Document:

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                                                                    EXHIBIT 10.6

                           CHANGE OF CONTROL AGREEMENT

         This Change of Control Agreement (this "Agreement") is entered into and
deemed effective as of April 14, 2000, by and between Grant Prideco, Inc., a
Delaware corporation (the "Company"), and William G. Chunn (the "Employee").

                              W I T N E S S E T H:
                              - - - - - - - - - -

         WHEREAS, the Employee has accepted an offer of employment with the
Company as Executive Vice President of Operations; and

         WHEREAS, the terms of employment with the Company included an agreement
with the Employee that in the event there were to be a Change of Control (as
defined below) of the Company within three years from the date hereof, the
Employee would be entitled to certain enhanced severance benefits if the
employment of the Employee is terminated by the Company without Cause (as
defined below) or by the Employee for Good Reason (as defined below).

         NOW, THEREFORE, IT IS HEREBY AGREED AS FOLLOWS:

         1.       Certain Definitions.

                  (a) "Effective Date" shall mean the first date during the
Change of Control Period (as defined in Section 1(b)) on which a Change of
Control (as defined in Section 1(c)) occurs. Anything in this Agreement to the
contrary notwithstanding, if a Change of Control occurs and if the Employee's
employment with the Company is terminated prior to the date on which the Change
of Control occurs, and if it is reasonably demonstrated by the Employee that
such termination of employment (i) was at the request of a third party who has
taken steps reasonably calculated to effect a Change of Control or (ii)
otherwise arose in connection with or anticipation of a Change of Control, then
for all purposes of this Agreement the "Effective Date" shall mean the date
immediately prior to the date of such termination of employment.

                  (b) The "Change of Control Period" shall mean the period
commencing on the date hereof and ending on the third anniversary of the date
hereof; provided, however, that commencing on the date one year after the date
hereof, and on each annual anniversary of such date (such date and each annual
anniversary thereof shall be hereinafter referred to as the "Renewal Date"),
unless previously terminated, the Change of Control Period shall be
automatically extended so as to terminate three year(s) after such Renewal Date,
unless at least 60 days prior to the Renewal Date the Company shall give notice
to the Employee that the Change of Control Period shall not be so extended.

                  (c)      A "Change of Control" shall mean:

                           (i)  The acquisition by any individual, entity or
group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act")) (a "Person") of
beneficial ownership (within the meaning of Rule 13d-3 promulgated under the
Exchange Act) of 50 percent or more of either (A) the then outstanding shares of
common stock of the Company (the "Outstanding Company Common Stock") or (B) the
combined voting power of the then outstanding voting securities of the Company
entitled to vote generally in the election of directors (the "Outstanding
Company Voting Securities"); provided, however, that for purposes of this
subsection (i), the following acquisitions shall not constitute a Change of
Control:

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                                    (A)     any acquisition directly from the
Company; or

                                    (B)     any acquisition by the Company; or

                                    (C)     any acquisition by any employee
benefit plan (or related trust) sponsored or maintained by the Company or any
corporation controlled by the Company; or

                                    (D)     any acquisition by any corporation
pursuant to a transaction that complies with clauses (A), (B) and (C) of
subsection (iii) of this Section 1(c); or

                           (ii)  Individuals, who, as of the date hereof,
constitute the Board (the "Incumbent Board") cease for any reason to constitute
at least a majority of the Board; provided, however, that any individual
becoming a director subsequent to the date hereof whose election, or nomination
for election by the Company's stockholders, was approved by a vote of at least a
majority of the directors then comprising the Incumbent Board shall be
considered as though such individual was a member of the Incumbent Board, but
excluding, for this purpose, any such individual whose initial assumption of
office occurs as a result of an actual or threatened election contest with
respect to the election or removal of directors or other actual or threatened
solicitation of proxies or consents by or on behalf of a Person other than the
Board; or

                           (iii)  Consummation of a reorganization, merger or
consolidation or sale or other disposition of all or substantially all of the
assets of the Company (a "Corporate Transaction") in each case, unless,
following such Corporate Transaction, (A) all or substantially all of the
individuals and entities who were the beneficial owners, respectively, of the
Outstanding Company Common Stock and Outstanding Company Voting Securities
immediately prior to such Corporate Transaction beneficially own, directly or
indirectly, more than 60 percent of, respectively, the then outstanding shares
of common stock and the combined voting power of the then outstanding voting
securities entitled to vote generally in the election of directors, as the case
may be, of the corporation resulting from such Corporate Transaction (including,
without limitation, a corporation that as a result of such transaction owns the
Company or all or substantially all of the Company's assets either directly or
through one or more subsidiaries) in substantially the same proportions as their
ownership, immediately prior to such Corporate Transaction, of the Outstanding
Company Common Stock and the Outstanding Company Voting Securities, as the case
may be, (B) no Person (excluding any corporation resulting from such Corporate
Transaction or any employee benefit plan (or related trust) of the Company or
such corporation resulting from such Corporate Transaction) beneficially owns,
directly or indirectly, 20 percent or more of, respectively, the then
outstanding shares of common stock of the corporation resulting from such
Corporate Transaction or the combined voting power of the then outstanding
voting securities of such corporation except to the extent that such ownership
existed prior to the Corporate Transaction and (C) at least a majority of the
members of the board of directors of the corporation resulting from such
Corporate Transaction were members of the Incumbent Board at the time of the
execution of the initial agreement, or of the action of the Board, providing for
such Corporate Transaction; or

                           (iv)   Approval by the stockholders of the Company of
a complete liquidation or dissolution of the Company.

                  (d) "Board" shall mean the Board of Directors of the Company.

         2. Employment Period. The Company hereby agrees that the Company or an
affiliated company will continue the Employee in its employ, and the Employee
hereby agrees to remain in the employ of the Company or an affiliate subject to
the terms and conditions of this Agreement, for the period commencing on the
Effective Date and ending on the second anniversary of such date (the
"Employment Period").

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         3.       Terms of Employment.

                  (a) Position and Duties. During the Employment Period, (i) the
Employee's position shall be at least commensurate in all material respects with
the most significant of those held, exercised and assigned at any time during
the 120-day period immediately preceding the Effective Date and (ii) the
Employee's services shall be performed at the Company's principal executive
offices in The Woodlands, Texas or other locations less than 50 miles from such
principal executive offices or the Company's facilities in Navasota, Texas or
other locations less than 35 miles from such facilities.

                  (b) Compensation.

                           (i) Base Salary. During the Employment Period, the
         Employee shall receive an annual base salary ("Annual Base Salary") at
         least equal to the annual base salary payable to the Employee by the
         Company and/or its affiliated companies immediately preceding the
         Effective Date; provided, however, that notwithstanding the foregoing,
         the Employee's Annual Base Salary shall be subject to any company-wide
         salary reduction that takes effect during the Employment Period. During
         the Employment Period, the Annual Base Salary shall be reviewed from
         time to time on the same basis as similarly situated employees;
         provided, however, that a salary increase shall not necessarily be
         awarded as a result of such review. Any increase in Annual Base Salary
         may not serve to limit or reduce any other obligation to the Employee
         under this Agreement. Annual Base Salary shall not be reduced after any
         such increase. The term Annual Base Salary as utilized in this
         Agreement shall refer to Annual Base Salary as so increased.

                           (ii) Annual Bonus. The Employee shall be eligible for
         an annual bonus (the "Annual Bonus") for each fiscal year ending during
         the Employment Period on the same basis as other key employees under
         the Company's annual incentive programs.

                           (iii) Incentive, Savings and Retirement Plans. During
         the Employment Period, the Employee shall be entitled to participate in
         all incentive, savings and retirement plans, practices, policies and
         programs applicable generally to the Employee's peer key employees of
         the Company and its affiliated companies. As used in this Agreement,
         the term "affiliated companies" shall include any company controlled
         by, controlling or under common control with the Company.

                           (iv) Welfare Benefit Plans. During the Employment
         Period, the Employee and/or the Employee's family, as the case may be,
         shall be eligible to participate in and shall receive all benefits
         under welfare benefit plans, practices, policies and programs provided
         by the Company and its affiliated companies (including, without
         limitation, medical, prescription, dental, disability, salary
         continuance, employee life, group life, accidental death and travel
         accident insurance plans and programs) to the extent applicable
         generally to the Employee's peer key employees of the Company and its
         affiliated companies.

                           (v) Fringe Benefits. During the Employment Period,
         the Employee shall be entitled to (A) payment of professional
         association dues, payment of state professional taxes and a car
         allowance and (B) such other fringe benefits as in effect generally at
         any time thereafter with respect to the Employee's peer key employees
         of the Company and its affiliated companies.

                           (vi) Vacation. During the Employment Period, the
         Employee shall be entitled to at least three weeks paid vacation or
         such greater amount of paid vacation as may be applicable to the
         Employee's peer key employees of the Company and its affiliated
         companies.

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                           (vii) Deferred Compensation Plan. During the
         Employment Period, the Employee shall be entitled to continue to
         participate in any deferred compensation or similar plans in which the
         Employee was participating in prior to the Employment Period subject to
         such changes thereto as may be necessary to reflect the effect of the
         Change of Control.

         4.       Termination of Employment.

                  (a) Death or Disability. The Employee's employment shall
terminate automatically upon the Employee's death during the Employment Period.
If the Company determines in good faith that the Disability of the Employee has
occurred during the Employment Period (pursuant to the definition of Disability
set forth below), it may give to the Employee written notice in accordance with
Section 11(b) of this Agreement of its intention to terminate the Employee's
employment. In such event, the Employee's employment with the Company shall
terminate effective 30 days after receipt of such notice by the Employee (the
"Disability Effective Date"), provided that within the 30-day period after such
receipt, the Employee shall not have returned to full-time performance of the
Employee's duties. For purposes of this Agreement, "Disability" shall mean the
absence of the Employee from the Employee's duties with the Company on a
full-time basis for 180 calendar days as a result of incapacity due to mental or
physical illness that is determined to be total and permanent by a physician
selected by the Company or its insurers and acceptable to the Employee or the
Employee's legal representative.

                  (b)      Cause.  The Company may terminate the Employee's
employment during the Employment Period for Cause. For purposes of this
Agreement, "Cause" shall mean:

                           (i)      the failure of the Employee to perform the
         Employee's duties with the Company or one of its affiliates (other than
         any such failure resulting from incapacity due to physical or mental
         illness), after a written demand for substantial performance is
         delivered to the Employee by the Company that specifically identifies
         the manner in which the Employee has not performed the Employee's
         duties;

                           (ii)     the engaging by the Employee in illegal
         conduct or misconduct that is materially and demonstrably injurious to
         the Company;

                           (iii)    the conviction of the Employee of a crime
         involving moral turpitude;

                           (iv)     the misappropriation by the Employee of
         funds of the Company or one of the its affiliates;

                           (v)      the disparagement by the Employee of the
         Company or one of its affiliates or of management thereof; or

                           (vi)     any conduct that is materially detrimental
         to the Company as determined in good faith by the Board of Directors of
         the Company, so long as the Employee has received prior written notice
         that such conduct is materially detrimental to the Company and will be
         grounds for termination for "cause".

                  For purposes of this provision, no act, or failure to act, on
the part of the Employee shall be considered "willful" unless it is done, or
omitted to be done, by the Employee in bad faith or without reasonable belief
that the Employee's action or omission was in the best interests of the Company.
Any act, or failure to act, based upon authority given pursuant to a resolution
duly adopted by the Board or upon the instructions of the Chief Executive
Officer or of a senior officer of the Company or based upon the advice of
counsel for the Company shall be conclusively presumed to be done, or omitted to
be done, by the Employee in good faith and in the best interests of the Company.

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                  (c)      Good Reason.  The Employee's employment may be
terminated by the Employee during the Employment Period for Good Reason. For
purposes of this Agreement, "Good Reason" shall mean:

                           (i) the assignment to the Employee of any duties
         inconsistent in any respect with the Employee's position (including
         status, offices, titles and reporting requirements), authority, duties
         or responsibilities as contemplated by Section 3(a) of this Agreement,
         or any other action by the Company that results in a diminution in such
         position, authority, duties or responsibilities, excluding for this
         purpose an isolated, insubstantial and inadvertent action not taken in
         bad faith and that is remedied by the Company promptly after receipt of
         notice thereof given by the Employee;

                           (ii) any failure by the Company to comply with any of
         the provisions of Section 3(b) of this Agreement, other than an
         isolated, insubstantial and inadvertent failure not occurring in bad
         faith and that is remedied by the Company promptly after receipt of
         notice thereof given by the Employee;

                           (iii) the Company's requiring the Employee to be
         based at any office or location other than as provided in Section
         3(a)(ii) hereof or the Company's requiring the Employee to travel on
         Company business to a substantially greater extent than required
         immediately prior to the Effective Date;

                           (iv) any purported termination by the Company of the
         Employee's employment otherwise than as expressly permitted by this
         Agreement; or

                           (v) any failure by the Company to comply with and
         satisfy Section 10(c) of this Agreement.

                  For purposes of this Section 4(c), any good faith
determination of "Good Reason" made by the Employee shall be conclusive.

                  (d) Notice of Termination. Any termination during the
Employment Period by the Company for Cause, or by the Employee for Good Reason,
shall be communicated by Notice of Termination to the other party hereto given
in accordance with Section 11(b) of the Agreement. For purposes of this
Agreement, a "Notice of Termination" means a written notice that (i) indicates
the specific termination provision in this Agreement relied upon, (ii) to the
extent applicable, sets forth in reasonable detail the facts and circumstances
claimed to provide a basis for termination of the Employee's employment under
the provision so indicated and (iii) if the Date of Termination (as defined
below) is other than the date of receipt of such notice, specifies the
termination date (which date, in the case of a notice by the Company, shall be
not more than 30 days after the giving of such notice). The failure by the
Employee or the Company to set forth in the Notice of Termination any fact or
circumstance that contributes to a showing of Good Reason or Cause shall not
waive any right of the Employee or the Company, respectively, from asserting
such fact or circumstance in enforcing the Employee's or the Company's rights
hereunder.

                  (e)      Date of Termination.  "Date of Termination" shall
mean:

                           (i) if the Employee's employment is terminated by the
         Company for Cause, or by the Employee for Good Reason, the date of
         receipt of the Notice of Termination or any later date specified
         therein, as the case may be;

                           (ii) if the Employee's employment is terminated by
         the Company other than for Cause, death or Disability, the Date of
         Termination shall be the date on which the Company notifies the
         Employee of such termination; and

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                           (iii) if the Employee's employment is terminated by
         reason of death or Disability, the Date of Termination shall be the
         date of death of the Employee or the Disability Effective Date, as the
         case may be.

         5.       Obligations of the Company Upon Termination.

                  (a) Good Reason; Other than For Cause, Death or Disability.
If, during the Employment Period, the Company terminates the Employee's
employment other than for Cause, death or Disability, or the Employee terminates
employment for Good Reason:

                           (i) The Company shall pay to the Employee in a lump
         sum in cash within 30 days after the Date of Termination the aggregate
         of the following amounts:

                                    (A) the sum of (1) the Employee's Annual
                  Base Salary through the Date of Termination to the extent not
                  theretofore paid, (2) the product of (x) the higher of (I) the
                  highest Annual Bonus received by the Employee over the
                  preceding three year period and (II) the Annual Bonus that
                  would be payable in respect of the current fiscal year, if any
                  (such higher amount being referred to as the "Highest Annual
                  Bonus") and (y) a fraction, the numerator of which is the
                  number of days in the current fiscal year through the Date of
                  Termination, and the denominator of which is 365, and (3) any
                  compensation previously deferred by the Employee under a plan
                  sponsored by the Company (together with any accrued interest
                  or earnings thereon), and any accrued vacation pay, in each
                  case to the extent not theretofore paid (the sum of the
                  amounts described in clauses (1), (2) and (3) shall be
                  hereinafter referred to as the "Accrued Obligations"); and

                                    (B) an amount equal to two times the sum of
                  (i) the then current Annual Base Salary of the Employee and
                  (ii) the Highest Annual Bonus; and

                                    (C) an amount equal to the total of the
                  employer basic and matching contributions credited to the
                  Employee under the Company's 401(k) Savings Plan (the "401(k)
                  Plan") and any other deferred compensation plan during the
                  12-month period immediately preceding the month of the
                  Employee's Date of Termination multiplied by two, such amount
                  to be grossed up so that the amount the Employee actually
                  receives after payment of any federal or state taxes payable
                  thereon equals the amount first described above; and

                                    (D) an amount equal to two times the total
                  amount of all fringe benefits received by Employee on an
                  annualized basis.

                           (ii) For a period of two years from the Employee's
         Date of Termination or such longer period as may be provided by the
         terms of the appropriate plan, program, practice or policy, the Company
         shall continue benefits to the Employee and/or the Employee's family
         equal to those that would have been provided to them in accordance with
         the plans, programs, practices and policies described in Section
         3(b)(iv) of this Agreement if the Employee's employment had not been
         terminated; provided, however, that with respect to any of such plans,
         programs, practices or policies requiring an employee contribution, the
         Employee shall continue to pay the monthly employee contribution for
         same, and provided further, that if the Employee becomes re-employed by
         another employer and is eligible to receive medical or other welfare
         benefits under another employer provided plan, the medical and other
         welfare benefits described herein shall be secondary to those provided
         under such other plan during such applicable period of eligibility;

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                           (iii) All benefits and amounts under the Company's
         deferred compensation plan and the 401(k) Plan and any other similar
         plans, including any stock options held by the Employee, not already
         vested shall be 100% vested;

                           (iv) To the extent not theretofore paid or provided,
         the Company shall timely pay or provide to the Employee any other
         amounts or benefits required to be paid or provided or that the
         Employee is eligible to receive under any plan, program, policy or
         practice or contract or agreement of the Company and its affiliated
         companies (such other amounts and benefits shall be hereinafter
         referred to as the "Other Benefits"); and

                           (v) The foregoing payments are intended to compensate
         the Employee for a breach of the Company's obligations and place
         Employee in substantially the same position had the employment of the
         Employee not been so terminated as a result of a breach by the Company.
         The payments shall be in lieu of any other severance payments that
         might be due to the Employee under the Company's severance and other
         similar plans.

                  (b) Death. If Employee's employment is terminated by reason of
the Employee's death during the Employment Period, this Agreement shall
terminate without further obligations to the Employee's legal representatives
under this Agreement, other than for payment of Accrued Obligations and the
timely payment or provision of Other Benefits. Accrued Obligations shall be paid
to the Employee's estate or beneficiaries, as applicable, in a lump sum in cash
within 30 days after the Date of Termination.

                  (c) Disability. If the Employee's employment is terminated by
reason of the Employee's Disability during the Employment Period, this Agreement
shall terminate without further obligations to the Employee, other than for
payment of Accrued Obligations and the timely payment or provision of Other
Benefits. Accrued Obligations shall be paid to the Employee in a lump sum in
cash within 30 days after the Date of Termination.

                  (d) Cause; Other Than for Good Reason. If the Employee's
employment is terminated for Cause during the Employment Period, this Agreement
shall terminate without further obligations to the Employee under this
Agreement, other than the obligation to pay to the Employee (x) his or her
Annual Base Salary through the Date of Termination, (y) the amount of any
compensation previously deferred by the Employee, and (z) Other Benefits, in
each case to the extent theretofore unpaid. If the Employee voluntarily
terminates employment during the Employment Period, excluding a termination for
Good Reason, this Agreement shall terminate without further obligations to the
Employee under this Agreement, other than for Accrued Obligations and the timely
payment or provision of Other Benefits. In such case, all Accrued Obligations
shall be paid to the Employee in a lump sum in cash within 30 days after the
Date of Termination subject to such other options or restrictions as provided by
law.

         6. Other Rights. Except as provided hereinafter, nothing in this
Agreement shall prevent or limit the Employee's continuing or future
participation in any plan, program, policy or practice provided by the Company
or any of its affiliated companies and for which the Employee may qualify, nor
shall anything herein limit or otherwise affect such rights as the Employee may
have under any contract or agreement with the Company or any of its affiliated
companies. Except as provided hereinafter, amounts that are vested benefits or
that the Employee is otherwise entitled to receive under any plan, policy,
practice or program of or any contract or agreement with the Company or any of
its affiliated companies at or subsequent to the Date of Termination shall be
payable in accordance with such plan, policy, practice or program or contract or
agreement. It is expressly agreed by the Employee that he or she shall have no
right to receive, and hereby waives any entitlement to, any severance pay or
similar benefit under any other plan, policy, practice or program of the
Company. In addition, if the Employee has an employment or similar agreement
with the Company at the Date of Termination, he or she agrees that he or she
shall have the right to receive all of the

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benefits provided under this Agreement or such other agreement, whichever one,
in its entirety, the Employee chooses, but not both agreements, and when the
Employee has made such election, the other agreement shall be superseded in its
entirety and shall be of no further force and effect. The Employee also agrees
that to the extent he or she may be eligible for any severance pay or similar
benefit under any laws providing for severance or termination benefits, such
other severance pay or similar benefit shall be coordinated with the benefits
owed hereunder, such that the Employee shall not receive duplicate benefits.

         7.       Full Settlement.

                  (a) No Rights of Offset. The Company's obligation to make the
payments provided for in this Agreement and otherwise to perform its obligations
hereunder shall not be affected by any set-off, counterclaim, recoupment,
defense or other claim, right or action that the Company may have against the
Employee or others.

                  (b) No Mitigation Required. In no event shall the Employee be
obligated to seek other employment or take any other action by way of mitigation
of the amounts payable to the Employee under any of the provisions of this
Agreement and such amounts shall not be reduced whether or not the Employee
obtains other employment.

                  (c) Legal Fees. The Company agrees to pay as incurred, to the
full extent permitted by law, all legal fees and expenses that the Employee may
reasonably incur as a result of any contest (regardless of the outcome thereof)
by the Company or the Employee of the validity or enforceability of, or
liability under, any provision of this Agreement or any guarantee of performance
thereto (including as a result of any contest by the Employee about the amount
of any payment pursuant to this Agreement), plus in each case interest on any
delayed payment at the applicable Federal rate provided for in Section
7872(f)(2)(A) of the Internal Revenue Code of 1986, as amended (the "Code").

         8.       Certain Additional Payments by the Company.

                  (a) Anything in this Agreement to the contrary notwithstanding
and except as set forth below, in the event it shall be determined that any
payment or distribution by the Company to or for the benefit of the Employee
(whether paid or payable or distributed or distributable pursuant to the terms
of this Agreement or otherwise, but determined without regard to any additional
payments required under this Section 8) (a "Payment") would be subject to the
excise tax imposed by Section 4999 of the Code or any interest or penalties are
incurred by the Employee with respect to such excise tax (such excise tax,
together with any such interest and penalties, are hereinafter collectively
referred to as the "Excise Tax"), then the Employee shall be entitled to receive
an additional payment (a "Gross-Up Payment") in an amount such that after
payment by the Employee of all taxes (including any interest or penalties
imposed with respect to such taxes), including without limitation, any income
taxes (and any interest and penalties imposed with respect thereto) and Excise
Tax imposed upon the Gross-Up Payment, the Employee retains an amount of the
Gross-Up Payment equal to the Excise Tax imposed upon the Payments.
Notwithstanding the foregoing provisions of this Section 8(a), if it shall be
determined that the Employee is entitled to a Gross-Up Payment, but that the
Employee, after taking into account the Payments and the Gross-Up Payment, would
not receive a net after-tax benefit of at least $50,000 (taking into account
both income taxes and any Excise Tax) as compared to the net after-tax proceeds
to the Employee resulting from an elimination of the Gross-Up Payment and a
reduction of the Payments, in the aggregate, to an amount (the "Reduced Amount")
such that the receipt of Payments would not give rise to any Excise Tax, then no
Gross-Up Payment shall be made to the Employee and the Payments, in the
aggregate, shall be reduced to the Reduced Amount.

                  (b) Subject to the provisions of Section 8(c), all
determinations required to be made under this Section 8, including whether and
when a Gross-Up Payment is required and the amount of such Gross-Up

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Payment and the assumptions to be utilized in arriving at such determination
shall be made by Arthur Andersen LLP or, as provided below, such other certified
public accounting firm as may be designated by the Employee (the "Accounting
Firm"), which shall provide detailed supporting calculations both to the Company
and the Employee within 15 business days after the receipt of notice from the
Employee that there has been a Payment, or such earlier time as is requested by
the Company. In the event that the Accounting Firm is serving as accountant or
auditor for the individual, entity or group effecting the Change of Control, the
Employee shall appoint another nationally recognized accounting firm to make the
determinations required hereunder (which accounting firm shall then be referred
to as the Accounting Firm hereunder). All fees and expenses of the Accounting
Firm shall be borne solely by the Company. Any Gross-Up Payment, as determined
pursuant to this Section 8, shall be paid by the Company to the Employee within
five days after the receipt of the Accounting Firm's determination. Any
determination by the Accounting Firm shall be binding upon the Company and the
Employee. As a result of the uncertainty in the application of Section 4999 of
the Code at the time of the initial determination by the Accounting Firm
hereunder, it is possible that Gross-Up Payments that will not have been made by
the Company should have been made ("Underpayment"), consistent with the
calculations required to be made hereunder. In the event that the Company
exhausts its remedies pursuant to Section 8(c) and the Employee thereafter is
required to make a payment of any Excise Tax, the Accounting Firm shall
determine the amount of the Underpayment that has occurred and any such
Underpayment shall be promptly paid by the Company to or for the benefit of the
Employee.

                  (c) The Employee shall notify the Company in writing of any
claim by the Internal Revenue Service that, if successful, would require the
payment by the Company of the Gross-Up Payment (or an additional Gross-Up
Payment) in the event the IRS seeks higher payment. Such notification shall be
given as soon as practicable, but no later than ten business days after the
Employee is informed in writing of such claim, and shall apprise the Company of
the nature of such claim and the date on which such claim is requested to be
paid. The Employee shall not pay such claim prior to the expiration of the
30-day period following the date on which he gives such notice to the Company
(or such shorter period ending on the date that any payment of taxes with
respect to such claim is due). If the Company notifies the Employee in writing
prior to the expiration of such period that it desires to contest such claim,
the Employee shall:

                           (i) give the Company any information reasonably
         requested by the Company relating to such claim,

                           (ii) take such action in connection with contesting
         such claim as the Company shall reasonably request in writing from time
         to time, including without limitation, accepting legal representation
         with respect to such claim by an attorney reasonably selected by the
         Company,

                           (iii) cooperate with the Company in good faith in
         order to effectively contest such claim, and

                           (iv) permit the Company to participate in any
         proceedings relating to such claims; provided, however, that the
         Company shall bear and pay directly all costs and expenses (including
         additional interest and penalties) incurred in connection with such
         costs and shall indemnify and hold the Employee harmless, on an
         after-tax basis, for any Excise Tax or income tax (including interest
         and penalties with respect thereto) imposed as a result of such
         representation and payment of costs and expenses. Without limitation on
         the foregoing provisions of this Section 8(c), the Company shall
         control all proceedings taken in connection with such contest and, at
         its sole option, may pursue or forego any and all administrative
         appeals, proceedings, hearings and conferences with the taxing
         authority in respect of such claim and may, at its sole option, either
         direct the Employee to pay the tax claimed and sue for a refund or
         contest the claim in any permissible manner, and the Employee agrees to
         prosecute such contest to determination before any administrative
         tribunal, in a court of initial jurisdiction and in one or more
         appellate courts, as the Company shall determine; provided, however,

                                       9
<PAGE>   10

         that if the Company directs the Employee to pay such claim and sue for
         a refund, the Company shall advance the amount of such payment to the
         Employee, on an interest-free basis and shall indemnify and hold the
         Employee harmless, on an after-tax basis, from any Excise Tax or income
         tax (including interest or penalties with respect thereto) imposed with
         respect to such advance or with respect to any imputed income with
         respect to such advance; and further provided that any extension of the
         statute of limitations relating to payment of taxes for the taxable
         year of the Employee with respect to which such contested amount is
         claimed to be due is limited solely to such contested amount.
         Furthermore, the Company's control of the contest shall be limited to
         issues with respect to which a Gross-Up Payment would be payable
         hereunder and the Employee shall be entitled to settle or contest, as
         the case may be, any other issues raised by the Internal Revenue
         Service or any other taxing authority.

                  (d) If, after the receipt by the Employee of an amount
advanced by the Company pursuant to Section 8(c), the Employee becomes entitled
to receive any refund with respect to such claim, the Employee shall (subject to
the Company's complying with the requirements of Section 8(c)) promptly pay to
the Company the amount of such refund (together with any interest paid or
credited thereon after taxes applicable thereto). If, after the receipt by the
Employee of an amount advanced by the Company pursuant to Section 8(c), a
determination is made that the Employee shall not be entitled to any refund with
respect to such claim and the Company does not notify the Employee in writing of
its intent to contest such denial of refund prior to the expiration of 30 days
after such determination, then such advance shall be forgiven and shall not be
required to be repaid and the amount of such advance shall offset, to the extent
thereof, the amount of Gross-Up Payment required to be paid.

         9. Confidential Information. The Employee shall hold in a fiduciary
capacity for the benefit of the Company all secret or confidential information,
knowledge or data relating to the Company or any of its affiliated companies,
and their respective businesses, that shall have been obtained by the Employee
during the Employee's employment by the Company or any of its affiliated
companies, provided that it shall not apply to information that is or shall
become public knowledge (other than by acts by the Employee or representatives
of the Employee in violation of this Agreement), information that is developed
by the Employee independently of such information, or knowledge or data or
information that is disclosed to the Employee by a third party under no
obligation of confidentiality to the Company. After termination of the
Employee's employment with the Company, the Employee shall not, without the
prior written consent of the Company or as may otherwise be required by law or
legal process, communicate or divulge any such information, knowledge or data to
anyone other than the Company and those designated by it. In no event shall an
asserted violation of the provisions of this Section 9 constitute a basis for
deferring or withholding any amounts otherwise payable to the Employee under
this Agreement.

         10.      Successors.

                  (a) This Agreement is personal to the Employee and shall not
be assignable by the Employee otherwise than by will or the laws of descent and
distribution. This Agreement shall inure to the benefit of and be enforceable by
the Employee's legal representatives.

                  (b) This Agreement shall inure to the benefit of and be
binding upon the Company and its successors and assigns.

                  (c) The Company will require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Company to (i) assume
expressly and agree to perform this Agreement in the same manner and to the same
extent that the Company would be required to perform it if no such succession
had taken place and (ii) issue to the Employee substantially similar options to
purchase shares of equity in such successor in replacement of options held by
the Employee to purchase shares of common stock of the Company. As used in this
Agreement, "Company"

                                       10
<PAGE>   11

shall mean the Company as hereinbefore defined and any successor to its business
and/or assets as aforesaid that assumes and agrees to perform this Agreement by
operation of law, or otherwise.

         11.      Miscellaneous.

                  (a) THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS, WITHOUT REFERENCE TO PRINCIPLES
OF CONFLICT OF LAWS. The captions of this Agreement are not part of the
provisions hereof and shall have no force or effect. This Agreement may not be
amended or modified otherwise than by a written agreement executed by the
parties hereto or their respective successors and legal representatives.

                  (b) All notices and other communications hereunder shall be in
writing and shall be given by hand delivery to the other party or by registered
or certified mail, return receipt requested, postage prepaid, addressed as
follows:

                  If to the Employee:         William G.Chunn
                                              9850 E. Shore Dr.
                                              Willis, Texas 77378

                  If to the Company:          Grant Prideco, Inc.
                                              1450 Lake Robbins Drive, Suite 600
                                              The Woodlands, Texas 77380
                                              Attention: General Counsel

or to such other address as either party shall have furnished to the other in
writing in accordance herewith. Notices and communications shall be effective
when actually received by the addressee.

                  (c) The invalidity or unenforceability of any provision of
this Agreement shall not affect the validity or enforceability of any other
provision of this Agreement.

                  (d) The Company may withhold from any amounts payable under
this Agreement such Federal, state, local or foreign taxes as shall be required
to be withheld pursuant to any applicable law or regulation.

                  (e) The Employee's or the Company's failure to insist upon
strict compliance with any provision of this Agreement or the failure to assert
any right the Employee or the Company may have hereunder, including without
limitation, the right of the Employee to terminate employment for Good Reason
pursuant to Section 4(c)(i)-(v) of this Agreement, shall not be deemed to be a
waiver of such provision or right or any other provision or right of this
Agreement.

         IN WITNESS WHEREOF, the Employee has hereunto set the Employee's hand
and, pursuant to the authorization from its Board of Directors, the Company has
caused these presents to be executed in its name and on its behalf, all as of
the day and year first above written.

                                                    /s/ William G. Chunn
                                              ----------------------------------
                                                      William G. Chunn

                                              GRANT PRIDECO, INC.

                                              By         /s/ John C. Coble
                                              ----------------------------------
                                                          John C. Coble
                                                            President

                                       11<PAGE>   1
                                                                  EXHIBIT 10.1
                                                                EXECUTION COPY

                          AGREEMENT AND PLAN OF MERGER

                                   DATED AS OF

                                FEBRUARY 14, 2000

                                      AMONG

                      AMERICAN PLUMBING & MECHANICAL, INC.,

                              LDI MECHANICAL, INC.,

                         LINDY DENNIS INDUSTRIES, INC.,

                         LDI HEATING & AIR CONDITIONING,

                                 LDI MECHANICAL,

                        KRAHENBUHL PLUMBING INCORPORATED,

                       KRAHENBUHL FIRE SPRINKLERS LLC AND

                           GREEN VALLEY PLUMBING, INC.

                                       AND

                                 LLOYD C. SMITH,

                                SANDRA A. SMITH,

                   JAMES K. KRAHENBUHL, TRUSTEE U/D/T 4/22/99,

                  KAYLEEN B. KRAHENBUHL, TRUSTEE U/D/T 4/22/99

                                       AND

                               JEFFERY L. MINARIK

<PAGE>   2

                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                                                              Page
<S>                                                                                                           <C>
ARTICLE I The Merger...........................................................................................1
         Section  1.1.  The Merger.............................................................................1
         Section  1.2.  Conversion of Shares...................................................................2
         Section  1.3.  Merger Consideration Adjustment........................................................3
         Section  1.4.  Surrender and Payment..................................................................4
         Section  1.5.  Withholding Rights.....................................................................4
         Section  1.6.  Lost Certificates......................................................................4
         Section  1.7.  Other Documents to be Delivered Immediately Prior to the
                        Effective Time........................................................................ 4
         Section  1.8.  Conditions to the Obligations of the Company Stockholders..............................6
         Section  1.9.  Conditions to the Obligations of AMPAM.................................................6
         Section  1.10. Termination............................................................................7

ARTICLE II The Surviving Corporation...........................................................................8
         Section  2.1.  Certificate of Incorporation.  ........................................................8
         Section  2.2.  Bylaws.  ..............................................................................8
         Section  2.3.  Directors and Officers.................................................................8

ARTICLE III Representations and Warranties of the Company Stockholders.........................................8
         Section  3.1.  Organization and Qualification.........................................................8
         Section  3.2.  Capitalization; Ownership..............................................................9
         Section  3.3.  Authorization..........................................................................9
         Section  3.4.  Consents and Approvals; No Violation...................................................9
         Section  3.5.  Affiliate Relationships...............................................................10
         Section  3.6.  Financial Statements..................................................................10
         Section  3.7.  Undisclosed Liabilities...............................................................11
         Section  3.8.  Accounts and Notes Receivables........................................................11
         Section  3.9.  Assets................................................................................11
         Section  3.10. Material Contracts, Commitments and Customers.........................................12
         Section  3.11. Operating Authority...................................................................13
         Section  3.12. Bank Account Information..............................................................13
         Section  3.13. Conduct of Business Since Company Unaudited Balance Sheet Date........................13
         Section  3.14. Litigation; Orders....................................................................15
         Section  3.15. Labor Matters.........................................................................15
         Section  3.16. Compliance with Laws..................................................................15
         Section  3.17. Insurance.............................................................................15
         Section  3.18. Environmental Matters.................................................................15
         Section  3.19. Taxes.................................................................................16
</TABLE>

                                        i
<PAGE>   3

<TABLE>
<S>                                                                                                          <C>
         Section  3.20. Employee Benefit Plans................................................................18
         Section  3.21. Brokerage Fees and Commissions........................................................20
         Section  3.22. Tax Treatment.........................................................................20

ARTICLE IV Representations and Warranties of AMPAM............................................................20
         Section  4.1.  Organization and Qualification........................................................20
         Section  4.2.  Capitalization........................................................................20
         Section  4.3.  Authorization.........................................................................21
         Section  4.4.  Consents and Approval; No Violation...................................................21
         Section  4.5.  SEC Filings...........................................................................22
         Section  4.6.  Tax Treatment.........................................................................22

ARTICLE V Additional Covenants and Agreements.................................................................22
         Section  5.1.  Reasonable Best Efforts...............................................................22
         Section  5.2.  Certain Filings.......................................................................22
         Section  5.3.  Public Announcements..................................................................22
         Section  5.4.  Further Assurances....................................................................23
         Section  5.5.  Notices of Certain Events.............................................................23
         Section  5.6.  Release from Guarantees...............................................................23
         Section  5.7.  Future Cooperation; Tax Matters.......................................................23
         Section  5.8.  Expenses..............................................................................24
         Section  5.9.  Repayment of Related Party Indebtedness...............................................24
         Section  5.10. FIRPTA Certificate....................................................................24
         Section  5.11. Preparation and Filing of Tax Returns.................................................24
         Section  5.12. Transfer of Real Property.............................................................25
         Section  5.13. Antitrust Law Compliance..............................................................25
         Section  5.14. Pending Closing.......................................................................25
         Section  5.15. Notification of Certain Matters.......................................................27
         Section  5.16. Amendment of Schedules................................................................28
         Section  5.17. Board of Directors Seat...............................................................28
         Section  5.18. Company's Health Benefits and 401K Contributions......................................28
         Section  5.19. Access to Materials...................................................................28

ARTICLE VI Indemnification....................................................................................28
         Section  6.1.  Indemnification by the Company Stockholders...........................................28
         Section  6.2.  Indemnification Related to Tax Liabilities............................................29
         Section  6.3.  Indemnification Related to Accounts Receivable........................................29
         Section  6.4.  Indemnification by AMPAM..............................................................29
         Section  6.5.  Indemnification Proceedings...........................................................30
         Section  6.6.  Exclusive Remedy......................................................................31
</TABLE>

                                       ii

<PAGE>   4

<TABLE>
 <S>                                                                                                          <C>
         Section  6.7.  Limitations on Indemnification.........................................................31
         Section  6.8.  Indemnification if Negligence of Indemnitee............................................33
         Section  6.9.  No Third Party Beneficiaries...........................................................33

ARTICLE VII Noncompetition Covenants...........................................................................33
         Section  7.1.  Prohibited Activities..................................................................33
         Section  7.2.  Equitable Relief.......................................................................34
         Section  7.3.  Reasonable Restraint...................................................................34
         Section  7.4.  Severability; Reformation..............................................................35
         Section  7.5.  Material and Independent Covenant......................................................35
         Section  7.6.  Materiality............................................................................35

ARTICLE VIII Applicable Securities Laws/Transfer Restrictions..................................................36
         Section  8.1.  Company Stockholders' Representations and Warranties
                        Concerning Securities..................................................................36
         Section  8.2.  Transfer Restrictions Relating to AMPAM Common Stock...................................36

ARTICLE IX Registration Rights.................................................................................37
         Section  9.1.  Piggyback Registration Rights..........................................................37
         Section  9.2.  Registration Procedures................................................................38
         Section  9.3.  Indemnification........................................................................40
         Section  9.4.  Underwriting Agreement.................................................................41
         Section  9.5.  Transfer of Rights.....................................................................42
         Section  9.6.  Rule 144 Reporting.....................................................................42

ARTICLE X Nondisclosure of Confidential Information............................................................43
         Section  10.1. General................................................................................43
         Section  10.2. Equitable Relief.......................................................................43
         Section  10.3. Non-Public Information.................................................................43
         Section  10.4. Survival...............................................................................44
         Section  10.5. Return of Information..................................................................44

ARTICLE XI Redemption of AMPAM Stock...........................................................................45
         Section  11.1. Redemption Trigger.....................................................................45
         Section  11.2. Minimum Redemption; Limitations........................................................45
         Section  11.3. Notice; Limitations....................................................................45
         Section  11.4. Termination of Redemption Obligation...................................................46

ARTICLE XII Miscellaneous......................................................................................46
         Section  12.1. Governing Law..........................................................................46
         Section  12.2. Entire Agreement.......................................................................46
         Section  12.3. Notices................................................................................46
</TABLE>

                                      iii
<PAGE>   5

<TABLE>
<S>                                                                                                            <C>
         Section  12.4.  Successors and Assigns.................................................................47
         Section  12.5.  Survival of Representations and Warranties.............................................47
         Section  12.6.  Headings; Definitions..................................................................47
         Section  12.7.  Amendments and Waivers.................................................................47
         Section  12.8.  Construction of Certain Provisions.....................................................48
         Section  12.9.  Severability...........................................................................48
         Section  12.10. Jurisdiction...........................................................................48
         Section  12.11. Waiver of Jury Trial...................................................................48
         Section  12.12. Specific Performance...................................................................48
         Section  12.13. Counterparts; Effectiveness............................................................49
         Section  12.14. Mutual Indemnification Against Claims of Brokers.......................................49
         Section  12.15. Definitions and Usage..................................................................49
</TABLE>

                                       iv
<PAGE>   6

                             EXHIBITS AND SCHEDULES

<TABLE>
<CAPTION>
<S>                 <C>
Exhibit A           Form of Employment Agreement - President
Exhibit B           Form of Employment Agreement - Management
Exhibit C           Form of Opinion of Counsel to Company Stockholders
Exhibit D           Form of Certificate of Secretary of the Company
Exhibit E           Form of Company Stockholder Release
Exhibit F           Form of Company Stockholder Receipt
Exhibit G           Form of Cross-Receipt
Exhibit H           Form of Opinion of Andrews & Kurth L.L.P.
Exhibit I           Form of Certificate Certifying Representations and Warranties
Exhibit J           Form of Lease

Schedule 1.5        Required Withholding
Schedule 2.3        Officers of Surviving Corporation
Schedule 3.1        Organization and Qualification of Company
Schedule 3.2        Ownership of Company Stock and Delivery Instructions
Schedule 3.4        Company Consents and Approvals; No Violation
Schedule 3.5        Affiliate Relationships
Schedule 3.6        Company Financial Statements
Schedule 3.7        Company Undisclosed Liabilities
Schedule 3.8        Company Accounts and Notes Receivables
Schedule 3.9        Company Assets
Schedule 3.10       Material Contracts, Commitments and Customers
Schedule 3.11       Company Operating Authority
Schedule 3.12       Company Bank Account Information
Schedule 3.13       Company Conduct of Business
Schedule 3.14       Company Litigation; Orders
Schedule 3.15       Company Labor Agreements
Schedule 3.17       Company Insurance
Schedule 3.18       Company Disposal Sites
Schedule 3.19       Company Taxes
Schedule 3.20       Company Employee Benefit Plans
Schedule 3.21       Company Brokerage Fees and Commissions
Schedule 4.4        AMPAM Consents and Approvals; No Violation
Schedule 5.6        Company Stockholder Guarantees
Schedule 5.9        Repayment of Advances, Receivables and Loans
Schedule 5.12       Transfer of Real Property
Schedule 5.14       Actions Pending Closing
</TABLE>

                                       v
<PAGE>   7

                          AGREEMENT AND PLAN OF MERGER

         AGREEMENT AND PLAN OF MERGER ("Agreement") dated as of February 14,
2000, among American Plumbing & Mechanical, Inc., a Delaware corporation
("AMPAM"), LDI Mechanical, Inc., a Delaware corporation and a wholly owned
subsidiary of AMPAM ("Acquisition"), Lindy Dennis Industries, Inc., a Texas
corporation, LDI Heating & Air Conditioning, a California corporation, LDI
Mechanical, a California corporation, Krahenbuhl Plumbing Incorporated, a Nevada
corporation, Krahenbuhl Fire Sprinklers LLC, a Nevada limited liability company,
and Green Valley Plumbing, Inc., a Nevada corporation (collectively the
"Company"), and Lloyd C. Smith, Sandra A. Smith, James K. Krahenbuhl and Kayleen
B. Krahenbuhl, Trustees u/d/t 4/22/99, and Jeffery L. Minarik, who are all of
the stockholders and/or members of the Company (together, the "Company
Stockholders").

                                    RECITALS:

         WHEREAS, the Boards of Directors of AMPAM and the Company have
determined that the combination of AMPAM and the Company is in the best
interests of the stockholders and/or members of AMPAM and the Company,
respectively;

         WHEREAS, the Company Stockholders desire to convey to AMPAM all of the
issued and outstanding shares of capital stock and membership interest of the
Company, free and clear of all liens, and the Company Stockholders agree to be
bound by a covenant not to compete;

         WHEREAS, AMPAM desires to acquire such shares of capital stock and
membership interest of the Company as more fully set forth herein and enforce
the covenant not to compete; and

         WHEREAS, AMPAM, the Company and the Company Stockholders intend the
combination of AMPAM and the Company to qualify as a tax-free reorganization
under the provisions of Section 368 of the Internal Revenue Code of 1986, as
amended (the "Code"), and the regulations thereunder;

         NOW, THEREFORE, in consideration of the mutual covenants and agreements
set forth herein, the parties hereto agree as follows:

                                    ARTICLE I

                                   THE MERGER

     SECTION 1.1. THE MERGER. (a) Subject to the execution of this Agreement and
the delivery of the documents listed in Section 1.7, at the Effective Time (as
hereinafter defined), the Company shall be merged (the "Merger") with and into
Acquisition in accordance with the General

                                     - 1 -

<PAGE>   8

Corporation Law of the State of Delaware ("Delaware Law") and the laws of the
states of organization of the Company (collectively "Company Law"), whereupon
the separate existence of the Company shall cease, and Acquisition shall be the
surviving corporation (the "Surviving Corporation").

         (b) Immediately following the execution of this Agreement and the
delivery of the documents listed in Section 1.7, and the satisfaction or waiver
of the conditions contained in Section 1.8 and Section 1.9, the Company and
Acquisition will file a certificate of merger with the Delaware Secretary of
State (the "Certificate of Merger") and appropriate merger documents with the
Texas, California and Nevada Secretary of State (the "State Certificates"), and
make all other filings or recordings required by Delaware Law or Company Law in
connection with the Merger. The Merger shall become effective at such time (the
"Effective Time") as the Certificate of Merger and the State Certificates are
duly filed with the Delaware, Texas, California and Nevada Secretary of State
(or at such later time as may be agreed in writing by the parties hereto and
specified in the Certificate of Merger and the State Certificates).

         (c) From and after the Effective Time, the Surviving Corporation shall
possess all the rights, assets, powers, privileges, and franchises and be
subject to all of the obligations, liabilities, restrictions, and disabilities
of the Company and Acquisition, all as provided under Delaware Law.

         (d) The closing of the transactions contemplated by this Agreement (the
"Closing") shall take place at the offices of Andrews & Kurth, L.L.P. in
Houston, Texas, at 10:00 a.m., on a day within 5 business days following the
date on which regulatory approval under the Hart Scott Act (as defined) is
received or on such other day and time as shall be agreed to by the parties.
This Closing shall coincide with the Effective Time.

     SECTION 1.2. CONVERSION OF SHARES. At the Effective Time:

         (a) the shares of common stock of the Company ("Company Common Stock")
and membership interest of the Company ("Company Membership Interest")
outstanding immediately prior to the Effective Time (the Company Common Stock
and the Company Membership Interest outstanding immediately prior to the
Effective Time shall hereinafter be referred to collectively as the "Company
Stock" unless some distinction is necessary) shall be converted into the right
to receive, without interest, an aggregate consideration equal to 1,346,154
shares of common stock, $0.01 par value, of AMPAM ("AMPAM Common Stock") and
$12,000,000 in cash, as adjusted by Section 1.3 (collectively, the "Merger
Consideration").

         (b) each share of common stock of Acquisition outstanding immediately
prior to the Effective Time shall remain outstanding and represent, after the
Effective Time, one share of common stock of the Surviving Corporation, and
shall constitute the only outstanding shares of capital stock of the Surviving
Corporation.

                                     - 2 -
<PAGE>   9

         (c) AMPAM shall issue to non-stockholder employees of the Company, as
determined by the Company and approved by AMPAM, 195,000 non-qualified stock
options, at an option price per share to be determined by AMPAM within thirty
(30) days after the Effective Time, which will vest 20% per year over a five
year period beginning on the date of such grant.

     SECTION 1.3. MERGER CONSIDERATION ADJUSTMENT.

         (a) Within three (3) days before the anticipated date of Closing, the
Company Stockholders will cause the Company to prepare an estimated balance
sheet of the Company (the "Estimated Balance Sheet") at the Company's expense
which will be dated as of the Effective Time (as defined in Section 12.15) and
will deliver such Estimated Balance Sheet to AMPAM for its review. The cash
portion only of the Merger Consideration set forth in Section 1.2 hereof to be
paid on the date of Closing shall then be adjusted (the "Adjustments") as
follows (the "Adjusted Merger Consideration"):

               (i) increased by the amount, if any, by which the Actual Working
          Capital (as defined in Section 12.15) as reflected on the Estimated
          Balance Sheet exceeds the Target Working Capital (as defined in
          Section 12.15);

               (ii) reduced by the amount, if any, by which the Target Working
          Capital exceeds the Actual Working Capital as reflected on the
          Estimated Balance Sheet; and

               (iii) reduced by the amount, if any, of Actual Indebtedness (as
          defined in Section 12.15) (except for any Actual Indebtedness used in
          the calculation of Actual Working Capital), as reflected on the
          Estimated Balance Sheet.

         (b) Within the sixty (60) day period following the Closing, AMPAM and
the Company Stockholders will attempt in good faith to finalize the Company's
Estimated Balance Sheet, such finalized balance sheet to be referred to herein
as the "Final Balance Sheet". If AMPAM and the Company Stockholders cannot
mutually agree on a Final Balance Sheet within this sixty (60) day period, then
immediately following the conclusion of such sixty (60) day period the Final
Balance Sheet shall be delivered to the independent accounting firm of
Pricewaterhouse Coopers. Pricewaterhouse Coopers shall have thirty (30) days to
review the Final Balance Sheet and its determinations within such period shall
be final and binding on the parties. To the extent the Final Balance Sheet
differs from the Estimated Balance Sheet and to the extent these differences
would increase or decrease the Adjustments as calculated pursuant to Section
1.3(a), the cash portion only of the Adjusted Merger Consideration shall then be
further adjusted (the "Readjusted Merger Consideration") in the same manner as
the formula used in Section 1.3(a).

         (c) The settlement or payment of the Adjustments to the cash portion
only of the Merger Consideration pursuant to Section 1.3(a) shall occur on the
date of Closing. The settlement

                                     - 3 -
<PAGE>   10

or payment of the Adjustments to the cash portion of the Adjusted Merger
Consideration pursuant to Section 1.3(b) shall occur within ten (10) business
days after the Final Balance Sheet is finalized.

     SECTION 1.4. SURRENDER AND PAYMENT. At the Effective Time, the Company
Stockholders will deliver to AMPAM the certificates listed on Schedule 3.2 (the
"Certificates") representing all of the outstanding shares of Company Stock, and
AMPAM will, in exchange therefor, issue and deliver to the Company Stockholders
the AMPAM Common Stock, and pay to the Company Stockholders by wire transfer in
immediately available funds the Adjusted Merger Consideration (subject to
further readjustment, if necessary, to arrive at the Readjusted Merger
Consideration), divided among the Company Stockholders in accordance with the
written instructions provided in Schedule 3.2. The Certificates will be duly
endorsed (or accompanied by duly executed stock powers), with signatures of
those Company Stockholders not present at the closing guaranteed by a commercial
bank.

     SECTION 1.5. WITHHOLDING RIGHTS. Each of the Surviving Corporation and
AMPAM shall be entitled to deduct and withhold from the consideration otherwise
payable to any Person (as defined in Section 12.15) pursuant to this Article I
such amounts as it is required to deduct and withhold with respect to the making
of such payment under any provision of federal, state, local, or foreign tax
law. These amounts are set forth in Schedule 1.5 to this Agreement. To the
extent that amounts are so withheld by the Surviving Corporation or AMPAM, as
the case may be, such withheld amounts shall be treated for all purposes of this
Agreement as having been paid to the holder of the Company Stock in respect of
which such deduction and withholding was made by the Surviving Corporation or
AMPAM, as the case may be.

     SECTION 1.6. LOST CERTIFICATES. If any Certificate shall have been lost,
stolen, or destroyed, upon the making of an affidavit of that fact by the Person
claiming such Certificate to be lost, stolen, or destroyed and, if required by
the Surviving Corporation, the posting by such Person of a bond, in such
reasonable amount as the Surviving Corporation may direct, as indemnity against
any claim that may be made against it with respect to such Certificate, AMPAM
will issue in exchange for such lost, stolen, or destroyed Certificate, the
Merger Consideration to be paid in respect of the shares of Company Stock
represented by such Certificates as contemplated by this Article I.

     SECTION 1.7. OTHER DOCUMENTS TO BE DELIVERED IMMEDIATELY PRIOR TO THE
EFFECTIVE TIME.

         (a) Immediately prior to the Effective Time and at the Closing, the
Company and the Company Stockholders will deliver to AMPAM:

               (i) an Employment Agreement (collectively with the employment
          agreements specified in Section 1.7(a) (ii), the "Employment
          Agreements"), in the form attached hereto as Exhibit A, for Lloyd C.
          Smith;

                                     - 4 -
<PAGE>   11

               (ii) Employment Agreements each in the form attached hereto as
          Exhibit B, for each of the following employees of the Company: Michael
          Smith, Robert Smith, James K. Krahenbuhl, Jeffrey L. Minarik and Byrl
          Lumby;

               (iii) an opinion of counsel to the Company Stockholders in the
          form attached hereto as Exhibit C;

               (iv) a Certificate of the Secretary of the Company in the form
          attached hereto as Exhibit D;

               (v) a release executed by the Company Stockholders in the form
          attached hereto as Exhibit E;

               (vi) the minute book and corporate seal of the Company;

               (vii) receipts executed by the Company Stockholders in the form
          attached hereto as Exhibit F;

               (viii) a cross-receipt executed by the Company Stockholders in
          the form attached hereto as Exhibit G;

               (ix) a certificate dated as of the Closing executed by the
          President of the Company and the Company Stockholders in the form
          attached hereto as Exhibit I certifying that the representations and
          warranties set forth in Article III are true and correct; and

               (x) Leases each in the form attached hereto as Exhibit J, with
          Smith Properties LLC for the properties located at 1740 Delilah
          Street, Corona, California, and 3862 East Post Road, Las Vegas,
          Nevada, and with Plumbing Properties LLC for the property located at
          3842 East Post Road, Las Vegas, Nevada (collectively the "Leases").

         (b) Immediately prior to the Effective Time and at the Closing, AMPAM
and Acquisition will deliver to the Company Stockholders:

               (i) the Employment Agreements executed by a duly authorized
          representative of AMPAM or Acquisition on behalf of the Surviving
          Corporation;

               (ii) an opinion of Andrews & Kurth L.L.P. in the form attached
          hereto as Exhibit H;

               (iii) a cross-receipt executed by AMPAM in the form attached
          hereto as Exhibit G;

                                     - 5 -
<PAGE>   12

               (iv) a certificate dated as of the Closing executed by an
          executive officer of AMPAM in the form attached hereto as Exhibit I
          certifying that the representations and warranties set forth in
          Article IV are true and correct; and

               (v) the Leases executed by a duly authorized representative of
          AMPAM or Acquisition on behalf of the Surviving Corporation.

     SECTION 1.8. CONDITIONS TO THE OBLIGATIONS OF THE COMPANY STOCKHOLDERS. The
obligations of the Company Stockholders to consummate the Merger are subject to
the fulfillment, at or before the Closing, of all of the following conditions,
any one or more of which may be waived by the Company Stockholders.

         (a) The representations and warranties of AMPAM and Acquisition
contained in this Agreement shall be true as of the Effective Time, subject to
changes in the Schedules pursuant to Section 5.16.

         (b) All of the obligations of AMPAM and Acquisition to be performed at
or before the Closing pursuant to the terms of this Agreement shall have been
duly performed.

         (c) The documents necessary to consummate the Merger shall have been
filed with the Secretary of State of the State of Delaware and the Secretary of
State of Texas, California and Nevada.

         (d) The Company Stockholders shall have received an opinion of counsel
to AMPAM in the form of Exhibit H regarding certain matters.

         (e) No event or circumstance shall have occurred which would constitute
an AMPAM Material Adverse Change (as defined in Section 12.15).

     SECTION 1.9. CONDITIONS TO THE OBLIGATIONS OF AMPAM. The obligations of
AMPAM and Acquisition to consummate the Merger are subject to the fulfillment,
at or before the Closing, of all the following conditions, any one or more of
which may be waived by AMPAM.

         (a) The representations and warranties of the Company Stockholders
contained in this Agreement shall be true as of the Effective Time, subject to
changes in the Schedules pursuant to Section 5.16 that have been approved by
AMPAM, if necessary.

         (b) All of the obligations of the Company and the Company Stockholders
to be performed at or before the Closing pursuant to the terms of this Agreement
shall have been duly performed, including without limitation those set forth in
Article I hereof.

         (c) AMPAM shall have received an opinion of counsel to the Company
Stockholders in the form of Exhibit C regarding certain matters.

                                     - 6 -
<PAGE>   13

         (d) The documents necessary to consummate the Merger shall have been
filed with the Secretary of State of the State of Delaware and the Secretary of
State of the States of Texas, California and Nevada.

         (e) All waiting, review and investigation periods (and any extensions
thereof) applicable to the consummation of the Merger under the Hart Scott Act
shall have expired or been terminated.

     SECTION 1.10. TERMINATION. (a) This Agreement may be terminated at any time
prior to the Closing solely:

               (i) by mutual consent of AMPAM and the Company Stockholders;

               (ii) by all of the Company Stockholders on the one hand, or by
          AMPAM (acting through its board of directors), on the other hand, if
          the transactions contemplated by this Agreement to take place at the
          Closing shall not have been consummated by March 31, 2000, unless the
          failure of such transactions to be consummated is due to the willful
          failure of the party seeking to terminate this Agreement to perform
          any of its obligations under this Agreement to the extent required to
          be performed by it prior to the Closing. Additionally, if the reason
          for the failure of the Closing to occur by this date is that
          regulatory approval under the Hart Scott Act has not been received in
          time for the Closing to occur by March 31, 2000, then, the Closing may
          be extended by the mutual agreement of the parties to a date five days
          after such regulatory approval is received;

               (iii) by the Company Stockholders on the one hand, or by AMPAM,
          on the other hand, if a material breach or material default shall be
          made by the other party in the observance or in the due and timely
          performance of any of the covenants or agreements contained herein,
          and the curing or waiver of such material breach or material default
          shall not have been made on or before the Closing;

               (iv) by either party if, pursuant to Section 5.16, that party
          wishes to amend their Schedules and the other party refuses to consent
          to such amendment;

               (v) by the Company Stockholders, if the conditions set forth in
          Section 1.8 hereof have not been satisfied or waived as of the
          Closing; or

               (vi) by AMPAM, if the conditions set forth in Section 1.9 hereof
          have not been satisfied or waived as of the Closing.

         (b) Procedure and Effect of Termination. In the event of a termination
pursuant to this Section 1.10, written notice setting forth the reasons thereof
shall forthwith be given by the terminating party to the other party. If this
Agreement is terminated as provided in this Section 1.10, no party shall have
any liability or further obligation hereunder to any other party, except as
provided

                                     - 7 -
<PAGE>   14

in Article X, provided, that the termination of this Agreement will in no way
limit any obligation or liability of any party based on or arising from a breach
or default by such party with respect to any of its representations, warranties,
covenants or agreements contained in this Agreement.

                                   ARTICLE II

                            THE SURVIVING CORPORATION

     SECTION 2.1. CERTIFICATE OF INCORPORATION. The certificate of incorporation
of Acquisition in effect at the Effective Time shall be the certificate of
incorporation of the Surviving Corporation until amended in accordance with
applicable law.

     SECTION 2.2. BYLAWS. The bylaws of Acquisition in effect at the Effective
Time shall be the bylaws of the Surviving Corporation until amended in
accordance with applicable law.

     SECTION 2.3. DIRECTORS AND OFFICERS. From and after the Effective Time,
until successors are duly elected or appointed and qualified in accordance with
applicable law, (i) the directors of the Surviving Corporation shall be as set
forth on Schedule 2.3 hereto and (ii) the officers of the Surviving Corporation
shall be as set forth on Schedule 2.3 hereto.

                                   ARTICLE III

           REPRESENTATIONS AND WARRANTIES OF THE COMPANY STOCKHOLDERS

         Each Company Stockholder jointly and severally represents and warrants
to AMPAM and Acquisition that all of the following representations and
warranties in this Article III are true (i) as of the date of execution of this
Agreement, (ii) as of the Effective Time subject to Section 5.16, and (iii) for
a period of two years from the Closing (the last day of such period being the
"Expiration Date"), except that the representations and warranties set forth in
Sections 3.2, 3.18 and 3.19 shall survive until such time as the applicable
statute of limitations period has run, which expired statute of limitations
period shall be deemed to be the Expiration Date for the representations and
warranties set forth in Sections 3.2, 3.18 and 3.19. Except as expressly set
forth in this Agreement, the Company Stockholders expressly disclaim any
representation or warranty (express, implied or otherwise) relating to the
Company including, without limitation, any warranty of merchantability or
fitness for a particular purpose.

     SECTION 3.1. ORGANIZATION AND QUALIFICATION. The Company is a corporation
or limited liability company duly organized, validly existing, and in good
standing under the laws of the state of its incorporation or organization and
has the requisite corporate power to carry on its business as it is now being
conducted. The Company is duly qualified to conduct business as a foreign
corporation or organization in every state of the United States in which its
ownership or lease of

                                     - 8 -
<PAGE>   15

property or the conduct of its business and operations makes such qualification
necessary, except for such states in which the Company's failure to be so
qualified is not reasonably expected to have, individually or in the aggregate,
a Company Material Adverse Effect (as defined in Section 12.15). Schedule 3.1
contains a list of all jurisdictions in which the Company is authorized or
qualified to do business. Prior to the Closing, the Company will deliver to
AMPAM true and complete copies of the articles of incorporation or organization
and bylaws or operating agreement of the Company, in each instance including any
amendments thereto, as currently in effect.

     SECTION 3.2. CAPITALIZATION; OWNERSHIP. The authorized capital stock and
membership interest of the Company is set forth on Schedule 3.2 and are issued
and outstanding. The Company Stock are all of the issued and outstanding shares
of capital stock and membership interest of the Company and have been duly
authorized and validly issued and are fully paid and nonassessable and free of
preemptive rights. Except as set forth in Schedule 3.2, there are not, as of the
date hereof, any outstanding or authorized subscriptions, options, warrants,
calls, rights, commitments, or any other agreements of any character (any of the
foregoing, a "Commitment") obligating the Company to issue any additional shares
of capital stock of the Company, or any other securities convertible into or
evidencing the right to subscribe for any shares of capital stock of the
Company. The Company Stockholders own the respective number of shares of Company
Stock set forth on Schedule 3.2 attached hereto, free and clear of all Liens (as
defined in Section 12.15). Each of the Company Stockholders has full legal
right, power and authority to exchange, assign and transfer or cause to be
exchanged, assigned or transferred their respective shares of Company Stock. The
delivery to AMPAM of the Company Stock pursuant to the terms of this Agreement
will transfer valid title thereto, free and clear of all Liens.

     SECTION 3.3. AUTHORIZATION. The Company has the requisite corporate or
limited liability company power and authority to execute and deliver this
Agreement and to consummate the transactions contemplated by this Agreement. The
Company Stockholders and/or the Board of Directors of the Company have by
unanimous written consent (a) determined that participating in the Merger is in
the best interests of the Company and its stockholders or members and (b)
approved this Agreement and the Merger. No other corporate proceedings on the
part of the Company or the Company Stockholders are necessary to authorize the
execution and delivery of this Agreement or the consummation by the Company and
the Company Stockholders of the transactions contemplated hereby. This Agreement
has been duly authorized, executed, and delivered by the Company and the Company
Stockholders and constitutes the valid and binding obligation of the Company and
the Company Stockholders, enforceable against the Company and the Company
Stockholders in accordance with its terms, subject to bankruptcy, insolvency,
fraudulent transfers, reorganization, moratorium, and similar laws of general
applicability relating to or affecting creditors' rights and to general equity
principals.

     SECTION 3.4. CONSENTS AND APPROVALS; NO VIOLATION. Neither the execution
and delivery of this Agreement by the Company or the Company Stockholders, nor
the consummation by the Company or the Company Stockholders of the transactions
contemplated by this Agreement, will:

                                     - 9 -
<PAGE>   16

(a) require any consent, approval, authorization, or permit of, or filing with
or notification to, any Governmental Authority (as defined in Section 12.15),
except (i) the filing of a Certificate of Merger in accordance with Delaware
Law, (ii) the filing of the State Certificates in accordance with Company Law,
(iii) any regulatory approvals or routine governmental consents, including
approvals in connection with the Hart Scott Act, normally acquired before or
after the consummation of transactions such as transactions of the nature
contemplated by this Agreement, which consents and approvals are listed on
Schedule 3.4, or (iv) where the failure to obtain such consent, approval,
authorization, or permit, or to make such filing or notification, is not
reasonably expected to have, individually or in the aggregate, a Company
Material Adverse Effect or prevent or delay, in any material respect, the
consummation of the transactions contemplated by this Agreement; (b) result in a
default (or give rise to any right of termination, cancellation, or
acceleration) under any of the terms, conditions, or provisions of any contract,
commitment or similar agreement to which the Company is a party, except (i) as
set forth on Schedule 3.4 or (ii) for such defaults (or rights of termination,
cancellation, or acceleration) as to which requisite waivers or consents have
been obtained or which are not reasonably expected to have, individually or in
the aggregate, a Company Material Adverse Effect or prevent or delay, in any
material respect, the consummation of the transactions contemplated by this
Agreement; or (c) assuming compliance with the matters referred to in Section
3.4(a), violate any order, writ, injunction, decree, statute, rule, or
regulation applicable to the Company, or any of its assets, except for
violations which are not reasonably expected to have, individually or in the
aggregate, a Company Material Adverse Effect or prevent or delay, in any
material respect, the consummation of the transactions contemplated by this
Agreement. The Company is not, and the transactions contemplated by this
Agreement will not result, in violation of its Articles of Incorporation or
Bylaws.

     SECTION 3.5. AFFILIATE RELATIONSHIPS. Except as set forth on Schedule 3.5,
none of the Company Stockholders nor any Affiliate (as defined in Section 12.15)
of any of the Company Stockholders, and no director, officer, employee or agent
of or consultant to the Company, owns, directly or indirectly, in whole or in
part, any property, assets or right, tangible or intangible, which is associated
with any property, asset or right owned by the Company or which the Company is
operating or using or the use of which is necessary for its business. Also
included in Schedule 3.5 is disclosure of any relationships which any of the
Company Stockholders have, or any director, officer, employee, or agent of or
consultant to the Company has, with the Company or any other corporation,
partnership, firm, association or business organization, entity or enterprise
which is a competitor, potential competitor, supplier or customer of the
Company. The Persons named on Schedule 3.5 are the only Persons who may be
deemed Affiliates of the Company under Rule 145 of the Securities Act of 1933,
as amended (the "1933 Act").

     SECTION 3.6. FINANCIAL STATEMENTS. Attached as Schedule 3.6 are (a) the
balance sheet, statement of income and statement of cash flows of the Company as
of and for the years ended December 31, 1996, 1997 and 1998 (the "Company
Financial Statements") and (b) the unaudited consolidated balance sheet,
statement of income and statement of cash flows of the Company as of and for the
year ended December 31, 1999 (the "Company Unaudited Financial Statements"). The

                                     - 10 -
<PAGE>   17

Company Financial Statements and the Company Unaudited Financial Statements
present fairly the consolidated financial position, results of operations, and
changes in financial position of the Company as of the respective dates or for
the respective periods to which they apply in accordance with United States
generally accepted accounting principles, consistently applied ("GAAP").

     SECTION 3.7. UNDISCLOSED LIABILITIES. Schedule 3.7 sets forth an accurate
list as of the Company Unaudited Balance Sheet Date (as defined below) of (i)
all liabilities of the Company which are reflected in the balance sheet
contained in the Company Unaudited Financial Statements and (ii) any liabilities
of any kind of the Company which are not reflected in the balance sheet included
in the Company Unaudited Financial Statements. Except as set forth on Schedule
3.7 or as reflected, reserved against, or otherwise disclosed in the Company
Unaudited Financial Statements, the Company did not, at the date of the
unaudited balance sheet included in the Company Unaudited Financial Statements
(the "Company Unaudited Balance Sheet Date") and does not have, at the date
hereof, any liabilities or obligations, whether accrued, contingent, absolute,
determined, determinable or otherwise, that may have, individually or in the
aggregate, a Company Material Adverse Effect.

     SECTION 3.8. ACCOUNTS AND NOTES RECEIVABLES. Schedule 3.8 sets forth an
accurate list as of the Company Unaudited Balance Sheet Date of the accounts and
notes receivable of the Company, including receivables from and advances to
employees of the Company and the Company Stockholders. Included in Schedule 3.8
is an aging of all accounts and notes receivable showing amounts due in 30-day
aging categories. The trade and other accounts receivable of the Company which
are classified as current assets on the balance sheet as of the Company
Unaudited Balance Sheet Date are bona fide receivables, were acquired in the
ordinary course of business, are stated in accordance with GAAP and, subject to
the reserve for doubtful accounts, need not be written-off as uncollectible.
Except to the extent reflected on Schedule 3.8, such accounts and notes are
collectible in the amount shown on Schedule 3.8.

     SECTION 3.9. ASSETS. Schedule 3.9 sets forth an accurate list of all real
and personal property included in "property and equipment" on the balance sheet
of the Company as of the Company Unaudited Balance Sheet Date and all other
tangible assets of the Company with a value in excess of $5,000 (i) owned by the
Company as of the Company Unaudited Balance Sheet Date and (ii) acquired since
the Company Unaudited Balance Sheet Date, including in each case true, complete
and correct copies of leases for significant equipment and for all real property
leased by the Company and descriptions of all real property on which buildings,
warehouses, workshops, garages and other structures used in the operation of the
business of the Company are situated. Schedule 3.9 indicates which assets are
currently owned, or were formerly owned, by the Company Stockholders or
Affiliates of the Company or the Company Stockholders. Except as specifically
identified on Schedule 3.9, all of the tangible assets, vehicles and other
significant machinery and equipment of the Company listed on Schedule 3.9 are in
good working order and condition, ordinary wear and tear excepted, and have been
maintained in accordance with standard industry practices. All fixed assets used
by the Company that are material to the operation of the Company's business

                                     - 11 -
<PAGE>   18

are either owned by the Company or leased under an agreement identified on
Schedule 3.9. All leases set forth on Schedule 3.9 are in full force and effect
and constitute valid and binding agreements of the parties thereto in accordance
with their respective terms.

         Schedule 3.9 contains true, complete and correct copies of all title
reports and title insurance policies received by the Company with respect to
real property it leases. Schedule 3.9 also includes a summary description of all
plans or projects involving the opening of new operations, expansion of existing
operations or the acquisition of any real property or existing business, to
which management of the Company has devoted effort or expenditure in the
two-year period prior to the date of this Agreement, which if pursued by the
Company would require additional expenditures of capital.

         The Company has good and indefeasible title to the tangible and
intangible personal property owned and used in their business, including the
properties identified on Schedule 3.9, subject to no mortgage, pledge, lien,
claim, conditional sales agreement, encumbrance or charge, except for liens
reflected on Schedule 3.9, liens for current Taxes not yet payable and
assessments not in default, easements for utilities serving only the property,
and easements, covenants and restrictions and other exceptions to title shown of
record in the appropriate public records in the jurisdictions in which the
properties, assets and leasehold estates are located, which do not adversely
affect the Company's use of the property.

     SECTION 3.10. MATERIAL CONTRACTS, COMMITMENTS AND CUSTOMERS. Schedule 3.10
sets forth an accurate list as of the Company Unaudited Balance Sheet Date of
(i) all material contracts, commitments and similar agreements to which the
Company is a party or by which they or any of their property is bound
(including, but not limited to, joint venture or partnership agreements,
contracts with any labor organizations, loan agreements, indemnity or guaranty
agreements, bonds, mortgages, liens, pledges or other security agreements) and
the Company Stockholders have delivered true copies of such agreements to AMPAM
and (ii) all customers representing 5% or more of the Company's revenues, taken
as a whole, in any of the periods covered by the Company Financial Statements or
the Company Unaudited Financial Statements. For purposes of the preceding
sentence, a contract commitment or similar agreement is "material" if it (i) has
a term of more than one year (other than contracts, commitments or agreements
that are cancelable without liability or penalty within 30 days of notice from
the Company of cancellation or that can be terminated by the Company without
material penalty upon notice of 30 days or less) or (ii) requires the payment by
or to the Company of more than $100,000 during any 12-month period. Except as
disclosed on Schedule 3.10, all such agreements are in full force and effect and
none of such contracts or agreements unduly burdens or restricts the Company in
the ordinary course of its business. None of the Company's customers or
suppliers has canceled service or products, as appropriate. Except to the extent
set forth on Schedule 3.10, (i) the Company has complied with all material
commitments and obligations and are not in default under any contracts and
agreements and no notice of default has been received and (ii) none of the
Company's customers listed pursuant to (ii) above has canceled or substantially
reduced or is currently attempting or threatening to cancel

                                     - 12 -
<PAGE>   19

or substantially reduce its use of the Company's products or services. Except as
set forth on Schedule 3.10, the Company is not now, nor has it ever been, a
party to any contracts subject to price redetermination or renegotiation.

     SECTION 3.11. OPERATING AUTHORITY. The Company possesses all material
governmental licenses, permits, franchises, and other authorizations
("Licenses") of any Governmental Authority that are necessary to the ownership
or operation of their business as currently conducted, and all such Licenses are
in full force and effect, except where the failure to possess any License or the
failure to be in full force and effect is not reasonably expected to have,
individually or in the aggregate, a Company Material Adverse Effect, and the
Company is not in default in any respect relating thereto. No proceeding is
pending or, to the Company Stockholders' Knowledge, is threatened seeking the
revocation or limitation of any such License that is reasonably expected to
have, individually or in the aggregate, a Company Material Adverse Effect.

         Schedule 3.11 sets forth an accurate list and summary description as of
the Company Unaudited Balance Sheet Date of all Licenses, certificates,
trademarks, trade names, patents, patent applications and copyrights related to
the assets owned or held by the Company. The Licenses and other rights listed on
Schedule 3.11 are valid, and the Company has not received any notice that any
person intends to cancel, terminate or not renew any such License or other
right. The Company has conducted and is conducting its business in compliance in
all material respects with the requirements, standards, criteria and conditions
set forth in the Licenses and other rights listed on Schedule 3.11 and is not in
violation of any of the foregoing in any material respect. Except as
specifically provided in Schedule 3.11, the consummation of the transactions
contemplated by this Agreement will not result in a default under or a breach or
violation of, or adversely affect the rights and benefits afforded to the
Company by, any such Licenses or other rights.

     SECTION 3.12. BANK ACCOUNT INFORMATION. Schedule 3.12 contains an accurate
list of the names and addresses of every bank and other financial institution in
which Company maintains an account (whether checking, savings or otherwise),
lock box, or safe deposit box, and the account numbers and persons having
signature authority or legal access thereto.

     SECTION 3.13. CONDUCT OF BUSINESS SINCE COMPANY UNAUDITED BALANCE SHEET
DATE. Except as expressly contemplated by this Agreement and except as set forth
on Schedule 3.13, since the Company Unaudited Balance Sheet Date there has not
been:

               (i) any Company Material Adverse Change (as defined in Section
          12.15);

               (ii) any damage, destruction or casualty loss (whether or not
          covered by insurance), alone or in the aggregate, which has caused a
          Company Material Adverse Effect on the Company;

                                     - 13 -
<PAGE>   20

               (iii) any change in the authorized capital of the Company or its
          outstanding securities or any change in ownership interests or any
          grant of any options, warrants, calls, conversion rights or
          commitments;

               (iv) any dividend or any distribution declared or paid with
          respect to, or purchases or redemptions of any of the Company Stock;

               (v) any increase in the compensation, bonus, sales commissions or
          fee arrangement payable or to become payable by the Company to any of
          its officers, directors, stockholders, employees, consultants or
          agents, except for ordinary and customary bonuses and salary increases
          for employees in accordance with past practice;

               (vi) any work interruptions, labor grievances or claims filed, or
          any event or condition of any character, which has caused a Company
          Material Adverse Effect;

               (vii) any sale or transfer, or any agreement to sell or transfer,
          any material assets, property or rights of the Company to any person,
          including, without limitation, the Company Stockholders and their
          Affiliates, except inventory sold or transferred in the Ordinary
          Course of Business (as defined in Section 12.15);

               (viii) any cancellation, or agreement to cancel, any indebtedness
          or other obligation owing to the Company, including without limitation
          any indebtedness or obligation of any Company Stockholders or any
          Affiliate thereof;

               (iv) any plan, agreement or arrangement granting any preferential
          rights to purchase or acquire any interest in any of the material
          assets, property or rights of the Company or requiring consent of any
          party to the transfer and assignment of any such assets, property or
          rights;

               (x) any purchase or acquisition of, or agreement, plan or
          arrangement to purchase or acquire, any property, rights or assets
          outside of the Ordinary Course of Business;

               (xi) any waiver of any material rights or claims of the Company;

               (xii) any amendment or termination of any material document to
          which the Company is a party, except for the termination of a material
          document in accordance with its terms without any action on the part
          of the Company;

               (xiii) any transaction by the Company outside the Ordinary Course
          of Business;

               (xiv) any cancellation or termination of a material contract with
          a customer or client listed on Schedule 3.10 prior to the scheduled
          termination date thereof; or

                                     - 14 -
<PAGE>   21

               (xv) any other distribution of property or assets by the Company
          other than in the Ordinary Course of Business, other than (a)
          distributions of nonoperating assets specifically identified on
          Schedule 3.13 and (b) distributions of real estate required by Section
          5.12 of this Agreement.

     SECTION 3.14. LITIGATION; ORDERS. Except as set forth on Schedule 3.14, as
of the date hereof, there are no Actions (as defined in Section 12.15) pending
or, to the Company Stockholders' Knowledge, threatened against the Company.
Except as set forth on Schedule 3.14, as of the date hereof there are no
judgments or outstanding orders, injunctions, decrees, stipulations, or awards
(whether rendered by a court or administrative agency or by arbitration) against
the Company.

     SECTION 3.15. LABOR MATTERS. Except as set forth on Schedule 3.15, there
are no agreements with labor unions or associations representing employees of
the Company. No material work stoppage against the Company is pending or, to the
Company Stockholders' Knowledge, threatened. The Company has not been nor is
involved in or, to the Company Stockholders' Knowledge, is threatened with any
labor dispute, arbitration, lawsuit, or administrative proceeding relating to
labor matters involving the employees of the Company (excluding routine workers'
compensation claims) that is reasonably expected to have, individually or in the
aggregate, a Company Material Adverse Effect.

     SECTION 3.16. COMPLIANCE WITH LAWS. The conduct of the business by the
Company complies with all statutes, laws, regulations, ordinances, rules,
judgments, orders, or decrees applicable thereto (other than Environmental Laws
(as hereinafter defined) which are governed solely by Section 3.18), except for
violations or failures so to comply, if any, that would not have, individually
or in the aggregate, a Company Material Adverse Effect.

     SECTION 3.17. INSURANCE. Schedule 3.17 sets forth a list of all insurance
policies issued in favor of the Company which relate to its business, and all
such policies are currently in force and effect. True and complete copies of all
such policies have been delivered to AMPAM. A true and complete list of all
insurance loss runs and workers' compensation claims received for the past three
(3) policy years has been delivered to AMPAM. The insurance carried by the
Company, which the Company Stockholders believe to be adequate in character and
amount, is with financially sound and reputable insurers unaffiliated with any
of the Company Stockholders or the Company. None of such policies is a "claims
made" policy. All insurance policies carried by the Company are currently in
full force and effect. The Company's insurance has never been canceled and the
Company has never been denied coverage or experienced a substantial increase in
premiums or substantial reduction in coverage from one policy period to the next
period.

     SECTION 3.18. ENVIRONMENTAL MATTERS. Other than violations that would not
have, individually or in the aggregate, a Company Material Adverse Effect, the
Company is in compliance with all applicable Environmental Laws. Without
limitation of the foregoing, there are no past, existing, pending or, to the
Company Stockholders' Knowledge, threatened actions, suits,

                                     - 15 -
<PAGE>   22
investigations, inquiries, proceedings or clean-up obligations by or to any
Governmental Authority relating to any Environmental Laws with respect to the
Company, except for actions, suits, investigations, inquiries, proceedings, and
obligations that would not have, individually or in the aggregate, a Company
Material Adverse Effect. To the Company Stockholders' Knowledge (i) there are no
underground storage tanks on, in or under any properties owned by the Company
and no underground storage tanks have been closed or removed from any of such
properties during the time such properties were owned, leased or operated by the
Company which are not listed on Schedule 3.18 and (ii) there is no asbestos or
asbestos-containing material present in any of the properties owned by the
Company, and no asbestos has been removed from any of such properties during the
time such properties were owned, leased or operated by the Company. Neither the
Company nor any of its respective properties are subject to any material
liabilities or expenditures (fixed or contingent) relating to any suit,
settlement, court order, administrative order, regulatory requirement, judgment
or claim asserted or arising under any Environmental Law. All notices, permits,
or similar authorizations, if any, required to be obtained or filed in
connection with the operations of the Company, including, without limitation,
treatment, storage, disposal, or release of a hazardous substance or solid waste
into the environment, have been duly obtained or filed, other than any such
notices, permits, or similar authorizations the failure of which to obtain or
file is not reasonably expected to have, individually or in the aggregate, a
Company Material Adverse Effect. The term "release" has the meaning specified in
CERCLA (as hereinafter defined), and the term "disposal" (or "disposed") has the
meaning specified in RCRA (as hereinafter defined). For the purposes hereof,
"Environmental Laws" shall mean any and all laws, statutes, ordinances, rules,
regulations, orders, or determinations of any Governmental Authority pertaining
to the environment in effect on the date of this Agreement and in effect at such
time in any and all jurisdictions in which the Company operates, including,
without limitation, the Clean Air Act, as amended, the Comprehensive
Environmental Response, Compensation and Liability Act, as amended ("CERCLA"),
the Federal Water Pollution Control Act, as amended, the Resource Conservation
and Recovery Act, as amended ("RCRA"), the Safe Drinking Water Act, as amended,
the Toxic Substances Control Act, as amended, comparable state and local laws
and other material environmental protection laws in effect on the date of this
Agreement. Schedule 3.18 lists all disposal sites that the Company has utilized
as of the Company Unaudited Balance Sheet Date.

     SECTION 3.19. TAXES. (a) Except as set forth on Schedule 3.19, the Company
has filed when due all Company Returns (as defined in Section 12.15), and has,
except for Taxes that are being contested in good faith and set forth on
Schedule 3.19, timely paid and discharged all Tax obligations shown thereon and
adequate reserves have been established on the books of the Company for all
Taxes for which the Company is liable but payment is not yet due, (ii) the
Company Returns correctly and accurately reflect the facts regarding the income,
business and assets, operations, activities, status, or other matters of the
Company, and any other information required to be shown thereon, and are not
subject to penalties under Section 6662 of the Code, relating to
accuracy-related penalties, or any corresponding provision of applicable state,
local, or foreign Tax law or any predecessor provision of law, and (iii) the
Company has not received any notice of any Tax deficiency outstanding, proposed,
or assessed against or allocable to it, nor has it executed any

                                     - 16 -
<PAGE>   23

waiver of any statute of limitations on the assessment or collection of any Tax,
or executed or filed with the Internal Revenue Service or any other Governmental
Authority any agreement now in effect extending the period for assessment or
collection of any Taxes against the Company. No liens for Taxes exist upon the
assets of the Company except liens for Taxes that are not yet due. The Company
is not and never has been subject to Tax in any jurisdiction outside the United
States. No litigation with respect to any Tax for which the Company is asserted
to be liable is pending or, to the Knowledge of the Company or any Company
Stockholder, threatened, and no basis which the Company or any Company
Stockholder believes to be valid exists on which any claim for any such Tax can
be asserted against the Company. There are no requests for rulings or
determinations in respect of any Taxes pending between the Company and any
taxing authority. No issues have been raised and remain pending by any taxing
authority in connection with the examination of any return of the Company. All
deficiencies asserted and assessments made, if any, as a result of or in
connection with any examination have been paid in full or are fully reflected as
a liability in the financial statements. The Company is not and never has been
party to any Tax allocation or sharing agreement. All amounts required to be
withheld by the Company and paid to governmental agencies for income, social
security, unemployment insurance, sales, excise, use and other Taxes have been
collected or withheld and paid to the proper taxing authority. For purposes of
this Agreement, "Tax" or "Taxes" means taxes of any kind, levies, or other like
assessments, customs, duties, imposts, charges, or fees, including, without
limitation, income, gross receipts, ad valorem, value added, excise, real or
personal property, asset, sales, use, license, payroll, transaction, capital,
net worth and franchise taxes, estimated taxes, withholding, employment, social
security, workers compensation, utility, severance, production, unemployment
compensation, occupation, premium, windfall profits, transfer, and gains taxes
or other governmental taxes imposed or payable to the United States, or any
state, county, local, or foreign government or subdivision or agency thereof,
and in each instance such term shall include any interest, penalties, or
additions to tax attributable to or imposed with respect to any such tax,
including penalties for the failure to file any tax return or report.

         (b) The Company has never been a member of an affiliated group of
corporations, within the meaning of Section 1504 of the Code, other than as a
common parent corporation.

         (c) None of the assets of the Company is property that the Company is
required to treat as being owned by any other Person pursuant to the "safe
harbor lease" provisions of former Section 168(f)(8) of the Code.

         (d) None of the assets of the Company directly or indirectly secures
any debt the interest on which is tax-exempt under Section 103(a) of the Code.

         (e) None of the assets of the Company is "tax-exempt use property"
within the meaning of Section 168(h) of the Code.

         (f) The Company has not agreed to make, nor is it required to make, any
adjustment under Section 481(a) of the Code by reason of a change in accounting
method or otherwise.

                                     - 17 -
<PAGE>   24

     (g) The Company has not participated in, nor will it participate in, an
international boycott within the meaning of Section 999 of the Code.

     (h) The Company neither has nor had a permanent establishment in any
foreign country, as defined in any applicable tax treaty or convention between
the United States and such foreign country.

     (i) The Company has not filed a consent pursuant to the collapsible
corporation provisions of Section 341(f) of the Code (or any corresponding
provision of state, local, or foreign income tax law) or agreed to have Section
341(f)(2) of the Code (or any corresponding provision of state, local, or
foreign income tax law) apply to any disposition of any asset owned by it.

     (j) Neither the Company nor any Company Stockholder is a "foreign person"
as that term is defined in Section 1445(f)(3) of the Code.

     (k) The Company has not made, is not obligated to make and is not a party
to any agreement that would require it to make any payment that is not
deductible under Section 280G of the Code.

     (l) No asset of the Company is subject to any provision of applicable law
that eliminates or reduces the allowance for depreciation or amortization in
respect of that asset below the allowance generally available to an asset of its
type.

     SECTION 3.20. EMPLOYEE BENEFIT PLANS. (a) Schedule 3.20 contains a list of
all "employee pension benefit plans" (as defined in Section 3(2) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA")) (sometimes
referred to herein as "Company Pension Plans"), "employee welfare benefit plans"
(as defined in Section 3(l) of ERISA, hereinafter a "Company Welfare Plan"),
stock option, stock purchase, incentive, bonus, deferred compensation plans or
arrangements, vacation, change in control, stay-on bonus plans or arrangements,
and other material employee compensation and fringe benefit plans or agreements,
maintained, contributed to, or pursuant to which the Company has or may have any
liability, whether or not heretofore terminated (all the foregoing being herein
called "Company Benefit Plans"). The Company has delivered to AMPAM an accurate
list (which is set forth on Schedule 3.20) showing all officers, directors and
key employees of the Company, listing all employment agreements with such
officers, directors and key employees and the rate of compensation (and the
portions thereof attributable to salary, bonus and other compensation,
respectively) of each of such persons as of (i) December 31,1999 and (ii) the
date hereof. The Company has provided to AMPAM true, complete and correct copies
of any employment agreements for persons listed on Schedule 3.20. Since December
31, 1999, except as disclosed on Schedule 3.20, there have been no increases in
the compensation payable or any special bonuses to any officer, director, key
employee or other employee, except ordinary salary increases implemented on a
basis consistent with past practices. The Company has made available to AMPAM
true, complete, and correct copies of (1) each Company Benefit Plan and any
subsequently adopted amendments thereto (or, in the case of unwritten Company
Benefit Plans,

                                     - 18 -
<PAGE>   25

descriptions thereof), (2) the most recent annual report on Form 5500 filed with
respect to each Company Benefit Plan (if any such report was required), (3) the
most recent summary plan description for each Company Benefit Plan for which
such a summary plan description is required (with all summaries of material
modifications provided after the most recent summary plan description was
distributed), (4) each trust agreement, group annuity contract and service
agreement relating to any Company Benefit Plan and (5) each favorable
determination letter from the Internal Revenue Service with respect to each
Company Benefit Plan that is intended to be qualified under Section 401(a) of
the Code.

     (b) All Company Benefit Plans are and have been administered in compliance
with their terms and all applicable laws, including, without limitation, ERISA
and the Code, except where the failure to so administer the Company Benefit
Plans or to comply with such laws would not have, individually or in the
aggregate, a Company Material Adverse Effect. There are no pending or, to the
Company Stockholders' Knowledge, threatened investigations by any governmental
entity, termination proceedings, or other, suits or proceedings against or
involving any Company Benefit Plan. All such plans that are intended to qualify
(the "Qualified Plans") under Section 401(a) of the Code are, and have been so
qualified and have been determined by the Internal Revenue Service to be so
qualified, and copies of such determination letters are attached to Schedule
3.20. Except as disclosed on Schedule 3.20, all reports and other documents
required to be filed with any Governmental Authority or distributed to plan
participants or beneficiaries (including, but not limited to, actuarial reports,
audits or tax returns) have been timely filed or distributed, and copies thereof
are included as part of Schedule 3.20 hereof.

     (c) All contributions to, and payments from, the Company Benefit Plans
required to be made in accordance with the Company Benefit Plans or applicable
law have been timely made. All accrued contribution obligations of the Company
with respect to any Company Benefit Plan have either been fulfilled in their
entirety or are fully reflected on the balance sheet in the Company Financial
Statements and the Company Unaudited Financial Statements.

     (d) No Company Benefit Plan is subject to Section 302 or Title IV of ERISA
or Section 412 of the Code or is a "multiemployer plan" within the meaning of
Section 4001(a)(3) of ERISA or a "multiple employer's plan" within the meaning
of Section 413 of the Code.

     (e) (i) No "prohibited transaction" (under Section 4975 of the Code or
Section 406 of ERISA) has occurred with respect to any Company Benefit Plan and
(ii) there has been no breach of any fiduciary duty with respect to any Company
Benefit Plan, other than, in the case of (i) and (ii), those that are not
reasonably expected to have, individually or in the aggregate, a Company
Material Adverse Effect.

     (f) The Company does not maintain or contribute to any Company Welfare Plan
that could not be unilaterally terminated by the Company at any time without
liability.

                                     - 19 -
<PAGE>   26

     (g) Except as set forth on Schedule 3.20, there are no assets of any
Company Benefit Plan that are not readily tradeable on a national securities
exchange, including the NASDAQ Stock Market.

     SECTION 3.21. BROKERAGE FEES AND COMMISSIONS. Except as set forth on
Schedule 3.21, neither the Company nor the Company Stockholders has incurred any
obligation or entered into any agreement for any investment banking, brokerage
or finder's fee, or commission in respect of the transactions contemplated by
this Agreement for which AMPAM or the Company shall incur any liability.

     SECTION 3.22. TAX TREATMENT. Neither the Company nor, to the Company
Stockholders' Knowledge, any of its Affiliates has taken, has agreed or failed
to take, or intends to take any action or has any Knowledge of any fact or
circumstance that would prevent the Merger from qualifying as a reorganization
within the meaning of Section 368 of the Code (a "368 Reorganization").

                                   ARTICLE IV

                     REPRESENTATIONS AND WARRANTIES OF AMPAM

         AMPAM represents and warrants to the Company Stockholders that all of
the representations and warranties in this Article IV are true (i) as of the
date of execution of this Agreement, (ii) as of the Effective Time subject to
Section 5.16, and (iii) for a period of two years from the Closing (the last day
of such period being the "Expiration Date"), except that the representations and
warranties set forth in Section 4.2 and Section 4.5 shall survive until such
time as the applicable statute of limitations period has run, which expired
statute of limitations period shall be deemed to be the Expiration Date for the
representations and warranties set forth in Sections 4.2 and 4.5.

     SECTION 4.1. ORGANIZATION AND QUALIFICATION. Each of AMPAM and Acquisition
is a corporation duly organized, validly existing and in good standing under the
laws of the state of its incorporation, and AMPAM has the requisite corporate
power to carry on its business as it is now conducted. AMPAM and Acquisition are
duly qualified to conduct business as a foreign corporation in each jurisdiction
in which its ownership or lease of property or the conduct of its business and
operations makes such qualification necessary, except for such jurisdictions in
which AMPAM's or Acquisition's failure to be so qualified is not reasonably
expected to have, individually or in the aggregate, an AMPAM Material Adverse
Effect (as defined in Section 12.15).

     SECTION 4.2. CAPITALIZATION. (a) The authorized capital stock of AMPAM
consists of 100,000,000 shares of AMPAM Common Stock, 5,000,000 shares of
Restricted Common Stock and 10,000,000 shares of preferred stock. As of December
31, 1999, there were outstanding 11,463,115 shares of AMPAM Common Stock
(including no shares of treasury stock), 2,423,517 shares of restricted voting
common stock and 1,048,820 shares of 10% Cumulative Redeemable Convertible

                                     - 20 -
<PAGE>   27

Preferred Stock Series A. All outstanding shares of capital stock of AMPAM have
been duly authorized and validly issued and are fully paid and non-assessable
and free of preemptive rights.

     (b) The AMPAM Common Stock to be issued as part of the Merger Consideration
have been duly authorized and, when issued and delivered in accordance with the
terms of this Agreement, will have been validly issued and will be fully paid
and non-assessable, and the issuance thereof is not subject to any preemptive or
other similar right.

     SECTION 4.3. AUTHORIZATION. The execution, delivery and performance by
AMPAM and Acquisition of this Agreement, and the consummation by AMPAM and
Acquisition of the transactions contemplated hereby, are within the corporate
powers of AMPAM and Acquisition and have been duly authorized by all necessary
corporate action. This Agreement has been duly executed and delivered by AMPAM
and Acquisition and constitutes the valid and binding obligation of AMPAM and
Acquisition enforceable against AMPAM and Acquisition in accordance with its
terms.

     SECTION 4.4. CONSENTS AND APPROVAL; NO VIOLATION. Neither the execution and
delivery of this Agreement by AMPAM and Acquisition, nor the consummation by
AMPAM and Acquisition of the transactions contemplated by this Agreement, will:
(a) require any consent, approval, authorization, or permit of, or filing with
or notification to, any Governmental Authority, except (i) the filing of the
Certificate of Merger in accordance with Delaware Law, (ii) the filing of the
State Certificates in accordance with Company Law, (iii) compliance with any
applicable requirements of the 1933 Act, the Securities Exchange Act of 1934, as
amended (the "1934 Act"), and foreign or state securities or Blue Sky laws, (iv)
any regulatory approvals or routine governmental consents, including approvals
in connection with the Hart Scott Act, normally acquired before or after the
consummation of transactions such as transactions of the nature contemplated by
this Agreement which consents and approvals are listed on Schedule 4.4, or (v)
where the failure to obtain such consent, approval, authorization, or permit, or
to make such filing or notification, is not reasonably expected to have,
individually or in the aggregate, an AMPAM Material Adverse Effect or prevent or
delay, in any material respect, the consummation of the transactions
contemplated by this Agreement; (b) result in a default (or give rise to any
right of termination, cancellation, or acceleration) under any of the terms,
conditions, or provisions of any agreement or other instrument binding upon
AMPAM or any of its subsidiaries, except for such defaults (or rights of
termination, cancellation, or acceleration) as to which requisite waivers or
consents have been obtained or which are not reasonably expected to have,
individually or in the aggregate, an AMPAM Material Adverse Effect or prevent or
delay, in any material respect, the consummation of the transactions
contemplated by this Agreement; or (c) assuming compliance with the matters
referred to in Section 4.4(a), violate any order, writ, injunction, decree,
statute, rule, or regulation applicable to AMPAM or any of its subsidiaries or
any of their assets, except for violations which are not reasonably expected to
have, individually or in the aggregate, an AMPAM Material Adverse Effect or
prevent or delay, in any material respect, the consummation of the transactions
contemplated by this Agreement.

                                     - 21 -
<PAGE>   28

     SECTION 4.5. SEC FILINGS. (a) AMPAM has filed with the Securities and
Exchange Commission ("SEC") all material forms, statements, reports and
documents (the "AMPAM SEC Filings") required to be filed by it under the 1934
Act and the rules and regulations thereunder.

     (b) As of its filing date, each AMPAM SEC Filing complied as to form in all
material respects with the applicable requirements of the 1934 Act.

     (c) As of its filing date, each AMPAM SEC Filing filed pursuant to the 1934
Act did not contain any untrue statement of a material fact or omit to state any
material fact necessary in order to make the statements made therein, in the
light of the circumstances under which they were made, not misleading.

     (d) AMPAM has previously delivered to the Company Stockholders copies of
AMPAM's private placement memorandum, dated January 13, 2000 (the "PPM"). As of
its date, the PPM did not contain any untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary to make
the statements therein, in light of the circumstances under which they were
made, not misleading.

     SECTION 4.6. TAX TREATMENT. AMPAM has not taken, will not take, and has not
failed to take any action, and does not know of any fact, occurrence or
circumstance, that would prevent the Merger from qualifying as a 368
Reorganization.

                                    ARTICLE V

                       ADDITIONAL COVENANTS AND AGREEMENTS

     SECTION 5.1. REASONABLE BEST EFFORTS. Subject to the terms and conditions
of this Agreement, each party will use its reasonable best efforts to take, or
cause to be taken, all actions and to do, or cause to be done, all things
necessary, proper, or advisable under applicable laws and regulations to
consummate the transactions contemplated by this Agreement.

     SECTION 5.2. CERTAIN FILINGS. The Company and AMPAM shall cooperate with
one another (i) in determining whether any action by or in respect of, or filing
with, any Governmental Authority is required, or any actions, consents,
approvals, or waivers are required to be obtained from parties to any material
agreements, in connection with the consummation of the transactions contemplated
by this Agreement and (ii) in taking such actions or making such filings,
furnishing information required in connection therewith and seeking timely to
obtain such actions, consents, approvals, or waivers.

     SECTION 5.3. PUBLIC ANNOUNCEMENTS. Without the prior consent of AMPAM,
which consent shall not be unreasonably withheld, none of the Company or the
Company Stockholders will issue, or permit any agent or Affiliate to issue, any
press releases or otherwise make or permit any

                                     - 22 -
<PAGE>   29

agent or Affiliate to make, any public statements with respect to this Agreement
or the transactions contemplated by this Agreement.

     SECTION 5.4. FURTHER ASSURANCES. At and after the Effective Time, the
officers and directors of the Surviving Corporation will be authorized to
execute and deliver, in the name and on behalf of the Company or Acquisition,
any deeds, bills of sale, assignments, or assurances, and to take and do, in the
name and on behalf of the Company or Acquisition, any other actions and things,
to vest, perfect, or confirm of record or otherwise in the Surviving Corporation
any and all right, title, and interest in, to, and under any of the rights,
properties, or assets of the Company acquired or to be acquired by the Surviving
Corporation as a result of, or in connection with, the Merger.

     SECTION 5.5. NOTICES OF CERTAIN EVENTS. Each of the Company, the Company
Stockholders, Acquisition and AMPAM shall promptly notify the other parties
hereto of:

     (a) any notice or other communication from any Person alleging that the
consent of such Person is or may be required in connection with the transactions
contemplated by this Agreement;

     (b) any notice or other communication from any Governmental Authority in
connection with the transactions contemplated by this Agreement;

     (c) any actions, suits, claims, investigations or proceedings commenced or,
to its Knowledge, threatened against, relating to, or involving or otherwise
affecting such party that relate to the consummation of the transactions
contemplated by this Agreement; and

     (d) any material failure on its part to comply with or satisfy any
covenant, condition or agreement to be complied with or satisfied by it
hereunder; provided, however, that the delivery of any notice pursuant to this
Section 5.5(d) shall not limit or otherwise affect the remedies available
hereunder to the party receiving such notice.

     SECTION 5.6. RELEASE FROM GUARANTEES. Following the Effective Time, AMPAM
and the Surviving Corporation shall use reasonable efforts to have the Company
Stockholders released from the personal guarantees of the Company's indebtedness
identified on Schedule 5.6. In the event that AMPAM cannot obtain releases of
any such guarantees on or prior to one hundred and twenty (120) days subsequent
to the Effective Time, AMPAM shall pay off or otherwise refinance or retire such
indebtedness.

     SECTION 5.7. FUTURE COOPERATION; TAX MATTERS. At AMPAM's expense, the
Company, Company Stockholders, Acquisition and AMPAM shall each deliver or cause
to be delivered to the other following the Effective Time such additional
instruments as the other may reasonably request for the purpose of fully
carrying out this Agreement. At AMPAM's expense, the Company Stockholders will
cooperate and use their reasonable best efforts to have the present officers,
directors and employees of and independent accountants to the Company cooperate
with AMPAM

                                     - 23 -
<PAGE>   30

at and after the Effective Time in furnishing information, evidence, testimony
and other assistance in connection with any actions, proceedings, arrangements
or disputes of any nature with respect to matters pertaining to all periods
prior to the Effective Time, including, without limitation, consent to the
inclusion of any independent auditor's report in documents filed by AMPAM under
the 1933 Act or 1934 Act.

     SECTION 5.8. EXPENSES. AMPAM and Acquisition on one hand, and the Company
Stockholders on the other, will each pay their own fees, expenses and
disbursements of their respective agents, representatives, accountants and
counsel incurred in connection with the execution, delivery and performance of
this Agreement and any amendment thereto.

     SECTION 5.9. REPAYMENT OF RELATED PARTY INDEBTEDNESS. Concurrently with the
Closing of this Agreement, (i) the Company Stockholders shall repay to the
Company all amounts outstanding as advances to or receivables from the Company
Stockholders and (ii) the Company shall repay all amounts outstanding under
loans to the Company from the Company Stockholders. Such advances, receivables
and loans, and the amounts thereof, are listed on Schedule 5.9.

     SECTION 5.10. FIRPTA CERTIFICATE. Each Company Stockholder will deliver to
AMPAM a certificate to the effect that he is not a foreign person pursuant to
Section 1.1445-2(b) of the Treasury regulations.

     SECTION 5.11. PREPARATION AND FILING OF TAX RETURNS. (a) The Company
Stockholders shall file or cause to be filed all required Company tax returns
for all taxable periods that end on or before the Effective Time, but in each
case only after AMPAM has reviewed such filings and consented thereto.

     (b) AMPAM shall file or cause to be filed all tax returns for all taxable
periods ending after the Effective Time.

     (c) Each party hereto shall, and shall cause its subsidiaries and
Affiliates to, provide to each of the other parties hereto such cooperation and
information as any of them reasonably may request in filing any tax returns,
amended tax returns or claim for refund, determining a liability for Taxes or a
right to refund of Taxes or in conducting any audit or other proceeding in
respect of Taxes. Such cooperation and information shall include providing
copies of all relevant portions of relevant tax returns, together with relevant
accompanying schedules and relevant work papers, relevant documents relating to
rulings or other determinations by taxing authorities and relevant records
concerning the ownership and Tax basis of property, which such party may
possess. Each party shall make its employees reasonably available on a mutually
convenient basis at its cost to provide explanation of any documents or
information so provided. Subject to the preceding sentence, each party required
to file tax returns pursuant to this Agreement shall bear all costs of filing
such tax returns.

                                     - 24 -
<PAGE>   31

     SECTION 5.12. TRANSFER OF REAL PROPERTY. At or prior to the Effective Time,
except as set forth on Schedule 5.12, any real property owned by the Company
will be sold or distributed by the Company on terms mutually acceptable to AMPAM
and the Company and leased back by the Company on terms no less favorable to the
Company than those available from an unaffiliated party and otherwise reasonably
acceptable to AMPAM.

     SECTION 5.13. ANTITRUST LAW COMPLIANCE. Not later than five business days
after the date hereof, the Company, the Company Stockholders and AMPAM shall, at
AMPAM's sole cost and expense, prepare and file with the United States
Department of Justice (the "Department") and the Federal Trade Commission (the
"FTC") the notification and report form with respect to the transactions
contemplated by this Agreement as required pursuant to the Hart-Scott-Rodino
Antitrust Improvements Act of 1976 (the "Hart Scott Act"). The Company, the
Company Stockholders and AMPAM shall each cooperate with the other in
preparation of such filings and shall promptly comply with any reasonable
request by the Department or the FTC for supplemental information and shall use
their best efforts to obtain early termination of the waiting period under the
Hart Scott Act.

     SECTION 5.14. PENDING CLOSING. (a) Between the date of this Agreement and
the Effective Time, the Company Stockholders will, and will cause the Company
to, except as set forth on Schedule 5.14:

               (i) carry on its respective businesses in substantially the same
          manner as it has heretofore;

               (ii) use all commercially reasonable efforts to maintain its
          properties and facilities, including those held under leases, in as
          good working order and condition as at present, ordinary wear and tear
          excepted;

               (iii) perform in all material respects all of its respective
          obligations under agreements relating to or affecting its respective
          assets, properties or rights;

               (iv) use all reasonable efforts to keep in full force and effect
          present insurance policies or other comparable insurance coverage;

               (v) use its commercially reasonable efforts to maintain and
          preserve its business organization intact, retain its respective
          present key employees and maintain its respective relationships with
          suppliers, customers and others having business relations with the
          Company;

               (vi) use reasonable efforts to maintain compliance with all
          material permits, laws, rules and regulations, consent orders, and all
          other orders of applicable courts, regulatory agencies and similar
          governmental authorities;

                                     - 25 -
<PAGE>   32

               (vii) maintain present debt and lease instruments in accordance
          with their terms and not enter into new or amended debt or lease
          instruments without the Knowledge and consent of AMPAM (which consent
          shall not be unreasonably withheld), except that debt and/or lease
          instruments may be replaced without the consent of AMPAM if such
          replacement instruments are on terms at least as favorable to the
          Company as the instruments being replaced;

               (viii) maintain or reduce present salaries and commission levels
          for all officers, directors, employees and agents, except for ordinary
          and customary bonus and salary increases for employees in accordance
          with past practices;

               (ix) afford to the officers and authorized representatives of
          AMPAM reasonable access during normal business hours to all of the
          Company's sites, properties, books and records, and will furnish AMPAM
          with such additional financial and operating data and other
          information as to the business and properties of the Company as AMPAM
          may from time to time reasonably request; and

               (x) avoid taking any actions or undertaking any transactions that
          would prevent or impede the Merger from qualifying as a 368
          Reorganization.

     (b) Except as disclosed on Schedule 5.14, between the date hereof and the
Effective Time, the Company will not, without prior written consent of AMPAM:

               (i) make any change in its charter or Bylaws;

               (ii) issue any securities, options, warrants, calls, conversion
          rights or commitments relating to its securities of any kind;

               (iii) declare or pay any dividend, or make any distribution in
          respect of its stock whether now or hereafter outstanding, or
          purchase, redeem or otherwise acquire or retire for value any shares
          of its stock, except for distributions in the Ordinary Course of
          Business;

               (iv) enter into any contract or commitment or incur or agree to
          incur any liability or make any capital expenditures, except if it is
          in the normal course of business (consistent with past practice) or
          involves an amount not in excess of three percent (3%) of the
          Company's revenues for the 12 months ended December 31, 1999;

               (v) create, assume or permit to exist any new mortgage, pledge or
          other lien or encumbrance upon any assets or properties whether now
          owned or hereafter acquired, except with respect to purchase money
          liens incurred in connection with the acquisition of equipment with an
          aggregate cost not in excess of three percent

                                     - 26 -
<PAGE>   33

          (3%) of the Company's revenues for the 12 months ended December 31,
          1999, necessary or desirable for the conduct of the businesses of the
          Company;

               (vi) sell, assign, lease or otherwise transfer or dispose of any
          property or equipment, except in the Ordinary Course of Business or
          pursuant to Section 5.12;

               (vii) negotiate for the acquisition of any business or the
          start-up of any new business;

               (viii) merge or consolidate or agree to merge or consolidate with
          or into any other corporation;

               (ix) waive any material rights or claims of the Company, provided
          that the Company may negotiate and adjust bills and accounts in the
          course of good faith disputes with customers in a manner consistent
          with past practice, provided, further, that such adjustments shall not
          be deemed to be included in Schedule 5.14 unless specifically listed
          thereon;

               (x) amend or terminate any material agreement, permit, license or
          other right of the Company, except in the Ordinary Course of Business;
          or

               (xi) enter into any other transaction outside the Ordinary Course
          of Business or prohibited hereunder.

     (c) None of the Company Stockholders, the Company, nor any agent, officer,
director, trustee or any representative of any of the foregoing will, during the
period commencing on the date of this Agreement and ending with the earlier to
occur of the Effective Time or the termination of this Agreement in accordance
with its terms, directly or indirectly: (i) solicit or initiate the submission
of proposals or offers from any person for, (ii) participate in any discussions
pertaining to, or (iii) furnish any information to any person other than AMPAM
or its authorized agents relating to, any acquisition or purchase of all or a
material amount of the assets of, or any equity interest in, the Company or a
merger, consolidation or business combination of the Company.

     SECTION 5.15. NOTIFICATION OF CERTAIN MATTERS. The Company Stockholders
shall give prompt notice to AMPAM upon obtaining Knowledge of (i) the occurrence
or non-occurrence of any event of which would be likely to cause any
representation or warranty contained herein to be untrue or inaccurate and (ii)
any failure of any Company Stockholder or the Company to comply with or satisfy
any covenant, condition or agreement to be complied with or satisfied by such
person hereunder. AMPAM shall give prompt notice to the Company Stockholders of
(i) the occurrence or non-occurrence of any event of which would be likely to
cause any representation or warranty of AMPAM contained herein to be untrue or
inaccurate and (ii) any failure of AMPAM to comply with or satisfy any covenant,
condition or agreement to be complied with or satisfied by it hereunder.

                                     - 27 -
<PAGE>   34

     SECTION 5.16. AMENDMENT OF SCHEDULES. Each party hereto agrees that, with
respect to the representations and warranties of such party contained in this
Agreement, such party shall have the continuing obligation until 24 hours prior
to the Effective Time to notify the other party with respect to any matter (i)
hereafter arising or discovered which, if existing or known at the date of this
Agreement, would have been required to be set forth or described in the
Schedules or (ii) which may have been omitted from the Schedules previously
provided by such party. Notwithstanding the foregoing sentence, no amendment or
supplement to a Schedule prepared by the Company may be made unless AMPAM
consents to such amendment or supplement; and provided further, that no
amendment or supplement to a Schedule prepared by AMPAM may be made unless the
Company Stockholders consent to such amendment or supplement. For all purposes
of this Agreement, including without limitation for purposes of determining
whether the conditions set forth in Section 1.8 and Section 1.9 have been
fulfilled, the Schedules hereto, as amended or supplemented with the consent of
AMPAM or the Stockholders, as the case may be, as provided above, shall be
deemed to be the Schedules to this Agreement.

     SECTION 5.17. BOARD OF DIRECTORS SEAT. AMPAM agrees that the management of
AMPAM or the Board of Directors of AMPAM will nominate Lloyd C. Smith for a
Class I Director seat on AMPAM's Board of Directors effective April 1, 2000, and
that the term of a Class I Director is three years.

     SECTION 5.18. COMPANY'S HEALTH BENEFITS AND 401K CONTRIBUTIONS. AMPAM and
Acquisition agree that the Surviving Corporation, as of the Effective Time or as
soon as practicable thereafter, will increase (i) the Company's participating
percentage associated with the Company's health insurance plan to 100% for the
employee only and (ii) the Company's 401K plan matching percentage to 50% of the
employee's contribution up to 6% of said employee's salary, as allowed by law.

     SECTION 5.19. ACCESS TO MATERIALS. For a period of five (5) years after the
Effective Time, the Company Stockholders will have reasonable access to all
documents, materials, information and instruments of the Company.

                                   ARTICLE VI

                                 INDEMNIFICATION

         The Company Stockholders and AMPAM each make the following covenants:

SECTION 6.1. INDEMNIFICATION BY THE COMPANY STOCKHOLDERS. (a) The Company
Stockholders covenant and agree that they, jointly and severally, will
indemnify, defend, protect, and hold harmless AMPAM, the Company, and the
Surviving Corporation, and their respective officers, directors, employees,
stockholders, agents, representatives, and Affiliates (the "AMPAM

                                     - 28 -
<PAGE>   35

Indemnitees") at all times from and after the date of this Agreement until the
applicable Expiration Date from and against all claims, damages, losses,
liabilities (joint or several), obligations, penalties, defenses, actions,
lawsuits, proceedings, judgments, demands, assessments, adjustments, costs, and
expenses (including specifically, but without limitation, reasonable fees,
disbursements, and expenses of attorneys, accountants, other professional
advisors and of expert witnesses and reasonable costs of investigation and
preparation) (collectively "Damages"), as they are incurred, directly or
indirectly resulting from, relating to or arising out of (i) any breach of or
inaccuracy in, or any allegation or claim by a third party which, if true, would
constitute a breach or inaccuracy in, any representation or warranty set forth
herein or in the Schedules or certificates delivered in connection herewith;
(ii) any breach or non-performance, partial or total, by the Company or any of
the Company Stockholders of any covenant or agreement of the Company (or any
Affiliate or subsidiary thereof) or the Company Stockholders (or any Affiliate
or subsidiary thereof) contained in this Agreement; or (iii) the Company
Litigation referenced in Schedule 3.14.

     (b) AMPAM acknowledges and agrees that other than the representations and
warranties of the Company Stockholders specifically contained in this Agreement,
there are no representations or warranties of the Company Stockholders, either
express or implied, with respect to the transactions contemplated by this
Agreement, the Company, or the Company's assets, liabilities or business.

     SECTION 6.2. INDEMNIFICATION RELATED TO TAX LIABILITIES. The Company
Stockholders shall retain liability, and shall indemnify AMPAM, for the payment
of any Tax liabilities, net of any Tax benefits, with respect to the conduct of
the business of the Company prior to and up to the Effective Time.

     SECTION 6.3. INDEMNIFICATION RELATED TO ACCOUNTS RECEIVABLE. Should the
Company Stockholders indemnify AMPAM for a breach of the representation and
warranty contained in Section 3.8 related to collectibility of accounts
receivable, AMPAM shall pay to the Company Stockholders any net amounts after
attorney fees that are received by the Surviving Corporation or AMPAM after the
Company Stockholders make such indemnification payments with respect to accounts
receivable outstanding on the Company Unaudited Balance Sheet Date. The Company
Stockholders may pursue the collection of such accounts receivable at their own
cost and for their own account if the Board of Directors of the Surviving
Corporation elects not to pursue the collection of such accounts receivable.

     SECTION 6.4. INDEMNIFICATION BY AMPAM. AMPAM covenants and agrees that it
will indemnify, defend, protect and hold harmless the Company Stockholders (the
"Stockholder Indemnitees") at all times from and after the date of this
Agreement from and against all claims, Damages, losses, liabilities (joint or
several), obligations, penalties, defenses, actions, lawsuits, proceedings,
judgments, demands, assessments, adjustments, costs, and expenses (including
specifically, but without limitation, fees, disbursements, and expenses of
attorneys, accountants,

                                     - 29 -
<PAGE>   36

other professional advisors and of expert witnesses and costs of investigation
and preparation), as they are incurred, directly or indirectly resulting from,
relating to or arising out of:

               (i) any breach of or any inaccuracy in, or any claim by a third
          party which, if true, would constitute a breach or inaccuracy in, any
          representation or warranty of AMPAM set forth herein or in the
          Schedules or certificates delivered in connection herewith;

               (ii) any breach or non-performance, partial or total, by AMPAM of
          any covenant or agreement of AMPAM (or any Affiliate or subsidiary
          thereof) contained in this Agreement; or

               (iii) any liability under the 1933 Act or any Federal or state
          securities law or regulation, at common law or otherwise, arising out
          of or based on any untrue statement or alleged untrue statement of a
          material fact contained in the PPM, or any amendment of or supplement
          to the PPM, or arising out of or based on any omission or alleged
          omission to state therein a material fact required to be stated
          therein or necessary to make the statements therein not misleading.

     SECTION 6.5. INDEMNIFICATION PROCEEDINGS. Promptly after a party
indemnified pursuant to this Article VI ("Indemnitee") has received notice of or
has Knowledge of any claim by a person not a party to this Agreement ("third
party") or the commencement of any action or proceeding by a third party, the
Indemnitee shall promptly, and in any event within 60 days of the assertion of
any claim or the discovery of any fact upon which Indemnitee intends to base a
claim for indemnification under this Agreement ("Indemnitee Claim"), as a
condition precedent to the Indemnitee Claim, give written notice to the party or
parties from whom indemnification is sought ("Indemnitor") of such claim by the
third party. Such notice shall state the nature and the basis of such claim and
a reasonable estimate of the amount thereof. If the Indemnitor does not object
in writing to such indemnification claim within 30 days after receiving notice
thereof, the Indemnitee shall be entitled to recover promptly from the
Indemnitor the amount of such claim (but such recovery shall not limit the
amount of any additional indemnification to which the Indemnitee may be entitled
pursuant to Section 6.1 or 6.3, as the case may be), and no later objection by
the Indemnitor shall be permitted. If the Indemnitor agrees that he, she or it
has an indemnification obligation but objects that he, she or it is obligated to
pay only a lesser amount, the Indemnitee shall nevertheless be entitled to
recover promptly from the Indemnitor the lesser amount, without prejudice to the
Indemnitee's claim for the difference. In the event of any Indemnitee Claim,
Indemnitor, at its option, shall have the right to defend or settle, at its own
expense and by its own counsel, any such matter so long as the Indemnitor
pursues the same in good faith and diligently. If the Indemnitor undertakes to
defend or settle, it shall promptly notify the Indemnitee of its intention to do
so, within the Indemnitor's 30-day objection period set forth above, and the
Indemnitee shall cooperate with the Indemnitor and its counsel in the defense
thereof and in any settlement thereof. Notwithstanding the foregoing, the
Indemnitee shall have the right to participate in any matter through counsel of
its own choosing at Indemnitor's own expense; provided that the Indemnitor's
counsel shall always be lead counsel and

                                     - 30 -
<PAGE>   37

shall determine all litigation and settlement steps, strategy and the like.
Except as set forth in the preceding sentence, after the Indemnitor has notified
the Indemnitee of its intention to undertake to defend or settle any such
asserted liability, and for so long as the Indemnitor diligently pursues such
defense, the Indemnitor shall not be liable for any additional legal expenses
incurred by the Indemnitee in connection with any defense or settlement of such
asserted liability, except to the extent such participation is requested by the
Indemnitor, in which event the Indemnitee shall be reimbursed by the Indemnitor
for reasonable additional legal expenses, out-of-pocket expenses and allocable
share of employee compensation incurred in connection with such participation
for any employee whose participation is so requested. If the Indemnitor desires
to accept a final and complete settlement of any such third party claim and the
Indemnitee refuses to consent to any such settlement which contains a complete
and irrevocable release of Indemnitee of all current and future claims related
to or arising out of the matter in dispute, then the Indemnitor's liability
under this Section with respect to such third party claim shall be limited to
the amount so offered in settlement by said third party. If the Indemnitor does
not undertake to defend such matter to which the Indemnitee is entitled to
indemnification hereunder, or fails diligently to pursue such defense, the
Indemnitee may undertake such defense through counsel of its choice, at the cost
and expense of the Indemnitor, and the Indemnitee may settle such matter,
without the consent of the Indemnitor, and the Indemnitor shall immediately
reimburse the Indemnitee for the amount paid in such settlement and any other
liabilities or expenses incurred (including all legal fees and expenses) by the
Indemnitee in connection therewith as such amounts, liabilities, expenses and
fees are incurred. In the event that the Indemnitee does not elect to defend
such matter to which the Indemnitee is entitled to indemnification hereunder,
then any failure of the Indemnitee to defend or to participate in the defense of
such matter, shall not relieve the Indemnitor of its obligations hereunder.

     SECTION 6.6. EXCLUSIVE REMEDY. The indemnification provided for in this
Article VI shall (except as prohibited by ERISA) be the exclusive remedy in any
action seeking damages or any other form of monetary relief brought by any party
to this Agreement against another party to this Agreement with respect to any
provision of this Agreement, provided that, nothing herein shall be construed to
limit the right of a party, in a proper case, to seek injunctive relief for a
breach of this Agreement. AMPAM hereby waives, to the fullest extent permitted
under applicable law, any and all other rights, claims and causes of action,
known or unknown, it or any indemnified person may have against the Company or
any of the Company Stockholders relating to this Agreement or the transactions
pursuant to this Agreement arising under or based upon any Federal, state, local
or foreign statute, law, rule, regulation or otherwise. Any indemnity payment
under this Article VI shall be treated as an adjustment to the Merger
Consideration for Tax purposes unless a final determination (which shall include
the execution of a Form 870-AD or successor form) with respect to the Indemnitee
or any of its Affiliate causes any such payment not to be treated as an
adjustment to the Merger Consideration for U.S. Federal income Tax purposes.

     SECTION 6.7. LIMITATIONS ON INDEMNIFICATION. (a) AMPAM shall not assert any
claim for indemnification under this Article VI against the Company Stockholders
until such time as, and solely to the extent that, the aggregate of all claims
which AMPAM may have against the Company

                                     - 31 -
<PAGE>   38

Stockholders shall exceed 3.0% of the Merger Consideration (the "Indemnification
Threshold"). The Company Stockholders shall not assert any claim for
indemnification hereunder against AMPAM until such time as, and solely to the
extent that, the aggregate of all claims which Company Stockholders may have
against AMPAM shall exceed the Indemnification Threshold; provided, however,
that this sentence shall not be applicable with respect of any failure by AMPAM
to comply with its obligations pursuant to Section 1.2, Section 1.3 and Section
5.6. After the Indemnification Threshold has been met, all claims must be made
in $10,000 increments, which claims may be cumulated in order to meet such
$10,000 thresholds.

     (b) No person shall be entitled to indemnification under this Article VI if
and to the extent that such person's claim for indemnification is directly or
indirectly related to a breach by such person of any representation, warranty,
covenant or other agreement set forth in this Agreement. No claim for
indemnification against the Company Stockholders shall limit, diminish or change
any obligation of AMPAM pursuant to Section 5.6 hereof.

     (c) Notwithstanding any other term of this Agreement, no Company
Stockholder shall be liable under this Article VI for an amount which exceeds
eighty-five percent (85%) of the amount of proceeds received by such Company
Stockholder (valued as of the Closing) in connection with the purchase and sale
of the Company Stock.

     (d) A Company Stockholder may pay any indemnification obligation under
Article VI by means of the payment of cash or a combination of the payment of
cash and the delivery to AMPAM of shares of AMPAM stock; provided that AMPAM
shall have the right to reduce pro rata the number of shares of each Company
Stockholder included in the payment of such indemnification obligation to the
extent that inclusion of such shares would, in the written opinion of tax
counsel to AMPAM or its independent auditors, cause the transactions
contemplated hereby to fail as a 368 Reorganization. For the purpose of
crediting Company Stockholders for payments made to AMPAM by means of delivery
of shares of AMPAM stock, the AMPAM stock shall be valued at $13.00 per share.

     (e) In determining the amount of any loss, liability or expense for which
any party is entitled to indemnification under this Agreement, the gross amount
thereof will be reduced by any correlative insurance proceeds or other third
party indemnity or reimbursement proceeds realized or to be realized by any
party for such loss, liability or expense (or, in the case of AMPAM, by AMPAM,
Acquisition or any subsidiary of AMPAM or Acquisition) and such correlative
insurance proceeds or other third party indemnity or reimbursement proceeds
shall be net of any insurance premium or other incremental cost or expense owed
or payable to any third party which becomes due as a result of such claim. AMPAM
shall use commercially reasonable efforts to pursue any available insurance
coverage or other rights of indemnity or reimbursement from third parties with
respect to any such loss, liability or expense.

                                     - 32 -
<PAGE>   39

     SECTION 6.8. INDEMNIFICATION IF NEGLIGENCE OF INDEMNITEE. The
indemnification provided in this Article VI shall be applicable whether or not
negligence of the Indemnitee is alleged or proven.

     SECTION 6.9. NO THIRD PARTY BENEFICIARIES. The foregoing indemnification is
given solely for the purpose of protecting the AMPAM Indemnitees and the
Stockholder Indemnitees and shall not be deemed extended to, or interpreted in a
manner to confer any benefit, right, or cause of action upon, any other Person.

                                   ARTICLE VII

                            NONCOMPETITION COVENANTS

     SECTION 7.1. PROHIBITED ACTIVITIES. Except as otherwise provided in the
Employment Agreements, the Company Stockholders will not, during the term of
their employment with the Surviving Corporation and for a period of two (2)
years immediately following the termination of a Stockholder's employment with
the Surviving Corporation or AMPAM, directly or indirectly, for themselves or on
behalf of or in conjunction with any Person:

     (a) engage, as an officer, director, shareholder, owner, partner, joint
venturer, or in a managerial or advisory capacity, whether as an employee,
independent contractor, consultant, or advisor, or as a sales representative,
whether paid or unpaid, in any plumbing, piping, mechanical, heating,
ventilation or air conditioning contracting, installation or services business
directly related thereto (such business and operations referred to herein as the
"Plumbing and Mechanical Business"), in direct competition with AMPAM or any of
its subsidiaries within 100 miles of where AMPAM or any of its subsidiaries
conducts business, including any territory serviced by AMPAM or any of its
subsidiaries (which subsidiaries, for purposes of this Article VII shall
include, without limitation, the Surviving Corporation) (the "Territory");

     (b) call upon any Person who is, at that time, within the Territory, an
employee of AMPAM or any of its subsidiaries for the purpose or with the intent
of enticing such employee away from or out of the employ of AMPAM or any of its
subsidiaries;

     (c) call upon any Person who is, at that time, or which has been, within
one (1) year prior to that time, a customer of AMPAM or any of its subsidiaries
within the Territory for the purpose of soliciting customers, orders or
contracts for any Plumbing and Mechanical Business within the Territory;

     (d) call upon any prospective acquisition candidate, on any Company
Stockholder's own behalf or on behalf of any competitor of AMPAM or any of its
subsidiaries, which candidate, to the Knowledge of such Stockholder after due
inquiry, was called upon by AMPAM or any subsidiary

                                     - 33 -
<PAGE>   40

thereof or for which AMPAM or any subsidiary thereof made an acquisition
analysis, for the purpose of acquiring such entity; or

     (e) disclose customers, whether in existence or proposed, of AMPAM or any
of its subsidiaries to any person, firm, partnership, corporation or business
for any reason or purpose whatsoever except to the extent that AMPAM or any of
its subsidiaries has in the past disclosed such information to the public, any
person, firm partnership, corporation, business or other entity for valid
business reasons.

         Notwithstanding the above, the foregoing covenant shall not be deemed
to prohibit any Company Stockholder from (i) acquiring as an investment not more
than one percent (1%) of the capital stock of a company engaged in the Plumbing
and Mechanical Business whose stock is publicly traded on a national securities
exchange, the NASDAQ Stock Market or an over-the-counter or similar market, (ii)
acquiring as an investment not more than one percent (1%) of the capital stock
of a competing business whose stock is not publicly traded if the AMPAM Board of
Directors consents to such acquisition, or (iii) engaging in activities,
directly or indirectly, related to owning, leasing, developing, or selling real
estate. Any ownership interest in any business which is in competition with
AMPAM or any of its subsidiaries shall immediately be disclosed to the AMPAM
Board of Directors.

     SECTION 7.2. EQUITABLE RELIEF. Because of the difficulty of measuring
economic losses to AMPAM as a result of a breach of the foregoing covenant, and
because of the immediate and irreparable damage that could be caused to AMPAM
for which it would have no other adequate remedy, each Company Stockholder
agrees that the foregoing covenants may be enforced by AMPAM by injunctions,
restraining orders, and other equitable actions and agrees to waive any
requirement for the securing or posting of any bond in connection with the
obtaining of any such injunctive or any other equitable relief.

     SECTION 7.3. REASONABLE RESTRAINT. It is agreed by the parties hereto that
the foregoing covenants in this Article VII impose a reasonable restraint on the
Company Stockholders in light of the activities and business of AMPAM and its
subsidiaries on the date of the execution of this Agreement and the current
plans of AMPAM and its subsidiaries; but it is also the intent of AMPAM and the
Company Stockholders that such covenants be construed and enforced in accordance
with the changing activities, business, and locations of AMPAM and its
subsidiaries throughout the term of this covenant whether before or after the
Effective Time, unless the Company Stockholder was conducting such new business
prior to AMPAM or any of its subsidiaries conducting such new business. For
example, if, subsequent to the Effective Time or during the term of the Company
Stockholder's employment with the Surviving Corporation, as applicable, AMPAM or
one of its subsidiaries engages in new and different activities, enters a new
business, or establishes new locations for its current or new activities or
business in addition to or other than the activities or business it is currently
conducting in the locations currently established therefor, then the Company
Stockholders will be precluded from soliciting the customers or employees of
such new activities

                                     - 34 -
<PAGE>   41

or business or from such new location and from directly competing with such new
activities or business within 100 miles of where such new activities, business
or locations are conducted, unless the Company Stockholder was conducting such
new activities or business prior to AMPAM or any of its subsidiaries conducting
such new activities or business.

     SECTION 7.4. SEVERABILITY; REFORMATION. The covenants in this Article VII
are severable and separate, and the unenforceability of any specific covenant
shall not affect the continuing validity and enforceability of any other
covenant. In the event any court of competent jurisdiction shall determine that
the scope, time or territorial restrictions set forth in this Article VII are
unreasonable, then it is the intention of the parties that such restrictions be
enforced to the fullest extent which the court deems reasonable, and this
Agreement shall thereby be reformed.

     SECTION 7.5. MATERIAL AND INDEPENDENT COVENANT. The Company Stockholders
acknowledge that their agreements with the covenants set forth in this Article
VII are material conditions to AMPAM's agreement to execute and deliver this
Agreement and to consummate the transactions contemplated hereby. All of the
covenants in this Article VII shall be construed as an agreement independent of
any other provision in this Agreement, and the existence of any claim or cause
of action of any Company Stockholder against AMPAM or one of its subsidiaries,
whether predicated on this Agreement or otherwise, shall not constitute a
defense to the enforcement by AMPAM of such covenants. It is specifically agreed
that the two (2) year period during which the agreements and covenants of each
Company Stockholder made in this Article VII shall survive shall be computed by
excluding from such computation any time during which such Company Stockholder
is in violation of any provision of this Article VII. The covenants contained in
this Article VII shall not be affected by any breach of any other provision
hereof by any party hereto.

     SECTION 7.6. MATERIALITY. The Company and the Company Stockholders hereby
agree that this covenant is a material and substantial part of this transaction.

                                     - 35 -
<PAGE>   42

                                  ARTICLE VIII

                APPLICABLE SECURITIES LAWS/TRANSFER RESTRICTIONS

     SECTION 8.1. COMPANY STOCKHOLDERS' REPRESENTATIONS AND WARRANTIES
CONCERNING SECURITIES. As of the date hereof and as of the Effective Time, the
Company Stockholders hereby make the following representations and warranties to
and for the benefit of AMPAM: (i) that the Company Stockholders have been
provided with copies of the PPM and have been provided as much time and
opportunity as they deemed appropriate to review and study such PPM, and to
consult with AMPAM regarding the merits and risks of the transactions
contemplated by this Agreement; (ii) that the Company Stockholders have had
adequate opportunity to ask questions of and receive answers from the officers
of AMPAM pertaining to the purchase of the AMPAM Common Stock pursuant to the
Merger, and (iii) all such questions have been answered to the satisfaction of
the Company Stockholders.

     SECTION 8.2. TRANSFER RESTRICTIONS RELATING TO AMPAM COMMON STOCK. For a
period of two years from the Effective Time or, in the event that AMPAM
completes an IPO (as defined in Section 12.15), for a period through the second
anniversary of the date of the closing of such IPO (the "Restricted Period"), no
Stockholder shall (i) sell, assign, exchange, transfer, pledge, or otherwise
dispose of any shares of AMPAM Common Stock received by the Stockholder pursuant
to this Agreement or any securities convertible into, exchangeable or
exercisable for any shares of AMPAM Common Stock received by such Stockholder
pursuant to this Agreement, (ii) grant any option to purchase, or otherwise
enter into any contract to sell, assign, transfer, pledge or otherwise dispose
of, any shares of AMPAM Common Stock received by such Stockholder pursuant to
this Agreement, or (iii) enter into any swap or any other agreement or any
transaction that transfers, in whole or in part, directly or indirectly, the
economic consequence of ownership of the AMPAM Common Stock, whether any such
swap or transaction is to be settled by delivery of shares of AMPAM Common Stock
or other securities, by the delivery or payment of cash or otherwise, except, in
the case of clauses (i), (ii) or (iii) above, (A) as otherwise agreed by AMPAM,
(B) for the sale of shares of AMPAM stock, and entering into agreements relating
to the sale of shares of AMPAM stock, pursuant to Section 11 hereof, (C) for
transfers to (I) immediate family members of such Stockholder who agree with
AMPAM in writing to be bound by the restrictions set forth in this Section 8.2,
(II) trusts, limited partnerships or other estate planning entities for the
benefit of such Stockholder or family members of such Stockholder which have
agreed with AMPAM in writing, through action taken by the trustees, partners or
other persons having authority to bind the trust, limited partnership or other
estate planning entity, to be bound by the restrictions set forth in this
Section 8.2, (III) any charitable organization that qualifies for receipt of
charitable contributions under Section 170(c) of the Code which agrees with
AMPAM in writing to be bound by the restrictions set forth in this Section 8.2.
or (D) pursuant to Article IX hereof, the sale by such Stockholder in an IPO of
shares of AMPAM stock representing not more than 10% of such Stockholder's pro
rata share of the cash portion of the Adjusted or Readjusted (as appropriate)
Merger Consideration; provided, however, that AMPAM shall have the right to
reduce pro rata the

                                     - 36 -
<PAGE>   43

number of shares of each selling Company Stockholder included in such IPO to the
extent that inclusion of such shares would, in the opinion of tax counsel to
AMPAM or its independent auditors, cause the transactions contemplated hereby to
fail as a 368 Reorganization; and provided further, if AMPAM is advised in
writing in good faith by any managing underwriter of an unwritten offering of
the securities being offered pursuant to any registration statement under
Article IX that the number of shares to be sold by persons other than AMPAM is
greater than the number of such shares which can be offered without adversely
affecting the success of the offering, AMPAM may reduce pro rata (among all
AMPAM stockholders and all other security holders in the offering the number of
shares offered for the accounts of such persons (based on the number of shares
held by such person) to a number deemed satisfactory by such managing
underwriter. During this restricted period, the certificates evidencing the
AMPAM Common Stock delivered to the Stockholders pursuant to this Agreement will
bear a legend substantially in the form set forth below:

THE SHARES REPRESENTED BY THIS CERTIFICATE MAY NOT BE SOLD, ASSIGNED, EXCHANGED,
TRANSFERRED, PLEDGED OR OTHERWISE DISPOSED OF EXCEPT PURSUANT TO THE TERMS OF
THE AGREEMENT AND PLAN OF MERGER PURSUANT TO WHICH SUCH SHARES WERE ISSUED, AND
THE ISSUER SHALL NOT BE REQUIRED TO GIVE EFFECT TO ANY ATTEMPTED SALE,
ASSIGNMENT, EXCHANGE, TRANSFER, PLEDGE OR OTHER DISPOSITION PRIOR TO EXPIRATION
OF THE RESTRICTED PERIOD REFERRED TO IN THE AGREEMENT AND PLAN OF MERGER EXCEPT
IN ACCORDANCE WITH THE TERMS OF SUCH AGREEMENT. SUCH RESTRICTIONS ON TRANSFER
ARE SET FORTH IN AN AGREEMENT AND PLAN OF MERGER, A COPY OF WHICH IS MAINTAINED
AT THE PRINCIPAL OFFICES OF THE ISSUER. UPON THE WRITTEN REQUEST OF THE HOLDER
OF THIS CERTIFICATE, THE ISSUER AGREES TO REMOVE THIS RESTRICTIVE LEGEND (AND
ANY STOP ORDER PLACED WITH THE TRANSFER AGENT) AFTER THE DATE SPECIFIED ABOVE.

                                   ARTICLE IX

                               REGISTRATION RIGHTS

     SECTION 9.1. PIGGYBACK REGISTRATION RIGHTS. Whenever AMPAM proposes to
register any AMPAM stock for its own or other's account under the 1933 Act for a
public offering, other than (i) any shelf or other registration of shares to be
used as consideration for acquisitions of additional businesses by AMPAM and
(ii) registrations relating to employee benefit plans, AMPAM shall give each of
the Company Stockholders prompt written notice of its intent to do so. Upon the
written request of any of the Company Stockholders given within 15 calendar days
after receipt of such notice, notwithstanding the provisions of Section 8
(except as specified below with respect to an IPO), AMPAM shall cause to be
included in such registration all of the AMPAM stock issued to such Company
Stockholders pursuant to this Agreement (including any stock issued as or
issuable

                                     - 37 -
<PAGE>   44

upon the conversion or exchange of any convertible security, warrant, right or
other security which is issued by AMPAM as a stock split, dividend or other
distribution with respect to, or in exchange for, or in replacement of such
AMPAM stock) which any such Company Stockholder requests, other than shares of
AMPAM stock which may then be immediately sold under Rule 144(k) (or any similar
or successor provision) promulgated under the 1933 Act, and other than shares of
AMPAM stock that have been theretofore sold by the Company Stockholder in
accordance with the 1933 Act, provided that AMPAM shall have the right to reduce
pro rata the number of shares of each selling Company Stockholder included in
such registration to the extent that inclusion of such shares would, in the
written opinion of tax counsel to AMPAM or its independent auditors, cause the
transactions contemplated hereby to fail as a 368 Reorganization; provided,
however, that with respect to a proposal by AMPAM to register AMPAM stock under
the 1933 Act in connection with an IPO, no Company Stockholder shall be
permitted pursuant to this Section 9.1 to have included in such registration
more shares of AMPAM stock than permitted to be sold by such Company Stockholder
pursuant to Section 8. In addition, if AMPAM is advised in writing in good faith
by any managing underwriter of an underwritten offering of the securities being
offered pursuant to any registration statement under this Section 9.1 that the
number of shares to be sold by persons other than AMPAM is greater than the
number of such shares which can be offered without adversely affecting the
success of the offering, AMPAM may reduce pro rata (among the Company
Stockholders and all other selling security holders in the offering) the number
of shares offered for the accounts of such persons (based upon the number of
shares held by such person) to a number deemed satisfactory by such managing
underwriter. If any Company Stockholder disapproves of the terms of the
underwriting, that Company Stockholder may elect to withdraw therefrom by
written notice to AMPAM and the managing underwriter. That Company Stockholder's
shares of AMPAM stock so withdrawn shall also be withdrawn from registration;
provided, however, that, if by the withdrawal of such shares a greater number of
shares of AMPAM stock held by other Company Stockholders may be included in such
registration, then AMPAM shall offer to all other stockholders of AMPAM the
right to include additional shares in the same proportion used in effecting the
above limitations. AMPAM shall not, for a period of two years following the
Closing, grant to any other person any rights to cause AMPAM to register any
securities in priority over, or in precedent to, the rights granted to the
Company Stockholders hereunder. Notwithstanding anything in this Agreement to
the contrary, if AMPAM has entered or enters into any agreement with any Person
providing for rights to register shares of AMPAM stock under the 1933 Act and
such rights are more favorable (as determined by the Company Stockholder's in
their sole discretion) than the rights set forth in Section 9, then AMPAM
acknowledges and agrees that the Company Stockholders shall have the right to
elect to have those more favorable terms apply in lieu of any less favorable
terms contained in Section 9 of this Agreement.

     SECTION 9.2. REGISTRATION PROCEDURE. Whenever AMPAM is required to register
shares of AMPAM stock pursuant to Section 9.1, AMPAM will, as expeditiously as
possible: (i) Prepare and file with the SEC a registration statement with
respect to such shares and use its best efforts to cause such registration
statement to become effective (provided that before filing a registration
statement or prospectus or any amendments or supplements or term sheets thereto,
AMPAM will

                                     - 38 -
<PAGE>   45

furnish a representative of the Company Stockholders with copies of all such
documents proposed to be filed) as promptly as practical; (ii) Notify the
Company Stockholders of any stop order issued or threatened by the SEC and take
all reasonable actions required to prevent the entry of such stop order or to
remove it if entered; (iii) Prepare and file with the SEC such amendments and
supplements to such registration statement and the prospectus used in connection
therewith as may be necessary to keep such registration statement effective for
a period of not less than 120 days, cause the prospectus to be supplemented by
any required prospectus supplement, and as so supplemented to be filed pursuant
to Rule 424 under the 1933 Act; and comply with the provisions of the 1933 Act
applicable to it with respect to the disposition of all securities covered by
such registration statement during the applicable period in accordance with the
intended methods of disposition by the sellers thereof set forth in such
registration statement or supplement to the prospectus; (iv) Furnish to each
Company Stockholder who so requests such number of copies of such registration
statement, each amendment and supplement thereto and the prospectus included in
such registration statement (including each preliminary prospectus and any term
sheet associated therewith), and such other documents as such Company
Stockholder may reasonably request in order to facilitate the disposition of the
relevant shares; (v) Make "generally available to its security holders" (within
the meaning of Rule 158) an earnings statement satisfying the provisions of
Section 11(a) of the 1933 Act and Rule 158 thereunder no later than 90 days
after the end of the 12-month period beginning with the first day of AMPAM's
first fiscal quarter commencing after the effective date of the registration
statement; (vi) Make every reasonable effort to obtain the withdrawal of any
order suspending the effectiveness of the registration statement at the earliest
possible moment; (vii) If requested by the managing underwriter or underwriters,
if any, or any participating Company Stockholder, promptly incorporate in a
prospectus supplement or post-effective amendment such information as the
managing underwriter or underwriters or any participating Company Stockholder,
as the case may be, reasonably requests to be included therein, including,
without limitation, information with respect to the number of shares of AMPAM
stock being sold by participating Stockholders to any underwriter or
underwriters, the purchase price being paid therefor by such underwriter or
underwriters and with respect to any other terms of an underwritten offering of
the shares of AMPAM stock to be sold in such offering, and promptly make all
required filings of such prospectus by supplement or post-effective amendment;
(viii) Make available for inspection by participating Company Stockholders, any
underwriter participating in any disposition pursuant to such registration
statement, and the counsel retained by the participating Company Stockholders,
counsel for the underwriters and any accountant or other agent retained by
participating Company Stockholders or any such underwriter (collectively, the
"Inspectors"), all financial and other records, pertinent corporate documents
and properties of AMPAM (the "Records"), as shall be reasonably necessary to
enable them to exercise their due diligence responsibility, and cause AMPAM's
officers, directors and employees to supply all information reasonably requested
by any such Inspectors in connection with such registration statement; provided,
that records which AMPAM determines, in good faith, to be confidential and which
AMPAM notifies the Inspectors are confidential shall not be disclosed by the
Inspectors unless (i) the disclosure of such Records is necessary to avoid or
correct a misstatement or omission in the registration statement or (ii) the
release of such Records is ordered pursuant to a subpoena or other order from a
court of competent jurisdiction after delivery

                                     - 39 -
<PAGE>   46

of sufficient notice to AMPAM to enable AMPAM to contest such subpoena or order;
(ix) Take all other steps reasonably necessary to effect the registration of the
shares of AMPAM stock contemplated hereby; (x) Use its best efforts to register
or qualify the securities covered by such registration statement under such
other securities or blue sky laws of such jurisdictions as shall be reasonably
requested by the Company Stockholders, and to keep such registration or
qualification effective during the period such registration statement is
required to be kept effective, provided that AMPAM shall not be required to
become subject to taxation, to qualify generally to do business or to file a
general consent to service of process in any such states or jurisdictions; (xi)
Cause all such shares of AMPAM stock to be listed or included not later than the
date of the first sale of shares of AMPAM stock under such registration
statement on any securities exchanges or trading systems on which similar
securities issued by AMPAM are then listed or included; and (xii) Notify each
Company Stockholder at any time when a prospectus relating thereto is required
to be delivered under the 1933 Act within the period that AMPAM is required to
keep the registration statement effective of the happening of any event as a
result of which the prospectus included in such registration statement (as then
in effect), together with any associated term sheet, contains an untrue
statement of a material fact or omits to state any fact required to be stated
therein or necessary to make the statements therein (in the case of the
prospectus or any preliminary prospectus, in light of the circumstances under
which they were made) not misleading, and, at the request of such Company
Stockholder, AMPAM promptly will prepare a supplement or amendment to such
prospectus so that, as thereafter delivered to the purchasers of the covered
shares, such prospectus will not contain an untrue statement of material fact or
omit to state any fact required to be stated therein or necessary to make the
statements therein (in the case of the prospectus or any preliminary prospectus,
in light of the circumstances under which they were made) not misleading. All
expenses incurred in connection with the registration under this Article 9 and
compliance with securities and blue sky laws (including all registration,
filing, listing, escrow agent, qualification, legal, printer and accounting
fees, but excluding underwriting commissions and discounts), shall be borne by
AMPAM.

     SECTION 9.3. INDEMNIFICATION.

         (a) In connection with any registration under Section 9.1, AMPAM shall
indemnify, to the extent permitted by law, each selling Company Stockholder (an
"Indemnified Party") against all losses, claims, damages, liabilities and
expenses arising out of or resulting from any untrue or alleged untrue statement
of material fact contained or incorporated by reference in any registration
statement, prospectus or preliminary prospectus or associated term sheet or any
omission or alleged omission to state or incorporated by reference therein a
material fact required to be stated or incorporated by reference therein or
necessary to make the statements therein not misleading except insofar as the
same are caused by or contained in or omitted from any information furnished in
writing to AMPAM by such Indemnified Party expressly for use therein or by any
Indemnified Parties' failure to deliver a copy of the registration statement or
prospectus or any amendment or supplements thereto after AMPAM has furnished
such Indemnified Party with a sufficient number of copies of the same.

                                     - 40 -
<PAGE>   47

         (b) In connection with any registration under Section 9.1, each selling
Company Stockholder shall furnish to AMPAM in writing such information
concerning the Company Stockholder and his or her proposed offering of shares as
is reasonably requested by AMPAM for use in any such registration statement or
prospectus and will indemnify, to the extent permitted by law, AMPAM, its
directors and officers and each person who controls AMPAM (within the meaning of
the 1933 Act) against any losses, claims, damages, liabilities and expenses
resulting from any untrue or alleged untrue statement of a material fact or any
omission or alleged omission to state therein a material fact required to be
stated in the registration statement or prospectus or any amendment thereof or
supplement thereto or necessary to make the statements therein not misleading,
but only to the extent that such untrue or alleged untrue statement or omission
or alleged omission is contained in or omitted from information so furnished in
writing to AMPAM by such Company Stockholder expressly for use in the
registration statement. Notwithstanding the foregoing, the liability of a
Company Stockholder under this Section 9.3 shall be limited to an amount equal
to the net proceeds actually received by such Company Stockholder from the sale
of the relevant shares covered by the registration statement.

         (c) Any person entitled to indemnification hereunder will (i) give
prompt notice to the indemnifying party of any claim with respect to which it
seeks indemnification and (ii) unless in such indemnified parties' reasonable
judgment, a conflict of interest between such indemnified and indemnifying
parties may exist with respect to such claim, permit such indemnifying party to
assume the defense of such claim with counsel reasonably satisfactory to the
indemnified party. Any failure to give prompt notice shall deprive a party of
its right to indemnification hereunder only to the extent that such failure
shall have adversely affected the indemnifying party. If the defense of any
claim is assumed, the indemnifying party will not be subject to any liability
for any settlement made without its consent (but such consent shall not be
unreasonably withheld). An indemnifying party that is not entitled or elects not
to assume the defense of a claim, will not be obligated to pay the fees and
expenses of more than one counsel for all parties indemnified by such
indemnifying party with respect to such claim, unless in the reasonable judgment
of any indemnified party, a conflict of interest may exist between such
indemnified party and any other of such indemnified parties with respect to such
claim.

     SECTION 9.4. UNDERWRITING AGREEMENT. In connection with each registration
pursuant to Section 9.1 covering an underwritten registered offering, (i) each
participating Company Stockholder shall execute and deliver to AMPAM a written
power of attorney instrument that (A) appoints an officer of AMPAM as such
Company Stockholder's attorney-in-fact for purposes of executing and delivering
an underwriting agreement among AMPAM, the underwriters named therein and such
Company Stockholder specifying the terms and conditions applicable to the sale
of AMPAM stock of such Company Stockholder in such offering and (B) otherwise is
in such form and containing such provisions as are customary in the securities
business for such an arrangement in connection with an underwritten registered
offering in which one or more stockholders of the issuer are participants,
including a provision that authorizes the attorney-in-fact appointed by such
Company Stockholder to execute and deliver such an underwriting agreement in the
event that the net price per share to be received by such Company Stockholder
from the sale of the shares of AMPAM stock to be sold in

                                     - 41 -
<PAGE>   48

such offering is not less than a price specified in such instrument and (iii)
AMPAM and each participating Company Stockholder agree to enter into a written
agreement with the managing underwriters in such form and containing such
provisions as are customary in the securities business for such an arrangement
between such managing underwriters and companies of AMPAM's size and investment
stature, including indemnification; provided, however, that (A) such Company
Stockholder shall be exempt and excluded from any indemnification of the
managing underwriters other than with respect to information provided by such
Company Stockholder with respect to such Company Stockholder to AMPAM or the
managing underwriters specifically for inclusion in any such registration
statement and (B) such Company Stockholder shall not be obligated to enter into
such an underwriting agreement in the event that the net price per share to be
received by such Company Stockholder from the sale of shares of AMPAM stock to
be sold in such offering is less than the floor price specified in the power of
attorney instrument executed and delivered to AMPAM pursuant to clause (i)
above.

     SECTION 9.5. TRANSFER OF RIGHTS. The right to cause AMPAM to register
shares of AMPAM Common Stock under this Agreement may be assigned to a
transferee or assignee of AMPAM Common Stock of any Company Stockholder to the
extent that such transferee or assignee is a member of the immediate family of a
Company Stockholder, a trust, limited partnership or other estate planning
entity for the benefit of any such persons or a charitable organization that
qualifies for receipt of charitable contributions under Section 170(c) of the
Code.

     SECTION 9.6. RULE 144 REPORTING. With a view to making available the
benefits of certain rules and regulations of the SEC that may permit the sale of
AMPAM Common Stock to the public without registration, following an IPO AMPAM
agrees to use its reasonable efforts, from and after the completion of an IPO,
to: (i) make and keep public information regarding AMPAM available as those
terms are understood and defined in Rule 144 under the 1933 Act beginning 90
days following the effective date of a registration statement relating to an
IPO; (ii) file with the SEC in a timely manner all reports and other documents
required of AMPAM under the 1933 Act and the 1934 Act at any time after it has
become subject to such reporting requirements; and (iii) so long as a Company
Stockholder owns any restricted AMPAM stock, furnish to each Company Stockholder
forthwith upon written request a written statement by AMPAM as to its compliance
with the current public information requirements of Rule 144 (at any time from
and after 90 days following the effective date of a registration statement
relating to an IPO), and of the 1933 Act and the 1934 Act (any time after it has
become subject to such reporting requirements), a copy of the most recent annual
or quarterly report of AMPAM, and such other reports and documents so filed as a
Company Stockholder may reasonably request in availing itself of any rule or
regulation of the SEC allowing a Company Stockholder to sell any such shares
without registration.

                                     - 42 -
<PAGE>   49

                                    ARTICLE X

                    NONDISCLOSURE OF CONFIDENTIAL INFORMATION

     SECTION 10.1. GENERAL. The Company Stockholders recognize and acknowledge
that they had in the past, currently have, and in the future may possibly have,
access to certain confidential information of the Company or the Surviving
Corporation, such as lists of customers or employees, operational policies, and
pricing and cost policies that are valuable, special, and unique assets of the
Company and will be valuable, special, and unique assets of the Surviving
Corporation. The Company Stockholders agree that they will not disclose such
confidential information to any Person for any purpose or reason whatsoever,
except (a) to authorized representatives of AMPAM, (b) following the Closing,
such information may be disclosed by the Company Stockholders as is required in
the course of performing their duties for AMPAM or the Surviving Corporation and
(c) to their counsel and other advisers, provided that such advisers (other than
counsel) agree to the confidentiality provisions of this Section 10.1; provided,
however that the foregoing disclosure prohibition shall not apply in the event
that (i) such information becomes known to the public generally through no fault
of the Company Stockholders, (ii) disclosure is required by law or the order of
any Governmental Authority under color of law, provided, that prior to
disclosing any information pursuant to this clause (ii), the Company
Stockholders shall, if possible, give prior written notice thereof to AMPAM and
provide AMPAM with the opportunity to contest such disclosure, or (iii) the
disclosing party reasonably believes that such disclosure is required in
connection with the defense of a lawsuit against the disclosing party. In the
event of a breach or threatened breach by any of the Company Stockholders of the
provisions of this Section, AMPAM shall be entitled to an injunction restraining
the Company Stockholders from disclosing, in whole or in part, such confidential
information. Nothing herein shall be construed as prohibiting AMPAM from
pursuing any other available remedy for such breach or threatened breach,
including the recovery of Damages. In the event the transactions contemplated by
this Agreement are not consummated, the Company Stockholders shall have none of
the above-mentioned restrictions on their ability to disseminate confidential
information with respect to the Company.

     SECTION 10.2. EQUITABLE RELIEF. Because of the difficulty of measuring
economic losses as a result of the breach of the foregoing covenants, and
because of the immediate and irreparable damage that would be caused for which
the Company, the Surviving Corporation, and/or AMPAM would have no other
adequate remedy, the Company Stockholders agree that the foregoing covenants may
be enforced against them by injunctions, restraining orders, and other equitable
actions and agree to waive any requirement for the securing or posting of any
bond in connection with the obtaining of any such injunctive or any other
equitable relief.

     SECTION 10.3. NON-PUBLIC INFORMATION. The Company Stockholders hereby
acknowledge that if they become aware of "material non-public information" (as
defined under applicable securities laws) regarding AMPAM, that they will be
required, under applicable securities laws, to refrain from trading in AMPAM
securities or disclosing any such information while such information is
non-public. The Company Stockholders further agree to communicate such
requirement to all personnel of the Company, the Surviving Corporation or
others, having Knowledge of such "material non-public information" regarding
AMPAM.

                                     - 43 -
<PAGE>   50

     SECTION 10.4. SURVIVAL. The obligations of the parties under this Article X
shall survive the termination or Closing, as the case may be, of this Agreement
for a period of five years.

     SECTION 10.5. RETURN OF INFORMATION. If the transactions contemplated by
this Agreement are not consummated, each of AMPAM and the Company Stockholders
will return all confidential information regarding the other and the terms and
conditions of the Confidentiality.

                                     - 44 -
<PAGE>   51

                                   ARTICLE XI

                            REDEMPTION OF AMPAM STOCK

     SECTION 11.1. REDEMPTION TRIGGER. In the event that, within three years of
the Effective Time, (i) AMPAM has not consummated an IPO and (ii) any Company
Stockholder has not received cash (including proceeds from the public or private
sale of AMPAM Stock received as consideration hereunder) equal to or exceeding
50% of the Adjusted or Readjusted (as appropriate) Merger Consideration received
by each Company Stockholder, such Company Stockholder shall have the right (the
"Put Right"), but not the obligation, commencing on the third anniversary of the
Effective Time to require AMPAM to purchase a number of shares of AMPAM Common
Stock then owned by such Company Stockholder, subject to Section 11.2 below. The
purchase price for such redemption shall be $13.00 per share, such price to be
subject to appropriate adjustment to reflect any reclassification, stock
dividend, subdivision, split-up or combination of shares of AMPAM Common Stock
after the Effective Time.

     SECTION 11.2. MINIMUM REDEMPTION; LIMITATIONS. If the events specified in
Section 11.1(i) and Section 11.1(ii), with Section 11.1(ii) being determined on
an individual Company Stockholder basis, have not occurred within the time
specified, AMPAM shall be obligated, pursuant to the Put Right, to purchase
annually from each eligible Company Stockholder no less than 10% of the AMPAM
Common Stock held by such Company Stockholder; provided, however, that the
Company Stockholders shall not be entitled to exercise their Put Rights if and
to the extent that (i) the Surviving Corporation has not achieved $6,000,000 of
adjusted earnings before interest, taxes, depreciation and amortization before
corporate allocations for charges and credits ("Adjusted EBITDA") for the year
preceding the year in which a Company Stockholder seeks to exercise his Put
Right, or (ii) the exercise of the Put Rights would, in the written opinion of
tax counsel to AMPAM or its independent auditors cause the transactions
contemplated hereby to fail as a 368 Reorganization. If AMPAM and the Company
Stockholders disagree on the amount of Adjusted EBITDA for the preceding year,
such determination of Adjusted EBITDA will be made by an independent accounting
firm and its determination will be final and binding on all parties. The
redemptions will be funded by internal cash flows or alternative financing
arrangements but AMPAM's obligation to make any redemption pursuant to this
Article XI will be subject to the covenants and restrictions contained in
AMPAM's private or public debt or equity instruments then in existence.

     SECTION 11.3. NOTICE; EXERCISE. The Company Stockholders may exercise their
Put Right by giving written notice (the "Put Notice") to AMPAM within thirty
(30) days after the third anniversary of the Effective Time. If any Company
Stockholder does not provide AMPAM with a Put Notice within such thirty-day
period, the Put Right applicable to such Company Stockholder shall expire. The
date for closing the sale of any shares of AMPAM Common Stock pursuant to a
proper exercise of a Put Right shall in no event be earlier than 90 days after
the date AMPAM receives the Put Notice. Any such closing shall be at such time
of day and place as shall be mutually

                                     - 45 -
<PAGE>   52

agreed between such holder and AMPAM. At such closing, AMPAM shall make payment
for the AMPAM Common Stock to be repurchased by wire transfer of immediately
available funds to a bank account designated by such Company Stockholder for
such purpose and such Company Stockholder shall deliver to AMPAM certificates,
duly endorsed for transfer, representing the shares of AMPAM Common Stock to be
purchased and sold pursuant to the exercise of such Put Right.

     SECTION 11.4. TERMINATION OF REDEMPTION OBLIGATION. Put Rights with respect
to any individual Company Stockholder will terminate upon receipt by such
Company Stockholder of 50% of the value of his or her Adjusted or Readjusted (as
appropriate) Merger Consideration in cash. Notwithstanding the foregoing, all of
AMPAM's redemption obligations contained in this Article XI shall terminate on
the earlier to occur of (i) an IPO, (ii) any sale of all or substantially all of
AMPAM's assets in one transaction or series of transactions, (iii) any merger or
consolidation which involves AMPAM and in which AMPAM is not the surviving
entity or (iv) any transaction after which the shares of AMPAM Common Stock, if
any, which are then held by persons other than the holders of AMPAM Common Stock
as of the Effective Time constitute 50% or more of AMPAM Common Stock
outstanding as of the date of the consummation of such transaction.

                                   ARTICLE XII

                                  MISCELLANEOUS

     SECTION 12.1. GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of Texas without reference to
the choice of law principles thereof.

     SECTION 12.2. ENTIRE AGREEMENT. This Agreement, together with the Schedules
and Exhibits hereto, constitute the entire agreement between the parties with
respect to the subject matter hereof, and there are no agreements,
understandings, representations, or warranties between the parties other than
those set forth or referred to herein.

     SECTION 12.3. NOTICES. All notices hereunder shall be sufficient upon
receipt for all purposes hereunder if in writing and delivered personally, sent
by documented overnight delivery service or, to the extent receipt is confirmed,
telecopy, telefax, or other electronic transmission service to the appropriate
address or number as set forth below.

         If to AMPAM or Acquisition, to:

               American Plumbing & Mechanical, Inc.
               1950 Louis Henna Blvd.
               Round Rock, Texas  78664
               Attention: Carl Wimberley

                                     - 46 -
<PAGE>   53

               Fax Number:  (512) 246-5290

         if to the Company or the Company Stockholders, to:

               Lindy Dennis Industries, Inc.
               1740 Delilah Street
               Corona, California  92879
               Attention: Lloyd C. Smith
               Fax Number:  (909) 817-0217

     SECTION 12.4. SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon
and inure to the benefit of the parties hereto and their respective successors
and assigns; provided, however, that no party may assign, delegate, or otherwise
transfer any of its rights or obligations under this Agreement without the
consent of each other party hereto, except AMPAM or Acquisition may transfer or
assign, in whole or from time to time in part, to one or more of their
Affiliates, the right to enter into the transactions contemplated by this
Agreement, but any such transfer or assignment will not relieve AMPAM or
Acquisition of its obligations hereunder. This Agreement is not intended to
confer upon any Person not a party hereto any rights or remedies hereunder, and
no Person other than the parties hereto or such Persons described above is
entitled to rely on any representation, warranty, or covenant contained herein.

     SECTION 12.5. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The
representations, warranties, covenants and agreements of the parties made herein
and at the time of the Closing or in writing delivered pursuant to the
provisions of this Agreement shall survive the consummation of the transactions
contemplated hereby and any examination on behalf of the parties until the
respective Expiration Dates referred to herein with respect thereto or, if no
Expiration Date is applicable with respect thereto, until the expiration of all
applicable statute of limitations periods.

     SECTION 12.6. HEADINGS; DEFINITIONS. The Section and Article headings
contained in this Agreement are inserted for convenience of reference only and
will not affect the meaning or interpretation of this Agreement. All references
to Sections or Articles contained herein mean Sections or Articles of this
Agreement unless otherwise stated. All capitalized terms defined herein are
equally applicable to both the singular and plural forms of such terms.

     SECTION 12.7. AMENDMENTS AND WAIVERS. This Agreement may not be modified or
amended except by an instrument or instruments in writing signed by the party
against whom enforcement of any such modification or amendment is sought. Any
party hereto may, only by an instrument in writing, waive compliance by any
other party hereto with any term or provision of this Agreement on the part of
such other party hereto to be performed or complied with. The waiver by any
party hereto of a breach of any term or provision of this Agreement shall not be
construed as a waiver of any subsequent breach.

                                     - 47 -
<PAGE>   54

     SECTION 12.8. CONSTRUCTION OF CERTAIN PROVISIONS. It is understood and
agreed that the specification of any dollar amount in the representations and
warranties contained in this Agreement or the inclusion of any specific item in
the Schedules or Exhibits is not intended to imply that such amounts or higher
or lower amounts, or the items so included or other items, are or are not
material, and no party shall use the fact of the setting of such amounts or the
fact of the inclusion of any such item in the Schedules in any dispute or
controversy between the parties as to whether any obligation, item, or matter
not described herein or included in a Schedule or Exhibit is or is not material
for purposes of this Agreement. It is agreed that neither party shall allege
that a provision of this Agreement shall be construed against a party because
such party drafted such provision.

     SECTION 12.9. SEVERABILITY. If any term or other provision of this
Agreement is invalid, illegal, or incapable of being enforced by any rule of law
or public policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect. Upon such determination that any
term or other provision is invalid, illegal, or incapable of being enforced, the
parties hereto shall negotiate in good faith to modify this Agreement so as to
effect the original intent of the parties as closely as possible in an
acceptable manner to the end that the transactions contemplated by this
Agreement are fulfilled to the extent possible.

     SECTION 12.10. JURISDICTION. Any legal action, suit, or proceeding in law
or equity arising out of or relating to this Agreement and transactions
contemplated by this Agreement may only be instituted in any state or federal
court in Travis County, Austin, Texas, and each party agrees not to assert, by
way of motion, as a defense, or otherwise, in any such action, suit, or
proceeding, any claim that it is not subject personally to the jurisdiction of
such court, that its property is exempt or immune from attachment or execution,
that the action, suit, or proceeding is brought in an inconvenient forum, that
the venue of the action, suit, or proceeding is improper or that this Agreement,
or the subject matter hereof or thereof may not be enforced in or by such court.
Each party further irrevocably submits to the jurisdiction of any such court in
any such action, suit, or proceeding. Any and all service of process and any
other notice in any such action, suit, or proceeding shall be effective against
any party if given by registered or certified mail, return receipt requested, or
by any other means of mail which requires a signed receipt, postage prepaid,
mailed to such party at the address listed in Section 12.3. Nothing herein
contained shall be deemed to affect the right of any party to serve process in
any manner permitted by law.

     SECTION 12.11. WAIVER OF JURY TRIAL. EACH OF THE PARTIES HERETO HEREBY
IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING
ARISING OUT OF OR RELATED TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED
HEREBY.

     SECTION 12.12. SPECIFIC PERFORMANCE. The parties hereto agree that
irreparable damage would occur in the event any provision of this Agreement was
not performed in accordance with the terms hereof and that the parties shall be
entitled to specific performance of the terms hereof in addition to any other
remedy to which they are entitled at law or in equity.

                                     - 48 -
<PAGE>   55

     SECTION 12.13. COUNTERPARTS; EFFECTIVENESS. This Agreement may be executed
in one or more counterparts, all of which shall be considered one and the same
agreement, and shall become effective when one or more counterparts have been
signed by each of the parties and delivered to the other party. In making proof
of this Agreement, it shall not be necessary to produce or account for more than
one such counterpart. A telecopied facsimile of an executed counterpart of this
Agreement shall be sufficient to evidence the binding agreement of each party to
the terms hereof. However, each party agrees to promptly deliver to the other
parties an original, duly executed counterpart of this Agreement.

     SECTION 12.14. MUTUAL INDEMNIFICATION AGAINST CLAIMS OF BROKERS. Each party
agrees to indemnify the other against all loss, cost, Damages or expense arising
out of claims for fees or commissions of brokers employed or alleged to have
been employed by such party.

     SECTION 12.15. DEFINITIONS AND USAGE. For the purposes of this Agreement:

                  "368 Reorganization" shall have the meaning specified in
         Section 3.22.

                  "1933 Act" shall have the meaning specified in Section 3.5.

                  "1934 Act" shall have the meaning specified in Section 4.4.

                  "Acquisition" shall have the meaning specified in the
         introductory paragraph of this Agreement.

                  "Actions" shall mean any actions, suits, arbitrations,
         inquiries, proceedings or investigations by or before any Governmental
         Authority.

                  "Actual Indebtedness" shall mean the aggregate amount of Debt
         Obligations reflected on the Estimated or Final (as appropriate)
         Balance Sheet.

                  "Actual Working Capital" shall mean the aggregate amount of
         (a) all current assets reflected on the Estimated or Final (as
         appropriate) Balance Sheet less (b) all current liabilities reflected
         on the Estimated or Final (as appropriate) Date Balance Sheet
         (excluding short-term debt and the current portion of long-term debt to
         the extent the same is included in Actual Indebtedness).

                  "Adjusted EBITDA" shall have the meaning specified in Section
         11.2.

                  "Adjusted Merger Consideration" shall have the meaning
         specified in Section 1.3(a).

                                     - 49 -
<PAGE>   56

                  "Adjustments" shall have the meaning specified in Section
         1.3(a).

                  "Affiliate" or "affiliate" means, with respect to any Person,
         any other Person directly or indirectly controlling, controlled by, or
         under common control with such Person.

                  "Agreement" shall have the meaning specified in the
         introductory paragraph of this Agreement and Plan of Merger.

                  "AMPAM" shall have the meaning specified in the introductory
         paragraph of this Agreement.

                  "AMPAM Common Stock" shall have the meaning specified in
         Section 1.2(a).

                  "AMPAM Indemnitees" shall have the meaning specified in
         Section 6.1.

                  "AMPAM Material Adverse Change" shall mean a material adverse
         change in the business, operations, properties, assets or condition
         (financial or otherwise), of AMPAM taken as a whole.

                  "AMPAM Material Adverse Effect" shall mean any fact,
         circumstance, event, or condition which has or would have a materially
         adverse effect on the business, operations, properties, condition
         (financial or otherwise), assets, liabilities, results of operations or
         prospects of AMPAM and its subsidiaries, taken as a whole.

                  "AMPAM SEC Filings" shall have the meaning specified in
         Section 4.5(a).

                  "CERCLA" shall have the meaning specified in Section 3.18.

                  "Certificates" shall have the meaning specified in Section
         1.4.

                  "Certificate of Merger" shall have the meaning specified in
         Section 1.1(b).

                  "Closing" shall have the meaning specified in Section 1.1(d).

                  "Code" shall mean the Internal Revenue Code of 1986, as
         amended, and any successor thereto.

                  "Commitment" shall have the meaning specified in Section 3.2.

                  "Company" shall have the meaning specified in the introductory
         paragraph of this Agreement.

                  "Company Benefit Plans" shall have the meaning specified in
         Section 3.20(a).

                                     - 50 -
<PAGE>   57

                  "Company Common Stock" shall have the meaning specified in
         Section 1.2(a).

                  "Company Financial Statements" shall have the meaning
         specified in Section 3.6.

                  "Company Law" shall have the meaning specified in Section
         1.1(a).

                  "Company Material Adverse Effect" shall mean any fact,
         circumstance, event, or condition which has or would have a materially
         adverse effect on the business, operations, properties, condition
         (financial or otherwise), assets, liabilities, results of operations or
         prospects of the Company, taken as a whole.

                  "Company Material Adverse Change" shall mean a material
         adverse change in the business, operations, properties, assets or
         condition (financial or otherwise), of the Company taken as a whole.

                  "Company Membership Interest" shall have the meaning specified
         in Section 1.2(a).

                  "Company Pension Plans" shall have the meaning specified in
         Section 3.20(a).

                  "Company Returns" shall mean all returns, declarations,
         reports, statements, and other documents required to be filed by the
         Company in respect of Taxes, and the term "Company Return" means any
         one of the foregoing Company Returns.

                  "Company Stock" shall have the meaning specified in Section
         1.2(a).

                  "Company Stockholders" shall have the meaning specified in the
         introductory paragraph of this Agreement.

                  "Company Unaudited Balance Sheet Date" shall have the meaning
         specified in Section 3.7.

                  "Company Unaudited Financial Statements" shall have the
         meaning specified in Section 3.6.

                  "Company Welfare Plan" shall have the meaning specified in
         Section 3.20(a).

                  "Damages" shall have the meaning specified in Section 6.1.

                  "Debt Obligations" shall mean any contract, agreement,
         indenture, note or other instrument relating to the borrowing of money,
         any capitalized lease obligation, any obligation properly classified as
         indebtedness or debt under GAAP or any guarantee or other

                                     - 51 -
<PAGE>   58

         contingent liability in respect of any indebtedness or obligation of
         any Person (other than the endorsement of negotiable instruments for
         deposit or collection in the ordinary course of business) and shall
         specifically include any loans or advances to or from the Company
         Stockholders or their respective Affiliates.

                  "Delaware Law" shall have the meaning prescribed in Section
         1.1(a).

                  "Department" shall have the meaning specified in Section 5.13.

                  "disposal" or "disposed" shall have the meaning specified in
         Section 3.18.

                  "Effective Time" shall have the meaning specified in Section
         1.1(b).

                  "Employment Agreements" shall have the meaning specified in
         Section 1.7(a)(i).

                  "Environmental Laws" shall have the meaning specified in
         Section 3.18.

                  "ERISA" shall have the meaning specified in Section 3.20(a).

                  "Estimated Balance Sheet" shall have the meaning specified in
         Section 1.3(a).

                  "Expiration Date" shall have the meaning specified in Article
         III and Article IV.

                  "Final Balance Sheet" shall have the meaning specified in
         Section 1.3(b).

                  "FTC" shall have the meaning specified in Section 5.13.

                  "GAAP" shall have the meaning specified in Section 3.6.

                  "Governmental Authority" shall mean (a) the United States of
         America, (b) any state, county, municipality, or other governmental
         subdivision within the United States of America, and (c) any court or
         any governmental department, commission, board, bureau, agency, or
         other instrumentality of the United States of America or of any state,
         county, municipality, water rights, taxing, or zoning authority, or
         other governmental subdivision within the United States of America.

                  "Hart Scott Act" shall have the meaning specified in Section
         5.13.

                  "Indemnification Threshold" shall have the meaning specified
         in Section 6.7.

                  "Indemnified Party" shall have the meaning specified in
         Section 9.3.

                                     - 52 -
<PAGE>   59

                  "Indemnitee" shall have the meaning specified in Section 6.5.

                  "Indemnitee Claim" shall have the meaning specified in Section
         6.5.

                  "Indemnitor" shall have the meaning specified in Section 6.5.

                  "Inspectors" shall have the meaning specified in Section 9.2.

                  "IPO" shall mean an initial public offering of AMPAM stock.

                  "Knowledge" when used in relation to any Person shall mean the
         actual (but not constructive) knowledge of such Person or such Person's
         officers after reasonable inquiry.

                  "Leases" shall have the meaning specified in Section
         1.7(a)(x).

                  "Licenses" shall have the meaning specified in Section 3.11.

                  "Liens" shall mean all liens, mortgages, security interests,
         pledges, equities, claims, options, and other encumbrances of any kind.

                  "Merger" shall have the meaning specified in Section 1.1(a).

                  "Merger Consideration" shall have the meaning specified in
         Section 1.2(a).

                  "officer" means in the case of AMPAM and the Company, any
         executive officer of AMPAM or the Company, as applicable, within the
         meaning of Rule 3b-7 of the 1934 Act.

                  "Ordinary Course of Business" shall mean the ordinary course
         of business consistent with past customs and practice (including with
         respect to quantity and frequency).

                  "Person" shall mean an individual, partnership, corporation,
         limited liability company, trust, incorporated or unincorporated
         association, joint venture, joint stock company, Governmental Authority
         or other legal entity of any kind.

                  "Plumbing and Mechanical Business" shall have the meaning
         specified in Section 7.1(a).

                  "PPM" shall have the meaning specified in Section 4.5(d).

                  "Put Notice" shall have the meaning specified in Section 11.3.

                  "Put Right" shall have the meaning specified in Section 11.1.

                                     - 53 -
<PAGE>   60

                  "Qualified Plans" shall have the meaning set forth in Section
         3.20(b).

                  "RCRA" shall have the meaning specified in Section 3.18.

                  "Readjusted Merger Consideration" shall have the meaning
         specified in Section 1.3(b).

                  "Records" shall have the meaning specified in Section 9.2.

                  "release" shall have the meaning specified in Section 3.18.

                  "Restricted Period" shall have the meaning specified in
         Section 8.2.

                  "SEC" shall have the meaning specified in Section 4.5(a).

                  "State Certificates" shall have the meaning specified in
         Section 1.1(b).

                  "Stockholder Indemnitees" shall have the meaning specified in
         Section 6.4.

                  "subsidiary" means, with respect to any Person, any entity of
         which securities or other ownership interests having ordinary voting
         power to elect a majority of the board of directors or other Persons
         performing similar functions are at any time directly or indirectly
         owned by such Person.

                  "Surviving Corporation" shall have the meaning specified in
         Section 1.1(a).

                  "Target Working Capital" shall mean $5,500,000.

                  "Tax" or "Taxes" shall have the meaning specified in Section
         3.19(a).

                  "Territory" shall have the meaning specified in Section
         7.1(a).

                  "third party" shall have the meaning specified in Section 6.5.

                  A reference in this Agreement to any statute shall be to such
         statute as amended from time to time, and the rules and regulations
         promulgated thereunder.

             [THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK.]

                                     - 54 -
<PAGE>   61

         IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective authorized officers as of the day and year
first above written.

                                           AMERICAN PLUMBING & MECHANICAL, INC.

                                           By:
                                               --------------------------------
                                               Name:
                                                    ---------------------------
                                               Title:
                                                     --------------------------

                                           LDI MECHANICAL, INC.

                                           By:
                                               --------------------------------
                                               Name:
                                                    ---------------------------
                                               Title:
                                                     --------------------------

                                           LINDY DENNIS INDUSTRIES, INC.

                                           By:
                                               --------------------------------
                                               Name: Lloyd C. Smith
                                               Title: President

                                           ------------------------------------
                                           Lloyd C. Smith

                                           ------------------------------------
                                           Sandra A. Smith

                                     - 55 -
<PAGE>   62

                                           LDI HEATING & AIR CONDITIONING

                                           By:
                                               --------------------------------
                                               Name: Lloyd C. Smith
                                               Title: President

                                           ------------------------------------
                                           Lloyd C. Smith

                                           LDI MECHANICAL

                                           By:
                                               --------------------------------
                                               Name: Lloyd C. Smith
                                               Title: President

                                           ------------------------------------
                                           Lloyd C. Smith

                                           ------------------------------------
                                           Jeffery L. Minarik

                                           KRAHENBUHL PLUMBING INCORPORATED

                                           By:
                                               --------------------------------
                                               Name: James K. Krahenbuhl
                                               Title:  President

                                           ------------------------------------
                                           Lloyd C. Smith

                                           ------------------------------------
                                           Jeffery L. Minarik, Trustee u/d/t
                                           4/22/99

                                     - 56 -

<PAGE>   63

                                           ------------------------------------
                                           Kayleen B. Krahenbuhl, Trustee u/d/t
                                           4/22/99

                                           KRAHENBUHL FIRE SPRINKLERS LLC

                                           By:
                                               --------------------------------
                                               Name: James K. Krahenbuhl
                                               Title: Manager

                                           ------------------------------------
                                           Lloyd C. Smith

                                           ------------------------------------
                                           James K. Krahenbuhl, Trustee u/d/t
                                           4/22/99

                                           ------------------------------------
                                           Kayleen B. Krahenbuhl, Trustee u/d/t
                                           4/22/99

                                           GREEN VALLEY PLUMBING, INC.

                                           By:
                                               --------------------------------
                                               Name: James K. Krahenbuhl
                                               Title: Manager

                                           ------------------------------------
                                           Lloyd C. Smith

                                           ------------------------------------
                                           James K. Krahenbuhl, Trustee u/d/t
                                           4/22/99

                                           ------------------------------------
                                           Kayleen B. Krahenbuhl, Trustee u/d/t
                                           4/22/99

                                     - 57 -
<PAGE>   64

                        SCHEDULE 1.5 REQUIRED WITHHOLDING

There are no amounts required to be withheld from the consideration otherwise
payable to any Person pursuant to Article I under provisions of federal, state,
local, or foreign tax law.

<PAGE>   65

          SCHEDULE 2.3 OFFICERS AND DIRECTORS OF SURVIVING CORPORATION

              Officers
              --------
              President                           Lloyd C. Smith

              Chief Financial Officer             David C. Baggett
              and Chief Accounting
              Officer, Vice President
              and Secretary

              Vice President                      Robert Smith

              Vice President                      Michael Smith

              Vice President - Plumbing           James K. Krahenbuhl

              Vice President - Commercial         Jeff Minarik

              Assistant Chief Financial           Byrl Lumby
              Officer and Assistant
              Secretary

              Directors
              ---------

              David C. Baggett

              Robert A. Christianson

              Lloyd C. Smith

<PAGE>   66

             SCHEDULE 3.1 ORGANIZATION AND QUALIFICATION OF COMPANY

<TABLE>
<CAPTION>
------------------------------------  ----------------------------------   -------------------------------------
                                                                                 JURISDICTION(S) OF FOREIGN
           ENTITY                        JURISDICTION OF ORGANIZATION                   QUALIFICATION
------------------------------------  ----------------------------------   -------------------------------------
<S>                                   <C>                                  <C>
Lindy Dennis Industries, Inc.                       Texas                  California, Nevada, New Jersey
------------------------------------  ----------------------------------   -------------------------------------
LDI Heating & Air Conditioning                   California                Arizona
------------------------------------  ----------------------------------   -------------------------------------
LDI Mechanical                                   California                None
------------------------------------  ----------------------------------   -------------------------------------
                                                                           California
Krahenbuhl Plumbing Incorporated                   Nevada
------------------------------------  ----------------------------------   -------------------------------------
                                                   Nevada
Krahenbuhl Fire Sprinklers LLC                                             None
------------------------------------  ----------------------------------   -------------------------------------
                                                   Nevada
Green Valley Plumbing, Inc.                                                None
------------------------------------  ----------------------------------   -------------------------------------
</TABLE>

<PAGE>   67

        SCHEDULE 3.2 OWNERSHIP OF COMPANY STOCK AND DELIVERY INSTRUCTIONS

                          LINDY DENNIS INDUSTRIES, INC.

<TABLE>
<CAPTION>
------------------------ ---------------------- ---------------------- ---------------------- ----------------------
                                                                                                   UNADJUSTED
     COMPANY STOCK                               NUMBER OF SHARES OF    NUMBER OF SHARES OF           CASH
    CERTIFICATE NO.          RECORD HOLDER          COMPANY STOCK       AMPAM COMMON STOCK        CONSIDERATION
------------------------ ---------------------- ---------------------- ---------------------- ----------------------
<S>                      <C>                     <C>                   <C>                    <C>
                         Lloyd C. Smith and
                         Sandra A. Smith,
           1             husband and wife as             397                  670,495         $     5,103,478
                         community property
------------------------ ---------------------- ---------------------- ---------------------- ----------------------
</TABLE>

                        LDI HEATING AND AIR CONDITIONING

<TABLE>
<CAPTION>
------------------------ ---------------------- ---------------------- ---------------------- ----------------------
                                                                                                   UNADJUSTED
     COMPANY STOCK                               NUMBER OF SHARES OF    NUMBER OF SHARES OF           CASH
    CERTIFICATE NO.          RECORD HOLDER          COMPANY STOCK       AMPAM COMMON STOCK        CONSIDERATION
------------------------ ---------------------- ---------------------- ---------------------- ----------------------
<S>                      <C>                     <C>                   <C>                    <C>
           1             Lloyd C. Smith                10,000                 670,494         $     5,103,478
------------------------ ---------------------- ---------------------- ---------------------- ----------------------
</TABLE>

                                 LDI MECHANICAL

<TABLE>
<CAPTION>
------------------------ ---------------------- ---------------------- ---------------------- ----------------------
                                                                                                   UNADJUSTED
     COMPANY STOCK                               NUMBER OF SHARES OF    NUMBER OF SHARES OF           CASH
    CERTIFICATE NO.          RECORD HOLDER          COMPANY STOCK       AMPAM COMMON STOCK        CONSIDERATION
------------------------ ---------------------- ---------------------- ---------------------- ----------------------
<S>                      <C>                     <C>                   <C>                    <C>
           1             Lloyd C. Smith                68,750                  2,841          $       55,402
------------------------ ---------------------- ---------------------- ---------------------- ----------------------
           2             Jeffrey L. Minarik            56,250                  2,324          $       45,335(1)
------------------------ ---------------------- ---------------------- ---------------------- ----------------------
</TABLE>

(1)      NO ADJUSTMENTS ARE TO BE APPLIED TO THE UNADJUSTED CASH CONSIDERATION
         FOR THE SHAREHOLDER.

<PAGE>   68

                        KRAHENBUHL PLUMBING INCORPORATED

<TABLE>
<CAPTION>
------------------------ ---------------------- ---------------------- ---------------------- ----------------------
                                                                                                   UNADJUSTED
     COMPANY STOCK                               NUMBER OF SHARES OF    NUMBER OF SHARES OF           CASH
    CERTIFICATE NO.          RECORD HOLDER          COMPANY STOCK       AMPAM COMMON STOCK        CONSIDERATION
------------------------ ---------------------- ---------------------- ---------------------- ----------------------
<S>                      <C>                     <C>                   <C>                    <C>
           5             Lloyd C. Smith                  350                     0            $       584,257
------------------------ ---------------------- ---------------------- ---------------------- ----------------------
                         James K. Krahenbuhl
                         and Kayleen B.
           6             Krahenbuhl, Trustees            650                     0            $     1,085,050(1)
                         u/d/t 4/22/99
------------------------ ---------------------- ---------------------- ---------------------- ----------------------
</TABLE>

                         KRAHENBUHL FIRE SPRINKLERS LLC

<TABLE>
<CAPTION>
------------------------ ---------------------- ---------------------- ---------------------- ----------------------
                                                                                                   UNADJUSTED
                                                                        NUMBER OF SHARES OF           CASH
                             RECORD HOLDER         MEMBER INTEREST      AMPAM COMMON STOCK        CONSIDERATION
------------------------ ---------------------- ---------------------- ---------------------- ----------------------
<S>                      <C>                     <C>                   <C>                    <C>
                         Lloyd C. Smith                  35%                     0            $         7,700
------------------------ ---------------------- ---------------------- ---------------------- ----------------------
                         James K. Krahenbuhl
                         and Kayleen B.
                         Krahenbuhl, Trustees            65%                     0            $        14,300(1)
                         u/d/t 4/22/99
------------------------ ---------------------- ---------------------- ---------------------- ----------------------
</TABLE>

(1)      NO ADJUSTMENTS ARE TO BE APPLIED TO THE UNADJUSTED CASH CONSIDERATION
         FOR THE SHAREHOLDER.

<PAGE>   69

                           GREEN VALLEY PLUMBING, INC.

<TABLE>
<CAPTION>
------------------------ ---------------------- ---------------------- ---------------------- ----------------------
                                                                                                   UNADJUSTED
     COMPANY STOCK                               NUMBER OF SHARES OF    NUMBER OF SHARES OF           CASH
    CERTIFICATE NO.          RECORD HOLDER          COMPANY STOCK       AMPAM COMMON STOCK        CONSIDERATION
------------------------ ---------------------- ---------------------- ---------------------- ----------------------
<S>                      <C>                     <C>                   <C>                    <C>
           4             Lloyd C. Smith                  350                     0                     350
------------------------ ---------------------- ---------------------- ---------------------- ----------------------

                         James K. Krahenbuhl
                         and Kayleen B.
           5             Krahenbuhl, Trustees            650                     0                     650(1)
                         u/d/t 4/22/99
------------------------ ---------------------- ---------------------- ---------------------- ----------------------
</TABLE>

(1)      NO ADJUSTMENTS ARE TO BE APPLIED TO THE UNADJUSTED CASH CONSIDERATION
         FOR THE SHAREHOLDER.

<PAGE>   70

            SCHEDULE 3.4 COMPANY CONSENTS AND APPROVALS; NO VIOLATION

Attached hereto is a list of all regulatory approvals or routine governmental
consents required for any of the transactions contemplated hereby to remain in
full force and effect, except where the failure to obtain such consent,
approval, authorization, or permit, or to make such filing or notification, is
not reasonably expected to have, individually or in the aggregate, a Company
Material Adverse Effect or prevent or delay in any material respect, the
consummation of the transactions contemplated by this Agreement, as well as a
list of all material contracts, commitments or similar agreements to which the
Company is a party and under which the consummation of any of the transactions
contemplated hereby may result in a default (or give rise to any right of
termination, cancellation or acceleration) except for such defaults (or rights
of termination, cancellation, or acceleration) as to which requisite waivers or
consents have been obtained or which are not reasonably expected to have,
individually or in the aggregate, a Company Material Adverse Effect or prevent
or delay, in any material respect, the consummation of the transactions
contemplated by this Agreement:

A.    Regulatory Approvals or Routine Governmental Consents:

      1.   Early termination letter regarding the Hart Scott Act (see
           Schedule 4.4 included elsewhere herein).

B.    Material Contracts or Commitments or Similar Agreements:

      1.   See attached list.

<PAGE>   71

                      SCHEDULE 3.5 AFFILIATE RELATIONSHIPS

(i)      There is no property, asset or right, tangible or intangible, which is
         associated with any property, asset or right owned or operated by the
         Company, which is also owned, directly or indirectly, in whole or in
         part, by any of the Company Stockholders or any director, officer,
         employee of or consultant to the Company.

(ii)     Attached hereto is a list of any relationships which any of the Company
         Stockholders have, or any director, officer, employee, or agent of or
         consultant to the Company has, with any other corporation, partnership,
         firm, association or business organization, entity or enterprise which
         is a competitor, potential competitor, supplier or customer of the
         Company:

<PAGE>   72

                    SCHEDULE 3.6 COMPANY FINANCIAL STATEMENTS

Attached hereto are the following Company Financial Statements and the Company
Unaudited Financial Statements.

A. Company Financial Statements:

     1.   Lindy Dennis Industries, Inc.

               a.    Reviewed Financial Statements for the years ended December
                     31, 1998 and 1997.

               b.    Reviewed Financial Statements for the years ended December
                     31, 1997 and 1996.

     2.   LDI Heating & Air Conditioning

               a.    Reviewed Financial Statements for the years ended December
                     31, 1998 and 1997.

               Note: LDI Heating & Air Conditioning was established in December
                     1996. No operations were conducted by the company for the
                     year ended December 31, 1996.

     3.   LDI Mechanical

               a.    Reviewed Financial Statements for the year ended December
                     31, 1998.

               Note: LDI Mechanical was as established in 1998.

     4.   Krahenbuhl Plumbing, Incorporated

               a.    Compiled Financial Statements for the year ended December
                     31, 1998.

               b.    Compiled Financial Statements for the year ended December
                     31, 1997.

               c.    Compiled Financial Statements for the year ended December
                     31, 1996.

<PAGE>   73

     5.   Krahenbuhl Fire Sprinklers LLC

               a.   Internal Balance Sheet and Income Statement for the year
                    ended December 31, 1998.

               Note: Krahenbuhl Fire Sprinklers LLC was established in 1998.

     6.   Green Valley Plumbing, Inc.

               a.   Internal Balance Sheet and Income Statement year ended
                    December 31, 1998.

               b.   Internal Balance Sheet and Income Statement year ended
                    December 31, 1997

               Note: Green Valley Plumbing, Inc. was established in 1997.

     B.   Company Unaudited Financial Statements:

          1.   LDI and Affiliates

               a.   Consolidated Balance Sheet and Income Statement for the year
                    ended December 31, 1999.

<PAGE>   74

                  SCHEDULE 3.7 COMPANY UNDISCLOSED LIABILITIES

Attached hereto is an accurate list as of the Company Unaudited Balance Sheet
Date of (i) all liabilities of the Company which are reflected in the balance
sheet contained in the Company Unaudited Financial Statements and (ii) all
liabilities of any kind of the Company which are not reflected in such balance
sheet.

i.   Liabilities reflected on Company Unaudited Financial Statements:

     See attached detail.

ii.  Liabilities not reflected on Company Unaudited Financial Statements:

         None.

<PAGE>   75

               SCHEDULE 3.8 COMPANY ACCOUNTS AND NOTES RECEIVABLES

(i)      Attached hereto is an accurate list as of the Company Unaudited Balance
         Sheet Date of the accounts and notes receivable of the Company,
         including an aging of all accounts and notes receivable showing amounts
         due in 30-day aging categories.

(ii)     Attached hereto is an accurate list of receivables from and advances to
         employees of the Company and the Company Stockholders.

<PAGE>   76

                           SCHEDULE 3.9 COMPANY ASSETS

(i)      Attached hereto is an accurate list of all real and personal property
         included in "property and equipment" on the balance sheet of the
         Company as of the Company Unaudited Balance Sheet Date and all other
         tangible assets of the Company with a value in excess of $5,000 (a)
         owned by the Company as of the Company Unaudited Balance Sheet Date and
         (b) acquired since the Company Unaudited Balance Sheet Date, including
         in each case true, complete and correct copies of leases for
         significant equipment and for all real property leased by the Company
         and descriptions of all real property on which buildings, warehouses,
         workshops, garages and other structures used in the operation of the
         business of the Company are situated.

(ii)     Attached hereto is a list of those assets of the Company that are
         currently owned, or were formerly owned, by the Company Stockholders or
         Affiliates of the Company.

         None.

(iii)    Attached hereto are true, complete and correct copies of all title
         reports and title insurance policies received or owned by the Company.

         Not Applicable.  Company does not own any real estate.

(iv)     There are no plans or projects involving the opening of new operations,
         expansion of existing operations or the acquisition of any real
         property or existing business, to which management of the Company has
         devoted effort or expenditure in the two-year period prior to the date
         hereof, which if pursued by the Company would require additional
         expenditures of capital.

(iv)     None of the personal property of the Company is subject to any liens.

<PAGE>   77

           SCHEDULE 3.10 MATERIAL CONTRACTS, COMMITMENTS AND CUSTOMERS

(i)      Attached hereto is an accurate list as of the Company Unaudited Balance
         Sheet Date of (a) all material contracts, commitments and similar
         agreements to which the Company is a party or by which they or any of
         their property is bound (including, but not limited to, joint venture
         or partnership agreements, contracts with any labor organizations, loan
         agreements, indemnity or guaranty agreements, bonds, mortgages, liens,
         pledges or other security agreements) and (b) all customers
         representing 5% or more of the Company's revenues, taken as a whole, in
         any of the periods covered by the Company Financial Statements or the
         Company Unaudited Financial Statements:

(ii)     None of the Company's customers or suppliers have canceled or
         substantially reduced service or products during the period covered by
         the Company Unaudited Financial Statements or are currently attempting
         or threatening to cancel or substantially reduce their use of the
         Company's products or services.

(iii)    The Company has complied with all material commitments and obligations
         and is not in default under the contracts and agreements listed in (i)
         above.

(iv)     The Company does not have any contracts subject to price
         redetermination or renegotiation.:

<PAGE>   78

                    SCHEDULE 3.11 COMPANY OPERATING AUTHORITY

Attached hereto is an accurate list and summary description as of the Company
Unaudited Balance Sheet Date of all Licenses, certificates, trademarks, trade
names, patents, patent applications and copyrights related to the assets owned
or held by the Company, all of which are in full force and effect:

<PAGE>   79

                 SCHEDULE 3.12 COMPANY BANK ACCOUNT INFORMATION

Attached hereto is an accurate list of the names and addresses of every bank and
other financial institution in which Company maintains an account (whether
checking, savings or otherwise), lock box, or safe deposit box, and the account
numbers and persons having signature authority or legal access thereto:

<PAGE>   80

                    SCHEDULE 3.13 COMPANY CONDUCT OF BUSINESS

Attached hereto is a description of any and all events occurring since the
Company Unaudited Balance Sheet Date of the type described in Section 3.13:

<PAGE>   81

                    SCHEDULE 3.14 COMPANY LITIGATION; ORDERS

(i)      Attached hereto is an accurate list of all Actions pending or, to the
         Company Stockholders' Knowledge, threatened against the Company:

(ii)     Attached hereto is an accurate list of all judgments or outstanding
         orders, injunctions, decrees, stipulations, or awards (whether rendered
         by a court or administrative agency or by arbitration) against the
         Company:

<PAGE>   82

                     SCHEDULE 3.15 COMPANY LABOR AGREEMENTS

There are no agreements with labor unions or associations representing employees
of the Company.

<PAGE>   83

                         SCHEDULE 3.17 COMPANY INSURANCE

Attached hereto is an accurate list of all insurance policies currently in
effect issued in favor of the Company that relate to their businesses:

<PAGE>   84

                      SCHEDULE 3.18 COMPANY DISPOSAL SITES

There are no disposal sites which the Company has utilized as of the Company
Unaudited Balance Sheet Date.

<PAGE>   85

                           SCHEDULE 3.19 COMPANY TAXES

(i)      Attached hereto is an accurate list of all instances where the Company
         has not filed when due all Company Returns or not timely paid or
         discharged all Tax obligations:

(ii)     Attached hereto is an accurate list of all instances where the Company
         returns do not correctly and accurately reflect facts regarding the
         income, business and assets, operations, activities, status or other
         matters of the Company and any other information required to be shown
         thereon and instances where the Company is subject to penalties under
         Section 6662 of the Code, relating to accuracy-related penalties, or
         any corresponding provision of applicable state, local, or foreign Tax
         law or any predecessor provision of law:

(iii)    Attached hereto is an accurate list of all instances where the Company
         has received any notice of any Tax deficiency outstanding, proposed, or
         assessed against or allocable to it, or has executed any waiver of any
         statute of limitations on the assessment or collection of any Tax, or
         executed or filed with the Internal Revenue Service or any other
         Governmental Authority any agreement not in effect extending the period
         for assessment or collection of any Taxes against the Company.

<PAGE>   86

                  SCHEDULE 3.20 COMPANY EMPLOYEE BENEFIT PLANS

(i)      Attached hereto is an accurate list and copies of all Company Benefit
         Plans:

(ii)     There are no instances where the Company Benefit Plans have not been
         administered in compliance with their terms.

(iii)    Attached hereto are all reports and other documents that are required
         to be filed with any Governmental Authority or distributed to plan
         participants or beneficiaries.

(iv)     Attached hereto is a list of all officers, directors and key employees
         of the Company and their rate of compensation as of December 31, 1999
         and the date hereof.

<PAGE>   87

              SCHEDULE 3.21 COMPANY BROKERAGE FEES AND COMMISSIONS

There are no obligations or agreements incurred or entered into by the Company
relating to the payment of any investment banking, brokerage or finder's fee or
commission in respect of the transactions contemplated by this Agreement.

<PAGE>   88

             SCHEDULE 4.4 AMPAM CONSENTS AND APPROVALS; NO VIOLATION

Attached hereto is a list of all regulatory approvals or routine governmental
consents required for any of the transactions contemplated hereby to remain in
full force and effect, except where the failure to obtain such consent,
approval, authorization, or permit, or to make such filing or notification, is
not reasonably expected to have, individually or in the aggregate, an AMPAM
Material Adverse Effect or prevent or delay in any material respect, the
consummation of the transactions contemplated by this Agreement, as well as a
list of all material contracts, commitments or similar agreements to which AMPAM
is a party and under which the consummation of any of the transactions
contemplated hereby may result in a default (or give rise to any right of
termination, cancellation or acceleration) except for such defaults (or rights
of termination, cancellation, or acceleration) as to which requisite waivers or
consents have been obtained or which are not reasonably expected to have,
individually or in the aggregate, an AMPAM Material Adverse Effect or prevent or
delay, in any material respect, the consummation of the transactions
contemplated by this Agreement:

A.       Regulatory Approvals or Routine Governmental Consents:

         1.       Early termination letter regarding the Hart Scott Act.

B.       Material Contracts or Commitments or Similar Agreements:

         1.       The Consent received by AMPAM from its Lenders (as defined in
                  the Consent) regarding the consummation of the transaction
                  contemplated by the Agreement.

<PAGE>   89

                   SCHEDULE 5.6 COMPANY STOCKHOLDER GUARANTEES

Attached hereto is an accurate list of the Company's indebtedness that the
Company Stockholders have personally guaranteed:

<PAGE>   90

            SCHEDULE 5.9 REPAYMENT OF ADVANCES, RECEIVABLES AND LOANS

Attached hereto is an accurate list of (i) Company advances to or receivables
from the Company Stockholders and (ii) loans to the Company from the Company
Stockholders:

<PAGE>   91

                     SCHEDULE 5.12 TRANSFER OF REAL PROPERTY

There is no real property owned by the Company that is not being distributed to
the Stockholders and leased back by the Company.

<PAGE>   92

                      SCHEDULE 5.14 ACTIONS PENDING CLOSING

Attached hereto is a list of any and all events occurring between the date of
this Agreement and the Effective Time of the type described in Section 5.14.

Section 5.14 (vii) - Pending sale of 1998 Lemon truck to GMAC and lease of new
2000 Chevy truck which may be finalized before or after effective date of
merger.

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