EXHIBIT 10.24
AGREEMENT AND PLAN OF MERGER
by and among
Group Maintenance America Corp.,
Southeast Mechanical Service, Inc.,
and
The Holders
of the
Outstanding Capital Stock
of
Southeast Mechanical Service, Inc.
DATED AUGUST 18, 1997
TABLE OF CONTENTS
Page
1. THE MERGER............................................................ -1-
1.1 The Merger....................................................... -1-
1.2 Effective Time of the Merger..................................... -1-
1.3 Closing.......................................................... -1-
1.4 Effects of the Merger............................................ -2-
1.4.1 At the Effective Time..................................... -2-
1.4.2 Effects on the Surviving Corporation...................... -2-
1.5 Written Consents and Other Actions............................... -2-
1.5.1 Written Consent of the Shareholders; Other Matters........ -2-
1.5.2 Written Consent of the Sole Shareholder of Merger Sub..... -2-
1.5.3 All Other Necessary Actions............................... -3-
1.6 Conversion of Stock.............................................. -3-
1.6.1 Merger Sub Capital Stock.................................. -3-
1.6.2 Cancellation of the Company Treasury Stock................ -3-
1.6.3 Merger Consideration...................................... -3-
1.7 Exchange of and Payment for Stock................................ -3-
1.7.1 Delivery of Company Common Stock and Closing Merger
Consideration........................................... -3-
1.7.2 Assignments............................................... -3-
1.7.3 Payment In Full Satisfaction of All Rights................ -3-
1.8 Determination of Closing Merger Consideration.................... -4-
1.8.1 Delivery of IPO Price to Public; Statement................ -4-
1.9 Post-Closing Determination of Final Merger Consideration......... -4-
1.9.1 Statement................................................. -4-
1.9.2 Review.................................................... -4-
1.9.3 Disputes.................................................. -4-
1.9.4 Resolution by Parties..................................... -4-
1.9.5 Final Determination....................................... -5-
1.9.6 Expenses.................................................. -5-
2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND THE SHAREHOLDERS.... -5-
2.1 Exhibit 2........................................................ -5-
2.2 Stock Ownership.................................................. -5-
2.3 Authority........................................................ -5-
2.4 Consents......................................................... -6-
3. REPRESENTATIONS AND WARRANTIES OF THE PARENT AND MERGER SUB........... -6-
3.1 Representations and Warranties................................... -6-
3.1.1 Organization.............................................. -6-
3.1.2 Capitalization of the Parent.............................. -6-
3.1.3 Authority................................................. -6-
3.1.4 Consents.................................................. -6-
3.1.5 Defaults.................................................. -7-
3.1.6 Investment Company........................................ -7-
3.1.7 Financial Statements...................................... -7-
3.1.8 Taxes..................................................... -7-
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3.1.9 Full Authority............................................ -7-
3.1.10 Access................................................... -8-
3.1.11 Disclosure............................................... -8-
3.1.12 Parent Material Adverse Effect........................... -8-
3.1.13 Tax-Free Reorganization.................................. -8-
3.2 Representations and Warranties Concerning the Merger Sub......... -9-
3.2.1 Organization and Standing................................. -9-
3.2.2 Capital Structure......................................... -9-
3.2.3 Authority................................................. -9-
3.2.4 Consents.................................................. -9-
4. CERTAIN COVENANTS, AGREEMENTS AND PRE-CLOSING MATTERS................. -9-
4.1 Agreements of Shareholders to be Effective Upon Closing.......... -9-
4.1.1 Covenant Not to Compete................................... -9-
4.1.2 Release................................................... -11-
4.2 Elimination of Expense........................................... -11-
4.3 Shareholder Indebtedness and Receivables......................... -11-
4.4 Assignment of Accounts Receivable................................ -11-
4.5 Audit............................................................ -11-
4.6 Pre-Closing Covenants and Agreements............................. -11-
4.7 Confidentiality.................................................. -11-
4.8 Tax-Free Reorganization.......................................... -12-
4.9 License of Company Logo.......................................... -12-
4.10 Release of Shareholder Guaranties................................ -12-
5. CONDITIONS PRECEDENT; CLOSING DELIVERIES.............................. -12-
5.1 Conditions Precedent to the Obligations of the Parent
and Merger Sub................................................. -12-
5.1.1 Accuracy of Representations and Warranties................ -12-
5.1.2 Performance of Covenants.................................. -12-
5.1.3 Legal Actions or Proceedings.............................. -12-
5.1.4 Approvals................................................. -13-
5.1.5 Closing Deliveries........................................ -13-
5.1.6 No Casualty, Loss or Damage............................... -13-
5.1.7 Licenses, etc............................................. -13-
5.1.8 No Material Adverse Change................................ -13-
5.1.9 IPO....................................................... -13-
5.1.10 Certain Corporate Actions................................. -13-
5.2 Conditions Precedent to the Obligations of the
Shareholders and the Company................................... -13-
5.2.1 Accuracy of Representations and Warranties................ -13-
5.2.2 Performance of Covenants.................................. -13-
5.2.3 Approvals................................................. -14-
5.2.4 Closing Deliveries........................................ -14-
5.2.5 IPO....................................................... -14-
5.2.6 Payment of Net Amounts to Shareholders.................... -14-
5.3 Deliveries by the Shareholders at the Closing.................... -14-
5.3.1 Closing Certificates...................................... -14-
5.3.2 Stock Transfer Restriction Agreement...................... -14-
5.3.3 Employment Agreement...................................... -14-
5.3.4 Lease Agreement........................................... -14-
5.3.5 Registration Rights Agreement............................. -14-
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5.3.6 Opinion of Counsel for the Shareholders and the Company... -14-
5.3.7 Documents, Stock Certificates............................. -14-
5.4 Deliveries by the Parent at the Closing.......................... -15-
5.4.1 Closing Certificates...................................... -15-
5.4.2 Stock Transfer Restriction Agreement...................... -15-
5.4.3 Employment Agreement...................................... -15-
5.4.4 Lease Agreement........................................... -15-
5.4.5 Registration Rights Agreement............................. -15-
5.4.6 Opinion of Counsel for the Parent and Merger Sub.......... -15-
5.4.7 Closing Merger Consideration.............................. -16-
6. SURVIVAL, INDEMNIFICATIONS............................................ -16-
6.1 Survival......................................................... -16-
6.2 Indemnification.................................................. -16-
6.2.1 Parent Indemnified Parties................................ -16-
6.2.2 Parent Indemnity.......................................... -17-
6.3 Limitations...................................................... -18-
6.4 Procedures for Indemnification................................... -18-
6.4.1 Notice.................................................... -18-
6.4.2 Legal Defense............................................. -18-
6.4.3 Settlement................................................ -18-
6.4.4 Cooperation............................................... -18-
6.5 Subrogation...................................................... -19-
7. TERMINATION........................................................... -19-
7.1 Grounds for Termination.......................................... -19-
7.1.1 Mutual Consent............................................ -19-
7.1.2 Optional By the Company................................... -19-
7.1.3 Optional By the Parent.................................... -19-
7.1.4 Termination Because of Material Adverse Change............ -19-
7.1.5 Breach By the Parent or Merger Sub........................ -19-
7.1.6 Breach by the Company or the Shareholders................. -19-
7.2 Effect of Termination............................................ -19-
8. MISCELLANEOUS......................................................... -19-
8.1 Notice........................................................... -19-
8.2 Further Documents................................................ -20-
8.3 Assignability.................................................... -20-
8.4 Exhibits and Schedules........................................... -20-
8.5 Sections and Articles............................................ -21-
8.6 Entire Agreement................................................. -21-
8.7 Headings......................................................... -21-
8.8 CONTROLLING LAW.................................................. -21-
8.9 Public Announcements............................................. -21-
8.10 No Third Party Beneficiaries..................................... -21-
8.11 Amendments and Waivers........................................... -21-
8.12 No Employee Rights............................................... -21-
8.13 Non-Recourse..................................................... -22-
8.14 When Effective................................................... -22-
8.15 Takeover Statutes................................................ -22-
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8.16 Number and Gender of Words....................................... -22-
8.17 Invalid Provisions............................................... -22-
8.18 Multiple Counterparts............................................ -22-
8.19 No Rule of Construction.......................................... -22-
8.20 Expenses......................................................... -22-
Exhibit 1 Calculation of Merger Consideration
Exhibit 1.5.1 Written Consents of Shareholders
Exhibit 1.5.2 Written Consents of Merger Sub
Exhibit 1.7 Letter of Transmittal to Shareholders
Exhibit 2 Representations and Warranties of Shareholder and the Company
Exhibit 2.2 Stock Ownership
Exhibit 4.2 Expenses of the Company
Exhibit 4.6 Pre-Closing Covenants and Agreements
Exhibit 4.9 License of Company Logo
Exhibit 4.10 Release of Shareholder Guaranties
Exhibit 5.3.2 Stock Transfer Restriction Agreement
Exhibit 5.3.3 Employment Agreement
Exhibit 5.3.4 Lease Agreement
Exhibit 5.3.5 Registration Rights Agreement
Exhibit 5.3.6 Opinion of Counsel for the Shareholders
Exhibit 5.4.6 Opinion of Counsel for the Parent
-iv-
AGREEMENT AND PLAN OF MERGER
----------------------------
This AGREEMENT AND PLAN OF MERGER (this "Agreement") made effective as of
August ___, 1997, by and among GROUP MAINTENANCE AMERICA CORP., a Texas
corporation (the "Parent"), SEMS ACQUISITION CORP., a Florida corporation
("Merger Sub"), SOUTHEAST MECHANICAL SERVICE, INC., a Florida corporation (the
"Company"), and THE UNDERSIGNED HOLDERS OF ALL OF THE OUTSTANDING CAPITAL STOCK
OF THE COMPANY (the "Shareholders").
WHEREAS, the respective Boards of Directors of the Parent, Merger Sub and
the Company have each approved the merger of the Company with and into Merger
Sub (the "Merger") pursuant to this Agreement and the applicable statutes of the
States of Florida and Texas, and pursuant to the Merger each issued and
outstanding share of Common Stock, [$1.00] par value per share, of the Company
("Company Common Stock") will be converted into the right to receive certain
shares of common stock, $.001 par value per share, of the Parent ("Parent Common
Stock"), and certain cash consideration, all as provided herein;
WHEREAS, the Merger has been approved, as required by applicable law, by
the Parent, acting as sole shareholder of Merger Sub, and by the Shareholders,
as the holders of all of the outstanding capital stock of the Company;
WHEREAS, for federal income tax purposes, it is intended that the Merger
shall qualify as a reorganization within the meaning of Section 368(a) of the
Internal Revenue Code of 1986, as amended (the "Code").
NOW, THEREFORE, in consideration of the premises and the representations,
warranties and agreements herein contained, the parties hereto agree as follows:
1. THE MERGER
1.1 The Merger. Subject to the terms and conditions hereof, and in
accordance with the Florida statute (the "Applicable Corporate Law") upon the
Effective Time (as defined in Section 1.2), the Company shall be merged with and
Sub. Merger Sub, as the surviving entity following the Merger, is
sometimes referred to in this Agreement as the "Surviving Corporation."
1.2 Effective Time of the Merger. In accordance with the requirements of
applicable law, appropriate Articles of Merger under the Applicable Corporate
Law shall be prepared, executed and submitted for filing with the Secretary of
State of the State of Florida as soon as practicable following the Closing (as
defined below). The date of such filing is referred to in this Agreement as the
"Effective Time."
1.3 Closing. The closing of the Merger ("Closing") will take place at
10:00 a.m. at the offices of Chamberlain, Hrdlicka, White, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ in
Houston, Texas on the closing date of the Parent's IPO (as defined below), but
in no event later than December 31, 1997 ("Closing Date"); provided that each of
the conditions precedent to the obligations of the parties to effect the Merger
set forth in Article 5 of this Agreement are then satisfied or waived by the
applicable party. The parties may agree in writing on another date, time or
place for the Closing. At the Closing, the parties will deliver or cause to be
delivered the documents described in Sections 5.3 and 5.4 below. The term "IPO"
means any underwritten public offering of Parent Common Stock resulting in net
cash proceeds to the Parent of at least the minimum proceeds (other than any
offering pursuant to any registration statement (i) relating to any capital
stock of Parent or options, warrants or other rights to acquire any such capital
stock issued or to be issued primarily to directors, officers or employees of
the Parent or any of its subsidiaries, (ii) relating to any employee benefit
plan or interest therein, (iii) relating principally to any preferred stock or
debt securities of the Parent, or (iv) filed pursuant to Rule 145 under the
Securities Act
Agreement and Plan of Merger/Page 1
of 1933, as amended ("Securities Act"), or any successor or similar provision).
The term "Minimum Proceeds" means the aggregate amount necessary to pay in full
(A) all indebtedness of Parent or any of its subsidiaries outstanding at the
closing of the IPO incurred for purposes of financing any acquisitions by the
Parent or any of its subsidiaries, (B) the aggregate redemption prices for the
redemption of all of the Parent's preferred stock outstanding at the closing of
the IPO issued by the Parent in connection with then completed acquisitions by
the Parent or any of its subsidiaries, and (C) the aggregate cash payable by the
Parent or any of its subsidiaries in connection with all then pending
acquisitions.
1.4 Effects of the Merger.
1.4.1 At the Effective Time. At the Effective Time, (i) the
Company shall merge with and into Merger Sub and as a result thereof, the
separate existence of the Company shall cease, (ii) the Articles of
Incorporation of Merger Sub, as in effect immediately prior to the Effective
Time, shall be the Articles of Incorporation of the Surviving Corporation,
except that the Articles of Incorporation of Merger Sub shall be amended to
provide that the name of the Surviving Corporation shall be changed to
"Southeast Mechanical Service, Inc.," (iii) the Bylaws of Merger Sub as in
effect immediately prior to the Effective Time shall be the Bylaws of the
Surviving Corporation, and (iv) the directors and officers of Merger Sub
immediately prior to the Effective Time shall become the directors and officers
of the Surviving Corporation, until the earlier of their resignation or removal
or until their respective successors are duly elected or appointed, as the case
may be.
1.4.2 Effects on the Surviving Corporation. As of and after the
Effective Time, the Surviving Corporation shall possess all the rights,
privileges, immunities and franchises of a public as well as of a private nature
previously belonging to the Company and Merger Sub; and all property (real,
personal and mixed), and all debts due on whatever account, including
subscriptions to shares, and all other choses in action, and all and every other
interest of or belonging to or due to each of the Company and Merger Sub shall
be transferred to, and vested in, the Surviving Corporation without further act
or deed; and all such property, rights and privileges, powers and franchises and
all and every other interest shall be thereafter the property of the Surviving
Corporation as they were of the Company and Merger Sub; and the title to any
real estate, or interest therein, whether by deed or otherwise, shall not revert
or be in any way impaired by reason of the Merger. The Surviving Corporation
shall be responsible and liable for all the liabilities and obligations of the
Company and Merger Sub, and any claim existing, or action or proceeding pending,
by or against the Company or Merger Sub may be prosecuted against the Surviving
Corporation. Neither the rights of creditors nor any liens upon the property of
the Company or Merger Sub shall be impaired by the Merger, and all debts,
liabilities and duties of each of the Company and Merger Sub shall attach to the
Surviving Corporation, and may be enforced against it to the same extent as if
such debts, liabilities and duties had been incurred or contracted by it, all in
accordance with 607.1106, et seq., of the Applicable Corporate Law and the terms
of this Agreement.
1.5 Written Consents and Other Actions.
1.5.1 Written Consent of the Shareholders; Other Matters.
Contemporaneously with the execution hereof, the Shareholders (i) are executing
and delivering to the Company a Unanimous Written Consent in substantially the
form of Exhibit 1.5.1 attached hereto, and (ii) hereby acknowledge that they are
aware of their dissenter's or appraisal rights with respect to the Merger and
their receipt of a copy of the provisions of Section 607.0902 of the Applicable
Corporate Law and have elected not to exercise such rights.
1.5.2 Written Consent of the Sole Shareholder of Merger Sub.
Contemporaneously with the execution hereof, the Parent is executing and
delivering to Merger Sub a written consent of the sole shareholder of Merger
Sub, in the form of Exhibit 1.5.2 attached hereto, pursuant to the applicable
provisions of the Applicable Corporate Law, adopting this Agreement.
Agreement and Plan of Merger/Page 2
1.5.3 All Other Necessary Actions. In addition to the actions set
forth in Sections 1.5.1 and 1.5.2, the Parent, Merger Sub and the Company will
take all actions necessary in accordance with the Applicable Corporate Law and
their respective articles of incorporation and bylaws to cause the Merger to be
consummated on, and subject to, the terms set forth in this Agreement and the
Applicable Corporate Law.
1.6 Conversion of Stock. As of the Effective Time, by virtue of the
Merger and without further action on the part of any holder of shares of Company
Common Stock or any holder of shares of capital stock of Merger Sub:
1.6.1 Merger Sub Capital Stock. Each share of capital stock of
Merger Sub issued and outstanding at the Effective Time shall remain outstanding
and shall be unchanged at and after the Merger and immediately following the
Effective Time shall constitute all of the issued and outstanding capital stock
of the Surviving Corporation.
1.6.2 Cancellation of the Company Treasury Stock. All shares of
Company Common Stock that are owned by the Company or any of its subsidiaries as
treasury stock shall be canceled and retired and shall cease to exist and no
stock of the Parent or other consideration shall be delivered in exchange
therefor.
1.6.3 Merger Consideration. The issued and outstanding shares of
Company Common Stock (other than shares to be canceled in accordance with
Section 1.6.2) shall be converted into the right to receive the Final Merger
Consideration (as determined in accordance with Exhibit 1 attached hereto). The
shares of Company Common Stock so converted into the right to receive the Final
Merger Consideration (a "Converted Share") shall, by virtue of the Merger and
without any action on the part of the holder thereof, at the Effective Time no
longer be outstanding and shall at such time be canceled and retired and shall
cease at such time to exist, and each holder of a certificate which prior to the
Effective Time validly evidenced any such Converted Shares (a "Stock
Certificate") shall thereafter cease to have any rights with respect to such
Converted Shares, except, upon the surrender of the Stock Certificates and a
duly executed and completed letter of transmittal in accordance with Section
1.7, the right to receive the Final Merger Consideration at the times and in the
manner set forth herein.
1.7 Exchange of and Payment for Stock.
1.7.1 Delivery of Company Common Stock and Closing Merger
Consideration. Prior to the Closing, the Parent will deliver to each of the
Shareholders a letter of transmittal, in substantially the form attached hereto
as Exhibit 1.7, to be used for the purpose of surrendering to Parent the Stock
Certificates in exchange for the right to receive the Final Merger Consideration
with respect to all of the Converted Shares evidenced by such Stock
Certificate. All of the Company Common Stock held by each Shareholder will be
surrendered by such Shareholder to the Parent together with a properly completed
and executed letter of transmittal (with each signature guaranteed by a
commercial bank or notarized by a notary public or similar official reasonably
satisfactory to the Parent), and the Parent shall cause to be delivered to such
Shareholder at the Closing the Closing Merger Consideration (determined in
accordance with Exhibit 1) applicable to the Converted Shares evidenced by the
Stock Certificates properly surrendered (with a properly executed and completed
letter of transmittal) by such Shareholder to the Parent.
1.7.2 Assignments. No assignment, transfer or other disposition of
record or beneficial ownership of any shares of Company Common Stock shall be
made on or after the date hereof.
1.7.3 Payment In Full Satisfaction of All Rights. The delivery of
the Closing Merger Consideration to the Shareholders with respect to their
Converted Shares shall be deemed to be payment in full
Agreement and Plan of Merger/Page 3
satisfaction of all rights pertaining to the outstanding Converted Shares except
for the right to receive additional shares of Parent Common Stock pursuant to
Section 1.9.
1.8 Determination of Closing Merger Consideration.
1.8.1 Delivery of IPO Price to Public; Statement. Within five
business days after the Parent and its underwriters agree on the initial price
to the public for a share of Parent Common Stock offered in the IPO, as set
forth in an executed underwriting agreement, the Parent shall deliver to the
Shareholders a written notice (the "Price Notice") setting forth such initial
price to the public and a statement setting forth a calculation, reviewed by
KPMG Peat Marwick LLP ("KPMG"), of the Closing Outstanding Common Stock Number
(as determined in accordance with Exhibit 1 attached hereto), the Closing Per
Share Common Stock Amount and the Closing Merger Consideration payable to the
Shareholders at Closing (the "Statement of Closing Consideration"). The initial
price to the public of a share of Parent Common Stock, as set forth in the Price
Notice, and the Closing Merger Consideration as set forth in the Statement of
Closing Consideration shall be final, conclusive and binding for purposes of
this Agreement.
1.9 Post-Closing Determination of Final Merger Consideration.
1.9.1 Statement. No later than 90 days after the Closing, the
Parent shall deliver to the Shareholders a statement showing the Final
Outstanding Common Stock Number (as determined in accordance with Exhibit 1
attached hereto), and the Final Merger Consideration (the "Statement of Final
Per Share Amounts"). Operating EBITDA shall have the meaning ascribed on
Exhibit 1.
1.9.2 Review. After delivery to the Shareholders of the Statement
of Final Per Share Amounts, the Shareholders and their representatives shall be
afforded the opportunity to review and inspect all of the financial records,
work papers, schedules and other supporting papers relating to the preparation
of the Statement of Final Per Share Amounts, and to consult with the Parent and
its representatives regarding the methods used in the preparation of the
Statement of Final Per Share Amounts.
1.9.3 Disputes. The Final Outstanding Common Stock Number and
the Final Merger Consideration as shown on the Statement of Final Per Share
Amounts shall be final, conclusive and binding for purposes of this Agreement,
unless the Shareholders shall deliver to the Parent a written notice of
disagreement ("Notice of Dispute") with any item or items in the Statement of
Final Per Share Amounts within 20 business days following receipt of the
Statement of Final Per Share Amounts, specifying in reasonable detail the nature
and extent of such disagreement; provided, however, that no Notice of Dispute
may be given unless the cumulative effect of such items would change the amount
of the Total Consideration (as defined in Exhibit 1) by $10,000 or more. If a
Notice of Dispute is not properly given within such time, the Final Outstanding
Common Stock Number and the Final Merger Consideration as set forth in the
Statement of Final Per Share Amounts shall be final, conclusive and binding for
purposes of this Agreement.
1.9.4 Resolution by Parties. If a Notice of Dispute is properly
given, the Parent and the Shareholders agree to negotiate in good faith and use
their best efforts to resolve any disagreement with respect to the Statement of
Final Per Share Amounts. If the Parent and the Shareholders shall not reach
such resolution within 30 days following receipt by the Parent of a properly
given Notice of Dispute, the dispute shall be referred to any of the "big six"
independent accounting firms which may be agreed to by Parent and the
Shareholders ("Accountants") (other than any such firm that serves as the
regular accountants for Parent, the Company or any of the Shareholders), who
shall resolve such dispute within 30 days after its submission to them. In the
event that Parent and the Shareholders cannot agree on the firm to serve as the
Accountants, Parent and the Shareholders shall promptly refer the selection to
KPMG, and the "big six" accounting firm selected by KPMG shall be the
Accountants for purposes of this Agreement. The Parent and the Shareholders (if
the dispute is resolved by them
Agreement and Plan of Merger/Page 4
or the Statement of Final Per Share Amounts otherwise becomes final pursuant
hereto without referral to the Accountants) or the Accountants (if a dispute is
resolved by them) shall set forth such resolution in writing and such writing
shall (i) set forth the Final Outstanding Common Stock Number and the Final
Merger Consideration and (ii) be final, conclusive and binding for purposes of
this Agreement. The cost of the Accountants for making such determination shall
be paid by the parties in the same ratio as the resolution of the disputed
items. This sharing of cost can be illustrated by the following example: Assume
that the parties have been unable to agree on items which if resolved in favor
of the Shareholders would increase the Total Consideration by $100,000. If the
Accountants resolve all items in favor of either party, the other party will pay
the costs of the Accountants. If the Accountants resolve the items such that the
Total Consideration is increased by $75,000, the cost of the Accountants would
be paid 75% by the Parent and 25% by the Shareholders.
1.9.5 Final Determination. Within 10 business days following the
final determination of the Final Outstanding Common Stock Number and the Final
Merger Consideration as provided in this Section 1.9 (i) the Parent shall
deliver to each Shareholder, as applicable, (a) the cash amount, if any, by
which the aggregate of the cash amount included in the Final Merger
Consideration payable to such Shareholder, as finally determined pursuant
hereto, exceeds the aggregate of the cash amount included in the Closing Merger
Consideration paid to such Shareholder at the Closing, and (b) the number of
shares of Parent Common Stock, if any, by which the aggregate of the number of
shares of Parent Common Stock included in the Final Merger Consideration
deliverable to such Shareholder, as finally determined pursuant hereto, exceeds
the aggregate of the number of shares of Parent Common Stock included in the
Closing Merger Consideration delivered to such Shareholder at the Closing, or
(ii) the Shareholder shall deliver to the Parent, as applicable, (a) the cash
amount, if any, by which the aggregate of the cash amount included in the
Closing Merger Consideration paid to such Shareholder at the Closing exceeds the
aggregate of the cash amount included in the Final Merger Consideration payable
to such Shareholder, as finally determined pursuant hereto, and (b) the number
of shares of Parent Common Stock, if any, by which the aggregate of the number
of shares of Parent Common Stock included in the Closing Merger Consideration
delivered to such Shareholder at the Closing exceeds the aggregate of the number
of shares of Parent Common Stock included in the Final Merger Consideration
deliverable to such Shareholders, as finally determined pursuant hereto.
1.9.6 Expenses. The Parent and the Shareholders shall each pay their
own costs incurred in connection with this Section 1.9, including the fees and
expenses of their respective attorneys and accountants, if any.
2. REPRESENTATIONS AND WARRANTIES
OF THE COMPANY AND THE SHAREHOLDERS
The Company and each of the Shareholders hereby represent and warrant to
the Parent and Merger Sub as follows:
2.1 Exhibit 2. The Company and each Shareholder represent that the
statements in Exhibit 2 attached hereto are true and correct.
2.2 Stock Ownership. The Company and each Shareholder represent that
such Shareholder owns, beneficially and of record, with full power to vote, the
number of shares of Company Common Stock set forth beside such Shareholder's
name on Exhibit 2.2 and such shares are so held by him free and clear of all
liens, encumbrances and adverse claims whatsoever.
2.3 Authority. Each Shareholder has full right, power, legal capacity
and authority to (i) execute, deliver and perform this Agreement, and all other
documents and instruments referred to herein or contemplated hereby to be
executed, delivered and performed by him (each a "Shareholder Related Document")
and (ii)
Agreement and Plan of Merger/Page 5
consummate the transactions contemplated herein and thereby. This Agreement has
been duly executed and delivered by him and constitutes, and each Shareholder
Related Document to which he is a party, when duly executed and delivered by him
will constitute, legal, valid and binding obligations enforceable against him in
accordance with their respective terms and conditions, except as such
enforcement may be limited by bankruptcy, insolvency, reorganization, moratorium
or other similar laws affecting the enforcement of creditors' rights generally
and by general principles of equity (whether applied in a proceeding at law or
in equity).
2.4 Consents. No approval, consent, order or action of or filing with
any court, administrative agency, governmental authority or other third party is
required for the execution, delivery or performance by him of this Agreement or
any Shareholder Related Document to which he is a party, except for the filing
of the Articles of Merger under Applicable Corporate Law. The execution,
delivery and performance by him of this Agreement and the Shareholder Related
Documents to which he is a party do not violate any mortgage, indenture,
contract, agreement, lease or commitment or other instrument of any kind to
which he is a party or by which he or his assets or properties may be bound or
affected or any law, rule or regulation applicable to him or any court
injunction, order or decree or any valid and enforceable order of any
governmental agency in effect as of the date hereof having jurisdiction over
him.
3. REPRESENTATIONS AND WARRANTIES
OF THE PARENT AND MERGER SUB
3.1 Representations and Warranties. The Parent hereby represents and
warrants to the Shareholders and the Company as follows:
3.1.1 Organization. The Parent is a corporation duly organized,
validly existing and in good standing under the laws of the State of Texas. The
Parent is duly qualified or licensed as a foreign corporation authorized to do
business in all states in which any of its assets or properties may be situated
or where its business is conducted except where the failure to obtain such
qualification or license would not have a Parent Material Adverse Effect (as
defined below).
3.1.2 Capitalization of the Parent. The total authorized capital
stock of Parent is as set forth and described in Parent's confidential
information statement delivered to Shareholders in connection with the
transactions contemplated by this Agreement. The outstanding shares of Parent
Common Stock and Parent Preferred Stock have been duly and validly issued and
are fully paid and non-assessable.
3.1.3 Authority. The Parent has the requisite, power and
authority to execute, deliver and perform this Agreement and all documents and
instruments referred to herein or contemplated hereby (the "Parent Related
Documents") and to consummate the transactions contemplated herein and thereby.
This Agreement has been duly executed and delivered by the Parent and
constitutes, and all the Parent Related Documents, when executed and delivered
by the Parent will constitute, legal, valid and binding obligations of the
Parent, enforceable in accordance with their respective terms and conditions
except as such enforcement may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting the enforcement of
creditors' rights generally and by general principles of equity (whether applied
in a proceeding at law or in equity).
3.1.4 Consents. No approval, consent, order or action of or filing
with any court, administrative agency, governmental authority or other third
party is required for the execution, delivery or performance by the Parent of
this Agreement or the Parent Related Documents or the consummation by the Parent
of the transactions contemplated hereby, except for (i) the filing of the
Parent's registration statement with respect to the IPO ("Registration
Statement") with the U.S. Securities and Exchange Commission ("SEC") pursuant to
the Securities Act and the SEC's declaration of effectiveness of such
Registration Statement and the completion of all necessary filings required
under, and the obtaining of all necessary consents and approvals required
Agreement and Plan of Merger/Page 6
pursuant to, state securities or "blue sky" laws in connection with the IPO, and
(ii) the filing of the Articles of Merger with the Secretary of State of
Florida.
3.1.5 Defaults. The Parent is not in default under or in
violation of, and the execution, delivery and performance of this Agreement and
the Parent Related Documents and the consummation by the Parent of the
transactions contemplated hereby and thereby will not result in a default under
or in violation of (i) any mortgage, indenture, charter or bylaw provision,
contract, agreement, lease, commitment or other instrument of any kind to which
the Parent is a party or by which the Parent or any of its properties or assets
may be bound or affected or (ii) any law, rule or regulation applicable to the
Parent or any court injunction, order or decree, or any valid and enforceable
order of any governmental agency in effect as of the date hereof having
jurisdiction over the Parent, which default or violation prevents the Parent
from consummating the transactions contemplated hereby or is reasonably likely
to have a Parent Material Adverse Effect.
3.1.6 Investment Company. The Parent is not an "investment
company" or a company "controlled" by an "investment company" within the meaning
of the Investment Company Act of 1940, as amended, or a "holding company," a
"subsidiary company" of a "holding company" or an "affiliate" of a "holding
company" or a "public utility" within the meaning of the Public Utility Holding
Company Act of 1935, as amended.
3.1.7 Financial Statements. The Parent has provided certain
financial statements to the Shareholders ("Parent Financial Statements") and
such Parent Financial Statements have been prepared in accordance with GAAP and
fairly present the consolidated financial position, results of operations and
cash flows of the Parent and its then existing consolidated subsidiaries as of
the dates and for the periods indicated, subject to normal year-end adjustments
and any other adjustments described therein or in the notes or schedules
thereto. The books and records of the Parent have been kept in reasonable
detail and accurately and fairly reflect the transactions of the Parent. Such
Balance Sheets present accurately and fairly in all material respects the
financial condition of the Parent as of the dates indicated thereon, and such
Statements of Earnings and Retained Earnings present accurately and fairly in
all material respects the results of the Parent's operations for the periods
indicated thereon. The Parent does not have any material liabilities or
obligations of a type which should be included in or reflected on such financial
statements if prepared in accordance with GAAP, whether related to tax or non-
tax matters, accrued or contingent, due or not yet due, liquidated or
unliquidated, or otherwise, except as and to the extent disclosed or reflected
in such financial statements.
3.1.8 Taxes. The Parent and each of its Subsidiaries have either
accrued, discharged or caused to be discharged, as the same have become due, or
the Parent Financial Statements contain adequate accruals and reserves for, all
taxes, interest thereon, fines and penalties of every kind and character,
attributable or relating to the properties and business of the Parent for the
period ended December 31, 1996.
3.1.9 Full Authority. The Parent has the corporate power and
authority and has obtained all licenses, permits, qualifications, and other
documentation (including permits required under applicable Environmental Law, as
defined in Exhibit 2) necessary to own and/or operate its businesses, properties
and assets and to carry on its businesses as being conducted on the date of this
Agreement, except such licenses, permits, qualifications or other documentation,
the failure to obtain which is not reasonably likely to result in a Parent
Material Adverse Effect, and such businesses are now being conducted and such
assets and properties are being owned and/or operated in compliance with all
applicable laws (including Environmental Law), ordinances, rules and regulations
of any governmental agency of the United States, any state or political
subdivision thereof, or any foreign jurisdiction, all applicable court or
administrative agency decrees, awards and orders and all such licenses, permits,
qualifications and other documentation, except where the failure to comply will
not have a Parent Material Adverse Effect, and there is no existing condition or
state of facts that would give rise to a violation thereof or a liability or
default thereunder that is reasonably likely to have a Parent Material Adverse
Effect.
Agreement and Plan of Merger/Page 7
3.1.10 Access. The Parent has cooperated fully in permitting the
Shareholders and their representatives to make a full investigation of the
properties, operations and financial condition of the Parent and has afforded
the Shareholders and their representatives reasonable access to the offices,
buildings, real properties, machinery and equipment, inventory and supplies,
records, files, books of account, tax returns, agreements and commitments and
personnel of Parent.
3.1.11 Disclosure. No representation or warranty by the Parent in
this Agreement, and no statement contained in any certificate delivered by the
Parent to the Shareholders pursuant to this Agreement, contains any untrue
statement of a material fact or omits any material fact necessary in order to
make the statements herein or therein, in light of the circumstances under which
they are or were made, not misleading.
3.1.12 Parent Material Adverse Effect. The term "Parent Material
Adverse Effect" shall mean an adverse effect on the properties, assets,
financial position, results of operations, long-term debt, other indebtedness,
cash flows or contingent liabilities of the Parent and its consolidated
subsidiaries, taken as a whole in an amount of $100,000 or more.
3.1.13 Tax-Free Reorganization. With respect to the qualification
of the Merger as a reorganization within the meaning of Section 368(a) of the
Code:
(i) The Parent has no plan or intention to sell, exchange or
otherwise dispose or liquidate the Surviving Corporation, to merge the
Surviving Corporation with or into any other corporation, to sell or
otherwise dispose of its Surviving Corporation Common Stock except for
transfers of Surviving Corporation Common Stock to corporations of which
the Parent has control (within the meaning of Section 368(a) of the Code) at
the time of such transfer, or to cause the Surviving Corporation to sell or
otherwise dispose of any of its assets or of any assets acquired in the
Merger, except for dispositions made in the ordinary course of business or
transfers of assets to a corporation of which the Surviving Corporation has
control (within the meaning of Section 368(a) of the Code) at the time of
such transfer.
(ii) The Parent has no plan or intention to cause the Surviving
Corporation, after the Merger, to issue additional shares of its stock that
would result in the Parent losing control of the Surviving Corporation
within the meaning of Section 368(c) of the Code.
(iii) Following the Merger, the Surviving Corporation will continue
the Company's historic business or use a significant portion of its historic
business assets in a business.
(iv) Except as provided in Section 8.20 below, if the Merger is
effected, the Parent and Merger Sub will each pay their respective expenses,
if any, incurred in connection with the Merger.
(v) The Parent Common Stock that will be issued in connection
with the Merger is voting stock within the meaning of Section 368(c) of the
Code.
(vi) At the Effective Time, neither the Parent nor Merger Sub will
have any outstanding warrants, options, convertible securities, or any other
right pursuant to which any person could acquire stock in the Parent or
Merger Sub which, if exercised or converted, would affect the Parent's
acquisition or retention of control of the Surviving Corporation.
(vii) Neither the Parent nor Merger Sub is an investment company as
defined in Section 368(a)(2)(F) of the Code.
Agreement and Plan of Merger/Page 8
(viii) None of the Parent Common Stock received by Shareholders as a
part of the Merger Consideration will be separate consideration for, or
allocable to, any employment agreement.
(ix) Neither the Parent nor Merger Sub is under the jurisdiction
of a court in a case under Title 11 of the United States Code, or a
receivership, foreclosure, or similar proceeding in a federal or state
court.
3.2 Representations and Warranties Concerning the Merger Sub. The Parent
and Merger Sub, jointly and severally, hereby represent and warrant to the
Shareholders and the Company as follows:
3.2.1 Organization and Standing. Merger Sub is a corporation duly
incorporated, validly existing and in good standing under the laws of the State
of Florida.
3.2.2 Capital Structure. The authorized capital stock of Merger
Sub consists of 5,000 shares of common stock, par value $.01 per share, 1,000 of
which are validly issued and outstanding, fully paid and nonassessable and are
owned by the Parent free and clear of all liens, encumbrances and adverse
claims.
3.2.3 Authority. Merger Sub has the corporate power and authority
to execute, deliver and perform this Agreement and to consummate the
transactions contemplated hereby. The execution and delivery of this Agreement,
the performance by Merger Sub of its obligations hereunder and the consummation
of the transactions contemplated hereby have been duly authorized by its Board
of Directors and the Parent as its sole shareholder, and, except for the
corporate filings required by state law, no other corporate proceedings on the
part of Merger Sub are necessary to authorize this Agreement and the transaction
contemplated hereby. This Agreement has been duly and validly executed and
delivered by Merger Sub and (assuming the due authorization, execution and
delivery hereof by the Company) constitutes a valid and binding obligation of
Merger Sub enforceable against Merger Sub in accordance with its terms, except
as such enforcement may be limited by bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting the enforcement of creditors' rights
generally and by general principles of equity (whether applied in a proceeding
at law or in equity).
3.2.4 Consents. No approval, consent, order or action of or filing
with any court, administrative agency, governmental authority or other third
party is required for the execution, delivery or performance by Merger Sub of
this Agreement or the consummation by Merger Sub of the transactions
contemplated hereby, except for (i) the filing of the Registration Statement
with the SEC pursuant to the Securities Act and the SEC's declaration of
effectiveness of such Registration Statement and the completion of all necessary
filings required under, and the obtaining of all necessary consents and
approvals required pursuant to, state securities or "blue sky" laws in
connection with the IPO, and (ii) the filing of the Articles of Merger with the
Secretary of State of Florida.
4. CERTAIN COVENANTS, AGREEMENTS AND PRE-CLOSING MATTERS
4.1 Agreements of Shareholders to be Effective Upon Closing. Effective
upon Closing, and without further action on the part of any party or other
person, each Shareholder covenants and agrees as follows:
4.1.1 Covenant Not to Compete. For the considerations specified
in this Agreement and in recognition that the covenants by the Shareholders in
this Section are a material inducement to the Parent to enter into and perform
this Agreement:
(i) ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇ agrees that for the period from the
Closing Date to the later to occur of (1) three years after the Closing Date
or (2) two years following any termination of the employment relationship by
the Company, he will not represent, engage in, carry on, or have a financial
interest in,
Agreement and Plan of Merger/Page 9
directly or indirectly, individually, as a member of a partnership or
limited liability company, equity owner, shareholder (other than as a
shareholder of less than one percent of the issued and outstanding stock of
a publicly-held company whose gross assets exceed $100 million), investor,
officer, director, trustee, manager, employee, agent, associate or
consultant, any business that involves indoor air quality, heating,
ventilation and air conditioning, mechanical construction, plumbing, sewer
cleaning, or electrical contracting (the "Business") within a 100 mile
radius of the Company's current headquarters in Hollywood, Florida;
provided, however, if (i) the Company terminates the Employment of ▇▇▇▇▇ ▇.
▇▇▇▇▇▇, ▇▇ without Cause (as defined in the Employment Agreement) or (ii)
▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇ terminates his employment with the Company for Employee
Cause (as defined in the Employment Agreement), then the applicable non-
compete period following such termination shall be the same as the period
over which the Company is required to provide benefits under terms of the
Employment Agreement in the event of termination without cause; and provided
further, that if Employee's employment terminates at the expiration of the
initial term or any renewal term of Employee's employment agreement with the
Company, there shall be no applicable non-compete period after such
termination of employment.
(ii) Each of ▇▇▇▇▇ ▇. ▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ (individually, a
"Non-Employee Shareholder," and collectively, the "Non-Employee
Shareholders") agrees that for the period of three years following the
Closing Date, he will not represent, engage in, carry on, or have a
financial interest in, directly or indirectly, individually, as a member of
a partnership or limited liability company, equity owner, shareholder (other
than as a shareholder of less than one percent of the issued and outstanding
stock of a publicly-held company whose gross assets exceed $100 million),
investor, officer, director, trustee, manager, employee, agent, associate or
consultant, any Business within a 100 mile radius of the Company's current
headquarters in Hollywood, Florida; provided, however, that the Non-Employee
Shareholders and their current and future affiliates shall be permitted to
engage in the business of commercial and institutional mechanical
construction as currently conducted by such affiliated companies, and such
business activity shall not result in violation of their covenants not to
compete contained hereinabove; and provided, further, that the foregoing
covenants not to compete shall cease to be binding on affiliates of the Non-
Employee Shareholders at such time as the Non-Employee Shareholders cease to
be owners of such affiliates.
(iii) During the three year term set forth in this Subsection
4.1.1(ii) above and following the expiration thereof, none of the Non-
Employee Shareholders, Southeast Mechanical Contractors, Inc. ("SMC"), nor
any of their affiliates will market commercial HVAC maintenance services of
the nature conducted by the Company under any name using "Southeast
Mechanical" in (1) Dade, (2) Braword and (3) Palm Beach Counties, Florida
except to prior commercial or institutional mechanical construction
customers of SMC. In that regard, the Non-Employee Shareholders will cause
SMC to observe and comply with the covenant provided in the immediately
preceding sentence in all events, including following any future sale of SMC
by the Non-Employee Shareholders.
(iv) Each Non-Employee Shareholder agrees that he shall, and that
he shall cause each affiliate in which he, alone or together with the other
Non-Employee Shareholder, owns a majority interest to, use their and his
reasonable efforts to refer to the Company all HVAC mechanical service and
maintenance business for a period of three years following the Closing Date.
(v) Each Shareholder agrees that the limitations set forth herein
on such Shareholder's rights to compete with the Parent and its affiliates
as set forth in this Section 4.1.1 are reasonable and necessary for the
protection of Parent and its affiliates. In this regard, each Shareholder
specifically agrees that the limitations as to period of time and geographic
area, as well as all other restrictions on the Shareholder's activities
specified herein, are reasonable and necessary for the protection of the
Parent and its affiliates.
Agreement and Plan of Merger/Page 10
Each Shareholder agrees that, in the event that the provisions of this
Section should ever be deemed to exceed the scope of business, time or
geographic limitations permitted by applicable law, such provisions shall be
and are hereby reformed to the maximum scope of business, time or geographic
limitations permitted by applicable law.
(vi) Each Shareholder agrees that the remedy at law for any breach
by such Shareholder of this Section 4.1.1 will be inadequate and that the
Parent shall be entitled to injunctive relief.
4.1.2 Release. Effective as of the Effective Time, the
Shareholders do hereby (i) release, acquit and forever discharge the Surviving
Corporation from any and all liabilities, obligations, claims, demands, actions
or causes of action arising from or relating to any event, occurrence, act,
omission or condition occurring or existing on or prior to the Effective Time
("Existing Claims"), including, without limitation, any claim for indemnity or
contribution from the Surviving Corporation in connection with the obligations
or liabilities of the Shareholders hereunder, except for salary and benefits
payable to a Shareholder as an employee in the ordinary course of business and
except for Existing Claims of the Shareholders as employees which are not known,
and which in the exercise of due diligence could not reasonably be expected to
be known as of the date of this Agreement, to the extent, but only to the
extent, that such Existing Claims are covered by insurance of the Company or the
Surviving Corporation; (ii) waive all breaches, defaults or violations of any
agreement applicable to the Company Common Stock and agree that any and all such
agreements are terminated as of the Effective Time, and (iii) waive any and all
preemptive or other rights to acquire any shares of capital stock of the Company
and release any and all claims arising in connection with any prior default,
violation or failure to comply with or satisfy any such preemptive or other
rights.
4.2 Elimination of Expense. Prior to Closing, the Shareholders will
produce evidence to the satisfaction of the Parent and its lenders that the
expenses of the Company as described on Exhibit 4.2 hereto have been eliminated
as expenses of the Company as of and following the Closing Date.
4.3 Shareholder Indebtedness and Receivables. Immediately prior to
Closing, the Shareholders shall cause to be paid in full in cash all accounts
payable, notes payable and advances payable by any Shareholder to the Company
and the Company shall pay in full in cash all accounts payable, notes payable
and advances payable by the Company to any Shareholder.
4.4 Assignment of Accounts Receivable. Within 90 days after the Closing
Date, Parent may elect to assign to Shareholders any accounts receivable that
were part of the calculation of Current Assets (as determined in accordance with
Exhibit 1 attached hereto) and which remain uncollected for 60 days or more, and
Shareholders shall purchase such accounts receivable from Parent for cash in the
amount of the uncollected face amount. Thereafter, the Surviving Corporation
shall use reasonable efforts to assist the Shareholders in collecting such
receivables, provided that the Surviving Corporation shall not be required to
make any expenditures in connection with such assistance.
4.5 Audit. Prior to Closing, KPMG shall complete an audit of the
Company through June 30, 1997 and such additional review work as may be
requested by the Parent through and including the Closing Date (or other periods
subsequent to June 30, 1997), and provide its report to the Parent and the
Shareholders.
4.6 Pre-Closing Covenants and Agreements. The Shareholders and the
Company jointly and severally agree as set forth in Exhibit 4.6 attached hereto.
4.7 Confidentiality. Prior to the Effective Time, none of the Parent,
Merger Sub, the Company or the Shareholders will disclose the terms of this
Agreement or the Merger to any person other than their respective directors,
officers, agents or representatives, except as otherwise provided herein or
unless required by law. The
Agreement and Plan of Merger/Page 11
Company may make appropriate disclosures of the general nature of the Merger
to its employees, vendors and customers to protect the Company's goodwill and to
facilitate the Closing. The Parent and Merger Sub may disclose pertinent
information regarding the Merger to its existing and prospective investors,
lenders, or investment bankers or financial advisors for the purpose of
obtaining financing, including, without limitation, financing related to the IPO
or other offerings of its securities may describe this Agreement and the
transactions contemplated hereby in any registration statement filed by the
Parent under the Securities Act and in reports filed by the Parent under the
Securities Exchange Act of 1934, and may file this Agreement as an exhibit to
any thereof. The Parent may also make appropriate disclosures of the general
nature of the Merger and the identity, nature and scope of the Company's
operations to prospective acquisition candidates in connection with the Parent's
efforts to effect additional acquisitions. Each party will have mutual approval
rights with respect to written employee presentations concerning the prospective
merger.
4.8 Tax-Free Reorganization. Unless the other parties shall otherwise
agree in writing, none of the Shareholders, the Parent, Merger Sub, the Company
or the Surviving Corporation shall knowingly take or fail to take any action,
which action or failure to act would jeopardize the qualification of the Merger
as a reorganization withing the meaning of Section 368(a) of the Code.
4.9 License of Company Logo. On the Closing Date, the Shareholders
will cause Southeast Mechanical Contractors, Inc. to execute a non-exclusive
license agreement authorizing Parent and the Surviving Corporation to use the
trademark and logo set forth on Exhibit 4.9 hereto to the extent of its rights
therein without charge. The license agreement shall not contain representations
or warranties regarding the rights of licensor in the licensed property.
4.10 Release of Shareholder Guaranties. Within 30 days after the
Closing Date, Parent will cause the Shareholders to be released from any
liability under personal guaranties of the indebtedness of the Company; provided
that the indebtedness so guaranteed does not exceed funded debt on the books of
the Company.
5. CONDITIONS PRECEDENT; CLOSING DELIVERIES
5.1 Conditions Precedent to the Obligations of the Parent and Merger Sub.
The obligations of the Parent and Merger Sub to effect the Merger under this
Agreement are subject to the satisfaction of each of the following conditions,
unless waived by the Parent in writing to the extent permitted by applicable
law:
5.1.1 Accuracy of Representations and Warranties. Except as set
forth in the certificate to be delivered at Closing, the representations and
warranties of the Shareholders and the Company contained in this Agreement, in
Exhibit 2 and the Disclosure Schedule referred to therein and the other Exhibits
provided by the Shareholders or the Company pursuant to this Agreement or in any
closing certificate or document delivered to the Parent pursuant hereto shall be
true and correct at and as of the Closing Date as though made at and as of that
time other than such representations and warranties as are specifically made as
of another date, and the Shareholders and the Company shall each have delivered
to the Parent and Merger Sub a certificate to that effect and listing any
exception thereto.
5.1.2 Performance of Covenants. Except as set forth in the
certificate to be delivered at Closing, the Shareholders and the Company shall
have performed and complied with all covenants of this Agreement to be performed
or complied with by them at or prior to the Closing Date, and the Shareholders
and the Company shall each have delivered to the Parent and Merger Sub a
certificate to that effect and listing any exception thereto.
5.1.3 Legal Actions or Proceedings. Except as set forth in the
certificate to be delivered at Closing, no legal action or proceeding shall have
been instituted after the date hereof against the Company or
Agreement and Plan of Merger/Page 12
against the Parent or Merger Sub arising by reason of the acquisition of the
Company pursuant to this Agreement, which is reasonably likely (i) to restrain,
prohibit or invalidate the consummation of the transactions contemplated by this
Agreement, (ii) to have a Company Material Adverse Effect or (iii) to have a
Parent Material Adverse Effect after giving effect to the consummation of the
transactions contemplated by this Agreement, and the Shareholders and the
Company shall each have delivered to the Parent and Merger Sub a certificate to
that effect and listing any exception thereto.
5.1.4 Approvals. Except as set forth in the certificate to be
delivered at Closing, the Company and the Shareholders shall have procured all
of the consents, approvals and waivers of third parties or any regulatory body
or authority, whether required contractually or by applicable law or otherwise
necessary for the execution, delivery and performance of this Agreement
(including the Company Related Documents and the Shareholder Related Documents)
by the Company and the Shareholders prior to the Closing Date, and Shareholders
and the Company shall each have delivered to the Parent and the Merger Sub a
certificate to that effect and listing any exception thereto.
5.1.5 Closing Deliveries. All documents required to be executed
or delivered at Closing by the Shareholders pursuant to Section 5.3 of this
Agreement shall have been so executed and delivered.
5.1.6 No Casualty, Loss or Damage. No material casualty, loss or
damage shall have occurred on or prior to the Effective Time to any of the
properties or assets of the Company.
5.1.7 Licenses, etc. The Company shall have obtained all such
licenses and permits as are legally required for the continued operation of the
business after the Effective Time, except such licenses and permits, the absence
of which will not have a Company Material Adverse Effect.
5.1.8 No Material Adverse Change. Since December 31, 1996, there
shall not have been any event that in the reasonable judgment of the Parent
materially adversely affects the properties, assets, financial condition,
results of operations, cash flows, businesses or prospects of the Company.
5.1.9 IPO. The Parent shall have completed the IPO on terms
acceptable to it, and the net proceeds thereof shall have been received by the
Parent.
5.1.10 Certain Corporate Actions. All necessary director and
shareholder resolutions, waivers and consents required to consummate the
transactions contemplated hereunder shall have been executed and delivered.
5.2 Conditions Precedent to the Obligations of the Shareholders and the
Company. The obligations of the Shareholders and the Company under this
Agreement are subject to the satisfaction of each of the following conditions,
unless waived by the Shareholders and the Company in writing:
5.2.1 Accuracy of Representations and Warranties. The
representations and warranties of the Parent and Merger Sub contained in this
Agreement or in any closing certificate or document delivered to the
Shareholders or the Company pursuant hereto shall be true and correct on and as
of the Closing Date as though made at and as of that date other than such
representations and warranties as are specifically made as of another date, and
the Parent and Merger Sub shall have delivered to the Shareholders and the
Company a certificate to that effect.
5.2.2 Performance of Covenants. Parent and Merger Sub shall have
performed and complied with all covenants of this Agreement to be performed or
complied with by them at or prior to the Closing Date
Agreement and Plan of Merger/Page 13
and the Parent and Merger Sub shall have delivered to the Shareholders and the
Company a certificate to such effect.
5.2.3 Approvals. The Parent shall have procured all of the
consents, approvals and waivers specified in Section 3.1.4 prior to the Closing
Date, and the Parent shall deliver to the Shareholders and the Company a
certificate to that effect.
5.2.4 Closing Deliveries. All documents and the Closing Merger
Consideration required to be executed or delivered at Closing by the Parent
pursuant to Section 5.4 of this Agreement shall have been so executed and
delivered.
5.2.5 IPO. The Parent shall have completed the IPO on terms
acceptable to it, and the net proceeds thereof shall have been received by the
Parent.
5.2.6 Payment of Net Amounts to Shareholders. The Parent, or Merger
Sub as the surviving corporation, shall pay to the Shareholders in cash the net
amount owing by the Company to each Shareholder as indicated on the books of the
Company; provided, however the aggregate amount of such payments to all
Shareholders, collectively, shall not exceed $372,000, reduced by the amount of
shareholder payables to the Company, if any, at the Closing Date.
5.3 Deliveries by the Shareholders at the Closing. At the Closing,
simultaneously with the deliveries by the Parent specified in Section 5.4 below,
and in addition to any deliveries required to be made by the Shareholders and
the Company pursuant to any other transaction document at the Closing, the
Shareholders shall deliver or cause to be delivered to the Parent the following:
5.3.1 Closing Certificates. The Shareholders and the Company
shall deliver the certificates required pursuant to Sections 5.1.1, 5.1.2,
5.1.3, 5.1.4 and 5.1.5.
5.3.2 Stock Transfer Restriction Agreement. Each Shareholder
shall execute and deliver a Stock Transfer Restriction Agreement on the Closing
Date, effective as of the Effective Time, substantially in the form set forth in
Exhibit 5.3.2.
5.3.3 Employment Agreement. ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇ shall execute and
deliver an Employment Agreement with the Company on the Closing Date, effective
as of the Effective Time, substantially in the form set forth in Exhibits 5.3.3.
5.3.4 Lease Agreement. The Shareholders shall cause the owner of
the property located at ▇▇▇▇ ▇. ▇. ▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇, to
execute and deliver a lease agreement with the Company in the form attached as
Exhibit 5.3.4.
5.3.5 Registration Rights Agreement. Each Shareholder shall
execute and deliver a Registration Rights Agreement at the Closing, effective as
of the Effective Time, substantially in the form set forth in Exhibit 5.3.5
attached hereto, as applicable.
5.3.6 Opinion of Counsel for the Shareholders and the Company.
The Shareholders shall deliver the favorable opinion of White & Case, counsel to
the Shareholders and the Company, dated the Effective Time, substantially in the
form and to the effect set forth in Exhibit 5.3.6 attached hereto.
5.3.7 Documents, Stock Certificates. The Shareholders shall execute
and deliver, and shall cause the Company to execute and deliver, the documents,
certificates, opinions, instruments and agreements required to be executed and
delivered by the Company or its officers or directors or any Shareholder at the
Agreement and Plan of Merger/Page 14
Closing as contemplated hereby or as may be reasonably requested by the Parent
and shall deliver or cause to be delivered the documents and evidence required
under Section 4. Stock Certificates representing all of the outstanding Company
Common Stock and a properly executed and completed letter of transmittal shall
be delivered by the Shareholders to the Parent.
The Parent and the Merger Sub may terminate this Agreement if in their
reasonable judgment the items disclosed on the certificates required to be
delivered by the Shareholders and the Company pursuant to Section 5.3.1,
individually or collectively, materially adversely affects the properties,
assets, financial condition, results of operations, cash flows, business or
prospects of the Company. In such event all parties to this Agreement shall be
relieved of all obligations hereunder except for the provisions of Section 8.20
which shall survive such termination.
The consummation of the Closing shall not be deemed to be a waiver by the
Parent or the Surviving Corporation of any of their rights or remedies hereunder
for any breach of warranty, covenant or agreement by the Company or the
Shareholders herein irrespective of any knowledge of or investigation made by or
on behalf of the Parent or Merger Sub, except to the extent that a specified
breach of the Company or the Shareholders of a specifically identified
representation, warranty, covenant or agreement herein shall be identified on a
certificate delivered to Parent and the Merger Sub at Closing by the Company or
the Shareholders. If the Parent and the Merger Sub elect to consummate the
Closing, the Parent and the Merger Sub shall be deemed to have waived their
rights and remedies hereunder for, and the Company and the Shareholders shall
have no liability or obligation to the Parent or the Merger Sub with respect to
any such specifically identified breach to the extent so identified by the
Company or the Shareholders.
5.4 Deliveries by the Parent at the Closing. At the Closing,
simultaneously with the deliveries by the Shareholders specified in Section 5.3
above, and in addition to any other deliveries to be made by the Parent and
Merger Sub pursuant to any other transaction document at the Closing, the Parent
shall deliver or cause to be delivered to the Shareholders the following:
5.4.1 Closing Certificates. The Parent and Merger Sub shall
deliver the certificates required pursuant to Sections 5.2.1, 5.2.2, 5.2.3 and
5.2.4.
5.4.2 Stock Transfer Restriction Agreement. The Company shall
execute and deliver a Stock Transfer Restriction Agreement with each Shareholder
on the Closing Date, effective as of the Effective Time, substantially in the
form set forth in Exhibit 5.3.2.
5.4.3 Employment Agreement. The Company shall execute and deliver
an Employment Agreement with the ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇ on the Closing Date,
effective as of the Effective Time, substantially in the form set forth in
Exhibits 5.3.3.
5.4.4 Lease Agreement. The Company, as lessee, shall execute and
deliver a lease agreement in the form attached as Exhibit 5.3.4 with respect to
the property located at ▇▇▇▇ ▇. ▇. ▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇, with
the owner of thereof.
5.4.5 Registration Rights Agreement. The Parent shall execute and
deliver to each of the Shareholders a Registration Rights Agreement at the
Closing, effective as of the Effective Time, substantially in the form set forth
in Exhibit 5.3.5.
5.4.6 Opinion of Counsel for the Parent and Merger Sub. The
Parent shall deliver the favorable opinion of Chamberlain, Hrdlicka, White,
▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, dated the Effective Time, substantially in the form and to
the effect set forth in Exhibit 5.4.6.
Agreement and Plan of Merger/Page 15
5.4.7 Closing Merger Consideration. The Parent shall deliver the
Closing Merger Consideration to the Shareholders.
The consummation of the Closing shall not be deemed to be a waiver by
the Shareholders of any of their rights or remedies hereunder for any breach of
warranty, covenant or agreement by the Parent or Merger Sub herein irrespective
of any knowledge of or investigation made by or on behalf of the Shareholders,
except to the extent that a specified breach of the Parent or Merger Sub of a
specifically identified representation, warranty, covenant or agreement herein
shall be identified on a certificate delivered to Shareholders at Closing by the
Parent or Merger Sub. If the Shareholders and the Company elect to consummate
the Closing, the Company and the Shareholders shall be deemed to have waived
their rights and remedies hereunder for, and the Parent and Merger Sub shall
have no liability or obligation to the Shareholders or the Company with respect
to, any such specifically identified breach, to the extent so identified by the
Parent or Merger Sub.
6. SURVIVAL, INDEMNIFICATIONS
6.1 Survival. The representations and warranties set forth in this
Agreement and the other documents, instruments and agreements contemplated
hereby shall survive after the date hereof to the extent provided herein. The
representations and warranties of the Shareholders and the Company herein and in
the Shareholder Related Documents and the Company Related Documents (as defined
in Exhibit 2) other than those of the Shareholders and the Company in Sections
2.2, 2.3, 2.4 and in Sections 2, 3 and 6, 11, 12 and 18 of Exhibit 2 shall
survive for a period of 12 months after the date hereof. The representations
and warranties of the Shareholders and the Company contained in Section 11 shall
survive for a period of 18 months after the date hereof. The representations
and warranties of the Shareholders and the Company contained in Sections 2.2,
2.3, 2.4 and in Sections 2, 3 and 6, 12 and 18 of Exhibit 2 shall survive for
five years. The representations and warranties of the Parent herein and in the
Parent Related Documents, other than those in Sections 3.1.3 and 3.1.4, shall
survive for a period of 12 months after the date hereof and the representations
and warranties of the Parent contained in Sections 3.1.3 and 3.1.4 shall survive
for five years. The periods of survival of the representations and warranties
as stated above in this Section 6.1 are referred to herein as the "Survival
Period." The liabilities of the parties under their respective representations
and warranties shall expire as of the expiration of the applicable Survival
Period and no claim for indemnification may be made with respect to any breach
of any representation or warranty, the applicable Survival Period of which shall
have expired, except to the extent that written notice of such breach shall have
been given to the party against which such claim is asserted on or before the
date of such expiration. The covenants and agreements of the parties herein
(including but not limited to Exhibit 4.6) and in other documents and
instruments executed and delivered in connection with the closing of the
transactions contemplated hereby shall survive for the maximum period permitted
by law.
6.2 Indemnification.
6.2.1 Parent Indemnified Parties. Subject to the provisions of
Sections 6.1 and 6.3 hereof, the Shareholders, jointly and severally with
respect to representations regarding the Company, and severally with respect to
their individual representation, shall indemnify, save and hold harmless the
Parent, the Surviving Corporation, Merger Sub and any of their assignees
(including lenders) and all of their respective officers, directors, employees,
representatives, agents, advisors and consultants and all of their respective
heirs, legal representatives, successors and assigns (collectively the "Parent
Indemnified Parties") from and against any and all damages, liabilities, losses,
loss of value (including the value of adverse effects on cash flow or earnings),
claims, deficiencies, penalties, interest, expenses, fines, assessments, charges
and costs, including reasonable attorneys' fees and court costs (collectively
"Losses") arising from, out of or in any manner connected with or based on:
Agreement and Plan of Merger/Page 16
(i) the breach of any covenant of a Shareholder or the Company or
the failure by a Shareholder or the Company to perform any obligation of a
Shareholder or the Company contained herein or in any Company Related
Document or Shareholder Related Document executed by such Shareholder;
(ii) any inaccuracy in or breach of any representation or warranty
of any Shareholder contained herein or in any Shareholder Related Document
executed by such Shareholder;
(iii) any inaccuracy in or breach of any representation or warranty
of the Company contained herein or in any Company Related Document;
(iv) indemnification payments made by the Company or the Surviving
Corporation to the Company's present or former officers, directors,
employees, agents, consultants, advisors or representatives in respect of
actions taken or omitted to be taken prior to the Closing; and
(v) any act, omission, occurrence, event, condition or
circumstance occurring or existing at any time on or before the Effective
Time and involving or related to the assets, properties, business or
operations now or previously owned or operated by the Company and not (a)
disclosed in the Disclosure Schedule or (b) disclosed in the Company
Financial Statements (as defined in Exhibit 2).
Notwithstanding anything herein to the contrary (i) the Parent Indemnified
Parties shall not be entitled to indemnification unless and until the Losses
exceed $50,000 in the aggregate, in which event the Parent Indemnified Parties
shall be entitled to indemnification for all Losses in excess of $10,000 in the
aggregate, and (ii) the maximum liability of the Shareholders pursuant to this
Section 6.2.1 shall in no event exceed the amount of the Total Consideration as
defined in Exhibit 1. The foregoing indemnities shall not limit or otherwise
affect the rights of Shareholders with respect to indemnity for Losses under
Section 6.2.2.
6.2.2 Parent Indemnity. Subject to the provisions of Sections 6.1
and 6.3, the Parent shall indemnify, save and hold harmless the Shareholders and
the Shareholders' heirs, legal representatives, successors and assigns from and
against all Losses arising from, out of or in any manner connected with or based
on:
(i) any breach of any covenant of the Parent or Merger Sub or the
failure by the Parent or Merger Sub to perform any of its obligations
contained herein or in the Parent Related Documents;
(ii) any inaccuracy in or breach of any representation or warranty
of the Parent or Merger Sub contained herein or in the Parent Related
Documents; and
(iii) any act, omission, event, condition or circumstance occurring
or existing at any time after (but not on or before) the Effective Time and
involving or relating to the assets, properties, businesses or operations of
the Company; provided, however, that this clause (iii) shall not apply to
any Losses to the extent that such Losses result from any Shareholder's acts
or omissions after the Effective Time as an officer, director and/or
employee of the Parent, the Surviving Corporation and/or any other affiliate
of the Parent.
Notwithstanding anything to the contrary herein, (i) the Shareholders shall not
be entitled to indemnification unless the Losses exceed $50,000 in the
aggregate, in which event the Shareholders shall be entitled to indemnification
for all Losses in excess of $10,000 in the aggregate, and (ii) the maximum
liability of the Parent and Merger Sub pursuant to this Section 6.2.2 shall in
no event exceed the amount of the Total Consideration as defined in Exhibit 1.
The foregoing indemnities shall not limit or otherwise adversely affect the
Parent Indemnified Parties' rights of indemnity for Losses under Section 6.2.1.
Agreement and Plan of Merger/Page 17
6.3 Limitations. The aggregate liability of the Shareholders under
Section 6.2.1 shall not exceed the cash amount equal to the Final Merger
Consideration with the Parent Common Stock being valued at the IPO Price for
such purpose. The aggregate liability of the Parent under Section 6.2.2 shall
not exceed the cash amount equal to the Final Merger Consideration with the
Parent Common Stock being valued at the IPO Price for such purpose.
6.4 Procedures for Indemnification.
6.4.1 Notice. The party (the "Indemnified Party") that may be
entitled to indemnity hereunder shall give prompt notice to the party obligated
to give indemnity hereunder (the "Indemnifying Party") of the assertion of any
claim, or the commencement of any suit, action or proceeding in respect of which
indemnity may be sought hereunder. Any failure on the part of any Indemnified
Party to give the notice described in this Section 6.4.1 shall relieve the
Indemnifying Party of its obligations under this Article 6 only to the extent
that such Indemnifying Party has been prejudiced by the lack of timely and
adequate notice (except that the Indemnifying Party shall not be liable for any
expenses incurred by the Indemnified Party during the period in which the
Indemnified Party failed to give such notice). Thereafter, the Indemnified
Party shall deliver to the Indemnifying Party, promptly (and in any event within
10 days thereof) after the Indemnified Party's receipt thereof, copies of all
notices and documents (including court papers) received by the Indemnified Party
relating to such claim, action, suit or proceeding.
6.4.2 Legal Defense. The Parent shall have the obligation to assume
the defense or settlement of any third-party claim, suit, action or proceeding
in respect of which indemnity may be sought hereunder, provided that (i) the
Shareholders shall at all times have the right, at their option, to participate
fully therein, and (ii) if the Parent does not proceed diligently to defend the
third-party claim, suit, action or proceeding within 10 days after receipt of
notice of such third-party claim, suit, action or proceeding, the Shareholders
shall have the right, but not the obligation, to undertake the defense of any
such third-party claim, suit, action or proceeding.
6.4.3 Settlement. The Indemnifying Party shall not be required to
indemnify the Indemnified Party with respect to any amounts paid in settlement
of any third-party suit, action, proceeding or investigation entered into
without the written consent of the Indemnifying Party; provided, however, that
if the Indemnified Party is a Parent Indemnified Party, such third-party suit,
action, proceeding or investigation may be settled without the consent of the
Indemnifying Party on 10 days' prior written notice to the Indemnifying Party if
such third-party suit, action, proceeding or investigation is then unreasonably
interfering with the business or operations of the Company or the Surviving
Corporation and the settlement is commercially reasonable under the
circumstances; and provided further, that if the Indemnifying Party gives 10
days' prior written notice to the Indemnified Party of a settlement offer which
the Indemnifying Party desires to accept and to pay all Losses with respect
thereto ("Settlement Notice") and the Indemnified Party fails or refuses to
consent to such settlement within 10 days after delivery of the Settlement
Notice to the Indemnified Party, and such settlement otherwise complies with the
provisions of this Section 6.4, the Indemnifying Party shall not be liable for
Losses arising from such third-party suit, action, proceeding or investigation
in excess of the amount proposed in such settlement offer. Notwithstanding the
foregoing, no Indemnifying Party will consent to the entry of any judgment or
enter into any settlement without the consent of the Indemnified Party, if such
judgment or settlement imposes any obligation or liability upon the Indemnified
Party other than the execution, delivery or approval thereof and customary
releases of claims with respect to the subject matter thereof.
6.4.4 Cooperation. The parties shall cooperate in defending any
such third-party suit, action, proceeding or investigation, and the defending
party shall have reasonable access to the books and records, and personnel in
the possession or control of the Indemnified Party that are pertinent to the
defense. The Indemnified Party may join the Indemnifying Party in any suit,
action, claim or proceeding brought by a third party, as to
Agreement and Plan of Merger/Page 18
which any right of indemnity created by this Agreement would or might apply,
for the purpose of enforcing any right of the indemnity granted to such
Indemnified Party pursuant to this Agreement.
6.5 Subrogation. Each Indemnifying Party hereby waives for itself and
its affiliates (as defined in Exhibit 2) any rights to subrogation against any
Indemnified Party or its insurers for Losses arising from any third-party claims
for which it is liable or against which it indemnifies any Indemnified Party
and, if necessary, each Indemnifying Party shall obtain waivers of such
subrogation from its, his or her insurers.
7. TERMINATION
7.1 Grounds for Termination. This Agreement may be terminated at
any time prior to the Closing Date:
7.1.1 Mutual Consent. By the written agreement of the Company and
the Parent; or
7.1.2 Optional By the Company. By the Company by written notice to
the Parent, if the Closing shall have failed to occur by 5:00 p.m. Houston,
Texas time on December 31, 1997, but only if neither the Company nor any
Shareholder has breached this Agreement or has failed to perform any of its, his
or her obligations under this Agreement;
7.1.3 Optional By the Parent. By the Parent, by written notice to
the Company, if the Closing shall have failed to occur by 5:00 p.m. Houston,
Texas time on December 31, 1997, but only if neither the Parent nor Merger Sub
has breached this Agreement or has failed to perform any of its obligations
under this Agreement;
7.1.4 Termination Because of Material Adverse Change. By Parent and
Merger Sub, pursuant to provisions of Section 5.3.7, or by Shareholders and the
Company, pursuant to provisions of Section 5.4.4.
7.1.5 Breach By the Parent or Merger Sub. By the Company, by
written notice to the Parent, if either the Parent or Merger Sub has breached
this Agreement or failed to perform any of its obligations under this Agreement;
or
7.1.6 Breach by the Company or the Shareholders. By the Parent, by
written notice to the Company, if either the Company or any Shareholder has
breached this Agreement or has failed to perform any of its, his or her
obligations under this Agreement.
7.2 Effect of Termination. If this Agreement is terminated as permitted
under Section 7.1, such termination shall be without liability of any party to
any other party, except that such termination shall be without prejudice to any
and all remedies the parties may have against each other for breach of this
Agreement except as otherwise provided by this Agreement.
Agreement and Plan of Merger/Page 19
8. MISCELLANEOUS
8.1 Notice. Any notice, delivery or communication required or permitted
to be given under this Agreement shall be in writing, and shall be mailed,
postage prepaid, or delivered, to the addresses given below:
To the Shareholders: With a copy to:
▇▇. ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇ K. ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
c/o Southeast Mechanical Service, Inc. White & Case
▇▇▇▇ ▇. ▇. ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇.,
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇ Suite 4900
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
▇▇. ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇. ▇. ▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
To the Parent:
Group Maintenance America Corp.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attn: President
or other such address as shall be furnished in writing by any such party to the
other party, and such notice shall be effective and be deemed to have been given
as of the date actually received.
To the extent any notice provision in any other agreement, instrument or
document required to be executed or executed by the parties in connection with
the transactions contemplated herein contains a notice provision which is
different from the notice provision contained in this Section 8.1 with respect
to matters arising under such other agreement, instrument or document, the
notice provision in such other agreement, instrument or document shall control.
8.2 Further Documents. The Shareholders shall, at any time and from
time to time after the date hereof, upon request by the Parent and without
further consideration, execute and deliver such instruments or other documents
and take such further action as may be reasonably required in order to perfect
any other undertaking made by the Shareholders hereunder.
8.3 Assignability. No Shareholder shall assign this Agreement in whole
or in part without the prior written consent of the Parent, except by the
operation of law. The Parent may assign its rights under this Agreement, the
Company Related Documents and the Shareholder Related Documents without the
consent of either Shareholder or the Company. After the Effective Time, the
Surviving Corporation may assign its rights under this Agreement, the Company
Related Documents and the Shareholder Related Documents without the consent of
any of the Shareholders.
8.4 Exhibits and Schedules. The Exhibits and Schedules (and any
appendices thereto) referred to in this Agreement are and shall be incorporated
herein and made a part hereof.
Agreement and Plan of Merger/Page 20
8.5 Sections and Articles. Unless the context otherwise requires, all
Sections, Articles and Exhibits referred to herein are, respectively, sections
and articles of, and exhibits to, this Agreement and all Schedules referred to
herein are schedules constituting a part of the Disclosure Schedule.
8.6 Entire Agreement. This Agreement constitutes the full
understanding of the parties, a complete allocation of risks between them and a
complete and exclusive statement of the terms and conditions of their agreement
relating to the subject matter hereof and supersedes any and all prior
agreements, whether written or oral, that may exist between the parties with
respect thereto. Except as otherwise specifically provided in this Agreement,
no conditions, usage of trade, course of dealing or performance, understanding
or agreement purporting to modify, vary, explain or supplement the terms or
conditions of this Agreement shall be binding unless hereafter made in writing
and signed by the party to be bound, and no modification shall be effected by
the acknowledgment or acceptance of documents containing terms or conditions at
variance with or in addition to those set forth in this Agreement. No waiver by
any party with respect to any breach or default or of any right or remedy and no
course of dealing shall be deemed to constitute a continuing waiver of any other
breach or default or of any other right or remedy, unless such waiver be
expressed in writing signed by the party to be bound. Failure of a party to
exercise any right shall not be deemed a waiver of such right or rights in the
future.
8.7 Headings. Headings as to the contents of particular articles and
sections are for convenience only and are in no way to be construed as part of
this Agreement or as a limitation of the scope of the particular articles or
sections to which they refer.
8.8 CONTROLLING LAW. THE VALIDITY, INTERPRETATION AND PERFORMANCE OF
THIS AGREEMENT AND ANY DISPUTE CONNECTED HEREWITH SHALL BE GOVERNED AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS EXCEPT TO THE EXTENT
THE APPLICABLE CORPORATE LAW MANDATORILY APPLIES WITH RESPECT THERETO.
8.9 Public Announcements. After the Effective Time, no Shareholder shall
make any press release, public announcement, or public confirmation or disclose
any other information regarding this Agreement or the contents hereof.
8.10 No Third Party Beneficiaries. Except as set forth in Article 6, no
person or entity not a party to this Agreement shall have rights under this
Agreement as a third party beneficiary or otherwise.
8.11 Amendments and Waivers. This Agreement may be amended by the Parent,
Merger Sub and the Company, by action taken by their Boards of Directors to the
extent permitted by applicable law; provided, however, that no such amendment
shall (i) alter or change any provision of this Agreement, the alteration or
change of which must be adopted by the holders of capital stock of the Company
under the certificate or articles of incorporation of the Company or the
Applicable Corporate Law, or (ii) alter or change this Section 8.11, unless each
such alteration or change is adopted by the holders of shares of capital stock
of the Company as may be required by the certificate or articles of
incorporation of the Company or the Applicable Corporate Law. Prior to the
Effective Time, all amendments to this Agreement must be by an instrument in
writing signed on behalf of the Parent, Merger Sub, the Company and the
Shareholders. After the Effective Time, all amendments to this Agreement must
be by an instrument in writing signed on behalf of the Parent and the
Shareholders. Any term or provision of this Agreement (other than the
requirements for shareholder approvals) may be waived in writing at any time by
the party which is, or whose shareholders are, entitled to the benefits thereof.
8.12 No Employee Rights. Except as provided herein, nothing herein
expressed or implied shall confer upon any employee of the Company, any other
employee or legal representatives or beneficiaries of any thereof any rights or
remedies, including any right to employment or continued employment for any
specified
Agreement and Plan of Merger/Page 21
period, of any nature or kind whatsoever under or by reason of this Agreement,
or shall cause the employment status of any employee to be other than terminable
at will.
8.13 Non-Recourse. No recourse for the payment of any amounts due
contemplated hereby or otherwise in respect thereof, and no recourse under or
upon any obligation, covenant or agreement of the Parent in this Agreement shall
be had against any incorporator, organizer, promoter, shareholder, officer,
director, employee or representative as such (other than the Shareholders as set
forth herein), past, present or future, of the Parent or of any successor
corporation, whether by virtue of any constitution, statute or rule of law, or
by enforcement of any assessment or penalty or otherwise; it being expressly
understood that all such liability is hereby expressly waived and released as a
condition of, and as a consideration for, the execution of this Agreement.
8.14 When Effective. This Agreement shall become effective only upon
the execution and delivery of one or more counterparts of this Agreement by each
of the Parent, Merger Sub, the Company and the Shareholders.
8.15 Takeover Statutes. If any "fair price," "moratorium," "control
share acquisition" or other form of anti-takeover statute or regulation shall
become applicable to the transactions contemplated hereby, Parent and the
Company and their respective members of their Boards of Directors shall grant
such approvals and take such actions as are necessary so that the transactions
contemplated by this Agreement may be consummated as promptly as practicable on
the terms contemplated herein and otherwise act to eliminate or minimize the
effects of such statute or regulation on the transactions contemplated herein.
8.16 Number and Gender of Words. Whenever herein the singular number is
used, the same shall include the plural where appropriate and words of any
gender shall include each other gender where appropriate.
8.17 Invalid Provisions. If any provision of this Agreement is held to
be illegal, invalid, or unenforceable under present or future laws, such
provisions shall be fully severable as if such invalid or unenforceable
provisions had never comprised a part of the Agreement; and the remaining
provisions of the Agreement shall remain in full force and effect and shall not
be affected by the illegal, invalid or unenforceable provision or by its
severance from this Agreement. Furthermore, in lieu of such illegal, invalid or
unenforceable provision, there shall be automatically as a part of this
Agreement, a provision as similar in terms to such illegal, invalid or
unenforceable provision as may be possible and be legal, valid and enforceable.
8.18 Multiple Counterparts. This Agreement may be executed in a number
of identical counterparts. If so executed, each of such counterparts is to be
deemed an original for all purposes and all such counterparts shall,
collectively, constitute one agreement, but, in making proof of this Agreement,
it shall not be necessary to produce or account for more than one such
counterpart.
8.19 No Rule of Construction. All of the parties hereto have been
represented by counsel in the negotiations and preparation of this Agreement;
therefore, this Agreement will be deemed to be drafted by each of the parties
hereto, and no rule of construction will be invoked respecting the authorship of
this Agreement.
8.20 Expenses. Each of the parties shall bear all of their own expenses
in connection with the negotiation and closing of this Agreement and the
transactions contemplated hereby; provided that the Company may pay the costs of
any broker, legal counsel, accountants, or other advisors engaged by the
Shareholders and shall pay fees and expenses associated with the accounting and
auditing fees and expenses of KPMG up to a maximum of $20,000; and provided
further that all fees, costs and expenses accrued by the Company but not yet
paid (including such accounting and auditing fees and expenses of KPMG) in
connection with the negotiation and closing of this Agreement and the
transactions contemplated hereby and the costs of any such broker, legal
Agreement and Plan of Merger/Page 22
counsel, accountants, or other advisors shall be included in current liabilities
for purposes of determining Working Capital. Notwithstanding the foregoing, if
the representations and warranties of the Company and the Shareholders are true
and correct in all material respects as of the date of this Agreement and as of
the Closing Date (without giving effect to exceptions which may be described on
the certificates to be delivered at Closing) and the Company and the
Shareholders have performed or offered to perform all of their agreements and
covenants herein, and the Parent refuses to conclude the transactions
contemplated by this Agreement, the accounting and auditing fees and expenses of
KPMG will be paid by the Parent.
IN WITNESS WHEREOF, this Agreement has been duly executed and delivered on
the date first hereinabove written.
PARENT:
GROUP MAINTENANCE AMERICA CORP.
By:
-----------------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, Executive Vice President
MERGER SUB:
SEMS ACQUISITION CORP.
By:
-----------------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, Vice President
SHAREHOLDERS:
/s/▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇
--------------------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇, as Shareholder
/s/▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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▇▇▇▇▇ ▇. ▇▇▇▇▇▇, as Shareholder
/s/▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, as Shareholder
COMPANY:
SOUTHEAST MECHANICAL SERVICE, INC.
By: /s/▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇
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▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇, President
Agreement and Plan of Merger/Page 23