 of Seller in effect at the date of this Agreement will remain in effect
unless otherwise determined by Parent after the Closing Date.
Section 6.4 Purchase of Certain Receivables. The Seller Parties agree
that if any Receivable remains unpaid for 90 days after Closing Date, Seller
shall, upon written request by Buyer made within 120 days after the Closing
Date, purchase the same from Buyer, without recourse, for cash equal to the
unpaid amount thereof.
Section 6.5 Assignment of Contracts. To the extent the assignment of
any Contract, Lease, Permit, commitment, security or other asset to be assigned
to Buyer pursuant to the provisions hereof shall require the consent of any
other person, this Agreement shall not constitute a contract to assign the same
if an attempted assignment would constitute a breach thereof or give rise to any
right of acceleration or termination. If any such consent has not been obtained
as of the date hereof, Seller agrees to cooperate with Buyer in any reasonable
arrangement designed to provide Buyer substantially the same benefits of any
such Contract, Lease, Permit, commitment, security or other asset, including
enforcement of any and all rights of Seller against the other party thereto
arising out of breach or cancellation thereof by such party or otherwise.
Seller agrees to use commercially reasonable efforts after the date hereof to
obtain any required consent to assignment which has not been obtained.
ARTICLE VII
CLOSING DELIVERIES
Section 7.1 Closing Deliveries by the Seller Parties. The Seller
Parties are delivering the following to Buyer on the Closing Date at the
Closing:
(a) A certificate, executed by Seller, to the effect that:
15
(i) the representations and warranties of the Seller Parties
contained in this Agreement, in Exhibit 4.1 and the Disclosure
Schedule referred to therein and the other Exhibits provided by the
Seller Parties pursuant to this Agreement or in any closing
certificate or document delivered to Buyer pursuant hereto are true
and correct in all material respects at and as of the Closing Date as
though made at and as of that date;
(ii) the Seller Parties 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;
(iii) no legal action or proceeding has been instituted against
any Seller Party, Buyer or Parent arising by reason of the acquisition
of the Purchased Assets by Buyer pursuant to this Agreement which is
reasonably likely (A) to restrain, prohibit or invalidate the
consummation of the transactions contemplated by this Agreement, (B)
to have a Parent Material Adverse Effect or (C) to have a Buyer
Material Adverse Effect after giving effect to the consummation of the
transactions contemplated by this Agreement;
(iv) the Seller Parties have obtained 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 (as defined in
Exhibit 4.1) and the Member Related Documents) by the Seller Parties;
(v) no casualty, loss or damage has occurred to any of the
properties or assets of Seller;
(vi) since December 31, 1996, there has not been any event that
in the reasonable judgment of Seller materially and adversely affects
the properties, assets, financial condition, results of operations,
cash flows, businesses or prospects of Seller; and
(vii) all necessary director and member resolutions, waivers and
consents required to consummate the transactions contemplated
hereunder have been executed and delivered.
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(b) A Stock Transfer Restriction Agreement, executed by Seller, in
substantially the form of Exhibit 7.1(b) attached hereto ("Stock Transfer
Restriction Agreement").
(c) Employment Agreements (with the insertion of the appropriate
Section 7(b) based on whether any such employee is designated an "Executive
or Key Employee" or "Manager" on Exhibit 7.1(c) attached hereto and with
the blanks appropriately completed as set forth in a confidential letter
between Seller and Buyer) with Buyer executed by the employees of Seller
specified in Exhibit 7.1(c), substantially in the form of Exhibit 7.1(c)-1
attached hereto (the "Employment Agreements").
(d) A Registration Rights Agreement, executed by Seller, in
substantially the form of Exhibit 7.1(d) attached hereto ("Registration
Rights Agreement").
(e) The favorable opinion of Xxxxxxxxxxx, Xxxxxxx & Xxxxxx in Denver,
Colorado, counsel to the Seller, dated the Closing Date, substantially to
the effect set forth in Exhibit 7.1(e) attached hereto.
(f) Bills of sale, deeds, assignments and any other necessary
instruments, executed by Seller, satisfactory in form and content and
approved prior to Closing by Buyer, conveying all the Purchased Assets to
Buyer, including, without limitation, a Xxxx of Sale, General Assignment
and Conveyance in substantially the form of Exhibit 7.1(f) attached hereto.
(g) If requested by Buyer, estoppel certificates and consents in form
and substance satisfactory to Buyer executed by the other parties to the
Contracts, Leases and Permits.
(h) An investment representation letter properly completed and
executed by Seller regarding its acquisition of the Parent Preferred Stock
and the Parent Common Stock pursuant hereto, in substantially the form of
Exhibit 7.1(h) attached hereto.
(i) An Adoption Agreement, executed by Seller, in substantially the
form of Exhibit 7.1(i) attached hereto ("Adoption Agreement").
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(j) A certificate or certificates executed by the holder or holders of
the long-term indebtedness of Seller described in Exhibit 3.1 certifying
the outstanding amount of such indebtedness as of the Closing Date.
The consummation of the Closing shall not be deemed to be a waiver by
Buyer of any of its rights or remedies against the Seller Parties hereunder for
any breach of warranty, covenant or agreement by any Seller Party herein
irrespective of any knowledge of or investigation made by or on behalf of Buyer.
Section 7.2 Closing Deliveries by Buyer. Buyer is delivering to Seller
the following on the Closing Date at the Closing:
(a) A certificate or certificates, executed by Buyer and Parent, to
the effect that:
(i) the representations and warranties of the Buyer and Parent
contained in this Agreement or in any closing certificate or document
delivered to the Seller Parties pursuant hereto are true and correct
in all material respects on and as of the Closing Date as though made
at and as of that date; and
(ii) Buyer has performed and complied with all covenants of this
Agreement to be performed or complied with by it at or prior to the
Closing Date.
(b) The Stock Transfer Restriction Agreement, executed by Parent.
(c) The Employment Agreements, executed by Buyer.
(d) The Registration Rights Agreement, executed by Parent.
(e) The favorable opinion of Buyer's legal counsel, dated the Closing
Date, substantially to the effect set forth in Exhibit 7.2(e) attached
hereto.
(f) The Adoption Agreement, executed by Parent.
(g) The Parent Common Stock and the cash required to be delivered to
Seller pursuant to Section 2.2.
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The consummation of the Closing shall not be deemed to be a waiver by
the Seller Parties of any of their rights or remedies hereunder for breach of
any warranty, covenant or agreement herein by Buyer irrespective of any
knowledge of or investigation with respect thereto made by or on behalf of the
Seller Parties.
ARTICLE VII
SURVIVAL, INDEMNIFICATIONS
Section 8.1 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 Seller Parties herein and in the Member
Related Documents and the Company Related Documents other than those of the
Seller Parties in Sections 4.2, 4.3 and 4.4 and in Sections 1 and 3 of Exhibit
4.1 shall survive for a period of 36 months after the date hereof and the
representations and warranties of the Seller Parties contained in Sections 4.2,
4.3 and 4.4 and in Sections 1 and 3 of Exhibit 4.1, shall survive for the
maximum period permitted by applicable law. The representations and warranties
of Buyer and Parent herein and in the Buyer Related Documents, other than those
in Sections 5.1(a) and (b) and 5.2(a) and (c) herein, shall survive for a period
of 36 months after the date hereof and the representations and warranties of
Buyer contained in Sections 5.1(a) and (b) and 5.3 (a) and (c) herein 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
8.1 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 which such claim is asserted on or before the date of such expiration.
The covenants and agreements of the parties herein 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.
Section 8.2 Indemnity by the Seller and the Members. Subject to the
provisions of Sections 8.1 and 8.4, the Seller and each of the Members,
severally, shall indemnify, save and hold harmless Buyer, Parent and any of
their assignees (including lenders) and all of their respective officers,
directors, employees, representatives, agents, advisors and consultants and all
of their
19
respective heirs, legal representatives, successors and assigns (collectively
the "Buyer Indemnified Parties") from and against any and all damages,
liabilities, losses, loss of value (including the value of adverse effects on
cash flow or earnings), claims, deficiencies, penalties, interest, expenses,
fines, assessments, charges and costs, including reasonable attorneys' fees and
court costs (collectively "Losses") arising from, out of or in any manner
connected with or based on:
(a) the breach of any covenant of any Seller Party or the failure by
any Seller Party to perform any obligation of any Seller Party contained
herein or in any Company Related Document or Member Related Document;
(b) inaccuracy in or breach of any representation or warranty of the
Seller (in the case of the representations and warranties contained in
Section 4.1 of this Agreement or in any Company Related Document) or such
Member contained herein or in any Company Related Document or Member
Related Document;
(c) indemnification payments payable by Seller to Seller's present or
former officers, directors, managers, employees, agents, consultants,
advisors or representatives in respect of actions taken or omitted to be
taken prior to the Closing;
(d) any liability or obligation, fixed or contingent, direct or
indirect, known or unknown, of Seller other than those specifically assumed
by Buyer pursuant to Section 3.1;
(e) any act, omission, occurrence, event, condition or circumstance
occurring or existing at any time on or before the Closing Date and
involving or related to the assets, properties, business or operations now
or previously owned or operated by Seller and not assumed by Buyer under
Section 3.1; and
(f) any failure to comply with applicable bulk sales or bulk transfer
laws in connection with the transactions contemplated hereby.
Section 8.3 Indemnity by Parent. Subject to the provisions of Sections
8.1 and 8.4, Parent shall indemnify, save and hold harmless the Seller Parties
and their respective heirs, legal representatives, successors and assigns
(collectively, the "Seller Indemnified Parties") from and against all Losses
arising from, out of or in any manner connected with or based on:
20
(a) any breach of any covenant of the Buyer or Parent or the failure
by Buyer or Parent to perform any of its obligations contained herein or in
the Buyer Related Documents;
(b) any inaccuracy in or breach of any representation or warranty of
Buyer or Parent contained herein or in the Buyer Related Documents;
(c) any act, omission, event, condition or circumstance occurring or
existing at any time after (but not on or before) the Closing Date and
involving or relating to the assets, properties, businesses or operations
of Seller; provided, however, that, with respect to any Seller Indemnified
Party that is or becomes an officer, director and/or employee of Parent,
Buyer or any other affiliate of the Parent (such Seller Indemnified Party
being referred to herein as an "Indemnified Employee"), this clause (c)
shall not apply to any Losses of such Indemnified Employee to the extent
such Losses result form such Indemnified Employee's acts or omissions after
the Closing Date as an officer, director and/or employee of Parent, Buyer
or any other affiliate of the Parent.
(d) the obligations and liabilities of Seller assumed by Buyer under
Section 3.1.
The foregoing indemnities shall not limit or otherwise adversely affect the
Buyer Indemnified Parties' rights of indemnity for Losses under Section 8.2.
Section 8.4 Limitations. The aggregate liability of the Seller under
this Section 8 shall not exceed the cash amount equal to the Purchase Price and
the aggregate liability of any Member under this Section 8 shall not exceed the
cash amount equal to the Purchase Price multiplied by the ratio that such
Member's interest in the Seller bears to all outstanding interests in the Seller
as of the date hereof. Notwithstanding any other provision of this Agreement
but subject to the limitations set forth in this Section 8.4, (i) the Seller
Parties shall not be liable to the Buyer Indemnified Parties under this Section
8 regarding any Losses until the aggregate Losses exceed $15,000 (the
"Threshold"); provided, however, that when the aggregate amount of all Losses
reaches the Threshold, the Seller Parties shall thereafter be liable in full
regarding all such Losses in excess of the amount of the Threshold, and (ii) the
Buyer and Parent shall not be liable to the Seller Indemnified Parties under
this Section 8 regarding any Losses until the aggregate Losses exceed the
Threshold; provided, however, that when the aggregate amount of all such Losses
reaches the Threshold, the Buyer and the Parent shall thereafter be liable in
full regarding all such Losses in excess of the amount of the Threshold.
21
Section 8.5 Procedures for Indemnification.
(a) The party (the "Indemnified Party") that may be entitled to
indemnity hereunder shall give prompt notice to the 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 8.5(a) shall relieve the Indemnifying
Party of its obligations under this Article 8 only to the extent that such
Indemnifying Party has been prejudiced by the lack of timely and adequate notice
(except that the Indemnifying Party shall not be liable for any expenses
incurred by the Indemnified Party during the period in which the Indemnified
Party failed to give such notice). Thereafter, the Indemnified Party shall
deliver to the Indemnifying Party, promptly (and in any event within 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.
(b) Buyer shall have the obligation to assume the defense or
settlement of any third-party claim, suit, action or proceeding in respect of
which indemnity may be sought hereunder, provided that (i) Seller shall at all
times have the right, at its option, to participate fully therein, and (ii) if
Buyer 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, Seller shall have the right, but not the obligation,
to undertake the defense of any such third-party claim, suit, action or
proceeding.
(c) 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 Buyer 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 Buyer 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 8.5, the Indemnifying Party shall not be liable for
Losses arising from such
22
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.
(d) 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 (as defined in Exhibit 4.1) 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.
Section 8.6 Subrogation. Each Indemnifying Party hereby waives for
itself and its affiliates (as defined in Exhibit 4.1) any rights to subrogation
against any Indemnified Party or its insurers for Losses arising from any third-
party claims for which it is liable or against which it indemnifies any
Indemnified Party and, if necessary, each Indemnifying Party shall obtain
waivers of such subrogation from its, his or her insurers.
ARTICLE IX
MISCELLANEOUS
Section 9.1 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 Seller Parties:
United Service Alliance, L.C.
0000 X. Xxxxxxxxx Xxxx., Xxxxx 000
Xxxxxxxx, Xxxxxxxx 00000
Attention: Xxx Xxxxxx
Telecopy: (000) 000-0000
23
To Buyer:
Group Maintenance America Corp.
0000 Xxxx Xxxx Xxxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000
Attn: President
Telecopy: (000) 000-0000
or other such address as shall be furnished in writing by any such party to the
other 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 9.1 with respect
to matters arising under such other agreement, instrument or document, the
notice provision in such other agreement, instrument or document shall control.
Section 9.2 Further Documents. The Seller Parties shall, at any time
and from time to time after the date hereof, upon request by Buyer 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 Seller Parties hereunder.
Section 9.3 Assignability. The Seller Parties shall not assign this
Agreement in whole or in part without the prior written consent of Buyer, except
by the operation of law. Buyer may assign its rights under this Agreement, the
Company Related Documents and the Member Related Documents without the consent
of any Seller Party.
Section 9.4 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.
Section 9.5 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 (as defined in Exhibit 4.1).
Section 9.6 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
24
terms and conditions of their agreement relating to the subject matter hereof
and supersedes any and all prior agreements, whether written or oral, that may
exist between the parties with respect thereto. Except as otherwise specifically
provided in this Agreement, no conditions, usage of trade, course of dealing or
performance, understanding or agreement purporting to modify, vary, explain or
supplement the terms or conditions of this Agreement shall be binding unless
hereafter made in writing and signed by the party to be bound, and no
modification shall be effected by the acknowledgment or acceptance of documents
containing terms or conditions at variance with or in addition to those set
forth in this Agreement. No waiver by any party with respect to any breach or
default or of any right or remedy and no course of dealing shall be deemed to
constitute a continuing waiver of any other breach or default or of any other
right or remedy, unless such waiver be expressed in writing signed by the party
to be bound. Failure of a party to exercise any right shall not be deemed a
waiver of such right or rights in the future.
Section 9.7 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.
SECTION 9.8 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.
Section 9.9 Public Announcements. The Seller Parties hereby agree that
no Seller Party shall make any press release, public announcement, or public
confirmation or disclose any other information regarding this Agreement or the
contents hereof.
Section 9.10 No Third Party Beneficiaries. Except as set forth in
Article VIII, no person or entity not a party to this Agreement shall have
rights under this Agreement as a third party beneficiary or otherwise.
Section 9.11 Amendments and Waivers. This Agreement may be amended by
the Buyer and Seller to the extent permitted by applicable law; provided,
however, that no such amendment shall (a) alter or change any provision of this
Agreement, the alteration or change of which must be adopted by the Members
under the articles of organization of Seller or applicable law, or (b) alter or
change this Section 9.11, unless each such alteration or change is adopted by
the Members as may be required by the articles of organization of Seller or
applicable law. All amendments to this
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Agreement must be by an instrument in writing signed on behalf of Buyer and the
Seller Parties. Any term or provision of this Agreement (other than the
requirements for Member approvals) may be waived in writing at any time by the
party which is, or whose Members are, entitled to the benefits thereof.
Section 9.12 No Employee Rights. Nothing herein expressed or implied
shall confer upon any employee of Seller, 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.
Section 9.13 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 Buyer in this Agreement shall be
had against any incorporator, organizer, promoter, shareholder, officer,
director, employee or representative as such (other than the Seller Parties as
set forth herein), past, present or future, of Buyer, 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.
Section 9.14 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 Seller Parties and Buyer.
Section 9.15 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, Buyer and
Seller and their respective members of their Boards of Directors or other
governing bodies 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.
Section 9.16 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.
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Section 9.17 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.
Section 9.18 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.
Section 9.19 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.
Section 9.20 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.
IN WITNESS WHEREOF, this Agreement has been duly executed and delivered on
the date first hereinabove written.
PARENT:
GROUP MAINTENANCE AMERICA CORP.
By:
---------------------------------
Name:
---------------------------------
Title:
---------------------------------
BUYER:
UNITED ACQUISITION CORP.
By:
---------------------------------
Name:
---------------------------------
Title:
---------------------------------
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SELLER:
UNITED SERVICE ALLIANCE, L.C.
By:
---------------------------------
Name:
---------------------------------
Title:
---------------------------------
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MEMBERS:
XXXXX X. XXXXX TRUST SPECTRUM ENERGY ENGINEERS, INC.
By: By:
------------------------- ----------------------------
Name: Name:
------------------------- ----------------------------
Title: Title:
------------------------- ----------------------------
XXXX XXXXXXX REVOCABLE TRUST XXX COMPANY
DATED 1/24/91
By: By:
------------------------- ----------------------------
Name: Name:
------------------------- ----------------------------
Title: Title:
------------------------- ----------------------------
XXXXXXXXX-XXXXXX INC. ENERGY SYSTEMS IND., INC.
By: By:
------------------------- ----------------------------
Name: Name:
------------------------- ----------------------------
Title: Title:
------------------------- ----------------------------
XXXXX MECHANICAL, INC.
By:
------------------------- -------------------------------
Name: XXXXX X. XXXXXXX, an Individual
-------------------------
Title:
-------------------------
--------------------------------------------------------------------------------
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MEMBERS:
-------------------------------- --------------------------------
XXXXXX X. XXXXXX, an Individual XXXXXX X. XXXXXX, an Individual
30