EXHIBIT 10.25
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
GROUP MAINTENANCE AMERICA CORP.
VAN'S ACQUISITION CORP.
VAN'S COMFORTEMP AIR CONDITIONING, INC.
AND
THE HOLDERS OF THE
OUTSTANDING CAPITAL STOCK
OF
VAN'S COMFORTEMP AIR CONDITIONING, INC.
August 18, 1997
TABLE OF CONTENTS
Page
1. THE MERGER...................................................................... 1
1.1 The Merger............................................................... 1
1.2 Effective Time of the Merger............................................. 1
1.3 Closing.................................................................. 1
1.4 Effects of the Merger.................................................... 2
1.4.1 At the Effective Time............................................. 2
1.4.2 Effects on the Surviving Corporation.............................. 2
1.5 Written Consents and Other Actions....................................... 3
1.5.1 Unanimous Written Consent of the Shareholders; Other Matters...... 3
1.5.2 Written Consent of the Sole Shareholder of Merger Sub............. 3
1.5.3 All Other Necessary Actions....................................... 3
1.6 Conversion of Stock...................................................... 3
1.6.1 Merger Sub Capital Stock.......................................... 3
1.6.2 Cancellation of the Company Treasury Stock........................ 3
1.6.3 Merger Consideration.............................................. 3
1.7 Exchange of and Payment for Stock........................................ 4
1.7.1 Delivery of Company Common Stock and Closing Merger Consideration. 4
1.7.2 Assignments....................................................... 4
1.7.3 Payment In Full Satisfaction of All Rights........................ 4
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 Total Consideration........................ 4
1.9.1 Statement......................................................... 4
1.9.2 Review............................................................ 5
1.9.3 Disputes.......................................................... 5
1.9.4 Resolution by Parties............................................. 5
1.9.5 Final Determination............................................... 5
1.9.6 Expenses.......................................................... 6
2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND THE SHAREHOLDER............... 6
2.1 Exhibit 2................................................................ 6
2.2 Stock Ownership.......................................................... 6
2.3 Authority................................................................ 6
2.4 Consents................................................................. 6
3. REPRESENTATIONS AND WARRANTIES OF THE PARENT AND MERGER SUB..................... 7
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3.1 Representations and Warranties........................................... 7
3.1.1 Organization...................................................... 7
3.1.2 Capitalization of the Parent...................................... 7
3.1.3 Authority......................................................... 7
3.1.4 Consents.......................................................... 7
3.1.5 Defaults.......................................................... 7
3.1.6 Investment Company................................................ 8
3.1.7 Financial Statements.............................................. 8
3.1.8 Taxes............................................................. 8
3.1.9 Full Authority.................................................... 8
3.1.10 Access............................................................ 8
3.1.11 Disclosure........................................................ 8
3.1.12 Parent Material Adverse Effect.................................... 9
3.1.13 Tax-Free Reorganization........................................... 9
3.2 Representations and Warranties Concerning the Merger Sub................. 10
3.2.1 Organization and Standing......................................... 10
3.2.2 Capital Structure................................................. 10
3.2.3 Authority.......................................................... 10
4. CERTAIN COVENANTS, AGREEMENTS AND PRE-CLOSING MATTERS.......................... 10
4.1 Agreements of the Shareholders to be Effective Upon Closing.............. 10
4.1.1 Covenant Not to Compete........................................... 10
4.1.2 Release........................................................... 11
4.2 Elimination of Expense................................................... 11
4.3 Deferred Compensation Plans.............................................. 11
4.4 Audit.................................................................... 11
4.5 Certain Payables and Receivables......................................... 12
4.6 Pre-Closing Covenants and Agreements..................................... 12
4.7 Confidentiality.......................................................... 12
4.8 Tax-Free Reorganization.................................................. 12
4.9 Company Plans............................................................ 12
4.10 Employee Options......................................................... 12
4.11 Purchase of Certain Receivables.......................................... 13
4.12 The Parent Plans......................................................... 13
5. CONDITIONS PRECEDENT; CLOSING DELIVERIES....................................... 13
5.1 Conditions Precedent to the Obligations of the Parent and Merger Sub..... 13
5.1.1 Accuracy of Representations and Warranties........................ 13
5.1.2 Performance of Covenants.......................................... 13
5.1.3 Legal Actions or Proceedings...................................... 13
5.1.4 Approvals......................................................... 14
5.1.5 Closing Deliveries................................................ 14
5.1.6 No Casualty, Loss or Damage....................................... 14
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5.1.7 Licenses, etc..................................................... 14
5.1.8 No Material Adverse Change........................................ 14
5.1.9 IPO............................................................... 14
5.1.10 Certain Corporate Actions......................................... 14
5.2 Conditions Precedent to the Obligations of the Shareholders and the
Company................................................................. 14
5.2.1 Accuracy of Representations and Warranties........................ 14
5.2.2 Performance of Covenants.......................................... 14
5.2.3 Approvals......................................................... 15
5.2.4 Closing Deliveries................................................ 15
5.3 Deliveries by the Shareholders at the Closing............................ 15
5.3.1 Closing Certificates.............................................. 15
5.3.2 Stock Transfer Restriction Agreement.............................. 15
5.3.3 Employment Agreements............................................. 15
5.3.4 Lease Agreement................................................... 15
5.3.5 Registration Rights Agreement..................................... 15
5.3.6 Opinion of Counsel for the Shareholders and the Company........... 15
5.3.7 Documents, Stock Certificates..................................... 15
5.3.8 Discharge of Indebtedness, Releases, Etc.......................... 16
5.4 Deliveries by the Parent at the Closing.................................. 16
5.4.1 Closing Certificates.............................................. 16
5.4.2 Registration Rights Agreement..................................... 16
5.4.3 Opinion of Counsel for the Parent and Merger Sub.................. 16
5.4.4 Closing Merger Consideration...................................... 16
6. SURVIVAL, INDEMNIFICATIONS...................................................... 17
6.1 Survival................................................................. 17
6.2 Indemnification.......................................................... 17
6.2.1 Parent Indemnified Parties........................................ 17
6.2.2 Parent Indemnity.................................................. 18
6.3 Limitations.............................................................. 18
6.4 Procedures for Indemnification........................................... 18
6.4.1 Notice............................................................ 19
6.4.2 Legal Defense..................................................... 19
6.4.3 Settlement........................................................ 19
6.4.4 Cooperation....................................................... 19
6.5 Subrogation.............................................................. 20
7. TERMINATION.................................................................... 20
7.1 Grounds for Termination.................................................. 20
7.1.1 Mutual Consent.................................................... 20
7.1.2 Optional By the Company........................................... 20
7.1.3 Optional By the Parent............................................ 20
7.1.4 Breach By the Parent or Merger Sub................................ 20
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7.1.5 Breach by the Company or any Shareholder.......................... 20
7.2 Effect of Termination.................................................... 20
8. MISCELLANEOUS................................................................... 20
8.1 Notice................................................................... 20
8.2 Further Documents........................................................ 21
8.3 Assignability............................................................ 21
8.4 Exhibits and Schedules................................................... 21
8.5 Sections and Articles.................................................... 21
8.6 Entire Agreement......................................................... 21
8.7 Headings................................................................. 22
8.8 CONTROLLING LAW.......................................................... 22
8.9 Public Announcements..................................................... 22
8.10 No Third Party Beneficiaries............................................. 22
8.11 Amendments and Waivers................................................... 22
8.12 No Employee Rights....................................................... 22
8.13 Non-Recourse............................................................. 23
8.14 When Effective........................................................... 23
8.15 Takeover Statutes........................................................ 23
8.16 Number and Gender of Words............................................... 23
8.17 Invalid Provisions....................................................... 23
8.18 Multiple Counterparts.................................................... 23
8.19 No Rule of Construction.................................................. 23
8.20 Expenses................................................................. 24
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LIST OF EXHIBITS
Exhibit 1.......................................... Determination of Final Merger Consideration
Exhibit 1.5.1........................................ Unanimous Written Consent of Shareholders
Exhibit 1.5.2.................... Written Consent of Sole Shareholder of Van's Acquisition Corp.
Exhibit 1.7.............................................................. Letter of Transmittal
Exhibit 2................................................................... Certain Statements
Exhibit 2.2.................................................. Ownership of Company Common Stock
Exhibit 3.1.4....................................................... Required Consents - Parent
Exhibit 4.3............... Procedure for Satisfaction of Deferred Compensation Plan Liabilities
Exhibit 4.6.................................................................. Certain Covenants
Exhibit 4.9.................................................. Company Plans to Remain in Effect
Exhibit 4.10A........................ Van's Comfortemp Air Conditioning, Inc. Stock Option Plan
Exhibit 4.10B..................................... Employees Who May be Granted Company Options
Exhibit 4.10C.............................................. Nonqualified Stock Option Agreement
Exhibit 5.3.2............................................. Stock Transfer Restriction Agreement
Exhibit 5.3.3................... List of Employees to Execute and Deliver Employment Agreements
Exhibit 5.3.3A............................................................ Employment Agreement
Exhibit 5.3.3B............................................................ Employment Agreement
Exhibit 5.3.4.................................................................. Lease Agreement
Exhibit 5.3.5.................................................... Registration Rights Agreement
Exhibit 5.3.6........................... Opinion of Counsel to the Shareholders and the Company
Exhibit 5.3.8........................................................... Terminated Obligations
Exhibit 5.4.3................................................. Opinion of Counsel to the Parent
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INDEX OF DEFINED TERMS
Page
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Agreement.................................................................. 1
Applicable Corporate Law................................................... 1
Closing.................................................................... 1
Closing Date............................................................... 1
Code....................................................................... 1
Company.................................................................... 1
Company Common Stock....................................................... 1
Company Option Plan........................................................ 12
Company Options............................................................ 12
Converted Share............................................................ 3
Effective Time............................................................. 1
Indemnified Party.......................................................... 19
Indemnifying Party......................................................... 19
IPO........................................................................ 1
Losses..................................................................... 17
Merger..................................................................... 1
Merger Sub................................................................. 1
Minimum Proceeds........................................................... 2
Notice of Dispute.......................................................... 5
Parent..................................................................... 1
Parent Common Stock........................................................ 1
Parent Financial Statements................................................ 8
Parent Indemnified Parties................................................. 17
Parent Material Adverse Effect............................................. 9
Parent Preferred Stock..................................................... 7
Parent Related Documents................................................... 7
Price Notice............................................................... 4
Registration Statement..................................................... 7
Resolution Accountants..................................................... 5
SEC........................................................................ 7
Securities Act............................................................. 2
Settlement Notice.......................................................... 19
Shareholder................................................................ 1
Shareholder Related Document............................................... 6
Statement of Closing Consideration......................................... 4
Statement of Final Per Share Amounts....................................... 5
Stock Certificate.......................................................... 3
Survival Period............................................................ 17
Surviving Corporation...................................................... 1
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Terminated Obligations....................................................... 16
Accountants.................................................................. 2
Agreement.................................................................... 1
Applicable Corporate Law..................................................... 1
Closing...................................................................... 1
Closing Date................................................................. 1
Closing Merger Consideration.......................................... Exhibit 1
Closing Outstanding Common Stock Number............................... Exhibit 1
Closing Per Share Cash Amount......................................... Exhibit 1
Closing Per Share Common Stock Amount................................. Exhibit 1
Code......................................................................... 1
Company...................................................................... 1
Company Common Stock......................................................... 1
Company Option Plan.......................................................... 12
Company Options.............................................................. 12
Converted Share.............................................................. 3
Effective Time............................................................... 1
Excess Expense Level Deduction........................................ Exhibit 1
Final Outstanding Common Stock Number................................. Exhibit 1
Final Per Share Cash Amount........................................... Exhibit 1
Final Per Share Common Stock Amount................................... Exhibit 1
GAAP.................................................................. Exhibit 1
Indemnified Party............................................................ 19
Indemnifying Party........................................................... 19
Investments........................................................... Exhibit 1
IPO.......................................................................... 1
IPO Price to the Public............................................... Exhibit 1
Long-Term Debt........................................................ Exhibit 1
Losses....................................................................... 18
Measurement Month Date................................................ Exhibit 1
Merger....................................................................... 1
Merger Sub................................................................... 1
Minimum Proceeds............................................................. 2
Monthly Balance Sheet............................................... Exhibit 4.6
Net After-Tax Income.................................................. Exhibit 1
Notice of Dispute............................................................ 5
Operating EBITDA Amount............................................... Exhibit 1
Other Ownership Interests............................................. Exhibit 1
Owner's Policies of Title Insurance................................. Exhibit 4.6
Parent..................................................................... 1
Parent Common Stock........................................................ 1
Parent Financial Statements................................................ 8
Parent Indemnified Parties................................................. 17
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Parent Material Adverse Effect............................................. 9
Parent Preferred Stock..................................................... 7
Parent Related Documents................................................... 7
Permitted Exceptions................................................ Exhibit 4.6
Price Notice............................................................... 4
Registration Statement..................................................... 7
SEC........................................................................ 7
Settlement Notice.......................................................... 19
Shareholder................................................................ 1
Shareholder Related Document............................................... 6
Statement of Closing Consideration......................................... 4
Statement of Final Per Share Amounts....................................... 5
Stock Certificate.......................................................... 3
Surveys............................................................. Exhibit 4.6
Survival Period............................................................ 17
Surviving Corporation...................................................... 1
Terminated Obligations..................................................... 16
Title Commitments................................................... Exhibit 4.6
Title Insurance Property............................................ Exhibit 4.6
Total Consideration................................................... Exhibit 1
Working Capital....................................................... Exhibit 1
Working Capital Addition.............................................. Exhibit 1
Working Capital Deduction............................................. Exhibit 1
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AGREEMENT AND PLAN OF MERGER
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This AGREEMENT AND PLAN OF MERGER (this "Agreement") made effective as of
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August ___, 1997, by and among Group Maintenance America Corp., a Texas
corporation (the "Parent"), Van's Acquisition Corp., a Florida corporation
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("Merger Sub"), Van's Comfortemp Air Conditioning, Inc., a Florida corporation
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(the "Company"), and the undersigned holders of all of the outstanding capital
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stock of the Company (the "Shareholders").
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WHEREAS, the respective Boards of Directors of the Parent, Merger Sub and
the Company have each approved the merger of the Company with and into Merger
Sub (the "Merger") pursuant to this Agreement and the applicable statutes of the
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State of Florida, and pursuant to the Merger each issued and outstanding share
of Common Stock, $1.00 par value per share, of the Company ("Company Common
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Stock") will be converted into the right to receive certain shares of common
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stock, $.001 par value per share, of the Parent ("Parent Common Stock"), and
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certain cash consideration, all as provided herein;
WHEREAS, the Merger has been approved, as required by applicable law, by
the Parent, acting as sole shareholder of Merger Sub, and by the 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").
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NOW, THEREFORE, in consideration of the premises and the representations,
warranties and agreements herein contained, the parties hereto agree as follows:
1. THE MERGER
1.1 The Merger. Subject to the terms and conditions hereof, and in
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accordance with the Florida Business Corporation Act (the "Applicable Corporate
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Law") upon the Effective Time (as defined in Section 1.2), the Company shall be
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merged with and into Merger Sub. Merger Sub, as the surviving entity following
the Merger, is sometimes referred to in this Agreement as the "Surviving
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Corporation."
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1.2 Effective Time of the Merger. In accordance with the requirements of
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applicable law, appropriate Articles of Merger under the Applicable Corporate
Law shall be prepared, executed and submitted for filing with the Secretary of
State of the State of Florida immediately following and on the same day as the
Closing (as defined below). The date of such filing is referred to in this
Agreement as the "Effective Time."
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1.3 Closing. The closing of the Merger ("Closing") will take place at the
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offices of Bracewell & ▇▇▇▇▇▇▇▇▇, L.L.P. in Houston, Texas on a date that is
contemporaneous with the closing of the Parent's IPO (as defined below), but in
no event later than December 31, 1997 ("Closing Date"); provided that each of
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the conditions precedent to the obligations of the parties to effect the Merger
set forth in Article 5 of this Agreement are then satisfied or waived by the
applicable party. The parties may agree in writing on another place for the
Closing. At the Closing, the parties will deliver or cause to be delivered the
documents and consideration described in Sections 5.3 and 5.4 below. The term
"IPO" means the first underwritten public
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offering of Parent Common Stock resulting in net cash proceeds to the Parent of
at least the Minimum Proceeds, as defined below (other than any offering
pursuant to any registration statement relating to any capital stock of the
Parent or options, warrants or other rights to acquire any such capital stock
issued or to be issued primarily to directors, officers or employees of the
Parent or any of its subsidiaries, (i) relating to any employee benefit plan or
interest therein, (ii) relating principally to any preferred stock or debt
securities of the Parent, or (iii) filed pursuant to Rule 145 under the
Securities Act of 1933, as amended ("Securities Act"), or any successor or
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similar provision). The term "Minimum Proceeds" means the aggregate amount
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necessary to pay in full (i) all indebtedness of the Parent or any of its
subsidiaries outstanding at the closing of the IPO and incurred for purposes of
financing any acquisitions by the Parent or any of its subsidiaries, (ii) the
aggregate redemption prices for the redemption of all of the Parent's preferred
stock outstanding at the closing of the IPO issued by the Parent in connection
with then completed acquisitions by the Parent or any of its subsidiaries, and
(iii) the aggregate cash payable by the Parent or any of its subsidiaries in
connection with all then pending acquisitions.
1.4 Effects of the Merger.
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1.4.1 At the Effective Time. At the Effective Time, (i) the Company
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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 "Van's Comfortemp Air Conditioning,
Inc.," (iii) the Bylaws of Merger Sub as in effect immediately prior to the
Effective Time shall be the Bylaws of the Surviving Corporation, and (iv) the
directors and officers of Merger Sub immediately prior to the Effective Time
shall become the directors and officers of the Surviving Corporation, until the
earlier of their resignation or removal or until their respective successors are
duly elected or appointed, as the case may be.
1.4.2 Effects on the Surviving Corporation. As of and after the
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Effective Time, the Surviving Corporation shall possess all the rights,
privileges, immunities and franchises 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 the Applicable Corporate Law and the terms of this Agreement.
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1.5 Written Consents and Other Actions.
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1.5.1 Unanimous Written Consent of the Shareholders; Other Matters.
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Contemporaneously with the execution hereof, the Shareholders (i) are executing
and delivering to the Company a Unanimous Written Consent in substantially the
form of Exhibits 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 607.1302 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.
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Contemporaneously with the execution hereof, the Parent is executing and
delivering to Merger Sub a written consent of the sole shareholder of Merger
Sub, in the form of Exhibits Exhibit 1.5.2 attached hereto, pursuant to the
applicable provisions of the Applicable Corporate Law, adopting this Agreement.
1.5.3 All Other Necessary Actions. In addition to the actions set
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forth in Sections 1.5.1 and 1.5.2, the Parent, Merger Sub and the Company will
take all actions necessary in accordance with the Applicable Corporate Law and
their respective articles of incorporation and bylaws to cause the Merger to be
consummated on, and subject to, the terms set forth in this Agreement and the
Applicable Corporate Law.
1.6 Conversion of Stock. As of the Effective Time, by virtue of the
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Merger and without further action on the part of any holder of shares of Company
Common Stock or any holder of shares of capital stock of Merger Sub:
1.6.1 Merger Sub Capital Stock. Each share of capital stock of
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Merger Sub issued and outstanding at the Effective Time shall remain outstanding
and shall be unchanged at and after the Merger and immediately following the
Effective Time shall constitute all of the issued and outstanding capital stock
of the Surviving Corporation.
1.6.2 Cancellation of the Company Treasury Stock. All shares of
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Company Common Stock that are owned by the Company as treasury stock or by any
of its subsidiaries shall be canceled and retired and shall cease to exist and
no stock of the Parent or other consideration shall be delivered in exchange
therefor.
1.6.3 Merger Consideration. Each share of Company Common Stock
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(other than shares to be canceled in accordance with Section 1.6.2) shall be
converted into the right to receive (i) that number of shares of Parent Common
Stock equal to the Final Per Share Common Stock Amount (as defined in Exhibits
Exhibit 1 attached hereto), and (ii) cash equal to the Final Per Share Cash
Amount (as defined in Exhibit 1 attached hereto). Each share of Company Common
Stock so converted into the right to receive cash equal to the Final Per Share
Cash Amount and shares of Parent Common Stock equal to the Final Per Share
Common Stock Amount (a "Converted Share") shall, by virtue of the Merger and
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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 Share (a "Stock
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Certificate") shall thereafter cease to have any rights with respect to such
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Converted Share, except, upon the surrender of the Stock Certificate and a duly
executed and completed letter of transmittal in accordance with Section 1.7, the
right to receive such cash and Parent Common Stock at the times and in the
manner set forth herein.
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1.7 Exchange of and Payment for Stock.
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1.7.1 Delivery of Company Common Stock and Closing Merger
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Consideration. Prior to the Closing, the Parent will deliver to each
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Shareholder a letter of transmittal, in substantially the form attached hereto
as Exhibits Exhibit 1.7, to be used for the purpose of surrendering to the
Parent Stock Certificates in exchange for the right to receive the Final Per
Share Cash Amount and the Final Per Share Common Stock Amount for each Converted
Share evidenced by such Stock Certificate. All of the Company Common Stock held
by the Shareholders will be surrendered by the Shareholders to the Parent
together with properly completed and executed letters of transmittal (with each
such 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 the Shareholders at the Closing the Closing Per Share
Cash Amount (as defined in Exhibit 1 attached hereto) and the Closing Per Share
Common Stock Amount (as defined in Exhibit 1 attached hereto) applicable to each
of the Converted Shares evidenced by the Stock Certificates properly surrendered
(with properly executed and completed letters of transmittal) by each
Shareholder to the Parent.
1.7.2 Assignments. Except for the granting of options to employees
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of the Company and the exercise or assignment thereof as permitted by Section
4.10, the assignment, transfer or other disposition of record or beneficial
ownership of any shares of Company Common Stock may not be made on or after the
date hereof.
1.7.3 Payment In Full Satisfaction of All Rights. The delivery of
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the Closing Per Share Cash Amount and the Closing Per Share Common Stock Amount
to the Shareholders with respect to their Converted Shares shall be deemed to be
payment in full satisfaction of all rights pertaining to the outstanding
Converted Shares except for the right to receive additional shares of Parent
Common Stock and cash pursuant to Section 1.9.
1.8 Determination of Closing Merger Consideration.
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1.8.1 Delivery of IPO Price to Public; Statement. After the Parent
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and its underwriters agree on the initial price to the public for a share of
Parent Common Stock offered in the IPO, as set forth in an executed underwriting
agreement, at the Closing the Parent shall deliver to the Shareholders a written
notice (the "Price Notice") setting forth such initial price to the public and a
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statement setting forth a calculation of the Closing Outstanding Common Stock
Number (as defined in Exhibit 1 attached hereto), the Closing Per Share Cash
Amount, the Closing Per Share Common Stock Amount and the Closing Merger
Consideration (as defined in Exhibit 1 attached hereto), payable to the
Shareholders at Closing (the "Statement of Closing Consideration"). The initial
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price to the public of a share of Parent Common Stock, as set forth in the Price
Notice, and the Closing Outstanding Common Stock Number, the Closing Per Share
Cash Amount, the Closing Per Share Common Stock Amount 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 Total Consideration.
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1.9.1 Statement. No later than 90 days after the Closing, the Parent
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shall deliver to the Shareholders a statement showing the Final Outstanding
Common Stock Number (as defined in Exhibit 1 attached hereto), the Final Per
Share Cash Amount, the Final Per Share Common Stock Amount and the
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Total Consideration (as defined in Exhibit 1 attached hereto) (the "Statement of
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Final Per Share Amounts"). For purposes of determining the Statement of Final
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Per Share Amounts, the Final Outstanding Common Stock Number, the Final Per
Share Cash Amount, the Final Per Share Common Stock Amount and the Total
Consideration shall be calculated or determined as of the last day of the month
immediately preceding the month in which the Closing occurs (unless the Closing
occurs on the last day of the month, in which case the Closing Date shall be
used).
1.9.2 Review. After delivery to the Shareholders of the Statement of
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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, the Final
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Per Share Cash Amount, the Final Per Share Common Stock Amount and the Total
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
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Amounts within 10 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 with
respect to any items unless such item involves an amount of $25,000 or more. If
a Notice of Dispute is not properly given within such time, the Final
Outstanding Common Stock Number, the Final Per Share Cash Amount, the Final Per
Share Common Stock Amount and the Total 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
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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 Ernst & Young LLP (the
"Resolution Accountants"), who shall resolve such dispute within 30 days after
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its submission to them. The Parent and the Shareholders (if the dispute is
resolved by them or the Statement of Final Per Share Amounts otherwise becomes
final pursuant hereto without referral to the Resolution Accountants) or the
Resolution Accountants (if a dispute is resolved by them) shall set forth such
resolution in writing and such writing shall (i) set forth the Final Outstanding
Common Stock Number, the Final Per Share Cash Amount, the Final Per Share Common
Stock Amount and the Total Consideration and (ii) be final, conclusive and
binding for purposes of this Agreement.
1.9.5 Final Determination. Within 10 business days following the
-------------------
final determination of the Final Outstanding Common Stock Number, the Final Per
Share Cash Amount, the Final Per Share Common Stock Amount and the Total
Consideration as provided in this Section 1.9 (i) the Parent shall deliver to
each Shareholder (a) the cash amount, if any, by which the aggregate of the
Final Per Share Cash Amounts payable to such Shareholder, as finally determined
pursuant hereto, exceeds the aggregate of the Closing Per Share Cash Amounts
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 Final Per Share Common Stock
Amounts deliverable to such Shareholder, as finally determined pursuant hereto,
exceeds the aggregate of the Closing Per Share Common Stock Amounts delivered to
such Shareholder at the Closing; or (ii) each Shareholder
-5-
shall deliver to the Parent (a) the cash amount, if any, by which the aggregate
of the Closing Per Share Cash Amounts paid to such Shareholder at the Closing
exceeds the aggregate of the Final Per Share Cash Amounts 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 Closing Per Share
Common Stock Amounts delivered to such Shareholder at the Closing exceeds the
aggregate of the Final Per Share Common Stock Amounts deliverable to such
Shareholder 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 the Shareholders, jointly and severally, hereby represent
and warrant to the Parent and Merger Sub as follows:
2.1 Exhibit 2. The statements in Exhibit 2 attached hereto are true and
---------
correct.
2.2 Stock Ownership. Each 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 Exhibits Exhibit 2.2 and such shares are so
held by such Shareholder 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 such Shareholder (each a "Shareholder
-----------
Related Document") and (ii) consummate the transactions contemplated herein and
----------------
thereby. This Agreement has been duly executed and delivered by the
Shareholders and constitutes, and any Shareholder Related Document, when duly
executed and delivered by the Shareholders named as parties therein will
constitute, legal, valid and binding obligations of such Shareholders
enforceable against such Shareholders 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 the Shareholders of this
Agreement or any Shareholder Related Document. The execution, delivery and
performance by the Shareholders of this Agreement and any Shareholder Related
Documents do not violate any mortgage, indenture, contract, agreement, lease or
commitment or other instrument of any kind to which any Shareholder is a party
or by which any Shareholder or such Shareholder's assets or properties may be
bound or affected or any law, rule or regulation applicable to any Shareholder
or any court injunction, order or decree or any valid and enforceable order of
any governmental agency in effect as of the date hereof having jurisdiction over
any Shareholder.
-6-
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. As of the execution date of this
----------------------------
Agreement, the total authorized capital stock of the Parent is as set forth in
the Confidential Information Statement dated August ___, 1997. The outstanding
shares of Parent Common Stock and Preferred Stock, $.001 par value ("Parent
------
Preferred Stock"), have been duly and validly issued and are fully paid and non-
---------------
assessable.
3.1.3 Authority. The Parent has the requisite power and authority to
---------
execute, deliver and perform this Agreement and all documents and instruments
referred to herein or contemplated hereby (the "Parent Related Documents") and
------------------------
to consummate the transactions contemplated herein and thereby. This Agreement
has been duly executed and delivered by the Parent and constitutes, and all the
Parent Related Documents, when executed and delivered by the Parent will
constitute, legal, valid and binding obligations of the Parent, enforceable in
accordance with their respective terms and conditions except as such enforcement
may be limited by bankruptcy, insolvency, reorganization, moratorium or other
similar laws affecting the enforcement of creditors' rights generally and by
general principles of equity (whether applied in a proceeding at law or in
equity).
3.1.4 Consents. Except as provided on Exhibits Exhibit 3.1.4, no
--------
approval, consent, order or action of or filing with any court, administrative
agency, governmental authority or other third party is required for the
execution, delivery or performance by the Parent of this Agreement or the Parent
Related Documents or the consummation by the Parent of the transactions
contemplated hereby, except for (i) the filing of the Parent's registration
statement with respect to the IPO ("Registration Statement") with the U.S.
----------------------
Securities and Exchange Commission ("SEC") pursuant to the Securities Act and
---
the SEC's declaration of effectiveness of such Registration Statement and the
completion of all necessary filings required under, and the obtaining of all
necessary consents and approvals required pursuant to, state securities or "blue
sky" laws in connection with the IPO, and (ii) the filing of the Articles of
Merger with the 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
-7-
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.
3.1.8 Taxes. The Parent has either accrued, discharged or caused to
-----
be discharged, as the same have become due, or the Parent Financial Statements
contain adequate accruals and reserves for, all taxes, interest thereon, fines
and penalties of every kind and character, attributable or relating to the
properties and business of the Parent for the period ended covered by the Parent
Financial Statements.
3.1.9 Full Authority. The Parent has the corporate power and
--------------
authority and has obtained all licenses, permits, qualifications, and other
documentation (including permits required under applicable Environmental Law, as
defined in Exhibit 2) necessary to own and/or operate its businesses, properties
and assets and to carry on its businesses as being conducted on the date of this
Agreement, except such licenses, permits, qualifications or other documentation,
the failure to obtain which is not reasonably likely to result in a Parent
Material Adverse Effect, and such businesses are now being conducted and such
assets and properties are being owned and/or operated in compliance with all
applicable laws (including Environmental Law), ordinances, rules and regulations
of any governmental agency of the United States, any state or political
subdivision thereof, or any foreign jurisdiction, all applicable court or
administrative agency decrees, awards and orders and all such licenses, permits,
qualifications and other documentation, except where the failure to comply will
not have a Parent Material Adverse Effect, and there is no existing condition or
state of facts that would give rise to a violation thereof or a liability or
default thereunder that is reasonably likely to have a Parent Material Adverse
Effect.
3.1.10 Access. The Parent has cooperated fully in permitting the
------
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
-8-
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.
(viii) None of the Parent Common Stock received by the Shareholders as
a part of the Final Merger Consideration will be separate consideration
for, or allocable to, any employment agreement.
-9-
(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).
4. CERTAIN COVENANTS, AGREEMENTS AND PRE-CLOSING MATTERS
4.1 Agreements of the Shareholders to be Effective Upon Closing.
-----------------------------------------------------------
Effective upon Closing, and without further action on the part of any party or
other person, the Shareholders covenant and agree as follows:
4.1.1 Covenant Not to Compete.
-----------------------
(i) For the considerations specified in this Agreement and in
recognition that the covenants by the Shareholders in this Section are a
material inducement to the Parent to enter into and perform this Agreement,
each Shareholder agrees that for the period from the Closing Date to the
later to occur of (a) the date which is five years after the Closing Date
or (b) the date which is two years following any termination of such
Shareholder's employment with the Company, such Shareholder will not
represent, engage in, carry on, or have a financial interest in, directly
or indirectly, individually, as a member of a partnership or limited
liability company, equity owner, shareholder (other than as a shareholder
of less than one percent of the issued and outstanding stock of a publicly-
held company whose gross assets exceed $100 million), investor, officer,
director, trustee, manager, employee, agent, associate or consultant engage
in any business that involves
-10-
indoor air quality, heating, ventilation, air conditioning, appliance,
mechanical construction or sewer cleaning products or services within an
80-mile radius of the city of Delray Beach, Florida; provided, however,
that if a Shareholder's employment with the Company is terminated without
Cause (as such term is defined in Exhibit 5.3.3A, the time period in
Section 4.1.1(i)(b) shall be reduced to one year.
(ii) 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 clause (i) 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 such Shareholder's activities specified
herein, are reasonable and necessary for the protection of the Parent and
its affiliates. 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.
(iii) 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, each Shareholder
-------
does hereby (i) release, acquit and forever discharge the Surviving Corporation
from any and all liabilities, obligations, claims, demands, actions or causes of
action arising from or relating to any event, occurrence, act, omission or
condition occurring or existing on or prior to the Effective Time, including,
without limitation, any claim for indemnity or contribution from the Surviving
Corporation in connection with the obligations or liabilities of such
Shareholder hereunder, except for salary and benefits payable to such
Shareholder as an employee in the ordinary course of business; (ii) waive all
breaches, defaults or violations of any agreement applicable to the Company
Common Stock and agree that any and all such agreements are terminated as of the
Effective Time, and (iii) waive any and all preemptive or other rights to
acquire any shares of capital stock of the Company and release any and all
claims arising in connection with any prior default, violation or failure to
comply with or satisfy any such preemptive or other rights.
4.2 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 in the Letter of Intent among the Parent,
the Company and the Shareholders dated May 29, 1997, have been eliminated as
expenses of the Surviving Corporation as of and following the Closing Date.
4.3 Deferred Compensation Plans. Prior to Closing, the Shareholders will
---------------------------
cause all current or future obligations of the Company under the split dollar
life and other deferred compensation plans covering any Shareholder or any
employee of the Company to be satisfied in full (including current or deferred
tax liabilities arising therefrom) and the cash value of such plans and the
plans themselves shall be distributed to the appropriate Shareholders and/or
employees all in accordance with the provisions of Exhibits Exhibit 4.3
attached hereto.
4.4 Audit. Prior to Closing, KPMG Peat Marwick LLP shall complete an
-----
audit of the Company for the fiscal year ended September 30, 1996 and for the
period from such date through June 30, 1997, and
-11-
such additional audit and/or review work as may be requested by the Parent
through and including the Closing Date and provide its report to the Parent and
the Shareholders.
4.5 Certain Payables and Receivables. On or prior to Closing, the
--------------------------------
Shareholders shall pay in full in cash all accounts receivable, notes receivable
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.
4.6 Pre-Closing Covenants and Agreements. The Shareholders and the
------------------------------------
Company jointly and severally agree as set forth in Exhibits 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 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, and may describe this
Agreement and the transactions contemplated hereby in any registration statement
filed by the Parent under the Securities Act and in reports filed by the Parent
under the Securities Exchange Act of 1934, and may file this Agreement as an
exhibit to any thereof. The Parent may also make appropriate disclosures of the
general nature of the Merger and the identity, nature and scope of the Company's
operations to prospective acquisition candidates in connection with the Parent's
efforts to effect additional acquisitions. Each party will have mutual approval
rights with respect to written employee presentations concerning the prospective
merger.
4.8 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 Company Plans. Except as otherwise contemplated by this Agreement,
-------------
the Company Plans (as defined in Exhibit 2) described on Exhibits Exhibit 4.9 of
the Company in effect at the date of this Agreement will remain in effect unless
otherwise determined by the Parent after the Effective Time.
4.10 Employee Options. Prior to the Effective Time, the Company and its
----------------
Board of Directors may adopt, (and, if adopted, the Shareholders shall approve)
a Stock Option Plan substantially in the form of Exhibits Exhibit 4.10A attached
hereto ("Company Option Plan") under which the Company may, during the period
from the date hereof through August 31, 1997 grant options ("Company Options")
to certain of its employees listed in Exhibits Exhibit 4.10B attached hereto, to
purchase up to the number of shares of Company Common Stock set forth on Exhibit
4.10B beside such employee's name, for the exercise price per share and for the
period set forth on Exhibit 4.10B attached hereto, all pursuant to Option
Agreements in substantially the form of Exhibits Exhibit 4.10C attached hereto.
The Company shall not grant any other stock options under the Company Option
Plan or otherwise. On or before September 5, 1997, the Company shall give
written notice to the Parent setting forth whether it has adopted the Company
Option Plan and, if so, the number of
-12-
Company Options granted thereunder, the employees to whom the Company Options
were granted and copies of each Option Agreement in effect with respect thereto.
At the Effective Time, the Company's obligations with respect to each
outstanding Company Option under such Option Agreements shall be assumed by the
Parent, as provided in the Option Agreements. The Company Options so assumed by
the Parent shall continue to have, and be subject to, the terms and conditions
set forth in the Company Option Plan and the Option Agreements, provided that
the number of shares of Parent Common Stock into which such Company Options are
exercisable and the exercise price therefor and certain other matters shall be
governed by Section 8(ii)of the Option Agreements.
4.11 Purchase of Certain Receivables. If any accounts receivable included
--------------------------------
in current assets of the Company for purposes of determining Working Capital (as
defined in Exhibit 1) remain unpaid in full for 60 days after the Closing, the
Shareholders shall, upon written request by the Surviving Corporation made
within 90 days after the Closing, purchase the same from the Surviving
Corporation, without recourse, for the uncollected amount thereof.
4.12 The Parent Plans. The Parent shall provide the senior management of
----------------
the Company a bonus/option plan. The benefits of such plan shall be based on
the Company's performance. The parameters of such plan shall be approved by the
compensation committee of the Board of Directors of the Parent.
5. CONDITIONS PRECEDENT; CLOSING DELIVERIES
5.1 Conditions Precedent to the Obligations of the Parent and Merger Sub.
--------------------------------------------------------------------
The obligations of the Parent and Merger Sub to effect the Merger under this
Agreement are subject to the satisfaction of each of the following conditions,
unless waived by the Parent in writing to the extent permitted by applicable
law:
5.1.1 Accuracy of Representations and Warranties. The
------------------------------------------
representations and warranties of the Shareholders and the Company contained in
this Agreement, in Exhibits 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.
5.1.2 Performance of Covenants. 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.
5.1.3 Legal Actions or Proceedings. No legal action or proceeding
----------------------------
shall have been instituted after the date hereof against the Company or against
the Parent or Merger Sub arising by reason of the acquisition of the Company
pursuant to this Agreement, which is reasonably likely (i) to restrain, prohibit
or invalidate the consummation of the transactions contemplated by this
Agreement, (ii) to have a Company Material Adverse Effect or (iii) to have a
Parent Material Adverse Effect after giving effect to the consummation of the
transactions contemplated by this Agreement, and the Shareholders and the
Company shall each have delivered to the Parent and Merger Sub a certificate to
that effect.
-13-
5.1.4 Approvals. 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
the Shareholders and the Company shall each have delivered to the Parent and
Merger Sub a certificate to that effect.
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 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
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 to the extent
permitted by applicable law:
5.2.1 Accuracy of Representations and Warranties. The
------------------------------------------
representations and warranties of the Parent and Merger Sub contained in this
Agreement or in any closing certificate or document delivered to the
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. The Parent and Merger Sub shall have
------------------------
performed and complied with all covenants of this Agreement to be performed or
complied with by them at or prior to the Closing Date and the Parent and Merger
Sub shall have delivered to the Shareholders and the Company a certificate to
such effect.
-14-
5.2.3 Approvals. The Parent shall have procured all of the consents,
---------
approvals and waivers specified in Section 3.1.4 prior to the Closing Date, and
the Parent shall have delivered to the Shareholders and the Company a
certificate to that effect.
5.2.4 Closing Deliveries. All documents required to be executed or
------------------
delivered at Closing by the Parent pursuant to Section 5.4 of this Agreement
shall have been so executed and delivered.
5.3 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. The Shareholders 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
Exhibits Exhibit 5.3.2.
5.3.3 Employment Agreements. Each Shareholder and certain other
---------------------
employees of the Company specified on Exhibits Exhibit 5.3.3 shall execute and
deliver an Employment Agreement (with the insertion of the appropriate Section
7(b) based on whether such Shareholder or any such employee is designated an
"Executive or Key Employee" or "Manager" on Exhibit 5.3.3 and with the blanks
appropriately completed as set forth in a confidential letter between the
Company and the Parent) with the Company on the Closing Date, effective as of
the Effective Time, substantially in the form set forth in Exhibits Exhibit
5.3.3A and Exhibit 5.3.3B Exhibit 5.3.3B, respectively.
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 substantially in the form attached as
Exhibits Exhibit 5.3.4.
5.3.5 Registration Rights Agreement. The Shareholders shall execute
-----------------------------
and deliver a Registration Rights Agreement at the Closing, effective as of the
Effective Time, substantially in the form set forth in Exhibits Exhibit 5.3.5
attached hereto.
5.3.6 Opinion of Counsel for the Shareholders and the Company. The
-------------------------------------------------------
Shareholders shall deliver the favorable opinion of Perry & Schone, P.A.,
counsel to the Shareholders and the Company, dated the Effective Time,
substantially in the form and to the effect set forth in Exhibits 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 the Shareholders at the
Closing as contemplated hereby or as may be reasonably requested by the Parent
and shall deliver or cause to be delivered the documents and evidence required
under Section 4. Stock Certificates representing all of the outstanding Company
Common Stock and properly executed and completed letters of transmittal shall be
delivered by the Shareholders to the Parent.
-15-
[5.3.8 Discharge of Indebtedness, Releases, Etc. The indebtedness of
----------------------------------------
the Company referred to in Exhibits Exhibit 5.3.8 attached hereto ("Terminated
----------
Obligations") shall be paid in full or refinanced on terms acceptable to the
-----------
Parent, and the Shareholders shall cause all holders of any such Terminated
Obligations to deliver to the Parent, in form reasonably satisfactory to the
Parent and the lenders to the Parent or Merger Sub, such customary releases,
termination statements, consents, approvals or other documents or instruments
required, in the judgment of the Parent, to release and terminate all liens,
security interests, claims, or rights of such holders against the Surviving
Corporation or the Parent or any of their respective assets in connection
therewith.]
The consummation of the Closing shall not be deemed to be a waiver by
the Parent or the Surviving Corporation of any of their rights or remedies
against the Shareholders 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;
provided, however, that if the Company shall disclose in writing to the Parent
prior to the Closing Date a specified breach of a specifically identified
representation, warranty, covenant or agreement of the Company or any
Shareholder herein by the Company or any Shareholder, and requests a waiver
thereof by the Parent, and the Parent shall waive any such specifically
identified breach in writing prior to the Closing Date, the Parent and the
Surviving Corporation, for themselves and for each Parent Indemnified Party (as
defined below) shall be deemed to have waived their respective rights and
remedies hereunder for, and the Shareholders shall have no liability with
respect to, any such specifically identified breach, to the extent so identified
by the Company and so waived by the Parent.
5.4 Deliveries by the Parent at the Closing. At the Closing,
---------------------------------------
simultaneously with the deliveries by the 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 Registration Rights Agreement. The Parent shall execute and
-----------------------------
deliver to 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.
5.4.3 Opinion of Counsel for the Parent and Merger Sub. The Parent
------------------------------------------------
and Merger Sub shall deliver the favorable opinion of its legal counsel dated
the Effective Time, substantially in the form and to the effect set forth in
Exhibits Exhibit 5.4.3.
5.4.4 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 breach of any
warranty, covenant or agreement herein by the Parent or Merger Sub irrespective
of any knowledge of or investigation with respect thereto made by or on behalf
of any Shareholder; provided, however, that if the Parent shall disclose in
writing to the Shareholders prior to the Closing a specified breach of a
specifically identified representation, warranty, covenant or
-16-
agreement of the Parent or Merger Sub contained herein by the Parent or Merger
Sub, and requests a waiver thereof by the Company and the Shareholders, and the
Company and the Shareholders shall waive any such specifically identified breach
in writing prior to 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 and waived by the Company and the Shareholders.
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 ▇▇▇▇▇▇▇▇ ▇, ▇, ▇, ▇▇ ▇▇▇ ▇▇(▇▇), (▇▇▇), (▇▇), (v), (vi),
(vii) and (viii) of Exhibit 2 shall survive for a period of 36 months after the
Closing Date and the representations and warranties of the Shareholders and the
Company contained in Sections 2.2, 2.3, 2.4 and in ▇▇▇▇▇▇▇▇ ▇, ▇, ▇, ▇▇ ▇▇▇
▇▇(▇▇), (▇▇▇), (▇▇), (v), (vi), (vii) and (viii) of Exhibit 2 shall survive for
the maximum period permitted by applicable law. The representations and
warranties of the Parent herein and in the Parent Related Documents, other than
those in Sections 3.1.3, 3.1.4, 3.1.8 and 3.1.13, shall survive for a period of
36 months after the Closing Date and the representations and warranties of the
Parent contained in Sections 3.1.3, 3.1.4, 3.1.8 and 3.1.13 shall survive for
the maximum period permitted by applicable law. The periods of survival of the
representations and warranties as stated above in this Section 6.1 are referred
to herein as the "Survival Period." The liabilities of the parties under their
---------------
respective representations and warranties shall expire as of the expiration of
the applicable Survival Period and no claim for indemnification may be made with
respect to any breach of any representation or warranty, the applicable Survival
Period of which shall have expired, except to the extent that written notice of
such breach shall have been given to the party against which such claim is
asserted on or before the date of such expiration. The covenants and agreements
of the parties herein (including but not limited to Exhibit 4.6) and in other
documents and instruments executed and delivered in connection with the closing
of the transactions contemplated hereby shall survive for the maximum period
permitted by law.
6.2 Indemnification.
---------------
6.2.1 Parent Indemnified Parties. Subject to the provisions of
--------------------------
Sections 6.1 and 6.3 hereof, the Shareholders 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:
(i) the breach of any covenant of the Shareholders or the Company
or the failure by the Shareholders or the Company to perform any obligation
of the Shareholders or the Company contained herein or in any Company
Related Document or Shareholder Related Document;
-17-
(ii) any inaccuracy in or breach of any representation or warranty
of the Shareholders contained herein or in any Shareholder Related
Document;
(iii) any inaccuracy in or breach of any representation or warranty
of the Company contained herein or in any Company Related Document;
(iv) indemnification payments made by the Company or the Surviving
Corporation to the Company's present or former officers, directors,
employees, agents, consultants, advisors or representatives in respect of
actions taken or omitted to be taken prior to the Closing; and
(v) any act, omission, occurrence, event, condition or circumstance
occurring or existing at any time on or before the Effective Time and
involving or related to the assets, properties, business or operations now
or previously owned or operated by the Company and not (a) disclosed with
reasonable specificity in the Disclosure Schedule or (b) disclosed in the
Company Financial Statements (as defined in Exhibit 2).
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.
The foregoing indemnities shall not limit or otherwise adversely affect the
Parent Indemnified Parties' rights of indemnity for Losses under Section 6.2.1.
6.3 Limitations. The aggregate liability of the Shareholders under
-----------
Section 6.2.1(ii) or (iii) shall not exceed the cash amount equal to the Total
Consideration with the Parent Common Stock being valued at the IPO Price to the
Public for such purpose. The aggregate liability of the Parent under Section
6.2.2(ii) shall not exceed the cash amount equal to the Total Consideration with
the Parent Common Stock being valued at the IPO Price to the Public for such
purpose.
-18-
6.4 Procedures for Indemnification.
------------------------------
6.4.1 Notice. The party (the "Indemnified Party") that may be
------ -----------------
entitled to indemnity hereunder shall give prompt notice to any party obligated
to give indemnity hereunder (the "Indemnifying Party") of the assertion of any
------------------
claim, or the commencement of any suit, action or proceeding in respect of which
indemnity may be sought hereunder. Any failure on the part of any Indemnified
Party to give the notice described in this Section 6.4.1 shall relieve the
Indemnifying Party of its obligations under this Article 6 only to the extent
that such Indemnifying Party has been prejudiced by the lack of timely and
adequate notice (except that the Indemnifying Party shall not be liable for any
expenses incurred by the Indemnified Party during the period in which the
Indemnified Party failed to give such notice). Thereafter, the Indemnified Party
shall deliver to the Indemnifying Party, promptly (and in any event within 10
days thereof) after the Indemnified Party's receipt thereof, copies of all
notices and documents (including court papers) received by the Indemnified Party
relating to such claim, action, suit or proceeding.
6.4.2 Legal Defense. The Parent shall have the obligation to assume
-------------
the defense or settlement of any third-party claim, suit, action or proceeding
in respect of which indemnity may be sought hereunder, provided that (i) the
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 which any right of
indemnity created by this Agreement would or might apply, for the
-19-
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,
-----------
himself or herself and its, his or her affiliates (as defined in Exhibit 2) any
rights to subrogation against any Indemnified Party or such Indemnified Party's
insurers for Losses arising from any third-party claims for which the
Indemnifying Party is liable or against which the Indemnifying Party
indemnifies any Indemnifying 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 their
respective 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 Breach By the Parent or Merger Sub. By the Company, by written
----------------------------------
notice to the Parent, if either the Parent or Merger Sub has materially breached
this Agreement or materially failed to perform any of its obligations under this
Agreement; or
7.1.5 Breach by the Company or any Shareholder. By the Parent, by
----------------------------------------
written notice to the Company, if the Company or any Shareholder has materially
breached this Agreement or has materially failed to perform any of their
respective obligations under this Agreement.
7.2 Effect of Termination. If this Agreement is terminated as permitted
---------------------
under Section 7.1, such termination shall be without liability of any party to
any other party, except that such termination shall be without prejudice to any
and all remedies the parties may have against each other for breach of this
Agreement.
8. MISCELLANEOUS
8.1 Notice. Any notice, delivery or communication required or permitted
------
to be given under this Agreement shall be in writing, and shall be mailed,
postage prepaid, or delivered, to the addresses given below, or sent by telecopy
to the telecopy numbers set forth below, as follows:
-20-
To the Company (prior to the Effective Time) or the Shareholders:
Van's Comfortemp Air Conditioning, Inc.
▇▇▇ ▇. ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇. ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
To the Parent or Merger Sub or the Surviving Corporation:
Group Maintenance America Corp.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attn: President
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
or other such address as shall be furnished in writing by any such party to the
other parties, and such notice shall be effective and be deemed to have been
given as of the date actually received.
To the extent any notice provision in any other agreement, instrument or
document required to be executed or executed by the parties in connection with
the transactions contemplated herein contains a notice provision which is
different from the notice provision contained in this Section 8.1 with respect
to matters arising under such other agreement, instrument or document, the
notice provision in such other agreement, instrument or document shall control.
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. The Shareholders shall not assign this Agreement in
-------------
whole or in part without the prior written consent of the Parent, except by the
operation of law. The Parent may assign its rights under this Agreement, the
Company Related Documents and the Shareholder Related Documents without the
consent of any 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 Shareholder.
8.4 Exhibits and Schedules. The Exhibits and Schedules (and any
----------------------
appendices thereto) referred to in this Agreement are and shall be incorporated
herein and made a part hereof.
8.5 Sections and Articles. Unless the context otherwise requires, all
---------------------
Sections, Articles and Exhibits referred to herein are, respectively, sections
and articles of, and exhibits to, this Agreement and all Schedules referred to
herein are schedules constituting a part of the Disclosure Schedule.
8.6 Entire Agreement. This Agreement constitutes the full understanding
----------------
of the parties, a complete allocation of risks between them and a complete and
exclusive statement of the terms and
-21-
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. Nothing herein expressed or implied shall confer
------------------
upon any employee of the Company, any other employee or legal representatives or
beneficiaries of any thereof any rights or remedies, including any right to
employment or continued employment for any specified period, of any
-22-
nature or kind whatsoever under or by reason of this Agreement, or shall cause
the employment status of any employee to be other than terminable at will.
8.13 Non-Recourse. No recourse for the payment of any amounts due
------------
hereunder or for any claim based on this Agreement or the transactions
contemplated hereby or otherwise in respect thereof, and no recourse under or
upon any obligation, covenant or agreement of the Parent in this Agreement shall
be had against any incorporator, organizer, promoter, shareholder, officer,
director, employee or representative as such (other than the 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, the Parent and the Company
and their respective members of their Boards of Directors shall grant such
approvals and take such actions as are necessary so that the transactions
contemplated by this Agreement 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.
-23-
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 (to the extent, and only to the extent, that any such payment will
not jeopardize the qualification of the Merger as a reorganization within the
meaning of Section 368(a) of the Code); and provided further that all fees,
costs and expenses incurred or payable by the Company in connection with the
negotiation and closing of this Agreement and the transactions contemplated
hereby shall be included in current liabilities for purposes of determining
Working Capital.
IN WITNESS WHEREOF, this Agreement has been duly executed and delivered on
the date first hereinabove written.
PARENT:
GROUP MAINTENANCE AMERICA CORP.
__________________________________________
J. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇., President
MERGER SUB:
VAN'S ACQUISITION CORP.
By:_______________________________________
President
SHAREHOLDERS:
__________________________________________
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
__________________________________________
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
COMPANY:
VAN'S COMFORTEMP AIR CONDITIONING, INC.
By:_______________________________________
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Title: President
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