EXHIBIT 10.21
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
GROUP MAINTENANCE AMERICA CORP.
MASTERS ACQUISITION CORP.
MASTERS, INC.
AND
THE HOLDER OF THE
OUTSTANDING CAPITAL STOCK
OF
MASTERS, 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 Written Consent of the Shareholder; 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
1.7 Exchange of and Payment for Stock........................................ 4
1.7.1 Delivery of Company Common Stock and Merger Consideration......... 4
1.7.2 Assignments....................................................... 4
1.7.3 Payment In Full Satisfaction of All Rights........................ 4
1.8 Determination of Total Consideration..................................... 4
1.8.1 Delivery of IPO Price to Public; Statement........................ 4
1.9 Cash Tax Distribution Addition........................................... 4
1.9.1 Determination and Payment of the Cash Tax Distribution Addition... 4
1.9.2 Statement......................................................... 5
1.9.3 Review............................................................ 5
1.9.4 Disputes.......................................................... 5
1.9.5 Resolution by Parties............................................. 5
1.9.6 Final Determination............................................... 5
2.REPRESENTATIONS AND WARRANTIES
OF THE COMPANY AND THE SHAREHOLDER............................................ 6
2.1 Exhibit 2................................................................ 6
2.2 Stock Ownership.......................................................... 6
2.3 Authority................................................................ 6
2.4 Consents................................................................. 6
3.REPRESENTATIONS AND WARRANTIES
OF THE PARENT AND MERGER SUB................................................... 6
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3.1 Representations and Warranties............................................. 6
3.1.1 Organization....................................................... 6
3.1.2 Capitalization of the Parent....................................... 7
3.1.3 Authority.......................................................... 7
3.1.4 Consents........................................................... 7
3.1.5 Defaults........................................................... 7
3.1.6 Investment Company................................................. 7
3.1.7 Financial Statements............................................... 7
3.1.8 Taxes.............................................................. 8
3.1.9 Full Authority..................................................... 8
3.1.10 Access............................................................. 8
3.1.11 Disclosure......................................................... 8
3.1.12 Parent Material Adverse Effect..................................... 8
3.1.13 Tax-Free Reorganization............................................ 8
3.1.14 Tax Elections...................................................... 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.............................. 10
4.1 Agreements of the Shareholder to be Effective Upon Closing................. 10
4.1.1 Covenant Not to Compete............................................ 10
4.1.2 Release............................................................ 11
4.2 Audit...................................................................... 11
4.3 Certain Payables and Receivables........................................... 11
4.4 Pre-Closing Covenants and Agreements....................................... 11
4.5 Confidentiality............................................................ 11
4.6 Tax-Free Reorganization.................................................... 12
4.7 Company Plans.............................................................. 12
4.8 Guaranteed Indebtedness.................................................... 12
4.9 HSR Act.................................................................... 12
4.10 Coverage for License Holders............................................... 12
4.11 Dynamic Software........................................................... 12
4.12 Accounts Receivable........................................................ 13
5.CONDITIONS PRECEDENT; CLOSING DELIVERIES........................................... 13
5.1 Conditions Precedent to the Obligations of the Parent and Merger Sub....... 13
5.1.1 Accuracy of Representations and Warranties.......................... 13
5.1.2 Performance of Covenants............................................ 13
5.1.3 Legal Actions or Proceedings........................................ 13
5.1.4 Approvals........................................................... 13
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5.1.5 Closing Deliveries................................................... 13
5.1.6 No Casualty, Loss or Damage.......................................... 13
5.1.7 Licenses, etc........................................................ 14
5.1.8 No Material Adverse Change........................................... 14
5.1.9 IPO.................................................................. 14
5.1.10 Certain Corporate Actions............................................ 14
5.1.11 Financing............................................................ 14
5.1.12 HSR Act.............................................................. 14
5.1.13 Closing of Asset Purchase and Sale................................... 14
5.2 Conditions Precedent to the Obligations of the Shareholder and the Company.. 14
5.2.1 Accuracy of Representations and Warranties........................... 14
5.2.2 Performance of Covenants............................................. 14
5.2.3 Approvals............................................................ 15
5.2.4 Closing Deliveries................................................... 15
5.2.5 HSR Act.............................................................. 15
5.2.6 Closing of Asset Purchase and Sale................................... 15
5.3 Deliveries by the Shareholder at the Closing................................ 15
5.3.1 Closing Certificates................................................. 15
5.3.2 Stock Transfer Restriction Agreement................................. 15
5.3.3 Employment Agreements................................................ 15
5.3.4 Lease Agreement...................................................... 15
5.3.5 Registration Rights Agreement........................................ 15
5.3.6 Opinion of Counsel for the Shareholder and the Company............... 15
5.3.7 Documents, Stock Certificates........................................ 16
5.3.8 Discharge of Notes and Leases; Releases, Etc......................... 16
5.4 Deliveries by the Parent at the Closing..................................... 16
5.4.1 Closing Certificates................................................. 16
5.4.2 Registration Rights Agreement........................................ 16
5.4.3 Opinion of Counsel for the Parent and Merger Sub..................... 16
5.4.4 Merger Consideration................................................. 17
6.SURVIVAL, INDEMNIFICATIONS.......................................................... 17
6.1 Survival.................................................................... 17
6.2 Indemnification............................................................. 17
6.2.1 Parent Indemnified Parties........................................... 17
6.2.2 Parent Indemnity..................................................... 18
6.3 Limitations................................................................. 19
6.4 Procedures for Indemnification.............................................. 19
6.4.1 Notice............................................................... 19
6.4.2 Legal Defense........................................................ 19
6.4.3 Settlement........................................................... 19
6.4.4 Cooperation.......................................................... 20
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6.5 Subrogation................................................................ 20
6.6 Warranty Work............................................................... 20
7.TERMINATION......................................................................... 20
7.1 Grounds for Termination..................................................... 20
7.1.1 Mutual Consent....................................................... 20
7.1.2 Optional By the Company.............................................. 20
7.1.3 Optional By the Parent............................................... 20
7.1.4 Breach By the Parent or Merger Sub................................... 21
7.1.5 Breach by the Company or the Shareholder............................. 21
7.2 Effect of Termination....................................................... 21
8.MISCELLANEOUS....................................................................... 21
8.1 Notice...................................................................... 21
8.2 Further Documents........................................................... 22
8.3 Assignability............................................................... 22
8.4 Exhibits and Schedules...................................................... 22
8.5 Sections and Articles....................................................... 22
8.6 Entire Agreement............................................................ 22
8.7 Headings.................................................................... 22
8.8 CONTROLLING LAW............................................................. 22
8.9 Public Announcements........................................................ 23
8.10 No Third Party Beneficiaries................................................ 23
8.11 Amendments and Waivers...................................................... 23
8.12 No Employee Rights.......................................................... 23
8.13 Non-Recourse................................................................ 23
8.14 When Effective.............................................................. 23
8.15 Takeover Statutes........................................................... 23
8.16 Number and Gender of Words.................................................. 24
8.17 Invalid Provisions.......................................................... 24
8.18 Multiple Counterparts....................................................... 24
8.19 No Rule of Construction..................................................... 24
8.20 Expenses.................................................................... 24
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LIST OF EXHIBITS
Exhibit 1...............................................Determination of Final Merger Consideration
Exhibit 1.5.1..................................Written Consent of Sole Shareholder of Masters, Inc.
Exhibit 1.5.2......................Written Consent of Sole Shareholder of Masters 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............................................Equipment to be Purchased by the Shareholder
Exhibit 4.3.......................................................................Certain Covenants
Exhibit 4.7.......................................................Company Plans to Remain in Effect
Exhibit 4.8.................................................................Guaranteed Indebtedness
Exhibit 5.3.2..................................................Stock Transfer Restriction Agreement
Exhibit 5.3.3A.................................................................Employment Agreement
Exhibit 5.3.4.......................................................................Lease Agreement
Exhibit 5.3.5.........................................................Registration Rights Agreement
Exhibit 5.3.6.................................Opinion of Counsel to the Shareholder and the Company
Exhibit 5.3.8................................................................Terminated Obligations
Exhibit 5.4.3......................................................Opinion of Counsel to the Parent
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INDEX OF DEFINED TERMS
Page
Accountants........................................................................... 5
Agreement............................................................................. 1
Applicable Corporate Law.............................................................. 1
Central Asset Purchase Agreement..................................................... 14
Closing............................................................................... 1
Closing Date.......................................................................... 1
Code.................................................................................. 1
Company............................................................................... 1
Company Common Stock.................................................................. 1
Converted Shares...................................................................... 3
Effective Time........................................................................ 1
HSR Act.............................................................................. 12
Indemnified Party.................................................................... 19
Indemnifying Party................................................................... 19
IPO................................................................................... 2
Losses............................................................................... 18
Merger................................................................................ 1
Merger Sub............................................................................ 1
Minimum Proceeds...................................................................... 2
Notice of Dispute..................................................................... 5
Parent................................................................................ 1
Parent Common Stock................................................................... 1
Parent Financial Statements........................................................... 7
Parent Indemnified Parties........................................................... 18
Parent Material Adverse Effect........................................................ 8
Parent Preferred Stock................................................................ 7
Parent Related Documents.............................................................. 7
Price Notice.......................................................................... 4
Registration Statement................................................................ 7
SEC................................................................................... 7
Settlement Notice.................................................................... 19
Shareholder........................................................................... 1
Shareholder Related Document.......................................................... 6
Statement of Closing Consideration.................................................... 4
Statement of Final Amount............................................................. 5
Stock Certificates.................................................................... 3
Survival Period...................................................................... 17
Surviving Corporation................................................................. 1
Terminated Obligations............................................................... 16
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Total Consideration........................................................... Exhibit 1
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"), Masters Acquisition Corp., a Maryland corporation
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("Merger Sub"), Masters, Inc., a Maryland corporation (the "Company"), and the
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undersigned holder of all of the outstanding capital stock of the Company (the
"Shareholder").
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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 Maryland and pursuant to the Merger each issued and outstanding share
of Common Stock, $1.00 par value per share, of the Company ("Company Common
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Stock") will be converted into the right to receive certain shares of common
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stock, $.001 par value per share, of the Parent ("Parent Common Stock"), and
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certain cash consideration, all as provided herein;
WHEREAS, the Merger has been approved, as required by applicable law, by
the Parent, acting as sole shareholder of Merger Sub, and by the Shareholder, as
the holder of all of the outstanding capital stock of the Company;
WHEREAS, for federal income tax purposes, it is intended that the Merger
shall qualify as a reorganization within the meaning of Section 368(a) of the
Internal Revenue Code of 1986, as amended (the "Code").
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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 Maryland General Corporation Law (the "Applicable Corporate
--------------------
Law") upon the Effective Time (as defined in Section 1.2), the Company shall be
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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
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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 Department of
Assessments and Taxation of Maryland immediately following and on the same day
as 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 & ▇▇▇▇▇▇▇▇▇, 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 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
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aggregate 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
purposes of financing any acquisitions by the Parent or any of its subsidiaries,
(ii) the aggregate redemption prices for the redemption of 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 connection 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
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Company shall merge with and into Merger Sub and as a result thereof, the
separate existence of the Company shall cease, (ii) the Articles of
Incorporation of Merger Sub, as in effect immediately prior to the Effective
Time, shall be the Articles of Incorporation of the Surviving Corporation,
except that the Articles of Incorporation of Merger Sub shall be amended to
provide that the name of the Surviving Corporation shall be changed to "Masters,
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 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 each 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 by or 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 Written Consent of the Shareholder; Other Matters.
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Contemporaneously with the execution hereof, the Shareholder (i) is executing
and delivering to the Company a Written Consent in substantially the form of
Exhibit 1.5.1 attached hereto, and (ii) hereby acknowledges that he is aware of
his dissenter's or appraisal rights with respect to the Merger and his receipt
of a copy of the provisions of Section 3-202 of the Applicable Corporate Law and
has elected not to exercise such rights.
1.5.2 Written Consent of the Sole Shareholder of Merger Sub.
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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. The Shareholder's shares of Company
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Common Stock (other than shares to be canceled in accordance with Section 1.6.2)
shall be converted into the right to receive (i) that number of shares of Parent
Common Stock equal to the Final Common Stock Amount (as defined in Exhibit 1
attached hereto), and (ii) cash equal to the Final Cash Amount (as defined in
Exhibit 1 attached hereto). The shares of Company Common Stock so converted into
the right to receive cash equal to the Final Cash Amount and shares of Parent
Common Stock equal to the Final Common Stock Amount (the "Converted Shares")
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shall, by virtue of the Merger and without any action on the part of the holder
thereof, at the Effective Time no longer be outstanding and shall at such time
be canceled and retired and shall cease at such time to exist, and the holder of
certificates which prior to the Effective Time validly evidenced the Converted
Shares (the "Stock Certificates") shall thereafter cease to have any rights with
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respect to such Converted Shares, except, upon the surrender of the Stock
Certificates and a duly executed and completed letter of transmittal in
accordance with Section 1.7, the right to receive such cash and Parent Common
Stock at the times and in the manner set forth herein.
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1.7 Exchange of and Payment for Stock.
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1.7.1 Delivery of Company Common Stock and Merger Consideration.
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At the Closing, the Parent will deliver to the Shareholder a letter of
transmittal, in substantially the form attached hereto as Exhibit 1.7, to be
used for the purpose of surrendering to the Parent Stock Certificates in
exchange for the right to receive the Final Cash Amount and the Final Common
Stock Amount for the Converted Shares evidenced by such Stock Certificates. All
of the Company Common Stock held by the Shareholder will be surrendered by the
Shareholder to the Parent together with properly completed and executed letters
of transmittal (with each such signature notarized by a notary public or similar
official reasonably satisfactory to the Parent), and the Parent shall cause to
be delivered to the Shareholder at the Closing the Final Cash Amount and the
Final Common Stock Amount applicable to the Converted Shares evidenced by the
Stock Certificates properly surrendered (with properly executed and completed
letters of transmittal) by the Shareholder to the Parent.
1.7.2 Assignments. Except for the granting of options to
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employees of the Company and the exercise or assignment thereof as permitted by
Section 4.10, the assignment, transfer or other disposition of record or
beneficial ownership of any shares of Company Common Stock may not be made on or
after the date hereof.
1.7.3 Payment In Full Satisfaction of All Rights. The delivery
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of the Final Cash Amount and the Final Common Stock Amount to the Shareholder
with respect to his Converted Shares shall be deemed to be payment in full
satisfaction of all rights pertaining to the outstanding Converted Shares except
for the right to receive additional cash pursuant to Section 1.9.
1.8 Determination of Total Consideration.
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1.8.1 Delivery of IPO Price to Public; Statement. After the
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Parent and its underwriters agree on the initial price to the public for a share
of Parent Common Stock offered in the IPO, as set forth in an executed
underwriting agreement, at the Closing the Parent shall deliver to the
Shareholder a written notice (the "Price Notice") setting forth such initial
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price to the public as set forth in an executed underwriting agreement between
the Parent and its underwriters and a statement setting forth a calculation of
the Final Cash Amount, the Final Common Stock Amount and the Total Consideration
(as defined in Exhibit 1 attached hereto), payable to the Shareholder at Closing
(the "Statement of Closing Consideration"). The initial price to the public of a
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share of Parent Common Stock, as set forth in the Price Notice, and the Final
Cash Amount, the Final Common Stock Amount and the Total Consideration, as set
forth in the Statement of Closing Consideration, shall be final, conclusive and
binding for purposes of this Agreement.
1.9 Cash Tax Distribution Addition.
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1.9.1 Determination and Payment of the Cash Tax Distribution
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Addition. The term "Cash Tax Distribution Addition" means the amount estimated
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by the Shareholder and the Parent of federal and state income taxes, including
any alternative minimum tax owed by the Shareholder, attributable to the
operations of the Company during the period from July 1, 1997 through the
Closing Date and not already withdrawn from the Company by the Shareholder. Such
estimated Cash Tax Distribution Addition shall be distributed to the Shareholder
prior to the Closing from the Company's accumulated adjustment account.
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In the event there remains a balance in the Company's accumulated adjustment
account after such distribution of the Cash Tax Distribution Addition, such
balance shall be distributed to the Shareholder prior to Closing and the amount
of such distribution of the balance of the accumulated adjustment account shall
reduce the Final Cash Amount. The payment of the Cash Tax Distribution Addition
shall not result in any additional income tax to the Shareholder. In the event
such payment results in additional income tax to the Shareholder, the Parent
shall pay the Shareholder a one-time amount by formula to cover such additional
tax.
1.9.2 Statement. Within 120 days following the Closing, the
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Parent shall determine the actual amount of the Cash Tax Distribution Addition
and set forth such amount on the Statement of Final Amount (the "Statement of
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Final Amount").
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1.9.3 Review. After delivery to the Shareholder of the Statement
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of Final Amount, the Shareholder and his representatives shall be afforded the
opportunity to review and inspect all of the financial records, work papers,
schedules and other supporting papers relating to the preparation of the
Statement of Final Amount, and to consult with the Parent and its
representatives regarding the methods used in the preparation of the Statement
of Final Amount.
1.9.4 Disputes. The Statement of Final Amount shall be final,
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conclusive and binding for purposes of this Agreement, unless the Shareholder
shall deliver to the Parent a written notice of disagreement ("Notice of
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Dispute") with any item or items in the Statement of Final Amount within 10
business days following receipt of the Statement of Final Amount, specifying in
reasonable detail the nature and extent of such disagreement. If a Notice of
Dispute is not properly given within such time, the Cash Tax Distribution
Addition as set forth in the Statement of Final Amount shall be final,
conclusive and binding for purposes of this Agreement.
1.9.5 Resolution by Parties. If a Notice of Dispute is properly
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given, the Parent and the Shareholder agree to negotiate in good faith and use
their best efforts to resolve any disagreement with respect to the Statement of
Final Amount. If the Parent and the Shareholder shall not reach such resolution
within 30 days following receipt by the Parent of a properly given Notice of
Dispute, Ernst & Young (the "Resolution Accountants") shall resolve such dispute
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within 30 days after its submission to them. The Parent and the Shareholder (if
the dispute is resolved by them or the Statement of Final Amount otherwise
becomes final pursuant hereto without referral to the Resolution Accountants) or
the Resolution Accountants (if a dispute is resolved by them) shall set forth
such resolution in writing and such writing shall (i) set forth the Cash Tax
Distribution Addition and (ii) be final, conclusive and binding for purposes of
this Agreement.
1.9.6 Final Determination. Within 10 business days following
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the final determination of the Cash Tax Distribution Addition in this Section
1.9, (i) the Parent shall deliver to the Shareholder the cash amount, if any, by
which the actual amount of the Cash Tax Distribution Addition as determined by
this Section 1.9 exceeds the estimated Cash Tax Distribution Addition, or (ii)
the Shareholder shall deliver to Parent the cash amount, if any, by which the
estimated Cash Tax Distribution Addition exceeds the amount of the actual Cash
Tax Distribution Addition determined by this Section 1.9 pursuant hereto. The
Parent and the Shareholder shall each pay their own costs incurred in connection
with this Section 1.9, including the fees and expenses of their respective
attorneys and accountants, if any.
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2. REPRESENTATIONS AND WARRANTIES
OF THE COMPANY AND THE SHAREHOLDER
The Company and the Shareholder, jointly and severally, hereby represent
and warrant to the Parent and Merger Sub as follows:
2.1 Exhibit 2. The statements in Exhibit 2 attached hereto are true and
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correct.
2.2 Stock Ownership. The Shareholder owns, beneficially and of record,
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with full power to vote, the number of shares of Company Common Stock set forth
beside the Shareholder's name on Exhibit 2.2 and such shares are so held by the
Shareholder free and clear of all liens, encumbrances and adverse claims
whatsoever.
2.3 Authority. The Shareholder has full right, power, legal capacity and
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authority to (i) execute, deliver and perform this Agreement, and all other
documents and instruments referred to herein or contemplated hereby to be
executed, delivered and performed by the Shareholder (each a "Shareholder
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Related Document") and (ii) consummate the transactions contemplated herein and
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thereby. This Agreement has been duly executed and delivered by the Shareholder
and constitutes, and each Shareholder Related Document, when duly executed and
delivered by the Shareholder will constitute, legal, valid and binding
obligations of the Shareholder enforceable against the Shareholder in accordance
with their respective terms and conditions, except as such enforcement may be
limited by bankruptcy, insolvency, reorganization, moratorium or other similar
laws affecting the enforcement of creditors' rights generally and by general
principles of equity (whether applied in a proceeding at law or in equity).
2.4 Consents. No approval, consent, order or action of or filing with any
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court, administrative agency, governmental authority or other third party
(except as shall be obtained prior to Closing) is required for the execution,
delivery or performance by the Shareholder of this Agreement or any Shareholder
Related Document. The execution, delivery and performance by the Shareholder of
this Agreement and the Shareholder Related Documents do not violate any
mortgage, indenture, contract, agreement, lease or commitment or other
instrument of any kind to which the Shareholder is a party or by which the
Shareholder or the Shareholder's assets or properties may be bound or affected
or any law, rule or regulation applicable to the Shareholder or any court
injunction, order or decree or any valid and enforceable order of any
governmental agency in effect as of the date hereof having jurisdiction over the
Shareholder.
3. REPRESENTATIONS AND WARRANTIES
OF THE PARENT AND MERGER SUB
3.1 Representations and Warranties. The Parent hereby represents and
------------------------------
warrants to the Shareholder and the Company as follows:
3.1.1 Organization. The Parent is a corporation duly organized,
------------
validly existing and in good standing under the laws of the State of Texas. The
Parent is duly qualified or licensed as a foreign corporation authorized to do
business in all states in which any of its assets or properties may be situated
or where its business is conducted except where the failure to obtain such
qualification or license would not have a Parent Material Adverse Effect (as
defined below).
-6-
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 dated August ___, 1997. The
outstanding shares of Parent Common Stock and Preferred Stock, par value $.001,
of Parent ("Parent Preferred Stock") have been duly and validly issued and are
-----------------------
fully paid and non-assessable.
3.1.3 Authority. The Parent has the requisite power and
---------
authority to execute, deliver and perform this Agreement and all documents and
instruments referred to herein or contemplated hereby (the "Parent Related
Documents") and to consummate the transactions contemplated herein and thereby.
---------
This Agreement has been duly executed and delivered by the Parent and
constitutes, and all the Parent Related Documents, when executed and delivered
by the Parent will constitute, legal, valid and binding obligations of the
Parent, enforceable in accordance with their respective terms and conditions
except as such enforcement may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting the enforcement of
creditors' rights generally and by general principles of equity (whether applied
in a proceeding at law or in equity).
3.1.4 Consents. 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 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 Department of Assessments and Taxation of Maryland.
3.1.5 Defaults. The Parent is not in default under or in
--------
violation of,and the execution, delivery and performance of this Agreement and
the Parent Related Documents and the consummation by the Parent of the
transactions contemplated hereby and thereby will not result in a default under
or in violation of (i) any mortgage, indenture, charter or bylaw provision,
contract, agreement, lease, commitment or other instrument of any kind to which
the Parent is a party or by which the Parent or any of its properties or assets
may be bound or affected or (ii) any law, rule or regulation applicable to the
Parent or any court injunction, order or decree, or any valid and enforceable
order of any governmental agency in effect as of the date hereof having
jurisdiction over the Parent, which default or violation prevents the Parent
from consummating the transactions contemplated hereby or is reasonably likely
to have a Parent Material Adverse Effect.
3.1.6 Investment Company. The Parent is not an "investment
------------------
company or a company "controlled" by an "investment company" within the meaning
of the Investment Company Act of 1940, as amended, or a "holding company," a
"subsidiary company" of a "holding company" or an "affiliate" of a "holding
company" or a "public utility" within the meaning of the Public Utility Holding
Company Act of 1935, as amended.
3.1.7 Financial Statements. The Parent has provided certain
--------------------
financial statements to the Shareholder ("Parent Financial Statements") and
---------------------------
such Parent Financial Statements have been prepared in
-7-
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 Law), ordinances, rules and regulations
of any governmental agency of the United States, any state or political
subdivision thereof, or any foreign jurisdiction, all applicable court or
administrative agency decrees, awards and orders and all such licenses, permits,
qualifications and other documentation, except where the failure to comply will
not have a Parent Material Adverse Effect, and there is no existing condition or
state of facts that would give rise to a violation thereof or a liability or
default thereunder that is reasonably likely to have a Parent Material Adverse
Effect.
3.1.10 Access. The Parent has cooperated fully in permitting the
------
Shareholder and his representatives to make a full investigation of the
properties, operations and financial condition of the Parent and has afforded
the Shareholder and his representatives reasonable access to the offices,
buildings, real properties, machinery and equipment, inventory and supplies,
records, files, books of account, tax returns, agreements and commitments and
personnel of Parent.
3.1.11 Disclosure. No representation or warranty by the Parent in
----------
this Agreement, and no statement contained in any certificate delivered by the
Parent to the Shareholder pursuant to this Agreement, contains any untrue
statement of a material fact or omits any material fact necessary in order to
make the statements herein or therein, in light of the circumstances under which
they are or were made, not misleading.
3.1.12 Parent Material Adverse Effect. The term "Parent Material
------------------------------ ---------------
Adverse Effect" shall mean an adverse effect on the properties, assets,
--------------
financial position, results of operations, long-term debt, other indebtedness,
cash flows or contingent liabilities of the Parent and its consolidated
subsidiaries, taken as a whole, in an amount of $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:
-8-
(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 Total Consideration received by the Shareholder
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.
3.1.14 Tax Elections. The Shareholder agrees that he shall not,
-------------
without the Parent's prior written consent, make any retroactive tax election or
other amendment or supplement to any of the Company's or the Shareholder's tax
returns with any local, state, Federal or foreign governmental authority
following the Merger or take any other action that could reasonably be expected
to have an adverse tax impact on the Parent or the Surviving Corporation
following the Effective Time. The Parent agrees that it shall not, without the
Shareholder's prior written consent, make any retroactive tax election or other
amendment or supplement to any of the Surviving Corporation's tax returns with
any local, state, Federal or
-9-
foreign governmental authority following the Merger or take any other action
that could reasonably be expected to have an adverse tax impact on the
Shareholder following the Effective Time.
3.2 Representations and Warranties Concerning the Merger Sub. The Parent
--------------------------------------------------------
and Merger Sub, jointly and severally, hereby represent and warrant to the
Shareholder and the Company as follows:
3.2.1 Organization and Standing. Merger Sub is a corporation duly
-------------------------
incorporated, validly existing and in good standing under the laws of the State
of Maryland.
3.2.2 Capital Structure. The authorized capital stock of Merger
-----------------
Sub consists of 5,000 shares of common stock, par value $.01 per share, 1,000 of
which are validly issued and outstanding, fully paid and nonassessable and are
owned by the Parent free and clear of all liens, encumbrances and adverse
claims.
3.2.3 Authority. Merger Sub has the corporate power and
---------
authority to execute, deliver and perform this Agreement and to consummate the
transactions contemplated hereby. The execution and delivery of this Agreement,
the performance by Merger Sub of its obligations hereunder and the consummation
of the transactions contemplated hereby have been duly authorized by its Board
of Directors and the Parent as its sole shareholder, and, except for the
corporate filings required by state law, no other corporate proceedings on the
part of Merger Sub are necessary to authorize this Agreement and the transaction
contemplated hereby. This Agreement has been duly and validly executed and
delivered by Merger Sub and (assuming the due authorization, execution and
delivery hereof by the Company) constitutes a valid and binding obligation of
Merger Sub enforceable against Merger Sub in accordance with its terms, except
as such enforcement may be limited by bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting the enforcement of creditors' rights
generally and by general principles of equity (whether applied in a proceeding
at law or in equity).
4. CERTAIN COVENANTS, AGREEMENTS AND PRE-CLOSING MATTERS
4.1 Agreements of the Shareholder to be Effective Upon Closing. Effective
----------------------------------------------------------
upon Closing, and without further action on the part of any party or other
person, the Shareholder covenants and agrees as follows:
4.1.1 Covenant Not to Compete.
-----------------------
(i) For the considerations specified in this Agreement and in
recognition that the covenants by the Shareholder in this Section are a
material inducement to the Parent to enter into and perform this Agreement,
the Shareholder agrees that for the period from the Closing Date to the
later to occur of (a) the date which is five years after the Closing Date
or (b) the date which is two years following any termination of the
Shareholder's employment with the Company, the Shareholder will not
represent, engage in, carry on, or have a financial interest in, directly
or indirectly, individually, as a member of a partnership or limited
liability company, equity owner, shareholder (other than as a shareholder
of less than one percent of the issued and outstanding stock of a publicly-
held company whose gross assets exceed $100 million), investor, officer,
director, trustee, manager, employee, agent, associate or consultant engage
in any business that engages in
-10-
the installation, construction and maintenance of heating, ventilation, air
conditioning systems, fire sprinklers or plumbing within a 100 mile radius
of Gaithersburg, Maryland.
(ii) The Shareholder agrees that the limitations set forth
therein on the Shareholder's rights to compete with the Parent and its
affiliates as set forth in clause (i) are reasonable and necessary for the
protection of Parent and its affiliates. In this regard, the Shareholder
specifically agrees that the limitations as to period of time and
geographic area, as well as all other restrictions on the Shareholder's
activities specified herein, are reasonable and necessary for the
protection of the Parent and its affiliates. The Shareholder agrees that,
in the event that the provisions of this Section should ever be deemed to
exceed the scope of business, time or geographic limitations permitted by
applicable law, such provisions shall be and are hereby reformed to the
maximum scope of business, time or geographic limitations permitted by
applicable law.
(iii) The Shareholder agrees that the remedy at law for any breach
by the Shareholder of this Section 4.1.1 will be inadequate and that the
Parent shall be entitled to injunctive relief.
4.1.2 Release. Effective as of the Effective Time, the
-------
Shareholder does hereby (i) release, acquit and forever discharge the Surviving
Corporation from any and all liabilities, obligations, claims, demands, actions
or causes of action arising from or relating to any event, occurrence, act,
omission or condition occurring or existing on or prior to the Effective Time,
including, without limitation, any claim for indemnity or contribution from the
Surviving Corporation in connection with the obligations or liabilities of the
Shareholder hereunder, except for salary and benefits payable to the Shareholder
as an employee in the ordinary course of business; (ii) waive all breaches,
defaults or violations of any agreement applicable to the Company Common Stock
and agree that any and all such agreements are terminated as of the Effective
Time, and (iii) waive any and all preemptive or other rights to acquire any
shares of capital stock of the Company and release any and all claims arising in
connection with any prior default, violation or failure to comply with or
satisfy any such preemptive or other rights.
4.2 Audit. Prior to Closing, the Company's accountants shall complete an
-----
audit of the Company for the fiscal year ended December 31, 1996 and for the
period from such date to June 30, 1997 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 Shareholder.
4.3 Certain Payables and Receivables. On or prior to Closing, the
--------------------------------
Shareholder shall pay in full in cash all accounts receivable, notes receivable
and advances payable by the 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 the Shareholder.
4.4 Pre-Closing Covenants and Agreements. The Shareholder and the Company
------------------------------------
jointly and severally agree as set forth in Exhibit 4.4 attached hereto.
4.5 Confidentiality. Prior to the Effective Time, none of the Parent,
---------------
Merger Sub, the Company or the Shareholder will disclose the terms of this
Agreement or the Merger to any person other than their respective directors,
officers, agents, representatives, banks or bonding companies except as
otherwise provided herein or unless required by law. The Company may make
appropriate disclosures of the general
-11-
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.
4.6 Tax-Free Reorganization. Unless the other parties shall otherwise
-----------------------
agree in writing, none of the Shareholder, the Parent, Merger Sub, the Company
or the Surviving Corporation shall knowingly take or fail to take any action
that would jeopardize the qualification of the Merger as a reorganization within
the meaning of Section 368(a) of the Code.
4.7 Company Plans. Except as otherwise contemplated by this Agreement,
-------------
the Company Plans (as defined in Exhibit 2) described on Exhibit 4.7 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.
4.8 Guaranteed Indebtedness. The Parent agrees to cause, within 30 days
-----------------------
after Closing, the Shareholder to be released from any personal liability he may
have under the guaranties listed on Exhibit 4.8 attached hereto.
4.9 HSR Act. The Parent, the Shareholder and the Company shall take all
-------
reasonable actions necessary to make all filings, if any, required under the
▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of 1976, as amended ("HSR Act") in
-------
connection with the transactions contemplated hereby and to obtain the
termination or expiration of the waiting period thereunder. The Parent shall
prepare and pay for the filing under the HSR Act.
4.10 Coverage for License Holders. The Parent and the Company shall cause
----------------------------
employees of the Company who hold trade licenses for the benefit of the Company
to be named in the Company's commercial general liability policies of insurance
as additional insureds. The Company shall provide the Parent with the names of
such licensees, in writing, prior to the Closing. The Surviving Corporation
shall hold such licensees harmless from any and all liability as a result of
their use of such licenses for the benefit of the Surviving Corporation.
4.11 Dynamic Software. Prior to the Closing, the Shareholder shall cause
----------------
the Company to obtain an exclusive worldwide royalty free license for the
software created by Dynamic Software currently utilized by the Company. The
Shareholder shall provide evidence on Schedule 4.11 of the Disclosure Schedule
satisfactory to the Parent that, other than licenses, without the right to
sublicense, granted to Cape Coral Plumbing, Dynamic Software has granted no
other license for and has granted no right to sublicense such software.
-12-
4.12 Accounts Receivable. There shall be no adjustment hereunder for
-------------------
Company accounts or notes receivable that are uncollectible.
5. CONDITIONS PRECEDENT; CLOSING DELIVERIES
5.1 Conditions Precedent to the Obligations of the Parent and Merger Sub.
--------------------------------------------------------------------
The obligations of the Parent and Merger Sub to effect the Merger under this
Agreement are subject to the satisfaction of each of the following conditions,
unless waived by the Parent in writing to the extent permitted by applicable
law:
5.1.1 Accuracy of Representations and Warranties. The representations
------------------------------------------
and warranties of the Shareholder and the Company contained in this Agreement,
in Exhibit 2 and the Disclosure Schedule referred to therein and the other
Exhibits provided by the Shareholder or the Company pursuant to this Agreement
or in any closing certificate or document delivered to the Parent pursuant
hereto shall be true and correct at and as of the Closing Date as though made at
and as of that time other than such representations and warranties as are
specifically made as of another date, and the Shareholder and the Company shall
each have delivered to the Parent and Merger Sub a certificate to that effect.
5.1.2 Performance of Covenants. The Shareholder and the Company shall
------------------------
have performed and complied with all covenants of this Agreement to be performed
or complied with by them at or prior to the Closing Date, and the Shareholder
and the Company shall each have delivered to the Parent and Merger Sub a
certificate to that effect.
5.1.3 Legal Actions or Proceedings. No legal action or proceeding
----------------------------
shall have been instituted after the date hereof against the Company or against
the Parent or Merger Sub arising by reason of the acquisition of the Company
pursuant to this Agreement, which is reasonably likely (i) to restrain, prohibit
or invalidate the consummation of the transactions contemplated by this
Agreement, (ii) to have a Company Material Adverse Effect or (iii) to have a
Parent Material Adverse Effect after giving effect to the consummation of the
transactions contemplated by this Agreement, and the Shareholder and the Company
shall each have delivered to the Parent and Merger Sub a certificate to that
effect.
5.1.4 Approvals. The Company and the Shareholder shall have procured
---------
all of the consents, approvals and waivers of third parties or any regulatory
body or authority, whether required contractually or by applicable law or
otherwise necessary for the execution, delivery and performance of this
Agreement (including the Company Related Documents and the Shareholder Related
Documents) by the Company and the Shareholder prior to the Closing Date, and the
Shareholder and the Company shall each have delivered to the Parent and the
Merger Sub a certificate to that effect.
5.1.5 Closing Deliveries. All documents required to be executed or
------------------
delivered at Closing by the Shareholder pursuant to Section 5.3 of this
Agreement shall have been so executed and delivered.
5.1.6 No Casualty, Loss or Damage. No casualty, loss or damage shall
---------------------------
have occurred on or prior to the Effective Time to any of the properties or
assets of the Company which would have a Company Material Adverse Effect.
-13-
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
-------------------------
shareholder resolutions, waivers and consents required to consummate the
transactions contemplated hereunder shall have been executed and delivered.
5.1.11 Financing. The Parent shall have obtained financing on terms
---------
and in amounts reasonably acceptable to it, to finance the payment of the cash
portion of the aggregate of the Final Per Share Cash Amounts and the ongoing
financing needs of the Surviving Corporation, and such financing shall be
available.
5.1.12 HSR Act. All required filings, if any, under the HSR Act with
-------
respect to the transactions contemplated hereby shall have been made and the
waiting periods thereunder shall have been terminated or shall have expired.
5.1.13 Closing of Asset Purchase and Sale. The Parent shall have been
----------------------------------
satisfied that the closing under that certain Asset Purchase Agreement of even
date herewith among Parent, Merger Sub and Central Equipment Rental Associates
II (the "Central Asset Purchase Agreement") has occurred or will occur
--------------------------------
contemporaneously with or immediately after the Effective Time.
5.2 Conditions Precedent to the Obligations of the Shareholder and the
------------------------------------------------------------------
Company. The obligations of the Shareholder and the Company under this
-------
Agreement are subject to the satisfaction of each of the following conditions,
unless waived by the Shareholder and the Company in writing 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 Shareholder or the Company
pursuant hereto shall be true and correct on and as of the Closing Date as
though made at and as of that date other than such representations and
warranties as are specifically made as of another date, and the Parent and
Merger Sub shall have delivered to the Shareholder and the Company a certificate
to that effect.
5.2.2 Performance of Covenants. The Parent and Merger Sub shall have
------------------------
performed and complied with all covenants of this Agreement to be performed or
complied with by them at or prior to the Closing Date and the Parent and Merger
Sub shall have delivered to the Shareholder and the Company a certificate to
such effect.
-14-
5.2.3 Approvals. The Parent shall have procured all of the consents,
---------
approvals and waivers specified in Exhibit 3.1.4 prior to the Closing Date, and
the Parent shall have delivered to the Shareholder and the Company a certificate
to that effect.
5.2.4 Closing Deliveries. All documents required to be executed or
------------------
delivered at Closing by the Parent pursuant to Section 5.4 of this Agreement
shall have been so executed and delivered.
5.2.5 HSR Act. All required filings, if any, under the HSR Act with
-------
respect to the transactions contemplated hereby shall have been made and the
waiting periods thereunder shall have been terminated or shall have expired.
5.2.6 Closing of Asset Purchase and Sale. The Shareholder shall have
----------------------------------
been satisfied that the closing under the Central Asset Purchase Agreement has
occurred or will occur contemporaneously with or immediately after the Effective
Time.
5.3 Deliveries by the Shareholder at the Closing. At the Closing,
--------------------------------------------
simultaneously with the deliveries by the Parent specified in Section 5.4 below,
and in addition to any deliveries required to be made by the Shareholder and the
Company pursuant to any other transaction document at the Closing, the
Shareholder shall deliver or cause to be delivered to the Parent the following:
5.3.1 Closing Certificates. The Shareholder and the Company shall
--------------------
deliver the certificates required pursuant to Sections 5.1.1, 5.1.2, 5.1.3, and
5.1.4.
5.3.2 Stock Transfer Restriction Agreement. The Shareholder shall
------------------------------------
execute and deliver a Stock Transfer Restriction Agreement on the Closing Date,
effective as of the Effective Time, substantially in the form set forth in
Exhibit 5.3.2.
5.3.3 Employment Agreements. The Shareholder 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 5.3.3A.
5.3.4 Lease Agreement. The Shareholder shall cause the owner of the
---------------
property located at ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ to execute
and deliver a lease agreement with the Company in the form attached as Exhibit
5.3.4.
5.3.5 Registration Rights Agreement. The Shareholder shall execute
-----------------------------
and deliver a Registration Rights Agreement at the Closing, effective as of the
Effective Time, substantially in the form set forth in Exhibit 5.3.5 attached
hereto.
5.3.6 Opinion of Counsel for the Shareholder and the Company. The
------------------------------------------------------
Shareholder shall deliver the favorable opinion of Willoner, ▇▇▇▇▇▇▇▇▇ and
▇▇▇▇▇, P.A., counsel to the Shareholder and the Company, dated the Effective
Time, substantially in the form and to the effect set forth in Exhibit 5.3.6
attached hereto.
-15-
5.3.7 Documents, Stock Certificates. The Shareholder shall execute
-----------------------------
and deliver, and shall cause the Company to execute and deliver, the documents,
certificates, opinions, instruments and agreements required to be executed and
delivered by the Company or its officers or directors or the Shareholder at the
Closing as contemplated hereby or as may be reasonably requested by the Parent
and shall deliver or cause to be delivered the documents and evidence required
under Section 4. Stock Certificates representing all of the outstanding Company
Common Stock and properly executed and completed letters of transmittal shall be
delivered by the Shareholder to the Parent.
5.3.8 Discharge of Notes and Leases; Releases, Etc. The notes and
--------------------------------------------
leases, except for trade debts, of the Company referred to in Exhibit 5.3.8
attached hereto ("Terminated Obligations") shall be paid in full or refinanced
----------------------
on terms acceptable to the Parent, and the Shareholder shall cause all holders
of any such Terminated Obligations to deliver to the Parent, in form reasonably
satisfactory to the Parent and the lenders to the Parent or Merger Sub, such
customary releases, termination statements, consents, approvals or other
documents or instruments required, in the judgment of the Parent, to release and
terminate all liens, security interests, claims, or rights of such holders
against the Surviving Corporation or the Parent or any of their respective
assets in connection therewith.
The consummation of the Closing shall not be deemed to be a waiver by
the Parent or the Surviving Corporation of any of their rights or remedies
against the Shareholder or the Company hereunder for any breach of warranty,
covenant or agreement by the Company or the Shareholder herein irrespective of
any knowledge of or investigation made by or on behalf of the Parent or Merger
Sub; provided, however, that if the Shareholder or the Company shall disclose in
writing to the Parent prior to the Closing Date a specified breach of a
specifically identified representation, warranty, covenant or agreement of the
Company or the Shareholder herein by the Company or the Shareholder, and
requests a waiver thereof by the Parent, and the Parent shall waive any such
specifically identified breach in writing prior to the Closing Date, the Parent
and the Surviving Corporation, for themselves and for each Parent Indemnified
Party (as defined below) shall be deemed to have waived their respective rights
and remedies hereunder for, and neither the Shareholder nor the Company shall
have any liability with respect to, any such specifically identified breach, to
the extent so identified by the Company and so waived by the Parent.
5.4 Deliveries by the Parent at the Closing. At the Closing,
---------------------------------------
simultaneously with the deliveries by the Shareholder specified in Section 5.3
above, and in addition to any other deliveries to be made by the Parent and
Merger Sub pursuant to any other transaction document at the Closing, the Parent
shall deliver or cause to be delivered to the Shareholder the following:
5.4.1 Closing Certificates. The Parent and Merger Sub shall deliver
--------------------
the certificates required pursuant to Sections 5.2.1, 5.2.2, and 5.2.3.
5.4.2 Registration Rights Agreement. The Parent shall execute and
-----------------------------
deliver to the Shareholder a Registration Rights Agreement at the Closing,
effective as of the Effective Time, substantially in the form set forth in
Exhibit 5.3.5.
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.
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5.4.4 Merger Consideration. The Parent shall deliver the Final Per
--------------------
Share Cash Amount and the Final Per Share Common Stock Amount to the
Shareholder.
The consummation of the Closing shall not be deemed to be a waiver by
the Shareholder of any of his rights or remedies hereunder for breach of any
warranty, covenant or agreement herein by the Parent or Merger Sub irrespective
of any knowledge of or investigation with respect thereto made by or on behalf
of the Shareholder or the Company; provided, however, that if the Parent shall
disclose in writing to the Shareholder prior to the Closing a specified breach
of a specifically identified representation, warranty, covenant or agreement of
the Parent or Merger Sub contained herein by the Parent or Merger Sub, and
requests a waiver thereof by the Company and the Shareholder, and the Company
and the Shareholder shall waive any such specifically identified breach in
writing prior to the Closing, the Company and the Shareholder shall be deemed to
have waived their rights and remedies hereunder for, and the Parent and Merger
Sub shall have no liability or obligation to the Shareholder or the Company with
respect to, any such specifically identified breach, to the extent so identified
by the Parent and waived by the Company and the Shareholder.
6. SURVIVAL, INDEMNIFICATIONS
6.1 Survival. The representations and warranties set forth in this
--------
Agreement and the other documents, instruments and agreements contemplated
hereby shall survive after the date hereof to the extent provided herein. The
representations and warranties of the Shareholder and the Company herein and in
the Shareholder Related Documents and the Company Related Documents (as defined
in Exhibit 2) other than those of the Shareholder and the Company in Sections
2.2, 2.3, 2.4 and in Sections 2 and 3 of Exhibit 2 shall survive for a period of
36 months after the Closing Date and the representations and warranties of the
Shareholder and the Company contained in Sections 2.2, 2.3, 2.4 and in Sections
2 and 3 of Exhibit 2 shall survive for the maximum period permitted by
applicable law. The representations and warranties of the Parent herein and in
the Parent Related Documents, other than those in Sections 3.1.3 and 3.1.4,
shall survive for a period of 36 months after the Closing Date 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 which such claim is asserted on or before the date of such
expiration. The covenants and agreements of the parties herein (including but
not limited to Exhibit 4.6) and in other documents and instruments executed and
delivered in connection with the closing of the transactions contemplated hereby
shall survive for the maximum period permitted by law.
6.2 Indemnification.
---------------
6.2.1 Parent Indemnified Parties. Subject to the provisions of
--------------------------
Sections 6.1 and 6.3 hereof, the Shareholder shall indemnify, save and hold
harmless the Parent, the Surviving Corporation, Merger Sub and any of their
assignees (including lenders) and all of their respective officers, directors,
employees, representatives, agents, advisors and consultants and all of their
respective heirs, legal representatives,
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successors and assigns (collectively the "Parent Indemnified Parties") from and
--------------------------
against any and all damages, liabilities, losses, loss of value (including the
value of adverse effects on cash flow or earnings), claims, deficiencies,
penalties, interest, expenses, fines, assessments, charges and costs, including
reasonable attorneys' fees and court costs (collectively "Losses") arising from,
------
out of or in any manner connected with or based on:
(i) the breach of any covenant of the Shareholder or the Company or
the failure by the Shareholder or the Company to perform any obligation of
the Shareholder or the Company contained herein or in any Company Related
Document or Shareholder Related Document;
(ii) any inaccuracy in or breach of any representation or warranty of
the Shareholder contained herein or in any Shareholder Related Document;
(iii) any inaccuracy in or breach of any representation or warranty of
the Company contained herein or in any Company Related Document;
(iv) indemnification payments made by the Company or the Surviving
Corporation to the Company's present or former officers, directors,
employees, agents, consultants, advisors or representatives in respect of
actions taken or omitted to be taken prior to the Closing; and
(v) any act, omission, occurrence, event, condition or circumstance
occurring or existing at any time on or before the Effective Time and
involving or related to the assets, properties, business or operations now
or previously owned or operated by the Company and not (a) disclosed with
reasonable specificity in the Disclosure Schedule or (b) disclosed in the
Company Financial Statements (as defined in Exhibit 2).
The foregoing indemnities shall not limit or otherwise adversely affect the
Shareholder's rights of indemnity for Losses under Section 6.2.2.
6.2.2 Parent Indemnity. Subject to the provisions of Sections 6.1 and
----------------
6.3, the Parent shall indemnify, save and hold harmless the Shareholder and the
Shareholder's heirs, legal representatives, successors and assigns from and
against all Losses arising from, out of or in any manner connected with or based
on:
(i) any breach of any covenant of the Parent or Merger Sub or the
failure by the Parent or Merger Sub to perform any of its obligations
contained herein or in the Parent Related Documents;
(ii) any inaccuracy in or breach of any representation or warranty of
the Parent or Merger Sub contained herein or in the Parent Related
Documents; and
(iii) any act, omission, event, condition or circumstance occurring or
existing at any time after (but not on or before) the Effective Time and
involving or relating to the assets, properties, 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 the Shareholder's
acts or omissions after the
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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 Shareholder under Section
-----------
6.2.1(ii) or (iii) shall not exceed the cash amount equal to the Total
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) shall not exceed the cash amount equal to the Total Consideration
with the Parent Common Stock being valued at the IPO Price to the Public for
such purpose.
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). 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 hereunder, provided that (i) the
Shareholder 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 Shareholder
shall have the right, but not the obligation, to undertake the defense of any
such third-party claim, suit, action or proceeding.
6.4.3 Settlement. The Indemnifying Party shall not be required to
----------
indemnify the Indemnified Party with respect to any amounts paid in settlement
of any third-party suit, action, proceeding or investigation entered into
without the written consent of the Indemnifying Party; provided, however, that
if the Indemnified Party is a Parent Indemnified Party, such third-party suit,
action, proceeding or investigation may be settled without the consent of the
Indemnifying Party on 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
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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 itself or
-----------
himself and its or his 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.
6.6 Warranty Work. Notwithstanding anything herein to the contrary,
-------------
neither the Parent nor Merger Sub shall seek indemnification hereunder for any
warranty claims arising out of work performed by the Company prior to the
Effective Time even if such claims exceed the applicable reserves therefor.
7. TERMINATION
7.1 Grounds for Termination. This Agreement may be terminated at any time
-----------------------
prior to the Closing Date:
7.1.1 Mutual Consent. By the written agreement of the Company and the
--------------
Parent; or
7.1.2 Optional By the Company. By the Company by written notice to
-----------------------
the Parent, if the Closing shall have failed to occur by 5:00 p.m. Houston,
Texas time on December 31, 1997, but only if neither the Company nor the
Shareholder has breached this Agreement or has failed to perform any of its or
his obligations under this Agreement;
7.1.3 Optional By the Parent. By the Parent, by written notice to the
----------------------
Company, if the Closing shall have failed to occur by 5:00 p.m. Houston, Texas
time on December 31, 1997, but only if neither the Parent nor Merger Sub has
breached this Agreement or has failed to perform any of its obligations under
this Agreement;
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7.1.4 Breach By the Parent or Merger Sub. By the Company, by written
----------------------------------
notice to the Parent, if either the Parent or Merger Sub has breached this
Agreement or failed to perform any of its obligations under this Agreement; or
7.1.5 Breach by the Company or the Shareholder. By the Parent, by
----------------------------------------
written notice to the Company, if either the Company or the Shareholder has
breached this Agreement or has failed to perform any of its or his 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 Shareholder:
Masters, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
To the Parent or Merger Sub or the Surviving Corporation:
Group Maintenance America Corp.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attn: President
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
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.
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8.2 Further Documents. The Shareholder shall, at any time and from time
-----------------
to time after the date hereof, upon request by the Parent and without further
consideration, execute and deliver such instruments or other documents and take
such further action as may be reasonably required in order to perfect any other
undertaking made by the Shareholder hereunder.
8.3 Assignability. The Shareholder shall not assign this Agreement in
-------------
whole or in part without the prior written consent of the Parent, except by the
operation of law. The Parent may assign its rights under this Agreement, the
Company Related Documents and the Shareholder Related Documents without the
consent of the 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
the Shareholder.
8.4 Exhibits and Schedules. The Exhibits and Schedules (and any
----------------------
appendices thereto) referred to in this Agreement are and shall be incorporated
herein and made a part hereof.
8.5 Sections and Articles. Unless the context otherwise requires, all
---------------------
Sections, Articles and Exhibits referred to herein are, respectively, sections
and articles of, and exhibits to, this Agreement and all Schedules referred to
herein are schedules constituting a part of the Disclosure Schedule.
8.6 Entire Agreement. This Agreement constitutes the full understanding
----------------
of the parties, a complete allocation of risks between them and a complete and
exclusive statement of the terms and conditions of their agreement relating to
the subject matter hereof and supersedes any and all prior agreements, whether
written or oral, that may exist between the parties with respect thereto.
Except as otherwise specifically provided in this Agreement, no conditions,
usage of trade, course of dealing or performance, understanding or agreement
purporting to modify, vary, explain or supplement the terms or conditions of
this Agreement shall be binding unless hereafter made in writing and signed by
the party to be bound, and no modification shall be effected by the
acknowledgment or acceptance of documents containing terms or conditions at
variance with or in addition to those set forth in this Agreement. No waiver by
any party with respect to any breach or default or of any right or remedy and no
course of dealing shall be deemed to constitute a continuing waiver of any other
breach or default or of any other right or remedy, unless such waiver be
expressed in writing signed by the party to be bound. Failure of a party to
exercise any right shall not be deemed a waiver of such right or rights in the
future.
8.7 Headings. Headings as to the contents of particular articles and
--------
sections are for convenience only and are in no way to be construed as part of
this Agreement or as a limitation of the scope of the particular articles or
sections to which they refer.
8.8 CONTROLLING LAW. THE VALIDITY, INTERPRETATION AND PERFORMANCE OF THIS
---------------
AGREEMENT AND ANY DISPUTE CONNECTED HEREWITH SHALL BE GOVERNED AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS EXCEPT TO THE EXTENT THE
APPLICABLE CORPORATE LAW MANDATORILY APPLIES WITH RESPECT THERETO.
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8.9 Public Announcements. After the Effective Time, the Shareholder
--------------------
shall not make any press release, public announcement, or public confirmation or
disclose any other information regarding this Agreement or the contents hereof.
8.10 No Third Party Beneficiaries. Except as set forth in Article 6, no
----------------------------
person or entity not a party to this Agreement shall have rights under this
Agreement as a third party beneficiary or otherwise.
8.11 Amendments and Waivers. This Agreement may be amended by the Parent,
----------------------
Merger Sub and the Company, by action taken by their Boards of Directors to the
extent permitted by applicable law; provided, however, that no such amendment
shall (i) alter or change any provision of this Agreement, the alteration or
change of which must be adopted by the holders of capital stock of the Company
under the certificate or articles of incorporation of the Company or the
Applicable Corporate Law, or (ii) alter or change this Section 8.11, unless each
such alteration or change is adopted by the holders of shares of capital stock
of the Company as may be required by the certificate or articles of
incorporation of the Company or the Applicable Corporate Law. Prior to the
Effective Time, all amendments to this Agreement must be by an instrument in
writing signed on behalf of the Parent, Merger Sub, the Company and the
Shareholder. After the Effective Time, all amendments to this Agreement must be
by an instrument in writing signed on behalf of the Parent and the Shareholder.
Any term or provision of this Agreement (other than the requirements for
shareholder approvals) may be waived in writing at any time by the party which
is, or whose shareholders are, entitled to the benefits thereof.
8.12 No Employee Rights. Nothing herein expressed or implied shall confer
------------------
upon any employee of the Company, any other employee or legal representatives or
beneficiaries of any thereof any rights or remedies, including any right to
employment or continued employment for any specified period, of any nature or
kind whatsoever under or by reason of this Agreement, or shall cause the
employment status of any employee to be other than terminable at will.
8.13 Non-Recourse. No recourse for the payment of any amounts due
------------
hereunder or for any claim based on this Agreement or the transactions
contemplated hereby or otherwise in respect thereof, and no recourse under or
upon any obligation, covenant or agreement of the Parent in this Agreement shall
be had against any incorporator, organizer, promoter, shareholder, officer,
director, employee or representative as such (other than the Shareholder as set
forth herein), past, present or future, of the Parent or of any successor
corporation, whether by virtue of any constitution, statute or rule of law, or
by enforcement of any assessment or penalty or otherwise; it being expressly
understood that all such liability is hereby expressly waived and released as a
condition of, and as a consideration for, the execution of this Agreement.
8.14 When Effective. This Agreement shall become effective only upon the
--------------
execution and delivery of one or more counterparts of this Agreement by each of
the Parent, Merger Sub, the Company and the Shareholder.
8.15 Takeover Statutes. If any "fair price," "moratorium," "control share
-----------------
acquisition" or other form of anti-takeover statute or regulation shall become
applicable to the transactions contemplated hereby, 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
-23-
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 shall pay the costs
of any broker or finder engaged by the Shareholder and the accounting and
auditing fees and expenses of the Company's accountants for the audit for fiscal
1996 (not to exceed $50,000) (to the extent, and only to the extent, that any
such payment will not jeopardize the qualification of the Merger as a
reorganization within the meaning of Section 368(a) of the Code) and the Parent
shall pay the fees and expenses of the Company's accountants for the audit
through the period ending June 30, 1997; 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 and the costs of any such broker or finder shall be included in current
liabilities for purposes of determining Working Capital.
-24-
IN WITNESS WHEREOF, this Agreement has been duly executed and delivered on
the date first hereinabove written.
PARENT:
GROUP MAINTENANCE AMERICA CORP.
By:
_________________________________________
J. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇., President
MERGER SUB:
MASTERS ACQUISITION CORP.
By:
_________________________________________
President
SHAREHOLDER:
____________________________________________
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
COMPANY:
MASTERS , INC.
By:
_________________________________________
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
President
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