Exhibit 10.1

 

AGREEMENT AND PLAN OF MERGER

 

BY AND AMONG

 

DYNA TEN CORPORATION,

 

COMFORT SYSTEMS USA, INC.,

 

CSUSA (20), INC.,

 

SCOTT BRADY, AS A SIGNING SHAREHOLDER,

 

AND

 

MARK NYQUIST, AS A SIGNING SHAREHOLDER AND

 

AS SHAREHOLDER REPRESENTATIVE

 

DATED AS OF APRIL 7, 2014

 

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TABLE OF CONTENTS

 

 

 

Page

 

 

 

ARTICLE I

THE MERGER

1

1.01

The Merger

1

1.02

Conversion of Common Stock

2

1.03

Exchange of Certificates; Lost Certificates; Paying Agent

2

1.04

Certificate of Incorporation

3

1.05

Bylaws

3

1.06

Directors and Officers

3

1.07

Buy-Sell Agreements

3

 

 

 

ARTICLE II

THE CLOSING; MERGER CONSIDERATION ADJUSTMENTS; DISSENTING STOCK; WITHHOLDING
RIGHTS

3

2.01

The Closing

3

2.02

The Closing Transactions

3

2.03

Working Capital Adjustment

4

2.04

WIP Adjustment to Merger Consideration

6

2.05

Other Adjustments to Merger Consideration

8

2.06

Earn-Out

10

2.07

Dissenting Stock

12

 

 

 

ARTICLE III

CONDITIONS TO CLOSING

12

3.01

Conditions to the Purchaser’s and the Merger Sub’s Obligations

12

3.02

Conditions to the Company’s Obligations

14

3.03

Other Conditions

15

 

 

 

ARTICLE IV

REPRESENTATIONS AND WARRANTIES OF THE COMPANY

16

4.01

Organization and Qualification

16

4.02

Capitalization

16

4.03

Authority

17

4.04

Consents and Approvals; No Violation

17

4.05

Books and Records

18

4.06

Absence of Certain Changes

18

4.07

Absence of Undisclosed Liabilities

19

4.08

Accounts Receivable

20

4.09

Inventory

20

4.10

Litigation

20

4.11

Tax Matters

21

4.12

Employee Benefit Plans

22

4.13

Employment Matters

23

4.14

Contracts

23

4.15

Related Party Transactions

23

4.16

Compliance with Laws

24

4.17

Insurance

24

4.18

Intellectual Property

25

4.19

Environmental Matters

25

4.20

Real Property

26

4.21

Personal Property

26

4.22

Brokers; Financial Advisors

27

 

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4.23

Bank Accounts; Powers of Attorney

27

4.24

Indebtedness

27

4.25

Subsidiaries and Predecessors

27

4.26

Financial Statements

27

4.27

Customers and Suppliers

28

4.28

Vote Required

28

4.29

WIP Schedule

28

4.30

Unclaimed Property

28

4.31

No Other Representations and Warranties

28

 

 

 

ARTICLE V

REPRESENTATIONS AND WARRANTIES OF THE PURCHASER AND THE MERGER SUB

29

5.01

Organization and Corporate Power

29

5.02

Authority

29

5.03

Consents and Approvals

29

5.04

Brokers; Financial Advisors

29

5.05

Financing

30

5.06

Investment Representation

30

 

 

 

ARTICLE VI

COVENANTS OF THE COMPANY AND THE SIGNING SHAREHOLDERS

30

6.01

Conduct of the Business

30

6.02

Negative Covenants

30

6.03

Access to Books and Records

32

6.04

Conditions

32

6.05

Notification

32

6.06

Shareholder Approval

32

6.07

Signing Shareholder Actions

32

6.08

No Alternative Transactions

33

 

 

 

ARTICLE VII

COVENANTS OF THE PURCHASER

33

7.01

Access to Books and Records

33

7.02

Notification

34

7.03

Conditions

34

7.04

Contact with Customers and Suppliers

34

7.05

Director and Officer Indemnification and Insurance

34

7.06

Confidentiality Agreement

34

7.07

Life Insurance

34

 

 

 

ARTICLE VIII

TERMINATION

35

8.01

Termination

35

8.02

Effect of Termination

36

 

 

 

ARTICLE IX

TAX MATTERS

36

9.01

Tax Periods Ending on or Before the Closing Date

36

9.02

Tax Periods Beginning Before and Ending After the Closing Date

36

9.03

Cooperation on Tax Matters

37

9.04

Transfer Taxes

37

9.05

Contests

38

9.06

Amendments

38

9.07

Refunds

38

9.08

Section 338(h)(10)

38

 

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9.09

Post-Closing Date Activities

41

 

 

 

ARTICLE X

INDEMNIFICATION

41

10.01

Indemnification and Payment of Damages by the Shareholders

41

10.02

Indemnification by the Purchaser

42

10.03

Claims

42

10.04

Notice and Defense of Certain Proceedings

43

10.05

Payment; Interest

44

10.06

Limitations

44

10.07

Exclusive Remedy

47

 

 

 

ARTICLE XI

SHAREHOLDER REPRESENTATIVE

47

11.01

Appointment

47

11.02

Certain Payments; Expenses

48

11.03

Indemnification

48

11.04

Liability

48

11.05

Distribution

49

11.06

Successor

49

11.07

Contribution

49

 

 

 

ARTICLE XII

CERTAIN SHAREHOLDER MATTERS

50

12.01

Noncompetition and Nonsolicitation

50

12.02

Confidential Information

51

12.03

Release

52

12.04

Certain Actions

52

 

 

 

ARTICLE XIII

MISCELLANEOUS

52

13.01

Entire Agreement; Assignment

52

13.02

Reformation and Severability

53

13.03

Notices

53

13.04

Governing Law

54

13.05

Interpretation

54

13.06

GAAP

54

13.07

Payments to Shareholders

55

13.08

Parties in Interest

55

13.09

Counterparts

55

13.10

Incorporation by Reference

55

13.11

Consent to Jurisdiction; Waiver of Jury Trial

55

13.12

Construction

55

13.13

Press Releases and Communications

55

13.14

Expenses

56

13.15

Certain Matters

56

13.16

Amendment and Waiver

56

13.17

Third-Party Beneficiaries

57

13.18

Further Assurances

57

13.19

Deliveries to the Purchaser

57

13.20

Specified Sections

57

13.21

Lease

57

13.22

Projections

57

13.23

Acknowledgement Regarding Gardere Wynne Sewell LLP

57

13.24

Certain Transaction Matters

58

 

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SCHEDULES

 

Schedule A-1 — Certain Real Property Improvements

Schedule 2.04 — WIP Projects

Schedule 2.05(f) — Written-Off Receivables

Schedule 3.01(h) — Persons to Execute a Confidentiality, Non-Competition and
Non-Solicitation Agreement

Schedule 3.01(i) — Persons to Provide Certain Acknowledgments

Schedule 4.02 — Capitalization

Schedule 4.04 — Consents and Approvals; No Violation

Schedule 4.06 — Certain Changes

Schedule 4.07 — Liabilities

Schedule 4.08(a) — Accounts Receivable

Schedule 4.08(b) — Notes Receivable

Schedule 4.08(c) — Costs in Excess of Billings

Schedule 4.08(d) — Retainage

Schedule 4.10 — Litigation

Schedule 4.11 — Tax Matters

Schedule 4.11(b) — Governmental Authority and Taxes

Schedule 4.12 — Employee Benefit Plans

Schedule 4.13 — Employment Matters

Schedule 4.14(a) — Material Contracts

Schedule 4.15 — Related Party Transactions — Contracts

Schedule 4.15(b) — Related Party Transactions — Assets

Schedule 4.16 — Compliance with Laws

Schedule 4.17 — Insurance

Schedule 4.18 — Intellectual Property

Schedule 4.19 — Environmental Matters

Schedule 4.20(a) — Real Property Leases

Schedule 4.20(b) — Real Property

Schedule 4.21 — Personal Property

Schedule 4.23 — Bank Accounts; Powers of Attorney

Schedule 4.24 — Indebtedness

Schedule 4.25 — Subsidiaries and Predecessors

Schedule 4.27 — Customers and Suppliers

Schedule 4.29 — WIP Schedule

Schedule 5.03 — Consents and Approvals

Schedule 6.02(g) — Tax Returns

Schedule 7.05(a) — Indemnification Agreements

Schedule 9.08(f) — Allocation of Total Allocable Price

Schedule 10.06(c) — Indemnification — Basket Amount

Schedule 10.06(d) — Indemnification — Cap

Schedule 12.01 — Noncompetition and Nonsolicitation

 

iv

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EXHIBITS

 

Exhibit A — Definitions

Exhibit B — Escrow Agreement

Exhibit C — GAAP Adjustments

 

v

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AGREEMENT AND PLAN OF MERGER

 

This Agreement and Plan of Merger (this “Agreement”), dated as of April 7, 2014,
is made by and among Dyna Ten Corporation, a Texas corporation (the “Company”),
Comfort Systems USA, Inc., a Delaware corporation (the “Purchaser”), CSUSA
(20), Inc., a Delaware corporation and wholly owned subsidiary of the Purchaser
(the “Merger Sub”), Scott Brady and Mark Nyquist, for purposes of the Specified
Sections (as defined below) only (each a “Signing Shareholder”), and Mark
Nyquist in his capacity as representative for the Shareholders (as defined
below) (in such capacity, the “Shareholder Representative”).  The Purchaser, the
Merger Sub, the Company, the Signing Shareholders and the Shareholder
Representative are sometimes individually referred to herein as a “Party” and
collectively as the “Parties.”

 

WITNESSETH:

 

WHEREAS, the Purchaser desires to acquire 100% of the Company’s issued and
outstanding Common Stock in a reverse triangular merger transaction on the terms
and subject to the conditions set forth herein;

 

WHEREAS, the respective boards of directors of the Purchaser, the Merger Sub and
the Company have authorized, adopted and approved this Agreement and determined
that this Agreement and the Merger are desirable and in the best interests of
their respective entities and shareholders; and

 

WHEREAS, capitalized terms used and not otherwise defined herein shall have the
meanings set forth in Exhibit A.

 

NOW, THEREFORE, in consideration of the premises and the respective
representations, warranties and covenants contained herein and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Parties hereby agree as follows:

 

ARTICLE I
THE MERGER

 

1.01                        The Merger.

 

(a)                                 At the Effective Time, the Merger Sub shall
merge with and into the Company (the “Merger”) in accordance with the Texas
Business Organizations Code (the “TBOC”) and the General Corporation Law of the
State of Delaware (the “DGCL”), whereupon the separate existence of the Merger
Sub shall cease, and the Company shall be the surviving corporation (the
“Surviving Corporation”).

 

(b)                                 At the Closing, the Company and the Merger
Sub shall cause certificates of merger (in such forms as the Purchaser and the
Shareholder Representative shall agree) to be executed and filed with the
Secretary of State of the State of Delaware and the State of Texas
(collectively, the “Certificates of Merger”) and make all other filings or
recordings required by the TBOC and the DGCL in connection with the Merger.  The
Merger shall become effective at such time as the Certificate of Merger is duly
filed with the Secretary of State of the State of Texas or at such later time as
is specified in such Certificate of Merger (the “Effective Time”).

 

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(c)                                  The Merger will have the effects set forth
in the TBOC, the DGCL and in this Agreement.

 

1.02                        Conversion of Common Stock.  At the Effective Time,
pursuant to the Merger and without any action on the part of the holders
thereof:

 

(a)                                 Except as otherwise provided in Section 2.07
and other than shares of Dissenting Stock, each share of the Company’s common
stock, having no par value per share (the “Common Stock”), issued and
outstanding immediately before the Effective Time shall be converted into the
right to receive (without interest) in cash a share of the Merger Consideration
equal to (i) the total Merger Consideration, divided by (ii) the total number of
outstanding shares as of the Effective Time.

 

(b)                                 Each share of Common Stock shall be no
longer outstanding and automatically be canceled and cease to exist, and each
holder of a certificate representing shares of Common Stock (each a
“Shareholder” and, collectively, the “Shareholders”) will cease to have any
rights with respect thereto or to such Shareholder’s Common Stock, except the
right to receive the Merger Consideration applicable to such shares.

 

(c)                                  Each share of Common Stock held immediately
before the Effective Time by the Company as treasury stock shall be canceled,
and no payment shall be made with respect thereto.

 

(d)                                 Each share of Common Stock, par value $0.001
per share, of the Merger Sub issued and outstanding immediately before the
Effective Time shall be converted into and become one validly issued, fully paid
and non-assessable share of Common Stock, par value $0.001 per share, of the
Surviving Corporation.

 

1.03                        Exchange of Certificates; Lost Certificates; Paying
Agent.  At the Effective Time, each Shareholder whose shares of Common Stock are
converted into the right to payment pursuant to Section 1.02 shall surrender to
the Purchaser or its designee certificates representing the number of shares of
Common Stock held by such Shareholder.  At and following the Closing, the
Purchaser shall pay each Shareholder who has surrendered such Shareholder’s
certificates representing shares of Common Stock the amount of cash to which
such Shareholder is entitled pursuant to Section 1.02.  Surrendered certificates
shall forthwith be canceled.  Until so surrendered and exchanged, each such
certificate shall represent solely the right to receive the applicable portion
of the Merger Consideration pursuant to Section 1.02, and the Surviving
Corporation shall not be required to pay the Shareholder thereof its Pro Rata
Share of the Merger Consideration to which such Shareholder would otherwise have
been entitled.  Notwithstanding the foregoing, if any such certificate
representing shares of Common Stock shall have been lost, stolen or destroyed,
then, upon the making of an affidavit of such fact by the Shareholder claiming
such certificate to be lost, stolen or destroyed and the providing of an
Affidavit of Lost Certificate by such Shareholder, in form and substance
reasonably satisfactory to the Purchaser, against any claim that may be made
with respect to such certificate, the Purchaser shall issue, in exchange for
such lost, stolen or destroyed certificate, the applicable Merger Consideration
to be paid in respect of the shares of Common Stock represented by such
certificate, as contemplated by this Article I.

 

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1.04                        Certificate of Incorporation.  The certificate of
incorporation of the Company in effect at the Effective Time shall be the
certificate of incorporation of the Surviving Corporation until amended in
accordance with applicable Legal Requirements.

 

1.05                        Bylaws.  The bylaws of the Company in effect at the
Effective Time shall be the bylaws of the Surviving Corporation until amended in
accordance with applicable Legal Requirements.

 

1.06                        Directors and Officers.  Effective at the Effective
Time, the directors and officers of the Company shall resign.  From and after
the Effective Time, until successors are duly elected or appointed in accordance
with applicable Legal Requirements (or their earlier death, resignation or
removal), the directors and officers of the Merger Sub at the Effective Time
shall be the directors and officers, as applicable, of the Surviving
Corporation.

 

1.07                        Buy-Sell Agreements.  At the Effective Time, each
Buy-Sell Agreement shall automatically be terminated and no longer effective,
and each provision therein under which the Company or any Shareholder may have
any rights as a result of or in connection with the Transactions shall be
irrevocably waived.

 

ARTICLE II
THE CLOSING; MERGER CONSIDERATION ADJUSTMENTS; DISSENTING STOCK; WITHHOLDING
RIGHTS

 

2.01                        The Closing.  The closing of the Transactions (the
“Closing”) shall take place at the offices of Gardere Wynne Sewell LLP, at
1601 Elm Street, Suite 3000, Dallas, Texas 75201, at 10:00 a.m. on or before the
second Business Day following full satisfaction or due waiver of all of the
closing conditions set forth in Article III (other than those to be satisfied at
the Closing) or on such other date as is mutually agreeable to the Parties.  The
date and time of the Closing are referred to herein as the “Closing Date.”  The
Parties contemplate that executed versions of the documents required to be
delivered at Closing by the Parties may be delivered by facsimile or e-mail
transmissions, in which case the originals of such documents will be delivered
by overnight courier.

 

2.02                        The Closing Transactions.  Subject to the terms and
conditions set forth in this Agreement, the Parties shall cause the following to
occur on the Closing Date:

 

(a)                                 the Company and the Merger Sub shall cause
the Certificates of Merger to be executed and filed with the Secretary of State
of the State of Delaware and the Secretary of State of the State of Texas;

 

(b)                                 the Purchaser shall deliver the Closing Cash
Consideration by wire transfer of immediately available funds to the
Shareholders (other than to the Shareholders who own shares of Dissenting Stock)
to the account(s) designated by the Shareholders;

 

(c)                                  the Purchaser shall pay the Transaction
Expenses that are identified in writing to the Purchaser at least three Business
Days before the Closing Date, by wire transfer of immediately available funds to
the account(s) designated by each Person to whom such Transaction Expenses are
to be paid;

 

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(d)                                 the Purchaser shall deliver to the Escrow
Agent the Indemnity Escrow Amount for deposit into an account (the “Indemnity
Escrow Account”), and the Shareholder Representative Escrow Amount for deposit
into a separate account (the “Shareholder Representative Escrow Account”),
established pursuant to the terms of the Escrow Agreement;

 

(e)                                  each Shareholder shall deliver to the
Purchaser one or more certificates representing the number of shares of Common
Stock held by such Shareholder as of immediately before the Effective Time or
Affidavits of Lost Certificate in form and substance reasonably satisfactory to
the Purchaser; and

 

(f)                                   the Purchaser, the Merger Sub, the Company
and the Shareholder Representative (on behalf of the Shareholders) shall make
such other deliveries as are required by Article III.

 

2.03                        Working Capital Adjustment.

 

(a)                                 At least one, but not more than three,
Business Days before the Closing Date, the Company shall prepare and deliver to
the Purchaser, based on the Company’s books and records and other information
then available, a good faith estimate of (i) the Target Working Capital (the
“Estimated Target Working Capital”) and (ii) the Closing Working Capital (the
“Estimated Closing Working Capital”). If the Estimated Closing Working Capital
(y) is less than the Estimated Target Working Capital, the Closing Cash
Consideration shall be reduced by an amount equal to such deficiency, or
(z) exceeds the Estimated Target Working Capital, the Closing Cash Consideration
shall be increased by an amount equal to such excess.

 

(b)                                 On the morning of the first Business Day
following the Closing Date, the Shareholder Representative and the Purchaser
shall cause a physical inventory of the Surviving Corporation’s assets to be
conducted by the Surviving Corporation’s employees.  Within 60 days following
the Closing Date, the Shareholder Representative, on behalf of the Shareholders,
shall prepare (or caused to be prepared), in accordance with GAAP, a calculation
of the Closing Working Capital and the Target Working Capital, which shall take
into account such physical inventory, and shall, at that time, provide the
Purchaser with such calculation (the “Proposed Statement”).

 

(c)                                  Within 45 days after receipt of the
Proposed Statement, the Purchaser shall either accept the Proposed Statement, at
which time the Closing Working Capital and the Target Working Capital set forth
in the Proposed Statement shall become final and binding on the Parties, or
certify to the Shareholder Representative the Purchaser’s alternate calculation
of the Closing Working Capital and the Target Working Capital (the “Purchaser’s
Statement”).  If the Purchaser fails to accept the Proposed Statement or deliver
to the Shareholder Representative the Purchaser’s Statement within such 45-day
period, the Proposed Statement shall become final and binding on the Parties.

 

(d)                                 The Shareholder Representative and the
Purchaser shall then make good faith efforts to meet and resolve the differences
between the Proposed Statement and the Purchaser’s Statement.  If within 30 days
after receipt by the Shareholder Representative of the Purchaser’s Statement,
such Parties have been unable to reach agreement, such Parties shall

 

4

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engage the Resolving Accountant to calculate the Closing Working Capital and the
Target Working Capital, and shall direct the Resolving Accountant to make its
determination within 30 days of its engagement.  The Closing Working Capital and
the Target Working Capital shall, as determined by the Resolving Accountant, be
final and binding on the Parties; provided that the Closing Working Capital and
Target Working Capital selected by the Resolving Accountant be either the
Closing Working Capital and Target Working Capital set forth in the Proposed
Statement or the Purchaser’s Statement.  The Resolving Accountant shall certify
its decision in writing to the Purchaser and the Shareholder Representative. 
The fees, costs and expenses of the Resolving Accountant shall be borne by the
Shareholders if the Purchaser’s Statement is determined by the Resolving
Accountant as the most accurate, or shall be borne by the Purchaser if the
Proposed Statement is determined by the Resolving Accountant as the most
accurate.

 

(e)                                  After the Closing Working Capital (“Final
Closing Working Capital”) and the Target Working Capital (the “Final Target
Working Capital”) amounts become final and binding on the Parties pursuant to
Section 2.03(c) or Section 2.03(d) (the “Determination Date”),

 

(i)                                     the following shall occur with respect
to the Final Target Working Capital:

 

(A)                               if the Final Target Working Capital is less
than the Estimated Target Working Capital, the Purchaser shall pay to each
Shareholder his Pro Rata Share of such excess; or

 

(B)                               if the Final Target Working Capital exceeds
the Estimated Target Working Capital, the Shareholders shall pay such shortfall
to the Purchaser; and

 

(ii)                                  the following shall occur with respect to
the Final Closing Working Capital:

 

(A)                               if the Final Closing Working Capital is less
than the Estimated Closing Working Capital, the Shareholders shall pay such
shortfall to the Purchaser; or

 

(B)                               if the Final Closing Working Capital exceeds
the Estimated Closing Working Capital, the Purchaser shall pay to each
Shareholder his Pro Rata Share of such excess.

 

Each payment due pursuant to this Section 2.03(e)(i) and Section 2.03(e)(ii), if
any, shall be netted against each other, and only one payment shall be due and
payable.

 

(f)                                   Any amount owed pursuant to
Section 2.03(e) (i) shall be made within five Business Days following the
Determination Date by wire transfer of immediately available funds to the
account(s) designated by the Purchaser and/or the Shareholder Representative
(and if owed by the Shareholders, shall be paid to the Purchaser from Indemnity
Escrow Funds to the extent funds are available therefor up to a maximum of
$250,000, and any excess amount owed to the Purchaser and not paid from the
Indemnity Escrow Funds pursuant to the foregoing shall be paid to the Purchaser
directly from each Shareholder (on a joint and several basis) based on each
Shareholder’s Pro Rata Share of such obligation) and (ii) that are not paid
within five

 

5

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Business Days following the Determination Date shall earn interest at an annual
rate of 4%, compounded quarterly, from the Determination Date until paid.

 

(g)                                  The Purchaser and the Shareholder
Representative shall give each other timely access to all documents, contracts
and records related to the calculation of all amounts contemplated by this
Section 2.03, and if such access is not given timely, the time periods set forth
in this Section 2.03 shall be extended as reasonably necessary to make the
calculations contemplated in this Section 2.03.

 

2.04                        WIP Adjustment to Merger Consideration.

 

(a)                                 As promptly as practical after the 18-month
period following the Closing Date (the “Adjustment Date”), but in no event later
than 60 days after the Adjustment Date, the Parties shall perform an analysis
(the “WIP Analysis”) of the accruals with respect to the contracts set forth on
Schedule 2.04 and any other customer contracts entered into after the date of
this Agreement and before the close of business on the Closing Date
(collectively, the “WIP Projects”).  The WIP Analysis shall show the amount (the
“WIP Adjustment”) by which the Company’s net earnings as of the Closing were
overstated or understated by reason of any improper accruals of revenues and
expenses on the WIP Projects as of the Closing (as if the final amounts had been
known as of the Closing).  The WIP Analysis as of the Adjustment Date shall
cover the WIP Projects completed on or before the Adjustment Date.  The WIP
Adjustment shall be determined on an aggregate basis netting out over and under
accruals.  The WIP Adjustment shall be calculated on a contract-by-contract
basis using the following formula:

 

WIP Adjustment

=

Final Revenue Earned

x

(

Cost to Date @ Closing Date

Final Total Costs

)

-

Revenue Earned @ Closing Date

-

Any loss that would

have been accrued as of Closing Date in accordance with GAAP

 

For example, if at the Closing the Company has earned $800,000 of revenues and
accrued $600,000 of expenses with respect to a particular project and upon
completion of the project, total revenues are $1,000,000 and total costs are
$650,000, the WIP Adjustment with respect to that project would be positive
$123,077, reflecting the additional margin that would have been reflected as of
the Closing.  Also, for example, if at the Closing, the Company has recognized
$800,000 of revenues and incurred $600,000 of expenses with respect to a
particular project, and upon completion of the project, total revenues earned
are $1,000,000 and total expenses are $1,100,000, the WIP Adjustment with
respect to that project would be negative $300,000, composed of $200,000 in
margin that had been incorrectly recognized as of the Closing plus $54,546
representing the amount of the loss that had been spent before the Closing, plus
$45,454 representing the amount of expected loss that would have been accrued
pursuant to GAAP as of the Closing for the project.

 

(b)                                 Based on the WIP Analysis and within 60 days
after the Adjustment Date, the Shareholder Representative, on behalf of the
Shareholders, shall provide the Purchaser with its calculation of the WIP
Adjustment (the “Proposed WIP Statement”), and the Purchaser shall either accept
the Proposed WIP Statement, which will then be deemed final and binding on the

 

6

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Parties, or provide to the Shareholder Representative the Purchaser’s alternate
calculation of the WIP Adjustment (the “Purchaser’s WIP Statement”).  If the
Purchaser fails to accept the Proposed WIP Statement or deliver to the
Shareholder Representative the Purchaser’s WIP Statement within 45 days of
receipt of the Proposed WIP Statement, the Proposed WIP Statement shall be final
and binding on the Parties.

 

(c)                                  The Purchaser and the Shareholder
Representative shall then make good faith efforts to meet and resolve any
differences between the Proposed WIP Statement and the Purchaser’s WIP
Statement.  If within 30 days after receipt by the Shareholder Representative of
the Purchaser’s WIP Statement, the Purchaser and the Shareholder Representative
have been unable to reach agreement, such Parties shall engage the Resolving
Accountant to calculate the WIP Adjustment, and shall direct the Resolving
Accountant to make its determination within 30 days of its engagement.  The WIP
Adjustment determined by the Resolving Accountant shall be final and binding on
the Parties; provided that, the WIP Adjustment amount calculated by the
Resolving Accountant shall be either the WIP Adjustment amount set forth in the
Proposed WIP Statement or the Purchaser’s WIP Statement.  The Resolving
Accountant shall certify its decision in writing to the Purchaser and the
Shareholder Representative.  The fees, costs and expenses of the Resolving
Accountant shall be borne by the Shareholders if the Purchaser’s WIP Statement
is determined by the Resolving Accountant as the most accurate, or shall be
borne by the Purchaser if the Proposed WIP Statement is determined by the
Resolving Accountant as the most accurate.

 

(d)                                 After the WIP Adjustment (the “Final WIP
Adjustment”) has been determined as final and binding on the Parties pursuant to
Section 2.04(b) or Section 2.04(c) (the “WIP Adjustment Determination Date”),
the following shall occur:

 

(i)                                     If the Final WIP Adjustment is a
negative amount, the Shareholders shall pay to the Purchaser such amount (as a
positive number) through a distribution from the Indemnity Escrow Funds to the
extent funds are available therefor up to a maximum of $2,500,000, and any
excess amount owed to the Purchaser and not paid from the Indemnity Escrow Funds
pursuant to the foregoing shall be paid to the Purchaser directly from each
Shareholder (on a joint and several basis) based on each Shareholder’s Pro Rata
Share of such obligation; or

 

(ii)                                  If the Final WIP Adjustment is a positive
amount, the Purchaser shall pay to each Shareholder his Pro Rata Share of the
total amount reflected by the Final WIP Adjustment.

 

(e)                                  Any amounts owed pursuant to this
Section 2.04 (i) shall be paid within five days following the WIP Adjustment
Determination Date by wire transfer of immediately available funds to the
account(s) designated by the Purchaser and/or the Shareholder Representative
(and if owed by the Shareholders shall be paid to the Purchaser from the
Indemnity Escrow Funds to the extent funds are available therefor) and (ii) that
are not paid within five days following the WIP Adjustment Determination Date
shall earn interest at an annual rate of 4%, compounded quarterly, from the WIP
Adjustment Determination Date until paid.

 

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(f)                                   The Purchaser and the Shareholder
Representative shall give each other timely access to all documents, contracts
and records related to the calculation of the WIP Adjustment, and if such access
is not given timely, the time periods set forth in this Section 2.04 shall be
extended as reasonably necessary to make the calculations contemplated in this
Section 2.04.

 

(g)                                  Notwithstanding the above, if any WIP
Project is not completed by the Adjustment Date, there shall be a separate WIP
Analysis and WIP Adjustment with respect thereto as promptly as practicable, but
in no event later than 60 days, after its completion, which shall be governed in
accordance with the provisions of Section 2.04(a) through Section 2.04(f), which
are hereby incorporated into this Section 2.04(g), mutatis mutandis.

 

2.05                        Other Adjustments to Merger Consideration.

 

(a)                                 Medical Insurance Benefit Plan Reserve. On
August 31, 2015, the Shareholder Representative, on behalf of the Shareholders,
shall prepare (or cause to be prepared) and deliver to the Purchaser a statement
setting forth (i) the amount included in the calculation of the Closing Working
Capital with respect to the Company’s self-funded medical insurance Benefit Plan
minus (ii) the amount paid by the Company after the Closing with respect to
participant claims under such Benefit Plan made for services provided on or
before the Closing Date (the “Reserve Difference”).  Within five days of the
delivery of such statement, (y) if the Reserve Difference is a positive number,
the Purchaser shall pay to each Shareholder his Pro Rata Share of the Reserve
Difference, and (z) if the Reserve Difference is a negative number, each
Shareholder shall pay to the Purchaser his Pro Rata Share of such amount. 
Notwithstanding the foregoing, if on August 31, 2015 any participant claims
under the Company’s self-funded medical insurance Benefit Plan related to
services provided on or before the Closing Date remain subject to dispute or are
being negotiated, the Reserve Difference shall be calculated and paid excluding
from such calculation and payment all amounts related to such disputed or
negotiated claims.  Not later than five days after each such disputed or
negotiated claims has been resolved, the Purchaser shall pay to each Shareholder
his Pro Rata Share of, or the Purchaser shall pay to each Shareholder, as
applicable, any additional amounts that would have been included in the original
payment of the Reserve Difference had such claims been resolved as of August 31,
2015.

 

(b)                                 Vendor Rebates.  To the extent not included
in the Closing Working Capital, following the Closing Date, and within ten days
of receipt, the Purchaser shall remit to each Shareholder his Pro Rata Share of
all rebates received after the Closing Date from the Company’s vendors that
relate to rebates earned by the Company for periods up to and including the
Closing Date, excluding any rebates earned by the Company under the Purchaser’s
vendor rebate program.

 

(c)                                  Property Casualty Policy Reserve.  As soon
as practicable after the Closing, the Shareholder Representative, on behalf of
the Shareholders, shall prepare (or cause to be prepared) and deliver to the
Purchaser a statement setting forth (i) the amount included in the calculation
of the Closing Working Capital for pre-paid property and casualty insurance
minus (ii) the amount actually owed to the carrier under such policy for periods
up to and including the Closing Date (the “Pre-Paid Insurance Difference”). 
Within five days of the delivery of such

 

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statement, (y) to the extent the Pre-Paid Insurance Difference is a positive
number, the Purchaser shall pay to each Shareholder his Pro Rata Share of such
amount, and (z) to the extent the Pre-Paid Insurance Difference is a negative
number, each Shareholder shall pay to the Purchaser his Pro Rata Share of such
amount.

 

(d)                                 Over-Accrued Taxes.

 

(i)                                     On or before January 31, 2015, the
Shareholder Representative, on behalf of the Shareholders, shall prepare (or
cause to be prepared) and deliver to the Purchaser a statement setting forth
(A) the aggregate of all accruals for Taxes included in the calculation of the
Closing Working Capital minus (B) the amount actually paid or payable by the
Company for such Taxes with respect to the Pre-Closing Tax Period (the “Tax
Accruals Difference”).  Within 20 days of the delivery of such statement, (1) to
the extent the Tax Accruals Difference is a positive number and the Purchaser
agrees with the Shareholder Representative’s statement, the Purchaser shall pay
to each Shareholder his Pro Rata Share of such amount, and (2) to the extent
such amount is a negative number and the Purchaser agrees with the Shareholder
Representative’s statement, each Shareholder pay to the Purchaser his Pro Rata
Share of such amount.

 

(ii)                                  If the Purchaser disputes the amount of
the Tax Accruals Difference set forth in the Shareholder Representative’s
statement within such 20-day period, the Purchaser shall provide the Shareholder
Representative with its calculation of the Tax Accruals Difference within ten
days of such 20-day period.  Upon delivery of the Purchaser’s calculation to the
Shareholder Representative, the Purchaser and the Shareholder Representative
shall make good faith efforts to meet and resolve their differences, and if they
cannot resolve their differences within 30 days of the expiration of such
ten-day period, the Purchaser and the Shareholder Representative shall promptly
engage the Resolving Accountant, and shall direct the Resolving Accountant to
make a final and binding calculation of the Tax Accruals Difference within 30
days of its engagement; provided that the Tax Accruals Difference shall be
either the calculation submitted by the Purchaser or the calculation submitted
by the Shareholder Representative.  The fees, costs and expenses of the
Resolving Accountant shall be borne by the Purchaser if the Resolving Accountant
determines that the Shareholder Representative’s calculation of the Tax Accruals
Difference is the most accurate, or shall be borne by the Shareholders if the
Resolving Accountant determines that the Purchaser’s calculation of the Tax
Accruals Difference is the most accurate.

 

(iii)                               Within 20 days after the Tax Accruals
Difference has been determined by the Resolving Accountant, (1) if the Tax
Accruals Difference is a positive number, the Purchaser shall pay to each
Shareholder his Pro Rata Share of such amount, and (2) if the Tax Accruals
Difference is a negative number, each Shareholder shall pay to the Purchaser his
Pro Rata Share of such amount.

 

(e)                                  Pre-Paid Life Insurance.  To the extent not
included in the Closing Working Capital, within ten days of receipt, the
Purchaser shall remit to each Shareholder his Pro Rata Share of any refunded
amount received by the Company after the Closing in respect of the termination
of (i) the Transamerica Life Insurance Company life insurance policy on Mark
Nyquist’s life with a benefit of $5,000,000 and (ii) the The Lincoln National
Life Insurance

 

9

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Company life insurance policy on Scott Brady’s life with a benefit of
$5,000,000, pursuant to Section 7.07.

 

(f)                                   Certain Payments.  Notwithstanding any
provision herein to the contrary, if any of the accounts receivables of the
Company that have been written-off by the Company and set forth on Schedule
2.05(f) are not included in the Final Closing Working Capital and are received
after the Closing by the Surviving Corporation or its Subsidiaries, or by the
Purchaser on behalf of the Company, such payment shall promptly be forwarded to
the Shareholders (based on each Shareholder’s Pro Rata Share of such amount).

 

(g)                                  Certain Matters.

 

(i)                                     The Purchaser and the Shareholder
Representative shall give each other timely access to all documents, contracts
and records as reasonably necessary in connection with the calculation of all
amounts contemplated by this Section 2.05, and if such access is not given
timely, the time periods set forth in this Section 2.05 shall be extended as
reasonably necessary to make the calculations contemplated in this Section 2.05.

 

(ii)                                  Notwithstanding any provision herein to
the contrary, any amounts owed pursuant to this Section 2.05 (A) shall be paid
by wire transfer of immediately available funds to the account(s) designated by
the Shareholder Representative or the Purchaser, as applicable, (B) by the
Shareholders shall be paid from the Indemnity Escrow Funds and (C) that are not
paid within five days following the due date for such amount shall earn interest
at an annual rate of 4%, compounded quarterly, from the date due and payable
until paid. If the Indemnity Escrow Funds are insufficient to pay any amount
owed to the Purchaser under this Section 2.05, any excess amount shall be paid
to the Purchaser directly from each Shareholder (on a joint and several basis)
based on each Shareholder’s Pro Rata Share of such obligation.

 

(h)                                 Indemnified Receivables.  All right, title
and interest in and to any Indemnified Receivables for which the Shareholders
indemnify the Purchaser pursuant to Section 10.01(d) shall hereby be deemed
automatically assigned and transferred by the Purchaser to the Shareholders, who
may seek collection of such Indemnified Receivables in the discretion of the
Shareholder Representative, provided that in seeking collection the Shareholders
shall not unreasonably harm the Company’s relationships with current customers.

 

2.06                        Earn-Out.

 

(a)                                 Calculation of Earn-Out.  As part of the
Merger Consideration, the Purchaser shall pay to the Shareholders additional
amounts as follows (each, an “Earn-Out Payment”):

 

(i)                                     If the Company’s After-Tax Net Earnings
during the first 12 months following the Closing Date exceed the Earn-Out
Threshold, then the Purchaser shall pay to the Shareholders an amount equal to
80% of such excess.

 

(ii)                                  If the Company’s After-Tax Net Earnings
during the second 12-month period following the Closing Date exceed the Earn-Out
Threshold, then the Purchaser shall pay to the Shareholders an amount equal to
65% of such excess.

 

10

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(iii)          If the Company’s After-Tax Net Earnings during the third 12-month
period following the Closing Date exceed the Earn-Out Threshold, then the
Purchaser shall pay to the Shareholders an amount equal to 50% of such excess.

 

(b)           Maximum Cap on Earn-Out. Notwithstanding anything herein to the
contrary, the combined total of all Earn-Out Payments made to the Shareholders
pursuant to Section 2.06(a) shall not exceed $4,000,000.

 

(c)           Payment of Earn-Out.  On or before 60 days following the end of
each of the first, second, and third 12-month period described in
Section 2.06(a)(i)-(iii), the Shareholder Representative shall deliver to the
Purchaser a written calculation of the applicable Earn-Out Payment due to the
Shareholders under Section 2.06(a)(i), (ii) or (iii), if any.

 

(d)           Resolution of Dispute.  If the Purchaser disputes the Shareholder
Representative’s calculation of an Earn-Out Payment, the Purchaser shall so
notify the Shareholder Representative within 45 days after receipt of the
Shareholder Representative’s written calculation referred to in Section 2.06(c),
and shall promptly thereafter submit to the Shareholder Representative the
Purchaser’s calculation of such Earn-Out Payment.  If the Purchaser does not
submit such calculation to the Shareholder Representative within such 45-day
period, the Shareholder Representative’s calculation shall be deemed accepted
and shall be final and binding on the Parties.  If the Purchaser disputes the
Shareholder Representative’s calculation, the Purchaser and the Shareholder
Representative shall then make a good faith effort to meet and resolve any
differences between the Purchaser’s calculation and the Shareholder
Representative’s calculation.  If within 30 days after receipt of the
Purchaser’s calculation, the Purchaser and the Shareholder Representative have
been unable to reach agreement, the Purchaser and the Shareholder Representative
shall promptly engage the Resolving Accountant to determine whether the
Purchaser’s or the Shareholder Representative’s calculation is most accurate,
and shall direct the Resolving Accountant to make its determination within 30
days of its engagement.  The Resolving Accountant shall certify this decision in
writing to the Parties, and shall have no choice but to select either the
Purchaser’s calculation in its entirety or the Shareholder Representative’s
calculation in its entirety (there shall be no award of pre-judgment interest). 
The Resolving Accountant’s determination shall be final and binding on the
Parties.  The fees, costs and expenses of the Resolving Accountant, including
any attorneys’ or experts’ fees related thereto, shall be borne by the
non-prevailing Party.

 

(e)           Payment.  Within ten days after an Earn-Out Payment is finally
determined pursuant to Section 2.06(d), the Purchaser will pay the Earn-Out
Payment, if any, to the Shareholders, based on each Shareholder’s Pro Rata Share
of the Earn-Out Payment, by wire transfer of immediately available funds.

 

(f)            Post-Closing Operation of the Company. Subject to the terms of
this Agreement, after the Closing, the Purchaser shall have sole discretion with
regard to all matters relating to the operation of the Company and shall have no
obligation to operate the Company in order to achieve any Earn-out Payment or to
maximize the amount of any Earn-out Payment; provided, that the Purchaser shall
not, directly or indirectly, take any actions in bad faith that would have the
purpose of avoiding or reducing any of the Earn-out Payments hereunder.

 

11

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2.07        Dissenting Stock.

 

(a)           Notwithstanding any provision of this Agreement to the contrary,
shares of Common Stock issued and outstanding immediately before the Effective
Time that are held by any Shareholder who is entitled to demand and properly
demands appraisal of such shares (collectively, the “Dissenting Stock”) pursuant
to, and who complies with, the provisions of Subchapter H of Chapter 10 of the
TBOC (“Subchapter H”) will not be converted into the right to receive the
consideration as provided in Section 1.02 but instead such Shareholder will be
entitled to payment of the fair value of such shares in accordance with the
provisions of Subchapter H.  At the Effective Time, the Dissenting Stock will no
longer be outstanding and will automatically be canceled and will cease to
exist, and each holder of Dissenting Stock will cease to have any rights with
respect thereto, except the right to receive the fair value of such shares in
accordance with the provisions of Subchapter H.  Notwithstanding any provision
herein to the contrary, if any such holder fails to perfect or otherwise waives,
withdraws or loses the right to appraisal under Subchapter H, or a court of
competent jurisdiction determines that such holder is not entitled to the relief
provided by Subchapter H, then the right of such holder to be paid the fair
value of such holder’s shares of Common Stock under Subchapter H will cease and
such shares will be deemed to have been converted at the Effective Time into,
and will have become, the right to receive the consideration as provided in
Section 1.02.

 

(b)           The Company shall give prompt notice to the Purchaser of any
demands for appraisal of any shares of Common Stock, withdrawals of such demands
and any other instruments served pursuant to the TBOC received by the Company,
and the Purchaser will have the right to participate in all negotiations and
proceedings with respect to such demands.

 

ARTICLE III
CONDITIONS TO CLOSING

 

3.01        Conditions to the Purchaser’s and the Merger Sub’s Obligations.  The
obligations of the Purchaser and the Merger Sub to consummate the Transactions
are subject to the satisfaction of the following conditions immediately before
the Effective Time:

 

(a)           The representations and warranties set forth in Article IV of this
Agreement (i) shall have been, if qualified as to materiality or Material
Adverse Effect, true and correct and, if not so qualified, shall have been true
and correct in all material respects, as of the date of this Agreement (except
for such representations and warranties that address matters only as of a
particular date, which shall only be true and correct (or true and correct in
all material respects, as applicable), as of such date), and (ii) shall be, if
qualified as to materiality or Material Adverse Effect, true and correct and, if
not so qualified, shall be true and correct in all material respects, as of the
Closing Date as though made on the Closing Date except (A) for such
representations and warranties that address matters only as of a particular
date, which shall only be true and correct (or true and correct in all material
respects, as applicable), as of such date, and (B) for changes contemplated by
this Agreement.

 

(b)           The Company shall have performed in all material respects all of
the covenants and agreements required to be performed by it under this Agreement
at or before the Closing;

 

12

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(c)           All consents which are set forth on Schedule 4.04 shall have been
obtained;

 

(d)           No action or proceeding before any Governmental Authority shall be
pending wherein an unfavorable judgment, decree or order would prevent the
performance of this Agreement or the consummation of the Transactions, declare
unlawful the Transactions or cause the Transactions to be rescinded;

 

(e)           The Purchaser shall have received each of the following:

 

(i)            a certificate of the Company, dated as of the Closing Date,
stating that the conditions specified in Sections 3.01(a) and 3.01(b), as they
relate to the Company, have been satisfied;

 

(ii)           a certificate signed by the Secretary of the Company, dated as of
the Closing Date, certifying as to (a) the full force and effect of the articles
of incorporation and bylaws (or equivalent governing documents) of each of the
Company and its Subsidiary attached to such certificates as exhibits, (b) the
accuracy and full force and effect of resolutions adopted by the Company Board
regarding this Agreement and the Transactions and attached as one or more
exhibits to such certificate and (c) the names and signatures of the officers of
the Company authorized to sign this Agreement;

 

(iii)          a certificate (in such form as may be reasonably requested by
counsel to the Purchaser) conforming to the requirements of Treasury Regulations
Sections 1.1445-2(c) and 1.897-2(h); and

 

(iv)          a consent on IRS Form 8023 executed by each Shareholder  and his
or her spouse consenting to the Section 338(h)(10) Election (provided, however,
that notwithstanding any provision herein to the contrary, neither the Company
nor any Shareholder shall have any liability to the Purchaser or the Merger Sub
if this condition is not satisfied because less than all of the Shareholders
executed such election).

 

(f)            The Certificates of Merger shall have been duly filed with the
Secretary of State of the State of Delaware and the Secretary of State of the
State of Texas;

 

(g)           Mark Nyquist and Scott Brady shall have each executed an
Employment Agreement in a form that is mutually satisfactory to such Person and
the Purchaser;

 

(h)           The Persons set forth on Schedule 3.01(h) shall have each executed
a Confidentiality, Non-Competition and Non-Solicitation Agreement in a form that
is mutually satisfactory to such Person and the Purchaser;

 

(i)            Each Shareholder has acknowledged in writing that he is bound by
the terms of this Agreement, including Article XII for the time period set forth
on Schedule 3.01(i);

 

(j)            The Escrow Agreement shall have been executed by the Escrow Agent
and the Shareholder Representative and shall have been delivered to the
Purchaser;

 

13

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(k)           The Company shall have delivered to the Purchaser the written
resignation of each director and officer of the Company to be effective as of
the Effective Time;

 

(l)            Since the date of this Agreement and through the Closing, the
Company shall not have experienced a Material Adverse Effect;

 

(m)          No Indebtedness shall be outstanding and unpaid; and

 

(n)           The holders of no more than 5% of the outstanding shares of Common
Stock as of immediately before the Effective Time, in the aggregate, shall have
demanded (and shall not have waived or withdrawn their) appraisal rights
pursuant to Subchapter H with respect to such shares of Common Stock.

 

3.02        Conditions to the Company’s Obligations.  The obligation of the
Company to consummate the Transactions, and the obligation of the Signing
Shareholders to perform the covenants set forth in the Specified Sections, is
subject to the satisfaction of the following conditions immediately before the
Effective Time:

 

(a)           The representations and warranties set forth in Article V of this
Agreement (i) shall have been, if qualified as to materiality or material
adverse effect, true and correct and, if not so qualified, shall have been true
and correct in all material respects, as of the date of this Agreement (except
for such representations and warranties that address matters only as of a
particular date, which shall only be true and correct (or true and correct in
all material respects, as applicable), as of such date), and (ii) shall be, if
qualified as to materiality or Material Adverse Effect, true and correct and, if
not so qualified, shall be true and correct in all material respects, as of the
Closing Date as though made on the Closing Date except (A) for such
representations and warranties that address matters only as of a particular
date, which shall only be true and correct (or true and correct in all material
respects, as applicable), as of such date, and (B) for changes contemplated by
this Agreement;

 

(b)           The Purchaser and the Merger Sub shall have performed in all
material respects all the covenants and agreements required to be performed by
them under this Agreement at or before the Closing;

 

(c)           All consents which are set forth on Schedule 4.04 shall have been
obtained;

 

(d)           No action or proceeding before any Governmental Authority shall be
pending wherein an unfavorable judgment, decree or order would prevent the
performance of this Agreement or the consummation of the Transactions, declare
unlawful the Transactions or cause the Transactions to be rescinded;

 

(e)           The Purchaser shall have delivered to the Company and the
Shareholder Representative (on behalf of the Shareholders) a certificate, dated
as of the Closing Date, stating that the conditions specified in
Sections 3.02(a) and 3.02(b) have been satisfied;

 

(f)            The Purchaser shall have delivered to the Company and the
Shareholder Representative (on behalf of the Shareholders) a certificate signed
by the Secretary of the

 

14

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Purchaser certifying as to (i) the full force and effect of the certificate of
incorporation and bylaws (or equivalent governing documents) of the Purchaser
attached to such certificate as exhibits, (ii) the accuracy and full force and
effect of resolutions adopted by the board of directors of the Purchaser
regarding this Agreement and the Transactions and attached as one or more
exhibits to such certificate and (iii) the names and signatures of the officers
of the Purchaser authorized to sign this Agreement;

 

(g)           The Purchaser shall have delivered to the Company and the
Shareholder Representative (on behalf of the Shareholders) a certificate signed
by the Secretary of the Merger Sub certifying as to (i) the full force and
effect of the certificate of formation and bylaws of the Merger Sub attached to
such certificate as exhibits, (ii) the accuracy and full force and effect of
resolutions adopted by the board of directors of the Merger Sub and the sole
shareholder of the Merger Sub regarding this Agreement and the Transactions and
attached as one or more exhibits to such certificate and (iii) the names and
signatures of the officers of the Merger Sub authorized to sign this Agreement;

 

(h)           The Closing Cash Consideration, the Escrow Amount and the
Shareholder Representative Escrow Amount shall have been delivered by the
Purchaser pursuant to the terms of this Agreement;

 

(i)            The Certificates of Merger shall have been duly filed with the
Secretary of State of the State of Delaware and the Secretary of State of the
State of Texas;

 

(j)            The Escrow Agreement shall have been executed by the Escrow Agent
and the Purchaser and shall have been delivered to the Company;

 

(k)           The holders of no more than 5% of the outstanding shares of Common
Stock as of immediately before the Effective Time, in the aggregate, shall have
demanded (and shall not have waived or withdrawn their) appraisal rights
pursuant to Subchapter H with respect to such shares of Common Stock;

 

(l)            Mark Nyquist and Scott Brady shall have each executed an
Employment Agreement in a form that is mutually satisfactory to such Person and
the Purchaser;

 

(m)          The Purchaser shall have delivered to the Company a resale
exemption certificate with respect to the Company’s inventory, in a form
reasonably acceptable to the Company; and

 

(n)           The Purchaser has, or has caused the Surviving Corporation to,
obtain or maintain insurance policies for directors’ and officers’ liability,
errors and omissions and pollution coverage, with such terms (including coverage
periods) that are mutually satisfactory to the Purchaser and the Shareholder
Representative, for the benefit of the Persons who are the beneficiaries of such
types of policies that are maintained by the Company immediately prior to the
Closing.

 

3.03        Other Conditions.  The obligation of each of the Company, the
Purchaser and the Merger Sub to consummate the Transactions is subject to the
satisfaction of the following conditions as of immediately before the Effective
Time:

 

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(a)           The Company shall have obtained the Shareholder Approval in
accordance with the Company’s articles of incorporation and the TBOC and no
Change in Board Recommendation shall have occurred; and

 

(b)           This Agreement shall not have been terminated in accordance with
Section 8.01.

 

ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY

 

The Company hereby makes the representations and warranties set forth in this
Article IV to the Purchaser and the Merger Sub (all references to “Company” in
this Article IV include the Company’s subsidiary Dyna Ten Maintenance Services,
LLC (“DTMS”) except to the extent specifically excluded or except as otherwise
clearly required by the context). The Company has delivered to the Purchaser the
schedules to this Agreement referred to in this Article IV on the date hereof
(collectively, the “Disclosure Schedules”).

 

4.01        Organization and Qualification.  The Company is a corporation, and
DTMS is a limited liability company, duly formed, validly existing and in good
standing under the laws of the State of Texas.  Except for DTMS, the Company has
no Subsidiaries. The Company has all requisite corporate power and authority to
carry on its business as it is now being conducted and to own, lease and operate
its properties and assets as now owned, leased or operated. DTMS has all
requisite limited liability company power and authority to carry on its business
as it is now being conducted and to own, lease and operate its properties and
assets as now owned, leased or operated. Correct and complete copies of the
articles of incorporation (certified as of a recent date by the Secretary of
State of the State of Texas) and bylaws of the Company, with all amendments
thereto through the date of this Agreement, have been made available by the
Company to the Purchaser.  Correct and complete copies of the articles of
formation (certified as of a recent date by the Secretary of State of the State
of Texas) and operating agreement of DTMS, with all amendments thereto through
the date of this Agreement, have been made available by the Company to the
Purchaser. The business and activities of each of the Company and DTMS, as
currently conducted, do not require either the Company or DTMS to be qualified
to do business in any foreign jurisdiction.

 

4.02        Capitalization.

 

(a)           The authorized capital stock of the Company consists of 1,000,000
shares of Common Stock, 990,000 shares of which are issued and outstanding as of
the date of this Agreement, and 10,000 shares of which are held by the Company
in treasury.  The Shareholders are the sole and exclusive record and beneficial
owners and holders of, and have good, valid and indefeasible record and
beneficial title to, the Common Stock, free and clear of any Encumbrances (other
than pursuant to the Buy-Sell Agreements).  All shares of Common Stock and any
other securities of the Company outstanding as of the date of this Agreement,
and the record owners thereof as of the date of this Agreement, are set forth in
Schedule 4.02.  Immediately after the Closing, the Purchaser shall be the sole
and exclusive record and beneficial holder and owner of the Common Stock, free
and clear of all Encumbrances (other than those created by the Purchaser). 
There are no outstanding subscriptions, options, convertible

 

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securities, rights, warrants, calls or other agreements or commitments of any
kind issued or granted by, or binding upon, the Company to purchase or otherwise
acquire any security of or equity interest in the Company.  There are no
outstanding subscriptions, options, convertible securities, rights, warrants,
calls or other agreements or commitments of any kind obligating the Company to
issue any securities of the Company, or irrevocable proxies or any agreements
restricting the transfer of or otherwise relating to the Common Stock.  All of
the shares of Common Stock have been duly authorized and validly issued, and are
fully paid and nonassessable and not subject to any preemptive rights or similar
rights except as set forth in the Buy-Sell Agreements.  All dividends and other
distributions declared before the date hereof with respect to the issued and
outstanding shares of the Common Stock have been paid or distributed.

 

(b)           The Company owns all of the outstanding membership interests in
DTMS, free and clear of all Encumbrances. There are no outstanding
subscriptions, options, convertible securities, rights, warrants, calls or other
agreements or commitments of any kind issued or granted by, or binding upon,
DTMS or the Company to purchase or otherwise acquire any membership interest in
DTMS. There are no are no outstanding subscriptions, options, convertible
securities, rights, warrants, calls or other agreements or commitments of any
kind obligating the DTMS to issue any membership interest in DTMS, or
irrevocable proxies or any agreements restricting the transfer of or otherwise
relating to the membership interests in DTMS.

 

4.03        Authority.  The Company has the right, power and authority to
execute and deliver this Agreement, to perform the obligations hereunder and to
consummate the Transactions.  This Agreement has been duly executed and
delivered by the Company and constitutes the legal, valid and binding agreement
of the Company enforceable against the Company in accordance with its terms,
subject to applicable bankruptcy, insolvency, reorganization or similar laws
affecting creditors’ rights generally and to general principles of equity,
regardless of whether enforcement is sought in a proceeding at law or in equity.

 

4.04        Consents and Approvals; No Violation.  Except for the filing of the
Certificates of Merger and as set forth on Schedule 4.04, no filing or
registration with or notice to, and no permit, authorization, consent or
approval of, any Person is necessary for the Company to execute this Agreement
or to consummate the Transactions.  Except as set forth on Schedule 4.04,
neither the execution and delivery of this Agreement, the performance of the
obligations hereunder, nor the consummation of the Transactions will, as of the
Closing Date: (a) conflict with or result in any breach of any provision of the
articles of incorporation or the bylaws of the Company or any resolution adopted
by the Company Board or the Shareholders, or conflict with or result in any
breach of any provision of the articles of formation or the operating agreement
of DTMS or any resolution adopted by the Company as DTMS’s sole member;
(b) result in a violation or breach of, or constitute (with or without due
notice or lapse of time or both) a default or give rise to any right of
termination, cancellation or acceleration under, any of the terms, conditions or
provisions of any Material Contract to which the Company or DTMS is a party or
by which any of their respective properties or assets may be bound; (c) give
rise to any Encumbrance on any of the properties or assets of the Company or
DTMS; or (d) except as would not reasonably be expected to have a Material
Adverse Effect, violate any Legal Requirement applicable to the Company or DTMS.

 

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4.05        Books and Records.  The books of account, minute books and share
record books of the Company, all of which have been made available to the
Purchaser, are complete and correct in all material respects and have been
maintained in accordance with Legal Requirements.  The minute books of the
Company contain accurate and complete records of all corporate action taken by
the Company Board and the Shareholders.  No corporate action has been taken for
which minutes or resolutions which were required to be, but have not been,
prepared and are not contained in such minute books.

 

4.06        Absence of Certain Changes.  Except as set forth on Schedule 4.06,
since the Balance Sheet Date, the Company has conducted its business only in the
Ordinary Course of Business and there has not been:

 

(a)           any Material Adverse Effect;

 

(b)           any damage, destruction or loss, whether covered by insurance or
not, materially and adversely affecting the properties or business of the
Company;

 

(c)           other than in the Ordinary Course of Business, any increase in or
creation of compensation payable or to become payable by the Company to any of
its directors, officers, employees, or agents in any stock option, bonus
payment, service award, pension, retirement, severance, savings, insurance,
expense allowance, or other plan, agreement, or arrangement made to or with any
of them;

 

(d)           other than in the Ordinary Course of Business, any sale,
assignment, lease, transfer, license, abandonment or other disposition by the
Company of any interest in its assets;

 

(e)           any declaration, setting aside, or payment of any dividend or
other distribution (including distributions of property and assets) in respect
of the capital stock of the Company, or any direct or indirect redemption,
retirement, purchase or other acquisition by the Company of any such capital
stock;

 

(f)            any stock dividend, stock split, reorganization, recapitalization
or other change of any type whatsoever in the outstanding capital stock of the
Company;

 

(g)           any amendment to the articles of incorporation or bylaws of the
Company;

 

(h)           any change in the accounting methods followed by the Company;

 

(i)            any entry into, termination (other than expiration) or receipt of
notice of termination of any Material Contract, except in the Ordinary Course of
Business;

 

(j)            any payment of any obligation or Liability other than current
liabilities or obligations disclosed in the Company’s books and records and
current liabilities or obligations incurred since the Balance Sheet Date in the
Ordinary Course of Business;

 

(k)           any incurrence, other than obligations or Liabilities incurred in
the Ordinary Course of Business, of any obligations or Liabilities;

 

18

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(l)            any waiver, cancellation, writing off or writing down, other than
in the Ordinary Course of Business, of any rights or claims of the Company;

 

(m)          any material change in the manner of the Company’s billings or the
credit terms made available by the Company, to any of its customers;

 

(n)           any failure to replenish inventories and supplies other than in
the Ordinary Course of Business;

 

(o)           made or rescinded any material Tax election or settled or
compromised any material Liability as it relates to Taxes (“Tax Liability”);

 

(p)           except for Permitted Encumbrances, allowed any Encumbrance to be
imposed upon any of the assets, properties or rights of the Company;

 

(q)           any default on any material obligation or obligations;

 

(r)            any entry into any transaction not in the Ordinary Course of
Business;

 

(s)            any entry into any new line of business or acquisition of any
business organization or division thereof;

 

(t)            except as otherwise permitted by this Agreement or to the extent
such amounts do not exceed $1,000 in each individual transaction or with respect
to the Real Property Leases, any loan or advance of any money or other property
to, or entry into any other transaction with, any Company employee or Affiliate
of the Company;

 

(u)           any establishment, adoption, entry into, amendment or termination
of any compensation plan, agreement, program, policy, trust or fund of the
Company;

 

(v)           any settlement of any litigation providing for injunctive or other
equitable relief;

 

(w)          any entry into any joint venture, partnership or similar
arrangement for the conduct of business;

 

(x)           any capital expenditures, or agreements to make any new capital
expenditures, in excess of $50,000;

 

(y)           except in the Ordinary Course of Business, any delay or
postponement of any payment of accounts payable and other Liabilities; or

 

(z)           any authorization or commitment to do any of the foregoing
actions.

 

4.07        Absence of Undisclosed Liabilities.  Except (a) as and to the extent
accrued or reserved against in the balance sheet included in the Year-end
Financial Statements as of December 31, 2013, (b) to the extent arising after
the Balance Sheet Date, incurred in the Ordinary Course of Business and accrued
or reserved against in the books and records of the

 

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Company, (c) as expressly provided for in any of the Company’s Contracts and
which are not required to be included on a balance sheet in accordance with
GAAP, or (d) as disclosed on Schedule 4.07, the Company does not have any
Liabilities of the type required to be included on a balance sheet in accordance
with GAAP.

 

4.08        Accounts Receivable.

 

(a)           Except for the amounts set forth on Schedule 4.08(a), all accounts
receivable of the Company (the “Accounts Receivable”) are reflected properly on
the Company’s books and records and represent legal, valid, binding and
enforceable obligations arising from sales actually made or services actually
performed in the Ordinary Course of Business.  The Accounts Receivable are
current and will be collected in full within twelve (12) months after the
Closing Date, except for bad debt and write-offs that are within the levels of
reserves as of the Closing for the same.  There is no contest, claim or right of
set-off other than returns in the Ordinary Course of Business under any Contract
with any obligor of any Accounts Receivable relating to the amount or validity
of such Accounts Receivable.

 

(b)           Except for the amounts set forth on Schedule 4.08(b), all notes
receivable of the Company (the “Notes Receivable”) are reflected properly on the
Company’s books and records and represent legal, valid, binding and enforceable
obligations owed to the Company arising from the Company’s Ordinary Course of
Business.  The Notes Receivable are current and will be collected in full within
twelve (12) months after the Closing Date.  There is no contest, claim or right
of set-off with any obligor of any Note Receivable relating to the amount or
validity of such Note Receivable.

 

(c)           Except for the amounts set forth on Schedule 4.08(c), all costs in
excess of billings of the Company are reflected properly on the Company’s books
and records, and these costs in excess of billings will, after being billed,
represent legal, valid, binding and enforceable obligations arising from sales
actually made or services actually performed in the Ordinary Course of
Business.  There is no contest, claim or right of set-off under any Contract
with any obligor relating to the amount or validity of these costs in excess of
billings.

 

(d)           Except for the amounts set forth on Schedule 4.08(d), all
retainage of the Company is reflected properly on the Company’s books and
records, and this retainage represents legal, valid, binding, and enforceable
obligations arising from sales actually made or services actually performed in
the Ordinary Course of Business.  There is no contest, claim, or right of
set-off under any Contract with any obligor relating to the amount or validity
of this retainage.

 

4.09        Inventory.  Since the Balance Sheet Date, no inventory has been sold
or disposed of, except through sales in the Ordinary Course of Business.  All
inventory of the Company consists of a quality and quantity usable and salable
in the Ordinary Course of Business, except for obsolete items and items of below
standard quality which in each case have been written off or written down to net
realizable value as reflected in the Financial Statements.

 

4.10        Litigation.  Except as set forth on Schedule 4.10, there are no
actions, suits, claims, investigations, reviews or other proceedings pending or,
to the Knowledge of the

 

20

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Company, threatened against the Company, or involving any of its properties or
assets, at law or in equity, before or by any Governmental Authority (a
“Proceeding”).  Except as set forth on Schedule 4.10, since January 1, 2004, the
Company has not been subject to any formal or informal order, decree, consent,
agreement, memorandum of understanding or enforcement action with any
Governmental Authority and, to the Knowledge of the Company, was not subject
thereto before January 1, 2004.

 

4.11        Tax Matters.  Except as disclosed on Schedule 4.11:

 

(a)           All Tax Returns required to be filed by or on behalf of the
Company have been timely filed.  Such Tax Returns were correct and complete in
all material respects and have been prepared in compliance in all material
respects with all applicable material Legal Requirements.  All Taxes due and
owing by or with respect to the Company for the periods covered by such Tax
Returns (whether or not shown on any Tax Return) have been paid or are
adequately reserved for on the Company’s books and records.  With respect to the
periods for which Tax Returns have not been filed, the Company has established
adequate reserves for the payment of all Taxes.  The Company is currently not
the beneficiary of any extension of time within which to file any Tax Return. 
Except for claims resolved before January 1, 2009, no written claim has ever
been made to the Company by a Governmental Authority in a jurisdiction where the
Company does not file Tax Returns that it is or may be subject to taxation by
that jurisdiction.

 

(b)           No deficiencies for any Taxes have been proposed, asserted, or
assessed against the Company that are not adequately provided for on the
Company’s books and records and no request for waivers of the time to assess any
such Taxes has been granted or are pending.  Except as set forth on
Schedule 4.11(b), the Company is not involved with any Governmental Authority in
any audit examination, deficiency or refund litigation or material matter in
controversy with respect to any Taxes.  All Taxes due by the Company with
respect to completed and settled examinations or concluded litigation have been
paid or adequately reserved for.  The Company has not executed an extension or
waiver of any statute of limitations on the assessment or collection of any Tax
due that is currently in effect.

 

(c)           None of the assets or properties of the Company is subject to any
Tax lien, other than Permitted Encumbrances, and those that may thereafter be
paid without penalty or the validity of which are being contested in good faith
by appropriate proceedings and for which adequate provisions are being
maintained.

 

(d)           The Company has (i) collected and withheld all Taxes that it has
been required to collect or withhold in connection with any amounts paid or
owing to any employee, independent contractor, creditor, Shareholder or other
Person and (ii) has timely submitted and paid all such collected and withheld
amounts to the appropriate Governmental Authorities.  Except as may reasonably
be expected to result in a Material Adverse Effect, the Company is in compliance
with the back-up withholding and information reporting requirements under
(i) the Code and the rules and regulations promulgated thereunder and (ii) all
other applicable Legal Requirements.

 

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(e)           The Company has been a validly electing S corporation within the
meaning of Code Sections 1361 and 1362 at all times since June 26, 1980.  Since
the effective date of the Company’s election to be taxed in accordance with
Subchapter S of the Code, the Shareholders and the Company have not taken any
action or failed to take any action that would result in the Company failing to
qualify pursuant to Subchapter S of the Code.

 

4.12        Employee Benefit Plans.  The following statements are true and
correct:

 

(a)           Schedule 4.12 lists each deferred compensation plan, bonus and
incentive arrangement, stock option plan, restricted stock arrangement,
“cafeteria plan” as described in Section 125 of the Code and any other “employee
welfare benefit plan” (as defined in Section 3(1) of ERISA), each “employee
pension benefit plan” (as defined in Section 3(2) of ERISA) maintained by the
Company or to which the Company contributes or is required to contribute and all
other similar plans, programs and arrangements (the “Benefit Plans”).

 

(b)           Except as disclosed on Schedule 4.12, no Benefit Plan provides for
continuing benefits or coverage for any participant, beneficiary or former
employee after such participant’s or former employee’s termination of
employment, except as may be required by Section 4980B of the Code or ERISA.

 

(c)           All of the Benefit Plans and any related funding instruments
comply, and have complied during the applicable statute of limitations, both as
to form and operation in all material respects with the provisions of ERISA, the
Code and with all other applicable Legal Requirements.

 

(d)           The Company has never maintained or contributed to, and has not
participated in or agreed to participate in, a multi-employer plan (as defined
in Section 3(37) of ERISA), and the Company could not have any Liability under
any such multi-employer plan.

 

(e)           Except as set forth on Schedule 4.12, there are no Proceedings
pending with respect to or under any Benefit Plan other than routine claims for
plan benefits, and there are no disputes or Proceedings pending or, to the
Knowledge of the Company, threatened with respect to any the Benefit Plans.

 

(f)            Except as set forth on Schedule 4.12, neither the execution and
delivery of this Agreement nor the consummation of the Transactions will
(i) result in any payment to be made by the Company or the Purchaser (including
severance, unemployment compensation, golden parachute (as defined in
Section 280G of the Code) or otherwise) becoming due to any employee of the
Company or (ii) increase or vest any benefits otherwise payable under any
Benefit Plan.  No Benefit Plan that is a nonqualified deferred compensation plan
subject to Section 409A of the Code has been materially modified (as defined
under Section 409A of the Code) on or after October 3, 2004 and all such
nonqualified deferred compensation plans have been operated and administered in
good faith compliance with Section 409A of the Code from the period beginning
January 1, 2005 through the Closing Date.

 

(g)           The Company has a sufficient accrual for liabilities that have
been incurred but have not yet been paid or otherwise recorded with respect to
the self-insurance portion of the Benefit Plans.

 

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4.13        Employment Matters.

 

(a)           Except as disclosed on Schedule 4.13, the Company is not a party
to any Contracts granting benefits or rights to employees or consultants, any
collective bargaining agreement or any conciliation agreement with the
Department of Labor, the Equal Employment Opportunity Commission or any other
Governmental Authority.  There are no unfair labor practice complaints pending
against the Company before the National Labor Relations Board and no similar
claims pending before any other Governmental Authority and, to the Knowledge of
the Company, no such claims are threatened.  There is no activity or Proceeding
of any labor organization (or representative thereof) or employee group to
organize any employees of the Company, nor any strikes, slowdowns, work
stoppages, lockouts or threats thereof, by or with respect to any such
employees.  The Company is in material compliance with all applicable Legal
Requirements respecting employment and employment practices and terms and
conditions of employment and wages and hours, and the Company is not engaged in
any unfair labor practices. Without limiting the foregoing, the Company is in
compliance with the Immigration Reform and Control Act of 1986 and maintains a
current Form I-9, as required by such Act, in the personnel file of each
Employee.

 

(b)           The Company has made available to the Purchaser a correct and
complete list of all employees of the Company, together with each employee’s
rate of compensation, bonuses since January 1, 2011 and, if applicable, the
amount of any unpaid bonuses, vacation or other payments or benefits
attributable to such employee as of December 31, 2013, and such unpaid
commitments are fully reflected in the Financial Statements.

 

4.14        Contracts.

 

(a)           Schedule 4.14(a) contains a listing of all Material Contracts to
which the Company is a party or is otherwise subject or by which the Company is
bound.  Correct and complete copies of all of the Material Contracts on
Schedule 4.14(a) have been delivered to the Purchaser.

 

(b)           Each Material Contract is in full force and effect and is a valid
and binding obligation of the Company.  Neither the Company nor, to the
Knowledge of the Company, any other party to any Material Contract is in breach
or violation of, or default under, or has repudiated any provision of, any
Material Contract.  None of the parties to the Material Contracts has given
written notice to the Company of its intent to cancel or terminate such Material
Contract or otherwise materially alter its relationship with the Company in the
future and, to the Knowledge of the Company, none of such parties has
communicated an intent to do so.

 

4.15        Related Party Transactions.  Except as set forth on Schedule 4.15,
there are no Contracts between or among the Company (whether on its own behalf
or in its capacity as trustee or custodian for the funds of any employee benefit
plan (as defined in ERISA)) and any Shareholder or any Affiliate of any
Shareholder.  Except as disclosed on Schedule 4.15(b), no Shareholder or any
Affiliate of any Shareholder owns any asset used in, or necessary to, the
business of the Company.

 

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4.16        Compliance with Laws.

 

(a)           Except as set forth on Schedule 4.16, the Company is not in
material default with respect to or in violation of any applicable Legal
Requirement.  The Company has all material Governmental Authorizations required
to conduct its business as it is now being conducted, and the consummation of
the Transactions will not constitute a material violation of the terms and
conditions of any Governmental Authorizations.  Except as set forth on
Schedule 4.16, immediately following the consummation of the Transactions, the
Company will have the same rights as it had immediately before the consummation
of the Transactions in such Governmental Authorizations without impairment or
change of any kind.

 

(b)           All required filings with respect to the Governmental
Authorizations required by the Company to conduct its business have been timely
made and all required applications for renewal thereof have been timely filed. 
All such Governmental Authorizations are in full force and effect and there are
no Proceedings pending or, to the Knowledge of the Company, threatened that seek
the revocation, cancellation, suspension or adverse modification thereof.

 

(c)           In the conducting the business of the Company, neither the Company
nor any of its directors, officers, employees, or agents, has (i) directly or
indirectly, given, or agreed to give, any illegal gift, contribution, payment,
or similar benefit to any supplier, customer, governmental official or employee
or other Person who was, is or may be in a position to help or hinder the
Company (or assist in connection with any actual or proposed transaction), or
made, or agreed to make, any illegal contribution, or reimbursed any illegal
political gift or contribution made by any other Person, to any candidate for
federal, state, local or foreign public office or (ii) established or maintained
any unrecorded fund or asset or made any false entries on any books or records
for any such purpose.

 

(d)           None of the representations or warranties contained in this
Section 4.16 shall be deemed to relate to any matters addressed more
specifically by the representations or warranties set forth in another
Section of this Article IV, including Section 4.11, Section 4.12, Section 4.13
and Section 4.19.

 

4.17        Insurance.

 

(a)           Schedule 4.17 contains a description of all policies of property,
fire and casualty, product liability, workers’ compensation, liability and other
forms of insurance owned or held by the Company or otherwise insuring the
Company or its assets or businesses.  Such description provides reasonably
complete details concerning such policies, identifying among other things,
(i) the issuer of each such policy, (ii) the amount of coverage still available
and outstanding under each such policy, (iii) whether each such policy is a
“claims made” or an “occurrences” policy and (iv) any retrospective premium
adjustments.  Correct and complete copies of such policies have been made
available to the Purchaser.

 

(b)           Except as set forth on Schedule 4.17, neither the Company nor any
Shareholder has received (i) any notice of cancellation of any policy described
in Section 4.17(a) or refusal of coverage thereunder, (ii) any written notice
that the issuer of any such policy has

 

24

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filed for protection under applicable bankruptcy or other insolvency laws or is
otherwise in the process of liquidating or has been liquidated or (iii) any
other written notice that such policies are no longer in full force or effect or
that the issuer of any such policy is no longer willing or able to perform its
obligations or plans to raise the premiums for or materially alter the coverage
thereunder.

 

4.18        Intellectual Property.

 

(a)           Schedule 4.18 sets forth a list of all names, trade names,
fictitious business names, brand names, registered and unregistered trademarks,
service marks and applications and all patents and patent applications owned by
the Company and/or used in connection with its business. The Company is
authorized to use or has purchased and maintains licenses for all of its
software used in connection with its business and has maintained reasonable
evidence of such purchases.

 

(b)           The Company directly or indirectly owns, or is licensed or
otherwise possesses rights to use, all Intellectual Property used in its
business as currently conducted, and no Person has delivered written notice
challenging, and to the Knowledge of the Company no Person is infringing, the
Intellectual Property of the Company.  The Company has not received any written
notice of any claim that the conduct of its business infringes upon or violates
the Intellectual Property rights of any other Person, and, to the Knowledge of
the Company, the conduct by the Company of its business does not so infringe
upon or violate any patent, copyright, trademark or other proprietary right of
any other Person.

 

4.19        Environmental Matters.  Except as set forth on Schedule 4.19:

 

(a)           Since January 1, 2004, neither the Company, nor, to its Knowledge,
any of its Business Facilities is in violation of, or has violated or has been
or is in material non-compliance with, any Environmental Laws in connection with
the ownership, use, maintenance or operation of, or conduct of the business of,
the Company or any of its Business Facilities.

 

(b)           Since January 1, 2004, to the Knowledge of the Company, no
Materials of Environmental Concern have been released by the Company or are
present on or under any Business Facility in quantities or concentrations that
exceed any applicable standard established by Environmental Laws, and the
Company has not received any written notice of any release or threatened release
of Materials of Environmental Concern, or of any Remediation obligation under
Environmental Laws or Environmental Permits, relating to the ownership, use,
maintenance or operation of any Business Facility of the Company.

 

(c)           The Company is not subject to any consent order, compliance order
or administrative order relating to or issued under any Environmental Law, or
any pending or, to the Knowledge of the Company, threatened Environmental
Claims.

 

(d)           Since January 1, 2004, to the Company’s Knowledge, other than in
material compliance with applicable Legal Requirements, no Materials of
Environmental Concern generated from any Business Facility, or for which the
Company arranged for disposal (collectively, the “Specified Materials”), have
been treated, stored, disposed of or released at a

 

25

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location that is subject to an existing claim under Environmental Laws as a
result of such treatment, storage, disposal or release of the Specified
Materials.

 

(e)           Since January 1, 2004, the Company has not voluntarily undertaken
Remediation of any Business Facility or other site, or entered into any
agreement for the payment of costs associated with such activity, and there are
no Liabilities arising out of or relating to Environmental Laws to which the
Company has agreed to assume or satisfy.

 

(f)            Except as would not reasonably be expected to result in a
Material Adverse Effect, the Company has filed and/or maintained all notices,
notifications, financial assurance, environmental management plans, worker
protection plans, applications or other documents or instruments that are
required to be maintained or filed by the Company pursuant to Environmental Laws
for the operation of its business or the ownership or operation of any Business
Facility.

 

4.20        Real Property.

 

(a)           The Company has made available to the Purchaser correct and
complete copies of all real property leases to which the Company is a party,
together with all amendments and supplements thereto and modifications thereof
(the “Real Property Leases”).  A list of the Real Property Leases is set forth
on Schedule 4.20(a).  All of the Real Property Leases are legally valid and
binding and in full force and effect, and there are no defaults by the Company
thereunder or, to the Knowledge of the Company, by any other party thereto.  No
leasehold or other interest of the Company in real property is subject or
subordinate to any Encumbrance, except (a) as described on Schedule 4.20(a),
(b) mortgages or security interests shown as securing specified Liabilities with
respect to which no default (or event that, with notice or lapse of time or
both, would constitute a default) exists, and (c) Permitted Encumbrances.

 

(b)           Schedule 4.20(b) contains a true and complete list (including
legal descriptions) of all real property owned by the Company (the “Real
Property”).  The Company has good and marketable title to the Real Property,
free and clear of any Encumbrances except (i) as described on Schedule 4.20(b),
(ii) mortgages or security interests shown as securing specified Liabilities
with respect to which no default (or event that, with notice or lapse of time or
both, would constitute a default) exists, and (iii) Permitted Encumbrances.  The
Company (A) does not currently lease all or any part of the Real Property to any
other Person and (B) has not received written notice of any pending, and to the
Knowledge of the Company there is no threatened, condemnation proceeding with
respect to any of the Real Property.

 

4.21        Personal Property.  Schedule 4.21 lists all equipment and other
tangible personal property that (a) is owned or leased by the Company and
(b) has a book value of at least $20,000.  The Company has made available to the
Purchaser correct and complete copies of all leases pertaining to the personal
property listed on Schedule 4.21, all of which are legally valid and binding and
in full force and effect, and there are no defaults by the Company thereunder
or, to the Knowledge of the Company, by any other party thereto.  No interest of
the Company in tangible personal property is subject or subordinate to any
Encumbrance (other than Permitted Encumbrances), except as described on
Schedule 4.21.  None of the rights of the Company under any such leasehold or
other interest in tangible personal property will be impaired by the

 

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consummation of the Transactions, and all of such rights will be enforceable by
the Company after the Closing without the consent or agreement of any other
Person, except for consents and agreements specifically described on
Schedule 4.21. Except as set forth in Schedule 4.21, the properties and assets
owned, leased or licensed by the Company include all properties and assets used
in the Company’s business and are sufficient for the conduct of the Company’s
business as currently conducted.

 

4.22        Brokers; Financial Advisors.  The Company has not employed any
investment bank, financial advisor, broker or finder or incurred any liability
for any investment bank, financial advisory, brokerage or finders’ fees or
commission in connection with the Transactions.

 

4.23        Bank Accounts; Powers of Attorney.  Schedule 4.23 sets forth (a) the
name of each bank, savings and loan, credit union or other financial institution
in which the Company has any account, certificate of deposit or other investment
or safe deposit box, the style and number of each such account or safe deposit
box and the names of all Persons authorized to draw thereon or have access
thereto and (b) the name of each Person holding a general or special power of
attorney from the Company and a summary of the terms thereof.

 

4.24        Indebtedness.  The Company does not have any Indebtedness other than
as set forth on Schedule 4.24.

 

4.25        Subsidiaries and Predecessors.  Schedule 4.25 sets forth a list of
all names of all predecessors of the Company, all names under which the Company
does business and any other entity from which the Company previously acquired
significant assets other than in the Ordinary Course of Business.  Except as set
forth on Schedule 4.25, the Company does not own any interest in any other
entity.

 

4.26        Financial Statements.

 

(a)           Complete and correct copies of the following financial statements
have been made available to the Purchaser:

 

(i)            the balance sheets of the Company and its Subsidiary as of
December 31, 2013, 2012 and 2011 and the related statements of profit and loss
for the one-year periods ended December 31, 2013, 2012 and 2011, together with
the related notes and schedules (such balance sheets and statements of profit
and loss and the related notes and schedules are referred to herein as the
“Year-end Financial Statements”); and

 

(ii)           the balance sheet of the Company and its Subsidiary as of
February 28, 2014 (the “Balance Sheet Date”) and the related statement of profit
and loss for the two-month period ended February 28, 2014 (such balance sheet
and statement of profit and loss, the “Interim Financial Statements”).  The
Year-end Financial Statements and the Interim Financial Statements are
collectively referred to herein as the Financial Statements (the “Financial
Statements”).

 

(b)           The Financial Statements have been prepared from, and are
consistent with, the books and records of the Company and its Subsidiary in
conformity with GAAP and present fairly in all material respects the financial
position and results of operations of the

 

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Company and its Subsidiary as of the dates of such statements and for the
periods covered thereby (subject to, in the case of the Interim Financial
Statements, normal year-end audit adjustments consistent with prior periods and
the absence of notes).  The books of account of the Company and its Subsidiary
have been kept accurately in all material respects in the Ordinary Course of
Business, the transactions entered therein represent bona fide transactions and
the revenues, expenses, assets and liabilities of the Company and its Subsidiary
have been properly recorded therein in all material respects.

 

4.27        Customers and Suppliers.  Schedule 4.27 sets forth a complete and
accurate list of (a) the Company’s ten largest customers (measured by aggregate
billings) during 2013, indicating the existing contracts with each such customer
by product or service provided, and (b) the Company’s ten largest suppliers of
materials, products or services (measured by the aggregate amount purchased by
the Company) during 2013, indicating the Contracts for continued supply from
each such supplier.  None of such customers or suppliers has given written
notice to the Company of its intent to cancel, terminate or otherwise materially
alter (including any material reduction in the rate or amount of sales or
purchasers or material increase in the prices charged or paid, as the case may
be) its relationship with the Company and, to the Knowledge of the Company, none
of such parties has communicated an intent to do so.

 

4.28        Vote Required.  The Shareholder Approval is the only approval of the
Shareholders that is necessary to approve this Agreement and the Transactions.

 

4.29        WIP Schedule.  A work in progress schedule for the Company’s
customer contracts as of February 28, 2014 is attached as Schedule 4.29 (the
“WIP Schedule”).  Except as set forth in Schedule 4.29, the WIP Schedule, in the
aggregate, fairly represents as of February 28, 2014, in all material respects,
the total estimated contract costs, earned revenues to date, estimated gross
profits (in dollar and in percentage), and actual gross profit recognized to
date (in dollars).

 

4.30        Unclaimed Property.  The Company does not have assets that
constitute unclaimed property under applicable Legal Requirements.

 

4.31        No Other Representations and Warranties.  The Purchaser acknowledges
and agrees that by virtue of the Merger, except as set forth in this Agreement,
the Purchaser is acquiring the Company’s and its Subsidiary’s assets and
business in their “AS IS, WHERE IS” condition and state of repair, and with all
faults and defects, and that, except for the representations and warranties
contained in this Article IV (including the related portions of the Disclosure
Schedules), neither the Company nor any other Person has made or makes any other
express or implied representation or warranty, either written or oral, on behalf
of the Company, including any representation or warranty as to the accuracy or
completeness of any information regarding the Company or the Shareholders made
available to the Purchaser and its Representatives or as to the future revenue,
profitability or success of the Company, or as to the assets, business or
prospects of the Company, or any representation or warranty arising from statute
or otherwise in law.

 

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ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER AND THE MERGER SUB

 

Each of the Purchaser and the Merger Sub hereby makes the representations and
warranties set forth in this Article V to the Company and the Shareholders
(including the Shareholder Representative).

 

5.01        Organization and Corporate Power.  Each of the Purchaser and the
Merger Sub is a corporation duly incorporated, validly existing and in good
standing under the laws of the State of Delaware, and has all requisite
corporate power and authority to enter into and carry out its obligations under
this Agreement.  The Merger Sub is a newly formed corporation that is directly
wholly-owned by the Purchaser.  The Merger Sub was formed solely for purposes of
engaging in the Merger, and has no operations or assets, other than as required
for state law minimum capitalization.

 

5.02        Authority.  The execution and delivery of this Agreement, the
performance of the obligations hereunder and the consummation of the
Transactions have been duly and validly authorized and approved by each of the
Purchaser’s and the Merger Sub’s board of directors and by the Merger Sub’s sole
shareholder, and no further corporate actions or proceedings on the part of the
Purchaser or the Merger Sub or their stockholders are necessary to authorize the
execution and delivery of this Agreement, the performance of its obligations
hereunder or the consummation of the Transactions.  This Agreement has been duly
executed and delivered by each of the Purchaser and the Merger Sub and
constitutes the legal, valid and binding agreement of each of the Purchaser and
the Merger Sub enforceable against each of the Purchaser and the Merger Sub in
accordance with its terms, subject to applicable bankruptcy, insolvency,
reorganization, or similar laws affecting creditors’ rights generally and to
general principles of equity, regardless of whether enforcement is sought in a
proceeding at law or in equity.

 

5.03        Consents and Approvals.  Except as set forth on Schedule 5.03, no
filing or registration with, and no permit, authorization, consent or approval
of, any Person is necessary for the Purchaser or the Merger Sub to execute this
Agreement and consummate the Transactions.  Except as would not reasonably be
expected to have a material adverse effect on the Purchaser’s or the Merger
Sub’s ability to consummate the Transactions or set forth on Schedule 5.03,
neither the execution and delivery of this Agreement, the performance of the
obligations hereunder nor the consummation of the Transactions will, as of the
Closing Date:  (a) conflict with or result in any breach of any provision of the
certificate of incorporation and bylaws of the Purchaser or the Merger Sub or
any resolution adopted by the board of directors or stockholders of the
Purchaser or the Merger Sub; (b) result in a material violation or breach of, or
constitute (with or without due notice or lapse of time or both) a material
default (or give rise to any right of termination, cancellation or acceleration)
under, any of the terms, conditions or provisions of any Contract to which the
Purchaser or the Merger Sub is a party or by which any of the Purchaser’s or the
Merger Sub’s properties or assets may be bound; or (c) violate any Legal
Requirement applicable to the Purchaser or the Merger Sub.

 

5.04        Brokers; Financial Advisors.  Neither the Purchaser nor the Merger
Sub has employed any investment bank, financial advisor, broker or finder or
incurred any liability for

 

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any investment bank, financial advisory, brokerage or finders’ fees or
commission in connection with the Transactions.

 

5.05        Financing.  The Purchaser and the Merger Sub have, in the form of
cash on hand together with amounts available for borrowing under the Purchaser’s
existing credit arrangements, sufficient funds to pay all amounts due pursuant
to Article II and to otherwise consummate the Transactions.

 

5.06        Investment Representation.  The Purchaser is acquiring the shares of
Common Stock solely for its own account for investment purposes and not with a
view to, or for offer or sale in connection with, any distribution thereof. The
Purchaser acknowledges that the shares of Common Stock are not registered under
the Securities Act or any state securities laws, and that the shares of Common
Stock may not be transferred or sold except pursuant to the registration
provisions of the Securities Act or pursuant to an applicable exemption
therefrom and subject to state securities laws and regulations, as applicable.
The Purchaser is able to bear the economic risk of holding the Common Stock for
an indefinite period (including total loss of its investment), and has
sufficient knowledge and experience in financial and business matters so as to
be capable of evaluating the merits and risk of its investment.

 

ARTICLE VI
 COVENANTS OF THE COMPANY AND THE SIGNING SHAREHOLDERS

 

6.01        Conduct of the Business.  From the date hereof until the Effective
Time, the Company shall conduct its business in the Ordinary Course of Business
in accordance with applicable Legal Requirements and, except as contemplated by
this Agreement, the Company shall use commercially reasonable efforts to
preserve intact the present business organization of the Company, to keep
available the services of the current officers, employees, consultants and
contractors of the Company and maintain satisfactory relationships with
customers, suppliers and other Persons with which the Company has significant
business relations.

 

6.02        Negative Covenants.  From the date hereof until the Effective Time,
except as otherwise contemplated by this Agreement, consented to in writing by
the Purchaser (such consent not to be unreasonably withheld, delayed or
conditioned) or required by applicable Legal Requirements, the Company shall
not  directly or indirectly do any of the following:

 

(a)           amend or otherwise change its governing documents;

 

(b)           issue, sell, contract to issue or sell, pledge, dispose of, grant,
encumber or authorize the issuance, sale, pledge, disposition, grant or
Encumbrance of any capital stock or other ownership interest (including any
phantom interest), of the Company or any revenue or profit-sharing interest in
respect of the Company;

 

(c)           reclassify, combine, split, subdivide, redeem, purchase or
otherwise acquire, directly or indirectly, any of its capital stock;

 

(d)           (i) acquire or invest in any Person or division thereof; (ii) 
issue any debt securities or assume, guarantee, endorse or otherwise become
responsible for, the obligations of any Person, or make any loans or advances
(except with respect to loans to employees not

 

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exceeding $1,000 in each case); (iii) enter into or amend any Material Contract,
other than in the Ordinary Course of Business; (iv) authorize any capital
expenditure is in excess of $50,000 individually or $250,000 in the aggregate;
or (v) increase or change any assumptions underlying, or methods of calculating,
any bad debt, contingency or other reserves;

 

(e)           increase (with respect to the top 25 employees of the Company
only), defer or fail to pay the compensation payable or to become payable to its
officers, employees, agents or consultants or grant any severance or termination
pay to any director, officer or employee, or establish, adopt, enter into,
terminate, fail to renew or amend any employee benefit plan, collective
bargaining or other Contract, trust, fund or policy for the benefit of any
director, officer, manager, employee or independent contractor;

 

(f)            make any change with respect to accounting methods or practices
or internal accounting control, inventory, investment, credit, allowance or Tax
procedures or practices;

 

(g)           except as set forth on Schedule 6.02(g), (i) make or alter any Tax
election, settle or compromise any Tax liability, file any amended Tax Return or
file any Tax Return being filed late (taking into account any validly obtained
extensions of time to file) or surrender any right to claim a material Tax
refund, offset, or other reduction in Tax liability or (ii) with the exception
of items occurring as a result of the Merger, accelerate or move any Tax
deduction, attribute or benefit to the Pre-Closing Tax Period or defer any Tax
detriment or taxable income to the Post-Closing Tax Period, other than in the
Ordinary Course of Business;

 

(h)           pay, discharge or satisfy any claim, Liability, or right
(absolute, accrued, asserted or unasserted, contingent or otherwise), other than
the payment, discharge or satisfaction in the Ordinary Course of Business;

 

(i)            forgive, cancel or defer any indebtedness or waive any claims or
rights of material value;

 

(j)            prepay any Liability having a fixed maturity of more than 90 days
from the date such Liability was issued or incurred;

 

(k)           purchase or sell, transfer, license, lease or otherwise dispose of
any material properties or assets (real, personal or mixed, tangible or
intangible), other than the purchase and sale of inventory in the Ordinary
Course of Business;

 

(l)            make or approve any write-off or write-down or any determination
to write-off or write-down any of the assets or properties of the Company;

 

(m)          pay, loan or advance any amount to, or sell, transfer, license,
lease or otherwise dispose of any properties or assets (real, personal or mixed,
tangible or intangible) to, any of the Company’s current or former Shareholders,
officers, directors, employees or consultants or any of their respective
Affiliates, other than (i) cash compensation paid to officers, employees and
consultants in the Ordinary Course of Business, (ii) advances for travel and
other business-related expenses and (iii) payment under the Real Property
Leases;

 

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(n)           take any action that would or is reasonably likely to result in
(i) any of the representations or warranties of the Company set forth in this
Agreement being untrue in any material respect, (ii) the breach of any covenant
of the Company set forth in this Agreement or (iii) any of the conditions to
Closing set forth in this Agreement not being satisfied; or

 

(o)           agree or commit to do any of the foregoing.

 

6.03                        Access to Books and Records.  Subject to
Section 7.05, from the date hereof until the Effective Time or the earlier
termination of this Agreement, the Company shall provide the Purchaser and its
Representatives with access at all reasonable times and upon at least two
Business Days’ advance notice to the offices, properties, books and records of
the Company in order for the Purchaser to have the opportunity to make such
investigation as it shall reasonably desire to make of the affairs of the
Company; provided that such access does not unreasonably interfere with the
normal operations of the Company; provided further that all requests for access
shall be directed to Mark Nyquist, Chief Executive Officer of the Company, or
such other person as the Company may designate from time to time.

 

6.04                        Conditions.  The Company and the Signing
Shareholders shall each use commercially reasonable efforts to cause the
conditions set forth in Section 3.01 to be satisfied and to consummate the
Transactions as soon as reasonably practicable after the satisfaction of the
conditions set forth in Article III (other than those to be satisfied at the
Closing); provided that neither the Company nor the Shareholder Representative
or the Signing Shareholders shall be required to expend any funds to obtain any
non-Party or governmental consents required under Section 3.01(c) or
Section 3.03(b).

 

6.05                        Notification.  From the date hereof until the
Closing, the Company shall disclose to the Purchaser in writing any material
breaches of or inaccuracies in the representations and warranties contained in
Article IV, and any other matters that would reasonably be likely to result in
any of the conditions to closing set forth in this Agreement not to be
satisfied, promptly upon discovery thereof; and, except for purposes of
Section 3.01(a), such disclosures shall amend and supplement the attached
Disclosure Schedules in the form of “Updated Schedules” delivered to the
Purchaser; provided that the delivery of any notice pursuant to this
Section 6.05, or any amendments or supplements to the attached Disclosure
Schedules, shall be for informational purposes only, and shall not in any way be
deemed to cure any inaccuracy or breach of any provision of this Agreement or in
any way limit or affect any rights or remedies under this Agreement (including
rights to indemnification).

 

6.06                        Shareholder Approval.  Within three days after the
execution and delivery of this Agreement, the Company shall submit to all of the
Shareholders information and documents relating to the terms of the Merger and
this Agreement, in form and substance reasonably satisfactory to the Purchaser
and its counsel, that shall satisfy all requirements of the TBOC. On or before
April 29, 2014, at a duly called meeting of the Shareholders, the Company shall
submit the terms of the Merger and this Agreement to the Shareholders for
approval, unless unanimous written consent in lieu of a meeting is earlier
obtained.

 

6.07                        Signing Shareholder Actions.  Each Signing
Shareholder (a) shall vote his shares of Common Stock in favor of the Merger,
and shall not permit any shares of Common Stock

 

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directly or indirectly beneficially owned or controlled by such Signing
Shareholder to become Dissenting Stock, (b) shall execute a consent to the
Section 338(h)(10) Election, and (c) agrees that at the Effective Time each
Buy-Sell Agreement to which he is a party shall automatically be terminated and
no longer effective, and hereby waives every provision therein under which such
Signing Shareholder may  have any rights as a result of or in connection with
the Transactions.

 

6.08        No Alternative Transactions.  Unless this Agreement shall have been
terminated in accordance with its terms, neither the Company nor any Signing
Shareholder shall (and the Company shall not permit its Subsidiary to), directly
or indirectly, through any current or former shareholder, member, officer,
director, manager, agent or otherwise, solicit, initiate or encourage the
submission of any proposal or offer from any Person relating to any acquisition
or purchase of all or substantially all of the assets of, or a majority of the
outstanding shares of capital stock of, the Company or its Subsidiary or any
business combination with the Company or its Subsidiary that would result in a
Person owning substantially all of the assets, or a majority of the outstanding
capital stock, of the Company (an “Acquisition Proposal”), or participate in any
negotiations regarding, or furnish to any other Person any information with
respect to, or otherwise cooperate or negotiate in any way with, or assist or
participate in, facilitate or encourage, any effort or attempt by any other
Person to do or seek any of the foregoing. The Company and each Signing
Shareholder, as the case may be, shall notify the Purchaser immediately of any
Acquisition Proposal made and shall, in any such notice to the Purchaser,
indicate in reasonable detail the identity of the Person making such Acquisition
Proposal and the terms and conditions of such Acquisition Proposal. If, at any
time before obtaining the Shareholder Approval, the Company Board concludes in
good faith, following consultation with its outside legal counsel, that the
failure of the Company Board to make a Change in Board Recommendation would
reasonably be expected to constitute a breach of its fiduciary obligations to
the Shareholders under applicable Legal Requirements, then the Company Board may
make a Change in Board Recommendation.  The Company and the Signing Shareholders
shall not (and the Company shall not permit its Subsidiary to) release any
Person from, or waive any provision of, any confidentiality, standstill or
similar agreement to which the Company or its Subsidiary or any Signing
Shareholder is a party or bound.

 

ARTICLE VII
COVENANTS OF THE PURCHASER

 

7.01        Access to Books and Records.  From and after the Closing, the
Purchaser shall, and shall cause the Surviving Corporation to, provide the
Shareholders (including the Shareholder Representative) and their agents with
reasonable access (for the purpose of examining and copying), during normal
business hours, and upon reasonable advance notice specifying the reason for
seeking access, to the books and records of the Surviving Corporation and its
Subsidiaries with respect to periods or occurrences before the Closing Date, and
to employees of the Purchaser, the Surviving Corporation and their Affiliates
for a reasonable, non-competitive purpose. Unless otherwise consented to in
writing by the Shareholder Representative, neither the Purchaser nor the
Surviving Corporation shall, for a period of seven years following the Closing
Date, destroy, alter or otherwise dispose of any of the books and records of the
Company or its Subsidiary for any period before the Closing Date without first
offering to surrender to the Shareholder Representative such books and records
or any portion

 

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thereof which the Purchaser or the Surviving Corporation may intend to destroy,
alter or dispose of.

 

7.02        Notification.  From the date hereof until the Closing Date, the
Purchaser shall disclose to the Company and the Shareholder Representative in
writing any material variances from the representations and warranties contained
in Article V promptly upon discovery thereof, and the Purchaser shall promptly
notify the Company and the Shareholder Representative if the Purchaser obtains
knowledge that any representation and/or warranty of the Company in this
Agreement or the attached Disclosure Schedules is not true and correct in all
material respects, or if the Purchaser obtains knowledge of any material errors
in, or omissions from, any Schedule to this Agreement; provided that the
delivery of any notice pursuant to this Section 7.02 shall be for informational
purposes only, and shall not in any way be deemed to cure any inaccuracy or
breach of any provision of this Agreement or in any way limit or affect any
rights or remedies under this Agreement (including rights to indemnification).

 

7.03        Conditions.  The Purchaser shall use commercially reasonable efforts
to cause the conditions set forth in Section 3.02 to be satisfied and to
consummate the Transactions as soon reasonably possible after the satisfaction
of the conditions set forth in Article III (other than those to be satisfied at
the Closing); provided that the Purchaser shall not be required to expend any
funds to obtain any non-Party or governmental consents in connection therewith.

 

7.04        Contact with Customers and Suppliers.  The Purchaser hereby agrees
that it is not authorized to and shall not (and shall not permit any of its
Representatives or Affiliates (or its Affiliate’s Representatives to) contact
any officer, director, employee, customer, supplier or other material business
relation of the Company or its Subsidiary before the Closing without the prior
written consent of the Company, other than in the Purchaser’s ordinary course of
business.

 

7.05        Director and Officer Indemnification and Insurance.  All rights to
indemnification, advancement of expenses and exculpation by the Company now
existing in favor of each Person who is now, or has been at any time before the
date hereof or who becomes before the Closing Date, an officer or director of
the Company, as provided in the articles of incorporation or bylaws of the
Company, in each case as in effect on the date of this Agreement, or pursuant to
any other agreements in effect on the date hereof that are set forth on Schedule
7.05(a), shall survive the Closing Date and shall continue in full force and
effect in accordance with their respective terms.

 

7.06        Confidentiality Agreement.  Notwithstanding the terms thereof, the
Confidentiality Agreement shall remain in effect upon execution of this
Agreement and shall continue in full force and effect until the Effective Time.

 

7.07        Life Insurance.

 

(a)           At, or as soon as practicable after, the Closing, the Purchaser
shall cause the Surviving Corporation to (i) transfer to Mark Nyquist (or his
designee) the Transamerica Occidental Life Insurance Company life insurance
policy on Mark Nyquist’s life with a benefit of $2,500,000 and (ii) terminate
the Transamerica Life Insurance Company life insurance policy on Mark Nyquist’s
life with a benefit of $5,000,000.

 

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(b)           At, or as soon as practicable after, the Closing, the Purchaser
shall cause the Surviving Corporation to (i) transfer to Scott Brady (or his
designee) the Transamerica Occidental Life Insurance Company life insurance
policy on Scott Brady’s life with a benefit of $2,500,000 and (ii) terminate the
The Lincoln National Life Insurance Company life insurance policy on Scott
Brady’s life with a benefit of $5,000,000.

 

ARTICLE VIII
TERMINATION

 

8.01        Termination.  This Agreement may be terminated at any time before
the Effective Time as follows and in no other manner:

 

(a)           by mutual written consent of the Purchaser and the Merger Sub, on
the one hand, and the Company, on the other hand;

 

(b)           by the Purchaser and the Merger Sub on the one hand, or by the
Company, on the other hand, upon the issuance by a court of competent
jurisdiction or other governmental body of an order, decree or ruling or their
taking of any other action restraining, enjoining or otherwise prohibiting the
Merger, which order, decree, ruling or any other action shall have become final
and non-appealable;

 

(c)           by the Purchaser and the Merger Sub, on the one hand, or by the
Company, on the other hand, if the Closing shall not have occurred on or before
the date that is 60 days after the date of this Agreement, or such later date as
may have been agreed upon in writing by the Parties; provided, however, that no
termination may be made under this provision (i) by the Company if the failure
to close shall be caused by the action or inaction of the Company or any Signing
Shareholder or (ii) by the Purchaser or the Merger Sub if the failure to close
shall be caused by the action or inaction of the Purchaser or the Merger Sub;

 

(d)           by the Purchaser and the Merger Sub, upon a breach of any covenant
or agreement on the part of the Company or any Signing Shareholder set forth in
this Agreement, or if any representation or warranty of the Company shall have
become untrue, in either case such that the condition set forth in
Sections 3.01(a) and 3.01(b) could not be satisfied; provided, however, that, if
such breach is curable by the Company (or any Signing Shareholder, as
applicable) through the exercise of commercially reasonable efforts, the
Purchaser and the Merger Sub may not terminate this Agreement under this
Section 8.01(d) until the expiration of 30 days after providing written notice
of such breach to the Company (or any Signing Shareholder, as applicable) so
long as the Company (or any Signing Shareholder, as applicable) continues to
exercise commercially reasonable efforts to cure such breach; or

 

(e)           by the Company, upon a breach of any covenant or agreement on the
part of the Purchaser or the Merger Sub set forth in this Agreement, or if any
representation or warranty of the Purchaser or the Merger Sub shall have become
untrue, in either case such that the condition set forth in Section 3.02(a) and
3.02(b) would not be satisfied; provided, however, that, if such breach is
curable by the Purchaser and the Merger Sub through the exercise of commercially
reasonable efforts, the Company may not terminate this Agreement under this
Section 8.01(e) until the expiration of 30 days after providing written notice
of such breach to the

 

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Purchaser so long as the Purchaser and the Merger Sub continue to exercise
reasonable commercially efforts to cure such breach.

 

8.02        Effect of Termination.  If this Agreement is terminated pursuant to
Section 8.01, the provisions of this Agreement will immediately become void and
of no further force or effect (other than Section 7.06, this Section 8.02 and
Article XIII, which will survive the termination of this Agreement in accordance
with their terms), and there will be no liability on the part of any Party to
any other Party, except for knowing or willful breaches of the covenants
contained in this Agreement (including the failure of a Party to consummate the
Transactions following the satisfaction of all the conditions to such Party’s
obligations under Article III) before the time of such termination.  Nothing in
this Article VIII will be deemed to impair the right of any Party to compel
specific performance by another Party of its obligations under this Agreement.

 

ARTICLE IX
TAX MATTERS

 

9.01        Tax Periods Ending on or Before the Closing Date.  The Shareholders
shall prepare or cause to be prepared all Tax Returns for the Company for all
periods ending on or before the Closing Date (a “Pre-Closing Tax Period”) that
are due after the Closing Date, including any short-period return resulting from
the Transactions.  Such Tax Returns shall be prepared in a manner consistent
with the Company’s prior practice.  With respect to all such Tax Returns
(excluding the Company’s Form 1120S, U.S. corporation Tax Return) (a) the
Shareholder Representative shall provide copies of such Tax Returns to the
Purchaser for review at least 30 days before the due date (or in the case of
non-income Tax Returns, a reasonable number of days before the filing due date)
and shall make such revisions to such Tax Returns as are reasonably requested by
the Purchaser and (b) the Purchaser shall properly file or cause to the filed
all such Tax Returns.  Except as provided in Section 9.04, the Purchaser shall
pay or cause to be paid all Taxes shown as due on such Tax Returns (excluding
the Company’s Form 1120S, U.S. corporation Tax Return).

 

9.02        Tax Periods Beginning Before and Ending After the Closing Date.  The
Purchaser shall prepare or cause to be prepared and file or cause to be filed
any Tax Returns of the Company for Tax periods that begin before the Closing
Date and end after the Closing Date (the “Straddle Period”).  Any Tax Return for
any Straddle Period shall be prepared in a manner consistent with the Company’s
prior practice.  The Purchaser shall provide the Shareholder Representative with
copies of such Tax Returns for review at least 30 days before the due date (or
in the case of non-income Tax Returns, a reasonable number of days before the
filing due date) and shall make such revisions to such Tax Returns as are
reasonably requested by the Shareholder Representative.  The Purchaser shall pay
or cause to be paid all Taxes of the Company with respect to such Straddle
Periods.  Except as provided in Section 9.04 and except for any Tax resulting
from a Section 338(h)(10) Election, the Shareholders shall pay to the Purchaser
within ten days following the receipt of a request by the Purchaser, accompanied
by supporting documentation, an amount equal to the excess of (a) the portion of
such Taxes that relates to the portion of such Tax period ending on the Closing
Date over (b) the Taxes reflected in as a Liability in the Final Closing Working
Capital.  For purposes of this Section 9.02, in the case of any Taxes that are
imposed on a periodic basis and are payable for a Straddle Period, the portion
of such Tax that relates to the portion of such Straddle Period ending on the
Closing Date

 

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shall be deemed (i) in the case of any Taxes (including real property Taxes and
other property Taxes) other than Taxes based upon or related to income or
receipts (or imposed in connection with any sale or other transfer or assignment
of property or any other specifically identifiable transaction or event), to be
the amount of such Tax for the entire Straddle Period multiplied by a fraction,
the numerator of which is the number of days in the Straddle Period ending on
the Closing Date and the denominator of which is the number of days in the
entire Straddle Period, and (ii) in the case of any Tax based upon or related to
income or receipts (including franchise Taxes) or imposed in connection with any
sale or other transfer or assignment of property or any other specifically
identifiable transaction or event, equal to the amount that would be payable if
the relevant Straddle Period ended on the Closing Date based on an interim
closing of the books as of the end of the Closing Date.  All determinations
necessary to give effect to the foregoing allocations shall be made in a manner
consistent with prior practice of the Company.

 

9.03        Cooperation on Tax Matters.

 

(a)           The Purchaser, the Company and the Shareholder Representative
shall cooperate fully, as and to the extent reasonably requested by each other,
in connection with the filing of Tax Returns pursuant to this Article IX and any
Proceeding with respect to Taxes.  Such cooperation shall include the retention
and (upon request) the provision of records and information that are reasonably
relevant to any such Proceeding and making employees available on a mutually
convenient basis to provide additional information and explanation of any
material provided hereunder.  The Purchaser shall cause the Surviving
Corporation to (i) retain all books and records with respect to Tax matters
pertinent to the Company relating to any taxable period beginning before the
Closing Date until the expiration of the statute of limitations (and any
extensions thereof) of the respective taxable periods, and abide by all record
retention agreements entered into with any taxing authority, and (ii) give the
Shareholder Representative reasonable written notice before transferring,
destroying or discarding any such books and records and, if the Shareholder
Representative so requests, the Company shall allow the Shareholder
Representative to take possession of such books and records.  This Section 9.03
supersedes any conflicting terms set forth in Section 7.01.

 

(b)           The Purchaser and the Shareholder Representative, upon request,
shall use their commercially reasonable efforts to obtain any certificate or
other document from any Person as may be necessary to mitigate, reduce or
eliminate any Tax that could be imposed (including, but not limited to, with
respect to the Transactions).

 

(c)           The Purchaser and the Shareholder Representative, upon request,
shall provide each other with all information that may be required to report
pursuant to Sections 6043 or 6043A of the Code and all Treasury Regulations
promulgated thereunder.

 

9.04        Transfer Taxes.  The Shareholders and the Purchaser each shall bear
50% of all excise, sales, transfer, documentary, filing, recordation and other
similar Taxes, levies, fees and charges, if any (including all real estate
transfer Taxes and conveyance and recording fees, if any), that may be imposed
upon, or payable or collectible or incurred in connection with, this Agreement
and the Transactions.  The Purchaser shall cooperate with the Shareholder
Representative as to the filing of any necessary documentation and Tax Returns
with respect to such Taxes.

 

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9.05        Contests.  If any Governmental Authority asserts a claim, makes an
assessment or otherwise disputes or affects the Tax reporting position of the
Company for any Pre-Closing Tax Period or for a Straddle Period, the Purchaser
shall, within ten days following receipt by the Purchaser or the Surviving
Corporation of notice thereof, provide written notice thereof to the Shareholder
Representative.  The Shareholder Representative shall have the right to
represent and control the interests of the Company in any Tax audit or
administrative or court action, suit, claim, investigation, review or other
judicial or administrative proceeding, at law or in equity, before or by any
Governmental Authority or arbitration panel (a “Tax Contest”) relating to the
Pre-Closing Tax Period and to employ counsel of the Shareholder Representative’s
choice; provided, however, that with respect to any such Tax Contest that may
adversely affect the Surviving Corporation with respect to Taxes for any period
after the Closing Date (the “Post-Closing Tax Period”), (a) the Purchaser shall
have the right, at its own expense, to participate in, and consult with the
Shareholder Representative regarding, any such Tax Contest and (b) any
settlement or other disposition of any such Tax Contest may only be with the
prior written consent of the Purchaser, which consent will not be unreasonably
withheld, conditioned or delayed.  The Purchaser and the Shareholder
Representative will jointly control any Tax Contest relating to a Straddle
Period at their own expense, and any settlement or other disposition of any such
Tax Contest may only be made with the written consent of both the Shareholder
Representative and the Purchaser, which consent will not be unreasonably
withheld, conditioned or delayed.

 

9.06        Amendments.  The Purchaser will not, and will not allow the
Surviving Corporation to, (a) make or amend any Tax Return, or make or amend any
claim, disclaimer or election in respect of Taxes, (b) surrender any right to
claim a refund of Taxes, (c) consent to any extension or waiver of the
limitations period applicable to any Tax claim or assessment or (d) take any
other similar action relating to the filing of any Tax Return or the payment or
refund of any Tax with respect to any Pre-Closing Tax Period or Straddle Period,
without the prior written consent of the Shareholder Representative, which
consent shall not be unreasonably withheld, conditioned or delayed.  The
Purchaser will not change an annual accounting period, or adopt or change any
accounting method or file concerning the Company, with respect to any Tax Return
for a Pre-Closing Tax Period or Straddle Period without the prior written
consent of the Shareholder Representative, which consent shall not be
unreasonably withheld, conditioned or delayed.

 

9.07        Refunds.  Any refund of, or credit against future obligations for,
Taxes (including any interest with respect thereto) attributable to any
Pre-Closing Tax Period or the portion of any Straddle Period ending on the
Closing Date shall be the property of the Shareholders to the extent such refund
is not reflected as an asset in the Final Closing Working Capital or has been
funded by the Purchaser pursuant to Section 9.01, and if received by the
Purchaser, the Surviving Corporation or any of their Affiliates, shall be paid
promptly to the Shareholders based on their respective Pro Rata Shares.

 

9.08        Section 338(h)(10).

 

(a)           For federal income tax purposes (and for corresponding state
corporate income or franchise tax purposes, to the extent permissible), the
Shareholders and the Purchaser will jointly elect to treat the Merger as a
deemed sale of the assets of the Company to the

 

38

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Purchaser in accordance with Section 338(h)(10) of the Code (and any
corresponding elections under state and/or local tax law, collectively, a
“Section 338(h)(10) Election”).

 

(b)           The Purchaser shall pay each Shareholder by wire transfer his Pro
Rata Share of the Section 338 Amount (i) within ten days after the Section 338
Amount becomes final pursuant to Section 9.08(c) and (ii) any increase to the
Section 338 Amount that occurs thereafter within ten days after such amount
becomes final. The “Section 338 Amount” equals the sum of (i) the difference
(the “Section 338 Tax Amount”) between (a) the Shareholders’ Tax Liability
giving effect to the Section 338(h)(10) Election, and (b) the Shareholders’ Tax
Liability assuming the Section 338(h)(10) Election is not made, plus (ii) an
amount equal to the Shareholders’ reasonable costs and expenses arising from or
related to the Section 338(h)(10) Election (including the reasonable costs and
expenses of the Shareholder Representative’s Representative to evaluate and
advise the Shareholder Representative, and negotiate and prepare documents
(including this Agreement) on behalf of the Shareholders, with respect to the
Section 338(h)(10) Election, compute incremental Tax Liability of the
Shareholders arising therefrom or related thereto and to confirm that the
Shareholders will not incur other adverse consequences relating thereto) (the
amounts described in this clause (ii) collectively referred to as the
“Section 338 Expenses”), plus (iii) additional payments (the “Gross Up Tax
Amounts”) equal to any Tax Liability incurred by the Shareholders arising from
receipt of the Section 338 Tax Amount, the Section 338 Expenses and all Gross Up
Tax Amounts, sufficient such that after payment of the Section 338 Tax Amount,
the Section 338 Expenses and all Tax liabilities incurred by the Shareholders
from receipt of the Section 338 Tax Amount, the Section 338 Expenses and the
Gross Up Tax Amounts, the Shareholders retain the same amount of net proceeds
arising out of the Transactions as the Shareholders would have retained but for
the Section 338(h)(10) Election.  For purposes of this Section 9.08(b), the Tax
rate applicable to each Shareholder shall be the maximum marginal federal income
Tax rate applicable to an individual resident of Texas taking into consideration
the character of the income in question.

 

(c)           Within 60 days after the Closing Date, the Shareholder
Representative shall deliver or cause to be delivered to the Purchaser its
calculation of the Section 338 Amount (the “Shareholder Representative’s 338
Calculation”). Within 30 days after receipt of the Shareholder Representative’s
338 Calculation, the Purchaser shall either (i) accept in writing the
Shareholder Representative’s 338 Calculation, or (ii) provide the Shareholder
Representative with the Purchaser’s alternate calculation of the Section 338
Amount (the “Purchaser’s 338 Calculation”).  The Purchaser’s failure to provide
the Purchaser’s 338 Calculation to the Shareholder Representative in compliance
with clause (ii) of the previous sentence shall be deemed acceptance of the
Shareholder Representative’s 338 Calculation by the Purchaser.  If and promptly
after the Purchaser timely provides the Purchaser’s 338 Calculation to the
Shareholder Representative, the Parties shall in good faith seek to resolve the
differences between the Shareholder Representative’s 338 Calculation and the
Purchaser’s 338 Calculation.  If within 30 days after receipt by the Shareholder
Representative of the Purchaser’s 338 Calculation, the Parties have been unable
to reach full agreement, the Parties shall engage the Resolving Accountant and
direct that the Resolving Accountant determine, within 30 days thereafter,
whether the Shareholder Representative’s 338 Calculation or the Purchaser’s 338
Calculation is more accurate, and such determination shall be final and binding
on the Parties.  The fees, costs, and expenses of the Resolving Accountant and
the expense of participating in (including any attorneys’ fees related thereto)
and resolving this matter shall be borne by the Shareholders if the

 

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Purchaser’s 338 Calculation is selected by the Resolving Accountant as most
accurate and shall be borne by the Purchaser if the Shareholder Representative’s
338 Calculation is selected by the Resolving Accountant as most accurate.  If
the Resolving Accountant does not determine one to be more accurate than the
other, the Shareholders and the Purchaser each shall pay 50% of the fees, costs
and expenses of the Resolving Accountant.  Any such amounts owed by the
Shareholders shall be paid from the Indemnity Escrow Funds. If the Indemnity
Escrow Funds are insufficient to pay any amount owed to the Purchaser under
Section 9.08, any excess amount shall be paid to the Purchaser directly from
each Shareholder (on a joint and several basis) based on each Shareholder’s Pro
Rata Share of such obligation.

 

(d)           The Parties shall take or cause to be taken all actions necessary
to file, on a timely basis, the election prescribed pursuant to Treasury
Regulations Section 1.338(h)(10)-1(c)(3), and to refrain from taking any action
in connection with the filing of the federal (and any applicable state) income
and franchise Tax Returns of the Company or otherwise which would be
inconsistent with or jeopardize the Section 338(h)(10) Election.  Within ten
days before the Closing Date, the Shareholder Representative shall prepare IRS
Form 8023 and any equivalent state forms required to make the
Section 338(h)(10) Election and shall provide those forms to the Purchaser for
review and approval, which approval shall not be unreasonable withhold, delayed
or conditioned (which approval shall occur no later than two days before the
Closing Date). The Shareholders and the Purchaser shall execute and timely file
such election forms.

 

(e)           It is understood and agreed by the Parties that (i) the Company’s
S corporation status shall continue through the end of the Closing Date,
(ii) there shall be an S corporation tax year ending at the end of the Closing
Date and a C corporation tax year commencing on the day following the Closing
Date, as specified in the Treasury Regulations promulgated under
Section 338(h)(10) of the Code, and (iii) the taxable income or loss of the
Company shall be allocated for 2014 between the S corporation taxable year and
the C corporation taxable year by using the closing of the books method
effective on the close of business on the Closing Date, with the deemed asset
sale included on the S corporation year return.

 

(f)            The Merger Consideration, the liabilities of the Company as of
the Closing Date and all other relevant items or adjustments, as determined for
federal income Tax purposes (collectively, the “Total Allocable Price”), shall
be allocated among the assets of the Company existing as of the Closing Date in
accordance with the methodology set forth on Schedule 9.08(f) (the
“Allocation”).  Such Allocation reflects the fair market value of such assets in
accordance with Section 1060 of the Code (and any similar provision of state or
local law, as appropriate).  Any amount owed pursuant to Section 2.03(e),
Section 2.04, Section 2.05 or Section 9.08 shall be treated by the Parties and
the Shareholders for tax purposes as adjustments to the Merger Consideration and
shall be treated by the Parties and the Shareholders as adjustments to the
allocation of the Total Allocable Price to goodwill.  The Total Allocable Price,
excluding the Earn-Out Payment, shall be allocated to the assets as set forth on
Schedule 9.08(f), and the Earn-Out Payment (and any payments made thereunder) is
consideration payable for, and shall be allocated solely to, the Company’s
goodwill. The Shareholder Representative and the Purchaser will act in good
faith and reasonably cooperate with each other to agree on the final Allocation
of the Total Allocable Price on or before the 30th day after the Final Closing
Working Capital is

 

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finally determined under Section 2.03 consistent with the methodology set forth
on Schedule 9.08(f). Any adjustments to the Total Allocable Price shall likewise
be allocated among the Company’s assets consistent with Schedule 9.08(f). The
Shareholder Representative and the Purchaser shall timely file IRS Form 8883 in
accordance with the Allocation. The Shareholder Representative and the Purchaser
shall report the Transactions on all Tax Returns filed by the Parties (and the
Shareholders) in a manner consistent with the Allocation, and no Party (or any
Shareholder) shall take any position for Tax purposes (whether in audits, Tax
Returns or otherwise) that is inconsistent with the Allocation, unless otherwise
required by applicable law.

 

(g)           For federal, state and local income and franchise tax purposes,
the Merger Sub will be disregarded, and the Merger will be treated as a purchase
by the Purchaser of all of the Common Stock directly from the Shareholders.

 

9.09        Post-Closing Date Activities.  If and to the extent the Purchaser
causes the Surviving Corporation or its Subsidiary to engage in any transaction
(other than in the ordinary course of the Surviving Corporation’s or its
Subsidiary’s business or pursuant to this Agreement) between the Effective Time
and 11:59 p.m. on the Closing Date, the Purchaser shall be solely responsible
for, and shall indemnify the Shareholders from and against, any Taxes relating
thereto or arising therefrom.

 

ARTICLE X
INDEMNIFICATION

 

10.01      Indemnification and Payment of Damages by the Shareholders.  Subject
to this Article X, from and after the Closing, the Shareholders will indemnify,
defend and hold harmless the Purchaser, the Merger Sub, and their respective
Representatives and Affiliates (collectively, the “Purchaser Indemnified
Persons”), from, against and in respect of any and all Damages sustained or
incurred by any Purchaser Indemnified Person to the extent relating to,
resulting from or arising out of:

 

(a)           any breach of or inaccuracy in any representation or warranty made
by the Company in this Agreement;

 

(b)           any breach or nonfulfillment by the Company of any covenant or
obligation of the Company in this Agreement;

 

(c)           any claims or Proceedings resulting from, arising out of, relating
to or caused by any Liability of the Purchaser and the Merger Sub for any
matters set forth in Article IX for which the Shareholders are responsible;

 

(d)           any failure of the Company to collect the full amount of the
Indemnified Receivables outstanding as of the Closing Date within the first 12
months after the Closing Date (or, in the case of retainage, within 24 months
after the Closing Date), in each case, net of any reserves in the Final Closing
Working Capital;

 

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(e)           any payments in respect of Dissenting Stock in excess of the
amount that otherwise would have been payable or issuable in respect of such
shares under this Agreement if such shares were not Dissenting Stock;

 

(f)            any Indebtedness outstanding and unpaid as of the Closing; or

 

(g)           any Transaction Expenses not set forth on the schedule delivered
pursuant to Section 2.02(c).

 

10.02      Indemnification by the Purchaser.  Subject to this Article X, from
and after the Closing, the Purchaser and the Merger Sub will indemnify, defend
and hold harmless the Shareholders (including the Shareholder Representative in
his capacity as such) and their Affiliates, and the Representatives of the
Shareholders (including the Shareholder Representative in his capacity as such)
and their Affiliates (collectively, the “Shareholder Indemnified Persons”),
from, against and in respect of any and all Damages sustained or incurred by any
Shareholder Indemnified Person to the extent relating to, resulting from or
arising out of:

 

(a)           any breach of or inaccuracy in any representation or warranty made
by the Purchaser or the Merger Sub in this Agreement;

 

(b)           any breach or nonfulfillment by the Purchaser or the Merger Sub of
any covenant or obligation of the Purchaser or the Merger Sub in this Agreement;
or

 

(c)           any claims or Proceedings resulting from, arising out of, relating
to or caused by any Liability of the Shareholders for any matters set forth in
Article IX for which the Purchaser is responsible.

 

10.03      Claims.  In order for the Purchaser Indemnified Persons or the
Shareholder Indemnified Persons (as the case may be, the “Indemnified Persons”)
to be entitled to any indemnification under this Agreement in respect of a claim
that is not a Non-Party Claim, the Indemnified Persons shall give written notice
(the “Claim Notice”), promptly after the Indemnified Persons become aware of any
fact, condition or event which may give rise to Damages for which
indemnification may be sought under this Article X, to (a) the Shareholder
Representative, in the case of indemnification pursuant to Section 10.01, and
(b) the Purchaser, in the case of indemnification pursuant to Section 10.02. 
Within ten days after receipt of the Claim Notice, which shall include
reasonable documentation setting forth a description of the matters entitling
the Indemnified Persons to indemnity hereunder, the Persons required to
indemnify the Indemnified Persons under this Article X (the “Indemnifying
Persons”), at no cost or expense to the Indemnified Persons, shall diligently
commence resolution of such matters in a manner reasonably acceptable to the
Indemnified Persons and shall diligently and timely prosecute such resolution to
completion.  If the Indemnifying Persons, within ten days after their receipt of
the Claim Notice (or such shorter time as may be necessary under the
circumstances), fail to diligently commence resolution of such matters in a
manner reasonably acceptable to the Indemnified Persons, the Indemnified Persons
shall have the right to undertake all appropriate and reasonable actions to
resolve or otherwise address such matters at the sole expense of the
Indemnifying Persons to the extent such matters are subject to indemnification
under this Agreement.  With respect to those claims that the Indemnifying
Persons are not disputing in

 

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good faith and that may be satisfied by payment of a liquidated sum of money,
including claims for reimbursement of expenses incurred in connection with any
circumstances entitling the Indemnified Persons to indemnity hereunder, the
Indemnifying Persons shall pay the full amount so claimed to the extent
supported by reasonable documentation within 15 days following such resolution. 
If the Indemnifying Persons disputes any portion of the claimed Liability in
connection with such claim, the Indemnifying Persons shall pay any undisputed
part of such Liability, and Indemnifying Persons and the Indemnified Persons
shall have 30 days to resolve any remaining dispute.  If any Proceeding is
commenced between the Indemnifying Persons and any Indemnified Person, the
prevailing party in such Proceeding shall be entitled to recover all reasonable
costs and expenses incurred in connection with such Proceeding, including
reasonable attorneys’ fees.

 

10.04      Notice and Defense of Certain Proceedings.  Subject to Section 9.05,
in order for the Indemnified Persons to be entitled to any indemnification under
this Agreement in respect of a claim, suit or demand (regardless of whether a
Proceeding has been filed or instituted) made by any Person against an
Indemnified Person (a “Non-Party Claim”) in respect of which indemnity may be
sought under this Article X from the Indemnifying Persons, the Indemnified
Person shall, within three Business Days upon first acquiring knowledge of the
fact, condition or event which may give rise to a Non-Party Claim give written
notice of the Non-Party Claim (and, in any event, immediately upon acquiring
such knowledge if necessary to avoid a default judgment or other material
adverse consequence) (the “Proceeding Notice”) to (a) the Shareholder
Representative, in the case of indemnification pursuant to Section 10.01 and
(b) the Purchaser, in the case of indemnification pursuant to Section 10.02. 
The Indemnifying Person may assume the defense of the Non-Party Claim, including
the employment of competent counsel and the payment of all expenses, provided
that the Indemnifying Person gives written notice to the Indemnified Person
within 15 days after its receipt of the Proceeding Notice that the Indemnifying
Person will indemnify the Indemnified Person from and against the entirety of
any and all Damages that the Indemnified Person may suffer resulting from,
arising out of, relating to, in the nature of or caused by the Non-Party Claim. 
In no event shall any Indemnified Person be required to make any expenditure or
bring any cause of action to enforce the Indemnifying Person’s obligations and
Liability under and pursuant to the indemnifications set forth in this
Article X.  The Indemnified Person shall have the right to employ separate
counsel in respect of the Non-Party Claim and to participate in the defense
thereof, but the fees and expenses of such one counsel shall be at the sole
expense of the Indemnified Person; provided, that the Indemnifying Persons shall
pay or reimburse the fees of such counsel if the Indemnified Person, in the
opinion of counsel, determines that there exist actual or potential conflicts of
interest that make representation by the same counsel inappropriate.  If the
Indemnifying Person, within 15 days after its receipt of the Proceeding Notice,
fails to assume the defense thereof, the Indemnified Person shall have the right
to undertake the defense, compromise or settlement of the Non-Party Claim for
the account and at the expense of the Indemnifying Person, subject to the right
of the Indemnifying Person to assume the defense of the Non-Party Claim with
competent counsel at any time before the settlement, compromise or final
determination thereof. If the Indemnifying Person assumes the defense of the
Non-Party Claim, the Indemnifying Person shall not, without the Indemnified
Person’s prior written consent (such consent not to be unreasonably withheld,
conditioned or delayed), settle or compromise the Non-Party Claim or consent to
the entry of any judgment with respect to the Non-Party Claim unless such
settlement, compromise or judgment (i) requires solely the payment of money
damages by the Indemnifying

 

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Person and such damages are paid by the Indemnifying Person, (ii) includes as an
unconditional term thereof the release by the claimant or the plaintiff of the
Indemnified Person from all liability in respect of the Non-Party Claim and
(iii) involves no finding or admission of any liability of the Indemnified
Person or violation of any Legal Requirement or the rights of any Person and no
effect on any other claims that may be made against the Indemnifying Person.  If
the Indemnifying Person assumes the defense of the Non-Party Claim, the
Indemnified Person shall not be entitled to recovery from the Indemnifying
Person with respect to any compromise or settlement thereof effected by the
Indemnified Person without the prior written consent of the Indemnifying Person
unless the Indemnified Person has reassumed the defense of the Non-Party Claim
pursuant to the provisions of this Section 10.04.

 

10.05      Payment; Interest.  Subject to this Article X, the Indemnifying
Person shall make any payment required to be made under this Article X in cash
at such time as the claim becomes undisputed or is resolved by a final,
non-appealable judicial order (the “Due Date”).  Any Damages required to be paid
by an Indemnifying Person under this Article X that are not paid within ten
Business Days following the Due Date shall thereafter be deemed delinquent, and
the Indemnifying Person shall pay to the Indemnified Person immediately upon
demand, interest at the rate of four percent (4%) per annum, compounded
quarterly, not to exceed the maximum non-usurious rate allowed by applicable
law, from the date such payment becomes delinquent to the date such delinquent
sums is paid.

 

10.06      Limitations.  Notwithstanding anything to the contrary contained in
this Agreement or in any certificate, schedule, statement, document or
instrument furnished hereunder, the Indemnifying Persons’ indemnification
obligations pursuant to this Article X are limited as set forth in this
Section 10.06:

 

(a)           Payments from Indemnity Escrow Funds.  If any Purchaser
Indemnified Person is entitled to indemnification pursuant to this Article X,
the amount of Damages, if any, for which such Purchaser Indemnified Person is
entitled to indemnification (together with any interest thereon) shall be paid
from the Indemnity Escrow Funds, which shall be the sole and exclusive source of
recovery for any amounts owing to the Purchaser Indemnified Persons pursuant to
this Article X until such time that the Indemnity Escrow Funds are exhausted in
accordance with the terms of this Agreement and the Escrow Agreement.  If the
full amount of the Indemnity Escrow Funds is paid to the Purchaser Indemnified
Persons, any additional liability of the Shareholders under this Article X may
be satisfied by any Purchaser Indemnified Person by offset of amounts not yet
paid by the Purchaser under this Agreement (including amounts that may be
payable to or for the Shareholders pursuant to Article II or IX, but excluding
any compensation or any other employment benefits owed to any of the
Shareholders), resulting in a reduction thereto, and the Purchaser may retain a
reasonable portion of any such amounts sufficient to satisfy pending
indemnification claims until final resolution of such indemnification claims),
in all cases subject to the limits set forth in this Article X.

 

(b)           Pro Rata Share; Several Liability.

 

(i)            Each Shareholder’s aggregate liability hereunder shall not exceed
an amount equal to 60% of the aggregate of such Shareholder’s Pro Rata Share of
the Merger

 

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Consideration actually received by such Shareholder, provided that this
limitation shall not apply to the type of claims set forth in (a) on Schedule
10.06(d).

 

(ii)           To the extent the Company breaches the representations and
warranties in Section 4.02 (Capitalization) due to the actions or omissions of
one or more Shareholders, or one or more Shareholders breaches a covenant set
forth in Article XII, the Purchaser Indemnified Persons shall seek, and shall be
entitled to payment of, any Damages solely from such Shareholder or
Shareholders, who shall be severally (and not jointly or jointly and severally)
liable, and the provisions of this Article X referencing the “Indemnifying
Persons” shall be deemed to include only such Shareholder or Shareholders (on a
several basis), and no other Person; provided that the foregoing limitation as
it relates to Section 4.02 (Capitalization) shall not apply to shares held by
the Company in treasury.

 

(c)                                  Basket.

 

(i)            The Purchaser Indemnified Persons shall not be entitled to
indemnification pursuant to this Article X unless and until the aggregate of all
Damages with respect to any matters set forth in Section 10.01(a) exceeds the
amount set forth on Schedule 10.06(c) (the “Basket Amount”), in which case the
Indemnifying Persons shall be liable only to the extent such Damages exceed the
Basket Amount; provided, however, that the Basket Amount shall not be applicable
to claims with respect to the representations and warranties set forth on
Schedule 10.06(c).

 

(ii)           The Shareholder Indemnified Persons shall not be entitled to
indemnification pursuant to this Article X unless and until the aggregate of all
Damages with respect to any matters set forth in Section 10.02(a) exceeds the
Basket Amount, in which case the Indemnifying Persons shall be liable only to
the extent such Damages exceed the Basket Amount; provided, however, that the
Basket Amount shall not be applicable to claims with respect to the
representations and warranties set forth on Schedule 10.06(c).

 

(d)                                 Cap.  Subject to Section 10.06(b), the
Shareholders’ collective liability pursuant to Section 10.01(a) shall not
exceed, in the aggregate, the applicable amount set forth on
Schedule 10.06(d) (the “Cap”); provided, however, that the Cap shall not be
applicable as and to the extent set forth on Schedule 10.06(d).

 

(e)                                  Survival.  The representations and
warranties of the Parties contained in this Agreement shall continue in full
force and effect after the Closing but shall terminate on, and no claims for
indemnification under this Article X with respect to such representations and
warranties shall be asserted after, the second anniversary of the Closing Date,
except that:

 

(i)            the representations and warranties contained in Section 4.01
(Organization and Qualification), Section 4.02 (Capitalization), Section 4.03
(Authority), Section 5.01 (Organization and Corporate Power), Section 5.02
(Authority), Section 5.05 (Financing) and Section 5.06 (Independent
Investigation), and the indemnification obligations under this Article X with
respect to such representations and warranties, shall continue without
termination;

 

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(ii)           the representations and warranties contained in Section 4.11 (Tax
Matters), Section 4.12 (Employee Benefit Plans) and Section 4.19 (Environmental
Matters), and the indemnification obligations under this Article X with respect
to such representations and warranties, shall terminate on, and no claims for
indemnification under this Article X with respect to such representations and
warranties shall be asserted after, the expiration of the statute of limitations
applicable to the respective claim;

 

(iii)          the representations and warranties contained in Section 4.8
(Accounts Receivable) and Section 4.18 (Intellectual Property), and the
indemnification obligations under this Article X with respect to such
representations and warranties, shall terminate on, and no claims for
indemnification under this Article X with respect to such representations and
warranties shall be asserted after, the fifth anniversary of the Closing Date;
and

 

(iv)          claims in respect of fraud or illegal acts, and any
indemnification obligations under this Article X corresponding thereto, shall
terminate on, and no claims for indemnification with respect thereto shall be
asserted after, the expiration of the statute of limitations applicable to such
claim.

 

All covenants and agreements of the Parties and the Shareholders contained in
the provisions of this Agreement shall survive the Closing indefinitely or for
the period expressly set forth therein.

 

(f)                                   Insurance; Tax Effect; Reserves.

 

(i)            The amount of Damages that the Purchaser Indemnified Persons
shall be entitled to recover under this Article X shall be determined (a) net of
any amounts paid by any third party insurance carrier with respect to such
Damages, net of any increase in insurance premiums or other costs, including
deductibles, incurred during the one-year period following the claim resolution
date solely as a result of recovering such insurance amounts, and (b) after
taking into account any Tax benefit realized by the Purchaser Indemnified
Persons with regard to such Damages.  The Purchaser and the Surviving
Corporation shall use, and shall cause the Indemnified Persons to use, their
commercially reasonable efforts to maximize the amount of insurance proceeds and
Tax benefits available in respect of such Damages.

 

(ii)           If an insurance recovery, Tax benefit or other recovery is
received by any Purchaser Indemnified Person with respect to any Damages for
which any such Person has received indemnification payments hereunder, then a
refund equal to the aggregate amount of the recovery shall be made, in cash in
immediately available funds, promptly to the Indemnifying Persons who made such
indemnification payments to such Purchaser Indemnified Person.

 

(iii)          The amount of Damages owed by any Indemnifying Person pursuant to
this Article X shall be reduced by the amount of reserves for such Damages taken
into account in the Final Closing Working Capital (including any Tax reserves
contemplated by Article IX).

 

(g)                                  Limitation on Damages.  No claim hereunder
shall be made or awarded for, and in no event shall any Indemnifying Person be
liable to any Indemnified Person under

 

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this Agreement for, and the definition of “Damages” hereunder shall exclude, any
(i) exemplary, punitive, remote, speculative, consequential, special or
incidental damages, and (ii) Damages that arise solely from a change after the
Closing of Legal Requirements or accounting methodology that is required by
GAAP.

 

(h)                                 Mitigation; Related Matters.

 

(i)            Without limiting the provisions of Section 10.06(f), each
Indemnified Person shall take commercially reasonable efforts to mitigate all
Damages (including by seeking recovery under all available insurance policies
and seeking Tax refunds) upon and after becoming aware of any event that could
reasonably be expected to give rise to Damages that are or may be indemnifiable
under this Article X.  No Indemnifying Person shall be liable for Damages
incurred by an Indemnified Person to the extent such Damages result from or
arise out of an Indemnified Person’s failure to use commercially reasonable
efforts to mitigate Damages in accordance with the immediately preceding
sentence.

 

(ii)           The Indemnified Persons shall not be entitled to recover any
Damages relating to any matter arising under one provision of this Agreement if
and to the extent that such Indemnified Persons recovered amounts in respect of
Damages with respect to such matter pursuant to any other provision of this
Agreement (including Article II); provided, however, that nothing herein will
preclude an Indemnified Person from presenting multiple theories of liability
with respect to a claim for Damages hereunder or with respect to the resolution
thereof.

 

10.07      Exclusive Remedy.  NOTWITHSTANDING ANY PROVISION HEREIN TO THE
CONTRARY, AFTER THE CLOSING, EXCEPT IN INSTANCES OF FRAUD AND ILLEGAL ACTS,
(a) THE PROVISIONS SET FORTH IN THIS ARTICLE X SHALL BE THE SOLE AND EXCLUSIVE
RIGHTS, OBLIGATIONS AND REMEDIES OF THE PARTIES WITH RESPECT TO THE RECOVERY OF
DAMAGES WITH RESPECT TO THIS AGREEMENT, THE EVENTS GIVING RISE THERETO AND THE
TRANSACTIONS AND (b) NO PARTY SHALL HAVE ANY RIGHTS AGAINST THE OTHER PARTIES
(OR THEIR AFFILIATES), OR THE SHAREHOLDERS AND THEIR AFFILIATES, OTHER THAN AS
IS EXPRESSLY PROVIDED IN THIS ARTICLE X, WITH RESPECT TO THE RECOVERY OF DAMAGES
WITH RESPECT TO THIS AGREEMENT, THE EVENTS GIVING RISE THERETO AND THE
TRANSACTIONS; PROVIDED THAT THE FOREGOING LIMITATIONS SHALL NOT APPLY TO DAMAGES
RESULTING FROM BREACHES OF ARTICLE XII.

 

ARTICLE XI
SHAREHOLDER REPRESENTATIVE

 

11.01      Appointment.  By the approval of this Agreement and the Merger
pursuant to the TBOC, the Shareholders hereby irrevocably appoint the
Shareholder Representative as the representative, agent, proxy and
attorney-in-fact for all of the Shareholders for all purposes under this
Agreement, including the full power and authority on the Shareholders’ behalf,
to (a) consummate the Transactions, including the execution and delivery of the
Escrow Agreement and the other agreements, instruments and documents
contemplated hereby or executed in

 

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connection herewith, (b) negotiate disputes arising under, or relating to, this
Agreement, the Escrow Agreement and the other agreements, instruments and
documents contemplated hereby or executed in connection herewith, (c) receive
and disburse to the Shareholders any funds or assets received on behalf of the
Shareholders under this Agreement, the Escrow Agreement or otherwise,
(d) maintain or withhold any amounts received on behalf of the Shareholders
pursuant to this Agreement, the Escrow Agreement or otherwise, or offset such
amounts against any other amounts, to satisfy any and all obligations or
liabilities incurred by the Shareholder Representative in the performance of its
duties hereunder, including to use and expend the Shareholder Representative
Escrow Funds in the Shareholder Representative’s sole discretion to fulfill its
duties hereunder or to provide additional funds for the Shareholder
Representative Escrow Account (and the Shareholder Representative is hereby
authorized to direct the Purchaser to make payments to the Shareholder
Representative Escrow Account in accordance with the foregoing) and to retain
such Shareholder Representative Escrow Funds in accordance with this Agreement
and the Escrow Agreement, (e) execute and deliver any amendment or waiver to
this Agreement, the Escrow Agreement and the other agreements, instruments and
documents contemplated hereby or executed in connection herewith (without the
prior approval of the Shareholders) and (f) take all other actions to be taken
by or on behalf of the Shareholders in connection with this Agreement, the
Escrow Agreement and the other agreements, instruments and documents
contemplated hereby or executed in connection herewith.  The Shareholders, by
approving this Agreement, further agree that such agency and proxy are coupled
with an interest, are therefore irrevocable without the consent of the
Shareholder Representative and shall survive a Shareholder’s death, incapacity,
illness, bankruptcy, dissolution, termination, liquidation or other inability to
act or the occurrence of any other event.  All decisions and actions by the
Shareholder Representative shall be binding upon all of the Shareholders, and no
Shareholder shall have the right to object, dissent, protest or otherwise
contest the same.  The Shareholder Representative shall have no duties or
obligations hereunder except those forth herein and such duties and obligations
shall be determined solely by the express provisions of this Agreement.

 

11.02      Certain Payments; Expenses.  The Shareholder Representative shall be
entitled to receive and use the Shareholder Representative Escrow Funds for the
purpose of paying any and all (a) amounts due by the Shareholders to the
Purchaser under this Agreement or otherwise in connection with the Transactions
that are not paid from the Indemnity Escrow Agreement (notwithstanding any
provision herein to the contrary requiring such amounts to be paid directly by
the Shareholders to the Purchaser) and (b) expenses, charges and liabilities,
including attorneys’ fees and fees of other professionals incurred by the
Shareholder Representative in the performance or discharge of its duties, rights
and obligations under this Agreement.

 

11.03      Indemnification.  Each Shareholder, severally, for itself only (and
not jointly or jointly and severally), shall indemnify and hold harmless the
Shareholder Representative against all expenses (including reasonable attorneys’
fees), judgments, fines and amounts incurred by the Shareholder Representative
in connection with any Proceeding to which the Shareholder Representative is
made a party by reason of the fact it is or was acting as the Shareholder
Representative pursuant to the terms of this Agreement.

 

11.04      Liability.  Neither the Shareholder Representative nor any of its
Representatives shall incur any liability to any Shareholder by virtue of the
failure or refusal of the Shareholder Representative for any reason to
consummate the Transactions or relating to the performance of

 

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its duties hereunder, except for actions or omissions constituting actual fraud
or bad faith.  The Shareholder Representative shall have no liability in respect
of any Proceeding brought against the Shareholder Representative by any
Shareholder if the Shareholder Representative took or omitted taking any action
in good faith, and the Shareholder Representative shall be entitled to use the
Shareholder Representative Escrow Funds to pay all such expenses, fees,
judgments, fines and amounts incurred by it.

 

11.05      Distribution.  Upon final resolution of all indemnification
obligations (including pursuant to Article X and the Escrow Agreement), and all
other liabilities and obligations, of the Shareholders (including the
Shareholder Representative) and full reimbursement of all obligations or
liabilities incurred by the Shareholder Representative in the performance of its
duties hereunder, the Shareholder Representative shall distribute all funds held
by it on behalf of the Shareholders to the Shareholders, based each
Shareholder’s respective Pro Rata Share.

 

11.06      Successor.  The Shareholder Representative may resign at any time by
submitting a written resignation to the Purchaser.  Upon the death, physical,
mental incapacity or resignation of the initial Shareholder Representative,
Scott Brady shall be the successor Shareholder Representative.  Upon the death,
physical or mental incapacity of Scott Brady or if Scott Brady resigns or
otherwise ceases to serve as successor Shareholder Representative, a successor
Shareholder Representative shall be elected by the Shareholders (or their
representative heirs, successors and assignees) who held of record a majority of
the outstanding shares of Common Stock as of immediately before the Effective
Time, with each Shareholder to be given a vote equal its Pro Rata Share pursuant
to a procedure to be mutually agreed upon among the Shareholders.  The
Shareholders shall cause to be delivered to the Purchaser prompt written notice
of such election of a successor Shareholder Representative.  Pending the
election of a successor Shareholder Representative, the two Shareholders (or
their heirs, successors or assigns) having the greatest aggregate Pro Rata Share
shall act as the interim Shareholder Representative.  Each interim and successor
Shareholder Representative shall have all the power, authority, rights and
privileges conferred by this Agreement upon the original Shareholder
Representative, and the term “Shareholder Representative” as used herein shall
be deemed to include any interim or successor Shareholder Representative.  Any
successor Shareholder Representative shall, in writing, accept such appointment
and agree to be bound by the terms of this Agreement.  The document evidencing
such appointment and agreement shall be delivered to the Shareholders and the
Purchaser.

 

11.07      Contribution.  If any amount is owed by the Shareholders to the
Purchaser or the Shareholder Representative pursuant to this Agreement or the
Escrow Agreement (the “Shareholder Amount”), and is not paid by delivery of
Indemnity Escrow Funds or Shareholder Representative Escrow Funds, each
Shareholder shall pay his Pro Rata Share of the Shareholder Amount as directed
by the Shareholder Representative.  If any Shareholder fails to pay his Pro Rata
Share of any Shareholder Amount (the “Defaulting Shareholder”), the other
Shareholders (the “Covering Shareholders”) shall pay the amount the Defaulting
Shareholder fails to pay (the “Shareholder Default Amount”), with each Covering
Shareholder paying a portion of the Shareholder Default Amount equal to (a) such
Covering Shareholder’s Pro Rata Share, divided by (b) the Pro Rata Share of all
Covering Shareholders in the aggregate.  Immediately upon demand, the Defaulting
Shareholder shall reimburse each Covering Shareholder for that portion of the
Shareholder Default Amount paid by such Covering Shareholder and otherwise
indemnify,

 

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reimburse and hold harmless such Covering Shareholder from and against any
Damages incurred by such Covering Shareholder as a result of the Defaulting
Shareholder’s failure to comply with the provisions of this Section 11.07.  All
payments pursuant to this Section 11.07 shall be made by wire transfer of
immediately available funds or by cashier’s check. Notwithstanding anything to
the contrary herein, this Section 11.07 shall in no event be construed to alter
or in any way limit the Purchaser’s rights, to indemnification or otherwise,
under this Agreement.

 

ARTICLE XII
CERTAIN SHAREHOLDER MATTERS

 

12.01      Noncompetition and Nonsolicitation.

 

(a)           Except as provided in Schedule 12.01, after the Effective Time and
until the anniversary of the Closing Date set forth besides each Shareholder’s
name on Schedule 3.01(i) (as applicable with respect to each Shareholder, the
“Non-compete Term”), each of the Shareholders listed in Schedule 12.01 (the
“Specified Shareholders”) shall not directly or indirectly conduct, engage in,
assist others with, knowingly render services (of an executive, marketing,
manufacturing, research and development, administrative, financial or consulting
nature) to, have an equity or profit interest in, or otherwise be an Affiliate
of, any business engaged in the business of HVAC, plumbing or mechanical
construction contracting, or provide service, within Texas, within 125 miles of
4375 Diplomacy Road, Fort Worth, Texas, or within 100 miles of anywhere else the
Company regularly does business, including Amarillo, Texas, unless such
Specified Shareholder is performing such otherwise prohibited work for or on
behalf of the Purchaser or its Affiliates.  Notwithstanding the immediately
preceding sentence, the Specified Shareholders, together with their Affiliates,
may be a passive investor owning, in the aggregate, no more than 2% of the
outstanding equity securities of any entity the equity securities of which are
listed on a national securities exchange.

 

(b)           During the Non-compete Term, the Specified Shareholders shall not,
and the Specified Shareholders shall use their reasonable commercial efforts to
cause each of their Affiliates not to, directly or indirectly solicit the
employment or services of, or (except in connection with performing their duties
to the Surviving Corporation) cause or attempt to cause to leave the employment
or services of, or otherwise recruit or hire, any employee of the Surviving
Corporation as of the Effective Time who continues his or her employment with
the Surviving Corporation after the Effective Time.

 

(c)           During the Non-compete Term, the Specified Shareholders shall not,
and the Specified Shareholders shall use their reasonable commercial efforts to
cause each of their Affiliates not to, directly or indirectly engage or
participate in any effort or act to induce any customer, supplier, associate,
employee, sales agent or independent contractor of, or other Person transacting
business with, the Surviving Corporation to terminate its relationship with or
reduce or cease doing business with the Surviving Corporation, or in any way
knowingly interfere with the relationship between any such Person and the
Surviving Corporation.

 

(d)           The damages that would be suffered by the Surviving Corporation
and the Purchaser as a result of any breach of the provisions of this
Section 12.01 may not be calculable and an award of a monetary judgment for such
a breach may be an inadequate remedy.

 

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Consequently, the Surviving Corporation and the Purchaser shall have the right,
in addition to any other rights they may have, to obtain, in any court of
competent jurisdiction, injunctive relief to restrain any breach or threatened
breach of any provision of this Section 12.01.  This remedy is in addition to
monetary damages for any Damages directly or indirectly suffered by the
Surviving Corporation or the Purchaser and reasonable attorneys’ fees and any
other relief available to the Surviving Corporation or the Purchaser.

 

(e)                                  If any court of competent jurisdiction
finally determines that the time period or the geographic scope of any covenant
set forth in this Section 12.01 is unreasonable or excessive and any such
covenant is ruled to be unenforceable by said court, the restrictions of this
Section 12.01 shall remain in full force and effect for the greatest time period
and within the greatest geographic area that would not render it unenforceable,
and each Party hereby consents to said court’s alteration of this Section 12.01
as necessary to render it enforceable.  The Parties intend that each of the
covenants in Sections 12.01(a), (b), (c) and (d) shall be deemed to be a
separate covenant.

 

(f)                                   The covenants contained in this
Section 12.01 are independent of any covenants of the Purchaser contained herein
or in any other document or instrument delivered in connection herewith or
pursuant hereto, and any breach by the Purchaser of any such covenant shall not
justify any breach by the Specified Shareholders of their covenants under this
Section 12.01.

 

(g)                                  The Non-compete Term as it applies in
Sections 12.01(a), (b) and (c) shall be computed by excluding from such
computation any time during which the Shareholders are in violation of any
provision of this Section 12.01.

 

12.02                 Confidential Information.

 

(a)                                 Except in response to legal process (where
the Shareholders have, to the extent permitted by applicable Legal Requirements,
promptly notified the Surviving Corporation so that it may seek appropriate
relief), effective at the Effective Time, the Shareholders shall not divulge,
furnish or make accessible to any non-Party or use in any way any (except in the
course and scope of employment by the Surviving Corporation) confidential or
secret knowledge or information of the Surviving Corporation, including trade
secrets, confidential or secret designs, processes, formulae, plans, devices or
material (whether or not patentable) directly or indirectly used in any aspect
of the business of the Surviving Corporation, any customer or supplier lists of
the Surviving Corporation, any confidential or secret development or research
work of the Surviving Corporation or any other confidential information or
secret aspects of the business of the Surviving Corporation, including with
respect to the Transactions or this Agreement itself.  The confidentiality
covenant in this Section 12.02 shall not apply to information that (a) is
generally available to the public on or after the Effective Time, other than as
a result of a disclosure not otherwise permissible under this Section 12.02,
(b) was independently developed by the Shareholder without use of the Surviving
Corporation’s confidential information or (c) became available to the
Shareholder on a non-confidential basis from a source other than the Surviving
Corporation or the Purchaser.

 

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(b)                                 Except in response to legal process (where
the Purchaser, the Merger Sub and their Representatives (the “Purchaser
Persons”) have, to the extent permitted by applicable Legal Requirements,
promptly notified the Shareholder Representative so that it may seek appropriate
relief on behalf of the Shareholders), effective at the Effective Time, the
Purchaser Persons shall not divulge, furnish or make accessible to any non-Party
or use in any way any confidential information, including with respect to the
Transactions or this Agreement itself.  The confidentiality covenant in this
Section 12.02(b) shall not apply to information that (a) is generally available
to the public on or after the Effective Time, other than as a result of a
disclosure not otherwise permissible under this Section 12.02(b), (b) was
independently developed by a Purchaser Person without use of a Shareholder’s
confidential information or (c) became available to the Purchaser Person on a
non-confidential basis from a source other than a Shareholder.

 

12.03                 Release.  At and as of the Effective Time, by their
approval of this Agreement, the Shareholders shall be deemed to have released
the Company and the Purchaser from any and all claims of the Shareholders
against the Company and the Purchaser, and any and all obligations of the
Company and the Purchaser to the Shareholders; provided, that the foregoing
release shall not apply to (i) any claim for a breach of this Agreement or for
payments or benefits due to a Shareholder under this Agreement, (ii) a
Shareholder’s rights to indemnification from the Company (or its successors),
whether pursuant to an agreement, the Company’s articles of incorporation or
bylaws, applicable law or otherwise, (iii) any claim that may arise in the
future from events or actions occurring after the Effective Time or (iv) any
rights to compensation, benefits or other amounts from, or reimbursement by, the
Company in its Ordinary Course of Business.

 

12.04                 Certain Actions.  Except as otherwise contemplated by this
Agreement and the Transactions and except as to claims alleging fraud or illegal
acts, the Purchaser shall not cause the Company, on its own behalf or on behalf
of its Subsidiary, to pursue any claim against a Signing Shareholder for any
action or omission or other occurrence that relates to any time prior to Closing
without the other Signing Shareholder’s consent.

 

ARTICLE XIII
MISCELLANEOUS

 

13.01                 Entire Agreement; Assignment.  This Agreement, including
the Disclosure Schedules, exhibits and other schedules hereto, the documents,
instruments and schedules referred to herein and all other documents dated as of
the date hereof and on the Closing, including the Escrow Agreement, constitutes
the entire agreement among the Parties with respect to the subject matter hereof
and supersedes all other prior agreements and understandings, both written and
oral, among the Parties or any of them with respect to the subject matter
hereof.  This Agreement and all of the provisions hereof shall be binding upon
and inure to the benefit of the Parties hereto and their respective successors
and permitted assigns, but neither this Agreement nor any of the rights,
interests and obligations hereunder shall be assigned by any of the Parties
without the prior written consent of the other Parties; provided, however, that
the Purchaser may assign its rights under this Agreement to (a) any Affiliate of
the Purchaser provided that, in such event, the Purchaser shall unconditionally
and fully guarantee all of the obligations of such assignee under this Agreement
or (b) its lenders as collateral.

 

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13.02                 Reformation and Severability.  The provisions of this
Agreement shall be separable and a determination that any provision of this
Agreement is invalid, illegal, unenforceable or void shall not affect the
validity, legality or enforceability of any other provision of this Agreement. 
In case any provision of this Agreement shall be invalid, illegal, unenforceable
or void, it shall, to the extent possible, be modified and/or interpreted in
such manner as to be valid, legal and enforceable, but so as to most nearly
retain the intent of the Parties, and if such modification is not possible, such
provision shall be severed from this Agreement, and in either case, the
validity, legality and enforceability of the remaining provisions of this
Agreement shall not in any way be affected or impaired thereby.  Any court of
competent jurisdiction is authorized and directed by the Parties to enforce any
otherwise invalid, illegal or unenforceable provision in part, to modify it, to
enforce it only to a degree and not fully, or otherwise to enforce that
provision only in a manner and to an extent, or for a shorter period of time,
that renders the provision valid or enforceable.  The intent of the Parties is
that this Agreement be enforceable and enforced to the maximum extent possible
after excising (or deeming excised) all invalid or unenforceable provisions,
whether or not the remaining provisions are grammatically correct.

 

13.03                 Notices.  All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be delivered in person,
by reputable overnight delivery service or other courier, by electronic mail
(with receipt confirmed) or by registered or certified mail (postage prepaid,
return receipt requested) as follows:

 

if to the Purchaser or the Merger Sub:

 

Comfort Systems USA, Inc.

Office of the General Counsel

675 Bering, Suite 400

Houston, Texas 77057

Electronic mail:  notice@comfortsystemsusa.com

 

and if to the Company (prior to Closing):

 

Dyna Ten Corporation

Mark Nyquist

4375 Diplomacy Road

Fort Worth, Texas 76155

Electronic mail: markcnyquist@gmail.com

 

with a copy (that shall not constitute legal notice) to:

 

Gardere Wynne Sewell LLP

1601 Elm Street, Suite 3000

Dallas, Texas  75201

Attn:  Alan Perkins

Electronic mail:  aperkins@gardere.com

 

and if to the Shareholder Representative:

 

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Mark Nyquist

7803 Jefferson Circle

Colleyville, Texas 76034

Electronic mail:  markcnyquist@gmail.com

 

with a copy (that shall not constitute legal notice) to:

 

Gardere Wynne Sewell LLP

1601 Elm Street, Suite 3000

Dallas, Texas  75201

Attn:  Alan Perkins

Electronic mail:  aperkins@gardere.com

 

or to such other physical or electronic mail address as the Party to whom notice
is given may have previously furnished to the other Parties in writing in the
manner set forth above (provided that notice of any change of address shall be
effective only upon receipt thereof).  All such communications shall be deemed
to have been duly given, (a) as of the date of delivery, if delivered personally
or by overnight delivery service or other courier, (b) upon the date on which
the transmission is separately confirmed in writing, if delivered by electronic
mail, and (c) on the date receipt is acknowledged, if delivered by registered or
certified mail.  A Party may change its address for notice by notice to the
other Parties in the manner set forth above. If notice is provided by electronic
mail, the subject line of the message shall begin with the word “NOTICE,” in
capital letters, followed by specific reference to this Agreement.

 

13.04                 Governing Law.  This Agreement shall be governed by and
construed in accordance with the laws of the State of Texas, without regard to
principles of conflicts of law thereof.

 

13.05                 Interpretation.  The masculine and neuter genders used in
this Agreement each includes the masculine, feminine and neuter genders, and the
singular number includes the plural, each where appropriate, and vice versa. 
Wherever the term “including” or a similar term is used in this Agreement, it
shall be read as if it were written “including by way of example only and
without in any way limiting the generality of the clause or concept referred
to.”  The descriptive headings are inserted for convenience of reference only
and are not intended to be part of or to affect the meaning or interpretation of
this Agreement. The terms “hereof,” “herein” and “hereunder” and terms of
similar import are references to this Agreement as a whole and not to any
particular provision of this Agreement.  Section, clause, schedule and exhibit
references contained in this Agreement are references to sections, clauses,
schedules and exhibits in or to this Agreement, unless otherwise specified.

 

13.06                 GAAP.  The Purchaser agrees that the provisions set forth
on Exhibit C shall be applied when calculating any number in accordance with
GAAP, or otherwise determining compliance with GAAP, under this Agreement.

 

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13.07                 Payments to Shareholders.  All payments contemplated
hereunder to be paid to the Shareholders, or any of them, shall be paid by wire
transfer of immediately available funds to the account(s) designated by the
Shareholder Representative.

 

13.08                 Parties in Interest.  This Agreement shall be binding upon
and inure solely to the benefit of each Party, and nothing in this Agreement,
express or implied, is intended to confer upon any other Person any rights or
remedies of any nature whatsoever under or by reason of this Agreement.

 

13.09                 Counterparts.  This Agreement may be executed
simultaneously in two or more counterparts, each of which shall be deemed an
original and all of which together shall constitute but one and the same
instrument.  Facsimile or scanned and emailed (by Portable Document Format
(“pdf”)) transmission of any signed original document or retransmission of any
signed facsimile or scanned and emailed (by pdf) transmission shall constitute
enforceable original documents and will be deemed the same as delivery of an
original.  At the request of any Party, the Parties will confirm facsimile or
scanned and emailed transmission by signing a duplicate original document.

 

13.10                 Incorporation by Reference.  Any and all schedules
(including the Disclosure Schedules), exhibits, annexes, statements, reports,
certificates or other documents or instruments referred to herein or attached
hereto are incorporated herein by reference hereto as though fully set forth at
the point referred to in this Agreement.

 

13.11                 Consent to Jurisdiction; Waiver of Jury Trial.  The
Parties irrevocably submit to the jurisdiction of the United States District
Court for the Northern District of Texas, and/or any state court of the State of
Texas located in Dallas County in any Proceeding brought in connection with,
arising from or relating to this Agreement, the Transactions and any document
contemplated herein or otherwise relating hereto, and each Party hereby waives
and further agrees not to assert as a defense in any such Proceeding any claim
that such Party is not personally subject to the jurisdiction of any such
courts, that the venue of the Proceeding is brought in an inconvenient forum or
that this Agreement or the subject matter hereof may not be enforced in or by
such courts.  THE PARTIES HEREBY WAIVE IRREVOCABLY ANY AND ALL RIGHTS TO DEMAND
A TRIAL BY JURY IN CONNECTION WITH THIS AGREEMENT, THE TRANSACTIONS OR ANY
DOCUMENT CONTEMPLATED HEREIN OR OTHERWISE RELATED HERETO.

 

13.12                 Construction.  The Parties have participated jointly in
the negotiation and drafting of this Agreement.  In the event an ambiguity or
question of intent or interpretation arises, this Agreement shall be construed
as if drafted jointly by the Parties and no presumption or burden of proof shall
arise favoring or disfavoring any Party by virtue of the authorship of this
Agreement, and the Parties shall mutually negotiate and draft any amendments
necessary to conform this Agreement to the original intent of the Parties.

 

13.13                 Press Releases and Communications.  No press release or
public announcement related to this Agreement or the Transactions, or before the
Closing any other announcement or communication to the employees, customers or
suppliers of the Company, shall be issued or made without the joint approval of
the Purchaser and the Shareholder Representative, unless

 

55

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required by law (in the reasonable opinion of counsel) in which case the
Purchaser and the Shareholder Representative shall have the right to review and
comment on such press release or announcement before publication; provided that
the Shareholder Representative and the Company shall be entitled to communicate
with the Shareholders regarding this Agreement and the Transactions and the
Purchaser shall be entitled to make such public disclosures as required by the
rules and regulations of the Securities and Exchange Commission and the New York
Stock Exchange.

 

13.14                 Expenses.  Whether or not the Closing takes place, except
as otherwise provided herein, all fees, costs and expenses (including fees,
costs and expenses of legal counsel, investment bankers, brokers or other
representatives and consultants and appraisal fees, costs and expenses) incurred
in connection with the negotiation of this Agreement and the other agreements
contemplated hereby, the performance of this Agreement and the other agreements
contemplated hereby, and the consummation of the Transactions shall be paid by
the Party incurring such fees and expenses, whether or not the Transactions are
consummated; provided that the Purchaser and the Merger Sub hereby acknowledge
that the Company may, at or before the Closing, pay the fees, costs and expenses
incurred by the Shareholders and the Shareholder Representative.

 

13.15                 Certain Matters.  The specification of any dollar amount
or the inclusion of any item in the representations and warranties contained in
this Agreement, the Disclosure Schedules, the Updated Schedules or the exhibits
hereto is not intended to imply that the amounts, or higher or lower amounts, or
the items so included, or other items, are or are not required to be disclosed
(including whether such amounts or items are required to be disclosed as
material or threatened) or are within or outside of the Ordinary Course of
Business, and no Party shall use the fact of the setting of the amounts or the
fact of the inclusion of any item in this Agreement, the Disclosure Schedules,
the Updated Schedules or exhibits hereto in any dispute or controversy involving
the Parties as to whether any obligation, item or matter not set forth or
included in this Agreement, the Disclosure Schedules, the Updated Schedules or
exhibits hereto is or is not required to be disclosed (including whether the
amount or items are required to be disclosed as material or threatened) or is
within or outside of the Ordinary Course of Business for purposes of this
Agreement.  In addition, matters reflected in the Disclosure Schedules and the
Updated Schedules are not necessarily limited to matters required by this
Agreement to be reflected in the Disclosure Schedules and the Updated
Schedules.  Such additional matters are set forth for informational purposes
only and do not necessarily include other matters of a similar nature.  The
information contained in this Agreement, in the Disclosure Schedules, the
Updated Schedules and exhibits hereto is disclosed solely for purposes of this
Agreement, and no information contained herein or therein shall be deemed to be
an admission by any Person not a Party to any non-Party of any matter whatsoever
(including any violation of Legal Requirements or breach of contract).

 

13.16                 Amendment and Waiver.  Except as set forth in Section 6.05
with respect to the Updated Schedules or as otherwise provided herein, any
provision of this Agreement or the Disclosure Schedules or exhibits hereto may
be amended or waived only in a writing signed by all of the Parties.  No waiver
of any provision hereunder or any breach or default thereof shall extend to or
affect in any way any other provision or prior or subsequent breach or default.

 

56

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13.17                 Third-Party Beneficiaries.  Except as provided in
Section 7.06 and Article X, this Agreement is for the sole benefit of the
Parties, the Shareholders and their respective heirs, successors and permitted
assigns, and nothing herein, express or implied, is intended to or shall confer
upon any other Person any legal or equitable right, benefit or remedy of any
nature whatsoever under or by reason of this Agreement.

 

13.18                 Further Assurances.  From time to time after the Closing,
at a Party’s reasonable request and expense but without further consideration,
the other Parties will execute and deliver such other instruments of conveyance
and transfer and take such other action as the requesting Party may reasonably
require to effect the Transactions and to carry out the intent of this
Agreement.

 

13.19                 Deliveries to the Purchaser.  The Purchaser acknowledges
and agrees that any document or item will be deemed “delivered,” “provided” or
“made available” for all purposes within the meaning of this Agreement if such
document or item (a) is included in the Company’s electronic data room, (b) is
actually delivered or provided to the Purchaser or the Purchaser’s
Representatives (including to the Purchaser’s Representatives) or (c) is made
available upon request, including at the Company’s offices.

 

13.20                 Specified Sections.  Notwithstanding any provision herein
to the contrary, the Signing Shareholders are signatories to this Agreement
solely for purposes of making the agreements set forth in the Specified
Sections.

 

13.21                 Lease.  Before the Closing, the parties to the
Headquarters Lease shall negotiate in good faith and amend the Headquarters
Lease to, among other things, reflect mutually agreeable rent adjustments and
renewal options.

 

13.22                 Projections.  In connection with the Purchaser’s
investigation of the Company and its Subsidiary, and their operations, the
Purchaser may have received from the Company and its Representatives certain
projections and forecasts related to the Company and its Subsidiary and their
operations.  The Purchaser acknowledges and agrees that: (a) there are
uncertainties inherent in attempting to make such projections and forecasts;
(b) the Purchaser is familiar with such uncertainties; (c) the Purchaser is
taking full responsibility for making its own evaluation of the adequacy and
accuracy of all projections and forecasts so furnished to it, and any use of or
reliance by the Purchaser on such projections and forecasts shall be at its sole
risk; and (d) the Purchaser shall have no claim against any Person (including
the Company, the Shareholder Representative and the Shareholders) with respect
thereto. Accordingly, the Purchaser acknowledges and agrees that the Company and
its Subsidiary, and their Representatives, do not make any representation or
warranty to the Purchaser, express or implied, with respect to such projections
or forecasts. Nothing in this Section 13.22 shall be construed to alter or limit
the representations and warranties set forth in Article IV of this Agreement, or
to alter or in any way limit the Purchaser’s rights in the event that any
projections or forecasts contained or were based upon fraudulent or intentional
misrepresentations by the Company, its Subsidiary or any Shareholder.

 

13.23                 Acknowledgement Regarding Gardere Wynne Sewell LLP.  The
Shareholders acknowledge and understand that Gardere Wynne Sewell LLP has
represented only the

 

57

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Company in connection with the preparation of this Agreement and the
Transactions and that Gardere Wynne Sewell LLP has not represented any
Shareholder, member of the Company’s management or Company employee regarding
this Agreement or the Transactions. Each of the Shareholders acknowledges and
affirms that such Shareholder has had the opportunity to consult with legal
counsel of its choosing regarding this Agreement and has not relied upon Gardere
Wynne Sewell LLP to provide it with any legal advice regarding such matters, nor
has Gardere Wynne Sewell LLP provided any such advice.

 

13.24                 Certain Transaction Matters.

 

(a)                                 Waiver of Conflicts.  Recognizing that
Gardere Wynne Sewell LLP has acted as legal counsel to the Company, its
Subsidiary, certain of the Shareholders and certain of their respective
Affiliates before the date hereof, and that Gardere Wynne Sewell LLP intends to
act as legal counsel to certain of the Shareholders and their respective
Affiliates (which will no longer include the Company and its Subsidiary) after
the Closing, each of the Purchaser and the Merger Sub hereby each waives, on its
own behalf and agrees to cause its Affiliates, the Surviving Corporation and its
Subsidiaries to waive, any conflicts that may arise in connection with Gardere
Wynne Sewell LLP representing any Shareholders or their Affiliates after the
Closing as such representation may relate to the Purchaser, the Merger Sub, the
Company, the Surviving Corporation and its Subsidiaries or the Transactions.

 

(b)                                 Transaction Records.  All communications,
records and documents relating to the negotiation, documentation and
consummation of the Transactions shall be deemed to belong solely to the
Shareholders and their respective Affiliates (and not the Purchaser, the
Company, the Surviving Corporation or its Subsidiaries), and may be removed from
the Surviving Corporation’s premises or electronic records by such Persons. 
Accordingly, the Purchaser, the Surviving Corporation and its Subsidiaries shall
not have access to any such communications, records or documents from and after
the Effective Time, and shall not seek to access such materials even if such
materials are not removed from the Surviving Corporation’s premises or
electronic systems.  Notwithstanding the foregoing, nothing in this
Section 13.20(b) shall be applicable to any written agreements between the
Company and its customers, suppliers, contractors or other Persons (other than
the Company’s accountants, attorneys and other professional service providers,
and the Representatives and Affiliates of such Persons, in each case, only to
the extent it relates to the Transactions).

 

(c)                                  Privileged Information.  Without limiting
Section 13.21(b), all communications involving attorney-client confidences
between the Shareholders, the Company and its Subsidiary and their Affiliates,
on the one hand, and Gardere Wynne Sewell LLP, on the other hand, relating to
the negotiation, documentation and consummation of the Transactions shall be
deemed to be attorney-client confidences that belong solely to the Shareholders
and their respective Affiliates (and not the Purchaser, the Company, the
Surviving Corporation or its Subsidiaries).  Accordingly, the Purchaser, the
Surviving Corporation and its Subsidiaries shall not have access to any such
communications or to the files of Gardere Wynne Sewell LLP relating to such
engagement from and after the Effective Time.  Without limiting the generality
of the foregoing, from and after the Effective Time, (a) the Shareholders and
their Affiliates (and not the Surviving Corporation and its Subsidiaries) shall
be the sole holders of the attorney-client privilege with respect to such
engagement, and none of the Purchaser, the Company, the

 

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Surviving Corporation or its Subsidiaries shall be a holder thereof or have
access thereto, (b) to the extent that files of Gardere Wynne Sewell LLP in
respect of such engagement constitute property of the client, only the
Shareholders and their Affiliates (and not the Surviving Corporation and its
Subsidiaries) shall hold such property rights and have access thereto and
(c) Gardere Wynne Sewell LLP shall have no duty whatsoever to reveal or disclose
any such attorney-client communications or files to the Surviving Corporation or
its Subsidiaries by reason of any attorney-client relationship between Gardere
Wynne Sewell LLP and the Company or its Subsidiaries or otherwise.

 

[Signature Page Follows]

 

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IN WITNESS WHEREOF, the Parties have executed this Agreement on the day and year
first above written.

 

 

DYNA TEN CORPORATION

 

 

 

 

 

 

 

By:

/s/ Mark Nyquist

 

 

Mark Nyquist, Chief Executive Officer

 

 

 

 

 

 

 

COMFORT SYSTEMS USA, INC.

 

 

 

 

 

 

 

By:

/s/ William George

 

Name:

William George

 

Title:

Executive Vice President

 

 

 

 

 

 

 

CSUSA (20), INC.

 

 

 

 

 

 

 

By:

/s/ Trent McKenna

 

Name:

Trent McKenna

 

Title:

Vice President

 

 

 

 

 

 

 

/s/ Mark Nyquist

 

Mark Nyquist, solely in his capacity as a Signing Shareholder (and for purposes
of the Specified Sections only) and as Shareholder Representative

 

 

 

 

 

 

 

/s/ Scott Brady

 

Scott Brady, solely in his capacity as a Signing Shareholder (and for purposes
of the Specified Sections only)

 

60

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Exhibit A

 

Definitions

 

For purposes of this Agreement, the following terms shall have the respective
meanings set forth below:

 

“Accounts Receivable” has the meaning given to it in Section 4.08(a).

 

“Acquisition Proposal” has the meaning given to it in Section 6.08.

 

“Adjustment Date” has the meaning given to it in Section 2.04(a).

 

“Affiliate” means, with respect to a Person, (a) any Person that, directly or
indirectly, controls, is controlled by or is under common control with, such
Person in question, (b) any officer, director or shareholder of such Person in
question, and (c) any Person that, directly or indirectly, controls, is
controlled by or is under common control with, any officer, director or
shareholder of such Person in question.  For the purposes of the definition of
Affiliate, “control” (including, with correlative meaning, the terms “controlled
by” and “under common control with”) as used with respect to any Person, shall
mean the possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of such Person, whether through the
ownership of voting securities or by contract or otherwise.

 

“After-Tax Net Earnings” shall mean the net income of the Company for the
relevant period (after income tax) determined (a) in a manner consistent with
GAAP and, when there is more than one interpretation that complies with GAAP,
the Company’s past practices, (b) by assuming a stipulated 37% combined
corporate and state tax rate (subject to adjustment if statutory tax rates
decrease) as follows: EBIT multiplied by 0.63, (c) by eliminating any corporate
management fees or similar overhead allocations for services provided by the
Purchaser or its Affiliates and any expenses, including goodwill amortization,
arising out of the Merger, and (d) by adding back any Texas margin tax paid by
the Company.  For clarification purposes of the above, it is the express
intention of the Parties that the calculation shall fairly reflect the true
economic return of the Company as an incremental part of the Purchaser.

 

“Agreement” has the meaning given to it in the preamble to this Agreement.

 

“Allocation” has the meaning given to it in Section 9.08(f).

 

“Balance Sheet Date” has the meaning given to it in Section 4.26(a)(ii).

 

“Basket Amount” has the meaning given to it in Section 10.06(c).

 

“Benefit Plans” has the meaning given to it in Section 4.12(a).

 

“Business Day” means any day excluding Saturday, Sunday or another day on which
commercial banking institutions in the State of Texas are authorized or required
by law to be closed.

 

A-1

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“Business Facility” means any real property that the Company currently leases,
operates, owns, or manages in any manner or which the Company or any of its
organizational predecessors formerly leased, operated, owned or managed in any
manner.

 

“Buy-Sell Agreements” means each Dyna Ten Corporation 2006 Stock Buy-Sell
Agreement, as amended in 2013, among the Company and each other Person signatory
thereto.

 

“Cap” has the meaning given to it in Section 10.06(d).

 

“Certificate of Merger” has the meaning given to it in Section 1.01(b).

 

“Change in Board Recommendation” means the Company Board (a) withdrawing or
modifying the approval by the Company Board of this Agreement and the
Transactions or (b) approving or recommending, or proposing to approve or
recommend, or resolving to approve or recommend, any Acquisition Proposal.

 

“Claim Notice” has the meaning given to it in Section 10.3.

 

“Closing” has the meaning given to it in Section 2.01.

 

“Closing Cash Consideration” means (a) $37,500,000 (as it may be adjusted
pursuant to Article II), minus (b) the Indemnity Escrow Amount, minus (c) the
Shareholder Representative Escrow Amount, minus (d) all Transaction Expenses
paid by the Purchaser pursuant to Section 2.02(c).  Subject to the last sentence
of Section 2.07(a), the term “Closing Cash Consideration” shall exclude the
aggregate amount that would have been paid to the Shareholders who own shares of
Dissenting Stock pursuant to Section 2.02(b) if such Shareholders had not
exercised their rights under Subchapter H.

 

“Closing Date” has the meaning given to it in Section 2.01.

 

“Closing Working Capital” means an amount equal to, as of the close of business
on the Closing Date, the Working Capital, if any, plus an amount equal to
(a) the amount expended by the Company on improvements to its property located
at 13350 Trinity Boulevard, Fort Worth, Texas 76040, as set forth on Schedule
A-1 and in amounts not to exceed those set forth on Schedule A-1, less (b) the
amortized value of the Company’s seat licenses for Cowboys stadium.

 

“Code” means the Internal Revenue Code of 1986, as amended.

 

“commercially reasonable efforts” means the efforts that a commercially
reasonable Person desirous of achieving a result would use in similar
circumstances to achieve that result as expeditiously as reasonably practicable,
provided, however, that, except as otherwise set forth herein, a Person required
to use commercially reasonable efforts under this Agreement will not thereby be
required to take any action that would result in a material adverse change in
the benefits to such Person under this Agreement or the Transactions, to make
any change to its business, to incur any fees or expenses (other than normal and
usual filing fees, processing fees and incidental expenses), to commence any
litigation or to incur any other material burden.

 

“Common Stock” has the meaning given to it in Section 1.02(a).

 

A-2

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“Company” has the meaning given to it in the preamble to this Agreement.

 

“Company Board” means the Board of Directors of the Company.

 

“Confidentiality Agreement” means that certain Confidentiality and Nondisclosure
Agreement between the Company and the Purchaser, dated as of February 14, 2014.

 

“Contract” means any agreement, contract, obligation, promise, commitment,
arrangement, understanding or undertaking (whether written or oral and whether
express or implied).

 

“Covering Shareholders” has the meaning given to it in Section 11.07.

 

“Damages” includes damages, losses, liabilities (including STRICT LIABILITY),
costs (including court costs) and expenses (including reasonable attorneys’,
accountants’ and other professional advisers’ fees) incurred by an Indemnified
Person.

 

“Defaulting Shareholders” has the meaning given to it in Section 11.07.

 

“Determination Date” has the meaning given to it in Section 2.03(e).

 

“DGCL” has the meaning given to it in Section 1.01(a).

 

“Disclosure Schedules” has the meaning given to it in the introductory paragraph
to Article IV.

 

“Dissenting Stock” has the meaning given to it in Section 2.07(a).

 

“DTMS” has the meaning given to it in the introductory paragraph to Article IV.

 

“Due Date” has the meaning given to it in Section 10.05.

 

“Earn-Out Payment” has the meaning given to it in Section 2.06(a).

 

“Earn-Out Threshold” shall be an amount equal to $3,500,000.

 

“Effective Time” has the meaning given to it in Section 1.01(b).

 

“Encumbrance” means any charge, claim, community or other marital property
interest, condition, equitable interest, encumbrance, lien, license, option,
pledge, security interest, right of first offer or refusal, mortgage, right of
way, easement, encroachments, servitude or restriction or covenant of any kind,
including any restriction on use, voting, transfer, receipt of income or
exercise of any other attribute of ownership.

 

“Environmental Claim(s)” means:  any Proceeding, whether threatened, sought,
brought or imposed, that is related to or seeks to recover Damages under
applicable Environmental Laws related to, or that seeks to impose liability
under applicable Environmental Laws for:  (a) improper use or treatment of
wetlands or other protected land or wildlife; (b) noise; (c) radioactive
materials (including naturally occurring radioactive materials); (d) explosives;

 

A-3

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(e) pollution, contamination, preservation, protection, decontamination,
remediation or clean-up of the air, surface water, groundwater, soil or
protected lands related to Materials of Environmental Concern; (f) exposure of
persons or property to Materials of Environmental Concern and the effects
thereof; (g) the release or threatened release (into the indoor or outdoor
environment), generation, extraction, mining, beneficiating, manufacture,
processing, distribution in commerce, use, transfer, transportation, treatment,
storage, disposal or Remediation of Materials of Environmental Concern;
(h) injury to or death of or threat to the health or safety of any person or
persons caused directly or indirectly by Materials of Environmental Concern;
(i) the implementation of spill prevention and/or disaster plans relating to
Materials of Environmental Concern; (j) violation of or noncompliance with
Environmental Laws; (k) community right-to-know and other disclosure laws; or
(l) maintaining, disclosing or reporting information to Governmental Authorities
or any other Person under any applicable Environmental Laws.  The term
“Environmental Claim” also includes any Damages incurred for reasonable and
necessary testing to determine whether Remediation is required under
requirements of Environmental Law, or any monitoring or responding to efforts by
a regulatory agency with jurisdiction to require Remediation under requirements
of Environmental Law.

 

“Environmental Laws” means any and all treaties, statutes, laws, rules,
regulations, ordinances, orders, consent agreements, orders on consent, or
guidance documents now or hereafter in effect of any applicable international,
federal, state or local executive, legislative, judicial, regulatory, or
administrative agency, board, tribunal, or authority or any associated judicial
or administrative decision that relate in any manner to health, the environment,
pollution, the emission, discharge, release, treatment, storage, disposal,
management, or response to Materials of Environmental Concern, a community’s
right to know, or worker protection.

 

“Environmental Permit” means all permits, licenses, certificates, registrations,
identification numbers, applications, consents, approvals, variances, notices of
intent, and exemptions necessary for the ownership, use and/or operation of any
Business Facility to comply with Environmental Laws.

 

“ERISA” means the Employee Retirement Income Security Act of 1974, as amended.

 

“Escrow Agent” means Wilmington Trust or its successor.

 

“Escrow Agreement” means an escrow agreement in the form of attached Exhibit B
between the Purchaser, the Company and the Shareholder Representative.

 

“Estimated Closing Working Capital” has the meaning given to it in
Section 2.03(a).

 

“Estimated Target Working Capital” has the meaning given to it in
Section 2.03(a).

 

“Final Closing Working Capital” has the meaning given to it in Section 2.03(e).

 

“Final Target Working Capital” has the meaning given to it in Section 2.03(e).

 

“Final WIP Adjustment” has the meaning given to it in Section 2.04(d).

 

“Financial Statements” has the meaning given to in Section 4.26(a)(ii).

 

A-4

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“GAAP” means United States generally accepted accounting principles as in effect
at the time of the application of such principles and applied on a basis
consistent with past practice, and, in the case of the financial statements of
the Company and its Subsidiary, is subject to the provisions set forth on
Exhibit C.

 

“Governmental Authority” means any foreign governmental authority, the United
States of America, any State of the United States of America, any local or
municipal authority and any political subdivision of any of the foregoing, any
multi-national organization or body, any agency, department, division,
commission, board, bureau, court or other authority of any of the foregoing, or
any quasi-governmental or private body (including any board of arbitration or
similar entity) exercising, or purporting to exercise, any executive,
legislative, judicial, administrative, police, regulatory or taxing authority or
power of any nature.

 

“Governmental Authorization” means any permit, Environmental Permit, license,
franchise, approval, certificate, consent, ratification, permission,
confirmation, endorsement, waiver, certification, privilege, right,
registration, qualification or other similar authorization issued, granted,
given or otherwise made available by or under the authority of any Governmental
Authority with applicable jurisdiction or pursuant to any applicable Legal
Requirement.

 

“Gross Up Tax Amounts” has the meaning given to it in Section 9.08(b).

 

“Headquarters Lease” means that certain Commercial Lease Agreement, dated
August 26, 2008, between 808 Real Estate Partners, LLC and the Company, as
amended by that certain Amendment to Lease dated February 1, 2011.

 

“Indebtedness” means all obligations of the Company: (a) for borrowed money;
(b) evidenced by bonds, debentures, notes or other similar instruments
(including any seller notes issued in connection with any acquisition undertaken
by the Company); (c) under any capitalized lease liabilities; (d) for the
deferred purchase price of property, goods or services (other than trade
payables or accruals incurred in the Ordinary Course of Business); (e) in
respect of letters of credit and bankers’ acceptances; (f) for Contracts
relating to interest rate protection, swap and collar agreements; (g) in the
nature of guarantees of the obligations described in clauses (a) through
(f) above of any other Person; and (h) for any accrued interest, prepayment
premiums or penalties or other fees, costs or expenses related to any of the
foregoing, in each case determined in accordance with GAAP.

 

“Indemnified Person” has the meaning given to it in Section 10.03.

 

“Indemnified Receivables” means the Company’s Accounts Receivable, Notes
Receivable, costs in excess of billings and retainage.

 

“Indemnifying Person” has the meaning given to it in Section 10.03.

 

“Indemnity Escrow Account” has the meaning given to it in Section 2.02(d).

 

“Indemnity Escrow Amount” means an amount equal to $5,000,000.

 

A-5

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“Indemnity Escrow Funds” means the amount of cash held from time to time by the
Escrow Agent in the Indemnity Escrow Account pursuant to the Escrow Agreement.

 

“Intellectual Property” means all names, trade names, fictitious business names,
brand names, registered and unregistered trademarks, service marks and
applications, all patents and patent applications, all copyrights in both
published and unpublished works, and all inventions, processes, formulas,
patterns, designs, know-how, trade secrets, software, technical information,
process technology, plans, drawings, and blue prints.

 

“Interim Financial Statements” has the meaning given to it in
Section 4.26(a)(ii).

 

“Knowledge” means (a) with respect to the Company, the actual knowledge after
reasonable inquiry of Mark Nyquist and Scott Brady, and (b) with respect to the
Purchaser or the Merger Sub, the actual knowledge after reasonable inquiry of
the officers or directors of such Party.

 

“Legal Requirement” means any law (including Environmental Laws), statute, code,
resolution, promulgation, ordinance, decree, requirement, order, judgment, writ,
injunction, treaty, proclamation, rule or regulation of, and the terms of any
Governmental Authorization issued by, any Governmental Authority with applicable
jurisdiction or any license, franchise, permit or similar right granted under
any of the foregoing, or any other similar provision having the force or effect
of law.

 

“Liability” means any debt, obligation, duty or liability of any nature.

 

“Material Adverse Effect” means an effect that is materially adverse to the
business, operations, assets, liabilities, condition (financial or other) or
results of operations of the Company and its Subsidiary, taken as a whole, but
shall exclude any effect resulting or arising from: (a) any change in any Legal
Requirement or accounting requirement or interpretations thereof; (b) any change
in interest rates; (c) any change relating to financial market, economic or
geopolitical conditions in general; (d) any change that is generally applicable
to the industries or markets in which the Company or its Subsidiary operates;
(e) any failure of the Company or its Subsidiary to meet projected or forecasted
revenue or earnings (but excluding the underlying cause of such failure);
(f) the entry into or announcement of this Agreement and/or the consummation of
the Transactions, including any termination of, reduction in or similar negative
impact on relationships, contractual or otherwise, with any customers,
employees, partners or suppliers of the Company or its Subsidiary to the extent
due to the announcement and performance of this Agreement or the identity of the
Parties, or the performance of this Agreement and the Transactions, including
compliance with the covenants set forth herein; (g) any action taken by the
Purchaser or any of its Affiliates; (h) any omission to act or action taken with
the consent of the Purchaser (including those omissions to act or actions taken
which are permitted by this Agreement); or (i) any national or international
political or social event or occurrence, including the engagement by the United
States in hostilities, whether or not pursuant to the declaration of a national
emergency or war, or the occurrence of any military or terrorist attack upon the
United States, or any of its territories, possessions or diplomatic or consular
offices or upon any military installation, equipment or personnel of the United
States, except in the case of (c), (d) and (i) above to the extent any such
event or occurrence impacts the Company

 

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in a manner disproportionate to the impact on other companies in the industry in
which the Company operates.

 

“Material Contracts” means all (a) Contracts for the purchase or sale of goods
and/or services in excess of $200,000, (b) Real Property Leases, (c) Contracts
with a noncompetition, nonsolicitation, “most favored nations” pricing or
exclusivity provision or other provision that would prevent, restrict or limit
in any way the Company or the Purchaser from carrying on its business in any
manner or in any geographic location, (d) Contracts granting a power of
attorney, agency or similar authority to another Person, and (e) Contracts
required to be set forth on Schedule 4.15.

 

“Materials of Environmental Concern” means:  (a) those substances included
within the statutory and/or regulatory definitions or listings of “hazardous
substance,” “medical waste,” “special waste,” “solid waste,” “hazardous waste,”
“extremely hazardous substance,” “regulated substance,” “hazardous materials,”
“toxic substances,” or “contaminant” under any applicable Environmental Law;
(b) any material, waste or substance which is or contains:  (i) petroleum, oil
or a fraction thereof, (ii) explosives, (iii) radioactive materials (including
naturally occurring radioactive materials) or (iv) solid wastes that pose
imminent and substantial endangerment to health or the environment; and (c) such
other substances, materials or wastes that are classified or regulated under any
applicable Environmental Law.

 

“Merger” has the meaning given to it in Section 1.01(a).

 

“Merger Consideration” means (a) the Closing Cash Consideration, plus (b) the
portion of the Indemnity Escrow Amount that may be released to the Shareholders
pursuant to the terms of this Agreement and the Escrow Agreement, plus (c) the
initial Shareholder Representative Escrow Amount, plus or minus (d) all amounts
paid pursuant to Section 2.03, Section 2.04, Section 2.05 and Section 2.06, plus
(e) the Section 338 Amount, as adjusted pursuant to Section 9.08.

 

“Merger Sub” has the meaning given to it in the preamble to this Agreement.

 

“Non-compete Term” has the meaning given to it in Section 12.01.

 

“Non-Party Claim” has the meaning given to it in Section 10.04.

 

“Notes Receivable” has the meaning given to it in Section 4.08(b).

 

“Ordinary Course of Business” shall mean an action taken by any Person in the
ordinary course of such Person’s business which is consistent with past customs
and practices of such Person (including past practice with respect to quantity,
amount, magnitude and frequency, standard employment and payroll practice with
respect to management of working capital) which is taken in the ordinary course
of the normal day-to-day operations of such Person.

 

“Party” has the meaning given to it in the preamble to this Agreement.

 

“Permitted Encumbrances” means:

 

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(a)                                 liens securing liabilities which are
reflected or reserved against in the Financial Statements to the extent so
reflected or reserved;

 

(b)                                 liens for Taxes not yet due and payable or
being contested in good faith by appropriate procedures (and which are reserved
against in the Financial Statements);

 

(c)                                  mechanics, carriers’, workmens’,
repairmens’ or other like liens;

 

(d)                                 purchase money liens and liens securing
rental payments under capital lease arrangements;

 

(e)                                  easements, rights of way, zoning ordinances
and other similar encumbrances affecting Real Property;

 

(f)                                   other than with respect to owned real
property, liens arising under original purchase price conditional sales
contracts or equipment leases with third parties; or

 

(g)                                  other imperfections of title or
Encumbrances, if any, that are not reasonably likely to result in a Material
Adverse Effect.

 

“Person” means an individual, a partnership, a corporation, a limited liability
company, an association, a joint stock company, a trust, a joint venture, an
unincorporated organization or a Governmental Authority.

 

“Post-Closing Tax Period” has the meaning given to it in Section 9.05.

 

“Pre-Closing Tax Period” has the meaning given to it in Section 9.01.

 

“Pre-Paid Insurance Difference” has the meaning given to it in Section 2.05(c).

 

“Pro Rata Share” means as to each Shareholder, the number of shares of Common
Stock owned by such Shareholder divided by the total number of outstanding
shares of Common Stock, calculated as of immediately before the Effective Time
and taking into account any decrease to the number of outstanding shares of
Common Stock as a result of the Dissenting Stock ceasing to be outstanding
pursuant to Section 2.07.

 

“Proposed Statement” has the meaning given to it in Section 2.03(b).

 

“Proceeding” has the meaning given to it in Section 4.10.

 

“Proceeding Notice” has the meaning given to it in Section 10.04.

 

“Proposed WIP Statement” has the meaning given to it in Section 2.04(b).

 

“Purchaser” has the meaning given to it in the preamble to this Agreement.

 

“Purchaser’s 338 Calculation” has the meaning given to it in Section 9.08(c).

 

“Purchaser Indemnified Persons” has the meaning given to it in Section 10.01.

 

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“Purchaser Persons” has the meaning given to it in Section 12.02(b).

 

“Purchaser’s Statement” has the meaning given to it in Section 2.03(c).

 

“Purchaser’s WIP Statement” has the meaning given to it in Section 2.04(b).

 

“Real Property” has the meaning given to it in Section 4.20(b).

 

“Real Property Leases” has the meaning given to it in Section 4.20(a).

 

“Remediation” means (a) any removal or remedial action necessary to comply with
and ensure compliance with requirements of Environmental Laws and (b) the taking
of all reasonably necessary precautions required under applicable Environmental
Laws to protect against and/or respond to, remove or remediate or monitor the
release or threatened release of Materials of Environmental Concern at, on, in,
about, under, within or near the air, soil, surface water, groundwater or soil
vapor at any Business Facility.

 

“Representative” means, with respect to a particular Person, any director,
manager, officer, employee, agent, consultant, advisor or other representative
of such Person, including legal counsel, accountants and financial advisors.

 

“Reserve Difference” has the meaning given to it in Section 2.05(a).

 

“Resolving Accountant” means a jointly selected certified public accounting
firm, of local or regional recognition, having no past or current business
relationship with any Party (a “Qualified Firm”); provided, that if, within such
20-day period the Parties are unable to agree on a Resolving Accountant, the
Parties shall request the American Arbitration Association to designate a
Qualified Firm with offices in Dallas, Texas as the Resolving Accountant within
ten days following the expiration of such 20-day period.

 

“Section 338 Amount” has the meaning given to it in Section 9.08(b).

 

“Section 338 Expenses” has the meaning given to it in Section 9.08(b).

 

“Section 338 Tax Amount” has the meaning given to it in Section 9.08(b).

 

“Section 338(h)(10) Election” has the meaning given to it in Section 9.08(a).

 

“Securities Act” means the Securities Act of 1933, as amended, and the rules and
regulations promulgated thereunder.

 

“Shareholder” has the meaning given to it in Section 1.02(b).

 

“Shareholder Amount” has the meaning given to it in Section 11.07.

 

“Shareholder Approval” means the affirmative vote of the holders of two-thirds
of the outstanding shares of Common Stock at a duly called meeting of the
Shareholders (present in person or represented by proxy at such meeting), or by
unanimous written consent in lieu of a

 

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meeting, in favor of the Company’s entry into this Agreement and the
consummation of the Transactions.

 

“Shareholder Default Amount” has the meaning given to it in Section 11.07.

 

“Shareholder Indemnified Persons” has the meaning given to it in Section 10.02.

 

“Shareholder Representative” has the meaning given to it in the preamble to this
Agreement.

 

“Shareholder Representative Escrow Account” has the meaning given to it in
Section 2.02(d).

 

“Shareholder Representative Escrow Amount” means $500,000 deposited at Closing
plus additional amounts that may be added thereto pursuant to Section 11.01.

 

“Shareholder Representative Escrow Funds” means the amount of cash held from
time to time by the Escrow Agent in the Shareholder Representative Escrow
Account pursuant to the Escrow Agreement.

 

“Shareholder Representative’s 338 Calculation” has the meaning given to it in
Section 9.08(c).

 

“Signing Shareholder” has the meaning given to it in the preamble to this
Agreement.

 

“Specified Sections” means the following:  Section 6.04, Section 6.07,
Section 6.08, and Article XII (but, with respect to each Signing Shareholder,
only to the extent of such Signing Shareholder’s individual obligations under
Article XII).

 

“Specified Materials” has the meaning given to it in Section 4.19(d).

 

“Specified Shareholders” has the meaning given to it in Section 12.01(a).

 

“Straddle Period” has the meaning given to it in Section 9.02.

 

“Subchapter H” has the meaning given to it in Section 2.07(a).

 

“Subsidiary” means, when used with reference to a particular Person, any
corporation, at least twenty percent (20%) of the outstanding voting securities
of which is owned or controlled directly or indirectly by such Person, or if
less than twenty percent (20%) of such voting securities are so owned or
controlled, any corporation in regard to which such Person possesses, directly
or indirectly, the power to direct or cause the direction of management and
policies of such corporation.  Any partnership, joint venture or other
enterprise shall be a Subsidiary of a particular Person if that Person has,
directly or indirectly, a twenty percent (20%) or greater equity interest or in
regard to which such Person possesses, directly or indirectly, the power to
direct or cause the direction of management and policies of such entity.

 

“Surviving Corporation” has the meaning given to it in Section 1.01(a).

 

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“Target Working Capital” means an amount equal to (a) 7.1% of the Company’s
aggregate revenues for the 12-month period ending as of the close of business on
the Closing Date reduced by (b) $550,000.

 

“Tax” or “Taxes” means (a) any tax (including any income tax, franchise tax,
capital gains tax, gross receipts tax, value-added tax, surtax, excise tax, ad
valorem tax, transfer tax, stamp tax, sales tax, use tax, property tax,
inventory tax, occupancy tax, withholding tax, payroll tax, gift tax, estate tax
or inheritance tax), levy, assessment, tariff, impost, imposition, toll, duty
(including any customs duty), or deficiency, and any related amount (including
any fine, penalty or interest), imposed, assessed or collected by or under the
authority of any Governmental Authority with respect to its taxing authority or
(b) any Liability for the payment of any amounts of the type described in
sub-item (a) of this definition payable pursuant to any tax-sharing agreement or
pursuant to any other contract relating to the sharing or payment of any such
tax, levy, assessment, tariff, impost, imposition, toll, duty, or deficiency or
otherwise as a result of being liable for another Person’s taxes as a transferee
or successor, by Contract or otherwise.

 

“Tax Accruals Difference” has the meaning given to it in Section 2.05(d).

 

“Tax Contest” has the meaning given to it in Section 9.05.

 

“Tax Liability” has the meaning given to it in Section 4.06(o).

 

“Tax Return” means any return (including any information return), report,
statement, declaration, schedule, notice, notification, form, certificate, claim
of refund or other document or information filed with or submitted to, or
required to be filed with or submitted to, any Governmental Authority in
connection with the determination, assessment, collection or payment of any Tax
or in connection with the administration, implementation or enforcement of or
compliance with any Legal Requirement relating to any Tax, including any
Schedule or attachment thereto, and including any amendment thereof.

 

“TBOC” has the meaning given to it in Section 1.01(a).

 

“Total Allocable Price” has the meaning given to it in Section 9.08(f).

 

“Transaction Expenses” means all fees, costs and expenses incurred by the
Company or its Subsidiary incident to the negotiation, preparation and execution
of this Agreement and all related agreements and documentation, to the extent
not paid by the Company or its Subsidiary before the Effective Time, including
fees, costs and expenses of legal counsel, investment bankers, brokers or other
representatives and consultants and appraisal fees, costs and expenses, and any
bonuses, accelerated payments, severance payable in connection with the
Transactions or other similar payments to or in respect of any employee or other
Person in connection with the Transactions, including, the Company’s portion of
applicable payroll taxes relating thereto, resulting from the Transactions.

 

“Transactions” means the transactions contemplated by this Agreement, including
the Merger.

 

“Updated Schedules” has the meaning given to it in Section 6.05.

 

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“WIP Adjustment” has the meaning given to it in Section 2.04(a).

 

“WIP Adjustment Determination Date” has the meaning given to it in
Section 2.04(d).

 

“WIP Analysis” has the meaning given to it in Section 2.04(a).

 

“WIP Projects” has the meaning given to it in Section 2.04(a).

 

“WIP Schedule” has the meaning given to it in Section 4.29.

 

“Working Capital” means the Company’s current assets minus current liabilities.

 

“Year-end Financial Statements” has the meaning given to it in
Section 4.26(a)(i).

 

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