EXHIBIT 10.6
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AGREEMENT AND PLAN OF EXCHANGE
by and among
GROUP MAINTENANCE AMERICA CORP.
and
THE HOLDERS OF THE
OUTSTANDING CAPITAL STOCK
OF
HALLMARK AIR CONDITIONING, INC.
June 24, 1997
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Confidential information has been omitted from this document and has been filed
separately with the Securities and Exchange Commission. Each such omission has
been marked by "XXX".
TABLE OF CONTENTS
Page
1. THE CLOSING................................................................................... 1
1.1. The Closing Date................................................................. 1
1.2. Post-Closing Adjustment.......................................................... 2
2. REPRESENTATIONS AND WARRANTIES OF THE STOCKHOLDERS........................................... 3
2.1. Exhibit 2........................................................................ 3
2.2. Stock Ownership.................................................................. 3
2.3. Authority........................................................................ 3
2.4. Consents......................................................................... 3
3. REPRESENTATIONS AND WARRANTIES OF PARENT...................................................... 4
3.1. Representations and Warranties................................................... 4
3.1.1. Organization............................................................ 4
3.1.2. Capitalization of Parent................................................ 4
3.1.3. Authority............................................................... 4
3.1.4. Consents................................................................ 4
3.1.5. Defaults................................................................ 4
3.1.6. Investment Company...................................................... 5
3.1.7. Financial Statements.................................................... 5
3.1.8. Taxes................................................................... 5
3.1.9. Full Authority.......................................................... 5
3.1.10. Access.................................................................. 6
3.1.11. Disclosure.............................................................. 6
3.1.12. Parent Preferred Stock.................................................. 6
3.1.13. Parent Material Adverse Effect.......................................... 6
4. CERTAIN OTHER ACTIONS, COVENANTS AND DOCUMENTS................................................ 6
4.1. Transfer Restrictions............................................................ 6
4.2. Adoption of Shareholders Agreement............................................... 6
4.3. Stockholder Employment Agreements................................................ 6
4.4. Covenant Not to Compete.......................................................... 7
4.5. Certain Elections................................................................ 7
4.5.1. Securities Acquisition Election......................................... 8
4.5.2. Transfer Transaction Election........................................... 8
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4.5.3. Other.................................................................... 9
4.6. Release.......................................................................... 9
4.7. Releases of Stockholders......................................................... 10
4.8. Leases........................................................................... 10
4.9. Certain Employment and Consulting Arrangements................................... 10
4.10. Other Closing Documents.......................................................... 10
5. SURVIVAL, INDEMNIFICATIONS..................................................................... 10
5.1. Survival......................................................................... 10
5.2. Indemnification.................................................................. 11
5.2.1. Parent Indemnified Parties............................................... 11
5.2.2. Parent Indemnity......................................................... 12
5.3. Limitations...................................................................... 12
5.4. Notice........................................................................... 12
6. MISCELLANEOUS.................................................................................. 14
6.1. Notice........................................................................... 14
6.2. Further Documents................................................................ 14
6.3. Assignability.................................................................... 14
6.4. Exhibits and Schedules........................................................... 15
6.5. Sections and Articles............................................................ 15
6.6. Entire Agreement................................................................. 15
6.7. Headings......................................................................... 15
6.8. CONTROLLING LAW AND JURISDICTION................................................. 15
6.9. Public Announcements............................................................. 15
6.10. No Third Party Beneficiaries..................................................... 16
6.11. Amendments and Waivers........................................................... 16
6.12. No Employee Rights............................................................... 16
6.13. Non-Recourse..................................................................... 16
6.14. When Effective................................................................... 17
6.15. Takeover Statutes................................................................ 17
6.16. Number and Gender of Words....................................................... 17
6.17. Invalid Provisions............................................................... 17
6.18. Multiple Counterparts............................................................ 17
6.19. No Rule of Construction.......................................................... 17
6.20. Expenses......................................................................... 17
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AGREEMENT AND PLAN OF EXCHANGE
THIS AGREEMENT AND PLAN OF EXCHANGE (this Agreement") is made this 24th day
of June, 1997, among GROUP MAINTENANCE AMERICA CORP., a Texas corporation
("Parent") and the holders (the "Stockholders") of all of the outstanding
capital stock of Hallmark Air Conditioning, Inc., a Texas corporation
("Hallmark"). ▇▇▇▇▇ ▇▇▇▇▇▇ Air Conditioning, Inc., a Texas corporation ("JAAC"),
is a wholly-owned subsidiary of Hallmark. Hallmark is sometimes referred to
herein as the "Company." Hallmark and JAAC are sometimes referred to herein
collectively as the "Companies."
WHEREAS, Parent and the Stockholders desire to provide for the transfer by
the Stockholders to Parent of the outstanding shares of capital stock of the
Company in exchange for cash, preferred stock and common stock of Parent;
WHEREAS, for federal income tax purposes, it is intended that such transfer
and exchange shall qualify as an exchange under the provisions of Section 351 of
the Internal Revenue Code of 1986, as amended and the rules and regulations
promulgated thereunder;
WHEREAS, Parent has adopted and Parent and the Stockholders have executed
and delivered a Section 351 Plan;
NOW, THEREFORE, in consideration of the premises and the representations,
warranties and agreements herein contained, and intending to be legally bound
hereby, the parties agree as follows:
1. THE CLOSING
1.1. The Closing Date. For purposes of this Agreement, the term "Closing
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Date" shall mean the date hereof. On the Closing Date, as soon as practicable
after the execution of this Agreement, a Closing (the "Closing") shall occur.
At the Closing, the Stockholders shall deliver to Parent the Stockholders' stock
certificates evidencing all of the Stockholders' shares of common stock, $100
par value, of the Hallmark ("Hallmark Common Stock") and completed letters of
transmittal, and Parent shall deliver to the Stockholders $2,015,572 in cash
(the "Closing Cash Consideration"), certificates evidencing 580,000 shares of
preferred stock, $.001 par value, of Parent ("Parent Preferred Stock") and
certificates evidencing 264,218 shares (the "Closing Number of Parent Common
Shares") of common stock, $.001 par value, of Parent ("Parent Common Stock").
The portion of such Closing Cash Consideration, shares of Parent Preferred Stock
and shares of Parent Common Stock to be delivered to each Stockholder is set
forth on Exhibit 1.1 attached hereto.
The Closing Cash Consideration is subject to post-closing adjustment as provided
below. One hundred thousand dollars ($100,000) of the Final Cash Consideration
(as defined below) shall be allocated as consideration for the covenant not to
compete set forth in Section 4.4 and shall be allocated to the Stockholders in
the percentages shown on Exhibit 1.1.
1.2. Post-Closing Adjustment.
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(i) As promptly as practicable, and in any event no later than ninety
(90) days after the date hereof, Parent shall cause to be prepared and delivered
to the Stockholders a statement (the "Statement") showing (a) a calculation,
based on the books and records of the Companies as of the Closing Date, of the
Long-Term Debt (as defined below), the Current Assets (as defined below) and the
Current Liabilities (as defined below) and (b) the Final Cash Consideration
(determined as set forth below).
(ii) The Closing Cash Consideration has been determined by agreement of
Parent and the Stockholders as being an acceptable estimate of 90% of the Final
Cash Consideration payable to the Stockholders hereunder. To arrive at the
Final Cash Consideration, there shall be deducted from $XXX (a) the amount, if
any, by which Long-Term Debt as shown on the Statement exceeds $XXX and (b) the
amount, if any, by which the positive difference of the sum of (1) Current
Assets minus (2) XXX times Current Liabilities is less than $XXX. The resulting
amount shall be the Final Cash Consideration.
(iii) If the Final Cash Consideration as shown on the Statement exceeds
the Closing Cash Consideration, Parent will pay to the Stockholders (in the
percentages shown on Exhibit 1.1) the amount of the excess in cash within 10
days after the date of delivery of the Statement to the Stockholders. If the
Closing Cash Consideration exceeds the Final Cash Consideration, as shown on the
Statement, the Stockholders will pay to Parent the amount of the excess in cash
within 10 days after the date of delivery of the Statement to the Stockholders.
(iv) For purposes of the Agreement (a) the term "Long-Term Debt" shall
mean all long-term liabilities of the Companies as of the Closing Date,
including deferred taxes and capitalized lease obligations, all as determined in
accordance with U.S. generally accepted accounting principles consistently
applied ("GAAP"); (b) the term "Current Assets" shall mean the consolidated
current assets of the Companies as of the Closing Date, as determined in
accordance with GAAP; and (c) the term "Current Liabilities" shall mean the
consolidated current liabilities of the Companies as of the Closing Date, as
determined in accordance with GAAP; provided, however, that all expenses of the
Companies or the Stockholders (other than the audit fee paid by the Companies to
KPMG Peat Marwick) incurred in connection with the transactions contemplated
hereby which are payable by the Companies shall be accrued as of such date and
included in Current Liabilities. Accounts
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Confidential information has been omitted from this page and has been filed
separately with the Securities and Exchange Commission. Each such omission has
been marked by "XXX".
receivable on the books of the Companies at the Closing Date that remain
uncollected on the date of the Statement and which are over 60 days old shall,
if so identified by Parent, not be included in Current Assets and such accounts
receivable so identified shall be assigned to the Stockholders without recourse,
net of any reserve for bad debt attributable to such accounts receivable;
provided, however, that any such accounts receivable attributable to Metro-Media
shall not be so assigned.
2. REPRESENTATIONS AND WARRANTIES
OF THE STOCKHOLDERS
The Stockholders, jointly and severally, hereby represent and warrant to
Parent as follows:
2.1. Exhibit 2. The statements in Exhibit 2 attached hereto are true and
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correct.
2.2. Stock Ownership. Each Stockholder owns, beneficially and of record,
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with full power to vote, the number of shares of Hallmark Common Stock set forth
beside such Stockholder's name on Exhibit 1.1 and such shares are so held by
such Stockholder free and clear of all liens, encumbrances and claims
whatsoever.
2.3. Authority. Each Stockholder has full right, power, legal capacity and
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authority to (i) execute, deliver and perform this Agreement, and all other
documents and instruments referred to herein or contemplated hereby to be
executed, delivered and performed by the Stockholder (each a "Stockholder
Related Document") and (ii) consummate the transactions contemplated herein and
thereby. This Agreement has been duly executed and delivered by each
Stockholder and constitutes, and each Stockholder Related Document, when duly
executed and delivered by each Stockholder who is a party thereto will
constitute, legal, valid and binding obligations of such Stockholder enforceable
against such Stockholder in accordance with their respective terms and
conditions, except as such enforcement may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting the enforcement of
creditors' rights generally and by general principles of equity (whether applied
in a proceeding at law or in equity).
2.4. Consents. No approval, consent, order or action of or filing with any
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court, administrative agency, governmental authority or other third party is
required for the execution, delivery or performance by the Stockholders of this
Agreement or any Stockholder Related Document. The execution, delivery and
performance by each Stockholder of this Agreement and the Stockholder Related
Documents to which such Stockholder is a party do not violate any mortgage,
indenture, contract, agreement, lease or commitment or other instrument of any
kind to which such Stockholder is a party or by which such Stockholder or such
Stockholder's assets or properties may be bound or affected or any law, rule or
regulation applicable to such Stockholder
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or any court injunction, order or decree or any valid and enforceable order of
any governmental agency in effect as of the date hereof having jurisdiction over
such Stockholder.
3. REPRESENTATIONS AND WARRANTIES OF PARENT
3.1. Representations and Warranties. Parent hereby represents and warrants
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to the Stockholders as follows:
3.1.1. Organization. Parent is a corporation duly organized, validly
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existing and in good standing under the laws of the State of Texas. 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 Parent. The total authorized capital stock
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of Parent is 100,000,000 shares of Parent Common Stock, of which 16,359,446
shares are issued and outstanding and none of which are held in the treasury of
Parent, 50,000,000 shares of Parent preferred stock, $.001 par value, of which
45,137 shares of Series A Parent Preferred Stock are issued and outstanding. 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. Parent has full right, power, legal capacity and
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authority to execute, deliver and perform this Agreement and all documents and
instruments referred to herein or contemplated hereby and to consummate the
transactions contemplated herein and thereby (the "Parent Related Documents").
This Agreement has been duly executed and delivered by Parent and constitutes,
and all Parent Related Documents, when executed and delivered by Parent will
constitute, legal, valid and binding obligations of 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
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with any court, administrative agency, governmental authority or other third
party is required for the execution, delivery or performance by Parent of this
Agreement or the Parent Related Documents or the consummation by Parent of the
transactions contemplated hereby.
3.1.5. Defaults. Parent is not in default under or in violation of,
and the execution, delivery and performance of this Agreement and Parent Related
Documents and the consummation by Parent of the transactions contemplated hereby
and thereby will not result in a default under or
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in violation of (i) any mortgage, indenture, charter or bylaw provision,
contract, agreement, lease, commitment or other instrument of any kind to which
Parent is a party or by which Parent or any of its properties or assets may be
bound or affected or (ii) any law, rule or regulation applicable to Parent or
any court injunction, order or decree, or any valid and enforceable order of any
govern mental agency in effect as of the date hereof having jurisdiction over
Parent, which default or violation could adversely affect the ability of Parent
to consummate the transactions contemplated hereby or will have a Parent
Material Adverse Effect.
3.1.6. Investment Company. Parent is not an "investment company" or a
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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. Parent has provided certain financial
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statements to the Stockholders ("Parent Financial Statements") and such Parent
Financial Statements have been prepared in accordance with GAAP, are true and
correct in all material respects, and are fair presentations of the consolidated
financial position, results of operations and cash flows of Parent and its then
existing consolidated subsidiaries as of the dates and for the periods
indicated. The books and records of Parent have been kept in reasonable detail
and accurately and fairly reflect the transactions of Parent.
3.1.8. Taxes. Parent has either accrued, discharged or caused to be
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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 Parent for the period ended December 31, 1996.
3.1.9. Full Authority. Parent has full power, authority and legal
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right and has 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,
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 which would give
rise to a violation thereof or a liability or default
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thereunder, except where a violation, liability or default will not have a
Parent Material Adverse Effect.
3.1.10. Access. Parent has cooperated fully in permitting the
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Stockholders and their representatives to make a full investigation of the
properties, operations and financial condition of Parent; and afforded the
Stockholders 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 Parent in this
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Agreement no statement contained any certificate delivered by Parent to the
Stockholders 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 Preferred Stock. No preferred stock issued by Parent
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prior to the IPO (as defined below) shall be senior to the Parent Preferred
Stock.
3.1.13. Parent Material Adverse Effect. The term "1 Parent Material
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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 Parent and its consolidated
subsidiaries, taken as a whole in an amount of $50,000 or more.
4. CERTAIN OTHER ACTIONS, COVENANTS AND DOCUMENTS
Parent and the Stockholders agree as follows:
4.1. Transfer Restrictions. Contemporaneously herewith, the Stockholders
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and Parent are executing and delivering a Stock Transfer Restriction Agreement
and a Registration Rights Agreement.
4.2. Adoption of Shareholders Agreement. Contemporaneously herewith, the
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Stockholders are executing and delivering to Parent an adoption agreement
pursuant to which the Stockholders agree to be bound by the Shareholders
Agreement among Parent and its existing shareholders, as amended, a copy of
which has been delivered to the Stockholders.
4.3. Stockholder Employment Agreements. Contemporaneously herewith, the
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Company and the Stockholders are executing and delivering employment agreements.
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4.4. Covenant Not to Compete.
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(i) For the considerations specified in this Agreement and in
recognition that the covenants by the Stockholders in this Section are a
material inducement to Parent to enter into and perform this Agreement, each
Stockholder agrees that, for the period from the date hereof to the last to
occur of the date which is (a) five (5) years after the date hereof or (b) the
date which is one (1) year following termination of such Stockholder's
employment with the Company, such Stockholder 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,
stockholder (other than as a stockholder of less than one percent (1%) of the
issued and outstanding stock of a publicly-held company whose gross assets
exceed one hundred million dollars), investor, officer, director, trustee,
manager, employee, agent, associate or consultant engage in any business which
involves indoor air quality, heating, ventilation and air conditioning, plumbing
or electrical contracting within a 100 mile radius of either Houston, Texas or
San Antonio, Texas; provided, however, that if a Stockholder has entered into an
Employment Agreement with Parent and such Stockholder is terminated without
Cause under such agreement (as such term is defined in such agreement), the non-
compete period described above applicable to such Stockholder shall be for the
period from the date hereof to the last to occur of the date which is (a) three
(3) years after the date hereof or (b) the date which is one (1) year following
termination of such Stockholder's employment with the Company.
(ii) Each Stockholder agrees that the limitations set forth herein
on such Stockholder's rights to compete with Parent and its affiliates as set
forth in clause (i) are reasonable and necessary for the protection of Parent
and its affiliates. In this regard, each Stockholder specifically agrees that
the limitations as to period of time and geographic area, as well as all other
restrictions on such Stockholder's activities specified herein, are reasonable
and necessary for the protection of Parent and its affiliates. Each Stockholder
agrees that, in the event that the provisions of this Section should ever be
deemed to exceed the scope of business, time or geographic limitations permitted
by applicable law, such provisions shall be and are hereby reformed to the
maximum scope of business, time or geographic limitations permitted by
applicable law.
(iii) Each Stockholder agrees that the remedy at law for any
breach by such Stockholder of this Section 4.4 will be inadequate and that
Parent shall be entitled to injunctive relief.
4.5. Certain Elections. In the event that Parent has not effected an
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underwritten public offering of Parent Common Stock (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 Parent,
or any of
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its subsidiaries (ii) relating to any employee benefit plan or interest therein,
(iii) relating principally to any preferred stock or debt securities of Parent,
or (iv) filed pursuant to Rule 145 under the Securities Act of 1933, as amended,
or any successor or similar provision) resulting in net cash proceeds to Parent
of at least $20,000,000 (the "IPO") on or before December 31, 1998:
4.5.1. Securities Acquisition Election. The Stockholders acting as a
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group may elect, by written notice to Parent delivered on or before January 31,
1999 (the "Election Notice") to call upon Parent to acquire, for the cash
amount of $2,244,576 plus simple interest thereon at the rate of 8% per annum
from the date hereof to the date of the closing of such acquisition (the
"Securities Acquisition Consideration") all of the shares of Parent Common Stock
and Parent Preferred Stock issued by Parent to the Stockholders pursuant to this
Agreement (the "Securities Acquisition Transaction"). In the event that Parent
determines not to agree to acquire such shares in the Securities Acquisition
Transaction, Parent shall, within 90 days of receipt of the Election Notice,
give written notice to the Stockholders ("Parent Rejection Notice") that it has
so determined not to agree to acquire such shares. In the event Parent
determines to agree to acquire such shares in the Securities Acquisition
Transaction, Parent shall, within 90 days of receipt of the Election Notice,
give written notice to the Stockholders ("Parent Acceptance Notice") that it
agrees to acquire such shares. The Parent Acceptance Notice shall also specify
the date, time and place of the closing of the Securities Acquisition
Transaction; provided that such closing shall be held not more than 60 days
after delivery of the Parent Acceptance Notice. At such closing, the
Stockholders shall deliver or cause to be delivered to Parent or its designee
stock certificates evidencing the Parent Common Stock and Parent Preferred Stock
duly endorsed and in proper form for transfer on the stock records of the
Companies with customary written warranties of good title, authority to transfer
and absence of liens or other exceptions to title hereto, and Parent or its
designee shall deliver or cause to be delivered to the Stockholders the
Securities Acquisition Consideration and a letter containing customary
representations and warranties evidencing compliance with applicable securities
laws. If the Parent Acceptance Notice is not delivered to the Stockholders
within 90 days of Parent's receipt of the Election Notice, Parent will
conclusively be deemed to have delivered a Parent Rejection Notice to the
Stockholders on the 90th day after Parent's receipt of the Election Notice. Upon
delivery or deemed delivery of the Parent Rejection Notice, the Stockholders
shall have no right to request Parent to acquire any Parent Common Stock or
Parent Preferred Stock pursuant to this Section 4.5.1.
4.5.2. Transfer Transaction Election. Within 20 days after the
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delivery or deemed delivery of the Parent Rejection Notice, the Stockholders
(acting as a group) may, by written notice to Parent delivered within such 20
day period, (the "Second Election Notice") require Parent to transfer the
stock or assets of the Companies to the designees named in the Second Election
Notice in a transaction (the "Transfer Transaction") structured to (i) relieve
Parent and its affiliates of any liability on the then remaining indebtedness
attributable to the financing of the transaction
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contemplated hereby; provided, however, that professional fees or related costs
for underwriting, legal, accounting, tax, financial, insurance or consulting
services shall not be included in calculating any liability contemplated by this
clause (i), (ii) take into account any capital Parent invested in/or withdrew
from the Companies (other than for debt service on the foregoing) from the date
hereof to the closing of the Transfer Transaction, and (iii) relieve Parent from
or otherwise satisfy any income tax consequences to Parent from the Transfer
Transaction. The terms of the Transfer Transaction will be such that Parent will
receive no economic benefit or detriment therefrom. The Second Election Notice
will contain the addresses of the designee named therein and all of the proposed
terms (including the consideration payable to Parent or the Companies) of the
Transfer Transaction. The proposed terms of the Transfer Transaction contained
in the Second Election Notice shall be final, conclusive and binding for
purposes of this Agreement unless Parent shall deliver to the Stockholders a
written notice of disagreement ("Notice of Objection") with any such proposed
terms within 20 business days following receipt of the Second Election Notice,
specifying in reasonable detail the nature and extent of such disagreement. If
within 10 business days following receipt by the Stockholders of a Notice of
Objection, Parent and the Stockholders are unable to resolve any disagreement
with respect to the proposed terms of the Transfer Transaction as set forth in
the Second Election Notice, the disagreement shall be submitted for resolution
to Ernst & Young (the "Accountants"), who shall resolve the issues in dispute,
and giving effect to such resolution, determine the final terms of the Transfer
Transaction. The Accountants shall act as an arbitrator to determine and resolve
only those issues in dispute. The Accountants' resolution shall (a) be made
within 30 days of the submission of the dispute to them, (b) be in accordance
with this Agreement, (c) be set forth in a written statement delivered to Parent
and the Stockholders, (d) set forth the final terms of the Transfer Transaction,
and (e) be final, conclusive and binding for purposes of this Agreement.
4.5.3. Other. Parent will cooperate fully with the Stockholders in
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obtaining any consent required from Parent's lenders to effect a Securities
Acquisition Transaction or a Transfer Transaction as contemplated hereby. On
the closing of a Transfer Transaction, all noncompetition agreements between
Parent and any employee of either Company who does not continue employment with
Parent or its affiliates will be terminated. At the closing of a Securities
Acquisition Transaction or a Transfer Transaction, the parties will enter into
mutual releases under which the parties release all claims against each other
which have arisen or could arise based on events, acts or omissions occurring or
existing prior to such closing.
4.6. Release. The Stockholders do hereby (i) release, acquit and forever
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discharge the Companies 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
Closing Date, including, without limitation, any claim for indemnity or
contribution from either Company in connection with the obligations or
liabilities of the Stockholders hereunder,
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except for salary and benefits payable to a Stockholder as an employee in the
ordinary course of business; (ii) waive all breaches, defaults or violations of
any agreement applicable to the Hallmark Common Stock and the JAAC Common Stock
and agree that any and all such agreements are terminated as of the Closing
Date; and (iii) waive any and all pre-emptive or other rights to acquire any
shares of capital stock of either Company and release any and all claims arising
in connection with any prior default, violation or failure to comply with or
satisfy any such pre-emptive or other rights.
4.7. Releases of Stockholders. Within 30 days after the date hereof,
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Parent shall cause the Stockholders to be released from any liability under
their personal guaranties of the indebtedness of the Companies described in
Section 4.7 of the Disclosure Schedule (as defined in Exhibit 2).
4.8. Leases. Contemporaneously herewith, (i) Hallmark, as lessee and the
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St. ▇▇▇ Family Trust as owner of the property located at ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇,
▇▇▇▇▇▇▇, ▇▇▇▇▇ are entering into a lease of such property and (ii) Hallmark, as
lessee, and ▇▇▇▇▇ ▇▇▇▇▇▇, as owner of the property located at ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇,
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ are entering into a lease of such property.
4.9. Certain Employment and Consulting Arrangements. Contemporaneously
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herewith, Hallmark and each of ▇▇▇▇ ▇▇▇▇▇▇ and ▇▇▇▇▇▇ ▇. St. ▇▇▇ are entering
into agreements relating to consulting services and certain benefits, and
Hallmark and ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ and Hallmark and ▇▇▇▇ ▇▇▇▇▇ are entering into
employment agreements.
4.10.Other Closing Documents. Contemporaneously herewith:
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(i) The Stockholders are delivering to Parent an opinion of legal
counsel satisfactory to Parent; and
(ii) Parent is delivering to the Stockholders (a) an opinion of legal
counsel satisfactory to the Stockholders, and (b) certified resolutions of the
Board of Directors of Parent in form satisfactory to the Stockholders.
5. SURVIVAL, INDEMNIFICATIONS
5.1. Survival. The representations and warranties set forth in this
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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 Stockholders herein and of the
Stockholders and the Company in the Stockholder Related Documents and the
Company Related Documents (as defined in Exhibit 2) other than those of the
Stockholders in Sections 2.2, 2.3, 2.4,
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and in Sections 2 and 3 of Exhibit 2 shall survive for a period of thirty-six
(36) months after the date hereof and the representations and warranties of the
Stockholders contained in Sections 2.2, 2.3, 2.4, and in Sections 2 and 3 of
Exhibit 2 shall survive for the maximum period permitted by applicable law. The
representations and warranties of 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 thirty-six (36) months after the date hereof and the representations
and warranties of Parent contained in Sections 3.1.3 and 3.1.4 shall survive for
the maximum period permitted by applicable law. The periods of survival of the
representations and warranties as stated above in this Section 5.1 are referred
to herein as the "Survival Period". The liabilities of the parties under their
respective representations and warranties shall expire as of the expiration of
the applicable Survival Period and no claim for indemnification may be made with
respect to any breach of any representation or warranty, the applicable Survival
Period of which shall have expired, except to the extent that written notice of
such breach shall have been given to the party against which such claim is
asserted on or before the date of such expiration. The covenants and agreements
of the parties herein and in other documents and instruments executed and
delivered in connection with the closing of the transactions contemplated hereby
shall survive for the maximum period permitted by law.
5.2. Indemnification.
---------------
5.2.1. Parent Indemnified Parties. Subject to the provisions of
--------------------------
Sections 5.1 and 5.3 hereof, the Stockholders, severally and not jointly, shall
indemnify, save and hold harmless Parent, the Companies 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, claims, deficiencies, penalties, interest, expenses, fines,
assessments, charges and costs, including reasonable attorneys' fees and court
costs (collectively "Losses") arising from, out of or in any manner connected
with or based on:
(i) the breach of any covenant of such Stockholder or the
failure by such Stockholder to perform any obligation of such
Stockholder contained herein or in any Stockholder Related
Document;
(ii) any inaccuracy in or breach of any representation or
warranty of such Stockholder contained herein or in any
Stockholder Related Document;
(iii) indemnification payments (pursuant to a written
agreement, articles of incorporation or bylaws predating this
Agreement) made by Hallmark or JAAC to their present or former
officers, directors, employees, agents, consultants, advisors
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or representatives in respect of actions taken or omitted to be
taken prior to the Closing; and
(iv) any act, omission, occurrence, event, condition or
circumstance occurring or existing at any time on or before the
Closing and involving or related to the assets, properties,
business or operations now or previously owned or operated by
either Company and (a) not disclosed in the Disclosure Schedule
or (b) not disclosed in the Company Financial Statements (as
defined in Exhibit 2).
5.2.2. Parent Indemnity. Subject to the provisions of Sections 5.1
----------------
and 5.3, Parent shall indemnify, save and hold harmless the Stockholders and the
Stockholders' heirs, legal representatives, successors and assigns from and
against any damages, liabilities, losses, claims, deficiencies, penalties,
interest, expenses, fines, assessments, charges and costs including reasonable
attorneys' fees and court costs (collectively, "Losses") arising from, out of or
in any manner connected with or based on:
(i) any breach of any covenant of Parent or the failure by Parent
to perform any obligation of Parent contained herein or in the Parent
Related Documents;
(ii) any inaccuracy in or breach of any representation or warranty
of Parent 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 date hereof and
involving or relating to the assets, properties, businesses or operations
of the Companies; provided, however, that clause (iii) shall not apply to
any Losses to the extent that such Losses result from the Stockholder's
acts or omissions after the date hereof as an officer, director and/or
employee of Parent or either Company and/or any other affiliate of Parent.
The foregoing indemnities shall not limit or otherwise adversely affect the
Parent Indemnified Parties' rights of indemnity for Losses under Section 5.2.1.
5.3. Limitations. The aggregate liability of the Stockholders under
------------
Sections 5.2.1 shall not exceed $4,484,100. The aggregate liability of Parent
under Section 5.2.2 shall not exceed $4,484,100. The liability of each of the
Stockholders shall be limited to their proportionate share of $4,484,100, based
on percentage ownership set forth on Exhibit 1.1.
5.4. Notice. The party (the "Indemnified Party") which may be entitled
------
to indemnity hereunder shall give prompt notice to the party obligated to give
indemnity hereunder (the
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"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 5.4 shall relieve the Indemnifying Party of its
obligations under this Article 5 only to the extent that such Indemnifying Party
has been prejudiced by the lack of timely and adequate notice. 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 Stockholders 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 ten (10) days after receipt of notice of such third-party claim, suit,
action or proceeding, the Stockholders shall have the right, but not the
obligation, to undertake the defense of any such third-party claim, suit, action
or proceeding. 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
ten (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 either Company and the settlement is
commercially reasonable under the circumstances; and provided further, that if
the Indemnifying Party gives ten (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 ten
(10) days after delivery of the Settlement Notice to the Indemnified Party, and
such settlement otherwise complies with the provisions of this Section 5.4, 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. 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 which are pertinent to the
defense. The parties agree that the Indemnified Party may join the Indemnifying
Party in any suit, action, claim or proceeding brought by a third party, as to
which any right of indemnity created by this Agreement would or might apply, for
the purpose of enforcing any right of the indemnity granted to such Indemnified
Party pursuant to this Agreement.
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6. MISCELLANEOUS
6.1. Notice. Any notice, delivery or communication required or permitted
------
to be given under this Agreement shall be in writing, and shall be mailed,
postage prepaid, or delivered, to the addresses given below, or sent by telecopy
to the telecopy numbers set forth below, as follows:
To the Stockholders:
Mr. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
c/o Hallmark Air Conditioning, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
To Parent:
Group Maintenance America Corp.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attn: President
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
or other such address as shall be furnished in writing by any such party to the
other parties, and such notice shall be effective and be deemed to have been
given as of the date actually received.
To the extent any notice provision in any other agreement, instrument or
document required to be executed or executed by the parties in connection with
the transactions contemplated herein contains a notice provision which is
different from the notice provision contained in this Section 6.1 with respect
to matters arising under such other agreement, instrument or document, the
notice provision in such other agreement, instrument or document shall control.
6.2. Further Documents. The Stockholders shall, at any time and from time
-----------------
to time after the date hereof, upon request by 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 Stockholders hereunder.
6.3. Assignability. No Stockholder shall assign this Agreement in whole or
-------------
in part without the prior written consent of Parent, except by the operation of
law. Parent may assign its
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rights under this Agreement, the Company Related Documents and the Stockholder
Related Documents without the consent of either Stockholder.
6.4. 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.
6.5. Sections and Articles. Unless the context otherwise requires, all
---------------------
Sections and Articles referred to herein are, respectively, sections and
articles of this Agreement and all Exhibits and Schedules referred to herein
are, respectively, exhibits, and schedules constituting a part of the Disclosure
Schedule.
6.6. 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.
6.7. 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.
6.8. CONTROLLING LAW AND JURISDICTION. 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.
6.9. Public Announcements. No press release, public announcement,
--------------------
confirmation or other information regarding this Agreement or the contents
hereof shall be made by any party or either Company without the prior
consultation of the Stockholders and Parent, except as may be necessary in the
opinion of counsel of any party to meet the requirements or regulations of any
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applicable law, governmental unit or agency or stock exchange on which the
securities of such party may be listed. Notwithstanding the foregoing, either
Company may make appropriate disclosures of the general nature of the
transaction contemplated hereby to its employees, vendors and customers to
protect such Company's good will and to facilitate the consummation of the
transactions contemplated hereby, and Parent may disclose pertinent information
regarding the transaction contemplated hereby to its existing and prospective
investors, lenders or investment bankers or financial advisors for the purposes
of obtaining financing (including a contemplated IPO). Parent may also make
appropriate disclosures of the general nature of the transaction contemplated
hereby and the identity, nature and scope of the operations of the Companies to
prospective acquisition candidates in its efforts to attract additional
acquisitions for Parent. Parent and the Stockholders shall jointly approve the
contents of any press releases, written employee presentations or other
materials of potentially wide distribution that disclose or refer to the
transaction contemplated hereby, except for such press releases or other
communications required by law.
6.10. No Third Party Beneficiaries. Except as set forth in Article 5, no
----------------------------
person or entity not a party to this Agreement shall have rights under this
Agreement as a third party beneficiary or otherwise.
6.11. Amendments and Waivers. This Agreement may be amended by Parent and
----------------------
the Stockholders; provided that all amendments to this Agreement must be by an
instrument in writing signed on behalf of Parent and by the Stockholders. Any
term or provision of this Agreement may be waived in writing at any time by the
party which is entitled to the benefits thereof.
6.12. No Employee Rights. Nothing herein expressed or implied shall confer
------------------
upon any employee of either Company, any other employee or legal representatives
or beneficiaries of any thereof any rights or remedies, including any right to
employment or continued employment for any specified period, of any nature or
kind whatsoever under or by reason of this Agreement, or shall cause the
employment status of any employee to be other than terminable at will.
6.1. Non-Recourse. No recourse for the payment of any amounts due
------------
hereunder or for any claim based on this Agreement or the transactions
contemplated hereby or otherwise in respect thereof, and no recourse under or
upon any obligation, covenant or agreement of Parent in this Agreement shall be
had against any incorporator, organizer, promoter, stockholder, officer,
director, employee or representative as such (other than the Stockholders as set
forth herein), past, present or future, of 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 (except in the case of
fraud on the part of any such person); 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; provided, however, that
this Section 6.13 shall not otherwise release Parent from any
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obligation under this Agreement or waive any rights that the Stockholders may
have with respect to Parent or its successors and assigns.
6.14. When Effective. This Agreement shall become effective only upon the
--------------
execution and delivery of one or more counterparts of this Agreement by Parent
and the Stockholders.
6.15. 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 Companies 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.
6.16. 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.
6.17. 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.
6.18. 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.
6.19. 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.
6.20. 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
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that the Companies may pay the costs of any financial advisor, broker or finder
engaged by the Stockholders and the accounting and auditing fees and expenses of
KPMG Peat Marwick (not to exceed $20,000); and provided further that all fees,
costs and expenses incurred or payable by either Company (other than such
accounting and auditing fees and expenses) in connection with the negotiation
and closing of this Agreement and the transactions contemplated hereby and the
costs of any such financial advisor, broker or finder shall be included in
Current Liabilities.
IN WITNESS WHEREOF, this Agreement has been duly executed and
delivered on the date first hereinabove written.
GROUP MAINTENANCE AMERICA CORP.
By:_________________________________________
Name:_______________________________________
Title:______________________________________
________________________________________
▇▇▇▇▇▇▇ ▇▇▇▇▇▇
________________________________________
▇▇▇▇▇▇ ▇▇▇▇▇
________________________________________
▇▇▇▇ ▇▇▇▇▇▇
St. ▇▇▇ Family Trust
By:_________________________________________
Name:_______________________________________
Title:______________________________________
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