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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No. 2)
Building One Services Corporation
- --------------------------------------------------------------------------------
(Name of Issuer)
Common Stock, Par Value $.001
- --------------------------------------------------------------------------------
(Title of Class of Securities)
120114103
- --------------------------------------------------------------------------------
(CUSIP Number)
Mr. Andrew Africk
Boss Investment LLC
c/o Apollo Management, L.P.
1301 Avenue of the Americas, 38th Floor
New York, NY 10019
(212) 515-3200
with copies to:
Michael D. Weiner, Esq. John J. Suydam, Esq.
Apollo Management, L.P. O'Sullivan Graev & Karabell, LLP
1999 Avenue of the Stars, Suite 1900 30 Rockefeller Plaza, 24th Floor
Los Angeles, CA 90067 New York, NY 10012
(310) 201-4100 (212) 408-2400
- --------------------------------------------------------------------------------
(Name, Address and Telephone Number of Person Authorized to
Receive Notices and Communications)
November 2, 1999
- --------------------------------------------------------------------------------
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to
report the acquisition that is the subject of this Schedule 13D, and is
filing this schedule because of (S)(S)240.13d-1(e), 240.13d-1(f) or
240.13d-1(g), check the following box.
Note: Schedules filed in paper format shall include a signed original and
five copies of the schedule, including all exhibits. See (S)240.13d-7 for
other parties to whom copies of this statement are to be sent.
*The remainder of this cover page shall be filled out for a reporting
person's initial filing on this form with respect to the subject class of
securities, and for any subsequent amendment containing information which
would alter disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be
deemed to be "filed" for the purpose of Section 18 of the Securities
Exchange Act of 1934 ("Act") or otherwise subject to the liabilities of
that section of the Act but shall be subject to all other provisions of the
Act (however, see the Convertible Notes).
Potential persons who are to respond to the collection of information
contained in this form are not required to respond unless the form displays
a currently valid OMB control number.
<PAGE>
- --------------------------------------------------------------------------------
1. Names of Reporting Persons.
I.R.S. Identification Nos. of above persons (entities only).
Boss Investment LLC*
...........................................................................
- --------------------------------------------------------------------------------
2. Check the Appropriate Box if a Member of a Group (See Instructions)
(a) X
........................................................................
(b)
........................................................................
- --------------------------------------------------------------------------------
3. SEC Use Only
...............................................................
- --------------------------------------------------------------------------------
4. Source of Funds (See Instructions) OO
........................................
- --------------------------------------------------------------------------------
5. Check if Disclosure of Legal Proceedings Is Required Pursuant to
Items 2(d) or 2(e)
.........................................................
- --------------------------------------------------------------------------------
6. Citizenship or Place of Organization DE
.......................................
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
7. Sole Voting Power -0-
.....................................
-----------------------------------------------------------
Number of Shares 8. Shared Voting Power -0-
Beneficially Owned ...................................
by Each Reporting -----------------------------------------------------------
Person With
9. Sole Dispositive Power -0-
................................
-----------------------------------------------------------
10. Shared Dispositive Power -0-
..............................
- --------------------------------------------------------------------------------
11. Aggregate Amount Beneficially Owned by Each Reporting Person -0-
...............
- --------------------------------------------------------------------------------
12. Check if the Aggregate Amount in Row (11) Excludes Certain Shares
(See Instructions)
.........................................................
- --------------------------------------------------------------------------------
13. Percent of Class Represented by Amount in Row (11) 0%
.........................
- --------------------------------------------------------------------------------
14. Type of Reporting Person (See Instructions)
OO
................................................................................
................................................................................
................................................................................
................................................................................
................................................................................
2
<PAGE>
- --------------------------------------------------------------------------------
1. Names of Reporting Persons.
I.R.S. Identification Nos. of above persons (entities only).
Apollo Investment Fund IV, L.P.*
...........................................................................
- --------------------------------------------------------------------------------
2. Check the Appropriate Box if a Member of a Group (See Instructions)
(a) X
........................................................................
(b)
........................................................................
- --------------------------------------------------------------------------------
3. SEC Use Only
...............................................................
- --------------------------------------------------------------------------------
4. Source of Funds (See Instructions) OO
........................................
- --------------------------------------------------------------------------------
5. Check if Disclosure of Legal Proceedings Is Required Pursuant to
Items 2(d) or 2(e)
.........................................................
- --------------------------------------------------------------------------------
6. Citizenship or Place of Organization DE
.......................................
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
7. Sole Voting Power 5,356,327 shares of Common Stock
.....................................
-----------------------------------------------------------
Number of Shares 8. Shared Voting Power 5,643,553 shares of Common Stock
Beneficially Owned ...................................
by Each Reporting -----------------------------------------------------------
Person With
9. Sole Dispositive Power 5,356,327 shares of Common Stock
................................
-----------------------------------------------------------
10. Shared Dispositive
Power 5,643,553 shares of Common Stock
................................
- --------------------------------------------------------------------------------
11. Aggregate Amount Beneficially Owned by
Each Reporting Person 5,643,553 shares of Common Stock
................................
- --------------------------------------------------------------------------------
12. Check if the Aggregate Amount in Row (11) Excludes Certain Shares
(See Instructions)
.........................................................
- --------------------------------------------------------------------------------
13. Percent of Class Represented by Amount in Row (11) 17.8%
.........................
- --------------------------------------------------------------------------------
14. Type of Reporting Person (See Instructions)
PN
................................................................................
................................................................................
................................................................................
................................................................................
................................................................................
3
<PAGE>
- --------------------------------------------------------------------------------
1. Names of Reporting Persons.
I.R.S. Identification Nos. of above persons (entities only).
Apollo Overseas Partners IV, L.P.*
...........................................................................
- --------------------------------------------------------------------------------
2. Check the Appropriate Box if a Member of a Group (See Instructions)
(a) X
........................................................................
(b)
........................................................................
- --------------------------------------------------------------------------------
3. SEC Use Only
...............................................................
- --------------------------------------------------------------------------------
4. Source of Funds (See Instructions) OO
........................................
- --------------------------------------------------------------------------------
5. Check if Disclosure of Legal Proceedings Is Required Pursuant to
Items 2(d) or 2(e)
.........................................................
- --------------------------------------------------------------------------------
6. Citizenship or Place of Organization DE
.......................................
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
7. Sole Voting Power 287,226 shares of Common Stock
.....................................
-----------------------------------------------------------
Number of Shares 8. Shared Voting Power 5,643,553 shares of Common Stock
Beneficially Owned ...................................
by Each Reporting -----------------------------------------------------------
Person With
9. Sole Dispositive Power 287,226 shares of Common Stock
................................
-----------------------------------------------------------
10. Shared Dispositive
Power 5,643,553 shares of Common Stock
................................
- --------------------------------------------------------------------------------
11. Aggregate Amount Beneficially Owned by
Each Reporting Person 5,643,553 shares of Common Stock
.....................................................
- --------------------------------------------------------------------------------
12. Check if the Aggregate Amount in Row (11) Excludes Certain Shares
(See Instructions)
.........................................................
- --------------------------------------------------------------------------------
13. Percent of Class Represented by Amount in Row (11) 17.8%
.........................
- --------------------------------------------------------------------------------
14. Type of Reporting Person (See Instructions)
PN
................................................................................
................................................................................
................................................................................
................................................................................
................................................................................
4
<PAGE>
- --------------------------------------------------------------------------------
1. Names of Reporting Persons.
I.R.S. Identification Nos. of above persons (entities only).
Apollo Advisors IV, L.P.*
...........................................................................
- --------------------------------------------------------------------------------
2. Check the Appropriate Box if a Member of a Group (See Instructions)
(a) X
........................................................................
(b)
........................................................................
- --------------------------------------------------------------------------------
3. SEC Use Only
...............................................................
- --------------------------------------------------------------------------------
4. Source of Funds (See Instructions) OO
........................................
- --------------------------------------------------------------------------------
5. Check if Disclosure of Legal Proceedings Is Required Pursuant to
Items 2(d) or 2(e)
.........................................................
- --------------------------------------------------------------------------------
6. Citizenship or Place of Organization DE
.......................................
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
7. Sole Voting Power -0-
.....................................
-----------------------------------------------------------
Number of Shares 8. Shared Voting Power 5,643,553 shares of Common Stock
Beneficially Owned ...................................
by Each Reporting -----------------------------------------------------------
Person With
9. Sole Dispositive Power -0-
................................
-----------------------------------------------------------
10. Shared Dispositive
Power 5,643,553 shares of Common Stock
................................
- --------------------------------------------------------------------------------
11. Aggregate Amount Beneficially Owned by
Each Reporting Person 5,643,553 shares of Common Stock
................................
- --------------------------------------------------------------------------------
12. Check if the Aggregate Amount in Row (11) Excludes Certain Shares
(See Instructions)
.........................................................
- --------------------------------------------------------------------------------
13. Percent of Class Represented by Amount in Row (11) 17.8%
.........................
- --------------------------------------------------------------------------------
14. Type of Reporting Person (See Instructions)
PN
................................................................................
................................................................................
................................................................................
................................................................................
................................................................................
5
<PAGE>
- --------------------------------------------------------------------------------
1. Names of Reporting Persons.
I.R.S. Identification Nos. of above persons (entities only).
Apollo Management IV, L.P.
...........................................................................
- --------------------------------------------------------------------------------
2. Check the Appropriate Box if a Member of a Group (See Instructions)
(a) X
........................................................................
(b)
........................................................................
- --------------------------------------------------------------------------------
3. SEC Use Only
...............................................................
- --------------------------------------------------------------------------------
4. Source of Funds (See Instructions) OO
........................................
- --------------------------------------------------------------------------------
5. Check if Disclosure of Legal Proceedings Is Required Pursuant to
Items 2(d) or 2(e)
.........................................................
- --------------------------------------------------------------------------------
6. Citizenship or Place of Organization DE
.......................................
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
7. Sole Voting Power -0-
.....................................
-----------------------------------------------------------
Number of Shares 8. Shared Voting Power 5,643,553 shares of Common Stock
Beneficially Owned ...................................
by Each Reporting -----------------------------------------------------------
Person With
9. Sole Dispositive Power -0-
................................
-----------------------------------------------------------
10. Shared Dispositive
Power 5,643,553 shares of Common Stock
.................................................
- --------------------------------------------------------------------------------
11. Aggregate Amount Beneficially Owned by
Each Reporting Person 5,643,553 shares of Common Stock
......................................................
- --------------------------------------------------------------------------------
12. Check if the Aggregate Amount in Row (11) Excludes Certain Shares
(See Instructions)
.........................................................
- --------------------------------------------------------------------------------
13. Percent of Class Represented by Amount in Row (11) 17.8%
.........................
- --------------------------------------------------------------------------------
14. Type of Reporting Person (See Instructions)
PN
................................................................................
................................................................................
................................................................................
................................................................................
................................................................................
6
<PAGE>
On March 22, 1999 Boss Investment LLC, a Delaware limited liability
company owned by certain Reporting Entities (as defined in Item 2) (the
"Investor"), entered into a Securities Purchase Agreement (the "Purchase
- --------- --------
Agreement"), with Building One Services Corporation, a Delaware corporation (the
- ---------
"Issuer"). Pursuant to the Purchase Agreement, on April 30, 1999 the Investor
------
acquired approximately $100.0 million of the Issuer's 7.5% Junior Subordinated
Convertible Debentures (the "Convertible Notes"). The Convertible Notes
-----------------
initially were convertible into 4,444,444 shares of common stock of the Issuer,
par value $.001 per share (the "Issuer's Common Stock").
---------------------
On June 30, 1999, the Investor acquired from Friedman, Billings,
Ramsey & Co., Inc. warrants to purchase 1,030,000 shares of the Issuer's Common
Stock (the "Warrants"). Assuming the Investor exercised the Warrants and
--------
converted the Convertible Notes, and assuming all interest payments are paid in
cash, the Investor would own 5,643,553 shares of the Issuer's Common Stock, or
approximately 17.8% based on the Issuer's outstanding shares as of November 9,
1999.
*On July 28, 1999, the Investor was dissolved and distributed the
Convertible Notes and Warrants to its members, each of whom is a Reporting
Entity, resulting in direct beneficial ownership by AIF IV and Overseas Partners
of $94.9 million and $5.1 million, respectively, of Convertible Notes. The
distribution also resulted in direct beneficial ownership by AIF IV and Overseas
Partners of Warrants to purchase 977,573 and 52,427 shares of Common Stock,
respectively.
ITEM 4. PURPOSE OF THE TRANSACTION
Item 4 of the Schedule 13D is amended to add the following:
On November 2, 1999, the Issuer and Group Maintenance America Corp., a
Texas corporation ("GroupMAC"), entered into an Agreement and Plan of Merger
--------
(the "Merger Agreement") pursuant to which the Issuer agreed to merge with and
----------------
into GroupMAC, with GroupMAC being the surviving corporation (the "Merger"). The
------
closing of the Merger is conditioned upon, among other things, the approval of
the shareholders of each of the Issuer and GroupMAC, concurrent completion of
the investment by BOSS II (as described below) in GroupMAC, regulatory approval,
GroupMAC obtaining a senior debt facility, with terms reasonably acceptable to
GroupMAC and the Issuer, in an amount of at least $800,000,000.
Simultaneously with the execution of the Merger Agreement, BOSS II,
LLC, a Delaware limited liability company ("BOSS II") whose members are AIF IV
-------
and Overseas Partners, entered into a Subscription and Exchange Agreement with
GroupMAC (the "Exchange Agreement") pursuant to which BOSS II agreed to acquire
------------------
shares of Convertible Preferred Stock, $.001 par value per share, of GroupMAC
(the "Convertible Preferred"), in exchange for the Convertible Notes, plus
---------------------
accrued and unpaid interest thereon and $150,000,000 in cash. The Convertible
Preferred initially will be convertible into approximately 18,214,857 shares of
GroupMAC Common Stock at a conversion price of $14.00 per share. In connection
with the execution of the Exchange Agreement, BOSS II, AIF IV and Overseas
Partners executed a Letter Agreement pursuant to which BOSS II agreed, upon a
closing under the Exchange Agreement to transfer the Convertible Notes in
accordance with the terms thereof and subject to the conditions
7
<PAGE>
set forth therein. The closing of the transactions contemplated in the Exchange
Agreement are conditioned upon the closing of the Merger.
Pursuant to the Merger Agreement, the Warrants will be assumed by
GroupMAC and will continue to have and be subject to the same terms and
conditions set forth in the Warrants, except that such Warrants shall be
exercisable for 1,287,500 shares of GroupMAC Common Stock at a per share
exercise price of $16.
The Reporting Entities have no present plans or proposals to acquire
additional securities of the Issuer. However, the Reporting Entities reserve
the right from time to time to acquire additional securities and/or to dispose
of securities and to participate in future transactions with respect to the
Issuer's Securities. Upon a material change in the beneficial ownership of the
Reporting Persons, the Reporting Persons will amend this Schedule 13D.
ITEM 5. INTEREST IN THE SECURITIES OF THE ISSUER
(a) On June 30, 1999, the Issuer paid a total of $1,895,000 of accrued interest
on the Convertible Notes in additional Convertible Notes. On September 30,
1999, the Issuer paid a total of $1,910,000 of accrued interest on the
Convertible Notes in additional Convertible Notes. Assuming the conversion
of the principal amount, the Reporting Entities beneficially own Convertible
Notes convertible into an aggregate of 5,643,553 shares of Common Stock, or
approximately 17.8% of the total issued and outstanding shares of Common
Stock.
(c) The responses set forth in Item 4 are incorporated herein.
(e) On July 28, 1999, the Investor was dissolved and distributed the Convertible
Notes and Warrants to its members, each of whom is a Reporting Entity.
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT
TO SECURITIES OF THE ISSUER
The responses set forth in Item 4 are incorporated herein.
ITEM 7. MATERIAL TO BE FILED AS EXHIBITS
1. Subscription and Exchange Agreement, dated as of November 2,
1999, between Boss II LLC, a Delaware limited liability company, and
Group Maintenance America Corp., a Texas corporation.
2. Letter Agreement, dated November 2, 1999, between Apollo
Investment Fund IV, L.P., Apollo Overseas Partners IV. L.P., Group
Maintenance America Corp. and Building One Services Corporation.
3. Agreement and Plan of Merger, dated as of November 2, 1999, by
and between Group Maintenance America Corp. and Building One Services
Corporation.
8
<PAGE>
After reasonable inquiry and to the best of his knowledge and belief,
the undersigned certifies that the information set forth in this statement is
true, complete and correct. In addition, by signing below, the undersigned
agrees that this Schedule 13D may be filed jointly on behalf of each of Apollo
Investment Fund IV, L.P., Apollo Advisors IV, L.P. Apollo Management IV, L.P.and
Apollo Overseas Partners IV, L.P.
Dated as of the 15th day of November, 1999.
APOLLO INVESTMENT FUND IV, L.P. APOLLO ADVISORS IV, L.P.
By: Apollo Advisors IV, L.P., By: Apollo Capital Management IV, Inc.,
its General Partner its General Partner
By: Apollo Capital Management IV, Inc.,
its General Partner By: /s/ Michael D. Weiner
------------------------------------
Name: Michael D. Weiner
By: /s/ Michael D. Weiner Title: Vice President
-----------------------------
Name: Michael D. Weiner
Title: Vice President
APOLLO OVERSEAS PARTNERS IV, L.P.
APOLLO MANAGEMENT IV, L.P. By: Apollo Advisors IV, L.P.,
its General Partner
By:
By: By: Apollo Capital Management IV, Inc.,
its General Partner
By: /s/ Michael D. Weiner
-----------------------------
Name: Michael D. Weiner
Title: Vice President
By: /s/ Michael D. Weiner
-------------------------------
Name: Michael D. Weiner
Title: Vice President
9
<PAGE>
SUBSCRIPTION AND EXCHANGE AGREEMENT
BETWEEN
GROUP MAINTENANCE AMERICA CORP.
AND
BOSS II, LLC
Dated as of November 2, 1999
<PAGE>
TABLE OF CONTENTS
<TABLE>
<S> <C>
ARTICLE I DEFINITIONS.......................................................... 1
ARTICLE II ISSUANCE OF CONVERTIBLE PREFERRED STOCK............................. 6
2.1 Issuance of Convertible Preferred Stock................................ 6
2.2 Closing................................................................ 6
2.3 Company Actions........................................................ 6
ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE COMPANY...................... 7
3.1 Authority.............................................................. 7
3.2 Authorization of Convertible Preferred Stock and Conversion Shares..... 7
3.3 Consents and Approvals; No Violations.................................. 7
3.4 State Takeover Statutes................................................ 8
3.5 Share Retention Agreements............................................. 8
3.6 Merger Agreement....................................................... 8
3.7 Financing.............................................................. 9
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF INVESTOR.......................... 9
4.1 Organization........................................................... 9
4.2 Authority.............................................................. 9
4.3 Consents and Approvals; No Violations.................................. 9
4.4 Ownership of the BOSC Debentures....................................... 10
4.5 Ownership of Company Common Stock...................................... 10
4.6 Brokers................................................................ 10
4.7 Investment Representations and Warranties.............................. 11
ARTICLE V COVENANTS............................................................ 11
5.1 Other Actions.......................................................... 11
5.2 Advice of Changes; Filings............................................. 12
5.3 Financial Information.................................................. 12
5.4 Merger Agreement Covenants............................................. 13
ARTICLE VI ADDITIONAL AGREEMENTS............................................... 13
6.1 Access to Information.................................................. 13
6.2 Reasonable Efforts; Notification....................................... 13
6.3 Fees and Expenses...................................................... 14
6.4 Public Announcements................................................... 15
6.5 NYSE................................................................... 15
6.6 Securities and Exchange Commission..................................... 16
6.7 Use of Proceeds........................................................ 16
6.8 Merger Agreement....................................................... 16
6.9 Confidentiality........................................................ 16
ARTICLE VII CONDITIONS......................................................... 17
7.1 Conditions to Each Party's Obligation.................................. 17
7.2 Conditions to the Company's Obligations................................ 17
7.3 Conditions to the Investor's Obligations............................... 18
ARTICLE VIII TERMINATION AND AMENDMENT......................................... 20
8.1 Termination............................................................ 20
8.2 Effect of Termination.................................................. 21
</TABLE>
<PAGE>
<TABLE>
<S> <C>
ARTICLE IX MISCELLANEOUS....................................................... 22
9.1 Amendment.............................................................. 22
9.2 Extension; Waiver...................................................... 22
9.3 Survival of Representations, Warranties and Agreements, Limitation
on Liability........................................................... 22
9.4 Notices................................................................ 22
9.5 Indemnification........................................................ 23
9.6 Interpretation......................................................... 25
9.7 Entire Agreement; Third Party Beneficiaries............................ 25
9.8 Governing Law.......................................................... 25
9.9 Counterparts........................................................... 25
9.10 Assignment............................................................. 26
9.11 Enforcement............................................................ 26
</TABLE>
ii
<PAGE>
Exhibits
- --------
Exhibit A: Form of Investor's Rights Agreement
Exhibit B: Form of Statement of Designations
Exhibit C: Form of Fee Letter
Exhibit 4.4: Form of Agreement Letter
Exhibit 7.3(d): Form of Opinion of Bracewell & Patterson
Schedules
- ---------
Schedule 3.3(d): Third Party Consents
Schedule 3.5: Share Retention Agreements
Schedule 5.1(e): Employees
Schedule 7.3(g): BOSC Share Retention Agreement
iii
<PAGE>
SUBSCRIPTION AND EXCHANGE AGREEMENT (this
"Agreement"), dated as of November 2, 1999,
---------
between GROUP MAINTENANCE AMERICA CORP., a Texas
corporation (the "Company") and BOSS II, LLC, a
-------
Delaware limited liability company (the
"Investor").
--------
WHEREAS, the Company and Building One Services Corporation have
entered into an Agreement and Plan of Merger, dated as of the date hereof (the
"Merger Agreement"), pursuant to which the Company agrees to fund the conversion
- -----------------
of up to $150,000,000 aggregate share value of its Common Stock (as hereinafter
defined), into cash pursuant to the Merger Agreement, and
WHEREAS, the Company desires to issue to the Investor shares of its
Convertible Preferred Stock (as hereinafter defined) equal to an aggregate share
value of $250,000,000 plus an amount equal to the accrued but unpaid interest as
of the Closing Date on the BOSC Debentures (as hereinafter defined), in exchange
for $150,000,000 in cash and the BOSC Debentures, on the terms and conditions
set forth herein, and
WHEREAS, the Merger and the exchange hereunder of the BOSC Debentures
for Convertible Preferred Stock are intended to qualify as a reorganization
under the provisions of Section 368(a) of the Internal Revenue Code of 1986, as
amended;
NOW, THEREFORE, in consideration of the mutual covenants and
agreements herein contained, and intending to be legally bound hereby, the
Investor and the Company hereby agree as follows:
ARTICLE I
DEFINITIONS
As used in this Agreement, the following terms shall have the following
respective meanings:
"Affiliate" means, with respect to any specified person, any other person
---------
that, directly or indirectly, through one or more intermediaries, controls, is
controlled by, or is under common ownership or control with, or is owned or
controlled by, such specified person; provided that Affiliates of the Investor,
any designees of the Investor and Apollo shall exclude operating companies that
would otherwise be deemed an Affiliate of such Persons, and shall include all
investment partnerships and special purpose entities that are not operating
companies, whether existing as of the date hereof or created hereafter, if the
Persons controlling Apollo have the dominant management role in such entities.
As used in this definition, the term "control" (including the terms
"controlling", "controlled by" and "under common control with") of a person
means the possession, direct or indirect, of the power to direct or cause the
direction of the management and policies of such person, whether through the
ownership of voting securities, by contract or otherwise.
<PAGE>
"Apollo" means Apollo Management IV, L.P. and its Affiliates.
------
"Beneficial Owner" means a Person who is determined to be a "beneficial
----------------
owner" of, or who "beneficially owns" any capital stock of the Company (i) which
such person or any of its Affiliates or Associates (each as defined in the
Exchange Act) owns, directly or indirectly; (ii) which such Person or any of its
Affiliates or Associates has, directly or indirectly, (A) the right to acquire
(whether such right is exercisable immediately or only after the passage of any
period of time), pursuant to any agreement, arrangement or understanding or upon
the exercise of conversion rights, exchange rights, warrants or options, or
otherwise, or (B) the right to vote pursuant to any agreement, arrangement or
understanding; or (iii) which are owned, directly or indirectly, by any other
Person with which such Person or any of its Affiliates or Associates has any
agreement, arrangement or understanding for the purpose of acquiring, holding,
voting or disposing of any shares of Capital Stock.
"BOSC" means Building One Services Corporation, a Delaware corporation.
----
"BOSC Debentures" means the 7 1/2% Convertible Subordinated Junior
---------------
Debentures due 2012 of BOSC, governed by an Indenture dated as of April 30, 1999
by and between BOSC and United States Trust Company of New York.
"BOSC Debentureholders" has the meaning set forth in Section 4.4.
---------------------
"BOSC Share Retention Agreement" has the meaning set forth in Section
------------------------------ -------
7.3(g).
- ------
"business day" means any calendar day that is not a Saturday, Sunday or day
------------
on which nationally chartered banks are required to be closed in New York, New
York.
"Closing" has the meaning set forth in Section 2.2.
------- -----------
"Closing Date" has the meaning set forth in Section 2.2.
------------ -----------
"Commission" means the United States Securities and Exchange Commission.
----------
"Common Stock" means the common stock of the Company, $.001 par value per
------------
share.
"Common Stock Equivalent" means one share of Common Stock or the right to
-----------------------
acquire, whether or not immediately exercisable, one share of Common Stock,
whether evidenced by an option, warrant, convertible security or other
instrument or agreement, in each case, as adjusted to account for any stock
splits, reverse stock splits, stock dividends or other similar event.
"Company" has the meaning set forth in the recitals to this Agreement.
-------
"Condition Termination Date" has meaning set forth in Section 7.3(g).
-------------------------- --------------
"Confidentiality Agreement" has the meaning set forth in Section 6.9.
------------------------- -----------
2
<PAGE>
"Contract" means any loan or credit agreement, note, bond, mortgage,
--------
indenture, lease, sublease, purchase order or other contract, agreement,
commitment, instrument, Permit (as hereinafter defined), concession, franchise
or license.
"Conversion Shares" has the meaning set forth in Section 2.1(c).
----------------- --------------
"Convertible Preferred Stock" means the Company's 7 1/4% convertible
---------------------------
preferred stock, par value $.001 per share, to be issued by the Company to the
Investor pursuant to the terms and conditions of this Agreement and to be
governed by the Statement of Designations.
"Delaware Company Warrants" has the meaning set forth in Section 3.3 of the
-------------------------
Merger Agreement.
"Effective Time" has the meaning set forth in Section 1.1 of the Merger
--------------
Agreement.
"Exchange Act" means the Securities Exchange Act of 1934 and the rules and
------------
regulations promulgated thereunder, each as amended.
"Expense Reimbursement Event" shall mean that this Agreement shall have
---------------------------
been terminated pursuant to Section 8.1(d)(i),(ii), (iii),(iv), (v) or, pursuant
------------------------------------------
to Section 8.1(d)(vi) or Section 8.1(g)(iii) if such termination pursuant to
Section 8.1(d)(vi) or Section 8.1(g)(iii) occurs after a breach by the Company
of the Merger Agreement, provided, however, that no Expense Reimbursement Event
-------- -------
shall be deemed to occur pursuant to Section 8.1(d)(v) unless the shareholders
of the Company shall not have approved the transactions contemplated by the
Merger Agreement and the Company shall have consummated an Alternative
Transaction (as defined in the Merger Agreement) within one year of the
termination of this Agreement.
"Fee Letter" has the meaning set forth in Section 7.3(e).
---------- --------------
"Financing Letter" has the meaning set forth in Section 3.7.
---------------- -----------
"GAAP" means United States generally accepted accounting principles.
----
"Governmental Entity" means any national, federal, state, municipal, local,
-------------------
territorial, foreign or other government or any department, commission, board,
bureau, agency, regulatory authority or instrumentality thereof, or any court,
judicial, administrative, or arbitral body or public or private tribunal.
"HSR Act" means the Hart-Scott-Rodino Antitrust Improvements Act of 1976,
-------
as amended.
"Indebtedness" has the meaning set forth in Section 10 of the Statement of
------------
Designations.
"Indemnified Party" has the meaning set forth in Section 9.5.
----------------- -----------
"Investor" means BOSS II, LLC, a Delaware limited liability company.
--------
"Investment Amount" has the meaning set forth in Section 2.1(a).
----------------- --------------
3
<PAGE>
"Investor's Expenses" means all reasonable out-of-pocket expenses
-------------------
(including reasonable attorneys fees) paid or incurred by or on behalf of the
Investor to a Third Party in connection with the negotiation, execution and
delivery of, the due diligence conducted by the Investor and its agents and
representatives in connection with, and the consummation (to the extent
applicable) of the transactions contemplated by, (i) this Agreement, (ii) the
Merger Agreement, (iii) the Investor's Rights Agreement and each of the
documents and instruments referred to in any of the foregoing, including,
without limitation, the indebtedness to be incurred in connection with the
transactions contemplated by this Agreement and the Merger Agreement.
Notwithstanding anything in this Agreement to the contrary, the maximum amount
of Investor Expenses shall be $3,000,000.
"Investor's Rights Agreement" has the meaning set forth in Section 7.3(e).
--------------------------- --------------
"Law" means all provisions of laws, statutes, ordinances, rules, bylaws,
---
regulations, writs, Permits or Orders of any Governmental Entity.
"Liens" means, with respect to any asset, (a) any mortgage, deed of trust,
-----
lien, pledge, encumbrance, charge or security interest of any kind whatsoever in
or on such asset (including the filing of or agreement to give any financing
statement under the Uniform Commercial Code of any jurisdiction), (b) the
interest of a vendor or a lessor under any conditional sale agreement, capital
Lease or title retention agreement relating to such asset and (c) in the case of
securities, any purchase option, right of first refusal, call, appreciation
right or similar right of a third party with respect to such securities.
"material adverse change" has the meaning set forth in Section 9.6.
----------------------- -----------
"Material Adverse Effect" has the meaning set forth in Section 9.6.
----------------------- -----------
"Material Contract" means any Contract that (i) evidences or provides for
-----------------
any Indebtedness of the Company or any Subsidiary, or any of their Affiliates,
in an amount in excess of $5,000,000, or any encumbrance securing such
Indebtedness, (ii) restricts the Company or any Subsidiary, or any of their
Affiliates, from engaging in any line of business or (iii) is required to be
disclosed by the Company pursuant to the Exchange Act or the Securities Act (as
hereinafter defined).
"Merger" has the meaning set forth in Section 7.2(b).
------ --------------
"Merger Agreement" has the meaning set forth in the recitals to this
----------------
Agreement.
"Merger Shares" has the meaning set forth in Section 7.3(g).
------------- --------------
"NYSE" has the meaning set forth in Section 6.5.
---- -----------
"Order" means all judgments, injunctions, orders and decrees of all
-----
Governmental Entities in Proceedings (as hereinafter defined) in which the
person in question is a party or by which any of its properties is bound.
4
<PAGE>
"Organizational Documents" means, with respect to any person, each
------------------------
instrument or other document that (a) defines the existence of such person,
including its certificate of limited partnership or articles or certificate of
incorporation, as filed or recorded with an applicable Governmental Entity, or
(b) governs the internal affairs of such person, including its partnership
agreement or by-laws.
"Outside Date" has the meaning set forth in Section 8.1(b).
------------ --------------
"Payment Event" shall mean that this Agreement shall have been terminated
-------------
pursuant to Section 8.1(d)(i),(ii), (iii),(iv), (v) or, pursuant to Section
------------------------------------------
8.1(d)(vi) or Section 8.1(g)(iii) if such termination pursuant to Section
8.1(d)(vi) or Section 8.1(g)(iii) occurs after a breach by the Company of the
Merger Agreement, provided, however, that no Payment Event shall be deemed to
-------- -------
occur pursuant Section 8.1(d)(v) unless the shareholders of the Company shall
not have approved the transactions contemplated by the Merger Agreement and the
Company shall have consummated an Alternative Transaction (as defined in the
Merger Agreement) within one year of the termination of this Agreement.
"Permits" means, collectively, all franchises, approvals, clearances,
-------
permits, licenses, authorizations, registrations, certificates, and variances
obtained from, or agreements with, any Governmental Entity.
"Proceeding" means any claim, demand, suit, action, hearing, grievance,
----------
arbitration, mediation or proceeding in any court or before any Governmental
Entity, whether at law or in equity.
"Securities Act" means the Securities Act of 1933 and the rules and
--------------
regulations promulgated thereunder, each as amended.
"Share Retention Agreement" has the meaning set forth in Section 3.5.
------------------------- -----------
"Statement of Designations" means the statement of designations,
-------------------------
preferences, limitations and relative rights of the Convertible Preferred Stock,
in the form set forth in Exhibit B.
---------
"Subsidiary" has the same meaning has the meaning set forth in Section
----------
2.2(b) of the Merger Agreement.
"Termination Fee" has the meaning set forth in Section 6.3(b).
--------------- --------------
"Third Party" means any person or "group," as described in Rule 13d-5(b)
-----------
promulgated under the Exchange Act, other than the Investors or any of their
Affiliates.
"Transaction Documents" means this Agreement, the Fee Letter, the
---------------------
Investor's Rights Agreement, the Statement of Designations and the Merger
Agreement.
5
<PAGE>
ARTICLE II
ISSUANCE OF CONVERTIBLE PREFERRED STOCK
2.1 Issuance of Convertible Preferred Stock.
(a) At the Closing, the Company shall issue and deliver to the Investor
a certificate or certificates representing the sum of $250,000,000 plus an
amount equal to the accrued and unpaid interest as of the Closing Date on the
BOSC Debentures (the "Investment Amount"), aggregate share value of Convertible
-----------------
Preferred Stock against receipt by the Company of:
(i) a wire transfer of immediately available funds in the amount
of $150,000,000 to an account designated by the Company at least two
business days prior to the Closing; and
(ii) all of the certificates representing all of the outstanding
BOSC Debentures.
(b) The Convertible Preferred Stock certificates shall be registered in
the names designated by the Investor to the Company at least two business days
prior to the Closing.
(c) The Company has authorized and reserved and covenants to continue to
reserve, free of preemptive rights and other preferential rights, a sufficient
number of shares of Common Stock to satisfy the rights of conversion of the
holders of the Convertible Preferred Stock. Any shares of Common Stock issuable
upon conversion of the Convertible Preferred Stock, and such shares of Common
Stock when issued, are herein referred to as the "Conversion Shares."
-----------------
(d) The number of shares of Convertible Preferred Stock to be issued
pursuant to the terms and conditions of this Agreement shall be determined by
dividing the number representing the Investment Amount by 1,000.
2.2 Closing.
The closing (the "Closing") hereunder with respect to the issuance and sale
-------
of the Convertible Preferred Stock shall take place at the offices of O'Sullivan
Graev & Karabell, LLP, 30 Rockefeller Plaza, 24th Floor, New York, New York (or
at the offices of the lenders to the Company or such other place as the parties
may agree) as soon as practicable after December 31, 1999 and promptly after the
satisfaction or waiver of all of the conditions set forth in Article VII (the
-----------
date upon which the Closing occurs being referred to as the "Closing Date") and
------------
immediately prior to the consummation of the consummation of the transactions
contemplated under the Merger Agreement.
2.3 Company Actions.
The Company represents and warrants that at meetings duly called and held,
its Board of Directors has (a) taken all necessary steps to render the
restrictions of Article 13.03 of the Texas Business Corporation Act inapplicable
to the transactions contemplated by this Agreement and (b) resolved to elect not
to be subject, to the extent permitted by Law, to any state takeover law
6
<PAGE>
other than Article 13.03 of the Texas Business Corporation Act that may purport
to be applicable to the transactions contemplated by this Agreement.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to the Investors as of the date hereof
and as of the Closing Date as follows:
3.1 Authority.
The Company has the requisite corporate power and authority to execute and
deliver this Agreement and each other Transaction Document and to consummate the
transactions contemplated hereby and thereby. The execution, delivery and
performance of this Agreement, the other Transaction Documents and the other
agreements, documents and instruments referred to herein and therein have been
duly authorized by all necessary corporate action on the part of the Company and
no other corporate proceedings on the part of the Company are necessary to
authorize this Agreement, any other Transaction Document or any such other
agreement, document or instrument or to consummate the transactions so
contemplated hereby or thereby. This Agreement and the other Transaction
Documents have been duly executed and delivered by the Company and each such
document will, upon approval of the Company's shareholders, constitute a valid
and binding obligation of the Company enforceable against the Company in
accordance with its 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).
3.2 Authorization of Convertible Preferred Stock and Conversion Shares.
The shares of Convertible Preferred Stock have been duly authorized for
issuance and, when issued and delivered, and consideration recited herein has
been received in accordance with the provisions of this Agreement, will be
validly issued, fully paid and nonassessable. The Conversion Shares have been
duly authorized and reserved for issuance, and, when the shares of Convertible
Preferred Stock have been issued by the Company, (i) the Convertible Preferred
Stock will be convertible into Conversion Shares in accordance with the terms as
set forth in the Statement of Designations, and (ii) the Conversion Shares
issuable upon such conversion, when issued and delivered in accordance with the
provisions of the Statement of Designations, will be validly issued, fully paid
and nonassessable.
3.3 Consents and Approvals; No Violations.
Except for Permits as may be required under, and other applicable
requirements of, the Securities Act, the Exchange Act and applicable foreign and
state securities or blue sky laws and the HSR Act, neither the execution,
delivery or performance of this Agreement by the Company nor the consummation by
the Company of the transactions contemplated hereby will (a) conflict with or
result in any breach of any provision of the Organizational Documents of the
Company or any of its material Subsidiaries, (b) require the Company to make any
filing with, provide any
7
<PAGE>
notice to, or obtain any Permit, authorization, consent or approval of, any
Governmental Entity (except where the failure to obtain such Permit,
authorization, consent or approval or to make such filings would not reasonably
be expected to prevent or materially delay the consummation of the transactions
contemplated by this Agreement), (c) result in the creation or imposition of any
Liens upon the properties or assets of the Company or any Subsidiary, (d) except
as set forth on Schedule 3.3(d), result in a violation or breach of, require any
---------------
notice to any party pursuant to, or constitute (with or without due notice or
lapse of time or both) a default (or give rise to any right of termination,
amendment, cancellation, acceleration or right of non-renewal or require any
prepayment or offer to purchase any debt) under, any of the terms, conditions or
provisions of any Material Contract to which the Company or any of its
Subsidiaries is a party or by which the Company's or any of its Subsidiaries'
properties or assets may be bound, (e) violate any Order or Law applicable to
the Company or any of its Subsidiaries or any of their respective properties or
assets or (f) result in the loss, forfeiture, revocation, termination or
diminution of any Permit, except in the case of clauses (b), (c), (d), (e) and
(f), for violations, breaches, defaults, losses, forfeitures, revocations,
terminations or diminutions which would not, individually or in the aggregate,
cause a Material Adverse Effect.
3.4 State Takeover Statutes.
No "fair price", "moratorium", "control share acquisition" or other similar
antitakeover statute or regulation enacted under state or federal laws in the
United States (with the exception of Article 13.03 of the TBCA) applicable to
the Company is applicable to this Agreement, the Merger Agreement or the other
transactions contemplated hereby or thereby. The action of the Board of
Directors of the Company in approving this Agreement and the Merger Agreement
(and the transactions provided for herein and therein) is sufficient to render
Article 13.03 of the TBCA inapplicable to this Agreement and the Merger
Agreement.
3.5 Share Retention Agreements.
The Company has received extensions to each share retention agreement from
the shareholders listed in Schedule 3.5, copies of which have been delivered to
------------
the Investor (the "Share Retention Agreements"). Except in connection with the
--------------------------
Merger, no Share Retention Agreement has been amended, waived, supplemented or
restated and each Share Retention Agreement remains in full force and effect,
enforceable in accordance with its terms against the shareholders party thereto.
Except in connection with the Merger, the Company has not amended, waived,
supplemented or restated any contractual restrictions on transfer of any shares
of Common Stock (except pursuant to the Share Retention Agreements) and all such
restrictions are enforceable in accordance with their terms against the
shareholders party thereto.
3.6 Merger Agreement
The Company and BOSC have entered into the Merger Agreement, a copy of
which has been delivered to the Investor. The Company hereby restates the
representations and warranties of the Company set forth in the Merger Agreement
as if such representations and warranties were set forth herein in their
entirety, and such representations and warranties are incorporated by reference
herein.
8
<PAGE>
3.7 Financing.
The Company has obtained a commitment letter from Bank of America with
respect to $800,000,000 of senior debt financing, a copy of which has been
delivered to the Investor (the "Financing Letter"). There have been no changes,
----------------
modifications or waivers with respect to the Financing Letter since the date of
its delivery to the Investor.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF INVESTOR
The Investor represents and warrants to the Company as of the date hereof
and as of the Closing Date as follows:
4.1 Organization.
The Investor is duly organized, validly existing and in good standing under
the laws of the jurisdiction of its organization and has all requisite power and
authority to carry on its business as now being conducted. The Investor is duly
qualified or licensed to do business and is in good standing in each
jurisdiction in which the nature of its business or the ownership or leasing of
its properties makes such qualifications or licensing necessary, other than in
such jurisdictions where the failure to be so qualified or licensed
(individually or in the aggregate) could not be reasonably expected to either
prevent or materially delay its ability to perform its obligations hereunder.
The Investor has made available to the Company complete and correct copies of
its certificate of formation, operating agreement and by-laws, as amended to the
date hereof.
4.2 Authority.
The Investor has the requisite power and authority to execute and deliver
this Agreement and each other Transaction Document to which it is a party, and
to consummate the transactions contemplated hereby and thereby. The execution,
delivery and performance of this Agreement, the other Transaction Documents and
the other agreements, documents and instruments referred to herein and therein,
in each case to which the Investor is a party, and the consummation of the
transactions contemplated hereby and thereby, have been duly authorized by all
necessary action on the part of the Investor and no other proceedings on the
part of the Investor are necessary to authorize this Agreement, any other
Transaction Document or any such other agreement, document or instrument or to
consummate the transactions so contemplated hereby or thereby. This Agreement
and the other Transaction Documents and the other agreements, documents and
instruments referred to herein and therein to which the Investor is a party have
been duly executed and delivered by the Investor and each such document
constitutes a valid and binding obligation of the Investor enforceable against
the Investor in accordance with its respective terms.
4.3 Consents and Approvals; No Violations.
Except for filings, Permits, authorizations, consents and approvals as may
be required under, and other applicable requirements of, the Securities Act,
Exchange Act, applicable foreign
9
<PAGE>
and state securities or blue sky laws, the HSR Act, and applicable state
takeover laws, neither the execution, delivery or performance of this Agreement,
the other Transaction Documents or other agreements, documents or instruments
referred to herein or therein, by the Investor, nor the consummation by the
Investor of the transactions contemplated hereby or thereby will (i) conflict
with or result in any breach of any provision of its Organizational Documents,
(ii) require any filing with, notice to, or Permit, authorization, consent or
approval of, any Governmental Entity (except where the failure to obtain such
permits, authorizations, consents or approvals or to make such filings would not
reasonably be expected to prevent or materially delay the consummation of the
transactions contemplated by this Agreement), (iii) result in a violation or
breach of, require any notice to any party pursuant to, or constitute (with or
without due notice or lapse of time or both) a default (or give rise to any
right of termination, amendment, cancellation or acceleration) under, any of the
terms, conditions or provisions of any Contract to which the Investor or any of
its subsidiaries is a party or by which any of them or any of their properties
or assets may be bound or (iv) violate any Order or Law applicable to the
Investor or any of its properties or assets, except in the case of clauses (iii)
and (iv) for violations, breaches or defaults which could not, individually or
in the aggregate, be reasonably expected to either prevent or materially delay
its ability to perform its obligations hereunder.
4.4 Ownership of the BOSC Debentures.
The lawful owners, of record and beneficially, of the BOSC Debentures are
limited partnerships under common control with the Investor (the "BOSC
----
Debentureholders"). The BOSC Debentureholders have good and marketable title to
- ----------------
such debentures, free and clear of any Liens and the Investor will cause the
transfer of the BOSC Debentures as per the Agreement Letter, in the form
attached hereto as Exhibit 4.4, in accordance with the terms of, and subject to
------------
the conditions set forth in, this Agreement.
4.5 Ownership of Company Common Stock.
As of the date hereof, the Investor does not own of record or beneficially,
and is not the Beneficial Owner of a number of shares of Common Stock which, in
the aggregate, exceeds 1% of the outstanding shares of Common Stock on the date
hereof and, without the consent of the Company, the Investor shall not acquire
or dispose of any shares of Common Stock until after the Closing Date except in
connection with the transactions contemplated in Section 2.1 of this Agreement.
4.6 Brokers.
No broker, investment banker, financial advisor, finder or other person is
entitled to any brokerage, investment banker's, financial advisor's, finder's or
other fee or commission for which the Company will be liable in connection with
the execution of this Agreement by the Investor or the performance by the
Investor of its obligations hereunder, except as otherwise set forth in the Fee
Letter.
10
<PAGE>
4.7 Investment Representations and Warranties.
(a) The Investor is acquiring the Convertible Preferred Stock to be
acquired hereunder for its own account, for investment and not with a view to
the distribution thereof, and without any present intention of distributing the
same.
(b) The Investor understands that the Convertible Preferred Stock has
not been, and will not upon issuance be, registered or qualified under the
Securities Act, or any applicable state securities laws, by reason of its
issuance in a transaction exempt from the registration or qualification
requirements of the Securities Act and such laws, that the Convertible Preferred
Stock and any Conversion Shares must be held indefinitely unless a subsequent
disposition thereof is registered or qualified under the Securities Act and such
laws or is exempt from such registration or qualification, and that the
certificates representing the shares of Preferred Stock will carry appropriate
legends with respect to the foregoing.
(c) The Investor will be an "accredited investor" at the Closing within
the meaning of Rule 501(a) promulgated under the Securities Act.
(d) The Investor (i) has been furnished with or has had access to the
information that such Investor has requested from the Company sufficient to
enable the Investor to evaluate the merits and risks of an investment in the
Convertible Preferred Stock, (ii) has had an opportunity to discuss with, and
ask questions of, management of the Company the intended business and financial
affairs of the Company, and (iii) has generally such knowledge and experience in
business and financial matters so as to enable the Investor to understand and
evaluate the risks of and form an investment decision with respect to its
investment in the Convertible Preferred Stock.
(e) The Investor has no need for liquidity in its investment in the
Convertible Preferred Stock and is able to bear the economic risk of its
investment in the Convertible Preferred Stock and the complete loss of all of
such investment.
(f) The Investor understands that there is no public market for the
Convertible Preferred Stock and that the transferability of the Convertible
Preferred Stock is restricted.
(g) The Investor recognizes that an investment in the Company involves
certain risks, and has taken full cognizance of, and understands all of, the
risk factors related to the purchase of the Convertible Preferred Stock.
ARTICLE V
COVENANTS
5.1 Other Actions.
(a) The Company shall not, and shall cause each Subsidiary not to, take
or omit to take any action, the taking or omission of which would reasonably be
expected to result in (i) any of the representations and warranties of the
Company set forth in this Agreement becoming untrue or inaccurate in any
material respect or (ii) any of the conditions set forth in Article VII
-----------
11
<PAGE>
not being satisfied (subject to the Company's right to take actions specifically
permitted by Section 8.1).
-----------
(b) Without limiting Section 5.1(a), effective at the Effective Time,
--------------
the Company shall file the Statement of Designations with the Secretary of State
of the State of Texas, decrease the size of its board of directors to 13 persons
and cause at least 4 persons designated by the Investors to be added to the
Company's board of directors.
(c) Without limiting Section 5.1(a), the Company shall use its
--------------
commercially reasonable best efforts to obtain the requisite funds required for
the consummation of the transactions contemplated hereby and pursuant to the
Merger Agreement; and to pay the related fees and expenses, all on the terms and
conditions set forth in the Financing Letter or on other terms acceptable to the
Investor and the Company.
(d) The Investor shall not take or omit to take any action, the taking
or omission of which would reasonably be expected to result in (i) any of the
representations and warranties, of the Investor set forth in this Agreement
becoming untrue or inaccurate in any material respect or (ii) any of the
conditions set forth in Article 7 not being satisfied (subject to the Investors
right to take actions specifically permitted by Section 8.1).
(e) The Company shall not amend the employment agreement of any of the
individuals listed on Schedule 5.1(e) without the prior written consent of
---------------
Investor.
(f) the Company will take such action as is necessary to prevent the
acceleration of the vesting of any Company Stock Options or Warrants except
pursuant to the Merger Agreement and except for the acceleration of vesting of
the options of Persons listed on part 4 of Schedule 4.16 of the Merger
Agreement, which Persons are not marked with an asterisk on such Schedule.
5.2 Advice of Changes; Filings.
From the date hereof until the Closing Date, the Company shall confer with
the Investor on a regular basis as reasonably requested by the Investor, report
on operational matters and promptly advise the Investor orally and, if requested
by the Investor, in writing of any material change with respect to the Company
or any Subsidiary. From the date hereof until the Closing Date, the Company
shall promptly after filing provide to the Investor (or its counsel) copies of
all filings made by the Company or any Subsidiary with any Governmental Entity
in connection with this Agreement and the transactions contemplated hereby.
5.3 Financial Information.
From the date hereof until the Closing Date, the Company shall furnish to
the Investor all documents filed with or submitted to the Commission by the
Company during such period promptly after such filing or submission. From the
date hereof until the Closing Date, the Company shall also furnish to the
Investor as soon as available but in any event within 30 days of each calendar
month, the unaudited consolidated and consolidating balance sheets and income
statements of the Company and its Subsidiaries, showing its financial condition
as of the close of such month and the results of operations during such month
and for then elapsed portion of the
12
<PAGE>
Company's fiscal year, in each case, setting forth, to the extent available, the
comparative figures for the corresponding month in the prior fiscal year, the
corresponding elapsed portion of the prior fiscal year and the budget amount for
such month (all to be prepared in accordance with GAAP consistently applied).
5.4 Merger Agreement Covenants.
The Company hereby agrees to perform all its obligations set forth in the
Merger Agreement as if such obligations were set forth herein in their entirety
and such obligations are incorporated herein by reference.
ARTICLE VI
ADDITIONAL AGREEMENTS
6.1 Access to Information.
The Company and its Subsidiaries shall afford to the Investor, and to the
Investor's officers, employees, accountants, counsel, financial advisers and
other representatives, reasonable access during normal business hours from the
date hereof to the Closing Date to all their respective properties, books,
contracts, commitments, personnel and records and, during such period, the
Company shall furnish promptly to the Investor all other information concerning
its business, properties and personnel as the Investor may reasonably request.
6.2 Reasonable Efforts; Notification.
(a) Upon the terms and subject to the conditions set forth in this
Agreement, each of the parties agrees to use all commercially reasonable efforts
to take, or cause to be taken, all actions, and to do, or cause to be done, and
to assist and cooperate with the other parties in doing, all things necessary,
proper or advisable to consummate and make effective, in the most expeditious
manner practicable, the transactions contemplated by this Agreement, including
(i) the obtaining of all necessary actions or non-actions, waivers, consents and
approvals from Governmental Entities and the making of all necessary
registrations and filings (including filings required by the HSR Act) and the
taking of all reasonable steps as may be necessary to obtain an approval or
waiver from, or to avoid an action or proceeding by, any Governmental Entity,
(ii) the obtaining of all necessary consents, approvals or waivers from third
parties, (iii) the defending of any lawsuits or other legal proceedings, whether
judicial or administrative, challenging this Agreement or the consummation of
any of the transactions contemplated by this Agreement, including seeking to
have any stay or temporary restraining order entered by any court or other
Governmental Entity vacated or reversed, (iv) the execution and delivery of any
additional instruments necessary to consummate the transactions contemplated by,
and to fully carry out the purposes of, this Agreement and the other Transaction
Documents and (v) subject to the execution of appropriate confidentiality
agreements, reasonably cooperating with all potential sources of financing to
the Investor in connection with the transactions contemplated by this Agreement,
and the taking of all reasonable steps as may be necessary or advisable to
consummate one or more financing transactions with such potential sources of
financing, including participating in "road shows" with respect to the issuance
of securities in one or more
13
<PAGE>
private placements or transactions registered under the Securities Act. In
connection with and without limiting the foregoing, the Company and its Board of
Directors shall (i) take all action necessary to ensure that no "fair price,"
"moratorium," "control share acquisition" or other similar or antitakeover
statute or similar statute or regulation enacted under applicable Law is or
becomes applicable to this Agreement or any other transactions contemplated by
this Agreement and (ii) if any such statute or regulation becomes applicable to
any transaction contemplated by this Agreement, take all action reasonably
necessary to ensure that the transactions contemplated by this Agreement may be
consummated as promptly as practicable on the terms contemplated by this
Agreement and otherwise to minimize the effect of such statute or regulation on
this Agreement and the transactions contemplated by this Agreement. Nothing in
this Agreement shall be deemed to require the Investor to dispose of or hold
separate any asset or collection of assets.
(b) The Company shall give prompt notice to the Investor of (i) any
representation or warranty made by it contained in this Agreement becoming
untrue or inaccurate in any material respect or (ii) the failure by it,
including its failure to cause a Subsidiary, to comply with or satisfy in any
material respect any covenant, condition or agreement to be complied with or
satisfied by it or any Subsidiary under this Agreement; provided, however, that
-------- -------
no such notification shall affect the representations, warranties, covenants or
agreement of the parties or the conditions to the obligations of the parties
under this Agreement.
(c) The Investor shall give prompt notice to the Company of (i) any
representation or warranty made by it contained in this Agreement becoming
untrue or inaccurate in any material respect or (ii) the failure by it to comply
with or satisfy in any material respect any covenant, condition or agreement to
be complied with or satisfied by it under this Agreement; provided, however,
-------- -------
that no such notification shall affect the representations, warranties,
covenants or agreements of the parties or the conditions to the obligations of
the parties under this Agreement.
6.3 Fees and Expenses.
(a) Except as otherwise provided in this Agreement or as otherwise
agreed to by the parties hereto in writing, all fees and expenses incurred in
connection with this Agreement and the transactions contemplated by this
Agreement shall be paid by the party incurring such fees or expenses, whether or
not the transactions contemplated by this Agreement are consummated.
(b) If a Payment Event shall occur at any time, then, within five
business days following such Payment Event, the Company shall pay to the
Investor a fee in an amount equal to $3.75 million (the "Termination Fee") and
---------------
shall reimburse the Investor for the Investor's Expenses not previously
reimbursed.
(c) If an Expense Reimbursement Event shall occur at any time, then,
within five business days following such Expense Reimbursement Event, the
Company shall reimburse the Investor for the Investor's Expenses not previously
reimbursed.
14
<PAGE>
(d) If the transactions contemplated by this Agreement are consummated,
the Company shall reimburse the Investor for all of the Investor's Expenses,
such reimbursement to occur at the Closing by wire transfer of immediately
available funds.
(e) Notwithstanding anything to the contrary set forth in this
Agreement, if this Agreement shall have been terminated by the Investor for any
reason and at the time of termination this Agreement could have been terminated
pursuant to more than one subsection of Section 8.1 and could not have
-----------
terminated by the Company pursuant to Section 8.1, then the Investor shall be
-----------
entitled to choose which such subsection this Agreement shall have been
terminated pursuant to.
(f) The Company acknowledges that the agreements contained in this
Section 6.3 are an integral part of the transactions contemplated by this
- -----------
Agreement and that, without these agreements, the Investor would not enter into
this Agreement. Accordingly, if the Company fails to pay the Termination Fee or
the Investor's Expenses when due and, in order to obtain such payment, the
Investor commences a suit which results in a judgment against the Company for
the Termination Fee and/or the Investor's Expenses, the Company shall pay to the
Investor all reasonable out-of-pocket costs and expenses (including reasonable
attorneys fees and expenses) paid by or on behalf of the Investor to a Third
Party in connection with such suit, together with interest on the amount of the
Termination Fee and the Investor's Expenses that are the subject of such
judgment at the prime rate as set by Chase Manhattan Bank in effect on the date
such payment was required to be made.
(g) In the event that any Termination Fee and related Investor's
Expenses are paid by the Company to the Investor hereunder, the Termination Fee
and related Investor's Expenses shall be the sole and exclusive remedy of the
Investor for claims related to, based on or arising out of this Agreement, the
Merger Agreement, the subject matter hereof or thereof or the transactions
contemplated herein or therein.
6.4 Public Announcements.
The Investor, on the one hand, and the Company, on the other hand, will
consult with each other before issuing, and provide each other the opportunity
to review and comment upon, any press release or other public statements with
respect to the transactions contemplated by this Agreement and shall not issue
any such press release or make any such public statement without the prior
consent of the other party, except to the extent required by applicable Law or
on the advice of legal counsel that such press release or public statement is
required under applicable Law or the rules of any national securities exchange.
6.5 NYSE.
The Company shall use its commercially reasonable best efforts to obtain
prior to Closing the approval for listing on the New York Stock Exchange
("NYSE"), effective upon official notice of issuance, of the Conversion Shares
----
(without any modification of the terms of the Convertible Preferred Stock as set
forth in the Statement of Designations). The Company shall consult and
cooperate with the Investor and its counsel in performing its obligations under
this Section 6.5. The Company and its advisors will not engage in any
-----------
substantive discussions or
15
<PAGE>
otherwise communicate in writing with the NYSE or any of its agents or
representatives with respect to the transactions contemplated by the Transaction
Documents without the prior written consent of the Investor. The Investor agrees
to cooperate and assist the Company in connection with the foregoing.
6.6 Securities and Exchange Commission.
The Company and its advisors will not engage in any substantive discussions
or otherwise communicate in writing with the Commission or any of its agents or
representatives with respect to the transactions contemplated by the Transaction
Documents without the prior written consent of the Investor. The Investor
agrees to cooperate and assist the Company in connection with the foregoing.
6.7 Use of Proceeds.
The Company shall use all the proceeds received from the sale of the
Convertible Preferred Stock pursuant to this Agreement to fund the conversion of
Common Stock into cash and the purchase of options pursuant to the Merger
Agreement, or to the extent that the entirety of the $150,000,000 received
pursuant hereto is not used to effect such conversion, for the repayment of all
or part of any Indebtedness of the Company or any of its Subsidiaries or for the
purchase of shares of Common Stock, so long as the purchase price paid for such
shares is less than the Conversion Price (as defined in the Statement of
Designations), and provided that the Company will not purchase any shares from
any Person that is an officer or employee of the Company, if such purchase would
reduce such Person's ownership of Common Stock Equivalents below 50% of the
level of such Person's ownership as of the date hereof.
6.8 Merger Agreement.
(a) The Company shall not amend, waive or supplement any provision of
the Merger Agreement without the prior written consent of the Investor.
(b) The Company shall promptly deliver to the Investor any notices
delivered by the Company or received by the Company in connection with the
Merger Agreement.
6.9 Confidentiality.
The Parties will hold any such information which is nonpublic in confidence
in accordance with the terms of the Confidentiality Agreement, dated May 27,
1999, and accepted June 1, 1999, between the Company and Apollo Management IV,
L.P., (the "Confidentiality Agreement"), and in the event of termination of this
-------------------------
Agreement for any reason each party will promptly comply with the terms of the
Confidentiality Agreement.
16
<PAGE>
ARTICLE VII
CONDITIONS
7.1 Conditions to Each Party's Obligation.
The respective obligations of each party to consummate the transactions
contemplated by Section 2.1 are subject to the prior satisfaction or waiver,
-----------
where permissible, of the following conditions:
(a) No statute, rule, regulation, executive order, decree or injunction
shall have been enacted, entered, promulgated or enforced by any court or
Governmental Entity that prohibits or restricts the consummation of the
transactions contemplated by this Agreement or the other Transaction Documents
or makes such consummation illegal (each party agreeing to use commercially
reasonable efforts to have any such prohibition lifted).
(b) The waiting period applicable to the consummation of the
transactions contemplated by this Agreement under the HSR Act shall have expired
or been terminated.
(c) The conditions set forth in the Financing Letter shall have been
satisfied or waived and the funding referred to therein shall be available to
the Company on terms and conditions and in such amounts satisfactory to the
Investor and the Company.
(d) The Common Stock (including the Conversion Shares) shall have been
approved for listing on the NYSE.
(e) There shall exist no default under any material indebtedness of
either BOSC or the Company.
7.2 Conditions to the Company's Obligations.
The obligation of the Company to consummate the transactions contemplated
by Section 2.1 are subject to the prior satisfaction or waiver of the following
-----------
conditions:
(a) All of the representations and warranties of the Investor set forth
in this Agreement shall be true and correct in all material respects (except for
those representations and warranties that are qualified as to materiality, which
shall be true and correct in all respects and except for those representations
and warranties that speak as of a specific time, which shall be true and correct
as of such time) as of the Closing Date as though made on and as of such time,
and the Investor shall have performed in all material respects all covenants and
agreements (except for the payment of cash and the delivery of the BOSC
Debentures, which shall be
17
<PAGE>
performed in all respects, without regard to materiality) required to be
performed by it under this Agreement at or prior to the Closing Date and the
Company shall have received a certificate signed by an executive officer of the
Investor to the foregoing effect.
(b) All of the conditions to the obligations of the Company and BOSC to
consummate the merger contemplated in the Merger Agreement (the "Merger")
------
capable of being satisfied prior to the consummation of this Agreement shall
have been satisfied to the Company's reasonable satisfaction, unless the failure
------
to consummate the Merger is due to a breach by the Company of the Merger
Agreement.
(c) The Company shall have been provided with a certificate from an
officer of the Investor certifying that the conditions precedent to the
Company's obligations set forth in this Section shall have been satisfied.
(d) The Company shall have obtained financing pursuant to the term sheet
attached as an exhibit to the Financing Letter on such other terms reasonably
acceptable to the Company.
(e) Neither the Company nor BOSC shall be required by any Governmental
Entity to divest any material portion of its business in connection with the
consummation of the Merger or as a condition to the effectiveness of the Merger.
(f) All notices required to be given prior to the Closing Date with, and
all consents, approvals, authorizations, waivers and amendments required to be
obtained prior to the Closing Date from, any Third Party in connection with the
consummation by the Company and the Investor of the transactions contemplated by
this Agreement have been made and/or obtained, except in the case of a Third
Party other than a Governmental Entity, the failure to give such notice or
obtain such consent, approval, authorization, waiver or amendment would not be
likely to have a Material Adverse Effect on the Company.
7.3 Conditions to the Investor's Obligations.
The obligations of the Investor to consummate the transactions contemplated
by Section 2.1 are subject to the prior satisfaction or waiver by the Investor
-----------
of the following conditions:
(a) All of the representations and warranties of the Company set forth
in this Agreement shall be true and correct as of the Closing Date as though
made on and as of such time except to the extent that the failure to be true and
correct has not had and could not reasonably be expected to have, in the
aggregate, an adverse effect on the Company and its Subsidiaries, taken as a
whole, that a reasonably prudent investor in the Investor's position would
consider material relative to the investment to be made by the Investor pursuant
to this Agreement (except for those representations and warranties that are
qualified as to materiality, which shall be true and correct in all respects,
and except for those representations and warranties that speak as of a specific
time, which shall be true and correct as of such time), and the Company shall
have performed in all material respects all covenants and agreements (except for
the obligation to deliver the certificates representing the Convertible
Preferred Stock, which shall be performed in all respects, without regard to
materiality) required to be performed by it
18
<PAGE>
under this Agreement at or prior to the Closing Date (it being understood that
any such breach may be cured to the extent permitted by Section 8.1(d)). The
--------------
Investor shall have received a certificate signed by an executive officer of the
Company to the foregoing effect.
(b) All of the conditions set forth in the Merger Agreement that are
capable of being satisfied prior to the consummation of this Agreement shall
have been satisfied to the Investor's reasonable satisfaction.
(c) All notices required to be given prior to the Closing Date with, and
all consents, approvals, authorizations, waivers and amendments required to be
obtained prior to the Closing Date from, any Third Party in connection with the
consummation by the Company of the transactions contemplated by this Agreement
have been made and/or obtained, except in the case of a Third Party other than a
Governmental Entity, the failure to give such notice or obtain such consent,
approval, authorization, waiver or amendment would not be likely to have a
Material Adverse Effect on the Investor.
(d) The Investor shall have been provided with an opinion of Bracewell &
Patterson, counsel to the Company, or the general counsel of the Company, as to
the matters set forth in Exhibit 7.3(d).
--------------
(e) The Company and the Investor shall have executed the Investor's
Rights Agreement, a form of which is attached hereto as Exhibit A (the
---------
"Investor's Rights Agreement"), and a Fee Letter, a form of which is attached
---------------------------
hereto as Exhibit C (the "Fee Letter"), and the Company shall have performed all
--------- ----------
of its obligations required to be performed at or prior to the Closing pursuant
to the Investor's Rights Agreement and the Fee Letter.
(f) The Company shall have filed the Statement of Designations,
substantially in the form of Exhibit B, with the Secretary of State of the State
---------
of Texas.
(g) The holders of BOSC capital stock representing two-thirds of the
shares described on Schedule 7.3(g), each of which have previously executed an
---------------
agreement with respect to the retention of such BOSC shareholder's shares of
BOSC capital stock (each, a "BOSC Share Retention Agreement"), shall have
------------------------------
executed an amended BOSC Share Retention Agreement pursuant to which such
shareholder agrees that any shares of Common Stock such shareholder receives in
connection with the Merger (the "Merger Shares") shall be subject to the same
-------------
restrictions on transfer as set forth in the BOSC Share Retention Agreement;
provided, however, that (i) notwithstanding anything in this Agreement to the
- -------- -------
contrary, the right of the Investor not to consummate the transactions
contemplated in this Agreement and to terminate this Agreement because of a
failure of the Company to satisfy the condition set forth in this Section 7.2(g)
must be exercised by the Investor in writing by 11:59 p.m. on the date (the
"Condition Termination Date") that is 14 days after receipt thereby of written
--------------------------
notice from the Company that the Company is ready to file the first draft of the
S-4 (as defined in the Merger Agreement) with the Commission (it being
understood that the Company agrees to withhold filing of the S-4 until the
expiration of such 14 day period), and (ii) if the Company does not receive a
written notice from the Investor that it will not consummate the transactions
contemplated in the Agreement and is terminating the Agreement because the
Company has failed to satisfy the condition set forth in Section 7.2(g) on or
prior to the Condition Termination Date, all rights of the Investor not to
19
<PAGE>
consummate the transactions contemplated in the Agreement and to terminate the
Agreement because the condition set forth in Section 7.2(g) has not been
satisfied shall terminate and be of no further force or effect.
(h) Since June 30, 1999 there shall have been no development, change or
effect that is likely to have a Material Adverse Effect on the Company and its
Subsidiaries, taken as a whole.
(i) There shall have been no changes (i) with respect to the employment
by the Company of J. Patrick Millinor, Jr., Donald L. Luke, Chester J.
Jachimiec, Darren B. Miller or Alfred R. Roach, Jr. or (ii) with respect to the
employment by the Company or by BOSC of Joseph Ivey, William Love or Michael
Sullivan that are not satisfactory to the Investor.
(j) The Investor shall have been provided with a certificate from an
officer of the Company certifying that the conditions precedent to the
Investor's obligations set forth in this Section have been satisfied.
(k) The Company shall have obtained financing pursuant to the term sheet
attached as an exhibit to the Financing Letter on terms reasonably acceptable to
Investor.
(l) Neither the Company nor BOSC shall be required by any Governmental
Entity to divest any material portion of its business in connection with the
consummation of the Merger or as a condition to the Effectiveness of the Merger.
ARTICLE VIII
TERMINATION AND AMENDMENT
8.1 Termination.
This Agreement may be terminated at any time prior to the Closing Date as
follows:
(a) By mutual written consent of the Investor and the Company.
(b) By either the Investor or the Company if the Closing Date shall not
have occurred on or before March 31, 2000 (the "Outside Date"); provided that
------------
the right to terminate this Agreement under this Section 8.1(b) shall not be
--------------
available to any party whose breach of any representation, warranty or covenant
under this Agreement has been the cause of or resulted in the failure of the
Closing Date to occur on or before such date.
(c) By either the Investor or the Company if any Governmental Entity
shall have issued an Order permanently enjoining, restraining or otherwise
prohibiting the issuance of the Convertible Preferred Stock, the consummation of
the transactions contemplated by the Merger Agreement, and such Order or other
action shall have become final and nonappealable.
(d) By the Investor, if (i) any of the representations and warranties of
the Company contained in this Agreement shall fail to be true and correct in any
material respect when made or have become untrue or incorrect except to the
extent that the failure to be true and
20
<PAGE>
correct has not had and could not reasonably be expected to have, in the
aggregate, an adverse affect on the Company and its Subsidiaries, taken as a
whole, that a reasonably prudent investor in the Investor's position would
consider material relative to the transactions to be consummated by the Investor
pursuant to this Agreement, (ii) the Company shall have breached or failed to
comply in any material respect with any of its obligations under this Agreement,
and such breach or failure shall continue unremedied for 15 days after the
Company has received written notice from the Investor of the occurrence of such
breach or failure; provided, however, that in remedying any such breach or
-------- -------
failure the Company shall not have spent any money, incurred any liabilities or
undertaken any obligations which expenditure, incurrence or undertaking,
individually or together with the breach or failure so remedied, would itself
constitute a material breach of or failure to perform any, representation,
warranty or covenant of this Agreement, (iii) the Company shall have terminated
the Merger Agreement pursuant to Section 7.1(g)(i) thereof, (iv) the Company
shall have breached or failed to comply in any material respect with any of its
obligations under the Merger Agreement and such breach or failure results in the
termination of the Merger Agreement, (v) the shareholders of the Company shall
not have approved the transactions contemplated by the Merger Agreement;
provided, however, that the right to terminate this Agreement under this Section
- -------- -------
8.1(d)(v) shall not be available to the Investor if the Investor's breach of any
representation, warranty or covenant under this Agreement has been the cause of
the failure of the shareholders to not approve the transactions contemplated by
the Merger Agreement or (vi) if the Company or BOSC shall have terminated the
Merger Agreement.
(e) By the Investor if there shall have occurred any material adverse
change since June 30, 1999.
(f) By the Company if (i) any of the representations and warranties of
the Investor contained in this Agreement shall fail to be true and correct in
any material respect, in each case either as of the date hereof or have since
become, and at the time of termination remain, untrue in any material respect,
(ii) the Investor shall have breached or failed to comply in any material
respect with any of its obligations under this Agreement (other than as a result
of a breach by the Company of any of its obligations under this Agreement) and
such failure to be true and correct, breach or failure shall continue unremedied
for 15 days after the Investor has received written notice from the Company of
the occurrence of such breach or failure, (iii) BOSC shall have terminated the
Merger Agreement.
8.2 Effect of Termination.
In the event of a termination of this Agreement by either the Company or
the Investor as provided in Section 8.1, this Agreement shall forthwith become
-----------
void and there shall be no liability or obligation on the part of the Investor
or the Company or their respective officers, directors or Affiliates, except
that Section 6.3, Section 6.4, Section 6.8, Section 8.1, this Section 8.2 and
----------- ----------- ----------- ----------- -----------
Article IX shall survive any such termination and except that nothing herein
- ----------
shall relieve any party for liability for any breach hereof.
21
<PAGE>
ARTICLE IX
MISCELLANEOUS
9.1 Amendment.
This Agreement may not be amended except by an instrument in writing signed
on behalf of all of the parties.
9.2 Extension; Waiver.
At any time prior to the Closing Date, the parties hereto, by action taken
or authorized by their respective Boards of Directors, may, to the extent
legally allowed, (i) extend the time for the performance of any of the
obligations or other acts of the other parties hereto, (ii) waive any
inaccuracies in the representations and warranties contained herein or in any
document delivered pursuant hereto or (iii) waive compliance with any of the
agreements or conditions applicable to such party contained herein. Any
agreement on the part of a party hereto to any such extension or waiver shall be
valid only if set forth in a written instrument signed on behalf of such party.
The failure of any party to this Agreement to assert any of its rights under
this Agreement or otherwise shall not constitute a waiver of those rights.
9.3 Survival of Representations, Warranties and Agreements, Limitation on
Liability.
The representations, warranties and covenants contained in this Agreement
or in any instrument delivered pursuant to this Agreement shall survive the
execution and delivery of this Agreement until 30 days after the delivery to the
Investor of the Company's audited financial statements for the twelve months
ending December 31, 2001 and may be relied upon by any permitted subsequent
holder of Convertible Preferred Stock, regardless of any investigation made by
or on behalf of the Investors or any other holder of Convertible Preferred Stock
at any time.
9.4 Notices.
All notices and other communications hereunder shall be in writing and
shall be deemed given if delivered personally, telecopied (which is confirmed),
sent by overnight courier (providing proof of delivery) or mailed by registered
or certified mail (return receipt requested) to the parties at the following
addresses (or at such other address for a party as shall be specified by like
notice):
if to the Investor, to:
BOSS II, LLC
c/o Apollo Management, L.P.
1301 Avenue of the Americas, 38th Floor
New York, New York 10019
Attention: Mr. Andrew Africk
Telecopy No.: (212) 515-3262
22
<PAGE>
with a copy to:
O'Sullivan Graev & Karabell, LLP
30 Rockefeller Plaza, 24th Floor
New York, New York 10112
Attention: John M. Scott, Esq.
Telecopy No.: (212) 728-5950
and, if to the Company, to:
Group Maintenance America, Corp.
8 Greenway Plaza, Suite 1500
Houston, Texas 77046
Attn: Chief Executive Office
Telecopy No.: (713) 626-4766
with a copy to:
Bracewell & Patterson
711 Louisiana, Suite 2900
Houston, Texas 77002
Attention: John L. Bland, Esq.
Telecopy No.: (713) 221-1212
9.5 Indemnification.
(a) The Company hereby agrees to indemnify and hold harmless the
Investor and its Affiliates, partners, officers, directors, employees, agents
and representatives (each, an "Indemnified Party") against any (i) losses,
-----------------
liabilities or damages other than those that result from or relate to a
Proceeding by any Third Party (including derivative actions brought through or
in the name of the Company), or (ii) losses, liabilities or damages resulting
from or relating to a Proceeding by any third party (including derivative
actions brought through or in the name of the Company), in the case of clause
(i) and (ii) of this Section 9.5(a), in connection with any breach of the
representations and warranties or the covenants made by the Company in this
Agreement, the Investor's Rights Agreement, or any other document or instrument
entered into by the Investor in connection with the transactions contemplated
hereby or thereby.
Notwithstanding anything in this Section 9.5 to the contrary, no
Indemnified Party shall have any right to collect any consequential or punitive
damages from the Company pursuant to Section 9.5(a)(i) above.
(b) Except as set forth in Section 6.3 of this Agreement, the rights set
forth in this Section 9.5 shall be the sole and exclusive remedy of the Investor
for claims related to, based on or arising out of this Agreement, the subject
matter hereof or the transactions contemplated herein; provided, however, that
-------- -------
if a Termination Fee and related Investor's Expenses are paid by the Company to
the Investor pursuant to Section 6.3 of this Agreement, the indemnification
rights contained in this Section 9.5 shall automatically terminate and the
payment of such
23
<PAGE>
Termination Fee and related Investor's Expenses shall be the sole and exclusive
remedy of the Investor for such claims.
(c) With respect to Section 9.5(a)(ii), the Indemnified Party shall give
prompt notice to the Company 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 9.5(c) shall relieve the Company of its
obligations under this Section 9.5 only to the extent that the Company has been
prejudiced by the lack of timely and adequate notice (except that the Company
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 Company, 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.
(d) With respect to any claim under Section 9.5(a)(ii), the Company
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
under this Agreement if it has agreed irrevocably to indemnify the Indemnified
Parties, provided that an Indemnified Party shall at all times have the right,
at such Indemnified Party's option, to participate fully therein, provided,
--------
further, that the Company shall not be entitled to assume the defense or
- -------
settlement if any of the Indemnified Parties reasonably determines it has
defenses that are inconsistent with the Company's defenses to such claims. In
the event the Company does not proceed diligently to defend the third-party
claim, suit, action or proceeding within 10 days after receipt of written notice
by an Indemnified Party of such third-party claim, suit, action or proceeding,
the Indemnified Party shall have the right, but not the obligation, to undertake
the defense of any such third-party claim, suit, action or proceeding and in
such event the Company shall have the right to participate at its own expense.
(e) With respect to any claim under Section 9.5(a)(ii), the Company
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 Company (which
consent shall not be unreasonably withheld or delayed), provided, further,
-------- -------
neither the Company nor any Indemnified Party may enter into any settlement of a
third party Claim if such settlement (i) has any non-cash component that
purports to apply to the other side or (ii) any cash component that is not being
paid by the party entering into such settlement.
(f) 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 Company 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.
24
<PAGE>
9.6 Interpretation.
When a reference is made in this Agreement to an Article or a Section, such
reference shall be to an Article or a Section of this Agreement unless otherwise
indicated. The table of contents and headings contained in this Agreement are
for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement. Unless the context otherwise requires, words
importing the singular shall include the plural, and vice versa. Whenever the
words "include", "includes" or "including" are used in this Agreement, they
------- -------- ---------
shall be deemed to be followed by the words "without limitation". The phrase
------------------
"made available" in this Agreement shall mean that the information referred to
- ---------------
has been made available if requested by the party to whom such information is to
be made available. As used in this Agreement, the term "subsidiary" of any
----------
person means another person, an amount of the voting securities, other voting
ownership or voting partnership interests of which is sufficient to elect at
least a majority of its Board of Directors or other governing body (or, if there
are no such voting interests, 50% or more of the equity interests of which) is
owned directly or indirectly by such first person. As used in this Agreement,
"Material Adverse Effect" means, when used in respect of the Company and its
- ------------------------
Subsidiaries, any effect or condition that, individually or in the aggregate
with any other effect or condition, is materially adverse to the assets,
properties, business, financial condition, results of operations of the Company
and its Subsidiaries, taken as a whole. As used in this Agreement, "material
--------
adverse change" means, when used in respect of the Company and its Subsidiaries,
- --------------
any change or event that, individually or in the aggregate with any other change
or event, is materially adverse to the assets, properties, business, financial
condition or results of operations of the Company and its Subsidiaries, taken as
a whole. As used in this Agreement, except where expressly indicated otherwise,
the phrase "knowledge" with respect to the Company, means to the actual
---------
knowledge, after due inquiry (i.e., the amount of inquiry that would be
----
undertaken by a reasonably prudent business person given like facts and
circumstances) of each of the Company's directors and officers. As used in this
Agreement, the term "person" shall be interpreted broadly and shall include any
person, individual, corporation, limited partnership, limited liability company,
trust, association or other entity or business organization of any kind or
division thereof.
9.7 Entire Agreement; Third Party Beneficiaries.
This Agreement (a) constitutes the entire agreement and supersedes all
prior agreements and understandings, both written and oral, among the parties
with respect to the subject matter hereof, and (b) is not intended to confer
upon any person other than the parties hereto any rights or remedies hereunder.
9.8 Governing Law.
This Agreement shall be governed and construed in accordance with the laws
of the State of New York without regard to the conflicts of laws principles
thereof.
9.9 Counterparts.
This Agreement may be executed in two or more counterparts, all of which
shall be considered one and the same agreement and shall become effective when
two or more
25
<PAGE>
counterparts have been signed by each of the parties and delivered to the other
parties, it being understood that all parties need not sign the same
counterpart.
9.10 Assignment.
Neither this Agreement nor any of the rights, interests or obligations
hereunder shall be assigned by any party hereto (whether by operation of law or
otherwise) without the prior written consent of the other party; provided, that
--------
an Investor may assign its rights, interests and obligations to an Affiliate
without the consent of the Company. Subject to the preceding sentence, this
Agreement will be binding upon, inure to the benefit of and be enforceable by
the parties and their respective successors and permitted assigns.
9.11 Enforcement.
The parties agree that irreparable damage would occur in the event that
any of the provisions of this Agreement were not performed in accordance with
their specific terms or were otherwise breached. It is accordingly agreed that
the parties shall be entitled to an injunction or injunctions to prevent
breaches of this Agreement and to enforce specifically the terms and provisions
of this Agreement in any court of the United States located in the State of New
York or in a State court located in the City of New York, this being in addition
to any other remedy to which they are entitled at law or in equity. In addition,
each of the parties hereto irrevocably and unconditionally (i) consents to
submit such party to the personal jurisdiction of any such Federal or State
court if any dispute arises out of this Agreement or any of the transactions
contemplated hereby, (ii) agrees that such party will not attempt to deny or
defeat such personal jurisdiction by motion or other request for leave from any
such court, (iii) agrees that such party will not bring any action relating to
this Agreement or any of the transactions contemplated hereby in any court other
than a Federal court sitting in the state of New York or a New York State court
located in the City of New York and (iv) waives any right to trial by jury with
respect to any claim or proceeding related to or arising out of this Agreement
or any of the transactions contemplated hereby.
26
<PAGE>
IN WITNESS WHEREOF, the Investor and the Company have caused this
Agreement to be signed by their respective officers thereunto duly authorized as
of the date first written above.
BOSS II, LLC
By: /s/ Andrew Africk
-------------------
Name: Andrew Africk
Title: Manager
GROUP MAINTENANCE AMERICA CORP.
By: /s/ J. Patrick Millinor, Jr.
------------------------------
Name: J. Patrick Millinor, Jr.
Title: Chief Executive Officer
<PAGE>
DEBENTURE SIDE LETTER AGREEMENT
APOLLO INVESTMENT FUND IV, L.P.
APOLLO OVERSEAS PARTNERS IV, L.P.
c/o Apollo Management, L.P.
1301 Avenue of the Americas, 38th Floor
New York, New York 10019
November 2, 1999
Group Maintenance America Corp.
8 Greenway Plaza, Suite 1500
Houston, Texas 77046
Attention: Mr. Rick Millinor, Chief Executive Officer
Building One Services Corporation
10 Cheshire Lane, Suite 210
Minnetonka, MN 55305
Attention: Mr. Joseph Ivey, President and Chief Executive Officer
Dear Messrs. Millinor and Ivey:
Reference is made to the Subscription and Exchange Agreement dated as of the
date hereof (the "Subscription Agreement") between Group Maintenance America
Corp. (the "Company") and BOSS II, LLC (the "Investor"), concerning the purchase
of the Company's 7 1/4 % Convertible Preferred Stock (the "Convertible Preferred
Stock") by the Investor. Capitalized terms defined in the Subscription Agreement
shall have the same meaning when used herein.
This letter is to confirm that Apollo Investment Fund IV, L.P. and
Apollo Overseas Partners IV, L.P. (together, the "BOSC Debentureholders"), are
---------------------
the lawful owners, of record and beneficially, of the BOSC Debentures and that
the BOSC Debentureholders are limited partnerships under common control with the
Investor.
The BOSC Debentureholders have good and marketable title to the BOSC
Debentures, free and clear of any Liens and will transfer the BOSC Debentures to
the Company, free and clear of any Liens, upon a Closing of the Subscription
Agreement in accordance with the terms thereof, and subject to the conditions
set forth therein.
As of the date hereof, the BOSC Debentureholders do not own of record
or beneficially, and are not the Beneficial Owner of a number of shares of
Common Stock which, in the aggregate, exceeds 1% of the outstanding shares of
Common Stock on the date hereof and, without the consent of the Company, the
BOSC Debentureholders shall not acquire or dispose of
<PAGE>
any shares of Common Stock until after the Closing Date except in connection
with the transactions contemplated in Section 2.1 of Subscription Agreement.
No broker, investment banker, financial advisor, finder or other
person is entitled to any brokerage, investment banker's, financial advisor's,
finder's or other fee or commission for which the Company will be liable in
connection with the execution of the Subscription Agreement by the Investor or
the performance by the Investor of its obligations thereunder, except as
otherwise set forth in the Fee Letter.
Each of the BOSC Debentureholders is an "accredited investor" within
the meaning of Rule 501(a) promulgated under the Securities Act.
By their execution of this letter, the BOSC Debentureholders hereby
waive any and all rights they may have pursuant to the Indenture dated as of
April 30, 1999, by and between Building One Services Corporation and United
States Trust Company of New York arising as a result of the execution of, or
performance in accordance with their terms or, the Subscription Agreement and
the Merger Agreement.
APOLLO INVESTMENT FUND IV, L.P. APOLLO OVERSEAS PARTNERS IV, L.P.
By: Apollo Advisors IV, L.P. By: Apollo Advisors IV, L.P.
By: Apollo Capital Management IV, Inc. By: Apollo Capital Management IV, Inc.
By: /s/ Andrew Africk By: /s/ Andrew Africk
---------------------- ----------------------
Name: Andrew Africk Name: Andrew Africk
Title: Vice President Title: Vice President
<PAGE>
AGREEMENT AND PLAN OF MERGER
Dated as of November 2, 1999
by and between
Group Maintenance America Corp.
and
Building One Services Corporation
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page (s)
ARTICLE I THE MERGER
<C> <S> <C>
Section 1.1 The Merger...................................................... 1
Section 1.2 Closing......................................................... 2
Section 1.3 Effects of the Merger........................................... 2
Section 1.4 Articles of Incorporation and Bylaws............................ 3
Section 1.5 Directors....................................................... 3
Section 1.6 Officers........................................................ 3
<CAPTION>
ARTICLE II CONVERSION OF SECURITIES
<C> <S> <C>
Section 2.1 Conversion of Capital Stock..................................... 4
Section 2.2 Effect of Merger on Delaware Common Stock....................... 4
Section 2.3 Exchange of Delaware Company Stock Certificates................. 6
Section 2.4 Texas Company Eligible Shares................................... 11
Section 2.5 Manner of Conversion of Texas Company Eligible Shares into Cash;
Limitations Thereon............................................. 11
Section 2.6 Surrender of Texas Company Stock Certificates and Payment....... 15
<CAPTION>
ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE DELAWARE COMPANY
<C> <S> <C>
Section 3.1 Due Incorporation, Etc.......................................... 17
Section 3.2 Qualification as Foreign Entities............................... 17
Section 3.3 Capital Stock................................................... 18
Section 3.4 Capitalization of the Delaware Company Subsidiaries............. 19
Section 3.5 Ownership of Equity Interests................................... 19
Section 3.6 Corporate Power and Authority................................... 19
Section 3.7 No Conflicts or Consents........................................ 20
Section 3.8 SEC Reports and Financial Statements............................ 21
Section 3.9 Information in Disclosure Documents and Registration Statement.. 22
Section 3.10 Litigation...................................................... 23
Section 3.11 No Material Adverse Change...................................... 23
Section 3.12 Taxes........................................................... 24
Section 3.13 Vote Required................................................... 26
Section 3.14 Opinion of Financial Advisor.................................... 26
Section 3.15 Change in Control Provisions.................................... 26
Section 3.16 Undisclosed Material Liabilities................................ 26
Section 3.17 Employee Benefit Plans.......................................... 27
Section 3.18 Licenses and Registration....................................... 29
Section 3.19 Compliance with Laws............................................ 30
Section 3.20 Environmental Matters........................................... 30
Section 3.21 Labor Matters................................................... 32
Section 3.22 State Takeover Statutes......................................... 32
Section 3.23 Ownership of Texas Company Common Stock......................... 33
Section 3.24 General......................................................... 33
<CAPTION>
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE TEXAS COMPANY
<C> <S> <C>
Section 4.1 Due Incorporation, Etc.......................................... 34
Section 4.2 Qualification as Foreign Entities............................... 35
</TABLE>
-i-
<PAGE>
<TABLE>
<C> <S> <C>
Section 4.3 Capital Stock................................................... 35
Section 4.4 Preferred Stock Agreement....................................... 36
Section 4.5 Capitalization of the Texas Company Subsidiaries................ 36
Section 4.6 Ownership of Equity Interests................................... 36
Section 4.7 Corporate Power and Authority................................... 36
Section 4.8 No Conflicts or Consents........................................ 37
Section 4.9 SEC Reports and Financial Statements............................ 38
Section 4.10 Information in Disclosure Documents and Registration Statement.. 39
Section 4.11 Litigation...................................................... 40
Section 4.12 No Material Adverse Change...................................... 40
Section 4.13 Taxes........................................................... 40
Section 4.14 Vote Required................................................... 41
Section 4.15 Opinion of Financial Advisor.................................... 42
Section 4.16 Change in Control Provisions.................................... 42
Section 4.17 Undisclosed Material Liabilities................................ 42
Section 4.18 Employee Benefit Plans.......................................... 42
Section 4.19 Licenses and Registration....................................... 45
Section 4.20 Compliance with Laws............................................ 45
Section 4.21 Environmental Matters........................................... 45
Section 4.22 State Takeover Statutes......................................... 46
Section 4.23 Labor Matters................................................... 46
Section 4.24 General......................................................... 47
<CAPTION>
ARTICLE V COVENANTS
<C> <S> <C>
Section 5.1 Conduct of Business of the Delaware Company..................... 48
Section 5.2 Conduct of Business of the Texas Company........................ 52
Section 5.3 Commercially Reasonable Best Efforts............................ 56
Section 5.4 Letter of the Delaware Company's Accountants.................... 59
Section 5.5 Letter of the Texas Company's Accountants....................... 59
Section 5.6 Access to Information........................................... 59
Section 5.7 Stock Exchange Listing.......................................... 60
Section 5.8 Employee Benefit Plans.......................................... 60
Section 5.9 Insurance and Indemnity......................................... 66
Section 5.10 Fees and Expenses............................................... 66
Section 5.11 Brokers or Finders.............................................. 67
Section 5.12 No Solicitation................................................. 67
Section 5.13 Texas Company and Delaware Company Shareholder Meetings......... 71
Section 5.14 Rule 145........................................................ 75
Section 5.15 Board Membership and Officers................................... 76
Section 5.16 Takeover Statute................................................ 77
Section 5.17 Tax Matters..................................................... 77
Section 5.18 Notification of Certain Matters................................. 77
Section 5.19 Transition Planning............................................. 77
<CAPTION>
ARTICLE VI CONDITIONS
<C> <S> <C>
Section 6.1 Conditions to Each Party's Obligation To Effect the
Merger.......................................................... 78
Section 6.2 Conditions of Obligations of the Delaware Company............... 80
Section 6.3 Conditions of Obligations of the Texas Company.................. 81
</TABLE>
-ii-
<PAGE>
<TABLE>
<CAPTION>
ARTICLE VII TERMINATION
<C> <S> <C>
Section 7.1 Termination..................................................... 81
Section 7.2 Effect of Termination........................................... 83
Section 7.3 Terms of Payment................................................ 85
Section 7.4 Termination for Costs and Expenses.............................. 86
<CAPTION>
ARTICLE VIII MISCELLANEOUS
<C> <S> <C>
Section 8.1 Survival of Representations, Warranties and Agreements......... 86
Section 8.2 Amendment...................................................... 87
Section 8.3 Extension; Waiver.............................................. 87
Section 8.4 Notices........................................................ 87
Section 8.5 Interpretation................................................. 88
Section 8.6 Counterparts................................................... 88
Section 8.7 Entire Agreement; No Third Party Beneficiaries................. 89
Section 8.8 GOVERNING LAW.................................................. 89
Section 8.9 Specific Performance........................................... 89
Section 8.10 Publicity...................................................... 89
Section 8.11 Assignment..................................................... 89
Section 8.12 Validity....................................................... 90
Section 8.13 Taxes.......................................................... 90
</TABLE>
-iii-
<PAGE>
SCHEDULE OF DEFINED TERMS
<TABLE>
<CAPTION>
Defined Term Page
<S> <C>
162(m) Bonus Plan................................................................... 64
Aggregate Elected Cash Share Number................................................. 14
Agreement........................................................................... 1
Alternative Transaction............................................................. 70
business day........................................................................ 2
Cash Share Election................................................................. 12
Closing............................................................................. 2
COBRA............................................................................... 27
Code................................................................................ 1
Common Stock Trust.................................................................. 9
Confidentiality Agreement........................................................... 60
Contracts........................................................................... 20
Current Employees................................................................... 65
Debentures.......................................................................... 18
Delaware Company Disclosure Schedule................................................ 34
Delaware Company Plan............................................................... 28
Delaware Company.................................................................... 1
Delaware Company Stock Certificates................................................. 4
Delaware Company Common Stock....................................................... 4
Delaware Company Senior Indenture................................................... 80
Delaware Company Excluded Shares.................................................... 5
Delaware Company Superior Proposal.................................................. 75
Delaware Company Determination Notice............................................... 74
Delaware Company Options............................................................ 18
Delaware Company Proxy Statement.................................................... 23
Delaware Company Junior Indenture................................................... 22
Delaware Company Subsequent Determination........................................... 74
Delaware Company SEC Documents...................................................... 21
Delaware Company Per Share Stock Amount............................................. 4
Delaware Company Balance Sheet...................................................... 24
Delaware Company Acquisition Agreement.............................................. 74
Delaware Company Stockholders' Meeting.............................................. 73
Delaware Company Contracts.......................................................... 21
Delaware Company Stock Certificate.................................................. 4
Delaware Company Subsidiary......................................................... 19
Delaware Company Returns............................................................ 24
Delaware Company Environmental Permits.............................................. 30
Delaware Company ERISA Affiliate.................................................... 27
Delaware Company Material Permits................................................... 30
Delaware Company Warrants........................................................... 18
Delaware Company Option Plans....................................................... 18
Delaware Company Multiemployer Plan................................................. 29
Delaware Designees.................................................................. 76
DGCL................................................................................ 1
Directors Option Plan............................................................... 62
</TABLE>
-iv-
<PAGE>
<TABLE>
<S> <C>
Effective Time...................................................................... 2
Elected Cash Share.................................................................. 12
Election Deadline................................................................... 12
Election Form Record Date........................................................... 12
Election Form....................................................................... 12
Employee Benefit Plans.............................................................. 64
Employee Stock Purchase Plan........................................................ 64
Environmental Law................................................................... 31
Equity Rights....................................................................... 18
ERISA............................................................................... 27
Excess Shares....................................................................... 9
Exchange Act........................................................................ 20
Exchange Agent...................................................................... 6
Exchange Fund....................................................................... 7
Executive Committee................................................................. 76
GAAP................................................................................ 21
Governmental Entity................................................................. 20
Group............................................................................... 25
Hazardous Materials................................................................. 31
Hazardous Materials Contamination................................................... 31
HSR Act............................................................................. 20
Investor Designees.................................................................. 76
Investor Rights Agreement........................................................... 26
Joint Designee...................................................................... 76
Law................................................................................. 21
Liens............................................................................... 19
Mailing Date........................................................................ 12
material............................................................................ 33
material adverse effect............................................................. 33
Material Delaware Company Contracts................................................. 51
Material Texas Company Contracts.................................................... 55
Merger.............................................................................. 1
Merger Consideration................................................................ 8
New Financing....................................................................... 56
New Investor........................................................................ 79
NYSE................................................................................ 9
Option Payment Amount............................................................... 14
Option Share Reduction Amount....................................................... 14
Option Waivers...................................................................... 61
Parties............................................................................. 1
Party............................................................................... 1
Payment Fund........................................................................ 15
PBGC................................................................................ 25
Per Share Cash Amount............................................................... 11
Person.............................................................................. 5
Pre-Surrender Dividends............................................................. 8
Preferred Stock Agreement........................................................... 36
Proration Factor.................................................................... 14
Release............................................................................. 31
Requisite Delaware Holder Approvals................................................. 26
</TABLE>
-v-
<PAGE>
<TABLE>
<S> <C>
Requisite Texas Holder Approvals.................................................... 42
Returns............................................................................. 25
S-4................................................................................. 22
SAS................................................................................. 59
SEC................................................................................. 21
Securities Act...................................................................... 20
Stock Performance Plan.............................................................. 63
Subsidiary.......................................................................... 5
Surviving Corporation Common Stock.................................................. 5
Surviving Corporation............................................................... 1
Taxes............................................................................... 25
TBCA................................................................................ 1
Termination Date.................................................................... 82
Termination Fee..................................................................... 84
Texas Company ERISA Affiliate....................................................... 43
Texas Company Balance Sheet......................................................... 41
Texas Company Returns............................................................... 40
Texas Company Multiemployer Plan.................................................... 45
Texas Company Determination Notice.................................................. 72
Texas Company Proxy Statement....................................................... 39
Texas Company Material Permits...................................................... 45
Texas Company Shareholders' Meeting................................................. 71
Texas Company Acquisition Agreement................................................. 72
Texas Company Disclosure Schedule................................................... 48
Texas Company Plan.................................................................. 44
Texas Company Superior Proposal..................................................... 73
Texas Company SEC Documents......................................................... 38
Texas Company Stock Certificate..................................................... 11
Texas Company Contracts............................................................. 37
Texas Company Subsidiary............................................................ 36
Texas Company Environmental Permits................................................. 46
Texas Company Options............................................................... 35
Texas Company Option Plans.......................................................... 35
Texas Company Eligible Share........................................................ 4
Texas Company Common Stock.......................................................... 4
Texas Company Subsequent Determination.............................................. 72
Texas Company Preferred Stock....................................................... 79
Texas Company....................................................................... 1
Texas Designees..................................................................... 76
Third Party......................................................................... 71
Total Eligible Share Number......................................................... 14
</TABLE>
-vi-
<PAGE>
AGREEMENT AND PLAN OF MERGER
----------------------------
This AGREEMENT AND PLAN OF MERGER, dated as of November 2, 1999 (this
"Agreement"), is by and between Group Maintenance America Corp., a Texas
- ----------
corporation (the "Texas Company"), and Building One Services Corporation, a
-------------
Delaware corporation (the "Delaware Company"). As used in this Agreement, the
----------------
term "Party" shall refer to the Texas Company or the Delaware Company,
-----
individually, and the term "Parties" shall refer to the Texas Company and the
-------
Delaware Company, collectively.
WHEREAS, the respective Boards of Directors of the Texas Company and the
Delaware Company have determined that the combination of the Delaware Company
and the Texas Company in a "merger of equals" transaction would be advisable and
beneficial to their respective corporations and equity holders, and that such
transaction is consistent with and in furtherance of such entities' respective
long-term business strategies; and
WHEREAS, for federal income tax purposes, the Merger (as hereinafter
defined) and the exchange of the debentures issued pursuant to the Delaware
Company Junior Indenture (as hereinafter defined) for Texas Company Preferred
Stock (as hereinafter defined) pursuant to the Preferred Stock Agreement (as
hereinafter defined) are intended to qualify as a reorganization under the
provisions of Section 368(a) of the Internal Revenue Code of 1986, as amended
(the "Code");
----
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements set forth herein, each of
the Parties agrees as follows:
ARTICLE I
THE MERGER
Section I.1 The Merger. At the Effective Time (as hereinafter defined)
----------
and upon the terms and subject to the conditions set forth in this Agreement and
the General Corporation Law of the State of Delaware (the "DGCL") and the Texas
----
Business Corporation Act (the "TBCA"), the Delaware Company shall be merged with
----
and into the Texas Company and the separate corporate existence of the Delaware
Company shall thereupon cease, with the Texas
<PAGE>
Company being the surviving corporation (the "Surviving Corporation") of the
---------------------
merger (the "Merger") and continuing its existence under the laws of the State
------
of Texas. As promptly as practicable after the satisfaction or waiver of the
conditions set forth in Article VI hereof and the consummation of the Closing
referred to in Section 1.2 hereof, the Delaware Company and the Texas Company
shall cause to be filed (i) with the Secretary of State of the State of Delaware
a properly executed certificate of merger consistent with the terms of this
Agreement and the DGCL, and (ii) with the Secretary of State of the State of
Texas properly executed articles of merger consistent with the terms of this
Agreement and the TBCA. The Merger shall become effective at such time as the
articles of merger are duly filed with the Secretary of State of the State of
Texas and the certificate of merger is duly filed with the Secretary of State of
the State of Delaware, or at such subsequent date or time as the Parties shall
agree and specify in the certificate of merger and articles of merger (the time
the Merger becomes effective being hereinafter referred to as the "Effective
---------
Time").
- ----
Section I.2 Closing. Unless this Agreement is terminated and the
-------
transactions contemplated herein abandoned pursuant to Section 7.1, and assuming
the satisfaction or waiver of the conditions set forth in Article VI, the
closing of the Merger (the "Closing") shall take place (i) no sooner than the
-------
first business day after December 31, 1999, and no later than second business
day thereafter following the satisfaction or waiver of the conditions set forth
in Article VI (other than the conditions to be satisfied or waived at the
Closing), at the offices of Bracewell & Patterson, L.L.P., 2900 South Tower,
Pennzoil Place, Houston, Texas, or (ii) on such other date or at such other
place as agreed to in writing by the Parties. For purposes of this Agreement,
the term "business day" shall mean any calendar day other than Saturday, Sunday
------------
or any day that nationally chartered financial institutions are legally required
to close in either Houston, Texas, or New York, New York.
Section I.3 Effects of the Merger. At the Effective Time, the Merger
---------------------
will have the effects set forth in the DGCL and the TBCA. Without limiting the
generality of the foregoing, and subject thereto, at the Effective Time, all the
properties, rights, privileges, powers and franchises of the Delaware Company
and the Texas Company shall continue with, or vest in, as the case may be, the
Surviving Corporation, and all debts, liabilities and duties of the Delaware
Company and the Texas Company shall continue with, or become, as the case may
be, the debts, liabilities and duties
-2-
<PAGE>
of the Surviving Corporation. If, at any time after the Effective Time, the
Surviving Corporation shall consider or be advised that any deeds, bills of
sale, assignments, assurances or any other actions or things are necessary or
desirable to continue in, vest, perfect or confirm of record or otherwise in the
Surviving Corporation its right, title or interest in, to or under any of the
rights, properties, privileges, franchises or assets of the Delaware Company as
a result of, or in connection with, the Merger or otherwise to carry out this
Agreement, the officers and directors of the Surviving Corporation shall be
directed and authorized to execute and deliver, in the name and on behalf of
either of such constituent corporations, all such deeds, bills of sale,
assignments and assurances and to take and do, in the name and on behalf of the
Delaware Company or otherwise, all such other actions and things as may be
necessary or desirable to vest, perfect or confirm any and all right, title and
interest in, to and under such rights, properties, privileges, franchises or
assets in the Surviving Corporation or otherwise to carry out this Agreement.
Section I.4 Articles of Incorporation and Bylaws. The articles of
------------------------------------
incorporation of the Texas Company shall be amended and restated in the Merger
to read in their entirety as set forth on Exhibit 1.4(a) hereof, and, as so
amended and restated, shall be the articles of incorporation of the Surviving
Corporation following the Effective Time, until duly amended in accordance with
the TBCA. The bylaws of the Texas Company shall be the bylaws of the Surviving
Corporation after the Effective Time, until duly amended in accordance with
the TBCA.
Section I.5 Directors. The directors of the Surviving Corporation at
---------
the Effective Time shall be determined in accordance with Section 5.15, and such
directors shall hold office from the Effective Time in accordance with the
articles of incorporation and bylaws of the Surviving Corporation until his or
her successor is duly elected or appointed and qualified.
Section I.6 Officers. The officers of the Surviving Corporation at the
--------
Effective Time shall be determined in accordance with Section 5.15, and such
officers shall hold office from the Effective Time in accordance with the
articles of incorporation and bylaws of the Surviving Corporation and until his
or her successor is duly appointed and qualified.
-3-
<PAGE>
ARTICLE II
CONVERSION OF SECURITIES
Section II.1 Conversion of Capital Stock. At the Effective Time, as a
---------------------------
result of the Merger and without any action on the part of the holder of any
capital stock of the Delaware Company or the Texas Company:
(1) Subject to Sections 2.2(d) and 2.3(e), each share of
common stock, par value $.001 per share, of the Delaware Company (the "Delaware
--------
Company Common Stock") that is issued and outstanding immediately prior to the
- --------------------
Effective Time, other than Delaware Company Excluded Shares (as hereinafter
defined), shall be converted into the right to receive 1.25 fully paid, validly
issued and nonassessable shares of Surviving Corporation Common Stock (as
hereinafter defined) (the "Delaware Company Per Share Stock Amount").
---------------------------------------
(2) Each share of common stock, par value $.001 per share, of
the Texas Company (the "Texas Company Common Stock") that is issued and
--------------------------
outstanding immediately prior to the Effective Time, other than Texas Company
Eligible Shares (as hereinafter defined), shall remain issued and outstanding.
(3) Each share of Texas Company Preferred Stock that is
issued and outstanding immediately prior to the Effective Time shall remain
issued and outstanding.
(4) Each share of Texas Company Common Stock that is issued
and outstanding immediately prior to the Effective Time and which under the
terms of Sections 2.4, 2.5 and 2.6 is to be converted into the right to receive
cash (a "Texas Company Eligible Share") shall, without any action by the holder
----------------------------
thereof, be converted into the right to receive the Per Share Cash Amount (as
hereinafter defined).
-4-
<PAGE>
Section II.2 Effect of Merger on Delaware Common Stock. (1) Each share
-----------------------------------------
of Delaware Company Common Stock so converted pursuant to the Merger shall, by
virtue of the Merger and without any action on the part of the holder thereof,
no longer be outstanding and shall be canceled and shall cease to exist, and
each holder of a certificate which, prior to the Effective Time, evidenced any
such share (individually, a "Delaware Company Stock Certificate" and
----------------------------------
collectively, the "Delaware Company Stock Certificates") shall thereafter cease
-----------------------------------
to have any rights with respect to such certificates or the shares formerly
represented thereby, except, upon the surrender of the Delaware Company Stock
Certificate in accordance with Section 2.3, the right to receive from the
Surviving Corporation (i) the number of whole shares of common stock, $.001 par
value per share, of the Surviving Corporation (the "Surviving Corporation Common
----------------------------
Stock") equal to the product of (A) the Delaware Company Per Share Stock Amount,
- -----
multiplied by (B) the number of shares of Delaware Company Common Stock formerly
evidenced by such Delaware Company Stock Certificate, (ii) the amount of cash
payable pursuant to Section 2.3(e) in lieu of any fractional shares issuable
pursuant to Section 2.1(i), and (iii) the amount of any Pre-Surrender Dividends
payable pursuant to Section 2.3(c).
(2) At the Effective Time, all shares of capital stock of the
Delaware Company that are owned by the Delaware Company or the Texas Company or
any of their respective wholly owned Subsidiaries (as hereinafter defined)
(collectively, "Delaware Company Excluded Shares"), shall be canceled and will
--------------------------------
cease to exist and no capital stock or other consideration will be delivered in
exchange therefor. As used in this Agreement, "Subsidiary" means, with respect
----------
to any specified corporation, partnership, individual, association, organization
or other entity or group ("Person"), any corporation or other entity or
------
organization, whether incorporated or unincorporated, of which (i) such Person
or any other Subsidiary of such Person is a general partner (excluding
partnerships, the general partnership interests of which held by such Person or
any Subsidiary of such Person do not have a majority of the voting interest in
such partnership), or (ii) at least a majority of the securities or other
interests having by their terms ordinary voting power to elect a majority of the
Board of Directors or others performing similar functions with respect to such
corporation or other organization is directly or indirectly owned or controlled
by such Person, by any one or more of its Subsidiaries, or by such Person and
-5-
<PAGE>
one or more of its Subsidiaries. References to a wholly owned Subsidiary of an
entity include a Subsidiary, all of the common equity of which is owned directly
or through "wholly owned" Subsidiaries by such entity.
(3) The stock transfer books of the Delaware Company shall
be closed at the Effective Time and no transfer of any Delaware Company Common
Stock will thereafter be recorded on any of such stock transfer books. In the
event of a transfer of ownership of Delaware Company Common Stock that is not
registered in the transfer records of the Delaware Company at the Effective
Time, a certificate or certificates representing the number of whole shares of
Surviving Corporation Common Stock issuable in respect of such shares of
Delaware Company Common Stock shall be issued to the transferee together with a
cash payment in lieu of fractional shares, if any, in accordance with Section
2.3(e) hereof, and a cash payment in the amount of Pre-Surrender Dividends, if
any, in accordance with Section 2.3(c) hereof, if the Delaware Company Stock
Certificate therefor is presented to the Exchange Agent (as hereinafter
defined), accompanied by all documents required to evidence and effect such
transfer, together with evidence that any applicable stock transfer taxes have
been paid and the payment of any required transfer taxes. Until surrendered as
contemplated by Section 2.3, each Delaware Company Stock Certificate will be
deemed at any time after the Effective Time to represent only the right to
receive upon such surrender the relevant Merger Consideration (as hereinafter
defined) and the other amounts, if any, payable to such holder pursuant to this
Article II.
(4) In the event that between the date of this Agreement and
the Effective Time the outstanding shares of Delaware Company Common Stock or
Texas Company Common Stock (except pursuant to this Agreement and only upon the
consent of each of the Parties) are changed into a different number of shares or
a different class, by reason of any stock dividend, subdivision,
reclassification, recapitalization, split, combination or exchange of shares,
the Delaware Company Per Share Stock Amount and the amount of cash payable in
respect of fractional shares pursuant to Section 2.3(e) or payable pursuant to
Section 2.3(c) will be appropriately adjusted to reflect such stock dividend,
subdivision, reclassification, recapitalization, split, combination or exchange
of shares.
Section II.3 Exchange of Delaware Company Stock Certificates.
-----------------------------------------------
-6-
<PAGE>
(1) Subject to the terms and conditions hereof, the Texas
Company and the Delaware Company shall jointly appoint ChaseMellon Shareholder
Services, L.L.C., as exchange agent to effect the exchange of the Delaware
Company Common Stock for the Surviving Corporation Common Stock in accordance
with the provisions of this Article II (the "Exchange Agent"). After the
--------------
Effective Time, the Surviving Corporation will irrevocably deposit, or will
cause to be so deposited, with the Exchange Agent for the benefit of the holders
of Delaware Company Stock Certificates (other than holders of those Delaware
Company Stock Certificates representing Delaware Company Excluded Shares), the
certificates evidencing the shares of the Surviving Corporation Common Stock
payable or issuable pursuant to Section 2.1 upon the due surrender of Delaware
Company Stock Certificates (such certificates evidencing shares of the Surviving
Corporation Common Stock, together with any cash or other dividends or
distributions declared or made, and any other cash or other property paid, with
respect thereto, being hereinafter collectively referred to as the "Exchange
--------
Fund"). The Surviving Corporation shall pay all charges and expenses, including
- ----
those of the Exchange Agent, in connection with the transactions contemplated in
this Article II. Subject to Sections 2.3(e), (f), (g) and (h), the Exchange
Agent will deliver to holders of Delaware Company Stock Certificates (other than
those representing Delaware Company Excluded Shares) in accordance with Section
2.3(b) the Merger Consideration and any other amounts payable to such holders
pursuant to this Article II. The Exchange Fund will not be used for any other
purpose. All interest, dividends or other income earned on cash deposits in the
Exchange Fund shall be for the account of the Surviving Corporation.
(2) Immediately after the Effective Time, the Surviving
Corporation shall cause the Exchange Agent to mail to each holder of record of
shares of Delaware Company Common Stock that were converted pursuant to Section
2.1 (i) a letter of transmittal (which will be in such form and have such
provisions as the Delaware Company and the Texas Company may reasonably specify
prior to the Effective Time) and (ii) instructions for use in effecting the
surrender of the Delaware Company Stock Certificate in exchange for certificates
representing shares of Surviving Corporation Common Stock. Upon surrender of a
Delaware Company Stock Certificate for cancellation to the Exchange Agent,
together with a properly completed and duly executed letter of transmittal, the
holder of such Delaware Company Stock Certificate will be entitled, after the
Effective Time, to receive in exchange therefor (y) a certificate representing
-7-
<PAGE>
that number of whole shares of Surviving Corporation Common Stock, pursuant to
the provisions of this Article II, and (z) cash in lieu of fractional shares of
Surviving Corporation Common Stock to which such holder is entitled pursuant to
Section 2.3(e) (the shares of Surviving Corporation Common Stock and cash
described in clauses (y) and (z) above being collectively referred to herein as
the "Merger Consideration") and any other amounts, if any, payable to such
--------------------
holder pursuant to this Article II, and the Delaware Company Stock Certificate
so surrendered will forthwith be canceled.
(3) No dividends or other distributions declared or made, or
any other cash or other property paid, after the Effective Time with respect to
shares of Surviving Corporation Common Stock with a record date after the
Effective Time (such dividends or distributions being referred to collectively
herein as the "Pre-Surrender Dividends") will be paid to the holder of any
-----------------------
unsurrendered Delaware Company Stock Certificate with respect to the shares of
Surviving Corporation Common Stock that such holder is entitled to receive upon
the surrender thereof in accordance with this Section 2.3. Subject to the effect
of applicable laws, following surrender of any such Delaware Company Stock
Certificate, there will be paid to the record holder of the certificates
representing whole shares of Surviving Corporation Common Stock issued in
exchange therefor, without interest, (i) the amount of the Pre-Surrender
Dividends theretofore paid or issued with respect to such whole shares of
Surviving Corporation Common Stock, and (ii) at the appropriate payment date,
the amount of Pre-Surrender Dividends with a payment date subsequent to
surrender payable with respect to such whole shares of Surviving Corporation
Common Stock.
(4) The Merger Consideration paid or delivered as provided
above, together with any Pre-Surrender Dividends, will be deemed to have been
issued in full satisfaction of all rights pertaining to such shares of Delaware
Company Common Stock and there will be no further registration of transfers on
the stock transfer books of the Surviving Corporation of the shares of Delaware
Company Common Stock that were outstanding immediately prior to the Effective
Time. If, after the Effective Time, Delaware Company Stock Certificates are
presented to the Surviving Corporation for any reason, they will be canceled and
exchanged as provided in this Article II.
(5) No fractional shares of and no certificate or scrip
representing fractional shares of Surviving Corporation Common Stock will be
issued upon the surrender for exchange of Delaware Company Stock Certificates.
-8-
<PAGE>
In lieu of the issuance of any fractional shares of Surviving Corporation Common
Stock pursuant to Section 2.1(i), as promptly as practicable following the
Effective Time, the Exchange Agent shall determine the excess of (i) the number
of whole shares of Surviving Corporation Common Stock delivered to the Exchange
Agent by the Surviving Corporation pursuant to this Article II over (ii) the
aggregate number of whole shares of the Surviving Corporation Common Stock to be
issued to holders of Delaware Company Stock Certificates pursuant to this
Article II (such excess being herein called the "Excess Shares"). As soon after
-------------
the Effective Time as practicable, the Exchange Agent, as agent for the holders
of Delaware Company Stock Certificates, shall sell the Excess Shares at then
prevailing prices on the New York Stock Exchange ("NYSE"), all in the manner
----
provided in this Section.
The sale of the Excess Shares by the Exchange Agent shall be executed on
the NYSE through one or more member firms of the NYSE and shall be executed in
round lots to the extent practicable. The Exchange Agent shall use all
reasonable efforts to complete the sale of the Excess Shares as promptly
following the Effective Time as, in the Exchange Agent's reasonable judgment, is
practicable consistent with obtaining the best execution of such sales in light
of prevailing market conditions. Until the net proceeds of such sale or sales
have been distributed to the holders of Delaware Company Stock Certificates, the
Exchange Agent will hold such proceeds in trust for the holders of Delaware
Company Stock Certificates entitled to receive shares of Surviving Corporation
Common Stock under this Article II (the "Common Stock Trust"). The Surviving
------------------
Corporation shall pay all commissions, transfer taxes and other out-of-pocket
transaction costs, including the expenses and compensation, of the Exchange Act
incurred in connection with such sale of the Excess Shares. The Exchange Agent
shall determine the portion of the Common Stock Trust to which each holder of a
Delaware Company Stock Certificate entitled to receive Surviving Corporation
Common Stock under this Article II shall be entitled, if any, by multiplying the
amount of the aggregate net proceeds compromising the Common Stock Trust by a
fraction, the numerator of which is the amount of the fractional share interest
to which such holder of a Delaware Company Stock Certificate would otherwise be
entitled (after taking into account all Delaware Company Stock Certificates then
held by such holder) and the denominator of which is the aggregate amount of
fractional share interest to which all holders of Delaware Company Stock
Certificates would otherwise be entitled.
-9-
<PAGE>
Notwithstanding the previous provisions of this Section 2.3(e), if the
Parties shall so agree in writing prior to the Effective Time, then in lieu of
the sale of Excess Shares and the making of the payments contemplated above,
each holder of a Delaware Company Stock Certificate shall be paid an amount in
cash equal to the product obtained by multiplying the fractional share interest
to which such holder (after taking into account all Delaware Company Stock
Certificates then held by such holder) would otherwise be entitled by the
closing price for a share of Texas Company Common Stock on the NYSE Composite
Transactions tape on the first business day immediately preceding the Effective
Time, and, in such case, all references herein to the cash proceeds of the sale
of the Excess Shares and similar references shall be deemed to mean and refer to
the payments calculated as set forth in this sentence.
As soon as practicable after the determination of the amounts of cash, if
any, to be paid to holders of Delaware Company Stock Certificates in lieu of any
fractional share interests, the Exchange Agent shall make available such amounts
to such holders of Delaware Company Stock Certificates, subject to and in
accordance with this Article II.
(6) The Surviving Corporation shall not be liable to any
holder of shares of Delaware Company Common Stock for any shares of Surviving
Corporation Common Stock (or dividends or distributions with respect thereto) or
cash delivered to a public official pursuant to any applicable abandoned
property, escheat or similar law.
(7) Any portion of the Exchange Fund or the Common Stock
Trust that remains undistributed to the holders of Delaware Company Stock
Certificates for one year after the Effective Time will be delivered to the
Surviving Corporation, upon demand, and any holders of Delaware Company Stock
Certificates who have not theretofore complied with this Article II will
thereafter look only to the Surviving Corporation for the Merger Consideration
and any unpaid Pre-Surrender Dividends to which they are entitled pursuant to
this Article II.
(8) The Surviving Corporation or the Exchange Agent will be
entitled to deduct and withhold from the consideration otherwise payable
pursuant to this Agreement to any holder of Delaware Company Stock Certificates
such amounts as the Surviving Corporation or the Exchange Agent are required to
deduct and withhold with respect to the making of such payment under the Code,
or any provision of state, local or foreign tax law. To the extent that amounts
are so withheld by the Surviving Corporation or the Exchange Agent, such
withheld amounts will be treated for
-10-
<PAGE>
all purposes of this Agreement as having been paid to the holder of the Delaware
Company Stock Certificates in respect of which such deduction and withholding
was made by the Surviving Corporation or the Exchange Agent. Notwithstanding the
foregoing, no amount shall be withheld from any payment made hereunder to a
holder of Delaware Company Stock Certificates who provides the Exchange Agent
with a properly completed Internal Revenue Service Form W-9 or Substitute Form
W-9, or who otherwise provides the Exchange Agent with appropriate evidence that
such Person is exempt from federal income tax back-up withholding.
Section II.4 Texas Company Eligible Shares. (1) Each holder of a
-----------------------------
certificate which prior to the Effective Time evidenced any Texas Company
Eligible Share (a "Texas Company Stock Certificate") shall thereafter cease to
-------------------------------
have any rights with respect to such certificate or the shares formerly
represented thereby, except, upon the surrender of the Texas Company Stock
Certificate in accordance with Section 2.5, the right to receive from the
Surviving Corporation an amount equal to the product of (i) $13.50 (the "Per
---
Share Cash Amount") multiplied by (ii) the number of Texas Company Eligible
- -----------------
Shares formerly evidenced by such Texas Company Stock Certificate.
(2) In the event that between the date of this Agreement and
the Effective Time the outstanding shares of Texas Company Common Stock (except
pursuant to the this Agreement and only upon the consent of each of the Parties)
are changed into a different number of shares or a different class, by reason of
any stock dividend, subdivision, reclassification, recapitalization, split,
combination or exchange of shares, the Per Share Cash Amount and the Total
Eligible Share Number will be appropriately adjusted to reflect such stock
dividend, subdivision, reclassification, recapitalization, split, combination or
exchange of shares.
Section II.5 Manner of Conversion of Texas Company Eligible Shares into
----------------------------------------------------------
Cash; Limitations Thereon.
- -------------------------
(1) Election Procedures. An election form and other appropriate
-------------------
and customary transmittal materials (which shall specify that delivery shall be
effected, and risk of loss and title to the certificates formerly evidencing
shares of Texas Company Eligible Shares shall pass, only upon proper delivery of
such certificates to the Exchange Agent, in such form as the Texas Company shall
designate ("Election Form")) shall be mailed at least thirty days prior to the
-------------
anticipated Effective Time or on such other date as the Texas Company shall
determine ("Mailing
-------
-11-
<PAGE>
Date") to each holder of record of shares of Texas Company Common Stock on the
- ----
business day which is not more than five days prior to the Mailing Date
("Election Form Record Date"). Each Election Form shall permit a holder of
-------------------------
shares of Texas Company Common Stock (or the beneficial owner through
appropriate and customary documentation and instructions) to make an
unconditional election ("Cash Share Election"), subject to the allocation
-------------------
procedures set forth below, with respect to such holder's (or beneficial
owner's) shares of Texas Company Common Stock, to have up to 50% of such shares
become Texas Company Eligible Shares (each, an "Elected Cash Share").
------------------
No shares of Texas Company Common Stock with respect to which the holder
(or the beneficial owner, as the case may be) shall not have submitted to the
Exchange Agent an effective, properly completed Election Form on or before 5:00
p.m., Houston, Texas time, on or before the business day which is three business
days prior to the Effective Time (or such other time and date as Texas Company
designates) (the "Election Deadline") shall be deemed to be an Elected Cash
-----------------
Share and each such holder (or beneficial owner, as the case may be) shall be
deemed not to have made a Cash Share Election with respect to such share. Any
shares of Texas Company Common Stock with respect to which the holder thereof
(or the beneficial owner, as the case may be) has indicated in an effective,
properly completed Election Form submitted to the Exchange Agent on or before
the Election Deadline an election to have such shares become an Elected Cash
Share but which cannot become an Elected Cash Share because of the 50%
limitation set forth above shall also not be deemed to be an Elected Cash Share
and such holder (or beneficial owner, as the case may be) shall be deemed not to
have made a Cash Share Election with respect to such shares.
The Texas Company shall use its commercially reasonable efforts to make
available one or more Election Forms as may be reasonably requested by any
Person who becomes a holder (or beneficial owner) of shares of Texas Company
Common Stock between the Election Form Record Date and the close of business on
the business day prior to the Election Deadline, and shall provide to the
Exchange Agent all information reasonably necessary for it to perform as
specified herein.
Any such election shall have been properly made only if the Exchange Agent
shall have actually received a properly completed Election Form on or prior to
the Election Deadline. An Election Form shall be deemed properly
-12-
<PAGE>
completed only if accompanied by one or more Texas Company Stock Certificates
(or customary affidavits and indemnification regarding the loss or destruction
of such certificates or the guaranteed delivery of such certificates)
representing all Elected Cash Shares held by the holder or beneficial owner of
such shares, together with duly executed transmittal materials included in the
Election Form. Any Election Form may be revoked or changed by the Person
submitting such Election Form at any time prior to the Election Deadline. In the
event an Election Form is revoked prior to the Election Deadline and no
subsequent Election Form is delivered to the Exchange Agent prior to the
Election Deadline, the Elected Cash Shares represented by such Election Form
shall not be deemed to be Elected Cash Shares and the holder (or beneficial
owner) thereof shall not be deemed to have made a Cash Share Election with
respect thereto. Subject to the terms of this Agreement and of the Election
Form, the Exchange Agent shall have reasonable discretion to determine whether
any election, revocation or change has been properly or timely made and to
disregard immaterial defects in the Election Forms, and any good faith decisions
of the Exchange Agent regarding such matters shall be binding and conclusive.
Neither the Texas Company nor the Exchange Agent shall be under any obligation
to notify any Person of any defect in an Election Form.
(2) As soon as practicable after the Election Deadline, and
in any event prior to the Effective Time, the Texas Company shall cause the
Exchange Agent to effect the allocation among the holders (or beneficial owners)
of Elected Cash Shares those shares which shall become Texas Company Eligible
Shares as of the Effective Time as follows:
(1) Elected Cash Shares More Than Total Eligible Share
--------------------------------------------------
Number. If the aggregate number of Elected Cash Shares reflected in Election
- ------
Forms properly completed and timely delivered to the Exchange Agent and not
revoked (the "Aggregate Elected Cash Share Number"), as determined by the
-----------------------------------
Exchange Agent, is more than the Total Eligible Share Number (as hereinafter
defined), then:
(1) A proration factor (the "Proration Factor")
----------------
shall be determined by the Exchange Agent and shall be a fraction, (1) the
numerator of which is the Total Eligible Share Number and (2) the denominator of
which is the Aggregate Elected Cash Share Number;
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<PAGE>
(2) The number of Elected Cash Shares covered by
each Cash Share Election which shall become Texas Company Eligible Shares as of
the Effective Time shall be determined by the Exchange Agent by multiplying the
Proration Factor by the total number of Elected Cash Shares covered by such Cash
Share Election and rounding any fractional share to the nearest whole share
(with .5 of a share or less rounded down); and
(3) All Elected Cash Shares other than those which
become Texas Company Eligible Shares in accordance with Clause (2) above shall
not become Texas Company Eligible Shares and no other outstanding shares of
Texas Company Common Stock shall become Texas Company Eligible Shares; or
(2) Elected Cash Shares Equal to or Less Than Total
-----------------------------------------------
Eligible Share Number. If the Aggregate Elected Cash Share Number is equal to or
- ---------------------
less than the Total Eligible Share Number (as determined by the Exchange Agent),
then each Elected Cash Share shall become a Texas Company Eligible Share as of
the Effective Time and no other outstanding shares of Texas Company Common Stock
shall become Texas Company Eligible Shares.
(3) For purposes of this Agreement, the term "Total Eligible Share
--------------------
Number" means the number determined as follows:
- ------
(i) First, determine the total dollar amount paid by the Texas
Company with respect to options pursuant to Section 5.8(c) (the
"Option Payment Amount");
----------------------
(ii) Second, divide the Option Payment Amount by 13.50 (the result
being referred to as the "Option Share Reduction Amount"); and
-----------------------------
(iii) Third, subtract the Option Share Reduction Amount from
11,111,111, and round the result downward to the nearest whole
number.
Notwithstanding anything in this Agreement to the contrary, the maximum number
of Texas Company Eligible Shares shall be the Total Eligible Share Number (i)
plus any additional shares of Texas Company Common Stock that become Texas
Company Eligible Shares as a result of rounding to the nearest whole share and
(ii) minus any shares of Texas Company Common Stock that do not become Texas
Company Eligible Shares, in either case as a result of rounding to the nearest
whole share pursuant to Section 2.5(b).
-14-
<PAGE>
Section II.6 Surrender of Texas Company Stock Certificates and Payment.
---------------------------------------------------------
(1) Upon the latest to occur of the Effective Time and the
completion of the allocation procedures set forth in Section 2.5, the Surviving
Corporation will deposit, or will cause to be so deposited, with the Exchange
Agent for the benefit of the holders (or beneficial owners) of Texas Company
Eligible Shares, the cash amount owed with respect to the Texas Company Eligible
Shares as determined by the Escrow Agent and agreed to by the Texas Company and
the Delaware Company (the "Payment Fund"). Subject to Sections 2.5, the Exchange
------------
Agent will deliver the Per Share Cash Amount with respect to each of the Texas
Company Eligible Shares in accordance with this Section 2.6. All interest,
dividends or other income earned on cash deposits in the Payment Fund shall be
for the account of the Surviving Corporation.
(2) Upon surrender of a Texas Company Stock Certificate for
cancellation to the Exchange Agent or to such other agent or agents as may be
appointed by the Surviving Corporation, together with a properly completed and
duly executed Election Form, the holder of such Texas Company Stock Certificate
will be entitled, after the Effective Time, to receive (x) any cash payable in
respect of the Texas Company Eligible Shares formerly represented by any such
Texas Company Stock Certificate and (y) a certificate or certificates
representing that number of shares of Surviving Corporation Common Stock , if
any, represented by such Texas Company Stock Certificate which are not Texas
Company Eligible Shares, and the Texas Company Stock Certificate so surrendered
will forthwith be canceled. In the event of a transfer of ownership of Texas
Company Common Stock that is not registered in the transfer records of the Texas
Company, any cash and the certificates representing the proper number of shares
of Surviving Corporation Common Stock may be paid or delivered to a transferee
if the relevant Texas Company Stock Certificate is presented to the Exchange
Agent, accompanied by all documents required to evidence and effect such
transfer, together with evidence that any applicable stock transfer taxes have
been paid and the payment of any required transfer taxes.
-15-
<PAGE>
(3) From and after the Effective Time, there will be no
further registration of transfers on the stock transfer books of the Surviving
Corporation of the Texas Company Eligible Shares which were outstanding
immediately prior to the Effective Time.
(4) The Surviving Corporation will not be liable to any
holder (or beneficial owner) of Texas Company Eligible Shares for any shares of
Surviving Corporation Common Stock or cash delivered to a public official
pursuant to any applicable abandoned property, escheat or similar law.
(5) Any portion of the Payment Fund that remains
undistributed to the former holders (or beneficial owners) of Texas Company
Eligible Shares for one month after the Effective Time will be delivered to the
Surviving Corporation, upon demand, and any holders (or beneficial owners) of
Texas Company Stock Certificates who have not theretofore complied with this
Article II will thereafter look only to the Surviving Corporation, as unsecured
creditors, for the cash and certificates, if any, to which they are entitled
pursuant to this Article II.
(6) The Surviving Corporation or the Exchange Agent will be
entitled to deduct and withhold from the amounts otherwise payable pursuant to
this Agreement to any holder (or beneficial owner) of Texas Company Eligible
Shares such amounts as the Surviving Corporation or the Exchange Agent are
required to deduct and withhold with respect to the making of such payment under
the Code, or any provision of state, local or foreign tax law. To the extent
that amounts are so withheld by the Surviving Corporation or the Exchange Agent,
such withheld amounts will be treated for all purposes of this Agreement as
having been paid to the holder (or beneficial owner) of the Texas Company
Eligible Shares in respect of which such deduction and withholding was made by
the Surviving Corporation or the Exchange Agent. Notwithstanding the foregoing,
no amount shall be withheld from any payment made hereunder to a holder (or
beneficial owner) of Texas Company Eligible Shares who provides the Exchange
Agent with a properly completed Internal Revenue Service Form W-9 or Substitute
Form W-9, or who otherwise provides the Exchange Agent with appropriate evidence
that such Person is exempt from federal income tax back-up withholding.
-16-
<PAGE>
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE DELAWARE COMPANY
The Delaware Company represents and warrants to the Texas Company that,
except as expressly described or permitted in this Agreement or as disclosed to
the Texas Company in the Delaware Company Disclosure Schedule (as hereinafter
defined):
Section III.1 Due Incorporation, Etc. Each of the Delaware Company and
-----------------------
each Delaware Company Subsidiary (as hereinafter defined) is a corporation or
other legal entity duly organized, validly existing and in good standing under
the laws of the jurisdiction of its incorporation or organization, with all
requisite power and authority to own, operate and lease its properties and to
carry on its business as it is now being conducted, except where the failure to
be so organized, existing or in good standing or to have such power and
authority would not, individually or in the aggregate, have a material adverse
effect (as hereinafter defined) on the Delaware Company and its Subsidiaries,
taken as a whole.
Section III.2 Qualification as Foreign Entities. Each of the Delaware
---------------------------------
Company and each Delaware Company Subsidiary is duly licensed or qualified to do
business and, if applicable, is in good standing, in each state or other
jurisdiction in which the character of the properties owned or leased by it or
the nature of the business conducted by it requires it to be so licensed or
qualified, except where the failure to be so licensed, qualified or in good
standing would not have a material adverse effect on the Delaware Company.
Section III.3 Capital Stock. The authorized capital stock of the
-------------
Delaware Company consists solely of 250,000,000 shares of Delaware Company
Common Stock and 11,000,000 shares of preferred stock, par value $.001 per
share. As of the date hereof, 26,098,806 shares of Delaware Company Common
Stock are outstanding , no shares of preferred stock of the Delaware Company are
outstanding, 4,262,320 shares of Delaware Company Common Stock are reserved for
issuance pursuant to the exercise of the Delaware Company Options (as
hereinafter defined), 4,613,578 shares of the Delaware Company Common Stock are
reserved for issuance to the holders of the 7 1/2% Convertible Subordinated Pay
in Kind Debentures Due 2012 issued by the Delaware Company (the "Debentures"),
----------
and 3,250,000 shares of Delaware Company Common Stock are reserved for issuance
pursuant to the exercise of the Warrants
-17-
<PAGE>
originally issued by the Delaware Company to Friedman Billings & Ramsey & Co.
Inc. and Jonathan J. Ledecky pursuant to the Warrant Agreements dated November
25, 1997 (the "Delaware Company Warrants"). All of the Delaware Company's issued
-------------------------
and outstanding shares of capital stock are duly authorized, validly issued,
fully paid and nonassessable. Except as set forth in Section 3.3 of the Delaware
Company Disclosure Schedule and as described in this Section 3.3, the Delaware
Company does not have any outstanding convertible or exchangeable securities,
subscriptions, calls, options, warrants, rights contractual or arising by
operation of law (including, without limitation, rights of first refusal and
preemptive rights), or other agreements or commitments of any character relating
to the issuance, purchase, other acquisition or voting of any shares of the
capital stock of, or other equity or ownership interest in (collectively,
Equity Rights") the Delaware Company. A true and correct list of the
- --------------
outstanding options of the Delaware Company (the "Delaware Company Options")
------------------------
granted pursuant to the plans of the Delaware Company set forth in Section 3.3
of Delaware Company Disclosure Schedule or otherwise (the plans described in
Section 3.3 of the Delaware Company Disclosure Schedule being referred to
collectively herein as the "Delaware Company Option Plans") and the purchase
-----------------------------
prices of the shares of Delaware Company Common Stock issuable upon the exercise
of each Delaware Company Warrant and each Delaware Company Option has been
delivered by the Delaware Company to the Texas Company prior to the date of this
Agreement.
Section III.4 Capitalization of the Delaware Company Subsidiaries. Set
---------------------------------------------------
forth on Schedule 3.4 of the Delaware Company Disclosure Schedule is a true and
correct list of all of the direct and indirect Subsidiaries of the Delaware
Company and the issued and outstanding capital stock of such Subsidiaries as of
the date of this Agreement. All issued and outstanding shares of capital stock
of each of the Subsidiaries of the Delaware Company (a "Delaware Company
----------------
Subsidiary") are duly authorized, validly issued, fully paid and nonassessable.
- ----------
Section III.5 Ownership of Equity Interests. Except as otherwise set
-----------------------------
forth in Section 3.5 of the Delaware Company Disclosure Schedule, the Delaware
Company or one or more of its wholly-owned Subsidiaries owns, of record and
beneficially, all of the issued and outstanding capital stock or other equity
interests of each of the Delaware Company Subsidiaries and all outstanding
Equity Rights with respect to each Delaware Company Subsidiary, free and clear
(except
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<PAGE>
as otherwise contemplated in the Credit Agreement dated April 30, 1999, among
the Delaware Company, various lending institutions, Goldman Sachs Credit
Partners LP, as documentation agent, and others) of all material liens, security
interests, charges, adverse claims, options, preferential rights of purchase,
restrictions or legends of any kind (collectively, "Liens"). Except as described
-----
above or as set forth in Section 3.5 of the Delaware Company Disclosure
Schedule, neither the Delaware Company nor any of the Delaware Company
Subsidiaries owns or holds, directly or indirectly, any capital stock of, or
other equity or other ownership interest in (or any securities, rights or other
interests exchangeable for, convertible into or which otherwise relate to the
acquisition of any capital stock of) any Person or is a partner or joint
venturer in any partnership or joint venture material to the Delaware Company.
Section III.6 Corporate Power and Authority. The Delaware Company has
-----------------------------
the requisite corporate power to execute, deliver and perform this Agreement and
to consummate the transactions contemplated hereby, subject, in the case of this
Agreement, to obtaining the Requisite Delaware Holder Approvals (as hereinafter
defined). The execution and delivery of this Agreement by the Delaware Company
and the consummation of the transactions contemplated hereby have been duly
authorized by all necessary corporate action on the part of the Delaware
Company, subject, to obtaining the Requisite Delaware Holder Approvals. This
Agreement has been duly and validly executed and delivered by the Delaware
Company and constitutes the valid and binding agreement of the Delaware Company,
enforceable against the Delaware Company in accordance with its terms, except as
limited by bankruptcy, insolvency, moratorium and similar laws affecting
creditors' rights and except as limited by equitable principles.
Section III.7 No Conflicts or Consents. (1) Except as provided for
------------------------
in Article I and as required under the Hart-Scott-Rodino Antitrust Improvements
Act of 1976, as amended and the rules and regulations thereunder (the "HSR
---
Act"), the Securities Exchange Act of 1934, as amended and the rules and
regulations thereunder (the "Exchange Act"), and the Securities Act of 1933, as
------------
amended and the rules and regulations thereunder (the "Securities Act"), and
--------------
state securities or "blue sky" Laws, no notices, reports or other filings are
required to be made by the Delaware Company or any Delaware Company Subsidiary
with, nor are any consents, registrations, approvals, permits or authorizations
required to be obtained by the Delaware Company from, any domestic governmental
or regulatory authority, agency,
-19-
<PAGE>
commission, court or other entity ("Governmental Entity"), in connection with
-------------------
the execution and delivery of this Agreement by the Delaware Company and the
consummation by the Delaware Company of the transactions contemplated hereby,
the failure to make or obtain any or all of which would have a material adverse
effect on the Delaware Company, or would prevent, materially delay or materially
burden the transactions contemplated in this Agreement.
(2) The execution and delivery of this Agreement by the
Delaware Company does not, and the consummation by the Delaware Company of the
transactions contemplated hereby will not, constitute or result in (i) a breach
or violation of, or a default under, the certificate of incorporation or bylaws
of the Delaware Company or the comparable governing instruments of any material
Delaware Company Subsidiary, (ii) except with respect to the Investor Rights
Agreement and as set forth on Schedule 3.7 of the Delaware Company Disclosure
Schedule, a breach or violation of, a default under, the acceleration of or the
creation of any Lien on assets (with or without the giving of notice or the
lapse of time) pursuant to, any provision of any agreement, lease, contract,
note, mortgage, indenture, arrangement or other obligation not otherwise
terminable on 90 days' or less notice ("Contracts") of the Delaware Company or
---------
any of its Subsidiaries (the "Delaware Company Contracts") or any change in the
--------------------------
rights or obligations of any party under any of the Delaware Company Contracts,
or (iii) a violation of any domestic law, rule, ordinance or regulation ("Law")
---
or judgment, decree, order, award or governmental or non-governmental permit or
license to which the Delaware Company or any of its Subsidiaries is subject,
except in the case of clauses (ii) and (iii) above for such breaches,
violations, defaults, accelerations, Liens or changes that, alone or in the
aggregate, would not have a material adverse effect on the Delaware Company, or
would not prevent, materially delay or materially burden the transactions
contemplated by this Agreement.
Section III.8 SEC Reports and Financial Statements. Since November 25,
------------------------------------
1997, the Delaware Company has filed with the Securities and Exchange Commission
(the "SEC") all forms, reports and documents required to be filed by it under
---
the Exchange Act or the Securities Act (as they have been amended since the time
of their filing, collectively, the "Delaware Company SEC Documents"). The
------------------------------
Delaware Company SEC Documents, including without limitation, any financial
statements or schedules included therein, at the time filed, and any forms,
reports or other documents filed by
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the Delaware Company with the SEC after the date of this Agreement, (a) did not
at the time they were filed, or will not at the time they are filed, contain any
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary in order to make the statements therein, in light
of the circumstances under which they were made, not misleading and (b) complied
or will be prepared in compliance in all material respects with the applicable
requirements of the Exchange Act or the Securities Act, as the case may be. The
financial statements of the Delaware Company included in the Delaware Company
SEC Documents comply as to form in all material respects with applicable
accounting requirements and with the published rules and regulations of the SEC
with respect thereto, have been prepared in accordance with United States
generally accepted accounting principles ("GAAP") applied on a consistent basis
----
during the periods involved (except as may be indicated in the notes thereto or,
in the case of the unaudited statements, to normal audit adjustments) and fairly
present (subject, in the case of the unaudited statements, to normal audit
adjustments) the consolidated financial position of the Delaware Company and its
Subsidiaries as at the dates thereof and the consolidated results of their
operations and cash flows for the periods then ended. All liabilities or
obligations (absolute, accrued, fixed, contingent or otherwise) required to be
reflected, reserved against or otherwise disclosed in the financial statements
of the Delaware Company included in the Delaware Company SEC Documents filed
prior to the date of this Agreement have been properly reflected, reserved
against or otherwise disclosed in such financial statements in accordance with
the rules and regulations of the SEC and GAAP applied on a consistent basis
during the periods involved (except as may be indicated in the notes thereto or,
in the case of the unaudited statements, to normal audit adjustments). Except as
set forth in the financial statements of the Delaware Company included in the
Delaware Company SEC Documents, the Delaware Company has not incurred any
indebtedness (other than indebtedness with respect to the payment of interest
paid in kind) pursuant to the Indenture dated April 30, 1999, by and between the
Company and U. S. Trust Company related to the Delaware Company's 72 %
Convertible Junior Subordinated Debentures due 2012 (the "Delaware Company
----------------
Junior Indenture"). Except as disclosed in Section 3.8 of the Delaware Company
- ----------------
Disclosure Schedule, since June 30,1999, and prior to the date of this
Agreement, no act, omission, occurrence, event, condition or circumstance has
occurred or become known to the Delaware Company, and no
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transaction, commitment or agreement has been entered into by the Delaware
Company or any of its Subsidiaries, that should have been disclosed in the
Delaware Company SEC Documents.
Section III.9 Information in Disclosure Documents and Registration
----------------------------------------------------
Statement. (1) None of the information supplied or to be supplied by the
- ---------
Delaware Company from time to time in writing specifically for inclusion or
incorporation by reference in the registration statement on Form S-4 to be filed
with the SEC by the Texas Company in connection with the issuance of shares of
Surviving Corporation Common Stock in connection with the Merger (the "S-4")
---
will, at the time it becomes effective under the Securities Act and at the
Effective Time, contain any untrue statement of a material fact or omit to state
any material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading.
(2) The proxy or information statement relating to the
meeting of the Delaware Company's stockholders to be held to obtain the
Requisite Delaware Holders Approvals (as it may be amended from time to time,
the "Delaware Company Proxy Statement") will not, at the date mailed to the
--------------------------------
Delaware Company's stockholders and at the time of the meeting of stockholders
to be held in connection with the Merger, contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they are made, not misleading. The Delaware Company
Proxy Statement will, when filed with the SEC by the Delaware Company, comply as
to form in all material respects with the provisions of the Exchange Act and the
rules and regulations thereunder.
(3) Notwithstanding the foregoing, the Delaware Company
makes no representation with respect to statements made in any of the foregoing
documents based on information supplied by the Texas Company specifically for
inclusion therein.
Section III.10 Litigation. Except as disclosed in the Delaware Company
----------
SEC Documents filed prior to the date of this Agreement, there is as of the date
hereof no suit, claim, action, proceeding or investigation pending or, to the
best knowledge of the Delaware Company, threatened, against the Delaware Company
or any of its Subsidiaries which, individually or in the aggregate, would have a
material adverse effect on the Delaware Company, or a material
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adverse effect on the ability of the Delaware Company to consummate the
transactions contemplated by this Agreement. Except as disclosed in the Delaware
Company SEC Documents filed prior to the date of this Agreement, neither the
Delaware Company nor any of its Subsidiaries is subject to any outstanding
order, writ, injunction or decree which, individually or in the aggregate, would
have a material adverse effect on the Delaware Company, or a material adverse
effect on the ability of the Delaware Company to consummate the transactions
contemplated hereby.
Section III.11 No Material Adverse Change. Except as disclosed in
--------------------------
the Delaware Company SEC Documents filed prior to the date of this Agreement,
since June 30, 1999, the Delaware Company and its Subsidiaries have conducted
their respective businesses in the ordinary and usual course and there has not
been any material adverse change in the assets, business, results of operations
or financial condition of the Delaware Company and its Subsidiaries, taken as a
whole.
Section III.12 Taxes. (1) Except as set forth in the financial
-----
statements (including the notes thereto) included in the Delaware Company SEC
Documents, (i) all Returns material to the Delaware Company and its
Subsidiaries, taken as a whole (the "Delaware Company Returns"), required to be
------------------------
filed with any taxing authority by, or with respect to, the Delaware Company or
any of its Subsidiaries have been timely filed in accordance with all applicable
Laws; (ii) the Delaware Company and its Subsidiaries have timely paid all Taxes
shown as due and payable on the Delaware Company Returns that have been so
filed, and, as of the time of filing, the Delaware Company Returns correctly
reflected in all material respects the facts regarding the income, business,
assets, operations, activities and the status of the Delaware Company and the
Delaware Company Subsidiaries, other than Taxes that are being contested in good
faith and for which adequate reserves are reflected on the Delaware Company's
Consolidated Balance Sheet as of June 30, 1999 (the "Delaware Company Balance
------------------------
Sheet"); (iii) the Delaware Company and its Subsidiaries have made provision for
- -----
all Taxes (material to the Delaware Company and its Subsidiaries, taken as a
whole) payable by them for which no Delaware Company Return has yet been filed
or for which no Delaware Company Returns are required to be filed; (iv) the
charges, accruals and reserves for Taxes with respect to the Delaware Company
and its Subsidiaries reflected on the Delaware Company Balance Sheet are
adequate under GAAP (applied on a consistent basis during the
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<PAGE>
periods involved) to cover the Tax liabilities accruing through the date
thereof; (v) there is no action, suit, proceeding, audit or claim now pending
against or with respect to the Delaware Company or any of its Subsidiaries, or,
to the knowledge of the Delaware Company, proposed or threatened, in respect of
any Tax where there is a reasonable possibility of an adverse determination
material to the Delaware Company and its Subsidiaries, taken as a whole; (vi)
there are no Liens on any of the assets of the Delaware Company or any of its
Subsidiaries with respect to Taxes, other than Liens for Taxes not yet due and
payable or for Taxes that the Delaware Company or one or more of its
Subsidiaries is contesting in good faith through appropriate proceedings and for
which appropriate reserves have been established, and (vii) neither the Delaware
Company nor any of its Subsidiaries has been a member of an affiliated,
consolidated, combined or unitary group other than one of which the Delaware
Company was the common parent.
(2) For purposes of this Agreement, the following
definitions shall apply:
(1) The term "Group" means, individually and
-----
collectively, (1) the Delaware Company and (2) any individual, trust,
corporation, partnership or any other entity as to which the Delaware Company is
liable for Taxes incurred by such individual or entity either as a transferee,
or pursuant to Treasury Regulation Section 1.1502-6, or pursuant to any other
provision or federal, territorial, state, local or foreign law or regulations.
(2) The term "Taxes" means all taxes, however
-----
denominated, including any interest, penalties or other additions to tax that
may become payable in respect thereof, imposed by any federal, territorial,
state, local or foreign governmental or any agency or political subdivision of
any such government, which taxes shall include, without limiting the generality
of the foregoing, all income or profits taxes (including, but not limited to,
federal income taxes and state income taxes), real property taxes, payroll and
employee withholding taxes, unemployment withholding taxes, unemployment
insurance taxes, social security taxes, sales and use taxes, ad valorem taxes,
excise taxes, franchise taxes, gross receipts taxes, business license taxes,
occupation taxes, real and personal property taxes, stamp taxes, environmental
taxes, transfer taxes, workers' compensation, Pension Benefit Guaranty
Corporation ("PBGC") premiums and other governmental charges, and other
----
obligations of the same or of a similar nature to any of the foregoing, which
any member of the Group is required to pay, withhold or collect.
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<PAGE>
(3) The term "Returns" means all reports, estimates,
-------
declarations of estimated tax, information statements and returns relating to,
or required to be filed in connection with, any Taxes, including information
returns or reports with respect to backup withholding and any other payments to
third parties.
(3) All material elections made since December 31, 1998,
with respect to Taxes affecting the Delaware Company or any of its Subsidiaries
as of the date of this Agreement are set forth in Section 3.12 of the Delaware
Company Disclosure Schedule.
Section III.13 Vote Required. The affirmative vote of the holders of a
-------------
majority in voting power of the outstanding shares of Delaware Company Common
Stock and the Debentures, voting together as a single class, and the holders of
a majority in voting power of the outstanding principal amount of the
Debentures, voting separately as a class, and the written consent of Boss
Investment pursuant to Section 16(a) of the Investor Rights Agreement dated
March 22, 1999, by and among the Delaware Company and the investors listed
thereon (the "Investor Rights Agreement"), are the only votes of the holders of
-------------------------
any class or series of the Delaware Company's capital stock or any other
securities necessary to adopt this Agreement and approve the transactions
contemplated hereby (the "Requisite Delaware Holder Approvals").
-----------------------------------
Section III.14 Opinion of Financial Advisor. The Delaware Company has
----------------------------
received the opinion of Bear, Stearns & Co. Inc., its financial advisor, dated
as of the date of this Agreement, and provided a true, correct and complete copy
of such opinion to the Texas Company.
Section III.15 Change in Control Provisions. Except as set forth in
----------------------------
Section 3.15 of the Delaware Company Disclosure Schedule, neither the Delaware
Company nor any of its Subsidiaries is a party to any Delaware Company Plan or
any material contract, agreement, plan, arrangement or understanding which, by
its terms, would cause any obligation of any of such entities to be created,
triggered or accelerated or would cause any right of any of such entities to be
lost or deferred, in any case as a result of the Delaware Company executing, or
consummating the transactions contemplated by, this Agreement.
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<PAGE>
Section III.16 Undisclosed Material Liabilities. The Delaware Company
--------------------------------
and its Subsidiaries, taken as a whole, do not have any material liabilities or
obligations (whether known or unknown, absolute, accrued, contingent or
otherwise and whether due or to become due), except (a) as and to the extent
disclosed in Section 3.16 of the Delaware Company Disclosure Schedule; (b) as
and to the extent reflected, disclosed or reserved against in the Delaware
Company SEC Documents filed prior to the date hereof; or (c) for liabilities and
obligations incurred since June 30, 1999 in the ordinary course of business
consistent with past practice.
Section III.17 Employee Benefit Plans. (1) Except where the failure to
----------------------
be true would not, individually or in the aggregate, have a material adverse
effect on the Delaware Company, (i) each Delaware Company Plan (as hereinafter
defined) has been operated and administered in accordance with its terms and
applicable Law, including, but not limited to, the Employee Retirement Income
Security Act of 1974, as amended ("ERISA"), and the Code, (ii) each Delaware
-----
Company Plan intended to be "qualified" within the meaning of Section 401(a) of
the Code is so qualified, (iii) except as required by the Consolidated Omnibus
Budget Reconciliation Act of 1985 and the Rules and Regulations thereunder
("COBRA"), no Delaware Company Plan provides death or medical benefits (whether
- -------
or not insured), with respect to current or former employees of the Delaware
Company or of any trade or business, whether or not incorporated, which together
with the Delaware Company would be deemed a "single employer" within the meaning
of Section 4001 of ERISA (a "Delaware Company ERISA Affiliate"), beyond their
--------------------------------
retirement or other termination of service, (iv) no liability under Title IV of
ERISA has been incurred by the Delaware Company or any Delaware Company ERISA
Affiliate that has not been satisfied in full, and no condition exists that
presents a material risk to the Delaware Company or any Delaware Company ERISA
Affiliate of incurring any such liability (other than PBGC premiums), (v) all
contributions or other amounts due from the Delaware Company or any Delaware
Company ERISA Affiliate with respect to each Delaware Company Plan have been
paid in full, (vi) neither the Delaware Company nor any Delaware Company ERISA
Affiliate has engaged in a transaction in connection with which the Delaware
Company or any of its Subsidiaries could reasonably be expected to be subject to
either a civil penalty assessed pursuant to Section 409 or 502(i) of ERISA or a
tax imposed pursuant to Section 4975 or 4976 of the Code, and (vii) there are no
pending or anticipated or, to the best
-26-
<PAGE>
knowledge of Delaware Company, threatened claims (other than routine claims for
benefits) by, on behalf of or against any Delaware Company Plan or any trusts
related thereto.
(20 Except as set forth in Section 3.17 of the Delaware Company Disclosure
Schedule, neither the execution and delivery of this Agreement nor the
consummation of the transactions contemplated hereby will (i) result in any
payment (including, without limitation, severance, unemployment compensation,
parachute payments under Section 280G of the Code or otherwise) becoming due to
any current or former director or any employee of the Delaware Company or any of
its Subsidiaries under any Delaware Company Plan or otherwise or cause any prior
payment made to any current or former director or employee of the Delaware
Company or any of its Subsidiaries to be a parachute payment under Section 280G
of the Code, (ii) materially increase any benefits otherwise payable under any
Delaware Company Plan or (iii) result in any acceleration of the time of payment
or vesting of any such benefits. Except as set forth in Section 3.17 of the
Delaware Company Disclosure Schedule, no payments have been made or will be made
by the Delaware Company or any of its Subsidiaries that would not be deductible
by the Delaware Company or any of its Subsidiaries under Section 162(m) of the
Code. Except as set forth in Section 3.17 of the Delaware Company Disclosure,
no benefits or bonus has accrued or will accrue under the Consolidation Capital
Corporation Section 162(m) Bonus Plan or any other bonus program for any
officer, director, or any senior regional manager of the Delaware Company on or
before the Effective Time.
(30 For purposes of this Agreement, the term "Delaware Company Plan" shall
---------------------
mean each deferred compensation, bonus or other incentive compensation, stock
purchase, stock option, including, without limitation, any Delaware Company
Option Plan, or other equity compensation plan, program, agreement or
arrangement; each severance or termination pay, medical, surgical,
hospitalization, life insurance or other "welfare" plan, fund or program (within
the meaning of Section 3(1) of ERISA); each profit-sharing, stock bonus or other
"pension" plan, fund or program (within the meaning of Section 3(2) of ERISA);
each employment, termination or severance agreement; and each other employee
benefit plan, fund, program, agreement or arrangement, in each case, that is
sponsored, maintained or contributed to or required to be contributed to by the
Delaware Company or by any Delaware Company ERISA Affiliate
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<PAGE>
or to which the Delaware Company or any Delaware Company ERISA Affiliate is
party, whether written or oral, for the benefit of any employee or former
employee of the Delaware Company or any Delaware Company ERISA Affiliate.
(40 Except where the failure to be true would not, individually or in the
aggregate, have a material adverse effect on the Delaware Company, with respect
to each Delaware Company Multiemployer Plan (as hereinafter defined) (i) no
withdrawal liability has been incurred by the Delaware Company or any Delaware
Company ERISA Affiliate, and the Delaware Company has no reason to believe that
any such liability will be incurred, prior to the Closing Date, (ii) no such
plan is in "reorganization" (within the meaning of Section 4241 of ERISA), (iii)
no notice has been received that increased contributions may be required to
avoid a reduction in plan benefits or the imposition of an excise tax, or that
the plan is or may become "insolvent" (within the meaning of Section 4241 of
ERISA), (iv) no proceedings have been instituted by the Pension Benefit Guaranty
Corporation against the plan, (v) there is no contingent liability for
withdrawal liability by reason of a sale of assets pursuant to Section 4204 of
ERISA, and (vi) except as disclosed in Section 3.17(d) of the Delaware Company
Disclosure Schedule, if the Delaware Company or any Delaware Company ERISA
Affiliate were to have a complete or partial withdrawal under Section 4203 of
ERISA as of the Closing, no obligation to pay withdrawal liability would exist
on the part of the Delaware Company or any ERISA Affiliate. "Delaware Company
----------------
Multiemployer Plan" means a multiemployer plan within the meaning of Section
- ------------------
4001(a) (3) of ERISA with respect to which the Delaware Company or any Delaware
Company ERISA Affiliate has an obligation to contribute or has or could have
withdrawal liability under Section 4201 of ERISA.
(50 No Person, except those listed in Section 3.17(e) of the Delaware
Company Disclosure Schedule, is eligible to receive any specified number of
shares of Delaware Company Common Stock under the Stock Performance Plan (as
hereinafter defined), including, without limitation, any allocations or other
rights giving such Person any right to the award or issuance of the Delaware
Company Common Stock whether or not on account of the occurrence of the
transactions contemplated hereby. Waivers of any such rights have been obtained
and copies forwarded to the Texas Company prior to the date of this Agreement.
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<PAGE>
Section III.18 Licenses and Registration. The Delaware Company and its
-------------------------
Subsidiaries have all permits, governmental licenses, registrations, orders,
exemptions and approvals necessary to own (or lease, as applicable) and operate
their properties and to carry on their businesses substantially as presently
conducted (and as presently proposed to be conducted) as required by Law or the
rules and regulations of any Governmental Entity (the "Delaware Company Material
-------------------------
Permits") and all of such Delaware Company Material Permits are valid and in
- -------
full force and effect, other than those permits, licenses, registrations,
orders, exemptions and approvals, the absence of which would not result in a
material adverse effect on the Delaware Company.
Section III.19 Compliance with Laws. The Delaware Company and its
--------------------
Subsidiaries have complied with all Laws applicable to their businesses,
properties (whether owned or leased), assets and operations (including, without
limitation, those relating to wages and hours, occupational health and safety,
record keeping, customs, antitrust, labor, consumer protection, employee
relations, workers' compensation and securities), except for such non-compliance
as would not have a material adverse effect on the Delaware Company.
Section III.20 Environmental Matters. (1) With such exceptions as,
---------------------
individually or in the aggregate, would not have a material adverse effect on
the Delaware Company, (i) no written notice, notification, demand, request for
information, citation, summons, complaint or order has been received by, and no
investigation, action, claim, suit, proceeding or review is pending or, to the
knowledge of the Delaware Company, threatened by any Person against, the
Delaware Company or any of its Subsidiaries, with respect to any applicable
Environmental Law, (ii) the Delaware Company and its Subsidiaries are currently
and have been in compliance with all applicable Environmental Laws, (iii) the
Delaware Company and each of its Subsidiaries have obtained and complied with
the terms and conditions of all permits and other approvals necessary under
applicable Environmental Laws to operate its business and to treat, transport,
store, dispose of and otherwise handle Hazardous Substances ("Delaware Company
----------------
Environmental Permits"), (iv) there have been no Releases or threats of Releases
- ---------------------
(as that term is defined in applicable Environmental Laws) at, from, in, on,
under, or to any property owned or operated by the Delaware Company or any of
its Subsidiaries except as permitted by applicable Environmental Laws, (v) the
Delaware Company or any of its Subsidiaries have reported to
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<PAGE>
all appropriate authorities to the extent required by applicable Environmental
Laws all past and present sites owned and operated by the Delaware Company or
any of its Subsidiaries where Hazardous Substances have been treated, stored,
disposed of or otherwise handled, and (vi) there is no on-site or off-site
location to which the Delaware Company or any of its Subsidiaries have
transported or disposed of Hazardous Substances or arranged for the
transportation or disposal of Hazardous Substances.
(20 For purposes of this Agreement, the following terms have the
following meanings:
(10 "Environmental Law" means any law, rule, regulation, or
-----------------
ordinance, as in effect at the Effective Time, of any Governmental Entity
relating to pollution or protection of the environment, including, without
limitation, any Law relating to emissions, discharges, Releases or threatened
Releases of pollutants, contaminants or Hazardous Materials or wastes into the
ambient air, surface water, ground water or land.
(20 "Hazardous Materials" means (1) any "hazardous waste" as
-------------------
defined in the Resource Conservation and Recovery Act of 1976 (42 U.S.C.
Sections 6901 et seq.), as amended through the Effective Time, and regulations
-- ---
promulgated thereunder; (2) any "hazardous substance" as defined in the
Comprehensive Environmental Response, Compensation and Liability Act of 1980 (42
U.S.C. Sections 9601 et seq.), as amended through the Effective Time, and
-- ---
regulations promulgated thereunder; (3) any "toxic substance" as defined in the
Toxic Substances Control Act (15 U.S.C. Sections 2601 et seq.), as amended
-- ---
through the Effective Time, and regulations promulgated thereunder; and (4)
petroleum, and any of its derivatives, by-products and other petroleum-related
hydrocarbons.
(30 "Hazardous Materials Contamination" means contamination
---------------------------------
of the soil, groundwater, surface water, air or other elements by Hazardous
Materials that would give rise to liability under applicable Environmental Law.
(40 "Release" means any spilling, leaking, pumping, pouring,
-------
emitting, emptying, discharging, injecting, escaping, leaching, dumping or
disposing into the environment (including the abandonment or discarding of
barrels, containers or other closed receptacles containing any Hazardous
Material), but excludes (1) any release which results in exposure to Persons
solely within a workplace, with respect to a claim which such Persons may
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<PAGE>
assert against the employer of such Persons, (2) emissions from the engine
exhaust of a motor vehicle, rolling stock, aircraft or vessel, and (3) the
normal application of fertilizer.
Section III.21 Labor Matters. Neither the Delaware Company nor any of
-------------
its Subsidiaries is the subject of any material proceeding asserting that it or
any of its Subsidiaries has committed an unfair labor practice or seeking to
compel it to bargain with any labor union or labor organization nor is there
pending or, to the knowledge of the Delaware Company, threatened in writing, nor
has there been for the past five years, any labor strike, dispute, walkout, work
stoppage, slow-down or lockout involving the Delaware Company or any of its
Subsidiaries, except in each case as would not, individually or in the
aggregate, have a material adverse effect on the Delaware Company.
Additionally, except as disclosed in Section 3.21 of the Delaware Company
Disclosure Schedule, (a) neither the Delaware Company nor any of its
Subsidiaries is a party to any collective bargaining agreement, (b) there is no
unfair labor practice complaint against the Delaware Company or any of its
Subsidiaries pending or, to the knowledge of the Delaware Company, threatened
before the National Labor Relations Board that would, if adversely determined
against the Delaware Company or any of its Subsidiaries, have a material adverse
effect on the Delaware Company, (c) there is no labor strike or organized slow
down or stoppage actually pending or, to the knowledge of the Delaware Company,
threatened against the Delaware Company or any of its Subsidiaries which
involves the employees of the Delaware Company or any of its Subsidiaries and
which would have a material adverse effect on the Delaware Company, (d) no
private agreement restricts the Delaware Company or any of its Subsidiaries from
relocating, closing or terminating any of its operations or facilities, and (e)
except for plant closings or layoffs that, individually or in the aggregate,
would not have a material adverse effect on the Delaware Company, neither the
Delaware Company nor any of its Subsidiaries has implemented any plant closing
or layoff of employees that could reasonably be expected to require notification
under the Worker Adjustment Retraining and Notification Act of 1988, as amended,
or any similar state or local Law or regulation and no such layoffs will be
implemented before the Effective Time.
Section III.22 State Takeover Statutes. No "fair price", "moratorium",
-----------------------
"control share acquisition" or other similar antitakeover statute or regulation
enacted under state or federal laws in the United States (with the exception of
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Section 203 of the DGCL) applicable to the Delaware Company is applicable to the
Merger or the other transactions contemplated hereby. The action of the Board
of Directors of the Delaware Company in approving this Agreement (and the
transactions provided for herein) is sufficient to render inapplicable to this
Agreement (and the transactions provided for herein or contemplated hereby) the
restrictions on "business combinations" (as defined in Section 203 of the DGCL)
as set forth in Section 203 of the DGCL.
Section III.23 Ownership of Texas Company Common Stock. Neither the
----------------------------------------
Delaware Company nor any Delaware Company Subsidiary, as of the date hereof,
owns of record or beneficially, or is the Beneficial Owner of a number of shares
of Texas Company Common Stock which, in the aggregate, exceeds 1% of the
outstanding shares of Texas Company Common Stock and, without consent of the
Texas Company, which consent shall not be unreasonably withheld, neither the
Delaware Company nor any Delaware Company Subsidiary shall acquire or dispose of
any shares of Texas Company Common Stock until after the Closing Date except in
connection with the transactions contemplated by this Agreement. Beneficial
Owner has the meaning ascribed to such term in Article XIII of the Texas
Company's Articles of Incorporation.
Section III.24 General. (1) As used above or elsewhere in this
-------
Agreement with respect to the Delaware Company and/or its Subsidiaries, the term
"material adverse effect" means an effect which is both material and adverse
-----------------------
with respect to, and the term "material" means material with respect to, the
--------
assets, business, results of operations or financial condition of the Delaware
Company taken as a whole with its Subsidiaries, and in either case shall be
determined net of, and only after giving the Delaware Company and its
Subsidiaries the benefit of, any insurance, indemnity, reimbursement,
contribution, compensation or other similar right which would operate to reduce,
offset, compensate or otherwise limit the impact thereof on the Delaware Company
and/or any of its Subsidiaries; provided, however, that any change or changes in
or caused by the prices of products or services and any change in Law, rule, or
regulation or GAAP (applied on a consistent basis during the periods involved),
shall not be deemed to constitute a material adverse effect or be deemed
material.
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(20 For purposes of this Agreement, the term "Delaware Company
----------------
Disclosure Schedule" means the Delaware Company Disclosure Schedule delivered by
- -------------------
the Delaware Company to the Texas Company prior to the date hereof.
(30 No recourse or liability whatsoever with respect to this Agreement
shall be had against any stockholder, officer, director, employee or agent, as
such, past, present or having such capacity at any time prior to the Effective
Time, of the Delaware Company, any of its Subsidiaries, or any successor
thereof, either directly or through the Delaware Company, any of its
Subsidiaries or any successor thereof, such recourse or liability, if any, being
expressly waived and released by the Texas Company and its Subsidiaries as a
condition of, and as consideration for, the execution of this Agreement and any
other documents, instruments or certificates executed or delivered in connection
with this Agreement or the Merger.
(40 The foregoing representations and warranties of the Delaware
Company, and any liability for breach or violation thereof, shall terminate
absolutely and be of no further force and effect at and as of the Effective
Time.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE TEXAS COMPANY
The Texas Company represents and warrants to the Delaware Company that,
except as expressly described or permitted in this Agreement or as disclosed to
the Delaware Company in the Texas Company Disclosure Schedule (as hereinafter
defined):
Section IV.1 Due Incorporation, Etc. Each of the Texas Company and
-----------------------
each Texas Company Subsidiary (as hereinafter defined) is a corporation or other
legal entity duly organized, validly existing and in good standing under the
laws of the jurisdiction of its incorporation or organization, with all
requisite power and authority to own, operate and lease its properties and to
carry on its business as it is now being conducted, except where the failure to
be so organized, existing or in good standing or to have such power and
authority would not, individually or in the aggregate, have a material adverse
effect (as hereinafter defined) on the Texas Company and its Subsidiaries, taken
as a whole.
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Section IV.2 Qualification as Foreign Entities. Each of the Texas
----------------------------------
Company and each Texas Company Subsidiary is duly licensed or qualified to do
business and, if applicable, is in good standing, in each state or other
jurisdiction in which the character of the properties owned or leased by it or
the nature of the business conducted by it requires it to be so licensed or
qualified, except where the failure to be so licensed, qualified or in good
standing would not have a material adverse effect on the Texas Company.
Section IV.3 Capital Stock. As of the date hereof, the authorized
--------------
capital stock of the Texas Company consists solely of 100,000,000 shares of the
Texas Company Common Stock and 50,000,000 shares of preferred stock, $.001 par
value per share. As of the date hereof, 38,344,681 shares of Texas Company
Common Stock are outstanding, no shares of the preferred stock of the Texas
Company are outstanding, and 5,033,452 shares of Texas Company Common Stock are
reserved for issuance pursuant to the exercise of Texas Company Options (as
hereinafter defined). All of the Texas Company's issued and outstanding shares
of capital stock are duly authorized, validly issued, fully paid and
nonassessable. Except as set forth in Section 4.3 of the Texas Company
Disclosure Schedule, for the rights contained in the Preferred Stock Agreement
and as set forth in this Section 4.3, there are not outstanding any Equity
Rights with respect to the Texas Company. A true and correct list of all of the
outstanding options of the Texas Company (the "Texas Company Options") granted
---------------------
pursuant to the plans of the Texas Company set forth in Section 4.3 of the Texas
Company Disclosure Schedule or otherwise (the plans described in Section 4.3 of
the Texas Company Disclosure Schedule being referred to collectively herein as
the "Texas Company Option Plans") and the purchase prices of the shares of Texas
--------------------------
Company Common Stock issuable upon the exercise of each Texas Company Option has
been delivered by the Texas Company to the Delaware Company prior to the date of
this Agreement.
Section IV.4 Preferred Stock Agreement. The Subscription and Exchange
-------------------------
Agreement between the Texas Company and the New Investor (as hereinafter
defined) (the "Preferred Stock Agreement") has been duly executed and delivered
-------------------------
by the Texas Company.
Section IV.5 Capitalization of the Texas Company Subsidiaries. Set
------------------------------------------------
forth on Schedule 4.5 of the Texas Company Disclosure Schedule is a true and
correct list of all of the direct and indirect Subsidiaries of the Texas Company
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<PAGE>
and the issued and outstanding capital stock of such Subsidiaries as of the date
of this Agreement. All issued and outstanding shares of capital stock of each
of the Subsidiaries of the Texas Company (a "Texas Company Subsidiary") are duly
------------------------
authorized, validly issued, fully paid and nonassessable.
Section IV.6 Ownership of Equity Interests. The Texas Company or one
-----------------------------
or more of its wholly-owned Subsidiaries owns, of record and beneficially, all
of the issued and outstanding capital stock or other equity interests of each of
the Texas Company Subsidiaries and all outstanding Equity Rights with respect to
each Texas Company Subsidiary, free and clear (except as otherwise contemplated
in the Second Amended and Restated Credit Agreement, dated as of October 15,
1998, among the Texas Company, certain of its Subsidiaries, the banks party
thereto and Chase Bank of Texas, National Association, as Agent for such banks,
as amended by the First Amendment to Second Amended and Restated Credit
Agreement, dated as of May 25, 1999 among the same parties and the documents
related thereto) of all Liens. Except as described above or as set forth in
Section 4.6 of the Texas Company Disclosure Schedule, neither the Texas Company
nor any of the Texas Company Subsidiaries owns or holds, directly or indirectly,
any capital stock of, or other equity or other ownership interest in (or any
securities, rights or other interests exchangeable for, convertible into or
which otherwise relate to the acquisition of any capital stock of), any Person
or is a partner or joint venturer in any partnership or joint venture material
to the Texas Company.
Section IV.7 Corporate Power and Authority. The Texas Company has the
------------------------------
requisite corporate power to execute, deliver and perform this Agreement and to
consummate the transactions contemplated hereby, subject to obtaining the
Requisite Texas Holder Approvals. The execution and delivery of this Agreement
by the Texas Company and the consummation of the transactions contemplated
hereby have been duly authorized by all necessary corporate action on the part
of the Texas Company, subject, to obtaining the Requisite Texas Holder
Approvals. This Agreement has been duly and validly executed and delivered by
the Texas Company and constitutes the valid and binding agreement of the Texas
Company, enforceable against the Texas Company in accordance with its terms,
except as limited by bankruptcy, insolvency, moratorium and similar laws
affecting creditors' rights and except as limited by equitable principles.
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<PAGE>
Section IV.8 No Conflicts or Consents. (1) Except as provided for in
------------------------
Article I and as required under the HSR Act, the Exchange Act, the Securities
Act, and state securities or "blue sky" Laws, no notices, reports or other
filings are required to be made by the Texas Company with, nor are any consents,
registrations, approvals, permits or authorizations required to be obtained by
the Texas Company from, any Governmental Entity, in connection with the
execution and delivery of this Agreement by the Texas Company and the
consummation by the Texas Company of the transactions contemplated hereby, the
failure to make or obtain any or all of which would have a material adverse
effect on the Texas Company, or would prevent, materially delay or materially
burden the transactions contemplated in this Agreement.
(20 Except as set forth in Section 4.8 of the Texas Company Disclosure
Schedule, the execution and delivery of this Agreement by the Texas Company does
not, and the consummation by the Texas Company of the transactions contemplated
hereby will not, constitute or result in (i) a breach or violation of, or a
default under, the articles of incorporation or bylaws of the Texas Company or
the comparable governing instruments of any material Texas Company Subsidiary,
(ii) a breach or violation of, or a default under, the acceleration of or the
creation of any lien, pledge, security interest or other encumbrance on assets
(with or without the giving of notice or the lapse of time) pursuant to, any
provision of any Contracts of the Texas Company or any of its Subsidiaries (the
"Texas Company Contracts") or any change in the rights or obligations of any
-----------------------
party under any of the Texas Company Contracts or (iii) any Law or judgment,
decree, order, award or governmental or non-governmental permit or license to
which the Texas Company or any of its Subsidiaries is subject, except, in the
case of clause (ii) and (iii) above for such breaches, violations, defaults,
accelerations or changes that, alone or in the aggregate, would not have a
material adverse effect on the Texas Company, or would not prevent, materially
delay or materially burden the transactions contemplated by this Agreement.
Section IV.9 SEC Reports and Financial Statements. Since January 1,
------------------------------------
1997, the Texas Company has filed with the SEC all forms, reports and documents
required to be filed by it under the Exchange Act or the Securities Act (as they
have been amended since the time of their filing, collectively, the "Texas
-----
Company SEC Documents"). The Texas
- ---------------------
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<PAGE>
Company SEC Documents, including without limitation any financial statements or
schedules included therein, at the time filed, and any forms, reports or other
documents filed by the Texas Company with the SEC after the date of this
Agreement, (a) did not at the time they were filed, or will not at the time they
are filed, contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading and (b) complied or will be prepared in compliance in all
material respects with the applicable requirements of the Exchange Act or the
Securities Act, as the case may be. The financial statements of the Texas
Company included in the Texas Company SEC Documents comply as to form in all
material respects with applicable accounting requirements and with the published
rules and regulations of the SEC with respect thereto, have been prepared in
accordance with GAAP applied on a consistent basis during the periods involved
(except as may be indicated in the notes thereto or, in the case of the
unaudited statements, to normal audit adjustments) and fairly present (subject,
in the case of the unaudited statements, to normal audit adjustments) the
consolidated financial position of the Texas Company and its Subsidiaries as at
the dates thereof and the consolidated results of their operations and cash
flows for the periods then ended. All liabilities or obligations (absolute,
accrued, fixed, contingent or otherwise) required to be reflected, reserved
against or otherwise disclosed in the financial statements of the Texas Company
included in the Texas Company SEC Documents filed prior to the date of this
Agreement have been properly reflected, reserved against or otherwise disclosed
in such financial statements in accordance with the rules and regulations of the
SEC and GAAP applied on a consistent basis during the periods involved (except
as may be indicated in the notes thereto or, in the case of the unaudited
statements, to normal audit adjustments). Except as disclosed in Section 4.9 of
the Texas Company Disclosure Schedule, since June 30, 1999, and prior to the
date of this Agreement, no act, omission, occurrence, event, condition or
circumstance has occurred or become known to the Texas Company, and no
transaction, commitment or agreement has been entered into by the Texas Company
or any of its Subsidiaries, that should have been disclosed in the Texas Company
SEC Documents.
Section IV.10 Information in Disclosure Documents and Registration
----------------------------------------------------
Statement. (1) The S-4 will, at the time it becomes effective under the
- ---------
Securities Act and at the Effective Time, not contain any untrue statement of a
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<PAGE>
material fact or omit to state any material fact required to be stated therein
or necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading.
(20 The proxy or information statement relating to the meeting of the
Texas Company's shareholders to obtain the Requisite Texas Holder Approvals (as
it may be amended from time to time, the "Texas Company Proxy Statement") will
-----------------------------
not, at the date mailed to the Texas Company's shareholders and at the time of
the meeting of shareholders to be held in connection with the approval of this
Agreement and the issuance of the Texas Company Common Stock in connection with
the Merger, contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they are made, not
misleading. The Texas Company Proxy Statement will, when filed with the SEC by
the Texas Company, comply as to form in all material respects with the
provisions of the Exchange Act and the rules and regulations thereunder.
(30 Notwithstanding the foregoing, the Texas Company makes no
representation with respect to statements made in any of the foregoing documents
based on information supplied by the Delaware Company specifically for inclusion
therein.
Section IV.11 Litigation. Except as disclosed in the Texas Company SEC
----------
Documents filed prior to the date of this Agreement, there is as of the date
hereof no suit, claim, action, proceeding or investigation pending or, to the
best knowledge of the Texas Company, threatened, against the Texas Company or
any of its Subsidiaries which, individually or in the aggregate, would have a
material adverse effect on the Texas Company, or a material adverse effect on
the ability of the Texas Company to consummate the transactions contemplated by
this Agreement. Except as disclosed in the Texas Company SEC Documents filed
prior to the date of this Agreement, neither the Texas Company nor any of its
Subsidiaries is subject to any outstanding order, writ, injunction or decree
which, individually or in the aggregate, would have a material adverse effect on
the Texas Company, or a material adverse effect on the ability of the Texas
Company to consummate the transactions contemplated hereby.
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<PAGE>
Section IV.12 No Material Adverse Change. Except as disclosed in the
--------------------------
Texas Company SEC Documents filed prior to the date of this Agreement, in
connection with the transactions contemplated in this Agreement, and the
negotiation, execution and delivery of the Preferred Stock Agreement or the
consummation of the transactions contemplated thereby, since June 30, 1999,
there has not been any material adverse change in the assets, business, results
of operations or financial condition of the Texas Company and its Subsidiaries,
taken as a whole.
Section IV.13 Taxes. (10 Except as set forth in the financial
-----
statements (including the notes thereto) included in the Texas Company SEC
Documents and in Section 4.13 of the Texas Company Disclosure Schedule, (i) all
Returns material to the Texas Company and its Subsidiaries, taken as a whole
(the "Texas Company Returns"), required to be filed with any taxing authority
---------------------
by, or with respect to, the Texas Company or any of its Subsidiaries have been
timely filed in accordance with all applicable Laws; (ii) the Texas Company and
its Subsidiaries have timely paid all Taxes shown as due and payable on the
Texas Company Returns that have been so filed, and, as of the time of filing,
the Texas Company Returns correctly reflected in all material respects the facts
regarding the income, business, assets, operations, activities and the status of
the Texas Company and its Subsidiaries, other than Taxes that are being
contested in good faith and for which adequate reserves are reflected on the
Texas Company's Consolidated Balance Sheet dated June 30, 1999 (the "Texas
-----
Company Balance Sheet"); (iii) the Texas Company and its Subsidiaries have made
- ---------------------
provision for all Taxes material to the Texas Company and its Subsidiaries,
taken as a whole, payable by them for which no Texas Company Return has yet been
filed or for which no Texas Company Returns are required to be filed; (iv) the
charges, accruals and reserves for Taxes with respect to the Texas Company and
its Subsidiaries reflected on the Texas Company Balance Sheet are adequate under
GAAP (applied on a consistent basis during the periods involved) to cover the
Tax liabilities accruing through the date thereof; (v) there is no action, suit,
proceeding, audit or claim now pending against or with respect to the Texas
Company or any of its Subsidiaries, or, to the knowledge of the Texas Company,
proposed or threatened, in respect of any Tax where there is a reasonable
possibility of an adverse determination material to the Texas Company and its
Subsidiaries, taken as a whole; (vi) there are no Liens on any of the assets of
Texas Company or any of its Subsidiaries with respect to Taxes, other than Liens
for Taxes not yet due and
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<PAGE>
payable or for Taxes that the Texas Company or one or more of its Subsidiaries
is contesting in good faith through appropriate proceedings and for which
appropriate reserves have been established, and (vii) neither the Texas Company
nor any of its Subsidiaries has been a member of an affiliated, consolidated,
combined or unitary group other than one of which the Texas Company was the
common parent.
(20 All material elections made since December 31, 1998, with respect to
Taxes affecting the Texas Company or any of its Subsidiaries as of the date of
this Agreement are set forth in Section 4.13 of the Texas Company Disclosure
Schedule.
Section IV.14 Vote Required. Assuming that the representations and
-------------
warranties in Section 3.23 of this Agreement, and the reps and warranties of
BOSS II, LLC in Section 4.5 of the Subscription and Exchange Agreement are true
and correct, the affirmative vote of the holders of at least two-thirds of the
outstanding shares of Texas Company Common Stock entitled to vote with respect
to the approval of this Agreement and the affirmative vote of at least a
majority of the votes cast (provided the votes cast represents a majority in
interest of all securities entitled to vote) with respect to the issuance of the
Texas Company Common Stock in connection with the Merger and (if required by the
Shareholder Approval Policy of the NYSE) the issuance of the Texas Company
Preferred Stock pursuant to the Preferred Stock Agreement are the only votes of
the holders of any class or series of the Texas Company's capital stock or other
securities necessary to approve this Agreement and the transactions contemplated
hereby or the issuance of the Texas Company Common Stock in connection with the
Merger or the issuance of the Texas Company Preferred Stock pursuant to the
Preferred Stock Agreement (the "Requisite Texas Holder Approvals").
--------------------------------
Section IV.15 Opinion of Financial Advisor. The Texas Company has
----------------------------
received the opinion of Chase Securities, Inc., its financial advisor, to the
effect that, as of the date hereof, and provided a true, correct and complete
copy of such opinion to the Delaware Company.
Section IV.16 Change in Control Provisions. Except as set forth in
----------------------------
Section 4.16 of the Texas Company Disclosure Schedule, neither the Texas Company
nor any of its Subsidiaries is a party to any Texas Company Plan or any material
contract, agreement, plan, arrangement or understanding which, by its terms,
would cause any obligation
-40-
<PAGE>
of any of such entities to be created, triggered or accelerated or would cause
any right of any of such entities to be lost or deferred, in any case as a
result of the Texas Company executing, or consummating the transactions
contemplated by, this Agreement.
Section IV.17 Undisclosed Material Liabilities. The Texas Company and
--------------------------------
its Subsidiaries, taken as a whole, do not have any material liabilities or
obligations (whether known or unknown, absolute, accrued, contingent or
otherwise and whether due or to become due), except (a) as and to the extent
disclosed in Section 4.17 of the Texas Company Disclosure Schedule; (b) as and
to the extent reflected, disclosed or reserved against in the Texas Company SEC
Documents filed prior to the date hereof; or (c) for liabilities and obligations
incurred since June 30, 1999 in the ordinary course of business consistent with
past practice.
Section IV.18 Employee Benefit Plans. (1) Except where the failure to
----------------------
be true would not, individually or in the aggregate, have a material adverse
effect on the Texas Company, (i) each Texas Company Plan (as hereinafter
defined) has been operated and administered in accordance with its terms and
applicable Law, including, but not limited to ERISA and the Code, (ii) each
Texas Company Plan intended to be "qualified" within the meaning of Section
401(a) of the Code is so qualified, (iii) except as required by COBRA, no Texas
Company Plan provides death or medical benefits (whether or not insured), with
respect to current or former employees of the Texas Company or of any trade or
business, whether or not incorporated, which together with the Texas Company
would be deemed a "single employer" within the meaning of Section 4001 of ERISA
(a "Texas Company ERISA Affiliate"), beyond their retirement or other
-----------------------------
termination of service, (iv) no liability under Title IV of ERISA has been
incurred by the Texas Company or any Texas Company ERISA Affiliate that has not
been satisfied in full, and no condition exists that presents a material risk to
the Texas Company or any Texas Company ERISA Affiliate of incurring any such
liability (other than PBGC premiums), (v) all contributions or other amounts due
from the Texas Company or any Texas Company ERISA Affiliate with respect to each
Texas Company Plan have been paid in full, (vi) neither the Texas Company nor
any Texas Company ERISA Affiliate has engaged in a transaction in connection
with which the Texas Company or any of its Subsidiaries could reasonably be
expected to be subject to either a civil penalty assessed pursuant to Section
409 or 502(i) of ERISA or
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<PAGE>
a tax imposed pursuant to Section 4975 or 4976 of the Code, and (vii) there are
no pending or anticipated or, to the best knowledge of Texas Company, threatened
claims (other than routine claims for benefits) by, on behalf of or against any
Texas Company Plan or any trusts related thereto.
(20 Neither the execution and delivery of this Agreement nor the
consummation of the transactions contemplated hereby will (i) result in any
payment (including, without limitation, severance, unemployment compensation,
parachute payments under Section 280G of the Code or otherwise) becoming due to
any current or former director or any employee of the Texas Company or any of
its Subsidiaries under any Texas Company Plan or otherwise or cause any prior
payment made to any current or former director or employee of the Delaware
Company or any of its Subsidiaries to be a parachute payment under Section 280G
of the Code, (ii) materially increase any benefits otherwise payable under any
Texas Company Plan or (iii) result in any acceleration of the time of payment or
vesting of any such benefits. Except as set forth in Section 4.18(b) of the
Texas Company Disclosure Schedule, no payments have been made or will be made by
the Texas Company or any of its Subsidiaries that would not be deductible by the
Texas Company or any of its Subsidiaries under Section 162(m) of the Code.
Except as set forth in Section 4.18(b) of the Texas Company Disclosure, no
benefits or bonus has accrued or will accrue under any other bonus program for
any officer, director, or any senior regional manager of the Delaware Company on
or before the Effective Time.
(30 For purposes of this Agreement, the term "Texas Company Plan" shall
------------------
mean each deferred compensation, bonus or other incentive compensation, stock
purchase, stock option, including, without limitation, any Texas Company Option
Plan, or other equity compensation plan, program, agreement or arrangement; each
severance or termination pay, medical, surgical, hospitalization, life insurance
or other "welfare" plan, fund or program (within the meaning of Section 3(1) of
ERISA); each profit-sharing, stock bonus or other "pension" plan, fund or
program (within the meaning of Section 3(2) of ERISA); each employment,
termination or severance agreement; and each other employee benefit plan, fund,
program, agreement or arrangement, in each case, that is sponsored, maintained
or contributed to or required to be contributed to by the Texas
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<PAGE>
Company or by any Texas Company ERISA Affiliate or to which the Texas Company or
any Texas Company ERISA Affiliate is party, whether written or oral, for the
benefit of any employee or former employee of the Texas Company or any Texas
Company ERISA Affiliate.
(40 Except where the failure to be true would not, individually or in
the aggregate, have a material adverse effect on the Texas Company, with respect
to each Texas Company Multiemployer Plan (as hereinafter defined) (i) no
withdrawal liability has been incurred by the Texas Company or any Texas Company
ERISA Affiliate, and the Texas Company has no reason to believe that any such
liability will be incurred, prior to the Closing Date, (ii) no such plan is in
"reorganization" (within the meaning of Section 4241 of ERISA), (iii) no notice
has been received that increased contributions may be required to avoid a
reduction in plan benefits or the imposition of an excise tax, or that the plan
is or may become "insolvent" (within the meaning of Section 4241 of ERISA), (iv)
no proceedings have been instituted by the Pension Benefit Guaranty Corporation
against the plan, (v) there is no contingent liability for withdrawal liability
by reason of a sale of assets pursuant to Section 4204 of ERISA, and (vi) except
as disclosed in Section 4.18(d) of the Texas Company Disclosure Schedule, if the
Texas Company or any Texas Company ERISA Affiliate were to have a complete or
partial withdrawal under Section 4203 of ERISA as of the Closing, no obligation
to pay withdrawal liability would exist on the part of the Texas Company or any
ERISA Affiliate. "Texas Company Multiemployer Plan" means a multiemployer plan
--------------------------------
within the meaning of Section 4001(a) (3) of ERISA with respect to which the
Texas Company or any Texas Company ERISA Affiliate has an obligation to
contribute or has or could have withdrawal liability under Section 4201 of
ERISA.
Section IV.19 Licenses and Registration. The Texas Company and its
-------------------------
Subsidiaries have all permits, governmental licenses, registrations, orders,
exemptions and approvals necessary to own (or lease, as applicable) and operate
their properties and to carry on their businesses substantially as presently
conducted (and as presently proposed to be conducted) as required by Law or the
rules and regulations of any Governmental Entity (the "Texas Company Material
----------------------
Permits") and all of such Texas Company Material Permits are valid and in full
- -------
force and effect, other than those permits, licenses, registrations, orders,
exemptions and approvals, the absence of which would not result in a material
adverse effect on the Texas Company.
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<PAGE>
Section IV.20 Compliance with Laws. The Texas Company and its
--------------------
Subsidiaries have complied with all Laws applicable to their businesses,
properties (whether owned or leased), assets and operations (including, without
limitation, those relating to wages and hours, occupational health and safety,
record keeping, customs, antitrust, labor, consumer protection, employee
relations, workers' compensation and securities), except for such non-compliance
as would not have a material adverse effect on the Texas Company.
Section IV.21 Environmental Matters. With such exceptions as,
---------------------
individually or in the aggregate, would not have a material adverse effect on
the Texas Company, and except as set forth in Section 4.21 of the Texas Company
Disclosure Schedule, (i) no written notice, notification, demand, request for
information, citation, summons, complaint or order has been received by, and no
investigation, action, claim, suit, proceeding or review is pending or, to the
knowledge of the Texas Company, threatened by any Person against, the Texas
Company or any of its Subsidiaries, with respect to any applicable Environmental
Law, (ii) the Texas Company and its Subsidiaries are currently and have been in
compliance with all applicable Environmental Laws, (iii) the Texas Company and
each of its Subsidiaries have obtained and complied with the terms and
conditions of all permits and other approvals necessary under applicable
Environmental Laws to operate its business and to treat, transport, store,
dispose of and otherwise handle Hazardous Substances ("Texas Company
-------------
Environmental Permits"), (iv) there have been no Releases or threats of Releases
- ---------------------
(as that term is defined in applicable Environmental Laws) at, from, in, on,
under, or to any property owned or operated by the Texas Company or any of its
Subsidiaries except as permitted by applicable Environmental Laws, (v) the Texas
Company and its Subsidiaries have reported to all appropriate authorities to the
extent required by applicable Environmental Laws all past and present sites
owned and operated by the Texas Company or any of its Subsidiaries where
Hazardous Substances have been treated, stored, disposed of or otherwise
handled, and (vi) there is no on-site or off-site location to which the Texas
Company or any of its Subsidiaries have transported or disposed of Hazardous
Substances or arranged for the transportation or disposal of Hazardous
Substances.
Section IV.22 State Takeover Statutes. No "fair price", "moratorium",
-----------------------
"control share acquisition" or other similar antitakeover statute or regulation
enacted under state or federal laws in the United States (with the exception of
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Article 13.03 of the TBCA) applicable to the Texas Company is applicable to the
Merger or the other transactions contemplated hereby. The action of the Board
of Directors of the Texas Company in approving this Agreement (and the
transactions provided for herein or contemplated hereby) is sufficient to render
Article 13.03 of the TBCA inapplicable to this Agreement .
Section IV.23 Labor Matters. Neither the Texas Company nor any of its
-------------
Subsidiaries is the subject of any material proceeding asserting that it or any
of its Subsidiaries has committed an unfair labor practice or seeking to compel
it to bargain with any labor union or labor organization nor is there pending
or, to the knowledge of the Texas Company, threatened in writing, nor has there
been for the past five years, any labor strike, dispute, walkout, work stoppage,
slow-down or lockout involving the Texas Company or any of its Subsidiaries,
except in each case as would not, individually or in the aggregate, have a
material adverse effect on the Texas Company. Additionally, except as disclosed
in Section 4.23 of the Texas Company Disclosure Schedule, (a) neither the Texas
Company nor any of its Subsidiaries is a party to any collective bargaining
agreement, (b) there is no unfair labor practice complaint against the Texas
Company or any of its Subsidiaries pending or, to the knowledge of the Texas
Company, threatened before the National Labor Relations Board that would, if
adversely determined against the Texas Company or any of its Subsidiaries, have
a material adverse effect on the Texas Company, (c) there is no labor strike or
organized slow down or stoppage actually pending or, to the knowledge of the
Texas Company, threatened against the Texas Company or any of its Subsidiaries
which involves the employees of the Texas Company or any of its Subsidiaries and
which would have a material adverse effect on the Texas Company, (d) no private
agreement restricts the Texas Company or any of its Subsidiaries from
relocating, closing or terminating any of its operations or facilities, and (e)
except for plant closings or layoffs that, individually or in the aggregate,
would not have a material adverse effect on the Texas Company, neither the Texas
Company nor any of its Subsidiaries has implemented any plant closing or layoff
of employees that could reasonably be expected to require notification under the
Worker Adjustment Retraining and Notification Act of 1988, as amended, or any
similar state or local Law or regulation and no such layoffs will be implemented
before the Effective Time.
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<PAGE>
Section IV.24 General. (1) As used above or elsewhere in this
-------
Agreement with respect to the Texas Company and/or its Subsidiaries, the term
"material adverse effect" means an effect which is both material and adverse
with respect to, and the term "material" means material with respect to, the
assets, business, results of operations or financial condition of the Texas
Company taken as a whole with its Subsidiaries, and in either case shall be
determined net of, and only after giving the Texas Company and its Subsidiaries
the benefit of, any insurance, indemnity, reimbursement, contribution,
compensation or other similar right which would operate to reduce, offset,
compensate or otherwise limit the impact thereof on the Texas Company and/or any
of its Subsidiaries; provided, however, that any change or changes in or caused
by the prices of products or services and any change in Law, rule, or regulation
or GAAP (applied on a consistent basis during the periods involved), shall not
be deemed to constitute a material adverse effect or be deemed material.
(20 For purposes of this Agreement, the term "Texas Company Disclosure
------------------------
Schedule" means the Texas Company Disclosure Schedule delivered by the Texas
- --------
Company to the Delaware Company prior to the date hereof.
(3) No recourse or liability whatsoever with respect to this Agreement
or the Merger shall be had against any shareholder, officer, director, employee
or agent, as such, past, present or having such capacity at any time prior to
the Effective Time, of the Texas Company, any of its Subsidiaries, or any
successor thereof, either directly or through the Texas Company, any of its
Subsidiaries or any successor thereof, such recourse or liability, if any, being
expressly waived and released by the Delaware Company and its Subsidiaries as a
condition of, and as consideration for, the execution of this Agreement and any
other documents, instruments or certificates executed or delivered in connection
with this Agreement or the Merger.
(4) The foregoing representations and warranties of the Texas Company,
and any liability for breach or violation thereof, shall terminate absolutely
and be of no further force and effect at and as of the Effective Time.
ARTICLE V
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<PAGE>
COVENANTS
Section V.1 Conduct of Business of the Delaware Company. Except as
-------------------------------------------
contemplated by this Agreement or with the prior written consent of the Texas
Company, which consent shall not be unreasonably withheld or delayed and is
hereby given with respect to actions set forth in Section 5.1 of the Delaware
Company Disclosure Schedule, during the period from the date of this Agreement
to the Effective Time or the date of termination of this Agreement, whichever
first occurs, the Delaware Company will, and will cause each of its Subsidiaries
to, conduct its operations only in the ordinary and usual course of business
consistent with past practice and, consistent therewith, will use all reasonable
efforts, and will cause each of its Subsidiaries to use all reasonable efforts,
to preserve intact its present business organization, keep available the
services of its present officers and employees and preserve its relationships
with licensors, licensees, customers, suppliers, employees, consultants and any
others having business dealings with it, in each case in all material respects.
Without limiting the generality of the foregoing, and except as otherwise
expressly provided in this Agreement or as set forth in Section 5.1 of the
Delaware Company Disclosure Schedule, the Delaware Company will not, and will
not permit any of its Subsidiaries to, prior to the Effective Time, or the date
of termination of this Agreement, whichever first occurs, without the prior
written consent of the Texas Company, not to be unreasonably withheld or
delayed:
(1) adopt any amendment to its certificate of incorporation or by-laws
or comparable organizational documents;
(2) except for issuances of capital stock of the Delaware Company's
Subsidiaries to the Delaware Company or a wholly owned Subsidiary of the
Delaware Company, issue, reissue, sell or pledge or authorize or propose the
issuance, reissuance, sale or pledge of additional shares of capital stock of
any class, or securities convertible into capital stock of any class, or any
rights, warrants or options to acquire any convertible securities or capital
stock, other than the issuance of shares of Delaware Company Common Stock upon
the exercise of stock options or vesting of restricted or deferred stock unit
awards outstanding on the date of this Agreement, in each case in accordance
with their present terms;
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(3) declare, set aside or pay any dividend or other distribution
(whether in cash, securities or property or any combination thereof) in respect
of any class or series of its capital stock, except that any wholly owned
Subsidiary of the Delaware Company may pay dividends and make distributions to
the Delaware Company or any of the Delaware Company's wholly owned Subsidiaries;
(4) adjust, split, combine, subdivide, reclassify or redeem, purchase
or otherwise acquire, or propose to redeem or purchase or otherwise acquire, any
shares of its capital stock, other than pursuant to the Delaware Company Plans;
(5) (i) incur, assume or pre-pay any long-term debt or incur or assume
any short-term debt, except that the Delaware Company and its Subsidiaries may
incur, assume or pre-pay debt in the ordinary course of business consistent with
past practice, (ii) incur any indebtedness (other than indebtedness with respect
to the payment of interest paid in kind) pursuant to the Delaware Company Junior
Indenture, (iii) assume, guarantee, endorse or otherwise become liable or
responsible (whether directly, contingently or otherwise) for the obligations of
any other Person except in the ordinary course of business consistent with past
practice, or (iv) make any loans, advances or capital contributions to, or
investments in, any other Person except in the ordinary course of business
consistent with past practice and except for loans, advances, capital
contributions or investments between any wholly owned Subsidiary of the Delaware
Company and the Delaware Company or another wholly owned Subsidiary of the
Delaware Company;
(6) settle or compromise any suit or claim or threatened suit or claim
relating to the transactions contemplated hereby;
(7) except for (i) increases in salary, wages and benefits of
employees of the Delaware Company or its Subsidiaries (other than executive or
corporate officers of the Delaware Company or presidents of any of its
Subsidiaries) in accordance with past practice, (ii) increases in salary, wages
and benefits granted to employees of the Delaware Company or its Subsidiaries
(other than executive or corporate officers of the Delaware Company or
presidents of any of its Subsidiaries) in conjunction with promotions or other
changes in job status consistent with past practice or required under existing
agreements, and (iii) increases in salary, wages and benefits to employees of
the Delaware
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Company or its Subsidiaries pursuant to collective bargaining agreements entered
into in the ordinary course of business consistent with past practice, increase
the compensation or fringe benefits payable or to become payable to directors,
officers or employees of the Delaware Company or any of its Subsidiaries, or pay
any benefit not required by any existing plan or arrangement (including the
granting of, or waiver of performance or other vesting criteria under, stock
options, stock appreciation rights, shares of restricted stock or deferred stock
or performance units) or grant any severance or termination pay to (except
pursuant to existing agreements or policies), or enter into any employment or
severance agreement with, any director, officer or other key employee of the
Delaware Company or any of its Subsidiaries or establish, adopt, enter into,
terminate or amend any collective bargaining, bonus, profit sharing, thrift,
compensation, stock option, restricted stock, pension, retirement, welfare,
deferred compensation, employment, termination, severance or other employee
benefit plan, agreement, trust, fund, policy or arrangement for the benefit or
welfare of any directors, officers or current or former employees, except to the
extent such termination or amendment is required by applicable law; provided,
however, that nothing herein will be deemed to prohibit the payment of benefits
as they become payable;
(8) (i) acquire, sell, lease or dispose of any assets that are
material to the Delaware Company and its Subsidiaries, taken as a whole, (ii)
enter into any material commitment or transaction outside the ordinary course of
business consistent with past practice other than transactions between a wholly
owned Subsidiary of the Delaware Company and the Delaware Company or another
wholly owned Subsidiary of the Delaware Company, or (iii) enter into any
material commitment or transaction either in, or outside of, the ordinary course
of business if such commitment or transaction involves the payment or receipt by
the Delaware Company or any of its Subsidiaries of more than $50,000,000;
(9) acquire or sell or enter into any letter of intent, material
commitment or other agreement, whether written or oral, to acquire any debt or
equity securities of any Third Party;
(10) (i) modify, amend or terminate any Delaware Company Contract
which is, or should have been, disclosed in the Delaware Company SEC Documents
filed prior to the date hereof or filed with the SEC in connection therewith or
any Delaware Company Contract to which any Delaware Company Subsidiary is a
party and
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which, the Delaware Company in good faith believes, could involve the payment or
receipt of more than $10,000,000 (collectively, the "Material Delaware Company
-------------------------
Contracts"), (ii) waive, release, relinquish or assign any Material Delaware
- ---------
Company Contract (including any material insurance policy) or other material
right or claim, or (iii) cancel or forgive any material indebtedness owed to the
Delaware Company or any of its Subsidiaries, other than in each case in a manner
in the ordinary course of business consistent with past practice or which is not
material to the business of the Delaware Company and its Subsidiaries taken as a
whole;
(11) make any tax election not required by Law or settle or compromise
any tax liability, in either case that is material to the Delaware Company and
its Subsidiaries taken as a whole;
(12) change any of the material accounting principles or practices
used by it except as required by the SEC or the Financial Accounting Standards
Board;
(13) take any action which the Delaware Company believes when taken
would cause its representations and warranties contained herein to become
inaccurate in any material respect; or
(14) authorize, or commit or agree to take, any of the foregoing
actions.
; provided, however, that none of the restrictions set forth in this
Section 5.1 are intended to violate any provision of any agreement governing any
indebtedness of the Delaware Company or any of its Subsidiaries.
Section V.2 Conduct of Business of the Texas Company. Except as
----------------------------------------
contemplated by this Agreement or with the prior written consent of the Delaware
Company, which consent shall not be unreasonably withheld or delayed and is
hereby given with respect to actions set forth in Section 5.2 of the Texas
Company Disclosure Schedule, any actions necessary or advisable to consummate
the transactions contemplated by the Preferred Stock Agreement or any documents
contemplated therein and any actions necessary to obtain the New Financing (as
hereinafter defined), during the period from the date of this Agreement to the
Effective Time or the date of termination of this Agreement, whichever first
occurs, the Texas Company will, and will cause each of its Subsidiaries to,
conduct its operations only in the ordinary and usual course of business
consistent with past practice and, consistent therewith, will use all reasonable
efforts, and will cause each of its Subsidiaries to use all reasonable efforts,
to preserve intact its present business organization, keep
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available the services of its present officers and employees and preserve its
relationships with licensors, licensees, customers, suppliers, employees and any
others having business dealings with it, in each case in all material respects.
Without limiting the generality of the foregoing, and except as otherwise
expressly provided in this Agreement, as set forth in Section 5.2 of the Texas
Company Disclosure Schedule, or necessary or advisable to consummate the
transactions contemplated by the Preferred Stock Agreement or any documents
referred to therein or the New Financing, the Texas Company will not, and will
not permit any of its Subsidiaries to, prior to the Effective Time or the date
of termination of this Agreement, whichever first occurs, without the prior
written consent of the Delaware Company, not to be unreasonably withheld or
delayed:
(1) adopt any amendment to its articles of incorporation or by-laws or
comparable organizational documents other than as contemplated by this
Agreement;
(2) except for issuances of capital stock of the Texas Company's
Subsidiaries to the Texas Company or a wholly owned Subsidiary of the Texas
Company, issue, reissue, sell or pledge or authorize or propose the issuance,
reissuance, sale or pledge of additional shares of capital stock of any class,
or securities convertible into capital stock of any class, or any rights,
warrants or options to acquire any convertible securities or capital stock,
other than the issuance of shares of Texas Company Common Stock upon the
exercise of stock options or vesting of restricted or deferred stock unit awards
outstanding on the date of this Agreement, in each case in accordance with their
present terms;
(3) declare, set aside or pay any dividend or other distribution
(whether in cash, securities or property or any combination thereof) in respect
of any class or series of its capital stock, except that any wholly owned
Subsidiary of the Texas Company may pay dividends and make distributions to the
Texas Company or any of the Texas Company's wholly owned Subsidiaries;
(4) adjust, split, combine, subdivide, reclassify or redeem, purchase
or otherwise acquire, or propose to redeem or purchase or otherwise acquire, any
shares of its capital stock, other than pursuant to the Texas Company Plans;
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(5) (i) incur, assume or pre-pay any long-term debt or incur or assume
any short-term debt, except that the Texas Company and its Subsidiaries may
incur, assume or pre-pay debt in the ordinary course of business consistent with
past practice, (ii) assume, guarantee, endorse or otherwise become liable or
responsible (whether directly, contingently or otherwise) for the obligations of
any other Person (other than the Texas Company or any of its Subsidiaries)
except in the ordinary course of business consistent with past practice, or
(iii) make any loans, advances or capital contributions to, or investments in,
any other Person except in the ordinary course of business consistent with past
practice and except for loans, advances, capital contributions or investments
between any wholly owned Subsidiary of the Texas Company and the Texas Company
or another wholly owned Subsidiary of the Texas Company;
(6) settle or compromise any suit or claim or threatened suit or claim
relating to the transactions contemplated hereby;
(7) except for (i) increases in salary, wages and benefits of
employees of the Texas Company or its Subsidiaries (other than executive or
corporate officers of the Texas Company or presidents of any of its
Subsidiaries) in accordance with past practice, (ii) increases in salary, wages
and benefits granted to employees of the Texas Company or its Subsidiaries
(other than executive or corporate officers of the Texas Company or presidents
of any of its Subsidiaries) in conjunction with promotions or other changes in
job status consistent with past practice or required under existing agreements
and (iii) increases in salary, wages and benefits to employees of the Texas
Company or its Subsidiaries pursuant to collective bargaining agreements
entered into in the ordinary course of business consistent with past practice,
increase the compensation or fringe benefits payable or to become payable to its
directors, officers or employees (whether from the Texas Company or any of its
Subsidiaries), or pay any benefit not required by any existing plan or
arrangement (including, the granting of, or waiver of performance or other
vesting criteria under, stock options, stock appreciation rights, shares of
restricted stock or deferred stock or performance units) or grant any severance
or termination pay to (except pursuant to existing agreements or policies), or
enter into any employment or severance agreement with, any director, officer or
other key employee of the Texas Company or any of its Subsidiaries
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<PAGE>
or establish, adopt, enter into, terminate or amend any collective bargaining,
bonus, profit sharing, thrift, compensation, stock option, restricted stock,
pension, retirement, welfare, deferred compensation, employment, termination,
severance or other employee benefit plan, agreement, trust, fund, policy or
arrangement for the benefit or welfare of any directors, officers or current or
former employees, except to the extent such termination or amendment is required
by applicable law; provided, however, that nothing herein will be deemed to
prohibit the payment of benefits as they become payable;
(8) (i) acquire, sell, lease or dispose of any assets that are
material to the Texas Company and its Subsidiaries, taken as a whole, (ii) enter
into any material commitment or transaction outside the ordinary course of
business consistent with past practice other than transactions between a wholly
owned Subsidiary of the Texas Company and the Texas Company or another wholly
owned Subsidiary of the Texas Company; or (iii) enter into any material
commitment or transaction either in, or outside of, the ordinary course of
business if such commitment or transaction involves the payment or receipt by
the Texas Company or any of its Subsidiaries of more than $50,000,000;
(9) acquire or sell or enter into any letter of intent, material
commitment or other agreement, whether written or oral, to acquire any debt or
equity securities of any Third Party;
(10) (i) modify, amend or terminate any Texas Company Contract which
is, or should have been disclosed in the Texas Company SEC Documents filed prior
to the date hereof or filed with the SEC in connection therewith or any Texas
Company Contract which the Texas Company in good faith believes could involve
the payment or receipt of more than $10,000,000 (collectively, the "Material
--------
Texas Company Contracts"), (ii) waive, release, relinquish or assign any
- -----------------------
Material Texas Company Contract (including any material insurance policy) or
other material right or claim, or (iii) cancel or forgive any material
indebtedness owed to the Texas Company or any of its Subsidiaries, other than in
each case in a manner in the ordinary course of business consistent with past
practice or which is not material to the business of the Texas Company and its
Subsidiaries taken as a whole;
(11) make any tax election not required by Law or settle or compromise
any tax liability, in either case that is material to the Texas Company and its
Subsidiaries taken as a whole;
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<PAGE>
(12) change any of the material accounting principles or practices
used by it except as required by the SEC or the Financial Accounting Standards
Board;
(13) take any action which the Texas Company believes when taken would
cause its representations and warranties contained herein to become inaccurate
in any material respect; or
(14) authorize, or commit or agree to take, any of the foregoing
actions.
; provided, however, that none of the restrictions set forth in this
Section 5.1 are intended to violate any provision of any agreement governing any
indebtedness of the Delaware Company or any of its Subsidiaries. As used
herein, the term "New Financing", shall mean a senior debt facility with terms
-------------
reasonably acceptable to the Texas Company and the Delaware Company and provided
by a lender or lenders reasonably acceptable to the Texas Company and the
Delaware Company which shall provide for loans to the Texas Company, if
necessary, in an amount of at least $800,000,000.
Section V.3 Commercially Reasonable Best Efforts. (1) Subject to the
------------------------------------
terms and conditions of this Agreement, all of the Parties hereto will use their
respective commercially reasonable efforts to take, or cause to be taken, all
actions, and to do, or cause to be done, all things necessary, proper or
advisable under applicable laws and regulations to consummate and make effective
the transactions contemplated by this Agreement, including, without limitation,
(i) the prompt delivery in writing of any and all information reasonably
requested by another Party from time to time for inclusion or incorporation by
reference in the S-4, the Delaware Company Proxy Statement and the Texas Company
Proxy Statement, (ii) the prompt preparation and, subject to any limitations set
forth in the Preferred Stock Agreement, filing with the SEC of the S-4, the
Delaware Company Proxy Statement and the Texas Company Proxy Statement, (iii)
such actions as may be required to have the S-4 declared effective under the
Securities Act and the Delaware Company Proxy Statement and the Texas Company
Proxy Statement cleared by the SEC, in each case as promptly as practicable,
including by consulting with each other as to, and responding promptly to, any
SEC comments with respect thereto, (iv) obtaining, prior to the Effective Time,
all necessary blue sky permits and approvals and taking such other actions as
may be required to be taken under applicable state securities or blue sky laws
in connection with
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the issuance and delivery of shares of Texas Company Common Stock contemplated
hereby, (v) the making of any necessary filings, and thereafter make any
required submissions, with respect to this Agreement and the Merger under the
HSR Act, or any other applicable Law, and (vi) obtaining all consents required
under applicable Law or by contract necessary in connection with the Merger and
the transactions contemplated in this Agreement, the Preferred Stock Agreement
or the documents contemplated therein, the New Financing. Without limiting the
generality of the foregoing, each of the Delaware Company and the Texas Company
shall promptly comply with any requests for additional information under the HSR
Act, and shall use its commercially reasonable efforts to obtain termination of
the waiting period thereunder as promptly as practicable. In addition, if at any
time prior to the Effective Time any event or circumstance relating to the
Delaware Company or the Texas Company or any of their respective Subsidiaries,
or any of their respective officers or directors, should be discovered by the
Delaware Company or the Texas Company, as the case may be, and which should be
set forth in an amendment or supplement to the S-4, the Delaware Company Proxy
Statement or the Texas Company Proxy Statement, the discovering Party will
promptly inform the other Party of such event or circumstance.
(2) Each of the Parties will comply in all material respects with all
applicable Laws and with all applicable rules and regulations of any
Governmental Entity in connection with its execution, delivery and performance
of this Agreement and the transactions contemplated hereby.
(3) Each of the Parties shall, in connection with the efforts
referenced in this Section 5.3, (i) cooperate in all respects with each other in
connection with any filing or submission and in connection with any
investigation or other inquiry, including any proceeding initiated by a private
party, (ii) promptly inform the other Parties of any material communication
received by such Party from, or given in connection with any proceeding by a
private party, in each case regarding any of the transactions contemplated
hereby, (iii) consult with each other in advance of any meeting or conference
with any such Governmental Entity or, in connection with any proceeding by a
private party, with any other person, and to the extent permitted by the
applicable Governmental Entity or other person, give the other Parties the
opportunity to attend and participate in such meetings and conferences, and (iv)
provide any necessary
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<PAGE>
information with respect to and provide the other (or its counsel) copies of,
all filings made by such Party with any Governmental Entity in connection with
this Agreement and the transactions contemplated hereby.
(4) In furtherance and not in limitation of the covenants of the
Parties contained in this Section 5.3, if any administrative or judicial action
or proceeding, including any proceeding by a private party, is instituted (or
threatened to be instituted) challenging any transaction contemplated by this
Agreement as violative of any applicable Law, or if any statute, rule,
regulation, executive order, decree, injunction or administrative order is
enacted, entered or promulgated or enforced by a Governmental Entity which would
make the Merger or the other transactions contemplated hereby illegal or
otherwise prohibit or materially impair or delay consummation of the
transactions contemplated hereby, each of the Parties shall cooperate in all
respects with each other and use all commercially reasonable efforts to contest
and resist any such action or proceeding, to have vacated, lifted, reversed or
overturned any decree, judgment, injunction or other order, whether temporary,
preliminary or permanent, that is in effect and that prohibits, prevents or
restricts consummation of the transactions contemplated by this Agreement and to
have such statute, rule, regulation, executive order, decree, injunction or
administrative order repealed, rescinded or made inapplicable. Notwithstanding
the foregoing or any other provision of this Agreement, nothing in this Section
5.3 shall limit a Party's right to terminate this Agreement pursuant to Section
7.1 so long as such Party has up to then complied in all respects with its
obligations under this Section 5.3.
(5) If any objections are asserted with respect to the transactions
contemplated hereby under any applicable Law or if any suit is instituted by any
Governmental Entity or any private party challenging any of the transactions
contemplated hereby as violative of any applicable Law, each of the Texas
Company and the Delaware Company shall use its commercially reasonable efforts
to resolve any such objections or challenge as such Governmental Entity or
private party may have to such transactions under such Law so as to permit
consummation of the transactions contemplated by this Agreement.
Section V.4 Letter of the Delaware Company's Accountants. Following
--------------------------------------------
receipt by PricewaterhouseCoopers, the Delaware Company's independent auditors,
of an appropriate request from the Texas
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Company pursuant to Statement on Auditing Standards ("SAS") No. 72, the Delaware
---
Company will use its reasonable best efforts to cause to be delivered to the
Texas Company a letter of PricewaterhouseCoopers, dated a date within two
business days before the date on which the S-4 will become effective and
addressed to the Texas Company, in form and substance reasonably satisfactory to
the Texas Company, and customary in scope and substance for letters delivered by
independent public accountants in connection with registration statements on
Form S-4, which letter will be brought down to the Effective Time.
Section V.5 Letter of the Texas Company's Accountants. Following
-----------------------------------------
receipt by KPMG Peat Marwick LLP, the Texas Company's independent auditors, of
an appropriate request from the Delaware Company pursuant to SAS No. 72, the
Texas Company will use its reasonable best efforts to cause to be delivered to
the Delaware Company a letter of KPMG Peat Marwick, LLP, dated a date within two
business days before the date on which the S-4 will become effective and
addressed to the Delaware Company, in form and substance reasonably satisfactory
to the Delaware Company, and customary in scope and substance for letters
delivered by independent public accountants in connection with registration
statements on Form S-4, which letter will be brought down to the Effective Time.
Section V.6 Access to Information. Upon reasonable notice, each Party
---------------------
will (and will cause each of their respective Subsidiaries to) afford to the
officers, employees, accountants, counsel and other representatives of the
other, access, during normal business hours during the period prior to the
Effective Time, to all its properties, facilities, books, contracts, commitments
and records and other information as reasonably requested by such requesting
Party and, during such period, each of the Delaware Company and the Texas
Company will (and will cause each of their respective Subsidiaries to) furnish
promptly to the other (a) a copy of each report, schedule, registration
statement and other document filed or received by it during such period pursuant
to the requirements of United States federal securities laws or regulations, and
(b) all other information concerning its business, properties and personnel as
such other Party may reasonably request. The Parties will hold any such
information which is nonpublic in confidence in accordance with the terms of the
Confidentiality Agreement, dated June 1, 1999, between the Delaware Company and
the Texas Company,
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as amended (the "Confidentiality Agreement"), and in the event of termination of
-------------------------
this Agreement for any reason each Party will promptly comply with the terms of
the Confidentiality Agreement.
Section V.7 Stock Exchange Listing. The Texas Company will use its best
----------------------
efforts to (i) obtain, prior to the Effective Time, the approval for listing on
the NYSE, effective upon official notice of issuance, of the shares of Surviving
Corporation Common Stock to be issued in connection with the Merger pursuant to
Article II hereof , the shares of Surviving Corporation Common Stock which will
be issuable upon conversion of the Texas Company Preferred Stock and the shares
of Surviving Corporation Common Stock which will be issuable upon exercise
options, warrants, earn outs and convertible securities of the Delaware Company,
and (ii) cause such Surviving Corporation Common Stock to be duly registered or
qualified under all applicable state securities or blue sky laws.
Section V.8 Employee Benefit Plans. (1) Certain Delaware Company
---------------------- ------------------------
Plans. On or prior to the Effective Time, the Delaware Company and its Board
- -----
of Directors (or a committee thereof) and the Texas Company and its Board of
Directors (or a committee thereof) will take all action necessary to implement
the provisions contained in this Section 5.8 in a manner reasonably acceptable
to the Texas Company.
(1) Options and Warrants to Purchase Delaware Common Stock.
------------------------------------------------------
(1) Any Delaware Company Options that are unexercisable, but become
exercisable as a result of the transactions contemplated hereby, shall not
become exercisable because of the transactions contemplated hereby and any
discretion or any decision to be made by the Delaware Company or its delegate
with regard to any Delaware Company Options shall be made not to allow any of
such Delaware Company Options to become exercisable on account of the
transactions contemplated hereby. In addition, the Delaware Company shall
either (i) cause each Person who has Delaware Company Options that become
exercisable because of the transactions contemplated hereby to execute a waiver
whereby such person agrees that such options shall not become exercisable on
account of the transactions contemplated hereby (the "Option Waivers") or (ii)
--------------
enter into severance agreements with any person that has not signed an Option
Waiver. Such severance agreements shall provide for severance payments at the
Effective Time in amounts consistent with past practice of the Delaware Company
and not
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in excess of the amount set forth in Section 5.1(g) of the Delaware Company
Disclosure Schedule and that all of Delaware Company Options of such person
shall terminate and be of no force and effect at the Effective Time.
(2) At the Effective Time, the Delaware Company's obligations with
respect to each outstanding Delaware Company Option under the Delaware Company
Option Plans and each of the outstanding Delaware Company Warrants shall be
assumed by the Surviving Corporation. Options for which Option Waivers have not
been obtained and are required shall not be assumed by the Surviving
Corporation. The Delaware Company Options and the Delaware Company Warrants so
assumed by the Surviving Corporation shall continue to have, and be subject to,
the same terms and conditions set forth in the Delaware Company Option Plans (as
to the Delaware Company Option) and agreements pursuant to which such Delaware
Company Options and Delaware Company Warrants were issued as in effect
immediately prior to the Effective Time, except that (i) such Delaware Company
Options and Delaware Company Warrant shall be exercisable for that number of
whole shares of Surviving Corporation Common Stock equal to the product of the
number of shares of Delaware Company Common Stock covered by the Delaware
Company Options and the Delaware Company Warrants immediately prior to the
Effective Time multiplied by the Delaware Company Per Share Stock Amount,
rounded up to the nearest whole number of shares of Surviving Corporation Common
Stock, and (ii) the per share exercise price for the shares of Surviving
Corporation Common Stock issuable upon the exercise of such assumed Delaware
Company Options or the Delaware Company Warrants shall be equal to the quotient
determined by dividing the exercise price per share of Delaware Company Common
Stock specified for such Delaware Company Options under the applicable Delaware
Company Option Plans or agreement or Delaware Company Warrants immediately prior
to the Effective Time by the Delaware Company Per Share Stock Amount, rounding
the resulting exercise price down to the nearest whole cent. With respect to
the Delaware Company Options, the date of grant shall be the date on which the
Delaware Company Options were originally granted. Prior to such assumption of
such Delaware Company Options or Delaware Company Warrants by the Surviving
Corporation, the Delaware Company shall make all amendments to the plans and
agreements governing such Delaware Company Options and Delaware Company Warrants
to accomplish the foregoing, which shall be in a form reasonably acceptable to
the Texas Company. The
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Surviving Corporation shall (i) reserve for issuance the number of shares of
Surviving Corporation Common Stock that will become issuable upon the exercise
of such Delaware Company Options and the Delaware Company Warrants pursuant to
this Section 5.8(a)(i)(2) and (ii) at the Effective Time, execute a document
evidencing the assumption by the Surviving Corporation of the Delaware Company's
obligations with respect thereto under this 5.8(a)(i)(2). As soon as practicable
after the Effective Time, the Surviving Corporation shall file a registration
statement on Form S-8 (or any successor form), or another appropriate form with
respect to the shares of Surviving Corporation Common Stock subject to such
Delaware Company Options and shall use its reasonable commercial efforts to
maintain the effectiveness of such registration statement or registration
statements (and maintain the current status of the prospectus or prospectuses
contained therein) for so long as such Delaware Company Options remain
outstanding. With respect to those individuals who subsequent to the Merger will
be subject to the reporting requirements under Section 16(a) of the Exchange
Act, where applicable, the Surviving Corporation, to the extent legally
permissible, shall administer the Delaware Company Option Plans assumed pursuant
to this Section 5.8(a)(i)(2) in a manner that complies with Rule 16b-3
promulgated under the Exchange Act.
(2) Directors Option Plan. All Delaware Company Options issued and
---------------------
outstanding under the Consolidation Capital Corporation 1997 Non-Employee
Directors' Stock Plan (the "Directors Option Plan") shall be exercisable in
---------------------
accordance with such plan; provided that, the Delaware Company agrees to amend
the Directors Option Plan prior to the earlier to occur of the Effective Time or
December 31, 1999, to provide that no automatic grants of options under such
plan shall occur. Additionally, the Delaware Company agrees to terminate the
Directors Option Plan effective as of the Effective Time.
(3) Stock Performance Plan and All Other Stock-Based Plans.
------------------------------------------------------
(1) At the Effective Time, the Delaware Company shall take all steps
necessary to cause any shares of Delaware Company Common Stock granted pursuant
to any Delaware Company Plan, including, without limitation, the Delaware
Company's 1999 Stock Performance Incentive Plan (the "Stock Performance Plan"),
----------------------
to be converted into shares of Surviving Corporation Common Stock in accordance
with Section 2.1(i) hereof. Except as
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provided herein or as otherwise agreed to by the Parties, and to the extent
permitted by the applicable plan or agreement, the provisions in any plan,
program or arrangement (other than the Stock Performance Plan and the Delaware
Company Option Plans) providing for the issuance or grant of any other interest
in respect of the capital stock of the Delaware Company or any of its
Subsidiaries will be terminated as of the Effective Time.
(2) No shares of Delaware Company Stock shall be awarded or issued on
or before the Effective Time on account of the occurrence of the transactions
contemplated hereby pursuant to any Delaware Company Plan, including, without
limitation, the Stock Performance Plan, and any discretion or any decision to be
made by any person, committee or company with regard to the award or issue of
Delaware Company Stock pursuant to any Delaware Company Plan shall not be made
to grant any such award or approve or otherwise authorize such award or
issuance. Prior to the Effective Time and except as set forth in this Section
5.8, the Delaware Company shall cause each person who has a right to have
Delaware Company Stock either awarded or issued prior to the Effective Time
under a Delaware Company Plan whether or not on account of the occurrence of the
transactions contemplated hereby to execute a waiver whereby such person agrees
to release the Delaware Company of its obligation to award or issue Delaware
Company Stock under such Delaware Company Plan. After the Closing, the Texas
Company shall assume the Stock Performance Plan in accordance with its terms (or
adopt a substantially similar plan or utilize an existing Texas Company plan)
with respect to the Persons named in Section 3.17(e) of the Delaware Company
Disclosure Schedule, and the "Stock Price" which must be attained under Section
3 of the Stock Performance Plan and the number of shares of Delaware Company
Common Stock allocated to such individuals set forth in Section 3.17(e) of the
Delaware Company Disclosure Schedule shall be subject to appropriate adjustments
set forth in Section 5.8(a)(i)(2) above; provided, however, that if the benefits
under such plan have been satisfied with respect to any Person, then no further
obligations shall exist with respect to such Person.
(4) Employee Stock Purchase Plan. At a date to be agreed on by the
----------------------------
Parties which must be at least three days before the Closing, the Delaware
Company shall terminate the Consolidation Capital Corporation
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Employee Stock Purchase Plan (the "Employee Stock Purchase Plan") so that no
----------------------------
purchase or sales of Delaware Company Stock can occur under the Employee Stock
Purchase Plan after such date.
(5) 162(m) Bonus Plan. The Delaware Company shall terminate the
-----------------
consolidation Capital Corporation Section 162(m) Bonus Plan (the "162(m) Bonus
------------
Plan") prior to the Effective Time.
- ----
(6) Delaware Company Qualified Plans. Prior to the Closing Date, the
--------------------------------
Delaware Company and the Texas Company agree to use their best efforts to come
to an agreement with respect to how (i) to maintain the qualified status of
certain Delaware Company Plans which are qualified or intended to be qualified
under Section 401(a) of the Code ("Delaware Company Qualified Plans") from the
date of this Agreement through the Effective Time and (ii) to provide qualified
retirement benefits to the employees of the Surviving Corporation after the
Effective Time. Notwithstanding the above, the Delaware Company agrees to
maintain the qualified status of the Delaware Company Qualified Plans from the
date of this Agreement through the Effective Time.
(2) All Other Employee Benefit Plans of the Delaware Company and of the
-------------------------------------------------------------------
Texas Company. Except as otherwise contemplated by this Agreement, the employee
- -------------
benefit plans (as defined in Section 3(3) of ERISA) and other employee plans,
programs and policies other than salary (collectively, the "Employee Benefit
----------------
Plans") of the Delaware Company and its Subsidiaries and the Texas Company and
- -----
its Subsidiaries in effect at the date of this Agreement will remain in effect
until otherwise determined after the Effective Time unless otherwise determined
by the Board of Directors of the Surviving Corporation.
(1) Agreement and Conditions. Without limiting the generality of
------------------------
Section 5.8(b), the Surviving Corporation shall (i) honor (A) in accordance with
their terms all individual employment, severance and termination agreements of
the Delaware Company or any of its Subsidiaries, and (B) without modification
all other employee severance plans, policies, employment and severance
agreements of the Delaware Company or any of its Subsidiaries with respect to
their respective past and present officers, directors, employees and agents that
are in effect as of the Effective Time through the termination date specified in
such document, (ii) waive any limitations regarding pre-existing conditions of
employees of the Delaware Company and its Subsidiaries employed by any of them
as of the Effective Time
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("Current Employees") and their eligible dependents under any welfare or other
-----------------
employee benefit plans of the Surviving Corporation and its affiliates in which
they participate after the Effective Time (except to the extent that such
limitations would have applied under the analogous plan of the Delaware Company
and its Subsidiaries immediately before the Effective Time), and (iii) for the
Employee Benefit Plans applicable to employees of the Surviving Corporation
effective after the Effective Time, recognize all service with the Delaware
Company or any of its Subsidiaries and the Texas Company or any of its
Subsidiaries to the extent service is recognized for any purpose under similar
Delaware Company Plans and similar Texas Company Plans, except to the extent
such treatment would result in duplication of benefits or would violate
applicable Law.
(3) Certain Texas Company Options. With respect to the options listed
-----------------------------
on Exhibit 5.8(c), the Delaware Company and the Texas Company agree that,
notwithstanding anything in this Agreement to the contrary, the Texas Company
may, subject to the pre-approval of the Board of Directors of the Texas Company
and effective at the Effective Time, purchase a number of such options equal to
the number of such options requested to be purchased by the holder of such
options in writing up to a maximum of 50% of the options held by such Person
(the "Total Eligible Options"); provided, however, that in the event that the
Elected Cash Shares is more than the Total Eligible Share Number, the number of
options that may be purchased by the Company pursuant to this Section 5.8(c)
shall be subject to the proration procedures set forth in Section 2.5 of this
Agreement as if such shares were Elected Cash Shares. The purchase price at
which the Texas Company may repurchase any of such options shall be $13.50 per
share less the exercise price of such option. Any payments paid by the Company
to purchase such options shall be in exchange for the termination and
relinquishment by the holder of such options.
Section V.9 Insurance and Indemnity. For a period of six years after the
-----------------------
Effective Time, (a) the Surviving Corporation shall, subject to applicable Law,
maintain in effect the current provisions regarding indemnification of officers
and directors contained in the articles of incorporation and bylaws of the Texas
Company and each of its Subsidiaries and of the Delaware Company's Subsidiaries
as in effect immediately prior to the Effective Time and honor any
indemnification agreements of the Delaware Company and its respective
Subsidiaries with directors, officers or
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employees as in effect immediately prior to the Effective Time, (b) the
Surviving Corporation shall maintain in effect directors and officers liability
insurance having substantially the same terms and conditions and providing at
least the same coverage and amounts as the directors and officers liability
insurance maintained by the Delaware Company as in effect immediately prior to
the Effective Time for all directors and officers of the Delaware Company and
its Subsidiaries who served as such at any time since November 25, 1997;
provided, however, that the Surviving Corporation shall not be required to pay
more than $500,000 per year in premiums for such coverage and may reduce such
coverage to the extent required so that annual premiums therefor do not exceed
such amount, and (c) the Surviving Corporation shall indemnify the directors and
officers of the Delaware Company to the fullest extent to which the Surviving
Corporation is permitted to indemnify such officers and directors under its
articles of incorporation and bylaws and applicable Law.
Section V.10 Fees and Expenses. Whether or not the Merger is consummated,
-----------------
all costs and expenses incurred in connection with this Agreement and the
transactions contemplated hereby will be paid by the Party incurring such
expenses except (i) as set forth in Section 7.4, and (ii) that the Delaware
Company shall pay 60% of the fees and expenses of Baker Robbins to prepare a
report on the Y2K compliance of the Delaware Company and its Subsidiaries and
the Texas Company shall pay the remaining 40% of such fees and expenses.
Section V.11 Brokers or Finders. Each of the Delaware Company and the
------------------
Texas Company represents, as to itself, its Subsidiaries and its affiliates,
that no agent, broker, investment banker, financial advisor or other firm or
person is or will be entitled to any brokers, or finder's fee or any other
commission or similar fee in connection with any of the transactions
contemplated by this Agreement except Bear Stearns & Co. Inc., whose fees and
expenses will be paid by the Delaware Company or, if the Effective Time occurs,
by the Surviving Corporation, in accordance with the Delaware Company's
agreement with such firm, a copy of which has been provided to the Texas
Company, and Chase Securities, Inc., whose fees and expenses will be paid by the
Texas Company or, if the Effective Time occurs, by the Surviving Corporation in
accordance with the Texas Company's agreement with such firm, a copy of which
has been provided to the Delaware Company, and each of the Delaware Company and
the Texas Company will indemnify and hold
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the other harmless from and against any and all claims, liabilities or
obligations with respect to any other brokers, or finders, fees, commissions or
expenses asserted by any Person on the basis of any act or statement alleged to
have been made by such Party or any of its Subsidiaries or affiliates.
Section V.12 No Solicitation. (a) From and after the date hereof, the
---------------
Texas Company shall not, nor shall it permit any of its Subsidiaries to, nor
shall it authorize or permit any of its officers, directors or employees or any
investment banker, financial advisor, attorney, accountants or other
representatives retained by it or any of its Subsidiaries to, directly or
indirectly through another Person, solicit, initiate or encourage (including by
way of furnishing information), or take any other action designed to facilitate,
any inquiry, offer, proposal or agreement with respect to an Alternative
Transaction (as hereinafter defined); provided however, that if, at any time
prior to obtaining the Requisite Texas Holder Approvals, the Board of Directors
of the Texas Company determines in good faith, based on advice from outside
counsel and its financial advisors, that providing such information or
participating in such negotiations or discussions is required to prevent the
Board of Directors of the Texas Company from breaching their fiduciary duties to
the Texas Company's shareholders under applicable Law, the Board of Directors of
the Texas Company may, in response to any proposal that has been determined by
it to be a Texas Company Superior Proposal (as hereinafter defined), that was
not solicited by it and that did not otherwise result from a breach of this
Section 5.12(a), and subject to the Texas Company giving the Delaware Company at
least two business days written notice of its intention to do so, (x) furnish
information with respect to the Texas Company and its Subsidiaries to any Person
pursuant to a customary confidentiality agreement containing terms no less
restrictive than the terms of the Confidentiality Agreement, provided that a
copy of all such information is delivered simultaneously to the Delaware
Company, and (y) participate in negotiations regarding such proposal. The Texas
Company shall promptly notify the Delaware Company orally and in writing of any
request for information or of any proposal in connection with an Alternative
Transaction, the material terms and conditions of such request or proposal
(including a copy thereof, if in writing, and all other documentation and any
related correspondence) and the identity of the person making such request or
proposal. The Texas Company will keep
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the Delaware Company reasonably informed of the status and details (including
amendments or proposed amendments) of such request or proposal on a current
basis. The Texas Company shall immediately cease and terminate any existing
solicitation, initiation, encouragement, activity, discussion or negotiation
with any Third Party conducted heretofore by the Texas Company or its
representatives with respect to the foregoing. Subject to the first sentence of
this Section 5.12(a), the Texas Company (i) agrees not to release any Third
Party (as hereinafter defined) from, or waive any provision of, or fail to
enforce, any standstill agreement or similar agreements to which it is a party
related to, or which could affect, an Alternative Transaction and agrees that
the Delaware Company shall be entitled to enforce the Texas Company's rights and
remedies under and in connection with such agreements and (ii) acknowledges that
the provisions of clause (i) are an important and integral part of this
Agreement. Nothing contained in this Section 5.12 or Section 5.13 shall prohibit
the Texas Company (i) from taking and disclosing to its shareholders a position
contemplated by Rule 14c-9 or Rule 14e-2(a) promulgated under the Exchange Act,
or (ii) from making any disclosure to its shareholders if, in the good faith
judgment of the Board of Directors of the Texas Company, after receipt of advice
from outside counsel and its financial advisors, such disclosure is required to
prevent the Board of Directors of the Texas Company from breaching their
fiduciary duties to the Texas Company's shareholders under applicable Law.
Without limiting the foregoing, it is understood that any violation of the
restrictions set forth in this Section 5.12(a) by any director or officer of the
Texas Company or any of its Subsidiaries or any investment banker, financial
advisor, attorney, accountant or other representative of the Texas Company or
any of its Subsidiaries shall be deemed to be a breach of this Section 5.12(a)
by the Texas Company.
(b) From and after the date hereof, the Delaware Company shall not,
nor shall it permit any of its Subsidiaries to, nor shall it authorize or permit
any of its officers, directors or employees or any investment banker, financial
advisor, attorney, accountants or other representatives retained by it or any of
its Subsidiaries to, directly or indirectly through another person, (i) solicit,
initiate or encourage (including by way of furnishing information), or take any
other action designed to facilitate any inquiry, offer, proposal or agreement
with respect to an Alternative Transaction, or (ii) participate in any
discussions or negotiations regarding any Alternative Transaction; provided,
however, that if, at
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any time prior to obtaining the Requisite Delaware Holder Approvals, the Board
of Directors of the Delaware Company determines in good faith, based on advice
from outside counsel and its financial advisors, that providing such information
or participating in such negotiations or discussions is required to prevent the
Board of Directors of the Delaware Company from breaching their fiduciary duties
to the Delaware Company's stockholders under applicable Law, the Board of
Directors of the Delaware Company may, in response to a proposal that has been
determined by it to be a Delaware Company Superior Proposal (as hereinafter
defined), that was not solicited by it and that did not otherwise result from a
breach of this Section 5.12(b), and subject to the Delaware Company giving the
Texas Company at least two business days written notice of its intention to do
so, (x) furnish information with respect to the Delaware Company and its
Subsidiaries to any person pursuant to a customary confidentiality agreement
containing terms no less restrictive than the terms of the Confidentiality
Agreement, provided that a copy of all such information is delivered
simultaneously to the Texas Company, and (y) participate in negotiations
regarding such proposal. The Delaware Company shall promptly notify the Texas
Company orally and in writing of any request for information or of any proposal
in connection with an Alternative Transaction, the material terms and conditions
of such request or proposal (including a copy thereof, if in writing, and all
other documentation any related correspondence) and the identity of the person
making such request or proposal. The Delaware Company will keep the Texas
Company reasonably informed of the status and details (including amendments or
proposed amendments) of such request or proposal on a current basis. The
Delaware Company shall immediately cease and terminate any existing
solicitation, initiation, encouragement, activity, discussion or negotiation
with any Third Party conducted heretofore by the Delaware Company or its
representatives with respect to the foregoing. Subject to the first sentence of
this Section 5.12(b), the Delaware Company (i) agrees not to release any Third
Party from, or waive any provision of, or fail to enforce, any standstill
agreement or similar agreements to which it is a Party related to, or which
could affect, an Alternative Transaction and agrees that the Texas Company shall
be entitled to enforce the Delaware Company's rights and remedies under and in
connection with such agreements and (ii) acknowledges that the provisions of
clause (i) are an important and integral part of this Agreement. Nothing
contained in this Section 5.12 or in Section 5.13 shall prohibit the Delaware
Company (i) from taking and disclosing to its
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stockholders a position contemplated by Rule 14e-9 or Rule 14e-2(a) promulgated
under the Exchange Act, or (ii) from making any disclosure to its stockholders
if, in the good faith judgment of the Board of Directors of the Delaware
Company, based on advice from outside counsel and its financial advisors, such
disclosure is required to prevent the Board of Directors of the Delaware Company
from breaching their fiduciary duties to the Delaware Company's stockholders
under applicable Law. Without limiting the foregoing, it is understood that any
violation of the restrictions set forth in Section 5.12(b) by any director or
officer of the Delaware Company or any of its Subsidiaries or any investment
banker, financial advisor, attorney, accountant or other representative of the
Delaware Company or any of its Subsidiaries shall be deemed to be a breach of
Section 5.12(b) by the Delaware Company.
(c) For purposes of this Agreement, "Alternative Transaction" means
-----------------------
any of (i) a transaction or series of transactions pursuant to which any Person
(or group of Persons) other than the Texas Company and its Subsidiaries and
other than the Delaware Company and its Subsidiaries (a "Third Party") acquires
-----------
or would acquire, directly or indirectly, beneficial ownership (as defined in
Rule 13d-3 under the Exchange Act) of more than 20% of the outstanding shares of
the Texas Company or the Delaware Company, as the case may be, whether from the
Texas Company or the Delaware Company or pursuant to a tender offer or
otherwise, (ii) any acquisition or proposed acquisition of, or business
combination with, the Texas Company or any of its Subsidiaries or the Delaware
Company or any of its Subsidiaries, as the case may be, by a merger or other
business combination (including any so-called "merger-of-equals" and whether or
not the Texas Company or any of its Subsidiaries or the Delaware Company or any
of its Subsidiaries, as the case may be, is the entity surviving any such merger
or business combination), and (iii) any other transaction pursuant to which any
Third Party acquires or would acquire, directly or indirectly, control of 20% or
more of the consolidated assets (including for this purpose the outstanding
equity securities of Subsidiaries of the Texas Company or the Delaware Company,
as the case may be, and any entity surviving any merger or business combination
including any of them) of the Texas Company or any of its Subsidiaries or the
Delaware Company or any of its Subsidiaries, as the case may be.
Notwithstanding the foregoing, neither the Preferred Stock Agreement nor the
transactions or documents contemplated therein shall constitute an Alternative
Transaction.
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Section V.13 Texas Company and Delaware Company Shareholder Meetings. (a)
As promptly as practicable after the S-4 is declared effective under the
Securities Act, the Texas Company shall duly give notice of, convene and hold a
meeting of its shareholders (the "Texas Company Shareholders' Meeting") in
accordance with the TBCA for the purpose of obtaining the Requisite Texas
Holders Approvals and shall, subject to the provisions of Section 5.13(b)
hereof, through its Board of Directors, recommend to its shareholders the
approval of this Agreement, the issuance of the Texas Company Common Stock in
connection with the Merger and the issuance of the Texas Company Preferred Stock
pursuant to the Preferred Stock Agreement.
(b) Neither the Board of Directors of the Texas Company nor any
committee thereof shall (i) except as expressly permitted by this Section
5.13(b), withdraw, qualify or modify, or propose publicly to withdraw, qualify
or modify, in a manner adverse to the Delaware Company, the approval or
recommendation of such Board of Directors or such committee thereof of this
Agreement, the issuance of the Texas Company Common Stock in connection with the
Merger or the issuance of the Texas Company Preferred Stock pursuant to the
Preferred Stock Agreement, (ii) approve or recommend, or propose publicly to
approve or recommend, any Alternative Transaction, or (iii) cause the Texas
Company to enter into any letter of intent, agreement in principle, acquisition
agreement or other similar agreement (each, a "Texas Company Acquisition
-------------------------
Agreement") related to any Alternative Transaction. Notwithstanding the
- ---------
foregoing, in the event that prior to the later of the approval of this
Agreement, of the issuance of the Texas Company Common Stock in connection with
the Merger by the holders of the Texas Company Common Stock and the issuance of
the Texas Company Preferred Stock pursuant to the Preferred Stock Agreement, the
Board of Directors of the Texas Company determines in good faith, after it has
received a Texas Company Superior Proposal and after receipt of advice from
outside counsel and its financial advisors, that doing so is required to prevent
the Board of Directors of the Texas Company from breaching its fiduciary duties
to the Texas Company shareholders under applicable Law, the Board of Directors
of the Texas Company may (subject to this and the following sentences) inform
the Texas Company shareholders that it no longer believes that such approval is
advisable and no longer recommends approval (a "Texas
-----
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<PAGE>
Company Subsequent Determination") or pay the Termination Fee and terminate this
- --------------------------------
Agreement, but only at a time that is after the fifth business day following the
Delaware Company's receipt of written notice advising the Delaware Company that
the Board of Directors of the Texas Company has received a Texas Company
Superior Proposal specifying the material terms and conditions of such the Texas
Company Superior Proposal (and including a copy thereof with all accompanying
documentation, if in writing), identifying the Person making such Texas Company
Superior Proposal and stating that it intends to make a Texas Company Subsequent
Determination or to terminate this Agreement (a "Texas Company Determination
---------------------------
Notice"). After providing the Texas Company Determination Notice, the Texas
- ------
Company shall cause its financial and legal advisors to negotiate in good faith
with the Delaware Company during such five business days to make such
adjustments to the terms and conditions of this Agreement as would enable the
Texas Company to proceed with the Merger on such adjusted terms; provided,
however, that any such adjustment shall be at the discretion of the Parties at
the time. For purposes of this Agreement, a "Texas Company Superior Proposal"
-------------------------------
means any proposal (on its most recent amended or modified terms, if amended or
modified) made by a Third Party to enter into an Alternative Transaction which
the Board of Directors of the Texas Company determines in its good faith
judgment (based on, among other things, the advice of a financial advisor of
nationally recognized reputation) to be more favorable to the Texas Company's
shareholders than the Merger and the transactions contemplated herein, in the
Preferred Stock Agreement and by the New Financing, taking into account all
relevant factors (including whether, in the good faith judgment of the Board of
Directors of the Texas Company, based on the advice of a financial advisor of
nationally recognized reputation, the Third Party is reasonably able to finance
the transaction, and any proposed changes to this Agreement that may be proposed
by the Delaware Company in response to such Alternative Transaction).
Notwithstanding the foregoing, but subject to its right to terminate pursuant to
Section 7.1(g), the Texas Company agrees that its obligations pursuant to
5.13(a) to give notice of, convene and hold a meeting of its shareholders in
accordance with the TBCA and its articles of incorporation and bylaws shall not
be affected by the withdrawal or modification (other than a withdrawal or
modification in which the Texas Company Board of Directors recommends that its
shareholders not grant the Requisite
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Texas Holders Approvals) by the Texas Company Board of Directors, in accordance
with this Section 5.13(b), of its recommendation to the shareholders of the
Texas Company to grant the Requisite Texas Holders Approvals.
(c) As promptly as practicable after the S-4 is declared effective
under the Securities Act, the Delaware Company shall duly give notice of,
convene and hold a meeting of its stockholders and the holders of its Debentures
(the "Delaware Company Stockholders' Meeting") in accordance with the DGCL and
--------------------------------------
its certificate of incorporation and bylaws for the purpose of obtaining the
Requisite Delaware Holders Approvals and shall, subject to the provisions of
Section 5.13(d) hereof, through its Board of Directors, recommend to its
stockholders and the holders of the Debentures the adoption of this Agreement.
(d) Neither the Board of Directors of the Delaware Company nor any
committee thereof shall (i) except as expressly permitted by this Section
5.13(d), withdraw, qualify or modify, or propose publicly to withdraw, qualify
or modify, in a manner adverse to the Texas Company, the approval or
recommendation of such Board of Directors or such committee thereof of this
Agreement, (ii) approve or recommend, or propose publicly to approve or
recommend, any Alternative Transaction, or (iii) cause the Delaware Company to
enter into any letter of intent, agreement in principle, acquisition agreement
or other similar agreement (each, a "Delaware Company Acquisition Agreement")
--------------------------------------
related to any Alternative Transaction. Notwithstanding the foregoing, in the
event that prior to obtaining the Requisite Delaware Holders Approvals, the
Board of Directors of the Delaware Company determines in good faith, after it
has received a Delaware Company Superior Proposal and after receipt of advice
from outside counsel and its financial advisors, that doing so is required to
prevent the Board of Directors of the Delaware Company from breaching its
fiduciary duties to the Delaware Company stockholders under applicable Law, the
Board of Directors of the Delaware Company may (subject to this and the
following sentences) inform the Delaware Company stockholders that it no longer
believes that the Merger is advisable and no longer recommends approval (a
"Delaware Company Subsequent Determination") or pay the Termination Fee and
- ------------------------------------------
terminate this Agreement, but only at a time that is after the fifth business
day following the Texas Company's receipt of written notice advising the Texas
Company that the Board of Directors of the Delaware
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Company has received a Delaware Company Superior Proposal specifying the
material terms and conditions of such Delaware Company Superior Proposal (and
including a copy thereof with all accompanying documentation, if in writing),
identifying the Person making such Delaware Company Superior Proposal and
stating that it intends to make a Delaware Company Subsequent Determination or
to terminate this Agreement (a "Delaware Company Determination Notice") . After
--------------------------------------
providing a Delaware Company Determination Notice, the Delaware Company shall
cause its financial and legal advisors to negotiate in good faith with the Texas
Company during such five business days to make such adjustments to the terms and
conditions of this Agreement as would enable the Delaware Company to proceed
with the Merger on such adjusted terms; provided however, that any such
adjustment shall be at the discretion of the Parties at the time. For purposes
of this Agreement, a "Delaware Company Superior Proposal" means any proposal (on
------------------------------------
its most recently amended or modified terms, if amended or modified) made by a
Third Party to enter into an Alternative Transaction which the Board of
Directors of the Delaware Company determines in its good faith judgment (based
on, among other things, the advice of a financial advisor of nationally
recognized reputation) to be more favorable to the Delaware Company's
stockholders than the Merger taking into account all relevant factors (including
whether, in the good faith judgment of the Board of Directors of the Delaware
Company, based on the advice of a financial advisor of nationally recognized
reputation, the Third Party is reasonably able to finance the transaction, and
any proposed changes to this Agreement that may be proposed by the Texas Company
in response to such Alternative Transaction). Notwithstanding the foregoing, but
subject to its right to terminate pursuant to Section 7.1(g), the Delaware
Company agrees that its obligations pursuant to 5.13(c) to give notice of,
convene and hold a meeting of its stockholders and the holders of the Debentures
in accordance with the DGCL and its certificate of incorporation and bylaws
shall not be affected by the withdrawal or modification by the Delaware Company
Board of Directors, in accordance with this Section 5.13(d), of its
recommendation to the stockholders of the Delaware Company and the holders of
the Debentures to adopt this Agreement.
Section V.14 Rule 145. The Delaware Company will use its reasonable best
--------
efforts to cause all Persons who, at the time of the meeting of the Delaware
Company's stockholders to adopt this Agreement, may be deemed to
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be affiliates of the Delaware Company as that term is used in Rule 145 under the
Securities Act and who will become the beneficial owners of Surviving
Corporation Common Stock pursuant to the Merger to execute "affiliates' letters"
in customary form prior to the Effective Time. Except as otherwise provided in
any separate agreements between the Texas Company and any such affiliates, the
Texas Company will use its reasonable efforts to comply with the provisions of
Rule 144(c) under the Securities Act in order that such affiliates may resell
such Surviving Corporation Common Stock pursuant to Rule 145(d) under the
Securities Act. After the first anniversary of the Closing Date, upon a written
request, the Surviving Corporation will remove any restrictive legends related
to Rule 145 on the certificates evidencing Merger Consideration received by
Persons who are affiliates of the Delaware Company immediately before the
Effective Time but who are not affiliates of the Surviving Corporation
immediately after the Effective Time.
Section V.15 Board Membership and Officers. The Boards of Directors of
-----------------------------
the Texas Company shall take such action as may be required to cause the
directors comprising the full Board of Directors of the Surviving Corporation
and the officers of the Surviving Corporation immediately after the Effective
Time to reflect the provisions of this Section 5.15. The initial Board of
Directors of the Surviving Corporation following the Merger shall consist of 13
individuals; four shall be designees of the Delaware Company which shall be
reasonably acceptable to the other parties hereto (the "Delaware Designees"),
------------------
four shall be designees of the Texas Company which shall be reasonably
acceptable to the other parties hereto (the "Texas Designees"), four shall be
---------------
designees of the Investor (the "Investor Designees") and one (the "Joint
------------------ -----
Designee") shall be chosen jointly by the Delaware Company, the Texas Company
- ---------
and the Investor. At least two of the Delaware Designees shall not be employed
by the Delaware Company or its Subsidiaries, and at least two of the Texas
Designees shall not be employed by the Texas Company or its Subsidiaries. J.
Patrick Millinor shall serve as Chairman of the Board of the Surviving
Corporation immediately following the Merger and Joseph Ivey shall serve as
President and Chief Executive Officer of the Surviving Corporation. Each shall
report to the full Board of Directors. The executive committee (the "Executive
---------
Committee") of the Board shall consist of five members of the Board, two of whom
- ---------
shall be Ivey and Millinor. In the event that either of Messrs. Millinor or Ivey
ceases to be employed by the Texas Company or the Delaware Company,
respectively, immediately prior to the Effective Time, then the position with
the
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Surviving Corporation which would otherwise be held by them shall be filled
promptly after the Effective Time by the Board of Directors of the Surviving
Corporation. Except as set forth in this Section 5.15, all other officers of the
Surviving Corporation shall be selected by the Board of Directors of the
Surviving Corporation after consultation with Messrs. Millinor and Ivey. All
directors and officers so elected shall hold office from the Effective Time in
accordance with the charter documents governing such corporation until his or
her successor is duly elected or appointed and qualified.
Section V.16 Takeover Statute. If any "fair price", "moratorium",
----------------
"control share acquisition" or other form of anti-takeover statute or regulation
shall become applicable to the transactions contemplated hereby, the Delaware
Company, the Texas Company and their respective members of their respective
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.
Section V.17 Tax Matters. (1)Each of the Parties shall use its best
-----------
efforts to cause the Merger to constitute a tax-free "reorganization" under Code
Section 368(a). None of the Parties will knowingly take any action, and none of
the Parties will permit any of its Subsidiaries or Affiliates knowingly to take
any action, that would cause the Merger to fail to qualify as a tax-free
reorganization under Code Section 368(a).
(2) The Delaware Company will deliver a Representation Letter
substantially in the form of Exhibit 5.17(c)-1 executed as of the Closing Date
and the Texas Company will deliver a Representation Letter substantially in the
form of Exhibit 5.17(c)-2 executed as of the Closing Date.
Section V.18 Notification of Certain Matters. Each of the Delaware
-------------------------------
Company and the Texas Company shall give prompt notice to the other of:
(i) the occurrence or nonoccurrence of any event whose occurrence or
nonoccurrence would be likely to cause either (A) any representation or warranty
contained in this Agreement to be untrue or inaccurate with respect to such
Party and its Subsidiaries, taken as a whole, at any time from the date hereof
to the Effective Time, or (B) directly or indirectly, any material adverse
effect on such Party; and
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(ii)any material failure of such Party to comply with or satisfy any
covenant, condition or agreement to be complied with or satisfied by it
hereunder.
Section V.19 Transition Planning. J. Patrick Millinor, Jr., and Joseph
-------------------
Ivey, as Chief Executive Officers of the Texas Company and the Delaware Company,
respectively, jointly shall be responsible for coordinating all aspects of
transition planning and implementation relating to the Merger and the other
transactions contemplated hereby. If either such person ceases to be Chief
Executive Officer of his respective company for any reason, such Person's
successor as Chief Executive Officer shall assume his predecessor's
responsibilities under this Section 5.19. During the period between the date
hereof and the Effective Time, Messrs. Millinor and Ivey jointly shall (i)
examine various alternatives regarding the manner in which to best organize and
manage the businesses of the Texas Company and the Delaware Company after the
Effective Time, and (ii) coordinate policies and strategies with respect to
employees and employee compensation and benefit matters, in all cases subject to
applicable law.
ARTICLE VI
CONDITIONS
Section VI.1 Conditions to Each Party's Obligation To Effect the Merger.
----------------------------------------------------------
The respective obligations of the Parties to effect the Merger will be subject
to the satisfaction, on or prior to the Effective Time, of the following
conditions:
(1) The Delaware Company shall have obtained the Requisite Delaware
Holders Approvals.
(2) The Texas Company shall have obtained the Requisite Texas Company
Holders Approvals.
(3) Any waiting period under the HSR Act applicable to the Merger shall
have expired or been terminated.
(4) The S-4 shall have become effective under the Securities Act and no
stop order suspending the effectiveness of the Form S-4 shall then be in effect
and no proceeding for that purpose shall have been initiated or, to the
knowledge of the Texas Company or the Delaware Company, threatened.
(5) The Texas Company shall have received all state securities or blue sky
permits and other authorizations necessary to issue the shares of Surviving
Corporation Common Stock pursuant to this Agreement.
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(6) No temporary restraining order, preliminary or permanent
injunction or other order shall have been issued by any court of competent
jurisdiction and no other legal restraint or prohibition preventing the
consummation of the Merger shall be in effect (each Party agreeing to use all
reasonable efforts to have any such order reversed or injunction lifted).
(7) The shares of Surviving Corporation Common Stock to be issued in
connection with the Merger, the shares of Surviving Corporation Common Stock
which will be issuable upon conversion of the Texas Company Preferred Stock and
the shares of Surviving Corporation Common Stock will be issuable upon the
exercise of the options, warrants and convertible securities of the Delaware
Company shall have been approved for listing on the NYSE, subject to official
notice of issuance.
(8) The Texas Company shall have received the opinion of Bracewell &
Patterson, L.L.P. substantially in the form attached hereto as Exhibit 6.1(h)(i)
and the Delaware Company shall have received the opinion of Morgan, Lewis and
Bockius, LLP, substantially in the form attached hereto as Exhibit 6.1(h)(ii),
addressed to the Texas Company and the Delaware Company, respectively, based
upon representation letters substantially in the forms referenced in Section
5.17 of this Agreement, dated on or about the date of such opinion and such
other facts and representations as counsel may reasonably deem relevant, to the
effect that the Merger will be treated for federal income tax purposes as a
reorganization qualifying under the provisions of Section 368(a) of the Code.
(9) The Texas Company shall have received from an institutional
investor or its affiliated designees (the "New Investor"), pursuant to the
------------
Preferred Stock Agreement, the amount of $150,000,000 and all of the outstanding
Debentures as consideration for the issuance of shares of 7.25% Convertible
Preferred Stock, par value $.001 per share, of the Texas Company (the "Texas
-----
Company Preferred Stock").
- -----------------------
(10) The Texas Company shall have obtained the New Financing and
funding thereunder shall be available to the Texas Company.
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(11) All material consents, approvals and authorizations from
Government Entities or third parties required to effect, or as a result of, the
Merger, the failure to obtain which would have a material adverse effect on the
Surviving Corporation and its Subsidiaries, taken as a whole, shall have been
obtained.
(12) The Parties shall have obtained all waivers, amendments and
consents, if any, necessary so that the consummation of the transactions
pursuant to this Agreement and the Preferred Stock Agreement shall not cause a
default under the (i) Indenture dated April 30, 1999, by and among the Delaware
Company, as Issuer, the Guarantors named therein and IBJ Whitehall Bank & Trust
Company, as Trustee, related to the Delaware Company's 10 2 % Senior
Subordinated Notes due 2009 (the "Delaware Company Senior Indenture"), or (ii)
---------------------------------
Indenture dated January 22, 1999, by and among the Texas Company, the
Subsidiaries named therein, as Guarantors, State Street Bank and Trust Company,
as Trustee related to the Texas Company 9 3/4% Senior Subordinated Notes due
2009, Series A, and the 9 3/4% Senior Subordinated Notes due 2009, Series B.
Section VI.2 Conditions of Obligations of the Delaware Company. The
--------------------------------------------------
obligations of the Delaware Company to effect the Merger are further subject to
satisfaction or waiver of the following conditions:
(1) The representations and warranties of the Texas Company contained
in this Agreement shall be true and correct on the date hereof and (except to
the extent such representations and warranties speak as of a date earlier than
the date hereof) shall also be true and correct on and as of the Closing Date,
except for changes contemplated by this Agreement, with the same force and
effect as if made on and as of the Closing Date; provided, however, that for
purposes of this Section 6.2(a) only, such representations and warranties shall
be deemed to be true and correct unless the failure or failures of such
representations and warranties to be so true and correct (without regard to
materiality qualifiers contained therein), individually or in the aggregate,
results or would reasonably be expected to result in a material adverse effect
on the Texas Company;
(2) the Texas Company shall have performed or complied in all material
respects with all agreements and covenants required by this Agreement to be
performed or complied with by it on or before the Effective Time; and
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(3) the Delaware Company shall have received a certificate of an
executive officer of the Texas Company to the effect set forth in paragraphs (a)
and (b) above.
Section VI.3 Conditions of Obligations of the Texas Company. The
----------------------------------------------
obligations of the Texas Company to effect the Merger are further subject to the
satisfaction or waiver of the following conditions:
(1) The representations and warranties of the Delaware Company
contained in this Agreement shall be true and correct on the date hereof and
(except to the extent such representations and warranties speak as of a date
earlier than the date hereof) shall also be true and correct on and as of the
Closing Date, except for changes contemplated by this Agreement, with the same
force and effect as if made on and as of the Closing Date; provided, however,
that for purposes of this Section 6.3(a) only, such representations and
warranties shall be deemed to be true and correct unless the failure or failures
of such representations and warranties to be so true and correct (without regard
to materiality qualifiers contained therein), individually or in the aggregate,
results or would reasonably be expected to result in a material adverse effect
on the Delaware Company;
(2) the Delaware Company shall have performed or complied in all
material respects with all agreements and covenants required by this Agreement
to be performed or complied with by it on or before the Effective Time; and
(3) the Texas Company shall have received a certificate of an
executive officer of the Delaware Company to the effect set forth in paragraphs
(a) and (b) above.
ARTICLE VII
TERMINATION
Section VII.1 Termination . This Agreement may be terminated at any time
-----------
prior to the Effective Time whether before or, subject to the terms of this
Agreement, after approval of this Agreement by the stockholders and holders of
the Debentures of the Delaware Company or the shareholders of the Texas Company,
in each case as authorized by the respective Board of Directors of the Delaware
Company or the Texas Company:
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(1) by mutual consent of the Texas Company and the Delaware Company;
(2) by either of the Texas Company or the Delaware Company if the
Merger is not consummated before March 31, 2000 (the "Termination Date");
----------------
provided, however, that the right to terminate this Agreement under this Section
7.1(b) shall not be available to any Party whose failure to fulfill any
obligation under this Agreement has been the cause of, or resulted in, the
failure of any condition to be satisfied;
(3) by either of the Texas Company or the Delaware Company if there
shall be any Law that makes the consummation of the Merger illegal or otherwise
prohibited or if any court of competent jurisdiction has issued an order,
decree, ruling or injunction permanently restraining, enjoining or otherwise
prohibiting the consummation of the Merger, which injunction has become final
and non-appealable;
(4) (i) by the Delaware Company, (A) if the Texas Company shall have
breached in any material respect (without regard to materiality qualifiers
contained therein) any of its representations or warranties contained in this
Agreement or the Texas Company shall have failed to perform in any material
respect any of its covenants or other agreements contained in this Agreement,
which breach or failure to perform (1) is incapable of being cured by the Texas
Company, as the case may be, prior to the Termination Date and (2) renders any
condition under Section 6.1 or 6.2 incapable of being satisfied prior to the
Termination Date, or (B) if a condition under Section 6.1 or 6.2 to the Delaware
Company's obligations hereunder cannot be satisfied prior to the Termination
Date;
(ii) by the Texas Company, (A) if the Delaware Company shall have
breached in any material respect (without regard to materiality qualifiers
contained therein) any of its representations or warranties contained in this
Agreement or shall have failed to perform in any material respect any of its
covenants or other agreements contained in this Agreement, which breach or
failure to perform (1) is incapable of being cured by the Delaware Company prior
to the Termination Date and (2) renders any condition under Sections 6.1 or 6.3
incapable of being satisfied prior to the Termination Date, or (B) if a
condition under Section 6.1 or 6.3 to the Texas Company's obligations hereunder
cannot be satisfied prior to the Termination Date;
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(5) by either the Delaware Company or the Texas Company if the Board
of Directors of the other (i) shall fail to include in its Proxy Statement its
recommendation without modification or qualification that the stockholders and
Debenture holders of the Delaware Company adopt this Agreement, in the case of
the Delaware Company, or that the shareholders of the Texas Company adopt this
Agreement, approve the issuance of the shares of Texas Company Common Stock in
connection with the Merger and approve the issuance of the Texas Company
Preferred Stock pursuant to the Preferred Stock Agreement, in the case of the
Texas Company, (ii) shall withdraw or modify in any adverse manner its approval
or recommendation of this Agreement or the Merger, in the case of the Delaware
Company, or shall withdraw or modify in any adverse manner its approval or
recommendation of this Agreement or the Merger, the issuance of the shares of
Texas Company Common Stock in connection with the Merger or the issuance of the
Texas Company Preferred Stock pursuant to the Preferred Stock Agreement, in the
case of the Texas Company, (iii) shall fail to reaffirm such approval or
recommendation promptly after such Party's request, (iv) shall approve or
recommend any Alternative Transaction, or (v) shall resolve to take any of the
actions specified in this Section 7.1(e);
(6) by either the Delaware Company or the Texas Company if the
Requisite Delaware Holders Approvals or the Requisite Texas Holders Approvals,
as the case may be, shall fail to have been obtained at a duly held meeting of
such holders of either of such companies, including any adjournments thereof, or
(g)(i) by the Texas Company in accordance with Section 5.13(b), or
(ii) by the Delaware Company in accordance with Section 5.13(d), provided, that,
in each case, the Party terminating this Agreement pays the Termination Fee as a
condition to the effectiveness of such Party's termination under Section 7.1(g).
Section VII.2 Effect of Termination. (1) In the event of termination of
---------------------
this Agreement as provided in Section 7.1 hereof, and subject to the provisions
of Section 8.1 hereof, this Agreement shall forthwith become void and there
shall be no liability on the part of any of the Parties, except (i) as set forth
in this Section 7.2 and in Sections 3.9, 4.10, 5.10 and 5.11 hereof, and (ii)
nothing herein shall relieve any Party from liability for any willful breach
hereof.
(2) The Texas Company shall pay in accordance with Section 7.3 of this
Agreement to the Delaware Company a termination fee of $15,000,000 (the
"Termination Fee") upon the occurrence of any of the following
- ----------------
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events: (i) the termination of this Agreement by the Delaware Company pursuant
to Section 7.1(e) hereof, (ii) if this Agreement could have been (but was not)
terminated by the Delaware Company pursuant to Section 7.1(e) hereof , upon the
termination of this Agreement by the Texas Company or the Delaware Company
pursuant to Section 7.1(f), because of the failure of the Texas Company to
obtain the Requisite Texas Holders Approvals, (iii) (A) if this Agreement could
not have been terminated by the Delaware Company pursuant to Section 7.1(e)
hereof but is subsequently terminated by the Texas Company or the Delaware
Company pursuant to Section 7.1(f) because of the failure of the Texas Company
to obtain Requisite Texas Holders Approvals, (B) prior to the Texas Company
Shareholders' Meeting there shall have been an offer or proposal for, an
announcement of any intention with respect to (including the filing of a
statement of beneficial ownership on Schedule 13D discussing the possibility of
or reserving the right to engage in), or any agreement with respect to, a
transaction that would constitute an Alternative Transaction (except that for
the purposes of this Section 7.2(b), the applicable percentage in clause (i) of
the definition of "Alternative Transaction" shall be fifty percent (50%))
involving the Texas Company or any of the Texas Company's Subsidiaries, and (C)
within 12 months after the termination of this Agreement, the Texas Company
enters into a definitive agreement with any Third Party with respect to, or
consummates, an Alternative Transaction, (iv) this Agreement is terminated by
the Delaware Company pursuant to Section 7.1(d)(i) as a result of the Texas
Company's material breach of Sections 5.3, 5.12(a), 5.13(a) or 5.13(b) hereof
which, in the case of Section 5.3 only, is not cured within 30 days after notice
thereof to the Texas Company, or (v) this Agreement is terminated by the Texas
Company pursuant to Section 7.1(g). In addition, the Texas Company shall pay the
Delaware Company $30,000,000 as liquidated damages if the Texas Company shall
attempt to terminate this Agreement in a manner that is not provided in Section
7.1.
(3) The Delaware Company shall pay in accordance with Section 7.3 of
this Agreement to the Texas Company the Termination Fee upon the occurrence of
any of the following events: (i) the termination of this Agreement by the Texas
Company pursuant to Section 7.1(e) hereof, (ii) if this Agreement could have
been (but was not) terminated by the Texas Company pursuant to Section 7.1(e)
hereof, upon the termination of this Agreement by the Texas Company or the
Delaware Company pursuant to Section 7.1(f) because of the failure of the
Delaware Company to obtain the Requisite Delaware Holders Approvals, (iii) (A)
if this Agreement could not have been terminated by the Texas Company pursuant
to Section 7.1(e) hereof but is subsequently terminated by the Texas Company or
the Delaware Company pursuant to Section 7.1(f) because of the failure of the
Delaware Company
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to obtain the Requisite Delaware Holders Approvals, (B) prior to the Delaware
Company Stockholders' Meeting there shall have been an offer or proposal for, an
announcement of any intention with respect to (including the filing of a
statement of beneficial ownership on Schedule 13D discussing the possibility of
or reserving the right to engage in), or any agreement with respect to, a
transaction that would constitute an Alternative Transaction (except that for
the purposes of this Section 7.2(c), the applicable percentage in clause (i) of
the definition of "Alternative Transaction" shall be fifty percent (50%))
involving the Delaware Company or any of the Delaware Company's Subsidiaries,
and (C) within 12 months after the termination of this Agreement, the Delaware
Company enters into a definitive agreement with any Third Party with respect to,
or consummates, an Alternative Transaction, (iv) this Agreement is terminated by
the Texas Company pursuant to Section 7.1(d) as a result of the Delaware
Company's material breach of Sections 5.3, 5.12(b), 5.13(c) or 5.13(d) hereof
which, in the case of Section 5.3 only, is not cured within 30 days after notice
thereof to the Delaware Company or (v) this Agreement is terminated by the
Delaware Company pursuant to Section 7.1(g). In addition, the Delaware Company
shall pay the Texas Company $30,000,000 as liquidated damages if the Delaware
Company shall attempt to terminate this Agreement in violation of Section 7.1.
Section VII.3 Terms of Payment. Each terminate fee payable under
----------------
Sections 7.2(b) and (c) above shall be payable in cash, payable no later than
one business day following the delivery of notice of termination to the other
Party, except that (i) if such fee shall be payable pursuant to clause (iii) of
either of Section 7.2(b) or (c), such fee shall be payable no later than one
business day following the day such Party enters into the definitive agreement
or consummates a transaction referenced in such clause (iii)(C) of either
Section 7.2(b) or (c), (ii) if such fee shall be payable by the Texas Company
pursuant to Section 7.2(b)(ii) or by the Delaware Company pursuant to Section
7.2(c)(ii), such fee shall be payable prior to, and as a condition precedent to,
termination of this Agreement by the Texas Company pursuant to Section 7.1(f)
because of the failure of the Texas Company to obtain the Requisite Texas
Holders Approvals
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or by the Delaware Company pursuant to Section 7.1(f) because of the failure of
the Delaware Company to obtain the Requisite Delaware Holders Approvals, as the
case may be, and (iv) the Termination Fee shall be paid prior to or
contemporaneous with termination of this Agreement pursuant to Section 7.1(g).
Section VII.4 Termination for Costs and Expenses. The Delaware
----------------------------------
Company and the Texas Company agree that the Agreements contained in Sections
7.2(b) and (c) above are an integral part of the transactions contemplated by
this Agreement and that without these Agreements, they would not enter into this
Agreement. In the event of any dispute as to whether any fee due under such
Sections 7.2(b) and (c) is due and payable, the prevailing Party shall be
entitled to receive from the other Party the costs and expenses (including legal
fees and expenses) in connection with any action, including the filing of any
lawsuit or other legal action, relating to such dispute. Interest shall be paid
on the amount of any unpaid fee at the publicly announced prime rate of
Citibank, N.A. from the date such fee was required to be paid.
ARTICLE VIII
MISCELLANEOUS
Section VIII.1 Survival of Representations, Warranties and Agreements.
------------------------------------------------------
The representation, warranties and Agreements in this Agreement shall terminate
at the Effective Time or upon the termination of this Agreement pursuant to
Section 7.1 hereof, as the case may be, except that (a) the covenants,
representations and warranties set forth in Articles I and II and Sections 3.9,
4.9, 5.6, 5.10, 5.11 5.14, 5.15, 5.17 and 7.2 hereof shall survive termination
indefinitely, and (b) nothing contained herein shall limit any covenant or
Agreement of the Parties which by its terms contemplates performance after the
Effective Time.
Section VIII.2 Amendment. This Agreement may be amended by the Parties,
---------
by action taken or authorized by their respective Boards of Directors, at any
time before or after approval of the matters presented in connection with the
Merger by the stockholders or Debenture holders of the Delaware Company or the
shareholders of the Texas Company; provided, however, no such amendment shall be
made which by Law requires the further approval of such
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stockholders or shareholders or Debenture holders, as the case may be, without
such further approval. This Agreement may not be amended except by an instrument
in writing signed on behalf of each of the Parties.
Section VIII.3 Extension; Waiver. At any time prior to the Effective
-----------------
Time, any Party may, to the extent legally allowed, (i) extend the time for the
performance of any of the obligations or other acts of the other Party, (ii)
waive any inaccuracies in the representations and warranties contained herein or
in any document delivered pursuant hereto and (iii) waive compliance with any of
the Agreements or conditions contained herein. Any agreement on the part of a
Party to any such extension or waiver will be valid only if set forth in a
written instrument signed on behalf of such Party. The failure of any Party to
assert any of its rights under this Agreement or otherwise shall not constitute
a waiver of those rights.
Section VIII.4 Notices. All notices and other communications hereunder
-------
will be in writing and will be deemed given if delivered personally, telecopied
(which is confirmed) or mailed by registered or certified mail (return receipt
requested) to the Parties at the following addresses (or at such other address
for a Party as is specified by like
notice):
(1) if to the Texas Company, to
Group Maintenance America Corp.
8 Greenway Plaza, Suite 1500
Houston, Texas 77046
Attn.: Chief Executive Officer
Telecopy: 713-626-4766
with a copy to
Bracewell & Patterson, L.L.P.
711 Louisiana, Suite 2900
Houston, Texas 77002
Attn.: John L. Bland
Telecopy: 713-221-1212
and
(2) if to the Delaware Company, to
Building One Services
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110 Cheshire Lane, Suite 210
Minnetonka, Minnesota 55305
Attn: Joseph M. Ivey
Telecopy: 612-249-4977
with a copy to
Morgan, Lewis & Bockius, LLP
1701 Market Street
Philadelphia, Pennsylvania 19103-2921
Attn: N. Jeffrey Klauder
Telecopy: 215-963-5299
Section VIII.5 Interpretation. When a reference is made in this
--------------
Agreement to Sections, such reference will be to a Section of this Agreement
unless otherwise indicated. The headings contained in this Agreement are for
reference purposes only and will not affect in any way the meaning or
interpretation of this Agreement. Whenever the words "include," "includes" or
"including" are used in this Agreement they will be deemed to be followed by the
words "without limitation." The phrases "the date of this Agreement," "the date
hereof" and terms of similar import, unless the context otherwise requires, will
be deemed to refer to the date set forth in the introductory paragraph of this
Agreement.
Section VIII.6 Counterparts. This Agreement may be executed in two or
------------
more counterparts, all of which will be considered one and the same agreement
and will become effective when two or more counterparts have been signed by each
of the Parties and delivered to the other Parties, it being understood that all
Parties need not sign the same counterpart.
Section VIII.7 Entire Agreement; No Third Party Beneficiaries. This
----------------------------------------------
Agreement (including the documents and the instruments referred to herein), and
the Confidentiality Agreement (a) constitute the entire agreement and supersede
all prior Agreements and understandings, both written and oral, between the
Parties with respect to the subject matter hereof and thereof, and (b) other
than Sections than Article II, and Sections 3.24(c) and 4.24(c), are not
intended to confer upon any Person other than the Parties hereto and thereto any
rights or remedies hereunder or thereunder.
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Section VIII.8 GOVERNING LAW. EXCEPT AS SET FORTH IN THIS SECTION 8.8,
-------------
THIS AGREEMENT WILL BE GOVERNED AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF DELAWARE APPLICABLE TO CONTRACTS MADE, EXECUTED, DELIVERED AND
PERFORMED WHOLLY WITHIN THE STATE OF DELAWARE, WITHOUT REGARD TO ANY APPLICABLE
CONFLICTS OF LAW, EXCEPT TO THE EXTENT THAT THIS AGREEMENT PERTAINS TO THE
INTERNAL AFFAIRS OF A TEXAS CORPORATION, IN WHICH EVENT, AND ONLY WITH RESPECT
TO SUCH EVENT, THE LAWS OF THE STATE OF TEXAS SHALL APPLY.
Section VIII.9 Specific Performance. The Parties agree that if any of
--------------------
the provisions of this Agreement were not performed in accordance with their
specific terms or were otherwise breached, irreparable damage would occur, no
adequate remedy at Law would exist and damages would be difficult to determine,
and that the Parties will be entitled to specific performance of the terms
hereof, in addition to any other remedy at Law or equity.
Section VIII.10 Publicity. Except as otherwise required by Law or the
---------
applicable rules of any national securities exchange, for so long as this
Agreement is in effect, neither the Texas Company nor the Delaware Company will,
or will permit any of its Subsidiaries to, issue or cause the publication of any
press release or other public announcement with respect to the transactions
contemplated by this Agreement without having consulted with the other Party.
Section VIII.11 Assignment. Neither this Agreement nor any of the
----------
rights, interests or obligations hereunder will be assigned by any Party
(whether by operation of Law or otherwise) without the prior written consent of
the other Party. Subject to the preceding sentence, this Agreement will be
binding upon, inure to the benefit of and be enforceable by the Parties and
their respective successors and assigns.
Section VIII.12 Validity. The invalidity or unenforceability of any
--------
provision of this Agreement will not affect the validity or enforceability of
any other provisions hereof or thereof, which will remain in full force and
effect.
Section VIII.13 Taxes. Any liability arising out of the New York State
-----
Real Property Gains Tax and any other tax imposed by any domestic or foreign
taxing authority with respect to the property of the Delaware Company or the
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Texas Company due with respect to the Merger will be borne by the Surviving
Corporation and expressly will not be a liability of the stockholders of the
Delaware Company or the shareholders of the Texas Company.
IN WITNESS WHEREOF, the Texas Company and the Delaware Company have caused
this Agreement to be signed by their respective officers hereunto duly
authorized as of the date first written above.
GROUP MAINTENANCE AMERICA CORP.
By: /s/ J. Patrick Millnor, Jr.
-------------------------------------
Name: J. Patrick Millnor, Jr.
-----------------------------------
Title: Chief Executive Officer
-----------------------------------
BUILDING ONE SERVICES CORPORATION
By: /s/ Joseph M. Ivey
-------------------------------------
Name: Joseph M. Ivey
-----------------------------------
Title: President
-----------------------------------
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EXHIBIT 1.4(a)
CERTIFICATE OF INCORPORATION
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EXHIBIT 5.17(c) - 1
FORM OF DELAWARE COMPANY REPRESENTATION LETTER
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EXHIBIT 5.17(c) - 2
FORM OF TEXAS COMPANY REPRESENTATION LETTER
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