<PAGE>
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: NOVEMBER 25, 1998
(DATE OF EARLIEST EVENT REPORTED: NOVEMBER 13, 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 OFFICES) (ZIP CODE)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (713) 860-0100
<PAGE>
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
On November 13, 1998, Group Maintenance America Corp. (the "Company")
completed the acquisition of Trinity Contractors, Inc., a Texas corporation
("Trinity"). The Company purchased all of the outstanding capital stock of
Trinity through its wholly-owned subsidiary, GroupMAC Holding Corp. ("Holding
Corp."). The acquisition was effected in accordance with the Stock Purchase
Agreement (the "Stock Purchase Agreement") dated as of November 3, 1998, among
the Company, Holding Corp., Trinity, and the shareholders of Trinity. A copy of
the Stock Purchase Agreement has been filed as an exhibit to this Current Report
on Form 8-K and is incorporated herein by reference. The purchase price paid or
to be paid by the Company for Trinity consists of approximately $42.0 million in
cash, 1.5 million shares of the Company's common stock, par value $.001 per
share ("Common Stock"), $16.0 million in notes payable, warrants to purchase 0.8
million shares of Common Stock, and an additional number of shares of Common
Stock contingent upon the future performance of Trinity as described in the
Stock Purchase Agreement.
Substantially all of the stockholders of Trinity prior to the acquisition
will be employed by Trinity after the acquisition. Robert Munson, a shareholder
of Trinity prior to the acquisition, was elected a member of the Board of
Directors of the Company on November 19, 1998.
Prior to the acquisition, Trinity was engaged in the business of providing
full-service mechanical and electrical contracting services, including a broad
range of engineering, construction, preventive maintenance and other on-site
mechanical and electrical services to industrial, institutional and commercial
customers throughout the southern United States. The assets of Trinity consisted
primarily of cash, accounts receivable, inventory, equipment, vehicles, real
property and goodwill. The Company expects that Trinity will continue to
conduct its business in substantially the same manner as conducted before the
acquisition.
The cash portion of the consideration paid by the Company in connection
with the acquisition was provided pursuant to loans made under a Second Amended
and Restated Credit Agreement dated as of October 15, 1998 (the "Credit
Agreement") among the Company, certain subsidiaries of the Company, Chase Bank
of Texas, National Association, as Agent, Bank of America, Texas, N.A., as Co-
Agent, Paribas, as Syndication Agent, ABN AMRO Bank, N.V., as Documentation
Agent, and the other banks named therein (the "Lenders"). Under the Credit
Agreement, a syndicate of banks agreed to provide up to $230 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.
2
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ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial statements of businesses acquired.
Financial statements with respect to Trinity Contractors, Inc. are not
included with this report but will be filed by amendment on or before January
27, 1999.
(b) Pro forma financial information.
Pro forma financial statements of the Company reflecting the acquisition of
Trinity Contractors, Inc. are not included with this report but will be filed by
amendment on or before January 27, 1999.
(c) Exhibits.
The following exhibits are filed with this report:
2.1 Stock Purchase Agreement dated as of November 3, 1998 among the
Company, Holding Corp., Trinity Contractors, Inc. and the shareholders
of Trinity Contractors, Inc.
99 List of Lenders under the Credit Agreement.
3
<PAGE>
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: November 25, 1998
4
<PAGE>
INDEX OF EXHIBITS
2.1 Stock Purchase Agreement dated as of November 3, 1998 among the
Company, Holding Corp., Trinity Contractors, Inc. and the
shareholders of Trinity Contractors, Inc.
99 List of Lenders under the Credit Agreement.
<PAGE>
EXHIBIT 2.1
STOCK PURCHASE AGREEMENT
BY AND AMONG
GROUP MAINTENANCE AMERICA CORP.,
GROUPMAC HOLDING CORP.,
TRINITY CONTRACTORS, INC.
AND
THE HOLDERS OF THE
OUTSTANDING CAPITAL STOCK
OF
TRINITY CONTRACTORS, INC.
NOVEMBER 3, 1998
<PAGE>
TABLE OF CONTENTS
Page
1. PURCHASE AND SALE.................................................... 1
1.1 Company Common Stock............................................. 1
1.2 Closing.......................................................... 2
1.3 Delivery of and Payment for Company Common Stock................. 2
1.3.1 Aggregate Purchase Price................................. 2
1.3.2 Delivery of Company Common Stock, Cash Consideration,
Stock Consideration and Debt Consideration............... 2
1.3.3 Post-Closing Consideration............................... 3
1.4 Post-Closing Adjustment.......................................... 5
1.4.1 Notice of Adjustment..................................... 5
1.4.2 Review................................................... 5
1.4.3 Disputes................................................. 5
1.4.4 Resolution by Parties.................................... 6
1.4.5 Settlement of Adjustment................................. 6
1.4.6 Purchase of Certain Receivables.......................... 6
1.4.7 Expenses................................................. 7
1.4.8 Right of Set Off......................................... 7
2. REPRESENTATIONS AND WARRANTIES
OF THE COMPANY AND THE SHAREHOLDERS...................................... 8
2.1 Organization and Standing......................................... 8
2.2 Capitalization of the Company..................................... 9
2.3 Stock Ownership................................................... 9
2.4 Authority......................................................... 10
2.5 Consents; Violations.............................................. 10
2.6 Defaults.......................................................... 11
2.7 Full Authority.................................................... 11
2.8 Financial Statements.............................................. 12
2.9 Undisclosed Liabilities........................................... 12
2.10 Taxes............................................................. 12
2.11 Proprietary Rights................................................ 13
2.12 Title; Asset Condition............................................ 13
2.13 Accounts and Notes Receivable..................................... 14
2.14 Company Contracts; Company Plans.................................. 14
2.15 Year 2000 Compliance.............................................. 15
2.16 Legal Actions..................................................... 16
2.17 Labor and Employee Relations...................................... 16
2.18 No Material Adverse Change........................................ 17
2.19 Investment Company................................................ 18
2.20 Affiliate Relationships........................................... 18
2.21 Historic Business................................................. 19
2.22 Other Disclosures................................................. 19
2.23 Brokers and Finders............................................... 21
2.24 Disclosure........................................................ 21
2.25 Environmental Matters............................................. 21
<PAGE>
3. REPRESENTATIONS AND WARRANTIES
OF GROUPMAC AND HOLDING.................................................. 22
3.1 Representations and Warranties................................... 22
3.1.1 Organization and Standing........................................ 22
3.1.2 Capitalization of GroupMAC....................................... 22
3.1.3 Authority........................................................ 23
3.1.4 Consents......................................................... 23
3.1.5 GroupMAC Common Stock............................................ 23
3.1.6 Brokers and Finders.............................................. 23
3.1.7 Memorandum....................................................... 23
3.1.8 GroupMAC Material Adverse Effect................................. 24
3.2 Representations and Warranties Concerning Holding................ 24
3.2.1 Organization and Standing................................ 24
3.2.2 Capital Structure........................................ 24
3.2.3 Authority................................................ 24
3.2.4 Consents......................................................... 25
3.2.5 Brokers and Finders.............................................. 25
4. COVENANTS............................................................ 25
4.1 Conduct of Business............................................... 25
4.2 Certain Payables and Receivables.................................. 29
4.3 Confidentiality................................................... 29
4.4 Tax Matters; 338(h)(10) Election.................................. 29
4.5 Discharge of Indebtedness, Releases, Etc.......................... 30
4.6 HSR Act........................................................... 30
4.7 Cooperation....................................................... 30
4.8 Filings, Etc...................................................... 31
4.9 Access............................................................ 31
4.10 Satisfaction of Conditions........................................ 31
4.11 Exclusivity....................................................... 32
4.12 GroupMAC Guaranty................................................. 32
5. COVENANT NOT TO COMPETE; RELEASE..................................... 32
5.1 Covenant Not to Compete........................................... 32
5.2 Release........................................................... 34
6. CONDITIONS PRECEDENT; CLOSING DELIVERIES............................. 35
6.1 Conditions Precedent to the Obligations of Holding and GroupMAC.... 35
6.1.1 Accuracy of Representations and Warranties................. 35
6.1.2 Performance of Covenants................................... 35
6.1.3 Legal Actions or Proceedings............................... 35
6.1.4 Approvals.................................................. 35
6.1.5 Closing Deliveries......................................... 36
6.1.6 Licenses, etc.............................................. 36
6.1.7 No Material Adverse Change................................. 36
6.1.8 Certain Corporate Actions.................................. 36
6.1.9 Trinity Contractor Services, Inc........................... 36
6.1.10 TAT Acquisitions and Amendment............................. 36
6.1.11 HSR Act.................................................... 36
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6.1.12 Leases and Title Commitments............................... 36
6.1.13 Memorandum................................................. 37
6.1.14 Lenders.................................................... 37
6.2 Conditions Precedent to the Obligations of the Shareholders and the
Company............................................................ 37
6.2.1 Accuracy of Representations and Warranties................. 37
6.2.2 Performance of Covenants................................... 37
6.2.3 Approvals.................................................. 37
6.2.4 Closing Deliveries......................................... 38
6.2.5 HSR Act.................................................... 38
6.2.6 Memorandum................................................. 38
6.2.7 Material Adverse Change.................................... 38
6.3 Deliveries by the Shareholders at the Closing...................... 38
6.3.1 Closing Certificates....................................... 38
6.3.2 Stock Transfer Restriction Agreement....................... 38
6.3.3 Employment Agreements...................................... 38
6.3.4 Opinion of Counsel for the Shareholders and the Company.... 38
6.3.5 Power of Attorney.......................................... 39
6.3.6 Documents, Stock Certificates.............................. 39
6.3.7 The Allocation............................................. 39
6.3.8 Registration Rights Agreement.............................. 39
6.4 Deliveries by GroupMAC at the Closing.............................. 40
6.4.1 Closing Certificates....................................... 40
6.4.2 Opinion of Counsel for GroupMAC and Holding................ 40
6.4.3 Closing Consideration...................................... 40
6.4.4 Registration Rights Agreement.............................. 40
6.4.5 Other Agreements........................................... 41
7. SURVIVAL; INDEMNIFICATIONS........................................... 41
7.1 Survival........................................................... 41
7.2 Indemnification.................................................... 42
7.2.1 GroupMAC Indemnified Parties............................... 42
7.2.2 GroupMAC Indemnity......................................... 44
7.3 Limitations........................................................ 45
7.4 Sole Remedy........................................................ 46
7.5 Procedures for Indemnification..................................... 46
7.5.1 Notice..................................................... 46
7.5.2 Legal Defense.............................................. 47
7.5.3 Settlement................................................. 47
7.5.4 Cooperation................................................ 48
8. TERMINATION.......................................................... 48
8.1 Grounds for Termination............................................ 48
8.1.1 Mutual Consent............................................. 48
8.1.2 Optional By the Company.................................... 48
8.1.3 Optional By Holding or GroupMAC............................ 48
8.1.4 Breach By GroupMAC or Holding.............................. 48
8.1.5 Breach by the Company or the Shareholders.................. 48
8.2 Effect of Termination............................................. 48
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<PAGE>
9. MISCELLANEOUS........................................................ 49
9.1 Notice............................................................ 49
9.2 Further Documents................................................. 51
9.3 Assignability..................................................... 51
9.4 Exhibits and Schedules............................................ 52
9.5 Entire Agreement.................................................. 52
9.6 Headings.......................................................... 52
9.7 CONTROLLING LAW................................................... 53
9.8 No Third Party Beneficiaries...................................... 53
9.9 Amendments and Waivers............................................ 53
9.10 No Employee Rights................................................ 53
9.11 Non-Recourse...................................................... 53
9.12 When Effective.................................................... 54
9.13 Takeover Statutes................................................. 54
9.14 Number and Gender of Words........................................ 54
9.15 Invalid Provisions................................................ 54
9.16 Multiple Counterparts............................................. 54
9.17 No Rule of Construction........................................... 54
9.18 Expenses.......................................................... 55
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<PAGE>
LIST OF EXHIBITS
Exhibit 1.3.1A..................................................Note Term Sheet
Exhibit 1.3.1B...............................................Warrant Term Sheet
Exhibit 4.5..............................................Terminated Obligations
Exhibit 6.3.2..............................Stock Transfer Restriction Agreement
Exhibit 6.3.3..List of Employees to Execute and Deliver an Employment Agreement
Exhibit 6.3.3A......................Form of Employment Agreement for Executives
Exhibit 6.3.3B......................Form of Employment Agreement for Management
v
<PAGE>
LIST OF SCHEDULES
Schedule 2.1.......................................................Organization
Schedule 2.3..................................Ownership of Company Common Stock
Schedule 2.5........................Required Consents -Shareholders and Company
Schedule 2.6...........................................................Defaults
Schedule 2.7.....................................................Full Authority
Schedule 2.8...............................................Financial Statements
Schedule 2.11................................................Proprietary Rights
Schedule 2.12............................................Title; Asset Condition
Schedule 2.15....................................................Capitalization
Schedule 2.16.....................................................Legal Actions
Schedule 2.17......................................Labor and Employee Relations
Schedule 2.18...........................................Material Adverse Change
Schedule 2.20...........................................Affiliate Relationships
Schedule 2.22.................................................Other Disclosures
(i)........................Company Products; Environmental Studies
(ii).....................................................Employees
(iii)................................................Real Property
(iv)........................................................Assets
(v)...................................................Consignments
(vi).....................................................Insurance
(vii)........................................................Banks
(viii)...........................................Licenses; Permits
(ix)..........................................................Debt
(x).............................................Proprietary Rights
(xi)...................................................Investments
(xii)................................................Company Plans
(xiii).........................................Accounts Receivable
Schedule 3.1.4..........................Required Consents -GroupMAC and Holding
<PAGE>
INDEX OF DEFINED TERMS
Page
Accountants............................................................ 6
Allocation............................................................. 29
Adjustment............................................................. 5
Agreement.............................................................. 1
Allowed Expenses....................................................... 5
Average Closing Price.................................................. 4
Balance Sheet.......................................................... 12
Balance Sheet Date..................................................... 12
Cash Consideration..................................................... 2
Closing................................................................ 2
Closing Date........................................................... 2
Code................................................................... 1
Company................................................................ 1
Company Common Stock................................................... 1
Company Contract....................................................... 14
Company Financial Statements........................................... 12
Company Material Adverse Effect........................................ 18
Company Related Document............................................... 10
Debt Consideration..................................................... 2
EBITA.................................................................. 4
Environmental Issues................................................... 43
Environmental Law...................................................... 11
ERISA.................................................................. 15
Final Resolution....................................................... 6
GroupMAC............................................................... 1
GroupMAC Common Stock.................................................. 1
GroupMAC Indemnified Parties........................................... 42
GroupMAC Material Adverse Effect....................................... 24
GroupMAC Related Documents............................................. 23
Hazardous Substances................................................... 21
Holding................................................................ 1
HSR Act................................................................ 30
Identified Shareholders................................................ 33
Indemnified Party...................................................... 46
Indemnifying Party..................................................... 46
Investments............................................................ 20
knowledge.............................................................. 22
known.................................................................. 22
Losses................................................................. 42
Memorandum............................................................. 37
MIS Systems............................................................ 16
Notes.................................................................. 2
Notice of Adjustment................................................... 5
Notice of Dispute...................................................... 6
Period One............................................................. 4
Period One Excess Earnings............................................. 4
Period Two............................................................. 4
Period Two Excess Earnings............................................. 4
Post-Closing Consideration............................................. 3
<PAGE>
Power of Attorney...................................................... 6
Principal Shareholders................................................. 8
Proprietary Rights..................................................... 13
Qualified Shares....................................................... 40
Registration Rights Agreement.......................................... 40
Securities Act......................................................... 40
Settlement Notice...................................................... 47
Shareholder Representative............................................. 5
Shareholders........................................................... 1
Stock Consideration.................................................... 2
Survival Period........................................................ 41
TAT Acquisitions....................................................... 17
Tax Distribution Amount................................................ 5
Tax Returns............................................................ 13
TEA.................................................................... 8
TEM.................................................................... 8
Terminated Obligations................................................. 30
Threshold.............................................................. 45
Total Consideration.................................................... 2
Warrant Consideration.................................................. 2
Warrants............................................................... 2
Year 2000 Compliant.................................................... 16
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<PAGE>
STOCK PURCHASE AGREEMENT
This STOCK PURCHASE AGREEMENT (this "Agreement") made effective as of
November 3, 1998, by and among Group Maintenance America Corp., a Texas
corporation ("GroupMAC"), GroupMAC Holding Corp., a Delaware corporation
("Holding"), Trinity Contractors, Inc., a Delaware corporation (the "Company"),
and the undersigned holders of all of the outstanding shares of capital stock of
the Company (the "Shareholders").
WHEREAS, the Company is engaged in the same trade and business as that of
GroupMAC and its affiliates, and GroupMAC desires for Holding to acquire the
Company to complement GroupMAC's and its affiliates' existing trade and business
activities; and
WHEREAS, each of the Shareholders desires to sell, and Holding desires to
purchase from each Shareholder, the number of shares of common stock, par value
$.10 per share, of the Company ("Company Common Stock") set forth opposite such
Shareholder's name on Schedule 2.3 under the heading "Shares Owned" in exchange
for shares of common stock, $.001 par value per share, of GroupMAC ("GroupMAC
Common Stock"), certain cash consideration, certain subordinated promissory
notes and certain warrants, all as provided herein; and
WHEREAS, GroupMAC, Holdings and the Company expect that the transactions
contemplated by the Agreement will further certain of their respective business
objectives (including, without limitation, expansion of GroupMAC's existing
business, increased market share and volume efficiencies); and
WHEREAS, the parties hereto intend that the acquisition shall, solely for
federal and state income tax purposes, be viewed as the purchase of all of the
Company's assets by Holding as contemplated by Section 338(h)(10) of the
Internal Revenue Code of 1986, as amended (the "Code"); and
NOW, THEREFORE, in consideration of the premises and the representations,
warranties and agreements herein contained, the parties hereto agree as follows:
I. PURCHASE AND SALE
A. Company Common Stock. Subject to the terms and conditions of this
Agreement, on the Closing Date, each of the Shareholders will sell, transfer,
convey and assign to Holding, and Holding shall purchase from each Shareholder,
the number of shares of Company Common Stock set forth opposite such
Shareholder's name on Schedule 2.3 under the heading "Shares Owned", and shall
deliver to Holding, against delivery by Holding of the consideration payable to
such Shareholder pursuant to the terms of this Agreement, certificates
representing such shares of Company Common Stock, together with stock powers
duly executed in blank in forms acceptable to Holding.
B. Closing. The closing of the transactions contemplated by this
Agreement ("Closing") will take place at 10:00 a.m. at the offices of Bracewell
& Patterson, L.L.P., in Dallas, Texas on the date that each of the conditions
precedent to the obligations of the parties to effect such transactions set
forth in Article 6 of this Agreement are then satisfied or are waived by the
applicable party (such date, the "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 6.3 and 6.4 below.
C. Delivery of and Payment for Company Common Stock.
<PAGE>
1. Aggregate Purchase Price. Subject to adjustment as set forth in
Section 1.4 of this Agreement, the aggregate purchase price (the "Total
Consideration") for all of the shares of Company Common Stock shall be: (i)
$41,981,385 in cash (the "Cash Consideration"), (ii) 1,450,000 shares of
GroupMAC Common Stock, which, based on the closing price of GroupMAC Common
Stock on the New York Stock Exchange on November 2, 1998, has a value of
$18,487,500 (the "Stock Consideration"), (iii) subordinated promissory notes
(the "Notes") issued by GroupMAC in the aggregate principal amount of
$16,000,000 in a form to be agreed on by GroupMAC, Holding and the Shareholders
acting in their respective sole judgments and which shall contain the terms set
forth on the term sheet attached hereto as Exhibit 1.3.1A (the "Debt
Consideration"), (iv) warrants (the "Warrants") to purchase that number of
shares of GroupMAC Common Stock equal to the number of shares determined by
dividing (a) $16,000,000 by (b) the product of (1) 1.5 multiplied by (2) the
Average Closing Price on the Closing Date (the "Warrant Consideration"), which
shall be in a form to be agreed on by GroupMAC, Holding and the Shareholders
acting in their respective sole judgments and which shall contain the terms set
forth on the term sheet attached hereto as Exhibit 1.3.1B; provided, however,
that if a Shareholder would otherwise be entitled to receive a Warrant that
includes the right to receive a fraction of a share of GroupMAC Common Stock
pursuant to the clause (iv), such Shareholder shall be entitled to receive a
Warrant excluding such fractional share of GroupMAC Common Stock and shall be
entitled in lieu thereof to a cash payment (rounded up or down to the nearest
$.01, $.005 being rounded up to $.01) in an amount equal to such fractional part
of a share of GroupMAC Common Stock multiplied by the Average Closing Price for
the Closing Date, and (v) the Post-Closing Consideration.
2. Delivery of Company Common Stock, Cash Consideration, Stock
Consideration and Debt Consideration. At the Closing, (i) each Shareholder
shall deliver to Holding certificates representing that number of shares of
Company Common Stock set forth opposite such Shareholder's name on Schedule 2.3
under the heading "Shares Owned," together with properly executed stock powers
in forms acceptable to Holding (with each such signature guaranteed by a
commercial bank or notarized by a notary public or similar official reasonably
satisfactory to Holding), and (ii) GroupMAC and Holding shall (a) cause to be
delivered to such Shareholder that portion of the Cash Consideration set forth
opposite such Shareholder's name on Schedule 2.3 under the heading "Cash
Consideration," (b) notify and direct GroupMAC's stock transfer agent to prepare
and deliver to such Shareholder a stock certificate duly registered in the name
of such Shareholder representing the number of shares of GroupMAC Common Stock
set forth opposite such Shareholder's name on Schedule 2.3 under the heading
"Stock Consideration," (c) cause to be delivered to such Shareholder a Note in
the amount set forth opposite such Shareholder's name on Schedule 2.3 under the
heading "Debt Consideration," (d) cause to be delivered to such Shareholder a
Warrant representing the right to acquire the number of shares of GroupMAC
Common Stock equal to the product of (1) the Warrant Consideration, multiplied
by (2) the percentage set forth opposite such Shareholder's name on Schedule 2.3
under the heading "Ownership Percentage", and (e) cause to be delivered to each
Shareholder the additional amounts, if any, in accordance with Section 1.3.3.
3. Post-Closing Consideration. As further consideration for the
purchase of the shares of Company Common Stock from each respective Shareholder,
GroupMAC shall deliver to such Shareholder the post-closing consideration
described below (when aggregated with the consideration to be issued to all the
other Shareholders pursuant to this Section 1.3.3, the "Post-Closing
Consideration"):
(a) Within sixty (60) days after December 31, 1999, GroupMAC shall
issue to such Shareholder, and shall deliver stock certificates duly
registered in the name of such Shareholder representing, that number of
shares of GroupMAC Common Stock equal to the product of (i) the quotient of
(A) two times the Period One Excess Earnings, divided by (B) the Average
Closing
2
<PAGE>
Price for December 31, 1999, multiplied by (ii) the percentage set forth
opposite such Shareholder's name on Schedule 2.3 under the heading
"Ownership Percentage"; and
(b) Within sixty (60) days after December 31, 2000, GroupMAC shall
issue to such Shareholder, and shall deliver stock certificates duly
registered in the name of such Shareholder representing, that number of
shares of GroupMAC Common Stock equal to the product of (i) the quotient of
(A) two times the Period Two Excess Earnings, divided by (B) the Average
Closing Price for December 31, 2000, multiplied by (ii) the percentage set
forth opposite such Shareholder's name on Schedule 2.3 under the heading
"Ownership Percentage".
As used in this Agreement, the terms:
(i) "Period One Excess Earnings" shall mean the difference of (A) the EBITA
for the thirteen (13) month period commencing on December 1, 1998 and ending on
December 31, 1999 ("Period One"), minus (B) $11,916,667;
(ii) "Period Two Excess Earnings" shall mean the difference of (A) the
EBITA for the calendar year 2000 ("Period Two"), minus (B) $12,000,000;
(iii) "EBITA" shall mean the Company's net income before interest, taxes
and amortization of the goodwill (if any) resulting from the consummation of the
transactions contemplated by this Agreement as shown on the Company's financial
statements, which financial statements shall be prepared in accordance with GAAP
on a basis consistent with the Company Financial Statements; provided, however,
that in determining EBITA for purposes of this Section 1.3.3 (i) no allocation
of a proportionate amount of corporate overhead charged by GroupMAC to the
Company, if any, shall be included in calculating EBITA unless such overhead
charge replaces a charge previously incurred by the Company (provided that for
purposes of their calculation, such proportion of overhead shall be included
only to the extent that it does not exceed the amount previously incurred by the
Company or that reasonably could have been incurred by the Company), and (ii) in
the event of an acquisition of the assets or capital stock of a third party by
the Company, revenue, expenses and cost of capital associated with such
acquisition shall not be included in the calculation of EBITA unless the
Shareholder Representative (as defined herein) and GroupMAC agree on the
appropriate revenue, expenses and cost of capital associated with such
acquisition for inclusion in the calculation of EBITA; and
(iv) "Average Closing Price" shall mean, for a date specified in any
provision in this Agreement, the average of the closing prices of GroupMAC
Common Stock on the New York Stock Exchange for the ten (10) days of trading
ending two days of trading prior to the date specified in such provision.
Notwithstanding anything in this Section 1.3.3. to the contrary, (i) no
shares of GroupMAC Common Stock shall be issued for any period if the number of
shares to be issued is less than zero for such period and (ii) if any
Shareholder would otherwise be entitled to receive a fraction of a share of
GroupMAC Common Stock pursuant to this Section 1.3.3., such Shareholder shall be
entitled to receive in lieu of such fractional share a cash payment (rounded up
or down to the nearest $.01, $.005 being rounded up to $.01) in an amount equal
to such fractional part of a share of GroupMAC Common Stock multiplied by the
Average Closing Price for December 31, 1999 (for shares earned in Period One)
and for December 31, 2000 (for shares earned in Period Two).
3
<PAGE>
D. Post-Closing Adjustment.
1. Notice of Adjustment. In the event Holding determines that
between the Balance Sheet Date and the Closing Date, (i) the Company has
declared or paid any unusual bonuses, fees, commissions or distributions to any
of the Shareholders or the Company's officers, directors, or employees (other
than a distribution of cash in an amount equal to 39.6% of the taxable income of
the Company generated between the Balance Sheet Date and the Closing Date, which
shall be agreed to by Holding and the Company (the "Tax Distribution Amount@),
(ii) the Company has incurred expenses as contemplated by Section 9.18 of this
Agreement in excess of $600,000 in the aggregate (the "Allowed Expenses");
provided, however, that the parties acknowledge that such Allowed Expenses shall
be included as expenses in determining whether any bonuses or other
distributions are to be paid by the Company to the Company's employees pursuant
to all bonus and other profit sharing plans of the Company, or (iii) the Company
has paid those Shareholders which shall be parties to those Employment
Agreements attached as Exhibit 6.3.3 salaries in excess of the salaries
contemplated by such Employment Agreements, then Holding may deliver written
notice to the Shareholders (the "Notice of Adjustment") setting forth in
reasonable detail the types and amounts of such excess expenses, payments and
distributions. The sum total of such expenses, payments and distributions and
excesses as finally determined pursuant to this Section 1.4. shall be deemed an
adjustment to the Total Consideration and shall be governed by the provisions of
this Section 1.4 (the "Adjustment").
2. Review. After delivery to the Shareholders of the Notice of
Adjustment, 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 such Notice, and to consult with Holding and GroupMAC and their respective
representatives regarding the methods used in the preparation of such Notice.
3. Disputes. The Notice of Adjustment shall be final, conclusive
and binding for purposes of this Agreement, unless Bob Munson or his substitute
(who shall be acceptable to GroupMAC), acting on behalf of himself and the other
Shareholders (the "Shareholder Representative") pursuant to a power of attorney
executed by each of the Shareholders (the "Power of Attorney"), delivers to
Holding a written notice of disagreement ("Notice of Dispute") with any item or
items in the Notice of Adjustment within 20 business days following receipt of
such Notice, specifying in reasonable detail the nature and extent of such
disagreement.
4. Resolution by Parties. If a Notice of Dispute is properly given,
Holding and the Shareholder Representative shall use their commercially
reasonable efforts to resolve any disagreement with respect to the Notice of
Adjustment. If Holding and the Shareholder Representative do not resolve the
dispute within 30 days following receipt by Holding of a properly given Notice
of Dispute, then either party may submit the dispute to a nationally recognized
certified public accounting firm mutually agreed upon by Holding and the
Shareholder Representative which does not have any significant past or present
relationship with any of the parties hereto (the "Accountants") and the
Accountants shall resolve such dispute within 30 days after its submission to
the Accountants. If Holding and the Shareholder Representative do not agree on
a nationally recognized certified public accounting firm, the firm shall be
Arthur Andersen & Co.; provided, that such firm does not have any significant
past or present relationship with any of the parties hereto. Holding and the
Shareholder Representative (if the dispute is resolved by them) or the
Accountants (if a dispute is resolved by them) shall set forth such resolution
in writing, and such writing shall be final, conclusive and binding for purposes
of this Agreement (the "Final Resolution").
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5. Settlement of Adjustment. Holding shall cause GroupMAC to offset
from each Shareholder's Note an amount equal to the product of (a) the
Adjustment (other than Adjustments related to the Stockholders' Equity Addition,
if any, or the Stockholders' Equity Deduction, if any), multiplied by (b) the
percentage set forth opposite such Shareholder's name on Schedule 2.3 under the
heading "Ownership Percentage." Such offset shall occur at any time after (i)
25 business days following the date of the Notice of Adjustment if a Notice of
Dispute is not delivered or (ii) if a Notice of Dispute has been delivered, two
business days following the Final Resolution of the issues contained in such
Notice of Dispute.
6. Purchase of Certain Receivables. If any accounts receivable
(other than retainages, and other than any accounts receivables and retainages
related to the Fuel Cell Dock project in connection with the Agreement dated
October 14, 1994 by and between the Company and Dawson Building Contractors,
Inc. and the Jefferson County Courthouse project in connection with the
Agreement dated November 26, 1996 by and between the Company and Brice Building
Company, Inc.) recorded as assets of the Company on the Balance Sheet remain
unpaid in full on the date that occurs 120 days following the Closing, the
Shareholder Representative shall prepare and submit to Holding a schedule of
same, such schedule to include sufficient detail regarding such accounts, to
include without limitation aging information. The Company may elect to assign,
in whole or in part, such receivables (provided that all claims related thereto
are also assigned) to the Shareholders, and the Shareholders shall, within 10
days following notice by the Company, purchase such receivables from the Company
without recourse through a set off against the Notes pro rata (to the extent
possible) in accordance with this Section 1.4.6 in the amount of the uncollected
face amount of such receivables, net of any reserve therefor and net of any
consideration received from any person or entity not a party hereto from any
claims related thereto, which was recorded on the books of the Company as of the
Balance Sheet Date. Furthermore, if any retainages (other than retainages
related to the Fuel Cell Dock and Jefferson County Courthouse projects) that
were booked on the Balance Sheet and are not collected (after considering any
reserves with respect thereto as of the Balance Sheet Date and after applying
payments received from a particular customer against the oldest retainages of
such customer first) by the Company within six months following the completion
of the project to which they relate, the Company may elect to assign such
retainages (provided that all claims related thereto are also assigned) that
were booked on the Balance Sheet to the Shareholders, and the Shareholders will,
within 10 days following notice by the Company, purchase such retainages that
were booked on the Balance Sheet in the amount of the uncollected face amount of
such retainages (net of any reserve therefor and net of any consideration
received from any person or entity not a party hereto from any claims related
thereto) through a set off against the Notes pro rata (to the extent possible)
in accordance with this Section 1.4.6. The above-referenced purchases by the
Shareholders shall be several (and not joint) and pro rata, based on the
percentage for each Shareholder set forth opposite such Shareholder's name on
Schedule 2.3 under the heading "Ownership Percentage".
7. Expenses. GroupMAC, Holding and the Shareholders shall each pay
their own costs incurred in connection with this Section 1.4, including without
limitation the fees and expenses of their respective attorneys, accountants, and
financial advisors, if any; provided, however, that the Accountants' fees
associated with the resolution, if any, of any dispute that is the subject of a
Notice of Dispute shall be borne equally by Holding and the Shareholders. The
Shareholders' portion of such fees shall be paid by GroupMAC and GroupMAC shall
set off the Shareholders' portion of such fees against the Notes in accordance
with Section 1.4.8 and to the extent possible.
8. Right of Set Off. Notwithstanding anything in this Agreement to
the contrary, if any of the Shareholders shall fail to fulfill any of their
respective obligations set forth in this Agreement, including, without
limitation, Section 1.4, GroupMAC is hereby authorized at any time from time to
time, to the fullest extent permitted by law, to set off and apply any Post-
Closing Consideration held by and any amounts owed by GroupMAC on the Notes with
respect to the Debt Consideration to or for the credit or the
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account of such Shareholders against any and all such obligations now or
hereafter existing under this Agreement, and although such obligations with
respect to the Debt Consideration may be unmatured. The rights of GroupMAC under
this Section 1.4.8 are in addition to other rights and remedies which GroupMAC
and Holding may have. Such amounts shall be withheld by GroupMAC on a pro rata
basis, based on the percentage for each Shareholder set forth opposite such
Shareholder's name on Schedule 2.3 under the heading "Ownership Percentage".
II. REPRESENTATIONS AND WARRANTIES
OF THE COMPANY AND THE SHAREHOLDERS
The Company and, to their knowledge (other than the representations and
warranties contained in Section 2.3 of this Agreement), Russell L. Bates, Jim
Haltom, Eugene Jones, Robert Munson and Jack Vick ( the "Principal
Shareholders") hereby, jointly and severally, represent and warrant to Holding
and GroupMAC as follows; provided, however, that notwithstanding anything in
this Agreement to the contrary, each of the Shareholders, including, without
limitation, the Principal Shareholders, hereby, jointly and severally, represent
and warrant to Holding and GroupMAC as to such Shareholder (but not as to any
other Shareholder) as set forth in Section 2.3 of this Agreement; and provided
further, however, that for purposes of this Section 2, the term "Company" shall
include Trinity Contractors, Inc, T.E.A.2, Inc. ("TEA") and T.E.M., Inc.
("TEM"), unless the context requires otherwise:
A. Organization and Standing. The Company is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware and is duly qualified or licensed as a foreign corporation authorized
to do business in all other 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 will not have a Company Material Adverse
Effect. TEA is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware and is duly qualified or
licensed as a foreign corporation authorized to do business in all other 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
will not have a Company Material Adverse Effect. TEM is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware and is duly qualified or licensed as a foreign corporation authorized
to do business in all other 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 will not have a Company Material Adverse
Effect. Except as set forth in Schedule 2.1, the Company does not own, of record
or beneficially, directly or indirectly, any of the outstanding capital stock,
voting interests or ownership interests in any corporation, partnership, joint
venture, limited liability company, trust, limited partnership or other entity.
Schedule 2.1 contains a listing of all names under which the Company has done
business as well as the names of all predecessors of the Company, including,
without limitation, the names of all entities from which the Company previously
acquired significant assets. Copies of the charter documents, bylaws, minute
books and stock transfer records, each as amended to date, of the Company, TEA
and TEM, have been made available to GroupMAC in connection with the
transactions contemplated hereby and are complete and accurate and are true and
correct copies of the originals thereof.
B. Capitalization of the Company. As of the date of this Agreement, the
total authorized capital stock of the Company is 100,000 shares of Company
Common Stock, of which 32,216.035 shares are issued and outstanding. Seventy-Six
shares of Company Common Stock are held in treasury. Each issued and outstanding
share of capital stock of the Company is duly and validly authorized and issued,
fully paid and non-assessable, and was not issued in violation of the pre-
emptive rights of any past or present shareholder. As of the date of this
Agreement, the total authorized capital stock of TEA is 1,000,000 shares of TEA
Common Stock, of which 149,138 shares are issued and outstanding. Each issued
and outstanding share of
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capital stock of TEA is duly and validly authorized and issued, fully paid and
non-assessable, and was not issued in violation of the pre-emptive rights of any
past or present shareholder. As of the date of this Agreement, the total
authorized capital stock of TEM is 1,000,000 shares of TEM Common Stock, of
which 168,706 shares are issued and outstanding. Each issued and outstanding
share of capital stock of TEM is duly and validly authorized and issued, fully
paid and non-assessable, and was not issued in violation of the pre-emptive
rights of any past or present shareholder. Except as set forth in Schedule 2.2,
there are no outstanding convertible or exchangeable securities, subscriptions,
calls, options, warrants, rights or other agreements or commitments of any
character relating to the issuance or sale of any shares of capital stock of, or
other equity ownership interest in, the Company. Except as set forth in Schedule
2.2, the Company has no liability, contingent or otherwise, to any person or
entity in connection with pre-emptive or contractual subscription rights or the
offer, sale, purchase, surrender or cancellation of any shares of capital stock,
warrants, options or other equity or voting interests or securities of the
Company.
C. Stock Ownership. Each Shareholder owns, beneficially and of record,
with full power to vote, the number of shares of Company Common Stock set forth
opposite each Shareholder's name on Schedule 2.3 under the heading "Shares
Owned" and such shares are so held by such Shareholder free and clear of all
liens, encumbrances and adverse claims whatsoever. The Shareholder has the
requisite power and authority to execute, deliver and perform this Agreement and
all documents to be executed, delivered and performed by such Shareholder (each
a "Shareholder Related Document") and to consummate the transactions
contemplated hereby and thereby. This Agreement and all of the Shareholder
Related Documents to which the Shareholder is a party, when duly executed and
delivered by the Shareholder and all the other parties thereto, shall constitute
legal, valid and binding obligations of the Shareholder, enforceable against the
Shareholder in accordance with their respective 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). Except as provided on Schedule 2.5, 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 of this Agreement or any Shareholder Related Document by the
Shareholder. The execution, delivery and performance by the Shareholder of this
Agreement and any Shareholder Related Document to which the Shareholder is a
party do not violate any (i) mortgage, indenture, contract, agreement, lease,
letter of intent or commitment or other instrument of any kind to which the
Shareholder is a party or by which the Shareholder of his or her assets or
properties may be bound or affected, (ii) any law, rule or regulation applicable
to the Shareholder or (iii) 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.
D. Authority. The Company, TEA and TEM each has the requisite power and
authority to execute, deliver and perform this Agreement and all documents and
instruments referred to in this Agreement to be executed, delivered and
performed by each of them (each, a "Company Related Document") and to consummate
the transactions contemplated hereby and thereby. This Agreement and all of the
Company Related Documents, when duly executed and delivered by the Company, TEA
and TEM and all other parties thereto, shall constitute legal, valid and binding
obligations of each of them, enforceable against each of them in accordance with
their respective 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).
E. Consents; Violations. Except as provided in Schedule 2.5, no
approval, consent, order or action of or filing with any court, administrative
agency, governmental authority or other third party is
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required for the execution, delivery or performance of this Agreement or any
Company Related Document by the Company. The execution, delivery and performance
by the Company of this Agreement and any Company Related Documents do not
violate any (i) mortgage, indenture, contract, agreement, lease, letter of
intent or commitment or other instrument of any kind to which the Company is a
party or by which the Company, or any of its assets or properties may be bound
or affected, (ii) any law, rule or regulation applicable to the Company or (iii)
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
Company. Neither the execution and delivery of this Agreement nor the
consummation of the transactions contemplated hereby will result in, cause the
accelerated vesting or delivery of, or increase the amount or value of any
payment or benefit to any employee of the Company or any beneficiary under any
Company Plan (as hereinafter defined).
F. Defaults. Except as set forth in Schedule 2.6, neither the Company
nor any Company Plan is in default under or in violation of, (i) any mortgage,
indenture, charter or bylaw provision, provision of any Company Plan, contract,
agreement, lease, commitment or other instrument of any kind to which the
Company or any Company Plan is a party or by which the Company or any Company
Plan or any of its properties or assets may be bound or affected, (ii) any law,
rule or regulation applicable to the Company or any Company Plan, or (iii) any
court injunction, order or decree, or any valid and enforceable order of any
governmental agency in effect having jurisdiction over the Company or any
Company Plan, which default or violation could adversely affect the ability of
the Company to consummate the transactions contemplated hereby or will have a
Company Material Averse Effect.
G. Full Authority. Except as set forth in Schedule 2.7, the Company
has full power, authority and legal right and has all licenses, permits,
qualifications, and other documentation (including without limitation permits
required under applicable Environmental Law) necessary to own or operate its
businesses, properties and assets and to carry on its businesses as being
conducted on the date hereof. Such businesses are now being conducted and such
assets and properties are being owned and operated, and the Company Plans have
been implemented and maintained, in compliance with all applicable laws,
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 Company Material Adverse Effect, and there is
no existing condition or state of facts which would give rise to a violation
thereof or a liability or default thereunder, except where a violation,
liability or default will not have a Company Material Adverse Effect. The term
"Environmental Law" means any law, rule, regulation, approval, notice, decision,
decree or ordinance having the force of law, or order of any federal, state or
local executive, legislative, judicial, regulatory or administrative agency,
board or authority, which relate to (i) noise; (ii) pollution or protection of
the air, surface water, ground water, land or wildlife; (iii) solid, gaseous or
liquid waste generation, treatment, storage, use, processing, disposal or
transportation; (iv) exposure to hazardous or toxic substances; (v) the safety
or health of employees, or (vi) regulation of the manufacture, processing,
distribution in commerce, use, or storage of chemical substances.
H. Financial Statements. The Shareholders have delivered to GroupMAC and
Holding, and attached as Schedule 2.8 are copies of the following sets of
financial statements of the Company: (i) Balance Sheet as of December 31, 1997,
(ii) Balance Sheet (the "Balance Sheet") as of September 30, 1998 (the "Balance
Sheet Date"), (iii) Statements of Earnings and Retained Earnings for the nine
(9) month period ended on the Balance Sheet Date and (iv) Statements of Earnings
and Retained Earnings for the fiscal year December 31, 1997. Such financial
statements are collectively referred to herein as the "Company Financial
Statements." Such financial statements, except as described in the notes
thereto or in Schedule 2.8, have been prepared from the Company's records in
accordance with GAAP applied on a consistent basis
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throughout the periods covered thereby. Such Balance Sheets present fairly in
all material respects the financial condition of the Company as of the dates
indicated thereon, and such Statements of Earnings and Retained Earnings present
fairly in all material respects the results of the Company's operations for the
periods indicated thereon.
I. Undisclosed Liabilities. Except as and to the extent disclosed in
Schedule 2.9 or in the Company Financial Statements, the Company has no
liabilities or obligations of any nature required in accordance with GAAP to be
disclosed on the Balance Sheet included in the Company Financial Statements.
J. Taxes. The Company has filed all requisite federal, state and other
tax returns, information returns, declarations and reports for all fiscal
periods ended on or before the Balance Sheet Date that the Company was required
to file. All such tax returns were correct and complete in all material
respects. All taxes owed by the Company (whether or not revealed on any tax
return) have been paid. Without limiting the generality of the foregoing, the
Company has withheld and paid all taxes required to have been withheld or paid
in connection with amounts paid or owing to any employee, independent
contractor, creditor, stockholder or other third party. There are no claims
(nor, to the Company's knowledge, is there any matter pending which may result
in a claim) against the Company for federal, state or local income, sales, use,
franchise or other taxes for any period or periods prior to and including the
Balance Sheet Date and no written notice of any claim, whether pending or
threatened, for taxes has been received or, to the Company's knowledge, is
expected to be received which would create a lien on the Company's assets or
adversely affect the Company in any material respect. To the Company's
knowledge, the amounts shown as accruals for taxes and dividends payable on the
Company Financial Statements as of the Balance Sheet Date are sufficient for the
payment of all taxes of any kind or nature whatsoever for all fiscal periods
ended on or before such date. Copies of the federal, state and local income tax
returns and franchise tax returns of the Company (collectively, "Tax Returns")
and statements of deficiencies assessed against or agreed to by the Company for
its last three fiscal years have previously been provided to GroupMAC and
Holding. The Company has not obtained any extensions of time in which to file
any Tax Returns which have not yet been filed. The Company has not waived any
statute of limitations with respect to federal, state, or local income, sales,
use, franchise or other taxes or agreed to any extensions of time with respect
to a tax assessment or deficiency, except for such waivers or extensions which,
by their terms, have lapsed as of the date hereof. The Shareholders made a
valid election under the provisions of Subchapter S of the Code, and the Company
has not, since the effective date of the Subchapter S election, been subject to
taxation under the provisions of Subchapter C of the Code or under Section 11 or
Section 1374 of the Code. Neither the Shareholders nor the Company has taken
any action that terminated the Subchapter S election, and such election remains
in effect up to the Closing Date.
K. Proprietary Rights. The Company has sufficient rights to use all
trade names, brand names, trademarks, service marks and logos and to use and
practice all systems, including, without limitation, the MIS Systems,
technology, proprietary information, know-how or patented ideas, designs or
inventions (collectively "Proprietary Rights") used in the present operation of
its businesses and the marketing, distribution, sale and use of the materials
used and the products sold by the Company. None of the ownership, access to,
use or practice of the Proprietary Rights by the Company infringes on the rights
of any other party. Except as set forth on Schedule 2.11, (i) all Proprietary
Rights that are owned outright by the Company are valid and enforceable and will
survive the Closing without any consent or action by any party thereto or any
third party, and (ii) all licenses, leases and other agreements that provide the
Company with any rights respecting any Proprietary Rights constitute, legal,
valid and binding obligations of the Company, 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
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enforcement of creditors' rights generally and by general principles of equity
(whether applied in a proceeding at law or in equity).
L. Title; Asset Condition. Except as set forth in Schedule 2.12, the
Company owns outright, and has full legal and beneficial title to all of its
owned assets free and clear of all liens, pledges, mortgages, security
interests, conditional sales contracts and encumbrances, including without
limitation, good and marketable title to all of its owned real property
interests, free and clear of any mortgages, security agreements, liens or
encumbrances. All of the trucks, machinery and equipment of the Company are in
good working order and condition, ordinary wear and tear excepted.
M. Accounts and Notes Receivable. All of the Company's accounts and
notes receivable disclosed in Schedule 2.22 (xiii) are bona fide receivables,
were created in the ordinary course of business, are good and collectible
(subject to the Company's reserve for doubtful accounts, if any, set forth on
the Balance Sheet dated as of the Balance Sheet Date), and are not subject to
any meritorious defenses or rights of set-off.
N. Company Contracts; Company Plans.
(i) None of the Company's customers or suppliers under any Company
Contracts have canceled or substantially reduced, or to the knowledge of the
Company, are currently attempting or threatening to cancel or substantially
reduce service or products purchased from or sold to the Company, in each case
other than pursuant to the completion of any project (or portion thereof)
pursuant to a Company Contract. Except as set forth in Schedule 2.14, the
Company has complied with all commitments and obligations under each Company
Contract and is not in default under any such contracts and agreements, no
notice of default has been received by the Company, and the Company is not aware
of any defaults by customers, suppliers and other parties to such contracts and
agreements. The Company is not a party to any governmental contract subject to
price redetermination or renegotiation. A copy of each Company Contract is
maintained at the office of the Company. The term "Company Contract" means each
contract, lease, undertaking, commitment, mortgage, indenture, note, security
agreement, license and other agreement of the Company in effect on the date
hereof (a) involving the expenditure or receipt of more than $100,000 over the
term thereof, (b) containing provisions calling for the sale or purchase of raw
materials, products or services at prices that vary from the market prices of
such raw materials, products or services generally prevailing in customary third
party markets, (c) which include "take or pay", "meet or release", "most favored
nations" or similar pricing or delivery arrangements, (d) requiring the Company
to indemnify or hold harmless any other person or entity (excluding contracts
entered into in the ordinary course of business and involving the purchase or
sale of goods or services), (e) evidencing any warranty obligation of the
Company with respect to goods, services or products sold or leased by it,
(excluding contracts for the sale of goods or services entered into in the
ordinary course of business and excluding warranties implied by law given in the
ordinary course of business), (f) imposing on the Company any confidentiality or
non-disclosure (excluding contracts entered into in the ordinary course of
business and involving the purchase or sale of goods or services), non-
solicitation or non-compete obligation or containing any acceleration or
termination provisions effective upon a change of control of the Company or a
merger of the Company into another entity, (g) involving collective bargaining
or agreements with any labor union or employee group, (h) establishing or
otherwise evidencing the Company's policies of insurance, or (i) involving the
lease of real property. With respect to each of the Company's policies of
insurance, such insurance is currently in full force and effect, and, to the
Company's knowledge, (x) is adequate in character and amount and (y) is placed
with financially sound and reputable insurers unaffiliated with the Shareholders
or the Company. No policy of the Company's insurance has ever been canceled,
and the Company has never been denied coverage.
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(ii) The Company has previously provided GroupMAC and Holding true
and complete copies of all Company Plans. During the six year period ending
date of this Agreement, none of the Company Plans has been either a defined
benefit plan (as defined in Section 3(35) of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA")) or a multiemployer pension plan (as
defined in Section 3(37) of ERISA), and no Company Plan is or was subject to
Title IV of ERISA. Each Company Plan is in compliance with ERISA, the Code, and
other applicable laws in all material respects, and each plan that is intended
to qualify under Section 401(a) of the Code is so qualified and has been
determined by the Internal Revenue Service to so qualify. Nothing has occurred
and no condition exists with respect to any Company Plan that could subject the
Company to a tax, penalty, fine, lien or other liability. All contribution
obligations to the Company Plans have been satisfied. No amount paid or payable
by the Company in connection with the transactions contemplated by this
Agreement either solely as a result thereof or as a result of such transactions
in conjunction with any other events will be deemed an "excess parachute
payment" within the meaning of Section 280G of the Code. No payments have been
made by the Company pursuant to a Company Plan that were not or will not be
deductible by the Company under Section 162(m) of the Code. "Company Plan" is
defined as obligations, contingent or otherwise, covering any of the Company's
employees under any employment or consulting agreement or under any executive's
or employee's compensation plan, agreement or arrangement, including, without
limitation, any "employee welfare benefit plan" as defined in Section 3(1) of
ERISA , "employee pension benefit plan" as defined in Section 3(2) of ERISA or
any other pension, retirement, profit sharing, stock option, stock purchase,
bonus, fringe benefit, incentive, vacation, savings plan, health, welfare or
other employee or former employee benefit plan, program, policy or arrangement.
O. Year 2000 Compliance. The Company has taken commercially reasonable
efforts to determine whether the Company's management information systems
located and used at any of the Company's facilities, as currently configured
(the "MIS Systems"), are Year 2000 Compliant. To the Company's knowledge, the
MIS Systems are Year 2000 Compliant. "Year 2000 Compliant" means that the MIS
Systems will correctly recognize and perform properly date-sensitive functions
involving certain dates prior to, and any date after, December 31, 1999.
P. Legal Actions. Except as described in Schedule 2.16, no legal action,
suit, audit, investigation, unfair labor practice charge, complaint, claim,
grievance, or proceeding by or before any court, arbitration panel, governmental
authority or third party is pending or, to the knowledge of the Company,
threatened, which involves or may involve the Company or its now or previously
owned or operated assets, operations, properties or businesses.
Q. Labor and Employee Relations. Except as described in Schedule 2.17:
(a) there are no collective bargaining agreements or other labor union
contracts applicable to any employee of the Company, and no such agreement or
contract has been requested by any employee or group of employees of the
Company, nor has there been any discussion with respect thereto by management of
the Company with any employees of the Company. The Company has not received any
written notification of any unfair labor practice charges or complaints pending
before any agency having jurisdiction thereof nor are there any current union
representation claims involving any of the employees of the Company. To the
Company's knowledge, there are no such threatened charges or claims;
(b) to the Company's knowledge, there are no union organizing
activities or proceedings involving, or any pending petitions for recognition
of, a labor union or association as the exclusive bargaining agent for, or where
the purpose is to organize, any group or groups of employees of
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Company. There is not currently pending against the Company any proceeding
before the National Labor Relations Board, wherein any labor organization is
seeking representation of any employees of Company;
(c) there are no strikes, work stoppages, work slowdowns, or lockouts
and not, to the Company's knowledge, any threats thereof by or with respect to
any of the employees of Company. There have been no labor disputes, strikes,
slowdowns, work stoppages, lockouts, or similar matters involving employees of
Company at any time during the past 36 months;
(d) there are not pending any grievances filed by the employees of the
Company within any collective bargaining unit or by representatives of employees
within any collective bargaining unit. Further, there are no arbitration
decisions, settlement agreements, injunctions, consent decrees, or conciliation
agreements which affect the operations of the Company; and
(e) there are (a) no charges of discrimination or lawsuits involving
any alleged violation of any fair employment law, disabilities discrimination
law, age discrimination law, wage payment law, or occupational safety and health
law, (b) no pending litigation arising out of any employment relationship, or
other employment-related law, whether federal, state or local, (c) no pending
litigation arising out of any employment relationship, presently threatened or
pending, by any applicant, employee or former employee of the Company or any
representative of any such employee or former employee and (d) to the Company's
knowledge, no threatened charge, notice, proceeding, or litigation related to
the above. No charge or claim involving any of the facilities or employees of
the Company is pending with respect to equal employment opportunity, age
discrimination, occupational safety, disabilities discrimination, or any other
form of alleged employment practice or unfair labor practice, and, to the
Company's knowledge, no charge or claim is threatened.
R. No Material Adverse Change. Except as specifically set forth on
Schedule 2.18, as contemplated in this Agreement or with respect to the Allowed
Expenses, since the Balance Sheet Date there has not been: (i) , except in
connection with the acquisition by the Company of all of the outstanding capital
stock of TEA and TEM (the "TAT Acquisitions"), any change in the Company's
Articles of Incorporation or Bylaws, (ii) any change in the financial condition,
assets, liabilities (contingent or otherwise), income or business of the Company
that would constitute a Company Material Adverse Effect; (iii) any damage,
destruction or loss (whether or not covered by insurance) materially adversely
affecting the properties or business of the Company; (iv) , except in connection
with the TAT Acquisitions, any change in the authorized capital of the Company
or in its securities outstanding or any change in its ownership interests; (v)
any declaration or payment of any dividend or distribution in respect of the
capital stock or, except in connection with the TAT Acquisitions, any direct or
indirect redemption, purchase or other acquisition of any of the capital stock
of the Company; (vi) , except in connection with the TAT Acquisitions, any
contract or commitment entered into by the Company or any incurrence by the
Company or agreement by the Company to incur any liability or make any capital
expenditures in excess of $50,000, except in the normal course of business;
(vii) any increase in the compensation, bonus, sales commissions or fee
arrangement payable or to become payable by the Company to any of its officers,
directors, stockholders, employees, consultants or agents; (viii) any proposed
law or regulation (the existence of which is known, or in the normal course of
business should be known, to the Shareholders) or any event or condition of any
character materially adversely affecting the business or future prospects of the
Company; (ix) any creation, assumption or permitting to exist of any mortgage,
pledge or other lien or encumbrance upon any assets or properties of the Company
whether now owned or to be hereafter acquired; (x) any sale or transfer, or any
agreement to sell or transfer, any material assets, properties or rights of the
Company to any person, including, without limitation, any Shareholder or any
affiliate of any Shareholder, other than in the ordinary course of business;
(xi) any cancellation, or agreement to cancel, any indebtedness or other
obligation owing to the Company,
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including, without limitation, any indebtedness or obligation of a Shareholder
or any affiliate of a Shareholder; (xii) , except for agreements regarding the
acquisition of equity interests in TEA or TEM entered into in connection with
the TAT Acquisitions, any plan, agreement or arrangement granting any
preferential rights to purchase or acquire any interest in any of the assets,
properties or rights of the Company or requiring consent of any party to the
transfer and assignment of any such assets, properties or rights; (xiii) ,
except in connection with the TAT Acquisitions, any negotiation for the
acquisition of any business or start-up of any new business; (xiv) any merger or
consolidation or agreement to merge or consolidate with or into any other
corporation (except the transactions contemplated by this Agreement); (xv) any
waiver of any material rights or claims of the Company; (xvi) any breach,
amendment or termination of any material contract, agreement, license, permit,
permit application or other right to which the Company is a party; (xvii) any
discharge, satisfaction, compromise or settlement of any claim, lien, charge or
encumbrance or payment of any obligation or liability, contingent or otherwise,
other than current liabilities as of the Balance Sheet Date, current liabilities
incurred since the Balance Sheet Date in the ordinary course of business, and
prepayments of obligations in accordance with normal and customary past
practices; or (xviii) , except in connection with the TAT Acquisitions, any
transaction by the Company outside the ordinary course of its business. The term
"Company Material Adverse Effect" is defined as an adverse effect on the
properties, assets, financial position, results of operations, long-term debt,
other indebtedness, cash flows or contingent liabilities of the Company in an
amount of $100,000 or more.
S. Investment Company. The Company is not an "investment company" within
the meaning of Section 368(a)(2)(F) of the Code, 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.
T. Affiliate Relationships. Except as set forth in Schedule 2.20,
neither the Shareholders nor any affiliate of any Shareholder, and no director,
officer or employee of or, to the knowledge of the Company, any consultant to
the Company owns, directly or indirectly, in whole or in part, any property,
assets or right, tangible or intangible, which the Company is operating or using
(in the case of a consultant, as if owned by the Company) or the use of which is
necessary for its business. The Shareholders, and to the Company's knowledge,
the directors, officers, employees, agents or consultants of the Company do not
have any relationships with any other corporation, partnership, firm,
association or business organization, entity or enterprise which is a
competitor, supplier or customer of the Company. The term "affiliate" means with
respect to any person, any other person which directly or indirectly, by itself
or through one or more intermediaries, controls, or is controlled by, or is
under direct or indirect common control with, such person. The term "control"
means the possession, directly or indirectly, of the power to direct, or cause
the direction of, the management and policies of a person, whether through the
ownership of voting securities, by contract or otherwise.
U. Historic Business. The Company operates at least one significant
historic business line, or owns at least a significant portion of its historic
business assets, in each case within the meaning of Treasury Regulation Section
1.368-1(d).
V. Other Disclosures. The following disclosures pertaining to the
Company are set forth in Schedule 2.22:
(a) Schedule 2.22(i) is a list of the products of the Company, all
product registrations used by the Company, and all environmental studies of the
Company;
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(b) Schedule 2.22(ii) is a list of the names, start dates and current
annual wage rates of all salaried and hourly regular full-time and part-time
employees of the Company as of the Closing Date, together with a summary of the
bonuses, additional compensation and other like benefits, if any, paid or
payable to each employee and the last date, if any, on which each employee
received (a) a raise in annual salary or hourly wage or (b) a bonus;
(c) Schedule 2.22(iii) includes the legal descriptions of all real
property owned in fee or leased by the Company as lessee and a list of documents
reflecting any other real property interests owned of record or beneficially or
leased by the Company as lessee;
(d) Schedule 2.22(iv) includes a list of assets owned by the Company
as of the date hereof which have been capitalized and have an unamortized value
of $10,000 or more, including without limitation vehicles and rolling stock, and
a list of all leased equipment of the Company, including without limitation
leased vehicles and rolling stock;
(e) Schedule 2.22(v) is a list of raw materials or other property that
has been consigned to the Company, or is otherwise owned by a third party, and
that is located at any property owned or leased by the Company;
(f) Attached to and listed on Schedule 2.22(vi) is each policy of
insurance maintained by the Company together with information on premiums,
coverages, insurers, expiration dates and deductibles, and an accurate list of
all insurance loss runs and workers' compensation claims received for the past
three policy years (excluding such information for policies relating to employee
welfare or benefit plans);
(g) Schedule 2.22(vii) is a list of each bank, brokerage firm, trust
company or other financial institution in which the Company has an account and
the identity of each such account, and each bank in which the Company has a safe
deposit box, together with the names of all persons authorized to draw on any
such account or have access to any such safe deposit box;
(h) Schedule 2.22(viii) is a list and summary description of, and
copies of, all governmental licenses and permits of the Company, including
without limitation all short wave radio or other licenses issued to the Company
by the Federal Communications Commission or utilized by the Company in its
business or operations;
(i) Schedule 2.22(ix) is a list of each debt, note, mortgage, security
agreement, pledge agreement, guaranty, bond, letter of credit, lease or other
instrument creating any debt or contingent obligation of the Company in excess
of $10,000 or a lien or claim in excess of $10,000 on any of its assets (other
than unsecured trade accounts payable and indemnification obligations incurred
in the ordinary course of business);
(j) Schedule 2.22(x) is a list of all of the Company's Proprietary
Rights and a description of all license fees and royalties (or the basis of
calculation thereof) required to be paid now or in the future by the Company for
the use and practice of its Proprietary Rights;
(k) Schedule 2.22(xi) is a list of all powers of attorney presently in
effect granted by the Company and all investments ("Investments") of the Company
in any equity securities, partnership interests, indebtedness or other interests
in any other corporation, or any person, partnership, joint venture, limited
liability company, trust, limited partnership or other legal entity;
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(l) Schedule 2.22(xii) is a list of all Company Plans and true and
complete copies of any reports filed with any governmental agency with respect
to a plan during the preceding three years; and
(m) Schedule 2.22(xiii) is a list of all of the Company's accounts and
notes receivable existing as of the Balance Sheet Date.
W. Brokers and Finders. Other than the fees owed by the Shareholders to
Christenberry Collet & Company, Inc., 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.
X. Disclosure. No representation or warranty by the Shareholders in the
Agreement, and no statement contained in any Schedule or any certificate
delivered by the Company or the Shareholders to GroupMAC or Holding pursuant to
the 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.
Y. Environmental Matters. The Company has complied with and is in
compliance with any Environmental Law applicable to it or any of its properties,
assets, operations and businesses, except where a violation will not have a
Company Material Adverse Effect. Except as set forth on Schedule 2.25, the
Company has obtained and adhered to all necessary permits and other approvals
required pursuant to any applicable Environmental Laws including, without
limitation, such permits or approvals as are necessary to treat, transport,
store, dispose of and otherwise handle any hazardous substance, hazardous waste,
hazardous material, toxic substance, oil or petroleum product as such terms are
defined by Environmental Laws (collectively, "Hazardous Substances"), a list of
all of which permits and approvals is set forth on Schedule 2.25. Except as
set forth on Schedule 2.25, the Company has reported to the appropriate
authorities, to the extent required by all Environmental Laws, all past and
present sites owned and operated by the Company where Hazardous Substances have
been treated, stored, disposed of or otherwise handled. To the Company's
knowledge, there have been no releases or threats of releases (as defined in
Environmental Laws) at, from, in, under or on any property owned or operated by
the Company except as permitted by Environmental Laws. The Company does not have
any knowledge that any on-site or off-site location to which the Company has
transported or disposed of Hazardous Substances or arranged for the
transportation of Hazardous Substances is the subject of any federal, state,
local or foreign enforcement action or any other investigation which could lead
to any claim against the Company or GroupMAC for any clean-up cost, remedial
work, damage to natural resources, property damage or personal injury,
including, but not limited to, any claim under (i) the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as amended, (ii)
the Resource Conservation and Recovery Act, as amended, (iii) the Hazardous
Materials Transportation Act, as amended, or (iv) comparable state or local
statutes and regulations. The Company has no contingent liability in connection
with any release of any Hazardous Substance into the environment.
For purposes of this Article 2, the terms "knowledge" (whether or not
capitalized) and "known" (whether or not capitalized) mean, with respect to any
person, such person's conscious awareness of facts or circumstances on or prior
to the indicated time without additional investigation or inquiry (e.g. with
respect to representations and warranties contained herein, present conscious
awareness of facts or circumstances on or prior to the date hereof and at the
Closing Date); provided, however, that as applied to the Company, such terms
mean such conscious awareness of the Principal Shareholders of facts or
circumstances on or prior to the indicated time without additional investigation
or inquiry.
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III. REPRESENTATIONS AND WARRANTIES
OF GROUPMAC AND HOLDING
A. Representations and Warranties. GroupMAC hereby represents and
warrants to the Shareholders and the Company as follows:
1. Organization and Standing. GroupMAC is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Texas. GroupMAC 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 GroupMAC Material Adverse
Effect.
2. Capitalization of GroupMAC. As of the date of the Memorandum,
the total authorized and issued capital stock of GroupMAC is as set forth in the
Memorandum. The outstanding shares of GroupMAC Common Stock have been duly and
validly issued and are fully paid and non-assessable.
3. Authority. GroupMAC 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 "GroupMAC Related Documents") and
to consummate the transactions contemplated herein and thereby. This Agreement
has been duly executed and delivered by GroupMAC and constitutes, and all the
GroupMAC Related Documents, when executed and delivered by GroupMAC and all
other parties thereto will constitute, legal, valid and binding obligations of
GroupMAC, 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).
4. Consents. Except as provided on Schedule 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 GroupMAC of this Agreement or the GroupMAC Related
Documents or the consummation by GroupMAC of the transactions contemplated
hereby. The execution, delivery and performance by GroupMAC of this Agreement
and any GroupMAC Related Documents do not violate any mortgage, indenture,
contract, agreement, lease or commitment or other instrument of any kind to
which GroupMAC is a party or by which GroupMAC or GroupMAC's assets or
properties may be bound or affected or any law, rule or regulation applicable to
GroupMAC 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 GroupMAC.
5. GroupMAC Common Stock. All shares of GroupMAC Common Stock to be
issued by GroupMAC pursuant to this Agreement will be validly issued, fully paid
and nonassessable.
6. Brokers and Finders. GroupMAC 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.
7. Memorandum. When completed and as of the date of the Memorandum,
the Memorandum will comply in all material respects with applicable provisions
of the Securities Act of 1933, as amended, the Securities Exchange Act of 1934,
as amended, and the rules and regulations of the Securities
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Exchange Commission promulgated thereunder, and will not contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements made therein, in light of the
circumstances under which they were made, not misleading.
8. GroupMAC Material Adverse Effect. Since the date of the
Memorandum, there has been no GroupMAC Material Adverse Effect and no event,
circumstance or occurrence that reasonably could be expected (including without
limitation after delivery of any required notice and cure period) to constitute
a GroupMAC Material Adverse Effect. The term "GroupMAC 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 GroupMAC and its consolidated subsidiaries, taken as a
whole, in an amount of $5,000,000 or more.
B. Representations and Warranties Concerning Holding. GroupMAC and
Holding, jointly and severally, hereby represent and warrant to the Shareholders
and the Company as follows:
1. Organization and Standing. Holding is a corporation duly
incorporated, validly existing and in good standing under the laws of the State
of Delaware. Holding 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 GroupMAC Material Adverse
Effect.
2. Capital Structure. The authorized capital stock of Holding
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 GroupMAC free and clear of all liens, encumbrances and adverse claims.
3. Authority. Holding has the requisite power and authority to
execute, deliver and perform this Agreement and all other GroupMAC Related
Documents to which it is a party and to consummate the transactions contemplated
herein and thereby. This Agreement has been duly executed and delivered by
Holding and constitutes, and all the GroupMAC Related Documents to which Holding
is a party, when executed and delivered by Holding and all other parties thereto
will constitute, legal, valid and binding obligations of Holding, 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)
4. Consents. Except as provided on Schedule 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 Holding of this Agreement or the GroupMAC Related
Documents to which it is a party or the consummation by Holding of the
transactions contemplated hereby. The execution, delivery and performance by
Holding of this Agreement and any GroupMAC Related Documents to which it is a
party do not violate any mortgage, indenture, contract, agreement, lease or
commitment or other instrument of any kind to which Holding is a party or by
which Holding or Holding's assets or properties may be bound or affected or any
law, rule or regulation applicable to Holding 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 Holding.
5. Brokers and Finders. Holding 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
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hereby and has not dealt with anyone purporting to act in the capacity of a
finder or broker with respect thereto.
IV. COVENANTS
A. Conduct of Business. From the date hereof through the Closing, the
Company shall conduct its operations according to its ordinary and usual course
of business to preserve substantially intact its business organization, keep
available the services of its officers and employees, and maintain its present
relationships with licensors, suppliers, distributors, customers and others
having significant business relationships with the Company. Without limiting the
generality of the foregoing, and except as otherwise contemplated herein, in
connection with the Allowed Expenses, or consented to by Holding in writing,
from the date hereof through the Closing, the Company shall use its commercially
reasonable best efforts to:
(a) carry on its business in substantially the same manner as
carried on prior to the date hereof and not introduce any material
new method of management, operation or accounting (excluding the
change from equity accounting to consolidation as a result of the TAT
Acquisitions);
(b) to the extent within the Company's control, maintain its
properties, facilities, equipment and other assets, including without
limitation those held under leases, in good working order, condition
and repair, ordinary wear and tear excepted;
(c) perform all of its obligations under all debt and lease
instruments and other agreements (including without limitation the
Company Contracts) relating to or affecting its business, assets,
properties, equipment and rights, and pay all vendors, suppliers, and
other third parties (including without limitation mechanics and
materialmen) as and when their bills are due (in accordance with past
practice) and pay in full all payroll obligations when due in
accordance with past practices;
(d) to the extent commercially practicable and within the
Company's control, keep in full force and effect its present
insurance policies or other comparable insurance coverage;
(e) maintain and preserve its business organization intact,
retain its present employees and maintain its relationship with
suppliers, customers and others having business relations with the
Company;
(f) refrain from effecting any change in the capital structure of
the Company; refrain from incurring any expenditures outside the
normal course of business, including any capital expenditures in
excess of $50,000;
(g) refrain from starting or acquiring any new businesses;
(h) maintain its present salaries and commission levels for all
officers, directors, employees or agents, except for the usual and
customary merit increases for employees;
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(i) refrain from declaring or paying any bonuses, fees,
extraordinary commissions or any other unusual distributions to any
of the Shareholders or the Company's directors, management, sales
agents, employees or other personnel;
(j) promptly notify Holding of the receipt by it or any of the
Shareholders of any notice or claim, written or oral, of (a) default
or breach by the Company under, or of any termination (other than at
the end of the stated term thereof) or cancellation, or threat of
termination (other than at end of the stated term thereof) or
cancellation, of any Company Contract, (b) any loss of, damage to or
disposition of, any of the properties, assets or the products of the
Company of a value of $50,000 or more, singly or in the aggregate
(other than the sale or use of inventories in the ordinary course of
business), and (c) any claim or litigation instituted that could
reasonably be expected to have a Company Material Adverse Effect, or
to the knowledge of the Company, threatened, or any other material
adverse event or occurrence involving or affecting the Company or any
of its assets, properties, operations, businesses or employees to the
extent such claim, litigation, event or occurrence could reasonably
be expected to have a Company Material Adverse Effect;
(k) comply with and cause to be complied with all applicable
laws, rules, regulations and orders of all federal, state and local
governments or governmental agencies affecting or relating to the
Company or its assets, properties, operations, businesses or
employees except where the failure to comply will not have a Company
Material Adverse Effect;
(l) refrain from any sale, disposition, distribution or
encumbrance of any of its properties or assets;
(m) refrain from any purchase or redemption of any capital stock
or other voting interest of the Company;
(n) refrain from making any change in any accounting principle,
classification, policy or practice (excluding the change from equity
accounting to consolidation as a result of the TAT Acquisitions);
(o) refrain from effecting any amendment to the certificate or
articles of incorporation or bylaws or other governing instruments of
the Company;
(p) refrain from entering into or agreeing to enter into any
merger or consolidation by the Company with or into, and refrain from
acquiring all or substantially all of the assets, capital stock or
business of, any person, corporation, partnership, association or
other business organization or division of any thereof;
(q) maintain its present debt and lease agreements and
instruments (except those that expire on their stated maturity or
lease termination dates); refrain from entering into any amendment
thereto or new debt or lease agreements or instruments; refrain from
increasing any indebtedness for borrowed money (other than under
revolving lines of credit in place as of the date hereof in the
ordinary course of business and other than financing of vehicles and
equipment in the ordinary course of business consistent with past
practices) or issuing or selling any debt securities or letters of
credit; and refrain from making any voluntary pre-payments of
indebtedness or interest or other amounts thereon or with respect
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thereto (other than any payment of principal, interest and fees under
revolving lines of credit and regularly scheduled principal and
interest payments);
(r) manage working capital in the ordinary course consistent with
past practice and refrain from introducing any new method of
management or operation, providing any new discounted services or
products, discounting any receivables (other than in non-material
amounts consistent with past practices) or taking any action to
accelerate payment of any receivable prior to its due date; and
(s) refrain from entering into any contract, lease, undertaking,
commitment, mortgage, indenture, note, security agreement, license or
other agreement (a) involving the receipt or expenditure of more than
$5,000,000 over the term thereof, (b) containing provisions calling
for the sale or purchase of raw materials, products or services at
prices that vary from the market prices of such raw materials,
products or services generally prevailing in customary third-party
markets, (c) which include "take or pay", "meet or release", "most
favored nations" or similar pricing or delivery arrangements, (d)
with any officer, director, shareholder or affiliate of the Company,
(e) expressly requiring the Company to indemnify or hold harmless any
other person or entity, other than in connection with agreements
entered into by the Company in the ordinary course of business and
not involving the purchase of assets or capital stock, (f) expressly
evidencing any warranty obligation of the Company with respect to
goods, services or products sold or leased by it (other than
warranties given in the normal course of business containing
substantially the same terms as those presently in effect), (g)
imposing on the Company any non-compete obligation, or (h) imposing
on the Company any confidentiality or non-disclosure obligation,
other than in connection with agreements entered into by the Company
in the ordinary course of business and not involving the purchase of
assets or capital stock.
B. 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.
C. Confidentiality. Prior to the Closing, none of GroupMAC, Holding, the
Company or the Shareholders will disclose the terms of this Agreement to any
person other than their respective directors, officers, agents, representatives,
financial advisors or legal counsel, except as otherwise provided herein, as
required by law or unless the other party hereto consents to such disclosure in
advance; provided, however, that, notwithstanding the foregoing, GroupMAC may
issue a press release regarding the Agreement and the transactions contemplated
thereby in a form acceptable to the Company. The Company may make appropriate
disclosures of the general nature of the transactions contemplated by this
Agreement to its employees, vendors and customers to protect the Company's
goodwill and to facilitate the Closing. GroupMAC and Holding may disclose
pertinent information regarding the transactions contemplated by this Agreement
to GroupMAC's existing and prospective investors, lenders, or investment bankers
or legal or financial advisors and may describe this Agreement and the
transactions contemplated hereby in any private placement memorandum prepared by
GroupMAC, any registration statement filed by GroupMAC under the Securities Act
and in reports filed by GroupMAC under the Securities Exchange Act of 1934, as
amended, and the rules and regulations promulgated thereunder, and may file this
Agreement as an exhibit to any filing thereof. GroupMAC and Holding may also
make appropriate disclosures of the general nature of the transactions
contemplated by this Agreement and the identity, nature and scope of the
Company's operations to prospective acquisition candidates in connection with
GroupMAC's and Holding's efforts to effect
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additional acquisitions. Each party will have mutual approval rights with
respect to written employee presentations concerning the prospective
transactions.
D. Tax Matters; 338(h)(10) Election. The Shareholders shall prepare and
file or cause to be prepared and filed all final tax returns (including short
period tax returns) for the Company for all periods ending on or before the
Closing Date. Holding and the Shareholders are eligible to and shall make a
timely and effective joint election (the "338(h)(10) Election") under Section
338(h)(10) of the Code with regard to the purchase of all of the issued and
outstanding shares of the Company. Holding shall be responsible for, and
control, the preparation and filing of such election. The allocation of
purchase price among the assets of the Company (the "Allocation") shall be made
on or before the Closing Date and shall be made in the manner required by Code
Section 338, the Treasury Regulations promulgated thereunder, and any comparable
provisions of state, local or foreign law, as appropriate. Such Allocation
shall be used for purposes of determining the modified aggregate deemed sales
price under the applicable Treasury Regulations and in reporting the deemed sale
of assets of the Company in connection with the 338(h)(10) Election. GroupMAC,
Holding, the Company and the Shareholders shall report, act, and file in all
respects and for all purposes consistent with the Allocation. The Shareholders
shall execute and deliver to Holding such documents or forms (including Section
338 Forms, as defined below) as Holding shall reasonably request or as are
required by applicable law for an effective 338(h)(10) Election. "Section 338
Forms" shall mean all returns, documents, statements, and other forms that are
required to be submitted to any federal, state, county or other local taxing
authority in connection with a 338(h)(10) Election, including, without
limitation, any "statement of Section 338 election" and Internal Revenue Service
Form 8023 (together with any schedules or attachments thereto) that are required
pursuant to the Treasury Regulations. Neither GroupMAC, Holding, the Company,
the Shareholders, nor any of their respective affiliates shall take any action
or fail to take any action which would cause the 338(h)(10) Election not to be
made with regard to the purchase of all of the issued and outstanding shares of
the Company. The Shareholders shall pay all taxes arising from or relating to
the transactions contemplated by this Agreement (including, but not limited to,
any income, franchise, or similar taxes arising as a result of the 338(h)(10)
Election).
E. Discharge of Indebtedness, Releases, Etc. Within thirty (30) days
after the Closing, Holding or GroupMAC shall cause the indebtedness of the
Company referred to in Schedule 4.5 attached hereto ("Terminated Obligations")
to be paid in full or refinanced on terms acceptable to GroupMAC.
F. HSR Act. GroupMAC, Holding, the Shareholders and the Company 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. GroupMAC or Holding
shall pay all governmental agency filing fees related to HSR Act filings
required in connection with the transactions contemplated hereby.
G. Cooperation. The Shareholders and the Company will use their
commercially reasonably best efforts to arrange for the consummation of the
transactions contemplated hereby in an orderly fashion.
H. Filings, Etc. The Shareholders and the Company shall use their
commercially reasonable best efforts to make all filings which are required to
be made by them to lawfully consummate the transactions contemplated hereby.
I. Access. The Company shall cause its representatives to confer with
representatives of GroupMAC and Holding to keep them informed with respect to
the general status of the on-going operations of the business of the Company,
including, without limitation, with respect to those matters addressed in
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Section 4.1 of this Agreement. The Company will permit GroupMAC and Holding and
GroupMAC's and Holding's lenders, underwriters and placement agents and their
respective representatives, advisers, consultants, appraisers, auditors,
engineers and other experts to make a full investigation of the properties,
operations and financial condition of the Company and will afford GroupMAC and
Holding and GroupMAC's and Holding's lenders, underwriters and placement agents
and their respective representatives, advisers, consultants, appraisers,
auditors, engineers and other experts reasonable access to the offices,
buildings, real properties, machinery and equipment, inventory and supplies,
records, files, books of account, tax returns, agreements and commitments and
personnel of the Company. Without limitation of the foregoing, the Company
shall provide GroupMAC with such reasonably available financial information (and
schedules with respect thereto) with respect to the Company as GroupMAC or
Holding may reasonably request and will cooperate with and assist
representatives of GroupMAC and Holding in the preparation of such financial
information (and any opinions or reports with respect thereto) with respect to
the Company as GroupMAC or Holding may reasonably request.
J. Satisfaction of Conditions. The Company shall (i) use its
commercially reasonable best efforts to obtain, as soon as possible, all
governmental approvals required to be obtained by the Company and make, as soon
as possible, all filings with any governmental authority required on the part of
the Company to consummate the transactions contemplated hereby, (ii) use its
commercially reasonable best efforts to obtain, as soon as possible, all other
consents to and approvals required to be obtained by the Company to consummate
the transactions contemplated hereby, and (iii) otherwise use its commercially
reasonable best efforts to satisfy the conditions set forth in Article 6 of the
Agreement to the extent that such satisfaction is within its control; provided,
however, that this Section 4.10 shall not be construed to limit the rights of
the Company to terminate this Agreement as provided in Article 8 of the
Agreement. GroupMAC and Holding shall (i) use their respective commercially
reasonable best efforts to obtain, as soon as possible, all governmental
approvals required to be obtained by GroupMAC or Holding and make, as soon as
possible, all filings with any governmental authority required on the part of
GroupMAC or Holding to consummate the transactions contemplated hereby, (ii) use
their respective commercially reasonable best efforts to obtain, as soon as
possible, all other consents to and approvals required to be obtained by
GroupMAC or Holding to consummate the transactions contemplated hereby,
including, without limitation, those set forth in Section 6.1.11 of this
Agreement, and (iii) otherwise use its commercially reasonable best efforts to
satisfy the conditions set forth in Article 6 of the Agreement to the extent
that such satisfaction is within its control; provided, however, that this
Section 4.10 shall not be construed to limit the rights of GroupMAC or Holding
to terminate this Agreement as provided in Article 8 of the Agreement.
K. Exclusivity. Neither the Shareholders nor the Company shall (i)
solicit, initiate, or encourage the submission of any proposal or offer from any
person or entity relating to the acquisition or other transfer of any interest
in or rights to the capital stock or other voting securities, or any substantial
portion of the assets of the Company (including without limitation any
acquisition structured as a merger, consolidation, or share exchange), (ii)
participate in any negotiations or discussions regarding, furnish any
information with respect to, assist or participate in, or facilitate in any
other manner any effort or attempt by any person or entity in favor of any such
transaction or (iii) effect any such transaction. The Shareholders and the
Company will promptly notify GroupMAC and Holding if any person or entity makes
any proposal, offer, inquiry, or contact with respect to any of the foregoing.
L. GroupMAC Guaranty. GroupMAC hereby guarantees the obligations and
performance of Holdings under this Agreement as if GroupMAC had signed in the
place and stead of Holding with respect to such obligations.
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V. COVENANT NOT TO COMPETE; RELEASE
A. Covenant Not to Compete.
(a) For the consideration specified in this Agreement and in
recognition that the covenants by the Shareholders in this Section
are a material inducement to Holding and GroupMAC to enter into and
perform this Agreement, each Shareholder agrees that, effective upon
Closing, and without further action on the part of any party or other
person, the Shareholders covenant and agree that for the period from
the Closing Date (a) in the case of all Shareholders other than the
Identified Shareholders, the later to occur of (1) the date which is
five years after the Closing Date or (2) if applicable, the date
which is two years following any termination of such Shareholder's
employment with the Company or any of its affiliates, regardless of
the reason for such termination, and (b) in the case of the
Identified Shareholders, the date which is the second anniversary of
the termination of such Identified Shareholder's employment with the
Company or any of its affiliates, 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, consultant or contractor 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 without limitation any indoor air quality,
heating, electrical, ventilation, air conditioning, temperature
control, appliance, mechanical construction, piping, plumbing or
sewer cleaning products or installation, replacement, repair or
maintenance services within a 100-mile radius of the cities of Grand
Prairie, Tyler and Paris, Texas and Trussville, Alabama; provided,
however, that the employment by the Company of any Shareholder and
the activities conducted by such Shareholder in such capacity shall
not be deemed a violation of this Section 5.1. For purposes of this
Section 5.1, the term "Identified Shareholders" means Richard
Whitford, Wilton Jordan, John Maberry, Darrell Smith, Larry Elledge,
Dennis Jones, Mike Miller, Charles Adkins, David Coker, Wesley
Dunlap, G. Paul Holliman, Francis McCann, Bill Morrow, Ron Petty,
Jeff Spence, Edwin Storrs, Dennis Williamson, Robert Flowers, Karl
Kerr, Bill Brewer, Jim Stack, Audie Shelton, David Russell and
Darrell Speegle.
(b) The Shareholders agree that the limitations set forth herein
on each Shareholder's rights to compete with Holding, GroupMAC and
GroupMAC's affiliates as set forth in clause (i) are reasonable and
necessary for the protection of Holding and GroupMAC and GroupMAC's
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 Holding,
GroupMAC and GroupMAC's 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.
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(c) Each Shareholder agrees that the remedy at law for any breach
by such Shareholder of this Section 5.1 will be inadequate and that
Holding and GroupMAC shall be entitled to injunctive relief.
(d) Any violation of the covenant not to compete described in
this Article 5 shall extend the time period thereof for a period of
time equal to the period of time during which such violation
continues. In the event Holding, GroupMAC or any of GroupMAC's
affiliates is required to seek relief from such violation in any
court, board of arbitration or other tribunal, then the covenant
shall be extended for a period of time equal to the pendency of such
proceedings and any appeals thereof.
B. Release. Effective as of the Closing, the Shareholders do hereby (i)
release, acquit and forever discharge the Company from any and all liabilities,
obligations, claims, demands, actions or causes of action arising from or
relating to any event, occurrence, act, omission or condition occurring or
existing on or prior to the Closing, including, without limitation, any claim
for indemnity or contribution from the Company in connection with the
obligations or liabilities of the Shareholders hereunder, except for (a) salary
and benefits payable to the Shareholders as employees in the ordinary course of
business, (b) claims of the Shareholders pursuant to this Agreement or any
Shareholder Related Document, and (c) claims for indemnity or contribution in
connection with a Shareholder's actions on behalf of the Company or its business
in the course of such Shareholder's position as an officer, director or employee
of the Company and for which such Shareholder is entitled to indemnity or
contribution pursuant to applicable law and the Company's Articles of
Incorporation and Bylaws; (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 Closing, 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.
VI. CONDITIONS PRECEDENT; CLOSING DELIVERIES
A. Conditions Precedent to the Obligations of Holding and GroupMAC. The
obligations of Holding and GroupMAC to consummate the transactions contemplated
by this Agreement are subject to the satisfaction of each of the following
conditions, unless waived by Holding and GroupMAC in writing to the extent
permitted by applicable law:
1. Accuracy of Representations and Warranties. The representations
and warranties of the Shareholders and the Company contained in this Agreement
and any closing certificate or document delivered to Holding and GroupMAC
pursuant hereto shall be true and correct in all material respects at and as of
the Closing Date as though made at and as of that time, and the Shareholders and
the Company shall each have delivered to Holding and GroupMAC a certificate to
that effect.
2. Performance of Covenants. The Shareholders and the Company shall
have performed and complied with all covenants of this Agreement to be performed
or complied with by them at or prior to the Closing Date, and the Shareholders
and the Company shall each have delivered to Holding and GroupMAC a certificate
to that effect.
3. Legal Actions or Proceedings. No legal action or proceeding
shall have been instituted after the date hereof against the Company (other than
actions or proceedings brought by Holding or GroupMAC) or against Holding or
GroupMAC arising by reason of the acquisition of the Company
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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
GroupMAC Material Adverse Effect after giving effect to the consummation of the
transactions contemplated by this Agreement, and the Shareholders and the
Company shall each have delivered to Holding and GroupMAC a certificate to the
effect none of the foregoing shall have occurred; provided, however, that in
such certificate from the Shareholders, the Shareholders shall certify the
matters in this Section 6.1.3 to their knowledge.
4. Approvals. The Company and the Shareholders shall have procured
all of the consents, approvals and waivers of third parties or any regulatory
body or authority, whether required contractually or by applicable law or
otherwise necessary for the execution, delivery and performance of this
Agreement (including the Company Related Documents and the Shareholder Related
Documents) by the Company and the Shareholders prior to the Closing Date, and
the Shareholders and the Company shall each have delivered to Holding and
GroupMAC a certificate to that effect.
5. Closing Deliveries. All documents required to be executed or
delivered at Closing by the Shareholders pursuant to Section 6.3 of this
Agreement shall have been so executed and delivered.
6. 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.
7. No Material Adverse Change. Since the Balance Sheet Date, there
shall not have been any event that has had or could reasonably be expected to
have a Company Material Adverse Effect.
8. Certain Corporate Actions. All necessary director and
shareholder resolutions of the Company and, if necessary, the Shareholders, and
all waivers and consents that the Company and the Shareholders are required to
obtain to consummate the transactions contemplated hereunder shall have been
executed and delivered.
9. Trinity Contractor Services, Inc.. Holding and GroupMAC shall be
provided written evidence of the dissolution of Trinity Contractor Services,
Inc.
10. TAT Acquisitions and Amendment. Holding and GroupMAC shall be
provided written evidence reasonably satisfactory to them that the Company has
consummated the TAT Acquisitions and that TEA and TEM are direct or indirect
wholly-owned subsidiaries of the Company.
11. 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.
12. Leases and Title Commitments. Holding and GroupMAC shall (i)
have been provided true and correct copies of all leases covering any real
property used in the business or operations of the Company and Holding and
GroupMAC shall be satisfied with the terms and conditions thereof in its sole
discretion, and (ii) at their own expense, have received a commitment for title
insurance for each tract of real property owned by the Company from a title
insurance company or companies acceptable to Holding and GroupMAC and in a form,
with such encumbrances and exceptions and in an amount acceptable to Holding and
GroupMAC.
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13. Memorandum. The Company shall have prepared and delivered a
Private Placement Memorandum related to the GroupMAC Common Stock, the Notes (if
necessary) and the Warrants (if necessary), to be delivered to the Shareholders
hereunder (the "Memorandum"), and shall have delivered a copy of such Memorandum
to each Shareholder, and each Shareholder shall have acknowledged (i) receipt of
a copy of such Memorandum, and (ii) that such Shareholder has reviewed such
Memorandum with the assistance of competent professional advice to the extent
such Shareholder deems necessary.
14. Lenders. GroupMAC shall have obtained all requisite consents
and approvals from its sources of financing to fund the Cash Consideration and
issue the Debt Consideration, including, without limitation, the consents of
such financing sources to the form of the Notes.
B. 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:
1. Accuracy of Representations and Warranties. The representations
and warranties of Holding and GroupMAC contained in this Agreement or in any
closing certificate or document delivered to the Shareholders or the Company
pursuant hereto shall be true and correct in all material respects on and as of
the Closing Date as though made at and as of that date, and Holding and GroupMAC
shall have delivered to the Shareholders and the Company a certificate to that
effect.
2. Performance of Covenants. Holding and GroupMAC 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 Holding and GroupMAC
shall have delivered to the Shareholders and the Company a certificate to such
effect.
3. Approvals. Holding and GroupMAC shall have procured all of the
consents, approvals and waivers specified in Schedule 3.1.4 prior to the Closing
Date, and Holding and GroupMAC shall have delivered to the Shareholders and the
Company a certificate to that effect.
4. Closing Deliveries. All documents required to be executed or
delivered at Closing by Holding and GroupMAC pursuant to Section 6.4 of this
Agreement shall have been so executed and delivered.
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.
6. Memorandum. GroupMAC shall have completed the Memorandum and
shall have delivered a copy of such Memorandum to each Shareholder.
7. Material Adverse Change. Since the date of the Memorandum, there
shall not have been any event that has had or would reasonably be expected to
have a GroupMAC Material Adverse Effect.
C. Deliveries by the Shareholders at the Closing. At the Closing,
simultaneously with the deliveries by Holding and GroupMAC specified in Section
6.4 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 Holding and
GroupMAC the following:
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1. Closing Certificates. The Shareholders and the Company shall
deliver the certificates required pursuant to Sections 6.1.1, 6.1.2, 6.1.3 and
6.1.4.
2. Stock Transfer Restriction Agreement. Each Shareholder shall
execute and deliver a Stock Transfer Restriction Agreement to GroupMAC on the
Closing Date effective as of the Effective Time, substantially in the form set
forth in Exhibit 6.3.2.
3. Employment Agreements. Each of the Shareholders and certain
other employees of the Company specified on Exhibit 6.3.3 shall execute and
deliver an Employment Agreement with the Company on the Closing Date,
substantially in the form set forth in Exhibits 6.3.3A and 6.3.3B and at such
salaries as shall be agreed to by the employees who are parties thereto, the
Company and GroupMAC.
4. Opinion of Counsel for the Shareholders and the Company. The
Shareholders shall deliver the legal opinion of (i) Haynes and Boone LLP,
counsel to the Company, dated the Closing Date, in the form and subject to such
qualifications as are acceptable to GroupMAC and Holding, and (ii) , if
requested by GroupMAC and at GroupMAC's expense, counsel to the Shareholders,
dated the Closing Date, in the form and subject to such qualifications as are
acceptable to GroupMAC and Holding.
5. Power of Attorney. The Shareholders shall execute and deliver a
copy of the Power of Attorney to Holdings.
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
reasonably requested by Holding or GroupMAC and shall deliver or cause to be
delivered the documents and evidence required under Article 4. Stock
Certificates representing all of the outstanding Company Common Stock and
properly executed and completed stock powers duly executed in blank in a form
acceptable to Holding and GroupMAC shall be delivered by the Shareholders to
Holding.
7. The Allocation. The Company shall deliver written evidence of
the Allocation to Holding which, in form and substance, shall be acceptable to
the Shareholders, Holding and GroupMAC acting in their respective sole
judgments.
8. Registration Rights Agreement. The Shareholders shall have
executed and delivered the Registration Rights Agreement.
The consummation of the Closing shall not be deemed to be a waiver by
Holding or GroupMAC of any of their respective rights or remedies against the
Company or any of the Shareholders for any breach of representation, warranty,
covenant or agreement by the Company or any of the Shareholders without regard
for any knowledge of or investigation made by or on behalf of Holding or
GroupMAC; provided, however, that if the Company shall disclose in writing to
Holding and GroupMAC prior to the Closing Date a specified breach of a
specifically identified representation, warranty, covenant or agreement of the
Company or the Shareholders herein by the Company or any of the Shareholders,
and requests a waiver thereof by Holding and GroupMAC, and Holding and GroupMAC
shall waive any such specifically identified breach in writing prior to the
Closing Date, Holding, GroupMAC and the Company, for themselves and for each
GroupMAC Indemnified Party, shall be deemed to have waived their respective
rights and remedies hereunder for, and the Shareholders shall have no liability
with respect to, any such specifically identified breach, to the extent so
identified by the Company and so waived by Holding and GroupMAC.
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D. Deliveries by GroupMAC at the Closing. At the Closing, simultaneously
with the deliveries by the Shareholders specified in Section 6.3 above, and in
addition to any other deliveries to be made by GroupMAC and Holding pursuant to
any other transaction document at the Closing, Holding and GroupMAC shall
deliver or cause to be delivered to the Shareholders the following:
1. Closing Certificates. Holding and GroupMAC shall deliver the
certificates required pursuant to Sections 6.2.1, 6.2.2 and 6.2.3.
2. Opinion of Counsel for GroupMAC and Holding. Holding and
GroupMAC shall deliver the legal opinion of Bracewell & Patterson, L.L.P., dated
the Closing Date, in the form and subject to such qualifications as are
acceptable to the Company and the Shareholders.
3. Closing Consideration. Holding shall deliver the Cash
Consideration, the Notes, the Warrants and evidence to the Shareholders of
notification to GroupMAC's stock transfer agent with respect to issuance of
certificates representing GroupMAC Common Stock constituting the Stock
Consideration.
4. Registration Rights Agreement. GroupMAC shall have executed and
delivered a registration rights agreement with the Shareholders (the
"Registration Rights Agreement") pursuant to which GroupMAC shall agree, on the
terms and conditions set forth therein, to register for resale the shares of
GroupMAC Common Stock that make up the Stock Consideration, the shares of
GroupMAC Common Stock that are issuable upon the exercise of the Warrants, and
the shares of GroupMAC Common Stock that make up the Post-Closing Consideration,
if any (collectively, the "Qualified Shares"). Such Registration Rights
Agreement shall be in a form to be agreed on by GroupMAC and the Shareholders
acting in their respective sole judgments and shall provide (i) that GroupMAC
shall cause the registration statement pursuant to which the Qualified Shares
shall be registered for resale to be declared effective by the Securities and
Exchange Commission under the Securities Act of 1933, as amended, and the rules
and regulations promulgated thereunder (the "Securities Act"), on or prior to
December 31, 1999, and cause such registration statement to remain effective
until December 31, 2001, and (ii) that such Qualified Shares shall be listed for
trading on the New York Stock Exchange.
5. Other Agreements. Holding shall have delivered the employment
agreements described in Section 6.3.3 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 for breach of
any representation, warranty, covenant or agreement by Holding or GroupMAC
without regard for any knowledge of or investigation with respect thereto made
by or on behalf of any Shareholders; provided, however, that if Holding or
GroupMAC shall disclose in writing to the Shareholders prior to the Closing a
specified breach of a specifically identified representation, warranty, covenant
or agreement of Holding or GroupMAC or contained herein by Holding or GroupMAC,
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 Holding
and GroupMAC shall have no liability or obligation with respect to, any such
specifically identified breach, to the extent so identified by Holding or
GroupMAC and waived by the Company and the Shareholders.
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VII. SURVIVAL; INDEMNIFICATIONS
A. 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 contained in
Sections 2.2, 2.3, 2.4 shall survive for the maximum period permitted by
applicable law. All other representations and warranties of the Shareholders
and the Company herein and in the Shareholder Related Documents and the Company
Related Documents shall survive for a period of 18 months after the Closing
Date. The representations and warranties of GroupMAC contained in Sections
3.1.2, 3.1.3 and 3.1.4 shall survive for the maximum period permitted by
applicable law. The representations and warranties of Holding contained in
Sections 3.2.2, 3.2.3 and 3.2.4 shall survive for the maximum period permitted
by applicable law. All other representations and warranties of GroupMAC and
Holding herein, in GroupMAC Related Documents shall survive for a period of 18
months after the Closing Date. The periods of survival of the representations
and warranties as stated above in this Section 7.1 are referred to herein as the
"Survival Period." The liabilities of the parties under their respective
representations and warranties shall expire as of the expiration of the
applicable Survival Period and no claim for indemnification may be made with
respect to any breach of any representation or warranty, the applicable Survival
Period of which shall have expired, except to the extent that written notice of
such breach shall have been given to the party against which such claim is
asserted on or before the date of such expiration. The covenants and agreements
of the parties herein and in other documents and instruments executed and
delivered in connection with the closing of the transactions contemplated hereby
that contemplate performance by a party (all or in part) after the Closing Date
shall survive for the maximum period permitted by law.
B. Indemnification.
1. GroupMAC Indemnified Parties. Subject to the provisions of
Sections 7.3 and 7.5 hereof, the Shareholders shall, jointly and severally,
indemnify, save and hold harmless GroupMAC, Holding, the Company 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 "GroupMAC Indemnified Parties") from and against any and all
damages, liabilities, losses, loss of value (including without limitation
adverse effects on cash flow or earnings), claims, deficiencies, penalties,
interest, expenses, fines, assessments, charges and costs, including without
limitation reasonable attorneys' fees and court costs (collectively "Losses")
arising from, out of or in any manner connected with or based on:
(a) the breach of any covenant of a Shareholder or the failure by
any Shareholder to perform any obligation of such Shareholder
contained herein or in any Company Related Document or Shareholder
Related Document or the breach of any covenant of the Company prior
to the Closing Date or the failure by the Company to perform any of
its obligations contained herein or in any Company Related Document
or Shareholder Related Document and requiring performance by the
Company prior to the Closing Date;
(b) any inaccuracy in or breach of any representation or warranty
of any Shareholder contained herein or in any Shareholder Related
Document;
(c) any inaccuracy in or breach of any representation or warranty
of the Company contained herein or in any Company Related Document
irrespective of the state
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of knowledge of the Shareholders (or any of them) with respect to a
Company representation on warranty;
(d) indemnification payments made by the Company 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;
(e) any occurrence, event, condition or circumstance (a)
disclosed in any Preliminary Environmental Site Reviews or Phase 1
Reports received by GroupMAC on or before the Closing Date with
respect to the properties located at 2425 Dillard Street in Grand
Prairie, Texas, or 561 Simmons Drive, Trussville, Alabama, including,
without limitation, the cleanup, modernization and upgrade of all
underground storage tanks located at 2425 Dillard Street in Grand
Prairie, Dallas County, Texas as required under applicable
Environmental Laws in effect at any time on or prior to December 31,
1998, or (b) related to any underground storage tank located as of
the date hereof at any facility leased by the Company in the City of
Tyler, Texas on 5072 Shirley Drive (the "Environmental Issues"); and
(f) any act, omission, occurrence, event, condition or
circumstance occurring or existing at any time on or before the
Closing and involving or related to the assets, properties, business
or operations now or previously owned or operated by the Company and
not (a) disclosed with reasonable specificity in the Disclosure
Schedule (other than the Environmental Issues) or (b) disclosed in
the Company Financial Statements; provided, however that the
obligations set forth in this clause (vi) of Section 7.2.1 shall (A)
not include any indemnification obligation with respect to Losses
occurring as a result of the failure of any customer project to
provide the financial results projected in the bid, estimate or
proposal prepared by the Company in connection with such customer
project in the ordinary course of the Company's business, (provided
that such Loss is not known by the Company as of the date hereof or
at the Closing Date with sufficient specificity to require disclosure
elsewhere in this Agreement), (B) expire upon the fourth (4th)
anniversary of this Agreement, (C) as to any assignee of GroupMAC or
Holdings but not as to GroupMAC or Holdings, expire upon (1) the
assignment of all or a portion of this Agreement by GroupMAC and/or
Holding to any third party other than an affiliate of GroupMAC which
results in such third party having the immediate, presently
exercisable right to initiate claims under this clause (vi) of
Section 7.2.1, or (2) the occurrence of any event (for example, a
foreclosure) that causes any third party other than an affiliate of
GroupMAC to have the immediate, presently exercisable right to
initiate claims under this clause (vi) of Section 7.2.1., (D) expire
upon the sale of 35% or more of the outstanding (as of the date prior
to the date of such sale) voting capital stock of GroupMAC, Holding
or the Company in a single transaction or a series of related
transactions to a single party or a "group" as defined in Section
13(d)(3) of the Exchange Act., or (E) expire upon the occurrence of
any Bankruptcy Event; and provided further, however, that no GroupMAC
Indemnified Party shall be entitled to indemnification with respect
to any Losses pursuant to this clause (vi) of Section 7.2.1 if a
court of competent jurisdiction in a final, non-appealable judgement
determines that (x) the act, omission, occurrence, event, condition
or circumstance giving rise to such Losses would have entitled such
GroupMAC Indemnified Party to indemnification with respect to such
Losses pursuant to clauses (ii) or (iii) of this Section 7.2.1, and
(y) such GroupMAC Indemnified Party's right to indemnification for
such Losses pursuant to clauses (ii) or (iii) of Section 7.2.1 has
expired pursuant to Section 7.1 of this
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Agreement. As used in this Agreement, the term "Bankruptcy
Event"means that GroupMAC shall (1) consent to or not contest the
appointment of a receiver or trustee for GroupMAC or all or any part
of its property within sixty (60) days after such appointment, (2)
file a petition seeking relief under the bankruptcy, rearrangement,
reorganization or other debtor relief laws of the United States, any
state, or any other competent jurisdiction, (3) make a general
assignment for the benefit of its creditors, (4) have a petition
filed against it seeking relief under the bankruptcy, rearrangement,
reorganization or other debtor relief laws of the United States, any
state, or any other competent juris diction, or (5) have a court of
competent jurisdiction enter an order, judgment or decree appointing
a receiver or trustee for GroupMAC or all or any part of its
property, and such petition, order, judgment or decree is not
discharged or stayed and does not remain discharged or stayed within
a period of 60 days after its entry.
2. GroupMAC Indemnity. Subject to the provisions of Sections 7.1,
7.3 and 7.5, GroupMAC 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:
(a) any breach of any covenant of GroupMAC or Holding or the
failure by GroupMAC or Holding to perform any of its obligations
contained herein or in GroupMAC Related Documents;
(b) any inaccuracy in or breach of any representation or warranty
of Holding or GroupMAC contained herein or in GroupMAC Related
Documents;
(c) any failure by the Company to satisfy the Terminated
Obligations pursuant to Section 4.6 of this Agreement; and
(d) any act, omission, event, condition or circumstance occurring
or existing at any time after (but not on or before) the Closing and
involving or relating to the assets, properties, businesses or
operations of the Company; provided, however, that this clause (iv)
shall not apply to any Losses arising from, out of or in any manner
connected with or based on any Losses for which any GroupMAC
Indemnified Party may be indemnified pursuant to Section 7.2.1(vi)
above or any Shareholder's acts or omissions after the Closing as an
officer, director, or employee of GroupMAC, Holding, the Company or
any other affiliate of GroupMAC.
C. Limitations. No claim under Section 7.2.1 may be made until the
aggregate of all Losses for which claims for indemnification under such Section
exceeds $500,000 (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 liability of the Shareholders
under Section 7.2.1 shall (i) be reduced by (a) the amount of all insurance
proceeds actually received by GroupMAC or the Company that arise from the same
event or circumstance giving rise to such Losses, (b) the amount of any third
party set off rights actually awarded or allowed to GroupMAC or the Company that
arise from the same event or circumstance giving rise to such Losses, and (c) by
the amount of any reduction in the cash payment of Taxes owed by GroupMAC or the
Company arising directly from such Losses, (ii) other than for Losses related to
the matters covered in Sections 2.2, 2.3, 2.4, 2.5, 2.6, 2.10 and 2.12, not
exceed $25,000,000 in the aggregate for all Shareholders, (iii) for Losses
related to the matters covered in Sections 2.2, 2.3, 2.4, 2.5, 2.6, 2.10 and
2.12, not exceed the Total Consideration in the aggregate, (iv) for all Losses
in the aggregate,
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including those covered in clauses (ii) and (iii) of this Section 7.3., not
exceed the Total Consideration in the aggregate, (v) with respect to any
particular Shareholder, shall not exceed the amount of the Total Consideration
actually received by such Shareholder, and (vi) with respect to the obligations
of a particular Shareholder pursuant to Section 7.2.1(i) for breaches of any
covenant by any other Shareholder, shall expire on the second (2nd) anniversary
of this Agreement. The aggregate liability of GroupMAC under Section 7.2.2 shall
(i) be reduced by (a) the amount of all insurance proceeds actually received by
any of the Shareholders that arise from the same event or circumstance giving
rise to such Losses, (b) the amount of any third party set off rights actually
awarded or allowed to any of the Shareholders that arise from the same event or
circumstance giving rise to such Losses, and (c) by the amount of any reduction
in the cash payment of Taxes owed by any of the Shareholders arising directly
from such Losses, and, (ii) not exceed $25,000,000 in the aggregate for all
Shareholders. If any party recovers insurance proceeds after recovering any
Losses pursuant to this Article 7, then such party shall promptly assign such
proceeds to the parties from whom the related indemnity payments or set offs
were received. Notwithstanding any provision of this Agreement to the contrary,
(A) GroupMAC, on its own behalf, or on behalf of Holding, shall set off against
the Notes pro rata based on the percentage set forth opposite each Shareholder's
name on Schedule 2.3 under the heading "Ownership Percentage" to satisfy, to the
maximum extent possible, claims by it or Holding under this Agreement prior to
seeking to satisfy such claims by means of cash payments or transfers of
GroupMAC Common Stock from the Shareholders, and (B) to the extent possible,
each Shareholder shall be entitled to satisfy a portion of any claim owed by
him, her or it to GroupMAC or Holdings under this Agreement by transferring
shares of GroupMAC Common Stock to GroupMAC or Holdings; provided, however, that
the maximum number of shares of GroupMAC Common Stock that GroupMAC or Holdings
shall be required to accept as partial satisfaction of such claim shall not
exceed 40% of the aggregate value of such claim with such GroupMAC Common Stock
being valued for such purpose at the Average Closing Price as of the date a
notice is delivered with respect to such claim pursuant to Section 7.5 of this
Agreement.
D. Sole Remedy. Except with respect to conduct constituting actual
fraud and notwithstanding any provision of this Agreement to the contrary, the
respective indemnification and rights to recover provided in this Article VII,
subject to the limitations set forth herein, shall be the exclusive remedy for
any and all damages, liabilities, losses, loss of value (including without
limitation adverse effects on cash flow or earnings), claims deficiencies,
penalties, interest, expenses, fines, assessments, charges and costs, including
without limitation attorney's fees and court costs arising from, out of or in
any manner connected with or based on this Agreement or the transactions
contemplated hereby.
E. Procedures for Indemnification.
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 under this Agreement. Any failure on the part of any Indemnified
Party to give the notice described in this Section 7.5.1 shall relieve the
Indemnifying Party of its obligations under this Article 7 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) after the Indemnified Party's receipt thereof, copies of all notices and
documents (including without limitation court papers) received by the
Indemnified Party relating to such claim, action, suit or proceeding.
2. Legal Defense. GroupMAC shall have the sole right to assume the
defense or settlement of any third-party claim, suit, action or proceeding in
respect of which indemnity may be sought
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under this Agreement, provided that the Shareholder Representative shall at all
times have the right, at the Shareholder Representative's option, to participate
fully therein. In the event GroupMAC does not proceed diligently to defend the
third-party claim, suit, action or proceeding within 10 days after receipt of
written notice by the Shareholders 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.
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 GroupMAC Indemnified Party, such third-party suit,
action, proceeding or investigation may be settled without the consent of the
Indemnifying Party on 10 business 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 and the
settlement is commercially reasonable under the circumstances; and provided
further, that if the Indemnifying Party gives 10 business 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 business days after delivery of the Settlement Notice to
the Indemnified Party, and such settlement otherwise complies with the
provisions of this Section 7.5, 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, liability or sanction upon the
Indemnified Party other than the execution, delivery or approval thereof and
customary releases of claims with respect to the subject matter thereof.
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, 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.
VII. TERMINATION
A. Grounds for Termination. This Agreement may be terminated at any time
prior to the Closing Date:
1. Mutual Consent. By the written agreement of the Company, Holding
and GroupMAC; or
2. Optional By the Company. By the Company by written notice to
Holding and GroupMAC, if the Closing shall have failed to occur by 5:00 p.m.
Houston, Texas time on January 31, 1999, 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;
3. Optional By Holding or GroupMAC. By Holding or GroupMAC, by
written notice to the Company, if the Closing shall have failed to occur by 5:00
p.m. Houston, Texas time on January 31,
33
<PAGE>
1999, but only if Holding and GroupMAC have not breached this Agreement or have
failed to perform any of their respective obligations under this Agreement;
4. Breach By GroupMAC or Holding. By the Company, by written notice
to GroupMAC and Holding, if either GroupMAC or Holding has materially breached
this Agreement or failed to perform any of their respective obligations under
this Agreement; or
5. Breach by the Company or the Shareholders. By GroupMAC or
Holding, by written notice to the Company, if the Company or any Shareholder has
materially breached this Agreement or has failed to perform any of their
respective obligations under this Agreement.
B. Effect of Termination. If this Agreement is terminated as permitted
under Section 8.1, 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.
IX. MISCELLANEOUS
A. Notice. Any notice, delivery or communication required or permitted
to be given under this Agreement shall be in writing, and shall be mailed,
postage prepaid, or delivered, to the addresses given below, or sent by telecopy
to the telecopy numbers set forth below, as follows:
To the Company or the Shareholders prior to the Closing:
Trinity Contractors, Inc.
2425 Dillard
Grand Prairie, Texas 75051
Attn.: Robert Munson
Telecopy: (972) 988-2864
With a copy to:
Haynes and Boone, LLP
901 Main Street, Suite 1300
Dallas, Texas 75202-3789
Attn.: Michael M. Boone
Telecopy: (214) 651-5940
34
<PAGE>
To the Shareholders after the Closing:
c/o Trinity Contractors, Inc.
2425 Dillard
Grand Prairie, Texas 75051
Telecopy: (972) 988-2864
35
<PAGE>
With a copy to:
Haynes and Boone, LLP
901 Main Street, Suite 1300
Dallas, Texas 75202-3789
Attn.: Michael M. Boone
Telecopy: (214) 651-5940
To GroupMAC prior to and after the Closing or the Company after the Closing:
Group Maintenance America Corp.
8 Greenway Plaza, Suite 1500
Houston, Texas 77046
Attn.: President
Telecopy: (713) 626-4766
To Holding prior to and after the Closing:
GroupMAC Holding Corp.
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. Any requirement hereunder to deliver
notice to, obtain approval, consent or waiver from, or deliver any document to
GroupMAC and/or Holding shall be deemed satisfied if such notice or document is
delivered to either GroupMAC or Holding or if such approval, consent or waiver
is obtained from either GroupMAC or Holding.
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.
B. Further Documents. The Shareholders shall, at any time and from time
to time after the date hereof, upon request by GroupMAC or Holding 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 under this Agreement or any
Shareholder Related Documents.
C. Assignability. The Shareholders shall not assign this Agreement in
whole or in part without the prior written consent of Holding and GroupMAC,
except by the operation of law. On or prior to the Closing, Holding and
GroupMAC may not assign their respective rights under this Agreement, the
Company Related Documents and the Shareholder Related Documents without the
consent of the Shareholders or the Company. After the Closing, GroupMAC and/or
Holding may
36
<PAGE>
assign their respective rights under this Agreement, the Company Related
Documents and the Shareholder Related Documents without the consent of the
Shareholders or the Company; provided, however, that notwithstanding GroupMAC's
and/or Holding's assignment of any or all of their respective rights under this
Agreement, the Company Related Documents or the Shareholder Related Documents
after the Closing, GroupMAC shall remain liable for the payments of any Post-
Closing Consideration due and payable under this Agreement in the event such
payments are not made by the GroupMAC's assignee and any indemnification
obligations under this Agreement in the event such obligations are not satisfied
by GroupMAC's assignee.
D. 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. The inclusion in a Schedule of any item or
matter shall not in any case be construed to indicate that such item or matter
is material to the Company or to its business, financial condition or results of
operations.
E. 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 is
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.
F. Headings. Headings as to the contents of particular articles,
sections, exhibits and schedules are for convenience of reference 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.
G. 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.
H. No Third Party Beneficiaries. No person or entity not a party to this
Agreement shall have rights under this Agreement as a third party beneficiary or
otherwise.
I. Amendments and Waivers. This Agreement may only be amended by an
instrument in writing signed on behalf of GroupMAC, Holding, the Company and the
Shareholders. Neither a failure by either party hereto to exercise any of its
options hereunder, nor failure to enforce its rights or seek its remedies upon
any default, shall effect or constitute a waiver of the respective party's right
to enforce such right, or to seek remedy with respect to that default or to any
prior or
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<PAGE>
subsequent default. Any term or provision of this Agreement may only be waived
in writing by the party which is entitled to the benefits thereof.
J. No Employee Rights. Nothing herein expressed or implied shall confer
upon any employee of the Company or any other employee or legal representatives
or beneficiaries of any thereof, any rights or remedies, 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.
K. 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 Holding or GroupMAC in this
Agreement shall be had against any incorporator, organizer, promoter,
shareholder, officer, director, employee or representative, past, present or
future, of Holding or GroupMAC 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.
L. When Effective. This Agreement shall become effective only upon the
execution and delivery of one or more counterparts of this Agreement by each of
Holding, GroupMAC, the Company and the Shareholders.
M. 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 by this Agreement, Holding, GroupMAC
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.
N. 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.
O. 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.
P. Multiple Counterparts. This Agreement may be executed in a number of
identical counterparts. If so executed, each of such counterparts shall 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.
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<PAGE>
Q. No Rule of Construction. All of the parties hereto have been
represented by counsel in the negotiation and preparation of this Agreement;
therefore, this Agreement shall 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.
R. 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 (other than the fees and costs of the
Accountants generated pursuant to Section 1.4.7 of this Agreement) or other
advisors engaged by the Shareholders.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK.]
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<PAGE>
IN WITNESS WHEREOF, this Agreement has been duly executed and delivered on the
date first above written.
GROUPMAC:
GROUP MAINTENANCE AMERICA CORP.
By: /s/ Chester J. Jachimiec
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
HOLDING:
GROUPMAC HOLDING CORP.
By: /s/ Chester J. Jachimiec
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
SHAREHOLDERS:
/s/ Charles Adkins
---------------------------------------
Charles Adkins
/s/ Russell L. Bates
---------------------------------------
Russell L. Bates
/s/ Russell L. Bates
---------------------------------------
Russell L. Bates, as trustee of the 1998 Russell L.
Bates, III Grantor Retained Annuity Trust
/s/ Bill Brewer
---------------------------------------
Bill Brewer
/s/ David Coker
---------------------------------------
David Coker
/s/ Wesley Dunlap
---------------------------------------
Wesley Dunlap
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<PAGE>
/s/ Dennis Williamson
---------------------------------------
Dennis Williamson
/s/ Larry Elledge
---------------------------------------
Larry Elledge
/s/ James W. Hall
---------------------------------------
James W. Hall
/s/ Jim Haltom
---------------------------------------
Jim Haltom
/s/ Jim Haltom
---------------------------------------
Jim Haltom, as trustee of the 1998 James C. Haltom
Grantor Retained Annuity Trust
/s/ G. Paul Holliman
---------------------------------------
G. Paul Holliman
/s/ Robert Flowers
---------------------------------------
Robert Flowers
/s/ John Hines
---------------------------------------
John Hines
/s/ John D. Hines
---------------------------------------
John D. Hines, as trustee of the 1998 John D. Hines
Grantor Retained Annuity Trust
/s/ Eddie Hopkins
---------------------------------------
Eddie Hopkins
/s/ Dennis Jones
---------------------------------------
Dennis Jones
/s/ Eugene Jones
---------------------------------------
Eugene Jones
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/s/ Karl Kerr
---------------------------------------
Karl Kerr
/s/ Francis McCann
---------------------------------------
Francis McCann
/s/ Robert Marks
---------------------------------------
Robert Marks
/s/ Mike Miller
---------------------------------------
Mike Miller
/s/ Robert Munson
---------------------------------------
Robert Munson
/s/ Robert Munson
---------------------------------------
Robert Munson, as trustee of the 1998 Robert Munson,
III Grantor Retained Annuity Trust
/s/ Gary Polito
---------------------------------------
Gary Polito
/s/ Greg Lively
---------------------------------------
Greg Lively, as trustee of the Cheryl Anne Polito
Family Trust
/s/ Greg Lively
---------------------------------------
Greg Lively, as trustee of the Phillip Anthony
Polito Trust
/s/ Greg Lively
---------------------------------------
Greg Lively, as trustee of the Christopher James
Polito Trust
/s/ David Russell
---------------------------------------
David Russell
/s/ Ron Petty
---------------------------------------
Ron Petty
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<PAGE>
/s/ Audie Shelton
---------------------------------------
Audie Shelton
/s/ Darrell Smith
---------------------------------------
Darrell Smith
/s/ Darrell Speegle
---------------------------------------
Darrell Speegle
/s/ Jeff Spence
---------------------------------------
Jeff Spence
/s/ Edwin Storrs
---------------------------------------
Edwin Storrs
/s/ Bob Stodghill
---------------------------------------
Bob Stodghill
43
<PAGE>
/s/ Jim Stack
---------------------------------------
Jim Stack
/s/ Bill Morrow
---------------------------------------
Bill Morrow
/s/ Jack Vick
---------------------------------------
Jack Vick, as trustee of the 1998 Jack Vick Grantor
Retained Annuity Trust
/s/ Jack Vick
---------------------------------------
Jack Vick
/s/ John Maberry
---------------------------------------
John Maberry
/s/ Richard Whitford
---------------------------------------
Richard Whitford
/s/ Wilton Jordan
---------------------------------------
Wilton Jordan
44
<PAGE>
COMPANY:
TRINITY CONTRACTORS, INC.
By: /s/ Robert Munson
-----------------------------------
Name:
---------------------------------
Title:
--------------------------------
45
<PAGE>
EXHIBIT 99
LIST OF LENDERS
ABN AMRO Bank, N.V.
Bank of America Texas, N.A.
Chase Bank of Texas, National Association
Credit Lyonnais
National City Bank, Kentucky
Paribas
Union Bank of California, N.A.
Bank of Montreal
BankBoston, N.A.
Key Corporate Capital, Inc.
The Bank of Nova Scotia
