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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-----------------
FORM 8-K
-----------------
CURRENT REPORT PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT: MAY 22, 1998
(DATE OF EARLIEST EVENT REPORTED: MAY 8, 1998)
GROUP MAINTENANCE AMERICA CORP.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
TEXAS 1-13565 76-0535259
(STATE OR OTHER (COMMISSION (I.R.S. EMPLOYER
JURISDICTION FILE NUMBER) IDENTIFICATION NO.)
OF INCORPORATION)
8 GREENWAY PLAZA, SUITE 1500
HOUSTON, TEXAS 77046
(ADDRESS OF PRINCIPAL EXECUTIVE (ZIP CODE)
OFFICES)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (713) 860-0100
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
On May 8, 1998, Group Maintenance America Corp. (the "Company") completed
the acquisitions of Premex, Inc., a Maryland corporation ("Premex"), and Barr
Electric Corp., an Illinois corporation ("Barr").
ACQUISITION OF PREMEX
The Company acquired Premex pursuant to a merger (the "Premex Merger") of
Premex with and into Commercial Air Acquisition Corp., a wholly-owned subsidiary
of the Company ("CAAC"). The Premex Merger was effected in accordance with the
Agreement and Plan of Merger (the "Premex Merger Agreement") dated as of March
31, 1998, among the Company, CAAC, Premex, the shareholders of Premex and
Commercial Air Power and Cable, Inc. ("Commercial Air"). A copy of the Premex
Merger Agreement has been filed as an exhibit to this Current Report on Form 8-K
and is incorporated herein by reference. In the Premex Merger, CAAC was the
surviving corporation and changed its name to "Commercial Air Holding Company."
The purchase price paid or to be paid by the Company for Premex consists of $6.9
million in cash and .4 million shares of the Company's common stock, par value
$.001 per share ("Common Stock").
Prior to the Premex Merger, the stockholders of Premex were Thomas R.
Rosato, Barbara Rosato, Donald Franklin and Kristen Franklin. After the Premex
Merger, Messrs. Rosato and Franklin will be employed by the surviving
corporation.
Premex was a holding company whose only subsidiary was Commercial Air,
which provides retrofit renovations, replacement equipment installations,
service and maintenance for building automation systems, electrical distribution
systems, distributed data processing systems, communication networks and complex
building mechanical systems. The assets of Commercial Air consist primarily of
cash, accounts receivable, inventory, equipment, vehicles and goodwill. The
Company expects that Commercial Air will continue to conduct its
business in substantially the same manner as conducted before the Premex Merger.
ACQUISITION OF BARR ELECTRIC CORP.
The Company acquired Barr pursuant to a merger (the "Barr Merger" and,
together with the Premex Merger, the "Mergers") of Barr with and into Barr
Acquisition Corp., a wholly-owned subsidiary of the Company ("BAC"). The Barr
Merger was effected in accordance with the Agreement and Plan of Merger (the
"Barr Merger Agreement") dated as of March 27, 1998, among the Company, BAC,
Barr, and the shareholders of Barr. A copy of the Barr Merger Agreement has
been filed as an exhibit to this Current Report on Form 8-K and is incorporated
herein by reference. In the Barr Merger, BAC was the surviving corporation and
changed its name to "Barr Electric Corp." The purchase price paid or to be paid
by the Company for Barr consists of $5.3 million in cash and .4 million shares
of Common Stock.
2
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Prior to the Barr Merger, the stockholders of Barr were Michael Steven
Barr, as trustee of the Michael Steven Barr Trust, Terri Louise Barr, as trustee
of the Terri Louise Barr Trust, Patricia Ann Barr, as trustee of the Patricia
Ann Barr Trust, and Emil Widitz. After the Barr Merger, Messrs. Barr and
Widitz will be employed by the surviving corporation.
Barr is engaged in the business of providing electrical contracting
services for renovation and remodeling for large commercial and industrial
customers primarily in the Chicago area. The assets of Barr consist primarily of
cash, accounts receivable, inventory, equipment, vehicles and goodwill. The
Company expects that Barr will continue to conduct its business in substantially
the same manner as conducted before the Barr Merger.
CREDIT AGREEMENT
The cash portion of the consideration paid by the Company in connection
with each Merger was provided pursuant to loans made under a Credit Agreement
dated as of December 11, 1998, (the "Credit Agreement") among the Company,
certain subsidiaries of the Company, Texas Commerce Bank National Association
(now Chase Bank of Texas, National Association), as Agent, Banque Paribas and
ABN AMRO Bank, N.V., as Co-Agents, and the banks named therein (the "Lenders").
Under the Credit Agreement, a syndicate of banks agreed to provide up to $75
million of financing to the Company on a secured basis. A list of the Lenders
is set forth on Exhibit 99 which is incorporated herein by reference.
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ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial Statements of businesses acquired.
Financial statements with respect to Barr Electric Corp. and Premex, Inc.
are not included with this report but will be filed by amendment on or before
July 22, 1998.
(b) Pro forma financial information.
Pro forma financial statements of the Company reflecting the acquisitions
of Barr Electric Corp. and Premex, Inc. are not included with this report but
will be filed by amendment on or before July 22, 1998.
(c) Exhibits.
The following exhibits are filed with this report:
2.1 Agreement and Plan of Merger dated as of March 27, 1998 among the
Company, Barr Acquisition Corp., Barr Electric Corp. and the
shareholders of Barr Electric Corp.
2.2 Agreement and Plan of Merger dated as of March 31, 1998 among the
Company, Premex Acquisition Corp., Premex, Inc. and the shareholders
of Premex, Inc.
99 List of Lenders under the Credit Agreement.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
GROUP MAINTENANCE AMERICA CORP.
By: /s/ Randolph W. Bryant
---------------------------------------
Randolph W. Bryant
Senior Vice President
and General Counsel
Date: May 22, 1998
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INDEX OF EXHIBITS
2.1 Agreement and Plan of Merger dated as of March 27, 1998 among the
Company, Barr Acquisition Corp., Barr Electric Corp. and the
shareholders of Barr Electric Corp.
2.2 Agreement and Plan of Merger dated as of March 31, 1998 among the
Company, Premex Acquisition Corp., Premex, Inc. and the shareholders
of Premex, Inc.
99 List of Lenders under the Credit Agreement.
<PAGE>
EXHIBIT 2.1
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
GROUP MAINTENANCE AMERICA CORP.
BARR ACQUISITION CORP.
BARR ELECTRIC CORP.
AND
THE HOLDERS OF THE
OUTSTANDING CAPITAL STOCK
OF
BARR ELECTRIC CORP.
MARCH 27, 1998
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TABLE OF CONTENTS
<TABLE>
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Page
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1. THE MERGER..................................................................................................... 1
1.1 The Merger............................................................................................. 1
1.2 Effective Time of the Merger........................................................................... 1
1.3 Closing................................................................................................ 1
1.4 Effects of the Merger.................................................................................. 2
1.4.1 At the Effective Time.......................................................................... 2
1.4.2 Effects on the Surviving Corporation........................................................... 2
1.5 Written Consents and Other Actions..................................................................... 2
1.5.1 Unanimous Written Consent of the Shareholders; Other Matters................................... 2
1.5.2 Written Consent of the Sole Shareholder of Merger Sub.......................................... 2
1.5.3 All Other Necessary Actions.................................................................... 2
1.6 Conversion of Stock.................................................................................... 3
1.6.1 Merger Sub Capital Stock....................................................................... 3
1.6.2 Merger Consideration........................................................................... 3
1.7 Exchange of and Payment for Stock...................................................................... 3
1.7.1 Delivery of Company Common Stock and Closing Merger Consideration.............................. 3
1.7.2 Assignments.................................................................................... 3
1.7.3 Payment In Full Satisfaction of All Rights..................................................... 3
1.8 Determination of Closing Merger Consideration.......................................................... 4
1.8.1 Parent Common Stock Value; Statement........................................................... 4
1.9 Post-Closing Determination of Final Merger Consideration............................................... 4
1.9.1 Statement...................................................................................... 4
1.9.2 Review......................................................................................... 4
1.9.3 Disputes....................................................................................... 4
1.9.4 Resolution by Parties.......................................................................... 4
1.9.5 Final Determination............................................................................ 5
1.9.6 Expenses....................................................................................... 5
2. REPRESENTATIONS AND WARRANTIESOF THE COMPANY AND THE SHAREHOLDERS.............................................. 5
2.1 Exhibit 2................................................................................................ 5
2.2 Stock Ownership.......................................................................................... 5
2.3 Authority................................................................................................ 6
2.4 Consents................................................................................................. 6
2.5 Brokers and Finders...................................................................................... 6
3. REPRESENTATIONS AND WARRANTIESOF THE PARENT AND MERGER SUB..................................................... 6
3.1 Representations and Warranties........................................................................... 6
3.1.1 Organization..................................................................................... 6
3.1.2 Capitalization of the Parent..................................................................... 7
3.1.3 Authority........................................................................................ 7
3.1.4 Consents......................................................................................... 7
3.1.5 Defaults......................................................................................... 7
</TABLE>
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3.1.6 Investment Company.............................................................................. 7
3.1.7 Financial Statements............................................................................ 7
3.1.8 Taxes........................................................................................... 8
3.1.9 Full Authority.................................................................................. 8
3.1.10 Disclosure...................................................................................... 8
3.1.11 Parent Material Adverse Effect.................................................................. 8
3.1.12 Tax-Free Reorganization......................................................................... 8
3.1.13 Brokers and Finders............................................................................. 9
3.1.14 Parent Common Stock............................................................................. 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
3.2.4 Consents........................................................................................ 10
3.2.5 Defaults........................................................................................ 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......................................................................... 11
4.1.2 Release......................................................................................... 11
4.2 Releases of Personal Guaranties......................................................................... 12
4.3 Purchase of Certain Receivables......................................................................... 12
4.4 Certain Payables and Receivables........................................................................ 12
4.5 Pre-Closing Covenants and Agreements.................................................................... 12
4.6 Confidentiality......................................................................................... 12
4.7 Tax-Free Reorganization................................................................................. 13
4.8 Company Plans........................................................................................... 13
4.9 [Intentionally Omitted]................................................................................. 13
5. CONDITIONS PRECEDENT; CLOSING DELIVERIES...................................................................... 13
5.1 Conditions Precedent to the Obligations of the Parent and Merger Sub.................................... 13
5.1.1 Performance of Covenants........................................................................ 13
5.1.2 Legal Actions or Proceedings.................................................................... 13
5.1.3 Approvals....................................................................................... 13
5.1.4 Closing Deliveries.............................................................................. 13
5.1.5 Licenses, etc................................................................................... 13
5.1.6 Prospectus...................................................................................... 14
5.2 Conditions Precedent to the Obligations of the Shareholders and the Company............................. 14
5.2.1 Performance of Covenants........................................................................ 14
5.2.2 Approvals....................................................................................... 14
5.2.3 Closing Deliveries.............................................................................. 14
5.2.4 Legal Actions or Proceedings.................................................................... 14
5.2.5 Prospectus...................................................................................... 14
5.3 Deliveries by the Shareholders at the Closing........................................................... 14
5.3.1 Closing Certificates and Evidence of Payments................................................... 14
5.3.2 Stock Transfer Restriction Agreement............................................................ 15
5.3.3 Employment Agreements........................................................................... 15
5.3.4 Lease Agreement................................................................................. 15
</TABLE>
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<CAPTION>
<S> <C> <C> <C> <C>
5.3.5 Opinion of Counsel for the Shareholders and the Company.......................................... 15
5.3.6 Documents, Stock Certificates.................................................................... 15
5.4 Deliveries by the Parent at the Closing.................................................................. 15
5.4.1 Closing Certificates............................................................................. 16
5.4.2 Opinion of Counsel for the Parent and Merger Sub................................................. 16
5.4.3 Closing Merger Consideration..................................................................... 16
5.4.4 Consent to Lease Agreement....................................................................... 16
5.4.5 Other Agreements................................................................................. 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........................................................................... 19
6.4.1 Notice........................................................................................... 19
6.4.2 Legal Defense.................................................................................... 19
6.4.3 Settlement....................................................................................... 19
6.4.4 Cooperation...................................................................................... 20
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
7.1.5 Breach by the Company or the Shareholders........................................................ 21
7.2 Effect of Termination.................................................................................... 21
8. MISCELLANEOUS.................................................................................................. 21
8.1 Notice................................................................................................... 21
8.2 Further Documents........................................................................................ 22
8.3 Assignability............................................................................................ 22
8.4 Exhibits and Schedules................................................................................... 22
8.5 Sections and Articles.................................................................................... 22
8.6 Entire Agreement......................................................................................... 22
8.7 Headings................................................................................................. 22
8.8 CONTROLLING LAW.......................................................................................... 22
8.9 Public Announcements..................................................................................... 23
8.10 No Third Party Beneficiaries............................................................................. 23
8.11 Amendments and Waivers................................................................................... 23
8.12 No Employee Rights....................................................................................... 23
8.13 Non-Recourse............................................................................................. 23
8.14 When Effective........................................................................................... 23
8.15 Takeover Statutes........................................................................................ 23
8.16 Number and Gender of Words............................................................................... 24
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8.17 Invalid Provisions...................................................................................... 24
8.18 Multiple Counterparts................................................................................... 24
8.19 No Rule of Construction................................................................................. 24
8.20 Expenses................................................................................................ 24
</TABLE>
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LIST OF EXHIBITS
<TABLE>
<CAPTION>
<S> <C>
Exhibit 1................................................................................Determination of Final Merger Consideration
Exhibit 1.5.1......................................................................Written Consent of the Shareholders of Barr Corp.
Exhibit 1.5.2..........................................................Written Consent of Sole Shareholder of Barr Acquisition Corp.
Exhibit 1.7....................................................................................................Letter of Transmittal
Exhibit 2.........................................................................................................Certain Statements
Exhibit 2.2........................................................................................Ownership of Company Common Stock
Exhibit 2.4.............................................................................Required Consents - Shareholders and Company
Exhibit 3.1.4.............................................................................................Required Consents - Parent
Exhibit 4.2......................................................................................Personal Guaranties of Shareholders
Exhibit 4.5........................................................................................................Certain Covenants
Exhibit 4.8........................................................................................Company Plans to Remain in Effect
Exhibit 4.9...................................................................................................Terminated Obligations
Exhibit 5.3.2...................................................................................Stock Transfer.Restriction Agreement
Exhibit 5.3.3-A..........................................................................................Employment Agreement (Barr)
Exhibit 5.3.3-B........................................................................................Employment Agreement (Widitz)
Exhibit 5.3.5.................................................................Opinion of Counsel to the Shareholders and the Company
Exhibit 5.4.3........................................................................Opinion of Counsel to the.Parent and Merger Sub
</TABLE>
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INDEX OF DEFINED TERMS
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Page
<S> <C>
Accountants......................................................................................................... 5
Agreement........................................................................................................... 1
Applicable Corporate Law............................................................................................ 1
Closing............................................................................................................. 1
Closing Date........................................................................................................ 1
Code................................................................................................................ 1
Company............................................................................................................. 1
Company Common Stock................................................................................................ 1
Converted Share..................................................................................................... 3
Effective Time...................................................................................................... 1
Indemnified Party................................................................................................... 19
Indemnifying Party.................................................................................................. 19
Lease............................................................................................................... 15
Losses.............................................................................................................. 17
Merger.............................................................................................................. 1
Merger Sub1
Notice of Dispute................................................................................................... 4
Parent.............................................................................................................. 1
Parent Common Stock................................................................................................. 1
Parent Financial Statements......................................................................................... 7
Parent Indemnified Parties.......................................................................................... 17
Parent Material Adverse Effect...................................................................................... 8
Parent Related Documents............................................................................................ 7
Prospectus14
Securities Act...................................................................................................... 9
Settlement Notice................................................................................................... 19
Shareholder Related Document........................................................................................ 6
Shareholders........................................................................................................ 1
Statement of Closing Consideration.................................................................................. 4
Statement of Final Per Share Amounts................................................................................ 4
Stock Certificate................................................................................................... 3
Stock Transfer Restriction Agreement................................................................................ 15
Survival Period..................................................................................................... 17
Surviving Corporation............................................................................................... 1
Threshold........................................................................................................... 18
</TABLE>
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<PAGE>
AGREEMENT AND PLAN OF MERGER
This AGREEMENT AND PLAN OF MERGER (this "Agreement") made effective as of
March 27, 1998, by and among Group Maintenance America Corp., a Texas
corporation (the "Parent"), Barr Acquisition Corp., an Illinois corporation
("Merger Sub"), Barr Electric Corp., an Illinois corporation (the "Company"),
and the undersigned holders of all of the outstanding capital stock of the
Company (the "Shareholders").
WHEREAS, the respective Boards of Directors of the Parent, Merger Sub and
the Company have each approved the merger of the Company with and into Merger
Sub (the "Merger") pursuant to this Agreement and the applicable statutes of the
State of Illinois, and pursuant to the Merger each issued and outstanding share
of Class A Common Stock, $1.00 par value per share, of the Company and each
outstanding share of Class B Non-Voting Common Stock, $1.00 par value per share,
of the Company (collectively, the "Company Common Stock") will be converted into
the right to receive certain shares of Common Stock, $.001 par value per share,
of the Parent ("Parent Common Stock"), and certain cash consideration, all as
provided herein;
WHEREAS, the Merger has been approved, as required by applicable law, by
the Parent, acting as sole shareholder of Merger Sub, and by the Shareholders;
WHEREAS, for federal income tax purposes, it is intended that the Merger
shall qualify as a reorganization within the meaning of Section 368(a) of the
Internal Revenue Code of 1986, as amended (the "Code").
NOW, THEREFORE, in consideration of the premises and the representations,
warranties and agreements herein contained, the parties hereto agree as follows:
1. THE MERGER
1.1 The Merger. Subject to the terms and conditions hereof, and in
accordance with the Illinois Business Corporation Act of 1983, as amended (the
"Applicable Corporate Law"), upon the Effective Time (as defined in Section
1.2), the Company shall be 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 Corporation."
1.2 Effective Time of the Merger. In accordance with the requirements of
applicable law, appropriate Articles of Merger under the Applicable Corporate
Law shall be prepared, executed and submitted for filing with the Secretary of
State of the State of Illinois as soon as practicable following the Closing (as
defined below). The date of such filing is referred to in this Agreement as the
"Effective Time."
1.3 Closing. The closing of the Merger ("Closing") will take place at
10:00 a.m. at the offices of Bracewell & Patterson, L.L.P., in Houston, Texas,
on the date that each of the conditions precedent to the obligations of the
parties to effect the Merger set forth in Article 5 of this Agreement are then
satisfied or waived by the applicable party ("Closing Date"). The parties may
agree in writing on another date, time or place for the Closing. At the
Closing, the parties will deliver or cause to be delivered the documents
described in Sections 5.3 and 5.4 below.
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1.4 Effects of the Merger.
1.4.1 At the Effective Time. At the Effective Time, (i) the Company
shall merge with and into Merger Sub and as a result thereof, the separate
existence of the Company shall cease, (ii) the Articles of Incorporation of
Merger Sub, as in effect immediately prior to the Effective Time, shall be the
Articles of Incorporation of the Surviving Corporation, except that the Articles
of Incorporation of Merger Sub shall be amended to provide that the name of the
Surviving Corporation shall be changed to "Barr Electric Corp.," (iii) the
Bylaws of Merger Sub as in effect immediately prior to the Effective Time shall
be the Bylaws of the Surviving Corporation, and (iv) the directors and officers
of Merger Sub immediately prior to the Effective Time shall become the directors
and officers of the Surviving Corporation, until the earlier of their
resignation or removal or until their respective successors are duly elected or
appointed, as the case may be.
1.4.2 Effects on the Surviving Corporation. As of and after the
Effective Time, the Surviving Corporation shall possess all the rights,
privileges, immunities and franchises of a public as well as of a private nature
previously belonging to the Company and Merger Sub; and all property (real,
personal and mixed), and all debts due on whatever account, including
subscriptions to shares, and all other choses in action, and all and every other
interest of or belonging to or due to each of the Company and Merger Sub shall
be transferred to, and vested in, the Surviving Corporation without further act
or deed; and all such property, rights and privileges, powers and franchises and
all and every other interest shall be thereafter the property of the Surviving
Corporation as they were of the Company and Merger Sub; and the title to any
real estate, or interest therein, whether by deed or otherwise, shall not revert
or be in any way impaired by reason of the Merger. The Surviving Corporation
shall be responsible and liable for all the liabilities and obligations of the
Company and Merger Sub, and any claim existing, or action or proceeding pending,
by or against the Company or Merger Sub may be prosecuted against the Surviving
Corporation. Neither the rights of creditors nor any liens upon the property of
the Company or Merger Sub shall be impaired by the Merger, and all debts,
liabilities and duties of each of the Company and Merger Sub shall attach to the
Surviving Corporation, and may be enforced against it to the same extent as if
such debts, liabilities and duties had been incurred or contracted by it, all in
accordance with the Applicable Corporate Law and the terms of this Agreement.
1.5 Written Consents and Other Actions.
1.5.1 Unanimous Written Consent of the Shareholders; Other Matters.
Contemporaneously with the execution hereof, the Shareholders are executing and
delivering to the Company a Unanimous Written Consent in substantially the form
of Exhibits Exhibit 1.5.1 attached hereto.
1.5.2 Written Consent of the Sole Shareholder of Merger Sub.
Contemporaneously with the execution hereof, the Parent is executing and
delivering to Merger Sub, the Company and the Shareholders 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
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
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Applicable Corporate Law and their respective articles of incorporation and
bylaws to cause the Merger to be consummated on, and subject to, the terms set
forth in this Agreement and the Applicable Corporate Law.
1.6 Conversion of Stock. As of the Effective Time, by virtue of the
Merger and without further action on the part of any holder of shares of Company
Common Stock or any holder of shares of capital stock of Merger Sub:
1.6.1 Merger Sub Capital Stock. Each share of capital stock of Merger
Sub issued and outstanding at the Effective Time shall remain outstanding and
shall be unchanged at and after the Merger and immediately following the
Effective Time shall constitute all of the issued and outstanding capital stock
of the Surviving Corporation.
1.6.2 Merger Consideration. Each share of Company Common Stock 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
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
Certificate") shall thereafter cease to have any rights with respect to such
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.
1.7 Exchange of and Payment for Stock.
1.7.1 Delivery of Company Common Stock and Closing Merger
Consideration. Prior to the Closing, the Parent will deliver to each of the
Shareholders a letter of transmittal, in substantially the form attached hereto
as Exhibits Exhibit 1.7, to be used for the purpose of surrendering Stock
Certificates to the Parent 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 (i)
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 (ii) shall
notify and direct the Parent's stock transfer agent to prepare and deliver to
the Shareholders certificates based on 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 the Shareholders to the
Parent.
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1.7.2 Assignments. 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 the
Closing Per Share Cash Amount to the Shareholders with respect to the
Shareholders' Converted Shares and the notification of the Parent's stock
transfer agent with respect to the Closing Per Share Common Stock Amount 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.
1.8.1 Parent Common Stock Value; Statement. The Parent shall deliver
to the Shareholders a 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
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 Final Merger Consideration.
1.9.1 Statement. No later than 90 days after the Closing, the Parent
shall deliver to the Shareholders a statement showing the Final Outstanding
Common Stock Number (as defined in Exhibit 1), the Final Per Share Cash Amount,
the Final Per Share Common Stock Amount and the Total Consideration (as defined
in Exhibit 1 attached hereto) (the "Statement of Final Per Share Amounts").
1.9.2 Review. After delivery to the Shareholders of the Statement of
Final Per Share Amounts, the Shareholders and the Shareholders' 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
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
Amounts within 20 business days following receipt of the Statement of Final Per
Share Amounts, specifying in reasonable detail the nature and extent of such
disagreement; provided, however, that no Notice of Dispute may be given with
respect to any items unless such items in the aggregate involve an amount of
$10,000 or more and provided further that in the event such disagreement
involves an amount less than said amount, the Statement of Final Per Share
Amounts shall be final, conclusive and binding. 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
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Amount and the Final Merger Consideration as set forth in the Statement of Final
Per Share Amounts shall be final, conclusive and binding for purposes of this
Agreement.
1.9.4 Resolution by Parties. If a Notice of Dispute is properly
given, the Parent and the Shareholders agree to negotiate in good faith and use
their best efforts to resolve any disagreement with respect to the Statement of
Final Per Share Amounts. If the Parent and the Shareholders shall not reach
such resolution within 10 days following receipt by the Parent of a properly
given Notice of Dispute, Ernst & Young, L.L.P. (the "Accountants") shall resolve
such dispute within 30 days after 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
Accountants) or the Accountants (if a dispute is resolved by them) shall set
forth such resolution in writing and such writing shall (i) set forth the Final
Outstanding Common Stock Number, 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
the Shareholders (a) the cash amount, if any, by which the aggregate of the
Final Per Share Cash Amounts payable to the Shareholders, as finally determined
pursuant hereto, exceeds the aggregate of the Closing Per Share Cash Amounts
paid to the Shareholders 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 the Shareholders, as finally determined pursuant hereto,
exceeds the aggregate of the Closing Per Share Common Stock Amounts delivered to
the Shareholders at the Closing; or (ii) the Shareholders shall deliver to the
Parent (a) the amount, if any, by which the aggregate of the Closing Per Share
Cash Amounts and the Closing Per Share Common Stock Amounts paid or delivered to
the Shareholders at the Closing exceeds the aggregate of the Final Per Share
Cash Amounts and Final Per Share Common Stock Amounts payable or deliverable to
the Shareholders as finally determined pursuant hereto. Such amount shall, at
the election of Mr. Michael Steven Barr on behalf of all the Shareholders, be
paid by the Shareholders in cash or Parent Common Stock so long as such election
shall not, in the opinion of Parent, negatively impact the qualification of the
Merger as a reorganization within the meaning of Section 368(a) of the Code in
which event such election shall be made by Parent.
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; provided,
however, that the fees and expenses of the Accountants incurred in connection
with the resolution of a dispute pursuant to the provisions of this Section 1.9
shall be the responsibility of and paid by the parties to such dispute in
inverse proportion to the extent to which the Accountants supported each parties
position with respect to such dispute.
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2. REPRESENTATIONS AND WARRANTIES
OF THE COMPANY AND THE SHAREHOLDERS
The Company and each Shareholder, 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, if applicable, the number of shares of Company Common
Stock set forth beside each 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 each
Shareholder and constitutes, and any Shareholder Related Document, when duly
executed and delivered by the Shareholder named a party therein will constitute,
legal, valid and binding obligations of such Shareholder enforceable against the
Shareholder 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. Except as provided in Exhibit 2.4, 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 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 are 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 such 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 such Shareholder.
2.5 Brokers and Finders. Except for Sucsy, Fischer & Company (the
"Broker"), a broker who has been retained by the Shareholders, neither the
Company nor any of the Shareholders have employed any broker, finder or agent,
or incurred any broker's fee or finder's fee or commission, with respect to the
transactions referred to herein or contemplated hereby, nor has any of them
dealt with anyone purporting to act in the capacity of a finder or broker with
respect thereto.
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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 date of the Prospectus
(as hereinafter defined), the total authorized and issued capital stock of
Parent will be as set forth in the Prospectus. The outstanding shares of Parent
Common Stock reflected in such Prospectus 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 the filing of the Articles of Merger with the
Secretary of State of the State of Illinois. The execution, delivery and
performance by Parent of this Agreement and any Parent Related Documents do not
violate any mortgage, indenture, contract, agreement, lease or commitment or
other instrument of any kind to which the Parent is a party or by which the
Parent or the Parent's assets or properties may be bound or affected or 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.
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
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injunction, order or decree, or any valid and enforceable order of any
governmental agency in effect as of the date hereof having jurisdiction over the
Parent, which default or violation prevents the Parent from consummating the
transactions contemplated hereby or is reasonably likely to have a Parent
Material Adverse Effect .
3.1.6 Investment Company. The Parent is not an "investment company"
or a company "controlled" by an "investment company" within the meaning of the
Investment Company Act of 1940, as amended, or a "holding company," a
"subsidiary company" of a "holding company" or an "affiliate" of a "holding
company" or a "public utility" within the meaning of the Public Utility Holding
Company Act of 1935, as amended.
3.1.7 Financial Statements. The Parent will provide certain financial
statements to the Shareholders in the Prospectus ("Parent Financial Statements")
and such Parent Financial Statements will have been prepared in accordance with
GAAP and will 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 Disclosure. No representation or warranty by the Parent in this
Agreement and no statement contained in any final prospectus delivered by the
Parent to the Shareholders pursuant to this Agreement or any certificate
delivered by the Parent to the Company or the Shareholders pursuant to this
Agreement, contains or will contain any untrue statement of a material fact or
omits or will omit any material fact necessary in order to make the statements
herein or therein, in light of the circumstances under which they are or were
made, not misleading.
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3.1.11 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.
3.1.12 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.
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(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.
3.1.13 Brokers and Finders. The Parent has not employed any broker,
finder or agent, or incurred any broker's fee or commission, with respect to any
transactions referred to herein or contemplated hereby and has not dealt with
anyone purporting to act in the capacity of a finder or broker with respect
thereto.
3.1.14 Parent Common Stock. The issuance of all shares of Parent
Common Stock to be issued by Parent pursuant to the Merger, when issued in
accordance with this Agreement, will be registered under the Securities Act of
1933, as amended (the "Securities Act") and such shares will be listed for
trading on the New York Stock Exchange and will be validly issued, fully paid
and nonassessable and, subject to the requirements of Rules 144 and 145
promulgated pursuant to the Securities Act and the Stock Transfer Restriction
Agreement (as defined below), will be freely tradeable without restrictions.
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 Illinois.
3.2.2 Capital Structure. The authorized capital stock of Merger Sub
consists of 5,000 shares of Common Stock, par value $.01 per share, 1,000 of
which are validly issued and outstanding, fully paid and nonassessable and are
owned by the Parent free and clear of all liens, encumbrances and adverse
claims.
3.2.3 Authority. Merger Sub has the corporate power and authority to
execute, deliver and perform this Agreement and to consummate the transactions
contemplated hereby. The execution and delivery of this Agreement, the
performance by Merger Sub of its obligations hereunder and the consummation of
the transactions contemplated hereby have been duly authorized by its Board of
Directors and the Parent as its sole shareholder, and, except for the corporate
filings required by state law, no other corporate proceedings on the part of
Merger Sub are necessary to authorize this Agreement and the transaction
contemplated hereby. This Agreement has been duly and validly executed and
delivered by Merger Sub and (assuming the due authorization, execution and
delivery hereof by the Company) constitutes a valid and binding obligation of
Merger Sub enforceable against Merger Sub in accordance with its terms, except
as such enforcement may be limited by bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting the enforcement of creditors' rights
generally and by general principles of equity (whether applied in a proceeding
at law or in equity).
3.2.4 Consents. Except as set forth in 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 Merger Sub of this Agreement or the the consummation
by
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Merger Sub of the transactions contemplated hereby, except for the filing of the
Articles of Merger with the Secretary of State of the State of Illinois.
3.2.5 Defaults. Merger Sub is not in default under or in violation
of, and the execution, delivery and performance of this Agreement and the
consummation by Merger Sub 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 Merger Sub is a party or by which Merger
Sub or any of its properties or assets may be bound or affected or (ii) any law,
rule or regulation applicable to Merger Sub 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 Merger Sub, which default or
violation prevents Merger Sub from consummating the transactions contemplated
hereby or is reasonably likely to have a Parent Material Adverse Effect.
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 one year following any termination of such
Shareholder's employment with the Surviving Corporation or any of its
affiliates (as defined in Exhibit 2), regardless of the reason for such
termination, 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, owner, officer, director, trustee, manager,
employee, agent, associate or consultant engage in any business which
directly competes with any of the services or products produced, sold,
conducted, developed, or in the process of development by the Company on
the Closing Date (or, if clause (b) above is applicable, on the date of
termination of the Shareholder's employment), including any indoor air
quality, heating, electrical, ventilation, air conditioning, appliance,
mechanical construction, plumbing or sewer cleaning contracting, products
or services within a 100-mile radius of the city or cities in which the
Company presently conducts business; provided, however, that with respect
to Mr. Emil Widitz, the period referred to above shall be from the Closing
Date to the earlier to occur of (a) the date which is five years after the
Closing Date or (b) the date which is one year following any termination of
employment of Mr. Widitz with the Surviving Corporation or any of its
affiliates.
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(ii) The Shareholders agree that the limitations set forth herein on
each 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, the Shareholders
do hereby (i) release, acquit and forever discharge the Surviving Corporation
from any and all liabilities, obligations, claims, demands, actions or causes of
action arising from or relating to any event, occurrence, act, omission or
condition occurring or existing on or prior to the Effective Time, including,
without limitation, any claim for indemnity or contribution from the Surviving
Corporation in connection with the obligations or liabilities of the
Shareholders hereunder, except for salary and benefits payable to the
Shareholders as employees in the ordinary course of business and claims of the
Shareholders pursuant to Section 6.2.2 of this Agreement; (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 Releases of Personal Guaranties. The Parent agrees to use its
reasonable best efforts to cause the Shareholders to be released from the
personal guaranties described on Exhibit 4.2 given by them for the benefit of
the Company.
4.3 Purchase of Certain Receivables. If any accounts receivable included
in the assets of the Company for purposes of determining the Total Consideration
pursuant to Exhibit 1 remain unpaid in full on the date that occurs 90 days
following the Closing, the Shareholders shall, upon written request by the
Parent made on or before the date that occurs 120 days following the Closing,
purchase the same from the Surviving Corporation, without recourse, for the
uncollected face amount thereof (net of any reserve therefor for bad debts on
the books of the Company on the Closing Date). Such purchase by the
Shareholders shall be pro rata based on their ownership of the shares of Company
Common Stock on the Closing Date and, at the election of each Shareholder, may
be made for cash or for Parent Common Stock valued at the Parent Common Stock
Value, as defined in Exhibits Exhibit 1.
4.4 Certain Payables and Receivables. On or prior to Closing, the
Shareholders shall cause to be paid in full in cash all accounts receivable,
notes receivable and advances payable by the Shareholders to the Company and the
Company shall pay in full in cash all accounts payable, notes payable and
advances payable by the Company to the Shareholders.
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4.5 Pre-Closing Covenants and Agreements. The Shareholders and the
Company jointly and severally agree as set forth in Exhibits Exhibit 4.5
attached hereto.
4.6 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; provided, however, that the Company may disclose the
existence of this Agreement to Crestline Products Company, an Illinois
corporation, in connection with obtaining the consent required pursuant to
Section 5.3.4 of this Agreement. 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 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.
4.7 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,
that would jeopardize the qualification of the Merger as a reorganization
withing the meaning of Section 368(a) of the Code.
4.8 Company Plans. Except as otherwise contemplated by this Agreement,
the Company Plans (as defined in Exhibit 2) described on Exhibits Exhibit 4.8 in
effect at the date of this Agreement will remain in effect unless otherwise
determined by the Parent after the Effective Time.
4.9 [Intentionally Omitted].
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 Performance of Covenants. The Shareholders and the Company
shall have performed and complied (i) in all respects with all covenants (other
than those set forth on Exhibit 4.5 of this Agreement) of this Agreement to be
performed or complied with by them at or prior to the Closing Date, and (ii) in
all material respects with those covenants set forth on Exhibit 4.5 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.
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5.1.2 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 to restrain, prohibit or
invalidate 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.
5.1.3 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.
5.1.4 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.
5.1.5 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.
5.1.6 Prospectus. The Parent shall have completed, filed and had
declared effective under the Securities Act an amendment to its registration
statement related to the Parent Common Stock ("Prospectus") and shall have
delivered a copy of such Prospectus to the Company and each of the Shareholders.
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 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.
5.2.2 Approvals. The Parent shall have procured all of the consents,
approvals and waivers specified in Exhibit 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.
5.2.3 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.
5.2.4 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
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of the acquisition of the Company pursuant to this Agreement, which is
reasonably likely to restrain, prohibit or invalidate the consummation of the
transactions contemplated by this Agreement, and the Parent shall have delivered
to the Company and the Shareholders a certificate to the effect none of the
foregoing shall have occurred with respect to it.
5.2.5 Prospectus. The Company and each of the Shareholders shall have
received a copy of the Prospectus and each of them shall have acknowledged its
acceptance of such Prospectus, such acknowledgment not to be unreasonably
withheld.
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 and Evidence of Payments. The Shareholders
and the Company shall deliver the certificates required pursuant to Sections
5.1.1, 5.1.2 and 5.1.3, and the Company and the Shareholders shall have
delivered evidence reasonably satisfactory to the Parent that the Company and
the Shareholders have paid in full all costs and fees of the Broker and the
Shareholders' legal representatives incurred in connection with this Agreement
and the transactions contemplated hereby; provided, however, that the maximum
amount of such fees and expenses to be paid by the Company shall be $646, 075
(the "Expense Amount") and the funds for the payment by the Company of such
Expense Amount shall be provided by the Parent on the Closing Date.
5.3.2 Stock Transfer Restriction Agreement. Each Shareholder shall
execute and deliver a Stock Transfer Restriction Agreement on the Closing Date,
effective as of the Effective Time, substantially in the form set forth in
Exhibits Exhibit 5.3.2 (the "Stock Transfer Restriction Agreement").
5.3.3 Employment Agreements. Michael Barr shall execute and deliver
an Employment Agreement with the Surviving Corporation on the Closing Date,
effective as of the Effective Time, substantially in the form set forth in
Exhibits Exhibit 5.3.3-A, and Emil Widitz shall execute and deliver an
Employment Agreement with the Surviving Corporation on the Closing Date,
effective as of the Effective Time, substantially in the form set forth in
Exhibit 5.3.3-B.
5.3.4 Lease Agreement. The Shareholders shall cause the owner of the
property located at 222 East Marquardt Drive, Wheeling, Illinois 60090 to
consent to the assumption by the Surviving Corporation of the Company's present
lease on such property (in either case, the "Lease").
5.3.5 Opinion of Counsel for the Shareholders and the Company. The
Shareholders shall deliver the favorable opinion of Fischel & Kahn, Ltd.,
counsel to the Shareholders and the Company, dated the Closing Date,
substantially in the form and to the effect set forth in Exhibits Exhibit 5.3.5
attached hereto.
5.3.6 Documents, Stock Certificates. The Shareholders shall 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
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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.
The consummation of the Closing shall not be deemed to be a waiver by the
Parent or Merger Sub of any of their rights or remedies hereunder for breach of
any warranty, covenant or agreement herein by the Shareholders or the Company
irrespective of any knowledge of or investigation with respect thereto 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 a specified breach
of a specifically identified representation, warranty, covenant or agreement of
the Shareholders or the Company contained herein by the Shareholders or the
Company, and requests a waiver thereof by the Parent and Merger Sub, and the
Parent shall waive any such specifically identified breach in writing prior to
the Closing, the Parent and the Surviving Corporation, for themselves and their
heirs, legal representatives, successors and assigns, shall be deemed to have
waived their rights and remedies hereunder for, and the Shareholders shall have
no liability or obligation with respect to, any such specifically identified
breach, to the extent so identified by the Company and 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, 5.2.4 and 5.2.5.
5.4.2 Opinion of Counsel for the Parent and Merger Sub. The Parent
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.
5.4.3 Closing Merger Consideration. The Parent shall deliver the
Closing Merger Consideration to the Shareholders by delivering the Closing Per
Share Cash Amount for the Converted Shares and providing evidence to the
Shareholders' of notification of the Parent's stock transfer agent with respect
to issuance of certificates representing the Closing Per Share Common Stock
Amount applicable to the Converted Shares.
5.4.4 Consent to Lease Agreement. The Parent shall deliver an
acknowledgment of its assumption of the Lease described in Section 5.3.4 of
this Agreement.
5.4.5 Other Agreements. The Parent shall have delivered the
employment agreements described in Section 5.3.3. of this Agreement.
The consummation of the Closing shall not be deemed to be a waiver by
the Shareholders of any of the Shareholders' rights or remedies hereunder for
breach of any warranty, covenant or agreement
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herein by the Parent or Merger Sub irrespective of any knowledge of or
investigation with respect thereto made by or on behalf of any Shareholders;
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 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, for themselves and their
heirs, legal representatives, successors and assigns, shall be deemed to have
waived their rights and remedies hereunder for, and the Parent and Merger Sub
shall have no liability or obligation with respect to, any such specifically
identified breach, to the extent so identified by the Parent and waived by the
Company and the Shareholders.
Prior to Closing, the Parent will investigate and review the books and
records relating to the operation of the Company, and inspect the Company's
assets as it considered necessary to satisfy itself as to the condition of the
Company's business and properties. The Parent will notify the Company and the
Shareholders of any material discrepancy, statement or state of facts that is
discovered up until the Closing Date which may affect or render any of the
Company's or the Shareholders' representations or warranties contained herein
untrue or misleading. To the extent that the Parent has actual knowledge of any
such discrepancy, statement or state of facts (and the significance of such
discrepancy, statement or state of facts as such relates to the Company's and
the Shareholders' representations or warranties), and fails to notify the
Company and the Shareholders, the applicable representation or warranty known to
be untrue or misleading shall be unenforceable; provided, however, that the
foregoing provisions of this sentence shall not apply to representations and
warranties by the Company and the Shareholders concerning Section 302 of the
Labor Management Reporting Act, as amended. In all other respects, the
representations and warranties of the Company and the Shareholders shall remain
unaffected.
6. SURVIVAL, INDEMNIFICATIONS
6.1 Survival. The representations and warranties set forth in this
Agreement and the other documents, instruments and agreements contemplated
hereby shall survive after the date hereof to the extent provided herein. The
representations and warranties of the Shareholders and the Company herein and in
the Shareholder Related Documents and the Company Related Documents (as defined
in Exhibit 2) other than those of the Shareholders and the Company in Sections
2.2, 2.3, 2.4 and in Sections 2 and 3 of Exhibit 2 shall survive for a period of
30 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 Sections
2 and 3 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 and 3.1.4,
shall survive for a period of 30 months after the Closing Date and the
representations and warranties of the Parent contained in Sections 3.1.3 and
3.1.4 shall survive for the maximum period permitted by applicable law. The
periods of survival of the representations and warranties as stated above in
this Section 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
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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 4.5) 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 and all of their respective officers, directors and employees 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; provided, however, that Losses (as
hereinafter defined) collectable under this Section 6.2.1 in the form of adverse
effects on cash flow or earnings shall be limited to $2 million per claim,
action, suit or proceeding with respect to which an indemnification claim is
made pursuant to this Section 6.2.1 and an aggregate maximum for all such
claims, actions, suits and proceedings of $6 million), 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 a Shareholder or the Company or
the failure by any Shareholder or the Company to perform any obligation of
such Shareholders or the Company contained herein or in any Company Related
Document or Shareholder Related Document;
(ii) any inaccuracy in or breach of any representation or warranty
of any Shareholder 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 date of this Agreement
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) or included as
liabilities for purposes of determining the Stockholders' Equity Addition
and the Stockholders' Equity Deduction.
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
each Shareholder's heirs, legal representatives,
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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;
(iii) any act, omission, event, condition or circumstance occurring
or existing at any time after (but not on or before) the date of this
Agreement 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 solely
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. No claim under Section 621 may be made until the
aggregate of all Losses for which claims for indemnification under such Section
exceeds $100,000 (the "Threshold"), but all Losses (including, without
limitation, those below the amount of the Threshold) may be recovered under such
Section once the Threshold has been exceeded. The aggregate liability of the
Shareholders under Sections 6.2.1(ii) and (iii) shall not exceed the cash
amount equal to the Total Consideration with the Parent Common Stock being
valued at the Parent Common Stock Value 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 Parent Common Stock Value for such purpose.
6.4 Procedures for Indemnification.
6.4.1 Notice. The party (the "Indemnified Party") that may be
entitled to indemnity hereunder shall give 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. Such notice shall be given within 10 days after the
first receipt by an executive officer of the party seeking such indemnification
of notice of such claim, suit, action or proceeding. 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.
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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 the Shareholders' 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 20 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 20
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 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
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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 May 15, 1998, but only if neither the Company nor any Shareholder
has breached this Agreement or have 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 September 1, 1998, 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 breached this
Agreement or failed to perform any of its obligations under this Agreement; or
7.1.5 Breach by the Company or the Shareholders. By the Parent, by
written notice to the Company, if the Company or any Shareholder has breached
this Agreement or has 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:
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To the Company (prior to the Effective Time) or the Shareholders:
Mr. Michael Barr
14962 West Imperial Drive
Libertyville, Illinois 60048
With a copy to:
Mr. Morris G. Dyner
Fischel & Kahn, Ltd.
190 S. LaSalle Street
Chicago, Illinois 60603
Telecopy: (312) 726-1448
To the Parent or Merger Sub or the Surviving Corporation:
Group Maintenance America Corp.
8 Greenway Plaza, Suite 1500
Houston, Texas 77046
Attn: President
Telecopy: (713) 626-4766
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. After the Effective Time, the Parent may assign its rights
under this Agreement, the Company Related Documents and the Shareholder Related
Documents without the consent of any Shareholders 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 the Shareholders.
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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 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, the Shareholders
shall make no 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
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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 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
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similar in terms to such illegal, invalid or unenforceable provision as may be
possible and be legal, valid and enforceable.
8.18 Multiple Counterparts. This Agreement may be executed in a number of
identical counterparts. If so executed, each of such counterparts is to be
deemed an original for all purposes and all such counterparts shall,
collectively, constitute one agreement, but, in making proof of this Agreement,
it shall not be necessary to produce or account for more than one such
counterpart.
8.19 No Rule of Construction. All of the parties hereto have been
represented by counsel in the negotiations and preparation of this Agreement;
therefore, this Agreement will be deemed to be drafted by each of the parties
hereto, and no rule of construction will be invoked respecting the authorship of
this Agreement.
8.20 Expenses. Each of the parties shall bear all of their own expenses in
connection with the negotiation and closing of this Agreement and the
transactions contemplated hereby; provided that the Company may pay or accrue
the costs of any broker, legal counsel, accountants (including the fees and
costs of the 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.
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IN WITNESS WHEREOF, this Agreement has been duly executed and delivered on
the date first hereinabove written.
PARENT:
GROUP MAINTENANCE AMERICA CORP.
By: /s/ Chester J. Jachimiec
--------------------------------------
Name: Chester J. Jachimiec
------------------------------------
Title: Vice President
-----------------------------------
MERGER SUB:
BARR ACQUISITION CORP.
By: /s/ Chester J. Jachimiec
--------------------------------------
Name: Chester J. Jachimiec
------------------------------------
Title: Vice President
-----------------------------------
SHAREHOLDERS:
/s/ Michael Steven Barr
------------------------------------------
Michael Steven Barr, as trustee under an agreement
dated December 17, 1986, known as the Michael
Steven Barr Trust
/s/ Teri Louise Barr
------------------------------------------
Teri Louise Barr, as trustee under an agreement
dated December 17, 1986, known as the Teri Louise
Barr Trust
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<PAGE>
/s/ Patricia Ann Barr
------------------------------------------
Patricia Ann Barr, as trustee under an agreement
dated December 17, 1986, known as the Patricia Ann
Barr Trust
/s/ Emil Widitz
------------------------------------------
Emil Widitz
COMPANY:
BARR ELECTRIC CORP.
By: /s/ Michael Barr
------------------------------------
Name: Michael Barr
----------------------------------
Title: President
---------------------------------
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<PAGE>
[Exhibits intentionally omitted]
<PAGE>
EXHIBIT 2.2
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
GROUP MAINTENANCE AMERICA CORP.
COMMERCIAL AIR ACQUISITION CORP.
PREMEX, INC.,
THE HOLDERS OF THE
OUTSTANDING CAPITAL STOCK
OF
PREMEX, INC.
AND
COMMERCIAL AIR, POWER AND CABLE, INC.
MARCH 31, 1998
<PAGE>
TABLE OF CONTENTS
Page
1. THE MERGER............................................................ 1
1.1 The Merger...................................................... 1
1.2 Effective Time of the Merger.................................... 1
1.3 Closing......................................................... 1
1.4 Effects of the Merger........................................... 2
1.4.1 At the Effective Time................................... 2
1.4.2 Effects on the Surviving Corporation.................... 2
1.5 Written Consents and Other Actions.............................. 2
1.5.1 Unanimous Written Consent of the Shareholders;
Other Matters.......................................... 2
1.5.2 Written Consent of the Sole Shareholder of Merger Sub... 2
1.5.3 All Other Necessary Actions............................. 2
1.6 Conversion of Stock............................................. 3
1.6.1 Merger Sub Capital Stock................................ 3
1.6.2 Merger Consideration.................................... 3
1.7 Exchange of and Payment for Stock............................... 3
1.7.1 Delivery of Company Common Stock and Closing
Merger Consideration................................... 3
1.7.2 Assignments............................................. 3
1.7.3 Payment In Full Satisfaction of All Rights.............. 3
1.8 Determination of Closing Merger Consideration................... 4
1.8.1 Parent Common Stock Value; Statement.................... 4
1.9 Post-Closing Determination of Final Merger Consideration........ 4
1.9.1 Statement............................................... 4
1.9.2 Review.................................................. 4
1.9.3 Disputes................................................ 4
1.9.4 Resolution by Parties................................... 4
1.9.5 Final Determination..................................... 5
1.9.6 Expenses................................................ 5
2. REPRESENTATIONS AND WARRANTIESOF THE COMPANY, COMMERCIAL AIR AND THE
SHAREHOLDERS......................................................... 5
2.1 Exhibit 2....................................................... 5
2.2 Stock Ownership................................................. 5
2.3 Authority....................................................... 5
2.4 Consents........................................................ 6
2.5 Brokers and Finders............................................. 6
2.6 No Implied Representation....................................... 6
3. REPRESENTATIONS AND WARRANTIESOF THE PARENT AND MERGER SUB............ 6
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3.1 Representations and Warranties.................................... 6
3.1.1 Organization.............................................. 6
3.1.2 Capitalization of the Parent.............................. 6
3.1.3 Authority................................................. 7
3.1.4 Consents.................................................. 7
3.1.5 Defaults.................................................. 7
3.1.6 Investment Company........................................ 7
3.1.7 Financial Statements...................................... 7
3.1.8 Taxes..................................................... 8
3.1.9 Full Authority............................................ 8
3.1.10 Disclosure................................................ 8
3.1.11 Parent Material Adverse Effect............................ 8
3.1.12 Tax-Free Reorganization................................... 8
3.1.13 Brokers and Finders....................................... 9
3.1.14 Parent Common Stock....................................... 9
3.1.15 Previous Acquisitions..................................... 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............................................ 12
4.3 Purchase of Certain Receivables................................... 12
4.4 Certain Payables and Receivables.................................. 12
4.5 Pre-Closing Covenants and Agreements.............................. 12
4.6 Confidentiality................................................... 12
4.7 Tax-Free Reorganization........................................... 12
4.8 Company Plans..................................................... 13
4.9 HSR Act........................................................... 13
4.10 Certain Retainages................................................ 13
4.11 Employee Options.................................................. 13
4.12 Certain Information............................................... 13
4.13 Discharge of Indebtedness, Releases, Etc.......................... 13
4.14 Split-Dollar Life Insurance Policies.............................. 13
4.15 Employee Equity Agreements........................................ 13
5. CONDITIONS PRECEDENT; CLOSING DELIVERIES................................ 14
5.1 Conditions Precedent to the Obligations of the Parent
and Merger Sub................................................... 14
5.1.1 Accuracy of Representations and Warranties................ 14
5.1.2 Performance of Covenants.................................. 14
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5.1.3 Legal Actions or Proceedings............................... 14
5.1.4 Approvals.................................................. 14
5.1.5 Closing Deliveries......................................... 15
5.1.6 No Casualty, Loss or Damage................................ 15
5.1.7 Licenses, etc.............................................. 15
5.1.8 No Material Adverse Change................................. 15
5.1.9 Certain Corporate Actions.................................. 15
5.1.10 HSR Act................................................... 15
5.1.11 Prospectus................................................ 15
5.2 Conditions Precedent to the Obligations of the Shareholders,
the Company and Commercial Air..................................... 15
5.2.1 Accuracy of Representations and Warranties................. 15
5.2.2 Performance of Covenants................................... 15
5.2.3 Approvals.................................................. 16
5.2.4 Closing Deliveries......................................... 16
5.2.5 HSR Act.................................................... 16
5.2.6 Legal Actions or Proceedings............................... 16
5.2.7 Certain Corporate Actions.................................. 16
5.2.8 Prospectus................................................. 16
5.3 Deliveries by the Shareholders at the Closing...................... 16
5.3.1 Closing Certificates....................................... 16
5.3.2 Stock Transfer Restriction Agreement....................... 16
5.3.3 Employment Agreements...................................... 16
5.3.4 Documents, Stock Certificates.............................. 17
5.3.5 Opinion of Counsel for the Shareholders and the Company.... 17
5.3.6 Satisfaction of the Employee Equity Agreements Amount
and the Termination of the Employee Equity Agreements...... 17
5.3.7 Lease Consent.............................................. 17
5.3.8 Release of Guaranty........................................ 17
5.4 Deliveries by the Parent at the Closing............................ 17
5.4.1 Closing Certificates....................................... 17
5.4.2 Opinion of Counsel for the Parent and Merger Sub........... 18
5.4.3 Employee Equity Agreements Amount.......................... 18
5.4.4 Closing Merger Consideration............................... 18
5.4.5 Other Agreements........................................... 18
6. SURVIVAL, INDEMNIFICATIONS.............................................. 18
6.1 Survival.......................................................... 18
6.2 Indemnification................................................... 19
6.2.1 Parent Indemnified Parties................................ 19
6.2.2 Parent Indemnity.......................................... 20
6.3 Limitations....................................................... 20
6.4 Procedures for Indemnification.................................... 21
6.4.1 Notice.................................................... 21
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6.4.2 Legal Defense.............................................. 21
6.4.3 Settlement................................................. 21
6.4.4 Cooperation................................................ 21
6.5 Subrogation........................................................ 22
7. TERMINATION............................................................. 22
7.1 Grounds for Termination........................................... 22
7.1.1 Mutual Consent............................................ 22
7.1.2 Optional By the Company................................... 22
7.1.3 Optional By the Parent.................................... 22
7.1.4 Breach By the Parent or Merger Sub........................ 22
7.1.5 Breach by the Company or the Shareholders................. 22
7.2 Effect of Termination............................................. 22
8. MISCELLANEOUS........................................................... 22
8.1 Notice............................................................ 22
8.2 Further Documents................................................. 23
8.3 Assignability..................................................... 23
8.4 Exhibits and Schedules............................................ 23
8.5 Sections and Articles............................................. 23
8.6 Entire Agreement.................................................. 23
8.7 Headings.......................................................... 24
8.8 CONTROLLING LAW................................................... 24
8.9 Public Announcements.............................................. 24
8.10 No Third Party Beneficiaries...................................... 24
8.11 Amendments and Waivers............................................ 24
8.12 No Employee Rights................................................ 24
8.13 Non-Recourse...................................................... 25
8.14 When Effective.................................................... 25
8.15 Takeover Statutes................................................. 25
8.16 Number and Gender of Words........................................ 25
8.17 Invalid Provisions................................................ 25
8.18 Multiple Counterparts............................................. 25
8.19 No Rule of Construction........................................... 25
8.20 Expenses.......................................................... 25
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<PAGE>
<TABLE>
<CAPTION>
LIST OF EXHIBITS
<S> <C>
Exhibit 1................................................................................Determination of Final Merger Consideration
Exhibit 1.5.1....................................................................Written Consent of the Shareholders of Premex, Inc.
Exhibit 1.5.2................................................Written Consent of Sole Shareholder of Commercial Air Acquisition Corp.
Exhibit 1.7....................................................................................................Letter of Transmittal
Exhibit 2.........................................................................................................Certain Statements
Exhibit 2.2........................................................................................Ownership of Company Common Stock
Exhibit 2.4.............................................................................Required Consents - Shareholders and Company
Exhibit 3.1.4.............................................................................................Required Consents - Parent
Exhibit 4.2................................................................................................Expenses to be Eliminated
Exhibit 4.5........................................................................................................Certain Covenants
Exhibit 4.8............................................................................................................Company Plans
Exhibit 4.13..................................................................................................Terminated Obligations
Exhibit 5.3.2-A.................................................................................Stock Transfer Restriction Agreement
Exhibit 5.3.2-B.................................................................................Stock Transfer Restriction Agreement
Exhibit 5.3.3-A.................................................................................................Employment Agreement
Exhibit 5.3.3-B.................................................................................................Employment Agreement
Exhibit 5.3.5.................................................................Opinion of Counsel to the Shareholders and the Company
Exhibit 5.4.2........................................................................Opinion of Counsel to the Parent and Merger Sub
</TABLE>
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<PAGE>
INDEX OF DEFINED TERMS
Page
Accountants................................................................. 4
Agreement................................................................... 1
Applicable Corporate Law.................................................... 1
Chesapeake.................................................................. 13
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
Commercial Air.............................................................. 1
Commercial Air Common Stock................................................. 1
Company..................................................................... 1
Company Common Stock........................................................ 1
Converted Share............................................................. 3
Effective Time.............................................................. 1
Employee Equity Agreement................................................... 14
Employee Equity Agreement Amount............................................ 14
Excess Expense Level Deduction........................................ Exhibit 1
Final Aggregate Cash Amount........................................... Exhibit 1
Final Outstanding Common Stock Number................................. Exhibit 1
Final Per Share Cash Amount........................................... Exhibit 1
Final Per Share Common Stock Amount................................... Exhibit 1
HSR Act..................................................................... 13
Indemnified Party........................................................... 21
Indemnifying Party.......................................................... 21
Losses...................................................................... 19
Merger...................................................................... 1
Merger Sub.................................................................. 1
Notice of Dispute........................................................... 4
Other Ownership Interests..............................................Exhibit 1
Parent...................................................................... 1
Parent Common Stock......................................................... 1
Parent Financial Statements................................................. 7
Parent Indemnified Parties.................................................. 19
Parent Material Adverse Effect.............................................. 8
Parent Related Documents.................................................... 7
Prospectus.................................................................. 15
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Securities Act............................................................... 9
Settlement Notice............................................................ 21
Shareholder Related Document................................................. 5
Shareholders................................................................. 1
Statement of Closing Consideration........................................... 4
Statement of Final Per Share Amounts......................................... 4
Stock Certificate............................................................ 3
Stock Transfer Restriction Agreement......................................... 16
Survival Period.............................................................. 18
Surviving Corporation........................................................ 1
Terminated Obligations....................................................... 13
Threshold.................................................................... 20
Total Consideration................................................... Exhibit 1
(TERMS DEFINED IN EXHIBITS OTHER THAN EXHIBIT 1 ARE NOT INCLUDED IN THIS INDEX)
-vii-
<PAGE>
AGREEMENT AND PLAN OF MERGER
This AGREEMENT AND PLAN OF MERGER (this "Agreement") made effective as of
March 31, 1998, by and among Group Maintenance America Corp., a Texas
corporation (the "Parent"), Commercial Air Acquisition Corp., a Maryland
corporation ("Merger Sub"), Premex, Inc., a Maryland corporation (the
"Company"), the undersigned holders of all of the outstanding capital stock of
the Company (the "Shareholders"), and Commercial Air, Power & Cable, Inc., a
wholly-owned subsidiary of the Company ("Commercial Air").
WHEREAS, the respective Boards of Directors of the Parent, Merger Sub, the
Company and Commercial Air 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 State of Maryland, and pursuant to the Merger each issued and
outstanding share of Common Stock, $$.01 par value per share, of the Company
("Company Common Stock") will be converted into the right to receive certain
shares of common stock, $.001 par value per share, of the Parent ("Parent Common
Stock"), and certain cash consideration, all as provided herein;
WHEREAS, the authorized capital stock of Commercial Air is 100,000 shares
of Common Stock, $.01 par value per share ("Commercial Air Common Stock"), of
which 100,000 shares are issued and outstanding and held of record and
beneficially by the Company;
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;
WHEREAS, for federal income tax purposes, it is intended that the Merger
shall qualify as a reorganization within the meaning of Section 368(a) of the
Internal Revenue Code of 1986, as amended (the "Code").
NOW, THEREFORE, in consideration of the premises and the representations,
warranties and agreements herein contained, the parties hereto agree as follows:
1. THE MERGER
1.1 The Merger. Subject to the terms and conditions hereof, and in
accordance with the Maryland General Corporation Law (the "Applicable Corporate
Law") upon the Effective Time (as defined in Section 1.2), the Company shall be
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
Corporation."
1.2 Effective Time of the Merger. In accordance with the requirements of
applicable law, appropriate Articles of Merger under the Applicable Corporate
Law shall be prepared, executed and submitted for filing with the Secretary of
State of the State of Illinois as soon as practicable following the Closing (as
defined below). The date of such filing is referred to in this Agreement as the
"Effective Time."
1.3 Closing. The closing of the Merger ("Closing") will take place at
10:00 a.m. at the offices of Bracewell & Patterson, L.L.P., in Houston, Texas,
on the date that each of the conditions precedent to the obligations of the
parties to effect the Merger set forth in Article 5 of this Agreement are then
satisfied or waived by the applicable party ("Closing Date"). The parties may
agree in writing on another date, time or place for the Closing. At the
Closing, the parties will deliver or cause to be delivered the documents
described in Sections 5.3 and 5.4 below.
<PAGE>
1.4 Effects of the Merger.
1.4.1 At the Effective Time. At the Effective Time, (i) the Company
shall merge with and into Merger Sub and as a result thereof, the separate
existence of the Company shall cease, (ii) the Articles of Incorporation of
Merger Sub, as in effect immediately prior to the Effective Time, shall be the
Articles of Incorporation of the Surviving Corporation, except that the Articles
of Incorporation of Merger Sub shall be amended to provide that the name of the
Surviving Corporation shall be changed to "Commercial Air Holding Company,"
(iii) the Bylaws of Merger Sub as in effect immediately prior to the Effective
Time shall be the Bylaws of the Surviving Corporation, and (iv) the directors
and officers of Merger Sub immediately prior to the Effective Time shall become
the directors and officers of the Surviving Corporation, until the earlier of
their resignation or removal or until their respective successors are duly
elected or appointed, as the case may be.
1.4.2 Effects on the Surviving Corporation. As of and after the
Effective Time, the Surviving Corporation shall possess all the rights,
privileges, immunities and franchises of a public as well as of a private nature
previously belonging to the Company and Merger Sub; and all property (real,
personal and mixed), and all debts due on whatever account, including
subscriptions to shares, and all other choices 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.
1.5 Written Consents and Other Actions.
1.5.1 Unanimous Written Consent of the Shareholders; Other Matters.
Contemporaneously with the execution hereof, the Shareholders are executing and
delivering to the Company a Unanimous Written Consent in substantially the form
of Exhibits Exhibit 1.5.1 attached hereto.
1.5.2 Written Consent of the Sole Shareholder of Merger Sub.
Contemporaneously with the execution hereof, the Parent is executing and
delivering to Merger Sub a written consent of the sole shareholder of Merger
Sub, in the form of 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
forth in Sections 1.5.1 and 1.5.2, the Parent, Merger Sub, the Company and
Commercial Air 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.
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<PAGE>
1.6 Conversion of Stock. As of the Effective Time, by virtue of the
Merger and without further action on the part of any holder of shares of Company
Common Stock or any holder of shares of capital stock of Merger Sub:
1.6.1 Merger Sub Capital Stock. Each share of capital stock of Merger
Sub issued and outstanding at the Effective Time shall remain outstanding and
shall be unchanged at and after the Merger and immediately following the
Effective Time shall constitute all of the issued and outstanding capital stock
of the Surviving Corporation.
1.6.2 Merger Consideration. Each share of Company Common Stock 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
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
Certificate") shall thereafter cease to have any rights with respect to such
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.
1.7 Exchange of and Payment for Stock.
1.7.1 Delivery of Company Common Stock and Closing Merger
Consideration. Prior to the Closing, the Parent will deliver to each of the
Shareholders a letter of transmittal, in substantially the form attached hereto
as Exhibits Exhibit 1.7, to be used for the purpose of surrendering Stock
Certificates to the Parent 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 (i)
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 (ii) shall
notify and direct the Parent's stock transfer agent to prepare and deliver to
the Shareholders certificates based on 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 the Shareholders to the
Parent.
1.7.2 Assignments. The assignment, transfer or other disposition of
record or beneficial ownership of any shares of Company Common Stock or
Commercial Air 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 the
Closing Per Share Cash Amount to the Shareholders with respect to the
Shareholders' Converted Shares and the notification of the Parent's stock
transfer agent with respect to the Closing Per Share Common Stock Amount shall
be
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<PAGE>
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.
1.8.1 Parent Common Stock Value; Statement. The Parent shall deliver
to the Shareholders a 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
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 Final Merger Consideration.
1.9.1 Statement. No later than 90 days after the Closing, the Parent
shall deliver to the Shareholders a statement showing the Final Outstanding
Common Stock Number (as defined in Exhibit 1), the Final Per Share Cash Amount,
the Final Per Share Common Stock Amount and the Total Consideration (as defined
in Exhibit 1 attached hereto) (the "Statement of Final Per Share Amounts").
1.9.2 Review. After delivery to the Shareholders of the Statement of
Final Per Share Amounts, the Shareholders and the Shareholders' 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
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
Amounts within 20 business days following receipt of the Statement of Final Per
Share Amounts, specifying in reasonable detail the nature and extent of such
disagreement; provided, however, that no Notice of Dispute may be given with
respect to any items unless such items in the aggregate involve an amount of
$10,000 or more and provided further that in the event such disagreement
involves an amount less than $10,000, the Statement of Final Per Share Amounts
shall be final, conclusive and binding. 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 Final Merger
Consideration as set forth in the Statement of Final Per Share Amounts shall be
final, conclusive and binding for purposes of this Agreement.
1.9.4 Resolution by Parties. If a Notice of Dispute is properly
given, the Parent and the Shareholders agree to negotiate in good faith and use
their best efforts to resolve any disagreement with respect to the Statement of
Final Per Share Amounts. If the Parent and the Shareholders shall not reach
such resolution within 30 days following receipt by the Parent of a properly
given Notice of Dispute, KPMG Peat Marwick LLP (the "Accountants") shall resolve
such dispute within 30 days after 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
Accountants) or the Accountants
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<PAGE>
(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
later to occur of (i) 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, or (ii) 120
days following Closing, (a) the Parent shall deliver to each Shareholder (1) 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 Shareholders at the
Closing; and (2) 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 (b) each Shareholder shall deliver to the Parent (1) 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 (2) 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. Notwithstanding the foregoing, if a Shareholder is required to pay any
amounts to the Surviving Corporation under Section 4.3 and such amounts have not
been paid in full, the cash otherwise payable to such Shareholder under clause
(a)(1) above shall, to the extent necessary to pay such amounts in full, be paid
by the Parent to the Surviving Corporation; provided, that should the amount of
such cash be insufficient to pay such amounts in full, such Shareholder shall
remain obligated to pay the remaining balance to the Surviving Corporation.
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, subject to the
provisions of Section 8.20 of this Agreement.
2. REPRESENTATIONS AND WARRANTIES
OF THE COMPANY, COMMERCIAL AIR AND THE SHAREHOLDERS
The Company, Commercial Air, Tom Rosato and Barbara Rosato each, jointly
and severally, and Donald Franklin and Kristen Franklin, 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 each 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
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Related Document") and (ii) consummate the transactions contemplated herein and
thereby. This Agreement has been duly executed and delivered by each
Shareholder and constitutes, and any Shareholder Related Document, when duly
executed and delivered by the Shareholder named a party therein will constitute,
legal, valid and binding obligations of such Shareholder enforceable against the
Shareholder 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. Except as provided in Exhibit 2.4, 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 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 are 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 such 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 such Shareholder.
2.5 Brokers and Finders. Neither the Company, Commercial Air nor any of
the Shareholders have employed any broker, finder or agent, or incurred any
broker's fee or finder's fee or commission, with respect to the transactions
referred to herein or contemplated hereby, nor has any of them dealt with anyone
purporting to act in the capacity of a finder or broker with respect thereto.
2.6 No Implied Representation. Except for those representations and
warranties contained in this Agreement, the agreements referred to herein and
all exhibits and schedules referred to herein or attached hereto, the Company,
Commercial Air and the Shareholders are making no other representations or
warranties, express or implied, including, but not limited to, any implied
warranty or warranty as to the condition, operations, prospects, merchantability
or suitability of the Company or Commercial Air or their respective properties
or assets for a particular purpose. Additionally, the parties hereto agree that
no documents previously delivered by the Company, Commercial Air or the
Shareholders to the Parent or the Merger Sub relating to future projections or
other predictions shall be deemed to constitute representations or warranties of
the Company, Commercial Air or the Shareholders for any purpose whatsoever.
3. REPRESENTATIONS AND WARRANTIES
OF THE PARENT AND MERGER SUB
3.1 Representations and Warranties. The Parent hereby represents and
warrants to the Shareholders, Commercial Air 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 date of the Prospectus
(as hereinafter defined), the total authorized and issued capital stock of
Parent will be as set forth in the Prospectus. The
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outstanding shares of Parent Common Stock reflected in such Prospectus 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 the filing of the Articles of Merger with the
Secretary of State of the State of Illinois. The execution, delivery and
performance by Parent of this Agreement and any Parent Related Documents do not
violate any mortgage, indenture, contract, agreement, lease or commitment or
other instrument of any kind to which the Parent is a party or by which the
Parent or the Parent's assets or properties may be bound or affected or 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.
3.1.5 Defaults. The Parent is not in default under or in violation
of, and the execution, delivery and performance of this Agreement and the Parent
Related Documents and the consummation by the Parent of the transactions
contemplated hereby and thereby will not result in a default under or in
violation of (i) any mortgage, indenture, charter or bylaw provision, contract,
agreement, lease, commitment or other instrument of any kind to which the Parent
is a party or by which the Parent or any of its properties or assets may be
bound or affected or (ii) any law, rule or regulation applicable to the Parent
or any court injunction, order or decree, or any valid and enforceable order of
any governmental agency in effect as of the date hereof having jurisdiction over
the Parent, which default or violation prevents the Parent from consummating the
transactions contemplated hereby or is reasonably likely to have a Parent
Material Adverse Effect.
3.1.6 Investment Company. The Parent is not an "investment company"
or a company "controlled" by an "investment company" within the meaning of the
Investment Company Act of 1940, as amended, or a "holding company," a
"subsidiary company" of a "holding company" or an "affiliate" of a "holding
company" or a "public utility" within the meaning of the Public Utility Holding
Company Act of 1935, as amended.
3.1.7 Financial Statements. The Parent will provide certain financial
statements to the Shareholders in the Prospectus ("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
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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 Disclosure. No representation or warranty by the Parent in this
Agreement and no statement contained in any Prospectus delivered by the Parent
to the Shareholders pursuant to this Agreement contains any untrue statement of
a material fact or omits any material fact necessary in order to make the
statements herein or therein, in light of the circumstances under which they are
or were made, not misleading.
3.1.11 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.
3.1.12 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.
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(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.
(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.
3.1.13 Brokers and Finders. The Parent has not employed any broker,
finder or agent, or incurred any broker's fee or commission, with respect to any
transactions referred to herein or contemplated hereby and has not dealt with
anyone purporting to act in the capacity of a finder or broker with respect
thereto.
3.1.14 Parent Common Stock. The issuance of all shares of Parent
Common Stock to be issued by Parent pursuant to the Merger, when issued in
accordance with this Agreement, will be registered under the Securities Act of
1933, as amended (the "Securities Act") and such shares will be listed for
trading on the New York Stock Exchange and will be validly issued, fully paid
and nonassessable and, subject to the requirements of Rules 144 and 145
promulgated pursuant to the Securities Act and the Stock Transfer Restriction
Agreement (as defined below), will be freely tradeable without restrictions.
3.1.15 Previous Acquisitions. As of the date of this Agreement, the
Parent has not received any written notice of a claim for indemnification from,
or a threat in writing that a claim for indemnification will be made by, any
previous equity owner of any subsidiary of the Parent as of the date hereof, nor
has the Parent been named as a defendant in any arbitration proceeding or
lawsuit regarding a claim for indemnification by any previous equity owner of
any subsidiary of the Parent as of the date hereof.
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3.2 Representations and Warranties Concerning the Merger Sub. The Parent
and Merger Sub, jointly and severally, hereby represent and warrant to the
Shareholders, Commercial Air 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 Illinois.
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, Commercial Air and the Shareholders) 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, in the case of the
Shareholders named Thomas P. Rosato and Barbara Rosato, and three (3)
years, in the case of the Shareholders named Donald Franklin and Kristen
Franklin, after the Closing Date or (b) the date which is one year
following any termination of such Shareholder's employment with the
Surviving Corporation or any of its affiliates (as defined in Exhibit 2),
regardless of the reason for such termination, 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, owner,
officer, director, trustee, manager, employee, agent, associate or
consultant engage in any business which directly competes with any of the
services or products produced, sold, conducted, developed, or in the
process of development by the Company or Commercial Air on the Closing Date
(or, if clause (b)
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above is applicable, on the date of termination of the Shareholder's
employment), including any indoor air quality, heating, electrical,
ventilation, air conditioning, appliance, mechanical construction, plumbing
or sewer cleaning contracting, products or services within a 100-mile
radius of Beltsville, Maryland; provided, however, that nothing in this
Agreement shall prevent the Shareholder from owning and managing the
operations of Chesapeake Tower Systems, Commair Southeast, Inc., and
Automotive Technologies, Inc., so long as the business conducted by such
companies remains the same as the business conducted by such companies on
the date of this Agreement; provided further, however, that,
notwithstanding the foregoing, in the event that the Shareholder named Don
Franklin is terminated by the Company pursuant to Section 6.c. of his
Employment Agreement with the Company, (a) the foregoing provisions in this
Section 4.1.1 shall be applicable to such Shareholder for a period of
twelve (12)-months after the date of termination of his employment with the
Company, and (b) for the period beginning on the last day of such twelve
(12)-month period and continuing until the date that is two (2) years from
and after the date of termination of his employment with the Company, such
Shareholder shall not, directly or indirectly, whether as a principal,
agent, officer, director, employee, consultant, independent contractor or
otherwise, alone, in association with or behalf of any other person, firm,
corporation or other business organization, (1) solicit, sell, call upon,
advise, do or attempt to do business with or otherwise contract any
customer of Company, its parent, subsidiaries or other affiliate companies
as of the date of such termination, or (2) (I) hire or attempt to hire any
employee of Company, its parent, subsidiaries or other affiliate companies,
(II) assist in such hiring by any other person, (III) encourage any such
employee to terminate his/her employment with Company, its parent,
subsidiaries or other affiliate companies and/or (IV) solicit, encourage or
induce any Customer to terminate its relationship with Company, its parent,
subsidiaries or other affiliate companies.
(ii) The Shareholders agree that the limitations set forth herein on
each 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, the Shareholders
do hereby (i) release, acquit and forever discharge the Surviving Corporation
and Commercial Air 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 or Commercial Air in connection with the
obligations or liabilities of the Shareholders hereunder, except for salary and
benefits payable to the Shareholders as employees in the ordinary course of
business and claims of the Shareholders pursuant to Section 6.2.2 of this
Agreement; (ii) waive all breaches, defaults or violations of any agreement
applicable to the Company Common Stock or the Commercial Air Common Stock and
the 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 or Commercial Air and release any and
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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 that the expenses of the
Company and Commercial Air as described in Exhibit 4.2 hereto have been
eliminated as expenses of the Surviving Corporation and Commercial Air as of the
Balance Sheet Date.
4.3 Purchase of Certain Receivables. If any accounts receivable included
in the assets of the Company or Commercial Air as of the Balance Sheet Date
remain unpaid in full on the date that occurs 180 days following the Closing,
the Shareholders shall, upon written request by the Parent made on or before the
date that occurs 210 days following the Closing, purchase the same from the
Surviving Corporation or Commercial Air, without recourse, for cash equal to the
uncollected face amount thereof (net of any reserve therefor for bad debts on
the books of the Company or Commercial Air on the Closing Date). Such purchase
by the Shareholders shall be pro rata based on their ownership of the shares of
Company Common Stock on the Closing Date. If the Shareholders are required to
purchase any accounts receivable pursuant to this Section 4.3 or retainages
pursuant to Section 4.10 of this Agreement, then, upon the request of the
Shareholders, the Surviving Corporation and Commercial Air and their respective
employees shall provide reasonable assistance (including testimony) during
normal business hours to the Shareholders in collecting such accounts receivable
or retainages.
4.4 Certain Payables and Receivables. On or prior to Closing, the
Shareholders shall cause to be paid in full in cash all accounts receivable,
notes receivable and advances payable by the Shareholders to the Company or
Commercial Air and the Company or Commercial Air, as the case may be, shall pay
in full in cash all accounts payable, notes payable and advances payable by the
Company and Commercial Air to the Shareholders.
4.5 Pre-Closing Covenants and Agreements. The Shareholders, the Company
and Commercial Air jointly and severally agree as set forth in Exhibits Exhibit
4.5 attached hereto.
4.6 Confidentiality. Prior to the Effective Time, none of the Parent,
Merger Sub, the Company, Commercial Air 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 and Commercial Air may make
appropriate disclosures of the general nature of the Merger to their respective
employees, vendors and customers to protect the Company's and Commercial Air'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 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 and Commercial Air'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.
4.7 Tax-Free Reorganization. Unless the other parties shall otherwise
agree in writing, none of the Shareholders, the Parent, Merger Sub, the Company,
Commercial Air or the Surviving Corporation shall
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knowingly take or fail to take any action, that would jeopardize the
qualification of the Merger as a reorganization withing the meaning of Section
368(a) of the Code. Each of the parties shall cooperate in good faith at their
own expense to insure, to the extent reasonably practicable, that all tax
authorities treat the transactions contemplated by this Agreement as a
reorganization within the meaning of Section 368(a) of the Code.
4.8 Company Plans. Except as otherwise contemplated by this Agreement or
Exhibit 4.8, the Company Plans (as defined in Exhibit 2) described on Exhibits
Exhibit 4.8 in effect at the date of this Agreement will remain in effect unless
otherwise determined by the Parent after the Effective Time; and certain
additional plans will be implemented as described in Exhibit 4.8.
4.9 HSR Act. The Parent, the Shareholders, the Company and Commercial Air
shall take all reasonable actions necessary to make all filings, if any,
required under The Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended ("HSR Act") in connection with the transaction contemplated hereby and
to obtain the termination or expiration of the waiting period thereunder.
4.10 Certain Retainages. If any retainages included in the assets of the
Company or Commercial Air as of the Balance Sheet Date remain unpaid in full
(after considering any reserves with respect thereto as of the Balance Sheet
Date) on the date that occurs 6 months following the completion of the project
to which they relate, the Shareholders shall, upon written request by the
Surviving Corporation or Commercial Air, purchase same from the Surviving
Corporation or Commercial Air, as the case may be, without recourse, for the
cash amount equal to the uncollected face amount thereof.
4.11 Employee Options. Promptly after the Closing, the Parent will grant
to employees of Commercial Air who were formerly employees of the Commercial Air
options to purchase that number of shares of Parent Common Stock equal to
approximately 5.3% of the number of shares of Parent Common Stock issued to the
Shareholders pursuant to the Merger. The management of the Parent and
Commercial Air shall together determine the distribution of such options.
4.12 Certain Information. The Stockholders agree to cause the owners of
Chesapeake Tower Systems, Inc. ("Chesapeake"), to provide information about the
business, operations, assets, liabilities, financial condition, cash and flows
and results of operations of Chesapeake as may be reasonably requested by the
Parent in connection with a potential acquisition of Chesapeake and subject to a
confidentiality agreement to be executed by Parent.
4.13 Discharge of Indebtedness, Releases, Etc. Within thirty (30) days
after the Effective Time, the Parent shall cause the indebtedness of the Company
and Commercial Air referred to in Exhibit 4.13 attached hereto ("Terminated
Obligations") to be paid in full or refinanced on terms acceptable to the
Parent, which would include, without limitation, the full and complete release
of all personal guarantees entered in to by any of the Shareholders in
connection with any of such Terminated Obligations.
4.14 Split-Dollar Life Insurance Policies. On or prior to the Closing Date,
Commercial Air may assign the split-dollar life insurance policies maintained by
Commercial Air on employees of Commercial Air.
4.15 Employee Equity Agreements. Set fort on Exhibit 4.8 is a list of the
aggregate amount needed to satisfy in full all of Commercial Air's obligations
pursuant to each of the Employee Equity Agreements listed on Exhibit 4.8 (each
of such agreements shall be referred to individually herein as an
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"Employee Equity Agreement", and the total amount necessary to satisfy in full
all obligations pursuant to an Employee Equity Agreement shall be referred to as
the "Employee Equity Agreement Amount"). On the Closing Date, (i) the Parent
shall (a) pay to each person who is a party to an Employee Equity Agreement an
amount of cash and instruct the Parent's transfer agent to issue a number of
shares of Parent Common Stock equal to the Employee Equity Agreement Amount
attributable to such Employee Equity Agreement less the aggregate par value of
the shares of Parent Common Stock (using a par value of $.001 per share) issued
to such person, with the mixture of cash and Parent Common Stock to be paid by
Parent to each such person being as close to 50/50 as possible; provided,
however, that nothing in this Section 4.15 shall require the Parent to issue any
fractional shares of Parent Common Stock, and (b) deliver to each person who is
receiving any shares of Parent Common Stock as a part of the Employee Equity
Agreement Amount paid to such person a copy of the Prospectus, and (ii)
Commercial Air shall cause each person or entity who is a party to an Employee
Equity Agreement to execute and deliver an agreement, in a form satisfactory to
the Parent, terminating such Employee Equity Agreement, and to execute and
deliver a Stock Transfer Restriction Agreement in the form attached hereto as
Exhibit 5.3.2-B.
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, the Company and Commercial Air contained in
this Agreement, in Exhibits Exhibit 2 and the Disclosure Schedule referred to
therein and the other Exhibits provided by the Shareholders, the Company or
Commercial Air 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, the Company and Commercial Air shall each have delivered to
the Parent and Merger Sub a certificate to that effect.
5.1.2 Performance of Covenants. The Shareholders, the Company and
Commercial Air 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, the Company and Commercial Air 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
Commercial Air 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, the Company and Commercial Air shall each have delivered
to the Parent and Merger Sub a certificate to the effect none of the foregoing
shall have occurred with respect to it.
5.1.4 Approvals. The Company, Commercial Air 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
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Documents) by the Company, Commercial Air and the Shareholders prior to the
Closing Date, and the Shareholders, the Company and Commercial Air 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 which
individually would have a Company Material Adverse Effect shall have occurred on
or prior to the Effective Time to any of the properties or assets of the Company
or Commercial Air.
5.1.7 Licenses, etc. The Company and Commercial Air 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 February 28, 1998, 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 or Commercial
Air.
5.1.9 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.
5.1.10 HSR Act. All required filings, if any, under HSR Act with
respect to the transactions contemplated hereby shall have been made and the
waiting periods thereunder shall have been terminated or shall have expired.
5.1.11 Prospectus. The Parent shall have completed, filed and had
declared effective under the Securities Act an amendment to its registration
statement related to the Parent Common Stock ("Prospectus") and shall have
delivered a copy of such Prospectus to the Company and each of the Shareholders.
5.2 Conditions Precedent to the Obligations of the Shareholders, the
Company and Commercial Air. The obligations of the Shareholders, the Company
and Commercial Air under this Agreement are subject to the satisfaction of each
of the following conditions, unless waived by the Shareholders, the Company and
Commercial Air 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, the Company
or Commercial Air 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, the Company
and Commercial Air 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
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Closing Date and the Parent and Merger Sub shall have delivered to the
Shareholders, the Company and Commercial Air a certificate to such effect.
5.2.3 Approvals. The Parent shall have procured all of the consents,
approvals and waivers specified in Exhibit 3.1.4 prior to the Closing Date, and
the Parent shall have delivered to the Shareholders, the Company and Commercial
Air 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.
5.2.5 HSR Act. All required filings, if any, under the HSR Act with
respect to the transactions contemplated hereby shall have been made and the
waiting periods thereunder shall have been terminated or shall have expired.
5.2.6 Legal Actions or Proceedings. No legal action or proceeding
shall have been instituted after the date hereof against the Company or
Commercial Air 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 Parent shall have delivered to the Company and the Shareholders a
certificate to the effect none of the foregoing shall have occurred with respect
to it.
5.2.7 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.
5.2.8 Prospectus. The Company and each of the Shareholders shall have
received a copy of the Prospectus and each of them shall have acknowledged its
acceptance of such Prospectus, such acknowledgment not to be unreasonably
withheld.
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, the
Company and Commercial Air 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, the Company and
Commercial Air shall deliver the certificates required pursuant to Sections
5.1.1, 5.1.2, 5.1.3 and 5.1.4.
5.3.2 Stock Transfer Restriction Agreement. Each Shareholder shall
execute and deliver a Stock Transfer Restriction Agreement on the Closing Date,
effective as of the Effective Time, substantially in the form set forth in
Exhibits Exhibit 5.3.2-A (the "Stock Transfer Restriction Agreement").
5.3.3 Employment Agreements. Tom Rosato, Donald Franklin, Jake Davis,
Jerry Gallagher and Craig Carlton shall execute and deliver Employment
Agreements with the Surviving Corporation on the Closing Date, effective as of
the Effective Time, substantially in the forms set forth in Exhibits Exhibit
5.3.3 -A and Exhibits Exhibit 5.3.3-B , with the blanks completed as set forth
thereon.
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5.3.4 Documents, Stock Certificates. The Shareholders shall execute
and deliver the documents, certificates, opinions, instruments and agreements
required to be executed and delivered by the Company or Commercial Air or their
respective 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, and a stock certificate
representing all of the outstanding Commercial Air Common Stock shall be
delivered by the Shareholders to the Parent..
5.3.5 Opinion of Counsel for the Shareholders and the Company. The
Shareholders shall deliver the favorable opinion of Alan S. Kerxton, counsel to
the Shareholders, the Company and Commercial Air, dated the Effective Time,
substantially in the form and to the effect set forth in Exhibits Exhibit 5.3.5
attached hereto.
5.3.6 Satisfaction of the Employee Equity Agreements Amount and the
Termination of the Employee Equity Agreements. Commercial Air shall deliver the
executed termination agreements and Stock Transfer Restriction Agreements
required pursuant to Section 4.15 of this Agreement.
5.3.7 Lease Consent. Commercial Air shall deliver the consent of the
owner of the property located at 12100 Baltimore Avenue, Beltsville, Maryland
20850 to the Merger and the transactions contemplated by this Agreement in a
form reasonably satisfactory to the Parent.
5.3.8 Release of Guaranty. Commercial Air shall deliver a release of
all of Commercial Air's and the Company's obligations pursuant to all guaranties
issued by either of them in connection with obligations of Automotive
Technologies, Inc., pursuant to any leases by Automotive Technologies, Inc., of
real property.
The consummation of the Closing shall not be deemed to be a waiver by the
Parent or Merger Sub of any of their rights or remedies hereunder for breach of
any warranty, covenant or agreement herein by the Shareholders, the Company or
Commercial Air irrespective of any knowledge of or investigation with respect
thereto made by or on behalf of the Parent or Merger Sub; provided, however,
that if the Company or Commercial Air shall disclose in writing to the Parent
prior to the Closing a specified breach of a specifically identified
representation, warranty, covenant or agreement of the Shareholders, the Company
or Commercial Air contained herein by the Shareholders, the Company or
Commercial Air, and requests a waiver thereof by the Parent and Merger Sub, and
the Parent shall waive any such specifically identified breach in writing prior
to the Closing, the Parent and the Surviving Corporation, for themselves and
their heirs, legal representatives, successors and assigns, shall be deemed to
have waived their rights and remedies hereunder for, and the Shareholders shall
have no liability or obligation with respect to, any such specifically
identified breach, to the extent so identified by the Company and 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 5.2.6.
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5.4.2 Opinion of Counsel for the Parent and Merger Sub. The Parent
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
5.4.2.
5.4.3 Employee Equity Agreements Amount. The Parent shall deliver
each of the cash Employee Equity Agreement Amounts and instruct the Parent's
transfer agent to issue the shares of Parent Common Stock constituting a portion
of each of the Employee Equity Agreement Amounts.
5.4.4 Closing Merger Consideration. The Parent shall deliver the
Closing Merger Consideration to the Shareholders by delivering the Closing Per
Share Cash Amount for the Converted Shares and providing evidence to the
Shareholders' of notification of the Parent's stock transfer agent with respect
to issuance of certificates representing the Closing Per Share Common Stock
Amount applicable to the Converted Shares.
5.4.5 Other Agreements. The Parent shall have delivered the
employment agreements described in Section 5.3.3. of this Agreement and the
Lease.
The consummation of the Closing shall not be deemed to be a waiver by
the Shareholders of any of the Shareholders' 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 Shareholders; 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 agreement of
the Parent or Merger Sub contained herein by the Parent or Merger Sub, and
requests a waiver thereof by the Company, the Shareholders and Commercial Air,
and the Company. the Shareholders and Commercial Air shall waive any such
specifically identified breach in writing prior to the Closing, the Company, the
Shareholders and Commercial Air, for themselves and their heirs, legal
representatives, successors and assigns, shall be deemed to have waived their
rights and remedies hereunder for, and the Parent and Merger Sub shall have no
liability or obligation with respect to, any such specifically identified
breach, to the extent so identified by the Parent and waived by the Company, the
Shareholders and Commercial Air.
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, the Company and Commercial
Air herein and in the Shareholder Related Documents and the Company Related
Documents (as defined in Exhibit 2) other than those of the Shareholders, the
Company and Commercial Air in Sections 2.2, 2.3, 2.4 and in Sections 2 and 3 of
Exhibit 2 shall survive for a period of 36 months after the Closing Date and the
representations and warranties of the Shareholders, the Company and Commercial
Air contained in Sections 2.2, 2.3, 2.4 and in Sections 2 and 3 of Exhibit 2
shall survive for the maximum period permitted by applicable law. The
representations and warranties of the Parent herein and in the Parent Related
Documents, other than those in Sections 3.1.3 and 3.1.4, shall survive for a
period of 36 months after the Closing Date and the representations and
warranties of the Parent contained in Sections 3.1.3 and 3.1.4 shall survive for
the maximum period permitted by applicable law. The periods of survival of the
representations and warranties as stated above in this Section 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
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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 4.5) 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, Commercial Air, 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 a Shareholder, the Company or
Commercial Air or the failure by any Shareholder, the Company or Commercial
Air to perform any obligation of such Shareholders, the Company or
Commercial Air contained herein or in any Company Related Document or
Shareholder Related Document (other than the Employment Agreements to be
executed and delivered pursuant to Section 5.3.3 of this Agreement);
provided, however, that notwithstanding the foregoing, the failure of any
of Messrs. Davis, Gallagher or Carlton to execute and deliver an Employment
Agreement pursuant to Section 5.3.3 of this Agreement or the failure of
Commercial Air to deliver the landlord's consent pursuant to Section 5.3.7
of this Agreement shall not give rise to any claim for indemnification by
any Parent Indemnified Parties under this Agreement;
(ii) any inaccuracy in or breach of any representation or warranty
of any Shareholder contained herein or in any Shareholder Related Document
(other than the Employment Agreements to be executed and delivered pursuant
to Section 5.3.3 of this Agreement);
(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, Commercial Air or
the Surviving Corporation to the Company's or Commercial Air'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 or Commercial Air and not
(a) disclosed with reasonable specificity in the Disclosure Schedule or (b)
disclosed in the Company Financial Statements (as defined in Exhibit 2).
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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
each Shareholder's 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;
(iii) the failure of the Company or the Parent to discharge the
Terminated Obligations pursuant to Section 4.13 of this Agreement;
(iv) any personal guaranty granted by any Shareholder related to any
Company Contract; and
(v) 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 or Commercial Air; provided, however, that this clause (v)
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,
Commercial Air 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. No claim under Section 621 may be made until the
aggregate of all Losses for which claims for indemnification under such Section
exceeds $100,000 (the "Threshold"), but all Losses (including, without
limitation, those below the amount of the Threshold) may be recovered under such
Section once the Threshold has been exceeded. The aggregate liability of the
Shareholder's named Thomas P. Rosato and Barbara Rosato under Sections 6.2.1(ii)
and (iii) shall not exceed the cash amount equal to the Total Consideration,
with the Parent Common Stock being valued at the value of such stock used to
determine the Closing Per Share Common Stock Amount. The aggregate liability of
the Shareholder's named Donald Franklin and Kristen Franklin, in the aggregate,
(i) under Sections 6.2.1(ii) and (iii) shall not exceed the cash amount equal
to that portion of the Total Consideration paid to them in exchange for the
shares of Company Common Stock owned by them, with the Parent Common Stock being
valued at the value of such stock used to determine the Closing Per Share Common
Stock Amount, and (ii) shall be limited to their pro rata share of such Losses
based upon the ratio the share of Company Common Stock owned by them bears to
the total number of shares of Company Common Stock outstanding as of the date of
this Agreement. Additionally, the aggregate liability of the Shareholders (i)
for a breach of any of the representations contained in Sections 10, 11 or 12 of
Exhibit 2 regarding the Company Financial Statements shall not exceed an amount
equal to the actual value of the act, error or omission giving rise to such
breach multiplied by 5.75. 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 value of such stock used to
determine the Closing Per Share Common Stock Amount. Except for claims pursuant
to Section 6.2.1.(i)
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of this Agreement, claims involving fraud or negligent misrepresentation and
claims arising under any agreement that is an exhibit to this Agreement, the
indemnification rights contained in this Article 6 shall be the sole remedy of
the parties hereto with respect to the subject matter of this Agreement.
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 the Shareholders' 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, Commercial Air 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.
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The Indemnified Party may join the Indemnifying Party in any suit, action, claim
or proceeding brought by a third party, as to which any right of indemnity
created by this Agreement would or might apply, for the purpose of enforcing any
right of the indemnity granted to such Indemnified Party pursuant to this
Agreement.
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 June 30, 1998, but only if neither the Company, Commercial Air nor
any Shareholder has breached this Agreement or have 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 June 30, 1998, 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 breached this
Agreement or failed to perform any of its obligations under this Agreement; or
7.1.5 Breach by the Company or the Shareholders. By the Parent, by
written notice to the Company, if the Company, Commercial Air or any Shareholder
has breached this Agreement or has 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:
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To the Company or Commercial Air (prior to the Effective Time) or the
Shareholders:
Premex, Inc.
12100 Baltimore Avenue
Beltsville, Maryland 20705
Attn: President
Telecopy: (301) 419-3766
To the Parent or Merger Sub or the Surviving Corporation:
Group Maintenance America Corp.
8 Greenway Plaza, Suite 1500
Houston, Texas 77046
Attn: President
Telecopy: (713) 626-4766
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 Shareholders, the Company or Commercial Air. 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 the Shareholders or any other party.
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 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
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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, the Shareholders
shall make no 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, the Company and Commercial Air, 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 or Commercial Air under the certificate or articles of incorporation
of the Company or Commercial Air 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 or Commercial Air as may
be required by the certificate or articles of incorporation of the Company or
Commercial Air, as the case may be, 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, Commercial Air
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 or Commercial Air, any other employee or legal
representatives or beneficiaries of any thereof any rights or remedies,
including any right to employment or continued employment for any specified
period, of any nature or kind whatsoever under or by reason of this Agreement,
or shall cause the employment status of any employee to be other than terminable
at will.
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<PAGE>
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, Commercial Air 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, the Company and
Commercial Air and their respective members of their Boards of Directors shall
grant such approvals and take such actions as are necessary so that the
transactions contemplated by this Agreement may be consummated as promptly as
practicable on the terms contemplated herein and otherwise act to eliminate or
minimize the effects of such statute or regulation on the transactions
contemplated herein.
8.16 Number and Gender of Words. Whenever herein the singular number is
used, the same shall include the plural where appropriate and words of any
gender shall include each other gender where appropriate.
8.17 Invalid Provisions. If any provision of this Agreement is held to be
illegal, invalid, or unenforceable under present or future laws, such provisions
shall be fully severable as if such invalid or unenforceable provisions had
never comprised a part of the Agreement; and the remaining provisions of the
Agreement shall remain in full force and effect and shall not be affected by the
illegal, invalid or unenforceable provision or by its severance from this
Agreement. Furthermore, in lieu of such illegal, invalid or unenforceable
provision, there shall be automatically as a part of this Agreement, a provision
as similar in terms to such illegal, invalid or unenforceable provision as may
be possible and be legal, valid and enforceable.
8.18 Multiple Counterparts. This Agreement may be executed in a number of
identical counterparts. If so executed, each of such counterparts is to be
deemed an original for all purposes and all such counterparts shall,
collectively, constitute one agreement, but, in making proof of this Agreement,
it shall not be necessary to produce or account for more than one such
counterpart.
8.19 No Rule of Construction. All of the parties hereto have been
represented by counsel in the negotiations and preparation of this Agreement;
therefore, this Agreement will be deemed to be drafted by each of the parties
hereto, and no rule of construction will be invoked respecting the authorship of
this Agreement.
8.20 Expenses. Each of the parties shall bear all of their own expenses in
connection with the negotiation and closing of this Agreement and the
transactions contemplated hereby; provided that the Company may pay the costs of
any broker, legal counsel, accountants (including the fees and costs of
accountants) or other advisors engaged by the Company or Commercial Air or any
of the Shareholders (to the extent, and only to the extent, that any such
payment will not jeopardize the qualification of the Merger
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<PAGE>
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 or Commercial Air in connection with the negotiation and closing of this
Agreement and the transactions contemplated hereby shall be included in current
liabilities of the Company or Commercial Air, as the case may be.
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<PAGE>
IN WITNESS WHEREOF, this Agreement has been duly executed and delivered on
the date first hereinabove written.
PARENT:
GROUP MAINTENANCE AMERICA CORP.
By: /s/ Chester J. Jachimiec
------------------------------------
Name: Chester J. Jachimiec
----------------------------------
Title: Executive Vice President
---------------------------------
MERGER SUB:
COMMERCIAL AIR ACQUISITION CORP.
By: /s/ Chester J. Jachimiec
------------------------------------
Name: Chester J. Jachimiec
----------------------------------
Title: Vice President
---------------------------------
SHAREHOLDERS:
/s/ Thomas P. Rosato
---------------------------------------
/s/ Barbara Rosato
---------------------------------------
Thomas P. Rosato and Barbara Rosato, as tenants by
the entirety
/s/ Donald Franklin
---------------------------------------
/s/ Kristen Franklin
---------------------------------------
Donald Franklin and Kristen Franklin, as tenants
by the entirety
COMPANY:
PREMEX, INC.
By:/s/ Thomas P. Rosato
------------------------------------
Thomas P. Rosato, President
<PAGE>
COMMERCIAL AIR:
COMMERCIAL AIR, POWER & CABLE, INC.
By: /s/ Thomas P. Rosato
------------------------------------
Thomas P. Rosato, President
<PAGE>
[Exhibits intentionally omitted]
<PAGE>
EXHIBIT 99
LIST OF LENDERS
ABN AMRO Bank, N.V.
Banque Paribas
Bank of America Texas, N.A.
Chase Bank of Texas, National Association
(formerly Texas Commerce Bank National Association)
National City Bank, Kentucky
