EXHIBIT 1
AGREEMENT AND PLAN OF REORGANIZATION
DATED AS OF JUNE 13, 1996
BY AND AMONG
AMERICAN RESIDENTIAL SERVICES, INC.,
ARS ATLAS INC.,
ATLAS SERVICES, INC.
AND
THE STOCKHOLDERS AND OTHER STOCKHOLDERS NAMED HEREIN
TABLE OF CONTENTS
PAGE
ARTICLE I DEFINITIONS...................................................1
ARTICLE II THE MERGER AND RELATED MATTERS................................5
Section 2.01. Certificate of Merger...................................5
Section 2.02. The Effective Time......................................5
Section 2.03. Certain Effects of the Merger...........................5
Section 2.04. Effect of the Merger on Capital Stock...................6
Section 2.05. Delivery, Exchange and Payment..........................7
Section 2.06. Fractional Shares.......................................8
ARTICLE III REPRESENTATIONS AND WARRANTIES OF EACH
STOCKHOLDERAND OTHER STOCKHOLDERS.............................9
Section 3.01. By Each Stockholder.....................................9
ARTICLE IV REPRESENTATIONS AND WARRANTIESOF THE COMPANY AND
THE STOCKHOLDERS.............................................10
Section 4.01. By the Company and Each Stockholder....................10
ARTICLE V REPRESENTATIONS AND WARRANTIES OF ARS AND NEWCO..............11
Section 5.01. By ARS and Newco.......................................11
ARTICLE VI COVENANTS EXTENDING TO THE EFFECTIVE TIME....................11
Section 6.01. Of Each Party..........................................11
ARTICLE VII THE CLOSING AND CONDITIONS TO CLOSING AND
CONSUMMATION.................................................11
Section 7.01. The Closing and Certain Conditions.....................11
ARTICLE VIII COVENANTS FOLLOWING THE EFFECTIVE TIME.......................13
Section 8.01. Of Each Party Other Than the Company...................13
ARTICLE IX INDEMNIFICATION..............................................13
Section 9.01. Indemnification Rights and Obligations.................13
ARTICLE X LIMITATIONS ON COMPETITION...................................13
Section 10.01. Prohibited Activities.................................13
Section 10.02. Damages...............................................14
Section 10.03. Reasonable Restraint..................................14
Section 10.04. Severability; Reformation.............................14
Section 10.05. Independent Covenant..................................14
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Section 10.06. Materiality...........................................15
ARTICLE XI GENERAL PROVISIONS...........................................15
Section 11.01. Treatment of Confidential Information.................15
Section 11.02. Restrictions on Transfer of ARS Common Stock..........15
Section 11.03. Brokers and Agents....................................16
Section 11.04. Assignment; No Third Party Beneficiaries..............16
Section 11.05. Entire Agreement; Amendment; Waivers..................17
Section 11.06. Counterparts..........................................17
Section 11.07. Expenses..............................................17
Section 11.08. Notices...............................................18
Section 11.09. Governing Law.........................................19
Section 11.10. Exercise of Rights and Remedies.......................19
Section 11.11. Time..................................................19
Section 11.12. Reformation and Severability..........................19
Section 11.13. Remedies Cumulative...................................19
Section 11.14. Respecting the IPO....................................19
ARTICLE XII TERMINATION..................................................20
Section 12.01. Termination of This Agreement.........................20
Section 12.02. Liabilities in Event of Termination...................21
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AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION (this "Agreement") is made
as of June 13, 1996, by and among American Residential Services, Inc., a
Delaware corporation ("ARS"), ARS Atlas Inc., a South Carolina corporation and a
wholly owned subsidiary of ARS ("Newco"), Atlas Services, Inc., a South Carolina
corporation (the "Company"), and the persons listed on the signature pages
hereof under the caption "Stockholders" (collectively, the "Stockholders," and
each of those persons, individually, a "Stockholder") or the caption "Other
Stockholders."
PRELIMINARY STATEMENT
The parties to this Agreement have determined it is in their best
long-term interests to effect a business combination pursuant to which:
(a) Newco will merge into the Company on the terms and subject to
the conditions set forth herein (that merger being the "Merger");
(b) ARS will acquire the stock of all or some of the entities listed
in the accompanying Addendum 1 (each an "Other Founding Company" and,
collectively with the Company, the "Founding Companies") pursuant to
agreements that are (i) similar to this Agreement and (ii) entered into
among those entities and their equity owners, ARS and subsidiaries of ARS
(collectively, the "Other Agreements"); and
(c) ARS shall effect a public offering of shares of its common stock
and issue and sell those shares.
The respective boards of directors of ARS, Newco and the Company
have approved and adopted this Agreement to effect a transaction subject to
Section 351 of the Code.
NOW, THEREFORE, in consideration of the premises and the mutual
agreements, representations and undertakings contained herein, the parties
hereto hereby agree as follows:
ARTICLE I
DEFINITIONS
Section 1.01. CERTAIN DEFINED TERMS. As used in this Agreement, the
following terms have the meanings assigned to them below in this Section 1.01.
Capitalized terms used in this Agreement and not defined below in this Section
1.01 have the meanings assigned to them in the Preliminary Statement or Article
I of the Uniform Provisions (the text of which Article hereby is incorporated
herein by this reference), as the case may be.
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"ADJUSTMENT DETERMINATION DATE" means the date that is 30 days
following delivery by ARS of the Post-closing Statement to the
Stockholders, unless the Closing Date Working Capital and the Positive
Working Capital Adjustment or the Negative Working Capital Adjustment, as
the case may be, are determined pursuant to Section 2.05 by ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ LLP, in which event the Adjustment Determination Date is the date
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP delivers those determinations in writing to ARS.
"AGREED RATE" means 8.0% per annum.
"AGREEMENT" means this Agreement, including the Disclosure Statement
relating to this Agreement and all attached Schedules, Annexes and
Exhibits, as each of the same may be amended, modified or supplemented
from time to time pursuant to the provisions hereof or thereof.
"ARS" means American Residential Services, Inc., a Delaware
corporation.
"ARS ACQUISITION CANDIDATE" means any Entity engaged in any of the
businesses of providing repair, maintenance, replacement or warranty and
annual contract maintenance services for Plumbing, heating/air
conditioning and electrical systems to owners or occupants of
single-family homes, duplexes, condominiums and small commercial
facilities, designing and installing of any of those systems in new
construction, selling and servicing home appliances and other similar
residential and building services (i) which was called on by any of the
Company, ARS or the Subsidiaries of the Company or ARS in connection with
the possible acquisition by any of them of that Entity or (ii) of which
any of them has made an acquisition analysis.
"CLOSING DATE BALANCE SHEET" of the Company means a consolidated
balance sheet of the Company and the Company Subsidiaries as at the IPO
Closing Date which is prepared in accordance with GAAP on a basis
consistent with the basis on which the Current Balance Sheet was prepared.
"CLOSING DATE WORKING CAPITAL" of the Company means the Company's
Working Capital as determined from the Closing Date Balance Sheet,
provided, that if that determination is made pursuant to Section 2.05 by
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP, the amount equal to 50% of the fees and expenses of
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP which are attributable to its audit of the Closing
Date Balance Sheet and its making of that determination will be deemed a
liability of the Company for the purpose of determining its Closing Date
Working Capital and resulting Positive Working Capital Adjustment or
Negative Working Capital Adjustment, as the case may be.
"CLOSING MEMORANDUM" means the form of closing memorandum to be
prepared by ARS for the Closing under this Agreement in which are included
the forms of certificates
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of officers, the opinions of counsel and certain other documents to be
delivered at the Closing as provided in Article VII.
"COMPANY" means Atlas Services, Inc., a South Carolina corporation.
"COMPANY COMMON STOCK" means the common stock, par value $1.00 per
share, of the Company.
"COUNSEL FOR ARS AND NEWCO" means ▇▇▇▇▇ & ▇▇▇▇▇, L.L.P.
"COUNSEL FOR THE COMPANY AND THE STOCKHOLDERS" means Evans, Carter,
▇▇▇▇▇ & ▇▇▇▇▇▇▇, P.A.
"CURRENT BALANCE SHEET" means the unaudited consolidated balance
sheet of the Company and the Company Subsidiaries as at March 31, 1996.
"CURRENT BALANCE SHEET DATE" means March 31, 1996.
"DISCLOSURE STATEMENT" means the written statement executed by the
Company and each of the Stockholders and delivered to ARS prior to the
execution and delivery of this Agreement by ARS and Newco in which either
(a) exceptions are taken to each of certain of the representations and
warranties made by the Company and the Stockholders herein or (b) it is
confirmed that no exception is taken to that representation and warranty.
"DISSENTING SHARES" has the meaning specified in Section 2.04.
"INITIAL FINANCIAL STATEMENTS" means (a) the audited consolidated
balance sheets of the Company as at June 30, 1994 and 1995 and December
31, 1995 and the related audited consolidated statements of income
(operations), cash flows and stockholders' equity for each of the
Company's three fiscal years in the three-year period ended June 30, 1995
and the year ended December 31, 1995, together with the related audit
report of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP, and (b) the Current Balance Sheet and the
related unaudited consolidated statements of income (operations), cash
flows and stockholders' equity for the three- and 10-month periods ended
on the Current Balance Sheet Date.
"INTERIM DATE BALANCE SHEET" of the Company means the balance sheet
as at the end of the Company's fiscal quarter next preceding the date of
the Closing which is included in the Financial Statements.
"INTERIM DATE WORKING CAPITAL" of the Company means the Company's
Working Capital as determined from the Interim Date Balance Sheet by ARS
on a basis consistent with the determination of the Company's Working
Capital from the Current Balance Sheet.
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"INTERIM NEGATIVE WORKING CAPITAL ADJUSTMENT" means the amount, if
any, by which the Company's Interim Date Working Capital is more negative
than ($1,702,237).
"INTERIM POSITIVE WORKING CAPITAL ADJUSTMENT" means the amount, if
any, by which the Company's Interim Date Working Capital is greater (or
less negative) than ($1,702,237).
"MERGER CONSIDERATION" has the meaning specified in Section 2.04.
"NEGATIVE WORKING CAPITAL ADJUSTMENT" means the amount, if any, by
which the Company's Closing Date Working Capital is more negative than
($1,702,237).
"NEWCO" means ARS Atlas Inc., a Delaware corporation.
"OTHER STOCKHOLDER" means each owner, of record and/or beneficially,
of Company Common Stock other than the Stockholders.
"POSITIVE WORKING CAPITAL ADJUSTMENT" means the amount, if any, by
which the Company's Closing Date Working Capital is greater (or less
negative) than ($1,702,237).
"POST-CLOSING STATEMENT" has the meaning specified in Section 2.05.
"PRO RATA SHARE" means for each Stockholder and each Other
Stockholder the fraction expressed as a percentage and set forth in
Schedule 2.04, (a) the numerator of which is the number of shares of
outstanding Company Common Stock owned by that Person, as set forth in
Schedule 2.04, and (b) the denominator of which is the total number of
shares of outstanding Company Common Stock owned by all Stockholders and
Other Stockholders, as set forth in Schedule 2.04.
"PURCHASER REPRESENTATIVE" means a "purchaser representative" as
defined in Securities Act Rule 501(h).
"REQUIRED STOCKHOLDERS" means, at the time of any determination,
Stockholders who, at the Effective Time, will be or were entitled, subject
to the provisions of Section 2.05, to receive Merger Consideration
representing not less than 80% of the total Merger Consideration to be
received by all Stockholders pursuant to Section 2.04.
"RESPONSIBLE OFFICER" means ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇.
"SCHEDULED AGREEMENTS" means the agreements described in Schedule
4.11.
"SCBCA" means the South Carolina Business Corporation Act of 1988.
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"STOCKHOLDERS AGREEMENT" means the Stockholders Agreement entered
into as of June 13, 1996 among ARS, the Stockholders, the Other
Stockholders and the other Persons parties thereto.
"SURVIVING CORPORATION" means the Company, the Person to be
designated in the Certificate of Merger as the surviving corporation of
the Merger.
"TERRITORY" has the meaning specified in Section 10.01.
"▇▇▇▇▇▇▇ EMPLOYMENT AGREEMENT" means the Employment Agreement
entered into as of June 13, 1996 between ARS and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇.
"THRESHOLD AMOUNT" means 2% of the Transaction Value.
"TRANSACTION VALUE" means (a) at any time prior to the Adjustment
Determination Date, $21,000,000, and (b) on and after the Adjustment
Determination Date, $21,000,000 plus the Positive Working Capital
Adjustment, if any, or minus the Negative Working Capital Adjustment, if
any.
"TRANSFER TAXES" has the meaning specified in Section 11.07.
"UNIFORM PROVISIONS" means the Uniform Provisions of ARS for the
Acquisition of Founding Companies attached hereto as Annex 1.
"WORKING CAPITAL" of the Company means, as at any date and as
determined by reference to a consolidated balance sheet of the Company and
the Company Subsidiaries as at that date which is prepared in accordance
with GAAP, the amount by which (a) the sum, without duplication of
amounts, of all amounts that are included and classified as current assets
on that balance sheet exceeds, or is exceeded by, (b) the sum, without
duplication of amounts, of all amounts that are included and classified as
liabilities or as mandatorily redeemable Capital Stock on that balance
sheet; if at any time those current assets are exceeded by those
liabilities, Working Capital will be expressed as a negative amount.
ARTICLE II
THE MERGER AND RELATED MATTERS
Section 2.01. CERTIFICATE OF MERGER. Subject to the terms and
conditions hereof, the Company will cause a Certificate of Merger to be duly
executed and delivered on or promptly after the date of the Closing to the
Secretary of State of the State of South Carolina.
Section 2.02. THE EFFECTIVE TIME. The effective time of the Merger
(the "Effective Time") will be the time on the IPO Closing Date which the
Certificate of Merger specifies or, if the
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Certificate of Merger does not specify another time, 8:00 a.m., eastern daylight
standard time, on the IPO Closing Date.
Section 2.03. CERTAIN EFFECTS OF THE MERGER. At and as of the
Effective Time, (a) Newco will be merged with and into the Company in accordance
with the provisions of the SCBCA, (b) Newco will cease to exist as a separate
legal entity, (c) the articles of incorporation of the Company will be amended
to change the Company's authorized shares of capital stock to 1,000 shares, par
value $1.00 per share, of Common Stock, (c) the Company will be the Surviving
Corporation and, as such, will, all with the effect provided by the SCBCA, (i)
possess all the properties and rights, and be subject to all the restrictions
and duties, of the Company and Newco and (ii) be governed by the laws of the
State of South Carolina, (d) the Charter Documents of the Company then in effect
(after giving effect to the amendment of the Company's articles of incorporation
specified in clause (c) of this sentence) will become and thereafter remain
(until changed in accordance with (i) the applicable law (in the case of the
articles of incorporation) or (ii) its terms (in the case of the bylaws)) the
Charter Documents of the Surviving Corporation, (f) the initial board of
directors of the Surviving Corporation will be the persons named in Schedule
2.03, and those persons will hold the office of director of the Surviving
Corporation subject to the provisions of the applicable laws of the State of
South Carolina and the Charter Documents of the Surviving Corporation, and (g)
the initial officers of the Surviving Corporation will be as set forth in
Schedule 2.03, and each of those persons will serve in each office specified for
that person in Schedule 2.03, subject to the provisions of the Charter Documents
of the Surviving Corporation, until that person's successor is duly elected to,
and, if necessary, qualified for, that office.
Section 2.04. EFFECT OF THE MERGER ON CAPITAL STOCK. As of the
Effective Time, as a result of the Merger and without any action on the part of
any holder thereof:
(a) the shares of Company Common Stock issued and outstanding
immediately prior to the Effective Time will (i) be converted into the
right to receive, subject to the provisions of Section 2.05, without
interest, on surrender of the certificate evidencing those shares, (A) the
amount of cash and the number of whole shares of ARS Common Stock set
forth or determined as provided in Schedule 2.04 (the "Merger
Consideration") and (B) the amount of cash for and in lieu of fractional
shares of ARS Common Stock as will be determined pursuant to Section 2.06,
(ii) cease to be outstanding and to exist and (iii) be canceled and
retired;
(b) each share of Company Common Stock held in the treasury of the
Company or any Company Subsidiary will (i) cease to be outstanding and to
exist and (ii) be canceled and retired; and
(c) each share of Newco Common Stock issued and outstanding
immediately prior to the Effective Time will be converted into one share
of Common Stock, par value $1.00 per share, of the Surviving Corporation,
and the shares of Common Stock of the
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Surviving Corporation issued on that conversion will constitute all the
issued and outstanding shares of Capital Stock of the Surviving
Corporation.
Each holder of a certificate representing shares of Company Common Stock
immediately prior to the Effective Time will, as of the Effective Time and
thereafter, cease to have any rights respecting those shares other than the
right to receive, subject to the provisions of Section 2.05, without interest,
the Merger Consideration and the additional cash, if any, owing with respect to
those shares as provided in Section 2.06. Notwithstanding the foregoing, the
right to receive the Merger Consideration will not apply to any shares of
Company Common Stock which shall have statutory appraisal rights perfected with
respect thereto ("Dissenting Shares"), if those rights are available, pursuant
to the provisions of Chapter 13 of the SCBCA, it being intended and agreed that
any holder of those shares shall have in consideration for the cancellation
thereof only the rights, if any, afforded to that holder under Chapter 13 of the
SCBCA.
Section 2.05. DELIVERY, EXCHANGE AND PAYMENT. (a) At or after the
Effective Time: (i) each Stockholder and Other Stockholder, as the holder of
certificates representing shares of Company Common Stock, will, on surrender of
those certificates to ARS (or any agent that may be appointed by ARS for
purposes of this Section 2.05), receive, subject to the provisions of this
Section 2.05 and Section 2.06, the Merger Consideration; and (ii) until any
certificate representing Company Common Stock has been surrendered and replaced
pursuant to this Section 2.05, that certificate will, for all purposes, be
deemed to evidence ownership of the number of whole shares of ARS Common Stock
included in the Merger Consideration payable in respect of that certificate
pursuant to Section 2.04. All shares of ARS Common Stock issuable in the Merger
will be deemed for all purposes to have been issued by ARS at the Effective
Time.
(b) Each Stockholder and Other Stockholder will deliver to ARS (or
any agent that may be appointed by ARS for purposes of this Section 2.05) on or
before the IPO Closing Date the certificates representing Company Common Stock
owned by the Stockholder, duly endorsed in blank by that Person, or accompanied
by duly executed stock powers in blank, and with all necessary transfer tax and
other revenue stamps, acquired at that Person's expense, affixed and canceled.
Each Stockholder and Other Stockholder shall cure any deficiencies in the
endorsement of the certificates or other documents of conveyance respecting, or
in the stock powers accompanying, the certificates representing Company Common
Stock delivered by that Person.
(c) No dividends (or interest) or other distributions declared or
earned after the Effective Time with respect to ARS Common Stock and payable to
the holders of record thereof after the Effective Time will be paid to the
holder of any unsurrendered certificates representing shares of Company Common
Stock for which shares of ARS Common Stock have been issued in the Merger until
those certificates are surrendered as provided herein, but (i) on that surrender
ARS will cause to be paid, to the Person in whose name the certificates
representing such shares of ARS Common Stock shall then be issued, the amount of
dividends or other distributions previously paid with respect to such whole
shares of ARS Common Stock with a record date, or which have accrued, subsequent
to the Effective Time, but prior to surrender, and the amount of any cash
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payable to such Person for and in lieu of fractional shares pursuant to Section
2.06 and (ii) at the appropriate payment date or as soon as practicable
thereafter, ARS will cause to be paid to that Person the amount of dividends or
other distributions with a record date, or which have been accrued, subsequent
to the Effective Time, but which are not payable until a date subsequent to
surrender, which are payable with respect to such whole shares of ARS Common
Stock, subject in all cases to any applicable escheat laws. No interest will be
payable with respect to the payment of such dividends or other distributions or
cash for and in lieu of fractional shares on surrender of outstanding
certificates.
(d) Prior to the date of the Closing, ARS will cause to be prepared
and delivered to the Stockholders a statement setting forth the Interim Positive
Working Capital Adjustment, if any, or the Interim Negative Working Capital
Adjustment, if any. If an Interim Positive Working Capital Adjustment has been
determined, ARS will, promptly after the Effective Time, but subject to the
certificate surrender requirements of Section 2.05(a), pay to the Stockholders
and the Other Stockholders, without interest, their respective Pro Rata Shares
of the amount of the Interim Positive Working Capital Adjustment.
(e) As soon as practicable, and in any event within 60 days,
following the Effective Time, ARS will cause to be prepared and delivered to the
Stockholders and the Other Stockholders (i) the Closing Date Balance Sheet and
(ii) a statement (the "Post-closing Statement") of the Closing Date Working
Capital and the Positive Working Capital Adjustment, if any, or the Negative
Working Capital Adjustment, if any. The Post-closing Statement will be final and
binding on ARS, the Stockholders and the Other Stockholders unless, within 30
days following the delivery of the Post-closing Statement, a Stockholder
notifies ARS in writing that the Stockholder does not accept as correct the
amount of the Closing Date Working Capital or the amount of the Positive Working
Capital Adjustment or the Negative Working Capital Adjustment, as set forth in
the Post-closing Statement. If any Stockholder timely delivers to ARS that
notice respecting the Post-closing Statement, the Closing Date Balance Sheet
will be audited, and the Closing Date Working Capital and the Positive Working
Capital Adjustment or the Negative Working Capital Adjustment will be determined
within 30 days after the delivery to ARS of that notice, by ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP,
and these determinations will be final and binding on ARS and all the
Stockholders and the Other Stockholders.
(f) If a Positive Working Capital Adjustment is determined with
finality pursuant to Section 2.05(e), ARS will, promptly after the Adjustment
Determination Date, but subject to the certificate surrender requirements of
Section 2.05(a), pay to the Stockholders and the Other Stockholders their
respective Pro Rata Shares of the amount, together with interest thereon from
(and including) the IPO Closing Date to (but excluding) the Adjustment
Determination Date at the Agreed Rate, by which (i) the amount of the Positive
Working Capital Adjustment exceeds (ii) the amount of the Interim Positive
Working Capital Adjustment, if any. If a Negative Working Capital Adjustment is
determined with finality pursuant to Section 2.05(e), the Stockholders and Other
Stockholders will, no later than 10 Houston, Texas business days after ARS makes
a written request therefor, pay in cash their respective Pro Rata Shares of the
sum of (A) the amount of the Negative
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Working Capital Adjustment and (B) the Interim Positive Working Capital
Adjustment, if any, together with interest on that sum at the Agreed Rate from
(and including) the IPO Closing Date to (but excluding) the Adjustment
Determination Date.
Section 2.06. FRACTIONAL SHARES. Notwithstanding any other provision
herein, no fractional shares of ARS Common Stock will be issued, and any
Stockholder or Other Stockholder entitled hereunder to receive a fractional
share of ARS Common Stock but for this Section 2.06 will be entitled hereunder
to receive a cash payment for and in lieu thereof in the amount (rounded to the
nearest whole cent) equal to that Person's fractional interest in a share of ARS
Common Stock multiplied by the IPO Price.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF EACH STOCKHOLDER
AND OTHER STOCKHOLDERS
Section 3.01. BY EACH STOCKHOLDER. Each of the Stockholders and the
Other Stockholders represents and warrants to ARS that, as applied solely to
himself, all the following representations and warranties in this Article III
are as of the date of this Agreement, and will be, as amended or supplemented
pursuant to Section 6.08, on the date of the Closing and the IPO Closing Date,
true and correct:
(a) (i) he will be acquiring the shares of ARS Common Stock to be
issued pursuant to Section 2.04 to him solely for his account, for
investment purposes only and with no current intention or plan to
distribute, sell or otherwise dispose of any of those shares in connection
with any distribution; (ii) he is not a party to any agreement or other
arrangement for the disposition of any shares of ARS Common Stock other
than this Agreement and the Registration Rights Agreement; (iii) Schedule
3.01(b) correctly states (A) whether he is, or is not, an "accredited
investor" as defined in Securities Act Rule 501(a) and, if he is not such
an investor, (B) the name and address of his Purchaser Representative;
(iv) he (A) is able to bear the economic risk of an investment in the ARS
Common Stock acquired pursuant to this Agreement, (B) can afford to
sustain a total loss of that investment, (C) has such knowledge and
experience in financial and business matters that he is capable of
evaluating the merits and risks of the proposed investment in the ARS
Common Stock, (D) or his Purchaser Representative, if any, has had an
adequate opportunity to ask questions and receive answers from the
officers of ARS concerning any and all matters relating to the
transactions contemplated hereby, including the background and experience
of the current and proposed officers and directors of ARS, the plans for
the operations of the business of ARS, the business, operations and
financial condition of the Other Founding Companies and any plans of ARS
for additional acquisitions, and (E) or his Purchaser Representative, if
any, has asked all questions of the nature described in preceding clause
(D), and all those questions have been answered to his satisfaction and
the satisfaction of his Purchaser Representative, if any; and
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(b) the representations and warranties contained in Article III of
the Uniform Provisions (the text of which Article (in which the term
"Stockholder" means a Stockholder or an Other Stockholder for purposes
hereof) hereby is incorporated herein by this reference) are true and
correct as applied solely to himself, and his agreements set forth in that
Article hereby are agreed to.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
OF
THE COMPANY AND THE STOCKHOLDERS
Section 4.01. BY THE COMPANY AND EACH STOCKHOLDER. The Company and
each Stockholder jointly and severally represent and warrant to, and agree with,
ARS that all the following representations and warranties in this Article IV are
as of the date of this Agreement, and will be, as amended or supplemented
pursuant to Section 6.08, on the date of the Closing and the IPO Closing Date,
true and correct:
(a) the Organization State of each of the Company and the Company
Subsidiaries is the State of South Carolina, and each of the Company and
the Company Subsidiaries (i) is a corporation duly organized, validly
existing and in good standing under the laws of that State, (ii) has all
requisite corporate power and authority under those laws and its Charter
Documents to own or lease and to operate its properties and to carry on
its business as now conducted and (iii) is duly qualified and in good
standing as a foreign corporation in all jurisdictions (other than the
State of South Carolina) in which it owns or leases property or in which
the carrying on of its business as now conducted so requires except where
the failure to be so qualified, singly or in the aggregate, would not have
a Material Adverse Effect;
(b) (i) the authorized Capital Stock of the Company is comprised of
100,000 shares of Company Common Stock, of which 24,303 shares have been
issued and are now outstanding and no shares are held by the Company as
treasury shares, and (ii) no outstanding Derivative Securities of the
Company exist;
(c) (i) the terms and conditions of each of the Scheduled Agreements
are no less favorable to the Company than the Company reasonably could
have expected to obtain in an arm's-length transaction with a Person other
than an Affiliate of the Company, (ii) the rentals provided for in the
Scheduled Agreements constituting leases do not and will not exceed fair
market rentals of the properties being rented or leased under those
Scheduled Agreements and (iii) the payments provided to be made in the
other Scheduled Agreement do not exceed the fair market value of the
services performed;
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(d) prior to the date hereof: (i) (A) the articles of incorporation
of the Company shall have been duly amended by all necessary corporate
action on the part of the Company and the Stockholders to (1) authorize
the Company to engage in any business in which the SCBCA permits a
corporation incorporated thereunder lawfully to engage and (2) abolish the
preemptive rights of holders of Company Common Stock and (B) the articles
reflecting these amendments shall have been duly filed with and accepted
by the Secretary of State of the State of South Carolina; and (ii) each
Stockholder and each Other Stockholder shall have executed and delivered
to the Company, in form and substance satisfactory to ARS, a written
instrument that: (A) acknowledges the Company is and has, and releases the
Company for having and continuing to be, engaged in businesses beyond the
purposes presently set forth in the Company's articles of incorporation;
and (B) (1) acknowledges the Company may have issued and sold Company
Common Stock to one or more of the other Stockholders or Other
Stockholders in violation of the preemptive rights the SCBCA affords the
acknowledging Stockholder or Other Stockholder and (2) releases all claims
of every kind the acknowledging Stockholder or Other Stockholder has or
might have against the Company and each other Stockholder and Other
Stockholder as a result of those sales; and
(e) the representations and warranties contained in Article IV of
the Uniform Provisions (the text of which Article hereby is incorporated
herein by this reference) are true and correct, and the agreements set
forth in that Article hereby are agreed to.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF ARS AND NEWCO
Section 5.01. BY ARS AND NEWCO. ARS and Newco jointly and severally
represent and warrant to the Company and each Stockholder that all the following
representations and warranties in this Article V are as of the date of this
Agreement, and will be on the date of the Closing and the IPO Closing Date, true
and correct: (a) Newco is a corporation duly organized, validly existing and in
good standing under the laws of the State of South Carolina, (b) no Derivative
Securities of Newco are outstanding, (c) Newco has been organized for the sole
purpose of participating in the Merger and has not, and will not, engage in any
activities other than those necessary to effectuate the Merger and (d) the
representations and warranties contained in Article V of the Uniform Provisions
(the text of which Article hereby is incorporated herein by this reference) are
true and correct.
ARTICLE VI
COVENANTS EXTENDING TO THE EFFECTIVE TIME
Section 6.01. OF EACH PARTY. Until the Effective Time, subject to
the waiver provisions of Section 11.05, each party hereto will comply with each
covenant for which provision
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is made in Article VI of the Uniform Provisions (the text of which Article
hereby is incorporated herein by this reference) to be performed or observed by
that party.
ARTICLE VII
THE CLOSING AND CONDITIONS TO CLOSING AND CONSUMMATION
Section 7.01. THE CLOSING AND CERTAIN CONDITIONS. (a) THE CLOSING.
On or before the IPO Pricing Date, the parties hereto will take all actions
necessary to (i) effect the Merger (including, as permitted by the SCBCA, (A)
the execution of a Certificate of Merger (1) meeting the requirements of the
SCBCA and (2) providing that the Merger will become effective on the IPO Closing
Date and (B) the filing of that Certificate with the Secretary of State of the
State of South Carolina), (ii) verify the existence and ownership of the
certificates evidencing the Company Common Stock to be exchanged for the Merger
Consideration pursuant to Section 2.05 and (iii) satisfy the document delivery
requirements to which the obligations of the parties to effect the Merger and
the other transactions contemplated hereby are conditioned by the provisions of
this Article VII (all those actions collectively being the "Closing"). The
Closing will take place at the offices of ▇▇▇▇▇ & ▇▇▇▇▇, L.L.P., ▇▇▇▇ ▇▇▇▇▇, ▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇ at 10:00 a.m., Houston time, or at such later time on
the IPO Pricing Date as ARS shall specify by written notice to ▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇. The actions taken at the Closing will not include the completion of
either the Merger or the delivery of the Company Common Stock or the Merger
Consideration pursuant to Section 2.05. Instead, on the IPO Closing Date, the
Certificates of Merger will become effective pursuant to Section 2.02, and all
transactions contemplated by this Agreement to be closed or completed on or
before the IPO Closing Date, including the surrender of the Company Common Stock
in exchange for the Merger Consideration (including a certified check or checks
in an amount equal to the cash portion of the Merger Consideration) will be
closed or completed, as the case may be. During the period from the Closing to
the IPO Closing Date, this Agreement may be terminated by the parties only
pursuant to Section 12.01(b)(i).
(b) CERTAIN CONDITIONS TO THE OBLIGATIONS OF THE COMPANY, THE
STOCKHOLDERS AND THE OTHER STOCKHOLDERS. The obligations of the Company, the
Stockholders and the Other Stockholders with respect to the actions to be taken
by them at or before the Closing are subject to the satisfaction on or before
the date of the Closing, or waiver by them pursuant to Section 11.05, of all the
conditions set forth in Sections 7.02(a) and 7.03. The obligations of the
Stockholders with respect to the actions to be taken on the IPO Closing Date are
subject to the satisfaction on that date of the following conditions: (i) each
of the Stockholders' Agreement and the ▇▇▇▇▇▇▇ Employment Agreement then shall
be in full force and effect; and (ii) all the conditions set forth in Section
7.02(b) and 7.03.
(c) CERTAIN CONDITIONS TO THE OBLIGATIONS OF ARS AND NEWCO. The
obligations of ARS and Newco with respect to actions to be taken by them at or
before the Closing are subject to the satisfaction on or before the date of the
Closing, or waiver by them pursuant to Section 11.05, of the following
conditions: (i) the Company shall have delivered to ARS copies of the articles
of
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incorporation, each as amended to the date of the Closing and certified by
the Secretary of State of the State of South Carolina as of a Current Date, of
the Company and each Company Subsidiary; and (ii) all the conditions set forth
in Sections 7.02(a) and 7.04(a).
(d) The obligations of ARS and Newco with respect to the actions to
be taken on the IPO Closing Date are subject to the satisfaction on that date of
the following conditions: (i) the ▇▇▇▇▇▇▇ Employment Agreement then shall be in
full force and effect; and (ii) all the conditions set forth in Sections 7.02(b)
and 7.04(b).
(e) The text of Article VII of the Uniform Provisions hereby is
incorporated herein by this reference.
ARTICLE VIII
COVENANTS FOLLOWING THE EFFECTIVE TIME
Section 8.01. OF EACH PARTY OTHER THAN THE COMPANY. From and after
the Effective Time, subject to the waiver provisions of Section 11.05, each
party hereto (other than the Company) will comply with each covenant for which
provision is made in Article VIII of the Uniform Provisions (the text of which
Article hereby is incorporated herein by this reference) to be performed or
observed by that party.
ARTICLE IX
INDEMNIFICATION
Section 9.01. INDEMNIFICATION RIGHTS AND OBLIGATIONS. The text of
Article IX of the Uniform Provisions hereby is incorporated herein by this
reference. For purposes of Section 9.07(a), the Pro Rata Shares of the
Transaction Value are 60% and 40%, respectively, for ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ and
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, as Trustee under ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ Retained Annuity Trust.
For purposes of Section 9.07(b), the Transaction Value is 82.2943% of the amount
determined as the Transaction Value for other purposes hereof.
ARTICLE X
LIMITATIONS ON COMPETITION
Section 10.01. PROHIBITED ACTIVITIES. Each Stockholder agrees,
severally and not jointly with any other Person, that he will not, during the
period beginning on the date hereof and ending on the third anniversary of the
date hereof, directly or indirectly, for any reason, for his own account or on
behalf of or together with any other Person:
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(a) engage as an officer, director or in any other managerial
capacity or as an owner, co-owner or other investor of or in, whether as
an employee, independent contractor, consultant or advisor, or as a sales
representative or distributor of any kind, in any business selling any
products or providing any services in competition with the Company, any
Company Subsidiary or ARS or any Subsidiary of ARS (ARS and its
Subsidiaries collectively being "ARS" for purposes of this Article X)
within a radius of 100 miles of each location in which any of the Company
or the Company Subsidiaries was engaged in business on the date hereof or
immediately prior to the Effective Time (those locations collectively
being the "Territory");
(b) call on any natural person who is at that time employed by the
Company, any Company Subsidiary or ARS in any managerial capacity with the
purpose or intent of attracting that person from the employ of the
Company, any Company Subsidiary or ARS, provided that the Stockholder may
call on and hire any of his Immediate Family Members;
(c) call on any Person that at that time is, or at any time within
one year prior to that time was, a customer of the Company, any Company
Subsidiary or ARS within the Territory, (i) for the purpose of soliciting
or selling any product or service in competition with the Company, any
Company Subsidiary or ARS within the Territory and (ii) with the knowledge
of that customer relationship; or
(d) call on any ARS Acquisition Candidate, with the knowledge of
that Person's status as an ARS Acquisition Candidate, for the purpose of
acquiring that Person or arranging the acquisition of that Person by any
Person other than ARS.
Notwithstanding the foregoing, any Stockholder may own and hold as a passive
investment up to 1% of the outstanding Capital Stock of a competing Entity if
that class of Capital Stock is listed on the New York Stock Exchange or included
in the Nasdaq National Market. For purposes hereof and the respective tax
reporting positions of the parties hereto, each party hereto agrees that the
percentage of the cash portion of the Merger Consideration to be received by
each Stockholder pursuant to Section 2.04 which equals 1% of that Stockholder's
Pro Rata Share of the Transaction Value will represent, and be received as,
consideration for that Stockholder's agreement to observe the covenants in this
Section 10.01.
Section 10.02. DAMAGES. Because of the difficulty of measuring
economic losses to ARS as a result of any breach by a Stockholder of his
covenants in Section 10.01, and because of the immediate and irreparable damage
that could be caused to ARS for which it would have no other adequate remedy,
each Stockholder agrees that ARS may enforce the provisions of Section 10.01 by
injunctions and restraining orders against that Stockholder if he breaches any
of those provisions.
Section 10.03. REASONABLE RESTRAINT. The parties hereto each agree
that Sections 10.01 and 10.02 impose a reasonable restraint on the Stockholders
in light of the activities
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and business of ARS on the date hereof, the current business plans of ARS and
the investment by each Stockholder in ARS as a result of the Merger.
Section 10.04. SEVERABILITY; REFORMATION. The covenants in this
Article X are severable and separate, and the unenforceability of any specific
covenant in this Article X is not intended by any party hereto to, and shall
not, affect the provisions of any other covenant in this Article X. If any court
of competent jurisdiction shall determine that the scope, time or territorial
restrictions set forth in Section 10.01 are unreasonable as applied to any
Stockholder, the parties hereto, including that Stockholder, acknowledge their
mutual intention and agreement that those restrictions be enforced to the
fullest extent the court deems reasonable, and thereby shall be reformed to that
extent as applied to that Stockholder and any other Stockholder similarly
situated.
Section 10.05. INDEPENDENT COVENANT. All the covenants in this
Article X are intended by each party hereto to, and shall, be construed as an
agreement independent of any other provision in this Agreement, and the
existence of any claim or cause of action of any Stockholder against ARS,
whether predicated on this Agreement or otherwise, shall not constitute a
defense to the enforcement by ARS of any covenant in this Article X. It is
specifically agreed that the period specified in Section 10.01 shall be computed
in the case of each Stockholder by excluding from that computation any time
during which that Stockholder is in violation of any provision of Section 10.01.
The covenants contained in this Article X shall not be affected by any breach of
any other provision hereof by any party hereto.
Section 10.06. MATERIALITY. The Company and each Stockholder,
severally and not jointly with any other Person, hereby agree that this Article
X is a material and substantial part of the transactions contemplated hereby.
ARTICLE XI
GENERAL PROVISIONS
Section 11.01. TREATMENT OF CONFIDENTIAL INFORMATION. Each party
hereto will comply with each covenant for which provision is made in Section
11.01 of the Uniform Provisions (the text of which Section hereby is
incorporated herein by this reference) to be performed or observed by that
party.
Section 11.02. RESTRICTIONS ON TRANSFER OF ARS COMMON STOCK. (a)
During the two-year period ending on the second anniversary of the IPO Closing
Date (the "Restricted Period") (or if the two-year "holding" period for
restricted securities under Rule 144 under the Securities Act is reduced by the
SEC, the Restricted Period will be correspondingly reduced), no Stockholder
voluntarily will, except pursuant to and in accordance with the applicable
provisions of the Registration Rights Agreement: (i) sell, assign, exchange,
transfer, encumber, pledge, distribute, appoint or otherwise dispose of (A) any
shares of ARS Common Stock received by any Stockholder in the Merger or (B) any
interest in (including any option to buy or sell) any of those shares of ARS
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Common Stock, in whole or in part, and ARS will have no obligation to, and shall
not, treat any such attempted transfer as effective for any purpose; or (ii)
engage in any transaction, whether or not with respect to any shares of ARS
Common Stock or any interest therein, the intent or effect of which is to reduce
the risk of owning the shares of ARS Common Stock acquired pursuant to Section
2.04 (including, for example engaging in put, call, short-sale, straddle or
similar market transactions); provided, however, that this Section 11.02 shall
not restrict any transfer of ARS Common Stock acquired by a Stockholder pursuant
to Section 2.04 to any of that Stockholder's Related Persons who agree in
writing to be bound by the provisions of Section 11.01 and this Section 11.02.
The certificates evidencing the ARS Common Stock delivered to each Stockholder
and Other Stockholder pursuant to Section 2.05 will bear a legend substantially
in the form set forth below and containing such other information as ARS may
deem necessary or appropriate:
EXCEPT PURSUANT TO THE TERMS OF THE AGREEMENT AND PLAN OF REORGANIZATION
AMONG THE ISSUER, THE HOLDER OF THIS CERTIFICATE AND THE OTHER PARTIES
THERETO, THE SHARES REPRESENTED BY THIS CERTIFICATE MAY NOT BE VOLUNTARILY
SOLD, ASSIGNED, EXCHANGED, TRANSFERRED, ENCUMBERED, PLEDGED, DISTRIBUTED,
APPOINTED OR OTHERWISE DISPOSED OF, AND THE ISSUER SHALL NOT BE REQUIRED
TO GIVE EFFECT TO ANY ATTEMPTED VOLUNTARY SALE, ASSIGNMENT, EXCHANGE,
TRANSFER, ENCUMBRANCE, PLEDGE, DISTRIBUTION, APPOINTMENT OR OTHER
DISPOSITION OF ANY OF THOSE SHARES, DURING THE TWO-YEAR PERIOD ENDING ON
__________ [DATE THAT IS THE SECOND ANNIVERSARY OF THE IPO CLOSING DATE]
(THE "RESTRICTED PERIOD") (OR IF THE TWO YEAR "HOLDING" PERIOD FOR
RESTRICTED SECURITIES UNDER RULE 144 UNDER THE SECURITIES ACT OF 1933 IS
REDUCED BY THE SECURITIES AND EXCHANGE COMMISSION, THE RESTRICTED PERIOD
WILL BE CORRESPONDINGLY REDUCED). ON THE WRITTEN REQUEST OF THE HOLDER OF
THIS CERTIFICATE, THE ISSUER AGREES TO REMOVE THIS RESTRICTIVE LEGEND (AND
ANY STOP ORDER PLACED WITH THE TRANSFER AGENT) AFTER THE DATE SPECIFIED
ABOVE.
(b) Each Stockholder, severally and not jointly with any other
Person, (i) acknowledges that the shares of ARS Common Stock to be delivered to
that Stockholder pursuant to Section 2.04 have not been and, except pursuant to
the Registration Rights Agreement, if applicable, will not be registered under
the Securities Act and therefore may not be resold by that Stockholder without
compliance with the Securities Act and (ii) covenants that none of the shares of
ARS Common Stock issued to that Stockholder pursuant to Section 2.04 will be
offered, sold, assigned, pledged, hypothecated, transferred or otherwise
disposed of except after full compliance with all the applicable provisions of
the Securities Act and the rules and regulations of the SEC and applicable state
securities laws and regulations. All certificates evidencing shares of ARS
Common Stock issued pursuant to Section 2.04 will bear the following legend in
addition to the legend prescribed by Section 11.02(a):
THE SHARES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933 AND MAY ONLY BE SOLD OR OTHERWISE TRANSFERRED IF
THE HOLDER HEREOF COMPLIES WITH THAT LAW AND OTHER APPLICABLE SECURITIES
LAWS.
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In addition, certificates evidencing shares of ARS Common Stock issued pursuant
to Section 2.04 to each Stockholder and Other Stockholder will bear any legend
required by the securities or blue sky laws of the state in which that
Stockholder resides.
Section 11.03. BROKERS AND AGENTS. The Stockholders jointly and
severally represent and warrant to ARS that the Company has not directly or
indirectly employed or become obligated to pay any broker or similar agent in
connection with the transactions contemplated hereby and agree, without regard
to the Threshold Amount limitations set forth in Article IX, to indemnify ARS
against all Damage Claims arising out of claims for any and all fees and
commissions of brokers or similar agents employed or promised payment by the
Company.
Section 11.04. ASSIGNMENT; NO THIRD PARTY BENEFICIARIES. This
Agreement and the rights of the parties hereunder may not be assigned (except by
operation of law) and shall be binding on and inure to the benefit of the
parties hereto, the successors of ARS, and the heirs and legal representatives
of the Stockholders (and, in the case of any trust, the successor trustees of
that trust). Neither this Agreement nor any other Transaction Document is
intended, or shall be construed, deemed or interpreted, to confer on any Person
not a party hereto or thereto any rights or remedies hereunder or thereunder,
except as provided in Section 6.05(b) or 11.14, in Article IX or as otherwise
provided expressly herein or therein.
Section 11.05. ENTIRE AGREEMENT; AMENDMENT; WAIVERS. This Agreement
and the documents delivered pursuant hereto constitute the entire agreement and
understanding among the Stockholders, the Company, Newco and ARS and supersede
all prior agreements and understandings, both written and oral, relating to the
subject matter of this Agreement. This Agreement may be amended, modified or
supplemented, and any right hereunder may be waived, if, but only if, that
amendment, modification, supplement or waiver is in writing and signed by the
Required Stockholders, the Company and ARS; provided, however, that no such
amendment, modification, supplement or waiver will be effective unless it is
signed by each Stockholder affected thereby to the extent that it (a) changes
the several nature of that Stockholder's representations and warranties (to the
extent they are not already joint and several as provided in Sections 4.01 and
11.03), (b) reduces the amount, or changes the components, of the Merger
Consideration that Stockholder is entitled to receive pursuant to Section 2.04,
as adjusted pursuant to Section 2.05(f), (c) waives the consummation of the IPO
as a condition to consummation of the Merger or (d) amends or waives this
sentence. The waiver of any of the terms and conditions hereof shall not be
construed or interpreted as, or deemed to be, a waiver of any other term or
condition hereof.
Section 11.06. COUNTERPARTS. This Agreement may be executed in
multiple counterparts, each of which will be an original, but all of which
together will constitute one and the same instrument.
Section 11.07. EXPENSES. Whether or not the transactions
contemplated hereby are consummated, (a) ARS will pay the fees, expenses and
disbursements of ARS and Newco and their Representatives which are incurred in
connection with the subject matter of this Agreement and any
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amendments thereto, including all costs and expenses incurred in the performance
of and compliance with all conditions to be performed by ARS and Newco under
this Agreement, including the costs of preparing the Registration Statement, (b)
the Stockholders and Other Stockholders will pay from personal funds, and not
from funds of the Company or any Company Subsidiary, all sales, use, transfer
and other similar taxes and fees (collectively, "Transfer Taxes") incurred in
connection with the transactions contemplated hereby and (c) the Company will
pay the fees, expenses and disbursements of Counsel for the Company and the
Stockholders incurred in connection with the subject matter of this Agreement
and the Registration Statement on or before the IPO Closing Date (which fees,
expenses and disbursements will, to the extent accrued through the IPO Closing
Date but then unpaid, be recorded as a liability of the Company for the purpose
of determining its Closing Date Working Capital and resulting Positive Working
Capital Adjustment or Negative Working Capital Adjustment, as the case may be);
provided, however, if the Company or the Required Stockholders terminate this
Agreement otherwise than as permitted by Article XII, the Company will, no later
than 10 Houston, Texas business days after ARS makes a written request therefor,
reimburse ARS in the amount equal to the aggregate fees, costs and other
expenses invoiced to ARS by ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP in connection with its audit of
the Company's financial statements at December 31, 1995 and for the 12-month
period then ended. The Stockholders will, and will cause the Other Stockholders
to, file all necessary documentation and Returns with respect to all Transfer
Taxes. In addition, each Stockholder acknowledges that he, and not the Company
or ARS or the Surviving Corporation, will pay all Taxes due upon receipt of the
consideration payable to that Stockholder pursuant to Article II.
Section 11.08. NOTICES. All notices required or permitted hereunder
shall be in writing, and shall be deemed to be delivered and received (a) if
personally delivered or if delivered by telex, telegram, facsimile or courier
service, when actually received by the party to whom notice is sent or (b) if
delivered by mail (whether actually received or not), at the close of business
on the third Houston, Texas business day next following the day when placed in
the mail, postage prepaid, certified or registered, addressed to the appropriate
party or parties, at the address of such party set forth below (or at such other
address as such party may designate by written notice to all other parties in
accordance herewith):
(i) if to ARS or Newco, addressed to it at:
American Residential Services, Inc.
▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attn.: C. ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇.
Chief Executive Officer
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with copies (which shall not constitute notice for purposes of this
Agreement) to:
▇▇▇▇▇ & ▇▇▇▇▇, L.L.P.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇ ▇. Leader, Esq.;
(ii) if to the Stockholders, addressed to them at their addresses
set forth in Schedule 2.04; and
(iii) if to the Company, addressed to it at:
Atlas Services, Inc.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
and marked "Personal and Confidential"
with copies (which shall not constitute notice for purposes of this
Agreement) to:
Evans, Carter, ▇▇▇▇▇ & ▇▇▇▇▇▇▇, P.A.
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
SECTION 11.09. GOVERNING LAW. THIS AGREEMENT AND THE RIGHTS AND
OBLIGATIONS OF THE PARTIES HERETO SHALL BE GOVERNED BY AND CONSTRUED AND
ENFORCED IN ACCORDANCE WITH THE SUBSTANTIVE LAWS OF THE STATE OF NEW YORK
WITHOUT REGARD TO THE CONFLICTS OF LAW PROVISIONS THEREOF; PROVIDED, HOWEVER,
THAT ARTICLE X AND THE RIGHTS AND OBLIGATIONS THEREUNDER OF THE PARTIES THERETO
WILL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE SUBSTANTIVE LAWS OF THE
STATE OF SOUTH CAROLINA WITHOUT REGARD TO THE CONFLICTS OF LAW PROVISIONS
THEREOF.
Section 11.10. EXERCISE OF RIGHTS AND REMEDIES. Except as otherwise
provided herein, no delay or omission in the exercise of any right, power or
remedy accruing to any party hereto as a result of any breach or default
hereunder by any other party hereto shall impair any such right, power or
remedy, nor shall it be construed, deemed or interpreted as a waiver of or
acquiescence in any such breach or default, or of any similar breach or default
occurring later; nor shall any waiver of any single breach or default be
construed, deemed or interpreted as a waiver of any other breach or default
hereunder occurring before or after that waiver.
Section 11.11. TIME. Time is of the essence in the performance of
this Agreement in all respects.
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Section 11.12. REFORMATION AND SEVERABILITY. If any provision of
this Agreement is invalid, illegal or unenforceable, that provision shall, to
the extent possible, be modified in such manner as to be valid, legal and
enforceable but so as to most nearly retain the intent of the parties hereto as
expressed herein, and if such a modification is not possible, that provision
shall be severed from this Agreement, and in either case the validity, legality
and enforceability of the remaining provisions of this Agreement shall not in
any way be affected or impaired thereby.
Section 11.13. REMEDIES CUMULATIVE. No right, remedy or election
given by any term of this Agreement shall be deemed exclusive, but each shall be
cumulative with all other rights, remedies and elections available at law or in
equity.
Section 11.14. RESPECTING THE IPO. Each of the Company and the
Stockholders acknowledges and agrees that: (a) no firm commitment, binding
agreement or promise or other assurance of any kind, whether express or implied,
oral or written, exists at the date hereof that the Registration Statement will
become effective or that the IPO will occur at a particular price or within a
particular range of prices or occur at all; (b) neither ARS or any of its
Representatives nor any prospective underwriters in the IPO will have any
liability to the Company, the Stockholders or any of their respective Affiliates
or associates for any failure of (i) the Registration Statement to become
effective (provided, however, that ARS will use its reasonable best efforts to
cause the Registration Statement to become effective prior to December 31, 1996)
or (ii) the IPO to occur at a particular price or within a particular range of
prices or to occur at all; and (c) the decision of Stockholders to enter into
this Agreement, or to vote in favor of or consent to the Merger, has been or
will be made independent of, and without reliance on, any statements, opinions
or other communications of, or due diligence investigations that have been or
will be made or performed by, any prospective underwriter relative to ARS or the
IPO. The Underwriter shall have no obligation to any of the Company and the
Stockholders or the Other Stockholders with respect to any disclosure contained
in the Registration Statement.
ARTICLE XII
TERMINATION
Section 12.01. TERMINATION OF THIS AGREEMENT. (a) This Agreement may
be terminated at any time prior to the Closing solely:
(i) by the mutual written consent of ARS and the Company;
(ii) by the Stockholders or the Company, on the one hand, or by ARS,
on the other hand, if the transactions contemplated by this Agreement to
take place at the Closing shall not have been consummated by December 31,
1996, unless the failure of such transactions to be consummated results
from the willful failure of the party (or in the case of the Stockholders
and the Company, any of them) seeking to terminate this Agreement to
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perform or adhere to any agreement required hereby to be performed or
adhered to by it prior to or at the Closing or thereafter on the IPO
Closing Date;
(iii) by the Stockholders or the Company, on the one hand, or by
ARS, on the other hand, if a material breach or default shall be made by
the other party (or in the case of the Stockholders and the Company, any
of them) in the observance or in the due and timely performance of any of
the covenants, agreements or conditions contained herein; or
(iv) by ARS if it is entitled to do so as provided in Section 6.08;
(b) This Agreement may be terminated after the Closing solely:
(i) by ARS or the Company if the Underwriting Agreement is
terminated pursuant to its terms after the Closing and prior to the
consummation of the IPO; or
(ii) automatically and without action on the part of any party
hereto if the IPO is not consummated within 15 New York City business days
after the date of the Closing.
(c) If this Agreement is terminated pursuant to this Section 12.01,
the Merger will be deemed for all purposes to have been abandoned and of no
force or effect. If this Agreement is terminated pursuant to this Section 12.01
after the Certificate of Merger has been filed with the Secretary of State of
the State of South Carolina, but before the IPO has been consummated, ARS will
take all actions that Counsel for the Company and the Stockholders advises ARS
are required by the applicable laws of the State of South Carolina in order to
rescind the Merger.
Section 12.02. LIABILITIES IN EVENT OF TERMINATION. If this
Agreement is terminated pursuant to Section 12.01, there shall be no liability
or obligation on the part of any party hereto except (a) as provided in Section
11.07 and (b) to the extent that such liability is based on the breach by that
party of any of its representations, warranties or covenants set forth in this
Agreement.
-21-
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
as of the date first above written.
AMERICAN RESIDENTIAL SERVICES, INC.
By:
C. ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇.
Chief Executive Officer and President
ARS ATLAS INC.
By:
C. ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇.
Chief Executive Officer and President
ATLAS SERVICES, INC.
By:
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
President
STOCKHOLDERS:
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ as Trustee
under ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Retained Annuity Trust
OTHER STOCKHOLDERS:
*
▇▇▇▇▇▇▇ ▇▇▇▇▇
-22-
*
▇▇▇▇ ▇▇▇▇▇▇
*
▇▇▇▇▇▇ ▇▇▇▇▇▇
*
▇▇▇▇ ▇▇▇
*
▇▇▇▇▇ ▇▇▇▇▇
*
▇▇▇▇ ▇▇▇▇
*
▇▇▇▇▇ ▇▇▇▇▇▇▇
*
▇▇▇▇▇▇ ▇▇▇▇▇▇▇
*
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
*
▇▇▇▇▇▇▇ ▇▇▇▇
*
▇▇▇▇ ▇▇▇▇▇▇▇
*
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
-23-
*
▇▇▇▇▇ ▇▇▇▇▇▇▇▇
*
▇▇▇▇▇ ▇▇▇▇▇
*
▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇
*
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
*
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
*
▇▇ ▇▇▇▇▇
*
▇▇▇ ▇▇▇▇▇▇▇▇▇▇
*By: ________________________
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Attorney-in-Fact
-24-
ADDENDUM 1
to the
Agreement and Plan of Reorganization
dated as of June 13, 1996
by and among
American Residential Services, Inc.,
ARS Atlas Inc.,
Atlas Services, Inc.
and
the Stockholders and Other Stockholders named therein
A. Words and terms used in this Addendum which are defined in the
captioned Agreement to which this is an Addendum are used herein as therein
defined.
B. The Founding Companies are:
Atlas Services, Inc.
Bullseye Air Conditioning, Inc.
Climatic Corporation of Vero Beach
DIAL ONE Meridian and Hoosier, Inc.
Enterprises Holding Company
Florida Heating and Air Conditioning, Inc.
Florida Heating and Air Conditioning Service, Inc.
Florida Heating and Air Duct, Inc.
General Heating Engineering Company, Inc.
-25-
SCHEDULE 2.03
to the
Agreement and Plan of Reorganization
dated as of June 13, 1996
by and among
American Residential Services, Inc.,
ARS Atlas Inc.,
Atlas Services, Inc.
and
the Stockholders and Other Stockholders named therein
A. Words and terms used in this Schedule which are defined in the
captioned agreement to which this Schedule is attached as Schedule 2.03 are used
herein as defined therein.
B. The directors of the Surviving Corporation immediately after the
Effective Time are as follows: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇., ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ and
C. ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇.
C. The officers of the Surviving Corporation immediately following
the Effective Time are as follows:
President ........................................... ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Vice President and Assistant Secretary .............. ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Vice President and Secretary ........................ ▇▇▇▇ ▇. Held
-26-
SCHEDULE 2.04
to the
Agreement and Plan of Reorganization
dated as of June 13, 1996
by and among
American Residential Services, Inc.,
ARS Atlas Inc.,
Atlas Services, Inc.
and
the Stockholders and Other Stockholders named therein
A. Words and terms used in this Schedule which are defined in
the captioned Agreement to which this Schedule is attached as Schedule 2.04 are
used herein as defined therein.
B. The name and address of each Stockholder and Other Stockholder
are as follows:
--------------------------------------------------------------------------------
Stockholders ADDRESS
--------------------------------------------------------------------------------
c/o Atlas Services, Inc.
3548 ▇▇▇▇▇ ▇▇▇▇▇▇▇ Drive
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇....................... ▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
--------------------------------------------------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ as Trustee c/o Atlas Services, Inc.
under ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ Retained 3548 ▇▇▇▇▇ ▇▇▇▇▇▇▇ Drive
Annuity Trust ........................ ▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
--------------------------------------------------------------------------------
OTHER STOCKHOLDERS:
--------------------------------------------------------------------------------
c/o Atlas Services, Inc.
3548 ▇▇▇▇▇ ▇▇▇▇▇▇▇ Drive
▇▇▇▇▇▇▇ ▇. Quick........................ ▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
--------------------------------------------------------------------------------
c/o Atlas Services, Inc.
3548 ▇▇▇▇▇ ▇▇▇▇▇▇▇ Drive
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇........................ ▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
--------------------------------------------------------------------------------
-27-
c/o Atlas Services, Inc.
3548 ▇▇▇▇▇ ▇▇▇▇▇▇▇ Drive
▇▇▇▇▇ ▇▇▇▇▇▇▇........................... ▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
--------------------------------------------------------------------------------
c/o Atlas Services, Inc.
3548 ▇▇▇▇▇ ▇▇▇▇▇▇▇ Drive
▇▇▇▇ ▇. ▇▇▇▇▇▇.......................... ▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
--------------------------------------------------------------------------------
c/o Atlas Services, Inc.
3548 ▇▇▇▇▇ ▇▇▇▇▇▇▇ Drive
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇..................... ▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
--------------------------------------------------------------------------------
c/o Atlas Services, Inc.
3548 ▇▇▇▇▇ ▇▇▇▇▇▇▇ Drive
▇▇▇▇▇▇▇ ▇▇▇▇ Dehaver.................... ▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
--------------------------------------------------------------------------------
c/o Atlas Services, Inc.
3548 ▇▇▇▇▇ ▇▇▇▇▇▇▇ Drive
Marc. ▇. ▇▇▇▇▇▇▇........................ ▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
--------------------------------------------------------------------------------
c/o Atlas Services, Inc.
3548 ▇▇▇▇▇ ▇▇▇▇▇▇▇ Drive
▇▇▇▇▇▇▇ ▇▇▇▇............................ ▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
--------------------------------------------------------------------------------
c/o Atlas Services, Inc.
3548 ▇▇▇▇▇ ▇▇▇▇▇▇▇ Drive
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇....................... ▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
--------------------------------------------------------------------------------
c/o Atlas Services, Inc.
3548 ▇▇▇▇▇ ▇▇▇▇▇▇▇ Drive
▇▇▇▇▇ ▇▇▇▇▇............................. ▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
--------------------------------------------------------------------------------
c/o Atlas Services, Inc.
3548 ▇▇▇▇▇ ▇▇▇▇▇▇▇ Drive
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇......................... ▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
--------------------------------------------------------------------------------
-28-
--------------------------------------------------------------------------------
c/o Atlas Services, Inc.
3548 ▇▇▇▇▇ ▇▇▇▇▇▇▇ Drive
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇...................... ▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
--------------------------------------------------------------------------------
c/o Atlas Services, Inc.
3548 ▇▇▇▇▇ ▇▇▇▇▇▇▇ Drive
▇▇▇▇ ▇▇▇................................ ▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
--------------------------------------------------------------------------------
c/o Atlas Services, Inc.
3548 ▇▇▇▇▇ ▇▇▇▇▇▇▇ Drive
▇▇▇▇▇ ▇▇▇▇▇ ............................ ▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
--------------------------------------------------------------------------------
c/o Atlas Services, Inc.
3548 ▇▇▇▇▇ ▇▇▇▇▇▇▇ Drive
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ......................... ▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
--------------------------------------------------------------------------------
c/o Atlas Services, Inc.
3548 ▇▇▇▇▇ ▇▇▇▇▇▇▇ Drive
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ........................ ▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
--------------------------------------------------------------------------------
c/o Atlas Services, Inc.
3548 ▇▇▇▇▇ ▇▇▇▇▇▇▇ Drive
▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇ .................... ▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
--------------------------------------------------------------------------------
c/o Atlas Services, Inc.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇ ▇▇▇▇▇ ............................... ▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
--------------------------------------------------------------------------------
c/o Atlas Services, Inc.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ......................... ▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
--------------------------------------------------------------------------------
C. SUBJECT TO INCREASE OR REDUCTION BY THE APPLICATION OF THE
POSITIVE WORKING CAPITAL ADJUSTMENT OR THE NEGATIVE WORKING CAPITAL ADJUSTMENT,
AS THE CASE MAY BE, THE AGGREGATE MERGER CONSIDERATION WILL BE COMPRISED OF (1)
$5,000,000 IN CASH AND (2) SUCH NUMBER OF WHOLE AND FRACTIONAL SHARES OF ARS
COMMON STOCK AS SHALL EQUAL THE QUOTIENT OF (A) $21,000,000 DIVIDED
-29-
BY (B) THE IPO PRICE, AND THE STOCKHOLDERS AND THE OTHER STOCKHOLDERS WILL BE
ENTITLED TO RECEIVE THE MERGER CONSIDERATION PURSUANT TO SECTION 2.04 AS
FOLLOWS:
Shares of
Pre-Merger Share of
Company Merger Consideration
Common Pro Rata --------------------
Stock Owned Share Cash Stock
----------- -------- -------- --------
STOCKHOLDERS:
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇........... 12,000 49.3766% 80.0000% 39.8068%
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ as
Trustee under ▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇ Retained
Annuity Trust............. 8,000 32.9177 19.6276 37.0709
OTHER STOCKHOLDERS:
------------------
▇▇▇▇▇▇▇ ▇. Quick.......... 702 2.8885 - 3.7911
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇.......... 838 3.4481 - 4.5257
▇▇▇▇▇ ▇▇▇▇▇▇▇............. 992 4.0818 - 5.3574
▇▇▇▇ ▇. ▇▇▇▇▇▇............ 202 0.8311 - 1.0972
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇....... 243 0.9998 - 1.3123
▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ ..... 30 0.1234 - 0.1620
▇▇▇▇ ▇. ▇▇▇▇▇▇▇........... 18 0.0741 - 0.0972
▇▇▇▇▇▇▇ ▇▇▇▇.............. 441 1.8145 - 2.3817
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇......... 54 0.2221 - 0.2916
▇▇▇▇▇ ▇▇▇▇▇............... 23 0.0946 - 0.1242
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇........... 19 0.0781 - 0.1026
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇........ 14 0.0576 - 0.0756
▇▇▇▇ ▇▇▇ ................. 198 0.8147 0.3421 0.9624
▇▇▇▇▇ ▇▇▇▇▇ .............. 30 0.1234 - 0.1620
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ........... 344 1.4155 - 1.8578
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ .......... 59 0.2428 - 0.3186
▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇ ...... 6 0.2477 - 0.0324
▇▇ ▇▇▇▇▇ ................. 83 0.3415 - 0.4482
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ........... 7 0.0288 0.0302 0.0283
------------ --------- -------- --------
24,303 100.00% 100.00% 100.00%
====== ====== ====== ======
-30-
SCHEDULE 3.01
TO THE
AGREEMENT AND PLAN OF REORGANIZATION
DATED AS OF JUNE 13, 1996
BY AND AMONG
AMERICAN RESIDENTIAL SERVICES, INC.,
ARS ATLAS INC.,
ATLAS SERVICES, INC.
AND
THE STOCKHOLDERS AND OTHER STOCKHOLDERS NAMED THEREIN
A. WORDS AND TERMS USED IN THIS SCHEDULE WHICH ARE DEFINED IN THE
CAPTIONED AGREEMENT TO WHICH THIS SCHEDULE IS ATTACHED AS SCHEDULE 3.01 ARE USED
HEREIN AS THEREIN DEFINED.
B. EACH STOCKHOLDER IS AN "ACCREDITED INVESTOR" AS DEFINED IN
SECURITIES ACT RULE 501(A).
C. NONE OF THE OTHER INVESTORS IS AN "ACCREDITED INVESTOR" AS
DEFINED IN SECURITIES ACT RULE 501(A), BUT IS REPRESENTED BY ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇,
CPA, ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇, WHO IS
ACTING AS HIS OR HER PURCHASER REPRESENTATIVE.
-31-
SCHEDULE 3.02
TO THE
AGREEMENT AND PLAN OF REORGANIZATION
DATED AS OF JUNE 13, 1996
BY AND AMONG
AMERICAN RESIDENTIAL SERVICES, INC.,
ARS ATLAS INC.,
ATLAS SERVICES, INC.
AND
THE STOCKHOLDER NAMED THEREIN
A. WORDS AND TERMS USED IN THIS SCHEDULE WHICH ARE DEFINED IN THE
CAPTIONED AGREEMENT TO WHICH THIS SCHEDULE IS ATTACHED AS SCHEDULE 3.02 ARE USED
HEREIN AS DEFINED THEREIN.
B. THE RECORD AND BENEFICIAL OWNERS OF THE COMPANY CAPITAL STOCK AND ALL
LIENS ON SUCH STOCK ARE AS FOLLOWS:
OWNER SHARES LIENS
See Paragraph (C) of Schedule 2.04 None
-32-
SCHEDULE 3.07
to the
Agreement and Plan of Reorganization
dated as of June 13, 1996
by and among
American Residential Services, Inc.,
ARS Atlas Inc.,
Atlas Services, Inc.
and
the Stockholder named therein
A. Words and terms used in this Schedule which are defined in the
captioned Agreement to which this Schedule is attached as Schedule 3.07 are used
herein as defined therein.
B. The Stockholder is, alone or with one or more other Persons, the
controlling Affiliate of the following Entities, businesses or trades (other
than the Company and the Company Subsidiaries, if the Stockholder is an
Affiliate of the Company) that (a) are engaged in any line of business which is
the same as or similar to any line of business in which the Company or any
Company Subsidiary is engaged or (b) are, or have within the three-year period
ending on the date of this Agreement, engaged in any transaction with the
Company or any Company Subsidiary, except for transactions in the ordinary
course of business of the Company or that Company Subsidiary:
None
-33-
SCHEDULE 4.11
to the
Agreement and Plan of Reorganization
dated as of June 13, 1996
by and among
American Residential Services, Inc.,
ARS Atlas Inc.,
Atlas Services, Inc.
and
the Stockholders and Other Stockholders named therein
A. Words and terms used in this Schedule which are defined in the
captioned Agreement to which this Schedule is attached as Schedule 4.11 are used
herein as defined therein.
B. The following Related Party Agreements will be permitted to
continue in effect past the date of the Closing in accordance with their
respective terms, provided that (i) each of those agreements shall contain, or
shall be amended to contain, a provision to the effect that the rentals payable
by or to the Company thereunder always shall be no higher, and may be lower,
than fair market rentals as determined from time to time by an independent
appraiser selected by ARS:
(1) Lease dated as of May 11, 1995 between Blueberry Hill Limited
Liability Company ("Blueberry") and the Company.
(2) Lease dated as of December 15, 1995 between Blueberry and the
Company.
(3) Lease dated as of November 9, 1995 between GTM Partnership and
Golden Triangle Mechanical, Inc., a wholly owned Subsidiary of
the Company.
(4) Leasing agent agreement between Coastline Realty, Inc. and the
Company.
-34-
SCHEDULE 6.04
to the
Agreement and Plan of Reorganization
dated as of June 13, 1996
by and among
American Residential Services, Inc.,
ARS Atlas Inc.,
Atlas Services, Inc.
and
the Stockholder named therein
A. Words and terms used in this Schedule which are defined in the
captioned Agreement to which this Schedule is attached as Schedule 6.04 are used
herein as defined therein.
B. The Company and the Company Subsidiaries may make the following
Restricted Payments prior to the Effective Time:
None
-35-
SCHEDULE 6.12
to the
Agreement and Plan of Reorganization
dated as of June 13, 1996
by and among
American Residential Services, Inc.,
ARS Atlas Inc.,
Atlas Services, Inc.
and
the Stockholder named therein
A. Words and terms used in this Schedule which are defined in the
captioned Agreement to which this Schedule is attached as Schedule 6.12 are used
herein as defined therein.
B. The Company will make all arrangements and take all such actions as are
necessary and satisfactory to ARS to dispose, prior to the Effective Time, of
the following assets:
1. Ford Windstar
2. Cadillac STS
3. Chevrolet Tahoe
4. Cessna 421 airplane
-36-
SCHEDULE 8.05
to the
Agreement and Plan of Reorganization
dated as of June 13, 1996
by and among
American Residential Services, Inc.,
ARS Atlas Inc.,
Atlas Services, Inc.
and
the Stockholder named therein
A. Words and terms used in this Schedule which are defined in the
captioned Agreement to which this Schedule is attached as Schedule 8.05 are used
herein as defined therein.
B. At or within 60 days following the Effective Time, ARS will cause the
following Stockholder Guaranties to be terminated:
1. All guarantees relating to vehicle loans.
2. All guarantees relating to line of credit with NBSC.
3. All guarantees relating to mortgages on Atlas real property
BBET.
4. Guaranty for CDC floor plan financing.
5. Guarantees for other Atlas suppliers.
-37-
Atlas Services, Inc.
Annex 1
AMERICAN RESIDENTIAL SERVICES, INC.
UNIFORM PROVISIONS
FOR THE
ACQUISITION
OF
FOUNDING COMPANIES
WORDS AND TERMS USED IN THESE UNIFORM PROVISIONS WHICH ARE
DEFINED IN THE AGREEMENT AND PLAN OF REORGANIZATION AMONG AMERICAN RESIDENTIAL
SERVICES, INC., ARS ATLAS INC., ATLAS SERVICES, INC. AND THE STOCKHOLDERS AND
OTHER STOCKHOLDERS NAMED THEREIN (CALLED THEREIN AND HEREIN "THIS AGREEMENT") TO
WHICH THESE UNIFORM PROVISIONS ARE ATTACHED AS ANNEX 1 ARE USED HEREIN AS
DEFINED THEREIN.
TABLE OF CONTENTS
Page
ARTICLE I ADDITIONAL DEFINITIONS........................................-1-
Section 1.02. Additional Defined Terms..............................-1-
Section 1.03. Other Definitional Provisions........................-14-
Section 1.04 Captions..............................................-15-
ARTICLE III REPRESENTATIONS AND WARRANTIES OF EACH STOCKHOLDER...........-16-
Section 3.02. Ownership and Status of Company Capital Stock........-16-
Section 3.03. Power of the Stockholder; Approval of the Merger.....-16-
Section 3.04. No Conflicts or Litigation...........................-16-
Section 3.05. No Brokers...........................................-17-
Section 3.06. Preemptive and Other Rights; Waiver..................-17-
Section 3.07. Control of Related Businesses........................-17-
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE COMPANY
AND THE STOCKHOLDERS.........................................-18-
Section 4.02. Qualification........................................-18-
Section 4.03. Authorization; Enforceability; Absence of Conflicts;
Required Consents..................................-18-
Section 4.04. Charter Documents and Records; No Violation..........-19-
Section 4.05. No Defaults. ........................................-19-
Section 4.06. Company Subsidiaries.................................-19-
Section 4.07. Capital Stock of the Company and the Company
Subsidiaries.......................................-20-
Section 4.08. Transactions in Capital Stock........................-20-
Section 4.09. No Bonus Shares......................................-20-
Section 4.10. Predecessor Status; etc..............................-20-
Section 4.11. Related Party Agreements.............................-21-
Section 4.12. Litigation...........................................-21-
Section 4.13. Financial Statements; Disclosure.....................-21-
Section 4.14. Compliance With Laws.................................-22-
Section 4.15. Certain Environmental Matters........................-23-
Section 4.16. Liabilities and Obligations..........................-23-
Section 4.17. Receivables..........................................-24-
Section 4.18. Owned and Leased Real Properties.....................-24-
Section 4.19. Owned and Leased Property, Plant and Equipment.......-25-
Section 4.20. Proprietary Rights...................................-25-
Section 4.21. Title to Other Properties............................-25-
Section 4.22. Commitments..........................................-26-
Section 4.23. Capital Expenditures.................................-27-
Section 4.24. Inventories..........................................-27-
Section 4.25. Insurance............................................-28-
- i -
Section 4.26. Employee Matters.....................................-28-
Section 4.27. Compliance With ERISA, etc...........................-31-
Section 4.28. Taxes................................................-33-
Section 4.29. Government Contracts.................................-34-
Section 4.30. Absence of Changes...................................-34-
Section 4.31. Bank Relations; Powers of Attorney...................-36-
Section 4.32. Relations With Governments, etc......................-36-
ARTICLE V REPRESENTATIONS AND WARRANTIES OF ARS AND NEWCO..............-37-
Section 5.02. Organization; Power..................................-37-
Section 5.03. Authorization; Enforceability; Absence of Conflicts;
Required Consents...................................-37-
Section 5.04. Charter Documents....................................-38-
Section 5.05. Capital Stock of ARS and Newco.......................-38-
Section 5.06. Subsidiaries.........................................-39-
Section 5.07. Liabilities..........................................-39-
Section 5.08. Compliance With Laws; No Litigation..................-39-
Section 5.09. No Brokers...........................................-39-
ARTICLE VI COVENANTS EXTENDING TO THE EFFECTIVE TIME....................-40-
Section 6.02 Access and Cooperation; Due Diligence.................-40-
Section 6.03. Conduct of Business Pending Closing..................-40-
Section 6.04. Prohibited Activities................................-41-
Section 6.05. No Shop; Release of Directors........................-42-
Section 6.06. Notice to Bargaining Agents..........................-43-
Section 6.07. Notification of Certain Matters......................-43-
Section 6.08. Supplemental Information.............................-44-
Section 6.09. Cooperation in Connection With the IPO...............-44-
Section 6.10. Additional Financial Statements......................-45-
Section 6.11. Termination of Plans.................................-45-
Section 6.12. Disposition of Unwanted Assets.......................-45-
Section 6.13. HSR Act Matters......................................-45-
ARTICLE VII THE CLOSING AND CONDITIONS TO CLOSING AND
CONSUMMATION..............................................-46-
Section 7.02. Conditions to the Obligations of Each Party..........-46-
Section 7.03. Conditions to the Obligations of the Company and the
Stockholders.......................................-47-
Section 7.04. Conditions to the Obligations of ARS and Newco.......-48-
ARTICLE VIII COVENANTS FOLLOWING THE EFFECTIVE TIME....................-50-
Section 8.02. Disclosure...........................................-50-
Section 8.03. Preparation and Filing of Tax Returns................-50-
Section 8.04. Directors............................................-50-
- ii -
Section 8.05. Removal of Guaranties................................-50-
ARTICLE IX INDEMNIFICATION..............................................-51-
Section 9.02. Survival of Representations and Warranties...........-51-
Section 9.03. Indemnification of ARS Indemnified Parties...........-51-
Section 9.04. Indemnification of Stockholder Indemnified Parties...-52-
Section 9.05. Conditions of Indemnification........................-53-
Section 9.06. Remedies Not Exclusive...............................-55-
Section 9.07. Limitations on Indemnification.......................-55-
ARTICLE XI GENERAL PROVISIONS...........................................-56-
Section 11.01. Treatment of Confidential Information...............-56-
- iii -
THE UNIFORM PROVISIONS
ARTICLE I
ADDITIONAL DEFINITIONS
Section 1.02. ADDITIONAL DEFINED TERMS. As used in this
Agreement, the following terms have the meanings assigned to them below:
"ACQUISITION PROPOSAL" has the meaning specified in Section 6.05.
"AFFILIATE" means, as to any specified Person, any other Person
that, directly or indirectly through one or more intermediaries or
otherwise, controls, is controlled by or is under common control with
the specified Person. As used in this definition, "control" means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management or policies of a Person (whether through
ownership of Capital Stock of that Person, by contract or otherwise).
"AIR CONDITIONING AND REFRIGERATION CONTRACTING" means the
design, installation, construction, maintenance, service, repair,
alteration or modification of any appliance, equipment or other product
used in environmental air conditioning or filtering, commercial
refrigeration or process cooling or heating systems.
"ARS COMMON STOCK" means the common stock, par value $.001 per
share, of ARS.
"ARS INDEMNIFIED PARTY" means ARS and its Affiliates and each of
their respective officers, directors, employees, agents and counsel;
provided, however, that no Person who indemnifies ARS Indemnified
Parties in this Agreement in his capacity as a Stockholder will be an
ARS Indemnified Party for purposes of this Agreement, notwithstanding
that the Person is an ARS Indemnified Party for purposes of one or more
of the Other Agreements.
"ARS INDEMNIFIED LOSS" has the meaning specified in Section 9.03.
"CAPITAL LEASE" means a lease of (or other agreement conveying
the right to use) real or personal property that is required to be
classified and accounted for as a capital lease under GAAP as in effect
on the date of this Agreement.
"CAPITAL STOCK" means, with respect to: (a) any corporation, any
share, or any depositary receipt or other certificate representing any
share, of an equity ownership interest in that corporation; and (b) any
other Entity, any share, membership or other percentage interest, unit
of participation or other equivalent (however designated) of an equity
interest in that Entity.
-1-
"CASH COMPENSATION" means, as applied to any employee,
nonemployee director or officer of, or any natural person who performs
consulting or other independent contractor services for, the Company or
any Company Subsidiary, the wages, salaries, bonuses (discretionary and
formula), fees and other cash compensation paid or payable by the
Company and each Company Subsidiary to that employee or other natural
person.
"CERCLA" means the Comprehensive Environmental Response,
Conservation, and Liability Act of 1980.
"CERTIFICATE OF MERGER" means: (a) if the Surviving Corporation
is a Delaware corporation, the certificate of merger respecting the
Merger which contains the information required by the DGCL to effect the
Merger; and (b) if the Company's Organization State is not Delaware, the
articles or certificate of merger respecting the Merger which contains
the information required by the laws of the Company's Organization State
to effect the Merger.
"CHARTER DOCUMENTS" means, with respect to any Entity at any
time, in each case as amended, modified and supplemented at that time,
the articles or certificate of formation, incorporation or organization
(or the equivalent organizational documents) of that Entity, (b) the
bylaws or limited liability company agreement or regulations (or the
equivalent governing documents) of that Entity and (c) each document
setting forth the designation, amount and relative rights, limitations
and preferences of any class or series of that Entity's Capital Stock or
of any rights in respect of that Entity's Capital Stock.
"CLAIM NOTICE" has the meaning specified in Section 9.05.
"CLOSING" has the meaning specified in Section 7.01.
"CODE" means the Internal Revenue Code of 1986, as amended.
"COMPANY COMMITMENT" has the meaning specified in Section 4.22.
"COMPANY ERISA BENEFIT PLAN" has the meaning specified in Section
4.26.
"COMPANY ERISA PENSION PLAN" has the meaning specified in Section
4.26.
"COMPANY SUBSIDIARY" means at any time any Entity that is a
Subsidiary of the Company at that time.
"CONFIDENTIAL INFORMATION" means, with respect to any Person, all
trade secrets and other confidential, nonpublic and/or proprietary
information of that Person, including information derived from reports,
investigations, research, work in progress, codes, marketing and sales
programs, capital expenditure projects, cost summaries, pricing
formulae, contract analyses, financial information, projections,
confidential filings with any
-2-
Governmental Authority and all other confidential, nonpublic concepts,
methods of doing business, ideas, materials or information prepared or
performed for, by or on behalf of that Person.
"CURRENT BALANCE SHEET" has the meaning specified in Section
1.01.
"CURRENT BALANCE SHEET DATE" has the meaning specified in Section
1.01.
"CURRENT DATE" means any day during the 20-day period ending on
the date of the Closing.
"DAMAGE" to any specified Person means any cost, damage
(including any consequential, exemplary, punitive or treble damage) or
expense (including reasonable fees and actual disbursements by
attorneys, consultants, experts or other Representatives and Litigation
costs) to, any fine of or penalty on or any liability (including loss of
earnings or profits) of any other nature of that Person.
"DAMAGE CLAIM" means, as asserted (a) against any specified
Person, any claim, demand or Litigation made or pending against that
Person for Damages to any other Person, or (b) by the specified Person,
any claim or demand of the specified Person against any other Person for
Damages to the specified Person.
"DGCL" means the General Corporation Law of the State of
Delaware.
"DERIVATIVE SECURITIES" of a specified Entity means any Capital
Stock or debt security or other Indebtedness of the specified Entity or
any other Person which is convertible into or exchangeable for, or any
option, warrant or other right to acquire, (a) any unissued Capital
Stock of the specified Entity or (b) any Capital Stock of the specified
Entity which has been issued and is being held by the Entity directly or
indirectly as treasury Capital Stock.
"EFFECTIVE TIME" has the meaning specified in Section 2.02.
"ELECTION PERIOD" has the meaning specified in Section 9.05.
"EMPLOYEE POLICIES AND PROCEDURES" means at any time all employee
manuals and all material policies, procedures and work-related rules
that apply at that time to any employee, nonemployee director or officer
of, or any other natural person performing consulting or other
independent contractor services for, the Company or any Company
Subsidiary.
"EMPLOYMENT AGREEMENT" means at any time any (a) agreement to
which the Company or any Company Subsidiary is a party which then
relates to the direct or indirect
-3-
employment or engagement, or arises from the past employment or
engagement, of any natural person by the Company or any Company
Subsidiary, whether as an employee, a nonemployee officer or director, a
consultant or other independent contractor, a sales representative or a
distributor of any kind, including any employee leasing or service
agreement and any noncompetition agreement, and (b) agreement between
the Company or any Company Subsidiary and any Person which arises from
the sale of a business by that Person to the Company or any Company
Subsidiary and limits that Person's competition with the Company or any
Company Subsidiary.
"ENTITY" means any sole proprietorship, corporation, partnership
of any kind having a separate legal status, limited liability company,
business trust, unincorporated organization or association, mutual
company, joint stock company or joint venture.
"ENVIRONMENTAL LAWS" means any and all Governmental Requirements
relating to the environment or worker health or safety, including
ambient air, surface water, land surface or subsurface strata, or to
emissions, discharges, releases or threatened releases of pollutants,
contaminants, chemicals or industrial, toxic or hazardous substances or
wastes (including Solid Wastes, Hazardous Wastes or Hazardous
Substances) or noxious noise or odor into the environment, or otherwise
relating to the manufacture, processing, distribution, use, treatment,
storage, disposal, recycling, removal, transport or handling of
pollutants, contaminants, chemicals or industrial, toxic or hazardous
substances or wastes (including petroleum, petroleum distillates,
asbestos or asbestos-containing material, polychlorinated biphenyls,
chlorofluorocarbons (including chlorofluorocarbon-12) or
hydrochlorofluoro- carbons).
"ERISA" means the Employee Retirement Income Security Act of
1974.
"ERISA AFFILIATE" means, with respect to any specified Person at
any time, any other Person, including an Affiliate of the specified
Person, that is, or at any time within six years of that time was, a
member of any ERISA Group of which the specified Person is or was a
member at the same time.
"ERISA AFFILIATE PENSION PLAN" has the meaning specified in
Section 4.26.
"ERISA EMPLOYEE BENEFIT PLAN" means any "employee benefit plan"
as defined in Section 3(3) of ERISA and includes any ERISA Pension
Benefit Plan.
"ERISA GROUP" means any "group of organizations" within the
meaning of Section 414(b), (c), (m) or (o) of the Code or any
"controlled group" as defined in Section 4001(a)(14) of ERISA.
"ERISA PENSION BENEFIT PLAN" means any "employee pension benefit
plan," as defined in Section 3(2) of ERISA, including any plan that is
covered by Title IV of ERISA
-4-
or subject to the minimum funding standards under Section 412 of the
Code (excluding any Multiemployer Plan).
"EXCHANGE ACT" means the Securities Exchange Act of 1934.
"FINAL PROSPECTUS" means the prospectus included in the
Registration Statement at the time it becomes effective, except that if
the prospectus first furnished to the Underwriter after the Registration
Statement becomes effective for use in connection with the IPO differs
from the prospectus included in the Registration Statement at the time
it becomes effective (whether or not that prospectus so furnished is
required to be filed with the SEC pursuant to Securities Act Rule
424(b)), the prospectus so furnished is the "Final Prospectus."
"FINANCIAL STATEMENTS" means the Initial Financial Statements and
the other financial statements of the Company and the Company
Subsidiaries, if any, delivered to ARS pursuant to Section 6.10 prior to
the Effective Time.
"GAAP" means generally accepted accounting principles and
practices in the United States as in effect from time to time which (i)
have been concurred in by ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP and (ii) have been or are
applied on a basis consistent (except for changes concurred in by ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ LLP) with the most recent audited Financial Statements
delivered to ARS prior to the Effective Time.
"GENERAL RELEASE" means the general release of the Company and
the Company Subsidiaries to be executed at or before and delivered to
ARS and the Company at the Closing, effective as of the Effective Time,
by each Stockholder in the form of Exhibit 1.02-A with the blanks
appropriately filled.
"GOVERNMENTAL APPROVAL" means at any time any authorization,
consent, approval, permit, franchise, certificate, license, implementing
order or exemption of, or registration or filing with, any Governmental
Authority, including any certification or licensing of a natural person
to engage in a profession or trade or a specific regulated activity, at
that time.
"GOVERNMENTAL AUTHORITY" means (a) any national, state, county,
municipal or other government, domestic or foreign, or any agency,
board, bureau, commission, court, department or other instrumentality of
any such government, or (b) any Person having the authority under any
applicable Governmental Requirement to assess and collect Taxes for its
own account.
"GOVERNMENTAL REQUIREMENT" means at any time (a) any law,
statute, code, ordinance, order, rule, regulation, judgment, decree,
injunction, writ, edict, award, authorization or other requirement of
any Governmental Authority in effect at that time or (b) any obligation
included in any certificate, certification, franchise, permit or license
-5-
issued by any Governmental Authority or resulting from binding
arbitration, including any requirement under common law, at that time.
"GUARANTY" means, for any specified Person, without duplication,
any liability, contingent or otherwise, of that Person guaranteeing or
otherwise becoming liable for any obligation of any other Person (the
"primary obligor") in any manner, whether directly or indirectly, and
including any liability of the specified Person, direct or indirect, (a)
to purchase or pay (or advance or supply funds for the purchase or
payment of) that obligation or to purchase (or to advance or supply
funds for the purchase of) any security for the payment of that
obligation, (b) to purchase property, securities or services for the
purpose of assuring the owner of that obligation of its payment or (c)
to maintain working capital, equity capital or other financial statement
condition or liquidity of the primary obligor so as to enable the
primary obligor to pay that obligation; provided, that the term
"Guaranty" does not include endorsements for collection or deposit in
the ordinary course of the endorser's business.
"HSR ACT" means the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act
of 1976.
"IMMEDIATE FAMILY MEMBER" of a Stockholder means at any time: (a)
if that Stockholder is a natural person, any child or grandchild (by
blood or legal adoption) or spouse of that Stockholder at that time, or
any child of that spouse; and (b) if that Stockholder is an Entity whose
ultimate beneficial owner is a natural person, or a natural person and
his spouse, any child or grandchild (by blood or legal adoption) or
spouse at that time (if not then an ultimate beneficial owner of that
Entity), or any child of that spouse, of the ultimate beneficial owner
or owners.
"INDEBTEDNESS" of any Person means, without duplication, (a) any
liability of that Person (i) for borrowed money or arising out of any
extension of credit to or for the account of that Person (including
reimbursement or payment obligations with respect to surety bonds,
letters of credit, banker's acceptances and similar instruments), for
the deferred purchase price of property or services or arising under
conditional sale or other title retention agreements, other than trade
payables arising in the ordinary course of business, (ii) evidenced by
notes, bonds, debentures or similar instruments, (iii) in respect of
Capital Leases or (iv) in respect of Interest Rate Protection
Agreements, (b) any liability secured by any Lien upon any property or
assets of that Person (or upon any revenues, income or profits of that
Person therefrom), whether or not that Person has assumed that liability
or otherwise become liable for the payment thereof or (c) any liability
of others of the type described in the preceding clause (a) or (b) in
respect of which that Person has incurred, assumed or acquired a
liability by means of a Guaranty.
"INDEMNITY NOTICE" has the meaning specified in Section 9.05.
"INDEMNIFIED PARTY" has the meaning specified in Section 9.05.
-6-
"INDEMNIFYING PARTY" has the meaning specified in Section 9.05.
"INFORMATION" means written information, including (a) data,
certificates, reports and statements (excluding Financial Statements)
and (b) summaries of unwritten agreements, arrangements, contracts,
plans, policies, programs or practices or of unwritten amendments or
modifications of, supplements to or waivers under any of the foregoing
documents.
"IPO" means the first time after May 1, 1996 a registration
statement filed under the Securities Act and respecting a primary
offering by ARS of shares of ARS Common Stock (other than a registration
statement respecting shares being offered pursuant to a Company ERISA
Benefit Plan or any Other Compensation Plan) is declared effective under
the Securities Act and the shares registered by that registration
statement are issued and sold by ARS (otherwise than pursuant to the
exercise by the Underwriter of any over-allotment option).
"IPO CLOSING DATE" means the date on which ARS first receives
payment for the shares of ARS Common Stock it sells to the Underwriter
in the IPO.
"IPO PRICE" means the price per share of ARS Common Stock which
is set forth as the "price to public" on the cover page of the Final
Prospectus.
"IPO PRICING DATE" means the date, if any, on which ARS and the
Underwriter agree in the Underwriting Agreement to the price per share
of Common Stock at which the Underwriter, subject to the terms and
conditions of the Underwriting Agreement, will purchase newly issued
shares of ARS Common Stock from ARS on the IPO Closing Date.
"INTEREST RATE PROTECTION AGREEMENT" means, for any Person, an
interest rate swap, cap or collar agreement or similar arrangement
providing for the transfer or mitigation of interest rate risks of that
Person either generally or under specific contingencies between that
Person and any other Person.
"IRS" means the Internal Revenue Service.
"LIEN" means, with respect to any property or asset of any Person
(or any revenues, income or profits of that Person therefrom) (in each
case whether the same is consensual or nonconsensual or arises by
contract, operation of law, legal process or otherwise), (a) any
mortgage, lien, security interest, pledge, attachment, levy or other
charge or encumbrance of any kind thereupon or in respect thereof or (b)
any other arrangement under which the same is transferred, sequestered
or otherwise identified with the intention of subjecting the same to, or
making the same available for, the payment or performance of any
liability in priority to the payment of the ordinary, unsecured
creditors of that Person, including any "adverse claim" (as defined in
Section 8-302(b) of each applicable Uniform Commercial Code) in the case
of any Capital Stock. For purposes of this Agreement, a Person shall be
-7-
deemed to own subject to a Lien any asset that it has acquired or holds
subject to the interest of a vendor or lessor under any conditional sale
agreement, Capital Lease or other title retention agreement relating to
that asset.
"LITIGATION" means any action, case, proceeding, claim,
grievance, suit or investigation or other proceeding conducted by or
pending before any Governmental Authority or any arbitration proceeding.
"MATERIAL" means, as applied to any Entity, material to the
business, operations, property or assets, liabilities, financial
condition or results of operations of that Entity and its Subsidiaries
considered as a whole.
"MATERIAL ADVERSE EFFECT" means, with respect to the consequences
of any fact or circumstance (including the occurrence or non-occurrence
of any event) to the Company and the Company Subsidiaries considered as
a whole (or after the Effective Time the Surviving Corporation and the
Company Subsidiaries considered as a whole), that such fact or
circumstance has caused, is causing or will cause, directly, indirectly
or consequentially, singly or in the aggregate with other facts and
circumstances, any Damages in excess of the Threshold Amount.
"MATERIAL AGREEMENT" of an Entity means any contract or agreement
(a) to which that Entity or any of its Subsidiaries is a party, or by
which that Entity or any of its Subsidiaries is bound or to which any
property or assets of that Entity or any of its Subsidiaries is subject
and (b) which is Material to that Entity.
"MINIMUM CASH AMOUNT" has the meaning specified in Section 7.02.
"MOODY'S" means ▇▇▇▇▇'▇ Investors Service, Inc.
"MULTIEMPLOYER PLAN" means a "multiemployer plan" as defined in
Section 4001(a)(3) of ERISA, Section 414 of the Code or Section 3(37) of
ERISA.
"NEWCO COMMON STOCK" means the common stock, par value $.001 per
share, of Newco.
"ORGANIZATION STATE" means, as applied to (a) any corporation,
its state or other jurisdiction of incorporation, (b) any limited
liability company or limited partnership, the state or other
jurisdiction under whose laws it is organized and existing in that legal
form, and (c) any other Entity, the state or other jurisdiction whose
laws govern that Entity's internal affairs.
"OTHER AGREEMENTS" has the meaning specified in the Preliminary
Statement in this Agreement.
-8-
"OTHER COMPENSATION PLAN" means any compensation arrangement,
plan, policy, practice or program established, maintained or sponsored
by the Company or any Company Subsidiary, or to which the Company or any
Company Subsidiary contributes, on behalf of any of its employees,
nonemployee directors or officers or other natural persons performing
consulting or other independent contractor services for the Company or
any Company Subsidiary, (a) including all such arrangements, plans,
policies, practices or programs providing for severance pay, deferred
compensation, incentive, bonus or performance awards or the actual or
phantom ownership of any Capital Stock or Derivative Securities of the
Company or any Company Subsidiary, but (b) excluding all Company ERISA
Pension Plans and Employment Agreements.
"OTHER FINANCING SOURCES" has the meaning specified in Section
7.02.
"OTHER TRANSACTION DOCUMENTS" means the Other Agreements and the
other written agreements, documents, instruments and certificates at any
time executed pursuant to or in connection with the Other Agreements
(other than the Transaction Documents and the Underwriting Agreement),
all as amended, modified or supplemented from time to time.
"PBGC" means the Pension Benefit Guaranty Corporation.
"PERMITTED INVESTMENTS" means at the time of purchase or other
acquisition by the Company or any Company Subsidiary (a) obligations
issued or guaranteed by the United States of America with a remaining
maturity not exceeding one year, (b) commercial paper with maturities of
not more than 270 days and a published rating of not less than A-1 by
S&P or P-1 by Moody's and (c) certificates of deposit and bankers'
acceptances having maturities of not more than one year of any
commercial bank or trust company if (A) that bank or trust company has a
combined capital and surplus of at least $500,000,000 and (B) its
unsecured long-term debt obligations, or those of a holding company of
which it is a subsidiary, are rated not less than A- by S&P or A3 by
Moody's.
"PERMITTED LIENS" means, as applied to the property or assets of
any Person (or any revenues, income or profits of that Person
therefrom): (a) Liens for Taxes if the same are not at the time due and
delinquent; (b) Liens of carriers, warehousemen, mechanics, laborers and
materialmen for sums not yet due; (c) Liens incurred in the ordinary
course of that Person's business in connection with workmen's
compensation, unemployment insurance and other social security
legislation (other than pursuant to ERISA or Section 412(n) of the
Code); (d) Liens incurred in the ordinary course of that Person's
business in connection with deposit accounts or to secure the
performance of bids, tenders, trade contracts, statutory obligations,
surety and appeal bonds, performance and return-of-money bonds and other
obligations of like nature; (e) easements, rights-of-way, reservations,
restrictions and other similar encumbrances incurred in the ordinary
course of that Person's business or existing on property and not
materially interfering with the ordinary conduct of that Person's
business or the use of that property; (f) defects or irregularities in
that Person's title to its
-9-
real properties which do not materially (i) diminish the value of the
surface estate or (ii) interfere with the ordinary conduct of that
Person's business or the use of any of such properties; (g) any interest
or title of a lessor of assets being leased by any Person pursuant to
any Capital Lease disclosed in Section 4.19 of the Disclosure Statement
or any lease that, pursuant to GAAP, would be accounted for as an
operating lease; and (h) Liens securing purchase money Indebtedness
disclosed in Section 4.18 or 4.19 of the Disclosure Statement so long as
such Liens do not attach to any property or assets other than the
properties or assets purchased with the proceeds of such Indebtedness.
"PERSON" means any natural person, Entity, estate, trust, union
or employee organization or Governmental Authority or, for the purpose
of the definition of "ERISA Affiliate," any trade or business.
"PLAN" has the meaning specified in Section 4.27.
"PLUMBING" means the installation, repair, service or maintenance
of any piping, fixtures, appurtenances or appliances in and about
buildings where any natural person or persons live, work or assemble for
a supply of gas, water or liquids, or any combination thereof, or for
the disposal of waste water or sewage.
"PLUMBING LAWS" means any and all Governmental Requirements
related to Plumbing, such as Governmental Requirements relating to the
planning, superintending, installation, alteration, repair, service and
renovation of any pipeline, fixtures, appurtenances, appliances or drain
or waste pipes, and including Governmental Requirements relating to the
licensing of natural persons as plumbers of any classification.
"PRIVATE PLACEMENT MEMORANDUM" means the ARS Private Placement
Memorandum dated as of June 13, 1996 relating to the offer of ARS Common
Stock in connection with the Merger.
"PROFESSIONAL CODES" means any and all Governmental Requirements
relating to the licensing or other regulation of the business of Air
Conditioning and Refrigeration Contracting, the installation, repair or
replacement of electrical appliances, equipment and systems, Plumbing or
other residential or commercial on-site services, including building,
electric and mechanical codes, Plumbing Laws and Governmental
Requirements relating to Residential Service Companies.
"PROHIBITED TRANSACTION" means any transaction that is prohibited
under Section 4975 of the Code or Section 406 of ERISA and not exempt
under Section 4975 of the Code or Section 408 of ERISA.
-10-
"PROPERTY, PLANT AND EQUIPMENT" means at any time any property
that then would be included and classified as property, plant and
equipment on a consolidated balance sheet prepared in accordance with
GAAP of the Company and the Company Subsidiaries.
"PROPRIETARY RIGHTS" means (a) patents, applications for patents
and patent rights, (b) in each case, whether registered, unregistered or
under pending registration, trademark rights, trade names, trade name
rights, corporate names, business names, trade styles or dress, service
marks and logos and other trade designations and copyrights and (c), in
the case of the Company or any Company Subsidiary, all agreements
relating to the technology, know-how or processes used in any business
of the Company or any Company Subsidiary.
"QUALIFIED PLANS" has the meaning specified in Section 4.27.
"REGISTRATION RIGHTS AGREEMENT" means the registration rights
agreement to be executed and delivered at the Closing by ARS and the
Stockholders electing to be parties thereto in the form of Exhibit
1.02-B, with the blanks appropriately filled.
"REGISTRATION STATEMENT" means the registration statement,
including (a) each preliminary prospectus included therein prior to the
date on which that registration statement is declared effective under
the Securities Act (including any prospectus filed with the SEC pursuant
to Securities Act Rule 424(b)), (b) the Final Prospectus and (c) any
amendments thereof and all supplements and exhibits thereto, filed by
ARS with the SEC to register shares of ARS Common Stock under the
Securities Act for public offering and sale in the IPO.
"RETURNS" means the returns, reports or statements (including any
information returns) any Governmental Requirement requires to be filed
for purposes of any Tax.
"RELATED PARTY AGREEMENT" means any contract or other agreement,
written or oral, (a) to which the Company or any Company Subsidiary is a
party or is bound or by which any property of the Company or any Company
Subsidiary is bound or may be subject and (b) (i) to which any
Stockholder or any of that Stockholder's Related Persons or Affiliates
also is a party, (ii) of which any Stockholder or any of that
Stockholder's Related Persons or Affiliates is a beneficiary or (iii) as
to which any transaction contemplated thereby properly would be
characterized (without regard to the amount involved) as a related party
transaction for purposes of applying the disclosure requirements of GAAP
or the SEC applicable to the Registration Statement.
"RELATED PERSON" of a Stockholder means: (a) if that Stockholder
is a natural person, (i) any Immediate Family Member of that
Stockholder, (ii) any Estate of that Stockholder or any Immediate Family
Member of that Stockholder, (iii) the trustee of any inter vivos or
testamentary trust of which all the beneficiaries are Related Persons of
that Stockholder and (iv) any Entity the entire equity interest in which
is owned by any one or more of that
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Stockholder and Related Persons of that Stockholder; and (b) if that
Stockholder is an Entity, Estate or trust, (i) any Person who owns an
equity interest in that Stockholder on the date hereof, (ii) any Person
who would be a Related Person under clause (a) of this definition of a
natural person who is an ultimate beneficial owner of that Stockholder
or (iii) any other Entity the entire equity interest in which is owned
by any one or more of that Stockholder and Related Persons of that
Stockholder. As used in this definition, "Estate" means, as to any
natural person who has died or been adjudicated mentally incompetent by
a court of competent jurisdiction, (i) that person's estate or (ii) the
administrator, conservator, executor, guardian or representative of that
estate.
"REPRESENTATIVES" means, with respect to any Person, the
directors, officers, employees, Affiliates, accountants (including
independent certified public accountants), advisors, attorneys,
consultants or other agents of that Person, or any other representatives
of that Person or of any of those directors, officers, employees,
Affiliates, accountants (including independent certified public
accountants), advisors, attorneys, consultants or other agents.
"REPORTABLE EVENT" means, with respect to any Company ERISA
Pension Plan, (a) the occurrence of any of the events set forth in
Section 4043(b) or (c) (other than a Reportable Event as to which the
provision of 30 days' notice to the PBGC is waived under applicable
regulations), 4062(e) or 4063(a) of ERISA with respect to that plan, (b)
any event requiring the Company or any ERISA Affiliate to provide
security to that plan under Section 401(a)(29) of the Code or (c) any
failure to make a payment required by Section 412(m) of the Code with
respect to that plan.
"RESIDENTIAL SERVICE COMPANY" means any Person who issues and
performs, or arranges to perform, services pursuant to a Residential
Service Contract.
"RESIDENTIAL SERVICE CONTRACT" means any agreement or contract
whereby, for a fee, a Person undertakes, for a specified period of time,
to maintain, repair or replace all or any part of the structural
components, the appliances or the electrical, plumbing, heating, cooling
or air-conditioning systems on any residential property.
"RCRA" means the Resource Conservation and Recovery Act of 1976.
"RESTRICTED PAYMENT" means, with respect to any Entity at any
time, any of the following effected by that Entity: (a) any declaration
or payment of any dividend or other distribution, direct or indirect, on
account of any Capital Stock of that Entity or any Affiliate of that
Entity or (b) any direct or indirect redemption, retirement, purchase or
other acquisition for value of, or any direct or indirect purchase,
payment or sinking fund or similar deposit for the redemption,
retirement, purchase or other acquisition for value of, or to obtain the
surrender of, any then outstanding Capital Stock of that Entity or any
Affiliate of that Entity or any then outstanding warrants, options or
other rights to acquire or
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subscribe for or purchase unissued or treasury Capital Stock of that
Entity or any Affiliate of that Entity.
"SEC" means the Securities and Exchange Commission.
"SECURITIES ACT" means the Securities Act of 1933.
"SOLID WASTES, HAZARDOUS WASTES OR HAZARDOUS SUBSTANCES" have the
meanings ascribed to those terms in CERCLA, RCRA or any other
Environmental Law applicable to the business or operations of the
Company or any Company Subsidiary which imparts a broader meaning to any
of those terms than does CERCLA or RCRA.
"S&P" means Standard and Poor's Rating Group.
"STOCKHOLDER INDEMNIFIED PARTY" means (a) each Stockholder and
each of that Stockholder's Affiliates (other than the Company or,
following the Effective Time, the Surviving Corporation or ARS or any of
its Subsidiaries, if the Stockholder is an Affiliate of ARS), agents and
counsel and (b) prior to the Effective Time, the Company and each of its
officers, directors, employees, agents and counsel who are not
Stockholder Indemnified Parties within the meaning of clause (a) of this
definition.
"STOCKHOLDER INDEMNIFIED LOSS" has the meaning specified in
Section 9.04.
"SUBSIDIARY" of any specified Person at any time, means any
entity a majority of the Capital Stock of which is at that time owned or
controlled, directly or indirectly, by the specified Person.
"SUPPLEMENTAL INFORMATION" has the meaning specified in Section
6.08.
"TAX" or "TAXES" means all net or gross income, gross receipts,
net proceeds, sales, use, ad valorem, value added, franchise, bank
shares, withholding, payroll, employment, excise, property, deed, stamp,
alternative or add-on minimum, environmental or other taxes,
assessments, duties, fees, levies or other governmental charges or
assessments of any nature whatever imposed by any Governmental
Requirement, whether disputed or not, together with any interest,
penalties, additions to tax or additional amounts with respect thereto.
"TAXING AUTHORITY" means any Governmental Authority having or
purporting to exercise jurisdiction with respect to any Tax.
"TERMINATION EVENT" means, with respect to any Company ERISA
Pension Plan, (a) any Reportable Event with respect to that plan which
is likely to result in the termination of that plan, (b) the termination
of, or the filing of a notice of intent to terminate, that plan or the
treatment of any amendment to that plan as a termination under Section
4041(c) of
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ERISA or (c) the institution of proceedings to terminate, or the
appointment of a trustee to administer, that plan under Section 4042 of
ERISA.
"THIRD PARTY CLAIM" has the meaning specified in Section 9.05.
"TRANSACTION DOCUMENT" means this Agreement, the Certificates of
Merger, the General Releases, the Registration Rights Agreement and the
other written agreements, documents, instruments and certificates
executed pursuant to or in connection with this Agreement (other than
the Other Transaction Documents and the Underwriting Agreement),
including those specified in Article VII to be delivered at or before
the Closing, all as amended, modified or supplemented from time to time.
"UNDERWRITER" means collectively (a) the investment banking firms
that prospectively may enter into the Underwriting Agreement and (b)
from and after the IPO Pricing Date, the investment banking firms
parties to the Underwriting Agreement.
"UNDERWRITING AGREEMENT" has the meaning specified in Section
7.02.
"WELFARE PLAN" means an "employee welfare benefit plan" as
defined in Section 3(1) of ERISA.
"WHOLLY OWNED SUBSIDIARY" means any corporation or other Entity
all of whose outstanding Capital Stock on a fully diluted basis is owned
and controlled, directly or indirectly through another Wholly Owned
Subsidiary, by the Company.
Section 1.03. OTHER DEFINITIONAL PROVISIONS. (a) Except as
otherwise specified herein, all references herein to any Governmental
Requirement defined or referred to herein, including the Code, CERCLA, ERISA,
the Exchange Act, RCRA and the Securities Act, shall be deemed references to
that Governmental Requirement or any successor Governmental Requirement, as the
same may have been amended or supplemented from time to time, and any rules or
regulations promulgated thereunder.
(b) When used in this Agreement, the words "herein," "hereof" and
"hereunder" and words of similar import shall refer to this Agreement as a whole
and not to any provision of this Agreement, and the words "Article," "Section,"
"Annex," "Schedule" and "Exhibit" refer to Articles and Sections of, and
Annexes, Schedules and Exhibits to, this Agreement unless otherwise specified.
(c) Whenever the context so requires, the singular number
includes the plural and vice versa, and a reference to one gender includes the
other gender and the neuter.
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(d) The word "including" (and, with correlative meaning, the word
"include") means including, without limiting the generality of any description
preceding such word, and the words "shall" and "will" are used interchangeably
and have the same meaning.
Section 1.04 CAPTIONS. Captions to Articles, Sections and
subsections of, and Annexes, Schedules and Exhibits to, this Agreement or any
other Transaction Document are included for convenience of reference only, and
such captions shall not constitute a part of this Agreement or any other
Transaction Document for any other purpose or in any way affect the meaning or
construction of any provision of this Agreement or any other Transaction
Document.
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ARTICLE III
REPRESENTATIONS AND WARRANTIES OF EACH STOCKHOLDER
Section 3.02. OWNERSHIP AND STATUS OF COMPANY CAPITAL STOCK. The
Stockholder is the record and beneficial owner (or, if the Stockholder is a
trust or the estate of a deceased natural person, the legal owner) of the number
of shares of Company Capital Stock set forth, by each class, and by each series
in each class, thereof, opposite the Stockholder's name in Schedule 3.02, free
and clear of all Liens, except for the Liens accurately set forth in Schedule
3.02, all of which will be released at or before the Effective Time.
Section 3.03. POWER OF THE STOCKHOLDER; APPROVAL OF THE MERGER.
(a) The Stockholder has the full power, legal capacity and authority to execute
and deliver this Agreement and each other Transaction Document to which the
Stockholder is a party and to perform the Stockholder's obligations in this
Agreement and in all other Transaction Documents to which the Stockholder is a
party. This Agreement constitutes, and each such other Transaction Document,
when executed in the Stockholder's individual capacity and delivered by the
Stockholder, will constitute, the legal, valid and binding obligation of the
Stockholder, enforceable against the Stockholder in accordance with its terms,
except as that enforceability may be (i) limited by any applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting the enforcement
of creditors' rights generally and (ii) subject to general principles of equity
(regardless of whether that enforceability is considered in a proceeding in
equity or at law). If the Stockholder is an Entity, the Stockholder has
obtained, in accordance with all applicable Governmental Requirements and its
Charter Documents, all approvals and the taking of all actions necessary for the
authorization, execution, delivery and performance by the Stockholder of this
Agreement and the other Transaction Documents to which the Stockholder is a
party. If the Stockholder is acting otherwise than in his individual capacity
(whether as an executor or a guardian or in any other fiduciary or
representative capacity), all actions on the part of the Stockholder and all
other Persons (including any court) necessary for the authorization, execution,
delivery and performance by the Stockholder of this Agreement and the other
Transaction Documents to which the Stockholder is a party have been duly taken.
(b) The Stockholder, acting in each capacity in which he is
entitled, by reason of the Company's Charter Documents or the Governmental
Requirements of the Company's Organization State or for any other reason, to
vote to approve or disapprove the consummation of the Merger, has voted all the
shares of Company Capital Stock owned by him and entitled to a vote or votes on
that matter, in any one or more of the manners prescribed or permitted by the
Company's Charter Documents or the Governmental Requirements of the Company's
Organization State, whichever are controlling, to approve this Agreement and the
consummation of the Merger and the other transactions contemplated hereby.
Section 3.04. NO CONFLICTS OR LITIGATION. The execution,
delivery and performance in accordance with their respective terms by the
Stockholder of this Agreement and the other
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Transaction Documents to which the Stockholder is a party do not and will not
(a) violate or conflict with any Governmental Requirement, (b) breach or
constitute a default under any agreement or instrument to which the Stockholder
is a party or by which the Stockholder or any of the shares of Company Capital
Stock owned by Stockholder is bound, (c) result in the creation or imposition
of, or afford any Person the right to obtain, any Lien upon any of the shares of
Company Capital Stock owned by the Stockholder (or upon any revenues, income or
profits of the Stockholder therefrom) or (d) if the Stockholder is an Entity,
violate the Stockholder's Charter Documents. No Litigation is pending or, to the
knowledge of the Stockholder, threatened to which the Stockholder is or may
become a party which (a) questions or involves the validity or enforceability of
any of the Stockholder's obligations under any Transaction Document or (b) seeks
(or reasonably may be expected to seek) (i) to prevent or delay the consummation
by the Stockholder of the transactions contemplated by this Agreement to be
consummated by the Stockholder or (ii) damages in connection with any
consummation by the Stockholder of the transactions contemplated by this
Agreement.
Section 3.05. NO BROKERS. The Stockholder has not, directly or
indirectly, in connection with this Agreement or the transactions contemplated
hereby (a) employed any broker, finder or agent (other than a Purchaser
Representative) or (b) agreed to pay or incurred any obligation to pay any
broker's or finder's fee, any sales commission or any similar form of
compensation.
Section 3.06. PREEMPTIVE AND OTHER RIGHTS; WAIVER. Except for the
right of the Stockholder to receive shares of ARS Common Stock as a result of
the Merger or to acquire ARS Common Stock pursuant to any written option granted
by ARS to the Stockholder, the Stockholder either (a) does not own or otherwise
have any statutory or contractual preemptive or other right of any kind
(including any right of first offer or refusal) to acquire any shares of Company
Capital Stock or ARS Common Stock or (b) hereby irrevocably waives each right of
that type the Stockholder does own or otherwise has.
Section 3.07. CONTROL OF RELATED BUSINESSES. Except as accurately
set forth in Schedule 3.07, the Stockholder is not, alone or with one or more
other Persons, the controlling Affiliate of any Entity, business or trade (other
than the Company and the Company Subsidiaries, if the Stockholder is an
Affiliate of the Company) that (a) is engaged in any line of business which is
the same as or similar to any line of business in which the Company or any
Company Subsidiary is engaged or (b) is, or has within the three-year period
ending on the date of this Agreement, engaged in any transaction with the
Company or any Company Subsidiary, except for transactions in the ordinary
course of business of the Company or that Company Subsidiary.
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES
OF
THE COMPANY AND THE STOCKHOLDERS
Section 4.02. QUALIFICATION. Section 4.02 of the Disclosure
Statement accurately lists all the jurisdictions in which each of the Company
and the Company Subsidiaries is authorized or qualified to own or lease and to
operate its properties or to carry on its business as now conducted, and neither
the Company nor any Company Subsidiary owns, leases or operates properties or
carries on its business in any jurisdiction not listed in that Section which is
Material to the Company.
Section 4.03. AUTHORIZATION; ENFORCEABILITY; ABSENCE OF
CONFLICTS; REQUIRED CONSENTS. (a) The execution, delivery and performance by the
Company of this Agreement and each other Transaction Document to which it is a
party, and the effectuation of the Merger and the other transactions
contemplated hereby and thereby, are within its corporate or other power under
its Charter Documents and the applicable Governmental Requirements of its
Organization State and have been duly authorized by all proceedings, including
actions permitted to be taken in lieu of proceedings, required under its Charter
Documents and those Governmental Requirements.
(b) This Agreement has been, and each of the other Transaction
Documents to which the Company is a party, when executed and delivered to ARS
(or, in the case of the Certificates of Merger, the applicable Governmental
Authorities) will have been, duly executed and delivered by the Company and is,
or when so executed and delivered will be, the legal, valid and binding
obligation of the Company, enforceable against the Company in accordance with
its terms, except as that enforceability may be (i) limited by any applicable
bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the
enforcement of creditors' rights generally and (ii) subject to general
principles of equity (regardless of whether that enforceability is considered in
a proceeding in equity or at law).
(c) The execution, delivery and performance in accordance with
their respective terms by the Company of the Transaction Documents to which it
is a party have not and will not (i) violate, breach or constitute a default
under (A) the Charter Documents of any of the Company and the Company
Subsidiaries, (B) any Governmental Requirement applicable to any of the Company
and the Company Subsidiaries or (C) any Material Agreement of the Company, (ii)
result in the acceleration or mandatory prepayment of any Indebtedness, or any
Guaranty not constituting Indebtedness, of any of the Company and the Company
Subsidiaries or afford any holder of any of that Indebtedness, or any
beneficiary of any of those Guaranties, the right to require any of the Company
and the Company Subsidiaries to redeem, purchase or otherwise acquire, reacquire
or repay any of that Indebtedness, or to perform any of those Guaranties, (iii)
cause or result in the imposition of, or afford any Person the right to obtain,
any Lien upon any property or assets of any of the Company and the Company
Subsidiaries (or upon revenues, income or profits of any of the Company and the
Company Subsidiaries therefrom) or (iv) except as set forth in Section 4.03 of
the
-▇▇-
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, result in the revocation, cancellation, suspension or
material modification, in any single case or in the aggregate, of any
Governmental Approval possessed by any of the Company and the Company
Subsidiaries at the date hereof and necessary for the ownership or lease or the
operation of its properties or the carrying on of its business as now conducted,
including any necessary Governmental Approval under each applicable
Environmental Law and Professional Code.
(d) Except for (i) the filing of the Certificates of Merger with
the applicable Governmental Authorities, (ii) filings of the Registration
Statement under the Securities Act and the SEC order declaring the Registration
Statement effective under the Securities Act and (iii) as may be required by the
HSR Act or the applicable state securities or blue sky laws, no Governmental
Approvals are required to be obtained, and no reports or notices to or filings
with any Governmental Authority are required to be made, by any of the Company
and the Company Subsidiaries for the execution, delivery or performance by the
Company of the Transaction Documents to which it is a party, the enforcement
against the Company of its obligations thereunder or the effectuation of the
Merger and the other transactions contemplated thereby.
Section 4.04. CHARTER DOCUMENTS AND RECORDS; NO VIOLATION. The
Company has caused true, complete and correct copies of the Charter Documents,
each as in effect on the date hereof, and the minute books and similar corporate
or other Entity records of each of the Company and the Company Subsidiaries to
be delivered or otherwise made available to ARS. No breach or violation of any
Charter Document of any of the Company and the Company Subsidiaries has occurred
and is continuing.
Section 4.05. NO DEFAULTS. No condition or state of facts exists,
or, with the giving of notice or the lapse of time or both, would exist, which
(a) entitles any holder of any outstanding Indebtedness, or any Guaranty not
constituting Indebtedness, of any of the Company and the Company Subsidiaries,
or a representative of that holder, to accelerate the maturity, or require a
mandatory prepayment, of that Indebtedness or Guaranty, or affords that holder
or its representative, or any beneficiary of that Guaranty, the right to require
any of the Company and the Company Subsidiaries to redeem, purchase or otherwise
acquire, reacquire or repay any of that Indebtedness, or to perform that
Guaranty in whole or in part, (b) entitles any Person to obtain any Lien (other
than a Permitted Lien) upon any properties or assets of any of the Company and
the Company Subsidiaries (or upon revenues, income or profits of any of the
Company and the Company Subsidiaries therefrom) or (c) constitutes a violation
or breach of, or a default under, any Material Agreement of the Company by any
of the Company and the Company Subsidiaries.
Section 4.06. COMPANY SUBSIDIARIES. Section 4.06 of the
Disclosure Statement either (a) accurately sets forth the form of organization,
legal name, each assumed name and Organization State of each Company Subsidiary
or (b) correctly states no Entity is a Company Subsidiary. Except as accurately
disclosed in Section 4.06 of the Disclosure Statement, each Company Subsidiary
is a Wholly Owned Subsidiary. In the case of any Company Subsidiary that is not
a Wholly Owned Subsidiary, Section 4.06 of the Disclosure Statement accurately
sets forth,
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by each class and each series within each class, the number of outstanding
shares of Capital Stock of the Company Subsidiary, (a) the Company's aggregate
direct and indirect ownership of those shares and (b) the name and address of
record and percentage ownership of those shares of each holder of record thereof
other than the Company or a Company Subsidiary. No Lien exists on any
outstanding share of Capital Stock of any Company Subsidiary which is owned
directly or indirectly by the Company other than (a) the Liens, if any,
described in Section 4.06 of the Disclosure Statement, all of which will be
released at or before the Effective Time, and (b) Permitted Liens. Except as
accurately set forth in Section 4.06 of the Disclosure Statement, the Company
does not own, of record or beneficially, directly or indirectly through any
Person, and does not control, directly or indirectly through any Person or
otherwise, any Capital Stock or Derivative Securities of any Entity other than a
Company Subsidiary.
Section 4.07. CAPITAL STOCK OF THE COMPANY AND THE COMPANY
SUBSIDIARIES. All the issued and outstanding shares of Capital Stock of each of
the Company and the Company Subsidiaries (a) have been duly authorized and
validly issued in accordance with the applicable Governmental Requirements of
their issuer's Organization State and Charter Documents and (b) are fully paid
and nonassessable. Neither the Company nor any Company Subsidiary has issued or
sold any shares of its outstanding Capital Stock in breach or violation of (a)
any applicable statutory or contractual preemptive rights, or any other rights
of any kind (including any rights of first offer or refusal), of any Person or
(b) the terms of any of its Derivative Securities which then were outstanding.
No Person has, otherwise than solely by reason of that Person's right, if any,
to vote shares of the Capital Stock of the Company or any Company Subsidiary it
holds (to the extent those shares afford the holder thereof any voting rights)
any right to vote on any matter with the holders of Capital Stock of the Company
or any Company Subsidiary.
Section 4.08. TRANSACTIONS IN CAPITAL STOCK. Except as accurately
set forth in Section 4.08 of the Disclosure Statement: (a) the Company has no
obligation (contingent or otherwise) to purchase, redeem or otherwise acquire or
reacquire any of its equity securities or any interests therein or to pay any
dividend or make any distribution in respect thereof; and (b) no transaction has
been effected, and no action in contemplation of the transactions described in
this Agreement has been taken, respecting the equity ownership of either the
Company or any Company Subsidiary.
Section 4.09. NO BONUS SHARES. Except as accurately set forth in
Section 4.09 of the Disclosure Statement, no outstanding share of Capital Stock
of the Company was issued for less than the fair market value thereof at the
time of issuance or was issued in exchange for any consideration other than
cash.
Section 4.10. PREDECESSOR STATUS; ETC. Section 4.10 of the
Disclosure Statement accurately lists all the legal and assumed names of all
predecessor companies for the past five years of the Company, including the
names of any Entities from which the Company previously acquired material
assets. Except as accurately disclosed in Section 4.10 of the Disclosure
Statement, the
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Company has not been a Subsidiary or division of another corporation or a part
of an acquisition that later was rescinded.
Section 4.11. RELATED PARTY AGREEMENTS. Except as set forth in
Schedule 4.11, each Related Party Agreement in effect on the date hereof will
have been terminated as of the IPO Closing Date, and no Related Party Agreement
will exist then or thereafter to and including the Effective Time.
Section 4.12. LITIGATION. Except as accurately disclosed in
Section 4.12 of the Disclosure Statement, no Litigation is pending or, to the
knowledge of the Company or any Stockholder, threatened to which the Company or
any Company Subsidiary is or may become a party.
Section 4.13. FINANCIAL STATEMENTS; DISCLOSURE. (a) FINANCIAL
STATEMENTS. (i) The Financial Statements (including in each case the related
schedules and notes) delivered to ARS present fairly, in all material respects,
the consolidated financial position of the Company and the Company Subsidiaries
at the respective dates of the balance sheets included therein and the
consolidated results of their operations and their consolidated cash flows and
stockholders' or other owners' equity for the respective periods set forth
therein and have been prepared in accordance with GAAP. As of the date of any
balance sheet included in those Financial Statements, neither the Company nor
any Company Subsidiary then had any outstanding Indebtedness to any Person or
any liabilities of any kind (including contingent obligations, tax assessments
or unusual forward or long-term commitments), or any unrealized or anticipated
loss, which in the aggregate then were Material to the Company and required to
be reflected in those Financial Statements or in the notes related thereto in
accordance with GAAP which were not so reflected.
(ii) Since the Current Balance Sheet Date, no change has occurred
in the business, operations, properties or assets, liabilities, condition
(financial or other) or results of operations of the Company or any Company
Subsidiary that could reasonably be expected, either alone or together with all
other such changes, to have a Material Adverse Effect on the Company.
(b) DISCLOSURE. (i) As of the date hereof, all Information that
has been made available to ARS by or on behalf of the Company prior to the date
of this Agreement in connection with the transactions contemplated hereby is,
taken together, true and correct in all material respects (other than financial
budgets and projections) and does not contain any untrue statement of a material
fact or omit to state a material fact necessary in order to make the statements
contained therein not materially misleading in light of the circumstances under
which those statements were made.
(ii) All Information that is made available after the date hereof
from time to time prior to the Effective Time to ARS by or on behalf of the
Company in connection with or pursuant to this Agreement, any other Transaction
Document or the transactions contemplated hereby or thereby will be, when made
available and taken together, true and correct in all material respects
-21-
(other than financial budgets and projections) and will not contain any untrue
statement of a material fact or omit to state a material fact necessary in order
to make the statements contained therein not materially misleading in light of
the circumstances under which those statements are made.
(iii) All financial budgets and projections that have been or are
hereafter from time to time prepared by the Company or any of its
Representatives and made available prior to the Effective Time to ARS pursuant
to or in connection with this Agreement, any other Transaction Document or the
transactions contemplated hereby or thereby have been and will be prepared and
furnished to ARS in good faith and were and will be based on facts and
assumptions that are believed by the management of the Company to be reasonable
in light of the then current and foreseeable business conditions of the Company
and the Company Subsidiaries and represented and will represent that
management's good faith estimate of the consolidated projected financial
performance of the Company and the Company Subsidiaries based on the information
available to the Responsible Officer at the time so furnished.
Section 4.14. COMPLIANCE WITH LAWS. (a) Except as accurately
disclosed in Section 4.14 of the Disclosure Statement: (i) each of the Company
and the Company Subsidiaries possesses, or, if required by the applicable
Environmental Laws (including those relating to the maintenance, repair or
servicing of appliances, equipment or other products containing
chlorofluorocarbons or hydrochlorofluorocarbons) and Professional Codes, one or
more of its employees as required by those Environmental Laws and Professional
Codes possesses, all necessary master licenses and similar Governmental
Approvals required for the conduct of its business; and (ii) to the knowledge of
the Company, each of the Company and the Company Subsidiaries and such one or
more of its employees are in compliance in all material respects with the terms
and conditions of all Governmental Approvals necessary for the ownership or
lease and the operation of its properties (including all the facilities and
sites it owns or holds under any lease) and the carrying on of its business as
now conducted. The Company has provided ARS with an accurate, complete written
list of all the Governmental Approvals so possessed (other than permits for
particular jobs for customers as may be required under the applicable
Professional Codes). To the knowledge of the Company, all the Governmental
Approvals so listed are valid, and, except as accurately disclosed in Section
4.14 of the Disclosure Statement, neither the Company nor any Company Subsidiary
has received, nor to the knowledge of any Stockholder has any employee of either
received, any notice from any Governmental Authority of its intention to cancel,
terminate or not renew any of those Governmental Approvals.
(b) Except as accurately disclosed in Section 4.14 of the
Disclosure Statement, each of the Company and the Company Subsidiaries: (i) to
the knowledge of the Company, has been and continues to be in compliance with
all Governmental Requirements applicable to it or any of its presently or
previously owned or operated properties (including all the facilities and sites
now or previously owned or held by it under any lease), businesses or
operations, including all applicable Governmental Requirements under ERISA,
Environmental Laws and Professional Codes; and (ii)(A) neither the Company nor
any Company Subsidiary has received, nor to the knowledge of the Company has any
employee of either received, any notice from any Governmental Authority which
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asserts, or raises the possibility of assertion of, any noncompliance with any
of those Governmental Requirements and, to the knowledge of each of the Company,
the Company Subsidiaries and the Stockholders, (B) no condition or state of
facts exists which would provide a valid basis for any such assertion.
Section 4.15. CERTAIN ENVIRONMENTAL MATTERS. Except as accurately
disclosed in Section 4.15 of the Disclosure Statement: (a) to the knowledge of
the Company, the Company and each Company Subsidiary have complied, and remain
in compliance, to the knowledge of the Company, with the provisions of all
Environmental Laws applicable to any of them or any of their respective
presently owned or operated facilities, sites or other properties, businesses
and operations and which relate to the reporting by the Company and each Company
Subsidiary of all sites presently owned or operated by any of them where Solid
Wastes, Hazardous Wastes or Hazardous Substances have been treated, stored,
disposed of or otherwise handled; (b) no release (as defined in those
Environmental Laws) at, from, in or on any site owned or operated by the Company
or any Company Subsidiary has occurred which, if all relevant facts were known
to the relevant Governmental Authorities, reasonably could be expected to
require remediation to avoid deed record notices, restrictions, liabilities or
other consequences that would not be applicable if that release had not
occurred; (c) neither the Company nor any Company Subsidiary (or any agent or
contractor of either) has transported or arranged for the transportation of any
Solid Wastes, Hazardous Wastes or Hazardous Substances to, or disposed or
arranged for the disposition of any Solid Wastes, Hazardous Wastes or Hazardous
Substances at, any off-site location that could lead to any claim against the
Company, any Company Subsidiary, ARS or Newco, as a potentially responsible
party or otherwise, for any clean-up costs, remedial work, damage to natural
resources, personal injury or property damage, including any claim under CERCLA;
and (d) no storage tanks exist on or under any of the properties owned or
operated by the Company or any Company Subsidiary from which any Solid Wastes,
Hazardous Wastes or Hazardous Substances have been released into the surrounding
environment. The Company has provided ARS with copies (or if not available,
accurate written summaries) of all environmental investigations, studies,
audits, reviews and other analyses conducted by or on behalf, or which otherwise
are in the possession, of the Company or any Company Subsidiary respecting any
facility, site or other property presently owned or operated by the Company and
each Company Subsidiary.
Section 4.16. LIABILITIES AND OBLIGATIONS. Section 4.16 of the
Disclosure Statement accurately lists all present liabilities, of every kind,
character and description and whether accrued, absolute, fixed, contingent or
otherwise, of each of the Company and the Company Subsidiaries which (a) (i)
exceed or reasonably could be expected to exceed $10,000 and (ii) (A) had been
incurred prior to the Current Balance Sheet Date, but are not reflected on the
Current Balance Sheet, or (B) were incurred after the Current Balance Sheet
otherwise than in the ordinary course of business, and consistent with the past
practice, of that Entity. That Section also accurately lists and describes, for
each of the Company and the Company Subsidiaries: (a) each of its outstanding
secured and unsecured Guaranties not constituting its Indebtedness and, for each
of those Guaranties, whether any Stockholder or Related Person or Affiliate of
any Stockholder is a Person whose obligation is covered by that Guaranty, and
(b) for each of the items listed under clause (a)
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of this sentence, (i) if that item is secured by any property or asset of the
Company or any Company Subsidiary, the nature of that security, and (ii) if that
item is covered in whole or in part by a Guaranty of any Stockholder or any
Related Person or Affiliate of any Stockholder, the name of the guarantor.
Section 4.17. RECEIVABLES. Except as accurately set forth in
Section 4.17 of the Disclosure Statement; all the accounts and notes or other
advances receivable of the Company and the Company Subsidiaries reflected on the
Current Balance Sheet were collected, or are, in the good faith belief of the
Company's management, collectible, in the respective amounts so reflected, net
of the reserves, if any, reflected in the Current Balance Sheet.
Section 4.18. OWNED AND LEASED REAL PROPERTIES. (a) Section 4.18
of the Disclosure Statement accurately lists and correctly describes in all
material respects: (i) all real properties owned by any of the Company and the
Company Subsidiaries and, for each of those properties, the address thereof, the
type and square footage of each structure located thereon and the use thereof in
the business of the Company and the Company Subsidiaries; (ii) all real
properties of which any of the Company and the Company Subsidiaries is the
lessee and, for each of those properties, the address thereof, the type and
square footage of each structure located thereon the Company or a Company
Subsidiary is leasing and the expiration date of its lease and the use thereof
in the business of the Company and the Company Subsidiaries; and (iii) in the
case of each real property listed as being owned, whether it was previously
owned, and in the case of each real property listed as being leased, whether it
is presently owned, by any Stockholder or any of his Related Persons or
Affiliates (other than the Company and the Company Subsidiaries, if the
Stockholder is an Affiliate of the Company).
(b) The Company has provided ARS with true, complete and correct
copies of all title reports and insurance policies owned or in the possession of
any of the Company and the Company Subsidiaries and relating to any of the real
properties listed as being owned in Section 4.18 of the Disclosure Statement.
Except as accurately set forth in that Section or those reports and policies,
and except for Permitted Liens, the Company or a Company Subsidiary owns in fee,
and has good, valid and marketable title to, free and clear of all Liens, each
property listed in that Section as being owned.
(c) The Company has provided ARS with true, correct and complete
copies of all leases under which the Company or a Company Subsidiary is leasing
each of the properties listed in Section 4.18 of the Disclosure Statement as
being leased and, except as accurately set forth in Section 4.18 of the
Disclosure Statement, (i) each of those leases is, to the knowledge of the
Company, valid and binding on the lessor party thereto, and (ii) the lessee
party thereto has not sublet any of the leased space to any Person other than
the Company or a Company Subsidiary.
(d) The fixed assets of each of the Company and the Company
Subsidiaries are affixed only to one or more of the real properties listed in
Section 4.18 of the Disclosure Statement
-24-
and, except as accurately set forth in that Section, are well-maintained and
adequate for the purposes for which they presently are being used or held for
use, ordinary wear and tear excepted.
(e) The Company has accurately disclosed in all material respects
in writing to ARS all plans or projects involving the opening of new operations,
the expansion of any existing operations or the acquisition of any real property
or existing business, with respect to which management of the Company or any
Company Subsidiary has made any expenditure in the two-year period prior to the
date of the Agreement in excess of $25,000, or which if pursued by the Company
or any Company Subsidiary would require additional capital expenditures in
excess of $25,000.
Section 4.19. OWNED AND LEASED PROPERTY, PLANT AND EQUIPMENT (a)
The Company has provided ARS with a list accurate and complete in all material
respects of the Property, Plant and Equipment owned and leased by any of the
Company and the Company Subsidiaries, which list states, in the case of each of
those properties listed as being owned, whether it was previously owned, and in
the case of each of those properties listed as being leased, whether it is
presently owned, by any Stockholder or any of his Related Persons or Affiliates
(other than the Company and the Company Subsidiaries, if the Stockholder is an
Affiliate of the Company).
(b) Except as accurately set forth in Section 4.19 of the
Disclosure Statement and except for Permitted Liens, the Company or a Company
Subsidiary has good, valid and marketable title to, free and clear of all Liens,
each property listed in that Section as being owned.
(c) The Company has provided ARS with true, correct and complete
copies of all leases under which the Company or a Company Subsidiary is leasing
each of the properties listed in Section 4.19 of the Disclosure Statement as
being leased and all leases referred to in Section 4.21 and, except as
accurately set forth in Section 4.19 of the Disclosure Statement, (i) each of
those leases is, to the knowledge of the Company, valid and binding on the
lessor party thereto, and (ii) the lessee party thereto has not sublet any of
the leased property to any Person other than the Company or a Company
Subsidiary.
(d) Except as accurately set forth in Section 4.19 of the
Disclosure Statement, all the Property, Plant and Equipment listed therein are
in good working order and condition, ordinary wear and tear excepted, and
adequate for the purposes for which they presently are being used or held for
use.
Section 4.20. PROPRIETARY RIGHTS. Except as accurately set forth
in Section 4.20 of the Disclosure Statement, each of the Company and the Company
Subsidiaries owns or has the legal right to use all Proprietary Rights that are
necessary to the conduct of its business as now conducted, in each case free of
any claims or infringements known to the Company or any Stockholder. Section
4.20 of the Disclosure Statement accurately (a) lists these Proprietary Rights
and (b) indicates those owned by the Company or any Company Subsidiary and, for
those not listed as so owned, the agreement or other arrangement pursuant to
which they are possessed. Except as accurately set forth in that Section, (a) no
consent of any Person will be required for the use of any
-25-
of these Proprietary Rights by ARS or any Subsidiary of ARS following the
Effective Time and (b) no governmental registration of any of these Proprietary
Rights has lapsed or expired or been canceled, abandoned, opposed or the subject
of any reexamination request.
Section 4.21. TITLE TO OTHER PROPERTIES. In each case, free and
clear of all Liens except for Permitted Liens and as accurately set forth in
Section 4.21 of the Disclosure Statement, each of the Company and the Company
Subsidiaries has good and valid title to, or holds under a lease valid and
binding on the lessor party thereto, all its tangible personal properties and
assets (other than Property, Plant and Equipment) that individually is or in the
aggregate are Material to the Company.
Section 4.22. COMMITMENTS. (a) Except as accurately set forth in
Section 4.22(a) of the Disclosure Statement, the Company has provided ARS with a
complete, accurate list of each of the following (each a "Company Commitment")
to which any of the Company and the Company Subsidiaries is a party or by which
any of its properties is bound and which presently remains executory in whole or
in any part:
(i) each partnership, joint venture or cost-sharing agreement;
(ii) each guaranty or suretyship, indemnification or contribution
agreement or performance bond;
(iii) each instrument, agreement or other obligation evidencing
or relating to Indebtedness of any of the Company and the Company
Subsidiaries or to money lent or to be lent to another Person;
(iv) each contract to purchase or sell real property;
(v) each agreement with dealers or sales or commission agents,
public relations or advertising agencies, accountants or attorneys
(other than in connection with this Agreement and the transactions
contemplated hereby) involving total payments within any 12-month period
in excess of $10,000 and which is not terminable without penalty and on
no more than 30 days' prior notice;
(vi) each Related Party Agreement involving total payments within
any 12-month period in excess of $10,000 and which is not terminable
without penalty on no more than 30 days' prior notice;
(vii) each agreement for the acquisition or provision of
services, supplies, equipment, inventory, fixtures or other property
involving more than $10,000 in the aggregate;
-26-
(viii) each contract containing any noncompetition agreement,
covenant or undertaking;
(ix) each agreement providing for the purchase from a supplier of
all or substantially all the requirements of the Company or any Company
Subsidiary of a particular product or service; or
(x) each other agreement or commitment not made in the ordinary
course of business or that is Material to the Company.
True, correct and complete copies of all written Company Commitments, and true,
correct and complete written descriptions of all oral Company Commitments, have
heretofore been delivered or made available to ARS. Except as accurately set
forth in Section 4.22(a) of the Disclosure Statement: (i) there are no existing
or asserted defaults, events of default or events, occurrences, acts or
omissions that, with the giving of notice or lapse of time or both, would
constitute defaults or events of default under any Company Commitment Material
to the Company by any of the Company and the Company Subsidiaries or, to the
knowledge of the Company, any other party thereto; and (ii) no penalties have
been incurred, nor are amendments pending, with respect to the Company
Commitments Material to the Company. The Company Commitments are in full force
and effect and are valid and enforceable obligations of the Company or the
Company Subsidiaries parties thereto and, to the knowledge of the Company, the
other parties thereto in accordance with their respective terms, and no
defenses, off-sets or counterclaims have been asserted or, to the knowledge of
the Company, may be made by any party thereto (other than by the Company or a
Company Subsidiary), nor has the Company or a Company Subsidiary, as the case
may be, waived any rights thereunder, except as accurately described in Section
4.22 of the Disclosure Statement.
(b) Except as accurately disclosed in Section 4.22(b) of the
Disclosure Statement or contemplated hereby or by any other Transaction Document
to which the Company or any Company Subsidiary or Stockholder is a party: (i)
neither the Company nor any Company Subsidiary or Stockholder has received
notice of any plan or intention of any other party to any Company Commitment to
exercise any right to cancel or terminate any Company Commitment, and neither
the Company nor any Company Subsidiary or Stockholder knows of any condition or
state of facts which would justify the exercise of such a right; and (ii)
neither the Company nor any Company Subsidiary or Stockholder currently
contemplates, or has reason to believe any other Person currently contemplates,
any amendment or change to any Company Commitment.
Section 4.23. CAPITAL EXPENDITURES. Section 4.23 of the
Disclosure Statement accurately sets forth the total amount of capital
expenditures currently budgeted to be incurred by the Company and the Company
Subsidiaries during the balance of the Company's current fiscal year. Except as
accurately set forth in that Section, to the knowledge of the Company and the
Stockholders, no condition or state of facts exists which will cause the total
capital expenditures of the Company and the Company Subsidiaries which will be
required to replace worn-out Property, Plant and Equipment in any of the
Company's five fiscal years following that current fiscal year to
-27-
exceed by a material amount the amount budgeted for capital expenditures of that
type by the Company and the Company Subsidiaries for that current fiscal year in
order to maintain the types and levels of sales and services the Company and the
Company Subsidiaries presently provide.
Section 4.24. INVENTORIES. Except as accurately set forth in
Section 4.24 of the Disclosure Statement: (a) all inventories, net of reserves
determined in accordance with GAAP, of each of the Company and the Company
Subsidiaries which are classified as such on the Current Balance Sheet are, to
the knowledge of the Company, merchantable and salable or usable in the ordinary
course of business of the Company and the Company Subsidiaries; (b) the
inventories reflected in the Financial Statements, as at the Current Balance
Sheet Date, (i) were reasonable in relation to the then existing circumstances
of the Company and the Company Subsidiaries on a consolidated basis and
classified as current assets in accordance with GAAP, (ii) were consistent with
their past practices and (iii) fairly reflected the average inventory levels
maintained during the 12-month periods ended on that date; and (c) neither the
Company nor any Company Subsidiary depends on any single vendor for its
inventories the loss of which could have a Material Adverse Effect on the
Company or ever has sustained a difficulty Material to the Company in obtaining
its inventories.
Section 4.25. INSURANCE. Except as accurately set forth in
Section 4.25 of the Disclosure Statement: (a) the Company has provided ARS with:
(i) a list accurate as of the Current Balance Sheet Date of all insurance
policies then carried by each of the Company and the Company Subsidiaries; (ii)
an accurate list of all insurance loss runs and worker's compensation claims
received for the most recently ended three policy years; and (iii) true,
complete and correct copies of all insurance policies carried by each of the
Company and the Company Subsidiaries which are in effect, all of which (A) have
been issued by insurers of recognized responsibility and (B) currently are, and
will remain without interruption through the IPO Closing Date, in full force and
effect; (b) no insurance carried by the Company or any Company Subsidiary has
been canceled by the insurer during the past five years, and neither the Company
nor any Company Subsidiary has ever been denied coverage; and (c) neither the
Company nor any Company Subsidiary or Stockholder has received any notice or
other communication from any issuer of any such insurance policy of any material
increase in any deductibles, retained amounts or the premiums payable
thereunder, and, to the knowledge of the Company and the Stockholders, no such
increase in deductibles, retainages or premiums is threatened.
Section 4.26. EMPLOYEE MATTERS. (a) CASH COMPENSATION. The
Company has provided ARS with an accurate, complete written list of the names,
titles and rates of annual Cash Compensation, at the Current Balance Sheet Date
and at the date hereof (and the portions thereof attributable to salary or the
equivalent, fixed bonuses, discretionary bonuses and other Cash Compensation,
respectively) of all key employees (including all employees who are officers or
directors), nonemployee officers, nonemployee directors and key consultants and
independent contractors of each of the Company and the Company Subsidiaries.
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(b) EMPLOYMENT AGREEMENTS. Section 4.26(b) of the Disclosure
Statement accurately lists all Employment Agreements remaining executory in
whole or in part on the date hereof, and the Company has provided ARS with true,
complete and correct copies of all those Employment Agreements. Neither the
Company nor any Company Subsidiary is a party to any oral Employment Agreement.
(c) OTHER COMPENSATION PLANS. Section 4.26(c) of the Disclosure
Statement accurately lists all Other Compensation Plans either remaining
executory at the date hereof or to become effective after the date hereof. The
Company has provided ARS with a true, correct and complete copy of each of those
Other Compensation Plans that is in writing and an accurate description of each
of those Other Compensation Plans that is not written. Except as accurately set
forth in Section 4.26(c) of the Disclosure Statement, each of the Other
Compensation Plans, including each that is a Welfare Plan, may be unilaterally
amended or terminated by the Company or any Company Subsidiary without liability
to any of them, except as to benefits accrued thereunder prior to that amendment
or termination.
(d) ERISA BENEFIT PLANS. Section 4.26(d) of the Disclosure
Statement accurately (i) lists each ERISA Pension Benefit Plan (A)(1) the
funding requirements of which (under Section 301 of ERISA or Section 412 of the
Code) are, or at any time during the six-year period ending on the date hereof
were, in whole or in part, the responsibility of the Company or any Company
Subsidiary or (2) respecting which the Company or any Company Subsidiary is, or
at any time during that period was, a "contributing sponsor" or an "employer" as
defined in Sections 4001(a)(13) and 3(5), respectively, of ERISA (each plan
described in this clause (A) being a "Company ERISA Pension Plan"), (B) each
other ERISA Pension Benefit Plan respecting which an ERISA Affiliate is, or at
any time during that period was, such a "contributing sponsor" or "employer"
(each plan described in this clause (B) being an "ERISA Affiliate Pension Plan")
and (C) each other ERISA Employee Benefit Plan that is being, or at any time
during that period was, sponsored, maintained or contributed to by the Company
or any Company Subsidiary (each plan described in this clause (C) and each
Company ERISA Pension Plan being a "Company ERISA Benefit Plan"), (ii) states
the termination date of each Company ERISA Benefit Plan and ERISA Affiliate
Pension Plan that has been terminated and (iii) identifies for each ERISA
Affiliate Pension Plan the relevant ERISA Affiliates. The Company has provided
ARS with (i) true, complete and correct copies of (A) each Company ERISA Benefit
Plan and ERISA Affiliate Pension Plan, (B) each trust agreement related thereto
and (C) all amendments to those plans and trust agreements. Except as accurately
set forth in Section 4.26(d) of the Disclosure Statement, (i) neither the
Company nor any Company Subsidiary is, or at any time during the six-year period
ended on the date hereof was, a member of any ERISA Group that currently
includes, or included when the Company or a Company Subsidiary was a member,
among its members any Person other than the Company and the Company Subsidiaries
and (ii) no Person is an ERISA Affiliate of the Company or any Company
Subsidiary (other than the Company or any Company Subsidiary in the case of any
other Company Subsidiary or any Company Subsidiary in the case of the Company,
if the Company and the Company Subsidiaries comprise an ERISA Group).
-29-
(e) EMPLOYEE POLICIES AND PROCEDURES. Section 4.26(e) of the
Disclosure Statement accurately lists all Employee Policies and Procedures. The
Company has provided ARS with a copy of all written Employee Policies and
Procedures and a written description of all material unwritten Employee Policies
and Procedures.
(f) UNWRITTEN AMENDMENTS. Except as accurately described in
Section 4.26(f) of the Disclosure Statement, no material unwritten amendments
have been made, whether by oral communication, pattern of conduct or otherwise,
with respect to any of the Employment Agreements, Other Compensation Plans or
Employee Policies and Procedures.
(g) LABOR COMPLIANCE. To the knowledge of the Company, each of
the Company and the Company Subsidiaries has been and is in compliance with all
applicable Governmental Requirements respecting employment and employment
practices, terms and conditions of employment and wages and hours, and neither
the Company nor any Company Subsidiary is liable for any arrears of wages or
penalties for failure to comply with any of the foregoing. Neither the Company
nor any Company Subsidiary has engaged in any unfair labor practice or
discriminated on the basis of race, color, religion, sex, national origin, age,
disability or handicap in its employment conditions or practices. Except as
accurately set forth in Section 4.26(g) of the Disclosure Statement, there are
no (i) unfair labor practice charges or complaints or racial, color, religious,
sex, national origin, age, disability or handicap discrimination charges or
complaints pending or, to the knowledge of the Company, threatened against the
Company or any of the Company Subsidiaries before any Governmental Authority
(nor, to the knowledge of the Company, does any valid basis therefor exist) or
(ii) existing or, to the knowledge of the Company, threatened labor strikes,
disputes, grievances, controversies or other labor troubles affecting the
Company or any of the Company Subsidiaries (nor, to the knowledge of the
Company, does any valid basis therefor exist).
(h) UNIONS. Neither the Company nor any Company Subsidiary or
ERISA Affiliate has ever been a party to any agreement with any union, labor
organization or collective bargaining unit. No employees of the Company and the
Company Subsidiaries are represented by any union, labor organization or
collective bargaining unit. Except as accurately set forth in Section 4.26(h) of
the Disclosure Statement, to the knowledge of the Company, none of the employees
of the Company and the Company Subsidiaries has threatened to organize or join a
union, labor organization or collective bargaining unit.
(i) NO ALIENS All employees of each of the Company and the
Company Subsidiaries are citizens of, or are authorized in accordance with
federal immigration laws to be employed in, the United States.
(j) CHANGE OF CONTROL BENEFITS. Except as accurately set forth in
Section 4.26(j) of the Disclosure Statement, neither the Company nor any of the
Company Subsidiaries is a party to any agreement, or has established any policy,
practice or program, requiring it to make a payment or provide any other form of
compensation or benefit or vesting rights to any person performing
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services for the Company or any of the Company Subsidiaries which would not be
payable or provided in the absence of this Agreement or the consummation of the
transactions contemplated by this Agreement, including any parachute payment
under Section 280G of the Code.
(k) RETIREES. Neither the Company nor any of the Company
Subsidiaries has any obligation or commitment to provide medical, dental or life
insurance benefits to or on behalf of any of its employees who may retire or any
of its former employees who have retired except as may be required pursuant to
the continuation of coverage provisions of Section 4980B of the Code and the
applicable parallel provisions of ERISA.
Section 4.27. COMPLIANCE WITH ERISA, ETC. (a) COMPLIANCE. Each of
the Company ERISA Benefit Plans and Other Compensation Plans (each, a "Plan")
(i) is in substantial compliance with all applicable provisions of ERISA, as
well as with all other applicable Governmental Requirements, and (ii) has been
administered, operated and managed in accordance with its governing documents.
(b) QUALIFICATION. All Plans that are intended to qualify under
Section 401(a) of the Code (the "Qualified Plans") are so qualified and have
been determined by the IRS to be so qualified (or application for determination
letters have been timely submitted to the IRS). The Company has provided ARS
with true, complete and correct copies of the current plan determination
letters, most recent actuarial valuation reports, if any, most recent Form 5500,
or, as applicable, Form 5500-C/R, filed with respect to each such Qualified Plan
and most recent trustee or custodian report. To the extent that any Qualified
Plans have not been amended to comply with applicable Governmental Requirements,
the remedial amendment period permitting retroactive amendment of these
Qualified Plans has not expired and will not expire within 120 days after the
Effective Time. All reports and other documents required to be filed with any
governmental agency or distributed to plan participants or beneficiaries
(including annual reports, summary annual reports, actuarial reports, PBGC-1
Forms, audits or Returns) have been timely filed or distributed.
(c) NO PROHIBITED TRANSACTIONS, ETC. None of the Stockholders,
any Plan or the Company or any Company Subsidiary has engaged in any Prohibited
Transaction. No Plan has incurred an accumulated funding deficiency, as defined
in Section 412(a) of the Code and Section 302(a) of ERISA, and no circumstances
exist pursuant to which the Company or any Company Subsidiary could have any
direct or indirect liability whatsoever (including being subject to any
statutory Lien to secure payment of any such liability), to the PBGC under Title
IV of ERISA or to the IRS for any excise tax or penalty with respect to any Plan
now or hereafter maintained or contributed to by the Company or any of its ERISA
Affiliates. Further:
(i) there have been no terminations, partial terminations or
discontinuances of contributions to any Qualified Plan without a
determination by the IRS that such action does not adversely affect the
tax-qualified status of that plan;
(ii) no Termination Event has occurred;
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(iii) no Reportable Event has occurred with respect to any Plan
which was not properly reported;
(iv) the valuation of assets of any Qualified Plan, as of the
Effective Time, shall equal or exceed the actuarial present value of all
"benefit liabilities" (within the meaning of Section 40001(a)(16) of
ERISA) under that plan in accordance with the assumptions contained in
the Regulations of the PBGC governing the funding of terminated defined
benefit plans;
(v) with respect to Plans qualifying as "group health plans"
under Section 4980B of the Code or Section 607(l) or 609 of ERISA and
related regulations (relating to the benefit continuation rights imposed
by "COBRA" or qualified medical child support orders), the Company, each
Company Subsidiary and the Stockholders have complied (and at the
Effective Time will have complied) in all material respects with all
reporting, disclosure, notice, election and other benefit continuation
and coverage requirements imposed thereunder as and when applicable to
those plans, and neither the Company nor any Company Subsidiary has
incurred (or will incur) any direct or indirect liability or is (or will
be) subject to any loss, assessment, excise tax penalty, loss of federal
income tax deduction or other sanction, arising on account of or in
respect of any direct or indirect failure by the Company, any Company
Subsidiary or any Stockholder, at any time prior to the Effective Time,
to comply with any such federal or state benefit continuation or
coverage requirement, which is capable of being assessed or asserted
before or after the Effective Time directly or indirectly against the
Company, any Company Subsidiary, any Stockholder, the Surviving
Corporation or ARS with respect to any of those group health plans;
(vi) the Financial Statements as of the Current Balance Sheet
Date reflect the approximate total pension, medical and other benefit
liability for all Plans, and no material funding changes or
irregularities are reflected thereon which would cause those Financial
Statements to be not representative of prior periods; and
(vii) neither the Company nor any Company Subsidiary has incurred
liability under Section 4062 of ERISA.
(d) MULTIEMPLOYER PLANS. Except as set forth in Section 4.27(d)
of the Disclosure Statement, neither the Company nor any Company Subsidiary, and
no ERISA Affiliate of any of them, is, or at any time during the six-year period
ended on the date hereof was, obligated to contribute to a Multiemployer Plan.
Neither the Company nor any Company Subsidiary, and no ERISA Affiliate of any of
them, has made a complete or partial withdrawal from a Multiemployer Plan so as
to incur withdrawal liability as defined in Section 4201 of ERISA.
(e) CLAIMS AND LITIGATION. Except as accurately set forth in
Section 4.27(e) of the Disclosure Statement, no Litigation or claims (other than
routine claims for benefits) are pending or, to the knowledge of the Company,
threatened against, or with respect to, any of the Plans or with
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respect to any fiduciary, administrator or sponsor thereof (in their capacities
as such), or any party-in-interest thereof.
(f) EXCISE TAXES, DAMAGES AND PENALTIES. No act, omission or
transaction has occurred which would result in the imposition on the Company or
any Company Subsidiary of (i) breach of fiduciary duty liability damages under
Section 409 of ERISA, (ii) a civil penalty assessed pursuant to subsection (c),
(i) or (l) of Section 502 of ERISA or (iii) any excise tax under applicable
provisions of the Code with respect to any Plan.
(g) VEBA WELFARE TRUST. Any trust funding a Plan, which is
intended to be exempt from federal income taxation pursuant to Section 501(c)(9)
of the Code, satisfies the requirements of that section and has received a
favorable determination letter from the IRS regarding that exempt status and has
not, since receipt of the most recent favorable determination letter, been
amended or operated in a way that would adversely affect that exempt status.
Section 4.28. TAXES. (a) Each of the following representations
and warranties in this Section 4.28 is qualified to the extent set forth in
Section 4.28 of the Disclosure Statement.
(b) All Returns required to be filed with respect to any Tax for
which any of the Company and the Company Subsidiaries is liable have been duly
and timely filed with the appropriate Taxing Authority, each Tax shown to be
payable on each such Return has been paid, each Tax payable by the Company or a
Company Subsidiary by assessment has been timely paid in the amount assessed and
adequate reserves have been established on the consolidated books of the Company
and the Company Subsidiaries for all Taxes for which any of the Company and the
Company Subsidiaries is liable, but the payment of which is not yet due. Neither
the Company nor any Company Subsidiary is, or ever has been, liable for any Tax
payable by reason of the income or property of a Person other than the Company
or a Company Subsidiary. Each of the Company and the Company Subsidiaries has
timely filed true, correct and complete declarations of estimated Tax in each
jurisdiction in which any such declaration is required to be filed by it. No
Liens for Taxes exist upon the assets of the Company or any Company Subsidiary
except Liens for Taxes which are not yet due. Neither the Company nor any
Company Subsidiary is, or ever has been, subject to Tax in any jurisdiction
outside of the United States. No Litigation with respect to any Tax for which
the Company or any Company Subsidiary is asserted to be liable is pending or, to
the knowledge of the Company or any Stockholder, threatened and no basis which
the Company or any Stockholder believes to be valid exists on which any claim
for any such Tax can be asserted against the Company or any Company Subsidiary.
There are no requests for rulings or determinations in respect of any taxes
pending between the Company or any Company Subsidiary and any Taxing Authority.
No extension of any period during which any Tax may be assessed or collected and
for which the Company or any Company Subsidiary is or may be liable has been
granted to any Taxing Authority. Neither the Company nor any Company Subsidiary
is or has been a party to any tax allocation or sharing agreement. All amounts
required to be withheld by any of the Company and the Company Subsidiaries and
paid to governmental agencies for income, social security, unemployment
insurance, sales, excise, use and other Taxes have been collected or withheld
and
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paid to the proper Taxing Authority. The Company and each Company Subsidiary
have made all deposits required by law to be made with respect to employees'
withholding and other employment taxes.
(c) Neither the Company nor any Stockholder is a "foreign
person," as that term is referred to in Section 1445(f)(3) of the Code.
(d) The Company has not filed a consent pursuant to Section
341(f) of the Code or any comparable provision of any other tax statute and has
not agreed to have Section 341(f)(2) of the Code or any comparable provision of
any other tax statute apply to any disposition of an asset. The Company has not
made, is not obligated to make and is not a party to any agreement that could
require it to make any payment that is not deductible under Section 280G of the
Code. No asset of the Company or of any Company Subsidiary is subject to any
provision of applicable law which eliminates or reduces the allowance for
depreciation or amortization in respect of that asset below the allowance
generally available to an asset of its type. No accounting method changes of the
Company or of any Company Subsidiary exist or are proposed or threatened which
could give rise to an adjustment under Section 481 of the Code.
Section 4.29. GOVERNMENT CONTRACTS. Except as accurately set
forth in Section 4.29 of the Disclosure Statement, neither the Company nor any
Company Subsidiary is a party to any governmental contract subject to price
redetermination or renegotiation.
Section 4.30. ABSENCE OF CHANGES. Since the Current Balance Sheet
Date, except as accurately set forth in Section 4.30 of the Disclosure
Statement, none of the following has occurred with respect to the Company or any
Company Subsidiary:
(a) any circumstance, condition, event or state of facts (either
singly or in the aggregate), other than conditions generally affecting
the Air Conditioning and Refrigeration Contracting or Plumbing
businesses, which has caused, is causing or will cause a Material
Adverse Effect on the Company;
(b) any change in its authorized Capital Stock or in any of its
outstanding Capital Stock or Derivative Securities;
(c) any Restricted Payment, except any declaration or payment of
dividends by any Company Subsidiary solely to the Company;
(d) any increase in, or any commitment or promise to increase,
the rates of Cash Compensation as of the date hereof, or the amounts or
other benefits paid or payable under any Company ERISA Pension Plan or
Other Compensation Plan, except for ordinary and customary bonuses and
salary increases for employees (other than the Stockholders or their
Immediate Family Members) at the times and in the amounts consistent
with its past practice;
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(e) any work interruptions, labor grievances or claims filed, or
any similar event or condition of any character, that will have a
Material Adverse Effect on the Surviving Corporation following the
Effective Time;
(f) any distribution, sale or transfer of, or any Company
Commitment to distribute, sell or transfer, any of its assets or
properties of any kind which singly is or in the aggregate are Material
to the Company, other than distributions, sales or transfers in the
ordinary course of its business and consistent with its past practices
to Persons other than the Stockholders and their Immediate Family
Members and Affiliates;
(g) any cancellation, or agreement to cancel, any Indebtedness,
obligation or other liability owing to it, including any Indebtedness,
obligation or other liability of any Stockholder or any Related Person
or Affiliate thereof, provided that it may negotiate and adjust bills in
the course of good faith disputes with customers in a manner consistent
with past practice, if all those adjustments are included in the
Supplemental Information provided ARS pursuant to Section 6.08;
(h) any plan, agreement or arrangement granting any preferential
rights to purchase or acquire any interest in any of its assets,
property or rights or requiring consent of any Person to the transfer
and assignment of any such assets, property or rights;
(i) any purchase or acquisition of, or agreement, plan or
arrangement to purchase or acquire, any property, rights or assets
outside of the ordinary course of its business consistent with its past
practices;
(j) any waiver of any of its rights or claims that singly is or
in the aggregate are Material to the Company;
(k) any transaction by it outside the ordinary course of its
business or not consistent with its past practices;
(l) any incurrence by it of any Indebtedness or any Guaranty not
constituting its Indebtedness, or any Company Commitment to incur any
Indebtedness or any such Guaranty;
(m) any investment in the Capital Stock, Derivative Securities or
Indebtedness of any Person other than a Permitted Investment;
(n) except in accordance with the Company's consolidated capital
expenditure budget for the Company's current fiscal year, any capital
expenditure or series of related capital expenditures by the Company and
the Company Subsidiaries collectively in excess of $25,000, or
commitments by the Company and the Company Subsidiaries to make capital
expenditures totaling in excess of $25,000; or
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(o) any cancellation or termination of a Material Agreement of
the Company.
Section 4.31. BANK RELATIONS; POWERS OF ATTORNEY. The Company
has provided ARS with an accurate, complete written statement setting forth:
(a) the name of each financial institution in which the Company
or any Company Subsidiary has borrowing or investment arrangements,
deposit or checking accounts or safe deposit boxes;
(b) the types of those arrangements and accounts, including, as
applicable, names in which accounts or boxes are held, the account or
box numbers and the name of each Person authorized to draw thereon or
have access thereto; and
(c) the name of each Person holding a general or special power of
attorney from the Company or any Company Subsidiary and a description of
the terms of each such power.
Section 4.32. RELATIONS WITH GOVERNMENTS, ETC. Neither the
Company nor any Company Subsidiary has made, offered or agreed to offer anything
of value to any governmental official, political party or candidate for
government office which would cause the Company or any Company Subsidiary to be
in violation of the Foreign Corrupt Practices Act of 1977 or any Governmental
Requirement to a similar effect.
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ARTICLE V
REPRESENTATIONS AND WARRANTIES OF ARS AND NEWCO
Section 5.02. ORGANIZATION; POWER. ARS is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware, and each of ARS and Newco has all requisite corporate power and
authority under the laws of its Organization State and its Charter Documents to
own or lease and to operate its properties presently and following the Effective
Time and to carry on its business as now conducted and as proposed to be
conducted following the Effective Time. Neither ARS nor Newco has engaged in any
operations since its organization other than in connection with their formation
and capitalization and the transactions contemplated by this Agreement and the
Other Agreements.
Section 5.03. AUTHORIZATION; ENFORCEABILITY; ABSENCE OF
CONFLICTS; REQUIRED CONSENTS. (a) The execution, delivery and performance by
each of ARS and Newco of this Agreement and each other Transaction Document to
which it is a party, and the effectuation of the Merger and the other
transactions contemplated hereby and thereby, are within its corporate power
under its Charter Documents and the applicable Governmental Requirements of its
Organization State and have been duly authorized by all proceedings, including
actions permitted to be taken in lieu of proceedings, required under its Charter
Documents and the applicable Governmental Requirements of its Organization
State.
(b) This Agreement has been, and each of the other Transaction
Documents to which either of ARS or Newco is a party, when executed and
delivered to the other parties thereto (or, in the case of the Certificates of
Merger, the applicable Governmental Authorities), will have been, duly executed
and delivered by it and is, or when so executed and delivered will be, its
legal, valid and binding obligation, enforceable against it in accordance with
its terms, except as that enforceability may be (i) limited by any applicable
bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the
enforcement of creditors' rights generally and (ii) subject to general
principles of equity (regardless of whether that enforceability is considered in
a proceeding in equity or at law).
(c) The execution, delivery and performance in accordance with
their respective terms by each of ARS and Newco of the Transaction Documents to
which it is a party have not and will not (i) violate, breach or constitute a
default under (A) the Charter Documents of ARS or Newco, (B) any Governmental
Requirement applicable to ARS or Newco or (C) any Material Agreement of ARS or
Newco, (ii) result in the acceleration or mandatory prepayment of any
Indebtedness, or any Guaranty not constituting Indebtedness, of ARS or Newco or
afford any holder of any of that Indebtedness, or any beneficiary of any of
those Guaranties, the right to require ARS or Newco to redeem, purchase or
otherwise acquire, reacquire or repay any of that Indebtedness, or to perform
any of those Guaranties, (iii) cause or result in the imposition of, or afford
any Person the right to obtain, any Lien upon any property or assets of ARS or
Newco (or upon any revenues, income or profits of either ARS or Newco therefrom)
or (iv) result in the revocation, cancellation,
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suspension or material modification, in any single case or in the aggregate, of
any Governmental Approval possessed by ARS or Newco at the date hereof and
necessary for the ownership or lease and the operation of its properties or the
carrying on of its business as now conducted, including any necessary
Governmental Approval under each applicable Environmental Law and Professional
Code.
(d) Except for (i) the filing of the Certificates of Merger with
the applicable Governmental Authorities, (ii) filings of the Registration
Statement under the Securities Act and the SEC order declaring the Registration
Statement effective under the Securities Act and (iii) as may be required by the
HSR Act or the applicable state securities or blue sky laws, no Governmental
Approvals are required to be obtained, and no reports or notices to or filings
with any Governmental Authority are required to be made, by ARS or Newco for the
execution, delivery or performance by ARS or Newco of the Transaction Documents
to which it is a party, the enforcement against ARS or Newco, as the case may
be, of its obligations thereunder or the effectuation of the Merger and the
other transactions contemplated thereby.
Section 5.04. CHARTER DOCUMENTS. ARS has delivered to the Company
true, complete and correct copies of the Charter Documents of each of ARS and
Newco. No breach or violation of any Charter Document of either ARS or Newco has
occurred and is continuing.
Section 5.05. CAPITAL STOCK OF ARS AND NEWCO. (a) Immediately
prior to the Effective Time, (i) the authorized Capital Stock of ARS will be
comprised of (A) 50,000,000 shares of ARS Common Stock and (B) 10,000,000 shares
of preferred stock, $.001 par value per share, (ii) before giving effect to the
Merger and the merger or other acquisition transactions contemplated by the
Other Agreements, (A) the number of shares of ARS Common Stock then issued and
outstanding will be as set forth in the Registration Statement when it becomes
effective under the Securities Act, (B) no shares of the ARS preferred stock
then will be issued or outstanding and (C) ARS will have reserved for issuance
pursuant to Other Compensation Plans or the exercise of Derivative Securities
the number of shares of ARS Common Stock set forth in the Registration Statement
when it becomes effective under the Securities Act.
(b) The authorized Capital Stock of Newco is comprised of 1,000
shares of Newco Common Stock, all of which shares are issued, outstanding and
owned, of record and beneficially, by ARS.
(c) All shares of ARS Common Stock and Newco Common Stock
outstanding immediately prior to the Effective Time, and all shares of ARS
Common Stock to be issued pursuant to Section 2.04, when issued, (i) will have
been duly authorized and validly issued in accordance with the DGCL and their
issuer's Charter Documents and (ii) will be fully paid and nonassessable. None
of the shares of ARS Common Stock to be issued pursuant to Section 2.04 will,
when issued, have been issued in breach or violation of (i) any applicable
statutory or contractual preemptive rights, or any other rights of any kind
(including any rights of first offer or refusal), of any Person or (ii) the
terms of any of its Derivative Securities then outstanding.
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Section 5.06. SUBSIDIARIES. Immediately prior to the IPO Closing
Date, (a) ARS will have no Subsidiaries other than Newco and each Entity defined
as "Newco" in each of the Other Agreements, (b) Newco will have no Subsidiaries
and (c) neither ARS nor Newco will own, of record or beneficially, directly or
indirectly through any Person or otherwise (except pursuant hereto or to the
Other Agreements), any Capital Stock or Derivative Securities of any Entity not
described in this Section 5.06 as a Subsidiary of ARS (in the case of ARS) or
any Entity (in the case of Newco).
Section 5.07. LIABILITIES. Except as disclosed in the Private
Placement Memorandum, neither ARS nor Newco has any material liabilities of any
kind other than those incurred in connection with this Agreement and the Other
Agreements and the transactions contemplated hereby and thereby, including the
IPO.
Section 5.08. COMPLIANCE WITH LAWS; NO LITIGATION. Each of ARS
and Newco is in compliance with all Governmental Requirements applicable to it,
and no Litigation is pending or, to the knowledge of ARS, threatened to which
ARS or Newco is or may become a party which (a) questions or involves the
validity or enforceability of any obligation of ARS or Newco under any
Transaction Document, (b) seeks (or reasonably may be expected to seek) (i) to
prevent or delay consummation by ARS or Newco of the transactions contemplated
by this Agreement to be consummated by ARS or Newco, as the case may be, or (ii)
damages from ARS or Newco in connection with any such consummation.
Section 5.09. NO BROKERS. ARS has not, directly or indirectly, in
connection with this Agreement or the transactions contemplated hereby (a)
employed any broker, finder or agent or (b) agreed to pay or incurred any
obligation to pay any broker's or finder's fee, any sales commission or any
similar form of compensation.
Section 5.10. PRIVATE PLACEMENT MEMORANDUM. At the date hereof,
the Private Placement Memorandum (other than the historical financial
statements, including the notes thereto, of the Founding Companies (other than
the Company) and the historical information contained therein respecting the
Company and the Stockholders, to which this Section 5.10 does not apply) does
not contain any untrue statement of a material fact or omit to state a material
fact necessary in order to make the statements contained therein not materially
misleading in the light of the circumstances under which those statements are
made.
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ARTICLE VI
COVENANTS EXTENDING TO THE EFFECTIVE TIME
Section 6.02 ACCESS AND COOPERATION; DUE DILIGENCE. (a) From the
date hereof and until the IPO Closing Date, the Company will (i) afford to the
Representatives of ARS and each Other Founding Company reasonable access to all
the key employees, sites, properties, books and records of each of the Company
and the Company Subsidiaries, (ii) provide ARS with such additional financial
and operating data and other information relating to the business and properties
of each of the Company and the Company Subsidiaries as ARS or any Other Founding
Company may from time to time reasonably request and (iii) cooperate with ARS
and each Other Founding Company and their respective Representatives in the
preparation of any documents or other material which may be required in
connection with any Transaction Documents or any Other Transaction Documents.
Each Stockholder and the Company will treat all Confidential Information
obtained by them in connection with the negotiation and performance of this
Agreement or the due diligence investigations conducted with respect to each
Other Founding Company as confidential in accordance with the provisions of
Section 11.01. In addition, ARS will cause each Other Founding Company to enter
into a provision similar to this Section 6.02 in order to require each Other
Founding Company to keep confidential any Confidential Information respecting
any of the Company and the Company Subsidiaries obtained by that Other Founding
Company.
(b) Each of the Company and the Stockholders will use its best
efforts to secure, as soon as practicable after the date hereof, all approvals
or consents of third Persons as may be necessary to consummate the transactions
contemplated hereby.
(c) From the date hereof and until the IPO Closing Date, ARS and
Newco will (i) afford to the Representatives of the Company and the Stockholders
access to all sites, properties, books and records of ARS and Newco, (ii)
provide the Company with such additional financial and operating data and other
information relating to the business and properties of ARS and Newco as the
Company or any Stockholder may from time to time reasonably request and (iii)
cooperate with the Company and the Stockholders and their respective
Representatives in the preparation of any documents or other material which may
be required in connection with any Transaction Documents.
(d) If this Agreement is terminated pursuant to Section 12.1, ARS
promptly will return all written Confidential Information of the Company it then
possesses to the Company.
Section 6.03. CONDUCT OF BUSINESS PENDING CLOSING. From the date
hereof and until the Effective Time, the Company will, and will cause each
Company Subsidiary to, except as and only to the extent set forth in Section
6.03 of the Disclosure Statement:
(a) carry on its businesses in substantially the same manner as
it has heretofore and not introduce any material new method of
management, operation or accounting;
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(b) maintain its properties and facilities, including those held
under leases, in as good working order and condition as at present,
ordinary wear and tear excepted;
(c) perform all its obligations under agreements relating to or
affecting its assets, properties and other rights;
(d) keep in full force and effect without interruption all its
present insurance policies or other comparable insurance coverage;
(e) use reasonable commercial efforts to (i) maintain and
preserve its business organization intact, (ii) retain its present
employees and (iii) maintain its relationships with suppliers, customers
and others having business relations with it;
(f) comply with all applicable Governmental Requirements; and
(g) except as required or expressly permitted by this Agreement,
maintain the instruments and agreements governing its outstanding
Indebtedness and leases on their present terms and not enter into new or
amended Indebtedness or lease instruments or agreements involving
amounts over $5,000 in any case or $25,000 in the aggregate, without the
prior written consent of ARS (which consent will not be unreasonably
withheld).
Section 6.04. PROHIBITED ACTIVITIES. From the date hereof and
until the Effective Time, without the prior written consent of ARS or unless as
required or expressly permitted by this Agreement, the Company will not, and
will not permit any Company Subsidiary to:
(a) make any change in its Charter Documents;
(b) issue any of its Capital Stock or issue or otherwise create
any of its Derivative Securities;
(c) make any Restricted Payment (other than as provided in
Schedule 6.04);
(d) make any investments (other than Permitted Investments) in
the Capital Stock, Derivative Securities or Indebtedness of any Person;
(e) enter into any contract or commitment or incur or agree to
incur any liability or make any capital expenditures in a single
transaction or a series of related transactions involving an aggregate
amount of more than $25,000 otherwise than in the ordinary course of its
business and consistent with its past practice;
(f) increase or commit or promise to increase the Cash
Compensation payable or to become payable to any officer, director,
stockholder, employee or agent, consultant or independent contractor of
any of the Company and the Company Subsidiaries or make any
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discretionary bonus or management fee payment to any such Person, except
bonuses or salary increases to employees (other than the Stockholders or
their Immediate Family Members) at the times and in the amounts
consistent with its past practice;
(g) create, assume or permit to be created or imposed any Liens
(other than Permitted Liens) upon any of its assets or properties,
whether now owned or hereafter acquired, except for purchase money Liens
incurred in connection with the acquisition of equipment with an
aggregate cost not in excess of $10,000 and necessary or desirable for
the conduct of the business of any of the Company and the Company
Subsidiaries;
(h) (i) adopt, establish, amend or terminate any ERISA Employee
Benefit Plan, or any Other Compensation Plan or Employee Policies and
Procedures or (ii) take any discretionary action, or omit to take any
contractually required action, if that action or omission could either
(A) deplete the assets of any ERISA Employee Benefit Plan or any Other
Compensation Plan or (B) increase the liabilities or obligations under
any such plan;
(i) sell, assign, lease or otherwise transfer or dispose of any
of its owned or leased property or equipment otherwise than in the
ordinary course of its business and consistent with its past practice;
(j) negotiate for the acquisition of any business or the start-up
of any new business;
(k) merge, consolidate or effect a share exchange with, or agree
to merge, consolidate or effect a share exchange with, any other Entity;
(l) waive any of its material rights or claims, provided that it
may negotiate and adjust bills in the course of good faith disputes with
customers in a manner consistent with past practice, but such
adjustments will not be deemed to be included in Section 4.17 of the
Disclosure Statement unless specifically listed in the Supplemental
Information;
(m) commit a material breach of or amend or terminate any
Material Agreement of the Company or any of its Governmental Approvals;
or
(n) enter into any other transaction (i) outside the ordinary
course of its business and consistent with its past practice or (ii)
prohibited hereby.
Section 6.05. NO SHOP; RELEASE OF DIRECTORS. (a) Each of the
Company and the Stockholders agrees that, from the date hereof and until the
first to occur of the Effective Time or the termination of this Agreement in
accordance with Article XII, neither the Company nor any Stockholder, nor any of
their respective officers and directors shall, and the Company and each
Stockholder will direct and use their best efforts to cause each of their
respective Representatives not to, initiate, solicit or encourage, directly or
indirectly, any inquiries or the making or
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implementation of any proposal or offer (including any proposal or offer to the
Stockholders) with respect to a merger, acquisition, consolidation or similar
transaction involving, or any purchase of all or any significant portion of the
assets or any equity securities of, the Company (any such proposal or offer
being an "Acquisition Proposal") or engage in any activities, discussions or
negotiations concerning, or provide any Confidential Information respecting, the
Company, any Other Founding Company or ARS to, or have any discussions with, any
Person relating to an Acquisition Proposal or otherwise facilitate any effort or
attempt to make or implement an Acquisition Proposal. The Company and each
Stockholder will: (i) immediately cease and cause to be terminated any existing
activities, discussions or negotiations with any Persons conducted heretofore
with respect to any of the foregoing, and each will take the steps necessary to
inform the Persons referred to in the first sentence of this Section 6.05(a) of
the obligations undertaken in this Section 6.05(a); and (ii) notify ARS
immediately if any such inquiries or proposals are received by, any such
information is requested from or any such discussions or negotiations are sought
to be initiated or continued with the Company or any Stockholder.
(b) Each of the Company and the Stockholders hereby (i) waives
every right, if any, the Governmental Requirements of the Company's Organization
State afford the Company or Stockholders to require the Company's directors (or
their equivalents if the Company is not a corporation), in the exercise of their
fiduciary duties in their capacity as such, to engage in any of the activities
prohibited by this Section 6.05 and (ii) releases each such person from any and
all liability he might otherwise have to the Company or any Stockholders but for
this release.
Section 6.06. NOTICE TO BARGAINING AGENTS. Prior to the IPO
Closing Date, the Company will (a) satisfy any requirement for notice of the
transactions contemplated by this Agreement under applicable collective
bargaining agreements and (b) provide ARS with proof that any required notice
has been sent.
Section 6.07. NOTIFICATION OF CERTAIN MATTERS. The Stockholders
and the Company shall give prompt notice to ARS of (a) the existence or
occurrence of each condition or state of facts which will or reasonably could be
expected to cause any representation or warranty of the Company or any
Stockholder contained herein to be untrue or incorrect in any material respect
at or prior to the Closing or on the IPO Closing Date and (b) any material
failure of any Stockholder or the Company to comply with or satisfy any
covenant, condition or agreement to be complied with or satisfied by that Person
hereunder, provided that no such notice shall be required until ARS shall give
notice to the Company and the Stockholders of the date scheduled for the Closing
with respect to the occurrence in the ordinary course of business and consistent
with past practice of the Company or any Company Subsidiary, as the case may be,
of any condition or state of facts which would cause any of Sections 4.16, 4.17,
4.18, 4.19 and 4.21 of the Disclosure Statement to be incorrect. ARS shall give
prompt notice to the Company of (a) the existence or occurrence of each
condition or state of facts which will or reasonably could be expected to cause
any representation or warranty of ARS or Newco contained herein to be untrue or
inaccurate at or prior to the Closing or on the IPO Closing Date and (b) any
material failure of ARS or Newco to comply with or satisfy any covenant,
condition or agreement to be complied with or satisfied by it hereunder. The
delivery
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of any notice pursuant to this Section 6.07 shall not be deemed to (a) modify
the representations or warranties herein of the party delivering that notice, or
any other party, which modification may be made only pursuant to Section 6.08,
(b) modify the conditions set forth in Article VII or (c) limit or otherwise
affect the remedies available hereunder to the party receiving that notice.
Section 6.08. SUPPLEMENTAL INFORMATION. Each of the Company and
the Stockholders agrees that, with respect to the representations and warranties
of that party contained in this Agreement, that party will have the continuing
obligation (except to the extent otherwise provided in Section 6.07) until the
Closing to provide ARS promptly with such additional supplemental Information
(collectively, the "Supplemental Information"), in the form of (a) amendments to
then existing Schedules or Sections of the Disclosure Statement or (b)
additional Schedules or Sections of the Disclosure Statement, as would be
necessary, in the light of the circumstances, conditions, events and states of
facts then known to the Company or any Stockholder, to make each of those
representations and warranties true and correct as of the Closing and on the IPO
Closing Date. For purposes only of determining whether the conditions to the
obligations of ARS and Newco which are specified in Sections 7.04(a)(ii)(A) and
7.04(b)(ii) have been satisfied, and not for any purpose under Article IX, the
Schedules and the Disclosure Statement as of the Closing and on the IPO Closing
Date shall be deemed to be the Schedules and the Disclosure Statement as of the
date hereof as amended or supplemented by the Supplemental Information provided
to ARS prior to the Closing pursuant to this Section 6.08; provided, however,
that if the Supplemental Information so provided discloses the existence of
circumstances, conditions, events or states of facts which, in any combination
thereof, (a) have had a Material Adverse Effect on the Company which was not
reflected in the determination of the Transaction Value or, in the sole judgment
of ARS (which shall be conclusive for purposes of this Section 6.08 and Article
XII, but not for any purpose of Article IX), (b) are having or will have a
Material Adverse Effect on the Company or the Surviving Corporation, as the case
may be, ARS will be entitled either (i) to terminate this Agreement pursuant to
Section 12.01(d) or (ii) to treat as ARS Indemnified Losses for all purposes of
Article IX (which treatment will not prejudice the right of any Stockholder
under Article IX to contest Damage Claims made by ARS in respect of those ARS
Indemnified Losses) all Damages to the Company or the Surviving Corporation
which are attributable to the circumstances, conditions, events and states of
facts first disclosed herein after the date hereof in the Supplemental
Information. ARS will provide the Company with copies of the Registration
Statement, including all pre-effective amendments thereto, promptly after the
filing thereof with the SEC under the Securities Act.
Section 6.09. COOPERATION IN CONNECTION WITH THE IPO. The Company
and the Stockholders will (a) provide ARS and the Underwriter with all the
Information concerning the Company or any of the Stockholders which is
reasonably requested by ARS and the Underwriter from time to time in connection
with effecting the IPO and (b) cooperate with ARS and the Underwriter and their
respective Representatives in the preparation and amendment of the Registration
Statement (including the Financial Statements) and in responding to the comments
of the SEC staff, if any, with respect thereto. The Company and each Stockholder
agree promptly to (a) advise ARS if, at any time during the period in which a
prospectus relating to the IPO is required
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to be delivered under the Securities Act, any information contained in the then
current Registration Statement prospectus concerning the Company or the
Stockholders becomes incorrect or incomplete in any material respect and (b)
provide ARS with the information needed to correct or complete that information.
Section 6.10. ADDITIONAL FINANCIAL STATEMENTS. The Company will
furnish to ARS:
(a) as soon as available and in any event within 30 days after
the end of each of the Company's fiscal quarters which ends prior to the IPO
Pricing Date, an unaudited consolidated balance sheet of the Company and the
Company Subsidiaries as of the end of that fiscal quarter and the related
consolidated statements of income or operations, cash flows and stockholders' or
other owners' equity for that fiscal quarter and for the period of the Company's
fiscal year ended with that quarter, in each case (i) setting forth in
comparative form the figures for the corresponding portion of the Company's
previous fiscal year and (ii) prepared in accordance with GAAP applied on basis
consistent (A) throughout the periods indicated (excepting footnotes) and (B)
with the basis on which the Initial Financial Statements including the Current
Balance Sheet were prepared; and
(b) if requested by ARS in connection with any amendment of the
Registration Statement and promptly following any such request, such summary
consolidated operating or other financial information of the Company and the
Company Subsidiaries as of the end of either the first or second fiscal month in
any of the Company's fiscal quarters as ARS may request.
Section 6.11. TERMINATION OF PLANS. If requested by ARS, the
Company will, or will cause the applicable Company Subsidiary to, if permitted
by all applicable Governmental Requirements to do so, terminate each Plan
identified in Section 4.26(c) or (d) of the Disclosure Statement as a "Plan To
Be Terminated" prior to the Effective Time.
Section 6.12. DISPOSITION OF UNWANTED ASSETS. At or prior to the
Closing, the Company will make all arrangements and take all such actions as are
necessary and satisfactory to ARS to dispose, prior to the Effective Time, of
those assets of it or of one or more of the Company Subsidiaries which are
listed in Schedule 6.12.
Section 6.13. HSR ACT MATTERS. If ARS shall determine that
filings pursuant to and under the HSR Act are necessary or appropriate in
connection with the effectuation of the Merger or the consummation of the
acquisitions contemplated by the Other Agreements, and advises the Company in
writing of that determination, the Company promptly will compile and file under
the HSR Act such information respecting it as the HSR Act requires of an Entity
to be acquired, and the expiration or termination of the applicable waiting
period and any extension thereof under the HSR Act shall be deemed a condition
precedent set forth in Section 7.02(b).
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ARTICLE VII
THE CLOSING AND CONDITIONS TO CLOSING AND CONSUMMATION
Section 7.02. CONDITIONS TO THE OBLIGATIONS OF EACH PARTY. (a)
The obligation of each party hereto to take the actions contemplated to be taken
by that party at the Closing is subject to the satisfaction of each of the
following conditions on or before the date of the Closing:
(i) NO LITIGATION. No Litigation shall be pending on the date of
the Closing to restrain, prohibit or otherwise interfere with, or to
obtain material damages or other relief from ARS or the Surviving
Corporation in connection with, the consummation of the Merger or the
IPO;
(ii) GOVERNMENTAL APPROVALS. All Governmental Approvals (other
than the acceptance for filing of the Certificates of Merger) required
to be obtained by any of the Company, ARS and Newco in connection with
the consummation of the Merger and the IPO shall have been obtained; and
(iii) THE REGISTRATION STATEMENT. (A) The Registration Statement,
as amended to cover the offering, issuance and sale by ARS of such
number of shares of ARS Common Stock at the IPO Price (which need not be
set forth in the Registration Statement when it becomes effective under
the Securities Act) as shall yield aggregate cash proceeds to ARS from
that sale (net of the Underwriter's discount or commissions) in at least
the amount (the "Minimum Cash Amount") that is sufficient, when added to
the funds, if any, available from other sources (if any, and as set
forth in the Registration Statement when it becomes effective under the
Securities Act) (the "Other Financing Sources") to enable ARS to pay or
otherwise deliver on the IPO Closing Date (1) the total cash portion of
the Merger Consideration then to be delivered pursuant to Section 2.04,
(2) the total cash portion of the Merger or other acquisition
consideration then to be delivered pursuant to the Other Agreements as a
result of the consummation of the Merger or other acquisition
transactions contemplated thereby and (3) the total amount of
Indebtedness of the Founding Companies and ARS which the Registration
Statement discloses at the time it becomes effective under the
Securities Act will be repaid on the IPO Closing Date with proceeds
received by ARS from the IPO and the Other Financing Sources, shall have
been declared effective under the Securities Act by the SEC; (B) no stop
order suspending the effectiveness of the Registration Statement shall
have been issued by the SEC, and the SEC shall not have initiated or
threatened to initiate Litigation for that purpose; and (C) the
Underwriter shall have agreed in writing (the "Underwriting Agreement,"
which term includes the related pricing agreement, if any) to purchase
from ARS on a firm commitment basis for resale to the public initially
at the IPO Price, subject to the conditions set forth in the
Underwriting Agreement, such number of shares of ARS Common Stock
covered by the Registration Statement as, when multiplied by the price
per share of ARS Common Stock to be paid by
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the Underwriter to ARS pursuant to the Underwriting Agreement, shall
equal at least the Minimum Cash Amount.
(b) The obligation of each party hereto with respect to the
actions to be taken on the IPO Closing Date is subject to the satisfaction on
that date of each of the following conditions:
(i) NO LITIGATION. No Litigation shall be pending on the IPO
Closing Date to restrain, prohibit or otherwise interfere with, or to
obtain material damages or other relief from ARS or the Surviving
Corporation in connection with, the consummation of the Merger or the
IPO;
(ii) GOVERNMENTAL APPROVALS. All Governmental Approvals required
to be obtained by the Company, ARS and Newco in connection with the
consummation of the Merger and the IPO shall have been obtained;
(iii) RECEIPT OF CERTAIN CERTIFICATES. Each party to the
Stockholders Agreement or his Representative shall receive the
certificates that such party is entitled to receive on the IPO Closing
Date pursuant to Section 3.5 of the Stockholders Agreement; and
(iv) CLOSING OF THE IPO. ARS shall have issued and sold shares of
ARS Common Stock to the Underwriter in accordance with the Underwriting
Agreement for initial resale at the IPO Price and received payment
therefor in an amount at least equal to the amount by which (A) the
Minimum Cash Amount exceeds (B) the aggregate amount of funds actually
received on the IPO Closing Date, if any, from any one or more of the
Other Financing Sources.
Section 7.03. CONDITIONS TO THE OBLIGATIONS OF THE COMPANY AND
THE STOCKHOLDERS. The obligations of the Company and each Stockholder with
respect to actions to be taken by them at or before the Closing and the actions
to be taken on the IPO Closing Date are subject to the satisfaction, or the
written waiver by the Company on behalf of itself and each Stockholder pursuant
to Section 11.05 on or before the date of the Closing of, in addition to the
conditions specified in Section 7.02 (a) or 7.02 (b), as applicable, (i) all the
conditions set forth in Section 7.01(b), if any, and (ii) all the following
conditions:
(A) REPRESENTATIONS AND WARRANTIES. All the representations and
warranties of ARS and Newco in Article V shall be true and correct as of
the Closing as though made at that time;
(B) DELIVERY OF DOCUMENTS. ARS shall have delivered to the
Company, with copies for each Stockholder:
(1) an ARS officer's certificate respecting the
representations and warranties of ARS and Newco in Article V and
compliance with the covenants of
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ARS and Newco in Article VI and in the form thereof attached as
an exhibit to the Closing Memorandum;
(2) opinions dated the IPO Closing Date and addressed to
the Company and the Stockholders from Counsel for ARS and Newco
substantially in the forms thereof attached as exhibits to the
Closing Memorandum;
(3) a certificate of the secretary or any assistant
secretary of ARS in the form thereof (without attachments
thereto) attached as an exhibit to the Closing Memorandum and
respecting, and to which is attached, (a) the Charter Documents
of ARS and Newco (certified by the Secretary of State of the
State of Delaware in the case of the certificates of
incorporation included therein); (b) the resolutions of the
boards of directors of ARS and Newco respecting the Transaction
Documents and the transactions contemplated thereby; (c) a
certificate respecting the incumbency and true signatures of the
ARS and Newco officers who execute the Transaction Documents on
behalf of ARS and Newco, respectively; (d) a specimen certificate
evidencing shares of ARS Common Stock; (e) the prospectus
included in the Registration Statement when it became effective;
and (f) a facsimile copy of the Underwriting Agreement as
executed and delivered by ARS and the Underwriter;
(4) the Registration Rights Agreement duly executed and
delivered by ARS; and
(5) a certificate, dated as of a Current Date, duly issued
by the Secretary of State of the State of Delaware, showing ARS
to be in good standing and authorized to do business in that
State.
Section 7.04. CONDITIONS TO THE OBLIGATIONS OF ARS AND NEWCO. (a)
The obligations of ARS and Newco with respect to actions to be taken by them at
or before the Closing are subject to the satisfaction on or before the date of
the Closing of, in addition to the conditions specified in Section 7.02 (a), (i)
all the conditions set forth in Section 7.01(c), if any, and (ii) all the
following conditions:
(A) REPRESENTATIONS AND WARRANTIES. All the representations and
warranties of the Stockholders and the Company in Articles III and IV
shall be true and correct as of the Closing as though made at that time;
(B) DELIVERY OF DOCUMENTS. The Stockholders and the Company shall
have delivered to ARS:
(1) a Company officer's certificate, signed by a
Responsible Officer, respecting the representations and
warranties of the Stockholders and the Company in Articles III
and IV and compliance with the covenants of the Stockholders and
the
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Company in Article VI and in the form thereof attached as an
exhibit to the Closing Memorandum;
(2) opinions dated the IPO Closing Date and addressed to
ARS from Counsel for the Company and the Stockholders
substantially in the form thereof attached as exhibits to the
Closing Memorandum;
(3) a certificate of the secretary or any assistant
secretary of the Company in the form thereof (without attachments
thereto) attached as an exhibit to the Closing Memorandum and
respecting, and to which is attached, (a) the Charter Documents
of the Company; (b) the resolutions of the board of directors of
the Company respecting the Transaction Documents and the
transactions contemplated thereby; and (c) a certificate
respecting the incumbency and true signatures of the Responsible
Officers who execute the Transaction Documents on behalf of the
Company;
(4) from each Stockholder, a General Release duly executed
and delivered by that Stockholder;
(5) from each Stockholder, an executed certificate to the
effect that no withholding is required under Section 1445 of the
Code, in the form of Exhibit 7.04, with the blanks appropriate
filled; and
(6) for each of the Company and the Company Subsidiaries,
a certificate, dated as of a Current Date, duly issued by the
appropriate Governmental Authorities in its Organization State
and, unless waived by ARS, in each other jurisdiction listed for
it in Section 4.02 of the Disclosure Statement, showing it to be
in good standing and authorized to do business in its
Organization State and those other jurisdictions and that all
state franchise and/or income tax returns and taxes due by it in
its Organization State and those other jurisdictions for all
periods prior to the Closing have been filed and paid.
(b) The obligations of ARS and Newco with respect to the actions
to be taken on the IPO Closing Date are subject to the satisfaction on that date
of (i) all the conditions set forth in Section 7.01(d), if any, and (ii) the
condition that all the representations and warranties of the Stockholders and
the Company in Articles III and IV shall be true and correct as of the IPO
Closing Date as though made on that date.
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ARTICLE VIII
COVENANTS FOLLOWING THE EFFECTIVE TIME
Section 8.02. DISCLOSURE. If, subsequent to the IPO Pricing Date
and prior to the 25th day after the date of the Final Prospectus, any
Stockholder becomes aware of any fact or circumstance which would change (or, if
after the Effective Time, would have changed) a representation or warranty of
the Company or any Stockholder in this Agreement or would affect any document
delivered pursuant hereto in any material respect, that Stockholder will
promptly give notice of that fact or circumstance to ARS.
Section 8.03. PREPARATION AND FILING OF TAX RETURNS. Each party
hereto will, and will cause its Affiliates to, provide to each of the other
parties hereto such cooperation and information as any of them reasonably may
request in filing any Return, amended Return or claim for refund, determining a
liability for Taxes or a right to refund of Taxes or in conducting any audit or
other proceeding in respect of Taxes. This cooperation and information shall
include providing copies of all relevant portions of the relevant Returns,
together with such accompanying schedules and work papers, documents relating to
rulings or other determinations by Taxing Authorities and records concerning the
ownership and Tax bases of property as are relevant which a party possesses.
Each party will make its employees, if any, reasonably available on a mutually
convenient basis at its cost to provide an explanation of any documents or
information so provided. Subject to the preceding sentence, each party required
to file Returns pursuant to this Agreement shall bear all costs attributable to
the preparation and filing of those Returns.
Section 8.04. DIRECTORS. ARS will cause such corporate
proceedings as on its part will be necessary to cause each of the persons, if
any, who are named in the Final Prospectus as persons who will become members of
the board of directors of ARS following the Effective Time to be appointed to
that board when that prospectus so provides.
Section 8.05. REMOVAL OF GUARANTIES. At or within 60 days
following the Effective Time, ARS will cause the Stockholder Guaranties listed
in Schedule 8.05 to be terminated.
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ARTICLE IX
INDEMNIFICATION
Section 9.02. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All the
provisions of this Agreement will survive the Closing and the Effective Time
indefinitely notwithstanding any investigation at any time made by or on behalf
of any party hereto or the provision of any Supplemental Information pursuant to
Section 6.08, provided that the representations and warranties set forth in
Articles IV, V and VI and in any certificate delivered in connection herewith
with respect to any of those representations and warranties will terminate and
expire on June 12, 1998, except as follows: (a) the representations and
warranties of the Stockholders which relate expressly or by necessary
implication to Taxes, ERISA or other employment or labor matters or the
Governmental Requirements referred to in clause (iii) of Section 9.03(a) will
survive until the expiration of the applicable statutes of limitations
(including all periods of extension and tolling); (b) the representations and
warranties of the Stockholders which relate expressly or by necessary
implication to the environment or Environmental Laws will survive for a period
of three years from the Effective Time; and (c) the representations and
warranties of the Company will terminate and expire at the Effective Time. After
a representation and warranty has terminated and expired, no indemnification
will or may be sought pursuant to this Article IX on the basis of that
representation and warranty by any Person who would have been entitled pursuant
to this Article IX to indemnification on the basis of that representation and
warranty prior to its termination and expiration, provided that, in the case of
each representation and warranty that will terminate and expire as provided in
this Section 9.02, no claim presented in writing for indemnification pursuant to
this Article IX on the basis of that representation and warranty prior to its
termination and expiration will be affected in any way by that termination and
expiration.
Section 9.03. INDEMNIFICATION OF ARS INDEMNIFIED PARTIES. (a)
Subject to the applicable provisions of Sections 9.02 and 9.07, the Stockholders
covenant and agree that they, jointly and severally, will indemnify each ARS
Indemnified Party against, and hold each ARS Indemnified Party harmless from and
in respect of, all Damage Claims that arise from, are based on or relate or
otherwise are attributable to (i) any breach of the representations and
warranties of the Stockholders or the Company set forth herein (other than in
Article III) or in certificates delivered in connection herewith (other than in
respect of certificates relating only to the representations and warranties in
Article III), (ii) any nonfulfillment of any covenant or agreement on the part
of the Stockholders or the Company under this Agreement, (iii) any liability
under the Securities Act, the Exchange Act or other applicable Governmental
Requirement which arises out of or is based on (A) any untrue statement or
alleged untrue statement of a material fact relating to the Company and the
Company Subsidiaries, or any of them, which is (1) provided to ARS or its
counsel by the Company or the Stockholders and (2) contained in any preliminary
prospectus relating to the IPO, the Registration Statement or any prospectus
forming a part thereof, or any amendment thereof or supplement thereto, or (B)
any omission or alleged omission to state therein a material fact relating to
the Company and the Company Subsidiaries, or any of them, required to be stated
therein or necessary to make the statements therein not misleading, and not
provided to
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ARS or its counsel by the Company or the Stockholders (each such Damage Claim
and each Damage Claim described in Section 9.03(b) being an "ARS Indemnified
Loss"); provided, however, that no Stockholder shall be obligated to indemnify
any ARS Indemnified Party against any ARS Indemnified Loss to the extent that
such untrue statement (or alleged untrue statement) was made in, or such
omission (or alleged omission) occurred in, any preliminary prospectus and the
Stockholder timely provided, in writing, corrected or the necessary additional
information to ARS and its counsel for inclusion in the Final Prospectus.
(b) Each Stockholder, severally and not jointly with any other
Person, covenants and agrees that he will indemnify each ARS Indemnified Party
against, and hold each ARS Indemnified Party harmless from and in respect of,
all Damage Claims that arise from, are based on or relate or otherwise are
attributable to (i) any breach of the representations and warranties of that
Stockholder solely as to that Stockholder set forth in Article III or in
certificates delivered by that Stockholder and relating to those representations
and warranties, (ii) any nonfulfillment of any several, and not joint and
several, agreement on the part of that Stockholder under this Agreement or (iii)
any liability under the Securities Act, the Exchange Act or other applicable
Governmental Requirement which arises out of or is based on (A) any untrue
statement or alleged untrue statement of a material fact relating solely to that
Stockholder which is (1) provided to ARS or its counsel by that Stockholder and
(2) contained in any preliminary prospectus relating to the IPO, the
Registration Statement or any prospectus forming a part thereof, or any
amendment thereof or supplement thereto, or (B) any omission or alleged omission
to state therein a material fact relating solely to that Stockholder required to
be stated therein or necessary to make the statements therein not misleading,
and not provided to ARS or its counsel by that Stockholder; provided, however,
that no Stockholder shall be obligated to indemnify any ARS Indemnified Party
against any ARS Indemnified Loss to the extent that such untrue statement (or
alleged untrue statement) was made in, or such omission (or alleged omission)
occurred in, any preliminary prospectus and the Stockholder timely provided, in
writing, corrected or the necessary additional information to ARS and its
counsel for inclusion in the Final Prospectus.
Section 9.04. INDEMNIFICATION OF STOCKHOLDER INDEMNIFIED PARTIES.
ARS covenants and agrees that it will indemnify each Stockholder Indemnified
Party against, and hold each Stockholder Indemnified Party harmless from and in
respect of, all Damage Claims (that arise from, are based on or relate or
otherwise are attributable to (i) any breach by ARS or Newco of their
representations and warranties set forth herein or in their certificates
delivered to the Company or the Stockholders in connection herewith, (ii) any
nonfulfillment of any covenant or agreement on the part of ARS or Newco under
this Agreement (each such Damage Claim being a "Stockholder Indemnified Loss");
or (iii) any liability under the Securities Act, the Exchange Act or other
applicable Governmental Requirement which arises out of or is based on (A) any
untrue statement or alleged untrue statement of a material fact relating to ARS,
Newco or any of the Other Founding Companies contained in any preliminary
prospectus relating to the IPO, the Registration Statement or any prospectus
forming a part thereof, or any amendment thereof or supplement thereto, or (B)
any omission or alleged omission to state therein a material fact relating to
ARS, Newco or any of
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the Other Founding Companies, or any of them, required to be stated therein or
necessary to make the statements therein not misleading in the light of the
circumstances under which they were made.
Section 9.05. CONDITIONS OF INDEMNIFICATION. (a) All claims for
indemnification under this Agreement shall be asserted and resolved as follows
in this Section 9.05.
(b) A party claiming indemnification under this Agreement (an
"Indemnified Party") shall promptly (i) notify the party from whom
indemnification is sought (the "Indemnifying Party") of any third-party claim or
claims asserted against the Indemnified Party ("Third Party Claim") that could
give rise to a right of indemnification under this Agreement and (ii) transmit
to the Indemnifying Party a written notice ("Claim Notice") describing in
reasonable detail the nature of the Third Party Claim, a copy of all papers
served with respect to that claim (if any), an estimate of the amount of damages
attributable to the Third Party Claim to the extent feasible (which estimate
shall not be conclusive of the final amount of such claim) and the basis for the
Indemnified Party's request for indemnification under this Agreement. Except as
set forth in Section 9.02, the failure to promptly deliver a Claim Notice shall
not relieve the Indemnifying Party of its obligations to the Indemnified Party
with respect to the related Third Party Claim except to the extent that the
resulting delay is materially prejudicial to the defense of that claim. Within
15 days after receipt of any Claim Notice (the "Election Period"), the
Indemnifying Party shall notify the Indemnified Party (i) whether the
Indemnifying Party disputes its potential liability to the Indemnified Party
under this Article IX with respect to that Third Party Claim and (ii) if the
Indemnifying Party does not dispute its potential liability to the Indemnified
Party with respect to that Third Party Claim, whether the Indemnifying Party
desires, at the sole cost and expense of the Indemnifying Party, to defend the
Indemnified Party against that Third Party Claim.
(c) If the Indemnifying Party does not dispute its potential
liability to the Indemnified Party and notifies the Indemnified Party within the
Election Period that the Indemnifying Party elects to assume the defense of the
Third Party Claim, then the Indemnifying Party shall have the right to defend,
at its sole cost and expense, that Third Party Claim by all appropriate
proceedings, which proceedings shall be prosecuted diligently by the
Indemnifying Party to a final conclusion or settled at the discretion of the
Indemnifying Party in accordance with this Section 9.05(c) and the Indemnified
Party will furnish the Indemnifying Party with all information in its possession
with respect to that Third Party Claim and otherwise cooperate with the
Indemnifying Party in the defense of that Third Party Claim; provided, however,
that the Indemnifying Party shall not enter into any settlement with respect to
any Third Party Claim that purports to limit the activities of, or otherwise
restrict in any way, any Indemnified Party or any Affiliate of any Indemnified
Party without the prior consent of that Indemnified Party (which consent may be
withheld in the sole discretion of that Indemnified Party). The Indemnified
Party is hereby authorized, at the sole cost and expense of the Indemnifying
Party, to file, during the Election Period, any motion, answer or other
pleadings that the Indemnified Party shall deem necessary or appropriate to
protect its interests or those of the Indemnifying Party. The Indemnified Party
may participate in, but not control, any defense or settlement of any Third
Party Claim controlled by the Indemnifying Party pursuant to this Section
9.05(c) and will bear its own costs and
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expenses with respect to that participation; provided, however, that if the
named parties to any such action (including any impleaded parties) include both
the Indemnifying Party and the Indemnified Party, and the Indemnified Party has
been advised by counsel that there may be one or more legal defenses available
to it which are different from or additional to those available to the
Indemnifying Party, then the Indemnified Party may employ separate counsel at
the expense of the Indemnifying Party, and, on its written notification of that
employment, the Indemnifying Party shall not have the right to assume or
continue the defense of such action on behalf of the Indemnified Party.
(d) If the Indemnifying Party (i) within the Election Period (A)
disputes its potential liability to the Indemnified Party under this Article IX,
(B) elects not to defend the Indemnified Party pursuant to Section 9.05(c) or
(C) fails to notify the Indemnified Party that the Indemnifying Party elects to
defend the Indemnified Party pursuant to Section 9.05(c) or (ii) elects to
defend the Indemnified Party pursuant to Section 9.05(c) but fails diligently
and promptly to prosecute or settle the Third Party Claim, then the Indemnified
Party shall have the right to defend, at the sole cost and expense of the
Indemnifying Party (if the Indemnified Party is entitled to indemnification
hereunder), the Third Party Claim by all appropriate proceedings, which
proceedings shall be promptly and vigorously prosecuted by the Indemnified Party
to a final conclusion or settled. The Indemnified Party shall have full control
of such defense and proceedings. Notwithstanding the foregoing, if the
Indemnifying Party has delivered a written notice to the Indemnified Party to
the effect that the Indemnifying Party disputes its potential liability to the
Indemnified Party under this Article IX and if such dispute is resolved in favor
of the Indemnifying Party, the Indemnifying Party shall not be required to bear
the costs and expenses of the Indemnified Party's defense pursuant to this
Section 9.05 or of the Indemnifying Party's participation therein at the
Indemnified Party's request, and the Indemnified Party shall reimburse the
Indemnifying Party in full for all reasonable costs and expenses of such
litigation. The Indemnifying Party may participate in, but not control, any
defense or settlement controlled by the Indemnified Party pursuant to this
Section 9.05(d), and the Indemnifying Party shall bear its own costs and
expenses with respect to such participation.
(e) In the event any Indemnified Party should have a claim
against any Indemnifying Party hereunder that does not involve a Third Party
Claim, the Indemnified Party shall transmit to the Indemnifying Party a written
notice (the "Indemnity Notice") describing in reasonable detail the nature of
the claim, an estimate of the amount of Damages attributable to that claim to
the extent feasible (which estimate shall not be conclusive of the final amount
of such claim) and the basis of the Indemnified Party's request for
indemnification under this Agreement. If the Indemnifying Party does not notify
the Indemnified Party within 15 days from its receipt of the Indemnity Notice
that the Indemnifying Party disputes such claim, the claim specified by the
Indemnified Party in the Indemnity Notice shall be deemed a liability of the
Indemnifying Party hereunder. If the Indemnifying Party has timely disputed such
claim, as provided above, such dispute shall be resolved by proceedings in an
appropriate court of competent jurisdiction if the parties do not reach a
settlement of such dispute within 30 days after notice of a dispute is given.
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(f) Payments of all amounts owing by an Indemnifying Party
pursuant to this Article IX relating to a Third Party Claim shall be made within
30 days after the latest of (i) the settlement of that Third Party Claim, (ii)
the expiration of the period for appeal of a final adjudication of that Third
Party Claim or (iii) the expiration of the period for appeal of a final
adjudication of the Indemnifying Party's liability to the Indemnified Party
under this Agreement. Payments of all amounts owing by an Indemnifying Party
pursuant to Section 9.05(e) shall be made within 30 days after the later of (i)
the expiration of the 30-day Indemnity Notice period or (ii) the expiration of
the period for appeal of a final adjudication of the Indemnifying Party's
liability to the Indemnified Party under this Agreement.
Section 9.06. REMEDIES NOT EXCLUSIVE. The remedies provided in
this Agreement shall not be exclusive of any other rights or remedies available
to one party against the other, either at law or in equity.
Section 9.07. LIMITATIONS ON INDEMNIFICATION. (a) Notwithstanding
the provisions of Section 9.03(a), neither the Company nor any of the
Stockholders shall be required to indemnify or hold harmless any of the ARS
Indemnified Parties on account of any ARS Indemnified Loss under Section 9.03(a)
unless the liability of the Company and the Stockholders in respect of that ARS
Indemnified Loss, when aggregated with the liability of the Company and the
Stockholders in respect of all ARS Indemnified Losses under Section 9.03(a),
exceeds, and only to the extent the aggregate amount of all those ARS
Indemnified Losses does exceed, the Threshold Amount. In no event shall (i) the
aggregate joint and several liability of the Company and the Stockholders under
this Agreement, including Section 9.03(a), exceed the Transaction Value or (ii)
the aggregate liability of each Stockholder under this Agreement, including
Sections 9.03(a) and 9.03(b), exceed that Stockholder's Pro Rata Share of the
Transaction Value. For purposes of determining the amount of ARS Indemnified
Losses, no effect will be given to any resulting Tax benefit to any ARS
Indemnified Party.
(b) Notwithstanding the provisions of Section 9.04, ARS shall not
be required to indemnify or hold harmless any of the Stockholder Indemnified
Parties on account of any Stockholder Indemnified Loss unless the liability of
ARS in respect of that Stockholder Indemnified Loss, when aggregated with the
liability of ARS in respect of all Stockholder Indemnified Losses, exceeds, and
only to the extent the aggregate amount of all those Stockholder Indemnified
Losses does exceed, the Threshold Amount. In no event shall ARS be liable under
this Agreement, including Section 9.04, for any amount in excess of the
Transaction Value. For purposes of determining the amount of Stockholder
Indemnified Losses, no effect will be given to any resulting Tax benefit to any
Stockholder Indemnified Party.
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GENERAL PROVISIONS
Section 11.01. TREATMENT OF CONFIDENTIAL INFORMATION. (a) Each of
the Company and the Stockholders, severally and not jointly with any other
Person, acknowledges that it has or may have had in the past, currently has and
in the future may have access to Confidential Information of the Company and the
Company Subsidiaries, the Other Founding Companies and their Subsidiaries and
ARS and its Subsidiaries. Each of the Company and the Stockholders, severally
and not jointly with any other Person, agrees that it will keep confidential all
such Confidential Information furnished to it and, except with the specific
prior written consent of ARS will not disclose such Confidential Information to
any Person except (a) Representatives of ARS, (b) its own Representatives,
provided that these Representatives (other than counsel) agree to the
confidentiality provisions of this Section 11.01; and provided, further, that
Confidential Information shall not include (i) such information which becomes
known to the public generally through no fault of any Stockholder, (ii)
information required to be disclosed by law or the order of any governmental
authority under color of law, provided, that prior to disclosing any information
pursuant to this clause (ii), each Stockholder shall, if possible, give prior
written notice thereof to ARS and provide ARS with the opportunity to contest
such disclosure, or (iii) the disclosing party reasonably believes that such
disclosure is required in connection with the defense of a lawsuit against the
disclosing party. In the event of a breach or threatened breach by any
Stockholder of the provisions of this Section 11.01 with respect to any
Confidential Information, ARS shall be entitled to an injunction restraining
such Stockholder from disclosing, in whole or in part, that Confidential
Information. Nothing herein shall be construed as prohibiting ARS from pursuing
any other available remedy for such breach or threatened breach, including the
recovery of damages.
(b) Because of the difficulty of measuring economic losses as a
result of the breach of the foregoing covenants in Section 11.01(a), and because
of the immediate and irreparable damage that would be caused to ARS for which it
would have no other adequate remedy, each of the Company and the Stockholders
agrees that ARS may enforce the provisions of Section 11.01(a) by injunctions
and restraining orders against each of them who breaches any of those
provisions.
(c) The obligations of ARS set forth in Section 6.02(d) are
incorporated in this Section 11.01 by this reference.
(d) The obligations of the parties under this Section 11.01 shall
survive the termination of this Agreement.