EXHIBIT 2.1
________________________________________________________________________________
AGREEMENT AND PLAN OF REORGANIZATION
dated as of November 13, 1998
by and among
AMERICAN RESIDENTIAL SERVICES, INC.,
BEACH ACQUISITION, LLC,
T. A. BEACH CORP.
and
the STOCKHOLDERS named herein
________________________________________________________________________________
AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION (this "Agreement") is made as of
November 13, 1998, by and among American Residential Services, Inc., a Delaware
corporation ("ARS"); Beach Acquisition, LLC, a Delaware limited liability
company, and a wholly owned subsidiary of ARS ("ARS Sub"); T. A. Beach Corp., a
Maryland corporation (the "Company"); and the persons listed on the signature
page hereof under the caption "Stockholders" (collectively, the "Stockholders,"
and each of those persons, individually, a "Stockholder").
PRELIMINARY STATEMENT
The parties to this Agreement have determined that it is in their best
long-term interests to effect a business combination by means of a Merger
pursuant to which ARS Sub will merge into the Company on the terms and subject
to the conditions set forth herein (that Merger being the "Acquisition").
NOW, THEREFORE, in consideration of the premises and the mutual agreements,
representations and undertakings contained herein, the parties hereto hereby
agree as follows:
Paragraph 1. Certain Defined Terms. As used in this Agreement, the
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following terms have the meanings assigned to them below in this Paragraph 1.
Capitalized terms used in this Agreement and not defined below in this Paragraph
1 have the meanings assigned to them in the Preliminary Statement, Article IX of
the Standard Provisions or the Special Provisions, as the case may be.
"Acquired Business" means the Company.
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"Acquisition Consideration" has the meaning specified in Paragraph 2.
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"ARS Sub Employment Agreements" means the Employment Agreements in the
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form thereof attached hereto as Exhibit 1-A to be entered into as of the
Effective Date between the Company and ▇▇▇▇▇▇ ▇. Beach, Jr., ▇▇▇▇▇▇▇ ▇.
Beach, Jr., ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ and ▇▇▇▇▇ ▇. ▇▇▇▇▇▇.
"Calculated Value" has the meaning specified in Schedule 2(D).
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"Ceiling Amount" means $3,500,000.00; provided, however, that, for
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purposes of Section 7.06(b), the Ceiling Amount is $1,000,000.00.
"Closing" has the meaning specified in Paragraph 3.
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"Closing Date" means November 13, 1998 or such later date as to which
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ARS and the Company may agree in writing.
"Company" means T. A. Beach Corp., a Maryland corporation.
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"Company Capital Stock" means the Common Stock, without par value, of
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the Company.
"Counsel for the Company and the Stockholders" means ▇▇▇▇▇ ▇.
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▇▇▇▇▇▇▇▇, Esq.
"Current Balance Sheet" means the balance sheet of the Company as of
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July 31, 1998.
"Current Balance Sheet Date" means August 31, 1998.
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"DLLCA" means the Delaware Limited Liability Company Act.
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"Effective Date" means the Closing Date.
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"Facilities" means a portion of the real property and improvements
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located at ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, as more fully
described in the Facilities Lease.
"Facilities Lease" means the lease in the form thereof attached hereto
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as Exhibit 1-B pursuant to which ▇▇▇▇▇▇ ▇. Beach, Jr., one of the
Stockholders, and his wife, ▇▇▇▇ ▇. Beach, will lease the Facilities to the
Company for the period and on the other terms specified therein.
"Initial Financial Statements" means the balance sheets of the Company
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as of August 31, 1996, 1997 and 1998 and the related statements of
operations and retained earnings for each of the Company's fiscal years in
the three-year period ended August 31, 1998, which the Company has
delivered to ARS.
"MGCL" means Maryland General Corporation Law.
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"Pro Rata Share" of a Stockholder means: (a) 75% in the case of
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▇▇▇▇▇▇ ▇. Beach, Jr., (b) 20% in the case of ▇▇▇▇▇▇▇ ▇. Beach, Jr., and (c)
5% in the case of ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇.
"Responsible Officer" means ▇▇▇▇▇▇ ▇. Beach, Jr.
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"Standard Provisions" has the meaning specified in Paragraph 4.
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"Surviving Corporation" means the Company, which is to be designated
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in the Articles of Merger and Certificate of Merger as the surviving
corporation of the Merger.
"Threshold Amount" means 1% of the Ceiling Amount.
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Paragraph 2. (A) Articles of Merger. Subject to the terms and
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conditions hereof, the Company will cause Articles of Merger to be duly executed
and delivered on or promptly after the Closing Date and filed with the State
Department of Assessments and Taxation of the State of Maryland ("SDAT") and the
Certificate of Merger with the Office of the Secretary of State of the State of
Delaware.
(B) The Effective Time. The effective time of the Merger (the
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"Effective Time") will be the time on the Effective Date which the Articles of
Merger specify or, if the Articles of Merger do not specify another time, 5:00
p.m., Houston, Texas time, on the Effective Date.
(C) Certain Effects of the Merger. At and as of the Effective Time,
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(1) ARS Sub will be merged with and into the Company in accordance with the
provisions of the MGCL and the DLLCA, (2) ARS Sub will cease to exist as a
separate legal entity, (3) the articles of incorporation of the Company will be
amended to change the Company's authorized shares of capital stock to 1,000
shares, par value $1.00 per share, of Common Stock, (4) the Company will be the
Surviving Corporation and, as such, will, all with the effect provided by the
MGCL and the DLLCA, (a) possess all the properties and rights, and be subject to
all the restrictions and duties, of the Company and ARS Sub and (b) be governed
by the laws of the State of Maryland, (5) the Charter Documents of the Company
then in effect (after giving effect to the amendment to the Company's articles
of incorporation specified in clause (3) of this sentence) will become and
thereafter remain (until changed in accordance with (a) applicable law (in the
case of the articles of incorporation) or (b) their terms (in the case of the
bylaws)) the Charter Documents of the Surviving Corporation, (6) the initial
board of directors of the Surviving Corporation will be the persons named in
Schedule 2(C), and those persons will hold the office of director of the
Surviving Corporation, subject to the provisions of the applicable laws of the
State of Maryland and the Charter Documents of the Surviving Corporation, and
(7) the initial officers of the Surviving Corporation will be as set forth in
Schedule 2(C), and each of those persons will serve in each office specified for
that person in Schedule 2(C), subject to the provisions of the Charter Documents
of the Surviving Corporation, until that person's successor is duly elected to,
and, if necessary, qualified for, that office.
(D) Effect of the Merger on Capital Stock. As of the Effective Time,
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as a result of the Merger and without any action on the part of any holder
thereof:
(1) the shares of Company Capital Stock issued and outstanding
immediately prior to the Effective Time will (a) be converted into the
right to receive, subject to the provisions of Paragraph 2(E), without
interest, on surrender of the certificates evidencing those shares, the
amount of cash and the aggregate principal amount of Convertible Notes
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as provided in Schedule 2(D) (the "Acquisition Consideration"), (b) cease
to be outstanding and to exist and (c) be canceled and retired;
(2) each share of Company Capital Stock held in the treasury of the
Company or any Company Subsidiary will (a) cease to be outstanding and to
exist and (b) be canceled and retired; and
(3) all of the percentage interests of the ARS Sub outstanding
immediately prior to the Effective Time will be converted into shares of
Common Stock, par value $1.00 per share, of the Surviving Corporation and
the shares of Common Stock of the Surviving Corporation issued on that
conversion will constitute all the issued and outstanding shares of Capital
Stock of the Surviving Corporation.
Each holder of a certificate representing shares of Company Capital Stock
immediately prior to the Effective Time will, as of the Effective Time and
thereafter, cease to have any rights respecting those shares other than the
right to receive, subject to the provisions of Paragraph 2(E), without interest,
the Acquisition Consideration and the additional cash, if any, owing with
respect to those shares as provided in Paragraph 2(F).
(E) Delivery, Exchange and Payment. (1) At or after the Effective
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Time: (a) the Stockholders, as holders of certificates representing shares of
Company Capital Stock, will, on surrender of those certificates to ARS (or any
agent that may be appointed by ARS for purposes of this Paragraph 2(E)),
receive, subject to the provisions of this Paragraph 2(E) and Paragraph 2(F),
the Acquisition Consideration; and (b) until any certificate representing
Company Capital Stock has been surrendered and replaced pursuant to this
Paragraph 2(E), that certificate will, for all purposes, be deemed to evidence
ownership of the number of the aggregate principal amount of Convertible Notes
included in the Acquisition Consideration payable in respect of that certificate
pursuant to Paragraph 2(D). All shares of Convertible Notes issuable in the
Merger will be deemed for all purposes to have been issued by ARS at the
Effective Time.
(2) Each Stockholder will deliver to ARS (or any agent that may be
appointed by ARS for purposes of this Paragraph 2(E)) on or before the Closing
Date the certificates representing all the Company Capital Stock owned by that
Stockholder, duly endorsed in blank, or accompanied by stock powers in blank
duly executed, by that Person, and with all necessary transfer tax and other
revenue stamps, acquired at that Person's expense, affixed and canceled. Each
Stockholder shall cure any deficiencies in the endorsement of the certificates
or other documents of conveyance respecting, or in the stock powers
accompanying, the certificates representing Company Capital Stock delivered by
that Person.
(3) At or before the Effective Time, the Company will distribute to
▇▇▇▇▇▇ ▇. Beach, Jr. that certain 1989 Navy Mercedes Benz ▇▇▇ ▇▇ ▇▇▇▇▇▇▇▇▇▇▇,
▇▇▇# ▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇.
(4) At or before the Effective Time, the Company will distribute to
▇▇▇▇▇▇▇ ▇.
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Beach, Jr., that certain 1998 Black Jeep Grand ▇▇▇▇▇▇▇▇, ▇▇▇# ▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇
and the Company will pay off in full the certain indebtedness associated with
such vehicle, which indebtedness as of October 13, 1998, was approximately
$24,770.26.
(5) At or before the Effective Time, or as soon thereafter as
appropriate statements can be received from the life insurance underwriter,
▇▇▇▇▇▇ ▇. Beach, Jr. may purchase from the Company that certain split-dollar
life insurance policy, Policy No. 92258411, owned by the Company issued by
Transamerica Life Companies insuring the life of ▇▇▇▇▇▇ ▇. Beach with a face
amount of $250,000.00, by paying to the Company the amount required to release
the Company's collateral security interest and terminate the split dollar
agreement, to be based on calculations received from the underwriter.
(6) At or before the Effective Time, the Company will repay that
certain indebtedness owed to ▇▇▇▇▇▇ ▇. Beach, Jr. as evidenced by that
Promissory Note dated May 3, 1994, made by the Company and payable to the order
of ▇▇▇▇▇▇ ▇. Beach, Jr., which amount as of the Closing Date will be
approximately $253,041.67 and ▇▇▇▇▇▇ ▇. Beach, Jr. will repay to the Company the
amount of $3,987.65, representing his indebtedness to the Company.
(7) ARS will provide at Closing a Letter of Credit in the amount of
$1,000,000.00, with an expiration date of October 31, 1998 to secure ▇▇▇▇▇▇ ▇.
Beach, Jr. from any liability that he may incur in connection with that certain
Continuing Agreement of Indemnity-Contractor's Form dated August 8, 1989, by and
between the Company, Reliance Insurance Company, ▇▇▇▇▇▇ ▇. Beach, Jr. and ▇▇▇▇
▇. Beach relating to the issuance of payment and performance bonds by Reliance
Insurance Company on the Company's behalf prior to the Closing Date. ▇▇▇▇▇▇ ▇.
Beach, Jr., has agreed that upon his release from any liability under such
Continuing Agreement of Indemnity he will assist ARS in cancelling such letter
of credit.
Paragraph 3. The Closing. On or before the Closing Date, the parties
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hereto will take all actions necessary to (A) effect the Acquisition (including,
as permitted by the MGCL and the DLLCA, (i) the execution of Articles of Merger
and Certificate of Merger (a) meeting the requirements of the MGCL and the DLLCA
respectively, and (b) providing that the Merger will become effective on the
Effective Date and (ii) the filing of those Articles of Merger with the State
Department of Assessments and Taxation of the State of Maryland and the
Certificate of Merger with the Office of the Secretary of State of the State of
Delaware), (B) verify the existence and ownership of the certificates evidencing
the Company Capital Stock to be exchanged for the Acquisition Consideration
pursuant to Paragraph 2(E) and (C) satisfy the document delivery requirements on
which the obligations of the parties to effect the Acquisition and the other
transactions contemplated hereby are conditioned by the provisions of Article V
(all those actions collectively being the "Closing"). The Closing will take
place at the offices of ▇▇▇▇, ▇▇▇▇ & ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇ ▇▇▇▇▇▇, ▇.▇.,
▇▇▇▇▇▇▇▇▇▇, ▇.▇., at 10:00 a.m., Eastern Standard Time, or at such later time on
the Closing Date as ARS shall specify by written notice to ▇▇▇▇▇▇ ▇. Beach, Jr.
Paragraph 4. Incorporation of Standard Provisions.
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(a) The American Residential Services, Inc. Standard Provisions for
Business Combinations, marked "Form 98-1 (BC)" and attached hereto as Annex
1 (the "Standard Provisions"), hereby are incorporated in this Agreement by
this reference and constitute a part of this Agreement with the same force
and effect as if set forth at length herein.
(b) Article VII of the Standard Provisions hereby is amended by adding
thereto the following section:
Section 7.7 Certain Additional Indemnities (a) The Company and
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▇▇▇▇▇▇ ▇. Beach, Jr, one of the Stockholders, jointly and severally,
agree, without regard to the Threshold Amount limitations set forth in
Article VII, to indemnify ARS and ARS Sub against all Damage Claims,
resulting from, arising out of, or relating to the following:
(a) The alleged repurchase, including any failure to repurchase,
of 255 shares of the Company's stock from Electrical Security
Corporation.
(b) The judgment entered in the Circuit Court of Loudoun County,
Virginia against ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, Personal Representative of
the Estate of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, and T. A. Beach Corp. by
▇▇▇▇ ▇▇▇▇▇ in the amount of $66,245.12 plus interest at the rate
of 9% per annum from the date of judgment. The Stockholders
agree to diligently pursue, following the Closing, the obtaining
of a release of the Company from the judgment.
Paragraph 5. Counterparts. This Agreement may be executed in
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multiple counterparts, each of which will be an original, but all of which
together will constitute one and the same instrument.
Paragraph 6. Notices. For purposes of Section 10.06, notices shall
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be addressed to the Stockholders and the Company, as follows:
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(A) if to a Stockholder, addressed to him or her at:
▇▇. ▇▇▇▇▇▇ ▇. Beach, Jr.
▇▇▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇. ▇▇▇▇▇▇▇ ▇. Beach, Jr.
▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
or
▇▇. ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
; and
(B) if to the Company, addressed to it at:
▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. Beach, Jr., President
with copies (which shall not constitute notice for purposes of this
Agreement) to:
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
AMERICAN RESIDENTIAL SERVICES, INC.
By: /S/ ▇▇▇▇ ▇. Held
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▇▇▇▇ ▇. Held
Senior Vice President
BEACH ACQUISITION, LLC
By: /s/ ▇▇▇▇ ▇. Held
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▇▇▇▇ ▇. Held
President
T. A. BEACH CORP.
By: /s/ ▇▇▇▇▇▇ ▇. Beach, Jr.
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▇▇▇▇▇▇ ▇. Beach, Jr.
President
Stockholders:
/s/ ▇▇▇▇▇▇ ▇. Beach, Jr.
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▇▇▇▇▇▇ ▇. Beach, Jr.
/s/ ▇▇▇▇▇▇▇ ▇. Beach, Jr.
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▇▇▇▇▇▇▇ ▇. Beach, Jr.
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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SCHEDULE 2(C)
to the
Agreement and Plan of Reorganization
to which
American Residential Services, Inc.
and
T. A. Beach Corp.
are parties
A. Words and terms used in this Schedule which are defined in the
captioned Agreement are used herein as therein defined.
B. The directors of the Surviving Corporation immediately after the
Effective Time are as follows: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇., ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇.
and ▇▇▇▇ ▇. Held.
C. The officers of the Surviving Corporation immediately after the
Effective Time are as follows:
Chairman of the Board............ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇.
President........................ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Vice President................... ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, ▇▇
Vice President and Secretary..... ▇▇▇▇ ▇. Held
Controller....................... ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Treasurer........................ A. ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ III
Assistant Secretary.............. ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
End of Schedule
SCHEDULE 2(D)
to the
Agreement and Plan of Reorganization
to which
American Residential Services, Inc.
and
T. A. Beach Corp.
are parties
A. Words and terms used in this Schedule which are defined in the
captioned Agreement are used herein as therein defined.
B. The aggregate Acquisition Consideration will be comprised of (1)
$2,500,00.00 in cash, and (2) $1,000,00.00 aggregate principal amount of
Convertible Notes. The Convertible Notes included in the Acquisition
Consideration will be Convertible Senior Subordinated Notes, Series A of ARS,
which will bear interest at the rate of 7.5% per annum. If those Convertible
Notes are redeemed by ARS at its option pursuant to the Convertible Notes
Indenture during the 12-month period beginning April 15 in the year indicated
(April 20, in the case of 2000), the redemption price (as a percentage of the
principal amount to be redeemed) will be: 2000 -- 104.14%; 2001 -- 103.11%;
2002 -- 102.07%; and 2003 -- 101.04%. The Original Issue Date of those
Convertible Notes will be the date on which the Effective Time occurs, the
Convertibility Commencement Date of those Convertible Notes will be one day
after the first anniversary of that Original Issue Date and the Initial
Conversion Price will be fixed at a rate of $12.00 per share of ARS Common
Stock, which price may be higher or lower than the fair market value of such
stock on the Closing Date or the date of conversion.
C. Each Stockholder will be entitled to receive his [or her] Pro
Rata Share of the Acquisition Consideration pursuant to Paragraph 2(D), subject
to the provisions of Paragraphs 2(E) and 2(F).
D. The Acquisition Consideration is being paid to the parties set
forth and in the amounts indicated in the attached Schedule 2(D)(1).
End of Schedule